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Exhibit 10.8
HASTINGS BOOKS, MUSIC & VIDEO, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
AND TRUST AGREEMENT
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TABLE OF CONTENTS
ARTICLE I
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III
ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
PARTICIPANT CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI
ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
TERMINATION OF SERVICE - PARTICIPANT VESTING . . . . . . . . . . . . . . . 26
ARTICLE VIII
TIME, FORM AND METHOD OF PAYMENT OF BENEFITS . . . . . . . . . . . . . . . 32
ARTICLE IX
EXEMPT LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X
REDEMPTION, PURCHASE PRIVILEGES AND OBLIGATIONS . . . . . . . . . . . . . . 47
ARTICLE XI
EMPLOYER ADMINISTRATIVE PROVISIONS . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XII
COMMITTEES - ADMINISTRATION AND INVESTMENT PROVISIONS . . . . . . . . . . . 51
ARTICLE XIII
PARTICIPANT ADMINISTRATIVE PROVISIONS . . . . . . . . . . . . . . . . . . . 55
ARTICLE XIV
FIDUCIARY DUTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XV
INSURANCE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XVI
DISCONTINUANCE, AMENDMENT, AND TERMINATION . . . . . . . . . . . . . . . . 62
ARTICLE XVII
PARTICIPATION BY AFFILIATES OF EMPLOYER . . . . . . . . . . . . . . . . . . 64
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ARTICLE XVIII
TRUSTEE, POWERS AND DUTIES . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XIX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XX
TOP HEAVY PLAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE XXI
ELIGIBLE ROLLOVER DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 80
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ARTICLE I
INTRODUCTION
THIS AGREEMENT, by and between Hastings Books, Music & Video, Inc., a
corporation organized and existing under the laws of the State of Texas (herein
referred to as the "Plan Sponsor") and Trustees as shall be appointed from time
to time by the Plan Sponsor (herein referred to as the "Trustee") for the
benefit of all employees of the Plan Sponsor and its affiliated companies who
are or may become eligible hereunder and who participate in the Hastings Books,
Music & Video, Inc. Employee Stock Ownership Plan hereby established.
W I T N E S S E T H:
The purpose of this Plan is to enable participating Employees
(hereinafter defined) to share in the growth and prosperity of the Company
through equity ownership therein. The Plan is designed to invest primarily in
Qualifying Employer Securities (hereinafter defined). The benefits provided by
this Plan will be paid from a Trust Fund (hereinafter defined) established by
the Company and will be in addition to the benefits Employees are entitled to
receive under any other programs of the Employer (hereinafter defined) and
under the Federal Social Security Act.
This Plan and the separate related Trust (hereinafter defined) forming
a part hereof are established and shall be maintained for the exclusive benefit
of the eligible Employees of the Employer and their Beneficiaries (hereinafter
defined). Except as hereinafter provided, no part of the Trust Fund shall ever
revert to the Employer, except as hereinafter provided, or be used for or
diverted to purposes other than the exclusive benefit of the Employees of the
Employer and their Beneficiaries or the payment of administrative expenses of
the Plan and Trust.
The Plan is 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)(1)(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).
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ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Definitions.
(1) Account. The separate account maintained for each Participant
to reflect his allocable share of contributions made under
this Plan and the income, losses, appreciation and
depreciation of the Trust Fund attributable thereto.
(2) Accrued Benefit. The balance in a Participant's Account as of
any date derived from Employer contributions and the cash
surrender value, or in the case of a deceased Participant, the
face value of any Insurance Contracts on the life of the
Participant held by the Trustee for the individual benefit of
such Participant.
(3) Act. Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any
regulations or rulings issued thereunder.
(4) Active Participant. For each Plan Year, any Employee who
satisfies the eligibility requirement of Article III and who
completes at least one thousand (1,000) Hours of Service
during such Plan Year.
(5) Administration Committee. The person(s) appointed by the Plan
Administrator to assist in the administration of the Plan.
The Committee shall serve at the pleasure of the Plan
Administrator.
(6) Alternate Payee. The spouse, former spouse, child, or other
dependent of a Participant who is recognized by a Domestic
Relations Order as having a right to receive all, or a portion
of, the benefits payable under the Plan with respect to such
Participant.
(7) Annual Addition. The sum of the following additions to a
Participant's Account for the Limitation Year:
(i) Employer contributions;
(ii) Forfeitures;
(iii) Employee contributions, excluding any rollover
contributions (as defined in Sections 402(c),
403(a)(4), 403(b)(8) and 408(d)(3) of the Code)
without regard to Participant contributions to a
simplified employee pension which are excludable from
gross income under Section 408(k)(6) of the Code; and
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(iv) contributions made during the Limitation Year
allocated to any individual medical benefit account
(within the meaning of Section 415(l) of the Code)
that is established for the Participant and that is
part of a defined benefit plan (within the meaning of
Section 414(j) of the Code).
(8) Beneficiary. A person or persons designated by a Participant
to receive any death benefit which shall be payable under this
Plan. Each Participant from time to time may designate any
person or persons (who may be designated contingently or
successively and who may be an entity other than a natural
person) as his Beneficiary or Beneficiaries to whom his Plan
benefits are paid if he dies before receipt of all such
benefits. Each Beneficiary designation shall be in a form
prescribed by the Plan Administrator and will be effective
only when filed with the Plan Administrator during the
Participant's lifetime. Each Beneficiary designation filed
with the Plan Administrator will cancel all Beneficiary
designations previously filed with the Plan Administrator. In
the event a married Participant designates a Beneficiary other
than his Spouse, his Spouse must consent to such designation
in writing, witnessed by a notary public or the Plan
Administrator. This consent must be on file with the Plan
Administrator before the Beneficiary designation can be
honored. Such spousal consent shall not be required if it is
established to the satisfaction of the Administration
Committee that such consent cannot be obtained because the
spouse cannot be located or because of such other
circumstances as the Secretary of the Treasury may prescribe
by regulations. A spousal consent filed with the Plan
Administrator shall be applicable only with respect to the
Spouse who has signed such form.
(9) Board of Directors. The Board of Directors of the Company,
unless otherwise indicated or the context otherwise requires.
(10) Break in Service. Any Plan Year during which an Employee or
Participant does not complete more than five hundred (500)
Hours of Service, determined as of the end of the Plan Year.
(11) Collateral Suspense Account. An account established by or at
the direction of the Administration Committee pursuant to
Section 6.3 in which any Qualifying Employer Securities
acquired with the proceeds of an Exempt Loan are accounted for
until released from such Account and allocated among the
Accounts of Participants.
(12) Code. The Internal Revenue Code of 1986, as amended, and any
regulations and rulings issued thereunder.
(13) Committees. Collectively, the Administration Committee and
the Investment Committee as from time to time constituted.
(14) Company. Hastings Books, Music & Video, Inc. or any successor
thereto which shall adopt this Plan.
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(15) Compensation. Includes amounts accrued to a Participant as
wages, salaries, fees for professional services, and other
amounts received for personal services actually rendered in
the course of employment with the Employer as an Employee to
the extent that such amounts are includible in gross income
(including but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of
profits, concussions on insurance premiums, tips, bonuses,
fringe benefits, reimbursement or other expenses under a
nonaccountable plan (as described in Section 1.62-2(c) of the
Income Tax Regulations)). The term "Compensation" shall also
include, in the case of a Participant who is an employee
within the meaning of Section 401(c) of the Code, the
Participant's earned income (as described in Section 401(c)(2)
of the Code) (determined without regard to any exclusions from
gross income similar to those in Sections 931 and 933 of the
Code) any foreign earned income as defined under Section
911(b) of the Code, regardless of whether such income is
excludable from the gross income of the Employee under Section
911 of the Code; amounts described in Code Sections 104(a)(3),
105(a) and 105(h), but only to the extent that these amounts
are includible in the gross income of the Participant; amounts
paid or reimbursed by the Employer for moving expenses
incurred by the Participant, but only to the extent that these
amounts are not deductible by the Participant under Code
Section 217; the value of a nonqualified stock option granted
to the Participant by the Employer, but only to the extent
that the value of the option is includible in the gross income
of the Participant for the taxable year when granted; and the
amount includible in the gross income of the Participant upon
making an election described in Section 83(b) of the Code.
The term "compensation" shall exclude the following:
(i) other contributions made by the Employer to a plan of
deferred compensation to the extent that, before the
application of the Code Section 415 limitations to
that plan, the contributions are not includible in
the gross income of the Participant for the taxable
year in which contributed;
(ii) Employer contributions made on behalf of a
participant to a simplified employee pension plan
described in Code Section 408(k) are not considered
as Compensation for the taxable year in which
contributed to the extent such contributions are
excludable by the Participant from gross income under
Code Section 408(k)(6);
(iii) Any distributions from a plan of deferred
compensation are not considered as Compensation,
regardless of whether such amounts are includible 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 includible in the gross income of the
Participant;
(iv) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by an employee either becomes
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freely transferable or is no longer subject to a
substantial risk of forfeiture (pursuant to Code
Section 83 and regulations thereunder);
(v) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(vi) Other amounts that receive special tax benefits such
as premiums for group term life insurance (but only
to the extent that the premiums are not includible in
the gross income of the Employee), or contributions
made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of a 403(b)
annuity contract (whether or not the contributions
are excludable from the gross income of the
Participant).
Compensation for any Limitation Year is the
compensation actually paid or includible in gross
income during such year. For the purposes of a
contribution or an allocation under the Plan based on
Compensation, Compensation shall only include amounts
actually paid an Employee during the period he is a
Participant for services performed as a Covered
Employee. Compensation, for purposes of a
contribution or allocation under the Plan, shall not
include wages required to be recognized by the
federal government for the personal use of a Company
automobile or wages paid as an automobile allowance.
Notwithstanding the above, Compensation shall include
any amount which is contributed by the Employer
pursuant to a salary reduction agreement and which is
not includible in the gross income of the Employee
under Sections 125, 402(a)(8), 402(h) or 403(b) of
the Code. However, for purposes of Section 6.14, in
the determination of Compensation in connection with
the Limitation on Annual Additions under Code Section
415, this paragraph should be disregarded.
Notwithstanding the foregoing, the annual
Compensation of a Participant in excess of $200,000
shall be disregarded under the Plan. This dollar
limitation shall be adjusted by the Secretary of the
Treasury at the same time and in the same manner as
provided under Section 415(d) of the Code.
In applying the dollar limitation provided herein,
the family group of a Highly Compensated Participant
who is subject to the Family Member aggregation rules
of Section 414(q)(6) of the Code because such
Participant is either a "five percent owner" of the
Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during
the year, shall be treated as a single Participant,
except that for this purpose Family Members shall
include only the affected Participant's spouse and
any lineal descendants who have not attained age
nineteen (19) before the close of the year. If, as a
result of
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the application of such rules, the adjusted $200,000
limitation is exceeded, then the limitation shall be
prorated among the affected individuals in proportion
to each such individual's Compensation as determined
under this Section prior to the application of this
limitation.
(16) Covered Employee. Each Employee except Employees who are (1)
leased employees within the meaning of Section 414(n) or
Section 414(o) of the Code, (ii) nonresident aliens and who
receive no earned income (within the meaning of Section 911(b)
of the Code) from the Employer which constitutes income from
sources within the United States (within the meaning of
Section 861(a)(3) of the Code), or (iii) included in a unit of
employees covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between employee
representatives and the Employer, if there is evidence that
retirement benefits were the subject of good faith bargaining
between such employee representatives and the Employer;
provided, however, that "Covered Employee" shall include any
Employee who would otherwise be excluded under this Section
2.1(16)(iii) whose employee representatives have, through
collective bargaining, negotiated participation in this Plan
with the Employer or its representatives.
(17) Diversification Election Period. The six-Plan Year period
beginning with the later of:
(i) The first Plan Year in which the Participant first
became a Qualified Participant, or
(ii) The first Plan Year beginning after December 31,
1986.
For purposes of the preceding sentence, a Participant who
first became a Qualified Participant in the Plan Year
beginning in 1987 shall be treated as having become a
Qualified Participant in the Plan Year beginning in 1988.
(18) Domestic Relations Order. Any judgment, decree, or order
(including one that approves a property settlement agreement)
that related 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 is
rendered under a state (within the meaning of Section
7701(a)(10) of the Code) domestic relations law (including a
community property law).
(19) Early Retirement Age. The first day of any Plan Year
subsequent to the Participant's attaining age fifty-five (55)
and completing ten (10) Years of Service, within the meaning
of Section 7.6.
(20) Effective Date. June 1, 1993.
(21) Employee. Employee shall mean any person on the payroll of
the Employer whose wages from the Employer are subject to
withholding for purposes of
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Federal income taxes and for purposes of the Federal Insurance
Contributions Act.
The term Employee shall also include any leased employee
deemed to be an employee of any employer described in the
previous paragraph as provided in Sections 414(n) or (o) of
the Code. Notwithstanding the previous sentence, if such
leased Employees constitute not more than 20 percent of the
Employer's nonhighly compensated work force within the meaning
of Section 414(n)(5)(C)(ii) of the Code, the term "Employee"
shall not include those leased Employees covered by the plan
described in Section 414(n)(5) of the Code.
(22) Employer. The Company and any corporation or other entity
that is a member of an affiliated group (as defined in
Sections 414(b), (c) or (m) of the Code or any successor
provision) including an entity which duly adopts the Plan with
the approval of the Company as provided for in Article XVIII
hereof.
(23) Employer Security. Shares of stock and bonds or debentures
(issued with interest coupons or in registered form) issued by
the Company, any corporation in an unbroken chain of
corporations in which the Company either directly or
indirectly through subsidiary corporations owns stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock of such corporation, and
any corporation in an unbroken chain of corporations ending
with the Company that owns, directly or indirectly through
subsidiary corporations, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of
stock in such corporation.
(24) Employment Commencement Date. The date on which an Employee
first performs an Hour of Service for the Employer.
(25) Exempt Loan. 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 the Act), 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 obligation.
(26) Fiscal Year. The Employer's taxable year for Federal income
tax purposes.
(27) Forfeiture. The portion of a Participant's Account that is
not part of the Participant's Vested Accrued Benefit and that
the Participant permanently ceases to be entitled to when the
Participant either (i) incurs five (5) consecutive Breaks in
Service as the result of his termination of Service or (10
receives a distribution of his entire Vested Accrued Benefit
(or, in the case of a Participant with no Vested Accrued
Benefit, a deemed distribution of $0), as provided in Section
7.10. A Forfeiture shall be deemed to occur as of the last day
of the Plan Year in which event or state of affairs giving
rise to the Forfeiture occurs or arises.
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(28) Forfeiture Suspense Account. An account established pursuant
to Section 6.8.
(29) Former Participant. Any individual, other that a Re-Employed
Employee, who has been a Participant hereunder, but who has
incurred a Break in Service, and who has not yet received the
entire benefit to which he is entitled under the Plan.
(30) Hour of Service.
(a) Each hour for which an Employee is paid, or entitled
to payment, for the performance of duties for the
Employer. These hours shall be credited to the
Employee for the computation period or periods in
which duties are performed; and
(b) Each hour for which an Employee is paid, or entitled
to payment, by the Employer on account of a period of
time during which no duties are performed
(irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness,
incapacity (including Disability), layoff, jury duty,
Military duty or Leave of Absence. No more than 501
Hours of Service shall be credited under this
paragraph for any single continuous period (whether
or not such period occurs in a single computation
period). Hours under this paragraph shall be
calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by this reference; and
(c) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to
by the Employer. The same Hours of Service shall not
be credited both under paragraph (a) or paragraph
(b), as the case may be, and under this paragraph
(c). These hours shall be credited to the Employee
for the computation period in which the award or
agreement pertains rather than the computation period
in which the award, agreement or payment is made.
(d) Hours of Service shall be determined on the basis of
actual hours for which an Employee is paid or
entitled to payment.
(e) An Hour of Service respecting any member of an
affiliated service group (as defined in Section
414(m) of the Code) of which the Employer is a
member, or respecting any incorporated or
unincorporated trade or business which is under
common control with the Employer (as defined in
Section 414(c) of the Code) shall be credited as an
Hour of Service with the Employer.
(f) Hours of Service also will be credited for any
individual considered an Employee for purposes of
this Plan under Section 414(n) of the Code.
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Solely for purposes of determining whether an Employee or
Participant has incurred a Break in Service under Section 7.6,
an Employee or Participant shall be credited with eight (8)
hours for each day (to a maximum of forty (40) hours per week)
that the Employee or Participant is on any unpaid Leave of
Absence. In no event shall hours credited under the preceding
sentence be counted as Hours of Service for purposes of
computing a Participant's Vested Accrued Benefit derived from
Employer contributions or for purposes of determining whether
a Participant is eligible to share in the allocation of
Employer contributions and Forfeitures under Article VI. In
addition, an Employee or Participant who incurs a Parental
Absence shall be treated as an Employee or Participant on an
unpaid Leave of Absence for purposes of the first sentence of
this paragraph; provided, however, that Hours of Service
credited to an Employee or Participant as a result of a
Parental Absence shall be credited only in the year in which
such Parental Absence commences unless such Employee or
Participant would not have incurred a Break in Service during
such year without being credited with Hours of Service for
such Parental Absence, in which case such Hours of Service
shall be credited for the year immediately following the year
in which the Parental Absence commences. For purposes of the
immediately preceding sentence, the term "year" shall mean the
periods of computation used hereunder to determine an
Employee's or Participant's Years of Service for purposes of
eligibility and vesting. The Hours of Service to be credited
in connection with such Parental Absence shall be the Hours of
Service that otherwise would normally have been credited to an
Employee or Participant but for such absence or, in any case
in which the Administration Committee is unable to determine
the number of Hours of Service that would otherwise normally
have been credited to such Employee or Participant, eight (8)
Hours of Service per day of absence, provided that the total
number of hours so treated as Hours of Service for any period
of Parental Absence shall not be exceed five hundred and one
(501) Hours of Service.
The Administration Committee shall resolve any ambiguity with
respect to the crediting of an Hour of Service in favor of the
Employee.
(31) Insurance Contract. Any ordinary or term life insurance or
annuity contract which may be issued hereunder by an insurance
company.
(32) Investment Committee. The Plan Investment Committee appointed
to direct Plan investments pursuant to Section 12.1.
(33) Leave of Absence. Any period of absence from the active
employment of the Employer granted to the Employee in writing
in accordance with a uniform policy, consistently applied, or
compulsory military service, subject to the following
conditions:
(a) Absence from the active service of the Employer by
reason of Leave of Absence granted by the Employer
because of accident, illness, or for any other reason
granted by the Employer on the basis of a uniform
policy
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applied without discrimination will not terminate an
Employee's Service provided he 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
the Employer's policy with respect to permitted
absences.
(b) Absence from the active service of the Employer
because of engagement in military service will be
considered a Leave of Absence granted by the Employer
and will not terminate the Service of an Employee if
he returns to the active employment of the Employer
within 90 days from and after discharge or separation
from such engagement or, if later, within the period
of time during which he has re-employment rights
under any applicable Federal law.
(c) The Employer shall not be required to re-employ any
Employee whose active service with the Employer was
terminated by reason of military service unless such
Employee has reemployment rights under any applicable
Federal law.
(d) If any such Employee who is Leave of Absence pursuant
to paragraph (a) or (b) above does not return to the
active employment of the Employer at or prior to the
expiration of his Leave of Absence, his Service will
be considered terminated as of the date on which his
Leave of Absence began; provided, however, that, if
such Employee is prevented from his timely return to
the active employment of the Employer because of his
permanent disability or his death, he shall be
treated under the Plan as though he returned to
active employment immediately preceding the date of
his permanent disability or his death.
(34) Limitation Year. A calendar year or any other twelve (12)
consecutive month period adopted pursuant to a written
resolution adopted by the Board of Directors for purposes of
complying with Section 415 of the Code.
(35) Normal Retirement Age. The date the Participant attains age
65.
(36) Parental Absence. Any period of absence from the active
Service of the Employer:
(a) By reason of pregnancy of the Employee;
(b) By reason of the birth of a child of the Employee;
(c) By reason of placement of a child with the Employee
in connection with the adoption of such child by the
Employee; or
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(d) For purposes of caring for such child for a period
beginning immediately following such birth or
placement.
(37) Participant. An Employee or former Employee, other than a
Former Participant, who has satisfied the requirements of
Section 3.1 and who has not incurred a Break in Service
following his termination of Service with the Employer.
(38) Plan. The Hastings Books, Music & Video, Inc. Employee Stock
Ownership Plan as embodied herein and as amended from time to
time.
(39) Plan Year. The Fiscal Year of the Plan, ending on the 31st
day of May.
(40) Publicly Traded. With respect to a Qualifying Employer
Security, such a security that is listed on a national
securities exchange registered under Section 6 of the
Securities Exchange Act of 1934 (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.
(41) Qualified Contributions. Contributions of Employer Securities
to a Participant's Employer Contribution Account under the
Plan after December 31, 1986, and any dividends in the form of
Employer Securities or in cash or other property that is used
to acquire Employer Securities 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.
(42) Qualified Domestic Relations Order. A Domestic Relations
Order that:
(a) 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;
(b) Does not require the Plan to provide any type or form
of benefit, or any option, not otherwise provided
under the Plan;
(c) Does not require the Plan to provide increased
benefits (determined on the basis of actuarial
value);
(d) Does not require the payment of benefits to an
Alternate Payee that are required to be paid to
another Alternate Payee under another order
previously determined to be a Qualified Domestic
Relations Order; and
(e) Clearly specifies:
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(i) The name and last known mailing address (if
any) of the Participant and the name and
mailing address of each Alternate Payee
covered by the order;
(ii) The amount or percentage of the Participant's
benefits to be paid by the Plan to each such
Alternate Payee, or the manner in which such
amount or percentage is to be determined;
(iii) The number of payments or payment period to
which such order applies; and
(iv) Specifically specifies that it is applicable
with respect to this Plan.
In the case of any payment before a Participant has separated
from Service, a Domestic Relations Order will not be treated
as failing to be a Qualified Domestic Relations Order solely
because such order requires the payment of benefits be made to
an Alternate Payee:
(f) On or after the date on which the Participant attains
age fifty-five (55);
(g) As if the Participant had retired on the date on
which payment is to commence under such order (taking
into account only the present value of benefits
actually accrued as of such date); and
(h) In any form in which such benefits may be paid under
the Plan to the Participant.
(43) Qualified Participant. 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), (in) or (o)) as the Company.
(44) Qualifying Employer Security. Except as provided in Section
9.7, an Employer Security which is (1) stock or otherwise an
equity security, or (ii) a bond, debenture, note or
certificate or other evidence of indebtedness described in
paragraphs (1), (2), and (3) of Section 503(e) of the Code.
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(45) Re-Employed Employee. For purposes of determining a
Participant's Vested Accrued Benefit under Article VII, an
Employee who has previously separated from Service or service
with a Related Employer:
(a) With any nonforfeitable interest in Employer
contributions or employer contributions under a
Related Plan; or
(b) Without a nonforfeitable interest in Employer
contributions or employer contributions under a
Related Plan, but whose number of consecutive Breaks
in Service does not equal or exceed his number of
Years of Service (as defined in Section 7.6), and who
resumes Service before his number of consecutive
Breaks in Service equals or exceeds the greater of
five (5) or his number of Years of Service as defined
in Section 7.6.
(46) Related Employer. Any business entity that is:
(a) A member of a controlled group of corporations (as
defined by Section 414(b) of the Code, with such
Section being modified, for purposes of Section 6.14,
in accordance with Section 415 (h) of the Code) which
includes the Company;
(b) A member of a group of trades or businesses (whether
or not incorporated) that are under common control
(as defined in Section 414(c) of the Code, with such
Section being modified, for purposes of Section 6.14,
in accordance with Section 415(h) of the Code) with
the Company;
(c) A member of an affiliated service group (as defined
by Section 414(m) of the Code) which includes the
Company; or
(d) An entity required to be aggregated with the Company
pursuant to Section 414(o) of the Code.
(47) Related Plan. Any other defined contribution plan (as defined
in Section 414(i) of the Code) maintained by the Company or
any Related Employer.
(48) Required Commencement Date. The April 1 of the calendar year
following the calendar year in which the Participant attains
age seventy and one-half (70 1/2).
(49) Service. Any period of time the Employee is in the employ of
the Employer, including any period the Employee is on Leave of
Absence authorized by the Employer under a uniform,
nondiscriminatory policy applicable to all Employees.
(50) Stock. Shares of any class of capital common stock, which are
Qualifying Employer Securities issued by Hastings Books, Music
& Video, Inc., a Texas corporation.
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(51) Trust. The trust established to hold, administer, and invest
the contributions made under the Plan.
(52) Trust Agreement. The agreement between the Employer and the
Trustee or any successor Trustee establishing the Trust and
specifying the duties of the Trustee.
(53) Trustee. The persons or entities from time to time appointed
as Trustee under the Trust Agreement.
(54) Trust Fund. All property of every kind held or acquired by
the Trustee under the Trust Agreement.
(55) Valuation Date. May 31 of each year.
(56) Vested Accrued Benefit. The percentage of a Participant's
Accrued Benefit to which he becomes entitled upon termination
of his participation in the Plan.
(57) Year of Service. The initial Year of Service is defined as a
twelve (12) consecutive month period, measured from the
Employee's Employment Commencement Date, during which the
Employee completes at least 1,000 Hours of Service.
Subsequent Years of Service will be measured by Plan Years
beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
For purposes of eligibility, if the Employee does not complete
1,000 Hours of Service in the twelve consecutive month period
following the Employment Commencement Date, subsequent periods
shall be measured on a Plan Year basis beginning with the Plan
Year following the Employment Commencement Date. For purposes
of vesting, each Plan Year, including the initial Plan Year of
employment, during which the Employee completes 1,000 Hours of
Service shall count as a Year of Service. Years of Service
with any participating or nonparticipating Related Employer
shall be treated as Years of Service with the Employer. An
Employee who transfers from a participating Employer to
another participating Related Employer shall continue to be
covered by this Plan without interruption and shall not be to
have incurred a termination of service. The Employer shall
have the right to credit prior service with other
organizations that are not Related Employers as Years of
Service under this Plan and such prior service credit shall be
given in a nondiscriminatory manner.
All of an Employee's Years of Service with the Employer are
counted to determine the nonforfeitable percentage in the
Employee's Account derived from Employer contributions except
Years of Service before age 18.
2.2 Prior Service. For purposes of Section 7.6, service by an Employee
with any corporation that is acquired by the Employer or that was
acquired by a predecessor of the Employer shall be deemed Service with
the Employer, provided that the Employee becomes an employee of the
Employer concurrently with such acquisition or that the
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Employee became an employee of a predecessor of the Employer
concurrently with such acquisition.
2.3 Word Usage. Words used in the masculine gender shall apply to the
feminine where applicable, and wherever the context of the Plan
dictates, the plural shall be read as the singular and the singular as
the plural. Whenever the words "Article" or "Section" are used in
this Plan or a cross reference is made to an "Article" or "Section,"
the words "Article" or "Section" shall refer to an Article or Section
of this Plan unless the context specifies otherwise. Compounds of the
word "here," such as "herein" and "hereof" shall mean of this Plan,
unless otherwise specified or required by the context.
2.4 Construction. It is the intention of the Employer that the Plan be
qualified under the provisions of the Code and the Act and all its
provisions shall be construed to that result.
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. A Covered Employee shall become a Participant
in the Plan on the earlier of (a) the first day of the Plan
Year coincident with or next following the date the Employee
completes one Year of Service and attains age twenty-one (21)
or (b) the first December 1 following the date the Employee
completes one Year of Service and attains age twenty-one (21).
3.2 Break in Service - Participation. For purposes of
participation in the Plan, the Plan shall not apply any Break
in Service rule.
3.3 Participation Upon Re-Employment. A Participant whose
employment terminates and who is subsequently re-employed as a
Covered Employee before incurring five consecutive Breaks in
Service shall re-enter the Plan as a Participant on the date
of his re-employment. A Participant whose employment
terminates and who is subsequently re-employed, but not as a
Covered Employee, shall, if he subsequently becomes a Covered
Employee before incurring five consecutive Breaks in Service,
re-enter the Plan as a Participant on the date he first
performs an Hour of Service as a Covered Employee subsequent
to his re-employment. All other Covered Employees who are
re-employed must meet the requirements of Section 3.1.
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ARTICLE IV
EMPLOYER CONTRIBUTIONS
4.1 Employer Contributions. For each Plan Year that ends with or within
the Employees taxable year, the Employer may contribute to the Trust a
contribution of from zero percent (0%) to fifteen percent (15%) of the
Compensation for the Plan Year of all Participants who are entitled to
share in the allocation of contributions under Section 6.10, in cash
or stock of the Employer, as its Board of Directors shall determine
and authorize.
The amount of the total Employer contribution for any Plan Year shall
not exceed:
(a) The aggregate limitation prescribed by Section 6.14 for all
Participants entitled to share in the allocation of Employer
contributions under Section 6.10, reduced by Forfeitures
arising tinder Section 7.10, and
(b) The sum of any amounts that have been erroneously forfeited or
erroneously allocated with respect to Employees who were or
would have been entitled to share in the allocation of
Employer contributions, but for the failure to credit such
Participants with Hours of Service which were, determined
during the Plan Year to be creditable pursuant to Section
2.1(30), reduced by Forfeitures arising under Section 7.10 to
the extent the contribution was not made in a preceding Plan
Year.
4.2 Determination of Contribution. The Employer, from its records, shall
determine the amount of any contributions to be made by it to the
Trust under the terms of the Plan.
4.3 Time and Method Payment of Contribution. The Employer may pay its
contribution for each Plan Year in one (1) or more installments. The
Employer's contribution for any Plan Year shall be, due on the last
day of its taxable year with or within which such Plan Year ends, and,
unless paid before, shall be payable then or as soon thereafter as
practicable, but not later than the time prescribed by law for filing
the Employer's Federal income tax return (including extensions
thereof) for such taxable year, without interest. If the contribution
is on account of the Employer's preceding taxable year, the
contribution shall be accompanied by the Employer's signed statement
to the Trustee that payment is on account of such taxable year.
Contributions my be paid in cash, Qualifying Employer Securities, or
other property, as the Employer may determine. Qualifying Employer
Securities and property shall be valued at their fair market value at
the time of contribution. All contributions for each Plan Year shall
be deemed to be paid as of the last day of such Plan Year.
4.4 Return of Employer Contributions. Notwithstanding any, provision
herein to the contrary, upon the Employer's request, a contribution
which was made upon a mistake of fact or conditioned upon
deductibility of the contribution under Section 404 of the Code shall
be returned to the Employer within one (1) year after payment of the
contribution or disallowance of the deduction (to the extent
disallowed), as the case may be.
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ARTICLE V
PARTICIPANT CONTRIBUTIONS
5.1 Participant Contributions. A Participant may not make any
contribution to the Trust established under this Plan.
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ARTICLE VI
ALLOCATIONS
6.1 Participant's Accounts. The Administration Committee shall establish
an Account which will reflect the Participant's share of contributions
under the Plan and the income, losses, appreciation and depreciation
of the Trust Fund attributable thereto.
6.2 Separate Accounts - Break in Service. If a Participant incurs five
(5) consecutive Breaks in Service and subsequently re-enters the Plan
as a Re-Employed Employee prior to the time that he has received a
distribution hereunder equal to one hundred percent (100%) of his
Vested Accrued Benefit, determined as of the last day of the Plan Year
in which he incurred the last of such five (5) consecutive Breaks in
Service, the Administration Committee shall maintain, or cause to be
maintained, a separate Account for the Participant's pre-Breaks in
Service Accrued Benefit derived from contributions and Forfeitures,
and a separate Account for his post-Breaks in Service Accrued Benefit
derived from contributions and forfeitures, unless the Participant's
entire Accrued Benefit under the Plan is one hundred percent (100%)
nonforfeitable at the time his income the last of such five, (5)
consecutive Breaks in Service.
6.3 Collateral Suspense Accounts. The Administration Committee shall
establish a Collateral Suspense Account for each Exempt Loan made
pursuant to Article IX and shall allocate thereto any Qualifying
Employer Securities acquired with the proceeds of such Exempt Loan;
provided, however, that the Administration Committee need not
establish a separate Collateral Suspense Account for an Exempt Loan
that is made for purposes of repaying a prior Exempt Loan. Any
Qualifying Employer Securities allocated to a Collateral Suspense
Account shall be treated as if they were given as collateral for the
Exempt Loan as provided in Section 9.3 without regard to whether they
are actually given as collateral for such loan, and shall be released
from the Collateral Suspense Account in accordance with the provisions
of Section 9.6 for allocation to the Accounts of Participants and
Beneficiaries in accordance with Section 6.8.
6.4 Valuation of Accounts. As of each Valuation Date, prior to allocating
contributions, if any, for the Plan Year, the Administration Committee
shall:
(a) First. charge to the proper Participants' Accounts all
payments or distributions made from Participants' Accounts
since the last preceding Valuation Date that have not been
charged previously, as provided in Section 6.5;
(b) Next. adjust the net credit balance in Participants' Accounts
upward or downward, pro rata, according to the then net credit
balances of any single Participant to those of all
Participants, so that the totals of the net credit balances
will equal the then net worth of the Trust Fund less an amount
equal to the sum of (1) the Collateral Suspense Account, (2)
the Forfeiture Suspense Account, and (3) contributions, if
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any, paid to the Trustee for the period elapsed since the last
preceding Valuation Date.
The Collateral Suspense Accounts, if any, shall not be
adjusted to reflect any Trust earnings or losses. The
Forfeiture Suspense Account, however, shall be adjusted to
reflect Trust earnings or losses.
For purposes of Valuation of Accounts under this Section 6.4,
all Insurance Contracts held by the Trustee for the benefit of
an individual Participant shall be treated as having no value.
6.5 Charging of Payments and Distributions. As of each Valuation Date,
all payments and distributions made under the Plan, since the last
preceding Valuation Date to or for the benefit of a Participant or his
Beneficiary will be charged to the proper account of such Participant.
6.6 Allocation of Contributions and Qualifying Employer Securities
Released From Collateral Suspense Accounts - General. As of each
Valuation Date, for the Plan Year ending of such Valuation Date, the
Administration Committee shall.
(a) First, determine the aggregate limitation prescribed by
Section 6.14 for all Participants described in Section 6.10.
To the aggregate limitation add any amounts described in
Section 4.1(b).
(b) Next, allocate (i) contributions, if any, not used to repay
Exempt Loans, and (ii) any Qualifying Employer Securities
released from Collateral 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
Employees entitled to share in the amount described in Section
4.1(b) in the proportion that the amount required for all
entitled Employees until the amount described in Section
4.1(b) is fully allocated. Former Employees and Beneficiaries
shall be treated as Employees for purposes of this paragraph.
(c) Finally, allocate (i) any Qualifying Employer Securities
released from Collateral 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 (ii) contributions, if
any, not used to repay Exempt Loans, in accordance with
Section 6.7 to the Accounts of each Participant entitled to an
allocation under Section 6.10. The allocation of
contributions for any such Participant shall not exceed the
amount determined pursuant to Section 6.14. If, after the
first such allocation, any Employer contributions remain, the
remainder shall be allocated and re-allocated in the same
manner prescribed in this paragraph until exhausted.
6.7 Method of Allocating and Crediting Contributions and Qualifying
Employer Securities Released From Collateral Suspense Accounts.
Subject to the conditions and limitations of Section 6.14, as of each
Valuation Date the Employer's contributions, if any, for the
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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 Collateral 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 Employer's contribution, for that Plan Year (as
provided in Section 6.10) in the proportion that each such
Participant's Compensation for the Plan Year ending on the Valuation
Date bears to the Compensation of all such Participants for such Plan
Year.
6.8 Forfeitures. Forfeitures that have arisen under Section 7.10 shall be
used first to reduce Employer contributions to this Plan. To the
extent possible, Forfeitures shall be used to reduce the Employer
contributions for the Plan Year in which such Forfeitures occur.
However, if Forfeitures arising during a particular Plan Year exceed
the retired Employer contributor for that year, the amount of the
Forfeitures in excess of the Employer contributions required for such
year shall be credited to and held unallocated in a Suspense Account
until the next succeeding Plan Year when such Forfeitures shall be
deemed Forfeitures arising under Section 7.10. The Administration
Committee shall continue to hold the undistributed, non-vested portion
of a terminated Participant's Accrued Benefit in his Account solely
for his benefit until a Forfeiture occurs at the time specified in
Article VII.
6.9 Employer Contributions Considered Made on Last Day of Plan Year. For
purposes of this Article VI, the Employer contributions, if any, under
the Plan for any Plan Year will be considered to have been made on the
last day of that year, regardless of when paid to the Trustee.
6.10 Participants to Whom Employer Contributions Will Be Allocated. The
Employer contributions, if any, for any Plan Year that are not used to
repay Exempt Loans and any Qualifying Employer Securities released
from Collateral Suspense Accounts for such year that are not given as
collateral for an Exempt Loan, the proceeds of which are, used to
repay a prior Exempt Loan, will be allocated among and credited to the
Accounts of:
(a) All Active Participants who performed at least one thousand
(1,000) Hours of Service during the Plan Year; and
(b) Participants on Leave of Absence on the Valuation Date who
received Compensation from the Employer during the Plan Year,
regardless if such Participants performed at least one
thousand (1,000) Hours of Service during the Plan Year; and
(c) Participants who died, retired, or became permanently disabled
during the Plan Year who received Compensation from the
Employer during that year, regardless if such Participants
performed at least one thousand (1,000) Hours of Service
during the Plan Year.
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6.11 Valuation. Within a reasonable time after the close of each Plan
Year, the Trustee shall prepare or cause to be prepared a statement of
the condition of the Trust Fund, setting forth all investments,
receipts, and disbursements, and other transactions effected by it
during such Plan Year, and showing all the assets of the Trust Fund
and the cost and fair market value thereof. If the Trustee does not
constitute an independent appraiser within the meaning of Section
410(a)(28)(C) of the Code, then, to the extent an independent
appraiser is required by such Code section, the Trustee shall retain
an independent appraiser to make such valuation. This Trustees
statement shall be delivered to the Administration Committee. The
Administration Committee shall then cause to be prepared, and shall
deliver to each Participant or Former Participant an annual report
disclosing the status of his Account in the Trust. The Trustee's (or
independent appraiser's) determination of the fair market value of the
assets of the Trust Fund and the Administration Committee's charges or
credits to accounts shall be final and conclusive on all persons ever
interested hereunder, subject to Section 13.11 hereof.
6.12 Special Valuation. While it is contemplated that the Trust will be
valued by the Trustee and allocations made only on the Valuation Date,
should it be necessary to make distributions under the provisions
hereof, and the Administration Committee, in good faith determines
that, because of (a) an extraordinary change of economic conditions,
(b) the occurrence of some casualty radically affecting the value of
the Trust Fund or a substantial part thereof, or (c) an abnormal
fluctuation in the, value of the Trust Fund has occurred since the end
of the Preceding Plan Year, the Administration Committee may, in its
sole discretion, to prevent the payee from receiving a substantially
greater or lesser amount than what he would be entitled to, based on
current values, cause a revaluation of the Trust Fund to be made and a
reallocation of the interests therein as of the date the payee's right
of distribution becomes fixed. The Administration Committee's
determination to make such special valuation and the valuation of the
Trust Fund as determined by the Trustee shall be conclusive and
binding on all persons ever interested hereunder, subject to Section
13.11 hereof.
6.13 Equitable Allocations. If the Administration Committee in good faith
determines that certain expenses of administration paid by the Trustee
during the Plan Year under consideration, are not general, ordinary,
and usual and should not be equitably be borne by all Participants,
but should be borne only by one or more Participants, for whom or
because of whom such specific expenses were incurred, the net earnings
and adjustments in value of the accounts shall be increased by the
amounts of such expenses, and the Administration Committee shall make
suitable adjustments by debiting the particular account or accounts of
such one or more Participants, Former Participants, or Beneficiaries,
provided, however, that any such adjustment must be nondiscriminatory
and consistent with the provisions of Section 401(a) of the Code.
6.14 Limitation on Annual Additions.
(a) General. Notwithstanding any other provision of the Plan, the
Annual Addition to a Participant's Account for any Limitation
Year may not exceed an amount equal to the lesser of:
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(i) Thirty thousand dollars ($30,000) or, if greater,
one-fourth (1/4) of the dollar limitation in effect
under Section 415(b)(1)(A) of the Code, adjusted for
the Limitation Year (if and to the extent that such
adjustment may be allowed by regulations prescribed
by the Secretary of the Treasury) to take into
account any cost-of-living increase adjustment
provided for that year under Section 415(d) of the
Code (the "dollar limitation"); or
(ii) Twenty-five percent (25%) of the Compensation of the
Participant for the Limitation Year.
For purposes of the preceding sentence, if the Trustee enters into an
Exempt Loan pursuant to Article IX hereof and no more than one third
(1/3) of the Employer 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 Employer 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 6.14.
(b) Additional Limitation - Related Plan. If a Participant also
participates in a Related Plan, the limitation specified in
subparagraph (a) of this Section 6.14 shall be reduced by the
Annual Addition made under any Related Plan on behalf of the
Participant for the Limitation Year.
(c) Additional Limitation - Defined Benefit Plan. If a
Participant also participates in one or more qualified defined
benefit plans (as defined in Section 414(j) of the Code)
maintained by the Employer or a Related Employer, the maximum
amount otherwise allocable to his Accounts under subparagraphs
(a) and (b) of this Section 6.14 shall be reduced to the
extent necessary to ensure that the sum of the "Defined
Benefit Fraction" for the Limitation plus the "Defined
Contribution Fraction" for the Limitation Year does not exceed
1.0.
The "Defined Benefit Fraction" for a Limitation Year shall be
a fraction (i) the numerator of which shall be the projected
annual benefit of the Participant under such defined benefit
plan or plans (determined as of the close of the year) and
(ii) the denominator of which shall be an amount equal to the
lesser of (A) the product of 1.25 multiplied by the dollar
limitation in effect for such year under Section 415(b)(1)(A)
of the Code or (B) the product of 1.4 multiplied by the amount
which may be taken into account for such year under Section
415(b)(1)(B) of the Code with respect to such Participant.
The "Defined Contribution Fraction" for a Limitation Year
shall be a fraction (i) the numerator of which shall be the
sum of the annual additions (as defined in Section 415(c)(2)
of the Code) to the Participant's accounts under all defined
contribution plans maintained by the Employer or Related
Employer as of the close of the Limitation Year, and (ii) the
denominator of which shall be the sum of the lesser of the
following amounts determined for each such plan for the
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Limitation Year and for each prior year of service with the
Employer: (A) the product of 1.25 multiplied by the dollar
limitation in effect for such year under Section 415(c)(1)(A)
of the Code (determined without regard to Section 415(c)(6) of
the Code) or (B) the product of 1.4 multiplied by the amount
which may be taken into account under Section 415(c)(1)(B) of
the Code with respect to such individual under the defined
contribution plans for the Limitation Year.
Notwithstanding the foregoing, the provisions of this
subsection (c) shall only apply if such defined benefit plan
or plans do not provide for a reduction of benefits to ensure
that the sum of the Defined Benefit Fraction for such
Limitation Year and the Defined Contribution Fraction for such
Limitation Year does not exceed 1.0.
(d) Adjusting Annual Additions. In the event it is necessary to
limit the Annual Additions to the Accounts of a Participant
under this Plan, adjustments shall first be made to the Annual
Additions under any other defined contribution plan of the
Employer, if permitted by such plan, and if further
adjustments are required, the Administration Committee shall
allocate Employer contributions in excess of the permitted
Annual Addition to a suspense account. Amounts in this
suspense account shall be allocated in the succeeding Plan
Year as part of the Employer contribution, if any, for such
Plan Year. Amounts held in such suspense account shall be
allocable before the Employer contribution, if any, for such
Plan Year. In the event of termination of the Plan, amounts
credited to such suspense account shall, to the extent
permitted by this Section, be allocated among the Accounts of
Participants in the ratio that each such Participant's
Compensation for the Plan Year in which the termination occurs
bears to the Compensation of all such Participants for that
Plan Year. Further reductions or adjustments to the method
described above for adjusting
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the Annual Additions of Participants may be made pursuant to
the directions of the Administration Committee and may be made
pursuant to priorities established under related defined
contribution plans.
6.15 Allocation Does Not Create Rights. No Participant shall acquire any
night to or interest in any specific asset of the Trust as a result of
the allocations provided for in the Plan.
6.16 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 Collateral Suspense Account, the Company
shall have the obligation, to:
(a) Pay such dividend directly to the Participants or their
Beneficiaries;
(b) 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;
(c) 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
(d) 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 (a) or (b) 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 Participant's or
Beneficiary's 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 Collateral 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 (c)
above, Qualifying Employer Securities with a fair market value of not
less than the amount of such dividends shall be released from the
Collateral Suspense Account and allocated to Participants' Accounts
pursuant to Section 6.7 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 6.16.
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ARTICLE VII
TERMINATION OF SERVICE - PARTICIPANT VESTING
7.1 Normal Retirement. A Participant may retire from the Service of the
Company on the date he attains Normal Retirement Age. Upon
termination of a Participant's employment for any reason after
attaining Normal Retirement Age, the Administration Committee shall
direct the Trustee to make payment of the full value of the
Participant's Accrued Benefit to him at such times and in such manner
as provided in Article VIII hereof. The value of the Participant's
Accrued Benefit shall be determined as of the Valuation Date which is
on or, if not on, which immediately precedes the date the
Participant's employment terminates, adjusted, if applicable, to
reflect any allocations and adjustments to his Accounts to which he is
entitled under Article VI hereof made as of the Valuation Date
following as termination of Service with the Company. The
Participant's Accrued Benefit shall be adjusted annually to reflect
any earnings and losses allocated to his Accounts pursuant to Section
8.9. A Participant who remains in the employ of the Company after
attaining Normal Retirement Age shall continue to participate herein
until the date of his actual retirement.
7.2 Early Retirement. A Participant may apply for an early retirement
benefit in accordance with Section 13.12 hereof, and retire as of the
first day of any Plan Year subsequent to the date the Participant
attains Early Retirement Age. Upon termination of a Participant's
employment under this Section 7.2, the Administration Committee shall
direct the Trustee to make payment of the full value of the
Participant's Accrued Benefit to him at such times and in such manner
as provided in Article VIII hereof. The value of the Participant's
Accrued Benefit shall be determined as of the Valuation Date
coinciding with or immediately preceding the date the Participant's
employment terminates under this Section 7.2, adjusted, if applicable,
to reflect any allocations and adjustments to his Accounts to which he
is entitled under Article VI made on the Valuation Date following his
termination of Service with the Company. The Participant's Accrued
Benefit shall be adjusted annually to reflect any earnings and losses
allocated to such his Account pursuant to Section 8.9.
Any Participant who terminates employment after having satisfied the
Years of Service requirement of this section and who is entitled to
receive any Vested Accrued Benefit hereunder may, upon satisfying the
minimum age requirement of this section, apply for an early retirement
benefit in accordance with Section 13.12 hereof, and shall be entitled
to receive an early retirement benefit at the time and in the manner
specified in Article VIII.
7.3 Disability. A Participant who becomes permanently disabled shall have
the full value of his Accrued Benefit paid to him at such times and in
such manner as provided in Article VIII hereof. The value of a
disabled Participant's Accrued Benefit shall be determined as of the
Valuation Date coinciding with or immediately preceding the date of
the Participant's termination of employment due to disability,
adjusted, if applicable, to reflect any allocations and adjustments to
his Accounts to which he is entitled under
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Article VI made on the Valuation Date following his termination of
Service with the Company by reason of his permanent disability. The
Participant's Accrued Benefit shall be adjusted annually to reflect
any earnings and losses allocated to his Account pursuant to Section
8.9.
A Participant is permanently disabled for purposes of the Plan when
the Participant has a physical or mental condition resulting from
bodily injury, disease, or mental disorder which renders him incapable
of continuing any gainful occupation and which condition constitutes
total disability under the federal Social Security Acts.
7.4 Death. Upon the death of a Participant, his Beneficiary shall be
entitled to receive the full value of the deceased Participant's
Accrued Benefit determined as of the Valuation Date coinciding with or
immediately preceding the date of such Participant's death, adjusted,
if applicable, to reflect any allocations or adjustments to his
Accounts to which he is entitled under Article VI made on the
Valuation Date following the date of the Participant's death. The
deceased Participant's Accrued Benefit shall be adjusted annually to
reflect any earnings and losses allocated to his Account pursuant to
Section 8.9. The value of a deceased Participant's Accrued Benefit
shall be paid to his Beneficiary at such times and in such manner as
provided in Article VIII hereof.
7.5 Termination of Service Prior to Normal Retirement Age. If a
Participant's employment terminates prior to Normal Retirement Age for
any reason other than early retirement, death, or permanent
disability, then for each Year of Service (as determined under Section
7.6 hereof) he shall receive a percentage of his Accrued Benefit in
his Account, (the balance being a Forfeiture pursuant to Section 7.10)
equal to the following:
Years of Service Percentage of Accrued
With the Company Benefit Payable
---------------- ---------------
Less than 3 years None
3 years but less than 4 20%
4 years but less than 5 40%
5 years but less than 6 60%
6 years but less than 7 80%
7 years or more 100%
The value of the Participant's Vested Accrued Benefit in his Account
shall be determined as of the Valuation Date coinciding with or next
following the date of the Participant's termination of employment.
The Participant's Vested Accrued Benefit shall be adjusted annually to
reflect any earnings and losses allocated to his Account pursuant to
Section 8.9. Payments shall be made at such times and in such manner
as provided in Article VIII hereof. Forfeitures shall be used to
reduce Employer contributions in accordance with Section 6.8.
7.6 Years of Service - Vesting. For purposes of vesting under Section
7.5, Years of Service shall mean any Plan Year during which the
Participant completes not less than One
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Thousand (1,000) Hours of Service with the Employer or a Related
Employer. In the case of an Employee who separates from Service and
who resumes employment with the Employer, but not as a Re-Employed
Employee, Years of Service, as defined in this Section, prior to his
resumption of employment shall be disregarded. In addition, if a
Participant has incurred five (5) consecutive Breaks in Service,
Service after such Breaks in Service shall not increase the
Participant's nonforfeitable percentage in his Accrued Benefit in his
Account that accrued prior to such five (5) consecutive Breaks in
Service.
7.7 Vesting After a Distribution Without a Break in Service. If a
distribution is made to a Participant at a time when the Participant
has a Vested Accrued Benefit of less than one hundred percent (100%)
in his Account, and such Participant incurs no Break in Service prior
to the time that the distribution is made, a separate Account shall be
established to reflect the Participant's Accrued Benefit in such
Account as of the time of the distribution. At any given time, the
value of the Participant's Vested Accrued Benefit attributable to such
separate Account shall be equal to an amount computed as follows:
(a) First, add the account balance of such account and the amount
of the distribution made at a time when the Participant was
less than one hundred percent (100%) vested in his Account;
(b) Second, multiply the amount obtained in (a) by the
Participant's vested percentage in such account, determined in
accordance with Section 7.5 hereof, and
(c) Finally, subtract the amount of the distribution added to the
account balance under subsection (a) above from the amount
obtained in (b).
7.8 Included Years of Service - Vesting. For purposes of determining
"Years of Service" under Section 7.5, the Plan shall take into account
all Years of Service an Employee completes with the Employer except:
(a) In the case of an Employee who separates from Service and who
resumes employment, but not as a Re-Employed Employee, Years
of Service prior to his resumption of employment: and
(b) Any Year of Service after the Participant first incurs five
(5) consecutive Breaks in Service as the result of a
termination of employment; provided, however, this exclusion
shall apply solely in determining a Participant's Vested
Accrued Benefit in his Account prior to said five (5)
consecutive Breaks in Service.
7.9 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 Collateral
Suspense Account in accordance with the provisions of Section 6.6
shall be forfeited only after all other assets allocated to such
account are forfeited. If more than one 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.
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7.10 Forfeiture Occurs and Restoration of Non-Vested Accrued Benefit.
(a) Forfeiture Occurs. Except as provided in Section 7.11, a
Participant shall permanently cease to be entitled to that
part of his Account that is not part of his Vested Accrued
Benefit when the Participant either:
(i) Incurs five (5) consecutive Breaks in Service as the
result of the termination of his Service; or
(ii) Receives a distribution of his entire Vested Accrued
Benefit in such Account, including the portion
thereof derived from Employer contributions as the
result of his termination of Service (provided such
distribution, if any, is made not later than the
close of the second Plan Year following the
Participant's termination of Service).
A Participant who has an Accrued Benefit but does not have a
Vested Accrued Benefit shall be deemed to be a Participant who
has received a distribution of his entire Vested Accrued
Benefit on the last day of the Plan Year in which he
terminates Service. A Participant's Forfeiture shall be
deemed to occur on the last day of the Plan Year in which the
event or state of affairs giving rise to the Forfeiture occurs
or arises. The Administration Committee shall determine a
Participant's Accrued Benefit Forfeiture, if any, solely by
reference to the vesting schedule of Section 7.5.
(b) Restoration of Non-Vested Accrued Benefit. If an individual
who was formerly a Participant has incurred a Forfeiture of
his non-Vested Accrued Benefit in accordance with the
provisions of Section 7.10(a) by reason of a distribution
described in clause (6) of the first sentence of such Section
and returns to the Service of the Employer prior to incurring
five (5) consecutive Breaks in Service, such individual's
forfeited non-Vested Accrued Benefit shall be restored and
credited to an Account hereinafter called the "Restoration
Account," if the individual repays to the Plan the full amount
of the distribution prior to the earlier of (1) the last day
of the Plan Year in which the individual incurs five (5)
Service, or (ii) the lapse of five (5) years following the
individual's consecutive Breaks in re-employment by the
Employer or a Related Employer (provided that the individual
must be an Employee or an employee of a Related Employer at
the tune of repayment). In the case of an individual who was
formerly a Participant, who terminated Service with an Accrued
Benefit but without a Vested Accrued Benefit, and whose
non-Vested Accrued Benefit became a forfeiture due to a deemed
distribution under Section 7. 10(a), such individual shall be
deemed to repay his deemed distribution on the Valuation Date
that coincides with or immediately follows his re-employment
by the Employer or a Related Employer, provided that such
individual is an Employee or an employee of a Related Employer
on such Valuation Date, and, provided further, that he returns
to the Service of the Employer prior to incurring five (5)
consecutive Breaks in Service. As of the Valuation Date that
coincides with or immediately follows such
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repayment or deemed repayment, and prior to the allocation of
(1) the Trust Fund pursuant to Section 6.4(b), (ii)
Forfeitures pursuant to Section 6.8, or (iii) Employer
contributions, if any, pursuant to Sections 6.6 and 6.7, there
shall be allocated to the Participants Restoration Accounts an
amount (the "Restoration Amount") of the Trust Fund equal to
the amount of his previously forfeited non-Vested Accrued
Benefit. The Restoration Amount shall be credited first
against forfeitures arising. for the Plan Year, and if such
Forfeitures are not sufficient to satisfy the Restoration
Amount in full, the Restoration Amount shall be further
credited against Trust Fund income and gain for the Plan Year,
and if the Restoration Amount thereafter still remains
unsatisfied in full, the remainder of such amount shall be
satisfied out of Employer contributions, if any, for the Plan
Year, which contributions shall be supplemented for the Plan
Year by an amount equal to such remainder. The Restoration
Amount shall not be deemed an Annual Addition or portion
thereof for any Limitation Year. The Administration Committee
shall give timely notification to any rehired Employee, if
such Employee is eligible to make a repayment, of his night to
make such repayment prior to the earlier of five (5)
consecutive Breaks in Service after such distribution has
occurred or five (5) years following his reemployment, and
such notice shall also include an explanation of the
consequences of not making such repayment.
7.11 Termination, Partial Termination, or Complete Discontinuance of
Employer Contributions. Notwithstanding any other provision in this
Plan, in the event of a termination or partial termination of the Plan
or a complete discontinuance of Employer contributions under the Plan,
all affected Participants shall have a fully vested interest in their
Accrued Benefit determined as of the date of such event. The value of
the Accrued Benefit shall be determined on the date the Accrued
Benefit becomes fully vested, as if such date was the Valuation Date
for the Plan Year in which the termination, partial termination, or
complete discontinuance of Employer contributions occurs.
7.12 Amendment to Vesting Schedule. Although the Company reserves the
fight to amend the vesting schedule set forth in Section 7.6 at any
time, the Company shall not amend the vesting schedule (and no
amendment shall be effective) if the amendment would reduce the
nonforfeitable percentage of any Participant's Accrued Benefit derived
from Employer contributions (determined as of the later of the date
the Company adopts the amendment, or the date the amendment becomes
effective) to a percentage less that the nonforfeitable percentage
computed under the Plan without regard to the amendment.
In the event the vesting schedule of this Plan is amended, any
Participant who has completed at least three (3) Years of Service, as
defined in Section 7.6, may elect to have his Vested Accrued Benefit
computed under the Plan without regard to such amendment by notifying
the Administration Committee in writing during the election period
hereinafter described. The election period shall begin on the date
such amendment is adopted and shall end no earlier than the latest of
the following dates:
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34
(a) The date which is sixty (60) days after the day such amendment
is adopted;
(b) The date which is sixty (60) days after such amendment becomes
effective; or
(c) The date which is sixty (60) days after the day the
Participant is given written notice of such amendment by the
Administration Committee.
Any election made pursuant to this Section 7.12 shall be irrevocable.
The Administration 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.
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ARTICLE VIII
TIME, FORM AND METHOD OF PAYMENT OF BENEFITS
8.1 Time of Payment.
(a) Normal Retirement. Unless the Participant elects otherwise,
pursuant to Section 8.2, in the event of normal retirement,
within the meaning of Section 7.1, payment of the
Participant's Accrued Benefit shall commence as soon as
administratively feasible, but in no event later than one (1)
year after the close of the Plan Year in which the Participant
separates from Service by reason of the attainment of Normal
Retirement Age. A Participant who remains in the employee of
the Company past Normal Retirement Age shall not be required
to receive a distribution hereunder until after his actual
retirement date, except that, in any case, payment of the
Participant's Accrued Benefit shall commence not later than
the Required Commencement Date.
(b) Early Retirement. Unless the Participant elects to delay the
commencement of the distribution of his Accrued Benefit
pursuant to Section 8.2, or, alternatively, to accelerate the
commencement of such distribution pursuant to this Section
8.1(b), in the event of early retirement, within the meaning
of Section 7.2, payment of a Participant's Accrued Benefit
shall commence as soon as administratively feasible, but in no
event later than one (1) year after the close of the Plan Year
in which the Participant attains Normal Retirement Age.
Notwithstanding the foregoing, a Participant who separates
from Service by reason of Early Retirement may elect to
commence the distribution of his Accrued Benefit as soon as
administratively feasible after his separation from Service,
but in no event later than one (1) year after the close of the
Plan Year in which such separation occurs.
(c) Death. Unless the Participant elects otherwise, pursuant to
Section 8.2, in the event of the Participant's death, payment
of the Participant's Accrued Benefit shall commence as soon as
administratively feasible, but in no event later than one (1)
year after the close of the Plan Year in which the
Administration Committee receives proof of the Participant's
death.
(d) Disability. Unless the Participant elects to delay the
commencement of the distribution of his Accrued Benefit
pursuant to Section 8.2, or, alternatively, to accelerate the
commencement of such distribution pursuant to this Section
8.1(d), in the event of permanent disability, payment of the
Participant's Accrued Benefit shall commence as soon as
administratively feasible, but in no event later than one (1)
year after the close of the Plan Year in which the Participant
attains. Normal Retirement Age. Notwithstanding the
foregoing, a Participant who separates from Service due to
permanent disability may elect to commence the distribution of
his Accrued Benefit as soon as administratively feasible after
such separation, but in no event later than one (1) year after
the close of the Plan Year
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36
in which the Administration Committee determines that
permanent disability exists.
(e) Other Termination of Service. Unless the Participant elects
to delay the commencement of the distribution of his Accrued
Benefit pursuant to Section 8.2, or, alternatively, to
accelerate the commencement of such distribution pursuant to
this Section 8.1(e), in the event of the Participant's
termination of employment for any reason other than normal
retirement, early retirement, permanent disability, or death,
payment of a Participant's Vested Accrued Benefit shall
commence no later than one (1) year after the close of the
Plan Year in which the Participant attains Normal Retirement
Age. Notwithstanding the foregoing, a Participant who
terminates employment pursuant to this Section 8.1(e) may
elect to commence the distribution of Vested Accrued Benefit
before the date he attains Normal Retirement Age, in which
case such distribution will continence by the end of the Plan
Year which is the fifth (5th) Plan Year following the Plan
Year in which the Participant terminates employment. However,
if the Participant dies or becomes permanently disabled after
terminating employment but prior to commencement of his
benefits, the Administration Committee, upon confirmation of
the death or disability, shall direct the Trustee to make
payment of the Participant's Vested Accrued Benefit to him (or
to his Beneficiary if the Participant is deceased) in accord
with the provisions of Section 8.1(c), in cases of death,
Section 8.1(d), in cases of permanent disability.
(f) Distribution of Certain Qualifying Employer Securities.
Notwithstanding any provision contained herein to the
contrary, if any portion of a Participant's Accrued Benefit
consists of Qualifying Employer Securities acquired with the
proceeds of an Exempt Loan that has not been fully repaid, the
Administration 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 loan is
repaid. The Administration Committee shall apply the
provisions of this Section 8.1(f) in a nondiscriminatory and
uniform manner.
8.2 Limitation on Time of Payment.
(a) General Rule. Notwithstanding any provision contained herein
to the contrary, unless the Participant elects otherwise, the
Trustee shall concurrence, payment of the Participant's Vested
Accrued Benefit not later than sixty (60) days after the close
of the Plan Year in which the latest of the following events
occurs:
(i) The date the Participant attains Normal Retirement
Age;
(ii) The date the Participant terminates Service
(employment) with the Employer; or
(iii) The date the Participant completes ten (10) years of
participation in the Plan.
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A Participant may, at the time and in the manner proscribed by
the Administration Committee, elect to defer the payment of
his Vested Accrued Benefit beyond the dates specified above by
submitting a written statement to the Administration Committee
describing his benefit and the date on which the payment of
such benefit shall be made. Notwithstanding the preceding
sentence, a Participant may not elect to defer the payment of
his Vested Accrued Benefit if the exercise of such election
will cause the present value of the retirement benefits
payable solely to the Participant not to be greater than fifty
percent (50%) of the present value of the total retirement
benefits payable to the Participant and his Beneficiaries.
The Administration Committee shall determine the "present
value" as of the date the Trustee is to make payment of the
Participant's Vested Accrued Benefit. The Administration
Committee shall charge the electing Participant's Account for
any expense incurred in making the determination of "present
value." If the Administration Committee determines not to
permit the Participant's election, it shall direct to the
Trustee in writing to make distribution of the Participant's
Vested Accrued Benefit to him in accordance with Section 8.3.
The Administration Committee shall apply the provisions of
this Section 8.2 in a nondiscriminatory and uniform manner
Notwithstanding the foregoing, the Vested Accrued Benefit of
each Participant (i) shall be distributed to such Participant
not later than the Required Commencement Date or (ii) shall be
distributed, commencing not later than the Required
Commencement Date, in accordance with regulations, over the
life of such Participant or over the lives of such Participant
and his Beneficiary (or over a period not extending beyond the
life expectancy of such Participant or the life expectancy of
such Participant and his Beneficiary).
(b) Death After Payments Have Begun. If distributions under the
Plan have commenced with respect to a Participant and the
Participant dies before his entire Vested Accrued Benefit has
been distributed to him, the remaining portion of such benefit
shall be distributed at least as rapidly as such benefit would
have been distributed to him, commencing not later than the
Required Commencement Date, under the method of distribution
in effect at the Participant's death.
(c) Death Prior to Payment of Benefits. If the Participant dies
before the distribution of his Vested Accrued Benefit has
commenced in accordance with Section 8.2, or if distribution
of the Participant's Vested Accrued Benefit has commenced but
the Participant dies prior to his Required Commencement Date,
the remainder of the Participant's benefit shall be
distributed within five (5) years after his death. However,
if any portion of the Participant's Vested Accrued Benefit is
payable to or for the benefit of a Beneficiary and such
portion of the Participant's undistributed benefit will be
distributed in accordance with regulations over the life of
such Beneficiary or over a period not extending beyond the
life expectancy of such Beneficiary and such distributions
commence not later than one (1) year after the date of the
Participant's death (or such later date as the Secretary of
Treasury may by regulation prescribe), the deceased
Participant's benefit shall be
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38
distributed in accordance with such method of payment.
Notwithstanding any of the foregoing, if the Beneficiary is
the surviving spouse of the Participant, the deceased
Participant's benefit shall be distributed to such surviving
spouse on or before the date on which the Participant would
have attained age seventy and one-half (70 1/2); provided,
further, that if the surviving spouse dies before the
distributions to such spouse commence, the distribution of the
deceased Participant's benefit shall begin on or before a date
determined as if the surviving spouse were the Participant.
For purposes of this Section 8.2(c), the life expectancy of
the Participant and his spouse may be redetermined but not
more frequently than annually. In addition, pursuant to
regulations prescribed by the Secretary of the Treasury, any
amount paid to a child of the Participant shall be treated as
if it had been paid to the surviving spouse of the Participant
if such amount will become payable to the surviving spouse
upon such child's attainment of majority (or other designated
event permitted under regulations prescribed by the Secretary
of the Treasury). For the purposes of this paragraph, the
term "Beneficiary" shall only include individuals.
Notwithstanding the foregoing provisions of this paragraph,
nothing in this paragraph shall permit any Participant to
elect any form of distribution not otherwise expressly
permitted under this Plan; but rather, the Administration
Committee may at any time modify any form of distribution
elected by a Participant or Beneficiary to ensure compliance
with this paragraph.
(d) Section 401(a)(9) Compliance. Notwithstanding any other
provision herein to the contrary, distributions hereunder will
be made in accordance with the Treasury Regulations under
section 401(a)(9) of the Code, including Treasury Regulations
Section 1.401(a)(9)-2, and any Internal Revenue Service
rulings, announcements or notices promulgated under section
401(a)(9) of the Code, including any grandfather or
transitional rules thereunder. Furthermore, any provisions
contained herein which reflect section 401(a)(9) of the Code
shall override any distribution options in the Plan
inconsistent with section 401(a)(9) of the Code.
8.3 Special Limitation on Involuntary Payment of Benefits.
(a) Vested Accrued Benefit Not in Excess of $3,500.
Notwithstanding the foregoing provisions of this Article VIII,
if a Participant terminates Service for any reason and the
value of the Participant's Vested Accrued Benefit, determined
as of the Valuation Date immediately preceding a proposed
distribution date following such termination of Service, does
not exceed $3,500, the Administration Committee shall direct
the Trustee to distribute the value of the Participant's
Vested Accrued Benefit (including a deemed distribution of $0)
to the Participant in a lump sum.
(b) Vested Accrued Benefit in Excess of $3,500. If the value of a
Participant's Vested Accrued Benefit exceeds $3,500, the
Participant may file with the Administration Committee a
written request for the payment of the entire amount of his
Vested Accrued Benefit in any of the forms specified in
Section 8.4 and the
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39
Committee shall direct the Trustee so to pay such amount to
the Participant in accordance with the provisions of Sections
8.1, 8.2, and 8.6.
(c) Limitation on Involuntary Payment of Benefits. If (i) a
Participant terminates Service for any reason other than death
prior to the date the Participant attains Normal Retirement
Age, (ii) the Participant does not consent to the commencement
of payment of his Vested Accrued Benefit prior to the later of
such date, and (iii) the value of the Participant's Vested
Accrued Benefit as of the Valuation Date immediately preceding
a proposed distribution date after such termination of Service
exceeds $3,500, the Administration Committee shall direct the
Trustee to retain the value of the Participant's Vested
Accrued Benefit in the Trust Fund until the earlier of the
date that the Participant requests the Administration
Committee to commence the distribution of such benefit in
accordance with Section 8.1(e) or the date the Participant
attains Normal Retirement Age, when the value of such Vested
Accrued Benefit shall be distributed in accordance with one of
the options under Section 8.4, as selected by the Participant.
Until distribution, the Participant's account shall be
administered in accordance with this Section 8.3. The
restrictions on the time of distribution of a Participant's
Vested Accrued Benefit set forth above in this paragraph shall
not apply after a Participant's death.
Notwithstanding the foregoing provisions of this Section 8.3,
a Participant who has terminated Service as provided above in
this Section 8.3 and satisfied the Service requirements for
early retirement specified in Section 7.2, shall, upon
attaining the age specified in such Section 7.2, become
eligible for a distribution of his Vested Accrued Benefit as
if the Participant were eligible for early retirement, within
the meaning of Section 7.2.
8.4 Form of Payment. A Participant, Former Participant, or the
Beneficiary of a deceased Participant or Former Participant may elect
to have his Vested Accrued Benefit distributed entirely in cash or in
shares of Stock, provided, however, that if Stock is elected, the
Administration Committee shall direct the Trustee to pay the value of
any fractional shares of Stock in cash. Any whole shares of Stock
distributed pursuant to this Section 8.4 may be subject to a right of
first refusal in accordance with Section 10.1 hereof, and may be
eligible for put option rights in accordance with Section 10.2 hereof.
However, if the Company's charter or bylaws restrict the ownership of
substantially all outstanding stock to Employees or to the Trust, any
distribution hereunder may be made entirely in cash without granting
the right to demand a distribution of Stock.
A Participant, Former Participant, or Beneficiary shall make an
election under this Section 8.4 by filing an election form with the
Administration Committee on or before the date that is sixty (60) days
prior to the date that the distribution of his Vested Accrued Benefit
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 Accrued Benefit, the Administration Committee shall
direct the Trustee to distribute the Participant's Vested Accrued
Benefit in cash as provided in Section 8.6.
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8.5 Securities Law Restrictions. If at the time shares of 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
Administration Committee, the Administration 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 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 Administration
Committee, may be necessary to ensure that any such disposition by
such Participant (or his Beneficiary) will not 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 a 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 10.1.
8.6 Method of Payment. After all required accounting adjustments, the
Trustee, in accordance with the direction of the Administration
Committee, shall make payment of the Participant's Vested Accrued
Benefit, at the election of the Participant, under one (1) or more of
the following methods:
(a) By payment in a lump sum cash payment.
(b) In whole shares of Stock and any fractional shares of Stock in
cash.
(c) By transfer to another plan qualified under section 401(a) of
the Code.
(d) By transfer to:
(i) an individual retirement account described section
408(a) of the Code, or
(ii) an individual retirement annuity described in section
408(b) of the Code.
(e) 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 an Accrued Benefit in excess of Five Hundred Thousand
Dollars ($500,000), five (5) years plus one (1) additional
year (but no more than five (5) additional years) for each One
Hundred Thousand Dollars ($ 100,000) or fraction thereof by
which such benefit exceeds Five Hundred Thousand Dollars
($500,000).
(f) By direct transfer to a plan qualified under Section 401(a) of
the Code which accepts direct transfer contributions, an
individual retirement account described 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
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described in section 403(a) of the Code; provided, that the
distribution form elected pursuant to this Section 8.6(f)
qualified for transfer pursuant to section 401(a)(31) of the
Code. The Administration Committee shall provide each
Participant entitled to a distribution of his Vested Accrued
Benefit 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 8.6(f).
If a Participant does not make an election hereunder, his
Vested Accrued Benefit shall automatically be paid in the form
specified in Section 8.6(e) above. Notwithstanding the
foregoing provisions of this Section 8.6, the phrase "payment
in a lump sum" as used herein shall not include the
distribution of an Insurance Contract providing for (i) a life
annuity to a Participant, (ii) a joint and survivor annuity to
a Participant and his Beneficiary, or (iii) any other form of
payment having the effect of (i) or (ii) above.
8.7 Benefit Payment Elections. A Participant who is entitled to receive a
benefit under Article VII hereof may elect to receive any benefit to
which he is entitled in one (1) or any combination of the seven (7)
forms of payment of retirement benefits specified in Section 8.6
hereof. Upon a Participant's request, the Administration Committee
shall furnish the Participant an appropriate form for the making of
the election. The Participant shall make an election under this
Section 8.7 by filing the election form with the Administration
Committee on or before the last day of the Plan Year following which
the Trustee would otherwise commence payment of a Participant's
Accrued Benefit in accordance with the provisions of Section 8.1
hereof. The Participant shall not be permitted to make any election
for an optional form of retirement benefits payable solely to the
Participant will not be greater than fifty percent (50%) of the
present value of the total retirement benefits payable to the
Participant and his Beneficiaries. The Administration Committee shall
determine "present value" as of the date the Trustee is to commence
payment of the Participant's Vested Accrued Benefit. The
Administration Committee shall charge the electing Participant's
Account for any expense incurred in making the "present value"
determination. The Administration Committee shall apply the
provisions of this Section 8.7 in a nondiscriminatory and uniform
mariner.
8.8 Special Limitations on Form of Benefits Distribution. Notwithstanding
any provision of this Plan to the contrary, (a) a Participant may not
elect that his Vested Accrued Benefit be paid in the form of a life
annuity and (b) except as provided in the immediately following
sentence, upon a Participant's death prior to the payment in full of
such Participant's Vested Accrued Benefit, the Participant's Vested
Accrued Benefit, including all amounts payable under Insurance
Contracts purchased pursuant to Section 15.2, or portion thereof not
paid as of the Participant's death, shall be paid in full to the
Participant's surviving spouse. Payment of a deceased Participant's
Vested Accrued Benefit shall not be paid in accordance with the
immediately preceding sentence, but shall be paid in accordance with
the Participant's election under the Plan if there is no spouse
surviving the Participant or if the surviving spouse consents in the
manner required in the immediately following sentence to payment of
the Participant's Vested Accrued
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Benefit to a designated Beneficiary other than the Participant's
spouse. A Participant's spouse may consent in writing to the naming
of a designated Beneficiary other than the spouse to receive the
Participant's Vested Accrued Benefit, or portion thereof not
distributed on the date of the Participant's death, such consent to
acknowledge the effect of the election and be witnessed by a member of
the Administration Committee or a notary public. Such election may
not be changed without spousal consent, unless the consent expressly
permits designations by the Participant without any requirement of
further spousal consent. Consent of the Participant's spouse shall
not be required if the spouse cannot be located or under such other
circumstances as the Secretary of Treasury may by regulations
prescribe. Any consent by a spouse (or establishment that the consent
of a spouse may not be obtained) shall be effective only with respect
to such spouse.
8.9 Deferral of Payments. If a Participant's Account is retained in the
Trust after the date on which his participation ends and he has become
a Former Participant, the Account may continue to be treated as a part
of the Trust Fund. The Account will be credited (or debited) with its
share of the net income (or loss) attributable to the investments of
the Trust Fund but shall not be credited with any further Employer
contributions. Notwithstanding the foregoing, the Administration
Committee in its sole discretion may direct that the Former
Participant's Account be segregated and placed in a separate account.
Once the Participant's Account is so segregated, it will no longer
share in income, increases, or decreases, if any, of the Trust, nor
will they be credited with any further Employer contributions. A
segregated account alone shall be credited with any income it earns,
and it alone shall bear any expense or loss it incurs. Upon the
eventual distribution of such segregated Account, the Participant
shall continue to have all the rights described in Section 8.6.
8.10 Limitation on Distributions. Except as otherwise provided in this
Article VIII or Section 12.13, a Participant, Former Participant, or
Beneficiary is not entitled to any payment, withdrawal, or
distribution under the Plan.
8.11 Payment in the Event of Legal Disability. Payments to any
Participant, Former Participant, or Beneficiary shall be made to the
recipient entitled thereto in person or upon his personal receipt, in
form satisfactory to the Administration Committee, except when the
recipient entitled thereto shall be under a legal disability or, in
the sole judgment of the Administration Committee, shall otherwise be
unable to apply such payment in furtherance of his own interest and
advantage. The Administration 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:
(a) To such person directly;
(b) To the guardian of his person or his estate;
(c) To a relative or friend of such person, to be expended for his
benefit; or
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(d) To a custodian for such person under any Uniform Gifts to
Minors Act.
The decision of the Administration Committee, in each case, will be
final, binding, and conclusive upon all persons ever interested
hereunder. The Administration Committee shall not be obliged to see
to the proper application or expenditure of any payment so made. Any
payment made pursuant to the power herein conferred upon the
Administration Committee shall operate as a complete discharge of all
obligations of the Trustee and the Administration Committee, to the
extent of the distributions so made.
8.12 Accounts Charged. The Administration Committee shall charge all
distributions made to a Participant or to his Beneficiary from his
Account against the Account of the Participant when made.
8.13 Payment Only From Trust Fund. All benefits of the Plan shall be
payable solely from the Trust Fund and neither the Employer,
Administration Committee, nor Trustee shall have any liability or
responsibility therefor except as expressly provided herein.
8.14 Unclaimed Account Procedure. Neither the Trustee nor the
Administration Committee shall be obliged to search for, or ascertain
the whereabouts of, any Participant or Beneficiary. The
Administration Committee, by certified or registered mail addressed to
his last known address of record with the Administration Committee or
the Employer, shall notify any Participant or Beneficiary that he is
entitled to a distribution under this Plan, and the notice shall quote
the provisions of this Section. If the Participant fails to claim his
benefits or make his whereabouts known in writing to the
Administration Committee within seven (7) calendar years after the
date of Notification, the benefits under the Plan of the Participant
or Beneficiary will be disposed of as follows:
(a) If the whereabouts of the Participant is unknown but the
whereabouts of the Participant's Beneficiary then is known to
the Administration Committee, distribution will be made to the
Beneficiary.
(b) If the whereabouts of the Participant and his Beneficiary then
is unknown to the Administration Committee, but the
whereabouts of one or more relatives by adoption, blood, or
marriage of the Participant is known to the Administration
Committee, the Administration Committee shall direct the
Trustee to distribute the Participant's benefits to any one or
more of such relatives and in such proportions as the
Administration Committee determines.
(c) If the Administration Committee does not know the whereabouts
of any of the above persons the Administration Committee shall
then notify the Social Security Administration of the
Participant's (or Beneficiary's) failure to claim the
distribution to which he is entitled. The Administration
Committee shall request the Social Security Administration to
notify the Participant (or Beneficiary) in accord with the
procedures it has established for this purpose.
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While payment is pending, the Administration Committee may
direct the Trustee to hold the Participant's benefits in a
segregated Account. The segregated Account shall be entitled
to all income it earns and shall bear all expense or loss it
incurs. Any payment made pursuant to the power herein
conferred upon the Administration Committee shall operate as a
complete discharge of all obligations of the Trustee and the
Administration Committee, to the extent of the distributions
so made.
If, after the procedures in this Section 8.14 have been
exhausted, neither the Participant nor his Beneficiary has
made his whereabouts known, said Participant's Vested Accrued
Benefit shall be forfeited to the Employer. Notwithstanding
such a forfeiture, however, the Participant or his Beneficiary
may reclaim the Participant's Vested Accrued Benefit at any
time by giving written notice to the Employer.
8.15 Qualified Domestic Relations Orders. During any period in which the
issue of whether a Domestic Relations Order is a Qualified Domestic
Relations Order is being determined (by the Administration Committee,
by a court of competent jurisdiction, or otherwise), the
Administration Committee shall direct the Trustee to segregate in a
separate account or in an escrow account the amount that would have
been payable to the Alternate Payee during such period if the Domestic
Relations Order is determined to be a Qualified Domestic Relations
Order. If within eighteen (18) months the Domestic Relations Order
(or modification thereof) is determined to be a Qualified Domestic
Relations Order, the Administration Committee shall direct the Trustee
to pay the segregated account (and any earnings or interest thereon)
or the balance held in the escrow account, as applicable, to the
person or persons entitled thereto. If within eighteen (18) months it
is determined that the order is not a Qualified Domestic Relations
Order or the issue as to whether such Domestic Relations Order is a
Qualified Domestic Relations Order is not resolved, the Administration
Committee shall direct the Trustee to pay the segregated account (and
any earnings or interest thereon) or the balance of the escrow
account, as applicable, to the person or persons who would have been
entitled to such amounts if there had been no Domestic Relations
Order. Any determination that a Domestic Relations Order is a
Qualified Domestic Relations Order which is made after the close of
the eighteen (18) month period shall be applied prospectively only.
The Administration Committee shall establish reasonable procedures for
determining whether a Domestic Relations Order is a Qualified Domestic
Relations Order and to administer distributions under Qualified
Domestic Relations Orders. When the Plan receives a Domestic
Relations Order the Administration Committee shall promptly notify the
appropriate Participant and any other Alternate Payee of the receipt
of such order and the Administration Committee's procedures for
determining whether such order is a Qualified Domestic Relations
Order. The Administration Committee shall determine whether a
Domestic Relations Order is a Qualified Domestic Relations Order
within a reasonable period after receipt of such order, and shall
within a reasonable time after such determination notify the
Participant and each Alternate Payee of such determination.
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8.16 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 Plan which provides that:
(a) a Participant's benefits under the Plan may be paid in more than
one 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.
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ARTICLE IX
EXEMPT LOANS
9.1 Investment Committee Direction. Subject to the limitations of Section
9.2, 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.
9.2 Limitations.
(a) Primary Benefit Requirement. An Exempt Loan must be made
primarily for the benefit of Participants and Beneficiaries.
(b) 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.
(c) 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.
(d) 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:
(i) To acquire Qualifying Employer Securities;
(ii) To repay such loan; or
(iii) To repay a prior Exempt Loan.
(e) Puts, Calls, etc. Except as provided in Sections 10.1 and
10.2 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.
(f) Interest Rate. The interest rate charged under an Exempt Loan
must not be in excess of a reasonable rate of interest.
(g) 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.
9.3 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
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are Qualifying Employer 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 Collateral Suspense Account created
pursuant to Section 6.3, No person entitled to payment under an Exempt
Loan shall have any right to Trust assets other than the following:
(a) Collateral given for the Exempt Loan;
(b) Employer 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
(c) Earnings attributable to Qualifying Employer Securities given
as collateral for the Exempt Loan and earnings attributable to
the investment of Employer contributions described in
paragraph (b) of this Section 9.3.
9.4 Repayment of Exempt Loan. Principal and interest payable under an
Exempt Loan shall be satisfied out of.
(a) Employer contributions (other than contributions of the
Trustee to satisfy its obligations under the Exempt Loan);
(b) Earnings attributable to the investment of such contributions;
and
(c) 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 Employer
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
Employer contributions available for making such payments. Earnings
that may be used under this Section 9.4 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
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Year are in excess of the total Employer contributions available to
the Trustee for making payments under the Exempt Loan.
9.5 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 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.
9.6 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 Collateral 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 Collateral Suspense
Account relating to such loan shall equal the number of Qualifying
Employer Securities allocated to such account immediately before the
release 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 9.6, the
Administration Committee, in its sole and absolute discretion, may
determine the number of Qualifying Employer Securities to be released
from the Collateral 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:
(a) 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.
(b) 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 Collateral 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.
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If more than one class of Quaff*g Employer Securities is given as
collateral for the Exempt Loan, the number of Qualifying Employer
Securities of each class to be released from the Collateral Suspense
Account for any Plan Year shall be determined by applying the same
fraction to each class.
9.7 Leveraged Employee Stock Ownership Plan. If an Exempt Loan is made by
the Trustee pursuant to Section 9. 1, 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:
(a) 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
(b) If there is no common stock which meets the requirements of
subparagraph (a), 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:
(i) that class of common stock of the Employer (or of any
other such corporation) having the greatest voting
power; and
(ii) that class of stock of the Employer (or of any other
such corporation) having the greatest dividend
rights; or
(c) 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.
(i) such stock is convertible at any time into common
stock which is readily tradeable on an established
securities market; and
(ii) such conversion is set at a conversion price which
(as of the date of the acquisition by the Plan) is
reasonable.
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ARTICLE X
REDEMPTION, PURCHASE PRIVILEGES AND OBLIGATIONS
10.1 Right of First Refusal. The Employer may retain a night of first
refusal to purchase Qualifying Employer Securities acquired by the Trustee and
distributed to Participants and Beneficiaries. The Employer may transfer such
a right to the Trustee; provided, however, that any such transferred right must
otherwise satisfy the requirements of this Section 10.1. Qualifying Employer
Securities subject to the night of first refusal provided for in this Section
10. I must not be Publicly Traded at the time the right of first refusal may
be exercised. The purchase price and other terms under the right of first
refusal shall not be less favorable to the seller than the greater of the value
of the Qualifying Employer Securities, determined in accordance with Section
10.3 hereof, or the purchase price and other terms offered by a buyer other
than the Employer or the Trustee making a good faith offer to purchase the
Qualifying Employer Securities from the seller. The right of first refusal
shall expire no later than fourteen (14) days after the seller gives written
notice to the holder of the night that an offer by a third party to purchase
the Qualifying Employer Securities has been received. A legend may be placed
on all Qualifying Employer Securities subject to the night of first refusal,
which references such right.
10.2 Put Option. Qualifying Employer Securities distributed to a
Participant (or his Beneficiary) shall be subject to a put option if they are
not Publicly Traded when distributed or if they are subject to a trading
limitation when distributed. For purposes of this Section 10.2, a trading
limitation is a restriction under any Federal or state securities law, any
regulation thereunder, or an agreement not prohibited by this Article X,
affecting the Qualifying Employer Securities which makes such securities not as
freely tradeable as securities not subject to such restriction.
The put option shall be exercisable only by a Participant, his donees, or a
person (including an estate or its distributees) to whom the Qualifying
Employer Securities pass by reason of his death. The put option shall permit a
Participant or other person described in the immediately preceding sentence to
put the Qualifying Employer Securities subject thereto to the Employer. Under
no circumstances may the put option bind the Plan or the Trustee; provided,
however, that the put option may grant the Trustee an option to assume the
rights and obligations of the Employer at the time the put option is exercised.
If Federal or state law would be violated by the Employer's honoring of the put
option, the put option shall permit the Qualifying Employer Securities to be
put, in a manner consistent with such law, to a third party (other than the
Trustee) that has substantial net worth at the time the put option is made
available and whose net worth. is expected to remain substantial.
The following requirements shall apply to a put option created pursuant to this
Section 10.2:
(a) Duration of Put Option. A put option shall be exercisable at
least during a sixty (60) day period commencing on the date
the Qualifying Employer Securities subject to such option are
distributed under the Plan, and, if the put option is not
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exercised within such sixty (60) day period, for an additional
period of at least sixty (60) days in the following Plan Year
(as provided in applicable Treasury Regulations). In the case
of Qualifying Employer Securities that are Publicly Traded
without any trading limitation when distributed, but which
cease to be so traded within the period described above, the
Employer must notify each shareholder holding such Qualifying
Employer Securities in writing on or before the tenth (10th)
day after the date such Qualifying Employer Securities cease
to be so traded that for the remainder of the above-described
period, the Qualifying Employer Securities are subject to a
put option. The number of days between such tenth (10th) day
and the date on which such notice is actually given, if later
than the tenth (10th) day, shall be added to the duration of
the put option. Any notice given under this paragraph (a)
must inform distributees of the terms of the put options that
they are to hold.
(b) Time Excluded from Duration of Put Option. The period during
which a put option granted pursuant to this Section 10.2 is
exercisable does not include any time that a distributes is
unable to exercise it because the party bound by the put
option is prohibited from honoring it by applicable Federal or
state law.
(c) Manner of Exercise. A put option granted under this Section
10.2 shall be exercised by the holder thereof by notifying the
Employer in writing that the put option is being exercised.
(d) Price. The price at which a put option is exercisable is the
value of the Qualifying Employer Securities with respect to
which the option is being exercised, determined in accordance
with the provisions of Section 10.3.
(e) Payment Terms. Payment required under a put option granted
pursuant to this Section 10.2 shall begin thirty (30) days
after the exercise of the put option, and shall be made in a
maximum of five (5) equal annual installment payments. The
Employer shall provide adequate security and pay reasonable
interest on the unpaid amounts due under the put option. For
put options purchased as a part of an installment
distribution, payment must be made not later than thirty (30)
days after the exercise of the put option.
10.3 Valuation. For purposes of this Article X, valuations of Qualifying
Employer Securities must be made in good faith and must be based on
all relevant factors that should be considered in determining their
value. In the case of a transaction between the Plan and a
Disqualified Person or a Party in Interest, the value of Qualifying
Employer Securities must be determined as of the date of the
transaction. For all other purposes under this Article X, the value
of Qualifying Employer Securities must be determined as of the most
recent Valuation Date or special valuation date.
In addition to and consistent with the requirements of the preceding
paragraph, the methodologies for determining valuations of Qualifying
Employer Securities shall be as follows:
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(a) Securities Traded on a Recognized Exchange. If the relevant
Qualified Employer Securities are readily tradeable on an
established securities market, the value shall be deemed to be
the mean trading price of such securities on such established
securities markets over a reasonable period of time.
(b) Securities Not Traded on a Recognized Exchange. If the
relevant Qualified Employer Securities are not readily
tradeable on an established securities market, all valuations
with respect to the activities of the Plan shall be determined
by an independent appraiser (who is defined as any appraiser
meeting requirements similar to the requirements of the
regulations prescribed under Code section 170(a)(1)).
10.4 Stock Transfer Documents. In the event the Put Option provided for in
Section 10.2 is exercised or a purchase of shares is made by the
Trustee or the Employer as provided for in Section 10.1, at such time
as requested by the Trustee or the Employer, the distributee shall
execute such stock powers or other documents required by the Trustee
or the Employer to transfer and convert, ownership of the shares
purchased to the Trustee and/or the Employer.
10.5 Preservation of Purchase Rights. The Put Option and the fight of
first refusal get forth above shall continue and apply to any
distribution made from the Plan prior to or after a date on which the
Plan no longer maintains the status of an employee stock ownership
plan, as that term is defined in section 4975(e)(7) of the Code.
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ARTICLE XI
EMPLOYER ADMINISTRATIVE PROVISIONS
11.1 Information. The Employer shall, upon request or as may be
specifically required hereunder, furnish or cause to be furnished, all
of the information or documentation which is necessary or required by
the Committees and Trustee to perform their respective duties and
functions under the Plan. The Employer's records as to the current
information the Employer furnishes to the Committees and Trustee shall
be conclusive as to all persons.
11.2 No Liability. Subject to Article XIV, the Employer assumes no
obligation or responsibility to any of the Employees, Participants, or
Beneficiaries for any act of, or failure to act, on the part of the
Committees of the Trustee.
11.3 Employer Action. Any action required of the Employer shall be by
resolution of its Board of Directors or by a person authorized to act
by Board resolution.
11.4 Indemnify. The Employer shall indemnify and save harmless the Board
of Directors, individual Trustee(s), and the members of the
Committees, and each of them, from and against any and all loss
resulting from liability to which the Board of Directors, individual
Trustee(s), and the Committees, or the members of the Board of
Directors and Committees, may be subjected by reason of any act or
conduct (except willful or reckless misconduct) in their official
capacities in the administration of this Plan or Trust or both,
including all expenses reasonably incurred in their defense, in case
the Employer falls to provide such defense. The indemnification
provisions of this Section 11.4 shall not relieve the Board of
Directors, individual Trustee(s), or any members of the Committees
from any liability he may have under the Act for breach of a fiduciary
duty.
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ARTICLE XII
COMMITTEES - ADMINISTRATION AND INVESTMENT PROVISIONS
12.1 Appointment of Committees. The Board of Directors shall appoint an
Administration Committee to administer the Plan, and an Investment
Committee to direct Plan investments, the members of which may or may
not be Participants in the Plan. The members of both Committees may
be identical, such members shall constitute a single Committee
possessing the rights and powers of each.
12.2 Term. Each member of each Committee shall serve until his successor
is appointed. Any member of either Committee may be removed by the
Board of Directors, with or without cause, which shall have the power
to fill any vacancy which may occur. A Committee member may resign
upon written notice to the Employer.
12.3 Compensation. The members of the Committees shall serve without
compensation for services as such, but the Employer shall pay all
expenses of both Committees, including the expenses for any bond
required under section 412 of the Act. To the extent such expenses
are not paid by the Employer, they shall be paid by the Trustee from
the Trust Fund.
12.4 Powers of Administration Committee. Subject to Article XIV, the
Committee shall have the following powers and duties:
(a) To direct the administration of the Plan in accordance with
the provisions herein set forth;
(b) To adopt rules of procedure and regulations necessary for the
administration of the Plan provided the rules are not
inconsistent with the terms of the Plan;
(c) To determine all questions with regard to rights of Employees,
Participants, and Beneficiaries under the Plan, including but
not limited to rights of eligibility of an Employee to
participate in the Plan, the value of a Participants Accrued
Benefit, and the vested Accrued Benefit of each Participant;
(d) To enforce the terms of the Plan and the rules and regulations
it adopts;
(e) To direct the Trustee as respects the crediting and
distribution of the Trust and all other matters within its
discretion as provided in the Trust Agreement;
(f) To review and render decisions respecting a claim for, or
denial of a claim for, a benefit under the Plan;
(g) To furnish the Employer with information which the Employer
may require for tax or other purposes;
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(h) To engage the service 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;
(i) To prescribe procedures to be followed by distributees in
obtaining benefits;
(j) To receive from the Employer and from Employees such
information as shall be necessary for the proper
administration of the Plan;
(k) To receive and review reports of the financial condition and
of the receipts and disbursements of the Trust Fund from the
Trustee;
(l) To maintain, or cause to be maintained, separate Accounts in
the name of each Participant to reflect the Participant's
Accrued Benefit under the Plan;
(m) To select a secretary, who need not be a member of the
Administration Committee; and
(n) To interpret and construe the Plan.
The Administration Committee shall have no power to add to, subtract
from, or modify any of the terms of the Plan, or to change or add to
any benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Plan.
Nonetheless, the Administration Committee shall have absolute
discretion in the exercise of its powers under this Section 12.4. All
exercises of power by the Administration Committee hereunder shall be
final, conclusive and binding, unless found by a court of competent to
be arbitrary and capricious.
12.5 Powers of Investment Committee. The Investment Committee shall have
the following powers and duties:
(a) 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 of sections 407(a)(2), (3), or (4) of the Act,
as provided in the Trust Agreement;
(b) To direct the Trustee to make Exempt Loans, the proceeds of
which are to be used for the purposes enumerated in Section
9.2(b);
(c) To furnish the Employer with information which the Employer
may require for tax or other purposes,
(d) To engage the service 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;
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(e) To receive and review reports of the financial condition and
of the receipts and disbursements of the Trust Fund from the
Trustee;
(f) 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;
(g) To engage the services of an Investment Manager or Managers
(as defined in section 3(38) of the Act), 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;
(h) To select a secretary, who need not be a member of the
Investment Committee; and
(i) To interpret and construe the Plan with respect to the
investment, reinvestment, and disposition of Plan assets.
12.6 Manner of Action. The decision of a majority of the members of each
Committee appointed and qualified shall control. In case of a vacancy
in the membership of the Committees, the remaining members of the
respective Committee may exercise any and all of the powers,
authorities, duties, and discretions conferred upon such Committee
pending the filling of the vacancy. The Committees 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. Each Committee shall maintain adequate records of its
decisions.
12.7 Authorized Representative. Each Committee may authorize any one of
its members, or its secretary, to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers,
letters, or other documents. Each Committee must evidence this
authority by an instrument signed by all its respective members and
filed with the Trustee.
12.8 Nondiscrimination. The Administration Committee shall administer the
Plan in a uniform, nondiscriminatory manner for the exclusive benefit
of the Participants and their Beneficiaries.
12.9 Interested Member. No member of the Administration Committee may
decide or determine any matter concerning the distribution, nature, or
method of settlement of his own benefits under the Plan unless there
is only one person acting alone in the capacity as the Administration
Committee.
12.10 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
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to any Plan Investment Manager (herein so-called), if any, the Plan's
short-term and long-term financial needs so investment policy can be
coordinated with Plan financial requirements.
12.11 Individual Statement. As soon as practicable after the Valuation Date
of each Plan Year but within the time prescribed by the Act and
regulations under the Act, the Administration Committee will deliver
to each Participant (and to each Beneficiary) a statement reflecting
the condition of his Accrued Benefit in the Trust as of that date and
such other information the Act requires be furnished the Participant
or Beneficiary. No Participant except a member of the Administration
or Investment Committee, shall have the night to inspect the records
reflect the Account of any other Participant.
12.12 Books and Records. The Administration 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 the
responsibility of the Administration Committee.
12.13 Diversification Requirements. Subject to paragraph (d) of this
Section 12.13, to the extent required by section 401(a)(28)(B) of the
Code, and notwithstanding the provisions of Section 12.5, 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 (1) twenty-five
percent (25%) of Qualified Contributions that have ever been allocated
to the Qualified Participant's Account, less (11) the number of shares
of Employer Securities 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%)."
(a) Delivery of Diversification Distribution. A Qualified
Participant shall receive a distribution elected pursuant to
this Section 12.13 within ninety (90) days after the last day
of the period during which an election can be made.
(b) Delivery of Employer Securities. The number of shares of
Employer Securities 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 Employer Securities delivered to the
Participant must consist of Employer Securities that,
immediately prior to distribution hereunder, are subject to
the put option requirements of Section 10.2.
(c) No Effect on Other Distributions. Any distribution that is
made pursuant to this Section 12.13 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.
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ARTICLE XIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
13.1 Beneficiary Designation. Each Participant may from time to time
designate, in writing, a Beneficiary to whom the Trustee shall pay his
Accrued Benefit in the Trust Fund in the event of his death. The
Administration Committee shall prescribe the form for the written
designation of Beneficiary and, upon the Participant's filing the form
with the Administration Committee, it shall revoke all designations
filed prior to that date by the same Participant. As a condition to
any married Participant designating a Beneficiary other than his
spouse, to the extent required by applicable law, the Administration
Committee shall require the spouse's consent, as described in Sections
2.1(8) and 8.8.
13.2 No Beneficiary Designation. If a Participant fails to name a
Beneficiary in accord with Section 13.1, or if the Beneficiary named
by a Participant predeceases him or dies before complete distribution
of the Participant's Accrued Benefit in lump sum to the legal
representative or representatives of the estate of the last to die of
the Participant and his Beneficiary. The Administration Committee, in
its sole discretion, shall direct the Trustee as to whom the Trustee
shall make payment under this Section.
13.3 Voting of Qualifying Employer Securities. Each Participant, Former
Participant, or Beneficiary of a deceased Participant or Former
Participant shall be the "named fiduciary," as such term is defined in
Section 402(a)(2) of the Act, with respect to the Qualifying Employer
Securities allocated to his Account and shall be entitled to direct
the Trustee concerning the manner in which such Qualifying Employer
Securities are to be voted. Not less than. fifteen (15) days nor more
than fifty (50) days prior to holding of each annual or special
meeting of the shareholders of the Company, the Trustee shall furnish
to each Participant, Former Participant, and Beneficiary of a deceased
Participant or Former Participant a ballot form or proxy covering
those issues to be voted on, on which may be set forth the
Participants, Former Participants, or Beneficiary's instruction as to
the manner of voting those Qualifying Employer Securities with respect
to which he is entitled to direct the Trustee under this Section 13.3.
Upon receipt of such instructions, the Trustee shall vote (or exercise
dissenters rights where applicable) such Qualifying Employer
Securities in accordance with the instructions received. The Trustee
shall be the "named fiduciary" with respect to any nonvoted or
unallocated Qualifying Employer Securities and shall vote such
Qualifying Employer Securities in its sole and absolute discretion.
13.4 Personal Data to Administration Committee. Each Participant and
Beneficiary must furnish to the Administration Committee evidence,
data, or information as the Administration Committee considers
necessary or desirable for the purpose of administering the Plan. The
provisions of this Plan are effective for the benefit of each
Participant upon the condition precedent that each Participant will
promptly furnish full, true, and complete evidence, data, and
information when requested by the Administration Committee, provided
the Administration Committee shall advise each Participant of the
effect of his failure to comply with its request.
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13.5 Address for Notification. Each Participant and each Beneficiary of a
deceased Participant shall file with the Administration Committee, in
writing, his post office address, and each subsequent change of such
post office address. Any payment or distribution hereunder, and any
communication addressed to a Participant or his Beneficiary, at the
last address filed with the Administration Committee, or if no such
address has been filed, then the last address indicated on the records
of the Employer shall be deemed to have been delivered to the
Participant or his Beneficiary on the date that such distribution or
communication is deposited in the United States fl, postage prepaid.
13.6 Place of Payment and Proof of Continued Eligibility. Any check
representing payment hereunder and any communication addressed to an
Employee, a former Employee, a retired Employee, or Beneficiary at his
last address filed with the Administration Committee, or if no such
address has been filed, then at his last address as indicated on the
records of the Employer, shall be deemed to have been delivered to
such person on the date on which such check or communication is
deposited in the United States mail. If the Administration Committee,
for any reason, is in doubt as to whether pension payments are being
received by the person entitled thereto, it shaH, by registered mail
addressed to the person concerned, notify such person that all
unmailed and future retirement income payments shall be henceforth
withheld until he provides the Administration Committee with evidence
of his continued life and his proper mailing address.
13.7 Assignment or Alienation. No benefit payable under the Plan shall be
subject in any manner to alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution, or levy of any
kind, either voluntary or involuntary, except to the extent provided
under a Qualified Domestic Relations Order, prior to actually being
received by the person entitled to the benefit under the terms of the
Plan. The Trust Fund shall not in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements, or torts
of any person entitled to benefits hereunder, except to the extent
that under a Qualified Domestic Relations Order the Trustee is
required to pay over a Participant's Accrued Benefit hereunder to an
Alternate Payee. In the event an Employer or the Trustee receives
written notice of an adverse claim to a benefit distributable or being
paid to a Participant, Former Participant or Beneficiary, the Trustee
may suspend payment(s) of such benefit until such matter is resolved
to the satisfaction of the Trustee.
13.8 Litigation Against the Trust. If any legal action filed against the
Trustee, Board of Directors, or the Committee, or against any member
or members of the Committee or Board of Directors, by or on behalf of
any Participant or Beneficiary, results adversely to the Participant
or to the Beneficiary, the Trustee shall reimburse itself, the Board
of Directors, Committee, and any member or members of the Committee or
Board of Directors, all costs and fees expended by it or them by
surcharging all costs and fees against the sums payable under the Plan
to the Participant or to the Beneficiary, but only to the extent a
court of competent jurisdiction specifically authorizes and direct any
such surcharges and only to the extent permitted under section 40
I(a)(I 3) of the Code.
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13.9 Information Available. Any Participant in the Plan or any Beneficiary
may examine copies of the Plan description, latest annual report, any
bargaining agreement, this Plan and Trust, contract, or any other
instrument under which the Plan was established or is operated. The
Administration Committee will maintain all of the items listed in this
Section in his office, or in such other place or places as he may
designate from time to time in order to comply with the regulations
issued under the Act, for examination during reasonable business
hours. Upon the written request of a Participant or Beneficiary the
Administration Committee shall furnish him with a copy of any item
listed in this Section. The Administration Committee may make a
reasonable charge to the requesting person for the copy so furnished.
13.10 Beneficiary's Right to Information. A Beneficiary's night to (and the
Committees', or a Trustee's duty to provide to the Beneficiary)
information or data concerning the Plan shall not arise until he first
becomes entitled to receive a benefit under the Plan.
13.11 Claims Procedure. Prior to or upon becoming entitled to receive a
benefit hereunder, a Participant or Beneficiary shall file a claim for
such benefit with the Administration Committee at the time and in the
manner prescribed thereby. Notwithstanding the immediately preceding
sentence, the Administration Committee may direct the Trustee to
commence payment of a Participant's or Beneficiary's benefits
hereunder without requiring the filing of a claim therefore if the
Administration Committee has knowledge of such Participant's or
Beneficiary's whereabouts.
13.12 Early Retirement Benefits. A Participant who is eligible to apply for
an early retirement benefit under Section 7.2 hereof and elects to do
so shall file an application therefore with the Administration
Committee at the time and in the manner prescribed thereby.
13.13 Appeal Procedure for Denial of Benefits. The Administration Committee
shall provide adequate notice in writing to any Participant or to any
Beneficiary ("Claimant") whose claim for benefits under the Plan the
Administration Committee has denied. Such notice must be sent within
ninety (90) days of the date the claim is received by the
Administration Committee unless special circumstances require an
extension of time for processing the claim. Such extension shall not
exceed ninety (90) days and no extension shall be allowed unless,
within the initial ninety (90) day period, the Claimant is sent an
extension notice indicating the special circumstances requiring the
extension and specifying a date by which the Administration Committee
expects to render its final decision. The Administration Committee's
notice of denial to the Claimant shall set forth:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent Plan provisions on which the
Administration Committee based its denial;
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(c) A description of any additional material and information
needed for the Claimant to perfect his claim and an
explanation of why the material or information is needed;
(d) A statement that the Claimant may:
(i) Request a review upon written application to the
Committee;
(ii) Review pertinent Plan documents; and
(iii) Submit issues and comments in writing; and
(e) A statement that any appeal the Claimant washes to make of the
adverse determination must be in writing to the Administration
Committee within sixty (60) days after receipt of the
Administration Committee's notice of denial of benefits. The
Administration Committee's notice must further advise the
Claimant that his failure to appeal the action to the
Administration Committee in writing within the sixty (60) day
period will render the Administration Committee's
determination final, binding, and conclusive.
If the Claimant should appeal to the Administrative Committee, he, or
his duly authorized representative, may submit, in writing, whatever
issues and comments he, or his duly authorized representative, feels
are pertinent. The Administration Committee shall re-examine all
facts related to the appeal and make a final determination as to
whether the denial of benefits is Justified under the circumstances.
The Administration Committee shall advise the Claimant in writing of
its decision, and the specific Plan provisions on which the decision
is based. The notice of the decision shall be given with sixty (60)
days of the Claimant's written request for review, unless special
circumstances (such as a hearing) would make the rendering of a
decision within the sixty (60) day period infeasible, but in no event
shall the Administration Committee render a decision regarding the
denial of a claim for benefits later than one hundred and twenty (120)
days after its receipt of a request for review. If an extension of
time for review is required because of special circumstances, written
notice of the extension shall be furnished to the Claimant prior to
the date the extension period commences.
The Administration Committee's notice of denial of benefits shall
identify the name of each member of the Administration Committee and
the name and address of the Administration Committee member to whom
the Claimant may forward his appeal.
13.14 No Rights Implied. Nothing contained in this Plan, or with respect to
the establishment of the Trust, or any modification or amendment to
the Plan or Trust, or in the creation of any Account, or the payment
of any benefit, shall give any Employee, Participant, or any
Beneficiary any right to continue employment, any legal or equitable
right against the Employer or any officer, director, or Employee of
the Employer, or against the Trustee, or its agents or employees,
except as expressly provided by the Plan, the Trust or the Act.
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ARTICLE XIV
FIDUCIARY DUTIES
14.1 Fiduciaries. The "Fiduciaries" of the Plan shall consist of the
following:
(a) The Employer;
(b) The Administration Committee;
(c) The Investment Committee;
(d) The Trustee; and
(e) Such other person or persons that are designated to carry out
fiduciary responsibilities under the Plan in accordance with
Section 14.3(c).
Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan. A Fiduciary may employ one or more
persons to render advice with regard to any responsibility such
Fiduciary has under the Plan.
14.2 Allocation of Responsibilities. The powers and responsibilities of
the Fiduciaries are hereby allocated as indicated below:
(a) Employer. The Employer shall be responsible for all functions
assigned or reserved to it under the Plan and Trust Agreement.
Any authority assigned or reserved to the Employer under the
Plan and Trust Agreement shall be exercised by resolution of
the Employer's Board of Directors.
(b) Administration Committee. The Administration Committee shall
have the responsibility and authority to control the operation
and administration of the Plan in accordance with the terms of
the Plan and Trust Agreement, except with respect to duties
and responsibilities specifically allocated to other
fiduciaries. The Administration Committee shall have the
authority to issue written directions to the Trustee to the
extent provided in the Trust Agreement. The Trustee shall
follow the Administration Committee's directions unless it is
clear that the actions to be taken under those directions
would be violations of applicable fiduciary standards or would
be contrary to the terms of the Plan or Trust Agreement.
(c) Investment Committee. The Investment Committee shall have the
responsibility and authority to control the investment of the
Trust Fund in accordance with the terms of the Plan and Trust
Agreement, except with respect to duties and responsibilities
specifically allocated to other fiduciaries. The Investment
Committee shall have the authority to issue written directions
to the Trustee to the extent provided in the Trust Agreement.
The Trustee shall follow the Investment
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Committee's directions, unless it is clear that the actions to
be taken under those directions would be violations of
applicable fiduciary standards or would be contrary to the
terms of the Plan or Trust Agreement.
(d) Trustee. The Trustee shall have the duties and
responsibilities set out in the Trust Agreement, subject,
however, to direction by the Committees as set out in the
Trust Agreement.
(e) Allocations. Powers and responsibilities may be allocated to
other fiduciaries in accordance with Section 14.3, or as
otherwise provided herein or in the Trust Agreement.
This Article is intended to allocate to each Fiduciary the individual
responsibility for the prudent execution of the functions assigned to
it, and none of such responsibilities or any other responsibility
shall be shared by two or more of such Fiduciaries unless such sharing
shall be provided by a specified provision of the Plan or Trust
Agreement.
14.3 Procedures for Delegation and Allocation of Responsibilities.
Fiduciary responsibilities may be allocated as follows:
(a) Each Committee may specifically allocate responsibilities to a
specified member or members of the Committee.
(b) Each Committee may designate a person or persons other than a
Fiduciary to carry out fiduciary responsibilities under the
Plan (this authority shall not cause any person or persons
employed to perform ministerial acts and services for the Plan
to be deemed fiduciaries of the Plan).
(c) The Investment Committee may appoint an Investment Manager or
managers to manage (including the power to acquire and dispose
of) the assets of the Plan (or a portion thereof).
(d) If at any time there be more than one Trustee serving under
the Trust Agreement, such Trustees may allocate specific
responsibilities, obligations, or duties among themselves in
such manner as they shall agree.
Any allocation of responsibilities pursuant to this Section 14.3 shall
be made by filing a written notice thereof with the Administration
Committee specifically designating the person or persons to whom such
responsibilities or duties are allocated and specifically setting out
the particular duties and responsibilities with respect to which the
allocation or designation is made.
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ARTICLE XV
INSURANCE CONTRACTS
15.1 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 contracts 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.
15.2 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.
15.3 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.
15.4 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.
15.5 Acquittance. An insurance company shall be discharged from all
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.
15.6 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.
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ARTICLE XVI
DISCONTINUANCE, AMENDMENT, AND TERMINATION
16.1 Discontinuance. The Employer shall have the night, at any time, to
suspend or discontinue its contributions under the Plan.
16.2 Amendment. The Employer shall have the right at any tune and from
time to time to amend the Plan in any manner it deems necessary or
advisable in order to qualify (or maintain qualification of) the Plan
and Trust under the provisions of Code section 401(a) and to amend the
Plan in any other manner provided no amendment shall:
(a) Except as provided for in Sections 4.4 and 16.9, authorize or
permit any of the Trust Fund (other than the part which is
required to pay taxes and administration expenses) to be used
for or diverted to purposes other than for the exclusive
benefit of the Participants or their Beneficiaries;
(b) Cause or permit any portion of the Trust fund to revert to or
become the property of the Employer;
(c) Increase duties or responsibilities of the Trustee or the
Committees without the written consent of the affected Trustee
or the affected member of the Administration or Investment
Committee.
The Employer shall make all amendments in writing. Each amendment
shall state the date to which it is either retroactively or
prospectively effective.
16.3 Termination. The Company shall have the right to terminate the Plan
at any time. The Plan shall terminate upon the first to occur of the
following:
(a) The date terminated by action of the Board of Directors;
(b) The date the Company shall be judicially declared bankrupt or
insolvent; or
(c) The dissolution, merger, consolidation, or reorganization of
the Company or the sale by the Employer of all or
substantially all of its assets, unless the successor or
purchaser makes provision to continue the Plan, in which event
the successor or purchaser shall be substituted as the
Employer under this Plan.
16.4 Vesting on Termination or Suspension. Notwithstanding any other
provision of this Plan to the contrary, upon the date of full or
partial termination of the Plan, or, upon complete discontinuance of
contributions to the Plan, an affected Participant's right to his
Accrued Benefit, shall be one hundred percent (100%) nonforfeitable.
The Administration Committee shall interpret and administer this
Section 16.4 in accord with the intent and scope of the Regulations
issued under section 41 I (d)(3) of the Code.
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16.5 Procedures on Termination. In the event of termination of the Plan or
permanent discontinuance of Employer contributions, the Company shall,
in its sole discretion, authorize any one of the following procedures:
(a) Continue Plan. To continue the Plan in operation in all
respects until the Trustee has distributed all benefits under
the Plan, except that no further persons shall become
Participants, no further Employer contributions shall be made,
all Accounts shall be fully vested, and no further payments
shall be made except in distribution of the Trust Fund and
payment of administration expenses; or
(b) Liquidate Plan. Subject to the restrictions of Section 8.14,
to wind up and liquidate the Plan and Trust and distribute the
assets thereof after deduction of all expenses to the
Participants, Former Participants, and Beneficiaries in
accordance with their respective Accounts as then constituted.
If the Company makes no election before termination, then this
subsection (b) will, govern distribution of the Trust Fund.
16.6 Merger. The Trustee shall not consent to, or be a party to, any
merger or consolidation with another plan, or to a transfer of assets
or liabilities to another plan, unless immediately after the merger,
consolidation, or transfer, the surviving Plan provides each
Participant a benefit equal to or greater than the benefit immediately
before the merger, consolidation, or transfer. In addition, the
Trustee shall not accept a transfer of assets to this Plan from
another plan if such assets are attributable, directly or indirectly,
to a transfer or distribution from a defined benefit plan (within the
meaning of section 4140) of the Code) or a defined contribution plan
(within the meaning of section 414(i) of the Code) subject to the
minimum funding standards of section 412 of the Code.
16.7 Notice in Change of Terms. The Administration Committee, within the
time prescribed by the Act and applicable regulations shall furnish
all Participants and Beneficiaries a summary descriptive of any
material amendment to the Plan or notice of discontinuance of the Plan
and all other information required by the Act to be furnished without
charge.
16.8 Approval By Internal Revenue Service. Notwithstanding anything herein
to the contrary, contributions to this Plan are conditioned upon the
initial qualification of the Plan under Code section 401. If the Plan
receives an adverse determination with respect to its initial
qualification, then the Plan may return such contributions to the
Employer within one (1) year after such determination, provided the
application for the determination is made by the time prescribed by
law for filing the Employer's return for the taxable year in which the
Plan was adopted, or such later date as the Secretary of the Treasury
may prescribe.
16.9 Reversion of Forfeiture Suspense Amount. Notwithstanding any
provision contained herein to the contrary, the Employer reserves the
right to recover upon the termination of the Plan and Trust Fund any
amounts held in a Forfeiture Suspense Account in the year of
termination.
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ARTICLE XVII
PARTICIPATION BY AFFILIATES OF EMPLOYER
17.1 Adoption by Affiliates. Any corporation or other business entity
which is a member of a controlled group (as defined in sections
414(b), (c), (in) or (o) of the Code or any successor provision) which
includes the Company may, with the consent of the Company, adopt the
Plan for its employees. Such adoption shall be made by resolution of
such corporation's Board of Directors and an instrument executed by
its officers pursuant thereto. The provisions of the Plan shall apply
to each Employer severally except as (a) provided in the instrument
adopting the Plan and Trust and (b) otherwise specifically provided
herein.
17.2 Amendment. If the Plan is amended by the Company after it has been
adopted by one (1) or more affiliates pursuant to Section 17. 1,
unless otherwise expressly provided, the Plan shall be treated as so
amended by such affiliates without the necessity of any action on
their parts.
17.3 Termination. If the Plan is terminated by the Company, it shall be
deemed terminated by each affiliate that has adopted such instruments
pursuant to Section 17. 1. Furthermore, any affiliate that has adopted
the Plan pursuant to Section 17.1 may discontinue its participation
herein at any time; provided, however, that such action shall not be
treated as a termination of the Plan by the Company or any other
affiliate who has adopted the Plan.
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ARTICLE XVIII
TRUSTEE, POWERS AND DUTIES
18.1 Establishment and Acceptance of Trust. The Trustee as of its date of
signature hereon, accepts the Trust hereby established and consents to
act as Trustee subject to the terms, provisions, conditions, and
limitations of this Plan.
18.2 Scope of Trustee's Functions. In all matters relating to the detailed
administration of the Plan the Trustee shall act only upon the
authorization evidenced by certificate of the Administration Committee
and shall be fully protected in relying and acting thereon; provided,
however, if at any time the Administration Committee shall fail to
give directions or instructions to the Trustee in regard to any detail
affecting the administration of the Plan over which the Administration
Committee has jurisdiction, then and in that event the Trustee,
although being under no obligation to do so, may act without such
directions or instructions and may exercise its own discretion and
judgment as seems appropriate and advisable under the circumstances in
order to effectuate the purposes of the Plan. Where the Trustee does
so act without direction or instruction from the Administration
Committee, it shall act solely in the interests of the Participants
and their Beneficiaries and for the exclusive purpose of providing the
benefits required and defraying reasonable expenses of administering
the Plan.
The Trustee shall not be required to act on instructions received from
the Administration Committee, other than instructions from a qualified
Investment Manager, if in its sole discretion and opinion it believes
that compliance with such instructions would result in an action which
would be improper or imprudent. In the event the Trustee declines or
refuses to follow such instructions given in writing by the
Administration Committee or its duly authorized representative, notice
of such refusal shall be furnished to the Administration Committee in
writing within fifteen (15) days of receipt of the Administration
Committee's written instructions.
If at any time the Administration Committee fails or refuses to
provide the Trustee with written instructions concerning any action
which, in the sole discretion of the Trustee, is deemed necessary in
order to properly administer the Plan under the provisions hereunder
and in accordance with applicable laws and regulations, then and in
that event, the Trustee shall notify the Administration Committee in
writing of the Trustee's intent to take such action on a date no
earlier than thirty (30) days from the date notice is received by the
Administration Committee. The notice shall describe the action which
will be performed by the Trustee on a certain date unless written
notice is received from the Administration Committee within thirty
(30) days disapproving such action and instructing the Trustee
concerning the course of action which the Trustee should follow. If
the Administration Committee fails or refuses to respond to the
Trustees notification of intended action, such failure or refusal to
respond shall be deemed by the Trustee as implied consent on the part
of the Administration Committee and on behalf of the
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Employer to the action intended to be performed by the Trustee and
shall be deemed as authorizing the Trustee to so act at the expiration
of the thirty (30) day period.
18.3 Powers and Duties. The Trustee is hereby authorized and empowered to
establish and maintain for and on behalf of the Plan Participants such
pooled investment accounts as the Administration Committee may direct,
and into which the Plan assets shall be invested. In establishing
such pooled investment accounts, or in utilize investments as the
Administration Committee may from time to time direct, the Trustee
shall be authorized and empowered to perform the following functions
with respect to the Plan:
(a) To invest and reinvest the Plan assets in real, personal, or
mixed property including but not limited to securities of
domestic and foreign corporations and investment trusts
(whether open-end or not), bonds, preferred stocks, common
stocks, mortgages, mortgage participations, interests in any
common trust fund or commingled employee benefit fund to the
extent allowed under applicable laws and regulations and with
complete discretion as to converting realty into personalty or
personalty into realty.
(b) To invest in land, whether improved or unimproved, and improve
any such land in any manner determined by the Administration
Committee to be feasible and prudent. To lease real,
personal, or mixed property on such terms as the
Administration Committee shall deem proper, including the
power to make leases that may extend beyond any time in which
Plan termination may be necessary by such Employer; and to
foreclose, extend, renew, assign, release, or partially
release and discharge mortgages or other liens.
(c) To invest in bonds, stocks, secured notes, or similar
securities permitted by applicable laws and regulations.
(d) To borrow funds at the direction of the Administration
Committee or Investment Committee, from any party permitted by
applicable laws and regulations for the purpose of purchasing
as investments any property as collateral to secure such loan;
provided, however, the following terms and conditions shall
apply to any Exempt Loan:
(1) The Trustee shall use the proceeds of the loan within
a reasonable time after receipt only for any or all
of the following purposes: (i) to acquire Qualifying
Employer Securities, (ii) to repay such loan, or
(iii) to repay a prior Exempt Loan. Except as
provided under Article X, no Qualifying Employer
Security may be subject to a put, call or other
option, or buy-sell or similar arrangement while held
by and when distributed from this Plan, whether or
not this Plan is then an employee stock ownership
plan.
(2) The interest rate of the loan shall not be more than
a reasonable rate of interest.
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(3) Any collateral the Trustee pledges to the creditor
showy consist only of the assets purchased by the
borrowed funds and those assets the Trust used as
collateral on the prior Exempt Loan repaid with the
proceeds of the current Exempt Loan.
(4) The creditor shall have no recourse against the Trust
under the loan except with respect to such collateral
given for the loan, contributions (other than
contributions of Qualifying Employer Securities) that
the Employer makes to the Trust to meet its
obligations under the loan, and earnings attributable
to such collateral and the investment of such
contributions. The payment made with respect to an
Exempt Loan by the Plan during a Plan Year must not
exceed an amount equal to the sum of such
contributions and earnings received during or prior
to the year less such Payments in prior years. The
Investment Committee and the Trustee must account
separately for such contributions and earnings in the
books of account of the Plan until the Trust repays
the loan.
(5) In the event of default upon the loan, the value of
Plan assets transferred in satisfaction of the loan
must not exceed the amount of the default, and if the
lender is a Disqualified Person, the loan must
provide for transfer of Plan assets upon default only
upon and to the extent of the failure of the Plan to
meet the payment schedule of the loan.
(6) The Trustee must add and maintain all assets acquired
with the proceeds of an Exempt Loan in a Collateral
Suspense Account. In withdrawing assets from the
Collateral Suspense Account, the Trustee shall apply
the provisions of Regulation Sections 54.4975-7(b)(8)
and (15) as if all securities in the Collateral
Suspense Account were encumbered. Upon the payment
of any portion of the loan, the Trustee shall effect
the release of assets in the Collateral Suspense
Account from encumbrances in accordance with the
provisions of Section 9.6.
(7) The loan must be for a specific term and may not be
payable at the demand of any person except in the
case of default.
(8) Notwithstanding the fact that this Plan ceases to be
an employee stock ownership plan, Qualifying Employer
Securities acquired with the proceeds of an Exempt
Loan shall continue after the Trustee repays the loan
to be subject to the provisions of Treasury
Regulation sections 54.4975-7(b)(4), (10), (11) and
(12) relating to put, call or other options and to
buy-sell or similar arrangements, except to the
extent these regulations are inconsistent with Code
section 409(h).
(e) To make investments of types other than specified herein,
provided such investments are in accordance with applicable
laws and regulations.
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(f) To make distribution to or for the benefit of a retiree,
disabled Participant, inactive Participant, Former Participant
or of their Beneficiaries.
(g) To purchase an annuity contract on behalf of a Participant or
Former Participant as directed by the Administration
Committee.
(h) To acquire or retain property returning no income or slight
income as may be deemed advisable by the Administration
Committee without liability therefor.
(i) To sell, exchange, give options, partition, convey, or
otherwise dispose of@ with or without covenants of warranty of
title, any property, which may from time to time be or become
a part of the Plan assets at public or private sale or
otherwise, for cash or other consideration or on credit, and
upon such terms and conditions and for such consideration as
the Administration Committee shall consider advisable, and to
transfer the same free of all trusts.
(j) To vote, in person or by proxy, any stocks or other properties
having voting rights, to execute any options, rights or
privileges pertaining to any property; to participate in any
merger, reorganization or consolidation affecting any part of
the Plan assets and in connection therewith to take any action
which an individual could take with respect to property owned
outright by such individual including the payment of expenses
or assessments, the deposit of stock or property with a
protective committee, the acceptance or retention of new
securities or property and the payment of such amounts of
money as may seem advisable in connection therewith; and to
hold any item constituting a part of the Plan assets for any
length of time in the name of a nominee or nominees without
mention of the Trust or any instrument of ownership.
(k) To execute and deliver oil, gas, and other mineral leases,
containing such unitization, pooling, and recycling agreements
and other provisions as the Administration Committee may deem
proper; to execute mineral and royalty conveyances; to
purchase leases, royalties, and any type of mineral interest;
and to execute and deliver drilling contracts or other
contracts or options and other instruments which the
Administration Committee may consider necessary or desirable
in connection with oil, gas, or other mining interests. All
such instruments may be executed and delivered for such
consideration as the Administration Committee, in its sole
discretion, deems to be fair and reasonable.
(l) To exercise all other powers presently granted to Trustees by
the Texas Trust Code as amended and in force on the effective
date of this Plan, as amended from time to time thereafter,
and not in conflict with the provisions hereof
(m) To do any and all things necessary and proper, including the
power to execute any other instruments which may be required
to fully and completely accomplish any of the powers herein
conferred.
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(n) As a condition precedent to acting as Trustee for and on
behalf of the Employer, the Trustee may require that the
Administration Committee execute any appropriate and proper
instruments authorizing investment of Plan assets by the
Trustee in investments so directed by the Administration
Committee or authorizing any action by the Trustee so desired
by the Administration Committee.
18.4 Liability of Trustees. The Trustee shall not be responsible for any
acts or omissions of the Administration Committee. Any certificate or
other instrument duly signed by the Administration Committee
purporting to evidence any instructions, direction, or order of the
Administration Committee shall be accepted by the Trustee as
conclusive proof thereof.
18.5 Reliance Upon Acts of Trustee. No person dealing with the Trustee
shall be required to verify the application by the Trustee of any
money paid or other property delivered to the Trustee, and all persons
dealing with the Trustee shall be entitled to rely upon the
representations and decisions of the Trustee as to its authority and
are released from any duty of inquiry with respect thereto. Any
action of the Trustee hereunder shall be conclusively evidenced for
all purposes of the Trust by the certification of the Trustee, and
such certificate when received by an issuing company or by any other
person, shall be conclusive evidence of the facts recited therein and
shall fully protect all persons relying upon the truth thereof. A
third person dealing with the Trustee shall not be required to make
any inquiry whether the Administration Committee has instructed the
Trustee, or whether the Trustee is otherwise authorized to take or
omit any action.
18.6 Records and Accounting of Trustee / Valuation of Plan Assets. The
Trustee shall keep proper accounts of all investments, receipts,
disbursements, and other transactions affected by it hereunder and all
accounts, books, and records relating thereto shall be open for
inspection at all reasonable times by the Administration Committee, or
any other representative designated by the Employer.
Within ninety (90) days following the Valuation Date, and at such
other interim Valuation Dates as may be requested by the
Administration Committee, the Trustee shall furnish the Administration
Committee with a detailed statement of the Plan assets for the twelve
(12) month period beginning with the previous Valuation Date of the
Plan and ending with the last day of the Plan Year.
Annual reports prepared for the Employer by the Trustee as provided in
the preceding paragraph shall reflect the fair market value of all
assets to the Employer's account as of the Valuation Date of the Plan.
Each annual report shall reflect:
(a) A detailed record of all cash receipts and disbursements for
the Plan Year.
(b) Value of all Plan assets on a cash basis held for the
Employer.
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(c) Statement of earned income on a cash basis, other than capital
gains or losses, during the preceding twelve-month period.
All such Plan assets which are listed by a recognized stock exchange
or which otherwise have a readily ascertainable market value shall be
valued by the Trustee as of the Valuation Date. Any assets held mi
the Employer's Trust account by the Trustee which do not have a
readily ascertainable market value shall be valued by the
Administration Committee as of the Valuation Date and such value
reported to the Trustee in writing. Upon the expiration of ninety
(90) days from the date of filing such annual or other account, or
upon the earlier specific approval thereof by the Administration
Committee, the Trustee, to the extent permitted by ERISA, shall be
forever released and discharged from liability and accountability to
anyone, with respect to the propriety of its accounts and transactions
shown in such accounting, except with respect to such accounts or
transactions as to which the Administration Committee shall within
such ninety (90) day period file Written objection with the Trustee or
with respect to any fraudulent act of the Trustee. Nothing herein
contained, however, shall preclude the Trustee from its right to have
any of its accounts judicially settled by a court of competent
jurisdiction.
18.7 Payment of Compensation and Expenses. The compensation of the
Trustee, payable by the Employer or directly from the Plan assets,
shall be determined by agreement wherein the Employer shall entitle
the Trustee to receive a reasonable rate of compensation for services
rendered in the performance of duties as Trustee. All reasonable
expenses necessarily incurred by the Trustee in the performance of its
duties shall also be agreed to and shall be paid by the Employer or
upon approval of the Administration Committee directly from Plan
assets. The cost of any bond required of the Trustee in accordance
with applicable laws and regulations, or as may be required by the
Administration Committee, shall be paid by the Employer or directly
from Plan assets.
18.8 Resignation or Removal of Trustee Withdrawal From Trust. The trustee
may resign as Trustee hereunder for any reason, but such resignation
shall become effective only at the expiration of thirty (30) days
after written notice thereof has been forwarded by registered mail to
the Employer and after an audit of the books and records of the
Trustee has been made under the direction of the Administration
Committee and has been approved by the Administration Committee.
At the discretion of the Employer, the Trustee may be removed as
Trustee hereunder, but such removal shall become effective only at the
expiration of thirty (30) days after the Employer delivers written
notice by registered mail to the Trustee and informs the Trustee of
the name and address of the successor trustee to which assets are to
be transferred.
18.9 Successor Trustee. If at any time the Trustee acting hereunder shall
resign or be removed, or cease to exist, a successor trustee or
successor trustees shall be appointed forthwith by the Employer.
Successor trustees may be a bank or other corporation with trust
powers organized under the laws of the United States of America or of
any State, an individual trustee, or a board of trustees. Any
successor trustee appointed hereunder
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may qualify as such by executing, acknowledging, and delivering to the
Administration Committee an instrument accepting such appointment,
whereupon such successor shall be and become vested with all the
estate, rights, powers, discretions, duties, and obligations of the
original Trustee as provided in this Plan.
18.10 Accounting Upon Resignation or Removal of Trustee. In the event of
resignation or removal of the Trustee, the Trustee shall have the
night to a full, final, and complete settlement of its account with
the Trust either (1) by agreement of settlement between the Trustee
and the Employer, or (2) if no such agreement can be reached, then by
judicial settlement in an action instituted by the Trustee in a court
of competent jurisdiction i the county where the Trustee's principal
place of business is located. Upon the making of such settlement, the
Trustee shall transfer to the successor trustee all Plan assets as
they may then be constituted, and true copies of all its records
relating to the Trust, and shall execute all documents necessary to
transfer the Plan assets to the successor trustee, and the Trustee
thereupon shall be discharged from further liability for all matters
embraced within such settlement.
18.11 Employment of Agents. The Trustee shall be empowered to employ legal,
accounting, clerical, and other assistance which may be required in
carrying out the provisions of this Plan with such expenses to be paid
by the Employer; provided, however, that the Administration Committee
may direct the Trustee to pay such expenses from Plan assets.
18.12 Employer Securities and Real Property. The Trustee shall be empowered
to acquire and hold Qualifying Employer Securities and "Qualifying
Employer Real Property," as those terms are defined in the Act,
provided, however, that the Trustee shall not be permitted to acquire
any Qualifying Employer Securities or Qualifying Employer Real
Property if, immediately after the acquisition of such securities or
property, the fair market value of all qualifying Employer securities
and qualifying Employer real property held by the Trustee hereunder
should amount to more than 100% of the fair market value of all the
assets in the Trust Fund.
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ARTICLE XIX
MISCELLANEOUS
19.1 Execution of Receipts and Releases. Any payment to any Participant,
or to his legal representative or Beneficiary, in accordance with the
provision of the Plan, shall to the extent thereof be in full
satisfaction of all claims hereunder against the Plan and Trust. The
Administration Committee may require such Participant, legal
representative, or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release therefore in such form as it
shall determine.
19.2 No Guarantee of Interest. Neither the Trustee, the Administration
Committee, the Investment Committee, nor the Employer guarantee the
Trust Fund from loss or depreciation. The Employer does not guarantee
the payment of any money which may be or becomes due to any person
from the Trust Fund. The liability of the Administration Committee
and the Trustee to make any payment from the Trust Fund is limited to
the then available assets of the Trust.
19.3 Payment of Expenses. All expenses incident to the administration,
termination, protection of the Plan and Trust, including but not
limited to legal, accounting, and Trustee fees, shall be paid by the
Employer, and until paid shall constitute a first and prior claim and
lien against the Trust Fund.
19.4 Employer Records. Records of the Employer as to an Employee's or
Participant's period of employment, termination of employment and the
reason therefore, leaves of absence, reemployment, and Compensation
will be conclusive on all persons, unless determined to be incorrect.
19.5 Interpretation and Adjustments. To the extent permitted by law, an
interpretation of the Plan and a decision on any matter within the
Fiduciary's discretion made in good faith is binding on all persons.
A misstatement or mistake of fact shall be corrected when it becomes
known and the person responsible shall make such adjustment on account
thereof as he considers equitable and practicable.
19.6 Uniform Rules. In the administration of the Plan, uniform rules will
be applied to all Participants similarly situated.
19.7 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document, or other information which the
person acting on it considers pertinent and reliable, and signed, made
or presented by the proper party or parties.
19.8 Severability. In the event any provision of the Plan shall be held to
be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions of the Plan, but shall be
fully severable and the Plan shall be construed and enforced as if the
illegal or invalid provision had never been included herein.
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19.9 Notice. Any notice to be given herein by the Trustee, the Employer,
or the Committees, shall be deemed delivered, when (a) personally
delivered, or (b) placed in the United States mails, in an envelope
addressed to the last known address of the person to whom the notice
is given.
19.10 Waiver of Notice. Any person entitled to notice under the Plan may
waive the notice.
19.11 Successors. The Plan shall be binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal
representatives, upon the Employer, its successors and assigns, and
upon the Trustee, the Committees, and their successors.
19.12 Headings. The titles and headings of Articles and Sections are
included for convenience of reference only and are not to be
considered in construction of the provisions hereof.
19.13 Governing Law. All questions arising with respect to the provisions
of this Agreement shall be determined by application of the laws of
the State of Texas except to the extent Texas law is preempted by
Federal statute.
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ARTICLE XX
TOP HEAVY PLAN PROVISIONS
20.1 Generally. For any Plan Year in which the Plan is a Top-Heavy Plan,
the requirements of Sections 20.2, 20.3 and 20.4 must be met in
accordance with section 416 of the Code and the regulations
thereunder.
20.2 Minimum Contributions. Minimum Employer contributions for a
Participant who is not a Key Employee shall be required under the Plan
for the Plan Year as follows:
(a) The amount of the minimum contributions shall be the lesser of
the following percentages of Compensation:
(1) three percent or,
(2) the highest percentage at which such contributions
are made under the Plan for the Plan Year on behalf
of a Key Employee.
(A) For purposes of this paragraph (2), all
defined contribution plans required to be
included in an Aggregation Group shall be
treated as one plan.
(B) This paragraph (2) shall not apply if the
Plan is required to be included in an
Aggregation Group and the Plan enables a
defined benefit plan required to be included
in the Aggregation Group to meet the
requirements of sections 401(a)(4) or 410 of
the Code.
(C) For purposes of this paragraph (2), the
calculation of the percentage at which
contributions are made for a Key Employee
shall be based only on his pay not in excess
of $200,000, such amount to be adjusted
annually for increases in the cost of living
in accordance with section 416(d) of the
Code.
(b) There shall be disregarded for purposes of this Section 20.2
any contributions or benefits under chapter 21 of the Code
(relating to the Federal Insurance Contributions Act), Title
II of the Social Security Act, or any other Federal or state
law.
(c) For purposes of this Section 20.2, the term "Participant"
shall be deemed to refer to all Participants who have not
separated from service at the end of the Plan Year.
20.3 Super Top-Heavy Plans. If, for any Plan Year in which the Plan is a
Top-Heavy Plan it is also a Super Top-Heavy Plan, then for purposes of
the limitations on contributions
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and benefits under section 415 of the Code, the dollar limitations in
the defined benefit plan fraction and the defined contribution
fraction shall be multiplied by 1.0 rather than 1.25. However, if the
application of the provisions of this Section 20.3 would cause any
individual to exceed the combined section 415 limitations on
contributions and benefits, then the application of the provisions of
this Section 20.3 shall be suspended as to such individual until such
time as he no longer exceeds the combined section 415 limitations
modified by this Section 20.3. During the period of such suspension,
there shall be no Employer contributions or forfeitures allocated to
such individual under this or any other defined contribution plan of
the Employer and there shall be no accruals for such individual under
any defined benefit plan of the Employer.
20.4 Termination of Service Prior to Normal Retirement Age. If during any
Plan Year a Participant has performed at least one Hour of Service for
the Employer and the Plan is a Top Heavy Plan, such Participant shall
have a non-forfeitable interest in his Accrued Benefit attributable to
his Account, should his Service with the Employer terminate prior to
Normal Retirement Age for any reason other than early retirement,
death or permanent disability, in accordance with the following
schedule:
Years of Credited Percent
Service for Vesting Purposes Vested
---------------------------- ------
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%
Notwithstanding any of the foregoing, if during any prior Plan Year
the Plan was a Top Heavy Plan and in any subsequent Plan Year the Plan
ceases to be a Top Heavy Plan, the rights of a Participant who had
performed at least one Hour of Service during the period the Plan was
a Top Heavy Plan in and to his Accrued Benefit attributable to his
Account shall not be less than his vested rights during the period
that the Plan was a Top Heavy Plan. Provided, further, any
Participant who has three (3) or more Years of Service at the
beginning of a Plan Year in which the Plan ceases to be a Top Heavy
Plan shall have the right to elect, within a reasonable time of the
beginning of the Plan Year in which the Plan ceases to be a Top Heavy
Plan, to have his nonforfeitable percentage under this Plan computed
in accordance with the schedule applicable to Plan Years in which the
Plan is a Top Heavy Plan. Any election made under this Section 20.4
shall be made in the manner specified hereunder as if such change in
vesting schedule had been made by way of an amendment.
20.5 Determination of Top Heaviness. The determination of whether a plan
is Top-Heavy shall be made as follows:
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79
(a) If the Plan is not required to be included in an Aggregation
Group with other plans, it shall be Top-Heavy only, if when
considered by itself it is a Top-Heavy Plan and it is not
included in a permissive Aggregation Group that is not a
Top-Heavy Group.
(b) If the Plan is required to be included in an Aggregation Group
with other plans, it shall be Top-Heavy only if the
Aggregation Group, including any permissively aggregated
plans, is Top-Heavy.
(c) If a plan is not a Top-Heavy Plan and is not required to be
included in an Aggregation Group, then it shall not be
Top-Heavy even if it is permissively aggregated in an
Aggregation Group which is a Top-Heavy Group.
20.6 Determination of Super Top Heaviness. A plan shall be a Super
Top-Heavy Plan if It would be a Top-Heavy Plan under the provisions of
Section 20.7, but substituting "90 percent" for "60 percent" in the
ratio test in Section 20.7.
20.7 Calculation of Top-Heavy Ratios. A plan shall be Top-Heavy and an
Aggregation Group shall be a Top-Heavy Group with respect to any Plan
Year as of the Determination Date, if the sum as of the Determination
Date of the Cumulative Accrued Benefits and the Cumulative Accounts of
Employees who are Key Employees for the Plan Year, exceeds 60 percent
of a similar sum determined for all Employees, excluding former Key
Employees.
20.8 Cumulative Accounts and Cumulative Accrued Benefits. The Cumulative
Accounts and Cumulative Accrued Benefits for any Employee shall be
determined as follows:
(a) "Cumulative Account" shall mean the sum of the amount of an
Employee's account under a defined contribution plan (for an
unaggregated plan) or under all defined contribution plans
included in an Aggregation Group (for aggregated plans)
determined as of the most recent plan Valuation Date within a
12-month period ending on the Determination Date, increased by
any contributions due after such Valuation Date and before the
Determination Date.
(b) "Cumulative Accrued Benefit" means the sum of the present
value of an Employee's accrued benefits under a defined
benefit plan (for an unaggregated plan) or under all defined
benefit plans included in an Aggregation Group (for aggregated
plans), determined under the actuarial assumptions set forth
in such plan or such plans, as of the most recent plan
Valuation Date within a 12-month period ending on the
Determination Date as if the Employee voluntarily terminated
service as of such Valuation Date.
(c) Accounts and benefits shall be calculated to include all
amounts attributable to both Employer and Employee
contributions but excluding amounts attributable to voluntary
deductible Employee contributions.
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80
(d) Accounts and benefits shall be increased by the aggregate
distributions during the five-year period ending on the
Determination Date made with respect to an Employee under the
plan or plans as the case may be or under a terminated plan
which, if it had not been terminated, would have been required
to be included in the Aggregation Group.
(e) If any Employee has not performed services for the Employer
maintaining the Plan at any time during the five-year period
ending on the Determination Date, any accrued benefit for such
Employee (and the account of such Employee) shall not be taken
into account.
(f) Rollovers and direct plan-to-plan transfers shall be handled
as follows:
(1) If the transfer is initiated by the Employee and made
from a plan maintained by one employer to a plan
maintained by another employer, the transferring plan
continues to count the amount transferred under the
rules for counting distributions. The receiving plan
does not count the amount if accepted after December
31, 1983, but does count the amount if accepted prior
to December 31, 1983.
(2) If the transfer is not initiated by the Employee or
is made between plans maintained by the Employers,
the transferring plan shall no longer count the
amount transferred and the receiving plan shall count
the amount transferred.
(3) For purposes of this subsection (f), all employers
aggregated under the rules of sections 414(b), (c)
and (in) of the Code shall be considered a single
employer.
20.9 Other Definitions. For purposes of this Article XX, the following
definitions shall apply, to be interpreted in accordance with the
provisions of section 416 of the Code and the regulations thereunder:
(a) "Aggregation Group" means a plan or group of plans which
includes all plans maintained by the Employers in which a Key
Employee is a participant or which enables any plan in which a
Key Employee is a participant to meet the requirements of Code
section 40 1 (a)(4) or Code section 410, as well as other
plans selected by the Employer for permissive aggregation,
inclusion of which would not prevent the group of plans from
continuing to meet the requirements of such Code sections.
(b) "Compensation" shall have the meaning set forth in Section
2.1(15).
(c) "Determination Date" means, with respect to any Plan Year:
(1) the last day of the preceding Plan Year, or
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81
(2) in the case of the first Plan Year of any plan, the
last day of such Plan Year.
(d) "Employee" means, for purposes of this Article XX, any person
employed by an Employer and shall also include any Beneficiary
of such person, provided that the requirement of Section 20.2
shall not apply to any person included in a unit of Employees
covered by an agreement which the Secretary of Labor finds to
be a collective bargaining agreement between Employee
representatives and one or more Employers if there is evidence
that retirement benefits were the subject of good faith
bargaining between such Employee representatives and such
Employer or Employers.
(e) "Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code section
414(b)) which includes the Employer, or any trades or
businesses (whether or not incorporated) which are under
common control (as defined in Code section 414(c)) with the
Employer, or a member of an affiliated service group (as
defined in Code section 414(m)) which includes the Employer.
(f) "Hour of Service" shall have the meaning set forth in Section
2.1(30).
(g) "Key Employee" means as of any Determination Date, any
Employee, former Employee, or Beneficiary of a former Employee
who is, at any time during the Plan Year, or was, during any
one of the four preceding Plan Years any one or more of the
following:
(1) An officer of an Employer having annual Compensation
greater than 50% of the limitation in effect under
Code section 415(b)(1)(A) for any such Plan Year,
unless 50 other such officers (or, if lesser, a
number of such officers equal to the greater of three
or ten percent of the Employees) have higher annual
Compensation.
(2) An owner (or considered an owner under Code section
318) of one of the ten largest interest in the
Employer if such individual's annual Compensation
exceeds 100 percent of the dollar [initiation in
effect under Code section 415(c)(1)(A). For purposes
of this paragraph (2), if two Employees have the same
interest, the one with the greater Compensation shall
be treated as owning the larger interest.
(3) Any person owning (or considered as owning within the
meaning of Code section 318) more than five
percent of the outstanding stock of an Employer or
stock possessing more than five percent of the total
combined voting power of such stock.
(4) A person who would be described in paragraph (3)
above if "one percent" were substituted for "five
percent" each place it appears in paragraph (3)
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 78
82
above, and who has annual Compensation of more than
$150,000. For purposes of determining ownership
under this subsection 20.9(g), Code section
318(a)(2)(C) shall be applied by substituting "five
percent" for "50 percent" and the rules of
subsections (b), (c) and (m) of section 414 of the
Code shall not apply.
(h) "Year of Service" means a year which constitutes a "Year of
Service" under the rules of paragraphs (4), (5) and (6) of
Code section 41 1 (a) to the extent not inconsistent with the
provisions of this Article XX.
(i) "Non-Key Employee" means an Employee who is not a Key
Employee.
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 79
83
ARTICLE XXI
ELIGIBLE ROLLOVER DISTRIBUTIONS
21.1 General Rule. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election under
this Article XXI, a Distributee may elect, at the time and in the
manner prescribed by the Plan Administrator, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover.
21.2 Definitions. For purposes of this Article XXI, the following
definitions shall apply, to be interpreted in accordance with the
provisions of Section 401(a)(3 1) of the Code and the regulations
thereunder:
(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:
(1) any distribution that is one of a series of
substantially equal periodic payments .(not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a
specified period of ten years or more;
(2) any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and
(3) the portion of any distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities).
(b) "Eligible Retirement Plan" means an individual retirement
account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that
accepts the Distributee's Eligible Rollover Distribution.
However, in die 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" includes an Employee or former Employee. In
addition, the Employees or former Employee's surviving Spouse
and the Employee's or former Employees Spouse or former Spouse
who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are
Distributees with regard to the interest of the Spouse or
former Spouse.
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 80
84
(d) "Direct Rollover" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
IN WITNESS WHEREOF, this Agreement has been executed this 31st day of May, 1994.
Signed, sealed, and delivered in the presence of:
SPONSOR:
HASTINGS BOOKS, MUSIC & VIDEO, INC.
By: /s/ Walter McNeer
-----------------------------------
Its: Executive Vice President
----------------------------------
ATTEST:
/s/ Steve P. Jones
- --------------------------------------
Secretary
TRUSTEE:
/s/ Susan L. Powers
- --------------------------------------
Vice President & Trust Officer
Amarillo National Bank
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 81
85
AMENDMENT ONE
TO THE
HASTINGS BOOKS, MUSIC & VIDEO, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
WHEREAS, HASTINGS BOOKS, MUSIC & VIDEO, INC. (the "Employer")
heretofore adopted the HASTINGS BOOKS, MUSIC & VIDEO, INC. EMPLOYEE STOCK
OWNERSHIP PLAN (the "Plan"); and
WHEREAS, pursuant to Section 16.2 thereof the Employer reserved the
right at any time to amend said Plan and desires to amend said Plan;
NOW THEREFORE, the Plan, effective as of June 1, 1993, is hereby
retroactively amended to June 1, 1993 as follows:
1. Section 2.1(15), Compensation, is hereby amended by adding the
following paragraph at the end of the Section as follows:
"For purposes of Section 6.7, Method of Allocating and Crediting
Contributions and Qualifying Employer Securities Released From
Collateral Suspense Accounts, Compensation does not include
commissions or bonuses paid to Employees."
2. Section 6.10, Participants to Whom Employer Contributions Will Be
Allocated, is hereby amended by adding the following paragraph at the
end of the Section as follows:
"A Participant whose employment is terminated before the end of a Plan
Year, but after he has completed 1,000 Hours of Service for the Plan
Year, shall not share in Employer contributions for the Plan Year
unless by the terminated Participants not sharing in Employer
contributions for the Plan Year, the Plan would fail to meet the
coverage requirements of Code Section 410(b)(1) for the Plan Year, in
which case members of the group of terminated Participants shall share
in Employer contributions for the Plan Year as follows: the minimum
number required to meet the coverage tests under Code Section
410(b)(1) based on their number of Hours of Service credited during
the Plan Year, ranked in descending order. If more than one
individual receives credit for the lowest number of Hours of Service
for which any individual must be covered in order to meet the coverage
tests (pursuant to the sentence above), then all individuals receiving
credit for exactly that number of Hours of Service shall share in the
allocation of Employer contributions.
IN WITNESS WHEREOF, this instrument of amendment has been executed on
this the 31st day of May, 1994, effective retroactively as provided herein, by
the Employer and the Trustees.
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 82
86
ATTEST: HASTINGS BOOKS, MUSIC & VIDEO, INC.
EMPLOYER
/s/ Gene P. Jones By: /s/ Walter McNeer
- -------------------------- ----------------------------------------
TRUSTEES:
/s/ Susan L. Powers
-------------------------------------------
Vice President & Trust officer
Amarillo National Bank
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 83
87
AMENDMENT TWO
WHEREAS, Hastings Books, Music & Video, Inc. ("Employer") heretofore
adopted the Hastings Books, Music & Video, Inc. Employees Stock Ownership Plan
(the "Plan"); and
WHEREAS, pursuant to Section 16.2 thereof the Employer reserved the
right at any time to amend said Plan and desires to amend said Plan;
NOW THEREFORE, the Plan, effective as of June 1, 1994, is hereby
retroactively amended to June 1, 1994, as follows:
1. The name of the Plan shall be changed from the "Hastings Books, Music
& Video, Inc. Employees Stock Ownership Plan" to the "Hastings Books,
Music & Video, Inc. Associates Stock Ownership Plan."
2. Section 2.1 (15) is hereby amended by adding the following paragraph
at the end of the Section as follows:
Notwithstanding any of the foregoing, for purposes of Section
6.7, Method of Allocating and Crediting Contributions and
Qualifying Employer Securities Released From Collateral
Suspense Accounts, Compensation includes only base pay and
excludes commissions, bonuses, moving expenses, health club
dues, and executive medical reimbursement, and other similar
perquisites, however, 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 medial 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.
2. Section 2.1 (55), Valuation Date, is hereby revised to the following
language:
"January 31 of each year."
3. Section 7.10 (39) Plan Year is hereby revised to the following
language:
"The Fiscal Year of the Plan, ending on the 31st day of
January."
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 84
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IN WITNESS WHEREOF, this instrument of amendment has been executed on
this the 31st day of May, 1994, effective retroactively as provided herein, by
the Employer and the Trustees.
ATTEST: HASTINGS BOOKS, MUSIC & VIDEO, INC.
EMPLOYER
/s/ Gene P. Jones By: /s/ Walter McNeer
- ----------------------------- -------------------------------
TRUSTEES:
/s/ Susan L. Powers
----------------------------------
Vice President & Trust officer
Amarillo National Bank
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 85
89
THIRD AMENDMENT TO THE
HASTINGS BOOKS, MUSIC & VIDEO, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST AGREEMENT
This Third Amendment to the Hastings Books, Music & Video, Inc.
Employee Stock Ownership Plan and Trust Agreement (the "ESOP") is hereby made
and entered into this 22nd day of May , 1996, by Hastings Books, Music &
Video, Inc. (the "Employer").
WITNESSETH:
WHEREAS, the Plan was originally established effective June 1, 1993;
WHEREAS, Section 16.2 of the Plan permits the Employer to amend the
Plan at anytime; and
WHEREAS, it is necessary to amend the Plan in order to receive a
favorable determination letter from the Internal Revenue Service;
NOW THEREFORE, the Plan is hereby amended by replacing Section 2.1(15)
in its entirety with the following:
"(15) Compensation. Includes amounts accrued to a Participant as
wages, salaries, fees for professional services, and other
amounts received for personal services actually rendered in
the course of employment with the Employer as an Employee to
the extent that such amounts are includible 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, bonuses,
fringe benefits, reimbursement or other expenses under a
nonaccountable plan (as described in Section 1.62-2(c) of the
Income Tax Regulations)). The term "Compensation" shall also
include, in the case of a Participant who is an employee
within the meaning of Section 401(c) of the Code, the
Participants earned income (as described in Section 401(c)(2)
of the Code) (determined without regard to any exclusions from
gross income similar to those in Sections 931 and 933 of the
Code); any foreign earned income as defined under Section
911(b) of the Code, regardless of whether such income is
excludable from the gross income of the Employee under Section
911 of the Code; amounts described in Code Sections 104(a)(3),
105(a) and 105(h), but only to the extent that these amounts
are includible in the gross income of the Participant; amounts
paid or reimbursed by the Employer for moving expenses
incurred by the Participant, but only to the extent that these
amounts are not deductible by the Participant under Code
Section 217; the value of a nonqualified stock option granted
to the Participant by the Employer, but only to the extent
that the value of the option is includible in the gross income
of the Participant for the taxable year when granted; and the
amount includible in the gross income of the Participant upon
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 86
90
making an election described in Section 83(b) of the Code.
The term "compensation" shall exclude the following:
(i) other contributions made by the Employer to a plan of
deferred compensation to the extent that, before the
application of the Code Section 415 limitations to
that plan, the contributions are not includible in
the gross income of the Participant for the taxable
year in which contributed;
(ii) Employer contributions made on behalf of a
participant to a simplified employee pension plan
described in Code Section 408(k) are not considered
as Compensation for the taxable year in which
contributed to the extent such contributions are
excludable by the Participant from gross income under
Code Section 408(k)(6);
(iii) Any distributions from a plan of deferred
compensation are not considered as Compensation,
regardless of whether such amounts are includible in
the gross income of the Participant when distributed.
However, any amounts receive d by a Participant
pursuant to an unfunded nonqualified plan shall be
considered as Compensation in the year such amounts
are includible in the gross income of the
Participant;
(iv) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by an employee either becomes freely
transferable or is no longer subject to a substantial
risk of forfeiture (pursuant to Code Section 83 and
regulations thereunder);
(v) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(vi) Other amounts that receive special tax benefits such
as premiums for group term life insurance (but only
to the extent that the premiums are not includible in
the gross income of the Employee), or contributions
made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of a 403(b)
annuity contract (whether or not the contributions
are excludable from the gross income of the
Participant).
Compensation for any Limitation Year is the compensation
actually paid or includible in gross income during such year.
For the purposes of a contribution or an allocation under the
Plan based on Compensation, Compensation shall only include
amounts actually paid an Employee during the period he is a
Participant for services performed as a Covered Employee.
Compensation, for purposes of a contribution or allocation
under the Plan, shall not include wages required to be
recognized by the federal government for the personal use of a
Company automobile or wages paid as an automobile allowance.
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 87
91
Notwithstanding the above, Compensation shall include any
amount which is contributed by the Employer pursuant to a
salary reduction agreement and which is not includible in the
gross income of the Employee under Sections 125, 402(a)(8),
402(h) or 403(b) of the Code. However, for purposes of
Section 6.14, in the determination of Compensation in
connection with the limitation on Annual Additions under Code
Section 415, this paragraph should be disregarded.
Notwithstanding the foregoing, the annual Compensation of a
Participant in excess of $200,000 shall be disregarded under
the Plan. This dollar limitation shall be adjusted by the
Secretary of the Treasury at the same time and in the same
manner as provided under Section 415(d) of the Code.
In applying the dollar limitation provided herein, the family
group of a Highly Compensated Participant who is subject to
the Family Member aggregation rules of Section 414(q)(6) of
the Code because such Participant is either a "five percent
owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation"
during the year, shall be treated as a single Participant,
except that for this purpose Family Members shall include only
the affected Participants spouse and any lineal descendants
who have not attained age nineteen (19) before the close of
the year. It as a result of the application of such rules,
the adjusted $200,000 limitation is exceeded, then the
limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as
determined under this Section prior to the application of this
limitation.
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to
the contrary, for Plan Years beginning on or after January 1,
1994, the annual Compensation of each Employee taken into
account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the
cost of living in accordance with Section 401(a)(17)(B) of the
Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over
which Compensation is determined (determination period)
beginning in such calendar year. If a determination period
consists of fewer than 12 months, the OBRA '93 annual
compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section
401(a)(17) of the Code shall means the OBRA '93 annual
compensation limit set forth in this provision.
If Compensation for any prior determination period is taken
into account in determining an employee's benefits accruing in
the current Plan Year, the Compensation for that prior
determination period is subject to OBRA '93 annual
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 88
92
compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit
is $150,000.
For purposes of Section 6.7, Method of Allocating and
Crediting Contributions and Qualifying Employer Securities
Released From Collateral Suspense Accounts, Compensation does
not include commissions or bonuses paid to Employees.
Notwithstanding any of the foregoing, for purposes of Section
6.7, Method of Allocating and Crediting Contributions and
Qualifying Employer Securities Released From Collateral
Suspense Accounts, Compensation includes only base pay and
excludes commissions, bonuses, moving expense, health club
dues, and executive medical reimbursement, and other similar
perquisites, however, 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.
"Section 4.4 shall be amended by replacing the Section in its entirety as
follows:
"4.4 Return of Employer Contributions. In the event that the
Commissioner of Internal Revenue determines that the Plan is not
initially qualified under the Code, any contribution made incident to
that initial qualification by the Employer must be returned to the
Employer within one year after the date the initial qualification is
denied, but only if the application for the qualification is made by
the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as the
Secretary of the Treasury may prescribe.
All contributions made pursuant to this Article IV are conditioned on
deductibility of such contributions under Code Section 404 for any
year is disallowed, the contribution shall be returned to the Employer
within one year after disallowance of the deduction.
If a contribution is made by an Employer by a mistake of fact, the
contribution may be returned to the Employer within one year after the
payment of the contribution.
Notwithstanding the above, earnings attributable to amounts described
in paragraphs two and three of this Section 4.4 shall not be returned
to the Employer; losses attributable to such amounts shall reduce the
amount returned."
Section 20.2(a)(2)(C) shall be amended by adding the following after the last
paragraph:
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 89
93
"In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary,
for Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93
annual compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Section
401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months,
over which Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer
than. 12 months, the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is
12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall
means the OBRA '93 annual compensation limit set forth in this
provision.
If Compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current
Plan Year, the Compensation for that prior determination period is
subject to OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods
beginning before the first day of the first Plan Year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000."
IN WITNESS WHEREOF, Hastings Books, Music & Video, Inc. has executed
this Third Amendment.
ATTEST:
Hastings Books, Music & Video, Inc.
/s/ C.W. Millikin /s/ Jeffery D. Sumpter
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Corporate Controller, Asst. Secretary, Asst. Treasurer
Asst. Secretary, Asst. Treasurer & Corporate Tax Manager
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Hastings Books, Music & Video, Inc. Employee Stock Ownership Plan Page 90