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EXHIBIT 10.32
TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN
AS AMENDED AND RESTATED
EFFECTIVE APRIL 1, 1999
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TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN
TABLE OF CONTENTS
Page
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ARTICLE I - NAME AND EFFECTIVE DATE ......................................................... 1
1.01 Name of Plan .................................................................. 1
1.02 Trust ......................................................................... 1
1.03 Trustee ....................................................................... 1
1.04 Trust Fund .................................................................... 1
1.05 Effective Date ................................................................ 2
1.06 Plan Year ..................................................................... 2
1.07 Inactive 401(k) Feature ....................................................... 2
ARTICLE II - ADMINISTRATION ................................................................. 2
2.01 Appointment of Administrative Committee ....................................... 2
2.02 Term of Office of Committee Members ........................................... 2
2.03 Powers and Duties ............................................................. 2
2.04 Organization and Operation of the Committee ................................... 3
2.05 Records and Reports ........................................................... 4
2.06 Indemnification ............................................................... 4
ARTICLE III - ELIGIBILITY ................................................................... 4
3.01 Conditions of Eligibility ..................................................... 4
3.02 Application for Participation ................................................. 4
3.03 Definition of Employee ........................................................ 5
3.04 Definition of Year of Service ................................................. 5
3.05 Break in Service - Participation .............................................. 8
ARTICLE IV - CONTRIBUTIONS .................................................................. 8
4.01 Participants' Contributions ................................................... 8
4.02 Collection and Payment of Participant's Contributions ......................... 9
4.03 Company Contributions ......................................................... 9
4.04 Insufficient Profits .......................................................... 9
4.05 Limitation on Annual Addition ................................................. 9
4.06 Annual Addition ............................................................... 10
4.07 Aggregation of Plans .......................................................... 10
4.08 Elimination of Excess Annual Additions ........................................ 11
4.09 Conclusiveness of Determination of Company Contributions....................... 13
4.10 Suspension of Contributions ................................................... 13
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4.11 Non-forfeitability, Reversion and Diversion of Company Contributions........... 13
4.12 Defined Contribution Plan ..................................................... 14
4.13 Actual Contribution Percentage Test ........................................... 14
ARTICLE V - ALLOCATION AND VALUATION ........................................................ 17
5.01 Establishment of Participants' Accounts ....................................... 17
5.02 Allocation and Crediting of Participant Contributions ......................... 17
5.03 Allocation and Crediting of Company Contributions ............................. 17
5.04 Allocation and Crediting of Investment Experience ............................. 18
5.05 Valuation of the Trust Fund ................................................... 19
5.06 Notice to Participants of Account Balances .................................... 19
5.07 Good Faith Valuation Binding .................................................. 19
5.08 Errors and Omissions in Accounts .............................................. 19
ARTICLE VI - VESTING AND DISTRIBUTION OF BENEFITS ........................................... 19
6.01 General Provisions ............................................................ 19
6.02 Retirement .................................................................... 19
6.03 Valuation of Participant's Account ............................................ 20
6.04 Special Distributions of Participant's Account During Employment .............. 20
6.05 Manner and Media of Payment of Benefits ....................................... 21
6.06 Other Termination of Employment ............................................... 22
6.07 Distributions Under Domestic Relations Orders ................................. 22
6.08 Date of Payment ............................................................... 24
6.09 Commencement of Distributions ................................................. 24
6.10 Required Distributions ........................................................ 26
6.11 Beneficiary Designation ....................................................... 27
6.12 No Beneficiary Designation .................................................... 27
6.13 Exercise of Voting Rights and Tender Rights ................................... 27
6.14 Direct Rollover of Eligible Rollover Distributions ............................ 29
ARTICLE VII - TRUST AND TRUSTEE ............................................................. 29
7.01 Establishment and Acceptance of Trust ......................................... 29
7.02 Investment of the Trust Fund .................................................. 30
ARTICLE VIII - TOP HEAVY RULES .............................................................. 30
8.01 Minimum Employer Contribution ................................................. 30
8.02 Additional Contribution ....................................................... 30
8.03 Determination of Top Heavy Status ............................................. 31
8.04 Definitions ................................................................... 31
ARTICLE IX - AMENDMENT AND TERMINATION ...................................................... 32
9.01 Amendment ..................................................................... 32
9.02 Termination ................................................................... 32
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ARTICLE X - MISCELLANEOUS.................................................................... 33
10.01 Notices and Forms ............................................................ 33
10.02 Plan Not an Employment Contract .............................................. 33
10.03 Prohibition Against Alienation ............................................... 33
10.04 Unclaimed Account Procedure .................................................. 33
10.05 Conflicting Claims ........................................................... 34
10.06 Multiple Copies .............................................................. 34
10.07 Gender and Number ............................................................ 34
10.08 Construction of Plan ......................................................... 35
10.09 Special Rules Relating to Veterans Re-Employment Rights under USERRA ......... 35
ARTICLE XI - ADOPTION OF THE PLAN BY AFFILIATED AND ASSOCIATED
COMPANIES AND RELATION TO OTHER PLANS ....................................................... 35
11.01 Method of Adoption ........................................................... 35
11.02 Receipt of Participants' Accounts from Other Plans ........................... 36
11.03 Receipt of Funds from Acquired Company's Plans ............................... 36
11.04 Merger or Consolidation....................................................... 36
ARTICLE XII - CLAIMS PROCEDURE .............................................................. 37
12.01 Claims Procedure ............................................................. 37
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TANDY BRANDS ACCESSORIES, INC.
EMPLOYEES INVESTMENT PLAN
PREAMBLE
WHEREAS, TANDY BRANDS ACCESSORIES, INC., a corporation formed under the
laws of the State of Delaware (the "Company") previously adopted a stock bonus
plan, effective as of January 1, 1991, which was spun off from the Tandy Brands
Employees Investment Plan maintained by The Bombay Company, Inc. (formerly Tandy
Brands, Inc.) when the Company became an independent, publicly traded
corporation (the "Prior Plan"); and
WHEREAS, the Company now desires to amend and restate the Prior Plan to
add an inactive cash or deferred feature (which may be activated by resolution
of the Board of Directors of the Company at a later date), to incorporate
amendments which have previously been made, and to modify provisions of the plan
to the extent necessary to comply with recent legislation, including the Small
Business Job Protection Act of 1996 and the Taxpayer Relief Act of 1997;
NOW, THEREFORE, in consideration of the premises and to carry out the
purposes and intent as set forth above, said Prior Plan is hereby restated,
retitled, and amended in its entirety, superseded and replaced by this separate,
restated Tandy Brands Accessories, Inc. Employees Investment Plan, effective
April 1, 1999, except as otherwise specifically noted herein. There will be no
gap or lapse in time or effect between such Plans and the existence of a
qualified Plan shall be continuous and uninterrupted.
The terms and conditions of this restated Tandy Brands Accessories,
Inc. Profit Sharing and 401(k) Plan are as follows:
ARTICLE I
NAME AND EFFECTIVE DATE
1.01 Name of Plan: The Plan herein created shall be known as the "Tandy
Accessories, Inc. Employees Investment Plan."
1.02 Trust: The trust established to hold and invest contributions made
under the Plan for the exclusive benefit of the Participants included in the
Plan from which the benefits will be distributed.
1.03 Trustee: The qualified and acting trustee or trustees under the
Trust, who shall be the fiduciary or fiduciaries designated to invest and manage
the Plan assets and to operate and administer the Trust Fund.
1.04 Trust Fund: All assets of whatsoever kind or nature held from time
to time by the Trustee in the Trust, without distinction as to income and
principal and without regard to source.
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1.05 Effective Date: This Plan shall be effective as of April 1, 1999,
unless otherwise set forth hereinafter.
1.06 Plan Year: The Plan Year shall be the twelve (12) month period
ending each June 30.
1.07 Inactive 401(k) Feature: The Plan is amended to add an inactive
salary reduction contribution feature under section 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code"). The 401(k) feature may be
activated by resolution of the Board of Directors of the Company. At such time,
the Plan will be amended to include the specific provisions implementing the
401(k) feature, including provisions controlling salary deferral contributions,
discretionary matching contributions made by the Company on account of such
salary deferral contributions, nondiscrimination testing provisions, and such
other language or provisions as are required under section 401(k) or section
401(m) of the Code or integral thereto.
ARTICLE II
ADMINISTRATION
2.01 Appointment of Administrative Committee: The Company shall appoint
a committee to be known as the "Administrative Committee", hereinafter referred
to as the "Committee," to administer the Plan. This Committee shall consist of
three members who shall not necessarily be employees of the Company. The Company
shall advise the Trustee of the names of the members of the Committee, and the
Trustee shall be entitled to rely thereon until similarly advised of a change in
the membership of the Committee.
2.02 Term of Office of Committee Members: Each member of the Committee
shall hold office until his death, disability, resignation or removal from
office. Any member of the Committee may be removed by the Company at its
pleasure. Any Committee member may resign by delivering his written resignation
to the Company and to the Committee. Vacancies in the Committee arising from any
cause whatsoever shall be filled by the Company.
2.03 Powers and Duties: The Committee shall administer the Plan in
accordance with its terms, and shall have all powers necessary to carry out the
provisions of the Plan. Without limiting the generality of the foregoing, the
Committee shall have the following powers:
(a) To make and publish such rules and regulations as it may deem
necessary and to carry out the provisions of the Plan;
(b) To determine all questions arising in the administration,
interpretation and application of the Plan, including questions of
eligibility of Employees and of the status and rights of Participants,
beneficiaries and any other person hereunder;
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(c) To direct the investment and reinvestment of the Trust Fund
and the income therefrom, as more particularly specified hereinafter;
(d) To authorize all disbursements by the Trustee from the Trust
Fund;
(e) To decide any dispute arising hereunder;
(f) To construe the provisions of the Plan and to correct any
defects therein;
(g) To provide procedures for determination of claims for
benefits; and
(h) To take any and all further actions from time to time as the
Committee, in its sole and absolute discretion, shall deem necessary
for the proper administration of the Plan.
The Committee shall have full and absolute discretion in the exercise
of each and every aspect of its authority under this Plan, including, without
limitation, all of the rights, powers and authorities specified in this Section
2.03. The determination of the Committee as to any question arising hereunder
shall be conclusive and binding on all persons.
2.04 Organization and Operation of the Committee: The Committee shall
act by a majority of its members at the time in office and such action may be
taken either by a vote at a meeting or in writing without a meeting; however, a
Committee member shall not vote on any question relating specifically to
himself, but any necessary action regarding such Committee member shall be
decided by the remaining members of the Committee. In the event the remaining
members of the Committee are unable to agree upon the disposition of any such
questions, the Company shall appoint another person eligible for membership on
the Committee to serve as a temporary member for the purpose of reaching a
decision on the matter in issue. Such matters shall then be determined by a
majority of the Committee, including said temporary member.
The Committee may authorize any one or more of its members to execute
any document or documents on behalf of the Committee, in which event the
Committee shall notify the Trustee in writing of such action and the names of
its members so designated. The Trustee thereafter shall accept and rely upon any
document executed by such member or members as representing action by the
Committee until the Committee shall file with the Trustee a written revocation
of such designation.
The Committee may adopt such by-laws and regulations as it deems
desirable for the conduct of its affairs, and may appoint such accountants,
counsel, specialists, and other persons as it deems necessary or desirable in
connection with the administration of the Plan. Such accountants and counsel
may, but need not, be accountants and counsel for the Company. The Committee
shall be entitled to rely conclusively upon, and shall be fully protected in,
any action taken by it in good faith in relying upon any opinions or reports
which shall be furnished to it by any such accountant, counsel, or other
specialist.
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The Committee and the Trustee may by agreement in writing arrange for
the Committee to perform any of the Trustee's ministerial functions, including
but not limited to the maintenance of records of account of each Participant and
determination of value of each Participant's Account.
The Company may furnish the Committee with such clerical assistance on
a full or part time basis as shall from time to time be reasonable or desirable
to assist in the administration of the Plan, and shall pay all costs and
expenses, including Trustee's fees and expenses, incurred in the administration
of the Plan, save and except those costs and expenses, including attorneys'
fees, which are charged to the accounts of Participants by a court of competent
jurisdiction in any litigation in which the Plan or any of its fiduciaries are a
party.
2.05 Records and Reports: The Committee shall keep a record of all its
proceedings and acts, and shall keep all such books of account, records, and
other data as may be necessary for the proper administration of the Plan. The
Committee shall notify the Trustee and the Company of any action taken by the
Committee, and, when required, shall notify any other interested person or
persons. The Committee will specifically maintain separate records as to the
total Participants, contributions, the Company's contributions, and the total
value of each Participant's account. Within a reasonable period of time after
the end of each calendar quarter, the Committee shall notify each Participant of
his total account value which will include the Participant's contribution and
the Company's contribution.
2.06 Indemnification: The Company shall to the extent permitted by law,
indemnify each member of the Committee against any and all claims, losses,
damages, expenses, liabilities, including any amounts paid in settlement with
approval, arising from any action or failure to act that constitutes or is
alleged to constitute a breach of such person's responsibilities in connection
with the Plan under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or any other law, unless the same is judicially determined to
be due to the gross negligence, willful misconduct or willful failure to act of
such member. The Committee may, at its discretion, require the written approval
or disapproval of the Company prior to taking any action in any particular
matter made the subject of its responsibility hereunder.
ARTICLE III
ELIGIBILITY
3.01 Conditions of Eligibility: Any Employee on the Effective Date who
was a Participant in the Prior Plan shall continue to be a Participant in the
Plan. Any Employee who completes two (2) Years of Service with the Company,
subsequent to the Effective Date of this Plan, shall be eligible to participate
in the Plan as of the first payroll period following the completion of service
as above specified.
3.02 Application for Participation: In order to become a Participant
hereunder, each eligible Employee shall execute a written application, on a form
to be furnished by the Committee, wherein he shall evidence:
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(a) his intent to participate in the Plan;
(b) his consent to make Participant Contributions to the Trust
Fund in accordance with Article IV, Section 4.01(a) of this Plan; and
(c) his consent that such contributions be withheld by the Company
from his gross salary and wages at each pay period.
Once an employee has completed the necessary service for participation
in the Plan, he may file an application for participation at any time
thereafter. His participation in the Plan shall not become effective, however,
until the start of the next pay period after the application with his signature
is received by the Company.
3.03 Definition of Employee: "Employee" shall mean any individual
employed by the Company, including any U.S. citizen employed by any foreign
affiliated or associated company. As used above "Employee" shall also include,
without limitation, any salesman who is an Employee of the Company and
recognized as such for Social Security purposes. The term Employee shall not
include:
(a) An individual who is a nonresident alien who receives no
earned income from the Company which constitutes income from sources
within the United States;
(b) An individual who is a member of a collective bargaining unit,
unless the terms of the collective bargaining agreement between the
Company and the bargaining unit require that the individual be eligible
to participate in the Plan;
(c) An individual classified as an independent contractor or
leased employee under the Company's customary worker classification
procedures (whether or not such individual is actually an employee); or
(d) An individual employed by an employer that is affiliated or
associated with the Company, unless such employer has adopted the Plan
as a Participating Company pursuant to Section 11.01.
3.04 Definition of Year of Service: A Year of Service means an
Eligibility Computation Period during which the Employee has not less than one
thousand (1,000) Hours of Service.
(a) Employment Commencement Date: An Employee's Employment
Commencement Date is the first day for which the Employee is entitled
to be credited with an Hour of Service described in subsection (c)
below.
(b) Eligibility Computation Period: An Eligibility Computation
Period means a twelve (12) consecutive month period commencing on an
Employee's Employment
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Commencement Date, or any anniversary thereof, whether before or after the
Effective Date. In the case of an Employee who incurs one or more Breaks in
Service, the Eligibility Computation Period after the last such Break in Service
shall commence on the first day for which he is credited with an Hour of Service
after the last such Break in Service, and any anniversary thereof.
(c) Hour of Service: Each hour connected with a person's service,
either before or after the Effective Date, for an Employer and described in one
or more of the paragraphs (1) through (3) below, subject to the provisions of
paragraphs (4) and (5).
(1) Each hour for which such person is paid, or entitled to be
paid, for the performance of duties during the applicable period, shall
be an Hour of Service.
(2) Each hour for which such person is paid, or entitled to be
paid, by an Employer on account of a period of time during which such
person performs no duties, even if the employment relationship has
terminated, due to vacation, holiday, illness, incapacity, disability,
layoff, jury duty, military duty, or leave of absence, shall be an Hour
of Service. Notwithstanding the foregoing sentence,
(A) Not more than 501 hours shall be credited under this
paragraph (2) to such person on account of any single continuous
period during which he performs no duties;
(B) No hours shall be credited under this paragraph (2) on
account of hours for which such person is paid or entitled to be
paid under a plan maintained solely for the purpose of complying
with applicable workmen's compensation, unemployment compensation,
or disability insurance laws; and
(C) No hours shall be credited on account of a payment to
such person solely as reimbursement for medical or related
expenses incurred by such person.
Only for purposes of this paragraph (2), a payment shall be deemed
to be made by or due from the Employer directly, or indirectly through
a trust, fund, insurer, or other entity, to which the Employer
contributes or pay premiums, and regardless of whether such
contributions are for the benefit of particular employees or a group of
employees in the aggregate.
(3) With respect to periods either before or after the Effective
Date during which no duties were performed, each hour for which back
pay is awarded or agreed to by an Employer shall be an Hour of Service,
regardless of any mitigation of
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damages. However, any such hours with respect to periods described in
paragraph (2) shall be subject to all of the limitations set forth in
paragraph (2).
(4) Notwithstanding paragraphs (1) through (3) of this subsection
(c), no hour shall be credited more than once as an Hour of Service.
The number of hours credited for reasons other than the performance of
duties, and the crediting of Hours of Service to computation periods,
shall be determined in accordance with 29 C.F.R. Section 2530.200b-
2(b)-(c).
(5) Solely for purposes of determining whether the Employee incurs
a Break in Service under any provision of this Plan, the Committee
shall credit Hours of Service during an Employee's unpaid absence
period due to maternity or paternity leave. The Committee shall
consider an Employee on maternity or paternity leave if the Employee's
absence is due to the Employee's pregnancy, the birth of the Employee's
child, the placement with the Employee of an adopted child, or the care
of the Employee's child immediately following the child's birth or
placement. The Committee shall credit Hours of Service under this
paragraph on the basis of the number of Hours of Service the Employee
would receive if he were paid during the absence period or, if the
Committee cannot determine the number of Hours of Service the Employee
would receive, on the basis of eight (8) hours per days during the
absence period. The Committee shall credit only the number of Hours of
Service (up to 501 Hours of Service) necessary to prevent an Employee's
Break in Service. The Committee shall credit all Hours of Service
described in this paragraph to the computation period in which the
absence period begins, or, if the Employee does not need these Hours of
Service to prevent a Break in Service in the computation period in
which his absence period begins, the Committee shall credit these Hours
of Service to the immediately following computation period. The
Committee shall apply this paragraph for absence periods which begin in
Plan Years commencing after December 31, 1984.
(d) Exclusion From Break-in-Service: An Employee's service shall not be
deemed to be broken during such period as the Employee shall be:
(1) on military leave; or
(2) on other leave of absence authorized by the Company for
sickness, disability, or other circumstances, granted in accordance
with an established and uniformly applied Company policy; or
(3) laid off in Order to effect a temporary reduction in
personnel, provided such Employee shall be re-employed within three
hundred sixty-five (365) days after such layoff.
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(e) For purposes of this Section 3.04, the "Employer" shall mean
(1) the Company; (2) any other corporation that is a member of a
controlled group of corporations, within the meaning of section 414(b)
and (c) of the Code; (3) any member of an affiliated service group
under section 414(m) of the Code; and (4) any other entity required to
be aggregated under section 414(o) of the Code. Service credited under
the Prior Plan shall be included as service under the Plan. In
addition, service for an organization that has been acquired by Tandy
Brands Accessories, Inc., before it is so acquired, shall be treated as
service for the Employer. Any service for Tandy Brands, Inc. (now known
as The Bombay Company, Inc.) before January 1, 1991 shall be treated as
service for the Employer.
3.05 Break in Service-Participation: An Employee shall incur a "Break
in Service" if during any Eligibility Computation Period, as defined in Section
3.04(b), he does not complete more than five hundred (500) Hours of Service. An
Employee who incurs a "Break in Service" after completing one or more Years of
Service but before becoming eligible to participate in the Plan shall be
eligible to participate in the Plan after completing one additional Year of
Service after he becomes an Employee. A Participant whose employment terminates
and who is subsequently reemployed may reenter the Plan as a Participant by
complying with the procedure set forth in Section 3.02 hereof. In such event,
his participation in the Plan shall become effective as of the first pay period
following the date on which the application with his signature is received by
the Company.
ARTICLE IV
CONTRIBUTIONS
4.01 Participants' Contributions:
(a) Qualifying contributions. Each Participant shall contribute to
the Trust Fund under the Plan "qualifying contributions" in an amount
equal to five percent (5%) of his gross salary and wages. All
Participant Contributions are non-forfeitable and fully vested, being
held in trust for the account of the Participant or his beneficiary.
(b) Gross Salary and Wages. For purposes of this Plan, the term
"gross salary and wages" is defined as all compensation paid in cash,
including bonuses, which is includable in gross income as provided for
under section 414(s) of the Code and is subject to withholding on IRS
Form W-2, plus any payments to the Company's cafeteria plan under
section 125 of the Code. The term "gross salary and wages" specifically
does not include any contributions made under the Tandy Brands
Accessories Stock Purchase Program which are used to purchase stock for
a participating Employee and are included in such W-2 form as referred
to above. Effective for Plan Years beginning on or after January 1,
1989 and before January 1, 1994, "gross salary and wages" shall not
exceed $200,000, as adjusted by the Secretary of the Treasury for
increases in the cost of living at the time and in the manner set forth
in section 415(d) of the Code. Effective for Plan Years beginning on or
after January 1, 1994, "gross salary and wages" shall not exceed
$150,000, as adjusted by the
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Secretary of the Treasury for increases in the cost of living at the
time and in the manner set forth in section 401(a)(17)(B) of the Code.
On or before June 30,1997, in determining the gross salary and wages of
a Participant for purposes of this limitation, the rules of section
414(q)(6) of the code shall apply, except in applying such rules, the
term "family" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19
before the close of the year. If, as a result of the application of
such rules, the adjusted limitation is exceeded, then the limitation
shall be prorated among the affected individuals in proportion to each
such individual's gross salary and wages as determined under this
Subsection (b) prior to the application of this limitation. On or after
July 1, 1997, the family aggregation rules required by section
414(q)(6) of the Code shall not apply.
4.02 Collection and Payment of Participant's Contributions: The Company
shall withhold and deduct on each regular pay day from each Participant's gross
salary and wages that percentage of same which constitutes such Participant's
Contributions to the Trust Fund, as set forth in Section 4.01 hereof. The
Company shall pay over to the Trustee all such contributions of Participants
within thirty (30) days following the calendar month in which such contributions
shall have been deducted and withheld. In the event a Participant withdraws from
the Plan, and his contributions for the calendar month preceding the time of his
withdrawal have been withheld from his gross salary and wages, but have not been
paid over the Trustee, then the Company shall refund to such withdrawing
Participant the amount of his contribution so withheld and not paid over to the
Trustee.
4.03 Company Contributions: Within thirty (30) days following each
calendar quarter, the Company shall contribute out of its current or accumulated
earnings and profits and pay over to the Trustee on behalf of each Participant,
in addition to the contributions described in subsection (a) of Section 4.01, an
amount calculated in accordance with Section 5.03, provided that in the case of
withdrawal from the Plan by a Participant within a calendar quarter, the Company
shall not be required to contribute to the Trust Fund under this Section 4.03 on
behalf of the withdrawing Participant for the calendar quarter in which such
withdrawal occurs.
4.04 Insufficient Profits: In the event the Company should not have
sufficient current earnings or profits or be operating at a loss currently and
thus be unable to pay its full contributions to the Plan, then such
contributions, if any, that it shall be able to make shall be allocated among
all Participants in proportion to the contributions that would be made on their
behalf in the absence of the limitation to current earnings or profits. For
purposes of this Section 4.04, current or accumulated earnings and profits shall
be determined as of the end of each Plan Year, in accordance with generally
accepted accounting principles but without regard to any deduction for
contributions to this Plan or any other qualified plan under section 401 (a) of
the Code.
4.05 Limitation on Annual Addition: The Plan Year shall be the
limitation year of this Plan for purposes of section 415 of the Code. The Annual
Addition to a Participant's Account for a Plan Year shall not exceed his Maximum
Annual Addition, which after December 31, 1983, shall be the lesser of:
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(a) Twenty-five percent (25%) of such Participant's Compensation
during the Plan Year; or
(b) $30,000.00 or beginning after January 1, 1988, such amount as
adjusted from time to time under section 415(c)(1) of the Code and
section 1.415-6(d) of the Treasury Regulations, and in effect for the
calendar year in which the Plan Year ends.
4.06 Annual Addition: For purposes of Section 4.05, the Annual
Additions are the sum of the following amounts allocated on behalf of a
Participant for a limitation year:
(a) All Company contributions;
(b) all forfeitures;
(c) all Participant nondeductible contributions (provided that the
Annual Additions for any limitation year beginning before January 1,
1987 shall not be recomputed to treat all Participant nondeductible
contributions as Annual Additions); and
(d) amounts allocated after March 31, 1984, to an individual
medical benefit account, as defined in section 415 (1)(2) of the Code
which is part of a pension or annuity plan maintained by the Employer,
and amounts derived from contributions paid or accrued after December
31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in section 419A(d)(3) of
the Code) under a welfare benefit plan (as defined in section 419(e) of
the Code) maintained by the Employer.
4.07 Aggregation of Plans: For purposes of determining a Participant's
Annual Addition under Section 4.06 and his Maximum Annual Addition under Section
4.05, the following special rules shall apply:
(a) "Company Contributions" shall include all Employer
contributions allocated to the Account of the Participant for the
limitation year in this and any other defined contribution plan
maintained by an Employer.
(b) "Participant Contributions" shall include all contributions
made by the Participant for the limitation year to this Plan and any
other defined contribution plan maintained by an Employer.
(c) "Compensation" shall mean the total of a Participant's earned
income, wages, salaries, and fees for personal services and other
amounts received for personal services actually rendered in the course
of employment with the Employer maintaining the Plan (including, but
not limited to, commissions paid salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance
premiums, tips, and bonuses and
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in the case of a Participant who is an Employee within the meaning of
section 401(c)(1) of the Code and the regulations thereunder, the
Participant's earned income as described in section 401(c)(2) of the
Code and the regulations thereunder), and excluding the following: (1)
Employer contributions to a Plan of deferred compensation which, before
application of limitations under section 415 of the Code, are not
included in the Employee's gross income for the taxable year in which
contributed or Employer contributions under a simplified employee
pension plan to the extent such contributions are not included in the
gross income of the Employee or any distributions from a plan of
deferred compensation regardless of whether such amounts are includable
in the gross income of the Employee when distributed, except any amount
received by the Employee pursuant to an unfunded, non-qualified plan to
the extent such amounts are includable in gross income of the Employee;
(2) amounts realized from the exercise of a non-qualified stock option
or when restricted stock (or property) held by the Employee becomes
either freely transferable or is no longer subject to a substantial
risk of forfeiture; (3) amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option; and
(4) other amounts which receive special tax benefits, such as premiums
for group term life insurance, but only to the extent the premiums are
included 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 an annuity described in section 403(b) of the
Code (whether or not the amounts are actually excluded from gross
income of the Employee). For Plan Years beginning after June 30, 1989 a
Participant's Compensation shall be limited to $200,000.00 (unless
adjusted in the manner permitted under section 415(d) of the Code). For
limitation years beginning on or after July 1, 1998, Compensation shall
include any elective deferrals (as defined in section 402(g)(3) of the
Code) and any amount which is contributed or deferred by the Employer
at the election of the Employee and which is not includible in the
gross income of the Employee by reason of section 125 or section 457 of
the Code.
(d) "Employer" shall mean (1) the Company; (2) any other
corporation that is a member of a controlled group of corporations,
within the meaning of section 1563(a) of the Code, determined without
regard to section 1563(a)(4) or (e)(3)(C) of the Code and with the
phrase "more than 50 percent" substituted for the phrase "at least 80
percent" each place it appears in section 1563(a)(1), that includes the
Company; and (3) any other entity that is under common control, within
the meaning of sections 414(c), (m) or (o) of the Code with the
Company.
4.08 Elimination of Excess Annual Additions:
(a) In the event that the Annual Addition, as defined in Section
4.06, to a Participant's Account for a Plan Year would (but for this
Section 4.08) exceed his maximum Annual Addition for such Plan Year, as
defined in Section 4.05, then the amount of contributions to this Plan
on behalf of the Participant for the Plan Year credited to the
Participant's Account shall be reduced to the extent necessary to
prevent an excess Annual
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Addition. Such reduction shall be taken first from the Company
Contributions, and then from the Participant Contributions.
(b) If as a result of the allocation of forfeitures or a
reasonable error in estimating Compensation, contributions that have
been made to the Plan on behalf of a Participant are required by
Subsection (a) of this Section 4.08 to be reduced, then such
contributions and any earnings and gains attributable to them, shall be
treated as contributions on behalf of the Participant for the next Plan
Year, and to the extent necessary, for succeeding Plan Years.
(c) Notwithstanding anything in Subsection (b) of this Section
4.08, if the Participant is not an Employee at the end of any Plan
Year, then any excess contributions on his behalf that have not yet
been treated under Subsection (b) as contributions for any Plan Year
shall be held unallocated in a suspense account and allocated, and
reallocated as often as necessary to prevent any excess Annual
Additions, for the next Plan Year, to the Accounts of the Participants
in proportion to their Compensation for such Plan Year. Amounts so
allocated shall be treated as Company contributions, and shall be used
to reduce Company contributions otherwise required for the Plan Year
for which they are allocated, and succeeding Plan Years if necessary.
(d) If, after all allocations and reallocations required by
Subsection (c) of this Section 4.08 have been made, there remain
Company contributions in the suspense account under Subsection (c) that
cannot be allocated, then such contributions shall be allocated to a
suspense account under this Subsection (d). For the Plan Year following
such allocation to a suspense account such contributions shall be
released from such account and allocated on a first-in, first-out
basis, in accordance with Subsection (c) of this Section 4.08. No other
Company contribution that would result in an Annual Addition shall be
credited to an Account unless all Company contributions for prior Plan
Years have been released from the suspense account maintained under
this Subsection (d) and allocated in accordance with this Subsection
(d).
(e) Any suspense account held under Subsection (c) or (d) of this
Section 4.08 shall be valued in accordance with Section 5.04, as if
such suspense account were an Account of a Participant.
(f) Company contributions being held under Subsection (b) of this
Section 4.08 for later allocation to a Participant's Account shall be
treated as if such contributions were a part of an Account of the
Participant, but no such contributions or amounts held in suspense
accounts under Subsection (c) or (d) of this Section 4.08 shall, prior
to such later allocation, be distributed to Participants, former
Participants, or beneficiaries. Furthermore, except as otherwise
provided in this Subsection (f), such contribution amounts shall not be
deemed to be part of any Participant's Account.
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4.09 Conclusiveness of Determination of Company Contributions: Neither
the Trustee nor the Committee shall be under any duty to inquire into the
correctness of the amounts contributed and paid over to the Trustee by the
Company in accordance with this Article IV, nor shall the Trustee or the
Committee or any other person be under any duty to enforce the payment of the
contributions to be made; and the determination by the Company of its
contributions hereunder shall be final and conclusive upon all persons.
4.10 Suspension of Contributions: A Participant while in the employ of
the Company may suspend his contributions for a period of six (6) months by
filing with the Committee a written request at least two (2) weeks prior to the
date on which his suspension of contributions is to become effective. A
Participant on sick leave or leave of absence authorized by the Company, who,
though on such leave nevertheless receives a salary from the Company, may
likewise suspend his contributions for the term of such leave by filing a
written request with the Committee two (2) weeks prior to the date on which his
suspension is to become effective. Contributions by and on behalf of a
Participant shall be automatically suspended for any month during which he fails
to receive any salary from the Company. Contributions by and on behalf of a
Participant shall be automatically suspended as of the time any such Participant
may be laid off by the Company to effect a temporary reduction in personnel,
provided that if such Participant shall not have been re-employed within three
hundred sixty-five (365) days from the time he is laid off, then his employment
shall be deemed to have terminated and the amount of his vested Account shall be
paid over to him in accordance with Section 6.05. During such time as a
Participant's Contributions shall be suspended, the Company's Contributions
relating to such Participant's Contributions shall likewise be suspended. No
Participant shall be permitted to make up any suspended contributions, and no
additional suspension shall be permitted until after the expiration of at least
twelve (12) months following the end of the prior suspension period.
4.11 Non-forfeitability, Reversion and Diversion of Company
Contributions: A Participant's Account value is, at all times, one hundred
percent (100%) non-forfeitable. Company contributions and the Plan and Trust
shall be for the exclusive benefit of Participants and beneficiaries; and except
as provided in this Section 4.11, the Company shall have no right, title or
interest in or to the contributions made under the Plan, no part of the Trust
Fund shall revert to the Company, and no part of the Trust Fund, except any part
required to pay taxes and expenses, shall be diverted to purposes other than for
the exclusive benefit of Participants and their beneficiaries. However, all
Company contributions are made subject to the deductibility of contributions to
the Plan and to the qualification of the Plan under the Code. Amounts
contributed by the Company under the following circumstances will be returned to
the Company within one year of the indicated date:
(a) Mistake of fact - date of payment;
(b) Before denial of qualification - date of denial of
qualification;
(c) Before disallowance of deduction - date of disallowance of
deduction.
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In the case of amounts returnable under (a) or (c) above, earnings
attributable to the excess contribution shall not be returned to the Company,
but losses attributable thereto shall reduce the amount to be returned. In the
case of amounts returnable under (b) above, earnings, gains and losses for the
period of disqualification shall be reflected in the amounts returned to the
Company.
4.12 Defined Contribution Plan: A Defined Contribution Plan is hereby
defined as a retirement plan which provides for an individual account for each
Participant and for benefits based solely on the amount contributed to the
Participant's account, and any income expenses, gains and losses, and any
forfeitures of accounts of other Participants which the Committee may allocate
to such Participant's Account. The Committee shall treat all defined
contribution plans (whether or not terminated) maintained by the Employer as a
single plan.
4.13 Actual Contribution Percentage Test:
(a) Maximum Annual Allocation: For each Plan Year, the annual
allocation derived from Participant contributions and Company matching
contributions to a Participant's Account shall satisfy one of the
following tests:
(1) The actual contribution percentage for the Highly
Compensated Participants shall not be more than the actual
contribution percentage for the Nonhighly Compensated Participants
multiplied by 1.25; or
(2) The excess of the actual contribution percentage for the
Highly Compensated Participants over the actual contribution for
the Nonhighly Compensated Participants shall not be more than 2
percentage points. Additionally, the actual contribution
percentage for the Highly Compensated Participants shall not
exceed the actual contribution percentage for the Nonhighly
Compensated Participants multiplied by 2.
(b) Actual Contribution Percentage: For purposes of this Section
4.13, actual contribution percentage means with respect to the Highly
Compensated Participants and the Nonhighly Compensated Participants for
a Plan Year, the average of the ratios, calculated separately for each
Participant in such group, of the amount of Company Contributions and
Participant Contributions allocated respectively to each Participant
Account for such Plan Year, to such Participant's Compensation for such
Plan Year. For purposes of this Section, a Highly Compensated
Participant and a Nonhighly Compensated Participant shall include any
Employee eligible to participate in the Plan whether or not such
Employee actually participates.
Further, for purposes of determining the actual contribution
percentage of Highly Compensated Participants who are five percent (5%)
owners or top ten (10) highly compensated Employees, the Participant
Contributions, Company Contributions, and Compensation of such
Participants shall include the Participant's Contributions, Company
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Contributions, and Compensation of all the Participant's family members as
defined in section 414(q)(6)(B) of the Code. Family members, with respect to
highly compensated Employees who are five percent (5%) owners or top ten (10)
highly compensated Employees, shall be treated as separate Employees in
determining the actual contribution percentage for such Highly Compensated
Participants. For Plan Years beginning on or after July 1, 1997, the family
aggregation rules of section 414(q)(6) of the Code do not apply.
(c) Adjustment to Actual Contribution Percentage: In the event the
initial calculations made pursuant to this Section do not satisfy one
of the tests set forth in this Section, then the Trustee, shall on or
before the fifteenth (15) day of the third (3rd) month following the
end of the Plan Year, but in no event, later than the close of the
following Plan Year, return to each affected Highly Compensated
Participant, his portion of the excess aggregate contributions (and any
income allocable thereto) which shall be distributed to him until one
of the tests set forth in this Section is satisfied in accordance with
section 401 (m)(6)(c) of the Code. For purposes of any refund required
pursuant to this Section, Participant contributions and any Company
contributions shall be refunded on a pro rata basis.
Effective July 1, 1997, Participant Contributions and Company
Contributions included in the "highly compensated contribution
percentage" for a Participant whose contribution percentage is greater
than the permitted maximum shall automatically be revoked to the extent
necessary to comply with such contribution percentage test and the
amount of such contribution, to the extent revoked, shall constitute an
"excess aggregate contribution" to be distributed to such Participant
(with earnings thereon), no later than the last day of the Plan Year
following the Plan Year for which such contribution was made. Excess
aggregate contributions are allocated to the Highly Compensated
Participants with the largest amounts of Participant Contributions and
Company Contributions taken into account in calculating the
contribution percentage test for the Plan Year in which the excess
arose, beginning with the Highly Compensated Participant with the
largest amount of such Participant Contributions and Company
Contributions and continuing in descending order until all excess
aggregate contributions have been allocated. In the event there is a
loss allocable to an excess aggregate contribution, any distribution to
a Participant as required by this Section shall be no greater than the
lesser of (1) the value of the Participant's Account or (2) the
Participant's excess aggregate contribution for the Plan Year.
(d) Administrative Adjustments to Contribution Levels: If at any
time during a Plan Year the Committee in its sole discretion determines
that both of the tests set forth in this Section may not be met for
such Plan Year, then the Committee shall have the unilateral right
during the Plan Year to require prospective reductions for the balance
of such Plan Year, or part thereof, of the percentage of contributions
of Highly Compensated Participants. Such reductions shall be made to
the extent necessary to insure that one of the tests set forth in this
section shall be met for the Plan Year and shall be based on estimates
made from information made available to the Committee at any time
during the Plan Year. Prospective
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reductions shall be calculated in accordance with such
non-discriminatory procedures as the Committee shall select.
(e) Definitions: For purposes of this Section the following terms shall
have the following meanings:
(1) Highly Compensated Participant: Effective for the Plan Years
beginning on or after July 1, 1997, the term Highly Compensated
Participant shall mean any Participant who is a Highly Compensated
Employee as further defined herein.
A Highly Compensated Employee means any Employee who:
(A) was a 5 percent (5%) owner (as defined in section
416(i)(1) of the Code) of the Employer at any time during the
current or the preceding Plan Year; or
(B) for the preceding Plan Year (i) had compensation from
the Employer in excess of $80,000 (as adjusted by the Secretary
pursuant to section 415(d) of the Code, except that the base
period shall be the calendar quarter ending September 30, 1996),
and (ii) if the Employer elects the application of this clause for
such preceding Plan Year, was in the top-paid group of Employees
for such preceding Plan Year.
For these purposes, an Employee is in the top-paid group of Employees
for any Plan Year if such Employee is in the group consisting of the top twenty
percent (20%) of the Employees when ranked on the basis of compensation paid
during such Plan Year. The determination of who is a Highly Compensated
Employee, including the determinations of the number and identity of Employees
in the top-paid group will be made in accordance with section 414(q) of the Code
and the regulations thereunder.
For purposes of this Section, the term Compensation means compensation
as defined in Section 4.07(c).
In determining whether an Employee is a Highly Compensated Employee in
1997, this Section 4.13(e)(1) is treated as having been in effect in 1996.
Effective for Plan Years beginning on or after July 1, 1997, the family
aggregation rules required by section 414(q)(6) of the Code have been deleted
from the Plan. This section is subject to the plan amendment rules of section
1.401(a)4-5(a) of the Treasury Regulations.
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(2) Nonhighly Compensated Participant: The term Nonhighly
Compensated Participant shall mean any Participant or former
Participant who is not a Highly Compensated Participant.
(3) Former Participant: The term Former Participant means a
person who has been a Participant, but who ceases to be a Participant
for any reason. For purposes of this Section, a Former Participant
shall be treated as a Highly Compensated Participant if such Former
Participant was a Highly Compensated Participant when he separated from
service of the Employer or was a Highly Compensated Participant at the
time of attaining age 55.
ARTICLE V
ALLOCATION AND VALUATION
5.01 Establishment of Participants' Accounts:
The Committee shall establish and maintain, on behalf of each
Participant and beneficiary, an Account which shall be divided into segregated
subaccounts as the Committee shall deem appropriate or helpful. Each Account
shall be credited with contributions allocated to such Account and generally
shall be credited with income on investments derived from the assets of such
Accounts. Notwithstanding anything herein to the contrary, while contributions
may be allocated to a Participant's Account as of a particular date (as
specified in the Plan), such contributions shall actually be added to a
Participant's Account and shall be credited with investment experience only from
the date such contributions are received and credited to the Participant's
Account by the Trustee. Each Account of a Participant or beneficiary shall be
maintained until the value thereof has been distributed to or on behalf of such
Participant or beneficiary.
5.02 Allocation and Crediting of Participant Contributions:
As of each Valuation Date coinciding with or immediately following the
date on which Participant Contributions are received on behalf of a Participant,
such contributions shall be allocated and credited directly to the appropriate
Account or subaccount of such Participant.
For the purposes of this Plan (unless otherwise specifically defined),
the term "Valuation Date" shall mean each business day on which the Trustee (or
if more than one Trustee, the institutional Trustee) operates and is open for
business; provided, the value of an Account or the Trust Fund on a day other
than a business day shall be the value determined for the immediately preceding
business day.
5.03 Allocation and Crediting of Company Contributions: The Trustee, as
of the last day of each calendar quarter for which the Company shall make a
contribution, shall allocate to each Account an amount equal to one hundred
fifty percent (150%) of the dollar amount of the
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Participant Contributions of each such Participant during each such calendar
quarter. Should a Participant withdraw from the Plan within a calendar quarter,
then the Company shall not contribute any amount based on the Participant's
Contributions within such calendar quarter in which he withdraws and no part of
the Company's Contributions for a quarter shall be allocated to any Participant
who withdraws in such calendar quarter.
5.04 Allocation and Crediting of Investment Experience: As of each
Valuation Date, the Trustee shall determine the fair market value of the Trust
Fund which shall be the sum of the fair market values of the investment funds
established from time to time pursuant to Article VII ("Investment Funds"). The
Committee shall determine the amount of the Accounts as follows:
(a) Determination of Investment Experience: As of each
Valuation Date, the investment earnings (or losses) of each Investment
Fund shall be the amount by which the sum determined in (1) exceeds (or
is less than) the sum determined in (2), where (1) and (2) are as
follows:
(1) The sum of (A) the fair market value of such
Investment Fund as of such Valuation Date, plus (B) the amount
of distributions and withdrawals and any transfers to other
Investment Funds made since the immediately preceding
Valuation Date from amounts invested in the Investment Fund;
and
(2) The sum of (A) the fair market value of the
Investment Fund as of the immediately preceding Valuation
Date, plus (B) contributions deposited in and amounts
transferred to such Investment Fund since the immediately
preceding Valuation Date.
(b) Utilization of Investment Experience: To the extent
directed by the Committee, investment earnings initially may be used to
replace abandoned Accounts as provided in Section 10.04 or to pay Plan
expenses. As of each Valuation Date and prior to the allocations
described in Section 5.02 and Section 5.03, each Participant's Account
shall be allocated and credited with a portion of such remaining
earnings or debited with a portion of such losses of each Investment
Fund, as determined in accordance with subsection (a) hereof, in the
proportion that (1)(A) the amount credited to such Account that was
invested in such Investment Fund as of the immediately preceding
Valuation Date, minus (B) any distributions or withdrawals or transfers
to other Investment Funds which were made from such Account since such
preceding Valuation Date and on or before such current Valuation Date,
plus (C) any amounts transferred to such Investment Fund since the
immediately preceding Valuation Date bears to (2)(A) the total amount
invested in such Investment Fund by all Participants as of the
immediately preceding Valuation Date, minus (B) any distributions or
withdrawals or transfers to other Investment Funds which were made
since such preceding Valuation Date and on or before such current
Valuation Date, plus (C) any amounts transferred to such Investment
Fund since the immediately preceding Valuation Date.
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5.05 Valuation of the Trust Fund: As of each Valuation Date, the
Trustee shall determine the fair market value of each of the Investment Funds.
All costs and expenses incurred in connection with Plan investments and all
costs and expenses incurred in connection with the general administration of the
Plan and the Trust shall be allocated between the Investment Funds in the
proportion in which the amount invested in each Investment Fund bears to the
amount invested in all Investment Funds as of the appropriate Valuation Date;
provided, all costs and expenses directly identifiable to one Investment Fund
shall be allocated to that Investment Fund.
5.06 Notice to Participants of Account Balances: At least once for
each Plan Year, the Committee shall cause a written statement of a Participant's
Account balance to be distributed to the Participant.
5.07 Good Faith Valuation Binding: In determining the value of the
Trust Fund and the Accounts, the Trustee and the Committee shall exercise their
best judgment, and all such determinations of value (in the absence of bad
faith) shall be binding upon all Participants and Beneficiaries.
5.08 Errors and Omissions in Accounts: If an error or omission is
discovered in the Account of a Participant or Beneficiary, the Committee shall
cause appropriate, equitable adjustments to be made as of the Valuation Date as
soon as practicable following the discovery of such error or omission.
ARTICLE VI
VESTING AND DISTRIBUTION OF BENEFITS
6.01 General Provisions: Except as provided in Article IX hereof,
relating to the termination of this Trust, a Participant's Account in the Trust
Fund shall be deemed to vest immediately and shall be distributed as provided
herein. A Participant shall not forfeit any portion of his Account for any
reason or cause except as provided under Section 10.04.
6.02 Retirement: Any Participant who, while actively employed by the
Company, shall attain the age of 65 after the Effective Date of the Plan, shall
become eligible to retire on his 65th birthday, hereinafter referred to as
"Normal Retirement Age." However, such Participant may postpone his retirement
date, provided that any postponement beyond his 70th birthday shall require the
consent of the Company. In the event of such postponement, such Participant
shall continue to participate in the Plan in accordance with all the terms and
conditions specified herein. Upon a Participant's actual retirement date, such
Participant's Account shall become distributable, and his participation in the
Plan shall cease. The Committee in accordance with the provisions of Section
6.05 hereof shall direct the Trustee to distribute to such Participant the value
of his Account as determined under the provisions of Section 6.03 hereof.
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6.03 Valuation of Participant's Account: In the event of retirement,
termination of employment, or withdrawal or distribution from the Plan, the
value of the Account of a Participant shall be the amount credited to his
Account, determined as of the Valuation Date coincident with or immediately
preceding the date of distribution.
6.04 Special Distributions of Participant's Account During Employment:
(a) Financial Hardship: A Participant may withdraw all or such
portion of the value of his Account as may be required to satisfy
immediate and heavy financial needs of the Participant. A distribution
based upon financial hardship cannot exceed the amount required to meet
the immediate financial need created by the hardship and not reasonably
available from other resources of the Participant. As used herein, the
term "Financial Hardship" shall mean: (1) the inability of the
Participant to meet expenses incurred or assumed as the result of an
accident or illness to, or the death of a member of, his family; (2)
the need for funds for the purchase of a home by a Participant or
additions to or major alterations to a home already owned by him; or
(3) the need by a Participant for funds for college or graduate school
tuition fees or expenses for a son or daughter. A distribution as a
result of a Financial Hardship shall be made only upon the written
request of the Participant, properly documenting the existence of the
hardship and the amount required to be distributed to meet the
immediate need and not reasonably available from other resources of the
Participant. The Committee shall direct the Trustee to make the
distribution to the Participant in a lump-sum payment in cash, unless
in the written request for the distribution, the Participant requests
that it be in a form otherwise described in Section 6.05(c).
(b) Disability: If a Participant suffers a Disability, he may
upon his written request or that of his legal guardian or
representative receive a distribution of all or part of the value of
any or all of his Account. A Disability is a medically determinable
physical or mental impairment that, as determined by the Committee, is
of such permanence and degree that the Participant is, and for the
indefinite future will be, unable to perform substantial gainful
activity commensurate with his professional or other training,
education, and comparable to his then or prior services for the
Company. The Committee shall direct the Trustee to make the
distribution to the Participant in a lump-sum payment in cash, unless
in the written request for the distribution, the Participant, or his
legal guardian or representative, requests that it be in a form
otherwise described in Section 6.05.
(c) Attainment of Age 59 1/2: At any time after a Participant
attains the age of 59 1/2, he may upon his written request receive a
distribution of all or part of the value of any or all of his Account.
The Committee shall direct the Trustee to make the distribution to the
Participant in a lump sum in cash, unless in the Participant's written
request for the distribution, he requests that it be in a form
otherwise described in Section 6.05.
(d) Valuation of Account: The Distributions from a
Participant's Account shall be valued in accordance with the provisions
of Section 6.03.
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(e) Suspension of Contributions: In the event of a withdrawal
under this Section 6.04 which is less than one fourth (1/4) of the
value of the Participant's Account, then contributions by and an behalf
of a Participant shall be suspended for six (6) months. In the event of
a total withdrawal, the Participant shall be suspended from
participation in the Plan for twenty-four (24) months.
6.05 Manner and Media of Payment of Benefits: Upon a Participant's
retirement, death or his voluntary termination of employment, a Participant's
participation in the Plan shall cease effective as of his payroll termination
date. The Participant or Participant's beneficiary may file with the Committee a
written notice specifying one of the three (3) following methods of payment to
be used in distribution of such Participant's Account. The Committee shall then
direct the Trustee to distribute to such Participant or his beneficiary, as may
be appropriate, the value of his Account, pursuant to the method of payment
specified by the Participant. Provided, however, in the event there are
conflicting claims to a Participant's Account or in the event the Committee, for
any reason, shall be in doubt as to its right to direct payment for any amount
to any Participant, beneficiary, or beneficiaries, the Committee may direct the
Trustee to hold the Participant's Account, without liability for interest
thereon, other than adjustments to the value of such Account, valued in
accordance with the provisions of Section 6.03, until the rights thereto shall
have been judicially determined, or the Committee may direct the Trustee to pay
such Account value into a court of competent jurisdiction, such Account value to
be distributed by such court after a judicial determination of the rights
thereto. The three (3) alternative methods which may be used in payment of a
Participant's Account are:
(a) Lump-sum payment in cash;
(b) Payment in monthly installments over any designated period
of years, not to exceed ten (10) years, or, if shorter, the life
expectancy of the Participant, or the joint life expectancy of the
Participant and his designated beneficiary, with any unpaid balance at
the date of the Participant's death to be payable to the surviving
beneficiary designated by such Participant. The Committee shall direct
the Trustee, after conferring with the Participant, to
(1) Segregate the aggregate amount of such
Participant's Account into a special account, which special
account will receive full credit for all income earned by the
special account after it is segregated; or
(2) At the beginning of each quarter during the
installment period, segregate the amount of the Participant's
Account needed to make such installment payments during that
quarter. The Participant's Account in the Plan shall be
reduced by the payments to be made in such quarter. The
balance of the Participant's Account shall remain as a part of
the Trust Fund until the next quarterly withdrawal is made to
meet the subsequent installment payments; or
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(c) A combination lump-sum payment in cash and securities of
the Company. Company securities are defined as and include those
securities which qualify as "employer securities" under applicable
Internal Revenue Service regulations and rulings. The maximum number of
Company securities to be received by the Participant will be determined
as follows:
(1) Divide the total value of the corpus of the Plan
into the total value of each Company security owned by the
Plan. The date of valuation, herein, shall be the same date
used in determining the value of the Participant's Account
under Section 6.03;
(2) Each percentage ascertained in paragraph (1)
above is multiplied times the total value of the Participant's
Account, as ascertained under Section 6.03, resulting in the
maximum dollar value for each category of the Company
securities to which the Participant would be entitled;
(3) The dollar value for each security as ascertained
in paragraph (2) above is divided by the price of such Company
security as valued under Section 6.03, resulting in the number
of each Company security to be received;
(4) If the Participant desires a lesser number of
securities than provided for above, then a lesser number will
be distributed and the balance of the Participant's Account
will be paid in cash.
6.06 Other Termination of Employment: Upon termination of a
Participant's employment by the Company for reasons other than those set out in
Section 6.05, a Participant shall have the right to direct the Trustee to
distribute to the Participant the value of his Account (as determined in
accordance with Section 6.03 hereof) in a lump-sum payment in cash.
6.07 Distributions Under Domestic Relations Orders: Nothing contained
in this Plan shall prevent the Trustee, in accordance with the direction of the
Committee, from complying with the provisions of a qualified domestic relations
order. A qualified domestic relations order means any judgment, decree, or order
(including approval of a property settlement agreement) that (a) relates to the
provision of child support, alimony payments, or marital property rights to a
spouse, former spouse, child or other dependent of a Participant, (b) is made
pursuant to any state's domestic relations law, and (c) 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. Such an order must clearly specify the name and
mailing address of the Participant and alternate payee(s). An alternate payee is
defined as a spouse, former spouse, child, or other dependent whom the domestic
relations order recognizes as having a right to benefits. The amount or
percentage of the Participant's benefits to be paid or the manner by which such
amount is to be determined must also be specified. A qualified order may not
require the Plan to provide any type or form of benefit or option not otherwise
provided under the Plan nor require a payment to an
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alternate payee which is required to be paid to another alternate payee under
another qualified domestic relations order. It also may not require the Plan to
provide increased benefits. This Plan specifically permits distribution to an
alternate payee under a qualified domestic relations order at any time,
irrespective of whether the Participant has attained his earliest retirement age
(as defined under section 414(p) of the Code) under the Plan. A distribution to
an alternate payee prior to the Participant's attainment of earliest retirement
age is available only if (1) the order specifies distribution at that time or
permits an agreement between the Plan and the alternate payee to authorize an
earlier distribution; and (2) if the amount to which the alternate payee is
entitled under the Plan exceeds $5,000 (effective July 1, 1998), and the order
so requires, the alternate payee consents to any distribution occurring prior to
the Participant's attainment of earliest retirement age. Nothing in this section
6.07 gives a Participant a right to receive a distribution at a time not
otherwise permitted under the Plan.
The Committee shall establish reasonable procedures to determine the
qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Committee promptly shall notify the Participant and any
alternate payee named in the order, in writing, of the receipt of the order and
the Plan's procedures for determining the qualified status of the order. Within
a reasonable period of time after receiving the domestic relations order, the
Committee shall determine the qualified status of the order and shall notify the
Participant and each alternate payee, in writing, of its determination. The
Committee shall provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order, or in a manner
consistent with Department of Labor regulations. The Committee may treat as
qualified any domestic relations order entered prior to January 1, 1985,
irrespective of whether it satisfied all the requirements described in section
414(p) of the Code.
If any portion of a Participant's Account is payable during the period
the Committee is making its determination of the qualified status of the
domestic relations order, the Committee shall direct the Trustee to segregate
the amounts payable in a separate account and to invest the segregated account
solely in fixed income investments. If the Committee determines the order is a
qualified domestic relations order within eighteen (18) months of receiving the
order, the Committee shall direct the Trustee to distribute the segregated
account in accordance with the order. If the Committee does not make its
determination of the qualified status of the order within eighteen (18) months
after receiving the order, the Committee shall direct the Trustee to distribute
the segregated account in the manner the Plan would distribute if the order did
not exist and shall apply the order prospectively if the Committee later
determines the order is a qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Committee may direct the Trustee to
invest any partitioned amount in a segregated subaccount or separate account and
to invest the account in federally insured, interest-bearing savings account(s)
or time deposit(s) (or a combination of both), or in other fixed income
investments. A segregated subaccount shall remain a part of the Trust, but it
alone shall share in any income it earns, and it alone shall bear any expense or
loss it incurs.
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The Trustee shall make any payments or distributions required under
this Section 6.07 by separate benefit checks or other separate distribution to
the alternate payee(s).
6.08 Date of Payment: The payments due to a Participant or beneficiary
under Article VI, shall be paid as soon as administratively practicable
following the effective date of the written notice, request or payroll
termination date, but in no event will be made later than forty-five (45) days
following the end of the calendar quarter next succeeding said request or
termination. Provided, however, in the event the Committee has received
conflicting claims to an Account, or if the Committee, for any reason, shall be
in doubt as to its right to direct payment of any amount to any Participant,
beneficiary or beneficiaries, the forty-five (45) day time limit for payment of
the Account shall not be applicable.
Notwithstanding the foregoing or any other provision in the Plan to the
contrary, if the present value of the Participant's accrued benefit exceeds
$5,000 (effective July 1, 1998), no distribution shall be made to the
Participant prior to his attaining Normal Retirement Age unless he consents to
such distribution. Such consent must be obtained in writing within the ninety
(90) day period ending on the annuity starting date. The annuity starting date
is the first day of the first period for which an amount is paid hereunder in
any form. The Committee shall notify the Participant of the right to defer any
distribution until he attains Normal Retirement Age. Such notification shall,
include a general description of the material features, and an explanation of
the relative values of, the optional forms of benefit available under the Plan
in a manner that would satisfy the notice requirements of section 417(a)(3) of
the Code, and shall be provided no less than thirty (30) days and no more than
ninety (90) days prior to the annuity starting date. Notwithstanding the
foregoing, the consent of the Participant shall not be required to the extent
that a distribution is required to satisfy section 415 of the Code. In addition,
upon termination of this Plan if the Plan does not then offer an annuity option,
the Participant's Account may, without the consent of the Participant, be
distributed to the Participant or transferred to another defined contribution
plan within the same controlled group, as defined in section 414(b) or (c) of
the Code.
Furthermore, if a distribution is one to which sections 401(a)(11)
and 417 of the Code do not apply, such distribution may commence less than
thirty (30) days after the notice required under section 1.411(a)-11(c) of
the Treasury Regulations is given, provided that: (a) the Committee clearly
informs the Participant that he has a right to a period of at least thirty (30)
days after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution option), and
(b) the Participant, after receiving the notice, affirmatively elects a
distribution.
6.09 Commencement of Distributions: Unless otherwise elected in writing
by the Participant, payment of benefits other than death benefits hereunder must
commence not later than sixty (60) days after the end of the Plan Year
coinciding with or immediately following the later of the following events:
(a) The Participant's attainment of age 65;
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(b) The tenth anniversary of the year in which the Participant
commenced participation in the Plan; or
(c) The date the Participant terminates service with the
Employer.
Notwithstanding the foregoing, effective July 1, 1997, payment of
benefits must commence no later than the Participant's "required beginning
date," which is the first day of April of the calendar year following the later
of (1) the calendar year in which a Participant attains age 70 1/2 or (2) the
calendar year in which the Participant retires. The required beginning date for
a five percent (5%) owner (as described in section 416(i) of the Code) is the
first day of April of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
Notwithstanding any provision herein to the contrary, any Participant
who attains age 70 1/2 in a calendar year after 1995 and prior to 1999, may
irrevocably elect, in the manner established by the Committee, by the first day
of April of the calendar year following the year in which the Participant
attains age 70 1/2 (or by December 31, 1997 in the case of a Participant who
attains age 70 1/2 in 1996) to defer distributions until the first day of April
of the calendar year following the calendar year in which the Participant
retires. If no such election is made, the Participant will begin receiving
distributions by the first day of April of the calendar year following the year
in which the Participant attains age 70 1/2 (or by December 31, 1997 in the case
of a Participant who attains age 70 1/2 in 1996). Furthermore, any Participant
who attains age 70 1/2 in a calendar year prior to 1996, may irrevocably elect,
in the manner established by the Committee, to stop distributions and recommence
distributions as of the first day of April of the calendar year following the
calendar year in which such Participant retires. In such event, there shall be
no new annuity starting date upon such recommencement. Finally, any Participant
who attains age 70 1/2 in a calendar year after 1998 shall have an affirmative
election to irrevocably commence distributions hereunder at any time thereafter,
in the manner established by the Committee, and in a method of payment set forth
in Section 6.05.
If a Participant's interest is to be distributed in other than a lump
sum, then the amount to be distributed each year must be at least an amount
equal to the quotient obtained by dividing the Participant's entire interest by
the life expectancy of the Participant or the joint life expectancy of the
Participant and his designated beneficiary. The minimum distribution shall be
computed by reference to the expected return multiples in Tables V and VI of
section 1.72-9 of the Treasury Regulations. For purposes of this computation, a
Participant's life expectancy, and that of his spouse, may not be recalculated.
Life expectancy or, if applicable, joint and last survivor expectancy, shall be
calculated using the attained age of the Participant and, if applicable, that of
his designated beneficiary as of the Participant's and, if applicable, the
designated beneficiary's birthday in the first calendar year for which a
distribution is required, reduced by one for each calendar year which has
elapsed since the date life expectancy was first calculated.
For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least fifty percent
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(50%) of the present value of the total amount available for distribution is
paid within the life expectancy of the Participant. For calendar years beginning
after December 31, 1988, the amount to be distributed each year, beginning with
distributions for the first calendar year for which a minimum distribution is
required, shall not be less than the quotient obtained by dividing the
Participant's benefit by the applicable life expectancy or, if the Participant's
spouse is not the designated beneficiary, by the lesser of the applicable life
expectancy or the applicable divisor determined from the table set forth in
Q&A-4 of section 1.401(a)(9)-2 of the Treasury Regulations; provided that
distributions after the death of the Participant shall be distributed using the
applicable life expectancy as the relevant divisor.
6.10 Required Distributions: If the distribution of a Participant's
interest has begun and the Participant dies before his entire interest has been
distributed to him, the remaining portion of such interest shall be distributed
at least as rapidly as under the method of distribution being used as of his
date of death. If a Participant dies before he has begun to receive any
distributions of his interest under the Plan, his death benefit shall be
distributed to his beneficiary no later than December 31 of the calendar year
containing the fifth anniversary of his death. The 5-year distribution
requirement shall not apply, however, to any portion of the deceased
Participant's interest that is payable to or for the benefit of a designated
beneficiary. In such event, such portion may be distributed over a period not
extending beyond the life expectancy of such designated beneficiary provided
such distribution begins not later than December 31 of the calendar year
immediately following the calendar year of the Participant's death. In the event
the Participant's surviving spouse is his designated beneficiary, the
requirement that distributions commence within one year of a Participant's death
shall not apply. Rather, such distribution will not be required to begin earlier
than the later of: (a) December 31 of the calendar year immediately following
the calendar year of the Participant's death and (b) December 31 of the calendar
year in which the deceased Participant would have attained age 70 1/2. If the
surviving spouse dies before the distributions to such spouse begin, then the
5-year distribution requirement shall apply as if the spouse were the
Participant. If the Participant has not elected a method of distribution prior
to his death, then the designated beneficiary must elect the method of
distribution no later than the earlier of (a) December 31 of the calendar year
in which distributions would be required to begin under the preceding provisions
of this paragraph, or (b) December 31 of the calendar year which contains the
fifth anniversary of the Participant's date of death. If the Participant has no
designated beneficiary, or if the designated beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death. Distribution of a Participant's benefits is
considered to have begun, for purposes of this paragraph, on the Participant's
"required beginning date"; provided that if the Participant's designated
beneficiary is his surviving spouse, and such surviving spouse dies after the
Participant but before payments to such surviving spouse have begun, then
distribution of benefits is considered to have begun on the date distribution to
the surviving spouse is required to begin pursuant to the provisions of this
paragraph. For purposes of applying these rules in the event of the
Participant's death, the expected return multiples in Tables V and VI of section
1.72-9 of the Treasury Regulations shall be utilized. The life expectancy of a
surviving spouse may not be
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recalculated. Any amount paid to the child of the Participant will be treated as
if it had been paid to the surviving spouse if the amount becomes payable when
the child reaches the age of majority.
6.11 Beneficiary Designation: Any Participant may from time to time
designate, in writing, any person or persons, contingently or successively, to
whom the Trustee shall pay his Account value in the event of his death. A
Participant's beneficiary designation shall not be valid after December 31,
1984, unless the Participant's spouse consents to the beneficiary designation. A
Participant's beneficiary designation does not require spousal consent if the
Participant's spouse is the Participant's sole designated beneficiary. The
Committee shall prescribe the form for the written designation of beneficiary
and, upon the Participant's filing the form with the Committee, it effectively
shall revoke all designations filed prior to that date by the same Participant.
6.12 No Beneficiary Designation: If a Participant fails to name a
beneficiary in accordance with Section 6.11, or if the beneficiary named by a
Participant predeceases him or dies before complete distribution of the
Participant's Account value, then the Trustee shall pay the Participant's
Account value in one, or any combination, of the methods specified under Section
6.05 in the following order of priority to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including adopted
children, and surviving children of deceased children, per stirpes (by
right of representation);
(c) The Participant's surviving parents, in equal shares; or
(d) The legal representative of the estate of the last to die
of the Participant and his beneficiary.
6.13 Exercise of Voting Rights and Tender Rights: Notwithstanding
anything to the contrary in the Plan, the following provisions shall govern the
exercise of Voting Rights and Tender Rights with respect to shares of common
stock of the Company held in the Trust Fund:
(a) For purposes of this Section 6.13, the terms set forth
below shall have the following meanings:
"Allocable Shares" shall mean, with respect to a
Participant, the Participant's proportionate share of all
Company common stock held in the Trust Fund as of the
applicable Valuation Date.
"Tender Offer" shall mean any tender offer for, or
request or invitation for tenders of, shares of common stock
of the Company, whether the consideration proposed to be
exchanged for such shares is cash, the securities of any
person or any other form of property.
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"Tender Rights" shall mean any and all rights to
tender or exchange shares of common stock of the Company
pursuant to a Tender Offer.
"Voting Rights" shall mean any and all rights to vote
or consent with respect to shares of common stock of the
Company.
(b) The Trustee shall exercise Tender Rights with respect to a
Participant's Allocable Shares in accordance with timely written
instructions delivered by such Participant to the Trustee. Tender
Rights with respect to fractional Allocable Shares shall be exercised
on a combined basis in order to comply, to the extent possible, with
all timely written instructions received from Participants. If timely
written instructions are not received from a Participant, the Trustee
shall not exercise Tender Rights with respect to such Participant's
Allocable Shares.
(c) The Trustee shall exercise Voting Rights with respect to a
Participant's Allocable Shares in accordance with timely written
instructions delivered by such Participant to the Trustee. Voting
Rights with respect to fractional Allocable Shares shall be exercised
on a combined basis in order to comply, to the extent possible, with
all timely written instructions received from Participants. If timely
written instructions are not received from a Participant, the Trustee
shall exercise Voting Rights with respect to such Participant's
Allocable Shares in the same proportion as those shares of common stock
of the Company with respect to which timely written instructions were
received.
(d) The Trustee shall use its best efforts to ensure that
Participants are able to direct the exercise of Voting Rights and
Tender Rights on the basis of the same information, and in accordance
with substantially the same procedures, as are available to the holders
of shares of common stock of the Company. Without limiting the
generality of the foregoing, the Trustee shall take the following
actions:
(1) Give prior written notice to Participants of any
occasion upon which Voting Rights or Tender Rights may be
exercised;
(2) Transmit to Participants any written information
relating to the exercise of Voting Rights or Tender Rights
that is distributed by the management of the Company or any
other person;
(3) Request written instructions from Participants as
to the manner in which Voting Rights or Tender Rights should
be exercised; and
(4) Exercise Voting Rights or Tender Rights in
accordance with the written instructions delivered by
Participants to the Trustee.
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(e) The Trustee shall not disclose to the Company, and shall
maintain strict confidentiality with respect to, any information
regarding the exercise of Voting Rights or Tender Rights, including
without limitation information regarding the identity of any
Participant who exercises or fails to exercise such rights.
(f) Any cash proceeds received upon the consummation of a
Tender Offer shall be invested in such assets, other than common stock
of the Company, as the Committee shall, by written instructions to the
Trustee, select. Any other property received upon the consummation of a
Tender Offer shall be promptly liquidated by the Trustee and shall be
invested in such assets, other than common stock of the Company, as the
Committee shall, by written instructions to the Trustee, select.
6.14 Direct Rollover of Eligible Rollover Distributions: An individual
who is entitled to a benefit hereunder, the distribution of which would qualify
as an eligible rollover distribution (as defined in section 401(a)(31)(C) of
the Code) may, in lieu of receiving any payment or payments from the Plan,
direct the Trustee to transfer all or any portion of such payment or payments
directly to the trustee of one or more eligible retirement plans (as defined in
section 401(a)(31)(D) of the Code). Such election must be made on a form
provided by the Committee for that purpose and received by the Committee no
later than the date established by the Committee preceding the date on which the
distribution is to occur. Any election made pursuant to this Section 6.14 may be
revoked at any time prior to the date established by the Committee preceding the
date on which the distribution is to occur. If an individual who is so entitled
has not elected a direct rollover within the time and in the manner set forth
above, such distributee shall be deemed to have affirmatively waived a direct
rollover. A distributee who wishes to elect a direct rollover shall provide to
the Committee, within the time and in the manner prescribed by the Committee,
such information as the Committee shall reasonably request regarding the
eligible retirement plan or plans to which the payment or payments are to be
transferred. The Committee shall be entitled to rely on the information so
provided, and shall not be required to independently verify such information.
The Committee shall be entitled to delay the transfer of any payment or payments
pursuant to this Section 6.14 until it has received all of the information which
it has requested in accordance with this Section 6.14.
ARTICLE VII
TRUST AND TRUSTEE
7.01 Establishment and Acceptance of Trust: The Trustee shall receive
any contributions paid to it in cash, securities and such other property as
shall be acceptable to the said Trustee. The Trust Fund shall be held, managed
and administered in trust pursuant to the terms of this Plan and the terms of
the agreement with the Trustee establishing the Trust (the "Trust Agreement").
The terms of the Trust Agreement are hereby incorporated by reference and made a
part of this Plan.
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7.02 Investment of the Trust Fund: The Trustee shall invest all or
substantially all of the assets of the Trust Fund in common stock or other
securities of the Company, provided, however, that the Committee may, by
written instructions to the Trustee, direct it to purchase any other securities,
which the Committee, in its discretion may select. The Trustee may also invest
and reinvest all or any part of the assets of the Trust in any common,
collective, or commingled trust fund that is maintained by the Trustee or by any
other bank or other institution and that is available to employee plans
qualified under section 401(a) of the Code or to individual retirement accounts
that are exempt from tax under section 408(e) of the Code, or any successor
provisions to sections 401, 408, or 584, and during the period of time that an
investment through any such medium shall exist, to the extent of participation
of the Plan, the declaration of trust of such common, collective or commingled
trust fund shall constitute a part of this Plan. When so authorized by the
Committee, the Trustee may make purchases from, or sales to, other trusts of
which the Trustee also serves as trustee notwithstanding the provisions of
Article 7425B-13 of the Civil Statutes of the State of Texas. No transaction
shall be permitted under this Section 7.02 that would constitute a prohibited
transaction under section 4975(c) of the Code or section 406 of ERISA or that
would cause the Plan not to be qualified under section 401(a) of the Code.
ARTICLE VIII
TOP HEAVY RULES
8.01 Minimum Employer Contribution: If this Plan is top heavy in any
Plan Year beginning after December 31, 1983, the Plan guarantees a minimum
contribution (subject to the provisions of this Article VIII) of three percent
(3%) of Compensation for each Non-Key Employee who is a Participant employed by
the Company on the Valuation Date (June 30) of the Plan Year without regard to
Hours of Service completed during the Plan Year. However, if the contribution
rate for the Key Employee with the highest contribution rate is less than three
percent (3%) of his Compensation, the minimum contribution for Non-Key Employees
shall equal the highest contribution rate received by a Key Employee.
The contribution rate is the sum of Company contributions (not
including Company contributions to Social Security) and forfeitures allocated to
the Participant's Account for the Plan Year divided by his Compensation for the
Plan Year. For purposes of determining the minimum contribution, for Plan Years
beginning after December 31, 1984, the Committee shall consider contributions
made pursuant to a salary reduction agreement or similar arrangement as Company
contributions. To determine the contribution rate, the Committee shall consider
all qualified top heavy defined contribution plans maintained by the Company as
a single plan.
8.02 Additional Contribution: If the contribution rate for the Plan
Year with respect to a Non-Key Employee described in Section 8.01 is less than
the minimum contribution, the Company will increase its contribution for such
Employee to the extent necessary so his contribution rate for the Plan Year will
equal the guaranteed minimum contribution.
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8.03 Determination of Top Heavy Status: The Plan is top heavy for a
Plan Year if the top heavy ratio as of the Valuation Date exceeds sixty percent
(60%). The top heavy ratio is a fraction, the numerator of which is the sum of
the present value of Account values (also known as accrued benefit for purposes
of section 416 of the Code) for all Key Employees as of the Valuation Date, the
contributions due as of the Valuation Date, and distributions made within the
five (5) Plan Year period ending on the Valuation Date, and the denominator of
which is a similar sum determined for all Employees. The Committee shall
calculate the top heavy ratio by disregarding the Account value of any Non-Key
Employee who was formerly a Key Employee. For Plan Years beginning after
December 31, 1984, the Committee shall calculate the top heavy ratio by
disregarding the Account values (including distributions, if any, of the
Account) of an individual who has not performed services for the Company during
the five (5) Plan Year period ending on the Valuation Date. The Committee shall
calculate the top heavy ratio, including the extent to which it must take into
account distributions, rollovers and transfers, in accordance with section 416
of the Code and the regulations thereunder. This Plan, if it is part of a
Required Aggregation Group, is top heavy only if the top heavy ratio for the
Required Aggregation Group exceeds sixty percent (60%), making it a top heavy
group.
8.04 Definitions: For the purposes of this Article VIII:
(a) "Key Employee" shall mean, as of any Valuation Date, any
Employee or former Employee (or beneficiary of such Employee) who, at
any time during the Plan Year (which includes the Valuation Date) or
during the preceding four Plan Years, is an officer (having annual
Compensation in excess of fifty percent (50%) of the limitation under
section 415(b)(1)(A) of the Code in effect for any such Plan Years) of
the Company, one of the Employees having annual Compensation in excess
of the limitation under section 415(c)(1)(A) of the Code in effect for
any such Plan Years and owning one of the ten largest interests in the
Company, a more than five percent (5%) owner of the Company, or a more
than one percent (1%) owner of the Company who has annual Compensation
of more than $150,000.00.
(b) "Non-Key Employee" is an Employee who does not meet the
definition of Key Employee.
(c) "Compensation" for the purposes of this Article VIII shall
mean the first $200,000.00 (or, beginning January 1, 1988, such larger
amount as the Commissioner of Internal Revenue may prescribe) of
Compensation, as defined in Section 4.07(c) hereof.
(d) "Valuation Date" for the purposes of this Article VIII for
any Plan Year is June 30 of each Plan Year.
(e) "Required Aggregation Group" means (1) each qualified plan
of the Company in which at least one Key Employee participates; and (2)
any other qualified plan of the
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Company which enables a plan described in (1) to meet the requirements
of section 401(a)(4) or 410 of the Code.
ARTICLE IX
AMENDMENT AND TERMINATION
9.01 Amendment: The Company shall have the right at any time, and from
time to time: (a) to amend this Plan in such manner as it may deem necessary or
advisable in order to qualify this Plan and the Trust created hereby under the
applicable provisions of the Code, and any such amendment by its terms may be
retroactive; and (b) to amend this Plan in any other manner. However, except as
otherwise provided in Section 4.11, no such amendment shall authorize or permit
any part of the Trust Fund (other than such part as 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 or estates, or
shall cause or permit any portion of the Trust Fund to revert to or become the
property of the Company, and no such amendment which affects the rights, duties
or responsibilities of the Trustee may be made without the Trustee's written
consent. Furthermore, no amendment shall decrease a Participant's Account value
or eliminate an optional form of distribution with respect to a Participant with
an Account value at the date of the amendment, except to the extent permitted
under section 412(c)(8) of the Code. Any such amendment shall become effective
upon delivery of a written instrument, executed by order of the Company's Board
of Directors, to the Trustee and the endorsement of the Trustee of its written
consent thereto.
9.02 Termination: The Company has established the Plan in the
expectation and with the confidence that it will continue in effect
indefinitely. However, due to the vicissitudes of general economic and business
conditions which may affect the Company's ability to so continue the Plan, it
must, and does hereby, reserve the right to terminate the Plan in whole or in
part at any time. Such termination shall be effected by delivery to the Trustee
and the Committee of written notice of such action by the Company.
Upon termination or partial termination of the Plan, or upon complete
discontinuance of Company contributions, the Accounts of the Participants shall
be non-forfeitable. In the event of the termination within the meaning of such
term as used in Title IV of ERISA of the Plan, the assets of the Plan shall be
allocated to Participants or Beneficiaries and distributed in accordance with
the provisions of section 403(d)(1) of ERISA and any regulations promulgated
thereunder.
Upon the happening of any event, the enactment of any law, and issuance
of any rule, regulation, direction, command, demand, or order of any court,
administrative, regulative or other agency, or of any group, or organization, or
any individual on behalf of same, which in any way or manner, or to any extent
whatsoever, impairs or prevents the free exercise of the uncontrolled discretion
of the Board of Directors of the Company in connection with terminating this
Plan and
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the Trust hereby created, then and in any such event, such Plan and Trust shall
thereupon, ipso facto, be terminated.
ARTICLE X
MISCELLANEOUS
10.01 Notices and Forms: All notices, applications, designations, forms
and other communications required or provided for hereunder shall be in writing
and shall be executed at the time, and in the manner and form prescribed by the
Committee or by the Trustee, as the case may be, and if directed to the Company
or to the Committee shall be mailed by first class mail to the payroll office of
the Company and shall be deemed given when received, and if directed to the
Trustee, shall be mailed by first class mail to the payroll office of the
Company and delivered by the Company to the Trustee and shall be deemed to have
been given when received by the Trustee.
10.02 Plan Not an Employment Contract: The adoption and maintenance of
the Plan shall not be deemed to constitute a contract between the Company and
any Employee or Participant or to be a consideration for or an inducement to or
condition of employment of any person. Nothing herein contained shall be
construed to give any Employee or Participant the right to be retained in the
employment of the Company or to interfere with the right of the Company to
terminate the employment of an Employee or Participant at any time.
10.03 Prohibition Against Alienation: Except as otherwise provided in
this Plan and subject to section 414(p) of the Code relating to qualified
domestic relations orders, no Participant or beneficiary shall have any right to
withdraw, assign (either at law or in equity), pledge, transfer, appropriate,
encumber, commute, alienate, or anticipate his interest in the Trust, or any
payments to be made hereunder, and no benefits, payments, rights, or interest of
such a person under the Plan shall be in any way subject to any legal or
equitable process to levy or execute upon, charge, garnish or attach the same
for payment of any claim against such person, nor shall any such person have any
right of any kind whatsoever with respect to the Trust, or any estate or
interest therein, or with respect to any other property or rights, other than
the right to receive such distributions as are made out of the Trust, as and
when the same are or shall become due and payable under the terms of this Plan.
Any attempt to transfer, pledge or levy upon or otherwise alienate an interest
of a Participant or beneficiary shall be invalid.
10.04 Unclaimed Account Procedure: The Plan does not require either the
Trustee or the Committee to search for, or ascertain the whereabouts of any
Participant or beneficiary. The Committee, by certified or registered mail
addressed to his last known address of record with the Committee or the Company,
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, or beneficiary, fails to claim his distributive
share or make his whereabouts known in writing to the Committee within six (6)
months from the date of mailing of the notice, or before the termination or
discontinuance of this Plan, whichever should first occur, the Committee shall
treat
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the Participant's or beneficiary's unclaimed payable benefits as forfeited and
shall reallocate the unclaimed payable benefits in the same manner as the
Company contribution for the Plan Year in which the forfeiture occurs.
If a Participant or beneficiary who has incurred a forfeiture of his
Account value under the provisions of the first paragraph of this Section 10.04
makes a claim, at any time, for his forfeited benefits, the Committee shall
restore the Participant's or beneficiary's forfeited benefits to the same dollar
amount as the dollar amount of the benefits forfeited, unadjusted for any gains
or losses occurring subsequent to the date of the forfeiture. The Committee
shall make the restoration during the Plan Year in which the Participant or
beneficiary makes the claim first from the amount, if any, of Participant
forfeitures the Committee otherwise would allocate for the Plan Year, then from
the amount, if any, of the Trust Fund's net income or gain for the Plan Year and
then from the amount, or additional amount, the Company shall contribute to
enable the Committee to make the required restoration. The Committee shall
direct the Trustee to distribute the Participant's or beneficiary's restored
benefit to him not later than sixty (60) days after the close of the calendar
quarter in which the Committee restores the forfeited benefit. The forfeiture
provisions of this Section 10.04 shall apply solely to the Participant's or to
the beneficiary's benefit derived from Company contributions.
10.05 Conflicting Claims: In the event that there are conflicting
claims to a Participant's Account or that the Committee shall, for any reason,
be in doubt as to its right to direct payment of any amount to any Participant,
beneficiary or beneficiaries, then the Committee may direct the Trustee to
retain such Account or amount without liability for any interest thereon, other
than adjustments to the value of such Account, valued in accordance with the
provisions of Section 6.03, until the rights thereto shall have been judicially
determined, or may direct the Trustee to pay such Account or amount into a court
of competent jurisdiction, to be distributed by such court after determining the
rights thereto. If either such action is taken, neither the Committee, the
Trustee nor the Company shall be under any further liability with respect to
such Account or amount to anyone whatsoever. Also, if the Trustee shall be in
doubt as to its right to pay any amount to any Participant, beneficiary or
beneficiaries, then the Trustee may retain such amount, without liability for
any interest thereto, other than adjustments to the value of such Account,
valued in accordance with the provisions of Section 6.03, until the rights
thereto have been judicially determined, or the Trustee may pay such amount into
a court of competent jurisdiction, in either of which events neither the
Trustee, the Committee, nor the Company shall be under any further liability
with respect to such amount to anyone whatsoever.
10.06 Multiple Copies: This Plan may be executed in any number of
counterparts, each of which shall be deemed an original.
10.07 Gender and Number: Wherever any words are used herein in the
masculine gender, they shall be construed as though they were also used in the
feminine gender, in all cases where they would so apply, and wherever any words
are used herein in the singular form, they shall be construed as though they
were also in the plural form, in all cases where they would so apply.
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10.08 Construction of Plan: This Plan shall be construed according to
the laws of the State of Texas, except as superseded by federal law, and in
accordance with ERISA and the Code, as amended from time to time.
10.09 Special Rules Relating to Veterans Re-Employment Rights under
USERRA: Notwithstanding any provision of this Plan to the contrary, effective as
of December 12, 1994, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with section 414(u) of
the Code.
ARTICLE XI
ADOPTION OF THE PLAN BY AFFILIATED AND ASSOCIATED
COMPANIES AND RELATION TO OTHER PLANS
11.01 Method of Adoption: Any affiliated or associated entity of the
Company by resolution of its board of directors, may adopt the Plan hereby
created, provided that in so doing it adopts and accepts all of the provisions
of this Plan as it exists at the time of such adoption. Both the written consent
of the Company and a resolution of the affiliated or associated entity adopting
the Plan shall be delivered to the Trustee and the effective date of adoption
shall be upon delivery of said instruments to the Trustee. From and after the
effective date when such affiliated or associated entity shall have become a
party to this Plan, it shall be known as a "Participating Company" and it shall,
for the purposes of this Plan, be included within the meaning of the word
"Company," subject, however, to the following provisions:
(a) The right and authority to select the Trustee and
successor trustee and to appoint the Committee shall be vested in and
exercisable solely by the Company.
(b) Separate accounts shall be maintained by the Trustee for
Participants from a Participating Company and such accounts shall
receive and be funded from contributions of those Participants and from
contributions from the particular Participating Company employing such
Participants.
(c) Separate records shall be maintained for the Accounts of
Participants of a Participating Company, but such Accounts shall be
administered by the Trustee and the Committee on the same basis as
those of the Participants of the Company.
(d) A Participating Company shall have the right at any time
to discontinue its participation hereunder and to terminate, as to
itself, this Plan and the Trust created hereunder, by delivering to the
Trustee written notice of such termination, accompanied by a certified
resolution of the board of directors of such Participating Company
authorizing termination, and such termination shall become effective
when notice is received by the Trustee. Upon discontinuance of
contributions or termination of the Trust, as to itself, by a
Participating Company, the Company may, in its sole and absolute
discretion, direct the
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Trustee to segregate the interests of such Participating Company,
represented by the amounts credited to the Accounts of Participants who
are employees of such Participating Company, as such Accounts are
constituted at the time of termination by such Participating Company,
as determined and directed by the Committee. The Accounts of such
Participants shall become wholly non-forfeitable as of the date of such
segregation by the Trustee. The Committee shall direct the Trustee to
distribute to such Participants the total value of their respective
Accounts in cash or in kind, provided that in the event the Trustee is
directed to make a distribution in kind, the assets so distributed
shall be valued at the time of such distribution. The Committee's
determination of fair market value shall be conclusive on all persons.
(e) Whenever an employee transfers from one Participating
Company to another, he shall be permitted to continue in this Plan.
Upon transfer, his Account shall be considered an Account of the latter
Participating Company and all subsequent Employee and Company
contributions paid in through the new employer.
11.02 Receipt of Participants' Accounts from Other Plans: The Company
may, in its sole and absolute discretion, permit the Trustee of this Plan to
accept transfer of Participant's accounts from the Trustees of other similarly
qualified employee savings or investment plans. Such transfers will be received
in the form of cash or other assets representing the value of the Participants'
Accounts as valued by the predecessor plan on the transfer date of the assets.
The cash or other assets received will be added to the Trust Fund of the Plan,
and accounted for appropriately.
11.03 Receipt of Funds from Acquired Company's Plans: The Company may,
in its sole and absolute discretion, permit the Trustee of this Plan to accept
transfers of Participants' accounts from plans of companies heretofore or
hereafter acquired by the Company, or any of its subsidiaries, provided that the
plan from which the transfer is made is qualified under the applicable
provisions of the Code.
11.04 Merger or Consolidation: In the case of any merger or
consolidation with or transfer of assets or liabilities to any other plans, each
Participant and beneficiary in the Plan must be entitled to receive a benefit
immediately after the merger, consolidation or transfer if such plan were then
terminated, which benefit it is equal to or greater than the benefit it he would
have been entitled to receive immediately before the merger, consolidation or
transfer if the Plan had been terminated.
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ARTICLE XII
CLAIMS PROCEDURE
12.01 Claims Procedure:
(a) It shall not be necessary for any person to file a claim
to receive a benefit to which he is entitled hereunder. However, any
person who believes that he is entitled to a benefit under the Plan
shall have the right to file with the Committee a written notice of
claim for such benefit. The Committee shall either grant or deny such
claim within ninety (90) days after its receipt of such written notice
of claim (or within such other period as may be mutually agreed to by
the parties), unless special circumstances require an extension of time
of up to an additional ninety (90) days for processing the claim and
appropriate notice of such extension is given; provided, however, that
any delay on the part of the Committee in arriving at a decision shall
not adversely affect benefits payable under a granted claim. A decrease
in the value of a Participant's Account, due to fair market value
depreciation during the processing of a claim shall not be deemed to be
an adverse effect attributable to Committee delay.
(b) In the case of a denied claim, the Committee shall provide
written notice claimant setting forth:
(1) The specific reason for such denial;
(2) Specific reference to the pertinent Plan
provisions on which the denial is based;
(3) A description of any additional material or
information necessary for the claimant to perfect the claim
and an explanation of why such material or information is
necessary; and
(4) An explanation of the Plan's claim review
procedure set forth in this Section 12.01.
(A) Any person who makes a claim that is
denied under Section 12.01 shall have the right, at
any time within sixty (60) days after the claimant
receives written notice of such denial, to appeal the
denial of his claim to the Committee for a full and
fair review. In the event of such appeal, the
Committee shall afford the claimant or his duly
authorized representative the opportunity:
(i) to review documents pertinent
to the claim;
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(ii) to submit issues and comments
in writing; and
(iii) to discuss such documents and
issues with the Committee.
(B) The final decision of the Committee
shall be made not later than sixty (60) days after
its receipt from the claimant of a request for
review, unless special circumstances, such as the
need to hold a hearing, require an extension of time
for processing, in which case a decision shall be
made as soon as possible but not later than one
hundred twenty (120) days after receipt of a request
for review. Such decision shall be made in writing,
shall include specific reasons for the decision,
written in a manner calculated to be understood by
the claimant, shall include specific references to
pertinent Plan provisions on which the decision is
based, and to the extent permitted by law shall be
final and binding on the claimant.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by
its duly appointed officer and its corporate seal to be hereunto affixed as of
the date first above written.
ATTEST: TANDY BRANDS ACCESSORIES, INC.
/s/ DARREL A. RICE By: /s/ J.S.B. JENKINS
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Secretary Name: J.S.B. Jenkins
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Title: President and CEO
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