EXHIBIT 10.4
EAGLE TEST SYSTEMS
EMPLOYEE STOCK OWNERSHIP PLAN
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS................................................... 1
1.1 "Act"......................................................... 1
1.2 "Administrator"............................................... 1
1.3 "Affiliated Employer"......................................... 1
1.4 "Aggregate Account"........................................... 2
1.5 "Anniversary Date"............................................ 2
1.6 "Beneficiary"................................................. 2
1.7 "Code"........................................................ 2
1.8 "Company Stock"............................................... 2
1.9 "Company Stock Account"....................................... 2
1.10 "Compensation"................................................ 2
1.11 "Contract" or "Policy"........................................ 3
1.12 "Early Retirement Date"....................................... 3
1.13 "Eligible Employee"........................................... 3
1.14 "Employee".................................................... 3
1.15 "Employer".................................................... 4
1.16 "ESOP"........................................................ 4
1.17 "Fiduciary"................................................... 4
1.18 "Fiscal Year"................................................. 4
1.19 "Forfeiture".................................................. 4
1.20 "Former Participant".......................................... 4
1.21 "415 Compensation"............................................ 4
1.22 "Highly Compensated Employee"................................. 5
1.23 "Highly Compensated Participant".............................. 6
1.24 "Hour of Service"............................................. 6
1.25 "Income"...................................................... 7
1.26 "Investment Manager".......................................... 7
1.27 "Key Employee"................................................ 7
1.28 "Late Retirement Date"........................................ 8
1.29 "Leased Employee"............................................. 8
1.30 "Non-Highly Compensated Participant".......................... 8
1.31 "Non-Key Employee"............................................ 8
1.32 "Normal Retirement Age"....................................... 9
1.33 "Normal Retirement Date"...................................... 9
1.34 "1-Year Break in Service"..................................... 9
1.35 "Other Investments Account"................................... 9
1.36 "Participant"................................................. 9
1.37 "Participant's Account"....................................... 9
1.38 "Plan"........................................................ 9
1.39 "Plan Year"................................................... 9
1.40 "Regulation".................................................. 10
1.41 "Retired Participant"......................................... 10
1.42 "Retirement Date"............................................. 10
1.43 "Terminated Participant"...................................... 10
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1.44 "Top Heavy Plan".............................................. 10
1.45 "Top Heavy Plan Year"......................................... 10
1.46 "Total and Permanent Disability".............................. 10
1.47 "Trustee"..................................................... 10
1.48 "Trust Fund".................................................. 10
1.49 "Valuation Date".............................................. 10
1.50 "Vested"...................................................... 10
1.51 "Year of Service"............................................. 10
ARTICLE II - ADMINISTRATION............................................... 11
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER................... 11
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY....................... 12
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES................. 12
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR........................ 12
2.5 RECORDS AND REPORTS........................................... 13
2.6 APPOINTMENT OF ADVISERS....................................... 14
2.7 PAYMENT OF EXPENSES........................................... 14
2.8 CLAIMS PROCEDURE.............................................. 14
2.9 CLAIMS REVIEW PROCEDURE....................................... 14
ARTICLE III - ELIGIBILITY................................................. 15
3.1 CONDITIONS OF ELIGIBILITY..................................... 15
3.2 EFFECTIVE DATE OF PARTICIPATION............................... 15
3.3 DETERMINATION OF ELIGIBILITY.................................. 15
3.4 TERMINATION OF ELIGIBILITY.................................... 15
3.5 OMISSION OF ELIGIBLE EMPLOYEE................................. 15
3.6 INCLUSION OF INELIGIBLE EMPLOYEE.............................. 15
3.7 REHIRED EMPLOYEES AND BREAKS IN SERVICE....................... 16
3.8 ELECTION NOT TO PARTICIPATE................................... 17
ARTICLE IV - CONTRIBUTION AND ALLOCATION.................................. 17
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION................. 17
4.2 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION...................... 17
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS.......... 17
4.4 MAXIMUM ANNUAL ADDITIONS...................................... 20
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS..................... 22
4.6 DIRECTED INVESTMENT ACCOUNT................................... 23
4.7 QUALIFIED MILITARY SERVICE.................................... 24
ARTICLE V - FUNDING AND INVESTMENT POLICY................................. 24
5.1 INVESTMENT POLICY............................................. 24
5.2 TRANSACTIONS INVOLVING COMPANY STOCK.......................... 25
ARTICLE VI - VALUATIONS................................................... 26
6.1 VALUATION OF THE TRUST FUND................................... 26
6.2 METHOD OF VALUATION........................................... 26
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ARTICLE VII - DETERMINATION AND DISTRIBUTION OF BENEFITS.................. 26
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT..................... 26
7.2 DETERMINATION OF BENEFITS UPON DEATH.......................... 26
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY.............. 28
7.4 DETERMINATION OF BENEFITS UPON TERMINATION.................... 28
7.5 DISTRIBUTION OF BENEFITS...................................... 30
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED.......................... 33
7.7 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY............. 34
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN................ 34
7.9 RIGHT OF FIRST REFUSALS....................................... 34
7.10 STOCK CERTIFICATE LEGEND...................................... 35
7.11 PRE-RETIREMENT DISTRIBUTION................................... 35
7.12 ADVANCE DISTRIBUTION FOR HARDSHIP............................. 36
7.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION............... 36
ARTICLE VIII - TRUSTEE.................................................... 37
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE......................... 37
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE................... 37
8.3 OTHER POWERS OF THE TRUSTEE................................... 38
8.4 LOANS TO PARTICIPANTS......................................... 41
8.5 VOTING COMPANY STOCK.......................................... 42
8.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS...................... 43
8.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES................. 43
8.8 ANNUAL REPORT OF THE TRUSTEE.................................. 43
8.9 AUDIT......................................................... 44
8.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE................ 44
8.11 TRANSFER OF INTEREST.......................................... 45
8.12 TRUSTEE INDEMNIFICATION....................................... 45
8.13 DIRECT ROLLOVER............................................... 45
ARTICLE IX - AMENDMENT, TERMINATION AND MERGERS........................... 46
9.1 AMENDMENT..................................................... 46
9.2 TERMINATION................................................... 47
9.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS................... 47
ARTICLE X - TOP HEAVY..................................................... 47
10.1 TOP HEAVY PLAN REQUIREMENTS................................... 47
10.2 DETERMINATION OF TOP HEAVY STATUS............................. 48
ARTICLE XI - MISCELLANEOUS................................................ 50
11.1 PARTICIPANT'S RIGHTS.......................................... 50
11.2 ALIENATION.................................................... 50
11.3 CONSTRUCTION OF PLAN.......................................... 51
11.4 GENDER AND NUMBER............................................. 51
11.5 LEGAL ACTION.................................................. 51
11.6 PROHIBITION AGAINST DIVERSION OF FUNDS........................ 51
11.7 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE.................... 52
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11.8 INSURER'S PROTECTIVE CLAUSE................................... 52
11.9 RECEIPT AND RELEASE FOR PAYMENTS.............................. 52
11.10 ACTION BY THE EMPLOYER........................................ 52
11.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY............ 53
11.12 HEADINGS...................................................... 53
11.13 APPROVAL BY INTERNAL REVENUE SERVICE.......................... 53
11.14 UNIFORMITY.................................................... 53
11.15 SECURITIES AND EXCHANGE COMMISSION APPROVAL................... 53
ARTICLE XII - PARTICIPATING EMPLOYERS..................................... 54
12.1 ADOPTION BY OTHER EMPLOYERS................................... 54
12.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS....................... 54
12.3 DESIGNATION OF AGENT.......................................... 54
12.4 EMPLOYEE TRANSFERS............................................ 54
12.5 PARTICIPATING EMPLOYER CONTRIBUTION AND FORFEITURES........... 54
12.6 AMENDMENT..................................................... 55
12.7 DISCONTINUANCE OF PARTICIPATION............................... 55
12.8 ADMINISTRATOR'S AUTHORITY..................................... 55
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EAGLE TEST SYSTEMS
EMPLOYEE STOCK OWNERSHIP PLAN
THIS AGREEMENT, hereby made and entered into this 19th day of September
2002, by and between Eagle Test Systems, Inc. (herein referred to as the
"Employer") and Leonard Foxman (herein referred to as the "Trustee").
WITNESSETH:
WHEREAS, the Employer heretofore established an Employee Stock Ownership
Plan effective October 1, 1995, (hereinafter called the "Effective Date") known
as Eagle Test Systems Employee Stock Ownership Plan (herein referred to as the
"Plan") in recognition of the contribution made to its successful operation by
its employees and for the exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer has the ability to
amend the Plan, provided the Trustee joins in such amendment if the provisions
of the Plan affecting the Trustee are amended; and
WHEREAS, contributions to the Plan will be made by the Employer and such
contributions made to the trust will be invested primarily in the capital stock
of the Employer;
NOW, THEREFORE, effective October 1, 2001, except as otherwise provided,
the Employer and the Trustee in accordance with the provisions of the Plan
pertaining to amendments thereof, hereby amend the Plan in its entirety and
restate the Plan to provide as follows:
ARTICLE I - DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
1.2 "Administrator" means the Employer unless another person or entity
has been designated by the Employer pursuant to Section 2.2 to administer the
Plan on behalf of the Employer.
1.3 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
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1.4 "Aggregate Account" means, with respect to each Participant, the
value of all accounts maintained on behalf of a Participant, whether
attributable to Employer or Employee contributions, subject to the provisions of
Section 10.2.
1.5 "Anniversary Date" means the last day of the Plan Year.
1.6 "Beneficiary" means the person (or entity) to whom the share of a
deceased Participant's total account is payable, subject to the restrictions of
Sections 7.2 and 7.5.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.8 "Company Stock" means common stock issued by the Employer (or by a
corporation which is a member of the controlled group of corporations of which
the Employer is a member) which is readily tradeable on an established
securities market. If there is no common stock which meets the foregoing
requirement, the term "Company Stock" means common stock issued by the Employer
(or by a corporation which is a member of the same controlled group) having a
combination of voting power and dividend rights equal to or in excess of: (A)
that class of common stock of the Employer (or of any other such corporation)
having the greatest voting power, and (B) that class of common stock of the
Employer (or of any other such corporation) having the greatest dividend rights.
Noncallable preferred stock shall be deemed to be "Company Stock" if such stock
is convertible at any time into stock which constitutes "Company Stock"
hereunder and if such conversion is at a conversion price which (as of the date
of the acquisition by the Trust) is reasonable. For purposes of the preceding
sentence, pursuant to Regulations, preferred stock shall be treated as
noncallable if after the call there will be a reasonable opportunity for a
conversion which meets the requirements of the preceding sentence.
1.9 "Company Stock Account" means the account of a Participant which is
credited with the shares of Company Stock purchased and paid for by the Trust
Fund or contributed to the Trust Fund.
1.10 "Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments of
compensation by the Employer (in the course of the Employer's trade or business)
for a Plan Year for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. Compensation
must be determined without regard to any rules under Code Section 3401(a) that
limit the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of Compensation shall be
made by:
(a) including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 132(f)(4) for Plan
Years beginning after December 31, 2000, 402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
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For a Participant's initial year of participation, Compensation shall be
recognized for the entire Plan Year.
Compensation in excess of $150,000 (or such other amount provided in the
Code) shall be disregarded. Such amount shall be adjusted for increases in the
cost of living in accordance with Code Section 401 (a)(1 7)(B), except that the
dollar increase in effect on January 1 of any calendar year shall be effective
for the Plan Year beginning with or within such calendar year. For any short
Plan Year the Compensation limit shall be an amount equal to the Compensation
limit for the calendar year in which the Plan Year begins multiplied by the
ratio obtained by dividing the number of full months in the short Plan Year by
twelve (12).
For Plan Years beginning after December 31, 1996, for purposes of
determining Compensation, the family member aggregation rules of Code Section
401 (a)(1 7) and Code Section 414(q)(6) (as in effect prior to the Small
Business Job Protection Act of 1996) are eliminated.
For purposes of this Section, if the Plan is a plan described in Code
Section 413(c) or 414(f) (a plan maintained by more than one Employer), the
limitation applies separately with respect to the Compensation of any
Participant from each Employer maintaining the Plan.
1.11 "Contract" or "Policy" means any life insurance policy, retirement
income policy or annuity policy (group or individual) issued pursuant to the
terms of the Plan. In the event of any conflict between the terms of this Plan
and the terms of any contract purchased hereunder, the Plan provisions shall
control.
1.12 "Early Retirement Date" means the first day of the month (prior to
the Normal Retirement Date) coinciding with or following the date on which a
Participant or Former Participant attains age Sixty, and has completed at least
Five Years of Service with the Employer (Early Retirement Age). A Participant
shall become fully Vested upon satisfying this requirement if still employed at
Early Retirement Age.
A Former Participant who separates from service after satisfying the
service requirement for Early Retirement and who thereafter reaches the age
requirement contained herein shall be entitled to receive benefits under this
Plan.
1.13 "Eligible Employee" means any Employee.
Employees of Affiliated Employers shall not be eligible to participate in
this Plan unless such Affiliated Employers have specifically adopted this Plan
in writing.
Employees classified by the Employer as independent contractors who are
subsequently determined by the Internal Revenue Service to be Employees shall
not be Eligible Employees.
1.14 "Employee" means any person who is employed by the Employer or
Affiliated Employer, and excludes any person who is employed as an independent
contractor. Employee shall include Leased Employees within the meaning of Code
Sections 414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a
plan described in Code Section 414(n)(5) and
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such Leased Employees do not constitute more than 20% of the recipient's
non-highly compensated work force.
1.15 "Employer" means Eagle Test Systems, Inc. and any successor which
shall maintain this Plan; and any predecessor which has maintained this Plan.
The Employer is a corporation with principal offices in the State of Illinois.
In addition, where appropriate, the term Employer shall include any
Participating Employer (as defined in Section 12.1) which shall adopt this Plan.
1.16 "ESOP" means an employee stock ownership plan that meets the
requirements of Code Section 4975(e)(7) and Regulation 54.4975-11.
1.17 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan.
1.18 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on October 1 of each year and ending the following September 30.
1.19 "Forfeiture" means that portion of a Participant's Account that is
not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of the
Participant's Account of a Former Participant who has severed employment with
the Employer. For purposes of this provision, if the Former Participant has a
Vested benefit of zero, then such Former Participant shall be deemed to have
received a distribution of such Vested benefit as of the year in which the
severance of employment occurs, or
(b) the last day of the Plan Year in which a Former Participant
who has severed employment with the Employer incurs five (5) consecutive 1-Year
Breaks in Service.
Regardless of the preceding provisions, if a Former Participant is
eligible to share in the allocation of Employer contributions or Forfeitures in
the year in which the Forfeiture would otherwise occur, then the Forfeiture will
not occur until the end of the first Plan Year for which the Former Participant
is not eligible to share in the allocation of Employer contributions or
Forfeitures. Furthermore, the term "Forfeiture" shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.20 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.21 "415 Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401 (a) and all other payments
of compensation by the Employer (in the course of the Employer's trade or
business) for a Plan Year for which the Employer is required to furnish the
Participant a written statement under Code Sections 6041(d),
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6051 (a)(3) and 6052. "415 Compensation" must be determined without regard to
any rules under Code Section 3401 (a) that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed (such as the exception for agricultural labor in Code Section 3401
(a)(2)).
For "limitation years" beginning after December 31, 1997, for purposes of
this Section, the determination of "415 Compensation" shall include any elective
deferral (as defined in Code Section 402(g)(3)), and any amount which is
contributed or deferred by the Employer at the election of the Participant and
which is not includible in the gross income of the Participant by reason of Code
Sections 125, 132(f)(4) for "limitation years" beginning after December 31, 2000
and 457.
1.22 "Highly Compensated Employee" means, for Plan Years beginning after
December 31, 1996, an Employee described in Code Section 414(q) and the
Regulations thereunder, and generally means any Employee who:
(a) was a "five percent owner" as defined in Section 1.27(c) at
any time during the "determination year" or the "look-back year"; or
(b) for the "look-back year" had "415 Compensation" from the
Employer in excess of $80,000. The $80,000 amount is adjusted at the same time
and in the same manner as under Code Section 415(d), except that the base period
is the calendar quarter ending September 30, 1996.
The "determination year" means the Plan Year for which testing is being
performed, and the "look back year" means the immediately preceding twelve (12)
month period. However, for purposes of (b) above, the "look-back year" shall be
the calendar year beginning within the twelve-month period immediately preceding
the "determination year."
A highly compensated former Employee is based on the rules applicable to
determining Highly-Compensated Employee status as in effect for the
"determination year," in accordance with Regulation 1.414(q)-1T, A-4 and IRS
Notice 97-45 (or any superseding guidance).
In determining whether an Employee is a Highly Compensated Employee for a
Plan Year beginning in 1997, the amendments to Code Section 414(q) stated above
are treated as having been in effect for years beginning in 1996.
For purposes of this Section, for Plan Years beginning prior to January 1,
1998, the determination of "415 Compensation" shall be made by including amounts
that would otherwise be excluded from a Participant's gross income by reason of
the application of Code Sections 125, 402(e)(3), 402(h)(1)(B) and, in the case
of Employer contributions made pursuant to a salary reduction agreement, Code
Section 403(b).
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911 (d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861 (a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account as
a single employer and Leased Employees within the meaning of Code
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Sections 414(n)(2) and 414(o)(2) shall be considered Employees unless such
Leased Employees are covered by a plan described in Code Section 414(n)(5) and
are not covered in any qualified plan maintained by the Employer. The exclusion
of Leased Employees for this purpose shall be applied on a uniform and
consistent basis for all of the Employer's retirement plans. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees without regard
to whether they performed services during the "determination year."
1.23 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the component of the Plan being
tested.
1.24 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties (these hours will be credited to the Employee for
the computation period in which the duties are performed); (2) each hour for
which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty
or leave of absence) during the applicable computation period (these hours will
be calculated and credited pursuant to Department of Labor regulation
2530.200b-2 which is incorporated herein by reference); (3) each hour for which
back pay is awarded or agreed to by the Employer without regard to mitigation of
damages (these hours will be credited to the Employee for the computation period
or periods to which the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made). The same Hours of
Service shall not be credited both under (1) or (2), as the case may be, and
under (3).
Notwithstanding (2) above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of (2) above, a payment shall be deemed to be made by or due
from the Employer regardless of whether such payment is made by or due from the
Employer directly, or indirectly through, among others, a trust fund, or
insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
For purposes of this Section, Hours of Service will be credited for
employment with other Affiliated Employers. The provisions of Department of
Labor regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
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1.25 "Income" means the income or losses allocable to which amount shall
be allocated in the same manner as income or losses are allocated pursuant to
Section 4.3(d).
1.26 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.27 "Key Employee" means an Employee as defined in Code Section 416(i)
and the Regulations thereunder. Generally, any Employee or former Employee (as
well as each of the Employee's or former Employee's Beneficiaries) is considered
a Key Employee if the Employee's or former Employee's, at any time during the
Plan Year that contains the "Determination Date" or any of the preceding four
(4) Plan Years, has been included in one of the following categories:
(a) an officer of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) having annual "415
Compensation" greater than 50 percent of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation" from
the Employer for a Plan Year greater than the dollar limitation in effect under
Code Section 415(c)(1)(A) for the calendar year in which such Plan Year ends and
owning (or considered as owning within the meaning of Code Section 318) both
more than one-half percent interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner"
means any person who owns (or is considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of the
Employer or stock possessing more than five percent (5%) of the total combined
voting power of all stock of the Employer or, in the case of an unincorporated
business, any person who owns more than five percent (5%) of the capital or
profits interest in the Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent owner" means
any person who owns (or is considered as owning within the meaning of Code
Section 318) more than one percent (1 %) of the outstanding stock of the
Employer or stock possessing more than one percent (1 %) of the total combined
voting power of all stock of the Employer or, in the case of an unincorporated
business, any person who owns more than one percent (1 %) of the capital or
profits interest in the Employer. In determining percentage ownership hereunder,
employers that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers. However, in determining
whether an individual has "415 Compensation" of more than $150,000,"415
Compensation" from each employer required to be aggregated under Code Sections
414(b), (c), (m) and (o) shall be taken into account.
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For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 132(f)(4) for Plan
Years beginning after December 31, 2000, 402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
1.28 "Late Retirement Date" means a Participant's actual Retirement Date
after having reached Normal Retirement Date.
1.29 "Leased Employee" means, for Plan Years beginning after December 31,
1996, any person (other than an Employee of the recipient Employer) who pursuant
to an agreement between the recipient Employer and any other person or entity
("leasing organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one year,
and such services are performed under primary direction or control by the
recipient Employer. Contributions or benefits provided a Leased Employee by the
leasing organization which are attributable to services performed for the
recipient Employer shall be treated as provided by the recipient Employer.
Furthermore, Compensation for a Leased Employee shall only include Compensation
from the leasing organization that is attributable to services performed for the
recipient Employer. A Leased Employee shall not be considered an Employee of the
recipient Employer:
(a) if such employee is covered by a money purchase pension plan
providing:
(1) a nonintegrated employer contribution rate of at least
10% of compensation, as defined in Code Section 415(c)(3), but for Plan
Years beginning prior to January 1, 1998, including amounts which are
contributed by the Employer pursuant to a salary reduction agreement and
which are not includible in the gross income of the Participant under Code
Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are treated as
Employer contributions, and for Plan Years beginning prior to January 1,
2001, excluding amounts that are not includible in gross income under Code
Section 132(f)(4);
(2) immediate participation;
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient Employer's nonhighly compensated work force.
1.30 "Non-Highly Compensated Participant" means, for Plan Years beginning
after December 31, 1996, any Participant who is not a Highly Compensated
Employee.
1.31 "Non-Key Employee" means any Employee or former Employee (and such
Employee's or former Employee's Beneficiaries) who is not, and has never been, a
Key Employee.
8
1.32 "Normal Retirement Age" means the Participant's 62 birthday, or the
Participant's 5 anniversary of joining the Plan, if later. A Participant shall
become fully Vested in the Participant's Account upon attaining Normal
Retirement Age.
1.33 "Normal Retirement Date" means the Participant's Normal Retirement
Age.
1.34 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation from
active employment with the Employer pursuant to an established nondiscriminatory
policy, whether occasioned by illness, military service, or any other reason.
A "maternity or paternity leave of absence" means an absence from work for
any period by reason of the Employee's pregnancy, birth of the Employee's child,
placement of a child with the Employee in connection with the adoption of such
child, or any absence for the purpose of caring for such child for a period
immediately following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the absence from
work begins, only if credit therefore is necessary to prevent the Employee from
incurring a 1-Year Break in Service, or, in any other case, in the immediately
following computation period. The Hours of Service credited for a "maternity or
paternity leave of absence" shall be those which would normally have been
credited but for such absence, or, in any case in which the Administrator is
unable to determine such hours normally credited, eight (8) Hours of Service per
day. The total Hours of Service required to be credited for a "maternity or
paternity leave of absence" shall not exceed the number of Hours of Service
needed to prevent the Employee from incurring a 1-Year Break in Service.
1.35 "Other Investments Account" means the account of a Participant which
is credited with such Participant's share of the net gain (or loss) of the Plan
and Employer contributions in other than Company Stock and which is debited with
payments made to pay for Company Stock.
1.36 "Participant" means any Eligible Employee who participates in the
Plan and has not for any reason become ineligible to participate further in the
Plan.
1.37 "Participant's Account" means the account established and maintained
by the Administrator for each Participant with respect to such Participant's
total interest in the Plan and Trust resulting from the Employer contributions.
1.38 "Plan" means this instrument, including all amendments thereto.
1.39 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on October 1 of each year and ending the following September 30.
9
1.40 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or a delegate of the Secretary of the Treasury, and as
amended from time to time.
1.41 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.42 "Retirement Date" means the date as of which a Participant retires
for reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement Date
(see Section 7.1).
1.43 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
1.44 "Top Heavy Plan" means a plan described in Section 10.2(a).
1.45 "Top Heavy Plan Year" means a Plan Year during which the Plan is a
Top Heavy Plan.
1.46 "Total and Permanent Disability" means a physical or mental
condition of a Participant resulting from bodily injury, disease, or mental
disorder which renders such Participant incapable of continuing usual and
customary employment with the Employer. The disability of a Participant shall be
determined by a licensed physician chosen by the Administrator. The
determination shall be applied uniformly to all Participants.
1.47 "Trustee" means the person or entity named as trustee herein or in
any separate trust forming a part of this Plan, and any successors.
1.48 "Trust Fund" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.49 "Valuation Date" means the Anniversary Date and may include any
other date or dates deemed necessary or appropriate by the Administrator for the
valuation of the Participant's accounts during the Plan Year, which may include
any day that the Trustee, any transfer agent appointed by the Trustee or the
Employer or any stock exchange used by such agent, are open for business.
1.50 "Vested" means the nonforfeitable portion of any account maintained
on behalf of a Participant.
1.51 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
For purposes of eligibility for participation, the initial computation
period shall begin with the date on which the Employee first performs an Hour of
Service. The participation computation period beginning after a 1 -Year Break in
Service shall be measured from the date on which an Employee again performs an
Hour of Service. The participation computation period shall shift to the Plan
Year which includes the anniversary of the date on which the Employee
10
first performed an Hour of Service. An Employee who is credited with the
required Hours of Service in both the initial computation period (or the
computation period beginning after a 1-Year Break in Service) and the Plan Year
which includes the anniversary of the date on which the Employee first performed
an Hour of Service, shall be credited with two (2) Years of Service for purposes
of eligibility to participate.
For vesting purposes, the computation periods shall be the Plan Year,
including periods prior to the Effective Date of the Plan.
The computation period shall be the Plan Year if not otherwise set forth
herein.
Notwithstanding the foregoing, for any short Plan Year, the determination
of whether an Employee has completed a Year of Service shall be made in
accordance with Department of Labor regulation 2530.203-2(c). However, in
determining whether an Employee has completed a Year of Service for benefit
accrual purposes in the short Plan Year, the number of the Hours of Service
required shall be proportionately reduced based on the number of full months in
the short Plan Year.
Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II - ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER.
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered to appoint
and remove the Trustee and the Administrator from time to time as it deems
necessary for the proper administration of the Plan to ensure that the Plan is
being operated for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the Code, and the Act.
The Employer may appoint counsel, specialists, advisers, agents (including any
nonfiduciary agent) and other persons as the Employer deems necessary or
desirable in connection with the exercise of its fiduciary duties under this
Plan. The Employer may compensate such agents or advisers from the assets of the
Plan as fiduciary expenses (but not including any business (settlor) expenses of
the Employer), to the extent not paid by the Employer.
(b) The Employer may, by written agreement or designation, appoint
at its option an Investment Manager (qualified under the Investment Company Act
of 1940 as amended), investment adviser, or other agent to provide direction to
the Trustee with respect to any or all of the Plan assets. Such appointment
shall be given by the Employer in writing in a form acceptable to the Trustee
and shall specifically identify the Plan assets with respect to which the
Investment Manager or other agent shall have authority to direct the investment.
(c) The Employer shall establish a "funding policy and method,"
i.e., it shall determine whether the Plan has a short run need for liquidity
(e.g., to pay benefits) or whether liquidity is a long run goal and investment
growth (and stability of same) is a more current need, or shall appoint a
qualified person to do so. The Employer or its delegate shall communicate such
needs and goals to the Trustee, who shall coordinate such Plan needs with its
investment policy. The communication of such a "funding policy and method" shall
not, however, constitute
11
a directive to the Trustee as to the investment of the Trust Funds. Such
"funding policy and method" shall be consistent with the objectives of this Plan
and with the requirements of Title I of the Act.
(d) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or allocated by it
under the provisions of this Plan or pursuant to procedures established
hereunder. This requirement may be satisfied by formal periodic review by the
Employer or by a qualified person specifically designated by the Employer,
through day-to-day conduct and evaluation, or through other appropriate ways.
(e) The Employer will furnish Plan Fiduciaries and Participants
with notices and information statements when voting rights must be exercised
pursuant to Section 8.5.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY. The Employer shall be the
Administrator. The Employer may appoint any person, including, but not limited
to, the Employees of the Employer, to perform the duties of the Administrator.
Any person so appointed shall signify acceptance by filing written acceptance
with the Employer. Upon the resignation or removal of any individual performing
the duties of the Administrator, the Employer may designate a successor.
2.3 ALLOCATION AND DELEGATION OF RESPONSIBILITIES. If more than one
person is appointed as Administrator, the responsibilities of each Administrator
may be specified by the Employer and accepted in writing by each Administrator.
In the event that no such delegation is made by the Employer, the Administrators
may allocate the responsibilities among themselves, in which event the
Administrators shall notify the Employer and the Trustee in writing of such
action and specify the responsibilities of each Administrator. The Trustee
thereafter shall accept and rely upon any documents executed by the appropriate
Administrator until such time as the Employer or the Administrators file with
the Trustee a written revocation of such designation.
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR. The primary responsibility
of the Administrator is to administer the Plan for the exclusive benefit of the
Participants and their Beneficiaries, subject to the specific terms of the Plan.
The Administrator shall administer the Plan in accordance with its terms and
shall have the power and discretion to construe the terms of the Plan and to
determine all questions arising in connection with the administration,
interpretation, and application of the Plan. Any such determination by the
Administrator shall be conclusive and binding upon all persons. The
Administrator may establish procedures, correct any defect, supply any
information, or reconcile any inconsistency in such manner and to such extent as
shall be deemed necessary or advisable to carry out the purpose of the Plan;
provided, however, that any procedure, discretionary act, interpretation or
construction shall be done in a nondiscriminatory manner based upon uniform
principles consistently applied and shall be consistent with the intent that the
Plan shall continue to be deemed a qualified plan under the terms of Code
Section 401(a), and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers necessary or
appropriate to accomplish the Administrator's duties under the Plan.
12
The Administrator shall be charged with the duties of the general
administration of the Plan as set forth under the terms of the Plan, including,
but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant hereunder and to
receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to
the amount and the kind of benefits to which any Participant shall be entitled
hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration of
the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent with the terms
hereof;
(f) to determine the size and type of any Contract to be purchased
from any insurer, and to designate the insurer from which such Contract shall be
purchased;
(g) to compute and certify to the Employer and to the Trustee from
time to time the sums of money necessary or desirable to be contributed to the
Plan;
(h) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that the Trustee can
exercise any investment discretion in a manner designed to accomplish specific
objectives;
(i) to establish and communicate to Participants a procedure for
allowing each Participant to direct the Trustee as to the distribution of such
Participant's Company Stock Account pursuant to Section 4.6;
(j) to establish and communicate to Participants a procedure and
method to insure that each Participant will vote Company Stock allocated to such
Participant's Company Stock Account pursuant to Section 8.5;
(k) to determine the validity of, and take appropriate action with
respect to, any qualified domestic relations order received by it; and
(l) to assist any Participant regarding the Participant's rights,
benefits, or elections available under the Plan.
2.5 RECORDS AND REPORTS. The Administrator shall keep a record of all
actions taken and shall keep all other books of account, records, policies, and
other data that may be necessary for proper administration of the Plan and shall
be responsible for supplying all information and reports to the Internal Revenue
Service, Department of Labor, Participants, Beneficiaries and others as required
by law.
13
2.6 APPOINTMENT OF ADVISERS. The Administrator, or the Trustee with the
consent of the Administrator, may appoint counsel, specialists, advisers, agents
(including nonfiduciary agents) and other persons as the Administrator or the
Trustee deems necessary or desirable in connection with the administration of
this Plan, including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries.
2.7 PAYMENT OF EXPENSES. All expenses of administration may be paid out
of the Trust Fund unless paid by the Employer. Such expenses shall include any
expenses incident to the functioning of the Administrator, or any person or
persons retained or appointed by any Named Fiduciary incident to the exercise of
their duties under the Plan, including, but not limited to, fees of accountants,
counsel, Investment Managers, and other specialists and their agents, the costs
of any bonds required pursuant to Act Section 412, and other costs of
administering the Plan. Until paid, the expenses shall constitute a liability of
the Trust Fund.
2.8 CLAIMS PROCEDURE. Claims for benefits under the Plan may be filed in
writing with the Administrator. Written notice of the disposition of a claim
shall be furnished to the claimant within 90 days after the application is
filed, or such period as is required by applicable law or Department of Labor
regulation. In the event the claim is denied, the reasons for the denial shall
be specifically set forth in the notice in language calculated to be understood
by the claimant, pertinent provisions of the Plan shall be cited, and, where
appropriate, an explanation as to how the claimant can perfect the claim will be
provided. In addition, the claimant shall be furnished with an explanation of
the Plan's claims review procedure.
2.9 CLAIMS REVIEW PROCEDURE. Any Employee, former Employee, or
Beneficiary of either, who has been denied a benefit by a decision of the
Administrator pursuant to Section 2.8 shall be entitled to request the
Administrator to give further consideration to a claim by filing with the
Administrator a written request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes the claim should be
allowed, shall be filed with the Administrator no later than sixty (60) days
after receipt of the written notification provided for in Section 2.8. The
Administrator shall then conduct a hearing within the next sixty (60) days, at
which the claimant may be represented by an attorney or any other representative
of such claimant's choosing and expense and at which the claimant shall have an
opportunity to submit written and oral evidence and arguments in support of the
claim. At the hearing (or prior thereto upon five (5) business days written
notice to the Administrator) the claimant or the claimant's representative shall
have an opportunity to review all documents in the possession of the
Administrator which are pertinent to the claim at issue and its disallowance.
Either the claimant or the Administrator may cause a court reporter to attend
the hearing and record the proceedings. In such event, a complete written
transcript of the proceedings shall be furnished to both parties by the court
reporter. The full expense of any such court reporter and such transcripts shall
be borne by the party causing the court reporter to attend the hearing. A final
decision as to the allowance of the claim shall be made by the Administrator
within sixty (60) days of receipt of the appeal (unless there has been an
extension of sixty (60) days due to special circumstances, provided the delay
and the special circumstances occasioning it are communicated to the claimant
within the sixty (60) day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
14
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE III - ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY. Any Eligible Employee who has completed
one (1) Year of Service and has attained age 21 shall be eligible to participate
hereunder as of the date such Employee has satisfied such requirements. However,
any Employee who was a Participant in the Plan prior to the effective date of
this amendment and restatement shall continue to participate in the Plan.
3.2 EFFECTIVE DATE OF PARTICIPATION. An Eligible Employee shall become a
Participant effective as of the first day of the Plan Year in which such
Employee met the eligibility requirements of Section 3.1.
3.3 DETERMINATION OF ELIGIBILITY. The Administrator shall determine the
eligibility of each Employee for participation in the Plan based upon
information furnished by the Employer. Such determination shall be conclusive
and binding upon all persons, as long as the same is made pursuant to the Plan
and the Act. Such determination shall be subject to review pursuant to Section
2.9.
3.4 TERMINATION OF ELIGIBILITY. In the event a Participant shall go from
a classification of an Eligible Employee to an ineligible Employee, such Former
Participant shall continue to vest in the Plan for each Year of Service
completed while a noneligible Employee, until such time as the Participant's
Account shall be forfeited or distributed pursuant to the terms of the Plan.
Additionally, the Former Participant's interest in the Plan shall continue to
share in the earnings of the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE. If, in any Plan Year, any Employee
who should be included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution by the
Employer for the year has been made and allocated, then the Employer shall make
a subsequent contribution, if necessary after the application of Section 4.3(e),
so that the omitted Employee receives a total amount which the Employee would
have received (including both Employer contributions and earnings thereon) had
the Employee not been omitted. Such contribution shall be made regardless of
whether it is deductible in whole or in part in any taxable year under
applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE. If, in any Plan Year, any person
who should not have been included as a Participant in the Plan is erroneously
included and discovery of such inclusion is not made until after a contribution
for the year has been made and allocated, the Employer shall be entitled to
recover the contribution made with respect to the ineligible person provided the
error is discovered within twelve (12) months of the date on which it was made.
Otherwise, the amount contributed with respect to the ineligible person shall
constitute a Forfeiture for the Plan Year in which the discovery is made.
15
3.7 REHIRED EMPLOYEES AND BREAKS IN SERVICE.
(a) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed by the Employer
before a 1-Year Break in Service occurs, the Former Participant shall become a
Participant as of the reemployment date.
(b) If any Participant becomes a Former Participant due to
severance from employment with the Employer and is reemployed after a 1-Year
Break in Service has occurred, Years of Service shall include Years of Service
prior to the 1-Year Break in Service subject to the following rules:
(1) In the case of a Former Participant who under the Plan
does not have a nonforfeitable right to any interest in the Plan resulting
from Employer contributions, Years of Service before a period of 1-Year
Break in Service will not be taken into account if the number of
consecutive 1-Year Breaks in Service equal or exceed the greater of (A)
five (5) or (B) the aggregate number of pre-break Years of Service. Such
aggregate number of Years of Service will not include any Years of Service
disregarded under the preceding sentence by reason of prior 1-Year Breaks
in Service.
(2) A Former Participant who has not had Years of Service
before a 1 Year Break in Service disregarded pursuant to (1) above, and
completes a Year of Service for eligibility purposes shall participate in
the Plan as of the date immediately following completion of a Year of
Service.
(c) After a Former Participant who has severed employment with the
Employer incurs five (5) consecutive 1-Year Breaks in Service, the Vested
portion of said Former Participant's Account attributable to pre-break service
shall not be increased as a result of post-break service. In such case, separate
accounts will be maintained as follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
(2) one account representing the Participant's Employer
derived account balance in the Plan attributable to post-break service.
(d) If any Participant becomes a Former Participant due to
severance of employment with the Employer and is reemployed by the Employer
before five (5) consecutive 1-Year Breaks in Service, and such Former
Participant had received a distribution of the entire Vested interest prior to
reemployment, then the forfeited account shall be reinstated only if the Former
Participant repays the full amount which had been distributed. Such repayment
must be made before the earlier of five (5) years after the first date on which
the Participant is subsequently reemployed by the Employer or the close of the
first period of five (5) consecutive 1-Year Breaks in Service commencing after
the distribution. If a distribution occurs for any reason other than a severance
of employment, the time for repayment may not end earlier than five (5) years
after the date of distribution. In the event the Former Participant does repay
the full amount distributed, the undistributed forfeited portion of the
Participant's Account must be restored in full, unadjusted by any gains or
losses occurring subsequent to the Valuation Date preceding the distribution.
The source for such reinstatement may be Forfeitures occurring
16
during the Plan Year. If such source is insufficient, then the Employer will
contribute an amount which is sufficient to restore any such forfeited Accounts
provided, however, that if a discretionary contribution is made for such year,
such contribution shall first be applied to restore any such Accounts and the
remainder shall be allocated in accordance with Section 4.3.
If a non-Vested Former Participant was deemed to have received a
distribution and such Former Participant is reemployed by the Employer before
five (5) consecutive 1-Year Breaks in Service, then such Participant will be
deemed to have repaid the deemed distribution as of the date of reemployment.
3.8 ELECTION NOT TO PARTICIPATE. An Employee may, subject to the
approval of the Employer, elect voluntarily not to participate in the Plan. The
election not to participate must be communicated to the Employer, in writing,
within a reasonable period of time. before the beginning of a Plan Year.
ARTICLE IV - CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION.
(a) For each Plan Year, the Employer shall contribute to the Plan
such amount as shall be determined by the Employer.
(b) The Employer contribution shall not be limited to years in
which the Employer has current or accumulated net profit. Additionally, to the
extent necessary, the Employer shall contribute to the Plan the amount necessary
to provide the top heavy minimum contribution. All contributions by the Employer
shall be made in cash or in such property as is acceptable to the Trustee.
4.2 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION. The Employer may make its
contribution to the Plan for a particular Plan Year at such time as the
Employer, in its sole discretion, determines. If the Employer makes a
contribution for a particular Plan Year after the close of that Plan Year, the
Employer will designate to the Trustee the Plan Year for which the Employer is
making its contribution.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS.
(a) The Administrator shall establish and maintain an account in
the name of each Participant to which the Administrator shall credit as of each
Anniversary Date, or other Valuation Date, all amounts allocated to each such
Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation of the
Employer contributions for each Plan Year. Within a reasonable period of time
after the date of receipt by the Administrator of such information, the
Administrator shall allocate such contribution to each Participant's Account in
the same proportion that each such Participant's Compensation for the year bears
to the total Compensation of all Participants for such year.
17
Only Participants who have completed a Year of Service during the Plan
Year and are actively employed on the last day of the Plan Year shall be
eligible to share in the discretionary contribution for the year.
(c) The Company Stock Account of each Participant shall be
credited as of each Anniversary Date with the Participant's allocable share of
Company Stock (including fractional shares) purchased and paid for by the Plan
or contributed in kind by the Employer. Stock dividends on Company Stock held in
the Participant's Company Stock Account shall be credited to the Participant's
Company Stock Account when paid to the Plan. Cash dividends on Company Stock
held in the Participant's Company Stock Account shall be credited to the
Participant's Other Investments Account when paid to the Plan.
(d) As of each Valuation Date, before the current valuation period
allocation of Employer contributions, any earnings or losses (net appreciation
or net depreciation) of the Trust Fund shall be allocated in the same proportion
that each Participant's and Former Participant's nonsegregated accounts (other
than each Participant's Company Stock Account) bear to the total of all
Participants' and Former Participants' nonsegregated accounts (other than each
Participant's Company Stock Account) as of such date.
(e) On or before each Anniversary Date any amounts which became
Forfeitures since the last Anniversary Date may be made available to reinstate
previously forfeited account balances of Former Participants, if any, in
accordance with Section 3.7(d), be used to satisfy any contribution that may be
required pursuant to Section 3.5 and/or 7.8, or used to pay any administrative
expenses of the Plan. The remaining Forfeitures, if any, shall be used to reduce
the contribution of the Employer hereunder for the Plan Year in which such
Forfeitures occur.
(f) For any Top Heavy Plan Year, Employees not otherwise eligible
to share in the allocation of contributions as provided above, shall receive the
minimum allocation provided for in Section 4.3(h) if eligible pursuant to the
provisions of Section 4.3(j).
(g) Notwithstanding the foregoing, Participants who are not
actively employed on the last day of the Plan Year due to Retirement (Early,
Normal or Late) or death shall not share in the allocation of contributions for
that Plan Year.
(h) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the
Employer contributions allocated to the Participant's Account of each Employee
shall be equal to at least three percent (3%) of such Employee's "415
Compensation" (reduced by contributions and forfeitures, if any, allocated to
each Employee in any defined contribution plan included with this Plan in a
Required Aggregation Group). However, if (1) the sum of the Employer
contributions allocated to the Participant's Account of each Key Employee for
such Top Heavy Plan Year is less than three percent (3%) of each Key Employee's
"415 Compensation" and (2) this Plan is not required to be included in an
Aggregation Group to enable a defined benefit plan to meet the requirements of
Code Section 401 (a)(4) or 410, the sum of the Employer contributions allocated
to the Participant's Account of each Employee shall be equal to the largest
percentage allocated to the Participant's Account of any Key Employee.
18
However, no such minimum allocation shall be required in this Plan for any
Employee who participates in another defined contribution plan subject to Code
Section 412 included with this Plan in a Required Aggregation Group.
(i) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Account of any Key Employee shall be
equal to the ratio of the sum of the Employer contributions allocated on behalf
of such Key Employee divided by the "415 Compensation" for such Key Employee.
(j) For any Top Heavy Plan Year, the minimum allocations set forth
above shall be allocated to the Participant's Account of all Employees who are
Participants and who are employed by the Employer on the last day of the Plan
Year, including Employees who have (1) failed to complete a Year of Service; and
(2) declined to make mandatory contributions (if required) to the Plan.
(k) For the purposes of this Section, "415 Compensation" in excess
of $150,000 (or such other amount provided in the Code) shall be disregarded.
Such amount shall be adjusted for increases in the cost of living in accordance
with Code Section 401 (a)(1 7)(B), except that the dollar increase in effect on
January 1 of any calendar year shall be effective for the Plan Year beginning
with or within such calendar year. If "415 Compensation" for any prior
determination period is taken into account in determining a Participant's
minimum benefit for the current Plan Year, the "415 Compensation" for such
determination period is subject to the applicable annual "415 Compensation"
limit in effect for that prior period. For this purpose, in determining the
minimum benefit in Plan Years beginning on or after January 1, 1989, the annual
"415 Compensation" limit in effect for determination periods beginning before
that date is $200,000 (or such other amount as adjusted for increases in the
cost of living in accordance with Code Section 415(d) for determination periods
beginning on or after January 1, 1989, and in accordance with Code Section 401
(a)(1 7)(B) for determination periods beginning on or after January 1, 1994).
For determination periods beginning prior to January 1, 1989, the $200,000 limit
shall apply only for Top Heavy Plan Years and shall not be adjusted. For any
short Plan Year the "415 Compensation" limit shall be an amount equal to the
"415 Compensation" limit for the calendar year in which the Plan Year begins
multiplied by the ratio obtained by dividing the number of full months in the
short Plan Year by twelve (12).
(l) Notwithstanding anything in this Section to the contrary, all
information necessary to properly reflect a given transaction may not be
available until after the date specified herein for processing such transaction,
in which case the transaction will be reflected when such information is
received and processed. Subject to express limits that may be imposed under the
Code, the processing of any contribution, distribution or other transaction may
be delayed for any legitimate business reason (including, but not limited to,
failure of systems or computer programs, failure of the means of the
transmission of data, force majeure, the failure of a service provider to timely
receive values or prices, and the correction for errors or omissions or the
errors or omissions of any service provider). The processing date of a
transaction will be binding for all purposes of the Plan.
(m) Notwithstanding anything to the contrary, if this is a Plan
that would otherwise fail to meet the requirements of Code Section 410(b)(1)(B)
and the Regulations
19
thereunder because Employer contributions would not be allocated to a sufficient
number or percentage of Participants for a Plan Year, then the following rules
shall apply:
(1) The group of Participants eligible to share in the
Employer's contribution for the Plan Year shall be expanded to include the
minimum number of Participants who would not otherwise be eligible as are
necessary to satisfy the applicable test specified above. The specific
Participants who shall become eligible under the terms of this paragraph
shall be those who have not separated from service prior to the last day
of the Plan Year and have completed the greatest number of Hours of
Service in the Plan Year.
(2) If after application of paragraph (1) above, the
applicable test is still not satisfied, then the group of Participants
eligible to share in the Employer's contribution for the Plan Year shall
be further expanded to include the minimum number of Participants who have
separated from service prior to the last day of the Plan Year as are
necessary to satisfy the applicable test. The specific Participants who
shall become eligible to share shall be those Participants who have
completed the greatest number of Hours of Service in the Plan Year before
terminating employment.
(3) Nothing in this Section shall permit the reduction of a
Participant's accrued benefit. Therefore any amounts that have previously
been allocated to Participants may not be reallocated to satisfy these
requirements. In such event, the Employer shall make an additional
contribution equal to the amount such affected Participants would have
received had they been included in the allocations, even if it exceeds the
amount which would be deductible under Code Section 404. Any adjustment to
the allocations pursuant to this paragraph shall be considered a
retroactive amendment adopted by the last day of the Plan Year.
(4) Notwithstanding the foregoing, if the portion of the
Plan which is not a Code Section 401(k) plan would fail to satisfy Code
Section 410(b) if the coverage tests were applied by treating those
Participants whose only allocation would otherwise be provided under the
top heavy formula as if they were not currently benefiting under the Plan,
then, for purposes of this Section 4.3(m), such Participants shall be
treated as not benefiting and shall therefore be eligible to be included
in the expanded class of Participants who will share in the allocation
provided under the Plan's non top heavy formula.
4.4 MAXIMUM ANNUAL ADDITIONS.
(a) Notwithstanding the foregoing, for "limitation year" beginning
after December 31, 1994, the maximum "annual additions" credited to a
Participant's accounts for any "limitation year" shall equal the lesser of: (1)
$30,000 adjusted annually as provided in Code Section 415(d) pursuant to the
Regulations, or (2) twenty-five percent (25%) of the Participant's "415
Compensation" for such "limitation year." If the Employer contribution that
would otherwise be contributed or allocated to the Participant's accounts would
cause the "annual additions" for the "limitation year" to exceed the maximum
"annual additions," the amount contributed or allocated will be reduced so that
the "annual additions" for the "limitation year"
20
will equal the maximum "annual additions," and any amount in excess of the
maximum "annual additions," which would have been allocated to such Participant
may be allocated to other Participants. For any short "limitation year," the
dollar limitation in (1) above shall be reduced by a fraction, the numerator
of which is the number of full months in the short "limitation year" and the
denominator of which is twelve (12).
(b) For purposes of applying the limitations of Code Section 415,
"annual additions" means the sum credited to a Participant's accounts for any
"limitation year" of (1) Employer contributions, (2) Employee contributions, (3)
forfeitures, (4) amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Code Section 415(1)(2) which is part of a pension
or annuity plan maintained by the Employer and (5) 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 Code Section
419A(d)(3)) under a welfare benefit plan (as defined in Code Section 419(e))
maintained by the Employer. Except, however, the "415 Compensation" percentage
limitation referred to in paragraph (a)(2) above shall not apply to: (1) any
contribution for medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise treated as an
"annual addition," or (2) any amount otherwise treated as an "annual addition"
under Code Section 415(l)(1).
(c) For purposes of applying the limitations of Code Section 415,
the transfer of funds from one qualified plan to another is not an "annual
addition." In addition, the following are not Employee contributions for the
purposes of Section 4.4(b): (1) rollover contributions (as defined in Code
Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2) repayments of loans
made to a Participant from the Plan; (3) repayments of distributions received by
an Employee pursuant to Code Section 411 (a)(7)(B) (cash-outs); (4) repayments
of distributions received by an Employee pursuant to Code Section 411 (a)(3)(D)
(mandatory contributions); and (5) Employee contributions to a simplified
employee pension excludable from gross income under Code Section 408(k)(6).
(d) For purposes of applying the limitations of Code Section 415,
the "limitation year" shall be the Plan Year.
(e) For the purpose of this Section, all qualified defined
contribution plans (whether terminated or not) ever maintained by the Employer
shall be treated as one defined contribution plan.
(f) For the purpose of this Section, if the Employer is a member
of a controlled group of corporations, trades or businesses under common control
(as defined by Code Section 1563(a) or Code Section 414(b) and (c) as modified
by Code Section 415(h)), is a member of an affiliated service group (as defined
by Code Section 414(m)), or is a member of a group of entities required to be
aggregated pursuant to Regulations under Code Section 414(o), all Employees of
such Employers shall be considered to be employed by a single Employer.
(g) For the purpose of this Section, if this Plan is a Code
Section 413(c) plan, each Employer who maintains this Plan will be considered to
be a separate Employer.
21
(h) (1) If a Participant participates in more than one defined
contribution plan maintained by the Employer which have different Anniversary
Dates, the maximum "annual additions" under this Plan shall equal the maximum
"annual additions" for the "limitation year" minus any "annual additions"
previously credited to such Participant's accounts during the "limitation year."
(2) If a Participant participates in both a defined
contribution plan subject to Code Section 412 and a defined contribution
plan not subject to Code Section 412 maintained by the Employer which have
the same Anniversary Date, "annual additions" will be credited to the
Participant's accounts under the defined contribution plan subject to Code
Section 412 prior to crediting "annual additions" to the Participant's
accounts under the defined contribution plan not subject to Code Section
412.
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained by the
Employer which have the same Anniversary Date, the maximum "annual
additions" under this Plan shall equal the product of (A) the maximum
"annual additions" for the "limitation year" minus any "annual additions"
previously credited under subparagraphs (1) or (2) above, multiplied by
(B) a fraction (i) the numerator of which is the "annual additions" which
would be credited to such Participant's accounts under this Plan without
regard to the limitations of Code Section 415 and (ii) the denominator of
which is such "annual additions" for all plans described in this
subparagraph.
(i) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements prescribed in this
Section shall at all times comply with the provisions of Code Section 415 and
the Regulations thereunder.
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS.
(a) If, as a result of a reasonable error in estimating a
Participant's Compensation, a reasonable error in determining the amount of
elective deferrals (within the meaning of Code Section 402(g)(3)) that may be
made with respect to any Participant under the limits of Section 4.4 or other
facts and circumstances to which Regulation 1.415-6(b)(6) shall be applicable,
the "annual additions" under this Plan would cause the maximum "annual
additions" to be exceeded for any Participant, the "excess amount" will be
disposed of in one of the following manners, as uniformly determined by the
Administrator for all Participants similarly situated.
(1) If the Participant is covered by the Plan at the end of
the "limitation year," the "excess amount" will be used to reduce the
Employer contribution for such Participant in the next "limitation year,"
and each succeeding "limitation year" if necessary;
(2) If, after the application of subparagraph (1) above, an
"excess amount" still exists, and the Participant is not covered by the
Plan at the end of the "limitation year," the "excess amount" will be held
unallocated in a "Section 415 suspense account." The "Section 415 suspense
account will be applied to reduce future
22
Employer contributions for all remaining Participants in the next
"limitation year," and each succeeding "limitation year" if necessary;
(3) If a "Section 415 suspense account" is in existence at
any time during the "limitation year" pursuant to this Section, it will
not participate in the allocation of investment gains and losses of the
Trust Fund. If a "Section 415 suspense account" is in existence at any
time during a particular "limitation year," all amounts in the "Section
415 suspense account" must be allocated and reallocated to Participants'
accounts before any Employer contributions or any Employee contributions
may be made to the Plan for that "limitation year." "Excess amounts" may
not be distributed to Participants or Former Participants.
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if any, of (1) the
"annual additions" which would be credited to the Participant's account under
the terms of the Plan without regard to the limitations of Code Section 415 over
(2) the maximum "annual additions" determined pursuant to Section 4.4.
(c) For purposes of this Section, "Section 415 suspense account"
shall mean an unallocated account equal to the sum of "excess amounts" for all
Participants in the Plan during the "limitation year."
4.6 DIRECTED INVESTMENT ACCOUNT.
(a) Each "Qualified Participant" may elect within ninety (90) days
after the close of each Plan Year during the "Qualified Election Period" to
direct the Trustee in writing as to the distribution in cash of 25 percent of
the total number of shares of Company Stock acquired by or contributed to the
Plan that have ever been allocated to such "Qualified Participant's" Company
Stock Account (reduced by the number of shares of Company Stock previously
distributed in cash pursuant to a prior election). In the case of the election
year in which the last election can be made by the Participant, the preceding
sentence shall be applied by substituting "50 percent" for "25 percent." If the
"Qualified Participant" elects to direct the Trustee as to the distribution of
the Participant's Company Stock Account, such direction shall be effective no
later than 180 days after the close of the Plan Year to which such direction
applies.
Notwithstanding the above, if the fair market value (determined pursuant
to Section 6.1 at the Plan Valuation Date immediately preceding the first day on
which a "Qualified Participant" is eligible to make an election) of Company
Stock acquired by or contributed to the Plan and allocated to a "Qualified
Participant's" Company Stock Account is $500 or less, then such Company Stock
shall not be subject to this paragraph. For purposes of determining whether the
fair market value exceeds $500, Company Stock held in accounts of all employee
stock ownership plans (as defined in Code Section 4975(e)(7)) and tax credit
employee stock ownership plans (as defined in Code Section 409(a)) maintained by
the Employer or any Affiliated Employer shall be considered as held by the Plan.
(b) For the purposes of this Section the following definitions
shall apply:
23
(1) "Qualified Participant" means any Participant or Former
Participant who has completed ten (10) Years of Service as a Participant
and has attained age 55.
(2) "Qualified Election Period" means the six (6) Plan Year
period beginning with the later of (i) the first Plan Year in which the
Participant first became a "Qualified Participant," or (ii) the first Plan
Year beginning after December 31, 1986.
4.7 QUALIFIED MILITARY SERVICE. Notwithstanding any provision of this
Plan to the contrary, effective December 12, 1994, contributions, benefits and
service will be provided in accordance with Code Section 414(u).
ARTICLE V - FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY.
(a) The Plan is designed to invest primarily in Company Stock.
(b) With due regard to subparagraph (a) above, the Administrator
may also direct the Trustee to invest funds under the Plan in other property
described in the Trust or in life insurance policies to the extent permitted by
subparagraph (c) below, or the Trustee may hold such funds in cash or cash
equivalents.
(c) With due regard to subparagraph (a) above, the Administrator
may also direct the Trustee to invest funds under the Plan in insurance policies
on the life of any "keyman" Employee. The proceeds of a "keyman" insurance
policy may not be used for the repayment of any indebtedness owed by the Plan
which is secured by Company Stock. In the event any "keyman" insurance is
purchased by the Trustee, the premiums paid thereon during any Plan Year, net of
any policy dividends and increases in cash surrender values, shall be treated as
the cost of Plan investment and any death benefit or cash surrender value
received shall be treated as proceeds from an investment of the Plan.
(d) The Plan may not obligate itself to acquire Company Stock from
a particular holder thereof at an indefinite time determined upon the happening
of an event such as the death of the holder.
(e) The Plan may not obligate itself to acquire Company Stock
under a put option binding upon the Plan. However, at the time a put option is
exercised, the Plan may be given an option to assume the rights and obligations
of the Employer under a put option binding upon the Employer.
(f) All purchases of Company Stock shall be made at a price which,
in the judgment of the Administrator, does not exceed the fair market value
thereof. All sales of Company Stock shall be made at a price which, in the
judgment of the Administrator, is not less than the fair market value thereof.
The valuation rules set forth in Article VI shall be applicable.
24
5.2 TRANSACTIONS INVOLVING COMPANY STOCK.
(a) No portion of the Trust Fund attributable to (or allocable in
lieu of) Company Stock acquired by the Plan in a sale to which Code Section 1042
applies may accrue or be allocated directly or indirectly under any plan
maintained by the Employer meeting the requirements of Code Section 401(a):
(1) during the "Nonallocation Period," for the benefit of
(i) any taxpayer who makes an election under Code
Section 1042(a) with respect to Company Stock,
(ii) any individual who is related to the taxpayer
(within the meaning of Code Section 267(b)), or
(2) for the benefit of any other person who owns (after
application of Code Section 318(a) applied without regard to the employee
trust exception in Code Section 318(a)(2)(B)(i)) more than 25 percent of
(i) any class of outstanding stock of the Employer or
Affiliated Employer which issued such Company Stock, or
(ii) the total value of any class of outstanding stock
of the Employer or Affiliated Employer.
(b) Except, however, subparagraph (a)(1)(ii) above shall not apply
to lineal descendants of the taxpayer, provided that the aggregate amount
allocated to the benefit of all such lineal descendants during the
"Nonallocation Period" does not exceed more than five (5) percent of the Company
Stock (or amounts allocated in lieu thereof) held by the Plan which are
attributable to a sale to the Plan by any person related to such descendants
(within the meaning of Code Section 267(c)(4)) in a transaction to which Code
Section 1042 is applied.
(c) A person shall be treated as failing to meet the stock
ownership limitation under paragraph (a)(2) above if such person fails such
limitation:
(1) at any time during the one (1) year period ending on the
date of sale of Company Stock to the Plan, or
(2) on the date as of which Company Stock is allocated to
Participants in the Plan.
(d) For purposes of this Section, "Nonallocation Period" means the
period beginning on the date of the sale of the Company Stock and ending on the
date which is ten (10) years after the date of sale.
25
ARTICLE VI - VALUATIONS
6.1 VALUATION OF THE TRUST FUND. The Administrator shall direct the
Trustee, as of each Valuation Date, to determine the net worth of the assets
comprising the Trust Fund as it exists on the Valuation Date. In determining
such net worth, the Trustee shall value the assets comprising the Trust Fund at
their fair market value (or their contractual value in the case of a Contract or
Policy) as of the Valuation Date and shall deduct all expenses for which the
Trustee has not yet obtained reimbursement from the Employer or the Trust Fund.
6.2 METHOD OF VALUATION. Valuations must be made in good faith and based
on all relevant factors for determining the fair market value of securities. In
the case of a transaction between a Plan and a disqualified person, value must
be determined as of the date of the transaction. For all other Plan purposes,
value must be determined as of the most recent Valuation Date under the Plan. An
independent appraisal will not in itself be a good faith determination of value
in the case of a transaction between the Plan and a disqualified person.
However, in other cases, a determination of fair market value based on at least
an annual appraisal independently arrived at by a person who customarily makes
such appraisals and who is independent of any party to the transaction will be
deemed to be a good faith determination of value. Company Stock not readily
tradeable on an established securities market shall be valued by an independent
appraiser meeting requirements similar to the requirements of the Regulations
prescribed under Code Section 170(a)(1).
ARTICLE VII - DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT. Every Participant may
terminate employment with the Employer and retire for the purposes hereof on the
Participant's Normal Retirement Date or Early Retirement Date. However, a
Participant may postpone the termination of employment with the Employer to a
later date, in which event the participation of such Participant in the Plan,
including the right to receive allocations pursuant to Section 4.3, shall
continue until such Participant's Late Retirement Date. Upon a Participant's
Retirement Date or attainment of Normal Retirement Date without termination of
employment with the Employer, or as soon thereafter as is practicable, the
Trustee shall distribute, at the election of the Participant, all amounts
credited to such Participant's Account in accordance with Sections 7.5 and 7.6.
7.2 DETERMINATION OF BENEFITS UPON DEATH.
(a) Upon the death of a Participant before the Participant's
Retirement Date or other termination of employment, all amounts credited to such
Participant's Account shall become fully Vested. If elected, distribution of the
Participant's Account shall commence not later than one (1) year after the close
of the Plan Year in which such Participant's death occurs. The Administrator
shall direct the Trustee, in accordance with the provisions of Sections 7.5 and
7.6, to distribute the value of the deceased Participant's accounts to the
Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct the Trustee, in accordance with the provisions of Sections 7.5 and
7.6, to distribute any remaining
26
Vested amounts credited to the accounts of a deceased Former Participant to such
Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason of an
outstanding loan to the Participant or Former Participant shall be taken into
account in determining the amount of the death benefit.
(d) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive payment of the value of the
account of a deceased Participant or Former Participant as the Administrator may
deem desirable. The Administrator's determination of death and of the right of
any person to receive payment shall be conclusive.
(e) The Beneficiary of the death benefit payable pursuant to this
Section shall be the Participant's spouse. Except, however, the Participant may
designate a Beneficiary other than the spouse if:
(1) the spouse has waived the right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the Participant has a
court order to such effect (and there is no "qualified domestic relations
order" as defined in Code Section 414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a form
satisfactory to the Administrator. A Participant may at any time revoke a
designation of a Beneficiary or change a Beneficiary by filing written (or in
such other form as permitted by the Internal Revenue Service) notice of such
revocation or change with the Administrator. However, the Participant's spouse
must again consent in. writing (or in such other form as permitted by the
Internal Revenue Service) to any change in Beneficiary unless the original
consent acknowledged that the spouse had the right to limit consent only to a
specific Beneficiary and that the spouse voluntarily elected to relinquish such
right.
(f) In the event no valid designation of Beneficiary exists, or if
the Beneficiary is not alive at the time of the Participant's death, the death
benefit will be paid to the Participant's estate. If the Beneficiary does not
predecease the Participant, but dies prior to distribution of the death benefit,
the death benefit will be paid to the Beneficiary's estate.
(g) Notwithstanding anything in this Section to the contrary, if a
Participant has designated the spouse as a Beneficiary, then a divorce decree or
a legal separation that relates to such spouse shall revoke the Participant's
designation of the spouse as a Beneficiary unless the decree or a qualified
domestic relations order (within the meaning of Code Section 414(p)) provides
otherwise.
27
(h) Any consent by the Participant's spouse to waive any rights to
the death benefit must be in writing (or in such other form as permitted by the
Internal Revenue Service), must acknowledge the effect of such waiver, and be
witnessed by a Plan representative or a notary public. Further, the spouse's
consent must be irrevocable and must acknowledge the specific nonspouse
Beneficiary.
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY. In the event of a
Participant's Total and Permanent Disability prior to the Participant's
Retirement Date or other termination of employment, all amounts credited to such
Participant's Account shall become fully Vested. In the event of a Participant's
Total and Permanent Disability, the Administrator, in accordance with the
provisions of Sections 7.5 and 7.6, shall direct the distribution to such
Participant of all Vested amounts credited to such Participant's Account. If
such Participant elects, distribution shall commence not later than one (1) year
after the close of the Plan Year in which Total and Permanent Disability occurs.
7.4 DETERMINATION OF BENEFITS UPON TERMINATION.
(a) If a Participant's employment with the Employer is terminated
for any reason other than death, Total and Permanent Disability or retirement,
then such Participant shall be entitled to such benefits as are provided
hereinafter pursuant to this Section 7.4.
If a portion of a Participant's Account is forfeited, Company Stock
allocated to the Participant's Company Stock Account must be forfeited only
after the Participant's Other Investments Account has been depleted. If interest
in more than one class of Company Stock has been allocated to a Participant's
Account, the Participant must be treated as forfeiting the same proportion of
each such class.
Distribution of the funds due to a Terminated Participant shall be made on
the occurrence of an event which would result in the distribution had the
Terminated Participant remained in the employ of the Employer (upon the
Participant's death, Total and Permanent Disability, Early or Normal
Retirement). However, at the election of the Participant, the Administrator
shall direct the Trustee that the entire Vested portion of the Terminated
Participant's Account attributable to Company Stock to be payable to such
Terminated Participant one (1) year after the close of the Plan Year which is
the fifth Plan Year following the Plan Year in which the Participant otherwise
separates from service. However, if such Terminated Participant is reemployed by
the Employer before distribution is required to be made under this paragraph,
such distribution shall be postponed. Any distribution under this paragraph
shall be made in a manner which is consistent with and satisfies the provisions
of Sections 7.5 and 7.6, including, but not limited to, all notice and consent
requirements of Code Section 411 (a)(11) and the Regulations thereunder.
If, for Plan Years beginning after August 5, 1997, the value of a
Terminated Participant's Vested benefit derived from Employer and Employee
contributions does not exceed $5,000 ($3,500 for Plan Years beginning prior to
August 6, 1997) and, if the distribution is made prior to March 22, 1999, has
never exceeded $5,000 ($3,500 for Plan Years beginning prior to August 6, 1997)
at the time of any prior distribution, then the Administrator shall direct the
28
Trustee to cause the entire Vested benefit to be paid to such Participant
in a single lump sum.
For purposes of this Section 7.4, if the value of a Terminated
Participant's Vested benefit is zero, the Terminated Participant shall be deemed
to have received a distribution of such Vested benefit.
(b) The Vested portion of any Participant's Account shall be a
percentage of the total amount credited to the Participant's Account determined
on the basis of the Participant's number of Years of Service according to the
following schedule:
VESTING SCHEDULE
YEARS OF SERVICE PERCENTAGE
Less than 5 0%
5 100%
(c) Notwithstanding the vesting schedule provided for in paragraph
(b) above, for any Top Heavy Plan Year, the Vested portion of the Participant's
Account of any Participant who has an Hour of Service after the Plan becomes top
heavy shall be a percentage of the total amount credited to the Participant's
Account determined on the basis of the Participant's number of Years of Service
according to the following schedule:
VESTING SCHEDULE
YEARS OF SERVICE PERCENTAGE
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy Plan,
the Administrator shall revert to the vesting schedule in effect before this
Plan became a Top Heavy Plan. Any such reversion shall be treated as a Plan
amendment pursuant to the terms of the Plan.
29
(d) Notwithstanding the vesting schedule above, the Vested
percentage of a Participant's Account shall not be less than the Vested
percentage attained as of the later of the effective date or adoption date of
this amendment and restatement.
(e) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer contributions to the Plan or upon any full or
partial termination of the Plan, all amounts then credited to the account of any
affected Participant shall become 100% Vested and shall not thereafter be
subject to Forfeiture.
(f) The computation of a Participant's nonforfeitable percentage
of such Participant's interest in the Plan shall not be reduced as the result of
any direct or indirect amendment to this Plan. In the event that the Plan is
amended to change or modify any vesting schedule, or if the Plan is amended in
any way that directly or indirectly affects the computation of the Participant's
nonforfeitable percentage, or if the Plan is deemed amended by an automatic
change to a top heavy vesting schedule then each Participant with at least three
(3) Years of Service as of the expiration date of the election period may elect
to have such Participant's nonforfeitable percentage computed under the Plan
without regard to such amendment or change. If a Participant fails to make such
election, then such Participant shall be subject to the new vesting schedule.
The Participant's election period shall commence on the adoption date of the
amendment and shall end sixty (60) days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(g) In determining Years of Service for purposes of vesting under
the Plan, Years of Service prior to the vesting computation period in which an
Employee attains age eighteen shall be excluded.
7.5 DISTRIBUTION OF BENEFITS.
(a) The Administrator, pursuant to the election of the
Participant, shall direct the Trustee to distribute to a Participant or such
Participant's Beneficiary any amount to which the Participant is entitled under
the Plan in one lump-sum payment.
(b) Any distribution to a Participant, for Plan Years beginning
after August 5, 1997, who has a benefit which exceeds $5,000 ($3,500 for Plan
Years beginning prior to August 6, 1997) or, if the distribution is made prior
to March 22, 1999, has ever exceeded $5,000 ($3,500 for Plan Years beginning
prior to August 6, 1997) at the time of any prior distribution, shall require
such Participant's written (or in such other form as permitted by the Internal
Revenue Service) consent if such distribution occurs prior to the time the
benefit is "immediately distributable." A benefit is "immediately distributable"
if any part of the benefit could be distributed to the Participant (or surviving
spouse) before the Participant attains (or would have attained if not deceased)
the later of the Participant's Normal Retirement Age or age 62. With regard to
this required consent:
30
(1) The Participant must be informed of the right to defer
receipt of the distribution. If a Participant fails to consent, it shall
be deemed an election to defer the distribution of any benefit. However,
any election to defer the receipt of benefits shall not apply with respect
to distributions which are required under Section 7.5(e).
(2) Notice of the rights specified under this paragraph
shall be provided no less than thirty (30) days and no more than ninety
(90) days before the date the distribution commences.
(3) Written (or such other form as permitted by the Internal
Revenue Service) consent of the Participant to the distribution must not
be made before the Participant receives the notice and must not be made
more than ninety (90) days before the date the distribution commences.
(4) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to the
distribution.
Any such distribution may commence less than thirty (30) days after the
notice required under Regulation 1.411(a)-11(c) is given, provided that: (1) the
Administrator clearly informs the Participant that the Participant has a right
to a period of at least thirty (30) days after receiving the notice to consider
the decision of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and (2) the Participant, after receiving the
notice, affirmatively elects a distribution.
(c) Notwithstanding anything herein to the contrary, the
Administrator may direct that cash dividends on shares of Company Stock
allocable to Participants' Company Stock Accounts be:
(1) Paid by the Employer directly in cash to the
Participants in the Plan or their Beneficiaries.
(2) Paid to the Plan and distributed in cash to Participants
in the Plan or their Beneficiaries no later than ninety (90) days after
the close of the Plan Year in which paid.
(3) Allocated to Participants' Other Investment Accounts.
(d) Any part of a Participant's benefit which is retained in the
Plan after the Anniversary Date on which the Participant's participation ends
will continue to be treated as a Company Stock Account or as an Other
Investments Account (subject to Section 7.4(a)) as provided in Article IV.
However, neither account will be credited with any further Employer
contributions.
(e) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits made on or after January 1, 1997 shall
be made in accordance with the following requirements and shall otherwise comply
with Code Section 401 (a)(9) and the Regulations thereunder (including
Regulation 1.401 (a)(9)-2), the provisions of which are incorporated herein by
reference:
31
(1) A Participant's benefits shall be distributed or must
begin to be distributed not later than the April 1st of the calendar year
following the calendar year in which the Participant attains age 70 1/2.
Such distribution shall be equal to or greater than any required
distribution.
(2) Distributions to a Participant and the Participant's
Beneficiaries shall only be made in accordance with the incidental death
benefit requirements of Code Section 401 (a)(9)(G) and the Regulations
thereunder.
With respect to distributions under the Plan made for calendar years
beginning on or after January 1, 2002, the Plan will apply the minimum
distribution requirements of Code Section 401 (a)(9) in accordance with the
Regulations under Code Section 401 (a)(9) that were proposed on January 17,
2001, notwithstanding any provision of the Plan to the contrary. This amendment
shall continue in effect until the end of the last calendar year beginning
before the effective date of final Regulations under Code Section 401 (a)(9) or
such other date specified in guidance published by the Internal Revenue Service.
(f) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in accordance with
the following requirements and shall otherwise comply with Code Section 401
(a)(9) and the Regulations thereunder. If it is determined, pursuant to
Regulations, that the distribution of a Participant's interest has begun and the
Participant dies before the entire interest has been distributed, the remaining
portion of such interest shall be distributed at least as rapidly as under the
method of distribution selected pursuant to Section 7.5 as of the date of death.
If a Participant dies before receiving any distributions of the interest in the
Plan or before distributions are deemed to have begun pursuant to Regulations,
then the death benefit shall be distributed to the Participant's Beneficiaries
by December 31st of the calendar year in which the fifth anniversary of the
Participant's date of death occurs.
However, the 5-year distribution requirement of the preceding paragraph
shall not apply to any portion of the deceased Participant's interest which is
payable to or for the benefit of a designated Beneficiary. In such event, such
portion shall be distributed over a period not extending beyond the life
expectancy of such designated Beneficiary provided such distribution begins not
later than December 31st of the calendar year immediately following the calendar
year in which the Participant died. However, in the event the Participant's
spouse (determined as of the date of the Participant's death) is the designated
Beneficiary, the requirement that distributions commence within one year of a
Participant's death shall not apply. In lieu thereof, distributions must
commence on or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died; or (2)
December 31st of the calendar year in which the Participant would have attained
age 70 1/2. If the surviving spouse dies before distributions to such spouse
begin, then the 5-year distribution requirement of this Section shall apply as
if the spouse was the Participant.
(g) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse shall be redetermined annually in
accordance with Regulations. Life expectancy and joint and last survivor
expectancy shall be computed using the return multiples in Tables V and VI of
Regulation 1.72-9.
32
(h) Except as limited by Sections 7.5 and 7.6, whenever the
Trustee is to make a distribution, the distribution may be made on such date or
as soon thereafter as is practicable. However, unless a Former Participant
elects in writing to defer the receipt of benefits (such election may not result
in a death benefit that is more than incidental), the payment of benefits shall
occur not later than the sixtieth (60th) day after the close of the Plan Year in
which the latest of the following events occurs:
(1) the date on which the Participant attains the earlier of
age 65 or the Normal Retirement Age specified herein;
(2) the tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan; or
(3) the date the Participant terminates his service with the
Employer.
(i) If a distribution is made to a Participant who has not severed
employment and who is not fully Vested in the Participant's Account and the
Participant may increase the Vested percentage in such account, then, at any
relevant time the Participant's Vested portion of the account will be equal to
an amount ("X") determined by the formula: r
X equals P(AB plus D) - D
For purposes of applying the formula: P is the Vested percentage at the
relevant time, AB is the account balance at the relevant time, and D is the
amount of distribution.
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED.
(a) Distribution of a Participant's benefit may be made in cash or
Company Stock or both, provided, however, that if a Participant or Beneficiary
so demands, such benefit shall be distributed only in the form of Company Stock.
Prior to making a distribution of benefits, the Administrator shall advise the
Participant or the Participant's Beneficiary, in writing (or such other form as
permitted by the Internal Revenue Service), of the right to demand that benefits
be distributed solely in Company Stock.
(b) If a Participant or Beneficiary demands that benefits be
distributed solely in Company Stock, distribution of a Participant's benefit
will be made entirely in whole shares or other units of Company Stock. Any
balance in a Participant's Other Investments Account will be applied to acquire
for distribution the maximum number of whole shares or other units of Company
Stock at the then fair market value. Any fractional unit value unexpended will
be distributed in cash. If Company Stock is not available for purchase by the
Trustee, then the Trustee shall hold such balance until Company Stock is
acquired and then make such distribution, subject to Sections 7.5(h) and 7.5(e).
(c) The Trustee will make distribution from the Trust only on
instructions from the Administrator.
(d) Notwithstanding anything contained herein to the contrary, if
the Employer charter or by-laws restrict ownership of substantially all shares
of Company Stock to
33
Employees and the Trust Fund, as described in Code Section 409(h)(2)(B)(ii)(I),
then the Administrator shall distribute a Participant's Account entirely in cash
without granting the Participant the right to demand distribution in shares of
Company Stock.
(e) Except as otherwise provided herein, Company Stock distributed
by the Trustee may be restricted as to sale or transfer by the by-laws or
articles of incorporation of the Employer, provided restrictions are applicable
to all Company Stock of the same class. If a Participant is required to offer
the sale of Company Stock to the Employer before offering to sell Company Stock
to a third party, in no event may the Employer pay a price less than that
offered to the distributee by another potential buyer making a bona fide offer
and in no event shall the Trustee pay a price less than the fair market value of
the Company Stock.
7.7 DISTRIBUTION FOR MINOR OR INCOMPETENT BENEFICIARY. In the event a
distribution is to be made to a minor or incompetent Beneficiary, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none in the case of a minor Beneficiary, to a parent of such Beneficiary
or a responsible adult with whom the Beneficiary maintains residence, or to the
custodian for such Beneficiary under the Uniform Gift to Minors Act or Gift to
Minors Act, if such is permitted by the laws of the state in which said
Beneficiary resides. Such a payment to the legal guardian, custodian or parent
of a minor Beneficiary shall fully discharge the Trustee, Employer, and Plan
from further liability on account thereof.
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN. In the event that
all, or any portion, of the distribution payable to a Participant or Beneficiary
hereunder shall, at the later of the Participant's attainment of age 62 or
Normal Retirement Age, remain unpaid solely by reason of the inability of the
Administrator, after sending a registered letter, return receipt requested, to
the last known address, and after further diligent effort, to ascertain the
whereabouts of such Participant or Beneficiary, the amount so distributable
shall be treated as a Forfeiture pursuant to the Plan. Notwithstanding the
foregoing, effective October 1, 2001, or if later, the adoption date of this
amendment and restatement, if the value of a Participant's Vested benefit
derived from Employer and Employee contributions does not exceed $5,000 ($3,500
for Plan Years beginning prior to August 6, 1997), then the amount distributable
may, in the sole discretion of the Administrator, either be treated as a
Forfeiture, or be paid directly to an individual retirement account described in
Code Section 408(a) or individual retirement annuity described in Code Section
408(b) at the time it is determined that the whereabouts of the Participant or
the Participant's Beneficiary cannot be ascertained. In the event a Participant
or Beneficiary is located subsequent to the Forfeiture, such benefit shall be
restored, first from Forfeitures, if any, and then from -an additional Employer
contribution if necessary. However, regardless of the preceding, a benefit which
is lost by reason of escheat under applicable state law is not treated as a
Forfeiture for purposes of this Section nor as an impermissible forfeiture under
the Code.
7.9 RIGHT OF FIRST REFUSALS.
(a) If any Participant, the Participant's Beneficiary or any other
person to whom shares of Company Stock are distributed from the Plan (the
"Selling Participant") shall, at any time, desire to sell some or all of such
shares (the "Offered Shares") to a third party (the "Third Party"), the Selling
Participant shall give written notice of such desire to the Employer
34
and the Administrator, which notice shall contain the number of shares offered
for sale, the proposed terms of the sale and the names and addresses of both the
Selling Participant and Third Party. Both the Trust Fund and the Employer shall
each have the right of first refusal for a period of fourteen (14) days from the
date the Selling Participant gives such written notice to the Employer and the
Administrator (such fourteen (14) day period to run concurrently against the
Trust Fund and the Employer) to acquire the Offered Shares. As between the Trust
Fund and the Employer, the Trust Fund shall have priority to acquire the shares
pursuant to the right of first refusal. The selling price and terms shall be the
same as offered by the Third Party.
(b) If the Trust Fund and the Employer do not exercise their right
of first refusal within the required fourteen (14) day period provided above,
the Selling Participant shall have the right, at any time following the
expiration of such fourteen (14) day period, to dispose of the Offered Shares to
the Third Party; provided, however, that (i) no disposition shall be made to the
Third Party on terms more favorable to the Third Party than those set forth in
the written notice delivered by the Selling Participant above, and (ii) if such
disposition shall not be made to a third party on the terms offered to the
Employer and the Trust Fund, the offered Shares shall again be subject to the
right of first refusal set forth above.
(c) The closing pursuant to the exercise of the right of first
refusal under Section 7.9(a) above shall take place at such place agreed upon
between the Administrator and the Selling Participant, but not later than ten
(10) days after the Employer or the Trust Fund shall have notified the Selling
Participant of the exercise of the right of first refusal. At such closing, the
Selling Participant shall deliver certificates representing the Offered Shares
duly endorsed in blank for transfer, or with stock powers attached duly executed
in blank with all required transfer tax stamps attached or provided for, and the
Employer or the Trust Fund shall deliver the purchase price, or an appropriate
portion thereof, to the Selling Participant.
7.10 STOCK CERTIFICATE LEGEND. Certificates for shares distributed
pursuant to the Plan shall contain the following legend:
"The shares represented by this certificate are transferable
only upon compliance with the terms of EAGLE TEST SYSTEMS EMPLOYEE
STOCK OWNERSHIP PLAN effective as of October 1, 2001, which grants
to Eagle Test Systems, Inc. a right of first refusal, a copy of said
Plan being on file in the office of the Company."
7.11 PRE-RETIREMENT DISTRIBUTION. At such time as a Participant shall
have attained the age of 62 years, the Administrator, at the election of the
Participant who has not severed employment with the Employer, shall direct the
Trustee to distribute all or a portion of the amount then credited to the
accounts maintained on behalf of the Participant. However, no distribution from
the Participant's account shall occur prior to 100% vesting. No distribution
shall be made from the Participant's account unless the Participant has
completed five years of participation in the Plan. In the event that the
Administrator makes such a distribution, the Participant shall continue to be
eligible to participate in the Plan on the same basis as any other Employee. Any
distribution made pursuant to this Section shall be made in a manner consistent
35
with Sections 7.5 and 7.6, including, but not limited to, all notice and consent
requirements of Code Section 411 (a)(11) and the Regulations thereunder.
7.12 ADVANCE DISTRIBUTION FOR HARDSHIP.
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan Year up to
the lesser of 100% of the Vested Participant's Account valued as of the last
Valuation Date or the amount necessary to satisfy the immediate and heavy
financial need of the Participant. Any distribution made pursuant to this
Section shall be deemed to be made as of the first day of the Plan Year or, if
later, the Valuation Date immediately preceding the date of distribution, and
the Participant's Account shall be reduced accordingly. Withdrawal under this
Section shall be authorized if the distribution is on account of:
(1) Medical expenses described in Code Section 213(d)
incurred by the Participant, the Participant's spouse, or any of the
Participant's dependents (as defined in Code Section 152) or necessary for
these persons to obtain medical care as described in Code Section 213(d);
(2) The costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the Participant;
(3) Funeral expenses for a member of the Participant's
family;
(4) Payment of tuition, related educational fees, and room
and board expenses for the next twelve (12) months of post-secondary
education for the Participant, and the Participant's spouse, children, or
dependents;
(5) Payments necessary to prevent the eviction of the
Participant from the Participant's principal residence or foreclosure on
the mortgage on that residence; or
(6) An immediate and heavy financial need of the Participant
provided that the Administrator applies the need to all Participants in a
uniform and nondiscriminatory manner.
(b) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the provisions of Sections
7.5 and 7.6, including, but not limited to, all notice and consent requirements
of Code Section 411 (a)(11) and the Regulations thereunder.
7.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION. All rights and
benefits, including elections, provided to a Participant in this Plan shall be
subject to the rights afforded to any "alternate payee" under a "qualified
domestic relations order." Furthermore, a distribution to an "alternate payee"
shall be permitted if such distribution is authorized by a "qualified domestic
relations order," even if the affected Participant has not separated from
service and has not reached the "earliest retirement age" under the Plan. For
the purposes of this Section, "alternate payee," "qualified domestic relations
order" and "earliest retirement age" shall have the meaning set forth under Code
Section 414(p).
36
ARTICLE VIII - TRUSTEE
8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE.
(a) The Trustee shall have the following categories of
responsibilities:
(1) Consistent with the "funding policy and method"
determined by the Employer, to invest, manage, and control the Plan assets
subject, however, to the direction of the Employer or an Investment
Manager appointed by the Employer or any agent of the Employer;
(2) At the direction of the Administrator, to pay benefits
required under the Plan to be paid to Participants, or, in the event of
their death, to their Beneficiaries; and
(3) To maintain records of receipts and disbursements and
furnish to the Employer and/or Administrator for each Plan Year a written
annual report pursuant to Section 8.8.
(b) In the event that the Trustee shall be directed by the
Employer, or an Investment Manager or other agent appointed by the Employer with
respect to the investment of any or all-Plan assets, the Trustee shall have no
liability with respect to the investment of such assets, but shall be
responsible only to execute such investment instructions as so directed.
(1) The Trustee shall be entitled to rely fully on the
written (or other form acceptable to the Administrator and the Trustee,
including, but not limited to, voice recorded) instructions of the
Employer, or any Fiduciary or nonfiduciary agent of the Employer, in the
discharge of such duties, and shall not be liable for any loss or other
liability, resulting from such direction (or lack of direction) of the
investment of any part of the Plan assets.
(2) The Trustee may delegate the duty of executing such
instructions to any nonfiduciary agent, which may be an affiliate of the
Trustee or any Plan representative.
(c) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to sign papers
on their behalf.
8.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE.
(a) The Trustee shall invest and reinvest the Trust Fund to keep
the Trust Fund invested without distinction between principal and income and in
such securities or property, real or personal, wherever situated, as the Trustee
shall deem advisable, including, but not limited to, stocks, common or
preferred, open-end or close-end mutual funds, bonds and other evidences of
indebtedness or ownership, and real estate or any interest therein. The Trustee
shall at all times in making investments of the Trust Fund consider, among other
factors, the short and long-term financial needs of the Plan on the basis of
information furnished by the Employer. In making such investments, the Trustee
shall not be restricted to securities or other
37
property of the character expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to any limitations
imposed by the Code or the Act so that at all times the Plan may qualify as an
Employee Stock Ownership Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to the
terms of its usual and customary bank agency agreement, under which the duties
of such bank or trust company shall be of a custodial, clerical and
record-keeping nature.
(c) The Trustee may transfer to a common, collective, pooled trust
fund or money market fund maintained by any corporate Trustee or affiliate
thereof hereunder, all or such part of the Trust Fund as the Trustee may deem
advisable, and such part or all of the Trust Fund so transferred shall be
subject to all the terms and provisions of the common, collective, pooled trust
fund or money market fund which contemplate the commingling for investment
purposes of such trust assets with trust assets of other trusts. The Trustee may
transfer any part of the Trust Fund intended for temporary investment of cash
balances to a money market fund. The Trustee may withdraw from such common,
collective, pooled trust fund or money market fund all or such part of the Trust
Fund as the Trustee may deem advisable.
(d) In the event the Trustee invests any part of the Trust Fund,
pursuant to the directions of the Administrator, in any shares of stock issued
by the Employer, and the Administrator thereafter directs the Trustee to dispose
of such investment, or any part thereof, under circumstances which, in the
opinion of counsel for the Trustee, require registration of the securities under
the Securities Act of 1933 and/or qualification of the securities under the Blue
Sky laws of any state or states, then the Employer at its own expense, will take
or cause to be taken any and all such action as may be necessary or appropriate
to effect such registration and/or qualification.
8.3 OTHER POWERS OF THE TRUSTEE. The Trustee, in addition to all powers
and authorities under common law, statutory authority, including the Act, and
other provisions of the Plan, shall have the following powers and authorities,
to be exercised in the Trustee's sole discretion:
(a) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase of securities,
margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other property held by the
Trustee, by private contract or at public auction. No person dealing with the
Trustee shall be bound to see to the application of the purchase money or to
inquire into the validity, expediency, or propriety of any such sale or other
disposition, with or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription rights or
other options, and to make any payments incidental thereto; to oppose, or to
consent to, or otherwise participate in, corporate reorganizations or other
changes affecting corporate securities, and to delegate discretionary powers,
and to pay any
38
assessments or charges in connection therewith; and generally to exercise any of
the powers of an owner with respect to stocks, bonds, securities, or other
property. However, the Trustee shall not vote proxies relating to securities for
which it has not been assigned full investment management responsibilities. In
those cases where another party has such investment authority or discretion, the
Trustee will deliver all proxies to said party who will then have full
responsibility for voting those proxies;
(d) To cause any securities or other property to be registered in
the Trustee's own name or in the name of one or more of the Trustee's nominees,
in a clearing corporation, in a depository, or in entry form or in bearer form,
but the books and records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem advisable;
and for any sum so borrowed, to issue a promissory note as Trustee, and to
secure the repayment thereof by pledging all, or any part, of the Trust Fund;
and no person lending money to the Trustee shall be bound to see to the
application of the money lent or to inquire into the validity, expediency, or
propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash
balances as the Trustee may, from time to time, deem to be in the best interests
of the Plan, without liability for interest thereon;
(g) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or acquired as Trustee
hereunder, whether or not such securities or other property would normally be
purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments that may
be necessary or appropriate to carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence or defend suits
or legal or administrative proceedings, and to represent the Plan in all suits
and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel may or may not
be agent or counsel for the Employer;
(k) To apply for and procure from responsible insurance companies,
to be selected by the Administrator, as an investment of the Trust Fund such
annuity, or other Contracts (on the life of any Participant) as the
Administrator shall deem proper; to exercise, at any time or from time to time,
whatever rights and privileges may be granted under such annuity, or other
Contracts; to collect, receive, and settle for the proceeds of all such annuity
or other Contracts as and when entitled to do so under the provisions thereof;
39
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest or in cash or cash balances
without liability for interest thereon, including the specific authority to
invest in any type of deposit of the Trustee (or of a financial institution
related to a Trustee);
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To invest in shares of investment companies registered under
the Investment Company Act of 1940.
(o) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations including the
specific authority to make deposit into any savings accounts or certificates of
deposit of the Trustee (or a financial institution related to the Trustee);
(p) To vote Company Stock as provided in Section 8.5;
(q) To consent to or otherwise participate in reorganizations,
recapitalizations, consolidations, mergers and similar transactions with respect
to Company Stock or any other securities and to pay any assessments or charges
in connection therewith;
(r) To deposit such Company Stock (but only if such deposit does
not violate the provisions of Section 8.5 hereof) or other securities in any
voting trust, or with any protective or like committee, or with a trustee or
with depositories designated thereby;
(s) To sell or exercise any options, subscription rights and
conversion privileges and to make any payments incidental thereto;
(t) To exercise any of the powers of an owner, with respect to
such Company Stock and other securities or other property comprising the Trust
Fund. The Administrator, with the Trustee's approval, may authorize the Trustee
to act on any administrative matter or class of matters with respect to which
direction or instruction to the Trustee by the Administrator is called for
hereunder without specific direction or other instruction from the
Administrator;
(u) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, or, if the
options are not traded on a national securities exchange, are guaranteed by a
member firm of the New York Stock Exchange regardless of whether such options
are covered;
(v) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the Trustee may deem
necessary to carry out the purposes of the Plan.
40
8.4 LOANS TO PARTICIPANTS.
(a) The Trustee may, in the Trustee's discretion, make loans to
Participants and Beneficiaries under the following circumstances: (1) loans
shall be made available to all Participants and Beneficiaries on a reasonably
equivalent basis; (2) loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to other
Participants and Beneficiaries; (3) loans shall bear a reasonable rate of
interest; (4) loans shall be adequately secured; and (5) loans shall provide for
periodic repayment over a reasonable period of time.
(b) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the Participant) may,
in accordance with a uniform and nondiscriminatory policy established by the
Administrator, be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the Participant during the
one year period ending on the day before the date on which such loan is
made, over the outstanding balance of loans from the Plan to the
Participant on the date on which such loan was made, or
(2) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant under the Plan.
For purposes of this limit, all plans of the Employer shall be considered
one plan.
(c) Loans shall provide for level amortization with payments to be
made not less frequently than quarterly over a period not to exceed five (5)
years. However, loans used to acquire any dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan is made) as a
"principal residence" of the Participant shall provide for periodic repayment
over a reasonable period of time that may exceed five (5) years. For this
purpose, a "principal residence" has the same meaning as a "principal residence"
under Code Section 1034. Loan repayments may be suspended under this Plan as
permitted under Code Section 414(u)(4).
(d) Any loans granted or renewed shall be made pursuant to a
Participant loan program. Such loan program shall be established in writing and
must include, but need not be limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans
offered;
(5) the procedure under the program for determining a
reasonable rate of interest;
41
(6) the types of collateral which may secure a Participant
loan; and
(7) the events constituting default and the steps that will
be taken to preserve Plan assets.
Such Participant loan program shall be contained in a separate written
document which, when properly executed, is hereby incorporated by reference and
made a part of the Plan. Furthermore, such Participant loan program may be
modified or amended in writing from time to time without the necessity of
amending this Section.
(e) Notwithstanding anything in this Plan to the contrary, if a
Participant or Beneficiary defaults on a loan made pursuant to this Section,
then the loan default will be a distributable event to the extent permitted by
the Code and Regulations.
(f) Notwithstanding anything in this Section to the contrary, any
loans made prior to the date this amendment and restatement is adopted shall be
subject to the terms of the plan in effect at the time such loan was made.
8.5 VOTING COMPANY STOCK. The Trustee shall vote all Company Stock held
by it as part of the Plan assets at such time and in such manner as the
Administrator shall direct. Provided, however, that if any agreement entered
into by the Trust provides for voting of any shares of Company Stock pledged as
security for any obligation of the Plan, then such shares of Company Stock shall
be voted in accordance with such agreement. If the Administrator fails or
refuses to give the Trustee timely instructions as to how to vote any Company
Stock as to which the Trustee otherwise has the right to vote, the Trustee shall
not exercise its power to vote such Company Stock and shall consider the
Administrator's failure or refusal to give timely instructions as an exercise of
the Administrator's rights and a directive to the Trustee not to vote said
Company Stock.
Notwithstanding the foregoing, if the Employer has a registration-type
class of securities, each Participant or Beneficiary shall be entitled to direct
the Trustee as to the manner in which the Company Stock which is entitled to
vote and which is allocated to the Company Stock Account of such Participant or
Beneficiary is to be voted. If the Employer does not have a registration-type
class of securities, each Participant or Beneficiary in the Plan shall be
entitled to direct the Trustee as to the manner in which voting rights on shares
of Company Stock which are allocated to the Company Stock Account of such
Participant or Beneficiary are to be exercised with respect to any corporate
matter which involves the voting of such shares with respect to the approval or
disapproval of any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially all assets of
a trade or business, or such similar transaction as prescribed in Regulations.
For purposes of this Section the term "registration-type class of securities"
means: (A) a class of securities required to be registered under Section 12 of
the Securities Exchange Act of 1934; and (B) a class of securities which would
be required to be so registered except for the exemption from registration
provided in subsection (g)(2)(H) of such Section 12.
If the Employer does not have a registration-type class of securities and
the by-laws of the Employer require the Plan to vote an issue in a manner that
reflects a one-man, one-vote
42
philosophy, each Participant or Beneficiary shall be entitled to cast one vote
on an issue and the Trustee shall vote the shares held by the Plan in proportion
to the results of the votes cast on the issue by the Participants and
Beneficiaries.
8.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS. At the direction of the
Administrator, the Trustee shall, from time to time, in accordance with the
terms of the Plan, make payments out of the Trust Fund. The Trustee shall not be
responsible in any way for the application of such payments.
8.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES. The Trustee shall be
paid such reasonable compensation as set forth in the Trustee's fee schedule (if
the Trustee has such a schedule) or as agreed upon in writing by the Employer
and the Trustee. However, an individual serving as Trustee who already receives
full-time pay from the Employer shall not receive compensation from the Plan. In
addition, the Trustee shall be reimbursed for any reasonable expenses, including
reasonable counsel fees incurred by it as Trustee. Such compensation and
expenses shall be paid from the Trust Fund unless paid or advanced by the
Employer. All taxes of any kind whatsoever that may be levied or assessed under
existing or future laws upon, or in respect of, the Trust Fund or the income
thereof, shall be paid from the Trust Fund.
8.8 ANNUAL REPORT OF THE TRUSTEE.
(a) Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer contribution for each Plan Year, the
Trustee, or its agent, shall furnish to the Employer and Administrator a written
statement of account with respect to the Plan Year for which such contribution
was made setting forth:
(1) the net income, or loss, of the Trust Fund;
(2) the gains, or losses, realized by the Trust Fund upon
sales or other disposition of the assets;
(3) the increase, or decrease, in the value of the Trust
Fund;
(4) all payments and distributions made from the Trust Fund;
and
(5) such further information as the Trustee and/or
Administrator deems appropriate.
(b) The Employer, promptly upon its receipt of each such statement
of account, shall acknowledge receipt thereof in writing and advise the Trustee
and/or Administrator of its approval or disapproval thereof. Failure by the
Employer to disapprove any such statement of account within thirty (30) days
after its receipt thereof shall be deemed an approval thereof. The approval by
the Employer of any statement of account shall be binding on the Employer and
the Trustee as to all matters contained in the statement to the same extent as
if the account of the Trustee had been settled by judgment or decree in an
action for a judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all persons having or
claiming an interest in the Plan were parties. However, nothing
43
contained in this Section shall deprive the Trustee of its right to have its
accounts judicially settled if the Trustee so desires.
8.9 AUDIT.
(a) If an audit of the Plan's records shall be required by the Act
and the regulations thereunder for any Plan Year, the Administrator shall direct
the Trustee to engage on behalf of all Participants an independent qualified
public accountant for that purpose. Such accountant shall, after an audit of the
books and records of the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the Plan Year, furnish
to the Administrator and the Trustee a report of the audit setting forth the
accountant's opinion as to whether any statements, schedules or lists that are
required by Act Section 103 or the Secretary of Labor to be filed with the
Plan's annual report, are presented fairly in conformity with generally accepted
accounting principles applied consistently.
(b) All auditing and accounting fees shall be an expense of and
may, at the election of the Employer, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank, insurance
company, or similar institution, regulated, supervised, and subject to periodic
examination by a state or federal agency, then it shall transmit and certify the
accuracy of that information to the Administrator as provided in Act Section
103(b) within one hundred twenty (120) days after the end of the Plan Year or by
such other date as may be prescribed under regulations of the Secretary of
Labor.
8.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE.
(a) Unless otherwise agreed to by both the Trustee and the
Employer, a Trustee may resign at any time by delivering to the Employer, at
least thirty (30) days before its effective date, a written notice of
resignation.
(b) Unless otherwise agreed to by both the Trustee and the
Employer, the Employer may remove a Trustee at any time by delivering to the
Trustee, at least thirty (30) days before its effective date, a written notice
of such Trustee's removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such successor, upon
accepting such appointment in writing and delivering same to the Employer,
shall, without further act, become vested with all the powers and
responsibilities of the predecessor as if such successor had been originally
named as a Trustee herein. Until such a successor is appointed, the remaining
Trustee or Trustees shall have full authority to act under the terms of the
Plan.
(d) The Employer may designate one or more successors prior to the
death, resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such designation, the
successor shall, without further act, become vested with all the powers and
responsibilities of the predecessor as if such successor had been named as
Trustee herein immediately upon the death, resignation, incapacity, or removal
of the predecessor.
44
(e) Whenever any Trustee hereunder ceases to serve as such, the
Trustee shall furnish to the Employer and Administrator a written statement of
account with respect to the portion of the Plan Year during which the individual
or entity served as Trustee. This statement shall be either (i) included as part
of the annual statement of account for the Plan Year required under Section 8.8
or (ii) set forth in a special statement. Any such special statement of account
should be rendered to the Employer no later than the due date of the annual
statement of account for the Plan Year. The procedures set forth in Section 8.8
for the approval by the Employer of annual statements of account shall apply to
any special statement of account rendered hereunder and approval by the Employer
of any such special statement in the manner provided in Section 8.8 shall have
the same effect upon the statement as the Employer's approval of an annual
statement of account. No successor to the Trustee shall have any duty or
responsibility to investigate the acts or transactions of any predecessor who
has rendered all statements of account required by Section 8.8 and this
subparagraph.
8.11 TRANSFER OF INTEREST. Notwithstanding any other provision contained
in this Plan, the Trustee at the direction of the Administrator shall transfer
the Vested interest, if any, of a Participant to another trust forming part of a
pension, profit sharing or stock bonus plan maintained by such Participant's new
employer and represented by said employer in writing as meeting the requirements
of Code Section 401(a), provided that the trust to which such transfers are made
permits the transfer to be made.
8.12 TRUSTEE INDEMNIFICATION. The Employer agrees to indemnify and hold
harmless the Trustee against any and all claims, losses, damages, expenses and
liabilities the Trustee may incur in the exercise and performance of the
Trustee's power and duties hereunder, unless the same are determined to be due
to gross negligence or willful misconduct.
8.13 DIRECT ROLLOVER.
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a "distributor's" election under this Section, a
"distributee" may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an "eligible rollover distribution" that
is equal to at least $500 paid directly to an "eligible retirement plan"
specified by the "distributee" in a "direct rollover."
(b) For purposes of this Section the following definitions shall
apply:
(1) An "eligible rollover distribution" is any distribution
of all or any portion of the balance to the credit of the "distributee,"
except that an "eligible rollover distribution" does not include: any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or life
expectancy) of the "distributee" or the joint lives (or joint life
expectancies) of the "distributee" and the "distributee's" designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code
Section 401 (a)(9); the portion of any other distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities); any
hardship distribution described in Code Section
45
401(k)(2)(B)(i)(IV) made after December 31, 1999; and any other
distribution that is reasonably expected to total less than $200 during a
year.
(2) An "eligible retirement plan" is an individual
retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a), or a qualified trust described in Code
Section 401(a), that accepts the "distributee's" "eligible rollover
distribution." However, in the case of an "eligible rollover distribution"
to the surviving spouse, an "eligible retirement plan" is an individual
retirement account or individual retirement annuity.
(3) A "distributee" includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Code Section 414(p), are "distributees" with regard to the interest of the
spouse or former spouse.
(4) A "direct rollover is a payment by the Plan to the
"eligible retirement plan" specified by the "distributee."
ARTICLE IX - AMENDMENT, TERMINATION AND MERGERS
9.1 AMENDMENT.
(a) The Employer shall have the right at any time to amend this
Plan subject to the limitations of this Section. However, any amendment which
affects the rights, duties or responsibilities of the Trustee or Administrator,
may only be made with the Trustee's or Administrator's written consent. Any such
amendment shall become effective as provided therein upon its execution. The
Trustee shall not be required to execute any such amendment unless the amendment
affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it authorizes
or permits 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 any purpose
other than for the exclusive benefit of the Participants or their Beneficiaries
or estates; or causes any reduction in the amount credited to the account of any
Participant; or causes or permits any portion of the Trust Fund to revert to or
become property of the Employer.
(c) Except as permitted by Regulations (including Regulation
1.411(d)-4) or other IRS guidance, no Plan amendment or transaction, having the
effect of a Plan amendment (such as a merger, plan transfer or similar
transaction) shall be effective if it eliminates or reduces any "Section 411
(d)(6) protected benefit" or adds or modifies conditions relating to "Section
411 (d)(6) protected benefits" which results in a further restriction on such
benefit unless such "Section 411 (d)(6) protected benefits" are preserved with
respect to benefits accrued as of the later of the adoption date or effective
date of the amendment. "Section 411 (d)(6) protected benefits" are benefits
described in Code Section 411 (d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit. A Plan amendment that
eliminates or restricts the ability of a Participant to receive payment of the
Participant's interest
46
in the Plan under a particular optional form of benefit will be permissible if
the amendment satisfies the conditions in (1) and (2) below:
(1) The amendment provides a single-sum distribution form
that is otherwise identical to the optional form of benefit eliminated or
restricted. For purposes of this condition (1), a single-sum distribution
form is otherwise identical only if it is identical in all respects to the
eliminated or restricted optional form of benefit (or would be identical
except that it provides greater rights to the Participant) except with
respect to the timing of payments after commencement.
(2) The amendment is not effective unless the amendment
provides that the amendment shall not apply to any distribution with an
annuity starting date earlier than the earlier of: (i) the ninetieth
(90th) day after the date the Participant receiving the distribution has
been furnished a summary that reflects the amendment and that satisfies
the Act requirements at 29 CFR 2520.104b-3 (relating to a summary of
material modifications) or (ii) the first day of the second Plan Year
following the Plan Year in which the amendment is adopted.
9.2 TERMINATION.
(a) The Employer shall have the right at any time to terminate the
Plan by delivering to the Trustee and Administrator written notice of such
termination. Upon any full or partial termination, all amounts credited to the
affected Participants' Accounts shall become 100% Vested as provided in Section
7.4 and shall not thereafter be subject to forfeiture, and all unallocated
amounts, including Forfeitures, shall be allocated to the accounts of all
Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets of the Trust Fund to Participants in a
manner which is consistent with and satisfies the provisions of Sections 7.5 and
7.6. Except as permitted by Regulations, the termination of the Plan shall not
result in the reduction of "Section 411 (d)(6) protected benefits" in accordance
with Section 9.1(c)
9.3 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS. This Plan and Trust may
be merged or consolidated with, or its assets and/or liabilities may be
transferred to any other plan and trust only if the benefits which would be
received by a Participant of this Plan, in the event of a termination of the
Plan immediately after such transfer, merger or consolidation, are at least
equal to the benefits the Participant would have received if the Plan had
terminated immediately before the transfer, merger or consolidation, and such
transfer, merger or consolidation does not otherwise result in the elimination
or reduction of any "Section 411(d)(6) protected benefits" in accordance with
Section 9.1(c).
ARTICLE X - TOP HEAVY
10.1 TOP HEAVY PLAN REQUIREMENTS. For any Top Heavy Plan Year, the Plan
shall provide the special vesting requirements of Code Section 416(b) pursuant
to Section 7.4 of the Plan and the special minimum allocation requirements of
Code Section 416(c) pursuant to Section 4.3 of the Plan.
47
10.2 DETERMINATION OF TOP HEAVY STATUS.
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of Accrued Benefits
of Key Employees and (2) the sum of the Aggregate Accounts of Key Employees
under this Plan and all plans of an Aggregation Group, exceeds sixty percent
(60%) of the Present Value of Accrued Benefits and the Aggregate Accounts of all
Key and Non-Key Employees under this Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such Participant's
Present Value of Accrued Benefit and/or Aggregate Account balance shall not be
taken into account for purposes of determining whether this Plan is a Top Heavy
Plan (or whether any Aggregation Group which includes this Plan is a Top Heavy
Group). In addition, if a Participant or Former Participant has not performed
any services for any Employer maintaining the Plan at any time during the five
year period ending on the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into account for the
purposes of determining whether this Plan is a Top Heavy Plan.
(b) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date is the sum of:
(1) the Participant's Account balance as of the most recent
valuation occurring within a twelve (12) month period ending on the
Determination Date.
(2) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of any
contributions actually made after the Valuation Date but due on or before
the Determination Date, except for the first Plan Year when such
adjustment shall also reflect the amount of any contributions made after
the Determination Date that are allocated as of a date in that first Plan
Year.
(3) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4) preceding Plan
Years. However, in the case of distributions made after the Valuation Date
and prior to the Determination Date, such distributions are not included
as distributions for top heavy purposes to the extent that such
distributions are already included in the Participant's Aggregate Account
balance as of the Valuation Date. Notwithstanding anything herein to the
contrary, all distributions, including distributions under a terminated
plan which if it had not been terminated would have been required to be
included in an Aggregation Group, will be counted. Further, distributions
from the Plan (including the cash value of life insurance policies) of a
Participant's account balance because of death shall be treated as a
distribution for the purposes of this paragraph.
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax deductible qualified
voluntary employee contributions shall not be considered to be a part of
the Participant's Aggregate Account balance.
48
(5) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee and made from a
plan maintained by one employer to a plan maintained by another employer),
if this Plan provides the rollovers or plan-to-plan transfers, it shall
always consider such rollovers or plan-to-plan transfers as a distribution
for the purposes of this Section. If this Plan is the plan accepting such
rollovers or plan-to-plan transfers, it shall not consider such rollovers
or plan-to-plan transfers as part of the Participant's Aggregate Account
balance.
(6) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the rollover or
plan-to-plan transfer, it shall not be counted as a distribution for
purposes of this Section. If this Plan is the plan accepting such rollover
or plan-to-plan transfer, it shall consider such rollover or plan-to-plan
transfer as part of the Participant's Aggregate Account balance,
irrespective of the date on which such rollover or plan-to-plan transfer
is accepted.
(7) For the purposes of determining whether two employers
are to be treated as the same employer in (5) and (6) above, all employers
aggregated under Code Section 414(b), (c), (m) and (o) are treated as the
same employer.
(c) "Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Employer in which a Key Employee
is a participant in the Plan Year containing the Determination Date or any of
the four preceding Plan Years, and each other plan of the Employer which enables
any plan in which a Key Employee participates to meet the requirements of Code
Sections 401 (a)(4) or 410, will be required to be aggregated. Such group shall
be known as a Required Aggregation Group. In the case of a Required Aggregation
Group, each plan in the group will be considered a Top Heavy Plan if the
Required Aggregation Group is a Top Heavy Group. No plan in the Required
Aggregation Group will be considered a Top Heavy Plan if the Required
Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also
include any other plan not required to be included in the Required Aggregation
Group, provided the resulting group, taken as a whole, would continue to satisfy
the provisions of Code Sections 401 (a)(4) and 410. Such group shall be known as
a Permissive Aggregation Group. In the case of a Permissive Aggregation Group,
only a plan that is part of the Required Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is a Top Heavy Group. No plan
in the Permissive Aggregation Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
49
(4) An Aggregation Group shall include any terminated plan
of the Employer if it was maintained within the last five (5) years ending on
the Determination Date.
(d) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last day of such Plan
Year.
(e) Present Value of Accrued Benefit: In the case of a defined
benefit plan, the Present Value of Accrued Benefit for a Participant other than
a Key Employee, shall be as determined using the single accrual method used for
all plans of the Employer and Affiliated Employers, or if no such single method
exists, using a method which results in benefits accruing not more rapidly than
the slowest accrual rate permitted under Code Section 411 (b)(1)(C). The
determination of the Present Value of Accrued Benefit shall be determined as of
the most recent valuation date that falls within or ends with the 12-month
period ending on the Determination Date except as provided in Code Section 416
and the Regulations thereunder for the first and second plan years of a defined
benefit plan.
(f) "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees
under all defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group, exceeds sixty percent
(60%) of a similar sum determined for all Participants.
ARTICLE XI - MISCELLANEOUS
11.1 PARTICIPANT'S RIGHTS. This Plan shall not be deemed to constitute a
contract between the Employer and any Participant or to be a consideration or an
inducement for the employment of any Participant or Employee. Nothing contained
in this Plan shall be deemed to give any Participant or Employee the right to be
retained in the service of the Employer or to interfere with the right of the
Employer to discharge any Participant or Employee at any time regardless of the
effect which such discharge shall have upon the Employee as a Participant of
this Plan.
11.2 ALIENATION.
(a) Subject to the exceptions provided below, and as otherwise
permitted by the Code and Act, no benefit which shall be payable out of the
Trust Fund to any person (including a Participant or the Participant's
Beneficiary) shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the
same shall be void; and no such benefit shall in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements, or torts of any such
person, nor shall it be subject to attachment or legal process for or against
such person, and the same shall not be recognized by the Trustee, except to such
extent as may be required by law.
50
(b) Subsection (a) shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan by reason of a loan made pursuant to Section
8.4, as a result of a loan from the Plan. At the time a distribution is to be
made to or for a Participant's or Beneficiary's benefit, such proportion of the
amount to be distributed as shall equal such indebtedness shall be paid to the
Plan, to apply against or discharge such indebtedness. Prior to making a
payment, however, the Participant or Beneficiary must be given written notice by
the Administrator that such indebtedness is to be so paid in whole or part from
the Participant's Account. If the Participant or Beneficiary does not agree that
the indebtedness is a valid claim against the Vested Participant's Account, the
Participant or Beneficiary shall be entitled to a review of the validity of the
claim in accordance with procedures provided in Sections 2.8 and 2.9.
(c) Subsection (a) shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other domestic
relations orders permitted to be so created by the Administrator under the
provisions of the Retirement Equity Act of 1984. The Administrator shall
establish a written procedure to determine the qualified status of domestic
relations orders and to administer distributions under such qualified orders.
Further, to the extent provided under a "qualified domestic relations order," a
former spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
(d) Subsection (a) shall not apply to an offset to a Participant's
accrued benefit against an amount that the Participant is ordered or required to
pay the Plan with respect to a judgment, order, or decree issued, or a
settlement entered into, on or after August 5, 1997, in accordance with Code
Sections 401 (a)(13)(C) and (D).
11.3 CONSTRUCTION OF PLAN. This Plan and Trust shall be construed and
enforced according to the Code, the Act and the laws of the State of Illinois,
other than its laws respecting choice of law, to the extent not pre-empted by
the Act.
11.4 GENDER AND NUMBER. Wherever any words are used herein in the
masculine, feminine or neuter gender, they shall be construed as though they
were also used in another gender in all cases where they would so apply, and
whenever any words are used herein in the singular or plural form, they shall be
construed as though they were also used in the other form in all cases where
they would so apply.
11.5 LEGAL ACTION. In the event any claim, suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which the Trustee, the
Employer or the Administrator may be a party, and such claim, suit, or
proceeding is resolved in favor of the Trustee, the Employer or the
Administrator, they shall be entitled to be reimbursed from the Trust Fund for
any and all costs, attorney's fees, and other expenses pertaining thereto
incurred by them for which they shall have become liable.
11.6 PROHIBITION AGAINST DIVERSION OF FUNDS.
(a) Except as provided below and otherwise specifically permitted
by law, it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the happening of
any contingency, by collateral arrangement or by any other means, for any part
of the corpus or income of any Trust Fund maintained pursuant to
51
the Plan or any funds contributed thereto to be used for, or diverted to,
purposes other than the exclusive benefit of Participants, Former Participants,
or their Beneficiaries.
(b) In the event the Employer shall make an excessive contribution
under a mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer may
demand repayment of such excessive contribution at any time within one (1) year
following the time of payment and the Trustees shall return such amount to the
Employer within the one (1) year period. Earnings of the Plan attributable to
the contributions may not be returned to the Employer but any losses
attributable thereto must reduce the amount so returned.
(c) Except for Sections 3.5, 3.6, and 4.1(b), any contribution by
the Employer to the Trust Fund is conditioned upon the deductibility of the
contribution by the Employer under the Code and, to the extent any such
deduction is disallowed, the Employer may, within one (1) year following the
final determination of the disallowance, whether by agreement with the Internal
Revenue Service or by final decision of a competent jurisdiction, demand
repayment of such disallowed contribution and the Trustee shall return such
contribution within one (1) year following the disallowance. Earnings of the
Plan attributable to the contribution may not be returned to the Employer, but
any losses attributable thereto must reduce the amount so returned.
11.7 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE. The Employer,
Administrator and Trustee, and their successors, shall not be responsible for
the validity of any Contract issued hereunder or for the failure on the part of
the insurer to make payments provided by any such Contract, or for the action of
any person which may delay payment or render a Contract null and void or
unenforceable in whole or in part.
11.8 INSURER'S PROTECTIVE CLAUSE. Except as otherwise agreed upon in
writing between the Employer and the insurer, an insurer which issues any
Contracts hereunder shall not have any responsibility for the validity of this
Plan or for the tax or legal aspects of this Plan. The insurer shall be
protected and held harmless in acting in accordance with any written direction
of the Trustee, and shall have no duty to see to the application of any funds
paid to the Trustee, nor be required to question any actions directed by the
Trustee. Regardless of any provision of this Plan, the insurer shall not be
required to take or permit any action or allow any benefit or privilege contrary
to the terms of any Contract which it issues hereunder, or the rules of the
insurer.
11.9 RECEIPT AND RELEASE FOR PAYMENTS. Any payment to any Participant,
the Participant's legal representative, Beneficiary, or to any guardian or
committee appointed for such Participant or Beneficiary in accordance with the
provisions of the Plan, shall, to the extent thereof, be in full satisfaction of
all claims hereunder against the Trustee and the Employer, either of whom may
require such Participant, legal representative, Beneficiary, guardian or
committee, as a condition precedent to such payment, to execute a receipt and
release thereof in such form as shall be determined by the Trustee or Employer.
11.10 ACTION BY THE EMPLOYER. Whenever the Employer under the terms of the
Plan is permitted or required to do or perform any act or matter or thing, it
shall be done and performed by a person duly authorized by its legally
constituted authority.
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11.11 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY. The "named
Fiduciaries" of this Plan are (1) the Employer, (2) the Administrator and (3)
the Trustee, and (4) any Investment Manager appointed hereunder. The named
Fiduciaries shall have only those specific powers, duties, responsibilities, and
obligations as are specifically given them under the Plan including, but not
limited to, any agreement allocating or delegating their responsibilities, the
terms of which are incorporated herein by reference. In general, the Employer
shall have the sole responsibility for making the contributions provided for
under Section 4.1; and shall have the authority to appoint and remove the
Trustee and the Administrator; to formulate the Plan's "funding policy and
method"; and to amend or terminate, in whole or in part, the Plan. The
Administrator shall have the sole responsibility for the administration of the
Plan, including, but not limited to, the items specified in Article II of the
Plan, as the same may be allocated or delegated thereunder. The Trustee shall
have the sole responsibility of management of the assets held under the Trust,
except to the extent directed pursuant to Article II or with respect to those
assets, the management of which has been assigned to an Investment Manager, who
shall be solely responsible for the management of the assets assigned to it, all
as specifically provided in the Plan. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan, authorizing or providing for such
direction, information or action. Furthermore, each named Fiduciary may rely
upon any such direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action. It is intended under
the Plan that each named Fiduciary shall be responsible for the proper exercise
of its own powers, duties, responsibilities and obligations under the Plan as
specified or allocated herein. No named Fiduciary shall guarantee the Trust Fund
in any manner against investment loss or depreciation in asset value. Any person
or group may serve in more than one Fiduciary capacity.
11.12 HEADINGS. The headings and subheadings of this Plan have been
inserted for convenience of reference and are to be ignored in any construction
of the provisions hereof.
11.13 APPROVAL BY INTERNAL REVENUE SERVICE. Notwithstanding anything
herein to the contrary, if, pursuant to an application for qualification filed
by or on behalf of the Plan by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan is adopted, or such
later date that the Secretary of the Treasury may prescribe, the Commissioner of
Internal Revenue Service or the Commissioner's delegate should determine that
the Plan does not initially qualify as a tax-exempt plan under Code Sections 401
and 501, and such determination is not contested, or if contested, is finally
upheld, then if the Plan is a new plan, it shall be void ab initio and all
amounts contributed to the Plan by the Employer, less expenses paid, shall be
returned within one (1) year and the Plan shall terminate, and the Trustee shall
be discharged from all further obligations. If the disqualification relates to
an amended plan, then the Plan shall operate as if it had not been amended.
11.14 UNIFORMITY. All provisions of this Plan shall be interpreted and
applied in a uniform, nondiscriminatory manner. In the event of any conflict
between the terms of this Plan and any Contract purchased hereunder, the Plan
provisions shall control.
11.15 SECURITIES AND EXCHANGE COMMISSION APPROVAL. The Employer may
request an interpretative letter from the Securities and Exchange Commission
stating that
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the transfers of Company Stock contemplated hereunder do not involve
transactions requiring a registration of such Company Stock under the Securities
Act of 1933. In the event that a favorable interpretative letter is not
obtained, the Employer reserves the right to amend the Plan and Trust
retroactively to their Effective Dates in order to obtain a favorable
interpretative letter or to terminate the Plan.
ARTICLE XII - PARTICIPATING EMPLOYERS
12.1 ADOPTION BY OTHER EMPLOYERS. Notwithstanding anything herein to the
contrary, with the consent of the Employer and Trustee, any other corporation or
entity, whether an affiliate or subsidiary or not, may adopt this Plan and all
of the provisions hereof, and participate herein and be known as a Participating
Employer, by a properly executed document evidencing said intent and will of
such Participating Employer.
12.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS.
(a) Each such Participating Employer shall be required to use the
same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to, commingle, hold
and invest as one Trust Fund all contributions made by Participating Employers,
as well as all increments thereof.
(c) Any expenses of the Plan which are to be paid by the Employer
or borne by the Trust Fund shall be paid by each Participating Employer in the
same proportion that the total amount standing to the credit of all Participants
employed by such Employer bears to the total standing to the credit of all
Participants.
12.3 DESIGNATION OF AGENT. Each Participating Employer shall be deemed to
be a party to this Plan; provided, however, that with respect to all of its
relations with the Trustee and Administrator for the purpose of this Plan, each
Participating Employer shall be deemed to have designated irrevocably the
Employer as its agent. Unless the context of the Plan clearly indicates the
contrary, the word "Employer" shall be deemed to include each Participating
Employer as related to its adoption of the Plan.
12.4 EMPLOYEE TRANSFERS. In the event an Employee is transferred between
Participating Employers, accumulated service and eligibility shall be carried
with the Employee involved. No such transfer shall effect a termination of
employment hereunder, and the Participating Employer to which the Employee is
transferred shall thereupon become obligated hereunder with respect to such
Employee in the same manner as was the Participating Employer from whom the
Employee was transferred.
12.5 PARTICIPATING EMPLOYER CONTRIBUTION AND FORFEITURES. Any
contribution or Forfeiture subject to allocation during each Plan Year shall be
determined and allocated separately by each Participating Employer, and shall be
allocated only among the Participants eligible to share of the Employer or
Participating Employer making the contribution or by which the forfeiting
Participant was employed. On the basis of the information furnished by the
Administrator, the Trustee shall keep separate books and records concerning the
affairs of
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each Participating Employer hereunder and as to the accounts and credits of the
Employees of each Participating Employer. The Trustee may, but need not,
register Contracts so as to evidence that a particular Participating Employer is
the interested Employer hereunder, but in the event of an Employee transfer from
one Participating Employer to another, the employing Employer shall immediately
notify the Trustee thereof.
12.6 AMENDMENT. Amendment of this Plan by the Employer at any time when
there shall be a Participating Employer hereunder shall only be by the written
action of each and every Participating Employer and with the consent of the
Trustee where such consent is necessary in accordance with the terms of this
Plan.
12.7 DISCONTINUANCE OF PARTICIPATION. Any Participating Employer shall be
permitted to discontinue or revoke its participation in the Plan at any time. At
the time of any such discontinuance or revocation, satisfactory evidence thereof
and of any applicable conditions imposed shall be delivered to the Trustee. The
Trustee shall thereafter transfer, deliver and assign Contracts and other Trust
Fund assets allocable to the Participants of such Participating Employer to such
new trustee as shall have been designated by such Participating Employer, in the
event that it has established a separate qualified retirement plan for its
Employees provided, however, that no such transfer shall be made if the result
is the elimination or reduction of any "Section 411 (d)(6) protected benefits"
as described in Section 9.1(c). If no successor is designated, the Trustee shall
retain such assets for the Employees of said Participating Employer pursuant to
the provisions of Article VII hereof. In no such event shall any part of the
corpus or income of the Trust as it relates to such Participating Employer be
used for or diverted for purposes other than for the exclusive benefit of the
Employees of such Participating Employer.
12.8 ADMINISTRATOR'S AUTHORITY. The Administrator shall have authority to
make any and all necessary rules or regulations, binding upon all Participating
Employers and all Participants, to effectuate. the purpose of this Article.
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IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
Eagle Test Systems, Inc.
By /s/ Leonard Foxman
-----------------------
EMPLOYER
Leonard Foxman
By /s/ Leonard Foxman
-----------------------
TRUSTEE
ATTEST /s/ Theodore Foxman
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