EXHIBIT (10)(u)
J. ALEXANDER'S CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
(AS AMENDED AND RESTATED)
EFFECTIVE DATE: JANUARY 1, 1997
J. ALEXANDER'S CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1997
TABLE OF CONTENTS
ARTICLE I
Purpose.................................................................................................2
ARTIE II
Definitions.............................................................................................3
2.1 Definitions.................................................................................3
(a) Account..........................................................................3
(b) Acquisition Loan.................................................................3
(c) Additions........................................................................3
(d) Administrator....................................................................3
(e) Adopting Company.................................................................3
(f) Affiliated Company...............................................................3
(g) Authorized Leave of Absence......................................................3
(h) Beneficiary......................................................................4
(i) Board of Directors...............................................................4
(j) Break in Service.................................................................4
(k) Cash Sub-Account.................................................................4
(l) Change of Control................................................................5
(m) Code.............................................................................6
(n) Committee........................................................................6
(o) Company..........................................................................6
(p) Company Stock....................................................................6
(q) Company Stock Sub-Account........................................................6
(r) Compensation.....................................................................6
(s) Determination Date...............................................................7
(t) Direct Rollover..................................................................7
(u) Disability Benefit Date..........................................................7
(v) Distributee......................................................................7
(w) Early Retirement Date............................................................7
(x) Effective Date...................................................................7
(y) Eligible Retirement Plan.........................................................7
(z) Eligible Rollover Distribution...................................................8
(aa) Employee.........................................................................9
(bb) Employer.........................................................................9
(cc) ERISA............................................................................9
(dd) Fiduciaries......................................................................9
(ee) Financed Shares..................................................................9
(ff) 5-Percent Owner..................................................................9
(gg) Flexible Benefits Plan...........................................................9
(hh) Forfeiture.......................................................................9
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(ii) Former Participant...............................................................9
(jj) Highly Compensated Employee.....................................................10
(kk) Hour of Service.................................................................10
(ll) Income..........................................................................12
(mm) Key Employee....................................................................12
(nn) Leased Employee.................................................................12
(oo) Loan Amortization Account.......................................................13
(pp) Loan Suspense Account...........................................................13
(qq) Minimum Benefit.................................................................13
(rr) Non-Key Employee................................................................13
(ss) Normal Retirement Date..........................................................13
(tt) Participant.....................................................................13
(uu) Plan............................................................................13
(vv) Plan Year.......................................................................13
(ww) Qualified Participant...........................................................13
(xx) Savings Incentive Plan..........................................................13
(yy) Section 415 Compensation........................................................14
(zz) Stock Purchase Account..........................................................14
(aaa) Top-Heavy Plan..................................................................14
(bbb) Top-Heavy Plan Year.............................................................14
(ccc) Trust...........................................................................14
(ddd) Trustee.........................................................................14
(eee) Valuation Date..................................................................14
(fff) Year of Eligibility Service.....................................................14
(ggg) Year of Vesting Service.........................................................15
ARTICLE III
Participation..........................................................................................16
3.1 Participation..............................................................................16
3.2 Termination of Participation...............................................................16
3.3 Participation upon Re-Employment...........................................................16
3.4 Agreement to Terms of Plan.................................................................16
ARTICLE IV
Contributions and Forfeitures..........................................................................17
4.1 Employer Contributions.....................................................................17
4.2 Employee Contributions.....................................................................17
4.3 Forfeitures................................................................................19
4.4 Employer Top-Heavy Special Contributions...................................................20
4.5 Rollover Contributions.....................................................................20
4.6 Time of Payment of Employer Contributions..................................................20
4.7 Acquisition Loans..........................................................................21
ARTICLE V
Allocations to Participant's Accounts..................................................................22
5.1 Individual Accounts........................................................................22
5.2 Account Adjustments........................................................................22
(a) Forfeitures and Employer Contributions..........................................22
(b) Stock Purchase Account..........................................................22
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(c) Loan Amortization Account.......................................................23
(d) Sub-Accounts of Participant's Account...........................................23
(e) Financed Shares.................................................................24
(f) Income..........................................................................25
(g) Dividends on Company Stock......................................................25
5.3 Maximum Additions..........................................................................26
5.4 Allocation of Top-Heavy Special Contribution to Provide Minimum Benefits...................27
ARTICLE VI
Benefits...............................................................................................28
6.1 Time for Distribution......................................................................28
6.2 Method of Payment..........................................................................30
6.3 Normal Retirement Benefit..................................................................30
6.4 Early Retirement Benefit...................................................................30
6.5 Delayed Retirement Benefit.................................................................30
6.6 Total and Permanent Disability Benefit.....................................................30
6.7 Death Benefit..............................................................................30
6.8 Vested Benefit.............................................................................30
6.9 Designation of Beneficiary.................................................................31
6.10 Additional Benefits........................................................................32
6.11 Form of Distribution.......................................................................32
6.12 Distribution of Dividends on Company Stock.................................................33
6.13 Pre-Retirement Distribution Rights.........................................................33
6.14 Valuation Date.............................................................................33
6.15 Direct Rollover............................................................................34
ARTICLE VII
Trust; Voting Rights...................................................................................35
7.1 Assets Held in Trust.......................................................................35
7.2 Voting Rights..............................................................................35
7.3 Tender Offer...............................................................................36
ARTICLE VIII
Administration.........................................................................................38
8.1 Allocation of Responsibility Among Fiduciaries for Plan and Trust Administration...........38
8.2 Appointment of Committee...................................................................38
8.3 Claims and Review Procedures...............................................................38
8.4 Committee Powers and Duties................................................................39
8.5 Rules and Decisions........................................................................40
8.6 Committee Procedures.......................................................................40
8.7 Authorization of Member to Sign Documents..................................................40
8.8 Duty to Keep Records and File Reports......................................................41
8.9 Authorization of Benefit Payments..........................................................41
8.10 Application and Forms for Benefits.........................................................41
8.11 Facility of Payment........................................................................41
8.12 Indemnification of Committee Members.......................................................41
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ARTICLE IX
Miscellaneous..........................................................................................42
9.1 Nonguarantee of Employment.................................................................42
9.2 Rights to Trust Assets.....................................................................42
9.3 Nonalienation of Benefits..................................................................42
9.4 Discontinuance of Employer Contributions...................................................42
9.5 Single Plan and Trust of Employers.........................................................42
9.6 Leased Employees...........................................................................43
9.7 Applicable Law.............................................................................43
9.8 Acquisition by or of Adopting Company......................................................43
9.9 No Restrictions on Financed Shares.........................................................43
9.10 Qualified Military Service.................................................................44
9.11 Certain Judgments, Orders, Decrees and Settlements.........................................44
ARTICLE X
Amendments and Action by Employer......................................................................45
10.1 Amendments.................................................................................45
10.2 Limitation on Amendments...................................................................45
10.3 Action by Employer.........................................................................45
ARTICLE XI
Successor Employer and Merger or Consolidation of Plan.................................................46
11.1 Successor Employer.........................................................................46
11.2 Plan Assets................................................................................46
ARTICLE XII
Plan Termination.......................................................................................47
12.1 Right to Terminate.........................................................................47
12.2 Partial Termination........................................................................47
12.3 Liquidation of the Trust...................................................................47
12.4 Manner of Distribution.....................................................................47
12.5 Company Stock in Loan Suspense Account.....................................................47
ARTICLE XIII
Top-Heavy Provisions...................................................................................48
13.1 Top-Heavy Plan Requirements................................................................48
13.2 Definitions................................................................................48
13.3 Determination of Top-Heavy Status..........................................................49
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PREAMBLE
WHEREAS, effective as of January 1, 1992, Volunteer Capital Corporation
(which subsequently changed its name to J. Alexander's Corporation), a Tennessee
corporation (the "Company"), established the Volunteer Capital Corporation
Employee Stock Ownership Plan (the "Plan") to enable its eligible employees to
share in the growth and prosperity of the Company; and
WHEREAS, the Company amended the Plan on February 17, 1993, and in
connection with the receipt of a favorable determination letter dated April 1,
1994, the Plan was again amended to comply with IRS requirements on June 29,
1994; and
WHEREAS, the Plan was further amended on February 17, 1998 and December
30, 1998, and the name of the Plan was changed to be J. Alexander's Corporation
Employee Stock Ownership Plan; and
WHEREAS, the Company desires to amend and restate the Plan to update
the Plan for the remaining changes required by legislation referred to as the
Uniformed Services Employment and Reemployment Act of 1994, the Small Business
Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the Internal
Revenue Service Restructuring and Reform Act of 1998, the Uruguay Round
Agreement Act ("GATT"), and the Community Renewal Tax Relief Act of 2000, as
well as various regulatory provisions, and several other technical changes as
required in order to comply with Internal Revenue Service rulings regarding the
GUST amendments, and to make certain changes permitted or required by the
Economic Growth and Tax Relief Reconciliation Act of 2001, after which the
Company intends to apply to the IRS for a determination letter ("GUST letter").
NOW, THEREFORE, in consideration of the premises, effective as of
January 1, 1997 (except for such other dates as may be noted for certain
provisions), the Company hereby amends and restates the Plan to provide as
hereinafter set forth in this document.
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ARTICLE I
PURPOSE
The Plan and Trust are for the purpose of enabling employees of the
Company and of any other Adopting Company to share in the growth and prosperity
of the Company and to accumulate capital for their future economic security. The
Plan and Trust are intended to be a stock bonus plan and trust meeting the
requirements of Sections 401(a) and 501(a) of the Internal Revenue Code of 1986,
and the Employee Retirement Income Security Act of 1974, as amended, ("ERISA")
so the Plan will be a qualified plan and the Trust will be exempt from taxation.
A primary purpose of the Plan is to enable Participants to acquire a proprietary
interest in the Company and, in furtherance of that goal, contributions of the
Employer to the Trust will be invested primarily in Company Stock. The Plan and
Trust obtained a loan from the Company to finance the acquisition of Company
Stock and purchased Company Stock from certain shareholders of the Company on or
about June 25, 1992. The Plan is an employee stock ownership plan, as described
in Section 4975(e)(7) of the Code and in Section 407(d)(6) of ERISA, which is a
stock bonus plan qualified under Section 401(a) of the Code.
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ARTICLE II
DEFINITIONS
2.1 Definitions. The following words and phrases, when used
herein, unless the context clearly indicates otherwise, shall have the following
meanings:
(a) Account. The Account maintained for a Participant to
record his share of contributions by the Employer and adjustments
thereto. A Participant's Account is composed of two sub-accounts, the
Company Stock Sub-Account and the Cash Sub-Account.
(b) Acquisition Loan. A loan incurred by the Trustee to
acquire Company Stock pursuant to Section 4975(d)(3) of the Code.
(c) Additions. The sum of Employer contributions pursuant
to Section 4.1 (including cash contributions to the Stock Purchase
Account and the Loan Amortization Account) and Forfeitures which would
be allocated to the Participant's Account for a Plan Year if such
contributions and Forfeitures were combined and allocated directly to
the Account in proportion to Compensation. If no more than one-third
(1/3) of the Employer contributions for the Plan Year to the Loan
Amortization Account which are deductible under paragraph (9) of
Section 404(a) of the Code are allocated to Highly Compensated
Employees, the annual Additions for such Plan Year shall not include
either (i) Forfeitures of Financed Shares, or (ii) Employer
contributions to the Loan Amortization Account which are applied to pay
interest on an Acquisition Loan and deductible under Section
404(a)(9)(B) of the Code.
(d) Administrator. The Committee.
(e) Adopting Company. Any organization or corporation
affiliated with the Company which is authorized by the Board of
Directors to adopt the Plan, and which adopts the Plan. The term shall
also include the Company and any organization or corporation into which
an Adopting Company may be merged or consolidated or by which it may be
succeeded, and which may adopt the Plan.
(f) Affiliated Company. Any corporation which is a member
of a controlled group of corporations of which an Adopting Company is a
member, or any unincorporated trade or business which is under the
common control of or with any Adopting Company, or any affiliated
service group of which an Adopting Company is a member, which are
required to be aggregated with Employer under Section 414(b), (c), (m)
or (o) of the Code.
(g) Authorized Leave of Absence. Any absence authorized
by the Employer under the Employer's personnel practices. An absence
due to service in the Armed
3
Forces of the United States shall be considered an Authorized Leave of
Absence provided that the Employee does not voluntarily enlist.
(h) Beneficiary. The person or persons (including a trust
or estate) designated by a Participant in accordance with the
provisions of Section 6.9 to receive any death benefit which shall be
payable under this Plan.
(i) Board of Directors. Except where the context clearly
indicates otherwise, the duly constituted Board of Directors of the
Company.
(j) Break in Service. A twelve consecutive-month period
computed on the basis of the Plan Year, in which an Employee has not
completed more than 500 Hours of Service. For purposes of this Section
2.1(j), but not for any other purpose, an Employee on an Authorized
Leave of Absence or who is absent for the reasons described in the
following sentence shall be deemed to have completed the number of
Hours of Service as he is regularly scheduled to complete while at
work. In the case of an Employee's absence from work for any period
(i) by reason of the pregnancy of the
individual,
(ii) by reason of the birth of the child of the
individual,
(iii) by reason of the placement of a child with
the individual in connection with the adoption of such child
by such individual, or
(iv) for purposes of caring for such child for a
period beginning immediately following such birth or
placement,
the hours so treated as Hours of Service shall not exceed 501 Hours of
Service and shall be credited only in the Plan Year in which such
absence commences if the Participant would be prevented from incurring
a Break in Service in that Plan Year solely because of such crediting,
or in any other case, in the immediately following Plan Year.
(k) Cash Sub-Account. The portion of a Participant's
Account which reflects his share of
(i) the amount, if any, of Employer
contributions made in cash;
(ii) any cash dividends on Company Stock that has
been allocated to his Company Stock Sub-Account (other than
currently distributable dividends or dividends used to repay
an Acquisition Loan);
(iii) cash Forfeitures; and
4
(iv) proceeds of the sale of Company Stock
allocated to his Company Stock Sub-Account.
(l) Change of Control. A Change of Control shall occur if
any one of the following should occur:
(i) any "person" (as such term is defined in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended) becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20% or
more of either the then issued and outstanding common stock or
the combined voting power of the Company's then outstanding
securities;
(ii) the shareholders of the Company approve
(A) any merger, consolidation or other
business combination of the Company with any other
"person" (as defined in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, as amended)
or affiliate thereof, other than a merger or
consolidation that would result in the outstanding
common stock of the Company immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into common stock
of the surviving entity or a parent or affiliate
thereof) at least sixty percent (60%) of the
outstanding common stock of the Company or such
surviving entity or a parent or affiliate thereof
outstanding immediately after such merger,
consolidation or other business combination, or
(B) any sale, lease, exchange or other
transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the
assets of the Company; or
(iii) during any period of two consecutive years,
individuals who at the beginning of such period were members
of the Board of Directors of the Company cease for any reason
to constitute at least a majority thereof (unless the
re-election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who
were directors at the beginning of the period).
Notwithstanding the occurrence of any of the foregoing events,
the Board of Directors may determine that an event otherwise
constituting a Change of Control of the Company shall not be considered
a Change of Control for purposes of this Plan. Such determination by
the Board of Directors shall be effective only if it is made by the
Board of Directors prior to the occurrence of the event which would
otherwise be a Change of Control, or after such event if made by the
Board of Directors a majority of which is
5
composed of the same members as constituted the Board of Directors
immediately prior to the event that would otherwise be a Change of
Control of the Company.
(m) Code. The Internal Revenue Code of 1986, as amended.
(n) Committee. The persons appointed pursuant to the
provisions of Article VIII.
(o) Company. J. Alexander's Corporation, a Tennessee
corporation, and any successor, purchaser, or transferee of the
operating assets and business of J. Alexander's Corporation, which
elects to continue the Plan.
(p) Company Stock. Common stock issued by the Company, or
by any Affiliated Company, which stock is readily tradable on an
established securities market. Non-callable preferred stock shall be
treated as Company Stock if such stock is convertible at any time into
stock which meets the requirements of the preceding sentence and if
such conversion is at a conversion price which (as of the date of the
acquisition by the Plan) is reasonable. For this purpose preferred
stock shall be treated as non-callable if, after the call, there will
be a reasonable opportunity for a conversion which meets the
requirements of the last preceding sentence.
(q) Company Stock Sub-Account. The portion of a
Participant's Account, expressed in whole and fractional shares of
Company Stock, which represents his share of (i) Company Stock
purchased with his Cash Sub-Account; (ii) Employer contributions made
in the form of Company Stock; (iii) Financed Shares released from the
Loan Suspense Account; (iv) Forfeitures of Company Stock; and (v) any
Company Stock attributable to earnings on such Company Stock
Sub-Account.
(r) Compensation. The total of all amounts paid for
employment by the Employer to or for the benefit of a Participant
during the Plan Year (as shown on the Form W-2 filed for federal income
tax purposes), such as salary, bonus, wage, commission, and overtime
payments. Compensation shall not include any of the following (even if
includible in gross income):
(i) reimbursements or other expense allowances
and moving expenses (including indemnity payments for loss on
sale of an Employee's home); and
(ii) fringe benefits (cash and non-cash),
deferred compensation and welfare benefits.
Notwithstanding the foregoing, Compensation shall include any salary
reduction or other elective deferrals to the Savings Incentive Plan or
any other plan pursuant to Section 401(k) of the Code and salary
reduction contributions or other elective deferrals under the Flexible
Benefit Plan or any other plan pursuant to Section 125 of the Code.
Effective on
6
January 1, 2001, Compensation shall also include elective amounts that
are not includible in the gross income of the Employee under Section
132(f)(4) of the Code. Compensation in excess of the first $150,000 (as
adjusted from time to time pursuant to Section 401(a)(17)(B) of the
Code) for any Employee shall not be taken into account. Effective on
January 1, 2002, the limit on Compensation taken into account for any
Employee shall be increased to $200,000 (as adjusted from time to time
pursuant to Section 401(a)(17)(B) of the Code.
(s) Determination Date. The last day of the Plan Year
preceding the Plan Year for which a determination is made whether the
Plan is a Top-Heavy Plan.
(t) Direct Rollover. A Direct Rollover is a payment by
the Plan to the Eligible Retirement Plan specified by the Distributee.
(u) Disability Benefit Date. The first day of the
calendar month following a determination by the Committee that the
Participant is unable to engage in any substantial gainful activity by
reason of a medically determinable physical or mental impairment which
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12 months.
(v) Distributee. A Distributee includes a Participant and
Former Participant. In addition, the Participant's surviving spouse and
the Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section
414(p) of the Code, are Distributees with regard to the interest of the
spouse or former spouse.
(w) Early Retirement Date. The date, prior to the Normal
Retirement Date, which shall be the later of (i) the date on which a
Participant attains age 60, or (ii) the date on which he has earned
five (5) Years of Vesting Service.
(x) Effective Date. January 1, 1997.
(y) Eligible Retirement Plan. [THIS VERSION OF SECTION
2.1(Y) IS EFFECTIVE FOR DISTRIBUTIONS MADE ON OR BEFORE JANUARY 1,
2002]. Any of the following:
(i) an individual retirement account as
described in Code Section 408(a),
(ii) an individual retirement annuity as
described in Code Section 408(b),
(iii) an annuity plan as described in Code Section
403(a), or
(iv) a qualified trust as described in Code
Section 401(a) which is exempt from tax under Code Section
501(a) and which accepts Eligible Rollover
7
Distributions; provided, however, that 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.
(y) Eligible Retirement Plan. [THIS VERSION OF SECTION
2.1(Y) IS EFFECTIVE FOR DISTRIBUTIONS MADE ON OR AFTER JANUARY 1,
2002.] Any of the following:
(i) a qualified trust as described in Code
Section 401(a) which is exempt from tax under Code Section
501(a);
(ii) an individual retirement account as
described in Code Section 408(a);
(iii) an individual retirement annuity as
described in Code Section 408(b);
(iv) an annuity plan as described in Code Section
403(a);
(v) an annuity contract as described in Code
Section 403(b); and
(vi) an eligible plan under Code Section 457(b)
which is maintained by a state, political subdivision of a
state, or any agency or instrumentality of a state or
political subdivision of a state.
The foregoing definition of "Eligible Retirement Plan" shall also apply
in the case of a distribution to a surviving spouse, or to a spouse or
former spouse who is the alternate payee under a qualified domestic
relations order as defined in Section 414(p) of the Code.
(z) Eligible Rollover Distribution. 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 of
the following:
(i) any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) over 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,
(ii) a distribution over a period certain of ten
years or more,
(iii) a distribution to the extent such
distribution is required under Code Section 401(a)(9) for
Participants who have attained age 70-1/2,
(iv) the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
Employer securities), or
8
(v) effective for distributions on or after
January 1, 1999, a distribution of elective deferrals
described in Section 402(g)(3) of the Code on account of
"financial hardship"; and effective for distributions made
after December 31, 2001, any distribution which is made upon
the hardship of the Participant.
(aa) Employee. Any person employed by the Employer;
provided, however, that the term "Employee" shall not include (i)
Leased Employees (except as otherwise required pursuant to Section 9.8
of this Plan), (ii) any person included in a unit of employees whose
terms and conditions of employment are covered by a collective
bargaining agreement, or (iii) an individual who is classified in the
records of the Employer as an independent contractor, regardless of
whether such individual is later determined by the Internal Revenue
Service or a federal or state court to be a common law employee of the
Employer.
(bb) Employer. The Company and any Adopting Company.
(cc) ERISA. Public Law No. 93-406, the Employee Retirement
Income Security Act of 1974, as amended from time to time.
(dd) Fiduciaries. The Employer, the Committee and the
Trustee, each of which, for purposes of the Plan and ERISA, shall be
named Fiduciaries; provided, however, that the Employer is not
necessarily acting in a fiduciary capacity in all its transactions with
the Plan.
(ee) Financed Shares. Company Stock purchased by the
Trustee with the proceeds of an Acquisition Loan.
(ff) 5-Percent Owner. Any Employee who owns (or is
considered to own under the constructive ownership rules of Section 318
of the Code) more than five percent (5%) of the outstanding stock of
the Adopting Company which employs him or stock possessing more than
five percent (5%) of the total voting power of the Adopting Company
which employs him. In making the foregoing determination, the
beneficial interest in stock of any Adopting Company which may be owned
by the Trust shall not be attributed to any Employee.
(gg) Flexible Benefit Plan. J. Alexander's Corporation
Flexible Benefit Plan, a cafeteria plan pursuant to Section 125 of the
Code, as amended from time to time.
(hh) Forfeiture. The non-vested portion of a Participant's
Account which is forfeited pursuant to Section 4.3(a) of the Plan.
(ii) Former Participant. A Participant whose employment
with the Employer has terminated, but who has an Account balance under
the Plan which has not been paid.
9
(jj) Highly Compensated Employee. A Highly Compensated
Employee for the purposes of determinations regarding the current Plan
Year is any Employee who:
(1) was a 5-Percent Owner at any time during the
Plan Year or the preceding Plan Year; or
(2) received Section 415 Compensation (as
adjusted below) from the Employer in excess of $80,000 for the
preceding Plan Year and, if elected by the Employer for a Plan
Year in accordance with Section 414(q)(1)(B)(ii) of the Code,
was in the top-paid group of the Employer for the preceding
Plan Year. The "top-paid group" referred to in the preceding
sentence consists of the 20% most highly compensated employees
of the Employer ranked on the basis of compensation received
during the next prior Plan Year. For the purposes of
determining the number of employees in the "top-paid group"
referred to in the preceding sentence, employees described in
Code Section 414(q)(5) and Q&A 9(b) of Section 1.414(q)-1T of
the Treasury Regulations are excluded.
In making the above determinations, Section 415 Compensation shall
include salary reductions or elective deferrals under the Savings
Incentive Plan or any other plan pursuant to Section 401(k) of the Code
and salary reductions or elective deferrals under the Flexible Benefits
Plan or other plan pursuant to Section 125 of the Code. The $80,000
amount is indexed and shall be adjusted pursuant to Treasury
Regulations. Furthermore, solely for purposes of this Section 2.1(jj),
"Employer" shall include any Affiliated Company.
(kk) Hour of Service.
(1) Each hour for which an Employee is directly
or indirectly paid or entitled to payment by the Employer for
the performance of duties. These hours shall be credited to
the Employee for the computation period or periods in which
the duties are performed; and
(2) Each hour for which an Employee is directly
or indirectly paid or entitled to payment by the Employer for
reasons (such as vacation, sickness or disability) other than
for the performance of duties, provided that no hours shall be
credited to an Employee on account of payments made or due
under a plan maintained solely for the purpose of complying
with applicable workmen's compensation, unemployment
compensation or disability insurance laws, and further
provided that no more than 501 Hours of Service shall be
credited under this Section 2.1(kk)(2) 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). These hours shall be credited
to the Employee for the computation period or periods in which
the units of time on the basis of which such payments are
calculated occur, beginning with the first unit of
10
time to which the payment relates; provided, however, that if
such payment is not calculated on the basis of units of time,
such hours shall be credited to the computation period in
which the condition for which the Employee is paid or entitled
to payment occurs, or if the period during which such
condition occurs extends beyond one computation period, such
hours shall be allocated between the first two of such
computation periods on a reasonable and consistently applied
basis as determined by the Committee; and
(3) Each hour for which back pay, irrespective
of mitigation of damages, has been either awarded or agreed to
by the Employer. These hours shall 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.
For the purpose of determining the Hours of Service which must
be credited to an Employee for a given computation period, the
following method shall be utilized:
(a) The number of Hours of Service for Employees
for whom time records are kept shall be determined from
Employer records.
(b) The number of Hours of Service for Employees
paid on a salaried basis for whom no time records are kept
shall be determined on the basis of the payroll periods for
which the Employee is paid or entitled to payment, at the rate
of 45 Hours of Service for each weekly payroll period in the
case of a weekly payroll period, 90 Hours of Service for each
bi-weekly payroll period in the case of a bi-weekly payroll
period, 95 Hours of Service for each semi-monthly payroll
period in the case of a semi-monthly payroll period, and 190
Hours of Service for each monthly payroll period in case of a
monthly payroll period. An Employee shall be credited with the
full number of Hours of Service corresponding to a payroll
period for each payroll period for which the Employee would be
required to be credited with at least one Hour of Service
under (1), (2) or (3) above.
In the case of a payment which is made or due on account of a
period during which an Employee performs no duties, and which results
in the crediting of Hours of Service or in the case of an award or
agreement for back pay which results in the crediting of Hours of
Service, the number of such Hours of Service to be credited shall be
determined in accordance with Section 2530.200b-2(b) of the Regulations
of the Department of Labor issued on December 28, 1976, as the same may
be amended from time to time, which Regulations are hereby incorporated
herein by reference as fully as though copied herein verbatim.
In calculating the number of Hours of Service with which an
Employee is to be credited for purposes of determining his eligibility
to participate under Article III and his vested benefit under Section
6.8, service with any Affiliated Company shall be counted.
11
(ll) Income. The net gain or loss of the Trust from
investments based upon fair market value, as reflected by
(i) interest payments and dividends from all
sources other than (A) Company Stock and (B) amounts held in
the Loan Amortization Account,
(ii) realized and unrealized gains and losses on
securities other than Company Stock,
(iii) other investment transactions, and
(iv) expenses paid from the Trust.
(mm) Key Employee. Any Employee or former Employee (and
his Beneficiaries) who, at any time during the Plan Year which includes
the Determination Date, or any of the preceding four (4) Plan Years, is
-
(a) An officer of any Affiliated Company having
annual Section 415 Compensation greater than 50 percent of the
limitation in effect under Section 415(b)(1)(A) of the Code
for any such Plan Year;
(b) One of the ten Employees having annual
Section 415 Compensation greater than the limitation in effect
under Section 415(c)(1)(A) of the Code and owning (or
considered as owning within the meaning of Section 318 of the
Code) both more than a one-half percent (0.5%) interest and
the largest percentage ownership interests in any of the
Affiliated Companies;
(c) A 5-percent Owner; or
(d) A 1-percent Owner (defined as any person who
would be a 5-percent Owner if "one percent (1%)" were
substituted for "five percent (5%)" each place it appears in
Section 2.1(ff) having annual Section 415 Compensation of more
than $150,000.
For purposes of determining the number of officers taken into
account pursuant to Treasury Regulation ss.1.416-1, employees described
in Section 414(q)(5) of the Code shall be excluded.
(nn) Leased Employee. Any person who is not an employee of
the Employer and who provides services to the Employer if
(i) such services are provided pursuant to an
agreement between the Employer and a leasing organization,
12
(ii) such person has performed such services for
the Employer (or for an Affiliated Company) on a substantially
full-time basis for a period of at least one year, and
(iii) such services are performed under primary
direction or control by the Employer.
The determination of whether such person is a Leased Employee shall be
made in accordance with Section 414(n) of the Code.
(oo) Loan Amortization Account. The single account for the
Plan which shall be credited with Employer cash contributions made for
the purpose of repayment of an Acquisition Loan (including interest),
and other adjustments as provided in Section 5.2(c).
(pp) Loan Suspense Account. The single account for the
Plan which shall be credited with Financed Shares not yet allocated to
Participants' Company Stock Sub-Accounts, and other adjustments as
provided in Section 5.2(e).
(qq) Minimum Benefit. For any Top-Heavy Plan Year, the
minimum benefit required by Section 416 of the Code to be provided to
each Participant as described in Section 5.4.
(rr) Non-Key Employee. Any Employee who is not a Key
Employee.
(ss) Normal Retirement Date. The date on which a
Participant attains age 65.
(tt) Participant. A person participating in the Plan in
accordance with the provisions of Article III.
(uu) Plan. J. Alexander's Corporation Employee Stock
Ownership Plan, as set forth herein and amended from time to time.
(vv) Plan Year. The twelve-month period from January 1
through December 31.
(ww) Qualified Participant. A participant who has attained
age 55 and has completed ten (10) years of participation in the plan
subsequent to December 31, 1991, and who is entitled to elect to
receive a pre-retirement distribution from his Account pursuant to
Section 6.13.
(xx) Savings Incentive Plan. J. Alexander's Corporation
Savings Incentive and Salary Deferral Plan, a profit sharing and 401(k)
plan originally established effective January 1, 1985, as amended from
time to time.
13
(yy) Section 415 Compensation. The total "wages" paid for
employment by the Employer (and all Affiliated Companies) to or for the
benefit of a Participant during the Plan Year (as shown on the Form W-2
filed for federal income tax purposes). For purposes of this
determination, "wages" shall mean wages as defined in withholding at
the source, and all other payments of compensation to the Employee by
the Employer for which the Employer is required to furnish the Employee
a written statement under Sections 6041(d) and 6051(a)(3) of the Code,
but determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or
the services performed, and excluding from wages amounts paid or
reimbursed by the Employer for moving expenses incurred by an Employee
to the extent that at the time of the payment it is reasonable to
believe that these amounts are deductible by the Employee under Section
217 of the Code. Effective as of January 1, 1998, Section 415
Compensation shall include salary reductions or elective deferrals, as
defined in Section 402(g)(3) of the Code, under the Savings Incentive
Plan or any other plan pursuant to Section 401(k) of the Code and any
amount which is contributed or deferred by the Employer at the election
of the Employee and which is not includible in the gross income of the
Employee by reason of Section 125 or 457 of the Code (including
elective contributions to the Flexible Benefit Plan). Effective on
January 1, 2001, Section 415 Compensation shall also include elective
amounts that are not includible in the gross income of the Employee
under Section 132(f)(4) of the Code.
(zz) Stock Purchase Account. The single account for the
Plan which shall be credited with cash contributions by the Employer
made for the purpose of purchasing Company Stock and which shall be
debited when Company Stock is purchased.
(aaa) Top-Heavy Plan. The meaning given that term by
Section 416(g) of the Code, as described with particularity in Article
XIII.
(bbb) Top-Heavy Plan Year. Any Plan Year for which the Plan
is a Top-Heavy Plan.
(ccc) Trust. The fund known as the J. Alexander's
Corporation Employee Stock Ownership Trust, maintained in accordance
with the terms of the Trust Agreement, as from time to time amended,
which constitutes a part of this Plan.
(ddd) Trustee. The corporation, individual or individuals
appointed by the Board of Directors of the Company to administer the
Trust.
(eee) Valuation Date. The last day of each Plan Year or the
date on which a special valuation is made pursuant to Section 6.14.
(fff) Year of Eligibility Service. A twelve
consecutive-month period in which an Employee has completed 1,000 Hours
of Service. The initial computation period shall be measured from the
date employment commenced and subsequent computation periods
14
shall be based on the Plan Year beginning with the Plan Year which
includes the first anniversary of the date employment commenced.
In the case of an Employee who, under the Plan, does not have
any nonforfeitable right to an accrued benefit, Years of Eligibility
Service before any period of consecutive one-year Breaks in Service
shall not be taken into account if the number of consecutive Breaks in
Service equals or exceeds the greater of five (5) or the number of such
Years of Eligibility Service prior to the period of consecutive Breaks
in Service.
Years of Eligibility Service prior to January 1, 1992 shall be
taken into account.
(ggg) Year of Vesting Service. A Plan Year in which an
Employee has completed 1,000 Hours of Service, except:
(1) In the case of any Employee who has five
consecutive one-year Breaks in Service, Years of Vesting
Service after such consecutive Breaks in Service shall not be
taken into account for purposes of determining the
nonforfeitable percentage of his Account as it existed prior
to the period of consecutive Breaks in Service.
(2) In the case of an Employee who, under the
Plan, does not have any nonforfeitable right to an accrued
benefit, Years of Vesting Service before any period of
consecutive one-year Breaks in Service shall not be taken into
account if the number of consecutive Breaks in Service equals
or exceeds the greater of five (5) or the number of such Years
of Vesting Service prior to the period of consecutive Breaks
in Service.
Years of Vesting Service prior to January 1, 1987, shall be
excluded without exception. Years of Vesting Service as of December 31,
1991 shall be determined based on the number of calendar years
commencing on January 1, 1987 and anniversaries thereof during which
the Employee was credited with at least one Hour of Service. Such
determination shall be made in accordance with paragraphs 1 and 2 of
this Section 2.1(ggg). For all Employees, regardless of their hire
date, all Years of Vesting Service commencing on or after January 1,
1992, shall be determined under the foregoing rules of this Section
2.1(ggg) excluding this last paragraph.
15
ARTICLE III
PARTICIPATION
3.1 Participation. Any Employee shall be eligible to participate
in the Plan upon completing one Year of Eligibility Service and attaining age
twenty-one. An eligible Employee shall become a Participant as of January 1 of
the Plan Year in which he met the requirements, if he met the requirements in
the first six months of the Plan Year, or as of January 1 of the next succeeding
Plan Year, if he met the requirements in the last six months of the Plan Year.
An Employee otherwise entitled to commence participation on the above entry date
shall not commence participation on that date if he terminates his employment
(i) prior to the above entry date, in the case of an Employee who was hired
during the last six months of a Plan Year, or (ii) prior to the first
anniversary date of his employment commencement date, in the case of an Employee
who was hired during the first six months of a Plan Year; but such Employee
shall, if he should be re-employed, be treated in the same manner as a former
Participant pursuant to Section 3.3.
Notwithstanding the foregoing, no Employee shall become a Participant
unless such Employee shall submit to the Committee, in the manner and form
specified by the Committee, any application for participation in the Plan which
the Committee may require from time to time.
3.2 Termination of Participation. Participation in the Plan shall
cease upon a termination of employment as an Employee with the Employer.
3.3 Participation upon Re-Employment. A former Employee who is
re-employed shall be credited with Years of Eligibility Service and Years of
Vesting Service prior to the termination of his employment to the extent
provided in Sections 2.1(fff) and 2.1(ggg).
A former Employee who is re-employed and whose Years of Eligibility
Service prior to re-employment are excluded pursuant to Section 2.1(fff) shall
be treated as a new Employee and shall not participate until he has satisfied
the conditions for participation pursuant to the requirements of Section 3.1.
Any other former Employee who is re-employed shall become a Participant
effective on the date of re-employment.
3.4 Agreement to Terms of Plan. Upon becoming a Participant, an
Employee shall be bound by the terms of the Plan and Trust, including all
amendments thereto.
16
ARTICLE IV
CONTRIBUTIONS AND FORFEITURES
4.1 Employer Contributions. The Employer expects to contribute to
the Plan each year. The amount of such contributions shall be determined
annually by the Employer, and except as hereinafter provided in the event of a
Change of Control, the Employer shall not be required to make such Employer
contributions in any particular year. Unless otherwise designated by the
Employer, Employer contributions shall be conditioned upon the deductibility of
the contribution under Section 404 of the Code. Such contributions shall be
returned to the Employer under the conditions specified in Section 7.1.
Employer contributions shall be made in cash, shares of Company Stock,
or such other property as the Employer may from time to time determine. The
Employer may direct all or any portion of a cash contribution to the Stock
Purchase Account, which shall be used to purchase Company Stock on or before the
time specified in Section 4.6 for payment of Employer contributions to the
Trust. The Employer may further direct all or any portion of a cash contribution
to the Loan Amortization Account, which shall be used to repay principal and
interest on any Acquisition Loan.
Upon the occurrence of a Change of Control at a time when an
Acquisition Loan remains outstanding, the Employer shall be immediately
obligated to make an Employer contribution to the Loan Amortization Account for
the Plan Year during which the Change of Control occurs equal to the lesser of
the following sums:
(i) an amount sufficient to enable the Trust to pay the
entire outstanding principal and interest on the Acquisition Loan, or
(ii) an amount sufficient to enable all Participants to
receive an allocation for that Plan Year of the maximum Additions to
their Account permitted pursuant to Section 5.3;
provided, however, that the Company shall have no such obligation if the Board
of Directors nullifies the occurrence of the Change of Control in the manner
provided in Section 2.1(l).
Any amounts so contributed to the Loan Amortization Account shall be
paid by the Trustee to the holder of the Acquisition Loan and any Financed
Shares which would otherwise be allocated to Participants so as to create an
annual Addition in excess of the limitations of Section 5.3 shall be reallocated
to other Participants in proportion to their Compensation to the extent that
such reallocation does not cause the annual Additions for such other
Participants to exceed the limitations of Section 5.3.
4.2 Employee Contributions. No Participant shall be required or
permitted to make contributions to the Plan.
17
4.3 Forfeitures. [THIS VERSION OF SECTION 4.3 IS EFFECTIVE PRIOR
TO JANUARY 1, 1998].
(a) If a Participant terminates employment for any
reason, other than normal retirement, early retirement, delayed
retirement, disability or death, the portion of his Account which is
not a "vested benefit" as described in Section 6.8 shall be subject to
becoming a Forfeiture. Such non-vested portion of a Participant's
Account shall become a Forfeiture at the time provided in Section
4.3(b) for a cash out of his nonforfeitable benefit.
(b) After termination of employment with Employer and
with all Affiliated Companies (other than for disability, normal
retirement, early retirement, delayed retirement, or death), but no
later than the end of the Plan Year following the Plan Year in which
such termination occurs, the Participant shall be entitled to receive a
"cash out" of such Participant's "vested benefit" as determined
pursuant to Section 6.8 provided that such "vested benefit" is not
greater than $10,000. Distribution of a vested benefit greater than
$10,000 shall occur at the time provided in the last paragraph of this
Section 4.3(b). Such cash out of the vested benefit shall not be made
in the absence of written consent thereto by the Participant if the
vested benefit (as determined pursuant to Section 6.8) attributable to
Employer contributions is greater than $3,500. For the sole purpose of
determining whether the vested benefit is less than $3,500 or $10,000,
as the case may be, Company Stock in the Participant's Company Stock
Sub-Account shall be valued at its market value on the first trading
date of the Plan Year during which the distribution is scheduled to
occur. A Participant having a vested benefit of zero shall be deemed to
have been cashed out hereunder on the date of his termination of
employment. Upon such a deemed payment, the Participant's nonvested
Account balance shall become a Forfeiture upon the date of the cash
out. Such Forfeiture shall then be allocated to the Accounts of other
Participants as provided in Section 5.2.
A Participant having a vested benefit of zero who is deemed to
receive a cash out upon termination of employment, and who later
resumes employment covered under the Plan before the last day of the
Plan Year in which the Participant incurs five (5) consecutive Breaks
in Service commencing after the deemed distribution, shall have
restored the Participant's previous balance in his Account at the time
of the cash out, with no adjustment for Income or other earnings, and
all Years of Service, whether before or after the cash-out date, shall
be counted for purposes of determining the Participant's vested
percentage in the restored Account balance. The number of shares in
Company Stock restored to his Company Stock Sub-Account shall be the
number of shares which can be purchased, based on the market value per
share on the date of the deemed repayment, for a sum equal to the
market value of the shares in the Participant's Company Stock
Sub-Account on the date of the deemed cash out.
Forfeitures which have become available for allocation during
the Plan Year in which a deemed repayment occurs shall first be
allocated to the extent required to restore the Participant's
previously nonvested Account balance in full, and any remaining
18
Forfeitures shall be allocated as provided in Section 5.2. If available
Forfeitures are insufficient to restore the Participant's previously
nonvested Account balance, the difference shall be provided by a
special Employer contribution. The foregoing special contribution and
allocation of Forfeitures shall not be considered as part of the annual
Addition for that Participant in connection with the limitations of
Section 5.3 hereof.
If a distribution is not made at the time specified in the
first paragraph of this Section 4.3(b) because the Participant's vested
benefit is greater than $10,000, as determined by reference to the
market value of the Company Stock on the first trading date of the Plan
Year during which the distribution would have been made if the vested
benefit had been less than $10,000, the Participant shall be entitled
to elect to receive a distribution of his vested benefit during the
third Plan Year following the Plan Year during which he terminated
employment with Employer and with all Affiliated Companies.
4.3 Forfeitures. [THIS VERSION OF SECTION 4.3 IS EFFECTIVE AS OF
JANUARY 1, 1998.]
(a) If a Participant terminates employment for any
reason, other than normal retirement, early retirement, delayed
retirement, disability or death, the portion of his Account which is
not a "vested benefit" as described in Section 6.8 shall be subject to
becoming a Forfeiture. Such non-vested portion of a Participant's
Account shall become a Forfeiture at the time provided in Section
4.3(b) for a cash out of his nonforfeitable benefit.
(b) After termination of employment with Employer and
with all Affiliated Companies (other than for disability, normal
retirement, early retirement, delayed retirement, or death), but no
later than the end of the Plan Year following the Plan Year in which
such termination occurs, the Participant shall be entitled to receive a
"cashout" of such Participant's "vested benefit" as determined pursuant
to Section 6.8; provided, however, that corporate officers of the
Company may receive the cashout referred to in this Section 4.3(b) only
if such "vested benefit" is not greater than $10,000. Distribution to a
corporate officer of the Company of a vested benefit greater than
$10,000 shall occur at the time provided in the last paragraph of this
Section 4.3(b). Such cash out of the vested benefit shall not be made
in the absence of written consent thereto by the Participant if the
vested benefit (as determined pursuant to Section 6.8) attributable to
Employer contributions is greater than $5,000. For the sole purpose of
determining whether the vested benefit is less than $5,000 or $10,000,
as the case may be, Company Stock in the Participant's Company Stock
Sub-Account shall be valued at its market value on the first trading
date of the Plan Year during which the distribution is scheduled to
occur. A Participant having a vested benefit of zero shall be deemed to
have been cashed out hereunder on the date of his termination of
employment. Upon such a deemed payment, the Participant's nonvested
Account balance shall become a Forfeiture upon the date of the cash
out. Such Forfeiture shall then be allocated to the Accounts of other
Participants as provided in Section 5.2.
19
A Participant having a vested benefit of zero who is deemed to
receive a cash out upon termination of employment, and who later
resumes employment covered under the Plan before the last day of the
Plan Year in which the Participant incurs five (5) consecutive Breaks
in Service commencing after the deemed distribution, shall have
restored the Participant's previous balance in his Account at the time
of the cash out, with no adjustment for Income or other earnings, and
all Years of Service, whether before or after the cash-out date, shall
be counted for purposes of determining the Participant's vested
percentage in the restored Account balance. The number of shares in
Company Stock restored to his Company Stock Sub-Account shall be the
number of shares which can be purchased, based on the market value per
share on the date of the deemed repayment, for a sum equal to the
market value of the shares in the Participant's Company Stock
Sub-Account on the date of the deemed cash out.
Forfeitures which have become available for allocation during
the Plan Year in which a deemed repayment occurs shall first be
allocated to the extent required to restore the Participant's
previously nonvested Account balance in full, and any remaining
Forfeitures shall be allocated as provided in Section 5.2. If available
Forfeitures are insufficient to restore the Participant's previously
nonvested Account balance, the difference shall be provided by a
special Employer contribution. The foregoing special contribution and
allocation of Forfeitures shall not be considered as part of the annual
Addition for that Participant in connection with the limitations of
Section 5.3 hereof.
If a distribution is not made at the time specified in the
first paragraph of this Section 4.3(b) because the Participant is a
corporate officer of the Company and such Participant's vested benefit
is greater than $10,000, as determined by reference to the market value
of the Company Stock on the first trading date of the Plan Year during
which the distribution would have been made if such Participant's
vested benefit had been less than $10,000, such Participant shall be
entitled to elect to receive a distribution of his vested benefit
during the third Plan Year following the Plan Year during which he
terminated employment with the Employer and with all Affiliated
Companies.
4.4 Employer Top-Heavy Special Contributions. For each Top-Heavy
Plan Year the Employer shall make a special contribution to the Trust as may be
required in an amount sufficient to satisfy the allocation of the Minimum
Benefit to each Non-Key Employee pursuant to Section 5.4.
4.5 Rollover Contributions. No rollover contributions shall be
permitted.
4.6 Time of Payment of Employer Contributions. All contributions
by the Employer shall be paid to the Trustee, and payment for each fiscal year
shall be made not later than the date prescribed by law for filing the
Employer's federal income tax return, including extensions which have been
granted for the filing of such return.
20
4.7 Acquisition Loans. The Trustee may, with the direction of the
Committee, incur Acquisition Loans from time to time to purchase Financed Shares
of Company Stock for the Trust or to repay a prior Acquisition Loan. The Trustee
shall not enter into any Acquisition Loans without the approval of the Board of
Directors. The following provisions shall apply with respect to any such
Acquisition Loan:
(a) the Acquisition Loan must be at a reasonable rate of
interest and without recourse against the Trust;
(b) any collateral pledged to the creditor by the Trust
shall consist only of the Company Stock purchased with the proceeds of
the loan and Company Stock that was used as collateral for a prior
Acquisition Loan repaid with the proceeds of the current Acquisition
Loan (provided, however, that, in addition to such collateral, the
Company may guarantee or provide collateral for repayment of the loan);
(c) under the terms of the Acquisition Loan, the creditor
shall not have any right to assets of the Trust other than (1)
collateral given for the loan, (2) Employer contributions to the Loan
Amortization Account, and (3) amounts earned on such collateral and on
the investment of contributions to the Loan Amortization Account;
(d) upon the payment of any portion of the balance due on
the Acquisition Loan, the Company Stock originally pledged as
collateral for such repaid portion shall be released from the
encumbrance and allocated as provided in Section 5.2(e);
(e) the Acquisition Loan must be for a specific term and
may not be payable at the demand of any person except in the case of
default;
(f) in the event of default on the Acquisition Loan, the
value of the Plan assets transferred in satisfaction of the loan must
not exceed the amount of default. If the lender is a "disqualified
person", as defined in Section 4975(e)(2) of the Code, the Acquisition
Loan must provide for a transfer of Plan assets upon default only upon
and to the extent of the failure of the Plan to meet the payment
schedule of the loan; and
(g) the proceeds of the Acquisition Loan must be used
within a reasonable time after their receipt to acquire Company Stock.
Financed Shares shall be initially credited to the Loan Suspense
Account and shall be transferred for allocation to the Company Stock
Sub-Accounts of Participants only as payments of principal and interest
are made on the Acquisition Loan by the Trustee, as provided in Section
5.2(e).
21
ARTICLE V
ALLOCATIONS TO PARTICIPANT'S ACCOUNTS
5.1 Individual Accounts. The Administrator shall create and
maintain adequate records to disclose the interest in the Trust of each
Participant, Former Participant, and Beneficiary. The maintenance of individual
accounts is only for accounting purposes, and a segregation of the assets of the
Trust to each Account shall not be required.
5.2 Account Adjustments. The Accounts of Participants and Former
Participants shall be adjusted in accordance with the following:
(a) Forfeitures and Employer Contributions. As of the
last day of each Plan Year, the Account of each Participant who is an
Employee on the last day of such Plan Year shall be credited with his
share (as determined below) of the contributions (which contributions
shall be combined with any Forfeitures which have become available for
allocation during such Plan Year) made by the Employer for the Plan
Year; provided, however, that a Participant who terminated employment
during such Plan Year by reason of normal retirement, early retirement,
delayed retirement, disability or death shall not be excluded from
receiving an allocation of the Employer contribution and Forfeitures.
Notwithstanding the foregoing, for any Plan Year in which a
Change of Control occurs, all Participants who are Employees on the
date of the Change of Control shall receive an allocation of the
Employer contribution and Forfeitures for that Plan Year.
Contributions in cash to the Stock Purchase Account or to the
Loan Amortization Account shall not be allocated to the Accounts of
Participants, but Company Stock purchased from the Stock Purchase
Account and Company Stock released from the Loan Suspense Account as a
result of such contributions shall be allocated to the Company Stock
Sub-Accounts of Participants as provided in Section 5.2(d)(1). Company
Stock contributed in kind, purchased from the Stock Purchase Account,
or released from the Loan Suspense Account shall be allocated as of
each Valuation Date to such Participants in the proportion that each
Participant's Compensation for such Plan Year bears to the total
Compensation of all Participants entitled to share in the contribution.
(b) Stock Purchase Account. A single Stock Purchase
Account shall be established for Employer contributions in cash
earmarked for investment in Company Stock. The Stock Purchase Account
shall be credited at the time of Employer contributions designated for
such Stock Purchase Account pursuant to Section 4.1. It shall be
debited at the time and in the amount of purchases of Company Stock
from such Stock Purchase Account. Any earnings on assets in the Trust
represented by cash contributions to the Stock Purchase Account prior
to use of such assets to purchase Company Stock shall be allocated for
each Plan Year as Income.
22
(c) Loan Amortization Account. A Loan Amortization
Account shall be established in the case of an Acquisition Loan to
purchase Financed Shares of Company Stock pursuant to Section 4.7,
which Account shall be debited for the repayment by the Trust of the
Acquisition Loan (including principal and interest) and shall be
credited with all Employer contributions in cash earmarked to meet the
obligations of the Trust under the Acquisition Loan, with earnings on
such contributions, and with cash dividends on Company Stock held in
the Trust used to repay the Acquisition Loan pursuant to Section
5.2(g).
(d) Sub-Accounts of Participant's Account. Each
Participant's Account shall be composed of both a Company Stock
Sub-Account and a Cash Sub-Account as follows:
(1) The Company Stock Sub-Account of each
Participant will be credited (as of the last day of the Plan
Year) with his allocated share of Company Stock (including
fractional shares) purchased and paid for by the Trust,
purchased through the Stock Purchase Account, released from
the Loan Suspense Account as hereinafter provided, or
contributed in kind by the Employer; with stock dividends on
Company Stock held in his Company Stock Sub-Account; and with
Forfeitures of Company Stock from the Company Stock
Sub-Accounts of terminated Participants. Contributions in kind
of Company Stock, Company Stock purchased from the Stock
Purchase Account, and Forfeitures of Company Stock shall be
allocated among the Company Stock Sub-Accounts of Participants
in proportion to Compensation in the ratios described in
Section 5.2(a). Company Stock purchased and paid for by the
Trust (other than Financed Shares or Company Stock from the
Stock Purchase Account) shall be allocated among such Company
Stock Sub-Accounts of Participants in the same ratios that the
balances of their respective Cash Sub-Accounts bear to each
other immediately before such purchase. Financed Shares
released from the Loan Suspense Account shall be allocated in
the manner provided in Section 5.2(e).
Any shares of Company Stock sold by the Trust shall
be deemed to come from the Company Stock Sub-Accounts of the
Participants on a pro rata basis and shall be debited (as of
the last day of the Plan Year) from such Company Stock
Sub-Accounts. Any distribution in kind of Company Stock during
the Plan Year shall be debited from the Company Stock
Sub-Account of the Participant receiving the distribution. The
Committee shall maintain adequate records of the aggregate
cost basis of Company Stock allocated to each Participant's
Company Stock Sub-Account.
(2) The Cash Sub-Account of each Participant
shall be credited (or debited) as of the last day of the Plan
Year with its share of the Income of the Trust, with the
proceeds of any Company Stock in such Participant's Company
Stock Sub-Account which is sold, with cash dividends on
Company Stock in his
23
Company Stock Sub-Account (or debited with distributions of
such dividends) pursuant to Section 5.2(g), and with
contributions in cash or property (other than Company Stock)
in excess of the total amount thereof allocated to the Loan
Amortization Account and to the Stock Purchase Account. The
Cash Sub-Account shall be debited for any purchase (other than
from the Stock Purchase Account or through an Acquisition
Loan) of Company Stock in the same ratios that the balances of
the respective Cash Sub-Accounts of the Participants bear to
each other immediately before such purchase.
(e) Financed Shares. Company Stock acquired by the Trust
through an Acquisition Loan ("Financed Shares") shall be held in the
Loan Suspense Account, and the total number of shares to be allocated
each Plan Year to the Company Stock Sub-Accounts of Participants shall
be determined by multiplying the total number of shares purchased with
the Acquisition Loan (or, in years subsequent to such purchase, the
number of Financed Shares held in the Loan Suspense Account immediately
preceding the date of such allocation) by a fraction, the numerator of
which is the total amount of principal and interest payments made on
the Acquisition Loan by the Trust for the Plan Year and the denominator
of which is the sum of the numerator plus the principal and interest
payments to be made for all future Plan Years on the Acquisition Loan.
In the discretion of the Committee, the number of shares to be
allocated shall be determined solely with reference to principal
payments in the above formula if (1) the loan provides for payments of
principal and interest at a cumulative rate that is not less rapid at
any time than level annual payment of such amounts for ten (10) years,
(2) the disregarded interest is determined to be interest under
standard loan amortization tables, and (3) the term of the loan does
not exceed ten (10) years, whether initially or by reason of renewal,
extension or refinancing of the Acquisition Loan.
Financed Shares thus released from the Loan Suspense Account
shall be allocated to the Company Stock Sub-Accounts of those
Participants entitled to share in such allocation under Section 5.2(a)
in the following manner:
(1) First, with respect to Financed Shares
released by reason of Employer contributions used to repay the
Acquisition Loan, in the manner provided in Section 5.2(a);
and
(2) Second, with respect to Financed Shares
released by reason of the application of dividends on Company
Stock, in accordance with the provisions of Section 5.2(g).
If an interim Valuation Date is selected pursuant to Section
6.14, the foregoing allocation rules shall be applied for the period
commencing on January 1 of that Plan Year and ending on the interim
Valuation Date, taking into account only principal and interest paid on
the Acquisition Loan and Compensation of Participants during that
period. A similar allocation shall be made for the period commencing on
the interim
24
Valuation Date and ending on December 31 of that Plan Year, taking into
account only principal and interest paid on the Acquisition Loan and
Compensation of Participants during that period.
(f) Income. The Income of the Trust for each Plan Year
shall be allocated to the Cash Sub-Accounts of each Participant and
Former Participant on the last day of each Plan Year in proportion to
the Cash Sub-Account balances of such Participants at the beginning of
the Plan Year (or if all such Cash Sub-Account balances are zero, in
proportion to the Company Stock Sub-Account balances at the beginning
of the Plan Year), but after first reducing each such beginning Cash
Sub-Account balance by the sum of (i) distributions from the Cash
Sub-Account during the Plan Year and (ii) debits to the Cash
Sub-Account for purchases of Company Stock as provided in Section
5.2(d)(2); or if all Cash Sub-Account balances are zero, after first
reducing each Company Stock Sub-Account by the amount of any charge to
such Company Stock Sub-Account during the Plan Year. Additionally, an
allocation of Income shall be made to a Participant's Cash Sub-Account
on any other Valuation Date specified in Section 2.1(eee).
(g) Dividends on Company Stock. Cash dividends on Company
Stock shall be allocated in the following manner:
(1) Dividends paid on shares of Company Stock
allocated to Participants' Company Stock Sub-Accounts or held
in the Loan Suspense Account shall (as required by applicable
Acquisition Loan documentation or, if not so required, as
determined by the Committee) be used by the Trustee, as
directed by the Committee, to repay the balance of an
outstanding Acquisition Loan. Any Financed Shares released
from the Loan Suspense Account by reason of such dividends
shall be allocated in the following manner:
(i) First, if cash dividends paid with
respect to shares allocated to a Participant's
Company Stock Sub-Account are used to repay an
Acquisition Loan, then Company Stock with a fair
market value equal to the amount of such dividends
must be allocated to such Participant's Company Stock
Sub-Account.
(ii) Second, if any Financed Shares
released by reason of such dividends (whether paid on
Company Stock allocated to Company Stock Sub-Accounts
or on Company Stock held in the Loan Suspense
Account) remain after the allocation described in
clause (i), these shares shall be allocated to the
Company Stock Sub-Accounts of Participants, pro rata,
according to the balance of each Company Stock
Sub-Account as of the immediately preceding Valuation
Date, reduced in each case by the amount of any
charge to said Company Stock Sub-Account since the
next preceding Valuation Date.
25
(2) Except as provided in Section 5.2(g)(1) in
the case of dividends used to repay an Acquisition Loan, any
cash dividends with respect to shares of Company Stock
allocated to Participants' Company Stock Sub-Accounts
(including cash dividends described in Section 5.2(g)(3), paid
with regard to Company Stock which is distributed during the
Plan Year) or held in the Loan Suspense Account shall be
allocated among and credited to Cash Sub-Accounts of the
Participants; provided, however, that the dividends so
allocated (whether paid with respect to Company Stock
allocated to Company Stock Sub-Accounts or held in the Loan
Suspense Account) shall be allocated among and credited to
Cash Sub-Accounts, pro rata, according to the number of shares
of Company Stock held in the respective Company Stock
Sub-Accounts on the date the dividends are paid. Cash
dividends on Company Stock otherwise not yet allocated to the
Company Stock Sub-Accounts of Participants shall be allocated
for each Plan Year as Income.
(3) No allocation of cash dividends on Company
Stock, and no allocation of Financed Shares released from the
Loan Suspense Account by reason of such dividends, shall be
made to the Account of a Participant for a Plan Year to the
extent the Participant receives during that Plan Year a
distribution of Company Stock with regard to which the
dividends were paid. Any such cash dividends or Financed
Shares released from the Loan Suspense Account by reason of
such dividends shall be allocated as Income in accordance with
Section 5.2(f).
(4) Cash dividends which are distributed to
Participants pursuant to Section 6.12 shall be debited from
the Cash Sub-Accounts of the distributees, unless such cash
dividends are paid directly to Participants by the Company.
5.3 Maximum Additions. Notwithstanding anything contained herein
to the contrary, the total Additions made to the Account of a Participant for
any Plan Year shall not exceed the lesser of $30,000 (as adjusted from time to
time pursuant to Section 415(d) of the Code) or 25 percent (25%) of the
Participant's Section 415 Compensation for such Plan Year. Effective as of
January 1, 2002, such Additions shall not exceed the lesser of $40,000, as
adjusted from time to time pursuant to Section 415(d) of the Code, or 100
percent (100%) of the Participant's Section 415 Compensation for such Plan Year.
If, in any year, as the result of the allocation of Forfeitures, a
reasonable error in estimating a Participant's Section 415 Compensation, or
other limited facts and circumstances, the Additions would exceed the limitation
for any Participant, such excess shall be reallocated to eligible Participants
as a Forfeiture for the Plan Year. If such reallocated Additions cause the
limitation to be exceeded for all Participants, such excess shall be held in a
suspense account. The amounts in such suspense account shall be allocated as of
each Valuation Date until the account is exhausted, the allocation to be
analogous to that provided in Section 5.2(a). Income shall not be allocated to
such suspense account. If a suspense account is in existence at any time
26
during a particular Plan Year, other than the first Plan Year for which the
suspense account is created, all amounts in the suspense account must be
allocated and reallocated to Participants' Accounts (subject to the limitations
of Section 415 of the Code) before any Employer contributions which would
constitute Additions may be made for that Plan Year.
In addition to this Plan, the Employer maintains the Savings Incentive
Plan with a limitation year corresponding to the Plan Year. If a Participant is
also a participant in the Savings Incentive Plan, the limitation upon the annual
additions which may otherwise be credited to his Savings Incentive Plan account
shall be first reduced by the total Additions for the Plan Year credited to such
Participant's Account under this Plan, and the Additions to this Plan shall not
be reduced by reason of any annual additions to the Savings Incentive Plan.
5.4 Allocation of Top-Heavy Special Contribution to Provide
Minimum Benefits. For Top-Heavy Plan Years, the Employer contributions made
pursuant to Section 4.1 and the special contribution described in Section 4.4
shall first be allocated to the Account of each Non-Key Employee who has not
terminated employment with the Employer at the end of the Plan Year in an amount
sufficient to provide the Minimum Benefit described by the following test. The
sum of Employer contributions and Forfeitures allocated during the Plan Year to
the Account maintained for each Participant who is a Non-Key Employee shall be
at least as great as a percentage of such Non-Key Employee's Section 415
Compensation. Such percentage shall be equivalent to the highest ratio for a Key
Employee for that Plan Year of
(i) the sum of Employer contributions and Forfeitures
allocated to the Account of the Key Employee, to
(ii) the Section 415 Compensation of the Key Employee
(restricted to $150,000 ($200,000 as of January 1, 2002) as adjusted
from time to time to Section 401(a)(17) of the Code);
provided, however, that the percentage shall not exceed three percent (3%). This
Minimum Benefit shall be provided in every Top-Heavy Plan Year to all
Participants who are Non-Key Employees and who have not terminated employment
with Employer at the end of the Plan Year.
The provisions of this Section 5.4 shall not apply, and no Employer
special contribution pursuant to Section 4.4 shall be required, for any Non-Key
Employee to the extent that such Non-Key employee is a participant in the
Savings Incentive Plan or another defined contribution plan included with this
Plan in a Required or Permissive Aggregation Group (as those terms are defined
in Section 13.2(c) and (d) and the Employer has provided an allocation of the
minimum benefit applicable to top-heavy plans in such other defined contribution
plan.
27
ARTICLE VI
BENEFITS
6.1 Time for Distribution. Distribution of benefits to a
Participant or Beneficiary shall occur at the date specified in whichever is
applicable of paragraphs (a), (b) or (c), subject to the override provisions of
paragraphs (d), (e), (f) and (g) of this Section 6.1:
(a) Retirement. Distribution shall occur no later than
the end of the 60-day period after the close of the Plan Year in which
a Participant retires on or after his Early Retirement Date or his
Normal Retirement Date.
(b) Death or Disability. Distribution shall occur no
later than the end of the 60-day period after the close of the Plan
Year in which occurs a Participant's Disability Benefit Date or in
which a Participant terminates employment with the Employer (or a
Former Participant's employment with an Affiliated Company) by reason
of his death.
(c) Other Termination. If the Participant's employment
with Employer and with all Affiliated Companies is terminated other
than for disability, normal retirement, early retirement, delayed
retirement or death, distribution shall occur at the time provided in
Section 4.3(b) for a "cash out" of such Participant's benefits.
(d) Administrative Extension. In the event that due to
administrative delays it is not possible for the Committee to calculate
the value of the benefit to be distributed to a Participant pursuant to
paragraph (a), (b) or (c) above, then distribution shall be deferred
until such calculation can be made, but may not be deferred for a
longer time than is prescribed in applicable regulations under ERISA or
the Code.
(e) Age 70 1/2. Except for a 5-Percent Owner,
distribution shall commence not later than the April 1 next following
the later of the calendar year in which a Participant attains age 70
1/2 or retires; provided, however, that a Participant who was born
before July 1, 1928, may elect to have his distribution commence not
later than the April 1 next following the calendar year in which such
Participant attains age 70 1/2 whether or not he remains in the employ
of the Employer. For a 5-Percent Owner, distribution shall commence not
later than the April 1 next following the calendar year in which such
Participant attains age 70 1/2 whether or not he remains in the employ
of the Employer. A Participant receiving distributions pursuant to this
Section 6.1(e) as of January 1, 1997, who has not retired and who is
not a 5-Percent Owner, may elect to cease receiving such distributions
until the April 1 next following the calendar year in which such
Participant retires.
Such distribution of a Participant's benefits shall be made in
accordance with the following requirements and shall otherwise comply
with Section 401(a)(9) of the Code and the Treasury Regulations
thereunder (including Regulation Section 1.401(a)(9)-2). In accordance
with Section 401(a)(9) of the Code and the Treasury Regulations
28
thereunder, for purposes of determining the maximum period over which
distributions must be made under Section 401(a)(9) of the Code, a
Participant (or his spouse, if applicable) may elect whether or not
life expectancy will be recalculated as permitted under Section
401(a)(9)(D) of the Code; provided, however, that such election must be
made no later than the first required distribution date under Section
401(a)(9) of the Code, after which such election shall be irrevocable.
Absent such an election, life expectancies shall be recalculated.
With respect to distributions under this 6.1(e) made for
calendar years commencing on or after January 1, 2002, the Plan will
apply the minimum distribution requirements of Section 401(a)(9) of the
Code in accordance with the Regulations under Section 401(a)(9) that
were proposed in January 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 Section 401(a)(9) of the Code or such other
date as may be specified in guidance published by the Internal Revenue
Service.
(f) Option to Delay. Except for a distribution on account
of a Participant's death, no distribution whose value exceeds $3,500
(this limit is increased to $5,000 effective on January 1, 1998) shall
be made prior to the Participant's Normal Retirement Date without the
written consent of the Participant.
(g) Normal Retirement Date Override. Subject to any
election described in paragraph (f), distribution to a Participant
whose termination of employment has occurred shall commence no later
than 60 days after the end of the Plan Year in which occurs his Normal
Retirement Date.
The foregoing paragraphs (d), (e), (f) and (g) are applicable notwithstanding
anything to the contrary contained in paragraphs (a), (b) and (c).
The Plan shall give written notice to a Participant or Beneficiary,
eligible for a distribution of benefits pursuant to this Section 6.1. Such
notice shall be given to an eligible Participant or Beneficiary no less than 30
days but no more than 90 days prior to the proposed date of distribution.
Distribution of such benefits in excess of $3,500 (this limit is increased to
$5,000 effective on January 1, 1998) during this period shall comply with the
requirements of Section 4.3(b). However, if the distribution is one to which
Sections 401(a)(11) and 417 of the Code do not apply, such distribution may
commence less than 30 days after such notice provided that the Committee clearly
informs the Participant or Beneficiary that he has a right to a period of at
least 30 days after receiving such notice to consider the decision of whether or
not to elect a distribution and that the Participant or Beneficiary, after
receiving such notice, affirmatively elects a distribution.
29
6.2 Method of Payment. The benefits provided hereunder shall be
payable in one lump sum payment (but allowing for separate distributions of cash
and Company Stock within the same calendar year).
6.3 Normal Retirement Benefit. Each Participant in the employment
of the Employer on his Normal Retirement Date (and each Former Participant who
on his Normal Retirement Date is employed by an Affiliated Company), shall be
eligible to retire on that date and shall be 100% vested in his Account balance.
6.4 Early Retirement Benefit. Each Participant in the employment
of the Employer on his Early Retirement Date (and each Former Participant who on
his Early Retirement Date is employed by an Affiliated Company), shall be
eligible to retire on that date and shall be 100% vested in his Account balance.
6.5 Delayed Retirement Benefit. A Participant who remains in
employment with the Employer (and a Former Participant, with an Affiliated
Company) beyond his Normal Retirement Date shall be eligible to retire on his
Delayed Retirement Date, which shall be the date on which he actually retires,
and he shall be entitled to a benefit of the amount in his Account.
6.6 Total and Permanent Disability Benefit. Each Participant who
terminates employment with the Employer by reason of his total and permanent
disability (and each Former Participant who terminates employment with an
Affiliated Company by reason of his total and permanent disability) shall, upon
his Disability Benefit Date, be 100% vested in his Account balance.
6.7 Death Benefit. If a Participant's employment with Employer (or
a Former Participant's employment with an Affiliated Company) is terminated by
death, such Participant shall be 100% vested in his Account balance and such
Account balance shall be payable as a benefit to his Beneficiary as designated
pursuant to Section 6.9. The payment of death benefits to a Beneficiary shall be
made in one lump-sum payment (but allowing separate distributions of cash and
Company Stock within the same calendar year).
6.8 Vested Benefit. If any Participant's employment with Employer
and with all Affiliated Companies is terminated other than by normal retirement,
early retirement, delayed retirement, disability or death, he shall be entitled
to a "vested benefit" which shall include a percentage of his Account, based on
his Years of Vesting Service, according to the vesting table provided in either
Section 6.8(a) or Section 6.8(b), depending upon whether the Plan is a Top-Heavy
Plan for the Plan Year during which such termination occurs:
(a) Except as provided in Section 6.8(b) and (c) the
percentage shall be as follows:
30
Percentage of
Years of Vesting Service Account
------------------------ -------------
Less than 5 0%
5 or more 100%
(b) For a Plan Year for which the Plan is a Top-Heavy
Plan, the percentage shall be as follows:
Percentage of
Years of Vesting Service Account
------------------------ -------------
Fewer than 3 0%
3 or more 100%
(c) such termination of employment (other than by reason
of death, disability, normal retirement, early retirement or delayed
retirement) in any year which is not a Top-Heavy Plan Year, each
Participant who had three (3) or more Years of Vesting Service at any
time during a Top-Heavy Plan Year shall be entitled to elect a vested
benefit determined in accordance with the table in Section 6.8(b). Any
other Employee who was a Participant during a Top-Heavy Plan Year shall
be entitled to a vested benefit determined in accordance with the table
in Section 6.8(a), except that such percentage shall not be less than
the percentage under the table in Section 6.8(b) which would have
applied if his termination of employment had occurred on the last day
of the last Top-Heavy Plan Year prior to his actual termination of
employment.
(d) The remainder of a Participant's Account which does
not constitute his vested benefit shall be treated as a Forfeiture at
the time and in the manner specified pursuant to Sections 4.3 and
5.2(a).
(e) For purposes of determining whether an Employee is
entitled to receive any vested benefit under this Article VI, and the
time of payment of such vested benefit under Section 4.3(c), he shall
not be deemed to have terminated his employment under the Plan until he
is no longer employed by any Affiliated Company to which he may have
been transferred, irrespective of whether he shall have ceased to be
classified as an Employee following such transfer.
6.9 Designation of Beneficiary. Subject to the rights of a
surviving spouse described herein, each Participant (or Former Participant) may
from time to time designate a Beneficiary or Beneficiaries to whom his Plan
benefits are to be paid if he dies before receipt of all such benefits. Each
Beneficiary designation, or revocation thereof, shall be in a form prescribed by
the Committee and will be effective only when filed with the Committee. Unless
the conditions which follow for the designation of a Beneficiary other than the
spouse are satisfied, the Beneficiary of a Participant who is married on the
date of his death shall be the surviving spouse, whether or not so designated in
the form, and even if no such form is filed. Designation of a
31
Beneficiary other than such Participant's spouse for any portion of the benefits
shall be valid only if either
(i) the spouse consents in writing thereto, acknowledging
the effect of such designation, the particular non-spouse Beneficiary
and the form of benefit payment;
(ii) the spouse consents in writing thereto, acknowledging
the effect of such designation and the form of benefit payment, and the
consent by the spouse expressly permits future changes of Beneficiary
without further consent by the spouse;
(iii) the Participant, although married at the time of the
designation, is ultimately not survived by his spouse or is divorced
from his spouse;
(iv) the surviving spouse cannot be located; or
(v) the Participant and spouse are legally separated as
evidenced by a court order.
Spousal consent pursuant to (i) or (ii) shall be witnessed by a notary
public or Plan representative, and shall be irrevocable. If the Participant is
survived by a spouse other than the spouse who consented to designation of
another as Beneficiary, the consent of the former spouse shall be ineffective.
If the Participant has no designation of a Beneficiary in effect at the time of
his death, and is not survived by a spouse, or if the surviving spouse cannot be
located, any Plan benefits shall be payable in the following order of priority:
(a) to the children, including adopted children, of the Participant in equal
shares, per stirpes; or if none survive, (b) to the surviving natural parents of
the Participant, in equal shares; or if neither survives, (c) to the estate of
the Participant.
6.10 Additional Benefits. Whenever benefits are computed according
to the balance of a Participant's Account on a Valuation Date, and thereafter
additional amounts are allocated to such Participant's Account from
contributions, Forfeitures, Income, dividends or other investment earnings, such
additional amounts shall be paid as additional benefits and shall be payable in
the same manner as the other benefits payable from such Account. If the
allocation of such Income or other investment earnings produces a net loss, the
benefits paid shall be reduced notwithstanding the initial computation of
benefits according to the balance of a Participant's Account on a Valuation
Date.
6.11 Form of Distribution. Distributions from the Company Stock
Sub-Account shall be made in full shares of Company Stock. Balances representing
fractional shares may be paid in cash. Distributions from the Cash Sub-Account
shall be made in cash; provided, however, that the Participant shall have the
right to elect that the entire amount of his Account be distributed to him in
the form of Company Stock (except for fractional shares). The Committee shall
advise the Participant in writing of his right to elect to receive Company Stock
and of the proposed distribution date at which time, within reasonable limits, a
distribution in cash will be
32
made from the Cash Sub-Account if the Participant does not elect in writing to
receive Company Stock. Such election by the Participant to receive Company Stock
from his Cash Sub-Account shall be irrevocable and shall be valid only if
received by the Committee at least thirty (30) days prior to the proposed
distribution date. In the event that a distribution of Company Stock is to be
made from the funds in the Participant's Cash Sub-Account, any balance in a
Participant's Cash Sub-Account may be applied to provide whole shares of Company
Stock for distribution at the then fair market value.
6.12 Distribution of Dividends on Company Stock. The Committee may,
in its sole discretion, distribute to Participants cash dividends received by
the Trust on Company Stock allocated to each such Participant's Company Stock
Sub-Account, provided that such distribution must be made no later than ninety
(90) days after the close of the Plan Year in which such dividends are paid to
the Trust; or such cash dividends may, in the discretion of the Board of
Directors, be paid directly to the Participants instead of to the Trust.
6.13 Pre-Retirement Distribution Rights. If a Participant has
attained age 55 and has completed 10 years of participation in this Plan
subsequent to December 31, 1991, and thus has become a Qualified Participant,
the Committee shall offer such Qualified Participant during his first "election
period" (as defined below) and successive "election periods" the right to elect
a distribution of a portion of the Company Stock credited to his Account. The
"election period" shall be the first 90 days immediately following the end of
each Plan Year in the "qualified election period". The "qualified election
period" shall commence with the first Plan Year after the Participant becomes a
Qualified Participant and end with the fifth Plan Year thereafter. For example,
a Participant who first becomes a Qualified Participant in the Plan Year ending
December 31, 2001, will first be entitled to elect a distribution in the period
from January 1, 2002 through March 30, 2002. If the Qualified Participant elects
such a distribution, the distribution will be made within 90 days after the end
of that election period. The amount which may be elected for distribution during
the first such "election period" is 25% of the number of shares of Company Stock
then credited to that Qualified Participant's Account. The amount which may be
elected for distribution upon future elections, during successive election
periods, shall be determined by multiplying the number of shares of Company
Stock credited to the Qualified Participant's Account (including shares of
Company Stock which have been previously distributed pursuant to this
subsection) by 25% or, with respect to a Qualified Participant's final election,
50%, reduced by the amount of any prior distributions elected by such
Participant pursuant to this subsection. Notwithstanding the foregoing, if the
fair market value of the Company Stock allocated to the ESOP Account of a
Qualified Participant is less than five hundred dollars ($500.00) as of the
Valuation Date immediately preceding the first day of an election period, then
such Qualified Participant shall not be entitled to elect to receive a
distribution for that election period.
6.14 Valuation Date. The Valuation Date which shall be the basis
for determining benefits payable to any Participant or Beneficiary shall be the
last Valuation Date preceding the date of the Participant's termination of
employment with the Employer, with additional benefits and Income added (or a
loss subtracted) as of subsequent Valuation Dates preceding the date of
33
distribution as provided in Section 6.10. At any time the Employer may select an
interim Valuation Date in addition to the regular Valuation Dates (the last day
of each Plan Year), in which case the Employer shall notify the Trustee in
writing within sixty (60) days either preceding or following such interim
Valuation Date. Any such interim Valuation Date shall be selected and applied by
the Employer uniformly to all Participants so as to avoid the prohibited
discrimination described in Section 401(a)(4) of the Code.
6.15 Direct Rollover. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a Distributee's election under this
Section 6.15, a Distributee may elect, at the time and in the manner prescribed
by the Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover provided that the recipient Eligible Retirement Plan accepts rollover
contributions, and effective for distributions on or after January 1, 2002, in
the case of an eligible governmental plan described in clause (vi) of Section
2.1(y), such governmental plan separately accounts for amounts transferred into
such plan from this Plan. The Plan provisions otherwise applicable to
distributions continue to apply to this Direct Rollover option. The Distributee
shall, in the time and manner prescribed by the Committee, specify the amount to
be directly transferred and the Eligible Retirement Plan to receive the
transfer. Any portion of a distribution which is not transferred shall be
distributed to the Distributee in the form specified in Section 6.11.
34
ARTICLE VII
TRUST; VOTING RIGHTS
7.1 Assets Held in Trust. All contributions under this Plan shall
be paid to the Trustee and deposited in the Trust. All assets of the Trust,
including investment income, shall be retained for the exclusive benefit of
Participants and Beneficiaries and shall be used to pay benefits to such persons
or to pay administrative expenses of the Plan to the extent not paid by the
Employer. No part of the Trust shall revert to or inure to the benefit of the
Employer, except that upon the Employer's request, a contribution which was made
under a mistake of fact or conditioned upon the deductibility of any
contribution under Section 404 of the Code shall be returned to the Employer
within one (1) year after the payment of the contribution or the disallowance of
the deduction (to the extent disallowed), whichever is applicable.
The maximum amount that may be returned to the Employer in the case of
a mistake of fact or disallowance of the deduction is the excess of
(i) the amount contributed over, as relevant,
(ii) (A) the amount which would have been contributed had
no mistake of fact occurred, or
(B) the amount that would have been contributed
had the contribution been limited to the amount that is
deductible after any disallowance by the Internal Revenue
Service.
Income attributable to the excess contribution may not be returned to
the Employer, but losses attributable thereto must reduce the amount to
be so returned. If the withdrawal of the amount attributable to the
mistaken or nondeductible contribution would cause the balance of the
Account of any participant to be reduced to less than the balance which
would have been in the Account had the mistaken or nondeductible amount
not been contributed, then the amount to be returned to the Employer
must be limited so as to avoid such reduction.
7.2 Voting Rights. All Company Stock held in the Trust shall be
voted as hereinafter provided for pass-through voting by Participants or for
direction of voting by the Committee under this Section 7.2 or Section 7.3. Each
Participant, Former Participant and Beneficiary of a deceased Participant shall
be entitled to direct the Trustee as to the exercise of voting rights regarding
any corporate matter which involves the voting of Company Stock then allocated
to his Company Stock Sub-Account. If Participants are entitled to so direct the
Trustee as to the voting of Company Stock allocated to their Company Stock
Sub-Accounts, all such Company Stock as to which instructions have been received
(which may include an instruction to abstain) shall be voted in accordance with
such instructions. The Trustee shall abstain from voting the allocated shares of
Company Stock as to which no written instructions are received.
35
The Committee shall provide, or cause to be provided, to each
Participant, Former Participant and Beneficiary of a deceased Participant notice
of any meeting of the shareholders of the Company at which Company Stock is
entitled to be voted. Such notice shall include such information statements as
are required to be sent to shareholders of the Company generally, and the time
and manner for furnishing such notice or information statements shall be in
compliance with both applicable law and the Company's charter and by-laws as
generally applicable to security holders. The Committee shall request written
instructions from each Participant, Former Participant and Beneficiary as to the
voting of the shares of Company Stock allocated to his Company Stock
Sub-Account. The Committee shall tabulate the written instructions received on
or prior to the date established by the Committee and communicated to the
Participants for returning the written instructions and shall instruct the
Trustee as to the voting of the shares of Company Stock represented by such
written instructions.
In the event that no shares of Company Stock are allocated to the
Company Stock Sub-Accounts on the record date, the Committee shall not be
required to provide notice of the meeting or information statements and the
Trustee shall vote all Company Stock as the Trustee, in his discretion, shall
determine.
After the first allocation of shares of Company Stock to the Company
Stock Sub-Accounts, the Trustee shall vote any shares of Company Stock in the
Loan Suspense Account in accordance with the instructions of the Committee. The
Committee shall determine its instructions based upon the percentage of shares
of Company Stock to be voted, for and against each issue to be considered at the
meeting, including in the tabulation of such percentages only those shares of
Company Stock allocated to Company Stock Sub-Accounts as to which written
instructions were received from Participants by the Committee.
7.3 Tender Offer. In the event of any of the following actions by
a third party:
(1) a tender offer or an exchange offer for stock of the
Company;
(2) a proposal for the merger or consolidation of the
Company with such third party; or
(3) a proxy solicitation for the purpose of electing
directors who propose to approve acts described in (1) or (2);
then, except as hereinafter provided under this Section 7.3, the Trustee shall
tender or not tender Company Stock, vote in favor of or against the proposal for
merger or consolidation, or respond to the proxy solicitation for election of
directors, as instructed by the Committee. The Committee shall provide or cause
to be provided to each Participant, Former Participant and Beneficiary of a
deceased Participant any information relevant to the investment decision, as is
provided to stockholders of the Company generally, together with a form for
written instructions as to the shares of Company Stock allocated to the Company
Stock Sub-Account of each Participant, Former Participant and Beneficiary. With
respect to that Company Stock, the
36
Committee shall instruct the Trustee in accordance with such written
instructions as are received by the Committee on or prior to the date
established by the Committee and communicated to the Participants, Former
Participants and Beneficiaries for returning the written instructions.
With respect to (i) any Company Stock allocated to the Company Stock
Sub-Accounts as to which the Committee receives no written instructions, and to
(ii) all Company Stock in the Loan Suspense Account or not otherwise allocated
either to the Company Stock Sub-Accounts (herein collectively referred to as
"unallocated shares"), the Committee shall instruct the Trustee either to
tender, to vote in favor of the proposal, or to vote for directors who support
such action, in the same proportion of the total of such unallocated shares as
the number of shares of Company Stock allocated to the Company Stock
Sub-Accounts which are tendered, voted in favor of the proposal, or voted for
directors who support such action, pursuant to written instructions from
Participants, Former Participants and Beneficiaries, bears to the total number
of shares of Company Stock allocated to the Company Stock Sub-Accounts of all
Participants, Former Participants and Beneficiaries. The Committee shall
instruct the Trustee not to tender, or to vote in opposition to the proposal for
merger or consolidation, or to vote in favor of directors who oppose such tender
offer or proposal, in the same proportion of the total of such unallocated
shares as the number of shares of Company Stock allocated to the Company Stock
Sub-Accounts which are not tendered, voted in opposition to the proposal, or
voted for directors who oppose such tender offer or proposal, pursuant to
written instructions or lack of any instructions from Participants, Former
Participants and Beneficiaries, bears to the total number of shares of Company
Stock allocated to the Company Stock Sub-Accounts of all Participants, Former
Participants and Beneficiaries.
Unless an interim Valuation Date is selected pursuant to Section 6.14,
if no Company Stock has been allocated to the Company Stock Sub-Accounts, then
the Trustee shall tender or not tender all shares of Company Stock, vote in
favor of or against the proposal for merger or consolidation, or vote for or
against directors who support such tender offer or proposal, as the Trustee, in
his discretion, shall determine.
37
ARTICLE VIII
ADMINISTRATION
8.1 Allocation of Responsibility Among Fiduciaries for Plan and
Trust Administration. The Fiduciaries shall have only those specific powers,
duties, responsibilities and obligations which are specifically given them under
this Plan or the Trust. Any person or group of persons may serve in more than
one Fiduciary capacity with respect to the Plan. The Committee shall be the
Administrator of the Plan, and shall have the sole responsibility for the
administration of the Plan. The Trustee shall have the responsibility for the
administration of the Trust and the management of the assets held under the
Trust, except as specifically provided in the Trust, and subject to the purpose
of the Plan as described in Article I to invest primarily in Company Stock.
The Board of Directors may appoint an investment committee and, by
written notice to the Trustee, direct that investment authority as to all or any
portion of the assets of the Trust shall be vested in such investment committee
as a named Fiduciary; and the Trustee shall be subject to the direction of such
committee regarding the investment of such assets within the limitations
provided in the Trust. The Trustee shall not be liable for claims arising as a
result of following the directions of the investment committee, as specifically
provided in the Trust. Each Fiduciary shall be responsible for the proper
exercise of its own powers, duties and responsibilities, but shall not be
responsible for any act or failure to act of another Fiduciary. Named
Fiduciaries with respect to the Plan may designate persons other than named
Fiduciaries to carry out fiduciary responsibilities under the Plan.
8.2 Appointment of Committee. A Committee consisting of no more
than three persons shall be appointed by and serve at the pleasure of the Board
of Directors. The Board of Directors may name the Company to assume the duties
of the Committee. All usual and reasonable expenses of the Committee shall be
paid by the Employer, or upon the direction of the Committee, shall be paid by
the Trustee out of the Trust. No member of the Committee who is an Employee
shall receive compensation for his services on the Committee.
8.3 Claims and Review Procedures. The Committee shall establish
reasonable procedures concerning the filing of claims for benefits hereunder,
and shall administer such procedures uniformly. If a claim is wholly or
partially denied, the Committee shall furnish the claimant, within a reasonable
period of time after receipt of the claim by the Committee, a notice of such
denial, setting forth at least the following information in language calculated
to be understood by the claimant:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on
which the denial is based;
38
(c) a description of any additional material or
information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary; and
(d) an explanation of the claims review procedure in the
Plan.
Upon receipt of such a notice of denial, or if such a notice is not
furnished but the claim has not been granted within sixty (60) days of its
filing, the claimant or his duly authorized representative may appeal to the
Committee for a full and fair review.
In submitting a request for review, the claimant or his duly authorized
representative may request a review upon written application to the Committee,
may review pertinent documents, and may submit comments in writing. Such request
for review must be made within sixty (60) days of the receipt by the claimant of
the notice of denial (or within sixty (60) days of the expiration of the sixty
(60) day period beginning with the date of the filing of the claim, if no such
notice is received during such period).
The Committee shall respond promptly to a request for review and shall
deliver a written decision which shall include, in a manner calculated to be
understood by the claimant, the decision itself, specific reasons therefor and
specific references to the pertinent Plan provisions on which the decision is
based. The decision shall be made not later than one hundred and twenty (120)
days after receipt of a request for review.
8.4 Committee Powers and Duties. The Committee shall have all
power and authority (including absolute discretion with respect to the exercise
of that power and authority) necessary, properly advisable, desirable or
convenient for the performance of its duties. In performing its duties, the
Committee shall have discretionary authority to grant or deny benefits under
this Plan. Notwithstanding the foregoing sentence, the Committee shall have no
power to add to, subtract from or modify any of the terms of the Plan, or to
change or add to any benefits provided by the Plan, or to waive or fail to apply
any requirements of eligibility for a benefit under the Plan. Any decision by
the Committee shall be conclusive and binding on all persons subject to the
claims review procedures described in Section 8.3 and subject to judicial review
only where it is shown by clear and convincing evidence that the Committee acted
in an arbitrary and capricious manner. The duties of the Committee shall
include, but not be limited to, the following:
(a) to construe and interpret the Plan, decide all
questions of eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(b) to prescribe procedures to be followed by
Participants or Beneficiaries in filing applications for benefits;
(c) to appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems advisable,
including legal and actuarial counsel;
39
(d) to formulate written procedures to determine the
qualified status of domestic relations orders pursuant to Section
414(p)(6) of the Code and to administer payment of benefits in
accordance with such orders as are concluded to be qualified;
(e) to determine whether to offer to Participants the
right to elect a distribution in the form of cash;
(f) to authorize delivery and payment by the Trustee of
Company Stock and cash under the Plan; and
(g) to compile the instructions from Participants
regarding the voting of Company Stock as described in Section 7.2 and
regarding the response to a third party tender offer or other corporate
transaction described in Section 7.3, and to direct the Trustee in
accordance with those instructions.
8.5 Rules and Decisions. The Committee may adopt such rules as it
deems necessary, desirable, or appropriate. All rules and decisions of the
Committee shall be uniformly and consistently applied to all Participants in
similar circumstances. When making a determination or calculation, the Committee
shall be entitled to rely upon information furnished by a Participant or
Beneficiary, the Employer, the legal counsel of the Employer, or the Trustee.
Any decision by the Committee shall be conclusive and binding upon all
persons, subject to the claims review procedure described in Section 8.3 and
subject to judicial review where it is shown by clear and convincing evidence
that the Committee acted in an arbitrary and capricious manner.
8.6 Committee Procedures. The Committee may act at a meeting or in
writing without a meeting. The Committee may elect one of its members as
chairman, appoint a secretary, who may or may not be a Committee member, and
advise the Trustee of such actions in writing. The Committee may adopt such
by-laws or regulations as it deems desirable for the conduct of its affairs. All
decisions of the Committee shall be made by the vote of the majority including
actions in writing taken without a meeting. A dissenting Committee member who,
within a reasonable time after he has knowledge of any action or failure to act
by the majority, registers his dissent in writing delivered to the other
Committee members, the Employer, and the Trustee, shall not be responsible for
any such action or failure to act.
8.7 Authorization of Member to Sign Documents. The Committee may
authorize any one or more of its members (or any person or persons, if the
Company is the Committee) to execute any document or documents on behalf of the
Committee. The Committee shall notify the Trustee in writing of such action and
the name or names of the person or persons so designated. The Trustee thereafter
may accept and rely upon any document executed by such member or members as
representing action by the Committee until the Committee shall file with the
Trustee a written revocation of such designation.
40
8.8 Duty to Keep Records and File Reports. The Committee shall
keep records and other data as may be necessary for proper administration of the
Plan, including the balance of the Accounts for each Participant. The Committee
shall file or cause to be filed all annual reports, financial and other
statements as may be required by any federal or state statute, agency or
authority within the time prescribed by law or regulation for filing such
documents. The Committee shall furnish such reports, statements and other
documents to Participants and Beneficiaries of the Plan as may be required by
any federal or state statute or regulation.
8.9 Authorization of Benefit Payments. The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan.
8.10 Application and Forms for Benefits. The Committee may require
a Participant to complete and file with the Committee an application for a
benefit and all other forms approved by the Committee, and to furnish all
pertinent information requested by the Committee. The Committee may rely upon
all such information so furnished it, including the Participant's current
mailing address.
8.11 Facility of Payment. Whenever, in the Committee's opinion, a
person entitled to receive any payment of a benefit or installment thereof
hereunder is under a legal disability or is incapacitated in any way so as to be
unable to manage his financial affairs, the Committee may direct the Trustee to
make payments to such person or to his legal representative or to a relative or
friend of such person for his benefit, or the Committee may direct the Trustee
to apply the payment for the benefit of such person in such manner as the
Committee considers advisable. Any payment of a benefit or installment thereof
in accordance with the provisions of this Section shall be a complete discharge
to the Trustee of any liability for the making of such payment under the
provisions of the Plan.
8.12 Indemnification of Committee Members. The Employer shall
indemnify and hold harmless each member of the Committee, and any person signing
documents on behalf of the Committee, against any and all liability, claims,
damages and expense, including fees of individuals appointed pursuant to Section
8.4(c), which the member may incur in administration of the Plan, unless arising
from the gross negligence or willful misconduct of such member. This
indemnification shall be limited to the costs and expenses not covered under any
fiduciary insurance provided by the Employer.
41
ARTICLE IX
MISCELLANEOUS
9.1 Nonguarantee of Employment. Nothing contained in this Plan
shall be construed as a contract of employment between the Employer and any
Employee, or as a right of any Employee to be continued in the employment of the
Employer, or as a limitation of the right of the Employer to discharge any of
its Employees, with or without cause.
9.2 Rights to Trust Assets. No Employee or Beneficiary shall have
any right to, or interest in, any assets of the Trust Fund upon termination of
his employment or otherwise, except as provided in this Plan. All payments of
benefits as provided for in this Plan shall be made solely out of the assets of
the Trust and none of the Fiduciaries shall be personally liable therefor in any
manner.
9.3 Nonalienation of Benefits. Benefits payable under this Plan
shall not be subject in any manner to anticipation, alienation, execution, or
levy of any kind, either voluntary or involuntary, including any such liability
which is for alimony or other payments for the support of a spouse or former
spouse, or for any other relative of the Participant prior to actually being
received by the person entitled to the benefit under the terms of the Plan; and
any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge or otherwise dispose of any right to benefits payable hereunder, shall be
void. The Trust shall not in any manner be liable for, or subject to, the debts,
contracts, liabilities, engagements or torts of any person entitled to benefits
thereunder. The foregoing prohibition on alienation of benefits shall not apply
to prevent payments by the Trustee in recognition of the rights of a spouse,
former spouse, child or other dependent of the Participant embodied in a
qualified domestic relations order as defined in Section 206(d)(3) of ERISA and
in Section 414(p)(1) of the Code ("QDRO"). No such QDRO shall require payment of
any form or amount of benefit, or time of payment thereof, except as otherwise
permitted under this Plan; provided, however, that such payment may be required
by the QDRO prior to termination of employment of the Participant at any time
after the Participant attains age 50.
In the event a Participant's benefits are garnished or attached by
order of any court, or if there are multiple claimants to the same benefits, the
Committee may bring an action for declaratory judgment in a court of competent
jurisdiction to determine the proper recipient of the benefits to be paid by the
Plan. During the pendency of said action, any benefits that become payable may
be paid into the court as they become payable, to be distributed by the court to
the recipient it deems proper.
9.4 Discontinuance of Employer Contributions. In the event of
permanent discontinuance of contributions to the Plan by the Employer, the
Accounts of all Participants shall, as of the date of such discontinuance,
become nonforfeitable.
9.5 Single Plan and Trust of Employers. The Plan of each Employer
which adopts this Plan shall be administered as a single Plan, and a single
Trust Fund shall be used for the
42
investment of all Plan assets and the payment of benefits hereunder. All
Forfeitures subject to allocation during a Plan Year shall be allocated to all
Participants in accordance with Section 5.2(a), and not exclusively to those
Participants who are employees of the Adopting Company which was the employer of
the Former Participant incurring the Forfeiture.
9.6 Leased Employees. Notwithstanding any other provisions of the
Plan, for purposes of determining the number or identity of Highly Compensated
Employees and for purposes of the pension requirements of Section 414(n)(3) of
the Code, the employees of the Employer shall include "Leased Employees."
9.7 Applicable Law. The Plan hereby created shall be construed,
administered and governed in all respects in accordance with ERISA and, to the
extent not superseded by federal law, in accordance with the laws of the State
of Tennessee; provided, however, that if any provision is susceptible of more
than one interpretation, such interpretation shall be given thereto as is
consistent with the Plan being a qualified plan within the meaning of the Code.
9.8 Acquisition by or of Adopting Company. If an Affiliated
Company should adopt this Plan, or if the Company or an Adopting Company should
acquire substantially all the assets of another company or a division thereof,
any employees who are hired by Company or by an Adopting Company as a result of
such acquisition shall become eligible to participate in this Plan in accordance
with Section 3.1, subject to such terms as the Board of Directors may determine
by resolution. The Board of Directors may in its sole discretion treat service
with the previous employer prior to such previous employer's becoming an
Affiliated Company or prior to the acquisition, as the case may be, as service
with the Company to whatever extent it deems advisable for purposes of
determining under this Plan eligibility for participation, vesting, and
eligibility to share in the Employer contributions, or any combination of the
foregoing; provided, however, that all employees of such previous employer who
continue in the employment of Company or of an Adopting Company shall be treated
uniformly; and provided further that the crediting of such prior service shall
not discriminate in favor of Highly Compensated Participants. The Board of
Directors shall determine, by appropriate resolutions, the extent to which such
prior service shall be included in determining hereunder Hours of Service and
Years of Service, and to what extent such inclusion shall be restricted to the
purpose of determining eligibility for participation, vesting, or eligibility to
share in Employer contributions, or any combination thereof. Any Board
resolutions required by this Section 9.8 may be adopted either before or after
the acquisition of assets or adoption of this Plan by the Affiliated Company.
Except to the extent required under ERISA, no such prior service shall be so
included unless appropriate resolutions are adopted by the Board of Directors.
9.9 No Restrictions on Financed Shares. Except as required by the
securities laws or other applicable laws, no Company Stock originally acquired
as Financed Shares shall be subject to a put, call or other option, or buy-sell,
right of first refusal, or similar arrangement while held by and when
distributed from the Plan, whether or not the Plan is then an employee stock
ownership plan as described in Section 4975(e)(7) of the Code.
43
9.10 Qualified Military Service. Effective on October 13, 1996,
with respect to affected Employees who are re-employed on or after December 12,
1994, and notwithstanding any provision of this Plan to the contrary,
contributions, benefits, and service credit with respect to qualified military
service will be provided in accordance with Section 414(u) of the Code.
9.11 Certain Judgments, Orders, Decrees and Settlements. Effective
for judgments, orders and decrees issued, and settlements entered into, on or
after August 5, 1997, the Plan shall be permitted to offset all or a portion of
a Participant's vested benefit against an amount that the Participant is ordered
or required to pay to the Plan if the order or requirement to pay arises in
connection with:
(a) the Participant's conviction for a crime involving
the Plan;
(b) a civil judgment (or consent order or decree) entered
by a court in an action brought in connection with a violation of the
fiduciary provisions of ERISA; or
(c) a settlement agreement between the Secretary of Labor
and the Participant in connection with a violation (or alleged
violation) of the fiduciary provisions of ERISA.
To be effective, the judgment, order, decree or settlement agreement
establishing such liability must expressly provide that the Participant's vested
benefit under the Plan be offset to satisfy such liability. If the Participant
is married at the time his benefit under the Plan is offset to satisfy the
liability, spousal consent to such offset is required to the extent otherwise
required under this Plan unless the spouse is also required to pay an amount to
the Plan in the judgment, order, decree or settlement or unless the judgment,
order, decree or settlement provides a fifty percent (50%) survivor annuity or
its equivalent to the spouse. The provisions of this Section 9.11 are to be
interpreted in accordance with Section 401(a)(13)(C) of the Code.
44
ARTICLE X
AMENDMENTS AND ACTION BY EMPLOYER
10.1 Amendments. Each Employer reserves the right to amend its Plan
provided such amendment does not cause any part of the Trust to be used for, or
diverted to, any purpose other than the exclusive benefit of Participants,
Former Participants or their Beneficiaries, except as may be necessary to make
the Plan comply with ERISA. Amendment of the Plan by the Company shall similarly
amend the Plan of each Adopting Company, except that any Adopting Company may
exclude its Plan from such amendment by resolution of its Board of Directors.
10.2 Limitation on Amendments. No amendment to this Plan shall have
the effect of reducing the amount then credited to the Accounts of any
Participant or of causing the nonforfeitable percentage of the accrued benefit
derived from Employer contributions (determined as of the later of the date such
amendment is adopted, or the date such amendment becomes effective) of any
Participant under the Plan to be less than his nonforfeitable percentage
computed under the Plan without regard to such amendment. For the purposes of
this Section 10.2, a Plan amendment which has the effect of eliminating or
reducing an early retirement benefit or eliminating an optional form of benefit
(as provided in Treasury regulations) with respect to benefits attributable to
service before the amendment shall be treated as reducing the amount credited to
the Accounts of a Participant.
10.3 Action by Employer. Any action by the Employer may be by
resolution of its Board of Directors, or by any person or persons duly
authorized by resolution of said Board to take such action.
45
ARTICLE XI
SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLAN
11.1 Successor Employer. In the event of the dissolution, merger,
consolidation or reorganization of the Employer, provision may be made by which
the Plan and Trust will be continued by the successor; and, in that event, such
successor shall be substituted for the Employer under the Plan. The substitution
of the successor shall constitute an assumption of Plan liabilities by the
successor and the successor shall have all of the powers, duties and
responsibilities of the Employer under the Plan.
11.2 Plan Assets. In the event of any merger or consolidation of
the Plan with, or transfer in whole or in part of the assets and liabilities of
the Trust to another trust fund held under, any other plan of deferred
compensation maintained or to be established for the benefit of all or some of
the Participants of this Plan, the assets of the Trust applicable to such
Participants shall be transferred to the other trust fund only if:
(a) each Participant would (if either this Plan or the
other plan then terminated) receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the
benefit he would have been entitled to receive immediately before the
merger, consolidation or transfer (if this Plan had then terminated);
(b) resolutions of the Board of Directors of the Employer
under this Plan, or of any new or successor employer of the affected
Participants, shall authorize such transfer of assets; and, in the case
of the new or successor employer of the affected Participants, its
resolutions shall include an assumption of liabilities with respect to
such Participants' inclusion in the new employer's plan; and
(c) such other plan and trust are qualified under
Sections 401(a) and 501(a) of the Internal Revenue Code.
The requirement of subparagraph (a) of this Section 11.2 shall be
satisfied, in the case of a spinoff of part of the assets and liabilities of
this Plan, if after the spinoff:
(1) The sum of the account balances for each
Participant in the resulting plans equals the account balance
of the Participant in the Plan before the spinoff, and
(2) The assets in each of the plans immediately
after the spinoff equals the sum of the account balances for
all participants in that plan.
46
ARTICLE XII
PLAN TERMINATION
12.1 Right to Terminate. In accordance with the procedures set
forth in this Article, the Employer may terminate the Plan at any time. In the
event of the dissolution, merger, consolidation or reorganization of the
Employer, the Plan shall terminate and the Trust shall be liquidated unless the
Plan is continued by a successor to the Employer in accordance with Section
11.1, or unless the Employer elects to continue the Trust and make distribution
to the Participants or their beneficiaries at the times and in the manner set
forth in Article VI hereof.
12.2 Partial Termination. Upon termination of the Plan with respect
to a group of Participants which constitutes a partial termination of the Plan,
the Trustee shall, in accordance with the directions of the Committee, allocate
and segregate for the benefit of the Participants then or theretofore employed
by the Employer with respect to which the Plan is being terminated, the
proportionate interest of such Participants in the Trust. The funds so allocated
and segregated shall be used by the Trustee to pay benefits to or on behalf of
Participants in accordance with Section 12.3.
12.3 Liquidation of the Trust. Upon termination or partial
termination of the Plan, the Accounts of all Participants affected thereby shall
become fully vested to the extent funded, and the Committee shall direct the
Trustee to distribute the assets remaining in the Trust (after payment of any
expenses properly chargeable thereto) to Participants, Former Participants and
Beneficiaries in proportion to their respective Account balances unless the
Employer elects to continue the Trust as provided in Section 12.1. Any amounts
which may remain unallocated in the suspense account described in Section 5.3
shall be returned to the Employer.
12.4 Manner of Distribution. To the extent that no discrimination
in value results, any distribution after termination of the Plan may be made, in
whole or in part, in cash, in securities or other assets in kind, as the
Committee, in its discretion, may determine; provided, however, that all
distributions from the Company Stock Sub-Accounts shall be in the form of
Company Stock. All non-cash distributions shall be valued at fair market value
at the date of distribution.
12.5 Company Stock in Loan Suspense Account. Upon termination of
the Plan or a permanent discontinuance of Employer contributions, any Company
Stock remaining in the Loan Suspense Account shall be first utilized to repay
the outstanding balance of the Acquisition Loan. Any shares of Company Stock
which may remain in the Loan Suspense Account after such repayment shall be
allocated to the Company Stock Sub-Accounts of Participants eligible to share in
the Employer contributions for that Plan Year pursuant to Section 5.2(a), in the
proportion that each such Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants entitled to share in Employer
contributions for that Plan Year.
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ARTICLE XIII
TOP-HEAVY PROVISIONS
13.1 Top-Heavy Plan Requirements. For any Top-Heavy Plan Year, the
Plan shall provide the following:
(a) Special vesting requirements of Section 416(b) of the
Code pursuant to Section 6.8(b) of the Plan;
(b) A Minimum Benefit required by Section 416(c) of the
Code pursuant to Sections 4.4 and 5.4 of the Plan; and
13.2 Definitions. In making the determination in Section 13.3, the
following terms, in addition to those set forth in Article II, shall have the
following meanings:
(a) "Aggregation Group" shall mean a Required Aggregation
Group or a Permissive Aggregation Group.
(b) The "Interest" of each Participant in the Plan is the
sum of
(i) the Aggregate Account Balance as of the most
recent Valuation Date occurring within the twelve (12) month
period ending on the Determination Date;
(ii) an adjustment for any contributions actually
made after such Valuation Date but before the Determination
Date; and
(iii) any distributions to such Participant or his
Beneficiary made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years
(including distributions under a terminated plan which, if it
had continued in existence, would be part of a Required
Aggregation Group);
and a similar amount calculated for any defined contribution plan other
than the Plan.
(c) "Permissive Aggregation Group" shall mean the
Required Aggregation Group of plans plus any other plan or plans
designated by the Employer which, when considered as a group with the
Required Aggregation Group, would continue to satisfy the requirements
of Sections 401(a)(4) and 410 of the Code.
(d) "Required Aggregation Group" shall mean
(i) each plan of an Affiliated Company in which
a key employee is a participant and
48
(ii) each other plan of an Affiliated Company
which enables any plan described in (i) to meet the
requirements of Section 401(a)(4) or 410 of the Code.
13.3 Determination of Top-Heavy Status.
(a) The Plan shall be a Top-Heavy Plan for any Plan Year
in which, as of the Determination Date, either
(i) the Plan is not part of a Required
Aggregation Group and the sum of the Interests of all Key
Employees in the Plan exceeds sixty percent (60%) of the sum
of the Interests of all Participants (including for this
purpose any individual who was a Participant during the five
year period ending on the Determination Date), unless the Plan
is part of a Permissive Aggregation Group which is not a
Top-Heavy Group, or
(ii) the Plan is part of a Required Aggregation
Group which is a Top-Heavy Group, unless such Required
Aggregation Group is itself part of a Permissive Aggregation
Group which is not a Top-Heavy Group.
(b) An Aggregation Group is a Top-Heavy Group if the sum
(as of the Determination Date) of
(i) the present value of the cumulative accrued
benefits for key employees (including any part of the accrued
benefit distributed in the five year period ending on the
Determination Date) under all defined benefit plans included
in the group, and
(ii) the Interests of key employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
participants in such plans (including for this purpose any individual who was a
participant during the five year period ending on the Determination Date).
(c) In making the determination under this Section 13.3,
the following rules are applicable:
(i) The Interest or accrued benefit of an
individual shall not be taken into account if that individual
did not perform any services for the Employer at any time
during the five year period ending on the Determination Date.
(ii) If any Non-Key Employee for the Plan Year
was a Key Employee in any prior Plan Year, his Interest or
accrued benefit shall not be taken into account.
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(iii) In an Aggregation Group, the Determination
Date for each plan for purposes of the test for a Top-Heavy
Group shall be those determination dates that fall within the
same calendar year.
(iv) Benefits paid on account of death of a
Participant shall be treated as distributions in computing the
Interest or accrued benefit of a Participant to the extent
that such death benefits do not exceed the Interest or accrued
benefit (excluding previous distributions) of the Participant
immediately prior to death.
IN WITNESS WHEREOF, J. Alexander's Corporation, a Tennessee
corporation, has caused this instrument to be executed this 25th day of
February, 2002, and effective as of January 1, 1997 (except for such other dates
as may be noted) by its duly authorized officers.
J. ALEXANDER'S CORPORATION
By /s/ J. Michael Moore
-------------------------------------------------
Title: Vice-President Human Resources and Administration
ATTEST:
Ruth Ann Tidwell
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