Exhibit 4.8
RITE AID 401(k) DISTRIBUTION EMPLOYEES SAVINGS PLAN
(Amended and Restated Effective January 1, 2001)
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TABLE OF CONTENTS
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ARTICLE I INTRODUCTION.................................................................1
ARTICLE II DEFINITIONS..................................................................1
ARTICLE III ADMINISTRATION...............................................................9
3.1 Named Fiduciary.................................................................9
3.2 Power of the Employer to Name an Independent Fiduciary.........................10
3.3 Administrator..................................................................10
3.4 Funding Agent..................................................................12
3.5 Funding Policy.................................................................12
3.6 Claims and Review Procedures...................................................12
3.7 Correction of Administrative Errors............................................13
3.8 Erroneous Payments.............................................................13
ARTICLE IV PARTICIPATION AND VESTING...................................................13
4.1 Eligibility for Participation..................................................13
4.2 Vesting........................................................................14
4.3 Effect of One-Year Break in Service............................................14
ARTICLE V CONTRIBUTIONS...............................................................15
5.1 Contributions..................................................................15
5.2 Allocation of Forfeitures......................................................16
5.3 Rollovers......................................................................18
5.4 Time of Payment of Contributions...............................................18
5.5 Discontinuance of Salary-Reduction Contributions and Voluntary Contributions...18
5.6 Maximum Contributions..........................................................18
5.7 Actual Deferral Percentage Tests...............................................21
5.8 Actual Contribution Percentage Tests...........................................23
ARTICLE VI DISPOSITION OF CONTRIBUTIONS................................................28
6.1 Payments to Funding Agent......................................................28
6.2 Investment Options/Subaccounts.................................................28
6.3 Designation of Contributions to Investment Subaccounts.........................29
6.4 Transfers Between Investment Subaccounts.......................................30
6.5 Valuation of Funds and Allocation of Earnings..................................30
ARTICLE VII DISPOSITION OF BENEFITS.....................................................30
7.1 Timing of Distributions........................................................30
7.2 Deferral of Distribution Date..................................................31
7.3 Method of Distribution.........................................................31
7.4 Qualified Election.............................................................33
7.5 Distribution Requirements......................................................34
7.6 In-Service Withdrawals.........................................................36
7.7 Loans..........................................................................38
ARTICLE VIII DEATH BENEFITS..............................................................40
8.1 Pre-Retirement Death Benefits..................................................40
8.2 Post-Retirement Death Benefits.................................................41
8.3 Distribution Requirements......................................................41
ARTICLE IX GENERAL PROVISIONS..........................................................41
9.1 Non-Alienation of Benefits.....................................................41
9.2 Non-Guarantee of Employment....................................................42
9.3 Beneficiary....................................................................43
9.4 Gender and Headings............................................................43
9.5 Construction...................................................................43
9.6 Plan Document..................................................................43
9.7 Plan Binding...................................................................44
9.8 Substitute Payee...............................................................44
9.9 Dividends......................................................................44
9.10 Location of Participant or Beneficiary.........................................44
9.11 Mistake of Fact Contributions..................................................44
9.12 Payment of Expenses............................................................45
9.13 Legal Action...................................................................45
9.14 Bonding........................................................................45
9.15 Employer's and Trustee's Protective Clause.....................................45
9.16 Funding Agent's Protective Clause..............................................46
9.17 Return of Contributions........................................................46
9.18 Military Service...............................................................46
9.19 Use of Electronic Media........................................................46
ARTICLE X AMENDMENT OR TERMINATION....................................................46
10.1 Authority to Amend or Terminate Plan...........................................46
10.2 Non-Forfeitability of Accrued Pension upon Plan Termination....................47
10.3 Substitution of Funding Agent..................................................47
10.4 Merger or Consolidation........................................................47
ARTICLE XI TRUSTEE.....................................................................48
11.1 Establishment of the Trust.....................................................48
11.2 Investment of the Trust Fund...................................................48
11.3 Investment Powers and Duties of the Trustee....................................49
11.4 Prohibition of Diversion.......................................................50
11.5 Trustee's Compensation.........................................................51
11.6 Resignation and Removal of Trustee.............................................51
11.7 Transfer of Interest...........................................................51
11.8 Compliance with ERISA Section 404(c)...........................................52
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ARTICLE I
INTRODUCTION
RITE AID 401(k) DISTRIBUTION EMPLOYEES SAVINGS PLAN
Effective July 1, 1994, Rite Aid Corporation ("Employer") established the Rite
Aid 401(k) Distribution Employee Savings Plan (the "Plan"), for the benefit of
the certain employees and their beneficiaries.
The provisions of the Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Rite Aid Corporation and
the individual(s) named as Trustee herein. The Trust is intended to be tax
exempt as described under Code section 501(a).
The Plan has been completely amended and restated herein, effective January 1,
2001, to incorporate various retroactive legal changes to comply with the
requirements of the Uruguay Round Agreements Act, the Uniformed Services
Employment and Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997, and the Internal
Revenue Service Restructuring and Reform Act of 1998 as well as the Community
Renewal Tax Relief Act of 2000. The Plan restatement also incorporates certain
changes permitted and required under the Economic Growth and Tax Relief
Reconciliation Act of 2001 ("EGTRRA"), which are intended as good faith
compliance with EGTRRA and are to be construed in accordance with EGTRRA and
guidance issued thereunder, generally effective January 1, 2002 as provided
herein. The Plan restatement also incorporates certain clarifying and
corrective changes, within the remedial amendment period for such changes.
ARTICLE II
DEFINITIONS
Whenever used in this Plan, the following terms will have the meanings
hereinafter set forth:
2.1 "Account" means the account established by the Funding Agent for each
Participant with respect to his total interest in the Plan resulting from:
(i) The Participant's Salary-Reduction Contributions;
(ii) The Participant's Voluntary Contributions;
(iii) The Participant's Rollover Contributions;
(iv) The Employer's Qualified Matching Contributions, if any;
(v) The Employer's Qualified Non-Elective Contributions, if any;
(vi) Recharacterized Salary-Reduction Contributions, if any.
Such contributions are described in detail in Article V of this Plan.
A Participant's Account may be subject to charges as described in the
Contract or Contracts between the Trustee, if applicable, or the Employer and
the Funding Agent, and any expenses involved in administering the Plan. Any
charges which would otherwise be made against a Participant's Account in
accordance with the Contracts and/or the Plan may instead be paid by the
Employer.
2.2 "Act" means the Employee Retirement Income Security Act of 1974 ("ERISA"),
as it may be amended from time to time.
2.3 "Administrator" means the person or committee designated to administer the
Plan by the board of directors of the Employer.
2.4 "Affiliate" means the Employer and any corporation which is or was a
member of a "controlled group of corporations" (as defined in Code section
414(b)) which includes the Employer, any trade or business whether or not
incorporated which is under "common control" (as that term is defined under
Code section 414(c)) with the Employer, any organization (whether or not
incorporated) which is a member of an "affiliated service group" (as defined
in Code section 414(m)) which includes the Employer, and any other entity
required to be aggregated with the Employer under Code section 414(o) and the
Regulations issued thereunder.
2.5 "Annuity Starting Date" means the first day of the first period for which
an amount is payable as an annuity, or, in the case of a benefit not payable
in the form of annuity, the first day on which all events have occurred which
entitles the Participant to such benefit.
2.6 An "Approved Absence," for purposes of this Plan, will be considered
service with the Employer except that no contributions will be made on behalf
of the Employee while so absent unless be receives Compensation from the
Employer during such absence. An Approved Absence may included periods of
absence from employment with the Employer for such purposes as vacation,
illness, maternity or paternity reasons or military service in the Armed
Forces of the United States. In addition, an Approved Absence may be granted
by the Employer for other reasons under rules uniformly applicable to all
Employees similarly situated. An Approved Absence will not, in the case of an
Employee in military service of the Armed Forces of the United States, exceed
that period during which his reemployment rights are protected by law. If an
Employee does not return to employment with the Employer immediately following
an Approved Absence, he will be considered terminated on the day following
such absence.
2.7 "Beneficiary" means the Participant's Eligible Spouse. If the Participant
makes a Qualified Election, then the Beneficiary means the person or entity to
whom a deceased Participant's Account is payable as designated by the
Participant.
2.8 "Board" means the board of directors of the Employer.
2.9 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
2.10 "Compensation" means, with respect to any Participant, total compensation
paid to the Participant for the Plan Year to the extent such amounts are
includible in the Participant's gross income for federal income tax purposes
and any elective deferrals with respect to employment with the Employer:
(i) under a qualified cash or deferred arrangement described in Code
section 401(k);
(ii) to a plan qualified under Code section 125;
(iii) of transportation benefits under a program established pursuant
to Code section 132(f);
(iv) to a tax-sheltered annuity described in Code section 403(b); or
(v) to a plan qualified under Code section 402(h).
Compensation shall not include any amounts paid by reason of services
performed:
(i) after the date a Participant ceases to be a Participant in the
Plan;
(ii) prior to the date an Employee becomes a Participant under the
Plan;
(iii) Any nontaxable fringe benefits provided by the Employer; and
(iv) Any amounts contributed by the Employer other than elective
deferrals, referred to in this Plan as Salary-Reduction Contributions, for or
on account of its Employees, under this Plan or under any other employee
benefit plan qualified under the provisions of Code section 401(a).
In addition, each Participant may elect to defer and have allocated
for a Plan Year all or a portion of any cash bonus attributable to services
performed by the Participant for the Employer during such Plan Year and which
would have been received by the Participant on or before two and one-half
months following the end of the Plan Year but for the deferral. A deferral
election may not be made with respect to cash bonuses which are currently
available on or before the date the Participant executed such election.
Notwithstanding the foregoing, cash bonuses attributable to services
performed by the Participant during a Plan Year but which are to be paid to
the Participant later than two and one-half months after the close of such
Plan Year will be subjected to whatever deferral election is in effect at the
time such cash bonus would have otherwise been received.
The amount by which Compensation and/or cash bonuses is reduced will
be that Participant's Deferred Compensation and be treated as a
Salary-Reduction Contribution and allocated to that Participant's Account.
For Plan Years after December 31, 1988 and before December 31, 1993,
Compensation in excess of $200,000 will be disregarded. For Plan Years after
December 31, 1993, and beginning before January 1, 2002, Compensation in
excess of $150,000 will be disregarded. Such amount will be adjusted at the
same time and in such manner as permitted under Code section 415(d).
Notwithstanding anything herein to the contrary, effective for Plan
Years beginning on and after January 1, 2002, Compensation shall be limited
annually to $200,000 (adjusted in future years as provided under Code section
401(a)(17)).
2.11 "Contract" means a group annuity contract or contracts issued to the
Trustee, if applicable, or Employer by the Funding Agent.
2.12 "Designated Investment Alternative" means a specific investment
identified by name by a Plan fiduciary as an available investment under the
Plan which may be acquired or disposed of by the Trustee pursuant to the
investment direction by a Participant.
2.13 "Directed Investment Option" means one or more of the following:
(a) a Designated Investment Alternative.
(b) any other investment permitted by the Plan and the Participant
Direction Procedures and acquired or disposed of by the Trustee
pursuant to the investment direction of a Participant.
2.14 "Disability Retirement Date" means, with respect to any Participant, the
first day of the month coinciding with or immediately following eligibility
for disability benefits. Disability means the total and permanent inability of
a Participant due to mental or physical illness or injury to perform the
duties of his regular occupation as certified by a qualified physician
selected by the Plan Administrator.
2.15 "Distribution Date" means, subject to the terms of the Plan, the first
day of the month coinciding with or next following a Participant's Normal,
Disability or Postponed Retirement Date, but not beyond his Required Beginning
Date as in this Plan.
2.16 "Direction Procedures" means such instructions, guidelines or policies,
the terms of which are incorporated herein, as shall be established pursuant
to Section 11.8 and observed by the Administrator and applied and provided to
Participants who have Participant Directed Accounts.
2.17 "Directed Account" means that portion of a Participant's interest in the
Plan with respect to which the Participant has directed the investment in
accordance with the Direction Procedures.
2.18 "Early Retirement Date." This Plan does not provide for a retirement date
prior to Normal Retirement Date.
2.19 "Effective Date" means July 1, 1994, the effective date of the Plan. The
effective date of this restatement is January 1, 2001.
2.20 "Eligible Employee" means an Employee of the Employer who satisfies the
eligibility requirements under the Plan. Notwithstanding anything herein to
the contrary, the term "Eligible Employee" shall not include any person who is
not recorded as an employee on the employment and payroll records of the
Employer or an Affiliate; any such person who is subsequently reclassified by
a court of law or regulatory body as a common law employee of such Employer or
Affiliate nevertheless shall not be an Eligible Employee. Consistent with the
foregoing, and for purposes of clarification only, the term Eligible Employee
does not include any individual who performs services for the Employer or an
Affiliate as an independent contractor, under an employee leasing arrangement,
or under any other non-employee or non-payroll classification.
2.21 "Eligible Spouse" means, with respect to any Participant, the spouse who
is married to the Participant on his Distribution Date or on the date of his
death, whichever comes first.
2.22 "Employee" means any person who is employed by the Employer, but excludes
any person who is not a "represented distribution associate." In addition, any
person who is eligible to become a Participant, after meeting the applicable
eligibility requirements in "The Rite Aid 401(k) Plan" (formerly known as the
Rite Aid Employee Investment Opportunity Plan) will be excluded under this
Plan.
2.23 "Employer" means Rite Aid Corporation and any predecessor and/or
successor thereto.
2.24 "Fiscal Year" means the fiscal period or fiscal year used by the Employer
for Federal income tax purposes.
2.25 "Funding Agent" means any legal reserve life insurance company or trustee
selected by the Employer to receive the Plan contributions and to pay the
benefits under and in accordance with the terms of the Plan.
2.26 An "Hour of Service" means:
each hour for which the Employee is directly or indirectly
paid, or entitled to payment, by the Employer or an Affiliate for the
performance of duties. (These hours will be credited to him for the period or
periods in which the duties are performed.); and
each hour for which an Employee is on an Approved Absence and
for which he is directly or indirectly paid by the Employer or an Affiliate.
(However, no more than 501 hours will be credited for each single continuous
period of an absence. These hours will be credited to him for the period or
periods during which he is so absent.); and
each hour for which back pay as an Employee, irrespective of
mitigation or damages, has been either awarded or agreed to by the Employer or
an Affiliate. (These hours will be credited to him for the period or periods
in which the award, agreement or payment was made.)
A given hour will be credited to an Employee only under one of the
above items. Hours of Service will be computed in accordance with the
Department of Labor Regulations Sections 2530.200b-2(b) and (c).
In lieu of determining Hours of Service on the basis of actual hours
for which an Employee is paid or entitled to payment, the Plan Administrator
may, in accordance with a uniform nondiscriminatory policy, elect to credit
Hours of Service using one of the following methods:
(i) Count actual Hours of Service for which an Employee is paid
or entitled to payment;
(ii) Count 190 Hours of Service for each month in which an
Employee is paid or entitled to Payment for at least one Hour of Service;
(iii) Count 95 Hours of Service for each semi-monthly period in
which an Employee is paid or entitled to payment for at least one Hour of
Service;
(iv) Count 45 Hours of Service for each week in which an
Employee is paid or entitled to payment for at least one Hour of Service;
(v) Count 10 Hours of Service for each day in which an Employee
is paid or entitled to payment for at least one Hour of Service.
Hours of Service shall be also credited for a leave of absence that
qualifies as leave under the Family and Medical Leave Act to the extent
required under such Act.
Notwithstanding any provision of this Plan to the contrary, Hours of
Service shall be credited with respect to qualified military service as
required in accordance with Section 414(u) of the Code.
2.27 "Investment Manager" means an entity that has the power to manage,
acquire, or dispose of Plan assets, and acknowledges fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940,
a bank, or an insurance company.
2.28 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or
for the recipient and related persons determined in accordance with Code
section 414(n)(6)) on a substantially full time basis for a period of at least
one year, and such services are performed under the primary direction or
control of the recipient. Contributions or benefits provided a leased employee
by the leasing organization which are attributable to services performed for
the recipient employer will be treated as provided by the recipient employer.
A Leased Employee will not be considered an Employee of the recipient
if:
(i) such employee is covered by a money purchase pension plan
providing:
(1) a non-integrated employer contribution rate of at least
10 percent of compensation, as defined in Code section 415(c)(3);
(2) immediate participation; and
(3) full and immediate vesting; and
(ii) Leased Employees do not constitute more than 20 percent of
the recipient's non-highly compensated work force.
2.29 "Named Fiduciary" means the person or committee designated to manage and
control the assets of the Plan.
2.30 "Normal Retirement Date" means the first day of the month coinciding with
or immediately following the Participant's attainment of age 65.
2.31 A "One-Year Break in Service" means a twelve consecutive month period
beginning on the date an Employee first completes an Hour of Service or
anniversary thereof in which the Employee does not complete more than 500
Hours of Service.
Solely for purposes of determining whether a One-Year Break in
Service has occurred in a computation period, an Employee who is granted an
Approved Absence for maternity or paternity reasons will receive credit for
the Hours of Service which would otherwise have been credited to such
Employee. However, no more than 501 Hours of Service will be credited under
this paragraph for a single computation period. For purposes of this
paragraph, an absence from work for maternity or paternity reasons means an
absence:
(i) by reason of the Employee's pregnancy;
(ii) by reasons of the birth of a child of the Employee;
(iii) by reason of the placement of a child with the Employee;
or
(iv) for purposes of caring for such child, for a period
beginning immediately following such birth or placement.
The Hours of Service credited under this paragraph will be credited
in the computation period in which the absence begins if the crediting is
necessary to prevent a One-Year Break in Service in that period, or in all
other cases, in the following computation period.
2.32 "Participant" means any Eligible Employee who on or after the Effective
Date meets the eligibility requirements set forth in this Plan.
2.33 "Plan" means the Rite Aid 401(k) Distribution Employees Savings Plan. The
Plan is intended to be a profit sharing plan within the meaning of Regulation
1.401(k) - 1(a)(1).
2.34 "Plan Year" means the period from January 1 through December 31, and each
twelve-month period commencing on January 1 thereafter. However the first year
of the Plan will be a short Plan Year beginning on July 1, 1994 and ending on
December 31, 1994.
2.35 "Postponed Retirement Date" means the date a Participant who continues in
employment beyond his Normal Retirement Date actually retires but not beyond
his Required Beginning Date.
2.36 "Qualified Matching Contributions" (QMACs) means the Employer's matching
contributions made pursuant to this Plan which are used to satisfy either the
Actual Deferral Percentage Test or the Actual Contribution Percentage Test.
Such contributions are non-forfeitable when made, and may not be
distributed to the Participant earlier than separation from service, death,
disability, or the attainment of age 59 1/2. Effective as of January 1, 2002,
such contributions may be distributed upon severance from employment and any
reference herein to "separation from service" shall be construed to mean
severance from employment with the Employer.
2.37 "Qualified Non-Elective Contributions" (QNECs) means the Employer's
contributions made pursuant to this Plan which are used to either satisfy the
Actual Deferral Percentage Test or the Actual Contribution Percentage Test.
Such contributions are non-forfeitable when made and may not be
distributed to the Participant earlier than separation from service, death,
disability, or the attainment of age 59 1/2. Effective as of January 1, 2002,
such contributions may be distributed upon severance from employment and any
reference herein to "separation from service" shall be construed to mean
severance from employment with the Employer.
2.38 "Regulations" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
2.39 "Taxable Year" means the annual period used by a Participant for Federal
income tax purposes.
2.40 "Trustee" means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.
2.41 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
2.42 "Year of Service" means a 12-consecutive-month period beginning on the
date an Employee first completes an Hour of Service or an anniversary thereof
during which he completes at least 1,000 Hours of Service.
For purposes of eligibility for participation, the initial
computation period will begin with the date on which the Employee first
performs an Hour of Service. The participation computation period beginning
after a One-Year Break in Service will be measured from the date on which an
Employee again performs an Hour of Service. After the initial computation
period, the participation computation period will shift to the current Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service. An Employee who is credited with 1,000 Hours of
Service in both the initial eligibility computation period and the first Plan
Year which commences prior to the first anniversary of the Employee's initial
eligibility computation period will be credited with two Years of Service for
purposes of eligibility to participate.
Years of Service with any corporation, trade or business which is a
member of a controlled group of corporations or under common control (as
defined by Section 1563(a) and Section 414(c) of the Code, or is a member of
an affiliated service group (as defined by Section 414(m) of the Code) will be
recognized.
ARTICLE III
ADMINISTRATION
3.1 Named Fiduciary.
The Employer will be the Named Fiduciary of the Plan and will have
the authority to control and manage the operation and administration of the
Plan. However, the Employer will not have any authority over the management,
control or investment of any assets that are placed in the control of the
Funding Agent.
The Named Fiduciary will discharge its duties under the Plan solely
in the interests of the Participants and their Beneficiaries and for the
exclusive purpose of providing benefits to Participants and their
Beneficiaries and defraying reasonable expenses of administering the Plan. The
Named Fiduciary will act with the care, skill, prudence and diligence under
the circumstances that a prudent man acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise of a like
character and with like aims.
The Named Fiduciary will have all the powers necessary or appropriate
to accomplish its duties under the Plan. Without limiting the generality of
the foregoing, the Named Fiduciary will have the following powers and duties:
(a) to allocate and delegate by written instrument, its fiduciary
responsibilities to designated persons in accordance with section 405 of the
Act, provided however, that any such allocation or delegation will be
terminable on such notice as the Named Fiduciary deems reasonable and prudent
under the circumstances and the Named Fiduciary will not be liable for any act
or omission of a person so designated;
(b) to appoint or delegate such authority to the Trustee to appoint
one or more Investment Managers (as defined in section 3(38) of the Act) to
manage (including the power to acquire and dispose of) any assets of the Plan;
(c) to determine the size and type of any Contract to be issued by
the Funding Agent and to designate the Funding Agent from which such Contract
will be obtained;
(d) to direct the Trustee, if applicable, or Employer to enter into
one or more Contracts with the Funding Agent under which the Funding Agent
establishes and makes available separate investment funds to which
Participants may direct the investment of their Accounts. Any such Contract(s)
may provide for the contributions thereunder to be held in the Funding Agent's
general account or one or more of its commingled separate accounts;
(e) to review periodically the performance of the Funding Agent for
the purpose of determining whether it is prudent to retain the Funding Agent;
and
(f) to direct the Board to appoint or remove a Trustee or Trustees
from time to time as it deems necessary for the proper administration of the
Plan to assure that the Plan is being operated for the exclusive benefit of
the Participants and their Beneficiaries.
The Named Fiduciary may serve in more than one capacity with respect
to the Plan (including service both as a fiduciary and administrator).
3.2 Power of the Employer to Name an Independent Fiduciary
(a) Effective February 1, 2001, notwithstanding anything in the Plan
to the contrary, in addition to the powers and responsibilities set forth in
Section 3.1 or otherwise in the Plan, the Employer shall be empowered to
appoint and remove, without the consent of any other party, one or more
individuals or entities to serve as independent named fiduciaries, within the
meaning of Section 402(a) of the Employee Retirement Income Security Act of
1974, as amended, ("ERISA") (each referred to as an "Independent Named
Fiduciary"), as it deems necessary or advisable, in its sole discretion, and
to delegate to such Independent Named Fiduciary full authority to control and
manage the operation and administration of the Plan with respect to certain
fiduciary matters, which prior to the appointment of the Independent Named
Fiduciary were under the authority and control of another Plan fiduciary. The
Employer may appoint an Independent Named Fiduciary at any time and for any
reason, including, without limitation, with respect to matters where a Plan
fiduciary may have an actual or potential conflict of interest. The
appointment of an Independent Named Fiduciary shall be evidenced in writing
(which may include a written agreement between the Employer, on behalf of the
Plan, and the Independent Named Fiduciary), which writing shall, among other
things, specifically identify the matter or matters with respect to which the
Independent Named Fiduciary shall have complete discretionary authority and
control on behalf of the Plan. The authority of the Independent Named
Fiduciary to act on behalf of the Plan and the specific powers and
responsibilities of the Independent Named Fiduciary, as set forth in such
writing, shall be incorporated by reference in (and made part of) the Plan, as
the stated authority, powers and duties of the Independent Named Fiduciary,
without any further action by the Employer or any other party, and the Plan
shall be deemed amended to the extent necessary to eliminate the authority,
powers and/or duties previously delegated to any other Plan fiduciary to the
extent they overlap with any of the authority, powers and/or duties delegated
by the Employer to the Independent Named Fiduciary.
(b) An Independent Named Fiduciary shall be a fiduciary as defined
under Section 3(21)of ERISA and a Named Fiduciary under Sections 2.26 and 3.1
of the Plan, and those Sections shall be deemed amended as appropriate to
reflect the foregoing.
3.3 Administrator.
The Employer will be the Administrator of the Plan. However, the
Employer may appoint one or more persons to carry out the duties it would
otherwise perform as Administrator. Any person, including an Employee of the
Employer, may serve as Administrator. Any person or persons so appointed will
indicate acceptance of such appointment, in writing, to the Employer. An
Administrator may resign by delivery of written notice to the Employer or may
be removed by the Employer by delivery of written notice to such
Administrator. Such written notice will specify the date of resignation or
removal.
The Administrator will ensure that the Plan is operated in accordance
with the terms of the Plan, the Code and the Act.
The Administrator will have all the powers necessary or appropriate
to accomplish his duties under the Plan. Without limiting the generality of
the foregoing, the Plan Administrator will have the following powers and
duties:
(a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan or required
to comply with applicable law;
(b) to construe and interpret any ambiguities in the Plan with the
fullest discretion permitted by law, its good faith interpretation thereof to
be final, conclusive and binding on any Employee, former Employee,
Participant, former Participant, Beneficiary or alternate payee;
(c) to decide on questions concerning the Plan and the eligibility of
any person to participate in the Plan;
(d) to compute the amounts to be distributed to any Participant,
former Participant or Beneficiary in accordance with the provisions of the
Plan, and to determine the person or persons to whom such amounts will be
distributed;
(e) to authorize the payment of distributions;
(f) to keep such records and submit such filings, elections,
applications, returns or other documents or forms as may be required under the
Code and applicable Regulations, or under other Federal, State, or local law
and regulations;
(g) to appoint such agents, counsel, accountants and consultants as
may be required to assist in administering the Plan;
(h) to furnish the Trustee with written instructions regarding all
contributions to the Trust and disposition of forfeitures, all distributions
to and withdrawals by Participants, and all loans made to Participants in
accordance with the Plan; and
(i) to be responsible for furnishing the Trustee with any information
respecting the Plan which the Trustee may request for the performance of its
duties or for the purpose of making any returns to the Internal Revenue
Service or the Department of Labor as may be requested of the Trustee.
The Administrator may delegate to one or more persons the authority
and responsibility with respect to the day-to-day operation of the Plan.
3.4 Funding Agent.
The Employer will have the power to appoint and remove the Funding
Agent. The Funding Agent will have the authority and discretion to manage,
control and invest (to the extent not directed by the Participants) the assets
of the Plan placed in its control. The determination of any transfers or
payments to be made by the Funding Agent will be made in accordance with the
terms of the Plan and any Contract or Contracts between the Trustee or
Employer and the Funding Agent.
3.5 Funding Policy.
The funding policy of the Plan is to make contributions in accordance
with the Plan.
3.6 Claims and Review Procedures.
Claims Procedures.
-----------------
If any person believes he is being denied any rights or benefits
under the Plan, such person may file a claim in writing with the
Administrator. If any such claim is wholly or partially denied, the
Administrator will notify such person of its decision in writing. Such
notification will contain:
(a) specific reasons for the denial;
(b) specific reference to pertinent Plan provisions;
(c) a description of any additional material or information necessary
for such person to perfect such claim and an explanation of why such material
or information is necessary; and
(d) information as to the steps to be taken if the person wishes to
submit a request for review.
Such notification will be given within 90 days after the claim is
received by the Administrator (or within 180 days, if special circumstances
require an extension of time for processing the claim, and if written notice
of such extension and circumstances is given to such person within the initial
90 day period). If such notification is not given within such period, the
claim will be considered denied as of the last day of such period and such
person may request a review of his claim.
Review Procedures.
-----------------
Within 60 days after the date on which a person receives written
notice of a denial (or, if applicable, within 60 days after the date on which
such denial is considered to have occurred) such person (or his or her duly
authorized representative) may:
(a) file a written request with the Administrator for a review of the
denied claim and of pertinent documents; and
(b) submit written issues and comments to the Administrator.
The Administrator will notify such person of its decision in writing.
Such notification will be written in a manner calculated to be understood by
such person and will contain specific reasons for the decision as well as
specific references to pertinent Plan provisions. The decision on review will
be made within 60 days after the request for review is received by the
administrator (or within 120 days, if special circumstances require an
extension of time for processing the request, such as an election by the
Administrator to hold a hearing, and if written notice of such extension and
circumstances is given to such person within the initial 60 day period). If
the decision on review is not made within such period, the claim will be
considered denied.
The decision of the Administrator on review will be final and binding
on all parties to the extent it is made in good faith and is reasonable and
not arbitrary or capricious.
3.7 Correction of Administrative Errors
The Administrator shall take such steps as it considers necessary and
appropriate to remedy any inequity that results from incorrect information
received or communicated in good faith or as the consequence of an
administrative error. Such steps may include, but shall not be limited to,
taking any action required under any employee plans compliance resolution
system of the Internal Revenue Service, any fiduciary correction program of
the Department of Labor, or any similar program of any governmental agency and
reallocation of Plan assets.
3.8 Erroneous Payments
In the event that a Participant, Beneficiary or "alternate payee"
under a qualified domestic relations order receives a distribution under this
Plan in excess of the amount, if any, to which he is entitled, by reason of a
calculation error or otherwise, the Administrator, in its sole and absolute
discretion, may adjust future benefit payments to the Participant, Beneficiary
or alternate payee to the extent necessary to recoup the amount which the
Participant, Beneficiary or alternate payee received which was in excess of
the amount to which he was entitled under the terms of this Plan. If the
Administrator determines, in its sole and absolute discretion, that it is not
feasible or desirable to adjust future benefit payments to the Participant,
Beneficiary or alternate payee, the Administrator may require the Participant,
Beneficiary or alternate payee to repay to the Plan the amount which is in
excess of the amount to which he is entitled under the terms of this Plan. All
amounts received by a Participant, Beneficiary or alternate payee under this
Plan shall be deemed to be paid subject to this condition. The determinations
of the Administrator made pursuant to this Section shall be final, conclusive
and binding on all parties, subject to any applicable claims procedure, and
shall not be overturned unless such determinations are arbitrary and
capricious.
ARTICLE IV
PARTICIPATION AND VESTING
4.1 Eligibility for Participation.
Each person who is an Eligible Employee on the Effective Date of the
Plan may become a Participant on such date. All other persons may become
Participants on the first day of the month coinciding with or next following
the later of his completion of one (1) Year of Service and his attainment of
age 21.
An Eligible Employee will become a Participant hereunder by making
application to the Employer for participation in the Plan and agreeing to the
terms hereof.
Upon acceptance of any benefits under this Plan, such Eligible
employee will automatically be bound by the terms and conditions of the Plan
and all amendments thereto.
If any former Participant is reemployed by the Employer before a
One-Year Break in Service occurs, he will continue to participate in the Plan
in the same manner as if such termination had not occurred. Salary-Reduction
Contributions may recommence on the Reemployment Commencement Date or on the
Entry Date next following the Participant's Reemployment Commencement Date, in
accordance with uniform rules and procedures established by the Plan
Administrator.
A former Participant will become a Participant immediately upon his
return to the employ of the Employer, in accordance with uniform rules and
procedures established by the Plan Administrator.
In the event a Participant becomes ineligible to participate because
he is no longer a member of an eligible class of Employees, but has not
incurred a One-Year Break in Service, such Employee will participate
immediately upon his return to an eligible class of Employees in accordance
with uniform rules and procedures established by the Plan Administrator. If
such Participant incurs a One-Year Break in Service, his eligibility to
participate shall be determined pursuant to Section 4.3.
In the event an Employee who is not a member of the eligible class of
Employees becomes a member of the eligible class, such Employee will
participate immediately, in accordance with uniform rules and procedures
established by the Plan Administrator, if such Employee has satisfied the
minimum age and service requirements and would have previously become a
Participant had he been in the eligible class.
If any reemployed Employee was not a Participant at the time of his
prior termination, he will become a Participant, in accordance with this
Section 4.1, at such time as he has satisfied the minimum age and service
requirements, taking into account his Credited Service at the time of his
prior termination, as well as his Credited Service rendered after his
reemployment.
4.2 Vesting.
A Participant will always be 100% vested in the portion of his
Account attributable to his Salary Reduction Contributions, Voluntary
Contributions, Rollover Contributions, the Employer's Qualified Matching
Contributions, if any, the Employer's Qualified Non-Elective Contributions, if
any, and any recharacterized Salary-Reduction Contributions.
4.3 Effect of One-Year Break in Service.
Effect on Participant's Account.
-------------------------------
If a Participant incurs a One-Year Break in Service and subsequently
completes an Hour of Service with the Employer, he will be eligible to
participate in the Plan immediately following the date he completes an Hour of
Service.
ARTICLE V
CONTRIBUTIONS
5.1 Contributions.
Contributions may be made by or on behalf of a Participant as
follows:
Salary-Reduction Contributions.
------------------------------
Each Participant may elect to defer, through periodic payroll
deductions, from 1% up to 15% of his Compensation (subject to the limitations
of this Article V) for the Plan Year and to have this amount contributed under
the Plan. Such deferred amounts are hereinafter referred to as
"Salary-Reduction Contributions." Such Contributions will be made pursuant to
a Salary-Reduction Agreement.
The Employer may, at its discretion, restrict the amount of
Salary-Reduction Contributions made by a Highly-Compensated Participant in any
Plan Year.
A Participant's Salary-Reduction Contributions will not exceed the
dollar limit set forth in Code section 402(g) for the Taxable Year of the
Participant. The dollar limitation will be adjusted annually as provided in
Code section 415(d) pursuant to Regulations. The adjusted limitation will be
effective as of January 1st of each calendar year.
In the event that such dollar limitation is exceeded, the excess
("Excess Salary-Reduction Contributions") will be adjusted, as provided in the
following paragraph, and will be returned to the Participant before the April
15 following the close of the Participant's Taxable Year. Excess
Salary-Reduction Contributions will not include any amounts properly
distributed as excess Annual Additions.
Excess Salary-Reduction Contributions shall be adjusted for any
income or loss for the Participant's Taxable Year. The income or loss
allocable to Excess Salary-Reduction Contributions is the income or loss
allocable to the Participant's Salary-Reduction Contributions account for the
Taxable Year multiplied by a fraction, the numerator of which is such
Participant's Excess Salary-Reduction Contributions for the year and the
denominator is the Participant's account balance attributable to
Salary-Reduction Contributions without regard to any income or loss occurring
during such Taxable Year.
In the event that a Participant is also a participant in:
(1) another qualified cash or deferred arrangement, as defined
in Code section 401(k);
(2) a simplified employee pension plan or deferred arrangement
described in Code section 402(h)(1)(B);
(3) an eligible deferred compensation plan under Code section
457;
(4) a plan described under Code section 501(c)(18); or
(5) a salary reduction arrangement under Code section 403(b)
and the elective deferrals, as defined in Code section 402(g)(3), made under
all such other arrangements and this Plan cumulatively exceed the dollar limit
set forth in Code section 402(g), as adjusted, such Participant may notify the
Administrator of such excess, in writing, not later than the March 1 following
the close of his Taxable Year, and request that his Salary-Reduction
Contributions under this Plan be reduced by an amount specified by the
Participant.
Such amount will be returned in the same manner as the Excess
Salary-Reduction Contributions under this Plan are returned, as described in
the preceding paragraph.
Notwithstanding the foregoing, a Participant's Excess
Salary-Reduction Contributions will be reduced, but not below zero, by any
distribution of Excess Contributions for the Plan Year beginning with or
within the Taxable Year of the Participant.
Voluntary Contributions.
-----------------------
A Participant may elect to make after-tax contributions in integral
percentages of up to 10% of his Compensation for any Plan Year. Such
contributions will be referred to as the Participant's "Voluntary
Contributions."
In no event may the Employer's Contributions, inclusive of
Salary-Reduction Contributions made on the Participants' behalf in years
beginning before January 1, 2002, for any Plan Year to the Plan exceed the
maximum amount of contributions permitted by law as a tax-deductible expense
for such Plan Year under Code section 404, or any other applicable provisions
of the Code.
5.2 Allocation of Forfeitures.
Any forfeitures of Employer Contributions, if applicable, which arise
will be used to pay all or a part of the expenses of the Plan.
Notwithstanding anything to the contrary, if this is a Plan that
would otherwise fail to meet the requirements of Code sections 410(b)(1) or
410(b)(2)(A)(i) and the Regulations thereunder because Employer Contributions,
if applicable, and forfeitures have not been allocated to a sufficient number
or percentage of Participants for a Plan Year, then the following rules will
apply:
(1) The group of Participants eligible to share in the
Employer's Contributions, if applicable, and forfeitures for the Plan Year
will be expanded to include the minimum number of Participants who would not
otherwise be eligible as are necessary to satisfy the applicable test
specified above. The specific Participants who will become eligible under the
terms of this paragraph will be those who are actively employed on the last
day of the Plan Year and, when compared to similarly situated Participants,
have completed the greatest number of Hours of Service in the Plan Year.
(2) If after application of paragraph (1) above, the applicable
test is still not satisfied, then the group of Participants eligible to share
in the Employer's Contributions, if applicable, and forfeitures for the Plan
Year will be further expanded to include the minimum number of Participants
who are not actively employed on the last day of the Plan Year as are
necessary to satisfy the applicable test. The specific Participants who will
become eligible to share will be those Participants, when compared to
similarly situated Participants, who have completed the greatest number of
Hours of Service in the Plan year before terminating employment.
(3) Nothing in this section will permit the reduction of a
Participant's accrued benefit. Therefore any amounts that have previously been
allocated to Participants may not be reallocated to satisfy these
requirements. In such event, the Employer will make an additional contribution
equal to the amount such affected Participants would have received had they
been included in the allocations, even if it exceeds the amount which would be
deductible under Code section 404. Any adjustment to the allocations pursuant
to this paragraph will be considered a retroactive amendment adopted by the
last day of the Plan Year.
5.3 Rollovers.
With the consent of the Administrator, amounts may be transferred
from other qualified plans, provided that the plan from which such funds are
transferred permits the transfer to be made and the transfer will not
jeopardize the tax-exempt status of the Plan and Trust or create adverse tax
consequences for the Employer.
At the direction of the Administrator, rollovers will be credited to
an Employee's or a Participant's Account held by the Funding Agent and will be
invested in the Investment Subaccounts in the proportions selected by the
Participant or the Employee.
A Participant or an Employee will be 100% vested with respect to any
rollover amounts credited to his Account, and such amounts will not be subject
to forfeiture for any reason.
The term "amounts transferred from other qualified plans" will mean:
(a) amounts transferred to this Plan directly from another qualified
plan;
(b) lump sum distributions received by a Participant or an Employee
from another qualified plan which are eligible for tax free rollover to a
qualified plan and which are transferred by the Participant or the Employee to
this Plan within sixty (60) days following his receipt thereof;
(c) amounts transferred to this Plan from a conduit individual
retirement account provided that the conduit individual retirement account has
no assets other than assets which:
(1) were previously distributed to the Participant or the
Employee by another qualified corporate or non-corporate plan as a lump sum
distribution;
(2) were eligible for tax-free rollover to a qualified
corporate or non-corporate plan;
(3) were deposited in such conduit individual retirement
account within sixty (60) days of receipt thereof, and other than earnings on
said assets; and
(d) amounts distributed to the Participant or the Employee from a
conduit individual retirement account meeting the requirements of clause (c)
above, and transferred by the Participant or the Employee to this Plan within
sixty (60) days of his receipt thereof from such conduit individual retirement
account. Prior to accepting any transfers to which this section applies, the
Administrator may require the Participant or the Employee to establish that
the amounts to be transferred to this Plan meet the requirements of this
section and may also require the Participant or the Employee to provide an
opinion of counsel, or other evidence satisfactory to the Employer, that the
amounts to be transferred meet the requirements of this section.
For purposes of this section, the term "qualified plan" will mean any
tax qualified plan under Code section 401(a).
5.4 Time of Payment of Contributions.
Salary-Reduction Contributions and Voluntary Contributions that have
been accumulated through payroll deductions will be paid to the Funding Agent
by the Trustee.
All Contributions of the Employer will be paid to the Funding Agent
by the Trustee, and payment will be made not later than the date prescribed by
law for filing the Employer's Federal income tax return, including extensions
that have been granted for the filing of such tax return.
5.5 Discontinuance of Salary-Reduction Contributions and Voluntary
Contributions.
Upon advance notice in accordance with procedures and in the form and
manner prescribed by the Administrator, a Participant may discontinue all, or
a portion, of his Salary-Reduction Contributions and Voluntary Contributions
at any time. He may recommence any Salary-Reduction Contributions and
Voluntary Contributions at any time upon advance notice in accordance with
procedures and in the form and manner prescribed by the Administrator.
5.6 Maximum Contributions.
(a) Notwithstanding anything in the Plan to the contrary, effective
for Plan Years beginning before January 1, 2002, the Annual Additions under
this Plan for any Participant in any Limitation Year, when added to the Annual
Additions that Year for such Participant under any other defined contribution
plan maintained by the Employer, will not exceed the lesser of:
(1) $30,000 (as adjusted in accordance with Code section
415(d)); or
(2) 25% of the Participant's "415 Compensation." This
limitation will not apply to any contribution for medical benefits (within the
meaning of Code sections 401(h) or 419(f)(2)) which is otherwise treated as an
"Annual Addition" hereunder.
Effective for Plan Years beginning on and after January 1, 2002, the maximum
annual addition shall not exceed the lesser of $40,000 (as adjusted for cost
of living under Code section 415(d)) and 100% of the Participant's Code
Section 415 Compensation for the Plan Year.
(b) For purposes of applying the limitations of Code section 415,
"Limitation Year" will mean a calendar year. If a Short Limitation Year is
created because of an amendment changing the Limitation Year to a different 12
consecutive month period, the maximum amount of Annual Addition for such Short
Limitation Year will not exceed the dollar amount specified in Code section
415(b)(1)(A) multiplied by the following fraction:
Number of Months in Short Limitation Year
-----------------------------------------
12
(c) For purposes of applying the limitations of Code section 415,
"Annual Additions" means the sum credited to a Participant's Account for any
Limitation Year of:
(1) employer contributions;
(2) employee contributions;
(3) forfeitures, if any;
(4) amounts allocated to an individual medical benefit account
as defined in Code section 415(l)(2) which is part of a pension or annuity
plan maintained by the Employer; and
(5) amounts derived from contributions paid or accrued, which
are attributable to post-retirement medical benefits allocated to the separate
account of a key employee (as defined in Code section 419A(d)(3)) under a
welfare benefit fund (as defined in Code section 419(e)) maintained by the
Employer.
For purposes of applying the limitations of Code section
415, the transfer of funds from one qualified plan to another is not an Annual
Addition. In addition, if the Plan permits any of the following payments or
contributions, such amounts will not be treated as employee contributions for
purposes of paragraph (2) of this subsection:
(i) rollover contributions;
(ii) repayments of loans made to the Participant from
the Plan;
(iii) repayments of distributions received by a
Participant pursuant to Code sections 411(a)(7)(B) or 411(a)(3)(D);
(iv) employee contributions to a simplified employee
pension plan excludable from gross income under Code section 408(k)(6); and
(v) excess of a Participant's elective deferrals, as
defined in Regulation 1.402(g) - (1)(b) over the applicable Code section
402(g)(1) limit for the taxable year, provided that such excess deferral is
distributed to the Participant no later than the first April 15th following
the close of his taxable year.
(d) For purposes of applying the limitations of Code section 415,
"415 Compensation" means the Participant's wages, salaries, fees for
professional services and other amounts for personal services actually
rendered in the course of employment with an Employer maintaining the Plan
(including, but not limited to, commissions paid to salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, and tips and bonuses), plus any amounts contributed pursuant to a
salary reduction agreement which are excludable from the employee's gross
income under Code sections 125, 132(f), 402(g)(3), 403 (b) or 457.
415 Compensation will exclude:
(1) contributions made by the Employer to a plan of deferred
compensation to the extent that the contributions are not includible in the
gross income of the Employee for the taxable year in which contributed (except
as specifically included herein);
(2) Employer contributions made on behalf of an Employee to a
simplified employee pension plan described in Code section 408(k) to the
extent such contributions are not includible in the Employee's gross income;
(3) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(4) other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the
premiums for group term life insurance are includible in the gross income of
the Employee) or contributions made by the Employer (whether or not under a
salary reduction agreement) toward the purchase of any annuity contract
described in Code section 403(b) (whether or not the contributions are
excludable from the gross income of the Employee).
(e) For purposes of this section, all qualified defined contribution
plans (whether terminated or not) ever maintained by the Employer will be
treated as one defined contribution plan.
(f) As soon as is administratively feasible after the end of the
Limitation Year, the maximum "Annual Additions" under this Plan and any other
defined contribution plan maintained by the Employer will be determined on the
basis of the Participant's actual 415 Compensation for the Limitation Year.
(g) If a reasonable error is made in estimating a Participant's 415
Compensation or other facts and circumstances exist to which Regulation
1.415-6(b) (6) will be applicable, and as a result, the Annual Additions under
this Plan would cause the maximum Annual Additions to be exceeded for any
Participant, the Administrator will:
(1) return any nondeductible voluntary employee contributions,
or elective deferrals (within the meaning of Code section 402(g) (3)) credited
for the Limitation Year to the extent such return would reduce the Excess
Amount in the Participant's Account;
(2) hold any Excess Amount in a Section 415 Suspense Account;
(3) use the Section 415 Suspense Account in the next Limitation
Year (and succeeding Limitation Years if necessary) to reduce Employer
Contributions for that Participant if that Participant is covered by the Plan
as of the end of the Limitation Year or if the Participant is not so covered,
allocate and reallocate the Section 415 Suspense Account in the next
Limitation Year (and succeeding Limitation Years if necessary) to all
Participants in the Plan before any Employer Salary-Reduction Contributions
are made to the Plan for such Limitation Year; and
(4) reduce Employee Contributions to the Plan for such
Limitation Year by the amount of the Section 415 Suspense Account allocated
and reallocated during such Limitation Year.
(h) For purposes of this section, "Excess Amount" for any Participant
for a Limitation Year will mean the excess, if any, of: (1) the Annual
Additions which would be credited to the Participant's Account under the terms
of the Plan without regard to the limitations of Code section 415 over (2) the
maximum Annual Additions determined pursuant to this section.
(i) "Section 415 Suspense Account" will mean an unallocated account
equal to the sum of Excess Amounts for all Participants in the Plan during the
Limitation Year, reduced by any returns made in accordance with this section.
(j) The Plan may not distribute Excess Amounts from the Section 415
Suspense Account to Participants or former Participants.
5.7 Actual Deferral Percentage Tests.
(a) For each Plan Year, the annual amount of Salary-Reduction
Contributions made on behalf of a Participant will satisfy one of the
following tests:
(1) The Actual Deferral Percentage for the Highly Compensated
Participant group for the current Plan Year will not be more than the Actual
Deferral Percentage of the Non-Highly Compensated Participant group for the
immediately prior Plan Year multiplied by 1.25; or
(2) The excess of the Actual Deferral Percentage for the Highly
Compensated Participant group for the current Plan Year over the Actual
Deferral Percentage for the Non-Highly Compensated Participant group for the
immediately prior Plan Year will not be more than two percentage points or
such lesser amount determined pursuant to Regulations to prevent the multiple
use of this alternative limitation with respect to any Highly Compensated
Participant. Additionally, the Actual Deferral Percentage for the
Highly-Compensated Participant group for the current Plan Year will not exceed
the Actual Deferral Percentage for the Non-Highly Compensated Participant
group for the immediately prior Plan Year multiplied by 2. The provisions of
Code Section 401(k)(3) and Regulation 1.401(k)-l(b) are incorporated herein by
reference.
In order to prevent the multiple use of the alternative method
described in this paragraph (2) above and in Code Section 401(m)(9)(A), any
Highly Compensated Participant eligible to make Salary-Reduction Contributions
pursuant to Section 5.1 and to make Employee contributions or to receive
matching contributions under this Plan or under any other plan maintained by
the Employer or an Affiliate shall have a combination of his actual deferral
ratio and his actual contribution ratio reduced pursuant to Regulation
1.401(m)-2, the provisions of which are incorporated herein by reference.
Provided, this provision regarding the multiple use of the alternative method
shall not apply to Plan Years beginning after December 31, 2001.
(3) To the extent permitted by regulations or other Internal
Revenue Service rulings of general applicability, the tests described in (1)
and (2) above shall be applied by substituting "Actual Deferral Percentage for
the Non-Highly Compensated Participant group for the current Plan Year" for
the phrase "Actual Deferral Percentage for the Non-Highly Compensated
Participant group for the immediately prior Plan Year" where such phrase
appears therein. Provided, any such change shall be reflected in an amendment
to the Plan.
(4) For purposes of this section, the Highly Compensated
Participant group and Non-Highly Compensated Participant group will include
all Employees eligible to make Salary-Reduction Contributions, whether or not
such Employees actually make such Contributions.
(b) For purposes of this section the following terms shall have the
following meanings:
"Actual Deferral Percentage" for a Plan Year means, with respect to
the Highly Compensated Participant group and Non-Highly Compensated
Participant group, the average of the ratios, calculated separately for each
Participant in such group, of the amount of Salary-Reduction Contributions
made on behalf of each Participant for such Plan Year to such Participant's
Compensation for such Plan Year. Such ratios will be calculated to the nearest
one-hundredth of one percent. Compensation will be limited to only that
Compensation received by the Employee while he was a Participant in the Plan.
"Compensation" has the meaning given such term by Code section 414(s)
and the Regulations issued thereunder.
"Excess Contributions" means, with respect to a Plan Year, the excess
of Employee Salary-Reduction Contributions of Highly Compensated Participants
for the Plan Year over the maximum amount of such contributions permitted as
an Annual Addition. Excess Contributions will be treated as an Annual
Addition.
"Highly Compensated Participant" means a Participant who is a highly
compensated employee as described in Code section 414(q) and the Regulations
thereunder who is a Participant and generally means an Employee who performed
services for the Employer during the "determination year" and is in one or
more of the following groups:
(i) Employees who at any time during the "determination year"
or "look-back year" were "five percent owners" of the Employer (as defined in
Code Section 416(i)(1));
(ii) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $80,000.
The "look-back year" shall be the calendar year ending with or within
the Plan Year for which testing is being performed, and the "determination
year" (if applicable) shall be the period of time, if any, which extends
beyond the "look-back year" and ends on the last day of the Plan Year for
which testing is being performed (the "lag period"). If the "lag period" is
less than twelve months long, the dollar threshold amount specified in (ii)
above shall be prorated based upon the number of months in the "lag period."
The dollar threshold amount specified in (ii) above shall be adjusted
at such time and in such manner as is provided in Regulations. In the case of
such an adjustment, the dollar limits which shall be applied are those for the
calendar year in which the "look-back year" begins.
In determining who is a Highly Compensated Participant, Employees who
are non-resident aliens and who received no earned income (within the meaning
of Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliates shall be taken into account as a
single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are
not covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year."
"Highly Compensated Former Employee" means a former Employee who had
a separation year prior to the "determination year" and was a Highly
Compensated Employee in the year of separation from service or in any
"determination year" after attaining age 55. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees. The method set
forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
"Non-Highly Compensated Participant" means any Participant who is not
a Highly Compensated Participant.
(c) For purposes of this section, if two or more plans which include
cash or deferred arrangements are considered one plan for the purposes of Code
section 401(a) or 410(b), the cash or deferred arrangements included in such
plans will be treated as one arrangement. For Plan Years beginning after
December 31, 1989, plans may be aggregated hereunder only if they have the
same plan year.
(d) Notwithstanding the above, for Plan Years beginning after
December 31, 1988, an employee stock ownership plan described in Code section
4975(e)(7) may not be combined with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan satisfies this section
and Code sections 401(a)(4) , 410(b) and 401(k).
(e) In the event that the initial allocation of the Participant's
Salary-Reduction Contributions does not satisfy one of the tests set forth in
this section, the Plan may use any one or a combination of the following:
(1) The Employer may make a contribution on behalf of the
Non-Highly Compensated Participants in an amount sufficient to satisfy one of
the tests. Such contributions will hereinafter be referred to as the
Employer's Qualified Non-Elective Contributions and will be allocated to each
Non-Highly Compensated Participant's Account in the same proportion that each
Non-Highly Compensated Participant's Compensation for the Plan Year bears to
the total Compensation of all Non-Highly Compensated Participants for such
Plan Year.
(2) The Employer may make a matching contribution on behalf of
the Non-Highly Compensated Participants who have elected to make
Salary-Reduction Contributions during the Plan Year in an amount based on a
percentage of such Salary-Reduction Contributions sufficient to satisfy one of
the tests. Such contributions will hereinafter be referred to as the
Employer's Qualified Matching Contributions and will be allocated to each
affected Non-Highly Compensated Participant's Account for such Plan Year.
(3) The Highly Compensated Participant having the highest
amount of Salary-Reduction Contributions may elect to have his portion of
Excess Salary-Reduction Contributions recharacterized as Voluntary
Contributions until one of the tests is satisfied, or until the amount of his
Salary Reduction Contributions equals the amount of Salary Reduction
Contributions of the Highly Compensated Participant having the next highest
amount of Salary Reduction Contributions. This process may continue until all
of the Excess Contributions are distributed.
With respect to the recharacterization of Excess Salary-Reduction
Contributions pursuant to the preceding paragraph, such amounts:
will be deemed to have occurred on the date on which the last
of those Highly Compensated Participants with Excess Salary-Reduction
Contributions to be recharacterized is notified of the recharacterization and
the tax consequences of such recharacterization;
will not exceed the amount of Salary-Reduction Contributions on
behalf of any Highly Compensated Participant for any Plan Year;
will be treated as Voluntary Contributions for the purposes of
Code section 401(a) (4) and Regulation 1.401(k)-1(b).
which relate to Excess Salary-Reduction Contributions
recharacterized in Plan Years beginning after December 31, 1988, will be
subject to the same distribution rules applicable to Salary-Reduction
Contributions. Excess Salary-Reduction Contributions recharacterized in Plan
Years ending on or before October 24, 1988, will be subject to the
distribution rules applicable to Voluntary Contributions.
A separate accounting will be maintained for such Recharacterized
Salary-Reduction Contributions for the purposes of segregating such
contributions from the Participant's Salary-Reduction and Voluntary
Contributions.
(4) Within two and one-half months following the end of each
Plan Year, each Highly Compensated Participant, beginning with the Participant
having the highest amount of Salary-Reduction Contributions will have the
portion of his Salary-Reduction Contributions which is in excess of the limit
(and any income or losses allocable to such excess) distributed to him until
one of the tests is satisfied, or until the amount of his Salary Reduction
Contributions equals the amount of Salary Reduction Contributions of the
Highly Compensated Participant having the next highest amount of Salary
Reduction Contributions. This process shall continue until all of the Excess
Contributions are distributed. Income and losses allocable to such excess will
be determined in the same manner as income or losses allocable to "Excess
Salary-Reduction Contributions." If such excess (plus income or losses
allocable thereto) is not distributed within two and one-half months after the
close of the applicable Plan Year, it will be distributed no later than the
close of the next following Plan Year and the Employer will pay the applicable
excise tax on the amount distributed during the succeeding period. Excess
Salary-Reduction Contributions will be considered Annual Additions for the
Limitation year in which such contributions were made.
Notwithstanding the foregoing, in determining the amount of Excess
Contributions to be distributed with respect to an affected Highly Compensated
Participant, such amount will be reduced by any Excess Salary-Reduction
Contributions previously distributed to such affected Highly Compensated
Participant for his taxable year ending with or within such Plan Year.
With respect to items (1) and (2) of this subsection:
(i) Such contributions will be made within twelve months after
the end of the Plan Year; and
(ii) A separate accounting will be maintained for the purposes
of excluding such contributions from the "Actual Contribution Percentage
Test."
5.8 Actual Contribution Percentage Tests.
(a) The Actual Contribution Percentage for the Highly Compensated
Participant group for the current Plan year will not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly
Compensated Participant group for the immediately prior Plan Year; or
(2) the lesser of 200 percent of such percentage for the
Non-Highly Compensated Participant group, or such percentage for the
Non-Highly Compensated Participant group plus two percentage points or such
lesser amount determined pursuant to Regulations to prevent the multiple use
of this alternative limitation with respect to any Highly Compensated
Participant described in this section and Code section 401(m)(9)(A). Any
Participant eligible to make Voluntary Contributions, if applicable, or to
receive matching contributions, if applicable, under this Plan or under any
other Plan maintained by the Employer will have his Actual Contribution
Percentage reduced pursuant to Regulation 1.401(m). The provisions of Code
section 401(m) and Regulations 1.401(m)-l(b) and 1.401(m)-2 are incorporated
herein by reference. Provided, this provision regarding the multiple use of
the alternative method shall not apply to Plan Years beginning after December
31, 2001.
(3) To the extent permitted by regulations or other Internal
Revenue Service rulings of general applicability, the tests described in (1)
and (2) above shall be applied by substituting "for the current Plan Year" for
the phrase "for the immediately prior Plan Year" where such phrase appears in
subparagraph (1) above. Provided, any such election shall be reflected in an
amendment to the Plan.
(4) A Highly Compensated Participant and Non-Highly Compensated
Participant will include any Employee eligible to make Voluntary
Contributions, whether or not such Employee actually makes such contributions.
(b) For the purposes of this section, the following terms shall have
the following meanings:
"Compensation" has the meaning given such term by Code section 414(s)
and the Regulations issued thereunder.
"Actual Contribution Percentage" for a Plan Year means, with respect
to the Highly Compensated Participant group and Non-Highly Compensated
Participant group, the average of the ratios (calculated separately for each
Participant in each group) of:
(1) the Participant's Voluntary Contributions, if any, and any
excess Salary-Reduction Contributions recharacterized as Voluntary
Contributions, if any;
(2) to the Participant's Compensation for such Plan Year.
Such ratios will be calculated to the nearest one-hundredth of one
percent.
(c) If two or more plans which include matching contributions or
voluntary contributions, or both, are considered as one plan for the purposes
of Code section 401(a)(4), 410(b) and 401(m), such plans will be treated as
one arrangement. For Plan Years beginning after December 31, 1989, plans may
be aggregated under this paragraph (d) only if they have the same plan years.
(d) Notwithstanding the above, for Plan Years beginning after
December 31, 1988, an employee stock ownership plan described in Code section
4975(e)(7) may not be combined with this plan for purposes of determining
whether the employee stock ownership plan or this Plan satisfies this section
and Code sections 401(a)(4), 410(b) and 401(m).
(e) If a Highly Compensated Participant is a Participant in two or
more plans which include matching contributions or voluntary contributions, or
both, all such contributions on behalf of such Highly Compensated Participant
will be aggregated for the purpose of determining the contribution percentage
with respect to such Highly Compensated Participant.
(f) In the event that neither of the tests specified in this section
are satisfied, the Plan may use one or a combination of the following:
(1) Within two and one-half months following the end of each
Plan Year, each Highly Compensated Participant, beginning with the Participant
having the highest amount of Voluntary Contributions (and any excess
Salary-Reduction Contributions recharacterized as Voluntary Contributions),
will have the portion of his Excess Aggregate Contributions (and any income or
losses allocable thereto) which is in excess of the limit (and any income or
losses allocable to such excess) distributed to him until one of the tests is
satisfied, or until the sum of Voluntary Contributions and any excess
Salary-Reduction Contributions recharacterized as Voluntary Contributions
equal the sum of the Voluntary Contributions and any excess Salary-Reduction
Contributions recharacterized as Voluntary Contributions of the Highly
Compensated Participant having the second highest amount of Voluntary
Contributions (and any excess Salary-Reduction Contributions recharacterized
as Voluntary Contributions). This process shall continue until all of the
Excess Aggregate Contributions are distributed.
Income or losses allocable to such excess will be determined in
the same manner as income or loss allocable to Excess Salary-Reduction
Contributions.
Any distribution or forfeiture of less than the entire amount
of Excess Aggregate Contributions (and any income or losses allocable to such
excess) will be treated as a pro-rata distribution. Distribution of Excess
Aggregate Contributions will be designated by the Employer as a distribution
of Excess Aggregate Contributions (and any income or losses allocable to such
excess). Forfeitures of Excess Aggregate Contributions will be treated in
accordance with Article V.
"Excess Aggregate Contributions" means, with respect to any
Plan Year, the excess of:
(a) the aggregate amount of Voluntary Contributions, if any,
and Excess Salary-Reduction Contributions recharacterized as Voluntary
Contributions, if any, over
(b) the maximum amount of such contributions permitted under
the limitations of this subsection.
If such excess (plus income or loss allocable thereto) is not
distributed within two and one-half months after the close of the applicable
Plan year, it will be distributed no later than the close of the next
following Plan Year and the Employer will pay the applicable excise tax on the
amount distributed after such two and one-half month period. Excess Voluntary
Contributions will be considered Annual Additions for the Limitation year in
which such contributions were made.
Any distribution of Excess Contributions, or any distribution
or forfeiture of Excess Aggregate Contributions, will be made in accordance
with Code section 401(a)(4).
Income and losses allocable to such excess will be determined
in the same manner as income or losses allocable to "Excess Salary-Reduction
Contributions."
(2) The Employer may make a contribution on behalf of the
Non-Highly Compensated Participants in an amount sufficient to satisfy one of
the tests. Such contributions will hereinafter be referred to as Employer
Qualified Non-Elective Contributions and will be allocated to each Non-Highly
Compensated Participant's Account in the same proportion that each Non-Highly
Compensated Participant's Compensation for the Plan Year bears to the total
Compensation of all Non-Highly Compensated Participants for such Plan Year.
(3) The Employer may make a matching contribution on behalf of
the Non-Highly Compensated Participants who have elected to make Voluntary
Contributions or Salary-Reduction Contributions during the Plan Year in an
amount based on a percentage of such Participant Contributions sufficient to
satisfy one of the tests. Such contributions will hereinafter be referred to
as the Employer's Qualified Matching Contributions and will be allocated to
each affected Non-Highly Compensated Participant's Account for such Plan Year.
With respect to items (2) and (3) of this subsection:
(i) Such contributions will be made within twelve months
after the end of the Plan Year; and
(ii) A separate accounting will be maintained for the
purposes of excluding such contributions from the "Actual Deferral Percentage
Test."
ARTICLE VI
DISPOSITION OF CONTRIBUTIONS
6.1 Payments to Funding Agent.
Each Contribution made on behalf of a Participant will be paid to the
Funding Agent by the Trustee within the time or times specified in Article V
and will be administered in accordance with Article XI and any Contract
between the Trustee, if applicable, or Employer and the Funding Agent.
6.2 Investment Options/Subaccounts.
The Funding Agent will maintain, with respect to each Participant, an
individual Investment Subaccount for each separate investment fund in which a
Participant participates. Participants will be permitted to direct the
Contributions made on their behalf among the Investment Subaccounts
established for this purpose. The Participants may choose a Fixed Income
Investment Subaccount or one or more Variable Income Investment Subaccounts.
"Fixed Income Investment Subaccount" is a subaccount which invests in
a separate investment fund composed primarily of debt obligations, such as
mortgages and bonds, providing a fixed rate of investment return.
"Variable Investment Subaccount" is a subaccount which invests in a
separate investment fund under which the value of the deposits to such account
will vary, up and down, to reflect investment income and market value changes.
Any one or any combination of the following types of securities may be
available:
(a) common, preferred, foreign or domestic stocks and/or qualified
securities of the Employer and/or a subsidiary,
(b) bonds,
(c) cash and cash equivalents, and
(d) open and/or closed-end mutual funds.
6.3 Designation of Contributions to Investment Subaccounts.
Each Participant will designate to the Administrator the proportion
of each Contribution made for him which is to be credited to each of the
Investment Subaccounts established for the Participant by the Funding Agent,
in accordance with procedures prescribed by the Administrator. Such proportion
may be any integral percentage from 0% to 100%. If no such designation is made
by the Participant before the first such Contribution is paid to the Funding
Agent by the Trustee, 100% of such Contributions, and 100% of each
Contribution on his behalf thereafter until such designation is made, will be
credited to his Fixed Income Investment Subaccount, or other investment
designated by the Employer.
A Participant may change the proportion of any Contribution made in
accordance with Article V which is to be credited to each Investment
Subaccount by notifying the Administrator when such change is to become
effective, in accordance with procedures prescribed by the Administrator. No
such changes may be retroactive. Such changed proportions will apply to such
Contributions received by the Funding Agent on or after the later of the
effective date of such change, or as soon as practicable following the date of
receipt of such notification by the Funding Agent, and will remain in effect
until any subsequent change is made by the Participant.
Any decision by a Participant to invest in any Investment Subaccount
pursuant to this Article or to request a loan pursuant to Article VII will
constitute an exercise of control over the assets allocated to his account by
such Participant to the extent of such exercise of control within the meaning
of ERISA section 404(c). Each Participant who so exercises such control will,
by such exercise, release and agree, on his behalf and on the behalf of his
heirs and beneficiaries, to indemnity and hold harmless the Funding Agent, the
Employer, and any officer or employee of any of them, from and against any
claim, demand, loss, liability, costs or expense (including reasonable
attorney's fees) caused by or arising out of such exercise, including without
limitation any diminution in value or losses incurred from such exercise.
6.4 Transfers Between Investment Subaccounts.
A Participant may transfer amounts among his Investment Subaccounts
at any time by notifying the Administrator or its designated representative as
provided by the procedures established by the Administrator and communicated
to the Participant in writing. Such procedures shall be nondiscriminatory by
their terms and in operation and shall comply with the provisions of ERISA
section 404(c). If such procedures provide for an oral election, a written
confirmation of the oral investment election shall be provided to the
Participant as soon as administratively feasible. An election may be revoked
only by another election and will remain in effect until such revocation. If
no initial election is timely received by the Administrator, the Administrator
shall invest the account in a fund designated for such purpose.
Any transfer made pursuant to this Section 6.4, will be made on the
date specified subject to any restrictions imposed in accordance with the
terms of any Contract between the Trustee, if applicable, or Employer and the
Funding Agent.
6.5 Valuation of Funds and Allocation of Earnings.
As of each December 31, or such other date upon which the Funding
Agent, Trustee and the Administrator will mutually agree, the Funding Agent
will determine the fair market value of the Contract, including earnings and
losses on each investment fund, and will adjust each Participant's Investment
Subaccounts in accordance with such valuation.
ARTICLE VII
DISPOSITION OF BENEFITS
7.1 Timing of Distributions.
If a Participant retires or otherwise terminates his employment (for
reasons other than death) with the Employer, the vested portion of his Account
will be distributed to him as of his Distribution Date except as otherwise
provided in section 7.2 and as follows:
(a) If the vested portion of the Participant's Account as of the date
of his termination is less than or equal to $5,000, the Participant will be
deemed to have elected a single sum payment and such payment will be made as
soon as practicable following the date of retirement or termination. The
consent of the Participant will not be required to make such distribution.
(b) If the vested portion of the Participant's Account as of the date
of his termination is greater than $5,000, upon advance notice in the form and
manner prescribed by the Administrator, a Participant may request a
distribution of all or a part of the vested portion of his Account at any date
on or after the Participant's day of termination, but not later than the
Participant's Required Beginning Date. In no event will distribution of any
portion of the Participant's Account pursuant to this subsection (b) be made
prior to such Participant's Normal Retirement Date unless the Participant
consents. The consent of the Participant will be obtained in writing within
the 90-day period ending on the date the Participant's Account is distributed
to him.
Notwithstanding anything to the contrary herein, the consent of the
Participant is not required to satisfy the requirements of section 7.5.
Unless a Participant elects to defer payment of his benefit pursuant
to section 7.2, subject to section 7.5, all distributions made pursuant to
this section will commence no later than 60 days after the end of the Plan
Year in which the latest of the following events occurs:
(1) the earlier of age 65 or Normal Retirement Date,
(2) the Participant's 5th anniversary in the Plan, or
(3) the Participant's termination date.
The Employer will notify the Funding Agent in writing of the
termination date or Distribution Date of each Participant.
7.2 Deferral of Distribution Date.
A retired or terminated Participant may elect, by notice, in
accordance with procedures and in the form and manner prescribed by the
Administrator, to the Funding Agent, to defer his Distribution Date, but not
beyond his Required Beginning Date.
7.3 Method of Distribution.
A Participant may elect to receive a distribution of his Account in
any of the following forms:
(a) a single sum payment equal to the value of his Account;
(b) a fixed dollar annuity which provides for a series of payments
the amount of which is the same each month and is fixed at the date payments
commence;
(c) a systematic withdrawal method providing monthly, quarterly,
semi-annual or annual installments made over a specified period of time or
made in a specified dollar amount, which ever method is selected by the
Participant, until the Participant's Account is liquidated. The Participant
may continue to make transfers pursuant to Article VI. The minimum payment
allowable under this method of distribution is $250. The Participant must have
an Account balance greater than or equal to $15,000; or
(d) a combination of any or all of a, b or c.
An election by a married Participant to receive his benefits in any
form other than a "Qualified Joint and Survivor Life Annuity" providing for
payments after his death to his Eligible Spouse must be made pursuant to a
Qualified Election unless:
the Participant does not elect to receive a distribution of his
account in the form of a life annuity, and
this Plan is not a Transferee Plan with respect to such
Participant. This Plan will be considered a "Transferee Plan" with respect to
any Participant if any portion of his Account is attributable to amounts
transferred from a defined benefit plan, money purchase plan, stock bonus or
profit-sharing plan which would otherwise provide for a life annuity form of
payment to the Participant.
Under the "Qualified Joint and Survivor Annuity" the first payment is
made to the Participant as of his Distribution Date. Subsequent monthly
payments are made to the Participant each month thereafter throughout his
remaining lifetime, terminating with the last monthly payment before the
death. Following the Participant's death, monthly payments are continued to
the Participant's Eligible Spouse. The monthly payment to the Eligible Spouse
is equal to 50% of the monthly payment which was payable to the Participant
during the Participant's lifetime.
Any annuity form must provide for payment to be made over:
(1) the life of the Participant;
(2) the lives of the Participant and his Eligible Spouse if
payments are to be made to the spouse, otherwise his designated beneficiary;
(3) a period not extending beyond the Participant's life
expectancy; or
(4) a period not extending beyond the life expectancy of the
Participant and his Eligible Spouse, if applicable, otherwise his designated
beneficiary.
A Participant may not elect any form of annuity providing monthly
payments to a contingent annuitant or designated beneficiary who is other than
his spouse, unless the actuarial value of the monthly annuity benefit expected
to be payable to the Participant is more than 50% of the actuarial value of
the aggregate monthly benefits expected to be payable under such annuity form.
In no event, however, may the amount of each monthly payment to a contingent
annuitant or designated beneficiary exceed that payable to the Participant.
(e) Eligible Rollover Distributions.
Notwithstanding the optional forms of payment listed above, a
distributee may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a
direct rollover.
(1) Eligible Rollover Distribution. An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution to the extent
such distribution is required under Code Section 401(a)(9); the portion of any
distribution that is not includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities); any other distribution that is reasonably expected to total less
than $200 during a year; and any hardship distribution described in Code
section 401(k)(2)(B)(i)(IV). Effective for distributions made after December
31, 2001, a portion of a distribution shall not fail to be an eligible
rollover distribution merely because the portion consists of after-tax
employee contributions which are not includible in gross income. However, such
portion may be transferred only to an individual retirement account or annuity
described in section 408(a) or (b) of the Code, or to a qualified defined
contribution plan described in section 401(a) or 403(a) of the Code that
agrees to separately account for amounts so transferred, including separately
accounting for the portion of such distribution which is includible in gross
income and the portion of such distribution which is not so includible.
(2) Eligible Retirement Plan. Effective for distributions made
prior to January 1, 2002, an eligible retirement plan is an individual
retirement account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a), that
accepts the distributee's eligible rollover distribution. However, in the case
of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity. Effective for distributions made after December 31, 2001, an eligible
retirement plan is an individual retirement account described in Code Section
408(a), an individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), a qualified trust described in
Code Section 401(a), an annuity contract described in Code Section 403(b), or
an eligible plan under Code Section 457(b) (maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state), where the plan sponsor agrees to accept the
distributee's eligible rollover distribution and, in the case of a 457(b) plan
or 403(b) annuity contract, also agrees to separately account for such
transferred amounts; the definition of an eligible retirement plan shall also
apply in the case of a eligible rollover distribution to a surviving spouse or
to a spouse or former spouse who is an alternate payee, as defined in Code
Section 414(p).
(3) Distributee. A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving spouse
and the employee's or former employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in Code
Section 414(p), are distributees with regard to the interest of the spouse or
former spouse.
(4) Direct Rollover. A direct rollover is a payment by the plan
to the eligible retirement plan specified by the distributee.
7.4 Qualified Election.
A "Qualified Election" means an election made by a Participant (a) to
receive benefits in a form other than a Qualified Joint and Survivor Annuity
providing for payments after his death to his Eligible Spouse or (b) to
designate a Beneficiary other than his spouse to receive the death benefit
described in Article VIII.
Any such election must be in writing and must be consented to by the
Participant's spouse. Such election will designate a beneficiary (or a form of
benefit) that may not be changed without spousal consent (unless the consent
of the spouse expressly permits designations by the Participant without the
requirement of further consent from the spouse). The spouse's consent must
acknowledge the effect of such election and be witnessed by a Plan
representative or a notary public. Notwithstanding this consent requirement,
if the Participant establishes to the satisfaction of a Plan representative
that such written consent cannot be obtained because there is no spouse or the
spouse cannot be located, either election described above by the Participant
will be deemed a Qualified Election. Any consent necessary under this
paragraph will be valid only with respect to the spouse who signs the consent,
or in the event of a deemed Qualified Election, the designated spouse.
Additionally, a revocation of a prior election may be made by a Participant
without the spouse's consent at any time before a distribution of the
Participant's Account is made. The number of revocations will not be limited.
The election period to waive the Qualified Joint and Survivor Annuity
will be the 90-day period ending on the Annuity Starting Date. For purposes of
this section, the "Annuity Starting Date" means the first day of the first
period for which an amount is payable as an annuity or as periodic
installments or, in the case of a benefit not payable in the form of an
annuity or as periodic installments, the date on which the Participant's
Account is distributed to him.
The Administrator will provide to each Participant, no less than 30
days and no more than 90 days prior to the Annuity Starting Date, a written
explanation, in a manner calculated to be understood by him, of:
(a) the terms and conditions of the Qualified Joint and Survivor
Annuity;
(b) the Participant's right to make, and the effect of, an election
to waive the Qualified Joint and Survivor Annuity;
(c) the right of the Participant's spouse to consent to any election
to waive the Qualified Joint and Survivor Annuity;
(d) the right of the Participant to revoke such election, and the
effect of such revocation.
The Administrator may, on a uniform and nondiscriminatory basis,
provide for other election periods that comply with Regulations under Code
Sections 401(a)(11) and 417.
7.5 Distribution Requirements.
The requirements of this section will apply to any distribution of a
Participant's interest and will take precedence over any inconsistent
provisions of this Plan.
(a) All distributions made pursuant to this Plan will comply with
Code section 401(a)(9) and the Regulations issued thereunder, and requirements
similar to the incidental death benefit requirement of Code section 401(a).
(b) "Required Beginning Date." The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant
Required Beginning Date. The Required Beginning Date of a Participant who has
not attained age 70-1/2 prior to January 1, 1989 is April 1 of the calendar
year following the calendar year in which the Participant attains age 70-1/2,
whether or not such Participant has retired. The Required Beginning Date of a
Participant who attained age 70-1/2 before January 1, 1989 is April 1 of the
calendar year following the calendar year in which the later of retirement or
attainment of age 70-1/2 occurs. The Required Beginning Date of a Participant
who attains age 70-1/2 during 1988 and who has not retired as of January 1,
1989 is April 1, 1990. The Required Beginning Date of a Participant who
attains age 70-1/2 after December 31, 2001 (and who is not a Five-Percent
owner), is April 1 of the calendar year following the calendar year in which
the later of his retirement or attainment of age 70-1/2 occurs.
Notwithstanding the preceding, if a Participant is a Five-Percent owner, his
Required Beginning Date is April 1 of the calendar year following the calendar
year in which the Participant attains age 70-1/2, regardless of when such
Participant attained age 70-1/2 and whether or not he is retired.
(c) Limits on Distribution Periods. Distributions, if not made in a
single sum, may only be made over one of the following periods:
(1) the life of the Participant;
(2) the lives of the Participant and his spouse if payments are
to be made to the spouse, otherwise his designated Beneficiary;
(3) a period certain not extending beyond the Participant's
life expectancy; or
(4) a period certain not extending beyond the life expectancy
of the Participant and his spouse if applicable, otherwise his designated
Beneficiary.
(d) Minimum Distributions, Annuities. If the Participant's benefit is
distributed in the form of an annuity purchased from a Funding Agent,
distributions thereunder will be made in accordance with the requirements of
Code section 401(a)(9) and the Regulations thereunder.
(e) If a Participant dies after distribution of his interest has
begun, the remaining portion of his interest will be distributed at least as
rapidly as under the form of benefit being used on the date of his death.
(f) Notwithstanding any provision of the Plan to the contrary, with
respect to distributions under the Plan made for calendar years beginning on
or after January 1, 2002, the Plan will apply the minimum distribution
requirements of section 401(a)(9) of the Internal Revenue Code in accordance
with the regulations under section 401(a)(9) that were proposed on January 17,
2001. 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) or such other date as may be specified in guidance published
by the Internal Revenue Service.
7.6 In-Service Withdrawals.
A participant may withdraw amounts from his account(s) before his separation
from service only under the circumstances and only to the extent provided
below. Effective as of January 1, 2002, such contributions may be distributed
upon severance from employment and any reference herein to "separation from
service" shall be construed to mean severance from employment with the
Employer. The Qualified Election requirements of Section 7.4 shall apply to a
withdrawal as provided in this Section 7.6 or if this Plan is, with respect to
the Participant, a direct or indirect transferee of a defined benefit plan,
money purchase pension plan (including a target benefit plan), or a stock
bonus or profit sharing plan which would otherwise have provided for a
qualified joint and survivor life annuity as the normal form of payment to the
Participant.
Voluntary Contributions.
-----------------------
A Participant may elect, while in the employ of the Employer, to
withdraw any or all of the portion of his Account which is attributable to his
Voluntary Contributions and any income or earnings thereon.
If the withdrawal is requested prior to the Participant's attainment
of age 62, the Participant's Eligible Spouse must give written consent
pursuant to the terms of a Qualified Election.
Any Participant receiving a withdrawal of all or a portion of his
Voluntary Contributions will be permitted only one such withdrawal in any
twelve (12) month period.
He will also not be permitted to make additional Voluntary
Contributions for a period of one (1) year following the date such withdrawal
is made.
Salary-Reduction Contributions.
------------------------------
A Participant may elect, while in the employ of the Employer, to
withdraw any or all of his Account attributable to Salary-Reduction
Contributions upon the first to occur of:
(a) his attainment of age 59 1/2 or
(b) proven "Financial Hardship."
Effective January 1, 1989, withdrawals for proven Financial
Hardships will be limited to:
(A) the Participant's Salary Reduction Contributions,
and, if applicable, any QNECs and/or QMACs made on behalf of such Participant,
made before January 1, 1989, and any income or earnings credited thereon
through December 31, 1988; and
(B) the Participant's Salary Reduction Contributions
made after January 1, 1989, without regard to any income or earnings thereon,
and, if applicable, without regard to the portion of his Account attributable
to any QNECs and/or QMACs and income or earnings thereon.
"Financial Hardship" means the immediate financial need of a
Participant associated with the following:
(a) medical expenses described in Code section 213 for the
Participant, spouse or dependents;
(b) tuition and related educational expenses for the next
twelve months of post-secondary education for the Participant, spouse or
dependents;
(c) costs directly related to the purchase of the principle
residence for the Participant (excluding mortgage payments);
(d) funeral expenses;
(e) payments necessary to prevent eviction of the Participant
from the Participant's principal residence or foreclosure on the mortgage on
such residence; or
(f) such other circumstances as the Plan Administrator may
determine within the intent of this section.
In the event of such hardship withdrawal, the Participant may
continue his participation in the Plan without interruption.
A Participant will not be permitted to make a hardship withdrawal
under this section unless he has already withdrawn any amount credited to his
Voluntary Contribution Account, if any.
If a Participant requests a hardship withdrawal prior to age 62, the
Participant's Eligible Spouse must give written consent pursuant to the terms
of a Qualified Election.
However, if a Participant receives a hardship distribution, his right to elect
a Salary-Reduction Contribution under this Plan and any other plan sponsored
by the Employer shall be suspended for 12 months after the receipt of such
distribution; provided, for distributions after December 31, 2001, the
suspension period shall be a six-month period. Further, the Participant may
not elect a Salary-Reduction Contribution for his Taxable Year immediately
following the Taxable Year of the hardship distribution in excess of the
applicable limit under Code section 402(g) for such Taxable Year less the
amount of such Participant's Salary-Reduction Contribution for the Taxable
Year of the hardship distribution.
Rollovers.
---------
A Participant may elect, while in the employ of the Employer, to
withdraw any or all of the portion of his Account which is attributable to his
Rollover Contributions.
If a Participant requests such withdrawal prior to age 62, the
Participant's Eligible Spouse must give written consent pursuant to the terms
of the Qualified Election.
7.7 Loans.
(a) Terms and Conditions.
The Plan will provide loans to Participants in accordance with loan
procedures adopted by the Administrator. Loan procedures shall be contained in
a separate written document which, when properly executed, is hereby
incorporated by reference and made a part of the Plan. Furthermore, such
Participant loan procedures may be modified or amended in writing from time to
time without the necessity of amending this Section. To the extent not in
conflict with such loan procedures in effect from time to time, the conditions
and restrictions set forth below shall apply to Participant loans under the
Plan:
(1) Application and Approval. A Participant may make an
application, in accordance with procedures and in the form and manner
prescribed by the Administrator, with the Administrator for a loan of a stated
amount and term and for a stated purpose.
The application shall be consented to by the participant's spouse, and the
spousal consent shall be witnessed by a plan representative or notary public.
Such spousal consent will not be required if the loan amount is not in excess
of $5,000 or if, with respect to the participant, this plan is not a direct or
indirect transferee of a defined benefit plan, money purchase pension plan
(including a target benefit plan), or a stock bonus or profit sharing plan
which would otherwise have provided for a qualified joint and survivor life
annuity as the normal form of distribution payment to the participant. If
spousal consent is required hereunder, it shall be obtained in compliance with
and have the effect described under Section 7.4 Qualified Election.
All loans shall be subject to the approval of the Administrator. Loans shall
be available to all Participants on a reasonably equivalent and
non-discriminatory basis. In considering a loan, the Administrator may take
into account the availability of cash in the fund. To the extent prohibited by
the Code and ERISA, no loans shall be made to any owner-employee or to any
shareholder-employee (within the meaning of Code Section 1379(b)).
On or after July 1, 1991 and before January 1, 2002, only two (2) outstanding
loans at a time shall be permitted for each Participant taking a loan.
Effective January 1, 2002, a Participant is permitted to have only one (1)
loan outstanding at a time, provided, however; that if, prior to January 1,
2002, a Participant had more than one (1) Plan loan outstanding, the
Participant is permitted to continue such loans, but will not be permitted to
take a new loan until all such loans have been repaid. For purposes of
determining how many outstanding loans a Participant has, a loan that is in
default shall be considered outstanding.
An assignment or pledge or any portion of the Participant's interest in the
Plan and a loan, pledge, or assignment with respect to any insurance contract
purchased under the Plan, shall be treated as a Participant loan under this
paragraph.
(2) Amount. No loan shall exceed the Participant's current
vested accrued benefit. Further no loan to any Participant may be made to the
extent that such loan, when added to the outstanding balance of all other
loans to the Participant, would exceed the lesser of:
(i) $50,000, reduced by the excess (if any) of:
(A) the highest outstanding balance of loans from
the Plan during the one-year period ending on the day before the date on which
such loan is made, over
(B) the outstanding balance of loans from the Plan
on the date on which such loan is made; or
(ii) One-half the present value of the nonforfeitable
accrued benefit of the Participant which is credited to his accounts.
For the purpose of the above limitation, all loans from all plans of the
Employer and other members of a group of employers described in Code Sections
414(b), 414(c), and 414(m) shall be aggregated. The amounts of the loan may
not be less than the minimum loan amount which may be established by the
Administrator for the Plan on a uniform and non-discriminatory basis. Such
minimum loan amount shall not exceed $1,000. Loans shall not be made available
to highly compensated employees, (as defined in Code Section 414(1)) in an
amount greater than the amount made available to other employees, except to
the extent that the then vested account balances may be greater.
(3) Term. The period of repayment for any loan shall be arrived
at by mutual agreement between the Administrator and the Participant; provided
that any such loan will by its terms require repayment within five years
unless such loan is used to acquire a dwelling unit which within a reasonable
time (determined at the time the loan is made) will be used as the
Participant's principal residence. Repayment shall, in any event, be made
before the participant's normal requirement age, and the loan shall not be
renewable. The loan shall require substantially level payments of principal
and interest not less frequently than quarterly.
(4) Interest Rate. Each loan shall bear reasonable interest at
a fixed rate to be determined by the Administrator. The Administrator shall
not discriminate among Participants in the matter of interest rates; but loans
granted at different times may bear different interest rates if, in the
opinion of the Administrator, the differences in rates are justified by
general economic conditions. The Administrator shall determine the interest
rate by using the prime rate plus 1%. The rate shall be set not less
frequently than at the beginning of each calendar quarter for all loans
approved during that period.
(5) Security. Each loan shall be evidenced by the borrowing
Participant's promissory note, in the amount of the loan, plus interest,
payable to the order of the Plan. Also, each loan shall be adequately secured
by the Participant's assignment to the Plan of all of the right, title or
interest in and to the fund up to the amount of the outstanding loan balance.
Default on the note shall be treated as a distributable event under this Plan
subject to the restrictions below. In the event of default, foreclosure on the
note and attachment of security shall not occur until after the earlier of a
distribution made under Section 7.3 or Section 7.6(a) of this plan or the last
day of the calendar quarter following the calendar quarter in which the
required installment was due without the default being cured and in any case
not later than the date which is the fifth anniversary of the making of the
loan. However, to the extent the loan is attributable to the Participant's
Salary-Reduction Contributions Account, the Participant's Voluntary
Contributions Account, the Employer's Qualified Matching Contributions Account
(if any) or the Employer's Qualified Non-Elective Contributions Account (if
any), attachment of security shall not occur until the Participant separates
from service. If any amount of principal or interest is outstanding to any
Participant at a time when distribution of benefits is to be made, then such
loan, including accrued interest thereon, shall be treated as a partial
distribution of the total benefit payable to such Participant or former
participant, and the note canceled. In such an event, the Participant's vested
accrued benefit under the applicable accounts shall be reduced pro rata.
(b) Participant Loan Sub-Accounts.
In the case of a Participant who has been granted a loan hereunder, the
Administrator shall establish a Participant Loan Sub-Account for the
Participant in an amount equal to the initial principal amount of the loan.
Interest and principal payments made by a Participant during a Plan Year shall
be deposited in the Participant Loan Sub-Account. As of the last day of each
Plan Year, all accumulated amounts shall be transferred out of said
sub-account and invested under the Plan's specified investment provisions. Any
additional fees or charges or taxes incurred with respect to the
administration of Participant Loan Sub-Account may be charged to such
Participant's account, or such fee may be paid by the Employer.
ARTICLE VIII
DEATH BENEFITS
8.1 Pre-Retirement Death Benefits.
Unless the Participant makes a Qualified Election, his Eligible
Spouse will be his designated Beneficiary. Upon the death of such Participant
before his Distribution Date, 100% of his Account will be applied to purchase
an annuity for the life of the Participant's designated Beneficiary, unless
the designated Beneficiary elects a different form of benefit as provided in
item (a) following:
(a) The designated Beneficiary, unless the Participant has directed
otherwise, may elect to receive his distribution under a method described in
Article VII.
(b) Distributions in other than the single payment form will be
subject to the following conditions, except as otherwise provided under
Section 7.5(f) above:
(1) if the designated Beneficiary is the Participant's Eligible
Spouse,
(A) such distribution form must provide for payment to
be made over the life of the Eligible Spouse (or over a period not exceeding
the life expectancy of the Eligible Spouse), and
(B) such distribution must commence to the Eligible
Spouse on or before the later of (i) December 31 of the calendar year
immediately following the calendar year in which the Participant dies, and
(ii) December 31 of the calendar year in which the Participant would have
attained age 70-1/2.
(2) If the designated Beneficiary is other than the
Participant's Eligible Spouse,
(A) such distribution form must provide for payment to
be over the life of the designated Beneficiary (or over a period not exceeding
the life expectancy of the designated Beneficiary), and
(B) such distribution must commence on or before
December 31 of the calendar year immediately following the calendar year in
which the Participant died.
(c) If the single payment form of distribution is elected by the
Eligible Spouse or designated Beneficiary, the total value of the
Participant's Account must be distributed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death, except as
otherwise permitted in accordance with Section 7.5(f) above.
(d) In no event will an annuity distribution be permitted under this
section if the value of the portion of the Participant's Account being used to
purchase such annuity is not in excess of $5,000.
8.2 Post-Retirement Death Benefits.
Any payments after the death of a Participant for whom an annuity has
been purchased, will be paid in accordance with the terms of the annuity form
selected.
Payments to a Beneficiary must be made at least as rapidly as such
payments were being made to the Participant. If an annuity has not been
purchased for such Participant, then unless the Participant has directed
otherwise the Beneficiary may elect to receive his benefit under any of the
methods of distribution described in Article VII.
8.3 Distribution Requirements.
All distributions made pursuant to this Article will comply with Code
section 401(a)(9) (including, but not limited to, the minimum distribution
rules) and the Regulations issued thereunder and requirements similar to the
incidental death benefit requirements of Code section 401(a).
ARTICLE IX
GENERAL PROVISIONS
9.1 Non-Alienation of Benefits.
Subject to the exceptions provided below, no benefit which will be
payable to any person out of the Trust Fund (including a Participant or his
Beneficiary) will be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the
same will be void; and no such benefit will in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements, or torts of any
such person, nor will it be subject to attachment or legal process for or
against such person, and the same will not be recognized except to such extent
as may be required by law.
This section will not apply to the extent a Participant is indebted
to the Plan, by reason of a qualified plan loan under this Plan. At the time a
distribution is to be made to or for a Participant's or Beneficiary's benefit,
such proportion of the amount to be distributed as will equal such
indebtedness will be paid to the Plan, to apply against or discharge such
indebtedness. Prior to making a payment, however, the Participant or
Beneficiary must be given written notice by the Administrator that such
indebtedness is to be paid in whole or part from the Participant's Account. If
the Participant or Beneficiary does not agree that the indebtedness is a valid
claim against the Participant's Account, he will be entitled to a review of
the validity of the claim in accordance with procedures provided in Article
III.
This provision will not apply to a "qualified domestic relations
order" defined in Code section 414(p), and those other domestic relations
orders permitted to be so treated by the Administrator under the provisions of
the Retirement Equity Act of 1984. The Administrator will establish a written
procedure to determine the qualified status of domestic relations orders and
to administer distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order," a former spouse
of a Participant will be treated as the Eligible Spouse for all purposes under
the Plan.
This Plan specifically permits distribution to an alternate payee
under a qualified domestic relations order at any time, irrespective of
whether the Participant has attained his earliest retirement age (as defined
under Code section 414(p)) under the Plan. A distribution to an alternate
payee prior to the Participant's attainment of earliest retirement age is
available only if: (1) the order specifies distribution at that time or
permits an agreement between the Plan and the alternate payee to authorize an
earlier distribution; and (2) if the present value of the alternate payee's
benefits under the Plan exceeds $5,000, and the order requires, the alternate
payee consents to any distribution occurring prior to the Participant's
attainment of earliest retirement age.
Furthermore, with respect to judgments, orders, decrees issued and
settlement agreements entered into on or after August 5, 1997, as described in
Code Section 401(a)(13)(C), a Participant's benefit may be reduced if a court
order or requirement to pay arises from: (1) a judgment of conviction for a
crime involving the Plan; (2) a civil judgment (or consent order or decree)
that is entered by a court in an action brought in connection with a breach
(or alleged breach) of fiduciary duty under ERISA; or (3) a settlement
agreement entered into by the Participant and either the Secretary of Labor or
the Pension Benefit Guaranty Corporation in connection with a breach of
fiduciary duty under ERISA by a fiduciary or any other person. The court
order, judgment, decree, or settlement agreement must specifically require
that all or part of the amount to be paid to the Plan be offset against the
Participant's Plan benefits. If the survivor annuity requirements of Code
Section 401(a)(11) apply with respect to distributions from the Plan to the
Participant and the Participant has a spouse at the time at which the offset
is to be made, such offset shall not be made unless the Plan complies with
Code Section 401(a)(13)(C)(ii).
9.2 Non-Guarantee of Employment.
The adoption of the Plan and Trust will not be deemed to be a
contract between the Employer and any Participants. Nothing contained in the
Plan will be deemed to give any Participant the right to be retained in the
employ of the Employer or to interfere with the managerial prerogatives and
decisions of the Employer.
9.3 Beneficiary.
The designation of a Participant's Beneficiary will be made by filing
with the Administrator a written designation identifying such Beneficiary.
Such designation may be changed or revoked by written notice filed with the
Administrator.
If the Participant's Beneficiary is not a natural person receiving
payments in his own right, then payment will be made only in a single sum. If
more than one Beneficiary of a Participant is concurrently entitled to receive
annuity payments, or if the monthly annuity payment to any Beneficiary would
be less than $50, or such other amount established from time to time by the
Administrator, and the value of such benefit is less than or equal to $5,000
(as described in Regulation 1.417(e)-l(b)), then, the value as determined by
the Administrator of such annuity will be paid in a single sum.
If there is no Beneficiary to receive any amount which becomes
payable to a Beneficiary in accordance with the terms of the Plan, such amount
will be payable to the estate of the last to die of the Participant, his
Eligible Spouse, if any, his contingent annuitant, if any, and his
Beneficiary. The Administrator, at its option, may pay any amount which would
otherwise be payable to the estate of the Participant to any one, or jointly
to any number, of the following surviving relatives of the Participant who
appear to the Administrator to be equitably entitled to payment because of
expenses incurred in connection with the burial or last illness of the
Participant: spouse, children, parents, brothers, sisters.
9.4 Gender and Headings.
Words in the masculine gender will include the feminine, the singular
will include the plural, and vice versa, unless qualified by the context. Any
headings used herein are included for the ease of reference only, and are not
construed so as to alter any of the terms hereof.
9.5 Construction.
The Plan and Trust will be interpreted, administered and enforced in
accordance with the Code and the Act, and the rights of Participants, former
Participants, Beneficiaries and all other persons will be determined in
accordance therewith; provided, however, that, to the extent that state law is
applicable, the laws of the state of residence of the Participant in question,
or if none, the state in which the principal office of the Administrator will
apply.
9.6 Plan Document.
A copy of the Plan and Trust and any and all future amendments
thereto will be available for inspection at all reasonable times to all
Participants at the office of the Employer.
9.7 Plan Binding.
The Plan and each and every provisions thereof will be binding on the
parties hereto and their respective heirs, executors, administrators and
assigns.
9.8 Substitute Payee.
The Administrator may refuse to make payment to anyone who, in its
opinion, is incapable of giving a valid receipt for such payment. Unless and
until claim is made by a duly appointed guardian or committee of such person,
the Administrator may make such payment to any person, institution or agency
then, in the judgment of the Administrator, contributing toward or providing
for the care and maintenance of such person.
9.9 Dividends.
Any dividends credited to a Contract or Contracts between the Trustee
and the Funding Agent will be used to provide additional benefits under the
Plan.
9.10 Location of Participant or Beneficiary.
In the event that all, or any portion, of the distribution payable to
a Participant or his Beneficiary hereunder will remain unpaid at the
expiration of five years after it will become payable, solely by reasons of
the inability of the Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further diligent
effort, to ascertain the whereabouts of such Participant or his Beneficiary,
the amount so distributable will be treated as a forfeiture. In the event a
Participant or Beneficiary is located subsequent to this benefit being
forfeited, such benefit will be restored. Any forfeiture arising pursuant to
this section will be used as specified in Article V.
9.11 Mistake of Fact Contributions.
Except as provided below and otherwise specifically permitted by law,
it will be impossible by operation of the Plan and Trust, by termination, by
power of revocation or amendment, by the happening of any contingency, by
collateral arrangement or by any other means, for any part of the corpus or
income of the Trust Fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes other than the
exclusive benefit of Participants, retired Participants, or their
Beneficiaries.
In the event the Employer makes a contribution under a mistake of
fact pursuant to Section 403(c)(2)(A) of the Act, the Employer may demand
repayment of such contribution at any time within one (1) year following the
time of payment and the Funding Agent will return such amount to the Employer
within the one (1) year period. Earnings of the Plan attributable to the
contributions may not be returned to the Employer but any losses attributable
thereto must reduce the amount so returned.
9.12 Payment of Expenses.
All expenses of administration may be charged against the amount
standing to the credit of each Participant's Account, unless paid by the
Employer. Such expenses will include any expenses incident to the functioning
of the Administrator, including but not limited to, fees of accountants,
counsel, and other specialists and their agents, and other costs of
administering the Plan and Trust. Until paid, the expenses will constitute a
liability of the Trust Fund. However, the Employer may reimburse the Trust
Fund for any administration expense incurred. Any administration expense paid
to the Trust Fund as reimbursement will not be considered an Employer
Contribution.
9.13 Legal Action.
In the event any claim, suit, or proceeding is brought regarding the
Plan established hereunder to which the Administrator or a Named Fiduciary may
be a party, and such claim, suit or proceeding is resolved in favor of the
Administrator or such Named Fiduciary they will be entitled to be reimbursed
from the Trust Fund for any or all costs, attorney's fees, and other expenses
pertaining thereto incurred by them for which they will have become liable.
Such expenses may be charged proportionately against the amount standing to
the credit of each Participant's Account, unless paid by the Employer.
9.14 Bonding.
Every Plan fiduciary, except a bank or an insurance company, unless
exempted by the Act and regulations thereunder, will be bonded in an amount
not less than 10% of the amount of the funds such fiduciary handles; provided,
however, that the minimum bond will be $1,000 and the maximum bond, $500,000.
The amount of funds handled will be determined at the beginning of
each Plan Year by the amount of funds handled by such person, group, or class
to be covered and their predecessors, if any, during the preceding Plan Year,
or if there is no preceding Plan Year, then by the amount of the funds to be
handled during the then current year. The bond will provide protection to the
Plan against any loss by reason of acts of fraud or dishonesty by the
fiduciary alone or in connivance with others. The surety will be a corporate
surety company (as such term is used in Act Section 412(a)(2)), and the bond
will be in a form approved by the Secretary of Labor. Notwithstanding anything
in the Plan and Trust to the contrary, the cost of such bonds will be an
expense of the Plan and Trust and may, at the election of the Administrator,
be paid from the Trust Fund or by the Employer. If such amount is to be paid
from the Trust Fund, such amounts may be charged against the amount standing
to the credit of each Participant's Account.
9.15 Employer's and Trustee's Protective Clause.
Neither the Employer, the Trustee nor its successor will be
responsible for the validity of any Contract issued hereunder or for the
failure on the part of the Funding Agent to make payments provided by any such
Contract, or for the action of any person which may delay payment or render a
Contract null and void or unenforceable in whole or in part.
9.16 Funding Agent's Protective Clause.
The Funding Agent who will issue Contracts hereunder will not have
any responsibility for the validity of this Plan or for the tax or legal
aspects of this Plan and Trust. The Funding Agent will be protected and held
harmless in acting in accordance with any written direction of the
Administrator, and will have no duty to see to the application of any funds
paid to a trustee, nor be required to question any actions directed by a
trustee. Regardless of any provision of this Plan and Trust, the Funding Agent
will not be required to take or permit any action or allow any benefit or
privilege contrary to the terms of any Contract which it issues hereunder, or
the rules of the Funding Agent.
9.17 Return of Contributions
Except as specifically stated in the Plan and Trust, any contribution
by the Employer to the Trust Fund is conditioned upon the deductibility of the
contribution by the Employer under the Code and, to the extent any such
deduction is disallowed, the Employer may within one (1) year following a
final determination of the disallowance, whether by agreement with the
Internal Revenue Service or by final decision of a court of competent
jurisdiction, demand repayment of such disallowed contribution and the Funding
Agent will return such contribution within one (1) year following the
disallowance. Earnings of the Plan and Trust attributable to the excess
contribution may not be returned to the Employer, but any losses attributable
thereto must reduce the amount so returned.
9.18 Military Service
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits, and service credit with respect to qualified military
service will be provided to the extent required by with Section 414(u) of the
Internal Revenue Code.
9.19 Use of Electronic Media
Notwithstanding anything in the Plan to the contrary, any requirement
for written notification, election or consent by the Employer, Administrator,
a Participant or a Beneficiary, as the case may be, under the Plan may be
validly made by an electronic medium to the extent permitted under Regulations
and the Act.
ARTICLE X
AMENDMENT OR TERMINATION
10.1 Authority to Amend or Terminate Plan.
The Employer intends this Plan and Trust to be permanent and to
continue indefinitely but necessarily reserves the right to terminate it at
any time or to modify, alter or amend the Plan and Trust in any respect,
retroactively or otherwise at any time or times. Such amendment shall be
stated in writing, shall be authorized by action of the Board under the
corporate bylaws, and shall designate the person to execute the amendment. No
modification, amendment, termination or any other change of the Plan and Trust
may provide that the assets of the Plan and Trust or the income thereon may be
used for or diverted to purposes other than the Plan and Trust, nor may any
change in the Plan reduce any vested interest of a Participant at the time of
such change unless such change is executed for the purpose of securing an
opinion from any governmental agency that the Plan and Trust satisfies the
requirements of any law or regulation administered by such agency.
No amendment made to the Plan and Trust will decrease the amount of a
Participant's Account or eliminate an optional form of distribution with
respect to amounts in his Account as of the effective date of that amendment,
except as provided by Treasury Regulations. Notwithstanding the preceding
sentence, the amount of a Participant's Account may be reduced to the extent
permitted under Code section 412(c)(8). Furthermore, no amendment made to the
Plan and Trust will have the effect of decreasing a Participant's vested right
to his Account determined without regard to such amendment as of the later of
the date such amendment is adopted or the date it becomes effective.
10.2 Non-Forfeitability of Accrued Pension upon Plan Termination.
Upon the complete discontinuance of Employer Contributions, inclusive
of Salary-Reduction Contributions, to the Plan or upon termination or partial
termination of the Plan and Trust, each Participant will have a nonforfeitable
right to the entire amount of his Account. Upon such discontinuance or
termination without the establishment of another defined contribution plan
other than an employee stock ownership plan (as defined in Code section
4975(g) or Code section 409) or a simplified employee pension plan (as defined
in Code section 408(k)), each Participant's Account will be distributed in a
manner which is consistent with and satisfies the provisions of this Plan
regarding distributions. Except as permitted by Regulations, the termination
of this Plan and Trust will not result in the reduction of Code section
411(d)(6) protected benefits.
10.3 Substitution of Funding Agent.
Anything in this Article X to the contrary notwithstanding, the
Employer may at any time change the Funding Agent and transfer all
contributions and the value of all Participants' Accounts to such successor
Funding Agent. Such transfer will be made in accordance with the terms of any
Contract between the Trustee, if applicable, or Employer and the Funding
Agent. Any such change will not be considered a deprivation of any
Participant's rights to, or any reduction in, any benefits accrued under the
Plan.
10.4 Merger or Consolidation.
If this Plan merges or consolidates with or transfers assets or
liabilities to any other plan, each Participant covered under this Plan must
be entitled to receive a benefit after the merger, consolidation or transfer
which, if said plan then terminated, would be equal to or greater than his
benefit under this Plan immediately prior to such merger, consolidation or
transfer if this Plan then terminated.
ARTICLE XI
TRUSTEE
11.1 Establishment of the Trust.
(a) The Employer and the Trustee hereby agree to the establishment of
a trust Consisting of such sums as will from time to time be paid to the
Trustee under the Plan and such earnings, income and appreciation as may
accrue thereon, which, less payments made by the Trustee to carry out the
purposes of the Plan, are referred to herein as the Trust Fund. The Trustee
will carry out the duties and responsibilities herein specified, but will be
under no duty to determine whether the amount of any contributions by the
Employer or any Participant is in accordance with the terms of the Plan nor
will the Trustee be responsible for the collection of any contribution under
the Plan.
(b) The Trust Fund will be held, invested, reinvested, and
administered by the Trustee in accordance with the terms of the Plan and this
Agreement solely in the interest of Participants and their Beneficiaries and
for the exclusive purpose of providing benefits to Participants and their
Beneficiaries and defraying reasonable expenses of administering the Plan.
Except as provided in Section 11.5, no assets of the Plan will inure to the
benefit of the Employer.
(c) The Trustee will pay benefits and expenses from the Trust Fund
only upon the written direction of the Plan Administrator, the fiduciary named
in the Plan as having the authority to control and manage the administration
of the Plan. The Trustee will be fully entitled to rely on such directions
furnished by the Plan Administrator, and will be under no duty to ascertain
whether such directions are in accordance with the provisions of the Plan.
11.2 Investment of the Trust Fund.
(a) The Employer will have the exclusive authority and discretion to
select the individual investment funds available for investment in the Plan.
In making such selection, the Employer will use the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of
an enterprise of a like character and with like aims. The Employer will insure
that the available investments under the Plan are sufficiently diversified so
as to minimize the risk of large losses, unless under the circumstances it is
clearly prudent not to do so.
(b) The Trustee will invest all amounts allocated to the separate
investment accounts of a Participant as directed by the Participant or Plan
Administrator in accordance with procedures established by the Administrator,
which directions will be timely furnished to the Trustee by the Plan
Administrator. In making any investment of the assets of the Trust Fund, the
Trustee will be fully entitled to rely on such directions furnished by the
Plan Administrator and will be under no duty to make any inquiry or
investigation with respect thereto. If the Trustee receives any contribution
under the Plan that is not accompanied by proper instructions directing its
investment, the Trustee will immediately notify the Plan Administrator of this
fact, and the Trustee may, in its discretion, hold or return all or a portion
of the contribution uninvested without liability for loss of income or
appreciation pending receipt of proper investment directions. Otherwise, it is
specifically intended under the Plan and this Agreement that the Trustee will
have no discretionary authority to determine the investment of the assets of
the Trust Fund.
11.3 Investment Powers and Duties of the Trustee.
Subject to the provisions of Section 11.1 and 11.2, the Trustee will
have the authority, in addition to any authority given by law, to exercise the
following powers in the administration of the Trust:
(a) to invest all or a part of the Trust Fund in investments
available under the Plan in accordance with the investment directions
furnished by the Plan Administrator without restriction to investments
authorized for fiduciaries, including, without limitation on the amount that
may be invested therein, any common, collective or commingled trust fund
maintained by the Trustee. Any investment in, and any terms and conditions of,
any such common, collective or commingled trust fund available only to
Employee trusts which meet the requirements of the Code or subsequent income
tax laws of the United States will constitute an integral part of this
Agreement and the Plan;
(b) to dispose of all or any part of the investments, securities or
other property which may from time to time or at any time constitute the Trust
Fund in accordance with the directions furnished by the Plan Administrator for
the investment of Participant's separate accounts or the payment of benefits
or expenses of the Plan, and to make, execute and deliver to the purchasers
thereof good and sufficient deeds of conveyance thereby, and all assignments,
transfers and other legal instruments, either necessary or convenient for
passing the title and ownership thereto, free and discharged of all trusts and
without liability on the part of such purchasers to see to the application of
the purchased money;
(c) to hold cash uninvested to the extent necessary to pay benefits
or expenses of the Plan, without liability for interest thereon;
(d) to cause, any investment of the Fund to be registered in the name
of the Trustee or the name of its nominee or nominees or to retain such
investment unregistered or in a form permitting transfer by delivery, provided
that the books and records of the Trustee will at all times show that all such
investments are part of the Fund;
(e) upon the written direction of the Plan Administrator, to vote in
person or in proxy with respect to all securities that are part of the Trust
Fund, and generally to exercise any of the powers of an owner with respect to
stocks, bonds, securities, or other property;
(f) upon written direction of the Plan Administrator, to apply for,
purchase, hold or transfer any life insurance, retirement income, endowment or
annuity contract;
(g) to consult and employ any suitable agent to act on behalf of the
Trustee and to contract for legal, accounting, clerical and other services
deemed necessary by the Trustee to manage and administer the Fund according to
the terms of this Plan;
(h) upon the written direction of the Plan Administrator, to make
loans from the Fund to Participants in amounts and on terms approved by the
Plan Administrator in accordance with the provisions of the Plan, provided
that the Plan Administrator will have the sole responsibility for computing
and collecting all loan repayments required to be made under the Plan;
(i) to pay from the Trust Fund all taxes imposed or levied with
respect to the Trust Fund or any part thereof under existing or future laws,
and to contest the validity or amount of any tax, assessment, claim or demand
with respect to the Fund or any part thereof;
(j) to borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee will deem
advisable, and for any sum so borrowed, to issue a promissory note as Trustee,
and to secure the repayment thereof by pledging all, or any part of the Trust
fund; and no person lending money to the Trustee will be bound to see to the
application of the money being lent or to inquire into the validity,
expediency, or propriety of any borrowing;
(k) to settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence or defend the
Plan in suits or legal or administrative proceedings, and to represent the
Plan in all suits and legal and administrative proceedings;
(l) to make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted; and
(m) to do all such acts and, exercise all such rights and privileges,
although not specifically mentioned herein, as the Trustee may deem necessary
to carry out the purposes of the Plan.
If there is more than one Trustee, they will Act by a majority of
their number, but may authorize one or more of them to sign papers on their
behalf.
11.4 Prohibition of Diversion.
(a) Except as provided in (b) below, at no time shall any part of the
corpus or income of the Trust Fund be used for, or diverted to, purposes other
than for the exclusive benefit of Participants or their Beneficiaries, or for
defraying reasonable expenses of administering the Plan.
(b) Notwithstanding the above, contributions made by the Employer
under the Plan will be returned to the Employer under the following
conditions:
(1) if a contribution is made by mistake of fact, such
contribution will be returned to the Employer within one year of the payment
of such contribution;
(2) contributions to the Plan are specifically conditioned upon
their deductibility under the Code. To the extent a deduction is disallowed
for any such contribution, it will be returned to the Employer within one year
after the disallowance of the deduction. Contributions which are not
deductible in the taxable year in which made but are deductible in subsequent
taxable years will not be considered to be disallowed for purposes of this
subsection; and
(3) contributions to the Plan are specifically conditioned on
initial and continued qualification of the Plan under the Code. If the Plan is
determined to be disqualified, contributions made in respect to any period
subsequent to the effective date of such disqualification will be returned to
the Employer within one year after the date of denial of qualification.
11.5 Trustee's Compensation.
If approved by the Plan Administrator, the Trustee will be entitled
to reimbursement for all direct expenses properly and actually incurred on
behalf of the Plan, which expenses will be paid out of the Trust Fund unless
paid directly by the Employer.
11.6 Resignation and Removal of Trustee.
(a) The Trustee may resign at any time by written notice to the
Employer, which will be effective 30 days after the delivery of written
notification to the Employer, unless otherwise agreed upon in writing.
(b) The Trustee may be removed by the Employer at any time upon 30
days written notice to the Trustee.
(c) The appointment of a successor Trustee hereunder shall be
accomplished by and will take effect upon the delivery to the resigning or
removed Trustee, as the case may be, of written notice of the Employer
appointing such successor Trustee, and an acceptance in writing of the office
of successor Trustee hereunder executed by the successor so appointed.
Any successor Trustee may be either a corporation authorized and
empowered to exercise trust powers or one or more individuals. All of the
provisions set forth herein with respect to the Trustee will relate to each
successor Trustee so appointed with the same force and effect as if such
successor Trustee had been originally named herein as the Trustee.
(d) Upon the appointment of a successor Trustee, the resigning or
removed Trustee will transfer and deliver the Trust Fund to such successor
Trustee, after reserving such reasonable amount as it will deem necessary to
provide for its expenses chargeable against the Fund for which it may be
liable. If the sums so reserved are not sufficient for such purposes, the
resigning or removed Trustee will be entitled to reimbursement for any
deficiency from the successor Trustee and the Employer who shall be jointly
and severally liable therefor.
11.7 Transfer of Interest.
Notwithstanding any other provision contained in this Plan, the
Trustee, at the direction of the Administrator, will transfer the interest, if
any, of such Participant in his account to another trust forming part of a
pension, profit sharing or stock bonus plan maintained by such Participant's
new employer and represented by said employer in writing as meeting the
requirement of Code section 401(a), provided that the trust to which such
transfers are made permits the transfer to be made.
Notwithstanding the above, with respect to distributions made after
December 31, 1992, if the distributee of any "eligible rollover distribution"
(as defined in Code Section 401(f)(2)(A)): (1) elects to have such
distribution paid directly to an "eligible retirement plan," and (2) specifies
the "eligible retirement plan" to which such distribution is to be paid (in
such form as a direct Trustee-to-trustee transfer to the specified eligible
retirement plan). Moreover, the amount subject to the direct
Trustee-to-trustee transfer will be limited to the amount of the distribution
that would be includible in gross income if not transferred in accordance with
the preceding (determined without regard to Code sections 402(c) and
403(a)(4)).
For purposes of this section, the term "eligible retirement plan" has
the meaning given such term by Code section 402(c)(8)(B), except that a
qualified trust will be considered an eligible retirement plan only if it is a
defined contribution plan, the terms of which permit the acceptance of
rollover distributions.
11.8 Compliance with ERISA Section 404(c).
(a) This Plan is intended to provide an opportunity for a Participant
or beneficiary (including an alternate payee) to exercise control over the
assets in his individual account and to choose from a broad range of
diversified investment alternatives the manner in which all or some of the
assets in his account are invested. To the extent that any provision under
this Plan governing the power of a Participant (or beneficiary) to control the
investment of an account is contrary to the provisions of this Section 11.8,
it is rescinded.
(b) Participants may, at any time, subject to any procedures
established by the Administrator (the Participant Direction Procedures),
direct the Trustee or the Funding Agent appointed by the Trustee, to invest
all of their accounts in specific assets, specific funds or other investments
permitted under the Plan or transfer such account balances, in whole or in
part, at any time by notifying the Trustee or the Funding Agent, among such
investments as permitted under the Plan. Such allocations and transfers may be
made in any integral percentage from 0% to 100%. That portion of the interest
of any Participant so directing will thereupon be considered a Participant's
Directed Account.
Notwithstanding anything herein to the contrary, effective as of
October 12, 1999, no new contributions may be invested in the Rite Aid
Corporation Stock Fund. Participants may transfer any amounts in their
Accounts which were allocated to the Rite Aid Corporation Stock Fund before
October 12, 1999 to any other Plan investments as permitted under the Plan and
the Participant Direction Procedures.
(c) The investment results shall be allocated to the Participant's
accounts based upon earnings and losses on the Participant's share in such
investment fund or funds.
(d) The Plan fiduciary responsible for the prudent selection of
investment vehicles offered to Participants and for the proper monitoring of
the performance of those vehicles shall continue to bear such
responsibilities. The fiduciary appointed under the terms of the Plan to
select investment vehicles shall provide for at least three core investment
alternatives that together meet the regulatory requirements for a broad range
of investment alternatives. Such investments shall offer the Participant or
beneficiary a reasonable opportunity to: (1) materially affect both the
potential return on the assets subject to his control and the degree of risk
to which those assets are subject; (2) diversify his investment so as to
minimize the risk of large losses, considering the nature of the Plan and the
size of Participants' account; and (3) choose from at least three diversified
categories of investments. Each such investment shall be diversified and shall
have materially different risk and return characteristics from the other core
alternatives. Together such investments shall permit the Participant to design
a portfolio with appropriate risk and return characteristics for the
Participant's financial and personal circumstances. Further, such investments
when taken together shall tend to minimize through diversification the overall
risk at any given level of respected return.
(e) The Trustee shall be obligated to comply with Participant
investment instructions except in the following limited circumstances:
(1) Implementation of the investment instructions by
participants and beneficiaries would result in a prohibited transaction
described in ERISA section 406 or section 4975 of the Code.
(2) Implementation of the investment instruction would generate
income that would be taxable to the plan.
(3) Implementation of the investment instruction:
(i) Would not be in accordance with the documents and
instruments governing the plan insofar as such documents and instruments are
consistent with the provisions of Title I of ERISA;
(ii) Would cause a fiduciary to maintain the indicia of
ownership of any assets of the plan outside the jurisdiction of the district
courts of the United States other than as permitted by section 404(b) of ERISA
and the regulations thereunder;
(iii) Would jeopardize the plan's tax qualified status
under the Code;
(iv) Could result in a loss in excess of a participant's
or beneficiary's account balance; or
(v) Would result in a direct or indirect: (a) Sale,
exchange, or lease of property between a plan sponsor or any affiliate of the
sponsor and the plan except for the acquisition or disposition of any interest
in a fund, subfund or portfolio managed by a plan sponsor or an affiliate of
the sponsor, or the purchase or sale of any qualifying employer security (as
defined in section 407(d)(5) of ERISA) which meets the condition of section
408(e) of ERISA and item (d) of this paragraph (v); (b) Loan to a plan sponsor
or any affiliate of the sponsor; (c) Acquisition or sale of any employer real
property (as defined in section 407(d)(2) of ERISA); or (d) Acquisition or
sale of any employer security except to the extent that:
o such securities are qualifying employer securities (as
defined in section 407(d)(5) of ERISA);
o such securities are publicly traded on a national
exchange or other generally recognized market;
o such securities are traded with sufficient frequency and
in sufficient volume to assure that participant and
beneficiary directions to buy or sell the security may
be acted upon promptly and efficiently;
o information provided to shareholders of such securities
is provided to participants and beneficiaries with
accounts holding such securities;
o voting, tender and similar rights with respect to such
securities are passed through to participants and
beneficiaries with accounts holding such securities;
o information relating to the purchase, holding, and sale
of securities, and the exercise of voting, tender and
similar rights with respect to such securities by
participants and beneficiaries, is maintained in
accordance with procedures which are designed to
safeguard the confidentiality of such information
("Confidentiality Procedures"), except to the extent
necessary to comply with Federal laws or state laws not
preempted by ERISA; and
o the Employer designates a fiduciary who is responsible
for ensuring that: the Confidentiality Procedures are
sufficient to safeguard the confidentiality of the
information described in the preceding subparagraph,
such procedures are being followed, and an independent
fiduciary is appointed to carry out activities relating
to any situations which the fiduciary designated by the
Employer determines involve a potential for undue
employer influence upon Participants and Beneficiaries
with regard to the direct or indirect exercise of
shareholder rights.
(f) As of each valuation date, all Participant Directed Accounts
shall be charged or credited with the net earnings, gains, losses and expenses
as well as any appreciation or depreciation in the market value using publicly
listed fair market values when available or appropriate.
(1) To the extent that the assets in a Participant's Directed
Account are accounted for as pooled assets or investments, the allocation of
earnings, gains and losses of each Participant's Directed Account shall be
based upon the total amount of funds so invested, in a manner proportionate to
the Participant's share of such pooled investment.
(2) To the extent that the assets in the Participant's Directed
Account are accounted for as segregated assets, the allocation of earnings,
gains and losses from such assets shall be made on a separate and distinct
basis.
(g) The Administrator shall provide an explanation of the
circumstances under which Participants and their Beneficiaries may give
investment instructions, which may include the following:
(1) the conveyance of instructions by the Participants and
their Beneficiaries to invest Participant Directed Accounts in Directed
Investments;
(2) the name, address and phone number of the fiduciary (and,
if applicable, the person or persons designated by the fiduciary to act on its
behalf) responsible for providing information to the Participant or a
Beneficiary upon request relating to the investments in Directed Investments;
(3) applicable restrictions on transfers to and from any
Designated Investment Alternative;
(4) a description of any transaction fees and expenses which
affect the balances in Participant Directed Accounts in connection with the
purchase or sale of Directed Investments; and
(5) general procedures for the dissemination of investment and
other information relating to the Designated Investment Alternatives as deemed
necessary or appropriate, including but not limited to a description of the
following:
(i) the investment vehicles available under the Plan,
including specific information regarding any Designated Investment
Alternative;
(ii) any designated Investment Managers; and (iii) a
description of the additional information which may be obtained upon request
from the fiduciary designated to provide such information.
(h) Any information regarding investments available under the Plan,
to the extent not described in any Participant Direction Procedures, may be
provided to the Participant in one or more written documents.
(i) Consistent with ERISA Section 404(c), the following shall apply
with respect to the investment by Participants and Beneficiaries in Employer
securities:
(1) Information provided to shareholders of such Employer
securities shall be provided to Participants and Beneficiaries with accounts
holding such securities.
(2) Voting, tender and similar rights with respect to Employer
securities shall be passed through to Participants and Beneficiaries with
accounts holding such securities. The Trustee shall vote or tender or take
other similar action with respect to such shares solely in accordance with
written instructions furnished to it by each Participant or Beneficiary.
Shares, including fractional shares, for which instructions are not received
by the Trustee shall not be voted or tendered.
(3) Information relating to the purchase, holding, and sale of
Employer securities, and the exercise of voting, tender and similar rights
with respect to such securities, by Participants and Beneficiaries, shall be
maintained in accordance with procedures which are designed to safeguard the
confidentiality of such information, except to the extent necessary to comply
with Federal laws or state laws not preempted by ERISA.
(4) The Employer shall be the fiduciary who is responsible for
(i) ensuring that any procedures used are sufficient to safeguard the
confidentiality of the information described in paragraph 3, (ii) such
procedures are being followed, and (iii) the independent fiduciary required by
paragraph (5), below, is appointed when necessary.
(5) An independent fiduciary shall be appointed to carry out
activities relating to any situations which the fiduciary designated in
accordance with paragraph 4, above, determines involve a potential for undue
Employer influence upon Participants and Beneficiaries with regard to the
direct or indirect exercise of shareholder rights.
(j) Any voting, tender or similar rights which are incidental to an
ownership interest in any investment offered under the Plan (other than Rite
Aid Corporation common stock) shall not be passed through to Participants
holding an ownership interest in such investment.
<page>
EXECUTION PAGE
on this 21st day of December, 2001.
RITE AID CORPORATION
By /s/ Keith W. Lovett
___________________________
Senior Vice President
IN WITNESS WHEREOF, this Plan has been signed by the below named
individual, duly appointed by Rite Aid Corporation to act as Plan Trustee, on
this 20th day of December, 2001.
/s/ Richard Varmecky
__________________________
Richard Varmecky, as TRUSTEE