Exhibit 4.1
THE RITE AID 401(k) PLAN
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS......................................................................1
ARTICLE II ADMINISTRATION..................................................................17
2.1 Powers and Responsibilities of the Employer.....................................17
2.2 Power of the Employer to Name An Independent Fiduciary..........................18
2.3 Designation of Administrative Authority.........................................19
2.4 Powers and Duties of the Administrator..........................................19
2.5 Records and Reports.............................................................20
2.6 Appointment of Advisers.........................................................20
2.7 Payment of Expenses.............................................................20
2.8 Claims Procedure................................................................21
2.9 Claims Review Procedure.........................................................21
2.10 Erroneous Payments..............................................................21
2.11 Correction of Administrative Errors.............................................22
2.12 Safe-Harbor Notice to Eligible Employees........................................22
ARTICLE III ELIGIBILITY.....................................................................22
3.1 Conditions of Eligibility.......................................................22
3.2 Effective Date of Participation.................................................23
3.3 Determination of Eligibility....................................................23
3.4 Termination of Eligibility......................................................23
3.5 Omission of Eligible Employee...................................................23
3.6 Inclusion of Ineligible Employee................................................23
3.7 Election Not to Participate.....................................................24
ARTICLE IV CONTRIBUTION AND ALLOCATION.....................................................24
4.1 Formula for Determining Employer Contribution...................................24
4.2 Participant's Salary Reduction Election.........................................25
4.3 Time of Payment of Employer Contribution........................................28
4.4 Allocation of Contribution and Earnings.........................................28
4.5 Actual Deferral Percentage Tests................................................31
4.6 Adjustment to Actual Deferral Percentage Tests..................................33
4.7 Actual Contribution Percentage Tests............................................34
4.8 Adjustment to Actual Contribution Percentage Tests..............................36
4.9 Maximum Annual Additions........................................................38
4.10 Adjustment for Excessive Annual Additions.......................................40
4.11 Transfers from Qualified Plans..................................................40
4.12 Voluntary Contributions.........................................................42
4.13 Paysop Contributions............................................................42
4.14 Directed Investment Account.....................................................42
4.15 Supplemental Employer Contribution..............................................46
4.16 Life Insurance..................................................................48
4.17 Safe-Harbor Plan Testing Exception..............................................48
ARTICLE V VALUATIONS......................................................................49
5.1 Valuation of the Trust Fund.....................................................49
5.2 Method of Valuation.............................................................49
ARTICLE VI DETERMINATION AND DISTRIBUTION OF BENEFITS......................................49
6.1 Determination of Benefits upon Retirement.......................................49
6.2 Determination of Benefits upon Death............................................50
6.3 Determination of Benefits in Event of Disability................................51
6.4 Determination of Benefits upon Termination......................................51
6.5 Distribution of Benefits........................................................53
6.6 Distribution of Benefits upon Death.............................................58
6.7 Time of Segregation or Distribution.............................................61
6.8 Distribution fr Minor Beneficiary...............................................61
6.9 Location of Participant or Beneficiary Unknown..................................61
6.10 Pre-Retirement Distribution.....................................................62
6.11 Advance Distribution fr Hardship................................................62
6.12 Qualified Domestic Relations Order Distribution.................................63
6.13 Profit Sharing Exception........................................................64
ARTICLE VII TRUSTEE...............................................................................64
7.1 Basic Responsibilities of the Trustee...........................................64
7.2 Investment Powers and Duties of the Trustee.....................................65
7.3 Other Powers of the Trustee.....................................................65
7.4 Loans to Participants...........................................................68
7.5 Duties of the Trustee Regarding Payments........................................69
7.6 Trustee's Compensation and Expenses and Taxes...................................69
7.7 Annual Report of the Trustee....................................................69
7.8 Audit...........................................................................70
7.9 Resignation, Removal and Succession of Trustee..................................70
7.10 Transfer of Interest............................................................71
7.11 Direct Rollover.................................................................71
7.12 Employer Securities and Real Property...........................................73
ARTICLE VIII AMENDMENT, TERMINATION AND MERGERS...................................................73
8.1 Amendment.......................................................................73
8.2 Termination.....................................................................74
8.3 Merger o Consolidation..........................................................74
ARTICLE IX TOP HEAVY.......................................................................74
9.1 Top Heavy Plan Requirements.....................................................74
9.2 Determination of Top Heavy Status...............................................74
9.3 Top-Heavy Determination for Plan Years Beginning January 1, 2002................77
ARTICLE X MISCELLANEOUS...................................................................78
10.1 Participant's Rights............................................................78
10.2 Military Service................................................................78
10.3 Alienation......................................................................78
10.4 Construction of Plan............................................................79
10.5 Gender and Number...............................................................80
10.6 Legal Action....................................................................80
10.7 Prohibition Against Diversion of Funds..........................................80
10.8 Bonding.........................................................................80
10.9 Employer's and Trustee's Protective Clause......................................81
10.10 Insurer's Protective Clause.....................................................81
10.11 Receipt and Release for Payments................................................81
10.12 Action by the Employer..........................................................81
10.13 Named Fiduciaries and Allocation of Responsibility..............................81
10.14 Headings........................................................................82
10.15 Approval by Internal Revenue Service............................................82
10.16 Uniformity......................................................................83
10.17 Use of Electronic Media.........................................................83
APPENDIX A ...............................................................................A-1
APPENDIX B ...............................................................................B-1
THE RITE AID 401(k) PLAN
THIS AGREEMENT, hereby made and entered into as of the date set
forth below, by and between Rite Aid Corporation (herein referred to as the
"Employer") and the Plan trustees named below (herein referred to as the
"Trustee").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established a Profit Sharing Plan
and Trust effective April 1, 1985 (hereinafter called the "Effective Date")
known subsequently as the Rite Aid Employee Investment Opportunity Plan and
hereafter as The Rite Aid 401(k) Plan (herein referred to as the "Plan") in
recognition of the contribution made to its successful operation by its
employees and for the exclusive benefit of its eligible employees; and
WHEREAS, the Plan was restated effective April 1, 1991 and
subsequently amended; and
WHEREAS, under the terms of the Plan, the Employer has the ability
to amend the Plan, provided the Trustee joins in such amendment if the
provisions of the Plan affecting the Trustee are amended; and
WHEREAS, the Employer wishes to amend the Plan (i) 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, (ii) effective as of January 1, 2002, to operate as a
safe-harbor plan under Internal Revenue Code Sections 401(k)(12) and
401(m)(11), (iii) to incorporate 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, and (iv) to incorporates certain clarifying and
corrective changes, within the remedial amendment period for such changes.
NOW, THEREFORE, the Employer and the Trustee hereby amend and
restate the Plan, effective as of January 1, 2001, except as otherwise
provided, including remedial effective dates consistent with changes required
by law, to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Account" means the account established by the Administrator
for each Participant with respect to his total interest in the Plan resulting
from:
-- the Participant's Salary Reduction Contributions made pursuant
to Section 4.2(a);
-- the Employer's Non-Elective Contribution made pursuant to
Section 4.1(b) (Employer matching contributions);
-- the Employer's Non-Elective Contribution made pursuant to
Section 4.1(c) (Employer discretionary contributions);
-- the Participant's Rollover Contributions made pursuant to
Section 4.11;
-- the Employer's Qualified Matching Contributions made pursuant
to Section 4.8(g), if any;
-- the Employer's Qualified Non-Elective Contribution made
pursuant to Section 4.1(d) (Employer qualified discretionary contributions);
-- the Employer's Qualified Non-Elective Contributions made
pursuant to Section 4.8(h), if any;
-- the Participant's Voluntary Contributions made to the Plan
prior to April 2, 1996 pursuant to Section 4.12;
-- the Employer's PAYSOP Contributions made pursuant to Section
4.13, if any; and
Such contributions are described in detail in Article IV 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.
A separate accounting shall be maintained with respect to that
portion of the Participant's Account attributable to any Participant's Salary
Reduction Contributions made pursuant to Section 4.1(a), Employer Non-Elective
Contributions made pursuant to Section 4.1(b) (Employer matching
contributions), Employer Non-Elective Contributions made pursuant to Section
4.1(c) (Employer discretionary contributions), Participant's Rollover
Contributions, Employer Qualified Non-Elective Contributions, Employer
Qualified Matching Contributions, Participant's Voluntary Contributions made
prior to April 2, 1996, and Employer PAYSOP Contributions (made pursuant to
the PAYSOP provision for Plan Years prior to January 1, 1987).
1.2 "Act" means the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
1.3 "Administrator" means the Employer unless another person or
entity has been designated by the Employer pursuant to Section 2.3 to
administer the Plan on behalf of the Employer.
1.4 "Affiliated Employer" means any corporation which is a member
of a controlled group of corporations (as defined in Code Section 414(b))
which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section
414(c)) with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in Code Section
414(m)) which includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to Regulations under Code Section 414(o).
1.5 "Aggregate Account" means, with respect to each Participant,
the value of all accounts maintained on behalf of a Participant, whether
attributable to Employer or Employee contributions, subject to the provisions
of Section 9.2.
1.6 "Anniversary Date" means December 31st.
1.7 "Annuity Starting Date" means, with respect to any
Participant, the first day of the first period for which an amount is paid as
an annuity or, in the case of a benefit not payable in the form of an annuity,
the first day on which all events have occurred which entitle the Participant
to such benefit.
1.8 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of
Sections 6.2 and 6.6.
1.9 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.10 "Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments
of compensation by the Employer (in the course of the Employer's trade or
business) for a Plan Year for which the Employer is required to furnish the
Participant a written statement under Code Sections 6041(d), 6051(a)(3) and
6052. Compensation must be determined without regard to any rules under Code
Section 3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of Compensation
shall be made by:
(a) including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includable in
the gross income of the Participant under Code Sections 125, 132(f),
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee contributions
described in Code Section 414(h)(2) that are treated as Employer
contributions;
(b) excluding any non-taxable fringe benefits; and
(c) excluding any wage income recognized on the exercise of
stock options or the lapse of restrictions on any property.
For a Participant's initial year of participation, Compensation
shall be recognized as of such Employee's effective date of participation
pursuant to Section 3.2.
Effective for Plan Years beginning before January 1, 2002,
Compensation in excess of $150,000 shall be disregarded. Such amount shall be
adjusted for increases in the cost of living in accordance with Code Section
401(a)(17), except that the dollar increase in effect on January 1 of any
calendar year shall be effective for the Plan Year beginning with or within
such calendar year. For any short Plan Year the Compensation limit shall be an
amount equal to the Compensation limit for the calendar year in which the Plan
Year begins multiplied by the ratio obtained by dividing the number of full
months in the short Plan Year by twelve (12). 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)).
Notwithstanding the foregoing, solely for purposes of determining
eligibility for and the amount of Employer matching contributions under
Section 4.1(b), Compensation shall not include any lump-sum bonus, profit
sharing, or other such amount paid by the Employer to a Highly Compensated
Participant pursuant to the Employer's arrangement for key employees. In all
other respects under the Plan, including for purposes of Sections 1.12,
4.2(b), 4.2(c) and 4.5 such an amount shall be considered Compensation.
1.11 "Contract" or "Policy" means any life insurance policy,
retirement income or annuity policy, or annuity contract (group or individual)
issued pursuant to the terms of the Plan.
1.12 "Deferred Compensation" with respect to any Participant means
the amount of the Participant's total Compensation which has been contributed
to the Plan in accordance with the Participant's deferral election pursuant to
Section 4.2 excluding any such amounts distributed as excess "annual
additions" pursuant to Section 4.10(a).
1.13 "Designated Investment Alternative" means a specific
investment identified by name by a 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.
1.14 "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.
1.15 "Early Retirement Date" means the first day of the month
(prior to the Normal Retirement Date) coinciding with or following the date on
which a Participant or Former Participant attains age 55, and has completed at
least 6 whole years of his Period of Service with the Employer (Early
Retirement Age). A Participant shall become fully Vested upon satisfying this
requirement if still employed at his Early Retirement Age.
A Former Participant who terminates employment after satisfying
the service requirement for Early Retirement and who thereafter reaches the
age requirement contained herein shall be entitled to receive his benefits
under this Plan.
1.16 "Elective Contribution" means the Employer contributions
of Deferred Compensation excluding any such amounts distributed as excess
"annual additions" pursuant to Section 4.10(a). In addition, any Employer
Qualified Non-Elective Contribution made pursuant to Section 4.6(c) which
is used to satisfy the "Actual Deferral Percentage" test and any
discretionary Employer Qualified Non-Elective Contribution made pursuant to
Section 4.1(d) shall be considered Elective Contributions for purposes of
the Plan. Any contributions deemed to be Elective Contributions (whether or
not used to satisfy the "Actual Deferral Percentage" test) shall be subject
to the requirements of Sections 4.2(b) and 4.2(c) and shall further be
required to satisfy the nondiscrimination requirements of Regulation
1.401(k)-l(b)(5), the provisions of which are specifically incorporated
herein by reference.
1.17 "Eligible Employee" means any Employee. Employees of
Affiliated Employers shall not be eligible to participate in this Plan
unless such Affiliated Employers have specifically adopted this Plan in
writing.
Employees whose employment is governed by the terms of a
collective bargaining agreement between Employee representatives (within
the meaning of Code Section 7701(a)(46) and the Employer under which
retirement benefits were the subject of good faith bargaining between the
parties, shall not be eligible to participate in this Plan unless such
agreement expressly provides for such coverage in the Plan.
Effective June 1, 1997, Employees who are Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall not be
eligible to participate in this Plan.
Effective June 1, 1997, Employees who are nonresident aliens
(within the meaning of Code Section 7701(b)(1)(B) and who receive no earned
income (within the meaning of Code Section 911(d)(2)) from the Employer
which constitutes income from sources within the United States (within the
meaning of Code Section 861(a)(3)) shall not be eligible to participate in
this 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
Affiliated Employer, including any such person who is subsequently
reclassified by a court of law or regulatory body as a common law employee
of such Employer or Affiliated Employer. 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 Affiliated
Employer as an independent contractor, under an employee leasing
arrangement, or under any other non-employee or non-payroll classification.
1.18 "Employee" means any person who is employed by the
Employer or Affiliated Employer. Employee shall include Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) unless such
Leased Employees are covered by a plan described in Code Section 414(n)(5)
and such Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.19 "Employer" means Rite Aid Corporation and any successor
which shall maintain this Plan. The Employer is a corporation, with
principal offices in the Commonwealth of Pennsylvania.
1.20 "Excess Aggregate Contributions" means, with respect to
any Plan Year, the excess of the aggregate amount of the Employer
Non-Elective Contributions made pursuant to Section 4.1(b) (Employer
matching contributions) and any qualified non-elective contributions,
qualified matching contributions or elective deferrals taken into account
pursuant to Section 4.7(c) on behalf of Highly Compensated Participants for
such Plan Year, over the maximum amount of such contributions permitted
under the limitations of Section 4.7(a).
1.21 "Excess Contributions" means, with respect to a Plan Year,
the excess of Elective Contributions used to satisfy the "Actual Deferral
Percentage" tests made on behalf of Highly Compensated Participants for the
Plan Year over the maximum amount of such contributions permitted under
Section 4.5(a).
1.22 "Excess Deferred Compensation" means, with respect to any
taxable year of a Participant, the excess of the aggregate amount of such
Participant's Deferred Compensation and the elective deferrals pursuant to
Section 4.2(e) actually made on behalf of such Participant for such taxable
year, over the dollar limitation provided for in Code Section 402(g), as
modified by Code Section 414(v). Excess Deferred Compensation shall be
treated as an "annual addition" pursuant to Section 4.9(b) when contributed
to the Plan unless distributed to the affected Participant not later than
the first April 15th following the close of the Participant's taxable year.
Additionally, for purposes of Sections 9.2 and 4.4(g), Excess Deferred
Compensation shall continue to be treated as Employer contributions even if
distributed pursuant to Section 4.2(e). However, Excess Deferred
Compensation of Non-Highly Compensated Participants is not taken into
account for purposes of Section 4.5(a) to the extent such Excess Deferred
Compensation occurs pursuant to Section 4.2(d).
1.23 "Fiduciary" means any person who (a) exercises any
discretionary authority or discretionary control respecting management of
the Plan or exercises any authority or control respecting management or
disposition of its assets, (b) renders investment advice for a fee or other
compensation, direct or indirect, with respect to any monies or other
property of the Plan or has any authority or responsibility to do so, or
(c) has any discretionary authority or discretionary responsibility in the
administration of the Plan, including, but not limited to, the Trustee, the
Employer and its representative body, and the Administrator.
1.24 "Fiscal Year" means the fiscal period or fiscal year used
by the Employer for Federal income tax purposes.
1.25 "Forfeiture" means that portion of a Participant's Account
that is not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a
Terminated Participant's Account, or
(b) the last day of the Plan Year in which the Participant
incurs five (5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case
of a Terminated Participant whose Vested benefit is zero, such Terminated
Participant shall be deemed to have received a distribution of his Vested
benefit upon his termination of employment. Restoration of such amounts
shall occur pursuant to Section 6.4(f)(2). In addition, the term Forfeiture
shall also include amounts deemed to be Forfeitures pursuant to any other
provision of this Plan.
1.26 "Former Participant" means a person who has been a
Participant, but who has ceased to be a Participant for any reason.
1.27 "415 Compensation" with respect to any Participant means
such Participant's wages, salaries, fees for professional services and
other amounts received (without regard to whether or not an amount is paid
in cash) for personal services actually rendered in the course of
employment with the Employer maintaining the Plan to the extent that the
amounts are includable in gross income (including, but not limited to,
commissions paid to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses,
fringe benefits and reimbursements or other expense allowances under a
nonaccountable plan (as described in Regulation 1.62-2(c)) for a Plan Year.
In addition, "415 Compensation" shall include any elective deferral (as
defined in Code Section 402(g)(3)), and any amount which is contributed or
deferred by the Employer at the election of the Participant and which is
not includable in the gross income of the Participant by reason of Code
Section 125, 132(f) or 457.
"415 Compensation" shall exclude (a)(1) contributions made by
the Employer to a plan of deferred compensation (for Plan Years beginning
after December 31, 1997, not including elective deferrals described in the
prior paragraph) to the extent that the contributions are not includable in
the gross income of the participant for the taxable year in which
contributed, (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 excludable from the Employee's gross income,
(3) any distributions from a plan of deferred compensation; (b) amounts
realized from the exercise of a non-qualified stock option or when
restricted stock (or property) held by an Employee either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;
(c) amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and (d) other amounts which
receive special tax benefits or contributions made by the Employer (whether
or not under a salary reduction agreement) towards the purchase of any
annuity contract described in Code Section 403(b) (whether or not the
contributions are actually excludable from the gross income of the
Employee).
1.28 "414(s) Compensation" has the meaning given the term by
Code Section 414(s) and the Regulations issued thereunder.
"414(s) Compensation" in excess of $150,000 shall be
disregarded. Such amount shall be adjusted for increases in the cost of
living pursuant to, and any changes in, Code Section 401(a)(17), except
that the dollar increase in effect on January 1 of any calendar year shall
be effective for the Plan Year beginning with or within such calendar year.
For any short Plan Year the "414(s) Compensation" limit shall be an amount
equal to the "414(s) Compensation" limit for the calendar year in which the
Plan Year begins multiplied by the ratio obtained by dividing the number of
full months in the short Plan Year by twelve (12).
1.29 "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.
1.30 "Highly Compensated Employee" means an Employee described
in Code Section 414(q) and the Regulations thereunder. Effective for Plan
Years beginning after December 31, 1996, "Highly Compensated Employee"
generally means an Employee who performed services for the Employer during
the "determination year" and is in one or more of the following groups:
(a) Employees who at any time during the "determination year"
or "look-back year" were "five percent owners" as defined in Section 1.36(c).
(b) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $80,000 and (if elected by the
Employer, as evidenced by an amendment to the Plan) was in the Top Paid Group
for the "look-back year."
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 (b) above shall be prorated based upon the number of months in
the "lag period."
The dollar threshold amount specified in (b) 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 Employee, Employees who
are non-resident aliens and who received no earned income (within the meaning
of Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account
as a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are
not covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year."
1.31 "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.
1.32 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.33 "Hour of Service" means, with respect to hourly Employees:
(a) each hour for which the Employee is directly or indirectly
paid, or entitled to payment, by the Employer or an Affiliated Employer for
the performance of duties. (These hours will be credited to him for the
period or periods in which the duties are performed.); and
(b) 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
Affiliated Employer. (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
(c) 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 Affiliated Employer. (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).
Notwithstanding anything herein to the contrary, with respect to
salaried Employees, in lieu of determining Hours of Service on the basis of
the actual hours for which an Employee is paid or entitled to payment
described above in this Section, the Plan Administrator shall, in accordance
with a uniform nondiscriminatory policy, credit Hours of Service using the
following method: 190 Hours of Service shall be credited for each month in
which a salaried Employee is paid or entitled to payment for at least one Hour
of Service by the Employer or an Affiliated Employer.
Hours of Service shall also be 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.
1.34 "Income" means the income or losses allocable to "excess
amounts" which shall equal the allocable gain or loss for the "applicable
computation period". The income allocable to "excess amounts" for the
"applicable computation period" is determined by multiplying the income for
the "applicable computation period" by a fraction. The numerator of the
fraction is the "excess amount" for the "applicable computation period." The
denominator of the fraction is the total "account balance" attributable to
"Employer contributions" as of the end of the "applicable computation period",
reduced by the gain allocable to such total amount for the "applicable
computation period" and increased by the loss allocable to such total amount
for the "applicable computation period." The provisions of this Section shall
be applied:
(a) For purposes of Section 4.2(e), by substituting:
(1) "Excess Deferred Compensation" for "excess amounts";
(2) "taxable year of the Participant" for "applicable
computation period";
(3) "Deferred Compensation" for "Employer contributions";
and
(4) "Participant's Account" for "account balance."
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Elective Contributions" for "Employer
contributions"; and
(4) "Participant's Account" for "account balance."
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess
amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Employer Non-Elective Contributions made pursuant to
Section 4.1(b) (Employer matching contributions) and any qualified
non-elective contributions, qualified matching contributions or elective
deferrals taken into account pursuant to Section 4.7(c)" for "Employer
contributions"; and
(4) "Participant's Account" for "account balance."
Income allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the Participant
shall be calculated from the first day of the taxable year of the Participant
to the date on which the distribution is made pursuant to either the
"fractional method" or the "safe harbor method." Under such "safe harbor
method," allocable Income for such period shall be deemed to equal ten percent
(10%) of the Income allocable to such Excess Deferred Compensation multiplied
by the number of calendar months in such period. For purposes of determining
the number of calendar months in such period, a distribution occurring on or
before the fifteenth day of the month shall be treated as having been made on
the last day of the preceding month and a distribution occurring after such
fifteenth day shall be treated as having been made on the first day of the
next subsequent month.
1.35 "Investment Manager" means an entity that (a) has the power
to manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.36 "Key Employee" means an Employee as defined in Code Section
416(i) and the Regulations thereunder. Generally, effective for Plan Years
beginning before January 1, 2002, any Employee or former Employee (as well as
each of his Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined
within the meaning of the Regulations under Code Section 416) having annual
"415 Compensation" greater than 50 percent of the amount in effect under Code
Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation"
from the Employer for a Plan Year greater than the dollar limitation in effect
under Code Section 415(c)(1)(A) for the calendar year in which such Plan Year
ends and owning (or considered as owning within the meaning of Code Section
318) both more than one-half percent interest and the largest interests in the
Employer.
(c) a "five percent owner" of the Employer. "Five percent
owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the outstanding
stock of the Employer or stock possessing more than five percent (5%) of the
total combined voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than five percent (5%) of
the capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual
"415 Compensation" from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than one percent (1%) of the outstanding
stock of the Employer or stock possessing more than one percent (1%) of the
total combined voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than one percent (1%) of the
capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be treated as separate employers.
However, in determining whether an individual has "415 Compensation" of more
than $150,000, "415 Compensation" from each employer required to be aggregated
under Code Sections 414(b), (c), (m) and (o) shall be taken into account.
1.37 "Late Retirement Date" means the first day of the month
coinciding with or next following a Participant's actual Retirement Date after
having reached his Normal Retirement Date.
1.38 "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 shall be treated as provided by the recipient employer.
A Leased Employee shall not be considered an Employee of the recipient:
(a) if such employee is covered by a money purchase pension
plan providing:
(1) a non-integrated employer contribution rate of at least
10% of compensation, as defined in Code Section 415(c)(3), but including
amounts which are contributed by the Employer pursuant to a salary reduction
agreement and which are not includable in the gross income of the Participant
under Code Sections 125, 402 (e) (3) , 402 (h) (1) (B) , 403(b) or 457(b), and
Employee contributions described in Code Section 414(h)(2) that are treated as
Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of
the recipient's non-highly compensated work force.
1.39 "Net Profit" means with respect to any Fiscal Year the
Employer's net income or profit for such Fiscal Year determined upon the basis
of the Employer's books of account in accordance with generally accepted
accounting principles, without any reduction for taxes based upon income, or
for contributions made by the Employer to this Plan.
1.40 "Non-Elective Contribution" means the Employer contributions
to the Plan excluding, however, contributions made pursuant to the
Participant's deferral election provided for in Section 4.2 and any Qualified
Non-Elective Contribution and/or any Qualified Matching Contribution used in
the "Actual Deferral Percentage" tests.
1.41 "Non-Highly Compensated Participant" means any Participant
who is not a Highly Compensated Employee.
1.42 "Non-Key Employee" means any Employee or former Employee (and
his Beneficiaries) who is not a Key Employee.
1.43 "Normal Retirement Age" means the Participant's 65th
birthday. A Participant shall become fully Vested in his Participant's Account
upon attaining his Normal Retirement Age.
1.44 "Normal Retirement Date" means the first day of the month
coinciding with or next following the Participant's Normal Retirement Age.
1.45 "1-Year Break in Service" means
(a) For eligibility purposes, 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 1-Year Break in
Service has occurred in a computation period, an Employee who is granted an
Approved Absence for maturity 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 (
(1) by reason of the Employee's pregnancy,
(2) by reason of the birth of a child of the Employee,
(3) by reason of the placement of a child with the Employee, or
(4) 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 1-Year Break in Service in that period, or
in all other cases, in the following computation period.
(b) For all other purposes, a Period of Severance of at least
12 consecutive months.
1.46 "Participant" means any Eligible Employee who participates in
the Plan and has not for any reason become ineligible to participate further
in the Plan.
1.47 "Participant Direction Procedures" means such instructions,
guidelines or policies, the terms of which are incorporated herein, as shall
be established pursuant to Section 4.14 and observed by the Administrator and
applied and provided to Participants who have Participant Directed Accounts.
1.48 "Participant's 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 Participant Direction
Procedure.
1.49 "Period of Service" means the aggregate of all periods
commencing with the Employee's first day of employment or reemployment with
the Employer or Affiliated Employer and ending on the date a 1-Year Break in
Service begins. The first day of employment or reemployment is the first day
the Employee performs an Hour of Service. An Employee will also receive
partial credit for any Period of Severance of less than 12 consecutive months.
Fractional periods of a year will be expressed in terms of days.
In addition, for purposes of determining the Vested portion of a
Participant's Account pursuant to Section 6.4(c), the Period of Service with
respect to any Eligible Employee who becomes an employee of the Employer as a
result of a transaction whereby the Employer acquired either operating assets
from such Eligible Employee's former employer or an ownership interest in such
Eligible Employee's former employer, shall be determined by treating such
Eligible Employee's employment with his or her former employer in accordance
with Appendix A (or another designated Appendix) hereto.
1.50 "Period of Severance" means a continuous period of time
during which the Employee is not employed by the Employer. Such period begins
on the date the Employee retires, quits or is discharged, or if earlier, the
12 month anniversary of the date on which the Employee was otherwise first
absent from service.
In the case of an individual who is absent from work for maternity
or paternity reasons, the 12-consecutive month period beginning on the first
anniversary of the first day of such absence shall not constitute a 1-Year
Break in Service. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (a) by reason of the pregnancy
of the individual, (b) by reason of the birth of a child of the individual,
(c) by reason of the placement of a child with the individual in connection
with the adoption of such child by such individual, or (d) for purposes of
caring for such child for a period beginning immediately following such birth
or placement.
1.51 "Plan" means this instrument, including all amendments
thereto.
1.52 "Plan Year" means the Plan's accounting year of twelve (12)
months commencing on January 1st of each year and ending the following
December 31st.
1.53 "Pre-Retirement Survivor Annuity" means a death benefit which
is an immediate annuity for the life of the Participant's spouse the payments
under which must be equal to the amount of benefit which can be purchased with
the Vested Account of a Participant (reduced by any security interest of the
Plan in an outstanding Plan loan).
1.54 "Qualified Matching Contribution" means any Employer
contribution made pursuant to Section 4.6(b) and Section 4.8(g). Such
contributions shall be considered an Elective Contribution for the purpose of
the Plan and used to satisfy the Actual Deferral Percentage tests or the
Actual Contribution Percentage tests.
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. 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.
1.55 "Qualified Non-Elective Contribution" means any Employer
contributions made pursuant to Section 4.6(c), 4.6(d) and Section 4.8(h). Such
contributions shall be considered Elective Contributions for the purposes of
the Plan and used to satisfy the "Actual Deferral Percentage" tests or the
"Actual Contribution Percentage'' tests as the Administrator deems necessary
or advisable.
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. 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.
1.56 "Regulations" means the Income Tax Regulations as promulgated
by the Secretary of the Treasury or his delegate, and as amended from time to
time.
1.57 "Retired Participant" means a person who has been a
Participant, but who has become entitled to retirement benefits under the
Plan.
1.58 "Retirement Date" means the date as of which a Participant
retires for reasons other than Total and Permanent Disability, whether such
retirement occurs on a Participant's Normal Retirement Date, Early or Late
Retirement Date (see Section 6.1).
1.59 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than by death,
Total and Permanent Disability or retirement. Effective prior to January 1,
2002, for purposes of eligibility to receive a benefit under Section 6.4, a
Participant shall be considered terminated only upon his separation from
service. As of January 1, 2002, a Participant shall be considered terminated
upon his "severance from employment" with the Employer, in accordance with
Code Section 401(k)(2)(B)(i)(I).
1.60 "Top Heavy Plan" means a plan described in Section 9.2(a).
1.61 "Top Heavy Plan Year" means a Plan Year during which the Plan
is a Top Heavy Plan, provided the Plan is not exempt from the requirements of
Code Section 416 as a safe-harbor plan under Code Sections 401(k)(12) and
401(m)(11).
1.62 "Top Paid Group" means the top 20 percent of Employees who
performed services for the Employer during the applicable year, ranked
according to the amount of "415 Compensation" (determined for this purpose in
accordance with Section 1.30) received from the Employer during such year. All
Affiliated Employers 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. 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, for
the purpose of determining the number of active Employees in any year, the
following additional Employees shall also be excluded; however, such Employees
shall still be considered for the purpose of identifying the particular
Employees in the Top Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months
during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the
Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only Employees who are not covered under such
agreements, then Employees covered by such agreements shall be excluded from
both the total number of active Employees as well as from the identification
of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be
applied on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable.
1.63 "Total and Permanent Disability" means a physical or mental
condition of a Participant resulting from bodily injury, disease, or mental
disorder which renders him incapable of continuing his usual and customary
employment with the Employer. The disability of a Participant shall be
determined by a licensed physician chosen by the Administrator. The
determination shall be applied uniformly to all Participants.
1.64 "Trustee" means the person or entity named as trustee herein
or in any separate trust forming a part of this Plan, and any successors.
1.65 "Trust Fund" means the assets of the Plan and Trust as the
same shall exist from time to time.
1.66 "Valuation Date" means the Anniversary Date and such other
date or dates deemed necessary by the Administrator. The Valuation Date
includes any day during the Plan Year that the Trustee, any transfer agent
appointed by the Trustee or the Employer and any stock exchange used by such
agent are open for business.
1.67 "Vested" means the nonforfeitable portion of any account
maintained on behalf of a Participant in accordance with Section 6.4.
1.68 "Year of Service" means, for purposes of determining whether
an Employee is eligible to participate in the Plan pursuant to Section 3.1, a
12-consecutive-month eligibility computation period during which he completes
at least 1,000 Hours of Service. The initial eligibility computation period
will begin with the date on which the Employee first performs an Hour of
Service. The eligibility computation period beginning after a 1-Year Break in
Service will be measured from the date on which an Employee again performs an
Hour of Service. After the initial eligibility computation period, the
eligibility 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.
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.
In addition, for purposes of determining whether an Employee is
eligible to participate in the Plan pursuant to Section 3.1, a Year of Service
with respect to any Eligible Employee who becomes an employee of the Employer
as a result of a transaction whereby the Employer acquired either operating
assets from such Eligible Employee's former employer or an ownership interest
in such Eligible Employee's former employer, shall be determined by treating
such Eligible Employee's employment with his or her former employer in
accordance with Appendix A (or another designated Appendix) hereto.
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered to
appoint and remove the Trustee and the Administrator from time to time as it
deems necessary for the proper administration of the Plan to ensure that the
Plan is being operated for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the Code, and the Act.
The Employer may appoint counsel, specialists, advisers, agents (including any
nonfiduciary agent) and other persons as the Employer deems necessary or
desirable in connection with the exercise of its fiduciary duties under this
Plan. The Employer may compensate such agents or advisers from the assets of
the Plan as fiduciary expenses (but not including any business (settlor)
expenses of the Employer), to the extent not paid by the Employer.
(b) The Employer may, by written agreement or designation,
appoint at its option an Investment Manager (qualified under the Investment
Company Act of 1940 as amended), investment adviser, or other agent to provide
direction to the Trustee with respect to any or all of the Plan assets. Such
appointment shall be given by the Employer in writing in a form acceptable to
the Trustee and shall specifically identify the Plan assets with respect to
which the Investment Manager or other agent shall have authority to direct the
investment.
(c) The Employer shall establish a "funding policy and
method," i.e., it shall determine whether the Plan has a short run need for
liquidity (e.g., to pay benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current need, or shall
appoint a qualified person to do so. The Employer or its delegate shall
communicate such needs and goals to the Trustee, who shall coordinate such
Plan needs with its investment policy. The communication of such a "funding
policy and method" shall not, however, constitute a directive to the Trustee
as to investment of the Trust Funds. Such "funding policy and method" shall be
consistent with the objectives of this Plan and with the requirements of Title
I of the Act.
(d) The Employer shall periodically review the performance of
any Fiduciary or other person to whom duties have been delegated or allocated
by it under the provisions of this Plan or pursuant to procedures established
hereunder. This requirement may be satisfied by formal periodic review by the
Employer or by a qualified person specifically designated by the Employer,
through day-to-day conduct and evaluation, or through other appropriate ways.
2.2 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 2.1 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 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 named 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
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 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 under
Section 1.23 of the Plan and a "named Fiduciary" under Section 10.13 of the
Plan, and those Sections shall be deemed amended as appropriate to reflect the
foregoing.
2.3 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall be the Administrator. The Employer may appoint
any person, or persons, including, but not limited to, the Employees of the
Employer, to perform the duties of the Administrator. Any person so appointed
shall signify his acceptance by filing written acceptance with the Employer.
Upon the resignation or removal of any individual performing the duties of the
Administrator, the Employer may designate a successor.
2.4 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer
the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan. The Administrator
shall administer the Plan in accordance with its terms and shall have the
power and discretion to construe the terms of the Plan and to determine all
questions arising in connection with the administration, interpretation, and
application of the Plan. Any such determination by the Administrator shall be
conclusive and binding upon all persons. The Administrator may establish
procedures, correct any defect, supply any information, or reconcile any
inconsistency in such manner and to such extent as shall be deemed necessary
or advisable to carry out the purpose of the Plan; provided, however, that any
procedure, discretionary act, interpretation or construction shall be done in
a nondiscriminatory manner based upon uniform principles consistently applied
and shall be consistent with the intent that the Plan shall continue to be
deemed a qualified plan under the terms of Code Section 401(a), and shall
comply with the terms of the Act and all regulations issued pursuant thereto.
The Administrator shall have all powers necessary or appropriate to accomplish
his duties under this Plan.
The Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited to, the
following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant hereunder and
to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect
to the amount and the kind of benefits to which any Participant shall be
entitled hereunder;
(c) to authorize and direct the
Trustee with respect to all nondiscretionary or otherwise directed
disbursements from the Trust;
(d) to maintain all necessary records for the administration
of the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent with the terms
hereof;
(f) to determine the size and type of any Contract to be
purchased from any insurer, and to designate the insurer from which such
Contract shall be purchased;
(g) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be contributed
to the Plan;
(h) to consult with the Employer and the Trustee regarding
the short and long-term liquidity needs of the Plan in order that the Trustee
can exercise any investment discretion in a manner designed to accomplish
specific objectives;
(i) to prepare and distribute to Employees a procedure for
notifying Participants and Beneficiaries of their rights to elect joint and
survivor annuities and Pre-Retirement Survivor Annuities as required by the
Act and regulations thereunder;
(j) to prepare and implement a procedure to notify Eligible
Employees that they may elect to have a portion of their Compensation deferred
or paid to them in cash;
(k) to act as the named Fiduciary responsible for
communications with Participants as needed to maintain Plan compliance with
ERISA Section 404(c), including but not limited to the receipt and
transmitting of Participant's directions as to the investment of their
account(s) under the Plan and the formulation of policies, rules, and
procedures pursuant to which Participants may give investment instructions
with respect to the investment of their accounts;
(l) to assist any Participant regarding his rights, benefits,
or elections available under the Plan.
2.5 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and
shall keep all other books of account, records, policies, and other data that
may be necessary for proper administration of the Plan and shall be
responsible for supplying all information and reports to the Internal Revenue
Service, Department of Labor, Participants, Beneficiaries and others as
required by law.
2.6 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, agents (including
nonfiduciary agents) and other persons as the Administrator or the Trustee
deems necessary or desirable in connection with the administration of this
Plan, including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining
Plan records and the providing of investment information to the Plan's
investment fiduciaries and to Plan Participants.
2.7 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses incident
to the functioning of the Administrator, or any person or persons retained or
appointed by any Named Fiduciary incident to the exercise of their duties
under the Plan, including, but not limited to, fees of accountants, counsel,
Investment Managers, agents (including nonfiduciary agents) appointed for the
purpose of assisting the Administrator or the Trustee in carrying out the
instructions of Participants as to the directed investment of their accounts
and other specialists and their agents, and other costs of administering the
Plan. Until paid, the expenses shall constitute a liability of the Trust Fund.
2.8 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with
the Administrator. Written notice of the disposition of a claim shall be
furnished to the claimant within 90 days after the application is filed. In
the event the claim is denied, the reasons for the denial shall be
specifically set forth in the notice in language calculated to be understood
by the claimant, pertinent provisions of the Plan shall be cited, and, where
appropriate, an explanation as to how the claimant can perfect the claim will
be provided. In addition, the claimant shall be furnished with an explanation
of the Plan's claims review procedure.
2.9 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has
been denied a benefit by a decision of the Administrator pursuant to Section
2.8 shall be entitled to request the Administrator to give further
consideration to his claim by filing with the Administrator (on a form which
may be obtained from the Administrator) a request for a hearing. Such request,
together with a written statement of the reasons why the claimant believes his
claim should be allowed, shall be filed with the Administrator no later than
60 days after receipt of the written notification provided for in Section 2.8.
The Administrator shall then conduct a hearing within the next 60 days, at
which the claimant may be represented by an attorney or any other
representative of his choosing and at which the claimant shall have an
opportunity to submit written and oral evidence and arguments in support of
his claim. At the hearing (or prior thereto upon 5 business days written
notice to the Administrator) the claimant or his representative shall have an
opportunity to review all documents in the possession of the Administrator
which are pertinent to the claim at issue and its disallowance. Either the
claimant or the Administrator may cause a court reporter to attend the hearing
and record the proceedings. In such event, a complete written transcript of
the proceedings shall be furnished to both parties by the court reporter. The
full expense of any such court reporter and such transcripts shall be borne by
the party causing the court reporter to attend the hearing. A final decision
as to the allowance of the claim shall be made by the Administrator within 60
days of receipt of the appeal (unless there has been an extension of 60 days
due to special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day period).
Such communication shall be written in a manner calculated to be understood by
the claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based. No
claim for benefits may be brought under the Act after a period of one year
from the date a claim is denied pursuant to this Section.
2.10 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.
2.11 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.
2.12 SAFE-HARBOR NOTICE TO ELIGIBLE EMPLOYEES
Effective for Plan Years beginning on and after January 1, 2002,
the Employer shall, within a reasonable period before the start of a Plan Year
(generally not later than 30 days before the start of a Plan Year and not
earlier than 90 days before the start of a Plan Year), provide each Eligible
Employee with a written notice ("Notice") describing the safe harbor matching
contribution formula to be used under the Plan for the Plan Year, including a
description of the different levels of Employer matching contribution
available under the Plan and other Employer contributions, all in accordance
with Code section 401(k)(12)(D) and applicable regulatory and other guidance
issued by the Secretary of the Treasury.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year of Service
and has attained age 21 shall be eligible to participate hereunder as of the
date he has satisfied such requirements. Effective January 1, 2002, any
Eligible Employee who has completed three months of service and has attained
age 21 shall be eligible to participate hereunder as of the date he has
satisfied such requirements. For purposes of this section, an Eligible
Employee will be credited with a month of service for each month in which the
Eligible Employee completes an Hour of Service. Solely for purposes of Section
4.1(b), an Eligible Employee shall be eligible to be a Participant for
purposes of Section 4.1(b) only if the Eligible Employee has completed one (1)
Year of Service.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as soon
as practicable following the date on which such Employee met the eligibility
requirements of Section 3.1, provided said Employee was still employed as of
such date (or if not employed on such date, as of the date of rehire).
In the event an Employee who is not a member of an eligible class
of Employees becomes a member of an eligible class, such Employee will
participate immediately if such Employee has satisfied the minimum age and
service requirements and would have otherwise previously become a Participant.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee
for participation in the Plan based upon information furnished by the
Employer. Such determination shall be conclusive and binding upon all persons,
as long as the same is made pursuant to the Plan and the Act. Such
determination shall be subject to review per Section 2.9.
3.4 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification
of an Eligible Employee to an ineligible Employee, such Former Participant
shall continue to vest in his interest in the Plan for each Period of Service
completed while a noneligible Employee, until such time as his Participant's
Account shall be forfeited or distributed pursuant to the terms of the Plan.
Additionally, his interest in the Plan shall continue to share in the earnings
of the Trust Fund.
(b) In the event a Participant is no longer a member of an
eligible class of Employees and becomes ineligible to participate, such
Employee will participate immediately upon returning to an eligible class of
Employees.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as
a Participant in the Plan is erroneously omitted and discovery of such
omission is not made until after a contribution by his Employer for the year
has been made, the Employer shall make a subsequent contribution with respect
to the omitted Employee in the amount which the said Employer would have
contributed with respect to him had he not been omitted. Such contribution
shall be made regardless of whether or not it is deductible in whole or in
part in any taxable year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included
as a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has
been made, the Employer shall not be entitled to recover the contribution made
with respect to the ineligible person regardless of whether or not a deduction
is allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a
Forfeiture (except for Deferred Compensation which shall be distributed to the
ineligible person) for the Plan Year in which the discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate
must be communicated to the Employer, in writing, at least thirty (30) days
before the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be deemed an
Employer Elective Contribution.
(b) Notwithstanding anything in the Plan to the contrary, for
Plan years beginning before January 1, 2002, on behalf of each Participant who
is eligible to share in matching contributions for the Plan Year, a matching
contribution equal to 40% of each such Participant's Deferred Compensation,
which amount shall be deemed an Employer Non-Elective Contribution. Except,
however, in applying the matching percentage specified above, only Salary
Reduction Contributions, up to 3% of annual Compensation shall be matched, and
the total Employer matching contribution for any Participant will not exceed
$1,200 per Plan Year.
For Plan Years beginning after December 31, 2001, the Plan
shall be operated in accordance with Code section 401(k)(12) and with
applicable regulatory and other guidance issued by the Secretary of the
Treasury as provided in Section as follows: The Employer shall make a
safe-harbor matching contribution on behalf of each active Participant in an
amount equal to 100% of the first 3% of such Participant's Compensation, and
50% of such active Participant's Compensation in excess of 3% but not in
excess of 5%, that has been contributed on his behalf to the Plan as Deferred
Compensation for the Plan Year, which amount shall be deemed an Employer
Non-Elective Contribution (other than for purposes of Section 6.4(c)). The
safe-harbor matching contribution shall be determined on an annual basis and
shall be adjusted to the extent necessary after the end of each Plan Year to
provide a matching contribution based on total Deferred Compensation for the
Plan Year.
(c) A discretionary amount out of its current or accumulated
Net Profits, which amount, if any, shall be deemed an Employer Non-Elective
Contribution.
(d) A discretionary amount on behalf of one or more
Non-Highly Compensated Participants, which amount, if any, shall be deemed an
Employer Qualified Non-Elective Contribution.
(e) Additionally, to the extent necessary, the Employer shall
contribute to the Plan the amount necessary to provide the top heavy minimum
contribution. All contributions by the Employer shall be made in cash.
(f) In no event shall total Employer Non-Elective
Contributions and Elective Contributions for the Employer's taxable year that
ends within such Plan Year, exceed the amount deductible under Code Section
404, or any other applicable provision of the Code, by the Employer for
federal income tax purposes for such taxable year (except as necessary to
satisfy the testing requirements of Sections 4.5(a) and 4.7(a)).
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) (1) Each Participant may elect to defer an amount equal
to the amount set forth in their deferral election, provided it does not (A)
exceed (i) the dollar limitation in effect for catch-up contributions under
Code Section 414(v), if applicable, plus the lesser of (1) the dollar
limitation under Code Section 402(g), and (2) 18% of the dollar limit
specified under Code Section 401(a)(17); or (B) cause the Plan to violate the
limitations of this Section 4.2, or Sections 4.1(e), 4.5(a) or 4.9. However,
the Employer may, at its discretion, restrict the deferral election of a
Highly Compensated Participant in any Plan Year. A deferral election (or
modification of an earlier election) may not be made with respect to
Compensation which is currently available on or before the date the
Participant executed such election or, if later, the latest of the date the
Employer adopts this cash or deferred arrangement, or the date such
arrangement first became effective.
(2) Effective for Plan Years beginning January 1, 2002, in
accordance with procedures adopted by the Administrator, each Participant who
has attained age 50 before the close of the Plan Year shall be eligible to
elect to make catch-up contributions from to 0% to 50% of Compensation, in
accordance with, and subject to the dollar limit under, Code Section 414(v)
and Regulations issued thereunder applicable for a Plan Year. Such catch-up
contributions shall not be taken into account for purposes of the provisions
of the Plan implementing the required limitations of Sections 402(g) and 415
of the Code. The Plan shall not be treated as failing to satisfy the
provisions of the Plan implementing the requirements of Code Section
401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of
the making of such catch-up contributions. Any such contributions that are
determined by the Administrator to have been made in error and that are in
excess of 18% of the Participant's Compensation shall be considered Excess
Deferred Compensation and treated in accordance with Section 4.2(e).
The amount contributed to the Plan pursuant to a
Participant's deferral election shall be that Participant's Deferred
Compensation and be treated as an Employer Elective Contribution and allocated
to that Participant's Account.
(b) The balance in each Participant's Account attributable to
Salary Reduction Contributions shall be fully Vested at all times and shall
not be subject to Forfeiture for any reason.
(c) Notwithstanding anything in the Plan to the contrary,
amounts held in the Participant's Account attributable to Salary Reduction
Contributions may not be distributable (including any offset of loans) earlier
than:
(1) a Participant's separation from service, Total and
Permanent Disability, or death; provided, that as of January 1, 2002, Salary
Reduction 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) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the establishment
or existence of a "successor plan," as that term is described in Regulation
1.401(k)-1(d)(3);
(4) the date of disposition by the Employer to an entity
that is not an Affiliated Employer of substantially all of the assets (within
the meaning of Code Section 409(d)(2)) used in a trade or business of such
corporation if such corporation continues to maintain this Plan after the
disposition with respect to a Participant who continues employment with the
corporation acquiring such assets;
(5) the date of disposition by the Employer or an
Affiliated Employer who maintains the Plan of its interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) to an entity which is not an
Affiliated Employer but only with respect to a Participant who continues
employment with such subsidiary; or
(6) the proven financial hardship of a Participant,
subject to the limitations of Section 6.11.
(d) If the dollar limitation described in Section 4.2(a)(1)
is exceeded, a Participant will be deemed to have notified the Administrator
of such excess amount which shall be distributed in a manner consistent with
Section 4.2(e). The dollar limitation shall be adjusted annually pursuant to
the method provided in Code Section 415(d) in accordance with Regulations.
(e) If a Participant's Deferred Compensation under this Plan
together with any elective deferrals (as defined in Regulation 1.402(g)-l(b))
under another qualified cash or deferred arrangement (as defined in Code
Section 401(k)), a simplified employee pension (as defined in Code Section
408(k)), a SIMPLE plan (as defined in Code Section 408(p), a salary reduction
arrangement (within the meaning of Code Section 3121(a)(5)(D)), a deferred
compensation plan under Section 457(b) of the Code, or a trust described in
Code Section 501(c)(18) cumulatively exceed the limitation imposed by Code
Section 402(g) (as adjusted annually in accordance with the method provided in
Code Section 415(d) pursuant to Regulations) for such Participant's taxable
year, the Participant may, not later than March 1 following the close of the
Participant's taxable year, notify the Administrator in writing of such excess
and request that his Deferred Compensation under this Plan be reduced by an
amount specified by the Participant. In such event, the Administrator may
direct the Trustee to distribute such excess amount (and any Income allocable
to such excess amount) to the Participant not later than the first April 15th
following the close of the Participant's taxable year. Any distribution of
less than the entire amount of Excess Deferred Compensation and Income shall
be treated as a pro rata distribution of Excess Deferred Compensation and
Income. The amount distributed shall not exceed the Participant's Deferred
Compensation under the Plan for the taxable year (and any Income allocable to
such excess amount). Provided, effective for years beginning January 1, 2002,
any elective deferrals under a deferred compensation plan under Section 457(b)
of the Code shall not be counted in calculating the cumulative amount subject
to the limitation imposed by Code Section 402(g). Any distribution on or
before the last day of the Participant's taxable year must satisfy each of the
following conditions:
(1) the distribution must be made after the date on which
the Plan received the Excess Deferred Compensation;
(2) the Participant shall designate the distribution as
Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a
distribution of Excess Deferred Compensation.
Any distribution made pursuant to this Section 4.2(e)
shall be made first from unmatched Deferred Compensation and, thereafter, from
Deferred Compensation which is matched. Matching contributions which relate to
such Deferred Compensation shall be forfeited.
(f) Notwithstanding Section 4.2(e) above, a Participant's
Excess Deferred Compensation shall be reduced, but not below zero, by any
distribution of Excess Contributions pursuant to Section 4.6(a) for the Plan
Year beginning with or within the taxable year of the Participant.
(g) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market value of
the Participant's Account shall be used to provide additional benefits to the
Participant or his Beneficiary.
(h) Employer Elective Contributions made pursuant to this
Section may be segregated into a separate account for each Participant in a
federally insured savings account, certificate of deposit in a bank or savings
and loan association, money market certificate, or other short-term debt
security acceptable to the Trustee until such time as the allocations pursuant
to Section 4.4 have been made.
(i) The Employer and the Administrator shall implement the
salary reduction elections provided for herein in accordance with the
following:
(1) A Participant must make his initial salary deferral
election within a reasonable time, not to exceed thirty (30) days, after
entering the Plan pursuant to Section 3.2. If the Participant fails to make an
initial salary deferral election within such time, then such Participant may
thereafter make an election in accordance with the rules governing
modifications. The Participant shall make such an election by entering into a
salary reduction agreement with the Employer and filing such agreement with
the Administrator in the form and manner prescribed by the Administrator. Such
election shall not have retroactive effect and shall remain in force until
revoked.
(2) A Participant may modify a prior election at any time
during the Plan Year and concurrently make a new election by filing a notice
with the Administrator in the form and manner prescribed by the Administrator
within a reasonable time before such modification is to be effective. Any
modification shall not have retroactive effect and shall remain in force until
revoked.
(3) A Participant may elect to prospectively revoke his
salary reduction agreement in its entirety at any time during the Plan Year by
providing the Administrator with such appropriate advance notice of such
revocation as may be acceptable to the Administrator. A Participant may
recommence salary reduction contributions at any time during the Plan Year by
filing a notice with the Administrator in the form and manner prescribed by
the Administrator within a reasonable time before the new election is to be
effective. Such new election shall not have retroactive effect and shall
remain in force until modified or revoked. Furthermore, the termination of the
Participant's employment, or the cessation of participation for any reason,
shall be deemed to revoke any salary reduction agreement then in effect.
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION
The Employer shall generally pay to the Trustee its contribution
to the Plan for each Plan Year within the time prescribed by law, including
extensions of time, for the filing of the Employer federal income tax return
for the Fiscal Year.
However, Employer Elective Contributions accumulated through
payroll deductions shall be paid to the Trustee as of the earliest date on
which such contributions can reasonably be segregated from the Employer
general assets. In no event shall such amounts be contributed later than the
15th business day of the month following the month in which the participant
contribution amounts would otherwise have been payable to the Participant in
cash. The provisions of Department of Labor regulations 2510.3-102 are
incorporated herein by reference. Furthermore, any additional Employer
contributions which are allocable to the Participant's Account for a Plan Year
shall be paid to the Plan no later than the twelve-month period immediately
following the close of such Plan Year.
4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS
(a) The Administrator shall establish and maintain an account
in the name of each Participant to which the Administrator shall credit as of
each Anniversary Date all amounts allocated to each such Participant as set
forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation of the
Employer contributions for each Plan Year. Within a reasonable period of time
after the date of receipt by the Administrator of such information, the
Administrator shall allocate such contribution as follows:
(1) With respect to the Employer Elective Contribution
made pursuant to Section 4.1(a), to each Participant's Account in an amount
equal to each such Participant's Deferred Compensation for the year.
(2) With respect to the Employer Non-Elective
Contribution made pursuant to Section 4.1(b) (Employer matching
contributions), to each Participant's Account in accordance with Section
4.1(b). Any Participant actively employed at any time during the Plan Year
shall be eligible to share in the matching contribution for the Plan Year.
(3) With respect to the Employer Non-Elective
Contribution made pursuant to Section 4.1(c), to each Participant's Account in
the same proportion that each such Participant's Compensation for the year
bears to the total Compensation of all Participants for such year.
(4) With respect to the Employer Qualified Non-Elective
Contribution made pursuant to Section 4.1(d), to one or more Non-Highly
Compensated Participant's Accounts in a non-discriminatory manner as
determined by the Administrator in accordance with Code Section 401(a)(4) and
in Regulations.
Only Participants who are actively employed on the last
day of the Plan Year shall be eligible to share in the discretionary
contribution for the year.
(c) As of each Anniversary Date any amounts which became
Forfeitures since the last Anniversary Date shall first be used to reinstate
any previously forfeited Account balances occurring during the year, and
should any amounts remain, shall then be invested in the guaranteed interest
account by the Trustee until used in any one or more of the following methods
as of the Plan Year in which the Forfeitures arise:
(1) pay all or a part of the plan expenses for such Plan
Year;
(2) reduce the Employer's Non-Elective Contribution made
pursuant to Section 4.1(b) (Employer matching contribution) for such Plan
Year;
(3) reallocate as an Employer Non-Elective Contribution
pursuant to Section 4.1(c) (Employer discretionary contributions) for such
Plan Year to all Participants who were active at any time during such Plan
Year; and/or
(4) allocate as a Qualified Non-Elective Contribution to
one or more Non-Highly Compensated Participants in order for the Employer to
satisfy the ADP/ACP tests for such Plan Year.
(d) For any Top Heavy Plan Year, Non-Key Employees not
otherwise eligible to share in the allocation of contributions as provided
above, shall receive the minimum allocation provided for in Section 4.4(g) if
eligible pursuant to the provisions of Section 4.4(i).
(e) Notwithstanding the foregoing, Participants who are not
actively employed on the last day of the Plan Year due to Retirement (Early,
Normal or Late), Total and Permanent Disability or death shall share in the
allocation of contributions for that Plan Year.
(f) As of each Valuation Date, after allocation of Employer
contributions, any earnings or losses (net appreciation or net depreciation)
of the Trust Fund shall be allocated in the same proportion that each
Participant's and Former Participant's nonsegregated accounts bear to the
total of all Participants' and Former Participants' nonsegregated accounts as
of such date. Earnings or losses with respect to a Participant's Directed
Account shall be allocated in accordance with Section 4.14.
Participants' transfers from other qualified plans deposited
in the general Trust Fund shall share in any earnings and losses (net
appreciation or net depreciation) of the Trust Fund in the same manner
provided above. Each segregated account maintained on behalf of a Participant
shall be credited or charged with its separate earnings and losses.
(g) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the
Employer contributions allocated to the Participant's Account of each Non-Key
Employee shall be equal to at least three percent (3%) of such Non-Key
Employee's "415 Compensation" (reduced by contributions and forfeitures, if
any, allocated to each Non-Key Employee in any defined contribution plan
included with this plan in a Required Aggregation Group). However, if (1) the
sum of the Employer contributions allocated to the Participant's Account of
each Key Employee for such Top Heavy Plan Year is less than three percent (3%)
of each Key Employee's "415 Compensation" and (2) this Plan is not required to
be included in an Aggregation Group to enable a defined benefit plan to meet
the requirements of Code Section 401(a)(4) or 410, the sum of the Employer
contributions allocated to the Participant's Account of each Non-Key Employee
shall be equal to the largest percentage allocated to the Participant's
Account of any Key Employee. However, in determining whether a Non-Key
Employee has received the required minimum allocation, such Non-Key Employee's
Deferred Compensation and matching contributions needed to satisfy the "Actual
Contribution Percentage" tests pursuant to Section 4.7(a) shall not be taken
into account.
However, no such minimum allocation shall be required in this
Plan for any Non-Key Employee who participates in another defined contribution
plan subject to Code Section 412 included with this Plan in a Required
Aggregation Group.
(h) For purposes of the minimum allocations set forth above,
the percentage allocated to the Participant's Account of any Key Employee
shall be equal to the ratio of the sum of the Employer contributions allocated
on behalf of such Key Employee divided by the "415 Compensation" for such Key
Employee.
(i) For any Top Heavy Plan Year, the minimum allocations set
forth above shall be allocated to the Participant's Account of all Non-Key
Employees who are Participants and who are employed by the Employer on the
last day of the Plan Year, including Non-Key Employees who have (1) failed to
complete a Period of Service; and (2) declined to make mandatory contributions
(if required) or, in the case of a cash or deferred arrangement, elective
contributions to the Plan.
(j) In lieu of the above, if a Non-Key Employee participates
in this Plan and a defined benefit pension plan included in a Required
Aggregation Group which is top heavy, a minimum allocation of five percent
(5%) of "415 Compensation" shall be provided under this Plan.
(k) For the purposes of this Section, "415 Compensation"
shall be limited to $150,000. Such amount shall be adjusted for increases in
the cost of living and changes in accordance with Code Section 401(a)(17),
except that the dollar increase in effect on January 1 of any calendar year
shall be effective for the Plan Year beginning with or within such calendar
year. For any short Plan Year the "415 Compensation" limit shall be an amount
equal to the "415 Compensation" limit for the calendar year in which the Plan
Year begins multiplied by the ratio obtained by dividing the number of full
months in the short Plan Year by twelve (12).
(l) Notwithstanding anything herein to the contrary,
Participants who terminated employment for any reason during the Plan Year
shall share in the salary reduction contributions made by the Employer for the
year of termination without regard to the Hours of Service credited.
(m) If a Former Participant is reemployed after five (5)
consecutive 1-Year Breaks in Service, then separate accounts shall be
maintained as follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
(2) one account representing his status in the Plan
attributable to post-break service.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year, the annual
allocation derived from Employer Elective Contributions to a Participant's
Account shall satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly
Compensated Participant group for the current Plan Year shall 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 shall not be more than two percentage
points. Additionally, the "Actual Deferral Percentage" for the Highly
Compensated Participant group for the current Plan Year shall 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.
However, in order to prevent the multiple use of the
alternative method described in (2) above and in Code Section 401(m)(9)(A),
any Highly Compensated Participant eligible to make elective deferrals
pursuant to Section 4.2 and to make Employee contributions or to receive
matching contributions under this Plan or under any other plan maintained by
the Employer or an Affiliated Employer 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.
(b) For the purposes of this Section "Actual Deferral
Percentage" means, with respect to the Highly Compensated Participant group
and Non-Highly Compensated Participant group for a Plan Year, the average of
the ratios, calculated separately for each Participant in such group, of the
amount of Employer Elective Contributions allocated to each Participant's
Account for such Plan Year, to such Participant's "414(s) Compensation" for
such Plan Year. The actual deferral ratio for each Participant and the "Actual
Deferral Percentage" for each group shall be calculated to the nearest
one-hundredth of one percent. Employer Elective Contributions allocated to
each Non-Highly Compensated Participant's Account shall be reduced by Excess
Deferred Compensation to the extent such excess amounts are made under this
Plan or any other plan maintained by the Employer. Anything herein to the
contrary notwithstanding, no catch-up contributions made in accordance with
Section 4.2(a)(2) and Code Section 414(v) shall be considered Employer
Elective Contributions for purposes of calculating Actual Deferral
Percentages.
(c) For the purposes of Sections 4.5(a) and 4.6, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall include
any Employee eligible to make a deferral election pursuant to Section 4.2,
whether or not such deferral election was made or suspended pursuant to
Section 4.2.
(d) For the purposes of this Section and Code Sections
4.01(a)(4), 410(b) and 401(k), if two or more plans which include cash or
deferred arrangements are considered one plan for the purposes of Code Section
401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii)), the cash or
deferred arrangements included in such plans shall be treated as one
arrangement. In addition, two or more cash or deferred arrangements may be
considered as a single arrangement for purposes of determining whether or not
such arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k). In such
a case, the cash or deferred arrangements included in such plans and the plans
including such arrangements shall be treated as one arrangement and as one
plan for purposes of this Section and Code Sections 401(a)(4), 410(b) and
401(k). Plans may be aggregated under this paragraph (e) only if they have the
same plan year.
Notwithstanding the above, an employee stock ownership plan
described in Code Section 4975(e)(7) or 409 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) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two or more cash or deferred arrangements
(other than a cash or deferred arrangement which is part of an employee stock
ownership plan as defined in Code Section 4975(e)(7) or 409) of the Employer
or an Affiliated Employer, all such cash or deferred arrangements shall be
treated as one cash or deferred arrangement for the purpose of determining the
actual deferral ratio with respect to such Highly Compensated Participant.
However, if the cash or deferred arrangements have different plan years, this
paragraph shall be applied by treating all cash or deferred arrangements
ending with or within the same calendar year as a single arrangement.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer Elective
Contributions made pursuant to Section 4.4 do not satisfy one of the tests set
forth in Section 4.5(a), the Administrator shall adjust Excess Contributions
in accordance with one of the options set forth below:
(a) On or before the fifteenth day of the third month
following the end of each Plan Year, the Highly Compensated Participant having
the highest amount of Elective Contributions shall have his portion of Excess
Contributions distributed to him until one of the tests set forth in Section
4.5(a) is satisfied, or until the amount of his Elective Contributions equals
the amount of Elective Contributions of the Highly Compensated Participant
having the next highest amount of Elective Contributions. This process shall
continue until all of the Excess Contributions are distributed. For each
Highly Compensated Participant, the amount of Excess Contributions is equal to
the Elective Contributions used to satisfy the "Actual Deferral Percentage"
tests on behalf of such Highly Compensated Participant (determined prior to
the application of this paragraph) minus the amount determined by multiplying
the Highly Compensated Participant's actual deferral ratio (determined after
application of this paragraph) by his "414(s) Compensation." However, in
determining the amount of Excess Contributions to be distributed with respect
to an affected Highly Compensated Participant as determined herein, such
amount shall be reduced pursuant to Section 4.2(e) by any Excess Deferred
Compensation previously distributed to such affected Highly Compensated
Participant for his taxable year ending with or within such Plan Year.
With respect to the distribution of Excess Contributions
pursuant to (a) above, such distribution:
(i) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are allocable;
(ii) shall be adjusted for Income; and
(iii) shall be designated by the Employer as a
distribution of Excess Contributions (and Income).
Alternatively, to the extent permitted under Code Section
414(v) and Regulations, Excess Contributions may be recharacterized as
catch-up contributions in lieu of being distributed pursuant to this Section
4.6(a).
(b) Notwithstanding the above, within twelve (12) months
after the end of the Plan Year, the Employer may make a special Qualified
Matching Contribution on behalf of Non-Highly Compensated Participants who
have elected to make Employer Elective Contributions (salary reduction
contributions) during the Plan Year in an amount based on a percentage of such
Employer Elective Contributions (salary reduction contributions) sufficient to
satisfy one of the tests set forth in Section 4.5(a) of the Plan.
(c) Notwithstanding the above, within twelve (12) months
after the end of the Plan Year, the Employer may make a special Qualified
Non-Elective Contribution on behalf of Non-Highly Compensated Participants in
an amount sufficient to satisfy one of the tests set forth in Section 4.5(a).
Such contribution shall be allocated to the Participant's Account of each
Non-Highly Compensated Participant in the same proportion that each Non-Highly
Compensated Participant's Compensation for the year bears to the total
Compensation of all Non-Highly Compensated Participants. A separate accounting
of any special Qualified Non-Elective Contribution shall be maintained in the
Participant's Account.
Alternatively, the Employer may make a Qualified Non-Elective
Contribution on behalf of one or more Non-Highly Compensated Participants in
an amount sufficient to satisfy one of the tests. Such contributions shall be
allocated in a non-discriminatory manner. Employer Qualified Non-Elective
Contributions made pursuant to Section 4.1(d) may be taken into account for
purposes of this Section 4.6(c) regardless of the fact such contributions were
contributed during the Plan Year for which the test under Section 4.5(a) is
being performed.
(d) If during a Plan Year the projected aggregate amount of
Elective Contributions to be allocated to all Highly Compensated Participants
under this Plan would, by virtue of the tests set forth in Section 4.5(a),
cause the Plan to fail such tests, then the Administrator may automatically
reduce proportionately or in the order provided in Section 4.6(a) each
affected Highly Compensated Participant's projected share of such
contributions by an amount necessary to satisfy one of the tests set forth in
Section 4.5(a).
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for the Highly
Compensated Participant group for the current Plan Year shall 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 2 percentage points. However, to
prevent the multiple use of the alternative method described in this paragraph
and Code Section 401(m)(9)(A), any Highly Compensated Participant eligible to
make elective deferrals pursuant to Section 4.2 or any other cash or deferred
arrangement maintained by the Employer or an Affiliated Employer and to make
Employee contributions or to receive matching contributions under this Plan or
under any plan maintained by the Employer or an Affiliated Employer 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 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.
(b) For the purposes of this Section and Section 4.8, "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 sum of Employer Non-Elective Contributions made
pursuant to Section 4.1(b) (Employer matching contributions) on behalf of each
such Participant for a Plan Year; to
(2) the Participant's "414(s) Compensation" for such Plan
Year.
(c) For purposes of determining the "Actual Contribution
Percentage" and the amount of Excess Aggregate Contributions pursuant to
Section 4.8(d), only Employer Non-Elective Contributions pursuant to Section
4.1(b) of the Plan (Employer matching contributions) contributed to the Plan
prior to the end of the succeeding Plan Year shall be considered. In addition,
the Administrator may elect to take into account, with respect to Employees
eligible to have Employer Non-Elective Contributions pursuant to Section
4.1(b) (Employer matching contributions) allocated to their accounts, elective
deferrals (as defined in Regulation 1.402(g)-l(b)), qualified non-elective
contributions (as defined in Code Section 401(m)(4)(C)), and qualified
matching contributions contributed to any plan maintained by the Employer.
Such elective deferrals and qualified non-elective contributions and qualified
matching contributions shall be treated as Employer matching contributions
subject to Regulation 1.401(m)-l(b)(5) which is incorporated herein by
reference. However, the Plan Year must be the same as the plan year of the
plan to which the elective deferrals and the qualified non-elective
contributions and qualified matching contributions are made.
(d) For purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(m), if two or more plans of the Employer to which matching
contributions, Employee contributions, or both, are made are treated as one
plan for purposes of Code Sections 401(a)(4) or 410(b) (other than the average
benefits test under Code Section 410(b)(2)(A)(ii)), such plans shall be
treated as one plan. In addition, two or more plans of the Employer to which
matching contributions, Employee contributions, or both, are made may be
considered as a single plan for purposes of determining whether or not such
plans satisfy Code Sections 401(a)(4), 410(b) and 401(m). In such a case, the
aggregated plans must satisfy this Section and Code Sections 401(a)(4), 410(b)
and 401(m) as though such aggregated plans were a single plan. Plans may be
aggregated under this paragraph (e) only if they have the same plan year.
Notwithstanding the above, an employee stock ownership plan
described in Code Section 4975(e)(7) or 409 may not be aggregated 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
under two or more plans (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7) or 409) which are maintained by the
Employer or an Affiliated Employer to which matching contributions, Employee
contributions, or both, are made, all such contributions on behalf of such
Highly Compensated Participant shall be aggregated for purposes of determining
such Highly Compensated Participant's actual contribution ratio. However, if
the plans have different plan years, this paragraph shall be applied by
treating all plans ending with or within the same calendar year as a single
plan.
(f) For purposes of Sections 4.7(a) and 4.8, a Highly
Compensated Participant and Non-Highly Compensated Participant shall include
any Employee eligible to have Employer Non-Elective Contributions made
pursuant to Section 4.1(b) (Employer matching contributions) allocated to his
account for the Plan Year.
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that the "Actual Contribution Percentage"
for the Highly Compensated Participant group exceeds the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant group pursuant to
Section 4.7(a), the Administrator (on or before the fifteenth day of the third
month following the end of the Plan Year, but in no event later than the close
of the following Plan Year) shall direct the Trustee to distribute to the
Highly Compensated Participant having the highest amount of matching
contributions, his Vested portion of Excess Aggregate Contributions (and
Income allocable to such contributions) and, if forfeitable, forfeit such
non-Vested Excess Aggregate Contributions attributable to Employer matching
contributions (and Income allocable to such forfeitures) until either one of
the tests set forth in Section 4.7(a) is satisfied, or until the amount of his
matching contributions equals the amount of matching contributions of the
Highly Compensated Participant having the next highest amount of matching
contributions. This process shall continue until all of the Excess Aggregate
Contributions are distributed.
(b) Any distribution and/or forfeiture of less than the
entire amount of Excess Aggregate Contributions (and Income) shall be treated
as a pro rata distribution and/or forfeiture of Excess Aggregate Contributions
and Income. Distribution of Excess Aggregate Contributions shall be designated
by the Employer as a distribution of Excess Aggregate Contributions (and
Income). Forfeitures of Excess Aggregate Contributions shall be treated in
accordance with Section 4.4.
(c) Excess Aggregate Contributions, including forfeited
matching contributions, shall be treated as Employer contributions for
purposes of Code Sections 404 and 415 even if distributed from the Plan.
Forfeited matching contributions that are reallocated to
Participants' Accounts for the Plan Year in which the forfeiture occurs shall
be treated as an "annual addition" pursuant to Section 4.9(b) for the
Participants to whose Accounts they are reallocated and for the Participants
from whose Accounts they are forfeited.
(d) For each Highly Compensated Participant, the amount of
Excess Aggregate Contributions is equal to the Employer Non-Elective
Contributions made pursuant to Section 4.1(b) (Employer matching
contributions) and any qualified non-elective contributions, qualified
matching contributions or elective deferrals taken into account pursuant to
Section 4.7(c) on behalf of the Highly Compensated Participant (determined
prior to the application of this paragraph) minus the amount determined by
multiplying the Highly Compensated Participant's actual contribution ratio
(determined after application of this paragraph) by his "414(s) Compensation."
The actual contribution ratio must be rounded to the nearest one-hundredth of
one percent. In no case shall the amount of Excess Aggregate Contribution with
respect to any Highly Compensated Participant exceed the amount of Employer
Non-Elective Contributions made pursuant to Section 4.1(b) (Employer matching
contributions) and any qualified non-elective contributions, qualified
matching contributions or elective deferrals taken into account pursuant to
Section 4.7(c) on behalf of such Highly Compensated Participant for such Plan
Year.
(e) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as voluntary
Employee contributions due to recharacterization for the plan year of any
other qualified cash or deferred arrangement (as defined in Code Section
401(k)) maintained by the Employer that ends with or within the Plan Year.
(f) If during a Plan Year the projected aggregate amount of
Employer matching contributions to be allocated to all Highly Compensated
Participants under this Plan would, by virtue of the tests set forth in
Section 4.7(a), cause the Plan to fail such tests, then the Administrator may
automatically reduce proportionately or in the order provided in Section
4.8(a) each affected Highly Compensated Participant's projected share of such
contributions by an amount necessary to satisfy one of the tests set forth in
Section 4.7 (a).
(g) Notwithstanding the above, within twelve (12) months
after the end of the Plan Year, the Employer may make a special Qualified
Matching Contribution on behalf of Non-Highly Compensated Participants who
have elected to make Employer Elective Contributions (salary reduction
contributions) during the Plan Year in an amount based on a percentage of such
Employer Elective Contributions (salary reduction contributions) sufficient to
satisfy one of the tests set forth in Section 4.7(a) of the Plan.
(h) Notwithstanding the above, within twelve (12) months
after the end of the Plan Year, the Employer may make a special Qualified
Non-Elective Contribution on behalf of Non-Highly Compensated Participants in
an amount sufficient to satisfy one of the tests set forth in Section 4.7(a).
Such contribution shall be allocated to the Participant's Account of each
Non-Highly Compensated Participant in the same proportion that each Non-Highly
Compensated Participant's Compensation for the year bears to the total
Compensation of all Non-Highly Compensated Participants. A separate accounting
of any special Qualified Non-Elective Contribution shall be maintained in the
Participant's Account.
Alternatively, the Employer may make a Qualified Non-Elective
Contribution on behalf of one or more Non-Highly Compensated Participants in
an amount sufficient to satisfy one of the tests. Such contributions shall be
allocated in a non-discriminatory manner.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, effective for Plan Years
beginning before January 1, 2002, the maximum "annual additions" credited to a
Participant's accounts for any "limitation year" shall equal the lesser of:
(1) $30,000 (adjusted annually as provided in Code Section 415(d) pursuant to
the Regulations), or (2) twenty-five percent (25%) of the Participant's "415
Compensation" for such "limitation year." For any short "limitation year," the
dollar limitation in (1) above shall be reduced by a fraction, the numerator
of which is the number of full months in the short "limitation year" and the
denominator of which is twelve (12). Effective for Plan Years beginning on and
after January 1, 2002, except to the extent provided in Section 4.2(a) and
Code section 414(v), 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, "annual additions" means the sum credited to a Participant's accounts for
any "limitation year" of (1) Employer contributions, (2) Employee
contributions, (3) forfeitures, (4) amounts allocated, to an individual
medical 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 plan (as defined
in Code Section 419(e)) maintained by the Employer. Except, however, the "415
Compensation" percentage limitation referred to in paragraph (a)(2) above
shall not apply to: (1) any contribution for medical benefits (within the
meaning of Code Section 419A(f)(2)) after separation from service which is
otherwise treated as an "annual addition," or (2) any amount otherwise treated
as an "annual addition" under Code Section 415(l)(1).
(c) For purposes of applying the limitations of Code Section
415, the transfer of funds from one qualified plan to another is not an
"annual addition." In addition, the following are not Employee contributions
for the purposes of Section 4.9(b)(2): (1) rollover contributions (as defined
in Code Sections 402(e)(6), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the Plan; (3) repayments of
distributions received by an Employee pursuant to Code Section 411(a)(7)(B)
(cash-outs); (4) repayments of distributions received by an Employee pursuant
to Code Section 411(a)(3)(D) (mandatory contributions); and (5) Employee
contributions to a simplified employee pension excludable from gross income
under Code Section 408(k)(6).
(d) For purposes of applying the limitations of Code Section
415, the "limitation year" shall be the Plan Year.
(e) For the purpose of this Section, all qualified defined
contribution plans (whether terminated or not) ever maintained by the Employer
shall be treated as one defined contribution plan.
(f) For the purpose of this Section, if the Employer is a
member of a controlled group of corporations, trades or businesses under
common control (as defined by Code Section 1563(a) or Code Section 414(b) and
(c) as modified by Code Section 415(h)), is a member of an affiliated service
group (as defined by Code Section 414(m)), or is a member of a group of
entities required to be aggregated pursuant to Regulations under Code Section
414(o), all Employees of such Employers shall be considered to be employed by
a single Employer.
(g) For the purpose of this Section, if this Plan is a Code
Section 413(c) plan, each Employer who maintains this Plan will be considered
to be a separate Employer.
(h) (1) If a Participant participates in more than one
defined contribution plan maintained by the Employer which have different
Anniversary Dates, the maximum "annual additions" under this Plan shall equal
the maximum "annual additions" for the "limitation year" minus any "annual
additions" previously credited to such Participant's accounts during the
"limitation year."
(2) If a Participant participates in both a defined
contribution plan subject to Code Section 412 and a defined contribution plan
not subject to Code Section 412 maintained by the Employer which have the same
Anniversary Date, "annual additions" will be credited to the Participant's
accounts under the defined contribution plan subject to Code Section 412 prior
to crediting "annual additions" to the Participant's accounts under the
defined contribution plan not subject to Code Section 412.
(3) If a Participant participates in more than one
defined contribution plan not subject to Code Section 412 maintained by the
Employer which have the same Anniversary Date, the maximum "annual additions"
under this Plan shall equal the product of (A) the maximum "annual additions"
for the "limitation year" minus any "annual additions" previously credited
under subparagraphs (1) or (2) above, multiplied by (B) a fraction (i) the
numerator of which is the "annual additions" which would be credited to such
Participant's accounts under this Plan without regard to the limitations of
Code Section 415 and (ii) the denominator of which is such "annual additions"
for all plans described in this subparagraph.
(i) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements prescribed in
this Section shall at all times comply with the provisions of Code Section 415
and the Regulations thereunder, the terms of which are specifically
incorporated herein by reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in estimating a
Participant's Compensation, a reasonable error in determining the amount of
elective deferrals (within the meaning of Code Section 402(g)(3)) that may be
made with respect to any Participant under the limits of Section 4.9 or other
facts and circumstances to which Regulation 1.415-6(b)(6) shall be applicable,
the "annual additions" under this Plan would cause the maximum "annual
additions" to be exceeded for any Participant, the Administrator shall (1)
distribute any elective deferrals (within the meaning of Code Section
402(g)(3)) or return any Employee contributions (whether voluntary or
mandatory), and for the distribution of gains attributable to those elective
deferrals and Employee contributions, to the extent that the distribution or
return would reduce the "excess amount" in the Participant's accounts (2) hold
any "excess amount" remaining after the return of any elective deferrals or
voluntary Employee contributions 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 or Employee contributions which would constitute
"annual additions" are made to the Plan for such "limitation year" (4) reduce
Employer contributions to the Plan for such "limitation year" by the amount of
the "Section 415 suspense account" allocated and reallocated during such
"limitation year."
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year, shall mean the excess, if any, of (1) the
"annual additions" which would be credited to his account under the terms of
the Plan without regard to the limitations of Code Section 415 over (2) the
maximum "annual additions" determined pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415 suspense
account" shall mean an unallocated account equal to the sum of "excess
amounts" for all Participants in the Plan during the "limitation year." The
"Section 415 suspense account" shall not share in any earnings or losses of
the Trust Fund.
4.11 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred from other qualified plans by any Employee, provided that the
trust 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 or
Trust or create adverse tax consequences for the Employer. The amounts
transferred shall be set up in a separate account herein referred to as a
"Participant's Rollover Account." Such account shall be fully Vested at all
times and shall not be subject to Forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account shall be held
by the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part, except
as provided in paragraphs (c) and (d) of this Section.
(c) Except as permitted by Regulations (including Regulation
1.411(d)-4), amounts attributable to elective contributions (as defined in
Regulation 1.401(k)-l(g)(3)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-l(d).
(d) The Administrator, at the election of the Participant,
shall direct the Trustee to distribute all or a portion of the amount credited
to the Participant's Rollover Account. Any distributions of amounts held in a
Participant's Rollover Account shall be considered as part of a Participant's
benefit in determining whether an involuntary cash-out of benefits without
Participant consent may be made.
(e) The Administrator may direct that employee transfers made
after a valuation date be segregated into a separate account for each
Participant in a federally insured savings account, certificate of deposit in
a bank or savings and loan association, money market certificate, or other
short term debt security acceptable to the Trustee until such time as the
allocations pursuant to this Plan have been made, at which time they may
remain segregated or be invested as part of the general Trust Fund, to be
determined by the Administrator.
(f) For purposes of this Section, the term "qualified plan"
shall mean any tax qualified plan under Code Section 401(a). The term "amounts
transferred from other qualified plans" shall mean: (i) amounts transferred to
this Plan directly from another qualified plan; (ii) distributions from
another qualified plan which are eligible rollover distributions and which are
either transferred by the Employee to this Plan within sixty (60) days
following his receipt thereof or are transferred pursuant to a direct
rollover; (iii) 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 (A) were previously distributed to the
Employee by another qualified plan as a lump-sum distribution (B) were
eligible for tax-free rollover to a qualified plan and (C) were deposited in
such conduit individual retirement account within sixty (60) days of receipt
thereof and other than earnings on said assets; and (iv) amounts distributed
to the Employee from a conduit individual retirement account meeting the
requirements of clause (iii) above, and transferred by the Employee to this
Plan within sixty (60) days of his receipt thereof from such conduit
individual retirement account.
(g) Prior to accepting any transfers to which this Section
applies, the Administrator may require the Employee to establish that the
amounts to be transferred to this Plan meet the requirements of this Section
and may also require the Employee to provide an opinion of counsel
satisfactory to the Employer that the amounts to be transferred meet the
requirements of this Section.
(h) Notwithstanding anything herein to the contrary, a
transfer directly to this Plan from another qualified plan (or a transaction
having the effect of such a transfer) shall only be permitted if it will not
result in the elimination or reduction of any "Section 411(d)(6) protected
benefit," as provided in Section 8.1.
4.12 VOLUNTARY CONTRIBUTIONS
(a) Prior to April 2, 1996, Participants were eligible to
make Voluntary Contributions to the Plan. On and after April 2, 1996,
Voluntary Contributions may no longer be made to the Plan, provided, however,
that after-tax contributions may be transferred to the Plan pursuant to
trust-to-trust transfers from another qualified plan. The balance in each
Participant's Account attributable to Voluntary Contributions (and any
earnings thereon) shall be fully Vested at all times and shall not be subject
to Forfeiture for any reason.
(b) A Participant may elect to withdraw his Voluntary
Contributions from his Participant's Account attributable to Voluntary
Contributions and the actual earnings thereon. If the Administrator maintains
sub-accounts with respect to Voluntary Contributions (and earnings thereon)
which were made on or before a specified date, a Participant shall be
permitted to designate which sub-account shall be the source for his
withdrawal.
(c) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive benefits, the fair
market value of the portion of the Participant's Account attributable to
Voluntary Contributions (and any earnings thereon) shall be used to provide
additional benefits to the Participant or his Beneficiary.
(d) The Administrator may direct that Voluntary Contributions
made after a Valuation Date be segregated into a separate account for each
Participant in a federally insured savings account, certificate of deposit in
a bank or savings and loan association, money market certificate or other
short term debt security acceptable to the Trustee until such time as the
allocations pursuant to this Plan have been made, at which time they may
remain segregated or be invested as part of the general Trust Fund to be
determined by the Administrator.
4.13 PAYSOP CONTRIBUTIONS
Effective on April 1, 1985, a Payroll Credit Employee Stock
Ownership Plan ("PAYSOP") was established in a prior plan to promote
Employees' interest in the business endeavors of the Employer.
Effective for the Plan Year beginning January 1, 1987, the
applicable provision of the prior plan under which contributions were made is
no longer operative. Contributions made on behalf of Participants pursuant to
the applicable provision of the prior plan will be referred to as the
"Employer's PAYSOP Contributions."
4.14 DIRECTED INVESTMENT ACCOUNT
(a) 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.
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: (i) 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 (iv) of this paragraph (E); (ii) Loan to a plan
sponsor or any affiliate of the sponsor; (iii) Acquisition or sale of any
employer real property (as defined in section 407(d)(2) of ERISA); or (iv)
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.
(b) 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.
(c) 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.
(d) 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.
(e) 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 Trustee 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.
(f) 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.
4.15 SUPPLEMENTAL EMPLOYER CONTRIBUTION
(a) Supplemental Employer Contribution
The Employer shall make a supplemental contribution (the
"Supplemental Employer Contribution") on behalf of each individual who is an
active employee of the Employer or any Affiliated Employer on January 1, 1997,
and who is either:
(i) a Participant on the first day of the Plan Year and
otherwise eligible to share in the Supplemental Employer Contribution, or
(ii) a Participant at any time during the Plan Year, if
such individual was a participant in the Thrifty PayLess, Inc. Profit Sharing
and 401(k) Retirement Savings Plan on January 1, 1997.
The amount of the Supplemental Employer Contribution shall be
determined by the Chief Financial Officer by appropriate resolution on or
before the last day of the Employer's taxable year that ends within such Plan
Year. The Supplemental Employer Contribution shall be allocated in accordance
with paragraph (b) below.
In no event shall the Supplemental Employer Contribution, when
aggregated with other Employer and Elective Contributions for the Employer's
taxable year that ends within such Plan Year, exceed the amount deductible by
the Employer for federal income tax purposes for such taxable year.
The Supplemental Employer Contribution for a Plan Year may be made
by the Employer in cash, in one or more installments without interest. The
Employer may make the Supplemental Employer Contribution at any time during
the Plan Year, and for purposes of deducting such Contribution, may make the
Contribution, not later than the time prescribed by the Code for filing the
Employer's income tax return including extensions, for its taxable year that
ends within such Plan Year.
(b) Allocation of Supplemental Employer Contribution
The Supplemental Employer Contribution for the Plan Year will
be allocated to the Accounts of each individual who is both an active Employee
and a Participant on the first day of the Plan Year, or a Participant at any
time during the Plan Year if such individual was a participant in the Thrifty
Payless, Inc. Profit Sharing and 401(k) Retirement Savings Plan on January 1,
1997, as follows:
(1) First, the Supplemental Employer Contribution will be
allocated during the Plan Year to the Account of each Participant as Elective
Contributions and as Employer Non-Elective Contributions (matching), and
(2) Second, the balance of the Supplemental Employer
Contribution remaining after the allocation in paragraph (1) above, shall be
allocated to Accounts of Participants who are actively employed on the last
day of the Plan Year or who are not actively employed on the last day of the
Plan Year due to Disability, Normal or Postponed Retirement or death, in the
ratio that such Participant's Elective Contributions during the Plan Year bear
to the Elective Contributions of all such Participants during the Plan Year.
(3) The Plan Administrator shall reduce the proportionate
allocation under paragraph (2) above to the Highly Compensated Employees (as
defined in Code Section 414(q)) to the extent necessary to comply with the
provisions of Code Section 401(a)(4) and the regulations thereunder.
(4) The Supplemental Employer Contribution allocated to
the Account of a Participant pursuant to paragraph (2) above shall be treated
in the same manner as the Employer Non-Elective Contributions (matching) for
all purposes of the Plan, and shall become fully vested and nonforfeitable in
accordance with Section 6.4(c). These Contributions shall be tested in
accordance with Section 4.7.
(5) The Supplemental Employer Contribution shall be held
in a suspense account until allocated in accordance with this Section 4.15(b).
Such suspense account shall not participate in the allocation of investment
gains, losses, income and deductions of the trust as a whole, but shall be
invested separately and all gains, losses, income and deductions attributable
to such investment shall be applied to reduce any Plan administrative
expenses, and thereafter, to reduce Employer contributions.
(6) If the amount of a Supplemental Employer Contribution
otherwise allocated to a participant would cause the Annual Additions of such
Participant to exceed the Participant's Maximum Annual Addition for any
Limitation Year, then such allocation shall be reduced pursuant to Section 4.9.
(7) Notwithstanding any other provision of the Plan to
the contrary, any allocation to a Participant's Account resulting from
Elective Contributions shall be made under either Section 4.2 or this Section,
as appropriate, but not both Sections. Similarly, any allocation of an
Employer Non-Elective Contribution made pursuant to Section 4.1(b) of the Plan
(Employer matching contribution) shall be made under either Section 4.1(b) or
this Section, as appropriate, but not both Sections.
4.16 LIFE INSURANCE
Prior to April 1, 1991, the purchase of life insurance was
permitted as an investment option. Effective on and after April 1, 1991, the
purchase of life insurance will no longer be available as an investment option
under this restated Plan.
If a Participant dies prior to the date on which his life
insurance policy, purchased prior to April 1, 1991, is converted or
distributed to him in accordance with the following sentence, the Trustee at
the direction of the Administrator, will pay any death benefits to the
Participant's Beneficiary as provided in this Plan.
The Trustee, at the direction of the Administrator, will
(i) convert the entire value of such life insurance
policies, purchased prior to April 1, 1991, to cash at or before the
Participant's retirement so that no portion of such value may be used to
continue life insurance protection beyond retirement date, or
(ii) distribute the policy, purchased prior to April 1,
1991, to the Participant. Any such election by the Participant may be subject
to the spousal consent requirements of Article VI, if applicable.
Provided, any Participant who is eligible to be part of the
proposed settlement class in the In Re: Great Southern Life Insurance Company
Sales Practices Litigation ("Litigation"), shall direct the Trustee as to the
action to be taken with respect to the proposed settlement of the Litigation
on his behalf. If a Participant does not so direct the Trustee, the
Participant shall be deemed to have directed the Trustee to elect on behalf of
the Participant to: (i) be part of the proposed settlement class; (ii) submit
a claim under the Claim Evaluation Process; and (iii) not to object to any
part of the settlement. To the extent premium certificates are issued with
respect to any Participant who elects to be part of the proposed settlement
class, all premium certificates shall be deposited in the Trust Fund and then
distributed to the Participant as soon as administratively feasible.
4.17 SAFE-HARBOR PLAN TESTING EXCEPTION
The requirements of Sections 4.5, 4.6, 4.7, and 4.8 shall not
apply to the extent the Plan is operated in accordance with Code sections
401(k)(12) and 401(m)(11), as set forth in Sections 2.12, 4.1(b), 4.3 and 6.4
of the Plan, with respect to a Plan Year. In the event that the safe-harbor
requirements of Code section 401(k)(12) and 401(m)(11) are not satisfied for a
Plan Year, Sections 4.5, 4.6, 4.7, and 4.8 shall apply, in accordance with all
applicable regulatory and other guidance issued by the Secretary of the
Treasury.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation
Date, to determine the net worth of the assets comprising the Trust Fund as it
exists on the Valuation Date. In determining such net worth, the Trustee shall
value the assets comprising the Trust Fund at their fair market value as of
the Valuation Date and shall deduct all expenses for which the Trustee has not
yet obtained reimbursement from the Employer or the Trust Fund. The Trustee
may update the value of any shares held in the Participant Directed Account by
reference to the number of shares held by that Participant, priced at the
market value as of the Valuation Date.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the
Trust Fund which are listed on a registered stock exchange, the Administrator
shall direct the Trustee to value the same at the prices they were last traded
on such exchange preceding the close of business on the Valuation Date. If
such securities were not traded on the Valuation Date, or if the exchange on
which they are traded was not open for business on the Valuation Date, then
the securities shall be valued at the prices at which they were last traded
prior to the Valuation Date. Any unlisted security held in the Trust Fund
shall be valued at its bid price next preceding the close of business on the
Valuation Date, which bid price shall be obtained from a registered broker or
an investment banker. In determining the fair market value of assets other
than securities for which trading or bid prices can be obtained, the Trustee
may appraise such assets itself, or in its discretion, employ one or more
appraisers for that purpose and rely on the values established by such
appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
In the event of a Participant terminates his employment upon
reaching his Normal Retirement Date, Early Retirement Date or Late Retirement
Date, all amounts credited to such Participant's Account shall become fully
Vested. However, a Participant may postpone the termination of his employment
with the Employer to a later date, in which event the participation of such
Participant in the Plan, including the right to receive allocations pursuant
to Section 4.4, shall continue until his Late Retirement Date. Upon a
Participant's Retirement Date, or as soon thereafter as is practicable, the
Trustee shall distribute, at the election of the Participant, all or a portion
of the amounts credited to such Participant's Account in accordance with
Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement
Date or other termination of his employment, all amounts credited to such
Participant's Account shall become fully Vested. The Administrator shall
direct the Trustee, in accordance with the provisions of Sections 6.6 and 6.7,
to distribute all or a portion of the value of the deceased Participant's
accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct the Trustee, in accordance with the provisions of Sections 6.6
and 6.7, to distribute any remaining Vested amounts credited to the accounts
of a deceased Former Participant to such Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason of an
outstanding loan to the Participant or Former Participant shall be taken into
account in determining the amount of the Pre-Retirement Survivor Annuity.
(d) The Administrator may require such proper proof of death
and such evidence of the right of any person to receive payment of the value
of the account of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's determination of death
and of the right of any person to receive payment shall be conclusive.
(e) Unless otherwise elected in the manner prescribed in
Section 6.6, the Beneficiary of the death benefit shall be the Participant's
spouse, who shall receive such benefit in the form of a Pre-Retirement
Survivor Annuity pursuant to Section 6.6. Except, however, the Participant may
designate a Beneficiary other than his spouse if:
(1) the Participant and his spouse have validly waived
the Pre-Retirement Survivor Annuity in the manner prescribed in Section 6.6,
and the spouse has waived his or her right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the Participant has a court
order to such effect (and there is no "qualified domestic relations order" as
defined in Code Section 414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made
on a form satisfactory to the Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by filing
his election of such revocation or change with the Administrator on the form
and in the manner prescribed by the Administrator. However, the Participant's
spouse must again consent in writing to any change in Beneficiary unless the
original consent acknowledged that the spouse had the right to limit consent
only to a specific Beneficiary and that the spouse voluntarily elected to
relinquish such right. In the event no valid designation of Beneficiary exist
at the time of the Participant's death or in the event the designated
Beneficiary predeceases the Participant, the death benefit shall be payable in
the following order: to the Participant's spouse, if living, otherwise, to the
Participant's children, if living, otherwise, to the Participant's parents, if
living, otherwise, to the Participant's siblings, if living, otherwise to the
estate of the Participant.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability
prior to his Retirement Date or other termination of his employment, all
amounts credited to such Participant's Account shall become fully Vested. In
the event of a Participant's Total and Permanent Disability, the Trustee, in
accordance with the provisions of Sections 6.5 and 6.7, shall distribute to
such Participant all or a portion of the amounts credited to such
Participant's Account as though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is
terminated for any reason other than death, Total and Permanent Disability or
retirement, such Participant shall be entitled to such benefits as are
provided hereinafter pursuant to this Section 6.4.
In the event that the amount of the Vested portion of the
Terminated Participant's Account equals or exceeds the fair market value of
any insurance Contracts, the Trustee, when so directed by the Administrator
and agreed to by the Terminated Participant, shall assign, transfer, and set
over to such Terminated Participant all Contracts on his life in such form or
with such endorsements so that the settlement options and forms of payment are
consistent with the provisions of Section 6.5. In the event that the
Terminated Participant's Vested portion does not at least equal the fair
market value of the Contracts, if any, the Terminated Participant may pay over
to the Trustee the sum needed to make the distribution equal to the value of
the Contracts being assigned or transferred, or the Trustee, pursuant to the
Participant's election, may borrow the cash value of the Contracts from the
insurer so that the value of the Contracts is equal to the Vested portion of
the Terminated Participant's Account and then assign the Contracts to the
Terminated Participant.
Distribution of the funds due to a Terminated Participant
shall be made on the occurrence of an event which would result in the
distribution had the Terminated Participant remained in the employ of the
Employer (upon the Participant's death, Total and Permanent Disability, Early
or Normal Retirement). However, at the election of the Participant, the
Administrator shall direct the Trustee to cause all or a portion of the Vested
portion of the Terminated Participant's Account to be payable to such
Terminated Participant. Provided, in the event a Participant is to receive a
distribution and subsequently is reemployed by the Employer before the
distribution is made, such distribution shall not be made. Any distribution
under this paragraph shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5.
If the value of a Terminated Participant's Vested benefit
derived from Employer and Employee contributions does not exceed $5,000 on the
Annuity Starting Date, the Administrator shall direct the Trustee to cause the
entire Vested benefit to be paid to such Participant in a single lump sum;
provided no such distribution shall be made after the Annuity Starting Date
without the Participant's consent and the consent of the Participant's spouse
(if applicable), in accordance with Section 6.5.
(b) A Participant shall always be fully Vested in the portion
of his Account attributable to his Salary Reduction Contributions, Employer
Non-Elective Contributions made pursuant to Section 4.1(b) for Plan Years
beginning on and after January 1, 2002 Employer safe-harbor matching
contributions, and Employer Qualified Non-Elective Contributions made pursuant
to Section 4.1(d) (Employer qualified discretionary contributions) and
Employer PAYSOP Contributions made pursuant to the prior plan.
(c) The Vested portion of any Participant's Account
attributable to Employer Non-Elective Contributions made pursuant to Section
4.1(c) and Employer matching contributions made with respect to Plan Years
beginning prior to January 1, 2002 (Employer matching contributions) shall be
a percentage of the total of such amount credited to his Participant's Account
determined on the basis of the Participant's number of whole years of his
Period of Service according to the following schedule:
Less than 2 0 %
2 20 %
3 40 %
4 60 %
5 80 %
6 100 %
(d) Notwithstanding the vesting schedule above, upon the
complete discontinuance of contributions to the Plan or upon any full or
partial termination of the Plan, all amounts credited to the account of any
affected Participant shall become 100% Vested and shall not thereafter be
subject to Forfeiture.
(e) The computation of a Participant's nonforfeitable
percentage of his interest in the Plan shall not be reduced as the result of
any direct or indirect amendment to this Plan. For this purpose, the Plan
shall be treated as having been amended if the Plan provides for an automatic
change in vesting due to a change in top heavy status. In the event that the
Plan is amended to change or modify any vesting schedule, to the extent
required in Regulations, a Participant with at least three (3) whole years of
his Period of Service as of the expiration date of the election period may
elect to have his nonforfeitable percentage computed under the Plan without
regard to such amendment. If a Participant fails to make such election, then
such Participant shall be subject to the new vesting schedule. The
Participant's election period shall commence on the adoption date of the
amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of
the amendment from the Employer or Administrator.
(f) (1) If any Former Participant shall be reemployed by
the Employer before a 1-Year Break in Service occurs, he shall continue to
participate in the Plan in the same manner as if such termination had not
occurred.
(2) If any Former Participant shall be reemployed by the
Employer before five (5) consecutive 1-Year Breaks in Service, and such Former
Participant had received, or was deemed to have received, a distribution of
his entire Vested interest prior to his reemployment, his forfeited account
shall be reinstated only if he repays the full amount distributed to him
before the earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer or the close of the
first period of five (5) consecutive 1-Year Breaks in Service commencing after
the distribution, or in the event of a deemed distribution, upon the
reemployment of such Former Participant. In the event the Former Participant
does repay the full amount distributed to him, or in the event of a deemed
distribution, the undistributed portion of the Participant's Account must be
restored in full, unadjusted by any gains or losses occurring subsequent to
the Valuation Date coinciding with or preceding his termination. The source
for such reinstatement shall first be any Forfeitures occurring during the
year. If such source is insufficient, then the Employer shall contribute an
amount which is sufficient to restore any such forfeited Accounts provided,
however, that if a discretionary contribution is made for such year pursuant
to Section 4.1(c), such contribution shall first be applied to restore any
such Accounts and the remainder shall be allocated in accordance with Section
4.4.
(3) If any Former Participant is reemployed after a
1-Year Break in Service has occurred, Periods of Service shall include Periods
of Service prior to his 1-Year Break in Service subject to the following
rules:
(i) Any Former Participant who under the Plan does
not have a nonforfeitable right to any interest in the Plan resulting from
Employer contributions shall lose credits otherwise allowable under (i) above
if his consecutive 1-Year Breaks in Service equal or exceed the greater of (A)
five (5) or (B) the aggregate number of his pre-break Periods of Service;
(ii) After five (5) consecutive 1-Year Breaks in
Service, a Former Participant's Vested Account balance attributable to
pre-break service shall not be increased as a result of post-break service;
(iii) If a Former Participant is reemployed by the
Employer, he shall participate in the Plan immediately on his date of
reemployment;
(iv) If a Former Participant (a 1-Year Break in
Service previously occurred, but employment had not terminated) is credited
with an Hour of Service after the first eligibility computation period in
which he incurs a 1-Year Break in Service, he shall participate in the Plan
immediately.
6.5 DISTRIBUTION OF BENEFITS
The provisions of this Section 6.5 are subject to Section 6.13,
Profit Sharing Exception, which provisions shall apply to all distributions
under the Plan.
(a) (1) Unless otherwise elected as provided below, a
Participant who is married on the Annuity Starting Date and who does not die
before the Annuity Starting Date shall receive the value of all of his
benefits in the form of a joint and survivor annuity. The joint and survivor
annuity is an annuity that commences immediately and shall be equal in value
to a single life annuity. Such joint and survivor benefits following the
Participant's death shall continue to the spouse during the spouse's lifetime
at a rate equal to 50% of the rate at which such benefits were payable to the
Participant. This joint and 50% survivor annuity shall be considered the
designated qualified joint and survivor annuity and automatic form of payment
for the purposes of this Plan. However, the Participant may elect to receive a
smaller annuity benefit with continuation of payments to the spouse at a rate
of seventy-five percent (75%) or one hundred percent (100%) of the rate
payable to a Participant during his lifetime, which alternative joint and
survivor annuity shall be equal in value to the automatic joint and 50%
survivor annuity. An unmarried Participant shall receive the value of his
benefit in the form of a life annuity. Such unmarried Participant, however,
may elect in writing to waive the life annuity. The election must comply with
the provisions of this Section as if it were an election to waive the joint
and survivor annuity by a married Participant, but without the spousal consent
requirement. The Participant may elect to have any annuity provided for in
this Section distributed upon the attainment of the "earliest retirement age"
under the Plan. The "earliest retirement age" is the earliest date on which,
under the Plan, the Participant could elect to receive retirement benefits.
(2) Any election to waive the joint and survivor annuity
must be made by the Participant in writing during the election period and be
consented to by the Participant's spouse. If the spouse is legally incompetent
to give consent, the spouse's legal guardian, even if such guardian is the
Participant, may give consent. Such election shall designate a Beneficiary (or
a form of benefits) 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 by the spouse). Such spouse's
consent shall be irrevocable and must acknowledge the effect of such election
and be witnessed by a Plan representative or a notary public. Such consent
shall not be required if it is established to the satisfaction of the
Administrator that the required consent cannot be obtained because there is no
spouse, the spouse cannot be located, or other circumstances that may be
prescribed by Regulations. The election made by the Participant and consented
to by his spouse may be revoked by the Participant in writing without the
consent of the spouse at any time during the election period. The number of
revocations shall not be limited. Any new election must comply with the
requirements of this paragraph. A former spouse's waiver shall not be binding
on a new spouse.
(3) The election period to waive the joint and survivor
annuity shall be the 90 day period ending on the Annuity Starting Date.
(4) With regard to the election, the Administrator shall
provide to the Participant no less than 30 days and no more than 90 days
before the Annuity Starting Date a written explanation of:
(i) the terms and conditions of the joint and
survivor annuity,
(ii) the Participant's right to make, and the effect
of, an election to waive the joint and survivor annuity,
(iii) the right of the Participant's spouse to
consent to any election to waive the joint and survivor annuity, and
(iv) the right of the Participant to revoke such
election, and the effect of such revocation.
(5) Any distribution provided for in this Section 6.5 may
commence less than 30 days after the notice required by Code Section 417(a)(3)
is given, provided that:
(i) the Administrator clearly informs the Participant
that the Participant has a right to a period of 30 days after receiving the
notice to consider whether to waive the joint and survivor annuity and consent
to a form of distribution other than a joint and survivor annuity,
(ii) the Participant is permitted to revoke an
affirmative distribution election at least until the Annuity Starting Date,
or, if later, at any time prior to the expiration of the 7-day period that
begins the day after the explanation of the joint and survivor annuity is
provided to the Participant,
(iii) distribution in accordance with the affirmative
election does not commence before the expiration of the 7-day period that
begins the day after the explanation of the joint and survivor annuity is
provided to the Participant.
(6) 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.
(b) In the event a married Participant duly elects pursuant
to paragraph (a)(2) above not to receive his benefit in the form of a joint
and survivor annuity, or if such Participant is not married, in the form of a
life annuity, the Administrator, pursuant to the election of the Participant,
shall direct the Trustee to distribute to a Participant or his Beneficiary any
amount to which he is entitled under the Plan in one or more of the following
methods:
(1) One lump-sum payment in cash or in property.
(2) Payments over a period certain or in specified dollar
amounts in monthly, quarterly, semiannual, or annual cash installments
(excluding, effective May 1, 2002, partial distributions). In order to provide
such installment payments, the Administrator may (A) segregate the aggregate
amount thereof in a separate, federally insured savings account, certificate
of deposit in a bank or savings and loan association, money market certificate
or other liquid short-term security or (B) purchase a nontransferable annuity
contract for a term certain (with no life contingencies) providing for such
payment. The period over which such payment is to be made shall not extend
beyond the Participant's life expectancy (or the life expectancy of the
Participant and his designated Beneficiary). The minimum payment amount is
$250.
(3) Purchase of or providing an annuity. However, such
annuity may not be in any form that will provide for payments over a period
extending beyond either the life of the Participant (or the lives of the
Participant and his designated Beneficiary) or the life expectancy of the
Participant (or the life expectancy of the Participant and his designated
Beneficiary).
(c) The present value of a Participant's Account may not be
paid without his written consent if the Vested value exceeds $5,000. A
Participant's spouse must also consent if the Participant elects payment in
the form of an annuity, in accordance with Section 6.5(a).
If the value of the Participant's Vested benefit derived from
Employer and Employee contributions does not exceed $5,000, the Administrator
may immediately distribute such benefit without such Participant's consent. No
distribution may be made under the preceding sentence after the Annuity
Starting Date unless the Participant consents in writing to such distribution.
(d) Any consent required under (c) above shall meet the
following requirements:
(1) No consent shall be valid unless the Participant has
received the notice required by Section 6.5(a) or the general description of
the material features of the optional forms of benefit available in accordance
with Regulation 1.411(a)-11(c), as applicable.
(2) The Participant must be informed of his right to
defer receipt of the distribution. If a Participant fails to consent, it shall
be deemed an election to defer the commencement of payment of any benefit.
However, any election to defer the receipt of benefits shall not apply with
respect to distributions which are required under Section 6.5(e).
(3) Notice of the rights specified under this paragraph
shall be provided no less than 30 days and no more than 90 days before the
Annuity Starting Date.
(4) Written consent of the Participant to the
distribution must not be made before the Participant receives the notice and
must not be made more than 90 days before the Annuity Starting Date.
(5) No consent shall be valid if a significant detriment
is imposed under the Plan on any Participant who does not consent to the
distribution.
(6) Notwithstanding the foregoing, any such distribution
may commence less than 30 days, subject to Section 6.5(a)(5), after the notice
required under Regulation 1.411(a)-11(c) is given, provided that: (1) the
Administrator clearly informs the Participant that the Participant has a right
to a period of at least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and (2) the Participant, after receiving the
notice, affirmatively elects a distribution. 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.
(e) Notwithstanding any provision in the Plan to the
contrary, the distribution of a Participant's benefits, whether under the Plan
or through the purchase of an annuity contract, shall be made in accordance
with the following requirements and shall otherwise comply with Code Section
401(a)(9) and the Regulations thereunder (including Regulation 1.401(a)(9)-2),
the provisions of which are incorporated herein by reference:
(1) Effective January 1, 1997, a Participant's benefits
shall be distributed or must begin to be distributed to him not later than
April l of the calendar year following the later of (i) the calendar year in
which the Participant attains age 70 1/2 or (ii) the calendar year in which
the Participant retires, provided, however, that this clause (ii) shall not
apply in the case of a Participant who is a "five (5) percent owner" at any
time during the five (5) Plan Year period ending in the calendar year in which
he attains age 70 1/2 or, in the case of a Participant who becomes a "five (5)
percent owner" during any subsequent Plan Year, clause (ii) shall no longer
apply and the required beginning date shall be the April 1st of the calendar
year following the calendar year in which such subsequent Plan Year ends. Such
distributions shall be equal to or greater than any required distribution.
Distributions to a Participant must begin no later than
the applicable April 1st as determined under the preceding paragraph and must
be made over the life of the Participant (or the lives of the Participant and
the Participant's designated Beneficiary) or a period certain not extending
beyond the life expectancy of the Participant (or the life expectancies of the
Participant and his designated Beneficiary) in accordance with Regulations.
(2) Distributions to a Participant and his Beneficiaries
shall only be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations thereunder.
(f) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a life
annuity) shall be redetermined annually in accordance with Regulations. Life
expectancy and joint and last survivor expectancy shall be computed using the
return multiples in Tables V and VI of Regulation 1.72-9.
(g) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of any annuity
Contract purchased and distributed to a Participant or spouse shall comply
with all of the requirements of the Plan.
(h) If a distribution is made at a time when a Participant is
not fully Vested in his Participant's Account and the Participant may increase
the Vested percentage in such account:
(1) a separate account shall be established for the
Participant's interest in the Plan as of the time of the distribution; and
(2) at any relevant time, the Participant's Vested
portion of the separate account shall be equal to an amount ("X") determined
by the formula:
X equals P (AB plus (R x D) ) - (R x D)
For purposes of applying the formula: P is the Vested percentage at the
relevant time, AB is the account balance at the relevant time, D is the amount
of distribution, and R is the ratio of the account balance at the relevant
time to the account balance after distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested
Participant who dies before the Annuity Starting Date and who has a surviving
spouse shall have the Pre-Retirement Survivor Annuity paid to his surviving
spouse. The Participant's spouse may direct that payment of the Pre-Retirement
Survivor Annuity commence within a reasonable period after the Participant's
death. If the spouse does not so direct, payment of such benefit will commence
at the time the Participant would have attained the later of his Normal
Retirement Age or age 62. However, the spouse may elect a later commencement
date. Any distribution to the Participant's spouse shall be subject to the
rules specified in Section 6.6(g).
(b) Any election to waive the Pre-Retirement Survivor Annuity
before the Participant's death must be made by the Participant in writing
during the election period and shall require the spouse's irrevocable consent
in the same manner provided for in Section 6.5(a)(2). Further, the spouse's
consent must acknowledge the specific nonspouse Beneficiary. Notwithstanding
the foregoing, the nonspouse Beneficiary need not be acknowledged, provided
the consent of the spouse acknowledges that the spouse has the right to limit
consent only to a specific Beneficiary and that the spouse voluntarily elects
to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor
Annuity shall begin on the first day of the Plan Year in which the Participant
attains age 35 and end on the date of the Participant's death. An earlier
waiver (with spousal consent) may be made provided a written explanation of
the Pre-Retirement Survivor Annuity is given to the Participant and such
waiver becomes invalid at the beginning of the Plan Year in which the
Participant turns age 35. In the event a Vested Participant separates from
service prior to the beginning of the election period, the election period
shall begin on the date of such separation from service.
(d) With regard to the election, the Administrator shall
provide each Participant within the applicable period, with respect to such
Participant (and consistent with Regulations), a written explanation of the
Pre-Retirement Survivor Annuity containing comparable information to that
required pursuant to Section 6.5(a)(4). For the purposes of this paragraph,
the term "applicable period" means, with respect to a Participant, whichever
of the following periods ends last:
(1) The period beginning with the first day of the Plan
Year in which the Participant attains age 32 and ending with the close of the
Plan Year preceding the Plan Year in which the Participant attains age 35;
(2) A reasonable period after the individual becomes a
Participant;
(3) A reasonable period ending after the Plan no longer
fully subsidizes the cost of the Pre-Retirement Survivor Annuity with respect
to the Participant;
(4) A reasonable period ending after Code Section
401(a)(11) applies to the Participant; or
(5) A reasonable period after separation from service in
the case of a Participant who separates before attaining age 35. For this
purpose, the Administrator must provide the explanation beginning one year
before the separation from service and ending one year after such separation.
If such a Participant thereafter returns to employment with the Employer, the
applicable period for such Participant shall be redetermined.
For purposes of applying this Section 6.6(d), a
reasonable period ending after the enumerated events described in paragraphs
(2), (3) and (4) is the end of the two year period beginning one year prior to
the date the applicable event occurs, and ending one year after that date.
(e) If the present value of the Pre-Retirement Survivor
Annuity derived from Employer and Employee contributions does not exceed
$5,000, the Administrator shall direct the immediate distribution of such
amount to the Participant's spouse. No distribution may be made under the
preceding sentence after the Annuity Starting Date unless the spouse consents
in writing. If the value exceeds $5,000, an immediate distribution of the
entire amount of the Pre-Retirement Survivor Annuity may be made to the
surviving spouse, provided such surviving spouse consents in writing to such
distribution. Any written consent required under this paragraph must be
obtained not more than 90 days before commencement of the distribution and
shall be made in a manner consistent with Section 6.5(a)(2).
(f) (1) To the extent the death benefit is not paid in the
form of a Pre-Retirement Survivor Annuity, it shall be paid to the
Participant's Beneficiary by either of the following methods, as elected by
the Participant (or if no election has been made prior to the Participant's
death, by his Beneficiary), subject to the rules specified in Section 6.6(g):
(2) One lump-sum payment in cash or in property.
(i) Payment in monthly, quarterly, semi-annual, or
annual cash installments over a period to be determined by the Participant or
his Beneficiary. After periodic installments commence, the Beneficiary shall
have the right to direct the Trustee to reduce the period over which such
periodic installments shall be made, and the Trustee shall adjust the cash
amount of such periodic installments accordingly.
(ii) Purchase of or providing an annuity. However,
such annuity may not be in any form that will provide for payments over a
period extending beyond either the life of the Participant (or the lives of
the Participant and his designated Beneficiary) or the life expectancy of the
Participant (or the life expectancy of the Participant and his designated
Beneficiary).
(3) In the event the death benefit payable pursuant to
Section 6.2 is payable in installments, then, upon the death of the
Participant, the Administrator may direct the Trustee to segregate the death
benefit into a separate account, and the Trustee shall invest such-segregated
account separately, and the funds accumulated in such account shall be used
for the payment of the installments.
(g) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant shall be made in
accordance with the following requirements and shall otherwise comply with
Code Section 401(a)(9) and the Regulations thereunder. If the death benefit is
paid in the form of a Pre-Retirement Survivor Annuity, then distributions to
the Participant's surviving spouse must commence on or before the later of:
(1) December 31st of the calendar year immediately following the calendar year
in which the Participant died; or (2) December 31st of the calendar year in
which the Participant would have attained age 70 1/2. If it is determined
pursuant to Regulations that the distribution of a Participant's interest has
begun and the Participant dies before his entire interest has been distributed
to him, the remaining portion of such interest shall be distributed at least
as rapidly as under the method of distribution selected pursuant to Section
6.5 as of his date of death. If a Participant dies before he has begun to
receive any distributions of his interest under the Plan or before
distributions are deemed to have begun pursuant to Regulations (and
distributions are not to be made in the form of a Pre-Retirement Survivor
Annuity), then his death benefit shall be distributed to his Beneficiaries by
December 31st of the calendar year in which the fifth anniversary of his date
of death occurs.
However, the 5-year distribution requirement of the preceding
paragraph shall not apply to any portion of the deceased Participant's
interest which is payable to or for the benefit of a designated Beneficiary.
In such event, such portion may, at the election of the Participant (or the
Participant's designated Beneficiary), be distributed over the life of such
designated Beneficiary (or over a period not extending beyond the life
expectancy of such designated Beneficiary) provided such distribution begins
not later than December 31st of the calendar year immediately following the
calendar year in which the Participant died. However, in the event the
Participant's spouse (determined as of the date of the Participant's death) is
his Beneficiary, the requirement that distributions commence within one year
of a Participant's death shall not apply. In lieu thereof, distributions must
commence on or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died; or (2)
December 31st of the calendar year in which the Participant would have
attained age 70 1/2. If the surviving spouse dies before distributions to such
spouse begin, then the 5-year distribution requirement of this Section shall
apply as if the spouse was the Participant.
(h) For purposes of Section 6.6(g), the election by a
designated Beneficiary to be excepted from the 5-year distribution requirement
must be made no later than December 31st of the calendar year following the
calendar year of the Participant's death. Except, however, with respect to a
designated Beneficiary who is the Participant's surviving spouse, the election
must be made by the earlier of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died or, if
later, the calendar year in which the Participant would have attained age 70
1/2; or (2) December 31st of the calendar year which contains the fifth
anniversary of the date of the Participant's death. An election by a
designated Beneficiary must be in writing and shall be irrevocable as of the
last day of the election period stated herein. In the absence of an election
by the Participant or a designated Beneficiary, the 5-year distribution
requirement shall apply.
(i) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a life
annuity) shall be redetermined annually in accordance with Regulations. Life
expectancy and joint and last survivor expectancy shall be computed using the
return multiples in Tables V and VI of Regulation 1.72-9.
(j) Notwithstanding anything in this Section 6.6 or in
Section 6.5 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, notwithstanding any provision of the Plan
to the contrary. This amendment shall continue in effect until the end of the
last calendar year beginning before the effective date of final regulations
under section 401(a)(9) or such other date as may be specified in guidance
published by the Internal Revenue Service.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the Trustee is
to make a distribution or to commence a series of payments the distribution
may be made or begun as soon as is practicable. However, unless a Former
Participant elects to defer the receipt of benefits (such election may not
result in a death benefit that is more than incidental), the payment of
benefits shall begin not later than the 60th day after the close of the Plan
Year in which the latest of the following events occurs: (a) the date on which
the Participant attains the earlier of age 65 or the Normal Retirement Age
specified herein; (b) the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or (c) the date the
Participant terminates his service with the Employer.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom
the Beneficiary maintains his residence, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act or Gift to Minors Act, if
such is permitted by the laws of the state in which said Beneficiary resides.
Such a payment to the legal guardian, custodian or parent of a minor
Beneficiary shall fully discharge the Trustee, Employer, and Plan from further
liability on account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable
to a Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such
Participant or his Beneficiary, the amount so distributable shall be treated
as a Forfeiture pursuant to the Plan. In the event a Participant or
Beneficiary is located subsequent to his benefit being reallocated, such
benefit shall be restored unadjusted for earnings or losses.
6.10 PRE-RETIREMENT DISTRIBUTION
At such time as a Participant shall have attained the age of
59-1/2 years, the Administrator, at the election of the Participant, shall
direct the Trustee to distribute all or a portion of the amount then credited
to the Participant's Account attributable to Salary Reduction Contributions,
Employer Non-Elective Contributions made pursuant to Section 4.1(b) (Employer
matching contributions), Employer Non-Elective Contributions made pursuant to
Section 4.1(c) (Employer discretionary contributions), and Employer Qualified
Non-Elective Contributions made pursuant to Section 4.1(d) (Employer qualified
discretionary contributions) maintained on behalf of the Participant. Any such
distribution shall be made on a pro rata basis from the Participant's
contribution sources in his Account with investment funds in each source being
liquidated on a pro rata basis. However, no distribution from the portion of
the Participant's Account attributable to the Employer Non-Elective
Contribution made pursuant to Section 4.1(b) (Employer matching contributions)
shall occur prior to 100% vesting of such portion.
Pursuant to Section 4.11(d) of the Plan, a Participant may, at any
time, elect to withdraw all or any of the portion of his Account attributable
to the Participant's Rollover 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 earnings thereon, however only one such
withdrawal of Voluntary Contributions may be made in any 12-month period.
A Participant may elect, while in the employ of the Employer, to
withdraw any or all of the portion of his Account attributable to the
Employer's PAYSOP Contributions, however no distribution from the Employer's
PAYSOP Contributions Account will occur before the end of the 84th month
beginning after the month in which the PAYSOP Contributions were allocated to
the Participant's Rite Aid Corporation common stock subaccount. In the event
that such distribution is made, the Participant will continue to be eligible
to participant in the Plan on the same basis as any other Participant.
Any such distribution shall be made in accordance with Section 6.5.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant,
shall direct the Trustee to distribute to any Participant in any one Plan Year
up to the lesser of 100% of his Participant's Account valued as of the last
Valuation Date or the amount necessary to satisfy the immediate and heavy
financial need of the Participant. However, a Participant will not be
permitted to make a hardship withdrawal pursuant to this Section unless he has
already withdrawn any amount credited to his Participant's Account
attributable to Voluntary Contributions (and any earnings thereon). Any
distribution made pursuant to this Section shall be deemed to be made as of
the first day of the Plan Year or, if later, the Valuation Date immediately
preceding the date of distribution, and the Participant's Account shall be
reduced accordingly. Any hardship distribution shall be made on a pro rata
basis from the Participant's contribution sources in his Account with
investment funds in each source being liquidated on a pro rata basis.
Withdrawal under this Section shall be authorized if the distribution is on
account of:
(1) Expenses for medical care described in Code Section
213(d) previously incurred by the Participant, his spouse, or any of his
dependents (as defined in Code Section 152) or necessary for these persons to
obtain medical care;
(2) The costs directly related to the purchase of a
principal residence for the Participant (excluding mortgage payments);
(3) Payment of tuition, related educational fees, and
room and board expenses for the next twelve (12) months of post-secondary
education for the Participant, his spouse, children, or dependents;
(4) funeral expenses;
(5) payments necessary to prevent eviction of the
Participant from the Participant's principal residence or foreclosure on the
mortgage on such residence; or
(6) such other circumstances as the Plan Administrator
may determine within the intent of this Section.
(b) No distribution shall be made pursuant to this Section
unless the Administrator determines a financial need on behalf of the
Participant based upon all relevant facts and circumstances.
(c) In the event of such hardship withdrawal, the Participant
may continue his participation in the Plan without interruption.
(d) Notwithstanding the above, distributions from the
Participant's Account pursuant to this Section shall be limited solely to the
Participant's total Deferred Compensation as of the date of distribution,
reduced by the amount of any previous distributions pursuant to this Section
and Section 6.10 (and not including any earnings thereon).
(e) Any such distribution shall be made in accordance with
Section 6.5.
6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order." Furthermore, a
distribution to an "alternate payee" shall be permitted if such distribution
is authorized by a "qualified domestic relations order," even if the affected
Participant has not separated from service and has not reached the "earliest
retirement age" under the Plan. The Administrator shall establish a written
procedure to determine the qualified status of domestic relations orders and
to administer distributions under such qualified orders. For the purposes of
this Section, "alternate payee," "qualified domestic relations order" and
"earliest retirement age" shall have the meaning set forth under Code Section
414(p).
6.13 PROFIT SHARING EXCEPTION
Notwithstanding any provisions of the Plan to the contrary, the
sections in this Article VI regarding spousal consent and forms of
distribution shall not apply if:
(a) a married Participant does not elect to receive benefits
under the Plan in the form of a life annuity;
(b) the Participant is entitled to receive death benefits
described in Section 6.6 or waives such benefit pursuant to election
procedures as described in Section 6.6; and
(c) the Plan is not a direct or indirect transferee of a
benefit from another qualified plan under which a life annuity form of payment
would be required to be paid to the Participant or his surviving spouse.
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The Trustee shall have the following categories of
responsibilities:
(1) Consistent with the "funding policy and method"
determined by the Employer, to invest, manage, and control the Plan assets
subject, however, to the direction of a Participant with respect to his
Participant Directed Accounts, the Employer or an Investment Manager appointed
by the Employer or any agent of the Employer;
(2) At the direction of the Administrator, to pay
benefits required under the Plan to be paid to Participants, or, in the event
of their death, to their Beneficiaries; and
(3) To maintain records of receipts and disbursements and
furnish to the Employer and/or Administrator for each Plan Year a written
annual report per Section 7.7.
(b) In the event that the Trustee shall be directed by a
Participant (pursuant to the Participant Direction Procedures), or the
Employer, or an Investment Manager or other agent appointed by the Employer
with respect to the investment of any or all Plan assets, the Trustee shall
have no liability with respect to the investment of such assets, but shall be
responsible only to execute such investment instructions as so directed.
(1) The Trustee shall be entitled to rely fully on the
written instructions of a Participant (pursuant to the Participant Direction
Procedures), or the Employer, or any Fiduciary or nonfiduciary agent of the
Employer, in the discharge of such duties, and shall not be liable for any
loss or other liability, resulting from such direction (or lack of direction)
of the investment of any part of the Plan assets.
(2) The Trustee may delegate the duty to execute such
instructions to any nonfiduciary agent, which may be an affiliate of the
Trustee or any Plan representative.
(3) The Trustee may refuse to comply with any direction
from the Participant in the event the Trustee, in its sole and absolute
discretion, deems such directions improper by virtue of applicable law. The
Trustee shall not be responsible or liable for any loss or expense which may
result from the Trustee's refusal or failure to comply with any directions
from the Participant.
(4) Any costs and expenses related to compliance with the
Participant's directions shall be borne by the Participant's Directed Account,
unless paid by the Employer.
(c) If there shall be more than one Trustee, they shall act
by a majority of their number, but may authorize one or more of them to sign
papers on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) Subject to the right of Participants to direct investment
of their accounts as set forth in Section 4.14, the Trustee shall invest and
reinvest the Trust Fund to keep the Trust Fund invested without distinction
between principal and income and in such securities or property, real or
personal, wherever situated, as the Trustee shall deem advisable, including,
but not limited to, stocks, common or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any interest therein. The
Trustee shall at all times in making investments of the Trust Fund consider,
among other factors, the short and long-term financial needs of the Plan on
the basis of information furnished by the Employer. In making such
investments, the Trustee shall not be restricted to securities or other
property of the character expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to any limitations
imposed by the Code or the Act.
(b) The Trustee may employ a bank or trust company pursuant
to the terms of its usual and customary bank agency agreement, under which the
duties of such bank or trust company shall be of a custodial, clerical and
record-keeping nature.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under
common law, statutory authority, including the Act, and other provisions of
the Plan, shall have the following powers and authorities, to be exercised in
the Trustee's sole discretion, subject to the right of Participants to direct
investment of their accounts as set forth in Section 4.14:
(a) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase of
securities, margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other property held by the
Trustee, by private contract or at public auction. No person dealing with the
Trustee shall be bound to see to the application of the purchase money or to
inquire into the validity, expediency, or propriety of any such sale or other
disposition, with or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to
give general or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription rights or
other options, and to make any payments incidental thereto; to oppose, or to
consent to, or otherwise participate in, corporate reorganizations or other
changes affecting corporate securities, and to delegate discretionary powers,
and to pay any assessments or charges in connection therewith; and generally
to exercise any of the powers of an owner with respect to stocks, bonds,
securities, or other property. However, the Trustee shall not vote proxies
relating to securities for which it has not been assigned full investment
management responsibilities. In those cases where another party has such
investment authority or discretion, the Trustee will deliver all proxies to
said party who will then have full responsibility for voting those proxies;
(d) To cause any securities or other property to be
registered in the Trustee's own name or in the name of one or more of the
Trustee's nominees, and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such investments
are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in
such amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as Trustee,
and to secure the repayment thereof by pledging all, or any part, of the Trust
Fund; and no person lending money to the Trustee shall be bound to see to the
application of the money lent or to inquire into the validity, expediency, or
propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash
balances as the Trustee may, from time to time, deem to be in the best
interests of the Plan, without liability for interest thereon;
(g) To accept and retain for such time as the Trustee may
deem advisable any securities or other property received or acquired as
Trustee hereunder, whether or not such securities or other property would
normally be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments that
may be necessary or appropriate to carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration any
claims, debts, or damages due or owing to or from the Plan, to commence or
defend suits or legal or administrative proceedings, and to represent the Plan
in all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel may or may not
be agent or counsel for the Employer;
(k) To apply for and procure from responsible insurance
companies, to be selected by the Administrator, as an investment of the Trust
Fund such annuity, or other Contracts (on the life of any Participant) as the
Administrator shall deem proper; to exercise, at any time or from time to
time, whatever rights and privileges may be granted under such annuity, or
other Contracts; to collect, receive, and settle for the proceeds of all such
annuity or other Contracts as and when entitled to do so under the provisions
thereof;
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms of United
States government obligations;
(n) To invest in shares of investment companies registered
under the Investment Company Act of 1940;
(o) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, or, if the
options are not traded on a national securities exchange, are guaranteed by a
member firm of the New York Stock Exchange;
(p) To deposit monies in federally insured savings accounts
or certificates of deposit in banks or savings and loan associations;
(q) To pool all or any of the Trust Fund, from time to time,
with assets belonging to any other qualified employee pension benefit trust
created by the Employer or an affiliated company of the Employer, and to
commingle such assets and make joint or common investments and carry joint
accounts on behalf of this Plan and such other trust or trusts, allocating
undivided shares or interests in such investments or accounts or any pooled
assets of the two or more trusts in accordance with their respective
interests;
(r) To appoint a nonfiduciary agent or agents to assist the
Trustee in carrying out any investment instructions of Participants and of any
Investment Manager or Fiduciary, and to compensate such agent(s) from the
assets of the Plan, to the extent not paid by the Employer;
(s) 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.
7.4 LOANS TO PARTICIPANTS
(a) In accordance with a loan policy or procedures adopted by
the Administrator, the Trustee may make loans to Participants from
Participants' Accounts under the following circumstances: (1) loans shall be
made available to all Participants on a reasonably equivalent basis; (2) loans
shall not be made available to Highly Compensated Employees in an amount
greater than the amount made available to other Participants; (3) loans shall
bear a reasonable rate of interest; (4) loans shall be adequately secured; (5)
shall provide for repayment over a reasonable period of time; (6) effective
prior to January 1, 2002, three (3) outstanding loans are permitted for each
Participant at a given time; and (7) loans may not be made from the
Participant's Account attributable to Employer Non-Elective Contributions made
pursuant to Section 4.1(b) of the Plan (Employer matching contributions).
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.
(b) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the Participant)
shall be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the Participant during the one
year period ending on the day before the date on which such loan is made, over
the outstanding balance of loans from the Plan to the Participant on the date
on which such loan was made, or
(2) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant under the Plan.
For purposes of this limit, all plans of the Employer
shall be considered one plan.
(c) Loans shall provide for level amortization with payments
to be made not less frequently than quarterly over a period not to exceed five
(5) years. However, loans used to acquire any dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan is made) as a
principal residence of the Participant shall provide for periodic repayment
over a reasonable period of time that may not exceed twenty (20) years.
Effective with respect to loans made on and after January 1, 2002, the
twenty-year maximum repayment period described in the prior sentence shall be
reduced to a period not to exceed ten (10) years. For this purpose, a
principal residence has the same meaning as a principal residence under Code
Section 1034.
(d) Any loans granted or renewed shall be made pursuant to a
Participant loan program. Such loan program shall be established in writing
and must include, but need not be limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of
loans offered;
(5) the procedure under the program for determining a
reasonable rate of interest;
(6) the types of collateral which may secure a
Participant loan; and
(7) the events constituting default and the steps that
will be taken to preserve Plan assets.
Such Participant loan program shall be contained in a separate
written document which, when properly executed, is hereby incorporated by
reference and made a part of the Plan. Furthermore, such Participant loan
program may be modified or amended in writing from time to time without the
necessity of amending this Section.
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from
time to time, in accordance with the terms of the Plan, make payments out of
the Trust Fund. The Trustee shall not be responsible in any way for the
application of such payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall
from time to time be agreed upon in writing by the Employer and the Trustee.
An individual serving as Trustee who already receives full-time pay from the
Employer shall not receive compensation from the Plan. In addition, the
Trustee shall be reimbursed for any reasonable expenses, including reasonable
counsel fees incurred by it as Trustee. Such compensation and expenses shall
be paid from the Trust Fund unless paid or advanced by the Employer. All taxes
of any kind and all kinds whatsoever that may be levied or assessed under
existing or future laws upon, or in respect of, the Trust Fund or the income
thereof, shall be paid from the Trust Fund.
7.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the
Anniversary Date or receipt of the Employer contribution for each Plan Year,
the Trustee shall furnish to the Employer and Administrator a written
statement of account with respect to the Plan Year for which such contribution
was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon
sales or other disposition of the assets;
(c) the increase, or decrease, in the value of the Trust
Fund;
(d) all payments and distributions made from the Trust Fund;
and
(e) such further information as the Trustee and/or
Administrator deems appropriate. The Employer, forthwith upon its receipt of
each such statement of account, shall acknowledge receipt thereof in writing
and advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of account
within thirty (30) days after its receipt thereof shall be deemed an approval
thereof. The approval by the Employer of any statement of account shall be
binding as to all matters embraced therein as between the Employer and the
Trustee to the same extent as if the account of the Trustee had been settled
by judgment or decree in an action for a judicial settlement of its account in
a court of competent jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were parties; provided,
however, that nothing herein contained shall deprive the Trustee of its right
to have its accounts judicially settled if the Trustee so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall be required by
the Act and the regulations thereunder for any Plan Year, the Administrator
shall direct the Trustee to engage on behalf of all Participants an
independent qualified public accountant for that purpose. Such accountant
shall, after an audit of the books and records of the Plan in accordance with
generally accepted auditing standards, within a reasonable period after the
close of the Plan Year, furnish to the Administrator and the Trustee a report
of his audit setting forth his opinion as to whether any statements, schedules
or lists that are required by Act Section 103 or the Secretary of Labor to be
filed with the Plan's annual report, are presented fairly in conformity with
generally accepted accounting principles applied consistently. All auditing
and accounting fees shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund.
(b) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated and supervised and
subject to periodic examination by a state or federal agency, it shall
transmit and certify the accuracy of that information to the Administrator as
provided in Act Section 103(b) within one hundred twenty (120) days after the
end of the Plan Year or by such other date as may be prescribed under
regulations of the Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a written
notice of his resignation.
(b) The Employer may remove the Trustee by mailing by
registered or certified mail, addressed to such Trustee at his last known
address, at least thirty (30) days before its effective date, a written notice
of his removal.
(c) Upon the death, resignation, incapacity, or removal of
any Trustee, a successor may be appointed by the Employer; and such successor,
upon accepting such appointment in writing and delivering same to the
Employer, shall, without further act, become vested with all the estate,
rights, powers, authority, and duties of his predecessor with like respect as
if he were originally named as a Trustee herein. Until such a successor is
appointed, the remaining Trustee or Trustees shall have full authority to act
under the terms of the Plan.
(d) The Employer may designate one or more successors prior
to the death, resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such designation, the
successor shall, without further act, become vested with all the estate,
rights, powers, authority, and duties of his predecessor with the like effect
as if he were originally named as Trustee herein immediately upon the death,
resignation, incapacity, or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such,
he shall furnish to the Employer and Administrator a written statement of
account with respect to the portion of the Plan Year during which he served as
Trustee. This statement shall be either (i) included as part of the annual
statement of account for the Plan Year required under Section 7.7 or (ii) set
forth in a special statement. Any such special statement of account should be
rendered to the Employer no later than the due date of the annual statement of
account for the Plan Year. The procedures set forth in Section 7.7 for the
approval by the Employer of annual statements of account shall apply to any
special statement of account rendered hereunder and approval by the Employer
of any such special statement in the manner provided in Section 7.7 shall have
the same effect upon the statement as the Employer's approval of an annual
statement of account. No successor to the Trustee shall have any duty or
responsibility to investigate the acts or transactions of any predecessor who
has rendered all statements of account required by Section 7.7 and this
subparagraph.
7.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan,
the Trustee at the direction of the Administrator shall transfer the Vested
interest, if any, of 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 requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made.
7.11 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an eligible rollover distribution that
is equal to at least $500 paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
(b) For purposes of this Section the following definitions
shall apply:
(1) An eligible rollover distribution is any distribution
of all or any portion of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include: any distribution that
is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is required
under Code Section 401(a)(9); the portion of any other distribution that is
not includable 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) 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) A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in Code
Section 414(p), are distributees with regard to the interest of the spouse or
former spouse.
(4) A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
7.12 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold "qualifying
Employer securities" and "qualifying Employer real property," as those terms
are defined in the Act, provided, however, that the Trustee shall not be
permitted to acquire any qualifying Employer securities or qualifying Employer
real property if, immediately after the acquisition of such securities or
property, the fair market value of all qualifying Employer securities and
qualifying Employer real property held by the Trustee hereunder should amount
to more than l00% of the fair market value of all the assets in the Trust
Fund.
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend
the Plan, subject to the limitations of this Section. However, any amendment
which affects the rights, duties or responsibilities of the Trustee, other
than an amendment to remove the Trustee, may only be made with the Trustee's
written consent. Any such amendment shall become effective as provided therein
upon its execution. The Trustee shall not be required to execute any such
amendment unless the Trust provisions contained herein are a part of the Plan
and the amendment affects the duties of the Trustee hereunder. Notwithstanding
the foregoing, the Administrator, or other committee or individual authorized
by the Employer, shall have the right to amend any Appendix to the Plan as it
deems necessary with respect to rules regarding employees affected by
acquisitions and dispositions.
(b) No amendment to the Plan shall be effective if it
authorizes or permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for or diverted
to any purpose other than for the exclusive benefit of the Participants or
their Beneficiaries or estates; or causes any reduction in the amount credited
to the account of any Participant; or causes or permits any portion of the
Trust Fund to revert to or become property of the Employer.
(c) Except as otherwise permitted by Regulations or other
guidance published by the Internal Revenue Service, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger, plan
transfer or similar transaction) shall be effective to the extent it
eliminates or reduces any "Section 411(d)(6) protected benefit" or adds or
modifies conditions relating to "Section 411(d)(6) protected benefits" the
result of which is a further restriction on such benefit unless such protected
benefits are preserved with respect to benefits accrued as of the later of the
adoption date or effective date of the amendment. "Section 411(d)(6) protected
benefits" are benefits described in Code Section 411(d)(6)(A) and Section
1.411(d)-4 of the Regulations, early retirement benefits and retirement-type
subsidies, and optional forms of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time to
terminate the Plan by delivering to the Trustee and Administrator written
notice of such termination. Upon any full or partial termination, all amounts
credited to the affected Participants' Accounts shall become 100% Vested as
provided in Section 6.4 and shall not thereafter be subject to forfeiture, and
all unallocated amounts shall be allocated to the accounts of all Participants
in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets of the Trust Fund to Participants in a
manner which is consistent with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash or in property or through
the purchase of irrevocable nontransferable deferred commitments from an
insurer. Except as permitted by Regulations, the termination of the Plan shall
not result in the reduction of "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its
assets and/or liabilities may be transferred to any other plan and trust only
if the benefits which would be received by a Participant of this Plan, in the
event of a termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
ARTICLE IX
TOP HEAVY
9.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section 6.4 of the
Plan and the special minimum allocation requirements of Code Section 416(c)
pursuant to Section 4.4 and 9.3 of the Plan.
9.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of Accrued Benefits
of Key Employees and (2) the sum of the Aggregate Accounts of Key Employees
under this Plan and all plans of an Aggregation Group, exceeds sixty percent
(60%) of the Present Value of Accrued Benefits and the Aggregate Accounts of
all Key and Non-Key Employees under this Plan and all plans of an Aggregation
Group.
If any Participant is a Non-Key Employee for any Plan Year,
but such Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate Account
balance shall not be taken into account for purposes of determining whether
this Plan is a Top Heavy Plan (or whether any Aggregation Group which includes
this Plan is a Top Heavy Group). In addition, if a Participant or Former
Participant has not performed any services for any Employer maintaining the
Plan at any time during the five year period ending on the Determination Date,
any accrued benefit for such Participant or Former Participant shall not be
taken into account for the purposes of determining whether this Plan is a Top
Heavy Plan.
(b) Aggregate Account: A Participant's Aggregate Account as
of the Determination Date is the sum of:
(1) his Participant's Account balance as of the most
recent valuation occurring within a twelve (12) month period ending on the
Determination Date;
(2) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of any contributions
actually made after the Valuation Date but due on or before the Determination
Date, except for the first Plan Year when such adjustment shall also reflect
the amount of any contributions made after the Determination Date that are
allocated as of a date in that first Plan Year.
(3) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4) preceding Plan Years.
However, in the case of distributions made after the Valuation Date and prior
to the Determination Date, such distributions are not included as
distributions for top heavy purposes to the extent that such distributions are
already included in the Participant's Aggregate Account balance as of the
Valuation Date. Notwithstanding anything herein to the contrary, all
distributions, including distributions under a terminated plan which if it had
not been terminated would have been required to be included in an Aggregation
Group, will be counted. Further, distributions from the Plan (including the
cash value of life insurance policies) of a Participant's account balance
because of death shall be treated as a distribution for the purposes of this
paragraph.
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax deductible qualified voluntary
employee contributions shall not be considered to be a part of the
Participant's Aggregate Account balance.
(5) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by another employer), if this
Plan provides the rollovers or plan-to-plan transfers, it shall always
consider such rollovers or plan-to-plan transfers as a distribution for the
purposes of this Section. If this Plan is the plan accepting such rollovers or
plan-to-plan transfers, it shall not consider such rollovers or plan-to-plan
transfers as part of the Participant's Aggregate Account balance.
(6) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the rollover or
plan-to-plan transfer, it shall not be counted as a distribution for purposes
of this Section. If this Plan is the plan accepting such rollover or
plan-to-plan transfer, it shall consider such rollover or plan-to-plan
transfer as part of the Participant's Aggregate Account balance, irrespective
of the date on which such rollover or plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two employers
are to be treated as the same employer in (5) and (6) above, all employers
aggregated under Code Section 414(b), (c), (m) and (o) are treated as the same
employer.
(c) "Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each qualified plan of the Employer in which a
Key Employee is a participant in the Plan Year containing the Determination
Date or any of the four preceding Plan Years, and each other qualified plan of
the Employer which enables any plan in which a Key Employee participates to
meet the requirements of Code Sections 401(a)(4) or 410, will be required to
be aggregated. Such group shall be known as a Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in
the group will be considered a Top Heavy Plan if the Required Aggregation
Group is a Top Heavy Group. No plan in the Required Aggregation Group will be
considered a Top Heavy Plan if the Required Aggregation Group is not a Top
Heavy Group.
(2) Permissive Aggregation Group: The Employer may also
include any other plan not required to be included in the Required Aggregation
Group, provided the resulting group, taken as a whole, would continue to
satisfy the provisions of Code Sections 401(a)(4) and 410. Such group shall be
known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is a Top Heavy Group. No plan
in the Permissive Aggregation Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated
plan of the Employer if it was maintained within the last five (5) years
ending on the Determination Date.
(d) "Determination Date" means (a) the last day of the
preceding Plan Year, or (b) in the case of the first Plan Year, the last day
of such Plan Year.
(e) Present Value of Accrued Benefit: In the case of a
defined benefit plan, the Present Value of Accrued Benefit for a Participant
other than a Key Employee, shall be as determined using the single accrual
method used for all plans of the Employer and Affiliated Employers, or if no
such single method exists, using a method which results in benefits accruing
not more rapidly than the slowest accrual rate permitted under Code Section
411(b)(1)(C). The determination of the Present Value of Accrued Benefit shall
be determined as of the most recent Valuation Date that falls within or ends
with the 12-month period ending on the Determination Date except as provided
in Code Section 416 and the Regulations thereunder for the first and second
plan years of a defined benefit plan.
(f) "Top Heavy Group" means an Aggregation Group in which, as
of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key
Employees under all defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar
sum determined for all Participants.
9.3 TOP-HEAVY DETERMINATION FOR PLAN YEARS BEGINNING JANUARY 1, 2002
Notwithstanding anything in the Plan to the contrary, this Section
9.3 shall apply for purposes of determining whether the Plan is a top-heavy
plan under section 416(g) of the Code for Plan Years beginning after December
31, 2001, and for determining whether the Plan satisfies the minimum benefits
requirements of Section 416(c) of the Code for such years.
(a) Key Employee shall mean any employee or former employee
(including any deceased employee) who at any time during the plan year that
includes the determination date was an officer of the Employer having annual
compensation greater than $130,000 (as adjusted under section 416(i)(1) of the
Code for Plan Years beginning after December 31, 2002), a 5-percent owner of
the Employer, or a 1- percent owner of the Employer having annual compensation
of more than $150,000. For this purpose, annual compensation means
compensation within the meaning of section 415(c)(3) of the Code. The
determination of who is a Key Employee will be made in accordance with Section
416(i)(1) of the Code and the applicable regulations and other guidance of
general applicability issued thereunder.
(b) This subsection (b) shall apply for purposes of
determining the present values of accrued benefits and the amounts of account
balances of employees as of the determination date.
(1) Distributions during year ending on the determination
date. The present values of accrued benefits and the amounts of account
balances of an employee as of the determination date shall be increased by the
distributions made with respect to the employee under the Plan and any plan
aggregated with the Plan under section 416(g)(2) of the Code during the 1-year
period ending on the determination date. The preceding sentence shall also
apply to distributions under a terminated plan which, had it not been
terminated, would have been aggregated with the Plan under Section
416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason
other than separation from service, death, or disability, this provision shall
be applied by substituting "5-year period" for "1-year period."
(c) Employees not performing services during year ending on
the determination date. The accounts of any individual who has not performed
services for the Employer during the 1-year period ending on the determination
date shall not be taken into account.
(d) Minimum contribution. Employer matching contributions
shall be taken into account for purposes of satisfying the minimum
contribution requirements of Section 416(c)(2) of the Code and the Plan.
Employer matching contributions that are used to satisfy the minimum
contribution requirements may nevertheless be treated as matching
contributions for purposes of the Actual Contribution Percentage test and
other requirements of Section 401(m) of the Code.
ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan
shall be deemed to give any Participant or Employee the right to be retained
in the service of the Employer or to interfere with the right of the Employer
to discharge any Participant or Employee at any time regardless of the effect
which such discharge shall have upon him as a Participant of this Plan.
10.2 MILITARY SERVICE
Effective December 12, 1994, notwithstanding any provision of this
Plan to the contrary, contributions, benefits, and service credit with respect
to qualified military service will be provided in accordance with Section
414(u) of the Internal Revenue Code.
10.3 ALIENATION
(a) Subject to the exceptions provided below, no benefit
which shall be payable out of the Trust Fund to any person (including a
Participant or his Beneficiary) shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge the same shall be void; and no such benefit shall
in any manner be liable for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it be subject to
attachment or legal process for or against such person, and the same shall not
be recognized by the Trustee, except to such extent as may be required by law.
(b) This provision shall not apply to the extent a
Participant or Beneficiary is indebted to the Plan, as a result of a loan from
the Plan. At the time a distribution is to be made to or for a Participant's
or Beneficiary's benefit, such proportion of the amount distributed as shall
equal such loan indebtedness shall be paid by the Trustee to the Trustee or
the Administrator, at the direction of the Administrator, to apply against or
discharge such loan indebtedness. Prior to making a payment, however, the
Participant or Beneficiary must be given written notice by the Administrator
that such loan indebtedness is to be so paid in whole or part from his
Participant's Account. If the Participant or Beneficiary does not agree that
the loan indebtedness is a valid claim against his Vested Participant's
Account, he shall be entitled to a review of the validity of the claim in
accordance with procedures provided in Sections 2.8 and 2.9.
(c) This provision shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other domestic
relations orders permitted to be so treated by the Administrator under the
provisions of the Retirement Equity Act of 1984. The Administrator shall
establish a written procedure to determine the qualified status of domestic
relations orders and to administer distributions under such qualified orders.
Further, to the extent provided under a "qualified domestic relations order,"
a former spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
(d) 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).
(e) 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).
10.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to
the Act and Code and the laws of the Commonwealth of Pennsylvania, other than
its laws respecting choice of law, to the extent not preempted by the Act.
10.5 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in
another gender in all cases where they would so apply, and whenever any words
are used herein in the singular or plural form, they shall be construed as
though they were also used in the other form in all cases where they would so
apply.
10.6 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding
the Trust and/or Plan established hereunder to which the Trustee, the Employer
or the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee, the Employer or the Administrator, they
shall be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
10.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically
permitted by law, it shall be impossible by operation of the Plan or of the
Trust, by termination of either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any other means,
for any part of the corpus or income of any trust fund maintained pursuant to
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.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section 403(c)(2)(A), the
Employer may demand repayment of such excessive contribution at any time
within one (1) year following the time of payment and the Trustees shall
return such amount to the Employer within the one (1) year period. Earnings of
the Plan attributable to the excess contributions may not be returned to the
Employer but any losses attributable thereto must reduce the amount so
returned.
10.8 BONDING
Every Fiduciary, except a bank or an insurance company, unless
exempted by the Act and regulations thereunder, shall be bonded in an amount
not less than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond, $500,000.
The amount of funds handled shall 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 shall 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 shall be a corporate surety
company (as such term is used in Act Section 412(a)(2)), and the bond shall be
in a form approved by the Secretary of Labor. Notwithstanding anything in the
Plan to the contrary, the cost of such bonds shall be an expense of and may,
at the election of the Administrator, be paid from the Trust Fund or by the
Employer.
10.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer, the Administrator, nor the Trustee, nor
their successors shall be responsible for the validity of any Contract issued
hereunder or for the failure on the part of the insurer to make payments
provided by any such Contract, or for the action of any person which may delay
payment or render a Contract null and void or unenforceable in whole or in
part.
10.10 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects
of this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty
to see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
10.11 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative,
Beneficiary, or to any guardian or committee appointed for such Participant or
Beneficiary in accordance with the provisions of the Plan, shall, to the
extent thereof, be in full satisfaction of all claims hereunder against the
Trustee and the Employer, either of whom may require such Participant, legal
representative, Beneficiary, guardian or committee, as a condition precedent
to such payment, to execute a receipt and release thereof in such form as
shall be determined by the Trustee or Employer.
10.12 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
10.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee. The named Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as are specifically
given them under the Plan or as accepted by or assigned to them pursuant to
any procedure provided under the Plan, including but not limited to any
agreement allocating or delegating their responsibilities, the terms of which
are incorporated herein by reference. In general, unless otherwise indicated
herein or pursuant to such agreements, the Employer shall have the duties
specified in Article II hereof, as the same may be allocated or delegated
thereunder, including but not limited to the responsibility for making the
contributions provided for under Section 4.1; and shall have the authority to
appoint and remove the Trustee and the Administrator; to formulate the Plan's
"funding policy and method"; and to amend or terminate, in whole or in part,
the Plan. The Administrator shall have the responsibility for the
administration of the Plan, including but not limited to the items specified
in Article II of the Plan, as the same may be allocated or delegated
thereunder. The Administrator shall act as the named Fiduciary responsible for
communicating with the Participant according to the Participant Direction
Procedures. The Trustee shall have the responsibility of management and
control of the assets held under the Trust, except to the extent directed
pursuant to Article II or with respect to those assets, the management of
which has been assigned to an Investment Manager, who shall be solely
responsible for the management of the assets assigned to it, all as
specifically provided in the Plan and any agreement with the Trustee. Each
named Fiduciary warrants that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of the Plan,
authorizing or providing for such direction, information or action.
Furthermore, each named Fiduciary may rely upon any such direction,
information or action of another named Fiduciary as being proper under the
Plan, and is not required under the Plan to inquire into the propriety of any
such direction, information or action. It is intended under the Plan that each
named Fiduciary shall be responsible for the proper exercise of its own
powers, duties, responsibilities and obligations under the Plan as specified
or allocated herein. No named Fiduciary shall guarantee the Trust Fund in any
manner against investment loss or depreciation in asset value. Any person or
group may serve in more than one Fiduciary capacity. In the furtherance of
their responsibilities hereunder, the "named Fiduciaries" shall be empowered
to interpret the Plan and Trust and to resolve ambiguities, inconsistencies
and omissions, which findings shall be binding, final and conclusive.
10.14 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
10.15 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial qualification of
the Plan under Code Section 401. If the Plan receives an adverse determination
with respect to its initial qualification, then the Plan may return such
contributions to the Employer within one year after such determination,
provided the application for the determination is made by the time prescribed
by law for filing the Employer's return for the taxable year in which the Plan
was adopted, or such later date as the Secretary of the Treasury may
prescribe.
(b) Notwithstanding any provisions to the contrary, except
Sections 3.5, 3.6, and 4.1(d), any contribution by the Employer to the Trust
Fund is conditioned upon the deductibility of the contribution by the Employer
under the Code and, to the extent any such deduction is disallowed, the
Employer may, within one (1) year following the disallowance of the deduction,
demand repayment of such disallowed contribution and the Trustee shall return
such contribution within one (1) year following the disallowance. Earnings of
the Plan attributable to the excess contribution may not be returned to the
Employer, but any losses attributable thereto must reduce the amount so
returned.
10.16 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any Contract purchased hereunder, the Plan provisions
shall control.
10.17 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.
EXECUTION PAGE
IN WITNESS WHEREOF, this Plan has been signed by a duly authorized
officer 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 20 day of December, 2001.
/s/ Richard Varmecky
------------------------------
Richard Varmecky, as TRUSTEE
APPENDIX A
SPECIAL RULES REGARDING ACQUISITIONS AND DISPOSITIONS
To the extent set out in this Appendix A, special rules shall
apply to Participants in connection with acquisitions and dispositions. No
transfer of accounts or merger of plans into the Plan described in this
Section will result in the elimination or reduction of Code Section 411(d)(6)
protected benefits.
(a) Laverdiere's Enterprises Transaction. Effective September 9,
1994 (the "Laverdiere's Acquisition Date"), the Employer purchased
Laverdiere's Enterprises, and Laverdiere's Enterprises employees became
employees of the Employer (the "Transferred Laverdiere's Employees").
Effective August 15, 1995 (the "Laverdiere's Transfer Date"), Transferred
Laverdiere's Employees' accounts in the Laverdiere's Enterprises Profit
Sharing Plan and Trust (the "Laverdiere's Plan") were transferred into the
Plan pursuant to a trustee-to-trustee transfer. As of the Laverdiere's
Transfer Date, all Transferred Laverdiere's Employees who were participants in
the Laverdiere's Plan are subject to the terms of the Plan. Also, as of the
Laverdiere's Acquisition Date any Transferred Laverdiere's Employee who was a
participant in the Laverdiere's Plan is automatically eligible to participate
in the Plan. All other Transferred Laverdiere's Enterprises employees will be
eligible to participate in the Plan after meeting generally applicable
eligibility requirements.
(b) Perry Drug Stores, Inc. Transaction. Effective January 27,
1995 (the "Perry Drug Acquisition Date"), the Employer purchased Perry Drug
Stores, Inc. Effective May 1, 1995 (the "Perry Drug Merger Date"), the Perry
Drug Stores Thrift Incentive Plan (the "Perry Plan") was merged into the Plan
and all participant accounts in the Perry Plan were transferred to the Plan
pursuant to a trustee-to-trustee transfer. As of the Perry Drug Merger Date,
all participants in the Perry Plan are subject to the terms of the Plan and
are 100% vested in all Employer Contributions. Also, as of the Perry Drug
Merger Date any Employee who was a participant in the Perry Plan prior to the
Merger Date is automatically eligible to participate (with the exclusion of
Perry Drug Stores, Inc. union warehouse employees) in the Plan after meeting
generally applicable eligibility requirements.
(c) Maxi Drug Inc. Transaction. Effective October 4 and 5, 1995
(the "Maxi Drug Acquisition Date"), the Employer purchased certain Maxi Drug
Inc. retail drug stores, and Maxi Drug Inc. employees of such stores became
employees of the Employer (the "Transferred Maxi Drug Employees"). Effective
February 1, 1996 (the "Maxi Drug Transfer Date"), Transferred Maxi Drug
Employees' accounts in the Maxi Drug Inc. Employee's Thrift 401(k) Profit
Sharing Plan (the "Maxi Drug Plan") were transferred to the Plan pursuant to a
trustee-to-trustee transfer. As of the Maxi Drug Transfer Date, all
Transferred Maxi Drug Employees who were participants in the Maxi Drug Plan
are subject to the terms of the Plan. Effective on the Maxi Drug Transfer
Date, all Matching and Profit Sharing Contributions transferred pursuant to
the trustee-to-trustee transfer are eligible for a Pre-Retirement Distribution
pursuant to Section 6.10 of the Plan.
As of the Maxi Drug Acquisition Date, all participants in the Maxi
Drug Plan who are Transferred Maxi Drug Employees are automatically eligible
to participate in the Plan, and are 100% vested in all Employer Matching and
Profit Sharing Contributions. All other Transferred Maxi Drug Employees will
be eligible to participate in the Plan after meeting generally applicable
eligibility requirements.
(d) White Shield, Inc. Transaction. Effective January 3, 1996 (the
"White Shield Acquisition Date"), the Employer purchased White Shield, Inc.,
and White Shield, Inc. employees became employees of the Employer (the
"Transferred White Shield Employees"). As of the White Shield Acquisition
Date, all Transferred White Shield Employees who participated in the White
Shield, Inc. Salary Savings Plan are automatically eligible to participate in
the Plan on such date. All other Transferred White Shield Employees will be
eligible to participate in the Plan after meeting generally applicable
eligibility requirements.
(e) Thrifty PayLess, Inc. Transaction. Effective December 12, 1996
(the "Thrifty Acquisition Date"), the Employer purchased Thrifty PayLess, Inc.
("Thrifty"), and Thrifty employees became employees of the Employer (the
"Transferred Thrifty Employees"). Effective October 10, 1998 (the "Thrifty
Merger Date"), the Rite Aid Corporation Profit Sharing and 401(k) Retirement
Savings Plan and Trust Agreement for Former Employees of Thrifty PayLess, Inc.
and Its Affiliates (the "Thrifty Plan") was merged into the Plan and all
participant accounts in the Thrifty Plan were transferred to the Plan pursuant
to a trustee-to-trustee transfer. As of the Thrifty Merger Date, all
participants in the Thrifty Plan are subject to the terms of the Plan, subject
to the following special rules:
(1) As of the Thrifty Acquisition Date all Transferred
Thrifty Employees who participated in the Thrifty Plan are automatically
eligible to participate in the Plan on such date. All other Transferred
Thrifty Employees will be eligible to participate in the Plan after meeting
generally applicable eligibility requirements.
(2) For purposes of determining vesting, a Transferred
Thrifty Employee's Period of Service shall be no less than the years of
vesting service calculated in accordance with the transition rules set forth
in Section 1.410(a)-7(f) and (g) of the Treasury Regulations.
(3) For purposes of Section 6.5(b)(2), the minimum payment
amount is zero. In addition, a Transferred Thrifty Employee may elect a lump
sum payment in the form of whole shares of Pacific Enterprises Stock fund to
the extent invested in the Pacific Enterprises Stock fund as of the Thrifty
Merger Date.
(4) For purposes of Section 6.10, a Transferred Thrifty
Employee who is on a disability leave of absence (as defined under the Thrifty
Plan) as of the Merger Date may also withdraw amounts from his or her
ASRE/JCRE/ASC Account (as defined under the Thrifty Plan), excluding any
portion of such account invested in the Confederation Life GIC Fund until the
fund is no longer restricted for this purpose. There may be no more than one
such withdrawal permitted in any 12-month period.
(5) A Transferred Thrifty Employee shall continue to vest in
his Profit Sharing Account (as defined under the Thrifty Plan) transferred
from the Thrifty Plan as of the Thrifty Merger Date as follows:
Period of Vesting Service Vested Percentage
------------------------- -----------------
less than 3 years 0%
3 but less than 4 years 20%
4 but less than 5 years 40%
5 but less than 6 years 60%
6 but less than 7 years 80%
7 or more years 100%
A Transferred Thrifty Employee shall continue to be 100%
vested in his accrued Employer Matching Account transferred from the Thrifty
Plan as of the Thrifty Merger Date. However, all contributions made under the
Plan after the Thrifty Merger Date shall vest in accordance with Section 6.4
of the Plan.
Notwithstanding any other provision contained in this
Plan, the above vesting schedule is modified as follows: A Transferred Thrifty
Employee who terminates service with the Employer for any reason before
becoming 100% vested in his Profit Sharing Account shall receive credit for a
Period of Service for purposes of vesting in his Profit Sharing Account for
the 12-month computation period in which he or she terminated, provided such
Participant had completed five (5) months of service (counting all months in
which a Participant completed one Hour of Service as a month of service) in
such 12-month computation period.
(6) To the extent the Thrifty Plan provided for a
qualified joint and survivor annuity under Section 401(a)(11) of the Code as
the normal form of benefit, such requirements shall no longer apply on or
after the Thrifty Merger Date. Accordingly, distributions on or after such
date shall comply with Article VI of the Plan.
(f) K & B, Incorporated Transaction. Effective August 27,
1997 (the "K & B Acquisition Date"), the Employer purchased K & B,
Incorporated ("K & B"), and K & B employees became employees of the Employer
(the "Transferred K & B Employees"). Effective October 10, 1998 (the "K & B
Merger Date"), the K & B Thrift Plan (the "K & B Plan") was merged into the
Plan and all participant accounts in the K & B Plan were transferred to the
Plan pursuant to a trustee-to-trustee transfer. As of the K & B Merger Date,
all participants in the K & B Plan are subject to the terms of the Plan,
subject to the following special rules:
(1) As of the K & B Acquisition Date all Transferred K &
B Employees who participated in the K & B Plan are automatically eligible to
participate in the Plan on such date. All other Transferred K & B Employees
will be eligible to participate in the Plan after meeting generally applicable
eligibility requirements.
(2) For purposes of determining vesting, a Transferred K
& B Employee's Period of Service shall be no less than the years of vesting
service calculated in accordance with the transition rules set forth in
section 1.410(a)-7(f) and (g) of the Treasury Regulations.
(3) For purposes of Section 6.5(b)(2), the minimum
payment amount is zero.
(4) For purposes of Section 6.10, a Transferred K & B
Employee may also withdraw the portion of his or her account attributable to
earnings on his or her Payroll Reduction.
Contributions (as defined under the K & B Plan) accrued
up to the K & B Merger Date, and the restriction limiting withdrawals of
Voluntary Contributions to one in any 12-month period shall not apply.
(5) A Transferred K & B Employee shall continue to vest
in his Company Contributions (as defined under the K & B Plan) transferred
from the K & B Plan as of the K & B Merger Date as follows:
Period of Service Vested Percentage
----------------- -----------------
Fewer than 5 years 0%
5 or more years 100%
However, all contributions made under the Plan after the
K & B Merger Date shall vest in accordance with Section 6.4 of the Plan. Any
participant in the K & B Plan who has a Termination of Employment (as defined
under the K&B Plan) as a result of the sale of K & B to Rite Aid shall be 100%
vested in his or her account attributable to Company Contributions.
Notwithstanding any other provision contained in this
Plan, the above vesting schedule is modified as follows: A Transferred K&B
Employee who terminates service with the Employer for any reason before
becoming 100% vested in his Company Contributions shall receive credit for a
Period of Service for purposes of vesting in his Company Contributions for the
12-month computation period in which he or she terminated, provided such
Participant had completed five (5) months of service (counting all months in
which a Participant completed one Hour of Service as a month of service) in
such 12-month computation period.
(g) Harco, Inc. Transaction. Effective August 27, 1997 (the
"Harco Acquisition Date"), the Employer purchased Harco, Inc. ("Harco"), and
Harco employees became employees of the Employer (the "Transferred Harco
Employees"). Effective October 10, 1998 (the "Harco Merger Date"), the
Harco/Carport 401(k) Plan (the "Harco Plan") was merged into the Plan and all
participant accounts in the Harco Plan were transferred to the Plan pursuant
to a trustee-to-trustee transfer. As of the Harco Merger Date, all
participants in the Harco Plan are subject to the terms of the Plan, subject
to the following special rules:
(1) As of the Harco Acquisition Date all Transferred
Harco Employees who participated in the Harco Plan are automatically eligible
to participate in the Plan on such date. All other Transferred Harco Employees
will be eligible to participate in the Plan after meeting generally applicable
eligibility requirements.
(2) For purposes of determining vesting, a Transferred
Harco Employee's Period of Service shall be no less than the years of vesting
service calculated in accordance with the transition rules set forth in
Section 1.410(a)-7(f) and (g) of the Treasury Regulations.
(3) For purposes of Section 6.5(b)(2), the minimum
payment amount is zero.
(4) A Transferred Harco Employee shall continue to vest
in his employer Non-Elective Contributions (as defined under the Harco Plan)
transferred from the Harco Plan as of the Harco Merger Date as follows:
Period of Service Vested Percentage
----------------- -----------------
0-4 years 0%
5 or more years 100%
However, all contributions made under the Plan after the
Harco Merger Date shall vest in accordance with Section 6.4 of the Plan.
Notwithstanding any other provision contained in this
Plan, the above vesting schedule is modified as follows: A Transferred Harco
Employee who terminates service with the Employer for any reason before
becoming 100% vested in his Non-Elective Contributions shall receive credit
for a Period of Service for purposes of vesting in his Non-Elective
Contributions for the 12-month computation period in which he or she
terminated, provided such Participant had completed five (5) months of service
(counting all months in which a Participant completed one Hour of Service as a
month of service) in such 12-month computation period.
(h) Nelson's Drug Store, Inc. 401(k) Profit Sharing Plan
Participants. Participants who have a portion of their Plan Account
attributable to amounts contributed on their behalf under the Nelson's Drug
Store, Inc. 401(k) Profit Sharing Plan ("Nelson's Account") shall continue to
vest in the non-vested portion of their Nelson's Account in accordance with
the vesting schedule provided under the Nelson's Plan, as follows:
Years of Service Vested Percentage
---------------- -----------------
Less than 3 years 0%
3 but less than 4 years 20%
4 but less than 5 years 40%
5 but less than 6 years 60%
6 but less than 7 years 80%
7 or more years 100%
For purposes of determining the vested percentage of
Participants' Nelson's Accounts, vesting service shall be calculated in
accordance with the transition rules set forth in Section 1.410(a)-7(f) and
(g) of the Treasury Regulations (relating to transitioning from the general
method to the elapsed time method of crediting service).
To the extent otherwise permitted under Section 6.10 with
respect to Participant Accounts, Participants with Nelson's Accounts may
withdraw the portion of their Nelson's Account attributable to elective
contributions and employer matching and discretionary contributions which are
100% vested. For purposes of distributions under Plan Section 6.11,
Participants with Nelson's Accounts may withdraw any portion of their Account
attributable to elective deferral contributions made under the Nelson's Drug
Store, Inc. 401(k) Profit Sharing Plan to the same extent that Deferred
Compensation may be distributed pursuant to Section 6.11.
APPENDIX B
AMENDMENTS TO CERTAIN MERGED PLANS
The following amendments were made in conjunction with the
Rite Aid Employee Investment Opportunity Plan ("Plan") restatement, effective
as of October 10, 1998, to effectuate the merger of the plans listed in this
Appendix B with the Plan.
I. The Rite Aid Corporation Profit Sharing and 401(k) Retirement Savings Plan
and Trust Agreement for Former Employees of Thrifty PayLess, Inc. and Its
Affiliates, formerly known as the Thrifty PayLess, Inc. Profit
Sharing and 401(k) Retirement Savings Plan, (the "Thrifty Plan")
The Thrifty Plan is amended, effective January 1, 1998 (unless otherwise
indicated), as follows:
1. New Section 1.19A of the Thrifty Plan is added to read as follow:
1.19A "Early Retirement Date". The first day of the month coinciding with or
following the date upon which a Participant attains the age of fifty-five (55)
years and has completed at least 6 Years of Service. A Participant shall
become fully vested upon satisfying this requirement if still employed at his
or her Early Retirement Date.
2. Section 1.63 of the Thrifty Plan is amended to read as follows:
1.63 "Years of Vesting Service".
(a) Determined by Periods of Service. A Period of Service is the aggregate of
all periods commencing with the Employee's first day of employment or
reemployment with the Employer and ending on the date a 1-Year Break in
Service begins. The first day of employment or reemployment is the first day
the Employee performs an Hour of Service. An Employee will also receive
partial credit for any Period of Severance if less than 12 consecutive months.
Fractional periods of a year will be expressed in terms of days. A 1-Year
Break in Service means a Period of Severance of at least 12 consecutive
months. A Period of Severance means a continuous period of time during which
the Employee is not employed by the Employer. Such period begins on the date
the Employee retires, quits or is discharged, or if earlier, the 12 month
anniversary of the date on which the Employee was otherwise first absent from
service. In the case of an individual who is absent from work for maternity or
paternity reasons, the 12 consecutive month period beginning on the first
anniversary of the first day of such absence shall not constitute a 1-Year
Break in Service. For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence (I) by reason of the pregnancy
of the individual, (II) by reason of the birth of a child of the individual,
(III) by reason of the placement of a child with the individual in connection
with the adoption of such child by such individual, or (IV) for purposes of
caring for such child for a period beginning immediately following such birth
or placement.
(b) Notwithstanding the above, to the extent required under section
1.410(a)-7(g) of the Regulations, a Participant's total Years of Vesting
Service shall not be less than the Years of Vesting Service calculated by
adding (I) the number of Years of Vesting Service calculated through the end
of the 1997 Plan Year under (c) below, plus (II) for the 1998 Plan Year, the
greater of (A) the Period of Service for the Participant calculated under (a)
above or (B) the service taken into account under the method prescribed in (c)
below, plus (III) the Period of Service for Plan Years following 1998
calculated under (a) above. In addition, notwithstanding anything herein to
the contrary, a Transferred Thrifty Employee (as defined in Appendix A to the
Plan) who terminates service with the Employer for any reason before becoming
100% vested in his Profit Sharing Account shall receive credit for a Period of
Service for purposes of vesting in his Profit Sharing Account for the 12-month
computation period in which he or she terminated, provided such Participant
had completed five (5) months of service (counting all months in which a
Participant completed one Hour of Service as a month of service) in such
12-month computation period.
(c) For purposes of determining Years of Vesting Service prior to January 1,
1998 and as required under (b) above, Year of Vesting Service means a 12
consecutive month period ending on the last day of a Plan Year in which an
Employee is credited with at least 1,000 Hours of Service. An Employee shall
be credited with a Year of Vesting Service at such time as he or she is
credited with 1,000 Hours of Service during such 12 consecutive month period.
(d) Years of Vesting Service shall include service credited prior to September
17, 1966, the original effective date of the Thrifty PayLess, Inc. Profit
Sharing Plan.
3. Section 7.1 of the Thrifty Plan is amended, effective December 7, 1998, by
deleting the third sentence thereunder.
4. The first paragraph of Section 7.2 of the Thrifty Plan is amended,
effective December 7, 1998, by deleting the phrase "for (1) his or her Profit
Sharing Account which shall be entirely invested in the TPI Profit Sharing
Fund and (2)", and the third paragraph is amended, effective December 7, 1998,
by deleting the phrase "maximum, if any, as of the Effective Date is set forth
in Appendix C, and".
5. Section 7.4 of the Thrifty Plan is amended, effective December 7, 1998, by
replacing the phrase "The Investment Fund specified as of the Effective Date
is set forth in Appendix C, and" with the phrase "This Investment Fund".
6. Section 8.2 of the Thrifty Plan is amended by replacing the term "Normal
Retirement Date" with the phrase "Early Retirement Date or Normal Retirement
Date".
7. Section 9.5(a) of the Thrifty Plan is amended by replacing "$500" with
"$1,000".
8. Section 9.6 of the Thrifty Plan is amended by replacing the term "two" with
the term "three".
9. Section 9.9 of the Thrifty Plan is amended by replacing the term "10" with
the term "20".
10. Section 10.7(b) of the Thrifty Plan is amended by (i) deleting paragraphs
(5) and (6), (ii) replacing the punctuation mark ";" after paragraph (3) with
the phrase "; or", and (iii) amending subsection (b)(4) to read as follows:
(4) such other circumstances as the Administrator may determine within the
intent of this Section.
11. Section 10.7(c) of the Thrifty Plan is amended to read as follows:
(c) No distribution shall be made pursuant to this Section unless the
Administrator determines a financial need on behalf of the Participant based
upon all relevant facts and circumstances.
12. Section 10.7(f) of the Thrifty Plan is amended to read as follows:
(f) In the event of such hardship withdrawal, the Participant may continue his
participation in the Plan without interruption.
13. The listing of Accounts in Section 10.10(b) of the Thrifty Plan is amended
to read as follows:
Rollover Account
401(k) Account
Employer Matching Account
Profit Sharing Account
Prior Profit Sharing Account
Prior ESOP Account
Prior After-Tax Account
14. Section 11.1 of the Thrifty Plan is amended, effective as of December 7,
1998, by deleting the second paragraph thereunder.
15. Section 11.6 of the Thrifty Plan is amended by replacing the phrase
"Normal Retirement Date or retires, whichever is later" with the phrase "Early
Retirement Date, Normal Retirement Date or retires, whichever is latest".
16. Section 16.2 of the Thrifty Plan is amended, effective as of December 7,
1998, by deleting the last paragraph thereunder, and amending Section 16.2(f),
to read as follows:
(f) Pacific Enterprises Stock, subject to the following limitations: A
Participant's existing investment in such stock as of the Effective Date, and
earnings thereon, may continue to be invested in the Pacific Enterprises Stock
until the Participant otherwise directs or, if earlier, the date the Pacific
Enterprises Stock fund is liquidated in accordance with the direction of the
Administrator. Pacific Enterprises Stock is not otherwise designated as
available for investment by Participants, except to the extent described in
this paragraph.
17. Effective as of December 7, 1998, Appendix C of the Thrifty Plan is
deleted.
II. The K & B Thrift Plan (the "K & B Plan")
The K & B Plan is amended, effective January 1, 1998 (unless otherwise
indicated), as follows:
18. New Section 2.10A is added to the K & B Plan to read as follows:
2.10A Early Retirement Age. The first day of the month (prior to the Normal
Retirement Age) coinciding with or following the date upon which a Participant
attains the age of fifty-five (55) years and has completed at least 6 Years of
Service. A Participant shall become fully vested upon satisfying this
requirement if still employed at his or her Early Retirement Age.
19. Section 2.33(a) of the K & B Plan is amended to read as follows:
2.33 Years of Service.
(a) (1) For purposes of determining eligibility, Year of Service means an
Eligibility Computation Period during which an Employee is credited with one
thousand (1,000) or more Hours of Service (whether or not continuous), except
as otherwise provided in this Section.
(2) For purposes of determining vesting, Year of Service means:
(i) Periods of Service. A Period of Service is the aggregate of all periods
commencing with the Employee's first day of employment or reemployment with
the Company and ending on the date a 1-Year Break in Service begins. The first
day of employment or reemployment is the first day the Employee performs an
Hour of Service. An Employee will also receive partial credit for any Period
of Severance if less than 12 consecutive months. Fractional periods of a year
will be expressed in terms of days. A 1-Year Break in Service means a Period
of Severance of at least 12 consecutive months. A Period of Severance means a
continuous period of time during which the Employee is not employed by the
Company. Such period begins on the date the Employee retires, quits or is
discharged, or if earlier, the 12 month anniversary of the date on which the
Employee was otherwise first absent from service. In the case of an individual
who is absent from work for maternity or paternity reasons, the 12 consecutive
month period beginning on the first anniversary of the first day of such
absence shall not constitute a 1-Year Break in Service. For purposes of this
paragraph, an absence from work for maternity or paternity reasons means an
absence (I) by reason of the pregnancy of the individual, (II) by reason of
the birth of a child of the individual, (III) by reason of the placement of a
child with the individual in connection with the adoption of such child by
such individual, or (IV) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
(ii) Notwithstanding paragraph (i) above, to the extent required under section
1.410(a)-7(g) of the Regulations, a Participant's total Years of Service for
vesting shall not be less than the Years of Service calculated by adding (I)
the number of Years of Service calculated through the end of the 1997 Plan
Year under paragraph (iii) below, plus (II) for the 1998 Plan Year, the
greater of (A) the Period of Service for the Participant calculated under
paragraph (i) above or (B) the service taken into account under the method
prescribed in paragraph (iii) below, plus (III) the Period of Service for Plan
Years following 1998 calculated under paragraph (i) above. In addition,
notwithstanding anything herein to the contrary, a Transferred K&B Employee
(as defined in Appendix A to the Plan) who terminates service with the Company
for any reason before becoming 100% vested in his Company Contributions shall
receive credit for a Period of Service for purposes of vesting in his Company
Contributions for the 12-month computation period in which he or she
terminated, provided such Participant had completed five (5) months of service
(counting all months in which a Participant completed one Hour of Service as a
month of service) in such 12-month computation period.
(iii) For purposes of determining Years of Service for vesting purposes prior
to January 1, 1998 and as required under paragraph (ii) above, Year of Service
means a 12 consecutive month period ending on the last day of a Plan Year in
which an Employee is credited with at least 1,000 Hours of Service. An
Employee shall be credited with a Year of Service for vesting at such time as
he or she is credited with 1,000 Hours of Service during such 12 consecutive
month period.
20. New Section 5.5 to the K & B Plan is added to read as follows:
5.5 Directed Investment Account.
(a) Notwithstanding anything in the Plan to the contrary, Participants may, at
any time, subject to a procedure established by the Committee (the Participant
Direction Procedures) and applied in a uniform nondiscriminatory manner,
direct the Trustee to invest all of their Accounts in specific assets,
specific funds or other investments permitted under the Plan and the
Participant Direction Procedures or transfer such account balances, in whole
or in part, at any time by notifying the Committee, among such investments as
permitted under the Plan and the Participant Direction Procedures. 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."
(b) 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.
(c) The Participant Direction Procedures shall provide an explanation of the
circumstances under which Participants and their Beneficiaries may give
investment instructions, including, but need not be limited to, 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 directed investments;
(3) applicable restrictions on transfers to and from any Designated Investment
Alternative;
(4) any restrictions on the exercise of voting, tender and similar rights
related to a directed investment by the Participants or their Beneficiaries;
(5) 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
(6) 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.
(d) Any information regarding investments available under the Plan, to the
extent not required to be described in the Participant Direction Procedures,
may be provided to the Participant in one or more written documents which are
separate from the Participant Direction Procedures and are not thereby
incorporated by reference into this Plan.
(e) The Committee, may, at its discretion, include in or exclude by amendment
or other action from the Participant Direction Procedures such instructions,
guidelines or policies as it deems necessary or appropriate to ensure proper
administration of the Plan, and may interpret the same accordingly.
(f) For purposes of this Section 5.5, the term "Designated Investment
Alternative" means a specific investment identified by name by a Fiduciary as
an available investment under the Plan which may be acquired or disposed of by
the Trustee pursuant to the investment direction of the Participant. In
addition, for purposes of this section, the term "Investment Manager" means an
entity that (a) has the power to manage, acquire, or dispose of Plan assets,
(b) acknowledges fiduciary responsibility to the Plan in writing, and (c) is a
person, firm, or corporation registered as an investment advisor under the
Investment Advisors Act of 1940, a bank, or an insurance company.
21. New Section 6.1A to the K & B Plan is added to read as follows:
6.1A Early Retirement. Upon a Participant's attainment of Early Retirement
Age, the entire amount credited to his or her Account as of the last preceding
or coinciding Valuation Date shall become vested and nonforfeitable, provided
that he or she is still employed on such date. Subject to section 6.2, the
Committee shall direct the Trustees to distribute to such Participant the
amount credited to such Participant's Account in accordance with the
provisions of ARTICLE VIIA or VIIB, whichever is applicable.
22. Section 6.5(a) of the K & B Plan is amended by replacing the phrase "after
Normal Retirement Age" with the phrase "after Normal or Early Retirement Age".
23. Section 6.5(c)(2) of the K & B Plan is amended by deleting the phrase ",
credited in Vesting Computation Periods,".
24. Section 7.1A(b) of the of the K & B Plan is amended by inserting the
following phrase to the end thereof (immediately preceding the "."):
or is treated as such a Participant, pursuant to Section 7.2B(a)(3).
25. Section 7.3A(a) of the of the K & B Plan is amended by replacing the
phrase "one of the methods" with the phrase "one or more of the methods," and
amending paragraph (3) to read as follows:
(3) payments over a period certain or in specified dollar amounts in monthly,
quarterly, semiannual, or annual cash installments. The period over which such
payment is to be made shall not extend beyond the Participant's life
expectancy, or if the Participant's spouse is living when payments begin, the
joint and last survivor life expectancy of the Participant and the
Participant's spouse. Any payments made after the Participant's death shall be
paid to the Participant's Beneficiary; or
26. Section 7.2B(a) of the of the K & B Plan is amended: (i) by replacing the
phrase "one of the methods" with the phrase "one or more of the methods"; (ii)
by replacing "; and" with the punctuation mark ";" at the end of paragraph
(1); (iii) by replacing the punctuation mark "." at the end of paragraph (2)
with "; and"; and (iv) by adding to the end thereof the following new
paragraph (3):
(3) purchase or provision of an annuity. However, such annuity may not be in
any form that will provide for payments over a period extending beyond either
the life of the Participant (or the lives of the Participant and his
designated Beneficiary) or the life expectancy of the Participant (or the life
expectancy of the Participant and his designated Beneficiary). If an annuity
is selected, the Participant shall be treated as if he or she became a
Participant before January 1, 1988 in accordance with ARTICLE VIIA.
27. Section 9.2(a) of the of the K & B Plan is amended by adding the following
sentence immediately following the first sentence:
In addition, a Participant may withdraw the portion of his or her Account
attributable to vested Company Contributions.
28. Section 9.3 of the of the K & B Plan is amended in its entirety to read as
follows:
(a) A Participant who has experienced a hardship, as described in this
Section, may withdraw from his or her Payroll Reduction Contribution
subaccount (under section 5.1(b)) amounts attributable to Payroll Reduction
Contributions (adjusted for net losses, if any). Withdrawal under this section
shall be authorized if the distribution is on account of:
(1) expenses for medical care described in Code section 213(d) previously
incurred by the Participant, his spouse, or any of his dependents (as defined
in Code section 152) or necessary for these persons to obtain medical care;
(2) the costs directly related to the purchase or substantial rehabilitation
of a principal residence for the Participant (excluding mortgage payments);
(3) payments of tuition, related educational fees, and room and board expenses
for the next twelve (12) months of post-secondary education for the
Participant, his spouse, children, or dependents; or
(4) such other circumstances as the Committee may determine within the intent
of this Section.
(b) No distribution shall be made pursuant to this section unless the
Committee determines a financial need on behalf of the Participant based upon
all relevant facts and circumstances.
(c) In the event of such hardship withdrawal, the Participant may continue his
participation in the Plan without interruption.
29. Section 12.5(c) of the K & B Plan is amended by inserting the phrase ",
except as otherwise provided in Section 5.5 of the Plan" at the end thereof.
30. New Article XVII to the K & B Plan is added, effective as of January 1,
1998, to read as follows:
ARTICLE XVII
DISCONTINUANCE OF CONTRIBUTIONS
Notwithstanding any other Plan provision to the contrary, effective as of
January 1, 1998, all contributions under the Plan shall cease.
31. New Article XVIII is added to the K & B Plan to read as follows:
ARTICLE XVIII
LOANS
(a) The Trustee may, in the Trustee's discretion, make loans to Participants
under the following circumstances: (1) loans shall be made available to all
Participants on a reasonably equivalent basis; (2) loans shall not be made
available to Highly Compensated Employees in an amount greater than the amount
made available to other Participants; (3) loans shall bear a reasonable rate
of interest; (4) loans shall be adequately secured; (5) shall provide for
repayment over a reasonable period of time; (6) only three (3) outstanding
loans are permitted for each Participant at a given time; and (7) loans may
not be made from the Participant's Account attributable to Company
Contributions.
(b) Loans made pursuant to this Section (when added to the outstanding balance
of all other loans made by the Plan to the Participant) shall be limited to
the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest outstanding balance
of loans from the Plan to the Participant during the one year period ending on
the day before the date on which such loan is made, over the outstanding
balance of loans from the Plan to the Participant on the date on which such
loan was made, or
(2) one-half (1/2) of the present value of the non-forfeitable accrued benefit
of the Participant under the Plan.
For purposes of this limit, all plans of the Employer shall be considered one
plan.
(c) Loans shall provide for level amortization with payments to be made not
less frequently than quarterly over a period not to exceed five (5) years.
However, loans used to acquire any dwelling unit which, within a reasonable
time, is to be used (determined at the time the loan is made) as a principal
residence of the Participant shall provide for periodic repayment over a
reasonable period of time that may exceed five (5) years. For this purpose, a
principal residence has the same meaning as a principal residence under Code
Section 1034.
(d) Any loans granted or renewed shall be made pursuant to a Participant loan
program. Such loan program shall be established in writing and must include,
but need not be limited to, the following:
(1) the identity of the person or positions authorized to administer the
Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans offered;
(5) the procedure under the program for determining a reasonable rate of
interest;
(6) the types of collateral which may secure a Participant loan; and
(7) the events constituting default and the steps that will be taken to
preserve Plan assets.
Such Participant loan program shall be contained in a separate written
document which, when properly executed, is hereby incorporated by reference
and made a part of the Plan. Furthermore, such Participant loan program may be
modified or amended in writing from time to time without the necessity of
amending this Section.
III. The Harco, Inc. 401(k) Plan (the "Harco Plan")
The Harco Plan is amended, effective February 1, 1998 (unless otherwise
indicated), as follows:
1. Section D13 of the Adoption Agreement to the Harco Plan is amended to read
as follows:
D13 EARLY RETIREMENT DATE (Plan Section 1.13) means the:
a. ( ) No Early Retirement provision.
b. ( ) date on which a Participant . . .
c. (x) first day of the month coinciding with or next following the date on
which a Participant . . .
d. ( ) Anniversary Date coinciding with or next following the date on which a
Participant
.. . .
AND, if b, c or d was selected . . .
1. (x) attains his fifty-fifth (55) birthday and has
(x) completed at least six (6) Years of Service.
2. Section E14(b) of the Adoption Agreement to the Harco Plan is amended by
checking box E14(b)(2) and by deleting the check in box E14(b)(1).
3. Section G1 of the Adoption Agreement to the Harco Plan is amended by
checking box G1(a) and by deleting the check in box G1(b).
4. Section G6 of the Adoption Agreement to the Harco Plan is amended to read
as follows:
G6 PRE-RETIREMENT DISTRIBUTION (Plan Section 6.10)
a. (x) If a Participant has reached the age of 59-1/2, distributions may be
made, at the Participant's election, from any accounts which are 100% Vested
without requiring the Participant to terminate employment.
b. ( ) No pre-retirement distribution may be made.
5. Section 1.75 of the Harco Plan is amended to read as follows:
1.75 "Years of Service" means
(a) (1) For purposes of determining eligibility, an Eligibility Computation
Period during which an Employee is credited with one thousand (1,000) or more
Hours of Service (whether or not continuous).
(2) For purposes of determining vesting, Year of Service means:
(i) Periods of Service. A Period of Service is the aggregate of all periods
commencing with the Employee's first day of employment or reemployment with
the Employer or Affiliated
Employer and ending on the date a 1-Year Break in Service begins. The first
day of employment or reemployment is the first day the Employee performs an
Hour of Service. An Employee will also receive partial credit for any Period
of Severance if less than 12 consecutive months. Fractional periods of a year
will be expressed in terms of days. A 1-Year Break in Service means a Period
of Severance of at least 12 consecutive months. A Period of Severance means a
continuous period of time during which the Employee is not employed by the
Employer. Such period begins on the date the Employee retires, quits or is
discharged, or if earlier, the 12 month anniversary of the date on which the
Employee was otherwise first absent from service. In the case of an individual
who is absent from work for maternity or paternity reasons, the 12 consecutive
month period beginning on the first anniversary of the first day of such
absence shall not constitute a 1-Year Break in Service. For purposes of this
paragraph, an absence from work for maternity or paternity reasons means an
absence (I) by reason of the pregnancy of the individual, (II) by reason of
the birth of a child of the individual, (III) by reason of the placement of a
child with the individual in connection with the adoption of such child by
such individual, or (IV) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
(ii) Notwithstanding paragraph (i) above, to the extent required under section
1.410(a)-7(g) of the Regulations, a Participant's total Years of Service for
vesting shall not be less than the Years of Service calculated by adding (I)
the number of Years of Service calculated through the end of the 1997 Plan
Year under paragraph (iii) below, plus (II) for the 1998 Plan Year, the
greater of (A) the Period of Service for the Participant calculated under
paragraph (i) above or (B) the service taken into account under the method
prescribed in paragraph (iii) below, plus (III) the Period of Service for Plan
Years following 1998 calculated under paragraph (i) above. In addition,
notwithstanding anything herein to the contrary, a Transferred Harco Employee
(as defined in Appendix A to the Plan) who terminates service with the
Employer for any reason before becoming 100% vested in his Non-Elective
Contributions shall receive credit for a Period of Service for purposes of
vesting in his Non-Elective Contributions for the 12-month computation period
in which he or she terminated, provided such Participant had completed five
(5) months of service (counting all months in which a Participant completed
one Hour of Service as a month of service) in such 12-month computation
period.
(iii) For purposes of determining Years of Service for vesting purposes prior
to January 1, 1998 and as required under paragraph (ii) above, Year of Service
means a 12 consecutive month period ending on the last day of a Plan Year in
which an Employee is credited with at least 1,000 Hours of Service. An
Employee shall be credited with a Year of Service for vesting at such time as
he or she is credited with 1,000 Hours of Service during such 12 consecutive
month period.
(b) "Eligibility Computation Period" means the twelve (12) consecutive month
period beginning with the day on which the Employee first performs an Hour of
Service (employment commencement date) and each anniversary thereof. The
computation period beginning after a 1-Year Break in Service shall be measured
from the date on which an Employee again performs an Hour of Service. If one
(1) Year of Service or less is required as a condition of eligibility, then
after the initial Eligibility Computation Period, the period shall 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.
1-Year Breaks in Service are measured using the same computation period in
determining Years of Service for eligibility or vesting, as the case may be.
(c) Years of Service with any predecessor Employer which maintained this Plan
shall be recognized. Years of Service with any other predecessor Employer
shall be recognized as specified in the Adoption Agreement. Years of Service
with any Affiliated Employer shall be recognized.
6. Section 4.6(d) of the Harco Plan is amended by inserting the following
sentence immediately after the first sentence:
Notwithstanding the foregoing, a Participant may, at any time, elect to
withdraw all or any of the portion of his account attributable to the
Participant's Rollover Contributions.
7. Section 6.6(g)(1) of the Harco Plan is amended by replacing the phrase
"either of" with the phrase "one or more of".
8. Section 7.4(a) of the Harco Plan is amended by replacing the phrase
"Participants and Beneficiaries" with the term "Participants", by replacing
the phrase "; and" with the punctuation mark ";", by replacing the punctuation
mark "." with the punctuation mark ";", and by inserting the following phrase
at the end thereof:
(6) only three outstanding loans are permitted for each Participant at a given
time; and (7) loans may not be made from the Participant's Account
attributable to Employer Non-Elective Contributions made pursuant to Section
E3 of the Adoption Agreement to the Plan and Section 11.1(b) of the Plan
(Employer matching contributions).
9. Section 11.8 of the Harco Plan is amended be replacing (a)(1) through
(a)(4), (b), and (c) with the following:
(1) Expenses for medical care described in Code Section 213(d) previously
incurred by the Participant, his spouse, or any of his dependents (as defined
in Code Section 152) or necessary for these persons to obtain medical care;
(2) The costs directly related to the purchase or substantial rehabilitation
of a principal residence for the Participant (excluding mortgage payments);
(3) Payments of tuition, related educational fees, and room and board expenses
for the next twelve (12) months of post-secondary education for the
Participant, his spouse, children, or dependents; or
(4) Such other circumstances as the Administrator may determine within the
intent of this Section.
(b) No distribution shall be made pursuant to this Section unless the
Administrator determines a financial need on behalf of the Participant based
upon all relevant facts and circumstances and unless the Participant's account
is fully vested.
(c) In the event of such hardship withdrawal, the Participant may continue his
participation in the Plan without interruption.