Exhibit 10.10
McGRATH RENTCORP
EMPLOYEE STOCK OWNERSHIP PLAN
Prepared: November 5, 1993
Revised: February 17, 1994
Revised: June 20, 1994
(C)1993, Menke & Associates, Inc.
All rights reserved
CONTENTS
Section Page
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1. Nature of Plan .............................................................................. 1
2. Definitions ................................................................................. 1
3. Eligibility ................................................................................. 9
4. Participation in Allocation of Benefits ..................................................... 9
(a) Participation .......................................................................... 9
(b) Leave of Absence ....................................................................... 9
(c) Suspended Participation ................................................................ 10
(d) Inactive Participation ................................................................. 10
5. Employer Contributions ...................................................................... 10
(a) Amount of Contribution ................................................................. 10
(b) Time for Making Contribution ........................................................... 10
(c) Form of Contribution ................................................................... 10
6. Investment of Trust Assets .................................................................. 10
(a) Authorized Investments ................................................................. 10
(b) Duties of Committee .................................................................... 10
(c) Plan Loans ............................................................................. 11
7. Allocations to Accounts ..................................................................... 11
(a) Individual Accounts .................................................................... 11
(b) Company Stock Account .................................................................. 12
(c) Other Investments Account .............................................................. 13
8. Expenses of the Plan and Trust .............................................................. 13
9. Voting Company Stock ........................................................................ 13
10. Disclosure to Participants .................................................................. 13
(a) Summary Plan Description ............................................................. 13
(b) Summary Annual Report ................................................................ 13
(c) Annual Statement ..................................................................... 13
(d) Notice of Rollover Treatment ......................................................... 13
(e) Additional Disclosures ............................................................... 14
11. Allocation of Employer Contributions and Forfeitures ........................................ 14
(a) Allocation of Employer Contributions and Forfeitures ................................. 14
(b) Allocation Limitations ............................................................... 15
12. Plan Benefit at Death, Disability or Retirement ............................................. 16
(a) Normal Retirement .................................................................... 16
(b) Deferred Retirement .................................................................. 16
(c) Disability Retirement ................................................................ 16
13. Other Termination of Service and Vesting .................................................... 16
(a) Vesting Schedule ..................................................................... 16
(b) Vesting Upon Reemployment ............................................................ 17
(c) Forfeitures .......................................................................... 17
(d) Cash-Out Distribution ................................................................ 17
14. Distribution of Plan Benefit ................................................................ 18
(a) Death, Disability or Retirement ...................................................... 18
(b) Other Termination of Participation ................................................... 18
(c) Death Prior to Distribution .......................................................... 18
(i)
(d) Valuation Date ....................................................................... 19
(e) Limitations .......................................................................... 19
(f) Commencement of Benefits ............................................................. 19
(g) Undistributed Accounts ............................................................... 19
(h) Optional Direct Transfer of Eligible Rollover Distributions .......................... 19
(i) Lien on Distribution ................................................................. 20
(j) Location of Participant or Beneficiary Unknown ....................................... 20
15. How Plan Benefit Will Be Distributed ........................................................ 20
(a) Form of Distribution ................................................................. 20
(b) Beneficiaries ........................................................................ 20
16. Rights and Options on Distributed Shares of Company Stock ................................... 20
17. Special Provisions .......................................................................... 21
(a) Diversification of Investments ....................................................... 21
(b) Cash Dividends ....................................................................... 21
(c) Advance Distributions ................................................................ 22
18. Administration .............................................................................. 22
(a) Named Fiduciaries for Administration of Plan and for Investment and Control
of Plan Assets ...................................................................... 22
(b) Investment of Plan Assets ............................................................ 22
(c) Funding Policy ....................................................................... 23
(d) Claims Procedures .................................................................... 23
(e) Qualified Domestic Relations Orders .................................................. 23
(f) General .............................................................................. 24
19. Amendment and Termination ................................................................... 24
(a) Amendment ............................................................................ 24
(b) Changes in the Code .................................................................. 24
(c) Termination, Partial Termination or Complete Discontinuance of Contributions ......... 24
(d) Determination by Internal Revenue Service ............................................ 24
(e) Return of Employer's Contribution .................................................... 24
20. Miscellaneous ............................................................................... 25
(a) Participation by Affiliated Company .................................................. 25
(b) Limitation of Rights; Employment Relationship ........................................ 25
(c) Merger; Transfer of Assets ........................................................... 25
(d) Prohibition Against Assignments ...................................................... 25
(e) Applicable Law; Severability ......................................................... 25
21. Top Heavy Provisions ........................................................................ 25
(a) Definitions .......................................................................... 25
(b) Vesting Requirements ................................................................. 28
(c) Minimum Benefits ..................................................................... 28
(d) Limitation on Annual Additions ....................................................... 28
22. Execution ................................................................................... 29
(ii)
McGRATH RENTCORP
EMPLOYEE STOCK OWNERSHIP PLAN
Section 1. NATURE OF PLAN.
(a) The purpose of this Plan is to enable participating Employees
of the Company and of any participating affiliates to share in the growth and
prosperity of the Company and to provide Participants with an opportunity to
accumulate capital for their future economic security. A primary purpose of the
Plan is to enable Participants to acquire a proprietary interest in the Company.
Consequently, Employer Contributions made to the Trust will be primarily
invested in Employer Securities.
(b) This Plan, originally effective as of January 1, 1985, and
amended and herein restated effective as of January 1, 1989 (except that
provisions which are required to be effective before this date in accordance
with the Tax Reform Act of 1986 are hereby generally applicable to the Plan
Years beginning after 1988, unless an earlier or later effective date is
required pursuant to a statute or Treasury Regulation or as stated in the Plan
document), is intended to qualify as an Employee Stock Ownership Plan, as
defined in Section 4975(e)(7) of the Internal Revenue Code (hereinafter referred
to as the "Code"), and as a stock bonus plan under Section 401(a) of the Code.
This Plan is adopted as an amendment and restatement of the Company's present
Employee Stock Ownership Plan. All Trust assets acquired under this Plan as a
result of Employer Contributions, income and other additions to the Trust will
be administered, distributed, forfeited and otherwise governed by the provisions
of this Plan which is administered by the Committee for the exclusive benefit of
Participants in the Plan and their Beneficiaries. It is intended that all
benefits, rights and features of this Plan be uniformly available to all
Participants.
Section 2. DEFINITIONS.
In this Plan, whenever the context so indicates, the singular or
plural number shall each be deemed to include the other, and the capitalized
words shall have the following meanings:
ACCOUNT
One of several Accounts maintained to record the interest of a
Participant in the Plan.
AFFILIATED COMPANY
Any Company which is a member of a controlled group of corporations
(as defined in Section 414(b) of the Code) which includes the
Employer, any trade or business (whether or not incorporated) which
is under common control (as defined in Section 414(c) of the Code)
with the Employer, any affiliated service group which includes the
Employer (as defined in Section 414(m) of the Code), and any other
entity required to be aggregated with the Employer under Section
414(o) of the Code.
ALTERNATE PAYEE
A spouse, former spouse, child or other dependent of a Participant
who is recognized by a Domestic Relations Order as having a right
to receive all or a portion of the benefits otherwise payable to a
Participant.
ANNIVERSARY DATE
The 31st day of December of each year.
ANNUAL ADDITIONS
The aggregate of amounts credited to a Participant's Accounts each
year from Employer Contributions, Forfeitures, and a Participant's
voluntary contributions (if any) under all defined contribution
plans of an Employer or Affiliated Company; provided, however, that
Employer Contributions applied to the payment of interest on a
Securities Acquisition Loan and Forfeitures of Employer Securities
purchased with the proceeds of a Securities Acquisition Loan shall
be excluded if no more than one third (1/3) of the Employer
Contribution deductible under Section 404(a)(9) of the Code for
that year is allocated to the Accounts of Highly Compensated
Employees. Amounts allocated after March 31, 1984 to an individual
medical account (as defined in Section 415(1)(2) of the Code) which
is part of a pension or annuity plan maintained by the Company
shall be treated as an Annual Addition. Any amounts attributable to
postretirement medical benefits allocated to the separate account
of a Key Employee (as defined in Section 419A(d)(3) of the Code)
under any Welfare Benefit Plan (as defined in Section 419(e) of the
Code) after December 31, 1985 shall be treated as an Annual
Addition. A restored Forfeiture, a transfer from another qualified
pension plan and a rollover contribution (if any) shall not be
counted as an "Annual Addition."
BENEFICIARY
The person or persons entitled to receive any benefits under the
Plan in the event of a Participant's death.
BOARD OF DIRECTORS
The board of directors of the Company.
BREAK IN SERVICE
A Plan Year during which a Participant has not completed more than
500 Hours of Service; provided, however, that for purposes of
Section 3 of the Plan, the Eligibility Computation Period will be
used to measure Breaks in Service.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
COMMITTEE
The Committee appointed by the Board of Directors to administer the
Plan and to give instructions to the Trustee.
COMPANY
McGrath Rentcorp.
COMPANY STOCK
Shares of any class of stock, preferred or common, voting or
nonvoting, which are issued by the Company or by any affiliate of
the Company, as defined in Section 407(d) of ERISA, including
Employer Securities.
COMPANY STOCK ACCOUNT
The Account of a Participant which is credited with the shares of
Company Stock purchased and paid for by the Trust or contributed to
the Trust.
CONTRIBUTIONS
Employer contributions which are deductible by an Employer under
Section 404(a) of the Code.
COVERED COMPENSATION
The total wages paid to a Participant by the Employer for each Plan
Year as reported on IRS Form W-2, including commissions, bonuses,
overtime compensation, and any salary deferrals under Sections
401(k) and 125 of the Code, but excluding any fringe benefits and
contributions to this or any other deferred compensation plan
except salary deferrals under Sections 401(k) and 125.
Notwithstanding the foregoing, effective for Plan Years beginning
after December 31, 1988, Covered Compensation of any Participant
taken into account in any Plan Year shall not exceed $200,000, as
indexed in accordance with Section 415(d)(1) of the Code. In
determining whether a Participant has Covered Compensation in
excess of $200,000, the rules of Section 414(q)(6) of the Code
shall apply, except that in applying such rules, the term "family
member" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19
before the close of the Plan Year, if such Participant is one of
the top ten Highly Compensated Employees of the Company. If, as a
result of the application of this rule, the adjusted $200,000 limit
is exceeded, the limitation shall be prorated among the affected
individuals in proportion to each such individual's Covered
Compensation as determined prior to the application of this
limitation. Covered Compensation does not include compensation paid
prior to the Entry Date on which an Employee first becomes eligible
to participate.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the
annual compensation of each Employee taken into account under the
Plan shall not exceed the Omnibus Budget Reconciliation Act of 1993
("OBRA `93") annual compensation limit. The OBRA `93 annual
compensation limit is $150,000, as adjusted by the Commissioner for
increases in cost of living in accordance with section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12
months, the OBRA `93 annual compensation limit will be multiplied
by a fraction, the numerator of which is the number of months in
the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference
in this Plan to the limitation under section 401(a)(17) of the Code
shall mean the OBRA `93 annual compensation limit set forth in this
provision.
If compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the
current Plan Year, the compensation for that prior determination
period is subject to the OBRA `93 annual compensation limit in
effect for that prior determination period. For this purpose, for
determination periods beginning before the first day of the first
plan year beginning on or after January 1, 1994, the OBRA `93
annual compensation limit is $150,000.
DEFERRED RETIREMENT
Termination of service subsequent to attainment of the Normal
Retirement Date.
DIRECT ROLLOVER
A payment by the Plan to the Eligible Retirement Plan specified by
the Distributee.
DISABILITY
If a Participant terminated employment because of a total and
permanent disability, the Participant will be given a Disability
Retirement without regard to age or length of service, and the
termination benefit shall be one hundred percent (100%) of the
amounts in all of the Participant's Accounts. "Total and permanent
disability" shall mean the Participant's entitlement to Social
Security disability benefits.
DISTRIBUTEE
Any 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 section 414(p)
of the Code, are Distributees with regard to the interest of the
spouse or former spouse.
DOMESTIC RELATIONS ORDER
Any judgment, decree, or order (including approval of a property
settlement agreement) which is made pursuant to a State domestic
relations law and which relates to the provision of child support,
alimony payments or marital property rights to a spouse, former
spouse, child or other dependent of a Participant.
EFFECTIVE DATE
The Effective Date of this amended and restated Plan is January 1,
1989 (except that provisions which are required to be effective
before this date in accordance with the Tax Reform Act of 1986 are
hereby generally applicable to the Plan Years beginning after 1988,
unless an earlier or later effective date is required pursuant to a
statute or Treasury Regulation or as stated in the Plan document).
ELIGIBLE RETIREMENT PLAN
An individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section 401(a) of the Code,
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.
ELIGIBLE ROLLOVER DISTRIBUTION
Any distribution of all or any portion of the balance to the credit
of the Distributee, except that an Eligible Rollover Distribution
does not include: any 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 Section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer Securities).
EMPLOYEE
A person, employed by an Employer, any portion of whose income is
subject to withholding of income tax and/or for whom Social
Security contributions are made by an Employer, as well as any
other person qualifying as a common law employee of an Employer.
Employee shall include Leased Employees unless: (i) such Employee
is covered by a money purchase pension plan providing: (1) a
nonintegrated Employer contribution rate of at least ten percent
(10%) of compensation, as defined in Section 415(c)(3) of the Code,
but including amounts contributed pursuant to a salary reduction
agreement which are excludable from the Employee's gross income
under Section 125, Section 402(a)(8), Section 402(h) or Section
403(b) of the Code; (2) immediate participation; and (3) full and
immediate vesting; and (ii) Leased Employees do not constitute more
than twenty percent (20%) of the Company's nonhighly compensated
work force.
EMPLOYER
McGrath Rentcorp and any other affiliate of the Company, as defined
in Section 407(d) of the ERISA, or any predecessor or successor
corporation, which has been designated by the Company as an
Employer participating in the Plan, and which has accepted such
designation and has agreed to be bound by the terms of the Plan and
Trust Agreement.
EMPLOYER SECURITIES
Common stock issued by the Company or by any affiliate of the
Company, as defined in Section 407(d) of ERISA, having a
combination of voting power and dividend rights equal to (i) that
class of common stock of the Company having the greatest voting
power and (ii) that class of common stock of the Company having the
greatest dividend rights. Noncallable preferred stock shall be
treated as Employer Securities if such stock is convertible at any
time into common stock which meets the above requirements, and if
(as of the date of acquisition by the Plan) the conversion price is
reasonable.
EMPLOYMENT COMMENCEMENT DATE
The date on which the Employee shall first perform an Hour of
Service for the Employer.
ENTRY DATE
The first day of January and the first day of July of each year.
ERISA
The Employee Retirement Income Security Act of 1974, as amended
from time to time.
EXCESS COMPENSATION
The amount by which a Participant's Covered Compensation for any
Plan Year exceeds the Social Security taxable wage base under
Section 3121(a)(1) of the Internal Revenue Code in effect at the
beginning of such Plan Year.
FISCAL YEAR
The annual accounting period adopted by the Company for federal
income tax purposes.
FORFEITURES
The portion of a Participant's Accounts which does not become part
of the Participant's Plan Benefit after the Participant incurs five
(5) consecutive one-year Breaks in Service. See Section 13 of the
Plan.
HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated
active Employees and highly compensated former Employees.
The term Highly Compensated active Employee includes any Employee
who performs service for the Employer during the determination year
and who, during the look-back year, (i) received compensation from
the Employer in excess of $75,000 (as adjusted pursuant to Section
415(d) of the Code); (ii) received compensation from the Employer
in excess of $50,000 (as adjusted pursuant to Section 415(d) of the
Code) and was a member of the top-paid group for such year;
or (iii) was an officer of the Employer and received compensation
during such year that is greater than fifty percent (50%) of the
dollar limitation in effect under Section 415(b)(1)(A) of the Code.
The term Highly Compensated Employee also includes (i) Employees
who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year,"
and the Employee is one of the one hundred (100) Employees who
received the most compensation from the Employer during the
determination year; and (ii) Employees who are five percent (5%)
owners at any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of (iii)
above during either a determination year or look-back year, the
highest paid officer for such year shall be treated as a Highly
Compensated Employee.
For this purpose, the determination year shall be the Plan Year.
The look-back year shall be the twelve-month period immediately
preceding the determination year.
The term Highly Compensated former Employee includes any Employee
who separated from service (or was deemed to have separated) prior
to the determination year, performed no service for the Employer
during the determination year, and was a highly compensated active
Employee for either the separation year or any determination year
ending on or after the Employee's fifty-fifth (55th) birthday.
If an Employee is, during a determination year or look-back year, a
family member of either a five percent (5%) owner who is an active
or former Employee or a Highly Compensated Employee who is one of
the ten (10) most Highly Compensated Employees ranked on the basis
of compensation paid by the Employer during such year, then the
family member and the five percent (5%) owner or top ten Highly
Compensated Employee shall be treated as a single Employee
receiving compensation and plan contributions or benefits equal to
the sum of such compensation and contributions or benefits of the
family member and five percent (5%) owner or top ten (10) Highly
Compensated Employee. For purposes of this Section, family member
includes the spouse, lineal ascendants and descendants of the
Employee or former Employee and the spouses of such lineal
ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top one hundred (100)
Employees, the number of Employees treated as officers and the
compensation that is considered, will be made in accordance with
Section 414(q) of the Code and the regulations thereunder.
HOUR OF SERVICE
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer or any
Affiliated Company during the applicable computation period.
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer or any Affiliated Company on account of a
period of time during which no duties are performed (irrespective
of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence.
Notwithstanding the preceding sentence, (1) no more than 501 Hours
of Service will be credited under this paragraph (b) to an Employee
on account of any single continuous period during which the
Employee performs no duties (whether or not such period occurs in a
single computation period); (2) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, during a
period in which no duties are performed, will not be credited to
the Employee if such payment is made or due under a plan maintained
solely for the purpose of complying with applicable workmen's
compensation, unemployment compensation or disability insurance
laws; and (3) Hours of Service will not be credited for a payment
which solely reimburses an Employee for medical or medically
related expenses incurred by the Employee. For purposes of this
paragraph (b), a payment shall be deemed to be made by or due from
an Employer or an Affiliated Company regardless of whether such
payment is made by or due from the Employer or an Affiliated
Company directly or indirectly through, among others, a trust fund,
or insurer, to which the Employer or an Affiliated Company
contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer or other
entity are for the benefit of particular Employees or are on behalf
of a group of Employees in the aggregate.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an
Affiliated Company.
(d) The determination of Hours of Service for reasons other than
the performance of duties, and the crediting of Hours of Service to
computation periods, shall be in accordance with U.S. Department of
Labor Regulations Section 2530.200b-2 (b) and (c). There shall be
no duplication of Hours of Service under any of the foregoing
provisions.
(e) In the case of a salaried Employee who is not paid on an hourly
basis, Hours of Service shall be based on any available records
which accurately reflect the actual number of hours worked by such
Employee. If such records do not
exist, such Employee shall be credited with Hours of Service on the
basis of 45 hours for each week for which the Employee would be
credited with at least one Hour of Service.
(f) For purposes of determining whether a Participant has incurred
a one-year Break in Service, a Participant will be credited with
Hours of Service for certain periods of absence from work by reason
of the Participant's pregnancy, the birth of a Participant's child,
the adoption of a Participant's child, or caring for a
Participant's child during the period immediately following the
birth or adoption of such child. If the Participant's normal work
hours are known, such Participant will be credited with the number
of hours that normally would have been credited for such absence.
If the Participant's normal work hours are not known, such
Participant will be credited with eight Hours of Service for each
normal workday during such absence. Not more than 501 Hours of
Service shall be credited for such purposes in the Plan Year in
which such absence commences if the Participant would otherwise
incur a Break in Service in such Plan Year; otherwise, such Hours
of Service shall be credited in the following Plan Year if such
absence continues in such Plan Year.
LEASED EMPLOYEE
Any person (other than an Employee of the Company) who pursuant to
an agreement between the Company and any other person ("leasing
organization") has performed services for the Company (or for the
Company and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full-time basis for a
period of at least one year, and such services are of a type
historically performed by employees in the business field of the
Company. Contributions or benefits provided a Leased Employee by
the leasing organization which are attributable to services
performed for the Company shall be treated as provided by the
Company.
LIMITATION YEAR
For purposes of the limitations on Contributions and benefits
imposed by Section 415 of the Code, the Limitation Year shall be
the Plan Year.
NORMAL RETIREMENT
Termination of service upon attainment of the Normal Retirement
Date.
NORMAL RETIREMENT DATE
The date on which a Participant attains age sixty-five (65) or the
5th anniversary of the date the Participant commenced
participation, whichever is later.
OTHER INVESTMENTS ACCOUNT
The Account of a Participant which is credited with a share of the
net income (or loss) of the Trust and Employer Contributions and
Forfeitures in other than Company Stock and which is debited with
payments made to pay for Company Stock.
PARTICIPANT
Any Employee who is participating in this Plan as defined in
Section 3 of the Plan or former Employee for whom an Account is
maintained. A Participant ceases to be a Participant when such
Participant's Account is closed after all amounts have been
distributed or Forfeited.
PLAN
The McGrath Rentcorp Employee Stock Ownership Plan, which includes
the Plan and Trust Agreement.
PLAN BENEFIT
The vested amount, as defined in Sections 12 and 13 of the Plan, of
a Participant's Accounts.
PLAN YEAR
The twelve (12) month period ending on each Anniversary Date.
QUALIFIED ELECTION PERIOD
The six (6) Plan Year period beginning with the first Plan Year in
which the Participant first became a Qualified Participant.
QUALIFIED PARTICIPANT
Any Participant who has attained age fifty-five (55) and has
completed ten (10) years of participation under the Plan.
RETIREMENT
Termination of service due to Normal Retirement, Deferred
Retirement or Disability.
SECURITIES ACQUISITION LOAN
A loan which is used to purchase Employer Securities and which
meets the requirements of paragraphs 1 and 2 of Section 6(c) of the
Plan.
SEGREGATED INVESTMENTS ACCOUNT
The Account of a Participant which is credited with amounts which
may not be used to purchase shares of Company Stock
pursuant to the provisions of Rev. Proc. 87-22.
STOCK BONUS PLAN
The portion of the Plan which is designed to qualify as such and is
subject to the rules pertaining to a stock bonus plan under Section
401(a) of the Code.
SUSPENSE ACCOUNT
The Suspense Account maintained by the Committee to which shall be
credited all shares of Employer Securities purchased with the
proceeds of a Securities Acquisition Loan.
TOTAL COMPENSATION
For purposes of Section 415 of the Code and the Top Heavy
provisions in Section 21 of this Plan,
(a) The term "Total Compensation" includes:
(1) The Employee'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 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 Section 1.62-2(c) of the
regulations under Section 62 of the Code).
(2) In the case of an Employee who is an employee within the
meaning of Section 401(c)(1) of the Code and the regulations
thereunder, the Employee's earned income (as described in Section
401(c)(2) of the Code and the regulations thereunder).
(3) Amounts described in Sections 104(a)(3), 105(a) and 105(h) of
the Code, but only to the extent that these amounts are includable
in the gross income of the Employee.
(4) Amounts paid or reimbursed by the Employer for moving expenses
incurred by an Employee, but only to the extent that at the time of
the payment it is reasonable to believe that these amounts are not
deductible by the Employee under Section 217 of the Code.
(5) The value of a nonqualified stock option granted to an Employee
by the Employer, but only to the extent that the value of the
option is includable in the gross income of the Employee for the
taxable year in which granted.
(6) The amount includable in the gross income of an Employee upon
making the election described in Section 83(b) of the Code.
(7) For purposes of subdivisions (1) and (2) of this subparagraph,
foreign earned income (as defined in Section 911(b) of the Code),
whether or not excludable from gross income under Section 911 of
the Code. Compensation described in subdivision (1) of this
subparagraph is to be determined without regard to the exclusions
from gross income in Sections
931 and 933 of the Code. Similar principles are to be applied with
respect to income subject to Sections 931 and 933 of the Code in
determining compensation described in subdivision (2) of this
subparagraph.
b) The term "Total Compensation" does not include items such as:
(1) Contributions made by the Employer to a plan of deferred
compensation to the extent that, before the application of Code
Section 415 limitations to that plan, the contributions are not
includable in the gross income of the Employee for the taxable year
in which contributed. In addition, Employer contributions made on
behalf of an Employee to a simplified employee pension plan
described in Code Section 408(k) are not considered as compensation
for the taxable year in which contributed. Additionally, any
distributions from a plan of deferred compensation are not
considered as compensation for Section 415 purposes, regardless of
whether such amounts are includable in the gross income of the
Employee when distributed. However, any amounts received by an
Employee pursuant to an unfunded nonqualified plan may be
considered as compensation for Code Section 415 purposes in the
year such amounts are includable in the gross income of the
Employee.
(2) Amounts realized from the exercise of a nonqualified 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 (under Section 83 of the Code).
(3) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option.
(4) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that
the premiums are not includable in the gross income of the
Employee), or contributions made by an Employer (whether or not
under a salary deferral agreement) towards the purchase of an
annuity contract described in Section 403(b) of the Code (whether
or not the contributions are excludable from the gross income of
the Employee)."
TRUST
The Trust created by the Trust Agreement entered into between the
Company and the Trustee.
TRUST AGREEMENT
The Agreement between the Company and the Trustee or any successor
Trustee establishing the Trust and specifying the duties of the
Trustee.
TRUSTEE
The Trustee (or Trustees) designated by the Company's Board of
Directors (and any successor Trustee). The Board of Directors may
provide that any person or group of persons may serve in more than
one fiduciary capacity with respect to the Plan (including service
as both Trustee and Committee member).
UNITS
A Participant shall be entitled to one (1) Unit for each $1,000 of
Covered Compensation and one (1) Unit for each six (6) months of
Service. Effective January 1, 1994, except as provided herein,
Participants shall be granted one (1) Unit for each $1,000 of
Covered Compensation and two (2) Units for each Year of Service.
Notwithstanding the foregoing, effective January 1, 1994, Highly
Compensated Employees shall not receive Unit credits for any Years
of Service.
VALUATION DATE
The Anniversary Date coinciding with or immediately preceding the
date of actual distribution of Plan Benefits. For purposes of the
top heavy provisions of this Plan, the Valuation Date is the most
recent Anniversary Date within a twelve (12)-month period ending on
a Determination Date (as defined in Section 21).
YEAR OF SERVICE
For purposes of eligibility, a twelve (12) month period beginning
on an Employee's Employment Commencement Date during which an
Employee is credited with not less than 1,000 Hours of Service.
For purposes of vesting under Section 13, all Plan Years after
December 31, 1984, during which an Employee has completed 1,000 or
more Hours of Service, including any Plan Year during which such
Participant has completed 1,000 or more Hours of Service but has
not yet become eligible to participate in the Plan.
In addition, for vesting purposes, a Participant, upon attaining
age twenty-one (21), will be credited with all Years of Service
with the Company between the ages of eighteen (18) and twenty-one
(21) after the original Effective Date of the Plan.
Section 3. ELIGIBILITY.
Each Employee shall become a Participant in the Plan from and after
the Entry Date coinciding with or next following the date on which the Employee
has completed a Year of Service, provided the Employee has attained age 21. For
eligibility purposes, a Year of Service is calculated in one of two ways. In the
first way, the "initial eligibility computation period" is the period of twelve
(12) consecutive months beginning on the Employee's Employment Commencement
Date. If the Employee does not complete 1,000 Hours of Service during that
12-month period, eligibility is calculated in a second way. In the second way,
the "subsequent eligibility computation period" is based on the Plan Year which
begins in the first year of employment and overlaps it. If the Employee does not
complete 1,000 Hours of Service during that Plan Year, the eligibility
computation period begins again on the first day of the following Plan Year and
so forth until the Employee completes 1,000 Hours of Service during a Plan Year.
Upon the Employee so becoming eligible, participation shall be
based on the total Covered Compensation paid to the Employee from and after said
Entry Date. If an Employee who has met the eligibility requirements leaves the
service of the Employer and returns to service after the Entry Date without
incurring five consecutive one-year Breaks in Service, the Employee shall
commence participation immediately upon returning to Service. All Employees who
were active Participants in the Company's Employee Stock Ownership Plan on
December 31, 1988 are automatically Participants in this Plan as of the
Effective Date.
An Employee whose terms of employment with the Employer are covered
by a collective bargaining agreement shall not be eligible to participate in the
Plan. Notwithstanding the foregoing, in the event any such Employees cease to be
subject to the collective bargaining agreement, Years of Service for purposes of
eligibility and vesting shall include years during which an Employee is covered
by a collective bargaining agreement after the original effective date of the
Plan.
Section 4. PARTICIPATION IN ALLOCATION OF BENEFITS.
(a) Participation.
Except in the case of death, Disability or Retirement, a
Participant will share in the allocation of Employer Contributions and
Forfeitures only if the Participant is still employed on the last day of the
Plan Year and has accumulated 1,000 or more Hours of Service during the Plan
Year. Except in the case of death, Disability or Retirement, a Participant who
accumulates less than 1,000 Hours of Service during a Plan Year will not share
in the allocation of Employer Contributions and Forfeitures under Section 11 for
such Plan Year, will not be given a Year of Service for purposes of vesting
under Section 13, and shall become an inactive Participant for that Plan Year.
Notwithstanding the foregoing, for Plan Years beginning after
December 31, 1988, in the event that the Plan fails to meet the coverage
requirements of Internal Revenue Code Section 410(b) for the Plan Year, members
of the group of Participants who are in the employ of the Employer and who have
completed more than 500 Hours of Service will share in Employer Contributions
and Forfeitures for the Plan Year as follows: the minimum number required to
meet the coverage tests under Code Section 410(b) based on their number of Hours
of Service credited during the Plan Year, ranked in descending order. If more
than one Employee receives credit for the lowest number of Hours of Service for
which any individual must be covered in order to meet the coverage tests, then
all employees receiving credit for exactly that number of Hours of Service shall
share in the allocation of Employer Contributions and Forfeitures.
A Participant reemployed following a Break in Service shall, after
completion of one Year of Service (measured by the Participant's reemployment
date), participate retroactively to the date of reemployment as to such
Participant's new Accounts for purposes of vesting under Section 13 and for
purposes of participating in the allocation of Employer Contributions and
Forfeitures under Section 11. If the Participant is reemployed after a Break in
Service and has no vested rights under the Plan and the number of consecutive
one-year Breaks in Service equals or exceeds five years or the number of
aggregate years of prebreak service, whichever is greater, the Participant shall
be treated as a new Employee for purposes of participation.
(b) Leave of Absence.
A Participant's employment is not considered terminated for
purposes of the Plan if the Participant has been on leave of absence with the
consent of the Company, provided that the Participant returns to the employ of
the Company within thirty (30) days after the leave (or within such longer
period as may be prescribed by law). Leave of absence shall mean a leave granted
by the Company, in accordance with rules uniformly applied to all Participants,
for reasons of health or public service or for reasons determined by the Company
to be in its best interests. Solely for purposes of preventing a Break in
Service, a Participant on such leave of absence shall be credited with eight (8)
Hours of Service for each business day of the leave. A Participant who does not
return to the employ of the Company within the prescribed time following the end
of the leave of absence shall be deemed to have
terminated employment as of the date when the leave began, unless such failure
to return was the result of death, Disability or Retirement.
(c) Suspended Participation.
A Participant who ceases to be an eligible Employee by becoming
subject to a collective bargaining agreement shall become a suspended
Participant. During the period of suspension, no amounts shall be credited to
the Participant's Accounts which are based on the Participant's Covered
Compensation from and after the date of suspension. However, amounts previously
credited to a Participant's Accounts shall continue to vest and the Participant
shall be entitled to benefits in accordance with the provisions of Section 14(g)
of this Plan throughout the period during which the Participant is on suspended
status.
(d) Inactive Participation.
A Participant who has more than 500 Hours of Service but less than
1,000 Hours of Service in any Plan Year shall be an inactive Participant for
that Plan Year. No amounts shall be credited to such Participant's Accounts
which are based on the Participant's Covered Compensation for that Plan Year
unless the Participant terminates employment due to death, Disability or
Retirement.
Section 5. EMPLOYER CONTRIBUTIONS.
(a) Amount of Contribution.
Employer Contributions shall be made to the Trust in such amounts
as may be determined by the Company's Board of Directors, provided that such
Contributions shall not exceed the maximum amounts deductible under Sections
404(a)(3) and 404(a)(9) of the Code. Employer Contributions shall be made in
sufficient amounts to cover principal and interest on a Securities Acquisition
Loan. Notwithstanding the foregoing, Employer Contributions may not be made in
amounts which would permit the limitation described in Section 11(b) to be
exceeded.
(b) Time for Making Contribution.
Employer Contributions for each year must be established by
resolution of the Company's Board of Directors and paid to the Trust not later
than the due date for filing the Company's federal income tax return for that
year, including extensions of such date.
(c) Form of Contribution.
Employer Contributions may be paid in cash, shares of Company Stock
or other property as the Company's Board of Directors may from time to time
determine. Shares of Company Stock and other property will be valued at their
then fair market value. In the case of a security for which there is a generally
recognized market, fair market value shall be the price of the security
prevailing on a national securities exchange which is registered under Section 6
of the Securities Exchange Act of 1934, or which has been listed for more than
one month on an electronic quotation system administered by a national
securities association registered under such Act. If the security is not so
traded on a national securities exchange or so listed on such an electronic
quotation system, fair market value shall be a price not less favorable to the
Plan than the offering price for the security as established by the current bid
and asked prices quoted by persons independent of the issuer and a party in
interest. No participant shall be required or permitted to make contributions to
the Plan or Trust.
Section 6. INVESTMENT OF TRUST ASSETS.
(a) Authorized Investments.
Employer Contributions in cash and other property received by the
Trust will be applied to pay any outstanding obligations of the Trust incurred
for the purchase of Employer Securities, or may be applied to purchase
additional shares of Company Stock from current shareholders, treasury shares,
or newly issued shares from the Company. The Committee may also direct the
Trustee to invest funds under the Plan in savings accounts, certificates of
deposit, securities, or other equity stocks or bonds or in any other kind of
real or personal property, including interests in oil or other depletable
natural resources, options, puts, calls, futures contracts and commodities; or
such funds may be held in non-interest-bearing bank accounts as necessary on a
temporary basis.
(b) Duties of Committee.
Except as otherwise provided in Section 18(b), all investments will
be made by the Trustee only upon the direction of the Committee. Except in the
case of a purchase from a Disqualified Person (as defined in Section 16 of the
Plan), all purchases of Company Stock shall be made at fair market value, as
defined in Section 5(c) hereof. In the case of a purchase from a Disqualified
Person, all purchases of Company Stock shall be made at prices which do not
exceed the fair market value of such shares as of the date of the transaction.
(c) Plan Loans.
(1) The Committee may direct the Trustee to incur Plan loans from
time to time to carry out the purposes of the Trust, provided that if the loan
is a Securities Acquisition Loan, the terms of the loan must comply with the
following requirements: Any such loan shall be for a specified term, shall bear
a reasonable rate of interest, may not exceed fifteen (15) years in duration,
and may only be secured by a collateral pledge of the Employer Securities so
acquired. Any such loan shall be primarily for the benefit of Plan Participants
and their Beneficiaries. No other Trust assets may be pledged as collateral by
the Trustee, and no lender shall have recourse against Trust assets other than
any shares of Employer Securities remaining subject to pledge. Any pledge of
Employer Securities must provide for the release of shares so pledged pursuant
to either the "General Rule" or the "Special Rule" set forth in Section 7.
Shares of Employer Securities released from the Suspense Account shall be
allocated to Participants' accounts in shares of stock or other nonmonetary
units. Repayments of principal and interest on any Securities Acquisition Loan
shall be made by the Trustee (as directed by the Committee) only from Employer
Contributions in cash to the Trust, from any cash dividends received by the
Trust on such Employer Securities or from any earnings attributable to the
investment of Employer Contributions made to the Trust in cash to meet its
obligations under the loan. Such Contributions, dividends and earnings shall be
accounted for separately in the books of accounts of the Plan until the
Securities Acquisition Loan is repaid. The proceeds of a Securities Acquisition
Loan may be used only to acquire Employer Securities, to repay such loan or to
repay a prior Securities Acquisition Loan. The Plan may not obligate itself to
acquire securities from a particular security holder at an indefinite time
determined upon the happening of an event such as the death of the holder. The
protections and rights described in Section 16 are nonterminable. Should this
Plan cease to be an Employee Stock Ownership Plan, or should the Securities
Acquisition Loan be repaid, all Employer Securities will continue to be subject
to the provisions of Section 16.
(2) In the event of default upon a Securities Acquisition Loan, the
value of Plan assets transferred in satisfaction of the loan must not exceed the
amount of default. If the lender is a Disqualified Person, a loan must provide
for a transfer of Plan assets upon default only upon and to the extent of the
failure of the Plan to meet the payment schedule of the loan. For purposes of
this paragraph, the making of a guarantee does not make a person a lender.
(3) Interest earned on any Securities Acquisition Loan made by a
bank, insurance company, regulated investment company or corporation actively
engaged in the business of lending money shall qualify for the fifty percent
(50%) exclusion from gross income under Section 133 of the Code to the extent
the loan meets the following criteria:
(A) The proceeds are paid to the Plan or are paid to the
Company and in turn lent by the Company to the Plan. If the proceeds of the loan
are in turn lent to the Plan, the repayment terms must be substantially similar
to the terms of the loan to the Company.
(B) If the loan was completed between June 6, 1989 and
November 17, 1989, the Plan must own thirty percent (30%) or more of either each
class of Company Stock or the total value of all outstanding stock of the
Company. In the case of loans completed after November 17, 1989, the Plan must
own more than fifty percent (50%) of such stock of the Company.
(C) The term of the loan may not exceed fifteen (15) years.
(D) In the case of loans completed after November 17, 1989,
Participants shall be entitled to direct how the stock acquired with such
Securities Acquisition Loan and allocated to their accounts will be voted.
If a Securities Acquisition Loan qualified under Section 133
of the Code is refinanced, the fifty percent (50%) interest exclusion shall
apply only during the first seven (7) years of the original commitment period
(measured from the date of the original loan) or during the original commitment
period, whichever is greater. Interest earned on any Securities Acquisition Loan
made by the Company or by any member of a controlled group of companies which
includes the Company shall not qualify for such interest exclusions.
Section 7. ALLOCATIONS TO ACCOUNTS.
(a) Individual Accounts.
The Committee shall establish and maintain individual Accounts for
each Participant in the Plan. Individual Accounts shall also be maintained for
all former Participants who still have an interest in the Plan. Except as
provided in Section 17(a), such individual Accounts shall not require a
segregation of the Trust assets and no Participant, former Participant or
Beneficiary shall acquire any right to or interest in any specific asset of the
Trust as a result of the allocation provided for in the Plan.
(b) Company Stock Account.
(1) The Company Stock Account of each Participant will be credited
as of each Anniversary Date with the Participant's allocated share of Company
Stock (including fractional shares) purchased and paid for by the Trust or
contributed in kind by the Company, with Forfeitures of Company Stock and with
stock dividends on Company Stock held in the Participant's Company Stock
Account.
A Participant shall have one Company Stock Account for
Employer Securities acquired by the Trust prior to January 1, 1987 and one
Company Stock Account for Employer Securities acquired by the Trust after
December 31, 1986.
Employer Securities acquired by the Trust with the proceeds
of a Securities Acquisition Loan shall be credited to a Suspense Account. For
each Plan Year during the duration of the loan, the number of shares of Employer
Securities to be released from said Suspense Account and allocated to the
Company Stock Accounts of Participants shall be determined pursuant to either
the "General Rule" or the "Special Rule" described below as selected by the
Committee for each Securities Acquisition Loan. Once the Committee has selected
either the General Rule or the Special Rule, that Rule shall be used exclusively
for the allocation of shares of Employer Securities purchased with the proceeds
of a particular Securities Acquisition Loan.
(A) General Rule: For each Plan Year during the duration of
the loan, the Committee shall withdraw from the Suspense Account a number of
shares of Employer Securities equal to the total number of such shares held in
the Suspense Account immediately prior to the withdrawal multiplied by a
fraction:
(i) The numerator of which is the amount of
principal and interest paid for the Plan Year; and
(ii) The denominator of which is the sum of the
numerator plus the principal and interest to be paid for all future years.
(B) Special Rule:
(i) For each Plan Year, the Committee shall withdraw
from the Suspense Account a number of shares of Employer Securities equal to the
total number of such shares held in the Suspense Account immediately prior to
the withdrawal multiplied by a fraction:
(aa) The numerator of which is the amount of
principal paid for the Plan Year; and
(bb) The denominator of which is the sum of the
numerator plus the principal to be paid for all future Plan Years.
(ii) The Committee may select the Special Rule only
if:
(aa) The Securities Acquisition Loan provides
for annual payments of principal and interest at a cumulative rate which is not
less rapid at any time than level annual payments of such amounts for ten (10)
years;
(bb) The interest included in any payment is
disregarded only to the extent that it would be determined to be interest under
standard loan amortization tables; and
(cc) By reason of a renewal, extension or
refinancing, the sum of the expired duration of the original loan, any renewal
period, any extension period and the duration of any new loan does not exceed
10 years.
(C) In determining the number of shares to be released for
any Plan Year under either the General Rule or the Special Rule:
(i) The number of future years under the Loan must
be definitely ascertainable and must be determined without taking into account
any possible extensions or renewal periods;
(ii) If the Loan provides for a variable interest
rate, the interest to be paid for all future Plan Years must be computed by
using the interest rate applicable as of the end of the Plan Year for which the
determination is being made; and
(iii) If the Employer Securities allocated to the
Suspense Account includes more than one class of shares, the number of shares of
each class to be withdrawn for a Plan Year from the Suspense Account must be
determined by applying the applicable fraction provided for above to each such
class.
(2) Allocations of Company Stock shall be reflected
separately for each class of such stock, and the Committee shall maintain
adequate records of the aggregate cost basis of Company Stock allocated to each
Participant's Company Stock Account.
(c) Other Investments Account.
The Other Investments Account of each Participant will be credited
(or debited) as of each Anniversary Date with the Participant's share of the net
income (or loss) of the Trust, with cash dividends on Company Stock not
distributed to Participants or used to pay a Securities Acquisition Loan and
with Employer Contributions and Forfeitures in other than Company Stock. The
Other Investments Account of each Participant will be credited (or debited) as
of each Anniversary Date with the Participant's share of the unrealized
appreciation (or depreciation) in the value of Trust assets other than Company
Stock. It will be debited for any payments for purchases of Company Stock or for
repayment of debt (including principal and interest) incurred for the purchase
of Employer Securities.
Section 8. EXPENSES OF THE PLAN AND TRUST.
Normal brokerage charges which are included in the cost of
securities purchased (or charged to proceeds in the case of sales) shall be paid
by the Trust. The Company shall pay all expenses in connection with the design,
establishment, or termination of the Plan. The Trust shall pay all costs of
administering the Plan and Trust, unless such expenses are paid by the Company.
Section 9. VOTING COMPANY STOCK.
The shares of Company Stock are publicly traded, so each
Participant shall be entitled to vote any voting shares of Company Stock
allocated to the Participant's Company Stock Account as of the record date. The
Trustee shall notify or shall cause Employer to notify each Participant of each
occasion for the exercise of voting rights not less than thirty (30) days before
such rights are to be exercised. The notification shall include all information
that the Employer distributes to shareholders regarding the exercise of such
rights. Participants shall be allowed to vote fractional shares. Any shareholder
rights other than voting rights (such as conversion rights) shall be subject to
Participant control and direction under the same terms and conditions as set
forth above. Any unallocated shares held by the Trust shall be voted by the
Trustee in accordance with instructions from the Committee.
Section 10. DISCLOSURE TO PARTICIPANTS.
(a) Summary Plan Description.
Within ninety (90) days after a Participant commences participation
(or after a Beneficiary first receives benefits under the Plan), the Committee
shall furnish such Participant (or Beneficiary) with the summary plan
description required by Sections 102(a)(1) and 104(b)(1) of ERISA. Such summary
plan description shall be updated from time to time as required under ERISA and
the Department of Labor regulations thereunder.
(b) Summary Annual Report.
Within nine (9) months after each Anniversary Date, the Committee
shall furnish each Participant (and each Beneficiary receiving benefits under
the Plan) with the summary annual report of the Plan required by Section
104(b)(3) of ERISA, in the form required by regulations of the Department of
Labor.
(c) Annual Statement.
As soon as possible after each Anniversary Date, Participants will
receive a written statement of their Accounts showing as of that Anniversary
Date:
(1) The balance in each of their Accounts as of the preceding
Anniversary Date.
(2) The amount of Employer Contributions and Forfeitures allocated
to their Accounts for the year.
(3) The adjustments to their Accounts to reflect their share of
dividends and the income and expenses of the Trust for the year.
(4) The new balances in each of their Accounts, including the
number of shares of Company Stock.
(5) The vested percentage of their Plan Benefit.
Upon the discovery of any error or miscalculation in an Account,
the Committee shall correct the same insofar as, in the Committee's discretion,
correction is feasible. Statements to Participants are for reporting purposes
only, and no allocation, valuation or statement shall, by itself, vest any right
or title in any part of the Trust fund.
(d) Notice of Rollover Treatment.
The Committee shall, when making any distribution which qualifies
as a qualifying rollover distribution under Section 402(c) or Section 401(a)(31)
of the Code, provide a written notice to the recipient which explains the
provisions of Sections 402(c)
and 401(a)(31) under which such distribution will not be subject to current tax
if transferred to an Eligible Retirement Account. In the case of a distribution
under Section 402(c), such notice shall be given not less than 30 days nor more
than 90 days before the distribution date. If the distribution is one to which
Sections 401(a)(11) and 417 of the Internal Revenue Code do not apply, such
distribution may commence less than 30 days after the notice required under
Section 1.411(a)11(c) of the Income Tax Regulations is given, provided that:
(1) the Committee 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.
(e) Additional Disclosure.
The Committee shall make available for examination by any
Participant (or Beneficiary) copies of the summary plan description, the Plan,
the Trust Agreement and the latest annual report of the Plan filed with the
Department of Labor. Upon written request of any Participant (or Beneficiary),
the Committee shall furnish copies of such documents and may make a reasonable
charge to cover the cost of furnishing such copies, as provided in regulations
of the Department of Labor.
Section 11. ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES.
(a) Allocation of Employer Contributions and Forfeitures.
The allocation will be made as follows:
(1) Employer Contributions.
(A) For all Plan Years beginning prior to January 1, 1994,
provided that the Plan has not obtained a Securities Acquisition Loan, Employer
Contributions will be allocated as of each Anniversary Date among the Accounts
of Participants in the Plan who are employed by the Company on the last day of
the year or Employees whose participation terminated during the year because of
Disability, Retirement or death, in the proportion that each such Participant's
Excess Compensation bears to the total Excess Compensation of all such
Participants for that year, provided that such allocation may not exceed an
amount equal to such Participant's Excess Compensation multiplied by the tax
rate for Old Age Survivors and Disability Insurance (OASDI) in effect at the
beginning of the Plan Year. Any remaining portion of the Employer Contributions
shall be allocated in the proportion that each such Participant's Units bears to
the total Units of all such Participants for that year. For purposes of this
paragraph, a person who is an inactive Participant for a Plan year, or whose
participation in the Plan terminates during a Plan Year for reasons other than
Retirement or death shall not be considered a Participant in the Plan on the
last day of that Plan Year, provided that this Plan has not become Top Heavy.
(B) For all Plan Years beginning on or after January 1, 1994,
Employer Contributions will be allocated as of each Anniversary Date among the
Accounts of Participants in the Plan who are employed on the last day of the
Plan Year, or Employees whose employment terminated during the year because of
death, Disability or Retirement, in the proportion that each such Participant's
Units bear to the total Units of all such Participants for that year. Shares of
Employer Securities released from the Suspense Account (as provided in Section
7(b)) by reason of the payment of interest and principal on a Securities
Acquisition Loan shall be allocated as of each Anniversary Date among the
Accounts of Participants in the Plan who are employed on the last day of the
Plan Year, or Employees whose employment terminated during the year because of
death, Disability or Retirement, in the proportion that each such Participant's
Units bear to the total Units of all such Participants for that year. For
purposes of this paragraph, a person who is an inactive Participant for a Plan
Year, or whose employment terminates during a Plan Year for reasons other than
death, Disability or Retirement, shall not be considered a Participant in the
Plan on the last day of that Plan Year.
(2) Forfeitures.
Forfeitures shall be allocated in the same manner as Employer
Contributions are allocated.
(3) Net Income (or Loss) of the Trust.
The net income (or loss) of the Trust will be determined
annually as of each Anniversary Date. Any stock dividends on shares of Company
Stock held by the Trust shall be allocated to each Participant's Company Stock
Account in the ratio in which the cumulative number of shares allocated to the
Participant's Company Stock Account as of the preceding Anniversary Date bears
to the total cumulative number of shares of Company Stock allocated to the
Company Stock Accounts of all Participants as of that date. Any cash dividends
paid on shares of Company Stock (whether or not allocated) and any gain on the
sale of unallocated shares of Company Stock shall be allocated to each
Participant's Other Investments Account in the ratio in which the cumulative
number of shares allocated to the Participant's Company Stock Account as of the
preceding Anniversary Date bears to the total cumulative number of shares of
Company Stock allocated to the Company Stock Accounts of all Participants as of
that date. All other net income (or loss) will be allocated to each
Participant's Other Investments Account in the ratio in which the
balance of the Participant's Other Investments Account on the preceding
Anniversary Date bears to the sum of the balances of the Other Investments
Accounts of all Participants on that date. For this purpose, Account balances
shall be reduced by amounts distributed to Participants during the Plan Year.
The net income (or loss) includes the increases (or
decreases) in the fair market value of assets of the Trust, interest, dividends,
other income and expenses attributable to assets in the Other Investments
Accounts since the preceding Anniversary Date. Net income (or loss) does not
include the interest paid under any installment contract for the purchase of
Company Stock by the Trust or on any loan obtained by the Trust to purchase
Company Stock. Notwithstanding the foregoing, no income (or loss) shall be
allocated to a terminated Participant's Account for the Plan Year in which the
Participant receives final distribution of the Plan Benefit.
(b) Allocation Limitations.
(1) The total Annual Additions to a Participant's Accounts for any
Limitation Year shall not exceed the lesser of (i) $30,000 (or, if greater,
one-fourth (1/4) of the dollar limitation in effect under Section 415(b)(1)(A)
of the Code), or (ii) twenty-five percent (25%) of the Participant's Total
Compensation for the Limitation Year. Notwithstanding the foregoing sentence,
for Plan Years beginning prior to July 12, 1989 the regular dollar limitation
specified in the preceding sentence (and any adjustments) may be increased by up
to one hundred percent (100%) of said amount. A Participant's allocable share of
Employer Contributions applied to the payment of interest on a Securities
Acquisition Loan and Forfeitures of Employer Securities purchased with the
proceeds of a Securities Acquisition Loan shall not be included as an Annual
Addition, provided that the amount of Employer Contributions and Forfeitures
allocated to a Participant's Accounts in excess of the regular dollar limitation
is in the form of Employer Securities (or cash used to purchase Employer
Securities) within thirty (30) days of the due date for filing the Company's
federal income tax return for that year, including extensions of such date), and
no more than one-third (1/3) of the Employer Contribution for that year is
allocated to the Accounts of Highly Compensated Employees.
(2) If an Employer is contributing to another defined contribution
plan, as defined in Section 414(i) of the Code, for Employees of the Company,
some or all of whom may be Participants in this Plan, then any such
Participant's Annual Additions in such other plan shall be aggregated with the
Participant's Annual Additions derived from this Plan for purposes of the
limitation in Paragraph (1) of this Subsection.
(3) If a Participant in this Plan is also a Participant in a
defined benefit plan to which Contributions are made by an Employer or
Affiliated Company, then in addition to the limitation contained in Paragraph
(1) of this Subsection, such Participant's allocations shall be limited, such
that the sum of the defined benefit plan fraction and the defined contribution
plan fraction for any Limitation Year shall not exceed 1.0. For purposes of this
Paragraph (3), the defined benefit plan fraction is a fraction, the numerator of
which is the projected annual benefit of the Participant under all such defined
Plans determined as of the close of the Limitation Year, and the denominator of
which is the lesser of (i) the product of 1.25 multiplied by the dollar
limitation in effect for such Plan Year, or (ii) the product of 1.4 multiplied
by one hundred percent (100%) of the Participant's average Total Compensation
for the Participant's highest three Limitation Years. For purposes of this
Paragraph (3), the defined contribution plan fraction for any Limitation Year is
a fraction, the numerator of which is the sum of the Annual Additions to the
Participant's Accounts as of the close of the Limitation Year, and the
denominator of which is the sum of the lesser of the following amounts
determined for such year and for each prior Year of Service with the Employer:
(i) the product of 1.25 multiplied by the dollar limitation in effect for such
Limitation Year or (ii) the product of 1.4 multiplied by twenty-five percent
(25%) of the Participant's Total Compensation.
(4) If Company Stock is purchased from a shareholder of the Company
and if such shareholder is also a Participant in this Plan, then notwithstanding
anything to the contrary contained in this Plan, the total Account balances of
such Participant's Accounts other than the Participant's Segregated Investments
Account, combined with the total Account balances of the Accounts of such
Participant's spouse, parents, grandparents, children, and grandchildren under
the Plan, shall not exceed twenty percent (20%) of the total of all Account
balances under the Plan. However, if the total Account balances of such
Participant's Accounts exceed twenty percent (20%) of the total of all Account
balances, then the amounts in excess of said twenty percent (20%) shall be
credited to that Participant's Segregated Investments Account and invested in
investments other than Company Stock.
(5) If, due to forfeitures, reasonable error in estimating
compensation, or other limited facts and circumstances as determined by the
Commissioner, the Account balances or the Annual Additions to a Participant's
Accounts would exceed the limitation described in Paragraphs (1), (2) or (3) of
this Subsection, the aggregate of the Annual Additions to this Plan and the
Annual Additions to any other plan described in Paragraphs (2) or (3) shall be
reduced until the applicable limitation is satisfied.
(6) The reduction shall be treated the same as Forfeitures and
shall be allocated in accordance with Section 11(a)(2) of the Plan to the
Accounts of Participants who are not affected by this limitation.
(7) If any amount cannot be reallocated under the foregoing
provision, such amount shall be deposited in a suspense account and allocated to
the maximum extent possible under Section 11(a)(2) of the Plan in succeeding
years, provided that (i) no Employer Contributions are made until Section 415 of
the Code will permit their allocation, (ii) no investment gains or losses are
allocated to such suspense account, and (iii) the amounts in such suspense
account are allocated at the earliest possible date.
(8) Notwithstanding the allocation provisions of Section 11(a)(1)
and (2), the excess, if any, of the Actual Allocation Percentage for the group
of Highly Compensated Employees over that of all other eligible Employees shall
not be more than two (2) percentage points, and the Actual Allocation Percentage
for the group of Highly Compensated Employees shall not be more than the Actual
Allocation Percentage for all other eligible Employees multiplied by two (2).
For purposes of this Paragraph, the term "Actual Allocation Percentage" for a
specified group of Employees for a Plan Year means the average of the ratios
(calculated separately for each Participant in such group) of (i) the amount of
the Employer Contributions actually allocated on behalf of each such Participant
as of a date within such Plan Year, to (ii) the Participant's Plan Year
Compensation (as defined in this Section) for services performed by the
Employee. In the event that the amount of allocations made on behalf of Highly
Compensated Employees for any Plan Year exceeds the maximum amount permitted
under the above-described limitations, such excess amount shall be reallocated
to other eligible employees. The amount of excess allocations for a Highly
Compensated Employee for a Plan Year is the amount (if any) by which the
Employee's allocations must be reduced for the Employee's actual allocation
ratio to equal the highest permitted actual allocation ratio under the Plan. To
calculate the highest permitted actual allocation ratio, the actual allocation
ratio of the highest Highly Compensated Employee with the highest allocation
ratio is reduced by the amount required to cause such Employee's actual
allocation ratio to equal the ratio of the next highest Highly Compensated
Employee. This process must be repeated until the allocations satisfy the actual
allocation percentage test.
Section 12. PLAN BENEFIT AT DEATH, DISABILITY OR RETIREMENT.
Participation in the allocation of Employer Contributions and Forfeitures
terminates as of the end of the Plan Year coinciding with or following a
Participant's death, Disability or Retirement. A Participant's Plan Benefit upon
death, Disability or Retirement will be the total of the Participant's Account
balances as of the coinciding or following Anniversary Date.
A Participant who, while employed with the Company, dies or attains any
of the following Retirement dates will be one hundred percent (100%) vested.
(a) Normal Retirement.
A Participant's Normal Retirement Date is the later of such
Participant's attainment of age sixty-five (65) or the fifth (5th) anniversary
of the year in which the Participant commenced participation.
(b) Deferred Retirement.
If a Participant continues in the service of the Employer beyond
the Normal Retirement Date, such Participant shall continue to participate in
the Plan during any period of employment following the Normal Retirement Date.
(c) Disability Retirement.
If a Participant terminated employment because of a total and
permanent disability, such Participant will be given a Disability Retirement
without regard to age or length of service, and the termination benefit shall be
one hundred percent (100%) of the amounts in all of such Participant's Accounts,
vested in accordance with the vesting schedule in Section 13. "Total and
permanent disability" shall mean the Participant's entitlement to Social
Security disability benefits.
Any amount credited to a Participant's Accounts with respect to the
Employer's Contribution for the Plan Year in which such Participant dies,
becomes Disabled or attains any of the above Retirement dates shall also be
completely vested at the time of such contribution.
Section 13. OTHER TERMINATION OF SERVICE AND VESTING.
(a) Vesting Schedule.
If a Participant has a Break in Service or the Participant's
employment is terminated for any reason other than as described in Section 12,
the vesting of such Participant's Plan Benefit will be based upon Years of
Service, as defined in Section 2, in accordance with the following vesting
schedule:
Years of Service Percentage of Accounts Vested
---------------- -----------------------------
Less than Three Years 0
Three Years 20
Four Years 40
Five Years 60
Six Years 80
Seven or more Years 100
(b) Vesting Upon Reemployment.
If a Participant is reemployed by the Company following a Break in
Service, such Participant's Accounts shall be vested as follows:
(1) Vesting of Prior Account Balances.
If a Participant has had five consecutive one-year Breaks in
Service, Years of Service after such five-year period will not be taken into
account for purposes of determining a Participant's vested interest in the
Participant's prebreak Account balances, and new Accounts will be established to
record the Participant's interest in the Plan for service after such five-year
period.
(2) Vesting of Subsequent Account Balances.
(A) In the case of a Participant who, at the time of a Break
in Service, does not have any vested right under Paragraph (a) above, Years of
Service before such Break in Service shall not be taken into account unless such
Participant returns to work for the Employer and completes one (1) Year of
Service. Notwithstanding the foregoing, Years of Service before such Break in
Service shall not be taken into account for purposes of determining a
Participant's vested interest in the Participant's postbreak Account balances if
the number of consecutive one-year Breaks in Service equals or exceeds five
years or the aggregate number of years of prebreak service, whichever is
greater.
(B) If a Participant had any degree of vested interest at the
time of the Participant's Break in Service, such Participant shall participate
retroactively to the Participant's reemployment date for purposes of determining
a Participant's vested interest in the Participant's postbreak Account balances.
Upon resuming participation, such Participant's Years of Service shall include
all Years of Service prior to the Break in Service.
(c) Forfeitures.
Any remainder of a terminating Participant's Account who has
incurred five (5) consecutive one-year Breaks in Service shall be treated as a
Forfeiture. Forfeitures shall be first charged against a Participant's Other
Investments Account, with any balance charged next against Company Stock which
was not acquired with the proceeds of a Securities Acquisition Loan then charged
against Employer Securities acquired with a Securities Acquisition Loan. If a
portion of a Participant's Account is to be forfeited and interests in more than
one class of Employer Securities have been allocated to a Participant's Account,
the Participant shall forfeit the same percentage of each such class. The
disposition of such Forfeitures shall be as follows:
(1) If a Participant has incurred five consecutive one-year Breaks
in Service and has not received a "cash-out distribution" (as defined below),
the nonvested balance of the Participant's Accounts shall be allocated as a
Forfeiture as soon as possible after the close of the Plan Year in which the
Participant incurs a five-year Break in Service.
(2) If a Participant who is not 100% vested receives a distribution
of a Plan Benefit, which is not a "cashout distribution" (as defined below),
prior to the occurrence of a five-year Break in Service, and such Participant
returns to work for the Employer, the portion of the Participant's Accounts
which was not vested shall be maintained separately (from any additional
contributions to this Plan) until such Participant becomes 100% vested. Such
Participant's vested and nonforfeitable percentage in such separate Accounts
upon any subsequent termination of Service shall be equal to:
X - Y
----------
100% - Y
For purposes of applying this formula, X is the vested percentage
at the time of the subsequent termination, and Y is the vested percentage at the
time of the prior termination. Separate Accounts shall share in the allocation
of Trust income or loss on every Anniversary Date prior to Forfeiture, but such
accounts shall not share in allocation of Trust income or loss on the
Anniversary Date on which they are forfeited.
(3) If a Participant receives a "cash-out distribution" (as defined
below), the nonvested balance of the Participant's Accounts shall be allocated
as a Forfeiture as of the Anniversary Date coinciding with or following the date
such Participant incurred a one-year Break in Service.
(d) Cash-Out Distribution.
Effective for Plan Years beginning on or after January 1, 1993, if
a partially vested Participant receives a cash-out distribution, the cash-out
distribution will result in a forfeiture of the nonvested portion of the
Participant's Accounts. A "cash-out distribution" is a distribution of the
vested portion of a Participant's Accounts that is made before the Participant's
Normal Retirement Date on account of termination of participation in the Plan,
provided that such distribution is made not later than the close of the second
Plan Year following the Plan Year in which such termination occurred.
If any former Participant shall be reemployed by the Employer
before five (5) consecutive one-year Breaks in Service, and such former
Participant had received a cash-out distribution prior to reemployment, the
forfeited portion of such Participant's Accounts shall be reinstated only if the
Participant repays the full amount distributed to such Participant. Such
repayment must be made by the former Participant before the Participant incurs
five (5) consecutive one-year Breaks in Service following the date of
distribution and before the five-year anniversary of his reemployment date. In
the event the former Participant does repay the full amount distributed to such
Participant, the undistributed portion of the Participant's Accounts must be
restored in full, unadjusted by any gains or losses occurring subsequent to the
Anniversary Date preceding the Participant's termination. Restoration of a
Participant's Accounts shall include restoration of all Code Section 411(d)(6)
protected benefits with respect to such restored amounts.
If the Participant repays the amount distributed to such
Participant within the required time period, the Committee shall restore the
forfeited portion of the Participant's Accounts as of the Anniversary Date
coinciding with or following the repayment. Such amount shall be restored, to
the extent necessary, in the following manner:
(A) first from current-year Forfeitures;
(B) second from current-year Trust earnings; and
(C) third from current-year Contributions.
To the extent the amounts described in clauses (A), (B) and (C) are
insufficient to enable the Committee to make the required restoration, the
Employer must contribute the additional amount necessary to enable the Committee
to make the required restoration.
A Participant who is zero percent (0%) vested shall be deemed to
have received a cash-out distribution as of the last day of the Plan Year in
which the Participant receives an allocation of Contributions or Forfeitures.
For purposes of applying the restoration provisions of this Paragraph, the
Committee will treat a zero percent (0%) vested Participant as repaying the
Participant's cash-out distribution on the first day of reemployment with the
Employer.
Section 14. DISTRIBUTION OF PLAN BENEFIT.
(a) Death, Disability or Retirement.
In the event of death, Disability or Retirement, a Participant's
Plan Benefit shall be distributed as follows not later than one year after the
close of the Plan Year in which such event occurs:
Distribution of the Company Stock Account and Other Investments
Account will be made in a lump sum.
Notwithstanding the foregoing, the Committee may, in its sole
discretion exercised in a uniform and nondiscriminatory manner, direct that the
distribution be made in substantially equal annual installments over a period of
five years.
(b) Other Termination of Participation.
In the event a Participant ceases to participate for reasons other
than death, Disability or Retirement, distribution of the Participant's Company
Stock Account and Other Investments Account shall be made in a lump sum as soon
as possible after the close of the Plan Year in which the Participant terminates
employment.
Notwithstanding the foregoing, the Committee may, in its sole
discretion exercised in a uniform and nondiscriminatory manner, direct that the
distribution be made in substantially equal annual installments over a period of
five years.
Notwithstanding the foregoing provisions of this Section 14(b), the
Plan shall not be required to distribute any Employer Securities acquired with
the proceeds of a Securities Acquisition Loan until the close of the Plan Year
in which such Securities Acquisition Loan has been repaid in full.
Notwithstanding the foregoing provisions of this Section 14(b), for
shares of Employer Securities acquired after December 31, 1986 the Plan shall
not be required to distribute any Employer Securities to the extent that the
Participants or Beneficiaries have elected to have their Company Stock Account
diversified under the provisions of Section 17(a) hereof.
All distributions made under this Section 14 shall be determined
and made in accordance with the Proposed Regulations under Section 40l(a)(9),
including the minimum distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the Proposed Regulations.
(c) Death Prior to Distribution.
If a Participant who has elected to defer distribution dies before the
distribution has commenced, such Participant's entire Plan Benefit shall be
distributed within five (5) years of the date of the Participant's death;
provided, however, that if any portion of a
Participant's Plan Benefit is payable to or for the benefit of an individual who
is the Participant's designated Beneficiary, such portion may, at the election
of such Beneficiary, be distributed over a period not exceeding the life
expectancy of such Beneficiary, provided such distributions begin not later than
one year after the death of the Participant; and provided further that if the
designated Beneficiary is the spouse of the Participant, at the election of the
spouse, such distribution (over a period not exceeding the life expectancy of
said spouse) need not commence until the date the Participant would have
attained age 70-1/2.
(d) Valuation Date.
All Accounts, including the Company Stock Account, shall be valued as
of a date coinciding with or immediately preceding the date of actual
distribution of Plan Benefits.
(e) Limitations.
If a present value of a Participant's Plan Benefit (determined in
accordance with Section 411(a)(11)(B) of the Code) has ever exceeded $3,500, any
distribution prior to the later of age sixty-two (62) or the Participant's
Normal Retirement Date may be made only with the written consent of the
Participant. The Committee shall provide the Participant with a written notice
which explains the provision of Section 411(a)(11), not less than 30 days nor
more than 90 days before the distribution date. If the distribution is one to
which Sections 401(a)(11) and 417 of the Internal Revenue Code do not apply,
such distribution may commence less than 30 days after the notice required under
Section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that:
(1) the Committee 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.
Failure of a Participant to consent to an immediate distribution
within the applicable time limit is an election to defer benefits to the later
of age sixty-two (62) or the Normal Retirement Date of the Participant.
(f) Commencement of Benefits.
At the request of a Participant, the Committee shall direct that the
distribution be deferred and commence not later than April 1 of the calendar
year following the calendar year in which such Participant attains age 70-1/2,
unless such Participant has attained age 70-1/2 prior to January 1, 1988. If a
Participant has attained age 70-1/2 prior to January 1, 1988, distributions must
begin not later than April 1 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 unless the Participant was a "five percent
(5%) owner" at any time during the Plan Year (or calendar year) in which the
Participant attained age 66-1/2 or any subsequent Plan Year. If a Participant
dies after the distribution of the Plan Benefit has commenced, the remaining
portion of the Plan Benefit shall be distributed at least as rapidly as under
the method being used at the date of the Participant's death.
Notwithstanding anything in this Section 14 to the contrary, payment
of the Plan Benefit will commence, unless the Participant otherwise elects, no
later than the sixtieth (60th) day after the close of the Plan Year (or if later
after the Plan Benefit is determined) in which the latest of the following
events occur:
(1) The attainment by the Participant of age sixty-five (65);
(2) The Participant's actual retirement from the employ of the
Company;
(3) The tenth (10th) anniversary of the year in which the Participant
commenced participation in the Plan.
(g) Undistributed Accounts.
Any part of a Participant's Company Stock Account and Other
Investments Account which is retained in the Trust after the Anniversary Date
coinciding with or immediately following the date on which the Participant
terminates employment shall, as soon as possible after such Anniversary Date, be
physically segregated and credited with interest on the unpaid principal balance
at the local passbook rate paid by any bank or savings and loan association
designated, in its sole discretion, by the Committee. However, except in the
case of reemployment (as provided for in Section 4), none of the Participant's
Accounts will be credited with any further Employer Contributions, Forfeitures,
dividends on Company Stock or gain on the sale of unallocated shares of Company
Stock.
(h) Optional Direct Transfer of Eligible Rollover Distributions.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section, for all
distributions made on or after January 1, 1993, a Distributee may elect, at the
time and in the manner prescribed by
the Plan Committee, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover.
(i) Lien on Distribution.
Notwithstanding anything to the contrary herein, if, at the time of
distribution, a Participant is indebted to the Trust, or has retained in his or
her possession money or property which properly belongs to the Trust, the Trust
shall have a lien on such distribution pending the resolution of such ownership
rights. The Trustee may exercise such lien either by directing the Company
secretary to withhold any stock transfer of title, or by withholding
distribution of any stock or the value of any stock or other assets, pending
resolution of such ownership rights.
(j) Location of Participant or Beneficiary Unknown.
In the event that all, or any portion, of the distribution payable
to a Participant or a Beneficiary hereunder shall remain unpaid solely by reason
of the inability of the Committee, after sending a registered letter, return
receipt requested, to the last known address, and after further diligent effort
to ascertain the whereabouts of such Participant or Beneficiary, the amount so
distributable shall be treated as a Forfeiture pursuant to the Plan. In the
event a Participant or Beneficiary is located subsequent to his benefit being
reallocated, such benefit shall be restored, including all protected benefits.
Section 15. HOW PLAN BENEFIT WILL BE DISTRIBUTED.
(a) Form of Distribution
Distribution of a Participant's Company Stock Account and Other
Investments Account may be made in cash or Employer Securities unless a
Participant elects to receive the distribution in the form of Employer
Securities, in which case the Participant's Plan Benefit will be distributed in
the form of whole shares of Employer Securities with the value of any fractional
shares paid in cash.
(b) Beneficiaries.
(1) Designation.
Distribution will be made to the Participant if living, and
if not, to the Participant's Beneficiary. A Participant may designate a
Beneficiary upon becoming a Participant and may change such designation at any
time by filing a written designation with the Committee. Notwithstanding
anything in this Section 15 to the contrary, if a Participant is married, a
Participant shall not designate anyone other than the Participant's spouse as
primary Beneficiary of the Participant's Plan Benefit unless such spouse
consents in writing to such designation, such spouse acknowledges the effect of
such election, and such writing is witnessed by a Plan representative or notary
public and filed with the Plan Committee.
(2) Absence of Valid Designation.
If, upon the death of a Participant, former Participant or
Beneficiary, there is no valid designation of a Beneficiary on file with the
Company or the benefit is not claimed by any Beneficiary within a reasonable
period of time after the death of the Participant, the benefit shall be paid to
the Participant's surviving spouse. If the Participant is not married or if the
Participant's spouse does not survive the Participant, the benefit shall be paid
to the Participant's estate.
Section 16. RIGHTS AND OPTIONS ON DISTRIBUTED SHARES OF COMPANY STOCK.
If the distribution of the Plan Benefit is made in the form of
shares of Company Stock, then the "Qualified Holder" (as defined below) of such
stock shall be granted, at the time that such shares are distributed to the
Qualified Holder, an option to "put" the shares to the company; provided,
however, that all such shares are so put; and provided, further, that the Trust
shall have the option to assume the rights and obligations of the Company at the
time the "put" option is exercised. The term "Qualified Holder" shall mean the
Participant or Beneficiary receiving the distribution of such shares, any other
party to whom the shares are transferred by gift or by reason of death, and also
any trustee of an individual retirement account (as defined under Code Section
408) to which all or any portion of the distributed shares is transferred
pursuant to a tax-free "rollover" transaction satisfying the requirements of
Sections 402 and 408 of the Code. A "put" option shall provide that, for a
period of sixty (60) days after such shares are distributed to a Qualified
Holder (as defined above) (and, if the "put" is not exercised within such sixty
(60) day period, for an additional period of sixty (60) days in the following
Plan Year), the Qualified Holder would have the right to have the Company
purchase such shares at their fair market value, as defined hereinabove in
subsection (a). Such "put" option shall be exercised by notifying the Company in
writing.
In the case of a lump sum distribution of Company Stock, the terms
of payment for the purchase of such shares of stock shall be as set forth in the
"put" and may be paid either in a lump sum or in up to five (5) equal annual
installments (with interest on the unpaid principal balance at a reasonable rate
of interest), as determined by the Committee. Payment for the purchase of such
shares must commence within thirty (30) days after the "put" is exercised. The
period during which the put option is exercisable does not include any time
during which the distributee is unable to exercise it because the party bound by
the put option is prohibited from honoring it by applicable federal or state
law. If payment is made in installments, adequate security and a reasonable rate
of interest must be provided. In the case of an installment distribution,
payment must be made within thirty (30) days after the put option is exercised
with respect to any installment distribution of Company Stock.
In the case of a purchase from a Disqualified Person, all purchases
of Company Stock shall be made at prices which do not exceed the fair market
value of such shares as of the date of the transaction. The term "Disqualified
Person" shall mean a person who is a fiduciary with respect to the Plan; a
person providing services to the Plan; an Employer any of whose employees are
covered by the Plan; an employee organization any of whose members are covered
by the Plan; an owner, directly or indirectly, of fifty percent (50%) or more of
(i) the total combined voting power of all classes of voting stock or of the
total value of all classes of the stock of a Corporation, (ii) the capital
interest or the profits interest of a partnership, or (iii) the beneficial
interest of a trust or unincorporated enterprise, which is an Employer or an
employee organization any of whose employees or members are covered by the Plan;
a member of the family of any Disqualified Person; a corporation, partnership,
trust or estate of which (or in which) fifty percent (50%) or more of (i) the
combined voting power of all classes of stock entitled to vote or the total
value of all classes of stock of such corporation, (ii) the capital interest or
profits interest of such partnership, or (iii) the beneficial interest of such
trust or estate is owned, directly or indirectly, or held by Disqualified
Persons; an employee, officer, director (or any individual having powers,
similar powers and responsibilities), a ten percent (10%) or more shareholder,
or a highly compensated employee (earning ten percent (10%) or more of the
yearly wages of an employer) of a Disqualified Person; or a ten percent (10%) or
more (in capital or profits) partner or joint venturer of a Disqualified Person.
The requirements of this Section shall apply to all distributions
after December 31, 1986, but shall not apply to the distribution of any portion
of a Participant's Plan Benefit which has been diversified, distributed or
transferred to another plan pursuant to the provisions of Subsection 17(a)
hereof.
Section 17. SPECIAL PROVISIONS.
(a) Diversification of Investments.
Within ninety (90) days after the close of each Plan Year in the
Qualified Election Period, each Qualified Participant shall be permitted to
direct the Plan as to the investment of not more than twenty-five percent (25%)
of the value of the Participant's Company Stock Account which is attributable to
Employer Securities which were acquired by the Plan after December 31, 1986, to
the extent such value exceeds the amount to which a prior election, if any,
applies. In the case of the sixth (6th) year of the Qualified Election Period,
the preceding sentence shall be applied by substituting "fifty percent (50%)"
for "twenty-five percent (25%)." The Participant's direction shall be completed
no later than ninety (90) days after the close of the ninety (90) day election
period.
The Plan Committee shall offer at least three investment options
(not inconsistent with regulations prescribed by the Internal Revenue Service)
to each Participant who makes an election under this Subsection.
In lieu of offering such investment options, the Plan Committee may
direct that all amounts subject to Participant elections under this Subsection
be distributed to Qualified Participants. All such distributions shall be
distributed within ninety (90) days after the close of the ninety (90) day
election period and shall be made in cash.
In lieu of receiving a distribution under this Subsection, a
Qualified Participant may direct the Plan to transfer the distribution to
another qualified plan of the Company which accepts such transfers, provided
that such plan permits employee-directed investments and does not invest in
Employer Securities to a substantial degree. Such transfer shall be made within
ninety (90) days after the close of the ninety (90) day election period.
(b) Cash Dividends.
Cash dividends, if any, on shares of Company Stock allocated to
Participants' Accounts may be accumulated in the Trust or may be paid to
Participants currently as determined in the sole discretion of the Committee,
exercised in a uniform and nondiscriminatory manner. Provided that the Plan is
primarily invested in Employer Securities, it is intended that the Company shall
be allowed a deduction with respect to any dividends paid on allocated shares of
Company Stock of any class held by the Plan on the record date to the extent
such dividends are paid in cash directly to the Participants, or their
Beneficiaries, or are paid to the Plan and are distributed from the Plan to the
Participants or their Beneficiaries not later than ninety (90) days after the
close of the Plan Year in which paid; provided, however, that the Company shall
not be required to pay or distribute any dividends with respect to the nonvested
portion of the Company Stock Account of a Participant who has terminated
employment prior to the date such dividends are paid directly to Participants,
or are distributed from the Plan to the Participants. Provided that the Plan is
primarily invested in Employer Securities, it is also intended that the Company
shall be allowed a deduction for any dividends used to make payments on a
Securities Acquisition Loan the proceeds of which were used to acquire the
Employer Securities (whether or not allocated) with respect to which the
dividend is paid, provided that in the case of dividends paid on allocated
shares, Employer Securities in an amount equal to such dividends are allocated
to such Participants for the year in which such dividends would otherwise have
been
allocated to such Participants. Effective for dividends paid after October 22,
1986, the Company shall be allowed a deduction for dividends paid only in the
taxable year of the Company in which the dividend is either paid to a
Participant or Beneficiary or held to make payments on a Securities Acquisition
Loan.
(c) Advance Distributions.
At the request of a Participant who has participated in this plan
for seven (7) or more years subsequent to January 1, 1985, the Committee shall
direct the Trustee to pay to the Participant or to the Participant's Beneficiary
an advance distribution not to exceed twenty-five percent (25%) of the
Participant's vested Plan Benefit as then estimated by the Committee, for reason
of hardship constituting immediate and heavy financial need.
At the request of a Participant who is then one hundred percent
(100%) vested in a Plan Benefit, the Committee shall direct the Trustee to pay
to the Participant or to the Participant's Beneficiary an advance distribution
not to exceed one hundred percent (100%) of such Participant's vested Plan
Benefit, for reason of hardship constituting immediate and heavy financial need.
The Committee, in its sole discretion, exercised in a uniform and
nondiscriminatory manner, shall determine whether the Participant's hardship
constitutes immediate and heavy financial need, based on all relevant facts and
circumstances. The following are financial needs considered immediate and heavy:
medical expenses (within the meaning of section 213(d) of the Code) incurred by
the Participant, the Participant's spouse, or dependents; the purchase
(excluding mortgage payments) of a principal residence for the Participant;
payment of tuition and related educational fees for the next twelve (12) months
of post-secondary education for the Participant, the Participant's spouse,
children, or dependents; or the need to prevent eviction of the Participant
from, or a foreclosure on the mortgage of, the Participant's principal
residence. Notwithstanding the foregoing, a distribution will not be considered
as necessary to satisfy an immediate and heavy financial need of the Participant
unless (i) the Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by the
Employer, and (ii) the distribution is not in excess of the amount of an
immediate and heavy financial need.
If any advance distribution is made, the Participant's Plan Benefit
when computed will be reduced by the amount of such advance.
If an advance distribution is made prior to a Participant attaining
age 59-1/2, such Participant's distribution will be subject to a 10% penalty
tax, in addition to ordinary income taxation.
Section 18. ADMINISTRATION.
(a) Named Fiduciaries for Administration of Plan and for Investment and
Control of Plan Assets.
(1) Board of Directors.
The Board of Directors shall have the following duties and
responsibilities in connection with the administration of the Plan:
(A) Making decisions with respect to amending or terminating
the Plan.
(B) Making decisions with respect to the selection,
retention or removal of the Trustee.
(C) Periodically reviewing the performance of the Trustee,
the members of the Committee, persons to whom duties have been allocated or
delegated and any advisers appointed pursuant to paragraph (f) (1) below.
(D) Determining the form and amount of Employer
Contributions.
The Board of Directors may by written resolution allocate its
duties and responsibilities to one or more of its members or delegate such
duties and responsibilities to any other persons; provided, however, that any
such allocation or delegation shall be terminable upon such notice as the Board
of Directors deems reasonable and prudent under the circumstances.
(2) Plan Committee.
(A) General.
The Company shall administer the Plan and is designated
as the "Plan Administrator" within the meaning of Section 3(16) of ERISA and
Section 414(g) of the Code. The Committee and the Company shall each be a "named
fiduciary" within the meaning of Section 402 of ERISA, but each party's role as
a named fiduciary shall be limited solely to the exercise of its own authority
and discretion, as defined under this Plan, to control and manage the operation
and administration of this Plan. A named fiduciary may designate other persons
who are not named fiduciaries to carry out its fiduciary duties hereunder, and
any such person shall become a fiduciary under the Plan with respect to such
delegated responsibilities. The members of the Committee shall be comprised of
not less than three (3) persons who shall be appointed by the Board of Directors
and who shall serve, without compensation, until such time as they resign, die
or become incapable of exercising their duties. All members of the Committee are
designated as agents of the Plan for purposes of service of legal process. The
Company shall certify to the Trustee the names and specimen signatures of the
members of the Committee. Any member may resign at any time by submitting an
appropriate written instrument to the Company, and while any vacancy exists, the
remaining members of the Committee may perform any act which the Committee is
authorized to perform. Any vacancy on the Committee shall be filled by
appointment by the remaining members of the Committee. All decisions required to
be made by the Committee involving the interpretation, application and
administration of the Plan shall be resolved by action of the Committee either
at a meeting or in writing without a meeting.
(B) Duties and Responsibilities.
The Committee shall have the following duties and
responsibilities in connection with the administration of the Plan:
(i) Establishing and implementing a funding policy as
described in Paragraph (c) below.
(ii) Determining the eligibility of Employees for
participation in the Plan.
(iii) Determining the eligibility of Employees for
benefits provided by the Plan including such duties and responsibilities as are
necessary and appropriate under the Plan's claims procedures.
(iv) Making recommendations to the Board of Directors
with respect to amendment or termination of the Plan, including recommendations
with respect to contributions under the Plan.
(v) Assuring that bonding requirements imposed by
ERISA are satisfied.
(vi) Authorizing, allocating and reviewing expenses
incurred by the Plan.
(vii) Communicating with Participants and other
persons.
(viii) Reviewing periodically any allocation or
delegation of duties and responsibilities and any appointment of advisers.
(ix) Investing and controlling the Plan assets.
(x) Directing the Trustee with respect to voting
shares of Company Stock, in accordance with the provisions of Section 9.
The Committee may establish rules and regulations and may
take any other necessary or proper action to carry out its duties and
responsibilities. Notwithstanding the foregoing provisions, the Trustee shall
have the primary responsibility for the withholding of income taxes from Plan
distributions, for the payment of withheld income taxes on Plan distributions to
the Internal Revenue Service, and for notification to Participants of their
right to elect not to have income tax withheld from Plan distributions.
Compliance with record keeping and reporting requirements of ERISA shall be the
primary responsibility of the Company.
(C) Allocation and Delegation of Responsibilities.
The Committee may, by written resolution, allocate its
administrative duties and responsibilities to one or more of its members or it
may delegate such duties and responsibilities to any other persons; provided,
however, that any such allocation or delegation shall be terminable upon such
notice as the Committee deems reasonable and prudent under the circumstances.
(b) Investment of Plan Assets.
The Plan assets shall be invested and controlled by the Committee;
provided, however, that the actual management of Trust investments, other than
Company Stock, may be delegated to the Trustee or may be delegated to one or
more investment managers appointed by the Committee. Any investment manager
appointed hereunder shall have the power to manage, acquire or dispose of assets
of the Plan and shall be either an investment adviser registered under the
Investment Advisers Act of 1940, or a bank, as defined in that Act, or an
insurance company qualified to perform such services under the laws of one or
more states. If an investment manager has been appointed, the Trustee shall
neither be liable for acts or omissions of such investment manager nor be under
any obligation to invest or otherwise manage any asset of the Trust fund, nor
shall the Committee be liable for any act or omission of the investment manager
in carrying out such responsibility. The custody of Plan assets shall at all
times be retained by the Trustee, unless they consist of insurance contracts or
policies issued and held by an insurance company authorized to conduct an
insurance business in a state. In addition to appointment of investment
managers, the Committee shall have the following duties and responsibilities:
(1) Periodically reviewing the investment of Plan assets and the
performance of the Trustee and any investment managers. With respect to the
Trustee, the Committee shall advise the Board of Directors of any matters which
might be relevant to
the decision as to whether the services of the Trustee should be retained. Based
on its review, the Committee shall determine the desirability of appointing or
retaining investment managers.
(2) Determining an investment policy to be followed with respect
to the Plan assets and communicating this policy to the person or persons
responsible for investing the Plan assets.
The Committee may by written resolution, allocate its investment duties
and responsibilities to one or more of its members or delegate such duties and
responsibilities to any other persons; provided, however, that any such
allocation or delegation shall be terminable upon such notice as the Committee
deems reasonable and prudent under the circumstances.
(c) Funding Policy.
The Committee shall cause to be made at reasonable intervals an
analysis of the future cash requirements of the Plan for payment of benefits and
expenses, including in the analysis such information as may be appropriate to
design an investment policy to satisfy the requirements.
(d) Claims Procedures.
Any person whose claim for benefits under the Plan has been denied
in whole or in part shall receive a written notice from the Committee setting
forth the specific reasons for such denial, specific references to the Plan
provisions on which the denial was based and an explanation of the procedure for
review of the denial. Such person, or a duly authorized representative, may
appeal to the Committee for a review of the denial by sending to the Committee a
written request for review within sixty (60) days after receiving notice of the
denial. The request for review shall set forth all grounds on which it is based,
together with supporting facts and evidence which the claimant deems pertinent,
and the Committee shall give the claimant the opportunity to review pertinent
documents in preparing the request. The Committee may require the claimant to
submit such additional facts, documents or other material as it deems necessary
or advisable in making its review. Within sixty (60) days after the receipt of
the request for review, the Committee shall communicate to the claimant in
writing its decision, and if the Committee confirms the denial, in whole or in
part, the communication shall set forth the reasons for the decision and
specific references to the Plan provisions on which the decision is based. Such
decisions of the Committee shall be final and conclusive upon all parties.
(e) Qualified Domestic Relations Orders.
(1) In the case of any Domestic Relations Order received by the
Plan, the Committee shall promptly notify the Participant and any other
Alternate Payee of the receipt of such order and of the Plan's procedures for
determining the qualified status of Domestic Relations Orders. Any Alternate
Payee shall be permitted to designate a representative for receipt of copies of
notices that are sent to the Alternate Payee with respect to such order. The
amount that would be payable to the Alternate Payee shall be segregated in a
segregated account as of the first day of the Plan Year during which the
Domestic Relations Order is received by the Committee. Such segregated account
shall be physically segregated and credited with interest on the unpaid
principal balance at the local passbook rate paid by any bank or savings and
loan association designated, in its sole discretion, by the Committee. If the
order is determined to be a qualified order within the eighteen (18) month
period described below, the segregated amount (including any interest or
earnings thereon) shall continue to be treated as a segregated account in the
name of the Alternate Payee. If the Committee determines that the order is not
qualified, or if the Committee (or the appropriate court) is not able to resolve
the issue within the eighteen (18) month period, the segregated amount
(including any interest or earnings thereon) shall be restored to the
Participant. For purposes of this Paragraph, the "eighteen (18) month period"
shall mean the eighteen (18) month period beginning with the date on which the
first payment would be required to be made under the Domestic Relations Order.
(2) In determining whether a Domestic Relations Order is
qualified, the Committee shall follow the procedures set forth in Section 18(d)
with respect to claims for Plan Benefits.
(3) A Domestic Relations Order will constitute a qualified
Domestic Relations Order only if such order (i) does not require the Plan to
provide any type or form of benefit (or any option) not otherwise provided under
the Plan, (ii) does not require the Plan to provide increased benefits, and
(iii) does not require the payment of benefits to an Alternate Payee which are
required to be paid to another Alternate Payee under another order previously
determined to be a qualified order. In addition, a Domestic Relations Order will
constitute a qualified order only if such order clearly specifies (i) the name
and last known mailing address of the Participant and of each Alternate Payee
covered by the order, (ii) the amount or the percentage of a Participant's Plan
Benefit that is to be paid to each Alternate Payee, or the manner in which such
amount or percentage is to be determined, (iii) the number of payments or the
period to which such order applies, and (iv) each plan to which such order
applies.
(4) In the case of any payment to an Alternate Payee before a
Participant has separated from service, the Plan shall not be required to make
any payment to an Alternate Payee prior to the date the Participant attains (or
would have attained) the Earliest Retirement Age. For purposes of this
Paragraph, the term "Earliest Retirement Age" means the earliest of (i) the date
on which the Participant is entitled to a distribution under the Plan, or (ii)
the later of the date the Participant attains age fifty (50) or the earliest
date on which the Participant could begin receiving benefit if the Participant
separated from service.
(f) General.
(1) The Board of Directors, the Committee or any person to whom
duties and responsibilities have been allocated or delegated, may employ other
persons for advice in connection with their respective responsibilities,
including actuaries, plan consultants, investment advisers, attorneys and
accountants.
(2) Any person may serve in more than one capacity with respect to
the Plan.
(3) The Board of Directors, the Committee or any person to whom
duties and responsibilities have been allocated or delegated shall be
indemnified and held harmless by the Company from any expense or liability
hereunder unless due to or arising from fraud, dishonesty, gross negligence, or
misconduct of the Board of Directors, the Committee, or such person, as the case
may be.
Section 19. AMENDMENT AND TERMINATION.
(a) Amendment.
To provide for contingencies which may require or make advisable
the clarification, modification or amendment of this Agreement, the Company
reserves the right to amend the Plan at any time and from time to time, in whole
or in part, including without limitation, retroactive amendments necessary or
advisable to qualify the Plan and Trust under the provisions of Sections 401(a)
and 4975(e)(7) of the Code or any successor or similar statute hereafter
enacted. However, no such amendment shall (1) cause any part of the assets of
the Plan and Trust to revert to or be recoverable by the Company or be used for
or diverted to purposes other than the exclusive benefit of Participants, former
Participants and Beneficiaries, (2) deprive any Participant, former Participant
or Beneficiary of any benefit already vested, except to the extent that such
amendment may be necessary to permit the Plan or the Trust to qualify or
continue to qualify as tax-exempt, (3) terminate the protections and rights
described in Section 16, (4) alter, change or modify the duties, powers or
liabilities of the Trustee hereunder without its written consent, or (5) with
respect to any benefit previously accrued, eliminate or reduce any early
retirement benefit or retirement type subsidy, or eliminate any optional form of
benefit, except to the extent permitted by Section 411(d)(6) of the Code.
(b) Changes in the Code.
Any other provision of this Plan to the contrary notwithstanding,
if any amendment to the Code requires that a conforming plan amendment must be
adopted effective as of a stated effective date in order for this Plan to
continue to be a qualified plan, this Plan shall be operated in accordance with
the requirement of such amendment to that law until the date when a conforming
plan amendment is adopted, or the date when a clear and unambiguous
nonconforming plan amendment is adopted, whichever occurs first.
(c) Termination, Partial Termination or Complete Discontinuance of
Contributions.
Although the Company has established the Plan with the bona fide
intention and expectation that it will be able to make contributions
indefinitely, nevertheless, the Company shall not be under any obligation or
liability to continue its contributions or to maintain the Plan for any given
length of time. The Company may in its sole discretion discontinue such
contributions or terminate the Plan in whole or in part in accordance with its
provisions at any time without any liability for such discontinuance or
termination. In the event of a termination or complete discontinuance of
contribution, if the Plan is not replaced by a comparable plan qualified under
Section 401(a) of the Code, then the Accounts of all Participants affected by
the termination or discontinuance of contributions will become nonforfeitable.
In the event of a partial termination, the Accounts of all Participants affected
by the partial termination will become nonforfeitable. After termination of the
Plan, the Committee and the Trust will continue until the Plan benefit of each
Participant has been distributed. Plan Benefits may be distributed promptly
after they are computed or distribution may be deferred as provided in Section
14 of the Plan, as the Committee may direct. Distributions made due to
termination of the Plan shall be in accordance with the modes of distribution
provided in the Plan.
(d) Determination by Internal Revenue Service.
Notwithstanding any other provision of the Plan, if the Internal
Revenue Service shall fail or refuse to issue a favorable written determination
or ruling with respect to the continued qualification of the Plan and exemption
of the Trust from tax under Section 501(a) of the Code, all Employer
Contributions under Section 401(a), together with any income received or accrued
thereon less any benefits or expenses paid shall, upon the written direction of
the Company, be deemed held by the Trustee under the Employee Stock Ownership
Plan as it existed prior to the adoption of this Plan and this Plan and the
Trust shall terminate.
(e) Return of Employer's Contribution.
Notwithstanding any other provision of the Plan, if a Contribution
is conditioned on its deductibility and the deduction is disallowed, such
Employer Contribution may be returned to the Employer if such Contribution is
returned within one (1) year thereafter and if the amount returned does not
exceed the excess of the actual Contribution over the amount which would have
been
contributed had there been no error in determining the deduction. If a
Contribution is made due to a mistake of fact, such Contribution may be returned
to the Employer if such Contribution is returned within six (6) months after the
Plan Administrator determines that the Contribution was made by such mistake and
if the amount returned does not exceed the excess of the actual Contribution
over the amount which would have been contributed had there been no mistake of
fact. 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.
Section 20. MISCELLANEOUS.
(a) Participation by Affiliated Company.
(1) Any Affiliated Company presently existing or hereafter acquired
may, with the consent of the Company, adopt the Plan and Trust and thereby
enable its employees to participate herein.
(2) In the event any Participant is transferred to an Affiliated
Company which is a participating Employer, such Participant shall continue to
participate hereunder in the allocation of Employer Contributions and the
Participant's Accounts shall continue to vest in accordance with Section 13. Any
Participant who is transferred to an Affiliated Company which is not a
participating Employer shall be treated as a suspended Participant in accordance
with Section 4(c).
(b) Limitation of Rights; Employment Relationship.
All Plan Benefits will be paid only from the Trust assets and
neither the Company nor any Employer nor the Committee nor the Trustee shall
have any duty or liability to furnish the Trust with any funds, securities or
other assets except as expressly provided in the Plan. Nothing herein shall be
construed to obligate any Employer to continue to employ any Employee.
(c) Merger; Transfer of Assets.
In no event shall this Plan be merged or consolidated with any
other employee benefit plan, nor shall there be any transfer of assets or
liabilities from this Plan to any other such plan, unless immediately after such
merger, consolidation or transfer, each Participant's benefits, determined as if
the plan had terminated, are at least equal to or greater than the benefits
which the Participant would have been entitled to had this Plan been terminated
immediately before such merger, consolidation or transfer.
(d) Prohibition Against Assignment.
The benefits provided by this Plan may not be assigned or
alienated; provided, however, that a qualified Domestic Relations Order shall
not be construed as an assignment or alienation. Except for indebtedness to the
Trust and orders to make payments or assign benefits to a spouse, former spouse,
child or other dependent under a qualified Domestic Relations Order, neither the
Company nor the Trustee shall recognize any transfer, mortgage, pledge,
hypothecation, order or assignment by any Participants or Beneficiaries of all
or part of their interest hereunder, and such interest shall not be subject in
any manner to transfer by operation of law, and shall be exempt from the claims
of creditors or other claimants from all orders, decrees, levies, garnishment
and/or executions and other legal or equitable process or proceedings against
such Participants or Beneficiaries to the fullest extent which may be permitted
by law.
(e) Applicable Law; Severability.
The Plan hereby created shall be construed, administered and
governed in all respects in accordance with ERISA and to the extent not
superseded by federal law, in accordance with the laws of the State of
California; provided, however, that if any provision is susceptible of more than
one interpretation, such interpretation shall be given thereto as is consistent
with the Plan being a qualified Employee Stock Ownership Plan within the meaning
of the Code. If any provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
hereof shall continue to be fully effective.
Section 21. TOP HEAVY PROVISIONS.
(a) Definitions.
For purposes of this Section 21, the following capitalized
words shall have the following meanings:
AGGREGATION GROUP
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Employer in which a
Key Employee is a participant, and each other plan of the Employer
which enables any plan in
which a Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be aggregated. Such
group shall be known as a Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the group
will be considered a Top Heavy Plan if the Required Aggregation
Group is a Top Heavy Group. No plan in the Required Aggregation
Group will be considered a Top Heavy Plan if the Required
Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include any
other plan not required to be included in the Required Aggregation
Group, provided the resulting group, taken as a whole, would
continue to satisfy the provisions of Code Sections 401(a)(4) and
410. Such group shall be known as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that is
part of the Required Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is a Top Heavy
Group. No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group is
not a Top Heavy Group.
(3) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
(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.
DETERMINATION DATE
With respect to any Plan Year, the last day of the preceding Plan
Year, or in the case of the first Plan Year of any Plan, the last
day of such Plan Year.
KEY EMPLOYEE
Any Employee, or former Employee, or Beneficiary of an Employee or
former Employee, who at any time during the Plan Year containing
the Determination Date or during any of the four (4) preceding Plan
Years is (or was) (i) an officer (and employee) having an annual
compensation greater than fifty percent (50%) of the amount in
effect under Section 415 (b) (1) (A) of the Code for any such Plan
Year, (ii) a shareholder (and employee) who owns (excluding any
stock held under the Plan) both more than one-half percent (.5%)
ownership interest in value and one of the ten (10) largest
interests in the Company (whether directly or through constructive
ownership rules) and having annual compensation of more than the
limitation in effect under Section 415 (c) (1) (A) of the Code,
(iii) a more than five percent (5%) shareholder, or (iv) a more
than one percent (1%) shareholder if such shareholder receives more
than $150,000 of compensation from the Company during the Plan
Year. For purposes of (iii) and (iv) above, the terms "five percent
(5%) shareholder" and "one percent (1%) shareholder" mean any
employee who owns (excluding any stock held under the Plan) more
than five percent (5%) (or more than one percent (1%) of the
outstanding stock of the corporation, or who owns stock possessing
more than five percent (5%) (or one percent (1%) of the total
combined voting power of all stock of the corporation (determined
without regard to the aggregation rules under Section 414 of the
Code). For purposes of (ii) above, if two or more Employees have
the same interest in the Company, the Employee having the greater
annual compensation from the Company shall be treated as having the
larger interest. For purposes of (i) above, the term "officers"
means persons whose regular duties include executive administrative
duties; however, no more than three (3) Employees or ten percent
(10%) of all Employees (up to a maximum of fifty (50) Employees),
whichever is greater, may be counted as officers. If the number of
officers of the Company exceeds these limitations, those officers
with the highest compensation in the Plan Year containing the
Determination Date or any of the four preceding Plan Years shall be
treated as Key Employees.
NON-KEY EMPLOYEE
Any Employee who is not a Key Employee.
TOP HEAVY GROUP
Any Aggregation Group, if as of the Determination Date, the sum of
(1) the present value of the accrued benefits for Key Employees
under all defined benefit plans included in such group and (2) the
aggregate Account balances of Key Employees under all defined
contribution plans included in such group, exceeds sixty percent
(60%) of a similar sum determined for all Employees.
TOP HEAVY PLAN
With respect to any Plan Year, of the Company or of any Affiliated
Company, any plan or Aggregation Group of plans of the Company or
of any Affiliated Company if, as of the Determination Date, the
aggregate Account balances of Key Employees under the plan or plans
exceeds sixty percent (60%) of the aggregate Account balances of
all Employees under such plan or plans. For purposes of this
definition, the term, "Account balances" shall include Account
balances of Participants attributable to Employer Contributions,
the Account balances attributable to Employees' Nondeductible
Contributions, and the amount of the aggregate distributions, if
any, made with respect to any Participant during the five (5) year
period ending on the Determination Date, including any
distributions under a terminated plan which would have been
required to be included in an aggregation group had such plan not
been terminated. The Account balances of an individual shall not be
taken into account if such individual has not performed any
services for the Company at any time during the five year period
ending on the Determination Date. The Account balances of a non-key
employee with respect to any Plan Year shall not be taken into
account if such individual was formerly a Key Employee for any
prior Plan Year. Any rollover contributions or transfers that are
unrelated (i.e., both initiated by the Employee and made from a
plan maintained by one Employer to a plan maintained by another
Employer) shall not be taken into account for purposes of
determining whether a plan is a Top Heavy Plan or whether any
Aggregation Group is a Top Heavy Group.
(b) Vesting Requirements.
With respect to any Plan Year, if as of the relevant
Determination Date, this Plan is deemed to be a Top Heavy Plan or part of a Top
Heavy Group, the vesting of Plan Benefits for such Plan Year with respect to any
Participant who completes one or more Hours of Service after the Plan becomes a
Top Heavy Plan or part of a Top Heavy Group will be based upon Years of Service,
as defined in Section 2 in accordance with the following vesting schedule, until
such time as the Plan is no longer deemed to be top heavy:
Years of Service Percentage of Accounts Vested
---------------- -----------------------------
Two Years 20
Three Years 40
Four Years 60
Five Years 80
Six Years or More 100
With respect to any Plan Year, if as of the relevant
Determination Date, this Plan ceases to be a Top Heavy Plan or part of a Top
Heavy Group, any portion of the accrued benefit of a Participant's Account that
was nonforfeitable before the Plan ceased to be top heavy will remain
nonforfeitable, and any Employee who was a Participant during the Top Heavy Plan
Year and who had three or more Years of Service (including any Years of Service
not yet taken into account under the Plan) will automatically remain under the
top heavy vesting schedule.
(c) Minimum Benefits.
With respect to any Plan Year, if as of the relevant
Determination Date, this Plan is deemed to be a Top Heavy Plan or part of a Top
Heavy Group, Employer Contributions and Forfeitures for such Plan Year for each
Participant who is not a Key Employee shall be not less than three percent (3%)
of each Participant's Total Compensation until such time as this Plan is no
longer deemed to be top heavy. Notwithstanding the foregoing, such percentage
for any such Plan Year shall not exceed the highest percentage at which
Contributions and Forfeitures are made for such Plan Year for any Key Employee,
as determined by dividing the Contribution for such Key Employee by so much of
such Key Employee's Total Compensation for the Plan Year as does not exceed
$200,000. The minimum benefit otherwise required under this paragraph shall be
reduced to the extent a Participant who is not a Key Employee has received a
benefit under any other plan maintained by the Employer and to the extent
permitted by Section 416 of the Code and the regulations thereunder dealing with
nonduplication of minimum benefits.
Amounts paid by the Company under the Federal Insurance
Contributions Act or under the Social Security Act may not be taken into account
for purposes of providing the required minimum benefits to Participants who are
not Key Employees.
For purposes of this Subsection (c), the term "Participant"
shall refer to any Employee who has not separated from service at the end of the
Plan Year, including Employees who have failed to complete 1,000 Hours of
Service, and any Employees who have been excluded because their compensation is
less than a stated amount but who must nevertheless be considered Participants
in order to satisfy the coverage requirements of Section 410(b) of the Code.
(d) Limitation on Annual Additions.
With respect to any Plan Year, if as of the relevant
Determination Date, this Plan is deemed to be a Top Heavy Plan or part of a Top
Heavy Group, the dollar limitation in the denominator of the defined
contribution plan fraction and the defined
benefit fraction shall be multiplied by 1.0 rather than by 1.25, for purposes of
determining the aggregate limit on Contributions and Forfeitures for a Key
Employee for such Plan Year, unless the sum of the Key Employees' benefits under
all defined contribution plans does not exceed ninety percent (90%) of the total
of all Participants' benefits for such Plan Year, and the Employer provides a
minimum contribution of not less than four percent (4%) of each Participant's
Total Compensation. The minimum benefit otherwise required under this paragraph
shall be reduced to the extent a Participant who is not a Key Employee has
received a benefit under any other plan maintained by the Employer and to the
extent permitted by Section 416 of the Code and the regulations there under
dealing with nonduplication of minimum benefits.
With respect to any Plan Year, if, as of the relevant
Determination Date, any Employee is covered by both a top heavy defined
contribution plan and a top heavy defined benefit plan, the minimum benefit
provided for each such Participant who is not a Key Employee under the defined
contribution plan shall be not less than five percent (5%) of the Participant's
Total Compensation; provided, however, that if the Employer desires to use a
factor of 1.25 in computing the denominators of the defined benefit fraction and
in the denominator of defined contribution fraction, the defined contribution
minimum benefit shall be seven and one-half percent (7.5%) of compensation.
Solely for the purpose of determining if the Plan, or any
other plan included in a required Aggregation Group of which this Plan is a
part, is a Top Heavy Plan, the accrued benefit of an Employee (other than a Key
Employee under a defined benefit plan or target benefit plan) shall be
determined under (i) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by the Affiliated Employers, or (ii) if
there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional accrual rate of Section
411(b)(1)(C) of the Code.
Section 22. EXECUTION.
To record the adoption of this Plan, the Company has caused its
appropriate officers to affix its corporate name and seal hereto this 1/st/ day
of August, 1994.
McGRATH RENTCORP
(SEAL) By /s/ ROBERT P. MCGRATH
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Robert P. McGrath, President
By /s/ DELIGHT SAXTON
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Delight Saxton, Secretary