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Exhibit 10.26
LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
Effective as of August 1, 1999
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LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
TABLE OF CONTENTS
<Table>
<Caption>
ARTICLE PAGE
I INTRODUCTION.............................................................1
1.1 THE PLAN...........................................................1
1.2 TYPE OF PLAN.......................................................1
1.3 PLAN OBJECTIVES....................................................1
1.4 EXCLUSIVE BENEFIT..................................................1
1.5 FUNDING............................................................1
1.6 SPONSOR AND EMPLOYERS..............................................2
1.7 EFFECTIVE DATE.....................................................2
1.8 AMENDMENT OF PRIOR PLANS...........................................2
II DEFINITIONS AND RULES OF INTERPRETATION..................................3
2.1 DEFINITIONS........................................................3
ACCOUNT............................................................3
ACCOUNT BALANCE....................................................3
ACTIVE PARTICIPANT.................................................3
ADMINISTRATOR......................................................3
AFFILIATE..........................................................3
ALTERNATE PAYEE....................................................3
ANNIVERSARY DATE...................................................3
BENEFICIARY........................................................3
BOARD..............................................................3
BREAK IN SERVICE...................................................4
CODE...............................................................4
</Table>
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<Table>
<Caption>
ARTICLE PAGE
COLLECTIVE BARGAINING AGREEMENT....................................4
COMPENSATION.......................................................4
COMPUTATION PERIOD.................................................4
CONTRIBUTION.......................................................4
CONTRIBUTION PERCENTAGE............................................5
DEFERRAL PERCENTAGE................................................5
DOL REGULATIONS or DOL REG.........................................5
EFFECTIVE DATE.....................................................5
ELIGIBLE EMPLOYEE..................................................5
EMPLOYEE...........................................................5
EMPLOYER...........................................................6
EMPLOYMENT COMMENCEMENT DATE.......................................6
ENTRY DATE.........................................................6
ERISA..............................................................6
FORFEITURE.........................................................6
401(k) COMPENSATION................................................6
415 AFFILIATE......................................................6
415 COMPENSATION...................................................6
HIGHLY COMPENSATED ADP.............................................6
HIGHLY COMPENSATED ACP.............................................6
HIGHLY COMPENSATED EMPLOYEE........................................7
HOUR OF SERVICE....................................................8
INACTIVE PARTICIPANT...............................................9
KEY EMPLOYEE.......................................................9
LEASED EMPLOYEE...................................................10
</Table>
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<Table>
<Caption>
ARTICLE PAGE
LEAVE OF ABSENCE..................................................11
LIMITATION YEAR...................................................11
MAXIMUM ACP.......................................................11
MAXIMUM ADP.......................................................11
NON-HIGHLY COMPENSATED ADP........................................12
NON-HIGHLY COMPENSATED ACP........................................12
NON-HIGHLY COMPENSATED EMPLOYEE...................................12
NON-KEY EMPLOYEE..................................................12
NORMAL RETIREMENT AGE.............................................12
PARTICIPANT.......................................................12
PERMANENT DISABILITY..............................................12
PLAN..............................................................12
PLAN YEAR.........................................................12
QUALIFIED DOMESTIC RELATIONS ORDER................................12
QUALIFIED MILITARY SERVICE........................................13
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY..........................13
RE-EMPLOYMENT COMMENCEMENT DATE...................................13
SPONSOR...........................................................13
TERMINATION OF EMPLOYMENT.........................................13
TESTING COMPENSATION..............................................14
TOP-HEAVY DETERMINATION DATE......................................14
TOP-HEAVY YEAR....................................................14
TREASURY REGULATIONS or TREAS. REG................................15
TRUST.............................................................16
TRUST AGREEMENT...................................................16
</Table>
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<Table>
<Caption>
ARTICLE PAGE
TRUSTEE...........................................................16
VESTED............................................................16
YEAR OF SERVICE...................................................16
2.2 CONFORMANCE WITH CODE AND ERISA...................................16
2.3 GENDER AND NUMBER; EFFECT OF TITLES...............................16
III COMPUTATION OF SERVICE..................................................17
3.1 METHOD OF COMPUTATION.............................................17
3.2 COMPUTATION OF SERVICE UNDER THE HOURS OF SERVICE METHOD..........17
3.3 SERVICE WITH PREDECESSOR EMPLOYERS................................19
IV PARTICIPATION...........................................................20
4.1 REQUIREMENTS FOR PARTICIPATION....................................20
4.2 DETERMINATION OF ENTRY DATE.......................................20
4.3 CESSATION AND RESUMPTION OF ACTIVE PARTICIPATION..................20
V AMOUNT AND ALLOCATION OF CONTRIBUTIONS..................................22
5.1 PRE-TAX CONTRIBUTIONS.............................................22
5.2 MATCHING CONTRIBUTIONS............................................23
5.3 PROFIT-SHARING CONTRIBUTIONS......................................24
5.4 ROLLOVER CONTRIBUTIONS............................................24
5.5 QUALIFIED NONELECTIVE CONTRIBUTIONS...............................25
5.6 MINIMUM CONTRIBUTION IN TOP-HEAVY YEARS...........................25
5.7 OTHER REQUIRED CONTRIBUTIONS......................................25
VI LIMITS ON CONTRIBUTIONS.................................................27
6.1 LIMIT ON ANNUAL ADDITIONS.........................................27
6.2 LIMIT ON PRE-TAX CONTRIBUTIONS....................................29
6.3 ACTUAL DEFERRAL PERCENTAGE LIMITATION.............................30
</Table>
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<Table>
<Caption>
ARTICLE PAGE
6.4 ACTUAL CONTRIBUTION PERCENTAGE LIMITATION.........................31
6.5 LIMIT ON DEDUCTIBLE CONTRIBUTIONS.................................33
6.6 PURPOSE OF LIMITATIONS; AUTHORITY OF ADMINISTRATOR................33
VII INVESTMENTS AND PLAN ACCOUNTING.........................................34
7.1 PARTICIPANT ACCOUNTS..............................................34
7.2 SEPARATE FUND ACCOUNTING..........................................34
7.3 PARTICIPANT-DIRECTED ACCOUNTS.....................................35
VIII VESTING AND FORFEITURE..................................................36
8.1 ACCOUNTS THAT ARE ALWAYS FULLY VESTED.............................36
8.2 VESTING ON RETIREMENT.............................................36
8.3 VESTING AT DEATH..................................................36
8.4 OTHER TERMINATION OF EMPLOYMENT...................................36
8.5 FORFEITURES.......................................................38
IX PAYMENT OF BENEFITS.....................................................40
9.1 METHODS OF BENEFIT PAYMENT........................................40
9.2 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT......................43
9.3 PAYMENTS AFTER A PARTICIPANT'S DEATH..............................44
9.4 PURPOSE OF LIMITATIONS; AUTHORITY OF ADMINISTRATOR................47
9.5 DIRECT TRANSFERS..................................................47
9.6 MISSING PARTICIPANTS AND BENEFICIARIES............................47
9.7 PAYMENT WITH RESPECT TO INCAPACITATED PARTICIPANTS OR
BENEFICIARIES...................................................48
9.8 LIMITATION ON LIABILITY FOR DISTRIBUTIONS.........................48
9.9 WITHDRAWALS.......................................................48
9.10 LOANS.............................................................50
X PLAN ADMINISTRATION.....................................................52
</Table>
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<Table>
<Caption>
ARTICLE PAGE
10.1 GENERAL FIDUCIARY STANDARD OF CONDUCT.............................52
10.2 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES....................52
10.3 ADMINISTRATOR.....................................................52
10.4 POWERS AND DUTIES OF ADMINISTRATOR................................52
10.5 COMMITTEE.........................................................53
10.6 COMPENSATION AND EXPENSES.........................................54
10.7 INDEMNIFICATION BY EMPLOYERS......................................54
10.8 SERVICE IN MULTIPLE CAPACITIES....................................54
10.9 CLAIMS PROCEDURE..................................................54
10.10 QUALIFIED DOMESTIC RELATIONS ORDERS...............................55
XI AMENDMENT, TERMINATION OR MERGER OF PLAN................................57
11.1 AMENDMENT.........................................................57
11.2 TERMINATION.......................................................57
11.3 CONTINUATION BY A SUCCESSOR OR PURCHASER..........................58
11.4 PLAN MERGER OR CONSOLIDATION......................................58
XII GENERAL PROVISIONS......................................................59
12.1 NO EMPLOYMENT GUARANTEE...........................................59
12.2 NONALIENATION OF PLAN BENEFITS....................................59
12.3 ACTION BY SPONSOR OR EMPLOYER.....................................59
12.4 APPLICABLE LAW....................................................59
12.5 PARTICIPANT LITIGATION............................................59
12.6 PARTICIPANT AND BENEFICIARY DUTIES................................60
12.7 ADEQUACY OF EVIDENCE..............................................60
12.8 NOTICE TO PARTICIPANTS AND BENEFICIARIES..........................60
12.9 WAIVER OF NOTICE..................................................60
</Table>
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<Table>
<Caption>
ARTICLE PAGE
12.10 SUCCESSORS........................................................60
12.11 SEVERABILITY......................................................60
12.12 NONREVERSION......................................................60
APPENDIX A....................................................................62
APPENDIX B...................................................................107
</Table>
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LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
Effective August 1, 1999
ARTICLE I
INTRODUCTION
1.1 THE PLAN. The following provisions constitute the LKQ
Corporation Employees' Retirement Plan (the "Plan") effective as of August 1,
1999. Seven Prior Plans which were maintained by certain Predecessor Employers
were amended and merged into this Plan as of the Effective Date. The seven Prior
Plans were originally adopted and maintained as follows: the Star Auto Parts,
Inc. 401(k) Profit Sharing Plan, adopted by Star Auto Parts, Inc. effective as
of January 1, 1992, and amended and restated effective as of January 1, 1995,
January 1, 1996, and August 1, 1998; the Triplett Auto Recyclers 401(k)
Retirement Savings Plan, adopted by Triplett Auto Recyclers effective as of
January 1, 1993; the Recyclers Group, Inc. Profit Sharing/401(k) Plan, adopted
by Recyclers Group, Inc. effective as of January 1, 1994, and amended and
restated effective as of July 1, 1998; the Bud's Auto Parts, Inc. 401(k) Profit
Sharing Plan, adopted by Bud's Auto Parts Inc. effective as of June 1, 1995; the
Route 16 Auto Salvage 401(k) Profit Sharing Plan, adopted by Route 16 Auto
Salvage effective as of January 1, 1996; the Damron Auto Parts, Inc. 401(k)
Plan, adopted by Damron Auto Parts, Inc. effective as of December 1, 1996; and
the Smart Parts 401K Plan, adopted by Hustiford Auto Company, Inc. effective
January 1, 1998. The following two additional Prior Plans, which were maintained
by certain Predecessor Employers, were amended and merged into this Plan as of
October 1, 1999: John's Import Auto 401(k) Savings Plan, adopted by Tercek
Enterprises, Inc. DBA John's Import Auto Wrecking Co. effective as of June 1,
1996; and Midwest Foreign Auto, Inc. 401(k) Profit Sharing Plan, adopted by
Midwest Foreign Auto, Inc. effective September 1, 1991, and amended and restated
effective January 1, 1998.
1.2 TYPE OF PLAN. For purposes of Section 401(a)(27) of the Code,
the Plan is designated as a profit sharing plan that includes a cash or deferred
arrangement qualified under Section 401(k) of the Code.
1.3 PLAN OBJECTIVES. The Plan is maintained by the Employers in
order to stimulate interest and initiative and increase efficiency among
Participants, to share with Participants the economic benefits produced by their
efforts and to assist in providing Participants with retirement benefits.
1.4 EXCLUSIVE BENEFIT. The Plan is for the exclusive benefit of
the Participants and their Beneficiaries. No portion of the funds contributed to
the Plan shall ever revert to or be applied for the benefit of the Employers,
except as specifically permitted herein.
1.5 FUNDING. In order to fund the benefits provided under the
Plan, the Sponsor has established the LKQ Corporation Employees' Retirement
Trust pursuant to the Trust Agreement. All benefits under the Plan shall be
provided exclusively by distributions from the Trust. The Sponsor shall have the
authority to replace the Trustee of the Trust at any time, or to establish
additional Trusts to fund benefits under the Plan. Benefits under the Plan may
also, in the Sponsor's
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discretion, be provided by the purchase of insurance contracts, and in such
event the term Trust shall also include the Plan's interest in such insurance
contracts.
1.6 SPONSOR AND EMPLOYERS. The sponsor of the Plan (the "Sponsor")
is LKQ Corporation. With the approval of the Sponsor, the Plan may be adopted
for the benefit of its Employees by any Affiliate or any other business entity
in which the Sponsor or an Affiliate has a substantial interest. The business
entities which adopt the Plan, including the Sponsor, are referred to in the
Plan as the "Employers." As of the Effective Date, the Employers other than the
Sponsor are 250 Auto Wreckers Corp., Black Horse Auto Parts, Inc., Bud's Auto
Parts, Inc., Damron Auto Parts, Inc., Damron Auto Parts, L.P., Damron Holding
Co., DAP Management Inc., DAP Trucking, Inc., Dismantling & Recycling, Inc.,
Gorham Auto Parts Corp., Hustisford Auto Co., Lakenor Auto & Truck Salvage,
Inc., LKQ All Models Corp., LKQ Auto Parts of Utah, Inc., LKQ Best Automotive
Corp., LKQ B&D Auto Recyclers Corp., LKQ D&R Auto Parts Corp., LKQ Management
Company, LKQ Midwest Auto Parts Corp., Mabry Auto Salvage Corp., Mid-America
Auto Parts, Inc., Redding Auto Center, Inc., Route 16 Auto Salvage, Inc.,
Royal's Auto Salvage, Inc., Smith's Auto Sales and Salvage Corp., Star Auto
Parts, Inc., Triplett Auto Recyclers, Inc., and United Auto Dismantling, Inc.
1.7 EFFECTIVE DATE. The Effective Date of the Plan shall be
August 1, 1999, except as otherwise provided herein. The rights of a Participant
who incurred a Termination of Employment prior to the Effective Date, or of a
Beneficiary of such a Participant, shall, except as otherwise provided herein,
be determined by the terms of the Prior Plan as in effect as of the date on
which the Termination of Employment occurred. Notwithstanding the foregoing, any
provision of the Plan that is required to have an earlier effective date in
order to preserve the qualified status of the Plan under Section 401(a) of the
Code or any Treasury Regulation shall be effective as of such earlier date.
1.8 AMENDMENT OF PRIOR PLANS. Each of the Prior Plans is hereby
amended by adoption of the amendments provided in the Appendix A effective as of
the dates shown therein.
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ARTICLE II
DEFINITIONS AND RULES OF INTERPRETATION
2.1 DEFINITIONS. As used in this Plan, capitalized terms shall
have the meaning set forth below:
ACCOUNT. All of the separate accounts maintained under the Plan for
the benefit of a Participant as provided in Section 7.1. The term "Account"
shall not, unless otherwise specifically provided herein, include the
Section 415 Suspense Account, if any, established pursuant to Section 6.1.
ACCOUNT BALANCE. The total amount held for the benefit of a
Participant in his Account (or in the specific separate Account referred to), as
valued on a daily basis in accordance with the provisions of Article VII.
ACTIVE PARTICIPANT. Any Eligible Employee who participates in the Plan
as provided in Article IV, while he remains an Eligible Employee.
ADMINISTRATOR. The Sponsor or such other corporation or person (or
persons) appointed to administer the Plan pursuant to the provisions of
Section 10.3.
AFFILIATE. Any business entity that is either:
(a) a corporation that is a member of the same controlled group of
corporations, as defined in Section 414(b) of the Code, as an
Employer;
(b) a trade or business, whether or not incorporated, that is
under common control with an Employer within the meaning of
Section 414(c) of the Code;
(c) a member of the same affiliated service group, as defined in
Section 414(m) of the Code, as an Employer; or
(d) otherwise required to be aggregated with an Employer pursuant
to Treasury Regulations issued under Section 414(o) of the
Code,
but that is not itself an Employer.
ALTERNATE PAYEE. A spouse, former spouse, child or other dependent of
a Participant entitled to receive a portion of such Participant's Account under
a Qualified Domestic Relations Order.
ANNIVERSARY DATE. The last day of each Plan Year.
BENEFICIARY. Any person, including a trust or other entity, entitled
to receive any benefits which may become payable upon or after a Participant's
death.
BOARD. The board of directors of the Sponsor.
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BREAK IN SERVICE. A period of absence from employment that causes an
interruption in the computation of an Employee's Service under the hours of
service method, as defined in Article III.
CODE. The Internal Revenue Code of 1986, as now in effect or as
hereafter amended, and any regulation, ruling or other administrative guidance
issued pursuant thereto by the Internal Revenue Service.
COLLECTIVE BARGAINING AGREEMENT. A bona fide agreement that the
Secretary of Labor finds to be a collective bargaining agreement between
employee representatives and an Employer or Affiliate, provided that not more
than 50 percent of the Employees covered by such agreement are officers, owners
or executives of the Employer or Affiliate as determined under Section
7701(a)(46) of the Code.
COMPENSATION.
(a) GENERAL RULE. Except as otherwise provided below, an
Employee's Compensation for a Plan Year shall mean all amounts paid or made
available to the Employee by all Employers during the Plan Year for services as
an Active Participant that either (i) constitute wages as defined by Section
3401(a) of the Code for purposes of income tax withholding, but determined
without regard to any rules that limit the remuneration included in wages based
upon the nature or location of employment or the services performed, or (ii) are
otherwise required to be reported on Form W-2 (or such other form as may be
prescribed pursuant to Section 6041(d) and Section 6051(a)(3) of the Code).
(b) CERTAIN EXCLUSIONS. Except as otherwise provided in paragraph
(d), reimbursements or other expense allowances, fringe benefits (cash or
noncash), moving expenses, deferred compensation, welfare benefits, and bonuses
shall be excluded from a Participant's Compensation even if otherwise included
under paragraph (a).
(c) ANNUAL LIMIT ON COMPENSATION. An Employee's Compensation for
any Plan Year shall not exceed $160,000, as adjusted pursuant to Section
401(a)(17) of the Code. For purposes of computing the Pre-Tax Contributions
withheld from a Participant whose Compensation exceeds such limit, all
Compensation paid to the Participant during the period during which he has
elected to have Pre-Tax Contributions withheld shall be taken into account until
the total Compensation taken into account equals such limit.
(d) TREATMENT OF PRE-TAX CONTRIBUTIONS. Notwithstanding the
foregoing, an Employee's Compensation shall include any elective contributions
excluded from income under Section 125 of the Code (relating to cafeteria
plans), Section 402(e)(3) of the Code (relating to 401(k) plans), or Section
132(f) of the Code (relating to qualified transportation fringes).
COMPUTATION PERIOD. A twelve-month period used in computing an
Employee's Service, as determined under Section 3.1.
CONTRIBUTION. An amount contributed to the Plan by an Employer or a
Participant in accordance with Article V.
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CONTRIBUTION PERCENTAGE. The total amount of Matching Contributions
and Qualified Nonelective Contributions to the extent provided in Section 6.4
allocated to an Active Participant with respect to a Plan Year expressed as a
percentage of such Active Participant's Testing Compensation for such Plan Year
and calculated to the nearest one-hundredth of a percentage point. The
Contribution Percentage of an Active Participant who receives no such
Contributions shall be zero. If an Active Participant is eligible to receive any
such contributions under any other plan maintained by an Employer or Affiliate
(other than a plan which cannot be aggregated with the Plan under Section 410(b)
of the Code), his Contribution Percentage shall include the contributions and
compensation as determined under such other plan.
DEFERRAL PERCENTAGE. The total amount of Pre-Tax Contributions and
Qualified Nonelective Contributions to the extent provided in Section 6.3
allocated to an Active Participant with respect to a Plan Year expressed as a
percentage of such Active Participant's Testing Compensation for such Plan Year
and calculated to the nearest one-hundredth of a percentage point. The Deferral
Percentage of an Active Participant who receives no such Contributions shall be
zero. If an Active Participant is eligible to receive any such contributions
under any other plan maintained by an Employer or Affiliate (other than a plan
which cannot be aggregated with the Plan under Section 410(b) of the Code), his
Deferral Percentage shall include the contributions and compensation as
determined under such other plan.
DOL REGULATIONS or DOL REG. Regulations, including proposed and
temporary regulations, issued by the Department of Labor interpreting ERISA and
codified at Title 29 of the Code of Federal Regulations. Where a reference is
made to temporary or proposed regulations, such reference shall include any
permanent regulations, modified proposed or temporary regulations, issued in
lieu thereof.
EFFECTIVE DATE. The date on which this Plan is generally effective, as
provided in Section 1.7.
ELIGIBLE EMPLOYEE. All Employees who are employed by an Employer,
except that the term Eligible Employee shall not include Leased Employees,
Employees covered by a Collective Bargaining Agreement in which retirement
benefits were the subject of good faith bargaining, unless such Collective
Bargaining Agreement provides for such Employees to participate in the Plan, and
nonresident aliens who receive no earned income (as defined in Section 911(d)(2)
of the Code) from an Employer which constitutes income from sources within the
United States (as defined in Section 861(a)(3) of the Code). Notwithstanding the
foregoing, any person who is retained to provide services for an Employer and
who is classified by the Employer, whether or not pursuant to a written
agreement with such person or his or her Employer, as either an independent
contractor or as an employee of another employer (including, but not limited to,
any person who is a Leased Employee), shall not be eligible to participate in
the Plan, even if such person is subsequently determined to be an employee of an
Employer under any applicable law, whether as a result of an examination by any
administrative agency, a decision of any court, or otherwise.
EMPLOYEE. Any person who is an employee in the common law sense of an
Employer or an Affiliate, or who is a Leased Employee with respect to an
Employer or Affiliate.
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EMPLOYER. The Sponsor and any other business entity that adopts the
Plan with the consent of the Sponsor for the benefit of its Employees pursuant
to Section 1.6. A singular reference to an "Employer" shall be understood to be
a reference to any Employer individually, except where the context is
inconsistent with such interpretation. The Employers are listed in Exhibit A to
this Plan, which shall be revised from time to time to reflect the addition of
new Employers and the withdrawal of Employers.
EMPLOYMENT COMMENCEMENT DATE. The day on which an Employee first
performs an Hour of Service for an Employer or Affiliate.
ENTRY DATE. The date upon which an Eligible Employee becomes a
Participant as provided in Section 4.2.
ERISA. The Employee Retirement Income Security Act of 1974, as now in
effect or as hereafter amended, and any regulation, ruling or other
administrative guidance issued pursuant thereto by the Internal Revenue Service,
the Department of Labor or the Pension Benefit Guaranty Corporation.
FORFEITURE. The portion of a Participant's Account that exceeds the
Vested portion when he incurs a Termination of Employment, or at such other time
as provided in the Plan.
401(k) COMPENSATION. A Participant's Compensation for a Plan Year,
including the amount of any bonus which is not a year-end bonus based on
Employer performance and also including the amount of any deferral made in
accordance with the provisions of the LKQ Corporation 401(k) Plus Plan.
415 AFFILIATE. A business entity that either is an Affiliate, or would
be an Affiliate if Section 414 of the Code were modified in the manner provided
by Section 415(h) of the Code.
415 COMPENSATION. All amounts paid or made available by an Employer or
415 Affiliate to an Employee in a Limitation Year that would constitute
Compensation under paragraph (a) and (d) of the definition of Compensation if
paid to an Active Participant by an Employer, without regard to the other
paragraphs of such definition, whether or not included in the Participant's
Compensation.
HIGHLY COMPENSATED ADP. The average of the Deferral Percentages of all
Highly Compensated Employees who are Active Participants for a Plan Year,
including those whose Deferral Percentage is zero.
HIGHLY COMPENSATED ACP. The average of the Contribution Percentages of
all Highly Compensated Employees who are Active Participants for a Plan Year,
including those whose Contribution Percentage is zero.
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HIGHLY COMPENSATED EMPLOYEE.
(a) GENERAL RULE. Except as otherwise provided in this Section, an
Employee shall be considered a Highly Compensated Employee for any Plan Year if
he either:
(i) at any time during the Plan Year or the immediately preceding
Plan Year owned more than five percent, by voting power or
value, of the outstanding stock of an Employer or Affiliate
that is a corporation, or owned more than five percent of the
capital or profits interest in an Employer or Affiliate that
is not a corporation; or
(ii) in the immediately preceding Plan Year received 415
Compensation in excess of $80,000 (as adjusted pursuant to
Section 414(q)(1) of the Code for the preceding Plan Year)
and, if the Administrator so elects, was a member for such
preceding Plan Year of the highest-paid group described in
paragraph (b).
(b) HIGHEST-PAID GROUP. For any Plan Year, the highest-paid group
described in this paragraph (b) shall consist of the group consisting of the top
20 percent of Employees when ranked on the basis of 415 Compensation paid during
such Plan Year. For purposes of this paragraph (b), there shall be excluded
Employees who have not completed six months of service, Employees who normally
work less than 17 1/2 Hours of Service per week, Employees who normally work
during not more than six months during any Plan Year, and Employees who have not
attained the age of 18. The Administrator may elect to exclude Employees who are
described in paragraph (a)(ii) but who are not in the highest-paid group in any
Plan Year by adopting a resolution making such election, which shall be
considered an amendment to the Plan, and such election shall apply to all
succeeding Plan Years until the Administrator adopts a resolution revoking such
election.
(c) FORMER EMPLOYEES. A former Employee shall be treated as a
Highly Compensated Employee if he was a Highly Compensated Employee (based on
the definition in effect at such time) either when his employment was terminated
or at any time after attaining age 55.
(d) NONRESIDENT ALIENS. A nonresident alien who receives no earned
income (within the meaning of Section 911(d)(2) of the Code) which constitutes
income from sources within the United States (within the meaning of Section
861(a)(3) of the Code) from an Employer or Affiliate during any Plan Year shall
not be considered an Employee for such Plan Year for any purpose of this
Section.
(e) PURPOSE. The purpose of this Section is to conform to the
definition of "highly compensated employee" set forth in Section 414(q) of the
Code, as now in effect or as hereafter amended, which is incorporated herein by
reference, and to the extent that this Section shall be inconsistent with
Section 414(q) of the Code, either by excluding Employees who would be
classified as "highly compensated employees" thereunder or by including
Employees who would not be so classified, the provisions of Section 414(q) of
the Code shall govern and control. The Administrator may make or revoke any
elective adjustment to the definition of Highly Compensated Employee permitted
by Section 414(q) of the Code or any regulations, revenue procedures, or other
guidance issued
- 7 -
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thereunder and may elect to utilize the simplified method described in Revenue
Procedure 93-42 (with or without "snapshot day" testing), or any successor
thereto.
HOUR OF SERVICE. Each Employee shall be credited with an Hour of
Service for:
(a) GENERAL RULE. Each hour for which he is directly or indirectly
paid or entitled to payment by an Employer or Affiliate for the performance of
duties. These hours shall be credited to the Employee for the computation period
(or periods) during which the duties are performed. An Employee whose employer
does not have records which would permit it to accurately determine the actual
number of Hours of Service performed by such Employee shall be credited with the
following number of Hours of Service for each payroll period during which he
completes at least one Hour of Service, based upon the payroll period for which
the Employee is compensated:
(i) 45 Hours of Service for each weekly payroll period;
(ii) 90 Hours of Service for each bi-weekly payroll period;
(iii) 95 Hours of Service for each semi-monthly payroll period; or
(iv) 190 Hours of Service for each monthly payroll period.
Hours of Service credited to a payroll period which includes an Anniversary Date
shall be credited entirely to the Plan Year that includes the last day of such
payroll period. An Employee who is not compensated on the basis of a regular
payroll period shall be credited with 10 Hours of Service for each day on which
he completes at least one Hour of Service.
(b) PERIODS DURING WHICH NO SERVICES ARE PERFORMED. Except as
provided in paragraph (c) below, each hour (up to a maximum of 501 hours in any
one continuous period) for which he is directly or indirectly paid or entitled
to payment by an Employer or Affiliate (on account of a period during which no
duties are performed, such as vacation or sickness, including payments made from
a trust fund or insurance policy to which the Employer or Affiliate contributes
or pays premiums. In the case of payments which are computed on the basis of
specific periods of time during which no duties are performed, the Employee
shall receive credit for Hours of Service as if he had actually worked during
such periods of time, computed and credited as provided in paragraph (a). In the
case of all other payments, the Employee's Hours of Service shall be computed
and credited in the manner prescribed in subparagraphs (b) and (c) of DOL Regs.
Section 2530.200b-2, which are hereby incorporated herein by reference.
Notwithstanding the foregoing, no Hours of Service shall be credited for a
period during which no services are performed merely because an Employee is
receiving payments under a plan maintained solely to comply with an applicable
worker's compensation, unemployment compensation, or disability insurance law,
or payments which solely reimburse the Employee for medical or medically related
expenses.
(c) BACK PAY. Each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed to by any Employer or
Affiliate. These hours shall be credited to the Employee for the computation
period (or periods) to which the award, agreement or payment pertains rather
than the computation period (or periods) during which the award, agreement or
payment was made.
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INACTIVE PARTICIPANT. A person who was an Active Participant and who
is no longer an Eligible Employee, but whose Account has not yet been
distributed in full.
KEY EMPLOYEE.
(a) GENERAL RULE. Except as otherwise provided in this Section, an
Employee shall be considered a Key Employee for any Plan Year if, at any time
during the Key Employee Test Period, he:
(i) is an officer of any Employer or Affiliate whose 415
Compensation exceeds 50 percent of the annual dollar
limitation set forth in Section 415(b)(1)(A) of the Code; or
(ii) owns at least one-half percent of the outstanding stock of an
Employer or Affiliate and receives 415 Compensation in excess
of the annual defined contribution dollar limitation set forth
in Section 415(c)(1)(A) of the Code, unless at least ten other
Employees whose 415 Compensation exceeds the annual defined
contribution dollar limitation set forth in Section
415(c)(1)(A) of the Code own during any Plan Year in the Key
Employee Test Period a percentage share of the stock of the
Employer or Affiliate which is greater than such Employee's
percentage share; or
(iii) owns more than five percent of the stock of an Employer or
Affiliate; or
(iv) owns more than one percent of the stock of an Employer or
Affiliate and receives 415 Compensation for any Plan Year in
which he owns such percentage in excess of $150,000.
(b) LIMITATION ON INCLUSION OF OFFICERS. For purposes of
subparagraph (a)(i), the number of Employees classified as Key Employees solely
because they are officers shall not exceed the greater of (i) three or (ii) ten
percent of the largest number of Employees during any of the Years in the Key
Employee Test Period; provided, however, that in no event shall such number
exceed fifty (50). If more than such number of Employees would otherwise be
classified as Key Employees by reason of being officers, the Employees
classified as Key Employees by reason of being officers shall be those officers
who had the highest 415 Compensation during any of the Years in the Key Employee
Test Period during which they were officers.
(c) DETERMINATION OF LARGEST SHAREHOLDERS. For purposes of
subparagraph (a)(ii), in the event that two or more Employees own the same
percentage share of an Employer or Affiliate, the Employee who had the highest
415 Compensation of such Employees for the Plan Year during the Key Employee
Test Period in which his 415 Compensation was the highest and in which he owned
such interest in the Employer or Affiliate for part of the Plan Year shall be
treated as owning the largest percentage share of the stock of the Employer or
Affiliate. If an Employee's percentage interest in the stock of an Employer or
Affiliate changes during a Plan Year, his interest for such Plan Year shall be
the highest percentage he held at any time during such Plan Year.
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(d) DETERMINATION OF PERCENTAGE INTERESTS. For purposes of this
Section, an Employee shall be considered to own any stock of any Employer or
Affiliate which would be attributed to him under Section 318 of the Code (as
modified by substituting "five percent" for "50 percent" in Section 318(a)(2) of
the Code). In the case of an Employer or Affiliate that has issued more than one
class of stock, the applicable test shall be satisfied if the Employee's stock
ownership meets the test on the basis of either the value or the voting power of
the stock. In the case of an Employer or Affiliate that is not a corporation,
such tests shall be applied in accordance with regulations promulgated under
Section 416(i)(1)(B)(iii)(II) of the Code.
(e) DURATION OF CLASSIFICATION AS KEY EMPLOYEE. Any Employee who
meets any of the four tests set forth in paragraph (a) as of any Top-Heavy
Determination Date shall continue to be a Key Employee for the remainder of the
Key Employee Test Period, commencing with the Plan Year which includes such
Top-Heavy Determination Date, whether or not he remains an Employee, and, if
such Employee dies during such Key Employee Test Period his Beneficiaries shall
be classified as Key Employees for the balance of such Key Employee Test Period,
unless such Employee is a Key Employee solely by reason of paragraph (a)(i) and
is subsequently excluded from the group of officers having the highest 415
Compensation by reason of the limitation set forth in paragraph (b) in
subsequent Years or solely by reason of paragraph (a)(ii) and is subsequently
excluded from the group of the ten (10) Employees owning the largest percentage
shares of the stock of an Employer or Affiliate in subsequent Years.
(f) KEY EMPLOYEE TEST PERIOD. The Key Employee Test Period for any
Plan Year shall mean the period consisting of five Plan Years (or, if fewer, the
total number of Plan Years during which the Plan and all other employee plans
qualified under Section 401(a) of the Code maintained by an Employer or
Affiliate have been in effect) ending with the Plan Year which includes the
Top-Heavy Determination Date for such Plan Year.
(g) PURPOSE. The purpose of this Section is to conform to the
definition of "key employee" set forth in Section 416(i)(1) of the Code, which
is incorporated herein by reference, and to the extent that this Section shall
be inconsistent with Section 416(i)(1) of the Code, either by excluding
Employees who would be classified as "key employees" thereunder or by including
Employees who would not be so classified, the provisions of Section 416(i)(1) of
the Code shall govern and control.
LEASED EMPLOYEE.
(a) GENERAL RULE. Any person (other than a person described in
paragraph (b)) who performs services for an Employer or Affiliate under the
primary direction or control of the Employer or Affiliate on a substantially
full-time basis pursuant to an agreement between the Employer or Affiliate and
any third person (for purposes of this Section the "Leasing Organization"). A
Leased Employee shall not be considered to be an Employee until he has provided
such services to the Employer or Affiliate for at least one year, but thereafter
the Leased Employee's Years of Service shall be determined on the basis of the
entire period that the Leased Employee has performed services for any such
persons.
(b) EXCEPTION FOR LEASED EMPLOYEES COVERED BY OTHER PLANS. A
person shall not be considered a Leased Employee if (i) he is covered by a money
purchase pension plan maintained
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by the Leasing Organization and providing for contributions equal to at least 10
percent of the Leased Employee's compensation (without regard to integration
with Social Security) providing for full and immediate vesting of all such
contributions and, providing that each employee of the Leasing Organization
(other than employees who perform substantially all of their services for the
Leasing Organization) immediately participate in such plan (other than employees
whose compensation from the Leasing Organization for each of the plan years in
the four plan year period ending with the year under determination is less than
$1,000); and (ii) persons who would be Leased Employees but for this paragraph
(b) do not comprise more than 20 percent of the sum of number of Employees
(excluding Leased Employees) who have performed services for the an Employer or
Affiliate on a substantially full-time basis for at least one Plan Year and
persons who would be Leased Employees but for this paragraph (b), excluding in
each case any Highly Compensated Employee.
(c) DEFINITION OF AFFILIATE. Solely for purposes of this Section,
the term Affiliate shall also include any person related to an Employer or
Affiliate within the meaning of Section 144(a)(3) of the Code.
LEAVE OF ABSENCE. A period of absence that (i) is authorized by the
Employer or Affiliate, (ii) is covered by the Uniformed Services Employment and
Reemployment Rights Act of 1994, or (iii) to which the Employee is entitled
under the Family and Medical Leave Act of 1993 or any comparable state law;
provided, however, that the Employee retires or returns to work for an Employer
or Affiliate within the time specified in his Leave of Absence (or, if
applicable, within the period during which re-employment rights are protected by
law).
LIMITATION YEAR. The twelve-month period used by the Plan for purposes
of applying the limitations of Section 415 of the Code, which shall be the same
as the Plan Year.
MAXIMUM ACP. The maximum permissible Highly Compensated ACP for a Plan
Year, based upon the Non-Highly Compensated ACP for the current Plan Year, with
respect to the Plan Year ending on December 31, 1999, or the prior Plan Year,
with respect to Plan Years beginning on and after January 1, 2000, in accordance
with the following schedule:
If the Non-Highly Compensated ACP is The Maximum ACP is
2% or less the Non-Highly Compensated ACP
multiplied by two
greater than 2% but less than 8% the Non-Highly Compensated ACP
plus two percentage points
8% or more the Non-Highly Compensated ACP
multiplied by 1.25
MAXIMUM ADP. The maximum permissible Highly Compensated ADP for a Plan
Year, based upon the Non-Highly Compensated ADP for the current Plan Year, with
respect to the Plan Year ending on December 31, 1999, or the prior Plan Year,
with respect to Plan Years beginning on and after January 1, 2000, in accordance
with the following schedule:
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If the Non-Highly Compensated ADP is The Maximum ADP is
2% or less the Non-Highly Compensated ADP
multiplied by two
greater than 2% but less than 8% the Non-Highly Compensated ADP
plus two percentage points
8% or more the Non-Highly Compensated ADP
multiplied by 1.25
NON-HIGHLY COMPENSATED ADP. The average of the Deferral Percentages of
all Non-Highly Compensated Employees who are Active Participants for a Plan
Year, including those whose Deferral Percentage is zero.
NON-HIGHLY COMPENSATED ACP. The average of the Contribution
Percentages of all Non-Highly Compensated Employees who are Active Participants
for a Plan Year, including those whose Contribution Percentage is zero.
NON-HIGHLY COMPENSATED EMPLOYEE. Any Employee who for any Plan Year is
not a Highly Compensated Employee.
NON-KEY EMPLOYEE. Any Employee who for any Plan Year is not a Key
Employee.
NORMAL RETIREMENT AGE. The day on which a Participant attains the age
of 65.
PARTICIPANT. A person who is either an Active Participant or an
Inactive Participant.
PERMANENT DISABILITY. The inability of a Participant to perform a
substantial portion of his duties by reason of any medically determinable
physical or mental impairment which can be expected to be of long-continued and
indefinite duration. Disability shall be presumed to be present if the
Participant receives disability benefits under the Social Security Act.
Permanent Disability shall be determined solely by the Administrator upon
medical evidence from a physician selected by the Administrator. A determination
of Permanent Disability pursuant to the provisions of the Plan shall not be
construed to be an admission of disability in regard to any other claim of
disability brought by the Participant against an Employer.
PLAN. LKQ Corporation Employees' Retirement Plan, the profit sharing
plan created by this instrument, and any amendments or supplements thereto.
PLAN YEAR. The twelve-month accounting period used by the Plan, which
shall end on December 31 of each year.
QUALIFIED DOMESTIC RELATIONS ORDER.
(a) GENERAL RULE. Except as provided in paragraph (b), any order
(including a judgment, a decree or an approval of a property settlement
agreement entered by any court) which the Administrator determines (i) is made
pursuant to any state domestic relations law (including a community property
law), (ii) creates or recognizes the existence of an Alternate Payee's right to,
or assigns to an Alternate Payee the right to, receive all or a portion of a
Participant's Accounts, and (iii) clearly specifies (A) the name and last known
mailing address of the Participant and the name
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and last known mailing address of each Alternate Payee covered by the order, (B)
the amount or percentage of the Participant's benefits to be paid by the Plan to
each Alternate Payee, or the manner in which such amount or percentage is to be
determined, (C) the number of payments or period to which such order applies,
and (D) the employee benefit plan to which such order applies.
(b) REQUIREMENTS FOR QUALIFIED STATUS. An order shall in no event
be considered a Qualified Domestic Relations Order if the Administrator
determines that such order (i) requires the Plan to provide benefits to
Alternate Payees, the actuarial present value of which in the aggregate is
greater than the benefits which would otherwise have been provided to the
Participant, (ii) requires the Plan to pay benefits to an Alternate Payee, which
benefits are required to be paid to a different Alternate Payee under another
order previously determined to be a Qualified Domestic Relations Order, or (iii)
except as provided in paragraph (c), requires the Plan to provide any type or
form of benefit, or any option, not otherwise provided under the Plan.
(c) EXCEPTION FOR CERTAIN REQUIRED DISTRIBUTIONS. Notwithstanding
paragraph (b)(iii), an order shall not fail to be a Qualified Domestic Relations
Order merely because it requires a distribution to an Alternate Payee prior to
the time the Participant incurs a Termination of Employment.
QUALIFIED MILITARY SERVICE. Service by a Participant or Employee in
the armed forces of the United States of a character that entitles the
Participant or Employee to re-employment under the Uniformed Services Employment
and Reemployment Rights Act of 1994, but only if the Participant or Employee is
re-employed during the period following such service in which his right of
re-employment is protected by such Act.
QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. A single-premium annuity
contract purchased on commercially available terms from a life insurance company
selected by the Administrator with at least 50 percent of a deceased
Participant's Account Balance (or such larger percentage as may be elected by
the Participant) that provides equal monthly annuity payments for the life of
the Participant's surviving spouse in accordance with Article IX.
RE-EMPLOYMENT COMMENCEMENT DATE. The day on which an Employee first
performs an Hour of Service for an Employer or Affiliate after a Termination of
Employment, or, solely for purposes of computing an Employee's Service under the
elapsed time method, after commencing a period of absence from service, whether
or not paid, other than by reason of a Termination of Employment.
SPONSOR. LKQ Corporation, a Delaware corporation.
TERMINATION OF EMPLOYMENT.
(a) GENERAL RULE. An Employee shall be deemed to have incurred a
Termination of Employment as a result of:
(i) a retirement, a resignation or a dismissal for any reason;
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(ii) a failure to return to work promptly upon the request of the
Employer at the end of a layoff; or
(iii) a failure to retire or return to work at the end of a Leave of
Absence.
(b) FAILURE TO RETURN AFTER LEAVE. In the event that a Termination
of Employment occurs within the meaning of either subparagraph (a)(ii) or
(a)(iii), such termination shall be deemed to have occurred on the first day of
a layoff or a Leave of Absence for which the Employee was not credited with an
Hour of Service.
(c) TRANSFERS. A transfer between Employers or Affiliates shall
not be considered to be a Termination of Employment for
purposes of determining a Participant's Years of Service.
TESTING COMPENSATION. A Participant's Compensation for a Plan Year
determined without regard to the exclusions in paragraph (b) of the definition
of Compensation.
TOP-HEAVY DETERMINATION DATE. The Top-Heavy Determination Date for any
Plan Year is the last day of the immediately preceding Plan Year.
TOP-HEAVY YEAR.
(a) GENERAL RULE. Except as otherwise provided below, a Top-Heavy
Year shall be any Plan Year if, as of the Top-Heavy Determination Date for such
Plan Year, the aggregate Account Balances of all Key Employees under the Plan
exceed 60 percent of the aggregate Account Balances of all Participants under
the Plan.
(b) MANDATORY AGGREGATION GROUPS. Notwithstanding paragraph (a),
if during any Plan Year (i) at least one Participant is a Key Employee, (ii) as
of the Top-Heavy Determination Date for such Plan Year any Employer or Affiliate
has adopted any other employee plan qualified under Section 401(a) of the Code
and (iii) either (A) a Key Employee participates in such other plan or (B) the
Plan or such other plan has satisfied the requirements of Section 401(a)(4) or
Section 410 of the Code only by treating the Plan and such other plan as a
single plan, then the Plan Year shall be considered a Top-Heavy Year if and only
if the Account Balances of all Key Employees under the Plan and the aggregate
balances in the accounts of all Key Employees under all such other plans exceed
60 percent of the aggregate balances in the accounts of all Participants under
the Plan and all such other plans.
(c) PERMISSIVE AGGREGATION GROUPS. Notwithstanding paragraphs (a)
and (b), if as of any Top-Heavy Determination Date any Employer or Affiliate has
adopted any other employee plan qualified under Section 401(a) of the Code which
is not a plan described in paragraph (b), but which plan may be considered as a
single plan with the Plan and all plans described in paragraph (b) without
causing any of such plans to violate the requirements of either Section
401(a)(4) or Section 410 of the Code, the Plan Year shall not be considered a
Top-Heavy Year if the Account Balances of all Key Employees under the Plan and
the aggregate balances in the accounts of all Key Employees under all plans
described in paragraph (b) and all plans described in this paragraph (c) do not
exceed 60 percent of the aggregate balances in the accounts of all Participants
under all such plans.
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(d) INCLUSION OF DEFINED BENEFIT PLANS. If any of the plans
described in either paragraph (b) or (c) are defined benefit plans (as defined
in Section 414(j) of the Code), then the tests set forth in said paragraphs
shall be applied by substituting the present value of all benefits accrued under
such plans (as determined by the Administrator, using actuarial assumptions
which are uniform for all such plans and are reasonable in the aggregate) for
the account balances in such plans. The accrued benefits of the Non-Key
Employees under such plans shall be determined in accordance with Section
416(g)(4)(F) of the Code. If any of such plans have a determination date (as
defined in Section 416(g)(4)(C) of the Code) for purposes of determining
top-heavy status which is different from the Top-Heavy Determination Date, the
account balances (or the present value of the accrued benefits, in the case of a
defined benefit plan) in such plan shall be determined as of the determination
date for such plan which occurs in the same Plan Year as the Top-Heavy
Determination Date.
(e) ACCOUNT BALANCES. For purposes of this Section, account
balances shall include (i) all Contributions which any Employer or Affiliate has
paid or is legally obligated to pay to any employee plan as of the Top-Heavy
Determination Date (including Contributions made thereafter if they are
allocated as of the Top-Heavy Determination Date) and all Forfeitures allocated
as of the Top-Heavy Determination Date, and (ii) all distributions made to a
Participant or his Beneficiary during the Key Employee Test Period (or, in the
case of a defined benefit plan, the actuarial present value as of the Top-Heavy
Determination Date of such distributions). If any plan that was terminated
within the Key Employee Test Period would, if it had not been terminated, be a
plan described in paragraph (b), distributions made under such plan shall also
be taken into account. For purposes of this Section, account balances shall also
include amounts which are attributable to Contributions made by the Participants
(other than deductible voluntary contributions under Section 219 of the Code)
but shall not include any rollover (as defined in Section 402 of the Code) or a
direct transfer from the trust of any employee plan qualified under Section
401(a) of the Code if such plan is not maintained by an Employer or Affiliate
and such rollover or transfer is made at the request of the Participant after
December 31, 1983.
(f) CERTAIN FORMER EMPLOYEES. Anything to the contrary
notwithstanding, if an Employee has not performed any services for any Employer
or Affiliate at any time during the Key Employee Test Period, his account
balance (in the case of a defined contribution plan) or his accrued benefit (in
the case of a defined benefit plan) shall not be taken into consideration in the
determination of whether the Plan Year is a Top-Heavy Year.
(g) PURPOSE. The purpose of this Section is to conform to the
definition of "top-heavy plan" set forth in Section 416(g) of the Code, which is
incorporated herein by reference, and to the extent that this Section shall be
inconsistent with Section 416(g) of the Code, either by causing any Plan Year
during which the Plan would be classified as a "top-heavy plan" not to be a
Top-Heavy Year or by causing any Plan Year during which it would not be
classified as a "top-heavy plan" to be a Top-Heavy Year, the provisions of
Section 416(g) of the Code shall govern and control.
TREASURY REGULATIONS or TREAS. REG. Regulations, including proposed
and temporary regulations, issued by the Department of the Treasury or Internal
Revenue Service codified at Title 26 of the Code of Federal Regulations. Where a
reference is made to temporary or proposed
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regulations, such reference shall include any permanent regulations, modified
proposed or temporary regulations, issued in lieu thereof.
TRUST. The trust or trusts established to fund benefits provided under
the Plan, as provided in Section 1.5. The term "Trust" shall also include, as
applicable, any insurance policy purchased to fund benefits under the Plan.
TRUST AGREEMENT. The agreement pursuant to which the Trust is
established.
TRUSTEE. The person or persons acting as trustee of the Trust.
VESTED. The portion of a Participant's Account at any time that would
not be forfeited if he then incurred a Termination of Employment.
YEAR OF SERVICE. A Computation Period included in a Participant's
period of Service under the hours of service method, as defined in Article III.
2.2 CONFORMANCE WITH CODE AND ERISA. The Plan is intended to
comply in all respects with the requirements of Section 401(a) of the Code and
Title 1 of ERISA, and shall be so construed. References to specific provisions
of the Code or ERISA in certain provisions of the Plan shall not be construed to
limit reference to other provisions of the Code or ERISA in construing other
provisions of the Plan where such reference is consistent with the purpose of
the Plan. If any provision of the Code or ERISA is amended, any reference in the
Plan to such provision shall, if appropriate in the context and consistent with
the purpose of the Plan, be deemed to refer to any successor to such provision.
2.3 GENDER AND NUMBER; EFFECT OF TITLES. Wherever used in this
Plan, nouns or pronouns of one gender shall be interpreted to apply to all
genders, and the singular shall include the plural and vice-versa, as the
context may require. Titles, captions and headings of Articles, Sections and
Exhibits are for ease of reference only, and shall have no substantive meaning.
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ARTICLE III
COMPUTATION OF SERVICE
3.1 METHOD OF COMPUTATION.
(a) ELIGIBILITY SERVICE. For purposes of determining an Employee's
right to participate in the Plan pursuant to Article IV, an Employee's service
shall be determined using the hours of service method, with Computation Periods
commencing on the Employee's Employment Commencement Date or Re-Employment
Commencement Date and each anniversary thereof.
(b) VESTING SERVICE. For purposes of determining a Participant's
Vested Account Balance pursuant to Article VIII, a Participant's service shall
be determined using the hours of service method, with Vesting Computation
Periods being each Plan Year commencing with the Plan Year that includes the
Employee's Employment Commencement Date or Re-Employment Commencement Date.
3.2 COMPUTATION OF SERVICE UNDER THE HOURS OF SERVICE METHOD.
(a) GENERAL RULE. Under the hours of service method, an Employee
shall receive credit for one Year of Service for each Computation Period during
which he is credited with at least 1,000 Hours of Service with all Employers and
Affiliates, regardless of whether he is continuously employed throughout such
Computation Period. An Employee's Service for purposes of eligibility to
participate in the Plan and for purposes of vesting shall be calculated
separately under the rules of this Section, and whenever the term "Service,"
"Year of Service," "Break in Service," or "Computation Period" is modified by
the term "Eligibility" or "Vesting," such term shall refer only to such term as
applied for purposes of computing the Employee's service for purposes of
eligibility or vesting, as the case may be.
(b) RE-EMPLOYMENT. The Service of an Employee who incurs a
Termination of Employment and is subsequently re-employed shall include the
Service completed prior to such Termination of Employment, except as follows:
(i) If the Employee incurred a Break in Service, such prior
Service shall not be included until the Employee completes a
Year of Service after being re-employed.
(ii) If the Employee was not Vested in any portion of his Account
attributable to Contributions by the Employers at the time of
Termination of Employment such prior Service shall be included
under subparagraph (i) only if the number of Computation
Periods in such Break in Service did not exceed the greater of
five or the number of Years of Service completed prior to such
Termination of Employment, disregarding Years of Service
completed prior to earlier Terminations of Employment which
were not included by reason of this paragraph (b) when the
Employee was previously re-employed.
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(c) BREAKS IN SERVICE. Except as otherwise provided below, a Break
in Service shall mean a period of one or more consecutive Computation Periods
during each of which the Employee fails to complete more than 500 Hours of
Service with all Employers and Affiliates. The following Computation Periods
shall not be considered either Breaks in Service or Years of Service:
(i) A Computation Period in which the Employee completes more than
500 but fewer than 1,000 Hours of Service.
(ii) A Computation Period in which the sum of the Employee's Hours
of Service and Childbirth Leave Hours (as hereinafter defined)
exceeds 500. For purposes of this subparagraph (ii), an
Employee shall be credited with one Childbirth Leave Hour for
each Hour of Service (but not in excess of 501 for any one
continuous period of absence) which the Employee would have
completed but for the fact that the Employee is absent from
service (i) by reason of the pregnancy of the Employee, (ii)
by reason of the birth of a child of the Employee, (iii) by
reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee, or
(iv) for purposes of caring for such child for a period
beginning immediately following such birth or placement;
provided, however, that an hour which is considered an Hour of
Service shall not also be considered a Childbirth Leave Hour.
In the case of any Employee with respect to whom it is not
possible to determine the number of Hours of Service which
such Employee would have completed but for such absence, such
Employee shall be credited with eight (8) Childbirth Leave
Hours for each work day of such absence. All Childbirth Leave
Hours for any period of absence shall be attributed to the
Computation Period during which such period of absence begins
if the result of such attribution is to prevent such
Computation Period from being considered a Break in Service;
otherwise, all Childbirth Leave Hours shall be attributed to
the immediately following Computation Period. The
Administrator shall adopt regulations under which an Employee
may be required to furnish reasonable information on a timely
basis establishing the number of Childbirth Leave Hours to
which such Employee is entitled with respect to any period of
absence from service, and any Employee who fails to furnish
such information with respect to any period of absence shall
not be credited with any Childbirth Leave Hours for such
period of absence.
(iii) A Computation Period during which the Employee fails to
complete more than 500 Hours of Service because of Qualified
Military Service.
(iv) A Computation Period not otherwise described above in which
the Employee fails to complete more than 500 Hours of Service
because of a Leave of Absence which the Employee is entitled
to receive under the Family and Medical Leave Act of 1993, if
applicable, provided that the Employee returns to the employ
of an Employer within the period of time required for his
employment rights to be restored under the terms of said Act.
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(d) EXCLUSIONS FROM VESTING SERVICE. An Employee's Vesting Service
shall not include Years of Service completed before the Employee attained the
age of 18.
3.3 SERVICE WITH PREDECESSOR EMPLOYERS. Each Employee shall also
receive credit for all Service with the following predecessor employers computed
as if such predecessors had been Affiliates while the Employee was employed by
them: 250 Auto Wrecking, Inc., Damron Service, Inc., Damron Management, Inc.,
Damron Auto Parts Georgia, Inc., Damron Trucking, Inc., Damron Used Auto Parts
of Gainesville, Inc., Damron Auto Parts East, Inc., Dismantling & Recycling,
Inc., Gorham Used Auto Parts, Hustiford Auto Co, Inc. Cad-N-Chev, Inc., JRJ Auto
Parts, Best Foreign & American Automotive, Inc., B&D Auto Recyclers, Inc., D&R
Auto Parts, Inc., Viking Auto Salvage, Inc., Mabry Salvage, Inc., Wittig
Investments, Inc., and Recyclers Group, Inc.
In the event that the Sponsor or an Employer acquires the business of
another employer in the future, the employees of such business who become
Employees shall receive credit for their service with such predecessor employer
except to the extent otherwise provided in the acquisition agreement.
Notwithstanding the foregoing, in any case in which an Employer maintains a plan
of a predecessor employer, service for such predecessor employer shall be
counted as service for the Employer.
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ARTICLE IV
PARTICIPATION
4.1 REQUIREMENTS FOR PARTICIPATION. Each Eligible Employee who is
employed by an Employer on the Effective Date of the Plan shall become a
Participant on the Effective Date. Each other Eligible Employee shall become a
Participant on the Entry Date, as determined under Section 4.2, that he
satisfies all of the following requirements:
(a) He or she is then an Eligible Employee;
(b) He or she is at least 21 years of age; and
(c) He or she has completed the following:
(i) With respect to Pre-Tax Contributions and Matching
Contributions, six months of continuous employment or one Year
of Eligibility Service, whichever comes first; and
(ii) With respect to Profit Sharing Contributions, one Year of
Eligibility Service.
4.2 DETERMINATION OF ENTRY DATE. Each Eligible Employee's Entry
Date shall be the first day of the Plan Year or of the fourth, seventh or tenth
month of the Plan Year coinciding with or next following the date he meets the
requirements of Section 4.1.
4.3 CESSATION AND RESUMPTION OF ACTIVE PARTICIPATION.
(a) GENERAL RULE. A Participant who ceases to be an Eligible
Employee shall cease to be an Active Participant, but shall continue to be an
Inactive Participant until the full amount of his Account Balance is distributed
or forfeited in accordance herewith.
(b) REINSTATEMENT WITH RESPECT TO PRE-TAX CONTRIBUTIONS AND
MATCHING CONTRIBUTIONS. A former or Inactive Participant who again becomes an
Eligible Employee
(i) without having incurred a Break in Eligibility Service, shall
immediately become an Active Participant.
(ii) after having incurred a Break in Eligibility Service, shall
become an Active Participant upon completion of six months of
employment or one Year of Eligibility Service.
(c) REINSTATEMENT WITH RESPECT TO PROFIT SHARING CONTRIBUTIONS. A
former or Inactive Participant who again becomes an Eligible Employee
(i) without having incurred a Break in Eligibility Service shall
immediately become an Active Participant.
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(ii) after having incurred a Break in Eligibility Service, but who
is entitled to have his Service restored after completing one
Year of Eligibility Service, shall become an Active
Participant when such Eligibility Service is restored, but
such Active Participation shall be retroactive to his
Re-Employment Commencement Date.
(iii) after having incurred a Break in Eligibility Service, and who
is not entitled to have his Eligibility Service restored,
shall become an Active Participant in the same manner as a new
Employee.
(d) OTHER PLANS. Unless otherwise provided in a supplement to this
Plan, the Sponsor will provide that Employees who are participants in other
plans maintained by the Employers, or by businesses acquired by the Employers,
will become Active Participants immediately upon becoming Eligible Employees, in
accordance with Regulations issued pursuant to Section 401(a)(4) of the Code.
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ARTICLE V
AMOUNT AND ALLOCATION OF CONTRIBUTIONS
5.1 PRE-TAX CONTRIBUTIONS.
(a) AMOUNT OF CONTRIBUTIONS. Subject to the limitations in
Article VI, each Active Participant may elect to have a portion of his 401(k)
Compensation contributed to the Plan as Pre-Tax Contributions. Pre-Tax
Contributions shall be stated as a whole percentage of the Participant's 401(k)
Compensation, which shall be not less than one percent and not more than fifteen
percent, and the percentage elected shall be withheld from each payment of
Compensation to the Participant. Any Participant who is also a participant in
the LKQ Corporation 401(k) Plus Plan (the "401(k) Plus Plan") may elect to have
Pre-Tax Contributions made to the Plan for a Plan Year in such amounts as are
permitted in accordance with the limitations of Section 6.3(a). The
contributions shall be made at such time as the amount specified in the 401(k)
Plus Plan Participation Agreement shall be considered compensation in accordance
with the terms of the 401(k) Plus Plan.
(b) WITHHOLDING, DEPOSIT AND ALLOCATION OF CONTRIBUTIONS. All
Pre-Tax Contributions shall be withheld from Compensation payable to the
Participant, and shall be deposited in the Trust as soon as practical, but in no
event more than the fifteenth day of the month following the month in which they
were withheld. No amount shall be withheld from Compensation that is available
to be paid to the Participant before the date on which the election is made. All
Pre-Tax Contributions shall be allocated to the Participant's Pre-Tax
Contributions Account as of the day they are credited by the Trustee.
(c) TIMING AND REVISION OF ELECTIONS. An Active Participant is
permitted to make or revise a Pre-Tax Contributions Election as of any Election
Date coinciding with or succeeding his Entry Date. The Election Dates shall be
the first day of any payroll period. Each election or revision of an election
shall take effect for the first payment of Compensation payable to the
Participant on or after the Election Date as of which it is effective. Elections
or revisions shall be made in such form and manner as the Administrator shall
determine. The Administrator may also change the frequency of Election Dates,
suspend deferrals, or establish additional Election Dates in special
circumstances, such as the payment of annual bonuses or other circumstances that
may make it desirable for Participants to change their elections, provided that
in all cases the availability of Election Dates shall not discriminate in favor
of Highly Compensated Employees.
(d) TERMINATION AND RESUMPTION OF CONTRIBUTIONS. If an Active
Participant ceases to be an Active Participant, his election to have Pre-Tax
Contributions made on his behalf shall be automatically terminated, whether or
not he continues to be an Employee or Inactive Participant. If such Participant
continues to be an Employee, his Pre-Tax Contributions shall be terminated as of
the next payment of Compensation to him (subject to any necessary delay for
administrative processing). If he again becomes an Active Participant, he may
make a new election as of the Election Date coinciding with or next succeeding
his new Entry Date as provided in paragraph (c).
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5.2 MATCHING CONTRIBUTIONS.
(a) AMOUNT OF CONTRIBUTIONS.
(i) For the period beginning on January 1, 1999, and ending on
July 31, 1999 (September 30, 1999, with respect to LKQ John's
Eastside Corp. and LKQ Midwest Auto Parts Corp.), each
Employer that maintained a Prior Plan which provided for
matching contributions shall make such contributions in
accordance with the terms of that Prior Plan. However, if the
Prior Plan required employment on the last day of the Plan
Year as a condition of receiving an allocation of matching
contributions, such requirement is amended to mean employment
on the day prior to the date on which the Prior Plan was
merged into the Plan. In addition, if the Prior Plan required
a participant to complete a designated number of hours of
service during the Plan Year as a condition of receiving an
allocation of matching contributions, such requirement shall
be amended to require a pro-rated number of hours of service.
With respect to the John's Import Auto 401(k) Savings Plan and
the Midwest Foreign Auto, Inc. 401(k) Profit Sharing Plan, the
pro-rated amount shall be determined by multiplying the
required number of hours of service by the fraction 9/12. The
pro-rated amount with respect to all other Prior Plans shall
be determined by multiplying the required number of hours of
service by the fraction 7/12.
(ii) Effective August 1, 1999 (October 1, 1999, with respect to LKQ
John's Eastside Corp. and LKQ Midwest Auto Parts Corp.), each
Employer shall make Matching Contributions for each Match
Period, as defined below, on behalf of each of its Employees
on whose behalf Pre-Tax Contributions were made during such
period, in an amount equal to fifty percent of the portion of
the Pre-Tax Contributions made on behalf of such Employee that
does not exceed six percent of the Employee's Compensation for
such Match Period.
(b) ELIGIBILITY TO PARTICIPATE. The Employees eligible to
participate in Matching Contributions made pursuant to this Section for any
Match Period shall be those Employees on whose behalf Pre-Tax Contributions were
made during such Match Period. For purposes of this Section 5.2, the "Match
Period" shall mean each payroll period of the Employer.
(c) ALLOCATION AND DEPOSIT OF CONTRIBUTIONS. All Matching
Contributions shall be deposited in the Trust at such time or times as the
Sponsor shall determine, provided that the Matching Contributions made by each
Employer shall be deposited not later than the last date for the filing of the
Employer's federal income tax return for the year which includes the last day of
the Plan Year to which such Contributions relate. Each Participant's share of
Matching Contributions shall be allocated to the Participant's Matching
Contribution Account as of the day they are credited by the Trustee.
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5.3 PROFIT SHARING CONTRIBUTIONS.
(a) AMOUNT OF CONTRIBUTIONS.
(i) For the Plan Year ending December 31, 1999, each Employer
which maintained a Prior Plan shall make a Profit Sharing
Contribution in such amount, if any, as such Employer, in its
sole discretion, shall determine.
(ii) For Plan Years beginning on or after January 1, 2000, each
Employer shall make a Profit Sharing Contribution in such
amount, if any, as the Sponsor, in its sole discretion, shall
determine.
(b) ALLOCATION OF CONTRIBUTIONS.
(i) For the Plan Year ending December 31, 1999, Profit Sharing
Contributions shall be allocated among all eligible
Participants of an Employer as of the last day of the Plan
Year in accordance with the allocation formula provided in
Appendix B with respect to the Prior Plan maintained by that
Employer.
(ii) For Plan Years beginning on or after January 1, 2000, Profit
Sharing Contributions shall be allocated among all eligible
Participants of an Employer as of the last day of each Plan
Year in the proportion that the Compensation paid to each such
Participant bears to the Compensation paid to all such
Participants of that Employer during the Plan Year.
(c) ELIGIBILITY TO PARTICIPATE. The Employees eligible to
participate in an Employer's Profit Sharing Contribution made pursuant to this
Section for any Plan Year shall be those Employees of the Employer who have been
Active Participants at some time during such Plan Year and who are Employees on
the last day of the Plan Year and completed 1,000 Hours of Service during the
Plan Year or who incurred a Termination of Employment during the Plan Year due
to death, Retirement or Permanent Disability.
(d) ALLOCATION AND DEPOSIT OF CONTRIBUTIONS. All Profit Sharing
Contributions shall be deposited in the Trust at such time or times as the
Sponsor shall determine, provided that the Profit Sharing Contributions made by
each Employer shall be deposited not later than the last date for the filing of
the Employer's federal income tax return for the year which includes the last
day of the Plan Year to which such Contributions relate. Each Participant's
share of Profit Sharing Contributions shall be allocated to the Participant's
Profit Sharing Contribution Account as of the date credited by the Trustee.
5.4 ROLLOVER CONTRIBUTIONS. An Active Participant may make a
Contribution to the Plan which constitutes a rollover of benefits from another
plan qualified under Section 401(a) of the Code (either directly or through a
conduit IRA described in Section 408(d)(3)(A)(ii) of the Code), or cause the
trustee of another plan to make a direct transfer of such benefits on his behalf
(in either case, a "Rollover Contribution"). Such Contribution shall be
allocated to a separate Rollover Account maintained for the Participant. The
Administrator may establish uniform rules limiting or restricting Rollover
Contributions. An Eligible Employee who has not yet become a Participant may
also make
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a Rollover Contribution to the Plan, and shall be treated as an Inactive
Participant with respect to his Rollover Account until he becomes a Participant.
5.5 QUALIFIED NONELECTIVE CONTRIBUTIONS. The Sponsor may, but
shall not be obliged to, direct all Employers to make Qualified Nonelective
Contributions in an amount that does not exceed the amount necessary to enable
the Plan to satisfy the limitations of Section 6.3 or 6.4. Such Qualified
Nonelective Contributions shall be allocated among all Active Participants that
are Non-Highly Compensated Employees for the Plan Year in proportion to their
Compensation. Such Qualified Nonelective Contributions shall be allocated to the
Participants' Pre-Tax Contributions Accounts and shall be treated as Pre-Tax
Contributions for all purposes of the Plan.
5.6 MINIMUM CONTRIBUTION IN TOP-HEAVY YEARS.
(a) REQUIRED CONTRIBUTION. For any Plan Year that is a Top-Heavy
Year, the minimum amount of Profit Sharing Contributions allocated to the Profit
Sharing Account of each eligible Non-Key Employee shall be the lesser of (i) 3
percent of the Non-Key Employee's 415 Compensation for the Plan Year or (ii) the
highest Key Employee percentage (as hereafter described) for such Plan Year,
reduced in either case by any Qualified Nonelective Contributions allocated to
such Non-Key Employee for such Plan Year. For purposes of this Section, the "Key
Employee percentage" for each Key Employee shall mean the total amount of
Contributions other than Rollover Contributions made by or on behalf of such Key
Employee for a Plan Year expressed as a percentage of such Key Employee's 415
Compensation for the Plan Year. An eligible Non-Key Employee is one who was an
Active Participant at any time during the Plan Year and who has not incurred a
Termination of Employment prior to the end of the Plan Year regardless of
whether the Non-Key Employee has completed 1,000 Hours of Service during the
Plan Year. The amount of Profit Sharing Contributions that would otherwise be
allocated to the Key Employees shall be reallocated (in proportion to their 415
Compensation) to the eligible Non-Key Employees (in proportion to their 415
Compensation) to the extent necessary to satisfy the requirement of this
Section. Any additional amount required to satisfy the requirements of this
Section shall be contributed by the Employers in proportion to the 415
Compensation paid by them to eligible Non-Key Employees during the Plan Year,
regardless of any other limits on Profit Sharing Contributions contained in this
Article V.
(b) PARTICIPATION IN OTHER PLANS. The minimum Contribution
required by paragraph (a) shall be reduced by any employer contributions (other
than elective and matching contributions subject to Section 401(k) or Section
401(m) of the Code) allocated to the account of the Non-Key Employee in any
other defined contribution plan maintained by an Employer or Affiliate. If an
eligible Non-Key Employee also participates in any Top-Heavy Year in a top-heavy
defined benefit plan maintained by any Employer or Affiliate, then this Section
shall not apply to such eligible Non-Key Employee provided that the minimum
top-heavy benefit required by Section 416(c)(1) is accrued under such defined
benefit plan.
5.7 OTHER REQUIRED CONTRIBUTIONS. The Employers shall make any
additional contributions required to restore a forfeited Account pursuant to
Section 8.5(c) or 9.6 to the extent that Forfeitures occurring in the same Plan
Year are insufficient for such purpose. A Participant who is re-employed
following Qualified Military Service shall have the right to have additional
Pre-Tax
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Contributions made on his behalf in accordance with Section 5.1 in an amount up
to the amount of Pre-Tax Contributions he could have received during the period
of Qualified Military Service. Such additional Contributions shall be made by
additional withholding over a period of time not to exceed three times the
length of his Qualified Military Service (but not more than five years). Such
Participant shall also be entitled to receive any Matching Contributions he
would have received had such Pre-Tax Contributions been made during his period
of Qualified Military Service, and to receive any other Contributions he would
have received, had he been an Active Participant during such period of service.
All such contributions shall be deemed to have been received during the period
of Qualified Military Service for purposes of applying all limitations on
Contributions under this Plan. For purposes of this Section 5.7, a Participant
shall be deemed to have received Compensation during his period of Qualified
Military Service based on the rate of Compensation he would have received had he
been an Employee during such period or, if such rate cannot be determined with
reasonable certainty, based on his average Compensation received during the 12
month period (or his entire period of employment, if shorter) immediately prior
to the period of Qualified Military Service. The provisions of this Section 5.7
shall be interpreted and applied in accordance with Section 414(u) of the Code
and the Treasury Regulations issued thereunder.
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ARTICLE VI
LIMITS ON CONTRIBUTIONS
6.1 LIMIT ON ANNUAL ADDITIONS.
(a) LIMITATION. Notwithstanding any other provisions of the Plan,
the amount of annual additions (as hereinafter defined) allocated to a
Participant's Account for any Limitation Year shall not exceed an amount equal
to the lesser of:
(i) $30,000 (as adjusted pursuant to Section 415(d) of the Code as
of the first day of such Limitation Year); or
(ii) 25 percent of the Participant's 415 Compensation for the
Limitation Year, increased by any amounts treated as annual
additions solely by reason of subparagraph (b)(iv);
reduced in either case by the amount of annual additions credited to the
Participant's account for the Limitation Year under any other defined
contribution plan maintained by an Employer or 415 Affiliate.
(b) ANNUAL ADDITIONS. For purposes of this Section, annual
additions shall include (i) all Contributions made by an Employer or 415
Affiliate (including Pre-Tax Contributions and elective deferrals under other
plans), (ii) Contributions made by the Participant (other than Rollover
Contributions), (iii) Forfeitures, and (iv) contributions to a separate account
described in Section 401(h) of the Code or Section 419A(d) of the Code to
provide medical or life insurance benefits for Key Employees. An amount credited
to a Participant's Account in order to correct an error made in a previous
Limitation Year shall be treated for purposes of paragraph (a) as having been
credited to such Account in the Limitation Year to which the error relates.
(c) CORRECTION OF EXCESS ANNUAL ADDITIONS. If, as the result of an
allocation of Forfeitures, a reasonable error in determining a Participant's 415
Compensation, or similar factors, the amount otherwise allocable to a
Participant's Account would exceed the limitation set forth in paragraph (a),
the amount of such excess shall first be corrected by a return to the
Participant of all or a portion of his Pre-Tax Contributions for the Limitation
Year. If the allocations to the Participant's Account would still exceed the
limitation set forth in paragraph (a), then the amount of such excess shall be
allocated to such Participant's Account, but shall be applied to reduce the
amount that would otherwise be allocated to such Participant's Account in the
next succeeding Limitation Year and all subsequent Limitation Years until such
amount has been fully utilized. If such Participant is no longer covered by the
Plan as of the end of any such subsequent Limitation Year, any remaining portion
of such excess shall be reallocated to the Section 415 Suspense Account. For
each Limitation Year in which there remains a balance in the Section 415
Suspense Account, the amount of such balance shall be allocated and reallocated
among the Accounts of the Active Participants, in proportion to their
Compensation for such Limitation Year. Such allocation shall be subject to the
limitation of paragraph (a), and shall be made prior to any other allocation of
Contributions for such Limitation Year.
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(d) PARTICIPATION IN DEFINED BENEFIT PLAN. Anything to the
contrary notwithstanding, if during any Limitation Year ending prior to January
1, 2000, a Participant also participates in a defined benefit plan (as defined
in Section 414(j) of the Code) maintained by an Employer or 415 Affiliate, the
combination of the annual additions under this Plan and the projected annual
benefit under the defined benefit plan shall not exceed the combined plan
limitation set forth in paragraph (e) with respect to any Participant.
Compliance with the combined plan limitation shall be achieved by first
returning to the Participant all or a portion of his Pre-Tax Contributions as
described in paragraph (c), and then reducing the projected annual benefit under
the defined benefit plan.
(e) COMBINED PLAN LIMITATION. The combined plan limitation shall
be exceeded for a Limitation Year with respect to a Participant if the sum of
the Participant's "defined benefit plan fraction" and "defined contribution plan
fraction" (as hereafter defined) for such Limitation Year exceeds one. A
Participant's defined benefit plan fraction for any Limitation Year is a
fraction, the numerator of which is the Participant's projected annual benefit
under the defined benefit plan, determined as of the close of its plan year on
the assumptions that the Participant remains covered by the plan until normal
retirement age and that the Participant's compensation and all other factors
will remain the same (or, in the case of a Participant who has attained his
normal retirement age, his accrued benefit) and the denominator of which is the
lesser of:
(i) 1.25 multiplied by the maximum dollar limitation in effect
under Section 415(b)(1)(A) of the Code for such Limitation
Year, or
(ii) 1.4 multiplied by the amount which may be taken into account
under Section 415(b(1)(B) of the Code for such Limitation
Year.
A Participant's 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 Account 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
Limitation Year and each prior Limitation Year during any part of which the
Participant was an Employee of an Employer or 415 Affiliate:
(i) 1.25 multiplied by the maximum dollar limitation in effect
under Section 415(c)(1)(A) of the Code for such Limitation
Year (determined without regard to Section 415(c)(6) of the
Code), or
(ii) 1.4 multiplied by the maximum amount which could have been be
taken into account under Section 415(c)(1)(B) of the Code for
such Limitation Year.
Solely for purposes of computing the defined contribution plan fraction, the
term "Limitation Year" shall include all prior twelve-month periods which would
have been Limitation Years had the Plan been in existence and subject to Section
415 of the Code.
(f) TOP-HEAVY YEARS. For any Top-Heavy Year, 1.0 shall be
substituted for 1.25 wherever it appears in paragraph (e).
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(g) AGGREGATION OF PLANS. For purposes of this Section 6.1, all
defined benefit plans of any Employer or 415 Affiliate, whether or not
terminated, are to be treated as one defined benefit plan, and all defined
contribution plans of any Employer or 415 Affiliate, whether or not terminated,
are to be treated as one defined contribution plan.
6.2 LIMIT ON PRE-TAX CONTRIBUTIONS.
(a) LIMITATION. The total amount of Pre-Tax Contributions made on
behalf of any Participant under this Plan, plus the total amount of before-tax
elective deferrals made on behalf of the Participant under any other plan
described in Section 401(k) or Section 402(h)(1)(B) of the Code plus amounts
used to purchase an annuity under Section 403(b) of the Code pursuant to a
salary reduction agreement under Section 402(g)(3) of the Code, in any calendar
year shall not exceed $10,000.00 (or such larger dollar limitation as may then
be applicable for such calendar year under Section 402(g)(5) of the Code).
(b) NOTIFICATION AND DISTRIBUTION OF EXCESS. If the Participant
notifies the Administrator not later than April 1 of the following calendar year
that the limitation of this Section has been exceeded for any calendar year, and
specifies the amount of Pre-Tax Contributions that must be distributed from the
Plan to satisfy such limitation, such amount shall be distributed to the
Participant notwithstanding any other limitation on distributions contained in
this Plan. For purposes of this paragraph, if the limitation of this Section
would be exceeded by reason of Contributions made under this Plan, or under this
Plan and one or more other plans maintained by the Employers, the Participant
shall be deemed to have notified the Administrator and the necessary
distribution shall be made first from this Plan. The amount required to be
distributed pursuant to this Section 6.2 shall be reduced by any amount
previously distributed to satisfy Section 6.3.
(c) DISTRIBUTIONS DURING YEAR. If the notice is received or deemed
received within the calendar year for which the limitation is exceeded, the
required distribution shall, if possible, be made out of Pre-Tax Contributions
already received and before the end of such year, and shall be designated as a
distribution of excess Pre-Tax Contributions.
(d) DISTRIBUTIONS AFTER END OF YEAR. If the notice is received or
deemed received after the end of the calendar year, or the required distribution
cannot be accomplished before the end of the calendar year, the required
distribution shall be made not later than April 15 of the following calendar
year and shall include the income attributable to such distribution (as
determined under paragraph (e)), and the total amount distributed shall be
included in the Participant's taxable income for the calendar year in which the
excess occurred.
(e) ALLOCATION OF INCOME. For purposes of paragraph (d), the
amount of income allocated to the required distribution shall be equal to the
total income earned by the Participant's Pre-Tax Contributions Account for the
calendar year multiplied by a fraction, the numerator of which is the amount of
the required distribution and the denominator of which is the sum of the
Participant's Pre-Tax Contributions Account Balance as of the beginning of the
calendar year and the amount of Pre-Tax Contributions made during the calendar
year. The income allocable to the required distribution for the "gap period"
between the end of the calendar year and the date of the distribution shall also
be distributed. The gap period income shall be determined by multiplying the
amount of income determined as set forth above by 10 percent for each whole
month during the gap
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period. For such purpose, a distribution made on or before the 15th day of a
month shall be deemed to have been made on the first day of the month, and a
distribution made after the 15th day of the month shall be deemed to have been
made on the first day of the next month.
(f) USE OF OTHER METHODS. Notwithstanding paragraph (e), the
Administrator may use any other reasonable method of allocating income for any
year provided that such method does not violate Section 401(a)(4) of the Code,
is applied consistently to all excess distributions and Participants for the
year, and is the method used to allocate income to Accounts generally.
(g) FORFEITURE OF MATCHING CONTRIBUTIONS. The portion of any
Matching Contributions that relates to any excess Pre-Tax Contributions
distributed pursuant to this Section 6.2 shall be forfeited, notwithstanding any
other provision of the Plan or the Participant's Vesting Service.
6.3 ACTUAL DEFERRAL PERCENTAGE LIMITATION
(a) LIMITATION. The Pre-Tax Contributions of Participants who are
Highly-Compensated Employees shall be further limited for each Plan Year so that
the Highly Compensated ADP does not exceed the Maximum ADP. The Administrator
may impose percentage or dollar limits on the Pre-Tax Contribution elections of
such Participants during the Plan Year to prevent this limitation from being
exceeded, but in no event shall the Administrator have any liability to any
Highly Compensated Employee if it does not do so.
(b) CORRECTION OF EXCESS CONTRIBUTIONS. If the limitation of
paragraph (a) is exceeded for any Plan Year after taking into account any
Qualified Non-Elective Contributions, the excess Pre-Tax Contribution (as
determined under paragraph (c)) of each Participant who is a Highly-Compensated
Employee shall be distributed to such Participant. All distributions shall be
made, notwithstanding any other restriction on distributions in the Plan, not
later than 2 1/2 months following the end of the Plan Year if possible, and in
any event not later than the last day of the following Plan Year. The amount
required to be distributed under this Section 6.3 shall be reduced by any amount
previously distributed to satisfy Section 6.2. Any amount distributed shall
include the share of income allocable to such distribution, determined in
accordance with the method used under Section 6.2(e) or 6.2(f), and all
references to excess Pre-Tax Contributions shall be deemed to include such
allocated income.
(c) DETERMINATION OF EXCESS CONTRIBUTIONS. If it is necessary to
determine the excess Pre-Tax Contributions of Highly Compensated Employees
pursuant to paragraph (b) for any Plan Year, the following method shall be used:
(i) First, the Administrator shall determine the amount by which
the Pre-Tax Contributions of the Highly Compensated Employee
or Employees whose Deferral Percentage is the highest must be
reduced until their Deferral Percentage is equal to the
greater of the Deferral Percentage which will cause the Highly
Compensated ADP not to exceed the Maximum ADP or the Deferral
Percentage of the Highly Compensated Employee or Employees who
have the second highest Deferral Percentage. The same
procedure shall then
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be applied, if necessary, to the Pre-Tax Contributions of the
Highly Compensated Employees who have the second highest
Deferral Percentage (including those whose Deferral Percentage
was reduced in the prior step), and so on until the Highly
Compensated ADP no longer exceeds the Maximum ADP. The
aggregate amount by which all Pre-Tax Contributions would have
to be reduced, using this method, so that the Highly
Compensated ADP would no longer exceed the Maximum ADP is
hereinafter referred to as the "Aggregate Excess
Contribution."
(ii) Second, the Administrator shall determine the amount by which
the Pre-Tax Contributions (determined without regard to
subparagraph (c)(i) above) of the Highly Compensated Employee
or Employees whose Pre-Tax Contributions are the largest in
dollar amounts must be reduced until either the total amount
of reductions equals the Aggregate Excess Contribution or
their Pre-Tax Contributions are equal in amount to the Pre-Tax
Contributions of the Highly Compensated Employee or Employees
who have the second largest amount of Pre-Tax Contributions.
The same procedure shall then be applied, if necessary, to the
Pre-Tax Contributions of the Highly Compensated Employees who
received the second largest dollar amount of Pre-Tax
Contributions (including those whose Pre-Tax Contributions
were reduced in the prior step), and so on until the total
amount of reductions equals the Aggregate Excess Contribution.
(d) FORFEITURE OF MATCHING CONTRIBUTIONS. The portion of any
Matching Contributions that relates to any excess Pre-Tax Contributions
distributed pursuant to this Section 6.3 shall be forfeited, notwithstanding any
other provision of the Plan or the Participant's Vesting Service.
6.4 ACTUAL CONTRIBUTION PERCENTAGE LIMITATION
(a) LIMITATION. The Matching Contributions of Participants who are
Highly Compensated Employees shall be further limited for each Plan Year so that
the Highly Compensated ACP does not exceed the Maximum ACP (or such lower amount
as is determined under paragraph (e)). The Administrator may reduce the amount
of Matching Contributions allocated to such Participants in accordance with
paragraph (d) during the Plan Year to prevent this limitation from being
exceeded, but in no event shall the Administrator have any liability to any
Highly Compensated Employee if it does not do so.
(b) CORRECTION OF EXCESS CONTRIBUTIONS. If the limitation of
paragraph (a) is exceeded for any Plan Year after taking into account any
Qualified Non-Elective Contributions and the recharacterization of Pre-Tax
Contributions pursuant to paragraph (c), the excess Matching Contribution (as
determined under paragraph (d) of each Participant who is a Highly-Compensated
Employee shall be distributed to such Participant. All distributions shall be
made, notwithstanding any other restriction on distributions in the Plan, not
later than 2 1/2 months following the end of the Plan Year if possible, and in
any event not later than the last day of the following Plan Year. Each such
distribution shall include the share of income allocable to such distribution,
determined in
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accordance with the method used under Section 6.2(e) or 6.2(f), and all
references to excess Contributions shall be deemed to include such allocated
income.
(c) USE OF PRE-TAX CONTRIBUTIONS. For purposes of this Section, a
portion of the Pre-Tax Contributions made on behalf of Participants who are
Non-Highly Compensated Employees shall be treated as Matching Contributions.
Such amount shall be determined by applying the method set forth in paragraph
(d) to recharacterize the Pre-Tax Contributions of Non-Highly Compensated
Employees as Matching Contributions until either the limitation of paragraph (a)
is satisfied or any further recharacterization would cause the limitation of
Section 6.3 to be exceeded. If before-tax contributions under any other plan
maintained by an Employer or Affiliate are included in a Non-Highly Compensated
Employee's Contribution Percentage, such before-tax contributions may be
recharacterized only if such other plan and the Plan would satisfy Section
410(b) of the Code (without reliance on the average benefits test) if treated as
a single plan. Pre-Tax Contributions that are so recharacterized shall continue
to be treated as Pre-Tax Contributions for all other purposes under the Plan,
including specifically limitations on Forfeitures and distributions.
(d) DETERMINATION OF EXCESS CONTRIBUTIONS. If it is necessary to
determine the excess Matching Contributions of Highly Compensated Employees
pursuant to paragraph (b) for any Plan Year, the same two-step method described
in Section 6.3(c) shall be used.
(e) MULTIPLE USE OF ALTERNATIVE LIMITATION. If the sum of the
Highly Compensated ADP and the Highly Compensated ACP would otherwise exceed the
greater of (i) or (ii) below:
(i) The sum of (A) 1.25 times the greater of the Non-Highly
Compensated ADP or the Non-Highly Compensated ACP plus (B) two
percentage points plus the lesser of the Non-Highly
Compensated ADP or the Non-Highly Compensated ACP; provided
that the amount in (B) shall not exceed two times the lesser
of the Non-Highly Compensated ADP or the Non-Highly
Compensated ACP.
(ii) The sum of (A) 1.25 times the lesser of the Non-Highly
Compensated ADP or the Non-Highly Compensated ACP plus (B) two
percentage points plus the greater of the Non-Highly
Compensated ADP or the Non-Highly Compensated ACP; provided
that the amount in (B) shall not exceed two times the greater
of the Non-Highly Compensated ADP or the Non-Highly
Compensated ACP.
then this Section 6.4 shall be applied by substituting the highest Highly
Compensated ACP that will keep the sum of the Highly Compensated ADP and the
Highly Compensated ACP from exceeding such amount for the Maximum ACP in
paragraph (a).
(f) FORFEITURE OF NONVESTED CONTRIBUTIONS. If a distribution of an
excess Matching Contribution must be made to a Participant under this Section
6.4 at a time when the Participant is not fully Vested in his Matching
Contribution Account, then the amount distributed to such Participant shall be
equal to the amount of the excess Matching Contribution multiplied by the
percentage of the Matching Contribution Account that is Vested, and the
remaining portion of the excess Matching Contribution shall be forfeited.
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6.5 LIMIT ON DEDUCTIBLE CONTRIBUTIONS. Anything else contained
herein to the contrary notwithstanding, the total Contributions made by any
Employer to the Plan for any Plan Year shall not exceed 15 percent of the
aggregate Compensation paid by the Employer to all Participants during the Plan
Year, or such other amount as may be deductible under Section 404 of the Code
for such Plan Year (determined without regard to Section 263A of the Code).
6.6 PURPOSE OF LIMITATIONS; AUTHORITY OF ADMINISTRATOR. The
limitations of this Article VI are intended to comply with the requirements of
Section 415, Section 402(g), Section 401(k), Section 401(m) and Section
404(a)(3) of the Code and the Treasury Regulations issued thereunder, and shall
be construed accordingly. To the extent that said Treasury Regulations provide
for any elections or alternative methods of compliance not specifically
addressed in this Article VI, the Administrator shall have the authority to make
or revoke such election or utilize such alternative method of compliance unless
such election or alternative method of compliance by its terms requires an
amendment to the Plan.
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ARTICLE VII
INVESTMENTS AND PLAN ACCOUNTING
7.1 PARTICIPANT ACCOUNTS. The Administrator shall establish and
maintain the following separate Accounts with respect to Participants:
(a) PRE-TAX CONTRIBUTIONS ACCOUNT. A Pre-Tax Contributions Account
shall be maintained on behalf of each Participant who elects to have Pre-Tax
Contributions made on his behalf or who is allocated any Qualified Nonelective
Contributions.
(b) MATCHING CONTRIBUTIONS ACCOUNT. A Matching Contributions
Account shall be maintained on behalf of each Participant who is allocated any
Matching Contributions under the Plan.
(c) PRIOR PLAN MATCHING CONTRIBUTIONS ACCOUNT. A Prior Plan
Matching Contributions Account shall be maintained on behalf of each Participant
who received an allocation of Matching Contributions under one of the Prior
Plans.
(d) PROFIT SHARING CONTRIBUTIONS ACCOUNT. A Profit Sharing
Contributions Account shall be maintained on behalf of each Participant who is
allocated any Profit Sharing Contributions under the Plan.
(e) PRIOR PLAN PROFIT SHARING CONTRIBUTIONS ACCOUNT. A Profit
Sharing Contributions Account shall be maintained on behalf of each Participant
who received an allocation of Profit Sharing Contributions under one of the
Prior Plans.
(f) ROLLOVER ACCOUNT. A Rollover Account shall be maintained on
behalf of each Participant who elects to make a Rollover Contribution to the
Plan.
Each Account shall represent the aggregate amount of the type of Contribution
referred to above, less any withdrawals, distributions or Forfeitures charged
thereto, and adjusted by the earnings, gains, losses, expenses, and unrealized
appreciation or depreciation attributable to such Contributions. The maintenance
of separate Account balances shall not require physical segregation of plan
assets with respects to any Account. The Accounts maintained hereunder represent
the Participants' interests in the Plan and Trust and are intended as
bookkeeping records to assist the Administrator in the administration of the
Plan. Any reference to a Participant's "Accounts" or "Account Balances" shall
refer to all of the Accounts maintained in the Participant's name under the Plan
unless the context otherwise requires.
7.2 SEPARATE FUND ACCOUNTING.
(a) MANNER OF ACCOUNTING. The Trust shall be divided into separate
funds, as provided in Section 7.3, and the total balance in a Participant's
Account shall consist of the aggregate of the balance in the portion of his
Account that is invested in each of such funds, which shall be determined in
accordance with the accounting procedures specified in the trust agreement,
investment management agreement, insurance contract, custodian agreement or
other document
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under which such fund is maintained. To the extent not inconsistent with such
procedures, the following rules shall apply:
(i) Amounts deposited in a fund shall be deposited by means of a
transfer of such amounts to such fund from another fund as
required.
(ii) Amounts required to be transferred from a fund to satisfy
benefit payments shall be transferred from such investment
funds as soon as practicable following receipt by the trustee
or investment manager of proper instructions to complete such
transfers.
(iii) Except as provided in the applicable fund document, all
amounts deposited in a fund shall be invested as soon as
practical following receipt of such deposit. Notwithstanding
the primary purpose or investment policy of a fund, assets of
any fund which are not invested in the manner required by the
fund document shall be invested in such short term instruments
or funds as the applicable trustee or investment manager shall
determine pending investment in accordance with such
investment policy.
(b) SEPARATE PARTICIPANT ACCOUNTS. Notwithstanding the foregoing,
if any portion of the Trust is invested in a fund that permits each
Participant's interest in the fund to be accounted for as a separate account,
all Contributions, distributions, and earnings shall be accounted for as they
are actually received, disbursed, or earned.
7.3 PARTICIPANT-DIRECTED ACCOUNTS. The Administrator may permit or
require all Participants or Beneficiaries to direct the investment of some or
all of their own Accounts. If Participants are required or permitted to direct
the investment of their Accounts, the Administrator shall establish a written
procedure to govern such investments, which procedure shall satisfy the
requirements of Section 404(c) of ERISA and DOL Reg. Section 2550.404c-1,
including without limitation the establishment of at least three investment
funds that provide sufficient diversification, the identification of the
fiduciaries who are obligated to carry out participant investment directions,
and any limitations on permissible investments. Such procedure shall be appended
to and considered a part of this Plan.
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ARTICLE VIII
VESTING AND FORFEITURE
8.1 ACCOUNTS THAT ARE ALWAYS FULLY VESTED. The following Accounts
in the Plan shall be fully Vested at all times to the extent funded, and shall
not be forfeited for any reason:
(a) Pre-Tax Contributions Account
(b) Rollover Account
(c) Prior Plan Matching Contributions Account
(d) Prior Plan Profit Sharing Contributions Account
Any provision of the Plan that refers to vesting or forfeiture shall in no event
be construed to refer to any of the Accounts listed above. Any Account not
listed above shall be hereinafter sometimes referred to as a "Forfeitable
Account."
8.2 VESTING ON RETIREMENT. If a Participant incurs a Termination
of Employment on or after attaining his Normal Retirement Age or after becoming
Permanently Disabled, all of such Participant's Forfeitable Accounts shall be
fully Vested.
8.3 VESTING AT DEATH. If a Participant dies before becoming
eligible to retire pursuant to Section 8.2, his Forfeitable Accounts shall be
fully Vested.
8.4 OTHER TERMINATION OF EMPLOYMENT.
(a) DETERMINATION OF VESTED PORTION. If a Participant incurs a
Termination of Employment when he is not eligible to retire pursuant to Section
8.2 then, except as otherwise provided herein, the percentage of his Forfeitable
Accounts that is Vested shall be determined in accordance with his Years of
Vesting Service in accordance with the following tables:
(i) Matching Contributions Account
<Table>
<Caption>
Number of Years Vested Percentage
--------------- -----------------
Fewer than 2 0%
2 but not 3 50%
3 but not 4 75%
4 or more 100%
</Table>
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(ii) Profit Sharing Contributions Account
<Table>
<Caption>
Number of Years Vested Percentage
--------------- -----------------
Fewer than 1 0%
1 but not 2 25%
2 but not 3 50%
3 but not 4 75%
4 or more 100%
</Table>
(b) VESTING FOLLOWING A DISTRIBUTION. If at any time a Participant
receives a distribution from any of his Forfeitable Accounts at a time when it
is possible to increase the Vested percentage of such Account, thereafter the
Vested portion of such Account shall be determined as follows:
(i) FIRST, the amount previously distributed to the Participant
shall be multiplied by a fraction, the numerator of which is
the Account Balance at the time the Vested amount is being
determined and the denominator of which is the Account Balance
immediately preceding the distribution;
(ii) SECOND, the amount previously distributed to the Participant,
as adjusted under subparagraph (i), shall be added back to the
Account;
(iii) THIRD, the amount determined under subparagraph (ii) will be
reduced by applying the applicable vesting percentage
determined in accordance with the vesting schedule under
paragraph (a);
(iv) FOURTH, the amount previously distributed to the Participant,
as adjusted under subparagraph (i), shall be deducted from the
amount determined under subparagraph (iii).
(c) VESTING FOLLOWING RE-EMPLOYMENT. If a Participant incurs a
Termination of Employment when he is partially Vested in his Forfeitable
Accounts, and is subsequently re-employed but is not eligible to have his
forfeited Account Balances restored to him under Section 8.5, then any portion
of his Forfeitable Accounts that was Vested at the time of the Termination of
Employment but was not distributed to him (including a pro rata share of income,
gains, losses, expenses, and unrealized appreciation or depreciation) shall
thereafter be treated as a separate subaccount of such Account that is 100
percent Vested, and the vesting schedule in paragraph (a) shall apply only to
the remainder of such Account.
(d) VESTING FOLLOWING PLAN TERMINATION. If there is a complete or
partial termination of the Plan, or if there is a complete discontinuance of
Contributions to the Plan by any Employer, then the Forfeitable Accounts of all
Participants affected by such termination or discontinuance shall thereafter be
fully Vested.
(e) VESTING FOLLOWING PLAN AMENDMENTS. If any amendment to the
Plan alters directly or indirectly the manner in which the Vested portion of
Forfeitable Accounts is determined,
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then, in the case of any Participant who on the later of the date on which the
amendment is adopted or the effective date of the amendment had completed three
Years of Vesting Service, such Participant shall be given the right to elect to
have the Vested portion of his Forfeitable Accounts determined without regard to
such amendment. Such election must be exercised during a period beginning on the
date of adoption of the amendment and ending on the date that is 60 days after
the latest of the date the amendment is adopted, the date it is effective, or
the date on which written notice of the amendment is given to the Participant.
Such election must be made in writing and shall be irrevocable.
8.5 FORFEITURES.
(a) EFFECTIVE DATE OF FORFEITURE. The portion of any Participant's
Forfeitable Accounts which is not Vested when he incurs a Termination of
Employment under Section 8.4 will become a Forfeiture as of the last day of the
Plan Year in which occurs the earlier of (i) the date the Participant receives a
distribution or deemed distribution of the Vested portion of his Forfeitable
Account following the Termination of Employment or (ii) the date the Participant
incurs a Break in Service of at least five years following the Termination of
Employment. Matching Contributions forfeited pursuant to Section 6.2(g), Section
6.3(d) or Section 6.4(f) shall be forfeited as of the last day of the Plan Year
to which such Matching Contributions relate.
(b) APPLICATION OF FORFEITURES. Forfeitures occurring in any Plan
Year shall be applied in the following order:
(i) To restore the forfeited Accounts of Participants described in
paragraph (c) and Section 9.6 during such Plan Year;
(ii) In the case of Forfeitures derived from Matching Contribution
Accounts, to reduce the amount of Matching Contributions
required for such Plan Year; and
(iii) In the case of Forfeitures derived from Profit Sharing
Contribution and/or Top-Heavy Accounts, to reduce the amount
of Profit Sharing Contributions required for such Plan Year.
(c) RESTORATION OF FORFEITURES. If a Participant who incurs a
Termination of Employment when his Forfeitable Accounts are not fully Vested and
incurs a forfeiture upon receiving the distribution or deemed distribution of
the Vested portion of his Forfeitable Account is re-employed before incurring a
Break in Vesting Service of at least five years, the portion of his Account that
was not Vested shall be restored to his Account, without adjustment for any
gains or losses, when the Participant is entitled to have his Vesting Service
restored pursuant to Article III. Such restoration shall be made from
Forfeitures occurring during the Plan Year and/or from additional Contributions
by the Employers.
Notwithstanding the foregoing, if such Participant received a distribution of
the Vested portion of his Account excluding any portion attributable to his
Rollover Account, such amount will be restored only upon the Participant's
repayment to the Plan of the full amount of such distribution excluding
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any portion attributable to his Rollover Account, which shall be restored to his
Account. Such repayment must be made before the fifth anniversary of the date
the Participant is rehired or, if earlier, the date on which the Participant has
incurred a Break in Vesting Service of at least five years.
A Participant who is not Vested in any portion of his Forfeitable Account when
he incurs a Termination of Employment shall be deemed to have received a
distribution of the entire Vested balance of such Account and shall be deemed to
have repaid such deemed distribution if and when he is entitled to have his
Vesting Service restored pursuant to Article III. Nothing contained herein shall
be construed to cause any period with respect to which a Participant received a
distribution of the Vested portion of his Account to be disregarded for purposes
of determining the Participant's Eligibility or Vesting Service.
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ARTICLE IX
PAYMENT OF BENEFITS
9.1 METHODS OF BENEFIT PAYMENT.
(a) NORMAL FORM OF PAYMENT. The normal form of payment of a
Participant's benefit, whether to the Participant or a Beneficiary, shall,
except as otherwise provided in paragraph (e)(ii), be a cash lump sum
distribution equal to the Participant's total Vested Account Balance valued as
of the Accounting Date coincident with or immediately prior to such
distribution, and, except as otherwise provided herein, all benefits shall be
paid in such form.
(b) SMALL ACCOUNT BALANCE. If the Participant's total Vested
Account Balance at the time of distribution, or the portion thereof distributed
to a Beneficiary, does not exceed $5,000.00, then distribution shall be made in
the form described in paragraph (a).
(c) PAYMENT IN INSTALLMENTS. Wherever the Plan permits a
Participant or Beneficiary to elect to receive payment in installments, payment
shall be made in a series of distributions, not less often then annually,
determined in accordance with the provisions set forth below. The payments shall
continue until the Participant's entire Vested Account Balance, or the portion
thereof distributed to a Beneficiary, hereinafter referred to in this paragraph
(c) as the "Balance," has been distributed, and until such time, income, gains,
losses, expenses, and unrealized appreciation or depreciation shall continue to
be allocated to the Account in accordance with Article VII.
(i) The amount distributed in each calendar year commencing with
the calendar year in which the payment begins shall not be
less than the Balance on the last day of the preceding
calendar year divided by the divisor determined under clause
(iii) or (iv) below. If the first payment is made in the year
that includes the April 1 referred to in Section 9.2(d)(ii),
such payment shall relate to the immediately preceding year
and be computed as if paid in such preceding year, and shall
be subtracted from the Balance in computing the second annual
payment which shall be due by December 31 of the same year in
which the first payment was made.
(ii) Installments may be paid more often than annually, so long as
the total amount distributed in any year satisfies the minimum
distribution requirement of clause (i). Distributions in
excess of the minimum requirement in any year shall not reduce
the minimum required distribution in subsequent years.
Corrective distributions made to satisfy any of the
limitations of Article VI shall not be considered
distributions for purposes of the minimum distribution
requirement.
(iii) The divisor for the first year for which an installment
payment is to be made shall be elected by the Participant or
Beneficiary and shall be an integer that does not exceed
either (A) the life expectancy of the Participant (or
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Beneficiary) or (B) the shorter of (1) the joint and last
survivor life expectancy of the Participant and his designated
Beneficiary, and (2) if the Participant's designated
Beneficiary is not his spouse, the maximum period permitted by
the minimum distribution incidental death benefit rule as set
forth under proposed Treas. Reg. Section 1.401(a)(9)-2, Q&A 5,
or any successor thereto provided that in no event shall the
divisor be less than 5. Life expectancies shall be determined
in accordance with actuarial tables promulgated under Section
72 of the Code as of the Participant's and/or Beneficiary's
ages on their birthdays in the calendar year in which (or as
of which in the case of distribution that begins in the latest
year permitted by Section 9.2(d)(ii)) begins.
(iv) The divisor in all years after the initial year shall be the
divisor in the immediately preceding year reduced by one
except that if the initial divisor was determined by the life
expectancy of Participant or the joint and last survivor life
expectancy of the Survivor and his spouse, then if the
Participant so elects, the divisor for each subsequent year
shall be determined in the same manner as for the initial year
based on the Participant's and/or Beneficiary's ages on their
birthdays in such subsequent year.
(d) ANNUITIES. To the extent hereinafter provided, and subject to
the requirements of Section 9.1(e)(ii), a Participant or Beneficiary may elect
to have the portion of the Account distributable to him used to purchase an
annuity contract in any of the forms set forth below on commercially available
terms from a life insurance company selected by the Administrator. The amount of
monthly payments provided by such annuity contract shall be conclusively deemed
to be the actuarial equivalent of the Participant's Account Balance, and the
Plan shall have no further liability for payment of such annuity.
(i) LIFE ANNUITY. A monthly annuity for the life of the
Participant or Beneficiary, with no payments made following
the first day of the month in which the annuitant's death
occurs.
(ii) JOINT AND SURVIVOR ANNUITY. A monthly annuity for the life of
the Participant, with payments continuing following the
Participant's death to his Beneficiary, if the Beneficiary
survives the Participant, in an amount equal to 50 percent,
66-2/3 percent, 75 percent or 100 percent, as elected by the
Participant of the amount payable during the Participant's
lifetime. The last payment shall be made as of the first day
of the later of the month in which the Participant or
Beneficiary dies. A Participant may not change his Beneficiary
under a joint and survivor annuity after payment commences. If
the Beneficiary is not the Participant's spouse, the maximum
percentage payable after the Participant's death shall not
exceed the percentage required by the minimum distribution
incidental death benefit rule as set forth in proposed Treas.
Reg. Section 1.401(a)(9)-2, Q&A 6(b) and any successor
thereto. A "qualified" joint and survivor annuity shall mean a
joint and survivor annuity in which the Beneficiary is the
Participant's spouse and the percentage paid after the
Participant's death is 50 percent.
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(iii) JOINT AND SURVIVOR ANNUITY WITH INSTALLMENT REFUND. A monthly
annuity for the life of the Participant with a death benefit
payable to the Beneficiary in an amount equal to 50, 66-2/3,
75 or 100 percent of the amount payable during the
Participant's lifetime. The death benefit shall be a lump sum
payment equal to the difference between the amount used to
purchase the annuity and the total amount received as monthly
annuity payments. No death benefit shall be paid if the total
amount received as monthly annuity payments exceeds the amount
used to purchase the annuity.
(iv) LIFE ANNUITY WITH INSTALLMENT REFUND. A monthly annuity for
the life of the Participant with a death benefit payable to
the Beneficiary. The death benefit shall be a lump sum payment
equal to the difference between the amount used to purchase
the annuity and the total amount received as monthly annuity
payments. No death benefit shall be paid if the total amount
received as monthly annuity payments exceeds the amount used
to purchase the annuity.
(v) LIFE ANNUITY WITH PERIOD CERTAIN. A monthly annuity for the
life of the Participant, with payments in the same amount
continuing to a Beneficiary until a minimum number of total
payments have been made if the primary annuitant dies before
such minimum number of payments have been made. The minimum
number of payments shall be 60, 120, or 180 months. The
minimum number of guaranteed payments shall not exceed the
maximum permitted by the minimum distribution incidental death
benefit rule as set forth in proposed Treas. Reg. Section
1.401(a)(9)-2, Q&A 6(c) and any successor thereto.
Notwithstanding anything to the contrary, to the extent of a Participant's
Account Balance under any Prior Plan as of the Effective Date, a Participant may
receive a distribution in the form of any annuity that was permitted under the
document of any Prior Plan in which he participated.
(e) ELECTION PROCEDURES.
(i) Wherever the Plan provides for a Participant or Beneficiary to
elect a form of distribution (including the right to defer
receiving a distribution), the Administrator shall provide a
written explanation of the different forms of distribution.
Such explanation shall be provided not less than 30 nor more
than 90 days prior to the scheduled commencement of such
benefit, or within such other period as may be provided by any
applicable provision of ERISA or the Code. A Participant may
waive the requirement that the written explanation be provided
30 days prior to the commencement of his benefit and elect an
early commencement date, but in the case of a Participant to
whom paragraph (e)(ii) applies, no waiver shall take effect
until at least seven days after the written explanation is
provided.
(ii) In the case of a Participant part of whose Account was
transferred from a plan subject to Section 417 of the Code
other than in a Rollover Contribution (but not
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with respect to the portion of his Account that is separately
accounted for and represents Contributions under this Plan
only), or who elects to receive an annuity under the Plan
(whether or not such election is later revoked), such written
explanation shall be furnished either during the period
described in subparagraph (e)(i) or, if the Participant has
attained his Normal Retirement Age, not less than 90 days
prior to the date on which the distribution is scheduled to
begin, shall explain the terms and conditions of a qualified
joint and survivor annuity, the Participant's right to make
and the effect of an election to waive the qualified joint and
survivor annuity and to revoke such waiver, the right of the
Participant's spouse to consent or refuse to consent to such
waiver, and the effect of a revocation of a previous waiver,
and shall otherwise satisfy the requirements of Section
401(a)(11) and Section 417 of the Code. Such a Participant's
election to have his benefit paid in any form other than the
qualified joint and survivor annuity shall not be valid unless
the Participant waives payment in the form of a qualified
joint and survivor annuity and his waiver is consented to by
the Participant's spouse and the spouse's consent acknowledges
the effect of the consent, either designates a specific
alternate Beneficiary and form of payment or specifically
authorizes the Participant to make changes in the Beneficiary
and/or form of payment without further consent, and is
witnessed by a representative of a Plan or a notary public,
unless the Participant establishes to the Administrator's
satisfaction that the Participant is unable to locate his
spouse, that the Participant and his spouse are legally
separated, that the Participant has been abandoned by his
spouse and has a court order to such effect, or that such
other circumstances exist as justify a failure to obtain the
spouse's consent under Section 417 of the Code. A
Participant's waiver of the qualified joint and survivor
annuity under this paragraph (e)(ii) must be made within 90
days prior to the benefit commencement date, and may be
revoked at any time, and any number of times, prior to the
commencement of benefits. Consent of the Participant's spouse
shall not be required for revocation of the waiver, but a new
consent shall be required for any new election of an alternate
form of benefit or designation of a new Beneficiary unless the
spouse's prior consent explicitly authorized the Participant
to make changes in the form of benefit or Beneficiary. The
spouse's consent to a waiver shall be irrevocable, but shall
not be binding upon any subsequent spouse of the same
Participant.
9.2 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT.
(a) SMALL ACCOUNT BALANCES. If, at the time of a Participant's
Termination of Employment, his Vested Account Balance does not exceed the amount
provided in Section 9.1(b), the entire amount of the Vested Account Balance
shall be distributed to such Participant as soon as administratively feasible.
(b) RETIREMENT. A Participant who incurs a Termination of
Employment on or after attaining his Normal Retirement Age, or after becoming
Permanently Disabled, shall begin receiving the distribution of his Account
Balance as soon as administratively feasible unless the
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Participant's Account Balance exceeds the amount described in Section 9.1(b) and
the Participant elects to postpone receiving his distribution until a date not
later than the latest date determined under paragraph (d), provided that in no
event shall distribution begin before the Participant attains his Normal
Retirement Age unless the Participant so elects. Such distribution shall be made
either in the normal form provided in Section 9.1(a) or, if the Account Balance
exceeds or exceeded the amount described in Section 9.1(b) and the Participant
so elects, in any optional form provided by Section 9.1.
(c) TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT. If a
Participant incurs a Termination of Employment prior to being eligible to
retire, and paragraph (a) does not apply to such Participant, then if the
Participant so elects, distribution of his Vested Account Balance shall begin as
soon as administratively feasible and, if the Participant does not so elect,
distribution of his Vested Account Balance shall begin as soon as
administratively feasible after the Participant attains Normal Retirement Age. A
Participant who does not elect to begin receiving his distribution at the time
of his Termination of Employment may subsequently elect to begin receiving his
distribution at any time prior to attaining Normal Retirement Age. Such
distribution shall be made in the normal form provided in Section 9.1(a) or, if
the Account Balance exceeds the amount described in Section 9.1(b) and the
Participant so elects, in any optional form provided by Section 9.1.
(d) LATEST COMMENCEMENT DATE. Anything else contained herein to
the contrary notwithstanding, in no event shall distribution of a Participant's
Account begin later than the earliest of the dates determined under clause (i)
or clause (ii) below:
(i) Unless the Participant consents to a later date, the sixtieth
(60th) day after the close of the Plan Year in which the
latest of the following events occurs: (A) the Participant's
attainment of his Normal Retirement Age; (B) the tenth
anniversary of the date on which the Participant commenced
participation in the Plan; or (C) the Participant's
Termination of Employment.
(ii) April 1 of the calendar year following the later of the
calendar year in which the Participant attains the age of 70
1/2 or incurs a Termination of Employment, or, in the case of
a Participant who is described in paragraph (a)(i) of the
definition of Highly Compensated Employee in the year in which
he attains the age of 70 1/2, April 1 of the following
calendar year regardless of whether he has incurred a
Termination of Employment.
9.3 PAYMENTS AFTER A PARTICIPANT'S DEATH.
(a) DESIGNATION OF BENEFICIARIES. The Account of a Participant who
dies before his Account has been distributed in full shall be distributed to his
Beneficiary or Beneficiaries as provided herein:
(i) Each Participant may file with the Administrator, in such form
as the Administrator shall from time to time require, a
written designation of a Beneficiary or Beneficiaries
(including contingent or successive Beneficiaries). If more
than one Beneficiary is designated, such designation
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shall also specify the manner in which payments are to be
divided. In the absence of such designation, all payments
shall be divided per capita, or, if the Beneficiaries are the
Participant's descendants, per stirpes. The Beneficiaries may
be changed at any time or times by the filing of a new
designation with the Administrator, without the necessity of
obtaining the written consent of any Beneficiary, subject to
the rights of the Participant's spouse under clause (ii)
below. No designation of a Beneficiary or change thereof shall
be effective until it has been received by the Administrator.
The Administrator shall be entitled to rely upon the last
designation filed by the Participant prior to his death.
(ii) Except as otherwise provided in paragraph (d), any Beneficiary
designation which has the effect of causing any portion of a
Participant's Vested Account Balance to be paid to any
Beneficiary other than the surviving spouse of the Participant
shall be effective only if (i) such election is consented to,
in writing, by the person who was the Participant's spouse for
the one-year period ending on the date of the Participant's
death, and the spouse's signature is witnessed either by a
representative designated by the Administrator or by a notary
public, or (ii) it is established, to the satisfaction of the
Administrator, that the Participant had not been married for
one year on the date of his death or that, if the Participant
had been married for one year on the date of his death, that
the consent of the spouse could not be obtained when the
designation was filed because the Participant was unable to
locate his spouse, the Participant and his spouse were legally
separated, the Participant had been abandoned by his spouse
and had a court order to such effect, or that such other
circumstances existed as would justify a failure to obtain the
spouse's consent under Section 417 of the Code.
(iii) To the extent provided in any Qualified Domestic Relations
Order, a former spouse of the Participant shall be treated as
the Participant's spouse at the time of his death (and as
having been married to the Participant for a one-year period
at the time of his death).
(iv) If a Participant dies without having a Beneficiary
designation in force, or if at the time of the Participant's
death all designated Beneficiaries have died, payment shall be
made to the Participant's spouse at the time of his death if
they had been married for at least one year at the time of his
death; or if the Participant's spouse predeceases him or they
had been married for less than one year, then first among his
descendants (including adopted descendants), per stirpes; or,
if there are no then living descendants, to his estate.
(b) DEATH OF PARTICIPANT AFTER DISTRIBUTION HAS COMMENCED. If a
Participant dies after distribution of his benefit has commenced, and after the
date specified in Section 9.2(d)(ii) unless distribution has been made by
purchase of an annuity, then distribution shall continue under the same method
of distribution elected by the Participant. If distribution has commenced in any
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form other than through the purchase of an annuity but the Participant dies
prior to the date specified in Section 9.2(d)(ii), then distribution shall be
made in accordance with paragraph (c).
(c) DEATH OF PARTICIPANT BEFORE DISTRIBUTION HAS COMMENCED. If the
Participant dies before distribution of his Account has commenced, or before the
date specified in Section 9.2(d)(ii), then the remaining balance of the
Participant's Account shall be distributed among his Beneficiaries in a lump sum
as soon as administratively feasible following the Participant's death, but in
no event later than December 31 of the calendar year than includes the fifth
anniversary of the Participant's death. Notwithstanding the foregoing, any
Beneficiary whose share of the Participant's Account Balance exceeds the amount
described in Section 9.1(b) may elect to have such share distributed in
installments as provided in Section 9.1(c) or used to purchase a life annuity as
provided in Section 9.1(d)(i). In the case of a Beneficiary who is not the
Participant's surviving spouse, such payments must begin not later than December
31 of the calendar year that includes the first anniversary of the Participant's
death. In the case of a surviving spouse, commencement may be deferred until
December 31 of the calendar year in which the Participant would have attained
the age of 70 1/2, if later. If the surviving spouse dies before such
distribution is to begin, then the provisions of this paragraph (c) shall apply
to the successor Beneficiary as if the surviving spouse had been the
Participant, except that, if the surviving spouse had remarried, his surviving
spouse shall not be treated as the surviving spouse of a Participant. Such an
election must be made no later than the earlier of the date on which such
payments would be required to begin or December 31 of the calendar year that
includes the fifth anniversary of the Participant's death (or such earlier date
as the Administrator may establish for purposes of administrative processing),
and shall be irrevocable and binding on all successor Beneficiaries.
(d) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. If a deceased
Participant is described in Section 9.1(e)(ii) or has designated a person other
than his surviving spouse as a beneficiary without his obtaining the required
consent of his surviving spouse, and his surviving spouse does not consent
following his death, then, in lieu of the distribution provided in paragraph
(c), 50 percent (or such larger percentage as is set forth below) of such
Participant's remaining Vested Account Balance shall be used to purchase a
Qualified Preretirement Survivor Annuity for his surviving spouse, and the
remainder shall be distributed to his Beneficiaries in the manner provided in
paragraph (c). If the Participant has not designated any other Beneficiary, 100
percent shall be used to purchase the annuity. A surviving spouse may waive the
receipt of a Qualified Preretirement Survivor Annuity hereunder and receive
distribution in accordance with paragraph (c) instead.
(e) SPECIAL RULES FOR PAYMENTS TO SURVIVING SPOUSE. Any
distribution to a surviving spouse (including commencement of a Qualified
Preretirement Survivor Annuity) shall be available to such spouse within a
reasonable time following the Participant's death. For this purpose, a
reasonable time shall mean either 90 days or, if longer, the period of time
within which other types of distributions made on Termination of Employment are
customarily made. The portion of the Account payable to the surviving spouse
shall be adjusted for gains and losses before it is distributed in the same
manner and at the same times as Accounts are adjusted for purposes of other
distributions.
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9.4 PURPOSE OF LIMITATIONS; AUTHORITY OF ADMINISTRATOR. The
provisions of Sections 9.1, 9.2 and 9.3 are intended comply with the
requirements of Section 401(a)(9) of the Code, including specifically the
minimum distribution incidental death benefit rule of Section 401(a)(9)(G), the
proposed Treasury Regulations issued thereunder, and any final Treasury
Regulations, and shall be construed accordingly. Said Code and Treasury
Regulation provisions are hereby incorporated herein by this reference, and
shall control over any form of distribution provided in this Plan that is
inconsistent therewith. To the extent that said Treasury Regulations provide for
any elections or alternative methods of compliance not specifically addressed in
Sections 9.1, 9.2 and 9.3, the Administrator shall have the authority to make or
revoke such election or utilize such alternative method of compliance.
9.5 DIRECT TRANSFERS. Any Participant or Alternate Payee (but only
with respect to an Alternate Payee who is the spouse or former spouse of a
Participant) who is entitled to receive an "eligible rollover distribution," as
hereinafter defined, shall have the right to direct the transfer of all or a
portion of such distribution directly to an individual retirement account or
annuity qualified under Section 408 of the Code (other than an endowment
contract) (an "IRA"), or to a defined contribution pension or profit-sharing
trust qualified under Section 401(a), annuity plan qualified under Section
403(a) of the Code, or other "eligible retirement plan" as defined in Section
401(a)(31) of the Code, which will accept such a transfer, provided that the
amount so transferred must either be the entire amount of such distribution or
must be at least $500. The surviving spouse of a Participant shall similarly be
entitled to direct the transfer of all or a portion of any distribution to which
this Section 9.5 applies, but only to an IRA. The Administrator shall furnish
each Participant, Alternate Payee or surviving spouse to whom this Section 9.5
applies with a notice describing his right to a direct transfer and the tax
consequences of a distribution. Such notice shall be furnished not more than 90
days nor less than 30 days before the Participant, Alternate Payee or surviving
spouse is entitled to receive such distribution, and no distribution shall be
made until 30 days after he or she has received such notice unless he or she
waives such 30 day period in writing. For purposes of this Section 9.5, an
"eligible rollover distribution" means any distribution that is at least
$200.00, other than (i) a distribution that is part of a series of substantially
equal installment payments, paid not less frequently than annually, over the
life or life expectancy of the Participant, the joint lives or joint life
expectancies of the Participant and his beneficiary, or a fixed period of 10
years or more, but only to the extent such distribution exceeds the minimum
amount required to be distributed under the Plan, and (ii) a distribution of
Pre-Tax Contributions made on account of hardship. The Administrator may adopt
administrative procedures to implement direct transfers, which may vary the time
periods and minimum amounts set forth above, to the extent consistent with final
Treasury Regulations issued under Section 401(a)(31) of the Code.
9.6 MISSING PARTICIPANTS AND BENEFICIARIES. If a portion of an
Account remains to be distributed to a Participant or Beneficiary at a time when
the Administrator is unable to locate the Participant or Beneficiary, and the
Participant or Beneficiary fails to contact the Administrator within three years
after being notified of his right to receive such distribution by a letter sent
to his address on file with the Administrator, then such Account shall be
applied to reduce the amount of Contributions that the Employers would otherwise
be required to contribute to the Plan, but if the Participant or Beneficiary
later asserts a proper claim for such distribution, or if the person who would
be entitled to receive such distribution upon the death of such Participant or
Beneficiary
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establishes that such Participant or Beneficiary has died, the Employers shall
contribute the amount necessary to restore such Account.
9.7 PAYMENT WITH RESPECT TO INCAPACITATED PARTICIPANTS OR
BENEFICIARIES. If any person entitled to a distribution of benefits under the
Plan is under a legal disability, or in the Administrator's opinion, is
incapacitated in any way so as to be unable to manage his financial affairs, the
Administrator may direct the payment of such distribution to such person's legal
representative or to a relative or friend of such person for such person's
benefit or the trustee may direct the application of such benefits to the
benefit of such person. Payments made in accordance with this Section 9.7 shall
discharge all liabilities for such distribution under the Plan.
9.8 LIMITATION ON LIABILITY FOR DISTRIBUTIONS. Anything else
contained herein to the contrary notwithstanding, any distribution made under
any provision of this Article IX to a person whom the Administrator determines
in good faith to be entitled to receive such distribution shall fully discharge
the Plan's obligation to make such distribution, and neither the Plan, the
Trustee, the Administrator, the Sponsor nor any Employer shall have any further
liability with respect to such distribution to the Participant or any other
person claiming through him.
9.9 WITHDRAWALS.
(a) NON-HARDSHIP WITHDRAWALS. Participants shall be permitted to
make withdrawals from their Account without demonstrating a financial hardship
to the extent provided below:
(i) WITHDRAWALS FROM ROLLOVER ACCOUNT. A Participant may make one
withdrawal per Plan Year of any portion of the current balance
in his Rollover Account.
(ii) WITHDRAWALS AFTER AGE 59 1/2. A Participant who has attained
the age of 59 1/2 may make one withdrawal per Plan Year of any
portion of the current balance in his Pre-Tax Contributions
Account.
(iii) WITHDRAWALS BY INACTIVE PARTICIPANTS AND BENEFICIARIES. An
Inactive Participant or Beneficiary who has elected to receive
payment in installments or to defer distribution of his
Account Balance may, to the extent not inconsistent with an
irrevocable election or the requirements of Section 401(a)(9)
of the Code, withdraw amounts in excess of the minimum amounts
he is required to receive in any year, but such amount shall
not reduce the minimum distribution requirement in any
subsequent year.
(b) HARDSHIP WITHDRAWALS. A Participant may receive a hardship
withdrawal as provided below:
(i) Subject to the limitations set forth below, a hardship
withdrawal may be made from the Participant's Pre-Tax
Contributions Account.
(ii) A hardship withdrawal can only be made because of
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(A) the Participant's need to pay medical expenses (as
defined in Section 213(d) of the Code) for the
Participant, his spouse, or one of his dependents (as
defined in Section 152 of the Code);
(B) the Participant's need to purchase the Participant's
principal residence (excluding mortgage payments);
(C) the Participant's need to pay tuition, related fees, and
room and board for up to twelve months of post-secondary
education for the Participant, his spouse, one of his
children, or one of his dependents (as defined in Section
152 of the Code); or
(D) the Participant's need to pay rent to avoid eviction from
his principal residence, or mortgage payments to avoid
foreclosure on his principal residence.
(iii) A hardship withdrawal must be limited to the amount reasonably
necessary to satisfy the financial need described above (after
payment of all income taxes and penalties on the withdrawal).
A withdrawal will be considered reasonably necessary to
satisfy a financial need only if it satisfies the following
criteria:
(A) the Participant has obtained all other distributions
permitted under paragraph (a) and loans permitted under
Section 9.10,
(B) the Participant's elective deferrals (as hereinafter
defined) are suspended for a period of at least twelve
months after the withdrawal under all plans maintained by
any Employer or Affiliate, and
(C) the maximum amount of such elective deferrals for the
calendar year following the year of the withdrawal are
limited to the amount set forth in Section 6.2 reduced by
all elective deferrals made prior to the withdrawal in
the year of the withdrawal. For this purpose, the term
elective deferrals includes Pre-Tax Contributions and all
compensation the payment of which is deferred on a
pre-tax basis, including that deferred under
non-qualified plans.
(iv) A hardship withdrawal that is charged to the Pre-Tax
Contributions Account may not exceed the lesser of the (A)
current balance of the Account or (B) the excess of the total
amount of Pre-Tax Contributions made to the Account over the
total prior hardship withdrawals made from such Account.
(c) LIMITATIONS ON WITHDRAWALS. The Administrator may adopt
uniform and non-discriminatory procedures imposing limitations on the number,
frequency, or amount of hardship withdrawals pursuant to this Section 9.9.
(d) TREATMENT OF WITHDRAWALS. Except as otherwise specifically
provided herein, a withdrawal shall be treated as a distribution for all
purposes of the Plan. No withdrawal shall be
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made by any Participant unless such Participant waives the qualified joint and
survivor annuity (or life annuity, if unmarried) form of benefit with respect to
the portion of his Account withdrawn, and his spouse consents to such waiver in
the manner provided in said Section 9.1(e)(ii).
9.10 LOANS.
(a) ELIGIBILITY FOR LOANS. An Active Participant, or an Inactive
Participant who is still an Employee, may borrow against his Account Balance
subject to the provisions set forth herein. Such loans shall be available to all
Participants on a reasonably equivalent basis and shall not be made available to
Highly Compensated Employees, officers or shareholders in an amount greater than
the amount (stated as a percentage of the Participant's Accounts) made available
to other Participants. Inactive Participants who are no longer Employees and
Beneficiaries of deceased Participants shall be entitled to borrow from the Plan
only if they are "parties in interest" as defined in Section 3(14) of ERISA at
the time the loan is requested. Loans to such Inactive Participants and
Beneficiaries shall be governed by the same rules as provided in this Section,
with such modifications as the Administrator may determine to be appropriate to
reflect the lack of an employment relationship.
(b) MAXIMUM AMOUNT OF LOANS. A loan to any Participant, when added
to the outstanding balance of all other loans to him from the Plan, shall not
exceed the lesser of (i) 50 percent of the Participant's Vested Account Balance
or (ii) $50,000.00 reduced by the excess (if any) of (A) the highest outstanding
balance of loans from the Plan during the one year period ending on the day
before the date of the loan over (B) the outstanding balance of loans from the
Plan on the date of the loan.
(c) MAXIMUM TERM. Each loan to a Participant shall provide for
repayment over a period not to exceed five years, except that any such loan may
provide for repayment over a period up to 15 years if it is to be used to
acquire a dwelling unit which within a reasonable time is to be used (determined
at the time the loan is made) as the principal residence of the Participant.
Each such loan shall provide for substantially level amortization (with payments
not less frequently than quarterly) over the term of the loan.
(d) INTEREST RATE. Each such loan shall bear interest at a
reasonable rate to be determined by the Trustees in a nondiscriminatory manner,
taking into consideration interest rates currently being charged by commercial
lending institutions for similar loans.
(e) COLLATERAL AND ENFORCEMENT. Each loan made to a Participant
shall be secured by not more than 50 percent of the Vested portion of the
Participant's Accounts. Each Participant who is an Employee shall be required to
execute a wage withholding agreement providing for payments of principal and
interest to be withheld from his compensation. Each loan shall also provide that
Termination of Employment by the Participant is an event of default, whether or
not a distribution is made from the Participant's Accounts, permitting the
balance of the loan to be offset against the Participant's Accounts. Anything
else contained herein to the contrary notwithstanding, no amount shall be offset
against a Participant's Pre-Tax Contributions Account except at a time that a
distribution would be permitted to the Participant, whether or not a loan is
treated as a distribution for tax purposes under Section 72(p) of the Code.
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(f) ACCOUNTING TREATMENT. The loan shall for purposes of Article
VII be treated as an investment of the funds credited to the Participant's
Accounts. For purposes of the accounting adjustments provided for by Article VII
until the loan is repaid in full, the Administrator shall reduce the
Participant's Account Balances by the unpaid balance on such loan and shall
increase his Accounts by the amount of interest and other payments made by the
Participant. Each such reduction or increase shall be applied to the
Participant's Accounts and the Investment Funds in which his Accounts are
invested in such proportions as he may specify in accordance rules adopted by
the Administrator, or, if he fails to specify the proportions, shall be applied
proportionately to such Accounts and Investment Funds.
(g) OTHER RESTRICTIONS. No loan shall be made to any Participant
in an amount of less than $1,000. No loan shall be made to any Participant at
such time as he has an outstanding balance from a prior loan. The Administrator
may establish additional restrictions on the number, frequency, or terms of
loans, provided that such restrictions are applied in a uniform and
non-discriminatory manner and do not cause loans to fail to be available to
Participants on a reasonably equivalent basis. No loan shall be made to any
Participant unless such Participant waives the qualified joint and survivor
annuity (or life annuity, if unmarried) form of benefit with respect to the
portion of his Account that secures such loan, and his spouse consents to such
waiver in the manner provided in Section 9.1(e)(ii) within the 90 day period
ending on the date on which the loan is secured by the Participant's Account as
provided in paragraph (e).
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ARTICLE X
PLAN ADMINISTRATION
10.1 GENERAL FIDUCIARY STANDARD OF CONDUCT. Each fiduciary under
this Plan shall discharge his duties hereunder solely in the interest of the
Participants and their Beneficiaries and for the exclusive purpose of providing
benefits to the Participants and their Beneficiaries and defraying the
reasonable expenses of administering the Plan and the Trust. Each fiduciary
shall act with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man, acting in a like capacity and familiar with
such matters, would use in the conduct of an enterprise of a like character and
with like aims, in accordance with the documents and instruments governing the
Plan and the Trust, insofar as such documents and instruments are consistent
with this standard.
10.2 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES. The
fiduciaries shall have only those specific powers, duties, responsibilities and
obligations specifically delegated to them under this Agreement. The Sponsor,
the Administrator (if other than the Sponsor), members of the Committee, the
Trustee, if any, and any investment manager shall each be a "named fiduciary" as
defined in Section 402(a)(2) of ERISA. The Administrator may delegate fiduciary
duties (other than trustee duties) to persons other than named fiduciaries, and
may approve any allocation of fiduciary duties among named fiduciaries, as
provided in Section 405(c) of ERISA. If there is more than one Trustee, they may
enter into agreements among themselves with respect to the allocation of trustee
responsibilities with the consent of the Administrator as provided in Section
405(b) of ERISA.
10.3 ADMINISTRATOR. The Administrator of the Plan shall be the
Sponsor. The Administrator shall be the "plan administrator" as defined in
Section 414(g) of the Code, and the "administrator" as defined in Section
3(16)(A) of ERISA. The Administrator shall have the duty to file such plan
descriptions and annual reports as may be required by ERISA or similar
legislation and shall be designated to accept service of legal process and any
other notices for the Plan. The Administrator shall also furnish each
Participant with a summary plan description, a summary annual report, and all
other notices and other documents required by ERISA, the Code or this Plan. The
Sponsor shall have the authority to appoint one or more persons to serve as the
Administrator hereunder, and shall also have the authority to remove the
Administrator at any time that it is not serving as Administrator.
10.4 POWERS AND DUTIES OF ADMINISTRATOR. In addition to all other
powers and duties set forth herein, the Administrator shall have all necessary
power to accomplish its duties under the Plan, including, but not limited to,
the power to:
(a) construe and interpret the Plan, decide all questions of
eligibility and determine the amount, manner and time of payment of any benefits
hereunder;
(b) prescribe procedures to be followed by Participants or
Beneficiaries filing applications for benefits;
(c) assist any Participant regarding any rights, benefits or
elections available under the Plan;
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(d) adopt reasonable procedures for determining whether any order,
judgment or decree constitutes a Qualified Domestic Relations Order, and notify
the Participant and all alternative payees affected as to the results of its
determinations.
(e) direct the Trustee with respect to the amount and type of
benefits to which any Participant or Beneficiary shall be entitled hereunder and
with respect to other disbursements from the Trust;
(f) to the extent permitted under the Trust Agreement, direct the
Trustee with respect to the investments of the Trust;
(f) receive from the Employers and from Participants such
information as shall be necessary for the proper administration of the Plan;
(g) furnish the Employers, upon request, such annual reports with
respect to the administration of the Plan as are reasonable and appropriate;
(h) maintain all the necessary records for the administration of
the Plan;
(i) receive, review and keep on file (as it deems convenient and
proper) reports of benefit payments made by the Trustee and reports of
disbursements for expenses directed by it; and
(j) do all other acts which the Administrator deems necessary or
proper to accomplish and implement its responsibilities under the Plan.
Any rule or procedure adopted by the Administrator, or any decision, ruling or
determination made by the Administrator, in good faith and in accordance with
the applicable fiduciary standards of ERISA shall be final, binding and
conclusive on all Employers, Employees, Participants, Beneficiaries and all
persons claiming through them.
10.5 COMMITTEE.
(a) APPOINTMENT AND MEMBERSHIP. A Committee may be appointed to
administer the Plan as agent for the Sponsor. The Committee shall consist of one
or more members appointed by the Board from time to time. Each member shall
serve at the pleasure of the Board or for such term as the Board may determine,
and may be removed by the Board at any time. A member of the Committee who is an
Employee shall automatically cease to be a member upon his Termination of
Employment. The Board may change the size of the Committee at any time, and if
any vacancy occurs on the Committee, the remaining members shall have full
authority to act unless and until the Board appoints a replacement member.
(b) ACTION BY COMMITTEE. The Committee shall act by the
concurrence of a majority of its members at the time in office and such action
may be taken either by vote at a meeting or in writing without a meeting. The
Committee may adopt such by-laws, rules and regulations as it deems necessary,
desirable or appropriate for the conduct of its affairs. When making a
determination or calculation, the Committee shall be entitled to rely upon
information furnished by a Participant, Beneficiary, Employer, or Affiliate, the
Administrator or the Trustee, and shall have no
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duty or responsibility to verify such information. By vote or by unanimous
written consent the Committee may authorize any one or more of its members to
execute any instrument or document on its behalf.
(c) FAILURE TO APPOINT COMMITTEE. If the Sponsor is acting as
Administrator and fails to appoint a Committee, the Sponsor's powers and duties
as Administrator shall be discharged by such officers and employees as may be
specifically delegated such powers and duties by the Board or Chief Executive
Officer of the Sponsor or, in the absence of such delegation, by such officers
and employees as are customarily responsible for matters involving human
resources and/or employee benefits. In no event shall any such person be deemed
to be the Administrator unless he is specifically so designated and accepts such
designation in writing.
10.6 COMPENSATION AND EXPENSES. All fiduciaries and Committee
members who are Employees shall serve without compensation for their services
hereunder. Professional Trustees and investment managers shall be paid such
compensation as may be agreed upon by the Administrator. All expenses of the
administration of the Plan, including expenses incurred in the hiring of
consultants, advisors, investment managers, attorneys and accountants, shall be
paid by the Employers to the extent that such expenses are not paid out of the
Trust.
10.7 INDEMNIFICATION BY EMPLOYERS. The Employers shall indemnify
the members of the Committee, the Administrator and each Trustee for, and hold
them harmless from and against, any and all liabilities, losses, costs or
expenses (including reasonable attorneys fees) of whatsoever kind and nature
which may be imposed on, incurred by or asserted against them at any time by
reason of their service under the Plan or the Trust as long as they did not act
dishonestly or engage in willful misconduct or gross negligence in their
official capacities hereunder, including all expenses reasonably incurred in
their defense if the Employers fail to provide such defense.
10.8 SERVICE IN MULTIPLE CAPACITIES. Any person may serve in more
than one fiduciary capacity hereunder, including but not limited to service both
as a member of the Committee and as a Trustee.
10.9 CLAIMS PROCEDURE.
(a) FILING OF CLAIM. A Participant or Beneficiary, or an
authorized representative acting on his behalf (hereinafter called the
"claimant"), may notify the Administrator of a claim for benefits under the
Plan. Such notice may be in any form acceptable to the Administrator and shall
set forth the basis of such claim and shall authorize the Administrator to
conduct such examinations as may be necessary to determine the validity of the
claim and to take such steps as may be necessary to facilitate the payment of
any benefits to which the claimant may be entitled under the terms of the Plan.
(b) NOTICE OF DENIAL. Whenever a claim for benefits by the
claimant has been denied by the Administrator, a written notice of denial shall
be given to the claimant, prepared in a manner calculated to be understood by
him without legal assistance and setting forth the specific reasons for the
denial and explaining the procedure for an appeal and review of the decision by
the Administrator. Such notice shall be furnished not later than 90 days after
the claim has been filed
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(which 90 day period may be extended for up to an additional 90 days if special
circumstances require and notice of the extension is furnished to the claimant
prior to the end of the first 90 day period).
(c) REVIEW OF DENIAL. A claimant whose claim is denied, or his
authorized representative, may request a review upon written application to the
Administrator within 60 days after receiving notice of the denial. In connection
with such application, the claimant or his authorized representative may review
pertinent documents and may submit issues and comments in writing. If such an
application is made, the Administrator shall make a full and fair review of the
denial of the claim and shall make a decision not later than 60 days after
receipt of the application, unless special circumstances (such as the need to
hold a hearing) require an extension of time, in which case a decision shall be
made as soon as possible but not later than 120 days after receipt of the
request for review, and written notice of the extension shall be given to the
claimant before the commencement of the extension. The decision on review shall
be in writing and shall include specific reasons for the decision and specific
references to the pertinent provisions of the Plan on which the decision is
based.
10.10 QUALIFIED DOMESTIC RELATIONS ORDERS.
(a) DISTRIBUTION IN ACCORDANCE WITH QDRO. Notwithstanding Section
12.2 or anything else in the Plan to the contrary, a Participant's Accounts may
be distributed to an Alternate Payee in accordance with a Qualified Domestic
Relations Order.
(b) PROCEDURE ON RECEIPT OF ORDER. After receipt of an order that
is a potential Qualified Domestic Relations Order, the Administrator shall (i)
promptly notify the affected Participant and any Alternate Payee of the receipt
of such order and the Administrator's procedure for determining qualified status
of such orders, and (ii) within a reasonable period after receipt shall
determine whether the order is a Qualified Domestic Relations Order and notify
the Participant and each Alternate Payee of such determination.
(c) DETERMINATION OF STATUS OF ORDERS. The Administrator shall
establish a procedure to determine the qualified status of such orders and to
administer Plan distributions in accordance with Qualified Domestic Relations
Orders. Such procedure shall be in writing, shall include a provision specifying
the notification requirements enumerated in the preceding paragraph, shall
permit an Alternate Payee to designate a representative for receipt of
communications from the Administrator and shall include such other provisions as
the Administrator determines, consistent with Section 401(a)(13) and Section
206(d)(3) of ERISA.
(d) SEGREGATION OF ACCOUNTS. During any period in which the issue
of the qualified status of such an order is being determined (by the
Administrator, a court of competent jurisdiction or otherwise), the Plan shall
separately account for the amounts, if any, which would have been payable to the
Alternate Payee during such period if the order had been determined to be a
Qualified Domestic Relations Order.
(e) PAYMENT AFTER DETERMINATION OF STATUS. If an order is
determined to be a Qualified Domestic Relations Order within the 18-month period
after distribution of the Participant's
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Accounts would otherwise be required, then payment from the segregated account
shall be made to the appropriate Alternate Payee. If such a determination is not
made within the 18-month period, the segregated account shall be returned to the
Participant's Accounts under the Plan and shall be paid at the time and the
manner provided under the Plan as if no order had been received. Any subsequent
determination that the order is a Qualified Domestic Relations Order shall be
applied prospectively only.
(f) PRE-1985 ORDERS. An order that was entered prior to January 1,
1985 and that does not meet the requirements of a Qualified Domestic Relations
Order, shall nevertheless be treated as a Qualified Domestic Relations Order if
benefits were being paid pursuant to such order on such date, and, otherwise may
be treated as a Qualified Domestic Relations Order in the Administrator's
discretion.
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ARTICLE XI
AMENDMENT, TERMINATION OR MERGER OF PLAN
11.1 AMENDMENT.
(a) SPONSOR'S AUTHORITY TO AMEND. The Sponsor shall have the right
at any time to amend in whole or in part any or all of the provisions of this
Plan by action of its Board or any other person to whom the Board may delegate
such authority except as expressly set forth below. Any rule or procedure
adopted by the Administrator pursuant to Section 10.4 that is inconsistent with
any provision of the Plan that is administrative or ministerial in nature shall
also constitute an amendment to the Plan.
(b) NO REVERSIONARY AMENDMENTS. Except as expressly provided in
Section 12.12 below, no amendment may result in, authorize or permit any part of
the Trust, the income from the Trust or any Plan assets to be distributed to or
for the benefit of anyone other than the Participants and their Beneficiaries.
(c) NO BENEFIT REDUCTIONS. No amendment may be adopted which will
reduce any Participant's Account Balance or the Vested portion thereof to an
amount less than the Account Balance or the Vested portion thereof that the
Participant would be entitled to receive if he had resigned from the employ of
all Employers and Affiliates immediately prior to the later of the adoption date
or election date of such amendment. Except as otherwise provided in Treasury
Regulations issued pursuant to Section 411(d)(6) of the Code, an amendment that
eliminates or reduces an early retirement benefit or retirement-type subsidy, or
that eliminates an optional form of benefit, with respect to a Participant's
Account Balance shall be treated as reducing the Participant's Account Balance
for this purpose.
11.2 TERMINATION.
(a) COMPLETE TERMINATION. The Sponsor may terminate the Plan as to
all Employers at any time by written notice to all of the Employers.
(b) TERMINATION BY AN EMPLOYER. The Plan will terminate as to any
Employer on the earliest date on which one of the events described in (i)
through (iv) below has occurred with respect to any that employer:
(i) Any date that the Plan is terminated with respect to an
Employer by action of that Employer provided that the Sponsor
has been given prior written notice of such termination;
(ii) Any date that an Employer is judicially declared bankrupt or
insolvent;
(iii) Any date an Employer completely discontinues its Contributions
under the Plan; or
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(iv) Any date on which an Employer is dissolved, merged,
consolidated or reorganized or the date on which the assets of
an Employer are completely or substantially sold unless
arrangements have been made whereby the Plan will be continued
by a successor to that employer or purchaser of its assets
under Section 11.3.
11.3 CONTINUATION BY A SUCCESSOR OR PURCHASER. Notwithstanding
Section 11.2(b)(iv), the Plan and the Trust shall not terminate with respect to
an Employer in the event of dissolution, merger, consolidation or reorganization
of the Employer or sale by an Employer of its entire assets or substantially all
of its assets if arrangements are made in writing, with the consent of the
Sponsor, between the Employer and any successor to the Employer or purchaser of
all or substantially all of its assets whereby such successor or purchaser will
continue the Plan. If such arrangements are made then such successor or
purchaser shall be substituted for the Employer under the Plan.
11.4 PLAN MERGER OR CONSOLIDATION. The Sponsor may cause the Plan
or the Trust to be merged or consolidated with, or may transfer the assets or
liabilities under the Plan to, any other qualified plan or from any other
qualified plan provided that the documents and other arrangements regarding such
merger, consolidation or transfer provide safeguards which would cause each
Participant in the Plan, if the Plan terminated, to receive a benefit in the
event of a termination immediately after such merger, consolidation or transfer
which is equal to or greater than the benefit the Participant would have been
entitled to receive if the Plan had terminated immediately prior to such merger,
consolidation or transfer.
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ARTICLE XII
GENERAL PROVISIONS
12.1 NO EMPLOYMENT GUARANTEE. Neither the establishment of the Plan
nor any modification thereof, nor the creation of any fund or account, nor the
payment of any benefits shall be construed as giving to any Participant or other
person any legal or equitable right against the Sponsor, any Employer, the
Administrator or the Trustee except as herein provided. Under no circumstances
shall the terms of employment with an Employer of any Participant be modified or
in any way affected hereby. The maintenance of this Plan shall not constitute a
contract of employment with any Employer. Participation in the Plan will not
give any Participant a right to be retained as an employee of any Employer.
12.2 NONALIENATION OF PLAN BENEFITS. The rights or interests of any
Participant or any Participant's Beneficiaries to any benefits or future
payments hereunder shall not be subject to attachment or garnishment or other
legal process by any creditor of any such Participant or beneficiary nor shall
any such Participant or beneficiary have any right to alienate, anticipate,
commute, pledge, encumber or assign any of the benefits or rights which he may
expect to receive, contingently or otherwise under this Plan except as may be
required by Section 10.10 or otherwise by applicable law that is not pre-empted
by ERISA.
12.3 ACTION BY SPONSOR OR EMPLOYER. Action required to be taken or
permitted by the Sponsor or an Employer may be taken by action of the Board of
the Sponsor or such Employer or by a person or committee of persons authorized
to act by said Board.
12.4 APPLICABLE LAW. The Plan and the Trust shall be construed in
accordance with the provisions of ERISA and other applicable federal laws. To
the extent not inconsistent with such laws, this Plan shall be construed in
accordance with the laws of the State of Illinois.
12.5 PARTICIPANT LITIGATION. In any action or proceeding regarding
the Plan assets or any property constituting a portion or all thereof or
regarding the administration of the Plan, employees or former employees of an
Employer or their Beneficiaries or any other persons having or claiming to have
an interest in this Plan shall not be necessary parties and shall not be
entitled to any notice or process. Any final judgment which is not appealed or
appealable and may be entered in any such action or proceeding shall be binding
and conclusive on the parties hereto and all persons having or claiming to have
any interest in this Plan. To the extent permitted by law, if a legal action is
begun against the Sponsor, an Employer, the Administrator, the Committee, or the
Trustee by or on behalf of any person and such action results adversely to such
person or if a legal action arises because of conflicting claims to a
Participant's or other person's benefits, the costs to the Sponsor, an Employer,
the Administrator, the Committee, or the Trustee of defending the action will be
charged to the amounts, if any, which were involved in the action or were
payable to the Participant or other person concerned. To the extent permitted by
applicable law, acceptance of participation in this Plan shall constitute a
release of the Sponsor, each Employer, the Administrator, the Committee, and the
Trustee and their respective agents from any and all liability and obligation
not involving willful misconduct or gross neglect.
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12.6 PARTICIPANT AND BENEFICIARY DUTIES. Persons entitled to
benefits under the Plan shall file with the Administrator from time to time such
person's post office address and each change of post office address. Each such
person entitled to benefits under the Plan also shall furnish the committee with
all appropriate documents, evidence, data or information which the committee
considers necessary or desirable in administering the Plan. Any document will be
properly filed with the Administrator if it is delivered or mailed by registered
mail postage prepaid to the Administrator in care of the Sponsor.
12.7 ADEQUACY OF EVIDENCE. Evidence that is required of anyone
under this Plan shall be executed or presented by proper individuals or parties
and may be in the form of certificates, affidavits, documents or other
information which the person acting on such evidence considers pertinent and
reliable.
12.8 NOTICE TO PARTICIPANTS AND BENEFICIARIES. A notice mailed to a
Participant or Beneficiary at his last address filed with the Administrator will
be binding on the Participant or Beneficiary for all purposes of the Plan.
12.9 WAIVER OF NOTICE. Any notice under this Plan may be waived by
the person entitled to notice.
12.10 SUCCESSORS. This Plan will be binding on the Sponsor and
Employers, and on all persons entitled to benefits hereunder, and their
respective successor, heirs and legal representatives.
12.11 SEVERABILITY. If any provision of this Plan shall be held
illegal or invalid for any reason, such illegal or invalid provision shall not
affect the remaining provisions of the Plan, and the Plan shall be construed and
enforced as if such illegal or invalid provisions had never been contained in
the Plan.
12.12 NONREVERSION.
(a) PROHIBITION ON REVERSIONS. The Employers have no right, title
or interest in the assets of the Plan or in Trust and no portion of the Trust or
the assets of the Plan or interest therein shall at any time revert or be repaid
to the Employers, except as otherwise provided in paragraph (b).
(b) Notwithstanding paragraph (a), the following Employer
Contributions may be returned to an Employer:
(i) Employer Contributions which are made as a result of a good
faith mistake of fact may be returned to the Employer making
the Contributions within 12 months after the Contribution is
made by the Employer.
(ii) All Employer Contributions are conditioned upon the assumption
that such Contributions are deductible under Section 404 of
the Code, and shall be returned to the Employer that made such
Contribution to the extent the Employer's deduction is
disallowed. Such amount shall be returned within 12 months
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after the final conclusion of all administrative and judicial
proceedings with respect to the disallowance of such
deduction.
(iii) Upon termination of the Plan, any remaining balance in the
Section 415 Suspense Account shall revert to the Employers, in
such proportions as the Sponsor shall determine.
(c) GENERAL LIMITATIONS ON RETURNS. The amount returned to an
Employer pursuant to subparagraph (b)(i) or (b)(ii) shall be the excess, if any,
of the amount actually contributed over the amount that either would have been
contributed had the mistake not occurred, or that is determined to be
deductible, as applicable. Such amount shall be reduced by a pro rata share of
any losses incurred by the Trust, but shall not include any earnings. A
Contribution may be returned even though it has been allocated to a
Participant's Account, and such Account may be reduced accordingly, but in no
event shall any account be reduced below the amount that would have been
allocated to it if the mistaken or non-deductible Contribution had not been
made. If the amount returned under any provision of paragraph (b) represents a
Pre-Tax Contribution or Rollover Contribution, it shall be promptly paid by the
Employer to the Participant.
IN WITNESS WHEREOF, the Sponsor has caused this Plan to be executed by
its duly authorized officers this 1st day of August, 1999.
LKQ CORPORATION
By: /s/ Daniel J. Hemmer
----------------------------------
Its: Assistant Secretary
---------------------------
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APPENDIX A
AMENDMENTS TO THE
BUD'S AUTO PARTS, INC. 401(K) PROFIT SHARING PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
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For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year
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to be treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 4.5 of the basic plan document of the plan is amended to use the actual
deferral percentage (hereinafter "ADP") for participants who are Highly
Compensated Employees for the current plan year and the ADP for participants who
are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing
the nondiscrimination testing required under this section for the 1997 and 1998
plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
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2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
Section 4.7 of the basic plan document of the plan is amended to use the actual
contribution percentage (hereinafter "ACP") for participants who are Highly
Compensated Employees for the current plan year and the ACP for participants who
are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing
the nondiscrimination testing required under this section for the 1997 and 1998
plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
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Excess Aggregate Contributions will be distributed according to the following
procedures:
1. The dollar amount of excess aggregate contributions is computed for
each affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
2. The excess aggregate contributions are distributed in the following
manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess aggregate contributions are
distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
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AMENDMENTS TO THE
DAMROM AUTO PARTS, INC. 401(K) PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
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FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year to be
treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
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SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 3.07(a) of the basic plan document of the plan is amended to use the
actual deferral percentage (hereinafter "ADP") for participants who are Highly
Compensated Employees for the current plan year and the ADP for participants who
are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing
the nondiscrimination testing required under this section for the 1997 and 1998
plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected
Highly Compensated Employee (HCE) in accordance with the provisions
currently in effect.
2. The excess contributions are distributed in the following manner:
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Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
Section 3.07(a) of the basic plan document of the plan is amended to use the
actual contribution percentage (hereinafter "ACP") for participants who are
Highly Compensated Employees for the current plan year and the ACP for
participants who are non-highly compensated employees FOR THE PRECEDING PLAN
YEAR in performing the nondiscrimination testing required under this section for
the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following
procedures:
1. The dollar amount of excess aggregate contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
2. The excess aggregate contributions are distributed in the following
manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar
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<Page>
amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess aggregate contributions are
distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
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<Page>
AMENDMENTS TO THE
JOHN'S IMPORT AUTO 401(K) SAVINGS PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
- 72 -
<Page>
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year to be
treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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<Page>
Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4)
of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 12.5 of the basic plan document of the plan is amended to use the actual
deferral percentage (hereinafter "ADP") for participants who are Highly
Compensated Employees for the current plan year and the ADP for participants who
are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing
the nondiscrimination testing required under this section for the 1997 plan
year. In accordance with Section 12.5 of the basic plan document of the plan,
current year data was used to determine the ADP of non-highly compensated
employees for the 1998 plan year.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected
Highly Compensated Employee (HCE) in accordance with the provisions
currently in effect.
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<Page>
2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
Section 12.7 of the basic plan document of the plan is amended to use the actual
contribution percentage (hereinafter "ACP") for participants who are Highly
Compensated Employees for the current plan year and the ACP for participants who
are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing
the nondiscrimination testing required under this section for the 1997 plan
year. In accordance with Section 12.7 of the basic plan document of the plan,
current year data was used to determine the ACP of non-highly compensated
employees for the 1998 plan year.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following
procedures:
1. The dollar amount of excess aggregate contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
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<Page>
2. The excess aggregate contributions are distributed in the following
manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
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<Page>
AMENDMENTS TO THE
MIDWEST FOREIGN AUTO, INC. 401(K) PROFIT SHARING PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
- 77 -
<Page>
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year to be
treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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<Page>
Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4)
of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
In accordance with Section 11.110 of the basic plan document of the plan,
current year data was used to determine the ADP of non-highly compensated
employees for the 1998 plan year.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected
Highly Compensated Employee (HCE) in accordance with the provisions
currently in effect.
2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar
- 79 -
<Page>
amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
In accordance with Section 11.109 of the basic plan document of the plan,
current year data was used to determine the ACP of non-highly compensated
employees for the 1998 plan year.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following
procedures:
1. The dollar amount of excess aggregate contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
2. The excess aggregate contributions are distributed in the following
manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
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<Page>
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
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<Page>
AMENDMENTS TO THE
SMART PARTS 401K PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(C) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(D) for the preceding year:
(iii) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(iv) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
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<Page>
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year to be
treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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<Page>
Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4)
of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
In accordance with Section 11.110 of the basic plan document of the plan,
current year data was used to determine the ADP of non-highly compensated
employees for the 1997 and 1998 plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
4. The dollar amount of excess contributions is computed for each affected
Highly Compensated Employee (HCE) in accordance with the provisions
currently in effect.
5. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar
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<Page>
amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
6. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
In accordance with Section 11.109 of the basic plan document of the plan,
current year data was used to determine the ACP of non-highly compensated
employees for the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following
procedures:
3. The dollar amount of excess aggregate contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
4. The excess aggregate contributions are distributed in the following
manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
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<Page>
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
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<Page>
AMENDMENTS TO THE
RECYCLERS GROUP, INC. PROFIT SHARING/401(K) PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
- 87 -
<Page>
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year to be
treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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<Page>
Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
In accordance with Section 4.5 of the basic plan document of the plan, current
year data was used to determine the ADP of non-highly compensated employees for
the 1997 and 1998 plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected
Highly Compensated Employee (HCE) in accordance with the provisions
currently in effect.
2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
- 89 -
<Page>
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
In accordance with Section 4.7 of the basic plan document of the plan, current
year data was used to determine the ACP of non-highly compensated employees for
the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following
procedures:
1. The dollar amount of excess aggregate contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
2. The excess aggregate contributions are distributed in the following
manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
- 90 -
<Page>
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
- 91 -
<Page>
AMENDMENTS TO THE
ROUTE 16 AUTO SALVAGE 401(K) PROFIT SHARING PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
- 92 -
<Page>
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year to be
treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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<Page>
Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4)
of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 11.110 of the basic plan document of the plan is amended to use the
actual deferral percentage (hereinafter "ADP") for participants who are Highly
Compensated Employees for the current plan year and the ADP for participants who
are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing
the nondiscrimination testing required under this section for the 1997 and 1998
plan years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected
Highly Compensated Employee (HCE) in accordance with the provisions
currently in effect.
- 94 -
<Page>
2. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
Section 11.109 of the basic plan document of the plan is amended to use the
actual contribution percentage (hereinafter "ACP") for participants who are
Highly Compensated Employees for the current plan year and the ACP for
participants who are non-highly compensated employees FOR THE PRECEDING PLAN
YEAR in performing the nondiscrimination testing required under this section for
the 1997 and 1998 plan years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following
procedures:
1. The dollar amount of excess aggregate contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
2. The excess aggregate contributions are distributed in the following
manner:
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<Page>
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess aggregate contributions are
distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
- 96 -
<Page>
AMENDMENTS TO THE
STAR AUTO PARTS, INC. 401(K) PROFIT SHARING PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(C) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(D) for the preceding year:
(iii) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(iv) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
- 97 -
<Page>
For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year
- 98 -
<Page>
to be treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4)
of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 12.5 of the basic plan document of the plan is amended to use the actual
deferral percentage (hereinafter "ADP") for participants who are Highly
Compensated Employees for the current plan year and the ADP for participants who
are non-highly compensated employees for THE PRECEDING PLAN YEAR in performing
the nondiscrimination testing required under this section for the 1997 plan
year. In accordance with Section 12.5 of the basic plan document of the plan,
current year data was used to determine the ADP of non-highly compensated
employees for the 1998 plan year.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
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<Page>
Excess Contributions will be distributed according to the following procedures:
4. The dollar amount of excess contributions is computed for each affected
Highly Compensated Employee (HCE) in accordance with the provisions
currently in effect.
5. The excess contributions are distributed in the following manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
6. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
Section 12.7 of the basic plan document of the plan is amended to use the actual
contribution percentage (hereinafter "ACP") for participants who are Highly
Compensated Employees for the current plan year and the ACP for participants who
are non-highly compensated employees FOR THE PRECEDING PLAN YEAR in performing
the nondiscrimination testing required under this section for the 1997 plan
year. In accordance with Section 12.7 of the basic plan document of the plan,
current year data was used to determine the ACP of non-highly compensated
employees for the 1998 plan year.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following
procedures:
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4. The dollar amount of excess aggregate contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
5. The excess aggregate contributions are distributed in the following
manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
6. Repeat set 2 until total excess aggregate contributions are distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
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AMENDMENTS TO THE
TRIPLETT AUTO RECYCLERS 401(K) RETIREMENT SAVINGS PLAN
IRC SECTION 414(q) - HIGHLY COMPENSATED EMPLOYEES
Effective date: Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997, the
amendments are treated as having been in effect in 1996.
- - The term "highly compensated employee" includes highly compensated active
employees and highly compensated former employees. A highly compensated
active employee means any employee who:
(A) was a 5-percent owner (as defined in section 416(i)(1) of the
Code) of the employer at any time during the current or the
preceding year; or
(B) for the preceding year:
(i) had compensation from the employer in excess of $80,000
(as adjusted by the Secretary pursuant to section 415(d)
of the Code, except that the base period shall be the
calendar quarter ending September 30, 1996); and
(ii) if the employer elects the application of this clause for
such preceding year, was in the top-paid group of
employees for such preceding year.
For this purpose, an employee is in the top-paid group of employees for any
year if such employee is in the group consisting of the top 20 percent of
the employees when ranked on the basis of compensation paid during such
year.
A former employee shall be treated as a highly compensated employee if: (A)
such employee was highly compensated when such employee separated from
service or (B) such employee was a highly compensated employee at any time
after attaining age 55.
- - A determination of who is a highly compensated employee, including the
determinations of the number and identity of employees in the top-paid
group, will be made in accordance with section 414(q) of the Code and the
regulations thereunder.
For purposes of this subsection, the term "compensation" means compensation
within the meaning of section 415(c)(3) of the Code. The determination will
be made without regard to sections 125, 402(e)(3), and 402(h)(1)(B) of the
Code, and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to section 403(b) of the Code.
For plan years beginning after December 31, 1997, for purposes of this
subsection, the term "compensation" means compensation within the meaning
of section 415(c)(3) of the Code.
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FAMILY AGGREGATION RULES
Effective for plan years beginning after December 31, 1996, the family
aggregation rules required by IRS section 414(q)(6) of the Code have been
deleted from the plan. This subsection is subject to the plan amendment rules of
section 1.401(a)(4)-5(a) of the regulations.
SECTION 401(a)(9) REQUIRED DISTRIBUTIONS
NON-5-PERCENT OWNER: No amendment will be made to the plan for section 401(a)(9)
of the Code. The term "required beginning date" will continue to be defined as
April 1 of the calendar year following the calendar year in which the
participation attains age 70-1/2.
5-PERCENT OWNER: The required beginning date for a participant who is a
5-percent owner (as described in section 416(I) of the Code) is April 1 of the
calendar year following the calendar year in which the participation attains age
70-1/2.
SECTION 417(a)(7)(A)
SPECIAL RULE RELATING TO TIME FOR WRITTEN EXPLANATION
Effective Date: January 1, 1997
- - The written explanation described in section 417(a)(7)(A) of the Code may
be provided after the annuity starting date. The 90-day applicable election
period to waive the qualified joint and survivor annuity described in
section 417(a)(7)(A) of the Code, shall not end before the 30th day after
the date on which such explanation is provided.
The Secretary may by regulations limit the period of time by which the
annuity starting date precedes the provision of the written explanation
other than by providing that the annuity starting date may not be earlier
than termination of employment.
- - A participant may elect (with any applicable spousal consent) to waive any
requirement that the written explanation be provided at least 30 days
before the annuity starting date (or to waive the 30-day requirement under
the above paragraph) if the distribution commences more than 7 days after
such explanation is provided.
FAMILY AGGREGATION RULES
Effective as of January 1, 1997, the plan is amended to delete the provision of
family aggregation as described in section 401(a)(17)(A) of the Code which
requires a plan participant, the spouse of such participant and any lineal
descendants who have not attained age 19 before the close of the plan year to be
treated as a single participant for purposes of applying the limitation on
compensation for a plan year.
SECTION 414(n)(2): TREATMENT OF LEASED EMPLOYEES
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Effective as of January 1, 1997, the plan is amended to define the term "Leased
Employee" as any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the recipient
and related persons determined in accordance with sections 414(n)(6) of the
Code) on a substantially full-time basis for a period of at least 1 year, and
such services are performed under primary direction or control by the recipient.
SECTION 414(u): SPECIAL RULES RELATING TO VETERANS REEMPLOYMENT RIGHTS UNDER
USERRA
Effective date: As of December 12, 1994
Notwithstanding any provision of this plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Internal Revenue Code.
Loan repayment will be suspended under this plan as permitted section 414(u)(4)
of the Internal Revenue Code.
SECTION 401(d): AGGREGATION RULES FOR SELF-EMPLOYED PLANS
Effective as of January 1, 1997, any contributions to this plan on behalf of any
owner-employee may be made only with respect to the earned income of the
owner-employee that is derived from the trade or business with respect to which
the plan is established.
APPLICATION OF PARTICIPATION AND DISCRIMINATION STANDARDS
Section 4.5 of the plan is amended to use the actual deferral percentage
(hereinafter "ADP") for participants who are Highly Compensated Employees for
the current plan year and the ADP for participants who are non-highly
compensated employees for THE PRECEDING PLAN YEAR in performing the
nondiscrimination testing required under this section for the 1997 and 1998 plan
years.
The provision of section 401(k)(3)(A) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(k)(8)(c): DISCRIMINATION OF EXCESS CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess contributions
for any plan year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each of such employees.
Excess Contributions will be distributed according to the following procedures:
1. The dollar amount of excess contributions is computed for each affected
Highly Compensated Employee (HCE) in accordance with the provisions
currently in effect.
2. The excess contributions are distributed in the following manner:
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Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess contributions are distributed.
If these distributions are made, the ADP is treated as meeting the
nondiscrimination test of section 401(k)(3) of the Code regardless of whether
the ADP, if recalculated after distributions, would satisfy section 401(k)(3) of
the Code.
The above procedure issued for the purposes of recharacterizing excess
contributions under 401(k)(8)(A)(ii) of the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess contributions has been made, or a recharacterization has occurred, the
ADP for Highly Compensated Employees is deemed to be the largest amount
permitted under section 401(k)(3) of the Code.
SECTION 401(m): NONDISCRIMINATION TEST FOR MATCHING CONTRIBUTIONS AND EMPLOYEE
CONTRIBUTIONS
Section 4.7 of the plan is amended to use the actual contribution percentage
(hereinafter "ACP") for participants who are Highly Compensated Employees for
the current plan year and the ACP for participants who are non-highly
compensated employees FOR THE PRECEDING PLAN YEAR in performing the
nondiscrimination testing required under this section for the 1997 and 1998 plan
years.
The provisions of section 401(m)(6)(C) of the Code as amended by SBJPA are
incorporated herein by reference.
SECTION 401(m)(6)(C): METHOD OF DISTRIBUTING EXCESS AGGREGATE CONTRIBUTIONS
Effective as of January 1, 1997, any distribution of the excess aggregate
contributions for any plan year shall be made to Highly Compensated Employees on
the basis of the amount of contributions by, or on behalf of, each of such
employee. Forfeitures of excess aggregate contributions may not be allocated to
participants whose contributions are reduced under this paragraph.
Excess Aggregate Contributions will be distributed according to the following
procedures:
1. The dollar amount of excess aggregate contributions is computed for each
affected Highly Compensated Employee (HCE) in accordance with the
provisions currently in effect.
2. The excess aggregate contributions are distributed in the following
manner:
Reduce the applicable contributions of the HCE's beginning with the HCE
with the highest dollar amount, to equal the dollar amount of the HCE
with the next highest dollar amount of contributions.
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This amount will be distributed to the HCE with the highest dollar
amount.
3. Repeat set 2 until total excess aggregate contributions are
distributed.
If these distributions are made, the ACP is treated as meeting the
nondiscrimination test of section 401(m)(2) of the Code regardless of whether
the ACP, if recalculated after distributions, would satisfy section 401(m)(2) of
the Code.
For purposes of section 401(m)(9) of the Code, if a corrective distribution of
excess aggregate contributions has been made, the ACP for Highly Compensated
Employees is deemed to be the largest amount permitted under section 401(m)(2)
of the Code.
IRC SECTION 411(a)(11)(A)
Effective as of January 1, 1998, the plan is amended to permit distribution
without consent of any nonforfeitable accrued benefit which does not exceed
$5,000.
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APPENDIX B
PROFIT SHARING CONTRIBUTIONS ALLOCATION FORMULAS
FOR THE PLAN YEAR ENDING DECEMBER 31, 1999
1. BUD'S AUTO PARTS, INC. 401(k) PROFIT SHARING PLAN
Each eligible participant shall receive an allocation equal to his "base
compensation" multiplied by the "base percentage," plus his "excess
compensation," if any, multiplied by the "excess percentage," all as set
forth below. A participant's "base compensation" is the portion of his
compensation for the Plan Year that does not exceed $72,600, and his
"excess compensation" is the remainder of his compensation for the Plan
Year. The "total base compensation" for the Plan Year is the sum of the
base compensation of all participants eligible to receive an allocation for
the Plan Year, and the "total excess compensation" is the sum of the excess
compensation of all such participants. Initially, the "base percentage"
shall tentatively be determined to be the percentage that satisfies the
following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
(2 x Total Excess Compensation))
If the percentage so determined does not exceed 5.7 percent, it shall be
the base percentage and the "excess percentage" shall be equal to two times
the base percentage. If the percentage so determined does exceed 5.7
percent, the base percentage shall be redetermined to be the percentage
that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 5.7% Total Excess
Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 5.7
percent.
2. DAMRON AUTO PARTS, INC. 401(k) PLAN
Each eligible participant shall receive an allocation equal to his "base
compensation" multiplied by the "base percentage," plus his "excess
compensation," if any, multiplied by the "excess percentage," all as set
forth below. A participant's "base compensation" is the portion of his
compensation for the Plan Year that does not exceed $72,600, and his
"excess compensation" is the remainder of his compensation for the Plan
Year. The "total base compensation" for the Plan Year is the sum of the
base compensation of all participants eligible to receive an allocation for
the Plan Year, and the "total excess compensation" is the sum of the excess
compensation of all such participants. Initially, the "base percentage"
shall tentatively be determined to be the percentage that satisfies the
following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
(2 x Total Excess Compensation))
If the percentage so determined does not exceed 5.7 percent, it shall be
the base percentage and the "excess percentage" shall be equal to two times
the base percentage. If the
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percentage so determined does exceed 5.7 percent, the base percentage shall
be redetermined to be the percentage that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 5.7% Total Excess
Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 5.7
percent.
3. MIDWEST FOREIGN AUTO, INC. 401(k) PROFIT SHARING PLAN
Each eligible participant shall receive an allocation equal to his "base
compensation" multiplied by the "base percentage," plus his "excess
compensation," if any, multiplied by the "excess percentage," all as set
forth below. A participant's "base compensation" is the portion of his
compensation for the Plan Year that does not exceed $30,000, and his
"excess compensation" is the remainder of his compensation for the Plan
Year. The "total base compensation" for the Plan Year is the sum of the
base compensation of all participants eligible to receive an allocation for
the Plan Year, and the "total excess compensation" is the sum of the excess
compensation of all such participants. Initially, the "base percentage"
shall tentatively be determined to be the percentage that satisfies the
following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
(2 x Total Excess Compensation))
If the percentage so determined does not exceed 4.3 percent, it shall be
the base percentage and the "excess percentage" shall be equal to two times
the base percentage. If the percentage so determined does exceed 4.3
percent, the base percentage shall be redetermined to be the percentage
that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 4.3% Total Excess
Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 4.3
percent.
4. RECYCLERS GROUP, INC. PROFIT SHARING/401(k) PLAN
Each eligible participant shall receive an allocation equal to his "base
compensation" multiplied by the "base percentage," plus his "excess
compensation," if any, multiplied by the "excess percentage," all as set
forth below. A participant's "base compensation" is the portion of his
compensation for the Plan Year that does not exceed $72,600, and his
"excess compensation" is the remainder of his compensation for the Plan
Year. The "total base compensation" for the Plan Year is the sum of the
base compensation of all participants eligible to receive an allocation for
the Plan Year, and the "total excess compensation" is the sum of the excess
compensation of all such participants. Initially, the "base percentage"
shall tentatively be determined to be the percentage that satisfies the
following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
(2 x Total Excess Compensation))
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If the percentage so determined does not exceed 5.7 percent, it shall be
the base percentage and the "excess percentage" shall be equal to two times
the base percentage. If the percentage so determined does exceed 5.7
percent, the base percentage shall be redetermined to be the percentage
that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 5.7% Total Excess
Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 5.7
percent.
5. ROUTE 16 AUTO SALVAGE 401(k) PROFIT SHARING PLAN
Each eligible participant shall receive an allocation equal to his "base
compensation" multiplied by the "base percentage," plus his "excess
compensation," if any, multiplied by the "excess percentage," all as set
forth below. A participant's "base compensation" is the portion of his
compensation for the Plan Year that does not exceed $72,600, and his
"excess compensation" is the remainder of his compensation for the Plan
Year. The "total base compensation" for the Plan Year is the sum of the
base compensation of all participants eligible to receive an allocation for
the Plan Year, and the "total excess compensation" is the sum of the excess
compensation of all such participants. Initially, the "base percentage"
shall tentatively be determined to be the percentage that satisfies the
following equation:
Base Percentage = Total Allocable Amount/(Total Base Compensation +
(2 x Total Excess Compensation))
If the percentage so determined does not exceed 5.7 percent, it shall be
the base percentage and the "excess percentage" shall be equal to two times
the base percentage. If the percentage so determined does exceed 5.7
percent, the base percentage shall be redetermined to be the percentage
that satisfies the following equation:
Base Percentage = (Total Allocable Amount - 5.7% Total Excess
Compensation)/(Total Base Compensation + Total Excess Compensation)
In such event the Excess Percentage shall be the Base Percentage plus 5.7
percent.
6. SMART PARTS 401K PLAN
Each eligible Participant shall receive an allocation in proportion that
the Compensation paid to each such participant bears to the Compensation
paid to all such Participants during the Plan Year.
7. STAR AUTO PARTS, INC. 401(k) PROFIT SHARING PLAN
Each eligible Participant shall receive an allocation in proportion that
the Compensation paid to each such participant bears to the Compensation
paid to all such Participants during the Plan Year.
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8. TRIPLETT AUTO RECYCLERS 401(k) RETIREMENT SAVING PLAN
Each eligible Participant shall receive an allocation in proportion that
the Compensation paid to each such participant bears to the Compensation
paid to all such Participants during the Plan Year.
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LKQ CORPORATION EMPLOYEES' RETIREMENT PLAN
EXHIBIT A
LIST OF PARTICIPATING EMPLOYERS
1. 250 Auto Wreckers Corp.
2. Black Horse Auto Parts, Inc.
3. Bud's Auto Parts, Inc.
4. Damron Auto Parts, Inc.
5. Damron Auto Parts, L.P.
6. Damron Holding Co.
7. DAP Management Inc.
8. DAP Trucking, Inc.
9. Dismantling & Recycling, Inc.
10. Gorham Auto Parts Corp.
11. Grainger Auto Parts, Inc.
12. Hustisford Auto Co.
13. Lakenor Auto & Truck Salvage, Inc.
14. LKQ All Models Corp.
15. LKQ Auto Parts of Utah, Inc.
16. LKQ Best Automotive Corp.
17. LKQ B&D Auto Recyclers Corp.
18. LKQ Corporation
19. LKQ D&R Auto Parts Corp.
20. LKQ Great Lakes Corp.
21. LKQ Hunts Point Auto Parts Corp.
22. LKQ John's Eastside Corp.
23. LKQ John's Mid-Valley Corp.
24. LKQ John's Westside Corp.
25. LKQ Management Company
26. LKQ Manchester Auto Parts Corp.
27. LKQ Midwest Auto Parts Corp.
28. LKQ Raleigh Auto Parts Corp.
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29. Mabry Auto Salvage Corp.
30. Mid-America Auto Parts, Inc.
31. Redding Auto Center, Inc.
32. Route 16 Auto Salvage, Inc.
33. Royal's Auto Salvage, Inc.
34. Smith's Auto Sales and Salvage Corp.
35. Star Auto Parts, Inc.
36. Triplett Auto Recyclers, Inc.
37. United Auto Dismantling, Inc.
December 1, 1999
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