EXHIBIT 10.195
CHARLES SCHWAB
PROFIT SHARING AND EMPLOYEE STOCK OWNERSHIP PLAN
AS AMENDED THROUGH DECEMBER 1, 1997
CHARLES SCHWAB
PROFIT SHARING AND EMPLOYEE STOCK OWNERSHIP PLAN
AS AMENDED THROUGH DECEMBER 1, 1997
TABLE OF CONTENTS
Section Page
- ------- -----
1 Introduction and Purpose..................................... 1
2 Definitions.................................................. 2
3 Participation................................................ 14
4 Employer Contributions....................................... 16
5 Salary Reduction Agreements and Rollover Contributions....... 23
6 Allocation of Contributions.................................. 29
7 Special ESOP Provisions...................................... 30
8 Investment of Contributions, Valuations and Participants'
Cash Contribution Accounts................................. 37
9 Retirement Dates............................................. 39
10 Eligibility for Payment of Accounts and Vested Interests.... 40
11 Method of Payment of Accounts and Withdrawals................ 44
12 Maximum Amount of Allocation................................. 56
13 Voting Rights................................................ 59
14 Designation of Beneficiaries................................. 63
15 Administration of the Plan................................... 64
16 Expenses..................................................... 69
17 Employer Participation....................................... 70
18 Amendment or Termination of the Plan......................... 73
19 Top-Heavy Plan Requirements.................................. 76
20 General Limitations and Provisions........................... 82
21 Application to Puerto Rico Employees......................... 91
CHARLES SCHWAB
PROFIT SHARING AND EMPLOYEE STOCK OWNERSHIP PLAN
AS AMENDED THROUGH DECEMBER 1, 1997
SECTION 1. INTRODUCTION AND PURPOSE
1.1 The Plan Sponsor has established and maintains the Plan to enable
each Participant to benefit, in accordance with the terms of the Plan, from
contributions made by the Employer and from any increases in the value of the
Plan assets through investment of such assets. The Plan is comprised of
three parts: (i) a Section 401(k) plan, (ii) a profit sharing plan and (iii)
an employee stock ownership plan. The purpose of the employee stock
ownership plan portion of the Plan is to align Employees' interests with the
interests of shareholders. It is anticipated that Employer contributions to
the employee stock ownership plan will be invested primarily or entirely in
Shares of The Charles Schwab Corporation, that the employee stock ownership
plan may acquire such Shares of The Charles Schwab Corporation from time to
time with the proceeds of one or more Exempt Loans, the repayment of which
may be secured in part by a pledge of the Shares of The Charles Schwab
Corporation acquired with those loan proceeds, and that Employer
contributions to the employee stock ownership plan may be used in full or in
substantial part to the payment of interest on, and retirement of principal
of, such Exempt Loans.
This Plan is a restatement of the Charles Schwab Profit Sharing and
Employee Stock Ownership Plan, which was initially effective as of October 1,
1983. The effective date of this restatement is December 13, 1996. The
rights of any person who terminated employment or who retired on or before
the effective date of this restated Plan or any provision hereof, including
his or her eligibility for benefits and the time and form in which benefits,
if any, will be paid, shall be determined solely under the terms of the Plan
provisions as in effect on the date of his or her termination of employment
or retirement, unless such person is thereafter reemployed and
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again becomes a Participant. The rights of any other person shall be
determined solely under the terms of this restated Plan, except as may
otherwise be required by law.
The Plan and Trust are intended to qualify as a plan and trust
which are qualified and exempt from taxation under Sections 401(a) and 501(a)
of the Code. The Plan is intended to qualify in part as a profit sharing
plan (as defined in Section 401(a)(27) of the Code) and in part as a stock
bonus plan and an employee stock ownership plan (as defined by Section
4975(e)(7) of the Code and Section 407(d)(6) of the Act) designed to invest
primarily in shares of stock of the Employer which meet the requirements for
"qualifying employer securities" under Section 4975(e)(8) of the Code and
Section 407(d)(5) of the Act. All provisions of the Plan and Trust shall be
construed accordingly.
All Trust Fund assets acquired under the Plan as a result of debt
incurred to purchase Shares, Employer contributions, income and other
additions to the Trust Fund shall be administered, distributed, forfeited and
otherwise governed by the provisions of the Plan. It is intended that the
Trust associated with the Plan be exempt from federal income taxation
pursuant to the provisions of Section 501(a) of the Code. Subject to the
provisions of Section 16 of the Plan, the assets of the Plan shall be applied
exclusively for the purposes of providing benefits to Participants and
Beneficiaries under the Plan and for defraying expenses incurred in the
administration of the Plan and its corresponding Trust.
SECTION 2. DEFINITIONS
When used herein the following terms shall have the following meanings:
2.1 "Account" means the account or accounts established and maintained
on behalf of a Participant pursuant to (i) Section 6.1 with respect to the
Participant's Cash Contribution Account and (ii) Section 7.1 with respect to
the Participant's ESOP Account.
2.2 "Act" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
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2.3 "Actual Deferral Percentage" means the average of the ratios
(calculated separately for each Employee) for each Plan Year of (a) the
amount of Elective Contributions and Matching Contributions or Qualified
Nonelective Contributions (if the Committee determines to take such Matching
Contributions or such Qualified Nonelective Contributions into account when
calculating Actual Deferral Percentage) on behalf of each Employee for the
relevant Plan Year to (b) the Employee's compensation (as defined in Treasury
Regulation 1.415-2(d)(10) or in such other manner as is prescribed under
Section 414(s) of the Code) while a Participant for the relevant Plan Year.
2.4 "Affiliated Employer" means any corporation which is included in a
controlled group of corporations (within the meaning of Section 414(b) of the
Code) which includes the Plan Sponsor, any trade or business (whether or not
incorporated) which is under common control with the Plan Sponsor (within the
meaning of Section 414(c) of the Code), any organization included in the same
affiliated service group (within the meaning of Section 414(m) of the Code)
as the Plan Sponsor and any other entity required to be aggregated with the
Plan Sponsor pursuant to the Regulations under Section 414(o) of the Code;
except that for purposes of applying the provisions of Sections 12 and 19
with respect to the limitations on contributions, Section 415(h) of the Code
shall apply.
2.5 "Beneficiary" means the beneficiary or beneficiaries designated by
a Participant pursuant to Section 14 to receive the amount, if any, payable
under the Plan upon the death of such Participant.
2.6 "Board of Directors" means the board of directors of Charles Schwab
& Co., Inc.
2.7 "Break in Service" means a Plan Year (or for purposes of
determining membership in the Plan pursuant to Section 3, the Computation
Period) during which an individual has not completed more than 500 Hours of
Service, as determined by the Committee in accordance with the Regulations.
A Break in Service shall be deemed to have commenced on the first day of the
Plan Year in which it occurs. Solely for purposes of determining whether a
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Break in Service has occurred, an individual shall be credited with the Hours
of Service which such individual would have completed but for a maternity or
paternity absence, as determined by the Committee in accordance with this
Section 2.7 and the Code and Regulations; provided, however, that the total
Hours of Service so credited shall not exceed 501 Hours of Service and that
the individual shall timely provide the Committee with such information as it
shall require. Hours of Service credited for a maternity or paternity
absence shall be credited at eight Hours of Service per day and shall be
credited entirely (i) in the Plan Year or Computation Period in which the
absence began if such Hours of Service are necessary to prevent a Break in
Service in such Plan Year, or (ii) in the following Plan Year or Computation
Period. For purposes of this Section 2.7, maternity or paternity absence
shall mean an absence from work by reason of the individual's pregnancy, the
birth of the individual's child or the placement of a child with the
individual in connection with adoption of the child by such individual, or
for purposes of caring for a child for the period immediately following such
birth or adoption.
2.8 "Cash Contribution Account" means the account or accounts
established and maintained on behalf of a Participant pursuant to Section 6.1
with respect to the Participant's Elective Contributions, Matching
Contributions, Profit Sharing Contributions, Qualified Nonelective
Contributions or Rollover Contributions.
2.9 "Code" means the Internal Revenue Code of 1986, as now in effect or
as hereafter amended. All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.
2.10 "Committee" means the Administrative Committee of the Employer
provided for in Section 15. For purposes of the Act, the Employer shall be
the "named fiduciary" (with respect to the matters for which it is hereby
responsible under the Plan) of the Plan, and the Employer shall be the "plan
administrator" of the Plan within the meaning of Section 3(16)(A) of the Act.
2.11 "Compensation" means a Participant's W-2 compensation related to
services rendered to the Employer, excluding (i) living allowances, (ii)
travel or commuting allowances,
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(iii) reimbursements for financial planning, (iv) amounts that are paid as a
result of participation in the Employer's Long-Term Incentive Plan, (v)
employee referral awards, (vi) special incentive awards (other than regular
bonus programs), (vii) reimbursements for relocation expenses, (viii)
commissions (other than "dual commissions", commissions based on trading
results that are paid to traders who are also salaried and commissions where
the Participant's only form of remuneration is commissions), (ix) income
items attributable to the taxable portion of employee benefits and any cash
payments made as a result of an Employee's election not to receive insured
benefits pursuant to the Company's Pre-Tax Contribution Plan, (x) amounts
paid as short term disability benefits, (xi) any income items reflecting
grants in aid, and (xii) compensation in excess of $150,000 (adjusted for
cost of living to the extent permitted by Section 401(a)(17) of the Code and
Regulations). For purposes of determining the whole percentage of
Compensation for which a Participant may make a Salary Reduction Agreement,
and not for any other purposes, subparagraph (ix) hereof shall be
disregarded. Compensation shall be determined prior to reduction for any
contributions pursuant to such Participant's election under Section 5.1, and
any elective contributions made by the Employer on behalf of the Participant
in the Plan Year that are not includable in gross income under Section 125 of
the Code.
2.12 "Computation Period" means a 12 consecutive month period beginning
on the day an individual first performs an Hour of Service or first performs
an Hour of Service following a Break in Service. Thereafter, the Computation
Period shall be the Plan Year, commencing with the Plan Year that includes
the day immediately following the last day of the Computation Period
determined pursuant to the first sentence hereof.
2.13 "Contribution Percentage" means the average of the ratios
(calculated separately for each Participant for each Plan Year) of (a)(i)
Matching Contributions, if any, made by the Employer on behalf of a
Participant and (ii) Elective Contributions, (if the Committee elects to take
into account Elective Contributions when calculating the Contribution
Percentage) to (b) the Employee's compensation (as defined in Section
1.415-2(d)(10) of the Regulations or in such
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other manner as is prescribed under Section 414(s) of the Code) while a
Participant for the relevant Plan Year.
2.14 "Deferred Retirement Date" shall have the meaning set forth in
Section 9.2.
2.15 "Disability" means the inability to engage in any substantial
gainful activity considering the Participant's age, education and work
experience by reason of any medically determined physical or mental
impairment that has continued without interruption for a period of at least
six months and that can be expected to be of long, continued and indefinite
duration. The determination of the Committee as to whether a Participant has
a Disability shall be final, binding and conclusive.
2.16 "Effective Date" means October 1, 1983.
2.17 "Elective Contributions" means contributions made to the Trust Fund
pursuant to a Participant's Salary Reduction Agreement entered into pursuant
to Section 5.1, and which are considered tax deferred under Section 401(k) of
the Code.
2.18 "Elective Contribution Subaccount" means the account established
and maintained on behalf of a Participant pursuant to Section 6.2(a) with
respect to his or her Elective Contributions and Qualified Nonelective
Contributions.
2.19 "Employee" means any "regular employee" of the Employer who is paid
through United States payroll and for whom the Employer is required to
withhold United States Federal employment taxes excluding (i) any person
covered by any other pension, profit sharing or retirement plan to which any
Employer or Affiliated Employer is required to contribute either directly or
indirectly, (ii) any nonresident alien individual who received no earned
income (within the meaning of Section 911(d)(2)) from the Employer which
constitutes income from sources within the United States, (iii) any employee
who is included in a unit of employees covered by a negotiated collective
bargaining agreement which does not provide for his or her membership in the
Plan, (iv) any individual who provides services to the Employer pursuant to
an independent contractor agreement, irrespective of whether such individual
is subsequently retroactively reclassified as a common law employee for
periods during which the Employer
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originally classified such individual as an independent contractor, and (v)
any individual who provides services to the Employer pursuant to an agreement
between the Employer and a temporary agency or other leasing organization. A
director of the Employer is not eligible for membership in the Plan unless
such director is also an Employee. A leased employee (within the meaning of
Section 414(n) of the Code) is not eligible for membership in the Plan unless
the Employer designates such individual as eligible for membership in the
Plan.
2.20 "Employer" means Charles Schwab & Co., Inc. and any Participating
Employer which adopts this Plan subject to the approval of the Board of
Directors.
2.21 "ESOP Account" means the account established and maintained on
behalf of a Participant pursuant to Section 7.1 with respect to his or her
ESOP Contributions.
2.22 "ESOP Contributions" means the Employer contributions, if any, made
to the Plan on behalf of a Participant pursuant to Section 4.2(c).
2.23 "ESOP/Profit Sharing Entry Date" means the first day of each
calendar month.
2.24 "Exempt Loan" means any loan to the Plan or Trust not prohibited by
Section 4975(c) of the Code and Section 406 of the Act because the loan meets
the requirements set forth in Section 4975(d)(3) of the Code, Section
408(b)(3) of the Act and the Regulations promulgated thereunder, the proceeds
of which loan are used within a reasonable time after receipt by the Trust
Fund only for any or all of the following purposes: (a) to acquire Shares;
(b) to repay the same Exempt Loan; or (c) to repay any previous Exempt Loan.
2.25 "Highly Compensated Participant" means any Participant who, during
the relevant period, is treated as a highly compensated employee under
Section 414(q) of the Code. For purposes of determining which Employee is a
Highly Compensated Participant, the look-back determination shall be made on
the basis of the calendar year. The Plan shall comply with the procedures of
Treasury Regulation 1.401(k)-1(f) to the extent applicable. For purposes of
determining which Employee is a Highly Compensated Participant:
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(A) Highly Compensated Participant means a Participant who
performs Services during the determination year and is described in one or
more of the following groups:
(1) An Employee who is a five percent (5%) owner, as
defined in Section 416(i)(1) of the Code, at any time during the
determination year or the look-back year.
(2) An Employee who: (a) had compensation from the
Employer in excess of $80,000 (indexed as referenced in Section 414(q)(1) of
the Code) during the look-back year and (b) if the Employer elects the
application of this Subsection 2.25(A)(2) for such look-back year, such
Employee was in the "top-paid group" for the look-back year.
(B) For purposes of this Section:
(1) The determination year is the Plan Year for which
the determination of who is a Highly Compensated Participant is being made.
(2) The look-back year is the calendar year ending with
or within the determination year.
(3) The "top-paid group" consists of the top twenty
percent (20%) of Employees ranked on the basis of compensation received
during the look-back year. For purposes of determining the number of
Employees in the top-paid group, Employees described in Section 414(q)(5) of
the Code and the Regulations promulgated thereunder are excluded.
(4) For purposes of this Section 2.25, the term
"compensation" means compensation as defined in Section 414(q)(4) of the Code.
(5) Employers aggregated under Section 414(b), (c), (m),
or (o) of the Code are treated as a single employer.
(6) Highly Compensated Participants include a former
Employee who had a separation year prior to the determination year and who
was a Highly Compensated Participant for either (A) the determination year in
which the Employee separated from Service or (B) any determination year
ending on or after the Employee's 55th birthday. With respect to an Employee
who separated from Service before January 1, 1987, an Employee
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will be included as a Highly Compensated Participant only if the Employee was
a five percent (5%) owner or received Compensation in excess of $50,000
during (1) the determination year in which the Employee separated from
Service (or the year preceding such separation year) or (2) any year ending
on or after such Employee's 55th birthday (or the last year ending before
such Employee's 55th birthday).
2.26 "Hours of Service" means hours during the applicable Computation
Period in which an individual performs Service or is treated as performing
Service and, except in the case of military service or as otherwise
determined by the Committee, for which the Participant is directly or
indirectly entitled to payment. For all purposes under the Plan, (i) an
individual scheduled to work more than twenty hours per week shall be
credited (under rules determined by the Committee, uniformly applicable to
all individuals similarly situated and in accordance with the Regulations)
with 190 Hours of Service for each calendar month in which the individual
would otherwise be credited with one or more Hours of Service and (ii) an
individual who is scheduled to work less than twenty hours per week shall be
credited with Hours of Service for the applicable period in which such Hours
of Service accrue in accordance with Labor Department Regulation 29 CFR
Section 2530.200b-2(c), which regulation is incorporated herein by reference.
Hours of Service for reasons other than the performance of duties shall be
credited in accordance with Labor Department Regulation 29 CFR Section
2530.200b-2(b), which regulation is incorporated herein by reference.
The term "Service" includes performance of duties (or periods which
are treated as the performance of duties) for the Employer or for any
Affiliated Employer (under rules determined by the Committee, uniformly
applicable to all individuals similarly situated and in accordance with the
Regulations) for which an individual is entitled to receive credit for
"Service", including (i) vacation, (ii) holiday, (iii) absence authorized by
the Employer for sickness or incapacity (including disability or leave of
absence), (iv) layoff, (v) jury duty, (vi) if and to the extent required by
the Military Selective Service Act, as amended or any other federal law,
service in the Armed Forces of the United States and (vii) an approved leave
of absence
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granted by the Employer to an individual on or after August 5, 1993 pursuant
to the Family Medical Leave Act, but only if such individual returns to work
for the Employer at the end of such approved leave. Service also includes
periods of time for which back pay, irrespective of mitigation of damages, is
awarded or agreed to by the Employer or any Affiliated Employer; provided
that such award or agreement is not already credited as Service under either
of the preceding two sentences. Service may also include any period of a
Participant's prior employment by an organization upon such terms and
conditions as the Committee may approve and subject to any required IRS
approval. Notwithstanding the foregoing, (i) Hours of Service credited with
respect to an individual's service with BankAmerica Corporation or a related
corporation between January 11, 1983 and March 31, 1987 shall be considered
Service only if such individual was employed by the Employer prior to
November 24, 1993, (ii) Hours of Service credited with respect to an
individual's service with BankAmerica Corporation or a related corporation
prior to January 11, 1983 shall be considered Service, but only if such
individual was employed by the Employer prior to April 1, 1987, (iii) Hours
of Service credited with respect to service with Mayer & Schweitzer, Inc.
prior to July 1, 1991 shall be considered Service, and (iv) Service shall
include service with The Rose Company prior to April 1, 1989, service with
Performance Technologies, Inc. prior to August 31, 1994, service with
TrustMark, Inc. prior to July 31, 1995, and service with Hampton Pension
Services, Inc. prior to November 6, 1995.
2.27 "IRS" means the United States Internal Revenue Service.
2.28 "Labor Department" means the United States Department of Labor.
2.29 "Matching Contribution" means any Employer contribution, if any,
made to the Plan on behalf of a Participant pursuant to Section 4.2(a).
2.30 "Matching Contribution Subaccount" means the account established
and maintained on behalf of a Participant pursuant to Section 6.2(b) with
respect to the Participant's Matching Contributions.
2.31 "Normal Retirement Date" shall have the meaning set forth in
Section 9.1.
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2.32 "Participant" means any Employee who has satisfied the eligibility
requirements of Section 3 below.
2.33 "Participating Employer" means Charles Schwab & Co., Inc. or any
other Affiliated Employer, the board of directors or equivalent governing
body of which shall adopt the Plan and Trust Agreement by appropriate action
with the written consent of the Board of Directors. By its adoption of this
Plan, a Participating Employer shall be deemed to appoint Charles Schwab, &
Co., Inc., the Committee and the Trustee its exclusive agent to exercise on
its behalf all of the power and authority conferred by this Plan upon the
Employer. The authority of Charles Schwab & Co., Inc., the Committee and the
Trustee to act as such agent shall continue until the Plan is terminated as
to the Participating Employer and the relevant Trust Fund assets have been
distributed by the Trustee as provided in Section 17 of this Plan.
2.34 "Plan" means this Charles Schwab Profit Sharing and Employee Stock
Ownership Plan as the same is stated herein and as it may be amended from
time to time.
2.35 "Plan Sponsor" means The Charles Schwab Corporation.
2.36 "Plan Year" means the calendar year.
2.37 "Profit Sharing Contribution" means the Employer contribution, if
any, made to the Plan on behalf of a Participant pursuant to Section
4.2(b)(ii).
2.38 "Profit Sharing Subaccount" means the account established and
maintained on behalf of a Participant pursuant to Section 6.2(c) with respect
to the Participant's Profit Sharing Contributions.
2.39 "Purchasing Agent" means the agent designated by the Trustee to
enter into certain transactions with respect to Shares hereunder.
2.40 "Qualified Nonelective Contribution" means the Employer
contribution, if any, made to the Plan on behalf of a Participant pursuant to
Section 4.2(b)(i).
2.41 "Regulations" means the applicable regulations issued under the
Code or the Act by the IRS, the Labor Department or any other governmental
authority and any temporary rules or releases promulgated by such authorities
pending the issuance of such regulations.
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2.42 "Restated Effective Date" shall mean January 1, 1994.
2.43 "Retirement Date" means the Participant's Normal or Deferred
Retirement Date which has become effective pursuant to Section 9 below.
2.44 "Rollover Subaccount" means the account established and maintained
on behalf of a Participant pursuant to Section 6.2(d) with respect to the
Participant's Rollover Contributions.
2.45 "Rollover Contribution" means any contribution made by an Employee
pursuant to Section 5.6.
2.46 "Salary Reduction Agreement" means an agreement between a
Participant and the Employer entered into pursuant to Section 5.1.
2.47 "Section 401(k) Entry Date" means April 1 and October 1 of each
calendar year.
2.48 "Shares" means (i) with respect to Plan assets acquired with the
proceeds of an Exempt Loan, the common stock issued by The Charles Schwab
Corporation or any successor corporation thereto meeting the requirements of
both Section 4975(e)(8) of the Code and Section 407(d)(5) of the Act for
"qualifying employer securities," and (ii) with respect to Plan assets other
than those acquired with the proceeds of an Exempt Loan, stock issued by The
Charles Schwab Corporation or any successor corporation thereto, of any type,
kind or class meeting the requirements of Section 407(d)(5) of the Act for
"qualifying employer securities". All valuations of Shares, where such
Shares are not readily tradable on an established securities market and where
such valuations relate to activities carried on by the Plan, shall be made by
one or more independent appraisers retained by the Committee, who meet the
requirements, if any, of the Code and Regulations. To the extent and in the
manner required by the Code and Regulations, all independent appraisers, if
any, making appraisals pursuant to the foregoing sentence shall be registered
with the IRS.
2.49 "Surviving Spouse" means the survivor of a Participant to whom such
Participant was legally married on the date of the Participant's death.
2.50 "Suspense Subfund" means the subfund established under Section 7.3.
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2.51 "Taxable Compensation" means the W-2 compensation paid to an
individual for Service during any period under consideration.
2.52 "Taxable Year" means the calendar year.
2.53 "Total Break in Service" means a period of five or more consecutive
Computation Periods in which a Participant incurs a Break in Service, with
respect to a Participant who did not have a nonforfeitable right to any
portion of his or her Profit Sharing Subaccount or ESOP Account prior to the
beginning of the first such Computation Period.
2.54 "Trustee" means the Trustee selected by the Employer to hold the
funds contributed by the Employer to provide benefits under the Plan or any
successor or substitute.
2.55 "Trust Agreement" means the Charles Schwab Profit Sharing and
Employee Stock Ownership Plan Trust Agreement, as it may from time to time be
amended, and such additional and successor trust agreements as may be
executed.
2.56 "Trust Fund" means the funds held by the Trustee from which
payments to the Trustee are made to provide benefits under the Plan.
2.57 "Valuation Date" means the last day of each Plan Year or such
interim periods as the Committee may designate from time to time.
2.58 "Vested Interest" means the portion of a Participant's Account
which has become nonforfeitable pursuant to Section 10.3 below.
2.59 "Year of Eligibility Service" means a Computation Period during
which an Employee completes at least 1,000 Hours of Service.
2.60 "Year of Service" means a Computation Period during which an
individual completed at least 1,000 Hours of Service or satisfied any
alternative requirement, as determined by the Committee from time to time in
accordance with the Regulations.
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SECTION 3. PARTICIPATION
3.1 COMMENCEMENT OF PARTICIPATION.
(a) An Employee who is a Participant as of the date immediately
preceding the Restated Effective Date shall continue to be a Participant of
the Plan as of the Restated Effective Date.
(b) An Employee who is not a Participant on the Restated Effective
Date and who (A) is in Service on the Restated Effective Date or (B)
commences Service on or after the Restated Effective Date shall be eligible
to become a Participant of the Plan for purposes of:
(i) Elective Contributions, Matching Contributions and
Qualified Nonelective Contributions on the first Section 401(k) Entry Date
coincident with or next following his or her commencement of Service; and
(ii) Profit Sharing Contributions and ESOP Contributions on
the first ESOP/Profit Sharing Entry Date coincident with or next following
the date on which he or she completes a Year of Eligibility Service.
(c) An Employee who is eligible to become a Participant, but
declines to participate in the Plan, may become a Participant as of any
subsequent Section 401(k) Entry Date or ESOP/Profit Sharing Entry Date.
(d) An Employee who satisfies the requirements of Section
3.1(b)(ii) for participation but who terminates Service prior to becoming a
Participant in the Plan and subsequently becomes an Employee again prior to
incurring a Break in Service will become a Participant in the Plan for all
purposes as of the first day on which such individual again becomes an
Employee.
3.2 CESSATION OF PARTICIPATION. A Participant shall cease to be a
Participant upon the earliest to occur of (i) the Participant's retirement on
his or her Retirement Date, (ii) the Participant's death or Disability or
(iii) the Participant's termination of Service prior to his or her Retirement
Date followed by a Break in Service. A Participant who, without any Break in
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Service, ceases to be an Employee for any reason, shall not cease to be a
Participant, provided that, notwithstanding any other provision of the Plan,
and except as provided in Section 4.3, no contribution shall be made for the
benefit of such Participant, no contributions under the Plan shall be
allocated, added or otherwise credited to the Account of such Participant,
and no contributions, forfeitures or Shares released from a Suspense Subfund
shall be allocated, added or otherwise credited to the Account of such
Participant on or after the date on which such Participant ceases to be an
Employee and before the first day of the Plan Year coincident with or
preceding the date, if any, on which such Participant again resumes Service
as an Employee.
3.3 READMISSION AFTER CESSATION OF PARTICIPATION. A Participant who
has incurred a Total Break in Service and subsequently returns to Service
shall be treated as a new Employee for all purposes of the Plan. In all
other cases, a former Participant who returns to Service following a Break in
Service shall again become a Participant as of the first date of such former
Participant's return to Service, except that (i) such Participant shall not
be eligible to commence Elective Contributions until the first Section 401(k)
Entry Date or ESOP/Profit Sharing Entry Date coincident with or next
following the date the Participant returns to Service, and (ii) if such
former Participant is not then an Employee, such former Participant shall
again become a Participant as of the first day on which such former
Participant again becomes an Employee.
3.4 WAIVER OF PARTICIPATION. An individual who has satisfied the
requirements for participation set forth in Section 3.1 may permanently waive
participation in the Plan, but only if such individual is on temporary
transfer of employment to a Participating Employer from an Affiliated
Employer that is not a Participating Employer.
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SECTION 4. EMPLOYER CONTRIBUTIONS
4.1 ELECTIVE CONTRIBUTIONS. The Employer shall, subject to the
limitations of Sections 5 and 12, contribute to the Trust Fund for each Plan
Year on behalf of all Participants the total amount of Elective Contributions
designated to be contributed pursuant to Salary Reduction Agreements under
Section 5.1. Such contributions shall be paid in cash by the Employer to the
Trustee as soon as practicable, but in no event later than 90 days from the
date on which such amounts otherwise would have been payable to the
Participant in cash.
4.2 EMPLOYER CONTRIBUTIONS.
(a) Subject to the limitations of Section 12, the Employer shall
contribute Matching Contributions to the Trust Fund on behalf of all
Participants for whom Elective Contributions have been made equal to a
percentage of such Elective Contributions made for each such Participant.
The percentage (and, if desired, a maximum dollar amount) of Matching
Contributions shall be determined from time to time by the Board of Directors
and communicated to the Participants.
(b) Subject to the limitations of Section 12, for any Plan Year,
the Board of Directors may designate (i) a percentage of the aggregate
Compensation of all Participants or a fixed dollar amount to be contributed
to the Plan as Qualified Nonelective Contributions on behalf of certain
Participants who are not Highly Compensated Participants and may designate
(ii) a percentage of the aggregate Compensation of all Participants or a
fixed dollar amount to be contributed to the Plan as Profit Sharing
Contributions on behalf of all Employees who are or would be Participants but
for their election not to make Elective Contributions. Provided, however,
that effective as of January 1, 1995, no further Profit Sharing Contributions
shall be made to the Plan.
(c) Subject to the limitations of Section 12, and the provisions
of any applicable loan or contribution agreement, the Employer shall
contribute to the Trust Fund for each Plan Year as ESOP Contributions such
sum as the Board of Directors may, in its sole
16
discretion, determine, which sum may be zero. All or any part of the
contributions made under this Section 4.2(c) may be applied to repay any
outstanding Exempt Loan. The Committee may, subject to any pledge or similar
agreement, direct or determine the proportions of such contributions which
are applied to repay each such Exempt Loan and, with respect to any
particular Exempt Loan, the proportion of such contribution to be applied to
repay principal and interest on such Exempt Loan.
4.3 ALLOCATION OF MATCHING CONTRIBUTIONS, PROFIT SHARING CONTRIBUTIONS
AND ESOP CONTRIBUTIONS. Matching Contributions shall only be allocated to
those Participants employed on the last day of the Plan Year. Profit Sharing
Contributions and ESOP Contributions shall only be allocated to Participants
who are members of the Allocation Group for the Plan Year. For purposes of
Sections 4 and 7, the term "Allocation Group" means the group consisting of
(i) each Participant who completed at least One Thousand (1,000) Hours of
Service during the Plan Year and is employed by the Employer as of the last
day of the Plan Year, and (ii) each Participant whose employment with the
Employer terminated during the Plan Year by reason of Disability, death or
retirement on or after the Participant's Retirement Date. Profit Sharing
Contributions and ESOP Contributions shall be allocated among the Accounts of
Participants who are members of the Allocation Group for the Plan Year in the
same proportion that a Participant's Compensation during the Plan Year bears
to the total Compensation during the Plan Year of all Participants who are
members of the Allocation Group for such Plan Year. For purposes of the
preceding sentence, Compensation earned by a Participant prior to the
Participant's entry into the Plan pursuant to Section 3.1(b)(ii) shall not be
taken into account.
4.4 TIMING OF EMPLOYER CONTRIBUTIONS.
(a) Any Profit Sharing Contributions, Qualified Nonelective
Contributions and ESOP Contributions shall be deemed made on account of a
Taxable Year if (i) the Board of Directors determines the amount of such
contribution by appropriate action and announces the amount in writing to its
Employees within 30 days after the end of such Taxable Year, (ii) the
Employer designates such amount in writing as payment on account of such
Taxable Year or
17
(iii) the Employer claims such amount as a deduction on its federal tax
return for such Taxable Year.
(b) Profit Sharing Contributions, Matching Contributions, and,
subject to the provisions of any Exempt Loan, ESOP Contributions for any
particular Taxable Year may be paid to the Trustee in installments, but in
any event such contributions shall be paid no later than the due date for the
Employer's federal income tax return for such Taxable Year. The Employer
may, during any Taxable Year, make advance payments toward its contributions
for such Taxable Year. Any income, earnings or appreciation earned by any
amount contributed by the Employer prior to the end of the Plan Year shall be
treated as part of the Profit Sharing Contributions, Matching Contributions,
or ESOP Contributions, as the case may be, for such Plan Year. On or about
the date of such payment the Committee shall be advised of the amount of such
payment upon which its allocation pursuant to Section 4.3 is to be calculated.
4.5 FORFEITURES. Forfeitures of Profit Sharing Contributions arising
during the Plan Year pursuant to Section 10 shall be used to reduce the
amount of Matching Contributions made for such Plan Year pursuant to Section
4.2(a). Forfeitures of Shares attributable to ESOP Contributions (or ESOP
Contributions) arising during the Plan Year pursuant to Section 10 shall be
reallocated as ESOP Contributions on the last day of the Plan Year in which
such forfeiture occurs to all Participants entitled to receive Shares
attributable to ESOP Contributions (or ESOP Contributions), in the same
proportion as contributions are allocated pursuant to Sections 4.3 and 7.2.
Provided, in either case, that forfeitures shall first be used to fund
adjustments to Participants' Accounts required to correct operational errors,
to the extent directed by the Committee, or to fund any amounts to be
recredited to a Participant's Account pursuant to Section 10.5.
4.6 CONTRIBUTION PERCENTAGE TEST.
(a) Participant's Contribution Percentages must satisfy at least
one of the following tests:
18
(1) The Contribution Percentage for the Highly
Compensated Participants shall not exceed the Contribution Percentage of all
other Participants for the preceding Plan Year multiplied by 1.25; or
(2) (A) The excess of the Contribution Percentage for
the Highly Compensated Participants over the Contribution Percentage of all
other Participants for the preceding Plan Year shall not be more than two
percentage points and (B) the Contribution Percentage for Highly Compensated
Participants shall not be more than the Contribution Percentage for all other
Participants for the preceding Plan Year multiplied by 2.
(b) The Employer may elect to apply the foregoing tests by
using current Plan Year data rather than utilize data from the preceding Plan
Year. If such an election is made, it may not be changed except as provided
by Secretary of the Treasury. Notwithstanding the foregoing, for the 1997
Plan Year, the Employer may rely on the transitional relief set forth in
Internal Revenue Service Notice 97-2 to use current Plan Year data to apply
the foregoing tests.
(c) All Matching Contributions and Elective Contributions
that are made under two or more plans that are aggregated for purposes of
Sections 401(a)(4) and 410(b) of the Code are to be treated as made under a
single plan; and if two or more plans are permissively aggregated such plans
shall satisfy Sections 401(a)(4) and 410(b) as though they were a single plan
in accordance with Section 410(m) of the Code and Section 1.401(m)-1 of the
Regulations.
(d) For purposes of this Section 4.6, Matching Contributions
are taken into account for a Plan Year only if (i) made on account of the
Participant's Elective Contributions for the Plan Year, (ii) allocated to the
Participant's Account during the Plan Year and (iii) paid to the Trust Fund
prior to the end of the twelfth month following the close of the Plan Year.
(e) In applying the tests set forth in this Section 4.6, the
following rules shall apply:
19
(1) In the case of an Employee who receives no Matching
Contributions, the Matching Contributions that are to be included in
determining the Participant's Contribution Percentage are zero;
(2) The availability of Matching Contributions shall not
discriminate in favor of Highly Compensated Participants.
(3) The distribution of excess aggregate contributions
will include the income allocable thereto and shall be made on the basis of
the amount of Matching Contributions (and Elective Contributions, if the
Regulations permit and the Committee elects to take into account Elective
Contributions when calculating the Contribution Percentage) made on behalf of
each such Highly Compensated Participant. The income allocable to the excess
aggregate contributions includes income for the Plan Year for which the
excess aggregate contributions were made in accordance with Section
1.401(m)-1(e)(3)(ii) of the Regulations.
(4) A Participant shall include any Employee who is
directly or indirectly eligible to receive an allocation of Matching
Contributions and includes (i) an Employee who would be a Participant but for
the failure to make required contributions and (ii) a Participant whose right
to receive Matching Contributions has been suspended because of an election
(other than certain one-time elections) not to participate.
(f) For Plan Years commencing after December 31, 1998 for
which the Employer uses Section 410(b)(4)(B) of the Code to test minimum
coverage compliance, the Employer may exclude from consideration all
Participants (other than Highly Compensated Participants) who have not met
the minimum age and service requirements of Section 410(a)(1)(A) of the Code
in determining whether the tests set forth in Subsection 4.6(a) are met.
4.7 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(a) The Committee shall determine as of the end of the Plan Year,
and at such other time or times in its discretion, whether one of the
Contribution Percentages of Section 4.6 is satisfied for such Plan Year. If
neither of the tests set forth in Section 4.6 is satisfied, the Committee
shall distribute the excess aggregate contributions in the manner described
in this
20
Section 4.7. For purposes of this Section 4.7, "excess aggregate
contributions" means, with respect to any Plan Year and with respect to any
Participant, the excess of the aggregate amount of (i) Matching Contributions
(and any earnings and losses allocable thereto prior to distribution) and
(ii) the Elective Contributions (if the Regulations permit and the Committee
elects to take into account Elective Contributions when calculating the
Participant's Contribution Percentage) of Highly Compensated Participants for
such Plan Year, over the maximum amount of such contributions that could be
made on behalf of Participants without violating the requirements of Section
4.6. The amount of each Highly Compensated Participant's excess aggregate
contributions shall be determined by reducing the Matching Contributions of
all Highly Compensated Participants whose Contribution Percentage as adjusted
by this Section 4.7 are at the highest percentage rate for the Plan Year on a
pro rata basis by one hundredth of one percent (0.01%). The Committee shall
continue to utilize this procedure until one of the tests of Section 4.6 is
satisfied.
(b) If the Committee is required to distribute excess aggregate
contributions for any Highly Compensated Participant for a Plan Year in order
to satisfy the requirements of Section 4.6, then the Committee shall
distribute such excess aggregate contributions with respect to such Highly
Compensated Participants to the extent practicable before April 15th of the
Plan Year next following the Plan Year for which such excess aggregate
contributions were made, but in no event later than the end of the Plan Year
following such Plan Year. For each of such Participants, the amounts so
distributed shall be made in the following order of priority:
(i) by distributing Matching Contributions and earnings
thereon, to the extent necessary; and
(ii) by distributing Elective Contributions (to the extent
such amounts are included in the Contribution Percentage), and earnings
thereon.
All such distributions shall be made to Highly Compensated
Participants on the basis of the respective portions of such amounts
attributable to each such Highly Compensated
21
Participant. No spousal consent shall be required of any married Participant
who receives a refund of excess aggregate contributions.
4.8 AGGREGATE LIMIT FOR CONTRIBUTION PERCENTAGE AND ACTUAL DEFERRAL
PERCENTAGE.
(a) The sum of the Contribution Percentage and the Actual Deferral
Percentage for Highly Compensated Participants for the Plan Year shall not
exceed the "aggregate limit" defined in this Section 4.8.
(b) The term "aggregate limit" means the greater of (1) or (2)
below:
(1) The sum of (a) the greater of the Actual Deferral
Percentage for all Participants other than the Highly Compensated
Participants or the Contribution Percentage for all Participants other than
the Highly Compensated Participants, for the Plan Year multiplied by 1.25 and
(b) the lesser of such Actual Deferral Percentage or Contribution Percentage
plus 2, but not greater than 2 multiplied by the lesser of such Actual
Deferral Percentage or Contribution Percentage.
(2) The sum of (a) the lesser of the Actual Deferral
Percentage for all Participants other than the Highly Compensated
Participants or the Contribution Percentage for all Participants other than
the Highly Compensated Participants, for the Plan Year multiplied by 1.25 and
(b) the greater of such Actual Deferral Percentage or Contribution percentage
plus 2, but not greater than 2 multiplied by the greater of such Actual
Deferral Percentage or Contribution Percentage.
(c) If the aggregate limit is exceeded, the Committee shall
determine whether to: (i) make Qualified Nonelective Contributions to permit
the satisfaction of the test set forth in subsection (a) hereof; (ii) reduce
the Contribution Percentage of the Highly Compensated Participants as set
forth in Section 4.7; or (iii) reduce the Actual Deferral Percentage of the
Highly Compensated Participants as set forth in Section 5.5.
22
SECTION 5. SALARY REDUCTION AGREEMENTS
AND ROLLOVER CONTRIBUTIONS
5.1 SALARY REDUCTION AGREEMENTS.
(a) A Participant may elect to make Elective Contributions in any
Plan Year by entering into a written Salary Reduction Agreement with the
Employer. Each Salary Reduction Agreement shall provide that a portion of
the Participant's Compensation shall be paid through payroll deduction to the
Trust Fund as an Elective Contribution pursuant to Section 4.1 rather than
paid currently to the Participant. The Salary Reduction Agreement shall
provide for Elective Contributions equal to any whole percentage between one
percent (1%) and fifteen percent (15%) of a Participant's Compensation in any
payroll period, not to exceed the limitation set forth in Section 402(g) of
the Code (adjusted automatically for increases in accordance with the
Regulations). Notwithstanding the foregoing provisions of this Section 5.1,
the Committee may, but need not, adopt a procedure to enable Participants to
make lump sum Elective Contributions under the Plan through payroll
deductions. No Salary Reduction Agreement shall be effective unless the
Participant has filed a written investment direction pursuant to Section 8.3.
(b) A Salary Reduction Agreement will be taken into account for
any Plan Year only if it relates to Compensation that would have been
received by the Participant in the Plan Year (but for the deferral election).
(c) In the event that the aggregate amount of Elective
Contributions by a Participant exceeds the limitation described in subsection
(a) of this Section 5.1, the amount of such excess, increased by any income
and decreased by any losses attributable thereto, shall be refunded to the
Participant no later than the April 15th of the calendar year following the
calendar year for which the Elective Contributions were made. If a
Participant also participates, in any calendar year, in any other plans
subject to the limitations set forth in Section 402(g) of the Code and has
made excess deferrals under this Plan when combined with the other plans
23
subject to such limits, to the extent the Participant designates, in writing
submitted to the Committee no later than the March 1 of the calendar year
next following the calendar year for which the Elective Contributions were
made, any Elective Contributions under this Plan as excess deferrals, the
amount of such designated excess, increased by any income and decreased by
any losses attributable thereto, shall be refunded to the Participant no
later than the April 15 of the calendar year next following the calendar year
for which the Elective Contributions were made.
5.2 CHANGE OR SUSPENSION OF SALARY REDUCTION AGREEMENTS. Subject to
Section 5.1, a Participant may enter into or change his or her Salary
Reduction Agreement on each Section 401(k) Entry Date, effective as of the
first day of the Section 401(k) Entry Date, in accordance with rules
determined by the Committee. In addition, a Participant may also suspend his
or her Salary Reduction Agreement at any time, in accordance with rules
determined by the Committee. A Participant who suspends his or her Salary
Reduction Agreement in accordance with this Section 5.2 may enter into a new
Salary Reduction Agreement effective as of the next succeeding Section 401(k)
Plan Entry Date.
A Participant's most recent Salary Reduction Agreement shall
continue unchanged from year to year unless the Participant notifies the
Committee in writing of a change in such Salary Reduction Agreement in
accordance with the rules determined by the Committee.
5.3 Actual Deferral Percentage Test.
(a) Participants' Elective Contributions must satisfy at least one of
the following tests:
(1) The Actual Deferral Percentage for the Highly Compensated
Participants shall not exceed the Actual Deferral Percentage of all other
Participants for the preceding Plan Year multiplied by 1.25; or
(2) (A) The excess of the Actual Deferral Percentage for the
Highly Compensated Participants over the Actual Deferral Percentage of all other
Participants for the preceding Plan Year shall not be more than two percentage
points, and (B) the Actual Deferral
24
Percentage for the Highly Compensated Participants shall not be more than the
Actual Deferral Percentage for all other Participants for the preceding Plan
Year multiplied by 2.
(b) The Employer may elect to apply the foregoing tests by using
current Plan Year data rather than utilize data from the preceding Plan Year.
If such an election is made, it may not be changed except as provided by
Secretary of the Treasury. Notwithstanding the foregoing, for the 1997 Plan
Year, the Employer may rely on the transitional relief set forth in Internal
Revenue Service Notice 97-2 to use current Plan Year data to apply the
foregoing tests.
(c) All Elective Contributions that are made under two or more
plans that are aggregated for purposes of Sections 401(a)(4) and 410(b) of
the Code are to be treated as made under a single plan; and if two or more
plans are permissively aggregated, such plans shall satisfy Sections
401(a)(4) and 410(b) as though they were a single plan in accordance with
Section 410(k) of the Code and Section 1.401(k)-1 of the Regulations. For
purposes of calculating the Actual Deferral Percentage of any Highly
Compensated Participant all cash or deferred arrangements of the Employer or
any Affiliated Employer in which such Highly Compensated Participant
participates shall be treated as one cash or deferred arrangement.
(d) In applying the tests set forth in this Section 5.3, the
following rules shall apply:
(1) In the case of a Participant who makes no Elective
Contributions, the Elective Contributions that are to be included in
determining the Participant's Actual Deferral Percentage are zero;
(2) The distribution of excess contributions will include the
income allocable thereto and shall be made on the basis of the amount of
Elective Contributions on behalf of each such Highly Compensated Participant.
The income allocable to the excess contributions includes income for the Plan
Year for which the excess contributions were made in accordance with Section
1.401(k)-1(f)(4)(ii) of the Regulations.
(e) For Plan Years commencing after December 31, 1998 for which
the Employer uses Section 410(b)(4)(B) of the Code to test minimum coverage
compliance, the
25
Employer may exclude from consideration all Participants (other than Highly
Compensated Participants) who have not met the minimum age and service
requirements of Section 410(a)(1)(A) of the Code in determining whether the
tests set forth in Subsection 5.3(a) are met.
5.4 AMENDMENT OR REVOCATION OF SALARY REDUCTION AGREEMENT BY COMMITTEE.
The Committee shall determine as of the end of the Plan Year, and at such
other time or times in its discretion, whether one of the Actual Deferral
Percentage tests of Section 5.3 will be satisfied for such Plan Year. In the
event that neither of such Actual Deferral Percentage Tests is satisfied, the
Committee may amend or revoke the Salary Reduction Agreement of any
Participant at any time if it determines that such an amendment or revocation
is necessary to ensure that at least one of the Actual Deferral Percentage
tests of Section 5.3 will be satisfied for any Plan Year. The determination
of whether it is necessary to amend or revoke any Salary Reduction Agreement
shall be made pursuant to Section 5.3 and the procedure for such amendment or
revocation shall be determined pursuant to Section 5.5(a).
5.5 DISTRIBUTION OF EXCESS CONTRIBUTIONS.
(a) If neither of the tests set forth in Section 5.3 are
satisfied, the Committee shall in its discretion, to the extent permissible
under the Code and the Regulations, refund the excess contributions in the
manner described in Section 5.5(b). For purposes of this Section 5.5,
"excess contributions" means, with respect to any Plan Year, the excess of
the aggregate amount of Elective Contributions (and any earnings and losses
allocable thereto prior to distribution) made by Highly Compensated
Participants for such Plan Year, over the maximum amount of such Elective
Contributions that could be made by such Highly Compensated Participants
without violating the requirements of Section 5.3.
(b) If required in order to comply with the provisions of
Subsection 5.3 and the Code, the Committee shall refund excess contributions
for a Plan Year. The distribution of such excess contributions shall be made
to Highly Compensated Participants, to the extent practicable, before the
March 15th of the Plan Year next following the Plan Year for which such
excess contributions were made, but in no event later than the end of the
Plan Year next
26
following such Plan Year. Any such distribution shall be made to each Highly
Compensated Participant whose Elective Contributions are the highest for the
Plan Year, until one of the tests of Section 5.3 is satisfied. Matching
Contributions attributable to Elective Contributions returned to a Highly
Compensated Participant shall be distributed as provided in Section 4.6.
5.6 ROLLOVER CONTRIBUTIONS.
(a) A Participant may make a Rollover Contribution to the Plan in
accordance with rules established by the Committee uniformly applied
consisting of an eligible rollover distribution, as defined in Section
11.8(b), from a plan qualified under Section 401(a) of the Code or an
individual retirement account qualified under Section 408(a) of the Code (no
part of which is attributable to any source other than an eligible rollover
distribution from a qualified plan under Section 401(a) of the Code);
provided such eligible rollover distribution is in cash and contributed to
the Plan on or before the 60th day after the day in which such Participant
received such eligible rollover distribution. If a Participant elects to
make a Rollover Contribution, the Committee may require such evidence,
assurances, opinions and certifications, including a statement from the
previous plan that such plan was a qualified plan, that the Committee may
deem necessary to establish to its satisfaction that the amounts to be
contributed qualify as an eligible rollover distribution and will not affect
the qualification of the Plan or the tax-exempt status of the Trust under
Sections 401(a) and 501(a) of the Code, respectively. Except as otherwise
permitted by Section 5.7, in no event shall any assets be transferred to this
Plan from any profit sharing, pension or retirement plan that would cause
this Plan to become a "transferee" plan (within the meaning set forth in
Section 401(a)(11)(B) of the Code).
(b) Any Rollover Contribution shall be allocated to the
appropriate Participant's Rollover Contribution Subaccount which shall be
established and separately accounted for. A Participant shall have at all
times a nonforfeitable right in the amount credited to his or her Rollover
Contribution Subaccount.
(c) Each request by a Participant to make a Rollover Contribution
shall be subject to review by the Committee which shall make a case by case
determination that each
27
Rollover Contribution meets the requirements set forth in Section 5.6(a), and
such other requirements or conditions as the Committee may, from time to time
and in its sole discretion, impose; provided, however, that any determination
made by the Committee pursuant to this Section 5.6 shall not have the effect
of discriminating in favor of Participants who are officers, shareholders or
who are Highly Compensated Participants.
5.7 TRUSTEE-TO-TRUSTEE TRANSFER OF ASSETS. Notwithstanding anything in
Section 5.6 to the contrary, in the event of an acquisition by the Employer
or the Plan Sponsor of a company which maintains a plan and trust which are
qualified under Sections 401(a) and 501(a) of the Code, respectively, the
Board of Directors may (but shall not be required to) authorize a
"trustee-to-trustee" transfer of assets from such qualified plan into the
Plan and Trust Fund. The Trustee may require such evidence, assurances,
opinions and certifications, including a statement from the acquired
company's plan that such plan and trust are qualified under Sections 401(a)
and 501(a) of the Code, which the Trustee may deem necessary to establish to
its satisfaction that the amounts to be transferred will not affect the
qualification of the Plan or the tax-exempt status of the Trust under
Sections 401(a) and 501(a) of the Code, respectively.
28
SECTION 6. ALLOCATION OF CONTRIBUTIONS
6.1 ESTABLISHMENT OF CASH CONTRIBUTION ACCOUNT. The Committee shall
establish and maintain or cause to be established and maintained with respect
to each Participant a Cash Contribution Account showing his or her interest
under the Plan and in the Trust Fund and all relevant data pertaining
thereto. Each Participant shall be furnished with a written statement of his
or her Cash Contribution Account at least once annually and upon any
distribution to him or her. In maintaining the Cash Contribution Accounts
under the Plan, the Committee can conclusively rely on the valuations of the
Trust Fund in accordance with the Plan. The establishment and maintenance
of, or allocations and credits to, the Cash Contribution Account of any
Participant shall not vest in any Participant any right, title or interest in
and to any Plan assets or benefits, except at the time or times and upon the
terms and conditions and to the extent expressly set forth in the Plan and in
accordance with the terms of the Trust Fund.
6.2 ESTABLISHMENT OF SUBACCOUNTS. Each Participant's Cash Contribution
Account shall contain each of the following applicable subaccounts therein:
(a) All Elective Contributions on behalf of a Participant under
Section 4.1 and Qualified Nonelective Contributions on behalf of a
Participant under Section 4.2(b)(i) shall be credited to the Participant's
Elective Contribution Subaccount.
(b) All Matching Contributions on behalf of a Participant under
Section 4.2(a) shall be allocated and credited to the Participant's Matching
Contribution Subaccount.
(c) All Profit Sharing Contributions on behalf of a Participant
under Section 4.2(b)(ii) shall be allocated and credited to the Participant's
Profit Sharing Subaccount.
(d) All Rollover Contributions on behalf of a Participant under
Section 5.6 shall be allocated and credited to the Participant's Rollover
Contribution Subaccount.
29
SECTION 7. SPECIAL ESOP PROVISIONS
7.1 INVESTMENT OF ESOP ACCOUNTS. The ESOP Accounts of all Participants
shall be invested exclusively in Shares, except for cash or cash equivalent
investments held (a) for the limited purpose of making Plan distributions to
Participants and Beneficiaries, (b) pending the investment by the Purchasing
Agent of contributions or other cash receipts in Shares, (c) pending use to
repay an Exempt Loan, (d) for purposes of paying, under the terms described
in the Plan or Trust Agreement, fees and expenses incurred with respect to
the Plan or Trust and not paid for by the Participating Employers or (e) in
the form of de minimis cash balances. Neither any Participating Employer nor
the Purchasing Agent, the Committee or the Trustee shall have any
responsibility or duty to time any transaction involving Shares in order to
anticipate market conditions or changes in stock value, nor shall any such
person have any responsibility or duty to sell Shares held in the ESOP
Accounts (or otherwise to provide investment management for Shares held in
the ESOP Accounts) in order to maximize return or minimize loss.
Participating Employer contributions made in cash, and other cash received by
the Trustee, may be used by the Purchasing Agent to acquire Shares from
shareholders of the Employer or directly from the Employer.
7.2 ALLOCATION TO ESOP ACCOUNTS.
(a) Subject to the provisions of Section 4, the ESOP Account
maintained for each Participant will be credited as of the last day of each
Plan Year with the Participant's allocable share of:
(i) Shares purchased by the Purchasing Agent using cash
contributed by or on behalf of the Participating Employer employing such
Participant (or contributed directly to the Trust Fund) and
(ii) Shares released from the Suspense Subfund pursuant to
Section 7.3 and allocable to the contribution made by or on behalf of such
Participating Employer pursuant to Section 7.4.
30
(b) Shares attributable to ESOP Contributions shall be allocated
among the Accounts of Participants who are members of the Allocation Group
for the Plan Year in the same proportion that a Participant's Compensation
during the Plan Year bears to the total Compensation during the Plan Year of
all Participants who are members of the Allocation Group for such Plan Year.
For purposes of the preceding sentence, Compensation earned by a Participant
prior to the Participant's entry into the Plan pursuant to Section 3.1(b)(ii)
shall not be taken into account.
(c) Shares contributed directly to the Trust Fund for a Plan Year
shall be allocated under Section 7.2(a)(i) in the same proportion as Shares
purchased by the Trust Fund and allocated under Section 7.2(b).
7.3 SUSPENSE SUBFUND FOR ESOP ACCOUNTS. Shares acquired by the
Participants' ESOP Accounts through an Exempt Loan shall be added to and
maintained in the Suspense Subfund and shall thereafter be released from the
Suspense Subfund and allocated to Participants' ESOP Accounts as provided in
Sections 7.3 and 7.4. Shares acquired for the Trust Fund with the proceeds
of an Exempt Loan shall be released from the Suspense Subfund as the Exempt
Loan is repaid, in accordance with the provisions of this Section 7.3.
(a) For each Plan Year until the Exempt Loan is fully repaid, the
number of Shares released from the Suspense Subfund shall equal the number of
unreleased Shares immediately before such release for the current Plan Year
multiplied by the "Release Fraction." As used herein, the term "Release
Fraction" shall mean a fraction, the numerator of which is the amount of
principal and interest paid on the Exempt Loan for such current Plan Year and
the denominator of which is the sum of the numerator plus the principal and
interest to be paid on such Exempt Loan for all future years during the term
of such Exempt Loan (determined without reference to any possible extensions
or renewals thereof). For purposes of computing the denominator of the
Release Fraction, if the interest rate on the Exempt Loan is variable, the
interest to be paid in subsequent Plan Years shall be calculated by assuming
that the interest rate
31
in effect as of the end of the applicable Plan Year will be the interest rate
in effect for the remainder of the term of the Exempt Loan.
Notwithstanding the foregoing, in the event such Exempt Loan shall
be repaid with the proceeds of a subsequent Exempt Loan (the "Substitute
Loan"), such repayment shall not operate to release all such Shares in the
Suspense Subfund, but, rather, such release shall be effected pursuant to the
foregoing provisions of this Section 7.3(a) on the basis of payments of
principal and interest on such Substitute Loan.
(b) If required by any pledge or similar agreement, or if
permitted by such pledge or agreement and required by the Committee pursuant
to a one-time, irrevocable designation (which shall be made, if at all, in
connection with the making of an Exempt Loan) by the Committee, then, in lieu
of applying the provisions of Section 7.3(a) hereof with respect to an Exempt
Loan, Shares shall be released from the Suspense Subfund as the principal
amount of such Exempt Loan is repaid (without regard to interest payments),
provided the following three conditions are satisfied:
(i) The Exempt Loan shall provide for annual payments of
principal and interest at a cumulative rate that is not less rapid at any
time than level annual payments of such amounts for ten years;
(ii) The interest portion of any payment shall be disregarded
only to the extent it would be treated as interest under standard loan
amortization tables; and
(iii) If the Exempt Loan is renewed, extended or refinanced,
the sum of the expired duration of the Exempt Loan and the renewal, extension
or new Exempt Loan period shall not exceed ten years.
(c) If at any time there is more than one Exempt Loan outstanding,
then separate accounts may be established under the Suspense Subfund for each
such Exempt Loan. Each Exempt Loan for which a separate account is
maintained may be treated separately for purposes of the provisions governing
the release of Shares from the Suspense Subfund under this Section 7.3
(including for purposes of determining whether Section 7.3(a) or Section
7.3(b)
32
governs the release of Shares from any particular Suspense Subfund) and for
purposes of the provisions governing the application of Participating
Employer contributions to repay an Exempt Loan under Section 4.2.
(d) All Shares released from the Suspense Subfund during any Plan
Year shall be allocated among Participants as prescribed by Section 7.4.
7.4 DISPOSITION OF SHARES RELEASED FROM SUSPENSE SUBFUND.
(a) Shares released from the Suspense Subfund for a Plan Year in
accordance with Section 7.3 shall be held in the Trust Fund on an unallocated
basis until allocated by the Committee as of last day of the Plan Year.
Shares released from the Suspense Subfund on account of a payment for a Plan
Year of principal or interest on an Exempt Loan, to the extent payment is
made with contributions for such Plan Year, shall be allocated under Section
7.2(a)(ii) in the same proportion as Shares purchased with contributions
under Section 7.2(b).
(b) (i) Shares released from the Suspense Subfund on account of the
payment for a Plan Year of principal or interest on an Exempt Loan to the extent
such payment is made with dividends paid on Shares allocated to ESOP Accounts,
shall be allocated in the same proportion as dividends used to pay principal or
interest on such Exempt Loan would have been allocated under Section 7.9(b) had
such dividends not been so used; and
(ii) Subject to Section 4.2, Shares released from the Suspense
Subfund on account of the payment of principal or interest on an Exempt Loan, to
the extent such payment is made with dividends on Shares not allocated to
Accounts, shall be allocated to those ESOP Accounts and in the same proportion
as Shares released pursuant to Section 7.4(b)(i); provided that Shares so
released shall be otherwise allocated if necessary to satisfy the requirements
of the Code (other than Section 404(k)) and any Regulations thereunder.
(c) All Shares in the Trust Fund, other than the Shares held in the
Suspense Subfund as of the last day of any Plan Year, must be allocated to ESOP
Accounts as of the last day of any Plan Year.
33
7.5 LIMITATIONS ON ALLOCATIONS TO ESOP ACCOUNTS. Notwithstanding the
foregoing provisions of this Section 7:
(a) If more than one-third of all ESOP Contributions for a Plan
Year which are deductible only under Section 404(a)(9) of the Code would be
allocated, in the aggregate, to Participants described in Section 414(q) of
the Code, then the Committee may reduce such allocations pro rata in an
amount sufficient to ensure that such ESOP Contributions will be deductible
with respect to such Plan Year; and
(b) Any contributions which are prevented from being allocated due
to the restriction contained in Section 7.5(a) shall be allocated as of the
last day of the Plan Year pursuant to Sections 7.2 and 7.4 as though those
Participants described in Section 414(q) of the Code did not participate in
the Plan.
7.6 ACQUISITION OF SHARES.
(a) Notwithstanding the foregoing provisions of this Section 7, in
the event that Shares are acquired in a transaction to which Section 1042 of
the Code applies, then, in accordance with the Regulations, such Shares shall
not be allocated, directly or indirectly, to prohibited individuals as
defined in Section 409(n)(1) of the Code for the duration of the
nonallocation period (as defined in Section 409(n)(3)(C) of the Code).
(b) If Shares are prevented from being allocated due to the
prohibition contained in Section 7.6(a), the allocation of Shares
attributable to ESOP Contributions (or ESOP Contributions) otherwise provided
under Section 7.2 shall be adjusted to reflect such result.
7.7 EFFECT OF CHANGE IN PLAN SPONSOR'S CAPITALIZATION. Any Shares
received by the Trustee as a result of a stock split, dividend, conversion,
or as a result of a reorganization or other recapitalization of the Plan
Sponsor shall be allocated as of the day on which the Shares are received by
the Trustee in the same manner as the Shares to which they are attributable
are then allocated.
34
7.8 TRUSTEE AND COMMITTEE DISCRETION TO ENGAGE IN TRANSACTIONS IN
SHARES. Neither the Purchasing Agent, the Trustee nor the Committee shall be
required to engage in any transaction, including, without limitation,
directing the purchase or sale of Shares, which it determines in its sole
discretion may subject itself, its Participants, the Plan, any Participating
Employer, or any Participant to liability under federal or other state laws.
7.9 VALUATION OF ESOP ACCOUNTS.
(a) Subject to the requirements of Section 7.9(b), the fair market
value of the assets of the ESOP Accounts shall be determined as of each
Valuation Date, in accordance with generally accepted valuation methods and
practices including, but not limited to, in the case of Shares, the use of
one or more independent appraisers.
(b) The value of a Participant's ESOP Account as of any Valuation
Date shall equal the sum of:
(i) The aggregate value (as determined under Section 7.9(a))
of all Shares and dividends on Shares previously allocated to such
Participant's ESOP Account as of such Valuation Date; and
(ii) Subject to Section 7.9(c), the aggregate value (as
determined under Section 7.10(a)) of dividends, if any, received during the
Plan Year on Shares allocated to such Participant's ESOP Account.
(iii) Such Participant's allocable portion (determined in
accordance with the rules set forth in Section 7.4 for determining
Participant's allocable portion of Shares released from the Suspense Subfund)
of the earnings, if any, on all amounts contributed to the Trust Fund for
purposes other than the repayment of an Exempt Loan.
(c) Except as provided in Section 7.7, dividends payable, if any,
with respect to Shares held by the Participant's ESOP Account will be, in the
discretion of the Committee and in conformity with the terms of the Shares on
which such dividends are paid, (i) used for the purpose of repaying one or
more Exempt Loans, (ii) distributed from the Trust Fund to Participants or
their Beneficiaries not later than 90 days after the close of the Plan Year
in which
35
they are paid to the Trust Fund, (iii) paid directly to such Participants or
their Beneficiaries, (iv) retained in the Trust Fund and allocated pursuant
to Section 7.9(b), or (v) paid or utilized in a combination of any or all of
the foregoing four options.
(d) The Committee shall establish accounting procedures for the
purpose of making the allocations, valuations and adjustments to
Participant's ESOP Accounts in accordance with the provisions of the Plan.
From time to time, the Committee may modify its accounting procedures for the
purpose of achieving equitable and nondiscriminatory allocations among the
ESOP Accounts of Participants in accordance with the provisions of the Plan.
7.10 ROLE OF PURCHASING AGENT.
(a) All purchases of Shares made by the Trust Fund shall be made
by the Purchasing Agent. The Trustee shall forward to the Purchasing Agent
all amounts contributed to the employee stock ownership plan, and all amounts
to be invested in Shares pursuant to participant investment directions given
pursuant to Sections 8.3, 8.4 and 8.5. Amounts to be invested in Shares
shall be invested in Shares in the amount, in the manner and at the price
determined by the Purchasing Agent in its sole discretion, provided such
price shall be the fair market value of such Shares at the time of purchase.
The Purchasing Agent shall in its sole discretion select the broker-dealer
through which the purchase of such Shares shall be executed. The Purchasing
Agent shall also invest any cash dividends received on any Shares which are
allocated to Participants' Accounts and held as part of the Plan as provided
in Section 5.05(c) of the Trust Agreement.
(b) The Purchasing Agent shall sell Shares only at the direction
of the Trustee, which shall issue such instructions only at the direction of
the Committee; provided that such Committee direction shall not be required
for any sales of Shares required pursuant to the participant investment
directions given pursuant to Sections 8.3, 8.4 or 8.5, or pursuant to the
provisions of Section 13.5 or 13.6.
36
SECTION 8. INVESTMENT OF CONTRIBUTIONS, VALUATIONS
AND PARTICIPANTS' CASH CONTRIBUTION ACCOUNTS
8.1 DELIVERY OF CONTRIBUTIONS TO TRUST FUND. All monies, securities or
other property contributed to Participants' Cash Contribution Accounts shall be
delivered to the Trustee under the Trust Fund, to be managed, invested,
reinvested and distributed in accordance with the Plan and the Trust Fund.
8.2 PARTICIPANTS' RIGHT TO SELECT INVESTMENTS. Each Participant shall
have the right to invest his or her Cash Contribution Account among one or more
investment funds selected by the Company, which may include a fund established
for investment in Shares.
8.3 PARTICIPANT INVESTMENT ELECTION. As of any date permitted by the
Committee, a Participant may, in accordance with the rules of the Committee
uniformly applied, specify the percentage (in minimum multiples as may be
determined from time to time by the Committee) of contributions which are made
to the Participant's Cash Contribution Account that shall be invested in
investment funds selected by the Committee. An investment election may be made
separately with respect to (i) the aggregate of the Participant's Elective
Contribution Subaccount, Matching Contribution Subaccount, and Rollover
Contribution Subaccount and (ii) the Participant's Profit Sharing Subaccount.
8.4 CHANGE IN INVESTMENT ELECTION FOR FUTURE CONTRIBUTIONS. Any
investment direction specified by a Participant shall be deemed to be a
continuing direction until changed. A Participant may change an investment
direction as to future contributions made by such Participant or on his or her
behalf to the subaccounts of his or her Cash Contribution Account as of any day
permitted by the Committee in accordance with the rules of the Committee
uniformly applied.
8.5 CHANGE IN INVESTMENT ELECTION FOR PRIOR CONTRIBUTIONS. As of any date
permitted by the Committee, a Participant may change the percentages (in minimum
multiples as may be determined from time to time by the Committee) in which the
investment of the portion of his or
37
her Cash Contribution Account attributable to prior contributions shall be
allocated among the funds maintained by the Trustee. Such changes of
investment allocation may be made separately with respect to (i) the
aggregate of the Participant's Elective Contribution Subaccount, Matching
Contribution Subaccount, and Rollover Contribution Subaccount, and (ii) the
Participant's Profit Sharing Subaccount.
8.6 VALUATION OF CASH CONTRIBUTION ACCOUNTS.
(a) As of each Valuation Date, Participants' Cash Contribution
Accounts shall be valued pursuant to the terms of the Plan. Such valuation
shall be conclusive and binding upon all persons having an interest in the
Trust Fund.
(b) The Committee shall adjust the value of each Elective
Contribution Subaccount, Matching Contribution Subaccount, Profit Sharing
Subaccount, or Rollover Contribution Subaccount, as the case may be,
maintained under Participants' Cash Contribution Accounts as of each
Valuation Date to reflect the effect of income received and accrued, realized
and unrealized profits and losses, and all other transactions of the
preceding period. Such adjustments shall be made with respect to the period
since the next preceding Valuation Date by (i) deducting from each such
Subaccount the total of all payments made from such Subaccount during such
period, (ii) adding to or deducting from, as the case may be, each such
Subaccount such proportion of each item of income, profit or loss as the
amount in such Subaccount as of the next preceding Valuation Date bears to
the total of the amounts in all of such Participants' Elective Contribution
Subaccount, Matching Contribution Subaccount, Profit Sharing Subaccount, or
Rollover Contribution Subaccount, as the case may be, as of the preceding
Valuation Date and (iii) adding contributions to each such Elective
Contribution Subaccount, Matching Contribution Subaccount, Profit Sharing
Subaccount, or Rollover Contribution Subaccount, as the case may be, pursuant
to Sections 4 and 5 of the Plan. In making such allocations, the Committee
can conclusively rely on the valuations of the Subaccounts by the Trustee in
accordance with the Plan and the Trust.
38
SECTION 9. RETIREMENT DATES
9.1 NORMAL RETIREMENT DATE. The Normal Retirement Date of a
Participant shall be his or her 65th birthday. Upon attainment of his or her
Normal Retirement Date, a Participant shall have a nonforfeitable right to
100% of his or her Account.
9.2 DEFERRED RETIREMENT DATE. A Participant who remains in Service
after his or her Normal Retirement Date may retire on a Deferred Retirement
Date which shall be the first day of the month coincident with or next
following his or her termination of Service or as specified in a written
application to the Committee.
39
SECTION 10. ELIGIBILITY FOR PAYMENT OF ACCOUNTS
AND VESTED INTERESTS
10.1 PARTICIPANTS' RIGHT TO ACCOUNT UPON TERMINATION DUE TO RETIREMENT,
DEATH OR DISABILITY.
(a) A Participant shall have a nonforfeitable right to his or her
Account upon the occurrence of any of the following events while employed by
the Employer:
(i) attainment of his or her Retirement Date;
(ii) his or her death; or
(iii) his or her Disability.
(b) Upon the termination of Service of any Participant on or after
his or her Retirement Date or by reason of his or her death or Disability
("Terminated Participant"), the Terminated Participant (or, in the event of
the Participant's death, his or her Beneficiary) shall be entitled to an
amount equal to the Terminated Participant's Account, including any
subsequent contribution allocated to the Terminated Participant's Account
pursuant to Sections 6 or 7 with respect to the Plan Year in which the
Participant's Service is terminated. The Participant's Account shall be
distributable, in accordance with the methods and rules of distribution
described in Section 11, as soon as practicable following the Participant's
termination of Service. The value of the Participant's Account shall be
determined as of the Valuation Date coincident with or immediately preceding
the date of distribution of the Participant's Account.
10.2 PARTICIPANTS' RIGHT TO ACCOUNT UPON OTHER TERMINATION OF SERVICE.
Upon the termination of Service of any Participant prior to his or her
Retirement Date for any reason other than death or Disability, the Terminated
Participant shall be entitled to receive an amount equal to the sum of (i)
100% of the Participant's Elective Contribution Subaccount, Matching
Contribution Subaccount, and Rollover Contribution Subaccount and (ii) the
Participant's Vested Interest in his or her Profit Sharing Subaccount and
ESOP Account, including the Participant's Vested Interest in any subsequent
contribution allocated to the Participant's Account pursuant to
40
Sections 6 or 7 with respect to the Plan Year in which the Participant's
Service terminated. The Participant's Account shall be distributable, in
accordance with the methods and rules of distribution described in Section
11, as soon as practicable following the Valuation Date immediately following
the Participant's termination of Service. The value of the Participant's
Account shall be determined as of the Valuation Date coincident with or
immediately preceding the date of distribution of the Participant's Account.
If such Terminated Participant's Vested Interest is less than 100 percent,
the non-vested balance of such Participant's Profit Sharing Subaccount and
ESOP Account shall be forfeited and reallocated pursuant to Section 4.5 as of
the last day of the earlier of (i) the Plan Year in which the Participant's
Account is distributed, or (ii) the Plan Year in which the Participant incurs
a Total Break in Service.
10.3 VESTING SCHEDULE FOR DETERMINING VESTED INTERESTS. For all
purposes of this Plan, a Participant's Vested Interest in his or her Profit
Sharing Subaccount and ESOP Account shall consist of (i) the Participant's
percentage of his or her Profit Sharing Subaccount and (ii) the percentage of
the Participant's ESOP Account, both as determined from the following vesting
schedule on the basis of the number of Years of Service which the Participant
has completed as of the date of the Participant's termination of Service.
VESTING SCHEDULE
Years of Service Percentage
---------------- ----------
Less than three years 0%
Three years but less than four years 25%
Four years but less than five years 50%
Five years or more 100%
10.4 BREAKS IN SERVICE. If a Participant's Service is terminated prior
to his or her Retirement Date for any reason other than the Participant's
death or Disability prior to completing three Years of Service, and such
Participant incurs a Total Break in Service, such Participant shall not be
entitled to any benefit attributable to amounts allocated to the
Participant's Profit Sharing Subaccount or ESOP Account prior to such Total
Break in Service.
41
If a Participant returns to Service, Years of Service before such return
shall be counted, in addition to Years of Service following such return, in
determining the Participant's Vested Interest in the amount credited to the
Participant's Profit Sharing Subaccount or ESOP Account subsequent to the
Participant's return to Service. If such Participant does not complete one
Year of Service following his or her return, then the Participant shall not
be entitled to any further benefit under the Plan and the non-vested balance
of any Profit Sharing Contribution or ESOP Contributions credited or
recredited to such Participant's Profit Sharing Subaccount or ESOP Account
subsequent to the Participant's return shall be forfeited and reallocated
pursuant to Section 4.5 upon the Participant's termination of Service. All
forfeitures shall occur in conformity with the ordering rules of Section
54.4975-11(d) of the Regulations.
10.5 PARTICIPANT'S RIGHT TO RESTORATION OF ACCOUNT UPON RETURN TO
SERVICE. If a Terminated Participant who had a vested interest in such
Participant's Profit Sharing Subaccount or ESOP Account returns to Service
prior to incurring a Total Break in Service, the non-vested balance of the
Terminated Participant's Account, if any, forfeited pursuant to Section 10.2
shall be recredited to such Participant's Account, provided that, not later
than the fifth anniversary of the first date on which the Participant is
subsequently employed, such Participant repays the full amount of any
distribution made to the Participant upon his or her prior termination of
Service. Any amount so repaid, together with any non-vested portion of such
Participant's Account recredited pursuant to this Section 10.5, shall be
invested in the Trust Fund. If such Participant fails to make a repayment of
any distributed amounts pursuant to this Section 10.5, the non-vested portion
of such Participant's Account, if any, shall not be recredited.
10.6 PARTICIPANT'S RIGHT TO ACCOUNT UPON DEATH AFTER TERMINATION OF
SERVICE. Subject to the provisions of Section 10, if a Terminated
Participant dies before payment of the full value of his or her Account from
the Trust Fund, an amount equal to the current value of the unpaid portion of
the Participant's Vested Interest in his or her Account, including any
subsequent contribution allocated to the Terminated Participant's Account
pursuant to Sections 6 or 7 with respect to the Plan Year in which the
Participant's Service is terminated, shall be distributable, in
42
accordance with the methods and rules of distribution described in Section
11, as soon as practicable following the Participant's death. The value of
the Participant's Account shall be determined as of the Valuation Date
coincident with or immediately preceding the date of distribution of the
Participant's Account.
10.7 AMENDMENT OF VESTING SCHEDULE. If the vesting schedule contained
in Section 10.3 is amended, each Participant who has completed at least three
(3) Years of Service may elect, during the election period specified in this
Section, to have his or her vested percentage determined without regard to
such amendment. For purposes of this Section, the election period shall
begin as of the date on which the amendment changing the vesting schedule is
adopted, and shall end on the latest of the following dates: (i) the date
occurring sixty (60) days after the Plan amendment is adopted; (ii) the date
which is sixty (60) days after the day on which the Plan amendment becomes
effective; (iii) the date which is sixty (60) days after the day the
Participant is issued written notice of the Plan amendment by the Committee;
or (iv) such later date as may be specified by the Committee. The election
provided for in this Section shall be made in writing and shall be
irrevocable when made.
10.8 DISTRIBUTION FOLLOWING ATTAINMENT OF AGE 59-1/2 TO FORMER
PARTICIPANTS OF THE HAMPTON PENSION SERVICES, INC. 401(k) RETIREMENT SAVINGS
PLAN. A Participant who was employed by Hampton Pension Services, Inc. on
November 6, 1995 shall be entitled to receive, at any time following the date
such Participant attains age 59-1/2, a distribution of all or any portion of
the Participant's Account, to the extent attributable to any amounts that
were transferred to the Plan from such Participant's former account in The
Hampton Pension Services, Inc. 401(k) Retirement Savings Plan.
43
SECTION 11. METHOD OF PAYMENT OF ACCOUNTS
AND WITHDRAWALS
11.1 METHODS OF PAYMENT. Any benefit payable under the Plan, except
as otherwise provided in Section 11.2 shall be payable as soon as practicable
following the last day of the calendar month in which falls a Participant's
termination of Service (or other event requiring a distribution under the Plan),
in one lump sum payment from the Trust Fund, provided that the Participant may
elect to direct the Committee to directly transfer all or any portion of his or
her "eligible rollover distribution" (as defined in Section 11.8 below) to
another tax-qualified plan pursuant to Section 401(a)(31) of the Code. A
Participant who has no Vested Interest in his or her Account upon his or her
termination of Service will be deemed to have received a full distribution of
his or her Account as of such date. A Participant may also elect to receive a
distribution of his or her Account as soon as practicable following the first
anniversary of the last day of the calendar month in which occurs such
termination of Service (or other event requiring a distribution under the Plan),
or as soon as practicable following the Participant's Normal Retirement Date.
Subject to the provisions of Section 11.3 with respect to the
distribution of Shares, any distribution hereunder shall be made in cash;
provided, however, that pursuant to procedures adopted from time to time by the
Committee, a Participant may elect to receive a distribution in the form of
shares of the assets in which such Participant's Account was invested
immediately prior to the distribution, but only if such distribution is made
directly to a rollover IRA established with the Employer as custodian.
11.2 COMMENCEMENT OF PAYMENT. Notwithstanding any other provision of the
Plan to the contrary, (i) if a Participant has a Vested Interest in his or her
Account with a value of $3,500 or less it shall be distributed in one lump sum
as soon as is administratively feasible following the last day of the calendar
month in which such Participant's termination of employment occurs, and (ii) if
a Participant has a Vested Interest in his or her Account with a value of more
than
44
$3,500 it shall not commence to be distributed without the consent of the
Participant before the Participant's Normal Retirement Date.
In the absence of receipt of such consent by the Committee, payment
of the benefit to such Participant shall commence as soon as practicable
after the Participant's attainment of his or her Normal Retirement Date,
which benefit shall be in an amount equal to the value of the Participant's
distributable Account as of the Valuation Date coincident with or immediately
following the Participant's attainment of his or her Normal Retirement Date.
In any case where distribution of any benefit amount from the Participant's
Cash Contribution Account is to be deferred, the Committee shall either (i)
establish or cause to be established a special account for the benefit of the
former Participant, to be invested by the Trustee in a fixed investment
account established by the Trustee or (ii) cause all amounts in the
Participant's Cash Contribution Account deferred by the Participant to be
invested at the Participant's election in the same manner as the normal Cash
Contribution Accounts maintained for Participants under to the Plan.
11.3 SPECIAL RULES FOR DISTRIBUTION OF SHARES.
(a) Distribution of a Participant's Vested Interest from his or
her Account which is invested in Shares will be made entirely in whole
Shares, with the value of any fractional interest in Shares paid in cash;
provided, that pursuant to procedures adopted from time to time by the
Committee, a Participant may elect to receive such distribution in the form
of cash. Any cash or other property in a Participant's ESOP Account will be
used by the Purchasing Agent to acquire Shares, valued as of the last day of
the calendar month in which occurs (i) the Participant's election to receive
a distribution of his or her Account pursuant to Section 11.1, (ii) the
Participant's termination of Service, in the case of a distribution pursuant
to Section 11.2(i), or (iii) the Participant's Normal Retirement Date (or the
Participant's death, if earlier), in the case of a distribution pursuant to
Section 11.2(ii) to a Participant who failed to consent to a distribution
prior to his or her Normal Retirement Date (the "Share Conversion Date").
Notwithstanding the foregoing, if applicable corporate charter or bylaw
provisions restrict
45
ownership of substantially all outstanding Shares to Employees or to a plan
or trust described in Section 401(a) of the Code, then any distribution of a
Participant's Vested Interest in the Participant's ESOP Account shall be in
cash. When a distribution consists in whole or in part of Shares, and if
such Shares consists of more than one class of securities, the distribution
of such Shares shall consist of substantially the same proportion of each
such class of Shares as such classes of Shares represent proportions of the
Participant's Account. If the record date for dividends payable with respect
to Shares distributable to a Participant occurs following the Share
Conversion Date, such dividends shall not be considered attributable to such
Shares, but shall be considered as earnings of the Fund and allocated among
Participants' Accounts pursuant to Section 8.6(b).
(b) Notwithstanding anything in Section 11 to the contrary, in the
discretion of the Committee, Section 11.1 may not apply to Shares held in a
Participant's ESOP Account until the close of the Plan Year in which any
Exempt Loan used to acquire such Shares is repaid in full.
(c) If at the time of distribution, Shares distributed from the
Trust Fund that were acquired with the proceeds of an Exempt Loan are not
treated as "readily tradable on an established market" within the meaning of
Section 409(h) of the Code and Regulations, such Shares shall be subject to a
put option in the hands of a Qualified Holder by which such Qualified Holder
may sell all or any part of such Shares to the Trust. Should the Trust
decline to purchase all or any part of such Shares, the Employer shall
purchase those Shares that the Trust declines to purchase. The put option
shall be subject to the following conditions:
(i) The term "Qualified Holder" shall mean the Participant or
Beneficiary receiving the distribution of such Shares, any other party to whom
the Shares are transferred by gift or reason of death, or any trustee of an
individual retirement account (as defined under Code Section 408) to which all
or any portion of the distributed Shares is transferred pursuant to a tax-free
"rollover" transaction satisfying the requirements of Sections 402 and 408 of
the Code.
46
(ii) During the 60-day period following any distribution of
such Shares, a Qualified Holder shall have the right to require the Trust or
the Employer to purchase all or a portion of the distributed Shares held by
the Qualified Holder. The purchase price to be paid for any such Shares
shall be their fair market value determined as of the Valuation Date
coinciding with or immediately preceding the exercise of the put option under
this Section 11.3(c)(ii), provided that in the case of a transaction between
the Plan and a "disqualified person" within the meaning of Section 4975(e)(2)
of the Code, such fair market value shall be determined as of the date of the
transaction.
(iii) If a Qualified Holder shall fail to exercise such put
option, the put option shall temporarily lapse upon the expiration of the
60-day period. As soon as practicable following the last day of the Plan
Year in which the 60-day option period expires, the Employer shall notify the
non-electing Qualified Holder (if he or she is then a shareholder of record)
of the valuation of the Shares as of that date. During the 60-day period
immediately following receipt of such valuation notice, the Qualified Holder
shall again have the right to require the Employer to purchase all or any
portion of the distributed Shares. The purchase price to be paid therefor
shall be based on the valuation of the Shares as of the Valuation Date
coinciding with or immediately preceding the exercise of the option under
this Section 11.3(c)(iii), provided that in the case of a transaction between
the Plan and a "disqualified person" within the meaning of Section 4975(e)(2)
of the Code, such fair market value shall be determined as of the date of the
transaction.
(iv) The foregoing put options under Section 11.3(c)(ii) and
(iii) hereof shall be effective solely against the Employer and shall not
obligate the Plan or Trust in any manner.
(v) Except as otherwise required or permitted by the Code,
the put options under this Section 11.3(c) shall satisfy the requirements of
Section 54.4975-7(b) of the Treasury Regulations to the extent, if any, that
such requirements apply to such put options.
47
If a Qualified Holder exercises a put option under this
Section 11.3(c), payment for the Shares shall be made in substantially equal
annual payments over a period beginning not later than 30 days after the
exercise of the put option and not exceeding five years (provided that
adequate security and reasonable interest are provided with respect to unpaid
amounts).
Except as provided in this Section 11.3(c) or in Section 11.2,
no shares acquired with the proceeds of an Exempt Loan may be subject to a
put, call or other option, or buy-sell or similar arrangement while held by
or distributed from the Plan. The rights and protections set forth in this
Section 11.3(c) shall be non-terminable.
11.4 PAYMENTS TO SURVIVING SPOUSE OR BENEFICIARY. If a Participant or
former Participant dies before the commencement of his or her benefits under
the Plan, such Participant's or former Participant's Vested Interest in his
or her Account is payable in full to his or her Surviving Spouse. If such
Participant has no Surviving Spouse, he or she may designate a Beneficiary
pursuant to Section 14. A Participant may with the written consent of his or
her spouse elect to designate a Beneficiary other than or in addition to his
or her spouse. The written consent of the spouse must acknowledge the effect
of such election and must be witnessed by a representative of the Plan or a
notary public. Any such election may not be changed without spousal consent.
Such an election or revocation must be made in accordance with the
procedures developed by the Committee in accordance with the Code and
Regulations.
11.5 LATEST DATE FOR COMMENCEMENT OF BENEFITS.
(a) Payments will commence no later than 60 days following the
latest of the close of the Plan Year in which:
(i) the Participant attains his or her Normal Retirement
Date,
(ii) occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan, or
(iii) the Participant terminates his or her Service with the
Employer.
48
(b) Notwithstanding the provisions of the foregoing sentence, if
the amount payable cannot be ascertained, or, subject to the provisions of
Section 20.6, the Participant cannot be located after reasonable efforts, a
payment retroactive to the date determined under the foregoing sentence may
be made not later than 60 days after the earliest date on which the amount of
such payment can be ascertained under the Plan or the date on which the
Participant is located (whichever is applicable).
(c) Notwithstanding any other provision of the Plan, benefits
payable to a Participant who is a five percent (5%) owner, as defined in
Section 416 of the Code with respect to the Plan Year ending in the calendar
year in which the Participant attains age 70 1/2, shall commence no later than
April 1st of the calendar year following the calendar year in which such
Participant attains age 70 1/2. Commencing July 1, 1997, to the extent
permitted by the Code and Regulations, Participants who are not five percent
(5%) owners may elect to commence distribution of their benefits on April 1st
of the calendar year following the later of the calendar year in which such
Participant attains age 70 1/2 or the calendar year following the calendar
year in which such Participant retires.
(d) If a Participant dies before benefits have commenced,
distributions to any Surviving Spouse or Beneficiary shall be made as soon as
administratively feasible, but not later than five years after such
Participant's death. In the event that payment is made to the Participant's
Surviving Spouse, such distribution shall not commence later than the date on
which such Participant would have had to commence distributions under Section
401(a)(9) of the Code (or, in either case, on any later date prescribed by
Regulations). If the Participant's Surviving Spouse dies after such
Participant's death but before distribution has been made to such Surviving
Spouse, the Section 11.5(d) shall be applied to require payment of any
benefits as if such Surviving Spouse were the Participant.
(e) Pursuant to Regulations, any benefit paid to a child shall be
treated as if paid to a Participant's Surviving Spouse if such amount would
become payable to such Surviving Spouse on the child's attaining majority, or
other designated event permitted by Regulations.
49
11.6 REDIRECTION OF INVESTMENT OF ESOP ACCOUNT. Effective March 1,
1990, upon both attaining age 50 and completing five Years of Service, a
Participant shall be permitted to direct the Plan to transfer all or any
portion of the Vested Interest in the Participant's ESOP Account to the
Participant's Cash Contribution Account. Under rules prescribed by the
Committee, such directions shall be permitted during semi-annual periods, to
be determined by the Committee, effective as soon as administratively
feasible, but not later than 30 days from the date on which such direction is
given, and shall be made in ten percent (10%) increments of the Participant's
Vested Interest in his or her ESOP Account. In the event that the
Participant's Account does not provide at least three investment options to
the Participant other than investment in Shares, the Committee shall provide
diversification options to any Participant required to be given such
diversification options under Section 401(a)(28)(B) of the Code in a manner
consistent with the Code. Notwithstanding the foregoing, the ability to make
transfers may be restricted by the Committee to the extent necessary to
comply with any applicable federal securities laws (including Rule 144);
provided, however, that in no event shall a Participant be prevented from
transferring any amount necessary in order to meet the diversification
requirements set forth in Section 401(a)(28)(B) of the Code.
11.7 HARDSHIP WITHDRAWALS.
(a) A Participant who is an Employee may elect to withdraw all or
any portion of the Vested Interest in his or her Cash Contribution Account
attributable to Elective Contributions (but excluding any earnings on
Elective Contributions accruing after December 31, 1988), Profit Sharing
Contributions (if, and only if, the withdrawal is occasioned by a life
threatening illness to the Participant) by giving written notice thereof to
the Committee specifying such date, which shall not be less than 30 days
following the date such notice is given to the Committee. Such notice shall
designate that the hardship withdrawal shall be withdrawn from the investment
funds in which the Participant has directed investment of the Participant's
Cash Contribution Account.
(b) The Committee may authorize a hardship withdrawal only for:
50
(i) medical expenses described in Section 213(d) of the Code
incurred or immediately anticipated by the Participant, the Participant's
spouse, or any dependents of the Participant (as defined in Section 152 of the
Code);
(ii) the purchase (excluding mortgage payments) of a principal
residence of the Participant;
(iii) the payment of tuition and related educational fees for
the next 12 months of post-secondary education for the Participant or the
Participant's spouse, children, or dependents; or
(iv) the need to prevent the eviction of the Participant from
the Participant's principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(c) A hardship withdrawal may be authorized only to the extent
necessary to satisfy the hardship. A distribution will be deemed to be
necessary to satisfy the hardship only if the distribution is not in excess of
the amount of the immediate and heavy financial need of the Participant and such
Participant's tax obligations as a result of such distribution and the Employee
certifies in writing that such a hardship exists (and the Committee has no
knowledge to the contrary); provided that the Committee may set stricter
standards for making such determination on a nondiscriminatory basis; and
provided further that the Participant must obtain the written consent of his or
her spouse to the extent required by law. The Committee's decision shall be
final and binding on the Participant.
(d) In the event that a Participant's Vested Interest is less than
100% at the time of making a withdrawal from his Profit Sharing Subaccount
pursuant to Section 11.7(a), the Participant's Vested Interest in his or her
Profit Sharing Subaccount at any relevant time thereafter shall be equal to an
amount ("X") determined by the following formula: X = P [AB + (R x D)] - (R x
D). For purposes of applying the formula: P is the Participant's Vested
Interest at the relevant time, AB is the balance of the Participant's Profit
Sharing Subaccount at the relevant time; D is the amount distributed to the
Participant pursuant to Section 11.7(a); and
51
R is the ratio of the Participant's Profit Sharing Subaccount balance at the
relevant time to the Participant's Profit Sharing Subaccount balance
immediately after the distribution pursuant to Section 11.7(a).
11.8 DIRECT ROLLOVERS TO ANOTHER QUALIFIED PLAN OR IRA.
(a) This Section 11.8 applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section 11.8, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
(b) An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section 401(a)(9)
of the Code; and the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(c) An eligible retirement plan is an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code or a qualified trust described in section 401(a) of the Code,
that accepts the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity.
(d) A distributee includes a Participant or former Participant. In
addition, the Participant's or former Participant's Surviving Spouse and the
Participant's or former Participant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as
52
defined in Section 414(p) of the Code, are distributees with regard to the
interest of the Surviving Spouse, spouse or former spouse.
(e) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
(f) If a distribution is one to which Sections 401(a)(11) and 417 of
the Code do not apply, such distribution may commence less than 30 days after
the notice required under Section 1.411(a)-11(c) of the Regulations is given,
provided that:
(1) the Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
11.9 CERTAIN SECURITIES LAW RESTRICTIONS. Any distribution of Shares
pursuant to this Section 11 shall be subject to all applicable laws, rules and
regulations and to such approvals by stock exchanges or governmental agencies as
may be deemed necessary or appropriate by the Board of Directors. Each
distributee may be required to give the Employer a written representation that
such distributee will not be involved in a violation of state or federal
securities laws, including the Securities Act of 1933, as amended; the form of
such written representation will be prescribed by the Board of Directors.
11.10 PARTICIPANT LOANS.
(a) Upon a Participant's written request the Committee may direct the
Trustee to make a loan to such Participant from such Participant's Account.
Loans to Participants pursuant to this Section 11.10 shall be administered by
the Committee and shall be subject to a Participant Loan Policy and such other
procedures as may be adopted from time to time by the Committee. The Company
shall not have the discretion to refuse a loan request, so long as the
53
terms of the loan comply with the requirements of this Section 11.10 and the
Participant Loan Policy. The terms of the loan shall be determined by the
Committee, subject to the limits set forth in this Section, and shall be
evidenced by the Participant's promissory note. Loans shall be held in a
segregated Account of the Trust. An Employee who has made a Rollover
Contribution shall be considered a Participant for purposes of this Section,
even if such Employee has not yet become a Participant pursuant to Section 3.
(b) The aggregate outstanding balance of all loans to a
Participant from this Plan and all other qualified plans maintained by the
Employer, when added to any principal repayments on any participant loans
made within the twelve-month period preceding the date on which the loan is
made, may not exceed the lesser of (i) $50,000 or (ii) 50% of the vested
interest in the Participant's Account as of the day of making the loan.
(c) Principal and interest shall be repaid in level, periodic
installments by payroll deductions not less frequent than quarterly over a
definite period of time not to exceed five (5) years, provided, however, that
in the case of a loan the proceeds of which are used by the Participant to
acquire a principal residence of the Participant, the loan may be repayable
over a reasonable period of time in excess of five (5) years as determined by
the Committee.
(d) All loans shall be secured by a lien on the Participant's
interest in the trust. The amount of the loan may not exceed fifty percent
(50%) of the value of the Participant's vested Account balance at the time
the loan is made. The Committee may determine that any distribution made
pursuant to the Plan shall be reduced by an amount up to the outstanding
principal and interest balance of the loan.
54
(e) Any loan made pursuant to this Section 11.10 must not
constitute a prohibited transaction as defined in Section 4975 of the Code.
(f) Loan repayments will be suspended under the Plan as permitted
under Section 414(u)(4) of the Code.
55
SECTION 12. MAXIMUM AMOUNT OF ALLOCATION
12.1 SECTION 415 LIMITATIONS. Annual additions to a Participant's Account
with respect to any Plan Year may not exceed the limitations set forth in
Section 415 of the Code, which are incorporated herein by reference. For
these purposes, (i) "annual additions" shall have the meaning set forth in
Section 415(c)(2) of the Code, as modified elsewhere in the Code and the
Regulations, (ii) the limitation year shall mean the Plan Year unless any
other twelve consecutive month period is designated pursuant to a written
resolution adopted by the Employer, (iii) "compensation" shall have the
meaning elected by the Employer pursuant to Section 415(c)(3) of the Code,
and (iv) "annual additions" shall include annual additions under all other
defined contribution plans maintained by the Employer or any Affiliated
Employer. Effective for Plan Years beginning on or after January 1, 1998,
"compensation" shall be computed without reduction for a Participant's
elective deferrals under Section 402(g)(3) of the Code or for contributions
made by the Employer or the Participant under Section 125 of the Code. If
the requirements of Section 7.5(a) are satisfied, the term "annual additions"
shall not include any amounts credited to the Participant's Account (i)
resulting from rollover contributions, (ii) due to Participating Employer
contributions relating to interest payments on an Exempt Loan deductible
under Section 404(a)(9)(B) of the Code, or (iii) attributable to a forfeiture
of Shares acquired with the proceeds of an Exempt Loan.
Effective for limitation years commencing prior to January 1, 1999, if a
Participant in the Plan also participates in any defined benefit plan (as
defined in Sections 414(j) and 415(k) of the Code) maintained by the Employer or
any Affiliated Employer, in the event that in any Plan Year the sum of the
Participant's Defined Benefit Fraction (as defined in Section 415(e)(2) of the
56
Code) and the Participant's Defined Contribution Fraction (as defined in
Section 415(e)(3) of the Code) exceed 1.0, the benefit under such defined
benefit plan or plans shall be reduced in accordance with the provisions of
that plan or those plans, so that the sum of such fractions with respect to
the Participant will not exceed 1.0. If this reduction does not ensure that
the limitation set forth in Section 12.1 is not exceeded, then the annual
addition to any defined contribution plan, other than the Plan, shall be
reduced in accordance with the provisions of that plan but only to the extent
necessary to ensure that such limitation is not exceeded.
57
12.2 REFUND OR FORFEITURE OF AMOUNTS IN EXCESS OF SECTION 415 LIMITS.
(a) In the event that amounts which would otherwise be allocated
to a Participant's Account under the Plan must be reduced by reason of the
limitations of Section 12.1, then such reduction shall be made in the
following order or priority, but only to the extent necessary:
(i) first the Participant's Profit Sharing Contributions
shall be forfeited and reallocated pursuant to this Section 12.2; and then
(ii) the Participant's Matching Contributions shall be
forfeited and reallocated pursuant to this Section 12.2; and then
(iii) the Participant's Elective Contributions shall be
refunded to the Participant; and then
(iv) Shares allocated to the Participant's Account
attributable to ESOP Contributions shall be forfeited and reallocated
pursuant to this Section 12.2.
(b) Forfeitures arising under the Plan and allocable to such
Participant in respect of such Plan Year shall be reallocated to the Accounts
of other Participants as of the end of the Plan Year for which such reduction
is made in the manner provided under Section 4.5 above.
(c) If, with respect to any Plan Year, there is an excess
contribution on account of the limitations contained in this Section 12.2,
and such excess cannot be fully allocated in accordance with Section 12.2(b)
because of the limitations prescribed in this Section 12, the amount of such
excess which cannot be so allocated shall be held in suspense and allocated
in the succeeding Plan Year prior to any other contributions by the Employer
for such Plan Year.
58
SECTION 13. VOTING RIGHTS
13.1 VOTING OF SHARES IN GENERAL. Except as otherwise required by the
Act, the Code and the Regulations, all voting rights of Shares held in
Participants' Accounts shall be exercised by the Purchasing Agent only as
directed by the Participants or their Beneficiaries in accordance with the
provisions of this Section 13.
13.2 VOTING OF ALLOCATED SHARES.
(a) If any Participating Employer has a registration-type class of
securities (as defined in Section 409(e)(4) of the Code or any successor
statute thereto), then, with respect to all corporate matters submitted to
shareholders, all Shares (including fractional interests in Shares) allocated
and credited to the Accounts of Participants shall be voted in accordance
with the directions of such Participants as given to the Purchasing Agent
(subject to the provisions of Sections 13.4 and 13.6).
(b) If no Participating Employer has a registration-type class of
securities (as defined in Section 409(e)(4) of the Code or any successor
statute thereto), then, only with respect to corporate matters relating to a
corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of a trade or
business, or such other similar transaction that Regulations require, all
Shares allocated and credited to the Accounts of Participants shall be voted
only in accordance with the directions of such Participants as given to the
Purchasing Agent. Any allocated Shares with respect to which Participants
are entitled to vote pursuant to this Section 13.2 and for which such
directions are not received by the Purchasing Agent shall not be voted by the
Purchasing Agent. The Purchasing Agent shall vote all Shares held in the
Trust Fund allocated to the Accounts of Participants from whom voting
instructions are not required to be solicited under Section 13.2 only as the
Purchasing Agent directs in the Purchasing Agent's sole discretion in
accordance with the Act, after the Purchasing Agent determines such action to
be in the best interests of the Participants and their Beneficiaries.
59
13.3 MECHANICS OF VOTING ALLOCATED SHARES. If Participants are entitled
under Section 13.2 to direct the vote with respect to allocated Shares, then,
at least 30 days before each annual or special shareholders' meeting of the
Employer (or, if such schedule cannot be met, as early as practicable before
such meeting), the Committee shall furnish to each Participant a copy of the
proxy solicitation material sent generally to shareholders, together with a
form requesting confidential instructions concerning the manner in which the
Shares allocated to such Participant's Account (including fractional Shares
to 1/1000th of a Share) are to be voted. Upon timely receipt of such
instructions, the Purchasing Agent (after combining votes of fractional
Shares to give effect to the greatest extent possible to Participants'
instructions) shall vote the Shares as instructed. The instructions received
by the Purchasing Agent from each Participant shall be held by the Purchasing
Agent in strict confidence and shall not be divulged or released to any
person, including, without limitation, any officers or Employees of any
Participating Employer, or of any other Employer. The Trustee, the Employer,
the Purchasing Agent and the Committee shall not make recommendations to
Participants on whether to vote or how to vote.
13.4 VOTING OF UNALLOCATED SHARES AND UNVOTED ALLOCATED SHARES. With
respect to unallocated shares held in the Trust Fund and allocated shares
held in the Trust Fund for which no voting instructions are received, the
Purchasing Agent shall vote such Shares in the same proportions as the Shares
for which Participant voting instructions have been received.
13.5 TENDER OR EXCHANGE OF ALLOCATED SHARES. The Committee shall notify
each Participant of each tender or exchange offer for the Shares and utilize
its best efforts to distribute or cause to be distributed to each Participant
in a timely manner all information distributed to shareholders of the
Employer in connection with any such tender or exchange offer. Each
Participant shall have the right from time to time with respect to the Shares
allocated to the Participant's Account (including fractional Shares to
1/1000th of a Share) to instruct the Purchasing Agent in writing as to the
manner in which to respond to any tender or exchange offer which shall be
pending or which may be made in the future for all Shares or any portion
thereof. A Participant's instructions shall remain in force until superseded
in writing by the
60
Participant. The Purchasing Agent shall tender or exchange whole Shares only
as and to the extent so instructed. If the Purchasing Agent does not receive
instructions from a Participant regarding any tender or exchange offer for
Shares, the Purchasing Agent shall have no discretion in such matter and
shall not tender or exchange any such Shares in response thereto. Unless and
until Shares are tendered or exchanged, the individual instructions received
by the Purchasing Agent from Participants shall be held by the Purchasing
Agent in strict confidence and shall not be divulged or released to any
person, including, without limitation, any officers or Employees of any
Participating Employer, or of any other Employer; provided, however, that the
Purchasing Agent shall advise the Employer, at any time upon request, of the
total number of Shares not subject to instructions to tender or exchange.
13.6 TENDER OR EXCHANGE OF UNALLOCATED SHARES. The Purchasing Agent
shall tender unallocated Shares held in the Trust Fund in proportion to the
ratio that (A) the number of Shares with respect to which Participant
instructions in favor of the tender have been received bears to (B) the
number of shares with respect to which Participant instructions for or
against the tender have been received, provided the Purchasing Agent
determines that such action is consistent with its fiduciary obligations
under the Act. Neither the Purchasing Agent, the Committee nor the Trustee
shall have the discretion or power to sell, convey or transfer any
unallocated Shares held in the Participant's Accounts in response to a tender
or exchange offer unless a court of competent jurisdiction determines that
the Purchasing Agent is authorized to sell, convey or transfer any
unallocated Shares held in the Accounts in response to any tender or exchange
offer. In exercising any discretion or power, the Purchasing Agent shall
consider, to the extent permitted by applicable law, including the
Regulations, not only the potential increase in value, if any, in the
Accounts of the Participants as a result of a tender or exchange of the
unallocated Shares, but also the impact of any change in the management or
control of the Employer in the long run, including but not limited to whether
Participants will receive larger or smaller employee benefits than at present
under the Plan.
61
13.7 VOTING OF DECEASED PARTICIPANT'S SHARES. If this Section 13 applies
to Shares allocated to the Account of a deceased Participant, such Participant's
Beneficiary shall be entitled to direct the manner in which to respond to any
tender or exchange offer as if such Beneficiary were the Participant.
62
SECTION 14. DESIGNATION OF BENEFICIARIES
14.1 DESIGNATION OF BENEFICIARY. Each Participant shall file with the
Committee a written designation of one or more persons as the Beneficiary who
shall be entitled to receive the amount, if any, payable under the Plan upon
his or her death. A Participant may from time to time revoke or change his
or her Beneficiary designation without the consent of any prior Beneficiary
by filing a new designation with the Committee. The last such designation
received by the Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. A Participant's
Beneficiary designation shall not be effective to the extent that payments to
the Surviving Spouse are required pursuant to Section 11, and in no event
shall it be effective as of a date prior to such receipt.
14.2 FAILURE TO DESIGNATE BENEFICIARY. If no such Beneficiary
designation is in effect at the time of a Participant's death, or if no
designated Beneficiary survives the Participant, the payment of the amount,
if any, payable under the Plan upon his or her death shall be made to the
Participant's Surviving Spouse, if any; or if the Participant has no
Surviving Spouse, then to the Participant's children, if any, in equal
shares; or if the Participant has no children, to the Participant's parents,
if any, in equal shares; or if the Participant has no parents, to the
Participant's brothers and sisters, if any, in equal shares. If the
Participant has no brothers or sisters, payment shall be made to the
Participant's estate. If the Committee is in doubt as to the right of any
person to receive such amount, the Committee may direct the Trustee to retain
such amount, without liability for any interest thereon, until the rights
thereto are determined, or the Committee may direct the Trustee to pay such
amount into any court of appropriate jurisdiction and such payment shall be a
complete discharge of the liability of the Plan and the Trust Fund therefor.
63
SECTION 15. ADMINISTRATION OF THE PLAN
15.1 THE COMMITTEE. The Committee shall have general responsibility for
the administration, interpretation and construction of the Plan. The
Committee shall be responsible for establishing and maintaining Plan records,
including responsibility for compliance with the Actual Deferral Percentage
and Actual Contribution Percentage tests described in Sections 4.6 and 5.3,
and the Committee shall be responsible for complying with the reporting and
disclosure requirements of the Act. The Committee shall report to the Board
of Directors, or to a committee of the Board of Directors designated for that
purpose, periodically as shall be specified by the Board of Directors or such
designated committee, with regard to the matters for which it is responsible
under the Plan.
15.2 THE TRUSTEE. Except as otherwise provided in the Trust Agreement
or the Plan, the Trustee may act only as directed by the Committee, the
Employer or any other party, as applicable. The Trustee shall have
responsibility under the Plan for the management and control of the assets of
the Plan. The Committee shall periodically review the performance and
methods of the Trustee. The Employer or the Committee shall have the power
to appoint, remove or change the Trustee and, to the extent that the Trust
Fund is invested in assets other than Shares, shall have the power to appoint
or remove one or more investment advisers and to delegate to such adviser
authority and discretion to manage (including the power to acquire and
dispose of) the assets of the Plan, provided that (i) such adviser with such
authority and discretion shall be either a bank or a registered investment
adviser under the Investment Advisers Act of 1940, and shall acknowledge in
writing that it is a fiduciary with respect to the Plan and (ii) the
Committee shall periodically review the investment performance and methods of
each adviser(s) with such authority and discretion. The Committee shall
establish investment standards and policies and communicate the same to the
Trustee. If annuities are to be purchased under the Plan, the Committee
shall determine what contracts should be made available to terminated
Participants or purchased by the Trust Fund.
64
15.3 COMMITTEE'S RESPONSIBILITY FOR ENTERING INTO EXEMPT LOANS AND
VALUATION OF SHARES. The Committee shall have responsibility for directing
the Trustee as to whether and under what terms it shall enter into an Exempt
Loan and for directing the Purchasing Agent whether and under what terms it
shall purchase or otherwise dispose of Shares. In the event that there is no
generally recognized market for Shares, the Committee shall be the named
fiduciary with responsibility for determining the fair market value of the
Shares, provided, that any such determination shall be in accordance with
applicable Regulations, if any, and the Committee shall, in making such
determination, retain an independent appraiser to make such valuation on
behalf of the Committee in accordance with Section 7.9.
15.4 COMMITTEE'S POWER TO ENGAGE OUTSIDE EXPERTS. The Committee may
arrange for the engagement of such legal counsel, who may be counsel for the
Employer, and make use of such agents and clerical or other personnel as they
each shall require or may deem advisable for purposes of the Plan. The
Committee may rely upon the written opinion of such counsel and the
accountants engaged by the Committee and may delegate to any such agent of
said Committee its authority to perform any act hereunder, including without
limitation, those matters involving the exercise of discretion, provided that
such delegation shall be subject to revocation at any time at the discretion
of said Committee. The Committee shall engage such certified public
accountants, who may be accountants for the Employer, as it shall require or
may deem advisable for purposes of the Plan.
15.5 COMPOSITION OF COMMITTEE. The Committee shall consist of at least
three members, each of whom shall be appointed by, shall remain in office at
the will of, and may be removed, with or without cause, by the Board of
Directors. Any member of said Committee may resign at any time. No member of
said Committee shall be entitled to act on or decide any matter relating
solely to himself or any of his or her rights or benefits under the Plan.
The members of the Committee shall not receive any special compensation for
serving in their capacities as members of such Committee but shall be
reimbursed for any reasonable expenses incurred in connection therewith.
Except as otherwise required by the Act, no bond or other security need be
65
required of the Committee or any member thereof in any jurisdiction. Any
member of the Committee, or any agent to whom said Committee delegates any
authority, and any other person or group of persons, may serve in more than
one fiduciary capacity (including service both as a Trustee and
administrator) with respect to the Plan.
15.6 ACTIONS OF COMMITTEE. The Committee shall elect or designate its
own chairman, establish its own procedures and the time and place for its
meetings and provide for the keeping of minutes of all meetings. A majority
of the members of the Committee shall constitute a quorum for the transaction
of business at a meeting of the Committee. Any action of the Committee may
be taken upon the affirmative vote of a majority of the members of the
Committee at a meeting or, at the direction of its Chairman, without a
meeting, by mail, telephone or facsimile, provided that all of the members of
the Committee are informed by mail or telephone of their right to vote on the
proposal and of the outcome of the vote thereon.
15.7 DISBURSEMENT OF PLAN FUNDS. The Committee shall cause to be kept
full and accurate accounts of receipts and disbursements of the Plan, shall
cause to be deposited all funds of the Plan to the name and credit of the
Plan in such depositories as may be designated by the Committee, shall cause
to be disbursed the monies and funds of the Plan when so authorized by the
Committee and shall generally perform such other duties as may be assigned to
them from time to time by the Committee.
15.8 APPLICATION FOR BENEFITS. Each Participant or Beneficiary
believing himself eligible for benefits under the Plan shall apply for such
benefits by completing and filing with the Committee an application for
benefits on a form supplied by the Committee. Before the date on which
benefit payments commence, each such application must be supported by such
information and data as the Committee deems relevant and appropriate.
Evidence of age, marital status (and, in the appropriate instances, health,
death or disability) and location of residence shall be required of all
applicants for benefits. All claims for benefits under the Plan shall,
within a reasonable period of time, be decided by one or more persons
designated in writing by the chairman of the Committee.
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15.9 DENIED CLAIMS FOR BENEFITS. In the event that any claim for
benefits is denied in whole or in part, the Participant or Beneficiary whose
claim has been so denied shall be notified of such denial in writing by the
Committee. The notice advising of the denial shall specify the reason or
reasons for denial, make specific reference to pertinent Plan provisions,
describe any additional material or information necessary for the claimant to
perfect the claim (explaining why such material or information is needed) and
shall advise the Participant or Beneficiary, as the case may be, of the
procedure for the appeal of such denial. All appeals shall be made by the
following procedure:
(a) The Participant or Beneficiary whose claim has been denied
shall file with the Committee a notice of desire to appeal the denial. Such
notice shall be filed within sixty (60) days of notification by the Committee
of claim denial, shall be made in writing and shall set forth all of the
facts upon which the appeal is based. Appeals not timely filed shall be
barred.
(b) The Committee shall, within thirty (30) days of receipt of the
Participant's or Beneficiary's notice of appeal, establish a hearing date on
which the Participant or Beneficiary may make an oral presentation to the
Committee in support of his or her appeal. The Participant or Beneficiary
shall be given not less than ten (10) days' notice of the date set for the
hearing.
(c) The Committee shall consider the merits of the claimant's
written and oral presentations, the merits of any facts or evidence in
support of the denial of benefits and such other facts and circumstances as
the Committee shall deem relevant. If the claimant elects not to make an
oral presentation, such election shall not be deemed adverse to the
claimant's interest, and the Committee shall proceed as set forth below as
though an oral presentation of the contents of the claimant's written
presentation had been made.
(d) The Committee shall render a determination upon the appealed
claim which determination shall be accompanied by a written statement as to
the reasons therefor. The determination so rendered shall be binding on all
parties.
(e) For all purposes under the Plan, such decisions on claims
(where no review is requested) and decisions on review (where review is
requested) shall be final, binding
67
and conclusive on all interested persons as to participation and benefit
eligibility, the Employee's amount of Compensation and any other matter of
fact or interpretation relating to the Plan.
15.10 INDEMNIFICATION. To the maximum extent permitted by law, no member
of the Committee shall be personally liable by reason of any contract or
other instrument executed by such member of the Committee or on his or her
behalf in the Committee member's capacity as a member of such Committee nor
for any mistake of judgment made in good faith, and the Employer shall
indemnify and hold harmless, directly from its own assets (including the
proceeds of any insurance policy the premiums of which are paid from the
Employer's own assets), each member of the Committee and each other officer,
employee or director of the Employer to whom any duty or power relating to
the administration or interpretation of the Plan or to the management and
control of the assets of the Plan may be delegated or allocated, against any
cost or expense (including counsel fees) or liability (including any sum paid
in settlement of a claim with the approval of the Employer) arising out of
any act or omission to act in connection with the Plan unless arising out of
such person's own fraud or willful misconduct. The Employer shall advance
funds for legal expenses to the extent permitted by the Act.
15.11 AGENT FOR SERVICE OF PROCESS. The Committee or such other person
as may from time to time be designated by the Committee shall be the agent
for service of process under the Plan.
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SECTION 16. EXPENSES
16.1 PAYMENT OF PLAN EXPENSES. The expenses incurred in the management and
administration of the Plan shall be paid from the Trust Fund, except to the
extent the Employer, in its sole discretion, may choose to pay such expenses
from time to time; provided that any Trustee expenses paid to The Charles Schwab
Trust Company shall be payable solely by the Employer. Such expenses shall
include (i) the fees and expenses of any employee and of the Trustee for the
performance of their duties under the Plan and Trust Fund (including but not
limited to obtaining investment advice, record keeping services and legal
services), (ii) the expenses incurred by the members of the Committee in the
performance of their duties under the Plan (including reasonable compensation
for any legal counsel, certified public accountants, consultants and agents, and
cost of services rendered with respect to the Plan) and (iii) all other proper
charges and disbursements of the Trustee or the members of the Committee
(including settlements of claims or legal actions approved by counsel to the
Plan).
16.2 EXPENSES ATTRIBUTABLE TO INVESTMENT OF PLAN ASSETS AND TAXES.
Brokerage fees, transfer taxes and any other expenses incident to the purchase
or sale of securities by the Trustee shall be deemed to be part of the cost of
such securities, or deducted in computing the proceeds therefrom, as the case
may be. Expenses attributable to investments of the Trust Fund shall be paid
out of the Trust Fund, except to the extent the Employer, in its sole
discretion, may choose to pay such expenses from time to time; provided that
expense entirely attributable to any one investment or to any one investment
fund shall be allocated pro rata in accordance with Account balances among
Accounts invested in such investment or investment fund. Taxes, if any, of any
and all kinds whatsoever which are levied or assessed on any assets held or
income received by the Trustee shall be paid out of the Trust Fund.
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SECTION 17. EMPLOYER PARTICIPATION
17.1 ADOPTION OF PLAN BY AFFILIATED EMPLOYER. Any Affiliated Employer may
adopt the Plan and the Trust Fund by resolution of its board of directors or
equivalent governing body provided that (i) the Board of Directors has not
expressly disallowed participation by such Affiliated Employer in the Plan;
(ii) the Affiliated Employer has not previously expressly declined to
participate in the Plan; or (iii) the Affiliated Employer is not precluded from
participating in the Plan by a legally binding written document that precludes
such participation; and provided further that the Board of Directors consents to
such adoption. Any Affiliated Employer which so adopts the Plan shall be deemed
to appoint Charles Schwab & Co., Inc., the Committee and the Trustee its
exclusive agents to exercise on its behalf all of the power and authority
conferred under the Plan or the Trust Agreement. This authority shall continue
until the Plan is terminated and the relevant Trust Fund assets have been
distributed.
17.2 TERMINATION OF PARTICIPATION BY PARTICIPATING EMPLOYER. A
Participating Employer may terminate its participation in the Plan by giving the
Committee prior written notice specifying a termination date which shall be the
last day of a month at least 60 days subsequent to the date such notice is
received by the Committee. The Board of Directors may terminate any
Participating Employer's participation in the Plan, as of any termination date
specified by the Committee, for the failure of the Participating Employer to
make proper contributions or to comply with any other provision of the Plan.
17.3 EFFECT OF TERMINATION OF PARTICIPATION BY PARTICIPATING EMPLOYER.
Upon termination of the Plan as to any Participating Employer, such
Participating Employer shall not make any further contributions under the Plan
and no amount shall thereafter be payable under the Plan to or with respect to
any Participants then employed by such Participating Employer, except as
provided in this Section 17. To the maximum extent permitted by the Act, any
rights of Participants no longer employed by such Participating Employer and of
former Participants and their Beneficiaries and Surviving Spouses and other
eligible survivors under the Plan shall
70
be unaffected by such termination and any transfer, distribution or other
disposition of the assets of the Plan as provided in this Section 17 shall
constitute a complete discharge of all liabilities under the Plan with
respect to such Participating Employer's participation in the Plan and any
Participant then employed by such Participating Employer.
The interest of each such Participant who is in Service with such
Participating Employer as of the termination date is the amount, if any,
credited to his or her Account after payment of or provision for expenses and
charges and appropriate adjustment of the Accounts of all such Participants
for expenses and charges as described in Section 16, and all forfeitures
shall be nonforfeitable as of the termination date, and upon receipt by the
Committee of IRS approval of such termination, the full current value of such
amount shall be paid from the Trust Fund in the manner described in Section
17.4 or transferred to a successor employee benefit plan which is qualified
under Section 401(a) of the Code; provided, however, that in the event of any
transfer of assets to a successor employee benefit plan the provisions of
Section 17.4 will apply. No advances against such payments shall be made
prior to such receipt of approval, but after such receipt the Committee, in
its sole discretion, may direct the Trustee to make one or more advances in
accordance with Section 11.1.
All determinations, approvals and notifications referred to above
shall be in form and substance and from a source satisfactory to the
Committee. To the maximum extent permitted by the Act, the termination of the
Plan as to any Participating Employer shall not in any way affect any other
Participating Employer's participation in the Plan.
17.4 LIMITATIONS ON TRANSFER OF PLAN ASSETS TO SUCCESSOR PLAN. No
transfer of the Plan's assets and liabilities to a successor employee benefit
plan (whether by merger or consolidation with such successor plan or
otherwise) shall be made unless each Participant would, if either the Plan or
such successor plan then terminated, receive a benefit immediately after such
transfer which (after taking account of any distributions or payments to such
Participants as part of the same transaction) is equal to or greater than the
benefit such Participant would have been entitled to receive immediately
before such transfer if the Plan had then been
71
terminated. The Committee may also request appropriate indemnification from
the employer or employers maintaining such successor plan before making such
a transfer.
17.5 SHARES ALLOCATED TO SUSPENSE FUND EXCLUDED FROM TRANSFER OF PLAN
ASSETS TO SUCCESSOR PLAN. Notwithstanding any provision of this Section 17 to
the contrary, any Shares allocated to a Suspense Subfund shall not be
transferred to a successor employee benefit plan except as is required or
permitted by the Committee in accordance with the terms of an Exempt Loan and
the Regulations.
72
SECTION 18. AMENDMENT OR TERMINATION OF THE PLAN
18.1 AMENDMENT, SUSPENSION OR TERMINATION OF PLAN.
(a) Subject to the provisions of Section 18.1(b) and (c) hereof,
the board of directors of the Plan Sponsor reserves the right at any time to
suspend or terminate the Plan, any contributions thereunder, or any other
agreement or arrangement forming a part of the Plan, in whole or in part and
for any reason, and to adopt any amendment or modification thereto, all
without the consent of any Participating Employer, Participant, Beneficiary,
Surviving Spouse or other eligible survivor. Subject to the provisions of
Section 18.1(b) and (c) hereof, the Board of Directors reserves the right at
any time to amend or modify the Plan. Each Participating Employer by its
adoption of the Plan shall be deemed to have delegated this authority to the
Board of Directors.
(b) The Board of Directors shall not make any amendment or
modification which would (i) retroactively impair any rights to any benefit
under the Plan which any Participant, Beneficiary, Surviving Spouse or other
eligible survivor would otherwise have had at the date of such amendment by
reason of the contributions theretofore made or (ii) make it possible for any
part of the funds of the Plan (other than such part as is required to pay
taxes, if any, and administration expenses as provided in Section 16) to be
used for or diverted to any purposes other than for the exclusive benefit of
Participants and their Beneficiaries and Surviving Spouses and other eligible
survivors under the Plan prior to the satisfaction of all liabilities with
respect thereto.
18.2 POWER TO RETROACTIVELY AMEND, SUSPEND OR TERMINATE PLAN PROVISIONS.
Subject to the provisions of Section 18.1, any amendment, modification,
suspension or termination of any provision of the Plan may be made
retroactively if necessary or appropriate to qualify or maintain the Plan as
a plan meeting the requirements of Sections 401(a) of the Code or any other
applicable provision of law (including the Act) as now in effect or hereafter
amended or adopted and the Regulations issued thereunder.
73
18.3 NOTICE OF AMENDMENT, SUSPENSION OR TERMINATION. Notice of any
amendment, modification, suspension or termination of the Plan shall be given
by the Board of Directors or the board of directors of the Plan Sponsor, as
the case may be, to the Trustee and all Participating Employers.
18.4 EFFECT OF TERMINATION OF PLAN. Upon termination of the Plan, no
Participating Employer shall make any further contributions under the Plan
and no amount shall thereafter be payable under the Plan to or with respect
to any Participant except as provided in this Section 18, and to the maximum
extent permitted by the Act, transfers or distributions of the assets of the
Plan as provided in this Section 18 shall constitute a complete discharge of
all liabilities under the Plan. The provisions of the Plan which are
necessary for the operation of the Plan and the distribution or transfer of
the assets of the Plan shall remain in force.
Upon receipt by the Committee of IRS approval of such termination,
the full current value of such adjusted amount, and the full value of each
account described in Sections 6.2 and 7.1 above, shall be paid from the Trust
Fund to each Participant and former Participant (or, in the event of the
death of a Participant or former Participant, to the Surviving Spouse or
Beneficiary thereof) in any manner of distribution specified in Section 11
above, including payments which are deferred until the Participant's
termination of Service, as the Committee shall determine. Without limiting
the foregoing, any such distribution may be made in cash or in property, or
both, as the Committee in its sole discretion may direct.
All determinations, approvals and notifications referred to above
shall be in form and substance and from a source satisfactory to the
Committee.
18.5 PARTIAL TERMINATION OF PLAN. In the event that any governmental
authority, including without limitation the IRS, determines that a partial
termination (within the meaning of the Act) of the Plan has occurred or if
there is a complete discontinuance of Employer contributions then (i) the
interest of each Participant affected thereby in his or her Account shall
become nonforfeitable as of the date of such partial termination or complete
discontinuance of contributions and (ii) the provisions of Sections 18.2,
18.3 and 18.4 above, which in the opinion
74
of the Committee are necessary for the execution of the Plan and the
allocation and distribution of the assets of the Plan, shall apply.
18.6 TRUST FOR EXCLUSIVE BENEFIT OF PARTICIPANT. In no event shall any
part of the Trust Fund (other than such part as is required to pay taxes, if
any, and administration expenses as provided in Section 16 above) be used for
or diverted to any purposes other than for the exclusive benefit of
Participants and their Beneficiaries and Surviving Spouses under the Plan.
75
SECTION 19. TOP-HEAVY PLAN REQUIREMENTS
19.1 TOP-HEAVY PLAN - IN GENERAL. For any Plan Year for which this Plan
is a Top-Heavy Plan, the provisions of this Section 19 shall apply
notwithstanding any other provisions of the Plan.
19.2 EFFECT OF TOP-HEAVY STATUS. Each Participant who (i) is a Non-Key
Employee and (ii) is employed on the last day of the Plan Year, shall be
entitled to have contributions allocated to his or her Account of not less
than three percent (3%) of the Participant's Compensation (the "Minimum
Contribution Percentage") regardless of (i) whether such Non-Key Employee has
completed a Year of Service, and (ii) the amount of such Non-Key Employee's
Compensation; provided, however, that the minimum contribution percentage for
any Plan Year shall not exceed the percentage at which contributions are made
under the Plan for the Plan Year for the Key Employee for whom such
percentage is the highest for such Plan Year. For this purpose, such
percentage shall be determined by dividing the contributions made for such
Key Employee by so much of his or her Compensation (which solely for this
purpose includes Elective Contributions made by the Employer for the Key
Employee) for the Plan Year as does not exceed $150,000 (adjusted
automatically for increases in accordance with the Regulations).
Contributions taken into account under this Section 19.2 shall
include contributions under this Plan and under all other defined
contribution plans (as defined in Section 414(i) of the Code) required to be
included in an Aggregation Group; provided, however, that such contributions
shall not include (i) contributions to any defined contribution plan in the
required aggregation group if such contributions enable such a defined
contribution plan to meet the requirements of Sections 401(a)(4) or 410 of
the Code or (ii) contributions under the Social Security Act or any other
federal or state law.
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19.3 TOP-HEAVY VESTING SCHEDULE.
In the event that the Plan is a Top-Heavy Plan, all contributions shall
be vested according to the following vesting schedule:
Years of Service Percentage
---------------- ----------
Less than two years 0%
At least two years but less than three years 20%
At least three years but less than four years 50%
At least four years but less than five years 75%
Five years or more 100%
19.4 DEFINITIONS.
(a) "Top-Heavy Plan" means this Plan for any Plan Year if, as of the
Determination Date, (i) the present value of the Accounts of all Participants
who are Key Employees (excluding former Key Employees) exceeds 60 percent of
the present value of all Participants' Accounts (excluding former Key
Employees) or (ii) the Plan is required to be in an Aggregation Group which
for such Plan Year is a Top-Heavy Group. In determining whether the Plan
constitutes a Top-Heavy Plan, the Committee shall make the following
adjustments:
(i) When more than one plan is aggregated, the Committee shall
determine separately for each plan as of any Determination Date, the present
value of accrued benefits of all Participants and the value of Accounts of
all Participants.
(ii) Any such determination shall include the present value of
distributions made to former Participants under the applicable plan
(including a terminated plan) during the five-year period ending on the
Determination Date, unless reflected in the value of the accrued benefits or
the Accounts of such former Participants as of the Determination Date.
(iii) Any such determination shall include any Rollover
Contribution from any other plan as follows:
77
(A) If the Rollover Contribution is initiated by the
Employee and made to or from a plan maintained by a corporation which is not
an Affiliated Employer, the plan providing the distribution shall include
such distribution in the value of such accrued benefit or Account.
(B) If the Rollover Contribution is not initiated by the
Employee or made from a plan maintained by an Affiliated Employer, the plan
accepting the distribution shall include such distribution in the value of
such accrued benefit or Account.
(b) "Determination Date" means for any Plan Year the last day of the
next preceding Plan Year.
(c) "Aggregation Group" means all plans maintained by the Employer or
any Affiliated Employer which are required to be aggregated or permitted to
be aggregated. For purposes of this Section 19.4(c),
(i) The group of plans that are required to be aggregated (the
"required aggregation group") includes each plan of the Employer or any
Affiliated Employer in which a Key Employee is a Participant, and each other
plan of the Employer or any Affiliated Employer which enables a plan in which
a Key Employee is a Participant to meet the requirements of Sections
401(a)(4) or 410 of the Code; and
(ii) The group of plans that are permitted to be aggregated (the
"permissive aggregation group") includes the required aggregation group plus
one or more plans of the Employer or any Affiliated Employer that is not part
of the required aggregation group and that the Committee certifies as
constituting a plan within the permissive aggregation group. Such plan or
plans may be added to the permissive aggregation group only if the permissive
aggregation group would continue to meet the requirements of Sections
401(a)(4) and 410 of the Code.
(d) "Top Heavy Group" means the Aggregation Group, if as of any
Determination Date, the sum of (i) the present value of the accrued benefits
of all Participants who are Key Employees under all defined benefit plans
(within the meaning of Section 414(j) of the Code)
78
included in the Aggregation Group plus (ii) the aggregate value of the
Accounts of all Participants who are Key Employees under all defined
contribution plans (within the meaning of Section 414(i) of the Code)
included in the Aggregation Group exceeds 60 percent of the sum of (i) the
present value of the accrued benefits for all Participants (excluding former
Key Employees), under all such defined benefit plans plus (ii) the aggregate
value of the Accounts of all Participants (excluding former Key Employees)
under all such defined contribution plans. If the Aggregation Group that is
a Top-Heavy Group is a required aggregation group, each plan in the
Aggregation Group will be a Top-Heavy Plan. If the Aggregation Group that is
a Top-Heavy Group is a permissive aggregation group, only those plans that
are part of the required aggregation group will be treated as a Top-Heavy
Plan. If the Aggregation Group is not a Top-Heavy Group, no plan within such
Aggregation Group will be a Top-Heavy Plan.
For purposes of Section 19.4(a), the present value of accrued benefits
under any defined benefit plan and the value of Accounts under any defined
contribution plan shall be determined as of the Valuation Date that is
coincident with the Determination Date in accordance with the Regulations.
(e) "Key Employee" means any Employee or former Employee who, at any
time during the Plan Year preceding the Determination Date or during any of
the four preceding Plan Years, is or was one of the following:
(i) An officer of the Employer or any Affiliated Employer having
annual compensation (within the meaning of Section 414(q)(4)) greater than 50
percent of the amount in effect under Section 415(b)(1)(A) of the Code for
any Plan Year (as adjusted for increases in the cost of living in accordance
with the Regulations). For purposes of the preceding sentence there shall be
treated as officers for any such Plan Year no more than the lesser of:
(A) 50 Employees, or
(B) the greater of three Employees or 10 percent of the
Employees of the Employer or any Affiliated Employer;
79
(ii) One of the ten Employees owning (or considered as owning
within the meaning of Section 318 of the Code) more than a five percent (5%)
interest and one of the largest interests in the Employer or any Affiliated
Employer. An Employee will not be considered such an owner for any Plan Year
if the Employee's compensation (within the meaning of Section 414(q)(4)) is
less than $30,000 (as adjusted for increases in the cost of living in
accordance with the Regulations); for purposes of determining ownership
pursuant to Section 19.4(e)(ii) the aggregation rules of Section 414(b), (c)
and (m) of the Code apply.
(iii) Any person who owns (or considered as owning within the
meaning of Section 318 of the Code) more than a five percent interest in the
Employer;
(iv) Any person having compensation (within the meaning of
Section 414(q)(4)) of more than $150,000, and owning (or considered as owning
within the meaning of Section 318 of the Code) more than a one percent
interest in the Employer. For purposes of this Section 19.4(e), a
Beneficiary of a Key Employee shall be treated as a Key Employee and the
interests inherited by such Beneficiary shall be treated the same as if owned
by the Key Employee.
(f) "Non-Key Employee" means any "Non-Key Employee" as defined in
Section 416(i)(2) of the Code and the Regulations promulgated thereunder.
19.5 MAINTENANCE OF DEFINED BENEFIT PLAN IN ADDITION TO PLAN.
Effective for limitation years commencing prior to January 1, 2000, in
the event that the Plan is a Top-Heavy Plan for any Plan Year and the
Employer also maintains a defined benefit plan (within the meaning of Section
414 of the Code) which provides benefits on behalf of Participants, then one
of the two following provisions shall apply:
(1) If the Plan is a Top-Heavy Plan for any Plan Year but would not be a
"Top-Heavy Plan" for the Plan Year if "90 percent" were substituted for "60
percent" in Section 19.4(a), then Section 19.2 shall be applied for such Plan
Year by substituting "four percent" for "three percent."
80
(2) If a Top-Heavy Plan would continue to be a "Top-Heavy Plan" for the
Plan Year if "90 percent" were substituted for "60 percent", then the
denominator of the defined contribution plan fraction shall be calculated for
such Plan Year by substituting "1.0" for "1.25", except with respect to any
Participant who is not entitled to an allocation of Employer contributions
and does not receive any accruals under any defined benefit plan (within the
meaning of Section 414(j) of the Code) maintained by the Employer.
In the event that another defined contribution plan or a defined benefit
plan maintained by the Employer provides contributions or benefits on behalf
of Participants, the Committee shall take such other plan into account as a
part of this Plan to the extent required by the Code and in accordance with
the Regulations.
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SECTION 20. GENERAL LIMITATIONS AND PROVISIONS
20.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES. In no event
shall any part of the funds of the Plan be used for or diverted to any
purposes other than for the exclusive benefit of Participants and their
Beneficiaries under the Plan except as permitted under Section 403(c) of the
Act. Upon the transfer by a Participating Employer of any money to the
Trustee, all interest of the Participating Employer therein shall cease and
terminate.
20.2 NO RIGHTS TO CONTINUED EMPLOYMENT. Nothing contained in the Plan
shall give any employee the right to be retained in the employment of the
Employer or any Affiliated Employer or affect the right of the Employer or
any Affiliated Employer to dismiss any employee. The adoption and
maintenance of the Plan shall not constitute a contract between the Employer
and any employee or be consideration for, or an inducement to or condition
of, the employment of any employee.
20.3 TRUST SOLE SOURCE OF BENEFITS. The Trust Fund shall be the sole
source of benefits under the Plan and, except as otherwise required by the
Act, the Employer and the Committee assume no liability or responsibility for
payment for such benefits, and each Participant, Surviving Spouse,
Beneficiary or other person who shall claim the right to any payment under
the Plan shall be entitled to look only to the Trust Fund for such payment
and shall not have any right, claim or demand therefor against the Employer,
the Committee, or any Participant thereof, or any employee or director of the
Employer.
20.4 RISK OF DECREASE IN ASSETS. Each Participant, Beneficiary and
Surviving Spouse shall assume all risk in connection with any decrease in the
value of the assets of the Trust Fund and the Participants' Accounts or
special accounts and neither the Employer nor the Committee shall be liable
or responsible therefor.
20.5 INCAPACITY OF PARTICIPANT OR BENEFICIARY. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable
to care for his or her affairs because of illness or accident, or is a minor,
or has died, then any payment due such person or his
82
or her estate shall be made to his or her duly appointed legal
representative. Any such payment shall be a complete discharge of the
liability of the Plan and the Trust Fund therefor.
20.6 ANTIALIENATION; QUALIFIED DOMESTIC RELATIONS ORDERS.
(a) Except insofar as may otherwise be required by law or pursuant
to the terms of a Qualified Domestic Relations Order, as set forth in this
Section 20.5, no amount payable at any time under the Plan and the Trust Fund
shall be subject in any manner to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind
nor in any manner be subject to the debts or liabilities of any person, and
any attempt to so alienate or subject any such amount, whether presently or
thereafter payable, shall be void. If any person shall attempt to, or shall,
alienate, sell, transfer, assign, pledge, attach, charge or otherwise
encumber any amount payable under the Plan and Trust Fund, or any part
thereof, or if by reason of his or her bankruptcy or other event happening at
any such time such amount would be made subject to his or her debts or
liabilities or would otherwise not be enjoyed by such person, then the
Committee, if it so elects, may direct that such amount be withheld and that
the same or any part thereof be paid or applied to or for the benefit of such
person.
(b) Upon receipt of notification of any judgment, decree or order
(including approval of a property settlement agreement) which relates to the
provision of child support, alimony payments, or marital property rights of a
spouse, former spouse, child, or other dependent of a Participant and which
is made pursuant to a state domestic relations law (including a community
property law) (herein referred to as a "domestic relations order"), the
Committee shall (i) notify the Participant and any prospective Alternate
Payee named in the order of the receipt and date of receipt of such domestic
relations order and of the Plan's procedures for determining the status of
the domestic relations order as a Qualified Domestic Relations Order, and
(ii) within a reasonable period after receipt of such order, determine
whether it constitutes a Qualified Domestic Relations Order. The Plan's
procedures for the determination of whether a domestic relations order
constitutes a Qualified Domestic Relations
83
Order shall be set forth by the Committee in writing, shall provide for the
notification of each person specified in that order as entitled to payment of
benefits under the Plan (at the address included in the domestic relations
order) of such procedures promptly upon receipt by the Committee of such
domestic relations order, and shall permit the prospective Alternate Payee to
designate a representative for receipt of copies of notices that are sent to
the prospective Alternate Payee with respect to a domestic relations order.
(c) During any period in which the issue of whether a domestic
relations order is a Qualified Domestic Relations Order is being determined
(by the Committee, by a court of competent jurisdiction, or otherwise),
including the period beginning on the date of the Committee's receipt of the
order, the Committee shall segregate in a separate account in the Plan or in
an escrow account held by a Trustee the amounts, if any, which would have
been payable to the Alternate Payee during such period if the order had been
determined to constitute a Qualified Domestic Relations Order, provided that
if no payments would otherwise be made under the Plan to the Alternate Payee
or to the Participant or a Beneficiary of the Participant while the status of
the order as a Qualified Domestic Relations Order is being determined, no
segregation into a separate or escrow account shall be required. If a
domestic relations order is determined to be a Qualified Domestic Relations
Order within eighteen (18) months of the date of its receipt by the Committee
(or from the beginning of any other period during which the issue of its
being a Qualified Domestic Relations Order is being determined by the
Committee) the Committee shall cause to be paid to the persons entitled
thereto the amounts, if any, held in the separate or escrow account referred
to above in one lump sum. If a domestic relations order is determined not be
a Qualified Domestic Relations Order, or if the status of the domestic
relations order as a Qualified Domestic Relations Order is not finally
resolved within such eighteen month period, the Committee shall cause the
separate account or escrow account balance to be returned, with interest
thereon, to the Participant's Account or to be paid to the person or persons
to whom such amount would have been paid if there had been no such domestic
relations order, whichever shall
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apply. Any subsequent determination that such domestic relations order is a
Qualified Domestic Relations Order shall be prospective in effect only.
(d) (i) Benefits payable to an Alternate Payee shall be payable
in one lump sum and in no event shall such benefits continue beyond the
lifetime of the Alternate Payee. Such payment may be made at the time
specified in the Qualified Domestic Relations Order irrespective of whether
the Participant has attained the "earliest retirement age" (within the
meaning of Section 414(p)(4)(B) of the Code). In particular, no Alternate
Payee shall have the right with respect to any benefit payable by reason of a
Qualified Domestic Relations Order to (A) designate a beneficiary with
respect to amounts becoming payable under the Plan, (B) elect a method of
benefit distribution providing for benefits continuing beyond the Alternate
Payee's lifetime, (C) provide survivorship benefits to a spouse or dependent
of such Alternate Payee or to any other person, spouse, dependent or other
person, or (D) transfer rights under the Qualified Domestic Relations Order
by will or by state law of intestacy.
(ii) None of the payments, benefits or rights of any
Alternate Payee shall be subject to any claim of any creditor, and, in
particular, to the fullest extent permitted by law, all such payments,
benefits and rights shall be free from attachment, garnishment, trustee's
process, or any other legal or equitable process available to any creditor of
such Alternate Payee. No Alternate Payee shall have the right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or
payments which he or she may expect to receive, contingently or otherwise,
under the Plan.
(iii) Alternate Payees shall not have any right to (A) borrow
money under any Participant loan provisions under the Plan, (B) exercise any
Participant investment direction rights or privileges under the Plan, (C)
exercise any other election, privilege, option or direction rights of the
Participant under the Plan except as specifically provided in the Qualified
Domestic Relations Order, or (D) receive communications with respect to the
Plan except as specifically provided by law, regulation or the Qualified
Domestic Relations Order.
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(iv) Each Alternate Payee shall advise the Committee in
writing of each change of his or her name, address or marital status, and of
each change in the provisions of the Qualified Domestic Relations Order or
any circumstance set forth therein which may be material to the Alternate
Payee's entitlement to benefits thereunder or the amount thereof. Until such
written notice has been provided to the Committee, the Committee shall be (A)
fully protected in not complying with, and in conducting the affairs of the
Plan in a manner inconsistent with, the information set forth in the notice,
and (B) required to act with respect to such notice prospectively only, and
then only to the extent provided for in the Qualified Domestic Relations
Order. The Committee shall not be required to modify or reverse any payment,
transaction or application of funds occurring before the receipt of any
notice that would have affected such payment, transaction or application of
funds, nor shall the Committee or any other party be liable for any such
payment, transaction or application of funds.
(v) Except as specifically provided for in the Qualified
Domestic Relations Order, an Alternate Payee shall have no right to interfere
with the exercise by the Participant or by any Beneficiary of their
respective rights, privileges and obligations under the Plan.
(e) For purposes of this Plan, a Qualified Domestic Relations Order
means any judgment, decree, or order (including approval of a property
settlement agreement) which has been determined by the Committee in
accordance with procedures established under the Plan, to constitute a
qualified domestic relations order within the meaning of Section 414(p)(1) of
the Code and Alternate Payee means any person entitled to current or future
payment of benefits under the Plan pursuant to a Qualified Domestic Relations
Order.
20.7 INABILITY TO LOCATE PARTICIPANT OR BENEFICIARY. If the Committee
cannot ascertain the whereabouts of any person to whom a payment is due under
the Plan, and if, after five years from the date such payment is due, a
notice of such payment due is mailed to the last known address of such
person, as shown on the records of the Committee or the Employer, and within
three months after such mailing such person has not made written claim
therefor, the Committee,
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if it so elects, may direct that such payment and all remaining payments
otherwise due to such person be canceled on the records of the Plan and the
amount thereof applied to reduce the contributions of the Employer, and upon
such cancellation, the Plan and the Trust Fund shall, to the maximum extent
permitted by the Act, have no further liability therefor except that, in the
event such person later notifies the Committee of his or her whereabouts and
requests the payment or payments due to such person under the Plan, the
amount so applied shall be paid to him or her as provided in Section 11. All
elections, designations, requests, notices, instructions, and other
communications from the Employer, a Participant, Beneficiary, Surviving
Spouse or other person to the Committee required or permitted under the Plan
shall be in such form as is prescribed from time to time by the Committee,
shall be mailed or delivered to such location as shall be specified by the
Committee, and shall be deemed to have been given and delivered only upon
actual receipt thereof by the Committee at such location.
20.8 FAILURE TO RECEIVE IRS APPROVAL. Notwithstanding any other
provision herein, if this Plan shall not be approved by the IRS under the
provisions of the Code and the Regulations for any reason (including failure
to comply with any condition for such approval imposed by the IRS)
contributions made after the restatement of this Plan and prior to such
denial shall be returned, without any liability to any person, within one
year after the date of denial of such approval.
20.9 CONTRIBUTIONS CONDITIONED ON DEDUCTIBILITY. Notwithstanding any
other provision herein, all contributions to the Trust Fund are expressly
conditioned upon their deductibility under Section 404 of the Code and the
Regulations, and in the event of the final disallowance of the deduction for
any contribution, in whole or in part, then such contribution (to the extent
the deduction is disallowed) shall upon direction of the Committee, which
shall be given in conformity with the provisions of the Act, be returned,
without liability to any person, within one year after such final
disallowance.
20.10 MISTAKE OF FACT. Notwithstanding any other provisions herein, if
any contribution is made by a mistake of fact, such contribution shall upon
the direction of the Committee, which
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shall be given in conformity with the provisions of the Act, be returned,
without liability to any person, within one year after the payment of such
contribution.
20.11 COMMUNICATIONS WITH COMMITTEE. All elections, designations,
requests, notices, instructions, and other communications from the Employer,
a Participant, Beneficiary, Surviving Spouse or other person to the Committee
required or permitted under the Plan shall be in such form as is prescribed
from time to time by such Committee, shall be mailed by first-class mail or
delivered to such location as shall be specified by such Committee, and shall
be deemed to have been given and delivered only upon actual receipt thereof
by such Committee at such location.
20.12 COMMUNICATIONS WITH PARTICIPANTS AND BENEFICIARIES. All notices,
statements, reports and other communications from the Employer or the
Committee to any Employee, Participant, Surviving Spouse, Beneficiary or
other person required or permitted under the Plan shall be deemed to have
been duly given when delivered to, or when mailed by first-class mail,
postage prepaid and addressed to, such Employee, Participant, Surviving
Spouse, Beneficiary or other person at his or her address last appearing on
the records of the Committee.
20.13 PRIOR SERVICE CREDIT. Upon such terms and conditions as the
Committee may approve, and subject to any required IRS approval, benefits may
be provided under the Plan to a Participant with respect to any period of the
Participant's prior employment by any organization, and such benefits (and
any Service credited with respect to such period of employment under Section
2.25) may be provided for, in whole or in part, by funds transferred,
directly or indirectly (including a rollover from an individual retirement
account), to the Trust Fund from an employee benefit plan of such
organization which qualified under Section 401(a) of the Code.
20.14 GENDER AND NUMBER. Except where otherwise required by the context,
whenever used in the Plan the masculine gender includes the feminine and the
singular shall include the plural.
20.15 HEADINGS. The captions preceding the Sections of the Plan have been
inserted solely as a matter of convenience and in no way define or limit the
scope or intent of any provisions of the Plan.
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20.16 GOVERNING LAW. The Plan and all rights thereunder shall be governed
by and construed in accordance with the Act and, to the extent not
inconsistent therewith, the laws of the State of California.
20.17 SEVERABILITY OF PROVISIONS. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and
enforced as if such provisions had not been included.
20.18 HEIRS, ASSIGNS AND PERSONAL REPRESENTATIVES. The Plan shall be
binding upon the heirs, executors, administrators, successors and assigns of
the parties, including each Participant and Beneficiary, present and future
and all persons for whose benefit there exists any QDRO with respect to any
Participant (except that no successor to the Plan Sponsor shall be considered
a Plan Sponsor unless that successor adopts the Plan).
20.19 RELIANCE ON DATA AND CONSENTS. The Plan Sponsor, the Employer, each
participating Employer, the Board of Directors, the Committee, the Trustee,
all fiduciaries with respect to the Plan, and all other persons or entities
associated with the operation of the Plan, the management of its assets, and
the provision of benefits thereunder, may reasonably rely on the truth,
accuracy and completeness of all data provided by any Participant, Surviving
Spouse, Beneficiary, and Alternate Payee, including, without limitation, data
with respect to age, health and marital status. Furthermore, the Plan
Sponsor, the Employer, each participating Employer, the Board of Directors,
the Committee, the Trustee, and all fiduciaries with respect to the Plan may
reasonably rely on all consents, elections and designations filed with the
Plan or those associated with the operation of the Plan and its corresponding
Trust by any Participant, Surviving Spouse, Beneficiary, Alternate Payee, or
any representative of any such person, without duty to inquire into the
genuineness of any such consent, election or designation. None of the
aforementioned persons or entities associated with the operation of the Plan,
its assets and the benefits provided under the Plan shall have any duty to
inquire into any such data, and all may rely on such data being current to the
date of reference, it being the duty of the Participants,
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Surviving Spouses, Beneficiaries and Alternate Payees to advise the
appropriate parties of any change in such data.
20.20 QUALIFIED MILITARY SERVICE. Notwithstanding any provision of this
Plan to the contrary, contributions, benefits and service credit with respect
to qualified military service will be provided in accordance with Section
414(u) of the Code.
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SECTION 21. APPLICATION TO PUERTO RICO EMPLOYEES
21.1 MODIFICATIONS APPLICABLE TO PUERTO RICO. The provisions of
this Section shall govern the application of the provisions of the Plan to
Participants who are employed by the Company in and are residents of the
Commonwealth of Puerto Rico ("Puerto Rico Participants"):
(a) Notwithstanding Section 2.25, the definition of "Highly
Compensated Participant" shall be a Puerto Rico Participant employed by the
Company who receives Compensation that exceeds the Compensation paid to two
thirds of the Puerto Rico Participants, as provided in Section 165(e) of the
Puerto Rico Income Tax Act;
(b) The following shall apply in lieu of the second sentence
of Section 5.1(a) hereof: The Salary Reduction Agreement shall provide for
Elective Contributions equal to any whole percentage between one percent (1%)
and ten Percent (10%) of a Participant's Compensation in any payroll period,
not to exceed $7,500 (reduced by any contributions made by the Participant to
an IRA) in any calendar year;
(c) The Actual Deferral Percentage Test set forth in Section
5.3 shall be applied separately with respect to Puerto Rico Participants.
For purposes of applying the Actual Deferral Percentage Test to Puerto Rico
Participants, the definition of Highly Compensated Employee contained in
subparagraph (a) hereof shall be used; and
(d) For purposes of applying subparagraphs (b) and (c) of this
Section 21.1, the definition of Compensation contained in Section 2.11 shall
be applied without regard to clause (xii) thereof.
In all other respects, the terms of this Plan shall apply to Puerto
Rico Participants.
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