Stilwell Financial Inc.
401(k), Profit Sharing and
Employee Stock Ownership Plan
as amended and restated
effective
November 1, 2001
PREAMBLE
The purpose of this Plan and Trust is to provide, in accordance with
its provisions, a defined contribution plan providing retirement and other
related benefits for those Employees of the Employer who are eligible to
participate hereunder.
It is intended that the Plan qualify for approval under Internal
Revenue Code Section 401(a). It is intended that the Trust be exempt from
taxation under Code Section 501(a). It is further intended that the Plan comply
with the provisions of the Employee Retirement Income Security Act of 1974
(ERISA).
This Plan and Trust is exclusively for the benefit of the eligible
Employees and their Beneficiaries. The provisions of the Plan, as amended and
restated, will apply to all Plan Participants and Beneficiaries. However, if an
Employee is not credited with an Hour of Service on or after the restated
Effective Date, such Employee's Vested Accrued Benefit will be determined under
the terms of the Plan that were in effect as of the date the Employee was last
credited with an Hour of Service with the Employer.
This document is a complete amendment and restatement of the Stilwell
Financial Inc. 401(k) and Profit Sharing Plan, which was originally effective
July 12, 2000, and the Stilwell Financial Inc. Employee Stock Ownership Plan
which was originally effective October 1, 1999. The undersigned Plan Sponsor
hereby adopts this amendment and restatement to be effective November 1, 2001,
except as otherwise specified.
In addition, the Plan is amended to include certain good faith
provisions intended to be construed in accordance with the Economic Growth and
Tax Relief Reconciliation Act of 2001 ("EGTRRA") and guidance issued thereunder.
Except as otherwise provided, these good faith EGTRRA provisions shall be
effective as of the first day of the first Plan Year beginning after December
31, 2001. The good faith EGTRRA provisions shall supercede the provisions of the
Plan to the extent those provisions are inconsistent with the good faith EGTRRA
provisions.
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Background
Stilwell Financial Inc. established, effective as of July 12, 2000,
the Stilwell Financial Inc. 401(k)and Profit Sharing Plan ("401(k) Plan") for
the administration and distribution of (i) amounts transferred to the 401(k)Plan
from the Kansas City Southern Industries, Inc. 401(k) Plan and the Kansas City
Southern Industries, Inc. Profit Sharing Plan on behalf of current and former
employees of Stilwell Financial Inc. and its subsidiaries and (ii) contributions
to be made by the Employers for the purpose of providing retirement benefits to
eligible employees of Stilwell Financial Inc. and its subsidiaries.
Immediately prior to July 12, 2000, Stilwell Financial Inc. and its
subsidiaries were members of the controlled group of corporations (within the
meaning of Code ss. 414(b)) that included Kansas City Southern Industries, Inc.
As of July 12, 2000, all of the shares of Stilwell Financial Inc. held by Kansas
City Southern Industries, Inc. were distributed to the shareholders as a spin
off dividend and Stilwell Financial Inc. and its subsidiaries thereby ceased to
be members of the controlled group of corporations that included Kansas City
Southern Industries Inc.
Prior to July 12, 2000, eligible employees of Stilwell Financial Inc.
participated in the Kansas City Southern Industries, Inc. 401(k) Plan and the
Kansas City Southern Industries, Inc. Profit Sharing Plan. As of the July 12,
2000, the Kansas City Southern Industries, Inc. 401(k) Plan was split into two
separate plans: (1) a 401(k) plan, together with a profit sharing plan
component, providing benefits to eligible employees of Stilwell Financial Inc.
and its subsidiaries, to which were transferred the assets of the Kansas City
Southern Industries, Inc. 401(k) Plan and the Kansas City Southern Industries,
Inc. Profit Sharing Plan allocable to employees and former employees of Stilwell
Financial Inc. and its subsidiaries, and which is known as the Stilwell
Financial Inc. 401(k) and Profit Sharing Plan; and (2) a 401(k) plan providing
benefits to employees of Kansas City Southern Industries Inc. and certain of its
affiliates other than Stilwell Financial Inc. and its subsidiaries, and which
continued to be known as the Kansas City Southern Industries, Inc. 401(k). As
of July 12, 2000, Kansas City Southern Industries, Inc. also continued to
maintain the Kansas City Southern Industries, Inc. Profit Sharing Plan, which
continued to hold assets allocable to employees and former employees of Kansas
City Southern Industries, Inc. and certain of its affiliates other than Stilwell
Financial Inc. and its subsidiaries.
Effective as of July 12, 2000, employees of Stilwell Financial Inc. and
its subsidiaries ceased to be eligible to continue active participation in the
Kansas City Southern Industries, Inc. Plans. Effective as of July 12, 2000, the
401(k) Plan was established by Stilwell Financial Inc. as a successor to the
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Kansas City Southern Industries, Inc. Plans to provide retirement benefits for
eligible employees who continue employment with or become employed by Stilwell
Financial Inc. and its subsidiaries following the July 12, 2000.
Prior to January 1, 2001, Janus Capital Corporation sponsored the Janus
Capital Corporation Profit Sharing Plan in which eligible employees of Janus
Capital Corporation, Janus Service Corporation and Janus Capital International
Limited (collectively, "Janus") participated, and Berger LLC sponsored the
Berger 401(k) Profit Sharing Plan in which eligible employees participated.
Effective as of the January 1, 2001, the Janus Capital Corporation Profit
Sharing Plan and the Berger 401(k) Profit Sharing Plan were merged into the
401(k) Plan.
The provisions of the 401(k) Plan, as previously amended and restated
effective as of January 1, 2001, apply to an Employee who is employed by an
Employer on or after January 1, 2001, and to any other Employee (i) who was
employed by an Employer before July 12, 2000, whose Account was transferred from
either of the Kansas City Southern Industries, Inc. Plans to this Plan and who
continues to have an Account in this Plan as of January 1, 2001 or (ii) who was
employed by an Employer before January 1, 2001 and whose Account was transferred
from the Janus Capital Corporation Profit Sharing Plan or the Berger 401(k)
Profit Sharing Plan to the 401(k) Plan. If a Participant whose Account was
transferred from either of the Kansas City Southern Industries, Inc. Plans to
the 401(k) Plan as of July 12, 2000 terminated employment from his last Employer
prior to such date, or if a Participant whose Account is transferred from the
Janus Capital Corporation Profit Sharing Plan or the Berger Plan to the 401(k)
Plan as of January 1, 2001 terminated employment from his last Employer prior to
January 1, 2001, the terms of this Plan, as amended and restated effective as of
January 1, 2001, shall govern the maintenance and distribution of such
Participant's Account on and after January 1, 2001, and the terms of this Plan
shall govern the maintenance and distribution of his Account on and after
November 1, 2001, but in all other respects the benefits to which such
Participant is entitled shall be determined under the terms of the Kansas City
Southern Industries, Inc. 401(k) Plan, Kansas City Southern Industries, Inc.
Profit Sharing Plan, Janus Capital Corporation Profit Sharing Plan or Berger
401(k) Profit Sharing Plan, as applicable, as in effect on the date of the
Employee's termination of employment.
Stilwell Financial Inc. established, effective as of October 1, 1999,
the Stilwell Financial Inc. Employee Stock Ownership Plan for the administration
and distribution of (i) accounts transferred to the Plan from the Kansas City
Southern Industries, Inc. Employee Stock Ownership Plan on behalf of
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current and former employees of Stilwell Financial Inc. and its subsidiaries and
(ii) contributions to be made by the Employers that are members of the Stilwell
Financial Inc. for the purpose of providing retirement benefits to eligible
employees.
As of October 1, 1999 and thereafter through the period ending
immediately prior to July 12, 2000, the members of the Stilwell Financial Inc.
were members of the controlled group of corporations (within the meaning of Code
ss. 414(b)) that includes Kansas City Southern Industries, Inc. As of July 12,
2000, all of the shares of Stilwell Financial Inc. held by Kansas City Southern
Industries, Inc. were distributed to the shareholders of Kansas City Southern
Industries, Inc. as a spin off dividend (such transaction being referred to
herein as the "Spinoff") and the members of the Stilwell Group thereby ceased to
be members of the controlled group of corporations that includes Kansas City
Southern Industries, Inc.
Prior to October 1, 1999, eligible employees of the Stilwell Financial
Inc. participated in the Kansas City Southern Industries, Inc. Employee Stock
Ownership Plan. As of October 1, 1999, the Kansas City Southern Industries, Inc.
Employee Stock Ownership Plan was split into two separate plans: (1) an employee
stock ownership plan providing benefits to eligible employees of Stilwell
Financial Inc., to which were transferred the assets of the Kansas City Southern
Industries, Inc. Employee Stock Ownership Plan allocable to employees and former
employees of Stilwell Financial Inc., and which is known as the Stilwell
Financial Inc. Employee Stock Ownership Plan ("ESOP"); and (2) an employee stock
ownership plan providing benefits to employees of Kansas City Southern
Industries, Inc. and certain of its affiliates, which continued to hold the
assets of the Kansas City Southern Industries, Inc. Employee Stock Ownership
Plan allocable to eligible employees and former employees, and which continued
to be known as the Kansas City Southern Industries, Inc. Employee Stock
Ownership Plan.
Effective as of October 1, 1999, employees of the Stilwell Financial
Inc. and its subsidiaries ceased to be eligible to continue active participation
in the Kansas City Southern Industries, Inc. Employee Stock Ownership Plan.
Effective as of October 1, 1999, the Stilwell Financial Inc. Employee Stock
Ownership Plan was established by Stilwell Financial Inc. as a successor to the
Kansas City Southern Industries, Inc. Employee Stock Ownership Plan to provide
retirement benefits for eligible employees who continue employment with or
become employed by Stilwell Financial Inc. following October 1, 1999.
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As a result of the Spinoff, Participants' Accounts under the ESOP held
both Kansas City Southern Industries, Inc. shares and shares of common stock of
Stilwell Financial Inc. that were received as dividends with respect to such
Kansas City Southern Industries, Inc. shares, and are Employer Securities within
the meaning of Section 1.32. Following the Spinoff, all of the Kansas City
Southern Industries, Inc. shares allocated to Participants' Accounts were sold
and the sales proceeds reinvested in shares of common stock of Stilwell
Financial Inc.
Prior to January 1, 2001, the Stilwell Financial Inc. Employee Stock
Ownership Plan was intended to be an employee stock ownership plan, and to
qualify as such under Section 4975(e)(7) of the Code and under Treasury
Regulation Section 54.4975-11. Effective as of January 1, 2001, the Stilwell
Financial Inc. Employee Stock Ownership Plan was amended and restated , and as
so amended and restated the Plan (i) was and is intended to be a stock bonus
plan, and to qualify as such under Section 401(a) of the Code (including Section
401(a)(23) of the Code) and applicable Treasury Regulations, (ii) was and is not
intended to be an employee stock ownership plan within the meaning of Section
4975(e)(7) of the Code, and (iii) was and is intended to satisfy the
requirements of Treasury Regulation Section 54.4975-11 (including the
requirement to provide participants with nonterminable protections and rights
set forth in Treasury Regulation Section 54.4975-11(a)(3)) necessary to maintain
the qualification of the Plan as an employee stock ownership plan under Section
4975(e)(7) of the Code and Treasury Regulation Section 54.4975-11 with respect
to all periods prior to January 1, 2001.
Effective as of January 1, 2001, Berger LLC became a participating
Employer under the Stilwell Financial Inc. Employee Stock Ownership Plan.
The provisions of the Stilwell Financial Inc. Employee Stock Ownership
Plan, as amended and restated effective as of January 1, 2001, apply to an
Employee who is employed by an Employer on or after January 1, 2001, and to any
other Employee who was employed by an Employer before the October 1, 1999, whose
Account was transferred from the Kansas City Southern Industries Inc. Employee
Stock Ownership Plan to the Stilwell Financial Inc. Employee Stock Ownership
Plan and who continued to have an Account in the Stilwell Financial Inc.
Employee Stock Ownership Plan as of January 1, 2001. If a Participant whose
Account was transferred from the Kansas City Southern Industries Inc. Employee
Stock Ownership Plan to the Stilwell Financial Inc. Employee Stock Ownership
Plan as of October 1, 1999 terminated employment from his last Employer prior to
such date, the terms of the Stilwell Financial Inc. Employee Stock Ownership
Plan, as amended and restated effective as of January 1, 2001, shall govern the
maintenance and distribution of his Account on and after January 1, 2001, and
the term
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of the Plan shall govern the maintenance and distribution of his Account on and
after November 1, 2001, but in all other respects the benefits to which he is
entitled shall be determined under the terms of the Kansas City Southern
Industries Inc. Employee Stock Ownership Plan as in effect on the date of the
Employee's termination of employment.
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Contents
Article 1 -- DEFINITIONS ............................... 1-1
Article 2 -- Eligibility to Participate ................ 2-1
Article 3 -- Participant Accounts ...................... 3-1
Article 4 -- Accounting and Valuation .................. 4-1
Article 5 -- In-service Withdrawals .................... 5-1
Article 6 -- RESERVED.................................... 6-1
Article 7 -- Payment of Benefits ....................... 7-1
Article 8 -- MISCELLANEOUS ............................. 8-1
Article 9 -- ADMINISTRATION ............................ 9-1
Article 10 -- Limitation on Contributions ............... 10-1
Article 11 -- Nondiscrimination Provisions .............. 11-1
Article 12 -- Top-heavy Provisions ...................... 12-1
Article 13 -- Trustee and Trust Fund .................... 13-1
Article 14 REPURCHASE OF EMPLOYER SECURITIES ......... 14-1
Article 1
DEFINITIONS
As used in this document, unless otherwise defined or required by the context,
the following terms have the meanings set forth in this Article 1. Some of the
terms used in this document are not defined in Article 1, but for convenience
are defined as they are introduced in the text.
1.01 Account
Account means a separate account maintained for each Participant
reflecting applicable contributions, applicable forfeitures, investment
income or loss allocated to the account, and distributions.
1.02 Accrued Benefit
A Participant's Accrued Benefit means the total value of his
Account(s).
1.03 Beneficiary
Beneficiary means the person, persons, trust or other entity who is
designated, in accordance with Section 7.05 below, to receive any
amount payable upon the death of a Participant.
1.04 Code
Code means the Internal Revenue Code of 1986, as it may be amended from
time to time, and all regulations issued thereunder. Reference to a
section of the Code includes that section and any comparable section or
sections of any future legislation that amends, supplements or
supersedes such section and any regulations issued thereunder.
1.05 Compensation
Except where otherwise specifically provided in this Plan, Compensation
means W-2 Wages. W-2 Wages means wages for federal income tax
withholding purposes as defined in Code Section 3401(a), but determined
without regard to any rules that limit the remuneration included in
wages under this definition based on the nature or location of the
employment or the services performed. The Plan Administrator may treat
the amount reported as "wages, tips and other compensation" on Form W-2
as satisfying this definition.
Notwithstanding the foregoing, compensation includes any amounts
contributed by the Employer on behalf of any Employee pursuant to a
salary reduction agreement which are not includable in the gross income
of the Employee due to Code Sections 125, 402(e)(3), 402(h), 402(k),
403(b) or 457.
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For limitation years beginning on and after January 1, 2002, for
purposes of applying the limitations described in Article 10 of the
plan, compensation paid or made available during such limitation years
shall include elective amounts that are not includible in the gross
income of the employee by reason of section 132(f)(4).
For purposes of calculating contributions to the Plan pursuant to
Article 3, the period used to determine an Employee's Compensation for
a Plan Year will be limited to that portion of the Plan Year in which
the Employee was a Participant in the Plan.
For purposes of testing for compliance with the nondiscrimination in
contributions requirements of Code Section 401(a)(4) and the minimum
coverage requirements of Code Section 410(b), the period used to
determine an Employee's Compensation for a Plan Year may be limited to
that portion of the Plan Year in which the Employee was a Participant
in the Plan, provided that, for such purpose, this method is applied
uniformly to all Eligible Employees under the Plan for the Plan Year.
Notwithstanding the foregoing, the period used to determine an
Employee's Compensation is defined in Section 10.03(c) for purposes of
computing Annual Additions under Code Section 415; in Section
11.02(b)(3) for purposes of nondiscrimination testing under Code
Sections 401(k) and 401(m); in Section 11.01(a) for purposes of
determining who is a Highly Compensated Employee; and in Section
12.01(d) for purposes of determining who is a Key Employee.
Notwithstanding the foregoing, for all purposes under this Plan,
Compensation in excess of the Statutory Compensation Limit will be
disregarded. Statutory Compensation Limit means $160,000 (for Plan
Years beginning after December 31, 1996), as adjusted in subsequent
years in accordance with Code Section 401(a)(17)(B).
The annual compensation of each Participant taken into account in
determining allocations for any plan year beginning after December 31,
2001, shall not exceed $200,000, as adjusted for cost-of-living
increases in accordance with section 401(a)(17)(B) of the Code. Annual
compensation means compensation during the plan year or such other
consecutive 12-month period over which compensation is otherwise
determined under the plan (the determination period). The
cost-of-living adjustment in effect for a calendar year applies to
annual compensation for the determination period that begins with or
within such calendar year.
1.06 Disqualified Person
Disqualified Person has the meaning ascribed to that term under Code
Section 4975(e)(2).
1.07 Effective Date
The original Effective Date of the Stilwell Financial Inc. 401(k) and
Profit Sharing Plan was July 12, 2000. The Stilwell Financial Inc.
Employee Stock Ownership Plan was established effective as of
October 1, 1999. The Effective Date of this Plan as amended and
restated is November 1, 2001, except as specified elsewhere in this
document.
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1.08 Eligible Employee Classification
An Eligible Employee Classification is a classification of Employees of
a Participating Employer, the members of which are eligible to
participate in the Plan.
The Plan covers all employee classifications except:
o Leased Employees (see 1.09(b) below).
o Workers classified by the Employer as Independent
Contractors/Consultants.
o Employees whose terms of employment are governed by a
collective bargaining agreement (unless such agreement
provides for coverage under the Plan).
o Workers classified by the Employer as non-common law
employees.
o Nonresident aliens who receive no U.S. source earned income.
o Effective January 1, 2002, employees classified by the
Employer as interns.
Leased Employees, individuals who are classified by the Employer as
independent contractors and workers who are classified by the Employer
as non-common law employees are not eligible to participate in the Plan
whether or not such individuals are subsequently determined by a court
or administrative agency to be Employees for purposes of the Internal
Revenue Code or Title I of ERISA.
1.09 Employee
(a) In General
Unless otherwise specified, an Employee is any person who is
employed by the Employer, a Related Employer or a Participating
Employer.
(b) Leased Employee
The Plan does not treat a Leased Employee as an Employee of the
Employer. A Leased Employee is an individual (who otherwise is not
an Employee of the Employer) who, pursuant to a leasing agreement
between the Employer and any other person, has performed services
for the Employer (or for the Employer and any persons related to
the Employer within the meaning of Code ss.144(a)(3)) on a
substantially full time basis for at least one year and who
performs services under the primary direction or control of the
Employer. A Leased Employee who performs services for the Employer
pursuant to a contract or agreement which provides that the person
is a Leased Employee will not become eligible to participate in
this Plan merely by reason of a determination that the person is a
common-law employee of the Employer, unless and until the Employer
changes the employment classification of such person.
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1.10 Employer
(a) Employer
Unless otherwise specified, the term Employer includes the Plan
Sponsor, any Related Employer and any Participating Employer who
with the written consent of the Plan Sponsor adopts this Plan.
(b) Participating Employer
A Participating Employer is any organization which has adopted
this Plan and Trust, pursuant to the written consent of the Plan
Sponsor, and in accordance with the provisions of Section 8.10.
(c) Predecessor Employer
Predecessor Employer means any prior employer to which an Employer
is the successor, including any Predecessor Employer for which the
Employer maintains the obligations of a Predecessor Plan
established by the Predecessor Employer. Service with a
Predecessor Employer will be included as Service with the Employer
for all purposes under this Plan.
In addition, any prior employer listed as a Predecessor Employer
in an Appendix to this Plan will be regarded as a Predecessor
Employer for purposes of this Plan.
(d) Related Employer
The term Related Employer means any other corporation,
association, company or entity on or after the Effective Date
which is, along with the Plan Sponsor, a member of a controlled
group of corporations (as defined in Code Section 414(b)), a group
of trades or businesses which are under common control (as defined
in Code Section 414(c)), an affiliated service group (as defined
in Code Section 414(m)), or any organization or arrangement
required to be aggregated with the Plan Sponsor by Treasury
Regulations issued under Code Section 414(o).
A Related Employer shall not be a Participating Employer unless it
adopts the Plan in accordance with Section 8.10.
1.11 Employer Securities
Employer Securities means (i) prior to July 12, 2000, voting common
stock issued by Kansas City Southern Industries, Inc., or by a
corporation which is a member of the same controlled group of
corporations (within the meaning of Code Section 409(l)(4)), which is
readily tradable on an established securities market and constitutes
"qualifying employer securities" within the meaning of Code Section
4975(e)(8), (ii) on or after July 12, 2000, and prior to January 1,
2001, voting common stock issued by the Plan Sponsor, or by a
corporation which is a member of the same controlled group of
corporations (within the meaning of Code Section 409(l)(4)), which is
readily tradable on a established securities market and constitutes
qualifying employer securities within the meaning of Code Section
4975(e)(8), and (iii) on or after January 1, 2001, voting
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common stock issued by the Plan Sponsor, or by a member of the related
group that includes the Plan Sponsor (as defined in Section 1.10) which
is readily tradable on a established securities market and constitutes
employer securities within the meaning of Code Section 401(a)(23) and
qualifying employer securities within the meaning of ERISA Section
407(d)(5).
1.12 Employment Commencement Date
The date an Employee first is credited with an Hour of Service for the
Employer is his Employment Commencement Date.
1.13 Entry Date
Effective January 1, 2002, Entry Date means an Employee's Employment
Commencement Date.
Prior to January 1, 2002, Entry Date means the first day of the Plan
Year and the first day of the seventh (7th) month thereafter.
1.14 ERISA
ERISA means Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as it may be amended from time to time, and all
regulations issued thereunder. Reference to a section of ERISA includes
that section and any comparable section or sections of any future
legislation that amends, supplements or supersedes such section and any
regulations issued thereunder.
1.15 Exempt Loan
Exempt Loan means a loan made prior to January 1, 2001, to the
Stilwell Financial Inc. Employee Stock Ownership Plan or to the
Kansas City Southern Industries, Inc. Employee Stock Ownership Plan by
a Disqualified Person, or which a Disqualified Person guaranteed,
provided the loan satisfied the requirements of Treas. Reg.
Section 54.4975-7(b).
1.16 Fiscal Year
Fiscal Year means the taxable year of the Plan Sponsor. The Fiscal Year
of the Plan Sponsor is the 12 month period beginning January 1 and
ending December 31.
1.17 Forfeiture
Forfeiture refers to that portion, if any, of a Participant's Accrued
Benefit which is in excess of his Vested Accrued Benefit following the
termination of the Participant's employment. Forfeiture also refers to
Employer Matching Contributions that are forfeited because of Excess
Aggregate Contributions.
A Forfeiture is considered to occur as of the earlier of (a) the date
of the occurrence of the fifth of 5 consecutive One Year
Breaks-in-Service or (b) the date a Cash-Out Distribution occurs in
accordance with the provisions of Section 7.06(b).
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1.18 Hour of Service
An Hour of Service means:
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours will
be credited to the Employee for the computation period in which
the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no
duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
incapacity (including Disability as defined in Section 7.03),
layoff, jury duty, qualified military service or leave of absence.
No more than 501 Hours of Service will be credited under this
paragraph for any 12-month period. Hours under this paragraph will
be calculated and credited pursuant to Section 2530.200b-2 of the
Department of Labor Regulations which are incorporated herein by
this reference; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same
Hours of Service will not be credited both under paragraphs (a) or
(b), as the case may be, and under this paragraph (c). These hours
will be credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment is
made.
The Plan Administrator will not credit an Hour of Service under more
than one of the above paragraphs. A computation period for purposes of
this Section is the Plan Year, Year of Service period, Break in Service
period or other period, as determined under the Plan provision for
which the Plan Administrator is measuring an Employee's Hours of
Service.
The Employer will credit every Employee with Hours of Service on the
basis of the "actual" method. For purposes of the Plan, "actual" method
means the determination of Hours of Service from records of hours
worked and hours for which the Employer makes payment or for which
payment is due from the Employer. However, for an Employee who is paid
on other than an hourly basis, Hours of Service shall be credited
according to the following schedule, based on the payroll period of the
Employee, for each payroll period with respect to which he or she is
paid or is entitled to payment of compensation:
Payroll Period Hours of Service
-------------- ------------------
Daily 10
Weekly 45
Bi-Monthly 95
Monthly 190
Solely for purposes of determining whether a One Year Break-in-Service
has occurred, a Participant who is absent from work on an authorized
Leave of Absence or by reason of the Participant's pregnancy, birth of
the Participant's child, placement of a child with the Participant in
connection with the adoption of such child, or for the purpose of
caring for such child for a period immediately following such birth or
placement, will receive credit for the Hours of
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Service which otherwise would have been credited to the Participant but
for such absence. The Hours of Service credited under this paragraph
will be credited in the Plan Year in which the absence begins if such
crediting is necessary to prevent a One Year Break-in-Service in such
Plan Year; otherwise, such Hours of Service will be credited in the
following Plan Year. The Hours of Service credited under this paragraph
are those which would normally have been credited but for such absence.
In any case in which the Plan Administrator is unable to determine such
hours normally credited, 10 Hours of Service per day will be credited.
No more than 501 Hours of Service will be credited under this paragraph
for any 12-month period.
The Date of Severance is the second anniversary of the date on which
the absence begins. The period between the initial date of absence and
the first anniversary of the initial date of absence is deemed to be a
period of Service. The period between the first and second
anniversaries of the initial date of absence is neither a period of
service nor a period of severance.
1.19 Issuer
Issuer means the corporation that issued the Employer Securities.
1.20 Leave of Absence
An authorized Leave of Absence means a period of time of one year or
less granted to an Employee by the Employer due to illness, injury,
temporary reduction in work force, or other appropriate cause or due to
military service during which the Employee's reemployment rights are
protected by law, provided the Employee returns to the service of the
Employer on or before the expiration of such leave, or in the case of
military service, within the time his reemployment rights are so
protected or within 60 days of his discharge from military service if
no federal law is applicable. All authorized Leaves of Absence are
granted or denied by the Employer in a uniform and nondiscriminatory
manner, treating Employees in similar circumstances in a like manner.
If the Participant does not return to active service with the Employer
on or prior to the expiration of his authorized Leave of Absence he
will be considered to have had a Date of Severance as of the earlier of
the date on which his authorized Leave of Absence expired, the first
anniversary of the last date he worked at least one hour as an Active
Participant, or the date on which he resigned or was discharged.
1.21 Leveraged Employer Securities
Leveraged Employer Securities means Employer Securities acquired by the
Trust with the proceeds of an Exempt Loan (including Employer
Securities acquired by the Trust as a dividend with respect to, in
exchange for, or with proceeds from the sale of Employer Securities
acquired by the Stilwell Financial Inc. Employee Stock Ownership Plan
or the Kansas City Southern Industries, Inc. Employee Stock Ownership
Plan with the proceeds of an Exempt Loan) and which satisfied the
definition of qualifying employer securities in Code Section 4975(e)(8)
with respect to the plan to which the Exempt Loan was made during the
period the Exempt Loan was outstanding.
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1.22 Normal Retirement Age and Normal Retirement Date
A Participant's Normal Retirement Age is age sixty-five (65).
A Participant's Normal Retirement Date is the date on which the
Participant attains Normal Retirement Age.
1.23 One Year Break-in-Service
One Year Break-in-Service is defined in Section 1.35.
1.24 Participant
Participant means an Employee or former Employee who is eligible to
participate in this Plan and who is or who may become eligible to
receive a benefit of any type from this Plan or whose Beneficiary may
be eligible to receive any such benefit.
(a) Active Participant
Active Participant means a Participant who is currently an
Employee in an Eligible Employee Classification.
(b) Disabled Participant
Disabled Participant means a Participant who has terminated his
employment with the Employer due to his Disability, as defined in
Section 7.03, and who is receiving or is entitled to receive
benefits from the Plan.
(c) Retired Participant
Retired Participant means a Participant who has terminated his
employment with the Employer after meeting the requirements for
his Normal Retirement Date and who is receiving or is entitled to
receive benefits from the Plan.
(d) Vested Terminated Participant
Vested Terminated Participant means a Participant who has
terminated his employment with the Employer and all Related
Employers, who has a non-forfeitable right to all or a portion of
his or her Accrued Benefit and who has not received a distribution
of the value of his or her Vested Accrued Benefit.
(e) Inactive Participant
Inactive Participant means a Participant who has (i) interrupted
his status as an Active Participant without becoming a Disabled,
Retired or Vested Terminated Participant and (ii) has a
non-forfeitable right to all or a portion of his Accrued Benefit
and has not received a complete distribution of his benefit.
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(f) Former Participant
Former Participant means a Participant who has terminated his
employment with the Employer and who currently has no
non-forfeitable right to any portion of his or her Accrued
Benefit.
1.25 Payroll Withholding Agreement
Payroll Withholding Agreement means an affirmative election by a
Participant directing the Employer to withhold, each payroll period, a
whole percentage of his Compensation or a whole dollar amount and to
contribute such withheld amount to the Plan pursuant to the provisions
of Article 3.
If a Payroll Withholding Agreement is required pursuant to the
provisions of Article 3, then each Participant who elects to
participate in the Plan will enter into such agreement on or before the
first day of the payroll period for which the agreement is applicable
(or at some other time as specified by the Plan Administrator). Such
agreement will be effective for each payroll period thereafter until
modified or amended.
Payroll Withholding Agreements will be governed by the following
general guidelines:
(a) The Plan Administrator will establish and apply guidelines
concerning the frequency and timing of amendments or changes to
Payroll Withholding Agreements. Notwithstanding the foregoing, a
Participant may revoke his Payroll Withholding Agreement at any
time and discontinue all future withholding.
(b) The Plan Administrator may amend or revoke its Payroll Withholding
Agreement with any Participant at any time if the Plan
Administrator determines that such revocation or amendment is
necessary to insure that a Participant's Annual Additions for any
Plan Year will not exceed the limitations of Article 10, or to
insure that the requirements of Code Sections 401(k) and 401(m) of
the Code have been satisfied with respect to the amount which may
be withheld and contributed on behalf of the Highly Compensated
Group.
1.26 Plan, Plan and Trust, Trust
The terms Plan, Plan and Trust and Trust mean Stilwell Financial Inc
401(k), Profit Sharing and Employee Stock Ownership Plan. The Plan
Identification Number is 001. Pursuant to Code Section 401(a)(27), the
Plan is designated a profit sharing plan and, pursuant to Code Section
401(a)(23), a stock bonus plan. Furthermore, the Plan includes
provisions within the meaning of Code Sections 401(k) and 401(m).
The term Predecessor Plan means any qualified plan previously
established and maintained by an Employer and to which this Plan is the
successor.
1.27 Plan Administrator
The Plan Administrator is the Plan Sponsor or the person or persons
appointed to serve as Plan Administrator pursuant to Section 9.01.
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1.28 Plan Sponsor
Stilwell Financial Inc. is the Plan Sponsor.
1.29 Plan Year
The Plan Year is the 12 month period beginning January 1 and ending
December 31.
1.30 Trust Fund, Trust
These terms mean the total cash, securities, real property, insurance
contracts and any other property held by the Trustee.
1.31 Trustee
The Trustee is The Charles Schwab Trust Company or any successor
Trustee.
1.32 Valuation Date
Valuation Date, unless otherwise specified, means any business day on
which the New York Stock Exchange is open.
1.33 Vested Percentage and Vesting Schedule
A Participant's Vested Percentage as of a given date will be that
percentage determined in accordance with the following Vesting
Schedule.
-------------------------------- ---------------------------
Years of Service Vested Percentage
-------------------------------- ---------------------------
Less than 2 Years 0%
2 Years 25%
3 Years 50%
4 Years 75%
5 Years or More 100%
-------------------------------- ---------------------------
Notwithstanding the preceding, an Active Participant will be 100%
vested upon reaching his Normal Retirement Age.
Notwithstanding the preceding, an Active Participant will be 100%
vested in the event of his death, or upon his becoming eligible for
Disability Retirement as defined in Section 7.03.
Notwithstanding the above, the Vested Percentage of a Participant whose
accounts from a prior plan have been transferred to this Plan pursuant
to Section 8.06 will not be less than his vested percentage determined
under the provisions of the prior plan.
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Notwithstanding the foregoing provisions of this Section 1.33, the
Accrued Benefit of each Participant affected by the partial termination
of the 401(k) Plan or ESOP that occurred due to (i) any of the
reductions in force announced by an Employer on February 2, 2001, March
30, 2001, April 6, 2001 or April 20, 2001 or (ii) any other involuntary
termination of employment initiated by an Employer between April 20,
2001 and September 30, 2001 as part of its 2001 strategic restructuring
initiative (collectively the "2001 Reductions in Force") shall be fully
vested and 100% Nonforfeitable. For purposes of this Section 1.33, a
Participant shall be considered affected by the 2001 Reductions in
Force if such Participant's employment with an Employer was terminated
by an Employer as a result of the 2001 Reductions in Force. A
Participant shall not be considered affected by the 2001 Reductions in
Force if the Participant's employment with the Employer is terminated
due to death, disability, voluntary termination of employment, or any
involuntary termination of employment initiated by an Employer for
cause, inadequate job performance or any other reason that is unrelated
to the 2001 Reductions in Force.
1.34 Written Resolution
The terms Written Resolution and Written Consent are used
interchangeably and reflect decisions, authorizations, etc. by the Plan
Sponsor. A Written Resolution or Written Consent will be evidenced by a
resolution or a unanimous written consent of the Board of Directors of
the Plan Sponsor, by the written consent of an officer of the Plan
Sponsor who has been authorized to provide such consent by the Board of
Directors, or by the written consent of a committee of the Employer
which has been authorized to provide such consent by the Board of
Directors.
1.35 Year of Service
(a) Year of Vesting Service
Years of Service for purposes of computing a Participant's Vested
Percentage are referred to as Years of Vesting Service and are
based upon an Employee's Hours of Service. A Year of Vesting
Service is credited for each Plan Year during which an Employee is
credited with at least 1,000 Hours of Service.
A One Year Break-in-Service means any Plan Year during which an
Employee completes 500 or fewer Hours of Service.
Years of Vesting Service for purposes of determining a
Participant's Vested Percentage include service with any
organization which is a Related Employer with respect to the
Employer, and service with any other organization that may be
designated in an Appendix to this Plan as an employer for which
prior service credit has been granted by the Plan Sponsor for
purposes of determining a Participant's Vested Percentage.
Years of Vesting Service for purposes of determining the Vested
Percentage of a Participant who is reemployed after a period of
Qualified Military Service as defined in Chapter 43 of Title 38,
United States Code, will include the period of Qualified Military
Service.
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(b) Crediting Prior Service
In computing an Employee's Years of Vesting Service, the
following rules shall apply:
(i) For an Employee who terminates employment and is
subsequently re-employed, Service prior to the Break in
Service shall be taken into account upon re-employment
whether or not such Employee has incurred a One Year Break
in Service or five (5) consecutive One Year Breaks in
Service.
(ii) For a Participant who terminates employment without any
vested right to the Employer Contribution Account and who is
re-employed after a One Year Break in Service, Service
before the Break in Service shall be taken into account upon
reemployment.
(iii) Years of Service, for purposes of vesting, shall include
all Years of Service of the Employee with any Predecessor
Employer.
(iv) Years of Service with the Employer before a Participant
enters the Plan shall be considered for purposes of vesting.
(v) If the Employer is a member of a group of Related Employers,
then Year of Service for purposes of eligibility and vesting
shall include Service with any Related Employer.
In addition, (i) the Plan shall treat all service prior to July
12, 2000, that is credited with respect to an Employee under the
terms of the Kansas City Southern Industries, Inc. Employee
Stock Ownership Plan in effect prior to October 1, 1999, as
service with the Employer, and (ii) the Plan shall treat service
of an Employee on or after July 12, 2000, with an "affiliate" of
Stilwell Financial Inc. during the time it is an "affiliate" as
service with the Employer. For purposes of this Section, the
term "affiliate" means any corporation, partnership, joint
venture or other business entity with respect to which
twenty-five percent (25%) or more of the equity interests
therein are owned, directly or indirectly, by Stilwell Financial
Inc. or by any entity at least 80% of the equity interests of
which are owned by Stilwell Financial Inc.
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Article 2
ELIGIBILITY TO PARTICIPATE
2.01 Participation
Effective January 1, 2002, An Employee who is a member of an Eligible
Employee Classification will become eligible to participate in the Plan
on his or her Employment Commencement Date.
Prior to January 1, 2002, an Employee who is a member of an Eligible
Employee Classification will become eligible to participate in this
Plan on the Entry Date coinciding with or next following his or her
Employment Commencement Date.
An Employee who is eligible to participate as of the Effective Date or
as of a given Entry Date will automatically become a Participant as of
such date.
2.02 Participation After Reemployment
An Employee who has satisfied all of the eligibility requirements but
terminates employment prior to his Entry Date will participate in the
Plan immediately upon returning to the employ of the Employer in an
Eligible Employee Classification (but not prior to original Entry
Date).
A Participant or Former Participant who has terminated employment will
participate as an Active Participant in the Plan immediately upon
returning to the employ of the Employer in an Eligible Employee
Classification.
2.03 Change in Employment Classification
In the event a Participant becomes ineligible to participate because he
is no longer a member of an Eligible Employee Classification, the
Participant will participate immediately upon his return to an Eligible
Employee Classification.
In the event an Employee who is not a member of an Eligible Employee
Classification becomes a member of such a classification, such Employee
will begin to participate on the Entry Date coinciding with or next
following the later of the date he becomes a member of an Eligible
Employee Classification or the date he satisfies the eligibility
requirements which are specified in Section 2.01.
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Article 3
PARTICIPANT ACCOUNTS
3.01 Employee Pre-tax Contributions Account
(a) General
Employee Pre-tax Contributions Account means the Account of a
Participant reflecting Employee Pre-tax contributions, investment
income or loss allocated thereto and distributions. A
Participant's Employee Pre-tax Contributions Account is 100%
vested at all times.
(b) Employee Pre-tax Contributions
(1) Amount of Contribution
Each Participant may elect, pursuant to a Payroll Withholding
Agreement, to make an Employee Pre-tax Contribution not to
exceed ten (10) percent of the Participant's Compensation.
Effective January 1, 2002, Employee Pre-tax Contributions may
not exceed seventy-five (75) percent of the Participant's
Compensation. Such contribution will be designated as a whole
percentage of Compensation or a whole dollar amount.
(2) Nondiscrimination Requirements
All Employee Pre-tax Contributions are Elective Contributions
within the meaning of Section 11.02(b)(8) and must satisfy the
Nondiscrimination Requirements of Section 11.02.
(3) Excess Deferrals
The maximum amount of Employee Pre-tax Contributions which can
be made under the Plan on behalf of any Participant during any
calendar year will be limited to that amount which would not
constitute an Excess Deferral as defined in Section
11.02(b)(14).
The Plan Administrator will distribute any Excess Deferral,
together with the income allocable to it, to the Participant
no later than April 15 of the calendar year immediately
following the year of the Excess Deferral. If a Participant
notifies the Plan Administrator within the time prescribed by
the Code and regulations promulgated thereunder of any
calendar year that Excess Deferrals have been made on his
account for the previous calendar year by reason of
participation in a Cash or Deferred Arrangement maintained by
another employer or employers, and if the Participant requests
that the Plan Administrator distribute a specific amount to
him on account of Excess Deferrals and certifies that the
requested amount is an Excess Deferral, the Plan Administrator
will designate the amount requested together with the income
allocable to it as a distribution of Excess deferrals and
distribute such amount no later than April 15 of the calendar
year immediately following the year of such Excess Deferral.
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(4) Timing of Deposits
Contributions contributed to the Plan through payroll
deduction shall be segregated from the Employer's general
assets and contributed to the trust fund as soon as
administratively feasible following the payroll period for
which the contribution was made but in no event later than the
fifteenth (15th) business day of the month following the month
the deferrals were excluded from Compensation (or such other
date specified under regulations issued by the Secretary of
Labor).
The Contribution Period for Employee Pre-tax Contributions is
at least monthly.
(c) Catch-Up Contributions
Effective January 1, 2002, all employees who are eligible to make
Employee Pre-tax Contributions under this Plan and who have
attained age 50 before the close of the Plan Year shall be
eligible to make Catch-Up Contributions in accordance with, and
subject to the limitations of Code Section 414(v). Such Catch-Up
Contributions shall not be taken into account for purposes of Code
Sections 402(g) and 415. The Plan shall not be treated as failing
to satisfy the provisions of the Plan implementing the
requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12),
410(b), or 416, as applicable, by reason of making of such
Catch-Up Contributions.
3.02 Reserved
3.03 Employer Matching Contributions Account
(a) General
Employer Matching Contributions Account means the Account of a
Participant reflecting Employer Matching contributions,
forfeitures, investment income or loss allocated thereto and
distributions. A Participant's Employer Matching Contributions
Account is subject to the Vesting Schedule.
Qualified Matching Contributions Account means the Account of a
Participant reflecting Qualified Matching Contributions
contributions, investment income or loss allocated thereto and
distributions. A Participant's Qualified Matching Contributions
Account is 100% vested at all times.
(b) Employer Matching Contributions
Each Contribution Period, the Employer will make an Employer
Matching Contribution to each eligible Participant's Employer
Matching Contributions Account in an amount determined in
accordance with this Section subject to the limitations of Article
10.
For a given Contribution Period, the amount of Employer Matching
Contribution to be made to an eligible Participant's Employer
Matching Contributions Account is equal to 100% of that portion of
the Employee Pre-tax Contributions that is not in excess of three
(3) percent of the Participant's Compensation.
3-2
The Contribution Period for Matching Contributions is the last day
of the Plan Year; provided however, the Employer may make interim
allocations of Matching Contributions as of each date the
Participant is paid. The Employer may then contribute a true-up
Matching Contribution so that the Participant receives the total
Matching Contribution to which he or she is entitled under the
Plan as previously described.
Catch-up Contributions are not eligible for Employee Matching
Contributions.
(c) Application of Forfeitures
Forfeitures from a Participant's Employer Matching Contributions
Account will be added and allocated along with Discretionary
Profit Sharing Contributions in the Plan Year in which the
Forfeitures are determined to occur.
3.04 Discretionary Profit Sharing Contributions Account
(a) General
Discretionary Profit Sharing Contributions Account means the
Account of a Participant reflecting Discretionary Profit Sharing
contributions, forfeitures, investment income or loss allocated
thereto and distributions. A Participant's Discretionary Profit
Sharing Contributions Account is subject to the Vesting Schedule.
(b) Discretionary Profit Sharing Contributions
Each Plan Year, the Employer may, within the time prescribed by
law for making a deductible contribution, make a Discretionary
Profit Sharing Contribution to the Trust.
For a given Plan Year, the total Discretionary Profit Sharing
Contribution, if any, made by the Employer will be an amount
determined and authorized by the Employer for such Plan Year.
Such Discretionary Profit Sharing Contribution will be allocated
to the Discretionary Profit Sharing Contributions Accounts of all
eligible Participants by the ratio which each eligible
Participant's Compensation bears to the total Compensation of all
eligible Participants.
For a given Plan Year, a Participant is eligible to receive an
allocation of Discretionary Profit Sharing Contributions if he is
credited with at least 1,000 Hours of Service for such Plan Year
or terminates employment during the Plan Year due to retirement,
after attaining Normal Retirement Age, Disability or death.
(c) Application of Forfeitures
Forfeitures from a Participant's Discretionary Profit Sharing
Contributions Account will be added to and allocated along with
Discretionary Profit Sharing Contributions in the Plan Year in
which the Forfeitures are determined to occur.
3-3
3.05 Discretionary ESOP Stock Bonus Contributions Account
(a) General
Discretionary ESOP Stock Bonus Contributions Account means the
Account of a Participant reflecting Discretionary Stock Bonus
contributions, ESOP contributions, forfeitures, investment income
or loss allocated thereto and distributions. A Participant's
Discretionary ESOP Stock Bonus Contributions Account is subject
to the Vesting Schedule.
(b) Discretionary Stock Bonus Contributions
For a given Plan Year, within the time prescribed by law for
making a deductible contribution, the Employer may make a
Discretionary Stock Bonus Contribution in an amount determined and
authorized by the Employer for such Plan Year. The Employer may
make its Discretionary Stock Bonus Contribution in cash or in
Employer Securities at fair market value determined at the time of
contribution.
Such Discretionary Stock Bonus Contribution will be allocated to
all eligible Participants by the ratio which each eligible
Participant's Compensation bears to the total Compensation of all
eligible Participants.
For a given Plan Year, a Participant is eligible to receive an
allocation of Discretionary Profit Sharing Contributions if he is
credited with at least 1,000 Hours of Service for such Plan Year
or terminates employment during the Plan Year due to retirement,
after attaining Normal Retirement Age, Disability or death.
(c) Application of Forfeitures
Forfeitures from a Participant's Discretionary ESOP Stock Bonus
Contributions Account will be added to and allocated along with
Discretionary Profit Stock Bonus Contributions in the Plan Year in
which the Forfeitures are determined to occur.
3.06 Reserved
3.07 Rollover Contributions Account
(a) General
Rollover Contributions Account means the Account of a Participant
reflecting rollover contributions, investment income or loss
allocated thereto and distributions. A Participant's Rollover
Contributions Account is 100% vested at all times.
(b) Rollover Contribution
Rollover Contribution means a contribution to the Plan by a
Participant where such contribution is the result of a prior
distribution from an Eligible Retirement Plan as defined in
Section 7.09. Such prior contribution must be a rollover amount
described in Code Section 402(c)(4) or a contribution described in
Code Section 408(d)(3).
3-4
Each Employee who is a member of an Eligible Employee
Classification, regardless of whether he is a Participant in the
Plan, will have the right to make a Rollover Contribution of cash
(or other property of a form acceptable to the Plan Administrator
and the Trustee) into the Plan from another qualified plan. If the
Employee is not a Participant hereunder, his Rollover
Contributions Account will constitute his entire interest in the
Plan.
An Employee who has a balance in his Rollover Contributions
Account will be eligible to participate in any in-service
withdrawal benefit pertaining to Rollover Contributions Accounts
subject to Section 5.02. In no event will the existence of a
Rollover Contributions Account entitle the Employee to participate
in any other benefit provided by the Plan prior to the time when
he becomes an Active Participant.
3.08 Prior Plan Contributions Account
(a) General
Prior Plan Contributions Account means the Account or Accounts of
a Participant reflecting transfers from another qualified plan,
investment income or loss allocated thereto and distributions. A
Participant's Vested Percentage with regard to his Prior Plan
Contributions Account will be the greater of the percentage
determined according to the Vesting Schedule, a vesting schedule
determined by the terms of a transferor plan, or a vesting
schedule agreed to by the Plan Sponsor with regard to the merger
of a transferor plan.
(b) Prior Plan Transfers
Prior Plan Transfers will mean amounts transferred, in accordance
with a Written Resolution pursuant to Section 8.06, to this Plan
from another plan which is qualified under Code Sections 401(a)
and 501(a). Such amounts will, in this Plan, remain subject to any
restrictions or limitation on distribution that the Code subjected
such amounts to under the transferor plan, and such amounts will,
to the extent required under the Code, also remain subject to
payment in the form, at the times, and on the occasions provided
in the transferor plan.
No amount can be transferred to the Plan if the receipt of the
amount would require this Plan to make a distribution in a form
other than those set out in Section 7.07 of the Plan.
Subject to any restrictions imposed by the foregoing paragraph, an
Employee who has a balance in his Prior Plan Contributions Account
will be eligible to participate in any in-service withdrawal
benefit pertaining to Prior Plan Contributions Accounts subject to
Section 5.02. In no event will the existence of a Prior Plan
Contributions Account entitle the Employee to participate in any
other benefit provided by the Plan prior to the time when he
becomes an Active Participant.
3-5
Article 4
ACCOUNTING AND VALUATION
4.01 General Powers of the Plan Administrator
The Plan Administrator will have the power to establish rules and
guidelines, which will be applied on a uniform and non-discriminatory
basis, as it deems necessary, desirable or appropriate with regard to
accounting procedures and to the timing and method of contributions to
and/or withdrawals from the Plan.
4.02 Direction of Investment
(a) Application of this Section
Subject to the provisions of this Section, each Participant will
have the right to direct the investment of all of his Accounts
other than the ESOP Stock Bonus Contribution Account among the
Investment Funds which are made available by the Plan
Administrator.
(b) Investment Fund
An Investment Fund means any portion of the assets of the Trust
Fund that the Plan Administrator designates as an Investment Fund
in a manner and form acceptable to the Trustee, and for which the
Plan Administrator maintains a set of accounts separate from the
remaining assets of the Trust Fund.
(c) General Powers of the Plan Administrator
The Plan Administrator will have the power to establish rules and
guidelines as it deems necessary, desirable or appropriate with
regard to the directed investment of contributions in accordance
with this Section. Such rules and guidelines are intended to
comply with Section 404(c) of ERISA and the regulations
thereunder. Included in such powers, but not by way of limitation,
are the following powers and rights.
(1) To direct the Trustee to temporarily invest those
contributions which are pending directed investment in an
Investment Fund or in some other manner as determined by the
Plan Administrator.
(2) To establish rules with regard to the transfer of all or any
part of the balance of an Account or Accounts of a given
Participant from one Investment Fund to another.
(3) Direct the Trustee to maintain any part of the assets of any
Investment Fund in cash, or in demand or short-term time
deposits bearing a reasonable rate of interest, or in a
short-term investment fund that provides for the collective
investment of cash balances or in other cash equivalents
having ready marketability, including, but not limited to,
4-1
U.S. Treasury Bills, commercial paper, certificates of
deposit, and similar types of short-term securities.
(4) To temporarily suspend the ability of Participants to redirect
the investment of their Accounts during a transfer of assets
between trustees or custodians, during the replacement of
funds within the Trust, or at other times deemed necessary
with respect to the administration of the Plan.
Neither the Trustee nor the Plan Administrator will be liable for
any loss that results from a Participant's exercise of control
over the investment of the Participant's Accounts. If the
Participant fails to provide adequate directions, the Plan
Administrator will direct the investment of the Participant's
Account.
(d) Accounting
The Plan Administrator will maintain a set of accounts for each
Investment Fund. The accounts of the Plan Administrator for each
Investment Fund will indicate separately the dollar amounts of all
contributions made to such Investment Fund by or on behalf of each
Participant from time to time. The Plan Administrator will compute
the net income from investments; net profits or losses arising
from the sale, exchange, redemption, or other disposition of
assets, and the prorata share attributable to each Investment Fund
of the expenses of the administration of the Plan and Trust and
will debit or credit, as the case may be, such income, profits or
losses, and expenses to the unsegregated balance in each
Investment Fund from time to time. To the extent that the expenses
of the administration of the Plan and Trust are not directly
attributable to a given Investment Fund, such expenses, as of a
given Valuation Date, will be prorated among each Investment Fund;
such allocation of expenses will, in general, be performed in
accordance with the guidelines which are specified in this
Article.
(e) Future Contributions
Each Participant will elect the percentage of those contributions
which are subject to Participant direction of investment which are
to be deposited to each available Investment Fund. The timing of
such election will be specified by the Plan Administrator. Such
election will remain in effect until modified. If any Participant
fails to make an election by the appropriate date, he will be
deemed to have elected an Investment Fund(s) as determined by the
Plan Administrator. Elections will be limited to whole percentages
or whole dollar amounts.
(f) Change in Investment of Existing Balances
A Participant may file an election with the Plan Administrator to
shift the aggregate amount or reasonable increments (as determined
by the Plan Administrator) of the balance of his existing Account
or Accounts which are subject to Participant direction of
investment among the various Investment Funds. Elections will be
limited to whole percentages (or such other reasonable increments
as determined by the Plan Administrator).
4-2
(g) Changes in Investment Elections
Elections with respect to future contributions and/or with respect
to changes in the investment of past contributions will be in
writing or through such other means as may be approved by the Plan
Administrator and in a format specified by the Plan Administrator.
The Plan Administrator may establish additional rules and
procedures with respect to investment election changes including,
for example, the number of allowed changes per specified period,
the amount of reasonable fee, if any, which will be charged to the
Participant for making a change, specified dates or cutoff dates
for making a change, etc.
(h) Addition and Deletion of Investment Funds
Investment Funds may be deleted or added from time to time at the
direction of the Plan Administrator. The Plan Administrator will
establish guidelines for the proper administration of affected
Accounts when an Investment Fund is added or deleted.
4.03 Valuation Procedure
As of each Valuation Date, the Plan Administrator will determine from
the Trustee the fair market value of each Investment Fund and will,
subject to the provisions of this Article, determine the allocation of
such value among the Accounts of the Participants; in doing so, the
Plan Administrator will in the following order:
(a) Credit or charge, as appropriate, to the proper Accounts all
contributions, payments, transfers, forfeitures, withdrawals or
other distributions made to or from such Accounts since the last
preceding Valuation Date and that have not been previously
credited or charged.
(b) Credit or charge, as applicable, each Account with its pro rata
portion of the appreciation or depreciation in the fair market
value of each Investment Fund since the prior Valuation Date. Such
appreciation or depreciation will reflect investment income,
realized and unrealized gains and losses, other investment
transactions and expenses paid from each Investment Fund.
4.04 ESOP Diversification
Except as provided in this Section 4.04, a Participant does not have
the right to direct the Trustee with respect to the investment or
reinvestment of the assets comprising the Participant's ESOP Stock
Bonus Contributions Account.
(a) Prior to January 1, 2002, each Qualified Participant (as
defined below) may direct the Trustee as to the investment of
25% of the value of the Participant's Accrued Benefit
attributable to Employer Securities (the Eligible Accrued
Benefit), within 90 days after the end of the Plan Year (to
the extent a direction amount exceeds the amount to which a
prior direction under this Section applies) during the
Participant's Qualified Election Period (as defined below).
For the last Plan Year in the Participant's Qualified Election
Period, the Trustee will substitute "50%" for "25%" in the
immediately preceding sentence.
4-3
(b) Effective January 1, 2002, each Qualified Participant may
direct the Trustee as to the investment of up to 50% of the
value of the Participant's Accrued Benefit attributable to
Employer Securities (the Eligible Accrued Benefit), within 90
days after the end of the Plan Year (to the extent a direction
amount exceeds the amount to which a prior direction under
this Section applies) during the Participant's Qualified
Election Period.
The Qualified Participant must make his direction to the Trustee in
writing at such time and in such manner as the Plan Sponsor shall
prescribe, the direction may be effective no later than 180 days after
the close of the Plan Year to which the direction applies, and the
direction must specify the Investment Fund or Funds from among those
designated by the Plan Sponsor as available under the Plan. The Trustee
will make a diversification requested under this Section no later than
90 days after the last day of the period during which the Qualified
Participant may make the election.
For purposes of this Section the following definitions apply (1)
Effective January 1, 2002, a Qualified Participant means a Participant
who has attained age 55 and who has completed at least 5 years of
service. Prior to January 1, 2002, a Qualified Participant means a
Participant who has attained age 55 and who has completed at least 10
years of participation in the Plan (including, for this purpose, years
of participation in the Kansas City Southern Industries, Inc. Employee
Stock Ownership Plan). A "year of participation" means a Plan Year in
which the Participant was eligible for an allocation of ESOP
Contributions, irrespective of whether the Employer actually
contributed to the Plan for that Plan Year. (2) Prior to January 1,
2002, Qualified Election Period means the six (6) Plan Year period
beginning with the Plan Year in which the Participant first becomes a
Qualified Participant. Effective January 1, 2002, Qualified Election
Period means any Plan Year beginning with the Plan Year in which the
Participant first becomes a Qualified Participant and any later Plan
Year.
A Participant's right under this Section to direct the investment of
his ESOP Contributions Account applies solely to Employer Securities
acquired by the Plan after December 31, 1986.
4.05 Reserved
4.06 Dividends
All dividends paid with respect to Employer Securities owned by the
Trust shall be paid to the Plan and reinvested in Employer Securities.
4-4
Article 5
IN-SERVICE WITHDRAWALS
5.01 General
An Active Participant may not withdraw funds from his Accounts except
as permitted in this Section.
5.02 Rollover Contribution Withdrawals
Effective January 1, 2002, subject to procedures established by the
Plan Administrator and the provisions of Article 7, a Participant may
withdraw, at any time, all or any portion of his Accounts that are
attributable to Rollover Contributions.
5.03 Reserved
5.04 Age 59 1/2 and Normal Retirement Age Withdrawals
Effective January 1, 2002, subject to procedures established by the
Plan Administrator and the provisions of Article 7, an Active
Participant who has attained age 59 1/2 and has at least five (5) years
of Vesting Service may withdraw all or any portion of his eligible
vested Accounts. A Participant who has not attained age 59 1/2 and has
less than five (5) years of Vesting Service may not withdraw any
portion of his Accounts prior to the time when benefits otherwise
become payable in accordance with the provisions of Article 7 except as
provided elsewhere in this Article 5.
Prior to January 1, 2002, subject to procedures established by the Plan
Administrator and the provisions of Article 7, an Active Participant
who has attained age 59 1/2 and has at least five (5) years of Vesting
Service may withdraw all or a portion of his vested Accounts other than
the Discretionary Profit Sharing Contributions Account. After a
Participant attains Normal Retirement Age, a Participant may withdraw
all or a portion of his vested Accounts other than the Participant's
ESOP Stock Bonus Contribution Account. A Participant may not otherwise
withdraw any portion of his Accounts prior to the time when benefits
otherwise become payable in accordance with the provisions of Article 7
except as provided elsewhere in this Article 5.
5.05 Financial Hardship Withdrawals
Subject to procedures established by the Plan Administrator and the
provisions of Article 7, an Active Participant may file with the Plan
Administrator a request to withdraw, in order to avoid or alleviate a
Financial Hardship, an amount necessary to satisfy the Participant's
immediate and heavy financial need.
5-1
(a) Limits on the Amount of a Financial Hardship Withdrawal
Effective January 1, 2002, a Financial Hardship Withdrawal from a
Participant's Employee Pre-tax Contributions Account may not
exceed that portion of his Employee Pre-tax Contributions Account
which represents his total Employee Pre-tax Contributions.
Prior to January 1, 2002, a Financial Hardship Withdrawal from an
Employee Pre-tax Contribution Account may not exceed that portion
of the Employee Pre-tax Contribution Account which represents his
total Employee Pre-Tax Contributions and the Participant's
Rollover contribution Account.
(b) Definition of Financial Hardship
The Plan Administrator will allow Financial Hardship withdrawals
only if they are necessary to satisfy a Participant's immediate
and heavy financial need.
(c) Immediate and Heavy Financial Need
A withdrawal will be deemed to be made due to an immediate and
heavy financial need of the Participant if it is made because of:
(1) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse or any of
his dependents (as defined in Code Section 152) or necessary
for these persons to obtain medical care described in Code
Section 213(d);
(2) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(3) Payment of tuition, room and board or educational fees for the
next 12 months of post-secondary education for the
Participant, his spouse, children or dependents (as defined in
Code Section 152);
(4) Prevention of the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(d) Necessary To Satisfy Financial Need
No withdrawal may exceed the amount necessary to satisfy the
Participant's immediate and heavy financial need. However, the
amount of an immediate and heavy financial need may include any
amounts necessary to pay any federal, state or local income taxes
or penalties reasonably anticipated to result from the
distribution.
(e) Safe Harbor
No withdrawal may be made until the Participant has obtained all
distributions, other than hardship distributions, and all
nontaxable loans currently available to the Participant under all
plans maintained by the Employer. In addition, the Participant
must agree to limit Employee Pre-tax Contributions under the Plan
and any other Qualified plans maintained by the Employer for the
Participant's taxable year immediately following the taxable year
of the hardship distributed to the Section 401(g) limitation
reduced by the amount of the Participant's elective deferral made
in the taxable year of the hardship distribution.
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(f) Moratorium on Elective Contributions Pursuant to a Financial
Hardship Withdrawal
A participant who receives a distribution of elective deferrals
after December 31, 2001, on account of hardship shall be
prohibited from making elective deferrals and employee
contributions under this and all other plans of the employer for 6
months after receipt of the distribution. A participant who
receives a distribution of elective deferrals in calendar year
2001 on account of hardship shall be prohibited from making
elective deferrals and employee contributions under this and all
other plans of the employer for 6 months after receipt of the
distribution or until January 1, 2002, if later.
5.06 Limitation on Distributions from Elective Contribution Accounts
No distribution may be made from the Participant's Employee Pre-tax
Contributions Account or any account comprised of Matching
Contributions or Nonelective Contributions which are treated as
Elective Contributions in accordance with the provisions of Section
11.02(b) except under one of the following circumstances:
(a) the Participant's retirement, death, disability or separation from
service within the meaning of Code Section 401(k)(2)(B);
(b) the Participant's attaining of age 59 1/2;
(c) the avoidance or alleviation of a Financial Hardship
(d) the termination of this Plan without the establishment of a
successor plan within the meaning of Treasury Regulation
1.401(k)-1(d)(3);
(e) the sale or other disposition by the Employer of at least 85
percent of the assets used by the Employer in a trade or business
to an unrelated corporation which does not maintain the plan, but
only if the Participant continues employment with the corporation
acquiring the assets and only if the Employer continues to
maintain this Plan; or
(f) the sale or other disposition by the Employer of its interest in a
subsidiary to an unrelated entity which does not maintain the
plan, but only if the Participant continues employment with the
subsidiary and only if the Employer continues to maintain this
Plan.
(g) Distribution upon severance from employment shall apply to
distributions after December 31, 2001. However, such a
distribution shall be subject to the other provisions of the Plan
regarding distributions, other than provisions that require a
separation from service before such amounts may be distributed.
This paragraph does not apply to distributions of Excess Deferrals,
Excess Contributions, or excess Annual Additions.
5-3
5.07 Benefits Attributable to Assets Transferred from a Prior Plan
Notwithstanding any provision of this Plan to the contrary, amounts
transferred to this plan in accordance with a Written Resolution
pursuant to Section 8.06 will remain subject to any withdrawal rights
or restrictions that are required to be protected under the Code and,
to the extent required by law, will remain subject to payment in the
form, at the times, and on the occasions provided in the transferor
plan.
Subject to any restrictions imposed by the foregoing paragraph, the
Plan Administrator may establish a nondiscriminatory policy that will
permit In-Service Withdrawals from an Employee's Prior Plan
Contributions Account prior to the time when he becomes an Active
Participant.
5-4
Article 6
Reserved
6-1
Article 7
PAYMENT OF BENEFITS
7.01 Valuation of Accounts
For purposes of this Article, the value of a Participant's Accrued
Benefit will be determined as of the Valuation Date his Accounts are
liquidated or the Trustee issues transfer instructions for in-kind
distributions to effect his distribution.
7.02 Normal Retirement
In the event of a Participant's termination of employment after he has
reached his Normal Retirement Date, he will become a Retired
Participant and his Accrued Benefit will become distributable to him.
An Active Participant's Accrued Benefit will become non-forfeitable no
later than the date upon which he attains his Normal Retirement Age.
The form and timing of benefit payment will be governed by the
provisions of Section 7.07.
7.03 Disability Retirement
In the event of a Participant's termination of employment due to
Disability, his Accrued Benefit will become non-forfeitable and he will
be entitled to begin to receive a distribution of his Accrued Benefit
as of his date of termination. The form and timing of benefit payment
will be governed by the provisions of Section 7.07.
Disability means the determination by the Plan Administrator that a
Participant is unable by reason of any medically determinable physical
or mental impairment to perform the usual duties of his employment or
of any other employment for which he is reasonably qualified based upon
his education, training and experience.
7.04 Death Benefit
In the event of the death of a Participant prior to the date on which
he receives a complete distribution of his benefit under the Plan, if
the Participant has a Surviving Spouse and if a Beneficiary other than
the Participant's Surviving Spouse has not been designated pursuant to
a Qualified Election, the Participant's Surviving Spouse will be
entitled to receive the value of the Participant's Vested Accrued
Benefit.
If a Surviving Spouse does not exist or if a Beneficiary other than the
Participant's Surviving Spouse has been designated pursuant to a
Qualified Election (as defined in Section 7.05(c) and (d) below), the
Participant's designated Beneficiary will be entitled to receive the
value of the Participant's Vested Accrued Benefit.
If the Participant or Former Participant dies after distribution has
commenced, the Trustee shall continue to distribute the remaining
portion of the Participant's or Former Participant's
7-1
Nonforfeitable Account Balance at least as rapidly as under the method
of distribution used prior to the Participant's death.
If the Participant or Former Participant dies before distribution
commences, the Trustee shall complete distribution of the Participant's
or Former Participant's Nonforfeitable Account Balance by December 31
of the calendar year containing the fifth (5th) anniversary of the
Participant's or Former Participant's death, except to the extent that
the Designated Beneficiary elects to receive distributions under
paragraphs (A) or (B) below:
(A) If any portion of the Participant's or Former Participant's
Nonforfeitable Account Balance is payable to a Designated
Beneficiary, the Designated Beneficiary may elect distributions
over the life or over a period certain not greater than the life
expectancy of the Designated Beneficiary commencing on or before
December 31 of the calendar year immediately following the
calendar year in which the Participant or Former Participant
died;
(B) If the Designated Beneficiary is the Participant's Surviving
Spouse, the date distributions must begin under paragraph (A)
above shall not be earlier than the later of: (1) December 31 of
the calendar year immediately following the calendar year in
which the Participant or Former Participant died; and (2)
December 31 of the calendar year in which the Participant or
Former Participant would have attained age seventy and one-half
(70-1/2) years. If the Participant has not made an election
pursuant to this Section by the time of death, the Designated
Beneficiary must elect the method of distribution no later than
the earlier of: (1) December 31 of the calendar year in which
distributions must begin under this Section; or (2) December 31
of the calendar year which contains the fifth (5th) anniversary
of the date of death of the Participant or Former Participant. If
the Participant has no Designated Beneficiary, or if the
Designated Beneficiary does not elect a method of distribution,
distribution of the Nonforfeitable Account Balance of the
Participant or Former Participant must be completed by December
31 of the calendar year containing the fifth (5th) anniversary of
death.
(C) If the Surviving Spouse is the Beneficiary of any portion of a
deceased Participant's or Former Participant's benefits under the
Plan, the Surviving Spouse shall be permitted to direct that this
distribution of benefits commence at a reasonable time following
the death of the Participant or Former Participant under
applicable Treasury regulations.
(D) If the Surviving Spouse dies after the Participant or Former
Participant, but before payments to the Spouse begin, the
preceding provisions of this Section, with the exception of
paragraph (B), shall be applied as if the Surviving Spouse had
been the Participant.
7.05 Designation of Beneficiary
(a) General
Each Participant will be given the opportunity to designate a
Beneficiary or Beneficiaries, and from time to time the
Participant may file with the Plan Administrator a new or revised
designation on the form provided by the Plan Administrator. If a
Participant is married, any designation of a Beneficiary other
than the Participant's spouse must be consented to by the
Participant's spouse pursuant to a Qualified Election.
7-2
If a Participant dies without a spouse or designated Beneficiary
surviving; if the designated Beneficiary (other than the spouse)
does not survive until final distribution of the Participant's
Vested Accrued Benefit; if a Participant who is not married dies
without a designated Beneficiary; if a Participant who is not
married dies after having made and revoked a designation but prior
to having made a subsequent designation, or if the Plan
Administrator determines that a Participant's Beneficiary
designation is not effective for any reason, then the amount
remaining of the deceased Participant's Vested Accrued Benefit
will be payable in the following descending order to:
(i) first, the Participant's surviving spouse;
(ii) then, the Participant's surviving children, including
adopted children, in equal shares;
(iii) then, the Participant's surviving parents, in equal shares;
and
(iv) the legal representative of the estate of the Participant.
The Plan Administrator shall determine the applicable person,
class of persons, or legal entity to whom the benefit shall be
paid beginning with clause (i), in the descending order of clauses
(i) to (iv). Each class shall be determined to be not in existence
and, therefore, inapplicable by the Plan Administrator before
proceeding to the next class. In determining if a classification
is inapplicable, the Plan Administrator shall be required only to
make reasonable inquiry into the existence of the person or
persons.
Payment made pursuant to the power conferred on the Plan
Administrator in this Section shall operate as a complete
discharge of all obligations under the Plan concerning the share
of a deceased Participant and shall not be subject to review by
anyone but shall be final, binding and conclusive on all persons
for all purposes.
(b) Surviving Spouse
Surviving Spouse means a deceased Participant's spouse who was
married to the Participant on the Participant's date of death. The
Plan Administrator and the Trustee may rely conclusively on a
Participant's statement, in writing or through such other means as
may be approved by the Plan Administrator, of his marital status.
Neither the Plan Administrator nor the Trustee is required at any
time to inquire into the validity of any marriage, the
effectiveness of a common-law relationship or the claim of any
alleged spouse which is inconsistent with the Participant's report
of his marital status and the identity of his spouse.
If it is established to the satisfaction of the Plan Administrator
that the spouse cannot be located, then the deceased Participant's
Vested Accrued Benefit will be paid as if there were no surviving
spouse. If the spouse is legally incompetent, any election or
consent by the spouse may be made by the spouse's legal guardian.
If the deceased Participant is legally separated or has been
abandoned (within the meaning of local law) and there is an order
from a court of competent jurisdiction to this effect, then the
deceased Participant's Vested Accrued Benefit will be paid as if
there were no surviving spouse.
7-3
(c) Qualified Election
A Qualified Election means the designation of a specific
Beneficiary other than the Participant's spouse. Such Qualified
Election must be in writing and must be consented to by the
Participant's spouse. The spouse's written consent to a Qualified
Election must be witnessed by a representative of the Plan
Administrator or a notary public. Such consent will not be
required if the Participant establishes to the satisfaction of the
Plan Administrator that such written consent may not be obtained
because there is no spouse, the spouse cannot be located, the
participant is legally separated or has been abandoned and the
Participant has a court order to that effect, or the Participant
and the Participant's Spouse are not married through the one year
period ending on the date of death of the Participant or other
circumstances that may be prescribed by Treasury Regulations. Any
consent necessary under this provision will be valid only with
respect to the spouse who signs the consent (or in the event of a
deemed Qualified Election, the designated spouse). Additionally, a
revocation of a prior Qualified Election may be made by a
Participant without the consent of the spouse at any time before
the commencement of benefits; however, any Qualified Election
which follows such revocation must be in writing and must be
consented to by the Participant's spouse. The number of Qualified
Elections or revocations of such Qualified Elections will not be
limited.
7.06 Termination of Employment
(a) In General
If a Participant's employment terminates for any reason other than
retirement, death, or Disability (as defined in Section 7.03), his
Vested Accrued Benefit will become distributable to him as soon as
administratively feasible. The form and timing of benefit payment
will be governed by the provisions of Section 7.07.
(b) Cash-Out Distribution
If a Participant terminates employment and receives a distribution
equal to the Vested Percentage of his Accounts which are subject
to the Vesting Schedule (such Accounts are hereinafter referred to
as Employer Contribution Accounts), a Cash-Out Distribution will
have occurred if the following conditions are met:
(1) The Participant was less than 100% vested in his Employer
Contribution Accounts and
(2) The distribution was made due to the Employee's termination of
participation in the Plan.
A distribution will be deemed to be due to the termination of an
Employee's participation in the Plan if it is made no later than
the close of the second Plan Year following the Plan Year in which
such termination occurs.
(c) Restoration of Employer Contribution Accounts
If, following the date of a Cash-Out Distribution, a Former
Participant returns to an Eligible Employee Classification prior
to incurring 5 consecutive One Year Breaks-in-Service, then the
Participant will have the right to repay, in cash, to the Trustee,
within 5 years after his
7-4
return date, the portion of the Cash-Out Distribution which was
attributable to his Employer Contribution Accounts which were less
than 100% vested in order to restore such Accounts to their value
as of the date of the Cash-Out Distribution. The Plan
Administrator will restore an eligible Participant's Employer
Contribution Accounts as of the Valuation Date coinciding with or
immediately following the complete repayment of the Cash-Out
Distribution. To restore the Participant's Employer Accounts the
Plan Administrator, to the extent necessary, will, under rules and
guidelines applied in a uniform and nondiscriminatory manner,
first allocate to the Participant's Employer Contribution Accounts
the amount, if any, of Forfeitures which would otherwise be
allocated under Article 3.
To the extent such Forfeitures are insufficient to enable the Plan
Administrator to make the required restoration, the Employer will
contribute such additional amount as is necessary to enable the
Plan Administrator to make the required restoration. The Plan
Administrator will not take into account the allocation under this
Section in applying the limitation on allocations under Article
10.
(d) Non-Vested Participant
If a Participant who is zero percent vested in his Employer
Accounts terminates employment, a Cash-Out Distribution will be
deemed to have occurred as of the Participant's date of
termination of employment.
If the Participant subsequently returns to an Eligible Employee
Classification prior to incurring five consecutive One Year
Breaks-in-Service, then the Participant will immediately become
entitled to a complete restoration of his Employer Contribution
Accounts as of the Valuation Date coinciding with or next
following his date of re-employment. Such restoration will be made
in accordance with the provisions of Section 7.06(c).
(e) Determination of Amount of Vested Undistributed Account
If a Participant received a distribution of all or a portion of
his or her Accounts, Participant is less than 100% vested, and
such distribution does not meet the requirements of a Cash-Out
Distribution, prior to the Forfeiture of the non-vested portion of
his or her Account, the value of his or her undistributed Account
shall be held in a separate account and shall be determined at any
time prior to and including the date of Forfeiture under the
following formula:
X = P(AB + D) - D
For this formula, the variables represent the following factors:
X is the value of the vested portion of the Participant's Account;
P is the Participant's Nonforfeitable percentage at the relevant
time;
AB is the Account Balance at the relevant time; and
D is the amount of the distribution.
7-5
7.07 Timing and Form of Benefit Payments
(a) Timing of Benefit Payment
Subject to the provisions of Section 7.08, the Plan Administrator
will direct the Trustee to make the payment of any benefit
provided under this Plan upon the event giving rise to such
benefit within 60 days following the receipt of a Participant's
request for the payment of benefits in writing or through such
other means as may be approved by the Plan Administrator and in a
format specified by the Plan Administrator. The Plan Administrator
may temporarily suspend such processing in the event of unusual or
extraordinary circumstances such as the conversion of Plan records
from one recordkeeper to another.
(b) Form of Benefit Payment
The form of benefit will be a single sum payment. All
distributions of Employer Securities in a Participant's Account
shall be made in-kind in the form of Employer Securities. A
Participant may, however, elect to receive distributions in cash
based on the fair market value of the Employer Securities as of
the Valuation Date corresponding to the distribution or in a
combination of cash and Employer Securities. Any fractional share
of an Employer Security shall be paid in cash.
All distributions of assets other than Employer Securities in a
Participant's Account shall be paid in cash.
Notwithstanding the foregoing, if a terminated Participant's total
Vested Accrued Benefit is not in excess of $5,000 (effective
January 1, 2002, as determined without regard to that portion of
the account balance that is attributable to rollover contributions
and allocable earnings), such Participant's Vested Accrued Benefit
will be payable in a single sum payment of the entire amount of
his Vested Accrued Benefit. The Plan Administrator may, in
accordance with a policy that does not discriminate among
Participants, establish periodic times when the Plan Administrator
will direct the distribution of such amounts without the request
or approval of the Participant.
7.08 Commencement of Benefit
(a) General
Subject to the provisions of this Article, commencement of a
benefit will, unless the Participant elects otherwise in writing
or through such other means as may be approved by the Plan
Administrator, begin not later than the 60th day after the later
of the close of the Plan Year in which the Participant attains
Normal Retirement Age or the close of the Plan Year which contains
the date the Participant terminates his service with the Employer.
Payment of a Participant's benefits must begin no later than his
Required Beginning Date.
(b) Required Beginning Date
Effective the later of the Effective Date of the Plan or the first
day of the first Plan Year beginning after December 31, 1996, the
Required Beginning Date for the commencement of
7-6
benefit payments from the Plan is the April 1 immediately
following the later of (i) the calendar year in which the
Participant attains age 70 1/2, or (ii) if so elected by the
Participant, the calendar year in which the Participant retires.
Notwithstanding the foregoing, the Required Beginning Date for a
Participant who is a Five Percent Owner (as defined in Section
12.01(d)) with respect to the Plan Year in which the Participant
attains age 70 1/2, is the April 1 immediately following the
calendar year in which he attains age 70 1/2.
All distributions required under this Section will be determined
and made in accordance with the regulations issued under Code
Section 401(a)(9), including those dealing with minimum
distribution requirements. Notwithstanding the provisions of
Section 7.07, an Active Participant who has reached his Required
Beginning Date will receive an annual distribution of his Accrued
Benefit equal to the minimum required distribution determined
under Code Section 401(a)(9).
With respect to distributions under the Plan made for calendar
years beginning on or after January 1, 2002, the Plan will apply
the minimum distribution requirements of section 401(a)(9) of the
Internal Revenue Code in accordance with the regulations under
section 401(a)(9) that were proposed on January 17, 2001,
notwithstanding any provision of the Plan to the contrary. This
amendment shall continue in effect until the end of the last
calendar year beginning before the effective date of final
regulations under section 401(a)(9) or such other date as may be
specified in guidance published by the Internal Revenue Service.
(c) Life Expectancy
For distribution made before January 1, 2002, life expectancy and
joint and last survivor expectancy are to be computed by the use
of the return multiples contained in Treasury Regulations 1.72-9.
Unless the Participant elects otherwise by the time of the first
required distribution, life expectancy of the Participant and the
surviving spouse will be recalculated annually. Such election will
be irrevocable. The life expectancy of any other designated
Beneficiary will be calculated at the time payment first begins
without further recalculation.
If the Participant dies after distribution of his interest has
begun, the remaining portion of the interest will continue to be
distributed at least as rapidly as under the method of
distribution being used before the Participant's death.
(d) Exception for Elections Made before January 1, 1984
Neither Section 7.08(b) nor Section 7.08(c) will apply if, before
January 1, 1984, the Participant made a written designation
providing for the payment of benefits in an alternate method in
accordance with the following:
(1) The distribution by the Plan is one which would not have
disqualified the Plan under Code Section 401(a)(9) as in
effect before amendment by TEFRA.
(2) The distribution is in accordance with a method of
distribution designated by the Participant whose interest in
the Plan is being distributed or, if the Participant is
deceased, by a Beneficiary of the Participant.
7-7
(3) The designation was in writing, was signed by the Participant
or the Beneficiary, and was made before January 1, 1984.
(4) The Participant had accrued a benefit under the plan as of
December 31, 1983.
(5) The method of distribution designated by the Participant or
the Beneficiary specifies the time at which distribution will
commence, the period over which distributions will be made,
and in the case of any distribution upon the Participant's
death, the Beneficiaries of the Participant listed in order of
priority.
If a designation is revoked, any later distribution must satisfy
the requirements of Sections 7.08(b) and 7.08(c). Any changes in
the designation will be considered to be a revocation of the
designation. However, the mere substitution or addition of another
Beneficiary under the designation will not be considered to be a
revocation of the designation, so long as the substitution or
addition does not alter the period over which distributions are to
be made under the designation, directly or indirectly (for
example, by altering the relevant measuring life).
7.09 Direct Rollover of Eligible Rollover Distributions
(a) General
Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee's election under this Section,
a Distributee may elect, at the time and in the manner prescribed
by the Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover.
(b) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution of all or
any portion of the balance to the credit of the Distributee,
except that an Eligible Rollover Distribution does not include:
any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the Distributee or the joint lives
(or joint life expectancies) of the Distributee and the
Distributee's designated beneficiary, or for a specified period of
ten years or more; any distribution to the extent such
distribution is required under Code Section 401(a)(9); the portion
of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); effective for
Plan Years beginning after December 31, 1998, any hardship
distribution described in Code Section 401(k)(2)(B)(I)(IV) and
effective January 1, 2002, any amount that is distributed on
account of hardship.
Effective January 1, 2002, a portion of a distribution shall not
fail to be an Eligible Rollover Distribution merely because a
portion consists of after-tax employee contributions which are not
includible in gross income. However, such portion may be
transferred only to an individual retirement account or annuity
described in section 408(a) or (b) of the Code, or to a qualified
defined contribution plan described in section 401(a) or 403(a) of
the Code that agrees to separately account for amounts so
transferred, including separately accounting for
7-8
the portion of such distribution which is includible in gross
income and the portion of such distribution which is not so
includible.
(c) Eligible Retirement Plan
An Eligible Retirement Plan is any of the following that accepts
the Distributee's Eligible Rollover Distribution: an individual
retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), a qualified
trust described in Code Section 401(a), and Effective January 1,
2002, an annuity contract described in section 403(b) of the Code
and an eligible plan under section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any
agency or instrumentality of a state or political subdivision of a
state and which agrees to separately account for amounts
transferred into such plan from this plan. The definition of
eligible retirement plan shall also apply in the case of a
distribution to a surviving spouse, or to a spouse or former
spouse who is the alternate payee under a qualified domestic
relation order, as defined in section 414(p) of the Code.
(d) Distributee
A Distributee includes an Employee or Former Employee. In
addition, the Employee's or Former Employee's surviving spouse and
the Employee's or Former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as
defined in Code Section 414(p), are Distributees with regard to
the interest of the spouse or former spouse.
(e) Direct Rollover
A Direct Rollover is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
7.10 Waiver of 30-Day Notice
If a distribution is one to which Code Sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
notice required under Treasury Regulation 1.411(a)-11(c) is given,
provided that:
(1) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular
distribution option); and
(2) the Participant, after receiving the notice, affirmatively elects
to receive a distribution.
7-9
Article 8
MISCELLANEOUS
8.01 Exclusive Benefit
At no time will any part of the principal or income of the Plan assets
be used or diverted for purposes other than the exclusive benefit of
Participants in the Plan and their Beneficiaries, nor may any portion
of the Plan assets revert to the Plan Sponsor or any other Employer
except as provided in Sections 10.01(e) and 8.11.
8.02 Employment Rights of Parties Not Restricted
The adoption and maintenance of this Plan will not be deemed a contract
between the Employer and any Employee. Nothing in this Plan will give
any Employee or Participant the right to be retained in the employ of
the Employer or to interfere with the right of the Employer to
discharge any Employee or Participant at any time, nor will it give the
Employer the right to require any Employee or Participant to remain in
its employ, or to interfere with any Employee's or Participant's right
to terminate his employment at any time.
8.03 Right of Plan Sponsor to Amend or Terminate
The Plan Sponsor reserves the right to alter, amend, revoke or
terminate this Plan. No amendment will deprive any Participant or
Beneficiary of any vested right nor will it reduce any Accrued Benefit
to which he is then entitled with respect to Employer contributions
previously made, except as may be required to maintain the Plan as a
qualified plan under the Code. No amendment will change the duties or
responsibilities of the Trustee without its express written consent
thereto.
If this Plan is revoked or terminated (in whole or in part) or if
contributions are completely discontinued, the Accounts of all affected
Participants will become non-forfeitable. The Plan Sponsor will then
arrange for allocation of all assets among Participants so affected by
the total or partial termination in accordance with the requirements of
all applicable law and the regulations and requirements of the Internal
Revenue Service. All allocated amounts will be retained in the Plan to
the credit of the individual Participants until distribution as
directed by the Plan Sponsor. Distributions to Participants may be in
the form of cash or other Plan assets or partly in each.
8.04 Amendment to Vesting Schedule
No amendment to the Vesting Schedule will deprive a Participant of his
non-forfeitable right to his Vested Accrued Benefit as of the date of
the amendment. Further, if the Vesting Schedule of the Plan is amended,
or if the Plan is amended in any way that directly or indirectly
affects the computation of a Participant's non-forfeitable percentage,
each Participant in the Plan as of the
8-1
date of the amendment will have his Vested Percentage computed
according to the amended Vesting Schedule or according to the Vesting
Schedule prior to the amendment, whichever results in the higher Vested
Percentage.
8.05 Qualification of Plan
The Plan Sponsor will have the sole responsibility for obtaining and
retaining qualification of the Plan under the Code with respect to the
Plan Sponsor's individual circumstances.
Notwithstanding any of the foregoing provisions, if this Plan, upon
adoption by the Plan Sponsor, is submitted to the Internal Revenue
Service within the remedial amendment period for the tax year in which
the Plan is first effective, and the Internal Revenue Service then
determines that the Plan as initially adopted by the Plan Sponsor is
not a qualified plan under the Code, the Plan Sponsor may elect to
terminate this Plan by giving notice thereof in writing or through such
other means a may be permitted by law. Such termination will have the
same effect as if the Plan was never adopted, all policies and
contracts will be canceled, and all contributions, to the extent
recoverable from the Trustee, will be returned to their source. If any
amendment to this Plan is submitted to the Internal Revenue Service
within the period allowed under Code Section 401(b) which then
determines that the Plan as amended is not a qualified plan under the
Code, the Plan Sponsor may cancel or modify any or all provisions of
the amendment retroactive to the effective date of the amendment in
order to maintain the qualified status of the Plan, whereupon notice
thereof will be furnished to all affected Employees, Participants and
Beneficiaries in writing or through such other means as may be
permitted by law.
8.06 Mergers, Consolidations or Transfers of Plan Assets
In the event this Plan is merged or consolidated with another plan
which is qualified under Code Sections 401(a) (and 501(a) if
applicable), or in the event of a transfer of the assets or liabilities
of this Plan to another plan which is qualified under Code Sections
401(a) (and 501(a) if applicable), the benefit which each Participant
would be entitled to receive under the successor plan or other plan if
it were terminated immediately after the merger, consolidation or
transfer will be equal to or greater than the benefit which the
Participant would have received immediately before the merger,
consolidation or transfer if this Plan had then terminated.
Any transfer of assets and/or liabilities to (or from) this Plan from
(or to) another plan qualified under Code Sections 401(a) (and 501(a)
if applicable) will be evidenced by a Written Resolution by the Plan
Sponsor of each affected plan which specifically authorizes such
transfer of assets and/or liabilities.
Any transfer of assets to this Plan will be allowed under the
provisions of this Section if such transferred assets are not required
to be paid in the form of a qualified joint & survivor annuity or a
qualified survivor annuity in accordance with Code Section 401(a)(11).
The Plan Sponsor specifically authorizes the transfers of assets
between this Plan and plans designated in an Appendix to this Plan as
plans for which transfers are authorized on behalf of Participants who
transfer employment between Participating Employers in this Plan and
employers so listed who sponsor qualified retirement plans.
8-2
8.07 Alienation
(a) General
No person entitled to any benefit under this Plan will have any
right to sell, assign, transfer, hypothecate, encumber, commute,
pledge, anticipate or otherwise dispose of his interest in the
benefit, and any attempt to do so will be void. No benefit under
this Plan will be subject to any legal process, levy, execution,
attachment or garnishment for the payment of any claim against
such person.
(b) Exceptions
Section 8.07(a) will not apply to the extent a Participant or
Beneficiary is indebted to the Plan under the provisions of the
Plan. At the time a distribution is to be made to or for a
Participant's or Beneficiary's benefit, the portion of the amount
distributed which equals the indebtedness will be withheld by the
Trustee to apply against or discharge the indebtedness. Before
making a payment, however, the Participant or Beneficiary must be
given notice, in writing, or through such electronic means as may
be permitted by applicable regulations, that the indebtedness is
to be so paid in whole or part from his Participant's Accrued
Benefit. If the Participant or Beneficiary does not agree that the
indebtedness is a valid claim against his Vested Accrued Benefit,
he will be entitled to a review of the validity of the claim in
accordance with procedures established by the Plan Administrator.
Section 8.07(a) will not apply to a qualified domestic relations
order (QDRO) as defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the Plan
Administrator under the provisions of the Retirement Equity Act of
1984. The Plan Administrator will establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to
the extent provided under a QDRO, a former spouse of a Participant
will be treated as the spouse or Surviving Spouse (as defined in
Section 7.05) for all purposes under the Plan. All rights and
benefits, including elections, provided to a Participant under
this Plan will be subject to the rights afforded to any alternate
payee as such term is defined in Code Section 414(p).
This Plan specifically permits distribution to an alternate payee
under a QDRO (without regard to whether the Participant has
attained his or her earliest retirement age as that term is
defined under Code Section 414(p)) in the same manner that is
provided for a Vested Terminated Participant.
In addition, Section 8.07(a) will not apply to a judgment or
settlement described in Code Section 401(a)(13(C).
8.08 Construction
To the extent not preempted by ERISA, this Plan will be construed
according to the laws of the state in which the Plan Sponsor's
principal place of business is located. Words used in the singular will
include the plural, the masculine gender will include the feminine, and
vice versa, whenever appropriate.
8-3
8.09 Named Fiduciaries
(a) Allocation of Functions
The authority to control and manage the operation and
administration of the Plan and Trust created by this instrument
will be allocated between the Plan Sponsor and the Plan
Administrator, each of whom are designated as Named Fiduciaries
with respect to the Plan and Trust as provided for by Section
402(a)(2) of ERISA. The Plan Sponsor reserves the right to
allocate the various responsibilities for the present execution of
the functions of the Plan, other than the Trustees'
responsibilities, among its Named Fiduciaries. Any person or group
of persons may serve in more than one fiduciary capacity with
regard to the Plan.
(b) Responsibilities of the Plan Sponsor
The Plan Sponsor, in its capacity as a Named Fiduciary, will have
only the following authority and responsibility:
(1) To appoint or remove the Plan Administrator and furnish the
Trustee with certified copies of any resolutions of the Plan
Sponsor with regard thereto;
(2) To appoint and remove the Trustee;
(3) To appoint a successor Trustee or additional Trustees;
(4) To communicate information to the Plan Administrator and the
Trustee as needed for the proper performance of the duties of
each;
(5) To appoint an investment manager (or to refrain from such
appointment), to monitor the performance of the investment
manager so appointed, and to terminate such appointment (more
than one investment manger may be appointed and in office at
any time); and
(6) To establish and communicate to the Trustee a funding policy
for the Plan.
(c) Limitation on Obligations of Named Fiduciaries
No Named Fiduciary will have authority or responsibility to deal
with matters other than as delegated to it under this Plan or by
operation of law. A Named Fiduciary will not in any event be
liable for breach of fiduciary responsibility or obligation by
another fiduciary (including Named Fiduciaries) if the
responsibility or authority of the act or omission deemed to be a
breach was not within the scope of the Named Fiduciary's authority
or delegated responsibility.
(d) Standard of Care and Skill
The duties of each fiduciary will be performed with the care,
skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an
enterprise of like character and with like objectives.
8-4
8.10 Adoption and Withdrawal by Other Organizations
(a) Procedure for Adoption
Subject to the provisions of this Section, any organization now in
existence or hereafter formed or acquired, which is not already a
Participating Employer under this Plan and which is otherwise
legally eligible may, in the future, with the consent and approval
of the Plan Sponsor, by formal Written Resolution (referred to in
this Section as an Adoption Resolution), adopt the Plan and Trust
hereby created for all or any classification of persons in its
employment and thereby, from and after the specified effective
date, become a Participating Employer under this Plan. Such
consent will be effected by and evidenced by a formal Written
Resolution of the Plan Sponsor. The Plan Sponsor's consent may
provide for adoption by all or specified categories of Related
Employers. The Adoption Resolution may contain such specific
changes and variations in Plan terms and provisions applicable to
the adopting Participating Employer and its Employees as may be
acceptable to the Plan Sponsor. However, the sole, exclusive right
of any other amendment of whatever kind or extent to the Plan is
reserved to the Plan Sponsor. The Adoption Resolution will become,
as to the adopting organization and its Employees, a part of this
Plan as then amended or thereafter amended. It will not be
necessary for the adopting organization to sign or execute the
original or then amended Plan and Trust Agreement or any future
amendment to the Plan and Trust Agreement. The effective date of
the Plan for the adopting organization will be that stated in the
Adoption Resolution and from and after such effective date the
adopting organization will assume all the rights, obligations and
liabilities as a Participating Employer under this Plan. The
administrative powers of and control by the Plan Sponsor as
provided in the Plan, including the sole right of amendment or
termination of the Plan, of appointment and removal of the Plan
Administrator and the Trustee, and of appointment and removal of
an investment manager will not be diminished by reason of the
participation of the adopting organization in the Plan.
(b) Withdrawal
Any Participating Employer may withdraw from the Plan at any time,
without affecting the Plan Sponsor or other Participating
Employers not withdrawing. Withdrawal shall be effected by
providing a written resolution delivered to the Trustee and Plan
Sponsor specifying the effective date of such withdrawal. A
withdrawing Participating Employer may arrange for the
continuation by itself or its successor of this Plan in separate
forms for its own employees, with such amendments, if any, as it
may deem proper, and may arrange for continuation of the Plan by
merger with an existing plan and/or transfer of plan assets. The
Plan Sponsor may, in its absolute discretion, terminate a
Participating Employer's participation at any time when in its
judgment the Participating Employer fails or refuses to discharge
its obligations under the Plan.
(c) Adoption Contingent Upon Initial and Continued Qualifications
The adoption of this Plan by an organization as provided is hereby
made contingent and subject to the condition precedent that said
adopting organization meets, for its Employees, all the statutory
requirements for qualified plans, including, but not limited to,
Code Sections 401(a) and 501(a). If the Plan or the Trust, in its
operation, becomes disqualified, for any reason, as to the
adopting organization and its Employees, the portion of the Plan
assets
8-5
allocable to them will be segregated as soon as is
administratively feasible, pending either the prompt (1)
requalification of the Plan as to the organization and its
employees to the satisfaction of the Internal Revenue Service so
as not to affect the continued qualified status thereof as to
other Employers, (2) withdrawal of the organization from this Plan
and a continuation by itself or its successor of its plan
separately from this Plan, or by merger with another existing
plan, with a transfer of its said segregated portion of Plan
assets, or (3) termination of the Plan as to itself and its
Employees.
8.11 Employer Contributions
Employer contributions made to the Plan and Trust are made and will be
held for the sole purpose of providing benefits to Participants and
their Beneficiaries.
In no event will any contribution made by the Employer to the Plan and
Trust or income therefrom revert to the Employer except as provided in
Section 10.01(e) or as provided below.
(a) Notwithstanding any provision of this Plan to the contrary, if a
contribution is made by an Employer because of a mistake of fact,
the contribution may be returned to the Employer within one year
after the payment of the contribution. If demand is made by the
Employer within one year after payment of the contribution, the
Trustee will return the amount of the mistaken contribution which
will be equal to the excess of (i) the amount contributed over
(ii) the amount that would have been contributed had there not
occurred a mistake of fact. Earnings attributable to mistaken
contributions may not be returned to the Employer, but losses
attributable thereto will reduce the amount to be returned.
Notwithstanding any provision of this Plan to the contrary, if the
Internal Revenue Service determines that the Plan as adopted by
the Employer does not qualify under applicable sections of the
Code and applicable Treasury Regulations, and the Employer filed
an application with the Internal Revenue Service for a
determination of the qualified status of the Plan by the due date
of the return for the taxable year in which the Plan was adopted,
the value of all assets will be distributed by the Trustee to the
Employer within one year after the date such initial qualification
is denied. Thereafter, the Employer's participation in this Plan
and Trust will be considered rescinded and of no force or effect.
(c) Notwithstanding any provision of this Plan to the contrary, any
contribution by the Employer to the Plan is conditioned on the
deductibility of the contribution by the Employer under the Code.
To the extent any deduction is disallowed, the Employer, within
one year following a final determination of the disallowance,
whether by agreement with the Internal Revenue Service or by final
decision in a court of competent jurisdiction, may demand
repayment of the disallowed contribution, and the Trustee will
return the contribution within one year following the
disallowance. Earnings attributable to excess contributions may
not be returned to the Employer, but losses attributable thereto
will reduce the amount to be returned.
8.12 Employees in Qualified Military Service
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credits with respect to qualified
military service will be provided in accordance with Code
8-6
Section 414(u). Provisions of this plan that refer to Qualified
Military Service as defined in Code Section 414(u) are effective on the
later of the Effective Date of the Plan or December 12, 1994.
8-7
Article 9
ADMINISTRATION
9.01 Plan Administrator
The Plan Administrator will have the responsibility for the general
supervision and administration of the Plan and will be a fiduciary of
the Plan. The Plan Sponsor may, by Written Resolution, appoint one or
more individuals to serve as Plan Administrator, including in the form
of an Advisory Committee. If the Plan Sponsor does not appoint an
individual or individuals as Plan Administrator, the Plan Sponsor will
function as Plan Administrator. The Plan Sponsor may at any time, with
or without cause, remove an individual as Plan Administrator or
substitute another individual therefor.
9.02 Powers and Duties of the Plan Administrator
The Plan Administrator will be charged with and will have delegated to
it the full power, duty, authority and discretion to interpret and
construe the provisions of this Plan, to determine its meaning and
intent and to make application thereof to the facts of any individual
case; to determine in its discretion the rights and benefits of
Participants and the eligibility of Employees; to give necessary
instructions and directions to the Trustee and the Insurer as herein
provided or as may be requested by the Trustee and the Insurer from
time to time; to resolve all questions of fact relating to any of the
foregoing; and generally to direct the administration of the Plan
according to its terms. All decisions of the Plan Administrator in
matters properly coming before it according to the terms of this Plan,
and all actions taken by the Plan Administrator in the proper exercise
of its administrative powers, duties and responsibilities, will be
final and binding upon all Employees, Participants and Beneficiaries
and upon any person having or claiming any rights or interest in this
Plan. The Plan Administrator may engage agents to assist it and may
engage legal counsel who may be counsel for the Plan Sponsor.
The Plan Sponsor and the Plan Administrator will make and receive any
reports and information, and retain any records necessary or
appropriate to the administration of this Plan or to the performance of
duties hereunder or to satisfy any requirements imposed by law. In the
performance of its duties, the Plan Administrator will be entitled to
rely on information duly furnished by any Employee, Participant or
Beneficiary or by the Plan Sponsor or Trustee.
9.03 Actions of the Plan Administrator
The Plan Administrator may adopt such rules as it deems necessary,
desirable or appropriate with respect to the conduct of its affairs and
the administration of the Plan. Whenever any action to be taken in
accordance with the terms of the Plan requires the consent or approval
of the Plan Administrator, or whenever an interpretation is to be made
of the terms of the Plan, the Plan Administrator will act in a uniform
and non-discriminatory manner, treating all Employees and Participants
in similar circumstances in a like manner. If the Plan Administrator is
a group of individuals, all of its decisions will be made by a majority
vote. The Plan Administrator will
9-1
have the authority to employ one or more persons to render advice or
services with regard to the responsibilities of the Plan Administrator,
including but not limited to attorneys, actuaries, and accountants.
The Plan Administrator will have the authority to delegate its
responsibilities under the Plan to appropriate individuals or entities
to act on behalf of the Plan Administrator. Any persons employed to
render advice or services will have no fiduciary responsibility for any
ministerial functions performed with respect to this Plan.
9.04 Reliance on Plan Administrator and Plan Sponsor
Until the Plan Sponsor gives notice to the contrary, the Trustee and
any persons employed to render advice or services will be entitled to
rely on the designation of Plan Administrator that has been furnished
to them. In addition, the Trustee and any persons employed to render
advice or services will be fully protected in acting upon the written
directions and instructions of the Plan Administrator made in
accordance with the terms of this Plan. If the Plan Administrator is a
group of individuals, unless otherwise specified, any one of such
individuals will be authorized to sign documents on behalf of the Plan
Administrator and such authorized signatures will be recognized by all
persons dealing with the Plan Administrator.
The Trustee and any persons employed to render advice or services may
take cognizance of any rules established by the Plan Administrator and
rely upon them until notified to the contrary. The Trustee and any
persons employed to render advice or services will be fully protected
in taking any action upon any paper or document believed to be genuine
and to have been properly signed and presented by the Plan
Administrator, Plan Sponsor or any agent of the Plan Administrator
acting on behalf of the Plan Administrator.
9.05 Reports to Participants
The Plan Administrator will report in writing to a Participant his
Accrued Benefit under the Plan and the Vested Percentage of such
benefit when the Participant terminates his employment or reasonably
requests such a report in writing from the Plan Administrator. To the
extent required by law or regulation, the Plan Administrator will
annually furnish to each Participant, and to each Beneficiary receiving
benefits, a report that fairly summarizes the Plan's most recent
report.
9.06 Bond
The Plan Administrator and other fiduciaries of the Plan will be bonded
to the extent required by ERISA or other applicable law. No additional
bond or other security for the faithful performance of any duties under
this Plan will be required.
9.07 Compensation of Plan Administrator
The Compensation of the Plan Administrator will be left to the
discretion of the Plan Sponsor; no person who is receiving full pay
from the Employer will receive compensation for services as Plan
Administrator. All reasonable and necessary expenses incurred by the
Plan Administrator in supervising and administering the Plan will be
paid from the Plan assets by the Trustee at the direction of the Plan
Administrator to the extent directed by the Plan Sponsor.
9-2
9.08 Claims Procedure
The Plan Administrator will make all determinations as to the rights of
any Employee, Participant, Beneficiary or other person under the terms
of this Plan. Any Employee, Participant or Beneficiary, or person
claiming under them, may make claim for benefit under this Plan by
filing written notice with the Plan Administrator setting forth the
substance of the claim. If a claim is wholly or partially denied, the
claimant will have the opportunity to appeal the denial upon filing
with the Plan Administrator a written request for review within 60 days
after receipt of notice of denial. In making an appeal the claimant may
examine pertinent Plan documents and may submit issues and comments in
writing. Denial of a claim or a decision on review will be made in
writing by the Plan Administrator delivered to the claimant within 60
days after receipt of the claim or request for review, unless special
circumstances require an extension of time for processing the claim or
review, in which event the Plan Administrator's decision must be made
as soon as possible thereafter but not beyond an additional 60 days. If
no action on an initial claim is taken within 120 days, the claims will
be deemed denied for purposes of permitting the claimant to proceed to
the review stage. The denial of a claim or the decision on review will
specify the reasons for the denial or decision and will make reference
to the pertinent Plan provisions upon which the denial or decision is
based. The denial of a claim will also include a description of any
additional material or information necessary for the claimant to
perfect the claim and an explanation of the claim review procedure
herein described. The Plan Administrator will serve as an agent for
service of legal process with respect to the Plan unless the Plan
Sponsor, through Written Resolution, appoints another agent.
9.09 Unclaimed Benefits
If a Participant or Beneficiary is entitled to a distribution from the
Plan, the Participant or Beneficiary will be responsible for providing
the Plan Administrator with his current address. If the Plan
Administrator notifies the Participant or Beneficiary by registered
mail (return receipt requested) at his last known address that he is
entitled to a distribution and also notifies him of the provisions of
this paragraph, and the Participant or Beneficiary fails to claim his
benefits under the Plan or provide his current address to the Plan
Administrator within one year after such notification, the
distributable amount will be forfeited and used to reduce the cost of
the Plan. If the Participant or Beneficiary is subsequently located,
such benefit will be restored.
9.10 Fiduciary Responsibility
The Trustee will be solely responsible for its own acts or omissions.
The Trustee will not have duty to question any other fiduciary's
performance of duties allocated to such other fiduciary pursuant to the
Plan. If the Plan permits the appointment of additional trustees of
separate Trust Funds under the Plan, each will have no duties or
responsibilities for Plan assets held by another trustee.
Nothing contained in this Section will preclude any agreement
allocating specific responsibilities or obligations among the
co-fiduciaries provided that the agreement does not violate any of the
terms and provisions of this Plan or the requirements of applicable
laws.
9-3
9.11 Expenses of Administration
The Plan Sponsor does not and will not guarantee the Plan assets
against loss. The Plan Sponsor may in its sole discretion, but will not
be obligated to, pay the ordinary expenses of establishing the Plan,
including the fees of administrators, recordkeepers, consultants,
accountants and attorneys in connection therewith. The Plan Sponsor
may, in its sole discretion (but will not be obligated to), pay other
costs and expenses of administering the Plan, the taxes imposed upon
the Plan, if any, and the fees, charges or commissions with respect to
the purchase and sale of Plan assets. Unless paid by the Plan Sponsor,
such costs and expenses, taxes (if any), and fees, charges and
commissions will be a charge upon Plan assets and deducted by the
Trustee.
9.12 Distribution Authority
If any person entitled to receive payment under this Plan is a minor,
declared incompetent or is under other legal disability, the Plan
Administrator may, in its sole discretion, direct the Trustee to:
(a) Distribute directly to the person entitled to the payment;
(b) Distribute to the legal guardian or, if none, to a parent of the
person entitled to payment or to a responsible adult with whom the
person entitled to payment maintains his residence;
(c) Distribute to a custodian for the person entitled to payment under
the Uniform Gifts to Minors Act if permitted by the laws of the
state in which the person entitled to payment resides; or
(d) Withhold distribution of the amount payable until a court of
competent jurisdiction determines the rights of the parties
thereto or appoints a guardian of the estate of the person
entitled to payment.
If there is any dispute, controversy or disagreement between any
Beneficiary or person and any other person as to who is entitled to
receive the benefits payable under this Plan, or if the Plan
Administrator is uncertain as to who is entitled to receive benefits,
or if the Plan Administrator is unable to locate the person who is
entitled to benefits, the Plan Administrator may with acquittance
interplead the funds into a court of competent jurisdiction in the
judicial district in which the Plan Sponsor maintains its principal
place of business and, upon depositing the funds with the clerk of the
court, be released from any further responsibility for the payment of
the benefits. If it is necessary for the Plan Administrator to retain
legal counsel or incur any expense in determining who is entitled to
receive the benefits, whether or not it is necessary to institute court
action, the Plan Administrator will be entitled to reimbursement from
the benefits for the amount of its reasonable costs, expenses and
attorneys' fees incurred.
9.13 Member's Compensation, Expenses
The Sponsor may appoint an Advisory Committee to administer the Plan,
the members of which may or may not be Participants in the Plan, or
which may be the Plan Administrator acting alone. The members of the
Advisory Committee will serve without compensation for services as
such,
9-4
but the Employer will pay all expenses of the Advisory Committee,
including the expense for any bond required under ERISA.
9.14 Term
Each member of the Advisory Committee serves until the appointment of
his successor.
9.15 Powers
In case of a vacancy in the membership of the Advisory Committee, the
remaining members of the Advisory Committee may exercise any and all of
the powers, authority, duties and discretion conferred upon the
Advisory Committee pending the filling of the vacancy.
9.16 General
The Advisory Committee, in its sole and absolute discretion, shall
have all powers necessary to discharge its duties under this Plan
including, without limitation, the following:
(a) To select a Secretary, who need not be a member of the Advisory
Committee;
(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of a Participant's Accrued
Benefit and the Nonforfeitable percentage of each
Participant's Accrued Benefit;
(c) To adopt rules of procedure and regulations necessary for the
proper and efficient administration of the Plan provided the
rules are not inconsistent with the terms of this Plan;
(d) To construe and enforce the terms of the Plan and the rules
and regulations it adopts, including interpretation of the
Plan documents, and documents related to the Plan's operation,
and its decisions shall be final and binding on all interested
persons;
(e) To direct the Trustee as respects the crediting and distribution
of the Trust;
(f) To review and render decisions respecting a claim for (or denial
of a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(h) To engage the service of agents whom it may deem advisable to
assist it with the performance of its duties; and
(i) To engage the services of an Investment Manager or Managers
(as defined in ERISA ss.3(38)), each of whom will have full
power and authority to manage, acquire or dispose (or direct
the Trustee with respect to acquisition or disposition) of any
Plan asset under its control.
9-5
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
9.17 Funding Policy
The Advisory Committee will review, not less often than annually, all
pertinent Employee information and Plan data in order to establish
the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee
must communicate periodically, as it deems appropriate, to the
Trustee and to any Plan Investment Manager the Plan's short-term and
long-term financial needs so investment policy can be coordinated
with Plan financial requirements.
9.18 Manner of Action
The decision of a majority of the members appointed and qualified
controls.
9.19 Authorized Representative
The Advisory Committee may authorize any person, whether or not such
person is a member of the Advisory Committee, to sign on its behalf any
notices, directions, applications, certificates, consents, approvals,
waivers, letters or other documents. The Advisory Committee must
evidence this authority by an instrument signed by all members and
filed with the Trustee.
9.20 Interested Member
No member of the Advisory Committee may decide or determine any matter
concerning the distribution, nature or method of settlement of his own
benefits under the Plan, except in exercising an election available to
that member in his capacity as a Participant, unless the Plan
Administrator is acting alone in the capacity of the Advisory
Committee.
9.21 Unclaimed Account Procedure
The Plan does not require the Trustee or the Plan Administrator to
search for, or ascertain the whereabouts of, any Participant or
Beneficiary. At the time the Participant's or Beneficiary's benefit
becomes distributable, the Plan Administrator, by certified or
registered mail addressed to his last known address of record with the
Plan Administrator or the Employer, must notify the Participant, or
Beneficiary, that he is entitled to a distribution under this Plan. The
notice must quote the provisions of this Section 9.21. If the
Participant, or Beneficiary, fails to claim his distributive share or
make his whereabouts known in writing to the Plan Administrator within
6 months from the date of mailing of the notice, the Plan Administrator
will treat the Participant's or Beneficiary's unclaimed payable Accrued
Benefit as forfeited and will reallocate the unclaimed payable Accrued
Benefit. Where the benefit is distributable to the Participant, the
forfeiture under this paragraph occurs as of the last day of the notice
period, if the Participant's Nonforfeitable Accrued Benefit does not
exceed $5,000, or as of the first day the benefit is distributable
without the Participant's consent, if the present value of the
Participant's
9-6
Nonforfeitable Accrued Benefit exceeds $5,000. Where the
benefit is distributable to a Beneficiary, the forfeiture occurs on the
date the notice period ends except, if the Beneficiary is the
Participant's spouse and the Nonforfeitable Accrued Benefit payable to
the spouse exceeds $5,000, the forfeiture occurs as of the first day
the benefit is distributable without the spouse's consent. Pending
forfeiture, the Plan Administrator, following the expiration of the
notice period, may direct the Trustee to segregate the Nonforfeitable
Accrued Benefit in a segregated Account and to invest that segregated
Account in Federally insured interest bearing savings accounts or time
deposits (or in a combination of both), or in other fixed income
investments.
If a Participant or Beneficiary who has incurred a forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this
Section 9.21 makes a claim, at any time, for his forfeited Accrued
Benefit, the Plan Administrator must restore the Participant's or
Beneficiary's forfeited Accrued Benefit to the same dollar amount as
the dollar amount of the Accrued Benefit forfeited, unadjusted for any
gains or losses occurring subsequent to the date of the forfeiture. The
Plan Administrator will make the restoration during the Plan Year in
which the Participant or Beneficiary' makes the claim, first from the
amount, if any, of Participant forfeitures the Plan Administrator
otherwise would allocate for the Plan Year, then from the amount, if
any, of the Trust Fund net income or gain for the Plan Year and then
from the amount, or additional amount, the Employer contributes to
enable the Plan Administrator to make the required restoration. The
Plan Administrator will direct the Trustee to distribute the
Participant's or Beneficiary's restored Accrued Benefit to him no later
than 60 days after the close of the Plan Year in which the Plan
Administrator restores the forfeited Accrued Benefit. The forfeiture
provisions of this Section 9.21 apply solely to the Participant's or to
the Beneficiary's Accrued Benefit derived from Employer contributions.
9.22 Investment Manager
The Plan Administrator shall have the right to appoint an Investment
Manager for all or any part of the assets of the Trust Fund as the Plan
Administrator shall designate, provided that any firm so appointed
shall be and continue qualified to act as such in accordance with
ERISA. The Plan Administrator may remove any Investment Manager at
anytime, and need not specify any cause for such removal.
9-7
Article 10
LIMITATION ON CONTRIBUTIONS
10.01 Limitation on Annual Additions
The amount of the Annual Addition which may be allocated under this
Plan to any Participant's Account as of any Allocation Date will not
exceed the Defined Contribution Limit (based upon his Compensation up
to such Valuation Date) reduced by the sum of any allocations of Annual
Additions made to Participant's Accounts under this Plan as of any
preceding Allocation Date within the Limitation Year.
If, as a result of the allocation of forfeitures, a reasonable error in
estimating a participant's Compensation or a reasonable error in
determining the amount of elective deferrals (within the meaning of
section 402(g)(3) of the Code), the Annual Addition under this Plan on
behalf of a Participant exceeds the Defined Contribution Limit for such
Participant, then such amount in excess of the Defined Contribution
Limit shall be reduced as of any Allocation Date. The reduction will
be, to the extent required, effected by first reducing Participant
contributions (which increase the Annual Addition), then Forfeitures
(if any), and then Employer contributions to be allocated under this
Plan on behalf of the Participant as of the Allocation Date.
Effective January 1, 2002, all employees who are eligible to make
Employee Pre-tax Contributions under this Plan and who have attained
age 50 before the close of the plan year shall be eligible to make
Catch-Up Contributions in accordance with, and subject to the
limitations of, Code Section 414(v). Such Catch-Up Contributions shall
not be taken into account for purposes of the provisions of the plan
implementing the required limitations of Code Sections 402(g) and 415.
The plan shall not be treated as failing to satisfy the provisions of
the plan implementing the requirements of Code Sections 401(k)(3),
401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the
making of such Catch-Up Contributions.
Any necessary reduction will be made as follows:
(a) The amount of the reduction consisting of after-tax Participant
contributions and income allocable to such contributions will be
paid to the Participant as soon as administratively feasible.
(b) The amount of the reduction consisting of any other Participant
contributions and income allocable to such contributions will be
paid to the Participant as soon as administratively feasible.
(c) The amount of the reduction consisting of Forfeitures will be
allocated and reallocated to other Accounts in accordance with the
Plan formula for allocating Forfeitures to the extent
10-1
that such allocations do not cause the additions to any other
Participant's Accounts to exceed the lesser of the Defined
Contribution Limit or any other limitation provided in the Plan.
(d) The amount of the reduction consisting of Employer contributions
will be allocated and reallocated to other Accounts in accordance
with the Plan formula for Employer Contributions to the extent
that such allocations do not cause the additions to any other
Participant's Accounts to exceed the lesser of the Defined
Contribution Limit or any other limitation provided in the Plan.
(e) To the extent that the reductions described in paragraph (d)
cannot be allocated to other Participant's Accounts, the
reductions will be allocated to a suspense account as Forfeitures
and held therein until the next succeeding Allocation Date on
which Forfeitures could be applied under the provisions of the
Plan. All amounts held in a suspense account must be applied as
Forfeitures before any additional contributions, which would
constitute Annual Additions, may be made to the Plan. If the Plan
terminates, the suspense account will revert to the Employer to
the extent it may not be allocated to any Participant's Accounts.
(f) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, it will not participate
in the allocation of the Trust Fund's investment gains and losses.
10.02 Where Employer Maintains Another Qualified Plan
(a) Where Employer Maintains Another Qualified Defined Contribution
Plan
If the Employer maintains this Plan and one or more other
qualified defined contribution plans, one or more welfare benefit
funds (as defined in Code Section 419(e)), or one or more
individual medical accounts (as defined in Code Section
415(l)(2)), all of which are referred to in this Article 10 as
"qualified defined contribution plans," the Annual Additions
allocated under this Plan to any Participant's Accounts will be
limited in accordance with the allocation provisions of this
Section 10.02(a).
The amount of the Annual Additions which may be allocated under
this Plan to any Participant's Accounts as of any Allocation Date
will not exceed the Defined Contribution Limit (based upon
Compensation up to the allocation date) reduced by the sum of any
allocations of Annual Additions made to the Participant's Accounts
under this Plan and any other qualified defined contribution plans
maintained by the Employer as of any earlier Allocation Date
within the Limitation Year.
If an Allocation Date of this Plan coinciding with an Allocation
Date of any other plan described in the foregoing paragraph, the
amount of Annual Additions to be allocated on behalf of a
Participant under this Plan as of such date will be an amount
equal to the product of the amount described in the next preceding
paragraph multiplied by a fraction (not to exceed 1.0), the
numerator of which is the amount to be allocated under this Plan
without regard to this Article during the Limitation Year and the
denominator of which is the amount that would otherwise be
allocated on this Allocation Date under all plans without regard
to this Article 10.
10-2
If the Annual Addition under this Plan on behalf of a Participant
is to be reduced as of any Allocation Date as a result of the next
preceding two paragraphs, the reduction will be, to the extent
required, effected by first reducing Participant contributions
(which increase the Annual Addition) plus applicable trust
earnings, then Forfeitures (if any), and then any Employer
contributions plus applicable trust earnings, to be allocated
under this Plan on behalf of the Participant as of the Allocation
Date.
If as a result of the first four paragraphs of this Section 10.02,
the allocation of additions is reduced, the reduction will be
treated in the manner described in the third paragraph of Section
10.01.
(b) Where Employer Maintains a Qualified Defined Benefit Plan
If the Employer maintains (or has ever maintained), in addition to
this Plan, one or more qualified defined benefit plans, then for
any Limitation Year beginning before January 1, 2000, the Annual
Additions allocated under this Plan to any Participant's Accounts
will be limited in accordance with the provisions of Code Section
415(e), incorporating any transition rules that may apply to a
Participant's Accounts and including any adjustments that may be
required for a Limitation Year in which the Plan is determined to
be Top Heavy and subject to the requirements of Code Section 416.
10.03 Definitions Applicable to Article 10
(a) Allocation Date
Allocation Date means the date with respect to which all or a
portion of employer contributions, employee contributions and/or
forfeitures are allocated to participant accounts under a defined
contribution plan.
(b) Annual Additions
Annual Additions are the sum of the following amounts allocated to
any defined contribution plan maintained by the Employer
(including voluntary contributions to any defined benefit plan
maintained by the Employer) on behalf of a Participant for a
Limitation Year:
All Employee and Employer contributions;
All reallocated forfeitures;
Excess contributions described in Code Section 401(k) and excess
aggregate contributions described in Code Section 401(m),
irrespective of whether the Plan distributes or forfeits such
Excess Amounts, and excess deferrals described in Code Section
402(g), unless the excess deferrals are distributed no later than
the first April 15 following the close of the Participant's
taxable year;
Excess Amounts reapplied to reduce Employer Contributions under
this Section;
Amounts allocated after March 31, 1984 to an individual medical
account, as defined in Code Section 415(l)(2), included as part of
a pension or annuity plan maintained by the Employer;
10-3
Contributions paid or accrued after December 31, 1985, in taxable
years ending after that date, which are attributable to
post-retirement medical benefits allocated to the separate account
of a Key Employee as defined in Code Section 419A(d)(3), under a
welfare benefit fund, as described in Code Section 419(e),
maintained by the Employer; and
Allocations under a simplified employee pension plan.
Contributions or forfeitures will be treated as Annual Additions
regardless of whether they constitute Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions within the meaning
of the regulations under Code Section 401(k) or 401(m) and
regardless of whether they are corrected through distribution or
recharacterization. Excess deferrals distributed in accordance
with Treasury Regulation 1.402(g)-1(e)(2) or (3) are not Annual
Additions.
(c) Compensation
Except as otherwise provided in this Article 10, Compensation for
purposes of this Article is Compensation as defined in Section
1.05.
For Plan Years beginning on or after January 1, 1998, Compensation
for purposes of this Article 10 includes any amounts contributed
by the Employer or any Related Employer on behalf of any Employee
pursuant to a salary reduction agreement which are not includable
in the gross income of the Employee due to Code Section 125,
402(e)(3), 402(h), 402(k), 403(b), 457, or other amounts which may
be included under the provisions of Code Section 415(c)(3), as
amended from time to time.
For Plan Years beginning prior to January 1, 1998, Compensation
for purposes of this Article 10 excludes any amounts contributed
by the Employer or any Related Employer on behalf of any Employee
pursuant to a salary reduction agreement which are not includable
in the gross income of the Employee due to Code Section 125,
402(e)(3), 402(h), 402(k) or 403(b).
For purposes of this Article 10, the period used to determine an
Employee's Compensation is the Limitation Year.
(d) Defined Contribution Limit
The Defined Contribution Limit for a given Limitation Year is
equal to the lesser of (1) the Defined Contribution Compensation
Limit, which for Limitation Years ending before January 1, 2002,
is 25% of Compensation applicable to the Limitation Year and for
Limitation Years beginning on or after January 1, 2002, 100% of
Compensation applicable to the Limitation Year, or (2) the Defined
Contribution Dollar Limit. The Defined Contribution Dollar Limit
shall be the dollar limitation under Code Section 415(c)(1)(A), as
adjusted for cost of living under Code Section 415(d). If a short
Limitation Year is created because of an amendment changing the
Limitation Year to a different 12 consecutive month period, the
Defined Contribution Dollar Limit is multiplied by a fraction, the
numerator of which is equal to the number of months in the short
Limitation Year and the denominator of which is 12.
10-4
(e) Employer
The Employer is the Employer that adopts this Plan together with
all Related Employers. For this purpose, the definition of Related
Employer in Section 1.09 of this Plan is modified by Code Section
415(h).
(f) Limitation Year
The Limitation Year will be the 12 consecutive month period which
is specified in Article 1 of this Plan and which is adopted for
all qualified plans maintained by the Plan Sponsor pursuant to a
Written Resolution adopted by the Plan Sponsor. In the event of a
change in the Limitation Year, the additional limitations of
Treasury Regulation 1.415-2(b)(4)(iii) will also apply.
10-5
Article 11
NONDISCRIMINATION
11.01 Highly Compensated Definitions
(a) Calendar Year Data Election
The Calendar Year Data Election means the Employer has elected to
determine who is Highly Compensated based on Compensation received
(or for federal tax purposes, deemed to be received) in the
Calendar Year that ends within the Plan Year for which the
determination is being made. This election is permitted for Plans
with fiscal Plan Years beginning after December 31, 1997. For 1997
Determination Years, Plans with calendar Plan Years were also
permitted to make this election.
(b) Compensation
Except as otherwise provided in this paragraph, Compensation for
purposes of this Section 11.01 is Compensation as defined in
Section 1.05.
For purposes of determining whether an Employee is a Highly
Compensated Employee, the period used to determine an Employee's
Compensation is the Plan Year.
(c) Determination Year
Determination Year means the Plan Year for which the determination
of who is Highly Compensated is being made.
(d) Highly Compensated Employee
Highly Compensated Employee means any individual who is a Highly
Compensated Active Employee or a Highly Compensated Former
Employee within the meaning of Code Section 414(q) and the
regulations thereunder.
(d) Highly Compensated Active Employee
Highly Compensated Active Employee means any individual who:
o During the Determination Year or the Lookback Year was at
any time a 5-percent Owner (within the meaning of Code
Section 416(i)) of the Employer or any Related Employer;
o During the Calendar Year Lookback Year
o (i) received Compensation from the Employer and all
Related Employers in excess of $80,000 (or any greater
amount determined by regulations issued by the
Secretary of the Treasury under Code Section 415(d));
and
o (ii), was in the Top-paid Group for such Lookback
Year.
11-1
The Effective Date of the foregoing definition is the Plan Year
commencing January 1, 2002. The Employer has specified in the
Addendum attached hereto and made a part of this Plan, the Plan
Years for which another definition applies.
(e) Highly Compensated Former Employee
Highly Compensated Former Employee means any Former Employee who
had a Separation Year (within the meaning of Treasury Regulation
1.414(q)-1T Q&A-5) and was a Highly Compensated Active Employee
for either the Separation Year or any Determination Year ending on
or after the Employee's 55th birthday.
(f) Highly Compensated Group
Highly Compensated Group means all Highly Compensated Employees.
(g) Lookback Year
Lookback Year means the 12-month period immediately preceding the
Determination Year.
(h) Non-Highly Compensated Employee
Non-Highly Compensated Employee means an Employee who is not a
Highly Compensated Employee.
(i) Non-Highly Compensated Group
Non-Highly Compensated Group means all Non-Highly Compensated
Employees.
(j) Top-Paid Group
Top-Paid Group means those individuals who are among the top 20
percent of Employees of the Employer and all Related Employers
when ranked on the basis of Compensation received during the year.
In determining the number of individuals in the Top-Paid Group
(but not the identity of those individuals), the following
individuals may be excluded:
Employees who have not completed 6 months of Service by the end of
the year. For this purpose, an Employee who has completed One Hour
of Service in any calendar month will be credited with one month
of Service;
Employees who normally work fewer than 17 1/2hours per week;
Employees who normally work fewer than 6 months during any year.
For this purpose, an Employee who has worked on one day of a month
is treated as having worked for the whole month;
Employees who have not reached age 21 by the end of the year;
Nonresident aliens who received no earned income (which
constitutes income from sources within the United States) within
the year from the Employer or any Related Employer; and
11-2
Employees covered by a collective bargaining agreement negotiated
in good faith between the employee representatives and the
Employer or a group of employers of which the Employer is a member
if (i) 90% or more of all employees of the Employer and all
Related Employers are covered by collective bargaining agreements,
and (ii) this Plan covers only Employees who are not covered under
a collective bargaining agreement.
11.02 Nondiscrimination Requirements under Code Sections 401(k) and 401(m)
(a) Effective Date
The provisions of this Article are effective on the later of the
Effective Date of the Plan or the first day of the first Plan Year
beginning after December 31, 1996.
(b) Definitions Relating to Code Sections 401(k) and 401(m)
The following definitions apply to this Section:
(1) Aggregate Limit
With respect to a given Plan Year, Aggregate Limit means the
greater of the sum of [A + B] or the sum of [C + D] where:
A is equal to 125% of the greater of DP or CP;
B is equal to 2 percentage points plus the lesser of DP or
CP, not to exceed 2 times the lesser of DP or CP;
C is equal to 125% of the lesser of DP or CP;
D is equal to 2 percentage points plus the greater of DP
or CP, not to exceed 2 times the greater of DP or CP;
DP represents the Deferral Percentage for the Non-highly
Compensated Group eligible under the Cash or Deferred
Arrangement for the Plan Year; and
CP represents the Contribution Percentage for the
Non-highly Compensated Group eligible under the plan
providing for the Employee After-tax Contributions or
Employer Matching Contributions for the Plan Year
beginning with or within the Plan Year of the Cash or
Deferred Arrangement.
(2) Cash or Deferred Arrangement (CODA)
A Cash or Deferred Election is any election (or modification
of an earlier election) by an Employee to have the Employer
either:
(A) provide an amount to the Employee in the form of cash or
some other taxable benefit that is not currently
available, or
(B) contribute an amount to the Plan (or provide an accrual or
other benefit) thereby deferring receipt of Compensation.
11-3
A Cash or Deferred Election will only be made with respect to
an amount that is not currently available to the Employee on
the date of election. Further, a Cash or Deferred Election
will only be made with respect to amounts that would have (but
for the Cash or Deferred Election) become currently available
after the later of the date on which the Employer adopts the
Cash or Deferred Arrangement or the date on which the
arrangement first becomes effective.
A Cash or Deferred Election does not include a one-time
irrevocable election upon the Employee's commencement of
employment or first becoming an Eligible Employee.
(3) Compensation
Except as otherwise provided in this paragraph, Compensation
for purposes of this Section 11.02 is Compensation as defined
in Section 1.05.
For purposes of this Section 11.02, the period used to
determine an Employee's Compensation for a Plan Year may, at
the election of the Employer, be limited to that portion of
the Plan Year in which the Employee was an Eligible Employee.
(4) Contribution Percentage
Contribution Percentage means, for any specified group, the
average of the ratios calculated (to the nearest one-hundredth
of one percent) separately for each Participant in the group,
of the amount of Employee After-tax Contributions and Matching
Contributions which are made by or on behalf of each
Participant for a Plan Year to each Participant's Compensation
for the Plan Year.
For purposes of determining the Contribution Percentage, each
Employee who is eligible under the terms of the Plan to make
or to have contributions made on his behalf is treated as a
Participant. The Contribution Percentage of an eligible
Employee who makes no Employee After-tax Contribution and
receives no Matching Contribution is zero.
The Contribution Percentage of a Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to
make Employee After-tax Contributions or receive an allocation
of Matching Contributions (including Elective Contributions
and Nonelective Contributions which are treated as Employee or
Matching Contributions for purposes of the Contribution
Percentage Test) allocated to his accounts under two or more
plans which are sponsored by the Employer will be determined
as if the Employee After-tax and Matching Contributions were
made under a single plan. For purposes of this paragraph, if a
Highly Compensated Employee participates in two or more such
plans which have different Plan Years, all plans ending with
or within the same calendar year will be treated as a single
plan.
Anything to the contrary notwithstanding, in calculating the
average Non-highly Compensated Employee average Contribution
Percentage for the 1997 Plan Year, the plan must use the
Highly Compensated Employee definition applicable to the
preceding Plan Year.
11-4
(5) Contribution Percentage Test
The Contribution Percentage Test is a test applied on a Plan
Year basis to determine whether a plan meets the requirements
of Code Section 401(m). For 1997 and 1998 plan years, a plan
may perform the Contribution Percentage Test using either
current year data or prior year data without Internal Revenue
Service approval. The Appendix attached hereto and made a part
of this Plan describes the testing elections made by the
Employer for the 1997 and 1998 Plan Years.
In each of the following tests, the Contribution Percentage
for the Highly Compensated Group for a Plan Year is compared
with the Contribution Percentage for the Non-highly
Compensated Group for the Current Year. The Contribution
Percentage Test may be met by either satisfying the General
Contribution Percentage Test or the Alternative Contribution
Percentage Test.
Effective for Plan Years beginning after December 31, 1998,
the General Deferral Percentage Test is satisfied if the
Deferral Percentage for the Highly Compensated Group does not
exceed 125% of the Deferral Percentage for the Non-highly
Compensated Group, determined for the Plan Year for which the
General Deferral Percentage Test is conducted.
The Alternative Deferral Percentage Test is satisfied if the
Deferral Percentage for the Highly Compensated Group does not
exceed the lesser of:
(A) the Deferral Percentage for the Non-highly Compensated
Group plus 2 percentage points, or
(B) the Deferral Percentage for the Non-highly Compensated
Group multiplied by 2.0.
The Deferral Percentage for the Non-highly Compensated Group
shall be determined based on the average Deferral Percentage
of the Non-highly Compensated Group for the Plan Year for
which the Alternative Deferral Percentage Test is conducted.
If (i) one or more Highly Compensated Employees of the
Employer or any Related Employer are eligible to participate
in both a Cash or Deferred Arrangement and a plan which
provides for Employee After-tax Contributions or Matching
Contributions, (ii) the Deferral Percentage for the Highly
Compensated Group does not satisfy the General Deferral
Percentage Test, and (iii) the Contribution Percentage for the
Highly Compensated Group does not satisfy the General
Contribution Percentage Test, then the Deferral Percentage
Test will be deemed to be satisfied only if the sum of the
Deferral Percentage and the Contribution Percentage for the
Highly Compensated Group does not exceed the Aggregate Limit;
provided, however that the General Deferral Percentage Test
and the General Contribution; provided, however, that the
applicable Deferral Percentage Test and the applicable
Contribution Percentage Test are independently satisfied.
The Plan will not fail to satisfy the Deferral Percentage test
merely because all of the Eligible Employees under the Plan
for a Plan Year are Highly Compensated Employees.
11-5
If (i) one or more Highly Compensated Employees of the
Employer or any Related Employer are eligible to participate
in both a Cash or Deferred Arrangement and a plan which
provides for Employee After-tax Contributions or Matching
Contributions, (ii) the Deferral Percentage for the Highly
Compensated Group does not satisfy the General Deferral
Percentage Test, and (iii) the Contribution Percentage for the
Highly Compensated Group does not satisfy the General
Contribution Percentage Test, then the Contribution Percentage
Test will be deemed to be satisfied only if the sum of the
Deferral Percentage and the Contribution Percentage for the
Highly Compensated Group does not exceed the Aggregate Limit;
provided, however, that the applicable Deferral Percentage
Test and the applicable Contribution Percentage Test are
independently satisfied.
The Plan will not fail to satisfy the Contribution Percentage
test merely because all of the Eligible Employees under the
Plan for a Plan Year are Highly Compensated Employees.
(6) Deferral Percentage
Deferral Percentage means, for any specified group, the
average of the ratios calculated (to the nearest one-hundredth
of one percent) separately for each Participant in the group,
of the amount of Elective Contributions which are made on
behalf of each Participant for a Plan Year to each
Participant's Compensation for the Plan Year.
For purposes of determining the Deferral Percentage, each
Employee who is eligible under the terms of the Plan to have
contributions made on his behalf is treated as a Participant.
The Deferral Percentage of an eligible Employee who makes no
Elective Contribution is zero.
The Deferral Percentage of a Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to
have Elective Contributions (including Nonelective
Contributions or Matching Contributions which are treated as
Elective Contributions for purposes of the Deferral Percentage
Test) allocated to his accounts under two or more Cash or
Deferred Arrangements which are maintained by the Employer
will be determined as if the Elective Contributions were made
under a single Arrangement. For purposes of this paragraph, if
a Highly Compensated Employee participates in two or more Cash
or Deferred Arrangements which have different Plan Years, all
Cash or Deferred Arrangements ending with or within the same
calendar year will be treated as a single Arrangement.
Anything to the contrary notwithstanding, in calculating the
average Non-highly Compensated Employee average Deferral
Percentage for the 1997 Plan Year, the plan must use the
Highly Compensated Employee definition applicable to the
preceding Plan Year.
(7) Deferral Percentage Test
The Deferral Percentage Test is a test applied on a Plan Year
basis to determine whether a plan meets the requirements of
Code Section 401(k). For 1997 and 1998 plan years, a plan may
perform the Deferral Percentage Test using either current year
data or prior year data without Internal Revenue Service
approval. The Appendix attached hereto and made
11-6
a part of this Plan describes the testing elections made by
the Employer for the 1997 and 1998 Plan Years.
In each of the following tests, the Deferral Percentage for
the Highly Compensated Group for a Plan Year is compared with
the Deferral Percentage for the Non-highly Compensated Group.
for the current Plan Year (or the preceding Plan Year if
elected by the Employer in an Appendix to this Plan; provided,
however, that if such an election is made, it will be made in
accordance with regulations issued by the Secretary of the
Treasury). The Deferral Percentage Test may be met by either
satisfying the General Deferral Percentage Test or the
Alternative Deferral Percentage Test.
In the case of the first Plan Year of the Plan (if this is not
a successor plan within the meaning of Treasury Regulation
1.401(k)-1(d)(3)), the Deferral Percentage for the Non-highly
Compensated Group may be either (i) the actual Deferral
Percentage for the Non-highly Compensated Group for the first
Plan Year or, if the Employer elects, 3% as the Deferral
Percentage for the Non-highly Compensated Group for the
preceding year.
Effective for Plan Years beginning after December 31, 1998,
the General Deferral Percentage Test is satisfied if the
Deferral Percentage for the Highly Compensated Group does not
exceed 125% of the Deferral Percentage for the Non-highly
Compensated Group, determined for the Plan Year for which the
General Deferral Percentage Test is conducted.
The Alternative Deferral Percentage Test is satisfied if the
Deferral Percentage for the Highly Compensated Group does not
exceed the lesser of:
(A) the Deferral Percentage for the Non-highly Compensated
Group plus 2 percentage points, or
(B) the Deferral Percentage for the Non-highly Compensated
Group multiplied by 2.0.
The Deferral Percentage for the Non-highly Compensated Group
shall be determined based on the average Deferral Percentage
of the Non-highly Compensated Group for the Plan Year for
which the Alternative Deferral Percentage Test is conducted.
If (i) one or more Highly Compensated Employees of the
Employer or any Related Employer are eligible to participate
in both a Cash or Deferred Arrangement and a plan which
provides for Employee After-tax Contributions or Matching
Contributions, (ii) the Deferral Percentage for the Highly
Compensated Group does not satisfy the General Deferral
Percentage Test, and (iii) the Contribution Percentage for the
Highly Compensated Group does not satisfy the General
Contribution Percentage Test, then the Deferral Percentage
Test will be deemed to be satisfied only if the sum of the
Deferral Percentage and the Contribution Percentage for the
Highly Compensated Group does not exceed the Aggregate Limit;
provided, however, that the applicable Deferral Percentage
Test and the applicable Contribution Percentage Test are
independently satisfied.
The Plan will not fail to satisfy the Deferral Percentage test
merely because all of the Eligible Employees under the Plan
for a Plan Year are Highly Compensated Employees.
11-7
(8) Elective Contribution
Elective Contribution means any contribution made by the
Employer to a Cash or Deferred Arrangement on behalf of and at
the election of an Employee. An Elective Contribution will be
taken into account for a given Plan Year only if:
(A) The Elective Contribution is allocated to the
Participant's Account as of a date within the Plan Year to
which it relates;
(B) The allocation is not contingent upon the Employee's
participation in the Plan or performance of services on
any date after the allocation date;
(C) The Elective Contribution is actually paid to the trust no
later than 12 months after the end of the Plan Year to
which the Elective Contribution relates; and
(D) The Elective Contribution relates to Compensation which
either (i) but for the Participant's election to defer,
would have been received by the Participant in the Plan
Year or (ii) is attributable to services performed by the
Participant in the Plan Year and, but for the
Participant's election to defer, would have been received
by the Participant within two and one-half months after
the close of the Plan Year.
Elective Contributions will be treated as Employer
Contributions for purposes of Code Sections 401(a), 401(k),
402(a), 404, 409, 411, 412, 415, 416, and 417.
(9) Elective Deferral
Elective Deferral means the sum of the following:
(A) Any Elective Contribution to any Cash or Deferred
Arrangement to the extent it is not includable in the
Participant's gross income for the taxable year of
contribution;
(B) Any employer contribution to a simplified employee pension
as defined in Code Section 408(k) to the extent not
includable in the Participant's gross income for the
taxable year of contribution;
(C) Any employer contribution to an annuity contract under
Code Section 403(b) under a salary reduction agreement to
the extent not includable in the Participant's gross
income for the taxable year of contribution; plus
(D) Any employee contribution designated as deductible under a
trust described in Code Section 501(c)(18) for the taxable
year of contribution.
(10) Eligible Employee
Eligible Employee means an Employee who is directly or
indirectly eligible to make a Cash or Deferred Election under
the Plan for all or a portion of the Plan Year. An Employee
who is unable to make a Cash or Deferred Election because the
Employee has not contributed to another plan is also an
Eligible Employee. An Employee who would be eligible to make
Elective Contributions but for a suspension due to a
distribution, a loan, or an election not to participate in the
Plan, is treated as an Eligible Employee for
11-8
purposes of Code Section 401(k)(3) and 401(m) for a Plan Year
even though the Employee may not make a Cash or Deferred
Election due to the suspension. Also, an Employee will not
fail to be treated as an Eligible Employee merely because the
employee may receive no additional Annual Additions because of
Code Section 415(c)(1) or 415(e).
(11) Employee After-tax Contribution
Employee After-tax Contribution means any contribution made by
an Employee to any plan maintained by the Employer or any
Related Employer which is other than an Elective Contribution
and which is designated or treated at the time of contribution
as an after-tax contribution. Employee After-tax Contributions
include amounts attributable to Excess Contributions which are
recharacterized as Employee After-tax Contributions.
(12) Excess Contribution
Excess Contribution means, for each member of the Highly
Compensated Group, the amount of Elective Contribution
(including any Qualified Nonelective Contributions and
Qualified Matching Contributions which are treated as Elective
Contributions) which exceeds the maximum contribution which
could be made if the Deferral Percentage Test were to be
satisfied.
(13) Excess Aggregate Contribution
Excess Aggregate Contribution means, for each member of the
Highly Compensated Group, the amount of Employee After-tax and
Matching Contributions (including any Qualified Nonelective
Contributions and Elective Contributions which are treated as
Matching Contributions) which exceeds the maximum contribution
which could be made if the Contribution Percentage Test were
to be satisfied.
(14) Excess Deferral
Excess Deferral means, for a given calendar year, that amount
by which each Participant's total Elective Deferrals under all
plans of all employers exceed the dollar limit in effect under
Code Section 402(g) for the calendar year.
(15) Matching Contribution
Matching Contribution means any contribution made by the
Employer to any plan maintained by the Employer or any Related
Employer which is based on an Elective Contribution or an
Employee After-tax Contribution together with any forfeiture
allocated to the Participant's Account on the basis of
Elective Contributions, Employee After-tax Contributions or
Matching Contributions. A Matching Contribution will be taken
into account for a given Plan Year only if:
(A) The Matching Contribution is allocated to a Participant's
Account as of a date within the Plan Year to which it
relates;
(B) The allocation is not contingent upon the Employee's
participation in the Plan or performance of services on
any date after the allocation date;
11-9
(C) The Matching Contribution is actually paid to the Trust no
later than 12 months after the end of the Plan Year to
which the Matching Contribution relates; and
(D) The Matching Contribution is based on an Elective or
Employee After-tax Contribution for the Plan Year.
Any contribution or allocation, other than a Qualified
Nonelective Contribution, which is used to meet the minimum
contribution or benefit requirement of Code Section 416 is not
treated as being based on Elective Contributions or Employee
After-tax Contributions and therefore is not treated as a
Matching Contribution.
Qualified Matching Contribution is defined in Section
11.02(b)(17) below.
(16) Nonelective Contribution
Nonelective Contribution means any Employer contribution,
other than a Matching Contribution, which meets all of the
following requirements:
(A) The Nonelective Contribution is allocated to a
Participant's Account as of a date within the Plan Year to
which it relates;
(B) The allocation is not contingent upon the Employee's
participation in the Plan or performance of services on
any date after the allocation date;
(C) The Nonelective Contribution is actually paid to the Trust
no later than 12 months after the end of the Plan Year to
which the Nonelective Contribution relates; and
(D) The Employee may not elect to have the Nonelective
Contribution paid in cash in lieu of being contributed to
the Plan.
Qualified Nonelective Contribution is defined in Section
11.02(b)(18) below.
(17) Qualified Matching Contribution
Qualified Matching Contribution means a Matching Contribution
which is 100% vested and may be withdrawn or distributed only
under the conditions described in Treasury Regulation
1.401(k)-1(d).
(18) Qualified Nonelective Contribution
Qualified Nonelective Contribution means a Nonelective
Contribution which is 100% vested and may be withdrawn or
distributed only under the conditions described in Treasury
Regulation 1.401(k)-1(d).
(c) Application of Deferral Percentage Test
All Elective Contributions, including any Elective Contributions
which are treated as Employee After-tax or Matching Contributions
with respect to the Contribution Percentage Test, must satisfy the
Deferral Percentage Test. Furthermore, any Elective Contributions
which are not treated as Employee After-tax or Matching
Contributions with respect to the Contribution Percentage Test
must satisfy the Deferral Percentage Test. The Plan
11-10
Administrator will determine as soon as administratively feasible
after the end of the Plan Year whether the Deferral Percentage
Test has been satisfied. If the Deferral Percentage Test is not
satisfied, the Employer may elect to make an additional
contribution to the Plan on account of the Non-highly Compensated
Group. The additional contribution will be treated as a
Nonelective Contribution.
If the Deferral Percentage Test is not satisfied after any
Nonelective Contributions, the Plan Administrator may, in its sole
discretion, recharacterize all or any portion of the Excess
Contribution of each Highly Compensated Employee as an Employee
After-tax Contribution if Employee After-tax Contributions are
otherwise allowed by the Plan. If so, the Plan Administrator will
notify all affected Participants and the Internal Revenue Service
of the amount recharacterized no later than the 15th day of the
third month following the end of the Plan Year in which the Excess
Contribution was made. Excess Contributions will be includable in
the Participant's gross income on the earliest date any Elective
Contribution made on behalf of the Participant during the Plan
Year would have been received by the Participant had the
Participant elected to receive the amount in cash. Recharacterized
Excess Contributions will continue to be treated as Employer
contributions that are Elective Contributions for all other
purposes under the Code, including Code Sections 401(a) (other
than 401(a)(4) and 401(m)), 404, 409, 411, 412, 415, 416, 417 and
401(k)(2). With respect to the Plan Year for which the Excess
Contribution was made, the Plan Administrator will treat the
recharacterized amount as an Employee After-tax Contribution for
purposes of the Deferral Percentage Test and the Contribution
Percentage Test and for purposes of determining whether the Plan
meets the requirements of Code Section 401(a)(4), but not for any
other purposes under this Plan. Therefore, recharacterized amounts
will remain subject to the nonforfeiture requirements and
distribution limitations which apply to Elective Contributions.
If the Deferral Percentage Test is still not satisfied, then after
the close of the Plan Year in which the Excess Contribution arose
but within 12 months after the close of that Plan Year, the Plan
Administrator will distribute the Excess Contributions, together
with allocable income, to Participants of the Highly Compensated
Group to the extent necessary to satisfy the Deferral Percentage
Test. Failure to do so will cause the Plan to not satisfy the
requirements of Code Section 401(a)(4) for the Plan Year for which
the Excess Contribution was made and for all subsequent Plan Years
for which the Excess Contribution remains uncorrected.
The amount of Excess Contribution to be distributed to a Highly
Compensated Employee for a Plan Year will be reduced by any Excess
Deferrals previously distributed to the Participant for the
calendar year ending with or within the Plan Year in accordance
with Code Section 402(g)(2).
Excess Contributions will be treated as Employer contributions for
purposes of Code Sections 404 and 415 even if distributed from the
Plan.
(d) Application of Contribution Percentage Test
Employee After-tax Contributions and Matching Contributions,
disregarding any Matching Contributions which are treated as
Elective Contributions with respect to the Deferral Percentage
Test, must satisfy the Contribution Percentage Test. The Plan
Administrator will
11-11
determine as soon as administratively feasible after the end of
the Plan Year whether the Contribution Test has been satisfied. If
the Contribution Percentage Test is not satisfied, the Employer
may elect to make an additional contribution to the Plan for the
benefit of the Non-Highly Compensated Group. The additional
contribution will be treated as a Nonelective Contribution.
If the Contribution Percentage Test is still not satisfied, then
after the close of the Plan Year in which the Excess Aggregate
Contribution arose but within 12 months after the close of that
Plan Year, the Plan Administrator will distribute (or forfeit, to
the extent not vested) the Excess Aggregate Contributions,
together with allocable income, to Participants of the Highly
Compensated Group to the extent necessary to satisfy the
Contribution Percentage Test. Failure to do so will cause the Plan
to not satisfy the requirements of Code Section 401(a)(4) for the
Plan Year for which the Excess Aggregate Contribution was made and
for all subsequent Plan Years for which the Excess Aggregate
Contribution remains uncorrected.
The determination of any Excess Aggregate Contributions will be
made after the recharacterization of any Excess Contributions as
Employee After-tax Contributions.
Excess Aggregate Contributions, including forfeited Matching
Contributions, will be treated as Employer contributions for
purposes of Code Sections 404 and 415 even if they are distributed
from the Plan.
Forfeited Matching Contributions that are reallocated to the
Accounts of other Participants are treated as Annual Additions
under Code Section 415 for the Participant whose Accounts they are
reallocated to and for the Participants from whose Accounts they
are forfeited.
(e) Reduction of Excess Amounts
For the purpose of determining the total amounts of Excess
Contributions and/or Excess Aggregate Contributions to be
recharacterized, returned to Participants or forfeited as the case
may be, the total Excess Contribution or total Excess Aggregate
Contribution will be reduced in a manner so that the Deferral
Percentage or the Contribution Percentage (Relevant Percentage) of
the affected Participant(s) with the highest Relevant Percentage
will first be lowered to a point not less than the level of the
affected Participant(s) with the next highest Relevant Percentage.
If further overall reductions are required to satisfy the relevant
test, each of the above Participants' (or groups of Participants')
Relevant Percentage will be lowered to a point not less than the
level of the affected Participant(s) with the next highest
Relevant Percentage, and so on continuing until sufficient total
reductions have occurred to achieve satisfaction of the relevant
test.
The total Excess Contributions or Excess Aggregate Contributions
so determined will then be recharacterized, returned to
Participants or forfeited in such a manner that the amount of such
contributions allocated to the Highly Compensated Participant(s)
by or for whom the highest amount of such contributions have been
made during the Plan Year will first be lowered to an amount not
less than the amount made by or for the Highly Compensated
Participant with the next highest amount of such contributions
made during the Plan Year. If further reductions are required to
reduce the accounts of Highly Compensated Participants by the
total of all Excess Contributions or Excess Aggregate
Contributions, each of the above Participant's relevant
contributions will be lowered to a point not less than the level
of the Highly
11-12
Compensated Participant with the next highest amount
of such contributions made during the Plan Year, and so on,
continuing until sufficient total reductions have been made to
equal the total amount of Excess Contributions and/or excess
Aggregate Contributions as the case may be.
(f) Priority of Reductions
The Plan Administrator will determine the method and order of
correcting Excess Contributions and Excess Aggregate
Contributions. The method of correcting Excess Contributions and
Excess Aggregate Contributions must meet the requirements of Code
Section 401(a)(4). The determination of whether a rate of Matching
Contribution discriminates under Code Section 401(a)(4) will be
made after making any corrective distributions of Excess
Deferrals, Excess Contributions and Excess Aggregate
Contributions.
Excess Aggregate Contributions (and any attributable income) will
be corrected first, by distributing any excess Employee After-tax
Contributions (and any attributable income); then by distributing
vested excess Matching Contributions (and any attributable
income); and finally, by forfeiting or distributing non-vested
Matching Contributions (and any attributable income). The Plan
will not distribute Employee After-tax Contributions while the
Matching Contributions based upon those Employee After-tax
Contributions remain allocated.
(g) Income
The income allocable to any Excess Contribution made to a given
Account for a given Plan Year will be equal to the total income
allocated to the Account for the Plan Year, multiplied by a
fraction, the numerator of which is the amount of the Excess
Contribution and the denominator of which is equal to the sum of
the balance of the Account at the beginning of the Plan Year plus
the Participant's Elective Contributions and amounts treated as
Elective Contributions for the Plan Year.
The income allocable to any Excess Aggregate Contribution made to
a given Account for a given Plan Year will be equal to the total
income allocated to the Account for the Plan Year, multiplied by a
fraction, the numerator of which is the amount of the Excess
Aggregate Contribution and the denominator of which is equal to
the sum of the balance of the Account at the beginning of the Plan
Year plus the Participant's Employee After-tax and Matching
Contributions and amounts treated as Employee After-tax and
Matching Contributions for the Plan Year.
Notwithstanding the foregoing, the Plan may use any reasonable
method for computing the income allocable to any Excess
Contribution or Excess Aggregate Contribution provided the method
does not violate Code Section 401(a)(4), is used consistently for
all corrective distributions under the Plan for the Plan Year, and
is used by the Plan for allocating income to the Participants'
Accounts.
Income includes all earnings and appreciation, including interest,
dividends, rents, royalties, gains from the sale of property, and
appreciation in the value of stocks, bonds, annuity and life
insurance contracts and other property, regardless of whether the
appreciation has been realized.
11-13
(h) Allocation of Qualified Matching Contributions.
The Employer may designate all or a portion of its Matching
Contribution as a Qualified Matching Contribution in order to
satisfy nondiscrimination requirements. To be eligible for such
designation, such contributions must be contributed no later than
the time prescribed by Treasury Regulations to be considered,
based upon whether the Employer is utilizing the current year or
prior year testing method. To the extent that the Employer
designates all or any portion of contributions for the Plan Year
as a Qualified Matching Contribution as defined in Section
11.02(b)(18), such contribution will be allocated to the Employee
Pre-tax Contributions Account or Qualified Matching Contributions
Accounts of some or all eligible Participant(s) (i) beginning with
such eligible Participant(s) who have the lowest testing
Compensation as defined in Section 11.02(b), until such eligible
Participant(s) reach their Defined Contribution Limit as defined
in Section 10.03(d), or the amount designated as Qualified
Matching Contribution is fully allocated; and then (ii) continuing
with successive eligible Participants or groups of eligible
Participants in the same manner until the amount of the Qualified
Matching Contribution is fully allocated.
(i) Allocation of Qualified Non-elective Contributions.
The Employer may designate all or a portion of its Non-elective
Contribution as a Qualified Non-elective Contribution in order to
satisfy nondiscrimination requirements. To be eligible for such
designation, such contributions must be contributed no later than
the time prescribed by Treasury Regulations to be considered,
based upon whether the Employer is utilizing the current year or
prior year testing method. To the extent that the Employer
designates all or any portion of contributions for the Plan Year
as a Qualified Non-elective Contribution as defined in Section
11.02(b)(18), such contribution will be allocated to the Employee
Pre-tax Contributions Accounts of some or all eligible
Participant(s) (i) beginning with such eligible Participant(s) who
have the lowest testing Compensation as defined in Section
11.02(b), until such eligible Participant(s) reach their Defined
Contribution Limit as defined in Section 10.03(d), or the amount
designated as Qualified Non-elective Contribution is fully
allocated; and then (ii) continuing with successive eligible
Participants or groups of eligible Participants in ascending order
of testing Compensation in the same manner until the amount of the
Qualified Non-elective Contribution is fully allocated.
(j) Treatment as Elective Contributions
The Plan Administrator may, in its discretion, treat all or any
portion of Qualified Nonelective Contributions or Qualified
Matching Contributions or both, whether to this Plan or to any
other qualified plan which has the same Plan Year and is
maintained by the Employer or a Related Employer, as Elective
Contributions for purposes of satisfying the Deferral Percentage
Test if they meet all of the following requirements:
(1) All Nonelective Contributions, including the Qualified
Nonelective Contributions treated as Elective Contributions
for purposes of the Deferral Percentage Test, satisfy the
requirements of Code Section 401(a)(4);
(2) Any Nonelective Contributions which are not treated as
Elective Contributions for purposes of the Deferral Percentage
Test or as Matching Contributions for purposes of the
Contribution Percentage Test satisfy the requirements of Code
Section 401(a)(4);
11-14
(3) The Qualified Matching Contributions which are treated as
Elective Contributions for purposes of the Deferral Percentage
Test are not taken into account in determining whether any
Employee After-tax Contributions or other Matching
Contributions satisfy the Contribution Percentage Test;
(4) Any Matching Contributions which are not treated as Elective
Contributions for purposes of the Deferral Percentage Test
satisfy the requirements of Code Section 401(m); and
(5) The plan which includes the Cash or Deferred Arrangement and
the plan or plans to which the Qualified Nonelective
Contributions and Qualified Matching Contributions are made
could be aggregated for purposes of Code Section 410(b).
(k) Treatment as Matching Contributions
The Plan Administrator may, in its discretion, treat all or any
portion of Qualified Nonelective Contributions or Elective
Contributions or both, whether to this Plan or to any other
qualified plan which has the same Plan Year and is maintained by
the Employer or a Related Employer, as Matching Contributions for
purposes of satisfying the Contribution Percentage Test if they
meet all of the following requirements:
(1) All Nonelective Contributions, including the Qualified
Nonelective Contributions treated as Matching Contributions
for purposes of the Contribution Percentage Test, satisfy the
requirements of Code Section 401(a)(4);
(2) Any Nonelective Contributions which are not treated as
Elective Contributions for purposes of the Deferral Percentage
Test or as Matching Contributions for purposes of the
Contribution Percentage Test satisfy the requirements of Code
Section 401(a)(4);
(3) The Elective Contributions which are treated as Matching
Contributions for purposes of the Contribution Percentage Test
are not taken into account in determining whether any other
Elective Contributions satisfy the Deferral Percentage Test;
(4) The Qualified Nonelective Contributions and Elective
Contributions which are treated as Matching Contributions for
purposes of the Contribution Percentage Test are not taken
into account in determining whether any other contributions or
benefits satisfy Code Section 401(a);
(5) All Elective Contributions, including those treated as
Matching Contributions for purposes of the Contribution
Percentage Test, satisfy the requirements of Code Section
401(k)(3); and
(6) The plan that takes Qualified Nonelective Contributions and
Elective Contributions into account in determining whether
Employee After-tax and Matching Contributions satisfy the
requirements of Code Section 401(m)(2)(A) and the plan or
plans to which the Qualified Nonelective Contributions and
Elective Contributions are made could be aggregated for
purposes of Code Section 410(b).
11-15
(l) Aggregation of Plans
If the Employer or a Related Employer sponsors one or more other
plans which include a Cash or Deferred Arrangement, the Employer
may elect to treat any two or more of such plans as an aggregated
single plan for purposes of satisfying Code Sections 401(a)(4),
401(k) and 410(b). The Cash or Deferred Arrangements included in
such aggregated plans will be treated as a single Arrangement for
purposes of this Section. However, only those plans that have the
same plan year may be so aggregated.
If the Employer or a Related Employer sponsors one or more other
plans to which Employee After-tax Contributions or Matching
Contributions are made, the Employer may elect to treat any two or
more of such plans as an aggregated single plan for purposes of
satisfying Code Sections 401(a)(4), 401(m) and 410(b). However,
only those plans that have the same plan year may be so
aggregated.
Any such aggregation must be made in accordance with Treasury
Regulation 1.401(k)-1(b)(3). For example, contributions and
allocations under the portion of a plan described in Code Section
4975(e)(7) (an ESOP) may not be aggregated with the portion of a
plan not described in Code Section 4975(e)(7) (a non-ESOP) for
purposes of determining whether the ESOP or non-ESOP satisfies the
requirements of Code Sections 401(a)(4), 401(k), 401(m) and
410(b).
Plans that could be aggregated under Code Section 410(b) but that
are not actually aggregated for a Plan Year for purposes of Code
Section 410(b) may not be aggregated for purposes of Code Sections
401(k) and 401(m).
(m) Repeal of Multiple Use Test
Notwithstanding any provision to the contrary, the multiple use
test described in Treasury Regulation Section 1.401(m)-2 and this
Section of the plan shall not apply for plan years beginning after
December 31, 2001.
11.03 Failure to Meet Minimum Coverage Requirements
For any Plan Year, if the Plan fails to satisfy the ratio percentage
test under Code Section 410(b)(1)(B) for a Contribution Period, the
Employer may elect to suspend the requirement under Section 3.03(b)
that a Participant be employed on the last day of the Plan Year and/or
be credited with a minimum number of hours of service to be eligible to
share in the allocation of such contribution for such Contribution
Period.
If this paragraph applies for a Plan Year, the Employer will suspend
the requirements to share in the allocation of a contribution for a
given Contribution Period in the following manner.
a. All Participants who are (i) Nonhighly Compensated Employees,
(ii) employed by the Employer on the last day of the Plan Year
and (iii) not otherwise benefiting under the Plan, shall be
included in the group of Participants eligible to receive an
allocation in accordance with this section.
11-16
b. The Employer shall contribute on behalf of such number of
Participants in this group, beginning with the Participant
with the lowest Compensation and continuing in ascending
order, from the lowest to the highest Compensation, until the
number of Participants benefiting under this Section, within
the meaning of Treas. Reg. ss. 1.410(b)-3(a)(2), is sufficient
for the Plan to satisfy the ratio percentage test under Code
Section 410(b)(1)(B).
c. Should the Plan fail to satisfy the coverage requirements of
Code Section 410(b) after the application of paragraph (2),
then the next group of Participants eligible to share in any
allocation made hereunder, shall be those former Participants
who (i) separated from service during the Plan Year; (ii) were
Nonhighly Compensated Employees; and (iii) completed more than
500 hours during the Plan Year.
d. The Employer shall contribute on behalf of such number of
Participants in this group, beginning with the Participant
with the lowest Compensation and continuing in ascending
order, from the lowest to the highest Compensation, until the
number of Participants benefiting under this Section, within
the meaning of Treas. Reg. ss. 1.410(b)-3(a)(2), is sufficient
for the Plan to satisfy the ratio percentage test under Code
Section 410(b)(1)(B).
e. If two or more Employees in a class have the same
Compensation, the Employer will suspend the requirements to
share in the allocation of the contribution for all such
Employees, irrespective of whether the Plan can satisfy the
coverage requirements by accruing benefits for fewer than all
such Employees.
f. If the Employer's Plan includes matching contributions subject
to Code Section 401(m), this suspension of accrual
requirements applies separately to the Code Section 401(m)
portion of the Plan, and the Employer will treat an Employee
as benefiting under that portion of the Plan if the Employee
is an Eligible Employee for purposes of the Code Section
401(m) nondiscrimination test.
11-17
Article 12
TOP-HEAVY PROVISIONS
12.01 Top-Heavy Definitions
(a) Aggregate Account
Aggregate Account means, with respect to each Participant, the
value of all accounts maintained on behalf of the Participant,
whether attributable to Employer or Employee contributions, used
to determine Top-Heavy Plan status under the provisions of a
defined contribution plan. A Participant's Aggregate Account as of
the Determination Date will be the sum of:
(1) the balance of his Account(s) as of the most recent valuation
date occurring within a 12-month period ending on the
Determination Date (excluding any amounts attributable to
deductible voluntary employee contributions); plus
(2) contributions that would be allocated as of a date not later
than the Determination Date, even though those amounts are not
yet made or required to be made; plus
(3) any Plan Distributions made within the Plan Year that includes
the Determination Date or within the four preceding Plan
Years.
(b) Aggregation Group
Aggregation Group means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group
Each plan of the Employer in which a Key Employee is a
Participant, and each other plan of the Employer which enables
any plan in which a Key Employee participates to meet the
requirements of Code Section 401(a)(4) or 410, will be
aggregated and the resulting group will be known as a Required
Aggregation Group.
Each plan in the Required Aggregation Group will be considered
a Top-Heavy Plan if the Required Aggregation Group is a
Top-Heavy Group. No plan in the Required Aggregation Group
will be considered a Top-Heavy Plan if the Required
Aggregation Group is not a Top-Heavy Group.
(2) Permissive Aggregation Group
The Employer may also include any other plan not required to
be included in the Required Aggregation Group, provided the
resulting group (to be known as a Permissive Aggregation
Group), taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) and 410.
12-1
Only a plan that is part of the Required Aggregation Group
will be considered a Top-Heavy Plan if the Permissive
Aggregation Group is a Top-Heavy Group. No plan in the
Permissive Aggregation Group will be considered a Top-Heavy
Plan if the Permissive Aggregation Group is not a Top-Heavy
Group.
Only those plans of the Employer in which the Determination
Dates fall within the same calendar year will be aggregated in
order to determine whether the plans are Top-Heavy Plans.
(c) Determination Date
Determination Date means the last day of the preceding Plan Year,
or, in the case of the first Plan Year, the last day of the first
Plan Year.
(d) Key Employee
Effective January 1, 2002, Key employee means any employee or
former employee (including any deceased employee) who at any time
during the plan year that includes the determination date was an
officer of the employer having annual compensation greater than
$130,000 (as adjusted under Code Section 416(i)(1) for plan years
beginning after December 31, 2002), a 5-percent owner of the
employer, or a 1- percent owner of the employer having annual
compensation of more than $150,000. For this purpose, annual
compensation means compensation within the meaning of Code Section
415(c)(3). The determination of who is a key employee will be made
in accordance with Code Section 416(i)(1) and the applicable
regulations and other guidance of general applicability issued
thereunder.
Prior to January 1, 2002, Key Employee means any Employee or
former Employee (and his Beneficiary) who, at any time during the
Plan Year or any of the preceding four Plan Years, was:
(1) A "Five Percent Owner" of the Employer. "Five Percent Owner"
means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than 5% of the value of
the outstanding stock of the Employer or stock possessing more
than 5% of the total combined voting power of all stock of the
Employer. If the Employer is not a corporation, Five Percent
Owner means any person who owns more than 5% of the capital or
profits interest in the Employer. In determining percentage
ownership hereunder, Related Employers will be treated as
separate Employers; or
(2) A "One Percent Owner" of the Employer having Compensation from
the Employer of more than $150,000. "One Percent Owner" means
any person who owns (or is considered as owning within the
meaning of Code Section 318) more than 1% of the value of the
outstanding stock of the Employer or stock possessing more
than 1% of the total combined voting power of all stock of the
Employer. If the Employer is not a corporation, One Percent
Owner means any person who owns more than 1% of the capital or
profits interest in the Employer. In determining percentage
ownership hereunder, Related Employers will be treated as
separate Employers. However, in determining whether an
individual has Compensation of more than $150,000,
Compensation from each Related Employer will be taken into
account.
12-2
(3) One of the 10 Employees having Compensation not less than the
Defined Contribution Dollar Limit (as defined in Section
10.03(j) for the Plan Year) who owns (or is considered as
owning within the meaning of Code Section 318) both greater
than 1/2% interest and the largest interests in all Employers
required to be aggregated under Code Sections 414(b), (c), (m)
and (o);
(4) An officer (within the meaning of the regulations under Code
Section 416) of the Employer having Compensation greater than
50% of the defined benefit dollar limit as defined in Code
Section 415(b) for the Plan Year;
For purposes of determining whether an Employee is a Key Employee,
the period used to determine an Employee's Compensation is the
Plan Year.
(e) Non-Key Employee
Non-Key Employee means any Employee (and his Beneficiaries) who is
not a Key Employee.
(f) Plan Distributions
Plan distributions include distributions made before January 1,
1984, and distributions under a terminated plan which, if it had
not been terminated, would have been required to be included in an
aggregation group. However, distributions made after the valuation
date and before the Determination Date are not included to the
extent that they are already included in the Participant's Single
Sum Benefit as of the valuation date.
With respect to "unrelated" rollovers and plan-to-plan transfers
(those which are both initiated by an employee and made from a
plan maintained by one employer to a plan maintained by another
employer), if such a rollover or plan-to-plan transfer is made
from this Plan, it will be considered as a distribution for
purposes of this Section. If such a rollover or plan-to-plan
transfer is made to this Plan, it will not be considered as part
of the Participant's Single Sum Benefit. However, an unrelated
rollover or plan-to-plan transfer accepted before January 1, 1984,
will be considered as part of the Participant's Single Sum
Benefit.
With respect to "related" rollovers and plan-to-plan transfers
(those which are either not initiated by an employee or are made
from one plan to another plan maintained by the same employer), if
such a rollover or plan-to-plan transfer is made from this Plan,
it will not be considered as a distribution for purposes of this
Section. If such a rollover or plan-to-plan transfer is made to
this Plan, it will be considered as part of the Participant's
Single Sum Benefit.
(g) Present Value of Accrued Benefit
In the case of a defined benefit plan, a Participant's Present
Value of Accrued Benefit, for Top-Heavy determination purposes,
will be determined using the following rules:
(1) The Present Value of Accrued Benefit will be determined as of
the most recent "valuation date" within a 12-month period
ending on the Determination Date.
(2) For the first Plan Year, the Present Value of Accrued Benefit
will be determined as if (A) the Participant terminated
service as of the Determination Date; or (B) the Participant
12-3
terminated service as of the valuation date, but taking into
account the estimated Present Value of Accrued Benefits as of
the Determination Date.
(3) For any other Plan Year, the Present Value of Accrued Benefit
will be determined as if the Participant terminated service as
of the valuation date.
(4) Effective January 1, 2002, the accrued benefits and accounts
of any individual who has not performed services for the
employer during the 1-year period ending on the determination
date shall not be taken into account.
(5) The valuation date must be the same date used for computing
the defined benefit plan minimum funding costs, regardless of
whether a calculation is performed that plan year.
(6) A Participant's Present Value of Accrued Benefit as of a
Determination Date will be the sum of:
(A) the present value of his Accrued Benefit determined using
the actuarial assumptions which are specified below; plus
(B) any Plan Distributions made within the Plan Year that
includes the Determination Date or within the four
preceding Plan Years; plus
(C) any employee contributions, whether voluntary or
mandatory. However, amounts attributable to qualified
voluntary employee contributions, as defined in Code
Section 219(e)(2) will not be considered to be a part of
the Participant's Present Value of Accrued Benefit.
Effective January 1, 2002, The present values of accrued
benefits and the amounts of account balances of an employee as
of the determination date shall be increased by the
distributions made with respect to the employee under the plan
and any plan aggregated with the plan under section 416(g)(2)
of the Code during the 1-year period ending on the
determination date. The preceding sentence shall also apply to
distributions under a terminated plan which, had it not been
terminated, would have been aggregated with the plan under
section 416(g)(2)(A)(i) of the Code. In the case of a
distribution made for a reason other than separation from
service, death, or disability, this provision shall be applied
by substituting "5-year period" for "1-year period."
For purposes of this Section, the present value of a
Participant's Accrued Benefit will be equal to the greater of
the present value determined using the actuarial assumptions
which are specified in the defined benefit plan or the present
value determined using the Applicable Interest Rate and the
Applicable Mortality Table.
The Applicable Interest Rate is the rate equal to the annual
rate of interest on 30-year Treasury securities for the month
of November preceding the first day of the year of
distribution or such other time as the Secretary of the
Treasury may by regulations prescribe.
The Applicable Mortality Table is the table based on the
mortality rates in Revenue Ruling 95-6 or such other table as
the Secretary of the Treasury may later prescribe.
12-4
(7) Solely for the purpose of determining if this Plan (or any
other plan included in a Required Aggregation Group of which
this Plan is a part) is Top-Heavy, the Accrued Benefit of any
Employee other than a Key Employee will be determined under
(A) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by the Employer or any
Related Employer, or
(B) if there is no such method, as if the benefit accrued no
more rapidly than the slowest accrual rate permitted under
the fractional accrual rate of Code Section 411(b)(1)(C).
(h) Single Sum Benefit
The Single Sum Benefit for any Participant in a defined benefit
pension plan will be equal to his Present Value of Accrued
Benefit. The Single Sum Benefit for any Participant in a defined
contribution plan will be equal to his Aggregate Account.
(i) Top-Heavy Group
Top-Heavy Group means an Aggregation Group in which, as of the
Determination Date, the Single Sum Benefits of all Key Employees
under all plans included in the group exceeds 60% of a similar sum
determined for all Participants.
Super Top-Heavy Group means an Aggregation Group in which, as of
the Determination Date, the sum of (1) the Single Sum Benefits of
all Key Employees under all defined benefit plans included in the
group, plus (2) the Single Sum Benefit of all Key Employees under
all defined contribution plans included in the group exceeds 90%
of a similar sum determined for all Participants.
(j) Top-Heavy Plan
This Plan will be a Top-Heavy Plan for any Plan Year beginning
after December 31, 1983, in which, as of the Determination Date,
the Single Sum Benefits of all Key Employees exceed 60% of the
Single Sum Benefits of all Participants under this Plan.
This Plan will be a Super Top-Heavy Plan for any Plan Year
beginning after December 31, 1983, in which, as of the
Determination Date, the Single Sum Benefits of all Key Employees
exceed 90% of the Single Sum Benefits of all Participants under
this Plan.
If any Participant is a Non-Key Employee for a given Plan Year,
but was a Key Employee for any prior Plan Year, the Participant's
Single Sum Benefit will not be taken into account for purposes of
determining whether this Plan is a Top-Heavy or Super Top-Heavy
Plan (or whether any Aggregation Group which includes this Plan is
a Top-Heavy or Super Top-Heavy Group).
If an individual has performed no services for the Employer at any
time during the 5-year period ending on the Determination Date,
any Single Sum Benefit of such individual will not be taken into
account for purposes of determining whether this Plan is a
Top-Heavy or Super Top-Heavy Plan (or whether any Aggregation
Group which includes this Plan is a Top-Heavy Group or Super
Top-Heavy Group).
12-5
12.02 Minimum Benefit for a Top-Heavy Plan
(a) Minimum Allocation to a Defined Contribution Plan
Notwithstanding anything contained herein to the contrary, for any
Plan Year in which this Plan is determined to be Top-Heavy, a
Participant who is a Non-Key Employee (including any Employee who
is excluded from the Plan because his Compensation is less than a
stated amount) will be entitled to a minimum allocation of
Employer contributions plus any reallocated Forfeitures, in
addition to any Matching Contributions, Discretionary Profit
Sharing Contributions, or Discretionary Stock Bonus Contributions
allocated under the Plan, equal to 3% of the Non-Key Employee's
Compensation received during the Plan Year while a Participant in
the Plan. This minimum allocation will be deposited to the
Participant's Account specified by the Plan Administrator, will be
subject to the vesting and distribution rules pertaining to the
Account to which it is deposited, and will be provided to each
Non-Key Employee who is a Participant and is employed by the
Employer on the last day of the Plan Year whether or not he or she
is an otherwise eligible Participant or fails to make any
mandatory Employee contribution to the Plan.
The percentage referred to in the preceding paragraph will not
exceed the percentage of Compensation at which Elective
Contributions to a Cash or Deferred Arrangement and Employer
contributions are made or allocated to the Key Employee for whom
such percentage is the largest; provided, however, this sentence
will not apply if the Plan is required to be included in an
Aggregation Group to meet the requirements of Code Sections
401(a)(4) or 410(b).
For any Plan Year, the minimum allocation required under this
Section will be reduced by any other contributions made by the
Employer which may be taken into account in satisfying the
requirements of Code Section 416(c)(2). However, neither Elective
Contributions to a Cash or Deferred Arrangement nor Matching
Contributions for Non-Key Employees will be taken into account in
satisfying the requirements of Code Section 416(c)(2).
(b) Minimum Accrued Benefit under a Defined Benefit Plan
In any Plan Year in which a Non-key Employee is a Participant in
both this Plan and a defined benefit pension plan included in a
Required Aggregation Group which is top-heavy, then the minimum
allocation under Section 12.02(a) above shall be increased to 5%
of the Non-Key Employee's Compensation received during the Plan
Year while a Participant in the Plan.
12.03 Minimum Vesting Schedule for a Top-Heavy Plan
In any Plan Year in which the Plan is determined to be a Top-Heavy
Plan, a Participant's Vested Accrued Benefit for Employer contributions
credited during that Plan Year will be the greater of the Vested
Accrued Benefit determined by applying the Vesting Schedule provided in
Article 1 or the Vested Accrued Benefit determined by applying the
following Vesting Schedule:
12-6
-------------------------------- ---------------------------
Years of Service Vested Percentage
-------------------------------- ---------------------------
Less than 2 Years 0%
-------------------------------- ---------------------------
2 Years 20%
-------------------------------- ---------------------------
3 Years 40%
-------------------------------- ---------------------------
4 Years 60%
-------------------------------- ---------------------------
5 Years 80%
-------------------------------- ---------------------------
6 Years or More 100%
-------------------------------- ---------------------------
The minimum vesting requirements of this Article will apply to all
Accounts of a Participant that include contributions subject to the
Minimum Vesting Schedule for a Top-Heavy Plan.
If in any subsequent Plan Year the Plan ceases to be a Top-Heavy Plan,
the minimum vesting requirements of this Article will continue to apply
to all Accounts of the Participant that include contributions subject
to the Minimum Vesting Schedule for a Top-Heavy Plan.
12-7
Article 13
TRUSTEE AND TRUST FUND
13.01 Acceptance of Trust
The Trustee, by signing this Agreement, accepts this Trust and agrees
to perform the duties of the Trustee in accordance with the terms and
conditions set forth herein.
13.02 Trust Fund
(a) Purpose and Nature
The Trustee will establish and maintain a Trust Fund for purposes
of providing a means of accumulating the assets necessary to
provide the benefits which become payable under the Plan. The
Trustee will receive, hold and invest all contributions made by
the Employer, any Participating Employers, and the Participants,
including the investment earnings thereon. The Trust Fund arising
from such contributions and earnings will consist of all assets
held by the Trustee under the Plan and Trust. The Trustee will
manage the Trust Fund without distinction between principal and
income. All benefits payable under the Plan will be paid by the
Trustee from the Trust Fund.
Any person having any claim under the Plan will look solely to the
assets of the Trust Fund for satisfaction. In no event will the
Plan Administrator, the Employer, any Employees, any officer of
the Employer or any agents of the Employer or the Plan
Administrator be liable in their individual capacities to any
person whomsoever, under the provisions of this Plan and Trust,
except as provided by law.
The Trust Fund will be used and applied only in accordance with
the provisions of the Plan and Trust, to provide the benefits
thereof, and no part of the corpus or income of the Trust Fund
will be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants or their Beneficiaries
entitled to benefits under the Plan, except to the extent
specifically provided elsewhere herein.
The Trust Fund is intended to be a "domestic trust" for purposes
of Code Section 7701(a)(30)(E). In such regard, the Trust Fund
will be administered exclusively in the United States and will be
subject to the jurisdiction of courts within the United States.
Notwithstanding any provision of the Plan, to the extent required
to satisfy Code Section 7701(a)(30)(E), all substantial decisions
concerning the Trust Fund, including decisions regarding (i) the
establishment, operation and termination of the Trust Fund, and
(ii) the designation, termination and replacement of the Plan's
Trustee, will be made by individuals who are United States
Persons, as defined in Code Section 7701(a)(30).
13-1
(b) Operation of Trust Fund
The Trust Fund will be maintained in accordance with the
accounting requirements of the Plan. No Participant will have any
right to any specific asset or any specific portion of the Trust
Fund prior to distribution of benefits. Withdrawals from the Trust
Fund will be made to provide benefits to Participants and
Beneficiaries in the amounts specified by the Plan, and to pay
expenses agreed to in writing by the Plan Administrator.
(c) Investments
The Plan Sponsor (or the Plan Administrator or an Advisory
Committee appointed by the Plan Sponsor) will have the right to
periodically provide the Trustee with a written investment policy
which, in consideration of the needs of the Plan, sets forth the
investment objectives, policies, and guidelines which the Plan
Sponsor judges to be appropriate and prudent.
If a written investment policy is not so provided, then the
Trustee will set forth the investment policy for the Plan. In
doing so, the Trustee may consult with the Plan Sponsor (or the
Plan Administrator or an Advisory Committee appointed by the Plan
Sponsor) to secure information with regard to Plan Sponsor
investment objectives and general investment policy.
The Trustee will invest the Trust Fund in accordance with the
investment policy for the Trust Fund considering the fiduciary
requirements of law, the objectives of the Plan, and the liquidity
needs of the Plan.
(d) Plan Sponsor Direction of Investment
The Plan Sponsor will have the right to direct the Trustee with
respect to the investment and reinvestment of assets comprising
the Trust Fund. The Trustee and the Plan Sponsor (or the Plan
Administrator or an Advisory Committee appointed by the Plan
Sponsor) will execute a letter of agreement as a part of this Plan
containing such conditions, limitations and other provisions they
deem appropriate before the Trustee will follow any Plan Sponsor
direction with respect to the investment or reinvestment of any
part of the Trust Fund. Such letter of agreement may provide for
Participant direction with respect to the investment and
reinvestment of a Participant's Accounts in accordance with
Article 4.
Except to the extent required by ERISA or otherwise provided in a
letter of agreement or in this Section 13, the Trustee will have
no duty or responsibility to review, initiate action, or make
recommendations regarding Trust assets and will retain such assets
until directed by the Plan administrator to dispose of such
assets.
13.03 Receipt of Contributions
The Trustee will be accountable to the Employer for the funds
contributed to it, but will have no duty to see that the contributions
received comply with the provisions of the Plan. The Trustee will not
be obligated to collect any contributions from the Employer or the
Participants. The Trustee will have no duty to compute any amount
required to be transferred or paid to it by the Employer.
13-2
13.04 Powers of the Trustee
The Trustee's authority and discretion with respect to the Trust Fund
will at all times be subject to the proper written directions of the
Plan Administrator or Investment Manager. The Trustee is authorized and
empowered, but not by way of limitation, with the following powers,
rights and duties:
(a) To invest any part or all of the Trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, United
States retirement plan bonds, corporate bonds, debentures,
convertible debentures, commercial paper, U.S. Treasury bills,
book entry deposits with the United States Federal Reserve Bank
or System, Master Notes or similar arrangements sponsored by the
Trustee or any other financial institution as permitted by law,
improved or unimproved real estate situated in the United States,
mortgages, notes or other property of any kind, real or personal,
as a prudent man would so invest under like circumstances with
due regard for the purposes of this Plan;
(b) To hold that portion of the Trust Fund as the Trustee may deem
necessary for ordinary administration and for the disbursement of
funds in cash, without liability for interest, by depositing the
same in any bank (including deposits which bear a reasonable rate
of interest in a bank or similar financial institution supervised
by the United States or a State, even where the bank or financial
institution is the Trustee, or otherwise is a fiduciary of the
Plan, including The Charles Schwab Trust Company), subject to the
rules and regulations governing such deposits, and without regard
to the amount of any such deposit.
(c) To manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure,
lease for any term even though commencing in the future or
extending beyond the term of the Trust, and otherwise deal with
all property, real or personal, in such manner, for such
considerations and on such terms and conditions as the Trustee
will decide;
(d) To credit and distribute the Trust as directed by the Plan
Administrator or any agent of the Plan Administrator. The Trustee
will not be obliged to inquire as to whether any payee or
distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to
the manner of making any payment or distribution. The Trustee
will be accountable only to the Plan Administrator for any
payment or distribution made by it in good faith on the order or
direction of the Plan Administrator or any agent of the Plan
Administrator;
(e) To borrow money from any person other than a party in interest of
the Plan (unless covered by a prohibited transaction exemption)
with or without giving security, and to assume indebtedness,
extend mortgages and encumber by mortgage or pledge;
(f) To compromise, contest, arbitrate, or abandon claims and demands,
in its discretion;
(g) To have with respect to the Trust all of the rights of an
individual owner, whether specifically referred to or not in this
document, including the power to give proxies, to participate in
any voting trusts, mergers, consolidations or liquidations, to
exercise or sell stock subscriptions or conversion rights;
13-3
(h) To hold any securities or other property in the name of the
Trustee or its nominee, or in another form as it may deem
reasonable, with or without disclosing the trust relationship;
(i) To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management,
investment and distribution of the Trust;
(j) To compromise, arbitrate, or otherwise adjust or settle claims in
favor of or against the Trust and to deliver or accept
consideration in either total or partial satisfaction of any
indebtedness or other obligation, and to continue to hold
property so received for the period of time that the Trustee
deems appropriate;
(k) To file all tax forms or returns required of the Trustee;
(l) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the
Trustee will not be obligated to or required to do so unless
indemnified to its satisfaction; and
(m) To keep any or all of the Trust property at any place or places
within the United States or abroad, or with a depository or
custodian at such place or places; provided, however, that the
Trustee may not maintain the indicia of ownership of any assets
of the Plan outside the jurisdiction of the District Courts of
the United States, except as may be expressly authorized in U.S.
Treasury or U.S. Department of Labor regulations.
(n) The Trustee shall accept a contribution of cash or other property
otherwise acceptable to the Trustee that has been or will be
distributed to a participant (or an eligible employee who is to
become a participant) from another qualified plan, an individual
retirement account, a tax sheltered annuity or a governmental
plan, to the extent the contribution represents an eligible
rollover contribution within the meaning of Code Section
402(c)(4) or 408(d)(3), at the direction of the Administrator.
The Administrator shall be solely responsible for determining
that such assets represent an eligible rollover contribution
within the meaning of Code Section 402(c)(4) or 408(d)(3) The
Trustee shall accept a transfer of cash or other property
acceptable to the Trustee on behalf of a participant directly
from the Trustee of an employee benefit plan qualified under
Code Section (401(a)(4) at the direction of the Administrator or
to transfer cash or other property to another Trustee at the
direction of the Administrator.
13.05 Investment in Common or Collective Trust Funds
Notwithstanding the provisions of Section 13.04, the Plan Sponsor
specifically authorizes the Trustee to invest all or any portion of the
assets comprising the Trust Fund in any common or collective trust fund
which at the time of the investment provides for the pooling of the
assets of plans qualified under Code Section 401(a). The authorization
applies only if such common or collective trust fund: (a) is exempt
from taxation under Code Section 584 or 501(a); (b) if exempt under
Code Section 501(a), expressly limits participation to pension and
profit sharing trusts which are exempt under Code Section 501(a) by
reason of qualifying under Code Section 401(a); (c) prohibits that part
of its corpus or income which equitably belongs to any participating
trust from being used for or diverted to any purposes other than for
the exclusive benefit of the Employees or their Beneficiaries who are
entitled to benefits under such
13-4
participating trust; (d) prohibits assignment by a participating trust
of any part of its equity or interest in the group trust; and (e) the
sponsor of the group trust created or organized the group trust in the
United States and maintains the group trust at all times as a domestic
trust in the United States. The provisions of the common or collective
trust fund agreement, as amended by the Trustee from time to time, are
by this reference incorporated within this Plan and Trust. The
provisions of the common or collective trust fund will govern any
investment of Plan assets in that fund. This provision constitutes the
express permission required by Section 408(b)(8) of ERISA.
13.06 Investment in Insurance Company Contracts
The Trustee may invest any portion of the Trust Fund in a deposit
administration, guaranteed investment or similar type of investment
contract (hereinafter referred to as Contract); provided, however, that
no such Contract may provide for an optional form of benefit which
would not be provided for under the provisions hereof. The Trustee will
be the complete and absolute owner of Contracts held in the Trust Fund.
The Trustee may convert from one form to another any Contract held in
the Trust Fund; designate any mode of settlement; sell or assign any
Contract held in the Trust Fund; surrender for cash any Contract held
in the Trust Fund; agree with the insurance company issuing any
Contract to any release, reduction, modification or amendment thereof;
and, without limitation of any of the foregoing, exercise any and all
of the rights, options and privileges that belong to the absolute owner
of any Contract held in the Trust Fund that are granted by the terms of
any such Contract or by the terms of this Agreement.
The Trustee will hold in the Trust Fund the proceeds of any sale,
assignment or surrender of any Contract held in the Trust Fund and any
and all dividends and other payments of any kind received in respect to
any Contract held in the Trust Fund.
13.07 Fees and Expenses from Fund
The Trustee will be entitled to receive reasonable annual compensation
as may be mutually agreed upon from time to time between the Plan
Sponsor and the Trustee. The Trustee will pay all expenses reasonably
incurred by it in its administration and investment of the Trust Fund
from the Trust Fund unless the Plan Sponsor pays the expenses. No
person who is receiving full pay from the Plan Sponsor will receive
compensation for services as Trustee.
13.08 Records and Accounting
The Trustee will keep full and complete records of the administration
of the Trust Fund which the Plan Sponsor and the Plan Administrator may
examine at any reasonable time. As soon as practical after the end of
each Plan Year and at such other reasonable times as the Plan Sponsor
may direct, the Trustee will prepare and deliver to the Plan Sponsor
and the Plan Administrator an accounting of the administration of the
Trust, including a report on the fair market value of all assets of the
Trust Fund.
13-5
13.09 Distribution Directions
The Trustee will make distributions or transfers from the Trust as
specified in proper directions from the Plan Administrator or his
representative. The Trustee is authorized, to the extent required under
applicable law, to withhold from distributions to any payee an amount
that the Trustee determines is necessary to cover federal and state
taxes, and the Trustee is required to withhold such amounts if so
directed by the Plan Administrator. The Trustee will have no liability
for making any distribution or transfer pursuant to the direction of
the Plan Administrator (including amounts withheld pursuant to the
previous sentence) and will be under no duty to make inquiry whether
any distribution or transfer directed by the Plan Administrator is made
pursuant to the provisions of the Plan.
The Administrator will furnish to the Trustee all information necessary
to carry out such withholding, and, until such information is provided,
the Trustee will refrain from making such distribution.
If no one claims a payment or distribution made from the Trust, the
Trustee will notify the Plan Administrator and will dispose of the
payment in accordance with the subsequent written direction of the Plan
Administrator.
13.10 Third Party
No person dealing with the Trustee will be obliged to see to the proper
application of any money paid or property delivered to the Trustee, or
to inquire whether the Trustee has acted pursuant to any of the terms
of the Plan. Each person dealing with the Trustee may act upon any
notice, request or representation in writing by the Trustee, or by the
Trustee's duly authorized agent, and will not be liable to any person
whomsoever in so doing. The certification of the Trustee that it is
acting in accordance with the Plan will be conclusive in favor of any
person relying on the certification.
13.11 Professional Agents, Affiliates and Arbitration
(a) Professional Agents
The Trustee may employ and pay from the Trust Fund reasonable
compensation to agents, attorneys, accountants and other persons
to advise the Trustee as in its opinion may be necessary. The
Trustee may delegate to any agent, attorney, accountant or other
person selected by it any non-Trustee power or duty vested in it
by the Plan; the Trustee may act or refrain from acting on the
advice or opinion of any agent, attorney, accountant or other
person so selected.
(b) Use of Affiliates
Charles Schwab Trust Company (CSTC) is authorized to contract or
make other arrangements with The Charles Schwab Corporation,
Charles Schwab & Co., Inc., their affiliates and subsidiaries,
successors and assigns (collectively referred to as Schwab), and
any other organizations affiliated with or subsidiaries of CSTC or
related entities, for the provision of services to the Trust Fund
or Plan, except where such arrangements are
13-6
prohibited by law or regulation. As used below, authorized person
means any person whose authorization is required pursuant to the
provision of any prohibited transaction exemption otherwise
applicable.
CSTC is authorized to place securities orders, settle securities
trades, hold securities in custody and other related activities on
behalf of the Trust Fund through or by Schwab whenever possible
unless the authorized person specifically instructs the use of
another Broker. Trades and related activities conducted through
the Broker will be subject to fees and commissions established by
the Broker, which may be paid from the Trust Fund or netted from
the proceeds of trades.
Trades will not be executed through Schwab unless the Plan
Administrator and the authorized person have received disclosure
concerning the relationship of Schwab to CSTC, and the fees and
commissions which may be paid to Schwab, CSTC and any affiliate or
subsidiary of any of them as a result of using Schwab to execute
trades or for other services.
CSTC is authorized to disclose such information as is necessary to
the operation and administration of the Trust Fund to Schwab and
to such other persons or organizations that CSTC determines have a
legitimate business purpose for obtaining such information.
At the direction of the authorized person, CSTC may purchase
shares of regulated investment companies (or other investment
vehicles) advised by Schwab or CSTC ("Schwab Funds"), except to
the extent that such investment is prohibited by law or
regulation. Schwab Fund shares may not be purchased for or held by
the Trust Fund unless the Plan Administrator has received
disclosure concerning the relationship of Schwab or CSTC to the
Schwab Funds, and any fees which may be paid to such entities.
To the extent permitted under applicable laws, CSTC may invest in
deposits, long and short term debt instruments, stocks, and other
securities, including those of CSTC or Schwab.
CSTC and Schwab are authorized to tape record conversations
between CSTC or Schwab and persons acting on behalf of the Plan or
a Participant in order to verify data on transactions.
(c) Arbitration
Any dispute under this agreement by and between the Trustee and
the Plan Sponsor will be resolved by submission of the issue to a
member of the American Arbitration Association who is chosen by
the Plan Sponsor and the Trustee. If the Plan Sponsor and the
Trustee cannot agree on such a choice, each will nominate a
member of the American Arbitration Association, and the two
nominees will then select an arbitrator. Expenses of the
arbitration will be paid as decided by the arbitrator. This
paragraph will not be interpreted to diminish any rights a
Participant may have under ERISA.
13.12 Valuation of Trust
The Trustee will value the Trust Fund as of the last day of each Plan
Year to determine the fair market value of the Trust, and the Trustee
will value the Trust Fund on such other date(s) as may be necessary to
carry out the provisions of the Plan.
13-7
Notwithstanding any other provision, if the Trustee should determine
that the Trust Fund consists in whole or in part of property not traded
freely on a recognized market, or that information necessary to
ascertain the fair market value is not readily available, the Trustee
may request instructions from the Plan Administrator concerning the
value of such property for all purposes under this Plan and Trust, and
the Plan Administrator will comply with that request. The Trustee will
be entitled to rely upon the value placed upon such property by the
Plan Administrator. At the Trustee's option, it may request that the
Plan Administrator hire an independent appraiser that meets the
requirements of Code Section 401(a)(38)(C) to value the property.
Alternatively, if the Trustee chooses or if the Administrator fails or
refuses to instruct the Trustee on the value of such property within a
reasonable time after receipt of the Trustee's request, the Trustee at
its sole discretion may engage an independent appraiser to determine
the fair market value of such property. Any expenses with respect to
such appraisal will be paid by the Trustee out of the Trust Fund or, at
the option of the Plan Sponsor, by the Plan Sponsor.
13.13 Liability of Trustee
The Trustee will be liable only for the safeguarding and administration
of the assets of this Trust Fund in accordance with the provisions
hereof and any amendments hereto and no other duties or
responsibilities will be implied. The Trustee will not be required to
pay any interest on funds paid to or deposited with it or to its credit
under the provisions of this Trust, unless pursuant to a written
agreement between the Plan Sponsor and the Trustee. The Trustee will
not be responsible for the adequacy of the Trust Fund to meet and
discharge any liabilities under the Plan and will not be required to
make any payment of any nature except from funds actually received as
Trustee.
The Trustee may consult with legal counsel (who may be legal counsel
for the Plan Sponsor) selected by the Trustee and the opinion of such
counsel, when relied upon by the Trustee, will be evidence that the
Trustee was acting in good faith.
It will not be the duty of the Trustee to determine the identity or
mailing address of any Participant or any other person entitled to
benefits hereunder, such identity and mailing addresses to be furnished
by the Plan Sponsor, the Plan Administrator or an agent of the Plan
Administrator.
The Trustee will be under no liability in making payments in accordance
with the terms of this Plan and the certification of the Plan
Administrator or an agent of the Plan Administrator who has been
granted such powers by the Plan Administrator.
Except to the extent required by any applicable law, no bond or other
security for the faithful performance of duty hereunder will be
required of the Trustee.
13.14 Removal or Resignation and Successor Trustee
The Trustee may not resign prior to November 1, 2003, without the
consent of the Plan Sponsor, except for an event that poses undue
business risk to either party to this agreement. After November 1,
2003, the Trustee may resign at any time upon giving 90 days prior
written notice to the Plan Sponsor or, with the consent of the Plan
Sponsor, a Trustee may resign with less than 90 days prior written
notice.
13-8
The Plan Sponsor may remove a Trustee by giving at least 60 days prior
written notice to the Trustee.
Upon the removal or resignation of a Trustee, the Plan Sponsor will
appoint and designate a successor Trustee which will be one or more
individual successor Trustees or a corporate Trustee organized under
the laws of the United Sates or of any state thereof with authority to
accept and execute trusts. Any successor Trustee must accept and
acknowledge in writing its appointment as a successor Trustee before it
can act in such capacity.
Title to all property and records or true copies of such records
necessary to the current operation of the Trust Fund held by the
Trustee hereunder will vest in any successor Trustee acting pursuant to
the provisions hereof, without the execution or filing of any further
instrument. Any resigning or removed Trustee will execute all
instruments and do all acts necessary to vest such title in any
successor Trustee of record. Each successor Trustee will have, exercise
and enjoy all the powers, both discretionary and ministerial, herein
conferred upon his predecessor. No successor Trustee will be obligated
to examine the accounts, records and acts of any previous Trustee or
Trustees, and each successor Trustee in no way or manner will be
responsible for any action or omission to act on the part of any
previous Trustee.
The resigning or removed trustee may require as a condition of
transferring assets to a successor Trustee that the successor Trustee
present evidence that any bonding requirement under ERISA Section 412
has been met and/or may require that the Plan Sponsor provide a writing
indemnifying the Trustee against any losses arising from the
replacement of the Trustee except to the extent caused by a breach of
fiduciary duty by the removed Trustee.
If either party has given notice of removal or resignation as provided
under this Section 13.14, and upon the expiration of the advance notice
period no other successor Trustee has been appointed and has accepted
such appointment, the trustee may apply to a court of competent
jurisdiction for the appointment of a successor Trustee. The Trustee is
authorized to reserve such sum of money as it may deem advisable for
payment of fees and expenses in connection with the settlement of its
accounts or other proper Trust expenses, and any balance of such
reserve remaining after the payment of such fees and expenses will be
paid to the successor Trustee.
Any corporation which results from any merger, consolidation or
purchase to which the Trustee may be a party, or which succeeds to the
trust business of the Trustee, or to which substantially all the trust
assets of the Trustee may be transferred, will be the successor to the
Trustee hereunder without any further act or formality with like effect
as if the successor Trustee had originally been named Trustee herein;
and in any such event it will not be necessary for the Trustee or any
successor Trustee to give notice thereof to any person, and any
requirement, statutory or otherwise, that notice will be given is
hereby waived.
13.15 Appointment of Investment Manager
One or more Investment Managers, within the meaning of Section 3(38) of
ERISA, may be appointed by the Plan Sponsor (or the Plan Administrator)
to exercise full investment management authority with respect to all or
a portion of the Trust assets, as provided in Sections 3(38) and
403(a)(2) of ERISA. Authorized payment of the fees and expenses of the
Investment Manager(s) may be made from the Trust assets. For purposes
of this agreement, any Investment
13-9
Manager so appointed will, during the period of his appointment,
possess fully and absolutely those powers, rights and duties of the
Trustee (to the extent delegated in writing by the Plan Sponsor or the
Plan Administrator) with respect to the investment or reinvestment of
that portion of the Trust assets over which the Investment Manager has
investment management authority. The Investment Manager must be one of
the following:
(a) Registered as an investment advisor under the Investment Advisors
Act of 1940;
(b) A bank, as defined in the Investment Advisors Act of 1940; or
(c) An insurance company qualified to manage, acquire, or dispose of
such Plan assets under the laws of more than one state.
Any Investment Manager will acknowledge in writing to the Plan Sponsor
or the Plan Administrator and to the Trustee that he or it is a
fiduciary with respect to the Plan. During any period of time when the
Investment Manager is so appointed and serving, and with respect to
those assets in the Plan over which the Investment Manager exercises
investment management authority, the Trustee's responsibility will be
limited to holding such assets as a custodian, providing accounting
services, disbursing benefits as authorized, and executing such
investment instructions only as directed by the Investment Manager. The
Trustee will not be responsible for any acts or omissions of the
Investment Manager. Any certificates or other instruments duly signed
by the Investment Manager (or the authorized representative of the
Investment Manager), purporting to evidence any instruction, direction
or order of the Investment Manager with respect to the investment of
those assets of the Plan over which the Investment Manager has
investment management authority, will be accepted by the Trustee as
conclusive proof thereof. The Trustee will also be fully protected in
acting in good faith upon any notice, instruction, direction, order,
certificate, opinion, letter, telegram or other document believed by
the Trustee to be genuine and from the Investment Manager (or the
authorized representative of the Investment Manager). The Trustee will
not be liable for any action taken or omitted by the Investment Manager
or for any mistakes of judgment or other action made, taken or omitted
by the Trustee in good faith upon direction of the Investment Manager.
13.16 Termination of Trust
In the event that this Plan is terminated by the Plan Sponsor, the
Trust Fund will be distributed by the Trustee as and when directed by
the Plan Administrator in accordance with the provisions of the Plan
and Trust. From the date of termination of the Plan and until the final
distribution of the Trust assets, the Trustee will continue to have all
the powers provided under this Section that are necessary or desirable
for the orderly liquidation and distribution of the Trust Fund.
The Trustee may condition the transfer or distribution of any assets of
the Trust Fund upon termination of the Plan on receipt of a favorable
determination letter from the Internal Revenue Service confirming that
the termination of the Plan does not adversely affect the tax-exempt
status of the Trust Fund. Alternatively, the Trustee, in its sole
discretion, may accept the indemnification of the Trustee, that is
provided by the Plan Sponsor, against any liability arising from such
transfer or distribution, or may require the Plan Sponsor to post a
bond sufficient to protect the Trustee against such liability until
such time as a favorable determination letter is received.
13-10
13.17 Governing Law
The Trust will be administered in the State of Missouri, and its
validity, construction, and all rights hereunder will be governed by
ERISA and, to the extent not preempted, by the laws of Missouri. If any
provisions of this Trust will be invalid or unenforceable, the
remaining provisions will continue to be fully effective.
13.18 Proxy Voting
In no event will the Trustee be responsible for the discretionary
voting or tendering of shares of securities held in the Trust or for
ascertaining or monitoring whether, or how, proxies are voted or
whether the proper number of proxies is received. The Trustee will
deliver to the Plan Administrator, or the person or persons identified
by the Plan Administrator, proxies and powers of attorney and related
informational material, for any shares or other property held. Subject
to the provisions of this paragraph, the Plan Administrator will have
responsibility for instructing the Trustee as to voting such shares and
the tendering of such shares, by proxy or in person, except to the
extent such responsibility is delegated to another person, under the
terms of the Plan and Trust Agreement or under an agreement between the
named fiduciary of the Plan and an investment manager, in which case
such persons will have such responsibility. The Trustee may use agents
to effect such delivery to the Plan Administrator or the person or
persons identified by the Plan Administrator.
13.19 Employer Stock
(a) Type of Employer Stock
The Trustee will invest as directed by the Plan Sponsor, in common
stock of the Employer (Employer Stock) which includes treasury
stock which has been purchased by the Employer. The percentage of
Plan assets invested in such Employer Stock may exceed 10% of the
Plan's assets.
(b) Voting Rights
Voting rights with respect to shares of Employer Stock held in the
Trust Fund will be voted by the Trustee in such manner as may be
determined by the respective Participants, with respect to all
matters requiring shareholder approval.
The Trustee and the Employer will adopt reasonable measures to
enable the Employer to notify the Participants of the date and
purpose of each meeting of stockholders of the Employer at which
holders of shares of Employer Stock will be entitled to vote, and
to request instructions from each Participant to the Trustee as to
the voting at such meeting of full shares of Employer Stock
(whether or not vested) in the Accounts of such Participant. The
Trustee, itself or by proxy, will vote full shares of Employer
Stock in accordance with the instructions of the Participant. If
prior to the time of such meeting of stockholders (or a date prior
thereto specified by the Trustee) the Trustee will not have
received instructions from any Participant, the Trustee will have
no duty to make any decision or take any action regarding any such
stock unless otherwise instructed by the named fiduciary.
13-11
The Trustee shall vote the sum of fractional shares allocated to
Participant's Accounts and unallocated shares of Employer Stock in
the same manner and proportion as shares with respect to which
Participants have the right of direction as to voting
(c) Tender Offers
Each Participant, or, in the event of his death, his Beneficiary,
will have the right, to the extent of the number of full shares of
Employer Stock in his account, to direct the Trustee in writing as
to the manner in which to respond to a tender or exchange offer
with respect to shares of such Employer Stock.
The Employer will utilize its best efforts to timely distribute or
cause to be distributed to each Participant (or Beneficiary) such
information as will be distributed to shareholders of the Employer
in connection with any such tender or exchange offer.
The Trustee will, with respect to Employer Stock held in the Trust
Fund, accept or reject the terms of any tender offer and,
accordingly, tender Employer Stock held by the Trustee in the
Trust Fund in accordance with the terms and provisions of any
tender offer, or not tender such Employer Stock, as directed by
the respective Participants. With respect to full shares of
Employer Stock which are allocated to Participants who have not
given directions, the Trustee will not tender any shares of
Employer Stock with respect to which such Participants (or
Beneficiaries) have the right of direction.
The sum of fractional shares allocated to Participants' Accounts
and unallocated shares of Employer Stock will be tendered or
exchanged in the same manner and proportion as shares with respect
to which Participants have the right of direction are tendered or
exchanged.
The Plan Administrator may establish such rules and guidelines as
it deems appropriate to properly effect the provisions of this
Section.
13.20 Trustee Indemnification
To the extent permitted under applicable law, the Employer shall
indemnify and hold harmless the Trustee, its officers, employees,
and agents from and against all liabilities, losses, expenses, and
claims (including reasonable attorney's fees and costs of defense)
arising out of (1) the acts or omissions to act with respect to
the Plan or Trust by persons unrelated to the Trustee ("unrelated
persons"), (2) the Trustee's action or inaction with respect to
the Plan or Trust resulting from reasonable reliance on the action
or inaction of unrelated persons, including directions to invest
or otherwise deal with Plan assets, or (3) any violation by any
unrelated person of the provisions of applicable law or any
regulations promulgated thereunder or other applicable standards
of fiduciary conduct, unless the Trustee commits a breach of its
duties by reason of its negligence or willful misconduct. Expenses
incurred by the Trustee which it believes to be subject to
indemnification under this Agreement shall be paid by the Employer
upon the Trustee's request, provided that the Employer may delay
payment of any amount in dispute until such dispute is resolved
according to the provisions of the Plan or any Separate Trust
Agreement. Such resolution may include the award of interest on
unpaid amounts determined to be payable to the Trustee under this
Section.
13-12
In order that the indemnification provision contained herein shall
apply, upon the assertion of a claim or loss for which any party
(the Indemnitor), may be required to indemnify another party (the
Indemnitee), the Indemnitee shall promptly notify the Indemnitor
of such assertion or loss, and shall keep the Indemnitor advised
with respect to all developments concerning such claim. The
Indemnitor shall have the option to participate at its expense
with the Indemnitee in the defense of such claim. The Indemnitee
shall in no case confess any claim or make any compromise in any
case in which the Indemnitor may be required to indemnify it
except with the Indemnitor's prior written consent.
13.21 Exempt Loan
Prior to January 1, 2001, the Plan authorized the Trustee, at the
direction of the Advisory Committee, to enter into an Exempt Loan
transaction with respect to the Plan. Effective as of the January 1,
2001, the Plan ceased to be an employee stock ownership plan (within
the meaning of Section 4975(e)(7) of the Code) and, accordingly,
authorization to enter into Exempt Loan transactions was eliminated.
Notwithstanding the fact that the Plan has ceased to be an employee
stock ownership plan, Employer Securities acquired prior to January 1,
2001 with the proceeds of an Exempt Loan (including Employer Securities
acquired by the Plan as a dividend with respect to, in exchange for, or
with proceeds from the sale of Employer Securities acquired by the Plan
or the Kansas City Southern Industries, Inc. Employee Stock Ownership
Plan with the proceeds of an Exempt Loan) will continue to be subject
to the provisions of Treas. Reg. ss.ss.54.4975-7(b)(4), (10), (11) and
(12) relating to put, call or other options and to buy-sell or similar
arrangements, except to the extent these regulations are inconsistent
with Code ss.409(h).
13-13
Article 14
REPURCHASE OF EMPLOYER SECURITIES
14.01 Put Option
Shares of Employer Securities distributed to a Participant from the
Trust shall be subject to a "put" option at the time of distribution,
provided that such time the share are either not readily tradable on an
established market within the meaning of Code Section 409(h) or are
subject to a trading limitation. The "put" option shall be exercisable
by the Participant or his Beneficiary, by the donees of either, or by a
person (including an estate or it distributee) to whom the Employer
Securities pass by reason of the Participant's or Beneficiary's death.
The "put" option shall provide that for a period of at least fifteen
(15) months after such shares are distributed, the holder of the option
shall have the right to cause the Employer, by notifying it in writing,
to purchase such shares at their fair market value, as determined by
the Plan Sponsor, in accordance with Treas. Reg. Section
54.4975-11(d)(5). The Plan Sponsor may give the Trustee the option to
assume the rights and obligations of the Employer at the time the "put"
option is exercised, insofar as the repurchase of Employer Securities
is concerned. The period during which the "put" option is exercisable
shall not include any period during which the holder is unable to
exercise such "put" option because the Employer is prohibited from
honoring it by federal or state law. If the Employer is prohibited from
honoring the "put" option by federal or state law, the holder shall be
entitled to cause it to be honored, consistent with such law, by an
affiliate or shareholder of the Employer that has substantial net worth
and whose net worth is reasonably expected to remain substantial. If
shares of Employer Securities are readily tradable on an established
market on the date of distribution, but cease to be readily tradable on
an established market (as described above) within fifteen (15) months
after such date, the Employer Securities distributed shall be subject
to the "put" option described herein for the balance of the fifteen
(15) month period. the Employer shall give written notice to each
shareholder within ten (10) days of the date the Employer Securities
cease to be readily tradable on an established market or that the
Employer Securities become subject to a trading limitation that the
Employer Securities are subject to the "put" option for the remainder
of the fifteen (15) month period. If the Employer fails to give such
notice to the shareholder within such ten (10) day period, then the
number of days between such tenth (10th) day and the date on which the
notice is actually given shall be added to the duration of the fifteen
(15) month period. The terms of payment for the purchase of such shares
of Employer Securities shall be as set forth in the "put" option and,
if the Employer Securities are distributed as part of a total
distribution, may be either in a lump sum or in installments, as
determined by the Plan Sponsor. For purposes of the preceding sentence,
the term "total distribution" means the distribution within one taxable
year to the Participant, the amount to be paid for the Employer
Securities shall be paid not later than thirty (30) days after the date
the "put" option is exercised.
14-1
An installment payment in connection with a "put" option shall:
(a) provide for acceleration in the event of thirty (30) days'
default in the payment of interest or principal and shall
permit prepayment of the installment obligation in whole or in
part at any time or times without penalty;
(b) be adequately secured and bear a reasonable rate of interest,
both as determined by the Plan Sponsor;
(c) require equal annual payments;
(d) have a payment period not longer than five (5) years from the
date the "put" option is exercised;
(e) require that any payments pursuant to the installment
obligation must be substantially equal and begin to be made no
later than thirty (30) days after the date the "put" option is
exercised; and
(f) satisfy the requirements of Treas. Reg.
Section 54.4975-7(b)(12), except to the extent this
regulation is inconsistent with Code Section 409(h).
14.02 Continuation of Put Option
The "put" option provided for by Section 14.01 is nonterminable and
shall continue to apply to shares of Employer Securities distributed
hereunder notwithstanding the repayment of any Exempt Loan or any
amendment to, or termination of, this Plan which causes the Plan or a
portion of the Plan to cease to be an employee stock ownership plan
within the meaning of Code Section 4975(e)(7).
14-2
Appendix
Schedule of Employers for whom prior service credit has been granted by the Plan
Sponsor for purposes of calculating Years of Vesting Service and Years of
Eligibility Service pursuant to Section 1.35.
Berger Associates, Inc.
Kansas City Southern Industries, Inc.
Schedule of entities designated by the Plan Sponsor as Allocation Units for
purposes of the allocation of contributions to Participants pursuant to Article
3.
Schedule of qualified plans for which asset transfers are authorized by the Plan
Sponsor pursuant to Section 8.06 on behalf of Participants who transfer
employment between the Plan Sponsor or a Participating Employer in this Plan and
employers whose qualified plans are listed below.
Schedule of Elections to limit Highly Compensated Employees for a particular
Lookback Year to those who were in the Top-paid Group for such Lookback Year as
defined in Section 11.01(d)(2) and 11.01(j).
A. 1997 PLAN YEAR
1. TOP PAID GROUP ELECTION YES [ ] NO [ X ]
2. CALENDAR YEAR ELECTION YES [ ] NO [ X ]
B. 1998 PLAN YEAR
1. TOP PAID GROUP ELECTION YES [ ] NO [ X ]
2. CALENDAR YEAR ELECTION YES [ ] NO [ X ]
C. 1999 PLAN YEAR
1. TOP PAID GROUP ELECTION YES [ ] NO [ X ]
2. CALENDAR YEAR ELECTION YES [ ] NO [ X ]
D. 2000 PLAN YEAR
1. TOP PAID GROUP ELECTION YES [ ] NO [ X ]
2. CALENDAR YEAR ELECTION YES [ ] NO [ X ]
E. 2001 PLAN YEAR
1. TOP PAID GROUP ELECTION YES [ ] NO [ X ]
2. CALENDAR YEAR ELECTION YES [ ] NO [ X ]
IN WITNESS WHEREOF, this instrument has been executed by the duly authorized and
empowered officers of the Plan Sponsor, this -------- day of
- ---------------------, 2001.
STILWELL FINANCIAL INC.
By:
-------------------------
The Trustee agrees to serve as Trustee under the terms of this instrument.
CHARLES SCHWAB TRUST COMPANY
By:
---------------------------