<PAGE>
As filed with the Securities and Exchange Commission on March 18, 1998
File No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
HOMESTEAD VILLAGE INCORPORATED
(Exact name of registrant as specified in its charter)
MARYLAND 74-2770966
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2100 RiverEdge Parkway 30328
ATLANTA, GEORGIA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(770) 303-2200
HOMESTEAD VILLAGE INCORPORATED
401(K) SAVINGS PLAN
(Full title of the plan)
Jeffrey A. Klopf
Secretary
2100 RiverEdge Parkway
Atlanta, Georgia 30328
(770) 303-2200
(Agent for Service)
-----------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================
Proposed Proposed
Maximum Maximum
Title of Securities to be Amount to be Offering Price Aggregate Amount of
Registered Registered Per Share* Offering Price* Registration Fee
<S> <C> <C> <C> <C>
=========================================================================================================
Common Stock, $.01 par
value 130,000 Shares $13.625 $1,771,250.00 $522.52
=========================================================================================================
</TABLE>
* Estimated solely for the purpose of computing the registration fee on the
basis of the average of the high and low prices for the Common Stock as
reported on the American Stock Exchange on March 12, 1998.
==============================================================================
<PAGE>
Part II
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
Item 3. Incorporation of documents by reference.
The following documents, which have heretofore been filed by Homestead
Village Incorporated (the "Company" or "Registrant") with the Securities and
Exchange Commission (File No. 1-12269) are incorporated by reference herein and
shall be deemed to be a part hereof:
(a) Annual Report on Form 10-K for the year ended December 31, 1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997;
(c) Current Reports on Form 8-K filed December 12, 1997, as amended and
January 8, 1998; and
(d) The description of Common Stock, $.01 par value per share, included in
the Company's Registration Statement on Form 8-A filed with the
Commission on October 7, 1996;
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and shall be deemed a part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the issuance of the shares of Common Stock registered hereunder
will be passed upon for the Company by the law firm of Mayer, Brown & Platt,
Chicago, Illinois. Mayer, Brown & Platt has represented and is currently
representing the Company and certain of its affiliates.
Item 6. Indemnification of Directors and Officers.
Article Seventh of the Registrant's Charter provides as follows with
respect to indemnification of its directors and officers:
"The Corporation shall have the power, to the maximum extent permitted
by Maryland law in effect from time to time, to obligate itself to
indemnify and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (a) any individual who is a present or
former director or officer of the Corporation or (b) any individual who,
while a director or officer of the Corporation and at the request of the
Corporation, serves or has served as a director, officer, partner or
trustee of another corporation, partnership, joint venture, trust, employee
benefit plan or any other enterprise from and against any claim or
liability which such person may incur by reason of his or her status as a
present or former director or officer of the Corporation. The Corporation
shall have the power, with the approval
<PAGE>
of its Board of Directors, to provide such indemnification and advancement
of expenses to a person who served a predecessor of the Corporation in any
of the capacities described in (a) or (b) above and to any employee or
agent of the Corporation or a predecessor of the Corporation."
Article Eleventh of the Registrant's Charter provides as follows with
respect to limitation of liability of its directors and officers:
"To the maximum extent that Maryland law in effect from time to time
permits limitation of the liability of directors and officers of a Maryland
corporation, no director or officer of the Corporation shall be liable to
the Corporation or its stockholders for money damages. Neither the
amendment nor repeal of this Article ELEVENTH, nor the adoption or
amendment of any other provision of the charter or Bylaws of the
Corporation inconsistent with this Article ELEVENTH, shall apply to or
affect in any respect the applicability of the preceding sentence with
respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption."
Article XII of the Registrant's Bylaws provides as follows with respect
to indemnification of its directors and officers:
"To the maximum extent permitted by Maryland law in effect from time
to time, the Corporation, without requiring a preliminary determination of
the ultimate entitlement to indemnification, shall indemnify and shall pay
or reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any individual who is a present or former director or
officer of the Corporation and who is made a party to the proceeding by
reason of his service in that capacity or (b) any individual who, while a
director of the Corporation and at the request of the Corporation, serves
or has served another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer,
partner or trustee of such corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise and who is made a party to the
proceeding by reason of his service in that capacity. The Corporation may,
with the approval of its Board of Directors, provide such indemnification
and advance for expenses to a person who served a predecessor of the
Corporation in any of the capacities described in (a) or (b) above and to
any employee or agent of the Corporation or a predecessor of the
Corporation."
"Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or charter of the
Corporation inconsistent with this Article, shall apply to or affect in any
respect the applicability of the preceding paragraph with respect to any
act or failure to act which occurred prior to such amendment, repeal or
adoption."
In addition, the Registrant has entered into indemnity agreements with
each of its officers and Directors which provide for reimbursement of all
expenses and liabilities of such officer or Director, arising out of any lawsuit
or claim against such officer or Director due to the fact that he was or is
serving as an officer or Director, except for such liabilities and expenses (a)
the payment of which is judicially determined to be unlawful, (b) relating to
claims under Section 16(b) of the Securities Exchange Act of 1934, or (c)
relating to judicially determined criminal violations.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
See Index to Exhibits.
<PAGE>
Item 9. Undertakings.
A. Rule 415 Offering.
-----------------
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a post-
effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section
13 or section 15(d) of the Exchange Act that are incorporated
by reference in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. Filings Incorporating Subsequent Exchange Act Documents by Reference.
--------------------------------------------------------------------
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Indemnification of Directors and Officers.
-----------------------------------------
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions of the registrant's charter or by-laws or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful
<PAGE>
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of Homestead Village Incorporated hereby constitutes and appoints David
C. Dressler, Jr., Michael D. Cryan, Robert C. Aldworth, Robert E. Clark, Jeffrey
A. Klopf and Ariel Amir, and each of them, its or his true and lawful attorneys-
in-fact and agents, for it or him and in its or his name, place and stead, in
any and all capacities, (unless revoked in writing), to sign any and all
amendments to this registration statement (including post-effective amendments
thereto, and other documents in connection therewith), to sign a registration
statement filed with the Securities and Exchange Commission pursuant to Rule
462(b) promulgated under the Securities Act of 1933, as amended, and any and all
amendments thereto, and to file each such registration statement or amendment,
with all exhibits thereto, with the Securities and Exchange Commission, and
hereby grants to such attorneys-in-fact and agents, and each of them, full power
and authority to do and perform any and all acts and things requisite and
necessary to be done, as fully and to all intents and purposes as it or he might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta, State of Georgia, on the 17th day of
March, 1998.
HOMESTEAD VILLAGE INCORPORATED
By /s/ Michael D. Cryan
--------------------
Michael D. Cryan
Co-Chairman and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael D. Cryan Co-Chairman, Chief Operating March 17, 1998
- ---------------------------- Officer and Director
Michael D. Cryan
/s/ David C. Dressler, Jr. Co-Chairman, President, Chief March 17, 1998
- ---------------------------- Investment Officer and Director
David C. Dressler, Jr.
/s/ Robert C. Aldworth Senior Vice President and Chief March 17, 1998
- ---------------------------- Financial Officer (Principal
Robert C. Aldworth Financial Officer)
/s/ Robert E. Clark Vice President and Controller March 17, 1998
- ---------------------------- (Principal Accounting Officer)
Robert E. Clark
Director
- ----------------------------
John P. Frazee, Jr.
/s/ Manuel A. Garcia III Director March 17, 1998
- ----------------------------
Manuel A. Garcia III
/s/ John C. Schweitzer Director March 17, 1998
- ----------------------------
John C. Schweitzer
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------ --------------------
<S> <C>
4.1 Restated Homestead charter (incorporated by reference to Exhibit 3.1
to Homestead's Form S-4 Registration Statement (File No. 333-4455, the
"Homestead S-4")).
4.2 Amended and Restated Bylaws of Homestead (incorporated by reference to
Exhibit 3.2 to the Homestead S-4).
4.3 Rights Agreement, dated as of May 16, 1996, between Homestead and The
First National Bank of Boston, as Rights Agent, including form of
rights certificate (incorporated by reference to Exhibit 4.2 to the
Homestead S-4).
4.4 Amended and Restated Promissory Note by PTR Homestead Village
Incorporated in favor of Security Capital Pacific Trust ("PTR")
(incorporated by reference to Exhibit 4.3 to the Homestead Form 10-Q).
4.5 Amended and Restated Promissory Note by PTR Homestead Village Limited
Partnership in favor or PTR (incorporated by reference to Exhibit 4.4
to the Homestead Form 10-Q).
4.6 Additional Corporate Promissory Note by Atlantic Homestead Village
Incorporated in favor of Security Capital Atlantic Incorporated
("ATLANTIC") (incorporated by reference to Exhibit 4.5 to the
Homestead Form 10-Q).
4.7 Consolidated Amended and Restated Promissory Note by Atlantic
Homestead Village Limited Partnership in favor of ATLANTIC
(incorporated by reference to Exhibit 4.6 to the Homestead Form 10-Q).
4.8 Amended and Restated Promissory Note by Atlantic Homestead Village
Limited Partnership in favor of ATLANTIC (incorporated by reference to
Exhibit 4.7 to the Homestead Form 10-Q).
4.9 Form of stock certificate for shares of common stock of Homestead
(incorporated by reference to Exhibit 4.8 to the Homestead Form S-4).
4.10 Homestead Village Incorporated 401(k) Savings Plan
5 Opinion of Mayer, Brown & Platt as to the validity of the Common
Stock being registered.
15.1 Letter of Ernst & Young LLP regarding unaudited interim financial
information.
23.1 Consent of Mayer, Brown & Platt (included in the opinion filed as
Exhibit 5 to this Registration Statement).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of KPMG Peat Marwick LLP.
24 Power of Attorney pursuant to which amendments to this Registration
Statement may be filed (included on page II-5 of this Registration
Statement).
</TABLE>
<PAGE>
EXHIBIT 4.10
HOMESTEAD VILLAGE INCORPORATED
401(K) SAVINGS PLAN
<PAGE>
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 Sections 401 and 410
through 417 of the Internal Revenue Code. It is intended that the Trust qualify
for approval under Section 501 of the Code. It is further intended that the Plan
comply with the provisions of the Employee Retirement Income Security Act of
1974 (ERISA). In case of any ambiguity in the Plan's language, it will be
interpreted to accomplish the Plan's intent of qualifying under the Code and
complying with ERISA.
This Plan and Trust is exclusively for the benefit of the eligible Employees and
their Beneficiaries. Neither the Employer, the Plan Administrator nor the
Trustee will apply or interpret the terms of the Plan in any manner that permits
discrimination in favor of Highly Compensated Employees. All Employees under
similar circumstances will be treated alike.
The undersigned Employer and Trustee hereby adopt this Plan and Trust effective
as of January 1, 1997.
<PAGE>
TABLE OF CONTENTS
PAGE NO.
ARTICLE 1 - DEFINITIONS 1-1
ARTICLE 2 - PARTICIPATION 2-1
ARTICLE 3 - PARTICIPANT ACCOUNTS 3-1
ARTICLE 4 - ACCOUNTING AND VALUATION 4-1
ARTICLE 5 - RETIREMENT BENEFITS 5-1
ARTICLE 6 - DEATH BENEFIT 6-1
ARTICLE 7 - LIMITATIONS ON BENEFITS 7-1
ARTICLE 8 - MISCELLANEOUS 8-1
ARTICLE 9 - ADMINISTRATION 9-1
ARTICLE 10 - AMENDMENT OR TERMINATION OF PLAN 10-1
ARTICLE 11 - TRUSTEE AND TRUST FUND 11-1
<PAGE>
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 (loss)
allocated to the account and distributions.
1.02 Accounting Date, Valuation Date
The term Accounting Date means the last day of each Accounting Period and
any other days within the Accounting Period upon which, consistent with
established methods and guidelines, the Plan Administrator applies the
accounting procedures specified in Section 4.02. The term Valuation Date,
unless otherwise specified, means any business day on which the New York
Stock Exchange is open.
1.03 Accounting Period
Accounting Period means each of the 3-month periods which end on March
31st, June 30th, September 30th and December 31st.
1.04 Accrued Benefit
A Participant's Accrued Benefit means the total value of his Accounts as of
a given date. A Participant's Accrued Benefit will not be reduced solely on
account of an amendment to the Plan.
A Participant's Vested Accrued Benefit is equal to his Vested Percentage of
that portion of his Accrued Benefit which is subject to the Vesting
Schedule plus 100% of the remaining portion of his Accrued Benefit.
1.05 Beneficiary
Beneficiary means the person, persons, trust or other entity who is
designated by a Participant, subject to the provisions of Article 6, to
receive any amount payable upon the death of a Participant.
1.06 Cash-Out Distribution
Cash-Out Distribution means, as described in Article 5, a distribution to a
Participant upon termination of employment of his Vested Accrued Benefit.
1.07 Code and ERISA
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.
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
<PAGE>
thereunder.
1.08 Compensation
Except where otherwise specifically provided in this Plan, Compensation
means Aggregate Compensation as defined in Section 7.03(a).
For Plan Years beginning prior to January 1, 1998, Compensation also
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) or 403(b).
Notwithstanding the foregoing, for all purposes under this Plan,
Compensation in excess of the Statutory Compensation Limit will be
disregarded.
Statutory Compensation Limit means $150,000, as adjusted in accordance with
Code Section 401(a)(17)(B).
1.09 Effective Date
The Effective Date of the Plan is January 1, 1997.
1.10 Eligible Employee Classification
An Eligible Employee Classification is a classification of Employees, the
members of which are eligible to participate in the Plan. The Plan covers
all employee classifications except Leased Employees, part time Employees
who work less than 1,000 Hours of Service during an eligibility Computation
Period (as defined in Section 2.01), and Employees covered by collective
bargaining for whom retirement benefits have been the subject of good faith
bargaining.
1.11 Eligible Participant
An Eligible Participant is a Participant who, in accordance with the
provisions of Article 3, is eligible to share in the allocation of a
contribution for a given Contribution Period.
1.12 Employee
(a) In General
An Employee is any person who is employed by the Employer or a
Participating Employer.
(b) Leased Employee
A Leased Employee means any person who, pursuant to an agreement
between the Employer or any Related Employer ("Recipient Employer")
and any other person ("leasing organization"), has performed services
for the Recipient Employer on a substantially full-time basis for a
period of at least one year and such services are performed under the
primary direction or control of the Recipient Employer.
Any Leased Employee will be treated as an Employee of the Recipient
Employer; however, contributions or benefits provided by the leasing
organization which are attributable to the services performed for the
Recipient Employer will be treated as provided by the Recipient
Employer. If all Leased Employees constitute less than 20% of the
Employer's non-highly-compensated work force within the meaning of
Code Section 414(n)(1)(C)(ii), then the preceding sentence will not
apply to any Leased Employee if such Employee is covered by a money
purchase pension plan ("Safe Harbor Plan") which provides: (1) a
nonintegrated employer contribution rate of at least 10% of
compensation, (2) immediate participation, and (3) full and immediate
vesting.
<PAGE>
Years of Service for purposes of eligibility to participate in the
Plan and Years of Service for purposes of determining a Participant's
Vested Percentage include service by an Employee as a Leased Employee.
1.13 Employer and Plan Sponsor
The Plan Sponsor is Homestead Village Incorporated. A Participating
Employer is any other organization which has adopted this Plan and Trust in
accordance with Section 8.07. The Plan Sponsor and any Participating
Employers shall be referred to collectively as the Employers, and
individually as the Employer.
The term Predecessor Employer means any prior employer to which the
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.
1.14 Employment Commencement Date
The date an Employee first performs an Hour of Service for the Employer is
his Employment Commencement Date.
1.15 Entry Date
Entry Date means the January 1st, April 1st, July 1st or October 1st which
coincides with or next follows the date upon which the eligibility
requirements are met.
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
The term 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.
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 Article 5.
1.18 Highly Compensated Definitions
(a) Compensation
For purposes of this Section, Compensation means Aggregate
Compensation as defined in Section 7.03(a) plus (for Plan Years
beginning prior to January 1, 1998) amounts contributed by the
Employer pursuant to a salary reduction agreement which are excludable
from the gross income of the Employee under Code Section 125,
402(e)(3), 402(h), 402(k) or 403(b). Compensation in excess of the
Statutory Compensation Limit will be disregarded.
(b) Determination Year
Determination Year means the Plan Year for which the determination of
who is Highly Compensated is being made.
(c) Reserved
(d) Highly Compensated Employee
<PAGE>
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.
(e) Highly Compensated Active Employee
Highly Compensated Active Employee means any individual who:
(1) 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; or
(2) During the Lookback Year (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 (ii), if the Plan
Sponsor elects the application of this clause for such Lookback
Year, was in the Top-paid Group for such Lookback Year.
(f) Highly Compensated Former Employee
Highly Compensated Former Employee means any Former Employee who had a
Separation Year (within the meaning of Treasury Regulation Section
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.
(g) Highly Compensated Group
Highly Compensated Group means all Highly Compensated Employees.
(h) Lookback Year
Lookback Year means the 12-month period immediately preceding the
Determination Year.
(i) Non-Highly Compensated Employee
Non-Highly Compensated Employee means an Employee who is not a Highly
Compensated Employee.
(j) Non-Highly Compensated Group
Non-Highly Compensated Group means all Non-Highly Compensated
Employees.
(k) 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:
(1) 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;
(2) Employees who normally work fewer than 17 1/2 hours per week;
(3) 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;
(4) Employees who have not reached age 21 by the end of the year;
<PAGE>
(5) 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
(6) 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.
1.19 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), layoff, jury duty, military duty 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.
Hours of Service for all Employees will be determined on the basis of
actual hours for which an Employee is paid or is entitled to payment. Hours
of Service will be credited for employment with any Related Employer or any
Predecessor Employer. Hours of Service will be credited for any individual
considered an employee under Code Section 414(n) or 414(o) and the
regulations thereunder.
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 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, 8 Hours of Service per day will be
credited. No more than 501 Hours of Service will be credited under this
paragraph for any
<PAGE>
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.
1.20 Investment Fund
An Investment Fund means any portion of the assets of the Trust Fund which
the Plan Administrator designates as an Investment Fund and for which the
Plan Administrator maintains a set of accounts separate from the remaining
assets of the Trust Fund.
(a) Specific Investment Fund~w means an Investment Fund which is
designated as a Specific Investment Fund by the Plan Administrator in
a manner and form acceptable to the Trustee.
(b) General Investment Fund~w means all assets of the Trust Fund
excluding the assets of any Specific Investment Funds.
1.21 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.
1.22 Reserved
1.23 Normal Retirement Age
A Participant's Normal Retirement Age is age 65.
1.24 Normal Retirement Date
A Participant's Normal Retirement Date is the date on which the Participant
attains Normal Retirement Age.
1.25 One Year Break-in-Service
One Year Break-in-Service means any 365-day period following a
Participant's Date of Termination in which an Employee does not complete at
least one Hour of Service.
1.26 Participant
The term 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 means a Participant who is currently an Employee
in an Eligible
<PAGE>
Employee Classification.
(b) Disabled Participant means a Participant who has terminated his
employment with the Employer due to his Disability and who is
receiving or is entitled to receive benefits from the Plan.
(c) 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 means a Participant who has terminated
his employment with the Employer and who has a nonforfeitable 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 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.
(f) Former Participant means a Participant who has terminated his
employment with the Employer and who currently has no nonforfeitable
right to any portion of his or her Accrued Benefit.
1.27 Payroll Withholding Agreement
If a written Payroll Withholding Agreement is required pursuant to the
provisions of Article 3, then each Participant who elects to participate in
the Plan will file 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.
The terms of such agreement will provide that the Participant agrees to
have the Employer withhold, each payroll period, any whole percentage of
his Compensation (or such other amount as allowed by the Plan Administrator
under rules applied on a uniform and nondiscriminatory basis), not to
exceed the limitations of Article 7. In consideration of such agreement,
the Employer periodically will make a contribution to the Participant's
proper Account(s) in an amount equal to the total amount by which the
Participant's Compensation from the Employer was reduced during applicable
payroll periods pursuant to the Payroll Withholding Agreement.
Notwithstanding the above, Payroll Withholding Agreements will be governed
by the following general guidelines:
(a) A Payroll Withholding Agreement will apply to each payroll period
during which an effective agreement is on file with the Employer. Upon
termination of employment, such agreement will become void.
(b) 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.
(c) The Plan Administrator may amend or revoke its Payroll Withholding
Agreement with any Participant at any time, if the Employer determines
that such revocation or amendment is
<PAGE>
necessary to insure that a Participant's Annual Additions for any Plan
Year will not exceed the limitations of Article 7 or to insure that
the requirements of 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.
(d) Except as provided above, a Payroll Withholding Agreement may not be
revoked or amended by the Participant or the Employer.
1.28 Plan, Plan and Trust, Trust
The terms Plan, Plan and Trust and Trust mean Homestead Village
Incorporated 401(k) Savings Plan. The Plan Identification Number is 001.
The Plan is a profit sharing plan.
The term Predecessor Plan means any qualified plan previously established
and maintained by the Employer and to which this Plan is the successor.
1.29 Plan Administrator
The Plan Administrator is Homestead Village Incorporated.
1.30 Plan Year
The Plan Year is the 12 month period beginning January 1 and ending
December 31. The Limitation Year coincides with the Plan Year.
1.31 Reserved
1.32 Qualified Annuity Definitions
(a) Annuity Starting Date
Annuity Starting Date means (i) the first day of the first period for
which an amount is payable as an annuity, or (ii) in the case of a
benefit not payable in the form of an annuity, the first day on which
all events have occurred which entitled the Participant to such
benefit.
(b) Qualified Election
(1) In General
Qualified Election means a written waiver of a Qualified Joint
and Survivor Annuity or a Qualified Survivor Annuity. If the
provisions of Section 5.05(b) apply, the waiver must be consented
to by the Participant's spouse with such written consent
witnessed by a representative of the Plan Administrator or a
notary public. The spouse's consent must include the designation
of a specific Beneficiary and the form of payment which cannot be
changed without the consent of the spouse. 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
or other circumstances that may be prescribed by Treasury
Regulations. Any consent which is required under this Section
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, any revocation of a prior
waiver may be made by a Participant without the consent of the
spouse at any time before the Annuity Starting Date; however, any
waiver of a Qualified Joint and Survivor Annuity or a Qualified
Survivor Annuity which follows such revocation must be in writing
and must be consented to by the Participant's spouse. The number
of waivers or revocations of such waivers will not be limited.
<PAGE>
(2) Qualified Joint and Survivor Annuity Notices
If the provisions of Section 5.05(b) apply, not more than 90 days
nor less than 30 days before the Participant's Annuity Starting
Date, the Plan Administrator will provide the Participant a
written explanation of:
. the terms and conditions of a Qualified Joint and
Survivor Annuity;
. the Participant's right to make and the effect of a
Qualified Election to waive the Qualified Joint and
Survivor Annuity form of benefit;
. a general description of the eligibility conditions and
other material features of the optional forms of benefit
and sufficient additional information to explain the
relative values of the optional forms of benefit
available;
. the rights of the Participant's spouse; and
. the right to make, and the effect of, a revocation of a
previous Qualified Election to waive the Qualified Joint
and Survivor Annuity.
(3) Qualified Survivor Annuity Notices
If the provisions of Section 5.05(b) apply, the election period
to waive the Qualified Survivor Annuity begins on the first day
of the Plan Year in which the Participant attains age 35 and ends
on the date of the Participant's death. If a Vested Terminated
Participant separates from service before the beginning of the
election period, the election period begins on the date of
separation from service.
The Plan Administrator will, within the applicable notice period,
provide each Participant a written explanation of the Qualified
Survivor Annuity containing comparable information to that
required under the provisions of Section 1.32(b)(2). For purposes
of this paragraph, the term "applicable notice period" means
whichever of the following periods ends last:
. the period beginning with the first day of the Plan Year
in which the Participant attains age 32 and ending with
the close of the Plan Year preceding the Plan Year in
which the Participant attains age 35;
. the period beginning two years before and ending 12 months
after the individual becomes a Participant;
. the period beginning two years before and ending 12 months
after the joint and survivor rules become effective for
the Participant; or
. the period beginning one year before and ending 12 months
after the Participant separates from service before
attaining age 35.
A Participant who will not have attained age 35 as of the end of
any current Plan Year may make a special Qualified Election to
waive the Qualified Survivor Annuity for the period beginning on
the date of the election and ending on the first day of the Plan
Year in which the Participant attains age 35. The Election will
not be valid unless the Participant receives a written
explanation of the Qualified Survivor Annuity in terms comparable
to the explanation required above. Qualified Survivor Annuity
coverage will automatically resume as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver
on or after that date will be subject to
<PAGE>
the full requirements of this Section 1.32(b).
(c) Qualified Joint and Survivor Annuity
A Qualified Joint and Survivor Annuity means an annuity which is
purchased from an Insurer and which is payable for the life of the
Participant with a survivor annuity for the life of his Surviving
Spouse in an amount which is 50% of the amount payable during the
joint lives of the Participant and his spouse. The amount of the
Qualified Joint and Survivor Annuity will be the amount of benefit
which can be purchased from an Insurer with the Participant's Vested
Accrued Benefit.
(d) Qualified Life Annuity
A Qualified Life Annuity means an annuity which is purchased from an
Insurer and which is payable for the lifetime of the Participant with
payments terminating upon the death of the Participant. The amount of
the Qualified Life Annuity will be the amount of benefit which can be
purchased from an Insurer with the Participant's Vested Accrued
Benefit.
(e) Qualified Survivor Annuity
A Qualified Survivor Annuity which a Surviving Spouse will be eligible
to receive under the provisions of Section 6.02 means a monthly
benefit payable for the remaining lifetime of the Surviving Spouse.
The amount of the Qualified Survivor Annuity benefit will be the
amount of benefit which can be purchased from an Insurer with the
Participant's Vested Accrued Benefit.
If the Participant's Vested Accrued Benefit is $3,500 or less, such
Participant's Vested Accrued Benefit shall be payable to the Surviving
Spouse in a lump sum of the entire amount of the Participant's Vested
Accrued Benefit. If the Participant's Vested Accrued Benefit at the
time of any distribution exceeds $3,500, the Vested Accrued Benefit at
any later time will be deemed to exceed $3,500. If the Participant's
Vested Accrued Benefit exceeds $3,500, the Surviving Spouse may elect
to receive the Qualified Survivor Annuity as a lump sum.
1.33 Related Employer
The terms Related Employer and Affiliated Employer are used interchangeably
and mean any other corporation, association, company or entity on or after
the Effective Date which is, along with the Employer, 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 Employer by Treasury Regulations issued under Code
Section 414(o).
1.34 Required Beginning Date
The Required Beginning Date for the commencement of benefit payments from
the Plan is the April 1 immediately following the calendar year in which he
attains age 70-1/2 for a Participant who is a Five Percent Owner as defined
in Section 1.36(d)(1) with respect to the Plan Year in which the
Participant attains age 70-1/2.
The Required Beginning Date for the commencement of benefit payments from
the Plan for any other Participant is the April 1 immediately following the
later of (i) the calendar year in which the Participant attains age 70-1/2,
or (ii) the calendar year in which the Participant retires.
1.35 Surviving Spouse
Surviving Spouse means a deceased Participant's spouse who was married to
the Participant on
<PAGE>
the Participant's date of death. The Plan Administrator and the Trustee may
rely conclusively on a Participant's written statement 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.
1.36 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:
. 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
. 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
. 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.
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
<PAGE>
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
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.
(3) One of the 10 Employees having Compensation not less than the
Defined Contribution Dollar Limit (as defined in Section
7.03(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 Section
7.03(f) for the Plan Year;
For purposes of this Section, Compensation means Aggregate
Compensation as defined in Section 7.03(a) plus (for Plan Years
beginning prior to January 1, 1998) any amounts contributed by
the Employer pursuant to a salary reduction agreement which are
excludable from the gross income of the Employee under Code
Section 125, 402(e)(3), 402(h), 402(k) or 403(b). Compensation in
excess of the Statutory Compensation Limit is disregarded.
(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
<PAGE>
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 the 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 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) 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.
(5) A Participant's Present Value of Accrued Benefit as of a
Determination Date will be the sum of:
. the present value of his Accrued Benefit determined using the
actuarial assumptions which are specified below; plus
. any Plan Distributions made within the Plan Year that includes
the Determination Date or within the four preceding Plan Years;
plus
. 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.
For purposes of this Section, the present value of a
Participant's Accrued Benefit
<PAGE>
will be equal to the greater of the present value determined
using the actuarial assumptions which are specified for Actuarial
Equivalent purposes or the present value determined using the
"Applicable Interest Rate." The Applicable Interest Rate is the
rate or rates that would be used by the Pension Benefit Guaranty
Corporation for a trusteed single-employer plan to value a
Participant's or Beneficiary's benefit on the date of
distribution (the "PBGC Rate"). If the present value using the
PBGC Rate exceeds $25,000, the Applicable Interest Rate is 120%
of the PBGC Rate. However, the use of 120% of the PBGC Rate will
never result in a present value less than $25,000.
(6) 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
<PAGE>
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).
1.37 Trust Fund, Trust
These terms mean the total cash, securities, real property, insurance
contracts and any other property held by the Trustee.
1.38 Trustee
The Trustee is Charles Schwab Trust Company or any successor Trustee.
1.39 Vested Percentage
A Participant's Vested Percentage as of a given date will be that
percentage determined in accordance with the Vesting Schedule.
Notwithstanding the preceding, a Participant will be 100% vested upon
reaching the earlier of (a) his Normal Retirement Age or (b) the later of
the date upon which the Participant attains age 65 or reaches the 5th
anniversary of the date he commenced participation in the Plan.
1.40 Vesting Schedule
A Participant's Vested Percentage will be determined in accordance with the
following table:
Years of Vesting Service Vested Percentage
Less than 1 Year 0%
1 Year 20%
2 Years 40%
3 Years 60%
4 Years 80%
5 Years or more 100%
1.41 Written Resolution
The terms Written Resolution and Written Consent are used interchangeably
and reflect decisions, authorizations, etc. by the Employer. A Written
Resolution will be evidenced by a resolution of the Board of Directors of
the Employer, by a committee of such Board or by a person or persons
authorized by such Board or such committee.
1.42 Year of Service
(a) Crediting Years of Service
Years of Service are determined under the Elapsed Time Method. Under
the Elapsed Time Method, Years of Service are based upon an Employee's
Elapsed Time of employment irrespective of the number of hours
actually worked during such period; a Year of Service (including a
fraction thereof) will be credited for each completed 365 days of
Elapsed Time which need not be consecutive. The following terms are
used in determining Years of Service under the Elapsed Time Method:
(1) Date of Severance (Termination) - means the earlier of (A) the
actual date an Employee resigns, is discharged, dies or retires,
or (B) the first anniversary of the date an Employee is absent
from work (with or without pay) for any other reason, e.g.,
disability, vacation, leave of absence, layoff, etc.
(2) Exception for Leaves of Absence due to maternity or paternity
reasons.
<PAGE>
Notwithstanding the above, if any Employee is absent due to
maternity or paternity reasons (pregnancy or birth of a child of
such individual or the adoption of a child by such individual or
for purposes of caring for such child immediately after birth or
adoption) the Date of Severance (Termination) shall be the first
anniversary of the date such absence began and if the absence is
for a period of more than 12 months, the 12-month period
following the first anniversary of the date such absence began
shall not be treated as a period of Service or a Period of
Severance.
(3) Elapsed Time - means the total period of service which has
elapsed between a Participant's Employment Commencement Date and
Date of Termination including Periods of Severance where a One
Year Break-in-Service does not occur.
(4) Employment Commencement Date - means the date an Employee first
performs one Hour of Service for the Employer.
(5) One Year Break-in-Service - means any 365-day period following an
Employee's Date of Termination as defined above in which the
Employee does not complete at least one Hour of Service.
(6) Period of Severance - is the time between the actual Date of
Severance as defined above and the subsequent date, if any, on
which the Employee performs an Hour of Service.
All periods of employment will be aggregated including Periods of
Severance unless there is a One Year Break-in-Service.
Years of Service for purposes of determining eligibility to
participate in the Plan and Years of Vesting Service for purposes of
determining a Participant's Vested Percentage includes service with
any organization which is a Related Employer with respect to the
Employer, and specifically includes all Hours of Service with SC Group
Incorporated.
(b) For Vesting Purposes
Years of Service for purposes of computing a Participant's Vested
Percentage are referred to as Years of Vesting Service and are
determined using the Elapsed Time Method.
All of a Participant's Years of Vesting Service are taken into account
in determining his Vested Percentage.
ARTICLE 2
PARTICIPATION
2.01 Participation
An Employee who is a member of an Eligible Employee Classification will
become eligible to participate in the Plan on the Entry Date coincident
with or next following the completion of three months of service with the
Employer.
Notwithstanding the foregoing, an Employee who is classified by the
Employer as a part time employee will enter the Plan on the Entry Date
which coincides with or next follows the attainment of age 21 and the
completion of the first eligibility Computation Period during which the
Employee completes at least 1,000 Hours of Service.
<PAGE>
The initial Computation Period is the 12 consecutive month period beginning
with the Employee's Employment Commencement Date. Thereafter, the
Computation Period is the Plan Year beginning with the Plan Year in which
the initial Computation Period ends.
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.
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.
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 immediately if he has satisfied the eligibility
requirements which are specified in Section 2.01.
ARTICLE 3
PARTICIPANT ACCOUNTS
3.01 Employee Pre-tax Account
Employee Pre-tax Account means the Account of a Participant reflecting
applicable contributions, investment income or loss allocated thereto and
distributions. A Participant's Employee Pre-tax Account is 100% vested at
all times.
(a) Employee Pre-tax Contributions
(1) Amount of Contribution
Each Participant may elect to make an Employee Pre-tax
Contribution each Contribution Period not to exceed 18% of the
Participant's Compensation. Such contribution will be designated
as a whole percentage of Compensation or such other amount as
allowed by the Plan Administrator.
(2) Payroll Withholding
All Employee Pre-tax Contributions will be made pursuant to a
Payroll Withholding Agreement in accordance with Section 1.27.
(3) Nondiscrimination Requirements
All Employee Pre-tax Contributions are Elective Contributions
within the meaning of Section 4.05(a) and must satisfy the
Nondiscrimination Requirements of Section 4.05.
<PAGE>
(4) Excess Deferrals
The maximum amount of Employee Pre-tax Contribution 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 4.05. 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 before March 1 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
that calendar year. The amount of Excess Deferrals to be
distributed will be reduced by any Excess Contributions
previously distributed or recharacterized with respect to the
Plan Year beginning with or within the calendar year. The amount
of income allocable to the Excess Deferral will be determined as
described in Section 4.05.
(5) Timing of Deposits
The Employer will deposit all Employee Pre-tax Contributions on
the earliest date on which such contributions can reasonably be
segregated from the Employer's general assets, but in no event
later than 30 days after the date on which the amounts withheld
would otherwise have been paid to the Participant in cash.
Effective February 3, 1997, the Employer will deposit all
Employee Pre-tax Contributions on the earliest date on which such
contributions can reasonably be segregated from the Employer's
general assets, but in no event later than 15 business days
following the end of the month in which the amounts withheld
would otherwise have been paid to the Participant in cash.
The Contribution Period for Employee Pre-tax Contributions is
each month.
(b) Financial Hardship Withdrawals
A Participant may file with the Plan Administrator a written request
to withdraw, in order to avoid or alleviate a Financial Hardship, any
amount not to exceed that portion of his Employee Pre-tax Account
which represents his total Employee Pre-tax Contributions.
The Plan Administrator will allow Financial Hardship withdrawals only
if they are necessary to satisfy a Participant's immediate and heavy
financial need.
(1) 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:
. 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);
. Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
<PAGE>
. 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);
. Prevention of the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(2) 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. The Plan Administrator will allow the withdrawal if
it determines, after a full review of the Participant's written
request and evidence presented by the Participant showing
immediate and heavy financial need as well as the Participant's
lack of other reasonably available resources, that the withdrawal
is necessary to satisfy the need. No withdrawal will be treated
as necessary to the extent it can be satisfied from other
resources which are reasonably available to the Participant,
including those of the Participant's spouse and minor children. A
withdrawal will be treated as necessary to the extent the
Participant demonstrates to the satisfaction of the Plan
Administrator that the need cannot be relieved by any of the
following:
. Reimbursement or compensation by insurance or otherwise;
. Reasonable liquidation of assets to the extent the
liquidation would not itself cause an immediate and heavy
financial need;
. Cessation of Employee Pre-tax Contributions or Employee
After-tax Contributions (as defined in Section 4.05(a)) or
both under any plan maintained by any employer;
. Other distributions or nontaxable (at the time of the
loan) loans from plans maintained by any employer;
. Borrowing from commercial sources on reasonable commercial
terms.
Unless the Plan Administrator has evidence to the contrary, it
may rely upon the Participant's written representation that the
need cannot be relieved by any of the foregoing.
(3) Safe Harbor
The Plan Administrator will not allow any withdrawal 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.
Upon the withdrawal of any portion of a Participant's Employee
Pre-tax Account, the Participant will become ineligible for any
Elective Contribution to this Plan or any other plan maintained
by the Employer, or to make any contribution to this Plan or any
other plan maintained by the Employer until the first day of the
first payroll period which begins not less than 12 months
following the date of withdrawal. For this purpose the phrase
"any other plan maintained by the Employer" means all qualified
and
<PAGE>
nonqualified plans of deferred compensation maintained by the
Employer. The phrase includes stock option, stock purchase, or
similar plans, or a cash or deferred arrangement that is part of
a cafeteria plan within the meaning of Code Section 125. It does
not include the mandatory employee contribution portion of a
defined benefit plan, nor does it include a health or welfare
benefit plan (including one that is part of a cafeteria plan
within the meaning of Code Section 125).
Furthermore, the maximum amount of Employee Pre-tax Contributions
which can be made under the Plan on behalf of any Participant
during the calendar year which follows the calendar year in which
the withdrawal was made will be limited to the amount which would
not be treated as an Excess Deferral for that year reduced by the
amount of Employee Pre-tax Contributions made on behalf of the
Participant in the calendar year of withdrawal.
(c) Distributions
No distribution may be made from the Participant's Employee Pre-
tax Account or any account comprised of Matching Contributions or
Nonelective Contributions which are treated as Elective
Contributions in accordance with the provisions of Section
4.05(h) except under one of the following circumstances:
. the Participant's retirement, death, disability or
separation from service within the meaning of Code Section
401(k)(2)(B);
. the Participant's attaining of age 59 1/2;
. the avoidance or alleviation of a Financial Hardship;
. the termination of this Plan without the establishment of
a successor plan within the meaning of Treasury Regulation
Section 1.401(k)-1(d)(3);
. 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
. 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.
This paragraph does not apply to distributions of Excess
Deferrals, Excess Contributions, or excess Annual Additions.
3.02 Employer Discretionary Account
Employer Discretionary Account means the Account of a Participant
reflecting applicable contributions, forfeitures, investment income or loss
allocated thereto and distributions. A Participant's Employer Discretionary
Account is subject to the Vesting Schedule.
(a) Employer Discretionary Contributions
Each Plan Year, the Employer may, within the time prescribed by law
for making a deductible contribution, make an Employer Discretionary
Contribution to the Trust.
<PAGE>
For a given Plan Year, the total Employer Discretionary Contribution,
if any, made by the Employer will be an amount determined and
authorized by the Employer for such Plan Year; however, the Employer
will not authorize Employer Discretionary Contributions at such times
or in such amounts that the Plan, in operation, discriminates in favor
of Highly Compensated Employees.
The total Employer Discretionary Contribution made by the Employer
will be allocated by the ratio which each Eligible Participant's
Compensation bears to the total Compensation of all Eligible
Participants.
With respect to Employer Discretionary Contributions, if an Employee
enters the Plan on an Entry Date other than the first day of a Plan
Year, the Employee's Compensation which would otherwise be considered
will be limited to the Compensation actually paid to the Employee
while he is a Participant in the Plan.
(b) Contribution Period
The Contribution Period for Employer Discretionary Contributions is
each calendar year.
(c) Eligible Participant
With respect to Employer Discretionary Contributions, Eligible
Participant means any Participant who:
. completes 1,000 Hours of Service during the Plan Year and is
actively employed on the last day of the Plan Year; or
. retires, dies or becomes disabled during the Plan Year.
(d) Application of Forfeitures
Forfeitures from a Participant's Employer Discretionary Account will
be added to and allocated along with Employer Discretionary
Contributions in the Plan Year in which the Forfeitures are determined
to occur.
(e) Minimum Allocation for Top-Heavy Plan
Notwithstanding anything contained herein to the contrary, for any
Plan Year in which this Plan is determined to be Top-Heavy, a
Participant (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 Discretionary
Contributions equal to 3% of the Participant's Aggregate Compensation
received during the Plan Year. This minimum allocation will be
provided to each Participant who 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 Aggregate Compensation at which Employer
Discretionary 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.
(f) Withdrawals
A Participant may not withdraw any portion of his Employer
Discretionary Account prior to the time when benefits otherwise become
payable in accordance with the provisions of Article 5.
<PAGE>
3.03 Employer Matching Account
Employer Matching Account means the Account of a Participant reflecting
applicable contributions, forfeitures, investment income or loss allocated
thereto and distributions. A Participant's Employer Matching Account is
subject to the Vesting Schedule.
A Participant's Employer Matching Account will be invested only in Common
Stock of Homestead Village Incorporated (Employer Stock). Employer stock
includes treasury stock which has been purchased by the Employer.
(a) Employer Matching Contributions
Each Contribution Period, the Employer may, within the time prescribed
by law for making a deductible contribution, make an Employer Matching
Contribution to the Trust.
For a given Contribution Period, the total Employer Matching
Contribution, if any, made by the Employer will be an amount
determined and authorized by the Employer for such Contribution
Period; however, the Employer will not authorize Employer Matching
Contributions at such times or in such amounts that the Plan, in
operation, discriminates in favor of Highly Compensated Employees.
The Employer may make an Employer Matching Contribution in cash which
will be invested in Employer Stock, or the Employer may make all or a
portion of an Employer Matching Contribution in Employer Stock of
equivalent value.
The target Employer Matching Contribution to be made to an Eligible
Participant's Employer Matching Account is equal to 50% of that
portion of the Participant's Employee Pre-tax Contribution which is
not in excess of 6% of the Participant's Compensation.
If the sum of the target Employer Matching Contributions to be made
for all Participants is less than or greater than the total Employer
Matching Contribution made by the Employer in accordance with the
provisions of this Section, then the actual Employer Matching
Contribution allocated to each Eligible Participant's Employer
Matching Account will be adjusted proratably so that the sum of the
actual Employer Matching Contributions made for all Participants is
equal to the total Employer Matching Contribution made by the
Employer.
All Employer Matching Contributions are Matching Contributions within
the meaning of Section 4.05(a) and must satisfy the Nondiscrimination
Requirements of Section 4.05.
(b) Contribution Period
The Contribution Period for Employer Matching Contributions is each
month.
(c) Eligible Participant
With respect to Employer Matching Contributions, all Participants are
Eligible Participants.
(d) Application of Forfeitures
Forfeitures from a Participant's Employer Matching Account will be
used to reduce Employer Matching Contributions in the Plan Year in
which the Forfeitures are determined to occur.
(e) Withdrawals
A Participant may not withdraw any portion of his Employer Matching
Account prior to the
<PAGE>
time when benefits otherwise become payable in accordance with the
provisions of Article 5.
3.04 Rollover Account
Rollover Account means the Account of a Participant reflecting applicable
contributions, investment income or loss allocated thereto and
distributions. A Participant's Rollover Account is 100% vested at all
times.
(a) Rollover Contributions
Rollover Contribution means a contribution to the Plan by a
Participant where such contribution is the result of a prior
distribution from an Individual Retirement Account, an Individual
Retirement Annuity or another qualified plan. Such prior contribution
must be a rollover amount described in Section 402(c)(4) of the Code
or a contribution described in Section 408(d)(3) of the Code.
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 Account will constitute his entire interest in
the Plan. In no event will the existence of a Rollover Account entitle
the Employee to participate in any other benefit provided by the Plan.
If specifically provided for in a Written Resolution, Rollover
Contribution will also mean the amount of assets transferred, pursuant
to Section 10.05, to this Plan from another plan which is qualified
under Code Sections 401(a) and 501(a).
(b) Withdrawals
A Participant may withdraw all or any portion of his Rollover Account
at any time.
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 Valuation Procedure
As of each Valuation Date, the Plan Administrator will determine from the
Trustee the fair market value of each Specific 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.
<PAGE>
(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 Specific 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 Specific Investment Fund.
4.03 Reserved
4.04 Participant 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 except his
Employer Matching Account among the Specific Investment Funds which
are made available by the Plan Administrator.
(b) 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 a Specific Investment
Fund, in the General 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) To 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, U.S. Treasury
Bills, commercial paper, certificates of deposit, and similar
types of short-term securities, as may be deemed necessary by the
Trustee in its sole discretion.
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. The Trustee will have no duty
to review or make recommendations regarding a Participant's investment
directions.
(c) 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
<PAGE>
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.
(d) Future Contributions
Each Participant who chooses to participate in the Plan will elect the
percentage of those contributions (which are subject to Participant
direction of investment) which is to be deposited to each available
Investment Fund. Such election will be 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 multiples of one
percent (or such other reasonable increments as determined by the Plan
Administrator).
(e) Change in Investment of Past Contributions
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
multiples of one percent (or such other reasonable increments as
determined by the Plan Administrator).
(f) 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 on
a form provided by the Plan Administrator, except that each
Participant may authorize the Plan Administrator in writing on an
authorization form provided by the Plan Administrator to accept such
directions as may be made by the Participant by use of a telephone
voice response system maintained for such purpose.
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.
(g) Addition and Deletion of Specific Investment Funds
Specific Investment Funds may be made available 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 a Specific Investment Fund is added or deleted.
4.05 Nondiscrimination Requirements
(a) Definitions Applicable to the Nondiscrimination Requirements
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;
<PAGE>
(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:
. provide an amount to the Employee in the form of cash or
some other taxable benefit that is not currently
available, or
. contribute an amount to the Plan (or provide an accrual or
other benefit) thereby deferring receipt of Compensation.
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
For purposes of this Section, Compensation means Compensation as
defined in Section 1.08, subject to the limitations of this
Section 4.05(a)(3).
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 an Eligible Employee, provided that this
method is applied uniformly to all Eligible Employees under the
Plan for the Plan Year.
(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
<PAGE>
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.
(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).
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 preceding Plan Year (or the current Plan Year if elected by
the Employer; provided, however, that if such an election is
made, it may not be changed except as provided by the Secretary
of the Treasury).
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 Contribution Percentage for the Non-highly
Compensated Group will be the Contribution Percentage for the
Non-highly Compensated Group for the first Plan Year or, if the
Employer elects to use 3% as the Deferral Percentage for the
first Plan Year, the Contribution Percentage that would result if
the Deferral Percentage for each Non-highly Compensated
Participant were 3%.
The Contribution Percentage Test may be met by either satisfying
the General Contribution Percentage Test or the Alternative
Contribution Percentage Test.
The General Contribution Percentage Test is satisfied if the
Contribution Percentage for the Highly Compensated Group does not
exceed 125% of the Contribution Percentage for the Non-highly
Compensated Group.
The Alternative Contribution Percentage Test is satisfied if the
Contribution Percentage for the Highly Compensated Group does not
exceed the lesser of:
. the Contribution Percentage for the Non-highly Compensated
Group plus 2 percentage points, or
. the Contribution Percentage for the Non-highly Compensated
Group multiplied by 2.0.
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)
<PAGE>
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.
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.
(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).
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
preceding Plan Year (or the current Plan Year if elected by the
Employer; provided, however, that if such an election is made, it
may not be changed except as provided by the Secretary of the
Treasury).
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 will be 3%, or, if elected by the Employer, the
actual Deferral Percentage for the Non-highly Compensated Group
for the first Plan Year.
The Deferral Percentage Test may be met by either satisfying the
General Deferral Percentage Test or the Alternative Deferral
Percentage Test.
The General Deferral Percentage Test is satisfied if the Deferral
Percentage for the
<PAGE>
Highly Compensated Group does not exceed 125% of the Deferral
Percentage for the Non-highly Compensated Group.
The Alternative Deferral Percentage Test is satisfied if the
Deferral Percentage for the Highly Compensated Group does not
exceed the lesser of:
. the Deferral Percentage for the Non-highly Compensated
Group plus 2 percentage points, or
. the Deferral Percentage for the Non-highly Compensated
Group multiplied by 2.0.
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.
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.
(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:
. The Elective Contribution is allocated to the
Participant's Account as of a date within the Plan Year to
which it relates;
. The allocation is not contingent upon the Employee's
participation in the Plan or performance of services on
any date after the allocation date;
. 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
. 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.
<PAGE>
(9) Elective Deferral
Elective Deferral means the sum of the following:
. 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;
. 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;
. 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
. 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 or an election not to
participate in the Plan, is treated as an Eligible Employee for
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
<PAGE>
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:
. The Matching Contribution is allocated to a Participant's
Account as of a date within the Plan Year to which it
relates;
. The allocation is not contingent upon the Employee's
participation in the Plan or performance of services on
any date after the allocation date;
. 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
. 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 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).
(16) Nonelective Contribution
Nonelective Contribution means any Employer Contribution, other
than a Matching Contribution, which meets all of the following
requirements:
. The Nonelective Contribution is allocated to a
Participant's Account as of a date within the Plan Year to
which it relates;
. The allocation is not contingent upon the Employee's
participation in the Plan or performance of services on
any date after the allocation date;
. 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
<PAGE>
. The Employee may not elect to have the Nonelective
Contribution paid in cash in lieu of being contributed to
the Plan.
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).
(b) 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 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. 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).
<PAGE>
Excess Contributions will be treated as Employer Contributions
for purposes of Code Sections 404 and 415 even if distributed
from the Plan.
(c) 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 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. 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.
(d) Reserved
(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 shall then be recharacterized, returned to
Participants or forfeited in such a manner that the amount of
contribution allocated to the Highly Compensated Participant(s)
by or for whom the highest amount of contributions have been made
during the Plan Year will first be lowered
<PAGE>
to an amount not less that the amount made by or for the Highly
Compensated Participant with the next highest amount of
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
contributions will be lowered to a point not less than the level
of the Highly Compensated Participant with the next highest
amount of contribution made during the Plan Year, an 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.
<PAGE>
(h) 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:
. 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);
. 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);
. 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;
. 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
. 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).
(i) 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:
. 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);
. 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);
. 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;
. 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
<PAGE>
satisfy Code Section 401(a); and
. 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
. 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).
(j) 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 of 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).
ARTICLE 5
RETIREMENT BENEFITS
5.01 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 to
effect his distribution.
5.02 Normal Retirement
After an Active Participant reaches his Normal Retirement Date, he may
elect to retire. Upon such retirement he will become a Retired Participant
and his Accrued Benefit will become distributable to him. A Participant's
Accrued Benefit will become nonforfeitable no later than the date upon
which he attains his Normal Retirement Age. The form and timing of benefit
<PAGE>
payment will be governed by the provisions of Section 5.05.
5.03 Disability Retirement
In the event of a Participant's termination due to Disability, he will be
entitled to begin to receive a distribution of his Accrued Benefit which
will become nonforfeitable as of his date of termination. The form and
timing of benefit payment will be governed by the provisions of Section
5.05.
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.
5.04 Termination of Employment
(a) In General
If a Participant's employment terminates for any reason other than
retirement, death, or disability, his Accrued Benefit will become
distributable to him as of the last day of the month which coincides
with or next follows the last date upon which any contributions on the
Participant's behalf are made to the Trust following the Participant's
date of termination of employment (or as of such earlier date as
determined by the Plan Administrator in a uniform and
nondiscriminatory manner). The form and timing of benefit payment will
be governed by the provisions of Section 5.05.
(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 be
deemed to have occurred if the following conditions are met:
(1) The Participant was less than 100% vested in his Employer
Contribution Accounts; and
(2) The entire distribution is made before the last day of the second
Plan Year following the Plan Year in which the Participant
terminated employment.
(c) Restoration of Employer Contribution Accounts
If, following the date of a Cash-Out Distribution, a 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 to the Trustee, within 5 years after his 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 Accounting Date coincident with or
immediately following the complete repayment of the Cash-Out
Distribution. To restore the Participant's Employer Contribution
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 for a
particular Accounting Period 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
<PAGE>
will not take into account the allocation under this Section in
applying the limitation on allocations under Article 7.
(d) Non-Vested Participant
If a Participant who is zero percent vested in his Employer
Contribution 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
Accounting Date coincident with or next following his date of re-
employment. Such restoration will be made in accordance with the
provisions of Section 5.04(c).
5.05 Time and Manner of Payment
(a) Form of Benefit Payment
Subject to the provisions of Sections 5.05(b) and 5.06 below,
distributions of a Participant's Vested Accrued Benefit may be made in
any of the following methods as the Participant selects:
(1) in a lump sum in cash or in kind;
(2) in a life annuity;
(3) in installments over a period not to exceed the life expectancy
of the Participant or joint and last survivor expectancy of the
Participant and designated Beneficiary as selected by the
Participant.
(b) Qualified Joint and Survivor Annuity
This Section 5.05(b) shall apply only to a Participant in the Plan who
has elected payment in the form of a life annuity, and with respect to
the account of a Participant that is attributable to a direct or
indirect transfer from a qualified plan which is subject to the
survivor annuity requirements of Code Sections 401(a)(11) and 417. The
Vested Accrued Benefit of a Participant which is subject to this
Section 5.05(b) shall be payable as follows:
(1) a Participant who is not married on the date benefits are to
commence will be provided a Qualified Life Annuity, unless a lump
sum or installment payment is elected, under a Qualified
Election, by the Participant within the 90-day period which ends
on his benefit commencement date.
(2) a Participant who is married on the date benefits commence will
be provided a Qualified Joint and Survivor Annuity unless a lump
sum payment, installment payment or life annuity is elected,
under a Qualified Election, by the Participant within the 90-day
period which ends on his benefit commencement date.
Within the 90-day period which ends on a married Participant's
expected benefit commencement date, the Plan Administrator will
provide each Participant with a written explanation of:
(1) the terms and conditions of a Qualified Joint and Survivor
Annuity;
<PAGE>
(2) the Participant's right to make and the effect of a Qualified
Election to waive the Qualified Joint and Survivor Annuity form
of benefit;
(3) the rights of a Participant's spouse; and
(4) the right to make, and the effect of, a revocation of a previous
Qualified Election to waive the Qualified Joint and Survivor
Annuity.
(c) Account Balance not in Excess of $3,500
Notwithstanding the above, if a terminated Participant's Vested
Accrued Benefit is $3,500 or less, such Participant's Vested Accrued
Benefit shall be payable in a lump sum of the entire amount of his
Vested Accrued Benefit. If the value of his Vested Accrued Benefit at
the time of any distribution exceeds $3,500, the value of his Vested
Accrued Benefit at any later time will be deemed to also exceed
$3,500.
(d) Installment Payment
Upon request, the Participant may receive his benefit paid in a series
of substantially equal annual or more frequent installments over a
period certain not extending beyond the earliest of (a) the end of the
period measured by the joint life and last survivor expectancy of the
Participant and his spouse, or (b) twenty (20) years. The Plan
Administrator and the Trustee will have the power to establish rules
and guidelines as deemed necessary or appropriate with regard to the
payment of benefits under the installment payment form.
5.06 Commencement of Benefit
Subject to the provisions of this Article, commencement of a benefit will,
unless the Participant elects otherwise in writing, 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.
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 5.05, an Active Participant who
is a Five Percent Owner and 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).
For purposes of this Section, life expectancy and joint and last survivor
expectancy are to be computed by the use of the return multiples contained
in Section 1.72-9 of the Income Tax Regulations.
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.
5.07 Directed Transfer of Eligible Rollover Distributions
(a) General
This Section applies to distributions made on or after January 1,
1993. Notwithstanding
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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 section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(c) Eligible Retirement Plan
An Eligible Retirement Plan is an individual retirement account
described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of
an Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
(d) 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 section 414(p) of the Code, 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.
(f) 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 Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
. 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
. the Participant, after receiving the notice, affirmatively
elects to receive a distribution.
<PAGE>
ARTICLE 6
DEATH BENEFIT
6.01 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 to
effect his distribution.
6.02 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, the
Participant's Beneficiary will be entitled to receive the value of the
Participant's Accrued Benefit.
6.03 Designation of Beneficiary
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.
If a Participant dies without designating a Beneficiary, or if the
Participant is predeceased by all designated Beneficiaries and contingent
Beneficiaries, the Plan Administrator will distribute all benefits which
are payable in the event of the Participant's death in the following manner
and to the first of the following (who are listed in order of priority) who
survive the Participant by at least 30 days:
. All to the Participant's Surviving Spouse;
. Equally among the then living children of the Participant (by birth
or adoption);
. Among the Participant's then living lineal descendants, by right of
representation; or
. The Participant's estate.
<PAGE>
ARTICLE 7
LIMITATIONS ON BENEFITS
7.01 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 Aggregate 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 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
paragraph, 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.
Any necessary reduction will be made as follows:
(a) The amount of the reduction consisting of nondeductible Participant
contributions will be paid to the Participant as soon as
administratively feasible.
(b) The amount of the reduction consisting of any other Participant
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 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) Reserved.
(e) To the extent that the reductions described in paragraph (c) cannot be
allocated to other Participant's Accounts, the reductions, and any
reductions of Employer contributions which cannot be allocated to a
Participant's Accounts, will be allocated to a suspense account and
held therein until the next succeeding Allocation Date on which they
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.
7.02 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
<PAGE>
referred to in this Article 7 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 7.02(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 Aggregate
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 coincides with an Allocation Date
of any other plan described in the above 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 7.
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), then Forfeitures (if any), and then any
Employer contributions, 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 7.02 the
allocation of additions is reduced, the reduction will be treated in
the manner described in the third paragraph of Section 7.01.
(b) Where Employer Maintains a Qualified Defined Benefit Plan
(1) In General
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, the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction will not
exceed 1.0. If, in any Limitation Year, the sum of the Defined
Benefit Plan Fraction and the Defined Contribution Plan Fraction
for a Participant would exceed 1.0 without adjustment to the
amount of the annual benefit that can be paid to the Participant
under the defined benefit plan, then the amount of annual benefit
that would otherwise be paid to the Participant under the defined
benefit plan will be reduced to the extent necessary to reduce
the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for the Participant to 1.0.
(2) Transition Rule under TRA '86
If a plan was in existence on May 6, 1986, the numerator of the
Defined Contribution Plan Fraction will be reduced (to not less
than zero) as prescribed by the Secretary of the Treasury by
subtracting the amount required to decrease the sum of the
Defined Contribution Plan Fraction plus the Defined Benefit Plan
Fraction to 1.0. Such amount is determined (as of the first day
of the first Limitation Year beginning on or after January 1,
1987) as the product of:
<PAGE>
(A) The amount by which, without this adjustment, the sum of the
Defined Contribution Plan Fraction plus the Defined Benefit
Plan Fraction exceeds 1.0, multiplied by
(B) The denominator of the Defined Contribution Plan Fraction,
as computed through the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the
terms and conditions of the plan after May 5, 1986.
This subparagraph applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of
Code Section 415 for all Limitation Years beginning before
January 1, 1987.
(3) Transition Rule under TEFRA
In the case of a plan which met the limitation of Section 415 of
the Code for the last Limitation Year beginning before January 1,
1983, the numerator of the Defined Contribution Plan Fraction
will be reduced (to not less than zero) as prescribed by the
Secretary of the Treasury by subtracting the amount required to
decrease the sum of the Defined Contribution Plan Fraction plus
the Defined Benefit Plan Fraction to 1.0. Such amount is
determined (as of the first day of the first Limitation Year
beginning on or after January 1, 1983) as the product of:
(A) The amount by which, without this adjustment, the sum of the
Defined Contribution Plan Fraction plus the Defined Benefit
Plan Fraction exceeds 1.0, multiplied by
(B) The denominator of the Defined Contribution Plan Fraction,
as computed through the last Limitation Year beginning
before January 1, 1983.
7.03 Definitions Applicable to Article 7
(a) Aggregate Compensation
Aggregate Compensation means a Participant's earned income, wages,
salaries, and fees for professional services, and other amounts
received for personal services actually rendered in the course of
employment with the employer maintaining the plan (including, but not
limited to, commissions paid to salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
. Employer contributions to a plan of deferred compensation which
are not included in the employee's gross income for the taxable
year in which contributed or employer contributions under a
simplified employee pension plan to the extent the
contributions are deductible by the employee, or any
distributions from a plan of deferred compensation;
. Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the
employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
. Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
. Other amounts which received special tax benefits, or
contributions made by the employer (whether or not under a
salary reduction agreement) toward the purchase of an annuity
described in Code Section 403(b) (whether or not the amounts
are actually excludable from the gross income of the employee).
<PAGE>
For Plan Years beginning prior to January 1, 1998, Aggregate
Compensation 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).
Notwithstanding the above, for Plan Years beginning on or after
January 1, 1998, Aggregate Compensation 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) or 403(b).
Aggregate Compensation in excess of the Statutory Compensation Limit
is disregarded.
Aggregate Compensation for any Limitation Year is the Aggregate
Compensation actually paid or includable in gross income in such year.
(b) Allocation Date
Allocation Date means the date with respect to which all or a portion
of employer contributions, employee contributions or forfeitures or
both are allocated to participant accounts under a defined
contribution plan.
(c) Annual Additions
For Plan Years beginning after December 31, 1986, 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;
. Amounts allocated after March 31, 1984, to an individual
medical account, as defined in Code Section 415(l)(2) which is
part of a pension or annuity plan maintained by the Employer,
and amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after that date,
which are attributable to post-retirement medical benefits
required by Code Section 401(h)(6) to be allocated to the
separate account of a Key Employee under a welfare benefit plan
(as defined in Code Section 419(e)) maintained by the Employer.
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. The Annual Addition
for any Limitation Year beginning before January 1, 1987, will not be
recomputed to treat all Employee After-tax Contributions as Annual
Additions.
(d) Annual Benefit
Annual Benefit means a benefit payable annually in the form of a
straight life annuity (with no ancillary benefits) under a plan to
which employees do not contribute and under which no rollover
contributions are made.
<PAGE>
(e) Defined Benefit Compensation Limit
The Defined Benefit Compensation Limit is equal to 100% of the
Participant's average Aggregate Compensation for the three consecutive
calendar years (or other twelve consecutive month periods adopted by
the Employer pursuant to a Written Resolution and applied on a uniform
and consistent basis) of service during which the Participant had the
greatest Aggregate Compensation.
Where the annual benefit is payable to a Participant in a form other
than a straight life annuity or a Qualified Joint and Survivor
Annuity, the Defined Benefit Compensation Limit will be the Actuarial
Equivalent of a straight life annuity beginning at the same age. No
adjustment is required for the following: pre-retirement disability
benefits, pre-retirement death benefits and post-retirement medical
benefits. For purposes of this paragraph, the interest rate used in
adjusting the Defined Benefit Compensation Limit will be the greater
of (1) 5%, or (2) the post-retirement interest rate specified in the
plan for Actuarial Equivalent purposes.
Where the annual benefit is payable to a Participant who has fewer
than 10 years of service with the Employer or any Related or
Predecessor Employer, the Defined Benefit Compensation Limit will be
multiplied by a fraction, the numerator of which is the Participant's
number of years of service with the Employer or Related or Predecessor
Employer, and the denominator of which is 10.
With regard to a Participant who has separated from service with a
nonforfeitable right to an Accrued Benefit, the Defined Benefit
Compensation Limit will be adjusted effective January 1 of each
Calendar year. For any Limitation Year beginning after the separation
occurs, the Defined Benefit Compensation Limit will be equal to the
Defined Benefit Compensation Limit which was applicable to the
Participant in the Limitation Year in which he separated from service
multiplied by a fraction, the numerator of which is the Defined
Benefit Dollar Limit for the Limitation Year in which the Defined
Benefit Compensation Limit is being adjusted and the denominator of
which is the Defined Benefit Dollar Limit for the Limitation Year in
which the Participant separated from service.
(f) Defined Benefit Dollar Limit
The Defined Benefit Dollar Limit is equal to $90,000 for calendar
years 1984 through 1987. As of January 1, 1988 and as of January 1 of
each subsequent calendar year, the dollar limitation (described in
Code Section 415(b)(1)(A)) as determined by the Secretary of the
Treasury for that calendar year will become effective as the Defined
Benefit Dollar Limit for the calendar year. For calendar years between
1976 and 1983, the Defined Benefit Dollar Limit is $75,000 as adjusted
by the Secretary of the Treasury under Code Section 415(d) for that
calendar year. The Defined Benefit Dollar Limit for a calendar year
applies to Limitation Years ending with or within that calendar year.
Where the annual benefit is payable to a Participant in a form other
than a straight life annuity or a Qualified Joint and Survivor
Annuity, the Defined Benefit Dollar Limit will be the Actuarial
Equivalent of a straight life annuity beginning at the same age. No
adjustment is required for the following: pre-retirement disability
benefits, pre-retirement death benefits, and post-retirement medical
benefits. For purposes of this paragraph, the interest rate used for
adjusting the Defined Benefit Dollar Limit will be the greater of (1)
5%, or (2) the post-retirement interest rate specified for Actuarial
Equivalent purposes.
Where the annual benefit is payable to a Participant who has fewer
than 10 years of
<PAGE>
participation in the Plan, the Defined Benefit Dollar Limit will be
multiplied by a fraction, the numerator of which is the Participant's
number of years (or part thereof) of participation in the Plan, and
the denominator of which is 10. To the extent provided by the
Secretary of the Treasury, this paragraph will be applied to each
change in the benefit structure of the Plan.
For a benefit commencing before a Participant's Social Security
Retirement Age but at or after age 62, the Defined Benefit Dollar
Limit will be adjusted in a manner which is consistent with the
reduction for old-age insurance benefits commencing before Social
Security Retirement Age under the Social Security Act. The reduction
will be 5/9 of 1% for each of the first 36 months and 5/12 of 1% for
each additional month (up to 24 months) by which benefits commence
before the month of the Participant's Social Security Retirement Age.
The Defined Benefit Dollar Limit for a benefit commencing before age
62 will be adjusted to the Actuarial Equivalent of the Defined Benefit
Dollar Limit for a benefit commencing at age 62 based on an interest
rate equal to the greater of (1) 5%, or (2) the interest rate
specified in the plan for determining actuarial equivalence for early
retirement.
For a benefit commencing after a Participant's Social Security
Retirement Age, the Defined Benefit Dollar Limit will be adjusted to
the actuarial equivalent of the Defined Benefit Dollar Limit for a
benefit commencing at the Participant's Social Security Retirement
Age. For purposes of this paragraph, the interest rate used for
adjusting the Defined Benefit Dollar Limit will be the lesser of (1)
5%, or (2) the interest rate specified in the plan for determining
actuarial equivalence for early retirement.
(g) Defined Benefit Limit
The Defined Benefit Limit is the lesser of the Defined Benefit Dollar
Limit or the Defined Benefit Compensation Limit.
(h) Defined Benefit Plan Fraction Denominator
The Defined Benefit Plan Fraction Denominator with respect to any
Participant is the lesser of (1) the product of the Defined Benefit
Dollar Limit multiplied by 1.25, or (2) the product of the Defined
Benefit Compensation Limit multiplied by 1.4. However, for purposes of
determining the Defined Benefit Plan Fraction Denominator, "years of
service with the Employer or any Related or Predecessor Employer" will
be substituted for "years of participation in the Plan" wherever it
appears in Section 7.03(f).
(i) Defined Benefit Plan Fraction
The Defined Benefit Plan Fraction is a fraction determined as of the
close of a Limitation Year, the numerator of which is the Projected
Annual Benefit payable to a Participant under this Plan and the
denominator of which is the Defined Benefit Fraction Denominator. If a
Participant has participated in more than one defined benefit plan
maintained by the Employer, the numerator of the Defined Benefit Plan
Fraction is the sum of the projected annual benefits payable to the
Participant under all of the defined benefit plans, whether or not
terminated.
(j) 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
is 25% of Aggregate Compensation applicable to the Limitation Year, or
(2) the Defined Contribution Dollar Limit, which, for calendar years
after 1983 is the greater of $30,000 or one-fourth of the Defined
Benefit Dollar Limit for the Limitation Year, and for calendar years
between 1976 and 1983 is one-third of the Defined Benefit Dollar
Limit. If a short Limitation Year is created
<PAGE>
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.
(k) Defined Contribution Plan Fraction
The Defined Contribution Plan Fraction is a fraction determined as of
the close of a Limitation Year, the numerator of which is the sum of
the Annual Additions to the Participant's Accounts under all defined
contribution plans of the Employer for the current and all prior
Limitation Years and the denominator of which is the sum of the Annual
Additions which would have been made for the Participant for the
current and all prior Limitation Years (for all prior years of service
with the Employer or any predecessor Employer) if in each Limitation
year the Annual Additions equaled the lesser of (1) the product of the
Defined Contribution Compensation Limit for the Limitation Year
multiplied by 1.4, or (2) the product of the Defined Contribution
Dollar Limit for the Limitation Year multiplied by 1.25. The aggregate
amount in the numerator of this fraction due to years beginning before
January 1, 1976 may not exceed the aggregate amount in the denominator
of this fraction for all such years.
For purposes of this Section 7.03(k), the Annual Addition for any
Limitation Year beginning before January 1, 1987 will not be
recomputed to treat all Employee After-tax Contributions as Annual
Additions.
(l) 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 1.33 of this Plan is modified by Code Section
415(h).
(m) 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 Employer pursuant to a Written
Resolution adopted by the Employer. In the event of a change in the
Limitation Year, the additional limitations of Treasury Regulation
Section 1.415-2(b)(4)(iii) will also apply.
(n) Projected Annual Benefit
For purposes of this Section, a Participant's Projected Annual Benefit
is equal to the annual benefit to which a Participant in a defined
benefit Plan would be entitled under the terms of the plan based on
the following assumptions:
. The Participant will continue employment until reaching normal
retirement age as determined under the terms of the plan (or
current age, if that is later);
. The Participant's compensation for the Limitation Year under
consideration will remain the same for all future years;
. All other relevant factors used to determine benefits under the
plan for the Limitation Year under consideration will remain
constant for all future Limitation Years; and
. The benefits resulting from any Participant Contributions or
Rollover Contributions are disregarded.
<PAGE>
(o) Social Security Retirement Age
Social Security Retirement Age means age 65 for a Participant born
before January 1, 1938; age 66 for a Participant born after December
31, 1937, but before January 1, 1955; and age 67 for a Participant
born after December 31, 1954.
7.04 Effect of Top-Heavy Status
(a) General
Notwithstanding the provisions of Section 7.03, "1.0" will be
substituted for "1.25" wherever it appears in Sections 7.03(h) and
7.03(k) for any Limitation Year in which the Plan is found to be Top-
Heavy for the Plan Year which coincides with or ends within such
Limitation Year.
(b) Non-application
Section 7.04(a) will not apply for any Limitation Year in which, for
the Plan Year which coincides with or ends within such Limitation
Year, (1) the Plan is not determined to be Super Top-Heavy and (2) for
any Non-Key Employee who is a Participant in both this Plan and a
defined benefit plan maintained by the Employer or a Related Employer,
the annual allocation of Employer contributions plus Forfeitures under
this Plan is not less than 7.5% of the Non-Key Employee's Aggregate
Compensation.
ARTICLE 8
MISCELLANEOUS
8.01 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.
8.02 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 8.02(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 written notice
by the Plan Administrator that the indebtedness is to be so paid in
whole or part from his Participant's Accrued Benefit. If the
Participant or Beneficiary
<PAGE>
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 8.02(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 for all purposes under the
Plan. Where, however, because of a QDRO, more than one individual is
to be treated as a Surviving Spouse, the total amount to be paid may
not exceed the amount that would be paid if there were only one
Surviving Spouse. 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.
8.03 Qualification of Plan
The Employer will have the sole responsibility for obtaining and retaining
qualification of the Plan under the Code with respect to the Employer's
individual circumstances.
8.04 Construction
To the extent not preempted by ERISA, this Plan will be construed according
to the laws of the state in which the Employer'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.
8.05 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, the Trustee, and the Plan Administrator, all
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
Trustee's 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:
. To appoint or remove the Plan Administrator and furnish the
Trustee with certified copies of any resolutions of the Plan
Sponsor with regard thereto;
. To appoint and remove the Trustee;
<PAGE>
. To appoint a successor Trustee or additional Trustees;
. To communicate information to the Plan Administrator and the
Trustee as needed for the proper performance of the duties of
each;
. 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 o 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.
8.06 Status of Insurer
The term Insurer refers to any legal reserve life insurance company
licensed to do business in the state within which the Employer maintains
its principal office. The Insurer will file such returns, keep such
records, make such reports and supply such information as required by
applicable law or regulation.
8.07 Adoption and Withdrawal by Other Organizations
(a) Procedure for Adoption
Subject to the provisions of this Section 8.07, 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
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
and the Trustee. 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
<PAGE>
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, by complying with the provisions of the Plan. 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 transfer of plan assets. The Plan Sponsor may, it 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 Qualification
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 all the statutory requirements for
qualified plans, including, but not limited to, Sections 401(a) and
501(a) of the Internal Revenue Code for its Employees. 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 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.
8.08 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 7.01(e) or as provided below.
(a) Any contribution made to the Plan and Trust by the Employer because of
a mistake of fact may be returned to the Employer within one year of
such contribution.
(b) Notwithstanding any other provision of the Plan and Trust, if the
Internal Revenue Service determines initially that the Plan, as
adopted by the Employer, does not qualify under applicable sections of
the Code and applicable Treasury Department Regulations, and the
Employer does not wish to amend this Plan and Trust so that it does
qualify, 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) Any contribution made by the Employer will be conditioned on the
deductibility of such contribution and may be refunded to the
Employer, to the extent the contribution is determined not to be
deductible, within one year after such determination is made.
<PAGE>
8.09 Provisions Relating Employees in Qualified Military Service
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will
be provided in accordance with Section 414(u) of the Internal Revenue Code.
8.10 Unclaimed Benefits
In the event of the failure of a Participant or Beneficiary to claim
benefits payable under the Plan, and the inability of the Plan
Administrator to find the Participant or Beneficiary after a good faith
effort to do so, the benefits shall be allocated in the same manner as
Forfeitures at the end of the applicable Plan Year. This provision shall be
administered in a uniform and non-discriminatory manner. If a claim is
later made by the Participant or his Beneficiary, the benefits, together
with estimated earnings, will be reinstated from subsequent forfeitures and
Employer contributions.
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 Employer may, by Written Resolution, appoint one or more
individuals to serve as Plan Administrator. If the Employer does not
appoint an individual or individuals as Plan Administrator, the Employer
will function as Plan Administrator. The Employer 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 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 or 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 to generally 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 Employer 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 Employer 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
<PAGE>
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 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. 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 Employer
Until the Employer 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 person 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, Employer 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 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 which 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 not
paid by the Plan Sponsor.
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
<PAGE>
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
Employer, through written resolution, appoints another agent.
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.
9.09 Liability of Fiduciaries
Except for a breach of fiduciary responsibility due to gross negligence or
willful misconduct, the Plan Administrator will not incur any individual
liability for any decision, act, or failure to act hereunder. The Plan
Administrator may engage agents to assist it and may engage legal counsel
who may be counsel for the Employer. The Plan Administrator will not be
responsible for any action taken or omitted to be taken on the advice of
counsel.
If there is more than one person serving as a fiduciary in any capacity
(for example, co-Trustees), each will use reasonable care to prevent the
other or others from committing a breach of this Plan. 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. In
those instances where any duties have been allocated between co-
fiduciaries, a fiduciary will not be liable for any loss resulting to the
Plan arising from any act or omission on the part of another co-fiduciary
to whom responsibilities or obligations have been allocated except under
the following circumstances:
. If he participates knowingly in, or knowingly undertakes to conceal, an
act or omission of a co-fiduciary knowing the act or omission is a
breach; or
. If by his failure to comply with his specific responsibilities which
give rise to his status as a fiduciary, he has enabled the other
fiduciary to commit a breach; or
. If he has knowledge of a breach by a co-fiduciary, unless he makes
reasonable efforts under the circumstances to remedy the breach.
<PAGE>
9.10 Expenses of Administration
The Employer does not and will not guarantee the Plan assets against loss.
The Employer may, in its sole discretion (but will not be obligated to),
pay the 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 Employer, such
costs and expenses, taxes (if any), and fees, charges and commissions will
be a charge upon Plan assets and deducted by the Trustee to the extent
permitted by applicable law.
9.11 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:
. Distribute directly to the person entitled to the payment;
. 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;
. 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
. 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
Employer 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, to the extent
permitted by applicable law.
ARTICLE 10
AMENDMENT OR TERMINATION OF PLAN
10.01 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
<PAGE>
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.
A plan amendment which has the effect of (a) eliminating or reducing an
early retirement benefit or a retirement-type subsidy, or (b) eliminating
an optional benefit form, will, with respect to benefits attributable to
service before the amendment be treated as reducing Accrued Benefits.
10.02 Allocation of Assets Upon Termination of Plan
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 Employer 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 Employer.
Distribution to Participants may be in the form of cash or other Plan
assets or partly in each.
10.03 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 Employer except as provided in Sections
7.01(e) and 8.08.
10.04 Failure to Qualify
Notwithstanding any of the foregoing provisions, if this Plan, upon
adoption by the Employer, is submitted to the Internal Revenue Service
which then determines that the Plan as initially adopted by the Employer is
not a qualified plan under the Code, the Employer may elect to terminate
this Plan by giving written notice thereof. Such termination will have the
same effect as if the Plan were never adopted, all policies and contracts
will be cancelled, 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 Employer 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
written notice thereof will be furnished to all affected Employees,
Participants and Beneficiaries.
10.05 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.
<PAGE>
10.06 Effect of Plan Amendment on Vesting Schedule
No amendment to the Vesting Schedule will deprive a Participant of his
nonforfeitable 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
with at least 3 Years of Vesting Service as of the last day of the election
period described below may elect, within a reasonable period after the
adoption of the amendment, to have his Vested Percentage computed under the
Plan without regard to such amendment. The period during which such
election may be made will commence with the date the amendment is adopted
and will end 60 days after the latest of:
(a) the date the amendment is adopted;
(b) the date the amendment becomes effective; or
(c) the date the Participant is issued written notice of the amendment by
the Employer.
ARTICLE 11
TRUSTEE AND TRUST FUND
11.01 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.
11.02 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. 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.
<PAGE>
(b) Operation of the 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 Trustee will invest the Trust Fund in accordance with the proper
directions of the Plan Administrator or Investment Manager. Except to
the extent required by ERISA or otherwise provided in this Plan, the
Trustee shall have no duty or responsibility to review, initiate
action, or make recommendations regarding Trust assets and shall
retain assets until directed by the Plan Administrator to dispose of
them.
11.03 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.
11.04 Powers of the Trustee
Subject to the provisions and limitations contained elsewhere in this Plan,
the Trustee will have full discretion and authority with regard to the
investment of the Trust Fund. 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 maintain any part of the assets of the Trust Fund in cash, or in
demand or short-term time deposits bearing a reasonable rate of
interest (including demand or short-term time deposits of or with the
Trustee), or in a short-term investment fund or in other cash
equivalents having ready marketability, including, but not limited to,
U.S. Treasury Bills, commercial paper, certificates of deposit
(including such certificates of deposit of or with the Trustee), and
similar types of short-term securities, as may be deemed necessary by
the Trustee in its sole discretion;
(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
<PAGE>
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, 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, including the power to give proxies, to participate in any
voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights;
(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 best, 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 retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment
or delivery of the funds or property until final adjudication is made
by a court of competent jurisdiction;
(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.
11.05 Investment in Common or Collective Trust Funds
Notwithstanding the provisions of Section 11.04, 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
participating trust; (d) prohibits assignment by 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
<PAGE>
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.
11.06 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.
No insurance company which may issue any Contract based upon the
application of the Trustee will be responsible for the validity of this
Plan, be required to look into the terms of this Plan, be required to
question any act of the Plan Administrator or the Trustee hereunder or be
required to verify that any action of the Trustee is authorized by this
Plan. If a conflict should arise between the terms of the Plan and any such
Contract, the terms of the Plan will govern.
11.07 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.
11.08 Records and Accounting
The Trustee will keep full and complete records of the administration of
the Trust Fund which the Employer 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 Employer may direct, the Trustee
will prepare and deliver to the Employer 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.
11.09 Distribution Directions
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 direction of the Plan Administrator.
11.10 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
<PAGE>
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.
11.11 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
(1) 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 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.
(2) 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.
(3) 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.
(4) 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.
(5) 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.
(6) 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
<PAGE>
Schwab.
(7) 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 between the Employer and the Trustee under
this agreement will be resolved by submission of the issue to a member
of the American Arbitration Association who is chosen by the Employer
and the Trustee. If the Employer 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.
11.12 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.
11.13 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 Employer 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 Employer) selected by the Trustee and will be fully
protected for any action taken, suffered or omitted in good faith in
accordance with the opinion of said legal counsel. 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 Employer, 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.
11.14 Removal or Resignation and Successor Trustee
A Trustee may resign at any time upon giving 30 days prior written notice
to the Plan Sponsor or, with the consent of the Plan Sponsor, a Trustee may
resign with less than 30 days prior written notice.
The Plan Sponsor may remove a Trustee by giving at least 30 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.
<PAGE>
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.
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.
11.15 Appointment of Investment Manager
One or more Investment Managers 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. 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 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 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
<PAGE>
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.
11.16 Loans to Participants
The Plan Administrator may authorize the Trustee to lend on a
nondiscriminatory basis to a Participant an amount from the Plan as
specified herein; provided, a reasonable rate of interest will be charged
on the loan, the loan will be secured by 50% of the Participant's Vested
Accrued Benefit in the Plan, and provision for repayment will be made. All
loans will be subject to the approval of the Plan Administrator which will
investigate each application for a loan. The Plan Administrator will
prescribe such rules as may be necessary to provide guidelines as to under
which circumstances and for what purpose loans will be permitted.
The Plan Administrator will prescribe guidelines as to which Account or
Accounts loans may be made from. Each loan made to a Participant will be
made from the Participant's allowable Account or Accounts. All interest and
principal repayments will be credited to the Participant's Account from
which the loan was made.
In addition to any additional rules and regulations as the Plan
Administrator may adopt all loans will comply with the following terms and
conditions:
(a) Only Active and Inactive Participants will be eligible to apply for a
loan. Each application for a loan will be made in writing to the Plan
Administrator, whose action thereon will be final.
(b) Each loan will be made against collateral being the assignment of 50%
of the borrower's entire right, title and interest in and to the Trust
Fund, supported by the borrower's promissory note for the amount of the
loan, including interest payable to the order to the Trustee, and any
additional security deemed necessary to adequately secure the Loan. If a
person fails to make a required payment within 90 days of the due date set
forth in the loan agreement, the loan will be in default. There will be no
foreclosure against a Participant's Accrued Benefit prior to his becoming
entitled to a distribution of benefits in accordance with the terms of this
Plan. All loans will become due and payable in full upon the termination of
a Participant's employment. If a Participant with an outstanding loan
terminates employment and becomes entitled to a distribution of benefits
from the Plan, then the outstanding balance of the unpaid loan plus any
accrued interest thereon will be deducted from the amount of otherwise
distributable benefits and the Participant's promissory note will be
distributed to the Participant.
(c) The principal repayment will be amortized over the fixed life of a loan
with installments of principal and interest to be paid not less often than
quarterly. The period of repayment for each loan will be arrived at by
mutual agreement between the Plan Administrator and the borrower, but in no
event will such period exceed a reasonable period of time. The period of
repayment will in no event exceed 5 years unless the loan is to be used to
acquire, construct, reconstruct or substantially rehabilitate any dwelling
unit which, within a reasonable period of time, is to be used as a
principal residence of the Participant.
(d) The minimum amount of any loan is equal to $1,000.
(e) The maximum amount of any loan is such that when the amount of the loan
is added to the outstanding balance of all other loans made to the
Participant from the Plan (and any
<PAGE>
other plans maintained by the Employer or any Related Employer) the total
does not exceed the lesser of:
(1) 50% of the Participant's Vested Accrued Benefit; or
(2) $50,000, reduced by the amount, if any, of the highest balance of
all outstanding loans to the Participant during the one-year
period ending on the day prior to the day on which the loan in
question is made.
(f) Each loan will bear interest at a rate equal to the prime rate which
is published in the Wall Street Journal as being representative of the
base rate on corporate loans at large U.S. money center commercial
banks on the first day of the month in which the loan is made, plus 1
percentage point.
(g) A Participant may have no more than three loans outstanding at any
time.
(h) Each loan will require the Participant to consent to the loan and the
possible reduction in the Participant's Accrued Benefit. Such consent
must be made in writing within the 90-day period before the making of
the loan.
(i) No loan will be permitted to a Participant in a year in which he is
either an Owner-Employee or Shareholder-Employee as defined in Code
Section 4975(d).
ARTICLE 12
PROVISIONS RELATING TO EMPLOYER STOCK
12.01 Type of Employer Stock
The Trustee will, to the extent practical based on the Participant's
election, invest that portion of the Trust fund subject to
Participant direction in Common Stock of Homestead Village
Incorporated (Employer Stock). Employer Stock includes treasury
stock which has been purchased by the Employer.
12.02 Voting Rights
(a) In General
Voting rights with respect to shares of Employer Stock held in the
Trust Fund shall be voted by the Trustee in such manner as may be
determined by the respective Participants, with respect to all matters
requiring shareholder approval.
With respect to shares of Employer Stock in the Trust Fund which are
allocated to Participants who fail to give directions to the Trustee
or which are held in a loan suspense account or forfeiture suspense
account, such shares shall be voted by the Trustee based on the voting
directions of those Participants who issued directions with respect to
Employer Stock allocated to their Accounts. Persons for whom no
directions were received shall be disregarded for this purpose. The
number of non-voted shares to be voted in a particular manner shall be
determined by multiplying the total number of such shares by a
fraction, the numerator of which is the number of allocated shares
directed to be voted in such manner, and the denominator of which is
the total number of
<PAGE>
allocated shares directed to be voted in any manner with respect to
the matter at issue. For shares of Employer Stock held in a loan
suspense account or a forfeiture suspense account, the Plan
Administrator shall, in its absolute and sole discretion then and then
alone, either (i) select an independent fiduciary to vote all such
shares of Employer Stock in its sole discretion or (ii) vote all of
such shares of Employer Stock. For purposes of this Section,
Participants who direct the vote of Employer Stock allocated to their
Accounts shall be considered named fiduciaries of the Plan within the
meaning of ERISA Section 403(a)(1).
The Plan Administrator may establish such rules and guidelines as it
deems necessary to properly effect the provisions of this section.
(b) Tender Offers
The Employer has the right to direct the Trustee with respect to the
manner in which to respond to a tender or exchange offer with respect
to shares of Employer Stock held in the Plan.
If the Employer elects not to direct the Trustee, each Participant,
or, in the event of his death, his Beneficiary, shall 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 shall 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 shall, 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 Employer or by
respective Participants (or Beneficiaries). If Participants fail or
refuse to direct the Plan as to the manner in which to vote such
shares, or if shares are held in a forfeiture suspense account, the
Plan Administrator shall, in its sole and absolute discretion then and
then alone, either (i) select an independent fiduciary to vote or
tender all such shares of Employer Stock in its sole discretion or
(ii) vote or tender all such shares of Employer Stock. For purposes of
this Section, Participants who direct the vote or tender of Employer
Stock allocated to their Accounts shall be considered named
fiduciaries of the Plan within the meaning of ERISA Section 401(a)(1).
The Plan Administrator may establish such rules and guidelines as it
deems appropriate to properly effect the provisions of this Section.
<PAGE>
IN WITNESS WHEREOF, this instrument has been executed by the duly
authorized and empowered officers of the Employer, this ________ day of
_____________________, 19_____.
Homestead Village Incorporated
By:___________________________
The Trustee agrees to serve as Trustee under the terms of this instrument.
Charles Schwab Trust Company
By:_________________________
<PAGE>
Exhibit 5
March 17, 1998
Homestead Village Incorporated
2100 RiverEdge Parkway
Atlanta, Georgia 30328
Re: Registration Statement on Form S-8
401(k) Savings Plan
Ladies and Gentlemen:
We have acted as counsel to Homestead Village Incorporated, a Maryland
corporation ("Homestead" or the "Company"), in connection with the proceedings
(the "Company Proceedings") taken and to be taken relating to the registration
by the Company of an aggregate of 130,000 shares of Homestead common stock, $.01
par value per share (the "Shares"), with the Securities and Exchange Commission
(the "SEC") in connection with the Company's 401(k) Savings Plan (the "Plan").
We have also participated in the preparation and filing with the SEC under the
Securities Act of 1933, as amended, of a registration statement on Form S-8 (the
"Registration Statement") relating to the Shares.
As counsel to Homestead, we have examined originals or copies certified to
our satisfaction of the Company's Restated Charter and Amended and Restated
Bylaws, resolution of the Board of Directors and such other Company records,
instruments, certificates and documents and such questions of law as we
considered necessary or appropriate to enable us to express this opinion. As to
certain facts material to our opinion, we have relied, to the extent we deem
such reliance proper, upon certificates of public officials and officers of
Homestead. In rendering this opinion, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to authentic original documents of photostatic copies.
Based upon and subject to the foregoing and to the assumptions, limitations
and conditions set forth herein, we are of the opinion that, upon completion of
the Company Proceedings, the Shares will have been validly issued and delivered
in accordance with the Company Proceedings and the Plan, the Shares will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
MAYER, BROWN & PLATT
<PAGE>
Exhibit 15.1
March 16, 1998
Board of Directors and Shareholders
Homestead Village Incorporated
We are aware of the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Homestead Village Incorporated 401(k) Savings Plan
of our reports dated May 6, 1997, July 28, 1997 and October 29, 1997 relating to
the unaudited condensed interim financial statements of Homestead Village
Incorporated that are included in its Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
ERNST & YOUNG LLP
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Homestead Village Incorporated 401(k) Savings Plan of our
report dated February 24, 1997, with respect to the financial statements and
schedule of Homestead Village Incorporated in its Annual Report (Form 10-K) for
the year ended December 31, 1996, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Dallas, Texas
March 16, 1998
<PAGE>
Exhibit 23.3
Consent of Independent Auditors
The Board of Directors of
Homestead Village Incorporated:
We consent to the use of our report, incorporated by reference herein, dated May
1, 1996, relating to the combined balance sheet of PTR-Homestead Village Group
(the predecessor to Homestead Village Incorporated) as of December 31, 1995, the
related combined statements of operations, owners' equity and cash flows for
each of the years in the two-year period ended December 31, 1995 and, the
related 1995 and 1994 information included in Schedule III, Real Estate and
Accumulated Depreciation, incorporated by reference herein.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 16, 1998
