AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 25, 1999
REGISTRATION NO. 333-________
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------------
THE DIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 51-0374887
(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
15501 NORTH DIAL BOULEVARD
SCOTTSDALE, ARIZONA
85260-1619
(Address of registrant's
principal executive offices)
THE FREEMAN COSMETIC CORPORATION
CAPITAL ACCUMULATION PLAN
(Full title of the plan)
JANE E. OWENS
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
THE DIAL CORPORATION
15501 NORTH DIAL BOULEVARD
SCOTTSDALE, ARIZONA 85260-1619
(602) 754-3425
(Name, address, and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
===============================================================================
TITLE OF PROPOSED
SECURITIES AMOUNT TO PROPOSED MAXIMUM
TO BE BE MAXIMUM OFFERING AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER SHARE OFFERING PRICE REGISTRATION FEE
- -------------------------------------------------------------------------------
Common Stock, 150,000 (1) $26.59375(2) $3,989,063(2) $1,109
par value
$.01 per share
===============================================================================
(1) Includes an indeterminate number of shares of Common Stock that may be
issuable by reason of stock splits, stock dividends or similar transactions
in accordance with Rule 416 under the Securities Act of 1933. This
Registration Statement also pertains to rights to purchase shares of Junior
Participating Preferred Stock of the Registrant (the "Rights"). One Right
is included with each share of Common Stock. Until the occurrence of
certain prescribed events, the Rights are not exercisable, are evidenced by
the certificates for the Common Stock and will be transferred along with
and only with such Common Stock. Thereafter, separate Rights certificates
will be issued representing one Right for each share of Common Stock held,
subject to adjustment pursuant to antidilution provisions.
(2) Pursuant to Rule 457(c) and (h), estimated on the basis of the average
of the high and low sales prices of a share of Common Stock on the New York
Stock Exchange on January 22, 1999.
Note: Pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to
be offered and sold pursuant to The Freeman Cosmetic Corporation Capital
Accumulation Plan.
<PAGE>
EXPLANATORY NOTE
On July 1, 1998, The Dial Corporation (the "Company") acquired all of
the issued and outstanding shares of common stock of The Freeman Cosmetic
Corporation ("Freeman"). Prior to January 1, 1999, Freeman maintained The
Jerry Freeman 401(k) and Profit Sharing Plan. Effective as of January 1,
1999, Freeman amended and restated this plan and renamed it The Freeman
Cosmetic Corporation Capital Accumulation Plan (the "Plan"). In connection
with the amendment and restatement of the Plan, shares of Common Stock of
the Company will be issued to the Plan. The purpose of this Registration
Statement is to register the shares of Common Stock required to be
registered. This Registration Statement also registers an indeterminate
amount of interests to be offered and sold pursuant to the provisions of
the Plan.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents previously filed by the Company with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated in
this Registration Statement by reference and shall be deemed to be a part
hereof:
(1) The Company's Annual Report on Form 10-K for the year ended
January 3, 1998;
(2) The Company's Quarterly Reports on Form 10-Q for the
quarterly periods ended April 4, 1998, July 4, 1998 and October 3,
1998;
(3) The Company's Current Reports on Form 8-K filed on January
28, 1998, May 4, 1998, July 30, 1998, August 13, 1998, September 21,
1998 (as amended on November 25, 1998) and October 27, 1998;
(4) The description of the Company's Common Stock contained in
Registration Statement No. 1-11793 of the Company on Form 10, as
amended (the "Form 10") filed by the Company under the Securities Act
of 1933 (the "Securities Act"); and
(5) The description of the Rights contained in the Company's Form
10.
In addition, all documents filed by the Company and the Plan pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date
of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold
or which deregisters all such securities then remaining unsold, shall be
deemed to be incorporated in this Registration Statement by reference and
to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
The legality of the securities offered pursuant to this Registration
Statement has been passed upon for the Company by Jane E. Owens, Senior
Vice President, General Counsel and Secretary of the Company. Ms. Owens
owns shares and options to purchase shares of Common Stock of the Company.
Item 6. Indemnification of Directors and Officers
CERTAIN PROVISIONS OF CERTIFICATE OF INCORPORATION AND BYLAWS
The Certificate of Incorporation provides that each person who is or
was or had agreed to become a director or officer of the Company, or each
such person who is or was serving or who had agreed to serve at the request
of the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise (each "Another
Enterprise") (including the heirs, executors, administrators or estate of
such person), will be indemnified by the Company, in accordance with the
Company's Restated Bylaws (the "Bylaws"), to the fullest extent permitted
from time to time by the Delaware General Corporation Law (the "DGCL"), as
the same exists or may hereafter be amended (but, if permitted by
applicable law, in the case of any such amendment, only to the extent that
such amendment permits the Company to provide broader indemnification
rights than said law permitted the Company to provide prior to such
amendment) or any other applicable laws as presently or hereafter in
effect. The Company may, by action of the Board of Directors (the "Board"),
provide indemnification to employees and agents of the Company, and to
persons serving as employees or agents of Another Enterprise, at the
request of the Company, with the same scope and effect as the foregoing
indemnification of directors and officers. The Company shall be required to
indemnify any person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board or is a proceeding
to enforce such person's claim to indemnification pursuant to the rights
granted by the Certificate of Incorporation or otherwise by the Company. In
addition, pursuant to the Certificate of Incorporation, the Company has
entered into agreements with certain persons providing for indemnification
greater or different than that provided in the Certificate of
Incorporation. See "-- Indemnification Agreements."
The Bylaws provide that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he or she or a person of whom he
or she is the legal representative is or was a director or officer of the
Company or is or was serving at the request of the Company as a director or
officer of another corporation or of Another Enterprise, including service
with respect to employee benefit plans, whether the basis of such
Proceeding is alleged action in an official capacity as a director or
officer or in any other capacity while serving as a director or officer,
will be indemnified and held harmless by the Company to the fullest extent
authorized by the DGCL as the same exists or may in the future be amended
(but, if permitted by applicable law, in the case of any such amendment,
only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, Employee Retirement Income
Security Act of 1974, as amended, excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith and such indemnification will continue as to
a person who has ceased to be a director or officer and will inure to the
benefit of his or her heirs, executors and administrators; provided,
however, except as described in the second following paragraph with respect
to Proceedings to enforce rights to indemnification, the Company will
indemnify any such person seeking indemnification in connection with a
Proceeding (or part thereof) initiated by such person only if such
Proceeding (or part thereof) was authorized by the Board.
Pursuant to the Bylaws, to obtain indemnification, a claimant is to
submit to the Company a written request for indemnification. Upon such
written request by a claimant, a determination, if required by applicable
law, with respect to the claimant's entitlement to indemnification will be
made, (i) if requested by the claimant, by independent legal counsel, or
(ii) if the claimant does not so request, by the Board (a) by a majority
vote of the disinterested directors even though less than a quorum, (b) if
there are no disinterested directors or the disinterested directors so
direct, by independent legal counsel in a written opinion to the Board, or
(c) if the disinterested directors so direct, by the stockholders of the
Company. In the event the determination of entitlement to indemnification
is to be made by independent legal counsel at the request of the claimant,
the independent legal counsel will be selected by the Board unless there
shall have occurred within two years prior to the date of the commencement
of the action, suit or proceeding for which indemnification is claimed a
"Change in Control" (as defined in the Company's 1996 Stock Incentive
Plan), in which case the independent counsel shall be selected by the
claimant unless the claimant requests that such selection be made by the
Board.
Pursuant to the Bylaws, if a claim for indemnification is not paid in
full by the Company within 30 days after a written claim for
indemnification has been received by the Company, the claimant may at any
time thereafter bring suit against the Company to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant will be
entitled to be paid also the expense of prosecuting such claim. The Bylaws
provide that it will be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any
Proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Company) that the
claimant has not met the standard of conduct which make it permissible
under the DGCL for the Company to indemnify the claimant for the amount
claimed, but the burden of proving such defense will be on the Company.
Neither the failure of the Company (including, without limitation, the
disinterested directors, independent legal counsel or stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he
or she has met the applicable standards in the DGCL, nor an actual
determination by the Company (including the disinterested directors,
independent legal counsel or stockholders) that the claimant has not met
such applicable standard of conduct, will be a defense to the action or
create a presumption that the claimant has not met the applicable standard
of conduct in the DGCL. However, the Company will be bound by a
determination pursuant to the procedures set forth in the Bylaws that the
claimant is entitled to indemnification in any judicial proceeding
commenced pursuant to the Bylaws.
The Bylaws provide that the right to indemnification and the payment
of expenses incurred in defending a Proceeding in advance of its final
disposition conferred in the Bylaws will not be exclusive of any other
right which any person may have or may in the future acquire under any
statute, provision of the Certificate of Incorporation, the Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise.
The Bylaws permit the Company to maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Company
or Another Enterprise against any expense, liability or loss, whether or
not the Company would have the power to indemnify such person against such
expense, liability or loss under the DGCL. The Company has obtained
directors' and officers' liability insurance providing coverage to its
directors and officers. In addition, the Bylaws authorize the Company, to
the extent authorized from time to time by the Board, to grant rights to
indemnification and rights to be paid by the Company for the expenses
incurred in defending any Proceeding in advance of its final disposition,
to any employee or agent of the Company to the fullest extent of the
provisions of the Bylaws with respect to the indemnification and
advancement of expenses of directors and officers of the Company.
The Bylaws provide that the right to indemnification conferred therein
is a contract right and includes the right to be paid by the Company for
the expenses incurred in defending any Proceeding in advance of its final
disposition, except that if the DGCL requires, the payment of such expenses
incurred by a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered
by such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of
a Proceeding, will be made only upon delivery to the Company of an
undertaking by or on behalf of such director or officer, to repay all
amounts so advanced if it is ultimately determined that such director or
officer is not entitled to be indemnified under the Bylaws or otherwise.
FIDUCIARY DUTIES
The Certificate of Incorporation provides that a director of the
Company will not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL, which concerns unlawful payments of
dividends, stock purchases or redemptions or (iv) for any transaction from
which the director derived an improper personal benefit.
While the Certificate of Incorporation provides directors with
protection from awards for monetary damages for breaches of their duty of
care, it does not eliminate such duty. Accordingly, the Certificate of
Incorporation will have no effect on the availability of equitable remedies
such as an injunction or rescission based on a director's breach of his or
her duty of care.
INDEMNIFICATION AGREEMENTS
The Company is party to indemnification agreements with each of its
directors and certain of its officers (each, an "Indemnification
Agreement," and, collectively, the "Indemnification Agreements"). The
Indemnification Agreements, among other things, require the Company to
indemnify the directors and such officers to the fullest extent permitted
by law, and to advance to the directors all related expenses, subject to
reimbursement if it is subsequently determined that indemnification is not
permitted. The Company must also indemnify and advance all expenses
incurred by directors seeking to enforce their rights under the
Indemnification Agreements, and cover directors and such officers under the
Company's directors' and officers' liability insurance. Although the
Indemnification Agreements will offer substantially the same scope of
coverage afforded by provisions in the Certificate of Incorporation and the
Bylaws, they provide greater assurance to directors and officers that
indemnification will be available, because, as contracts, they cannot be
modified unilaterally in the future by the Board or by the stockholders to
eliminate the rights provided, an action that is possible with respect to
the relevant provisions of the Bylaws, at least as to prospective
elimination of such rights.
There has not been in the past and there is not presently pending any
litigation or proceeding involving a director, officer, employee or agent
of the Company in which indemnification would be required or permitted by
the Indemnification Agreements. In addition, the Board is not aware of any
threatened litigation or proceeding which may result in a claim for
indemnification under any Indemnification Agreement.
The DGCL provides that a contract between a corporation and a director
thereof is not void or voidable solely because the interested director is
present at the meeting authorizing the contract if the material facts
relating to the contract are known to the board of directors and the board
of directors in good faith authorizes the contract by the affirmative vote
of a majority of the disinterested directors, or the material facts
relating to the contract are known to the stockholders and the stockholders
in good faith authorize the contract, or the contract is fair to the
corporation at the time it is authorized or approved.
STATE LAW PROVISIONS
The Company is incorporated under the laws of the State of Delaware.
Section 145(a) of the DGCL provides that a Delaware corporation may
indemnify any person who was, is or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the corporation), by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was
serving at the request of such corporation as a director, officer, employee
or agent of Another Enterprise. The indemnity may include expenses
(including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided such person acted in good
faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was, is or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorney's fees)
actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit, provided such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification is permitted in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit
was brought shall determine that despite the adjudication of liability,
such person is fairly and reasonably entitled to be indemnified for such
expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director
or officer of a corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections 145(a) and 145(b) or
in the defense of any claim, issue or matter therein, such person shall be
indemnified against expenses actually and reasonably incurred in connection
therewith; that indemnification provided for by Section 145 of the DGCL
shall not be deemed exclusive of any other rights to which the indemnified
party may be entitled; and that the corporation may purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have
the power to indemnify him against such liabilities under such Section 145
of the DGCL.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
4.1 -- Restated Certificate of Incorporation of the Company
filed as Exhibit 3(a) to the Form 10.*
4.2 -- Bylaws of the Company filed as Exhibit 3(b) to the
Company's Form 10-Q for the quarter ended July 4,
1998.*
4.3 -- Form of Rights Agreement between the Company and the
Rights Agent named therein filed as Exhibit 4 to the
Form 10.*
4.4 -- The Freeman Cosmetic Corporation Capital Accumulation
Plan (Amended and Restated Effective as of January 1,
1999).
5 -- Opinion of counsel as to the legality of securities
offered under the Plan.
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of counsel (included on Exhibit 5 hereto).
24 -- Power of Attorney (included on signature page of this
Registration Statement).
- ---------------------------------------------
* Incorporated herein by reference.
Item 9. Undertakings
The Company hereby undertakes:
(a) To submit the Plan and any amendment thereto to the Internal
Revenue Service ("IRS") in a timely manner and will make all changes
required by the IRS in order to qualify the plan.
(b) 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;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this 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 this Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information
in this Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Company pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference
in this Registration Statement.
(c) That, for the purpose of determining any liability under the
Securities Act, 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.
(d) 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.
(e) That, for the purpose of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this 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.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the provisions described in Item 6 of
this Registration Statement, or otherwise, the Company has been advised
that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Company 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 and will be
governed by the final adjudication of such issue.
<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 of 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 Scottsdale, State of Arizona, on
January 25, 1999.
THE DIAL CORPORATION
/s/ Malcolm Jozoff
-------------------------
By: Malcolm Jozoff
Its: Chairman of the Board,
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
Malcolm Jozoff and Susan J. Riley and each of them as attorneys-in-fact,
with full power of substitution and resubstitution, to execute in the name
and on behalf of such person, individually and in each capacity stated
below, and to file, any and all amendments to this Registration Statement,
including any and all post-effective amendments, as fully as such person
could do in person, hereby verifying and confirming all that such
attorneys-in-fact, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on January 25, 1999.
SIGNATURE TITLE
- ---------------------------- --------------------------------
Chairman of the Board, President and
/s/ Malcolm Jozoff Chief Executive Officer
- ----------------------------
Malcolm Jozoff
Senior Vice President and Chief
/s/ Susan J. Riley Financial Officer (principal
- ---------------------------- financial and accounting officer)
Susan J. Riley
/s/ Joy A. Amundson Director
- ----------------------------
Joy A. Amundson
/s/ Herbert M. Baum Director
- ----------------------------
Herbert M. Baum
/s/ Joe T. Ford Director
- ----------------------------
Joe T. Ford
/s/ Thomas L. Gossage Director
- ----------------------------
Thomas L. Gossage
/s/ Donald E. Guinn Director
- ----------------------------
Donald E. Guinn
/s/ Michael T. Riordan Director
- ----------------------------
Michael T. Riordan
/s/ Barbara S. Thomas Director
- ----------------------------
Barbara S. Thomas
/s/ Salvador Villar Director
- ----------------------------
Salvador Villar
/s/ A. Thomas Young Director
- ----------------------------
A. Thomas Young
Constituting a majority of the Board of Directors.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
committee that administers the Plan has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Scottsdale, State of Arizona, on January 25,
1999.
/s/ Susan J. Riley
- ----------------------------
Susan J. Riley
/s/ Bernhard J. Welle
- ----------------------------
Bernhard J. Welle
/s/ Jeffrey S. Weiss
- ----------------------------
Jeffrey S. Weiss
/s/ Douglas Schoenoff
- ----------------------------
Douglas Schoenoff
Constituting the Retirement Committee,
which administers the Plan.
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
4.1 Restated Certificate of Incorporation of the Company
filed as Exhibit 3(a) to the Form 10.*
4.2 Bylaws of the Company filed as Exhibit 3(b) to the
Company's Form 10-Q for the quarter ended July 4,
1998.*
4.3 Form of Rights Agreement between the Company and the
Rights Agent named therein filed as Exhibit 4 to the
Form 10.*
4.4 The Freeman Cosmetic Corporation Capital Accumulation
Plan (Amended and Restated Effective as of January 1,
1999).
5 Opinion of counsel as to the legality of securities
offered under the Plan.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of counsel (included on Exhibit 5 hereto).
24 Power of Attorney (included on signature page of this
Registration Statement).
- ----------------------------
* Incorporated herein by reference.
EXHIBIT 4.4
FREEMAN COSMETIC CORPORATION CAPITAL ACCUMULATION PLAN
------------------------------------------------------
AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1999
<PAGE>
FREEMAN COSMETIC CORPORATION CAPITAL ACCUMULATION PLAN
------------------------------------------------------
AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1999
INDEX
Page
----
ARTICLE I. - INTRODUCTION...............................................1
1.1 ESTABLISHMENT AND EFFECTIVE DATE................................1
1.2 INTRODUCTION....................................................1
ARTICLE II. -DEFINITIONS AND CONSTRUCTION...............................1
2.1 DEFINITIONS.....................................................1
2.2 OTHER DEFINITIONS...............................................9
2.3 CONSTRUCTION....................................................9
ARTICLE III. -PARTICIPATION.............................................9
3.1 PARTICIPATION...................................................9
3.2 TERMINATION OF EMPLOYMENT......................................10
3.3 TRANSFERS......................................................10
3.4 SUSPENSION.....................................................10
3.5 TRANSFER OF BARGAINING UNIT EMPLOYEES..........................10
ARTICLE IV. -CONTRIBUTIONS.............................................11
4.1 EMPLOYER CONTRIBUTIONS.........................................11
4.2 CODE SECTION 401(K) SALARY REDUCTION...........................11
4.3 EMPLOYEE CONTRIBUTIONS.........................................12
4.4 AFTER-TAX SALARY DEDUCTION.....................................13
4.5 ROLLOVERS AND TRANSFERS FROM OTHER PLANS.......................13
4.7 TRUST FUND.....................................................14
4.8 GRANDFATHERED ACCOUNT..........................................14
ARTICLE V. -ALLOCATIONS TO PARTICIPANT'S ACCOUNT.......................14
5.1 INDIVIDUAL ACCOUNTS............................................14
5.2 ACCOUNT ADJUSTMENTS............................................15
5.3 ACTUAL DEFERRAL PERCENTAGE TEST................................16
5.4 AVERAGE CONTRIBUTION PERCENTAGE TEST...........................18
5.5 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.................19
5.6 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS......................20
5.7 DISTRIBUTION OF EXCESS CONTRIBUTIONS...........................21
5.8 MAXIMUM ADDITIONS..............................................21
5.9 ADJUSTMENT OF MATCHING CONTRIBUTIONS SUBACCOUNT................23
5.10 TOP-HEAVY PROVISIONS...........................................23
ARTICLE VI. -BENEFITS..................................................26
6.1 ENTITLEMENT TO BENEFITS........................................26
6.2 DEATH..........................................................26
6.3 PAYMENT OF BENEFITS............................................26
6.3A PAYMENT OF GRANDFATHERED ACCOUNTS..............................26
6.3B PAYMENT OF ACCOUNTS OTHER THAN GRANDFATHERED ACCOUNTS..........29
6.4 DESIGNATION OF BENEFICIARY.....................................30
6.5 WITHDRAWALS....................................................30
6.6 DEBITING OF INVESTMENT FUNDS...................................32
6.7 REQUIRED DISTRIBUTIONS.........................................32
6.8 DISTRIBUTION REQUIREMENTS......................................32
6.9 LOANS TO PARTICIPANTS..........................................33
6.10 ELIGIBLE ROLLOVER DISTRIBUTIONS................................34
ARTICLE VII. -INVESTMENT OPTIONS, TRUST FUND...........................35
7.1 PARTICIPANT DIRECTED INDIVIDUAL ACCOUNT PLAN...................35
7.2 EMPLOYEE SELECTED INVESTMENT OPTIONS, INVESTMENT FUNDS.........35
7.3 INVESTMENT ELECTIONS...........................................36
7.4 INVESTMENT TRANSFERS...........................................36
7.5 TENDER OFFERS..................................................36
7.6 VOTING OF STOCK................................................36
7.9 EXERCISE OF CONTROL............................................37
7.10 ADJUSTMENT OF ACCOUNTS.........................................38
7.11 LIMITATION OF LIABILITY AND RESPONSIBILITY.....................38
7.12 FORMER PARTICIPANTS AND BENEFICIARIES..........................38
ARTICLE VIII. -ADMINISTRATION OF THE PLAN..............................38
8.1 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES FOR
PLAN AND TRUST ADMINISTRATION................................38
8.2 APPOINTMENT OF COMMITTEE.......................................38
8.3 AUTHORITY OF COMMITTEE.........................................39
8.4 ACTION BY THE RETIREMENT COMMITTEE.............................40
8.5 EMPLOYMENT OF THIRD PARTIES....................................40
8.6 ALLOCATION AND DELEGATION......................................40
8.7 REPORTS........................................................40
8.8 CLAIMS PROCEDURE...............................................40
8.9 APPLICATION AND FORMS FOR BENEFITS.............................41
8.10 FACILITY OF PAYMENT............................................41
8.11 INDEMNIFICATION OF THE COMMITTEE...............................42
ARTICLE IX. -MISCELLANEOUS.............................................42
9.1 NONGUARANTEE OF EMPLOYMENT.....................................42
9.2 RIGHTS TO TRUST ASSETS.........................................42
9.3 NON-ALIENATION.................................................42
9.4 NONFORFEITABILITY OF BENEFITS..................................42
ARTICLE X. -AMENDMENTS AND ACTION BY EMPLOYER..........................42
10.1 AMENDMENTS....................................................42
10.2 ACTION BY THE COMPANY.........................................43
ARTICLE XI. -SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS...43
11.1 SUCCESSOR EMPLOYER............................................43
11.2 CONDITIONS APPLICABLE TO MERGERS OR CONSOLIDATIONS OF PLANS...43
ARTICLE XII. -PLAN TERMINATION.........................................43
12.1 RIGHT TO TERMINATE............................................43
12.2 PARTIAL TERMINATION...........................................44
12.3 LIQUIDATION OF THE TRUST FUND.................................44
ARTICLE XIII. -ADOPTION OF PLAN........................................44
13.1 ADOPTION AGREEMENT............................................44
<PAGE>
FREEMAN COSMETIC CORPORATION CAPITAL ACCUMULATION PLAN
ARTICLE I. - INTRODUCTION
1.1 ESTABLISHMENT AND EFFECTIVE DATE.
Effective as of January 1, 1999 (the "Effective Date"), Freeman
Cosmetic Corporation (the "Company") hereby amends and restates The Jerry
Freeman 401(k) and Profit Sharing Plan and renames it the Freeman Cosmetic
Corporation Capital Accumulation Plan (the "Plan").
1.2 INTRODUCTION.
(A) On July 1, 1998, The Dial Corporation acquired all of the issued
and outstanding common stock of the Company, and the Company became a
wholly owned subsidiary of The Dial Corporation.
(B) By Unanimous Written Consent dated December 18, 1998, the Board of
Directors of the Company amended the Plan, effective as of January 1, 1999,
to the extent permitted by applicable law to cause the Plan to contain
substantially the same rights and features as The Dial Corporation Capital
Accumulation Plan.
(C) It is the intention of the Board of Directors of the Company that
any rights and features of the Plan prior to its amendment and restatement
required to be preserved by applicable law (including, but not limited to,
Section 411(d)(6) of the Code and Section 204(g) of ERISA) be so preserved.
The Board of Directors of the Company has authorized and directed the
Retirement Committee to construe and administer the Plan to effectuate this
intent.
ARTICLE II. - DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS.
Where the following words and phrases appear in this Plan, they shall
have the respective meanings set forth in this Article, unless the context
clearly indicates to the contrary.
(A) Account(s): One or all of the Employee Contribution Account,
Employer Contribution Account, Salary Reduction Contribution Account,
Vested Rollover Contribution Account and Grandfathered Account, as the case
may be, and as appropriate in the context of each provision of the Plan
containing such term, for each Participant.
(B) Acquired Company: Means any business entity which has been
acquired or whose assets have been acquired by an Employer as defined in
Section 2.1(AA). Participants shall be credited with their "Hours of
Service," as defined in Section 2.1(NN), with the Acquired Company and any
other prior service recognized as eligibility or vesting service under a
qualified plan of the Acquired Company. Notwithstanding the foregoing, the
participation of an Acquired Company employee in the Plan shall be subject
to the intent of the acquiring Employer in making the acquisition which may
deny the recognition of service with the Acquired Company in order to
prevent discrimination or to protect the qualification of the Plan or for
any other reason arising out of the acquisition. The Committee shall ensure
that appropriate records are kept to carry out the terms of this provision.
(C) Actual Deferral Percentage: shall mean, for a specified group of
Participants for a Plan Year, the average of the ratios (calculated
separately for each Participant in such group) of (1) the amount of
Employer contributions actually paid over to the Trust on behalf of such
Participant for the Plan Year to (2) the Participant's Compensation for
such Plan Year (whether or not the Employee was a Participant for the
entire Plan Year). Employer contributions on behalf of any Participant
shall include: (1) any Elective Deferrals made pursuant to the
Participant's deferral election, including Excess Elective Deferrals of
Highly Compensated Employees, but excluding Elective Deferrals that are
taken into account in the Contribution Percentage test (provided the ADP
test is satisfied both with and without exclusion of these Elective
Deferrals); and (2) at the election of the Employer, Qualified Non-elective
Contributions and Qualified Matching Contributions. For purposes of
computing Actual Deferral Percentages, an Employee who would be a
Participant but for the failure to make Elective Deferrals shall be treated
as a Participant on whose behalf no Elective Deferrals are made.
(D) Adoption Agreement: The agreement executed by each Affiliate in
order to adopt the Plan pursuant to the provisions of Article XIII.
(E) Affiliate: An entity which, by reason of Code Section 414(b),
414(c), or 414(m), is treated as a single Employer with the Company.
(F) Aggregate Limit: The sum of (i) one hundred twenty-five percent
(125%) of the greater of the ADP of the Non-highly Compensated Employees
for the Plan Year or the ACP of Non-highly Compensated Employees under the
Plan subject to Code Section 401(m) for the Plan Year beginning with or
within the Plan Year of the CODA and (ii) the lesser of two hundred percent
(200%) or two (2) plus the lesser of such ADP or ACP. "Lesser" is
substituted for "greater" in "(i)" above, and "greater" is substituted for
"lesser" after "two (2) plus the" in "(ii)" if it would result in a larger
Aggregate Limit.
(G) Annual Additions: With respect to each Limitation Year, the total
of the Employer contributions allocated to a Participant's Salary Reduction
Contribution Account, Employee Contribution Account and Employer
Contribution Account. Amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section 415(l)(2) of the Code,
which is part of a pension or annuity plan maintained by the Employer are
treated as Annual Additions to a defined contribution plan. Also amounts
derived from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to
post-retirement medical benefits, allocated to the separate account of a
key Employee, as defined in Section 419A(d)(3) of the Code, under a welfare
benefit fund, as defined in Section 419(e) of the Code, maintained by the
Employer are treated as Annual Additions to a defined contribution plan.
For this purpose, any excess amount applied under Section 5.9 in the
Limitation Year to reduce Employer contributions will be considered Annual
Additions for such Limitation Year.
(H) Authorized Leave of Absence: Any absence authorized by the
Employer under the Employer's standard personnel practices provided that
all persons under similar circumstances must be treated alike in the
granting of such Authorized Leaves of Absence and provided further that the
Employee returns to employment with the Employer or retires within the
period of authorized absence. An absence due to service in the Armed Forces
of the United States shall be considered an Authorized Leave of Absence
provided that the Employee complies with all of the requirements of federal
law in order to be entitled to reemployment and provided further that the
Employee returns to employment with the Employer within the period provided
by such law.
(I) Average Contribution Percentage: The average of the Contribution
Percentages of the Eligible Participants in a group.
(J) Beneficiary: A person or persons (natural or otherwise) designated
by a Participant in accordance with the applicable provisions of Article VI
to receive any death benefit payable under this Plan.
(K) CODA: A cash or deferred arrangement as described in Section
401(k) of the Code.
(L) Code: The Internal Revenue Code of 1986, as amended.
(M) Committee: The Retirement Committee appointed to administer the
Plan pursuant to Article VIII.
(N) Company: Freeman Cosmetic Corporation.
(O) Compensation: Subject to the other provisions of the Plan and
except as defined in the Adoption Agreement of an Employer in accordance
with Article XIII, hereof, the total of all amounts paid to a Participant
by the Employer for personal services as would be reported on the
Participant's Federal Income Tax Withholding Statement (Form W-2) had
Participant not been a Participant under the Plan or any Plan sponsored by
the Employer which is qualified under Sections 125 or 129 of the Code and
excluding fringe benefits, overtime, bonuses and any benefits paid under
this Plan; provided, however, that the Committee, in its discretion, may
use any definition of "compensation" to determine whether the various
nondiscrimination tests are met as long as such definition satisfies Code
Section 414(s) and is applied uniformly to all Participants. For purposes
of allocating the Employer's contribution for the Plan Year in which a
Participant begins or resumes Participation, Compensation allocable to time
periods before his or her Participation began or resumed shall be
disregarded.
The annual Compensation of each Participant taken into account under
the Plan for any year shall not exceed the "OBRA '93 annual compensation
limit." The "OBRA '93 annual compensation limit" is One Hundred Fifty
Thousand Dollars ($150,000) as adjusted by the Commissioner for increases
in the cost-of-living in accordance with Section 401(a)(17)(B) of the Code.
The cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding twelve (12) months, over which Compensation is
determined (the "determination period") beginning in such calendar year. If
a determination period consists of fewer than twelve (12) months, the OBRA
'93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and
the denominator of which is twelve (12). If the "OBRA '93 compensation
limitation is exceeded, then the limitation shall be prorated among
affected individuals in proportion to each such individual's Compensation
as determined under this Section prior to the application of this
limitation. In determining the Compensation of a Participant for purposes
of this limitation, the rules of Section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "Family" shall include only the
spouse of the Participant and any lineal descendants of the Participant who
have not attained age nineteen (19) before the close of the year. Any
reference in this Plan to the limitation under Section 401(a)(17) of the
Code shall mean the OBRA '93 annual compensation limit set forth in this
provision. If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan
Year, the Compensation for that prior determination period is subject to
the OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods beginning
before the first day of the first Plan Year beginning on or after January
1, 1994, the OBRA '94 annual compensation limit is One Hundred Fifty
Thousand Dollars ($150,000).
(P) [omitted]
(Q) Contribution Percentage: The ratio (expressed as a percentage) of
the Participant's Contribution Percentage Amounts to the Participant's
Compensation for the Plan Year (whether or not the Employee was a
Participant for the entire Plan Year).
(R) Contribution Percentage Amounts: The sum of the Employee
Contributions, Matching Contributions, and Qualified Matching Contributions
(to the extent not taken into account for purposes of the ADP test) made
under the plan on behalf of the Participant for the Plan Year. Such
Contribution Percentage Amounts shall include forfeitures of Excess
Aggregate Contributions or Matching Contributions allocated to the
Participant's account which shall be taken into account in the year in
which such forfeiture is allocated. The Employer may include Qualified
Non-elective Contributions in the Contribution Percentage Amounts. The
Employer also may elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the ADP test is met before the Elective
Deferrals are used in the ACP test and continues to be met following the
exclusion of those Elective Deferrals that are used to meet the ACP test.
(S) Disability: A physical or mental condition which, in the sole
judgement of the Committee, based upon medical reports and other evidence
satisfactory to the Committee, permanently prevents an Employee from
satisfactorily performing his or her usual duties for the Employer and the
duties of any other position or job for the Employer for which such
Employee is qualified by reason of his or her training, education or
experience.
(T) Effective Date: The effective date of the amended and restated
Plan is January 1, 1999.
(U) Elective Deferrals: Any Employer contributions made to the Plan at
the election of the Participant, in lieu of cash compensation, including
contributions made pursuant to a salary reduction agreement or other
deferral mechanism. With respect to any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributions made on behalf
of such Participant pursuant to an election to defer under any qualified
CODA as described in Section 401(k) of the Code, any simplified Employee
pension cash or deferred arrangement as described in Section 402(h)(1)(B),
any eligible deferred compensation plan under Section 457, any plan as
described under Section 501(c)(18), and any Employer contributions made on
the behalf of a Participant for the purchase of an annuity contract under
Section 403(b) pursuant to a salary reduction agreement.
(V) Eligible Employee: Any Employee of the Company or any Affiliate
that has adopted this Plan other than Employees who are included within a
unit of employees covered by a collective bargaining agreement, for whom
retirement benefits were the subject of good faith bargaining, unless the
collective bargaining agreement specifically provides to the contrary.
(W) Eligible Participant: Any Employee who is eligible to make an
Employee Contribution, or an Elective Deferral (if the Employer takes such
contributions into account in the calculation of the Contribution
Percentage), or to receive a Matching Contribution (including forfeitures)
or a Qualified Matching Contribution. If an Employee Contribution is
required as a condition of participation in the plan, any Employee who
would be a Participant in the plan if such Employee made such a
contribution shall be treated as an Eligible Participant on behalf of whom
no Employee Contributions are made.
(X) Employee: Any person who is actively employed by an Employer or an
Affiliate.
(Y) Employee Contribution: Any contribution made to the Plan by or on
behalf of a Participant that is included in the Participant's gross income
in the year in which made and that is maintained under a separate account
to which earnings and losses are allocated.
(Z) Employee Contribution Account: The account maintained pursuant to
Section 4.3, hereof, to record for a Participant his or her after-tax
contributions and adjustments relating thereto.
(AA) Employer: Freeman Cosmetic Corporation or any Affiliate that has
adopted the Plan.
(BB) Employer Contribution Account: The account maintained pursuant to
Section 4.1(B), hereof, to record for a Participant his or her share of the
contributions of the Employer, if any, and adjustments relating thereto.
(CC) Employer Stock: The common stock of The Dial Corporation, par
value $.01 per share.
(DD) Entry Date: The first day of each calendar month.
(EE) ERISA: Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended.
(FF) [omitted]
(GG) Excess Aggregate Contributions: Shall mean, with respect to any
Plan Year, the excess of:
(1) The aggregate Average Contribution Percentage amounts taken
into account in computing the numerator of the Average
Contribution Percentage actually made on behalf of Highly
Compensated Employees for such Plan Year, over
(2) The maximum Average Contribution Percentage amounts
permitted by the ACP test (determined by reducing
contributions made on behalf of Highly Compensated Employees
in order of their Contribution Percentages beginning with
the highest of such percentages).
Such determination shall be made after first determining Excess
Elective Deferrals and then determining Excess Contributions.
In computing the Average Contribution Percentage, the Employer shall
take into account, and include as Contribution Percentage Amounts, Elective
Deferrals and Qualified Non-elective Contributions under this plan or any
other plan of the Employer, as provided by regulations.
Forfeitures of Excess Aggregate Contributions shall be:
(1) Applied to reduce Employer contributions for the Plan Year
in which the excess arose, but allocated as in (2), below,
to the extent the excess exceeds Employer contributions or
the Employer has already contributed for such Plan Year.
(2) Allocated, after all other forfeitures under the plan, to
the Matching Contribution account of each Non-highly
Compensated Participant who made Elective Deferrals or
Employee Contributions in the ratio which each such
Participant's Compensation for the Plan Year bears to the
total Compensation of all such Participants for such Plan
Year.
The Employer may elect to make Qualified Non-elective Contributions
under the plan on behalf of Employees.
(HH) Excess Contribution: Shall mean, with respect to any Plan Year,
the excess of:
(1) The aggregate amount of Employer contributions actually
taken into account in computing the ADP of Highly
Compensated Employees for such Plan Year over
(2) The maximum amount of such contributions permitted by the
ADP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of the ADPs,
beginning with the highest of such percentages).
(II) Excess Elective Deferrals: shall mean those Elective Deferrals
that are includible in a Participant's gross income under Section 402(g) of
the Code to the extent such Participant's Elective Deferrals for a taxable
year exceed the dollar limitation under such Code section. Excess Elective
Deferrals shall be treated as annual additions under the Plan unless such
amounts are distributed no later than the first April 15 following the
close of the Participant's taxable year.
(JJ) Family Member: A member of the Employee's family as defined in
Section 414(q)(6) of the Code.
(KK) Fiduciaries: The Committee and the Trustee, but only with respect
to the specific responsibilities of each for Plan and Trust administration,
all as described herein.
(LL) Grandfathered Account: The Account Balance of a Participant in
the Plan as of December 31, 1998, together with gains and or losses
thereon. Within each Grandfathered Account, two subaccounts shall be
maintained: a "Regular Subaccount," to which shall be allocated amounts
allocated to the Participant's "Regular Account" prior to its amendment and
restatement, and a "TDCA Subaccount," to which shall be allocated amounts
allocated to the Participant's "Tax-Deferred Contributions Account" prior
to its amendment and restatement.
(MM) Highly Compensated Employee: Includes active Highly Compensated
Employees and former Highly Compensated Employees. An active Highly
Compensated Employee includes any Employee who performs service for the
Employer during the determination year and who during the look-back year:
(i) received compensation from the Employer in excess of Seventy-Five
Thousand Dollars ($75,000) as adjusted pursuant to Section 415(d) of the
Code); (ii) received compensation from the Employer in excess of Fifty
Thousand Dollars ($50,000) (as adjusted pursuant to Section 415(d) of the
Code) and was a member of the top-paid group for such year; or (iii) was an
officer of the Employer and received compensation during such year that is
greater than fifty percent (50%) of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code. The term Highly Compensated Employee also
includes: (i) Employees who are both described in the preceding sentence if
the term "determination year" is substituted for the term "look-back year"
and the Employee is one (1) of the one hundred (100) Employees who receive
the most compensation from the Employer during the determination year; and
(ii) Employees who are five-percent (5%) owners at any time during the
look-back year or determination year. If no officer has satisfied the
compensation requirements of (iii) above during either a determination year
or look-back year, the highest paid officer for such year shall be treated
as a Highly Compensated Employee. For this purpose, the determination year
shall be the Plan Year. The look-back year shall be the twelve (12) month
period immediately preceding the determination year. A former Highly
Compensated Employee includes any Employee who separated from service (or
was deemed to have separated) prior to the determination year, performs no
service for the Employer during the determination year, and was an active
Highly Compensated Employee for either the separation year or any
determination year ending on or after the Employee's fifty-fifth (55th)
birthday.
If an Employee is, during a determination year or look-back year, a
Family Member of either a five-percent (5%) owner who is an active or
former Employee or a Highly Compensated Employee who is one of the ten (10)
most Highly Compensated Employees ranked on the basis of compensation paid
by the Employer during such year, then the Family Member and the
five-percent (5%) owner or top ten (10) Highly Compensated Employee shall
be aggregated. In such case, the Family Member and five-percent (5%) owner
or top ten (10) Highly Compensated Employee shall be treated as a single
Employee receiving compensation and Plan contributions or benefits equal to
the sum of such compensation and contributions or benefits of the Family
Member and five-percent (5%) owner or top ten (10) Highly Compensated
Employee. For purposes of this Section, Family Member includes the spouse,
lineal ascendants and descendants of the Employee or former Employee and
the spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including
the determinations of the number and identity of Employees in the top-paid
group, the top one hundred (100) Employees, the number of Employees treated
as officers and the compensation that is considered, will be made in
accordance with Section 414(q) of the Code and the regulations thereunder.
The Employer may elect to use the calendar year to determine whether
an Employee is a Highly Compensated Employee in the look-back year (as
defined in Treasury Regulations under Section 414(q) of the Code)
calculation. The calendar year used will be the calendar year ending with
or within the determination year (as defined in the regulations under
Section 414(q) of the Code). The determination year shall be the months (if
any) in the current Plan Year which follow the end of the calendar year
look-back year. If the Employer elects to make the calendar year
calculation election with respect to any plan, entity or arrangement, such
election must apply with respect to all plans, entities and arrangements of
the Employer.
(NN) Hour of Service:
(1) An hour for which an Employee is directly or indirectly
compensated, or is entitled to compensation, by the Employer
or an Affiliate for the performance of duties. Such Hours of
Service shall be credited to the respective computation
period in which the duties were performed.
(2) An hour for which an Employee is directly or indirectly
compensated, or is entitled to compensation, by the Employer
or an Affiliate 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
five hundred one (501) Hours of Service shall be credited
under this paragraph (2) for any single continuous period
(whether or not such period occurs in a single service
computation period). Hours of Service under this paragraph
(2) shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor regulations governing
the computation of Hours of Service, which are incorporated
herein by this reference.
(3) An hour for which back pay (irrespective of mitigation of
damages) is either awarded or agreed to by the Employer or
an Affiliate. The same Hours of Service shall not be
credited both under paragraph (1) or paragraph (2) above, as
the case may be, and under this paragraph (3). Hours of
Service attributable to back pay credits will be credited to
the respective service computation period or periods to
which the back pay pertains, rather than to the service
computation period or periods in which the award, agreement,
or payment is made.
(4) Employees shall also be credited with any additional Hours
of Service required to be credited pursuant to any Federal
law other than the Act or the Code;
provided, that service with an Affiliate prior to the date on which such
entity becomes an Affiliate shall not be considered in calculating the
Hours of Service under the Plan.
(OO) Income: The net gain or loss of the Trust Fund from investments,
as reflected by interest payments, dividends, realized and unrealized gains
and losses on securities, other investment transactions and expenses paid
from the Trust Fund. In determining the Income of the Trust Fund as of any
date, assets shall be valued on the basis of their fair market value.
(PP) Investment Fund(s): The investment funds described in Section
7.2.
(QQ) Matching Contribution: An Employer contribution made to this or
any other defined contribution plan on behalf of a Participant on account
of an Employee Contribution made by such Participant, or on account of a
Participant's Elective Deferral, under a plan maintained by the Employer.
(RR) Participant: An Employee participating in the Plan in accordance
with the provisions of Section 3.1.
(SS) Participation: The period commencing as of the date the Employee
became a Participant and ending on the date his or her employment with the
Employer terminated in accordance with Section 3.2, hereof.
(TT) Plan: Freeman Cosmetic Corporation Capital Accumulation Plan, as
amended from time to time. The Plan is an amendment and restatement,
effective January 1, 1999, of The Jerry Freeman 401(k) and Profit Sharing
Plan.
(UU) Qualified Matching Contributions: Matching Contributions which
are subject to the distribution and nonforfeitability requirements under
Section 401(k) of the Code when made.
(VV) Qualified Non-elective Contributions: Contributions (other than
Matching Contributions or Qualified Matching Contributions) made by the
Employer and allocated to Participants' Accounts that the Participants may
not elect to receive in cash until distributed from the Plan; that are
nonforfeitable when made; and that are distributable only in accordance
with the distribution provisions that are applicable to Elective Deferrals
and Qualified Matching Contributions.
(WW) Salary Reduction Contribution Account: The account maintained to
record for a Participant his or her pre-tax salary reduction contributions
made by the Employer pursuant to Sections 4.1(A) and 4.2 hereof, and
adjustments relating thereto.
(XX) [omitted]
(YY) Trust (or Trust Fund): The fund known as the Freeman Cosmetic
Corporation Capital Accumulation Plan Trust, maintained in accordance with
the terms of the trust agreement, as from time to time amended, which
constitutes a part of the Plan.
(ZZ) Trustee: The corporation or individuals appointed by the Board of
Directors of the Company to administer the Trust.
(AAA) Valuation Date: Each business day of the Plan Year.
(BBB) Vested Rollover Contribution Account: The account maintained
pursuant to Section 4.5, hereof, to record for a Participant rollover
amounts transferred to the Trust Fund and adjustments relating thereto.
(CCC) [omitted]
(DDD) Plan Year: The first Plan Year of the amended and restated Plan
shall be the short plan year commencing January 1, 1999 and ending November
30, 1999. Thereafter, the Plan Year shall be the 12-month period commencing
on December 1 and ending on the next following November 30.
(EEE) Minimum Company Contribution: Means the contributions made by
the Company under the Plan in accordance with the provisions of Section
4.1(C).
(FFF) Limitation Year: The 12-month period commencing on January 1 and
ending on December 31.
(GGG) Grandfathered Account: The account maintained pursuant to
Section 4.8 hereof to record for a Participant his or her account balances
under the Plan as of December 31, 1998, and adjustments relating thereto.
2.2 OTHER DEFINITIONS.
Definitions of terms and phrases that have a more limited application
are set forth in the sections to which they relate.
2.3 CONSTRUCTION.
The words "hereof," "herein," "hereunder," and other similar compounds
of the word "here" shall mean and refer to the entire Plan and not to any
particular provision or section. Article and section headings are included
for convenience of reference and are not intended to add to, or subtract
from, the terms of the Plan. Except when otherwise indicated by the
context, any masculine or feminine term shall also include the other
gender, and the use of any term in the singular or plural shall also
include the opposite number.
ARTICLE III. - PARTICIPATION
3.1 PARTICIPATION.
(A) Any Eligible Employee who immediately prior to the Effective Date
was a participant in the Plan shall be a Participant in the amended and
restated Plan on the Effective Date.
(B) With respect to any Employee who was an Eligible Employee on
December 31, 1998 but was not a Participant on such date, such Eligible
Employee shall become a Participant on the first day following December 31,
1998 on which he or she both has been an Employee for three (3) consecutive
months and has attained age twenty-one (21).
(C) With respect to any Employee who first became an Eligible Employee
on and following January 1, 1999, such Eligible Employee shall become a
Participant as of the later of the first Entry Date coincident with or next
following any "eligibility computation period" during which he or she has
at least one thousand (1,000) Hours of Service with the Employer or an
Acquired Company, provided that said Eligible Employee has entered into a
duly executed salary reduction agreement under Section 4.2 in advance of
said Entry Date and has fulfilled the Plan's enrollment procedures as
provided by the Committee. For purposes of this Section 3.1(C), the initial
"eligibility computation period" is the twelve (12) consecutive month
period commencing on the date on which the Employee first performs an Hour
of Service and the second and subsequent "eligibility computation periods"
are the twelve (12) consecutive month periods commencing on the
anniversaries of said date.
(D) Participation under the Plan shall cease and a person shall no
longer be a Participant upon termination of employment with the Employer,
as defined in Section 3.2, hereof. A rehired Eligible Employee shall be
credited with all Hours of Service performed prior to his termination of
employment. If a rehired Eligible Employee was a Participant or had
satisfied the eligibility service requirements of this Section during his
prior period of employment and following his return he is otherwise
eligible to participate in the Plan, he shall commence participation upon
the later of his date of rehire or the date on which he would have
commenced participation if his employment had not terminated.
3.2 TERMINATION OF EMPLOYMENT.
"Termination of Employment" shall be deemed to be the date:
(A) The Participant quit, was discharged (for any reason, including
Disability), died or retired; or
(B) The first anniversary of the date the Participant was continuously
absent (with or without pay) for any other reason, such as vacation,
holiday, temporary sickness, Authorized Leave of Absence or layoff, or the
date within such twelve (12) month period when the Participant quit, was
discharged, died or retired.
3.3 TRANSFERS.
For the purposes of determining eligibility to Participate in the Plan
under Section 3.1, an Eligible Employee shall receive credit for employment
with an Employer or an Affiliate.
3.4 SUSPENSION.
If a Participant (i) elects to defer distribution of his or her
benefit pursuant to Section 6.3B(C), (ii) is transferred to employment with
an Affiliate that has not adopted the Plan, (iii) ceases to be an Eligible
Employee, (iv) goes on an unpaid maternity or paternity leave under ERISA
Section 203(b), (v) receives a hardship withdrawal in accordance with
Section 6.5(D), or (vi) commences an Authorized Leave of Absence, as
reasonably determined by the Committee, his or her Participation under the
Plan shall be suspended, provided, however, that during the period of his
or her employment in such ineligible status or position: (a) he or she
shall cease to have any right to make contributions pursuant to Article IV,
hereof; (b) his or her Employer Contribution Account shall receive no
Employer contribution allocation under Section 5.2(C); (c) he or she shall
continue to participate in Income allocations pursuant to Section 5.2(A);
(d) the withdrawal privileges under the provisions of Article VI, other
than the loan provision of Section 6.9, shall continue to apply except for
a Participant who has deferred distribution of his or her benefit pursuant
to Section 6.3B(C); and (e) the Investment Fund transfer provisions of
Section 7.3 shall continue to apply.
3.5 TRANSFER OF BARGAINING UNIT EMPLOYEES.
If a Participant becomes included in a unit of employees covered by a
collective bargaining agreement and pursuant to collective bargaining is
excluded from this Plan and included in a collectively bargained plan, the
Committee, in the exercise of its discretion, may direct that the
Participant's Accounts in the Plan be transferred to the collectively
bargained plan if the collectively bargained plan so provides. The
Committee and Trustee are hereby authorized and directed collectively to
take all actions necessary or appropriate to accomplish such transfer. The
Accounts of the Participant shall be valued and adjusted as of the transfer
effective date, and the sum of the Account balances so determined shall
equal the amount transferred. Following the transfer, Participants will no
longer have any claim for benefits under this Plan, and the collectively
bargained plan, in accepting the assets transferred from this Plan, shall
be deemed to have accepted the liability for all amounts due to the
Participant.
ARTICLE IV. - CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS.
(A) For each Plan Year commencing on or after January 1, 1999, the
Employer shall contribute an amount to a Participant's Salary Reduction
Contribution Account equal to the total amount of contributions agreed to
be made by it pursuant to a salary reduction agreement under Section 4.2
entered into between the Employer and the Participant for such Plan Year.
Such deferrals shall be treated as matchable (and referred to as "Matched
Salary Reduction Contributions" for purposes of this Section 4.1) to the
extent that, for any Participant, they do not exceed three percent (3%) of
his Compensation for the applicable payroll period. Contributions made by
Employer for a given payroll period pursuant to salary reduction agreements
under Section 4.2 shall be promptly deposited in the Trust Fund as soon as
practicable after the payroll period to which they relate.
(B) In addition, for each Plan Year commencing on or after January 1,
1999, each Employer will make a Matching Contribution on behalf of each
eligible Participant in an amount equal to one hundred percent (100%) of
the Participant's Matched Salary Reduction Contributions for the Plan Year.
The Matching Contributions made on behalf of a Participant shall be
allocated to his Employer Contributions Accounts at the time provided in
Section 5.2(C). All Matching Contributions of an Employer shall be paid to
the Trustee and payment shall be made not later than the time prescribed by
law for filing the federal income tax return of the Employer, including any
extensions which have been granted for the filing of such tax return.
Amounts credited to a Participant's Employer Contribution Account shall be
one hundred percent (100%) vested and non-forfeitable at all times.
(C) For each Plan Year commencing on or after December 1, 1999, the
Company shall make contributions to the Plan in the form of employer
contributions (within the meaning of Section 404 of the Code), in cash or
stock, at least equal to a specified dollar amount, on behalf of those
individuals who are entitled to an allocation under Section 5.2(F) of the
Plan. Such amount shall be determined by the board of directors of the
Company, or the delegate of such Board, by resolution on or before the last
day of the Company's taxable year that ends within such Plan Year.
The Minimum Company Contribution for a Plan Year shall be paid by the
Company in one or more installments without interest. The Company shall pay
the Minimum Company Contribution at any time during the Plan Year, and for
purposes of deducting such contribution, shall make the contribution, not
later than the time prescribed by the Code for filing the Company's income
tax return including extensions, for its taxable year that ends within such
Plan Year. Notwithstanding any provision of the Plan to the contrary, the
Minimum Company Contribution made to the Plan by the Company shall not
revert to, or be returned to the Company.
4.2 CODE SECTION 401(K) SALARY REDUCTION.
(A) In addition to the other terms and conditions herein, each
Eligible Employee shall enter into prior to the Entry Date that such
Eligible Employee's Participation under the Plan is to commence pursuant to
Section 3.1 a written salary reduction agreement with the Employer which
will be applicable to Compensation for payroll periods after such Entry
Date. The terms of any such salary reduction agreement shall provide for
the purposes of Section 4.1(A) hereof that the Eligible Employee as a
Participant agrees to accept a reduction in salary from the Employer equal
to any percentage of his Compensation per payroll period, from one percent
(1%) to twelve percent (12%) of such Compensation. In consideration of such
agreement, the Employer will make a salary reduction contribution to the
Participant's Salary Reduction Contribution Account on behalf of the
Participant for such Plan Year in an amount equal to the total amount by
which the Participant's Compensation from the Employer was reduced during
the Plan Year pursuant to the salary reduction agreement. Amounts credited
to a Participant's Salary Reduction Contribution Account are intended to
qualify for income tax deferral under Section 401(k) of the Code and, as
such, shall be one hundred percent (100%) vested and non-forfeitable at all
times. If a Participant enters into a salary reduction agreement with the
Employer for a given Plan Year, his or her Compensation for such Plan Year
for all other purposes of this Plan, except with respect to a salary
deduction agreement under Section 4.4, hereof, shall be equal to his or her
Compensation after application of the salary reduction agreement.
(B) Unless otherwise amended or terminated in accordance with (2),
below, a Participant's salary reduction agreement shall be deemed
automatically renewed from year to year, while this Plan remains in force
and effect. Further, salary reduction agreements shall include, but not by
way of limitation, and be governed by the following:
(1) A salary reduction agreement shall apply to each payroll
period during which an effective salary reduction agreement
is on file with the Employer.
(2) A salary reduction agreement may be amended or terminated by
a Participant only once during each calendar quarter if the
purpose of the amendment is to decrease or increase the
amount of such Participant's Compensation which is subject
to salary reduction during the remainder of such Plan Year.
(3) Any amendment or termination of a salary reduction agreement
shall be effective on the first day of the following
calendar quarter after at least thirty (30) days prior
written notice by a Participant in the form required by
Employer.
(4) The Employer may amend or revoke its salary reduction
agreement with any Participant at any time, if the Committee
determines that such revocation or amendment is necessary to
insure that a Participant's Additions for any Limitation
Year will not exceed the limitations of Section 415 of the
Code or to insure that the discrimination tests of Section
401(k) and 401(m) of the Code are met for such Plan Year.
(C) The Committee may from time to time alter and/or add to the
requirements for salary reduction agreements expressed in Section 4.2(B).
The Employer shall abide by the Committee's determinations and directions
with respect to all matters covered in salary reduction agreements.
4.3 EMPLOYEE CONTRIBUTIONS.
Subject to the provisions of Section 4.4, hereof, a Participant may
contribute each Plan Year commencing on or after January 1, 1999 to an
Employee Contribution Account an amount pursuant to a written salary
deduction agreement under Section 4.4 not intended to qualify for income
tax deferral under Code Section 401(k), but to be subtracted from such
Participant's Compensation on an after-tax basis. Amounts credited to a
Participant's Employee Contribution Account shall remain one hundred
percent (100%) vested and non-forfeitable at all times. Highly Compensated
Employees may not elect to make Employee Contributions unless otherwise
permitted by the Retirement Committee.
4.4 AFTER-TAX SALARY DEDUCTION.
A Participant may elect to enter into a written salary deduction
agreement with Employer which shall be in the form and substance acceptable
to Employer and the Committee and will be applicable to all payroll periods
within a Plan Year commencing on or after January 1, 1999. A salary
deduction agreement may be amended or terminated only once during each
calendar quarter if the purpose of the amendment is to decrease or increase
the amount of such Participant's Compensation which is subject to salary
deduction agreement during the remainder of such Plan Year. The terms of
such salary deduction agreement shall provide, among other things, that for
the purposes of Section 4.3 the Participant agrees to accept a deduction
from salary from the Employer equal to any whole percentage of his
Compensation per payroll period, not to exceed ten percent (10%) of such
Compensation.
4.5 ROLLOVERS AND TRANSFERS FROM OTHER PLANS.
(A) An Employee eligible to Participate in the Plan regardless of
whether he or she has satisfied the Participation requirements of Section
3.1, who has received a distribution from a profit sharing plan, stock
bonus plan or pension plan intended to "qualify" under Section 401 of the
Code (the "Other Plan") may transfer such contribution to the Trust Fund if
such contribution would constitute, in the sole and absolute discretion of
the Committee, a "rollover contribution" within the meaning of the
applicable provisions of the Code. Additionally, a Participant may request,
with the approval of the Committee, that the Trustee accept a transfer from
the trustee of another qualified plan. Upon such approval, the Trustee
shall accept such transfer. The Committee may, in its sole discretion
decline to accept such transfer. For purposes of this Plan, both a
"rollover contribution" within the meaning of the applicable provisions of
the Code and a transfer initiated by the Participant from another plan
shall be referred to as a "Rollover Contribution." If the Committee decides
to grant a Participant's request to make a Rollover Contribution, the
Participant may contribute to the Trust Fund cash or other property
acceptable to the Trustee to the extent of such distribution. The procedure
approved by the Committee shall provide that such a transfer may be made
only if the following conditions are met: (a) the transfer occurs on or
before the sixtieth (60th) day following the Employee's receipt of the
distribution from the Other Plan; and (b) the amount transferred does not
exceed the distribution the Employee received from the Other Plan.
(B) Notwithstanding the foregoing, if an Employee had deposited a
distribution previously received from an Other Plan into an individual
retirement account ("IRA"), as defined in Section 408 of the Code, he or
she may transfer the amount of such distribution, plus earnings thereon
from the IRA, to this Plan; provided such Rollover Contribution is
deposited with the Trustee on or before the sixtieth (60th) day following
receipt thereof from the IRA.
(C) The Committee shall develop such procedures, and may require such
information from an Employee desiring to make or effectuate any Rollover
Contribution under this Section 4.5, as it deems necessary or desirable to
determine that the proposed Rollover Contribution will meet the
requirements of this Section. Upon approval by the Committee, the amount
transferred shall be deposited in the Trust Fund and shall be credited to a
Vested Rollover Contribution Account. Such account shall be one hundred
percent (100%) vested in the Employee, shall share in Income allocations in
accordance with Section 5.2(A), but shall not share in Employer
contribution allocations. Upon Termination of Employment, the total amount
of the Employee's Vested Rollover Contribution Account shall be distributed
in accordance with Article VI.
(D) Upon a Rollover Contribution by an Employee who is otherwise
eligible to participate in the Plan but who has not yet completed the
Participation requirements of Section 3.1, his or her Vested Rollover
Contribution Account shall represent his or her sole interest in the Plan
until he or she becomes a Participant.
4.6 [OMITTED]
4.7 TRUST FUND.
(A) All contributions under this Plan shall be paid to the Trustee and
deposited in the Trust Fund. However, all contributions made by the
Employer are expressly conditioned upon the continued qualification of the
Plan under the Code, including any amendments to the Plan. Upon the
Employer's request, a contribution which was made by a mistake of fact, or
conditioned upon qualification of the Plan or any amendment thereof shall
be returned to the Employer within one year after the payment of the
contribution, or the denial of the qualification, whichever is applicable.
(B) Except as provided above, all assets of the Trust Fund, including
investment Income, shall be retained for the exclusive benefit of
Participants and Beneficiaries and shall be used to pay benefits to such
persons or to pay administrative expenses of the Plan and Trust Fund to the
extent not paid by the Employer and shall not revert to or inure to the
benefit of the Employer.
(C) Notwithstanding anything herein to the contrary, the maximum
amount that may be returned to the Employer pursuant to subparagraph (A)
above is limited to the portion of such contribution attributable to the
mistake of fact or the portion of such contribution deemed non-deductible
(the "excess contribution"). Earnings attributable to the excess
contribution will not be returned to the Employer, but losses attributable
thereto will reduce the amount returned.
4.8 GRANDFATHERED ACCOUNTS.
Effective as of December 31, 1998, the Employer shall reallocate to a
Grandfathered Account the account balances of each Participant in the Plan
as of such date from any other accounts maintained on behalf of the
Participant under the Plan. On and following January 1, 1999, no
contributions shall be made to a Grandfathered Account. Amounts allocated
to a Participant's Grandfathered Account shall be one hundred percent
(100%) vested and non-forfeitable at all times.
ARTICLE V. - ALLOCATIONS TO PARTICIPANT'S ACCOUNT
5.1 INDIVIDUAL ACCOUNTS.
The Committee shall create and maintain adequate records to disclose
the interest in the Trust of each Participant and Beneficiary. Such records
shall be in the form of individual Accounts, and credits and charges shall
be made to such Accounts in the manner herein described. When appropriate,
a Participant shall have five separate Accounts--an Employer Contribution
Account, an Employee Contribution Account, a Salary Reduction Contribution
Account, a Vested Rollover Contribution Account and a Grandfathered
Account. Where necessary, the Committee shall create and maintain
subaccounts adequate to distinguish between funds in an Account for the
purposes of the Plan (e.g., Qualified Matching Contribution and Matching
Contribution subaccounts of the Employer Contribution Account). The
maintenance of individual Accounts and subaccounts is only for accounting
purposes, and a segregation of the assets of the Trust Fund to each Account
or subaccount shall not be required. Distributions and withdrawals made
from an Account shall be charged to the Account as of the date paid.
Because Participants have a choice of Investment Funds, any reference
in this Plan to a Salary Reduction Contribution Account, a Vested Rollover
Contribution Account, an Employee Contribution Account or a Grandfathered
Account shall be deemed to mean and include all accounts of a like nature
which are maintained for the Participant under each Investment Fund.
5.2 ACCOUNT ADJUSTMENTS.
The Accounts of Participants shall be adjusted no less frequently than
quarterly, recognizing the Participant's elections pursuant to Section 5.5,
hereof, in accordance with the following:
(A) Income: The Income of the Trust Fund shall be allocated to the
Accounts of Participants who had unpaid balances in their Accounts as of
each business day during the Plan Year, in proportion to the balances in
such Accounts, as adjusted to reflect and give appropriate weighting to any
receipt or distributions during the period, based on generally acceptable
principals of trust accounting agreed to by the Committee, the Trustee, and
the recordkeeper for the Plan and consistently applied. Each valuation
shall be based on the fair market value of assets in the Trust Fund on the
appropriate day.
(B) Salary Reduction Contributions: The Employer contributions that
are made pursuant to a salary reduction agreement entered into with a
Participant under Section 4.2 shall be allocated to the Participant's
Salary Reduction Contribution Account as soon as possible following receipt
by the Trustee.
(C) Matching Contributions: The Employer's Matching Contribution
described in Section 4.1(B), if any, shall be allocated among the Employer
Contribution Accounts of Participants in accordance with Section 4.1(B) as
of the last day of the relevant Plan Year.
(D) Contributions: A Participant's contributions shall be allocated to
his or her Employee Contribution Account as soon as possible following
receipt by the Trustee.
(E) [omitted]
(F) Minimum Company Contribution: The Minimum Company Contribution for
the Plan Year shall be allocated as follows:
(1) First, the Minimum Company Contribution for the Plan Year
shall be allocated during the Plan Year to each Employee of
the Company who is an Eligible Participant on the first day
of the Plan Year as Salary Reduction Contributions pursuant
to Section 4.1(A) and as Employer Matching Contributions
pursuant to Section 4.1(B). These allocations shall be made
to each such Eligible Participant's Salary Reduction
Contribution Account and Employer Contribution Account,
respectively.
(2) Second, the balance of the Minimum Company Contribution
remaining after the allocation in Section 5.2(F)(1) shall be
allocated to the Employer Contribution Account of each
individual who is not a Highly Compensated Employee (as
defined in Section 2.1(MM) of the Plan) and who is an
Eligible Participant on the first day of the Plan Year and
who is employed by the Company on the last day of the Plan
Year, in the ratio that such Eligible Participant's Salary
Reduction Contributions during the Plan Year bears to the
Salary Reduction Contributions of all such Eligible
Participants during the Plan Year.
(3) Third, notwithstanding Section 5.8 of the Plan, if the total
contributions allocated to a Participant's Accounts
including the Minimum Company Contribution exceeds the
Participant's maximum Annual Addition limit for any
Limitation Year, then such excess shall be held in a
suspense account. Such amounts shall be used to reduce
employer contributions in the next, and succeeding,
Limitation Years.
(4) Fourth, the balance of the Minimum Company Contribution
remaining after the allocations under Section 5.2(F) (1),
(2) and (3), shall be allocated as a nonelective
contribution to each Employee of the Company who is not a
Highly Compensated Employee (as defined in Section 2.1(MM)
of the Plan) and who is an Eligible Participant on the first
day of the Plan Year, in the ratio that such Eligible
Participant's Compensation for the Plan Year bears to the
Compensation for the Plan Year of all such Eligible
Participants. Contributions made pursuant to this Subsection
5.2(F)(4) shall be allocated to the Employer Contribution
Account of such Eligible Participant and are distributable
only in accordance with the distribution provisions
applicable to Employer Matching Contributions. Contributions
made pursuant to this Subsection shall be one hundred
percent (100%) vested and non-forfeitable at all times. Such
contribution shall be invested under the Plan in the manner
designated by such Eligible Participant.
(5) Each installment of the Minimum Company Contribution shall
be held in a contribution suspense account unless, or until,
allocated on or before the end of the Plan Year in
accordance with this Section 5.2(F). Such suspense account
shall not participate in the allocation of investment gains,
losses, income and deductions of the Trust Fund as a whole,
but shall be invested separately and all gains, losses,
income and deductions attributable to such investment shall
be applied to reduce Plan expenses, and thereafter, to
reduce employer contributions.
(6) The Minimum Company Contribution allocated to the Employer
Contribution Account of an Eligible Participant pursuant to
Section 5.2(F)(2) shall be treated in the same manner as
Employer Matching Contributions for all purposes of the
Plan.
(7) Notwithstanding any of the foregoing provisions to the
contrary, any allocation of Salary Reduction Contributions
shall be made under either Section 5.2(B) or this Section
5.2(F), but not both Sections. Similarly, any allocation of
a Matching Employer Contribution shall be made under either
Section 5.2(C) or this Section 5.2(F), as appropriate, but
not both Sections.
(8) Notwithstanding Section 2.1(RR) of the Plan, an Eligible
Participant who receives an allocation of a contribution
under this Section 5.2(F) shall be treated as a Participant
under the Plan for all purposes.
5.3 ACTUAL DEFERRAL PERCENTAGE TEST.
Notwithstanding any other provisions of the Plan,
(A) The Actual Deferral Percentage (hereinafter "ADP") for
Participants who are Highly Compensated Employees for each Plan Year and
the ADP for Participants who are Non-highly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
(1) The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP for
Participants who are Non-highly Compensated Employees for
the same Plan Year multiplied by one and twenty-five one
hundredths (1.25); or
(2) The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP for
Participants who are Non-highly Compensated Employees for
the same Plan Year multiplied by two (2), provided that the
ADP for Participants who are Highly Compensated Employees
does not exceed the ADP for Participants who are Non-highly
Compensated Employees by more than two (2) percentage
points.
(B) The ADP for any Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have Elective Deferrals (and
Qualified Non-elective Contributions or Qualified Matching Contributions,
or both, if treated as Elective Deferrals for purposes of the ADP test)
allocated to his or her accounts under two or more arrangements described
in Section 401(k) of the Code, that are maintained by the Employer, shall
be determined as if such Elective Deferrals (and, if applicable, such
Qualified Non-elective Contributions or Qualified Matching Contributions,
or both) were made under a single arrangement. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements that
have different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
(C) In the event that this Plan satisfies the requirements of Sections
401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of
such Sections of the Code only if aggregated with this plan, then this
Section shall be applied by determining the ADP of Employees as if all such
plans were a single plan. For Plan Years beginning after December 31, 1989,
plans may be aggregated in order to satisfy Section 401(k) of the Code only
if they have the same Plan Year.
(D) For purposes of determining the ADP of a Participant who is a
five-percent (5%) owner or one of the ten (10) most highly-paid Highly
Compensated Employees, the Elective Deferrals (and Qualified Non-elective
Contributions or Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) and Compensation of such
Participant shall include the Elective Deferrals (and, if applicable,
Qualified Non-elective Contributions and Qualified Matching Contributions,
or both) and Compensation for the Plan Year of Family Members (as defined
in Section 414(q)(6) of the Code). Family Members, with respect to such
Highly Compensated Employees, shall be disregarded as separate Employees in
determining the ADP both for Participants who are Non-highly Compensated
Employees and for Participants who are Highly Compensated Employees.
(E) For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-elective Contributions and Qualified Matching Contributions
must be made before the last day of the twelve (12) month period
immediately following the Plan Year to which contributions relate. Elective
Deferrals will be taken into consideration in performing the Actual
Deferral Percentage Test only if each of the following requirements is
satisfied:
(1) The Elective Contribution is allocated to the Participant's
Salary Reduction Contribution Account as of a date within
the Plan Year. For purposes of this paragraph (1), an
Elective Deferral is considered allocated as of a date
within a Plan Year only if (a) the allocation is not
contingent upon the Participant's participation in the Plan
or performance of services on any date subsequent to that
date, and (b) the Elective Deferral is actually paid to the
Trust no later than the end of the twelve (12) month period
immediately following the Plan Year to which the Elective
Contribution relates; and
(2) The Elective Deferral relates to Compensation that either
(a) would have been received by the Participant in the Plan
Year but for the Employee's election to defer under Section
4.2 or (b) is attributable to services performed by the
Participant in the Plan Year and, but for the Participant's
election to defer under Section 4.2 would have been received
by the Participant within two and one-half (2 1/2) months
after the close of the Plan Year.
(F) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-elective
Contributions or Qualified Matching Contributions, or both, used in such
test.
(G) The determination and treatment of the ADP amounts of any
Participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
(H) Qualified Matching Contributions and Qualified Non-elective
Contributions may be taken into account as Elective Deferrals for purposes
of calculating the Actual Deferral Percentages.
5.4 AVERAGE CONTRIBUTION PERCENTAGE TEST.
Notwithstanding any other provision of the Plan,
(A) Employee Contributions and Matching Contributions must meet the
nondiscrimination requirements of Section 401(a)(4) of the Code, and the
Average Contribution Percentage (hereinafter ACP) test of Section 401(m) of
the Code. The ACP test is required in addition to the ADP test under Code
Section 401(k). Qualified Matching Contributions and Qualified Non-elective
Contributions used to satisfy the ADP test may not be used to satisfy the
ACP test.
(B) The ACP for Participants who are Highly Compensated Employees for
each Plan Year and the ACP for Participants who are Non-highly Compensated
Employees for the same Plan Year must satisfy one of the following tests:
(1) The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP for
Participants who are Non-highly Compensated Employees for
the same Plan Year multiplied by one and twenty-five one
hundredths (1.25); or
(2) The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP for
Participants who are non-highly Compensated Employees for
the same Plan Year multiplied by two (2), provided that the
ACP for Participants who are Highly Compensated Employees
does not exceed the ACP for Participants who are Non-highly
Compensated Employees by more than two (2) percentage
points.
(C) Multiple Use: If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test maintained by
the Employer and the sum of the ADP and ACP of those Highly Compensated
Employees subject to either or both tests exceeds the Aggregate Limit, then
the ACP of those Highly Compensated Employees who also participate in a
CODA will be reduced (beginning with such Highly Compensated Employee whose
ACP is the highest) so that the limit is not exceeded. The amount by which
each Highly Compensated Employee's Contribution Percentage Amounts is
reduced shall be treated as an Excess Aggregate Contribution. The ADP and
ACP of the Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests. Multiple use does not
occur if either the ADP or ACP of the Highly Compensated Employees does not
exceed One and Twenty-Five One Hundredths (1.25) multiplied by the ADP and
ACP of the Non-highly Compensated Employees.
(D) For purposes of this Section, the Average Contribution Percentage
for any Participant who is a Highly Compensated Employee and who is
eligible to have Contribution Percentage Amounts allocated to his or her
account under two or more plans described in Section 401(a) of the Code, or
arrangements described in Section 401(k) of the Code that are maintained by
the Employer, shall be determined as if the total of such Contribution
Percentage Amounts was made under each plan. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements that
have different plan years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
(E) In the event that this Plan satisfies the requirements of Sections
401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with this Plan, then this Section
shall be applied by determining the Contribution Percentage of Employees as
if all such plans were a single plan. For Plan Years beginning after
December 31, 1989, plans may be aggregated in order to satisfy Section
401(m) of the Code only if they have the same Plan Year.
(F) For purposes of determining the Average Contribution Percentage of
a Participant who is a five-percent (5%) owner or one of the ten (10) most
highly-paid Highly Compensated Employees, the Contribution Percentage
Amounts and Compensation of such Participant shall include the Average
Contribution Percentage Amounts and Compensation for the Plan Year of
Family Members (as defined in Section 414(q)(6) of the Code). Family
Members, with respect to Highly Compensated Employees, shall be disregarded
as separate Employees in determining the Average Contribution Percentage
both for Participants who are Non-highly Compensated Employees and for
Participants who are Highly Compensated Employees.
(G) For purposes of determining the Average Contribution Percentage
test, Employee Contributions are considered to have been made in the Plan
Year in which contributed to the trust. Matching Contributions and
Qualified Non-elective Contributions will be considered made for a Plan
Year if made no later than the end of the twelve (12) month period
beginning on the day after the close of the Plan Year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-elective
Contributions or Qualified Matching Contributions, or both, used in such
test.
The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by
the Secretary of the Treasury.
5.5 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(A) Notwithstanding any other provisions of this Plan, Excess
Aggregate Contributions, plus any income and minus any loss allocable
thereto, shall be forfeited, if forfeitable, or if not forfeitable,
distributed no later than the last day of each Plan Year to Participants to
whose accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. This forfeiture or distribution of Excess Aggregate
Contributions shall be made for the Participants who are Highly Compensated
Employees in the order of their contribution percentages described in
Section 5.4, beginning with those having the highest percentage and then
continuing with others who have the next highest percentage, until the
requirements for the ACP test in Section 5.4 are met. For this purpose,
each forfeiture or distribution of Excess Aggregate Contributions that
occurs shall be treated as reducing both the amount of such contributions
and the adjusted percentage that is determined for the affected Participant
under Section 5.4. Excess Aggregate Contributions shall be allocated to
Participants who are subject to the family member aggregation rules of
Section 414(q)(6) of the Code in the manner prescribed by the regulations.
If such Excess Aggregate Contributions are distributed more than two and
one-half (2-1/2) months after the last day of the Plan Year in which such
excess amounts arose, a ten (10) percent excise tax will be imposed on the
Employer maintaining the plan with respect to those amounts. Excess
Aggregate Contributions shall be treated as Annual Additions under the
Plan.
(B) Excess Aggregate Contributions shall be adjusted for any income or
loss up to the end of the Plan Year for which they were determined to occur
(excluding any gap period after the end of that Plan Year and up to the
date of distribution in the subsequent Plan Year). The income or loss
allocable to Excess Aggregate Contributions shall be as determined under
the Plan's normal method of accounting.
(C) Forfeitures of Excess Aggregate Contributions may either be
reallocated to the Accounts of Non-highly Compensated Employees or applied
to reduce Employer contributions.
(D) Excess Aggregate Contributions shall be forfeited, if forfeitable
or distributed on a pro-rata basis from the Participant's Accounts.
(E) In addition, in lieu of distributing Excess Contributions as
provided in the Plan, or Excess Aggregate Contributions as provided in the
Plan, the Employer may make Qualified Non-elective Contributions on behalf
of Non-highly Compensated Employees that are sufficient to satisfy either
the Actual Deferral Percentage test or the Average Contribution Percentage
Test, or both, pursuant to the regulations under the Code.
5.6 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS.
(A) No Participant shall be permitted to have Elective Deferrals made
under this Plan, or any other qualified plan maintained by the Employer,
during any taxable year in excess of the dollar limitation contained in
Section 402(g) of the Code in effect at the beginning of such taxable year.
(B) A Participant may assign to this plan any Excess Elective
Deferrals made during a taxable year of the Participant by notifying the
Committee on or before the date specified in Section 5.6(E) of the amount
of the Excess Elective Deferrals to be assigned to the Plan.
(C) Notwithstanding any other provision of the Plan, Excess Elective
Deferrals, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose account
Excess Elective Deferrals were assigned for the preceding year and who
claims Excess Elective Deferrals for such taxable year. In addition, excess
deferrals and other contributions described in Section 5.3, plus any income
and minus any loss allocable thereto, shall be distributed no later than
the end of each Plan Year to Participants to whose accounts they were
allocated for the preceding Plan Year. This distribution of excess amounts
pursuant to Section 5.3 shall be made for the Participants who are Highly
Compensated Employees in the order of their deferral percentages described
in Section 5.3, beginning with those having the highest percentage and then
continuing with others who have the next highest percentage, until the
requirements of the ADP test in Section 5.3 are met. For this purpose, each
distribution of excess deferrals and other contributions that occurs shall
be treated as reducing both the amount of the deferrals and the adjusted
percentage that is determined for the affected Participant under Section
5.3.
(D) Excess Elective Deferrals shall be adjusted for any income or loss
up to the end of the Plan Year for which they were determined to occur
(excluding any gap period after the end of that Plan Year and up to the
date of distribution in the subsequent Plan Year). The income or loss
allocable to Excess Elective Deferrals shall be as determined under the
Plan's normal method of accounting.
(E) Participants who claim Excess Elective Deferrals for the preceding
taxable year must submit their claims in writing to the Committee by March
15.
5.7 DISTRIBUTION OF EXCESS CONTRIBUTIONS.
(A) Notwithstanding any other provision of this Plan, Excess
Contributions, plus any income and minus any loss allocable thereto, shall
be distributed no later than the last day of each Plan Year to Participants
to whose accounts such Excess Contributions were allocated for the
preceding Plan Year. If such excess amounts are distributed more than two
and one-half (2 1/2) months after the last day of the Plan Year in which
such excess amounts arose, a ten (10) percent excise tax will be imposed on
the Employer maintaining the Plan with respect to such amounts. Such
distributions shall be made to Highly Compensated Employees on the basis of
the respective portions of the Excess Contributions attributable to each of
such Employees. The Excess Contribution for a Highly Compensated Employee
shall be determined in the following manner: first, the Actual Deferral
Percentage of the Highly Compensated Employee with the highest Actual
Deferral Percentage is reduced to the extent necessary to satisfy the
Actual Deferral Percentage Test described in Section 5.3 or cause such
Actual Deferral Percentage to equal the Actual Deferral Percentage of the
Highly Compensated Employee with the next highest ratio; second, the
process is repeated until the Actual Deferral Percentage Test is satisfied.
The method of correcting Excess Contributions must, in any event, satisfy
the nondiscrimination requirements of Section 401(a)(4) of the Code. Excess
Contributions shall be allocated to Participants who are subject to the
family member aggregation rules of Section 414(q)(6) of the Code in the
manner prescribed by the regulations.
(B) Excess Contributions (including the amounts recharacterized) shall
be treated as Annual Additions under the Plan.
(C) Excess Contributions shall be adjusted for any income or loss up
to the end of the Plan Year for which they were determined to occur
(excluding any gap period after the end of the Plan Year and up to the date
of distribution in the subsequent Plan Year). The income or loss allocable
to Excess Contributions shall be as determined under the Plan's normal
method of accounting.
(D) Excess Contributions shall be distributed from the accounts to
which the Participant's Elective Deferrals and Qualified Matching
Contributions (if applicable) were allocated in proportion to the
Participant's Elective Deferrals and Qualified Matching Contributions (to
the extent used in the ADP test) for the Plan Year. Excess Contributions
shall be distributed from the Participant's Qualified Non-elective
Contribution account only to the extent that such Excess Contributions
exceed the balance in the Participant's Elective Deferral account and
Qualified Matching Contribution account.
5.8 MAXIMUM ADDITIONS.
(A) Notwithstanding anything contained herein to the contrary, the
total Annual Additions made to the Salary Reduction Contribution Account,
Employer Contribution Account, Employee Contribution Account of a
Participant for any Limitation Year shall not exceed the lesser of Thirty
Thousand Dollars ($30,000.00) or twenty-five percent (25%) of the
Participant's Compensation (as defined in Code Section 415 and after
application of the salary reduction agreement set forth in Section 4.2) for
such Limitation Year, except that such $30,000 shall be increased as
permitted by Internal Revenue Service regulations to reflect cost-of-living
adjustments.
(B) If such Annual Additions exceed the above limitations, the
contributions for the Limitation Year which cause the excess shall be
returned to the Participant in the following order:
(1) Any contributions to such Participant's Employee
Contribution Account, to the extent they would reduce the
excess amount, will be returned to the Participant.
(2) If after the application of paragraph (1) an excess amount
still exists, any contributions to such Participant's Salary
Reduction Contribution Account, to the extent they would
reduce the excess amount, will be returned to the
Participant.
(3) If after the application of paragraph (2) an excess amount
still exists, and the Participant is covered by the Plan at
the end of the Limitation Year, the excess amount in
Participant's account will be used to reduce Employer
Contributions to such Participant's Employer Contribution
Account, for such Participant in the next Limitation Year,
and each succeeding Limitation Year if necessary.
(4) If after the application of paragraph (2) an excess amount
still exists, and the Participant is not covered by the Plan
at the end of the Limitation Year, the excess amount will be
held unallocated in a suspense account. The suspense account
will be applied to reduce future Employer contributions of
that Participant's Employer to Employer Contribution
Accounts for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if
necessary. If a suspense account is in existence at any time
during the Limitation Year pursuant to this Section, it will
not participate in the allocation of the Trust Income.
(C) Notwithstanding the foregoing, the otherwise permissible Annual
Additions for any Participant under this Plan may be further reduced to the
extent necessary, as determined by the Committee, to prevent
disqualification of the Plan under Section 415 of the Code, which imposes
the following additional limitations on the benefits payable to
Participants who also may be participating in other tax-qualified pension,
profit-sharing, savings or stock bonus plans maintained by the Employer or
any of the members of the controlled group of corporations (for the
purposes of this Section "Employers") of which the Employer is a part: If
an individual is a Participant at any time in both a defined benefit plan
and a defined contribution plan maintained by any of the Employers, the sum
of the defined benefit plan fraction and the defined contribution plan
fraction for any Limitation Year may not exceed one (1.0). The defined
benefit plan fraction for any Limitation Year is a fraction, the numerator
of which is the Participant's projected annual benefit under the plan
(determined at the close of the Limitation Year) and the denominator of
which is the lesser of (i) the product of one and twenty-five one
hundredths (1.25), multiplied by the dollar limitation in effect under
Section 415(b)(1)(A) of the Code, or (ii) the product of one and four
tenths (1.4), multiplied by the amount which may be taken into account
under Section 415(b)(1)(B) of the Code with respect to such Participant
under the Plan for such Limitation Year. The defined contribution plan
fraction for any year is a fraction, the numerator of which is the sum of
the Annual Additions to the Participant's accounts as of the close of the
Limitation Year, and the denominator of which is the sum of the lesser of
the following amounts determined for such year and for each prior year of
service with the Employer; (i) the product of one and twenty-five one
hundredths (1.25), multiplied by the dollar limitation in effect under
Section 415(c)(1)(A) of the Code for such year, or (ii) the product of one
and four tenths (1.4), multiplied by the amount which may be taken into
account under Section 415(c)(1)(B) with respect to such Participants under
the Plan for such year. When the term "Annual Additions" is used in the
context of other defined contribution plans under this Section, it shall
have the same meaning as set forth in Section 2.1(G), hereof, but with
respect to Employer contributions and Employee contributions made under
such other plans. For purposes of this limitation, all defined benefit
plans of the Employers, whether or not terminated, are to be treated as one
defined benefit plan and all defined contribution plans of the Employers,
including the Plan whether or not terminated, are to be treated as one
defined contribution plan. As such, annual benefits and Annual Additions of
such plans are to be aggregated for the purposes of determining the defined
benefit plan fraction and the defined contribution plan fraction. The
extent to which Annual Additions under the Plan shall be reduced, as
compared with the extent to which annual benefits or Annual Additions under
any defined benefit plans or any other defined contribution plans shall be
reduced in order to achieve compliance with the limitations of Code Section
415 shall be dependent on the provisions of such other plans. To the extent
any such other plan or plans provide for a reduction first in benefits from
or Annual Additions to such other plan or plans, the necessary reductions
shall be under such other plan or plans. To the extent any such other plan
or plans do not provide for a reduction first in benefits from or Annual
Additions to such other plan or plans, the reduction in Annual Additions
necessary to achieve compliance with Code Section 415 shall be under the
Plan. If the reduction is under the Plan, the Committee shall advise
affected Participants of any additional limitations on their Annual
Additions required by this Section 5.8.
5.9 ADJUSTMENT OF MATCHING CONTRIBUTIONS SUBACCOUNT.
In the event that a distribution of excess Elective Deferrals or
Excess Contributions is made pursuant to Section 5.6 or 5.7 of the Plan,
the Matching Contribution subaccount will be adjusted by the amount of any
Employer Contribution attributable to such excess Elective Deferrals or
Excess Contributions (the "excess matching contribution") plus the income
allocable to any such excess matching contribution. The income allocable to
the excess matching contribution shall be determined by the Committee in
accordance with any method permitted under Treasury Regulation Sections
1.401(m)-1(e)(3) or 1.401(k)-1(f)(4) as applicable. Any such excess
employer matching contributions (and earnings allocable thereto) will be
forfeited and reallocated among the unaffected Participant's Accounts
pursuant to such rules as shall be adopted by the Committee, provided that
such treatment is applied uniformly to all Participants under the Plan for
the Plan Year involved.
5.10 TOP-HEAVY PROVISIONS.
(A) The following provisions shall become effective in any Plan Year
in which the Plan is determined to be a Top-Heavy Plan, notwithstanding any
contrary provision in the Plan. The Plan will be considered a Top-Heavy
Plan for the Plan Year if as of the last day of the preceding Plan Year,
(1) the value of the sum of Salary Reduction Contribution Accounts,
Employer Contribution Accounts, Employee Contribution Accounts and
Grandfathered Accounts (but not including any allocations to be made as of
such last day of the Plan Year except contributions actually made on or
before that date and allocated pursuant to Section 5.2) of Participants who
are Key Employees (as defined in Section 416(i) of the Code) exceeds sixty
percent (60%) of the value of the sum of Salary Reduction Contribution
Accounts, Employer Contribution Accounts, Employee Contribution Accounts
and Grandfathered Accounts (but not including any allocations to be made as
of such last day of the Plan Year except contributions actually made on or
before that date and allocated pursuant to Section 5.2) of all Participants
(the "60% Test") or (2) the Plan is part of a required aggregation group
(within the meaning of Section 416(g) of the Code and the required
aggregation group is top-heavy. However, and notwithstanding the result of
the 60% Test, the Plan shall not be considered a Top-Heavy Plan for any
Plan Year in which the Plan is a part of a required or permissive
aggregation group (within the meaning of Section 416(g) of the Code) which
is not top-heavy.
(B) Notwithstanding any contrary provision of the Plan, and except as
otherwise provided in (C) and (D) below, for any Plan Year during which the
Plan is deemed a Top-Heavy Plan, Employer contributions pursuant to Section
5.2(C) which are allocated to Employer Contribution Accounts on behalf of
any Participant who is not a Key Employee shall not be less than the lesser
of:
(1) Three percent (3%) of such Participant's Compensation; or
(2) In the case where the Employer has no defined benefit plan
which designates the Plan to satisfy Section 416(f) of the
Code, the largest percentage of Employer contributions as a
percentage of the first One Hundred Fifty Thousand Dollars
($150,000) of the Key Employee's Compensation allocated on
behalf of any Key Employee for that Plan Year.
The above mentioned minimum allocation is determined without regard to
any Social Security contribution. The minimum allocation shall be made even
though, under other Plan provisions, the Participant would not otherwise be
entitled to receive an allocation, or would have received a lesser
allocation for the Plan Year.
(C) The provisions of (B), above, shall not apply to any Participant
who was not employed by the Employer on the last day of the Plan Year
preceding the Plan Year the Plan is considered to be a Top-Heavy Plan.
(D) The provisions of (B), above, shall not apply to any Participant
to the extent the Participant is covered under any other plan or plans of
the Employer and the Employer has provided in the Adoption Agreement that
the minimum allocation or benefit requirement applicable to top-heavy plans
will be met in the other plan or plans.
(E) The minimum allocation required in (B), above, (to the extent
required to be nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D).
(F) If a Participant's Termination of Employment occurs while the Plan
is a Top-Heavy Plan, such Participant's vested percentage in his Employer
Contribution Account shall not be less than the percentage determined in
accordance with the following table:
Vested Forfeited
Years of Service Percentage Percentage
---------------- ---------- ----------
less than 2 0% 100%
2 but less than 3 20% 80%
3 but less than 4 40% 60%
4 but less than 5 60% 40%
5 but less than 6 80% 20%
6 or more 100% 0%
(G) For purposes of this Section 5.10, Compensation shall have the
meaning given such term in Treasury Regulation Section 1.415-2(d)(2) and
(3); provided, however, that for the limited purpose of determining whether
an Employee is a Key Employee, Compensation shall include amounts such as
Elective Deferrals to this Plan which are not currently includible in the
Participant's gross taxable income by reason of the application of Sections
125,402(e)(3) or 402(h)(1)(B) of the Code, if such amounts are attributable
to the performance of services for the Company or an Affiliate.
(H) If the Plan becomes a Top-Heavy Plan and subsequently ceases to be
such, the vesting schedule in Section (F) of this Section to the extent it
is more favorable than any vesting schedule that may be contained in the
Plan shall continue to apply in determining the vested percentage of any
Participant who had at least five Years of Service as of December 31 in the
last Plan Year of top-heaviness. For other Participants, said more
favorable schedule shall apply only to their Employer Contribution Account
balance as of such December 31. For the purposes of Section (F), Year of
Service shall be defined in the same manner as the term Year of Service is
used for vesting purposes in the event the Plan is amended to include a
vesting provision. In the event that the Plan is amended to change or
modify any vesting schedule, a Participant with at least three (3) Years of
Service as of the expiration of the election period may elect to have his
nonforfeitable percentage computed under the Plan without regard to such
amendment. If a Participant fails to make such election, then such
Participant shall be subject to the new vesting schedule. The Participant's
election period shall commence on the adoption date of the amendment and
shall end sixty (60) days after the latest of:
(1) the adopted date of the amendment;
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(I) Notwithstanding any contrary provisions contained herein, for any
Plan Year in which the Plan is a Top-Heavy Plan, any benefits to which the
Participant who is a Key Employee is entitled shall commence not later than
the Participant's taxable year in which he or she attains age, seventy and
one-half (70 1/2), whether or not his or her employment has terminated in
such year. If a benefit distribution under the Plan is made to a Key
Employee before he or she attains age fifty nine and one-half (59 1/2), and
during a Plan Year in which the Plan is a Top-Heavy Plan, the Participant
shall be advised by the Committee that an additional income tax may be
imposed equal to ten percent (10%) of the portion of the amount so received
which is included in his or her gross income for such taxable year, unless
such distribution is made on account of death or Disability.
(J) For any Plan Year in which the Plan is a Top-Heavy Plan, Section
5.4(C) shall be read by substituting the number one (1.00) for the number
one and twenty-five one hundredths (1.25) wherever it appears therein
except such substitution shall not have the effect of reducing any benefit
accrued under a defined benefit plan prior to the first day of the Plan
Year in which this provision becomes applicable.
(K) Neither Elective Deferrals nor Matching Contributions may be taken
into account for the purpose of satisfying the minimum top-heavy
contribution requirement.
(L) Notwithstanding anything in this Section 5.10 to the contrary, in
the event that the Plan shall be determined by the Committee (in its sole
and absolute discretion, but pursuant to the provisions of Section 416 of
the Code) to be a constituent in an "aggregation group," this Plan shall be
considered a Top-Heavy Plan only if the "aggregation group" is a "top-heavy
group." For purposes of this Section 5.10, an "aggregation group" shall
include the following:
(1) Each plan intended to qualify under Section 401(a) of the
Code sponsored by the Company or an Affiliate in which one
(1) or more Key Employees participate;
(2) Each other plan of the Company or an Affiliate that is
considered in conjunction with a plan referred to in clause
(1) in determining whether or not the nondiscrimination and
coverage requirements of Section 401(a)(4) or Section 410 of
the Code are met; and
(3) If the Committee, in the exercise of its discretion, so
chooses, any other such plan of the Company or an Affiliate
which, if considered as a unit with the plans referred to in
clauses (1) and (2), satisfies the requirements of Code
Section 401(a) and Code Section 410.
A "top-heavy group" for purposes of this Section 5.10 is an "aggregation
group" in which the sum of the present value of the cumulative accrued
benefits for Key Employees under all "defined benefit plans" (as defined in
Section 414(j) of the Code) included in such group plus the aggregate of
the account balances of Key Employees on the last Valuation Date in the
twelve (12) month period ending on the respective determination date under
all "defined contribution plans" (as defined in Section 414(i) of the Code)
included in such group exceeds sixty percent (60%) of the total of such
similar sum determined for all employees and beneficiaries covered by all
such plans (where such present values and account balances are those
present values applicable to those determination dates of each plan which
fall in the same calendar year). The Committee will calculate the present
value of the cumulative annual benefits under a defined benefit plan in
accordance with the rules set forth in the defined benefit plan. All
determinations will be made in accordance with applicable relegations under
Section 416 of the Code.
ARTICLE VI. - BENEFITS
6.1 ENTITLEMENT TO BENEFITS.
If a Participant's employment with the Employer is terminated for any
reason, he or she shall be vested in the entire amount in each of his or
her Accounts. Except as provided in Sections 6.3A(B) and 6.3B(C) hereof,
payment of benefits shall commence promptly after such Termination of
Employment.
6.2 DEATH.
(A) In the event that the Termination of Employment of a Participant
is caused by his or her death, his or her Beneficiary shall be vested in,
and paid the entire amount of, each of the deceased Participant's Accounts.
Payment shall commence promptly after the Participant's death, but the
Beneficiary shall not be entitled to receive such payment until the
Committee is reasonably satisfied that such Beneficiary is otherwise
entitled to receive such payment.
(B) Payment of benefits due under this Section shall be made in
accordance with Section 6.3.
6.3 PAYMENT OF BENEFITS.
6.3A PAYMENT OF GRANDFATHERED ACCOUNTS.
(A) Subject to Section 6.3A(G), payment of a Participant's
Grandfathered Account shall be made as provided in this Section 6.3A. The
Committee shall direct the Trustee to distribute the net credit balances in
the Participant's Grandfathered Account to or for the benefit of the
Participant, or in the event of his death, to or for the benefit of his
Beneficiary, in any one or a combination of the following methods as
selected by the Participant:
(i) In cash as a single payment; or
(ii) In cash in a series of substantially equal annual or more
frequent installments over a period not to exceed the life expectancy of a
Participant or, if married, the joint life expectancy of a Participant and
his or her spouse.
(B) Distributions of a Participant's Grandfathered Account will be
made or commenced (unless administratively unfeasible) no later than the
sixtieth (60th) day next following the close of the Plan Year during which
the Participant's termination date occurs; provided, however, that, subject
to Section 6.11, if the Participant fails to consent to an immediate
distribution, failure to so consent shall be construed as an election to
defer distribution until the later of (x) the Participant's "Normal
Retirement Date" (as defined below) (subject to earlier distribution,
however, as required by applicable law) and (y) the date on which the
Participant attains age sixty-two (62). Notwithstanding the preceding
sentence, a Participant who retires from the employ of an Employer on or
after the date on which he has attained age fifty-five (55) and has
completed ten (10) years of service shall be eligible to elect to receive
payment of his Grandfathered Account at any time after his termination date
(subject to earlier distribution, however, as required by applicable law).
For purposes of this Section 6.3A, a Participant's "Normal Retirement Date"
shall be the date on which the Participant retires from the employ of an
Employer on or after attaining age sixty-five (65).
(C) When and if directed by the Committee, the Trustee shall make
interim payments from the Grandfathered Account to the Participant, or in
the event of his death to his Beneficiary, at such time and in such amounts
as the Committee may direct during the period prior to the date on which
distribution of the Grandfathered Account commences.
(D) In the event of the Participant's death, the Committee shall
permit the Beneficiary to select the method of distributing the
Participant's Grandfathered Account if the Participant does not file a
written direction with the Committee prior to his death.
(E) Notwithstanding anything in the above to the contrary, payment of
the Participant's Grandfathered Account shall commence no later than the
latest of the close of the Plan Year in which occurs:
(i) the date on which the Participant attains age sixty-five
(65);
(ii) the tenth (10th) anniversary of the date on which the
Participant commenced participation; or
(iii) the date on which the Participant terminates employment.
(F) All payment options shall require that the present value of
expected payments to be made to the Participant shall be more than fifty
percent (50%) of the present value of all payments.
(G) Solely as to account balances under the Jerry Freeman, Inc. Profit
Sharing Plan that were transferred into this Plan, such amounts shall
continue to be eligible to be distributed in the following forms:
(i) The form of benefit to be received for a married Participant
shall be a fifty percent (50%) joint and survivor annuity, which is the
actuarial equivalent of the amount which would be paid under Subsection
(ii), unless the Participant elects under Subsection (iv) hereof to receive
an alternate form of payment as described in Subsections (ii) and (iii).
Unless an optional form of payment is selected pursuant to a qualified
election within the ninety (90)-day period ending on the Annuity Starting
Date, an unmarried Participant's benefit will be paid in the form of a life
annuity, as described under Subsection (ii). "Annuity Starting Date" means
the first day of the first period for which an amount is payable as an
annuity or, in the case of a benefit not payable in the form of an annuity,
the first day on which all events have occurred which entitle the
Participant to such benefit; or
(ii) In the form of a life annuity purchased from an insurance
company. Such single life annuity shall be a monthly annuity during the
life of the Participant with no payments on his behalf after his death
(this benefit shall be the automatic form of payment if the Employee has no
"Eligible Spouse" (as defined below) on his termination date, and shall be
the actuarial equivalent of the benefit as would be paid under Section
6.3A(A)(i)); or
(iii) In the form of a joint and survivor annuity purchased from
an insurance company. Such joint and survivor annuity shall be a monthly
annuity for the life of the Participant and, upon the death of the
Participant, a monthly annuity thereafter for the life of the designated
Beneficiary, which is equal to fifty percent (50%), sixty-six and
two-thirds percent (66-2/3%), or one hundred percent (100%) of the amount
of the annuity payable during the joint lives of the Participant and his
Beneficiary (with such benefit to be the actuarial equivalent of the
benefit as would be paid under Section 6.3A(A)(i)).
The Trustee shall have no discretion with respect to making distributions
under the Plan and, therefore, except as otherwise specifically provided
hereinabove, shall make distributions only at such time and in such manner
as the Committee directs. The Trustee shall have no responsibility to see
to the application of the amount of the annuity payable during the lives of
the Participant and his Beneficiary.
(iv) Any Participant (including a former Participant with a
vested interest) may elect, subject to Subsection (v) hereof, to have the
benefit payable to him paid in optional forms described in Subsections (ii)
and (iii) hereof, provided that a married Participant, pursuant to Code
Section 401(a)(11), shall receive his or her benefit in the form stated in
Subsection (i), unless the Participant with the consent of his/her spouse
elects not to receive a distribution in accordance with such method. Any
such election may be made at any time following the date the Employee
becomes a Participant and preceding the date payment of the Grandfathered
Account is to commence, and may be revoked by the Participant during such
period, provided that the Participant shall only be furnished written
notification, in nontechnical terms, of the availability of a
post-retirement election at least one hundred-eighty (180) days before the
termination date or Normal Retirement Date, if earlier. Spousal consent
evidencing the rejection of either a pre- or post-retirement survivor
benefit shall not take effect unless:
(a) The spouse of the Participant consents in writing to
such election;
(b) Such election designates a Beneficiary (or a form of
benefits) which may not be changed without spousal consent (or the consent
of the spouse expressly permits designations by the Participant without any
requirement of further consent by the spouse);
(c) The spousal consent acknowledges the effect of such
election and is witnessed by a Plan representative or notary public.
Further, spousal consent evidencing the rejection of a post-retirement
survivor benefit shall not take effect unless such written consent is made
within the ninety (90)-day period prior to the Annuity Starting Date, as
defined in this Section 6.3A(G)(i).
Spousal consent shall not be required where the Participant establishes to
the satisfaction of the Committee that such spousal consent may not be
obtained because there is no spouse or the spouse cannot be located. At the
time of such notification, the Participant shall also be furnished, or be
advised of the availability of, a written explanation, in nontechnical
language, of the terms and conditions of the joint and survivor annuity and
the financial effect upon the Participant's annuity (in terms of dollars
per annuity payment) of making such an election. Any election made by a
Participant hereunder shall be in writing and shall clearly indicate that
the Participant is electing to receive his Grandfathered Account in a form
other than that of a joint and survivor annuity. The election provided
hereunder may be revoked by the Participant within the period during which
an election may be made and, in addition, a new election may be made by the
Participant within such period, provided the spousal consent requirements
above have been met.
(v) Except as permitted in the succeeding sentence, a Participant
may not elect an optional form of retirement income (under any provisions
of this Article) providing monthly benefits to a Beneficiary, unless the
actuarial value of the payment expected to be made to the Participant is
more than fifty percent (50%) of the actuarial value of the total payments
expected to be made under such optional form. The preceding sentence shall
not apply to an optional form of retirement income providing monthly
benefits to the Eligible Spouse of a Participant for as long as such
Eligible Spouse shall survive the Participant. In no event, however, can
the amount of each monthly payment to a Beneficiary exceed that payable to
the Participant under the optional form of retirement income. For the
purposes of this Plan, "Eligible Spouse" shall mean the spouse of a
Participant who is legally married to the Participant throughout the one
(1)-year period ending on the earlier of the date of such Participant's
death, or the date payment of such Participant's Grandfathered Account
commences including, for this purpose, a spouse who marries an Employee
within one (1) year before the date payment of such Participant's
Grandfathered Account commences, notwithstanding the above.
(H) A Participant entitled to a distribution of his Grandfathered
Account may elect to receive a lump sum distribution of his entire
Grandfathered Account.
6.3B PAYMENT OF ACCOUNTS OTHER THAN GRANDFATHERED ACCOUNTS.
(A) Payment of a Participant's Accounts, other than his Grandfathered
Account, shall be made as provided in this Section 6.3B. Upon a
Participant's or Beneficiary's entitlement to payment of benefits under
Section 6.1 or 6.2 he or she shall file with the Committee his or her
written application therefor on such form or forms, and subject to such
reasonable conditions, as the Committee shall provide.
(B) The Committee shall follow a Participant's Beneficiary designation
made pursuant to Section 6.4. Payment to a Participant's Beneficiary shall
be made or commence as soon as practicable after a Participant's death and
upon such proofs of death and entitlement to benefits as the Committee may
require.
(C) The Committee shall make payment of benefits in one lump sum only.
Except as otherwise provided below, every Participant who has a separation
from service for any reason, including retirement, death or Disability,
shall have his or her vested Account, valued as of the effective date of
the distribution, distributed as soon as practicable following the
separation from service. If the Participant is not subject to an
involuntary distribution as provided in Section 6.11 hereof, then no
distribution shall be made to the Participant before the date specified in
Section 6.7, unless the Participant consents in writing to an earlier
distribution. Thus, if under the age specified in Section 6.7, a
Participant whose vested Account balance exceeds Five Thousand Dollars
($5,000) may elect to defer receipt of such balance until that date by
withholding written consent to the distribution. A Beneficiary does not
have a similar right to defer a distribution of the Participant's vested
Account balance following the Participant's death.
(D) The amount which a Participant or Beneficiary is entitled to
receive at any time and from time to time may be paid, in the discretion of
the Participant or Beneficiary, in cash or in Employer Stock, or in any
combination thereof, provided, however, payment in Employer Stock may be
limited to the extent a Participant's Account balances are invested in
whole shares of such Employer Stock under Section 7.2, and the Committee
may require that all such Employer Stock be transferred to such Participant
or Beneficiary.
(E) To the extent required by the regulations issued under Code
Section 411(a)(11), at least 30 days but not more than 90 days before a
Participant's scheduled benefit commencement date, the Committee shall
provide to the Participant a written explanation of his right to defer
receipt of the distribution. Such distributions may commence less than 30
days after the notice required under Section 1.411(a)-11(c) of the income
tax regulations is given, provided that:
(1) the Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable,
a particular distribution option); and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
6.4 DESIGNATION OF BENEFICIARY.
(A) Each Participant from time to time may designate any person or
persons (who may be designated contingently or successively and who may be
an entity other than a natural person) as his or her Beneficiary or
Beneficiaries to whom his Plan benefits are paid if he or she dies before
receipt of all such benefits. Each Beneficiary designation shall be in the
form prescribed by the Committee, will be effective only when filed with
the Committee during the Participant's lifetime, and, if the Committee
allows, may specify the method of payment of his or her benefits to the
Beneficiary. Each Beneficiary designation filed with the Committee will
cancel all Beneficiary designations previously filed with the Committee.
The revocation of a Beneficiary designation by a Participant no matter how
effected, shall not require the consent of any designated Beneficiary
unless the Beneficiary affected is the Participant's spouse, in which case
such spouse's consent shall be required to effect any such revocation in
accordance with Section 6.4(C). By designating a Beneficiary or
Beneficiaries as hereunder provided, a Participant grants the Committee the
discretion, in good faith, to make benefit payment(s) to any Beneficiary or
Beneficiaries named by such Participant despite any dispute by any person
or persons claiming such benefits, and holds the Plan, the Employer and the
Committee harmless from any claims arising out of any such good faith
payment(s) of benefits. Each Participant by designating a Beneficiary or
Beneficiaries, authorizes the Committee to retain any benefits otherwise
payable in the Trust Fund or, in its sole discretion, pay-over such
benefits to a court or other tribunal of competent jurisdiction pending the
final and binding disposition of any dispute as to the proper Beneficiary
or Beneficiaries by agreement of the parties or by a judgement of such
court or other tribunal of competent jurisdiction, as the case may be.
(B) If any Participant fails to designate a Beneficiary in the manner
provided above, or if the Beneficiary or Beneficiaries designated by a
deceased Participant die(s) before him or her or before complete
distribution of the Participant's benefits, the Committee, in its sole
discretion, may direct the Trustee to distribute such Participant's
benefits (or the balance thereof) in the following order to:
(1) The surviving spouse of such Participant or, if not living,
(2) The estate of such Participant.
(C) Notwithstanding anything contained herein to the contrary, a
Participant may not name as a Beneficiary someone other than his or her
spouse, and such designation shall have no effect, unless his or her spouse
consents thereto, in a signed writing which is notarized or witnessed by a
Plan representative, or if the Committee determines in its sole discretion
that such consent is not obtainable for good cause shown, consistent with
applicable law.
6.5 WITHDRAWALS.
(A) Subject to Sections (B), (C), (D), and (E) of this Section 6.5,
any Participant may make a withdrawal of all or part of his or her Employee
Contribution Account, Salary Reduction Contribution Account, Vested
Rollover Contribution Account and Grandfathered Account, provided, however,
that withdrawals must be made of all amounts in each classification below
(listed in descending order) before amounts in the next lower
classification may be withdrawn.
(1) Employee Contribution Account.
(2) Salary Reduction Contribution Account.
(3) Vested Rollover Contribution Account.
(4) Grandfathered Account.
(B) A Participant must have attained age fifty-nine and one-half (59
1/2) or have been determined by the Committee to have a "hardship" in
accordance with Section 6.5(D) in order to qualify for a withdrawal under
Section 6.5(A) with respect to his or her Salary Reduction Contribution
Account and/or Vested Rollover Contribution Account balances. Except for a
Participant who is age fifty-nine and one-half (59 1/2) or older and who
withdraws his entire Account balances, a Participant may not withdraw any
amounts from his or her Employer Contribution Account or from the Regular
Subaccount of his or her Grandfathered Account.
(C) Application for withdrawals shall be made on such forms as the
Committee prescribes and as permitted herein, and may be made once each
calendar month. Except as provided in Section 6.5(E), distribution of
withdrawals shall be made in a lump sum within forty-five (45) days
following receipt by the Committee of a properly completed application.
Withdrawal distributions shall be based on the value of the Participant's
Account(s) as of the effective date of the withdrawal, and subject to the
provisions of Section 6.6, may be made in the discretion of the Participant
in the form of cash, or in Employer Stock or in any combination thereof,
provided, however, payment in Employer Stock shall be limited to the extent
a Participant's Account balances are invested in whole shares of such
Employer Stock under Section 7.2 and the Committee may require that all
such Employer Stock be transferred to such Participant or Beneficiary.
(D) Distribution of Elective Deferrals (and earnings thereon accrued
as of December 31, 1988) may be made to a Participant in the event of
hardship. For the purposes of this Section, hardship is defined as an
immediate and heavy financial need of the Employee where such Employee
lacks other available resources. The following are the only financial needs
considered immediate and heavy: deductible medical expenses (within the
meaning of Section 213(d) of the Code) of the Employee, the Employee's
spouse, children, or dependents; the purchase (excluding mortgage payments)
of a principal residence for the Employee; payment of tuition or room and
board for the next quarter or semester of post-secondary education for the
Employee, the Employee's spouse, children or dependents; or the need to
prevent the eviction of the Employee from, or a foreclosure on the mortgage
of, the Employee's principal residence. A distribution will be considered
as necessary to satisfy an immediate and heavy financial need of the
Employee only if:
(1) The Employee has obtained all distributions other than
hardship distributions, and all nontaxable loans under all
plans maintained by the Employer;
(2) All plans maintained by the Employer provide that the
Employee's Elective Deferrals (and Employee Contributions)
will be suspended for twelve months after the receipt of the
hardship distribution;
(3) The distribution is not in excess of the amount of an
immediate and heavy financial need; and
(4) All plans maintained by the Employer provide that the
Employee may not make Elective Deferrals for the Employee's
taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit
under Section 402(g) of the Code for such taxable year less
the amount of such Employee's Elective Deferrals for the
taxable year of the hardship distribution.
A distribution based upon financial hardship cannot exceed the amount
required to meet the immediate financial need created by the hardship and
not reasonably available from other resources of the Participant.
Entitlement to a distribution based on financial hardship shall be
determined by the Committee in its sole and exclusive discretion. The
Committee may require such reasonable proof of immediate financial need as
it deems necessary to uniformly and fairly administer this Section 6.5, as
a condition precedent to any distribution by reason of financial hardship.
(E) Notwithstanding anything contained in Section 6.5(B) regarding the
age of a Participant or financial hardship to the contrary, a Participant
may withdraw all or a portion of his or her Employee Contribution Account
once each calendar month regardless of his or her age or the existence of
any financial hardship if such Participant satisfies all of the other terms
and conditions contained in this Section 6.5.
6.6 DEBITING OF INVESTMENT FUNDS.
If a Participant making less than a total withdrawal of his or her
Accounts under Section 6.5 has his or her Accounts invested in more than
one Investment Fund, the amount withdrawn from his or her Accounts shall be
debited, on a pro rata basis, against each Investment Fund in which such
Accounts are invested.
6.7 REQUIRED DISTRIBUTIONS.
In accordance with Code Section 401(a)(9) and the regulations issued
thereunder, distribution of the Account balances of a Participant will be
made by April 1 of the year following the calendar year in which such
Participant attains age seventy and one-half (70 1/2), and any balances
that arise thereafter will be distributed by each December 31 thereafter.
If the Participant has not yet terminated employment and has balances
invested in Employer Stock, the distribution of such balances shall, to the
maximum extent possible, be made in whole shares of Employer Stock.
6.8 DISTRIBUTION REQUIREMENTS.
(A) Elective Deferrals, Qualified Non-elective Contributions, and
Qualified Matching Contributions and income allocable to each, must comply
with the distribution requirements under Section 401(k)(2)(B) of the Code.
(B) Elective Deferrals, Qualified Non-elective Contributions, and
Qualified Matching Contributions, and income allocable to each are not
distributable to a Participant or his or her Beneficiary or Beneficiaries
in accordance with such Participant's or Beneficiary or Beneficiaries'
election, earlier than upon separation from service, death or disability.
(C) Such amounts may also be distributed upon:
(1) Termination of the Plan without the establishment of another
defined contribution plan.
(2) The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used in a trade or business
of such corporation if such corporation continues to
maintain this Plan after the disposition, but only with
respect to Employees who continue employment with the
corporation acquiring such assets.
(3) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the
meaning of Section 409(d)(3) of the Code) if such
corporation continues to maintain this plan, but only with
respect to Employees who continue employment with such
subsidiary.
(4) The attainment of age fifty-nine and one-half (59 1/2) in
the case of a profit-sharing plan.
(5) The hardship of the Participant subject to the provisions of
Section 6.5(D) of the Plan.
All distributions that may be made pursuant to one or more of the
foregoing distributable events are subject to the spousal and Participant
consent requirements (if applicable) contained in Sections 401(a)(11) and
417 of the Code.
6.9 LOANS TO PARTICIPANTS.
(A) The Committee may, in its sole discretion, and upon such terms and
conditions as it may require, direct the Trustee to loan a Participant an
amount which, when added to all loans outstanding under the Plan and made
by the Participant does not exceed the allowable portion, as determined
under the following table, of the Participant's total Account balances:
Maximum Loan
(Allowable Portion of Total
Total Vested Balance Account Balances)
-------------------- -----------------
$0 - $999 0%
$1,000 or more 50% but not to exceed $50,000
(B) If the Participant participates in another plan or plans by the
Employer or any of the members of the controlled group of corporations of
which the Employer is a part which allow(s) loans, the maximum loan limits
reflected in the above table apply in the aggregate to the Plan and any
such other plan or plans less any Matching Contributions made under the
Plan.
(C) For purposes of this Section, "Total Account Balance" means the
total dollar value, as of the effective date of the loan, of the
Participant's Accounts.
(D) Although used in determining the Total Account Balances, the
Employer Contribution Account balance is not available for loan.
(E) All loans shall be subject to the approval of the Committee which
shall investigate each application for a loan.
(F) In addition to such rules and regulations as the Committee may
adopt, all loans shall comply the following terms and conditions:
(1) An application for a loan by a Participant shall be made in
writing to the Committee whose action thereon shall be
final.
(2) The period of repayment for any loan shall be arrived at by
mutual agreement between the Committee and the borrower, but
such period in no event shall exceed five (5) years, except
that such five (5) year repayment rule shall not apply to
any loan used for the purpose of acquiring or constructing a
home which is the Participant's principal residence.
(3) Each loan shall be made against collateral being the
assignment of not more than fifty percent (50%) of the
borrower's entire right, title and interest in and to the
Trust Fund, supported by the borrower's collateral
promissory note for the amount of the loan, including
interest, payable to the order of the Trustee.
(4) Each loan shall bear interest at a rate to be fixed by the
Committee and, in determining the interest rate, the
Committee shall take into consideration interest rates
currently being charged. The Committee shall not
discriminate among Participants in the matter of interest
rates; but loans granted at different times may bear
different interest rates if, in the opinion of the
Committee, the difference in rates is justified by a change
in general economic conditions. Each loan shall bear
interest at an effective annual percentage rate which is not
less than the prime rate currently being charged to the
Trustee in its banking business, provided that such rate
does not violate any applicable usury laws.
(5) No distribution, other than a hardship withdrawal which is
approved by the Committee pursuant to Section 6.5 shall be
made to any Participant or to a Beneficiary of any such
Participant unless and until all unpaid loans, including
accrued interest thereon, have been repaid.
(6) Notwithstanding anything contained herein to the contrary, a
Participant may not obtain a loan unless it is consented to
by his or her spouse in a signed writing which is notarized
or witnessed by a Plan representative or if the Committee
determines in its sole discretion that such consent is not
obtainable for good cause shown, consistent with applicable
law.
6.10 ELIGIBLE ROLLOVER DISTRIBUTIONS.
(A) This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a distributee
may elect, at the time and in the manner prescribed by the Committee, to
have any portion of an "eligible rollover distribution" paid directly to an
"eligible retirement plan" specified by the "distributee" in the "direct
rollover."
(B) For purposes of this Section, the following definitions shall
apply:
(1) "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 of net unrealized appreciation with
respect to Employer securities).
(2) "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, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described
in Section 401(a) of the Code, that accepts that
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.
(3) "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.
(4) "Direct rollover" - A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
6.11 INVOLUNTARY CASH-OUT OF ACCOUNTS. Notwithstanding any provision of
this Plan to the contrary, to the extent that the value of a Participant's
Accounts on the Valuation Date next following his termination date does not
exceed five thousand dollars ($5,000), such Accounts shall be distributed
in a lump sum as soon as practicable following his termination date.
ARTICLE VII. - INVESTMENT OPTIONS, TRUST FUND
7.1 PARTICIPANT DIRECTED INDIVIDUAL ACCOUNT PLAN.
This Plan is intended to constitute a participant directed individual
account plan under Section 404(c) of ERISA. As such, Participants shall be
provided the opportunity to exercise control over the investment of a
portion of their Accounts under the Plan and to choose from a broad range
of investment alternatives.
7.2 EMPLOYEE SELECTED INVESTMENT OPTIONS, INVESTMENT FUNDS.
(A) Each Participant shall designate, on a form supplied by the
Committee, signed by the Participant and delivered to the Committee, the
Investment Fund(s) established pursuant to paragraph (B) below to which
contributions made pursuant to Sections 4.1(A), 4.3, 4.5, and 4.6 hereof,
are to be invested. A Participant's Employer Contribution Account balance
shall be invested only in Employer Stock, and the Participant shall have no
choice of Investment Funds with respect to such balance.
(B) The Committee shall direct the Trustee to establish three (3) or
more Investment Funds. The Committee also may direct the Trustee to change
the number and type of Investment Funds made available under the Plan from
time to time, without the necessity of Board action or Plan amendment.
7.3 INVESTMENT ELECTIONS.
(A) Each Participant may, except as hereinafter provided, elect with
respect to future contributions to his Employee Contribution Account,
Salary Reduction Contribution Account and Vested Rollover Contribution
Account to have the aggregate contributions to such Account(s) be invested
in a single Fund, or he may direct that ten percent (10%) increments (or
multiples of ten percent (10%) increments), of such Accounts be invested in
such Funds as he shall desire.
(B) Each Participant may change his investment directions in
accordance with the provisions of Section 7.3(A) to provide for the
investment of future contributions among the various Funds in ten percent
(10%) increments (or multiples of ten percent (10%) increments), as he
shall desire. Any such change may be made in accordance with procedures
established by the Committee.
7.4 INVESTMENT TRANSFERS.
Generally, a Participant may transfer amounts between the Investment
Funds in accordance with procedures established by the Committee. The
transfers shall be made in accordance with Section 7.3 in ten percent (10%)
increments (or multiples of ten percent (10%) increments).
7.5 TENDER OFFERS.
As soon as practicable after the commencement of a tender offer or
exchange offer ("Offer") for shares of Employer Stock, the Committee shall
use its reasonable best efforts to cause each Participant (who has an
Account allocated in whole or in part to Employer Stock) to be advised in
writing of the terms of the Offer, together with forms by which the
Participant may instruct the Committee to instruct the Trustee, or revoke
such instruction, to tender shares credited to his or her Account, to the
extent permitted under the terms of any such Offer. The Trustee shall
follow the directions of the Committee but the Trustee shall not tender
shares for which no instructions are received. In advising Participants of
the terms of the Offer, the Committee may include statements from the
management of The Dial Corporation setting forth its position with respect
to the Offer. The giving of instructions to the Trustee to tender shares of
Employer Stock and the tender thereof shall not be deemed a withdrawal or
suspension from the Plan or a forfeiture of any portion of the
Participant's interest in the Plan. The number of shares of Employer Stock
to which a Participant may provide instructions shall be the total number
of shares credited to his or her Account(s), whether or not the shares are
vested, as of the close of business on the day preceding the date on which
the tender offer commences or such earlier date which shall be designated
by the Committee, which the Committee, in its sole discretion, deems
appropriate for reasons of administrative convenience. Any securities
received by the Trustee as a result of a tender of shares hereunder shall
be held, and any cash so received shall be invested in short-term
investments, for the account of each Participant with respect to whom
shares of Employer Stock, were tendered pending any reinvestment by the
Trustee, as it may deem appropriate, consistent with the purposes of the
Plan.
7.6 VOTING OF STOCK.
(A) Each Participant (whose Account has allocated to it any shares of
Employer Stock) shall be entitled to instruct the Committee to instruct the
Trustee in writing how to vote, at each meeting of shareholders, such
shares of Employer Stock and to revoke any such instruction, to the extent
permitted under the terms of such vote. Such instruction or revocation
thereof shall apply to the total number of shares of Employer Stock
credited to the Participant's Accounts, whether or not vested, as of the
date coinciding with or immediately preceding the record date for the
shareholders' meeting or such earlier date which shall be designated by the
Committee which the Committee, in its sole discretion, deems appropriate
for reasons of administrative convenience. All the shares of Employer Stock
for which no instructions are received shall be voted by the Trustee in a
uniform manner as a single block in accordance with the instructions
received with respect to a majority of such shares for which instruction is
received, unless the Trustee, in exercising its discretion as a fiduciary
with respect to the voting of such shares, determines that the interest of
Participants and Beneficiaries requires it to vote in a different way. The
Committee shall use its reasonable best efforts to cause each Participant
(whose Account has allocated to it any shares of Employer Stock) to receive
such notices and informational statements as are furnished to the
shareholders in respect of the exercise of voting rights, together with
forms by which the Participant may instruct the Committee to instruct the
Trustee, or revoke such instruction, with respect to the vote of shares of
Employer Stock credited to his or her Account.
(B) Subsequent to a Participant's investment in any Investment Fund
other than one comprised of Employer Stock, all proxies relating to the
exercise of voting rights incidental to the ownership of any asset which is
held in such Investment Fund shall be passed through, either directly or
indirectly, to the Participant. Each Participant who so receives any
proxies shall be entitled to instruct the Committee to instruct the Trustee
in writing how to vote such proxies and to revoke any such instruction, to
the extent permitted under the terms of the proxy. Neither the Committee
nor the Trustee shall have authority to vote proxies for which no
instructions have been received.
7.7 [OMITTED]
7.8 [OMITTED]
7.9 EXERCISE OF CONTROL.
(A) The Committee shall provide each Participant with the opportunity
to obtain sufficient information to make informed decisions with regard to
investment alternatives available under the Plan, and incidents of
ownership appurtenant to such investments. The Committee shall promulgate
and distribute to Participants an explanation that the Plan is intended to
comply with Section 404(c) of ERISA and any relief from fiduciary liability
resulting therefrom, a description of investment alternatives available
under the Plan, an explanation of the circumstances under which
Participants may give investment instructions and any limitations thereon,
along with all other information and explanations required under Department
of Labor Regulation Section 2550.404c-1(b)(2)(B)(1). In addition, the
Committee shall provide information to Participants upon request as
required by Department of Labor Regulation Section 2550.404c-1(b)(2)(B)(2).
Neither the Employer, Committee, Trustee, nor any other individual
associated with the Plan or the Employer shall give investment advice to
Participants with respect to Plan investments. The providing of information
pursuant to this Article VII shall not in any way be deemed to be the
providing of investment advice, and shall in no way obligate the Employer,
Committee, Trustee or any other individual associated with the Plan or the
Employer to provide any investment advice.
(B) The Committee, pursuant to uniform and nondiscriminatory rules,
may charge each Participant's Accounts for the reasonable expenses of
carrying out investment instructions directly related to such Account,
provided that each Participant is periodically (not less than quarterly)
informed of such actual expenses incurred with respect to his or her
respective Accounts.
(C) The Committee shall decline to implement any Participant
instructions if the instruction is inconsistent with any provisions of the
Plan or Trust Agreement or any investment direction policies adopted by the
Committee from time to time. The Committee also may decline to implement
any Participant instructions to the extent permitted by Department of Labor
regulations issued under Section 404(c) of ERISA. The Committee, pursuant
to uniform and nondiscriminatory rules, may promulgate additional
limitations on investment instruction consistent with Section 404(c) of
ERISA from time to time.
(D) A Participant shall be given the opportunity to make independent
investment directions. No Plan fiduciary shall subject any Participant to
improper influence with respect to any investment decisions, nor shall any
Plan fiduciary conceal any non-public facts regarding a Participant's Plan
investment unless disclosure is prohibited by law. Plan fiduciaries shall
remain completely neutral in all regards with respect to Participant
investment direction. A Plan fiduciary may not accept investment
instructions from a Participant known to be legally incompetent, and any
transactions with a fiduciary, otherwise permitted under this Article VII
and the uniform and nondiscriminatory rules regarding investment direction
promulgated by the Committee, shall be fair and reasonable to the
Participant in accordance with Department of Labor Regulation Section
2550.404c-1(c)(3).
7.10 ADJUSTMENT OF ACCOUNTS.
Adjustments pursuant to Section 5.2 shall be made on a separate fund
basis. Gains and Income or losses attributable to each Investment Fund
shall be allocable strictly to the Investment Fund and Accounts invested
therein. Each Investment Fund shall be invested in accordance with the
provisions of the Plan and the Trust Agreement.
7.11 LIMITATION OF LIABILITY AND RESPONSIBILITY.
The Trustee, the Committee and the Employer shall not be liable for
acting in accordance with the directions of a Participant pursuant to this
Article VII or for failing to act in the absence of any such direction. The
Trustee, the Committee and the Employer shall not be responsible for any
loss resulting from any direction made by a Participant and shall have no
duty to review any direction made by a Participant. The Trustee shall have
no obligation to consult with any Participant regarding the propriety or
advisability of any selection made by the Participant.
7.12 FORMER PARTICIPANTS AND BENEFICIARIES.
For purposes of this Article VII, the term "Participant" shall be
deemed to include former Participants and the Beneficiaries of any deceased
Participants.
ARTICLE VIII. - ADMINISTRATION OF THE PLAN
8.1 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES FOR PLAN AND TRUST
ADMINISTRATION.
A Retirement Committee, composed of at least three members, shall be
appointed by the Board of Directors. Each member of the Retirement
Committee shall serve at the will of the Board and without compensation.
The Retirement Committee shall be the "named fiduciaries" of the Plan
within the meaning of Section 402(a) of ERISA. A member of the Retirement
Committee shall cease to be a member of such committee either automatically
upon ceasing to be an officer, director or employee of the Company or upon
resignation delivered in writing to the Board. In the event of such a
vacancy in membership, the remaining members of the Retirement Committee
shall have full power to act until such vacancy is filled. The usual and
reasonable expenses of the Retirement Committee shall be paid by the
Company, to the extent not paid by the Plan.
8.2 APPOINTMENT OF COMMITTEE.
Except as may be reserved elsewhere in this Plan, the Retirement
Committee shall administer the Plan and shall have the sole responsibility
for the administration thereof. In exercising any of its discretionary
powers with respect to the administration of the Plan, the Retirement
Committee shall act in a uniform and nondiscriminatory manner and for the
exclusive benefit of the Participants, retired Participants and their
Beneficiaries. The Retirement Committee shall have all powers and duties
necessary and proper to carry out its responsibilities under the Plan
including, but not by way of limitation,
(A) To construe and interpret the Plan and the Trust, resolve any
ambiguities and decide all questions as to eligibility and the
determination of the amount, manner and time of payment of any benefits
thereunder.
(B) To prescribe procedures to be followed and forms to be used by
Participants or Beneficiaries of the Plan, and to establish such rules and
guidelines as may be necessary or desirable for the proper administration
of the Plan.
(C) To prepare and distribute, in such manner as it determines to be
appropriate, all reports, returns and information related to the Plan,
whether as required by law or at the request of Participants, Beneficiaries
or other persons, or otherwise.
(D) To receive from the Company and from Participants and
Beneficiaries such information as shall be necessary for the proper
administration of the Plan.
(E) To furnish the Company upon request, such reports with respect to
the administration of the Plan as are reasonable and appropriate.
(F) To employ such experts, counsel and agents, and to secure such
accounting, actuarial and other services as it may deem advisable in
carrying out its powers and duties under the Plan.
(G) To authorize the payment of Plan benefits due to Participants and
Beneficiaries.
(H) To appoint a subcommittee consisting of at least three persons, to
serve at the pleasure of and subject to the rules of the Retirement
Committee, to consider requests for hardship withdrawals and loans under
the applicable provisions of the Plan.
The Retirement Committee shall also have the powers and duties
conferred upon it elsewhere in the Plan. Except as may be otherwise
provided in the Plan, the decision of the Retirement Committee as to any
dispute or question arising hereunder, including questions of construction,
interpretation and administration, shall be final and conclusive.
8.3 AUTHORITY OF COMMITTEE.
The Retirement Committee shall have all powers and duties necessary
and proper for the management and investment of the assets of the Plan,
including, but not by way of limitation,
(A) To establish a funding policy within the meaning of and consistent
with ERISA Section 402(b).
(B) To appoint one or more trustees, to negotiate and enter into on
behalf of the Plan a trust agreement with any such trustee and to terminate
the management of or replace any such trustee.
(C) To appoint one or more investment managers (within the meaning of
Section 3(38) of ERISA) to manage any or all assets of the Plan, to
negotiate and enter into on behalf of the Plan an agreement with any such
investment manager and to terminate the engagement of or replace any such
investment manager.
(D) To provide direction and give instructions to any trustee or
investment manager on all matters within the Retirement Committee's
discretion under the terms of any trust agreement or investment management
agreement.
(E) To execute or deliver any instrument or make any payment in behalf
of the Plan.
(F) To receive, review and keep on file (as it deems convenient or
proper) reports of the financial condition, and of the receipts and
disbursements, of the Trust.
(G) To select, monitor and replace the Investment Funds.
8.4 ACTION BY THE RETIREMENT COMMITTEE.
The Retirement Committee shall appoint a chairman and a secretary from
its members. Action by the Retirement Committee shall be taken by a vote of
the majority of its members present at a meeting at which a quorum is
present or signed by a majority of its members in writing without a
meeting. A majority of the members of the Retirement Committee present at a
meeting duly called shall constitute a quorum. The Retirement Committee
shall make and maintain minutes of each meeting and shall maintain other
appropriate books and records. The Retirement Committee may establish such
rules as it deems necessary or desirable for its own operations.
8.5 EMPLOYMENT OF THIRD PARTIES.
The Retirement Committee may employ one or more persons to render
advice or services with regard to any responsibility it has under the Plan
or Trust. The compensation of such person or persons shall be fixed by the
Retirement Committee.
8.6 ALLOCATION AND DELEGATION.
Except as limited in this Section 8.6 of this Article VIII the
Retirement Committee may allocate among its members, or delegate to any
person who is not a member, any responsibility which it has hereunder. No
responsibility with respect to the management or control of the assets of
the Trust may be so delegated or allocated; provided, however, that the
Retirement Committee may appoint one or more investment managers in respect
of the assets of the Trust. Any delegation or allocation of responsibility
pursuant to this Section 8.6 shall be evidenced by the minutes of the
meeting at which such delegation or allocation was approved or, if no such
meeting was held, by the writing under which such action was taken. Any
action of a person to whom such responsibility has been allocated or
delegated shall have the same force and effect for all purposes hereunder
as if taken by the Retirement Committee. Any allocation or delegation to
any person may be revoked upon written notice delivered to such person. The
Retirement Committee shall monitor any person to which it allocates or
delegates any responsibility pursuant to this Section 8.6 and shall require
such person periodically to report regarding the discharge of such
responsibility.
8.7 REPORTS.
The Retirement Committee shall report to the Board of Directors not
less than annually regarding the administration of the Plan, including, but
not limited to, the management of the assets of the Plan.
8.8 CLAIMS PROCEDURE.
The Committee shall make all determinations as to the right of any
person to a benefit. Benefits will begin upon receipt of a written claim in
the form and manner prescribed by the Committee. If an Employee,
Participant, Beneficiary, or any other person is dissatisfied with the
determination of his benefits, eligibility, participation, or any other
right or interest under this Plan, such person may file a written statement
setting forth the basis of the claim with the Committee in a manner
prescribed by the Committee. In connection with the determination of a
claim, or in connection with review of a denied claim, the claimant may
examine this Plan and any other pertinent documents generally available to
Participants relating to the claim and may submit comments in writing.
A written notice of the disposition of any such claim shall be
furnished to the claimant within thirty (30) days after the claim is filed
with the Committee, provided that the Committee or its designee may have an
additional period to decide the claim if it advises the claimant in writing
of the need for an extension and the date on which it expects to decide the
claim. The notice of the disposition of a claim shall refer, if
appropriate, to pertinent provisions of this Plan, shall set forth in
writing the reasons for denial of the claim if the claim is denied
(including references to any pertinent provisions of this Plan), and where
appropriate shall explain how the claimant can perfect the claim.
If the claim is denied, in whole or in part, the claimant shall also
be notified in writing that a review procedure is available. Thereafter,
within ninety (90) days after receiving the written notice of the
Committee's or its designee's disposition of the claim, the claimant may
request in writing, and shall be entitled to, a review meeting with the
Committee or its designee to present reasons why the claim should be
allowed. The claimant shall be entitled to be represented by counsel at the
review meeting. The claimant also may submit a written statement of his
claim and the reasons for granting the claim. Such statement may be
submitted in addition to, or in lieu of, the review meeting with the
Committee or its designee. The Committee or its designee shall have the
right to request of, and receive from, a claimant such additional
information, documents, or other evidence as the Committee or its designee
may reasonable require. If the claimant does not request a review meeting
within ninety (90) days after receiving written notice of the Committee's
or its designee's disposition of the claim, the claimant shall be deemed to
have accepted the Committee's or its designee's written disposition, unless
the claimant shall have been physically or mentally incapacitated so as to
be unable to request review within the ninety (90) day period.
A decision on review shall be rendered in writing by the Committee or
its designee ordinarily not later than sixty (60) days after review, and a
written copy of such decision shall be delivered to the claimant. If
special circumstances require an extension of the ordinary period, the
Committee or its designee shall so notify the claimant. In any event, if a
claim is not determined within one hundred twenty (120) days after
submission for review, it shall be deemed to be denied.
To the extent permitted by law, a decision on review by the Committee
or its designee shall be binding and conclusive upon all persons
whomsoever. To the extent permitted by law, completion of the claims
procedures described in this Section shall be a mandatory precondition that
must be complied with prior to commencing of a legal or equitable action in
connection with the Plan by a person claiming rights under the Plan or by
another person claiming rights through such a person. The Committee or its
designee, in its sole discretion, may waive those procedures as a mandatory
precondition to such an action.
8.9 APPLICATION AND FORMS FOR BENEFITS.
The Committee may require a Participant or Beneficiary to complete and
file with the Committee an application for a benefit on the forms approved
by the Committee, as a condition precedent to payment of benefits. The
Committee may rely upon all such information so furnished it, including the
Participant's or Beneficiary's current mailing address.
8.10 FACILITY OF PAYMENT.
Whenever, in the Committee's opinion, a person entitled to receive any
payment of a benefit or installment thereof hereunder is under a legal
disability or is incapacitated in any way so as to be unable to manage his
or her financial affairs, the Committee may direct the Trustee to make
payments to such person or to his or her legal representative or to a
relative or friend of such person for his or her benefit, or the Committee
may direct the Trustee to apply the payment for the benefit of such person
in such manner as the Committee may direct the Trustee to apply the payment
for the benefit of such person in such manner as the Committee considers
advisable. Any payment of a benefit or installment thereof in accordance
with the provisions of this Section shall be a complete discharge of any
liability for the making of such payment under the provisions of the Plan.
8.11 INDEMNIFICATION OF THE COMMITTEE.
The Committee and the individual members thereof shall be indemnified
by the Employer and not from the Trust Fund against any and all liability
arising by reason of any act or failure to act made in good faith pursuant
to the provisions of the Plan, including expenses reasonably incurred in
the defense of any claim relating thereto.
ARTICLE IX. - MISCELLANEOUS
9.1 NONGUARANTEE OF EMPLOYMENT.
Nothing contained in the Plan shall be construed as a contract of
employment between the Employer and any Employee, or as a right of any
Employee to be continued in the Employment of the Employer, or as a
limitation of the right of the Employer to discharge any of its Employees,
with or without cause.
9.2 RIGHTS TO TRUST ASSETS.
No Employee, Participant, or Beneficiary shall have any right to, or
interest in, any assets of the Trust Fund at any time, including upon
termination of his or her employment or otherwise, except as provided from
time to time under the Plan, and then only to the extent of the benefits
properly payable under the Plan to a Participant or Beneficiary out of the
assets of the Trust Fund. All payment of benefits as provided for the in
Plan shall be made solely out of the assets of the Trust Fund to the extent
sufficient, and none of the Fiduciaries or Employers shall be liable
therefore in any manner.
9.3 NON-ALIENATION.
(A) Except as permitted by the Plan in accordance with Code section
401(a)(13) and ERISA Section 206(d), no benefit payable at any time under
the Plan shall be subject to the debts or liabilities of a Participant or
his or her Beneficiary, and any attempt to alienate, sell, transfer,
assign, pledge, or otherwise encumber any such benefit, whether presently
or thereafter payable, shall be void. Subject to the foregoing exception,
no benefit under the Plan shall be subject in any manner to attachment,
garnishment, or encumbrance of any kind.
(B) In accordance with procedures consistent with Code Section 414(p)
that are established by the Committee (including procedures requiring
prompt notification of the affected Participant and each potential
alternate payee of the Plan's receipt of a domestic relations order and its
procedures for determining the qualified status of such order), judicial
orders for purposes of enforcing family support obligations or pertaining
to domestic relations (which orders do not alter the amount, timing or form
of benefit other than to have it commence at the earliest permissible date)
shall be honored by the Plan if the Committee determines that they
constitute qualified domestic relations orders within the meaning of Code
Section 414(p) and ERISA Section 206(d).
9.4 NONFORFEITABILITY OF BENEFITS.
Subject only to the specific provisions of the Plan, nothing shall be
deemed to divest a Participant of his or her right to the nonforfeitable
benefit to which he or she becomes entitled in accordance with the
provisions of the Plan.
ARTICLE X. - AMENDMENTS AND ACTION BY EMPLOYER
10.1 AMENDMENTS.
The Company reserves the right to make from time to time any amendment
or amendments to the Plan which do not cause (i) any adverse consequences
to any Participant's rights in his or her Account balances and Funds in
which such balances are invested, or (ii) any part of the Trust Fund to be
used for, or diverted to, any purpose other than the exclusive benefit of
Participants or their Beneficiaries, provided, however, that the Company
may make any amendment it determines necessary or desirable, with or
without retroactive effect, to comply with the Code and other applicable
law.
10.2 ACTION BY THE COMPANY.
Any action by the Company under the Plan may be by resolution of its
Board of Directors, or by any person or persons duly authorized by
resolution of said Board to take such action.
ARTICLE XI. - SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS
11.1 SUCCESSOR EMPLOYER.
In the event of the dissolution, merger, consolidation or
reorganization of an Employer, provision may be made in the sole discretion
of the Company by which the Plan and Trust will be continued by the
successor; and, in that event, such successor shall be substituted for
Employer under the Plan. The substitution of the successor shall constitute
an assumption of Plan liability by the successor and the successor shall
have all of the powers, duties and responsibilities of the Employer under
the Plan.
11.2 CONDITIONS APPLICABLE TO MERGERS OR CONSOLIDATIONS OF PLANS.
In the event of any merger or consolidation of the Plan with, or
transfer in whole or in part of the assets and liabilities of the Trust
Fund to another trust fund held under, any other plan of deferred
compensation maintained or to be established for the benefit of all or some
of the Participants of the Plan, the assets of the Trust Fund applicable to
such Participants shall be merged or consolidated with or transferred to
the other trust fund only if:
(A) Each Participant would (if either this Plan or the other plan then
terminated) receive a benefit immediately after the merger, consolidation
or transfer which is equal or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation or
transfer (if this Plan had then been terminated); and the determination of
such benefits shall be made in the manner and at the time prescribed in
regulations issued under ERISA;
(B) Resolutions of the Boards of Directors of the Employer under the
Plan, or of any new or successor Employer of the affected Participants,
shall authorize such transfer of assets; and, in the case of the new or
successor Employer of the affected Participants, its resolutions shall
include an assumption; of liabilities with respect to such Participants'
inclusion in the new Employer's plan; and
(C) Such other plan and trust are qualified under Sections 401(a) and
501(a) of the Code.
In addition to the foregoing, any merger, consolidation, or transfer
of assets described in this Section shall comply with applicable
requirements of Code Section 411(d)(6) to preserve optional forms of
benefits and other valuable rights that are legally protected.
ARTICLE XII. - PLAN TERMINATION
12.1 RIGHT TO TERMINATE.
In accordance with the procedures set forth in this Article, the
Company may terminate the Plan at any time in its entirety or with respect
to any Employer or group of Employees or Participants. The Board of
Directors of an Employer may terminate the Plan at any time with respect to
its Employees or any group of its Employees or Participants, provided such
Employer has made all contributions due to the Plan to the date of such
termination.
12.2 PARTIAL TERMINATION.
Upon termination of the Plan by the Company or by the Employer with
respect to such Employer or a group of Employees or Participants of such
Employer, the Trustee shall, in accordance with the directions of the
Committee, allocate and segregate for the benefit of the Participants with
respect to which the Plan is being terminated the proportionate interest of
such Participants in the Trust Fund. The funds so allocated and segregated
shall be used by the Trustee to pay benefits to or on behalf of
Participants in accordance with Section 12.3.
12.3 LIQUIDATION OF THE TRUST FUND.
(A) Upon termination or partial termination of the Plan, the accounts
of all Participants affected thereby shall become fully vested, and the
Committee may direct the Trustee: (a) to continue to administer the Trust
fund and pay Account balances in accordance with Article VI to Participants
affected by the termination upon their Termination of Employment or to
their Beneficiaries upon such a Participant's death, until the Trust Fund
has been liquidated; or (b) to distribute the assets remaining in the Trust
Fund, after payment of any expenses properly chargeable thereto, to
Participants and Beneficiaries in proportion to their respective Account
balances or rights thereto.
(B) In case the Committee directs liquidation of the Trust Fund
pursuant to (a) above, the expenses of administering the Plan and Trust, if
not paid by the Employer, shall be paid from the Trust Fund.
(C) The Trustee may delay distribution of assets under Section 12.3
pending receipt of written determination by the Internal Revenue Service
that the Plan is qualified upon termination.
ARTICLE XIII. - ADOPTION OF PLAN
13.1 ADOPTION AGREEMENT.
(A) Subject to the approval of the Company and consistent with the
provisions of ERISA and other applicable law, an Affiliate may adopt the
Plan for its Eligible Employees by entering into an Adoption Agreement in
the form and substance prescribed by the Committee. To the extent approved
by the Committee, each Affiliate may:
(1) Modify the definition of Eligible Employee set forth in
Section 2.1(V) hereof, with respect to its Employees; and
(2) Modify the definition of Compensation set forth in Section
2.1(O) hereof, with respect of its Employees.
Any such modification shall be reflected in the Adoption Agreement and
may be amended from time to time by a written supplement to the Adoption
Agreement with the approval of the Committee. Each Affiliate may determine
the level of Employer contributions to be made by the Affiliate to the
Employer Contribution Accounts of its Eligible Employees in each Plan Year.
(B) The Committee may prospectively require that all provisions of the
Plan be uniformly applied to all Affiliates, as set forth in the Plan,
notwithstanding any modification provisions in an Adoption Agreement. The
Company may prospectively revoke or modify any Affiliate's participation in
the Plan at any time and for any or no reason, without regard to the terms
of any Adoption Agreement, or terminate the Plan with respect to such
Affiliate's Employee Participants.
(C) By Execution of an Adoption Agreement (each of which by this
reference shall become a part of the Plan), the Affiliate agrees to be
bound by all the terms and conditions of the Plan, and delegates all
authority to amend or terminate the Plan, and to appoint and remove the
Committee and Trustee, to the Company.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by
its duly authorized representative effective as of the 1st day of January,
1999.
FREEMAN COSMETIC CORPORATION
By: /s/ Bernhard J. Welle
-----------------------------
Its: Senior Vice President,
Human Resources
-----------------------------
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of The Dial Corporation on Form S-8 of our report dated January 22, 1998,
appearing in the Annual Report on Form 10-K of The Dial Corporation for the
year ended January 3, 1998.
/s/ Deloitte & Touche LLP
- -------------------------
Phoenix, Arizona
January 25, 1999
EXHIBIT 23.1
EXHIBIT 23.2
[LETTERHEAD OF THE DIAL CORPORATION]
January 25, 1999
The Dial Corporation
15501 North Dial Boulevard
Scottsdale, Arizona 85260-1619
RE: Registration Statement on Form S-8 for The Freeman Cosmetic
Corporation Capital Accumulation Plan (As Amended and
Restated Effective as of January 1, 1999) (the "Plan")
Ladies and Gentlemen:
This opinion is delivered in connection with the registration by The
Dial Corporation, a Delaware corporation (the "Company"), on Form S-8 (the
"Registration Statement"), under the Securities Act of 1933 (the "Act"), as
amended, of 150,000 shares of common stock of the Company, par value $.01
per share (the "Common Stock"), together with the associated preferred
stock purchase rights (the "Rights"), issuable pursuant to the Plan.
In arriving at this opinion, I have examined such corporate
instruments, documents, statements and records of the Company, and I have
examined such statutes and regulations and have conducted such legal
analysis, as I have deemed relevant, necessary and appropriate for the
purposes of this opinion. I have assumed the genuineness of all signatures
and the authenticity of all documents submitted to me as originals, the
conformity to original documents of all the documents submitted to me as
certified or photostatic copies, and the authenticity of the originals of
such latter documents. I also have assumed that any future changes to the
terms and conditions of the Plans will be duly authorized by the Company
and will comply with all applicable laws.
Based on the foregoing, I am of the opinion that the 150,000 shares of
Common Stock to be issued pursuant to the Registration Statement, together
with the associated Rights, have been duly authorized and, when issued and
delivered by the Company in accordance with the terms and conditions of the
Plan, will be legally issued, fully paid and nonassessable securities of
the Company.
I hereby consent to the reference to my name in the Registration
Statement and further consent to the inclusion of this opinion as Exhibit 5
to the Registration Statement. In giving this consent, I do not hereby
admit that I am in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission.
The opinion expressed herein is solely for your benefit in connection
with the Registration Statement and may not be relied on in any manner or
for any purpose by any other person or entity and may not be quoted in
whole or in part without my prior written consent.
Very truly yours,
/s/ Jane E. Owens
--------------------------------------
Jane E. Owens
Senior Vice President, General Counsel
and Secretary
