<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 2000
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 jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
15501 NORTH DIAL BOULEVARD
SCOTTSDALE, ARIZONA
85260-1619
(Address of registrant's
principal executive offices)
SARAH MICHAELS, LLC
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
(480) 754-3425
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 150,000 (1) $12.9063 (2) $1,935,945 (2) $512
=========================================================================================================================
</TABLE>
(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 March 28, 2000.
<PAGE> 2
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 Sarah Michaels, LLC Capital Accumulation Plan.
<PAGE> 3
EXPLANATORY NOTE
On September 14, 1998, The Dial Corporation (the "Company") acquired all
of the issued and outstanding shares of common stock of Sarah Michaels, Inc.
("SMI"). Prior to April 1, 2000, SMI maintained the Sarah Michaels, LLC 401(k)
Profit Sharing Plan. Effective as of April 1, 2000, SMI amended and restated
this plan and renamed it the Sarah Michaels, LLC 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
December 31, 1999;
(2) 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
(3) 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.
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<PAGE> 4
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
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<PAGE> 5
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
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<PAGE> 6
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.
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<PAGE> 7
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.
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<PAGE> 8
Item 8. Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
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 -- Sarah Michaels, LLC Capital Accumulation Plan
(Amended and Restated Effective as of April 1,
2000).
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).
</TABLE>
- ---------------------------------------------
* 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;
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<PAGE> 9
(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.
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<PAGE> 10
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 March 31, 2000.
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 March 31, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Chairman of the Board, President and
/s/ Malcolm Jozoff Chief Executive Officer
- ------------------------------------
Malcolm Jozoff
Executive Vice President and
/s/ Susan J. Riley Chief 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
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C>
/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 M. Villar Director
- ------------------------------------
Salvador Villar
</TABLE>
Constituting a majority of the Board of Directors.
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<PAGE> 12
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 March 31, 2000.
/s/ Susan J. Riley
- ------------------------------------
Susan J. Riley
/s/ Mark R. Shook
- ------------------------------------
Mark R. Shook
/s/ Jeffrey S. Weiss
- ------------------------------------
Jeffrey S. Weiss
/s/ Bernhard J. Welle
- ------------------------------------
Bernhard J. Welle
Constituting the Retirement Committee,
which administers the Plan.
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<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
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 Sarah Michaels, LLC Capital Accumulation Plan
(Amended and Restated Effective as of April 1,
2000).
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).
</TABLE>
- ---------------------------
* Incorporated herein by reference.
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<PAGE> 1
Exhibit 4.4
SARAH MICHAELS, LLC CAPITAL ACCUMULATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF APRIL 1, 2000
<PAGE> 2
SARAH MICHAELS, LLC CAPITAL ACCUMULATION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF APRIL 1, 2000
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
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................................ 11
ARTICLE IV. - CONTRIBUTIONS................................................ 11
4.1 EMPLOYER CONTRIBUTIONS............................................... 11
4.2 CODE SECTION 401(K) SALARY REDUCTION................................. 12
4.3 EMPLOYEE CONTRIBUTIONS............................................... 13
4.4 AFTER-TAX SALARY DEDUCTION........................................... 13
4.5 ROLLOVERS AND TRANSFERS FROM OTHER PLANS............................. 13
4.7 TRUST FUND........................................................... 14
4.8 GRANDFATHERED ACCOUNTS............................................... 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...................................... 17
5.4 AVERAGE CONTRIBUTION PERCENTAGE TEST................................. 18
5.5 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS....................... 20
5.6 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS............................ 20
5.7 DISTRIBUTION OF EXCESS CONTRIBUTIONS................................. 21
5.8 MAXIMUM ADDITIONS.................................................... 22
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.................................................. 27
6.3A PAYMENT OF GRANDFATHERED ACCOUNTS................................... 27
6.3B PAYMENT OF ACCOUNTS OTHER THAN GRANDFATHERED ACCOUNTS............... 28
6.4 DESIGNATION OF BENEFICIARY........................................... 28
6.5 WITHDRAWALS.......................................................... 29
6.6 DEBITING OF INVESTMENT FUNDS......................................... 31
6.7 REQUIRED DISTRIBUTIONS............................................... 31
</TABLE>
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<TABLE>
<S> <C>
6.8 DISTRIBUTION REQUIREMENTS............................................ 31
6.9 LOANS TO PARTICIPANTS................................................ 32
6.10 ELIGIBLE ROLLOVER DISTRIBUTIONS..................................... 33
6.11 INVOLUNTARY CASH-OUT OF ACCOUNTS.................................... 34
ARTICLE VII. - INVESTMENT OPTIONS, TRUST FUND.............................. 34
7.1 PARTICIPANT DIRECTED INDIVIDUAL ACCOUNT PLAN......................... 34
7.2 EMPLOYEE SELECTED INVESTMENT OPTIONS, INVESTMENT FUNDS............... 34
7.3 INVESTMENT ELECTIONS................................................. 34
7.4 INVESTMENT TRANSFERS................................................. 35
7.5 TENDER OFFERS........................................................ 35
7.6 VOTING OF STOCK...................................................... 35
7.9 EXERCISE OF CONTROL.................................................. 36
7.10 ADJUSTMENT OF ACCOUNTS.............................................. 37
7.11 LIMITATION OF LIABILITY AND RESPONSIBILITY.......................... 37
7.12 FORMER PARTICIPANTS AND BENEFICIARIES............................... 37
ARTICLE VIII. - ADMINISTRATION OF THE PLAN................................. 37
8.1 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES FOR PLAN AND TRUST
ADMINISTRATION........................................................... 37
8.2 APPOINTMENT OF COMMITTEE............................................. 37
8.3 AUTHORITY OF COMMITTEE............................................... 38
8.4 ACTION BY THE RETIREMENT COMMITTEE................................... 39
8.5 EMPLOYMENT OF THIRD PARTIES.......................................... 39
8.6 ALLOCATION AND DELEGATION............................................ 39
8.7 REPORTS.............................................................. 39
8.8 CLAIMS PROCEDURE..................................................... 39
8.9 APPLICATION AND FORMS FOR BENEFITS................................... 40
8.10 FACILITY OF PAYMENT................................................. 40
8.11 INDEMNIFICATION OF THE COMMITTEE.................................... 41
ARTICLE IX. - MISCELLANEOUS................................................ 41
9.1 NONGUARANTEE OF EMPLOYMENT........................................... 41
9.2 RIGHTS TO TRUST ASSETS............................................... 41
9.3 NON-ALIENATION....................................................... 41
9.4 NONFORFEITABILITY OF BENEFITS........................................ 41
ARTICLE X. - AMENDMENTS AND ACTION BY EMPLOYER............................. 41
10.1 AMENDMENTS.......................................................... 41
10.2 ACTION BY THE COMPANY............................................... 42
ARTICLE XI. - SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLANS...... 42
11.1 SUCCESSOR EMPLOYER.................................................. 42
11.2 CONDITIONS APPLICABLE TO MERGERS OR CONSOLIDATIONS OF PLANS......... 42
ARTICLE XII. - PLAN TERMINATION............................................ 42
12.1 RIGHT TO TERMINATE.................................................. 42
12.2 PARTIAL TERMINATION................................................. 43
12.3 LIQUIDATION OF THE TRUST FUND....................................... 43
ARTICLE XIII. - ADOPTION OF PLAN........................................... 43
13.1 ADOPTION AGREEMENT.................................................. 43
</TABLE>
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SARAH MICHAELS, LLC CAPITAL ACCUMULATION PLAN
ARTICLE I. - INTRODUCTION
1.1 ESTABLISHMENT AND EFFECTIVE DATE.
Effective as of April 1, 2000 (the "Effective Date"), Sarah Michaels, LLC
(the "Company") hereby amends and restates the Sarah Michaels, LLC 401(k) Profit
Sharing Plan and renames it the Sarah Michaels, LLC Capital Accumulation Plan
(the "Plan").
1.2 INTRODUCTION.
(A) On September 14, 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 21, 1999, the Sole
Managers of the Company (the "Sole Managers") (i) amended the Plan 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
(with certain of these amendments taking effect as of January 1, 1999, others
taking effect as of January 1, 2000, and others taking effect on April 1, 2000)
and (ii) authorized this restatement of the Plan, effective as of April 1,
2000.
(C) It is the intention of the Sole Managers 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 Sole
Managers 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
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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.
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(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: Sarah Michaels, LLC.
(O) Compensation: Effective as of April 1, 2000, 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]
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(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
April 1, 2000.
(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; provided, however, that, on and after April 1, 2000,
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 shall not be Eligible Employees, 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.
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(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: Sarah Michaels, LLC and 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
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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 sum of all account balances of a
Participant in the Plan as of March 31, 2000, together with gains and or losses
thereon.
(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
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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
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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: Sarah Michaels, LLC Capital Accumulation Plan, as amended from
time to time. The Plan is an amendment and restatement, effective as of April 1,
2000, of the Sarah Michaels 401(k) 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]
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(YY) Trust (or Trust Fund): The fund known as the Sarah Michaels, LLC
Capital Accumulation Plan Trust (or such other trust that the Committee
designates), 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 Sole
Managers 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, 2000 and ending November 30,
2000. 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 March 31, 2000, 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 March 31,
2000 but was not a Participant on such date, such Eligible Employee shall become
a Participant not later than the
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first day of the first calendar quarter commencing on or after the date on which
he or she has been an Employee for six (6) consecutive months.
(C) With respect to any Employee who first became an Eligible Employee on
and following April 1, 2000, 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
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<PAGE> 14
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, 2000, 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,
2000, 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 January 1, 2000, 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 Sole Managers of the Company, or the delegate of the Sole
Managers, 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
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<PAGE> 15
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.
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<PAGE> 16
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, 2000 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 commencing on or
after April 1, 2000. 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
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<PAGE> 17
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,
effective on and after January 1, 2000, 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 January 1, 1999, the account balances of each Participant in the
Plan shall be one hundred percent (100%) vested and non-forfeitable. Effective
as of March 31, 2000, 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. Other
than as set forth in the preceding sentence, no allocations or 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
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<PAGE> 18
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
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<PAGE> 19
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.
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<PAGE> 20
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
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<PAGE> 21
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
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<PAGE> 22
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.
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<PAGE> 23
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
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<PAGE> 24
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
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<PAGE> 25
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
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<PAGE> 26
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
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<PAGE> 27
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:
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<PAGE> 28
<TABLE>
<CAPTION>
Vested Forfeited
Years of Service Percentage Percentage
---------------- ---------- ----------
<S> <C> <C>
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%
</TABLE>
(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
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<PAGE> 29
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 regulations 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.
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<PAGE> 30
(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) 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 sum payment; or
(ii) In cash in a series of substantially equal annual or more
frequent installments, with or without a period certain (of 10 or 20 years) over
a period of:
(a) If the Participant had made an effective election under
Section 242(b)(2) of TEFRA which has not been revoked, any period allowed by the
Internal Revenue Code and Regulations as in effect prior to TEFRA, or if longer,
any period permitted in (b) below;
(b) Otherwise, over a period not to exceed the greater of: (A)
the Participant's life expectancy or (B) the joint and last survivor life
expectancy of the Participant and his or her designated beneficiary (if such
beneficiary is an individual).
(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 or such later date following such termination date as
the Participant may elect.
(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.
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<PAGE> 31
(F) 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 or her
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
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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.
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(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
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<PAGE> 34
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.
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(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:
<TABLE>
<CAPTION>
Maximum Loan
(Allowable Portion of Total
Total Vested Balance Account Balances)
-------------------- -----------------
<S> <C> <C>
$0 - $999 0%
$1,000 or more 50% but not to exceed $50,000
</TABLE>
(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.
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(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
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<PAGE> 37
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. Effective April 1, 2000, 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 action by the Sole Managers 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.
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(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.
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<PAGE> 39
(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
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<PAGE> 40
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 Sole Managers of the Company. Each member of the Retirement
Committee shall serve at the will of the Sole Managers 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 Sole Managers. 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.
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<PAGE> 41
(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.
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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 Sole Managers of the Company
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
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<PAGE> 43
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.
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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,
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<PAGE> 45
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 Sole
Managers, or by any person or persons duly authorized by resolution of the Sole
Managers 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 Board of Directors or other governing body 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 or other
governing body 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.
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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.
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(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.
SARAH MICHAELS, LLC
By: /s/ Jane E. Owens
--------------------------------
Vice President and Secretary of
Sarah Michaels, Inc. and
SMILLC Holding Co., Inc.,
Sole Managers of Sarah Michaels,
LLC
--------------------------------
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<PAGE> 1
Exhibit 5
March 31, 2000
The Dial Corporation
15501 North Dial Boulevard
Scottsdale, Arizona 85260-1619
RE: Registration Statement on Form S-8 for Sarah Michaels 401(k) Plan
(As Amended and Restated Effective as of April 1, 2000) (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 Plan 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.
<PAGE> 2
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
<PAGE> 1
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 25, 2000, appearing
in the Annual Report on Form 10-K of The Dial Corporation for the year ended
December 31, 1999.
/s/ Deloitte & Touche LLP
- -----------------------------------
Deloitte & Touche LLP
Phoenix, Arizona
March 27, 2000
