<PAGE>
As filed with the Securities and Exchange Commission on November 8, 1996
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
DELTA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 11-3336165
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1000 Woodbury Road, Suite 200
Woodbury, New York 11797
(516) 364-8500
(Address of Principal Executive Offices)
1996 Stock Option Plan of Delta Financial Corporation,
Delta Funding Corp. 401(k) Profit Sharing Plan
(Full title of the plans)
HUGH I. MILLER
Chief Executive Officer
DELTA FINANCIAL CORPORATION
1000 Woodbury Road, Suite 200
Woodbury, New York 11797
(Name and address of agent for service)
(516) 364-8500
(Telephone number, including area code, of agent for service)
________________
Copies to:
JAMES R. TANENBAUM, Esq.
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004-2696
(212) 806-5400
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Title of Each Class of Amount to be Proposed Maximum Offering Proposed Maximum Amount of
Securities to be Registered Price Per Share (3) Aggregate Offering Price Registration
Registered (3) Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 2,200,000
$.01 per share shares (1) $16.50 $36,300,000 $11,000
- -------------------------------------------------------------------------------------------------------------------
Common Stock, par value 72,000
$.01 per share shares (2) $16.50 $ 1,188,000 $ 360
- -------------------------------------------------------------------------------------------------------------------
Total 2,272,000
shares $16.50 $37,488,000 $11,300
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of 2,200,000 shares of Common Stock of the Registrant which are
issuable upon exercise of options which have been or will be granted under
the 1996 Stock Option Plan of Delta Financial Corporation. This
Registration Statement also covers an indeterminate number of shares of
Common Stock which may be issuable by reason of stock splits, stock
dividends or similar transactions.
(2) Consists of 72,000 shares of Common Stock of the Registrant which may be
purchased from time to time at market prices for participants in the Delta
Funding Corp. 401(k) Profit Sharing Plan. In addition, pursuant to Rule
416(c) under the Securities Act of 1933 (the "Securities Act"), this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the Delta Funding Corp. 401(k) Profit
Sharing Plan.
(3) Calculated pursuant to Rule 457(h)(1) under the Securities Act and based
upon the original option exercise prices for shares of Common Stock.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Note: The documents containing the information specified in Part I of Form
S-8 will be sent or given to participants as specified by Rule
428(b)(1) under the Securities Act of 1933, as amended (the
"Securities Act"). Such documents need not be filed with the
Securities and Exchange Commission (the "Commission") either as part
of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424 under the Securities Act. These
documents and the documents incorporated by reference in the
Registration Statement pursuant to Item 3 of Part II of this Form S-8,
taken together, constitute a prospectus that meets the requirements of
Section 10(a) of the Securities Act. See Rule 428(a)(1) under the
Securities Act.
This Registration Statement on Form S-8 of Delta Financial Corporation, a
Delaware corporation (the "Registrant"), covers 2,272,000 shares of the
Registrant's Common Stock, par value $.01 per share ("Common Stock"), reserved
for issuance under the following employee benefit plans of the Registrant
(collectively, the "Plans"):
(i) 1996 Stock Option Plan of Delta Financial Corporation; and
(ii) Delta Funding Corp. 401(k) Profit Sharing Plan.
If necessary for a prospectus to be used for reoffers of the Registrant's
Common Stock acquired pursuant to the Plans, a prospectus prepared in accordance
with the requirements of Form S-3 will be filed as part of this Registration
Statement by means of a post-effective amendment hereto.
I-1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Registrant with the Commission are
incorporated herein by reference:
(a) The Registrant's prospectus filed on November 1, 1996 pursuant to Rule
424(b) under the Securities Act;
(b) All other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the date hereof; and
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A, dated September 3,
1996, including any amendments thereto or reports filed for the
purpose of updating such description.
In addition, all documents subsequently filed by the Registrant
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all securities
registered hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of the filing of such documents.
Any statement contained herein or 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 other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant's Certificate of Incorporation eliminates, to the fullest
extent permitted by the Law of the State of Delaware, personal liability of
directors to the Registrant and its stockholders for monetary damages for breach
of fiduciary duty as directors.
Section 145(a) of the Delaware General Corporation Law ("DGCL") provides in
relevant part that "a corporation may indemnify any person who was or is a party
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 the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he 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."
With respect to derivative actions, Section 145(b) of the DGCL provides in
relevant part that "[a] corporation may indemnify any person who was or is a
party 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 to procure a
judgment in its favor... [by reason of his service in one of the capacities
specified in the preceding sentence] against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the defense or
settlement or such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
II-1
<PAGE>
corporation and except that no indemnification shall be made 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 of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper".
Article NINTH of the Company's Certificate of Incorporation, provides:
"To the full extent permitted by the Delaware General Corporation Law or
any other applicable law currently or hereafter in effect, no Director of
the Company will be personally liable to the Company or its stockholders
for or with respect to any acts or omissions in the performance of his or
her duties as a Director of the Company. Any repeal or modification of this
Article Ninth will not adversely affect any right or protection of a
Director of the Company existing prior to such repeal or modification."
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
4.1* 1996 Stock Option Plan of Delta Financial Corporation.
4.2* Delta Funding Corp. 401(k) Profit Sharing Plan.
5.1* Opinion of Stroock & Stroock & Lavan as to the legality of the
securities being offered.
23.1* Consent of KPGM Peat Marwick LLP with respect to financial statements
of the Registrant.
23.2* Consent of Stroock & Stroock & Lavan (included in Exhibit 5.1).
24* Powers of Attorney (included on p. II-4 of this Registration
Statement).
- ----------
* Filed herewith.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement
to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material changes to such information in the
Registration Statement;
(2) 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;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions of Item 6 of this
Registration Statement, or otherwise, the Registrant has been advised
that, in the opinion of the Commission 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 Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant 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
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that the Delta Funding
Corp. 401(k) Profit Sharing Plan has been submitted to the Internal
Revenue Service (the "IRS") and that the Registrant has made all
changes required by the IRS in order to qualify the Delta Funding
Corp. 401(k) Profit Sharing Plan.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Town of Oyster Bay, State of New York on the 5th day of
November, 1996.
DELTA FINANCIAL CORPORATION
By: /s/ Hugh I. Miller
______________________________________
Hugh I. Miller
Chief Executive Officer
and President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitute and appoints Sidney A. Miller and Hugh I. Miller, and each of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) of and supplements to this Registration Statement and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorneys-in-fact and agents and each of them full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, to all intents and purposes and as fully as they might or
could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the 5th day of November, 1996.
Signature Capacity
--------- --------
/s/ Sidney A. Miller
_______________________________ Chairman of the Board
Sidney A. Miller
/s/ Hugh I. Miller
_______________________________ Chief Executive Officer,
Hugh I. Miller President and Director
(Principal and Executive Officer)
/s/ Richard Blass
_______________________________ Senior Vice President and
Richard Blass Director
/s/ Irwin Fein
_______________________________ Chief Financial Officer,
Irwin Fein Secretary and Treasurer
(Principal Accounting Officer)
/s/ Martin D. Payson
_______________________________ Director
Martin D. Payson
/s/ Arnold B. Pollard
_______________________________ Director
Arnold B. Pollard
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, the
trustees have duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Town of Oyster Bay, State
of New York on the 5th day of November, 1996.
DELTA FUNDING CORP. 401(k) PROFIT SHARING PLAN
By: /s/ Sidney A. Miller, Trustee
_____________________________________
Sidney A. Miller, Trustee
By: /s/ Hugh I. Miller, Trustee
_____________________________________
Hugh I. Miller, Trustee
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
4.1* 1996 Stock Option Plan of Delta Financial
Corporation.
4.2* Delta Funding Corp. 401(k) Profit Sharing
Plan.
5.1* Opinion of Stroock & Stroock & Lavan as to the
legality of the securities being offered.
23.1* Consent of KPMG Peat Marwick LLP with respect
to financial statements of the Registrant.
23.3* Consent of Stroock & Stroock & Lavan (included
in Exhibit 5.1).
24* Powers of Attorney (included on p. II-4 of
this Registration Statement).
- --------
* Filed herewith.
<PAGE>
1996 STOCK OPTION PLAN
OF
DELTA FINANCIAL CORPORATION
1. Purpose. The purpose of this Stock Option Plan is to advance the
interests of the Corporation by encouraging and enabling the acquisition of a
larger personal proprietary interest in the Corporation by employees and
directors of, and consultants to, the Corporation, and its Subsidiaries upon
whose judgment and keen interest the Corporation is largely dependent for the
successful conduct of its operations and by providing such employees, directors
and consultants with incentives to put forth maximum efforts for the success of
the Corporation's business. It is anticipated that the acquisition of such
proprietary interest in the Corporation and such incentives will stimulate the
efforts of such employees, directors and consultants on behalf of the
Corporation and its Subsidiaries and strengthen their desire to remain with the
Corporation and its Subsidiaries. It is also expected that such incentives and
the opportunity to acquire such a proprietary interest will enable the
Corporation and its Subsidiaries to attract desirable personnel.
2. Definitions. When used in this Plan, unless the context otherwise
requires:
(a) "Board of Directors" or "Board" shall mean the Board of Directors
of the Corporation, as constituted at any time.
(b) "Chairman of the Board" shall mean the person who at the time
shall be Chairman of the Board of Directors.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the Committee hereinafter described in
Section 3.
(e) "Corporation" shall mean Delta Financial Corporation, a Delaware
corporation.
(f) "Eligible Persons" shall mean those persons described in Section 4
who are potential recipients of Options.
(g) "Fair Market Value" on a specified date shall mean the closing
price at which a Share is traded on the stock exchange, if any, on which
Shares are primarily traded, but if no Shares were traded on such date,
then on the last previous date on which a Share was so traded, or,
<PAGE>
if the above is not applicable, the value of a Share as established by the
Committee for such date using any reasonable method of valuation.
(h) "Options" shall mean the Stock Options granted pursuant to this
Plan.
(i) "Plan" shall mean this 1996 Stock Option Plan of Delta Financial
Corporation, as adopted by the Board of Directors on October 8, 1996, and
approved by stockholders on October 8, 1996, as such Plan from time to time
may be amended.
(j) "President" shall mean the person who at the time shall be the
President of the Corporation.
(k) "Share" shall mean a share of common stock of the Corporation.
(l) "Subsidiary" shall mean any corporation 50% or more of whose stock
having general voting power is owned by the Corporation, or by another
Subsidiary, as herein defined, of the Corporation.
3. Committee. The Plan shall be administered by a Committee appointed by
the Board of Directors which shall consist of two or more directors of the
Corporation, each of whom shall be a "Non-Employee Director" within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and an "outside director" within the meaning of Section 162(m)
of the Code and the regulations promulgated thereunder. Notwithstanding the
foregoing, prior to the commencement of an initial public offering of Shares in
a transaction registered under the Securities Act of 1933, as amended, the Plan
shall be administered by the Board of Directors and all references in the Plan
to the Committee shall be deemed to refer to the Board of Directors during such
period.
4. Participants. All employees and directors of, and consultants to, the
Corporation or a Subsidiary, as determined by the Committee, shall be eligible
to receive Options under the Plan. The parties to whom Options are granted under
this Plan, and the number of Shares subject to each such Option, shall be
determined by the Committee in its sole discretion, subject, however, to the
terms and conditions of this Plan. Employees to whom Options may be granted
include employees who are also directors of the Corporation, or a Subsidiary.
5. Shares. Subject to the provisions of Section 14 hereof, the Committee
may grant Options with respect to an
- 2 -
<PAGE>
aggregate of up to 2,200,000 Shares, all of which Shares may be either Shares
held in treasury or authorized but unissued Shares. The maximum number of Shares
which may be the subject of Options granted to any individual during the
duration of the Plan shall not exceed 1,000,000 Shares. If the Shares that would
be issued or transferred pursuant to any Option are not issued or transferred
and cease to be issuable or transferable for any reason, the number of Shares
subject to such Option will no longer be charged against the limitation provided
for herein and may again be made subject to Options; provided, however, that
with respect to any Option granted to any Eligible Person who is a "covered
employee" as defined in Section 162(m) of the Code and the regulations
promulgated thereunder that is canceled or repriced, the number of Shares
subject to such Option shall continue to count against the maximum number of
Shares which may be the subject of Options granted to such Eligible Person and
such maximum number of Shares shall be determined in accordance with Section
162(m) of the Code and the regulations promulgated thereunder.
6. Grant of Options. The number of any Options to be granted to any
Eligible Person shall be determined by the Committee in its sole discretion. At
the time an Option is granted, the Committee may, in its sole discretion,
designate whether such Option (a) is to be considered as an incentive stock
option within the meaning of Section 422 of the Code, or (b) is not to be
treated as an incentive stock option for purposes of this Plan and the Code. No
Option which is intended to qualify as an incentive stock option shall be
granted under this Plan to any individual who, at the time of such grant, is not
an employee of the Corporation or a Subsidiary.
Notwithstanding any other provision of this Plan to the contrary, to the
extent that the aggregate Fair Market Value (determined as of the date an Option
is granted) of the Shares with respect to which Options which are designated as
(or deemed to be) incentive stock options granted to an employee (and any
incentive stock options granted to such employee under any other incentive stock
option plan maintained by the Corporation or any Subsidiary that meets the
requirements of Section 422 of the Code) first become exercisable in any
calendar year exceeds $100,000, such Options shall be treated as Options which
are not incentive stock options. Options with respect to which no designation is
made by the Committee shall be deemed to be options which are not incentive
stock options. This paragraph shall be applied by taking Options into account in
the order in which they are granted.
Nothing herein contained shall be construed to prohibit the issuance of
Options at different times to the same person.
- 3 -
<PAGE>
The form of an Option shall be determined from time to time by the
Committee. A certificate of Option signed by the Chairman of the Board or the
President or a Vice President of the Corporation, attested by the Treasurer or
an Assistant Treasurer, or Secretary or an Assistant Secretary of the
Corporation and bearing the seal of the Corporation affixed thereto, shall be
issued to each person to whom an Option is granted. The certificate of Option
for an Option shall be legended to indicate whether or not the Option is an
incentive stock option.
7. Purchase Price. The purchase price per Share for the Shares purchased
pursuant to the exercise of an Option shall be fixed by the Committee at the
time of grant of the Option; provided, however, that the purchase price per
Share for the Shares to be purchased pursuant to the exercise of an incentive
stock option shall not in any event be less than 100% of the Fair Market Value
of a Share on the date of grant of the Option.
8. Duration of Options. The duration of each Option shall be determined by
the Committee at the time of grant; provided, however, that the duration of any
Option shall not be more than ten years from the date upon which the Option is
granted.
9. Ten Percent Stockholders. Notwithstanding any other provision of this
Plan to the contrary, no Option which is intended to qualify as an incentive
stock option may be granted under this Plan to any employee who, at the time the
Option is granted, owns Shares possessing more than 10 percent of the total
combined voting power or value of all classes of stock of the Corporation,
unless the exercise price under such Option is at least 110% of the Fair Market
Value of a Share on the date such Option is granted and the duration of such
Option is no more than five years.
10. Exercise of Options. Except as otherwise provided herein, Options,
after the grant thereof, shall be exercisable by the holder at such rate and
times as may be fixed by the Committee at the time of grant. Notwithstanding the
foregoing, all or any part of any remaining unexercised Options granted to any
person may be exercised upon the occurrence of such special circumstance or
event as in the opinion of the Board of Directors merits special consideration;
provided, however, that in the case of an Option held by a member of the Board,
such member shall abstain from any determination hereunder to accelerate the
exercisability of such Option unless the acceleration applies to all Options
then outstanding.
An Option shall be exercised by the delivery of a written notice duly
signed by the holder thereof to such effect ("Exercise Notice"), together with
the Option certificate and
- 4 -
<PAGE>
the full purchase price of the Shares purchased pursuant to the exercise of the
Option, to the President or an officer of the Corporation appointed by the
President for the purpose of receiving the same. Payment of the full purchase
price shall be made as follows: in cash or by check payable to the order of the
Corporation; by delivery to the Corporation of Shares which shall be valued at
their Fair Market Value on the date of exercise of the Option (provided, that a
holder may not use any Shares unless the holder has beneficially owned such
Shares for at least six months); by a combination of the methods of payment
previously described; or by such other method of payment as the Committee in its
discretion may permit.
Within a reasonable time after the exercise of an Option, the Corporation
shall cause to be delivered to the person entitled thereto, a certificate for
the Shares purchased pursuant to the exercise of the Option. If the Option shall
have been exercised with respect to less than all of the Shares subject to the
Option, the Corporation shall also cause to be delivered to the person entitled
thereto a new Option certificate in replacement of the certificate surrendered
at the time of the exercise of the Option, indicating the number of Shares with
respect to which the Option remains available for exercise, or the original
Option certificate shall be endorsed to give effect to the partial exercise
thereof.
Notwithstanding any other provision of the Plan or of any Option, no Option
granted pursuant to the Plan may be exercised at any time when the Option or the
granting or exercise thereof violates any law or governmental order or
regulation.
11. Consideration for Options. The Corporation shall obtain such
consideration for the grant of an Option as the Committee in its discretion may
determine.
12. Non-transferability of Options. Options and all other rights thereunder
shall be non-transferable or non-assignable by the holder thereof except to the
extent that the estate of a deceased holder of an Option may be permitted to
exercise them. Options may be exercised or surrendered during the holder's
lifetime only by the holder thereof.
13. Termination of Employment or Service. All or any part of any Option, to
the extent unexercised, shall terminate immediately, upon the cessation or
termination for any reason of the holder's employment by, or service with, the
Corporation, the Parent or any Subsidiary, except that the holder shall have
until the end of the thirtieth day following the cessation of his employment or
service with the Corporation or its Subsidiaries, and no longer, to exercise any
unexercised Option that he could have exercised on the day on which such
employment
- 5 -
<PAGE>
or service terminated; provided, that such exercise must be accomplished prior
to the expiration of the term of such Option. Notwithstanding the foregoing, if
the cessation of employment or service is due to disability (to an extent and in
a manner as shall be determined in each case by the Committee in its sole
discretion) or to death, the holder or the representative of the estate of a
deceased holder shall have the privilege of exercising any unexercised Options
which the holder could have exercised at the time of such disability or death or
which the Board determines to accelerate pursuant to Section 10; provided,
however, that such exercise must be accomplished prior to the expiration of the
term of such Option and within one year of the holder's disability or death, as
the case may be. Notwithstanding any other provision of the Plan, the Board of
Directors may in its discretion extend the post-termination exercise period with
respect to any individual Option, but in no event beyond the expiration of the
original term of such Option. If the employment or service of any holder of an
Option with the Corporation or a Subsidiary shall be terminated because of the
holder's violation of the duties of such employment or service with the
Corporation or a Subsidiary as he may from time to time have, the existence of
which violation shall be determined by the Committee in its sole discretion
(which determination by the Committee shall be conclusive) all unexercised
Options of such holder shall terminate immediately upon such termination of the
holder's employment or service with the Corporation and all Subsidiaries, and a
holder of Options whose employment or service with the Corporation and any
Subsidiaries is so terminated, shall have no right after such termination to
exercise any unexercised Option he might have exercised prior to the termination
of his employment or service with the Corporation and Subsidiaries.
14. Adjustment Provision. If prior to the complete exercise of any Option
there shall be declared and paid a stock dividend upon the Shares or if the
Shares shall be split up, converted, exchanged, reclassified, or in any way
substituted for, then the Option, to the extent that it has not been exercised,
shall entitle the holder thereof upon the future exercise of the Option to such
number and kind of securities or cash or other property subject to the terms of
the Option to which he would have been entitled had he actually owned the Shares
subject to the unexercised portion of the Option at the time of the occurrence
of such stock dividend, split-up, conversion, exchange, reclassification or
substitution, and the aggregate purchase price upon the future exercise of the
Option shall be the same as if the originally optioned Shares were being
purchased thereunder.
Any fractional shares or securities issuable upon the exercise of the
Option as a result of such adjustment shall be
- 6 -
<PAGE>
payable in cash based upon the Fair Market Value of such shares or securities at
the time of such exercise. If any such event should occur, the number of Shares
with respect to which Options remain to be issued, or with respect to which
Options may be reissued, shall be adjusted in a similar manner.
Notwithstanding any other provision of the Plan, in the event of a
recapitalization, merger, consolidation, rights offering, separation,
reorganization or liquidation, or any other change in the corporate structure or
outstanding shares, the Committee may make such equitable adjustments to the
number of Shares and the class of shares available hereunder or to any
outstanding Options as it shall deem appropriate to prevent dilution or
enlargement of rights.
15. Issuance of Shares and Compliance with Securities Act. The Corporation
may postpone the issuance and delivery of Shares pursuant to the grant or
exercise of any Option until (a) the admission of such Shares to listing on any
stock exchange on which Shares of the Corporation of the same class are then
listed, and (b) the completion of such registration or other qualification of
such Shares under any State or Federal law, rule or regulation as the
Corporation shall determine to be necessary or advisable. Any holder of an
Option shall make such representations and furnish such information as may, in
the opinion of counsel for the Corporation, be appropriate to permit the
Corporation, in the light of the then existence or non-existence with respect to
such Shares of an effective Registration Statement under the Securities Act of
1933, as from time to time amended (the "Securities Act"), to issue the Shares
in compliance with the provisions of the Securities Act or any comparable act.
The Corporation shall have the right, in its sole discretion, to legend any
Shares which may be issued pursuant to the grant or exercise of any Option, or
may issue stop transfer orders in respect thereof.
16. Income Tax Withholding. If the Corporation, or a Subsidiary shall be
required to withhold any amounts by reason of any Federal, State or local tax
rules or regulations in respect of the issuance of Shares pursuant to the
exercise of any Option, the Corporation or the Subsidiary shall be entitled to
deduct and withhold such amounts from any cash payments to be made to the holder
of such Option. In any event, the holder shall make available to the Corporation
or Subsidiary, promptly when requested by the Corporation or such Subsidiary,
sufficient funds to meet the requirements of such withholding; and the
Corporation or Subsidiary shall be entitled to take and authorize such steps as
it may deem advisable in order to have such funds made available to the
Corporation or Subsidiary out of any funds or property due or to become due to
the holder of such Option.
- 7 -
<PAGE>
17. Administration and Amendment of the Plan. Except as hereinafter
provided, the Board of Directors or the Committee may at any time withdraw or
from time to time amend the Plan as it relates to, and the terms and conditions
of, any Option not theretofore granted, and the Board of Directors or the
Committee, with the consent of the affected holder of an Option, may at any time
withdraw or from time to time amend the Plan as it relates to, and the terms and
conditions of, any outstanding Option. Notwithstanding the foregoing, any
amendment by the Board of Directors or the Committee which would increase the
number of Shares issuable under the Plan or to any individual or change the
class of Eligible Persons shall be subject to the approval of the stockholders
of the Corporation.
Determinations of the Committee as to any question which may arise with
respect to the interpretation of the provisions of the Plan and Options shall be
final. The Committee may authorize and establish such rules, regulations and
revisions thereof not inconsistent with the provisions of the Plan, as it may
deem advisable to make the Plan and Options effective or provide for their
administration, and may take such other action with regard to the Plan and
Options as it shall deem desirable to effectuate their purpose.
The Plan is intended to comply with Rule l6b-3 under the Exchange Act. Any
provision inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.
18. No Right of Employment or Service. Nothing contained herein or in an
Option shall be construed to confer on any employee, consultant or director any
right to be continued in the employ or service of the Corporation or any
Subsidiary or derogate from any right of the Corporation and any Subsidiary to
retire, request the resignation of or discharge or otherwise cease its service
arrangement with any employee, consultant or director (without or with pay), at
any time, with or without cause.
19. Final Issuance Date. No Option shall be granted under the Plan after
October 7, 2006.
- 8 -
<PAGE>
DELTA FUNDING CORP.
401(K) PROFIT SHARING PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS .............................. 18
2.2 DETERMINATION OF TOP HEAVY STATUS ........................ 18
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER .............. 22
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY .................. 22
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES ............ 23
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR ................... 23
2.7 RECORDS AND REPORTS ...................................... 24
2.8 APPOINTMENT OF ADVISERS .................................. 24
2.9 INFORMATION FROM EMPLOYER ................................ 25
2.10 PAYMENT OF EXPENSES ...................................... 25
2.11 MAJORITY ACTIONS ......................................... 25
2.12 CLAIMS PROCEDURE ......................................... 25
2.13 CLAIMS REVIEW PROCEDURE .................................. 25
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY ................................ 26
3.2 APPLICATION FOR PARTICIPATION ............................ 26
3.3 EFFECTIVE DATE OF PARTICIPATION .......................... 27
3.4 DETERMINATION OF ELIGIBILITY ............................. 27
3.5 TERMINATION OF ELIGIBILITY ............................... 27
3.6 OMISSION OF ELIGIBLE EMPLOYEE ............................ 27
<PAGE>
3.7 INCLUSION OF INELIGIBLE EMPLOYEE .......................... 28
3.8 ELECTION NOT TO PARTICIPATE ............................... 28
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION ........... 28
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION ................... 29
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION ................ 33
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS ...... 33
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS .......................... 38
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS............. 41
4.7 MAXIMUM ANNUAL ADDITIONS .................................. 43
4.8 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS ................. 47
4.9 TRANSFERS FROM QUALIFIED PLANS ............................ 48
4.10 DIRECTED INVESTMENT ACCOUNT ............................... 50
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND ............................... 51
5.2 METHOD OF VALUATION ....................................... 51
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT ................. 51
6.2 DETERMINATION OF BENEFITS UPON DEATH ...................... 52
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY .......... 53
6.4 DETERMINATION OF BENEFITS UPON TERMINATION ................ 53
<PAGE>
6.5 DISTRIBUTION OF BENEFITS .................................. 57
6.6 DISTRIBUTION OF BENEFITS UPON DEATH ....................... 60
6.7 TIME OF SEGREGATION OR DISTRIBUTION ....................... 62
6.8 DISTRIBUTION FOR MINOR BENEFICIARY ........................ 62
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN ............ 63
6.10 PRE-RETIREMENT DISTRIBUTION ............................... 63
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP ......................... 63
6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION ........... 65
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE ..................... 65
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE ............... 66
7.3 OTHER POWERS OF THE TRUSTEE ............................... 67
7.4 LOANS TO PARTICIPANTS ..................................... 70
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS .................. 71
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES ............. 71
7.7 ANNUAL REPORT OF THE TRUSTEE .............................. 72
7.8 AUDIT ..................................................... 72
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE ............ 73
7.10 TRANSFER OF INTEREST ...................................... 74
7.11 DIRECT ROLLOVER ........................................... 74
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT ................................................. 75
8.2 TERMINATION ............................................... 76
8.3 MERGER OR CONSOLIDATION ................................... 77
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS ...................................... 77
9.2 ALIENATION ................................................ 77
9.3 CONSTRUCTION OF PLAN ...................................... 78
9.4 GENDER AND NUMBER ......................................... 78
9.5 LEGAL ACTION .............................................. 78
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS .................... 79
9.7 BONDING ................................................... 79
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE ................ 80
9.9 INSURER'S PROTECTIVE CLAUSE ............................... 80
9.10 RECEIPT AND RELEASE FOR PAYMENTS .......................... 80
9.11 ACTION BY THE EMPLOYER. ................................... 80
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY ........ 80
9.13 HEADINGS .................................................. 81
9.14 APPROVAL BY INTERNAL REVENUE SERVICE ...................... 81
9.15 UNIFORMITY ................................................ 82
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS ............................... 82
10.2 REOUIREMENTS OF PARTICIPATING EMPLOYERS ................... 82
10.3 DESIGNATION OF AGENT ...................................... 83
10.4 EMPLOYEE TRANSFERS ........................................ 83
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION ..................... 84
10.6 AMENDMENT ................................................. 84
10.7 DISCONTINUANCE OF PARTICIPATION ........................... 84
<PAGE>
10.8 ADMINISTRATOR'S AUTHORITY ................................. 85
<PAGE>
DELTA FUNDING CORP.
401(K) PROFIT SHARING PLAN
THIS AGREEMENT, hereby made and entered into this 14th day of July, 1994,
by and between Delta Funding Corp. (herein referred to as the "Emp1oyer") and
Sidney A. Miller and Hugh Miller (herein referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer desires to recognize the contribution made to its
successful operation by its employees and to reward such contribution by means
of a 401(k) Profit Sharing Plan for those employees who shall qualify as
Participants hereunder;
NOW, THEREFORE, effective April 1, 1994, (hereinafter called the
"Effective Date"), the Employer hereby establishes a 401(k) Profit Sharing Plan
and creates this trust (which plan and trust are hereinafter called the "P1an")
for the exclusive benefit of the Participants and their Beneficiaries, and the
Trustee hereby accepts the Plan on the following terms:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.2 "Administrator" means the person or entity designated by the Employer
pursuant to Section 2.4 to administer the Plan on behalf of the Employer.
1.3 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.4 "Aggregate Account" means, with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 2.2.
1.5 "Anniversary Date" means December 31st.
1
<PAGE>
1.6 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of Sections
6.2 and 6.6.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.8 "Compensation" with respect to any Participant means such
Participant's wages, salaries, fees for professional services and other amounts
received (without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are includible in
gross income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan (as described in Regulation
1.62-2(c)) for a Plan Year.
Compensation shall exclude (a) (1) contributions made by the
Employer to a plan of deferred compensation to the extent that, the
contributions are not includible in the gross income or the Participant for the
taxable year in which contributed, (2) Employer contributions made on behalf of
an Employee to a simplified employee pension plan described in Code Section
408(k) to the extent such contributions are excludable from the Employee's gross
income, (3) any distributions from a plan of deferred compensation; (b) amounts
realized from the exercise of a non-qualified stock option, or when restricted
stock (or property) held by an Employee either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture; (c) amounts realized from
the sale, exchange or other disposition of stock acquired under a qualified
stock option; and (d) other amounts which receive special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of any annuity contract described in Code
Section 403(b) (whether or not the contributions are actually excludable from
the gross income of the Employee).
For purposes of this Section, the determination of Compensation
shall be made by:
(a) including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not
includible in the gross income of the Participant under Code
Sections 125, 402(e) (3), 402(h), 403(b) or 457, and Employee
contributions described in Code Section 414(h)(2) that are treated
as Employer contributions.
For a Participant's initial year of participation, Compensation
shall be recognized as of such Employee's effective date of participation
pursuant to Section 3.3.
2
<PAGE>
Compensation in excess of $200,000 shall be disregarded. Such amount
shall be adjusted at the same time and in such manner as permitted under Code
Section 415(d), except that the dollar increase in effect on January 1 of any
calendar year shall be effective for the Plan Year beginning with or within such
calendar year and the first adjustment to the $200,000 limitation shall be
effective on January 1, 1990. For any short Plan Year the Compensation limit
shall be an amount equal to the Compensation limit for the calendar year in
which the Plan Year begins multiplied by the ratio obtained by dividing the
number of full months in the short Plan Year by twelve (12). In applying this
limitation, the family group of a Highly Compensated Participant who is subject
to the Family Member aggregation rules of Code Section 414(q)(6) because such
Participant is either a "five percent owner" of the Employer or one of the ten
(10) Highly Compensated Employees paid the greatest "415 Compensation" during
the year, shall be treated as a single Participant, except that for this purpose
Family Members shall include only the affected Participant's spouse and any
lineal descendants who have not attained age nineteen (19) before the close of
the year. If, as a result of the application of such rules the adjusted $200,000
limitation is exceeded, then the limitation shall be prorated among the affected
Family Members in proportion to each such Family Member's Compensation prior to
the application of this limitation, or the limitation shall be adjusted in
accordance with any other method permitted by Regulation.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of each
Employee taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Code Section 401(a)(17)(B). The cost of living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 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 12.
For Plan Years beginning on or after January 1, 1994, any reference
in this Plan to the limitation under Code Section 401(a)(17) 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.
3
<PAGE>
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 '93 annual
compensation limit is $150,000.
If, as a result of such rules, the maximum "annual addition" limit
of Section 4.7(a) would be exceeded for one or more of the affected Family
Members, the prorated Compensation of all affected Family Members shall be
adjusted to avoid or reduce any excess. The prorated Compensation of any
affected Family Member whose allocation would exceed the limit shall be adjusted
downward to the level needed to provide an allocation equal to such limit. The
prorated Compensation of affected Family Members not affected by such limit
shall then be adjusted upward on a pro rata basis not to exceed each such
affected Family Member's Compensation as determined prior to application of the
Family Member rule. The resulting allocation shall not exceed such individual's
maximum "annual addition" limit. If, after these adjustments, an "excess amount"
still results, such "excess amount" shall be disposed of in the manner described
in Section 4.8(a) pro rata among all affected Family Members.
For purposes of this Section, if the Plan is a plan described in
Code Section 413(c) or 414(f) (a plan maintained by more than one Employer), the
$200,000 limitation applies separately with respect to the Compensation of any
Participant from each Employer maintaining the Plan.
1.9 "Contract" or "Policy" means any life insurance policy, retirement
income or annuity policy, or annuity contract (group or individual) issued
pursuant to the terms of the Plan.
1.10 "Deferred Compensation" with respect to any Participant means the
amount of the Participant's total Compensation which has been contributed to the
Plan in accordance with the Participant's deferral election pursuant to Section
4.2 excluding any such amounts distributed as excess "annual additions" pursuant
to Section 4.8(a).
1.11 "Early Retirement Date." This Plan does not provide for a retirement
date prior to Normal Retirement Date.
1.12 "Elective Contribution" means the Employer's contributions to the
Plan of Deferred Compensation excluding any such amounts distributed as excess
"annual additions" pursuant to Section 4.8(a). In addition, any Employer
Qualified Non-Elective Contribution made pursuant to Section 4.6 shall be
considered an Elective Contribution for purposes of the Plan. Any such
contributions deemed to be Elective Contributions shall be subject to the
requirements of Sections 4.2(b) and 4.2(c) and shall further be required to
satisfy the discrimination requirements of Regulation l.401(k)-l(b)(5), the
provisions of which are specifically incorporated herein by reference.
4
<PAGE>
1.13 "Eligible Employee" means any Employee.
Employees whose employment is governed by the terms of a collective
bargaining agreement between Employee representatives (within the meaning of
Code Section 770l(a)(46)) and the Employer under which retirement benefits were
the subject or good faith bargaining between the parties will not be eligible to
participate in this Plan unless such agreement expressly provides for coverage
in this Plan or two percent or more of the Employees of the Employer who are
covered pursuant to that agreement are professionals as defined in Regulation
l.410(b)-9.
Employees of Affiliated Employers shall not be eligible to
participate in this Plan unless such Affiliated. Employers have specifically
adopted this Plan in writing.
1.14 "Employee" means any person who is employed by the Employer or
Affiliated Employer, but excludes any person who is an independent contractor.
Employee shall include Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and such Leased Employees do not constitute
more than 20% of the recipient's non-highly compensated work force.
1.15 "Employer" means Delta Funding Corp. and any Participating Employer
(as defined in Section 10.1) which shall adopt this Plan; any successor which
shall maintain this Plan; and any predecessor which has maintained this Plan.
The Employer is a corporation, with principal offices in the State of New York.
1.16 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions made on behalf of Highly Compensated Participants for
the Plan Year over the maximum amount of such contributions permitted under
Section 4.5(a). Excess Contributions shall be treated as an "annual addition"
pursuant to Section 4.7(b).
1.17 "Excess Deferred Compensation" means, with respect to any taxable
year of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 4.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.7(b) when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year. Additionally, for
purposes of Sections 2.2 and 4.4(i), Excess Deferred Compensation shall continue
to be treated as Employer contributions even if distributed pursuant to Section
4.2(f). However, Excess Deferred Compensation of Non-Highly Compensated
5
<PAGE>
Participants is not taken into account for purposes of Section 4.5(a) to the
extent such Excess Deferred Compensation occurs pursuant to Section 4.2(d).
l.l8 "Family Member" means, with respect to an affected Participant, such
Participant's spouse and such Participant's lineal descendants and ascendants
and their spouses, all as described in Code Section 414(q)(6)(B).
1.19 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and its representative body, and the
Administrator.
1.20 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on January 1st of each year and ending the following December 31st.
1.21 "Forfeiture" means that portion of a Participant's Account that is
not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a
Terminated Participant's Account, or
(b) the last day of the Plan Year in which the Participant
incurs five (5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case of a
Terminated Participant whose Vested benefit is zero, such Terminated Participant
shall be deemed to have received a distribution of his Vested benefit upon his
termination of employment. Restoration of such amounts shall occur pursuant to
Section 6.4(e)(2). In addition, the term Forfeiture shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.22 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.23 "415 Compensation" with respect to any Participant means such
Participant's wages, salaries, fees for professional services and other amounts
received (without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are
6
<PAGE>
includible in gross income (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan (as
described n Regulation l.62-2(c)) for a Plan Year.
"415 Compensation" shall exclude (a)(1) contributions made by the
Employer to a plan of deferred compensation to the extent that, the
contributions are not includible in the gross income of the Participant for the
taxable year in which contributed, (2) Employer contributions made on behalf of
an Employee to a simplified employee pension plan described in Code Section
408(k) to the extent such contributions are excludable from the Employee's gross
income, (3) any distributions from a plan of deferred compensation; (b) amounts
realized from the exercise of a non-qualified stock option, or when restricted
stock (or property) held by an Employee either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture; (c) amounts realized from
the sale, exchange or other disposition of stock acquired under a qualified
stock option; and (d) other amounts which receive special tax benefits, or
contributions made by the Employer (whether or not under a salary. reduction
agreement) towards the purchase of any annuity contract described in Code
Section 403(b) (whether or not the contributions are actually excludable from
the gross income of the Employee).
1.24 "414(s) Compensation" with respect to any Participant means such
Participant's "415 Compensation" paid during a Plan Year. The amount of "414(s)
Compensation" with respect to any Participant shall include "414(s)
Compensation" for the entire twelve (12) month period ending on the last day of
such Plan Year, except that "414(s) Compensation" shall only be recognized for
that portion of the Plan Year during which an Employee was a Participant in the
Plan.
For purposes of this Section, the determination of "414(s)
Compensation" shall be made by including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125, 402(e)(3),
402(h), 403(b) or 457, and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.
"414(s) Compensation" in excess of $200,000 shall be disregarded.
Such amount shall be adjusted at the same time and in such manner as permitted
under Code Section 415(d), except that the dollar increase in effect on January
1 of any calendar year shall be effective for the Plan Year beginning with or
within such calendar year and the first adjustment to the $200,000 limitation
shall be effective on January 1, 1990. For any short Plan Year the "414(s)
Compensation" limit shall be an amount equal to the "414(s) Compensation" limit
for the calendar
7
<PAGE>
year in which the Plan Year begins multiplied by the ratio obtained by dividing
the number of full months in the short Plan Year by twelve (12). In applying
this limitation, the family group of a Highly Compensated Participant who is
subject to the Family Member aggregation rules of Code Section 414(q)(6) because
such Participant is either a "five percent owner" of the Employer or one of the
ten (10) Highly Compensated Employees paid the greatest "415 Compensation"
during the year, shall be treated as a single Participant, except that for this
purpose Family Members shall include only the affected Participant's spouse and
any lineal descendants who have not attained age nineteen (19) before the close
of the year.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of each
Employee taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Code Section 401(a)(17)(B). The cost of living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 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 12.
For Plan Years beginning on or after January 1, 1994, any reference
in this Plan to the limitation under Code Section 401(a)(17) 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 '93 annual
compensation limit is $150,000.
1.25 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder, and generally means an Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the "determination year"
or "look-back year" were "five percent owners" as defined in Section
1.31(c).
8
<PAGE>
(b) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $50,000 and were in
the Top Paid Group of Employees for the Plan Year.
(d) Employees who during the "look-back year" were officers of
the Employer (as that term is defined within the meaning of the
Regulations under Code Section 4l6) and received "415 Compensation"
during the "look-back year" from the Employer greater than 50
percent of the limit in effect under Code Section 415(b)(1)(A) for
any such Plan Year. The number of officers shall be limited to the
lesser of (i) 50 employees; or (ii) the greater of 3 employees or 10
percent of all employees. For the purpose of determining the number
of officers, Employees described in Section 1.54(a), (b), (c) and
(d) shall be excluded, but such Employees shall still be considered
for the purpose of identifying the particular Employees who are
officers. If the Employer does not have at least one officer whose
annual "415 Compensation" is in excess of 50 percent of the Code
Section 415(b)(l)(A) limit, then the highest paid officer of the
Employer will be treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the 100
Employees paid the greatest "415 Compensation" during the
"determination year" and are also described in (b), (c) or (d) above
when these paragraphs are modified to substitute "determination
year" for "look-back year."
The "look-back year" shall be the calendar year ending with or
within the Plan Year for which testing is being performed, and the
"determination year" (if applicable) shall be the period of time, if any, which
extends beyond the "look-back year" and ends on the last day of the Plan Year
for which testing is being performed (the "lag period"). If the "lag period" is
less than twelve months long, the dollar threshold amounts specified in (b), (c)
and (d) above shall be prorated based upon the number of months in the "lag
period."
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125, 402(e)(3),
402(h), 403(b) or 457, and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions. Additionally, the dollar
threshold amounts specified in (b) and
9
<PAGE>
(c) above shall be adjusted at such time and in such manner as is provided in
Regulations. In the case of such an adjustment, the dollar limits which shall be
applied are those for the calendar year in which the "determination year" or
"look-back year" begins.
In determining who is a Highly Compensated Employee, Employees who
are non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken into account as
a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and are not
covered in any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform and consistent
basis for all of the Employer's retirement plans. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year."
1.26 "Highly Compensated Former Employee" means a former Employee who had
a separation year prior to the "determination year" and was a Highly Compensated
Employee in the year of separation from service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an Employee who separated
from service prior to 1987 will be treated as a Highly Compensated Former
Employee only if during the separation year (or year preceding the separation
year) or any year after the Employee attains age 55 (or the last year ending
before the Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner." For purposes
of this Section, "determination year," "415 Compensation" and "five percent
owner" shall be determined in accordance with Section 1.25. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees. The method
set forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
1.27 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.28 "Hour of Service" means (1) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (2) each
hour for which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury
10
<PAGE>
duty, disability, lay-off, military duty or leave of absence) during the
applicable computation period; (3) each hour for which back pay is awarded or
agreed to by the Employer without regard to mitigation of damages. These hours
will be credited to the Employee for the computation period or periods to which
the award, or agreement pertains rather than the computation period in which the
award, agreement or payment is made. The same Hours of Service shall not be
credited both under (1) or (2), as the case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made
by or due from the Employer regardless of whether such payment is made by or due
from the Employer directly, or indirectly through, among others, a trust fund,
or insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
An Hour of Service must be counted for the purpose of determining a
Year of Service, a year of participation for purposes of accrued benefits, a
1-Year Break in Service, and employment commencement date (or reemployment
commencement date). In addition, Hours of Service will be credited for
employment with other Affiliated Employers. The provisions of Department or
Labor regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
1.29 "Income" means the income or losses allocable to Excess Deferred
Compensation or Excess Contributions which amount shall be allocated in the same
manner as income or losses are allocated pursuant to Section 4.4(g).
1.30 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
11
<PAGE>
1.31 "Key Employee" means an Employee as defined in Code Section 4l6(i)
and the Regulations thereunder. Generally, any Employee or former Employee (as
well as each of his Beneficiaries) is considered a Key Employee if he, at any
time during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 4l6) having annual
"415 Compensation" greater than 50 percent of the amount in effect
under Code Section 415(b)(l)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation"
from the Employer for a Plan Year greater than the dollar limitation
in effect under Code Section 415(c)(1)(A) for the calendar year in
which such Plan Year ends and owning (or considered as owning within
the meaning of Code Section 318) both more than one-half percent
interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Employer or stock possessing more than five
percent (5%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person
who owns more than five percent (5%) of the capital or profits
interest in the Employer. In determining percentage ownership
hereunder, employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be treated as separate
employers.
(d) a "one percent owner" of the Employer having an annual
"415 Compensation" from the Employer of more than $150,000. "One
percent owner" means any person who owns (or is considered as owning
within the meaning of Code Section 318) more than one percent (1%)
of the outstanding stock of the Employer or stock possessing more
than one percent (1%) of the total combined voting power of all
stock of the Employer or, in the case of an unincorporated business,
any person who owns more than one percent (1%) of the capital or
profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated
under Code Sections 414(b), (c), (m) and (0) shall be treated as
separate employers. However, in determining whether an individual
has "415 Compensation" of more than $150,000, "415 Compensation"
from each employer required to be aggregated under Code
12
<PAGE>
Sections 414(b), (c), (m) and (o) shall be taken into account.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts which are contributed by he
Employer pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125, 402(e)(3),
402(h), 403(b) or 457, and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.
1.32 "Late Retirement Date" means the Anniversary Date coinciding with or
next following a Participant's actual Retirement Date after having reached his
Normal Retirement Date.
1.33 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one
year, and such services are of a type historically performed by employees in the
business field of the recipient employer. Contributions or benefits provided a
Leased Employee by the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided by the
recipient employer. A Leased Employee shall not be considered an Employee of the
recipient:
(a) if such employee is covered by a money purchase pension
plan providing:
(1) a non-integrated employer contribution rate of at least
10% of compensation, as defined in Code Section 415(c)(3),
but including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not
includible in the gross income of the Participant under Code
Sections 125, 402(e)(3), 402(h), 403(b) or 457, and Employee
contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.34 "Non-Elective Contribution" means the Employer's contributions
to the Plan excluding, however, contributions made
13
<PAGE>
pursuant to the Participant's deferral election provided for in Section 4.2 and
any Qualified Non-Elective Contribution.
1.35 "Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.36 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.37 "Normal Retirement Age" means the Participant's 65th birthday, or his
5th anniversary of joining the Plan, if later. A Participant shall become fully
Vested in his Participant's Account upon attaining his Normal Retirement Age.
1.38 "Normal Retirement Date" means the Anniversary Date nearest the
Participant's Normal Retirement Age.
1.39 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of Service shall be
recognized for "authorized leaves of absence" and "maternity and paternity
leaves of absence." Years of Service and 1-Year Breaks in Service shall be
measured on the same computation period.
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any period by reason
of the Employee's pregnancy, birth of the Employee's child, placement of a child
with the Employee in connection with the adoption of such child, or any absence
for the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following computation period.
The Hours of Service credited for a "maternity or paternity leave of absence"
shall be those which would normally have been credited but for such absence, or,
in any case in which the Administrator is unable to determine such hours
normally credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity leave of absence"
shall not exceed 501.
1.40 "Participant" means any Eligible Employee who participates in the
Plan as provided in Sections 3.2 and 3.3, and
14
<PAGE>
has not for any reason become ineligible to participate further in the Plan.
1.41 "Participant's Account" means the account established and maintained
by the Administrator for each Participant with respect to his total interest in
the Plan and Trust resulting from the Employer's Non-Elective Contributions.
1.42 "Participant's Combined Account" means the total aggregate amount of
each Participant's Elective Account and Participant's Account.
1.43 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer's Elective
Contributions. A separate accounting shall be maintained with respect to that
portion of the Participant's Elective Account attributable to Elective
Contributions pursuant to Section 4.2 and any Employer Qualified Non-Elective
Contributions.
1.44 "Plan" means this instrument, including all amendments thereto.
1.45 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on January 1st of each year and ending the following December 31st,
except for the first Plan Year which commenced April 1st.
1.46 "Qualified Non-Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to Section 4.6. Such
contributions shall be considered an Elective Contribution for the purposes of
the Plan and used to satisfy the "Actual Deferral Percentage" tests.
1.47 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.48 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.49 "Retirement Date" means the date as of which a Participant retires
for reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date or Late Retirement Date (see
Section 6.1).
1.50 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
1.51 "Terminated Participant" means a person who has been a Participant,
but whose employment has been terminated other than by death, Total and
Permanent Disability or retirement.
15
<PAGE>
1.52 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.53 "Top Heavy Plan Year" means a Plan Year during which the Plan is a
Top Heavy Plan.
1.54 "Top Paid Group" means the top 20 percent of Employees who performed
services for the Employer during the applicable year, ranked according to the
amount of "415 Compensation" (determined for this purpose in accordance with
Section 1.25) received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be
considered Employees unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and are not covered in any qualified plan
maintained by the Employer. Employees who are non-resident aliens and who
received no earned income (within the meaning of Code Section 911(d)(2)) from
the Employer constituting United States source income within the meaning of Code
Section 861(a)(3) shall not be treated as Employees. Additionally, for the
purpose of determining the number of active Employees in any year, the following
additional Employees shall also be excluded; however, such Employees shall still
be considered for the purpose of identifying the particular Employees in the Top
Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per
week;
(c) Employees who normally work less than six (6) months
during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees or the Employer
are covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied
on a uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.55 "Total and Permanent Disability" means a physical or mental condition
of a Participant resulting from bodily injury, disease, or mental disorder which
renders him incapable of
16
<PAGE>
continuing his usual and customary employment with the Employer. The disability
of a Participant shall be determined by a licensee physician chosen by the
Administrator. The determination shall be applied uniformly to all Participants.
l.56 "Trustee" means the person or entity named as trustee herein or in
any separate trust forming a part of this Plan, and any successors.
1.57 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.58 "Vested" means the nonforfeitable portion of any account maintained
on behalf of a Participant.
1.59 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
For purposes of eligibility for participation, the initial
computation period shall begin with the date on which the Employee first
performs an Hour of Service. The participation computation period beginning
after a 1-Year Break in Service shall be measured from the date on which an
Employee again performs an Hour of Service. The participation computation period
shall shift to the Plan Year which includes the anniversary of the date on which
the Employee first performed an Hour of Service. An Employee who is credited
with the required Hours of Service in both the initial computation period (or
the computation period beginning after a 1-Year Break in Service) and the Plan
Year which includes the anniversary of the date on which the Employee first
performed an Hour of Service, shall be credited with two (2) Years of Service
for purposes of eligibility to participate.
For vesting purposes, the computation period shall be the Plan Year.
For all other purposes, the computation period shall be the Plan
Year.
Notwithstanding the foregoing, for any short Plan Year, the
determination of whether an Employee has completed a Year of Service shall be
made in accordance with Department of Labor regulation 2530.203-2(c). However,
in determining whether an Employee has completed a Year of Service for benefit
accrual purposes in the short Plan Year, the number of the Hours of Service
required shall be proportionately reduced based on the number of full months in
the short Plan Year.
Years of Service with any Affiliated Employer shall be recognized.
17
<PAGE>
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan
and the special minimum allocation requirements of Code Section 416(c) pursuant
to Section 4.4 of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of
Accrued Benefits of Key Employees and (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and all plans of an
Aggregation Group, exceeds sixty percent (60%) of the Present Value
of Accrued Benefits and the Aggregate Accounts of all Key and
Non-Key Employees under this Plan and all plans of an Aggregation
Group.
If any Participant is a Non-Key Employee for any Plan Year,
but such Participant was a Key Employee for any prior Plan Year,
such Participant's Present Value of Accrued Benefit and/or Aggregate
Account balance shall not be taken into account for purposes of
determining whether this Plan is a Top Heavy or Super Top Heavy Plan
(or whether any Aggregation Group which includes this Plan is a Top
Heavy Group). In addition, a Participant or Former Participant has
not performed any services for any Employer maintaining the Plan at
any time during the five year period ending on the Determination
Date, any accrued benefit for such Participant or Former Participant
shall not be taken into account for the purposes of determining
whether this Plan is a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan
Year in which, as of the Determination Date, (1) the Present Value
of Accrued Benefits of Key Employees and (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and all plans of
an Aggregation Group, exceeds ninety percent (90%) of the Present
Value of Accrued Benefits and the Aggregate Accounts of all Key and
Non-Key Employees under this Plan and all plans of an Aggregation
Group.
(c) Aggregate Account: A Participant's Aggregate Account as of
the Determination Date is the sum of:
(1) his Participant's Combined Account balance as of the most
recent valuation occurring within
18
<PAGE>
a twelve (12) month period ending on the Determination Date;
(2) an adjustment or any contributions due as of the
Determination Date. Such adjustment shall be the amount of any
contributions actually made after the valuation date but due
on or before the Determination Date, except for the first Plan
Year when such adjustment shall also reflect the amount of any
contributions made after the Determination Date that are
allocated as of a date in that first Plan Year.
(3) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of distributions
made after the valuation date and prior to the Determination
Date, such distributions are not included as distributions for
top heavy purposes to the extent that such distributions are
already included in the Participant's Aggregate Account
balance as of the valuation date. Notwithstanding anything
herein to the contrary, all distributions, including
distributions made prior to January 1, l984, and distributions
under a terminated plan which if it had not been terminated
would have been required to be included in an Aggregation
Group, will be counted. Further, distributions from the Plan
(including the cash value of life insurance policies) of a
Participant's account balance because of death shall be
treated as a distribution for the purposes of this paragraph.
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax deductible
qualified voluntary employee contributions shall not be
considered to be a part of the Participant's Aggregate Account
balance.
(5) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee and
made from a plan maintained by one employer to a plan
maintained by another employer), if this Plan provides the
rollovers or plan-to-plan transfers, it shall always consider
such rollovers or plan-to-plan transfers as a distribution for
the purposes of this Section. If this Plan is the plan
accepting such rollovers or plan-to-plan transfers, It shall
not consider such rollovers or plan-to-plan
19
<PAGE>
transfers as part of the Participant's Aggregate Account
balance.
(6) with respect to related rollovers and plan-to-plan
transfers (ones either not initiated by the Employee or made
to a plan maintained by the same employer), if this Plan
provides the rollover or plan-to-plan transfer, it shall not
be counted as a distribution for purposes of this Section. If
this Plan is the plan accepting such rollover or plan-to-plan
transfer, it shall consider such rollover or plan-to-plan
transfer as part of the Participant's Aggregate Account
balance, irrespective of the date on which such rollover or
plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two employers are
to be treated as the same employer in (5) and (6) above, all
employers aggregated under Code Section 414(b), (c), (m) and
(o) are treated as the same employer.
(d) "Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Employer in
which a Key Employee is a participant in the Plan Year
containing the Determination Date or any of the four preceding
Plan Years, and each other plan of the Employer which enables
any plan in which a Key Employee participates to meet the
requirements of Code Sections 401(a)(4) or 410, will be
required to be aggregated. Such group shall be known as a
Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the
group will be considered a Top Heavy Plan if the Required
Aggregation Group is a Top Heavy Group. No plan in the
Required Aggregation Group will be considered a Top Heavy Plan
if the Required Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also
include any other plan not required to be included in the
Required Aggregation Group, provided the resulting group,
taken as a whole, would continue to satisfy the provisions of
Code Sections 401(a)(4) and 410. Such group shall be known as
a Permissive Aggregation Group.
20
<PAGE>
In the case of a Permissive Aggregation Group, only a plan
that is part of the Required Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation
Group is a Top Heavy Group. No plan in the Permissive
Aggregation Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are Top
Heavy Plans.
(4) An Aggregation Group shall include any terminated plan of
the Employer if it was maintained within the last five (5)
years ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the
preceding Plan Year, or (b) in the case of the first Plan Year, the
last day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case of a defined
benefit plan, the Present Value of Accrued Benefit for a Participant
other than a Key Employee, shall be as determined using the single
accrual method used for all plans of the Employer and Affiliated
Employers, or if no such single method exists, using a method which
results in benefits accruing not more rapidly than the slowest
accrual rate permitted under Code Section 411(b)(1)(C). The
determination of the Present Value of Accrued Benefit shall be
determined as of the most recent valuation date that falls within or
ends with the 12-month period ending on the Determination Date
except as provided in Code Section 4l6 and the Regulations
thereunder for the first and second plan years of a defined benefit
plan.
(g) "Top Heavy Group" means an Aggregation Group in which, as
of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees
under all defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for
all Participants.
21
<PAGE>
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove the
Trustee and the Administrator from time to time as it deems
necessary for the proper administration of the Plan to assure that
the Plan is being operated for the exclusive benefit of the
Participants and their Beneficiaries in accordance with the terms of
the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding policy and
method," i.e., it shall determine whether the Plan has a short run
need for liquidity (e.g., to pay benefits) or whether liquidity is a
long run goal and investment growth (and stability of same) is a
more current need, or shall appoint a qualified person to do so. The
Employer or its delegate shall communicate such needs and goals to
the Trustee, who shall coordinate such Plan needs with its
investment policy. The communication of such a "funding policy and
method" shall not, however, constitute a directive to the Trustee as
to investment of the Trust Funds. Such "funding policy and method"
shall be consistent with the objectives of this Plan and with the
requirements of Title I of the Act.
(c) The Employer shall periodically review the performance of
any Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied
by formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct
and evaluation, or through other appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any person,
including, but not limited to, the Employees of the Employer, shall be eligible
to serve as an Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. An Administrator may
resign by delivering his written resignation to the Employer or be removed by
the Employer by delivery of written notice of removal, to take effect at a date
specified therein, or upon delivery to the Administrator if no date is
specified.
The Employer, upon the resignation or removal of an Administrator,
shall promptly designate in writing a successor to this position. If the
Employer does not appoint an Administrator, the Employer will function as the
Administrator.
22
<PAGE>
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the
responsibilities of each Administrator may be specified by the Employer and
accepted in writing by each Administrator. In the event that no such delegation
is made by the Employer, the Administrators may allocate the responsibilities
among themselves, in which event the Administrators shall notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator until such time as the
Employer or the Administrators file with the Trustee a written revocation of
such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions arising in
connection with the administration, interpretation, and application of the Plan.
Any such determination by the Administrator shall be conclusive and binding upon
all persons. The Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such manner and to
such extent as shall be deemed necessary or advisable to carry out the purpose
of the Plan; provided, however, that any procedure, discretionary act,
interpretation or construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be consistent with the
intent that the Plan shall continue to be deemed a qualified plan under the
terms of Code Section 401(a), and shall comply with the terms of the Act and all
regulations issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect
to the amount and the kind of benefits to which any Participant
shall be entitled hereunder;
23
<PAGE>
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration
of the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent with
the terms hereof;
(f) to determine the size and type of any Contract to be
purchased from any insurer, and to designate the insurer from which
such Contract shall be purchased;
(g) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
(h) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that the
Trustee can exercise any investment discretion in a manner designed
to accomplish specific objectives;
(i) to prepare and implement a procedure to notify Eligible
Employees that they may elect to have a portion of their
Compensation deferred or paid to them in cash;
(j) to assist any Participant regarding his rights, benefits,
or elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, and other data that may be necessary
for proper administration of the Plan and shall be responsible for supplying all
information and reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, and other persons as
the Administrator or the Trustee deems necessary or desirable in connection with
the administration of this Plan.
24
<PAGE>
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the Employer
shall supply full and timely information to the Administrator on all matters
relating to the Compensation of all Participants, their Hours of Service, their
Years of Service, their retirement, death, disability, or termination of
employment, and such other pertinent facts as the Administrator may require; and
the Administrator shall advise the Trustee of such of the foregoing facts as may
be pertinent to the Trustee's duties under the Plan. The Administrator may rely
upon such information as is supplied by the Employer and shall have no duty or
responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses incident
to the functioning of the Administrator, including, but not limited to, fees of
accountants, counsel, and other specialists and their agents, and other costs of
administering the Plan. Until paid, the expenses shall constitute a liability of
the Trust Fund. However, the Employer may reimburse the Trust Fund for any
administration expense incurred.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 2.5, if there shall be more than
one Administrator, they shall act by a majority of their number, but may
authorize one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within 90 days after the application is filed. In the event the
claim is denied, the reasons for the denial shall be specifically set forth in
the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has
been denied a benefit by a decision of the Administrator pursuant to Section
2.12 shall be entitled to request the Administrator to give further
consideration to his
25
<PAGE>
claim by filing with the Administrator (on a form which may be obtained from the
Administrator) a request for a hearing. Such request, together with a written
statement of the reasons why the claimant believes his claim should be allowed,
shall be filed with the Administrator no later than 60 days after receipt of the
written notification provided for in Section 2.12. the Administrator shall then
conduct a hearing within the next 60 days, at which the claimant may be
represented by an attorney or any other representative of his choosing and at
which the claimant shall have an opportunity to submit written and oral evidence
and arguments in support of his claim. At the hearing (or prior thereto upon 5
business days written notice to the Administrator) the claimant or his
representative shall have an opportunity to review all documents in the
possession of the Administrator which are pertinent to the claim at issue and
its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within 60 days of receipt of the appeal (unless there
has been an extension of 60 days due to special circumstances, provided the
delay and the special circumstances occasioning it are communicated to the
claimant within the 60 day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year of Service and
has attained age 21 shall be eligible to participate hereunder as of the date he
has satisfied such requirements. The Employer shall give each prospective
Eligible Employee written notice of his eligibility to participate in the Plan
prior to the close of the Plan Year in which he first becomes an Eligible
Employee.
3.2 APPLICATION FOR PARTICIPATION
In order to become a Participant hereunder, each Eligible Employee
shall make application to the Employer for participation in the Plan and agree
to the terms hereof. Upon the acceptance of any benefits under this Plan, such
Employee shall automatically be deemed to have made application and shall be
bound by the terms and conditions of the Plan and all amendments hereto.
26
<PAGE>
3.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the
earlier of the first day of the Plan Year or the first day of the seventh month
of such Plan Year coinciding with or next following the date such Employee met
the eligibility requirements of Section 3.1, provided said Employee was still
employed as of such date (or if not employed on such date, as of the date of
rehire if a 1-Year Break in Service has not occurred).
In the event an Employee who is not a member of an eligible class of
Employees becomes a member of an eligible class, such Employee will participate
immediately if such Employee has satisfied the minimum age and service
requirements and would have otherwise previously become a Participant.
3.4 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee
for participation in the Plan based upon information furnished by the Employer.
Such determination shall be conclusive and binding upon all persons, as long as
the same is made pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.13.
3.5 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification
of an Eligible Employee to an ineligible Employee, such Former
Participant shall continue to vest in his interest in the Plan for
each Year of Service completed while a noneligible Employee, until
such time as his Participant's Account shall be forfeited or
distributed pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings of the
Trust Fund.
(b) In the event a Participant is no longer a member of an
eligible class of Employees and becomes ineligible to participate
but has not incurred a 1-Year Break in Service, such Employee will
participate immediately upon returning to an eligible class of
Employees. If such Participant incurs a 1-Year Break in Service,
eligibility will be determined under the break in service rules of
the Plan.
3.6 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by his Employer for the year has been made,
the Employer shall
27
<PAGE>
make a subsequent contribution with respect to the omitted Employee in the
amount which the said Employer would have contributed with respect to him had he
not been omitted. Such contribution shall be made regardless of whether or not
it is deductible in whole or in part in any taxable year under applicable
provisions of the Code.
3.7 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included
as a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has been
made, the Employer shall not be entitled to recover the contribution made with
respect to the ineligible person regardless of whether or not a deduction is
allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
(except for Deferred Compensation which shall be distributed to the ineligible
person) for the Plan Year in which the discovery is made.
3.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Employer, in writing, at least thirty (30) days before
the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be
deemed an Employer's Elective Contribution.
(b) A discretionary amount, which amount shall be deemed an
Employer's Non-Elective Contribution.
(c) Notwithstanding the foregoing, however, the Employer's
contributions for any Plan Year shall not exceed the maximum amount
allowable as a deduction to the Employer under the provisions of
Code Section 404. All contributions by the Employer shall be made in
cash or in such property as is acceptable to the Trustee.
28
<PAGE>
(d) Except, however, to the extent necessary to provide the
top heavy minimum allocations, the Employer shall make a
contribution even if it exceeds the amount which is deductible under
Code Section 404.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer a portion of his
Compensation which would have been received in the Plan Year (except
for the deferral election) by up to the maximum amount which will
not cause the Plan to violate the provisions of Sections 4.5(a) and
4.7, or cause the Plan to exceed the maximum amount allowable as a
deduction to the Employer under Code Section 404. A deferral
election (or modification of an earlier election) may not be made
with respect to Compensation which is currently available on or
before the date the Participant executed such election or, if later,
the latest of the date the Employer adopts this cash or deferred
arrangement, or the date such arrangement first became effective.
The amount by which Compensation is reduced shall be that
Participant's Deferred Compensation and be treated as an Employer
Elective Contribution and allocated to that Participant's Elective
Account.
(b) The balance in each Participant's Elective Account shall
be fully Vested at all times and shall not be subject to Forfeiture
for any reason.
(c) Amounts held in the Participant's Elective Account may not
be distributable earlier than:
(1) a Participant's termination of employment, Total and
Permanent Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the establishment or
existence of a "successor plan," as that term is described in
Regulation l.401(k)-l(d)(3);
(4) the date of disposition by the Employer to an entity that
is not an Affiliated Employer or substantially all of the
assets (within the meaning of Code Section 409(d)(2)) used in
a trade or business of such corporation if such corporation
continues to maintain this Plan after the disposition with
respect to a Participant who continues employment with the
corporation acquiring such assets;
29
<PAGE>
(5) the date of disposition by the Employer or an Affiliated
Employer who maintains the Plan of its interest in a
subsidiary (within the meaning of Code Section 409(d)(3)) to
an entity which is not an Affiliated Employer but only with
respect to a Participant who continues employment with such
subsidiary; or
(6) the proven financial hardship of a Participant, subject to
the limitations of Section 6.11.
(d) For each Plan Year, a Participant's Deferred Compensation
made under this Plan and all other plans, contracts or arrangements
of the Employer maintaining this Plan shall not exceed, during any
taxable year of the Participant, the limitation imposed by Code
Section 402(g), as in effect at the beginning of such taxable year.
If such dollar limitation is exceeded, a Participant will be deemed
to have notified the Administrator of such excess amount which shall
be distributed in a manner consistent with Section 4.2(f). The
dollar limitation shall be adjusted annually pursuant to the method
provided in Code Section 415(d) in accordance with Regulations.
(e) In the event a Participant has received a hardship
distribution from his Participant's Elective Account pursuant to
Section 6.11 or pursuant to Regulation l.401(k)-l(d)(2)(iv)(B) from
any other plan maintained by the Employer, then such Participant
shall not be permitted to elect to have Deferred Compensation
contributed to the Plan on his behalf for a period of twelve (12)
months following the receipt of the distribution. Furthermore, the
dollar limitation under Code Section 402(g) shall be reduced, with
respect to the Participant's taxable year following the taxable year
in which the hardship distribution was made, by the amount of such
Participant's Deferred Compensation, if any, pursuant to this Plan
(and any other plan maintained by the Employer) for the taxable year
of the hardship distribution.
(f) If a Participant's Deferred Compensation under this Plan
together with any elective deferrals (as defined in Regulation
l.402(g)-l(b)) under another qualified cash or deferred arrangement
(as defined in Code Section 401(k)), a simplified employee pension
(as defined in Code Section 408(k)), a salary reduction arrangement
(within the meaning of Code Section 3121(a)(5)(D)), a deferred
compensation plan under Code Section 457, or a trust described in
Code Section 501(c)(18) cumulatively exceed the limitation imposed
by Code Section 402(g) (as adjusted annually in
30
<PAGE>
accordance with the method provided in Code Section 415(d) pursuant
to Regulations) for such Participant's taxable year, the Participant
may, not later than March 1 following the close of the Participant's
taxable year, notify the Administrator in writing of such excess and
request that his Deferred Compensation under this Plan be reduced by
an amount specified by the Participant. In such event, the
Administrator may direct the Trustee to distribute such excess
amount (and any Income allocable to such excess amount) to the
Participant not later than the first April 15th following the close
of the Participant's taxable year. Any distribution of less than the
entire amount of Excess Deferred Compensation and Income shall be
treated as a pro rata distribution of Excess Deferred Compensation
and Income. The amount distributed shall not exceed the
Participant's Deferred Compensation under the Plan for the taxable
year. Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following
conditions:
(1) the distribution must be made after the date on which the
Plan received the Excess Deferred Compensation;
(2) the Participant shall designate the distribution as
Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution
of Excess Deferred Compensation.
(g) Notwithstanding Section 4.2(f) above, a Participant's
Excess Deferred Compensation shall be reduced, but not below zero,
by any distribution of Excess Contributions pursuant to Section
4.6(a) for the Plan Year beginning with or within the taxable year
or the Participant.
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Account shall be used to provide
additional benefits to the Participant or his Beneficiary.
(i) All amounts allocated to a Participant's Elective Account
may be treated as a Directed Investment Account pursuant to Section
4.10.
(j) Employer Elective Contributions made pursuant to this
Section may be segregated into a separate account for each
Participant in a federally insured savings account, certificate of
deposit in a bank or savings and loan association, money market
certificate, or other short-term debt security
31
<PAGE>
acceptable to the Trustee until such time as he allocations pursuant
to Section 4.4 have been made.
(k) The Employer and the Administrator shall implement the
salary reduction elections provided for herein in accordance with
the following:
(1) A Participant may commence making elective deferrals to
the Plan only after first satisfying the eligibility and
participation requirements specified in Article III. However,
the Participant must make his initial salary deferral election
within a reasonable time, not to exceed thirty (30) days,
after entering the Plan pursuant to Section 3.3. If the
Participant fails to make an initial salary deferral election
within such time, then such Participant may thereafter make an
election in accordance with the rules governing modifications.
The Participant shall make such an election by entering into a
written salary reduction agreement with the Employer and
filing such agreement with the Administrator. Such election
shall initially be effective beginning with the pay period
following the acceptance of the salary reduction agreement by
the Administrator, shall not have retroactive effect and shall
remain in force until revoked.
(2) A Participant may modify a prior election during the Plan
Year and concurrently make a new election by filing a written
notice with the Administrator within a reasonable time before
the pay period for which such modification is to be effective.
However, modifications to a salary deferral election shall
only be permitted quarterly, during election periods
established by the Administrator prior to the first day of
each Plan Year quarter. Any modification shall not have
retroactive effect and shall remain in force until revoked.
(3) A Participant may elect to prospectively revoke his salary
reduction agreement in its entirety at any time during the
Plan Year by providing the Administrator with thirty (30) days
written notice of such revocation (or upon such shorter notice
period as may be acceptable to the Administrator). Such
revocation shall become effective as of the beginning of the
first pay period coincident with or next following the
expiration of the notice period. Furthermore, the termination
of the Participant's employment, or the cessation of
participation for any reason,
32
<PAGE>
shall be deemed to revoke any salary reduction
agreement then in effect, effective immediately
following the close of the pay period within which
such termination or cessation occurs.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its
contribution to the Plan for each Plan Year within the time prescribed by law,
including extensions of time, for the filing of the Employer's federal income
tax return for the Fiscal Year.
However, Employer Elective Contributions accumulated through
payroll deductions shall be paid to the Trustee as of the earliest date on
which such contributions can reasonably be segregated from the Employer's
general assets, but in any event within ninety (90) days from the date on which
such amounts would otherwise have been payable to the Participant in cash. The
provisions of Department of Labor regulations 2510.3-102 are incorporated
herein by reference. Furthermore, any additional Employer contributions which
are allocable to the Participant's Elective Account for a Plan Year shall be
paid to the Plan no later than the twelve-month period immediately following
the close of such Plan Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account
in the name of each Participant to which the
Administrator shall credit as of each Anniversary Date
all amounts allocated to each such Participant as set
forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a
proper allocation of the Employer's contributions for
each Plan Year. Within a reasonable period of time after
the date of receipt by the Administrator of such
information, the Administrator shall allocate such
contribution as follows:
(1) With respect to the Employer's Elective
Contribution made pursuant to Section 4.1(a), to
each Participant's Elective Account in an amount
equal to each such Participant's Deferred
Compensation for the year.
(2) With respect to the Employer's Non-Elective
Contribution made pursuant to Section 4.1(b), to
each Participant's Account in the same
proportion that each such Participant's
Compensation for the year bears to the total
Compensation of all Participants for such year.
33
<PAGE>
Only Participants who have completed a Year of Service during
the Plan Year and are actively employed on the last day of the
Plan Year shall be eligible to share in the discretionary
contribution for the year.
(c) As of each Anniversary Date, any amounts which
became Forfeitures since the last Anniversary Date shall first
be made available to reinstate previously forfeited account
balances of Former Participants, if any, in accordance with
Section 6.4(e)(2). The remaining Forfeitures, if any, shall
be allocated each year among the Participants' Accounts of
Participants otherwise eligible to share in the allocation of
discretionary contributions pursuant to Section 4.4(b) in the
same proportion that each such Participant's Compensation for
the year bears to the total Compensation of all such
Participants for the year.
Provided, however, that in the event the allocation of
Forfeitures provided herein shall cause the "annual addition"
(as defined in Section 4.7) to any Participant's Account to
exceed the amount allowable by the Code, the excess shall be
reallocated in accordance with Section 4.8.
(d) With respect to the first Plan Year ending December
31st, Participants shall not be required to fulfill the
service requirement specified herein to share in any Employer
contribution. However, Participants must continue to be
actively employed on the last day of such Plan Year to the
extent provided herein.
(e) For any Top Heavy Plan Year, Employees not otherwise
eligible to share in the allocation of contributions and
Forfeitures as provided above, shall receive the minimum
allocation provided for in Section 4.4(i) if eligible pursuant
to the provisions of Section 4.4(k).
(f) Participants who are not actively employed on the
last day of the Plan Year due to Retirement (Normal or Late),
Total and Permanent Disability or death shall share in the
allocation of contributions and Forfeitures for that Plan Year
only if otherwise eligible in accordance with this Section.
(g) As of each Anniversary Date or other valuation date,
before allocation of Employer contributions for the entire
Plan Year and after allocation of Forfeitures, any earnings or
losses (net appreciation or net depreciation) of the Trust
Fund shall be allocated in the same proportion that each
34
<PAGE>
Participant's and Former Participant's nonsegregated accounts
bear to the total of all Participants' and Former
Participants' nonsegretated accounts as of such date.
Participants' transfers from other qualified plans
deposited in the general Trust Fund shall share in any
earnings and losses (net appreciation or net depreciation) of
the Trust Fund in the same manner provided above. Each
segregated account maintained on behalf of a Participant shall
be credited or charged with its separate earnings and losses.
(h) Participants' accounts shall be debited for any
insurance or annuity premiums paid, if any, and credited with
any dividends received on insurance contracts.
(i) Minimum Allocations Required for Top Heavy Plan
Years: Notwithstanding the foregoing, for any Top Heavy Plan
Year, the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each
Employee shall be equal to at least three percent (3%) of such
Employee's "415 Compensation" (reduced by contributions and
forfeitures, if any, allocated to each Employee in any defined
contribution plan included with this plan in a Required
Aggregation Group). However, if (1) the sum of the Employer's
contributions and Forfeitures allocated to the Participant's
Combined Account of each Key Employee for such Top Heavy Plan
Year is less than three percent (3%) of each Key Employee's
"415 Compensation" and (2) this Plan is not required to be
included in an Aggregation Group to enable a defined benefit
plan to meet the requirements of Code Section 401(a)(4) or
410, the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each
Employee shall be equal to the largest percentage allocated to
the Participant's Combined Account of any Key Employee.
However, in determining whether a Non-Key Employee has
received the required minimum allocation, such Non-Key
Employee's Deferred Compensation shall not be taken into
account.
However, no such minimum allocation shall be required in
this Plan for any Employee who participates in another defined
contribution plan subject to Code Section 412 providing such
benefits included with this Plan in a Required Aggregation
Group.
(j) For purposes of the minimum allocations set forth
above, the percentage allocated to the Participant's Combined
Account of any Key Employee
35
<PAGE>
shall be equal to the ratio of the sum of the Employer's
contributions and Forfeitures allocated on behalf of such Key
Employee divided by the "415 Compensation" for such Key
Employee.
(k) For any Top Heavy Plan Year, the minimum allocations
set forth above shall be allocated to the Participant's
Combined Account of all Employees who are Participants and who
are employed by the Employer on the last day of the Plan Year,
including Employees who have (1) failed to complete a Year of
Service; and (2) declined to make mandatory contributions (if
required) or, in the case of a cash or deferred arrangement,
elective contributions to the Plan.
(1) For the purposes of this Section, "415 Compensation"
shall be limited to $200,000. Such amount shall be adjusted at
the same time and in the same manner as permitted under Code
Section 415(d) except that the dollar increase in effect on
January 1 of any calendar year shall be effective for the Plan
Year beginning with or within such calendar year and the first
adjustment to the $200,000 limitation shall be effective on
January 1, 1990. For any short Plan Year the "415
Compensation" limit shall be an amount equal to the "415
Compensation" limit for the calendar year in which the Plan
Year begins multiplied by the ratio obtained by dividing the
number of full months in the short Plan Year by twelve (12).
In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provision of the Plan
to the contrary, for Plan Years beginning on or after January
1, 1994, the annual Compensation of each Employee taken into
account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the
cost of living in accordance with Code Section 401(a)(17)(B).
The cost of living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of
fewer than 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 12.
For Plan Years beginning on or after January 1, 1994,
any reference in this Plan to the limitation under Code
Section 401(a)(17) shall mean the OBRA '93 annual compensation
limit set forth in this provision.
36
<PAGE>
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 '93 annual compensation limit
is $150,000.
(m) Notwithstanding anything herein to the contrary,
Participants who terminated employment for any reason during
the Plan Year shall share in the salary reduction
contributions made by the Employer for the year of termination
without regard to the Hours of Service credited.
(n) If a Former Participant is reemployed after five (5)
consecutive 1-Year Breaks in Service, then separate accounts
shall be maintained as follows:
(1) one account for nonforfeitable benefits attributable
to pre-break service; and
(2) one account representing his status in the Plan
attributable to post-break service.
(o) Notwithstanding anything to the contrary, if this is
a Plan that would otherwise fail to meet the requirements of
Code Sections 401(a)(26), 410(b)(1) or 410(b)(2)(A)(i) and
the Regulations thereunder because Employer contributions
would not be allocated to a sufficient number or percentage of
Participants for a Plan Year, then the following rules shall
apply:
(1) The group of Participants eligible to share in the
Employer's contribution and Forfeitures for the Plan
Year shall be expanded to include the minimum number of
Participants who would not otherwise be eligible as are
necessary to satisfy the applicable test specified
above. The specific Participants who shall become
eligible under the terms of this paragraph shall be
those who are actively employed on the last day of the
Plan Year and, when compared to similarly situated
Participants, have completed the greatest number of
Hours of Service in the Plan Year.
(2) If after application of paragraph (1) above, the
applicable test is still not satisfied, then the group
of Participants eligible to share in the Employer's
contribution and Forfeitures for the Plan Year shall be
further expanded to
37
<PAGE>
include the minimum number of Participants who are not
actively employed on the last day of the Plan Year as
are necessary to satisfy the applicable test. The
specific Participants who shall become eligible to share
shall be those Participants, when compared to similarly
situated Participants, who have completed the greatest
number of Hours of Service in the Plan Year before
terminating employment.
(3) Nothing in this Section shall permit the reduction
of a Participant's accrued benefit. Therefore any
amounts that have previously been allocated to
Participants may not be reallocated to satisfy these
requirements. In such event, the Employer shall make an
additional contribution equal to the amount such
affected Participants would have received had they been
included in the allocations, even if it exceeds the
amount which would be deductible under Code Section 404.
Any adjustment to the allocations pursuant to this
paragraph shall be considered a retroactive amendment
adopted by the last day of the Plan Year
(4) Notwithstanding the foregoing, for any Top Heavy
Plan Year beginning after December 31, 1992, if the
portion of the Plan which is not a Code Section 401(k)
or 401(m) plan would fail to satisfy Code Section 410(b)
if the coverage tests were applied by treating those
Participants whose only allocation (under such portion
of the Plan) would otherwise be provided under the top
heavy formula as if they were not currently benefiting
under the Plan, then, for purposes of this Section
4.4(o), such Participants shall be treated as not
benefiting and shall therefore be eligible to be
included in the expanded class of Participants who will
share in the allocation provided under the Plan's non
top heavy formula.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year, the
annual allocation derived from Employer Elective Contributions
to a Participant's Elective Account shall satisfy one of the
following tests:
(1) The "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not be more than the
"Actual Deferral Percentage" of the Non-Highly
Compensated Participant group multiplied by 1.25, or
38
<PAGE>
(2) The excess of the "Actual Deferral Percentage" for
the Highly Compensated Participant group over the
"Actual Deferral Percentage" for the Non-Highly
Compensated Participant group shall not be more than two
percentage points. Additionally, the "Actual Deferral
Percentage" for the Highly Compensated Participant group
shall not exceed the "Actual Deferral Percentage" for
the Non-Highly Compensated Participant group multiplied
by 2. The provisions of Code Section 401(k)(3) and
Regulation l.401(k)-l(b) are incorporated herein by
reference.
However, in order to prevent the multiple use of the
alternative method described in (2) above and in Code
Section 401(m)(9)(A), any Highly Compensated
Participant eligible to make elective deferrals pursuant
to Section 4.2 and to make Employee contributions or to
receive matching contributions under any other plan
maintained by the Employer or an Affiliated Employer
shall have his actual contribution ratio reduced
pursuant to. Regulation l.401(m)-2, the provisions of
which are incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral
Percentage" means, with respect to the Highly Compensated
Participant group and Non-Highly Compensated Participant group
for a Plan Year, the average of the ratios, calculated
separately for each Participant in such group, of the amount
of Employer Elective Contributions allocated to each
Participant's Elective Account for such Plan Year, to such
Participant's "414(s) Compensation" for such Plan Year. The
actual deferral ratio for each Participant and the Actual
Deferral Percentage" for each group shall be calculated to the
nearest one-hundredth of one percent. Employer Elective
Contributions allocated to each Non-Highly Compensated
Participant's Elective Account shall be reduced by Excess
Deferred Compensation to the extent such excess amounts are
made under this Plan or any other plan maintained by the
Employer.
(c) For the purpose of determining the actual deferral
ratio of a Highly Compensated Employee who is subject to the
Family Member aggregation rules of Code Section 414(q)(6)
because such Participant is either a "five percent owner" of
the Employer or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the
year, the following shall apply:
39
<PAGE>
(1) The combined actual deferral ratio for the family
group (which shall be created as one Highly Compensated
Participant) shall be determined by aggregating Employer
Elective Contributions and "414(s) Compensation" of all
eligible Family Members (including Highly Compensated
Participants). However, in applying the $200,000 limit
to "414(s) Compensation," Family Members shall include
only the affected Employee's spouse and any lineal
descendants who nave not attained age 19 before the
close of the Plan Year.
(2) The Employer Elective Contributions and "414(s)
Compensation" of all Family Members shall be disregarded
for purposes of determining the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant
group except to the extent taken into account in
paragraph (1) above.
(3) If a Participant is required to be aggregated as a
member of more than one family group in a plan, all
Participants who are members of those family groups that
include the Participant are aggregated as one family
group in accordance with paragraphs (1) and (2) above.
(d) For the purposes of Sections 4.5(a) and 4.6, a
Highly Compensated Participant and a Non-Highly Compensated
Participant shall include any Employee eligible to make a
deferral election pursuant to Section 4.2, whether or not such
deferral election was made or suspended pursuant to Section
4.2.
(e) For the purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k), if two or more plans which
include cash or deferred arrangements are considered one plan
for the purposes of Code Section 401(a) (4) or 410(b) (other
than Code Section 410(b)(2)(A)(ii)), the cash or deferred
arrangements included in such plans shall be treated as one
arrangement. In addition, two or more cash or deferred
arrangements may be considered as a single arrangement for
purposes of determining whether or not such arrangements
satisfy Code Sections 401(a)(4), 410(b) and 401(k). In such a
case, the cash or deferred arrangements included in such plans
and the plans including such arrangements shall be treated as
one arrangement and as one plan for purposes of this Section
and Code Sections 401(a)(4), 410(b) and 401(k). Plans may be
aggregated under this paragraph (e) only if they have the same
plan year.
40
<PAGE>
Notwithstanding the above, an employee stock ownership plan
described in Code Section 4975(e)(7) or 409 may not be combined with this
Plan for purposes of determining whether the employee stock ownership plan
or this Plan satisfies this Section and Code Sections 401(a)(4), 410(b)
and 401(k).
(f) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two or more cash or deferred
arrangements (other than a cash or deferred arrangement which is part of
an employee stock ownership plan as defined in Code Section 4975(e)(7) or
409) of the Employer or an Affiliated Employer, all such cash or deferred
arrangements shall be treated as one cash or deferred arrangement for the
purpose of determining the actual deferral ratio with respect to such
Highly Compensated Participant. However, if the cash or deferred
arrangements have different plan years, this paragraph shall be applied by
treating all cash or deferred arrangements ending with or within the same
calendar year as a single arrangement.
4. 6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer's Elective
Contributions made pursuant to Section 4.4 do not satisfy one of the tests set
forth in Section 4.5(a), the Administrator shall adjust Excess Contributions
pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month following the
end of each Plan Year, the Highly Compensated Participant having the
highest actual deferral ratio shall have his portion of Excess
Contributions distributed to him until one of the tests set forth in
Section 4.5(a) is satisfied, or until his actual deferral ratio equals the
actual deferral ratio of the Highly Compensated Participant having the
second highest actual deferral ratio. This process shall continue until
one of the tests set forth in Section 4.5(a) is satisfied. For each Highly
Compensated Participant, the amount of Excess Contributions is equal to
the Elective Contributions on behalf of such Highly Compensated
Participant (determined prior to the application of this paragraph) minus
the amount determined by multiplying the Highly Compensated Participant's
actual deferral ratio (determined after application of this paragraph) by
his "414(s) Compensation." However, in determining the amount of Excess
Contributions to be distributed with respect to an affected Highly
Compensated Participant as determined herein, such amount shall be reduced
by any Excess Deferred Compensation previously distributed to
41
<PAGE>
such affected Highly Compensated Participant or his taxable year ending
with or within such Plan Year.
(1) With respect to the distribution of Excess Contributions
pursuant to (a) above, such distribution:
(i) may be postponed but not later than the close of the Plan
Year following the Plan Year to which they are allocable;
(ii) shall be adjusted for Income; and
(iii) shall be designated by the Employer as a distribution of
Excess Contributions (and Income).
(2) Any distribution of less than the entire amount of Excess
Contributions shall be treated as a pro rata distribution of Excess
Contributions and Income.
(3) The determination and correction of Excess Contributions of a
Highly Compensated Participant whose actual deferral ratio is
determined under the family aggregation rules shall be accomplished
by reducing the actual deferral ratio as required herein, and the
Excess Contributions for the family unit shall then be allocated
among the Family Members in proportion to the Elective Contributions
of each Family Member that were combined to determine the group
actual deferral ratio.
(b) Within twelve (12) months after the end of the Plan Year, the
Employer may make a special Qualified Non-Elective Contribution on behalf
of Non-Highly Compensated Participants in an amount sufficient to satisfy
one of the tests set forth in Section 4.5(a). Such contribution shall be
allocated to the Participant's Elective Account of each Non-Highly
Compensated Participant in the same proportion that each Non-Highly
Compensated Participant's Compensation for the year bears to the total
Compensation of all Non-Highly Compensated Participants.
(c) If during a Plan Year the projected aggregate amount of Elective
Contributions to be allocated to all Highly Compensated Participants under
this Plan would, by virtue of the tests set forth in Section 4.5(a), cause
the Plan to fail such tests, then the Administrator may automatically
reduce proportionately or in the order provided in Section 4.6(a) each
affected Highly Compensated Participant's
42
<PAGE>
deferral election made pursuant to Section 4.2 by an amount necessary to
satisfy one of the tests set forth in Section 4.5(a).
4.7 MAXIMUM AMNLAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual additions"
credited to a Participant's accounts for any "limitation year" shall equal
the lesser of: (1) $30,000 (or, if greater, one-fourth of the dollar
limitation in effect under Code Section 415(b)(1)(A)) or (2) twenty-five
percent (25%) of the Participant's "415 Compensation" for such "limitation
year." For any short "limitation year," the dollar limitation in (1) above
shall be reduced by a fraction, the numerator of which is the number of
full months in the short "limitation year" and the denominator of which is
twelve (12).
(b) For purposes of applying the limitations of Code Section 415,
"annual additions" means the sum credited to a Participant's accounts for
any "limitation year" of (1) Employer contributions, (2) Employee
contributions, (3) forfeitures, (4) amounts allocated, after March 31,
1984, to an individual medical account, as defined in Code Section 415(1)
(2) which is part of a pension or annuity plan maintained by the Employer
and (5) 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 Code Section 419A(d)(3)) under a welfare
benefit plan (as defined in Code Section 419(e)) maintained by the
Employer. Except, however, the "415 Compensation" percentage limitation
referred to in paragraph (a)(2) above shall not apply to: (1) any
contribution for medical benefits (within the meaning of Code Section
419A(f)(2)) after separation from service which is otherwise treated as
an "annual addition," or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(1)(1).
(c) For purposes of applying the limitations of Code Section 415,
the transfer of funds from one qualified plan to another is not an "annual
addition." In addition, the following are not Employee contributions for
the purposes of Section 4.7(b)(2): (1) rollover contributions (as defined
in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the Plan; (3) repayments of
distributions received by an Employee pursuant to Code Section 411(a)
(7)(B) (cash-outs); (4) repayments of distributions received
43
<PAGE>
by an Employee pursuant to Code Section 411(a)(3)(D) (mandatory
contributions); and (5) Employee contributions to a simplified employee
pension excludable from gross income under Code Section 408(k)(6).
(d) For purposes of applying the limitations or Code Section 415,
the "limitation year" shall be the Plan Year.
(e) The dollar limitation under Code Section 415(b) (1)(A) stated
in paragraph (a)(1) above shall be adjusted annually as provided in Code
Section 415(d) pursuant to the Regulations. The adjusted limitation is
effective as of January 1st of each calendar year and is applicable to
"limitation years" ending with or within that calendar year.
(f) For the purpose of this Section, all qualified defined benefit
plans (whether terminated or not) ever maintained by the Employer shall be
treated as one defined benefit plan, and all qualified defined
contribution plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined contribution plan.
(g) For the purpose of this Section, if the Employer is a member of
a controlled group of corporations, trades or businesses under common
control (as defined by Code Section 1563(a) or Code Section 414(b) and (c)
as modified by Code Section 415(h)), is a member of an affiliated service
group (as defined by Code Section 414(m)), or is a member of a group of
entities required to be aggregated pursuant to Regulations under Code
Section 414(o), all Employees of such Employers shall be considered to be
employed by a single Employer.
(h) For the purpose of this Section, if this Plan is a Code Section
413(c) plan, all Employers of a Participant who maintain this Plan will be
considered to be a single Employer.
(i) (1) If a Participant participates in more than one defined
contribution plan maintained by the Employer which have different
Anniversary Dates, the maximum "annual additions" under this Plan shall
ecual the maximum "annual additions" for the "limitation year" minus any
"annual additions" previously credited to such Participant's accounts
during the "limitation year."
(2) If a Participant participates in both a defined contribution
plan subject to Code Section
44
<PAGE>
412 and a defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary Date,
"annual additions" will be credited to the Participant's accounts
under the defined contribution plan subject to Code Section 412
prior to crediting "annual additions" to the Participant's accounts
under the defined contribution plan not subject to Code Section 412.
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained by the
Employer which have the same Anniversary Date, the maximum "annual
additions" under this Plan shall equal the product of (A) the
maximum "annual additions" for the "limitation year" minus any
"annual additions" previously credited under subparagraphs (1) or
(2) above, multiplied by (B) a fraction (i) the numerator of which
is the annual additions" which would be credited to such
Participant's accounts under this Plan without regard to the
limitations of Code Section 415 and (ii) the denominator of which is
such "annual additions" for all plans described in this
subparagraph.
(j) If an Employee is (or has been) a Participant in one or more
defined benefit plans and one or more defined contribution plans
maintained by the Employer, the sum of the defined benefit plan fraction
and the defined contribution plan fraction for any "limitation year" may
not exceed 1.0.
(k) The defined benefit plan fraction for any "limitation year" is a
fraction, the numerator of which is the sum of the Participant's projected
annual benefits under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator of which is
the lesser of 125 percent of the dollar limitation determined for the
"limitation year" under Code Sections 415(b) and (d) or 140 percent of the
highest average compensation, including any adjustments under Code Section
415(b).
Notwithstanding the above, if the Participant was a Participant as
of the first day of the first "limitation year" beginning after December
31, 1986, in one or more defined benefit plans maintained by the Employer
which were in existence on May 6, 1986, the denominator of this fraction
will not be less than 125 percent of the sum of the annual benefits under
such plans which the Participant had accrued as of the close of the last
"limitation year"
45
<PAGE>
beginning before January 1, 1987, disregarding any changes in the terms
and conditions of the plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the
aggregate satisfied the requirements of Code Section 415 for all
"limitation years" beginning before January 1, 1987.
(1) The defined contribution plan fraction for any "limitation year"
is a fraction, the numerator of which is the sum of the annual additions
to the Participant's Account under all the defined contribution plans
(whether or not terminated) maintained by the Employer for the current and
all prior "limitation years" (including the annual additions attributable
to the Participant's nondeductible Employee contributions to all defined
benefit plans, whether or not terminated, maintained by the Employer, and
the annual additions attributable to all welfare benefit funds, as defined
in Code Section 419(e), and individual medical accounts, as defined in
Code Section 415(1)(2), maintained by the Employer), and the denominator
of which is the sum of the maximum aggregate amounts for the current and
all prior "limitation years" of service with the Employer (regardless of
whether a defined contribution plan was maintained by the Employer). The
maximum aggregate amount in any "limitation year" is the lesser of 125
percent of the dollar limitation determined under Code Sections 415(b) and
(d) in effect under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first day of
the first "limitation year" beginning after December 31, 1986, in one or
more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted
if the sum of this fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this fraction, will be
permanently subtracted from the numerator of this fraction. The adjustment
is calculated using the fractions as they would be computed as of the end
of the last "limitation year" beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the Code Section 415 limitation applicable to
the first "limitation year" beginning on or after January 1, 1987. The
annual addition for any "limitation year" beginning before January 1,
1987
46
<PAGE>
shall not be recomputed to treat all Employee contributions as annual
additions.
(m) Notwithstanding the foregoing, for any "limitation year" in
which the Plan is a Top Heavy Plan, 100 percent shall be substituted for
125 percent in Sections 4.7(k) and 4.7(l) unless the extra minimum
allocation is being provided pursuant to Section 4.4. However, for any
"limitation year" in which the Plan is a Super Top Heavy Plan, 100 percent
shall be substituted for 125 percent in any event.
(n) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements prescribed
in this Section shall at all times comply with the provisions of Code
Section 415 and the Regulations thereunder, the terms of which are
specifically incorporated herein by reference.
4.8 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of the allocation of Forfeitures, a reasonable
error in estimating a Participant's Compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning of Code
Section 402(g)(3)) that may be made with respect to any Participant under
the limits of Section 4.7 or other facts and circumstances to which
Regulation 1.415-6(b)(6) shall be applicable, the "annual additions" under
this Plan would cause the maximum "annual additions" to be exceeded for
any Participant, the Administrator shall (1) distribute any elective
deferrals (within the meaning of Code Section 402(g)(3)) or return any
voluntary Employee contributions credited for the "limitation year" to the
extent that the return would reduce the "excess amount" in the
Participant's accounts (2) hold any "excess amount" remaining after the
return of any elective deferrals or voluntary Employee contributions in a
"Section 415 suspense account" (3) use the "Section 415 suspense account"
in the next "limitation year" (and succeeding "limitation years" if
necessary) to reduce Employer contributions for that Participant if that
Participant is covered by the Plan as of the end of the "limitation year,"
or if the Participant is not so covered, allocate and reallocate the
"Section 415 suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to all Participants in the
Plan before any Employer or Employee contributions which would constitute
"annual additions" are made to the Plan for such "limitation year" (4)
reduce Employer contributions to the Plan for such "limitation year" by
the amount of the "Section
47
<PAGE>
415 suspense account" allocated and reallocated during such "limitation
year."
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if any, of (1)
the "annual additions" which would be credited to his account under the
terms of the Plan without regard to the limitations of Code Section 415
over (2) the maximum "annual additions" determined pursuant to Section
4.7.
(c) For purposes of this Section, "Section 415 suspense account"
shall mean an unallocated account ecual to the sum of "excess amounts" for
all Participants in the Plan during the "limitation year." The "Section
415 suspense account" shall not share in any earnings or losses of the
Trust Fund.
4.9 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred from other cualified plans by Participants, provided that the
trust from which such funds are transferred permits the transfer to be
made and the transfer will not jeopardize the tax exempt status of the
Plan or Trust or create adverse tax consequences for the Employer. The
amounts transferred shall be set up in a separate account herein referred
to as a "Participant's Rollover Account." Such account shall be fully
Vested at all times and shall not be subject to Forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account shall be held by the
Trustee pursuant to the provisions of this Plan and may not be withdrawn
by, or distributed to the Participant, in whole or in part, except as
provided in paragraphs (c) and (d) of this Section.
(c) Except as permitted by Regulations (including Regulation
l.411(d)-4), amounts attributable to elective contributions (as defined in
Regulation l.401(k)-l(g)(3)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer shall be subject to the distribution limitations
provided for in Regulation l.401(k)-l(d).
(d) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive benefits, the
fair market value of the Participant's Rollover Account shall be used to
provide additional benefits to the Participant or his
48
<PAGE>
Beneficiary. Any distributions of amounts held in a Participant's Rollover
Account shall be made in a manner which is consistent with and satisfies
the provisions of Section 6.5, including, but not limited to, all notice
and consent requirements of Code Section 411(a)(11) and the Regulations
thereunder. Furthermore, such amounts shall be considered as part of a
Participant's benefit in determining whether an involuntary cash-out of
benefits without Participant consent may be made.
(e) The Administrator may direct that employee transfers made after
a valuation date be segregated into a separate account for each
Participant in a federally insured savings account, certificate of deposit
in a bank or savings and loan association, money market certificate, or
other short term debt security acceptable to the Trustee until such time
as the allocations pursuant to this Plan have been made, at which time
they may remain segregated or be invested as part of the general Trust
Fund, to be determined by the Administrator.
(f) All amounts allocated to a Participant's Rollover Account may be
treated as a Directed Investment Account pursuant to Section 4.10.
(g) For purposes of this Section, the term "qualified plan" shall
mean any tax qualified plan under Code Section 401(a). The term "amounts
transferred from other qualified plans" shall mean: (i) amounts
transferred to this Plan directly from another qualified plan; (ii)
distributions from another qualified plan which are eligible rollover
distributions and which are either transferred by the Employee to this
Plan within sixty (60) days following his receipt thereof or are
transferred pursuant to a direct rollover; (iii) amounts transferred to
this Plan from a conduit individual retirement account provided that the
conduit individual retirement account has no assets other than assets
which (A) were previously distributed to the Employee by another qualified
plan as a lump-sum distribution (B) were eligible for tax-free rollover to
a qualified plan and (C) were deposited in such conduit individual
retirement account within sixty (60) days of receipt thereof and other
than earnings on said assets; and (iv) amounts distributed to the Employee
from a conduit individual retirement account meeting the requirements of
clause (iii) above, and transferred by the Employee to this Plan within
sixty (60) days of his receipt thereof from such conduit individual
retirement account.
49
<PAGE>
(h) Prior to accepting any transfers to which this Section applies,
the Administrator may require the Employee to establish that the amounts
to be transferred to this Plan meet the requirements of this Section and
may also require the Employee to provide an opinion of counsel
satisfactory to the Employer that the amounts to be transferred meet the
requirements of this Section.
(i) This Plan shall not accept any direct or indirect transfers (as
that term is defined and interpreted under Code Section 401(a)(11) and
the Regulations thereunder) from a defined benefit plan, money purchase
plan (including a target benefit plan), stock bonus or profit sharing plan
which would otherwise have provided for a life annuity form of payment to
the Participant.
(j) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction having
the effect of such a transfer) shall only be permitted if it will not
result in the elimination or reduction of any "Section 411(d)(6)
protected benefit" as described in Section 8.1.
4.10 DIRECTED INVESTMENT ACCOUNT
(a) The Administrator, in his sole discretion, may determine that
all Participants be permitted to direct the Trustee as to the investment
of all or a portion of the interest in any one or more of their individual
account balances. If such authorization is given, Participants may,
subject to a procedure established by the Administrator and applied in a
uniform nondiscriminatory manner, direct the Trustee in writing to invest
any portion of their account in specific assets, specific funds or other
investments permitted under the Plan and the directed investment
procedure. That portion of the account of any Participant so directing
will thereupon be considered a Directed Investment Account, which shall
not share in Trust Fund earnings.
(b) A separate Directed Investment Account shall be established for
each Participant who has directed an investment. Transfers between the
Participant's regular account and his Directed Investment Account shall be
charged and credited as the case may be to each account. The Directed
Investment Account shall not share in Trust Fund earnings, but it shall be
charged or credited as appropriate with the net earnings, gains, losses
and expenses as well as any appreciation
50
<PAGE>
or depreciation in market value during each Plan Year
attributable to such account.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each
Anniversary Date, and at such other date or dates deemed necessary by the
Administrator, herein called "valuation date," to determine the net worth of
the assets comprising the Trust Fund as it exists on the "valuation date." In
determining such net worth, the Trustee shall value the assets comprising the
Trust Fund at their fair market value as of the "valuation date" and shall
deduct all expenses for which the Trustee has not yet obtained reimbursement
from the Employer or the Trust Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in
the Trust Fund which are listed on a registered stock exchange, the
Administrator shall direct the Trustee to value the same at the prices they
were last traded on such exchange preceding the close of business on the
"valuation date." If such securities were not traded on the "valuation date,"
or if the exchange on which they are traded was not open for business on the
"valuation date," then the securities shall be valued at the prices at which
they were last traded prior to the "valuation date." Any unlisted security held
in the Trust Fund shall be valued at its bid price next preceding the close of
business on the "valuation date," which bid price shall be obtained from a
registered broker or an investment banker. In determining the fair market value
of assets other than securities for which trading or bid prices can be
obtained, the Trustee may appraise such assets itself, or in its discretion,
employ one or more appraisers for that purpose and rely on the values
established by such appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the
Employer and retire for the purposes hereof on his Normal Retirement Date.
However, a participant may postpone the termination of his employment with the
Employer to a later date, in which event the participation of such Participant
in the Plan, including the right to receive allocations pursuant to Section
4.4, shall continue until his Late Retirement Date. Upon a Participant's
Retirement Date or attainment of his Normal Retirement Date without termination
of employment with the Employer, or as soon thereafter as is practicable, the
Trustee
51
<PAGE>
shall distribute all amounts credited to such Participant's Combined
Account in accordance with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date or
other termination of his employment, all amounts credited to such
Participant's Combined Account shall become fully Vested. The
Administrator shall direct the Trustee, in accordance with the provisions
of Sections 6.6 and 6.7, to distribute the value of the deceased
Participant's accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator shall
direct the Trustee, in accordance with the provisions of Sections 6.6 and
6.7, to distribute any remaining Vested amounts credited to the accounts
of a deceased Former Participant to such Former Participant's Beneficiary.
(c) Any security interest held by the Plan by reason of an
outstanding loan to the Participant or Former Participant shall be taken
into account in determining the amount of the death benefit.
(d) The Administrator may require such proper proof of death and
such evidence of the right of any person to receive payment of the value
of the account of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's determination of
death and of the right of any person to receive payment shall be
conclusive.
(e) The Beneficiary of the death benefit payable pursuant to this
Section shall be the Participant's spouse. Except, however, the
Participant may designate a Beneficiary other than his spouse if:
(1) the spouse has waived the right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been abandoned
(within the meaning of local law) and the Participant has a court
order to such effect (and there is no "qualified domestic relations
order" as defined in Code Section 414(p) which provides otherwise),
or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
52
<PAGE>
In such event, the designation of a Beneficiary shall be made
on a form satisfactory to the Administrator. A Participant may at any time
revoke his designation of a Beneficiary or change his Beneficiary by
filing written notice of such revocation or change with the Administrator.
However, the Participant's spouse must again consent in writing to any
change in Beneficiary unless the original consent acknowledged that the
spouse had the right to limit consent only to a specific Beneficiary and
that the spouse voluntarily elected to relinquish such right. In the event
no valid designation of Beneficiary exists at the time of the
Participant's death, the death benefit shall be payable to his estate.
(f) Any consent by the Participant's spouse to waive any rights to
the death benefit must be in writing, must acknowledge the effect of such
waiver, and be witnessed by a Plan representative or a notary public.
Further, the spouse's consent must be irrevocable and must acknowledge the
specific nonspouse Beneficiary.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior to
his Retirement Date or other termination of his employment, all amounts credited
to such Participant's Combined Account shall become fully Vested. In the event
of a Participant's Total and Permanent Disability, the Trustee, in accordance
with the provisions of Sections 6.5 and 6.7, shall distribute to such
Participant all amounts credited to such Participant's Combined Account as
though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date coinciding with or subsequent
to the termination of a Participant's employment for any reason other than
death, Total and Permanent Disability or retirement, the Administrator may
direct the Trustee to segregate the amount of the Vested portion of such
Terminated Participant's Combined Account and invest the aggregate amount
thereof in a separate, federally insured savings account, certificate of
deposit, common or collective trust fund of a bank or a deferred annuity.
In the event the Vested portion of a Participant's Combined Account is not
segregated, the amount shall remain in a separate account for the
Terminated Participant and share in allocations pursuant to Section 4.4
until such time as a distribution is made to the Terminated Participant.
53
<PAGE>
In the event that the amount of the Vested portion of the Terminated
Participant's Combined Account equals or exceeds the fair market value of
any insurance Contracts, the Trustee, when so directed by the
Administrator and agreed to by the Terminated Participant, shall assign,
transfer, and set over to such Terminated Participant all Contracts on his
life in such form or with such endorsements so that the settlement options
and forms of payment are consistent with the provisions of Section 6.5. In
the event that the Terminated Participant's Vested portion does not at
least equal the fair market value of the Contracts, if any, the Terminated
Participant may pay over to the Trustee the sum needed to make the
distribution equal to the value of the Contracts being assigned or
transferred, or the Trustee, pursuant to the Participant's election, may
borrow the cash value of the Contracts from the insurer so that the value
of the Contracts is equal to the Vested portion of the Terminated
Participant's Account and then assign the Contracts to the Terminated
Participant.
Distribution of the funds due to a Terminated Participant shall be
made on the occurrence of an event which would result in the distribution
had the Terminated Participant remained in the employ of the Employer
(upon the Participant's death, Total and Permanent Disability or Normal
Retirement). However, at the election of the Participant, the
Administrator shall direct the Trustee to cause the entire Vested portion
of the Terminated Participant's Combined Account to be payable to such
Terminated Participant. Any distribution under this paragraph shall be
made in a manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations thereunder.
If the value of a Terminated Participant's Vested benefit derived
from Employer and Employee contributions does not exceed $3,500 and has
never exceeded $3,500 at the time of any prior distribution, the
Administrator shall direct the Trustee to cause the entire Vested benefit
to be paid to such Participant in a single lump sum.
For purposes of this Section 6.4, if the value of a Terminated
Participant's Vested benefit is zero, the Terminated Participant shall be
deemed to have received a distribution of such Vested benefit.
(b) The Vested portion of any Participant's Account shall be a
percentage of the total amount credited to his Participant's Account
determined on the
54
<PAGE>
basis of the Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
Less than 2 0 %
2 20 %
3 40 %
4 60 %
5 80 %
6 100 %
(c) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer's contributions to the Plan or upon any
full or partial termination of the Plan, all amounts credited to the
account of any affected Participant shall become 100% Vested and shall not
thereafter be subject to Forfeiture.
(d) The computation of a Participant's nonforfeitable percentage of
his interest in the Plan shall not be reduced as the result of any direct
or indirect amendment to this Plan. For this purpose, the Plan shall be
treated as having been amended if the Plan provides for an automatic
change in vesting due to a change in top heavy status. 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
date 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 60 days
after the latest of:
(1) the adoption 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.
(e)(1) If any Former Participant shall be reemployed by the
Employer before a 1-Year Break in Service occurs, he shall continue to
participate in the Plan in the same manner as if such termination had not
occurred.
55
<PAGE>
(2) If any Former Participant shall be reemployed by the Employer
before five (5) consecutive 1-Year Breaks in Service, and such
Former Participant had received, or was deemed to have received, a
distribution of his entire Vested interest prior to his
reemployment, his forfeited account shall be reinstated only if he
repays the full amount distributed to him before the earlier of five
(5) years after the first date on which the Participant is
subsequently reemployed by the Employer or the close of the first
period of five (5) consecutive 1-Year Breaks in Service commencing
after the distribution, or in the event of a deemed distribution,
upon the reemployment of such Former Participant. In the event the
Former Participant does repay the full amount distributed to him, or
in the event of a deemed distribution, the undistributed portion of
the Participant's Account must be restored in full, unadjusted by
any gains or losses occurring subsequent to the Anniversary Date or
other valuation date coinciding with or preceding his termination.
The source for such reinstatement shall first be any Forfeitures
occurring during the year. If such source is insufficient, then the
Employer shall contribute an amount which is sufficient to restore
any such forfeited Accounts provided, however, that if a
discretionary contribution is made for such year pursuant to Section
4.1(b), such contribution shall first be applied to restore any such
Accounts and the remainder shall be allocated in accordance with
Section 4.4.
(3) If any Former Participant is reemployed after a 1-Year Break in
Service has occurred, Years of Service shall include Years of
Service prior to his 1-Year Break in Service subject to the
following rules:
(i) If a Former Participant has a 1-Year Break in Service, his
pre-break and post-break service shall be used for computing
Years of Service for eligibility and for vesting purposes only
after he has been employed for one (1) Year of Service
following the date of his reemployment with the Employer;
(ii) Any Former Participant who under the Plan does not have a
nonforfeitable right to any interest in the Plan resulting
from Employer contributions shall lose credits
56
<PAGE>
otherwise allowable under (i) above if his consecutive 1-Year
Breaks In Service equal or exceed the greater of (A) five (5)
or (B) the aggregate number of his pre-break Years of Service;
(iii) After five (5) consecutive 1-Year Breaks in Service, a
Former Participant's Vested Account balance attributable to
pre-break service shall not be increased as a result of
post-break service;
(iv) If a Former Participant who has not had his Years of
Service before a 1-Year Break in Service disregarded pursuant
to (ii) above completes one (1) Year of Service for
eligibility purposes following his reemployment with the
Employer, he shall participate in the Plan retroactively from
his date of reemployment;
(v) If a Former Participant who has not had his Years of
Service before a 1-Year Break in Service disregarded pursuant
to (ii) above completes a Year of Service (a 1-Year Break in
Service previously occurred, but employment had not
terminated), he shall participate in the Plan retroactively
from the first day of the Plan Year during which he
completes one (1) Year of Service.
(f) In determining Years of Service for purposes of vesting under
the Plan, Years of Service prior to the Effective Date of the Plan and
prior to the vesting computation period in which an Employee attained his
eighteenth birthday shall be excluded.
6.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the Participant,
shall direct the Trustee to distribute to a Participant or his Beneficiary
any amount to which he is entitled under the Plan in one or more of the
following methods:
(1) One lump-sum payment in cash or in property;
(2) Payments over a period certain in monthly, quarterly,
semiannual, or annual cash installments. In order to provide such
installment payments, the Administrator may (A) segregate the
aggregate amount thereof in a separate, federally insured savings
account, certificate of deposit in a bank or savings and
57
<PAGE>
loan association, money market certificate or other liquid
short-term security or (B) purchase a nontransferable annuity
contract for a term certain (with no life contingencies) providing
for such payment. The period over which such payment is to be made
shall not extend beyond the Participant's life expectancy (or the
life expectancy of the Participant and his designated Beneficiary).
(b) Any distribution to a Participant who has a benefit which
exceeds, or has ever exceeded, $3,500 at the time of any prior
distribution shall require such Participant's consent if such
distribution commences prior to the later of his Normal Retirement Age
or age 62. With regard to this required consent:
(1) The Participant must be informed of his right to defer receipt
of the distribution. If a Participant fails to consent, it shall be
deemed an election to defer the commencement of payment of any
benefit. However, any election to defer the receipt of benefits
shall not apply with respect to distributions which are required
under Section 6.5(c).
(2) Notice of the rights specified under this paragraph shall be
provided no less than 30 days and no more than 90 days before the
first day on which all events have occurred which entitle the
Participant to such benefit.
(3) Written consent of the Participant to the distribution must not
be made before the Participant receives the notice and must not be
made more than 90 days before the first day on which all events have
occurred which entitle the Participant to such benefit.
(4) No consent shall be valid if a significant detriment is imposed
under the Plan on any Participant who does not consent to the
distribution.
If a distribution is one to which Code Sections 401(a)(1l) and
417 do not apply, such distribution may commence less than 30 days after
the notice required under Regulation l.411(a)-11(c) is given, provided
that: (1) the Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving
the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and
(2) the
58
<PAGE>
Participant, after receiving the notice, affirmatively elects a
distribution.
(c) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits shall be made in accordance with
the following requirements and shall otherwise comply with Code Section
401(a)(9) and the Regulations thereunder (including Regulation
1.401(a)(9)-2), the provisions of which are incorporated herein by
reference:
(1) A Participant's benefits shall be distributed to him not later
than April 1st of the calendar year following the later of (i) the
calendar year in which the Participant attains age 70 1/2 or (ii)
the calendar year in which the Participant retires, provided,
however, that this clause (ii) shall not apply in the case of a
Participant who is a "five (5) percent owner" at any time during the
five (5) Plan Year period ending in the calendar year in which he
attains age 70 1/2 or, in the case of a Participant who becomes a
"five (5) percent owner" during any subsequent Plan Year, clause
(ii) shall no longer apply and the required beginning date shall be
the April 1st of the calendar year following the calendar year in
which such subsequent Plan Year ends. Alternatively, distributions
to a Participant must begin no later than the applicable April 1st
as determined under the preceding sentence and must be made over a
period certain measured by the life expectancy of the Participant
(or the life expectancies of the Participant and his designated
Beneficiary) in accordance with Regulations. Notwithstanding the
foregoing, clause (ii) above shall not apply to any Participant
unless the Participant had attained age 70 1/2 before January 1,
1988 and was not a "five (5) percent owner" at any time during the
Plan Year ending with or within the calendar year in which the
Participant attained age 66 1/2 or any subsequent Plan Year.
(2) Distributions to a Participant and his Beneficiaries shall only
be made in accordance with the incidental death benefit requirements
of Code Section 401(a)(9)(G) and the Regulations thereunder.
(d) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse may, at the election of the
Participant or the Participant's spouse, be redetermined in accordance
with Regulations. The election, once made, shall be
59
<PAGE>
irrevocable. If no election is made by the time distributions must
commence, then the life expectancy of the Participant and the
Participant's spouse shall not be subject to recalculation. Life
expectancy and joint and last survivor expectancy shall be computed using
the return multiples in Tables V and VI of Regulation 1.72-9.
(e) All annuity Contracts under this Plan shall be non-transferable
when distributed. Furthermore, the terms of any annuity Contract purchased
and distributed to a Participant or spouse shall comply with all of the
requirements of the Plan.
(f) If a distribution is made at a time when a Participant is not
fully Vested in his Participant's Account (employment has not terminated)
and the Participant may increase the Vested percentage in such account:
(1) a separate account shall be established for the Participant's
interest in the Plan as of the time of the distribution; and
(2) at any relevant time, the Participant's Vested portion of the
separate account shall be equal to an amount ("X") determined by the
formula:
X equals P(AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the Vested percentage at
the relevant time, AB is the account balance at the relevant time, D
is the amount of distribution, and R is the ratio of the account
balance at the relevant time to the account balance after
distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a)(1) The death benefit payable pursuant to Section 6.2 shall be
paid to the Participant's Beneficiary within a reasonable time after the
Participant's death by either of the following methods, as elected by the
Participant (or if no election has been made prior to the Participant's
death, by his Beneficiary) subject, however, to the rules specified in
Section 6.6(b):
(i) One lump-sum payment in cash or in property;
(ii) Payment in monthly, quarterly, semi-annual, or annual
cash installments
60
<PAGE>
over a period to be determined by the Participant or his
Beneficiary. After periodic installments commence, the
Beneficiary shall have the right to direct the Trustee to
reduce the period over which such periodic installments shall
be made, and the Trustee shall adjust the cash amount of such
periodic installments accordingly.
(2) In the event the death benefit payable pursuant to Section 6.2
is payable in installments, then, upon the death of the Participant,
the Administrator may direct the Trustee to segregate the death
benefit into a separate account, and the Trustee shall invest such
segregated account separately, and the funds accumulated in such
account shall be used for the payment of the installments.
(b) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in accordance
with the following requirements and shall otherwise comply with Code
Section 401(a)(9) and the Regulations thereunder. If it is determined
pursuant to Regulations that the distribution of a Participant's interest
has begun and the Participant dies before his entire interest has been
distributed to him, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of distribution
selected pursuant to Section 6.5 as of his date of death. If a Participant
dies before he has begun to receive any distributions of his interest
under the Plan or before distributions are deemed to have begun pursuant
to Regulations, then his death benefit shall be distributed to his
Beneficiaries by December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.
However, the 5-year distribution recuirement of the preceding
paragraph shall not apply to any portion of the deceased Participant's
interest which is payable to or for the benefit of a designated
Beneficiary. In such event, such portion shall be distributed over a
period not extending beyond the life expectancy of such designated
Beneficiary provided such distribution begins not later than December 31st
of the calendar year immediately following the calendar year in which the
Participant died. However, in the event the Participant's spouse
(determined as of the date of the Participant's death) is his Beneficiary,
the requirement that distributions commence within one year of a
Participant's death shall not apply. In lieu thereof, distributions must
commence on or before the
61
<PAGE>
later of: (1) December 31st of the calendar year immediately following the
calendar year in which the Participant died; or (2) December 31st of the
calendar year in which the Participant would have attained age 70 1/2. If
the surviving spouse dies before distributions to such spouse begin, then
the 5-year distribution requirement of this Section shall apply as if the
spouse was the Participant.
(c) For purposes or this Section, the life expectancy of a
Participant and a Participant's souse may, at the election of the
Participant or the Participant's spouse, be redetermined in accordance
with Regulations. The election, once made, shall be irrevocable. If no
election Is made by the time distributions must commence, then the life
expectancy of the Participant and the Participant's spouse shall not be
subject to recalculation. Life expectancy and joint and last survivor
expectancy shall be computed using the return multiples in Tables V and
VI of Regulation 1.72-9.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the Trustee is to make
a distribution or to commence a series of payments on or as of an Anniversary
Date, the distribution or series of payments may be made or begun on such date
or as soon thereafter as is practicable. However, unless a Former Participant
elects in writing to defer the receipt of benefits (such election may not result
in a death benefit that is more than incidental), the payment of benefits shall
begin not later than the 60th day after the close of the Plan Year in which the
latest of the following events occurs: (a) the date on which the Participant
attains the earlier of age 65 or the Normal Retirement Age specified herein; (b)
the 10th anniversary of the year in which the Participant commenced
participation in the Plan; or (c) the date the Participant terminates his
service with the Employer.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, such is permitted by
the laws of the state in which said Beneficiary resides. Such a payment to the
legal guardian, custodian or parent of a minor Beneficiary shall fully discharge
the Trustee, Employer, and Plan from further liability on account thereof.
62
<PAGE>
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all or any portion, or the distribution payable to a
Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall be restored.
6.10 PRE-RETIREMENT DISTRIBUTION
At such time as a Participant shall have attained the age of 59 1/2 years,
the Administrator, at the election of the Participant, shall direct the Trustee
to distribute all or a portion of the amount then credited to the accounts
maintained on behalf of the Participant. However, no distribution from the
Participant's Account shall occur prior to 100% vesting. In the event that the
Administrator makes such a distribution, the Participant shall continue to be
eligible to participate in the Plan on the same basis as any other Employee. Any
distribution made pursuant to this Section shall be made in a manner consistent
with Section 6.5, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations thereunder.
Notwithstanding the above, pre-retirement distributions from a
Participant's Elective Account shall not be permitted prior to the Participant
attaining age 59 1/2 except as otherwise permitted under the terms of the Plan.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan Year
up to the lesser of 100% of his Participant's Elective Account valued as
of the last Anniversary Date or other valuation date or the amount
necessary to satisfy the immediate and heavy financial need of the
Participant. Any distribution made pursuant to this Section shall be
deemed to be made as of the first day of the Plan Year or, if later, the
valuation date immediately preceding the date of distribution, and the
Participant's Elective Account shall be reduced accordingly. Withdrawal
under this Section shall be authorized only if the distribution is on
account of:
63
<PAGE>
(1) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse, or any of his
dependents (as defined in Code Section 152) or necessary for these
persons to obtain medical care;
(2) The costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
(3) Payment of tuition and related educational fees for the next
twelve (12) months of post-secondary education for the Participant,
his spouse, children, or dependents; or
(4) Payments necessary to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) No distribution shall be made pursuant to this Section unless
the Administrator, based upon the Participant's representation and such
other facts as are known to the Administrator, determines that all of the
following conditions are satisfied:
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant. The amount of the
immediate and heavy financial need may include any amounts necessary
to pay any federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution;
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable (at the time of the loan)
loans currently available under all plans maintained by the
Employer;
(3) The Plan, and all other plans maintained by the Employer,
provide that the Participant's elective deferrals and voluntary
Employee contributions will be suspended for at least twelve (12)
months after receipt of the hardship distribution or, the
Participant, pursuant to a legally enforceable agreement, will
suspend his elective deferrals and voluntary Employee contributions
to the Plan and all other plans maintained by the Employer for at
least twelve (12) months after receipt of the hardship distribution;
and
64
<PAGE>
(4) The Plan, and all other p1ans maintained by the Employer,
provide that the Participant may not make elective deferrals for the
Participant's taxable year immediately following the taxable year of
the hardship distribution in excess of the applicable limit under
Code Section 402(g) for such next taxable year less the amount or
such Participant's elective deferrals for the taxable year of the
hardship distribution.
(c) Notwithstanding the above, distributions from the Participant's
Elective Account pursuant to this Section shall be limited solely to the
Participant's total Deferred Compensation as of the date of distribution,
reduced by the amount of any previous distributions pursuant to this
Section and Section 6.l0.
(d) Any distribution made pursuant to this Section shall be made in
a manner which is consistent with and satisfies the provisions of Section
6.5, including, but not limited to, all notice and consent requirements of
Code Section 411(a) (11) and the Regulations thereunder.
6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a Participant in
this Plan shall be subject to the rights afforded to any "alternate payee" under
a "qualified domestic relations order. Furthermore, a distribution to an
"alternate payee" shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected Participant has not
separated from service and has not reached the "earliest retirement age" under
the Plan. For the purposes of this Section, "alternate payee, "qualified
domestic relations order" and "earliest retirement age" shall have the meaning
set forth under Code Section 414(p).
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of responsibilities:
(a) Consistent with the "funding policy and method" determined by
the Employer, to invest, manage, and control the Plan assets subject,
however, to the direction of an Investment Manager if the Trustee should
appoint such manager as to all or a portion of the assets of the Plan;
65
<PAGE>
(b) At the direction of the Administrator, to pay benefits required
under he Plan to be paid to Participants, or, in the event of their death,
to their Beneficiaries;
(c) To maintain records of receipts and disbursements and furnish to
the Employer and/or Administrator for each Plan Year a written annual
report per Section 7.7; and
(d) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to sign
papers on their behalf.
7. 2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep the
Trust Fund invested without distinction between principal and income and
in such securities or property, real or personal, wherever situated, as
the Trustee shall deem advisable, including, but not limited to, stocks,
common or preferred, bonds and other evidences of indebtedness or
ownership, and real estate or any interest therein. The Trustee shall at
all times in making investments of the Trust Fund consider, among other
factors, the short and long-term financial needs of the Plan on the basis
of information furnished by the Employer. In making such investments, the
Trustee shall not be restricted to securities or other property of the
character expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to any limitations
imposed by the Code or the Act so that at all times the Plan may qualify
as a qualified Profit Sharing Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to the
terms of its usual and customary bank agency agreement, under which the
duties of such bank or trust company shall be of a custodial, clerical and
record-keeping nature.
(c) The Trustee, at the direction of the Administrator, shall
ratably apply for, own, and pay premiums on Contracts on the lives of the
Participants. If a life insurance policy is to be purchased for a
Participant, the aggregate premium for ordinary life insurance for each
Participant must be less than 50% of the aggregate of the contributions
and Forfeitures to the credit of the Participant at any particular time.
If term insurance is purchased with such contributions, the aggregate
premium must be less than 25% of the aggregate contributions and
Forfeitures allocated to a
66
<PAGE>
Participant's Combined Account. If both term insurance and ordinary life
insurance are purchased with such contributions, the amount expended for
term insurance plus one-half of the premium or ordinary 1ife insurance may
not in the aggregate exceed 25% of the aggregate contributions and
Forfeitures allocated to a Participant's Combined Account. The Trustee
must convert the entire value of the life insurance contracts at or before
retirement into cash or provide for a periodic income so that no portion
of such value may be used to continue life insurance protection beyond
retirement, or distribute the Contracts to the Participant. In the event
of any conflict between the terms of this Plan and the terms of any
insurance Contract purchased hereunder, the Plan provisions shall control.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common law,
statutory authority, including the Act, and other provisions of the Plan, shall
have the following powers and authorities, to be exercised in the Trustee's sole
discretion:
(a) To purchase, or subscribe for, any securities or other property
and to retain the same. In conjunction with the purchase of securities,
margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to purchase,
or otherwise dispose of any securities or other property held by the
Trustee, by private contract or at public auction. No person dealing with
the Trustee shall be bound to see to the application of the purchase money
or to inquire into the validity, expediency, or propriety of any such sale
or other disposition, with or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription rights
or other options, and to make any payments incidental thereto; to oppose,
or to consent to, or otherwise participate in, corporate reorganizations
or other changes affecting corporate securities, and to delegate
discretionary powers, and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an owner with
respect to stocks, bonds, securities, or other property;
(d) To cause any securities or other property to be registered in
the Trustee's own name or in the name
67
<PAGE>
of one or more of the Trustee's nominees, and to hold any investments in
bearer form, but the books and records of the Trustee shall at all times
show that all such investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any part,
of the Trust Fund; and no person lending money to the Trustee shall be
bound to see to the application of the money lent or to inquire into the
validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash balances
as the Trustee may, from time to time, deem to be in the best interests of
the Plan, without liability for interest thereon;
(g) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or acquired as Trustee
hereunder, whether or not such securities or other property would normally
be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence or defend
suits or legal or administrative proceedings, and to represent the Plan in
all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel may or may
not be agent or counsel for the Employer;
(k) To apply for and procure from responsible insurance companies,
to be selected by the Administrator, as an investment of the Trust Fund
such annuity, or other Contracts (on the life of any Participant) as the
Administrator shall deem proper; to exercise, at any time or from time to
time, whatever rights and privileges may be granted under such annuity, or
other Contracts; to collect, receive, and settle for the proceeds of all
such annuity or other
68
<PAGE>
Contracts as and when entitled to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate or interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To invest in shares of investment companies registered under the
Investment Company Act of 1940;
(o) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, or, if
the options are not traded on a national securities exchange, are
guaranteed by a member firm of the New York Stock Exchange;
(p) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(q) To pool all or any of the Trust Fund, from time to time, with
assets belonging to any other qualified employee pension benefit trust
created by the Employer or an affiliated company of the Employer, and to
commingle such assets and make joint or common investments and carry joint
accounts on behalf of this Plan and such other trust or trusts, allocating
undivided shares or interests in such investments or accounts or any
pooled assets of the two or more trusts in accordance with their
respective interests;
(r) To do all such acts and exercise all such rights and privileges,
although not specifically mentioned herein, as the Trustee may deem
necessary to carry out the purposes of the Plan.
(s) Directed Investment Account. The powers granted to the Trustee
shall be exercised in the sole fiduciary discretion of the Trustee.
However, if Participants are so empowered by the Administrator, each
Participant may direct the Trustee to separate and keep separate all or a
portion of his account; and further each Participant is authorized and
empowered, in his sole and absolute discretion, to give directions to the
Trustee pursuant to the procedure established by the Administrator and in
such form as the Trustee may require concerning the investment of the
Participant's Directed Investment Account. The Trustee shall comply as
promptly as practicable with directions given by the
69
<PAGE>
Participant hereunder. The Trustee may refuse to comply with any direction
from the Participant in the event the Trustee, in its sole and absolute
discretion, deems such directions improper by virtue of applicable law.
The Trustee shall not be responsible or liable for any loss or expense
which may result from the Trustee's refusal or failure to comply with any
directions from the Participant. Any costs and expenses related to
compliance with the Participant's directions shall be borne by the
Participant's Directed Investment Account.
7.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion, make loans to
Participants and Beneficiaries under the following circumstances: (1)
loans shall be made available to all Participants and Beneficiaries on a
reasonably equivalent basis; (2) loans shall not be made available to
Highly Compensated Employees in an amount greater than the amount made
available to other Participants and Beneficiaries; (3) loans shall bear a
reasonable rate of interest; (4) loans shall be adequately secured; and
(5) shall provide for repayment over a reasonable period of time.
(b) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the
Participant) shall be limited to the lesser or:
(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the Participant during
the one year period ending on the day before the date on which such
loan is made, over the outstanding balance of loans from the Plan to
the Participant on the date on which such loan was made, or
(2) the greater of (A) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant under the Plan,
or (B) $10,000.
(c) Loans shall provide for level amortization with payments to be
made not less frequently than quarterly over a period not to exceed five
(5) years. However, loans used to acquire any dwelling unit which, within
a reasonable time, is to be used (determined at the time the loan is made)
as a principal residence of the Participant shall provide for periodic
repayment over a reasonable period of time that may exceed five (5) years.
70
<PAGE>
(d) Any loans granted or renewed shall be made pursuant to a
Participant loan program. Such loan program shall be established in
writing and must include, but need not be 1imited to, the following:
(1) the identity of the person or positions authorized to administer
the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans offered;
(5) the procedure under the program for determining a reasonable
rate of interest;
(6) the types of collateral which may secure a Participant loan; and
(7) the events constituting default and the steps that will be taken
to preserve Plan assets.
Such Participant loan program shall be contained in a separate
written document which, when properly executed, is hereby incorporated by
reference and made a part of the Plan. Furthermore, such Participant loan
program may be modified or amended in writing from time to time without
the necessity of amending this Section.
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the Trust
Fund. The Trustee shall not be responsible in any way for the application of
such payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall from time
to time be agreed upon in writing by the Employer and the Trustee. An individual
serving as Trustee who already receives full-time pay from the Employer shall
not receive compensation from the Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable counsel fees
incurred by it as Trustee. Such compensation and expenses shall be paid from the
Trust Fund unless paid or advanced by the Employer. All taxes of any kind and
all kinds whatsoever that may be levied or assessed under
71
<PAGE>
existing or future laws upon, or in respect of, the Trust Fund or the income
thereof, shall be paid from the Trust Fund.
7.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary Date
or receipt of the Employer's contribution for each Plan Year, the Trustee shall
furnish to the Employer and Administrator a written statement of account with
respect to the Plan Year for which such contribution was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales or
other disposition of the assets;
(c) the increase, or decrease, in the value or the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustee and/or Administrator
deems appropriate. The Employer, forthwith upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof shall be deemed
an approval thereof. The approval by the Employer of any statement of
account shall be binding as to all matters embraced therein as between the
Employer and the Trustee to the same extent as if the account of the
Trustee had been settled by judgment or decree in an action for a judicial
settlement of its account in a court of competent jurisdiction in which
the Trustee, the Employer and all persons having or claiming an interest
in the Plan were parties; provided, however, that nothing herein contained
shall deprive the Trustee of its right to have its accounts judicially
settled if the Trustee so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall required by the Act and
the regulations thereunder for any Plan Year, the Administrator shall
direct the Trustee to engage on behalf of all Participants an independent
qualified public accountant for that purpose. Such accountant shall, after
an audit of books and records of the Plan in accordance with generally
accepted auditing standards, within a reasonable period after the close of
the Plan Year,
72
<PAGE>
furnish to the Administrator and the Trustee a report of his audit setting
forth his opinion as to whether any statements, schedules or lists that
are required by Act Section 103 or the Secretary of Labor to be filed with
the Plan's annual report, are presented fairly in conformity with
generally accepted accounting principles applied consistently. All
auditing and accounting fees shall be an expense of and may, at the
election of the Administrator, be paid from the Trust Fund.
(b) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated and supervised and
subject to periodic examination by a state or federal agency, it shall
transmit and certify the accuracy of that information to the Administrator
as provided in Act Section 103(b) within one hundred twenty (120) days
after the end of the Plan Year or by such other date as may be prescribed
under regulations of the Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a written
notice of his resignation.
(b) The Employer may remove the Trustee by mailing by registered or
certified mail, addressed to such Trustee at his last known address, at
least thirty (30) days before its effective date, a written notice of his
removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such successor,
upon accepting such appointment in writing and delivering same to the
Employer, shall, without further act, become vested with all the estate,
rights, powers, discretions, and duties of his predecessor with like
respect as if he were originally named as a Trustee herein. Until such a
successor is appointed, the remaining Trustee or Trustees shall have full
authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to the
death, resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such designation,
the successor shall, without further act, become vested with all the
estate, rights, powers,
73
<PAGE>
discretions, and duties of his predecessor with the like effect as if he
were originally named as Trustee herein immediately upon the death,
resignation, incapacity, or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he shall
furnish to the Employer and Administrator a written statement of account
with respect to the portion of the Plan Year during which he served as
Trustee. This statement shall be either (i) included as part of the annual
statement of account for the Plan Year required under Section 7.7 or (ii)
set forth in a special statement. Any such special statement of account
should be rendered to the Employer no later than the due date of the
annual statement or account for the Plan Year. The procedures set forth in
Section 7.7 for the approval by the Employer of annual statements of
account shall apply to any special statement of account rendered hereunder
and approval by the Employer of any such special statement in the manner
provided in Section 7.7 shall have the same effect upon the statement as
the Employer's approval of an annual statement of account. No successor to
the Trustee shall have any duty or responsibility to investigate the acts
or transactions of any predecessor who has rendered all statements of
account required by Section 7.7 and this subparagraph.
7.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the Trustee at
the direction of the Administrator shall transfer the Vested interest, if any,
of such Participant in his account to another trust forming part of a pension,
profit sharing or stock bonus plan maintained by such Participant's new employer
and represented by said employer in writing as meeting the requirements of Code
Section 401(a), provided that the trust to which such transfers are made permits
the transfer to be made.
7.11 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(b) For purposes of this Section the following definitions shall
apply:
74
<PAGE>
(1) An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or
life expectancy) of the distributee or the joint lives (or joint
life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required
under Code Section 401(a)(9); and the portion of any distribution
that is not includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to
employer securities).
(2) An eligible retirement plan is an individual retirement account
described in Code Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section
401(a), that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.
(3) A distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as
defined in Code Section 414(p), are distributees with regard to the
interest of the spouse or former spouse.
(4) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the Plan,
subject to the limitations of this Section. Any such amendment shall be
adopted by formal action of the Employer's board of directors and
75
<PAGE>
executed by an officer authorized to act on behalf the Employer. However,
any amendment which affects the rights, duties or responsibilities of the
Trustee and Administrator may only be made with the Trustee's and
Administrator's written consent. Any such amendment shall become effective
as provided therein upon its execution. The Trustee shall not be required
to execute any such amendment unless the Trust provisions contained herein
are a part of the Plan and the amendment affects the duties of the Trustee
hereunder.
(b) No amendment to the Plan shall be effective if it authorizes or
permits any part of the Trust Fund (other than such part as is required to
pay taxes and administration expenses) to be used for or diverted to any
purpose other than for the exclusive benefit of the Participants or their
Beneficiaries or estates; or causes any reduction in the amount credited
to the account of any Participant; or causes or permits any portion of the
Trust Fund to revert to or become property of the Employer.
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger, plan
transfer or similar transaction) shall be effective to the extent it
eliminates or reduces any "Section 411(d)(6) protected benefit" or adds
or modifies conditions relating to "Section 411(d)(6) protected benefits"
the result of which is a further restriction on such benefit unless such
protected benefits are reserved with respect to benefits accrued as of the
later of the adoption date or effective date of the amendment. "Section
411(d)(6) protected benefits" are benefits described in Code Section
411(d)(6)(A), early retirement benefits and retirement-type subsidies, and
optional forms of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time to terminate the
Plan by delivering to the Trustee and Administrator written notice of such
termination. Upon any full or partial termination, all amounts credited to
the affected Participants' Combined Accounts shall become 100% Vested as
provided in Section 6.4 and shall not thereafter be subject to forfeiture,
and all unallocated amounts shall be allocated to the accounts of all
Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall direct
the distribution of the assets of the Trust Fund to Participants in a
manner which is
76
<PAGE>
consistent with and satisfies the provisions of Section 6.5. Distributions
to a Participant shall be made in cash or in property or through the
purchase of irrevocable nontransferable deferred commitments from an
insurer. Except as permitted by Regulations, the termination of the Plan
shall not result in the reduction of "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan and trust only if the
benefits which would be received by a Participant of this Plan, in the event of
a termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon him as a Participant of this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which shall
be payable out of the Trust Fund to any person (including a Participant or
his Beneficiary) shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge,
and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be void; and no such benefit shall in
any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any such person, nor shall it be
subject to attachment or legal process for or against such person, and the
same shall not be recognized by the Trustee, except to such extent as may
be required by law.
77
<PAGE>
(b) This provision shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, as a result of a loan from the Plan.
At the time a distribution is to be made to or for a Participant's or
Beneficiary's benefit, such proportion of the amount distributed as shall
equal such loan indebtedness shall be paid by the Trustee to the Trustee
or the Administrator, at the direction of the Administrator, to apply
against or discharge such loan indebtedness. Prior to making a payment,
however, the Participant or Beneficiary must be given written notice by
the Administrator that such loan indebtedness is to be so paid in whole or
part from his Participant's Combined Account. If the Participant or
Beneficiary does not agree that the loan indebtedness is a valid claim
against his Vested Participant's Combined Account, he shall be entitled to
a review of the validity of the claim in accordance with procedures
provided in Sections 2.12 and 2.13.
(c) This provision shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other domestic
relations orders permitted to be so treated by the Administrator under the
provisions of the Retirement Equity Act of 1984. The Administrator shall
establish a written procedure to determine the qualified status of
domestic relations orders and to administer distributions under such
qualified orders. Further, to the extent provided under a "qualified
domestic relations order," a former spouse of a Participant shall be
treated as the spouse or surviving spouse for all purposes under the Plan.
9.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the Act
and the laws of the State of New York, other than its laws respecting choice of
law, to the extent not preempted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender
in all cases where they would so apply, and whenever any words are used herein
in the singular or plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the Trust
and/or Plan established hereunder to which the Trustee or the Administrator may
be a party, and such claim,
78
<PAGE>
suit, or proceeding is resolved in favor of the Trustee or Administrator, they
shall be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by
law, it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any other
means, for any part of the corpus or income of any trust fund maintained
pursuant to the Plan or any funds contributed thereto to be used for, or
diverted to, purposes other than the exclusive benefit of Participants,
Retired Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive contribution
under a mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer
may demand repayment of such excessive contribution at any time within one
(1) year following the time of payment and the Trustees shall return such
amount to the Employer within the one (1) year period. Earnings of the
Plan attributable to the excess contributions may not be returned to the
Employer but any losses attributable thereto must reduce the amount so
returned.
9.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless exempted by
the Act and regulations thereunder, shall be bonded in an amount not less than
10% of the amount of the funds such Fiduciary handles; provided, however, that
the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount of
funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety company (as such
term is used in Act Section 412(a)(2)), and the bond shall be in a form approved
by the Secretary of Labor. Notwithstanding anything in the Plan to the contrary,
the cost of such bonds shall be an expense of and may, at the election of the
Administrator, be paid from the Trust Fund or by the Employer.
79
<PAGE>
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors, shall be
responsible for the validity of any Contract issued hereunder or for the failure
on the part of the insurer to make payments provided by any such Contract, or
for the action of any person which may delay payment or render a Contract null
and void or unenforceable in whole or in part.
9.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary, or
to any guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal representative, Beneficiary,
guardian or committee, as a condition precedent to such payment, to execute a
receipt and release thereof in such form as shall be determined by the Trustee
or Employer.
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required
to do or perform any act or matter or thing, it shall be done and performed by a
person duly authorized by its legally constituted authority.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee. The named Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as are specifically
given them under the Plan. In general, the Employer shall have the sole
responsibility for making the contributions provided for under Section 4.1; and
shall have the sole authority to appoint and remove the Trustee and the
Administrator; to formulate the Plan's "funding policy and method"; and to amend
or terminate, in whole
80
<PAGE>
or in part, the Plan. The Administrator shall have the sole responsibility for
the administration or the Plan, which responsibility is specifically described
in the Plan. The Trustee shall have the sole responsibility of management of the
assets held under the Trust, except those assets, the management of which has
been assigned to an Investment Manager, who shall be solely responsible for the
management of the assets assigned to it, all as specifically provided in the
Plan. Each named Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the provisions of
the Plan, authorizing or providing for such direction, information or action.
Furthermore, each named Fiduciary may rely upon any such direction, information
or action of another named Fiduciary as being proper under the Plan, and is not
required under the Plan to inquire into the propriety of any such direction,
information or action. It is intended under the Plan that each named Fiduciary
shall be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations under the Plan. No named Fiduciary shall
guarantee the Trust Fund in any manner against investment loss or depreciation
in asset value. Any person or group may serve in more than one Fiduciary
capacity. In the furtherance of their responsibilities hereunder, the "named
Fiduciaries" shall be empowered to interpret the Plan and Trust and to resolve
ambiguities, inconsistencies and omissions, which findings shall be binding,
final and conclusive.
9.13 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, contributions
to this Plan are conditioned upon the initial qualification of the Plan
under Code Section 401. If the Plan receives an adverse determination with
respect to its initial qualification, then the Plan may return such
contributions to the Employer within one year after such determination,
provided the application for the determination is made by the time
prescribed by law for filing the Employer's return for the taxable year in
which the Plan was adopted, or such later date as the Secretary of the
Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary, except Sections
3.6, 3.7, and 4.1(d), any contribution by the Employer to the Trust Fund
is conditioned upon the deductibility of the contribution by the Employer
under the Code and, to the extent any such deduction is disallowed, the
Employer may, within
81
<PAGE>
one (1) year following the disallowance of the deduction, demand repayment
of such disallowed contribution and the Trustee shall return such
contribution within one (1) year following the disallowance. Earnings of
the Plan attributable to the excess contribution may not be returned to
the Employer, but any losses attributable thereto must reduce the amount
so returned.
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner. In the event of any conflict between the terms of this
Plan and any Contract purchased hereunder, the Plan provisions shall control.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the consent of the
Employer and Trustee, any other corporation or entity, whether an affiliate or
subsidiary or not, may adopt this Plan and all of the provisions hereof, and
participate herein and be known as a Participating Employer, by a properly
executed document evidencing said intent and will of such Participating
Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required to use the
same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to, commingle, hold
and invest as one Trust Fund all contributions made by Participating
Employers, as well as all increments thereof. However, the assets of the
Plan shall, on an ongoing basis, be available to pay benefits to all
Participants and Beneficiaries under the Plan without regard to the
Employer or Participating Employer who contributed such assets.
(c) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an Employee of the Employer or a
Participating Employer, shall not affect such Participant's rights under
the Plan, and all amounts credited to such Participant's Combined Account
as well as his accumulated service time with the transferor or
predecessor, and his length of participation in the Plan, shall continue
to his credit.
82
<PAGE>
(d) All rights and values forfeited by termination of employment
shall inure only to the benefit of the Participants of the Employer or
Participating Employer by which the forfeiting Participant was employed,
except if the Forfeiture is for an Employee whose Employer is an
Affiliated Employer, then said Forfeiture shall inure to the benefit of
the Participants of those Employers who are Affiliated Employers. Should
an Employee of one ("First") Employer be transferred to an associated
("Second") Employer which is an Affiliated Employer, such transfer shall
not cause his account balance (generated while an Employee of "First"
Employer) in any manner, or by any amount to be forfeited. Such Employee's
Participant Combined Account balance for all purposes of the Plan,
including length of service, shall be considered as though he had always
been employed by the "Second" Employer and as such had received
contributions, forfeitures, earnings or losses, and appreciation or
depreciation in value of assets totaling the amount so transferred.
(e) Any expenses of the Trust which are to be paid by the Employer
or borne by the Trust Fund shall be paid by each Participating Employer in
the same proportion that the total amount standing to the credit of all
Participants employed by such Employer bears to the total standing to the
credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a party to this Plan;
provided, however, that with respect to all of its relations with the Trustee
and Administrator for the purpose of this Plan, each Participating Employer
shall be deemed to have designated irrevocably the Employer as its agent. Unless
the context of the Plan clearly indicates the contrary, the word "Employer"
shall be deemed to include each Participating Employer as related to its
adoption of the Plan.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
83
<PAGE>
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
Any contribution subject to allocation during each Plan Year shall be
allocated only among those Participants of the Employer or Participating
Employer making the contribution, except if the contribution is made by an
Affiliated Employer, in which event such contribution shall be allocated among
all Participants of all Participating Employers who are Affiliated Employers in
accordance with the provisions of this Plan. On the basis of the information
furnished by the Administrator, the Trustee shall keep separate books and
records concerning the affairs of each Participating Employer hereunder and as
to the accounts and credits of the Employees of each Participating Employer. The
Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but in
the event of an Employee transfer from one Participating Employer to another,
the employing Employer shall immediately notify the Trustee thereof.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be a
Participating Employer hereunder shall only be by the written action of each and
every Participating Employer and with the consent of the Trustee where such
consent is necessary in accordance with the terms of this Plan.
10.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke its
participation in the Plan. At the time of any such discontinuance or revocation,
satisfactory evidence thereof and of any applicable conditions imposed shall be
delivered to the Trustee. The Trustee shall thereafter transfer, deliver and
assign Contracts and other Trust Fund assets allocable to the Participants of
such Participating Employer to such new Trustee as shall have been designated by
such Participating Employer, in the event that it has established a separate
pension plan for its Employees, provided however, that no such transfer shall be
made if the result is the elimination or reduction of any "Section 411(d)(6)
protected benefits" in accordance with Section 8.1(c). If no successor is
designated, the Trustee shall retain such assets for the Employees of said
Participating Employer pursuant to the provisions of Article VII hereof. In no
such event shall any part of the corpus or income of the Trust as it relates to
such Participating Employer be used for or diverted to purposes other than for
the exclusive benefit of the Employees of such Participating Employer.
84
<PAGE>
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary rules
or regulations, binding upon all Participating Employers and all Participants,
to effectuate the purpose of this Article.
85
<PAGE>
IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
Delta Funding Corp.
By /s/ Hugh Miller
---------------------------------
EMPLOYER
/s/ Hugh Miller
---------------------------------
TRUSTEE
/s/ Sidney A. Miller
---------------------------------
TRUSTEE
86
AMENDMENT TO THE
DELTA FUNDING CORP.
401(k) PROFIT SHARING PLAN
THIS AGREEMENT is made by and between Delta Funding Corp. (the "Employer"),
and Hugh Miller and Sidney A. Miller (the "Trustees") as follows:
WHEREAS, the Employer has previously adopted the Plan;
AND WHEREAS, the Employer and the Trustee now desire, pursuant to the powers
granted them under the Plan, to amend the Plan;
NOW THEREFORE IT IS HEREBY AGREED by and among the Employer and the Trustees
that the Plan be amended as follows:
Section 4.10(a) shall be amended by the addition of the following:
Effective 10/1/96: During October, 1996 each Participant can direct
the Trustee to transfer up to 50% of their 9/30/96 account balances to the
Employer's Stock at the IPO price. Thereafter, each Participant can direct no
more than 25% of their Deferred Compensation to the Employer's Stock, and
future transfers of account balances to stock will be allowed only to the
extent that such transfers do not bring the value of the Participant's stock
account above 25% of the Participant's total account balances.
Section 4.1 shall be amended by the addition of the following:
(e) Effective 1/1/97: On behalf of each Participant who is eligible to share
in matching contributions for the Plan Year, a matching contribution equal
to 50% of each such Participant's Deferred Compensation, which amount
shall be deemed an Employer's Non-Elective Contribution.
Except, however, in applying the matching percentage specified above, only
salary reductions up to 6% of Compensation shall be considered.
Section 4.4(b)(2) shall be amended by the addition of the following:
With respect to the Employer's Non-Elective Contribution made pursuant to
Section 4.1(e), to each Participant's Account in accordance with Section 4.1
(e).
<PAGE>
Section 6.4(b) shall be amended by the addition of the following:
Effective 1/1/97, The Vested portion of any Participant's Account shall be a
percentage of the total amount credited to his Participant's Account determined
on the basis of the Participant's number of Years of Service according to the
following schedule:
Vesting Schedule
Years of Service Percentage
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 100%
Section 6.4(f) shall be amended by the addition of the following:
Effective 1/1/97: In determining years of service for purposes of vesting under
the Plan, years of service prior to the vesting computation period in which an
employee attained his eighteen birthday shall be excluded.
Section 4.2(a) shall be amended by the addition of the following:
Effective 1/1/97, the maximum amount of compensation each Participant may elect
to defer in the Plan year shall be limited to 15% of compensation.
<PAGE>
IN WITNESS WHEREOF, the Employer and the Trustees have caused this agreement to
be signed this 5th day of October, 1996.
By: Delta Funding Corp.
/s/ Richard Blass
---------------------------------
Signature
"Trustees"
By: Hugh Miller
/s/ Hugh Miller
---------------------------------
Signature
By: Sidney A. Miller
/s/ Sidney A. Miller
---------------------------------
Signature
<PAGE>
November 5, 1996
Delta Financial Corporation
1000 Woodbury Road, Suite 200
Woodbury, New York 11797
Re: Delta Financial Corporation
Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to you (the "Corporation") in connection with the
preparation and filing of the above-captioned Registration Statement on Form S-8
(the "Registration Statement") under the Securities Act of 1933, as amended,
relating to the proposed issuance of up to 2,272,000 shares (the "Original
Shares") of the Corporation's Common Stock, par value $.01 per share (the
"Common Stock"), which may be issued pursuant to the 1996 Stock Option Plan of
the Corporation or the Delta Funding Corp. 401(k) Profit Sharing Plan (the
"Plans") and such additional shares (the "Additional Shares") as may be issued
pursuant to the antidilution provisions of the Plans. The Original Shares and
the Additional Shares are hereinafter referred to together as the "Shares". This
opinion letter is Exhibit 5.1 to the Registration Statement.
We have examined copies of the Certificate of Incorporation and the Bylaws of
the Corporation and Delta Funding Corporation, each as amended to date, the
Registration Statement (including the exhibits thereto), the Plans, the minutes
of various meetings of the Board of Directors of the Corporation and Delta
Funding Corporation, and the originals, copies or certified copies of all such
records of the Corporation and Delta Funding Corporation, and all such
agreements, certificates of public officials, certificates of officers and
representatives of the Corporation and Delta Funding Corporation or others, and
such other documents, papers, statutes and authorities as we have deemed
necessary to form the basis of the opinion hereinafter expressed. In such
examination, we have assumed the genuineness of signatures and the conformity to
original documents of the documents supplied to us as copies. As to various
questions of fact material to such opinion, we have relied upon statements and
certificates of officers of the Corporation and Delta Funding Corporation and
others.
Attorneys involved in the preparation of this opinion are admitted to practice
law in the State of New York and we do not purport to be experts on, or express
any opinion herein concerning, any law other than the laws of the State of New
York, the federal laws of the United States of America and the General
Corporation Law of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that all of the
Shares have been duly authorized and, when issued under the circumstances
contemplated in the Registration Statement and the Plans, will be validly
issued, fully paid and nonassessable.
We hereby consent to your filing a copy of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit hereby that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
STROOCK & STROOCK & LAVAN
<PAGE>
The Stockholders
Delta Funding Corporation:
We consent to the use of our report incorporated herein by reference in the
registration statement.
KPMG Peat Marwick LLP
New York, New York
November 7, 1996
