AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1999
REGISTRATION NO. 333-____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LINENS 'N THINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 22-3463939
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
6 BRIGHTON ROAD
CLIFTON, NEW JERSEY 07015
(Address, including Zip Code, of Principal Executive Offices)
LINENS 'N THINGS, INC. 401(K) PLAN
(Full Title of the Plan)
NORMAN AXELROD
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT
LINENS 'N THINGS, INC.
6 BRIGHTON ROAD
CLIFTON, NEW JERSEY 07015
(973)778-1300
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
----------------------
With a copy to:
WARREN J. CASEY, ESQ.
PITNEY, HARDIN, KIPP & SZUCH
P.O. BOX 1945
MORRISTOWN, NEW JERSEY 07962
(973) 966-6300
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------- ----------------------- ----------------------- ------------------------ -----------------------
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities to to be Offering Price Aggregate Registration
be Registered Registered (1)(2) Per Share (3) Offering Price Fee
========================= ======================= ======================= ======================== ========================
<S> <C> <C> <C> <C>
Common Stock,
$0.01 par value per 75,000 $35.5625 $2,667,187.5 $741.48
share
- ------------------------- ----------------------- ----------------------- ------------------------ -----------------------
</TABLE>
- ---------------------
(1) Estimated solely for the purpose of calculating the registration fee
based upon the Registrant's current estimate of shares of Common Stock
issuable pursuant to the Linens 'n Things, Inc. 401(k) Plan (the
"Plan"). Also includes, pursuant to Rule 416 under the Securities Act of
1933, as amended (the "Securities Act"), additional shares of Common
Stock that may be issuable pursuant to anti-dilution provisions of the
Plan.
(2) In addition, pursuant to Rule 416(c) under the Securities Act, this
registration statement also covers an indeterminate amount of interests
to be offered or sold pursuant to the Plan.
(3) Estimated solely for the purpose of calculating the registration fee.
Such estimate has been computed in accordance with Rule 457(c) and Rule
457(h) under the Securities Act based on the average high and low prices
of the Registrant's Common Stock as reported on the New York Stock
Exchange on February 1, 1999.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. Plan Information.
Not filed with this Registration Statement.
ITEM 2. Registrant Information and Employee Plan Annual Information.
Not filed with this Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
The following documents filed by Linens 'n Things, Inc. (the
"Registrant") with the Commission are incorporated by reference in this
Registration Statement:
1. The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997.
2. The Plan's Annual Report on Form 11-K, filed on February
5, 1999, for the year ended December 31, 1997.
3. The Registrant's Form 8-K, filed on April 15, 1998,
reporting the Registrant's approval of a two-for-one split
of its Common Stock, to be effected in the form of a stock
dividend.
4. The Registrant's Quarterly Report on Form 10-Q, filed on
May 12, 1998, for the quarter ended March 28, 1998.
5. The Registrant's Form 8-K, filed on May 12, 1998, reporting
the March 31, 1998 amendment to the Registrant's Credit
Agreement dated as of November 20, 1996.
6. The Registrant's Quarterly Report on Form 10-Q, filed on
July 22, 1998, for the quarter ended June 27, 1998.
7. The Registrant's Quarterly Report on Form 10-Q, filed on
November 10, 1998, for the quarter ended September 26,
1998.
8. The Description of the Registrant's Common Stock contained
in the Registration Statement on Form S-1 (No. 333-27239).
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, prior
to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, hereby are incorporated herein by reference and shall be
deemed a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration Statement.
ITEM 4. Description of Securities.
Not applicable.
ITEM 5. Interests of Named Experts and Counsel.
Not applicable.
ITEM 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Act permits the
Registrant to indemnify officers, directors or employees against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
in connection with legal proceedings "if {as to any officer, director or
employee} 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 act or proceeding, had no reasonable cause to believe
his conduct was unlawful," provided that with respect to actions by, or in
the right of, the corporation against, such individuals, indemnification is
not permitted as to any 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." Individuals who are
successful in the defense of such action are entitled to indemnity for such
expenses reasonably incurred in connection therewith.
Article Ninth of the Amended and Restated Certificate of Incorporation
of the Registrant requires the Registrant to indemnify directors and officers
against liabilities which they may incur under the circumstances set forth in
the preceding paragraph. The right of indemnification in Article Ninth also
includes the right to be paid by the Registrant the expenses incurred in
connection with a legal proceeding in advance of its final disposition to the
fullest extent authorized by Delaware law. The right to indemnification
conferred under Article Ninth is a contract right.
The Registrant maintains standard policies of insurance under which
coverage is provided (a) to its directors and officers against loss arising
from claims made by reason of breach of duty or other wrongful act, and (b)
to the Registrant with respect to payments which may be made by the
Registrant to such officers and directors pursuant to the above
indemnification provision or otherwise as a matter of law.
The underwriting agreement filed as Exhibit 1 to the Registrant's
Registration Statement on Form S-1 (No. 333-12267) provides for
indemnification of directors and officers of the Registrant by the
underwriters of the Registrant's initial public offering against certain
liabilities.
ITEM 7. Exemption from Registration Claimed.
Not applicable.
ITEM 8. Exhibits.
(a) 5 Opinion of Pitney, Hardin, Kipp & Szuch, as to the
legality of the securities being registered.
23(a) Consent of KPMG LLP.
23(b) Consent of Pitney, Hardin, Kipp & Szuch (included
in Exhibit 5 hereto).
24 Power of Attorney (included on signature page hereto)
99 Linens 'n Things, Inc. 401(k) Plan.
(b) The undersigned Registrant has submitted the Plan and any
amendments thereto to the Internal Revenue Service (the "IRS") in a timely
manner and will make all changes required by the IRS in order to qualify the
Plan under Section 401 of the Internal Revenue Code of 1986, as amended to date.
ITEM 9. Undertakings.
1. The undersigned Registrant hereby undertakes:
(a) 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 change to such
information in the Registration Statement.
(b) That, for purposes 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.
(c) 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.
2. 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 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3. 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
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the 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 Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Clifton, State of New Jersey, on this 3rd day
of February, 1999.
Linens 'n Things, Inc.
(Registrant)
NORMAN AXELROD
By: _______________________________________________
Norman Axelrod
Chairman, Chief Executive Officer and President
(Principal Executive Officer)
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned officers
and directors of the Registrant hereby severally constitutes and appoints Norman
Axelrod, William T. Giles and Brian D. Silva, and each of them, their true and
lawful attorney-in-fact for the undersigned, in any and all capacities, with
full power of substitution, to sign any and all amendments to this Registration
Statement (including post-effective amendments), and to file the same with
exhibits thereto and other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact 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, as fully to all intents and purposes as he might or
could in person, hereby ratifying and confirming all that said attorney-in-fact
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
NORMAN AXELROD
- ---------------------
Norman Axelrod Chairman, Chief Executive Officer February 3, 1999
and President (Principal Executive Officer)
PHILIP H. BEEKMAN
- ----------------------
Philip E. Beekman Director February 3, 1999
HAROLD F. COMPTON
- ----------------------
Harold F. Compton Director February 3, 1999
CHARLES C. CONAWAY
- ---------------------
Charles C. Conaway Director February 3, 1999
STANLEY P. GOLDSTEIN
- ----------------------
Stanley P. Goldstein Director February 3, 1999
WILLIAM T. GILES
- ----------------------
William T. Giles Chief Financial Officer February 3, 1999
(Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
<PAGE>
The Plan. Pursuant to the requirements of the Securities Act, the
administrative committee of the Plan has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Clifton, State of New Jersey, on this 3rd day of February, 1999.
LINENS 'N THINGS, INC. 401(k) Plan
(Plan)
BRIAN D. SILVA
By: _________________________
Brian D. Silva
Senior Vice President, Human Resources
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
5 Opinion of Pitney, Hardin, Kipp & Szuch.
23(a) Consent of KPMG LLP.
23(b) Consent of Pitney, Hardin, Kipp & Szuch (included in Exhibit 5
hereto).
24 Power of Attorney (included on signature page hereto).
99 Linens 'n Things, Inc. 401(k) Plan
PITNEY, HARDIN, KIPP & SZUCH
P.O. BOX 1945
MORRISTOWN, NEW JERSEY 07962-1945
------
February 3, 1999
Linens 'n Things, Inc.
6 Brighton Road
Clifton, New Jersey 07015
Re: Registration Statement on Form S-8
Linens 'n Things, Inc. 401(k) Plan
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by Linens 'n Things, Inc. (the
"Corporation") with the Securities and Exchange Commission in connection with
the registration under the Securities Act of 1933, as amended (the "Act"), of
75,000 shares of common stock of the Corporation, $0.01 par value per share (the
"Shares") issuable pursuant to the Linens 'n Things, Inc. 401(k) Plan (the
"Plan") and of interests in the Plan.
We have also examined originals, or copies certified or otherwise
identified to our satisfaction, of the Plan, the Certificate of Incorporation
and By-laws of the Corporation, as currently in effect, and relevant resolutions
of the Board of Directors of the Corporation. We have examined such other
documents as we deemed necessary in order to express the opinion hereinafter set
forth.
In our examination of such documents and records, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, and conformity with the originals of all documents submitted
to us as copies.
Based on the foregoing, we are of the opinion that, when the
Registration Statement has become effective under the Act, and the Shares shall
have been duly issued in the manner contemplated by the Registration Statement
and the Plan, the Shares will be legally issued, fully paid and non-assessable.
The foregoing opinion is limited to the federal laws of the United
States and the laws of the State of Delaware, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction.
We hereby consent to use of this opinion as an Exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act, or the Rules and Regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
PITNEY, HARDIN, KIPP & SZUCH
Consent of Independent Auditors
The Board of Directors
Linens 'n Things, Inc.
We consent to the use of our audit report dated February 4, 1998 on the
consolidated balance sheets of Linens 'n Things, Inc. and subsidiaries as of
December 31, 1997 and 1996 and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1997 incorporated herein by reference in
the Registration Statement on Form S-8 of the Linens 'n Things, Inc. 401(k)
Plan.
Our audit report refers to Linens 'n Things, Inc.'s adoption of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" effective October 1, 1995 and a change in its policy
for accounting for the costs of internally developed software effective January
1, 1995.
KPMG LLP
New York, New York
February 5, 1999
LINENS 'N THINGS, INC.
401(K) PLAN
EFFECTIVE NOVEMBER 26, 1996
AMENDED MAY 1, 1998
AND FURTHER AMENDED THROUGH FEBRUARY 1,1999
<PAGE>
INTRODUCTION
Effective as of November 26, 1996, Linens 'n Things, Inc. established the Linens
'n Things, Inc. 401(k) Profit Sharing Plan for the benefit of such of its
employees as are eligible thereunder. The plan was subsequently amended as of
January 1, 1997 to reflect the relevant provisions of the Small Business Job
Protection Act of 1996. As of January 1, 1998, the plan was amended to provide
for the increased automatic lump sum cashout as provided under the Taxpayer
Relief Act of 1997 and to revise the plan name to Linens 'n Things, Inc. 401(k)
Plan ("Plan"). The Plan was amended as of May 1, 1998 to eliminate hardship
withdrawals. The Plan was also amended as of February 1, 1999 to add a Company
Stock Fund as an investment option under the Plan and to make certain changes to
the Plan as requested by the Internal Revenue Service in connection with the
Company's request for a favorable determination letter.
Except as otherwise herein specified, the rights and benefits of any Member who
retires or whose employment is terminated are determined in accordance with the
provisions of the Plan in effect and operative at the time of such retirement or
termination.
<PAGE>
LINENS 'N THINGS, INC. 401(K) PLAN
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS...................................................1
ARTICLE 2. ELIGIBILITY AND MEMBERSHIP...................................15
2.01 ELIGIBILITY................................................15
2.02 MEMBERSHIP.................................................15
2.03 REEMPLOYMENT OF FORMER EMPLOYEES AND FORMER MEMBERS........15
2.04 TRANSFERRED MEMBERS........................................16
2.05 TERMINATION OF MEMBERSHIP..................................16
ARTICLE 3. CONTRIBUTIONS................................................17
3.01 ELECTIVE DEFERRALS.........................................17
3.02 MATCHING CONTRIBUTIONS.....................................19
3.03 ROLLOVER CONTRIBUTIONS.....................................19
3.04 PLAN-TO-PLAN TRANSFERS.....................................20
3.05 CHANGE IN CONTRIBUTIONS....................................22
3.06 SUSPENSION OF CONTRIBUTIONS................................22
3.07 ACTUAL DEFERRAL PERCENTAGE TEST............................22
3.08 CONTRIBUTION PERCENTAGE TEST...............................25
3.09 AGGREGATE CONTRIBUTION LIMITATION..........................27
3.10 ADDITIONAL DISCRIMINATION TESTING PROVISIONS...............27
3.11 MAXIMUM ANNUAL ADDITIONS...................................29
3.12 RETURN OF CONTRIBUTIONS....................................32
3.13 CONTRIBUTIONS DURING PERIOD OF MILITARY LEAVE..............33
3.14 CONTRIBUTIONS NOT CONTINGENT UPON PROFITS..................35
ARTICLE 4. INVESTMENT OF CONTRIBUTIONS..................................36
4.01 INVESTMENT FUNDS...........................................36
4.02 INVESTMENT OF MEMBERS' ACCOUNTS............................36
4.03 RESPONSIBILITY FOR INVESTMENTS.............................36
4.04 CHANGE OF ELECTION.........................................37
4.05 REALLOCATION OF ACCOUNTS AMONG THE FUNDS...................37
4.06 LIMITATIONS IMPOSED BY CONTRACT............................37
4.07 PASS-THROUGH OF VOTING RIGHTS..............................37
4.08 ERISA SECTION 404(C) COMPLIANCE............................38
ARTICLE 5. VALUATION OF THE ACCOUNTS....................................39
5.01 VALUATION OF THE INVESTMENT FUNDS..........................39
5.02 RIGHT TO CHANGE PROCEDURES.................................39
5.03 STATEMENT OF ACCOUNTS......................................39
<PAGE>
LINENS 'N THINGS, INC. 401(K) PLAN
TABLE OF CONTENTS
(CONT'D)
ARTICLE 6. VESTED PORTION OF ACCOUNTS...................................40
6.01 ELECTIVE DEFERRAL ACCOUNT,
ROLLOVER ACCOUNT, AND TRANSFER ACCOUNT.....................40
6.02 MATCHING CONTRIBUTION ACCOUNT..............................40
6.03 DISPOSITION OF FORFEITURES.................................40
ARTICLE 7. LOANS TO MEMBERS.............................................42
7.01 AMOUNT AVAILABLE...........................................42
7.02 TERMS......................................................43
ARTICLE 8 WITHDRAWALS WHILE STILL EMPLOYED...............................46
8.01 HARDSHIP WITHDRAWAL........................................46
8.02 PROCEDURES AND RESTRICTIONS................................48
ARTICLE 9. DISTRIBUTION OF ACCOUNTS UPON TERMINATION
OF EMPLOYMENT...................................................50
9.01 ELIGIBILITY................................................50
9.02 FORM OF DISTRIBUTION.......................................50
9.03 DATE OF PAYMENT OF DISTRIBUTION............................51
9.04 AGE 701/2 REQUIRED DISTRIBUTION............................53
9.05 PROOF OF DEATH AND RIGHT OF BENEFICIARY OR OTHER PERSON....54
9.06 DISTRIBUTION LIMITATION....................................54
9.07 STATUS OF ACCOUNTS PENDING DISTRIBUTION....................54
9.08 DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS...................55
9.09 TRANSFER TO OTHER QUALIFIED PLANS..........................56
ARTICLE 10. ADMINISTRATION OF PLAN......................................57
10.01 APPOINTMENT OF COMMITTEE..................................57
10.02 DUTIES OF COMMITTEE.......................................57
10.03 INVESTMENT COMMITTEE......................................58
10.04 INDIVIDUAL ACCOUNTS.......................................58
10.05 MEETINGS..................................................58
10.06 ACTION OF MAJORITY........................................58
10.07 COMPENSATION AND BONDING..................................59
10.08 ESTABLISHMENT OF RULES....................................59
10.09 PRUDENT CONDUCT...........................................59
10.10 SERVICE IN MORE THAN ONE FIDUCIARY CAPACITY...............60
10.11 LIMITATION OF LIABILITY...................................60
10.12 INDEMNIFICATION...........................................60
10.13 APPOINTMENT OF INVESTMENT MANAGER.........................61
10.14 NAMED FIDUCIARY...........................................61
10.15 VALUATION DATE............................................61
<PAGE>
LINENS 'N THINGS, INC. 401(K) PLAN
TABLE OF CONTENTS
(CONT'D)
ARTICLE 11. MANAGEMENT OF FUNDS..........................................62
11.01 TRUST AGREEMENT...........................................62
11.02 EXCLUSIVE BENEFIT RULE....................................62
ARTICLE 12. AMENDMENT, MERGER AND TERMINATION............................63
12.01 AMENDMENT OF PLAN.........................................63
12.02 MERGER, CONSOLIDATION, OR TRANSFER........................64
12.03 ADDITIONAL PARTICIPATING EMPLOYERS........................64
12.04 TERMINATION OF PLAN.......................................65
12.05 DISTRIBUTION OF ACCOUNTS UPON A SALE OF
ASSETS OR A SALE OF A SUBSIDIARY..........................66
ARTICLE 13. GENERAL PROVISIONS...........................................67
13.01 NONALIENATION.............................................67
13.02 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN.............68
13.03 FACILITY OF PAYMENT.......................................68
13.04 INFORMATION...............................................68
13.05 TOP-HEAVY PROVISIONS......................................69
13.06 DISPOSITION OF UNCLAIMED BENEFITS.........................72
13.07 WRITTEN ELECTIONS.........................................73
13.08 CONSTRUCTION..............................................73
<PAGE>
LINENS 'N THINGS, INC. 401(K) PLAN
ARTICLE I. DEFINITIONS
1.01 "ACCOUNTS" means the Matching Contribution Account, the Elective
Deferral Account, the Rollover Account and the Transfer Account.
1.02 "ACTUAL DEFERRAL PERCENTAGE" means, with respect to a specified group
of Eligible Employees, the average of the ratios, calculated separately
for each Eligible Employee in that group, of (a) the amount of Elective
Deferrals made pursuant to Section 3.01 for a Plan Year (including
Elective Deferrals returned to a Highly Compensated Employee under
Section 3.01(c) and Elective Deferrals returned to any Employee
pursuant to Section 3.01(d)), to (b) the Eligible Employees' Statutory
Compensation for that entire Plan Year, provided that, upon direction
of the Committee, Statutory Compensation for a Plan Year shall only be
counted if received during the period an Eligible Employee is, or is
eligible to become, a Member. The Actual Deferral Percentage for each
group and the ratio determined for each Eligible Employee in the group
shall be calculated to the nearest one one-hundredth of one percent.
For purposes of determining the Actual Deferral Percentage for a Plan
Year, Elective Deferrals may be taken into account for a Plan Year only
if they:
(a) relate to compensation that either would have been received by
the Eligible Employee in the Plan Year but for the deferral
election, or are attributable to services performed by the
Eligible Employee in the Plan Year and would have been
received by the Eligible Employee within 2 1/2 months after
the close of the Plan Year but for the deferral election,
(b) are allocated to the Eligible Employee as of a date within
that Plan Year and the allocation is not contingent on the
participation or performance of service after such date, and
(c) are actually paid to the Trustee no later than 12 months after
the end of the Plan Year to which the contributions relate.
1.03 "AFFILIATE" means any company not participating in the Plan which is a
member of a controlled group of corporations (as defined in Section
414(b) of the Code) which also includes as a member the Company; any
trade or business under common control (as defined in Section 414(c) of
the Code) with the Company; any organization (whether or not
incorporated) which is a member of an affiliated service group (as
defined in Section 414(m) of the Code) which includes the Company; and
any other entity required to be aggregated with the Company pursuant to
regulations under Section 414(o) of the Code. Notwithstanding the
foregoing, for purposes of Sections 1.28 and 3.12, the definitions in
Sections 414(b) and (c) of the Code shall be modified by substituting
the phrase "more than 50 percent" for the phrase "at least 80 percent"
each place it appears in Section 1563(a)(1) of the Code.
1.04 "ANNUAL DOLLAR LIMIT" means $150,000, as adjusted from time to time for
cost-of-living in accordance with Section 401(a)(17)(B) of the Code.
1.05 "ANNUITY STARTING DATE" means the first day of the first period for
which an amount is paid following a Member's retirement or other
termination of employment.
1.06 "BENEFICIARY" means any person, persons or entity designated by a
Member to receive any benefits payable in the event of the Member's
death. However, a married Member's spouse shall be his or her sole
Beneficiary unless or until he or she elects another Beneficiary with
Spousal Consent. Such Spousal Consent must be witnessed by a Plan
representative or a notary public. If no Beneficiary designation is in
effect at the Member's death, or if no person, persons or entity so
designated survives the Member, the Member's surviving spouse, if any,
shall be deemed to be the Beneficiary; otherwise the Beneficiary shall
be the personal representative of the estate of the Member.
1.07 "BOARD OF DIRECTORS" means the Board of Directors of the Company or any
authorized committee thereof.
1.08 "BREAK IN SERVICE" means an event affecting forfeitures, which shall
commence as of the Member's Severance Date if he or she is not
reemployed by the Employer or an Affiliate within one year after a
Severance Date. However, if an Employee is absent from work immediately
following his or her or her active employment, irrespective of whether
the Employee's employment is terminated, because of the Employee's
pregnancy, the birth of the Employee's child, the placement of a child
with the Employee in connection with the adoption of that child by the
Employee or for purposes of caring for that child for a period
beginning immediately following that birth or placement, a Break in
Service shall occur only if the Member does not return to work within
two years of his or her Severance Date. A Break in Service shall not
occur during an approved leave of absence or during a period of
military service which is included in the Employee's Vesting Service
pursuant to Section 1.49.
1.09 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
1.10 "COMMITTEE" means the person or persons named by the Board of Directors
to administer and supervise the Plan as provided in Article 10.
1.11 "COMPANY" means Linens 'n Things, Inc., a Delaware Corporation.
1.12 "COMPANY STOCK FUND" means an investment fund which shall invest
primarily in shares of common stock of Linens 'n Things, Inc. with any
remaining cash invested in the money market fund under the Plan.
1.13 "COMPENSATION" means remuneration paid to an Eligible Employee by the
Employer at the regular basic rate for services rendered as an Eligible
Employee, including bonuses, overtime pay, pay for earned vacation, and
amounts subject to salary reduction agreements under a cash or deferred
arrangement or cafeteria plan as defined, respectively, in Sections
401(k) and 125 of the Code, which are maintained by an Employer, but
excluding severance pay, amounts paid pursuant to short term disability
policy of the Employer, income relating to stock options and restricted
stock awards, equalization payments to expatriates, payments or
accruals under a supplemental executive retirement plan, imputed income
relating to group term life insurance, payments relating to moving
expenses, reimbursements, the Employer's cost or contribution for any
private or public employee benefit plan and all other forms of special
pay. Compensation shall not exceed the Annual Dollar Limit.
1.14 "CONTRIBUTION PERCENTAGE" means, with respect to a specified group of
Eligible Employees, the average of the ratios, calculated separately
for each Eligible Employee in that group, of (a) the Eligible
Employee's Matching Contributions for that Plan Year (excluding any
Matching Contributions forfeited under the provisions of Sections 3.01
and 3.07), to (b) his or her Statutory Compensation for that entire
Plan Year provided that, upon direction of the Committee, Statutory
Compensation for a Plan Year shall only be counted if received during
the period an Eligible Employee is, or is eligible to become, a Member.
The Contribution Percentage for each group and the ratio determined for
each Eligible Employee in the group shall be calculated to the nearest
one one-hundredth of one percent.
1.15 "DISABILITY" means total and permanent physical or mental disability,
as determined under the long-term disability policy of Linens 'n
Things, Inc., as in effect from time to time.
1.16 "EARNINGS" means the amount of income to be returned with any excess
deferrals, excess contributions or excess aggregate contributions under
Section 3.01, 3.07, 3.08, or 3.09. Earnings on excess deferrals and
excess contributions shall be determined by multiplying the income
earned on the Elective Deferral Account for the Plan Year by a
fraction, the numerator of which is the excess deferrals or excess
contributions, as the case may be, for the Plan Year and the
denominator of which is the Elective Deferral Account balance at the
end of the Plan Year, disregarding any income or loss occurring during
the Plan Year. Earnings on excess aggregate contributions shall be
determined in a similar manner by substituting the Matching
Contribution Account for the Elective Deferral Account, and the excess
aggregate contributions for the excess deferrals and excess
contributions in the preceding sentence.
1.17 "EFFECTIVE DATE" means November 26, 1996.
1.18 "ELECTIVE DEFERRALS" means amounts contributed pursuant to Section
3.01.
1.19 "ELECTIVE DEFERRAL ACCOUNT" means the account credited with the
Elective Deferrals made on a Member's behalf, certain Transfers as
specified in Section 3.04 and the expenses, gains, and losses
attributable thereto.
1.20 "ELIGIBLE EMPLOYEE" means any Employee regularly employed by an
Employer who is paid from a payroll maintained in the United States,
Puerto Rico, or the U.S. Virgin Islands and who receives regular stated
compensation from an Employer other than a pension, severance pay,
retainer, or fee under contract. The term "Eligible Employee" shall not
include any Employee who is (i) a Leased Employee of any Employer and
who is employed by a leasing organization (as defined in Section
414(n)(2) of the Code which is not an Affiliate), (ii) included in a
unit of employees covered by a collective bargaining agreement which
does not provide for his or her membership in the Plan, (iii) a
nonresident alien who receives no earned income from the Employer which
constitutes income from sources within the United States, or (iv) an
individual who, on the basis of his or her regular stated work
schedule, is classified by the Company as a temporary Employee.
Notwithstanding the foregoing, the Committee may, by written
resolution, exclude from or include within, the category of Eligible
Employee any class of Employees. Any such designation shall be made in
a uniform and nondiscriminatory manner.
1.21 "EMPLOYEE" means an individual who renders services for pay to the
Employer or any Affiliate or a Leased Employee.
1.22 "EMPLOYER" means the Company or any successor by merger, purchase or
otherwise, with respect to its Eligible Employees; or any other company
participating in the Plan as provided in Section 12.03, with respect to
its Eligible Employees.
1.23 "EMPLOYMENT COMMENCEMENT DATE" means the first day of employment of an
Employee by the Employer or an Affiliate and the first day of
reemployment of an Employee by an Employer or an Affiliate following
such Employee's Break in Service.
1.24 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.25 "FUND" or "INVESTMENT FUND" means the separate funds in which
contributions to the Plan are invested in accordance with Article 4.
1.26 "HIGHLY COMPENSATED EMPLOYEE" means for a Plan Year beginning on or
after January 1, 1997, any employee of the Employer or an Affiliate
(whether or not eligible for membership in the Plan) who:
(i) was a 5-percent owner (as defined in Section 416(i) of
the Code) for such Plan Year or the prior Plan Year, or
(ii) for the preceding Plan Year received Statutory Compensation in
excess of $80,000, and if the Employer so elects, was among
the highest 20 percent of employees for the preceding Plan
Year when ranked by Statutory Compensation paid for that year
excluding, for purposes of determining the number of such
employees, such employees as the Committee may determine on a
consistent basis pursuant to Section 414(q) of the Code. The
$80,000 dollar amount in the preceding sentence shall be
adjusted from time to time for cost of living in accordance
with Section 414(q) of the Code.
Notwithstanding the foregoing, employees who are nonresident aliens and
who receive no earned income from the Employer or an Affiliate which
constitutes income from sources within the United States shall be
disregarded for all purposes of this Section.
The provisions of this Section shall be further subject to such
additional requirements as shall be described in Section 414(q) of the
Code and its applicable regulations, which shall override any aspects
of this Section inconsistent therewith.
1.27 "HOUR OF SERVICE" means, with respect to any applicable computation
period,
(a) each hour for which the Employee is paid or entitled to
payment for the performance of duties for the Employer or an
Affiliate;
(b) each hour for which the Employee is paid or entitled to
payment by the Employer or an Affiliate on account of a period
during which no duties are performed, whether or not the
employment relationship has terminated, due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence, but not more
than 501 hours for any single continuous period; and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an
Affiliate, excluding any hour credited under (a) or (b), which
shall be credited to the computation period or periods to
which the award, agreement or payment pertains rather than to
the computation period in which the award, agreement or
payment is made.
No hours shall be credited on account of any period during which the
employee performs no duties and receives payment solely for the purpose
of complying with unemployment compensation, Workers' Compensation or
disability insurance laws. The Hours of Service credited shall be
determined as required by Title 29 of the Code of Federal Regulations,
Sections 2530.200b-2.
1.28 "LEASED EMPLOYEE" means any person performing services for the Employer
or an Affiliate as a leased employee as defined in Section 414(n) of
the Code. In the case of any person who is a Leased Employee before or
after a period of service as an Eligible Employee, the entire period
during which he or she has performed services as a Leased Employee
shall be counted as service as an Employee for all purposes of the
Plan, except that he or she shall not, by reason of that status, become
a Member of the Plan.
1.29 "MATCHING CONTRIBUTIONS" means amounts contributed pursuant to Section
3.02.
1.30 "MATCHING CONTRIBUTION ACCOUNT" means the account credited with
Matching Contributions, certain Transfers as specified in Section 3.04,
and the expenses, gains, and losses attributable thereto.
1.31 "MEMBER" means any person included in the membership of the Plan as
provided in Article 2.
1.32 "NON-HIGHLY COMPENSATED EMPLOYEE" means for any Plan Year an employee
of the Employer or an Affiliate who is not a Highly Compensated
Employee for that Plan Year.
1.33 "PLAN" means on and after January 1, 1998, the Linens 'n Things, Inc.
401(k) Plan as set forth in this document or as amended from time to
time. Prior to January 1, 1998, the Plan was known as the
Linens 'n Things, Inc. 401(k) Profit Sharing Plan.
1.34 "PLAN YEAR" means the 12-month period beginning on any January 1. The
first Plan Year is a short Plan Year beginning on November 20, 1996 and
ending on December 31, 1996.
1.35 "PRIOR PLAN" means the 401(k) Profit Sharing Plan of Melville
Corporation and Affiliated Companies.
1.36 "QUALIFIED NON-ELECTIVE CONTRIBUTIONS" means contributions made by the
Employer pursuant to Section 3.10(d).
1.37 "RETIREMENT" means termination of employment with the Employer and all
Affiliates after reaching the earlier of (a) age 65 with five years of
Vesting Service or (b) age 55 with ten years of Vesting Service.
1.38 "ROLLOVER ACCOUNT" means the account credited with the Rollover
Contributions made by a Member, certain Transfers as specified in
Section 3.04, and the expenses, gains and losses attributable thereto.
1.39 "ROLLOVER CONTRIBUTIONS" means amounts contributed pursuant to Section
3.03.
1.40 "SEVERANCE DATE" means the earlier of (a) the date an Employee quits,
retires, is discharged or dies, or (b) the first anniversary of the
date on which an Employee is first absent from service, with or without
pay, for any reason such as vacation, sickness, disability, layoff or
leave of absence.
1.41 "SPOUSAL CONSENT" means the written consent of a Member's spouse to the
Member's designation of a specified Beneficiary. That consent shall be
witnessed by a Plan representative or notary public and shall
acknowledge the effect on the spouse of the Member's election. The
requirement for spousal consent may be waived by the Committee if it
believes there is no spouse, the spouse cannot be located, a legal
separation has occurred or because of such other circumstances as may
be established by applicable law.
1.42 "STATUTORY COMPENSATION" means the wages, salaries, and other amounts
paid in respect of an employee for services actually rendered to a
Company or an Affiliate, including by way of example, overtime, bonuses
and commissions, but excluding deferred compensation, stock options and
other distributions which receive special tax benefits under the Code.
Effective with the Plan Year beginning January 1, 1998, Statutory
Compensation shall include Elective Deferrals and amounts contributed
on a Member's behalf on a salary reduction basis to a cafeteria plan
under Section 125 of the Code. Statutory Compensation shall not exceed
the Annual Dollar Limit, provided that such Limit shall not be applied
in determining Highly Compensated Employees under Section 1.25.
1.43 "TRANSFER ACCOUNT" means the account credited with certain amounts
contributed to the Plan from the Prior Plan or pursuant to Section 3.04
and the expenses, gains, and losses attributable thereto.
1.44 "TRANSFERS" means the amount transferred to the Plan as provided in
Section 3.04(a).
1.45 "TRUST" or "TRUST FUND" means the fund established by the Board of
Directors as part of the Plan into which contributions are to be made
and from which benefits are to be paid in accordance with the terms of
the Plan.
1.46 "TRUSTEE" means the trustee or trustees holding the funds of the Plan
as provided in Article 10.
1.47 "VALUATION DATE" means the date or dates in each calendar month on
which any valuation is made, as determined under Committee procedures
established pursuant to Section 10.15.
1.48 "VESTED PORTION" means the portion of the Accounts in which the Member
has a nonforfeitable interest as provided in Article 6 or, if
applicable, Section 13.05.
1.49 "VESTING SERVICE" means, with respect to any Employee, the Employee's
period of employment with the Employer or any Affiliate, beginning on
the date he or she first completes an Hour of Service and ending on his
or her Severance Date, provided that:
(a) employment prior to age 18 shall be disregarded;
(b) if employment terminates and the Employee is reemployed within
one year of the earlier of (i) the Employee's date of
termination or (ii) the first day of an absence from service
immediately preceding his or her date of termination, the
period between the Employee's Severance Date and the
Employee's date of reemployment shall be included in the
Employee's Vesting Service;
(c) if the Employee is absent from the service of the Employer or
any Affiliate because of service in the Armed Forces of the
United States and he or she returns to service with the
Employer or an Affiliate having applied to return while his or
her reemployment rights were protected by law, the absence
shall be included in the Employee's Vesting Service;
(d) if the Employee is on a leave of absence approved by the
Employer, under rules uniformly applicable to all Employees
similarly situated, the Employer may authorize the inclusion
in his or her Vesting Service of any portion of that period of
leave which is not included in his or her Vesting Service
under (a) or (b) above; and
(e) if the Employee's employment is terminated and the Employee is
later reemployed after he or she has incurred a Break in
Service, the Employee's Vesting Service after reemployment
shall be aggregated with his or her previous period or periods
of Vesting Service if (i) the Employee was vested in his or
her Matching Contribution and Employer Contributions Account
at the time of his or her Break in Service or (ii) the period
from the Employee's Break in Service to his or her subsequent
reemployment does not equal or exceed the greater of five
years or the Employee's period of Vesting Service before his
or her Break in Service.
Notwithstanding the foregoing, the period of a Member's employment
rendered prior to the Effective Date which was recognized under the
Prior Plan as vesting service shall be recognized as Vesting Service
under this Plan on behalf of such Member.
An Employee's Vesting Service shall be measured in years and days, with
each 365 days of Vesting Service being equivalent to one year of
Vesting Service.
1.50 "YEAR OF PARTICIPATION SERVICE" means, with respect to any Employee, a
consecutive 12-month period of employment with the Employer or any
Affiliate, beginning on the date he or she first completes an Hour of
Service upon hire or rehire, or any Plan Year beginning after that date
in which he or she first completes at least 1,000 Hours of Service.
Notwithstanding the foregoing, the period of an Employee's employment
rendered prior to the Effective Date which was recognized under the
Prior Plan as participation service shall be recognized as
Participation Service under this Plan on behalf of such Member.
<PAGE>
ARTICLE 2. ELIGIBILITY AND MEMBERSHIP
2.01 ELIGIBILITY
Each Eligible Employee who was a member of the Prior Plan on November
19, 1996 shall become a Member on the Effective Date, provided he or
she is still an Eligible Employee. Each other Eligible Employee shall
be eligible to become a Member on the first day of the first payroll
period coinciding with or immediately following the date he or she
completes one Year of Participation Service and attains his or her 21st
birthday, provided he or she is then an Eligible Employee.
2.02 MEMBERSHIP
An Eligible Employee shall become a Member on the first day of the
first payroll period after the date he or she files with the Company in
a manner prescribed by the Committee:
(a) his or her election described in Section 3.01;
(b) his or her authorization to the Employer to reduce his or her
Compensation;
(c) his or her investment elections; and
(d) his or her Beneficiary designation.
2.03 REEMPLOYMENT OF FORMER EMPLOYEES AND FORMER MEMBERS
Any person reemployed by the Employer as an Eligible Employee, who was
previously a Member or who was previously eligible to become a Member,
shall be eligible to become a Member upon making the elections and
designation in accordance with Section 2.02. Any person reemployed by
the Employer as an Eligible Employee, who was not previously eligible
to become a Member, shall become a Member upon completing the
eligibility requirements described in Section 2.01 and filing the
appropriate elections and designation in accordance with Section 2.02.
2.04 TRANSFERRED MEMBERS
A Member who remains in the employ of the Employer or an Affiliate but
ceases to be an Eligible Employee shall continue to be a Member of the
Plan but shall not be eligible to receive allocations of Elective
Deferrals or Matching Contributions while his or her employment status
is other than as an Eligible Employee.
2.05 TERMINATION OF MEMBERSHIP
A Member's membership shall terminate on the Member's Severance Date
unless the Member is entitled to benefits under the Plan, in which
event his or her membership shall terminate when those benefits are
distributed to the Member in full.
<PAGE>
ARTICLE 3. CONTRIBUTIONS
3.01 ELECTIVE DEFERRALS
(a) A Member may elect to reduce his or her Compensation payable while a
Member by at least 2 percent and not more than 15 percent, in multiples
of 1 percent, and have that amount contributed to the Plan by the
Employer as Elective Deferrals. Elective Deferrals shall be further
limited as provided below and in Sections 3.07, 3.10, and 3.11. Any
Elective Deferrals shall be paid to the Trustee as soon as practicable,
but in no event later than the 15th day of the month following the
month in which the amounts would otherwise have been payable to the
Member in cash.
(b) In no event shall the Member's Elective Deferrals and similar
contributions made on his or her behalf by the Employer or an Affiliate
to all plans, contracts or arrangements subject to the provisions of
Section 401(a)(30) of the Code in any calendar year exceed $7,000 as
adjusted from time to time for cost-of-living pursuant to Section
402(g)(5) of the Code. If a Member's Elective Deferrals in a calendar
year reach that dollar limitation, his or her election of Elective
Deferrals for the remainder of the calendar year will be canceled. As
of the first pay period of the calendar year following such
cancellation, the Member's election of Elective Deferrals shall again
become effective in accordance with his or her previous election.
(c) In the event that the sum of the Elective Deferrals and similar
contributions to any other qualified defined contribution plan
maintained by the Employer or an Affiliate exceeds the dollar
limitation in Section 3.01(b) for any calendar year, the Member shall
be deemed to have elected a return of Elective Deferrals in excess of
such limit ("excess deferrals") from this Plan. The excess deferrals,
together with Earnings, shall be returned to the Member no later than
the April 15 following the end of the calendar year in which the excess
deferrals were made. The amount of excess deferrals to be returned for
any calendar year shall be reduced by any Elective Deferrals previously
returned to the Member under Section 3.07 for that calendar year. In
the event any Elective Deferrals returned under this paragraph (c) were
matched by Matching Contributions under Section 3.02, those Matching
Contributions, together with Earnings, shall be forfeited and used to
reduce Employer contributions. In the event those Matching
Contributions subject to forfeiture have been distributed to the
Member, the Employer shall make reasonable efforts to recover the
contributions from the Member.
(d) If a Member makes tax-deferred contributions under another qualified
defined contribution plan maintained by an employer other than the
Employer or an Affiliate for any calendar year and those contributions
when added to his or her Elective Deferrals exceed the dollar
limitation under Section 3.01(b) for that calendar year, the Member may
allocate all or a portion of such excess deferrals to this Plan. In
that event, such excess deferrals, together with Earnings, shall be
returned to the Member no later than the April 15 following the end of
the calendar year in which such excess deferrals were made. However,
the Plan shall not be required to return excess deferrals unless the
Member notifies the Committee, in writing, by March 1 of that following
calendar year of the amount of the excess deferrals allocated to this
Plan. The amount of any such excess deferrals to be returned for any
calendar year shall be reduced by any Elective Deferrals previously
returned to the Member under Section 3.07 for that calendar year. In
the event any Elective Deferrals returned under this paragraph (d) were
matched by Matching Contributions under Section 3.02, those Matching
Contributions, together with Earnings, shall be forfeited and used to
reduce Employer contributions. In the event those Matching
Contributions subject to forfeiture have been distributed to the
Member, the Employer shall make reasonable efforts to recover the
contributions from the Member.
(e) Except as provided in this Section 3.01 with respect to Elective
Deferrals or Section 3.03 with respect to Rollover Contributions,
Members are not required or permitted to make any other contributions
under this Plan.
3.02 MATCHING CONTRIBUTIONS
The Employer shall contribute on behalf of each of its Members who
elects to make Elective Deferrals an amount equal to 100 percent of the
first 6 percent of Elective Deferrals made on behalf of the Member to
the Plan during each payroll period. The Matching Contributions are
made expressly conditional on the Plan satisfying the provisions of
Sections 3.01, 3.07, 3.08, and 3.09. If any portion of the Elective
Deferrals to which the Matching Contribution relates is returned to the
Member under Section 3.01, 3.07, 3.08, or 3.09, the corresponding
Matching Contribution shall be forfeited, and if any amount of the
Matching Contribution is deemed an excess aggregate contribution under
Section 3.08 such amount shall be forfeited in accordance with the
provisions of that Section. The Matching Contributions shall be paid to
the Trustee as soon as practicable.
3.03 ROLLOVER CONTRIBUTIONS
With the permission of the Committee and without regard to any
limitations on contributions set forth in this Article 3, the Plan may
receive from an Eligible Employee, whether or not he or she has met the
eligibility requirements for membership, in cash, any amount previously
received (or deemed to be received) by him or her from a plan qualified
under Section 401 (a) of the Code.
The Plan may receive such amount either directly from the Eligible
Employee, from an individual retirement account or from a qualified
plan in the form of a direct rollover. Notwithstanding the foregoing,
the Plan shall not accept any amount unless such amount is eligible to
be rolled over to a qualified trust in accordance with applicable law
and the Eligible Employee provides evidence satisfactory to the
Committee that such amount qualifies for rollover treatment. Unless
received by the Plan in the form of a direct rollover, the Rollover
Contribution must be paid to the Trustee on or before the 60th day
after the day it was received by the Eligible Employee. An Eligible
Employee making a Rollover Contribution shall be entitled to make
investment elections under Section 4.02 with respect to such Rollover
Contributions.
3.04 PLAN-TO-PLAN TRANSFERS
(a) Without regard to any limitations on contributions set forth
in this Article 3, the Committee may, in its discretion,
direct the Trustee to accept a direct transfer, in cash, of
any assets held for a Member's benefit under a qualified
retirement plan of an Employer or the former employer of such
Member from the trustee or custodian of such other plan. Such
plan-to-plan transfer shall be accompanied by written
instruction showing separately the portion of the transfer
attributable to contributions by an Employer or the former
employer and by the Member respectively.
(b) Notwithstanding the foregoing, separate written instructions
delivered to the Committee shall identify the portion of the
transferred funds, if any, attributable to any period during
which the Member participated in a defined benefit plan, money
purchase pension plan (including a target benefit plan), stock
bonus plan or profit sharing plan which would otherwise have
provided a life annuity form of payment to the Member as the
normal form of payment.
(c) The Committee shall be entitled to rely on the written
instructions with respect to character of the transferred
funds and there shall be reflected in an appendix to the Plan
any special rules relating to transferred funds. To the extent
that such transferred amount is attributable to contributions
by an Employer or the former employer, it shall be maintained
in a separate transfer account. To the extent that such
transferred amount is attributable to after-tax contributions
by the Member, it shall be maintained in a voluntary
contribution transfer account established for the Member.
Notwithstanding the foregoing, the Committee may direct that
the fair market value of any transferred amounts be credited
to:
(i) the Member's Matching Contribution Account, to the
extent the amounts were attributable to employer
contributions made on the Member's behalf;
(ii) the Member's Rollover Account, to the extent such
amounts were held in a rollover account under the
transferor plan; and
(iii) the Member's Elective Deferral Account, to the extent
such amounts were attributable to any tax-deferred
contributions under a "qualified cash or deferred
arrangement" (as defined under Section 401(k) of the
Code and its applicable regulations) made on the
Member's behalf.
3.05 CHANGE IN CONTRIBUTIONS
The percentage of Compensation designated by a Member under Section
3.01 shall remain in effect until modified or revoked and shall
automatically apply to increases and decreases in the Member's
Compensation. A Member may change his or her election under Section
3.01 by giving such prior notice to the Committee in any manner that
the Committee shall prescribe. The changed percentage shall become
effective as of the first day of the first payroll period beginning
after the expiration of the notice period.
3.06 SUSPENSION OF CONTRIBUTIONS
A Member may revoke his or her election under Section 3.07 at any time
by giving such advance notice to the Committee in any manner that the
Committee shall prescribe. The revocation shall become effective as of
the first day of the first payroll period beginning after the
expiration of the notice period. A Member who has revoked his or her
election under Section 3.01 for a period of at least six months may
apply to the Committee to resume having his or her Compensation reduced
in accordance with Section 3.01 as of the first day of the first
payroll period next following such advance notice of that intent in any
manner that the Committee shall prescribe.
3.07 ACTUAL DEFERRAL PERCENTAGE TEST
With respect to each Plan Year commencing on or after January 1, 1997,
the Actual Deferral Percentage for Highly Compensated Employees who are
Members or eligible to become Members shall not exceed the Actual
Deferral Percentage for all Non-Highly Compensated Employees who are
Members or eligible to become Members multiplied by 1.25. If the Actual
Deferral Percentage for such Highly Compensated Employees does not meet
the foregoing test, the Actual Deferral Percentage for such Highly
Compensated Employees may not exceed the Actual Deferral Percentage for
all Non-Highly Compensated Employees who are Members or eligible to
become Members by more than two percentage points, and such Actual
Deferral Percentage for such Highly Compensated Employees may not be
more than 2.0 times the Actual Deferral Percentage for all Non-Highly
Compensated Employees who are Members or eligible to become Members (or
such lesser amount as the Committee shall determine to satisfy the
provisions of Section 3.09).
The Committee may implement rules limiting the Elective Deferrals which
may be made on behalf of some or all Highly Compensated Employees so
that this limitation is satisfied. If the Committee determines that the
limitation under this Section 3.07 has been exceeded in any Plan Year,
the following provisions shall apply:
(a) The amount of Elective Deferrals made on behalf of some or all
Highly Compensated Employees shall be reduced until the
provisions of this Section are satisfied as follows. The
actual deferral ratio of the Highly Compensated Employee with
the highest actual deferral ratio shall be reduced to the
extent necessary to meet the test or to cause such ratio to
equal the actual deferral ratio of the Highly Compensated
Employee with the next highest ratio. This process will be
repeated until the actual deferral percentage test is passed.
Each ratio shall be rounded to the nearest one one-hundredth
of one percent of the Member's Statutory Compensation. The
amount of Elective Deferrals made by each Highly Compensated
Employee in excess of the amount permitted under his revised
deferral ratio shall be added together. This total dollar
amount of excess contributions ("excess contributions") shall
then be allocated to some or all Highly Compensated Employees
in accordance with the provisions of paragraph (b) below.
(b) The Elective Deferrals of the Highly Compensated Employee with
the highest dollar amount of Elective Deferrals shall be
reduced by the lesser of (i) the amount required to cause that
Member's Elective Deferrals to equal the dollar amount of the
Elective Deferrals of the Highly Compensated Employee with the
next highest dollar amount of Elective Deferrals or (ii) an
amount equal to the total excess contributions. This procedure
is repeated until all excess contributions are allocated. The
amount of excess contributions allocated to a Highly
Compensated Employee, together with Earnings thereon, shall be
distributed to him in accordance with the provisions of
paragraph (c).
(c) The excess contributions allocated to a Member shall be paid
to the Member before the close of the Plan Year following the
Plan Year in which the excess contributions were made and, to
the extent practicable, within 2 1/2 months of the close of
the Plan Year in which the excess contributions were made.
However, any excess contributions for any Plan Year shall be
reduced by any Elective Deferrals previously returned to the
Member under Section 3.01 for that Plan Year. In the event any
Elective Deferrals returned under this Section 3.07 were
matched by Matching Contributions, such corresponding Matching
Contributions, with Earnings thereon, shall be forfeited and
used to reduce Employer Contributions.
(d) In the event any Matching Contributions subject to forfeiture
under this Section 3.07 have been distributed to the Member,
the Employer shall make reasonable efforts to recover the
contributions from the Member.
3.08 CONTRIBUTION PERCENTAGE TEST
With respect to each Plan Year beginning on or after January 1, 1997,
the Contribution Percentage for Highly Compensated Employees who are
Members or eligible to become Members shall not exceed the Contribution
Percentage for all Non-Highly Compensated Employees who are Members or
eligible to become Members multiplied by 1.25. If the Contribution
Percentage for such Highly Compensated Employees does not meet the
foregoing test, the Contribution Percentage for such Highly Compensated
Employees may not exceed the Contribution Percentage for all Non-Highly
Compensated Employees who are Members or eligible to become Members by
more than two percentage points, and the Contribution Percentage for
such Highly Compensated Employees for the Plan Year may not be more
than 2.0 times the Contribution Percentage for all Non-Highly
Compensated Employees who are Members or eligible to become Members (or
such lesser amount as the Committee shall determine to satisfy the
provisions of Section 3.09).
If the Committee determines that the limitation under this Section 3.08
has been exceeded in any Plan Year, the following provisions shall
apply:
(a) The amount of Matching Contributions made on behalf of some or
all Highly Compensated Employees in the Plan Year shall be
reduced until the provisions of this Section are satisfied as
follows. The actual contribution ratio of the Highly
Compensated Employee with the highest actual contribution
ratio shall be reduced to the extent necessary to meet the
test or to cause such ratio to equal the actual contribution
ratio of the Highly Compensated Employee with the next highest
actual contribution ratio. This process will be repeated until
the actual contribution percentage test is passed. Each ratio
shall be rounded to the nearest one one-hundredth of one
percent of a Member's Statutory Compensation. The amount of
Matching Contributions made by or on behalf of each Highly
Compensated Employee in excess of the amount permitted under
his revised actual contribution ratio shall be added together.
This total dollar amount of excess contributions ("excess
aggregate contributions") shall then be allocated to some or
all Highly Compensated Employees in accordance with the
provisions of paragraph (b).
(b) The Matching Contributions of the Highly Compensated Employee
with the highest dollar amount of such contributions shall be
reduced by the lesser of (i) the amount required to cause that
Member's Matching Contributions to equal the dollar amount of
such contributions of the Highly Compensated Employee with the
next highest dollar amount of such contributions, or (ii) an
amount equal to the total excess aggregate contributions. This
procedure is repeated until all excess aggregate contributions
are allocated. The amount of excess aggregate contributions
allocated to each Highly Compensated Employee, together with
Earnings thereon, shall be distributed or forfeited in
accordance with the provisions of paragraph (c) below.
(c) Excess aggregate contributions allocated to a Highly
Compensated Employee, to the extent attributable to vested
Matching Contributions, shall be paid to the Member and the
Matching Contributions which are forfeitable under the Plan
shall be forfeited and applied to reduce Employer
Contributions.
(d) Any repayment or forfeiture of excess aggregate contributions
shall be made before the close of the Plan Year following the
Plan Year for which the excess aggregate contributions were
made and, to the extent practicable, any repayment or
forfeiture shall be made within 2 1/2 months of the close of
the Plan Year in which the excess aggregate contributions were
made.
3.09 AGGREGATE CONTRIBUTION LIMITATION
Notwithstanding the provisions of Sections 3.07 and 3.08, in no event
shall the sum of the Actual Deferral Percentage of the group of
eligible Highly Compensated Employees and the Contribution Percentage
of such group, after applying the provisions of Sections 3.07 and 3.08,
exceed the "aggregate limit" as provided in Section 401(m)(9) of the
Code and the regulations issued thereunder. In the event the aggregate
limit is exceeded for any Plan Year, the Contribution Percentages of
the Highly Compensated Employees shall be reduced to the extent
necessary to satisfy the aggregate limit in accordance with the
procedure set forth in Section 3.08.
3.10 ADDITIONAL DISCRIMINATION TESTING PROVISIONS
(a) If any Highly Compensated Employee is a member of another
qualified plan of the Employer or an Affiliate, other than an
employee stock ownership plan described in Section 4975(e)(7)
of the Code or any other qualified plan which must be
mandatorily disaggregated under Section 410(b) of the Code,
under which elective deferrals or matching contributions are
made on behalf of the Highly Compensated Employee or under
which the Highly Compensated Employee makes after-tax
contributions, the Committee shall implement rules, which
shall be uniformly applicable to all employees similarly
situated, to take into account all such contributions for the
Highly Compensated Employee under all such plans in applying
the limitations of Sections 3.07, 3.08 and 3.09. If any other
such qualified plan has a plan year other than the Plan Year
defined in Section 1.34, the contributions to be taken into
account in applying the limitations of Sections 3.07, 3.08,
and 3.09 will be those made in the plan years ending with or
within the same calendar year.
(b) In the event that this Plan is aggregated with one or more
other plans to satisfy the requirements of Sections 401(a)(4)
and 410(b) of the Code (other than for purposes of the average
benefit percentage test) or if one or more other plans is
aggregated with this Plan to satisfy the requirements of such
sections of the Code, then the provisions of Sections 3.07,
3.08, and 3.09 shall be applied by determining the Actual
Deferral Percentage and Contribution Percentage of employees
as if all such plans were a single plan. If this Plan is
permissively aggregated with any other plan or plans for
purposes of satisfying the provisions of Section 401(k)(3) of
the Code, the aggregated plans must also satisfy the
provisions of Sections 401(a)(4) and 410(b) of the Code as
though they were a single plan. Plans may be aggregated under
this paragraph (c) only if they have the same plan year.
(c) The Employer may elect to use Elective Deferrals to satisfy
the tests described in Sections 3.08 and 3.09, provided that
the test described in Section 3.07 is met prior to such
election, and continues to be met following the Employer's
election to shift the application of those Elective Deferrals
from Section 3.07 to Section 3.08.
(d) The Employer may authorize that special "qualified nonelective
contributions" shall be made for a Plan Year, which shall be
allocated in such amounts and to such Members, who are not
Highly Compensated Employees, as the Committee shall
determine. The Committee shall establish such separate
accounts as may be necessary. Qualified nonelective
contributions shall be 100 percent nonforfeitable when made
and shall not be available for withdrawal prior to termination
of employment. Qualified nonelective contributions shall be
treated as Elective Deferrals to the extent permitted under
Treas. Reg. Section 1.401(k)-1(b)(5). Qualified nonelective
contributions made for the Plan Year may be used to satisfy
the tests described in Sections 3.07, 3.08, and 3.09, where
necessary.
(e) For Plan Years commencing on and after January 1, 1999, if the
Employer elects to apply the provisions of Section
410(b)(4)(B) to satisfy the requirements of Section
401(k)(3)(A)(i) of the Code, the Employer may apply the
provisions of Sections 3.07, 3.08, and 3.09 by excluding from
consideration all eligible employees (other than Highly
Compensated Employees) who have not met the minimum age and
service requirements of Section 410(a)(1)(A) of the Code.
3.11 MAXIMUM ANNUAL ADDITIONS
(a) The annual addition to a Member's Accounts for any Plan Year,
which shall be considered the "limitation year" for purposes
of Section 415 of the Code, when added to the Member's annual
addition for that Plan Year under any other qualified defined
contribution plan of the Employer or an Affiliate, shall not
exceed an amount which is equal to the lesser of (i) 25
percent of his or her aggregate remuneration for that Plan
Year or (ii) $30,000, as adjusted pursuant to Section 415(d)
of the Code.
(b) For purposes of this Section, the "annual addition" to a
Member's Accounts under this Plan or any other qualified
defined contribution plan (including a deemed qualified
defined contribution plan under a defined benefit plan)
maintained by the Employer or an Affiliate shall be the sum
of:
(i) the total contributions, including Elective
Deferrals, made on the Member's behalf by the
Employer and all Affiliates,
(ii) all Member contributions, exclusive of any Rollover
Contributions, and
(iii) forfeitures, if applicable,
that have been allocated to the Member's Accounts under this
Plan or his or her accounts under any other such qualified
defined contribution plan, and solely for purposes of clause
(i) of paragraph (a) above,
(iv) amounts described in Sections 415(l)(1) and
419A(d)(2) allocated to the Member.
For purposes of this paragraph (b), any Elective Deferrals
distributed under Section 3.07 and any Matching Contributions,
distributed or forfeited under the provisions of Section 3.01,
3.07, 3.08, or 3.09 shall be included in the annual addition
for the year allocated.
(c) For purposes of this Section, the term "remuneration" with
respect to any Member shall mean the wages, salaries and other
amounts paid in respect of that Member by the Employer or an
Affiliate for personal services actually rendered, and shall
include amounts contributed by the Employer pursuant to a
salary reduction agreement which are not includible in the
gross income of the Member under Sections 125, 402(g), or 457
of the Code, but shall exclude deferred compensation, stock
options and other distributions which receive special tax
benefits under the Code. Notwithstanding the foregoing, for
limitation years commencing prior to January 1, 1998,
remuneration shall exclude amounts contributed by the Employer
pursuant to a salary reduction agreement which are not
includible in the gross income of the employee under Sections
125, 402(g)(3), or 457 of the Code.
(d) If the annual addition to a Member's Accounts for any Plan
Year, prior to the application of the limitation set forth in
paragraph (a) above, exceeds that limitation due to a
reasonable error in estimating a Member's annual compensation
or in determining the amount of Elective Deferrals that may be
made with respect to a Member under Section 415 of the Code,
or as the result of the allocation of forfeitures, the amount
of contributions credited to the Member's Accounts in that
Plan Year shall be adjusted to the extent necessary to satisfy
that limitation in accordance with the following order of
priority:
(i) The Member's unmatched Elective Deferrals under
Section 3.01 shall be reduced to the extent
necessary. The amount of the reduction shall be
returned to the Member, together with any earnings on
the contributions to be returned.
(ii) The Member's matched Elective Deferrals and
corresponding Matching Contributions shall be reduced
to the extent necessary. The amount of the reduction
attributable to the Member's matched Elective
Deferrals shall be returned to the Member, together
with any earnings on those contributions to be
returned, and the amount attributable to the Matching
Contributions shall be forfeited and used to reduce
subsequent contributions payable by the Employer.
Any Elective Deferrals returned to a Member under this paragraph (f)
shall be disregarded in applying the dollar limitation on Elective
Deferrals under Section 3.01(b) and in performing the Actual Deferral
Percentage Test under Section 3.07.
3.12 RETURN OF CONTRIBUTIONS
(a) If the Commissioner of Internal Revenue, on timely application
made after the initial establishment of the Plan, determines
that the Plan is not qualified under Section 401(a) of the
Code, or refuses, in writing, to issue a determination as to
whether the Plan is so qualified, the Employer's contributions
made on or after the date on which that determination or
refusal is applicable shall be returned to the Employer. The
return shall be made within one year after the denial of
qualification. The provisions of this paragraph (a) shall
apply only if 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) If all or part of the Employer's deductions for contributions
to the Plan are disallowed by the Internal Revenue Service,
the portion of the contributions to which that disallowance
applies shall be returned to the Employer without interest but
reduced by any investment loss attributable to those
contributions, provided that the contribution is returned
within one year after the disallowance of deduction. For this
purpose, all contributions (including Elective Deferrals) made
by the Employer are expressly declared to be conditioned upon
their deductibility under Section 404 of the Code.
(c) The Employer may recover without interest the amount of its
contributions to the Plan made on account of a mistake of
fact, reduced by any investment loss attributable to those
contributions, if recovery is made within one year after the
date of those contributions.
(d) In the event that Elective Deferrals made under Section 3.01
are returned to the Employer in accordance with the provisions
of this Section 3.12, the elections to reduce Compensation
which were made by Members on whose behalf those contributions
were made shall be void retroactively to the beginning of the
period for which those contributions were made. The Elective
Deferrals so returned shall be distributed in cash to those
Members for whom those contributions were made; provided,
however, that if the contributions are returned under the
provisions of paragraph (a) above, the amount of Elective
Deferrals to be distributed to Member shall be adjusted to
reflect any investment gains or losses attributable to those
contributions.
3.13 CONTRIBUTIONS DURING PERIOD OF MILITARY LEAVE
(a) Notwithstanding any provisions of this Plan to the contrary,
contributions, benefits, and service credited with respect to
qualified military service will be provided in accordance with
Section 414(u) of the Code.
(b) Without regard to any limitations on contributions set forth
in this Article 3, a Member who is credited with Vesting
Service under the provisions of Section 1.49(b), because of a
period of service in the uniformed services of the United
States beginning on or after the Effective Date, may elect to
contribute to the Plan the Elective Deferrals that could have
been contributed to the Plan in accordance with the provisions
of the Plan had he remained continuously employed by the
Employer throughout such period of absence ("make-up
contributions"). The amount of make-up contributions shall be
determined on the basis of the Member's Compensation in effect
immediately prior to the period of absence, and the terms of
the Plan at such time. Any Elective Deferrals so determined
shall be limited as provided in Sections 3.01(b), 3.07, 3.08
and 3.09 with respect to the Plan Year or Years to which such
contributions relate rather than the Plan Year in which
payment is made. Any payment to the Plan described in this
paragraph shall be made during the applicable repayment
period. The repayment period shall equal three times the
period of absence, but not longer than five years and shall
begin on the later of: (i) the Member's date of reemployment,
or (ii) the date the Employer notifies the Eligible Employee
of his rights under this Section 3.13. Earnings (or losses) on
make-up contributions shall be credited commencing with the
date the make-up contribution is made in accordance with the
provisions of Article 4.
(c) With respect to a Member who makes the election described in
paragraph (a) above, the Employer shall make Matching
Contributions on the make-up contributions in the amount
described in the provisions of Section 3.02 as in effect for
the Plan Year to which such make-up contributions relate.
Employer Matching Contributions under this paragraph shall be
made during the period described in paragraph (b) above.
Earnings (or losses) on Matching Contributions shall be
credited commencing with the date the contributions are made
in accordance with the provisions of Article 4. Any
limitations on Matching Contributions described in Sections
3.02, 3.07, 3.08, and 3.09 shall be applied with respect to
the Plan Year or Years to which such contributions relate
rather than the Plan Year or Years in which payment is made.
(d) All contributions under this Section 3.13 are considered
"annual additions," as defined in Section 415(c)(2) of the
Code, and shall be limited in accordance with the provisions
of Section 3.12 with respect to the Plan Year or Years to
which such contributions relate rather than the Plan Year in
which payment is made.
3.14 CONTRIBUTIONS NOT CONTINGENT UPON PROFITS
The Employer may make contributions to the Plan without regard to the
existence or the amount of current and accumulated earnings and
profits. Notwithstanding the foregoing, however, this Plan is designed
to qualify as a "profit-sharing plan" for all purposes of the Code.
<PAGE>
ARTICLE 4. INVESTMENT OF CONTRIBUTIONS
4.01 INVESTMENT FUNDS
(a) Contributions to the Plan shall be invested in one or more
Investment Funds, as authorized by the Committee, which from
time to time may include the Company Stock Fund and such
equity funds, international equity funds, fixed income funds,
money market funds, and other funds as the Committee elects to
offer.
(b) The Trustee may keep such amounts of cash as it, in its sole
discretion, shall deem necessary or advisable as part of the
Funds, all within the limitations specified in the trust
agreement.
(c) Dividends, interest, and other distributions received on the
assets held by the Trustee in respect to each of the above
Funds shall be reinvested in the respective Fund.
4.02 INVESTMENT OF MEMBERS' ACCOUNTS
A Member shall make one investment election covering his or her
Accounts in accordance with one of the following options:
(a) 100 percent in one of the available Investment Funds;
(b) in more than one Investment Fund allocated in multiples of 1
percent.
If no investment election is made, any contributions made on the
Member's behalf shall be invested in a money market fund.
4.03 RESPONSIBILITY FOR INVESTMENTS
Each Member is solely responsible for the selection of his or her
investment options. The Trustee, the Committee, the Employer, and the
officers, supervisors and other employees of the Employer are not
empowered to advise a Member as to the manner in which his or her
Accounts shall be invested. The fact that an Investment Fund is
available to Members for investment under the Plan shall not be
construed as a recommendation for investment in that Investment Fund.
4.04 CHANGE OF ELECTION
A Member may change his or her investment election under Section 4.02
by giving such advance written notice to the Committee in the manner
that the Committee shall prescribe. Such changed investment election
shall become effective as soon as administratively practicable
following such notice and shall be effective only with respect to
subsequent contributions.
4.05 REALLOCATION OF ACCOUNTS AMONG THE FUNDS
A Member may elect to reallocate his or her Accounts among the
Investment Funds, in multiples of 1 percent, by giving such advance
written notice to the Committee as the Committee shall prescribe. Such
reallocation shall be effective as soon as administratively practicable
following such notice.
4.06 LIMITATIONS IMPOSED BY CONTRACT
Notwithstanding anything in this Article to the contrary, any
contributions invested in a fund of guaranteed investment contracts
shall be subject to any and all terms of such contracts, including any
limitations placed on the exercise of any rights otherwise granted to a
Member under any other provisions of this Plan with respect to such
contributions.
4.07 PASS-THROUGH OF VOTING RIGHTS
(a) To the extent a Member directs the investment of some portion
of his or her Accounts in the Company Stock Fund, all voting,
tender and similar rights shall be passed through to the
Member and the Member shall direct the Trustee as to how said
rights shall be excercised. With respect to the portion of the
Member's Accounts which has been invested in the other
Investment Funds offered under the Plan, the Trustee shall
vote all interests held by the Trust as directed by the
Employer.
(b) Procedures shall be established and maintained to ensure the
confidentiality of all information regarding a Member's
purchase, holding and sale of Company Stock as well as the
Member's exercise of appurtenant rights under this Section
4.07, except to the extent necessary to comply with federal
law or state law not preempted by ERISA. The Committee is
hereby designated as the fiduciary responsible for ensuring
that these confidentiality procedures are adequate and are
followed. In the event that the Committee determines that a
particular transaction relating to the Company Stock Fund may
involve the potential for undue Employer influence, the
Committee shall designate an independent fiduciary, who shall
not be an affiliate of the Employer, to assume responsibility
for all activities relating to said transaction.
4.08 ERISA SECTION 404(C) COMPLIANCE
This Plan is intended to constitute a plan described in Section 404(c)
of ERISA.
ARTICLE 5. VALUATION OF THE ACCOUNTS
5.01 VALUATION OF THE INVESTMENT FUNDS
The Trustee shall value the Investment Funds on each business day. On
each Valuation Date there shall be allocated to the Accounts of each
Member his or her proportionate share of the increase or decrease in
the fair market value of his or her Accounts in each of the Funds.
Whenever an event requires a determination of the value of the Member's
Accounts, the value shall be computed as of the Valuation Date
coincident with or immediately following the date of determination,
subject to the provisions of Section 5.02.
5.02 RIGHT TO CHANGE PROCEDURES
The Committee reserves the right to change from time to time the
procedures used in valuing the Accounts or crediting (or debiting) the
Accounts if it determines, after due deliberation and upon the advice
of counsel and/or the current recordkeeper, that such an action is
justified in that it results in a more accurate reflection of the fair
market value of assets. In the event of a conflict between the
provisions of this Article and such new administrative procedures,
those new administrative procedures shall prevail.
5.03 STATEMENT OF ACCOUNTS
At least once a calendar quarter, each Member shall be furnished with a
statement setting forth the value of his or her Accounts and the Vested
Portion of his or her Accounts.
<PAGE>
ARTICLE 6. VESTED PORTION OF ACCOUNTS
6.01 ELECTIVE DEFERRAL ACCOUNT, ROLLOVER ACCOUNT, AND TRANSFER ACCOUNT
A Member shall at all times be 100 percent vested in, and have a
nonforfeitable right to, his or her Elective Deferral Account, Rollover
Account, and Transfer Account.
6.02 MATCHING CONTRIBUTION ACCOUNT
(a) A Member shall be vested in, and have a nonforfeitable right
to, his or her Matching Contribution Account in accordance
with the following schedule:
YEARS OF VESTING SERVICE VESTED PERCENTAGE
less than 3 years 0%
at least 3 years but less than 5 50%
5 or more years 100%
(b) Notwithstanding the foregoing, a Member shall be 100 percent
vested in, and have a nonforfeitable right to, his or her
Accounts upon death, Disability, Retirement, or the later of
the attainment of his or her 65th birthday or the fifth
anniversary of the date he or she becomes a Member.
6.03 DISPOSITION OF FORFEITURES
Upon termination of employment of a Member who was not vested in his or
her Matching Contribution Account, his or her Matching Contribution
Account shall be forfeited. If the former Member is reemployed by the
Employer or an Affiliate before incurring a period of Break in Service
of five years, his or her Matching Contribution Account shall be
restored. The Committee shall direct the Trustee to apply forfeitures
during each Plan Year (i) to restore amounts previously forfeited by
Members but required to be reinstated upon resumption of employment,
(ii) to pay administrative expenses, or (iii) to reduce Employer
contributions. If forfeitures for any Plan Year are insufficient to
restore forfeitures required to be restored by this Section 6.03, the
Employer shall contribute the balance required for that purpose.
<PAGE>
ARTICLE 7. LOANS TO MEMBERS
7.01 AMOUNT AVAILABLE
(a) A Member who is an Employee of the Employer or an Affiliate
may borrow, on application to the Committee and on approval by
the Committee under such uniform rules as it shall adopt, an
amount which, when added to the outstanding balance of any
other loans to the Member from this Plan or any other
qualified plan of the Employer or an Affiliate, does not
exceed the lesser of
(i) 50 percent of the Vested Portion of his or her
Accounts, or
(ii) $50,000 reduced by the excess, if any, of (A) the
highest outstanding balance of loans to the Member
from such plans during the one year period ending on
the day before the day the loan is made, over (B) the
outstanding balance of loans to the Member from such
plans on the date on which the loan is made.
(b) The interest rate to be charged on loans shall be determined
at the time of the loan application and shall be based on the
interest rates charged by persons in the business of lending
money for loans of similar purpose and duration. The interest
rate so determined for purposes of the Plan shall be fixed for
the duration of each loan.
(c) The amount of the loan is to be transferred from the
Investment Funds in which the Member's Accounts are invested
to a special "Loan Fund" for the Member under the Plan. The
Loan Fund consists solely of the amount transferred to the
Loan Fund and is invested solely in the loan made to the
Member. The amount transferred to the Loan Fund shall be
pledged as security for the loan. Payments of principal on the
loan will reduce the amount held in the Member's Loan Fund.
Those payments, together with the attendant interest payment, will be
reinvested in the Investment Funds in accordance with the Member's then
effective investment election.
7.02 TERMS
(a) In addition to such rules and regulations as the Committee may
adopt, all loans shall comply with the following terms and
conditions:
(i) An application for a loan by a Member shall be made
in the manner and form prescribed by the Committee,
whose action in approving or disapproving the
application shall be final;
(ii) Each loan shall be evidenced by a promissory note
executed by the Member and payable to the Plan on a
fixed maturity date meeting the requirements of this
Section 7.02, but in not event later than the
Member's termination of employment;
(iii) The period of repayment for any loan shall be arrived
at by mutual agreement between the Committee and the
Member, but that period shall not exceed five years
unless the loan is to be used in conjunction with the
purchase of the principal residence of the Member. In
the event a Member enters the uniformed services of
the United States and retains reemployment rights
under law, repayments shall be suspended during the
period of leave and the period of repayment shall be
extended by the number of months of the period of
service in the uniformed services;
(iv) Payments of principal and interest will be made by
payroll deductions in substantially level amounts,
but no less frequently than quarterly, in an amount
sufficient to amortize the loan over the repayment
period.
(b) If a loan is not paid when the Member's benefits hereunder are
to be distributed, then any unpaid portion of such loan and
unpaid interest thereon shall be deducted by the Trustee from
the Member's Account before benefits are paid from the
Account. Such deduction shall, to the extent thereof, cancel
the indebtedness of the Member. If a loan is not repaid in
accordance with the terms contained in the promissory note and
a default occurs, the Plan may execute upon its security
interest in the Member's Accounts under the Plan to satisfy
the debt; however, the Plan shall not levy against any portion
of the Loan Fund attributable to amounts held in the Member's
Elective Deferral Account or Matching Contribution Account
until such time as a distribution of such Accounts could
otherwise be made under the Plan.
(c) If the Company makes a disposition of assets or of a
subsidiary and the Member becomes an employee of the acquiring
entity, the Committee may, in its discretion, transfer a
Member's outstanding loan to the trustee of the qualified
retirement plan maintained by the acquiring employer.
(d) Any additional rules or restrictions as may be necessary to
implement and administer the loan program shall be in writing
and communicated to employees. Such further documentation is
hereby incorporated into the Plan by reference, and the
Committee is hereby authorized to make such revisions to these
rules as it deems necessary or appropriate, on the advice of
counsel.
(e) To the extent required by law and under such rules as the
Committee shall adopt, loans shall also be made available on a
reasonably equivalent basis to any Beneficiary or former
Employee (i) who maintains an account balance under the Plan
and (ii) who is still a party-in-interest (within the meaning
of Section 3(14) of ERISA).
<PAGE>
ARTICLE 8. WITHDRAWALS WHILE STILL EMPLOYED
8.01 HARDSHIP WITHDRAWAL
(a) Effective as of July 1, 1997, a Member may, subject to Section
8.02, elect to withdraw all or part of the Elective Deferrals
made on his or her behalf to his or her Elective Deferral
Account upon furnishing proof of Hardship satisfactory to the
Committee. Notwithstanding the foregoing, effective May 1,
1998, the provisions of Article 8 shall be inapplicable on and
after such date and no withdrawals of Elective Deferrals shall
be permitted on or after such date.
(b) A Member shall be considered to have incurred a "Hardship" if,
and only if, he or she meets the requirements of paragraphs
(c) and (d) below.
(c) As a condition for Hardship there must exist with respect to
the Member an immediate and heavy need to draw upon his or her
Elective Deferral Account. The Committee shall presume the
existence of such immediate and heavy need if the requested
withdrawal is on account of any of the following:
(i) expenses for medical care described in Section 213(d)
of the Code previously incurred by the Member, his or
her spouse or any of his or her dependents (as
defined in Section 152 of the Code) or necessary for
those persons to obtain such medical care;
(ii) costs directly related to the purchase of a principal
residence of the Member (excluding mortgage
payments);
(iii) payment of tuition and related educational fees, and
room and board expenses, for the next 12 months of
post-secondary education of the Member, his spouse,
children, or dependents (as defined in Section 152 of
the Code);
(iv) payment of amounts necessary to prevent eviction of
the Member from his or her principal residence or to
avoid foreclosure on the mortgage of his or her
principal residence; or
(v) the inability of the Member to meet such other
expenses, debts or other obligations recognized by
the Internal Revenue Service as giving rise to
immediate and heavy financial need for purposes of
Section 401(k) of the Code.
The amount of withdrawal may not be in excess of the amount of
the immediate and heavy financial need of the employee,
including any amounts necessary to pay any federal, state or
local income taxes and any amounts necessary to pay any
penalties reasonably anticipated to result from the
distribution.
In evaluating the relevant facts and circumstances, the
Committee shall act in a nondiscriminatory fashion and shall
treat uniformly those Members who are similarly situated. The
Member shall furnish to the Committee such supporting
documents as the Committee may request in accordance with
uniform and nondiscriminatory rules prescribed by the
Committee.
(d) As a condition for Hardship, the Member must demonstrate that
the requested withdrawal is necessary to satisfy the financial
need described in paragraph (b). To demonstrate such
necessity, the Member who requests a hardship withdrawal to
satisfy a financial need described in (c) above must certify
to the Committee, on such form as the Committee may prescribe,
that the financial need cannot be fully relieved (i) through
reimbursement or compensation by insurance or otherwise, (ii)
by reasonably liquidation of the Member's assets, (iii) by
cessation of Elective Deferrals, or (iv) by other
distributions or nontaxable (at the time of the loan) loans
from the Plan or other plans of the Employer or Affiliates or
by borrowing from commercial sources at a reasonable rate in
an amount sufficient to satisfy the need. The actions listed
are required to be taken to the extent necessary to relieve
the hardship but any action which would have the effect of
increasing the hardship need not be taken. For purposes of
this paragraph (d), there shall be attributed to the Member
those assets of the Member's spouse and minor children which
are reasonably available to the Member. The Member shall
furnish to the Committee such supporting documents as the
Committee may request in accordance with uniform and
nondiscriminatory rules prescribed by the Committee. If, on
the basis of the Member's certification and the supporting
documents, the Committee finds it can reasonably rely on the
Member's certification, then the Committee shall find that the
requested withdrawal is necessary to meet the Member's
financial need.
8.02 PROCEDURES AND RESTRICTIONS
To make a withdrawal, a Member shall give such prior written notice to
the Committee as the Committee shall prescribe. A withdrawal shall be
made as of the Valuation Date next following the expiration of the
notice period. If a loan and a hardship withdrawal are processed as of
the Valuation Date, the amount available for the hardship withdrawal
will equal the Vested Portion of the Member's Accounts on such
Valuation Date reduced by the amount of the loan. The amount of the
withdrawal shall be allocated among the Investment Funds in proportion
to the value of the Member's Accounts from which the withdrawal is made
in each Investment Fund as of the date of the withdrawal. Subject to
the provisions of Section 9.08, all payments to Members under this
Article shall be made in cash as soon as practicable.
<PAGE>
ARTICLE 9. DISTRIBUTION OF ACCOUNTS UPON
TERMINATION OF EMPLOYMENT
9.01 ELIGIBILITY
Upon a Member's termination of employment the Vested Portion of his or
her Accounts, as determined under Article 6, shall be distributed as
provided in this Article. Except as otherwise provided in Article 8 and
Section 9.04, no distributions to a Member are permitted prior to
termination of employment of the Member. For purposes of this Article 9
only and except as otherwise provided in Section 12.05, if the Company
makes a disposition of assets or of a subsidiary and an Employee
becomes an employee of the acquiring entity, no termination of
employment will be deemed to occur if the acquiring entity adopts the
Plan or otherwise becomes an Employer whose employees accrue benefits
under the Plan, if the Plan is merged or consolidated with, or any
assets or liabilities are transferred from the Plan to, a plan
maintained by the acquiring entity in a transaction subject to Code
Section 414(1) or if, in the case of disposition of assets, the
disposition is less than substantially all of the assets used by it in
a trade or business. If the Company makes a disposition of assets or of
a subsidiary that does not result in a termination of employment, the
Committee may direct the Trustee to transfer all or part of the assets
in a Member's Accounts directly to the trustee of a qualified
retirement plan maintained by the acquiring employer.
9.02 FORM OF DISTRIBUTION
Distribution of the Vested Portion of a Member's Accounts shall be made
to the Member (or to his or her Beneficiary, in the event of death) in
a cash lump sum.
9.03 DATE OF PAYMENT OF DISTRIBUTION
(a) Except as otherwise provided in this Article, distribution of
the Vested Portion of a Member's Accounts shall be made as
soon as administratively practicable following the later of
(i) the Member's termination of employment, (ii) the fifth
anniversary of the date on which he or she became a Member, or
(iii) the 65th anniversary of the Member's date of birth (but
not more than 60 days after the close of the Plan Year in
which the later of (i), (ii), or (iii) occurs).
(b) A Member whose employment is terminated for any reason shall
be entitled, upon written request, in accordance with
procedures established by the Committee, to receive
distribution of the Vested Portion of his or her Account in
accordance with the following rules:
(i) If the value of the Vested Portion of a Member's
Accounts amounts to $5,000 or less, distribution of
the Vested Portion shall be made as soon as
practicable following the Valuation Date coincident
with or immediately following the Member's
termination of employment with the Employer and all
Affiliates.
(ii) Notwithstanding the foregoing provisions of this
Section, if the value of the Vested Portion of the
Member's Accounts exceeds $5,000 and the Member does
not consent in writing within 60 days (or such other
period prescribed by the Committee) of his or her
Severance Date to an immediate distribution to be
made as soon as administratively practicable,
distribution of the Vested Portion of the Member's
Accounts shall be made as soon as practicable
following the Valuation Date coincident with or
immediately following the earliest of
(A) receipt by the Committee at least 30 days' (or such
other period prescribed by the Committee) prior to
such Valuation Date of the Member's written request
for payment;
(B) the Member's attainment of age 65; or
(C) the Member's death.
If Matching Contributions under Section 3.02 shall be
allocated to the Member's Accounts following the date on which
a distribution is made hereunder, distribution of such
Matching Contributions shall be made to the Member or
Beneficiary in a single cash sum as soon as practicable
following the date on which such allocation is made.
(c) In the case of the death of a Member before the distribution
of his or her Accounts, the Vested Portion of his or her
Accounts shall be distributed to the Member's Beneficiary as
soon as administratively practicable following the Valuation
Date coincident with or next following the Member's date of
death.
(d) Except as provided in the following sentence, if the value of
the Vested Portion of a Member's Accounts exceeds $5,000, an
election by the Member to receive an earlier distribution made
pursuant to paragraph (b) shall not be valid unless the
written election is made (i) after the Member has received the
notice required under Section 1.411(a)-11(c) of the Income Tax
Regulations and (ii) within a reasonable time before the
effective date of the commencement of the distribution as
prescribed by said regulations. If a distribution is one to
which Sections 401(a)(11) and 417 of the Code do not apply,
such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(i) the Committee clearly informs the Member that he or
she 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
(ii) the Member, after receiving the notice, affirmatively
elects a distribution.
(e) The amount of a distribution made pursuant to this Section
9.03 shall be determined as of the applicable Valuation Date
preceding the actual date of payment.
9.04 AGE 70 1/2 REQUIRED DISTRIBUTION
(a) In no event shall the provisions of this Article operate so as
to allow the distribution of a Member's Accounts to begin
later than the April 1 following the calendar year in which he
or she attains age 70 1/2, provided that such commencement in
active service shall not be required with respect to a Member
(i) who is not a 5-percent owner as described in Section
416(i) of the Code and (ii) who attained age 70 1/2 prior to
January 1, 1988 or after January 1, 1997.
(b) In the event a Member is required to begin receiving payments
while in service under the provisions of paragraph (a) above,
a Member shall receive annual payments of the minimum amount
necessary to satisfy the minimum distribution requirements of
Section 401(a)(9) of the Code. Such minimum amount will be
determined on the basis of the joint life expectancy of the
Member and his or her Beneficiary. Such life expectancy will
be recalculated once each year; however, the life expectancy
of the Beneficiary will not be recalculated if the Beneficiary
is not the Member's spouse. The amount of the withdrawal shall
be allocated among the Investment Funds in proportion to the
value of the Member's Accounts as of the date of each
withdrawal.
The commencement of payments under this Section 9.04 shall not
constitute an Annuity Starting Date for purposes of Sections 72,
401(a)(11) and 417 of the Code. Upon the Member's subsequent
termination of employment, payment of the Member's Accounts shall be
made in accordance with the provisions of Section 9.02.
9.05 PROOF OF DEATH AND RIGHT OF BENEFICIARY OR OTHER PERSON
The Committee may require and rely upon such proof of death and such
evidence of the right of any Beneficiary or other person to receive the
value of the Accounts of a deceased Member as the Committee may deem
proper and its determination of the right of that Beneficiary or other
person to receive payment shall be conclusive.
9.06 DISTRIBUTION LIMITATION
Notwithstanding any other provision of this Article 9, all
distributions from this Plan shall conform to the regulations issued
under Section 401(a)(9) of the Code, including the incidental death
benefit provisions of Section 401(a)(9)(G) of the Code. Further, such
regulations shall override any Plan provision that is inconsistent with
Section 401(a)(9) of the Code.
9.07 STATUS OF ACCOUNTS PENDING DISTRIBUTION
Until distributed under Section 9.03 or 9.04, the Accounts of a Member
who is entitled to a distribution shall continue to be invested as part
of the funds of the Plan and the Member shall retain investment
transfer rights as described in Section 4.05 during the deferral
period. However, such Member shall not be entitled to borrow from his
or her Accounts after his or her Severance Date.
9.08 DIRECT ROLLOVER OF CERTAIN DISTRIBUTIONS
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution
paid directly by the Plan to an eligible retirement plan specified by
the distributee in a direct rollover. The following definitions apply
to the terms used in this Section:
(a) "Eligible rollover distribution" means 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 to the extent such
distribution is required under Section 401(a)(9) of the Code,
and the portion of any distribution that is not includible in
gross income;
(b) "Eligible retirement plan" means an individual retirement
account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that
accepts 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;
(c) "Distributee" means an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former
spouse who is the alternate payee under a qualified domestic
relations order as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or
former spouse; and
(d) "Direct rollover" means a payment by the Plan to the eligible
retirement plan specified by the distributee.
In the event that the provisions of this Section 9.08 or any part
thereof ceases to be required by law as a result of subsequent
legislation or otherwise, this Section 9.08 or any applicable part
thereof shall be ineffective without the necessity of further
amendments to the Plan.
9.09 TRANSFER TO OTHER QUALIFIED PLANS
If the Company makes a disposition of assets or a disposition of a
subsidiary that does not (a) result in a termination of employment
under this Article 9 or (b) qualify for a distribution under the
provisions of Section 12.05, the Committee may direct the Trustee to
transfer all or part of the assets in a Member's Accounts directly to
the trustee of a qualified retirement plan maintained by the acquiring
employer.
<PAGE>
ARTICLE 10. ADMINISTRATION OF PLAN
10.01 APPOINTMENT OF COMMITTEE
The general administration of the Plan and the responsibility for
carrying out the provisions of the Plan shall be placed in a Committee
of not less than three persons appointed from time to time by the Board
of Directors to serve at the pleasure of the Board of Directors. Any
person who is appointed a member of the Committee shall signify his or
her acceptance by filing written acceptance with the Board of Directors
and the Secretary of the Committee. Any member of the Committee may
resign by delivering his or her written resignation to the Board of
Directors and the Secretary of the Committee.
10.02 DUTIES OF COMMITTEE
The members of the Committee shall elect a chairman from their number
and a secretary who may be but need not be one of the members of the
Committee; may appoint from their number such subcommittees with such
powers as they shall determine; may authorize one or more of their
number or any agent to execute or deliver any instrument or make any
payment on their behalf; may retain counsel, employ agents and provide
for such clerical, accounting, and consulting services as they may
require in carrying out the provisions of the Plan; and may allocate
among themselves or delegate to other persons all or such portion of
their duties under the Plan, other than those granted to the Trustee
under the trust agreement adopted for use in implementing the Plan, as
they, in their sole discretion, shall decide.
10.03 INVESTMENT COMMITTEE
The Committee has appointed members who may be employees of the Company
to serve on the Investment Committee, which committee shall have the
responsibility for selecting the Investments under the Plan and
monitoring the performance of such Funds. The Committee delegates to
the Investment Committee all of its fiduciary responsibilities under
the Plan and ERISA in connection with the selection and monitoring of
the Investment Funds offered under the Plan.
10.04 INDIVIDUAL ACCOUNTS
The Committee shall establish or cause to be established and shall
maintain, or cause to be maintained, records showing the individual
balances in each Member's Accounts. However, maintenance of those
records and Accounts shall not require any segregation of the funds of
the Plan.
10.05 MEETINGS
The Committee shall hold meetings upon such notice, at such place or
places, and at such time or times as it may from time to time
determine.
10.06 ACTION OF MAJORITY
Any act which the Plan authorizes or requires the Committee to do may
be done by a majority of its members. The action of that majority
expressed from time to time by a vote at a meeting or in writing
without a meeting shall constitute the action of the Committee and
shall have the same effect for all purposes as if assented to by a11
members of the Committee at the time in office.
10.07 COMPENSATION AND BONDING
No member of the Committee shall receive any compensation from the Plan
for his or her services as such, although members of the Board of
Directors appointed to the Committee who are not Employees shall be
compensated at the customary fee payable by the Company for attendance
at committee meetings. Except as may otherwise be required by law, no
bond or other security need be required of any member in that capacity
in any jurisdiction.
10.08 ESTABLISHMENT OF RULES
Subject to the limitations of the Plan, the Committee from time to time
shall establish rules for the administration of the Plan and the
transaction of its business. The Committee shall have discretionary
authority to construe and interpret the Plan and to make factual
determinations (including, but not limited to, determination of an
individual's eligibility for Plan participation, the right and amount
of any benefit payable under the Plan and the date on which any
individual ceases to be a Member). The determination of the Committee
as to the interpretation of the Plan or any disputed question shall be
conclusive and final to the extent permitted by applicable law.
10.09 PRUDENT CONDUCT
The members of the Committee shall use that degree of care, skill,
prudence and diligence that a prudent man acting in a like capacity and
familiar with such matters would use in his or her conduct of a similar
situation.
10.10 SERVICE IN MORE THAN ONE FIDUCIARY CAPACITY
Any individual, entity or group of persons may serve in more than one
fiduciary capacity with respect to the Plan and/or the funds of the
Plan.
10.11 LIMITATION OF LIABILITY
The Employer, the Board of Directors, the directors of an Employer, the
members of the Committee, and any officer, Employee or agent of the
Employer shall not incur any liability individually or on behalf of any
other individuals or on behalf of the Employer for any act or failure
to act, made in good faith in relation to the Plan or the funds of the
Plan. However, this limitation shall not act to relieve any such
individual or the Employer from a responsibility or liability for any
fiduciary responsibility, obligation or duty under Part 4, Title I of
ERISA.
10.12 INDEMNIFICATION
The members of the Committee, the Board of Directors, and the
directors, officers, employees and agents of the Employer shall be
indemnified against any and all liabilities arising by reason of any
act, or failure to act, in relation to the Plan or the funds of the
Plan, including, without limitation, expenses reasonably incurred in
the defense of any claim relating to the Plan or the funds of the Plan,
and amounts paid in any compromise or settlement relating to the Plan
or the funds of the Plan, except for actions or failures to act made in
bad faith. The foregoing indemnification shall be from the funds of the
Plan to the extent of those funds and to the extent permitted under
applicable law; otherwise from the assets of the Employer.
10.13 APPOINTMENT OF INVESTMENT MANAGER
The Committee may, in its discretion, appoint one or more investment
managers (within the meaning of Section 3(38) of ERISA) to manage
(including the power to acquire and dispose of) all or part of the
assets of the Plan, as the Committee shall designate. In that event
authority over and responsibility for the management of the assets so
designated shall be the sole responsibility of that investment manager.
10.14 NAMED FIDUCIARY
For purposes of ERISA, the members of the Committee shall be the named
fiduciaries of the Plan.
10.15 VALUATION DATE
The Committee shall establish procedures for determining the Valuation
Dates which shall apply for withdrawals, distributions, or other
relevant purposes. Valuation Dates need not be the same for all
purposes. The Investment Funds shall be valued on each business day.
<PAGE>
ARTICLE 11. MANAGEMENT OF FUNDS
11.01 TRUST AGREEMENT
All the funds of the Plan shall be held by a Trustee appointed from
time to time by the Board of Directors under a trust agreement adopted,
or as amended, by the Board of Directors for use in providing the
benefits of the Plan and paying Plan expenses not paid directly by the
Employer. An Employer shall have no liability for the payment of
benefits under the Plan nor for the administration or management of the
funds paid over to the Trustee.
11.02 EXCLUSIVE BENEFIT RULE
Except as otherwise provided in the Plan, no part of the corpus or
income of the funds of the Plan shall be used for, or diverted to,
purposes other than for the exclusive benefit of Members and other
persons entitled to benefits under the Plan and paying the expenses of
the Plan not paid directly by the Employer. No person shall have any
interest in, or right to, any part of the earnings of the funds of the
Plan, or any right in, or to, any part of the assets held under the
Plan, except as and to the extent expressly provided in the Plan.
<PAGE>
ARTICLE 12. AMENDMENT, MERGER AND TERMINATION
12.01 AMENDMENT OF PLAN
The Board of Directors reserves the right at any time and from time to
time, and retroactively if deemed necessary or appropriate, to amend in
whole or in part any or all of the provisions of the Plan. The
Committee may amend the Plan (a) to conform the Plan with governmental
regulations or requirements in order to allow the Plan to maintain its
qualified status under the applicable provisions of the Code, (b) to
comply with any state or federal statutes or regulations, which in the
opinion of counsel necessitates amendment of the Plan and (c) to make
any other changes to the Plan, provided such changes would not
significantly increase the cost of the Plan, change the level of
benefits provided under the Plan or modify the underlying policy
reflected by the Plan. However, no amendment shall make it possible for
any part of the funds of the Plan to be used for, or diverted to,
purposes other than for the exclusive benefit of persons entitled to
benefits under the Plan. No amendment shall be made which has the
effect of decreasing the balance of the Accounts of any Member or of
reducing the nonforfeitable percentage of the balance of the Accounts
of a Member below the nonforfeitable percentage computed under the Plan
as in effect on the date on which the amendment is adopted or, if
later, the date on which the amendment becomes effective. Any action to
amend the Plan by the Board of Directors shall be taken in such manner
as may be permitted under the by-laws of the Company, and any action to
amend the Plan by the Committee shall be taken at a meeting held in
person or by telephone or other electronic means of by unanimous
written consent in lieu of a meeting.
12.02 MERGER, CONSOLIDATION, OR TRANSFER
The Plan may not be merged or consolidated with, and its assets or
liabilities may not be transferred to, any other plan unless each
person entitled to benefits under the Plan would, if the resulting plan
were then terminated, receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the
benefit he or she would have been entitled to receive immediately
before the merger, consolidation, or transfer if the Plan had then
terminated.
12.03 ADDITIONAL PARTICIPATING EMPLOYERS
(a) If any company is or becomes an Affiliate, the Board of
Directors may include the Employees of that Affiliate in the
membership of the Plan upon appropriate action by that
Affiliate necessary to adopt the Plan. In that event, or if
any persons become Employees of an Employer as the result of
merger or consolidation or as the result of acquisition of all
or part of the assets or business of another company, the
Board of Directors shall determine to what extent, if any,
previous service with the subsidiary, associated or other
company shall be recognized under the Plan, but subject to the
continued qualification of the trust for the Plan as
tax-exempt under the Code.
(b) Any Affiliate may terminate its participation in the Plan upon
appropriate action by it. In that event the funds of the Plan
held on account of Members in the employ of that Affiliate,
and any unpaid balances of the Accounts of all Members who
have separated from the employ of that Affiliate, shall be
determined by the Committee. Those funds shall be distributed
as provided in Section 12.04 if the Plan with respect to such
Affiliate should be terminated, or shall be segregated by the
Trustee as a separate trust, pursuant to certification to the
Trustee by the Committee, continuing the Plan as a separate
plan for the employees of that company under which the board
of directors of that company shall succeed to all the powers
and duties of the Board of Directors, including the
appointment of the members of the Committee.
12.04 TERMINATION OF PLAN
(a) The Board of Directors may terminate the Plan or completely
discontinue contributions under the Plan for any reason at any
time. In case of termination or partial termination of the
Plan, or complete discontinuance of Employer contributions to
the Plan, the rights of affected Members to their Accounts
under the Plan as of the date of the termination or
discontinuance shall be nonforfeitable. The total amount in
each Member's Accounts shall be distributed, as the Committee
shall direct, to him or her or for his or her benefit or
continued in trust for his or her benefit,
(b) Upon termination of the Plan, Elective Deferrals, with
earnings thereon, shall only be distributed to Members if (i)
neither the Employer nor an Affiliate establishes or maintains
a successor defined contribution plan, and (ii) payment is
made to the Members in the form of a lump sum distribution (as
defined in Section 402(d)(4) of the Code, without regard to
clauses (i) through (iv) of subparagraph (A), subparagraph
(B), or subparagraph (F) thereof). For purposes of this
paragraph, a "successor defined contribution plan" is a
defined contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code
("ESOP") or a simplified employee pension as defined in
Section 408(k) of the Code ("SEP")) which exists at the time
the Plan is terminated or within the 12 month period beginning
on the date all assets are distributed. However, in no event
shall a defined contribution plan be deemed a successor plan
if fewer than two percent of the employees who are eligible to
participate in the Plan at the time of its termination are or
were eligible to participate under another defined
contribution plan of the Employer or an Affiliate (other than
an ESOP or a SEP) at any time during the period beginning 12
months before and ending 12 months after the date of the
Plan's termination.
12.05 DISTRIBUTION OF ACCOUNTS UPON A SALE OF ASSETS OR A SALE OF A
SUBSIDIARY
Upon the disposition by an Employer of at least 85 percent of the
assets (within the meaning of Section 409(d)(2) of the Code) used by
the Employer in a trade or business or upon the disposition by the
Employer of its interest in a subsidiary (within the meaning of Section
409(d)(3) of the Code), Elective Deferrals, with earnings thereon, may
be distributed to those Members who continue in employment with the
employer acquiring such assets or with the sold subsidiary, provided
that (a) the Employer maintains the Plan after the disposition, (b) the
buyer does not adopt the Plan or otherwise become a participating
employer in the Plan and does not accept any transfer of assets or
liabilities from the Plan to a plan it maintains in a transaction
subject to Section 414(l)(1) of the Code, (c) payment is made to the
Member in the form of a lump sum distribution (as defined in Section
402(d)(4) of the Code, without regard to clauses (i) through (iv) of
subparagraph (A), subparagraph (B), or subparagraph (F) thereof), and
(d) payment is made by the end of the second calendar year following
the calendar year in which the disposition occurred.
<PAGE>
ARTICLE 13. GENERAL PROVISIONS
13.01 NONALIENATION
Except as required by any applicable law, no benefit under the Plan
shall in any manner be anticipated, assigned or alienated, and any
attempt to do so shall be void. However, payment shall be made in
accordance with the provisions of any judgment, decree, or order which:
(a) creates for, or assigns to, a spouse, former spouse, child or
other dependent of a Member the right to receive all or a
portion of the Member's benefits under the Plan for the
purpose of providing child support, alimony payments or
marital property rights to that spouse, child or dependent,
(b) is made pursuant to a State domestic relations law,
(c) does not require the Plan to provide any type of benefit, or
any option, not otherwise provided under the Plan, and
(d) otherwise meets the requirements of Section 206(d) of ERISA,
as amended, as a qualified domestic relations order", as
determined by the Committee.
Notwithstanding anything herein to the contrary, if the amount payable
to the alternate payee under the qualified domestic relations order is
less than $5,000 such amount shall be paid in one lump sum as soon as
practicable following the qualification of the order. If the amount
exceeds $5,000, it may be paid as soon as practicable following the
qualification of the order if the order provides for such immediate
payment and the alternate payee consents thereto; otherwise it may not
be payable before the earlier of (i) the Member's termination of
employment or (ii) the Member's attainment of age 50.
13.02 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN
The establishment of the Plan shall not confer any legal rights upon
any Employee or other person for a continuation of employment, nor
shall it interfere with the rights of the Employer to discharge any
Employee and to treat him or her without regard to the effect which
that treatment might have upon him or her as a Member or potential
Member of the Plan.
13.03 FACILITY OF PAYMENT
If the Committee shall find that a Member or other person entitled to a
benefit is unable to care for his or her affairs because of illness or
accident or because he or she is a minor, the Committee may direct that
any benefit due him or her, unless claim shall have been made for the
benefit by a duly appointed legal representative, be paid to his or her
spouse, a child, a parent or other blood relative, or to a person with
whom he or she resides. Any payment so made shall be a complete
discharge of the liabilities of the Plan for that benefit.
13.04 INFORMATION
Each Member, Beneficiary or other person entitled to a benefit, before
any benefit shall be payable to him or her or on his or her account
under the Plan, shall file with the Committee the information that it
shall require to establish his or her rights and benefits under the
Plan.
13.05 TOP-HEAVY PROVISIONS
(a) The following definitions apply to the terms used in this
Section:
(i) "applicable determination date" means the last day of
the preceding Plan Year;
(ii) "top-heavy ratio" means the ratio of (A) the value of
the aggregate of the Accounts under the Plan for key
employees to (B) the value of the aggregate of the
Accounts under the Plan for all key employees and
non-key employees;
(iii) "key employee" means an employee who is in a category
of employees determined in accordance with the
provisions of Sections 416(i)(1) and (5) of the Code
and any regulations thereunder, and where applicable,
on the basis of the Employee's Statutory Compensation
from the Employer or an Affiliate;
(iv) "non-key employee" means any Employee who is not a
key employee;
(v) "applicable Valuation Date" means the Valuation Date
coincident with or immediately preceding the last day
of the preceding Plan Year;
(vi) "required aggregation group" means any other
qualified plan(s) of the Employer or an Affiliate in
which there are members who are key employees or
which enable(s) the Plan to meet the requirements of
Section 401(a)(4) or 410 of the Code; and
(vii) "permissive aggregation group" means each plan in the
required aggregation group and any other qualified
plan(s) of the Employer or an Affiliate in which all
members are non-key employees, if the resulting
aggregation group continues to meet the requirements
of Sections 401(a)(4) and 410 of the Code.
(b) For purposes of this Section, the Plan shall be "top-heavy"
with respect to any Plan Year if as of the applicable
determination date the top-heavy ratio exceeds 60 percent. The
top-heavy ratio shall be determined as of the applicable
Valuation Date in accordance with Sections 416(g)(3) and (4)
of the Code and Article 5 of this Plan, and shall take into
account any contributions made after the applicable Valuation
Date but before the last day of the Plan Year in which the
applicable Valuation Date occurs. For purposes of determining
whether the Plan is top-heavy, the account balances under the
Plan will be combined with the account balances or the present
value of accrued benefits under each other plan in the
required aggregation group and, in the Company's discretion,
may be combined with the account balances or the present value
of accrued benefits under any other qualified plan in the
permissive aggregation group. Distributions made with respect
to a Member under the Plan during the five-year period ending
on the applicable determination date shall be taken into
account for purposes of determining the top-heavy ratio;
distributions under plans that terminated within such
five-year period shall also be taken into account, if any such
plan contained key employees and therefore would have been
part of the required aggregation group.
(c) The following provisions shall be applicable to Members for
any Plan Year with respect to which the Plan is top-heavy:
(i) In lieu of the vesting requirements specified in
Section 6.02, a Member shall be vested in, and have a
nonforfeitable right to, his or her Matching
Contribution Account in accordance with the following
schedule:
NONFORFEITABLE
YEARS OF VESTING SERVICE PERCENTAGE
less than 2 years 0%
2 years 20
3 years 40
4 years 60
5 or more years 100
provided that in no event shall the Vested Portion of
his or her Matching Contribution Account be less than
the Vested Portion determined under Section 6.02.
(ii) An additional Employer contribution shall be
allocated on behalf of each Member (and each Employee
eligible to become a Member) who is a non-key
employee, and who has not separated from service as
of the last day of the Plan Year, to the extent that
the contributions made on his or her behalf under
Section 3.02 for the Plan Year (and not needed to
meet the contribution percentage test set forth in
Section 3.09) would otherwise be less than 3 percent
of his or her remuneration. However, if the greatest
percentage of remuneration contributed on behalf of a
key employee under Sections 3.01 and 3.02 for the
Plan Year (disregarding any contributions made under
Section 3.13 for the Plan Year) would be less than 3
percent, that lesser percentage shall be substituted
for "3 percent" in the preceding sentence.
Notwithstanding the foregoing provisions of this
subparagraph (ii), no minimum contribution shall be
made under this Plan with respect to a Member (or an
Employee eligible to become a Member) if the required
minimum benefit under Section 416(c)(1) of the Code
is provided to him or her by any other qualified
pension plan of the Employer or an Affiliate. If a
Member (or an Employee eligible to become a Member)
is covered under one or more qualified defined
contribution plans in addition to the Plan, the
minimum contribution may be made under such other
plan or plans. For the purposes of this subparagraph
(ii), remuneration has the same meaning as set forth
in Section 3.11(c).
(d) If the Plan is top-heavy with respect to a Plan Year and
ceases to be top-heavy for a subsequent Plan Year, the
following provisions shall be applicable:
(i) If a Member has completed at least three years of
Vesting Service on or before the last day of the most
recent Plan Year for which the Plan was top-heavy,
the vesting schedule set forth in paragraph (b)(i)
shall continue to be applicable.
(ii) If a Member has completed at least two, but less than
three, years of Vesting Service on or before the last
day of the most recent Plan Year for which the Plan
was top-heavy, the vesting provisions of Section 6.02
shall again be applicable; provided, however, that in
no event shall the vested percentage of a Member's
Matching Contribution Account be less than the
percentage determined under paragraph (b)(i) above as
of the last day of the most recent Plan Year for
which the Plan was top-heavy.
13.06 DISPOSITION OF UNCLAIMED BENEFITS
In the event that any check in payment of benefits under the Plan
remains outstanding at the expiration of six months from the date of
mailing of such check to the last known address of the payee, the
Committee shall notify the Trustee to stop payment of all such
outstanding checks and to suspend the issuance of any further checks,
if any, to such payee. If, during the two-year period (or such other
period as specified by the Committee) from the date of mailing of the
first such check, the Committee cannot establish contact with the payee
by taking such action as it deems appropriate and the payee does not
make contact with the Committee, the amount due such payee shall be
forfeited and used to reduce the Employer contributions. Upon such
cancellation, the Plan and the trust shall have no further liability
therefor except that, in the event such person or his or her
beneficiary later notifies the Committee of his or her whereabouts and
requests the payment or payments due to him or her under the Plan, the
amount so applied shall be paid to him or her in accordance with the
provisions of the Plan.
13.07 WRITTEN ELECTIONS
Any elections, notifications or designations made by a Member pursuant
to the provisions of the Plan shall be made in writing and filed with
the Committee in a time and manner determined by the Committee under
rules uniformly applicable to all employees similarly situated. The
Committee reserves the right to change from time to time the time and
manner for making notifications, elections or designations by Members
under the Plan if it determines after due deliberation that such action
is justified in that it improves the administration of the Plan. In the
event of a conflict between the provisions for making an election,
notification or designation set forth in the Plan and such new
administrative procedures, those new administrative procedures shall
prevail.
13.08 CONSTRUCTION
(a) The Plan shall be construed, regulated and administered under
ERISA and the laws of the State of the State of New Jersey,
except where ERISA controls.
(b) The titles and headings of the Articles and Sections in this
Plan are for convenience only. In the case of ambiguity or
inconsistency, the text rather than the titles or headings
shall control.
