<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
SOUTHWEST BANCORPORATION OF TEXAS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0519693
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
(Address of principal executive offices, including zip code)
_________________
SOUTHWEST BANK OF TEXAS 401(K) SAVINGS PLAN
(Full title of the plan)
DAVID C. FARRIES
EXECUTIVE VICE PRESIDENT
SOUTHWEST BANCORPORATION OF TEXAS, INC.
4400 POST OAK PARKWAY
HOUSTON, TEXAS 77027
(Name and address of agent for service)
(713) 235-8800
(Telephone number, including area code, of agent for service)
Copies to:
Michael P. Finch
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================
TITLE OF AMOUNT PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
REGISTERED (1) REGISTERED PRICE PER SHARE (2) OFFERING PRICE FEE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$1.00 par value 250,000 $23.675 $5,918,750 $1,794.00
====================================================================================
</TABLE>
(1) Pursuant to Rule 416(c) under the Securities Act of 1933, this Registration
Statement also covers an indeterminate amount of interests in the Plan
named above.
(2) Estimated, solely for purposes of calculating the registration fee, in
accordance with Rule 457(h).
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been filed with the Securities and
Exchange Commission (the "Commission") by Southwest Bancorporation of Texas,
Inc., a Texas corporation (the "Company"), are incorporated herein by reference
and made a part hereof:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
(b) The Company's Quarterly Report on Form 10-Q for the three month period
ended March 31, 1997.
(c) Description of the Common Stock contained in the Company's Prospectus
dated January 27, 1997 (the "Prospectus"), included in the Company's
Registration Statement on Form S-1 (Registration Statement No. 333-
16509).
All documents filed by the Company and the Plan pursuant to Sections 13(a)
and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), subsequent to the effective date of this Registration Statement, prior to
the filing of a post-effective amendment to this Registration Statement
indicating that all securities offered hereby have been sold or deregistering
all securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in any 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 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 to
constitute a part of this Registration Statement, except as so modified or
superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation of the Company provide that, subject to
certain limitations, its officers and directors (and certain other individuals
acting on behalf of the Company) will be indemnified by the Company against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by such persons, to the fullest extent permitted under the Texas
Business Corporation Act (the "TBCA"). Generally, Article 2.02-1 of the TBCA
permits a corporation to indemnify a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding because the person was or
is a director or officer if it is determined that such person (i) conducted
himself in good faith, (ii) reasonably believed (a) in the case of conduct in
his official capacity as a director or officer of the corporation, that his
conduct was in the corporation's best interest, or (b) in other cases, that his
conduct was at least not opposed to the corporation's best interests, and (iii)
in the case of any criminal proceeding, had no reasonable cause to believe that
his conduct was unlawful. In addition, the TBCA requires a corporation to
indemnify a director or officer for any action that such director or officer is
wholly successful in defending on the merits.
The Company's Articles of Incorporation provide that a director of the
Company will not be liable to the corporation for monetary damages for an act or
omission in the director's capacity as a director, except to the extent not
permitted by law. Texas law does not permit exculpation of liability in the
case of (i) a breach of the director's duty of loyalty to the corporation or the
shareholders, (ii) an act or omission not in good faith that involves
intentional misconduct or a knowing violation of the law, (iii) a transaction
from which a director received an improper benefit,
-2-
<PAGE>
whether or not the benefit resulted from an action taken within the scope of the
director's office, (iv) an action or omission for which the liability of the
director is expressly provided by statute, or (v) an act related to an unlawful
stock repurchase or dividend.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
*4.1 Articles of Incorporation of the Company (Exhibit 3.1).
*4.2 Amendment dated December 18, 1996 to Articles of Incorporation
of the Company (Exhibit 3.3).
*4.3 Bylaws of the Company, restated as of December 31, 1996 (Exhibit
3.2).
4.4 Southwest Bank of Texas 401(k) Savings Plan as amended and
restated as of January 1, 1994 (the "401(k) Plan").
4.5 First Amendment to the 401(k) Plan, dated November 15, 1994.
4.6 Second Amendment of the 401(k) Plan, dated January 1, 1996.
4.7 Third Amendment to the 401(k) Plan, dated December 17, 1996.
4.8 Fourth Amendment to the 401(k) Plan, dated May 1, 1997.
5.1 Opinion of Vinson & Elkins L.L.P.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
24.1 Powers of Attorney (included on signature page).
_____________________________
* Incorporated by reference to the Exhibit number shown in parentheses filed
with the Company's Form S-1 Registration Statement No. 333-16509.
The Registrant has submitted the Plan and will submit all amendments
thereto to the Internal Revenue Service ("IRS") in a timely manner and has made
or will make all changes thereto required by the IRS in order to qualify the
Plan.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "1933 Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
-3-
<PAGE>
(2) That, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the 1933 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 1933 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 1933 Act and will be governed by the final
adjudication of such issue.
-4-
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-8 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON THE 28TH DAY OF MAY,
1997.
SOUTHWEST BANCORPORATION OF TEXAS,
INC.
By: /s/ WALTER E. JOHNSON
-----------------------------------
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Paul B. Murphy, Jr., David C. Farries and R. John
McWhorter, or any of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WALTER E. JOHNSON Chairman of the Board and Chief May 28, 1997
- --------------------------------- Executive Officer (Principal Executive
Walter E. Johnson Officer)
/s/ DAVID C. FARRIES Executive Vice President, Treasurer and May 28, 1997
- --------------------------------- Secretary (Principal Financial Officer)
David C. Farries
/s/ R. JOHN McWHORTER Vice President and Controller May 28, 1997
- --------------------------------- (Principal Accounting Officer)
R. John McWhorter
/s/ J. DAVID HEANEY Director May 28, 1997
- ---------------------------------
J. David Heaney
/s/ JOHN W. JOHNSON Director May 28, 1997
- ---------------------------------
John W. Johnson
/s/ JOHN B. BROCK III Director May 28, 1997
- ---------------------------------
John B. Brock III
/s/ ERNEST H. COCKRELL Director May 28, 1997
- ---------------------------------
Ernest H. Cockrell
/s/ WILHELMINA R. MORIAN Director May 28, 1997
- ---------------------------------
Wilhelmina R. Morian
/s/ PAUL B. MURPHY, JR. Director and President May 28, 1997
- ---------------------------------
Paul B. Murphy, Jr.
/s/ ANDRES PALANDJOGLOU Director May 28, 1997
- ---------------------------------
Andres Palandjoglou
/s/ MICHAEL T. WILLIS Director May 28, 1997
- ---------------------------------
Michael T. Willis
</TABLE>
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<PAGE>
EXHIBIT 4.4
SOUTHWEST BANK OF TEXAS
401(k) SAVINGS PLAN
As amended and restated
as of
January 1, 1994
<PAGE>
SOUTHWEST BANK OF TEXAS
401(K) SAVINGS PLAN
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.01 "Account"................................................2
1.02 "Accounting Date"........................................2
1.03 "Accrued Benefit"........................................2
1.04 "Administrative Committee"...............................2
1.05 "Beneficiary"............................................2
1.06 "Break in Service".......................................2
1.07 "Code"...................................................2
1.08 "Compensation"...........................................3
1.09 "Determination of Top Heavy Status"......................4
1.10 "Disability".............................................6
1.11 "Effective Date".........................................6
1.12 "Employee"...............................................6
1.13 "Employer"...............................................6
1.14 "ERISA"..................................................7
1.15 "Fiduciary"..............................................7
1.16 "Forfeiture Break in Service"............................7
1.17 "Highly Compensated Employee"............................7
1.18 "Hour of Service"........................................8
1.19 "Leased Employee"........................................9
1.20 "Normal Retirement Age"..................................9
1.21 "Normal Retirement Date"................................10
1.22 "Participant"...........................................10
1.23 "Plan"..................................................10
1.24 "Plan Administrator"....................................10
1.25 "Plan Entry Date".......................................10
1.26 "Plan Year".............................................10
1.27 "Retirement"............................................10
1.28 "Separation from Service"...............................10
1.29 "Trust".................................................10
1.30 "Trust Fund"............................................10
1.31 "Trustee"...............................................10
1.32 "Vested"................................................10
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.............................................11
2.02 YEAR OF SERVICE - ELIGIBILITY/PARTICIPATION.............11
2.03 BREAK IN SERVICE - ELIGIBILITY/PARTICIPATION............11
2.04 PARTICIPATION UPON REEMPLOYMENT.........................11
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<PAGE>
2.05 OMISSION OF ELIGIBLE EMPLOYEE...........................11
2.06 INCLUSION OF INELIGIBLE EMPLOYEE........................11
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT..................................................12
3.02 SALARY REDUCTION........................................13
3.03 SPECIAL RULES FOR DEFERRAL CONTRIBUTIONS................13
3.04 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST.................14
3.05 NONDISCRIMINATION RULES FOR EMPLOYER
MATCHING CONTRIBUTIONS/EMPLOYEE CONTRIBUTIONS...........19
3.06 MULTIPLE USE LIMITATION.................................21
3.07 DETERMINATION OF CONTRIBUTION...........................22
3.08 TIME OF PAYMENT OF CONTRIBUTION.........................22
3.09 CONTRIBUTION ALLOCATION.................................22
3.10 FORFEITURE ALLOCATION...................................25
3.11 ACCRUAL OF BENEFIT......................................25
3.12 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS....27
3.13 DEFINITIONS - ARTICLE III...............................29
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT VOLUNTARY CONTRIBUTION......................33
4.02 PARTICIPANT ROLLOVER CONTRIBUTIONS......................33
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 TERMINATION OF SERVICE UPON DEATH, DISABILITY OR
RETIREMENT..............................................35
5.02 TERMINATION OF SERVICE OTHER THAN UPON DEATH,
DISABILITY OR RETIREMENT................................35
5.03 CASHOUT DISTRIBUTION TO PARTIALLY
VESTED PARTICIPANTS/RESTORATION OF FORFEITED
MATCHING AND EMPLOYER CONTRIBUTION ACCOUNT..............35
5.04 SEGREGATED ACCOUNT FOR REPAID AMOUNT....................37
5.05 YEAR OF SERVICE - VESTING...............................37
5.06 INCLUDED YEARS OF SERVICE - VESTING.....................37
5.07 FORFEITURE OCCURS.......................................38
ARTICLE VI
TIME AND METHODS OF PAYMENT OF BENEFITS
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT......................39
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT....................41
6.03 BENEFIT PAYMENT ELECTIONS...............................44
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING
SPOUSES.................................................45
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<PAGE>
6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY..46
6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY........47
6.07 HARDSHIP/IN-SERVICE DISTRIBUTION RULES FROM
DEFERRAL CONTRIBUTIONS ACCOUNT..........................48
6.08 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS...........49
6.09 DIRECT ROLLOVER.........................................50
ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE................................52
7.02 NO LIABILITY............................................52
7.03 INDEMNITY OF COMMITTEE..................................52
7.04 EMPLOYER DIRECTION OF INVESTMENT........................52
7.05 AMENDMENT TO VESTING SCHEDULE...........................52
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION.................................54
8.02 NO BENEFICIARY DESIGNATION..............................54
8.03 PERSONAL DATA TO COMMITTEE..............................55
8.04 ADDRESS FOR NOTIFICATION................................55
8.05 ASSIGNMENT OR ALIENATION................................55
8.06 NOTICE OF CHANGE IN TERMS...............................55
8.07 LITIGATION AGAINST THE TRUST............................55
8.08 INFORMATION AVAILABLE...................................56
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS.................56
8.10 PARTICIPANT DIRECTION OF INVESTMENT.....................57
ARTICLE IX
ADMINISTRATIVE DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNT
9.01 MEMBERS' COMPENSATION EXPENSES..........................58
9.02 TERM AND NUMBER.........................................58
9.03 POWERS..................................................58
9.04 GENERAL.................................................58
9.05 FUNDING POLICY..........................................59
9.06 MANNER OF ACTION........................................59
9.07 AUTHORIZED REPRESENTATIVE...............................59
9.08 INTERESTED MEMBER.......................................59
9.09 INDIVIDUAL ACCOUNTS.....................................59
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT..................60
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME, GAIN
OR LOSS.................................................60
9.12 INDIVIDUAL STATEMENT....................................61
9.13 ACCOUNT CHARGED.........................................62
9.14 UNCLAIMED ACCOUNT PROCEDURE.............................62
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<PAGE>
ARTICLE X
TRUSTEE, POWERS AND DUTIES
10.01 ACCEPTANCE..............................................63
10.02 RECEIPT OF CONTRIBUTIONS................................63
10.03 INVESTMENT POWERS.......................................63
10.04 RECORDS AND STATEMENTS..................................65
10.05 FEES AND EXPENSES FROM FUND.............................66
10.06 PARTIES TO LITIGATION...................................66
10.07 PROFESSIONAL AGENTS.....................................66
10.08 DISTRIBUTION OF CASH OR PROPERTY........................66
10.09 DISTRIBUTION DIRECTIONS.................................66
10.10 THIRD PARTY.............................................66
10.11 RESIGNATION.............................................67
10.12 REMOVAL.................................................67
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE....................67
10.14 VALUATION OF TRUST......................................67
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER
APPOINTED...............................................67
10.16 INVESTMENT IN GROUP TRUST FUND..........................68
ARTICLE XI
MISCELLANEOUS
11.01 EVIDENCE................................................69
11.02 NO RESPONSIBILITY FOR EMPLOYER ACTION...................69
11.03 FIDUCIARIES NOT INSURERS................................69
11.04 WAIVER OF NOTICE........................................69
11.05 SUCCESSORS..............................................69
11.06 WORD USAGE..............................................69
11.07 STATE LAW...............................................69
11.08 EMPLOYMENT NOT GUARANTEE................................69
ARTICLE XII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
12.01 EXCLUSIVE BENEFIT.......................................71
12.02 AMENDMENT BY EMPLOYER...................................71
12.03 DISCONTINUANCE..........................................72
12.04 FULL VESTING ON TERMINATION.............................72
12.05 MERGER/DIRECT TRANSFER..................................72
12.06 TERMINATION.............................................73
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<PAGE>
SOUTHWEST BANK OF TEXAS
401(K) SAVINGS PLAN
Southwest Bank of Texas, N.A., a corporation organized under the laws of
the State of Texas, makes this Agreement with David Farries, Paul Murphy, Sharon
K. Sokol and Kim Zabin, Trustees.
WITNESSETH:
SOUTHWEST BANK OF TEXAS 401(k) SAVINGS PLAN continues, within this Plan and
Trust Agreement, the Plan formerly known as the Southwest Bank of Texas National
Association Savings Plan for the administration and distribution of
contributions made by the Employer for the purpose of permitting Participants to
save for their retirement with pre-tax dollars and rewarding eligible Employees
for past service. This Plan is an amended plan, in restated form, the original
plan being established on the 1st day of January, 1985. The provisions of this
Plan, as amended, apply solely to an Employee whose employment with the Employer
terminates on or after the restated Effective Date of the Employer's Plan. If
an Employee's employment with the Employer terminates prior to the restated
Effective Date, that Employee is entitled to benefits under the Plan formerly
known as the Southwest Bank of Texas National Association Savings Plan as that
Plan existed on the date of the employee's termination of employment. This Plan
is intended to be the type commonly referred to as a "profit sharing plan with a
cash or deferred arrangement".
Now, therefore, in consideration of their mutual covenants, the Employer
and the Trustee agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
1.01 "Account" means the separate account(s) which the Plan Administrator
or the Trustee maintains for a Participant under the Plan.
1.02 "Accounting Date" means March 30, June 30, September 30, and December 30
of each Plan Year. Unless otherwise specified in the Plan, the Plan
Administrator will make all plan allocations for a particular Plan Year
as of the Accounting Date of that Plan Year.
1.03 "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date. A Participant's Account includes his
"Deferral Contributions Account" and his "Employer Contributions
Account."
1.04 "Administrative Committee" means the Employer's Administrative Committee
as from time to time constituted pursuant to Article I.
1.05 "Beneficiary" means a person designated by a Participant who is or may
become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan remains a Beneficiary under the
Plan until the Trustee has fully distributed his benefit to him. A
Beneficiary's right to (and the Plan Administrator's or a Trustee's duty
to provide to the Beneficiary) information or data concerning the Plan
does not arise until he first becomes entitled to receive a benefit
under the Plan.
1.06 "Break in Service" means a Participant's failure to complete at least
five hundred and one (501) Hours of Service with the Employer during any
Plan Year. This concept of "Break in Service" has no application to
Participants who are Vested upon termination of employment.
Solely for purposes of determining whether the Employee incurs a Break
in Service under any provision of this Plan, the Plan Administrator must
credit Service during an Employee's unpaid absence period due to
maternity or paternity leave. The Plan Administrator considers an
Employee on maternity or paternity leave if the Employee's absence is
due to the Employee's pregnancy, the birth of the Employee's child, the
placement with the Employee of an adopted child, or the care of the
Employee's child immediately following the child's birth or placement.
The Plan Administrator credits Service under this Section 1.06 on the
basis of a Service, as described in Section 1.30, the Employee would
receive if he were paid during the absence period. The Plan
Administrator will credit only the Service necessary to prevent an
Employee's Break in Service. The Plan Administrator credits all Service
described in this Section 1.06 to the computation period in which the
absence period begins or, if the Employee does not need the Service to
prevent a Break in Service in the computation period in which his
absence period begins, the Plan Administrator credits the Service to the
immediately following computation period.
1.07 "Code" means the Internal Revenue Code of 1986, as amended.
-2-
<PAGE>
1.08 "Compensation" means the Participant's W-2 wages for purposes of federal
income tax withholding under Code section 3401(a), excluding bonuses,
reimbursements or other expenses allowances, fringe benefits (cash and
noncash) and moving expenses, but determined without regard to any rules
that limit remuneration included in wages based on the nature, except as
otherwise excluded, or location of the employment or the services
performed. Compensation also includes elective contributions made by the
Employer on the Employee's behalf. "Elective contributions" are amounts
excludable from the Employee's gross income under Code sections 125,
402(a)(8), 402(h) or 403(b), and contributed by the Employer, at the
Employee's election, to a Code section 401(k) arrangement, a Simplified
Employee Pension, cafeteria plan or tax-sheltered annuity. The term
"Compensation" does not include:
(i) Employer contributions (other than "elective contributions") to a
plan of deferred compensation to the extent the contributions are
not included in the gross income of the Employee for the taxable
year in which contributed, employer contributions on behalf of an
Employee to a Simplified Employee Pension Plan to the extent such
contributions are excludable from the Employee's gross income, and
any distributions from a plan of deferred compensation, regardless
of whether such amounts are includible in the gross income of the
Employee when distributed.
(ii) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by an Employee
either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture.
(iii) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option.
(iv) Other amounts which receive special tax benefits, such as premiums
for group term life insurance (but only to the extent that the
premiums are not includible in the gross income of the Employee).
Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.08, unless the Plan reference specifies a
modification to this definition. The Plan Administrator will take into
account all Compensation for the entire Plan Year.
(A) LIMITATIONS ON COMPENSATION.
(1) COMPENSATION DOLLAR LIMITATION. For any Plan Year beginning
after December 31, 1988, the Plan Administrator must take into
account only the first $200,000 (or beginning January 1, 1990,
such larger amount as the Commissioner of Internal Revenue may
prescribe) of any Participant's Compensation. For any Plan
Year beginning prior to January 1, 1989, this $200,000
limitation (but not the family aggregation requirement)
applies only if the Plan is top heavy for such Plan Year.
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<PAGE>
(2) APPLICATION OF COMPENSATION LIMITATION TO CERTAIN FAMILY
MEMBERS. The $200,000 Compensation limitation applies to the
combined Compensation of the Employee and of any family member
aggregated with the Employee under Section 1.17 who is either
(i) the Employee's spouse; or (ii) the Employee's lineal
descendant under the age of 19. If, for a Plan Year, the
combined Compensation of the Employee and such family members
who are Participants entitled to an allocation for that Plan
Year exceeds the $200,000 (or adjusted) limitation,
"Compensation" for each such Participant, for purposes of the
contribution and allocation provisions of Article III, means
his Adjusted Compensation. Adjusted Compensation is the amount
which bears the same ratio to the $200,000 (or adjusted)
limitation as the affected Participant's Compensation (without
regard to the $200,000 Compensation limitation) bears to the
combined Compensation of all the affected Participants in the
family unit.
(B) NONDISCRIMINATION. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees,
Compensation means Compensation as defined in this Section 1.08.
The Employer also may elect to use an alternate nondiscriminatory
definition, in accordance with the requirements of Code (S) 414(s)
and the regulations issued under that Code section. In determining
Compensation under this Section 1.08(B), the Employer may elect to
include all elective contributions made by the Employer on behalf
of the Employees. The Employer's election to include elective
contributions must be consistent and uniform with respect to
Employees and all plans of the Employer for any particular Plan
Year. The Employer may make this election to include elective
contributions for nondiscrimination testing purposes, irrespective
of whether this Section 1.08 includes elective contributions in
the general Compensation definition applicable to the Plan.
1.09 "Determination of Top Heavy Status". If this Plan is the only qualified
plan maintained by the Employer, the Plan is top heavy for a Plan Year
if the top heavy ratio as of the Determination Date exceeds 60%. The top
heavy ratio is a fraction, the numerator of which is the sum of the
present value of Accrued Benefits of all Key Employees as of the
Determination Date and the denominator of which is a similar sum
determined for all Employees. The Plan Administrator must include in the
top heavy ratio, as part of the present value of Accrued Benefits, any
contribution not made as of the Determination Date but includible under
Code section 416 and the applicable Treasury regulations, and
distributions made within the Determination Period. The Plan
Administrator must calculate the top heavy ratio by disregarding the
Accrued Benefit (and distributions, if any, of the Accrued Benefit) of
any Non-key Employee who was formerly a Key Employee, and by
disregarding the Accrued Benefit (including distributions, if any, of
the Accrued Benefit) of an individual who has not received credit for at
least one Hour of Service with the Employer during the Determination
Period. The Plan Administrator must calculate the top heavy ratio,
including the extent to which it must take into account distributions,
rollovers and transfers, in accordance with Code section 416 and the
regulations under that Code section.
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If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is
terminated, this Plan is top heavy only if it is part of the Required
Aggregation Group, and the top heavy ratio for the Required Aggregation
Group and for the Permissive Aggregation Group, if any, each exceeds 60%.
The Plan Administrator will calculate the top heavy ratio in the same
manner as required by the first paragraph of this Section 1.09, taking into
account all plans within the Aggregation Group. To the extent the Plan
Administrator must take into account distributions to a Participant, the
Plan Administrator must include distributions from a terminated plan which
would have been part of the Required Aggregation Group if it were in
existence on the Determination Date. The Plan Administrator will calculate
the present value of Accrued Benefits under defined benefit plans or
simplified employee pension plans included within the group in accordance
with the terms of those plans, Code section 416 and the regulations under
that Code section. If a Participant in a defined benefit plan is a Non-key
Employee, the Plan Administrator will determine his Accrued Benefit under
the accrual method, if any, which is applicable uniformly to all defined
benefit plans maintained by the Employer or, if there is no uniform method,
in accordance with the slowest accrual rate permitted under the fractional
rule accrual method described in Code section 411(b)(1)(C). To calculate
the present value of benefits from a defined benefit plan, the Plan
Administrator will use the actuarial assumptions (interest and mortality
only) prescribed by the defined benefit plan(s) to value benefits for top
heavy purposes. If an aggregated plan does not have a valuation date
coinciding with the Determination Date, the Plan Administrator must value
the Accrued Benefits in the aggregated plan as of the most recent valuation
date falling within the twelve-month period ending on the Determination
Date, except as Code section 416 and applicable Treasury regulations
require for the first and second plan year of a defined benefit plan. The
Plan Administrator will calculate the top heavy ratio with reference to the
Determination Dates that fall within the same calendar year.
DEFINITIONS. For purposes of applying the provisions of this Section 1.09:
(a) "Key Employee" means, as of any Determination Date, any Employee or
former Employee (or Beneficiary of such Employee) who, for any Plan
Year in the Determination Period: (i) has Compensation in excess of 50%
of the dollar amount prescribed in Code section 415(b)(1)(A) (relating
to defined benefit plans) and is an officer of the Employer; (ii) has
Compensation in excess of the dollar amount prescribed in Code section
415(c)(1)(A) (relating to defined contribution plans) and is one of the
Employees owning the ten largest interests in the Employer; (iii) is a
more than 5% owner of the Employer; or (iv) is a more than 1% owner of
the Employer and has Compensation of more than $150,000. The
constructive ownership rules of Code section 318 (or the principles of
that section, in the case of an unincorporated Employer,) will apply to
determine ownership in the Employer. The number of officers taken into
account under clause (i) will not exceed the greater of 3 or 10% of the
total number (after application of the Code section 414(q)(8)
exclusions) of Employees, but no more than 50 officers. The Plan
Administrator will make the determination of who is a Key Employee in
accordance with Code section 416(i)(1) and the regulations under that
Code section.
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(b) "Non-key Employee" is an employee who does not meet the definition
of Key Employee.
(c) "Compensation" means Compensation as determined under Section 1.17
(relating to the Highly Compensated Employee definition).
(d) "Required Aggregation Group" means: (1) each qualified plan of the
Employer in which at least one Key Employee participates at any time
during the Determination Period; and (2) any other qualified plan of
the Employer which enables a plan described in clause (1) to meet
the requirements of Code section 401(a)(4) or Code section 410.
(e) "Permissive Aggregation Group" is the Required Aggregation Group
plus any other qualified plans maintained by the Employer, but only
if such group would satisfy in the aggregate the requirements of
Code section 401(a)(4) and Code section 410. The Plan Administrator
will determine the Permissive Aggregation Group.
(f) "Employer" means the Employer that adopts this Plan.
(g) "Determination Date" for any Plan Year is the Accounting Date of the
preceding Plan Year or, in the case of the first Plan Year of the
Plan, the Accounting Date of that Plan Year.
(h) "Determination Period" is the 5 year period ending on the
Determination Date.
1.10 "Disability" means the Participant, because of a physical or mental
disability, will be unable to perform the duties of his customary
position of employment (or is unable to engage in any substantial
gainful activity) for an indefinite period which the Plan Administrator
considers will be of long continued duration. A Participant also is
disabled if he incurs the permanent loss or loss of use of a member or
function of the body, or is permanently disfigured, and incurs a
Separation from Service. The Plan considers a Participant disabled on
the date the Plan Administrator determines the Participant satisfies the
definition of disability. A Participant may be required to submit to a
physical examination, by a licensed physician chosen by the Plan
Administrator, in order to confirm disability. The Plan Administrator
will apply the provisions of this Section 1.10 in a nondiscriminatory,
consistent and uniform manner.
1.11 "Effective Date" of this Plan as amended and restated is January 1,
1994.
1.12 "Employee" means any individual who receives compensation from the
Employer which is reportable on Form W-2, except that the term
"Employee" shall also include a Leased Employee as described in Section
1.19, irrespective of the fact that such a Leased Employee does not
receive compensation from the Employer which is reportable on Form W-2.
1.13 "Employer" means SOUTHWEST BANK OF TEXAS, N.A., and all subsidiaries
thereof who adopt this Plan. The term Employer includes all corporations
which are members of a
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controlled group of corporations (as defined in Code section 414(b)),
trades or businesses (whether or not incorporated) which are under
common control (as defined in Code section 414(c)) or an affiliated
service group (as defined in Code section 414(m) or Code section 414(o))
as a related group.
If the Employer is a member of a related group, the term "Employer"
includes the related group members for purposes of crediting Hours of
Service, determining years of Service and Breaks in Service under
Article II and V, applying the Participants Test and Coverage Test under
the suspension of accrual requirements of Section 3.11(c), applying the
limitations on allocations in Part 2 of Article III, applying the top
heavy rules and the minimum allocation requirements of Article III, the
definitions of Employee, Highly Compensated Employee, Compensation and
Leased Employee, and for any other purposes required by the applicable
Code section or by the Plan provisions. However, only SOUTHWEST BANK OF
TEXAS, N.A. and all subsidiaries thereof who adopt this Plan may
contribute to the Plan and only an Employee employed by SOUTHWEST BANK
OF TEXAS, N.A. and all subsidiaries thereof who adopt this Plan is
eligible to participate in this Plan.
1.14 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.15 "Fiduciary" means any person who (a) exercises any discretionary
authority or control as to management of the Plan or exercises any
authority or control respecting management or disposition of its assets,
(b) renders investment advise for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan, or
(c) has any discretionary authority or responsibility in the
administration of the Plan, including, but not limited to, the Trustee,
the Employer and its representatives, and the Administrator.
1.16 "Forfeiture Break in Service" means a Participant's incurring five (5)
consecutive Breaks in Service.
1.17 "Highly Compensated Employee" means an Employee who, during the Plan
Year or during the preceding 12 month period:
(a) is a more than 5% owner of the Employer (applying the constructive
ownership rules of Code section 318, and applying the principles of
Code section 318, for an unincorporated entity);
(b) has Compensation in excess of $75,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year) and is part
of the top-paid 20% group of employees (based on Compensation for
the relevant year);
(d) has Compensation in excess of 50% of the dollar amount prescribed in
Code section 415(b)(1)(A) (relating to defined benefit plans) and is
an officer of the Employer.
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If the Employee satisfies the definition in clause (b), (c), or (d) in the
Plan Year but not during the preceding 12 month period and does not satisfy
clause (a) in either period, the Employee is a Highly Compensated Employee
only if he is one of the 100 most highly compensated Employees for the Plan
Year. The number of officers taken into account under clause (d) will not
exceed the greater of 3 or 10% of the total number (after application of
the Code section 414(q) exclusions) of Employees, but no more than 50
officers. If no Employee satisfies the Compensation requirement in clause
(d) for the relevant year, the Plan Administrator will treat the highest
paid officer as satisfying clause (d) for that year.
For purposes of this Section 1.17, "Compensation" means Compensation as
defined in Section 1.08 except that bonuses, reimbursements or other
expense allowances, fringe benefits (cash and noncash) and moving expenses
will be included as Compensation. The Plan Administrator must make the
determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of the top paid 20% group, the
top 100 paid Employees, the number of officers includible in clause (d) and
the relevant Compensation, consistent with Code section 414(q) and
regulations issued under that Code section. The Employer may make a
calendar year election to determine the Highly Compensated Employees for
the Plan Year, as prescribed by Treasury regulations. A calendar year
election must apply to all plans and arrangements of the Employer. For
purposes of applying any nondiscrimination test required under the Plan or
under the Code, in a manner consistent with applicable Treasury
regulations, the Plan Administrator will not treat as a separate Employee a
family member (a spouse, a lineal ascendant or descendant, or a spouse of a
lineal ascendant or descendant) of a Highly Compensated Employee described
in clause (a) of this Section, or a family member of one of the ten Highly
Compensated Employees with the greatest Compensation for the Plan Year, but
will treat the Highly Compensated Employee and all such family members as a
single Highly Compensated Employee. This aggregation rule applies to a
family member even if that family member is a Highly Compensated Employee
without family aggregation.
The term "Highly Compensated Employee" also includes any former Employee
who separated from Service (or has a deemed Separation from Service, as
determined under Treasury regulations) prior to the Plan Year, performs no
Service for the Employer during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after
his 55th birthday. If the former Employee's Separation from Service
occurred prior to January 1, 1987, he is a Highly Compensated Employee only
if he satisfied clause (a) of this Section 1.17 or received Compensation in
excess of $50,000 during: (1) the year of his Separation from Service (or
the prior year); or (2) any year ending after his 54th birthday.
1.18 "Hour of Service" means:
(a) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties. The Plan Administrator credits
Hours of Service under this sub-Section (a) to the Employee for the
computation period in which the Employee performs the duties,
irrespective of when paid;
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(b) Each Hour of Service for back pay, irrespective of mitigation of
damages, to which the Employer has agreed or for which the Employee has
received an award. The Plan Administrator credits Hours of Service
under this sub-Section (b) to the Employee for the computation
period(s) to which the award or the agreement pertains rather than for
the computation period in which the award, agreement or payment is
made; and
(c) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties
during a computation period, such as leave of absence, vacation,
holiday, sick leave, illness, incapacity (including disability),
layoff, jury duty or military duty.
The Plan Administrator will not credit an Hour of Service under more than
one (1) of the above sub-Sections. A computation period for purposes of
this Section 1.18 is the Plan Year, year of Service period, Break in
Service period or other period, as determined under the Plan provision for
which the Plan Administrator is measuring an Employee's Hours of Service.
The Plan Administrator will resolve any ambiguity with respect to the
crediting of an Hour of Service in favor of the Employee.
1.19 "Leased Employee". The Plan treats a Leased Employee as an Employee
of the Employer. A Leased Employee is an individual (who otherwise is not
an employee of the Employer) who, pursuant to a leasing agreement between
the Employer and any other person, has performed services for the Employer
(or for the Employer and any persons related to the Employer within the
meaning of Code section 144(a)(3)) on a substantially full time basis for
at least one year and who performs services historically performed by
employees in the Employer's business field. If a Leased Employee is
treated as an Employee by reason of this Section 1.19 of the Plan,
"Compensation" includes compensation from the leasing organization which is
attributable to services performed for the Employer.
Safe harbor plan exception. The Plan does not treat a Leased Employee as
an Employee if the leasing organization covers the employee in a safe
harbor plan and, prior to application of this safe harbor plan exception,
20% or less of the Employer's Employees (other than Highly Compensated
Employees are Leased Employees. A safe harbor plan is a money purchase
pension plan providing immediate participation, full and immediate vesting,
and a nonintegrated contribution formula equal to at least 10% of the
employee's compensation without regard to employment by the leasing
organization on a specified date. The safe harbor plan must determine the
10% contribution on the basis of compensation as defined in Code section
415(c)(3) plus elective contributions (as defined in Section 1.08).
Other requirements. The Plan Administrator must apply this Section 1.19 in
a manner consistent with Code sections 414(n) and 414(o) and the
regulations issued under those Code sections.
1.20 "Normal Retirement Age" means attainment of age sixty-five (65) years.
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1.21 "Normal Retirement Date" means the Accounting Date coincident with or
next following the Participant's Separation from Service with the Employer
after attainment of Normal Retirement Age. For a Participant separating
from Service with the Employer prior to his attainment of Normal Retirement
Age, "Normal Retirement Date" means the first Accounting Date coincident
with or next following his attainment of Normal Retirement Age.
1.22 "Participant" means an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Section 2.01. An Employee
who becomes a Participant will remain a Participant under the Plan until
the Trustee has fully distributed his Vested Accrued Benefit to him.
1.23 "Plan" means the retirement plan, formerly known as the Southwest Bank
of Texas National Association Savings Plan, established by the Employer and
continued in the form of this Agreement, designated as the Southwest Bank
of Texas 401(k) Savings Plan.
1.24 "Plan Administrator" means the Employer unless the Employer designates
another person to hold the position of Plan Administrator. In addition to
other duties, the Plan Administrator has full responsibility for compliance
with the reporting and disclosure rules under ERISA as respects this
Agreement.
1.25 "Plan Entry Date" means the restated Effective Date and every January
1, April 1, July 1, and October 1 after the restated Effective Date.
1.26 "Plan Year" means the calendar year.
1.27 "Retirement" means a Participant's Separation from Service after
attaining Normal Retirement Age.
1.28 "Separation from Service" means the date the Employee no longer has an
employment relationship with the Employer maintaining this Plan. The
employment relationship is terminated on the earliest of the date the
Employee quits, retires, is discharged or dies, or the first anniversary of
the first date of a period during which an Employee is absent from service
for any other reason.
1.29 "Trust" means the separate Trust created under the Plan.
1.30 "Trust Fund" means all property of every kind held or acquired by the
Trustee under this Agreement.
1.31 "Trustee" means David Farries, Sharon K. Sokol, Paul Murphy and Kim
Zabin, or any successor in office who in writing accepts the position of
Trustee.
1.32 "Vested" means the extent to which a Participant's Accrued Benefit is
nonforfeitable. Other forms of the word "Vest" will have the meaning that
the suffix would normally connote, given the meaning of Vesting.
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ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY. Each Employee, except those Employees who are hourly
paid, becomes a Participant in the Plan on the first day of the quarter
coinciding with or next following the later of the date on which he
completes one Year of Service or attains age eighteen (18). Each Employee
who was a Participant in the Plan on the day before the Effective Date of
this restated Plan continues as a Participant in the Plan.
2.02 YEAR OF SERVICE - ELIGIBILITY/PARTICIPATION. "Year of Service" for
Eligibility and Participation purposes means an Employee shall be credited
with a Year of Service in any Computation Period that he completes 1,000
Hours of Service, unless such Service can be disregarded under the Break in
Service rules. "Computation Period" shall be measured on the twelve
consecutive month period beginning with the Employee's Employment
Commencement Date and each anniversary thereof.
2.03 BREAK IN SERVICE - ELIGIBILITY/PARTICIPATION. For purposes of
Eligibility and Participation in the Plan, a Break in Service occurs after
a twelve consecutive month period which begins on a Participant's
Separation from Service and ends on the earlier of: the date which is
twelve months later or the date a Participant is reemployed.
2.04 PARTICIPATION UPON REEMPLOYMENT. A Participant whose employment with
the Employer terminates will reenter the Plan as a Participant on the date
of his reemployment. An Employee who satisfies the Plan's eligibility
conditions but who terminates employment with the Employer prior to
becoming a Participant will become a Participant in the Plan on the later
of the Plan Entry Date on which he would have entered the Plan had he not
terminated employment or the date of his reemployment. Any employee who
terminates employment prior to satisfying the Plan's eligibility conditions
becomes a Participant in accordance with the provisions of Section 2.01.
2.05 OMISSION OF ELIGIBLE EMPLOYEE. If, in any Plan year, any Employee who
should be included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution by his
Employer for the year has been made, the Employer shall make a subsequent
contribution with respect to the omitted Employee in the amount which the
said Employer would have contributed with respect to him had he not been
omitted. Such contribution shall be made regardless of whether or not it
is deductible in whole or in part in any taxable year under applicable
provisions of the Code.
2.06 INCLUSION OF INELIGIBLE EMPLOYEE. If, in any Plan year, any person
who should not have been included as a Participant in the Plan is
erroneously included and discovery of such incorrect inclusion is not made
until after a contribution for the year has been made, the Employer shall
not be entitled to recover the contribution made with respect to the
ineligible person regardless of whether or not a deduction is allowable
with respect to such contribution. In such event, the amount contributed
with respect to the ineligible person shall constitute a forfeiture for the
Plan Year in which the discovery is made.
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ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
PART 1. AMOUNT OF EMPLOYER CONTRIBUTIONS AND PLAN ALLOCATIONS: SECTIONS 3.01
THROUGH 3.11
3.01 AMOUNT. For each Plan Year, the Employer will contribute to the Trust
the following amounts:
(a) DEFERRAL CONTRIBUTIONS. "Deferral Contributions" means the amount by
which each Participant has elected to reduce his Compensation for
the Plan Year under his salary reduction agreement on file with the
Plan Administrator.
(b) EMPLOYER MATCHING CONTRIBUTIONS. "Employer Matching Contributions"
means an amount equal to a percentage the Employer from time to time
may deem advisable of each Participant's "eligible contributions",
but only to the extent the Participant's eligible contributions do
not exceed 6% of the Participant's Compensation for the Plan Year.
For purposes of this Section 3.01, "eligible contributions" means
the Deferral Contributions allocated to the Participant for that
Plan Year. Deferral Contributions that are excess deferrals under
Article III are not included as "eligible contributions". For this
purpose: (a) excess deferrals relate first to Deferral Contributions
for the Plan Year not otherwise eligible for a Matching
Contribution; and (2) if the Plan Year is not a calendar year, the
excess deferrals for a Plan Year are the last deferrals made for a
calendar year. The Employer may designate all or a portion of its
Employer Matching Contributions as Qualified Matching Contributions.
(c) DISCRETIONARY CONTRIBUTIONS. "Discretionary Contributions" means the
additional amount the Employer may from time to time deem advisable.
The Employer, in its sole discretion, may designate all or any
portion of its Discretionary Contribution as a Qualified Nonelective
Contribution at the time it makes the contribution.
The Employer may make its contribution under the Plan, irrespective of
whether it has net profits. Although, the Employer may contribute to this
Plan irrespective of whether it has net profits, the Employer intends this
Plan to be a profit sharing plan for all purposes under the Code. The
Employer will not make a contribution to the Trust for any Plan Year to the
extent the contribution would exceed the Participants' "Maximum Permissible
Amount" under Section 3.13.
The Trustee, upon written request from the Employer, must return to the
Employer the amount of the Employer's contribution made by the Employer by
mistake of fact or the amount of the Employer's contribution disallowed as
a deduction under Code section 404. The Trustee will not return any portion
of the Employer's contribution under the provisions of this paragraph more
than one (1) year after the Employer made the contribution by mistake of
fact; or the disallowance of the contribution as a deduction, and then,
only to the extent of such disallowance.
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The Trustee will not increase the amount of the Employer contribution
returnable under this Section 3.01 for any earnings attributable to the
contribution, but the Trustee will decrease the Employer contribution
returnable for any losses attributable to it. The Trustee may require the
Employer to furnish it whatever evidence the Trustee deems necessary to
enable the Trustee to confirm the amount the Employer has requested be
returned is properly returnable under ERISA.
3.02 SALARY REDUCTION. The Employer contribution described in section
3.01(a) is an elective deferral (i.e. "401(k)") arrangement. An Employee
who is eligible to participate in the 401(k) Plan may file a salary
reduction agreement with the Plan Administrator. A salary reduction
agreement executed by such Employee may not be effective earlier than its
execution date, and in no event earlier than the Employee's Plan Entry Date
(or in the case of a reemployed Employee, his reparticipation date under
Article II). A salary reduction agreement must specify the percentage of
Compensation the eligible Employee wishes to defer to the Plan. The salary
reduction agreement will apply only to Compensation (including increases in
Compensation) which would otherwise become currently available to the
Employee after the effective date of the salary reduction agreement.
If the salary reduction agreement specifies the reduction amount as a
percentage of Compensation, the percentage may not be less than one percent
(1%) of Compensation. An Employee's Deferral Contributions for a Plan
Year, subject to the deferral limitations in Section 3.03, may not exceed
fifteen percent (15%) of his Compensation for each pay period. An Employee
may modify his salary reduction agreement, either to reduce or to increase
the amount of Deferral Contributions, as of any January 1, April 1, July 1
or October 1. The Employee will make this modification by filing a new
salary reduction agreement with the Plan Administrator as soon as
administratively practicable prior to the January 1, April 1, July 1 or
October 1 for which the modification is to be first effective. An Employee
may suspend his salary reduction agreement at any time. An Employee who
suspends his salary reduction agreement may file a new salary reduction
agreement effective as of any subsequent calendar quarter following six
calendar months from the effective date the suspension of salary reduction
agreement.
3.03 SPECIAL RULES FOR DEFERRAL CONTRIBUTIONS.
ANNUAL ELECTIVE DEFERRAL LIMITATION. A Participant's elective deferrals
for a calendar year may not exceed the limitation on elective deferrals
determined under section 402(g) of the Code. The 402(g) limitation is the
greater of $7,000 or the adjusted amount determined by the secretary of the
Treasury. If the Employer determines the Participant's elective deferrals
for a calendar year would exceed the limitation on elective deferrals under
section 402(g) of the Code for the calendar year, the Employer will not
make any additional Deferral Contributions with respect to that Participant
for the remainder of that calendar year, paying in cash to the Participant
any amounts which would cause the Deferral Contributions to exceed the
limitation on elective deferrals under section 402(g) of the Code. If,
after the close of a calendar year, the Plan Administrator determines a
Participant's Deferral Contributions exceed the limitation on elective
deferrals under section 402(g) of the Code, the Plan Administrator will
distribute the amount in excess of the limitation (the "excess
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deferral"), as adjusted for allocable income or loss, no later than April
15 of the following calendar year. If the Plan Administrator distributes
the excess deferral by the appropriate April 15, it may make the
distribution irrespective of any other provision under this Plan or under
the Code.
If a Participant participates in another Plan under which he makes elective
deferrals pursuant to a Code section 401(k) arrangement, elective deferrals
under a Simplified Employee Pension, or salary reduction contributions to a
tax sheltered annuity, irrespective of whether the Employer maintains the
other plan, the Participant may provide the Plan Administrator a written
claim for excess deferrals made for a calendar year. The Participant must
submit the claim no later than the March 1 following the close of the
particular calendar year and the claim will specify the amount of the
Participant's Deferral Contributions under this Plan which are excess
deferrals. If the Plan Administrator receives a timely claim, it will
distribute to the Participant the excess deferral, as adjusted for
allocable income or loss, which the Employee has assigned to this Plan in
accordance with the distribution procedure described in the immediately
preceding paragraph.
ALLOCABLE INCOME. For purposes of making a distribution of excess
deferrals pursuant to this Section 3.03, allocable income means net income
or net loss allocable to the excess deferrals for the calendar year in
which the Employee made the excess deferral and for the "gap period"
measured from the beginning of the next calendar year to the date of
distribution. If the distribution of excess deferrals occurs during the
calendar year in which the Employee made the excess deferral, the Plan
Administrator will treat as a "gap period" the period from he first day of
that calendar year to the date of distribution. The Plan Administrator
will determine the allocable income in the same manner as described in
Section 3.04 for excess contributions, except the numerator of the
allocation fraction will be the amount of the Employee's excess deferrals
and the denominator of the allocation fraction will be the Employee's
Accrued Benefit attributable to his elective deferrals.
3.04 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST. For each Plan Year, the
401(k) arrangement must satisfy one of the following actual deferral
percentage ("ADP") tests:
(i) The average ADP for the Highly Compensated Group does not exceed 1.25
times the average ADP of the Nonhighly Compensated Group; or
(ii) The average ADP for the Highly Compensated Group does not exceed the
average ADP for the Nonhighly Compensated Group by more than two (2)
percentage points (or the lesser percentage permitted by the multiple
use limitation in Section 3.11) and the average ADP for the Highly
Compensated Group is not more than twice the average ADP for the
Nonhighly Compensated Group .
Unless otherwise specified, for purposes of applying Section 3.01, the ADP
and ACP tests, the following definitions apply:
(a) "Compensation" means Compensation as defined in Section 1.08 for
applying Section 3.01 and as defined in section 1.17 for purposes of
applying the ADP and
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ACP tests. The Employer may elect to define Compensation to include or
exclude elective deferrals under a Code section 401(k) arrangement or under
a Simplified Employee Pension maintained by the Employee, and Compensation
paid by the Employer which is not currently includible in gross income
pursuant to Code sections 125 or 403(b). The Employer's election must be
consistent and uniform with respect to all Employees and all plans of the
Employer for any particular Plan Year. The Employer may change the election
provided the change does not result in discrimination in favor of the
Highly Compensated Employees. The Plan Administrator will disregard an
Eligible Employee's Compensation in excess of $200,000 (or the adjusted
limitation prescribed by the Secretary of the Treasury). The $200,000 (or
adjusted) limitation on Compensation will apply to the combined
Compensation of any family members aggregated under Section 1.17 who are
spouses and any aggregated lineal descendants who are under the age of 19.
(b) "Deferral Contributions" means the sum of the Deferral Contributions
the Employer contributes on the Eligible Employee's behalf for the Plan
Year, pursuant to section 3.01. "Elective Deferrals" are the Deferral
Contributions the Employer contributes to the Trust at the election of an
Eligible Employee. If the Code Section 401(k) arrangement includes a cash
or deferred feature, any portion of a cash or deferred contribution
contributed to the Trust because of the Employee's failure to make a cash
election is an Elective Deferral, but any portion of a cash or deferred
contribution over which the Employee does not have a election is not an
Elective Deferral. Elective Deferrals do not include amounts designated as
nondeductible employee contributions at the time of deferral or
contribution.
(c) "Distribution Restrictions" means a Plan will not permit distribution
of the Accrued Benefit attributable to the specified contribution (nor
earnings on those contributions) except in the event of (1) the
Participant's death, disability, termination of employment or attainment of
age 59 1/2, (2) financial hardship satisfying the requirements of Code
Section 401(k) and the applicable Treasury regulations, (3) Plan
termination, without establishment of a successor Defined Contribution Plan
(other than an ESOP), (4) a sale of substantially all of the assets (within
the meaning of Code section 409(d)(2)) used in a trade or business, but
only to an Employee who continues employment with the corporation acquiring
those assets, or (5) a sale by a corporation of its interest in a
subsidiary (within the meaning of Code section 409(d)(3), but only to an
Employee who continues employment with the subsidiary. For Plan Years
beginning after December 31, 1988, a distribution on account of financial
hardship, as described in clause (2), may not include earnings on elective
deferrals credited as of a date later than December 31, 1988, and may not
include Qualified Matching Contributions and Qualified Nonelective
Contributions, nor any earnings on such contributions, credited after 1988.
A distribution described in clauses (3), (4) and (5), if made, after March
31, 1988, must be in a lump sum distribution, as required under Code
Section 401(k)(10).
(d) "Eligible Employee" means (1) for purposes of the ADP test, a
Participant on whose behalf the Employer makes Deferral Contributions (as
described in Section 3.01) or
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who is eligible to elect Deferral Contributions for the Plan Year,
irrespective of whether the Employer actually makes Deferral Contributions
on behalf of the Participant and (2) for purposes of the ACP test, a
Participant who is eligible to receive an allocation of Employer Matching
Contributions (as described in Section 3.01) or would be eligible if he
made the type of contributions necessary to receive an allocation of
Matching Contributions. The Plan Administrator treats a Participant as an
Eligible Employee irrespective of whether the Participant is employed by
the Employer on the last day of the Plan Year.
(e) "Employer Matching Contributions" are contributions made by the
Employer on account of elective deferrals under a Code section 401(k)
arrangement. "Qualified Matching Contributions" are Employer Matching
Contributions which are one hundred percent (100%) Vested at all times and
which are subject to the Distribution restrictions described in paragraph
(c).
(f) "Employer Nonelective Contributions" are contributions made by the
Employer which are not subject to a deferral election by the Employee and
which are not matching contributions. "Qualified Nonelective
Contributions" are Employer Nonelective Contributions which are one hundred
percent (100%) Vested at all times and which are subject to the
Distribution Restrictions described in paragraph (c).
(g) "Highly Compensated Group" means the eligible Employees who are Highly
Compensated Employees for the Plan Year.
(h) "Nonhighly Compensated Group" means the Eligible Employees who are not
Highly Compensated Employees and are not family members treated as Highly
Compensated Employee under Section 1.17.
CALCULATION OF ADP. The "average ADP" for a group is the average of the
separate ADP's calculated for each Eligible Employee who is a member of
that group. An Eligible Employee's ADP for a Plan Year is the ratio of (1)
the sum of Deferral Contributions allocated to the Eligible Employee for
the Plan Year, to (2) his Compensation for the Plan Year. For aggregated
family members treated as a single Eligible Employee under Section 1.17,
the ADP of the family unit is the ADP determined by combining the Deferral
Contributions and Compensation of all aggregated family members. A
Nonhighly Compensated Employee's ADP does not include elective deferrals
made to this Plan or to any other Plan maintained by the Employer, to the
extent such elective deferrals exceed the limitation on elective deferrals
under section 402(g) of the Code.
The Plan Administrator may determine (in a manner consistent with Treasury
regulation) the ADP's of the Eligible Employees by taking into account
Qualified Nonelective Contributions or Qualified Matching Contribution, or
both, made to this Plan or to any other qualified Plan maintained by the
Employer. The Plan Administrator may not include Qualified Nonelective
Contributions in the ADP test unless the allocation of Employer Nonelective
Contributions is nondiscriminatory when the Plan Administrator takes into
account all Nonelective Contributions (including Qualified Nonelective
Contributions) and also when the Plan
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Administrator takes into account only those Qualified Nonelective
Contributions not used in the ADP test or the ACP Test described in Section
3.05. For Plan Years beginning after December 31, 1989, the Plan
Administrator may not include in the ADP test any Qualified Nonelective
Contributions or Qualified Matching Contributions under another qualified
plan unless that plan has the same plan year as this Plan. The Plan
Administrator must maintain records to demonstrate compliance with the ADP
test, including the extent to which the Plan used Qualified Nonelective
Contributions or Qualified Matching Contributions to satisfy the test.
SPECIAL AGGREGATION RULE FOR HIGHLY COMPENSATED EMPLOYEES. To determine
the ADP for any Highly Compensated Employee, the Deferral Contributions
taken into account must include any elective deferrals made by the Highly
Compensated Employee under any other Code section 401(k) arrangement
maintained by the Employer, unless the deferrals are to an ESOP. If the
Plans containing the Code 401(k) arrangements have different Plan Years,
the Plan Administrator will determine the combined deferral contributions
on the basis of the Plan Years ending in the same calendar year.
AGGREGATION OF CERTAIN CODE 401(K) ARRANGEMENTS. If the Employer treats
two plans as a unit for coverage or nondiscrimination purposes, the
Employer must combine the Code Section 401(k) arrangements under such Plans
to determine whether either Plan satisfies the ADP test. This aggregation
rule applies to the ADP determination for all Eligible Employees,
irrespective of whether an Eligible Employee is a Highly Compensated
Employee or a Nonhighly Compensated Employee. The Plan Administrator also
may elect to aggregate the Code Section 401(k) arrangements under Plans
which the Employer does not treat as a unit for coverage or
nondiscrimination purposes. For Plan Years beginning after December 31,
1989, an aggregation of Code Section 401(k) arrangements under this
paragraph does not apply to Plans which have different Plan Years, and for
Plan Years beginning after December 31, 1988, the Plan Administrator may
not aggregate an ESOP (or the ESOP portion of a Plan) with a non-ESOP Plan
(or non-ESOP portion of Plan).
CHARACTERIZATION OF EXCESS CONTRIBUTIONS. If, pursuant to this Section
3.04, the Plan Administrator has elected to include Qualified Matching
Contributions in the average ADP, the Plan Administrator will treat excess
contributions as attributable proportionately to Deferral Contributions and
to Qualified Matching Contributions allocated on the basis of those
Deferral Contributions. If the total amount of a Highly Compensation
Employee's excess contributions for the Plan Year exceeds his Deferral
Contributions or Qualified Matching Contributions for the Plan Year, the
Plan Administrator will treat the remaining portion of his excess
contributions as attributable to Qualified Nonelective Contributions. The
Plan Administrator will reduce the amount of excess contributions for a
Plan Year distributable to a Highly Compensated Employee by the amount of
excess deferrals (as defined in Section 3.30), if any, previously
distributed to that Employee for the Employee's taxable year ending in that
Plan Year.
DISTRIBUTION OF EXCESS CONTRIBUTIONS. If the Plan Administrator determines
the Plan fails to satisfy the ADP test for a Plan Year, it will distribute
the excess contributions as adjusted for allocable income or loss, no later
than the last day of the succeeding Plan Year.
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However, the Employer will incur an excise tax equal to ten percent (10%)
of the amount of excess contributions for a Plan Year not distributed to
the appropriate Highly Compensated Employees by 2 1/2 months following the
close of that Plan Year. The excess contributions are the amount of
Deferral Contributions and Qualified Nonelective Contributions allocated to
Highly Compensated Employees which causes the Plan to fail to satisfy the
ADP test. The Plan Administrator will distribute to each Highly
Compensated Employee his respective share of the excess contributions. The
Plan Administrator will determine the respective shares of excess
contributions. The Plan Administrator will determine the respective shares
of excess contributions by starting with the Highly Compensated Employee(s)
who has the greatest ADP, reducing his ADP to the next highest ADP, then,
if necessary, reducing the ADP of the Highly Compensated Employee(s) at the
next highest ADP level (including the ADP of the Highly Compensated
Employee(s) whose ADP the Plan Administrator already has reduced), and
continuing in this matter until the average ADP for the Highly Compensated
Group satisfies the ADP test. If the Highly Compensated Employee is a part
of an aggregated family group, the Plan Administrator, in accordance with
the applicable Treasury regulations, will determine each aggregated family
member's allocable share of the excess contributions assigned to the family
unit.
ALLOCABLE INCOME. To determine the amount of the corrective distribution
required under this section 3.04, the Plan Administrator must calculate the
allocable income for the Plan Year in which the excess contributions arose
and for the "gap period" measured from the beginning of the next Plan Year
to the date of the distribution. "Allocable income" means net income or
net loss. To calculate allocable income for the Plan year, the Plan
Administrator: (1) first will determine the net income or net loss for the
Plan year on the Highly Compensated Employee's Accrued Benefit attributable
to Deferral Contributions; and (2) then will multiply this net income or
net loss by the following fraction:
Amount of the Highly Compensated Employee's Excess Contribution
Accrued Benefit Attributable to Deferral Contributions
The Accrued Benefit attributable to Deferral Contributions includes the
Accrued Benefit attributable to Qualified Matching Contributions and
Qualified Nonelective Contributions taken into account in the ADP test for
the Plan Year or for any prior Plan year. For purposes of the denominator
of the fraction, the Plan Administrator will calculate the Accrued Benefit
attributable to Deferral Contributions as of the last day of the Plan Year
(without regard to the net income or net loss for the Plan year on that
Accrued Benefit).
To calculate allocable income for the "gap period," the Plan Administrator
will perform the same calculation as described in the preceding paragraph,
except in clause (1) the Plan Administrator will determine, as of the last
day of the month preceding the date of distribution, the net income or net
loss for the "gap period" and in clause (2) will calculate the Accrued
Benefit attributable to Deferral Contributions as of the day before the
distribution. If the Plan does not perform a valuation on the last day of
the month preceding the date of distribution, the Plan Administrator, in
lieu of the calculation described in this paragraph, will calculate
allocable income for each month in the "gap period" as equal to 10% of the
allocable income for the Plan Year. Under this alternate calculation, the
Plan
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Administrator will disregard for the month in which the distribution
occurs, if the Plan makes the distribution no later than the 15th day of
that month.
3.05 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING CONTRIBUTIONS/EMPLOYEE
CONTRIBUTIONS. For Plan Years beginning after December 31, 1986, the Plan
Administrator must determine whether the annual Employer Matching
Contributions (other than Qualified Matching Contributions used in the ADP
under Section 3.04), if any, and the Employee contributions, if any,
satisfy one of the following average contribution percentage ("ACP") tests:
(i) The ACP for the Highly Compensated Group does not exceed 1.25 times
the ACP of the Nonhighly Compensated Group; or
(ii) The ACP for the Highly Compensated Group does not exceed the ACP for
the Nonhighly Compensated Group by more than two percentage points (or
the lesser percentage permitted by the multiple use limitation in
Section 3.06) and the ACP of the Highly Compensated Group is not more
than twice the ACP for the Nonhighly Compensated Group.
CALCULATION OF ACP. The average contribution percentage for a group is the
average of the separate contribution percentages calculated for each
Eligible Employee who is a member of that group. An Eligible Employee's
contribution percentage for a Plan Year is the ratio of the Eligible
Employee's aggregate contributions for the Plan Year to the Employee's
Compensation for the Plan Year. "Aggregate contributions" are Employer
matching contributions (other than Qualified Matching Contributions used in
the ADP test under Section 3.04) and employee after tax contributions, if
any. For aggregated family members treated as a single Highly Compensated
Employee, the contribution percentage of the family unit is the
contribution percentage determined by combining the aggregate contributions
and Compensation of all aggregated family members.
The Plan Administrator, in a manner consistent with Treasury regulations,
may determine the contribution percentages of the Eligible Employees by
taking into account Qualified Nonelective Contributions (other than
Qualified Nonelective Contributions used in the ADP test under Section
3.04) or elective deferrals, or both, made to this Plan or to any other
qualified Plan maintained by the Employer. The Plan Administrator may not
include qualified nonelective contributions in the ACP test unless the
allocation of nonelective contributions is nondiscriminatory when Plan
Administrator takes into account all nonelective contributions (including
the qualified nonelective contributions) and also when the Plan
Administrator takes into account only the nonelective contributions not
used in either the ADP test described in Section 3.04) or the ACP test
described in this Section 3.05). The Plan Administrator may not include
Elective Deferrals in the ACP test, unless the Plan which includes the
Elective Deferrals satisfies the ADP test both with and without the
Elective Deferrals included in this ACP test. For Plan Years beginning
after December 31, 1989, the Plan Administrator may not include in the ACP
test any Qualified Nonelective Contributions or Elective Deferrals under
another qualified plan unless that plan has the same plan year as this
Plan. The Plan Administrator must maintain records to demonstrate
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compliance with ACP test, including the extent to which the Plan used
Qualified Nonelective Contributions or Elective Deferrals to satisfy the
test.
SPECIAL AGGREGATION RULE FOR HIGHLY COMPENSATED EMPLOYEES. To determine
the contribution percentage of any Highly Compensated Employee, the
aggregate contributions taken into account must include any Matching
Contributions (other than Qualified Matching Contributions used in the ADP
test) and any Employee contributions made on his behalf to any other plan
maintained by the Employer, unless the other plan is an ESOP. If the plans
have different plan years, the Plan Administrator will determine the
combined aggregate contributions on the basis of the plan years ending in
the same calendar year.
AGGREGATION OF CERTAIN PLANS. If the Employer treats two plans as a unit
for coverage or nondiscrimination purposes, the Employer must combine the
plans to determine whether either plan satisfies the ACP test. This
aggregation rule applies to the contribution percentage determination for
all Eligible Employees irrespective of whether an Eligible Employee is a
Highly Compensated Employee or a Nonhighly Compensated Employee. The Plan
Administrator also may elect to aggregate plans which the Employer does not
treat as a unit for coverage or nondiscrimination purposes. For Plan Years
beginning after December 31, 1989, an aggregation of plans under this
paragraph does not apply to plans which have different plan years and, for
Plan Years beginning after December 31, 1988, the Plan Administrator may
not aggregate an ESOP (or the ESOP portion of a plan) with a non ESOP plan
(or non ESOP portion of a plan).
DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. The Plan Administrator
will determine excess aggregate contributions after determining excess
deferrals under Section 3.03 and excess contributions under Section 3.04.
If the Plan Administrator determines the Plan fails to satisfy the ACP test
for a Plan Year, it must distribute the excess aggregate contributions, as
adjusted for allocable income, during the next Plan Year. However, the
Employer will incur an excise tax equal to 10% of the amount of excess
aggregate contributions for a Plan year not distributed to the appropriate
Highly Compensated Employees during the first 2-1/2 months of that next
Plan Year. The excess aggregation contributions are the amount of the
aggregate contributions allocated on behalf of the Highly Compensated
employees which causes the Plan to fail to satisfy the ACP test. The Plan
Administrator will distribute to each Highly Compensated Employee his
respective share of the excess aggregate contributions. The Plan
Administrator will determine the respective shares of excess aggregate
contributions by starting with the Highly Compensated Employee(s) who has
the greatest contribution percentage, reducing his contribution percentage
to the next highest contribution percentage then, if necessary, reducing
the contribution percentage of the Highly Compensated Employee(s) at the
next highest contribution percentage (including the contribution percentage
of the Highly Compensated Employee(s) whose contribution percentage the
Plan Administrator already has reduce), and continuing in this manner until
the ACP for the Highly Compensated Group satisfies the ACP test. If the
Highly Compensated Employee is part of an aggregated family group, the Plan
Administrator, in accordance with the applicable Treasury regulations, will
determine each aggregated family member's allocable share of the excess
aggregate contributions assigned to the family unit.
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ALLOCABLE INCOME. To determine the amount of the corrective distribution
required under this Section 3.05, the Plan Administrator must calculate the
allocable income for the Plan Year in which the excess aggregate
contributions arose and for the "gap period" measured from the beginning of
the next Plan Year to the date of the distribution. "Allocable income"
means net income or net loss. The Plan Administrator will determine
allocable income in the same manner as described in Section 3.04 for excess
contributions, except the numerator of the allocation fraction will be the
Highly Compensated Employee's excess aggregate contributions and the
denominator of the allocation fraction will be the Employee's Accrued
Benefit attributable to aggregate contributions and, if applicable, to
qualified nonelective contributions and elective deferral included in the
ACP test for the Plan Year or for any prior Plan Year.
CHARACTERIZATION OF EXCESS AGGREGATE CONTRIBUTIONS. The Plan Administrator
will treat a Highly Compensation Employee's allocable share of excess
aggregate contributions in the following priority: (1) first as
attributable to his Employee contributions which are voluntary
contributions, if any; (2) then as matching contributions allocable with
respect to excess contributions determined under the ADP test described in
Section 3.04; (3) then on a pro rata basis to matching contributions and to
the deferral contributions relating to those matching contributions which
the Plan Administrator has included in the ACP test; (4) then on a pro rata
basis to Employee contributions which are mandatory contributions, if any,
and to the matching contributions allocated on the basis of those mandatory
contributions; and (5) last to qualified nonelective contributions used in
the ACP test. To the extent the Highly Compensated Employee's excess
aggregate contributions are attributable to matching contributions, and he
is not 100% vested in his Accrued Benefit attributable to matching
contributions, the Plan Administrator will distribute on the vested portion
and forfeit the nonvested portion. The vested portion of the Highly
Compensated Employee's excess aggregate contributions attributable to
Employer matching contributions is the total amount of such excess
aggregate contributions (as adjusted for allocable income) multiplied by
his vested percentage (determined as of the last day of the Plan Year for
which the Employer made the matching contribution). The Plan will allocate
forfeited excess aggregate contributions to reduce Employer matching
contributions for the Plan Year following the Plan Year for which the
Employer made the matching contributions.
3.06 MULTIPLE USE LIMITATION. For Plan Years beginning after December 31,
1988, if at least one Highly Compensated Employee is includible in the ADP
test under Section 3.04 and in the ACP test under Section 3.05, the sum of
the Highly Compensated Group's ADP and ACP may not exceed the multiple use
limitation.
The multiple use limitation is the sum of (i) and (ii):
(i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated
Group under the Code section 401(k) arrangement; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within
the Plan Year of the Code section 401(k) arrangement.
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(ii) 2% plus the lesser of (i)(a) or (i)(b), but no more than twice the
lesser of (i)(a) or (i)(b).
The Plan Administrator, in lieu of determining the multiple use limitation
as the sum of (i) and (ii), may elect to determine the multiple use
limitation as the sum of (iii) and (iv).
(iii) 125% of the lesser of: (a) the ADP of the Nonhighly Compensated Group
under the Code Section 401(k) arrangement; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or
within the Plan Year of the Code Section 401(k) arrangement.
(iv) 2% plus the greater of (iii)(a) or (iii)(b), but no more than twice
the greater of (iii)(a) or (iii)(b).
The Plan Administrator will determine whether the Plan satisfies the
multiple use limitation after applying the ADP test under Section 3.04 and
ACP test under Section 3.05 and after making any corrective distributions
required by those Sections. If, after applying this Section 3.06, the Plan
Administrator determines the Plan has failed to satisfy the multiple use
limitation, the Plan Administrator will correct the failure by treating the
excess amount as excess aggregate contributions under Section 3.05. The
multiple use does not apply unless, prior to its application, the ADP and
the ACP of the Highly Compensated Employee Group each exceeds 125% of the
respective percentages for the Nonhighly Compensated Group.
3.07 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust
under the terms of the Plan.
3.08 TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its contribution for
each Plan Year in one (1) or more installments without interest. The
Employer must make its contribution to the Treasury within the time
prescribed by the Code or applicable Treasury regulations. Deferral
Contributions are Employer contributions for all purposes under this Plan,
except to the extent the Code or Treasury regulations prohibit the use of
these contributions to satisfy the qualification requirements of the Code.
3.09 CONTRIBUTION ALLOCATION.
(a) METHOD OF ALLOCATION. To make allocations under the Plan, the Plan
Administrator shall establish a Deferral Contributions Account, a
Qualified Matching Contributions Account, a Regular Matching
Contributions Account, a Qualified Nonelective Contributions Account
and an Employer Discretionary Contributions Account. The Plan
Administrator will allocate and credit each annual Employer
contribution to the Treasury as follows:
(1) DEFERRAL CONTRIBUTIONS. The Plan Administrator shall allocate to
each Participant's Deferral Contributions Account the Deferral
Contributions the
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Employer makes to the Treasury on behalf of the Participant for
the Plan Year.
(2) MATCHING CONTRIBUTIONS. The Plan Administrator shall allocate
the Matching Contributions and, to the extent the Employer makes
Qualified Matching Contributions, the Qualified Matching
Contributions to the Matching Contributions Account and the
Qualified Matching Contributions Account, respectively, of each
Participant who satisfies the accrual requirements of Section
3.11. The allocation of Matching Contributions and Qualified
Matching Contributions is in the same proportion that each
Participant's eligible contributions (as defined in Section 3.01)
bears to the total eligible contributions of all Participants,
taking into account only the eligible contributions subject to
the matching contribution formula.
SPECIAL ALLOCATION PROVISIONS FOR EMPLOYER MATCHING CONTRIBUTION
ACCOUNT AND QUALIFIED MATCHING CONTRIBUTIONS ACCOUNT. As of
January 1, 1994, the Employer Matching Contribution Account and
if applicable, the Qualified Matching Contribution Account will
be primarily invested in Employer securities. To accomplish
this, on September 30 of each year, the Plan Administrator will
initiate an annual Employer stock purchase using funds in the
Employer Matching Contribution Account and if applicable, the
Qualified Matching Contribution Account. The number of Employer
securities actually allocated to each Participant is dependent
upon the fair market value of the Employer securities as of each
September 30. The fair market value of Employer securities shall
be determined annually by an independent third-party appraiser.
Contributions allocated to the Employer Matching Contribution
Account and if applicable, the Qualified Matching Contribution
Account prior to the annual Employer stock purchase shall be
temporarily invested in a money market type investment.
(3) QUALIFIED NONELECTIVE CONTRIBUTIONS. Subject to the conditions
of Section 3.11, the Plan Administrator shall allocate and credit
the Discretionary Contribution, if any, the Employer designates
as a Qualified Nonelective Contribution, to the Qualified
Nonelective Contributions Account of each Participant in the same
ratio that each Participant's Compensation for the Plan Year
bears to the total Compensation of all Participants for the Plan
Year.
The Plan Administrator may include a Qualified Nonelective
Contribution in the ADP test described in Section 3.03 to the
extent necessary to satisfy the test. For purposes of allocating
the Qualified Nonelective Contribution, the term "Participant"
means Participants who are Nonhighly Compensated Employees who
satisfy the conditions of Section 3.11.
(4) DISCRETIONARY CONTRIBUTIONS. Subject to Sections 3.09(b), 3.11
and 3.12 and any restoration allocation required under Section
5.03 and Section 9.14,
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the Plan Administrator shall allocate the Employer's
Discretionary Contributions, if any, which the Employer does not
designate as a Qualified Nonelective Contribution, to the
Discretionary Contributions Account of each Participant in the
same ratio that each Participant's Compensation for the Plan Year
bears to the total Compensation of all Plan Year for the Plan
Year.
(b) TOP HEAVY MINIMUM ALLOCATION.
(1) MINIMUM ALLOCATION. If the Plan is top heavy in any Plan Year:
(i) Each Non-key Employee (as defined in Section 1.09) who is a
Participant and is employed by the Employer on the last day
of the Plan Year will receive a top heavy minimum allocation
for that Plan Year.
(ii) The top heavy minimum allocation is the lesser of 3% of the
Non-key Employee's Compensation for the Plan Year or the
highest contribution rate for the Plan Year made on behalf
of any Key Employee (as defined in Section 1.09). However,
if a defined benefit plan maintained by the Employer which
benefits a Key Employee depends on this Plan to satisfy the
antidiscrimination rules of Code section 401(a)(4) or the
coverage rules of Code section 410 (or another plan
benefiting the Key Employee so depends on such defined
benefit plan), the top heavy minimum allocation is 3% of the
Non-key Employee's Compensation regardless of the
contribution rate for the Key Employees.
(2) SPECIAL DEFINITIONS. For purposes of this Section 3.09(b), the
term "Participant" includes any Employee otherwise eligible to
participate in the Plan but who is not a Participant because of
his failure to make elective deferrals under a 401(k) arrangement
or because of his failure to make mandatory employee
contributions. For purposes of clause (b), "Compensation" means
Compensation as defined in Section 1.08, disregarding elective
contributions and disregarding the requirements of Section 3.11.
(3) DETERMINING CONTRIBUTION RATES. For purposes of this Section
3.09(b), a Participant's contribution rate is the sum of Employer
contributions (not including Employer contributions to Social
Security) and forfeitures allocated to the Participant's Account
for the Plan Year divided by his Compensation for the entire Plan
Year. However, for purposes of satisfying a Participant's top
heavy minimum in Plan Years beginning after December 31, 1988, a
Participant's contribution rate does not include any elective
contributions under a Code section 401(k) arrangement nor any
Qualified Matching Contributions subject to the nondiscrimination
requirements of Code section 401(k) or of Code section 401(m).
To determine a Participant's
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contribution rate, the Plan Administrator must treat all
qualified top heavy defined contribution plans maintained by the
Employer as a single plan.
(4) NO ALLOCATION. If, for a Plan Year there are no allocations of
Employer contributions for any Key Employee, the Plan does not
require any top heavy minimum allocation for the Plan Year,
unless a top heavy minimum allocation applies because of the
maintenance by the Employer of more than one plan.
(5) METHOD OF COMPLIANCE. The Plan will satisfy the top heavy
minimum allocation in accordance with this Section 3.09(b)(5).
The Plan Administrator first will allocate the Employer
contribution (and Participant forfeitures, if any) for the Plan
Year in accordance with the allocation formula under Section
3.09(a). The Employer then will contribute an additional amount
for the Account of any Participant who is entitled under this
Section 3.09(b) to a top heavy minimum allocation and whose
contribution rate for the Plan Year is less than the top heavy
minimum allocation. The additional amount is the amount
necessary to increase the Participant's contribution rate to the
top heavy minimum allocation. The Plan Administrator will
allocate the additional contribution to the Account of the
Participant on whose behalf the Employer makes the contribution.
3.10 FORFEITURE ALLOCATION. Subject to any restoration allocation required
under Section 5.03 or 9.14, the Plan Administrator may apply any amount of
a Participant's Accrued Benefit forfeited under the Plan to pay expenses
under the Plan that would otherwise be paid by the Employer. Forfeitures
not used to pay expenses shall be allocated under the Plan to all
Participants in the Plan at the Accounting Date. The allocation to
Participants for all contributions other than Employer Matching
Contributions shall be made to the Participants Account in the same
proportion that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participant's Compensation for such Plan
Year. The allocation to Participants of Employer Matching contributions
shall be made to the Participants Account in proportion to each
Participant's Compensation for the Plan Year. The allocation to
Participants of Employer Matching contributions shall be made to the
Participants Account in proportion to each Participant's Compensation for
the Plan Year. The Plan Administrator will continue to hold the
undistributed, nonvested portion of a terminated Participant's Accrued
Benefit in his Account solely for his benefit until a forfeiture occurs at
the time specified in Section 5.07. Except as provided under Section 5.03,
a Participant will not share in the allocation of a forfeiture of any
portion of his Accrued Benefit.
3.11 ACCRUAL OF BENEFIT. The Plan Administrator will determine the
Employer Contributions on the basis of the Plan Year.
(a) COMPENSATION TAKEN INTO ACCOUNT. In allocating any Employer
contribution designated as Qualified Matching Contribution, Qualified
Nonelective Contribution or Discretionary Contribution, the Plan
Administrator, except for purposes of
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determining the top heavy minimum contribution under Section 3.04(b),
will take into account Compensation determined for the entire Plan
Year. In allocating Deferral Contributions, the Plan Administrator,
for Plan Years beginning prior to the later of January 1, 1992, or 60
days after the Treasury issues final regulations under Code sections
401(k) and 401(m), the Plan may limit Compensation taken into account
to Compensation received only for the portion of the Plan Year in
which the Employee was an Eligible Employee and only for the portion
of the Plan Year in which the Plan or the Code section 401(k)
arrangement was in effect. For subsequent Plan Years, Compensation
must include Compensation for the entire Plan Year, irrespective of
whether the Plan or the Code section 401(k) arrangement was in effect
for the entire Plan Year or whether the Employee begins, resumes or
ceases to be an Eligible Employee during the Plan Year.
(b) HOURS OF SERVICE REQUIREMENT. The Plan Administrator will not
allocate any portion of an Employer contribution designated as
Qualified Matching Contribution, Qualified Nonelective Contribution or
Discretionary Contribution for a Plan Year to any Participant's
Account if the Participant does not complete a minimum of 1,000 hours
of Service during the Plan Year, unless the Participant terminates
employment during the Plan Year due to Retirement, death or Disability
in the current Plan Year or in a Prior Plan Year. Notwithstanding the
preceding sentence, the Plan Administrator will allocate any portion
of an Employer contribution for a Plan Year to any Participant's
Account if the Participant satisfies the top heavy minimum allocation
requirement of Section 3.09(b).
(c) EMPLOYMENT REQUIREMENT. A Participant who, during a particular Plan
Year, completes the Hours of Service requirement under this Section
3.11 will not share in the allocation of Employer contributions,
designated as Qualified Matching Contributions, Qualified Nonelective
Contributions or Discretionary Contributions, and Participant
forfeitures, if any, for that Plan Year unless he is employed by the
Employer on the last day of that Plan Year. A Participant must be
actively employed on the last day of the quarter to share in the
allocation of Employer Matching Contributions, regardless of the Hours
of Service completed in a Plan Year. This employment condition does
not apply, if the Participant terminates employment during the Plan
Year due to Retirement, death or Disability in the current Plan Year
or in a prior Plan Year.
(d) SUSPENSION OF ACCRUAL REQUIREMENTS. The Plan suspends the accrual
requirements under Section 3.11(b) and (c) if, for any Plan Year
beginning after December 31, 1993, the Plan fails to satisfy the
Participation Test or the Coverage Test. A Plan satisfied the
Participant Test if, on each day of the Plan Year, the number of
Employees who benefit under the Plan is at least equal to the lesser
of 50 or 40% of the total number of Includible Employees as of such
day. A Plan satisfies the Coverage Test if, on the last day of each
quarter of the Plan Year, the number of Nonhighly Compensated
Employees who benefit under the Plan is at least equal to 70% of the
total number of includible Nonhighly Compensated Employees as of such
day. "Includible" Employees are all Employees other than: (1) those
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Employees excluded from participating in the Plan for the entire Plan
Year by reason of the collective bargaining unit exclusion or the
nonresident alien exclusion described in the Code or by reason of the
age and service requirements of Article II; and (2) any Employee who
incurs a Separation from Service during the Plan Year and fails to
complete at least 501 Hours of Service for the Plan Year. A
"Nonhighly Compensated Employee" is an Employee who is not a Highly
Compensated employee and who is not a family member aggregated with a
Highly Compensated employee pursuant to Section 1.17 of the Plan. For
purposes of the Participation Test and the Coverage Test, an Employee
is benefiting under the Plan on a particular date if he is entitled to
an allocation for the Plan Year. For any portion of the Plan subject
to the discrimination test described in Section 3.04, an Employee is
benefiting if he is an Eligible Employee for purposes of Section 3.04
and the Coverage Test applies separately to that portion of the Plan.
If this Section 3.11(d) applies for a Plan Year, the Plan
Administrator will suspend the accrual requirements for the includible
Employees who are Participants, beginning first with the includible
Employee(s) employed with the Employer on the last day of the Plan
Year, then the Includible Employee(s) who have the latest Separation
from Service during the Plan Year and continuing to suspend the
accrual requirements for each includible Employee who incurred an
earlier Separation from Service, from the latest to the earliest
Separation from Service date, until the Plan satisfies both the
Participation Test and the Coverage Test for the Plan Year. If two or
more includible Employees have a Separation from Service on the same
day, the Plan Administrator will suspend the accrual requirements for
all such includible Employees, irrespective of whether the Plan can
satisfy the Participation Test and the Coverage Test by accruing
benefits for fewer than all such includible Employees, irrespective of
whether the Plan can satisfy the Participation Test and the Coverage
Test by accruing benefits for fewer than all such includible
Employees. If the Plan suspends the accrual requirements for an
includible Employee, that Employee will share in the allocation of
Employer contributions and Participant forfeitures, if any, without
regard to the number of Hours of Service he has earned for the Plan
Year and without regard to whether he is employed by the Employer on
the last day of the Plan Year.
PART 2. LIMITATIONS ON ALLOCATIONS: SECTION 3.12 AND 3.13
3.12 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. The amount of
Annual Additions Which the Plan Administrator may allocate under this Plan
on a Participant's behalf for a Limitation Year may not exceed the Maximum
Permissible Amount. If the amount the Employer otherwise would contribute
to the Participant's Account would cause the Annual Additions for the
Limitation Year to exceed the Maximum Permissible Amount, the Employer will
reduce the amount of its contribution so the Annual Additions for the
Limitation Year will equal the Maximum Permissible Amount. If an
allocation of employer contributions, pursuant to Section 3.09, would
result in an Excess Amount (other than an Excess Amount resulting from the
circumstances described in Section 3.12(b)) to the Participant's Account,
the Plan Administrator will reallocate the
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Excess Amount to the remaining Participants who are eligible for an
allocation of Employer contributions for the Plan Year in which the
Limitation Year ends. The Plan Administrator will make this reallocation
on the basis of the allocation method under the Plan as if the Participant
whose Account otherwise would receive the Excess Amount is not eligible for
an allocation of Employer contributions.
(a) ESTIMATION OF COMPENSATION. Prior to the determination of the
Participant's actual Compensation for a Limitation Year, the Plan
Administrator may determine the Maximum Permissible Amount on the
basis of the Participant's estimated annual Compensation for such
Limitation Year. The Plan Administrator must make this determination
on a reasonable and uniform basis for all Participants similarly
situated. The Plan Administrator must reduce any Employer
contributions based on estimated annual Compensation by any Excess
Amount carried over from prior years. As soon as is administratively
feasible after the end of the Limitation Year, the Plan Administrator
will determine the Maximum Permissible Amount for such Limitation Year
on the basis of the Participant's actual Compensation for such
Limitation Year.
(b) DISPOSITION OF EXCESS AMOUNT. If pursuant to Section 3.12(a), there
is an Excess Amount with respect to a Participant for a Limitation
Year, the Plan Administrator will dispose of such Excess Amount as
follows:
(1) The Plan Administrator will return any nondeductible voluntary
Employee contributions to the Participant to the extent that the
return would reduce the Excess Amount. Such amounts returned are
disregarded for purposes of Section 3.05.
(2) If, after the application of sub-Section (1), an Excess Amount
still exists, and the Plan covers the Participant at the end of
the Limitation Year, then the Plan Administrator will use the
Excess Amount(s) to reduce future Employer contributions under
the Plan for the next Limitation Year and for each succeeding
Limitation Year, as is necessary, for the Participant. The
Participant may elect to limit his Compensation for allocation
purposes to the extent necessary to reduce his allocation for the
Limitation Year to the Maximum Permissible Amount and eliminate
the Excess Amount.
(3) If, after the application of sub-Section (1), an Excess Amount
still exists, and the Plan does not cover the Participant at the
end of the Limitation Year, then the Plan Administrator will hold
the Excess Amount unallocated in a suspense account. The Plan
Administrator, will apply the suspense account to reduce Employer
contributions for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if
necessary.
(4) Except as provided in "(1)" above, the Plan Administrator will
not distribute any Excess Amount(s) to Participants or to former
Participants.
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(5) Notwithstanding, paragraphs, (1), (2), (3) or (4) of this
Section, the Plan may provide for the distribution of 401(k)
Contributions, to the extent that the distribution or return
would reduce the excess amounts in the Participant's Account.
These amounts are disregarded for purposes of Sections 3.03 and
3.04.
(c) DEFINED BENEFIT PLAN LIMITATION. If the Participant presently
participates, or has ever participated under a defined benefit plan
maintained by the Employer, then the sum of the defined benefit plan
fraction and the defined contribution plan fraction for the
Participant for that Limitation Year must not exceed 1.0. The extent
necessary to satisfy the limitation under Section 3.13, the Employer
will reduce the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates and
then, if necessary, its contribution or allocation on behalf of the
Participant to the defined contribution plan under which the
Participant participates.
3.13 DEFINITIONS - ARTICLE III. For purposes of Article III, the following
terms mean:
(a) "Annual Addition" means the sum of the following amounts allocated on
behalf of a Participant for a Limitation Year: (i) all Employer
contributions; (ii) all forfeitures; and (iii) all Employee
contributions. Except to the extent provided in Treasury regulations,
Annual Additions include excess contributions described in Code
section 401(k), excess aggregate contributions described in Code
Section 401(m) and excess deferrals described in Code section 402(g),
irrespective of whether the plan distributes or forfeits such excess
amounts. Annual Additions also include Excess Amounts reapplied to
reduce Employer contributions under Section 3.12. Amounts allocated
after March 31, 1984, to an individual medical account (as defined in
Code section 415 (1)(2)) included as part of a defined benefit plan
maintained by the Employer are Annual Additions. Furthermore, Annual
Additions include contributions paid or accrued after December 31,
1985, for taxable years ending after December 31, 1985, attributable
to post-retirement medical benefits allocated to the separate account
of a key employee (as defined in Code section 419A(d)(3)) under a
welfare benefit fund (as defined in Code section 419(e)) maintained by
the Employer, but only for purposes of the dollar limitation
applicable to the Maximum Permissible Amount.
(b) "Compensation" - For purposes of applying the limitations of Part 2 of
this Article III, "Compensation" means Compensation as defined in
Section 1.08, disregarding elective contribution.
(c) "Maximum Permissible Amount" - The lesser of (i) $30,000 (or, if
greater, one fourth (1/4) of the defined benefit dollar limitation
under Code section 415(b)(1)(A)), or (ii) twenty-five percent (25%) of
the Participant's Compensation for the Limitation Year. If there is a
short Limitation Year because of a change in Limitation Year, the Plan
Administrator will multiply the $30,000 (or adjusted) limitation by
the following fraction:
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Number of months in the short Limitation Year
12
(d) "Employer" - The Employer that adopts this Plan and any related
employers. Solely for purposes of applying the limitations of Part 2
of this Article III, the Plan Administrator will determine related
employers by modifying Code sections 414(b) and (c) in accordance with
Code section 415(h).
(e) "Excess Amount" means the excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
(f) "Limitation Year" means the Plan Year. If the Employer amends the
Limitation Year to a different 12 consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year for
which the Employer makes the amendment, creating a short Limitation
Year.
(g) "Defined Contribution Plan" means a retirement plan which provides for
an individual account for each Participant and for benefits based
solely on the amount contributed to the Participant's account, and any
income, expenses, gains and losses, and any forfeitures of accounts of
other Participants which the plan may allocate to such Participant's
account. The Plan Administrator must treat all defined contribution
plans (whether or not terminated) maintained by the Employer as a
single plan. For purposes of the limitations of Part 2 of this
Article III, the Plan Administrator will treat employee contributions
made to a defined benefit plan maintained by the Employer as a
separate defined contribution plan. The Plan Administrator also will
treat as a defined contribution plan an individual medical account (as
defined in Code section 415(1)(2)) included as part of a defined
benefit plan maintained by the Employer and, for taxable years ending
after December 31, 1985, a welfare benefit fund under Code section
419(c) maintained by the Employer to the extent there are post-
retirement medical benefits allocated to the separate account of a key
employee (as defined in Code section 419 A(d)(3)).
(h) "Defined Benefit Plan" means a retirement plan which does not provide
for individual accounts for Employer contributions. The Plan
Administrator must create all defined benefit plans (whether or not
terminated) maintained by the Employer as a single plan.
(i) "Defined Benefit Plan Fraction" means
Projected annual benefit of the Participant under the defined
benefit plan(s)
------------------------------
The lesser of (i) 125% (subject to the "100% limitation" in paragraph
(k)) of the dollar limitation in effect under Code section
415(b)(1)(A) for the Limitation Year, or (ii) 140% of the
Participant's average Compensation for his high 3 consecutive years of
service.
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To determine the denominator of this fraction, the Plan Administrator
will make any adjustment required under Code section 415(b) and will
determine a year of service as a Plan Year. The "projected annual
benefit" is the annual retirement benefit (adjusted to an actuarially
equivalent straight life annuity if the plan expresses such benefit in
a form other than a straight life annuity or qualified joint and
survivor annuity) of the Participant under the terms of the defined
benefit plan on the assumptions he continues employment until his
normal retirement age (or current age, if later) as stated in the
defined benefit plan, his Compensation continues at the same rate as
in effect in the Limitation year under consideration until the date of
his normal retirement age and all other relevant factors used to
determine benefits under the defined benefit plan remain constant as
of the current Limitation Year for all future Limitation Years.
CURRENT ACCRUED BENEFIT. If the Participant accrued benefits in one
or more defined benefit plans maintained by the Employer which were in
existence on May 5, 1986, the dollar limitation used in the
denominator of this fraction will not be less than the Participant's
Current Accrued Benefit. A Participant's Current Accrued Benefit is
the sum of the annual benefits under such defined benefit plans which
the Participant had accrued as of the end of the 1986 Limitation Year
(the last Limitation Year beginning before January 1, 1987),
determined without regard to any change in the terms or conditions of
the Plan made after May 5, 1986, and without regard to any cost of
living adjustment occurring after May 5, 1986. This Current Accrued
Benefit rule applies only if the defined benefit plans individually
and in the aggregate satisfied the requirements of Code section 415 as
in effect at the end of the 1986 Limitation year.
(j) "Defined contribution plan fraction" means
The sum of the Annual Additions to the Participant's Account under the
defined contribution plan(s) and welfare benefit funds (as defined in
Code section 419(c)) as of the close of the Limitation Year
------------------------------
the sum of the lesser of the following amounts determined for the
Limitation Year and for each prior Year of Service with the Employer:
(i) 125% of the dollar limitation in effect under Code section
415(c)(1)(A) for the Limitation Year (determined without regard to the
special dollar limitations for employee stock ownership plans), or
(ii) 35% of the Participant's Compensation for the Limitation Year
The Plan Administrator may use on a uniform basis any transitional
rules prescribed by law to compute the Participant's defined
contribution plan fraction. For purposes of determining the defined
contribution plan fraction, the Plan Administrator will not recompute
Annual Additions in Limitations Years beginning prior to January 1,
1987, to treat all Employee contributions as Annual Additions. If the
plan satisfied Code section 415 for Limitation Years beginning prior
to January 1, 1987, the Plan Administrator will redetermine the
defined contribution plan fraction and the defined
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benefit plan fraction as of the end of the 1986 Limitation year, in
accordance with this Section 3.08. If the sum of the redetermined
fractions exceeds 1.0, the Plan Administrator will subtract
permanently from the numerator of the defined contribution plan
fraction an amount equal to the product of (i) the excess of the sum
of the fractions over 1.0, times (ii) the denominator of the defined
contribution plan fraction. In making the adjustment, the Plan
Administrator will disregard any accrued benefit under the defined
benefit plan which is in excess of the Current Accrued Benefit.
(k) "100% limitation" means if the 100% limitation applies, the Plan
Administrator must determine the denominator of the defined benefit
plan fraction and the denominator of the defined contribution plan
fraction by substituting 100% for 125%. The 100% limitation applies
only if: (i) the Plan's top heavy ratio exceeds 90%; or (ii) the
Plan's top heavy ratio is greater than 60%, and the Employer does not
provide extra minimum benefits which satisfy Code section 416(h)(2).
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ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT VOLUNTARY CONTRIBUTION
The Plan does not require nor permit Participant voluntary contributions.
4.02 PARTICIPANT ROLLOVER CONTRIBUTIONS. Any Participant, with the
Employer's written consent and after filing with the Trustee the form
prescribed by the Plan Administrator, may contribute cash only to the Trust
other than as a voluntary contribution if the contribution is a "rollover
contribution" which the Code permits an employee to transfer directly or
indirectly from one qualified plan to another qualified plan. Before
accepting a rollover contribution, the Trustee may require an Employee to
furnish satisfactory evidence that the proposed transfer is in fact a
"rollover contribution" which the Code permits an employee to make to a
qualified plan. A rollover contribution is not an Annual Addition under
Part 2 of Article III.
The Trustee may invest the rollover contribution in a segregated investment
Account for the Participant's sole benefit unless the Plan Administrator,
in its sole discretion, agrees to invest the rollover contribution as part
of the Trust Fund. A rollover contribution invested as part of the Trust
Fund as of the Accounting Date (or other valuation date) for each Plan
Year, will share in earnings and the amount of any realized or unrealized
appreciation or depreciation in the related investment fund for the period
since the last valuation date as described in Section 9.11. The Trustee
will not have any investment responsibility with respect to a Participant's
segregated rollover Account. The Participant, however, from time to time,
may direct the Trustee in writing as to the investment of his segregated
rollover Account; provided however, the Participant may not direct the
Trustee to make loans to his Employer. A Participant's segregated rollover
Account alone will bear any extraordinary expenses resulting from
investments made at the direction of the Participant. As of the Accounting
Date (or other valuation date) for each Plan Year, the Plan Administrator
will allocate and credit the net income (or net loss) from a Participant's
segregated rollover Account and the increase and decrease in the fair
market value of the assets of a segregated Account solely to that Account.
The Trustee is not liable nor responsible for any loss resulting to any
Beneficiary, nor to any Participant, by reason of any sale or investment
made or other action taken pursuant to and in accordance with the direction
of the Participant. In all other respects, the Trustee will hold,
administer and distribute a segregate rollover contribution in the same
manner as any Employer contribution made to the Trust. A rollover
contribution shall not be subject to forfeiture for any reason and may not
be withdrawn by, or distributed to the Participant in whole, or in part,
except at Normal Retirement Date, or on such other date when the
Participant or his Beneficiary is entitled to receive benefits.
An eligible Employee, prior to satisfying the Plan's eligibility
conditions, may make a rollover contribution to the Trust to the same
extent and in the same manner as a Participant. If an Employee makes a
rollover contribution to the Trust prior to satisfying the Plan's
eligibility conditions, the Plan Administrator and Trustee must treat the
Employee as a Participant for all purposes of the Plan except the Employee
is not a Participant for purposes
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of sharing in Employer contributions or Participant forfeitures under the
Plan until he actually becomes a Participant in the Plan. If the Employee
has a Separation from Service prior to becoming a Participant, the Trustee
will distribute his Rollover Contribution Account to him as if it were an
Employer contribution Account.
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ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 TERMINATION OF SERVICE UPON DEATH, DISABILITY OR RETIREMENT. Upon
Separation from Service due to death, Disability or Retirement, a
Participant will be 100% Vested in his Accrued Benefit. A Participant who
remains in the employ of the Employer after attaining Normal Retirement Age
will continue to participate in Employer contributions.
5.02 TERMINATION OF SERVICE OTHER THAN UPON DEATH, DISABILITY OR
RETIREMENT. A Participant's Deferral Contributions Account, Qualified
Matching Contributions Account, Qualified Nonelective Contributions Account
and Rollover Account will be 100% Vested at all times. Except as provided
in Section 5.01, for each year of Service, a Participant's Vested
Percentage of his Matching Contributions Account and Discretionary
Contributions Account equals the percentage in the following vesting
schedule:
Years of Percent
Service Vested
-------- --------
Less than 1 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
5.03 CASHOUT DISTRIBUTION TO PARTIALLY VESTED PARTICIPANTS/RESTORATION OF
FORFEITED MATCHING AND EMPLOYER CONTRIBUTION ACCOUNT. If, pursuant to
Article VI, a partially Vested Participant receives a cashout distribution
before he incurs a Forfeiture Break in Service (as defined in Section
1.16), the cashout distribution will result in an immediate forfeiture of
the cash portion of the Participant's Employer Matching Contribution and
Discretionary Contribution Accounts which are not Vested. Notwithstanding
any other provisions to the contrary, the portion of any partially Vested
Participant's Employer Matching Contribution and Discretionary Contribution
Account which accrued after July 1, 1993, shall not be considered forfeited
until the September 30th Accounting Date following the Participant's
Separation from Service. See Section 5.07. A partially Vested Participant
is a Participant whose nonforfeitable percentage determined under Section
5.02 is less than 100%. A cashout distribution is a distribution of the
entire present value of the Participant's Employer Matching Contribution
and Discretionary Contribution Accounts.
(a) RESTORATION AND CONDITIONS UPON RESTORATION. A partially Vested
Participant who is reemployed by the Employer after receiving a
cashout distribution of the Vested percentage of his Employer Matching
Contribution and Discretionary Contribution Accounts may repay the
Trustee the amount of the cashout distribution, unless the Participant
no longer has a right to restoration under the requirements of this
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Section 5.03. If a partially Vested Participant makes the cashout
distribution repayment, the Plan Administrator, subject to the
conditions of this paragraph (a), must restore his Employer Matching
Contribution and Discretionary Contribution Accounts to the same
dollar as the dollar amount of his Employer Matching Contribution and
Discretionary Contribution Accounts on the Accounting Date, or other
valuation date, immediately preceding the date of the cashout
distribution, unadjusted for any gains or losses occurring subsequent
to that Accounting Date, or other valuation date. Restoration of the
Participant's Employer Matching Contribution and Discretionary
Contribution Accounts includes restoration of all Code section
411(d)(6) protected benefits with respect to that restored Matching
and Employer Contribution Accounts, in accordance with applicable
Treasury regulations. The Plan Administrator will not restore a
reemployed Participant's Employer Matching Contribution and
Discretionary Contribution Accounts under this paragraph if:
(1) 5 years have elapsed since the Participant's first reemployment
date following the cashout distribution; or
(2) The Participant incurred a Forfeiture Break in Service. This
condition also applies if the Participant makes repayment within
the Plan Year in which he incurs the Forfeiture Break in Service
and that Forfeiture Break in Service would result in a complete
forfeiture of the amount the Plan Administrator otherwise would
restore.
(b) TIME AND METHOD OF RESTORATION. If neither of the two conditions
preventing restoration of the Participant's Employer Matching
Contribution and Discretionary Contribution Accounts applies, the Plan
Administrator will restore the Participant's Employer Matching
Contribution and Discretionary Contribution Accounts as of the Plan
Year Accounting Date coincident with or immediately following the
repayment. To restore the Participant's Employer Matching Contribution
and Discretionary Contribution Accounts, the Plan Administrator, to
the extent necessary, will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant forfeitures the Plan
Administrator would otherwise allocate under Section 3.10;
(2) Second, the amount, if any, of the Trust Fund net income or gain
for the Plan Year; and
(3) Third, the Employer Matching or Discretionary Contributions for
the Plan Year to the extent made.
To the extent the amounts described in clauses (1), (2), and (3) are
insufficient to enable the Plan Administrator to make the required
restoration, the Employer must contribute, without regard to any
requirement or condition of Section 3.01, the additional money necessary to
enable the Plan Administrator to make the required restoration. If, for a
particular Plan Year,
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the Plan Administrator must restore the Employer Matching Contribution and
Discretionary Contribution Accounts of more than one reemployed
Participant, then the Plan Administrator will make the restoration
allocation(s) to each such Participant's Account in the same proportion
that a Participant's restored amount for the Plan Year bears to the
restored amount for the Plan Year of all reemployed Participants. The Plan
Administrator will not take into account the allocation under this Section
5.03 in applying the limitation on allocations under Part 2 of Article III.
(c) 0% VESTED PARTICIPANT. The deemed cashout rule applies to 0% Vested
Participant. A 0% Vested Participant is a Participant whose Employer
Matching Contribution and Discretionary Contribution Accounts are
entirely forfeitable at the time of his Separation from Service.
Under the deemed cashout rule, the Plan Administrator will treat the
0% Vested Participant as having received a cashout distribution on the
date of the Participant's Separation from Service or, if the
Participant's Account is entitled to an allocation of Matching and
Employer contributions for the Plan Year in which the separates from
Service, on the last day of that Plan Year. For purposes of applying
the restoration provisions of this Section 5.03, the Plan
Administrator will treat 0% Vested Participant as repaying his cashout
"distribution" on the first date of his reemployment with the
Employer.
5.04 SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Plan Administrator
restores the Participant's Employer Matching Contribution and Discretionary
Contribution Accounts, as described in Section 5.03, the Trustee will
invest the cashout amount the Participant has repaid in a segregated
Account maintained solely for that Participant. The Trustee must invest
the amount in the Participant's segregated Account in Federally insured
interest bearing savings account(s) or time deposit(s) (or a combination of
both), or in other fixed income investments. Until commingled with the
balance of the Trust Fund on the date the Plan Administrator restores the
Participant's Employer Matching Contribution and Discretionary Contribution
Accounts, the Participant's segregated Account remains a part of the Trust,
but it alone shares in any income it earns and it alone bears any expense
or loss it incurs. Unless the repayment qualifies as a rollover
contribution, the Plan Administrator will direct the Trustee to repay to
the Participant as soon as is administratively practicable the full amount
of the Participant's segregated Account if the Plan Administrator
determines either of the conditions of Section 5.03(a) prevents restoration
as of the applicable Accounting Date, notwithstanding the Participant's
repayment.
5.05 YEAR OF SERVICE - VESTING. For purposes of Vesting and all other
provisions of the Plan, "Year of Service" means each Participant shall be
credited with a year of Service in any Plan Year during which he completes
at least 1,000 Hours of Service with the Employer unless the Plan reference
specifies a modification to this definition.
5.06 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining Vesting
years of Service, the Plan takes into account all years of Service an
Employee completes with the Employer, except any year of Service before the
Plan Year in which the Participant attained the age of 18. For the sole
purpose of determining a Participant's Vested percentage of his Employer
Matching Contribution and Discretionary Contribution Accounts derived from
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Employer contributions which accrued for his benefit prior to a Forfeiture
Break in Service, the Plan disregards any year of Service after the
Participant first incurs a Forfeiture Break in Service.
5.07 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
Employer matching Contribution and Discretionary Contribution Accounts
occurs under the Plan on the earlier of:
(a) The last day of the Plan Year in which the Participant first
incurs a Forfeiture Break in Service; or
(b) The date the Participant receives a cashout distribution.
The Plan Administrator determines the percentage of a Participant's
Employer Matching Contributions and Discretionary Contributions Accounts
forfeiture, if any, under this Section 5.07 solely by reference to the
Vesting schedule of Section 5.02. A Participant will nor forfeit any
portion of his Employer Matching Contributions and Discretionary
Contributions Accounts for any other reason or cause except as expressly
provided by this Section 5.07 or as provided under Section 9.14. A
Participant's
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ARTICLE VI
TIME AND METHODS OF PAYMENT OF BENEFITS
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. Unless, pursuant to Section 6.03,
the Participant or the Beneficiary elects in writing to a different method
of payment, the Plan Administrator will direct the Trustee to commence
distribution of a Participant's Vested Accrued Benefit in accordance with
the Section 6.01. A Participant must consent, in writing, to any
distribution required under this Section 6.01 if the present value of the
Participant's Vested Accrued Benefit, at the time of the distribution to
the Participant, exceeds $3,500 and the Participant has not attained Normal
Retirement Age. A "Distribution Date" under this Article VI, unless
otherwise specified within the Plan, is the end of the calendar year
coincident with or immediately following the date of Separation of Service
or as soon as administratively practicable or any subsequent end of a
calendar quarter as directed by the Participant. For purposes of the
consent requirements under this Article VI, if the present value of the
Participant's Vested Accrued Benefit, at the time of any distribution,
exceeds $3,500, the Plan Administrator must treat that present value as
exceeding $3,500 for purposes of all subsequent Plan distributions to the
Participant.
(a) TERMINATION OF EMPLOYMENT FOR A REASON OTHER THAN DISABILITY OR DEATH.
For a Participant who terminates employment with the Employer for a
reason other than Disability or death, the Plan Administrator will
direct the Trustee to commence distribution of the Participant's
Accrued Benefit, as follows:
(1) PARTICIPANT'S VESTED ACCRUED BENEFIT NOT EXCEEDING $3,500. In a
lump sum, on the first Distribution Date coincident with or
immediately following the Participant's Separation from Service.
(2) PARTICIPANT'S VESTED ACCRUED BENEFIT EXCEEDING $3,500. In a form
and at the time elected by the Participant, pursuant to Section
6.03. In the absence of an election by the Participant, the Plan
Administrator will direct the Trustee to distribute the
Participant's Vested Accrued Benefit on the 60th day following
the close of the Plan Year in which the Participant attains
Normal Requirement Age.
(b) REQUIRED BEGINNING DATE. If any distribution commencement date
described under Paragraph (a) of this Section 6.01, either by Plan
provision or by Participant election (or nonelection), is later than
the Participant's Required Beginning Date, the Plan Administrator
instead must direct the Trustee to make distribution under this
Section 6.01 on the Participant's Required Beginning Date. A
Participant's Required Beginning Date is the April 1 following the
close of the calendar year in which the Participant attains age
seventy and one-half (70 1/2). However, if the Participant, prior to
incurring a Separation from Service, attained age 70 1/2 by January
1, 1988, and, for the five Plan Year period ending in the calendar
year in which he attained age 70 1/2 and for all subsequent years, the
Participant was not a more than 5% owner (as defined in Section
1.17(a)), the Required Beginning Date is the April 1 following the
close of the calendar year in which the Participant separates from
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Service or, if earlier, the April 1 following the close of the
calendar year in which the Participant becomes a more than 5% owner.
Furthermore, if a Participant who was not a more than 5% owner
attained age 70 1/2 during 1988 and did not incur a Separation from
Service prior to January 1, 1989, his Required Beginning Date is April
1, 1990. A mandatory distribution at the Participant's Required
Beginning Date will be in the manner prescribed in Section 6.02
referring to Minimum Distribution.
(c) DISABILITY OF THE PARTICIPANT. For a Participant who Separates from
Service with the Employer due to Disability, the Plan Administrator
will direct the Trustee to commence distribution of the Participant's
Accrued Benefit, as follows:
(1) DISABLED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT DOES NOT
EXCEED $3,500. In a lump sum, on the first Distribution Date
coincident with or immediately following the Participant's
Separation from Service due to Disability.
(2) DISABLED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS
$3,500. The Plan Administrator will direct the Trustee to
distribute the Disabled Participant's Nonforfeitable Accrued
Benefit at the time and in the form elected by the Participant
(or, if applicable, by the Beneficiary) as permitted under this
Article VI. In the absence of an election, the Plan
Administrator will direct the Trustee to distribute the
Participant's undistributed Nonforfeitable Accrued Benefit in a
lump sum on the Distribution Date coincident with or immediately
following the determination of the Participant's Disability or,
if later, the first Distribution Date following the date the Plan
Administrator receives notification of or otherwise confirms the
Participant's Disability.
(d) DEATH OF THE PARTICIPANT. The Plan Administrator will direct the
Trustee, in accordance with this Section 6.01(d), to distribute to the
Participant's Beneficiary the Participant's Vested Accrued Benefit
remaining in the Trust at the time of the Participant's death.
(1) DECEASED PARTICIPANT'S VESTED ACCRUED BENEFIT DOES NOT EXCEED
$3,500. The Plan Administrator will direct the Trustee to pay the
deceased Participant's Vested Accrued Benefit in a single cash
sum, on the first Distribution Date following the Participant's
death or, if later, the date on which the Plan Administrator
receives notification of or otherwise confirms the Participant's
death.
(2) DECEASED PARTICIPANT'S VESTED ACCRUED BENEFIT EXCEEDS $3,500.
The Plan Administrator will direct the Trustee to pay the
deceased Participant's Vested Accrued Benefit at the time and in
the form elected by the Participant, or if applicable, by the
Beneficiary, pursuant to Section 6.03. In the absence of an
election, the Plan Administrator will direct the Trustee to
distribute the Participant's undistributed Vested Accrued Benefit
on the first Distribution
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Date following the close of the Plan Year in which the
Participant's death occurs or, if later, the first Distribution
Date following the date the Plan Administrator receives
notification of or otherwise confirms the Participant's death.
If the death benefit is payable in full to the Participant's
surviving spouse, the surviving spouse, in addition to the
distribution options provided in this Section 6.01(d), may elect
distribution at any time or in any form (other than the joint and
survivor annuity) this Article VI would permit for a Participant.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. A Participant's Accrued
Benefit, credited for the periods beginning after December 31, 1993, shall
be distributed only in a cash lump sum except to the extent required for an
active Employee to satisfy the minimum distribution requirements under
Section 401(a)(9).
A Participant's Accrued Benefit, credited for periods prior to January 1,
1994, shall be distributed in cash under any one or a combination of
options listed below:
(a) lump sum;
(b) Periodic Installments. The amount payable to a Participant under this
option shall be paid in equal monthly, quarterly, semiannual, or
annual cash installments. In order to provide such installment
payments the Plan Administrator may direct that the Participant's
interest in the Plan be segregated and invested separately, and that
the funds in the segregated account be used for the payment of the
installments. The period over which such payment(s) are made shall
not extend beyond the Participant's life expectancy (or the life
expectancy of the participant and his designated Beneficiary);
(c) Purchase of or providing any annuity. However such annuity may not be
in any form that will provide for payments over a period extend beyond
either the life of the Participant (or the lives of the Participant
and his designated Beneficiary) or the life expectancy of the
Participant (or the life expectancy of the Participant and his
designated Beneficiary).
(d) Joint and Survivor Annuity. The Joint and Survivor Annuity is an
annuity that commences immediately and shall be equal in value to a
single life annuity. Such joint and survivor benefits following the
Participant's death shall continue to the spouse during the spouse's
lifetime at a rate equal to 50% of the rate at which such benefits
were payable to the Participant. This Joint and Survivor Annuity
shall be considered the designated qualified Joint and Survivor
Annuity and automatic form of payment for the purposes of this Plan.
However, the Participant may elect to receive a smaller annuity
benefit with continuation of payments to the spouse at a rate of
seventy-five percent (75%) or one hundred percent (100%) of the rate
payable to a participant during his lifetime which alternative Joint
and Survivor Annuity shall be equal in value to the automatic Joint
and 50% Survivor Annuity. An unmarried
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Participant shall receive the value of his benefit in the form of a
life annuity. Such unmarried Participant, however, may elect to waive
the life annuity.
MINIMUM DISTRIBUTION REQUIREMENTS FOR PARTICIPANTS. The Plan Administrator
may not direct the Trustee to distribute the Participant's Vested Accrued
Benefit, nor may the Participant elect to have the Trustee distribute his
Vested Accrued Benefit, under a method of payment which, as of the Required
Beginning Date, does not satisfy the minimum distribution requirements
under Code section 401(a)(9) and the applicable Treasury regulations. The
minimum distribution for a calendar year equals the Participant's Vested
Accrued Benefit as of the latest valuation date preceding the beginning of
the calendar divided by the Participant's life expectancy or, if
applicable, the joint and last survivor expectancy of the Participant and
his designated Beneficiary (as determined under Article VIII, subject to
the requirements of the Code section 401(a)(9) regulations). The Plan
Administrator will increase the Participant's Vested Accrued Benefit, as
determined on the relevant valuation date, for contributions or forfeitures
allocated after the valuation date and by December 31 of the valuation
calendar year, and will decrease the valuation by distributions made after
the valuation date and by December 31 of the valuation calendar year. For
purposes of this valuation, the Plan Administrator will treat any portion
of the minimum distribution for the first distribution calendar year made
after the close of that year as a distribution occurring in that first
distribution calendar year. In computing a minimum distribution, the Plan
Administrator must use the unisex life expectancy multiples under Treasury
Regulation section 1.72-9. The Plan Administrator, only upon the
Participant's written request, may compute the minimum distribution for a
calendar year subsequent to the first calendar year for which the Plan
requires a minimum distribution by redetermining the applicable life
expectancy. However, the Plan Administrator may not redetermine the joint
life and last survivor expectancy of the Participant and a nonspouse
designated Beneficiary in a manner which takes into account any adjustment
to a life expectancy other than the Participant's life expectancy.
If the Participant's spouse is not his designated Beneficiary, a method of
payment to the Participant (whether by Participant election or by Plan
Administrator direction) may not provide more than incidental benefits to
the Beneficiary. The Plan must satisfy the minimum distribution incidental
benefit ("MDIB") requirement in the Treasury regulations issued under Code
section 401(a)(9) for distributions made on or after the Participant's
Required Beginning Date and before the Participant's death. To satisfy the
MDIB requirement, the Plan Administrator will compute the minimum
distribution required by this Section by substituting the applicable MDIB
divisor for the applicable life expectancy factor, if the MDIB divisor is a
lesser number. Following the Participant's death, the Plan Administrator
will compute the minimum distribution required by this Section solely on
the basis of the applicable life expectancy factor and will disregard the
MDIB factor. For Plan Years beginning prior to January 1, 1989, the Plan
satisfies the incidental benefits requirement if the distributions to the
Participant satisfied the MDIB requirement or if the present value of the
retirement benefits payable solely to the Participant is greater than 50%
of the present value of the total benefits payable to the Participant and
his Beneficiaries. The Plan Administrator must determine whether benefits
to the Beneficiary are incidental as of the
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date the Trustee is to commence payment of the retirement benefits to the
Participant, or as of any date the Trustee redetermines the payment period
to the Participant.
The minimum distribution for the first calendar year is due by the
Participant's Required Beginning Date. The minimum distribution for each
subsequent distribution calendar year, including the calendar year in which
the Participant's Required Beginning Date falls, is due by December 31 of
that year.
MINIMUM DISTRIBUTION REQUIREMENTS FOR BENEFICIARIES. The method of
distribution to the Participant's Beneficiary must satisfy Code section
401(a)(9) and the applicable Treasury regulations. If the Participant's
death occurs after his Required Beginning Date, the method of payment to
the Beneficiary must provide for completion of payment over a period which
does not exceed the payment period which had commenced for the Participant.
If the Participant's death occurs prior to his Required Beginning Date, the
method of payment to the Beneficiary, must provide for completion of
payment to the Beneficiary over a period not exceeding: (i) five (5) years
after the date of the Participant's death; or (ii) if the Beneficiary is a
designated Beneficiary, the designated Beneficiary's life expectancy. The
Plan Administrator may not direct payment of the Participant's Vested
Accrued Benefit over a period described in clause (ii) unless the Trustee
will commence payment to the designated Beneficiary no later than the
December 31 following the close of the calendar year in which the
Participant's death occurred or, if later, and if the designated
Beneficiary is the Participant's surviving spouse, December 31 of the
calendar year in which the Participant would have attained age seventy and
one-half (70-1/2). If the Trustee will make distribution in accordance
with clause (ii), the minimum distribution for a calendar year equals the
Participant's Vested Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the designated
Beneficiary's life expectancy. The Plan Administrator must use the unisex
life expectancy multiples under Treasury Regulation section 1.72-9 for
purposes of applying this paragraph. The Plan Administrator, only upon the
written request of the Participant or the Participant's surviving spouse,
may recalculate the life expectancy of the Participant's surviving spouse
not more frequently than annually, but may not recalculate the life
expectancy of a nonspouse designated Beneficiary after the Trustee
commences payment to the designated Beneficiary. The Plan Administrator
will apply this paragraph by treating any amount paid to the Participant's
child, which becomes payable to the Participant's surviving spouse upon the
child's attaining the age of majority, as paid to the Participant's
surviving spouse. Upon the Beneficiary's written request, the Plan
Administrator must direct the Trustee to accelerate payment of all, or any
portion, of the Participant's unpaid Accrued Benefit, as soon as
administratively practicable following the effective date of that request.
TRANSITIONAL ELECTIONS. Notwithstanding the provisions of this Section, if
the Participant (or Beneficiary) signed a written distribution designation
prior to January 1, 1984, the Plan Administrator must distribute the
Participant's Vested Accrued Benefit in accordance with that designation,
subject however, to the survivor requirements, if applicable, of Section
6.04. This paragraph does not apply to a pre-1984 distribution
designation, and the Plan Administrator will not comply with that
designation, if any of the following applies: (1) the method of
distribution would have disqualified the Plan under Code section 401(a)(9)
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as in effect on December 31, 1983; (2) the Participant did not have an
Accrued Benefit as of December 31, 1983; (3) the distribution designation
does not specify the timing and form of the distribution and the death
Beneficiaries (in order of priority); (4) the substitution of a Beneficiary
modifies the payment period of the distribution; or (5) the Participant (or
Beneficiary) modifies or revokes the distribution designation. In the
event of a revocation, the Plan must distribute, no later than December 31
of the calendar year following the year of revocation, the amount which the
Participant (or Beneficiary) would have received under this Section 6.02 if
the distribution designation had not been in effect. The Plan
Administrator will apply this paragraph to rollovers and transfers in
accordance with Part J of the Code section 401(a)(9) Treasury regulations.
6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days, but not later
than 30 days before the Participant (or Beneficiary) commences receipt of
his Accrued Vested Benefit, the Plan Administrator must provide a benefit
notice to a Participant who is eligible to make an election under this
Section 6.03. For distributions after September 30, 1993, a Participant's
Account Balance is eligible for distribution as of the valuation date
immediately preceding the date of the Participant's Separation from
Service, except however, that portion of the Participant's Account Balance
derived from the Employer Matching Contribution Account and if applicable,
the Qualified Matching Contribution Account accrued after January 1, 1994,
shall be valued on the September 30 immediately following the date which
the Participant separates from Service. The benefit notice must explain
the valuation of his Vested Account Balance as well as the optional forms
of benefit in the Plan, including the material features, and the values of
those options, and the Participant's right to defer distribution until he
attains Normal Retirement Age.
If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the Plan Administrator will direct the Trustee to distribute
the Participant's Vested Accrued Benefit in accordance with that election.
Any election under this Section 6.03 is subject to the requirements of
Section 6.02. The Participant or Beneficiary must make an election under
this Section 6.03 by filing his election form with the Plan Administrator
at any time before the Trustee otherwise would commence to pay a
Participant's Vested Accrued Benefit in accordance with the requirements of
Article VI.
(a) PARTICIPANT ELECTIONS AFTER TERMINATION OF EMPLOYMENT. If the present
value of a Participant's Vested Accrued Benefit exceeds $3,500, he may
elect to have the Trustee commence distribution as of any Distribution
Date after the Participant's Separation from Service but no later than
his Normal Retirement Date. For purposes of this Article VI, the term
"Normal Retirement Date" means the end of the year immediately
following the Participant's attaining Normal Retirement Age.
If the Participant is partially Vested in his Accrued Benefit, an
election under this Paragraph (a) to distribute prior to the
Participant's incurring a Forfeiture Break in Service, must be in the
form of a cashout distribution (as defined in Article V). A
Participant may not receive a cashout distribution if, prior to the
time the Trustee actually makes the cashout distribution, the
Participant returns to employment with the Employer.
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(b) PARTICIPANT ELECTIONS PRIOR TO TERMINATION OF EMPLOYMENT. The Plan
does not permit a Participant, other than as provided in Section 5.07,
to elect to receive a distribution of his Account Balance prior to
termination of employment.
(c) DEATH BENEFIT ELECTIONS. If the present value of the deceased
Participant's Vested Accrued Benefit exceeds $3,500, the Participant's
Beneficiary may elect to have the Trustee distribute the Participant's
Vested Accrued Benefit in a form and within a period permitted under
Section 6.02. The Beneficiary's election is subject to any
restrictions designated in writing by the Participant and not revoked
as of his date of death.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. A transfer
agreement described in Section 12.05 may not permit a plan which is subject
to the provisions of Code section 417 to transfer assets to this Plan,
unless the transfer is an elective transfer, as described in Section 12.05.
JOINT AND SURVIVOR ANNUITY. The Administrative Committee must direct the
Trustee to distribute a Participant's Nonforfeitable Account Balance in the
form of a qualified joint and survivor annuity, unless the Participant
makes a valid waiver election (described in Section 6.05 within the 90 day
period ending on the annuity starting date. If, as of the annuity starting
date, the Participant is married, a qualified joint and survivor annuity is
an immediate annuity which is purchasable with the Participant's
Nonforfeitable Account Balance and which provides a life annuity for the
Participant and a survivor annuity payable for the remaining life of the
Participant's surviving spouse equal to 50% of the amount of the annuity
payable for the remaining life of the Participant's surviving spouse equal
to 50% of the amount of the annuity payable during the life of the
Participant. If, as of the annuity starting date, the Participant is not
married, a qualified joint and survivor annuity is an immediate life
annuity for the Participant which is purchasable with the Participant's
Nonforfeitable Account Balance. On or before the annuity starting date,
the Administrative Committee, without Participant or spousal consent, must
direct the Trustee to pay the Participant's Nonforfeitable Account Balance
in a lump sum, in lieu of a qualified joint and survivor annuity, in
accordance with Section 6.01, if the Participant's Nonforfeitable Account
Balance is not greater than $3,500.
PRERETIREMENT SURVIVOR ANNUITY. If a married Participant dies prior to his
annuity starting date, the Administrative Committee will direct the Trustee
to distribute a portion of the Participant's Nonforfeitable Account Balance
to the Participant's surviving spouse in the form of a preretirement
survivor annuity, unless the Participant has a valid waiver election (as
described in Section 6.06) in effect, or unless the Participant and his
spouse were not married throughout the one year period ending on the date
of his death. A preretirement survivor annuity is an annuity which is
purchasable with 50% of the Participant's Nonforfeitable Account Balance
(determined as of the date of the Participant's death) and which is payable
for the life of the Participant's surviving spouse. The value of the
preretirement survivor annuity is attributable to Employer contributions
and to Employee contributions in the same proportion as the Participant's
Nonforfeitable Account Balance is attributable to those contributions. The
portion of the Participant's Nonforfeitable Account
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Balance not payable under this paragraph is payable to the Participant's
Beneficiary, in accordance with the other provisions of this Article VI.
If the present value of the preretirement survivor annuity does not exceed
$3,500, the Administrative Committee, on or before the annuity starting
date, must direct the Trustee to make a lump sum distribution to the
Participant's surviving spouse, in lieu of a preretirement survivor
annuity.
SURVIVING SPOUSE ELECTIONS. If the present value of the preretirement
survivor annuity exceeds $3,500, the Participant's surviving spouse may
elect to have the Trustee commence payment of the preretirement survivor
annuity at any time following the date of the Participant's death, but not
later than the mandatory distribution periods described in Section 6.02,
and may elect any of the forms of payment described in Section 6.02, in
lieu of the preretirement survivor annuity. In the absence of an election
by the surviving spouse, the Administrative Committee must direct the
Trustee to distribute the preretirement survivor annuity on the first
distribution date following the close of the Plan Year in which the latest
of the following events occurs: (i) the Participant's death; (ii) the date
the Administrative Committee receives notification of or otherwise confirms
the Participant's death; (iii) the date the Participant would have attained
Normal Retirement Age; or (iv) the date the Participant would have attained
age 62.
SPECIAL RULES. If the Participant has in effect a valid waiver election
regarding the qualified joint and survivor annuity or the preretirement
survivor annuity, the Administrative Committee must direct the Trustee to
distribute the Participant's Nonforfeitable Account Balance in accordance
with Sections 6.01, 6.02 and 6.03. The Administrative Committee will
reduce the Participant's Nonforfeitable account Balance by any security
interest (pursuant to any offset rights authorized by Section 10.03) held
by the Plan by reason of a Participant loan to determine the value of the
Participant's Nonforfeitable Account Balance distributable in the form of a
qualified joint and survivor annuity or preretirement survivor annuity,
provided any post-August 18, 1985, loan satisfied the spousal consent
requirement described in Section 10.03 of the Plan. For purposes of
applying this Article VI, the Administrative Committee treats a former
spouse as the Participant's spouse or surviving spouse to the extent
provided under a qualified domestic relations order described in Section
6.08. The provisions of this Section 6.04, and of Section 6.05 and 6.06,
apply separately to the portion of the Participant's Nonforfeitable Account
Balance subject to the qualified domestic relations order and to the
portion of the Participant's Nonforfeitable Account Balance not subject to
that order.
LIMITED APPLICATION OF SECTION 6.04. The preceding provisions of this
Section 6.04 apply only to a Participant whose Account Balance includes a
portion which was accrued prior to January 1, 1994. Sections 6.05 and 6.06
only apply to Participants to whom the preceding provisions of this Section
6.04 apply.
6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY. Not earlier
than 90 days, but not later than 30 days, before the Participant's annuity
starting date, the Administrative Committee must provide the Participant a
written explanation of the terms and conditions of the qualified joint and
survivor annuity, the Participant's right to make, and the effect of, an
election to waive the joint and survivor form of benefit, the rights of the
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Participant's spouse regarding the waiver election and the Participant's
right to make, and the effect of, a revocation of a waiver election. The
Plan does not limit the number of times the Participant may revoke a waiver
of the qualified joint and survivor annuity or make a new waiver during the
election period.
A married Participant's waiver election is not valid unless (a) the
Participant's spouse (to whom the survivor annuity is payable under the
qualified joint and survivor annuity), after the Participant has received
the written explanation described in this Section 6.05, has consented in
writing to the waiver election, the spouse's consent acknowledges the
effect of the election, and a notary public or the Plan Administrator (or
his representative) witnesses the spouse's consent, (b) the spouse consents
to the alternative form of payment designated by the Participant or to any
change in that designated form of payment, and (c) unless the spouse is the
Participant's sole primary Beneficiary, the spouse consents to the
Participant's Beneficiary designation or to any change in the Participant's
Beneficiary designation. The spouse's consent to a waiver of the qualified
joint and survivor annuity is irrevocable, unless the Participant revokes
the waiver election. The spouse may execute a blanket consent to any form
of payment designation or to any Beneficiary designation made by the
Participant, if the spouse acknowledges the right to limit that consent to
a specific designation but, in writing, waives that right. The consent
requirements of this Section 6.05 apply to a former spouse of the
Participant, to the extent required under a qualified domestic relations
order described in Section 6.08.
The Administrative Committee will accept as valid a waiver election which
does not satisfy the spousal consent requirements if the Administrative
Committee establishes the Participant does not have a spouse, the
Administrative Committee is not able to locate the Participant's spouse,
the Participant is legally separated or has been abandoned (within the
meaning of State law) and the Participant has a court order to that effect,
or other circumstances exist under which the Secretary of the Treasury will
excuse the consent requirement. If the Participant's spouse is legally
incompetent to given consent, the spouse's legal guardian (even if the
guardian is the Participant) may give consent.
6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY. The Administrative
Committee must provide a written explanation of the preretirement survivor
annuity to each married Participant, within the following period which ends
last: (1) the period beginning on the first day of the Plan Year in which
the Participant attains age 32 and ending on the last day of the Plan Year
in which the Participant attains age 34; (2) a reasonable period after an
Employee becomes a Participant; (3) a reasonable period after the joint and
survivor rules become applicable to the Participant; or (4) a reasonable
period after a fully subsidized preretirement survivor annuity no longer
satisfies the requirements for a fully subsidized benefit. A reasonable
period described in clauses (2), (3) and (4) is the period beginning one
year before and ending one year after the applicable event. If the
Participant separates from Service before attaining age 35, clauses (1),
(2), (3) and (4) do not apply and the Administrative Committee must provide
the written explanation within the period beginning one year before and
ending one year after the Separation from Service. The written explanation
must describe, in a manner consistent with Treasury regulations, the terms
and conditions of the preretirement survivor annuity comparable to the
explanation of the
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qualified joint and survivor annuity required under Section 6.05. The Plan
does not limit the number of times the Participant may evoke a waiver of
the preretirement survivor annuity or make a new waiver during the election
period.
A Participant's waiver election of the preretirement survivor annuity is
not valid unless (a) the Participant makes the waiver election no earlier
than the first day of the Plan Year in which he attains age 35 and (b) the
Participant's spouse (to whom the preretirement survivor annuity is
payable) satisfies the consent requirements described in Section 6.05,
except the spouse need not consent to the form of benefit payable to the
designated Beneficiary. The spouse's consent to the waiver of the
preretirement survivor annuity is irrevocable, unless the Participant
revokes the waiver election. Irrespective of the time of election
requirement described in clause (a), if the Participant separates from
Service prior to the first day of the Plan Year in which he attains age 35,
the Administrative Committee will accept a waiver election as respects the
Participant's Account Balance attributable to his Service prior to his
Separation from Service. Furthermore, if a Participant who has not
separated from Service makes a valid waiver election, except for the timing
requirement of clause (a), the Plan Administrator will accept that election
as valid, but only until the first day of the Plan Year in which the
Participant attains age 35. A waiver election described in this paragraph
is not valid unless made after the Participant has received the written
explanation described in this Section 6.06.
6.07 HARDSHIP/IN-SERVICE DISTRIBUTION RULES FROM DEFERRAL CONTRIBUTIONS
ACCOUNT. The distribution provisions in this Section 6.07 apply to
withdrawals from the Deferral Contributions Account, Qualified Matching
Contributions Account and the Qualified Nonelective Contributions Account
by a Participant who has not Separated from Service with the Employer. The
Participant, until he retires, has a continuing election to receive a
distribution of 50% of his Vested Account Balance from his Deferral
Contributions Account, Qualified Matching Contributions Account and
Qualified Nonelective Contributions Account if he has attained age fifty-
nine and one-half (59 1/2). If the Participant incurs an immediate and
heavy financial hardship, he may receive a distribution only to the extent
of the elective deferral portion of the Deferral Contributions Account plus
(1) any earnings on the Participant's elective deferrals credited before
January 1, 1989, and (2) his Qualified matching Contributions and Qualified
Nonelective Contributions, and earnings on such contributions, if credited
after December 31, 1988. Notwithstanding any other provision to the
contrary, the Plan shall not permit distribution of any amounts which
accrued after January 1, 1994, from the Employer Matching Contributions
Account, the Discretionary Contributions Account or the Qualified Matching
Contribution Account, if any, under the hardship distribution provisions of
the Plan.
A hardship distribution is on account of an immediate and heavy financial
need only if the distribution is for any of the following reasons: (1)
medical expenses described in Code section 213(d) incurred by the
Participant, by the Participant's spouse, or by any of the Participant's
dependents, or necessary to obtain such medical care; (2) the purchase
(excluding mortgage payments) of a principal residence for the Participant;
(3) the payment of post-secondary education tuition, for the next 12 month
period, for the Participant, for the Participant's spouse or for any of the
Participant's dependents (as defined in Code
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section 152); (4) to prevent the eviction of the Participant from his
principal residence or the foreclosure on the mortgage of the Participant's
principal residence; or (5) any need prescribed by the Revenue Service in a
revenue ruling, notice or other document of general applicability which
satisfies the safe harbor definition of hardship.
RESTRICTIONS ON HARDSHIP DISTRIBUTIONS. The following restrictions apply
to a Participant's hardship distribution.
(a) The Participant will not have the right to make a deferral election
under the 401(k) arrangement prescribed by Section 3.01(a) for the 12
month period following the date of his hardship distribution.
(b) The distribution may not exceed the amount of the immediate and heavy
financial need. The distribution will not exceed the amount of an
immediate and heavy financial need even though the Plan Administrator,
at its discretion, has elected to include in the amount of the
immediate and heavy financial need, those amounts necessary to pay any
federal, state or local income taxes or penalties reasonably
anticipated to result from the distribution. The Plan Administrator
will apply the provisions of this Section 6.07(b) in a
nondiscriminatory, consistent and uniform manner.
(c) The Participant must have obtained all distributions, other than
hardship distributions, and all nontaxable loans (determined at the
time of the loan) currently available under this Plan and all other
qualified plans maintained by the Employer.
(d) The Participant must agree to limit elective deferrals (as defined in
Section 3.03) under this Plan and under any other qualified Plan
maintained by the Employer, for the Participant's taxable year
immediately following the taxable year of the hardship distribution, to
the limitation on elective deferrals under section 402(g) of the Code
reduced by the amount of the Participant's elective deferrals made in
the taxable year of the hardship distribution.
The suspension of elective deferrals and employee contributions described
in clause (a) also must apply to all other qualified plans and to all
nonqualified plans of deferred compensation maintained by the Employer,
other than any mandatory employee contributions portion of a defined
benefit plan, including stock options, stock purchase and other similar
plans, but not including health or welfare benefit plans (other than the
cash or deferred arrangement portion of a cafeteria plan).
After the Participant separates from service with the Employer, the
provisions of this Article VI other than this Section 6.07 will apply to
the distribution of the Participant's Accrued Benefit, including the
portion attributable to his Deferral Contributions Account.
6.08 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing contained in
this Plan prevents the Trustee, in accordance with the direction of the
Plan Administrator, from complying with the provisions of a qualified
domestic relations order (as defined in Code
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section 414(p)). This Plan specifically permits distribution to an
alternate payee under a qualified domestic relations order at any time,
irrespective of whether the Participant has attained his earliest
retirement age (as defined under Code section 414(p)) under the Plan. A
distribution to an alternate payee prior to the Participant's attainment of
earliest retirement age is available only if: (1) the order specifies
distribution at that time or permits an agreement between the Plan and the
alternate payee to authorize an earlier distribution; and (2) if the
present value of the alternate payee's benefits under the Plan exceeds
$3,500, and the order requires, the alternate payee consents to any
distribution occurring prior to the Participant's attainment of earliest
retirement, age. Nothing in this Section 6.08 permits a Participant a
right to receive distribution at a time otherwise not permitted under the
Plan nor does it permit the alternate payee to receive a form of payment
not permitted under the Plan.
The Plan Administrator must establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Plan Administrator promptly will notify the
Participant and any alternate payee named in the order, in writing, of the
receipt of the order and the Plan's procedures for determining the
qualified status of the order. Within a reasonable period of time after
receiving the domestic relations order, the Plan Administrator must
determine the qualified status of the order and must notify the Participant
and each alternate payee, in writing, of its determination. The Plan
Administrator must provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order, or in a
manner consistent with Department of Labor regulations.
If any portion of the Participant's Vested Accrued Benefit is payable
during the period the Plan Administrator is making its determination of the
qualified status of the domestic relations order, the Plan Administrator
must make a separate accounting of the amounts payable. If the Plan
Administrator determines the order is a qualified domestic relations order
within eighteen (18) months of the date amounts first are payable following
receipt of the order, the Plan Administrator will direct the Trustee to
distribute the payable amounts in accordance with the order. If the Plan
Administrator does not make its determination of the qualified status of
the order within the eighteen (18) month determination period, the Plan
Administrator will direct the Trustee to distribute the payable amounts in
the manner the Plan would distribute if the order did not exist and will
apply the order prospectively if the Plan Administrator later determines
the order is a qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the qualified
domestic relations order, the Plan Administrator may direct the Trustee to
invest any partitioned amount in a segregated subaccount or separate
account and to invest the account in Federally insured, interest-bearing
savings account(s) or time deposit(s) (or a combination of both), or in
other fixed income investments. A segregated subaccount remains a part of
the Trust, but it alone shares in any income it earns, and it alone bears
any expense or loss it incurs. The Trustee will make any payments or
distributions required under this Section 6.08 by separate checks or other
separate distribution to the alternate payee(s).
6.09 DIRECT ROLLOVER. This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any provisions of the plan to the
contrary that would otherwise limit
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a Distributee's election under this Section, a Distributee may elect, at
the time and in the manner prescribed by the Plan Administrator, to have
any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover.
The following definitions apply for purposes of this Section.
Direct Rollover. A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
Distributee. A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined in
section 414(p) of the Code, are Distributees with regard to the interest of
the spouse or former spouse.
Eligible Retirement Plan. An Eligible Retirement Plan is an individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust described in
section 401(a) of the Code, that accepts 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.
Eligible Rollover Distribution. An Eligible Rollover Distribution is any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not
include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
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ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE. The Employer must supply current
information to the Plan Administrator as to the name, date of birth, date
of employment, annual Compensation, leaves of absence, Years of Service and
date of termination of employment of each Employee who is, or who will be
eligible to become, a Participant under the Plan, together with any other
information which the Plan considers necessary. The Employer's records as
to the current information the Employer furnishes to the Plan Administrator
are conclusive as to all persons.
7.02 NO LIABILITY. The Employer assumes no obligation or responsibility to
any of its Employees, Participants or Beneficiaries for any act of, or
failure to act, on the part of its Administrative Committee (unless the
Employer is the Administrative Committee), the Trustee or the Plan
Administrator (unless the Employer is the Plan Administrator).
7.03 INDEMNITY OF COMMITTEE. The Employer indemnifies and saves harmless
the Plan Administrator and the members of the Administrative Committee, and
each of them, from and against any and all loss resulting from liability to
which the Plan Administrator and the Administrative Committee, or the
members of the Administrative Committee may be subjected by reason of any
act or conduct (except willful misconduct or gross negligence) in their
official capacities in the administration of this Trust or Plan or both,
including all expenses reasonably incurred in their defense, in case the
Employer fails to provide such defense. The indemnification provisions of
this Section 7.03 do not relieve the Plan Administrator or any
Administrative Committee member from any liability he may have under ERISA
for breach of a fiduciary duty. Furthermore, the Plan Administrator and
the Administrative Committee members and the Employer may execute a letter
agreement further delineating the indemnification agreement of this Section
7.03, provided the letter agreement is consistent with and does not violate
ERISA. The indemnification provisions of this Section 7.03 extend to the
Trustee solely to the extent provided by letter agreement executed by the
Trustee and the Employer.
7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right to
direct the Trustee with respect to the investment and re-investment of
assets comprising the Trust Fund only if the Trustee consents in writing to
permit such direction. If the Trustee consents to Employer direction of
investment, the Trustee and the Employer must execute a letter agreement as
a part of this Plan containing such conditions, limitations and other
provisions they deem appropriate before the Trustee will follow any
Employer direction as respects the investment or re-investment of any part
of the Trust Fund.
7.05 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves the right
to amend the Vesting schedule at any time, the Plan Administrator will not
apply the amended Vesting schedule to reduce the Vested percentage of any
Participant's Employer Matching Contributions and Discretionary
Contributions Accounts (determined as of the later of the
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date the Employer adopts the amendment, or the date the amendment becomes
effective) to a percentage less than the Vested percentage computed under
the Plan without regard to the amendment.
If the Employer makes a permissible amendment to the Vesting schedule, each
Participant having at least three (3) Years of Service with the Employer
may elect to have the percentage of his Vested Accrued Benefit computed
under the Plan without regard to the amendment. The Participant must file
his election with the Plan Administrator within sixty (60) days of the
latest of (a) the Employer's adoption of the amendment; (b) the effective
date of the amendment; or (c) his receipt of a copy of the amendment. The
Plan Administrator, as soon as practicable, must forward a true copy of any
amendment to the Vesting schedule to each affected Participant, together
with an explanation of the effect of the amendment, the appropriate form
upon which the Participant may make an election to remain under the Vesting
schedule provided under the Plan prior to the amendment and notice of the
time within which the Participant must make an election to remain under the
prior Vesting schedule. For purposes of this Section 7.05, an amendment to
the Vesting schedule includes any Plan amendment which directly or
indirectly affects the computation of the Vested percentage of an
Employee's rights to his Employer Matching Contributions and Discretionary
Contributions Accounts.
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ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. Any Participant may from time to time designate,
in writing, any person or persons, contingently or successively, to whom
the Trustee will pay his Accrued Benefit on event of his death, and the
Participant may designate the form and method of payment. The Plan
Administrator will prescribe the form for the written designation of
Beneficiary and, upon the Participant's filing the form with the Plan
Administrator, the form effectively revokes all designations filed prior to
that date by the same Participant.
COORDINATION WITH SURVIVOR REQUIREMENTS. If the joint and survivor
requirements of Article VI apply to the Participant, this Section 8.01 does
not impose any special spousal consent requirements on the Participant's
Beneficiary designation. However, in the absence of spousal consent (as
required by Article VI) to the Participant's Beneficiary designation: (1)
any waiver of the joint and survivor annuity or of the preretirement
survivor annuity is not valid; and (2) if the Participant dies prior to his
annuity starting date, the Participant's Beneficiary designation will apply
only to the portion of the death benefit which is not payable as a
preretirement survivor annuity. Regarding clause (2), if the Participant's
surviving spouse is a primary Beneficiary under the Participant's
Beneficiary designation, the Trustee will satisfy the spouse's interest in
the Participant's death benefit first from the portion which is payable as
a preretirement survivor annuity.
SPECIAL RULE FOR EXEMPT PARTICIPANTS. The Beneficiary designation of a
married Exempt Participant is not valid unless the Participant's spouse
consents (in a manner described in Section 6.06) to the Beneficiary
designation. An "Exempt Participant" is a Participant who is not subject
to the joint and survivor consent requirements of Article VI. The spousal
consent requirement in this paragraph does not apply if the Participant and
his spouse are not married throughout the one year period ending on the
date of the Participant's death, or if the Participant's spouse is the
Participant's sole primary Beneficiary.
A married Participant's Beneficiary designation is not valid unless the
Participant's spouse consents, in writing, to the Beneficiary designation.
The spouses' consent must acknowledge the effect of that consent and a
notary public or the Plan (or his representative) must witness that
consent. The spousal consent requirements of this paragraph do not apply
if (1) the Participant and his spouse are not married throughout the one
year period ending on the date of the Participant's death; (2) the
Participant's spouse is the Participant's sole primary beneficiary; (3) the
Plan Administrator is not able to locate the Participant's spouse; (4) the
Participant is legally separated or has been abandoned (within the meaning
of State law) and the Participant has a court order to that effect; or (5)
other circumstances exist under which the Secretary of the Treasury will
excuse the consent requirement. If the Participant's spouse is legally
incompetent to give consent, the spouse's legal guardian (even if the
guardian is the Participant) may give consent.
8.02 NO BENEFICIARY DESIGNATION. If a Participant fails to name a
Beneficiary in accordance with Section 8.01, or if the Beneficiary named by
a Participant predeceases him
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or dies before complete distribution of the Participant's Accrued Benefit
as prescribed by the Participant's Beneficiary form, then the Trustee will
pay the Participant's Accrued Benefit in accordance with Section 6.02 in
the following order of priority to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including adopted children, in
equal shares;
(c) The Participant's surviving parents, in equal shares; or
(d) The legal representative of the estate of the last to die of the
Participant and his Beneficiary.
The Plan Administrator will direct the Trustee as to the method and to whom
the Trustee will make payment under this Section 8.02
8.03 PERSONAL DATA TO COMMITTEE. Each Participant and each Beneficiary of
a deceased Participant must furnish to the Plan Administrator such
evidence, data or information as the Plan Administrator considers necessary
or desirable for the purpose of administering the Plan. The provisions of
this Plan are effective for the benefit of each Participant upon the
condition precedent that each Participant will furnish promptly full, true
and complete evidence, data and information when requested by the Plan
Administrator, provided the Plan Administrator advises each Participant of
the effect of his failure to comply with its request.
8.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary of a
deceased Participant must file with the Plan Administrator from time to
time, in writing, his post office address and any change of post office
address. Any communication, statement or notice addressed to a
Participant, or Beneficiary, at his last post office address filed with the
Plan Administrator, or as shown on the records of the Employer, binds the
Participant, or Beneficiary, for all purposes of this Plan.
8.05 ASSIGNMENT OR ALIENATION. Subject to Code section 414(p) relating to
qualified domestic relations orders, neither a Participant nor a
Beneficiary may anticipate, assign or alienate (either at law or in equity)
any benefit provided under the Plan, and the Trustee will not recognize any
such anticipation, assignment or alienation. Furthermore, a benefit under
the Plan is not subject to attachment, garnishment, levy, execution or
other legal or equitable process.
8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the time
prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries a summary description of any material
amendment to the Plan or notice of discontinuance of the Plan and all other
information required by ERISA to be furnished without charge.
8.07 LITIGATION AGAINST THE TRUST. A court of competent jurisdiction may
authorize any appropriate equitable relief to redress violations of ERISA
or to enforce any provisions
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of ERISA or the terms of the Plan. A fiduciary may receive reimbursement
of expenses properly and actually incurred in the performance of his duties
with the plan.
8.08 INFORMATION AVAILABLE. Any Participant in the Plan or any Beneficiary
may examine copies of the Plan description, latest annual report, this Plan
and Trust, contract or any other instrument under which the Plan was
established or is operated. The Plan Administrator will maintain all of
the items listed in this Section 8.08 in his office, or in such other place
or places as he may designate from time to time in order to comply with the
regulations issued under ERISA, for examination during reasonable business
hours. Upon the written request of a Participant or Beneficiary the Plan
Administrator will furnish him with a copy of any item listed in this
Section 8.08. The Plan Administrator may make a reasonable charge to the
requesting person for the copy so furnished.
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Plan Administrator (or
on appeal, the Plan Administrator) is authorized to use its discretion in
construing all terms of the Plan. The Plan Administrator will provide
adequate notice in writing to any Participant or to any Beneficiary
("Claimant") whose claim for benefits under the Plan the Plan Administrator
has denied. The Plan Administrator's notice to the Claimant must set
forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions on which the Plan
Administrator based its denial;
(c) A description of any additional material and information needed for the
Claimant to perfect his claim and an explanation of why the material or
information is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Plan Administrator within
seventy-five (75) days after receipt of the Plan Administrator's notice
of denial of benefits. The Plan Administrator's notice must further
advise the Claimant that his failure to appeal the action to the Plan
Administrator in writing within the seventy-five (75) day period will
render the Participant's determination final, binding and conclusive.
If the Claimant should appeal to the Plan Administrator, he, or his duly
authorized representative, may submit, in writing, whatever issues and
comments he, or his duly authorized representative, feels are pertinent.
The Plan Administrator will re-examine all facts related to the appeal and
make a final determination as to whether the denial of benefits is
justified under the circumstances. The Plan Administrator must advise the
Claimant of its decision within sixty (60) days of the Claimant's written
request for review, unless special circumstances (such as a hearing) would
make the rendering of a decision within the sixty (60) day limit
unfeasible, but in no event may the Plan Administrator render a decision
respecting a denial for a claim for benefits later than one hundred twenty
(120) days after its receipt of a request for review.
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The Plan Administrator's notice of denial of benefits must identify the
name of each member of the Plan Administrator and the name and address of
the Plan Administrator member to whom the Claimant may forward his appeal.
8.10 PARTICIPANT DIRECTION OF INVESTMENT. A Participant may elect to have
amounts credited to his Account invested in the investment funds made
available by the Plan Administrator.
(a) The Employee will make an election as to the investment funds upon
becoming a Participant in the Plan. If no election is made, all
amounts in a Participant's Account will be invested in a money market
type fund. The Committee will provide each Participant with
information and forms to enable him to make his election.
(b) On January 1, April 1, July 1, or October 1, a Participant may elect
how future contributions and allocations to his Account will be
invested among the investment funds. Amounts invested in the funds
will be in increments of five percent (5%). Such elections will be
made at such time, in such manner and in such form as the Committee
may prescribe through uniform and nondiscriminatory rules.
(c) On January 1, April 1, July 1, or October 1, a Participant may elect
to transfer amounts between any of the investment funds. Amounts
transferred among the funds will be in increments of five percent
(5%). Such elections shall be at such time, in such manner and in
such form as the Plan Administrator may prescribe through uniform and
nondiscriminatory rules.
(d) Effective January 1, 1994 monies allocated to the Employer Matching
Contributions Account, the Discretionary Contributions Account, and
the Qualified Matching Contribution Account, if any, shall be invested
in Employer Stock. After, January 1, 1994, a Participant has no right
to transfer any amounts to or from the Employer Matching Contribution
Account, the Discretionary Contributions Account, and if applicable,
the Qualified Matching Contribution Account.
(e) The Plan Administrator reserves the right to change the investment
options under the Plan.
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ARTICLE IX
ADMINISTRATIVE DUTIES
WITH RESPECT TO PARTICIPANTS' ACCOUNT
9.01 MEMBERS' COMPENSATION EXPENSES. The Employer may appoint an
Administrative Committee to administer the Plan, the members of which may
or may not be Participants in the Plan. The members of the Administrative
Committee will serve without compensation for services as such, but the
Employer will pay all expenses of the Administrative Committee.
9.02 TERM AND NUMBER. Each member of the Administrative Committee serves
until the appointment of his successor. The Administrative Committee will
consist of at least three (3) members.
9.03 POWERS. In case of a vacancy in the membership of the Administrative
Committee, the remaining members of the Administrative Committee may
exercise any and all of the powers, authority, duties and discretion
conferred upon the Administrative Committee pending the filling of the
vacancy.
9.04 GENERAL. The Plan Administrator or Administrative Committee, if one
is appointed, have the following powers and duties:
(a) To select a Secretary, who need not be a member of the Administrative
Committee;
(b) To determine the rights of eligibility of an Employee to participate
in the Plan, the value of a Participant's Accrued Benefit and the
Vested percentage of each Participant's Accrued Benefit;
(c) To adopt rules of procedure and regulations necessary for the proper
and efficient administration of the Plan provided the rules are not
inconsistent with the terms of this Agreement;
(d) To enforce the terms of the Plan and the rules and regulations it
adopts;
(e) To direct the Trustee as respects the crediting and distribution of
the Trust;
(f) To review and render decisions respecting a claim for (or denial of a
claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(h) To engage the service of agents whom it may deem advisable to assist
it with the performance of its duties;
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(i) To engage the services of an Investment Manager or Managers (as
defined in ERISA section 3(38)), each of whom will have full power and
authority to manage, acquire or dispose (or direct the Trustee with
respect to acquisition or disposition) of any Plan asset under its
control; and
(j) To establish a nondiscriminatory policy which the Trustee must observe
in making loans, if any, to Participants.
The Plan Administrator must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
LOAN POLICY. If the Plan Administrator adopts a loan policy, pursuant to
paragraph (j), the loan policy must be a written document and must include:
(1) the identity of the person or positions of authority authorized to
administer the participant loan program; (2) a procedure for applying for
the loan; (3) the criteria for approving or denying the loan; (4) the
limitations, if any, on the types and amounts of loans available; (5) the
procedure for determining a reasonable rate of interest; (6) the types of
collateral which may secure the loan; and (7) the events constituting
default and the steps the Plan will take to preserve plan assets in the
event of default. This Section 9.04 specifically incorporates a written
loan policy as part of the Employer's Plan.
9.05 FUNDING POLICY. The Plan Administrator will review, not less often
than annually, all pertinent Employee information and Plan data in order to
establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Plan Administrator must
communicate periodically, as its deems appropriate, to the Trustee and any
Plan Investment Manager the Plan's short-term and long-term financial needs
so investment policy can be coordinated with Plan financial requirements.
9.06 MANNER OF ACTION. The decision of a majority of the members appointed
and qualified controls.
9.07 AUTHORIZED REPRESENTATIVE. The Plan Administrator may authorize any
one (1) of the members of the Administrative Committee, or is Secretary, to
sign on its behalf any notices, directions, applications, certificates,
consents, approvals, waivers, letters or other documents. The Plan
Administrator must evidence this authority by an instrument signed by all
members and filed with the Trustee.
9.08 INTERESTED MEMBER. No member of the Administrative Committee may
decide or determine any matter concerning the distribution, nature or
method of settlement of his own benefits under the Plan, except in
exercising an election available to that member in his capacity as a
Participant.
9.09 INDIVIDUAL ACCOUNTS. The Plan Administrator will maintain, or direct
the Trustee to maintain, a separate Account, or multiple Accounts, in the
name of each Participant to reflect the Participant's Accrued Benefit under
the Plan. If Participant re-enters the Plan subsequent to his having a
Forfeiture Break in Service, the Plan Administrator, or the
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Trustee, must maintain a separate Account for the Participant's pre-
Forfeiture Break in Service Accrued Benefit and a separate Account for his
post-Forfeiture Break in Service Accrued Benefit, unless the Participant's
entire Accrued Benefit under the Plan is one hundred percent (100%) Vested.
The Plan Administrator will make its allocations, or request the Trustee to
make its allocations, to the Accounts of the Participants in accordance
with the provisions of Section 9.11. The Plan Administrator may direct the
Trustee upon restoration of a partially Vested Participant's Account, as
described in Section 5.03, to maintain a temporary segregated investment
Account in the name of a Participant to prevent a distortion of income,
gain or loss allocations under Section 9.11. Such a temporary separate
account would be required upon the restoration of account. The Plan
Administrator must maintain records of its activities.
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Account Balance consists of that proportion of the net worth
(at fair market value) of the Employer's Trust Fund which the net credit
balance in his Account bears to the total net credit balance in the
Accounts (exclusive of the cash value of the incidental benefit insurance
contracts) of all Participants plus the cash surrender value of any
incidental benefit insurance contracts held by the Trustee on the
Participants life.
For purposes of a distribution under the Plan, the value of a Participant's
Account Balance is its value as of the valuation date immediately preceding
the date of the distribution except, however, that portion of the
Participant's Account Balance derived from the Employer Matching
Contribution Account and if applicable, the Qualified Matching Contribution
Account shall be valued on the September 30 immediately following the date
which the Participant separates from Service.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME, GAIN OR LOSS. A "valuation
date" under this Plan is each Accounting Date and each interim valuation
date determined under Section 10.14. As of each valuation date the Plan
Administrator must adjust Accounts to reflect net income, gain or loss
since the last valuation date. The valuation period is the period
beginning the day after the last valuation date and ending on the current
valuation date.
TRUST FUND ACCOUNTS. The allocation provisions of this paragraph apply to
all Participant Accounts other than segregated investment Accounts. The
Plan Administrator first shall determine the earnings and the amount of any
realized or unrealized appreciation or depreciation in the fair market
value of the Trust's portion of each of the investment funds offered
pursuant to the Plan. The Plan Administrator shall, for purposes of this
Section 9.11 only, partition each Participant's Deferral Contributions
Account, Qualified Matching Contributions Account, Employer Matching
Contributions Account, Qualified Nonelective Contributions Account,
Discretionary Contribution Accounts and Rollover Accounts into sub-Accounts
in respect of each investment fund in which the Participant's Accounts are
invested. The value of each sub-Account for each Participant shall be
determined as of the immediately preceding valuation date. For this
purpose, such value shall be deemed to be
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the same value as that determined as of such previous valuation date, but
adjusted for any forfeitures during the current valuation period arising
under Section 5.07 or under Section 9.14, and for amounts charged during
the current valuation period to the Accounts in accordance with Section
9.13 (relating to distributions). Each sub-Account's shares of earnings
and the amount of any realized or unrealized appreciation or depreciation
in the related investment fund for the period since the last valuation date
shall be determined by multiplying that sub-Account's Allocation Fraction
by the amount determined for the related investment fund pursuant to the
second sentence of this paragraph. "Allocation Fraction" means the ratio
of the sub-Account's Allocation Balance to the total Allocation Balances
for all sub-Accounts (for all Participants) invested in the same investment
fund. With respect to sub-Accounts of a Participant's Deferral
Contribution Account, "Allocation Balance" means such Account's value as of
the last valuation date as determined above increased by one-half of the
Participant's Deferral Contributions contributed and allocated to that sub-
Account since the last valuation date. With respect to sub-Accounts of a
Participant's Rollover Account, "Allocation Balance" means rollover
contribution amount determined by taking the number of days the rollover
was in the sub-Account during the valuation period in which the rollover
was made divided by the days in the valuation period times the amount of
any nonsegregated rollover contribution made during the current valuation
period.
SPECIAL PROVISIONS FOR EMPLOYER MATCHING CONTRIBUTION ACCOUNT AND QUALIFIED
MATCHING CONTRIBUTIONS ACCOUNT. Effective for the periods after January 1,
1994, the Employer Matching Contribution Account and if applicable, the
Qualified Matching Contribution Account receives all income it earns and
bears all expense or loss it incurs resulting from investment in any
temporary money market investment or Employer securities. The fair market
value of the Employer securities will be determined annually by a
independent third party appraiser.
SEGREGATED INVESTMENT ACCOUNTS. A segregated investment Account receives
all income it earns and bears all expense or loss it incurs. As of the
valuation date, the Plan Administrator must reduce a segregated Account for
any forfeiture arising under Section 5.07 after the Plan Administrator has
made all other allocations, changes or adjustments to the Account for the
Plan Year.
ADDITIONAL RULES. An Excess Amount or suspense account described in Part 2
of Article III does not share in the allocation of net income, gain or loss
described in this Section 9.11. This Section 9.11 applies solely to the
allocation of net income, gain or loss of the Trust. The Plan Administrator
will allocate the Employer contributions and Participant forfeitures, if
any, in accordance with Article III.
9.12 INDIVIDUAL STATEMENT. As soon as practicable after the Accounting
Date of each Plan Year, but within the time prescribed by ERISA and the
regulations under ERISA, the Plan Administrator will deliver to each
Participant (and to each Beneficiary) a statement reflecting the condition
of this Accrued Benefit in the Trust as of the date and such other
information ERISA requires be furnished the Participant or Beneficiary. No
Participant, except a member of the Plan Administrator, has the right to
inspect the records reflecting the Account of any other Participant.
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9.13 ACCOUNT CHARGED. The Plan Administrator will charge all distributions
made to a Participant or to his Beneficiary from his Account against the
Account of the Participant when made.
9.14 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either the
Trustee or the Plan Administrator to search for, or ascertain the
whereabouts of, any Participant or Beneficiary. At the time the
Participant's or Beneficiary's benefit becomes distributable under Article
VI, the Plan Administrator, by certified or registered mail addressed to
his last known address of record with the Plan Administrator or the
Employer, must notify any Participant, or Beneficiary, that he is entitled
to a distribution under this Plan. The notice must quote the provisions of
this Section 9.14 and otherwise must comply with the notice requirements of
Article VI. If the Participant, or Beneficiary, fails to claim his
distributive share or make his whereabouts known in writing to the Plan
Administrator within six (6) months from the date of mailing of the notice,
the Plan Administrator will treat the Participant's or Beneficiary's
unclaimed payable Accrued Benefit as forfeited and will reallocate the
unclaimed payable Accrued Benefit in accordance with Section 3.05. Where
the benefit is distributable to the Participant, the forfeiture under this
paragraph occurs as of the last day of the notice period, if the
Participant's Vested Accrued Benefit does not exceed $3,500, or as of the
first day the benefit is distributable without the Participant's consent,
if the present value of the Participant's Vested Accrued Benefit exceeds
$3,500. Where the benefit is distributable to a Beneficiary, the
forfeiture occurs on the date the notice period ends except, if the
Beneficiary is the Participant's spouse and the Vested Accrued Benefit
payable to the spouse exceeds $3,500, the forfeiture occurs as of the first
day the benefit is distributable without the spouse's consent. Pending
forfeiture, the Plan Administrator, following the expiration of the notice
period, may direct the Trustee to segregate the Vested Accrued Benefit in a
segregated Account and to invest the segregated Account in Federally
insured interest bearing savings accounts or time deposits (or in a
combination of both), or in other fixed income investments.
If a Participant or Beneficiary who has incurred a forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this Section
9.14 makes a claim, at any time, for his forfeited Accrued Benefit, the
Plan Administrator must restore the Participant's or Beneficiary's
forfeited Accrued Benefit to the same dollar amount as the dollar amount of
the Accrued Benefit forfeited, unadjusted for any gains or losses occurring
subsequent to the date of the forfeiture. The Plan Administrator will make
the restoration during the Plan Year in which the Participant or
Beneficiary makes the claim first from the amount, if any, of Participant
forfeitures the Plan Administrator otherwise would allocate for the Plan
Year, then from the amount, if any, of the Trust Fund net income or gain
for the Plan Year and then from the amount, or additional amount, the
Employer contributes to enable the Plan Administrator to make the required
restoration. The Plan Administrator will direct the Trustee to distribute
the Participant's or Beneficiary's restored Accrued Benefit to him in
accordance with Article VI. The forfeiture provisions of this Section 9.14
apply solely to the Participant's or to the Beneficiary Accrued Benefit
derived from Employer contributions.
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ARTICLE X
TRUSTEE, POWERS AND DUTIES
10.01 ACCEPTANCE. The Trustee accepts the Trust created under the plan and
agrees to perform the obligations imposed. The Trustee must provide bond
for the faithful performance of its duties under the Trust to the extent
required by ERISA.
10.02 RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the Employer for
the funds contributed to it by the Employer, but does not have any duty to
see that the contributions received comply with the provisions of the
Plan. The Trustee is not obliged to collect any contributions from the
Employer, nor is obliged to see that funds deposited with it are deposited
according to the provisions of the Plan.
10.03 INVESTMENT POWERS.
TRUSTEE POWERS. The Trustee has full discretion and authority with regard
to the investment of the Trust Fund except with respect to a Plan asset
under the control or direction of a properly appointed Investment Manager,
or with respect to a Plan asset subject to Employer, Participant or Plan
Administrator direction of investment. The Trustee must coordinate its
investment policy with Plan financial needs as communicated to it by the
Plan Administrator. The Trustee is authorized and empowered, but not by
way of limitation, with the following powers, rights and duties:
(a) To invest any part or all of the Trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures,
commercial paper, U.S. Treasury bills, U.S. Treasury notes and other
direct or indirect obligations of the United States Government or its
agencies, improved or unimproved real estate situated in the United
States, insurance contracts of any type, limited partnerships,
mortgages, notes or other property of any kind, real or personal, and
to buy or sell options on common stock on a nationally recognized
exchange with or without holding the underlying common stock, and to
make any other investments the Trustee deems appropriate, as a
prudent man would do under like circumstances with due regard for the
purposes of this Plan. Any investment made or retained by the Trustee
in good faith is proper but must be of a kind constituting a
diversification considered by law suitable for trust investments;
(b) To acquire and hold "qualifying Employer securities" and "qualifying
Employer real property", as those terms are defined in the Act,
further provided, that the Trustee shall be permitted to acquire any
qualifying Employer securities or qualifying Employer real property
even if, immediately after the acquisition of such securities or
property, the fair market value of all qualifying Employer securities
or qualifying Employer real property held by the Trustees hereunder
should amount to 100% of the fair market value of all assets in the
Trust Fund.
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(c) To retain in cash so much of the Trust Fund as it may deem advisable
to satisfy liquidity needs of the Plan and to deposit any cash held in
the Trust Fund in a bank account at reasonable interest. If the
Trustee is a bank or similar financial institution supervised by the
United States or by a State, this paragraph (b) includes specific
authority to invest in any type of deposit of the Trustee (or of a
bank related to the Trustee within the meaning of Code section 414(b))
at a reasonable rate of interest or in a common trust fund (provisions
of which govern the investment of such assets and which the Plan
incorporates by this reference) as described in Code section 584 which
the Trustee (or its affiliate, as defined in Code section 1504)
maintains exclusively for the collective investment of money
contributed by the bank (or the affiliate) in its capacity as trustee
and which conforms to the rules of the Comptroller of the Currency;
(d) To manage, sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any
term even though commencing in the future or extending beyond the term
of the Trust, and otherwise deal with all property, real or personal,
in such manner, for such considerations and on such terms and
conditions as the Trustee decides.
(e) To credit and distribute the Trust as directed by the Plan
Administrator. The Trustee is not obliged to inquire as to whether
any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee is
accountable only to the Plan Administrator for any payment or
distribution made by it in good faith on the order or direction of the
Plan Administrator.
(f) To compromise, contest, arbitrate or abandon claims and demands, in
its discretion;
(g) To have with respect to the Trust all of the rights of an individual
owner, including the power to give proxies, to participate in any
voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights;
(h) To hold any securities or other property in the name of the Trustee or
its nominee, with depositories or agent depositories or in another
form as it may deem best, with or without disclosing the trust
relationship;
(i) To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust;
(j) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment
or delivery of the funds or property until final adjudication is made
by a court of competent jurisdiction;
(k) To file all tax returns required of the Trustee;
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(l) To furnish to the, Employer, the Plan Administrator and the Plan
Administrator an annual statement of account showing the condition of
the Trust Fund and all investments, receipts, disbursements and other
transactions effected by the Trustee during the Plan Year covered by
the statement and also stating the assets of the Trust held at the
end of the Plan Year, which accounts are conclusive on all persons,
including the Employer, the Plan Administrator and the Administrative
Committee, except as to any act or transaction concerning which the
Employer, the Plan Administrator or the Administrative Committee
files with the Trustee written exceptions or objections within ninety
(90) days after the receipt of the accounts or for which ERISA
authorizes a longer period within which to object; and
(m) To begin, maintain or defend any litigation necessary in connection
with the administration of the Plan, except that the Trustee is not
obliged or required to do so unless indemnified to its satisfaction.
PARTICIPANT LOANS. This Section specifically authorizes the Trustees to
make loans on a nondiscriminatory basis to a Participant or to a
beneficiary in accordance with the loan policy established by the Plan
Administrator, provided: (1) the loan policy satisfies the requirements of
Section 9.04; (2) loans are available to all Participants and
Beneficiaries on a reasonable equivalent basis and are not available in a
greater amount for Highly Compensated Employees than for other Employees;
(3) any loan is adequately secured and bears a reasonable rate of
interest; (4) the minimum loan amount is $1,000 and the maximum loan
amount is the lessor of $50,000 or 50% of a Participants Vested Account
Balance; (5) the loan provides for repayment within five years except for
certain home loan which must be repaid within fifteen years; (6) the
default provisions of the note prohibit offset of the Participant's
Nonforfeitable Accrued Benefit prior to the time the Trustee otherwise
would distribute the Participant's Nonforfeitable Accrued Benefit; (7) the
amount of the loan does not exceed (at the time the Plan extends the loan
the present value of the Participant's Nonforfeitable Accrued Benefit; (8)
the loan shall be treated as a Directed Investment; and (9) the loan
otherwise conforms to the exemption provided by Code Section 4975(d)(1).
If the joint and survivor requirements of Article VI apply to the
Participant, the Participant may not pledge any portion of his Account
Balance as security for a loan made after August 18, 1985, unless, within
the 90 day period ending on the date the pledge becomes effective, the
Participant's spouse, if any, consents (in a manner described in Section
6.05 other than the requirement relating to the consent of a subsequent
spouse) to the security or, by separate consent, to an increase in the
amount of security. If the Employer is an "S Corporation", a Participant
who is a shareholder-Employee (an employee or an officer) who, at any time
during the Employer's taxable year, owns more than 5%, either directly or
by attribution under Code Section 318(a)(1), of the Employer's outstanding
stock may not receive a loan from the Plan. Notwithstanding any other
provision to the contrary, the Plan shall not permit distribution of any
amounts which accrued after January 1, 1994, from the Employer Matching
Contributions Account, the Discretionary Contributions Account or the
Qualified Matching Contribution Account, if any, under the loan provisions
of the Plan.
10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining to the
Plan must be open to the inspection of the Plan Administrator,
Administrative Committee and the
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Employer at all reasonable times and may be audited from time to time by
any person or persons as the Plan Administrator, Employer or
Administrative Committee may specify in writing. The Trustee must furnish
the Plan Administrator or Administrative Committee with whatever
information relating to the Trust Fund the Administrative Committee or
Plan Administrator considers necessary.
10.05 FEES AND EXPENSES FROM FUND. The Trustee will receive reasonable annual
compensation as may be agreed upon from time to time between the Employer
and the Trustee. The Trustee will pay all fees and expenses reasonably
incurred by it in its administration of the Plan from the Trust Fund
unless the Employer pays the fees and expenses. The Plan Administrator
will not treat any fee or expense paid, directly or indirectly, by the
Employer as an Employer contribution, provided the fee or expense relates
to the ordinary and necessary administration of the Fund. No person who is
receiving full pay from the Employer may receive compensation for services
as Trustee.
10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA, only the
Employer, the Plan Administrator, the Administrative Committee, and the
Trustee are necessary parties to any court proceeding involving the
Trustee or the Trust Fund. No Participant, or Beneficiary, is entitled to
any notice of process unless required by ERISA. Any final judgment entered
in any proceeding will be conclusive upon the Employer, the Plan
Administrator, the Administrative Committee, the Trustee, Participants and
Beneficiaries.
10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay from the Trust Fund
reasonable compensation to agents, attorneys, accountants and other
persons to advise the Trustee as in its opinion may be necessary. The
Trustee may delegate to any agent, attorney, accountant, or other person
selected by it any non-Trustee power or duty assigned it by the Plan, and
the Trustee may act or refrain from acting on the advice or opinion of any
agent, attorney, accountant or other person so selected.
10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may make distribution under
the Plan in cash or property, other than Employer Stock, or partly in
each, at its fair market value as determined by the Trustee. For purposes
of a distribution to a Participant or to a Participant's designated
Beneficiary or surviving spouse, "property" includes a nontransferable
annuity contract, provided the contract satisfies the requirements of this
Plan. In no event shall a distributions be made to a Participant or his
Designated Beneficiary in Employer Stock.
10.09 DISTRIBUTION DIRECTIONS. If no one claims a payment of distribution made
from the Trust, the Trustee must promptly notify the Plan Administrator
and then dispose of the payment in accordance with the subsequent
direction of the Plan Administrator.
10.10 THIRD PARTY. No person dealing with the Trustee is obligated to see to the
proper application of any money paid or property delivered to the Trustee,
or to inquire whether the Trustee has acted pursuant to any of the terms
of the Plan. Each person dealing with the Trustee may act upon any notice,
request or representation in writing by the Trustee, or by the Trustee's
duly authorized agent, and is not liable to any person in so acting. The
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certificate of the Trustee that it is acting in accordance with the Plan
will be conclusive in favor of any person relying on the certificate. If
more than two persons act as Trustee, the decision of a majority of such
persons controls with respect to any decision regarding the administration
or investment of the Trust Fund.
10.11 RESIGNATION. The Trustee may resign at any time as Trustee of the
Plan by giving thirty (30) days' written notice in advance to the Employer
and to the Plan Administrator. If the Employer fails to appoint a
successor Trustee within 60 days of its receipt of the Trustee's written
notice of resignation, the Trustee will treat the Employer as having
appointed itself as Trustee and as having filed its acceptance of
appointment with the former Trustee.
10.12 REMOVAL. The Employer, by giving thirty (30) days' written notice in
advance to the Trustee, may remove any Trustee. In the event of the
resignation or removal of a Trustee, the Employer must appoint a successor
Trustee if it intends to continue the Plan. If two or more persons hold
the position of Trustee, in the event of the removal of one such person,
during any period the selection of a replacement is pending, or during any
period such person is unable to serve for any reason, the remaining person
or persons will act as the Trustee.
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor Trustee succeeds to
the title to the Trust vested in his predecessor by accepting in writing
his appointment as successor Trustee and filing the acceptance with the
former Trustee and the Plan Administrator without the signing or filing of
any further statement. The resigning or removed Trustee, upon receipt of
acceptance in writing of the Trust by the successor Trustee, must execute
all documents and do all, acts necessary to vest the title of record in
any successor Trustee. Each successor Trustee has and enjoys all of the
powers, both discretionary and ministerial, conferred under this Agreement
upon his predecessor. A successor Trustee is not personally liable for any
act or failure to act of any predecessor Trustee, except as required under
ERISA. With the approval of the Employer and the Plan Administrator, a
successor Trustee, with respect to the Plan, may accept the account
rendered and the property delivered to it by a predecessor Trustee without
incurring any liability or responsibility for so doing.
10.14 VALUATION OF TRUST. The Trustee shall value the Trust Fund as of each
Accounting Date to determine the fair market value of the cash portion of
each Participant's Deferral Contributions Account and the segment of the
Employer Matching Contributions Account and Qualified Matching
Contributions Account, if any, accrued prior to January 1, 1994. That
portion of the Participant's Account Balance allocated to the Employer
Matching Contributions Account, the Discretionary Contributions Account
and the Qualified Matching Contributions Account, if any, allocated after
January 1, 1994, shall be valued as of the annual stock valuation date,
September 30. The Trustee also may value the Trust Fund on such other
interim valuation dates as he deems appropriate.
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER APPOINTED. The Trustee is
not liable for the acts or omissions of any Investment Manager or Managers
the Plan Administrator may appoint, nor is the Trustee under any
obligation to invest or otherwise manage any asst of the Plan which is
subject to the management of the properly
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appointed Investment Manager. The Plan Administrator, the Trustee and any
properly appointed Investment Manager may execute a letter agreement as
part of this Plan delineating the duties, responsibilities and liabilities
of the Investment Manager with respect to any part of the Trust Fund under
the control of the Investment Manager.
10.16 INVESTMENT IN GROUP TRUST FUND. The Trustee, for collective investment
purposes, may combine into one (1) trust fund the Trust created under this
Plan with the trust created under any other qualified retirement plan the
Employer maintains. However, the Trustee must maintain separate records of
account for the assets of each trust, in order to reflect properly each
Participant's Accrued Benefit under the plan(s) in which he is a
Participant.
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ARTICLE XI
MISCELLANEOUS
11.01 EVIDENCE. Anyone required to give evidence under the terms of the Plan
may do so by certificate, affidavit, document or other information which
the person to act in reliance may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. Both the Plan Administrator and the Trustee are fully protected
in acting and relying upon any evidence described under the immediately
preceding sentence.
11.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee nor the Plan
Administrator has any obligation nor responsibility with respect to any
action required by the Plan to be taken by the Employer, any Participant
or eligible Employee, or for the failure of any of the above persons to
act or make any payment or contribution, or to otherwise provide any
benefit contemplated under this Plan. Furthermore, the Plan does not
require the Trustee or the Plan Administrator to collect any contribution
required under the Plan, or to determine the correctness of the amount of
any Employer contribution. Neither the Trustee nor the Plan Administrator
need inquire into or be responsible for any action or failure to act on
the part of the others. Any action required of a corporate Employer must
be by its Board of Directors or its designate.
11.03 FIDUCIARIES NOT INSURERS. The Trustee, the Plan Administrator, the Plan
Administrator and the Employer in no way guarantee the Trust fund from
loss or depreciation. The Employer does not guarantee the payment of any
money which may be or becomes due to any person from the Trust Fund. The
liability of the Plan Administrator and the Trustee to make any payment
from the Trust Fund at any time and all times is limited to the then
available assets of the Trust.
11.04 WAIVER OF NOTICE. Any person entitled to notice under the Plan may
waive the notice.
11.05 SUCCESSORS. The Plan is binding upon all persons entitled to benefits
under the Plan, their respective heirs and legal representatives, upon the
Employer, its successors and assigns, and upon the Trustee and the Plan
Administrator and their successors.
11.06 WORD USAGE. Words used in the masculine also apply to the feminine where
applicable, and wherever the context of the Employer's Plan dictates, the
plural includes the singular and the singular includes the plural.
11.07 STATE LAW. Texas law will determine all questions arising with
respect to the provisions of this Agreement except to the extent Federal
statute supersedes Texas law.
11.08 EMPLOYMENT NOT GUARANTEE. Nothing contained in this Plan, or with respect
to the establishment of the Trust, or any modification or amendment to the
Plan or Trust, or in the creation of any Account, or the payment of any
benefit, gives any Employee, Participant or any Beneficiary any right to
continue employment, any legal or equitable right against the Employer, or
Employee of the Employer, or against the Trustee, or its agents or
employees,
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or against the Plan Administrator, except as expressly provided by the
Plan, the Trust, ERISA or by a separate agreement.
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ARTICLE XII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
12.01 EXCLUSIVE BENEFIT. Except as provided under Article III, the Employer has
no beneficial interest in any asset of the Trust and no part of any asset
in the Trust may ever revert to or be repaid to an Employer, either
directly or indirectly; nor prior to the satisfaction of all liabilities
with respect to the Participants and their Beneficiaries under the Plan,
may any part of the corpus or income of the Trust Fund, or any asset of
the Trust, be (at any time) used for, or diverted to, purposes other than
the exclusive benefit of the Participants or their Beneficiaries.
12.02 AMENDMENT BY EMPLOYER. The Employer has the right at any time and
from time to time:
(a) To amend this Agreement in any manner it deems necessary or advisable
in order to qualify (or maintain qualification of) this Plan and the
Trust created under it under the appropriate provisions of Code
section 401(a); and
(b) To amend this Agreement in any other manner.
No amendment may authorize or permit any of the Trust Fund (other than the
part which is required to pay taxes and administration expenses) to be
used for or diverted to purposes other than for the exclusive benefit of
the Participants or their Beneficiaries or estates. No amendment may cause
or permit any portion of the Trust Fund to revert to or become a property
of the Employer. The Employer also may not make any amendment which
affects the rights, duties or responsibilities of the Trustee, the Plan
Administrator or the Administrative Committee without the written consent
of the affected Trustee, the Plan Administrator or the affected member of
the Administrative Committee.
CODE SECTION 411(D)(6) PROTECTED BENEFITS. An amendment (including the
adoption of this Plan as a restatement of an existing plan) may not
decrease a Participant's Accrued Benefit, except to the extent permitted
under Code section 412(c)(8), and may not reduce or eliminate Code section
411(d)(6) protected benefits determined immediately prior to the adoption
date (or, if later, the effective date) of the amendment. An amendment
reduces or eliminates Code section 411(d)(6) protected benefits if the
amendment has the effect of either (1) eliminating or reducing an early
retirement benefit or a retirement-type subsidy (as defined in Treasury
regulations), or (2) except as provided by Treasury regulations,
eliminating an optional form of benefit. The Plan Administrator must
disregard an amendment to the extent application of the amendment would
fail to satisfy this paragraph. If the Plan Administrator must disregard an
amendment because the amendment would violate clause (1) of clause (2), the
Plan Administrator must maintain a schedule of the early retirement option
or other optional forms of benefit the Plan must continue for the affected
Participants. The Employer must make all amendments in writing. Each
amendment must state the date to which it is either retroactively or
prospectively effective.
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12.03 DISCONTINUANCE. The Employer has the right, at any time, to suspend or
discontinue its contributions under the Plan, and to terminate, at any
time, this Plan and the Trust created under this Agreement. The Plan will
terminate upon the first to occur of the following:
(a) The date terminated by action of the Employer;
(b) The date the Employer is judicially declared bankrupt or insolvent,
unless the proceeding authorized continued maintenance of the Plan;
(c) The dissolution, merger, consolidation or reorganization of the
Employer or the sale by the Employer of all or substantially all of
its assets, unless the successor or purchaser makes provision to
continue the Plan, in which event the successor or purchaser must
substitute itself as the Employer under this Plan.
12.04 FULL VESTING ON TERMINATION. Upon either full or partial termination of
the Plan, or if applicable, upon complete discontinuance of profit sharing
contributions to the Plan, an affected Participant's right to his Accrued
Benefit is one hundred percent (100%) Vested, irrespective of the Vested
percentage which otherwise would apply under Article V.
12.05 MERGER/DIRECT TRANSFER. The Trustee may not consent to, or be a party to,
any merger or consolidation with another plan, or to a transfer of assets
or liabilities to another plan, unless immediately after the merger,
consolidation or transfer, the surviving Plan provides each Participant a
benefit equal to or greater than the benefit each Participant would have
received had the Plan terminated immediately before the merger or
consolidation or transfer. The Trustee possesses the specific authority to
enter into merger agreements or direct transfer of assets agreements with
the trustees of other retirement plans described in Code section 401(a),
including an elective transfer, and to accept the direct transfer of plan
assets, or to transfer plan assets, as a party to any such agreement.
The Trustee may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
condition(s). If the Trustee accepts a direct transfer of plan assets, the
Plan Administrator and Trustee must treat the Employee as a Participant
for all purposes of the Plan except the Employee is not a Participant for
purposes of sharing in Employer contributions or Participant forfeitures
under the Plan until he actually becomes a Participant in the Plan. For
all purposes of this Section 12.05, the Plan will only accept a directed
transfer in the form of cash.
The Trustee may not consent to, or be a party to a merger, consolidation
or transfer of assets with a defined benefit plan, except with respect to
an elective transfer. The Trustee will hold, administer and distribute the
transferred assets as a part of the Trust Fund and the Trustee must
maintain a separate Employer contribution Account for the benefit of the
Employee on whose behalf the Trustee accepted the transfer in order to
reflect the value of the transferred assets. Unless a transfer of assets
to this Plan is an elective transfer, the Plan will preserve all Code
section 411(d)(6) protected benefits with respect to those transferred
assets, in the manner described in Section 12.02. A transfer is an
elective transfer if: (1) the transfer satisfies the first paragraph of
this Section 12.05; (2) the transfer is voluntary, under a fully
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<PAGE>
informed election by the Participant; (3) the Participant has an
alternative that retains his Code section 411(d)(6) protected benefits
(including an option to leave his benefit in the transferor plan, if that
plan is not terminating); (4) the transfer satisfies the applicable
spousal consent requirements of the Code; (5) the transferor plan
satisfies the joint and survivor notice requirements of the Code, if the
Participant's transferred benefit is subject to those requirements; (6)
the Participant has the right to immediate distribution from the
transferor plan, in lieu of the elective transfer; (7) the transferred
benefit is at least the greater of the single sum distribution provided by
the transferor plan for which the Participant is eligible or the present
value of the Participant's accrued benefit under the transferor plan
payable at that plan's normal retirement age; (8) the Participant has a
100% Vested interest in the transferred benefit; and (9) the transfer
otherwise satisfies applicable Treasury regulations. An elective transfer
may occur between qualified plans of any type.
DISTRIBUTION REQUIREMENTS UNDER CODE SECTION 401(K). If the Plan receives
a direct transfer (by merger or otherwise) of elective contributions (or
amounts treated as elective contributions) under a Plan with a Code
section 401(k) arrangement, the distribution restrictions of Code sections
401(k)(2) and (10) continue to apply to those transferred elective
contributions.
12.06 TERMINATION. Upon termination of the Plan, the distribution provisions of
Article VI remain operative, with the following exceptions:
(a) If the present value of the Participant's Vested Accrued Benefit does
not exceed $3,500, the Plan Administrator will direct the Trustee to
distribute the Participant's Vested Accrued Benefit to him in a lump
sum as soon as administratively practicable after the plan
terminates; and
(b) If the present value of the Participant's Vested Accrued Benefit
exceeds $3,500, the Participant or the Beneficiary, in addition to
the distribution events permitted under Article VI, may elect to have
the Trustee commence distribution of his Vested Accrued Benefit as
soon as administratively practicable after the Plan terminates.
To liquidate the Trust, the Plan Administrator will purchase a deferred
annuity contract for each Participant which protects the Participant's
distribution rights under the Plan, if the Participant's Vested Accrued
Benefit exceeds $3,500 and the Participant does not elect an immediate
distribution pursuant to Paragraph (2). The Trust will continue until the
Trustee in accordance with the direction of the Plan Administrator has
distributed all of the benefits under the Plan.
If this paragraph applies, in lieu of the preceding provisions of this
Section 12.06 and the distributions provisions of Article VI, the Plan
Administrator will direct the Trustee to distribute each Participant's
Vested Accrued Benefit, in lump sum, as soon as administratively
practicable after the termination of the Plan, irrespective of the present
value of the Participant's Vested Accrued Benefit and whether the
Participant consents to that distribution. This paragraph applies only if:
(1) the Plan does not provide any annuity option; (2) the Plan is a profit
sharing plan at the time of its termination date; and (3) as of
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<PAGE>
the period between the Plan termination date and the final distribution of
assets, the Employer does not maintain any other defined contribution plan
(other than an ESOP).
On each valuation date, the Plan Administrator will credit any part of a
Participant's Accrued Benefit retained in the Trust with its proportionate
share of the Trust's income, expenses, gains and losses, both realized and
unrealized. Upon termination of the Plan, the amount, if any, in a
suspense account under Article III will revert to the Employer, subject to
the conditions of the Treasury regulation s permitting such a reversion. A
resolution or amendment to freeze all future benefit accrual but otherwise
to continue maintenance of the Plan, is not a termination for purposes of
this Section 12.06.
SPECIAL RULE FOR DEFERRAL CONTRIBUTIONS ACCOUNT. Notwithstanding the
provisions of this Section 12.06, the Participant may not receive a
distribution of his Deferral Contributions Account, Qualified Matching
Contributions Account and Qualified Nonelective Contribution Account
pursuant to the termination of the Plan unless; (a) the Participant
otherwise is entitled to a distribution from these accounts under the Plan;
or (b) the Plan termination occurs without the establishment of a successor
Plan. A successor Plan under clause (b) is a defined contribution plan
(other than and ESOP) maintained by the Employer (or by a related Employer)
at the time of the termination of the Plan or within the period ending
twelve months after the final distribution of assets. A distribution made
after March 31, 1988, pursuant to clause (b), must be part of a lump sum
distribution to the Participant of his Vested Accrued Benefit.
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<PAGE>
IN WITNESS WHEREOF, the Employer and the Trustee have executed this Plan and
Trust this ____ day of ___________________________________________, 19_______.
SOUTHWEST BANK OF TEXAS, N.A. ____________________________
David Farries - Trustee
BY:_________________________ ____________________________
Paul Murphy - Trustee
____________________________
Sharon K. Sokol - Trustee
____________________________
Kim Zabin - Trustee
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<PAGE>
EXHIBIT 4.5
-----------
FIRST AMENDMENT TO THE SOUTHWEST BANK OF TEXAS
401(k) SAVINGS PLAN
This Amendment is made this 15th day of, November, 1994 by Southwest Bank
of Texas, N.A.
WITNESSETH:
WHEREAS, Southwest Bank of Texas, N.A. (The "Company") previously adopted
the Southwest Bank of Texas, N.A. Employees' Profit Sharing and Savings
Plan; and
WHEREAS, under Article XII of the Plan, the Company has retained the right
to amend the Plan;
NOW, THEREFORE, notwithstanding any other provision of the Plan to the
contrary, the following amendments are made to the plan effective as noted
herein:
1. Effective January 1, 1994, Section 1.08(A) is replaced in its entirety with
the following:
(A) Limitations on Compensation
(1) Compensation limitations after January 1, 1994. In addition to other
applicable limitations set forth in the plan, and notwithstanding any
other provision of the plan to the contrary, for plan years beginning
on or after January 1, 1994, the annual compensation of each employee
taken into account under the plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which
compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this plan to the limitation under section 401(a)(17) of the Code shall
mean the OBRA '93.
For plan years beginning on or after January 1, 1994, any reference
in this plan to the limitation under section 401(a)(17) of the Code
shall mean the OBRA '93 annual compensation limit set forth in this
provision.
<PAGE>
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current
plan year, the compensation for that prior determination period is
subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination
periods beginning before the first day of the first plan year
beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
(2) Application of compensation limitation to certain family members. The
$150,000 Compensation limitation applies to the combined Compensation
of the Employee and of any family member aggregated with the Employee
under Section 1.17 who is either (i) the Employee's spouse; or (ii)
the Employee's lineal Descendant under the age of 19. If, for a Plan
Year, the combined Compensation of the Employee and such family
members who are Participants entitled to an allocation for that Plan
Year exceeds the $150,000 (or adjusted) limitation, "Compensation" for
each such Participant, for purposes of the contribution and allocation
provisions of Article III, means his Adjusted Compensation. Adjusted
Compensation is the amount which bears the same ratio to the $150,000
(or adjusted) limitation as the affected Participant's Compensation
(without regard to the $150,000 Compensation limitation) bears to the
combined Compensation of all the affected Participants in the family
unit.
2. Effective January 1, 1995, Section 2.01 is replaced in its entirety with
the following:
2.01 ELIGIBILITY. Each Employee becomes a Participant in the plan on the
first day of the quarter coinciding with or next following the later
of the date on which he completes one Year of Service or attains age
eighteen (18). Each Employee who was a Participant in the Plan on the
day before the Effective Date of this restated Plan continues as a
Participant in the Plan.
3. Effective January 1, 1994, Section 2.02 is replaced in its entirety with
the following:
2.02 YEAR OF SERVICE - ELIGIBILITY/PARTICIPATION. "Year of Service" for
Eligibility and Participation purposes means an Employee shall be
credited with a Year of Service in any Computation Period that he
completes 1,000 Hours of Service, unless such Service can be
disregarded under the Break in Service rules. An employee shall be
credited with 190 Hours of Service whenever at least one Hour of
Service is earned in a monthly period. "Computation Period" shall be
measured on the twelve consecutive month period beginning with the
Employee's Employment Commencement Date and each anniversary thereof.
4. Effective January 1, 1994, Section 5.05 is replaced with the following:
5.05 YEAR OF SERVICE - VESTING. For purposes of Vesting and all other
provisions of the Plan "Year of Service" means each Participant shall
be credited with a year of Service in any Plan Year during which he
completes at least 1,000 Hours of Service with the Employer.
Participant shall be credited with 190 hours of service whenever
-2-
<PAGE>
at least one Hour of Service is earned in a monthly period, unless the
Plan reference specifies a modification to this definition.
5. Effective January 1, 1994, Section 9.10 beginning with the paragraph which
begins with "Special Provisions for Employer Matching Contribution Account
and Qualified Match Contribution Account." the last sentence of which will
be replaced with the following:
The fair market value of the Employer securities will be determined
quarterly by an independent third party appraiser.
6. Effective January 1, 1994, Section 10.14 is replaced with the following:
10.14 VALUATION OF TRUST. The Trustee shall value the Trust Fund as of each
Accounting Date to determine the fair market value of the cash
portion of each Participant's Deferral Contributions Account and the
segment of this Employer Matching Contributions Account and Qualified
Matching Contributions Account, if any, accrued prior to July 1,
1993. That portion of the Participant's Account Balance allocated to
the Employer Matching Contributions Account, the Discretionary
Contributions Account and the Qualified Matching Contributions
Account, if any, allocated after July 1, 1993, shall be valued as of
the Accounting Date. The Trustee also may value the Trust Fund on
such other interim valuation dates as he deems appropriate.
-3-
<PAGE>
IN WITNESS WHEREOF, the Employer and the Trustee have executed this Plan
and Trust this 15th day of November, 1994.
SOUTHWEST BANK OF TEXAS, N.A. David C. Farries
-------------------------------
Trustee
BY: Kim Zabin Paul B. Murphy
---------------------------- -------------------------------
Trustee
Sharon K. Sokol
-------------------------------
Trustee
Kim Zabin
-------------------------------
Trustee
-4-
<PAGE>
EXHIBIT 4.6
-----------
SECOND AMENDMENT
SOUTHWEST BANK OF TEXAS, N.A.
401(k) SAVINGS PLAN
WHEREAS, Southwest Bank of Texas, N.A. (the "Bank) has previously adopted
and is presently maintaining the Southwest Bank of Texas, N.A. 401(k) Savings
Plan; and
WHEREAS, the Southwest Bank of Texas, N.A. 401(k) Savings Plan reserves to
the Bank the right to amend its Plan at any time and to any lawful extent deemed
advisable by appropriate amendment; and
WHEREAS, the Bank now desires to amend its Plan in order to clarify its
provisions regarding participation by rehired employees;
NOW, THEREFORE, the Southwest Bank of Texas, N.A. 401(k) Savings Plan is
hereby amended effective as of January 1, 1996, in the following particulars,
but only the following particulars; to wit:
SECTION 2.04, CONCERNING PARTICIPATION UPON REEMPLOYMENT, IS AMENDED IN ITS
ENTIRETY TO READ AS FOLLOWS:
2.04 PARTICIPATION UPON REEMPLOYMENT. A Participant whose employment with
the Employer terminates will reenter the Plan as a Participant as of
the first day of the calendar quarter following the date of his
reemployment. An Employee who satisfies the Plan's eligibility
conditions but who terminates employment with the Employer prior to
becoming a Participant will become a Participant in the Plan on the
later of the Plan Entry Date on which he would have entered the Plan
had he not terminated employment or the date of his reemployment. Any
Employee who terminates employment prior to satisfying the Plan's
eligibility conditions becomes a Participant in accordance with the
provisions of Section 2.01.
<PAGE>
IN WITNESS WHEREOF, this Amendment has been executed in six (6) original
counterparts by the undersigned Bank acting herein by and through its duly
authorized officers on this the 18th Day of March, 1997.
SOUTHWEST BANK OF TEXAS, N.A.
BY: David C. Farries
----------------------------------
Executive Vice President
ATTEST:
Cassandra Sweet
- -------------------------
<PAGE>
EXHIBIT 4.7
-----------
THIRD AMENDMENT TO THE
SOUTHWEST BANK OF TEXAS
401(K) SAVINGS PLAN
(AS AMENDED AND RESTATED AS OF JANUARY 1, 1994)
W I T N E S S E T H:
WHEREAS, Southwest Bank of Texas, N.A., a corporation organized under the
laws of the State of Texas ("Southwest Bank"), maintains the "Southwest Bank of
Texas 401(k) Savings Plan, as Amended and Restated as of January 1, 1994: (the
"Plan"), for the benefit of its eligible employees and their beneficiaries; and
WHEREAS, the Plan provides in Section 12.02 thereof that Southwest Bank has
the right at any time and from time to time to amend the Plan; and
WHEREAS, Southwest Bank now desires to amend the Plan by the adoption of
this Third Amendment thereto:
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Effective as of January 1, 1996, Section 3.01 of the Plan is amended to
add the following provisions to the end of subsection 3.01(b).
For purposes of clarity, and not limitation, with respect to the above
provisions of this paragraph, the Employer Matching Contribution shall be
based on the Participant's eligible contributions for the Plan Year as a
percentage of the Participant's Compensation for the Plan Year. As of the
end of the Plan Year, the Employer shall determine the Matching
Contribution, if any, that should be made on behalf of each Participant
based on the matching contribution percentage that was designated by the
Employer for that Plan Year and the Participant's eligible contributions as
a percentage of his Compensation for the Plan Year. To the extent that any
Participant's Account was not credited with the full Employer Matching
Contribution to which it was entitled as the result of the Employer's
method of contributing such Contributions to the Plan during the Plan Year,
or for any other reason, then as for the end of the Plan Year, the Employer
shall contribute whatever Employer Matching Contribution amount is required
so that each Participant's
<PAGE>
Account is allocated and credited with the full amount of Employer Matching
Contributions to which it is entitled for that Plan Year.
2. Effective as of January 1, 1997, Section 2.01 of the Plan is hereby
amended by the addition of the following provisions to the end of that
Section:
Notwithstanding any provision of the Plan to the contrary, effective as of
January 1, 1997, any Contract Security Consultants, Contract Security
Guards and Contract Statement Processors shall not be eligible to
participate in the Plan.
3. The Plan, as amended by this Third Amendment thereto, is hereby
ratified any confirmed in all respects.
The undersigned, being duly authorized on behalf of Southwest Bank, has
executed this Third Amendment to the Plan on this 17th day of December, 1996.
ATTEST: SOUTHWEST BANK OF TEXAS N.A.
R. John McWhorter By: David C. Farries
- ----------------------------- -----------------------------
Name: R. John McWhorter Name: David C. Farries
------------------------ ---------------------------
Title: Vice President Title: Secretary
----------------------- --------------------------
<PAGE>
EXHIBIT 4.8
-----------
Fourth Amendment to
Southwest Bank of Texas
401(k) Savings Plan
(As Amended and Restated as of January 1, 1994)
WHEREAS, Southwest Bank of Texas, N.A., a corporation organized under the
laws of the State of Texas ("Southwest Bank"), maintains the Southwest Bank of
Texas 401(k) Savings Plan, as amended and restated as of January 1, 1994 (the
"Plan") for the benefit of its eligible employees and their beneficiaries; and
WHEREAS, the Plan provides in Section 12.02 thereof that Southwest Bank has
the right at any time and from time to time to amend the Plan; and
WHEREAS, Southwest Bank desires to amend the Plan;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of May
1, 1997, except as otherwise provided herein:
1. The following new Section 1.13(A) shall be added to the Plan:
"1.13(A) 'Employer Stock' means the common stock, par value $1.00 per
share, of Southwest Bancorporation of Texas, Inc."
2. Section 1.21 of the Plan shall be amended by deleting the word
"Accounting" each place it appears in such section and substituting
therefor the word "Valuation."
3 The following new section 1.31(A) shall be added to the Plan:
"1.31(A) 'Valuation Date' means each and every day of the Plan Year
on which the New York Stock Exchange is open for business."
4. The second paragraph of Section 3.09(a)(2) of the Plan which begins with
"Special Allocation Provisions for Employer Matching Contributions
Account and Qualified Matching Contributions Account." shall be deleted.
5. The second sentence of Section 3.10 of the Plan shall be deleted and the
following shall be substituted therefor:
"Forfeitures not used to pay expenses shall be allocated under the
Plan as of the last day of a Plan Year to Participants in the Plan
pursuant to Section 3.11(c)."
6. The second sentence of Section 3.11(c) of the Plan shall be deleted.
<PAGE>
7. The second sentence of Section 5.03 of the Plan shall be deleted.
8. The third sentence of Section 6.01 of the Plan shall be deleted and the
following shall be substituted therefor:
"A 'Distribution Date' under this Article VI, unless otherwise
specified within the Plan, shall be the date which is as soon as
administratively feasible after the date of Separation from Service or
any later date as directed by the Participant; provided, however, that
the portion of a Participant's Accrued Benefit credited for the periods
prior to January 1, 1994 shall not be distributed prior to the
expiration of the seven-day period that begins the day after the
information required to be furnished pursuant to Section 6.05 has been
furnished to the Participant."
9. The first sentence of Section 6.02 of the Plan shall be deleted and the
following shall be substituted therefor:
"A Participant's Accrued Benefit, credited for the periods beginning
after December 31, 1993, shall be distributed only in a cash lump sum
except that a Participant (or his designated Beneficiary, surviving
spouse or legal representative in the case of a deceased Participant)
may elect to have the portion of the Participant's Accounts invested in
Employer Stock distributed (or transferred pursuant to Section 6.09) in
full shares of Employer Stock with any balance of the Participant's
Accounts invested in Employer Stock attributable to fractional shares
to be paid or transferred in cash."
10. The second sentence of Section 6.03 of the Plan shall be deleted and
the following shall be substituted therefor:
"A Participant's Account Balance is eligible for distribution as soon
as administratively feasible following the date of the Participant's
Separation from Service."
11. The last sentence in the first paragraph of Section 6.07 of the Plan
shall be deleted.
12. Section 8.10 of the Plan shall be deleted and the following new Section
8.10 shall be substituted therefor:
"8.10 PARTICIPANT DIRECTION OF INVESTMENT. A Participant may elect
to have amounts credited to his Account invested in the investment
funds made available by the Administrative Committee.
-2-
<PAGE>
(a) Each Participant shall designate, in accordance with the
procedures established from time to time by the Administrative
Committee, the manner in which the amounts allocated to each of his
Accounts shall be invested from among the investment funds made
available from time to time by the Administrative Committee. With
respect to each of a Participant's Accounts, such Participant may
designate one of such investment funds for all the amounts allocated
to such Account or he may split the investment of the amounts
allocated to such Account between such investment funds in such
increments as the Administrative Committee may prescribe. If a
Participant fails to make a designation, then his Accounts shall be
invested in the investment fund or funds designated by the
Administrative Committee from time to time in a uniform and
nondiscriminatory manner.
(b) A Participant may change his investment designation for
future contributions to be allocated to any one or all of his
Accounts. Any such change shall be made in accordance with the
procedures established by the Administrative Committee, and the
frequency of such changes may be limited by the Administrative
Committee.
(c) A Participant may elect to convert his investment designation
with respect to the amounts already allocated to one or more of his
Accounts. Any such conversion shall be made in accordance with the
procedures established by the Administrative Committee, and the
frequency of such conversions may be limited by the Administrative
Committee.
(d) In the event that the Employer elects to make a Discretionary
Contribution to the Plan, the Employer shall have the right to
designate the investment fund or funds in which such Discretionary
Contribution shall be invested and a Participant may not change the
investment designation for such Discretionary Contribution unless and
until permitted by the Administrative Committee. If the Employer
elects to make a Discretionary Contribution to the Plan and does not
designate an investment fund or funds in which such Discretionary
Contribution shall be invested, such amounts shall be subject to the
provisions of Section 8.10(a) above."
13. The second sentence in Section 9.10 of the Plan shall be deleted and
the following shall be substituted therefor:
"For purposes of a distribution under the Plan, the value of a
Participant's Account balance is its value as of the Valuation Date
-3-
<PAGE>
coincident with or immediately preceding the date of the
distribution."
14. The third paragraph of Section 9.11 of the Plan which begins with
"Special Provisions for Employer Matching Contribution Account and
Qualified Matching Contributions Account" shall be deleted.
15. The last sentence of Section 10.03 of the Plan shall be deleted.
16. Section 10.08 of the Plan shall be deleted and the following new
section 10.08 shall be substituted therefor:
"10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may make
distribution under the Plan in cash or property, or partly in each, at
its fair market value as determined by the Trustee. For purposes of a
distribution to a Participant or to a Participant's designated
Beneficiary or surviving spouse, "property" includes a nontransferable
annuity contract, provided the contract satisfies the requirements of
the Plan."
17. Section 10.14 of the Plan shall be deleted and the following new
Section 10.14 shall be substituted therefor:
"10.14 VALUATION OF TRUST. The Trustee shall value the Trust Fund as of
each Accounting Date to determine the fair market value of each
Participant's Accounts. The Trustee may also value the Trust Fund on
such other interim Valuation Dates as the Trustee deems appropriate."
18. As amended hereby, the Plan is specifically ratified and reaffirmed.
Executed this 18th day of March, 1997.
SOUTHWEST BANK OF TEXAS, N.A.
By: David C. Farries
-------------------------------
Executive Vice President
Attest:
Cassandra Sweet
- ---------------------------
-4-
<PAGE>
EXHIBIT 5.1
-----------
[LETTERHEAD FOR VINSON & ELKINS APPEARS HERE]
May 28, 1997
Southwest Bancorporation of Texas, Inc.
4400 Post Oak Parkway
Houston, Texas 77027
Ladies and Gentlemen:
We have acted as counsel to Southwest Bancorporation of Texas, Inc., a Texas
corporation (the "Company"), in connection with the preparation of the Company's
Registration Statement on Form S-8 as filed by the Company with the Securities
and Exchange Commission pursuant to the Securities Act of 1933, as amended (the
"Registration Statement"), which Registration Statement relates to (i) an
aggregate of up to 250,000 shares of the Company's common stock, $1.00 par value
(the "Shares"), which are purchasable by employees of the Company pursuant to
the Southwest Bank of Texas 401(k) Savings Plan (the "Plan"), and (ii) the
interests of participants in the Plan (the "Interests"). In such connection, we
are passing on certain legal matters in connection with the sale of the Shares
and the Interests. At your request, this opinion is being furnished to you for
filing as an exhibit to the Registration Statement.
In connection with rendering this opinion, we have examined such
certificates, instruments and documents and reviewed such questions of law as we
have considered necessary or appropriate for the purposes of this opinion. In
addition, we have relied as to factual matters on certificates of certain public
officials and officers of the Company.
Based upon the foregoing examination and review, we are of the opinion that
the Shares and the Interests have been duly authorized for issuance and, when
the Registration Statement has been declared effective and the Shares and the
Interests are issued in accordance with the provisions of the Plan, the Shares
and the Interests will be validly issued, fully paid and non-assessable.
This opinion is rendered as of the effective date of the Registration
Statement. We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name in the Registration
Statement. In giving this consent, however, we do not hereby admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 and the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
VINSON & ELKINS L.L.P.
HOUSTON DALLAS WASHINGTON, D.C. AUSTIN MOSCOW LONDON SINGAPORE
<PAGE>
EXHIBIT 23.1
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of Southwest Bancorporation of Texas, Inc. on Form S-8 of our reports, which
include an explanatory paragraph regarding the Company's change as of January 1,
1994 in accounting for securities, dated January 31, 1997, on our audits of the
consolidated financial statements and financial statement schedule of Southwest
Bancorporation of Texas, Inc. and Subsidiaries as of December 31, 1996 and 1995,
and for the years ended December 31, 1996, 1995, and 1994, which reports are
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996.
COOPERS & LYBRAND L.L.P.
Houston, Texas
May 27, 1997
