As filed with the Securities and Exchange Commission on October 31, 1996
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VSE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 54-0649263
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2550 Huntington Avenue
Alexandria, Virginia 22303
(703) 960-4600
(Address of Principal Executive Offices, Including Zip Code)
C. S. Weber
VSE Corporation
2550 Huntington Avenue
Alexandria, Virginia 22303
(Name and Address of Agent for Service)
(703) 329-4770
(Telephone Number, Including Area Code, of Agent For Service)
Copy to:
Jeffrey E. Jordan, Esq.
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
(202) 857-6473
_______________
Approximate date of commencement of proposed sale to the public: As soon as
practicable on or after the effective date of this Registration Statement.
_______________
If the only securities being registered on this Form are being offered
pursuant to dividend or interestreinvestment plans, please check the following
box. [ ]
_______________
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
_______________
CALCULATION OF REGISTRATION FEE
______________________________________________________________________________
Proposed Proposed
Maximum Maximum
Offering Aggregate
Amount Price Per Offering Amount of
Title of Securities to be Share (1) or Price (1) Registration
to be Registered Registered Interest (2) (2) Fee
- ------------------------------------------------------------------------------
Common Stock,
$.05 par value 200,000 shares $17.25 $3,450,000 $1,189.65
______________________________________________________________________________
(1)Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c).
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
Subject to Completion, dated October 31, 1996
PROSPECTUS
VSE CORPORATION
200,000 Shares of Common Stock
The Common Stock of VSE Corporation (the "company" or "VSE"), par value
$0.05 per share (the "Common Stock"), offered hereby is held by the Selling
Securityholder (as defined herein) who may from time to time offer for sale
such shares of Common Stock. See "Selling Securityholder." The Corporation
will not receive any proceeds from the sale by the Selling Securityholder of
the Common Stock.
The Common Stock is listed on the Nasdaq National Market System under the
symbol "VSEC" (newspaper listing: VSE ). On October 29, 1996, the last
reported sale price of the Common Stock reported on the Nasdaq National Market
was $15.75 per share. See "Price Range of Common Stock."
_______________________________
See "Risk Factors" for certain information that should be considered by
prospective investors.
_______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
____________________
Any or all of the Common Stock may be sold from time to time to purchasers
directly by the Selling Securityholder. Alternatively, the Selling Security-
holder may from time to time offer any or all of the Common Stock through
underwriters, dealers, brokers or other agents. The company will pay the
expenses of this offering estimated at $21,690. The Common Stock offered
hereby may be sold from time to time in one or more transactions at a fixed
offering price, which may be changed, or at varying prices determined at the
time of sale or at negotiated prices. Such prices will be determined by the
Selling Securityholder or by agreement between the Selling Securityholder and
its underwriters, dealers, brokers or other agents.
Any underwriters, dealers, brokers or other agents participating in the
distribution of Common Stock offered hereby may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from the
Selling Securityholder and/or purchasers of Common Stock for whom they may act.
In addition, the Selling Securityholder and any such underwriters, dealers,
brokers or other agents that participate in the distribution of Common Stock
may be deemed to be underwriters under the Securities Act, and any profits on
the sale of Common Stock by them and any discounts, commissions or concessions
received by any of such persons may be deemed to be underwriting discounts and
commissions under the Securities Act. Those who act as underwriter, broker,
dealer or other agent in connection with the sale of the Common Stock will be
selected by the Selling Securityholder and may have other business relation-
ships with the company and its subsidiaries or affiliates in the ordinary
course of business. The company cannot presently estimate the amount of any
such discounts, commissions or concessions. The company knows of no existing
arrangements between the Selling Securityholder and any underwriter, dealer,
broker or other agent. See "Plan of Distribution."
The date of this Prospectus is October 31, 1996
<PAGE>
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having
been authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy
such securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under the circumstances, create any implication that there has been no
change in the affairs of the company since the date hereof or thereof or that
the information contained herein or therein is correct as of any time
subsequent to the date of such information.
TABLE OF CONTENTS
Page
Available Information . . . . . . . . . . 3
Documents Incorporated by Reference . . . .4
The Company . . . . . . . . . . . . . . . .5
Risk Factors . . . . . . . . . . . . . . . .6
Price Range of Common Stock . . . . . . . .7
Use of Proceeds . . . . . . . . . . . . . .7
Selling Securityholder . . . . . . . . . .8
Plan of Distribution . . . . . . . . . . . .8
Description of Capital Stock . . . . . . . .9
Legal Matters . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . 10
AVAILABLE INFORMATION
The company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder, and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed by the company with the Commission, including the
Registration Statement on Form S-3 of which this Prospectus is a part, may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: New York Regional Office, Seven
World Trade Center, New York, New York 10048 and Chicago Regional Office, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock
is traded in the over-the-counter market and is quoted in the Nasdaq National
Market. Copies of the company's reports, proxy statements and other informa-
tion filed with the Commission can also be inspected at the offices of the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
The company has filed with the Commission a Registration Statement on
Form S-3 (herein, together with all information incorporated by reference
therein and amendments and exhibits thereto, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the securities offered hereby. This Prospectus does not
contain all of the information set forth or incorporated by reference in the
Registration Statement, certain parts of which are omitted as permitted by the
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<PAGE>
rules and regulations of the Commission. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. For further information regarding the company and the securities
offered hereby, reference is made to the Registration Statement.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the company with the
Commission (File No. 0-3676) pursuant to the Exchange Act are incorporated
herein by this reference and are made part of this Prospectus:
1. The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
2. The Registrant's quarterly report on Form 10-Q for the period
ended March 31, 1996.
3. The Registrant's quarterly report on Form 10-Q for the period
ended June 30, 1996.
4. All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") since the
end of the fiscal year ended December 31, 1995.
5. Registrant's Form 8-A Registration Statement filed pursuant to
Section 12 of the Exchange Act, containing a description of the
Registrant's common stock ("Shares"), including any amendment or
report filed for the purpose of updating such description.
All documents filed by the company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
termination of the offering of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date any such document is filed. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon written or oral request, a copy of any
and all of the documents incorporated by reference herein, other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into such documents. Any such request may be directed to VSE
Corporation., Attention: C.S. Weber, at the company's principal executive
offices, which are located at 2550 Huntington Avenue Alexandria, Virginia,
telephone number (703) 960-4600.
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<PAGE>
<PAGE>
THE COMPANY
VSE Corporation and its subsidiaries and divisions ("VSE" or the
"company") operate in the professional and technical services industry. The
company's engineering, technical, and management services operations are
performed by VSE and its subsidiaries and divisions including the BAV Division,
CMstat Corporation, Energetics Incorporated, Human Resource Systems, Inc.,
Value Systems Services, and VSE Services Corporation. Engineering, technical,
and management services accounted for 100% of VSE's revenues from continuing
operations in 1995, 1994, and 1993.
VSE provides diversified engineering, development, technical, and
management services and products to maintain and modernize equipment and
systems, primarily for agencies of the U.S. Government (the "government") and
other government prime contractors.
VSE services include program planning; design and engineering,
including prototype development; electronic warfare support; logistics manage-
ment; ship reactivation, maintenance, repair, overhaul planning, and follow on
technical support; office automation systems and support; training; technology
research, development, and demonstration programs involving energy conservation
and efficiency, advanced technology transfers, and feasibility, assessment, and
development programs; and information systems and products, including cross-
platform technical data, product data, and configuration management (CM/PDM)
support. Typical projects include sustaining engineering support for military
vehicles, combat trailers, bridging systems, and amphibious transport; ocean
engineering and mooring systems; depot repair operations; electronic warfare
software development; machinery condition analysis; specification preparation
for ship alterations and repairs; training and video aids for air-launched
missiles; and technical data package preparation.
VSE also owns and operates an engineering test center in Ladysmith,
Virginia, consisting of approximately 44 acres of land and an improved storage
and vehicle maintenance facility. This facility has been used by VSE to test
military and commercial equipment for which VSE provides system technical
support and other engineering services.
VSE services are provided by a staff of approximately 1,200 employees
(including about 285 part-time employees). These employees are professional
and technical personnel having high levels of education, training, and skills,
including (a) mechanical, electrical, electronic, chemical, industrial, energy
and environmental services, marine, and ocean engineers, (b) computer systems,
applications, and data management specialists, (c) technical editors and
writers, and (d) graphic designers and technicians. The expertise required by
VSE's customers also frequently includes knowledge of government administrative
procedures. Many VSE employees have had experience as government employees in
the past. The company considers its relationships with employees to be
excellent.
VSE was originally incorporated under the laws of the State of
Delaware in 1959 under the name Value Engineering company. VSE's principal
executive offices are located at 2550 Huntington Avenue, Alexandria, Virginia
22303-1499, and its telephone number at that address is (703) 960-4600. The
Common Stock is listed on the Nasdaq National Market System under the symbol
"VSEC" (newspaper listing: "VSE").
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<PAGE>
<PAGE>
RISK FACTORS
Prospective investors should carefully consider, among other factors,
the following:
Government Contracts. The company relies heavily on contracts for the
rendering of professional and technical services to the government. In 1995,
over 90% of the company's revenues were derived from government contracts.
The company actively competes with a number of companies that provide
professional and technical services to the government. The company also
expects to encounter competition in the future from established companies and
new companies that may develop services competitive with the company's
services. In addition, budget constraints and political pressure may cause
reductions in the budgets of government agencies with whom the company
currently has contracts. Any of these factors may result in the company being
unable to renew existing or to secure new government contracts. Any of these
events would adversely affect the company's profitability.
Dependence on Key Personnel. Competition for qualified personnel in
the professional and technical services industry is intense. The future
success of the company will depend on its ability to attract and retain key
employees. The failure to attract or the loss of these individuals could have
an adverse effect on the company.
Possible Volatility of Stock Price. The market price for the Common
Stock has been highly volatile over the past several years, and the market
price may be subject to significant volatility in the future. Factors such as
the announcement of new government contracts by the company or its competitors,
fluctuations in quarterly performance, as well as market conditions in the
professional and technical services industries providing services to the
government, may have a significant impact on the market price of the Common
Stock.
Effect of Delaware Law and Certain Charter Provisions. Certain
provisions of Delaware law could have the effect of making it more difficult
for a third party to acquire, or of discouraging a third party from attempting
to acquire, control of the company. Such provisions could limit the price that
certain investors might be willing to pay in the future for shares of Common
Stock. Certain of these provisions could make it more difficult for stock-
holders to effect certain corporate actions or could also have the effect of
delaying or preventing a change in control of the company. See "Description of
Capital Stock."
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<PAGE>
<PAGE>
PRICE RANGE OF COMMON STOCK
<TABLE>
The Common Stock is traded in the over-the-counter market on the
Nasdaq National Market under the symbol "VSEC" (newspaper listing: "VSE"). The
following table sets forth, for the company's fiscal years indicated, the high
and low last sale prices of the Common Stock as reported by the Nasdaq National
Market, adjusted to reflect the two-for-one stock split effective on May 21,
1996.
<CAPTION>
Quarter High Low Dividends
<S> <C> <C> <C>
1994:
March 31 . . . . . . . . . . 6-3/4 6 0.0375
June 30. . . . . . . . . . . 6-1/8 6 0.0375
September 30 . . . . . . . . 6-5/8 5-3/4 0.0375
December 31. . . . . . . . . 7-3/8 7-1/8 0.04
For the year 7-3/8 5-3/4 0.1525
1995:
March 31 . . . . . . . . . . 7-7/8 7 0.04
June 30. . . . . . . . . . . 8-1/8 7-1/8 0.04
September 30 . . . . . . . . 14-1/2 7-3/8 0.04
December 31. . . . . . . . . 13-1/2 9-3/4 0.0425
For the year 14-1/2 7 0.1625
1996
First Quarter. . . . . . . . 17-1/2 12-1/2 0.0425
Second Quarter . . . . . . . 21 14-1/2 0.0425
Third Quarter . . . . . . . 21-1/2 14-3/4 0.0425
Fourth Quarter
(through October 29, 1996). 21 15-3/4
</TABLE>
On October 1, 1996, there were approximately 320 holders of record of the
Common Stock. See the cover page of this Prospectus for the last sales price
of the Common Stock reported on the Nasdaq National Market as of a recent date.
USE OF PROCEEDS
The sale of the Common Stock offered hereby is for the account of the trust
(the "Trust" or the "Selling Securityholder") established pursuant to the VSE
Corporation Employee ESOP/401(k) Plan (the "Plan"). Accordingly, the company
will not receive any of the proceeds from the sale by the Selling Security-
holder of the Common Stock.
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<PAGE>
<PAGE>
SELLING SECURITYHOLDER
The Common Stock offered by this Prospectus was initially purchased by the
Selling Securityholder in open market purchases for the account of the company
employees who participate in the Plan (the "Plan Participants"). The Selling
Securityholder, pursuant to the terms of the Plan, is required to sell portions
of the Common Stock from time to time in order to obtain cash to satisfy (i)
required distributions from the Trust resulting from the retirement, death,
disability or other termination of employment of a Plan Participant or (ii)
certain withdrawal requests from Plan Participants who remain company
employees. As a result of employee requests for distributions and withdrawals,
the Selling Securityholder is currently the beneficial owner of approximately
160,000 shares of Common Stock which the Selling Securityholder may seek to
sell pursuant to this Prospectus. In addition, the company and the Selling
Securityholder have estimated that in the reasonably foreseeable future the
Selling Securityholder may, as the result of Plan Participants' requests for
distributions or withdrawals, become the beneficial owner of up to 40,000
additional shares of Common Stock which the Selling Securityholder also may
seek to sell pursuant to this Prospectus.
Because the timing of distributions and withdrawals from the Trust are
uncertain or unknown and because Plan Participants may elect to receive Plan
benefits in cash and/or Common Stock, no estimate can be given as of the date
hereof as to the amount of Common Stock actually to be offered for sale by
the Selling Securityholder. In addition, for the foregoing reasons, no
estimate can be given as to the amount of Common Stock that will be
beneficially held by the Selling Securityholder upon the termination of the
offering made by this Prospectus. See "Plan of Distribution."
PLAN OF DISTRIBUTION
Any or all of the Common Stock may be sold from time to time to purchasers
directly by the Selling Securityholder. Alternatively, the Selling Security-
holder may from time to time offer any or all of the Common Stock through
underwriters, dealers, brokers or other agents. The company will receive no
proceeds from the sale of the Common Stock offered hereby.
The Common Stock offered hereby may be sold from time to time in one or
more transactions at a fixed offering price, which may be changed, or at
varying prices determined at the time of sale or at negotiated prices. Such
prices will be determined by the Selling Securityholder or by agreement between
the Selling Securityholder and its underwriters, dealers, brokers or other
agents.
Any underwriters, dealers, brokers or other agents participating in the
distribution of Common Stock offered hereby may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from the
Selling Securityholder and/or purchasers of Common Stock for whom they may act.
In addition, the Selling Securityholder and any such underwriters, dealers,
brokers or other agents that participate in the distribution of Common Stock
may be deemed to be underwriters under the Securities Act, and any profits on
the sale of Common Stock by them and any discounts, commissions or concessions
received by any of such persons may be deemed to be underwriting discounts and
commissions under the Securities Act. Those who act as underwriter, broker,
dealer or other agent in connection with the sale of the Common Stock will be
selected by the Selling Securityholder and may have other business relation-
ships with the company and its subsidiaries or affiliates in the ordinary
course of business. The company cannot presently estimate the amount of any
such discounts, commissions or concessions. The company knows of no existing
arrangements between the Selling Securityholder and any underwriter, dealer,
broker or other agent.
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<PAGE>
At any time a particular offer of Common Stock is made by the Selling
Securityholder, if required, a Prospectus Supplement will be distributed
which will set forth the identity of, and certain information relating to,
such Selling Shareholder, the aggregate amounts of Common Stock being offered
and the terms of the offering, including the name or names of any underwriters,
dealers, brokers or other agents, any discounts, commissions and other items
constituting compensation from such Selling Securityholder and any discounts,
commissions or concessions allowed or reallowed or paid to dealers. Such
Prospectus Supplement and, if necessary, a post-effective amendment to the
Registration Statement of which this Prospectus is a part will be filed with
the Commission to reflect the disclosure of additional information with respect
to the distribution of the Common Stock.
To comply with certain states' securities laws, if applicable, the Common
Stock offered hereby may be sold in such states only through brokers or
dealers. In addition, in certain states the Common Stock may not be sold
unless it has been registered or qualified for sale in such state or an
exemption from registration or qualification is available and complied with.
DESCRIPTION OF CAPITAL STOCK
The company's authorized capital stock consists of 5,000,000 shares of
Common Stock, $0.05 par value. As of October 1, 1996, there were 1,738,334
shares of Common Stock outstanding and held of record by approximately 320
stockholders, including the shares of Common Stock offered in this Prospectus.
The shares outstanding exclude 218,966 shares reserved for issuance under the
company's stock option plan. All of the outstanding shares of Common Stock
are, and the shares offered hereby will be, when delivered and paid for, fully
paid, validly issued and nonassessable.
Common Stock
Holders of shares of Common Stock are entitled to one vote per share on
all matters to bc voted on by stockholders and are entitled to receive such
dividends, if any, as may bc declared from time to time by the Board of
Directors ("Board") from funds legally available therefor. Upon liquidation or
dissolution of the company, the holders of Common Stock are entitled to receive
all assets available for distribution to the stockholders. Holders of Common
Stock have no preemptive or other subscription rights. There are no conversion
rights or redemption or sinking fund provisions with respect to Common Stock.
The Transfer Agent and Registrar for the Common Stock is the Registrar and
Transfer Company, 10 Commerce Drive, Cranford, New Jersey 07016.
Delaware General Corporation Law Section 203
The company is subject to the provisions of Section 203 of the General
Corporation Law of the State of Delaware. In general, Section 203 prohibits
certain publicly held Delaware corporations from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which the person or entity became an
interested stockholder, unless, among other exceptions, (i) the business
combination is approved by the Board prior to the date the interested stock-
holder attained such status, or by the holders of two-thirds of the outstanding
voting stock not owned by the interested stockholder or (ii) the interested
stockholder acquired 85% or more of the outstanding voting stock of the company
in the transaction. For purposes of Section 203, a "business combination" is
defined broadly to include mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Subject to
certain exceptions, an "interested stockholder" is a person or entity who,
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together with affiliates and associates, owns or within the three immediately
preceding years of a business combination did own, 15.0% or more of the
corporation's outstanding voting stock.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
company by Arent Fox Kintner Plotkin & Kahn, Washington, D.C.
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and eslewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
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<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the approximate amount of the fees and
expenses payable by the Registrant.
Securities and Exchange Commission registration fee . . . . . . . $ 1,189.65
*Blue sky fees and expenses (including legal fees) . . . . . . . -0-
*Accounting fees and expenses . . . . . . . . . . . . . . . . . . 15,000.00
*Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . 5,000.00
*Printing and engraving expenses . . . . . . . . . . . . . . . . . -0-
*Transfer agent and registrar fees . . . . . . . . . . . . . . . . -0-
*Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . 500.00
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,689.65
=========
___________________
* Estimated
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law, as amended (the
"DGCL"), provides that a corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another corpora-
tion, partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe that his conduct was unlawful.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stock-
holders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit.
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Article Eleven of the Registrant's Restated Certificate of Incorporation
provides for the elimination of personal liability of a director for breach of
fiduciary duty as permitted by Section 102(b)(7) of the DGCL, and Article VII,
Section 7 of the Registrant's Bylaws provides that the Registrant shall
indemnify its directors, officers, employees and agents to the extent permitted
by Section 145 of the Delaware General Corporation Law.
The Registrant has in effect a directors and officers liability insurance
policy under which the directors and officers of the Registrant are insured
against loss arising from claims made against them due to wrongful acts while
acting in their individual and collective capacities as directors and officers,
subject to certain exclusions.
Item 16. Exhibits.
Number Description
4. Instruments defining the rights of securityholders
4a. The VSE Corporation ESOP/401(k) Plan adopted 1984, as
amended.
5. Opinion of Arent Fox Kintner Plotkin & Kahn as to the legality of
the Common Stock being registered.
23. Consents of experts and counsel
23a. Consent of Arent Fox Kintner Plotkin & Kahn (included in
Exhibit 5)
23b. Consent of Arthur Andersen LLP
24. Power of Attorney of the Board of Directors (included on the
Signature Page hereof)
Item 17. 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;
(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; and
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<PAGE>
(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;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in 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 the that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to the directors, officers and controlling persons
of the Registrant pursuant to the provisions referred to in Item 15 or other-
wise, the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
-13-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Fairfax, State of Virginia, on the thirty-first
day of October, 1996.
VSE CORPORATION
By: /s/ C. S. Weber
C. S. Weber
Senior Vice President,
Secretary and Treasurer
-14-
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Donald M. Ervine and Craig S. Weber, and each
of them his true and lawful attorney-in-fact and agent with power of
substitution and resubstitution, for him, and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post
effective amendments) to this Registration Statement on Form S-3, and to file
the same, with all exhibits thereto, and all documents in connection therewith,
with the Commission, granting unto said attorney-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done to comply with the provisions of the
Securities Act and all requirements of the Commission, hereby ratifying and
confirming all that said attorney-in-fact or any of them, or their or his or
her substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:
Signatures Title Date
/s/ D. M. Ervine Chairman of the Board, October 31, 1996
D. M. Ervine Chief Executive Officer
and Director
/s/ R. B. McFarland President, Chief October 31, 1996
R. B. McFarland Operating Officer
and Director
/s/ C. S. Weber Senior Vice President, October 31, 1996
C. S. Weber Chief Financial Officer
Secretary and Treasurer
/s/ Sarah Clements Director October 31, 1996
Sarah Clements
/s/ R. J. Kelly Director October 31, 1996
R. J. Kelly
/s/ C. S. Koonce Director October 31, 1996
C. S. Koonce
/s/ J. M. Marchello Director October 31, 1996
J. M. Marchello
-15-
<PAGE>
Director
D. M. Osnos
Director
J. D. Ross
/s/ B. K. Wachtel Director October 31, 1996
B. K. Wachtel
-16-
<PAGE>
Exhibit 4a
VSE CORPORATION
EMPLOYEE ESOP/401(K) PLAN
AMENDED AND RESTATED EFFECTIVE DECEMBER 28, 1989
REFLECTING PLAN AMENDMENTS THROUGH DECEMBER 27, 1995
<PAGE>
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS. . . . . . . . . . . . . 15
2.2 DETERMINATION OF TOP HEAVY STATUS. . . . . . . . . . 15
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER. . . . . 17
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY. . . . . . . 18
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES. . . . 18
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR . . . . . . . 19
2.7 RECORDS AND REPORTS. . . . . . . . . . . . . . . . . 20
2.8 APPOINTMENT OF ADVISERS. . . . . . . . . . . . . . . 20
2.9 INFORMATION FROM EMPLOYER. . . . . . . . . . . . . . 20
2.10 PAYMENT OF EXPENSES. . . . . . . . . . . . . . . . . 20
2.11 MAJORITY ACTIONS . . . . . . . . . . . . . . . . . . 21
2.12 CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . 21
2.13 CLAIMS REVIEW PROCEDURE. . . . . . . . . . . . . . . 21
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY. . . . . . . . . . . . . . 23
3.2 APPLICATION FOR PARTICIPATION . . . . . . . . . . . 23
3.3 EFFECTIVE DATE OF PARTICIPATION . . . . . . . . . . 23
3.4 DETERMINATION OF ELIGIBILITY . . . . . . . . . . . . 23
3.5 TERMINATION OF ELIGIBILITY . . . . . . . . . . . . . 23
3.6 OMISSION OF ELIGIBLE EMPLOYEE. . . . . . . . . . . . 24
3.7 INCLUSION OF INELIGIBLE EMPLOYEE . . . . . . . . . . 24
3.8 ELECTION NOT TO PARTICIPATE . . . . . . . . . . . . 24
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTIONS . . 25
4.2 PARTICIPANT S SALARY REDUCTION ELECTION . . . . . . 25
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION . . . . . 28
4.4 ALLOCATION OF SHARING CONTRIBUTIONS, FORFEITURES
AND EARNINGS . . . . . . . . . . . . . . . . . . . . 28
4.5 ACTUAL DEFERRAL TESTS . . . . . . . . . . . . . . . 31
4.6 ADJUSTMENT TO ACTUAL DEFERRAL TESTS . . . . . . . . 33
4.7 MAXIMUM ANNUAL ADDITIONS . . . . . . . . . . . . . . 34
4.8 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS. . . . . . 37
4.9 TRANSFERS FROM QUALIFIED PLANS . . . . . . . . . . . 37
4.10 DIRECTED INVESTMENT ACCOUNT. . . . . . . . . . . . . 39
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY. . . . . . . . . . . . . . . . . . 41
5.2 APPLICATION OF CASH. . . . . . . . . . . . . . . . . 41
5.3 LOANS TO THE TRUST . . . . . . . . . . . . . . . . . 41
5.4 PARTICIPANT DIRECTED INVESTMENTS . . . . . . . . . . 42
ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND. . . . . . . . . . . . . 44
6.2 METHOD OF VALUATION. . . . . . . . . . . . . . . . . 44
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT. . . . . . 45
7.2 DETERMINATION OF BENEFITS UPON DEATH . . . . . . . . 45
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY . . 46
7.4 DETERMINATION OF BENEFITS UPON TERMINATION . . . . . 46
7.5 DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . 51
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED . . . . . . . . 53
7.7 DISTRIBUTION FOR MINOR BENEFICIARY . . . . . . . . . 54
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN . . . 54
7.9 ADVANCE DISTRIBUTION FOR HARDSHIP . . . . . . . . . 55
7.10 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION. . . 56
7.11 DIRECT ROLLOVER. . . . . . . . . . . . . . . . . . . 56
ARTICLE IX
AMENDMENT, TERMINATION, MERGERS AND LOANS
8.1 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . 58
8.2 TERMINATION. . . . . . . . . . . . . . . . . . . . . 58
8.3 MERGER OR CONSOLIDATION. . . . . . . . . . . . . . . 59
8.4 LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . 59
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS . . . . . . . . . . . . . . . . 61
9.2 ALIENATION . . . . . . . . . . . . . . . . . . . . . 61
9.3 CONSTRUCTION OF PLAN . . . . . . . . . . . . . . . . 62
9.4 GENDER AND NUMBER. . . . . . . . . . . . . . . . . . 62
9.5 LEGAL ACTION . . . . . . . . . . . . . . . . . . . . 62
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS . . . . . . . 62
9.7 BONDING. . . . . . . . . . . . . . . . . . . . . . . 63
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE . . . . . 63
9.9 INSURER'S PROTECTIVE CLAUSE. . . . . . . . . . . . . 63
9.10 RECEIPT AND RELEASE FOR PAYMENTS . . . . . . . . . . 63
9.11 ACTION BY THE EMPLOYER . . . . . . . . . . . . . . . 64
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY . 64
9.13 HEADINGS . . . . . . . . . . . . . . . . . . . . . . 64
9.14 UNIFORMITY . . . . . . . . . . . . . . . . . . . . . 64
9.15 SECURITIES AND EXCHANGE COMMISSION APPROVAL. . . . . 65
9.16 VOTING COMPANY STOCK . . . . . . . . . . . . . . . . 65
<PAGE>
VSE CORPORATION
EMPLOYEE ESOP/401(K) PLAN
THIS PLAN, hereby adopted this 21st day of Dec, 1995, by
VSE Corporation (herein referred to as the "Employer").
W I T N E S S E T H
WHEREAS, the Employer heretofore established an
Employee Stock Ownership Plan and Trust effective December 28,
1983 (hereinafter called the "Effective Date"), known as VSE
Corporation Employee PAYSOP/401(k) Plan and which Plan shall
hereinafter be known as VSE Corporation Employee ESOP/401(k) Plan
(herein referred to as the "Plan") in recognition of the
contribution made to its successful operation by its employees and
for the exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer has
the ability to amend the Plan, provided the Trustee joins in such
amendment if the provisions of the Plan affecting the Trustee are
amended; and
WHEREAS, the Employer desires to amend the Plan to
comply with the applicable requirements of the Tax Reform Act of
1986 and subsequent legislation, regulations and other guidance;
and
WHEREAS, The Employer intends that the Plan be
administered and interpreted so that the rights of any person
(including such person's beneficiaries) who terminated employment
or who retired on or before the effective date of this Plan, as
amended and restated herein, or of the later of the adoption of or
the effective date of a particular amendment, shall be determined
solely under the terms of this Plan as in effect on the date of
his termination of employment or retirement, unless such person is
thereafter reemployed and again becomes a Participant.
NOW, THEREFORE, effective December 28, 1989, except
where otherwise provided, the Employer hereby amends and restates
the Plan in its entirety for the exclusive benefit of the
Participants and their Beneficiaries, which in part is intended to
qualify as a stock bonus "employee stock ownership plan" within
the meaning of Code Sections 401(a) and 4975(e)(7), and which in
part is a profit sharing plan intended to satisfy the requirements
of Code Sections 401(a) and 401(k), and the Trustee hereby accepts
the Plan on the following terms (which terms shall include the
foregoing clauses):
<PAGE>
ARTICLE I
DEFINITIONS
"Act" means the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time.
"Administrator" means the person or entity designated
by the Employer pursuant to Section 2.4 to administer the Plan on
behalf of the Employer.
"Affiliated Employer" means any corporation which is a
member of a controlled group of corporations (as defined in Code
Section 414(b)) which includes the Employer; any trade or business
(whether or not incorporated) which is under common control (as
defined in Code Section 414(c)) with the Employer; any
organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which
includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to Regulations under Code
Section 414(o). The term Affiliated Employer shall be modified
as required by Code Section 415(h) for purposes of applying the
limitations of Code Section 415 to this Plan.
"Aggregate Account" means, with respect to each
Participant, the value of all accounts maintained on behalf of a
Participant, subject to the provisions of Section 2.2.
"Anniversary Date" means December 28th.
"Annuity Starting Date" means the first day of the
first period for which an amount is paid as an annuity, or, in the
case of a benefit not payable in the form of an annuity, the first
day on which all events have occurred which entitle the
Participant to such benefit.
"Beneficiary" means the person to whom the share of a
deceased Participant's total account is payable, subject to the
restrictions of Sections 7.2 and 7.5.
"Code" means the Internal Revenue Code of 1986, as
amended or replaced from time to time.
"Company Stock" means common stock issued by the
Employer (or by a corporation which is a member of the controlled
group of corporations of which the Employer is a member) which is
readily tradeable on an established securities market.
"Company Stock Account" means the account of a
Participant which is credited with the shares of Company Stock
purchased and paid for by the Trust Fund or contributed to the
Trust Fund. A separate accounting shall be maintained (a) for
purposes of Section 4.10(a) and Section 7.4(a) with respect to
that portion of the Company Stock Account acquired by the Plan
after December 31, 1986, (b) for that portion of the Company Stock
Account that is attributable to contributions for which the
Employer was eligible for and elected a tax credit pursuant to
Code Section 41 (referred to herein as PAYSOP contributions ),
and (c) with respect to that portion of the Company Stock Account
attributable to Elective Contributions and Non-Elective
Contributions.
"Compensation" with respect to any Participant:
(a) means such Participant's wages as defined in Code
Section 3401(a) and all other payments of compensation by the
Employer (in the course of the Employer's trade or business) for a
Plan Year for which the Employer is required to furnish the
Participant a written statement under Code Sections 6041(d),
6051(a)(3) and 6052. Compensation must be determined without
regard to any rules under Code Section 3401(a) that limit the
remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception
for agricultural labor in Code Section 3401(a)(2)).
(b) For purposes of this Section, the determination
of Compensation shall be made by including amounts which are
contributed by the Employer pursuant to a salary reduction
agreement and which are not includable in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h)(1)(B),
403(b) or 457, and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
However, Compensation in the form of a federally mandated fringe
benefit allowance, as provided for under the Service Contract Act,
shall be disregarded.
(c) For a Participant's initial year of
participation, Compensation shall be recognized for the entire
Plan Year.
(d) Compensation in excess of $200,000 shall be
disregarded. Such amount shall be adjusted at the same time and in
such manner as permitted under Code Section 415(d), except that
the dollar increase in effect on January 1 of any calendar year
shall be effective for the Plan Year beginning with or within such
calendar year and the first adjustment to the $200,000 limitation
shall be effective on January 1, 1990. For any short Plan Year the
Compensation limit shall be an amount equal to the Compensation
limit for the calendar year in which the Plan Year begins
multiplied by the ratio obtained by dividing the number of full
months in the short Plan Year by twelve (12). In applying this
limitation, the family group of a Highly Compensated Participant
who is subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a ''five
percent owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation" during
the year, shall be treated as a single Participant, except that
for this purpose Family Members shall include only the affected
Participant's spouse and any lineal descendants who have not
attained age nineteen (19) before the close of the year. If, as a
result of the application of such rules the adjusted $200,000
limitation is exceeded, then the limitation shall be prorated
among the affected Family Members in proportion to each such
Family Member's Compensation prior to the application of this
limitation, or the limitation shall be adjusted in accordance with
any other method permitted by Regulation.
(e) (1) In addition to other applicable limitations
set forth in the Plan, and notwithstanding any other provision of
the Plan to the contrary, for Plan Years beginning on or after
January 1, 1994, the annual Compensation of each Employee taken
into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the
cost of living in accordance with Code Section 401(a)(17)(B). The
cost of living adjustment in effect for a calendar year applies to
any period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the
OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12. For
Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Code Section 401(a)(17) shall
mean the OBRA '93 annual compensation limit set forth in this
provision. If Compensation for any prior determination period is
taken into account in determining an Employee's benefits accruing
in the current Plan Year, the Compensation for that prior
determination period is subject to the OBRA '93 annual
compensation limit in effect for that prior determination period.
For this purpose, for determination periods beginning before the
first day of the first Plan Year beginning on or after January 1,
1994, the OBRA '93 annual compensation limit is $150,000.
(2) If, as a result of such rules, the maximum
"annual addition" limit of Section 4.7(a) would be exceeded for
one or more of the affected Family Members, the prorated
Compensation of all affected Family Members shall be adjusted to
avoid or reduce any excess. The prorated Compensation of any
affected Family Member whose allocation would exceed the limit
shall be adjusted downward to the level needed to provide an
allocation equal to such limit. The prorated Compensation of
affected Family Members not affected by such limit shall then be
adjusted upward on a pro rata basis not to exceed each such
affected Family Member's Compensation as determined prior to
application of the Family Member rule. The resulting allocation
shall not exceed such individual's maximum "annual addition"
limit. If, after these adjustments, an "excess amount" still
results, such "excess amount" shall be disposed of in the manner
described in Section 4.8(a) pro rata among all affected Family
Members.
(f) If, in connection with the adoption of this
amendment and restatement, the definition of Compensation has been
modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement,
Compensation means compensation determined pursuant to the Plan
then in effect.
(g) For Plan Years beginning prior to January l,
1989, the $200,000 limit (without regard to Family Member
aggregation) shall apply only for Top Heavy Plan Years and shall
not be adjusted.
"Contract" or "Policy" means any life insurance
policy, retirement income or annuity policy, or annuity contract
(group or individual) issued pursuant to the terms of the Plan.
"Current Obligations" means the Trust obligations
arising from extension of credit to the Trust and payable in cash
within (1) year from the date an Employer contribution is due.
"Deferred Compensation" means with respect to any
Participant means the amount of the Participant's total
Compensation which has been contributed to the Plan in accordance
with the Participant's deferral election pursuant to Section 4.2
excluding any such amounts distributed as excess "annual
additions" pursuant to Section 4.8(a).
"Early Retirement Date" means any Anniversary Date
(prior to the Normal Retirement Date) coinciding with or following
the date on which a Participant or Former Participant attains age
55 and has completed at least 5 Years of Service (as determined
for vesting purposes under the Plan) (Early Retirement Age). A
Participant shall become fully Vested upon satisfying this
requirement if still employed at his Early Retirement Age.
"Elective Contribution" means the Employer's
contributions to the Plan of Deferred Compensation excluding any
such amounts distributed as excess "annual additions" pursuant to
Section 4.8(a). In addition, any Employer Qualified Non-Elective
Contribution made pursuant to Section 4.1(b) and Section 4.6 shall
be considered an Elective Contribution for purposes of the Plan.
Any such contributions deemed to be Elective Contributions shall
be subject to the requirements of Sections 4.2(b) and 4.2(c) and
shall further be required to satisfy the discrimination
requirements of Regulation 1.401(k)-l(b)(5), the provisions of
which are specifically incorporated herein by reference.
"Eligible Employee" means any Employee, other than
(a) Employees who are Leased Employees;
(b) Employees whose employment is governed by the
terms of a collective bargaining agreement between Employee
representatives (within the meaning of Code Section 7701(a)(46))
and the Employer under which retirement benefits were the subject
of good faith bargaining between the parties, unless such
agreement expressly provides for coverage in this Plan or two
percent or more of the Employees of the Employer who are covered
pursuant to that agreement are professionals as defined in
Regulation 1.410(b)-9;
(c) Employees who are nonresident aliens (within the
meaning of Code Section 7701(b)(1)(B)) and who receive no earned
income (within the meaning of Code Section 911(d)(2)) from the
Employee which constitutes income from sources within the United
States (within the meaning of Code Section 861(a)(3)); and
(d) Employees of an Affiliated Employer or separate
business unit, unless such Affiliated Employer or separate
business unit has specifically adopted this Plan in writing for
all or certain of its employees.
"Employee" means any person who is employed by the
Employer or Affiliated Employer, but excludes any person who is an
independent contractor. Employee shall include Leased Employees
unless such Leased Employees are covered by a plan described in
Code Section 414(n)(5) and such Leased Employees do not constitute
more than 20% of the recipient's non-highly compensated work
force.
"Employer" means VSE Corporation and any successor
which shall maintain this Plan; and any predecessor which has
maintained this Plan. The Employer is a corporation with principal
offices in the Commonwealth of Virginia.
"Excess Contributions" means, with respect to a Plan
Year, the excess of Elective Contributions made on behalf of
Highly Compensated Participants for the Plan Year over the maximum
amount of such contributions permitted under Section 4.5(a).
Excess Contributions shall be treated as an "annual addition"
pursuant to Section 4.7(c).
"Excess Deferred Compensation" means, with respect to
any taxable year of a Participant, the excess of the aggregate
amount of such Participant' s Deferred Compensation and the
elective deferrals pursuant to Section 4.2(f) actually made on
behalf of such Participant for such taxable year, over the dollar
limitation provided for in Code Section 402(g), which is
incorporated herein by reference. Excess Deferred Compensation
shall be treated as an "annual addition" pursuant to Section
4.7(c) when contributed to the Plan unless distributed to the
affected Participant not later than the first April 15th following
the close of the Participant's taxable year. Additionally, for
purposes of Sections 2.2 and 4.4(g), Excess Deferred Compensation
shall continue to be treated as Employer contributions even if
distributed pursuant to Section 4.2(f). However, Excess Deferred
Compensation of Non-Highly Compensated Participants is not taken
into account for purposes of Section 4.5(a) to the extent such
Excess Deferred Compensation occurs pursuant to Section 4.2(d).
"ESOP" means an employee stock ownership plan that
meets the requirements of Code Section 4975(e)(7) and Regulation
54.4975-11.
"Exempt Loan" means a loan made to the Plan by a
disqualified person or a loan to the Plan which is guaranteed by a
disqualified person and which satisfies the requirements of
Section 2550.408b-3 of the Department of Labor Regulations,
Section 54.4975-7(b) of the Treasury Regulations and Section 5.3
hereof.
"Family Member" means, with respect to an affected
Participant, such Participant's spouse and such Participant's
lineal descendants and ascendants and their spouses, all as
described in Code Section 414(q)(6)(B).
"Fiduciary" means any person who (a) exercises any
discretionary authority or discretionary control respecting
management of the Plan or exercises any authority or control
respecting management or disposition of its assets, (b) renders
investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan
or has any authority or responsibility to do so, or (c) has any
discretionary authority or discretionary responsibility in the
administration of the Plan, including, but not limited to, the
Trustee, the Employer and its representative body, and the
Administrator.
"Fiscal Year" means the Employer's accounting year of
12 months commencing on January 1st of each year and ending the
following December 31st.
"Forfeiture" means that portion of a Participant's
Account that is not Vested, and occurs on the earlier of (a) the
distribution of the entire Vested portion of a Terminated
Participant's Account, or (b) the last day of the Plan Year in
which the Participant incurs five (5) consecutive l-Year Breaks in
Service. Furthermore, for purposes of paragraph (a) above, in the
case of a Terminated Participant whose Vested benefit is zero,
such Terminated Participant shall be deemed to have received a
distribution of his Vested benefit upon his termination of
employment. In addition, the term Forfeiture shall also include
amounts deemed to be Forfeitures pursuant to any other provision
of this Plan.
"Former Participant" means a person who has been a
Participant, but who has ceased to be a Participant for any
reason.
"415 Compensation" means, with respect to any
Participant, such Participant's wages as defined in Code Section
3401(a) and all other payments of compensation by the Employer (in
the course of the Employer's trade or business) for a Plan Year
for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and
6052. "415 Compensation" must be determined without regard to any
rules under Code Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)). If, in connection
with the adoption of this amendment and restatement, the
definition of "415 Compensation" has been modified, then, for Plan
Years prior to the Plan Year which includes the adoption date of
this amendment and restatement, "415 Compensation" means
compensation determined pursuant to the Plan then in effect.
"414(s) Compensation" means, with respect to any
Participant, such Participant's "Compensation" paid during a Plan
Year as defined herein (but disregarding the last sentence of
subsection (b), subsection (e)(2) and (f)). If, in connection
with the adoption of this amendment and restatement, the
definition of "414(s) Compensation" has been modified, then, for
Plan Years prior to the Plan Year which includes the adoption date
of this amendment and restatement, "414(s) Compensation" means
compensation determined pursuant to the Plan then in effect.
"Highly Compensated Employee" means an Employee
described in Code Section 414(q) and the Regulations thereunder,
and generally means an Employee who performed services for the
Employer during the "determination year" and is in one or more of
the following groups:
(a) Employees who at any time during the
"determination year" or "look-back year" were "five percent
owners" (as defined in Code Section 416(i)(1)(B).
(b) Employees who received "415 Compensation" during
the "look-back year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during
the "look-back year" from the Employer in excess of $50,000 and
were in the Top Paid Group of Employees for the Plan Year.
(d) Employees who during the "look-back year" were
officers of the Employer (as that term is defined within the
meaning of the Regulations under Code Section 416) and received
"415 Compensation" during the "look-back year" from the Employer
greater than 50 percent of the limit in effect under Code Section
415(b)(1)(A) for any such Plan Year. The number of officers shall
be limited to the lesser of (i) 50 employees; or (ii) the greater
of 3 employees or 10 percent of all employees. For the purpose of
determining the number of officers, Employees described in Code
Section 414(q)(8)(A) through (D) shall be excluded, but such
Employees shall still be considered for the purpose of identifying
the particular Employees who are officers. If the Employer does
not have at least one officer whose annual "415 Compensation'' is
in excess of 50 percent of the Code Section 415(b)(1)(A) limit,
then the highest paid officer of the Employer will be treated as a
Highly Compensated Employee.
(e) Employees who are in the group consisting of the
100 Employees paid the greatest "415 Compensation" during the
"determination year" and are also described in (b), (c) or (d)
above when these paragraphs are modified to substitute
"determination year" for "look-back year."
The "look-back year" shall be the calendar year ending
with or within the Plan Year for which testing is being performed,
and the "determination year" (if applicable) shall be the period
of time, if any, which extends beyond the "look-back year" and
ends on the last day of the Plan Year for which testing is being
performed (the "lag period"). If the "lag period" is less than
twelve months long, the dollar threshold amounts specified in (b),
(c) and (d) above shall be prorated based upon the number of
months in the "lag period."
For purposes of this Section, the determination of
"415 Compensation" shall be made by including amounts which are
contributed by the Employer pursuant to a salary reduction
agreement and which are not includable in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h)(1)(B),
403(b) or 457, and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
Additionally, the dollar threshold amounts specified in (b) and
(c) above shall be adjusted at such time and in such manner as is
provided in Regulations. In the case of such an adjustment, the
dollar Limits which shall be applied are those for the calendar
year in which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee,
Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the
Employer constituting United States source income within the
meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken
into account as a single employer and Leased Employees shall be
considered Employees unless such Leased Employees are covered by a
plan described in Code Section 414(n)(5) and are not covered in
any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform
and consistent basis for all of the Employer's retirement plans.
Highly Compensated Former Employees shall be treated as Highly
Compensated Employees without regard to whether they performed
services during the "determination year."
"Highly Compensated Former Employee" means a former
Employee who had a separation year prior to the "determination
year" and was a Highly Compensated Employee in the year of
separation from service or in any "determination year" after
attaining age 55. Notwithstanding the foregoing, an Employee who
separated from service prior to 1987 will be treated as a Highly
Compensated Former Employee only if during the separation year (or
year preceding the separation year) or any year after the Employee
attains age 55 (or the last year ending before the Employee' s
55th birthday), the Employee either received "415 Compensation" in
excess of $50,000 or was a "five percent owner." For purposes of
this Section, "determination year, "415 Compensation" and "five
percent owner" shall have the same meaning as under the definition
of Highly Compensated Employee. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees. The
method set forth in this Section for determining who is a "Highly
Compensated Former Employee" shall be applied on a uniform and
consistent basis for all purposes for which the Code Section
414(q)) definition is applicable.
"Highly Compensated Participant" means any Highly
Compensated Employee who is eligible to participate in the Plan.
"Hour of Service" means (1) each hour for which an
Employee is directly or indirectly compensated or entitled to
compensation by the Employer for the performance of duties during
the applicable computation period; (2) each hour for which an
Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the
employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, jury
duty, disability, lay-off, military duty or leave of absence)
during the applicable computation period; (3) each hour for which
back pay is awarded or agreed to by the Employer without regard to
mitigation of damages. These hours will be credited to the
Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which
the award, agreement or payment is made. The same Hours of Service
shall not be credited both under (1) or (2), as the case may be,
and under (3).
Notwithstanding the above, (i) no more than 501 Hours
of Service are required to be credited to an Employee on account
of any single continuous period during which the Employee performs
no duties (whether or not such period occurs in a single
computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of
a period during which no duties are performed is not required to
be credited to the Employee if such payment is made or due under a
plan maintained solely for the purpose of complying with
applicable worker's compensation, or unemployment compensation or
disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an
Employee for medical or medically related expenses incurred by the
Employee.
For purposes of this Section, a payment shall be
deemed to be made by or due from the Employer regardless of
whether such payment is made by or due from the Employer directly,
or indirectly through, among others, a trust fund, or insurer, to
which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or
other entity are for the benefit of particular Employees or are on
behalf of a group of Employees in the aggregate.
An Hour of Service must be counted for the purpose of
determining a Year of Service, a year of participation for
purposes of accrued benefits, a l-Year Break in Service, and
employment commencement date (or reemployment commencement date).
In addition, Hours of Service will be credited for employment with
other Affiliated Employers. The provisions of Department of Labor
regulations 2530.200b-2(b) and (c) are incorporated herein by
reference.
"Income" means the income or losses allocable to
Excess Deferred Compensation or Excess Contributions which amount
shall be allocated in the same manner as income or losses are
allocated pursuant to Section 4.4(d).
"Investment Manager" means an entity that (a) has the
power to manage, acquire, or dispose of Plan assets and (b)
acknowledges fiduciary responsibility to the Plan in writing. Such
entity must be a person, firm, or corporation registered as an
investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.
"Key Employee" means an Employee as defined in Code
Section 416(i) and the Regulations thereunder. Generally, any
Employee or former Employee (as well as each of his Beneficiaries)
is considered a Key Employee if he, at any time during the Plan
Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the
following categories:
(a) an officer of the Employer (as that term is
defined within the meaning of the Regulations under Code Section
416) having annual "415 Compensation" greater than 50 percent of
the amount in effect under Code Section 415(b)(1)(A) for any such
Plan Year.
(b) one of the ten employees having annual "415
Compensation" from the Employer for a Plan Year greater than the
dollar limitation in effect under Code Section 415(c)(1)(A) for
the calendar year in which such Plan Year ends and owning (or
considered as owning within the meaning of Code Section 318) both
more than one-half percent interest and the largest interests in
the Employer.
(c) a "five percent owner" of the Employer. "Five
percent owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than five
percent (5%) of the outstanding stock of the Employer or stock
possessing more than five percent (5%) of the total combined
voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than five
percent (5%) of the capital or profits interest in the Employer.
In determining percentage ownership hereunder, employers that
would otherwise be aggregated under Code Sections 414(b), (c), (m)
and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an
annual "415 Compensation" from the Employer of more than $150,000.
"One percent owner" means any person who owns (or is considered as
owning within the meaning of Code Section 318) more than one
percent (1%) of the outstanding stock of the Employer or stock
possessing more than one percent (1%) of the total combined voting
power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than one percent
(1%) of the capital or profits interest in the Employer. In
determining percentage ownership hereunder, employers that would
otherwise be aggregated under Code Sections 414(b), (c), (m) and
(o) shall be treated as separate employers. However, in
determining whether an individual has "415 Compensation" of more
than $150,000, "415 Compensation" from each employer required to
be aggregated under Code Sections 414(b), (c), (m) and (o) shall
be taken into account.
For purposes of this Section, the determination of
"415 Compensation" shall be made by including amounts which are
contributed by the Employer pursuant to a salary reduction
agreement and which are not includable in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h)(1)(B),
403(b) or 457, and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
"Late Retirement Date" means the Anniversary Date
coinciding with or next following a Participant's actual
Retirement Date after having reached his Normal Retirement Date.
"Leased Employee" means any person (other than an
Employee of the recipient) who pursuant to an agreement between
the recipient and any other person ("leasing organization") has
performed services for the recipient (or for the recipient and
related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at
least one year, and such services are of a type historically
performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee by
the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided
by the recipient employer.
"Non-Elective Contribution" means the Employer's
contributions to the Plan excluding, however, contributions made
pursuant to the Participant's deferral election provided for in
Section 4.2 and any Qualified Non-Elective Contribution.
"Non-Highly Compensated Participant" means any
Participant who is neither a Highly Compensated Employee nor a
Family Member.
"Non-Key Employee" means any Employee or former
Employee (and his Beneficiaries) who is not a Key Employee.
"Normal Retirement Age" means the Participant's 65th
birthday. A Participant shall become fully Vested in his
Participant's Account upon attaining his Normal Retirement Age.
"Normal Retirement Date" means the Anniversary Date
nearest the Participant's Normal Retirement Age.
"l-Year Break in Service" means the applicable
computation period during which an Employee has not completed more
than 500 Hours of Service with the Employer. Further, solely for
the purpose of determining whether a Participant has incurred a
1-Year Break in Service, Hours of Service shall be recognized for
"authorized leaves of absence" and "maternity and paternity leaves
of absence." Years of Service and 1-Year Breaks in Service shall
be measured on the same computation period.
"Authorized leave of absence" means an unpaid,
temporary cessation from active employment with the Employer
pursuant to an established nondiscriminatory policy, whether
occasioned by illness, military service, or any other reason.
A "maternity or paternity leave of absence" means an
absence from work for any period by reason of the Employee's
pregnancy, birth of the Employee's child, placement of a child
with the Employee in connection with the adoption of such child,
or any absence for the purpose of caring for such child for a
period immediately following such birth or placement. For this
purpose, Hours of Service shall be credited for the computation
period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a
l-Year Break in Service, or, in any other case, in the immediately
following computation period. The Hours of Service credited for a
"maternity or paternity leave of absence" shall be those which
would normally have been credited but for such absence, or, in any
case in which the Administrator is unable to determine such hours
normally credited, eight (8) Hours of Service per day. The total
Hours of Service required to be credited for a "maternity or
paternity leave of absence" shall not exceed 501.
"Other Investments Account" means the account of a
Participant which is credited with his share of the net gain (or
loss) of the Plan and Employer contributions in other than Company
Stock and which is debited with payments made to pay for Company
Stock. A separate accounting shall be maintained with respect to
that portion of the Other Investments Account attributable to
Elective Contributions and Non-Elective Contributions.
"Participant" means any Eligible Employee who
participates in the Plan as provided in Sections 3.2 and 3.3, and
has not for any reason become ineligible to participate further in
the Plan.
"Participant's Account" means the account established
and maintained by the Administrator for each Participant with
respect to his total interest in the Plan and Trust resulting from
the Employer's Non-Elective Contributions.
"Participant's Combined Account" means the total
aggregate amount of each Participant's Elective Account and
Participant's Account.
"Participant's Elective Account" means the account
established and maintained by the Administrator for each
Participant with respect to his total interest in the Plan and
Trust resulting from the Employer' s Elective Contributions. A
separate accounting shall be maintained with respect to that
portion of the Participant' s Elective Account attributable to
Elective Contributions pursuant to Section 4.2 and any Employer
Qualified Non-Elective Contributions.
"Plan" means this instrument, including all amendments
thereto.
"Plan Year" means the Plan's accounting year of twelve
(12) months commencing on December 28th of each year and ending
the following December 27th.
"Qualified Non-Elective Contribution" means the
Employer's contributions to the Plan that are made pursuant to
Section 4.1(b) and Section 4.6. Such contributions shall be
considered an Elective Contribution for the purposes of the Plan
and used to satisfy the "Actual Deferral Percentage" tests.
"Regulation" means the Income Tax Regulations as
promulgated by the Secretary of the Treasury or his delegate, and
as amended from time to time.
"Retired Participant" means a person who has been a
Participant, but who has become entitled to retirement benefits
under the Plan.
"Retirement Date" means the date as of which a
Participant retires for reasons other than Total and Permanent
Disability, whether such retirement occurs on a Participant's
Normal Retirement Date, Early or Late Retirement Date (see Section
7.1).
"Super Top Heavy Plan" means a plan described in
Section 2.2(b).
"Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than
by death, Total and Permanent Disability or retirement.
"Top Heavy Plan" means a plan described in Section
2.2(a).
"Top Heavy Plan Year" means a Plan Year commencing
after December 31, 1983 during which the Plan is a Top Heavy Plan.
"Top Paid Group" means the top 20 percent of Employees
who performed services for the Employer during the applicable
year, ranked according to the amount of "415 Compensation"
(determined for purposes of determining Highly Compensated
Employees) received from the Employer during such year. All
Affiliated Employers shall be taken into account as a single
employer, and Leased Employees shall be considered Employees
unless such Leased Employees are covered by a plan described in
Code Section 414(n)(5) and are not covered in any qualified plan
maintained by the Employer. Employees who are non-resident aliens
and who received no earned income (within the meaning of Code
Section 911(d)(2)) from the Employer constituting United States
source income within the meaning of Code Section 861(a)(3) shall
not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the
following additional Employees shall also be excluded; however,
such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of
service;
(b) Employees who normally work less than 17 1/2 hours
per week;
(c) Employees who normally work less than six (6)
months during a year, and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of
the Employer are covered under agreements the Secretary of Labor
finds to be collective bargaining agreements between Employee
representatives and the Employer, and the Plan covers only
Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both
the total number of active Employees as well as from the
identification of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section
shall be applied on a uniform and consistent basis for all
purposes for which the Code Section 414(q) definition is
applicable.
"Total and Permanent Disability" means a physical or
mental condition of a Participant resulting from bodily injury,
disease, or mental disorder which renders him incapable of
continuing any gainful occupation and which condition constitutes
total disability under the federal Social Security Acts.
"Trustee" means the person(s) or entity named as
trustee herein or in any separate trust forming a part of this
Plan, and any successors.
"Trust Fund" means the assets of the Plan and Trust as
the same shall exist from time to time.
"Unallocated Company Stock Suspense Account" means an
account under the Plan containing Company Stock acquired with the
proceeds of an Exempt Loan and which has not been released from
such account and allocated to the Participants' Accounts.
"Vested" means the nonforfeitable portion of any
account maintained on behalf of a Participant.
"Year of Service" means the computation period of
twelve (12) consecutive months, herein set forth, during which an
Employee has at least 1000 Hours of Service.
(a) For purposes of eligibility for participation,
the initial computation period shall begin with the date on which
the Employee first performs an Hour of Service. The participation
computation period beginning after a 1-Year Break in Service shall
be measured from the date on which an Employee again performs an
Hour of Service. The participation computation period shall shift
to the Plan Year which includes the anniversary of the date on
which the Employee first performed an Hour of Service.
(b) For vesting purposes, the computation period
shall be the Plan Year, including periods prior to the Effective
Date of the Plan. Notwithstanding the foregoing, for any short
Plan Year, the determination of whether an Employee has completed
a Year of Service shall be made in accordance with Department of
Labor regulation 2530.203-2(c). However, in determining whether an
Employee has completed a Year of Service for benefit accrual
purposes in the short Plan Year, the number of the Hours of
Service required shall be proportionately reduced based on the
number of full months in the short Plan Year.
(c) Years of Service with any Affiliated Employer
shall be recognized.
<PAGE>
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide
the special vesting requirements of Code Section 416(b) pursuant
to Section 7.4 of the Plan and the special minimum allocation
requirements of Code Section 416(c) pursuant to Section 4.4 of the
Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan
Year in which, as of the Determination Date, (1) the Present Value
of Accrued Benefits of Key Employees and (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and all plans
of an Aggregation Group, exceeds sixty percent (60%) of the
Present Value of Accrued Benefits and the Aggregate Accounts of
all Key and Non-Key Employees under this Plan and all plans of an
Aggregation Group.
If any Participant is a Non-Key Employee for any Plan
Year, but such Participant was a Key Employee for any prior Plan
Year, such Participant's Present Value of Accrued Benefit and/or
Aggregate Account balance shall not be taken into account for
purposes of determining whether this Plan is a Top Heavy or Super
Top Heavy Plan (or whether any Aggregation Group which includes
this Plan is a Top Heavy Group). In addition, if a Participant or
Former Participant has not performed any services for any Employer
maintaining the Plan at any time during the five year period
ending on the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into account
for the purposes of determining whether this Plan is a Top Heavy
or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for
any Plan Year in which, as of the Determination Date, (1) the
Present Value of Accrued Benefits of Key Employees and (2) the sum
of the Aggregate Accounts of Key Employees under this Plan and all
plans of an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Benefits and the Aggregate Accounts of
all Key and Non-Key Employees under this Plan and all plans of an
Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate
Account as of the Determination Date is the sum of:
(1) his Participant' s Combined Account
balance as of the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date;
(2) an adjustment for any contributions due as
of the Determination Date. Such adjustment shall be the amount of
any contributions actually made after the valuation date but due
on or before the Determination Date, except for the first Plan
Year when such adjustment shall also reflect the amount of any
contributions made after the Determination Date that are allocated
as of a date in that first Plan Year.
(3) any Plan distributions made within the
Plan Year that includes the Determination Date or within the four
(4) preceding Plan Years. However, in the case of distributions
made after the valuation date and prior to the Determination Date,
such distributions are not included as distributions for top heavy
purposes to the extent that such distributions are already
included in the Participant's Aggregate Account balance as of the
valuation date. Notwithstanding anything herein to the contrary,
all distributions, including distributions made prior to January
1, 1984, and distributions under a terminated plan which if it had
not been terminated would have been required to be included in an
Aggregation Group, will be counted. Further, distributions from
the Plan (including the cash value of life insurance policies) of
a Participant's account balance because of death shall be treated
as a distribution for the purposes of this paragraph.
(4) any Employee contributions, whether
voluntary or mandatory. However, amounts attributable to tax
deductible qualified voluntary employee contributions shall not be
considered to be a part of the Participant's Aggregate Account
balance.
(5) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one employer to a plan
maintained by another employer), if this Plan provides the
rollovers or plan-to-plan transfers, it shall always consider such
rollovers or plan-to-plan transfers as a distribution for the
purposes of this Section. If this Plan is the plan accepting such
rollovers or plan-to-plan transfers, it shall not consider such
rollovers or plan-to-plan transfers as part of the Participant's
Aggregate Account balance. However, rollovers or plan-to-plan
transfers accepted prior to January 1, 1984 shall be considered as
part of the Participant's Aggregate Account balance.
(6) with respect to related rollovers and
plan-to-plan transfers (ones either not initiated by the Employee
or made to a plan maintained by the same employer), if this Plan
provides the rollover or plan-to-plan transfer, it shall not be
counted as a distribution for purposes of this Section. If this
Plan is the plan accepting such rollover or plan-to-plan transfer,
it shall consider such rollover or plan-to-plan transfer as part
of the Participant's Aggregate Account balance, irrespective of
the date on which such rollover or plan-to-plan transfer is
accepted.
(7) For the purposes of determining whether
two employers are to be treated as the same employer in (5) and
(6) above, all Affiliated Employers are treated as the same
employer.
(d) "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group as hereinafter
determined.
(1) Required Aggregation Group: In determining
a Required Aggregation Group hereunder, each plan of the Employer
in which a Key Employee is a participant in the Plan Year
containing the Determination Date or any of the four preceding
Plan Years, and each other plan of the Employer which enables any
plan in which a Key Employee participates to meet the requirements
of Code Sections 401(a)(4) or 410, will be required to be
aggregated such group shall be known as a Required Aggregation
Group. In the case of a Required Aggregation Group, each plan in
the group will be considered a Top Heavy Plan if the Required
Aggregation Group is a Top Heavy Group. No plan in the Required
Aggregation Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer
may also include any other plan not required to be included in the
Required Aggregation Group, provided the resulting group, taken as
a whole, would continue to satisfy the provisions of Code Sections
401(a)(4) and 410. Such group shall be known as a Permissive
Aggregation Group. In the case of a Permissive Aggregation Group,
only a plan that is part of the Required Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group is
a Top Heavy Group. No plan in the Permissive Aggregation Group
will be considered a Top Heavy Plan if the Permissive Aggregation
Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which
the Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are Top
Heavy Plans.
(4) An Aggregation Group shall include any
terminated plan of the Employer if it was maintained within the
last five (5) years ending on the Determination Date.
(e) "Determination Date" means (1) the last day of
the preceding Plan Year, or (2) in the case of the first Plan
Year, the last day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case of
a defined benefit plan, the Present Value of Accrued Benefit for a
Participant other than a Key Employee, shall be as determined
using the single accrual method used for all plans of the Employer
and Affiliated Employers, or if no such single method exists,
using a method which results in benefits accruing not more rapidly
than the slowest accrual rate permitted under Code Section
411(b)(1)(C). The determination of the Present Value of Accrued
Benefit shall be determined as of the most recent valuation date
that falls within or ends with the 12-month period ending on the
Determination Date except as provided in Code Section 416 and the
Regulations thereunder for the first and second plan years of a
defined benefit plan.
(g) "Top Heavy Group" means an Aggregation Group in
which, as of the Determination Date, the sum of (1) the Present
Value of Accrued Benefits of Key Employees under all defined
benefit plans included in the group, and (2) the Aggregate
Accounts of Key Employees under all defined contribution plans
included in the group, exceeds sixty percent (60%) of a similar
sum determined for all Participants.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and
remove the Trustee and the Administrator from time to time as it
deems necessary for the proper administration of the Plan to
assure that the Plan is being operated for the exclusive benefit
of the Participants and their Beneficiaries in accordance with the
terms of the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding policy
and method," i.e., it shall determine whether the Plan has a short
run need for liquidity (e.g., to pay benefits) or whether
liquidity is a long run goal and investment growth (and stability
of same) is a more current need, or shall appoint a qualified
person to do so. The Employer or its delegate shall communicate
such needs and goals to the Trustee, who shall coordinate such
Plan needs with its investment policy. The communication of such a
"funding policy and method" shall not, however, constitute a
directive to the Trustee as to investment of the Trust Funds. Such
"funding policy and method" shall be consistent with the
objectives of this Plan and with the requirements of Title I of
the Act.
(c) The Employer shall periodically review the
performance of any Fiduciary or other person to whom duties have
been delegated or allocated by it under the provisions of this
Plan or pursuant to procedures established hereunder. This
requirement may be satisfied by formal periodic review by the
Employer or by a qualified person specifically designated by the
Employer, through day-to-day conduct and evaluation, or through
other appropriate ways.
(d) The Employer will furnish Plan Fiduciaries and
Participants with notices and information statements when voting
rights must be exercised pursuant to Section 9.16.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators.
Any person, including, but not limited to, the Employees of the
Employer, shall be eligible to serve as an Administrator. Any
person so appointed shall signify his acceptance by filing written
acceptance with the Employer. An Administrator may resign by
delivering his written resignation to the Employer or be removed
by the Employer by delivery of written notice of removal, to take
effect at a date specified therein, or upon delivery to the
Administrator if no date is specified. The Employer, upon the
resignation or removal of an Administrator, shall promptly
designate in writing a successor to this position. If the Employer
does not appoint an Administrator, the Employer will function as
the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator,
the responsibilities of each Administrator may be specified by the
Employer and accepted in writing by each Administrator. In the
event that no such delegation is made by the Employer, the
Administrators may allocate the responsibilities among themselves,
in which event the Administrators shall notify the Employer and
the Trustee in writing of such action and specify the
responsibilities of each Administrator. The Trustee thereafter
shall accept and rely upon any documents executed by the
appropriate Administrator until such time as the Employer or the
Administrators file with the Trustee a written revocation of such
designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants
and their Beneficiaries, subject to the specific terms of the
Plan. The Administrator shall administer the Plan in accordance
with its terms and shall have the power and discretion to construe
the terns of the Plan and to determine all questions arising in
connection with the administration, interpretation, and
application of the Plan. Any such determination by the
Administrator shall be conclusive and binding upon all persons.
The Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such
manner and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan; provided, however,
that any procedure, discretionary act, interpretation or
construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be
consistent with the intent that the Plan shall continue to be
deemed a qualified plan under the terms of Code Section 401(a),
and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of
the general administration of the Plan, including, but not limited
to, the following:
(a) the discretion to determine all questions
relating to the eligibility of Employees to participate or remain
a Participant hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with
respect to the amount and the kind of benefits to which any
Participant shall be entitled hereunder;
(c) to authorize and direct the Trustee with respect
to all nondiscretionary or otherwise directed disbursements from
the Trust;
(d) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and to
make and publish such rules for regulation of the Plan as are
consistent with the terms hereof;
(f) to determine the size and type of any Contract
to be purchased from any insurer, and to designate the insurer
from which such Contract shall be purchased;
(g) to compute and certify to the Employer and to
the Trustee from time to time the sums of money necessary or
desirable to be contributed to the Plan;
(h) to consult with the Employer and the Trustee
regarding the short and long-term liquidity needs of the Plan in
order that the Trustee can exercise any investment discretion in a
manner designed to accomplish specific objectives;
(i) to prepare and implement a procedure to notify
Eligible Employees that they may elect to have a portion of their
Compensation deferred or paid to them in cash;
(j) to establish and communicate to Participants a
procedure, which includes at least three (3) investment options
pursuant to Regulations, for allowing each Participant to direct
the Trustee as to the investment of his Company Stock Account
pursuant to Section 4.10;
(k) to establish and communicate to Participants a
procedure and method to insure that each Participant will vote
Company Stock allocated to such Participant's Company Stock
Account pursuant to Section 9.16;
(l) to enter into a written agreement with regard to
the payment of federal estate tax pursuant to Code Section
2210(b);
(m) to assist any Participant regarding his rights,
benefits, or elections available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions
taken and shall keep all other books of account, records, and
other data that may be necessary for proper administration of the
Plan and shall be responsible for supplying all information and
reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of
the Administrator, may appoint counsel, specialists, advisers, and
other persons as the Administrator or the Trustee deems necessary
or desirable in connection with the administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions,
the Employer shall supply full and timely information to the
Administrator on all matters relating to the Compensation of all
Participants, their Hours of Service, their Years of Service,
their retirement, death, disability, or termination of employment,
and such other pertinent facts as the Administrator may require;
and the Administrator shall advise the Trustee of such of the
foregoing facts as may be pertinent to the Trustee's duties under
the Plan. The Administrator may rely upon such information as is
supplied by the Employer and shall have no duty or responsibility
to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the
Trust Fund unless paid by the Employer. Such expenses shall
include any expenses incident to the functioning of the
Administrator, including, but not limited to, fees of accountants,
counsel, and other specialists and their agents, and other costs
of administering the Plan. Until paid, the expenses shall
constitute a liability of the Trust Fund.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and
delegation of administrative authority pursuant to Section 2.5, if
there shall be more than one Administrator, they shall act by a
majority of their number, but may authorize one or more of them to
sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in
writing with the Administrator. Written notice of the disposition
of a claim shall be furnished to the claimant within 90 days after
the application is filed. In the event the claim is denied, the
reasons for the denial shall be specifically set forth in the
notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where
appropriate, an explanation as to how the claimant can perfect the
claim will be provided. In addition, the claimant shall be
furnished with an explanation of the Plan's claims review
procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of
either, who has been denied a benefit by a decision of the
Administrator pursuant to Section 2.12 shall be entitled to
request the Administrator to give further consideration to his
claim by filing with the Administrator (on a form which may be
obtained from the Administrator) a request for a hearing. Such
request, together with a written statement of the reasons why the
claimant believes his claim should be allowed, shall be filed with
the Administrator no later than 60 days after receipt of the
written notification provided for in Section 2.12. The
Administrator shall then conduct a hearing within the next 60
days, at which the claimant may be represented by an attorney or
any other representative of his choosing and at which the claimant
shall have an opportunity to submit written and oral evidence and
arguments in support of his claim. At the hearing (or prior
thereto upon 5 business days written notice to the Administrator)
the claimant or his representative shall have an opportunity to
review all documents in the possession of the Administrator which
are pertinent to the claim at issue and its disallowance. Either
the claimant or the Administrator may cause a court reporter to
attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished
to both parties by the court reporter. The full expense of any
such court reporter and such transcripts shall be borne by the
party causing the court reporter to attend the hearing. A final
decision as to the allowance of the claim shall be made by the
Administrator within 60 days of receipt of the appeal (unless
there has been an extension of 60 days due to special
circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant within the 60 day
period). Such communication shall be written in a manner
calculated to be understood by the claimant and shall include
specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
<PAGE>
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed 1000 Hours of
Service with the Employer shall be eligible to participate
hereunder as of the date he has satisfied such requirements.
However, any Employee who was a Participant in the Plan prior to
the effective date of this amendment and restatement shall
continue to participate in the Plan. The Employer shall give each
prospective Eligible Employee written notice of his eligibility to
participate in the Plan prior to the close of the Plan Year in
which he first becomes an Eligible Employee.
3.2 APPLICATION FOR PARTICIPATION
In order to become a Participant hereunder, each
Eligible Employee shall make application to the Employer for
participation in the Plan and agree to the terms hereof. Upon the
acceptance of any benefits under this Plan, such Employee shall
automatically be deemed to have made application and shall be
bound by the terms and conditions of the Plan and all amendments
hereto.
3.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant
effective as of the first day of the month coinciding with or next
following the date on which such Employee met the eligibility
requirements of Section 3.1, provided said Employee was still
employed as of such date (or if not employed on such date, as of
the date of rehire if a l-Year Break in Service has not occurred).
In the event an Employee who is not a member of an
eligible class of Employees becomes a member of an eligible class,
such Employee will participate immediately if such Employee has
satisfied the minimum age and service requirements and would have
otherwise previously become a Participant.
3.4 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of
each Employee for participation in the Plan based upon information
furnished by the Employer. Such determination shall be conclusive
and binding upon all persons, as long as the same is made pursuant
to the Plan and the Act. Such determination shall be subject to
review per Section 2.13.
3.5 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a
classification of an Eligible Employee to an ineligible Employee,
such Former Participant shall continue to vest in his interest in
the Plan for each Year of Service completed while a noneligible
Employee, until such time as his Participant's Account shall be
forfeited or distributed pursuant to the terms of the Plan.
Additionally, his interest in the Plan shall continue to share in
the earnings of the Trust Fund.
(b) In the event a Participant is no longer a member
of an eligible class of Employees and becomes ineligible to
participate but has not incurred a 1-Year Break in Service, such
Employee will participate immediately upon returning to an
eligible class of Employees. If such Participant incurs a l-Year
Break in Service, eligibility will be determined under the break
in service rules of the Plan.
3.6 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be
included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution
by his Employer for the year has been made, the Employer shall
make a subsequent contribution with respect to the omitted
Employee in the amount which the said employer would have
contributed with respect to him had he not been omitted. Such
contribution shall be made regardless of whether or not it is
deductible in whole or in part in any taxable year under
applicable provisions of the Code.
3.7 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have
been included as a Participant in the Plan is erroneously included
and discovery of such incorrect inclusion is not made until after
a contribution for the year has been made, the employer shall not
be entitled to recover the contribution made with respect to the
ineligible person regardless of whether or not a deduction is
allowable with respect to such contribution. In such event, the
amount contributed with respect to the ineligible person shall
constitute a Forfeiture (except for Deferred Compensation which
shall be distributed to the ineligible person) for the Plan Year
in which the discovery is made.
3.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the
employer, elect voluntarily not to participate in the Plan. The
election not to participate must be communicated to the Employer,
in writing, at least thirty (30) days before the beginning of a
Plan Year.
<PAGE>
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to
the Plan:
(a) The amount of the total salary reduction
elections of all Participants made pursuant to Section 4.2(a),
which amount shall be deemed an Employer's Elective Contribution.
(b) On behalf of each Participant who is eligible to
share in the Qualified Non-Elective Contribution for the Plan
Year, a discretionary Qualified Non-Elective Contribution equal to
a percentage of each eligible individual's Compensation, the exact
percentage to be determined each year by the Employer (which
percentage may be zero).
(c) A discretionary amount, which amount shall be
deemed an Employer's Non-Elective Contribution (which amount may
be zero).
(d) Notwithstanding the foregoing, however, the
Employer' s contributions for any Plan Year shall not exceed the
maximum amount allowable as a deduction to the Employer under the
provisions of Code Section 404. All contributions by the Employer
shall be made in cash, Company Stock or in such property as is
acceptable to the Trustee.
(e) Except, however, to the extent necessary to
provide the top heavy minimum allocations, the Employer shall make
a contribution even if it exceeds the amount which is deductible
under Code Section 404.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer his
Compensation which would have been received in the Plan Year, but
for the deferral election, in a flat dollar amount or in a whole
percentage up to 18%. A deferral election (or modification of an
earlier election) may not be made with respect to Compensation
which is currently available on or before the date the Participant
executed such election. The amount by which Compensation is
reduced shall be that Participant's Deferred Compensation and be
treated as an Elective Contribution and allocated to that
Participant's Elective Account.
(b) The balance in each Participant's Elective
Account shall be fully Vested at all times and shall not be
subject to Forfeiture for any reason.
(c) Amounts held in the Participant's Elective
Account may not be distributable earlier than:
(1) a Participant's termination of employment,
Total and Permanent Disability, or death;
(2) the termination of the Plan without the
establishment or existence of a "successor plan," as that term is
described in Regulation 1.401(k)- l(d)(3);
(3) the date of disposition by the Employer to
an entity that is not an Affiliated Employer of substantially all
of the assets (within the meaning of Code Section 409(d)(2)) used
in a trade or business of such corporation if such corporation
continues to maintain this Plan after the disposition with respect
to a Participant who continues employment with the corporation
acquiring such assets;
(4) the date of disposition by the Employer or
an Affiliated Employer who maintains the Plan of its interest in a
subsidiary (within the meaning of Code Section 409(d)(3)) to an
entity which is not an Affiliated Employer but only with respect
to a Participant who continues employment with such subsidiary; or
(5) the proven financial hardship of a
Participant, subject to the limitations of Section 7.9.
(d) A Participant's Deferred Compensation made under
this Plan and all other plans, contracts or arrangements of the
Employer maintaining this Plan shall not exceed, during any
taxable year of the Participant, the limitation imposed by Code
Section 402(g), as in effect at the beginning of such taxable
year. If such dollar limitation is exceeded, a Participant will be
deemed to have notified the Administrator of such excess amount
which shall be distributed in a manner consistent with Section
4.2(f). The dollar limitation shall be adjusted annually pursuant
to the method provided in Code Section 415(d) in accordance with
Regulations.
(e) In the event a Participant has received a
hardship distribution from his Participant's Elective Account
pursuant to Section 7.9 or pursuant to Regulation
1.401(k)(1(d)(2)(iv)(B) from any other plan maintained by the
Employer, then such Participant shall not be permitted to elect to
have Deferred Compensation contributed to the Plan on his behalf
for a period of twelve (12) months following the receipt of the
distribution. Furthermore, the dollar limitation under Code
Section 402(g) shall be reduced, with respect to the Participant's
taxable year following the taxable year in which the hardship
distribution was made, by the amount of such Participant's
Deferred Compensation, if any, pursuant to this Plan (and any
other plan maintained by the Employer) for the taxable year of the
hardship distribution.
(f) If a Participant's Deferred Compensation under
this Plan together with any elective deferrals (as defined in
Regulation 1.402(g)-l(b)) under another qualified cash or deferred
arrangement (as defined in Code Section 401(k)), a simplified
employee pension (as defined in Code Section 408(k)), a salary
reduction arrangement (within the meaning of Code Section
3121(a)(5)(D)), a deferred compensation plan under Code Section
457, or a trust described in Code Section 501(c)(18) cumulatively
exceed the limitation imposed by Code Section 402(g) (as adjusted
annually in accordance with the method provided in Code Section
415(d) pursuant to Regulations) for such
Participant's taxable year, the Participant may, not later than
March 1 following the close of the Participant's taxable year,
notify the Administrator in writing of such excess and request
that his Deferred Compensation under this Plan be reduced by an
amount specified by the Participant. In such event, the
Administrator may direct the Trustee to distribute such excess
amount (and any income allocable to such excess amount) to the
Participant not later than the first April 15th following the
close of the Participant's taxable year. Any distribution of less
than the entire amount of Excess Deferred Compensation and Income
shall be treated as a pro rata distribution of Excess Deferred
Compensation and Income. The amount distributed shall not exceed
the Participant's Deferred Compensation under the Plan for the
taxable year. Any distribution on or before the last day of the
Participant' s taxable year must satisfy each of the following
conditions:
(1) the distribution must be made after the
date on which the Plan received the Excess Deferred Compensation;
(2) the Participant shall designate the
distribution as Excess Deferred Compensation; and
(3) the Plan must designate the distribution
as a distribution of Excess Deferred Compensation.
(g) Notwithstanding Section 4.2(f) above, a
Participant's Excess Deferred Compensation shall be reduced, but
not below zero, by any distribution of Excess Contributions
pursuant to Section 4.6(a) for the Plan Year beginning with or
within the taxable year of the Participant.
(h) Employer Elective Contributions made pursuant to
this Section may be segregated into a separate account for each
Participant in a federally insured savings account, certificate of
deposit in a bank or savings and loan association, money market
certificate, or other short-term debt security acceptable to the
Trustee until such time as the allocations pursuant to Section 4.4
have been made.
(i) The Employer and the Administrator shall
implement the salary reduction elections provided for herein in
accordance with the following:
(1) A Participant may commence making elective
deferrals to the Plan only after first satisfying the eligibility
and participation requirements specified in Article III. The
Participant shall make such an election by entering into a written
salary reduction agreement with the Employer and filing such
agreement with the Administrator. Such election shall initially be
effective beginning with the pay period following the acceptance
of the salary reduction agreement by the Administrator, shall not
have retroactive effect, and shall remain in force until revoked.
(2) A Participant may modify a prior election
during the Plan Year and concurrently make a new election by
filing a written notice with the Administrator within a reasonable
time before the pay period for which such modification is to be
effective. However, modifications to a salary deferral election
shall only be permitted on a monthly basis (unless the
Administrator determines otherwise), during an election period
established by the Administrator prior to the first day of any
month. Any modification shall not have retroactive effect and
shall remain in force until revoked.
(3) A Participant may elect to prospectively
revoke his salary reduction agreement in its entirety at any time
during the Plan Year by providing the Administrator with thirty
(30) days written notice of such revocation (or upon such shorter
notice period as may be acceptable to the Administrator). Such
revocation shall become effective as of the beginning of the first
pay period coincident with or next following the expiration of the
notice period. Furthermore, the termination of the Participant's
employment, or the cessation of participation for any reason,
shall be deemed to revoke any salary reduction agreement then in
effect, effective immediately following the close of the pay
period within which such termination or cessation occurs.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Employer contributions will be paid in cash or Company
Stock as the Employer may from time to time determine. Company
Stock will be valued at its then fair market value. The Employer
shall generally pay to the Trustee its contribution to the Plan
for each Plan Year, within the time prescribed by law, including
extensions of time, for the filing of the Employer's federal
income tax return for the Fiscal Year.
However, Employer Elective Contributions accumulated
through payroll deductions shall be paid to the Trustee as of the
earliest date on which such contributions can reasonably be
segregated from the Employer's general assets, but in any event
within ninety (90) days from the date on which such amounts would
otherwise have been payable to the Participant in cash. The
provisions of Department of Labor regulations 2510.3-102 are
incorporated herein by reference. Furthermore, any additional
Employer contributions which are allocable to the Participant's
Elective Account for a Plan Year shall be paid to the Plan no
later than the twelve-month period immediately following the close
of such Plan Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an
account in the name of each Participant to which the Administrator
shall credit as of each Anniversary Date all amounts allocated to
each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with
all information required by the Administrator to make a proper
allocation of the Employer's contributions for each Plan Year.
Within a reasonable period of time after the date of receipt by
the Administrator of such information, the Administrator shall
allocate such contribution as follows:
(1) With respect to the Employer's Elective
Contribution made pursuant to Section 4.1(a), to each
Participant's Elective Account in an amount equal to each such
Participant's Deferred Compensation for the year.
(2) With respect to the Employer' s Qualified
Non-Elective Contribution made pursuant to Section 4.1(b), to each
Participant's Elective Account in accordance with Section 4.1(b).
Only Participants who have completed a Year of Service during the
Plan Year and are actively employed on the last day of the Plan
Year shall be eligible to share in the Qualified Non-Elective
Contribution for the year.
(3) With respect to the Employer's Non-Elective
Contribution made pursuant to Section 4.1(c), to each
Participant's Account in the same proportion that each such
Participant's Compensation for the year bears to the total
Compensation of all Participants for such year. Only Participants
who have completed a Year of Service during the Plan Year and are
actively employed on the last day of the Plan Year shall be
eligible to share in the discretionary contribution for the year.
(c) (1) The Company Stock Account of each
Participant shall be credited as of each Anniversary Date with his
allocable share of Company Stock (including fractional shares)
purchased and paid for by the Plan or contributed in kind by the
Employer. Stock dividends on Company Stock held in his Company
Stock Account shall be credited to his Company Stock Account when
paid. Cash dividends on Company Stock held in his Company Stock
Account shall, in the sole discretion of the Administrator, either
be credited to his Other Investments Account when paid or be used
to repay an Exempt Loan; provided, however, that when cash
dividends are used to repay an Exempt Loan, Company Stock shall be
released from the Unallocated Company Stock Suspense Account and
allocated to the Participant's Company Stock Account pursuant to
Section 4.4(i) and, provided further, that Company Stock allocated
to the Participant's Company Stock Account shall have a fair
market value not less than the amount of cash dividends which
would have been allocated to such Participant's Other Investments
Account for the year.
(2) Company Stock acquired by the Plan with the
proceeds of an Exempt Loan shall only be allocated to each
Participant's Company Stock Account upon release from the
Unallocated Company Stock Suspense Account as provided in Section
4.4(i) herein. Company Stock acquired with the proceeds of an
Exempt Loan shall be an asset of the Trust Fund and maintained in
an Unallocated Company Stock Suspense Account.
(d) As of each Anniversary Date or other valuation
date, after allocation of Employer contributions, any earnings or
losses (net appreciation or net depreciation) of the Trust Fund
shall be allocated in the same proportion that each Participant's
and Former Participant's nonsegregated accounts (other than each
Participant's Company Stock Account) bear to the total of all
Participants' and Former Participants' nonsegregated accounts
(other than Participants' Company Stock Accounts) as of such date.
(e) Participants' accounts shall be debited for any
insurance or annuity premiums paid, if any, and credited with any
dividends received on insurance contracts.
(f) As of each Anniversary Date any amounts which
became Forfeitures since the last Anniversary Date shall first be
made available to reinstate previously forfeited account balances
of Former Participants, if any, in accordance with Section
7.4(g)(2). The remaining Forfeitures, if any, shall be used to
reduce the contribution of the Employer hereunder for the Plan
Year in which such Forfeitures occur.
(g) Minimum Allocations Required for Top Heavy Plan
Years: Notwithstanding the foregoing, for any Top Heavy Plan Year,
the sum of the Employer's contributions allocated to the
Participant's Combined Account of each Participant described in
this Section 4.4(g) shall be equal to at least three percent (3%)
of such Employee's Compensation (reduced by contributions and
forfeitures, if any, allocated to each Employee in any defined
contribution plan included with this plan in a Required
Aggregation Group). However, if (1) the sum of the Employer's
contributions allocated to the Participant's Combined Account of
each Key Employee for such Top Heavy Plan Year is less than three
percent (3%) of each Key Employee's Compensation and (2) this Plan
is not required to be included in an Aggregation Group to enable
a defined benefit plan to meet the requirements of Code Section
401(a)(4) or 410, the sum of the Employer's contributions
allocated to the Participant's Combined Account of each Employee
shall be equal to the largest percentage allocated to the
Participant's Combined Account of any Key Employee. However, in
determining whether a Non-Key Employee has received the required
minimum allocation, such Non-Key Employee' s Deferred Compensation
shall not be taken into account. For purposes of the minimum
allocations set forth above, the percentage allocated to the
Participant's Combined Account of any Key Employee shall be equal
to the ratio of the sum of the Employer's contributions allocated
on behalf of such Key Employee divided by the Compensation for
such Key Employee. The minimum allocation described in this
Section 4.4(g) shall be allocated to all Participants who are
employed by the Employer on the last day of the Plan Year,
including Participants who have (1) failed to complete a Year of
Service; and (2) declined to make mandatory contributions (if
required) or, in the case of a cash or deferred arrangement,
elective contributions to the Plan. For the purposes of this
Section, the definition of "Compensation" in Article I shall be
applied by disregarding subsections (b) and (c) thereof.
(h) If a Former Participant is reemployed after five
(5) consecutive 1-Year Breaks in Service, then separate accounts
shall be maintained as follows: (1) one account for nonforfeitable
benefits attributable to pre-break service; and (2) one account
representing his status in the Plan attributable to post-break
service.
(i) All Company Stock acquired by the Plan with the
proceeds of an Exempt Loan must be added to and maintained in the
Unallocated Company Stock Suspense Account. Such Company Stock
shall be released and withdrawn from that account as if all
Company Stock in that account were encumbered. For each Plan Year
during the duration of the loan, the number of shares of Company
Stock released shall equal the number of encumbered shares held
immediately before release for the current Plan Year multiplied by
a fraction, the numerator of which is the amount of principal (or
principal and interest, if the Exempt Loan documents so provide)
paid for the Plan Year and the denominator of which is the sum of
the numerator plus the principal (or principal and interest, if
the Exempt Loan documents so provide) to be paid for all future
Plan Years. As of each Anniversary Date, the Plan must
consistently allocate to each Participant's Account, in the same
manner as the Employer s Non-Elective Contributions are allocated,
non-monetary units (shares and fractional shares of Company Stock)
representing each Participant's interest in Company Stock
withdrawn from the Unallocated Company Stock Suspense Account.
However, Company Stock released from the Unallocated Company Stock
Suspense Account with cash dividends pursuant to Section 4.4(c)
shall be allocated to each Participant's Company Stock Account in
the same proportion that each such Participant's number of shares
of Company Stock sharing in such cash dividends bears to the total
number of shares of all Participants' Company Stock sharing in
such cash dividends. Income earned with respect to Company Stock
in the Unallocated Company Stock Suspense Account shall be used,
at the discretion of the Administrator, to repay the Exempt Loan
used to purchase such Company Stock. Company Stock released from
the Unallocated Company Stock Suspense Account with such income,
and any income which is not so used, shall be allocated as of each
Anniversary Date or other valuation date in the same proportion
that each Participant's and Former Participant's nonsegregated
Accounts after the allocation of any earnings or losses pursuant
to Section 4.4(d) bear to the total of all Participants' and
Former Participants' nonsegregated Accounts after the allocation
of any earnings or losses pursuant to Section 4.4(d).
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) The annual allocation derived from Employer
Elective Contributions to a Participant' s Elective Account shall
satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the
Highly Compensated Participant group shall not be more than the
"Actual Deferral Percentage" of the Non-Highly Compensated
Participant group multiplied by 1.25, or
(2) The excess of the "Actual Deferral
Percentage" for the Highly Compensated Participant group over the
"Actual Deferral Percentage" for the Non-Highly Compensated
Participant group shall not be more than two percentage points.
Additionally, the "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not exceed the "Actual
Deferral Percentage" for the Non-Highly Compensated Participant
group multiplied by two (2). The provisions of Code Section
401(k)(3) and Regulation 1.401(k)-1(b) are incorporated herein by
reference.
(b) For the purposes of this Section, the term "Actual
Deferral Percentage" means, with respect to the Highly Compensated
Participant group and Non-Highly Compensated Participant group for
a Plan Year, the average of the ratios, calculated separately for
each Participant in such group, of the amount of Employer Elective
Contributions allocated to each Participant's Elective Account for
such Plan Year, to such Participant's "414(s) Compensation" for
such Plan Year. The actual deferral ratio for each Participant and
the "Actual Deferral Percentage" for each group shall be
calculated to the nearest one-hundredth of one percent. Employer
Elective Contributions allocated to each Non-Highly Compensated
Participant's Elective Account shall be reduced by Excess Deferred
Compensation to the extent such excess amounts are made under this
Plan or any other plan maintained by the Employer.
(c) For the purpose of determining the actual
deferral ratio of a Highly Compensated Employee who is subject to
the Family Member aggregation rules of Code Section 414(q)(6)
because such Participant is either a "five percent owner" of the
Employer or one of the ten (10) Highly Compensated Employees paid
the greatest "415 Compensation" during the year, the following
shall apply:
(1) The combined actual deferral ratio for the
family group (which shall be treated as one Highly Compensated
Participant) shall be determined by aggregating Employer Elective
Contributions and "414(s) Compensation" of all eligible Family
Members (including Highly Compensated Participants). However,
Family Members shall include only the affected Employee's spouse
and any lineal descendants who have not attained age 19 before the
close of the Plan Year. Notwithstanding the foregoing, with
respect to Plan Years beginning prior to January 1, 1990,
compliance with the Regulations then in effect shall be deemed to
be compliance with this paragraph.
(2) The Employer Elective Contributions and
"414(s) Compensation" of all Family Members shall be disregarded
for purposes of determining the "Actual Deferral Percentage" of
the Non-Highly Compensated Participant group except to the extent
taken into account in paragraph (1) above.
(3) If a Participant is required to be
aggregated as a member of more than one family group in a plan,
all Participants who are members of those family groups that
include the Participant are aggregated as one family group in
accordance with paragraphs (1) and (2) above.
(d) For the purposes of Sections 4.5(a) and 4.6, a
Highly Compensated Participant and a Non-Highly Compensated
Participant shall include any Employee eligible to make a deferral
election pursuant to Section 4.2, whether or not such deferral
election was made or suspended pursuant to Section 4.2.
(e) For the purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k), if two or more plans which include
cash or deferred arrangements are considered one plan for the
purposes of Code Section 401(a)(4) or 410(b) (other than Code
Section 410(b)(2)(A)(ii) as in effect for Plan Years beginning
after December 31, 1988), the cash or deferred arrangements
included in such plans shall be treated as one arrangement. In
addition, two or more cash or deferred arrangements may be
considered as a single arrangement for purposes of determining
whether or not such arrangements satisfy Code Sections 401(a)(4),
410(b) and 401(k). In such a case, the cash or deferred
arrangements included in such plans and the plans including such
arrangements shall be treated as one arrangement and as one plan
for purposes of this Section and Code Sections 401(a)(4), 410(b)
and 401(k). Plans may be aggregated under this paragraph (e) for
Plan Years beginning after December 31, 1989 only if they have the
same plan year. Notwithstanding the above, for Plan Years
beginning after December 31, 1988, this Plan may not be combined
with any other plan for purposes of determining whether this Plan
or any other plan satisfies this Section and Code Sections
401(a)(4), 410(b) and 401(k).
(f) For the purposes of this Section, if a Highly
Compensated Participant is a Participant under two or more cash or
deferred arrangements of the Employer or an Affiliated Employer,
all such cash or deferred arrangements shall be treated as one
cash or deferred arrangement for the purpose of determining the
actual deferral ratio with respect to such Highly Compensated
Participant. However, for Plan Years beginning after December 31,
1988, no such aggregation of cash or deferred arrangements is
required.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer's
Elective Contributions made pursuant to Section 4.4 do not satisfy
one of the tests set forth in Section 4.5(a) for Plan Years
beginning after December 31, 1986, the Administrator shall adjust
Excess Contributions pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month
following the end of each Plan Year, the Highly Compensated
Participant having the highest actual deferral ratio shall have
his portion of Excess Contributions distributed to him until one
of the tests set forth in Section 4.5(a) is satisfied, or until
his actual deferral ratio equals the actual deferral ratio of the
Highly Compensated Participant having the second highest actual
deferral ratio. This process shall continue until one of the tests
set forth in Section 4.5(a) is satisfied. For each Highly
Compensated Participant, the amount of Excess Contributions is
equal to the Elective Contributions on behalf of such Highly
Compensated Participant (determined prior to the application of
this paragraph) minus the amount determined by multiplying the
Highly Compensated Participant's actual deferral ratio (determined
after application of this paragraph) by his "414(s) Compensation."
However, in determining the amount of Excess Contributions to be
distributed with respect to an affected Highly Compensated
Participant as determined herein, such amount shall be reduced by
any Excess Deferred Compensation previously distributed to such
affected Highly Compensated Participant for his taxable year
ending with or within such Plan Year.
(1) With respect to the distribution of Excess
Contributions pursuant to (a) above, such distribution:
(i) may be postponed but not later than
the close of the Plan Year following the
Plan Year to which they are allocable;
(ii) shall be made from Qualified
Non-Elective Contributions only to the
extent that Excess Contributions exceed
the balance in the Participant's Elective
Account attributable to Deferred
Compensation;
(iii) shall be adjusted for Income; and
(iv) shall be designated by the Employer
as a distribution of Excess Contributions
(and Income).
(2) Any distribution of less than the entire
amount of Excess Contributions shall be treated as a pro rata
distribution of Excess Contributions and Income.
(3) The determination and correction of Excess
Contributions of a Highly Compensated Participant whose actual
deferral ratio is determined under the family aggregation rules
shall be accomplished by reducing the actual deferral ratio as
required herein, and the Excess Contributions for the family unit
shall then be allocated among the Family Members in proportion to
the Elective Contributions of each Family Member that were
combined to determine the group actual deferral ratio.
Notwithstanding the foregoing, with respect to Plan Years
beginning prior to January 1, 1990, compliance with the
Regulations then in effect shall be deemed to be compliance with
this paragraph.
(b) Within twelve (12) months after the end of the
Plan Year, the Employer may make a special Qualified Non-Elective
Contribution on behalf of Non-Highly Compensated Participants in
an amount sufficient to satisfy one of the tests set forth in
Section 4.5(a). Such contribution shall be allocated to the
Participant's Elective Account of each Non-Highly Compensated
Participant in the same proportion that each Non-Highly
Compensated Participant's Compensation for the year bears to the
total Compensation of all Non-Highly Compensated Participants.
(c) If during a Plan Year the projected aggregate
amount of Elective Contributions to be allocated to all Highly
Compensated Participants under this Plan would, by virtue of the
tests set forth in Section 4.5(a), cause the Plan to fail such
tests, then the Administrator may automatically reduce
proportionately or in the order provided in Section 4.6(a) each
affected Highly Compensated Participant's deferral election made
pursuant to Section 4.2 by an amount necessary to satisfy one of
the tests set forth in Section 4.5(a).
(d) The Administrator is authorized to implement
rules under which it may utilize any combination of the methods
described in this Section 4.6 to assure that the limitations of
Section 4.5(a) are satisfied.
4.7 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual
additions" credited to a Participant's accounts for any
"limitation year" shall equal the lesser of: (1) $30,000 (or, if
greater, one-fourth of the dollar limitation in effect under Code
Section 415(b)(1)(A)) or (2) twenty-five percent (25%) of the
Participant's "415 Compensation" for such "limitation year." For
any short "limitation year," the dollar limitation in (1) above
shall be reduced by a fraction, the numerator of which is the
number of full months in the short "limitation year" and the
denominator of which is twelve (12).
(b) For "limitation years" beginning prior to July 13,
1989, the dollar amount provided for in paragraph (a)(1) above
shall be increased by the lesser of the dollar amount determined
under paragraph (a)(l) above or the amount of Company Stock
contributed, or purchased with cash contributed; provided, that no
more than one-third of the Employer's contributions for the year
are allocated to Highly Compensated Participants. In applying this
limitation, the family group of a Highly Compensated Participant
who is subject to the Family Member aggregation rules of Code
Section 414)(q)(6) shall be determined pursuant to Regulations.
(c) For purposes of applying the limitations of Code
Section 415, "annual additions" means the sum credited to a
Participant's accounts for any "limitation year" of (1) Employer
contributions, (2) Employee contributions, (3) forfeitures, (4)
amounts allocated to an individual medical account, as defined in
Code Section 415(1)(2) which is part of a pension or annuity plan
maintained by the Employer and (5) amounts derived from
contributions which are attributable to post-retirement medical
benefits allocated to the separate account of a key employee (as
defined in Code Section 419A(d)(3)) under a welfare benefit plan
(as defined in Code Section 419(e)) maintained by the Employer.
Except, however, the "415 Compensation" percentage limitation
referred to in paragraph (a)(2) above shall not apply to: (1) any
contribution for medical benefits (within the meaning of Code
Section 419A(f)(2)) after separation from service which is
otherwise treated as an "annual addition," or (2) any amount
otherwise treated as an "annual addition" under Code Section
415(1)(1).
(d) For purposes of applying the limitations of Code
Section 415, the following are not "annual additions": (1) the
transfer of funds from one qualified plan to another and (2)
provided no more than one-third of the Employer Contributions to
the Plan for the year are allocated to Highly Compensated
Participants, Forfeitures of Company Stock purchased with the
proceeds of an Exempt Loan and Employer contributions applied to
the payment of interest on an Exempt Loan. In addition, the
following are not Employee contributions for the purposes of
Section 4.7(c)(2): (1) rollover contributions (as defined in Code
Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the Plan; (3)
repayments of distributions received by an Employee pursuant to
Code Section 411(a)(7)(B) (cash-outs); (4) repayments of
distributions received by an Employee pursuant to Code Section
411(a)(3)(D) (mandatory contributions); and (5) Employee
contributions to a simplified employee pension excludable from
gross income under Code Section 408(k)(6).
(e) For purposes of applying the limitations of Code
Section 415, the "limitation year" shall be the Plan Year.
(f) The dollar limitation under Code Section
415(b)(1)(A) stated in paragraph (a)(1) above shall be adjusted
annually as provided in Code Section 415(d) pursuant to the
Regulations. The adjusted limitation is effective as of January
1st of each calendar year and is applicable to "limitation years"
ending with or within that calendar year.
(g) For the purpose of this Section, all qualified
defined benefit plans (whether terminated or not) ever maintained
by the Employer shall be treated as one defined benefit plan, and
all qualified defined contribution plans (whether terminated or
not) ever maintained by the Employer shall be treated as one
defined contribution plan.
(h) (l) If a Participant participates in more than
one defined contribution plan maintained by the Employer which
have different Anniversary Dates, the maximum "annual additions"
under this Plan shall equal the maximum "annual additions" for the
"limitation year" minus any "annual additions" previously credited
to such Participant's accounts during the "limitation year."
(2) If a Participant participates in both a
defined contribution plan subject to Code Section 412 and a
defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary Date,
"annual additions" will be credited to the Participant' s accounts
under the defined contribution plan subject to Code Section 412
prior to crediting "annual additions" to the Participant's
accounts under the defined contribution plan not subject to Code
Section 412.
(3) If a Participant participates in more than
one defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary Date,
the maximum "annual additions" under this Plan shall equal the
product of (A) the maximum "annual additions" for the "limitation
year" minus any "annual additions" previously credited under
subparagraphs (1) or (2) above, multiplied by (B) a fraction (i)
the numerator of which is the "annual additions" which would be
credited to such Participant' s accounts under this Plan without
regard to the limitations of Code Section 415 and (ii) the
denominator of which is such "annual additions" for all plans
described in this subparagraph.
(i) (1) If an Employee is (or has been) a
Participant in one or more defined benefit plans and one or more
defined contribution plans maintained by the Employer, the sum of
the defined benefit plan fraction (as defined in Code Section
415(e)(2)) and the defined contribution plan fraction (as defined
in Code Section 415(e)(3)) for any "limitation year" may not
exceed 1.0.
(2) If the Employee was a Participant as of the
end of the first day of the first "limitation year" beginning
after December 31, 1986, in one or more defined contribution plans
maintained by the Employer which were in existence on May 6, 1986,
the numerator of the defined contribution fraction will be
adjusted if the sum of this fraction and the defined benefit
fraction would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of (1) the
excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted from
the numerator of this fraction. The adjustment is calculated using
the fractions as they would be computed as of the end of the last
"limitation year" beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the Code Section 415 limitation
applicable to the first "limitation year" beginning on or after
January 1, 1987. The annual addition for any "limitation year"
beginning before January 1, 1987 shall not be recomputed to treat
all Employee contributions as annual additions.
(2) For any "limitation year" in which the Plan
is a Top Heavy Plan, for purposes of calculating the defined
benefit plan fraction and the defined contribution plan fraction,
100 percent shall be substituted for 125 percent in Code
Section 415(e)(2) or (3), as the case may be, unless the extra
minimum allocation is being provided pursuant to Section 4.4.
However, for any "limitation year" in which the Plan is a Super
Top Heavy Plan, 100 percent shall be substituted for 125 percent
in any event.
(j) Notwithstanding anything contained in this Section
to the contrary, the limitations, adjustments and other
requirements prescribed in this Section shall at all times comply
with the provisions of Code Section 415 and the Regulations
thereunder, the terms of which are specifically incorporated
herein by reference.
4.8 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in
estimating a Participant's Compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning
of Code Section 402(g)(3)) that may be made with respect to any
Participant under the limits of Section 4.7 or other facts and
circumstances to which Regulation 1.415-6(b)(6) shall be
applicable, the "annual additions" under this Plan would cause the
maximum "annual additions" to be exceeded for any Participant, the
Administrator shall (1) distribute any elective deferrals (within
the meaning of Code Section 402(g)(3)) or return any voluntary
Employee contributions credited for the "limitation year" to the
extent that the return would reduce the "excess amount" in the
Participant's accounts; (2) hold any "excess amount" remaining
after the return of any elective deferrals or voluntary Employee
contributions in a "Section 415 suspense account"; (3) use the
"Section 415 suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to reduce Employer
contributions for that Participant if that Participant is covered
by the Plan as of the end of the "limitation year," or if the
Participant is not so covered, allocate and reallocate the
"Section 415 suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to all Participants in
the Plan before any Employer or Employee contributions which would
constitute "annual additions" are made to the Plan for such
"limitation year"; (4) reduce Employer contributions to the Plan
for such "limitation year" by the amount of the "Section 415
suspense account" allocated and reallocated during such
"limitation year."
(b) For purposes of this Article, "excess amount" for
any Participant for a "limitation year" shall mean the excess, if
any, of (1) the "annual additions" which would be credited to his
account under the terms of the Plan without regard to the
limitations of Code Section 415 over (2) the maximum "annual
additions" determined pursuant to Section 4.7.
(c) For purposes of this Section, "Section 415
suspense account" shall mean an unallocated account equal to the
sum of "excess amounts" for all Participants in the Plan during
the "limitation year." The "Section 415 suspense account" shall
not share in any earnings or losses of the Trust Fund.
4.9 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may
be transferred from other qualified plans by Employees, provided
that the trust from which such funds are transferred permits the
transfer to be made and the transfer will not jeopardize the tax
exempt status of the Plan or Trust or create adverse tax
consequences for the Employer. The amounts transferred shall be
set up in a separate account herein referred to as a
"Participant's Rollover Account." Such account shall be fully
Vested at all times and shall not be subject to Forfeiture for any
reason.
(b) Amounts in a Participant' s Rollover Account shall
be held by the Trustee pursuant to the provisions of this Plan and
may not be withdrawn by, or distributed to the Participant, in
whole or in part, except as provided in paragraphs (c) and (d) of
this Section.
(c) Except as permitted by Regulations (including
Regulation 1.411(d)-4), amounts attributable to elective
contributions (as defined in Regulation 1.401(k)-1(g)(3)),
including amounts treated as elective contributions, which are
transferred from another qualified plan in a plan-to-plan transfer
shall be subject to the distribution limitations provided for in
Regulation 1.401(k)-l(d).
(d) At Normal Retirement Date, or such other date when
the Participant or his Beneficiary shall be entitled to receive
benefits, the fair market value of the Participant's Rollover
Account shall be used to provide additional benefits to the
Participant or his Beneficiary. Any distributions of amounts held
in a Participant' s Rollover Account shall be made in a manner
which is consistent with and satisfies the provisions of Section
7.5, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations
thereunder. Furthermore, such amounts shall be considered as part
of a Participant's benefit in determining whether an involuntary
cash-out of benefits without Participant consent may be made.
(e) The Administrator may direct that employee
transfers made after a valuation date be segregated into a
separate account for each Participant in a federally insured
savings account, certificate of deposit in a bank or savings and
loan association, money market certificate, or other short term
debt security acceptable to the Trustee until such time as the
allocations pursuant to this Plan have been made, at which time
they may remain segregated or be invested as part of the general
Trust Fund, to be determined by the Administrator.
(f) For purposes of this Section, the term ''qualified
plan" shall mean any tax-qualified plan under Code Section 401(a).
The term "amounts transferred from other qualified plans" shall
mean: (i) amounts transferred to this Plan directly from another
qualified plan; (ii) distributions from another qualified plan
which are eligible rollover distributions and which are either
transferred by the Employee to this Plan within sixty (60) days
following his receipt thereof or are transferred pursuant to a
direct rollover; (iii) amounts transferred to this Plan from a
conduit individual retirement account provided that the conduit
individual retirement account has no assets other than assets
which (A) were previously distributed to the Employee by another
qualified plan as a lump-sum distribution; (B) were eligible for
tax-free rollover to a qualified plan and (C) were deposited in
such conduit individual retirement account within sixty (60) days
of receipt thereof and other than earnings on said assets; and
(iv) amounts distributed to the Employee from a conduit individual
retirement account meeting the requirements of clause (iii) above,
and transferred by the Employee to this Plan within sixty (60)
days of his receipt thereof from such conduit individual
retirement account.
(g) Prior to accepting any transfers to which this
Section applies, the Administrator may require the Employee to
establish that the amounts to be transferred to this Plan meet the
requirements of this Section and may also require the Employee to
provide an opinion of counsel satisfactory to the Employer that
the amounts to be transferred meet the requirements of this
Section.
(h) This Plan shall not accept any direct or indirect
transfers (as that term is defined and interpreted under Code
Section 401(a)(11) and the Regulations thereunder) from a defined
benefit plan, money purchase plan (including a target benefit
plan), stock bonus or profit sharing plan which would otherwise
have provided for a life annuity form of payment to the
Participant.
(i) Notwithstanding anything herein to the contrary, a
transfer directly to this Plan from another qualified plan (or a
transaction having the effect of such a transfer) shall only be
permitted if it will not result in the elimination or reduction of
any "Section 411(d)(6) protected benefit'' as described in Section
8.1.
4.10 DIRECTED INVESTMENT ACCOUNT
(a) (1) Each "Qualified Participant" may elect
within ninety (90) days after the close of each Plan Year during
the "Qualified Election Period" to direct the Trustee in writing
as to the investment of 25 percent of the total number of shares
of Company Stock acquired by or contributed to the employee stock
ownership plan (ESOP) portion of the Plan after December 31, 1986
that have ever been allocated to such ''Qualified Participant's"
Company Stock Account (reduced by the number of shares of Company
Stock previously invested pursuant to a prior election). In the
case of the election year in which the Participant can make his
last election, the preceding sentence shall be applied by
substituting "50 percent" for "25 percent". If the "Qualified
Participant" elects to direct the Trustee as to the investment of
his Company Stock Account, such direction shall be effective no
later than 180 days after the close of the Plan Year to which such
direction applies.
(2) Notwithstanding the above, if the fair
market value (determined pursuant to Section 6.1 at the Plan
valuation date immediately preceding the first day on which a
"Qualified Participant" is eligible to make an election) of
Company Stock acquired by or contributed to the ESOP portion of
the Plan after December 31, 1986 and allocated to a "Qualified
Participant's" Company Stock Account is $500 or less, then such
Company Stock shall not be subject to this paragraph. For purposes
of determining whether the fair market value exceeds $500, Company
Stock held in accounts of all employee stock ownership plans (as
defined in Code Section 4975(e)(7)) and tax credit employee stock
ownership plans (as defined in Code Section 409(a)) maintained by
the Employer or any Affiliated Employer shall be considered as
held by the ESOP portion of the Plan.
(b) For the purposes of this Section the following
definitions shall apply:
(1) "Qualified Participant" means any
Participant or Former Participant who has completed ten (10) Years
of Service as a Participant and has attained age 55.
(2) "Qualified Election Period" means the six
(6) Plan Year period beginning with the later of (i) the first
Plan Year in which the Participant first became a ''Qualified
Participant", or (ii) the first Plan Year beginning after December
31, 1986.
(c) A separate Directed Investment Account shall be
established for each Participant who has directed an investment.
Transfers between the Participant's regular account and his
Directed Investment Account shall be charged and credited as the
case may be to each account. The Directed Investment Account shall
not share in Trust Fund earnings, but it shall be charged or
credited as appropriate with the net earnings, gains, losses and
expenses as well as any appreciation or depreciation in market
value during each Plan Year attributable to such account.
<PAGE>
ARTICLE V
FUNDING AND INVESTMENT POLICY
5.1 INVESTMENT POLICY
(a) The Plan is designed to invest primarily in
Company Stock.
(b) With due regard to subparagraph (a) above, the
Administrator may also direct the Trustee to invest funds under
the Plan in other property described in the Trust or in life
insurance policies to the extent permitted by subparagraph (c)
below, or the Trustee may hold such funds in cash or cash
equivalents.
(c) With due regard to subparagraph (a) above, the
Administrator may also direct the Trustee to invest funds under
the Plan in insurance policies on the life of any "keyman"
Employee. The proceeds of a "keyman" insurance policy may not be
used for the repayment of any indebtedness owed by the Plan which
is secured by Company Stock. In the event any "keyman" insurance
is purchased by the Trustee, the premiums paid thereon during any
Plan Year, net of any policy dividends and increases in cash
surrender values, shall be treated as the cost of Plan investment
and any death benefit or cash surrender value received shall be
treated as proceeds from an investment of the Plan.
(d) The Plan may not obligate itself to acquire
Company Stock from a particular holder thereof at an indefinite
time determined upon the happening of an event such as the death
of the holder.
(e) The Plan may not obligate itself to acquire
Company Stock under a put option binding upon the Plan. However,
at the time a put option is exercised, the Plan may be given an
option to assume the rights and obligations of the Employer under
a put option binding upon the Employer.
(f) All purchases of Company Stock shall be made at a
price which, in the judgment of the Administrator, does not exceed
the fair market value thereof. All sales of Company Stock shall be
made at a price which, in the judgment of the Administrator, is
not less than the fair market value thereof. The valuation rules
set forth in Article VI shall be applicable.
5.2 APPLICATION OF CASH
Employer Non-Elective Contributions in cash shall first be
applied to pay any Current Obligations of the Trust Fund.
5.3 LOANS TO THE TRUST
(a) The Plan may borrow money for any lawful purpose,
provided the proceeds of an Exempt Loan are used within a
reasonable time after receipt only for any or all of the following
purposes:
(1) To acquire Company Stock.
(2) To repay such loan.
(3) To repay a prior Exempt Loan.
(b) All loans to the Trust which are made or
guaranteed by a disqualified person must satisfy all requirements
applicable to Exempt Loans including but not limited to the
following:
(1) The loan must be at a reasonable rate of
interest;
(2) Any collateral pledged to the creditor by
the Plan shall consist only of the Company Stock purchased with
the borrowed funds;
(3) Under the terms of the loan, any pledge of
Company Stock shall provide for the release of shares so pledged
on a pro-rata basis pursuant to Section 4.4(g);
(4) Under the terms of the loan, the creditor
shall have no recourse against the Plan except with respect to
such collateral, earnings attributable to such collateral,
Employer Non-Elective Contributions (other than contributions of
Company Stock) that are made to meet Current Obligations and
earnings attributable to such contributions;
(5) The loan must be for a specific term and
may not be payable at the demand of any person, except in the case
of default;
(6) In the event of default upon an Exempt
Loan, the value of the Trust Fund transferred in satisfaction of
the Exempt Loan shall not exceed the amount of default. If the
lender is a disqualified person within the meaning of Code Section
4975, an Exempt Loan shall provide for a transfer of Trust Funds
upon default only upon and to the extent of the failure of the
Plan to meet the payment schedule of the Exempt Loan;
(7) Exempt Loan payments during a Plan Year
must not exceed an amount equal to: (A) the sum, over all Plan
Years, of all Employer Non-Elective Contributions and cash
dividends paid by the Employer to the Plan with respect to such
Exempt Loan and earnings on such Employer Non-Elective
Contributions and cash dividends, less (B) the sum of the Exempt
Loan payments in all preceding Plan Years. A separate accounting
shall be maintained for such Employer non-Elective Contributions,
cash dividends and earnings until the Exempt Loan is repaid.
5.4 PARTICIPANT DIRECTED INVESTMENTS
(a) The Administrator, in its sole discretion, may
make a determination to rely on Section 404(c) of ERISA, as such
section relates to Participant investment direction regarding the
investment of all or any part of the Plan assets, to the extent
not inconsistent with the rules pertaining to employee stock
ownership plans and Exempt Loans. In the event of a decision to
comply with Section 404(c) of ERISA, the Administrator shall
establish rules and regulations and administer the affected
portion of the Plan in a manner consistent with the disclosure,
confidentiality and other provisions of Section 404(c) of ERISA
and the regulations promulgated thereunder.
(b) In the event that reliance on Section 404(c) is
sought with respect to any portion of the Plan, the Administrator
shall have the exclusive authority and discretion to direct the
Trustee to establish one or more investment funds for the
investment of the assets of the Trust fund. Such investment funds
may include, but need not be limited to, (i) mutual fund(s)
managed by an investment company or companies selected by the
Administrator, (ii) collective investment trusts, (iii) unit
investment trusts and (iv) annuities. In making such direction,
the Administrator shall use the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and
with like aims. The Administrator may, at any time, direct that a
new investment fund or funds be established and/or discontinue an
existing investment fund or funds. The assets constituting each
investment fund shall be segregated and kept separate from the
assets constituting the other investment funds. All dividends,
interest and other income of, as well as any cash received from
the sale or exchange of securities or other property of an
investment fund, shall be invested and reinvested in the same
investment fund.
(c) If the Trustee receives any contribution under
the Plan as to which written instructions directing its investment
are not in effect, the Trustee may, in its discretion, either (i)
hold all or a portion of the contribution uninvested without
liability for loss of income or appreciation pending receipt of
proper investment direction, or (ii) hold all or any portion of
the contribution in savings accounts and other types of time or
demand deposits with any financial institution.
(d) Such of the Participant's Accounts as the
Administrator shall permit the direction of Participants shall be
invested, by means of providing the Appropriate Form to the
Administrator or its delegate, in one or more of the investment
funds, allocated in whole percentages totaling 100%.
(e) The Participant shall receive written
confirmation of the Participant's investment instructions as soon
as reasonably practicable after such instructions are given.
Notwithstanding the above, the Trustee or the Administrator may
decline to follow a Participant's investment direction if doing so
would result in a non-exempt prohibited transaction under Section
4975 of the Code and/or 406 of ERISA, or any transaction which, if
implemented, would give rise to an event described in DOL
Regulations Section 2550.404c-1(d)(2)(ii).
<PAGE>
ARTICLE VI
VALUATIONS
6.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each
Anniversary Date, and at such other date or dates deemed necessary
by the Administrator, herein called "valuation date," to determine
the net worth of the assets comprising the Trust Fund as it exists
on the "valuation date." In determining such net worth, the
Trustee shall value the assets comprising the Trust Fund at their
fair asset value as of the "valuation date" and shall deduct all
expenses for which the Trustee has not yet obtained reimbursement
from the Employer or the Trust Fund.
6.2 METHOD OF VALUATION
Valuations must be made in good faith and based on all
relevant factors for determining the fair market value of
securities. In the case of a transaction between a Plan and a
disqualified person, value must be determined as of the date of
the transaction. For all other Plan purposes, value must be
determined as of the most recent "valuation date" under the Plan.
An independent appraisal will not in itself be a good faith
determination of value in the case of a transaction between the
Plan and a disqualified person. However, in other cases, a
determination of fair market value based on at least an annual
appraisal independently arrived at by a person who customarily
makes such appraisals and who is independent of any party to the
transaction will be deemed to be a good faith determination of
value.
<PAGE>
ARTICLE VII
DETERMINATION AND DISTRIBUTION OF BENEFITS
7.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the
Employer and retire for the purposes hereof on his Normal
Retirement Date or Early Retirement Date. However, a Participant
may postpone the termination of his employment with the Employer
to a later date, in which event the participation of such
Participant in the Plan, including the right to receive
allocations pursuant to Section 4.4, shall continue until his Late
Retirement Date. Upon a Participant's Retirement Date, or as soon
thereafter as is practicable, the Trustee shall distribute all
amounts credited to such Participant's Combined Account in
accordance with Sections 7.5 and 7.6.
7.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Annuity
Starting Date, all amounts credited to such Participant's Combined
Account shall become fully Vested. If elected, distribution of the
Participant' s Combined Account shall commence not later than one
(1) year after the close of the Plan Year in which such
Participant's death occurs. The Administrator shall direct the
Trustee, in accordance with the provisions of Sections 7.5 and
7.6, to distribute the value of the deceased Participant's
accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant after his
Annuity Starting Date, the Administrator shall direct the Trustee,
in accordance with the provisions of Sections 7.5 and 7.6, to
distribute any remaining Vested amounts credited to the accounts
of a deceased Former Participant to such Former Participant's
Beneficiary.
(c) Any security interest held by the Plan by reason
of an outstanding loan to the Participant or Former Participant
shall be taken into account in determining the amount of the death
benefit.
(d) The Administrator may require such proper proof of
death and such evidence of the right of any person to receive
payment of the value of the account of a deceased Participant or
Former Participant as the Administrator may deem desirable. The
Administrator's determination of death and of the right of any
person to receive payment shall be conclusive.
(e) The Beneficiary of the death benefit payable
pursuant to this Section shall be the Participant's spouse as of
his date of death. Except, however, the Participant may designate
a Beneficiary other than his spouse if:
(1) the spouse has waived the right to be the
Participant's Beneficiary, or
(2) the Participant is legally separated or has
been abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and there is no
"qualified domestic relations order" as defined in Code Section
414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a
form satisfactory to the Administrator. A Participant may at any
time revoke his designation of a Beneficiary or change his
Beneficiary by filing written notice of such revocation or change
with the Administrator. However, the Participant's spouse must
again consent in writing to any change in Beneficiary unless the
original consent acknowledged that the spouse had the right to
limit consent only to a specific Beneficiary and that the spouse
voluntarily elected to relinquish such right. In the event no
valid designation of Beneficiary exists at the time of the
Participant's death, the death benefit shall be distributed in the
following priority: (i) the Participant s spouse, (ii) the
Participant s children, (iii) the Participant s siblings, (iv) the
Participant s parents, (v) the Participant s grandchildren, and
(vi) the Participant s estate.
(f) Any consent by the Participant's spouse to waive
any rights to the death benefit must be in writing, must
acknowledge the effect of such waiver, and be witnessed by a Plan
representative or a notary public. Further, the spouse's consent
must be irrevocable and must acknowledge the specific nonspouse
Beneficiary.
7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent
Disability prior to his Retirement Date or other termination of
his employment, all amounts credited to such Participant's
Combined Account shall become fully Vested. In the event of a
Participant's Total and Permanent Disability, the Trustee, in
accordance with the provisions of Sections 7.5 and 7.6, shall
distribute to such Participant all amounts credited to such
Participant's Combined Account as though he had retired. If such
Participant elects, distribution shall commence not later than one
(1) year after the close of the Plan Year in which Total and
Permanent Disability occurs.
7.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) (1) On or before the Anniversary Date
coinciding with or subsequent to the termination of a
Participant's employment for any reason other than death, Total
and Permanent Disability or retirement, the Administrator may
direct the Trustee to segregate the amount of the Vested portion
of such Terminated Participant's Combined Account and invest the
aggregate amount thereof in a separate, federally insured savings
account, certificate of deposit, common or collective trust fund
of a bank or a deferred annuity. In the event the Vested portion
of a Participant's Combined Account is not segregated, the amount
shall remain in a separate account for the Terminated Participant
and share in allocations pursuant to Section 4.4 until such time
as a distribution is made to the Terminated Participant.
(2) If a portion of a Participant's Account is
forfeited, Company Stock allocated to the Participant's Company
Stock Account must be forfeited only after the Participant' s
Other Investments Account has been depleted. If interest in more
than one class of Company Stock has been allocated to a
Participant's Account, the Participant must be treated as
forfeiting the same proportion of each such class.
(3) In the event that the amount of the Vested
portion of the Terminated Participant's Combined Account equals or
exceeds the fair market value of any insurance Contracts, the
Trustee, when so directed by the Administrator and agreed to by
the Terminated Participant, shall assign, transfer, and set over
to such Terminated Participant all Contracts on his life in such
form or with such endorsements so that the settlement options and
forms of payment are consistent with the provisions of Section
7.5. In the event that the Terminated Participant's Vested portion
does not at least equal the fair market value of the Contracts, if
any, the Terminated Participant may pay over to the Trustee the
sum needed to make the distribution equal to the value of the
Contracts being assigned or transferred, or the Trustee, pursuant
to the Participant's election, may borrow the cash value of the
Contracts in the insurer so that the value of the Contracts is
equal to the Vested portion of the Terminated Participant's
Account and then assign the Contracts to the Terminated
Participant.
(4) Distribution of the funds due to a
Terminated Participant shall be made on the occurrence of an event
which would result in the distribution had the Terminated
Participant remained in the employ of the Employer (upon the
Participant' s death, Total and Permanent Disability, Early or
Normal Retirement). However, at the election of the Participant,
the Administrator shall direct the Trustee to cause the entire
Vested portion of the Terminated Participant' s Combined Account
to be payable to such Terminated Participant at any time which is
at least three (3) months after termination of employment. Any
distribution under this paragraph shall be made in a manner which
is consistent with and satisfies the provisions of Sections 7.5
and 7.6, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations
thereunder.
(5) If the value of a Terminated Participant's
Vested benefit derived from Employer and Employee contributions
does not exceed $3,500 and has never exceeded $3,500 at the time
of any prior distribution, the Administrator shall direct the
Trustee to cause the entire Vested benefit to be paid to such
Participant in a single lump sum.
For purposes of this Section 7.4, if the value of a Terminated
Participant's Vested benefit is zero, the Terminated Participant
shall be deemed to have received a distribution of such Vested
benefit.
(6) To the extent not inconsistent with Code
Sections 401(a)(9) and 401(a)(28), amounts held in the
Participant's Account that are attributable to PAYSOP
contributions may not be distributable earlier than:
(i) the end of the 84th month beginning
after the month the Company Stock acquired with the PAYSOP
contribution is allocated to the Participant's Account;
(ii) the Participant s termination of
employment, Total and Permanent Disability, or death;
(iii) the termination of the Plan;
(iv) the transfer of a Participant to the
employment of an acquiring employer in the case of a sale to an
entity that is not an Affiliated Employer of substantially all of
the assets (within the meaning of Code Section 409(d)(2)) used in
a trade or business of the Employer;
(v) the date of disposition by the
Employer or an Affiliated Employer who maintains the Plan of its
interest in a subsidiary (within the meaning of Code Section
409(d)(3)) to an entity which is not an Affiliated Employer but
only with respect to a Participant who continues employment with
such subsidiary; or
(b) A Participant shall at all times be fully vested
in his 401(k) Contributions Account, his Rollover Account, and
that portion of the Participant s Account that is attributable to
PAYSOP contributions. The Vested portion of any Participant's
Account shall be a percentage of the total amount credited to his
Participant's Account determined on the basis of the Participant's
number of Years of Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
Notwithstanding the foregoing, the Vested interest of a
Participant in his Participant Account who has not been credited
with an Hour of Service on or after December 28, 1989, shall be
determined in accordance with the vesting schedule in effect as of
the date of the Participant s termination of employment with the
Employer.
(c) Notwithstanding the vesting schedule provided for
in paragraph (b) above, for any Top Heavy Plan Year, the Vested
portion of the Participant's Account of any Participant who has an
Hour of Service after the Plan becomes top heavy shall be a
percentage of the total amount credited to his Participant's
Account determined on the basis of the Participant's number of
Years of Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy
Plans the Administrator shall revert to the vesting schedule in
effect before this Plan became a Top Heavy Plan. Any such
reversion shall be treated as a Plan amendment pursuant to the
terms of the Plan.
(d) Notwithstanding the vesting schedule above, the
Vested percentage of a Participant's Account shall not be less
than the Vested percentage attained as of the later of the
effective date or adoption date of this amendment and restatement.
(e) Notwithstanding the vesting schedule above, upon
the complete discontinuance of the Employer's contributions to the
Plan or upon any full or partial termination of the Plan, all
amounts credited to the account of any affected Participant shall
become 100% Vested and shall not thereafter be subject to
Forfeiture.
(f) The computation of a Participant's nonforfeitable
percentage of his interest in the Plan shall not be reduced as the
result of any direct or indirect amendment to this Plan. For this
purpose, the Plan shall be treated as having been amended if the
Plan provides for an automatic change in vesting due to a change
in top heavy status. In the event that the Plan is amended to
change or modify any vesting schedule, a Participant with at least
three (3) Years of Service (five (5) Years of Service with respect
to Participants who have not completed an Hour of Service on or
after December 28, 1989) as of the expiration date of the election
period may elect to have his nonforfeitable percentage computed
under the Plan without regard to such amendment. If a Participant
fails to make such election, then such Participant shall be
subject to the new vesting schedule. The Participant's election
period shall commence on the adoption date of the amendment and
shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written
notice of the amendment from the Employer or Administrator.
(g) (1) If any Former Participant shall be
reemployed by the Employer before a 1-Year Break in Service
occurs, he shall continue to participate in the Plan in the same
manner as if such termination had not occurred.
(2) If any Former Participant shall be
reemployed by the Employer before five (5) consecutive 1-Year
Breaks in Service, and such Former Participant had received, or
was deemed to have received, a distribution of his entire Vested
interest prior to his reemployment, his forfeited account shall be
reinstated only if he repays the full amount distributed to him
before the earlier of five (5) years after the first date on which
the Participant is subsequently reemployed by the Employer or the
close of the first period of five (5) consecutive 1-Year Breaks in
Service commencing after the distribution, or in the event of a
deemed distribution, upon the reemployment of such Former
Participant. In the event the Former Participant does repay the
full amount distributed to him, or in the event of a deemed
distribution, the undistributed portion of the Participant's
Account must be restored in full, unadjusted by any gains or
losses occurring subsequent to the Anniversary Date or other
valuation date coinciding with or preceding his termination. The
source for such reinstatement shall first be any Forfeitures
occurring during the year. If such source is insufficient, then
the Employer shall contribute an amount which is sufficient to
restore any such forfeited Accounts provided, however, that if a
discretionary contribution is made for such year pursuant to
Section 4.1(c), such contribution shall first be applied to
restore any such Accounts and the remainder shall be allocated in
accordance with Section 4.4.
(3) If any Former Participant is reemployed
after a 1-Year Break in Service has occurred, Years of Service
shall include Years of Service prior to his 1-Year Break in
Service subject to the following rules:
(i) If a Former Participant has a l-Year
Break in Service, his pre-break and post-break service shall be
used for computing Years of Service for eligibility and for
vesting purposes only after he has been employed for one (1) Year
of Service following the date of his reemployment with the
Employer;
(ii) Any Former Participant who under the
Plan does not have a nonforfeitable right to any interest in the
Plan resulting from Employer contributions shall lose credits
otherwise allowable under (i) above if his consecutive l-Year
Breaks in Service equal or exceed five (5);
(iii) After five (5) consecutive 1-Year
Breaks in Service, a Former Participant's Vested Account balance
attributable to pre-break service shall not be increased as a
result of post-break service;
(iv) If a Former Participant who has not
had his Years of Service before a 1-Year Break in Service
disregarded pursuant to (ii) above completes one (1) Year of
Service for eligibility purposes following his reemployment with
the Employer, he shall participate in the Plan retroactively from
his date of reemployment;
(v) If a Former Participant who has not
had his Years of Service before a l-Year Break in Service
disregarded pursuant to (ii) above completes a Year of Service (a
l-Year Break in Service previously occurred, but employment had
not terminated), he shall participate in the Plan retroactively
from the first day of the Plan Year during which he completes one
(1) Year of Service.
7.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the
Participant (or if no election has been made prior to the
Participant's death, by his Beneficiary), shall direct the Trustee
to distribute to a Participant or his Beneficiary any amount to
which he is entitled under the Plan in one lump-sum payment. The
distribution shall be based on the value of the Participant s
Combined Account determined as of the valuation date coincident
with or immediately preceding the date of distribution.
(b) Any distribution to a Participant who has a
benefit which exceeds, or has ever exceeded, $3,500 at the time of
any prior distribution shall require such Participant's consent if
such distribution occurs prior to his Normal Retirement Age. With
regard to this required consent:
(1) The Participant must be informed of his
right to defer receipt of the distribution. If a Participant fails
to consent, it shall be deemed an election to defer the
distribution of any benefit. However, any election to defer the
receipt of benefits shall not apply with respect to distributions
which are required under Section 7.5(g).
(2) Notice of the rights specified under this
paragraph shall be provided no less than 30 days and no more than
90 days before the first day on which all events have occurred
which entitle the Participant to such benefit. Such distribution
may commence less than 30 days after the notice is given, provided
that: (i) the Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular
distribution option), and (ii) the Participant, after receiving
the notice, affirmatively elects a distribution.
(3) Written consent of the Participant to the
distribution must not be made before the Participant receives the
notice and must not be made more than 90 days before the first day
on which all events have occurred which entitle the Participant to
such benefit.
(4) No consent shall be valid if a significant
detriment is imposed under the Plan on any Participant who does
not consent to the distribution.
(c) Notwithstanding anything herein to the contrary,
the Administrator, in his sole discretion, may direct that cash
dividends on shares of Company Stock allocable to Participants' or
Former Participants' Company Stock Accounts be distributed to such
Participants or Former Participants within 90 days after the close
of the Plan Year in which the dividends are paid.
(d) Any part of a Participant's benefit which is
retained in the Plan after the Anniversary Date on which his
participation ends will continue to be treated as a Company Stock
Account or as an Other Investments Account (subject to Section
7.4(a)) as provided in Article IV. However, neither account will
be credited with any further Employer contributions.
(e) Distributions of a Participant's Account after a
Valuation Date shall not be credited with earnings or losses from
the Valuation Date to the date of distribution.
(f) Except as may be required to satisfy the
requirements of Code Section 401(a)(9), distribution of a
Participant's Account shall not include any Company Stock acquired
with the proceeds of an Exempt Loan until the close of the Plan
Year in which such loan is repaid in full.
(g) Notwithstanding any provision in the Plan to the
contrary, the distribution of a Participant's benefits shall be
made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder (including Regulation 1.401(a)(9)-2), the provisions of
which are incorporated herein by reference:
(1) A Participant's benefits shall be
distributed to him not later than April 1st of the calendar year
following the later of (i) the calendar year in which the
Participant attains age 70 1/2 or (ii) the calendar year in which
the Participant retires, provided, however, that this clause (ii)
shall not apply in the case of a Participant who is a "five (5)
percent owner" at any time during the five (5) Plan Year period
ending in the calendar year in which he attains age 70 1/2 or, in
the case of a Participant who becomes a "five (5) percent owner"
during any subsequent Plan Year, clause (ii) shall no longer apply
and the required beginning date shall be the April 1st of the
calendar year following the calendar year in which such subsequent
Plan Year ends. Notwithstanding the foregoing, clause (ii) above
shall not apply to any Participant unless the Participant had
attained age 70 1/2 before January 1, 1988 and was not a "five (5)
percent owner" at any time during the Plan Year ending with or
within the calendar year in which the Participant attained age 66
1/2 or any subsequent Plan Year.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance with the incidental
death benefit requirements of Code Section 401(a)(9)(G) and the
Regulations thereunder.
(h) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant shall be
made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder. If it is determined pursuant to Regulations that the
distribution of a Participant's interest has begun and the
Participant dies before his entire interest has been distributed
to him, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of
distribution selected pursuant to Section 7.5 as of his date of
death. If a Participant dies before he has begun to receive any
distributions of his interest under the Plan or before
distributions are deemed to have begun pursuant to Regulations,
then his death benefit shall be distributed to his Beneficiaries
by December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.
However, the 5-year distribution requirement of
the preceding paragraph shall not apply to any portion of the
deceased Participant's interest which is payable to or for the
benefit of a designated Beneficiary. In such event, such portion
may, at the election of the Participant (or the Participant's
designated Beneficiary), be distributed over a period not
extending beyond the life expectancy of such designated
Beneficiary provided such distribution begins not later than
December 31st of the calendar year immediately following the
calendar year in which the Participant died. However, in the event
the Participant's spouse (determined as of the date of the
Participant's death) is his Beneficiary, the requirement that
distributions commence within one year of a Participant's death
shall not apply. In lieu thereof, distributions must commence on
or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant
died; or (2) December 31st of the calendar year in which the
Participant would have attained age 70 1/2. If the surviving
spouse dies before distributions to such spouse begin, then the
5-year distribution requirement of this Section shall apply as if
the spouse was the Participant.
(i) The restrictions imposed by this Section shall not
apply if a Participant has, prior to January 1, 1984, made a
written designation to have his retirement benefit paid in an
alternative method acceptable under Code Section 401(a) as in
effect prior to the enactment of the Tax Equity and Fiscal
Responsibility Act of 1982. Any such written designation made by a
Participant shall be binding upon the Plan Administrator
notwithstanding any contrary provision of Section 7.5.
(j) Subject to the spouse's right of consent afforded
under the Plan, the restrictions imposed by this Section shall not
apply if a Participant has, prior to January 1, 1984, made a
written designation to have his death benefits paid in an
alterative method acceptable under Code Section 401(a) as in
effect prior to the enactment of the Tax Equity and Fiscal
Responsibility Act of 1982.
(k) If a distribution is made at a time when a
Participant is not fully Vested in his Participant's Account
(employment has not terminated) and the Participant may increase
the Vested percentage in such account: (1) a separate account
shall be established for the Participant's interest in the Plan as
of the time of the distribution; and (2) at any relevant time, the
Participant's Vested portion of the separate account shall be
equal to an amount ("X") determined by the formula:
X equals P(AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the Vested percentage
at the relevant time, AB is the account balance at the relevant
time, D is the amount of distribution, and R is the ratio of the
account balance at the relevant time to the account balance after
distribution.
7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED
(a) Distribution of a Participant's benefit may be
made in cash or Company Stock or both, provided, however, that
with respect to the employee stock ownership plan (ESOP) portion
of the Plan, if a Participant or Beneficiary so requests, such
benefit (other than Company Stock reinvested pursuant to Section
4.10(a)) shall be distributed only in the form of Company Stock.
Prior to making a distribution of benefits, the Administrator
shall advise the Participant or his Beneficiary, in writing, of
the right to request that benefits under the ESOP portion of the
Plan be distributed solely in Company Stock.
(b) If a Participant or Beneficiary requests that
benefits under the ESOP portion of the Plan be distributed solely
in Company Stock, distribution of a Participant s benefit under
the ESOP portion of the Plan will be made entirely in whole shares
or other units of Company Stock. Any balance in a Participant' s
Other Investments Account will be applied to acquire for
distribution the maximum number of whole shares or other units of
Company Stock at the then fair market value. Any fractional unit
value unexpended will be distributed in cash. If Company Stock is
not available for purchase by the Trustee, then the Trustee shall
hold such balance until Company Stock is acquired and then make
such distribution, subject to Sections 7.5(g) and 7.5(e).
(c) The Trustee will make distribution from the Trust
only on instructions from the Administrator.
(d) Except as otherwise provided herein, Company Stock
distributed by the Trustee may be restricted as to sale or
transfer by the by-laws or articles of incorporation of the
Employer, provided restrictions are applicable to all Company
Stock of the same class. If a Participant is required to offer the
sale of his Company Stock to the Employer before offering to sell
his Company Stock to a third party, in no event may the Employer
pay a price less than that offered to the distributee by another
potential buyer making a bona fide offer and in no event shall the
Trustee pay a price less than the fair market value of the Company
Stock. However, no Company Stock acquired with the proceeds of
an Exempt Loan hereof may be subject to a put, call, or other
option, or buy-sell or similar arrangement when held by and when
distributed from the Trust Fund, whether or not the Plan is then
an employee stock ownership plan. The protections and rights
granted in this Section are nonterminable, and such protections
and rights shall continue to exist under the terms of this Plan so
long as any Company Stock acquired with the proceeds of an Exempt
Loan is held by the Trust Fund or by any Participant or other
person for whose benefit such protections and rights have been
created, and neither the repayment of such loan nor the failure of
the Plan to be an employee stock ownership plan, an amendment of
the Plan shall cause a termination of said protections and rights.
7.7 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then
the Administrator may direct that such distribution be paid to the
legal guardian, or if none, to a parent of such Beneficiary or a
responsible adult with whom the Beneficiary maintains his
residence, or to the custodian for such Beneficiary under the
Uniform Gift to Minors Act or Gift to Minors Act, if such is
permitted by the laws of the state in which said Beneficiary
resides. Such a payment to the legal guardian, custodian or parent
of a minor Beneficiary shall fully discharge the Trustee,
Employer, and Plan from further liability on account thereof.
7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution
payable to a Participant or his Beneficiary hereunder shall, at
the Participant's attainment of his Normal Retirement Age, remain
unpaid solely by reason of the inability of the Administrator,
after sending a registered letter, return receipt requested, to
the last known address, and after further diligent effort, to
ascertain the whereabouts of such Participant or his Beneficiary,
the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. In the event a Participant or Beneficiary is
located subsequent to his benefit being reallocated, such benefit
shall be restored.
7.9 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the
Participant, shall direct the Trustee to distribute to any
Participant in any one Plan Year up to the lesser of 100% of his
Participant's Elective Account, valued as of the valuation date
coincident with or immediately preceding the date of distribution,
the amount necessary to satisfy the immediate and heavy financial
need of the Participant. Any distribution made pursuant to this
Section shall be deemed to be made as of the first day of the Plan
Year or, if later, the evaluation date immediately preceding the
date of distribution, and the Participant' s Elective Account
shall be reduced accordingly. Withdrawal under this Section shall
be authorized only if the distribution is on account of:
(1) Expenses for medical care described in Code
Section 213(d) previously incurred by the Participant, his spouse,
or any of his dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care;
(2) The costs directly related to the purchase
of a principal residence for the Participant (excluding mortgage
payments);
(3) Payment of tuition and related educational
fees for the next twelve (12) months of post-secondary education
for the Participant, his spouse, children, or dependents; or
(4) Payments necessary to prevent the eviction
of the Participant from his principal residence or foreclosure on
the mortgage of the Participant's principal residence.
(b) No distribution shall be made pursuant to this
Section unless the Administrator, based upon the Participant's
representation and such other facts as are known to the
Administrator, determines that all of the following conditions are
satisfied:
(1) The distribution is not in excess of the
amount of the immediate and heavy financial need of the
Participant. The amount of the immediate and heavy financial need
may include any amounts necessary to pay any federal, state, or
local income taxes or penalties reasonably anticipated to result
from the distribution;
(2) The Participant has obtained all
distributions, other than hardship distributions, and all
nontaxable (at the time of the loan) loans currently available
under all plans maintained by the Employer;
(3) The Plan, and all other plans maintained by
the Employer, provide that the Participant s elective deferrals
and voluntary Employee contributions will be suspended for at
least twelve (12) months after receipt of the hardship
distribution or, the Participant, pursuant to a legally
enforceable agreement, will suspend his elective deferrals and
voluntary Employee contributions to the Plan and all other plans
maintained by the Employer for at least twelve (12) months after
receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by
the Employer, provide that the Participant may not make elective
deferrals for the Participant's taxable year immediately following
the taxable year of the hardship distribution in excess of the
applicable limit under Code Section 402(g) for such next taxable
year less the amount of such Participant's elective deferrals for
the taxable year of the hardship distribution.
(c) Notwithstanding the above, for Plan Years
beginning after December 31, 1988, distributions from the
Participant's Elective Account pursuant to this Section shall be
limited, as of the date of distribution, to the Participant's
Elective Account as of the end of the last Plan Year ending before
July 1, 1989, plus the total Participant's Deferred Compensation
after such date, reduced by the amount of any previous
distributions pursuant to this Section.
(d) Any distribution made pursuant to this Section
shall be made in a manner which is consistent with and satisfies
the provisions of Sections 7.5 and 7.6, including, but not limited
to, all notice and consent requirements of Code Section 411(a)(11)
and the Regulations thereunder.
7.10 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded
to any "alternate payee" under a ''qualified domestic relations
order." Furthermore, a distribution to an "alternate payee" shall
be permitted if such distribution is authorized by a ''qualified
domestic relations order," even if the affected Participant has
not separated from service and has not reached the "earliest
retirement age" under the Plan. For the purposes of this Section,
"alternate payee," qualified domestic relations order" and
"earliest retirement age" shall have the meaning set forth under
Code Section 414(p).
7.11 DIRECT ROLLOVER
(a) This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan
to the contrary that would otherwise limit a distributee's
election under this Section, a distributee may elect, at the time
and in the manner prescribed by the Administrator, to have any
portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover.
(b) For purposes of this Section the following
definitions shall apply:
(1) An eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee' s designated beneficiary, or for
a specified period of ten years or more; any distribution to the
extent such distribution is required under Code Section 401(a)(9);
and the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(2) An eligible retirement plan is an individual
retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity
plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or
individual retirement annuity.
(3) A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Code Section 414(p), are
distributee with regard to the interest of the spouse or former
spouse.
(4) A direct rollover is a payment by the plan
to the eligible retirement plan specified by the distributee.
<PAGE>
ARTICLE VIII
AMENDMENT, TERMINATION, MERGERS AND LOANS
8. 1 AMENDMENT
(a) The Employer shall have the right at any time to
amend the Plan, subject to the limitations of this Section. Any
such amendment shall be adopted by formal action of the Employer's
board of directors. However, any amendment which affects the
rights, duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and
Administrator's written consent. Any such amendment shall become
effective as provided therein upon its execution. The Trustee
shall not be required to execute any such amendment unless the
Trust provisions contained herein are a part of the Plan and the
amendment affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it
authorizes or permits any part of the Trust Fund (other than such
part as is required to pay taxes and administration expenses) to
be used for or diverted to any purpose other than for the
exclusive benefit of the Participants or their Beneficiaries or
estates; or causes any reduction in the amount credited to the
account of any Participant; or causes or permits any portion of
the Trust Fund to revert to or become property of the Employer.
(c) Except as permitted by Regulations, no Plan
amendment or transaction having the effect of a Plan amendment
(such as a merger, plan transfer or similar transaction) shall be
effective to the extent it eliminates or reduces any "Section
411(d)(6) protected benefit" or adds or modifies conditions
relating to "Section 411(d)(6) protected benefits" the result of
which is a further restriction on such benefit unless such
protected benefits are preserved with respect to benefits accrued
as of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits
and retirement-type subsidies, and optional forms of benefit. In
addition, no such amendment shall have the effect of terminating
the protections and rights set forth in Section 7.6(d), unless
such termination shall then be permitted under the applicable
provisions of the Code and Regulations; such a termination is
currently expressly prohibited by Regulation 54.4975-11(a)(3)(ii).
8.2 TERMINATION
(a) The Employer shall have the right at any time to
terminate the Plan by delivering to the Trustee and Administrator
written notice of such termination. Upon any full or partial
termination, all amounts credited to the affected Participants'
Combined Accounts shall become 100% Vested as provided in Section
7.4 and shall not thereafter be subject to forfeiture, and all
unallocated amounts shall be allocated to the accounts of all
Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the
Employer shall direct the distribution of the assets of the Trust
Fund to Participants in a manner which is consistent with and
satisfies the provisions of Sections 7.5 and 7.6. Except as
permitted by Regulations, the termination of the Plan shall not
result in the reduction of "Section 411(d)(6) protected benefits"
in accordance with Section 8.l(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or
its assets and/or liabilities may be transferred to any other plan
and trust only if the benefits which would be received by a
Participant of this Plan, in the event of a termination of the
plan immediately after such transfer, merger or consolidation, are
at least equal to the benefits the Participant would have received
if the Plan had terminated immediately before the transfer, merger
or consolidation, and such transfer, merger or consolidation does
not otherwise result in the elimination or reduction of any
"Section 411(d)(6) protected benefits" in accordance with Section
8.1(c).
8.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion, make
loans to Participants and Beneficiaries under the following
circumstances: (1) loans shall be made available to all
Participants and Beneficiaries on a reasonably equivalent basis;
(2) loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to
other Participants and Beneficiaries; (3) loans shall bear a
reasonable rate of interest; (4) loans shall be adequately
secured; and (5) loans shall provide for repayment over a
reasonable period of time.
(b) Loans made pursuant to this Section (when added to
the outstanding balance of all other loans made by the Plan to the
Participant) shall be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of
the highest outstanding balance of loans from the Plan to the
Participant during the one year period ending on the day before
the date on which such loan is made, over the outstanding balance
of loans from the Plan to the Participant on the date on which
such loan was made, or
(2) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant under the Plan.
For purposes of this limit, all plans of the Employer shall be
considered one plan. Additionally, with respect to any loan made
prior to January 1, 1987, the $50,000 limit specified in (1) above
shall be unreduced.
(c) Loans shall provide for level amortization with
payments to be made not less frequently than quarterly over a
period not to exceed five (5) years. However, loans used to
acquire any dwelling unit which, within a reasonable time, is to
be used (determined at the time the loan is made) as a principal
residence of the Participant shall provide for periodic repayment
over a reasonable period of time that may exceed five (5) years.
Notwithstanding the foregoing, loans made prior to January 1, 1987
which are used to acquire, construct, reconstruct or substantially
rehabilitate any dwelling unit which, within a reasonable period
of time is to be used (determined at the time the loan is made) as
a principal residence of the Participant or a member of his family
(within the meaning of Code Section 267(c)(4)) may provide for
periodic repayment over a reasonable period of time that may
exceed five (5) years. Additionally, loans made prior to January
1, 1987, may provide for periodic payments which are made less
frequently than quarterly and which do not necessarily result in
level amortization.
(d) Any loans granted or renewed on or after the last
day of the first Plan Year beginning after December 31, 1988 shall
be made pursuant to a Participant loan program. Such loan program
shall be established in writing and must include, but need not be
limited to, the following:
(1) the identity of the person or positions
authorized to administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or
denied;
(4) limitations, if any, on the types and
amounts of loans offered;
(5) the procedure under the program for
determining a reasonable rate of interest;
(6) the types of collateral which may secure a
Participant loan; and
(7) the events constituting default and the
steps that will be taken to preserve Plan assets.
Such Participant loan program shall be contained in a separate
written document which, when properly executed, is hereby
incorporated by reference and made a part of the Plan.
Furthermore, such Participant loan program may be modified or
amended in writing from time to time without the necessity of
amending this Section.
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract
between the Employer and any Participant or to be a consideration
or an inducement for the employment of any Participant or
Employee. Nothing contained in this Plan shall be deemed to give
any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the
Employer to discharge any Participant or Employee at any time
regardless of the effect which such discharge shall have upon him
as a Participant of this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below, no
benefit which shall be payable out of the Trust Fund to any person
(including a Participant or his Beneficiary) shall be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be void; and no such benefit shall in any
manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any such person, nor shall
it be subject to attachment or legal process for or against such
person, and the same shall not be recognized by the Trustee,
except to such extent as may be required by law.
(b) This provision shall not apply to the extent a
Participant or Beneficiary is indebted to the Plan, as a result of
a loan from the Plan. At the time a distribution is to be made to
or for a Participant's or Beneficiary's benefit, such proportion
of the amount distributed as shall equal such loan indebtedness
shall be paid by the Trustee to the Trustee or the Administrator,
at the direction of the Administrator, to apply against or
discharge such loan indebtedness. Prior to making a payment,
however, the Participant or Beneficiary must be given written
notice by the Administrator that such loan indebtedness is to be
so paid in whole or part from his Participant's Combined Account.
If the Participant or Beneficiary does not agree that the loan
indebtedness is a valid claim against his Vested Participant's
Combined Account, he shall be entitled to a review of the validity
of the claim in accordance with procedures provided in Sections
2.12 and 2.13.
(c) This provision shall not apply to a ''qualified
domestic relations order" deemed in Code Section 414(p), and those
other domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to
the extent provided under a "qualified domestic relations order,"
a former spouse of a Participant shall be treated as the spouse or
surviving spouse for all purposes under the Plan.
9.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced
according to the Act and the laws of the Commonwealth of Virginia,
other than its laws respecting choice of law, to the extent not
preempted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine,
feminine or neuter gender, they shall be construed as though they
were also used in another gender in all cases where they would so
apply, and whenever any words are used herein in the singular or
plural form, they shall be construed as though they were also used
in the other form in all cases where they would so apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which the
Trustee or the Administrator may be a party, and such claim, suit,
or proceeding is resolved in favor of the Trustee or
Administrator, they shall be entitled to be reimbursed from the
Trust Fund for any and all costs, attorney's fees, and other
expenses pertaining thereto included by them for which they shall
have become liable.
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise
specifically permitted by law, it shall be impossible by operation
of the Plan or of the Trust, by termination of either, by power of
revocation or amendment, by the happening of any contingency, by
collateral arrangement or by any other means, for any part of the
corpus or income of any trust fund maintained pursuant to the Plan
or any funds contributed thereto to be used for, or diverted to,
purposes other than the exclusive benefit of Participants, Retired
Participants, or their Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such excessive
contribution at any time within one (1) year following the time of
payment and the Trustees shall return such amount to the Employer
within the one (1) year period. Earnings of the Plan attributable
to the excess contributions may not be returned to the Employer
but any losses attributable thereto must reduce the amount so
redeemed.
(c) Notwithstanding any provisions to the contrary,
except Sections 3.6, 3.7, and 4.1(e), any contribution by the
Employer to the Trust Fund is conditioned upon the deductibility
of the contribution by the Employer under the Code and, to the
extent any such deduction is disallowed, the Employer may, within
one (1) year following the disallowance of the deduction, demand
repayment of such disallowed contribution and the Trustee shall
return such contribution within one ( 1) year following the
disallowance. Earnings of the Plan attributable to the excess
contribution may not be returned to the Employer, but any losses
attributable thereto must reduce the amount so returned.
9.7 BONDING
Every Fiduciary, except a bank or an insurance company,
unless exempted by the Act and regulations thereunder, shall be
bonded in an amount not less than 10% of the amount of the funds
such Fiduciary handles; provided, however, that the minimum bond
shall be $1,000 and the maximum bond, $500,000. The amount of
funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or
class to be covered and their predecessors, if any, during the
preceding Plan Year, or if there is no preceding Plan Year, then
by the amount of the funds to be handled during the then current
year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary
alone or in connivance with others. The surety shall be a
corporate surety company (as such term is used in Act Section
412(a)(2)), and the bond shall be in a form approved by the
Secretary of Labor. Notwithstanding anything in the Plan to the
contrary, the cost of such bonds shall be an expense of and may,
at the election of the Administrator, be paid from the Trust Fund
or by the Employer.
9.8 EMPLOYER'S AND TRUST'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their successors,
shall be responsible for the validity of any Contract issued
hereunder or for the failure on the part of the insurer to make
payments provided by any such Contract, or for the action of any
person which may delay payment or render a Contract null and void
or unenforceable in whole or in part.
9.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not
have any responsibility for the validity of this Plan or for the
tax or legal aspects of this Plan. The insurer shall be protected
and held harmless in acting in accordance with any written
direction of the Trustee, and shall have no duty to see to the
application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any
provision of this Plan, the insurer shall not be required to take
or permit any action or allow any benefit or privilege contrary to
the terms of any Contract which it issues hereunder, or the rules
of the insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative,
Beneficiary, or to any guardian or committee appointed for such
Participant or Beneficiary in accordance with the provisions of
the Plan, shall, to the extent thereof, be in full satisfaction of
all claims hereunder against the Trustee and the Employer, either
of whom may require such Participant, legal representative,
Beneficiary, guardian or committee, as a condition precedent to
such payment, to execute a receipt and release thereof in such
form as shall be determined by the Trustee or Employer.
<PAGE>
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is
permitted or required to do or perform any act or matter or thing,
it shall be done and performed by a person duly authorized by its
legally constituted authority.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer,
(2) the Administrator and (3) the Trustee. The named Fiduciaries
shall have only those specific powers, duties, responsibilities,
and obligations as are specifically given them under the Plan. In
general, the Employer shall have the sole responsibility for
making the contributions provided for under Section 4.1; and shall
have the sole authority to appoint and remove the Trustee and the
Administrator; to formulate the Plan's "funding policy and
method"; and to amend or terminate, in whole or in part, the Plan.
The Administrator shall have the sole responsibility for the
administration of the Plan, which responsibility is specifically
described in the Plan. The Trustee shall have the sole
responsibility of management of the assets held under the Trust,
except those assets, the management of which has been assigned to
an Investment Manager, who shall be solely responsible for the
management of the assets assigned to it, all as specifically
provided in the Plan. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it
shall be in accordance with the provisions of the Plan,
authorizing or providing for such direction, information or
action. Furthermore, each named Fiduciary may rely upon any such
direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan to
inquire into the propriety of any such direction, information or
action. It is intended under the Plan that each named Fiduciary
shall be responsible for the in proper exercise of its own powers,
duties, responsibilities and obligations under the Plan. No named
Fiduciary shall guarantee the Trust Fund in any manner against
investment loss or depreciation in asset value. Any person or
group may serve in more than one Fiduciary capacity. In the
furtherance of their responsibilities hereunder, the "named
Fiduciaries" shall be empowered to interpret the Plan and Trust
and to resolve ambiguities, inconsistencies and omissions. which
findings shall be binding, final and conclusive.
9.13 HEADINGS
The headings and subheadings of this Plan have been inserted
for convenience of reference and are to be ignored in any
construction of the provisions hereof.
9.14 UNIFORMITY
All provisions of this Plan shall be interpreted and applied
in a uniform, nondiscriminatory manner. In the event of any
conflict between the terms of this Plan and any Contract purchased
hereunder, the Plan provisions shall control.
9.15 SECURITIES AND EXCHANGE COMMISSION APPROVAL
The Employer may request an interpretative letter from the
Securities and Exchange Commission stating that the transfers of
Company Stock contemplated hereunder do not involve transactions
requiring a registration of such Company Stock under the
Securities Act of 1933. In the event that a favorable
interpretative letter is not obtained, the Employer reserves the
right to amend the Plan and Trust retroactively to their Effective
Dates in order to obtain a favorable interpretative letter or to
terminate the Plan.
9.16 VOTING COMPANY STOCK
(a) The Trustee shall vote all Company Stock held by it as
part of the Plan assets. Provided, however, that if any agreement
entered into by the Trust provides for voting of any shares of
Company Stock pledged as security for any obligation of the Plan,
then such shares of Company Stock shall be voted in accordance
with such agreement. The Trustee shall not vote Company Stock
which a Participant or a Beneficiary, pursuant to this Section,
fails to exercise.
(b) Notwithstanding Section 9.16(a), if the Employer has a
registration-type class of securities each Participant or
Beneficiary shall be entitled to direct the Trustee as to the
manner in which the Company Stock which is entitled to vote and
which is allocated to the Participant s or Beneficiary s Company
Stock Account under the ESOP part of the Plan is to be voted. For
purposes of this Section the term "registration-type class of
securities" means: (A) a class of securities required to be
registered under Section 12 of the Securities Exchange Act of
1934; and (B) a class of securities which would be required to be
so registered except for the exemption from registration provided
in subsection (g)(2)(H) of such Section 12. Shares of Company
Stock described in this Section 9.16(b) which are not voted by the
Participants and Beneficiaries shall be voted by the Trustees as
they deem appropriate and consistent with their fiduciary
responsibilities. The Trustees may solicit guidance and counsel
in the administration of their duties under the Plan.
<PAGE>
IN WITNESS WHEREOF, this Plan has been executed the day and
year first above written.
Signed, sealed, and delivered in the presence of:
VSE CORPORATION
By /s/ D. Ackerson Date December 21, 1995
ATTEST
TRUSTEES
/s/ C. S. Weber
CRAIG S. WEBER
/s/ M. A. Robin
MARK A. ROBIN
Exhibit 5
October 31, 1996
The Board of Directors
VSE Corporation
2550 Huntington Avenue
Alexandria, Virginia 22303
Gentlemen:
We have acted as counsel to VSE Corporation (the "Company") with respect
to the Company's Registration Statement on Form S-3, filed by the Company with
the Securities and Exchange Commission in connection with the registration
under the Securities Act of 1933, as amended, of 200,000 shares of Common
Stock, par value $.05 per share (the "Shares"). As counsel to the Company,
we have examined the Company's Certificate of Incorporation and such records,
certificates and other documents of the Company, as well as relevant statutes,
regulations, published rulings and such questions of law, as we considered
necessary or appropriate for the purpose of this opinion.
We assume that, prior to the sale of any Shares to which the Registration
Statement relates, appropriate action will be taken to register and qualify
such Shares for sale, to the extent necessary, under any applicable state
securities laws.
Based on the foregoing, we are of the opinion that the 200,000 Shares held
for the account of the trust established pursuant to the VSE Corporation
ESOP/401(k) Plan are validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement. In giving this consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the General Rules and Regulations
thereunder.
Very truly yours,
ARENT FOX KINTNER PLOTKIN & KAHN
-17-
Exhibit 23b
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 1, 1996
included in VSE Corporation's Form 10-K for the year ended December 31, 1995,
and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Washington, D.C.,
October 31, 1996
