<PAGE>
As filed with the Securities and Exchange Commission on May 27, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
PALEX, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0520673
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1360 POST OAK BLVD., SUITE 800
HOUSTON, TEXAS 77056
(713) 350-6030
(Address of registrant's principal executive offices)
ACME BARREL COMPANY EMPLOYEE
STOCK OWNERSHIP PLAN
(Full Title of Plan)
-------------------
Edward E. Rhyne Copy to: Eric A. Blumrosen
Vice President and General Counsel Gardere Wynne Sewell & Riggs, L.L.P.
PalEx, Inc. 333 Clay Avenue
1360 Post Oak Blvd., Suite 800 Suite 800
Houston, Texas 77056 Houston, Texas 77002-4086
(713) 350-6030 (713) 308-5533
(Name and address, including zip code, and telephone number,
including area code, of registrant's agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED (1) (2) SHARE (3) PRICE (1)(3) REGISTRATION FEE (3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,301,485 shares $10.53 $13,704,637.05 $4,042.87
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
(2) The shares of Common Stock, $.01 par value ("Common Stock"), of PalEx,
Inc., a Delaware corporation (the "Registrant"), being registered hereby
consist of shares held by the Trustee pursuant to the Acme Barrel Company
Employee Stock Ownership Plan (the "Plan") for the accounts of
participants.
(3) Calculated pursuant to Rule 457(h), based on the average of the high and
low prices for Common Stock on May 20, 1998, as reported on The Nasdaq
Stock Market.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10 PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
*Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended, and the Note to Part
I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Securities and
Exchange Commission are incorporated by reference in this Registration
Statement.
(1) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 28, 1997 (Commission File No. 000-22237).
(2) The Registrant's Amendment No. 1 to Form 10-K on Form 10-K/A for the
fiscal year ended December 28, 1997 (Commission File No. 000-22237).
(3) The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 29, 1998 (Commission File No. 000-22237).
(4) The Registrant's Current Report on Form 8-K/A filed April 28, 1998
(Commission File No. 000-22237).
(5) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A, as filed with the
Securities and Exchange Commission on January 17, 1997, which incorporated
by reference the section titled "Description of Capital Stock" contained in
the Prospectus filed with the Securities and Exchange Commission on
December 24, 1996 as part of the Registrant's Registration Statement on
Form S-1 (Registration No. 333-18683), as amended by the Registrant's
Registration Statement on Amendment No. 1 to Form 8-A on Form 8-A/A, as
filed with the Securities and Exchange Commission on January 28, 1997, and
the Registration Statement on Form 8-A, as filed with the Securities and
Exchange Commission on March 13, 1997 (Commission File No. 000-22237).
In addition, all documents subsequently filed by the Registrant or the Acme
Barrel Company Employee Stock Ownership Plan pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents. The consolidated financial
statements and schedules incorporated by reference in this registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated on their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
II-2
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Edward E. Rhyne, Vice President and General Counsel for the Registrant, has
rendered an opinion as to the legality of the securities being registered
hereby. Mr. Rhyne holds options to purchase 16,250 shares which were
exercisable on April 24, 1998 or that become exercisable within 60 days of such
date. Mr. Rhyne also holds options to purchase an additional 83,750 shares
which were not exercisable as of April 24, 1998 or within 60 days thereof.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") empowers a corporation to indemnify any person who was or
is a party to 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 by an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation 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, or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such person shall have been
made to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section 145
in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith; that indemnification provided for by Section 145
shall not be deemed exclusive of any other rights to which the indemnified party
may be entitled; that indemnification provided for by Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of such person's heirs, executors and administrators; and empowers the
corporation to purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain 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 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 stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or knowing violation of
law, (iii) under Section 174 of DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit.
II-3
<PAGE>
Article Eight of the Corporation's Amended and Restated Certificate of
Incorporation states that:
"No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty by such director as a director; provided, however, that
this Article Eight shall not eliminate or limit the liability of a
director to the extent provided by applicable law (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment to or
repeal of this Article Eight shall apply to, or have any effect on, the
liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior
to such amendment or repeal. If the DGCL is amended to authorize
corporate action further eliminating or limiting the personal liability
of directors, then the liability of a director of the Corporation shall
be eliminated or limited to the fullest extent permitted by the DGCL, as
so amended."
In addition, Article VI of the Corporation's Bylaws further provides that
the Corporation shall indemnify its officers, directors and employees to the
full extent permitted by law.
The Corporation has entered into an indemnification agreement with each of
its executive officers and directors which indemnifies such person to the
fullest extent permitted by its Amended and Restated Certificate of
Incorporation, its Bylaws and the DGCL. The Corporation also maintains
directors' and officers' liability insurance coverage.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 Acme Barrel Company Employee Stock Ownership Plan, effective May 1,
1986, as amended and restated effective May 1, 1989.
4.2 Acme Barrel Company Employee Stock Ownership Trust Agreement effective
May 1, 1986, as amended and restated effective May 1, 1989.
4.3 Amendment to Acme Barrel Company Employee Stock Ownership Plan,
effective May 1, 1994.
4.4 Acme Barrel Company Employee Stock Ownership Plan Amendment 1998-1,
effective January 1, 1998.
5.1 Opinion of Edward E. Rhyne, Vice President and General Counsel of the
Registrant.
5.2 Internal Revenue Service Determination Letter dated August 5, 1995.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Edward E. Rhyne (included as part of Exhibit 5.1).
24.1 Power of Attorney (set forth on the signature pages of this
Registration Statement).
II-4
<PAGE>
Registrant hereby undertakes that it will submit all amendments to the Plan
to the Internal Revenue Service ("IRS") in a timely manner, and that it will
make all changes required by the IRS in order to qualify the Plan under Section
401 of the Internal Revenue Code.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, 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 this Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and
(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in
this 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 further 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 Section 15(d) of the
Securities Exchange Act of 1934 (and each filing of the annual report of the
Plan pursuant to Section 15(d) of the Securities and Exchange Act of 1934) that
is incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 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.
II-5
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 21st day of May,
1998.
PALEX, INC.
(Registrant)
By:/s/ Vance K. Maultsby, Jr.
-------------------------------------------
Vance K. Maultsby, Jr., President and Chief
Executive Officer
Each person whose signature appears below hereby constitutes and appoints
Vance K. Maultsby, Jr. and Edward E. Rhyne and each of them (with full power
in each of them to act alone), his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign and to file with the
Securities and Exchange Commission and the securities regulatory authorities of
the several states registration statements, any amendment or post-effective
amendments or any and all other documents in connection therewith, in connection
with the registration under the Securities Act of 1933, as amended, or the
registration or qualification under any applicable state securities laws or
regulations, of interests in the Plan and shares of Common Stock issuable
pursuant to such Plan, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or either of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
below in the City of Houston, State of Texas on the 21st day of May, 1998.
Name Title
- ---- -----
/s/ Vance K. Maultsby, Jr. President and Chief Executive Officer
- -------------------------------- (principal executive officer)
Vance K. Maultsby, Jr.
/s/ Casey A. Fletcher Chief Accounting Officer and Secretary
- -------------------------------- (principal financial and accounting
Casey A. Fletcher officer)
/s/ Tucker S. Bridwell Director
- --------------------------------
Tucker S. Bridwell
II-6
<PAGE>
Name Title
- ---- -----
/s/ A. Joseph Cruz Director
- -------------------------
A. Joseph Cruz
/s/ John E. Drury Director
- -------------------------
John E. Drury
/s/ Troy L. Fraser Director
- -------------------------
Troy L. Fraser
/s/ A.E. Holland, Jr. Director
- -------------------------
A.E. Holland, Jr.
/s/ Sam W. Humphreys Director
- -------------------------
Sam W. Humphreys
/s/ Elliott S. Pearlman Director
- -------------------------
Elliott S. Pearlman
/s/ Stephen C. Sykes Director
- -------------------------
Stephen C. Sykes
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
Trustee has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Houston, State
of Texas, on the 21st day of May, 1998.
TRUSTEE FOR THE ACME BARREL
COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
By:/s/ Philip A. Pearlman
-----------------------
Philip A. Pearlman
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered Numbered
Number Exhibit Page
- ------ ------- -------------
<C> <S> <C>
4.1 Acme Barrel Company Employee Stock Ownership Plan, effective
May 1, 1986, as amended and restated effective May 1, 1989.
4.2 Acme Barrel Company Employee Stock Ownership Trust Agreement effective
May 1, 1986, as amended and restated effective May 1, 1989.
4.3 Amendment to Acme Barrel Company Employee Stock Ownership Plan,
effective May 1, 1994.
4.4 Acme Barrel Company Employee Stock Ownership Plan Amendment 1998-1,
effective January 1, 1998.
5.1 Opinion of Edward E. Rhyne, Vice President and General Counsel of
the Registrant.
5.2 Internal Revenue Service Determination Letter dated August 5, 1995.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Edward E. Rhyne (included as part of Exhibit 5.1).
24.1 Power of Attorney (set forth on the signature pages of this
Registration Statement).
</TABLE>
II-8
<PAGE>
EXHIBIT 4.1
ACME BARREL COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
Prepared: September 7, 1993
Revised: May 25, 1994
(C)1993, Menke & Associates, Inc.
All rights reserved.
<PAGE>
CONTENTS
Section Page
- ------- ----
1. Nature of Plan.......................................... 1
2. Definitions............................................. 3
3. Eligibility............................................. 17
4. Participation in Allocation of Benefits................. 18
(a) Participation................................... 18
(b) Leave of Absence................................ 19
(c) Suspended Participation......................... 20
(d) Inactive Participation.......................... 20
5. Employer Contributions.................................. 21
(a) Account of Contribution......................... 21
(b) Time for Making Contribution.................... 21
(c) Form of Contribution............................ 21
6. Assessment of Trust Assets.............................. 22
(a) Authorized Investments.......................... 22
(b) Duties of Committee............................. 22
(c) Plan Loans...................................... 23
(d) Nonrecognition of Gain.......................... 25
7. Allocations to Accounts................................. 27
(a) Individual Accounts............................. 27
(b) Voting Stock Account............................ 27
(c) Other Investments Account....................... 30
8. Expenses of the Plan and Trust.......................... 31
9. Voting Company Stock.................................... 32
10. Disclosure to Participants.............................. 33
(a) Summary Plan Description........................ 33
(b) Summary Annual Report........................... 33
(c) Annual Statement................................ 33
(d) Notice of Rollover Treatment.................... 34
(e) Additional Disclosures.......................... 34
11. Allocation of Employer Contributions and Forfeitures... 35
(a) Allocation of Employer Contributions and
Forfeitures..................................... 35
(b) Allocation Limitations.......................... 37
(i)
<PAGE>
12. Plan Benefit at Death, Disability or Retirement....... 43
(a) Normal Retirement................................. 43
(b) Deferred Retirement............................... 43
(c) Disability Retirement............................. 43
(d) Early Retirement.................................. 44
13. Other Termination of Service and Vesting.............. 45
(a) Vesting Schedule.................................. 45
(b) Vesting Upon Reemployment......................... 46
(c) Forfeitures....................................... 47
14. Distribution of Plan Benefit.......................... 49
(a) Death, Disability or Retirement................... 49
(b) Other Termination of Participation................ 49
(c) Death Prior to Distribution....................... 51
(d) Valuation Date.................................... 51
(e) Limitations....................................... 51
(f) Commencement of Benefits.......................... 52
(g) Undistributed Accounts............................ 53
(h) Optional Direct Transfer of Eligible
Rollover Distributions............................ 54
(i) Lien on Distribution.............................. 54
15. How Plan Benefit Will Be Distributed.................. 55
(a) Form of Distribution.............................. 55
(b) Beneficiaries..................................... 55
16. Rights and Options on Distributed Shares
of Company Stock...................................... 57
(a) Right of First Refusal............................ 57
(b) "Put" Option...................................... 59
(c) Other Options..................................... 61
17. Special Provisions.................................... 62
(a) Diversification of Investments.................... 62
(b) Cash Dividends.................................... 63
18. Administration........................................ 65
(a) Named Fiduciaries for Administration of Plan
and for Investment and Control of Plan Assets..... 65
(b) Investment of Plan Assets......................... 69
(c) Funding Policy.................................... 70
(d) Claims Procedures................................. 70
(e) Qualified Domestic Relations Orders............... 71
(f) General........................................... 73
(ii)
<PAGE>
19. Amendment and Termination.......................... 75
(a) Amendment...................................... 75
(b) Changes in the Code............................ 75
(c) Termination, Partial Termination or Complete
Discontinuance of Contributions................ 76
(d) Determination by Internal Revenue Service...... 77
(e) Return of Employer's Contribution.............. 77
20. Miscellaneous...................................... 79
(a) Participation by Affiliated Company............ 79
(b) Limitation of Rights; Employment Relationship.. 79
(c) Merger; Transfer of Assets..................... 79
(d) Prohibition Against Assignments................ 80
(e) Applicable Law; Severability................... 80
21. Top Heavy Provisions............................... 82
(a) Definitions.................................... 82
(b) Vesting Requirements........................... 83
(c) Minimum Benefits............................... 83
(d) Limitation on Annual Additions................. 84
22. Execution.......................................... 87
(iii)
<PAGE>
ACME BARREL COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
Section 1. NATURE OF PLAN.
(a) The purpose of this Plan is to enable participating Employees of
the Company and of any participating affiliates to share in the growth and
prosperity of the Company and to provide Participants with an opportunity to
accumulate capital for their future economic security. A primary purpose of the
Plan is to enable Participants to acquire a proprietary interest in the Company.
Consequently, Employer Contributions made to the Trust will be primarily
invested in Employer Securities.
(b) This Plan, originally effective as of May 1, 1986, and amended and
herein restated effective as of May 1, 1989 (except that provisions which are
required to be effective before this date in accordance with the Tax Reform Act
of 1986 are hereby generally applicable to the Plan Years beginning after 1988,
unless an earlier or later effective date is required pursuant to a statute or
Treasury Regulation or as stated in the Plan document), is intended to qualify
as an Employee Stock Ownership Plan, as defined in Section 4975(e)(7) of the
Internal Revenue Code (hereinafter referred to as the "Code"), and as a stock
bonus plan under Section 401(a) of the Code. This Plan is adopted as an
amendment and restatement of the Company's present Employee Stock Ownership
Plan. All Trust assets acquired under this Plan as a result of Employer
Contributions, income and other
1
<PAGE>
additions to the Trust will be administered, distributed, forfeited and
otherwise governed by the provisions of this Plan which is administered by the
Committee for the exclusive benefit of Participants in the Plan and their
Beneficiaries. It is intended that all benefits, rights and features of this
Plan be uniformly available to all Participants.
2
<PAGE>
Section 2. DEFINITIONS.
In this Plan, whenever the context so indicates, the singular or plural
number shall each be deemed to include the other, and the capitalized words
shall have the following meanings:
ACCOUNT
One of several Accounts maintained to record the interest of a Participant
in the Plan.
AFFILIATED COMPANY
Any Company which is a member of a controlled group of corporations (as
defined in Section 414(b) of the Code) which includes the Employer, any
trade or business (whether or not incorporated) which is under common
control (as defined in Section 414(c) of the Code) with the Employer, any
affiliated service group which includes the Employer (as defined in Section
414(m) of the Code), and any other entity required to be aggregated with
the Employer under Section 414(o) of the Code.
ALTERNATE PAYEE
A spouse, former spouse, child or other dependent of a Participant who is
recognized by a Domestic Relations Order as having a right to receive all
or a portion of the benefits otherwise payable to a Participant.
ANNIVERSARY DATE
The 30th day of April of each year.
ANNUAL ADDITIONS
The aggregate of amounts credited to a Participant's Accounts each year
from Employer Contributions, Forfeitures, and a Participant's voluntary
contributions (if any) under all defined contribution plans of an Employer
or Affiliated Company; provided, however, that Employer Contributions
applied to the payment of interest on a Securities Acquisition Loan and
Forfeitures of Employer Securities purchased with the proceeds of a
Securities Acquisition Loan shall be excluded if no more than one third
(1/3) of the Employer Contribution deductible under Section 404(c)(9) of
the Code for that year is allocated to the Accounts of Highly Compensated
Employ-
3
<PAGE>
ees. Amounts allocated after March 31, 1984 to an individual medical
account (as defined in Section 415(l)(2) of the Code) which is part of a
pension or annuity plan maintained by the Company shall be treated as an
Annual Addition. Any amounts attributable to postretirement medical
benefits allocated to the separate account of a Key Employee (as defined in
Section 419A(d)(3) of the Code) under any Welfare Benefit Plan (as defined
in Section 419(e) of the Code) after December 31, 1983 shall be treated as
an Annual Addition. A restored Forfeiture, a transfer from another
qualified pension plan and a rollover contribution (if any) shall not be
counted as an "Annual Addition."
BENEFICIARY
The person or persons entitled to receive any benefits under the Plan in
the event of a Participant's death.
BOARD OF DIRECTORS
The board of directors of the Company.
BREAK IN SERVICE
A Plan Year during which a Participant has not completed more than 500
Hours of Service.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
COMMITTEE
The Committee appointed by the Board of Directors to administer the Plan
and to give instructions to the Trustee.
COMPANY
Acme Barrel Company.
COMPANY STOCK
Shares of any class of stock, preferred or common, voting or nonvoting,
which are issued by the Company or by any affiliate of the Company, as
defined in Section 407(d) of ERISA, including Employer Securities and
Qualified Employer Securities.
4
<PAGE>
COMPANY STOCK ACCOUNT
The Account of a Participant which is credited with the shares of Company
Stock purchased and paid for by the Trust or contributed to the Trust.
CONTRIBUTIONS
Employer contributions which are deductible by an Employer under Section
404(a) of the Code.
COVERED COMPENSATION
The total wages paid to a Participant by the Employer for the prior
calendar year including commissions, bonuses, overtime compensation, and
any salary deferrals under Sections 401(k) and 125 of the Code, but
excluding any fringe benefits and contributions to this or any other
deferred compensation plan except salary deferrals under Sections 401(k)
and 125. Notwithstanding the foregoing, effective for Plan Years beginning
after December 31, 1988, Covered Compensation of any Participant taken into
account shall not exceed $200,000, as indexed in accordance with Section
415(d)(1) of the Code. In determining whether a Participant has Covered
Compensation in excess of $200,000, the rules of Section 414(q)(6) of the
Code shall apply, except that in applying such rules, the term "family
member" shall include only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19 before the
close of the Plan Year, if such Participant is one of the top ten Highly
Compensated Employees of the Company. If, as a result of the application of
this rule, the adjusted $200,000 limit is exceeded, the limitation shall be
prorated among the affected individuals in proportion to each such
individual's Covered Compensation as determined prior to the application of
this limitation.
DEFERRED RETIREMENT
Termination of service subsequent to attainment of the Normal Retirement
Date.
DIRECT ROLLOVER
A payment by the Plan to the Eligible Retirement Plan specified by the
Distributee.
DISABILITY
If the Committee determines in a uniform, nondiscriminatory manner, on the
basis of a doctor's certificate, that a Participant terminated employment
because of a
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total and permanent disability, the Participant will be given a Disability
Retirement without regard to age or length of service, and the termination
benefit shall be one hundred percent (100%) of the amounts in all of the
Participant's Accounts. "Total and permanent disability" shall mean the
mental or physical inability of the Participant to perform the
Participant's normal job, as evidenced by the certificate of a medical
examiner certifying such inability and certifying that such condition is
likely to be permanent. The Committee shall have the right to have a
Participant examined by a qualified physician of its own choosing. In the
event of a conflict of opinion between the Participant's physician and the
Committee's physician, the decision of the Committee's physician shall be
conclusive and binding on all parties.
DISTRIBUTEE
Any Employee or former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former Employee's spouse
or former spouse who is the Alternate Payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, are Distributees
with regard to the interest of the spouse or former spouse.
DOMESTIC RELATIONS ORDER
Any judgment, decree, or order (including approval of a property settlement
agreement) which is made pursuant to a State domestic relations law and
which relates to the provision of child support, alimony payments or
marital property rights to a spouse, former spouse, child or other
dependent of a Participant.
EARLY RETIREMENT DATE
The date on which a Participant attains age 55 or the 10th anniversary of
the date the Participant commenced participation, whichever is later.
EFFECTIVE DATE
The Effective Date of this amended and restated Plan is May 1, 1989 (except
that provisions which are required to be effective before this date in
accordance with the Tax Reform Act of 1986 are hereby generally applicable
to the Plan Years beginning after 1988, unless an earlier or later
effective date is required pursuant to a statute or Treasury Regulation or
as stated in the Plan document).
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ELIGIBLE RETIREMENT PLAN
An individual retirement account described in Section 408(a) of the Code,
an individual retirement annuity described in Section 408(b) of the Code,
an annuity plan described in Section 403(a) of the Code, or a qualified
trust described in Section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
ELIGIBLE ROLLOVER DISTRIBUTION
Any distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not
include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to Employer Securities).
EMPLOYEE
A person, employed by an Employer, any portion of whose income is subject
to withholding of income tax and/or for whom Social Security contributions
are made by an Employer, as well as any other person qualifying as a common
law employee of an Employer. Employee shall include Leased Employees
unless: (i) such Employee is covered by a money purchase pension plan
providing: (1) a nonintegrated Employer contribution rate of at least ten
percent (10%) of compensation, as defined in Section 415(c)(3) of the Code,
but including amounts contributed pursuant to a salary reduction agreement
which are excludable from the Employee's gross income under Section 125,
Section 402(a)(8), Section 402(h) or Section 403(b) of the Code; (2)
immediate participation; and (3) full and immediate vesting; and (ii)
Leased Employees do not constitute more than twenty percent (20%) of the
Company's nonhighly compensated work force.
EMPLOYER
Acme Barrel Company and any other affiliate of the Company, as defined in
Section 407(d) of the ERISA, or
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any predecessor or successor corporation, which has been designated by the
Company as an Employer participating in the Plan, and which has accepted
such designation and has agreed to be bound by the terms of the Plan and
Trust Agreement.
EMPLOYER SECURITIES
Common stock issued by the Company or by any affiliate of the Company, as
defined in Section 407(d) of ERISA, having a combination of voting power
and dividend rights equal to (i) that class of common stock of the Company
having the greatest voting power and (ii) that class of common stock of the
Company having the greatest dividend rights. Noncallable preferred stock
shall be treated as Employer Securities if such stock is convertible at any
time into common stock which meets the above requirements, and if (as of
the date of acquisition by the Plan) the conversion price is reasonable.
EMPLOYMENT COMMENCEMENT DATE
The date on which the Employee shall first perform an Hour of Service for
the Employer.
ENTRY DATE
The first day of May of each year.
ERISA
The Employee Retirement Income Security Act of 1974, as amended from time
to time.
FISCAL YEAR
The annual accounting period adopted by the Company for federal income tax
purposes.
FORFEITURES
The portion of a Participant's Accounts which does not become part of the
Participant's Plan Benefit after the Participant incurs five (5)
consecutive one-year Breaks in Service. See Section 13 of the Plan.
HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated active
Employees and highly compensated former Employees.
The term Highly Compensated active Employee includes any Employee who
performs service for the Employer during
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the determination year and who, during the look-back year, (i) received
compensation from the Employer in excess of $75,000 (as adjusted pursuant to
Section 415(d) of the Code); (ii) received compensation from the Employer in
excess of $50,000 (as adjusted pursuant to Section 415(d) of the Code) and was a
member of the top-paid group for such year; or (iii) was an officer of the
Employer and received compensation during such year that is greater than fifty
percent (50%) of the dollar limitation in effect under Section 415(b)(1)(A) of
the Code.
The term Highly Compensated Employee also includes (i) Employees who are both
described in the preceding sentence if the term "determination year" is
substituted for the term "look-back year," and the Employee is one of the one
hundred (100) Employees who received the most compensation from the Employer
during the determination year; and (ii) Employees who are five percent (5%)
owners at any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of (iii) above during
either a determination year or look-back year, the highest paid officer for such
year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The look-back
year shall be the twelve-month period immediately preceding the determination
year.
The term Highly Compensated former Employee includes any Employee who separated
from service (or was deemed to have separated) prior to the determination year,
performed no service for the Employer during the determination year, and was a
highly compensated active Employee for either the separation year or any
determination year ending on or after the Employee's fifty-fifth (55th)
birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a five percent (5%) owner who is an active or former Employee
or a Highly Compensated Employee who is one of the ten (10) most Highly
Compensated Employees ranked on the basis of compensation paid by the Employer
during such year, then the family member and the five percent (5%) owner or top
ten Highly Compensated Employee shall be treated as a single Employee receiving
compensation and plan contributions or benefits equal to the sum of such
compensation and contributions or benefits of the family member and five
percent (5%) owner or top ten (10) Highly Compensated Employee. For purposes of
this Section, family member includes the spouse, lineal ascendants and Employee
and the descendants of the Employee or former Employee and the
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spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid
group, the top one hundred (100) Employees, the number of Employees treated
as officers and the compensation that is considered, will be made in
accordance with Section 414(q) of the Code and the regulations thereunder.
HOUR OF SERVICE
(a) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer or any Affiliated Company during
the applicable computation period.
(b) Each hour for which an Employee is paid, or entitled to payment, by
the Employer or any Affiliated Company on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty or
leave of absence. Notwithstanding the preceding sentence, (1) no more than
501 Hours of Service will be credited under this paragraph (b) 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); (2) an hour for which an Employee is directly or
indirectly paid, or entitled to payment, during a period in which no duties
are performed, will not be credited to the Employee if such payment is made
or due under a plan maintained solely for the purpose of complying with
applicable workmen's compensation, unemployment compensation or disability
insurance laws; and (3) Hours of Service will not be credited for a payment
which solely reimburses an Employee for medical or medically related
expenses incurred by the Employee. For purposes of this paragraph (b), a
payment shall be deemed to be made by or due from an Employer or an
Affiliated Company regardless of whether such payment is made by or due
from the Employer or an Affiliated Company directly or indirectly through,
among others, a trust fund, or insurer, to which the Employer or an
Affiliated Company 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.
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer or an Affiliated Company.
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(d) The determination of Hours of Service for reasons other than the
performance of duties, and the crediting of Hours of Service to computation
periods, shall be in accordance with U.S. Department of Labor Regulations
Section 2530.200b-2 (b) and (c). There shall be no duplication of Hours of
Service under any of the foregoing provisions.
(e) In the case of a salaried Employee who is not paid on an hourly basis,
Hours of Service shall be based on any available records which accurately
reflect the actual number of hours worked by such Employee. If such records
do not exist, such Employee shall be credited with Hours of Service on the
basis of 45 hours for each week for which the Employee would be credited
with at least one Hour of Service.
(f) For purposes of determining whether a Participant has incurred a one-
year Break in Service, a Participant will be credited with Hours of Service
for certain periods of absence from work by reason of the Participant's
pregnancy, the birth of a Participant's child, the adoption of a
Participant's child, or caring for a Participant's child during the period
immediately following the birth or adoption of such child. If the
Participant's normal work hours are known, such Participant will be
credited with the number of hours that normally would have been credited
for such absence. If the Participant's normal work hours are not known,
such Participant will be credited with eight Hours of Service for each
normal workday during such absence. Not more than 501 Hours of Service
shall be credited for such purposes in the Plan Year in which such absence
commences if the Participant would otherwise incur a Break in Service in
such Plan Year; otherwise, such Hours of Service shall be credited in the
following Plan Year if such absence continues in such Plan Year.
INDEPENDENT APPRAISER
Any appraiser, appointed by the Trustee, who is independent of the Company
and who meets requirements of the regulations prescribed under Section
170(a)(1) of the Code.
LEASED EMPLOYEE
Any person (other than an Employee of the Company) who pursuant to an
agreement between the Company and any other person ("leasing organization")
has performed services for the Company (or for the Company and related
persons determined in accordance with Section 414(n)(6) of the Code) on a
substantially full-time basis for a
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period of at least one year, and such services are of a type historically
performed by employees in the business field of the Company. Contributions
or benefits provided a Leased Employee by the leasing organization which
are attributable to services performed for the Company shall be treated as
provided by the Company.
LIMITATION YEAR
For purposes of the limitations on Contributions and benefits imposed by
Section 415 of the Code, the Limitation Year shall be the Plan Year.
NORMAL RETIREMENT
Termination of service upon attainment of the Normal Retirement Date.
NORMAL RETIREMENT DATE
The date on which a Participant attains age sixty-five (65).
OTHER INVESTMENTS ACCOUNT
The Account of a Participant which is credited with a share of the net
income (or loss) of the Trust and Employer Contributions and Forfeitures in
other than Company Stock and which is debited with payments made to pay for
Company Stock.
PARTICIPANT
Any Employee who is participating in this Plan as defined in Section 3 of
the Plan or former Employee for whom an Account is maintained. A
Participant ceases to be a Participant when such Participant's Account is
closed after all amounts have been distributed or Forfeited.
PLAN
The Acme Barrel Company Employee Stock Ownership Plan, which includes the
Plan and Trust Agreement.
PLAN BENEFIT
The vested amount, as defined in Sections 12 and 13 of the Plan, of a
Participant's Accounts.
PLAN YEAR
The twelve (12) month period ending on each Anniversary Date.
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QUALIFIED ELECTION PERIOD
The six (6) Plan Year period beginning with the first Plan Year in which
the Participant first became a Qualified Participant.
QUALIFIED EMPLOYER SECURITIES
Employer Securities which are issued by a domestic corporation that has no
securities outstanding that are readily tradable on an established
securities market, have been held for at least three years by the seller
and were not received by the seller in a distribution from a Plan qualified
under Section 401(a) or in a transfer pursuant to an option or other right
to acquire stock under Section 83, 422, 422A, 423 or 424 of the Code.
QUALIFIED PARTICIPANT
Any Participant who has attained age fifty-five (55) and has completed ten
(10) years of participation under the Plan.
QUALIFIED REPLACEMENT PROPERTY
Any stock, bond, debenture, note, or other evidence of indebtedness issued
by a domestic corporation (other than the Employer corporation or any
corporation which is a member of a parent-subsidiary controlled group which
includes the Employer corporation) which does not, for the taxable year
preceding the taxable year in which such security is purchased, have
passive investment income exceeding twenty-five percent (25%) of the gross
receipts of such corporation for such year.
RETIREMENT
Termination of service due to Normal Retirement, Deferred Retirement, Early
Retirement or Disability.
SECURITIES ACQUISITION LOAN
A loan which is used to purchase Employer Securities and which meets the
requirements of paragraphs 1 and 2 of Section 6(c) of the Plan.
SEGREGATED INVESTMENTS ACCOUNT
The Account of a Participant which is credited with amounts which may not
be used to purchase shares of Company Stock pursuant to the provisions of
Rev. Proc. 87-22.
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STOCK BONUS PLAN
The portion of the Plan which is designed to qualify as such and is subject
to the rules pertaining to a stock bonus plan under Section 401(a) of the
Code.
SUSPENSE ACCOUNT
The Suspense Account maintained by the Committee to which shall be credited
all shares of Employer Securities purchased with the proceeds of a
Securities Acquisition Loan.
TOTAL COMPENSATION
For purposes of Section 415 of the Code and the Top Heavy provisions in
Section 21 of this Plan,
(a) The term "Total Compensation" includes:
(1) The Employee's wages, salaries, fees for professional services, and
other amounts received (without regard to whether or not an amount is paid
in cash) for personal services actually rendered in the course of
employment with the Employer maintaining the Plan to the extent that the
amounts are includible in gross income (including, but not limited to,
commissions paid sales men, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses,
fringe benefits, and reimbursements or other expense allowances under a
nonaccountable plan (as described in Section 1.62-2(c) of the regulations
under Section 62 of the Code).
(2) In the case of an Employee who is an employee within the meaning of
Section 401(c)(1) of the Code and the regulations thereunder, the
Employee's earned income (as described in Section 401(c)(2) of the Code and
the regulations thereunder).
(3) Amounts described in Sections 104(a)(3), 105(a) and 105(h) of the Code,
but only to the extent that these amounts are includable in the gross
income of the Employee.
(4) Amounts paid or reimbursed by the Employer for moving expenses incurred
by an Employee, but only to the extent that at the time of the payment it
is reasonable to believe that these amounts are not deductible by the
Employee under Section 217 of the Code.
(5) The value of a nonqualified stock option granted to an Employee by the
Employer, but only to the extent that
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the value of the option is includable in the gross income of the Employee
for the taxable year in which granted.
(6) The amount includable in the gross income of an Employee upon making
the election described in Section 83(b) of the Code.
(7) For purposes of subdivisions (1) and (2) of this subparagraph, foreign
earned income (as defined in Section 911(b) of the Code), whether or not
excludable from gross income under Section 911 of the Code. Compensation
described in subdivision (1) of this subparagraph is to be determined
without regard to the exclusions from gross income in Sections 931 and 933
of the Code. Similar principles are to be applied with respect to income
subject to Sections 931 and 933 of the Code in determining compensation
described in subdivision (2) of this subparagraph.
b) The term "Total Compensation" does not include items such as:
(1) Contributions made by the Employer to a plan of deferred compensation
to the extent that, before the application of Code Section 415 limitations
to that plan, the contributions are not includable in the gross income of
the Employee for the taxable year in which contributed. In addition,
Employer contributions made on behalf of an Employee to a simplified
employee pension plan described in Code Section 408(k) are not considered
as compensation for the taxable year in which contributed. Additionally,
any distributions from a plan of deferred compensation are not considered
as compensation for Section 415 purposes, regardless of whether such
amounts are includable in the gross income of the Employee when
distributed. However, any amounts received by an Employee pursuant to an
unfunded nonqualified plan may be considered as compensation for Code
Section 415 purposes in the year such amounts are includable in the gross
income of the Employee.
(2) Amounts realized from the exercise of a nonqualified stock option, or
when restricted stock (or property) held by an Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture (under Section 83 of the Code).
(3) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option.
(4) Other amounts which receive special tax benefits, such as premiums for
group term life insurance (but only
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to the extent that the premiums are not includable the gross income of the
Employee), or contributions by an Employer (whether or not under a salary
defer agreement) towards the purchase of an annuity contract described in
Section 403(b) of the Code (whether or the contributions are excludable
from the gross income of the Employee)."
TRUST
The Trust created by the Trust Agreement entered into between the Company
and the Trustee.
TRUST AGREEMENT
The Agreement between the Company and the Trustee or any successor Trustee
establishing the Trust and specifying the duties of the Trustee.
TRUSTEE
The Trustee (or Trustees) designated by the Company's Board of Directors
(and any successor Trustee). The Board of Directors may provide that any
person or group of persons may serve in more than one fiduciary capacity
with respect to the Plan (including service as both Trustee and Committee
member).
VALUATION DATE
The Anniversary Date coinciding with or immediately preceding the date of
actual distribution of Plan Benefits. For purposes of the top heavy
provisions of this Plan, the Valuation Date is the most recent Anniversary
Date within a twelve (12)-month period ending on a Determination Date (as
defined in Section 21).
YEAR OF SERVICE
For purposes of vesting under Section 13, all Plan Years after April 30,
1989, during which an Employee has completed 1,000 or more Hours of
Service, including any Plan Year during which such Participant has
completed 1,000 or more Hours of Service but has not yet become eligible to
participate in the Plan.
In addition, for vesting purposes, a Participant, upon attaining age
twenty-one (21), will be credited with all Years of Service with the
Company between the ages of eighteen (18) and twenty-one (21) after the
original Effective Date of the Plan.
Years of Service also include all Years of Service recognized under the
Company's prior Employee Stock Ownership Plan.
Years of Service also include all Years of Service with the Employer prior
to May 1, 1985.
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Section 3. ELIGIBILITY.
Each Employee shall become a Participant in the Plan retroactively to
the first day of the Plan Year during which the Employee has completed 1,000
Hours of Service, provided the Employee has attained age 21.
Upon the Employee so becoming eligible, participation in the Plan shall
be based on the total Covered Compensation paid to the Employee for the prior
calendar year. If an Employee who has met the eligibility requirements leaves
the service of the Employer and returns to service without incurring a one-year
Break in Service, the Employee shall commence participation immediately upon
returning to Service. All Employees who were active Participants in the
Company's Employee Stock Ownership Plan on April 30, 1989 are automatically
Participants in this Plan as of the Effective Date.
An Employee whose terms of employment with the Employer are covered by
a collective bargaining agreement shall not be eligible to participate in the
Plan unless the terms of such collective bargaining agreement specifically
provide for participation in this Plan. Notwithstanding the foregoing, in the
event any such Employees cease to be subject to the collective bargaining
agreement, Years of Service for purposes of eligibility and vesting shall
include all Years of Service with the Employer.
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Section 4. PARTICIPATION IN ALLOCATION OF BENEFITS.
(a) Participation.
Except in the case of death, Disability or Retirement, a Participant
will share in the allocation of Employer Contributions and Forfeitures only if
the Participant is still employed on the last day of the Plan Year and has
accumulated 1,000 or more Hours of Service during the Plan Year. Except in the
case of death, Disability or Retirement, a Participant who accumulates less than
1,000 Hours of Service during a Plan Year will not share in the allocation of
Employer Contributions and Forfeitures under Section 11 for such Plan Year, will
not be given a Year of Service for purposes of vesting under Section 13, and
shall become an inactive Participant for that Plan Year.
Notwithstanding the foregoing, for Plan Years beginning after December
31, 1988, in the event that the Plan fails to meet the coverage requirements of
Internal Revenue Code Section 410(b) for the Plan Year, members of the group of
Participants who are in the employ of the Employer and who have completed more
than 500 Hours of Service will share in Employer Contributions and Forfeitures
for the Plan Year as follows: the minimum number required to meet the coverage
tests under Code Section 410(b) based on their number of Hours of Service
credited during the Plan Year, ranked in descending order. If more than one
Employee receives credit for the lowest number of Hours of Service for which any
individual must be covered in order to meet the coverage tests, then all
employees receiving credit for
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exactly that number of Hours of Service shall share in the allocation of
Employer Contributions and Forfeitures.
A Participant reemployed following a Break in Service shall again
resume participation in the Plan as of the date of reemployment for purposes of
vesting under Section 13 and for purposes of participating in Employer
Contributions and Forfeitures under Section 11. However, if the Participant is
reemployed after a Break in Service and has no vested rights under the Plan and
the number of consecutive one-year Breaks in Service equals or exceeds five
years or the number of aggregate years of prebreak service, whichever is
greater, the Participant shall be treated as a new Employee for purposes of
participation.
(b) Leave of Absence.
A Participant's employment is not considered terminated for purposes
of the Plan if the Participant has been on leave of absence with the consent of
the Company, provided that the Participant returns to the employ of the Company
within thirty (30) days after the leave (or within such longer period as may be
prescribed by law). Leave of absence shall mean a leave granted by the Company,
in accordance with rules uniformly applied to all Participants, for reasons of
health or public service or for reasons determined by the Company to be in its
best interests. Solely for purposes of preventing a Break in Service, a
Participant on such leave of absence shall be credited with eight (8) Hours of
Service for each business day of the leave. A Participant who does not return to
the employ of the Company within the prescribed time following the end of the
leave
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of absence shall be deemed to have terminated employment as of
the date when the leave began, unless such failure to return was
the result of death, Disability or Retirement.
(c) Suspended Participation.
A Participant who ceases to be an eligible Employee by becoming
subject to a collective bargaining agreement shall become a suspended
Participant. During the period of suspension, no amounts shall be credited to
the Participant's Accounts which are based on the Participant's Covered
Compensation from and after the date of suspension. However, amounts previously
credited to a Participant's Accounts shall continue to vest and the Participant
shall be entitled to benefits in accordance with the provisions of Section 14(g)
of this Plan throughout the period during which the Participant is on suspended
status.
(d) Inactive Participation.
A Participant who has more than 500 Hours of Service but less than
1,000 Hours of Service in any Plan Year shall be an inactive Participant for
that Plan Year. No amounts shall be credited to such Participant's Accounts
which are based on the Participant's Covered Compensation for that Plan Year
unless the Participant terminates employment due to death, Disability or
Retirement.
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Section 5. EMPLOYER CONTRIBUTIONS.
(a) Amount of Contribution.
Employer Contributions shall be made to the Trust in such amounts as
may be determined by the Company's Board of Directors, provided that such
Contributions shall not exceed the maximum amounts deductible under Sections
404(a)(3) and 404(a)(9) of the Code. [Employer Contributions shall be made in
sufficient amounts to cover principal and interest on a Securities Acquisition
Loan.] Notwithstanding the foregoing, Employer Contributions may not be made in
amounts which would permit the limitation described in Section 11(b) to be
exceeded.
(b) Time for Making Contribution.
Employer Contributions for each year must be established by resolution
of the Company's Board of Directors and paid to the Trust not later than the due
date for filing the Company's federal income tax return for that year, including
extensions of such date.
(c) Form of Contribution.
Employer Contributions may be paid in cash, shares of Company Stock or
other property as the Company's Board of Directors may from time to time
determine. Shares of Company Stock and other property will be valued at their
then fair market value.
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Section 6. INVESTMENT OF TRUST ASSETS.
(a) Authorized Investments.
Employer Contributions in cash and other property received by the
Trust will be applied to pay any outstanding obligations of the Trust incurred
for the purchase of Employer Securities, or may be applied to purchase
additional shares of Company Stock from current shareholders, treasury shares,
or newly issued shares from the Company. The Committee may also direct the
Trustee to invest funds under the Plan in savings accounts, certificates of
deposit, securities, or other equity stocks or bonds or in any other kind of
real or personal property, including interests in oil or other depletable
natural resources, options, puts, calls, futures contracts and commodities; or
such funds may be held in non-interest-bearing bank accounts as necessary on a
temporary basis.
(b) Duties of Committee.
Except as otherwise provided in Section 18(b), all investments will be
made by the Trustee only upon the direction of the Committee. Except in the case
of a purchase from a Disqualified Person (as defined in Section 16(a) of the
Plan), all purchases of Company Stock shall be made at no more than fair market
value, as determined by an Independent Appraiser as of the most recent
Anniversary Date. In the case of a purchase from a Disqualified Person, all
purchases of Company Stock shall be made at prices which, in the judgment of the
Independent Appraiser, do not exceed the fair market value of such shares as of
the date of the transaction.
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(c) Plan Loans.
(1) The Committee may direct the Trustee to incur Plan loans from time
to time to carry out the purposes of the Trust, provided that if the loan is a
Securities Acquisition Loan, the terms of the loan must comply with the
following requirements: Any such loan shall be for a specified term, shall bear
a reasonable rate of interest, may not exceed fifteen (15) years in duration,
and may only be secured by a collateral pledge of the Employer Securities so
acquired. Any such loan shall be primarily for the benefit of Plan Participants
and their Beneficiaries. No other Trust assets may be pledged as collateral by
the Trustee, and no lender shall have recourse against Trust assets other than
any shares of Employer Securities remaining subject to pledge. Any pledge of
Employer Securities must provide for the release of shares so pledged pursuant
to either the "General Rule" or the "Special Rule" set forth in Section 7.
Shares of Employer Securities released from the Suspense Account shall be
allocated to Participants' accounts in shares of stock or other nonmonetary
units. Repayments of principal and interest on any Securities Acquisition Loan
shall be made by the Trustee (as directed by the Committee) only from Employer
Contributions in cash to the Trust, from any cash dividends received by the
Trust on such Employer Securities or from any earnings attributable to the
investment of Employer Contributions made to the Trust in cash to meet its
obligations under the loan. Such Contributions, dividends and earnings shall be
accounted for separately in the books of accounts of the Plan until the
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<PAGE>
Securities Acquisition Loan is repaid. The proceeds of a Securities Acquisition
Loan may be used only to acquire Employer Securities, to repay such loan or to
repay a prior Securities Acquisition Loan. The Plan may not obligate itself to
acquire securities from a particular security holder at an indefinite time
determined upon the happening of an event such as the death of the holder. The
protections and rights described in Section 16 are nonterminable. Should this
Plan cease to be an Employee Stock Ownership Plan, or should the Securities
Acquisition Loan be repaid, all Employer Securities will continue to be subject
to the provisions of Section 16.
(2) In the event of default upon a Securities Acquisition Loan, the
value of Plan assets transferred in satisfaction of the loan must not exceed the
amount of default. If the lender is a Disqualified Person, a loan must provide
for a transfer of Plan assets upon default only upon and to the extent of the
failure of the Plan to meet the payment schedule of the loan. For purposes of
this paragraph, the making of a guarantee does not make a person a lender.
(3) Interest earned on any Securities Acquisition Loan made by a bank,
insurance company, regulated investment company or corporation actively engaged
in the business of lending money shall qualify for the fifty percent (50%)
exclusion from gross income under Section 133 of the Code to the extent the loan
meets the following criteria:
(A) The proceeds are paid to the Plan or are paid to the
Company and in turn lent by the Company to the Plan.
24
<PAGE>
If the proceeds of the loan are in turn lent to the Plan, the repayment terms
must be substantially similar to the terms of the loan to the Company.
(B) If the loan was completed between June 6, 1989 and November 17,
1989, the Plan must own thirty percent (30%) or more of either each class of
Company Stock or the total value of all outstanding stock of the Company. In the
case of loans completed after November 17, 1989, the Plan must own more than
fifty percent (50%) of such stock of the Company.
(C) The term of the loan may not exceed fifteen (15) years.
(D) In the case of loans completed after November 17, 1989,
Participants shall be entitled to direct how the stock acquired with such
Securities Acquisition Loan and allocated to their accounts will be voted.
If a Securities Acquisition Loan qualified under Section 133 of the
Code is refinanced, the fifty percent (50%) interest exclusion shall apply only
during the first seven (7) years of the original commitment period (measured
from the date of the original loan) or during the original commitment period,
whichever is greater. Interest earned on any Securities Acquisition Loan made by
the Company or by any member of a controlled group of companies which includes
the Company shall not qualify for such interest exclusions.
(d) Nonrecognition of Gain.
(1) There shall be no recognition of gain upon a sale of Employer
Securities to the Plan if (i) in the case of a
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<PAGE>
purchase of Qualified Employer Securities on or prior to July 10, 1989, the
seller has held such Securities for at least twelve (12) months, (ii) in the
case of a purchase of Qualified Employer Securities after July 10, 1989, the
seller has held such Securities for at least three (3) years, (iii) after the
purchase the Plan owns at least thirty percent (30%) of each class of
outstanding stock of the Company (other than preferred stock described in
Section 1504(a)(4) of the Code), or thirty percent (30%) of the total value of
all outstanding stock of the Company (other than preferred stock described in
Section 1504(a)(4) of the Code), (iv) the seller purchases Qualified Replacement
Property within three (3) months prior to the sale or within twelve (12) months
after the sale, (v) on or before the time (including extension) for filing an
income tax return, the seller files with the IRS a written statement verified by
the Company, regarding the terms of the sale, and (vi) the Plan complies with
the allocation requirements set forth in Section 11(b)(5).
(2) If, during the three-year period after the Plan acquires Qualified
Employer Securities in a transaction in which gain is not recognized, the Plan
disposes of part or all of such Qualified Employer Securities, the Company shall
be liable for a tax equal to ten percent (10%) of the amount realized upon the
disposition, unless such disposition is necessary to meet the diversification
requirements of Section 17(a) of the Plan, or unless such disposition is made to
a Participant (or the Participant's Beneficiary) by reason of death, Disability,
Retirement after age 59-1/2, or a separation from service which results in a
one-year Break in Service.
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<PAGE>
Section 7. ALLOCATIONS TO ACCOUNTS.
(a) Individual Accounts.
The Committee shall establish and maintain individual Accounts for
each Participant in the Plan. Individual Accounts shall also be maintained for
all former Participants who still have an interest in the Plan. Except as
provided in Section 17(a), such individual Accounts shall not require a
segregation of the Trust assets and no Participant, former Participant or
Beneficiary shall acquire any right to or interest in any specific asset of the
Trust as a result of the allocation provided for in the Plan.
(b) Company Stock Account.
(1) The Company Stock Account of each Participant will be credited as
of each Anniversary Date with the Participant's allocated share of Company Stock
(including fractional shares) purchased and paid for by the Trust or contributed
in kind by the Company, with Forfeitures of Company Stock and with stock
dividends on Company Stock held in the Participant's Company Stock Account.
A Participant shall have one Company Stock Account for Employer
Securities acquired by the Trust prior to January 1, 1987 and one Company Stock
Account for Employer Securities acquired by the Trust after December 31, 1986.
Employer Securities acquired by the Trust with the proceeds of a
Securities Acquisition Loan shall be credited to a Suspense Account. For each
Plan Year during the duration of the loan, the number of shares of Employer
Securities to be
27
<PAGE>
released from said Suspense Account and allocated to the Company Stock Accounts
of Participants shall be determined pursuant to either the "General Rule" or the
"Special Rule" described below as selected by the Committee for each Securities
Acquisition Loan. Once the Committee has selected either the General Rule or the
Special Rule, that Rule shall be used exclusively for the allocation of shares
of Employer Securities purchased with the proceeds of a particular Securities
Acquisition Loan.
(A) General Rule: For each Plan Year during the duration of the loan,
the Committee shall withdraw from the Suspense Account a number of shares of
Employer Securities equal to the total number of such shares held in the
Suspense Account immediately prior to the withdrawal multiplied by a fraction:
(i) The numerator of which is the amount of principal and interest
paid for the Plan Year; and
(ii) The denominator of which is the sum of the numerator plus the
principal and interest to be paid for all future years.
(B) Special Rule:
(i) For each Plan Year, the Committee shall withdraw from the Suspense
Account a number of shares of Employer Securities equal to the total number of
such shares held in the Suspense Account immediately prior to the withdrawal
multiplied by a fraction:
(aa) The numerator of which is the amount of principal paid for the
Plan Year; and
28
<PAGE>
(bb) The denominator of which is the sum of the numerator plus the
principal to be paid for all future Plan Years.
(ii) The Committee may select the Special Rule only if:
(aa) The Securities Acquisition Loan provides for annual payments of
principal and interest at a cumulative rate which is not less rapid at any time
than level annual payments of such amounts for ten (10) years;
(bb) The interest included in any payment is disregarded only to the
extent that it would be determined to be interest under standard loan
amortization tables; and
(cc) By reason of a renewal, extension or refinancing, the sum of the
expired duration of the original loan, any renewal period, any extension period
and the duration of any new loan does not exceed 10 years.
(C) In determining the number of shares to be released for any Plan
Year under either the General Rule or the Special Rule:
(i) The number of future years under the Loan must be definitely
ascertainable and must be determined without taking into account any possible
extensions or renewal periods;
(ii) If the Loan provides for a variable interest rate, the interest
to be paid for all future Plan Years must be computed by using the interest rate
applicable as of the end of the Plan Year for which the determination is being
made;
29
<PAGE>
and
(iii) If the Employer Securities allocated to the Suspense
Account includes more than one class of shares, the number of shares of each
class to be withdrawn for a Plan Year from the Suspense Account must be
determined by applying the applicable fraction provided for above to each such
class.
(2) Allocations of Company Stock shall be reflected separately for
each class of such stock, and the Committee shall maintain adequate records of
the aggregate cost basis of Company Stock allocated to each Participant's
Company Stock Account.
(c) Other Investments Account.
The Other Investments Account of each Participant will be credited (or
debited) as of each Anniversary Date with the Participant's share of the net
income (or loss) of the Trust, with cash dividends on Company Stock not
distributed to Participants or used to pay a Securities Acquisition Loan and
with Employer Contributions and Forfeitures in other than Company Stock. The
Other Investments Account of each Participant will be credited (or debited) as
of each Anniversary Date with the Participant's share of the unrealized
appreciation (or depreciation) in the value of Trust assets other than Company
Stock. It will be debited for any payments for purchases of Company Stock or for
repayment of debt (including principal and interest) incurred for the purchase
of Employer Securities
30
<PAGE>
Section 8. EXPENSES OF THE PLAN AND TRUST.
Normal brokerage charges which are included in the cost of securities
purchased (or charged to proceeds in the case of sales) shall be paid by the
Trust. The Company shall pay all expenses in connection with the design,
establishment, or termination of the Plan. The Trust shall pay all costs of
administering the Plan and Trust, unless such expenses are paid by the Company.
31
<PAGE>
Section 9. VOTING COMPANY STOCK.
(a) Except as provided in Subsection (b) of this Section 9, all Company
Stock held by the Trust shall be voted by the Trustee in accordance with
instructions from the Committee. Notwithstanding the foregoing, Participants
and/or Beneficiaries shall be entitled to direct the voting of any voting shares
of Company Stock allocated to their Company Stock Accounts with respect to any
vote required for the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation, dissolution,
sale of substantially all the assets of a trade or business, or other similar
transactions prescribed by regulation. [Any unallocated shares held by the Trust
shall be voted by the Trustee in accordance with instructions from the
Committee.]
(b) Notwithstanding the provisions of Subsection (a) of this Section 9,
Participants and/or Beneficiaries shall be entitled to direct the voting of any
Employer Securities which are allocated to their Company Stock Accounts to the
extent such Employer Securities were acquired by or transferred to the Trust in
connection with a Securities Acquisition Loan completed after June 6, 1989 to
which Section 133 of the Code applied.
32
<PAGE>
Section 10. DISCLOSURE TO PARTICIPANTS.
(a) Summary Plan Description.
Within one hundred twenty (120) days after the receipt of an initial
favorable determination letter from the Internal Revenue Service relating to the
qualification of the Plan, and thereafter within ninety (90) days after a
Participant commences participation (or after a Beneficiary first receives
benefits under the Plan), the Committee shall furnish such Participant (or
Beneficiary) with the summary plan description required by Sections 102(a)(1)
and 104(b)(1) of ERISA. Such summary plan description shall be updated from time
to time as required under ERISA and the Department of Labor regulations
thereunder.
(b) Summary Annual Report.
Within nine (9) months after each Anniversary Date, the Committee
shall furnish each Participant (and each Beneficiary receiving benefits under
the Plan) with the summary annual report of the Plan required by Section
104(b)(3) of ERISA, in the form required by regulations of the Department of
Labor.
(c) Annual Statement.
As soon as possible after each Anniversary Date, Participants will
receive a written statement of their Accounts showing as of that Anniversary
Date:
(1) The balance in each of their Accounts as of the preceding
Anniversary Date.
(2) The amount of Employer Contributions and Forfeitures allocated
to their Accounts for the year.
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<PAGE>
(3) The adjustments to their Accounts to reflect their share of
dividends and the income and expenses of the Trust for the year.
(4) The new balances in each of their Accounts, including the
number of shares of Company Stock.
(5) The vested percentage of their Plan Benefit.
Upon the discovery of any error or miscalculation in an Account, the
Committee shall correct the same insofar as, in the Committee's discretion,
correction is feasible. Statements to Participants are for reporting purposes
only, and no allocation, valuation or statement shall, by itself, vest any right
or title in any part of the Trust fund.
(d) Notice of Rollover Treatment.
The Committee shall, when making any distribution which qualifies as a
qualifying rollover distribution under Section 402(a)(5)(E) or Section
401(a)(31) of the Code, provide a written statement to the recipient which
explains the provisions of Sections 402(a)(5)(E) and 401(a)(31) under which such
distribution will not be subject to current tax if transferred to an Eligible
Retirement Account.
(e) Additional Disclosure.
The Committee shall make available for examination by any Participant
(or Beneficiary) copies of the summary plan description, the Plan, the Trust
Agreement and the latest annual report of the Plan filed with the Department of
Labor. Upon written request of any Participant (or Beneficiary), the Committee
shall furnish copies of such documents and may make a reasonable charge to
cover the cost of furnishing such copies, as provided in regulations of the
Department of Labor.
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<PAGE>
Section 11. ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES.
(a) Allocation of Employer Contributions and Forfeitures.
The allocation will be made as follows:
(1) Employer Contributions.
Employer Contributions will be allocated as of each Anniversary Date
among the Accounts of Participants in the Plan who are employed on the last day
of the Plan Year, or Employees whose employment terminated during the year
because of death, Disability or Retirement, in the proportion that each such
Participant's Covered Compensation bears to the total Covered Compensation of
all such Participants for that year. Shares of Employer Securities released from
the Suspense Account (as provided in Section 7(b)) by reason of the payment of
interest and principal on a Securities Acquisition Loan shall be allocated as of
each Anniversary Date among the Accounts of Participants in the Plan who are
employed on the last day of the Plan Year, or Employees whose employment
terminated during the year because of death, Disability or Retirement, in the
proportion that each such Participant's Covered Compensation bears to the
total Covered Compensation of all such Participants for that year. For purposes
of this paragraph, a person who is an inactive Participant for a Plan Year, or
whose employment terminates during a Plan Year for reasons other than death,
Disability or Retirement, shall not be considered a Participant in the Plan on
the last day of that Plan Year.
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<PAGE>
(2) Forfeitures.
As of each Anniversary Date, any amount credited as of the preceding
Anniversary Date to the Accounts of Participants or former Participants which
has been forfeited during the year as provided by Section 13, shall be allocated
to the Accounts of Participants in the Plan who are employed on the last day of
the year, or Employees whose employment terminated during the year because of
death, Disability or Retirement, in the same manner as Employer Contributions
are allocated.
(3) Net Income (or Loss) of the Trust.
The net income (or loss) of the Trust will be determined annually as
of each Anniversary Date. Any stock dividends on shares of Company Stock held by
the Trust shall be allocated to each Participant's Company Stock Account in the
ratio in which the cumulative number of shares allocated to the Participant's
Company Stock Account as of the preceding Anniversary Date bears to the total
cumulative number of shares of Company Stock allocated to the Company Stock
Accounts of all Participants as of that date. Any cash dividends paid on shares
of Company Stock (whether or not allocated) and any gain on the sale of
unallocated shares of Company Stock shall be allocated to each Participant's
Other Investments Account in the ratio in which the cumulative number of shares
allocated to the Participant's Company Stock Account as of the preceding
Anniversary Date bears to the total cumulative number of shares of Company Stock
allocated to the Company Stock Accounts of all Participants as of that date.
All other net income (or loss) will be allocated to
36
<PAGE>
each Participant's Other Investments Account in the ratio in which the balance
of the Participant's Other Investments Account on the preceding Anniversary Date
bears to the sum of the balances of the Other Investments Accounts of all
Participants on that date. For this purpose, Account balances shall be reduced
by amounts distributed to Participants during the Plan Year.
The net income (or loss) includes the increases (or decreases) in the
fair market value of assets of the Trust, interest, dividends, other income and
expenses attributable to assets in the Other Investments Accounts since the
preceding Anniversary Date. Net income (or loss) does not include the interest
paid under any installment contract for the purchase of Company Stock by the
Trust or on any loan obtained by the Trust to purchase Company Stock.
Notwithstanding the foregoing, no income (or loss) shall be allocated to a
terminated Participant's Account for the Plan Year in which the Participant
receives final distribution of the Plan Benefit.
(b) Allocation Limitations.
(1) The total Annual Additions to a Participant's Accounts for any
Limitation Year shall not exceed the lesser of (i) $30,000 (or, if greater, one-
fourth (1/4) of the dollar limitation in effect under Section 415(b)(1)(A) of
the Code), or (ii) twenty-five percent (25%) of the Participant's Total
Compensation for the Limitation Year. Notwithstanding the foregoing sentence,
for Plan Years beginning prior to July 12, 1989 the regular dollar limitation
specified in the preceding sentence (and any adjustments) may be increased by up
to one hundred
37
<PAGE>
percent (100%) of said amount. A Participant's allocable share of Employer
Contributions applied to the payment of interest on a Securities Acquisition
Loan and Forfeitures of Employer Securities purchased with the proceeds of a
Securities Acquisition Loan shall not be included as an Annual Addition,
provided that the amount of Employer Contributions and Forfeitures allocated to
a Participant's Accounts in excess of the regular dollar limitation is in the
form of Employer Securities (or cash used to purchase Employer Securities)
within thirty (30) days of the due date for filing the Company's federal income
tax return for that year, including extensions of such date), and no more than
one-third (1/3) of the Employer Contribution for that year is allocated to the
Accounts of Highly Compensated Employees.
(2) If an Employer is contributing to another defined contribution
plan, as defined in Section 414(i) of the Code, for Employees of the Company,
some or all of whom may be Participants in this Plan, then any such
Participant's Annual Additions in such other plan shall be aggregated with the
Participant's Annual Additions derived from this Plan for purposes of the
limitation in Paragraph (1) of this Subsection.
(3) If a Participant in this Plan is also a Participant in a defined
benefit plan to which Contributions are made by an Employer or Affiliated
Company, then in addition to the limitation contained in Paragraph (1) of this
Subsection, such Participant's allocations shall be limited, such that the sum
of the defined benefit plan fraction and the defined contribution plan fraction
for any Limitation Year shall not
38
<PAGE>
exceed 1.0. For purposes of this Paragraph (3), the defined benefit plan
fraction is a fraction, the numerator of which is the projected annual benefit
of the Participant under all such defined Plans determined as of the close of
the Limitation Year, and the denominator of which is the lesser of (i) the
product of 1.25 multiplied by the dollar limitation in effect for such Plan
Year, or (ii) the product of 1.4 multiplied by one hundred percent (100%) of the
Participant's average Total Compensation for the Participant's highest three
Limitation Years. For purposes of this Paragraph (3), the defined contribution
plan fraction for any Limitation Year is a fraction, the numerator of which is
the sum of the Annual Additions to the Participant's Accounts as of the close of
the Limitation Year, and the denominator of which is the sum of the lesser of
the following amounts determined for such year and for each prior Year of
Service with the Employer: (i) the product of 1.25 multiplied by the dollar
limitation in effect for such Limitation Year or (ii) the product of 1.4
multiplied by twenty-five percent (25%) of the Participant's Total Compensation.
(4) If Company Stock is purchased from a shareholder of the Company
and if such shareholder is also a Participant in this Plan, then notwithstanding
anything to the contrary contained in this Plan, the total Account balances of
such Participant's Accounts other than the Participant's Segregated Investments
Account, combined with the total Account balances of the Accounts of such
Participant's spouse, parents, grandparents, children, and grandchildren under
the Plan, shall not exceed
39
<PAGE>
twenty percent (20%) of the total of all Account balances under the Plan.
However, if the total Account balances of such Participant's Accounts exceed
twenty percent (20%) of the total of all Account balances, then the amounts in
excess of said twenty percent (20%) shall be credited to that Participant's
Segregated Investments Account and invested in investments other than Company
Stock.
(5) In the case of a sale in which a seller elects nonrecognition of
gain under Section 1042 of the Code, no portion of such Qualified Employer
Securities may be allocated during the nonallocation period to the Account of
(i) the seller (or the seller's family) or (ii) any other person who owns (after
application of the family attribution rules) more than twenty-five percent (25%)
of any class of outstanding Company Stock, or more than twenty-five percent
(25%) of the total value of any class of outstanding Company Stock, at any time
during the one year period preceding the purchase of such Qualified Employer
Securities by the Plan, or on any subsequent date when such Qualified Employer
Securities are allocated to Participants in the Plan. For purposes of this
Paragraph, the seller's family shall include the seller's spouse, ancestors,
lineal descendants, and brothers and sisters. Notwithstanding the foregoing, for
shares of Company Stock acquired after October 22, 1986, lineal descendants of a
seller shall be permitted to share in the allocation of Qualified Employer
Securities, provided that the aggregate amount of such stock allocated for the
benefit of all such lineal descendants does not exceed more than five percent
(5%) of
40
<PAGE>
such stock purchased from the seller. For purposes of this Paragraph (5) (for
shares of Company Stock acquired after October 22, 1986), a person shall be
considered to be a more than twenty-five percent (25%) shareholder if the amount
of Company Stock which such person owns (whether outright or as a Plan
Participant), together with the amount of Company Stock owned by such person's
spouse, children, grandchildren and parents (whether outright or as Plan
Participants), exceeds twenty-five percent (25%) of any class of outstanding
Company Stock or twenty-five percent (25%) of the total value of any class of
outstanding Company Stock. For purposes of this Paragraph (5) (for shares of
stock acquired after October 22, 1986), the "nonallocation period" means the
period beginning on the date of the sale and ending on the later of (i) the date
which is ten (10) years after the date of sale, or (ii) the date of the Plan
allocation attributable to the final payment of the Securities Acquisition Loan.
(6) If, due to forfeitures, reasonable error in estimating
compensation, or other limited facts and circumstances as determined by the
Commissioner, the Account balances or the Annual Additions to a Participant's
Accounts would exceed the limitation described in Paragraphs (1), (2) or (3) of
this Subsection, the aggregate of the Annual Additions to this Plan and the
Annual Additions to any other plan described in Paragraphs (2) or (3) shall be
reduced until the applicable limitation is satisfied.
(7) The reduction shall be treated the same as forfeitures and shall
be allocated in accordance with Section
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<PAGE>
11(a)(2) of the Plan to the Accounts of Participants who are not affected by
this limitation.
(8) If any amount cannot be reallocated under the foregoing provision,
such amount shall be deposited in a suspense account and allocated to the
maximum extent possible under Section 11(a)(2) of the Plan in succeeding years,
provided that (i) no Employer Contributions are made until Section 415 of the
Code will permit their allocation, (ii) no investment gains or losses are
allocated to such suspense account, and (iii) the amounts in such suspense
account are allocated at the earliest possible date.
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<PAGE>
Section 12. PLAN BENEFIT AT DEATH, DISABILITY OR RETIREMENT.
Participation in the allocation of Employer Contributions and
Forfeitures terminates as of the end of the Plan Year coinciding with or
following a Participant's death, Disability or Retirement. A Participant's Plan
Benefit upon death, Disability or Retirement will be the total of the
Participant's Account balances as of the coinciding or following Anniversary
Date.
A Participant who, while employed with the Company, dies or attains any
of the following Retirement dates will be one hundred percent (100%) vested.
(a) Normal Retirement.
A Participant's Normal Retirement Date is the date the Participant
attains age sixty-five (65).
(b) Deferred Retirement.
If a Participant continues in the service of the Employer beyond the
Normal Retirement Date, such Participant shall continue to participate in the
Plan during any period of employment following the Normal Retirement Date.
(c) Disability Retirement.
If the Committee determines in a uniform, nondiscriminatory manner, on
the basis of a doctor's certificate, that a Participant terminated employment
because of a total and permanent disability, such Participant will be given a
Disability Retirement without regard to age or length of service, and the
termination benefit shall be one hundred percent (100%) of the amounts in all of
such Participant's Accounts. "Total and permanent disability" shall mean the
mental or physical inability
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<PAGE>
of the Participant to perform such Participant's normal job, as evidenced by the
certificate of a medical examiner certifying such inability and certifying that
such condition is likely to be permanent. The Committee shall have the right to
have a Participant examined by a qualified physician of its own choosing. In the
event of a conflict of opinion between the Participant's physician and the
Committee's physician, the decision of the Committee's physician shall be
conclusive and binding on all parties.
(d) Early Retirement.
A Participant will be granted Early Retirement at any time after
attaining age 55 or the 10th anniversary of the year in which the Participant
commenced participation, whichever is later.
Any amount credited to a Participant's Accounts with respect to the
Employer's Contribution for the Plan Year in which such Participant dies,
becomes Disabled or attains any of the above Retirement dates shall also be
completely vested at the time of such contribution.
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<PAGE>
Section 13. OTHER TERMINATION OF SERVICE AND VESTING.
(a) Vesting Schedule.
If a Participant has a Break in Service or the Participant's
employment is terminated for any reason other than as described in Section 12,
the vesting of such Participant's Plan Benefit will be based upon Years of
Service, as defined in Section 2, in accordance with the following vesting
schedule:
<TABLE>
<CAPTION>
Years of Service Percentage of Accounts Vested
---------------- -----------------------------
<S> <C>
Less than Four Years 0
Four Years 40
Five Years 45
Six Years 50
Seven Years 60
Eight Years 70
Nine Years 80
Ten Years 90
Eleven or more Years 100
</TABLE>
Notwithstanding the foregoing, effective for Plan Years beginning
after December 31, 1988 and for Employees who were Participants in the Plan on
or before December 31, 1988, the vesting of all Plan Benefits shall be in
accordance with the above vesting schedule or with the following vesting
schedule, whichever produces the greatest degree of vesting at a given point in
time. For Employees who become Participants after December 31, 1988, the
following vesting schedule shall apply:
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<PAGE>
Years of Service Percentage of Accounts Vested
----------------- ------------------------------
Less than Three Years 0
Three Years 20
Four Years 40
Five Years 60
Six Years 80
Seven or more Years 100
(b) Vesting Upon Reemployment.
If a Participant is reemployed by the Company following a Break in
Service, such Participant's Accounts shall be vested as follows:
(1) Vesting of Prior Account Balances.
If a Participant has had five consecutive one-year Breaks in Service,
Years of Service after such five-year period will not be taken into account for
purposes of determining a Participant's vested interest in the Participant's
prebreak Account balances, and new Accounts will be established to record the
Participant's interest in the Plan for service after such five-year period.
(2) Vesting of Subsequent Account Balances.
(A) IN THE CASE of a Participant who, at the time of a Break in
Service, does not have any vested right under Paragraph (a) above, Years of
Service before such Break in Service shall not be taken into account unless such
Participant returns to work for the Employer and completes one (1) Year of
Service. Notwithstanding the foregoing, Years of Service before such Break in
Service shall not be taken into account for
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<PAGE>
purposes of determining a Participant's vested interest in the Participant's
postbreak Account balances if the number of consecutive one-year Breaks in
Service equals or exceeds five years or the aggregate number of years of
prebreak service, whichever is greater.
(B) If a Participant had any degree of vested interest at the time of
the Participant's Break in Service, such Participant shall participate
retroactively to the Participant's reemployment date for purposes of determining
a Participant's vested interest in the Participant's postbreak Account balances.
Upon resuming participation, such Participant's Years of Service shall include
all Years of Service prior to the Break in Service.
(c) Forfeitures.
Any remainder of a terminating Participant's Account who has incurred
five (5) consecutive one-year Breaks in Service shall be treated as a
Forfeiture. Forfeitures shall be first charged against a Participant's Other
Investments Account, with any balance charged next against Company Stock which
was not acquired with the proceeds of a Securities Acquisition Loan then charged
against Employer Securities acquired with a Securities Acquisition Loan. If a
portion of a Participant's Account is to be forfeited and interests in more than
one class of Employer Securities have been allocated to a Participant's Account,
the Participant shall forfeit the same percentage of each such class. The
disposition of such Forfeitures shall be as follows:
(1) If a Participant has incurred five consecutive one-year Breaks
in Service, the nonvested balance of the
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Participant's Accounts shall be allocated as a Forfeiture as soon as possible
after the close of the Plan Year in which the Participant incurs a five-year
Break in Service.
(2) If a Participant who is not 100% vested receives a distribution of
a Plan Benefit prior to the occurrence of a five-year Break in Service, and such
Participant returns to work for the Employer, the portion of the Participant's
Accounts which was not vested shall be maintained separately (from any
additional contributions to this Plan) until such Participant becomes 100%
vested. Such Participant's vested and nonforfeitable percentage in such separate
Accounts upon any subsequent termination of Service shall be equal to:
X - Y
--------
100% - Y
For purposes of applying this formula, X is the vested percentage at
the time of the subsequent termination, and Y is the vested percentage at the
time of the prior termination. Separate Accounts shall share in the allocation
of Trust income or loss on every Anniversary Date prior to Forfeiture, but such
accounts shall not share in allocation of Trust income or loss on the
Anniversary Date on which they are forfeited.
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Section 14. DISTRIBUTION OF PLAN BENEFIT.
(a) Death, Disability or Retirement.
In the event of death, Disability or Retirement, a Participant's Plan
Benefit shall be distributed as follows not later than one year after the close
of the Plan Year in which such event occurs:
(1) Company Stock Account and Other Investments Account.
Distribution of the Company Stock Account and Other Investments
Account will be made in substantially equal annual installments over a period of
five years; provided, however, that if the value of such Accounts exceeds five
hundred thousand dollars ($500,000), the term of the distribution shall be five
years, plus one year (but not more than five (5) additional years) for each one
hundred thousand dollars ($100,000) (or fraction thereof) by which the value of
such Accounts exceeds five hundred thousand dollars ($500,000).
(2) Small Amounts.
Notwithstanding the foregoing, if the total value of all of a
Participant's Accounts is $3,500 or less, distribution shall be made in a lump
sum.
(b) Other Termination of Participation.
(1) Company Stock Account and Other Investments Account.
In the event a Participant ceases to participate for reasons other
than death, Disability or Retirement, distribution of the Participant's Company
Stock Account and Other
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Investments Account shall commence as soon as possible after the close of the
Plan Year in which the Participant incurs a one-year Break in Service.
Distribution of such Accounts will be made in substantially equal annual
installments over a period of five years; provided, however, that if the value
of such Accounts exceeds five hundred thousand dollars ($500,000), the term of
the distribution shall be five years, plus one year (but not more than five (5)
additional years) for each one hundred thousand dollars ($100,000) (or fraction
thereof) by which the value of such Accounts exceeds five hundred thousand
dollars ($500,000).
Notwithstanding the foregoing provisions of this Section 14(b), the
Plan shall not be required to distribute any Employer Securities acquired with
the proceeds of a Securities Acquisition Loan until the close of the Plan Year
in which such Securities Acquisition Loan has been repaid in full.
Notwithstanding the foregoing provisions of this Section 14(b), the
Plan shall not be required to distribute any Employer Securities to the extent
that the Participants or Beneficiaries have elected to have their Company Stock
Account diversified under the provisions of Section 17(a) hereof.
(2) Small Amounts.
Notwithstanding the foregoing, if the total value of all of a
Participant's Accounts is $3,500 or less, distribution shall be made in a lump
sum as soon as possible after the Participant incurs a one (1) year Break in
Service.
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(c) Death Prior to Distribution.
If a Participant who has elected to defer distribution dies before the
distribution has commenced, such Participant's entire Plan Benefit shall be
distributed within five (5) years of the date of the Participant's death;
provided, however, that if any portion of a Participant's Plan Benefit is
payable to or for the benefit of an individual who is the Participant's
designated Beneficiary, such portion may, at the election of such Beneficiary,
be distributed over a period not exceeding the life expectancy of such
Beneficiary, provided such distributions begin not later than one year after the
death of the Participant; and provided further that if the designated
Beneficiary is the spouse of the Participant, at the election of the spouse,
such distribution (over a period not exceeding the life expectancy of said
spouse) need not commence until the date the Participant would have attained age
70-1/2.
(d) Valuation Date.
All Accounts, including the Company Stock Account, shall be valued by
an Independent Appraiser as of the appropriate Valuation Date. The Company or
the Committee may require other valuations from time to time as necessary. For
stock acquired after December 31, 1986, any valuation of Company Stock
contributed to or purchased by the Plan shall be determined by an Independent
Appraiser.
(e) Limitations.
If a present value of a Participant's Plan Benefit (determined in
accordance with Section 411(a)(11)(B) of the Code)
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exceeds $3,500, any distribution prior to the later of age sixty-two (62) or the
Participant's Normal Retirement Date may be made only with the written consent
of the Participant.
Failure of a Participant to consent to an immediate distribution is an
election to defer benefits to the later of age sixty-two (62) or the Normal
Retirement Date of the Participant.
(f) Commencement of Benefits.
At the request of a Participant, the Committee shall direct that the
distribution be deferred and commence not later than April 1 of the calendar
year following the calendar year in which such Participant attains age 70-1/2,
unless such Participant has attained age 70-1/2 prior to January 1, 1988. If a
Participant has attained age 70-1/2 prior to January 1, 1988, distributions must
begin not later than April 1 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 unless the Participant was a "five percent
(5%) owner" at any time during the Plan Year (or calendar year) in which the
Participant attained age 66-1/2 or any subsequent Plan Year. If a Participant
dies after the distribution of the Plan Benefit has commenced, the remaining
portion of the Plan Benefit shall be distributed at least as rapidly as under
the method being used at the date of the Participant's death.
Notwithstanding anything in this Section 14 to the contrary, payment
of the Plan Benefit will commence, unless the Participant otherwise elects, no
later than the sixtieth (60th) day after the close of the Plan Year (or if later
after the Plan
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Benefit is determined) in which the latest of the following events
occur:
(1) The attainment by the Participant of age sixty-five (65);
(2) The Participant's actual retirement from the employ of the
Company;
(3) The tenth (10th) anniversary of the year in which the Participant
commenced participation in the Plan.
(g) Undistributed Accounts.
Any part of a Participant's Plan Benefit which is retained in the
Trust after the Anniversary Date coinciding with or immediately following the
date on which the Participant terminates employment will be credited, as of such
Anniversary Date, to a separate account in the name of the Participant, and such
account shall be credited with interest on the unpaid principal balance at the
rate paid on one-year certificates of deposit (as of the beginning of each Plan
Year) by any bank or savings and loan association designated, in its sole
discretion, by the Committee. Such separate account is for allocation purposes
only and shall not require a segregation of the Trust Assets or the purchase of
a certificate of deposit. The balance in a Participant's undistributed account
shall represent the Participant's interest in the Company Stock Account and the
Other Investments Account. However, except in the case of reemployment (as
provided for in Section 4), none of the Participant's Accounts will be credited
with any further Employer Contributions, Forfeitures, dividends on Company Stock
or gain on the sale of unallocated shares or stock.
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(h) Optional Direct Transfer of Eligible Rollover Distributions.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section, for all
distributions made after January 1, 1993, a Distributee may elect, at the time
and in the manner prescribed by the Plan Committee, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover.
(i) Lien on Distribution.
Notwithstanding anything to the contrary herein, if, at the time of
distribution, a Participant is indebted to the Trust, or has retained in his or
her possession money or property which properly belongs to the Trust, the Trust
shall have a lien on such distribution pending the resolution of such ownership
rights. The Trustee may exercise such lien either by directing the Company
secretary to withhold any stock transfer of title, or by withholding
distribution of any stock or the value of any stock or other assets, pending
resolution of such ownership rights.
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Section 15. HOW PLAN BENEFIT WILL BE DISTRIBUTED.
(a) Form of Distribution.
Distribution of a Participant's Company Stock Account and Other
Investments Account may be made entirely in cash unless a Participant elects to
receive the distribution in the form of Employer Securities, in which case the
Participant's Plan Benefit will be distributed in the form of whole shares of
Employer Securities with the value of any fractional shares paid in cash.
The Trustee will make distributions from the Trust only on
instructions from the Committee.
(b) Beneficiaries.
(1) Designation.
Distribution will be made to the Participant if living, and if not, to
the Participant's Beneficiary. A Participant may designate a Beneficiary upon
becoming a Participant and may change such designation at any time by filing a
written designation with the Committee. Notwithstanding anything in this Section
15 to the contrary, if a Participant is married, a Participant shall not
designate anyone other than the Participant's spouse as primary Beneficiary of
the Participant's Plan Benefit unless such spouse consents in writing to such
designation, such spouse acknowledges the effect of such election, and such
writing is witnessed by a Plan representative or notary public and filed with
the Plan Committee.
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(2) Absence of Valid Designation.
If, upon the death of a Participant, former Participant or
Beneficiary, there is no valid designation of a Beneficiary on file with the
Company or the benefit is not claimed by any Beneficiary within a reasonable
period of time after the death of the Participant, the benefit shall be paid to
the Participant's surviving spouse. If the Participant is not married or if the
Participant's spouse does not survive the Participant, the benefit shall be paid
to the Participant's estate.
Notwithstanding the foregoing, in the event that all, or any portion,
of the distribution payable to a Participant or his Beneficiary hereunder shall,
at the expiration of five (5) years after it shall become payable, remain unpaid
solely by reason of the inability of the Plan Administrator, after sending a
registered letter, return receipt request, to the last known address, and after
further diligent effort, to ascertain the location of such Participant or his
Beneficiary, the amount so distributable shall be reallocated in the same manner
as the Forfeiture pursuant to this Plan. In the event a Participant or
Beneficiary, is located subsequent to his vested amount being reallocated, such
benefit shall be restored.
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Section 16. RIGHTS AND OPTIONS ON DISTRIBUTED SHARES OF COMPANY STOCK.
(a) Right of First Refusal.
If the distribution of the Plan Benefit is made in the form of shares
of Company Stock, such shares of Company Stock distributed by the Trustee may,
as determined by the Company or the Committee, be subject to a "right of first
refusal," until such time as such shares are publicly traded. Such a "right"
shall provide that prior to any subsequent transfer, the shares must first be
offered by written offer, to the Trust, and then, if refused by the Trust, to
the Company. In the event that the proposed transfer constitutes a gift or other
such transfer at less than fair market value, the price per share shall be
determined by an Independent Appraiser (appointed by the Board of Directors) as
of the Anniversary Date coinciding with or immediately preceding the date of
exercise, except in the case of a transfer to a Disqualified Person. The term
"Disqualified Person" shall mean a person who is a fiduciary with respect to the
Plan; a person providing services to the Plan; an Employer any of whose
employees are covered by the Plan; an employee organization any of whose members
are covered by the Plan; an owner, directly or indirectly, of fifty percent
(50%) or more of (i) the total combined voting power of all classes of voting
stock or of the total value of all classes of the stock of a Corporation, (ii)
the capital interest or the profits interest of a partnership, or (iii) the
beneficial interest of a trust or unincorporated enterprise, which is an
Employer or an employee
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organization any of whose employees or members are covered by the Plan; a member
of the family of any Disqualified Person; a corporation, partnership, trust or
estate of which (or in which) fifty percent (50%) or more of (i) the combined
voting power of all classes of stock entitled to vote or the total value of all
classes of stock of such corporation, (ii) the capital interest or profits
interest of such partnership, or (iii) the beneficial interest of such trust or
estate is owned, directly or indirectly, or held by Disqualified Persons; an
employee, officer, director (or any individual having powers, similar powers and
responsibilities), a ten percent (10%) or more shareholder, or a highly
compensated employee (earning ten percent (10%) or more of the yearly wages of
an employer) of a Disqualified Person; or a ten percent (10%) or more (in
capital or profits) partner or joint venturer of a Disqualified Person.
In the event of a proposed purchase by a prospective bona fide
purchaser, the offer to the Trust and the Company shall be at the greater of
fair market value, as determined by an Independent Appraiser as of the
Anniversary Date coinciding with or immediately preceding the date of exercise
(except in the case of a purchase by a Disqualified Person), or at the price
offered by the prospective bona fide purchaser. In the case of a purchase by or
transfer to a Disqualified Person, fair market value shall be determined as of
the actual date of the transaction. Valuations must be made in good faith and
based on all relevant factors for determining the fair market value of
securities. The Trust may accept the offer at any time during a period
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not exceeding fourteen (14) days after receipt of such offer. In the event the
Trust does not accept such offer, the Company may accept such offer at any time
during said fourteen (14) day period.
In the case of a purchase from a Disqualified Person, all purchases of
Company Stock shall be made at prices which, in the judgment of an Independent
Appraiser, do not exceed the fair market value of such shares as of the date of
the transaction.
(b) "Put" Option.
If the distribution of the Plan Benefit is made in the form of shares
of Company Stock, then the "Qualified Holder" (as defined below) of such stock
shall be granted, at the time that such shares are distributed to the Qualified
Holder, an option to "put" the shares to the company; provided, however, that
all such shares are so put; and provided, further, that the Trust shall have the
option to assume the rights and obligations of the Company at the time the "put"
option is exercised. The term "Qualified Holder" shall mean the Participant or
Beneficiary receiving the distribution of such shares, any other party to whom
the shares are transferred by gift or by reason of death, and also any trustee
of an individual retirement account (as defined under Code Section 408) to which
all or any portion of the distributed shares is transferred pursuant to a tax-
free "rollover" transaction satisfying the requirements of Sections 402 and 408
of the Code. A "put" option shall provide that, for a period of sixty (60) days
after such shares are distributed to
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a Qualified Holder (as defined above) (and, if the "put" is not exercised within
such sixty (60) day period, for an additional period of sixty (60) days in the
following Plan Year), the Qualified Holder would have the right to have the
Company purchase such shares at their fair market value, as defined hereinabove
in subsection (a). Such "put" option shall be exercised by notifying the Company
in writing.
In the case of a lump sum distribution of Company Stock, the terms of
payment for the purchase of such shares of stock shall be as set forth in the
"put" and may be paid either in a lump sum or in up to five (5) equal annual
installments (with interest on the unpaid principal balance at a reasonable rate
of interest), as determined by the Committee. Payment for the purchase of such
shares must commence within thirty (30) days after the "put" is exercised. The
period during which the put option is exercisable does not include any time
during which the distributee is unable to exercise it because the party bound by
the put option is prohibited from honoring it by applicable federal or state
law. If payment is made in installments, adequate security and a reasonable rate
of interest must be provided. In the case of an installment distribution,
payment must be made within thirty (30) days after the put option is exercised
with respect to any installment distribution of Company Stock.
In the case of a purchase from a Disqualified Person, all purchases of
Company Stock shall be made at prices which, in the judgment of an Independent
Appraiser, do not exceed
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the fair market value of such shares as of the date of the transaction.
The requirements of this Subsection 16(b) shall apply to all
distributions after December 31, 1986, but shall not apply to the distribution
of any portion of a Participant's Plan Benefit which has been diversified,
distributed or transferred to another plan pursuant to the provisions of
Subsection 17(a) hereof.
(c) Other Options.
Except as otherwise provided in this Section 16, no security acquired
with the proceeds of a Securities Acquisition Loan may be subject to a put,
call, buy-sell or similar arrangement while held by or when distributed from the
Plan.
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Section 17. SPECIAL PROVISIONS.
(a) Diversification of Investments.
Within ninety (90) days after the close of each Plan Year in the
Qualified Election Period, each Qualified Participant shall be permitted to
direct the Plan as to the investment of not more than twenty-five percent (25%)
of the value of the Participant's Company Stock Account which is attributable to
Employer Securities which were acquired by the Plan after December 31, 1986, to
the extent such value exceeds the amount to which a prior election, if any,
applies. In the case of the sixth (6th) year of the Qualified Election Period,
the preceding sentence shall be applied by substituting "fifty percent (50%)"
for "twenty-five percent (25%)." The Participant's direction shall be completed
no later than ninety (90) days after the close of the ninety (90) day election
period.
The Plan Committee shall offer at least three investment options (not
inconsistent with regulations prescribed by the Internal Revenue Service) to
each Participant who makes an election under this Subsection.
In lieu of offering such investment options, the Plan Committee may
direct that all amounts subject to Participant elections under this Subsection
be distributed to Qualified Participants. All such distributions shall be
distributed within ninety (90) days after the close of the ninety (90) day
election period and shall be made in cash.
In lieu of receiving a distribution under this Subsection, a
Qualified Participant may direct the Plan to transfer
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the distribution to another qualified plan of the Company which accepts such
transfers, provided that such plan permits employee-directed investments and
does not invest in Employer Securities to a substantial degree. Such transfer
shall be made within ninety (90) days after the close of the ninety (90) day
election period.
(b) Cash Dividends.
Cash dividends, if any, on shares of Company Stock allocated to
Participants' Accounts may be accumulated in the Trust or may be paid to
Participants currently as determined in the sole discretion of the Committee,
exercised in a uniform and nondiscriminatory manner. Provided that the Plan is
primarily invested in Employer Securities, it is intended that the Company shall
be allowed a deduction with respect to any dividends paid on allocated shares of
Company Stock of any class held by the Plan on the record date to the extent
such dividends are paid in cash directly to the Participants, or their
Beneficiaries, or are paid to the Plan and are distributed from the Plan to the
Participants or their Beneficiaries not later than ninety (90) days after the
close of the Plan Year in which paid; provided, however, that the Company shall
not be required to pay or distribute any dividends with respect to the nonvested
portion of the Company Stock Account of a Participant who has terminated
employment prior to the date such dividends are paid directly to Participants,
or are distributed from the Plan to the Participants. Provided that the Plan is
primarily invested in Employer Securities, it is also intended that the Company
shall be allowed
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a deduction for any dividends used to make payments on a Securities Acquisition
Loan the proceeds of which were used to acquire the Employer Securities (whether
or not allocated) with respect to which the dividend is paid, provided that in
the case of dividends paid on allocated shares, Employer Securities in an amount
equal to such dividends are allocated to such Participants for the year in which
such dividends would otherwise have been allocated to such Participants.
Effective for dividends paid after October 22, 1986, the Company shall be
allowed a deduction for dividends paid only in the taxable year of the Company
in which the dividend is either paid to a Participant or Beneficiary or held to
make payments on a Securities Acquisition Loan.
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Section 18. ADMINISTRATION.
(a) Named Fiduciaries for Administration of Plan and for Investment
and Control of Plan Assets.
(1) Board of Directors.
The Board of Directors shall have the following duties and
responsibilities in connection with the administration of the Plan:
(A) Making decisions with respect to amending or terminating
the Plan.
(B) Making decisions with respect to the selection, retention
or removal of the Trustee.
(C) Making decisions with respect to selection of the
Committee.
(D) Periodically reviewing the performance of the Trustee, the
members of the Committee, persons to whom duties have been
allocated or delegated and any advisers appointed pursuant to
paragraph (f)(1) below.
(E) Determining the form and amount of Employer Contributions.
The Board of Directors may by written resolution allocate its duties and
responsibilities to one or more of its members or delegate such duties and
responsibilities to any other persons; provided, however, that any such
allocation or delegation shall be terminable upon such notice as the Board of
Directors deems reasonable and prudent under the circumstances.
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(2) Plan Committee.
(A) General.
The Company shall administer the Plan and is designated as the "Plan
Administrator" within the meaning of Section 3(16) of ERISA and Section 414(g)
of the Code. The Committee and the Company shall each be a "named fiduciary"
within the meaning of Section 402 of ERISA, but each party's role as a named
fiduciary shall be limited solely to the exercise of its own authority and
discretion, as defined under this Plan, to control and manage the operation and
administration of this Plan. A named fiduciary may designate other persons who
are not named fiduciaries to carry out its fiduciary duties hereunder, and any
such person shall become a fiduciary under the Plan with respect to such
delegated responsibilities. The members of the Committee shall be appointed by
the Board of Directors and shall serve, without compensation, until such time as
they resign, die or become incapable of exercising their duties. All members of
the Committee are designated as agents of the Plan for purposes of service of
legal process. The Company shall certify to the Trustee the names and specimen
signatures of the members of the Committee. Any member may resign at any time by
submitting an appropriate written instrument to the Company, and while any
vacancy exists, the remaining members of the Committee may perform any act which
the Committee is authorized to perform. Any vacancy shall be filled by
appointment by the Board. All decisions required to be made by the Committee
involving the interpretation, application and administration of the Plan shall
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be resolved by action of the Committee either at a meeting or in writing without
a meeting.
(B) Duties and Responsibilities.
The Committee shall have the following duties and
responsibilities in connection with the administration of the Plan:
(i) Establishing and implementing a funding policy
as described in Paragraph (c) below.
(ii) Determining the eligibility of Employees for
participation in the Plan.
(iii) Determining the eligibility of Employees for
benefits provided by the Plan including such duties and responsibilities as are
necessary and appropriate under the Plan's claims procedures.
(iv) Making recommendations to the Board of Directors
with respect to amendment or termination of the Plan, including recommendations
with respect to contributions under the Plan.
(v) Assuring that bonding requirements imposed by
ERISA are satisfied.
(vi) Authorizing, allocating and reviewing expenses
incurred by the Plan.
(vii) Communicating with Participants and other
persons.
(viii) Reviewing periodically any allocation or
delegation of duties and responsibilities and any appointment of advisers.
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(ix) Investing and controlling the Plan assets.
(x) Directing the Trustee with respect to voting
shares of Company Stock, in accordance with the provisions of Section 9.
The Committee may establish rules and regulations and may take any
other necessary or proper action to carry out its duties and responsibilities.
Notwithstanding the foregoing provisions, the Trustee shall have the primary
responsibility for the withholding of income taxes from Plan distributions, for
the payment of withheld income taxes on Plan distributions to the Internal
Revenue Service, and for notification to Participants of their right to elect
not to have income tax withheld from Plan distributions. Compliance with record
keeping and reporting requirements of ERISA shall be the primary responsibility
of the Company.
(C) Allocation and Delegation of Responsibilities.
The Committee may, by written resolution, allocate its administrative
duties and responsibilities to one or more of its members or it may delegate
such duties and responsibilities to any other persons; provided, however, that
any such allocation or delegation shall be terminable upon such notice as the
Committee deems reasonable and prudent under the circumstances.
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(b) Investment of Plan Assets.
The Plan assets shall be invested and controlled by the Committee;
provided, however, that the actual management of Trust investments, other than
Company Stock, may be delegated to the Trustee or may be delegated to one or
more investment managers appointed by the Committee. Any investment manager
appointed hereunder shall have the power to manage, acquire or dispose of assets
of the Plan and shall be either an investment adviser registered under the
Investment Advisers Act of 1940, or a bank, as defined in that Act, or an
insurance company qualified to perform such services under the laws of one or
more states. If an investment manager has been appointed, the Trustee shall
neither be liable for acts or omissions of such investment manager nor be under
any obligation to invest or otherwise manage any asset of the Trust fund, nor
shall the Committee be liable for any act or omission of the investment manager
in carrying out such responsibility. The custody of Plan assets shall at all
times be retained by the Trustee, unless they consist of insurance contracts or
policies issued and held by an insurance company authorized to conduct an
insurance business in a state. In addition to appointment of investment
managers, the Committee shall have the following duties and responsibilities:
(1) Periodically reviewing the investment of Plan assets and the
performance of the Trustee and any investment managers. With respect to the
Trustee, the Committee shall advise the Board of Directors of any matters which
might be relevant to the decision as to whether the services of the Trustee
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should be retained. Based on its review, the Committee shall determine the
desirability of appointing or retaining investment managers.
(2) Determining an investment policy to be followed with respect to
the Plan assets and communicating this policy to the person or persons
responsible for investing the Plan assets.
The Committee may by written resolution, allocate its investment duties
and responsibilities to one or more of its members or delegate such duties and
responsibilities to any other persons; provided, however, that any such
allocation or delegation shall be terminable upon such notice as the Committee
deems reasonable and prudent under the circumstances.
(c) Funding Policy.
The Committee shall cause to be made at reasonable intervals an
analysis of the future cash requirements of the Plan for payment of benefits and
expenses, including in the analysis such information as may be appropriate to
design an investment policy to satisfy the requirements.
(d) Claims Procedures.
Any person whose claim for benefits under the Plan has been denied in
whole or in part shall receive a written notice from the Committee setting forth
the specific reasons for such denial, specific references to the Plan provisions
on which the denial was based and an explanation of the procedure for review of
the denial. Such person, or a duly authorized representative, may appeal to the
Committee for a review of the denial
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by sending to the Committee a written request for review within sixty (60) days
after receiving notice of the denial. The request for review shall set forth all
grounds on which it is based, together with supporting facts and evidence which
the claimant deems pertinent, and the Committee shall give the claimant the
opportunity to review pertinent documents in preparing the request. The
Committee may require the claimant to submit such additional facts, documents or
other material as it deems necessary or advisable in making its review. Within
sixty (60) days after the receipt of the request for review, the Committee shall
communicate to the claimant in writing its decision, and if the Committee
confirms the denial, in whole or in part, the communication shall set forth the
reasons for the decision and specific references to the Plan provisions on which
the decision is based. Such decisions of the Committee shall be final and
conclusive upon all parties.
(e) Qualified Domestic Relations Orders.
(1) In the case of any Domestic Relations order received by the
Plan, the Committee shall promptly notify the Participant and any other
Alternate Payee of the receipt of such order and of the Plan's procedures for
determining the qualified status of Domestic Relations Orders. Any Alternate
Payee shall be permitted to designate a representative for receipt of copies of
notices that are sent to the Alternate Payee with respect to such order. The
amount that would be payable to the Alternate Payee shall be segregated in a
segregated account as of the first day of the Plan Year during which the
Domestic Relations Order is
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received by the Committee. Such segregated account shall continue to be treated
as a Company Stock Account and Other Investments Account, but will not be
credited with any further contributions or forfeitures. If the order is
determined to be a qualified order within the eighteen (18) month period
described below, the segregated amount (including any interest or earnings
thereon) shall continue to be treated as a segregated account in the name of the
Alternate Payee. If the Committee determines that the order is not qualified, or
if the Committee (or the appropriate court) is not able to resolve the issue
within the eighteen (18) month period, the segregated amount (including any
interest or earnings thereon) shall be restored to the Participant. For purposes
of this Paragraph, the "eighteen (18) month period" shall mean the eighteen (18)
month period beginning with the date on which the first payment would be
required to be made under the Domestic Relations Order.
(2) In determining whether a Domestic Relations order is qualified,
the Committee shall follow the procedures set forth in Section 18(d) with
respect to claims for Plan Benefits.
(3) A Domestic Relations order will constitute a qualified Domestic
Relations Order only if such order (i) does not require the Plan to provide any
type or form of benefit (or any option) not otherwise provided under the Plan,
(ii) does not require the Plan to provide increased benefits, and (iii) does not
require the payment of benefits to an Alternate Payee which are required to be
paid to another Alternate Payee under another order previously determined to be
a qualified order. In addi-
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tion, a Domestic Relations Order will constitute a qualified order only if such
order clearly specifies (i) the name and last known mailing address of the
Participant and of each Alternate Payee covered by the order, (ii) the amount or
the percentage of a Participant's Plan Benefit that is to be paid to each
Alternate Payee, or the manner in which such amount or percentage is to be
determined, (iii) the number of payments or the period to which such order
applies, and (iv) each plan to which such order applies.
(4) In the case of any payment to an Alternate Payee before a
Participant has separated from service, the Plan shall not be required to make
any payment to an Alternate Payee prior to the date the Participant attains (or
would have attained) the Earliest Retirement Age. For purposes of this
Paragraph, the term "Earliest Retirement Age" means the earliest of (i) the date
on which the Participant is entitled to a distribution under the Plan, or (ii)
the later of the date the Participant attains age fifty (50) or the earliest
date on which the Participant could begin receiving benefit if the Participant
separated from service.
(5) The provisions of this Section 18(e) shall be effective as of
January 1, 1985.
(f) General.
(1) The Board of Directors, the Committee or any person to whom duties
and responsibilities have been allocated or delegated, may employ other persons
for advice in connection with their respective responsibilities, including
actuaries, plan consultants investment advisers, attorneys and accountants
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(2) Any person may serve in more than one capacity with respect to
the Plan.
(3) The Board of Directors, the Committee or any person to whom duties
and responsibilities have been allocated or delegated shall be indemnified and
held harmless by the Company from any expense or liability hereunder unless due
to or arising from fraud, dishonesty, gross negligence, or misconduct of the
Board of Directors, the Committee, or such person, as the case may be.
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Section 19. AMENDMENT AND TERMINATION.
(a) Amendment.
To provide for contingencies which may require or make advisable the
clarification, modification or amendment of this Agreement, the Company reserves
the right to amend the Plan at any time and from time to time, in whole or in
part, including without limitation, retroactive amendments necessary or
advisable to qualify the Plan and Trust under the provisions of Sections 401(a)
and 4975(e)(7) of the Code or any successor or similar statute hereafter
enacted. However, no such amendment shall (1) cause any part of the assets of
the Plan and Trust to revert to or be recoverable by the Company or be used for
or diverted to purposes other than the exclusive benefit of Participants, former
Participants and Beneficiaries, (2) deprive any Participant, former Participant
or Beneficiary of any benefit already vested, except to the extent that such
amendment may be necessary to permit the Plan or the Trust to qualify or
continue to qualify as tax-exempt, (3) terminate the protections and rights
described in Section 16, (4) alter, change or modify the duties, powers or
liabilities of the Trustee hereunder without its written consent, or (5) with
respect to any benefit previously accrued, eliminate or reduce any early
retirement benefit or retirement type subsidy, or eliminate any optional form of
benefit, except to the extent permitted by Section 411(d)(6) of the Code.
(b) Changes in the Code.
Any other provision of this Plan to the contrary notwithstanding,
if any amendment to the Code requires that a
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conforming plan amendment must be adopted effective as of a stated effective
date in order for this Plan to continue to be a qualified plan, this Plan shall
be operated in accordance with the requirement of such amendment to that law
until the date when a conforming plan amendment is adopted, or the date when a
clear and unambiguous nonconforming plan amendment is adopted, whichever occurs
first.
(c) Termination, Partial Termination or Complete Discontinuance of
Contributions.
Although the Company has established the Plan with the bona fide
intention and expectation that it will be able to make contributions
indefinitely, nevertheless, the Company shall not be under any obligation or
liability to continue its contributions to maintain the Plan for any given
length of time. The Company may in its sole discretion discontinue such
contributions or terminate the Plan in whole or in part in accordance with its
provisions at any time without any liability for such discontinuance or
termination. In the event of a termination or complete discontinuance of
contribution, if the Plan is not replaced by a comparable plan qualified under
Section 401(a) of the Code, then the Accounts of all Participants affected by
the termination or discontinuance of contributions will become nonforfeitable.
In the event of a partial termination, the Accounts of all Participants affected
by the partial termination will become nonforfeitable. After termination of the
Plan, the Committee and the Trust will continue until the Plan benefit of each
Participant has been distributed. Plan Benefits may be
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distributed promptly after they are computed or distribution may be deferred as
provided in Section 14 of the Plan, as the Committee may direct. Distributions
made due to termination of the Plan shall be in accordance with the modes of
distribution provided in the Plan.
(d) Determination by Internal Revenue Service.
Notwithstanding any other provision of the Plan, if the Internal
Revenue Service shall fail or refuse to issue a favorable written determination
or ruling with respect to the continued qualification of the Plan and exemption
of the Trust from tax under Section 501(a) of the Code, all Employer
Contributions under Section 401(a), together with any income received or accrued
thereon less any benefits or expenses paid shall, upon the written direction of
the Company, be deemed held by the Trustee under the Employee Stock Ownership
Plan as it existed prior to the adoption of this Plan and this Plan and the
Trust shall terminate.
(e) Return of Employer's Contribution.
Notwithstanding any other provision of the Plan, if a Contribution is
conditioned on its deductibility and the deduction is disallowed, such Employer
Contribution may be returned to the Employer if such Contribution is returned
within one (1) year thereafter and if the amount returned does not exceed the
excess of the actual Contribution over the amount which would have been
contributed had there been no error in determining the deduction. If a
Contribution is made due to a mistake of fact, such Contribution may be returned
to the Employer if such Contribution is
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returned within six (6) months after the Plan Administrator determines that the
Contribution was made by such mistake and if the amount returned does not exceed
the excess of the actual Contribution over the amount which would have been
contributed had there been no mistake of fact. 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.
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Section 20. MISCELLANEOUS.
(a) Participation by Affiliated Company.
(1) Any Affiliated Company presently existing or hereafter acquired
may, with the consent of the Company, adopt the Plan and Trust and thereby
enable its employees to participate herein.
(2) In the event any Participant is transferred to an Affiliated
Company which is a participating Employer, such Participant shall continue to
participate hereunder in the allocation of Employer Contributions and the
Participant's Accounts shall continue to vest in accordance with Section 13. Any
Participant who is transferred to an Affiliated Company which is not a
participating Employer shall be treated as a suspended Participant in accordance
with Section 4(c).
(b) Limitation of Rights; Employment Relationship.
All Plan Benefits will be paid only from the Trust assets and neither
the Company nor any Employer nor the Committee nor the Trustee shall have any
duty or liability to furnish the Trust with any funds, securities or other
assets except as expressly provided in the Plan. Nothing herein shall be
construed to obligate any Employer to continue to employ any Employee.
(c) Merger; Transfer of Assets.
In no event shall this Plan be merged or consolidated with any other
employee benefit plan, nor shall there be any transfer of assets or liabilities
from this Plan to any other such plan, unless immediately after such merger,
consolidation or transfer, each Participant's benefits, determined as if the
plan
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had terminated, are at least equal to or greater than the benefits which the
Participant would have been entitled to had this Plan been terminated
immediately before such merger, consolidation or transfer.
(d) Prohibition Against Assignment.
The benefits provided by this Plan may not be assigned or alienated;
provided, however, that a qualified Domestic Relations Order shall not be
construed as an assignment or alienation. Except for indebtedness to the Trust
and orders to make payments or assign benefits to a spouse, former spouse, child
or other dependent under a qualified Domestic Relations Order, neither the
Company nor the Trustee shall recognize any transfer, mortgage, pledge,
hypothecation, order or assignment by any Participants or Beneficiaries of all
or part of their interest hereunder, and such interest shall not be subject in
any manner to transfer by operation of law, and shall be exempt from the claims
of creditors or other claimants from all orders, decrees, levies, garnishment
and/or executions and other legal or equitable process or proceedings against
such Participants or Beneficiaries to the fullest extent which may be permitted
by law.
(e) Applicable Law; Severability.
The Plan hereby created shall be construed, administered and governed
in all respects in accordance with ERISA and to the extent not superseded by
federal law, in accordance with the laws of the State of Illinois; provided,
however, that if any provision is susceptible of more than one interpretation,
such
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interpretation shall be given thereto as is consistent with the Plan being a
qualified Employee Stock Ownership Plan within the meaning of the Code. If any
provision of this instrument shall be held by a court of competent jurisdiction
to be invalid or unenforceable, the remaining provisions hereof shall continue
to be fully effective.
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Section 21. TOP HEAVY PROVISIONS.
(a) Definitions.
For purposes of this Section 21, the following
capitalized words shall have the following meanings:
AGGREGATION GROUP
(1) Required Aggregation Group: In determining a Required Aggregation Group
hereunder, each plan of the Employer in which a Key Employee is a
participant, 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.
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TOP HEAVY GROUP
Any Aggregation Group, if as of the Determination Date, the sum of (1)
the present value of the accrued benefits for Key Employees under all
defined benefit plans included in such group and (2) the aggregate
Account balances of Key Employees under all defined contribution plans
included in such group, exceeds sixty percent (60%) of a similar sum
determined for all Employees.
TOP HEAVY PLAN
With respect to any Plan Year, of the Company or of any Affiliated
Company, any plan or Aggregation Group of plans of the Company or of
any Affiliated Company if, as of the Determination Date, the aggregate
Account balances of Key Employees under the plan or plans exceeds sixty
percent (60%) of the aggregate Account balances of all Employees under
such plan or plans. For purposes of this definition, the term, "Account
balances" shall include Account balances of Participants attributable
to Employer Contributions, the Account balances attributable to
Employees' Nondeductible Contributions, and the amount of the aggregate
distributions, if any, made with respect to any Participant during the
five (5) year period ending on the Determination Date, including any
distributions under a terminated plan which would have been required to
be included in an aggregation group had such plan not been terminated.
The Account balances of an individual shall not be taken into account
if such individual has not performed any services for the Company at
any time during the five year period ending on the Determination Date.
The Account balances of a non-key employee with respect to any Plan
Year shall not be taken into account if such individual was formerly a
Key Employee for any prior Plan Year. Any rollover contributions or
transfers that are unrelated (i.e., both initiated by the Employee and
made from a plan maintained by one Employer to a plan maintained by
another Employer) shall not be taken into account for purposes of
determining whether a plan is a Top Heavy Plan or whether any
Aggregation Group is a Top Heavy Group.
(b) Vesting Requirements.
With respect to any Plan Year, if as of the relevant Determination
Date, this Plan is deemed to be a Top Heavy Plan or part of a Top Heavy Group,
the vesting of Plan Benefits for such Plan Year with respect to any Participant
who completes one or more Hours of Service after the Plan becomes a Top Heavy
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such percentage for any such Plan Year shall not exceed the highest percentage
at which Contributions and Forfeitures are made for such Plan Year for any Key
Employee, as determined by dividing the Contribution for such Key Employee by so
much of such Key Employee's Total Compensation for the Plan Year as does not
exceed $200,000. The minimum benefit otherwise required under this paragraph
shall be reduced to the extent a Participant who is not a Key Employee has
received a benefit under any other plan maintained by the Employer and to the
extent permitted by Section 416 of the Code and the regulations thereunder
dealing with nonduplication of minimum benefits.
Amounts paid by the Company under the Federal Insurance Contributions
Act or under the Social Security Act may not be taken into account for purposes
of providing the required minimum benefits to Participants who are not Key
Employees.
For purposes of this Subsection (c), the term "Participant" shall
refer to any Employee who has not separated from service at the end of the Plan
Year, including Employees who have failed to complete 1,000 Hours of Service,
and any Employees who have been excluded because their compensation is less than
a stated amount but who must nevertheless be considered Participants in order
to satisfy the coverage requirements of Section 410(b) of the Code.
(d) Limitation on Annual Additions.
With respect to any Plan Year, if as of the relevant Determination
Date, this Plan is deemed to be a Top Heavy Plan or part of a Top Heavy Group,
the dollar limitation in the
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denominator of the defined contribution plan fraction and the defined benefit
fraction shall be multiplied by 1.0 rather than by 1.25, for purposes of
determining the aggregate limit on Contributions and Forfeitures for a Key
Employee for such Plan Year, unless the sum of the Key Employees' benefits under
all defined contribution plans does not exceed ninety percent (90%) of the total
of all Participants' benefits for such Plan Year, and the Employer provides a
minimum contribution of not less than four percent (4%) of each Participant's
Total Compensation. The minimum benefit otherwise required under this paragraph
shall be reduced to the extent a Participant who is not a Key Employee has
received a benefit under any other plan maintained by the Employer and to the
extent permitted by Section 416 of the Code and the regulations thereunder
dealing with nonduplication of minimum benefits.
With respect to any Plan Year, if, as of the relevant Determination
Date, any Employee is covered by both a top heavy defined contribution plan and
a top heavy defined benefit plan, the minimum benefit provided for each such
Participant who is not a Key Employee under the defined contribution plan shall
be not less than five percent (5%) of the Participant's Total Compensation;
provided, however, that if the Employer desires to use a factor of 1.25 in
computing the denominators of the defined benefit fraction and in the
denominator of defined contribution fraction, the defined contribution minimum
benefit shall be seven and one-half percent (7.5%) of compensation.
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Solely for the purpose of determining if the Plan, or any other plan
included in a required Aggregation Group of which this Plan is a part, is a Top
Heavy Plan, the accrued benefit of an Employee (other than a Key Employee under
a defined benefit plan or target benefit plan) shall be determined under (i) the
method, if any, that uniformly applies for accrual purposes under all plans
maintained by the Affiliated Employers, or (ii) if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional accrual rate of Section 411(b)(1)(C) of the Code.
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Section 22. EXECUTION.
To record the adoption of this Plan, the Company has caused its
appropriate officers to affix its corporate name and seal hereto this 13th day
of January, 1995.
ACME BARREL COMPANY
(SEAL) By /s/ Elliot S. Pearlman
---------------------------------
Elliot S. Pearlman, President
By /s/ Ronald C. Meyer
---------------------------------
Ronald C. Meyer, Secretary
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EXHIBIT 4.2
ACME BARREL COMPANY
EMPLOYEE STOCK OWNERSHIP TRUST AGREEMENT
<PAGE>
ACNE BARREL COMPANY
EMPLOYEE STOCK OWNERSHIP TRUST AGREEMENT
CONTENTS
Paragraph Page
- --------- ----
A. The Trust Assets.................... 2
B. Investment.......................... 3
C. Trustee's Powers.................... 5
D. Voting Company Stock................ 6
E. Nominees............................ 7
F. Records............................. 7
G. Reports............................. 8
H. Distributions....................... 8
I. Signatures.......................... 10
J. Expenses............................ 11
K. Liability of Trustee................ 12
L. Amendment and Termination........... 13
M. Irrevocability...................... 14
N. Resignation or Removal of Trustee... 14
0. Definition.......................... 15
P. Miscellaneous....................... 16
Q. Acceptance.......................... 16
<PAGE>
ACME BARREL COMPANY
EMPLOYEE STOCK OWNERSHIP TRUST AGREEMENT
THIS AGREEMENT, between Acme Barrel Company, hereinafter referred to as
"Company," and Jordan A. Pearlman, Philip A. Pearlman and Elliot S. Pearlman,
hereinafter collectively referred to as "Trustee," originally effective as of
May 1, 1985, and amended and herein restated to be effective as of May 1, 1989
(except that provisions which are required to be effective before this date in
accordance with the Tax Reform Act of 1986 are hereby generally applicable to
the Plan Years beginning after 1988, unless an earlier or later effective date
is required pursuant to a statute or Treasury Regulation or as stated in the
Plan document),
W I T N E S S E T H:
WHEREAS, it is the policy of the Company to so finance and conduct its
operations as to enable its employees and the employees of any participating
affiliates to acquire through an Employee Stock Ownership Plan equity ownership
in the Company; and
WHEREAS, the Company has restated the "Acme Barrel Company Employee Stock
Ownership Plan," hereinafter referred to as the "Plan," effective as of May 1,
1989; as an amendment and restatement of the Company's prior Employee Stock
Ownership Profit Sharing Plan; (except that provisions which are required
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to be effective before this date in accordance with the Tax Reform Act of 1986
are hereby generally applicable to the Plan Years beginning after 1988, unless
an earlier or later effective date is required pursuant to a statute or Treasury
Regulation or as stated in the Plan document); and
WHEREAS, the Company has designated the Plan and this Trust as constituting
part of a plan intended to qualify under Section 401(a) of the Internal Revenue
Code (hereinafter referred to as the "Code");
NOW THEREFORE, the parties hereto do hereby restate the Acme Barrel Company
Employee Stock Ownership Trust and agree the following shall constitute the
Trust Agreement:
A. The Trust Assets.
(1) Employer Contributions shall be paid to the Trustee, from time to
time, in accordance with the Plan. All Employer Contributions hereafter made and
all investments thereof together with all accumulations, accruals, earnings and
income with respect thereto shall be held by the Trustee in trust hereunder as
the Trust Assets. The Trust Assets shall be received by the Trustee and invested
pursuant to written instructions to the Trustee from the Committee. The Trustee
shall not be responsible for the administration of the Plan, maintaining any
records of Participants' Accounts under the Plan, or the computation of or
collection of Employer Contributions, but shall hold, invest, reinvest, manage,
administer and distribute the Trust Assets as provided herein for the exclusive
benefit of Participants, retired Participants and their Beneficiaries.
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<PAGE>
(2) Unless otherwise directed by the Company or the Committee provided
for in the Plan (hereinafter referred to as the "Committee"), the Trustee shall
hold, invest and administer the Trust Assets as a single fund without
identification of any part of the Trust Assets with or allocation of any part of
the Trust Assets to the Company or to any affiliate of the Company designated by
it as a participating Employer under the Plan or to any Participant or group of
Participants of the Company or of any such affiliate or their Beneficiaries.
B. INVESTMENT.
(1) As directed by the Committee, the Trustee may invest and reinvest
the Trust Assets without distinction between principal and income in Company
Stock in accordance with the terms of the Plan and this Agreement. The Trustee
may also, as directed by the Committee, invest funds in savings accounts,
certificates of deposit, securities, or other equity stocks or bonds or in any
other kind of real or personal property, including interests in oil or other
depletable natural resources, options, puts, calls, futures contracts and
commodities; or such funds may be held in non-interest-bearing bank accounts, as
necessary on a temporary basis.
(2) The Plan assets shall be invested and controlled by the Committee;
provided, however, that the actual management of Trust investments, other than
Company Stock, may be delegated to the Trustee or may be delegated to one or
more investment managers appointed by the Committee. Investments directed by the
Committee shall not be in conflict with the "Prohibited Trans-
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actions" provisions of the Code as currently defined and as hereafter amended.
The Trustee shall purchase or sell such shares of Company Stock, including
shares of stock of any classification issued by any subsidiary or affiliate of
the Company, pursuant to direction from the Committee. The Trustee shall have no
obligation whatsoever to seek or request any such direction from the Committee,
nor shall the Trustee have any power or authority to dispose of any such Company
Stock acquired pursuant to such direction unless directed by the Committee. The
Trustee shall, subject to the limitations hereinafter set forth, be under a duty
to comply with any such direction when given, but shall have no responsibility
whatsoever in connection with any such purchase, retention or sale, other than
compliance with such direction.
(3) In the event the Trustee invests any part of the Trust Assets,
pursuant to the directions of the Committee, in any securities issued or
guaranteed by the Company or any subsidiary or affiliate of the Company, and the
Committee thereafter directs the Trustee to dispose of such investment, or any
part thereof, under circumstances which, in the opinion of counsel for the
Company require registration of the securities under the Securities Act of 1933
and/or qualification of the securities under the Blue Sky laws of any state or
states, then the Company, at its own expense, will take or cause to be taken any
and all such action as may be necessary or appropriate to effect such
registration and/or qualification.
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<PAGE>
C. TRUSTEE'S POWERS.
As directed by the Committee, the Trustee shall have the authority and
power to:
(1) Sell, transfer, mortgage, pledge, lease or otherwise dispose of, or
grant options with respect to any securities or other property in the Trust at
public or private sale;
(2) Subject to the restrictions set forth in Section 6 of the Plan,
borrow from any lender to acquire Company Stock or any other property authorized
by this Agreement, giving its note as Trustee with such interest and security
for the loan as may be appropriate and necessary;
(3) Vote upon any stock, including Company Stock as prescribed in
Paragraph D of this Agreement, bonds or other securities held in the Trust, or
otherwise consent to or request any action on the part of the issuer in person
or by proxy;
(4) Give general or specific proxies or powers of attorney with or
without powers of substitution;
(5) Participate in reorganizations, recapitalizations, consolidations,
mergers and similar transactions with respect to Company Stock or any other
securities;
(6) Deposit such Company Stock or other securities in any voting trust,
or with any protective or like committee, or with a trustee or with depositories
designated thereby;
(7) Exercise any options, subscription rights and conversion
privileges;
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(8) Sue, defend, compromise, arbitrate or settle any suit or legal
proceeding or any claim due it or on which it is liable;
(9) Contract or otherwise enter into transactions between itself as
Trustee and the Company, its subsidiaries and shareholders of any of them;
(10) Perform all acts which the Trustee shall deem necessary and
appropriate and exercise any and all powers and authority of the Trustee under
this Agreement;
(11) Exercise any of the powers of an owner, with respect to such
Company Stock and other securities or other property comprising the Trust
Assets. Either the Company or the Committee may authorize the Trustee to act on
any matter or class of matters with respect to which direction or instruction to
the Trustee by the Committee is called for hereunder without specific direction
or other instruction from the Committee.
D. VOTING COMPANY STOCK.
(1) Except as provided in subparagraph (2) of this Paragraph D, all
Company Stock held by the Trust shall be voted by the Trustee in accordance with
instructions from the Committee. Notwithstanding the foregoing, each Participant
and/or Beneficiary shall be entitled to direct the voting of any voting shares
of Company Stock allocated to his Company Stock Account with respect to any vote
required for the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation, dissolution,
sale of substantially all the assets of a trade or business, or other similar
transac-
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tions prescribed by regulation. Any unallocated shares held by the Trust shall
be voted by the Trustee.
(2) Notwithstanding the provisions of subparagraph (1) of this
Paragraph D, each Participant and/or Beneficiary shall be entitled to direct the
voting of any Employer Securities which are allocated to such Participant's
and/or Beneficiary's Company Stock Account to the extent such Employer
Securities were acquired by or transferred to the Trust in connection with a
Securities Acquisition Loan completed after June 6, 1989 to which Section 133 of
the Code applied.
E. NOMINEES.
The Trustee may register any securities or other property held by it
hereunder in its own name or in the name of its nominees with or without the
addition of words indicating that such securities are held in a fiduciary
capacity, and may hold any securities in bearer form, but the books and records
of the Trustee shall at all times show that all such investments are part of the
Trust.
F. RECORDS.
The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder, and
all accounts, books and records relating thereto shall be open to inspection by
any person designated by the Committee or the Company at all reasonable times.
The Trustee shall maintain such records, make such computations (except as
concerns Employer and Employee Contributions), and perform such ministerial acts
as the Committee may, from time to time, request.
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G. REPORTS.
(1) Within sixty (60) days after the end of each taxable year of the
Company, or the removal or resignation of the Trustee, and as of any other date
specified by the Committee, the Trustee shall file a report with the Committee.
This report shall show for each participating Employer all purchases, sales,
receipts, disbursements, and other transactions effected by the Trustee during
the year or period for which the report is filed, and shall contain an exact
description, the cost as shown on the Trustee's books, and the market value as
of the end of such period of every item held in the Trust and the amount and
nature of every obligation owed by the Trust.
(2) The Trustee may rely without liability upon the valuation of
Company Stock as determined by an Independent Appraiser. The value placed upon
such property by an Independent Appraiser shall be conclusive and binding upon
all parties with an interest herein.
H. DISTRIBUTIONS.
(1) The Trustee shall make distributions from the Trust at such times
and in such number of shares of Company Stock and amounts of cash to or for the
benefit of the persons entitled thereto under the Plan as the Committee directs
in writing. Any undistributed part of a Participant's Plan Benefit shall be
retained in the Trust until the Committee directs its distribution. Any portion
of a Participant's Plan Benefit to be distributed in cash shall be paid by the
Trustee, mailing its check to the person entitled to receive the distribution at
that
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<PAGE>
person's address of record. If a dispute arises as to who is entitled to or
should receive any benefit or payment, the Trustee may withhold or cause to be
withheld such payment until the dispute has been resolved.
(2) As directed by the Committee, the Trustee shall make payments out
of the Trust Assets. Such directions or instructions need not specify the
purpose of the payments so directed, and the Trustee shall not be responsible in
any way respecting the purpose or propriety of such payments.
(3) No distribution or payment under this Agreement to any Participant
or the Participant's Beneficiary under the Plan shall be subject in any manner
to anticipation, sale, transfer, assignment or encumbrance, whether voluntary or
involuntary, and no attempt so to anticipate, sell, transfer, assign or encumber
the same shall be valid or recognized by the Trustee, nor shall any such
distribution payment be in any way liable for, or subject to, the debts,
contracts, liabilities or torts of any person entitled to such distribution or
payment, except to such an extent as may be ordered under a Qualified Domestic
Relations order, as provided for in the Plan. If the Trustee is notified by the
Committee that any such Participant or Beneficiary has been adjudicated bankrupt
or has purported to anticipate, sell, transfer, assign or encumber any such
distribution or payment, voluntarily or involuntarily, the Trustee shall if so
directed by the Committee, hold or apply such distribution payment or any part
thereof to or for the benefit of such Participant or Beneficiary in such manner
as the Committee shall direct.
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<PAGE>
(4) In the event that any distribution or payment directed by the
Committee shall be mailed by the Trustee to the person specified in such
direction at the latest address of such person filed with the Committee, and
shall be returned to the Trustee because such person cannot be located at such
address, the Trustee shall promptly notify the Committee of such return. Upon
the expiration of sixty (60) days after such notification, such direction shall
become void, and unless and until a further direction by the Committee is
received by the Trustee with respect to such distribution or payment, the
Trustee shall thereafter continue to administer the Trust as if such direction
had not been made by the Committee. The Trustee shall not be obligated to search
for or ascertain the whereabouts of any such person.
(5) The Plan Trustee shall have the primary responsibility for the
withholding of income taxes from Plan distributions, for the payment of withheld
income taxes on Plan distributions to the Internal Revenue Service, and for
notification to Participants of their right to elect not to have income tax
withheld from Plan distributions.
I. SIGNATURES.
All communications required hereunder from the Company or the Committee
to the Trustee shall be in writing, signed by an officer of the Company or a
person authorized by the Committee to sign on its behalf. The Committee shall
authorize one or more individuals to sign, on its behalf, all communications
required hereunder between the Committee and the Trustee. The Company and
10
<PAGE>
the Committee shall at all times keep the Trustee advised of the names and
specimen signatures of all members of the Committee and the individuals
authorized to sign on behalf of the Committee. The Trustee shall be fully
protected in relying on any such communication and shall not be required to
verify the accuracy or validity thereof unless it has reasonable grounds to
doubt the authenticity of any signature. If after request the Trustee does not
receive instructions from the Committee on any matter in which instructions are
required hereunder, subject to the provisions of Paragraph D hereof, the Trustee
shall act or refrain from acting as it may determine. All communications
required hereunder from the Trustee shall be in writing, signed by the Trustee.
J. EXPENSES.
The Trustee and the Committee may employ suitable agents and counsel
who may be counsel for the Company. The Company shall pay all expenses in
connection with the design, establishment, or termination of the Plan. The Trust
shall pay all costs of administering the Plan, unless such expenses are paid by
the Company. However, normal brokerage charges, commissions, taxes and other
costs incident to the purchase and sale of securities which are included in the
cost of securities purchased, or charged against the proceeds in the case of
sales, shall be charged to and paid out of Trust Assets. Any expenses paid by
the Trust shall be reasonable and necessary. The Plan shall not pay, directly or
indirectly, any commissions with respect to the purchase of Employer Securities.
The Trustee shall be entitled
11
<PAGE>
to compensation as may be agreed upon in writing, from time to time, between the
Committee and the Trustee; provided, however, that no person (serving as a
fiduciary) who already receives full-time pay from the Company shall receive any
compensation from the Plan, except for reimbursement of expenses properly and
actually incurred.
K. LIABILITY OF TRUSTEE.
Subject to the provisions of the Employee Retirement Income Security
Act of 1974 (hereinafter referred to as ERISA), neither the Trustee nor the
Committee shall be liable for any expense or liability hereunder unless due to
or arising from fraud, dishonesty, negligence or misconduct of the Trustee or
Committee. Except as thus provided, the Trustee shall not be liable for the
making, retention or sale of any investment or reinvestment made by the Trustee
as herein provided, nor for any loss to or diminution of the Trust Assets, nor
for any action which the Trustee takes or refrains from taking which the Trustee
deems in good faith to be in the best interests of the Trust or which the
Trustee takes or refrains from taking at the direction of the Committee or
Company. Except as thus provided, the Committee shall not be liable for the
making, retention or sale of any investment or reinvestment made by the
Committee as herein provided, nor for any loss to or diminution of the Trust
Assets, nor for any action which the Committee takes or refrains from taking
which the Committee deems in good faith to be in the best interests of the Trust
or which the Committee takes or refrains from taking at the direction of the
Company. The Trustee shall
12
<PAGE>
not be required to pay interest on any part of the Trust Assets which are held
uninvested pursuant to the Committee's direction.
L. AMENDMENT AND TERMINATION.
(1) The Company shall have the right at any time, by an instrument or
in writing duly executed and acknowledged and delivered to the Trustee, to
modify, alter or amend this Agreement, in whole or in part, and to terminate the
Trust, in accordance with the express provisions of the Plan. The Company shall
have the right, to the extent provided by law, to amend this Agreement
retroactively to its effective date in order to satisfy initially the
requirements of Section 401(a) of the Code, and to terminate this Agreement in
the event of failure of the Internal Revenue Service, after application, to
determine that the Plan and the Trust initially satisfy the requirements of
Section 401(a) of the Code. In no event, however, shall the duties, power or
liabilities of the Trustee hereunder be changed without its prior written
consent.
(2) Notwithstanding any other provision of the Trust, if the Internal
Revenue Service shall fail or refuse to issue a favorable written determination
or ruling with respect to the continued qualification of the Plan and exemption
of the Trust from tax under Section 401(a) of the Code, all Employer
Contributions under Section 401(a), together with any income received or accrued
thereon less any benefits or expenses paid shall, upon the written direction of
the Company, be deemed held by the Trustee under the Employee Stock Ownership
Plan as it existed prior to the adoption of this Plan and this Plan and the
Trust shall terminate.
13
<PAGE>
M. IRREVOCABILITY.
Subject to the provisions of Paragraph L, this Trust is declared to be
irrevocable and at no time shall any part of the Trust Assets revert to or be
recoverable by the Company or by any participating Employer or be used for or be
diverted to purposes other than for the exclusive benefit of Participants or
retired or terminated Participants and their Beneficiaries. However, the
Committee may, by notice in writing to the Trustee, direct that all or part of
the Trust Assets be transferred to a successor Trustee or Trustees under a Trust
instrument which is for the exclusive benefit of such Participants and their
Beneficiaries and meets the requirements of Section 401(a) of the Code, and
thereupon the Trust Assets, or any part thereof, together with any outstanding
loans and accrued interest attributable thereto, shall be paid over, transferred
or assigned to said successor Trustee or Trustees free from the Trust created
hereunder; provided, however, that no part of the Trust Assets may be used to
pay insurance policy premiums or to make contributions of the Company or of any
participating Employer under any other plan maintained by the Company or any
participating Employer for the benefit of its Employees.
N. RESIGNATION OR REMOVAL OF TRUSTEE.
(1) Any Trustee may resign at any time upon thirty (30) days written
notice to the Company. Any Trustee may be removed at any time by the Company
upon thirty (30) days written notice to the Trustee. Upon the receipt of
instructions or directions from the Company or the Committee with which a
Trustee is unable
14
<PAGE>
or unwilling to comply, that Trustee may resign upon notice, in writing, to the
Company or the Committee, given within a reasonable time, under the
circumstances then prevailing, after the receipt of such instructions or
directions, and notwithstanding any other provisions hereof; in that event, that
Trustee shall have no liability to the Company, or any person interested herein
for failure to comply with such instructions or directions. Upon resignation or
removal of any Trustee, the Company shall appoint a successor Trustee (or
Trustees). The successor Trustee shall have the same powers and duties as are
conferred upon the Trustee hereunder, and the Trustee shall assign, transfer and
pay over to such successor Trustee all the moneys, securities and other property
then constituting the Trust Assets, together with such records or copies thereof
as may be necessary to the successor Trustee.
(2) The Trustee shall not be required to make any transfer under this
Paragraph N or the preceding Paragraph M to a successor Trustee or Trustees
unless and until it has been indemnified to its satisfaction against any
expenses and liabilities both with respect to such transfer and with respect to
any of its acts as Trustee prior to such transfer (except such expenses or
liabilities due to or arising from its fraud, dishonesty, negligence or
misconduct).
O. DEFINITION.
The definitions of certain words in the Plan shall apply to this
Agreement wherever applicable. The singular or plural number shall each be
deemed to include the other whenever the context so indicates.
15
<PAGE>
P. MISCELLANEOUS.
(1) So long as this Plan is in effect, all Employers shall file with
the Internal Revenue Service and the Department of Labor, at the time and place
required, the information required under ERISA and the Code. If this Trust and
the Plan referred to herein, after initially qualifying as a tax exempt
Trust under Section 40i(a) of the Code shall thereafter cease to be a qualified
Trust by reason of some act or omission on the part of the Company, the Company
agrees to indemnify Trustee and hold Trustee harmless against any liability it
may incur for Federal, Estate or other taxes as a result of payments made from
the Trust to Beneficiaries of deceased Participants after it ceases to be a
qualified trust.
(2) In the event any provisions of this Agreement shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of this Agreement, but shall be fully severable and the
Agreement shall be construed and enforced as if the illegal or invalid provision
had never been inserted herein.
Q. ACCEPTANCE.
The Trustee hereby accepts this Trust and agrees to hold the Trust
Assets existing on the date of this Agreement and all additions and accretions
thereto, subject to all the terms and conditions of this Agreement, which shall
be interpreted and construed in accordance with the Employee Retirement Income
Security Act of 1974 and any other applicable laws and to the extent not
superseded by Federal laws, in accordance with the laws of the State of
Illinois.
16
<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have caused this Agreement
to be executed in duplicate this 13th day of January, 1995.
ACME BARREL COMPANY
(SEAL) By /s/ Elliot S. Pearlman
----------------------------
Elliot S. Pearlman, President
By /s/ Ronald C. Meyer
----------------------------
Ronald C. Meyer, Secretary
TRUSTEE
/s/ Jordan A. Pearlman
----------------------------
Jordan A. Pearlman
/s/ Philip A. Pearlman
---------------------------
Philip A. Pearlman
/s/ Elliot S. Pearlman
----------------------------
Elliot S. Pearlman
17
<PAGE>
EXHIBIT 4.3
AMENDMENT TO
ACME BARREL COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
AGREEMENT made this 25th day of April, 1995 by and between ACME BARREL
COMPANY, the Employer, and PHILIP A. PEARLMAN and ELLIOT S. PEARLMAN as
Trustees.
W I T N E S S E T H:
WHEREAS, it is desired to amend the Trust Agreement of the Employer
effective May 1, 1994;
NOW, THEREFORE, it is agreed:
Section 11(a)l shall be amended to read as follows:
(1) Employer Contributions
Employer Contributions will be allocated as of each Anniversary Date
among the Accounts of Participants in the Plan who are employed on the last day
of the Plan year, or Employees whose employment terminated during the year
because of death, Disability or Retirement in the following manner:
a. The Covered Compensation for the Highly Compensated Participants
eligible to share in an allocation shall be divided by the
Covered Compensation of all Participants eligible to share in a
contributions.
b. If the resulting fraction is less than one-third (1/3), Employer
Contributions shall be allocated in the proportion that each
Participant's Covered Compensation bears to the total Covered
Compensation of all such Participants for that year.
c. If the resulting fraction is more than one-third (1/3), the
amount to be allocated shall be divided by three (3).
d. The resulting amount shall be allocated in the
proportion that each Highly Compensated
<PAGE>
Participant's Covered Compensation bears to the total Covered
Compensation of all Highly Compensated Participants for that
year.
e. The remaining Employer Contribution shall be allocated in the
proportion that each not Highly Compensated Participant's Covered
Compensation bears to the total Covered Compensation of all not
Highly Compensated Participants for that year.
Shares of Employer Securities released from the Suspense Account (as
provided in Section 7(b)) by reason of the payment of interest and principal on
a Securities Acquisition Loan shall be allocated as of each Anniversary Date
among the Accounts of Participants in the Plan who are employed on the last day
of the Plan Year, or Employees whose employment terminated during the year
because of death, Disability or Retirement, in the proportion that each such
Participant's Covered Compensation bears to the total Covered Compensation of
all such Participants for that year. For purposes of this paragraph, a person
who is an inactive Participant for a Plan year, or whose employment terminates
during a Plan Year for reasons other than death, Disability or Retirement, shall
not be considered a Participant in the Plan on the last day of that Plan Year.
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands the day and year
hereinabove set forth.
ACME BARREL COMPANY
BY: /s/ ELLIOT S. PEARLMAN
-------------------------------
Elliot S. Pearlman, President
BY: /s/ RONALD C. MEYER
-------------------------------
Ronald C. Meyer, Secretary
<PAGE>
EXHIBIT 4.4
ACME BARREL COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
AMENDMENT 1998-1
Pursuant to the authority of Section 19(a) of the Acme Barrel Company
Employee Stock Ownership Plan (the "Plan") and Section L of the Acme Barrel
Company Employee Stock Ownership Trust Agreement (the "Trust") and the
Directors' Resolutions dated February 12, 1998, the Plan and Trust are hereby
amended, effective as stated herein as follows:
1. Plan Section 9(a) is amended effective January 1, 1998 to read as
follows:
"9. VOTING COMPANY STOCK.
(a) Except as provided in subsection (b) of this Section 9, all
Company Stock held by the Trust shall be voted by the Trustee.
Notwithstanding the foregoing, Participants and/or Beneficiaries shall
be entitled to direct the voting of any voting shares of Common Stock
allocated to their Company Stock Accounts (the "Directed Shares") with
respect to any vote required for the approval or disapproval of any
corporate merger or consolidation, recapitalization, reclassifications,
liquidation, dissolution, sale of substantially all the assets of a
trade or business, or other similar transactions prescribed by
regulation. Any unallocated shares held by the Trust and any Directed
Shares for which the Trustee has not received instructions shall be
voted by the Trustee."
2. Trust Section D is amended effective January 1, 1998 to read as
follows:
"D. VOTING COMPANY STOCK.
Except as otherwise provided in this Section D, all Company Stock
held by the Trust shall be voted by the Trustee. Notwithstanding the
foregoing, Participants and/or Beneficiaries shall be entitled to
direct the voting of any voting shares of Company Stock allocated to
their Company Stork Accounts (the "Directed Shares") with respect to
any vote required for the approval or conforming disapproval of any
corporate merger or consolidation, recapitalization, reclassifications,
liquidation, dissolution, sale of substantially all the assets of a
trade or business, or other similar transactions prescribed by
regulation.
<PAGE>
Any unallocated shares held by the Trust and any Directed Shares for
which the Trustee has not received instructions shall be voted by the
Trustee."
3. Plan Section 18(b) is amended, effective May 15, 1998, by adding a new
subsection (3) to read as follows:
"(3) A Participant may direct the Trustee to sell up to twenty-five
percent (25%) of the vested portion of his or her Company Stock allocated to
the Participant's Company Stork Account and reinvest the proceeds of such
sale in such alternative investment funds selected by the Trustee. Neither
the trustee nor the Company, nor any fiduciary of the Plan shall be liable
to the Participant or any of his or her beneficiaries for any loss resulting
from an investment direction given by the Participant."
4. Trust Section B is amended, effective May 15, 1998, by adding a new
subsection (4) to read as follows:
"(4) The Trustee may invest a portion of a Participant's Company Stock
Account as directed by the Participant in compliance with, and as limited
by, Section 18(b)(3) of the Plan."
The remaining provisions of the Plan and Trust shall continue in full
force and effect.
ACME BARREL COMPANY
/s/ ELLIOT S. PEARLMAN
-------------------------------
By: Elliot S. Pearlman
Its: President
Trustees under the ACME BARREL
COMPANY EMPLOYEE STOCK
OWNERSHIP TRUST AGREEMENT
/s/ ELLIOT S. PEARLMAN
-------------------------------
Elliot S. Pearlman, Trustee
/s/ PHILIP A. PEARLMAN
-------------------------------
Philip A. Pearlman, Trustee
2
<PAGE>
ESOP:
- -----
Neil A. Lepkoff, President
Improved Funding Techniques Inc.
211 Broadway
Lynbrook, NY 11563
Phone: 516-887-4433 Fax: 516-887-1470
Administrator of ESOP and Profit Sharing Plan since 1995.
Everett A. Matthews, Inc.
114 Sansome Street, Suite 808
San Francisco, CA 94104
Phone: 415-788-2770
Has done annual common stock valuation for the ESOP since 1986.
ESOP (continued):
- -----------------
David L. Heald, Principal
Consulting Fiduciaries, Inc.
2745 Riverwoods Road
Riverwoods, IL 60015
Phone: 847-945-2745 Fax: 847-945-5611
Engaged January, 1998 as independent fiduciary for the ESOP.
<PAGE>
To:_____________________________
From: Ron Meyer
Re: ESOP Installment Payments
Current Internal Revenue Service rules now allow the rollover of your ESOP
installment payments into an Individual Retirement Account on a tax deferred
basis. Please complete the enclosed form indicating your selection of options,
and return it to me in the envelope provided. Immediately upon receipt of your
reply, disbursement will be made to you with withholding tax deducted, or
directly to your IRA custodian in full.
This election is made every year, and your present choice does not bind you to
that option for future installments.
<PAGE>
WITHHOLDING/ROLLOVER ELECTION FORM FOR
ELIGIBLE ROLLOVER DISTRIBUTIONS
CASH DISTRIBUTION
You must complete this form if you wish to make a direct rollover, or direct
payment to you of your "eligible rollover distribution." See explanation in
attached Special Tax Notice Regarding Plan Payments. Any eligible amount not
directly rolled over will be subject to the 20% federal withholding requirement
and may be subject to premature distribution penalties.
PART 1 - Personal Data
Name of Participant __________________________________________________________
Address ______________________________________________________________________
City/State _______________________________________________ Zip _______________
Date of Birth ____________________________ Social Security No.________________
PART 2 - Form of Distribution [check A or B]
___ A. I hereby elect to have my benefit distributed in cash.
___ B. I do not wish to have my plan benefit distributed in cash.
Distribute my plan benefit in the form of shares of Company
Stock and send me a Stock Transfer Agreement which describes
the terms of the RIGHT OF FIRST REFUSAL.
PART 3 - Distribution Options (check A, B or C]
___ A. I elect to directly roll over 100% of my Eligible Rollover
Distribution(s) to the IRA or qualified employer plan indicated in Part
4 below. (Must be at least $200.00)
___ B. I elect to directly roll over a portion of my payment $ (must be at
least $500.00) to the IRA or qualified employer plan indicated in Part
4 below.
___ C. I elect my total distribution be paid directly to me. I understand that
20% of the distribution will be withheld as Federal Income Taxes.
PART 4 - Direct Rollover Recipient - [complete A or B]
A. IRA INFORMATION:
Account Number: _____________________________________________________
Trustee or Custodian Name: __________________________________________
Address: ____________________________________________________________
____________________________________________________________
Attn: ____________________________________________________________
Phone Number: _______________________________________________________
EXHIBIT C
<PAGE>
Withholding/Rollover Election Form
For Eligible Rollover Distributions
Cash Distribution
Page 2
B. QUALIFIED EMPLOYER PLAN INFORMATION:
Plan Name: __________________________________________________________
Trust or Custodial Account Number: __________________________________
Address: ____________________________________________________________
Attn: _______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Phone Number: _______________________________________________________
Delivery Technique
___ Mail check to receiving Qualified Plan or IRA.
___ Provide a check to me for delivery to receiving Qualified Plan or IRA.
Check will only be negotiable by the receiving Qualified Plan or IRA.
PART 5 - Signature
I have received the Special Tax Notice Regarding Plan Payments summarizing
withholding and direct rollover rules which apply to my plan distribution. I
understand that normally I cannot receive my distribution earlier than 30 days
(or later than 90 days) after receiving this Notice. However, participants may
elect to waive the (30) day notice and either receive their distribution or have
a direct rollover made. Please sign below to waive your 30 days notice.
If you do not return this completed form in a timely manner and your
distribution is less than $3,500, 20% federal income tax will be withheld from
the taxable portion of your payment.
Date: ___________________________ Signature: __________________________
<PAGE>
Withholding\Rollover Election Form
for Eligible Rollover Distributions
Cash Distribution
Page 3
PART 6 - Consent to Distribution (for amounts in excess of $3,500)
I understand that the value of my plan benefit exceeds $3,500 and that I may,
therefore, elect to defer payment of my plan benefit until some future time.
Nevertheless, I hereby elect to receive my plan benefit now in accordance with
the elections above indicated.
Date: ___________________________ Signature: __________________________
State Withholding Election
[_] I elect not to have State income tax withheld from my plan distribution.
[_] If you wish to specify dollar amounts of withholding, CHECK THIS BOX and
indicate the amount below.
[_] Amount of State Withholding $____________
[_] If you wish to have withholding apply based on current Tax Tables, CHECK
THIS BOX.
Date: ___________________________ Signature: __________________________
<PAGE>
Exhibit 5.1
[LETTERHEAD OF PALEX, INC.]
May 26, 1998
PalEx, Inc.
1360 Post Oak Boulevard
Suite 800
Houston, Texas 77056
Gentlemen:
You have requested the undersigned's opinion in his capacity as General
Counsel of PalEx, Inc., a Delaware corporation (the "Company"), in connection
with the Registration Statement on Form S-8 (the "Registration Statement"),
filed with the Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended, of 1,301,485 shares
of the Company's Common Stock, par value $.01 per share (the "Common Stock"),
issued to the Acme Barrel Company Employee Stock Ownership Plan (the "Plan").
With respect to the foregoing, the undersigned has examined such documents
and questions of law as he deemed necessary to render the opinions expressed
below. Based upon the foregoing, the undersigned is of the opinion that the
Common Stock issued to the Plan is duly and validly issued, fully paid and
nonassessable.
The undersigned consents to the use of this opinion as Exhibit 5.1 to the
Registration Statement.
This opinion letter is as of the date hereof, and the undersigned
undertakes no obligation, and expressly disclaims any obligation, to advise you
of any change in the matters set forth herein. Please note that the opinions
expressed herein relate only to the matters specifically set forth, and no
opinion is implied or should be inferred as to any other matters.
Sincerely,
/s/ EDWARD E. RHYNE
-----------------------------------
Edward E. Rhyne
Vice President and General Counsel
<PAGE>
EXHIBIT 5.2
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
P. O. BOX A 3617 DPN20-6
CHICAGO, IL 60690
Employer Identification Number:
Date: August 6, 1995 86-2076371
File Folder Number:
860000096
ACME BARREL COMPANY Person to Contact:
2800 W. 18TH STREET TECHNICAL SCREENER
CHICAGO, IL 60608 Contact Telephone Number:
(312) 436-1040
Plan Name:
EMP STOCK OWNERSHIP PLAN
Plan Number: 002
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend on
its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal
or local statutes.
This determination is subject to your adoption of the proposed amendments
submitted in your letter dated February 17, 1995. The proposed amendments
should be adopted on or before the date prescribed by the regulations under Code
section 401(b).
This determination letter is applicable for the amendment(s) adopted on
January 18, 1995.
This plan satisfies the requirements of Code section 4975(e)(7).
<PAGE>
This plan has been mandatorily disaggregated, permissively aggregated, or
restructured to satisfy the nondiscrimination requirements.
This plan satisfies the nondiscrimination in amount requirement of section
1.401(a)(4)1(b)(2) of the regulations on the basis of a design-based safe
harbor described in the regulations.
This letter is issued under Rev. Proc. 93-89 and considers the amendments
required by the Tax Reform Act of 1986 except as otherwise specified in this
letter.
This plan satisfies the nondiscriminatory current availability requirements
of section 1.401(a)(d)-4(b) of the regulations with respect to those benefits,
rights, and features that are currently available to all employees in the plan's
coverage group. For this purpose, the plan's coverage group consists of those
employees treated as currently benefiting for purposes of demonstration that the
plan satisfies the minimum coverage requirements of section 410(b) of the Code.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act Pub. D. 103-465.
The information on the enclosed addendum is an integral part of this
determination. Please be sure to read and keep it with this letter.
We have sent a copy of this letter to your representative as indicated in
the power of attorney.
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely yours,
/s/ V. R. Engen
V. R. Engen
Acting District Director
Enclosures:
Publication 794
Addendum
<PAGE>
EXHIBIT 23.1
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 February 10, 1998
in PalEx, Inc.'s Form 10-K for the year ended December 28, 1997, and our reports
dated January 23, 1998, January 28, 1998, and February 27, 1998 in PalEx, Inc.'s
Current Report on Form 8-K/A, as filed with the Securities and Exchange
Commission on April 28, 1998, and to all references to our firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Houston, Texas
May 22, 1998
