As filed with the Securities and Exchange Commission on April 30, 1999
Registration No. 000-_________
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
FLAGSTAR BANCORP, INC.
---------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
MICHIGAN 38-3150651
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MICHIGAN 48302-0953
---------------------------------------
(Address of Principal Executive Office)
FLAGSTAR BANK 401(k) PLAN
FLAGSTAR BANCORP, INC. 1997 EMPLOYEES AND DIRECTORS STOCK OPTION PLAN AS AMENDED
- --------------------------------------------------------------------------------
(Full title of the Plans)
THOMAS J. HAMMOND, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
FLAGSTAR BANCORP, INC.
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MICHIGAN 48302-0953
-----------------------------------------
(Name and Address of Agent For Service)
(248) 338-7700
-------------------------------------------------------------
(Telephone Number, Including Area Code, of Agent for Service)
COPIES TO:
MATTHEW G. ASH, ESQUIRE
J. MARK POERIO, ESQUIRE
KUTAK ROCK
1101 CONNECTICUT AVENUE, N.W., SUITE 1000
WASHINGTON, D.C. 20036-4374
(202) 828-2400
-----------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title Of Amount Proposed Maximum Proposed Maximum Amount of
Securities To Be Offering Price Aggregate Offering Registration
To Be Registered (1) Registered (2) Per Share (3) Price (4) Fee
- -------------------- -------------- ------------- --------- ---
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 1,297,500 $25.94 $33,657,150 $9,356.69
<FN>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as amended, this Registration
Statement also covers an indeterminate amount of interests to be offered or sold pursuant to the
Flagstar Bank 401(k) Plan (the "401k Plan"), as described herein.
(2) Equals the sum of (i) the maximum number of shares expected to be issued under the 401k Plan assuming
that all employer and employee contributions to the 401k Plan are used to purchase shares of Common
Stock, together with an indeterminate number of shares which may be necessary to adjust the number of
additional shares of Common Stock reserved for issuance pursuant to the 401k Plan and being
registered hereby, as the result of a stock split, stock dividend, reclassification,
recapitalization or similar adjustment(s) of the Common Stock of Flagstar Bancorp, Inc., and (ii)
672,500 shares, which is the maximum number of shares issuable under the 1999 Amendment to the
Flagstar Bancorp, Inc. 1997 Employees and Directors Stock Option Plan (the "Option Plan"), as such
amounts may be increased in accordance with said plan in the event of a merger, consolidation,
recapitalization, stock dividend, stock split, or similar event involving the Registrant.
<PAGE>
(3) Under Rule 457(h) the shares (none of which is presently subject to option) are being registered based
upon the average of the high and low selling prices of the common stock of the Registrant as reported
on the National Association of Securities Dealers Automated Quotation, National Market System ("NMS")
on April 28, 1999 of $25.94 per share ($33,657,150 in the aggregate).
(4) Estimated based on (2) and (3) above.
</FN>
</TABLE>
2
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION
10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
*This Registration Statement relates to the registration of 1,297,500
shares of Common Stock, $.01 par value per share, of Flagstar Bancorp, Inc. (the
"Company") reserved for issuance and delivery under the Flagstar Bank 401(k)
Plan and the 1999 Amendment to the Flagstar Bancorp, Inc. 1997 Employees and
Directors Stock Option Plan (together, the "Plans"). Documents containing the
information required by Part I of this Registration Statement will be sent or
given to participants in the Plans as specified by Rule 428(b)(1). Such
documents are not filed with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement or as prospectuses
or prospectus supplements pursuant to Rule 424, in reliance on Rule 428.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Flagstar Bancorp, Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
and, accordingly, files periodic reports and other information with the
Commission. Reports, proxy statements and other information concerning the
Company filed with the Commission may be inspected and copies may be obtained
(at prescribed rates) at the Commission's Public Reference Section, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission,
including the Company. The address for the Commission's Web site is
"http://www.sec.gov".
The following documents filed by the Company are incorporated in this
Registration Statement by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (Commission File No. 000-22353);
(b) The description of the Company's securities contained in this Company's
Registration Statement on Form 8-A as filed with the Commission on April 7,
1997.
ALL DOCUMENTS FILED BY THE COMPANY PURSUANT TO SECTIONS 13(A), 13(C), 14
AND 15(D) OF THE 1934 ACT AFTER THE DATE HEREOF AND 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.
ITEM 4. DESCRIPTIONS OF SECURITIES
Not applicable, as the Common Stock is registered under Section 12 of the
Securities Exchange Act of 1934.
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Articles of Incorporation contain a provision,
authorized by the Michigan Business Corporation Act (the "MBCA"), designed to
eliminate in certain circumstances the personal liability of directors for
monetary damages to the Company or its stockholders for breach of their
fiduciary duty as directors. This provision, however, does not limit the
liability of any director who breached his or her duty of loyalty to the Company
or its stockholders, failed to act in good faith, obtained an improper personal
benefit or paid a dividend or approved a stock repurchase or redemption that was
prohibited under Michigan law. This provision will not limit or eliminate the
rights of the Company or any stockholder to seek an injunction or any other
nonmonetary relief in the event of a breach of director's duty of care. In
addition, this provision applies only to claims against a director arising out
of his or her role as a director and does not relieve a director from liability
unrelated to his or her fiduciary duty of care or from a violation of statutory
law such as certain liabilities imposed on a director under the federal
securities laws.
The Company's Restated Articles of Incorporation and Bylaws also provide
that the Company shall indemnify all directors and officers of the Company to
the full extent permitted by the MBCA. Under the provisions of the MBCA, any
director or officer who, in his or her capacity as such, is made or threatened
to be made a party to any suit or proceeding, may be indemnified if the Board
determines such director or officer acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Company or its stockholders.
Officers and directors are covered within specified monetary limits by
insurance against certain losses arising from claims made by reason of their
being directors or officers of the Company or of the Company's subsidiaries and
the Company's officers and directors are indemnified against such losses by
reason of their being or having been directors or officers of another
corporation, partnership, joint venture, trust or other enterprise at the
Company's or its subsidiaries' request.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
The exhibits scheduled to be filed as part of this Registration Statement
are as follows:
4.1 Form of Flagstar Bank 401(k) Plan and Adoption Agreement
4.2 Summary Plan Description of Flagstar Bank 401(k) Plan
4.3 Initial Enrollment Form, Beneficiary Designation Form, Change Form,
Check Deposit Form, Withdrawal Rollover/Distribution Election Form,
Hardship Withdrawal Request Form, Loan Provisions, and Special Tax
Notice
5 Opinion of Kutak Rock as to the legality of the Common Stock being
registered
23.1 Consent of Kutak Rock (appears in their opinion filed as Exhibit 5)
23.2 Consent of Grant Thornton LLP
2
<PAGE>
99.1 Flagstar Bancorp, Inc. 1997 Employees and Directors Stock Option Plan
as Amended
99.2 Form of Stock Option Agreement to be entered into with Optionees with
respect to Incentive Stock Options granted under the Flagstar Bancorp,
Inc. 1997 Employees and Directors Stock Option Plan as Amended
99.3 Form of Stock Option Agreement to be entered into with Optionees with
respect to Non-Incentive Stock Options granted under the Flagstar
Bancorp, Inc. 1997 Employees and Directors Stock Option Plan as
Amended
ITEM 9. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(b) 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.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3
<PAGE>
3. The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
4. 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 Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
4
<PAGE>
SIGNATURES
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 Bloomfield Hills, State of Michigan, on this 29th day
of April, 1999.
FLAGSTAR BANCORP, INC.
By: /s/ Thomas J. Hammond
-----------------------------------------
Thomas J. Hammond
Chairman and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement has been signed by the following persons (including a
majority of the Board of Directors of the Registrant) in the capacities and on
the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Thomas J. Hammond Chairman of the Board and April 29, 1999
- --------------------------- Chief Executive Officer
Thomas J. Hammond (Principal Executive Officer)
/s/ Mark T. Hammond Vice Chairman of the Board and April 29, 1999
- --------------------------- President
Mark T. Hammond
/s/ Michael W. Carrie Executive Vice President, April 29, 1999
- --------------------------- Chief Financial Officer and
Michael W. Carrie Treasurer (Principal Financial
and Accounting Officer)
/s/ Joan H. Anderson Director and Executive April 29, 1999
- --------------------------- Vice President
Joan H. Anderson
Director April ___, 1999
- ---------------------------
James D. Coleman
Director April ___, 1999
- ---------------------------
James D. Isbister
Director April ___, 1999
- ---------------------------
Richard S. Elsea
/s/ John R. Kersten Director April 29, 1999
- ---------------------------
John R. Kersten
Director April ___, 1999
- ---------------------------
C. Michael Kojaian
5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the trustees
(or other persons who administer the employee benefit plan) have duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Bloomfield Hills, State of Michigan,
on April 30, 1999.
FLAGSTAR BANK, as Plan Administrator
By /s/ Mary Kay McGuire
---------------------------------------
Mary Kay McGuire, Secretary
6
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
4.1 Form of Flagstar Bank 401(k) Plan and Adoption Agreement
4.2 Summary Plan Description of Flagstar Bank 401(k) Plan
4.3 Initial Enrollment Form, Beneficiary Designation Form, Change Form,
Check Deposit Form, Withdrawal Rollover/Distribution Election Form,
Hardship Withdrawal Request Form, Loan Provisions, and Special Tax
Notice
5 Opinion of Kutak Rock as to the legality of the Common Stock being
registered
23.1 Consent of Kutak Rock (appears in their opinion filed as Exhibit 5)
23.2 Consent of Grant Thornton LLP
99.1 Flagstar Bancorp, Inc. 1997 Employees and Directors Stock Option Plan
as Amended
99.2 Form of Stock Option Agreement to be entered into with Optionees with
respect to Incentive Stock Options granted under the Flagstar Bancorp,
Inc. 1997 Employees and Directors Stock Option Plan as Amended
99.3 Form of Stock Option Agreement to be entered into with Optionees with
respect to Non-Incentive Stock Options granted under the Flagstar
Bancorp, Inc. 1997 Employees and Directors Stock Option Plan as
Amended
7
MERRILL LYNCH
SPECIAL
PROTOTYPE
DEFINED CONTRIBUTION PLAN
-----------------------------------------
Base Plan Document #03 used in conjunction with:
Nonstandardized Profit Sharing Plan with CODA
Letter Serial Number: D359287b
National Office Letter Date: 6/29/93
Nonstandardized Money Purchase Pension Plan
Letter Serial Number: D359288b
National Office Letter Date: 6/29/93
Nonstandardized Profit Sharing Plan
Letter Serial Number: D359289b
National Office Letter Date: 6/29/93
Nonstandardized Target Benefit Plan
Letter Serial Number: D361009a
National Office Letter Date: 6/29/93
This Prototype Plan and Adoption Agreement are important legal instruments with
legal and tax implications for which the Sponsor, Merrill Lynch, Pierce, Fenner
& Smith, Incorporated, does not assume responsibility. The Employer is urged to
consult with its own attorney with regard to the adoption of the Plan and its
suitability to its circumstances.
<PAGE>
INTERNAL REVENUE SERVICE
Plan Description: Prototype Nonstandardized Profit Sharing Plan with CODA
FFN: 50339816103-004 Case: 9201920 EIN: 13-5674085
BPD: 03 Plan: 004 Letter Serial No. D359287b
Merrill Lynch Pierce
Fenner & Smith Inc
Post Office Box 9038
Princeton, NJ 08543
Department of the Treasury
Washington, DC 20224
Person to Contact: Mr. Wolf
Telephone Number: (202) 622-8380
Refer Reply to: E:EP:Q:1
Date: 06/29/93
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does
not in and of itself adversely affect the plan's acceptability under Section 401
of the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole or as to the effect of other
federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan: You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of Sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the
<PAGE>
plan should contact the sponsoring organization. The plan's adoption agreement
must include the sponsoring organization's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications
Branch
2
<PAGE>
INTERNAL REVENUE SERVICE
Plan Description: Prototype Nonstandardized Money Purchase Pension Plan
FFN: 50339816103-003 Case: 9201919 EIN: 13-5674085
BPD: 03 Plan: 003 Letter Serial No. D359288b
Merrill Lynch Pierce
Fenner & Smith Inc
Post Office Box 9038
Princeton, NJ 08543
Department of the Treasury
Washington, DC 20224
Person to Contact: Mr. Wolf
Telephone Number: (202) 622-8380
Refer Reply to: E:EP:Q:1
Date: 06/29/93
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does
not in and of itself adversely affect the plan's acceptability under Section 401
of the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole or as to the effect of other
federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan: You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of Sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the
3
<PAGE>
plan should contact the sponsoring organization. The plan's adoption agreement
must include the sponsoring organization's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications
Branch
4
<PAGE>
INTERNAL REVENUE SERVICE
Plan Description: Prototype Nonstandardized Profit Sharing Plan
FFN: 50339816103-002 Case: 9201918 EIN: 13-5674085
BPD: 03 Plan: 002 Letter Serial No. D359289b
Merrill Lynch Pierce
Fenner & Smith Inc
Post Office Box 9038
Princeton, NJ 08543
Department of the Treasury
Washington, DC 20224
Person to Contact: Mr. Wolf
Telephone Number: (202) 622-8380
Refer Reply to: E:EP:Q:1
Date: 06/29/93
Dear Applicant:
In our opinion, the amendment to the form of the plan identified above does
not in and of itself adversely affect the plan's acceptability under Section 401
of the Internal Revenue Code. This opinion relates only to the amendment to the
form of the plan. It is not an opinion as to the acceptability of any other
amendment or of the form of the plan as a whole or as to the effect of other
federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan: You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
An employer who adopts the amended form of the plan after the date of the
amendment should apply for a determination letter by filing an application with
the Key District Director of Internal Revenue on Form 5307, Short Form
Application for Determination for Employee Benefit Plan.
This letter with respect to the amendment to the form of the plan does not
affect the applicability to the plan of the continued, interim and extended
reliance provisions of Sections 13 and 17.03 of Rev. Proc. 89-9, 1989-1 C.B.
780. The applicability of such provisions may be determined by reference to the
initial opinion letter issued with respect to the plan.
5
<PAGE>
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial Number
and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications
Branch
6
<PAGE>
INTERNAL REVENUE SERVICE
Plan Description: Prototype Nonstandardized Target Benefit Plan
FFN: 50339816103-001 Case: 8904027 EIN: 13-5674085
BPD: 03 Plan: 001 Letter Serial No. D361009a
Merrill Lynch Pierce
Fenner & Smith Inc
Post Office Box 9038
Princeton, NJ 08543
Department of the Treasury
Washington, DC 20224
Person to Contact: Mr. Wolf
Telephone Number: (202) 622-8380
Refer Reply to: E:EP:Q:1
Date: 06/29/93
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion related only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
You must furnish a copy of this letter to each employer who adopts this
plan: You are also required to send a copy of the approved form of the plan, any
approved amendments and related documents to each Key District Director of
Internal Revenue Service in whose jurisdiction there are adopting employers.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). Therefore, an employer adopting the form of the plan should apply for a
determination letter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for Determination
for Employee Benefit Plan.
If you, the sponsoring organization, have any questions concerning the IRS
processing of this case, please call the above telephone number. This number is
only for use of the sponsoring organization. Individual participants and/or
adopting employers with questions concerning the plan should contact the
sponsoring organization. The plan's adoption agreement must include the
sponsoring organization's address and telephone number for inquiries by adopting
employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write,
7
<PAGE>
please refer to the Letter Serial Number and File Folder Number shown in the
heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications
Branch
8
<PAGE>
ARTICLE I
DEFINITIONS
As used in this Prototype Plan and in each Adoption Agreement, each of the
following terms shall have the meaning for that term set forth in this Article
I:
"Account" means a separate Elective Deferrals Account, Employee Thrift
Contributions Account, Employer Contributions Account, Matching 401(k)
Contributions Account, Matching Thrift Contributions Account, Participant
Voluntary Nondeductible Contributions Account, Qualified Matching Contributions
Account, Qualified Nonelective Contributions Account, Rollover Contribution
Account, and Transferred Account, as the case may be.
"Account Balance" means the value of an Account determined as of the
applicable Valuation Date.
"ACP Test" means the Contribution Percentage test that is set forth in
Section 3.05(b) of the Plan.
"Actual Deferral Percentage" means the ratio (expressed as a percentage) of
(a) Elective Deferrals made on behalf of an Eligible Participant for the Plan
Year (including Excess Elective Deferrals of Highly Compensated Employees and,
at the election of the Employer, Qualified Nonelective Contributions and/or
Qualified Matching Contributions), but excluding (i) Excess Elective Deferrals
of Nonhighly Compensated Employees that arise solely from Elective Deferrals
made under the Plan or plans of the Employer or an Affiliate and (ii) Elective
Deferrals that are taken into account in the ACP Test (provided the ADP Test is
satisfied with or without the exclusion of such Elective Deferrals) to (b) the
Participant's CODA Compensation for the Plan Year (whether or not the Eligible
Employee was a Participant for the entire Plan Year). The Actual Deferral
Percentage of an Eligible Participant who would be a Participant but for the
failure to make an Elective Deferral is zero.
"Adjustment Factor" means the cost of living adjustment factor prescribed
by the Secretary of the Treasury under Code Section 415(d) for years beginning
after December 31, 1987, as applied to such items and in such manner as the
Secretary shall provide.
"Administrator" means the Employer, unless otherwise specified by duly
authorized action by the Employer.
"Adoption Agreement" means the document so designated with respect to this
Prototype Plan that is executed by the Employer, as amended from time to time.
"ADP Test" means the Average Actual Deferral Percentage test set forth in
Section 3.04(b)(ii) of the Plan.
"Affiliate" means any corporation or unincorporated trade or business
(other than the Employer) while it is:
9
<PAGE>
(a) a member of a "controlled group of corporations" (within the
meaning of Code Section 414(b)) of which the Employer is a member;
(b) a member of any trade or business under "common control" (within
the meaning of Code Section 414(c)) with the Employer;
(c) a member of an "affiliated service group" (as that term is defined
in Code Section 414(m)) includes the Employer; or
(d) any other entity required to be aggregated with the Employer
pursuant to Code Section 414(o). With respect to Section 3.09, "Affiliate"
status shall be determined in accordance with Code Section 415(h).
"Annuity Contract" means an individual or group annuity contract issued by
an insurance company providing periodic benefits, whether fixed, variable or
both, the benefits or value of which a Participant or Beneficiary cannot
transfer, sell, assign, discount or pledge as collateral for a loan or as
security for the performance of an obligation, or for any other purpose, to any
person other than the issuer thereof. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or Spouse shall comply
with the requirements of the Plan.
"Average Actual Deferral Percentage" means for any group of Eligible
Participants, the average (expressed as a percentage) of the Actual Deferral
Percentages for each of the Eligible Participants in that group, including those
not making Elective Deferrals.
"Average Contribution Percentage" means for any group of Eligible
Participants, the average (expressed as a percentage) of the Contribution
Percentages for each of the Participants in that group, including those on whose
behalf Matching 401(k) Contributions and/or Matching Thrift Contributions, if
applicable, are not being made.
"Beneficiary" means a person or persons entitled to receive any payment of
benefits pursuant to Article VII.
"Benefit Commencement Date" means the first day, determined pursuant to
Article V, for which a Participant or Beneficiary receives or begins to receive
payment in any form of distribution as a result of death, Disability,
termination of Employment, Early Retirement, Plan termination or upon or after
Normal Retirement Age or age 70 1/2.
"CODA" means a cash or deferred arrangement pursuant to Code Section 401(k)
which is part of a profit sharing plan and under which an Eligible Participant
may elect to make Elective Deferrals in accordance with Section 3.04(a).
"CODA Compensation" means solely for purposes of determining the Actual
Deferral Percentage and the Contribution Percentage, CODA Compensation shall be
Compensation excluding or including "elective contributions" as specified in the
Adoption Agreement. The preceding sentence shall be effective for Plan Years
beginning on or after January 1, 1989.
10
<PAGE>
"Code" means the Internal Revenue Code of 1986, as now in effect or as
amended from time to time. A reference to a specific provision of the Code shall
include such provision and any applicable regulation pertaining thereto.
"Compensation" means for purposes of contributions, Compensation shall be
defined in the Adoption Agreement and Section 3.09(a)(vii), subject to any
exclusions elected under Section 1AA(d) of the Adoption Agreement, Section
3.01(d) and the following modifications:
(a) For a Self-Employed Individual, Compensation means his or her
Earned Income, provided that if the Self-Employed Individual is not a
Participant for an entire Plan Year, his or her Compensation for that Plan
Year shall be his or her Earned Income for that Plan Year multiplied by a
fraction the numerator of which is the number of days he or she is a
Participant during the Plan Year and the denominator of which is the number
of days in the Plan Year.
(b) Compensation of each Participant taken into account under the Plan
for any Plan Year beginning after December 21, 1988 shall be limited to the
first $200,000 as adjusted by the Adjustment Factor. In determining the
Compensation of a Participant for purposes of this limitation, the rule of
Code Section 414(q)(6) shall apply, except in applying such rules, the term
"family" shall include only the Spouse of the Participant and any lineal
descendants of the Participant who have not attained the age of 19 before
the close of the year. If, as a result of the application of such rules,
the adjusted $200,000 limitation is exceeded (except for purposes of
determining the portion of Compensation up to the Integration Level if the
Plan is integrated with Social Security), the limitation shall be prorated
among the affected Participants in proportion to each such Participant's
Compensation as determined in this definition prior to the application of
this limitation. In a manner applied uniformly to all Eligible Employees,
only Compensation during the period in which the Employee is an Eligible
Employee may be taken into account for purposes of the nondiscrimination
tests described in Code Section 401(k) and 401(m).
(c) If Compensation for any prior Plan Year is taken into account in
determining an Employee's contributions or benefits for the current year,
the Compensation for such prior year is subject to the applicable annual
compensation limit in effect for that prior year. For this purpose, for
years beginning before January 1, 1990, the applicable annual compensation
limit is $200,000.
(d) In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual compensation
of each employee taken into account under the Plan shall not exceed the
OBRA'93 annual compensation limit. The OBRA'93 annual compensation limit is
$150,000 as adjusted by the Commissioner for increases in the cost of
living in accordance with Section 401(a)(17)(B) of the Internal Revenue
Code.
The cost of living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which compensation is determined
(determination period) beginning
11
<PAGE>
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA'93 annual compensation limit will be multiplied by a fraction
the numerator of which is the number of months in the determination period and
the denominator of which is 12.
For Plan years beginning on or after January 1, 1994, any reference in the
Plan to the limitations under Section 401(a)(17) of the Code shall mean the
OBRA'93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing, in the current Plan year, the
Compensation for that prior determination period is subject to the OBRA'93
annual compensation limit in effect for that prior determination period. For
this purpose, for prior determination periods beginning before the first day of
the first Plan year beginning on or after January 1, 1994, the OBRA'93
Compensation limit is $150,000.
"Contribution Percentage" means the ratio (expressed as a percentage) of
the Participant's Contribution Percentage Amounts to the Participant's CODA
Compensation for the Plan Year, whether or not the Eligible Employee was a
Participant for the entire Plan Year.
"Contribution Percentage Amounts" means the sum of the (a) Matching 401(k)
Contributions; (b) Matching Thrift Contributions; (c) Qualified Matching
Contributions (to the extent not taken into account for purposes of the ADP
Test); (d) Employee Thrift Contributions; and (e) Participant Voluntary
Nondeductible Contributions, as applicable, made on behalf of the Participant
for the Plan Year. Such Contribution Percentage Amounts shall not include
Matching 401(k) Contributions that are forfeited either to correct Excess
Aggregate Contributions or because the contributions to which they relate are
Excess Elective Deferrals, Excess Contributions or Excess Aggregate
Contributions. The Employer may include Qualified Nonelective Contributions in
the Contribution Percentage Amounts, as specified in the Adoption Agreement.
Elective Deferrals may also be used in the Contribution Percentage Amounts so
long as the ADP Test is met before the Elective Deferrals are used in the ACP
Test and continues to be met following the exclusion of those Elective Deferrals
that are used to meet the ACP Test, as specified in the Adoption Agreement. An
Eligible Participant who does not direct an Elective Deferral or an Employee
Thrift Contribution shall be treated as an Eligible Participant on behalf of
whom no such contributions are made.
"Defined Benefit Plan" means a plan of the type defined in Code Section
414(j) maintained by the Employer or Affiliate, as applicable.
"Defined Contribution Plan" means a plan of the type defined in Code
Section 414(i) maintained by the Employer or Affiliate, as applicable.
"Disability" means disability as defined in the Adoption Agreement. The
permanence and degree of such impairment shall be supported by medical evidence.
"Early Retirement" means an actively employed Participant is eligible for
Early Retirement upon satisfying the requirements set forth in the Adoption
Agreement.
12
<PAGE>
"Early Retirement Date" means the Participant's Benefit Commencement Date
following his or her termination of Employment on or after satisfying the
requirements for Early Retirement and prior to Normal Retirement Age.
"Earned Income" means the "net earnings from self-employment" within the
meaning of Code Section 401(c)(2) of a Self-Employed Individual from the trade
or business with respect to which the Plan is established, but only if the
personal services of the Self-Employed Individual are a material
income-producing factor in that trade or business. Net earnings will be
determined without regard to items not included in gross income and the
deductions properly allocable to or chargeable against such items and are to be
reduced by contributions by the Employer or Affiliate to a Qualified Plan to the
extent deductible under Code Section 404. Where the Plan refers to Earned Income
in the context of a trade or business other than that with respect to which the
Plan is adopted, the term Earned Income means such net earnings as would be
Earned Income as defined above if that trade or business was the trade or
business with respect to which the Plan is adopted.
Net earnings shall be determined with regard to the deduction allowed to
the Employer by Code Section 164(f) for taxable years beginning after December
31, 1989.
"Elective Deferrals" means contributions made to the Plan during the Plan
Year by the Employer, at the election of the Participant, in lieu of cash
compensation and shall include contributions that are made pursuant to a 401(k)
Election. A Participant's Elective Deferral in any taxable year is the sum of
all Employer and Affiliate contributions pursuant to an election to defer under
any qualified cash or deferred arrangement, any simplified employee pension plan
or deferred arrangement as described in Code Section 402(h)(1)(B), any eligible
deferred compensation plan under Code Section 457, any plan as described under
Code Section 501(c)(18), and any Employer contributions made on behalf of a
Participant for the purchase of an annuity under Code Section 403(b) pursuant to
a salary reduction agreement. Such contributions are nonforfeitable when made
and are not distributable under the terms of the Plan to Participants or their
Beneficiaries earlier than the earlier of:
(a) termination from Employment, death or Disability of the
Participant;
(b) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
(c) disposition by the Employer or Affiliate to an unrelated
corporation of substantially all of its assets used in a trade or business
if such unrelated corporation continues to maintain the Plan after the
disposition but only with respect to Employees who continue employment with
the acquiring unrelated entity. The sale of 85% of the assets used in a
trade or business will be deemed a sale of "substantially all" the assets
used in a trade or business;
(d) sale by the Employer or Affiliate to an unrelated entity of its
interest in an Affiliate if such unrelated entity continues to maintain the
Plan but only with respect to Employees who continue employment with such
unrelated entity; or
13
<PAGE>
(e) the events specified in Part B, Article VIII of the Adoption
Agreement.
Elective Deferrals shall not include any deferrals properly distributed as
an "Excess Amount" pursuant to Section 3.09(b).
"Elective Deferrals Account" means the Account established for a
Participant pursuant to Section 3.08(a).
"Eligible Employee" means those Employees specified in the Adoption
Agreement.
"Eligible Participant" means an Eligible Employee who has met the
eligibility requirements set forth in the Adoption Agreement whether or not he
or she makes Elective Deferrals and/or Employee Thrift Contributions.
"Employee" means a Self-Employed Individual, or any individual who is
employed by the Employer in the trade or business with respect to which the Plan
is adopted and any individual who is employed by an Affiliate. Each Leased
Employee shall also be treated as an Employee of the recipient Employer. The
preceding sentence shall not apply, however, to any Leased Employer who is:
(a) covered by a money purchase pension plan maintained by the
"leasing organization" referred to in the definition of "Leased Employee"
which provides, with respect to such Leased Employee, a nonintegrated
Employer contribution rate of at least 10% of Limitation Compensation, but
including amounts contributed pursuant to a salary reduction agreement
which are excluded from the Employee's gross income under Code Section
402(a)(8), Code Section 402(h) or Code Section 403(b), immediate
participation, and full and immediate vesting; and
(b) such Leased Employees do not constitute more than 20% of the
Employer's and Affiliates' nonhighly compensated workforce. For purposes of
the Plan, all Employees will be treated as employed by a single employer.
"Employee Thrift Contributions" means employee nondeductible contributions
which are required to be eligible for a Matching Thrift Contribution. Employee
Thrift Contributions do not include Participant Voluntary Nondeductible
Contributions.
"Employee Thrift Contributions Account" means the Account established for a
Participant pursuant to Section 3.08(c).
"Employer" means the sole proprietorship, partnership or corporation that
adopts the Plan by executing the Adoption Agreement. For all purposes relating
to eligibility, participation, contributions, vesting and allocations, Employer
includes all Participating Affiliates.
"Employer Account" means the Participant's Matching 401(k) Contributions
Account, Matching Thrift Contributions Account, Employer Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective Contributions
Account, as the case may be.
14
<PAGE>
"Employer Contributions" means any contributions made by the Employer for
the Plan Year on behalf of a Participant in accordance with Section 3.01 of the
Plan.
"Employer Contributions Account" means the Account established for a
Participant pursuant to Section 3.08(b).
"Employment" means an Employee's employment or self-employment with the
Employer, Affiliate or a "leasing organization" referred to in the definition of
"Leased Employee" or, to the extent required under Code Section 414(a)(2) or as
otherwise specified by the Administrator on a uniform and nondiscriminatory
basis, any predecessor of any of them. If any of them maintains a plan of a
"predecessor employer" (within the meaning of Code Section 414(a)(1)),
employment or self-employment with the "predecessor employer" will be treated as
Employment. Additionally, if the trade or business conducted by a Self-Employed
Individual becomes incorporated, all employment with that trade or business or
with any Affiliate shall be treated as Employment with the Employer.
"Entry Date" means the date on which an Eligible Employee becomes a
Participant, as specified in the Adoption Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to a specific provision of ERISA shall
include such provision and any applicable regulation pertaining thereto.
"Excess Aggregate Contributions" means, with respect to any Plan Year, the
excess of:
(a) The aggregate Contribution Percentage Amounts, taken into account
in computing the numerator of the Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the ACP
Test (determined by reducing contributions made on behalf of Highly
Compensated Employees in the order of their Contribution Percentages
beginning with the highest of such percentages). Such determination shall
be made after first determining Excess Elective Deferrals and then
determining Excess Contributions.
"Excess Contributions" means with respect to any Plan Year, the aggregate
amount of Elective Deferrals, Qualified Nonelective Contributions and Qualified
Matching Contributions, if applicable, actually paid over to the Trust Fund on
behalf of Highly Compensated Employees for such Plan Year, over the maximum
amount of such contributions permitted by the ADP Test (determined by reducing
contributions made on behalf of Highly Compensated Employees in order of the
Actual Deferral Percentages, beginning with the highest of such percentages).
"Excess Elective Deferrals" means the amount of Elective Deferrals for a
Participant's taxable year that are includible in the gross income of the
Participant to the extent that such Elective Deferrals exceed the Code Section
402(g) dollar limitation and which the Participant allocates to the Plan
pursuant to the procedure set forth in Section 3.04(b). Excess Elective
15
<PAGE>
Deferrals shall be treated as an Annual Addition pursuant to Section 3.09,
unless such amounts are distributed no later than the first April 15th following
the close of the Participant's taxable year.
"Family Member" means an individual described in Code Section 414(q)(6)(B).
"401(k) Contributions Accounts" means the Participant's Elective Deferral
Account, Qualified Nonelective Contributions Account and/or Qualified Matching
Contributions Account, as the case may be.
"401(k) Election" means the election by a Participant to make Elective
Deferrals in accordance with Section 3.04(a).
"Fully Vested Separation" means Termination of Employment, by reason other
than death, of a Participant whose vested percentage in each Employer Account is
100%.
"Group Test" means a Trust Fund consisting of assets of any Plan maintained
and established by the Employer or an Affiliate pursuant to Section 10.14.
"Highly Compensated Employee" means the term Highly Compensated Employee
includes highly compensated active Employees and highly compensated former
employees.
(a) A highly compensated active Employee includes any Employee who
performs service for the Employer or Affiliate during the Plan Year and
who, during the look-back year (the 12-month period immediately preceding
the Plan Year):
(i) received Compensation from the Employer or Affiliate in
excess of $75,000 (as adjusted by the Adjustment Factor);
(ii) received Compensation from the Employer or Affiliate in
excess of $50,000 (as adjusted by the Adjustment Factor) and was a
member of the top-paid group for such year; or
(iii) was an officer of the Employer or Affiliate and received
Compensation during such year that is greater than 50% of the Defined
Benefit Dollar Limitation.
(b) The term Highly Compensated Employee also includes:
(i) Employees who are both described in the preceding sentence if
the term "Plan Year" is substituted for the term "look-back year" and
the Employee is one of the 100 Employees who received the most
Compensation from the Employer or Affiliate during the Plan Year; and
(ii) Employees who are 5% owners at any time during the look-back
year or Plan Year.
16
<PAGE>
(c) If no officer has received Compensation that is greater than 50%
of the Defined Benefit Dollar Limitation in effect during either the Plan
Year or look-back year, the highest paid officer of such year shall be
treated as a Highly Compensated Employee.
(d) A highly compensated former employee includes any Employee who
terminated Employment (or was deemed to have terminated) prior to the Plan
Year, performs no service for the Employer or Affiliate during the Plan
Year and was a highly compensated active employee for either the separation
year or any Plan Year ending on or after the Employee's fifty-fifth
birthday.
(e) If an Employee is, during a Plan Year or look-back year, a Family
Member of either (i) a 5% owner who is an active or former Employee or (ii)
a Highly Compensated Employee who is one of the 10 most highly compensated
employees ranked on the basis of Compensation paid by the Employer or
Affiliate during such year, then the Family Member and the 5% owner or
top-10 Highly Compensated Employee shall be aggregated. In such case, the
Family Member and 5% owner or top-10 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 5% owner or top-10 Highly Compensated
Employee. For purposes of this section, Family Member includes the Spouse,
lineal ascendants and descendants of the Employee or former employee and
the spouses of such lineal ascendants and descendants.
(f) 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 100 Employees; the number of Employees treated as
officers, and the Compensation that is considered will be made in
accordance with Code Section 414(q).
"Hour of Service" means if the Employer elects in the Adoption Agreement
the hourly record method, an Hour of Service shall include:
(a) Each hour for which an Employee is paid, or entitled to payment,
by the Employer or an Affiliate for the performance of duties for the
Employer or an Affiliate. These hours will be credited to the Employee for
each Plan Year in which the duties are performed or, with respect to
eligibility under Article II, the applicable computation period under the
definition of Year of Service in which the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer or an Affiliate due to a period of time during which no
duties are performed (irrespective of whether Employment has terminated)
due to vacation, holiday, illness, incapacity (including Disability),
layoff, jury duty, military duty or leave of absence. No more than 501
Hours of Service will be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph will be calculated and
credited pursuant to Section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference; and
17
<PAGE>
(c) Each hour for which backpay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an Affiliate.
The same Hours of Service will not be credited both under subparagraph (a)
or subparagraph (b), as the case may be, and under this subparagraph (c).
These hours will be credited to the Employee for the Year of Service or
other computation period to which the award or agreement pertains rather
than the Year of Service or other computation period in which the award,
agreement or payment is made.
If the Employer elects in the Adoption Agreement the elapsed time method,
an Hour of Service is an hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer or an Affiliate.
With respect to both the hourly record method and the elapsed time method,
in addition to service with an Affiliate, Hours of Service will also be credited
for any individual considered an Employee for purposes of the Plan under Code
Section 414(n).
"Immediately Distributable" means a Participant's Account is Immediately
Distributable if any part of such Account could be distributed to the
Participant or Participant's Surviving Spouse before the Participant attains (or
would have attained if not deceased) the later of Normal Retirement Age or age
62.
"Investment Manager" means any person appointed by the Trustee or, with
respect to Participant-Directed Assets, by the Participant or Beneficiary having
the power to direct the investment of such assets, to serve as such in
accordance with Section 10.8.
"Key Employee" means any Employee or former Employee (and the beneficiaries
of such Employee) who at any time during the "determination period" was (i) an
officer of the Employer or Affiliate, having an annual Compensation greater than
50% of the Defined Benefit Dollar Limitation for any Plan Year within the
"determination period"; (ii) an owner (or considered an owner under Code Section
318) of one of the 10 largest interests in the Employer or Affiliate if such
individual's Compensation exceeds 100% of the dollar limitation under Code
Section 415(c)(1)(A); (iii) a "5% owner" (as defined in Code Section 416(i)) of
the Employer or Affiliate; or (iv) a "l% owner" (as defined in Code Section
416(i)) of the Employer or Affiliate who has an annual Compensation of more than
$150,000. Annual Compensation means compensation as defined in Code Section
415(c)(3), but including amounts contributed by the Employer pursuant to a
salary reduction agreement which are excludable from the Employee's gross income
under Code Section 125, Code Section 402(a)(8), Code Section 402(h) or Code
Section 403(b). The "determination period" is the Plan Year containing the
"determination date" and the four preceding Plan Years. The "determination date"
for the first Plan Year is the last day of that Plan Year and for any subsequent
Plan Year is the last day of the preceding Plan Year. The determination of who
is a Key Employee will be made in accordance with Code Section 416(i).
"Leased Employee" means any individual (other than an Employee of the
recipient Employer or Affiliate) who, pursuant to an agreement between the
Employer or Affiliate and any other person (the "leasing organization") has
performed services for the Employer (or for the
18
<PAGE>
Employer or Affiliate and "related persons" determined in accordance with Code
Section 414(n)(6)) on a substantially full-time basis for a period of at least
one year, which services are of a type historically performed, in the business
field of the recipient Employer or Affiliate, by employees. Contributions or
benefits provided a Leased Employee by the leasing organization which are
attributable to services performed for the recipient Employer or Affiliate shall
be treated as provided by the recipient Employer.
"Limitation Year" means the Limitation Year as specified in the Adoption
Agreement. All Qualified Plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is amended to a different
12-consecutive-month period, the new Limitation Year must begin on a date within
the Limitation Year in which the amendment is made.
"Master or Prototype Plan" means a plan the form of which is the subject of
a favorable opinion letter from the Internal Revenue Service.
"Matching 401(k) Contribution" means any contribution made by the Employer
to this and/or any other Defined Contribution Plan for the Plan Year, by reason
of the Participant's 401(k) Election, and allocated to a Participant's Matching
401(k) Contributions Account or to a comparable account in another Defined
Contribution Plan. Matching 401(k) Contributions are subject to the distribution
provisions applicable to Employer Accounts in the Plan.
"Matching 401(k) Contributions Account" means the Account established for a
Participant pursuant to Section 3.08(d).
"Matching Thrift Contributions" means any contribution made by the Employer
for the Plan Year by reason of Employee Thrift Contributions. Matching Thrift
Contributions shall be subject to the distribution provisions applicable to
Employer Accounts in the Plan.
"Matching Thrift Contributions Account" means the Account established for a
Participant pursuant to Section 3.08(e).
"Net Profits" means the current and accumulated profits of the Employer
from the trade or business of the Employer with respect to which the Plan is
established, as determined by the Employer before deductions for federal, state
and local taxes on income and before contributions under the Plan or any other
Qualified Plan.
"Nonhighly Compensated Employee" means an Employee of the Employer who is
neither a Highly Compensated Employee nor a Family Member.
"Nonvested Separation" means Termination of Employment of a Participant
whose vested percentage in each Employer Account is 0%.
"Normal Retirement Age" means the age specified in the Adoption Agreement.
Notwithstanding the Employer's election in the Adoption Agreement, if, for Plan
Years beginning before January 1, 1988, Normal Retirement Age was determined
with reference to the anniversary of the participation commencement date (more
than five but not to exceed 10 years),
19
<PAGE>
the anniversary date for Participants who first commenced participation under
the Plan before the first Plan Year beginning on or after January 1, 1988 shall
be the earlier of (i) the tenth anniversary of the date the Participant
commenced participation in the Plan (or such anniversary as had been elected by
the Employer, if less than 10) or (ii) the fifth anniversary of the first day of
the first Plan Year beginning on or after January 1, 1988.
"Owner-Employee" means an individual who is a sole proprietor, if the
Employer is a sole proprietorship, or if the Employer is a partnership, a
partner owning more than 10% of either the capital interest or the profits
interest in the Employer, provided that, where the Plan refers to an
Owner-Employee in the context of a trade or business other than the trade or
business with respect to which the Plan is adopted, the term Owner-Employee
means a person who would be an Owner-Employee as defined above if that other
trade or business was the Employer.
"Partially Vested Separation" means Termination of Employment of a
Participant whose vested percentage in any Employer Account is less than 100%
but greater than 0%.
"Participant" means an Employee who has commenced, but not terminated,
participation in the Plan as provided in Article II.
"Participant Contributions Account" means the Participant's Participant
Voluntary Nondeductible Contributions Account and/or Employee Thrift
Contributions Account, as the case may be.
"Participant-Direct Assets" means the assets of an Account which are
invested, as described in Section 10.05(a), according to the direction of the
Participant or the Participant's Beneficiary, as the case may be, in either
individually selected investments or in commingled funds or in shares of
regulated investment companies.
"Participant Voluntary Nondeductible Contributions" means any voluntary
nondeductible contributions made in cash by a Participant to the Plan other than
Employee Thrift Contributions.
"Participant Voluntary Nondeductible Contributions Account" means the
Account established for a Participant pursuant to Section 3.08(f).
"Participating Affiliate" means any Affiliate or any other employer
designated as such by the Employer and, by duly authorized action, that has
adopted the Plan with the consent of the Employer and has not withdrawn
therefrom.
"Period of Severance" means for purposes of the hourly records method, a
Period of Severance is a period equal to the number of consecutive Plan Years
or, with respect to eligibility, the applicable computation period under the
definition of Year of Service, in which an Employee has 500 Hours of Service or
less. The Period of Severance shall be determined on the basis of Hours of
Service and shall commence with the first Plan Year in which the Employee has
500 Hours of Service or less. With respect to any period of absence during which
a Period of Severance does not commence, the Participant shall be credited with
the Hours of Service (up to
20
<PAGE>
a maximum of 501 Hours of Service in a Plan Year) which would otherwise have
been credited to him or her but for such absence, or if such Hours of Service
cannot be determined, eight Hours of Service for each day of absence.
For purposes of the elapsed time method, a Period of Severance is a
continuous period of at least 12 consecutive months during which an individual's
Employment is not continuing, beginning on the date an Employee retires, quits
or is discharged or, if earlier, the first 12-month anniversary of the date that
the individual is otherwise first absent from service (with or without pay) for
any other reason and ending on the date the individual again performs an Hour of
Service.
Anything in the definition thereof to the contrary notwithstanding, a
Period of Severance shall not commence if the Participant is:
(a) On an authorized leave of absence in accordance with standard
personnel policies applied in a nondiscriminatory manner to all Employees
similarly situated and returns to active Employment by the Employer or
Affiliate immediately upon the expiration of such leave of absence;
(b) On a military leave while such Employee's reemployment rights are
protected by law and returns to active Employment within 90 days after his
or her discharge or release (or such longer period as may be prescribed by
law); or
(c) Absent from work by reason of (i) the pregnancy of the Employee,
(ii) the birth of a child of the Employee, or (iii) the placement of a
child with the Employment in connection with the adoption of such child by
such Employee or (iv) the care of such child for a period beginning
immediately following such birth or placement. In determining when such a
Participant's Period of Severance begins, the Participant will be credited
with (A) for purposes of the elapsed time method, the 12-consecutive month
period beginning on the first anniversary of the first date of such absence
or (B) for purposes of the hourly records method, the Hours of Service he
or she would normally have had but for such absence, or, if such Hours
cannot be determined, eight Hours of Service for each day of such absence;
provided, however, that such Hours of Service shall not exceed 501 and
shall be credited only in the year in which such absence began if such
crediting would prevent the Participant from incurring a Period of
Severance in that year or, in any other case, shall be credited in the
immediately following year.
"Plan" means the plan established by the Employer in the form of this
Prototype Plan and the applicable Adoption Agreement executed by the Employer.
The Plan shall have the name specified in the Adoption Agreement.
"Plan Year" means each 12-consecutive month period ending on the date
specified in the Adoption Agreement during any part of which the Plan is in
effect.
"Prototype Plan" means the Merrill Lynch Special Prototype Defined
Contribution Plan set forth in this document, as amended or restated from time
to time.
21
<PAGE>
"Qualified Joint and Survivor Annuity" means an immediate annuity for the
life of Participant with a survivor annuity continuing after the Participant's
death to the Participant's Surviving Spouse for the Surviving Spouse's life in
an amount equal to 50% of the amount of the annuity payable during the joint
lives of the Participant and such Surviving Spouse and which is the actuarial
equivalent of a single life annuity which could be provided for the Participant
under an Annuity Contract purchased with the aggregate vested Account Balances
of the Participant's Accounts at the Benefit Commencement Date.
"Qualified Matching Contributions" means Matching Contributions which,
pursuant to the election made by the Employer, and in accordance with Code
Section 401(m), are nonforfeitable when made and subject to the limitation on
distribution set forth in the definition of Qualified Nonelective Contributions.
"Qualified Matching Contributions Account" means the Account established
for a Participant pursuant to Section 3.08(g).
"Qualified Nonelective Contributions" means contributions (other than
Matching 401(k) Contributions, Qualified Matching 401(k) Contributions or
Elective Deferrals), if any, made by the Employer which the Participant may not
elect to receive in cash until distributed from the Plan, which are
nonforfeitable when made, and which are not distributable under the terms of the
Plan to Participants or their Beneficiaries earlier than the earlier of:
(a) termination of Employment death, or Disability of the Participant;
(b) attainment of the age 59 1/2 by the Participant;
(c) termination of the Plan without establishment of another Defined
Contribution Plan by the Employer or an Affiliate;
(d) disposition by the Employer or Participating Affiliate to an
unrelated corporation of substantially all of its assets used in a trade or
business if such unrelated corporation continues to maintain the Plan after
the disposition but only with respect to Employees who continue employment
with the acquiring unrelated entity. The sale of 85% of the assets used in
a trade or business will be deemed a sale of "substantially all" the assets
used in a trade or business;
(e) sale by the Employer to an unrelated entity of its interest in an
Affiliate if such unrelated entity continues to maintain the Plan but only
with respect to Employees who continue employment with such unrelated
entity, and
(f) effective for Plan Years beginning before January 1, 1989, upon
the hardship of the Participant.
"Qualified Nonelective Contributions Account" means the Account established
for a Participant pursuant to Section 3.08(g).
22
<PAGE>
"Qualified Plan" means a Defined Benefit Plan or Defined Contribution Plan.
"Qualifying Employer Securities" means employer securities, as that term is
defined in ERISA Section 407(d)(5).
"Rollover Contribution" means a contribution described in Section 3.04.
"Rollover Contributions Account" means the Account established for a
Participant pursuant to Section 3.08(i).
"Self-Employed Individual" means an individual who has Earned Income for
the Plan Year involved from the trade or business for which the Plan is
established or who would have had such Earned Income but for the fact that the
trade or business with respect to which the Plan is established had no Net
Profits for that Plan Year.
"Social Security Retirement Age" means age 65 in the case of a Participant
attaining age 62 before January 1, 2000 (i.e., born before January 1, 1938), age
66 for a Participant attaining age 62 after December 31, 1999, and before
January 1, 2017 (i.e., born after December 31, 1937, but before January 1,
1955), and age 67 for a Participant attaining age 62 after December 31, 2016
(i.e., born after December 31, 1954).
"Sponsor" means the mass submitter, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and any successor thereto, and any other qualifying sponsoring
organization who sponsors with the consent of the mass submitter, the Prototype
Plan and makes the Prototype Plan available for adoption by Employers.
"Spouse" means the person married to a Participant, provided that a former
spouse will be treated as the Spouse to the extent provided under a "qualified
domestic relations order" (or a "domestic relations order" treated as such) as
referred to in Section 12.06.
"Surviving Spouse" means the person married to a Participant on the
earliest of (a) the date of the Participant's death, (b) the Participant's
Benefit Commencement Date, or (c) the date on which an Annuity Contract is
purchased for the Participant providing benefits under the Plan. Anything
contained herein to the contrary notwithstanding, a former spouse will be
treated as the Surviving Spouse to the extent provided under a "qualified
domestic relations order" (or a "domestic relations order" treated as such) as
referred to in Section 12.06.
"Taxable Wage Base" means the maximum amount of earnings which may be
considered "wages" for the Plan Year involved under Code Section 3121(a)(1).
"Transferred Account" means the Account established for a Participant
pursuant to Section 3.08(j).
"Trust" means the trust established under the Plan to which Plan
contributions are made and in which Plan assets are held.
"Trust Fund" means the assets of the Trust held by or in the name of the
Trustee.
23
<PAGE>
"Trustee" means the person appointed as Trustee pursuant to Article X and
any successor Trustee.
"Valuation Date" means the last business day of each Plan Year, the date
specified in the Adoption Agreement or determined pursuant to Section 10.06, if
applicable, and each other date as may be determined by the Administrator.
"Vesting Service" means the Years of Service credited to a Participant
under Article IV for purposes of determining the Participant's vested percentage
in any Employer Account established for the Participant.
"Years of Service" means if the Employer elects the hourly records method
in the Adoption Agreement, an Employee shall be credited with one Year of
Service for each Plan Year in which he or she has 1,000 Hours of Service. Solely
for purposes of eligibility to participate, an Employee shall be credited with a
Year of Service on the last day of the 12-consecutive month period which begins
on the first day on which he or she has an Hour of Service, if he or she has at
least 1,000 Hours of Service in that period. If an Employee fails to be credited
with a Year of Service on such date, he or she shall be credited with a Year of
Service on the last day of each succeeding 12-consecutive-month period.
If the Employer elects the elapsed time method in the Adoption Agreement,
the Employee's Years of Service shall be a span of service equal to the sum of:
(a) the period commencing on the date the Employee first performs an
Hour of Service and ending on the date he or she quits, retires, is
discharged, dies or, if earlier, the 12-month anniversary of the date on
which the Employee was otherwise first absent from service (with or without
pay) for any other reason; and
(b)(i) if the Employee quits, retires or is discharged, the period
commencing on the date the Employee terminated his or her Employment and
ending on the first date on which he or she again performs an Hour of
Service, if such date is within 12 months of the date on which he or she
last performed an Hour of Service; or
(ii) if the Employee is absent from work for any other reason and,
within 12 months of the first day of such absence, the Employee quits,
retires or is discharged, the period commencing on the first day of such
absence and ending on the first day he or she again performs an Hour of
Service if such day is within 12 months of the date his or her absence
began.
With respect to both the elapsed time method and the hourly record method,
service with a predecessor employer, determined in the manner in which the rules
of the Plan would have credited such service had the Participant earned such
service under the terms of the Plan, may be included in Years of Service, as
specified in the Adoption Agreement.
24
<PAGE>
ARTICLE II
PARTICIPATION
SECTION 2.01. ADMISSION AS A PARTICIPANT.
(a) An Eligible Employee shall become a Participant on the Entry Date
coincident with or next following the date on which he or she meets the
eligibility requirements specified in the Adoption Agreement; provided,
however, that:
(i) an Eligible Employee who has met the eligibility requirements
as of the first day of the Plan Year in which the Plan is adopted as a
new Plan shall become a Participant as of such date;
(ii) an Eligible Employee who had met the eligibility
requirements of a plan that is restated and/or amended to become the
Plan shall become a Participant as of the date the Plan is adopted;
and
(iii) if selected in the Adoption Agreement, an Eligible Employee
shall become a Participant on the effective date of the Plan providing
he or she is an Eligible Employee on such date.
(b) An Employee who did not become a Participant on the Entry Date
coincident with or next following the day on which he or she met the
eligibility requirements because he or she was not then an Eligible
Employee shall become a Participant on the first day on which he or she
again becomes an Eligible Employee unless determined otherwise in
accordance with Section 2.03(a) of the Plan.
(c) If the Plan includes a CODA or thrift feature, in addition to the
participation requirements set forth in Section 2.01(a), an Eligible
Employee shall become a Participant upon filing his or her 401(k) Election
or election to make Employee Thrift Contributions with the Administrator.
An election shall not be required if the Employer has elected to make
contributions to an Employer Account and/or Qualified Nonelective
Contributions with respect to all Eligible Participants.
(d) An individual who has ceased to be a Participant and who again
becomes an Eligible Employee shall become a Participant immediately upon
reemployment as an Eligible Employee unless determined otherwise in
accordance with Section 2.03(a) of the Plan.
SECTION 2.02. ROLLOVER MEMBERSHIP AND TRUST-TO-TRUST TRANSFER. An Eligible
Employee who makes a Rollover Contribution or a trust-to-trust transfer shall
become a Participant as of the date of such contribution or transfer even if he
or she had not previously become a Participant. Such an Eligible Employee shall
be a Participant only for the purposes of such Rollover Contribution or transfer
and shall not be eligible to share in contributions made by the Employer until
he or she has become a Participant in accordance with Section 2.01.
25
<PAGE>
SECTION 2.03. CREDITING OF SERVICE FOR ELIGIBILITY PURPOSES.
(a) For purposes of eligibility to participate, an Eligible Employee
or Participant without any vested interest in any Employer Account and
without an Elective Deferrals Account who terminates Employment shall lose
credit for his or her Years of Service prior to such termination of
Employment if his or her Period of Severance equals or exceeds five years
or, if greater, the aggregate number of Years of Service.
(b) For purposes of eligibility to participate, a Participant who has
a vested interest in any Employer Amount and who terminates Employment
shall retain credit for his or her Years of Service prior to such
termination of Employment without regard to the length of his or her Period
of Severance. In the event such Participant returns to Employment, he or
she shall participate immediately.
(c) A former Eligible Employee who was not a Participant who again
becomes an Eligible Employee with no Years of Service to his or her credit
shall be treated as a new Employee.
SECTION 2.04. TERMINATION OF PARTICIPATION. A Participant shall cease to be
a Participant:
(a) upon his or her death;
(b) upon the payment to him or her of all nonforfeitable benefits due
to him or her under the Plan, whether directly or by the purchase of an
Annuity Contract; or
(c) upon his or her Nonvested Separation.
SECTION 2.05. LIMITATION FOR OWNER-EMPLOYEE.
(a) If the Plan provides contributions or benefits for one or more
Owner-Employees who control the trade or business for which the Plan is
established and who also control as an Owner-Employee or as Owner-Employees
one or more other trades or businesses, the Plan and the plan established
for each such other trade or business must, when looked at as a single
plan, satisfy the requirements of Code Sections 401(a) and (d) with respect
to the employees of this and all of such other trades or businesses.
(b) If the Plan provides contributions or benefits for one or more
Owner-Employees who control as an Owner-Employee or as Owner-Employees one
or more other trades or businesses, the employees of the other trades or
businesses must be included in a plan which satisfies the requirements of
Code Sections 401(a) and (d) and which provides contributions and benefits
for the employees of such other trades or businesses not less favorable
than the contributions and benefits provided for Owner-Employees under the
Plan.
26
<PAGE>
(c) If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or benefits
of the employees under the plan of the trades or businesses which are
controlled must be as favorable as those provided for such individual under
the most favorable plan of the trade or business which is not controlled.
(d) For purposes of the preceding three subsections, an
Owner-Employee, or two or more Owner-Employees, will be considered to
control a trade or business if the Owner-Employee, or two or more
Owner-Employees together:
(i) own the entire interest in an unincorporated trade or
business; or
(ii) in the case of a partnership, own more than 50% of either
the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees, shall be treated as owning any interest in a partnership, which
is owned, directly or indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, is considered to control within the meaning of
the preceding sentence. SECTION 2.06. CORRECTIONS WITH REGARD TO PARTICIPATION.
(a) If in any Plan Year an Eligible Employee who should be included as
a Participant in the Plan is erroneously omitted and discovery of such
omission is not made until after a contribution by the Employer for the
year has been made, the Employer shall make a subsequent contribution with
respect to the omitted Eligible Employee in the amount which would have
contributed with respect to such Eligible Employee had he or she not been
omitted. Such contribution shall be made whether or not it is deductible in
whole or in part in any taxable year under applicable provisions of the
Code. It shall be the responsibility of the Employer and Administrator to
take any and all actions as required by this Section 2.06(a).
(b) If in any Plan Year any person who should not have been included
as a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has
been made, the amount contributed on behalf of such ineligible person shall
constitute a forfeiture for the Plan Year in which the discovery is made.
It shall be the responsibility of the Employer and Administrator to take
any and all actions as required by this Section 2.06(b).
SECTION 2.07. PROVISION OF INFORMATION. Each Employee shall execute such
forms as may reasonably be required by the Administrator and shall make
available to the Administrator any information the Administrator may reasonably
request in this regard. By virtue of his or her participation in the Plan, an
Employee agrees, on his or her own behalf and on behalf of all persons who may
have or claim any right by reason of the Employee's participation in the Plan,
to be bound by all provisions of the Plan.
27
<PAGE>
ARTICLE III
CONTRIBUTIONS AND ACCOUNT ALLOCATIONS
SECTION 3.01. EMPLOYER CONTRIBUTIONS AND ALLOCATIONS.
(a) If the Plan is a profit-sharing plan, the Employer will contribute
cash and/or Qualifying Employer Securities to the Trust Fund, in such
amount, if any, as specified in the Adoption Agreement and with respect to
Qualifying Employer Securities as is consistent with Sections 10.04(b) and
10.04(c). If the Plan is a profit-sharing plan, Net Profits may be
necessary for an Employer to make contributions, as specified in the
Adoption Agreement Employer Contributions for a Plan Year will be allocated
no later than the last day of the Plan Year to the Employer Contributions
Account of Participants eligible for an allocation in the manner specified
in the Adoption Agreement. A not-for-profit corporation may adopt a
profit-sharing plan as an incentive plan; provided, however, that such a
plan may not contain a CODA feature unless otherwise permitted by law.
(b) If the Plan is a money purchase pension plan, the Employer will
contribute cash to the Trust Fund in an amount equal to that percentage of
the Compensation of each Participant eligible for an allocation of Employer
contributions for that Plan Year as specified in the Adoption Agreement.
Employer Contributions for the Plan Year will be allocated as of the last
day of the Plan Year to the Employer Contributions Accounts of Participants
eligible for an allocation and entitled to share in such contributions in
the manner specified in the Adoption Agreement.
(c) If the Plan is a target benefit plan, the Employer will contribute
cash to the Trust Fund in an amount specified in the Adoption Agreement.
The amount contributed with respect to the targeted benefit of each
Participant eligible for an allocation for that Plan Year will be allocated
as of the last day of the Plan Year to the Participant's Employer
Contributions Account in the manner specified in the Adoption Agreement.
(d) If the Employer elects in the Adoption Agreement to make
contributions on behalf of a Participant whose Employment terminated due to
Disability, "Compensation" shall mean, with respect to such Participant,
the Compensation he or she would have received for the entire calendar year
in which the Disability occurred if he or she had been paid for such year
at the rate at which he or she was being paid immediately prior to such
Disability. Employer Contributions may be taken into account only if the
Participant is a Nonhighly Compensated Employee and contributions made on
his or her behalf are nonforfeitable.
(e) If an Employer has adopted more than one Adoption Agreement, or
has adopted a plan pursuant to the Merrill Lynch Special Prototype Defined
Benefit Plan and Trust, only one Adoption Agreement may be integrated with
Social Security.
28
<PAGE>
(f) For purposes of the Plan, contributions provided by the "leasing
organization" referred to under Article I in the definition of "Employer
Contributions Account" of a Leased Employee which are attributable to
services performed for the Employer shall be treated as provided by the
Employer.
SECTION 3.02. PARTICIPANT VOLUNTARY NONDEDUCTIBLE CONTRIBUTIONS.
(a) If elected by the Employer in the Adoption Agreement, each
Participant while actively employed may make Participant Voluntary
Nondeductible Contributions in cash in a dollar amount or a percentage of
Compensation which does not, when included in the Contribution Percentage
Amount, exceed the limitations set forth in Code Section 401(m).
(b) Participant Voluntary Nondeductible Contributions shall be made in
accordance with rules and procedures adopted by the Administrator.
SECTION 3.03. ROLLOVER CONTRIBUTIONS AND TRUST-TO-TRUST TRANSFERS.
(a) Any Eligible Employee or Participant may make a Rollover
Contribution under the Plan. A Rollover Contribution shall be in cash or in
other property acceptable to the Trustee and shall be a contribution
attributable to (i) a "qualified total distribution" (as defined in Code
Section 402(a)(5)), distributed to the contributing Employee under Code
Section 402(a)(5) from a Qualified Plan or distributed to the Employee
under Code Section 403(a)(4) from an "employee annuity" or referred to in
that section, or (b) a payout or distribution to the Employee referred to
in Code Section 408(d)(3) from an "individual retirement account" or an
"individual retirement annuity" described, respectively, in Code Section
409(a) or Section 408(b) consisting exclusively of amounts attributable to
"qualified total distributions" (as defined in Code Section 402(a)(5)) from
a Qualified Plan. The Plan shall not accept a Rollover Contribution
attributable to any accumulated deductible employee contributions as
defined by Code Section 72(o)(5)(B). The Trustee may condition acceptance
of a Rollover Contribution upon receipt of such documents as it may
require. In the event that an Employee makes a contribution pursuant to
this Section 3.03 intended to be a Rollover Contribution but which did not
qualify as a Rollover Contribution, the Trustee shall distribute to the
Employee as soon as practicable after that conclusion is reached the entire
Account balance in his or her Rollover Contributions Account deriving from
such contributions determined as of the valuation date coincident with or
immediately preceding such discovery.
(b) Any Eligible Employee or Participant may direct the Administrator
to direct the Trustee to accept a transfer to the Trust Fund from another
trust established pursuant to another Qualified Plan of all or any part of
the assets held in such other trust. The Plan shall not accept a direct
transfer attributable to accumulated deductible employee contributions as
defined by Code Section 72(o)(5)(B). The Trustee may condition acceptance
of such a trust-to-trust transfer upon receipt of such documents as it may
require.
29
<PAGE>
SECTION 3.04. SECTION 401(k) CONTRIBUTIONS AND ACCOUNT ALLOCATIONS.
(a) ELECTIVE DEFERRALS.
(i) Amount of Elective Deferrals. Subject to the limitations
contained in Section 3.04(b), the Employer will contribute cash to the
Trust Fund in an amount equal to:
(A) as specified on the participant's 401(k) Election form,
the specific dollar amount, or the deferral percentage multiplied
by each such Participant's Compensation; or
(B) a bonus contribution made pursuant to Section
3.04(a)(iii).
(ii) The amount elected by a Participant pursuant to a 401(k)
Election shall be determined within the limits specified in the
Adoption Agreement. The 401(k) Election shall be made on a form
provided by the Administrator but no election shall be effective prior
to approval by the Administrator. The Administrator may reduce the
amount of any 401(k) Election, or make such other modifications as
necessary, so that the Plan complies with the provisions of the Code.
A Participant's 401(k) Election shall remain in effect until modified
or terminate. Modification or termination of a 401(k) Election shall
be made at such time as specified in the Adoption Agreement.
(iii) If elected by the Employer in the Adoption Agreement, an
Eligible Employee may make a 401(k) Election to have an amount
withheld up to the amount of any bonus payable for such Plan Year and
direct the Employer to contribute the amount so withheld to his or her
Elective Deferrals Account.
(b) LIMITATION ON ELECTIVE DEFERRALS.
(i) Maximum Amount of Elective Deferrals and Distribution of
Excess Elective Deferrals.
(A) No Participant shall be permitted to have Elective
Deferrals made under the Plan, or any other Qualified Plan
maintained by the Employer, during any Plan Year in excess of the
dollar limitation contained in Code Section 402(g) in effect at
the beginning of the Participant's taxable year.
(B) Notwithstanding any other provision of the Plan, Excess
Elective Deferrals made to the Plan or assigned to the Plan, plus
any income and minus any loss allocable thereto, shall be
distributed no later than April 15, 1988, and each April 15
thereafter, to Participants to whose accounts Excess Elective
Deferrals were designated for the preceding Plan
30
<PAGE>
Year and who claim Excess Elective Deferrals for such taxable
year. Excess Elective Deferrals shall be treated as Annual
Additions.
(C) Claims. A Participant may designate to the Plan any
amount of his or her Elective Deferrals as Excess Elective
Deferrals during his or her taxable year. A Participant's claim
shall be in writing, shall be submitted to the Administrator no
later than March 1, shall specify the Participant's Excess
Elective Deferral for the preceding Plan Year, and shall be
accompanied by the Participant's written statement that, if such
amounts are not distributed, such Excess Elective Deferral, when
added to amounts deferred under other plans or arrangements
described in Code Section 401(k), Code Section 408(k), Code
Section 403(b) or Code Section 457, exceeds the limit imposed on
the Participant by Code Section 402(g) for the year in which the
deferral occurred. A Participant is deemed to notify the
Administrator of any Excess Elective Deferrals that arise by
taking into account only those Elective Deferrals made to the
Plan and any other plans of the Employer or an Affiliate.
(D) Determination of Income or Loss. Excess Elective
Deferrals shall be adjusted for income or loss up to the date of
distribution. The income or loss allocable to Participant's
Excess Elective Deferrals is the sum of (1) the income or loss
allocable to the Participant's Elective Deferrals Account for the
Participant's taxable year multiplied by a fraction the numerator
of which is the Participant's Excess Elective Deferrals for the
Participant's taxable year and the denominator of which is the
Account Balance of the Participant's Elective Deferrals Account
without regard to any income or loss occurring during such
taxable year, and (2) 10% of the amount determined under (A)
multiplied by the number of whole calendar months between the end
of the Participant's taxable year and the date of distribution,
counting the month of distribution if distribution occurs after
the fifteenth of such month.
Anything in the preceding paragraph of this Section 3.04(b)(i)(D)
to the contrary notwithstanding, any reasonable method for computing
the income or loss allocable to Excess Elective Deferrals may be used,
provided that such method is used consistently for all Participants
and for all corrective distributions under the Plan, and is used by
the Plan for allocating income or loss to Participants' Accounts.
Income or loss allocable to the period between the end of the taxable
year and the date of distribution may be disregarded in determining
income or loss.
(ii) ADP Test. The Average Actual Deferral Percentage for Highly
Compensated Employees for each Plan Year and the Average Actual
Deferral Percentage for Nonhighly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
31
<PAGE>
(A) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage for
Eligible Participants who are Nonhighly Compensated Employees for
the Plan Year multiplied by 1.25; or
(B) The Average Actual Deferral Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Actual Deferral Percentage for
Eligible Participants who are Nonhighly Compensated Employees for
the Plan Year multiplied by 2.0, provided that the Average Actual
Deferral Percentage for Eligible Participants who are Highly
Compensated Employees does not exceed the Average Actual Deferral
Percentage for Participants who are Nonhighly Compensated
Employees by more than two percentage points.
(iii) Special Actual Deferral Percentage Rules.
(A) The Actual Deferral Percentage for any Eligible
Participant who is a Highly Compensated Employee for the Plan
Year and who is eligible to have Elective Deferrals and Qualified
Matching Contributions or Qualified Nonelective Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP
Test, allocated to his or her accounts under two or more plans or
arrangements described in Code Section 401(k) that are maintained
by the Employer shall be determined as if all such Elective
Deferrals, Qualified Matching Contributions and Qualified
Nonelective Contributions were made under a single arrangement.
If a Highly Compensated Employee participates in two or more cash
or deferred arrangements that have different plan years, all cash
or deferred arrangements ending with or within the same calendar
year shall be treated as a single arrangement.
(B) In the event that the Plan satisfies the requirements of
Code Section 401(k), Code Section 401(a)(4) or Code Section
410(b) only if aggregated with one or more other qualified plans,
or if one or more other qualified plans satisfy the requirements
of such Code Sections only if aggregated with the Plan, then this
Section shall be applied by determining the Actual Deferral
Percentage of Employees as if all such qualified plans were a
single qualified plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy Code
Section 401(k) only if they have the same plan year.
(C) For purposes of determining the Actual Deferral
Percentage of an Eligible Participant who is a 5% owner or one of
the 10 most highly paid Highly Compensated Employees, the
Elective Deferrals (and
32
<PAGE>
Qualified Matching Contributions or Qualified Nonelective
Contributions, or both, if treated as Elective Deferrals for
purposes of one of the tests referred to in Section 3.04(b)(ii))
and CODA Compensation of such Participant shall include the
Elective Deferrals (and, if applicable, Qualified Matching
Contributions, Qualified Nonelective Contributions) and CODA
Compensation for the Plan Year of Family Members. Family Members
with respect to such Highly Compensated Employees shall be
disregarded as separate employees in determining the Actual
Deferral Percentage both for Eligible Participants who are
Nonhighly Compensated Employees and for Eligible Participants who
are Highly Compensated Employees.
(D) For purposes of determining the ADP Test, Elective
Deferrals, Qualified Matching Contributions and Qualified
Nonelective Contributions must be made before the last day of the
12-month period immediately following the Plan Year to which such
contributions relate.
(E) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP Test and the amount of
Qualified Nonelective Contributions and/or Qualified Matching
Contribution used in such test.
(F) The determination and treatment of the Elective
Deferrals, Qualified Matching Contributions and Qualified
Nonelective Contributions used in the ADP Test shall satisfy such
other requirements as may be prescribed by the Secretary of the
Treasury.
(iv) Distribution of Excess Contributions.
(A) In General. Notwithstanding any other provision of the
Plan except Section 3.04(b)(v), Excess Contributions, plus any
income and minus any loss allocable thereto, shall be distributed
no later than the last day of each Plan Year, beginning after
December 31, 1987, to Participants to whose Accounts Elective
Deferrals, Qualified Matching Contributions and Qualified
Nonelective Contributions were allocated for the preceding Plan
Year.1 Excess Contributions of Participants who are subject to
the Family Member aggregation rules shall be allocated among the
Family Member in proportion to the Elective Deferrals (and
amounts treated as Elective Deferrals) of each Family Member that
is combined to determine
- --------------------------
1Distribution of Excess Contributions on or before the last day of the Plan Year
after the Plan Year in which such excess amounts arose is required under Code
Section 401(k)(8) if the Plan is to maintain its tax-qualified status. However,
if such excess amounts, plus any income and minus any loss allocable thereto,
are distributed more than two and one-half months after the last day of the Plan
Year in which such excess amounts arose, then Code Section 4979 imposes a 10%
excise tax on the employer maintaining the plan with respect to such amounts.
33
<PAGE>
the combined Actual Deferral Percentage. Excess Contributions
shall be treated as Annual Additions.
(B) Determination of Income or Loss. Excess Contributions
shall be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess
Contributions is the sum of:
(1) the income or loss allocable to the Participant's
Elective Deferrals Account (and, if applicable, the
Qualified Nonelective Contributions Account or the Qualified
Matching Contributions Account or both) for the Plan Year
multiplied by a fraction the numerator of which is such
Participant's Excess Contributions for the year and the
denominator of which is the Account Balances of
Participant's Elective Deferrals Account, Qualified
Nonelective Contributions Account and Qualified Matching
Contributions Account if any of such contributions are
included in the ADP Test, without regard to any income or
loss occurring during such Plan Year; and
(2) 10% of the amount determined under (1) multiplied
by the number of whole calendar months between the end of
the Plan Year and the date of distribution, counting the
month of distribution if distribution occurs after the
fifteenth of such month.
Anything in the preceding paragraph of this Section
3.04(b)(iv)(B) to the contrary notwithstanding, any reasonable
method for computing the income or loss allocable to Excess
Contributions may be used, provided that such method is used
consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year, and is used by
the Plan for allocating income or loss to Participant's Accounts.
Income or loss allocable to the period between the end of the
Plan Year and the date of distribution may be disregarded in
determining income or loss.
(C) Accounting for Excess Contributions. Amounts distributed
under this Section 3.04(b)(iv) shall first be distributed from
the Participant's Elective Deferrals Account and Qualified
Matching Contributions Account in proportion to the Participant's
Elective Deferrals and Qualified Matching Contributions (to the
extent used in the ADP Test) for the Plan Year. Excess
Contributions shall be distributed from the Participant's
Qualified Nonelective Contributions Account only to the extent
that such Excess Contributions exceed the balance in the
Participant's Elective Deferrals Account and Qualified Matching
Contributions Account.
(v) In lieu of distributing Excess Contributions pursuant to the
preceding Section 3.04(b)(iv), and as specified in the Adoption
Agreement, the
34
<PAGE>
Employer may make special Qualified Nonelective Contributions on
behalf of Nonhighly Compensated Employees that are sufficient to
satisfy the ADP Test.
(vi) In lieu of distributing Excess Contributions, the
Participant may treat his or her Excess Contributions as an amount
distributed and then re-contributed by such Participant.
Recharacterized amounts are 100% nonforfeitable and subject to the
same distribution requirements as Elective Deferrals. Amounts may not
be recharacterized by a Highly Compensated Employee to the extent that
such amount in combination with other amounts made to the
Participant's Participant Contributions Account would exceed any
stated limit on such contributions, as specified in the Adoption
Agreement. If Excess Contributions are recharacterized, they must be
so no later than two and one-half months after the last day of the
Plan Year in which such Excess Contributions arose and they are deemed
to occur no earlier than the date the last Highly Compensated Employee
is informed in writing of the amount recharacterized and the
consequences thereof. Recharacterized amounts are taxable to the
Participant for the tax year in which he or she would have received
such contributions in cash.
(vii) Under no circumstances may Elective Deferrals, Qualified
Matching Contributions and Qualified Nonelective Contributions be
contributed and allocated to the Trust later than the last day of the
12-month period immediately following the Plan Year to which such
contributions relate.
SECTION 3.05. MATCHING 401(k) CONTRIBUTIONS.
(a) AMOUNT OF MATCHING CONTRIBUTIONS. Subject to the limitations
contained in Sections 3.09 and 3.05(b), for each Plan Year the Employer
will contribute, in cash and/or Qualifying Employer Securities, Matching
401(k) Contributions to the Trust Fund in an amount, if any, calculated by
reference to the Participants' Elective Deferrals as specified in the
Adoption Agreement.
(b) LIMITATION ON CONTRIBUTION PERCENTAGE.
(i) ACP Test. The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year
and the Average Contributions Percentage for Eligible Participants who
are Nonhighly Compensated Employees for the same Plan Year must
satisfy one of the following tests:
(A) the Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan
Year shall not exceed the Average Contribution Percentage for
Eligible Participants who are Nonhighly Compensated Employees for
the same Plan Year multiplied by 1.25; or
35
<PAGE>
(B) the Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees shall not
exceed the Average Contribution Percentage for Eligible
Participants who are Nonhighly Compensated Employees by more than
two percentage points or such lesser amount as the Secretary of
the Treasury shall prescribe to prevent the multiple use of this
alternative limitation with respect to any Highly Compensated
Employee.
(ii) Special Average Contribution Percentage Rules.
(A) For purposes of this Section 3.05(b), the Contribution
Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to
have Matching 401(k) Contributions or Matching Thrift
Contributions, as the case may be (other than Qualified Matching
Contributions), allocated to his or her account under two or more
qualified plans described in Code Section 401(a), or arrangements
described in Code Section 401(k) shall be determined as if the
total of such Contribution Percentage Amounts was made under each
plan. If a Highly Compensated Employee participates in two or
more cash or deferred arrangements that have different plan
years, all cash or deferred arrangements ending with or within
the same calendar year shall be treated as a single arrangement.
(B) In the event that this Plan satisfies the requirements
of Code Section 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of
Code Section 410(b) only if aggregated with this Plan, then this
Section 3.05(b) shall be applied by determining the Contribution
Percentages of Employees as if all such plans were a single plan.
For Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Code Section 401(m) only if they
have the same plan year.
(C) For purposes of determining the Contribution Percentage
of an Eligible Participant who is a 5% owner or one of the 10
most highly paid Highly Compensated Employees, the Contribution
Percentage Amounts and the CODA Compensation of such Participant
shall include the Contribution Percentage Amounts and CODA
Compensation for the Plan Year of Family Members. Family Members
with respect to Highly Compensated Employees shall be disregarded
as separate employees in determining the Contribution Percentage
both for Participants who are Nonhighly Compensated Employees and
for Participants who are Highly Compensated Employees.
(D) For purposes of determining the ACP Test, Matching
401(k) Contributions, Matching Thrift Contributions and Qualified
36
<PAGE>
Nonelective Contributions will be considered made for a Plan Year
if made no later than the end of the 12-month period beginning on
the day after the close of the Plan Year.
(E) The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP Test and the amount of
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, used in such test.
(iii) Multiple Use. If one or more Highly Compensated Employees
participate in both a cash or deferred arrangement and a plan subject
to the ACP Test and the sum of the Actual Deferral Percentage and the
Actual Contribution Percentage of those Highly Compensated Employees
exceeds the "aggregate limit," then the Actual Contribution Percentage
of those Highly Compensated Employees will be reduced, beginning with
such Highly Compensated Employee whose Actual Contribution Percentage
is the highest, so that the limit is not exceeded. The amount by which
each Highly Compensated Employee's Contribution Percentage is reduced
shall be treated as an Excess Aggregate Contribution. The Actual
Deferral Percentage and Actual Contribution Percentage of the Highly
Compensated Employees are determined after any corrections required to
meet the ADP Test and the ACP Test. Multiple use does not occur if
either the Average Deferral Percentage or Actual Contribution
Percentage of the Highly Compensated Employees does not exceed 1.25
multiplied by the Actual Deferral Percentage and the Actual
Contribution percentage of the Nonhighly Compensated Employees.
(A) The "aggregate limit is the sum of (1) 125% of the
greater of the Actual Deferral Percentage for Participants who
are Nonhighly Compensated Employees for the Plan Year or the
Actual Deferral Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year beginning with or within
the Plan Year and (2) the lesser of 200% or two plus the lesser
of such Actual Deferral Percentage or Actual Contribution
Percentage. "Lesser" is substituted for "greater" in (1) above,
and "greater" is substituted for "lesser" after "two plus the" in
(2) if it would result in a larger aggregate limit.
(iv) Forfeiture of Excess Aggregate Contributions.
(A) In General. Notwithstanding any other provision of this
Plan, Excess Aggregate Contributions, plus any income and minus
any loss allocable thereto, shall be forfeited and applied to
reduce subsequent Matching 401(k) Contributions or Matching
Thrift Contributions, as the case may be. No forfeitures arising
under this Section 3.06(b)(iv) shall be allocated to the account
of any Highly Compensated Employee. If not forfeitable, Excess
Aggregate Contributions shall be distributed no later
37
<PAGE>
than the last day of each Plan Year beginning after December 31,
1997 to Participants to whose Accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions of Participants who are subject to the
Family Member aggregation rules shall be allocated among the
Family Members in proportion to the amounts constituting
Contribution Percentage Amounts of each Family Member that is
combined to determine the combined Actual Contribution
Percentage. Excess Aggregate Contributions shall be treated as
Annual Additions. Anything above to the contrary notwithstanding,
any forfeiture or distribution under this Section 3.05(b)(iv)(A)
shall occur only if sufficient Employee Thrift Contributions
and/or Participant Voluntary Nondeductible Contributions, as the
case may be, are not distributed from the qualified plan holding
such Employee Thrift Contributions and/or Participant Voluntary
Nondeductible Contributions, as the case may be.2
(B) Determination of Income or Loss. Excess Aggregate
Contributions shall be adjusted for any income or loss up to the
date of distribution. The income or loss allocable to Excess
Aggregate Contributions is the sum of (1) the income or loss
allocable to the Participant's Matching 401(k) Contribution
Account or Matching Thrift Contribution Account (if any, and if
all amounts therein are not used in the ADP Test) and, if
applicable, Qualified Nonelective Contribution Account and
Elective Deferrals Account for the Plan Year multiplied by a
fraction the numerator of which is such Participant's Excess
Aggregate Contributions for the year and the denominator of which
is the Participant's Account Balance(s) attributable to
Contribution Percentage Amounts without regard to any income or
loss occurring during such Plan Year; and (2) 10% of the amount
determined under (1) multiplied by the number of whole calendar
months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution
occurs after the fifteenth of such month.
Anything in the preceding paragraph of this Section
3.05(b)(iv)(B) to the contrary notwithstanding, any reasonable
method for computing the income or loss allocable to Excess
Aggregate Contributions may be used, provided that such method is
used consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year, and is used by
- ---------------------------
2 Distribution or forfeiture of Excess Aggregate Contributions on or before the
last day of the Plan Year after the Plan Year in which such excess amounts arose
is required under Code Section 401(m)(6) if the Plan is to maintain its
tax-qualified status. However, if such excess amounts, plus any income and minus
any loss allocable thereto, are distributed more than two and one-half months
after the last day of the Plan Year in which such excess amounts arose, then
Code Section 4979 imposes a 10% excise tax on the employer maintaining the plan
with respect to such amounts.
38
<PAGE>
the Plan for allocating income or loss to Participants' Accounts.
Income or loss allocable to the period between the end of the
Plan Year and the date of distribution may be disregarded in
determining income or loss.
(C) The determination of the Excess Aggregate Contributions
shall be made after first determining the Excess Elective
Deferrals, and then determining the Excess Contributions.
(c) For purposes of determining the ACP Test, Qualified Nonelective
Contributions, Matching 401(k) Contributions and Matching Thrift
Contributions will be considered made for a Plan Year if paid to the
Trustee no later than the end of the 12-month period beginning on the day
after the close of the Plan Year.
SECTION 3.06. THRIFT CONTRIBUTIONS.
(a) EMPLOYEE THRIFT CONTRIBUTIONS. If elected by the Employer in the
Adoption Agreement to provide for Employee Thrift Contributions, the
Employer will contribute cash to the Trust Fund in an amount equal to (i)
the Employee Thrift Contribution percentage of each Participant on his or
her Employee Thrift Contribution election form multiplied by each such
Participant's Compensation or (ii) the specific dollar amount set forth on
the Participant's election form.
The amount elected by a Participant pursuant to a Participant's
Employee Thrift Contribution election shall be determined within the limits
specified in the Adoption Agreement. Such election shall be made on a form
provided by the Administrator but no election shall be effective prior to
approval by the Administrator. The Administrator may reduce the amount of
any Employee Thrift Contribution, or make such other modifications as
necessary, so that the Plan complies with the provisions of the Code. A
Participant's election shall remain in effect until modified or terminated
at such times as specified in the Adoption Agreement
(b) MATCHING THRIFT CONTRIBUTIONS. Subject to the limitations
contained in Sections 3.09 and 3.05(b), for each Plan Year the Employer
will contribute, in cash and/or Qualifying Employer Securities, Matching
Thrift Contributions to the Trust Fund in an amount, if any, calculated by
reference to the Participants' Employee Thrift Contributions, as specified
in the Adoption Agreement.
Matching Thrift Contributions made by the Employer will be allocated
to the Matching Thrift Contributions Account of those Participants who have
contributed Employee Thrift Contributions to the Plan, as specified in the
Adoption Agreement.
SECTION 3.07. TREATMENT OF FORFEITURES.
(a) If the Employer has elected in the Adoption Agreement to
reallocate forfeitures for a Plan Year among Participants, then such
forfeitures, if any, shall be allocated as of the last day of the Plan Year
to the Employer Accounts of those
39
<PAGE>
Participants who are eligible to share in the allocation of contributions
to that particular Employer Account (whether or not a contribution was made
for that Plan Year) for that Plan Year in that particular Employer Account
category with respect to which such forfeitures are attributable. If the
Plan is a Target Benefit Plan, forfeitures may only be used to reduce
Employer Contributions, in accordance with Section 3.07(b).
(b) If the Employer has elected in the Adoption Agreement to use
forfeiture to reduce contributions, then forfeitures shall be applied in
the succeeding Plan Year to reduce Employer Contributions in that
particular Employer Account category to which such forfeitures were
attributable.
SECTION 3.08. ESTABLISHING OF ACCOUNTS.
(a) An Elective Deferrals Account shall be established for each
Eligible Participant who makes a 401(k) Election to which the Administrator
shall credit, or cause to be credited, Elective Deferrals allocable to each
such Participant, plus earnings or losses thereon.
(b) An Employer Contributions Account shall be established for each
Participant to which the Administrator shall credit or cause to be credited
Employer contributions pursuant to Section 3.01, and forfeitures
attributable to such contributions, if any, plus earnings or losses
thereon.
(c) An Employee Thrift Contributions Account shall be established for
each Participant who makes Employee Thrift Contributions to the Plan, to
which the Administrator shall credit, or cause to be credited, all amounts
allocable to each such Participant, plus earnings or losses thereon.
(d) A Matching 401(k) Contributions Account shall be established for
each Participant for whom Matching 401(k) Contributions are made, to which
the Administrator shall credit, or cause to be credited, all such amounts
allocable to each such Participant, plus earnings or losses thereon.
(e) A Matching Thrift Contributions Account shall be established for
each Participant for whom Matching Thrift Contributions are made, to which
the Administrator shall credit, or cause to be credited, all amounts
allocable to each such Participant, plus earnings or losses thereon.
(f) A Participant Voluntary Nondeductible Contributions Account shall
be established for each Participant who makes Participant Voluntary
Nondeductible Contributions to the Plan, plus earnings or losses thereon.
(g) A Qualified Matching Contributions Account shall be established
for each Eligible Participant for whom Qualified Matching Contributions are
made to which the Administrator shall credit, or cause to be credited, all
amounts allocable to each such Participant, plus earnings or losses
thereon.
40
<PAGE>
(h) A Qualified Nonelective Contributions Account shall be established
for each Participant for whom Qualified Nonelective Contributions are made
to which the Administrator shall credit, or cause to be credited, all
amounts allocable to each such Participant plus earnings or losses thereon.
(i) A Rollover Contributions Account shall be established for each
Participant who contributes to the Plan pursuant to Section 3.03 to which
the Administrator shall credit, or cause to be credited, Rollover
Contributions made by the Participant, plus earnings or losses thereon.
(j) A Transferred Contributions Account shall be established for each
Participant for whom assets are transferred from another Qualified Plan, to
which the Administrator shall credit, or cause to be credited, transferred
assets, plus earnings or losses thereon.
SECTION 3.09. LIMITATION ON AMOUNT OF ALLOCATIONS.
(a) As used in this Section 3.09, each of the following terms shall
have the meaning for that term set forth in this Section 3.09(a):
(i) "Annual Additions" means, for each Participant, the sum of
the following amounts credited to the Participant's Accounts for the
Limitation Year:
(A) Employer Contributions within the meaning of IRS
regulation 1.415-6(b);
(B) Employee Contributions;
(C) forfeitures;
(D) allocation under a simplified employee pension; and
(E) any Excess Amount applied under a Defined Contribution
Plan in the Limitation Year to reduce Employer Contributions will
also be considered as part of the Annual Additions for such
Limitation Year.
Amounts allocated after March 31, 1984 to an "individual
medical benefit account" as defined in Code Section 415(l)(2)
("Individual Medical Benefit Account") which is part of a pension
or annuity plan maintained by the Employer or Affiliate are
treated as Annual Additions to a Defined Contribution Plan. Also,
amounts derived from contributions paid or accrued after December
31, 1985, in taxable years ending after that date, which are
attributable to post-retirement medical benefits allocated to the
separate account of a "key employee" as defined in Code Section
419A(d)(3) under a "welfare benefit fund" as defined in Code
41
<PAGE>
Section 419(e) ("Welfare Benefit Fund") maintained by the
Employer or Affiliate, are treated as Annual Additions to a
Defined Contribution Plan.
(ii) "Defined Benefit Dollar Limitation" means $90,000 multiplied
by the Adjustment Factor or such other limitation set forth in Code
Section 415(b)(1) as in effect for the Limitation Year.
(iii) "Defined Benefit Fraction" means a fraction the numerator
of which is the sum of the Projected Annual Benefits of the
Participant involved under all Defined Benefit Plans (whether or not
terminated) maintained by the Employer or Affiliate and the
denominator of which is the lesser of 125% of the Defined Benefit
Dollar Limitation determined for the Limitation Year or 140% of the
Participant's Highest Average Limitation Compensation, including any
adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a Participant
as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more Defined Benefit Plans maintained by
the Employer or Affiliate which were in existence on May 5, 1986, the
denominator of this fraction will not be less than 125% of the sum of
the annual benefits under such Plans which the Participant had accrued
as of the close of the last Limitation Year beginning before January
1, 1987, disregarding any changes in the terms and conditions of the
plans after May 5, 1986. The preceding sentence applies only if the
Defined Benefit Plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all Limitation Years beginning
before January 1, 1987.
(iv) "Defined Contribution Dollar Limitation" means $30,000 or,
if greater, one-fourth of the Defined Benefit Dollar Limitation as in
effect for the Limitation Year.
(v) "Defined Contribution Fraction" means a fraction the
numerator of which is the sum of the Annual Additions to the
Participant's Account or Accounts under all the Defined Contribution
Plans (whether or not terminated) maintained by the Employer or
Affiliate for the current and all prior Limitation Years (including
the Annual Additions attributable to the Participant's nondeductible
contributions to all Defined Benefit Plans, whether or not terminated,
maintained by the Employer or Affiliate and the Annual Additions
attributable to all Welfare Benefit Funds, Individual Medical Benefit
Accounts, and simplified employee pensions maintained by the Employer
or Affiliate) and the denominator of which is the sum of the "maximum
aggregate amounts" (as defined in the following sentence) for the
current and all prior Limitation Years of service with the Employer or
Affiliate (regardless of whether a Defined Contribution Plan was
maintained by the Employer or Affiliate). The "maximum aggregate
amount" in any Limitation Year is the lesser of (A) 125% of the
42
<PAGE>
Defined Benefit Dollar Limitation in effect under Code Section
415(c)(1)(A) or (B) 35% of the Participant's Compensation for such
year.
If the Employee was a Participant as of the first day of the
first Limitation Year beginning after December 31, 1986, in one or
more Defined Contribution Plans maintained by the Employer or
Affiliate in existence on May 5, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the Defined Benefit
Fraction would otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product of (A) the excess
of the sum of the fractions over 1.0 times (B) the denominator of this
fraction will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they
would be computed as of the later of the end of the last Limitation
Year beginning before January 1, 1987, and disregarding any changes in
the terms and conditions of the Plans made after May 6, 1986, but
using the Code Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual
Addition for any Limitation Year beginning before January 1, 1987
shall not be recomputed to treat all Participant contributions as
Annual Additions.
(vi) "Excess Amounts" means the excess of the Participant's
Annual Additions for the Limitation Year involved over the Maximum
Permissible Amount for that Limitation Year.
(vii) "Highest Average Limitation Compensation" means the average
Compensation as defined in Code Section 415(c)(3) of the Participant
involved for that period of three consecutive Years of Service with
the Employer or Affiliate (or, if the Participant has less than three
such Years of Service, the actual number thereof) that produces the
highest average.
(viii) "Limitation Compensation" means Compensation, as defined
in either (A), (B) or (C) below, as specified in the Adoption
Agreement:
(A) Code Section 415 Safe-Harbor Compensation. For an
Employee other than a Self-Employed Individual, the Employee's
earned income, wages, salaries and 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 (including, but not limited to,
commissions paid to salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits and reimbursements or
other expense allowances under a nonaccountable plan (as
described in Reg. 1.62-2(c)) and excluding the following:
(1) Employer contributions to a plan of deferred
compensation which are not includible in the Employee's
gross income for the taxable year in which contributed, or
contributions
43
<PAGE>
under a "simplified employee pension" plan (within the
meaning of Code Section 408(k)) to the extent such
contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(2) amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or
other property) held by the Employee either becomes freely
"transferable" or is no longer subject to a "substantial
risk of forfeiture" (both quoted terms within the meaning of
Code Section 83(a));
(3) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(4) other amounts which received special tax benefits,
or contributions made (whether or not under a salary
reduction agreement) toward the purchase of an annuity
described in Code Section 403(b) (whether or not the amounts
are actually excludable from the gross income of the
Employee); or for Limitation Years beginning after December
31, 1991, Limitation Compensation shall include only that
compensation which is actually paid or made available during
the Limitation Year.
(B) Information Required To Be Reported Under Sections 6041
and 6051 ("Wages, Tips and other Compensation Box" Form W-2).
"Limitation Compensation" is defined as wages as defined in Code
Section 3401(a) and all other payments of compensation to an
Employee by the Employer (in the course of the Employer's trade
or business) for which the Employer is required to furnish the
Employee a written statement under Sections 6041(d) and
6051(a)(3) of the Code. Compensation must be determined without
regard to any rules under Section 3401(a) that limit the
remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception
for agricultural labor in Section 3401(a)(2)).
(C) Code Section 3401(a) Wages. "Limitation Compensation" is
defined as wages within the meaning of Code Section 3401(a) for
the purposes of income tax withholding at the source but
determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception
for agricultural labor in Code Section 3401(a)(2)).
Without regard to the definition of Limitation Compensation
elected by the Employer, for a Self-Employed Individual,
"Limitation Compensation" means his or her Earned Income,
provided that if
44
<PAGE>
the Self-Employed Individual is not a Participant for an entire
Plan Year, his or her Limitation Compensation for that Plan Year
shall be his or her Earned Income for that Plan Year multiplied
by a fraction the numerator of which is the number of days he or
she is a Participant during the Plan Year and the denominator of
which is the number of days in the Plan Year. Additionally,
Limitation Compensation for a Participant in a Defined
Contribution Plan who is permanently and totally disabled (as
defined in Code Section 22(e)) is the compensation such
Participant would have received for the Limitation Year if the
Participant had been paid at the rate of compensation paid
immediately before becoming disabled; such imputed compensation
may be taken into account only if the Participant is not a Highly
Compensated Employee and contributions made on behalf of such
Participant are nonforfeitable when made.
(ix) "Maximum Permissible Amount" means the maximum Annual
Addition which may be contributed or allocated to a Participant's
Account under the Plan for any Limitation Year. The maximum Annual
Addition shall not exceed the lesser of (A) the Defined Contribution
Dollar Limitation or (B) 25% of the Participant's Compensation for the
Limitation Year. The Compensation limitation referred to in (B) shall
not apply to any contribution for medical benefits (within the meaning
of Code Section 401(h) or 419A(f)(2)) which is otherwise treated as an
Annual Addition under Code Section 415(l)(1) or 419A(d)(2). If a short
Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive-month period, the
Maximum Permissible Amount will not exceed the Defined Contribution
Dollar Limitation multiplied by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
(x) "Projected Annual Benefit" means the annual retirement
benefit (adjusted to an actuarially equivalent straight life annuity
if such benefit is expressed in a form other than a straight life
annuity or Qualified Joint and Survivor Annuity) to which the
Participant would be entitled under the terms of a Defined Benefit
Plan assuming:
(A) the Participant continues in employment with the
Employer or Affiliate until the Participant's "normal retirement
age" under the Plan within the meaning of Code Section 411(a)(8)
(or the Participant's current age, if later); and
(B) the Participant's Limitation Compensation for the
current Limitation Year and all other relevant factors used to
determine benefits under the Plan will remain constant for all
future Limitation Years.
45
<PAGE>
(b) The provisions of this subsection 3.09(b) apply with respect to a
Participant who does not participate in, and has never Participated in,
another Qualified Plan, a Welfare Benefit Fund or an Individual Medical
Benefit Account or a simplified employee pension, as defined in Code
Section 401(k), maintained by the Employer or an Affiliate, which provides
an Annual Addition as defined in Section 3.09(a)(i) of the Plan, other than
this Plan:
(i) The amount of Annual Additions which may be credited to the
Participant's Account for any Limitation Year will not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer Contribution that would
otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions on behalf of the Participant for the
Limitation Year to exceed the Maximum Permissible Amount with respect
to that Participant for the Limitation Year, the amount contributed or
allocated will be reduced so that the Annual Additions on behalf of
the Participant for the Limitation Year will equal such Maximum
Permissible Amount.
(ii) Prior to determining the Participant's actual Limitation
Compensation for a Limitation Year, the Employer may determine the
Maximum Permissible Amount for the Participant for the Limitation Year
on the basis of a reasonable estimation of the Participant's
Compensation for that Limitation Year. Such estimated Compensation
shall be uniformly determined for all Participants similarly situated.
(iii) As soon as is administratively feasible after the end of a
Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
compensation for the Limitation Year.
(iv) If, pursuant to Section 3.09(b)(iii) or as a result of the
allocation of forfeitures, there is an Excess Amount with respect to
the Participant for a Limitation Year, the Excess Amount shall be
disposed of as follows:
(A) First, any contribution to the Participant's Elective
Deferrals Account, Participant Voluntary Nondeductible
Contributions Account or Employee Thrift Contributions Account,
if applicable, and any earnings allocable thereto will be
distributed to the Participant to the extent that the return
thereof would reduce the Excess Amount in such Participant's
Accounts.
(B) If after the application of Section 3.09(b)(iv)(A) an
Excess Amount still exists, and the Participant is covered by the
Plan at the end of the Limitation Year, the remaining Excess
Amount in the Participant's Account will be used to reduce
Employer contributions (including allocation of any forfeitures)
under this Plan for such Participant in the
46
<PAGE>
next Limitation Year, and in each succeeding Limitation Year, if
necessary.
(C) If after the application of Section 3.09(b)(iv)(A) an
Excess Amount still exists, and the Participant is not covered by
the Plan at the end of the Limitation Year, the Excess Amount
will be held unallocated in a suspense account. The suspense
account will be applied to reduce future Employer contributions
under this Plan for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year, if
necessary; provided, however, that if all or any part of the
Excess Amount held in a suspense account is attributable to a
Participant's Elective Deferrals, such Excess Amount shall be
held unallocated in a suspense account to be used for such
Participant in the next Limitation Year and each succeeding
Limitation Year as an Elective Deferral if such Participant is
covered by the Plan in the next and each succeeding Limitation
Year, if necessary.
(D) If a suspense account is in existence at any time during
a Limitation Year pursuant to Section 3.09(b)(iv)(C), the
suspense account will not participate in the allocation of the
Trust Fund's investment gains or losses to or from any other
Account. If a suspense account is in existence at any time during
a particular Limitation Year, all amounts in the suspense account
must be allocated and reallocated to Participants' Accounts
before any Employer or Participant contributions may be made to
the Plan for the Limitation Year. Excess Amounts, other than
those Excess Amounts referred to in Section 3.09(b)(iv)(A), may
not be distributed to Participants or Former Participants.
(c) The provisions of this subsection 3.09(c) apply with respect to a
Participant who, in addition to this Plan, is covered or has been covered
under one or more Defined Contribution Plans which are Master or Prototype
Plans, Welfare Benefit Funds, an Individual Medical Benefit Account or a
simplified employee pension maintained by the Employer or an Affiliate,
which provides an Annual Addition as described in Section 3.09(a)(i) of the
Plan during any Limitation Year:
(i) The Annual Additions which may be credited to a Participant's
Accounts under this Plan for any such Limitation Year will not exceed
the Maximum Permissible Amount reduced by the Annual Additions
credited to the Participant's account or accounts under any other
plans and Welfare Benefit Fund, Individual Medical Benefit Account or
simplified employee pension for the same Limitation Year. If the
Annual Additions with respect to the Participant under any one or more
other such Defined Contribution Plans or Welfare Benefit Funds,
Individual Medical Benefit Account or simplified employee pension
maintained by the Employer are less than the Maximum Permissible
Amount and the Employer Contribution that would otherwise be
contributed or allocated to a
47
<PAGE>
Participant's Account under this Plan would cause the Annual Additions
for the Limitation Year to exceed this limitation, the amount
contributed or allocated shall be reduced so that the Annual Additions
under all such plans and funds for the Limitation Year will equal the
Maximum Permissible Amount.
If the Annual Additions with respect to the Participant under
such other Defined Contribution Plans and Welfare Benefit Funds,
Individual Medical Benefit Account or simplified employee pension in
the aggregate are equal to or greater than the Maximum Permissible
Amount, no amount will be contributed or allocated to any of the
Participant's Accounts under this Plan for the Limitation Year.
(ii) Prior to determining the Participant's actual compensation
for a Limitation Year, the Maximum Permissible Amount for a
Participant may be determined in the manner described in Section
3.09(b)(ii).
(iii) As soon as is administratively feasible after the end of a
Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Limitation Compensation for the Limitation Year.
(iv) If, pursuant to subsection 3.09(c)(iii) above, or as a
result of the allocation of forfeitures, a Participant's Annual
Additions under this Plan and the Participant's Annual Additions under
such other plans would result in an Excess Amount for a Limitation
Year, the Excess Amount will be deemed to consist of the Annual
Additions last allocated, except that Annual Additions attributable to
a simplified employee pension will be deemed to have been allocated
first, followed by Annual Additions to a Welfare Benefit Fund or
Individual Medical Benefit Account regardless of the actual allocation
date.
(v) If an Excess Amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date
of another such plan, the Excess Amount attributed to this Plan will
be the product of:
(A) the total Excess Amount allocated as of such date, times
(B) the ratio of (1) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan to (2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under this
Plan and all of the other plans referred to in the first sentence
of this Section 3.09(c).
(vi) Any Excess Amount attributed to this Plan will be disposed
in the manner described in Section 3.09(b)(iv).
48
<PAGE>
(d) If a Participant is covered under one or more Defined Contribution
Plans, other than this Plan, maintained by the Employer or an Affiliate
which are not Master or Prototype Plans, or Welfare Benefit Funds or an
Individual Medical Benefit Account maintained by the Employer, Annual
Additions which may be credited to the Participant's Account under this
Plan for any Limitation Year shall be limited in accordance with the
provisions of subsections 3.09(c)(i) through (vi) above as though each such
other plan was a Master or Prototype Plan.
(e) If the Employer maintains, or at any time maintained, a Defined
Benefit Plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Fraction and Defined Contribution Fraction
will not exceed 1.0 in any Limitation Year. If such sum would otherwise
exceed 1.0 and if such Defined Benefit Plan does not provide for a
reduction in benefits thereunder, Annual Additions which may be credited to
a Participant's Account under this Plan for any Limitation Year shall be
limited in accordance with the provisions of Section 3.09(b).
(f) If required pursuant to Section 4.04(d), "100%" shall be
substituted for "125%" wherever the latter percentage appears in this
Section 3.09.
SECTION 3.10. RETURN OF EMPLOYER CONTRIBUTIONS UNDER SPECIAL CIRCUMSTANCES.
Notwithstanding any provision of this Plan to the contrary, upon timely written
demand by the Employer or the Administrator to the Trustee:
(a) Any contribution by the Employer to the Plan under a mistake of
fact shall be returned to the Employer by the Trustee within one year after
the payment of the contribution.
(b) Any contribution made by the Employer incident to the
determination by the Commissioner of Internal Revenue that the Plan is
initially a Qualified Plan shall be returned to the Employer by the Trustee
within one year after notification from the Internal Revenue Service that
the Plan is not initially a Qualified Plan but only if the application for
the qualification is made by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan is adopted, or
such later date as the Secretary of the Treasury may prescribe.
(c) In the event the deduction of a contribution made by the Employer
is disallowed under Code Section 404, such contribution (to the extent
disallowed) must be returned to the Employer within one year of the
disallowance of the deduction.
49
<PAGE>
ARTICLE IV
VESTING
SECTION 4.01. DETERMINATION OF VESTING.
(a) A Participant shall at all times have a vested percentage of 100%
in the Account Balance of each of his or her Participant Contributions
Accounts, 401(k) Contributions Accounts, Rollover Contributions Account and
Transferred Account.
(b) A Participant shall have a vested percentage of 100% in his or her
Account Balance of each of his or her Employer Accounts if he or she
terminates Employment due to the attainment of Normal Retirement Age, Early
Retirement specified in the Adoption Agreement, if elected by the Employer
in the Adoption Agreement, or upon Disability or death.
(c) The vested percentage of a Participant in the Account Balance of
each of his or her Employer Accounts not vested pursuant to Section 4.01(a)
or 4.01(b) shall be determined in accordance with the vesting rule or
schedule specified in the Adoption Agreement.
SECTION 4.02. RULES FOR CREDITING VESTING SERVICE.
(a) Subject to Section 4.02(b), Years of Service shall be credited for
purposes of determining a Participant's Vesting Service as specified in the
Adoption Agreement. If the Employer maintains the plan of a predecessor
employer, service with such predecessor employer shall be treated as
service with the Employer for purposes of Vesting Service.
(b) An Employee who terminates Employment with no vested percentage in
an Employer Account shall, if he or she returns to Employment, have no
credit for Vesting Service prior to such termination of Employment if his
or her Period of Severance equals or exceeds five years.
(c) Vesting Service of an Employee following a Period of Severance of
five years or more shall not be counted for the purpose of computing his or
her vested percentage in his or her Employer Accounts derived from
contributions accrued prior to the Period of Severance. If applicable,
separate records shall be maintained reflecting the Participant's vested
rights in his or her Account Balance attributable to service prior to the
Period of Severance and reflecting the Participant's vested percentage in
his or her Account Balance attributable to service after the Period of
Severance. Vesting Service prior to and following an Employee's Period of
Severance shall be counted for purposes of computing his or her vested
percentage in an Employer Account derived from contributions made after the
Period of Severance.
50
<PAGE>
SECTION 4.03. EMPLOYER ACCOUNTS FORFEITURES.
(a) Subject to Section 5.06, upon the Nonvested Separation of a
Participant, the nonvested portion of each Employer Account of such
Participant will be forfeited as of the date of termination of Employment.
Upon the Partially Vested Separation of a Participant, the nonvested
portion of each Employer Account of such Participant will be forfeited as
of the date of termination of Employment; provided, however, that such
Participant receives a distribution in accordance with Section 5.06. If a
Participant does not receive a distribution following his or her
termination of Employment, the nonvested portion of each Employer Account
of the Participant shall be forfeited following a Period of Severance of
five years.
(b) If the Employer elects in the Adoption Agreement to reallocate
forfeitures, forfeitures for a Plan Year shall be allocated in accordance
with Section 3.07(a). If the Employer elects in the Adoption Agreement to
use forfeitures to reduce Employer contributions, forfeitures shall be
applied in accordance with Section 3.07(b).
SECTION 4.04. TOP-HEAVY PROVISIONS.
(a) As used in this Section 4.04, each of the following terms shall
have the meanings for that term set forth in this Section 4.04(a):
(i) "Determination Date" means, for any Plan Year subsequent to
the first Plan Year, the last day of the preceding Plan Year. For the
first Plan Year of the Plan, the last day of that year.
(ii) "Permissive Aggregation Group" means the Required
Aggregation Group of plans plus any other plan or plans of the
Employer or Affiliate which, when considered as a group with the
Required Aggregation Group, would continue to satisfy the requirements
of Code Sections 401(a)(4) and 410.
(iii) "Required Aggregation Group" means (A) each Qualified Plan
of the Employer or Affiliate in which at least one Key Employee
participates or participated at any time during the determination
period (regardless of whether the Plan has terminated), and (B) any
other qualified plan of the Employer or Affiliate which enables a plan
described in (A) to meet the requirements of Code Section 401(a)(4) or
410.
(iv) "Super Top-Heavy" means, for any Plan Year beginning after
December 31, 1983, the Plan if any Top-Heavy Ratio as determined under
the definition of Top-Heavy Plan exceeds 90%.
(v) "Top-Heavy Plan" means, for any Plan Year beginning after
December 31, 1983, the Plan if any of the following conditions exist:
51
<PAGE>
(A) The Top-Heavy Ratio for the Plan exceeds 60% and the
Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of Plans.
(B) The Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the
Top-Heavy Ratio for the group of plans exceeds 60%.
(C) The Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds 60%.
(vi) "Top-Heavy Ratio" means:
(A) If the Employer or Affiliate maintains one or more
Defined Contribution Plans (including any Simplified Employee
Pension Plan) and the Employer or Affiliate has never maintained
any Defined Benefit Plan which during the five-year period ending
on the Determination Date has or has had accrued benefits, the
Top-Heavy Ratio for this Plan alone or for the Required or
Permissive Aggregation Group as appropriate is a fraction the
numerator of which is the sum of the Account Balances of all Key
Employees as of the Determination Date (including any part of any
Account Balance distributed in the five-year period ending on the
Determination Date) and the denominator of which is the sum of
all Account Balances (including any part of any Account Balance
distributed in the five-year period ending on the Determination
Date), both computed in accordance with Code Section 416. Both
the numerator and denominator of the Top-Heavy Ratio are
increased to reflect any contribution not actually made as of the
Determination Date, but which is required to be taken into
account on that date under Code Section 416;
(B) If the Employer or an Affiliate maintains one or more
Defined Contribution Plans (including any Simplified Employee
Pension Plan) and the Employer or an Affiliate maintains or has
maintained one or more Defined Benefit Plans which during the
five-year period ending on the Determination Date has or has had
any accrued benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group as appropriate is a fraction the
numerator of which is the sum of Account Balances under the
aggregated Defined Contribution Plans for all Key Employees,
determined in accordance with (A) above, and the present value of
accrued benefits under the aggregated Defined Benefit Plans for
all Key Employees as of the Determination Date, and the
denominator of which is the sum of the Account Balances under the
aggregated Defined Contribution Plans for all Participants,
determined in accordance with (A) above, and the present value of
accrued benefits under the Defined Benefit
52
<PAGE>
Plans for all Participants as of the Determination Date, all
determined in accordance with Code Section 416. The accrued
benefit under a Defined Benefit Plan in both the numerator and
denominator of the Top-Heavy Ratio are increased for any
distribution of an accrued benefit made in the five-year period
ending on the Determination Date.
(C) For purposes of (i) and (ii) above, the value of Account
Balances and the present value of accrued benefits will be
determined as of the most recent Valuation Date that falls within
or ends with the 12-month period ending on the Determination
Date, except as provided in Code Section 416 for the first and
second Plan Years of a Defined Benefit Plan. The Account Balances
and accrued benefits of a Participant (1) who is not a Key
Employee but who was a Key Employee in a prior year or (2) who
has not been credited with at least one Hour of Service with the
Employer or an Affiliate at any time during the five-year period
ending on the Determination Date will be disregarded. The
calculation of the Top-Heavy Ratio and the extent to which
distributions, rollovers and transfers are taken into account
will be made in accordance with Code Section 416.
Elective Deferrals will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans the value of Account
Balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the calendar year.
The accrued benefit of a Participant who is not a Key Employee shall
be determined under (A) the method, if any, that uniformly applies for
accrual purposes under all Defined Benefit Plans or (B) if there is no such
method, as if such benefit accrued not rapidly than the slowest accrual
rate permitted under the fractional rule of Code Section 411(b)(1)(C).
(b) If the Plan is determined to be a Top-Heavy Plan or a Super
Top-Heavy Plan as of any Determination Date after December 31, 1983, then
the Top-Heavy vesting schedule specified in the Adoption Agreement,
beginning with the first Plan Year commencing after such Determination
Date, shall apply only for those Plan Years in which the Plan continues to
be a Top-Heavy Plan or Super Top-Heavy Plan as the case may be.
(c)(i) Except as provided in Sections 4.04(c)(iii) and (iv), for any
Plan Year in which the Plan is a Top-Heavy Plan, contributions and
forfeitures allocated to the Employer Contributions Account of any
Participant who is not a Key Employee in respect of that Plan Year shall
not be less than the lesser of: (A) 3% of such Participants Limitation
Compensation or (B) if the Employer has no Defined Benefit Plan which
designates this Plan to satisfy Code Section 401, the largest percentage of
contributions and forfeitures, as a percentage of the Key Employee's
Limitation Compensation,
53
<PAGE>
allocated to the Employer Contributions Account of any Key Employee for
that year. The minimum allocation is determined without regard to any
Social Security contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would not otherwise be
entitled to receive an allocation or would have received a lesser
allocation for the Plan Year because of (1) the Participant's failure to
complete a Year of Service, (2) the Participant's failure to make mandatory
Participant contributions to the Plan or (3) compensation less than a
stated amount.
(ii) For purposes of computing the minimum allocation, a
Participant's Limitation Compensation will be applied.
(iii) The provision in (i) above shall not apply to any
Participant who was not employed by the Employer or an Affiliate on
the last day of the Plan Year.
(iv) If the Employer or an Affiliate has executed Adoption
Agreements covering Participants by a plan which is a profit-sharing
plan and by another plan which is a money purchase pension plan or a
target benefit plan, the minimum allocation specified in the preceding
Section 4.04(c)(i) shall be provided by the money purchase pension
plan or by the target benefit plan as the case may be. If a
Participant is covered under this Plan and a Defined Benefit Plan
maintained pursuant to Adoption Agreements offered by the Sponsor, the
minimum allocation specified in the preceding Section 4.04(c)(i) shall
not be applicable and the Participant shall receive the minimum
benefit specified in the Defined Benefit Plan.
(v) With respect to any profit-sharing or money purchase pension
plan which becomes Top-Heavy and is integrated with Social Security,
prior to making the allocations specified in the Adoption Agreement,
anything contained therein to the contrary notwithstanding, there
shall be an allocation of the Employer Contribution to each eligible
Participant's Employer Contribution Account in the ratio that each
such Participant's Limitation Compensation for the Plan Year bears to
the Limitation Compensation of all such Participants for the Plan Year
but not in excess of 3% of such Limitation Compensation.
(d) If the Plan becomes a Top-Heavy Plan, then the maximum benefit
which can be provided under Section 3.09 shall continue to be determined by
applying "125%" wherever it appears in that Section and by substituting
"4%" for "3%" wherever that appears in Section 4.04(c). However, if the
Plan becomes a Super Top-Heavy Plan, the maximum benefit which can be
provided under Section 3.09 shall be determined by substituting "100%" for
"125%" wherever the latter percentage appears and the 3% minimum
contribution provided for in Section 4.04(d) shall remain unchanged.
(e) Beginning with the Plan Year in which this Plan is Top-Heavy, one
of the minimum Top-Heavy vesting schedules as specified in the Adoption
Agreement will apply. The minimum vesting schedule applies to all benefits
within the meaning of Code Section 411(a)(7) except those attributable to
Employee contributions, including benefits
54
<PAGE>
accrued before the effective date of Code Section 416 and benefits accrued
before the Plan became Top-Heavy. However, this Section 4.04 does not apply
to the Account Balances of any Employee who does not have an Hour of
Service after the plan has initially become Top-Heavy and such Employee's
vesting in his or her Employer Contributions Account will be determined
without regard to this Section 4.04. The minimum allocation pursuant to
Section 4.04(c) (to the extent required to be nonforfeitable under Code
Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B) or
Code Section 411(a)(3)(D).
ARTICLE V
AMOUNT AND DISTRIBUTION OF BENEFITS,
WITHDRAWALS AND LOANS
SECTION 5.01. DISTRIBUTION UPON TERMINATION OF EMPLOYMENT.
(a) Subject to Section 5.01(b), a Participant's Benefit Commencement
Date shall be as soon as practicable following his or her Fully Vested
Separation, Partially Vested Separation or Nonvested Separation, if
applicable, and in accordance with Section 5.06. If the Plan includes a
CODA feature, each 401(k) Contributions Account of a Participant shall be
payable in accordance with the events specified in Section 1.27 of the
Plan.
(b) If specified in the Adoption Agreement, a Participant's Benefit
Commencement Date shall be deferred until the earliest of his or her Normal
Retirement Age, Disability, or if elected by the Employer in the Adoption
Agreement, Early Retirement. If a Participant terminates Employment after
satisfying any service requirement for Early Retirement specified in the
Adoption Agreement, he or she shall be entitled to elect to receive a
distribution of his or her vested Employer Accounts upon satisfaction of
any age requirement for Early Retirement
SECTION 5.02. AMOUNT OF BENEFITS UPON A FULLY VESTED SEPARATION. A
Participant's benefits upon his or her Fully Vested Separation for any reason
other than Disability shall be the Account Balance of all of his or her Accounts
determined in accordance with Section 10.06(b).
SECTION 5.03. AMOUNT OF BENEFITS UPON A PARTIALLY VESTED SEPARATION. A
Participant's benefits upon his or her Partially Vested Separation for any
reason other than Disability shall be (a) the Account Balance of his or her
Employer Accounts determined in accordance with Section 10.06(b) multiplied by
his or her vested percentage determined pursuant to Section 4.13 or, if
applicable, Section 4.04(b) plus (b) the Account Balance of his or her other
Accounts determined in accordance with Section 10.06(b).
SECTION 5.04. AMOUNT OF BENEFITS UPON A NONVESTED SEPARATION. A
Participant's benefits upon his or her Nonvested Separation shall be the Account
Balance of his or her Accounts other than Employer Accounts, if any, determined
in accordance with Section 10.06(b).
55
<PAGE>
SECTION 5.05. AMOUNT OF BENEFITS UPON A SEPARATION DUE TO DISABILITY. If a
Participant terminates Employment due to a Disability, his or her benefit shall
be the Account Balance of all of his or her Accounts determined as a Fully
Vested Separation in accordance with Section 5.02 and Section 10.06(b). The
Benefit Commencement Date of any such Participant on whose behalf contributions
are being made pursuant to Section 3.01(d) shall be as soon as practicable after
the date such contributions cease.
SECTION 5.06. DISTRIBUTION AND RESTORATION.
(a) If, upon a Participant's termination of Employment, the vested
Account Balance of his or her Accounts as of the applicable Valuation Date
is equal to or less than $3,500, such Participant will receive a
distribution of his or her entire vested benefit and the nonvested portion
will be treated as forfeiture. If the value of a Participant's vested
Account is zero, the Participant shall be deemed to have received a
distribution of such vested Account.
(b) If, upon a Participant's termination of Employment, the vested
Account Balance of his or her Accounts as of the applicable Valuation Date
exceeds $3,500, the Participant may elect, in accordance with Article VI,
to receive a distribution of the entire vested portion of such Accounts and
the nonvested portion, if any, will be treated as a forfeiture.
(c) If the vested Account Balance of a Participant's Accounts as of
the applicable Valuation Date has an aggregate value exceeding (or at the
time of any prior distribution exceeded) $3,500, and the Participant's
benefit is Immediately Distributable, the Participant and the Participant's
Spouse (or where either the Participant or the Spouse has died, the
survivor) must consent to any distribution of such benefit. The consent of
the Participant and the Participant's Spouse shall be obtained in writing
within the 90-day period ending on the Participant's Benefit Commencement
Date, provided, however, that if the Plan is a profit sharing plan and
Section 6.12 applies, the consent of the Participant's Spouse will not be
required. The Administrator shall notify the Participant and the
Participant's Spouse of the right to defer any distribution until the
Participant's benefit is no longer Immediately Distributable. Such
notification shall include a general description of the material features
and an explanation of the relative values of the optional forms of benefit
available under the Plan in a manner that would satisfy the notice
requirements of Code Section 417(a)(3) and shall be provided no less than
30 days and no more than 90 days prior to the Benefit Commencement Date.
(d) Notwithstanding the foregoing, only the Participant need consent
to the commencement of a distribution in the form of a Qualified Joint and
Survivor Annuity while the Participant's benefit is Immediately
Distributable. Neither the consent of the Participant nor the Participant's
Spouse shall be required to the extent that a distribution is required to
satisfy Code Section 401(a)(9) or Code Section 415.
(e) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the
first Plan Year beginning
56
<PAGE>
after December 31,1988, the Participant's vested benefit shall not include
amounts attributable to accumulated deductible Participant contributions
within the meaning of Code Section 72(o)(5)(B).
(f) If a Participant, who after termination of Employment received a
distribution and forfeited any portion of an Employer Account or is deemed
to have received a distribution in accordance with Section 5.06(a), resumes
Employment, he or she shall have the right, while an Employee, to repay the
full amount previously distributed from such Employer Account. Such
repayment must occur before the earlier of (i) the date on which he or she
would have incurred a Period of Severance of five years commencing after
the distribution or (ii) five years after the first date on which the
Participant is subsequently reemployed. If the Participant makes a
repayment, the Account Balance of his or her relevant Employer Account
shall be restored to its value as of the date of distribution. The restored
amount shall be derived from forfeitures during the Plan Year and, if such
forfeitures are not sufficient, from a contribution by the Employer made as
of that date (determined without reference to Net Profits). If an Employee
who had a Nonvested Separation and was deemed to receive a distribution
resumes Employment before a Period of Severance of five years, his or her
Employer Account will be restored, upon reemployment, to the amount on the
date of such deemed distribution.
SECTION 5.07. WITHDRAWALS DURING EMPLOYMENT.
(a) If the Plan is a profit-sharing plan, and if the Employer has
elected in the Adoption Agreement to permit withdrawals during Employment,
prior to termination of Employment, each Participant upon attainment of age
59 1/2 may elect to withdraw, as of the Valuation Date next following the
receipt of an election by the Administrator, and upon such notice as the
Administrator may require, all or any part of the vested Account Balance of
all of his or her Accounts as of such Valuation Date.
(b) Notwithstanding Section 5.07(a), prior to termination of
Employment, each Participant with a Rollover Contributions Account and/or a
Participant Voluntary Nondeductible Contributions Account may elect to
withdraw, as of the Valuation Date next following the receipt of an
election by the Administrator, and upon such notice as the Administrator
may require, all or any of such Account as of such Valuation Date.
(c) The Administrator may establish from time to time rules and
procedures with respect to any withdrawals, including the order of Accounts
from which such withdrawals shall be made.
(d) No forfeitures shall occur as a result of a withdrawal pursuant to
this Section 5.07.
(e) If a Participant is married at the time of such election, the
Participant's Spouse must consent to such a withdrawal in the same manner
as provided in
57
<PAGE>
Section 6.02(d); provided, however, that if the Plan is a profit-sharing
plan and Section 6.01(b) applies, the consent of the Participant's Spouse
will not be required.
SECTION 5.08. LOANS.
(a) If the Employer has elected in the Adoption Agreement to make
loans available, a Participant may submit an application to the
Administrator to borrow from any Account maintained for the Participant (on
such terms and conditions as the Administrator shall prescribe) an amount
which when added to the outstanding balance of all other loans to the
Participant would not exceed the lesser of (i) $50,000 reduced by the
excess (if any) of the highest outstanding balance of loans during the
one-year period ending on the day before the loan is made, over the
outstanding balance of loans from the Plan on the date the loan is made, or
(ii) 50% of the vested portion of his or her Account from which the
borrowing is to be made as of the Valuation Date next following the receipt
of his or her loan application by the Administrator and the expiration of
such notice period as the Administrator may require. For this purpose, all
loans from Qualified Plans of the Employer or an Affiliate shall be
aggregated, and an assignment or pledge of any portion of the Participant's
interest in the Plan, and a loan, pledge or assignment with respect to any
insurance contract purchased under the Plan, will be treated as a loan
under this Section 5.08(a).
(b) If approved, each such loan shall comply with the following
conditions:
(i) It shall be evidenced by a negotiable promissory note;
(ii) The rate of interest payable on the unpaid balance of such
loan shall be a reasonable rate determined by the Administrator;
(iii) The Participant must obtain the consent of his or her
Spouse, if any, within the 90-day period before the time an Account is
used as security for the loan; provided, however, that if the Plan is
a profit-sharing plan that meets the requirements in Section 6.01(b)
of the Plan, the consent of the Participant's Spouse will not be
required. A new consent is required if an Account is used for any
increase in the amount of security. The consent shall comply with the
requirements of Section 6.02(d) but shall be deemed to meet any
requirements contained in Section 6.02(d) relating to the consent of
any subsequent Spouse. A new consent shall be required if an Account
is used for renegotiation, extension, renewal or other revision of the
loan;
(iv) The loan, by its terms, must require repayment (principal
and interest) be amortized in level payments, not less frequently than
quarterly, over a period not extending beyond five years from the date
of the loan; provided, however, that if the proceeds of the loan are
used to acquire a dwelling unit which within a reasonable time
(determined at the time the loan is made) will be used as the
principal residence of the Participant, the repayment schedule may be
for a term in excess of five years; and
58
<PAGE>
(v) The loan shall be adequately secured and may be secured by no
more than 50% of the Participant's vested interest in the Account
Balance of his or her Accounts.
(c) If a Participant or Beneficiary requests and is granted a loan,
and the loan is made from Participant-Directed Assets, principal and
interest payments with respect to the loan shall be credited solely to the
Account of the borrowing Participant from which the loan was made. Any loss
caused by nonpayment or other default on a Participant's loan obligations
shall be charged solely to that Account. Any other loan shall be treated as
an investment of the Trust Fund and interest and principal payments on
account thereof shall be credited to the Trust Fund. The Administrator
shall determine the order of Accounts from which a loan may be made.
(d) Anything herein to the contrary notwithstanding:
(i) In the event of a default, foreclosure on the promissory note
will not occur until a distributable event occurs under this Article
V;
(ii) No loan will be made to any Owner-Employee or to any
"shareholder-employee" of the Employer or a Participating Affiliate or
with respect to any amounts attributable to a Rollover Contribution or
a trust to trust transfer and relating to prior participation by such
an individual in a Qualified Plan. For this purpose, a
"shareholder-employee" means an employee or officer of an electing
small business, i.e., an "S corporation" as defined in Code Section
1361, who owns (or is considered as owning within the meaning of Code
Section 318(a)(1)) an any day during the taxable year of such
corporation, more than 5% of the outstanding stock of the corporation;
and
(iii) Loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to other
Employees.
(e) If a valid spousal consent has been obtained in accordance with
Section 5.08(b)(iii), then, notwithstanding any other provision of this
Plan, the portion of the Participant's vested Account used as a security
interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the
amount of the Participant's benefit payable at the time of death or
distribution, but only if the reduction is used as repayment of the loan.
If less than 100% of the Participant's vested benefit (determined without
regard to the preceding sentence) is payable to the Surviving Spouse, then
the Participant's benefit shall be adjusted by first reducing the
Participant's vested benefit by the amount of the security used as
repayment of the loan and then determining the benefit payable to the
Surviving Spouse.
59
<PAGE>
SECTION 5.09. HARDSHIP DISTRIBUTIONS.
(a) Effective January 1, 1989, if available and elected by the
Employer in the Adoption Agreement, a Participant may request a
distribution due to hardship from the vested portion of his or her Accounts
(other than from his or her Qualified Nonelective Contributions Account,
Qualified Matching Contributions Account or earnings accrued after December
31,1988 on the Participant's Elective Deferrals) only if the distribution
is made both due to an immediate and heavy financial need of the
Participant and is necessary to satisfy such financial need.
(b) A hardship distribution shall be permitted only if the
distribution is due to:
(i) expenses incurred or necessary for medical care described in
Code Section 213(d) incurred by the Participant, the Participant's
Spouse or any dependents of the Participant (as defined in Code
Section 152);
(ii) purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) payment of tuition and related educational fees for the
next 12 months of post-secondary education for the Participant, his or
her Spouse, children or dependents;
(iv) the need to prevent the eviction of the Participant from his
or her principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
(v) any other condition or event which the Commissioner of the
Internal Revenue Service determines is a deemed immediate and
financial need.
(c) A distribution will be considered necessary to satisfy an
immediate and heavy financial need of a Participant if all of the following
requirements are satisfied:
(i) The distribution will not be in excess of the amount of the
immediate and heavy financial need of the Participant (including
amounts necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution);
(ii) The Participant obtains all distributions, other than
hardship distributions, and all nontaxable loans currently available
under all plans maintained by the Employer or an Affiliate;
(iii) The Participant's Elective Deferrals, Employee Thrift
Contributions and Participant Voluntary Nondeductible Contributions
will be suspended for at least 12 months after receipt of the hardship
distribution in this Plan and in all other plans maintained by the
Employer or an Affiliate; and
60
<PAGE>
(iv) The Participant may not make Elective Deferrals for the
Participant's taxable year immediately following the taxable year of
the hardship distribution in excess of the applicable limit under Code
Section 402(g) for such next taxable year less the amount of such
Participant's Elective Deferrals for the taxable year of the
distribution in this Plan and in all other plans maintained by the
Employer or an Affiliate.
(d) If the distribution is made from any Account other than a 401(k)
Contributions Account, a distribution due to hardship may be made without
application of Section 5.09(c)(ii), 5.09(c)(iii) or 5.09(c)(iv).
SECTION 5.10. LIMITATION ON COMMENCEMENT OF BENEFITS.
(a) Anything in this Article V to the contrary notwithstanding a
Participant's Benefit Commencement Date shall in no event be later than the
sixtieth day after the close of the Plan Year in which the latest of the
following events occur:
(i) the attainment by the Participant of his or her Normal
Retirement Age;
(ii) the tenth anniversary of the year in which the Participant
commenced participation in the Plan; or
(iii) the Participant's termination of Employment.
Notwithstanding the foregoing, the failure of a Participant and Spouse
to consent to a distribution while a benefit is Immediately
Distributable shall be deemed to be an election to defer commencement
of payment of any benefit sufficient to satisfy this Section.
(b) If it is not possible to distribute a Participant's Accounts
because the Administrator has been unable to locate the Participant after
making reasonable efforts to do so, then a distribution of the
Participant's Accounts shall be made when the Participant can be located.
SECTION 5.11. DISTRIBUTION REQUIREMENTS.
(a) Subject to the Joint and Survivor Annuity rules set forth in
Article VI, the requirements of this Article shall apply to any
distribution of a Participant's interest and will take precedence over any
inconsistent provisions of this Plan. Unless otherwise specified, the
provisions of this Article apply to calendar years beginning after December
31, 1984. As used in this Section 5.11, each of the following terms shall
have the meaning for that term set forth in this Section 5.11(a):
(i) Applicable Life Expectancy. The life expectancy (or joint and
last survivor expectancy) calculated using the attained age of the
Participant (or designated Beneficiary) as of the Participant's (or
designated Beneficiary's) birthday in the applicable calendar year
reduced by one for each calendar year
61
<PAGE>
which has elapsed since the date Life Expectancy was first calculated.
If Life Expectancy is being recalculated, the Applicable Life
Expectancy shall be the Life Expectancy as so recalculated. The
applicable calendar year shall be the first distribution calendar
year, and if Life Expectancy is being recalculated, such succeeding
calendar year.
(ii) Designated Beneficiary. The individual who is designated as
the Beneficiary under the Plan in accordance with Code Section
401(a)(9). In the event that a Participant names a trust to be a
designated Beneficiary, such designation shall provide that, as of the
later of the date on which the trust is named as a Beneficiary or the
Participant's Required Beginning Date, and as of all subsequent
periods during which the trust is named as a Beneficiary, the
following requirements are met (i) the trust is a valid trust under
state law, or would be but for the fact that there is no corpus; (ii)
the trust is irrevocable; (iii) the Beneficiaries of the trust who are
Beneficiaries with respect to the trust's interest in the
Participant's benefits are identifiable from the trust instrument
within the meaning of Code Section 401(a)(9); and (iv) a copy of the
trust is provided to the Plan.
(iii) Distribution Calendar Year. A calendar year for which a
minimum distribution is required. For distributions beginning before
the Participant's death, the first Distribution Calendar Year is the
calendar year immediately preceding the calendar year which contains
the Participant's Required Beginning Date. For distributions beginning
after the Participant's death, the first Distribution Calendar Year is
the calendar year in which distributions are required to begin
pursuant to Section 7.02.
(iv) Life Expectancy. Life Expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the regulations issued under the
Code.
Unless otherwise elected by the Participant (or Spouse, in the
case of distributions described in Section 7.02) by the time
distributions are required to begin, Life Expectancies shall not be
recalculated annually. Such election shall be irrevocable as to the
Participant or Spouse and shall apply to all subsequent years. The
Life Expectancy of a nonspouse Beneficiary may not be recalculated.
(v) Required Beginning Date.
(A) General Rule. The Required Beginning Date of a
Participant is the first day of April of the calendar year
following the calendar year in which the Participant attains age
70 1/2.
(B) Transitional Rule. The Required Beginning Date of a
Participant who attains age 70 1/2 before January 1, 1988 shall
be determined in accordance with (1) or (2) below:
62
<PAGE>
(1) Non-5% Owners. The Required Beginning Date of a
Participant who is not a "5% owner" as defined in (iii)
below is the first day of April of the calendar year
following the calendar year in which the later of retirement
or attainment of age 70 1/2 occurs.
(2) 5% Owners. The Required Beginning Date of a
Participant who is a 5% owner during any year beginning
after December 31, 1979 is the first day of April following
the later of:
(I) the calendar year in which the Participant
attains age 70 1/2; or
(II) the earlier of the calendar year with or
within which ends the Plan Year in which the
Participant becomes a 5% owner, or the calendar year in
which the Participant retires.
The Required Beginning Date of a Participant who is not
a 5% owner who attains age 70 1/2 during 1988 and who has
not retired as of January 1, 1989 is April 1, 1990.
(C) 5% Owner. A Participant is treated as a 5% owner for purposes
of this Section 5.11 if such Participant is a 5% owner as defined in
Code Section 416(i) (determined in accordance with Section 416 but
without regard to whether the plan is top-heavy) at any time during
the Plan Year ending with or within the calendar year in which such
owner attains age 66 1/2 or any subsequent Plan Year.
(D) Once distributions have begun to a 5% owner under this
Section 5.11, they must continue to be distributed, even if the
Participant ceases to be a 5% owner in a subsequent year.
(b) All distributions required under this Section 5.11 shall be
determined and made in accordance with the Income Tax Regulations under
Code Section 401(a)(9), including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the regulations issued
under the Code. The entire interest of a Participant must be distributed or
begin to be distributed no later than the Participant's Required Beginning
Date.
(c) LIMITS ON DISTRIBUTION PERIODS. As of the first Distribution
Calendar Year, distributions, if not made in a lump sum, may only be made
over one of the following periods (or a combination thereof):
(i) the life of the Participant;
63
<PAGE>
(ii) the life of the Participant and a Designated Beneficiary;
(iii) a period certain not extending beyond the Life Expectancy
of the Participant; or
(iv) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated Beneficiary.
For calendar years beginning before January 1, 1989, if the
Participant's Spouse is not the Designated Beneficiary, the method of
distribution selected must assure that at least 50% of the present value of
the amount available for distribution is paid within the Life Expectancy of
the Participant.
(d) DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR.
(i) If the Participant's interest is to be paid in the form of
annuity distributions under the Plan (whether directly or in the form
of an annuity purchased from an insurance company), payments under the
annuity shall satisfy the following requirements:
(A) the annuity distributions must be paid in periodic
payments made at intervals not longer than one year,
(B) the distribution period must be over a life (or lives)
or over a period certain not longer than a Life Expectancy (or
joint life and last survivor expectancy) described in Code
Section 401(a)(9)(A)(ii) or Code Section 401(a)(9)(B)(iii),
whichever is applicable;
(C) the Life Expectancy (or joint life and last survivor
expectancy) for purposes of determining the period certain shall
be determined without recalculation of Life Expectancy;
(D) once payments have begun over a period certain, the
period certain may not be lengthened even if the period certain
is shorter than the maximum permitted;
(E) payments must either be nonincreasing or increase only
as follows:
(1) with any percentage increase in a specified and
generally recognized cost-of-living index;
(2) to the extent of the reduction to the amount of the
Participant's payments to provide for a survivor benefit
upon death, but only if the Beneficiary whose life was being
used to determine the distribution period described in
Section 5.11(d)(i)(C)
64
<PAGE>
dies and the payments continue otherwise in accordance with
that section over the life of the Participant;
(3) to provide cash refunds of Employee contributions
upon the Participants death, or
(4) because of an increase in benefits under the Plan.
(F) If the annuity is a life annuity (or a life annuity with
a period certain not exceeding 20 years), the amount which must
be distributed on or before the Participant's Required Beginning
Date (or, in the case of distributions after the death of the
Participant, the date distributions are required to begin
pursuant to Section 7.02) shall be the payment which is required
for one payment interval. The second payment need not be made
until the end of the next payment interval even if that payment
interval ends in the next calendar year. Payment intervals are
the periods for which payments are received, e.g., bimonthly,
monthly, semi-annually or annually.
If the annuity is a period certain annuity without a life
contingency (or is a life annuity with a period certain exceeding
20 years) periodic payments for each distribution calendar year
shall be combined and treated as an annual amount. The amount
which must be distributed by the Participant's Required Beginning
Date (or, in the case of distributions after the death of the
Participant, the date distributions are required to begin
pursuant to Section 7.02) is the annual amount for the first
Distribution Calendar Year. The annual amount for other
Distribution Calendar Years, including the annual amount for the
calendar year in which the Participant's Required Beginning Date
(or the date distributions are required to begin pursuant to
Section 7.02) occurs, must be distributed on or before December
31 of the calendar year for which the distribution is required.
(ii) Annuities purchased after December 31, 1988 are subject to
the following additional conditions:
(A) Unless the Participant's Spouse is the Designated
Beneficiary, if the Participant's interest is being distributed
in the form of a period certain annuity without a life
contingency, the period certain as of the beginning of the first
Distribution Calendar Year may not exceed the applicable period
determined using the table set forth in Q&A A-5 of Section
1.401(a)(9)-2 of the regulations issued under the Code.
(B) If the Participant's interest is being distributed in
the form of a joint and survivor annuity for the joint lives of
the Participant and a nonspouse Beneficiary, annuity payments to
be made on or after the
65
<PAGE>
Participant's Required Beginning Date to the Designated
Beneficiary after the Participant's death must not at any time
exceed the applicable percentage of the annuity payment for such
period that would have been payable to the Participant using the
table set forth in Q&A A-6 of Section 1.401(a)(9)-2 of the
regulations under the Code.
(iii) If payments under an annuity which complies with Section
5.11(d)(i) begin prior to January 1, 1989, the minimum distribution
requirements in effect as of July 27, 1987 shall apply to
distributions from this Plan, regardless of whether the annuity form
of payment is irrevocable. This transitional rule also applies to
defined annuity contracts distributed to or owned by the Participant
prior to January 1, 1989, unless additional contributions are made
under the Plan by the Employer or Affiliate with respect to such
contract.
(iv) If the form of distribution is an annuity made in accordance
with Section 5.11(d), any additional benefits accruing to the
Participant after his or her Required Beginning Date shall be
distributed as a separate and identifiable component of the annuity
beginning with the first payment interval ending in the calendar year
immediately following the calendar year in which such amount accrues.
(v) Any part of the Participant's interest which is in the form
of an individual account shall be distributed in a manner satisfying
the requirements of Code Section 401(a)(9).
(e) TRANSITIONAL RULE: SECTION 242 ELECTION. Notwithstanding the other
requirements of this Article and subject to the Joint and Survivor Annuity
rules set forth in Article VI, distribution on behalf of any Employee,
including a 5% owner, may be made in accordance with all of the following
requirements (regardless of when such distribution commences):
(i) The distribution by the trust is one which would not have
disqualified such trust under Code Section 401(a)(9) as in effect
prior to amendment by the Deficit Reduction Act of 1984;
(ii) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the trust is
being distributed or, if the Employee is deceased, by a Beneficiary of
such Employee;
(iii) Such designation was in writing, was signed by the Employee
or the Beneficiary, and was made before January 1, 1984;
(iv) The Employee had accrued a benefit under the Plan as of
December 31, 1983; and
66
<PAGE>
(v) The method of distribution designated by the Employee or the
Beneficiary specifies the time at which distribution will commence,
the period over which distributions will be made, and in the case of
any distribution upon the Employee's death, the Beneficiaries of the
Employee listed in order of priority.
A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required
information described above with respect to the distributions to be made
upon the death of the Employee.
For any distribution which commences before January 1, 1984, but
continues after December 31, 1983, the Employee, or the Beneficiary, to
whom such distribution is being made, will be presumed to have designated
the method of distribution under which the distribution is being made if
the method of distribution was specified in writing and the distribution
satisfies the requirements in subsections 5.11(e)(i) and (v).
If a designation is revoked any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9). If a designation is revoked
subsequent to the date distributions are required to begin, the trust must
distribute by the end of the calendar year following the calendar year in
which the revocation occurs the total amount not yet distributed to satisfy
Code Section 401(a)(9) but for the Section 242(b)(2) election. For calendar
years beginning after December 31, 1988, such distributions must meet the
minimum distribution incidental benefit requirements in Section
1.401(a)(9)-2 of the regulations issued under the Code. Any changes in the
designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another Beneficiary (one not
named in the designation) under the designation will not be considered to
be a revocation of the designation, so long as such substitution or
addition does not alter the period over which distributions are to be made
under the designation, directly or indirectly (for example, by altering the
relevant measuring life). In the case in which an amount is transferred or
rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3
of section 1.401(a)(9)-l of the regulations issued under the Code.
ARTICLE VI
FORMS OF PAYMENT OF RETIREMENT BENEFITS
SECTION 6.01. METHODS OF DISTRIBUTION.
(a) If the Plan is a money purchase pension plan or a target benefit
plan, a Participant's benefit shall be payable in the normal form of a
Qualified Joint and Survivor Annuity if the Participant is married on his
or her Benefit Commencement Date and in the normal form of an immediate
annuity for the life of the Participant if the Participant is not married
on that date. A Participant who terminated Employment on or after
satisfying the requirements for Early Retirement may elect to have his or
her Qualified Joint and Survivor Annuity distributed upon attainment of
such Early Retirement. If the Plan is a profit-sharing plan that satisfies
the requirements set forth in Section 6.01(b), a
67
<PAGE>
Participant's Accounts shall only be payable in the normal form of a
lump-sum distribution in accordance with Section 6.01(a)(ii) below. A
Participant in a money purchase pension plan, a target benefit plan or a
profit-sharing plan that does not satisfy the requirements set forth in
Section 6.01(b) may at any time after attaining age 35 and prior to his or
her Benefit Commencement Date elect, in accordance with Section 6.02, any
of the following optional forms of payment instead of the normal form:
(i) an Annuity Contract payable as:
(A) a single life annuity;
(B) a joint and 50% survivor annuity with a contingent
annuitant;
(C) a joint and 100% survivor annuity with a contingent
annuitant;
(D) an annuity for the life of the Participant with 120
monthly payments certain;
(ii) a lump-sum distribution in cash or in kind, or part in cash
and part in kind; or
(iii) in installment payable in cash or in kind, or part in cash
and part in kind am a period not in excess of that required to comply
with Section 5.11.4.
Anything in this Section 6.01(a) to the contrary notwithstanding, if
the value of a Participant's vested Account as of the applicable Valuation
Date is $3,500 or less, his or her benefit shall be paid in the form of a
lump-sum distribution and no optional form of benefit payment shall be
available.
(b) If the Plan is a profit-sharing plan, then (i) the Participant
cannot elect payments in the form of a Life annuity (this Section 6.01(b)
shall not apply if a life annuity form is an optional form preserved under
Code Section 411(d)(6)); (ii) on the death of the Participant, the
Participant's benefits will be paid to his or her Surviving Spouse, if any,
or, if his or her Surviving Spouse has already consented in a manner
conforming to an election under Section 6.02(d), then to the Participant's
Beneficiary; and (iii) the normal form of benefit shall be a lump-sum and
Sections 6.02(a), 6.02(b) and 6.02(d) shall not be applied by the
Administrator. A Participant in such a profit-sharing plan may also elect
to receive his or her benefit in the form of installments in accordance
with Section 6.01(a)(iii) of the Plan. This Section 6.01(b) shall not
apply, however, with respect to the Participant if it is determined that
the Plan is a direct or indirect transferee of a defined benefit plan, a
money purchase pension plan (including a target benefit plan) or a stock
bonus or profit-sharing plan which is subject to the survivor annuity
requirements of Code Sections 401(a)(11) and 417. In addition, this Section
6.01(b) shall not apply unless the Participant's Surviving Spouse, if any,
is the Beneficiary of (i) the
68
<PAGE>
proceeds of any insurance on the Participant's life purchased by Employer
contributions or (ii) forfeitures allocated to the Participant's Employer
Account or unless the Participant's Surviving Spouse has consented to the
Participant's designation of another Beneficiary as referred to in
subclause (iii) of this Section 6.01(b).
(c) The following transitional rules shall apply for those
Participants entitled to but not receiving benefits as of August 23, 1984:
(i) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by
Section 6.01 must be given the opportunity to elect to have Section
6.01 apply if such Participant is credited with at least one Hour of
Service under this Plan or a predecessor plan in a Plan Year beginning
on or after January 1, 1976, and such Participant had at least 10
Years of Service when he or she terminated from Employment.
(ii) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under this
Plan or a predecessor plan on or after September 2, 1974, and who is
not otherwise credited with an Hour of Service in a Plan Year
beginning on or after January 1, 1976, must be given the opportunity
to have his or her benefits paid in accordance with this Section
6.01(c)(iv).
(iii) The respective opportunities to elect (as described in
these Sections 6.01(c)(i) and (ii)) must be afforded to the
appropriate Participants during the period commencing on August 23,
1984, and ending on such Participant's Benefit Date.
(iv) Any Participant who has elected pursuant to Section
6.01(c)(ii) and any Participant who does not elect under Section
6.01(c)(i) or who meets the requirements of Section 6.01(c)(i), except
that such Participant does not have at least 10 Years of Service when
he or she terminates from Employment, shall have his or her benefits
distributed in accordance with all of the following requirements if
benefits would have been payable in the form of a single life annuity:
(A) Automatic Qualified Joint and Survivor Annuity. If
benefits in the form of a single life annuity become payable to a
married Participant who:
(1) begins to receive payments on or after Normal
Retirement Age;
(2) dies on or after Normal Retirement Age while in
active Employment;
69
<PAGE>
(3) begins to receive payments on or after the
"Qualified Early Retirement Age," as that term is defined
Section 6.01(c)(iv)(c)(1); or
(4) terminates from Employment on or after attaining
Normal Retirement Age (or Qualified Early Retirement Age)
and after satisfying the eligibility requirement for the
payment of benefits under the Plan and before his or her
Benefit Commencement Date; then such benefits will be
received in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has elected otherwise during
the election period which begins at least six months before
the Participant attains Qualified Early Retirement Age and
ends no earlier than 90 days before his or her Benefit
Commencement Date. Any election hereunder will be in writing
and may be changed by the Participant at any time.
(B) Election of Early Survivor Annuity. A Participant who is
employed after attaining the Qualified Early Retirement Age will
be given the opportunity to elect, beginning on the later of (1)
the ninetieth day before he or she attains his or her Qualified
Early Retirement Age or (2) the date on which participation
begins, and ending on the date he or she terminates Employment,
to have a survivor annuity payable on death. If the Participant
elects the survivor annuity, payments under such annuity must not
be less than the payments which would have been made to the
Spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any
election under this provision will be in writing and may be
changed by the Participant at any time.
(C) Qualified Early Retirement Age.
(1) For purposes of this Section 6.01(c), Qualified
Early Retirement Age is the latest of:
(a) the earliest date, under the Plan, on which
the Participant may elect to receive retirement
benefits;
(b) the first day of the 120th month beginning
before the Participant reaches Normal Retirement Age;
or
(c) the date the Participant begins participation.
(2) Qualified Joint and Survivor Annuity is an annuity
for the life of the Participant with a survivor annuity for
the life of the Spouse as described in Article I.
70
<PAGE>
SECTION 6.02. ELECTION OF OPTIONAL FORMS.
(a) By notice to the Administrator at any time prior to a
Participant's date of death and beginning on the first day of the Plan Year
in which the Participant attains age 35, the Participant may elect in
writing not to receive the normal form of benefit payment otherwise
applicable and to receive instead an optional form of benefit payment
provided for in Section 6.01(a). If the Participant separates from
Employment prior to the first day of the Plan Year in which the Participant
attains age 35, the Participant may make such election beginning on the
date he or she separates from Employment. This Section 6.02(a) shall not be
applicable if Section 6.01(b) applies to a Participant
(b) Within a reasonable period, but in any event no less than 30 and
no more than 90 days prior to each Participant's Benefit Commencement Date,
the Administrator shall provide to each Participant a written explanation
of the terms and conditions of a Qualified Joint and Survivor Annuity. Such
written explanation shall consist of:
(i) the terms and conditions of the Qualified joint and Survivor
Annuity;
(ii) the Participants right to make, and the effect of, an
election to waive the Qualified Joint and Survivor Annuity;
(iii) the rights of the Participant's Spouse under Section
6.02(d);
(iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified joint and Survivor Annuity;
and
(v) the relative values of the various optional forms of benefit
under the Plan.
The Administrator may, on a uniform and nondiscriminatory basis,
provide for such other notices, information or election periods or take
such other action as the Administrator considers necessary or appropriate
to implement the provisions of this Section 6.02(b).
(c) A Participant may revoke his or her election to take an optional
form of benefit, and elect a different form of benefit, at any time prior
to the Participant's Benefit Commencement Date.
(d) The election of an optional benefit by a Participant after
December 31, 1984 must also be a waiver of a Qualified Joint and Survivor
Annuity by the Participant. Any waiver of a Qualified Joint and Survivor
Annuity shall not be effective unless (A) the Participant's Spouse consents
in writing; (B) the election designates a specific alternate Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries which
may not be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent); (C)
the Spouse's
71
<PAGE>
consent to the waiver is witnessed by a Plan representative or notary
public; and (D) the Spouse's consent acknowledges the effect of the
election. Additionally, a Participant's waiver of the Qualified Joint and
Survivor Annuity will not be effective unless the election designates a
form of benefit payment which may not be changed without spousal consent or
the Spouse expressly permits designations without any further spousal
consent. Notwithstanding this consent requirement, if the Participant
establishes to the satisfaction of a Plan representative that such written
consent may not be obtained because there is no Spouse or the Spouse cannot
be located, the election will be deemed effective. Any consent necessary
under this provision will not be valid with respect to any other Spouse. A
consent that permits designations by the Participant without arty
requirement of further consent by such Spouse must acknowledge that the
Spouse has the right to limit consent to a specific Beneficiary, and a
specific form of benefit, where applicable, and that the Spouse voluntarily
elects to relinquish either or both of such rights. Additionally, a
revocation of a prior waiver may be made by a Participant without the
consent of the Spouse at any time before his or her Benefit Commencement
Date. The number of revocations shall not be limited. Any new waiver will
require a new consent by the electing Participant's Spouse. No consent
obtained under this provision shall be valid unless the Participant has
received notice as provided in this Section.
(e) The election of an optional form of benefit which contemplates the
payment of an annuity shall not be given effect if any person who would
receive benefits under the annuity dies before the Benefit Commencement
Date.
SECTION 6.03. CHANGE IN FORM OF BENEFIT PAYMENTS. Any former Employee whose
payments are being deferred or who is receiving installment payments may request
acceleration or other modification of the form of benefit distribution, subject
to Code Section 401(a)(9), provided that any necessary consent to such change
required pursuant to Section 6.02(d) is obtained from the Employee's Spouse.
This Section 6.03 shall not apply to any Employee who becomes a Participant on
or after January 1, 1989 or to Plans adopted after that date:
SECTION 6.04. DIRECT ROLLOVERS.
(a) The provisions of this Section 6.04 apply only to distributions
made on or after January 1, 1993.
(b) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee's election under this Section 6.04, a
Distributee may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the Distributee
in a Direct Rollover.
(c) DEFINITIONS. All terms used in this Section 6.04 shall have the
meaning set forth below:
(i) Eligible Rollover Distribution. An Eligible Rollover
Distribution is any distribution of all or any portion of the balance
to the credit of the
72
<PAGE>
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 10 years or more;
any distribution to the extent such distribution is required under
Code Section 401(a)(9); and the portion of any distribution that is
not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
(ii) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a) that accepts the Distributee's
Eligible Rollover Distribution. However, in the case of an Eligible
Rollover Distribution to the Surviving Spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement
annuity.
(iii) Distributee. A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's Surviving
Spouse and the Employee's or former Employee's Spouse or former Spouse
who is the alternate payee under a qualified domestic relations order,
as defined in Code Section 414(p), are Distributees with regard to the
interest of the Spouse or former Spouse.
(iv) Direct Rollover. A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
ARTICLE VII
DEATH BENEFITS
SECTION 7.01. PAYMENT OF ACCOUNT BALANCES.
(a) The benefits payable to the Beneficiary of a Participant who dies
while an Employee shall be the Account Balance of all of his or her
Accounts, including, if applicable, the proceeds of any life insurance
contract in effect on the Participant's life in accordance with Section
7.03. The benefits payable to the Beneficiary of a Participant who dies
after terminating Employment shall be the vested Account Balance of all of
his or her Accounts. Except as otherwise provided in this Article VII, a
Beneficiary may request that he or she be paid his or her benefits as soon
as practicable after the Participant's death.
(b) If a Participant dies before distribution of his or her entire
interest in the Plan has been completed, the remaining interest shall,
subject to Section 7.02(e), be distributed to the Participant's Beneficiary
in the form, at the time and from among the
73
<PAGE>
methods specified in Section 6.01(a) as elected by the Beneficiary in
writing filed with the Administrator. If an election is not received by the
Administrator within 90 days following the date the Administrator is
notified of the Participant's death, the distribution shall be made, if to
a Surviving Spouse, in accordance with Section 7.02(e)(ii), and, if to some
other Beneficiary, to the Beneficiary in a lump sum.
(c) The value of the benefits payable to a Beneficiary shall be
determined in accordance with Section 10.06(b). If the value of such death
benefit is $3,500 or less, distribution of such benefit shall be made in a
lump sum as soon as practicable following the death of the Participant.
SECTION 7.02. BENEFICIARIES.
(a) The Administrator shall provide each Participant, within the
period described in Section 7.02(a)(i) for such Participant, a written
explanation of the death benefit in such terms and in such a manner as
would be comparable to the explanation provided for meeting the
requirements applicable to a Qualified Joint and Survivor Annuity. This
Section 7.02(a) shall not be applicable if Section 6.01(b) applies to a
Participant.
(i) The period for providing a written explanation of the death
benefit for a Participant ends on the latest of the following to
occur:
(A) the period beginning with the first day of the Plan Year
in which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the Participant
attains age 35;
(B) a reasonable period aiding after the Employee becomes a
Participant; or
(C) a reasonable period ending after Code Section 417 first
applies to the Participant.
Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after termination of Employment in case of a
Participant who terminates Employment before attaining age 35 and who
has a vested interest in his or her Account.
(ii) For purposes of the preceding paragraph, a reasonable period
ending after the enumerated events described in (ii) and (iii) is the
end of the two-year period beginning one year prior to the date the
applicable event occurs and ending one year after that date. A
Participant who has a vested interest in his or her Account and who
terminates Employment before the Plan in which age 35 is attained,
shall be provided such notice within the two-year period beginning one
year prior to and ending one year after termination. If such a
Participant
74
<PAGE>
returns to Employment, the applicable period for such Participant
shall be redetermined.
(b) A Participant shall designate one or more Beneficiaries to whom
amounts due after his or her death, other than under the Qualified Joint
and Survivor Annuity, shall be paid. In the event a Participant fails to
make a proper designation or in the event that no designated Beneficiary
survives the Participant, the Participant's Beneficiary shall be the
Participant's Surviving Spouse, or if the Participant has no Surviving
Spouse, the legal representative of the Participant's estate as an asset of
that estate. A Participant's Beneficiary shall not have any right to
benefits under the Plan unless he or she shall survive the Participant.
(c) Any designation of a Beneficiary incorporated into an Annuity
Contract or insurance contract shall be governed by the terms of such
Annuity Contract or insurance contract. Any other designation of a
Beneficiary must be filed with the Administrator, in a time and manner
designated by such Administrator, in order to be effective. Any such
designation of a Beneficiary may be revoked by filing a later designation
or an instrument of revocation with the Administrator, in a time and manner
designated by the Administrator.
(d) Effective after December 31, 1984, a married Participant whose
designation of a Beneficiary is someone other than his or her Spouse,
including a Beneficiary referred to in the first sentence of Section
7.02(c), or the change of any such Beneficiary to a new Beneficiary other
than the Participant's Spouse, shall not be valid unless made in writing
and consented to by the Participant's Spouse in such terms and in such a
manner as would be comparable to the consent provided for a waiver of the
Qualified Joint and Survivor Annuity. The Spouse's consent to such
designation must be made in the manner described in Section 6.02(d).
(e) Notwithstanding any other provision of the Plan to the contrary:
(i) If the Participant dies after his or her Benefit Commencement
Date, but before distribution of his or her benefit has been
completed, the remaining portion of such benefit may continue in the
form and over the period in which the distributions were being made,
but in any event must continue to be made at least as rapidly as under
the method of distribution being used prior to the Participant's
death.
(ii) If the Participant dies leaving a Surviving Spouse before
his or her Benefit Commencement Date, the Participant's benefit shall
be payable to the Participant's Surviving Spouse in the form of an
annuity for the life of the Surviving Spouse. The preceding sentence
shall not apply if, within 90 days following the date the
Administrator is notified of the Participant's death, his or her
Surviving Spouse elects, by written notice to the Administrator, any
other form of benefit payment specified in Section 6.01(a), or such
Surviving Spouse has already consented in a manner described in
Section 6.02(d) to a distribution to
75
<PAGE>
an alternate Beneficiary designated by the Participant. If the Plan is
a profit-sharing plan which meets the requirements of Section 6.01(b),
the Surviving Spouse shall receive his or her distribution in the form
of a lump-sum unless she or he elects within 90 days following the
date the Administrator is notified of the Participant's death, any
other form of benefit payment specified in Section 6.01(a), or the
Participant's Surviving Spouse has already consented in a manner
described in Section 6.02(d) to a distribution to an alternate
Beneficiary designated by the Participant. If the Participant's
benefit is $3,500 or less, distribution shall be made in the form of a
lump sum, comprised of the assets in the Account immediately prior to
the distribution if the Account consists of Participant-Directed
Assets. If the Account does not consist of Participant-Directed
Assets, the distribution shall be in cash. If the Participant's
benefit is distributable in the form of an annuity for the life of the
Surviving Spouse, the Surviving Spouse may elect to have such annuity
distributed immediately.
(iii) If the Participant dies before his or her Benefit
Commencement Date, the distribution of the Participant's entire
interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death except to
the extent that an election is made by the designated Beneficiary
involved to receive distributions in accordance with (A) or (B) below
of this subsection (iii):
(A) if any portion of the Participant's interest is payable
to a designated Beneficiary who is an individual, distributions
may be made in substantially equal installments over the life or
Life Expectancy, as defined in Section 5.11(a)(iv), of the
designated Beneficiary commencing on or before December 31 of the
calendar year immediately following the calendar year of the
Participant's death,
(B) If the designated Beneficiary is the Participant's
Surviving Spouse, the date distributions are required to begin in
accordance with (A) of this subsection (iii) shall not be earlier
than the later of December 31 of the calendar year in which the
Participant died and December 31 of the calendar year in which
the Participant would have attained age 65; and
(C) if the Surviving Spouse dies before payments begin
subsequent distributions shall be made as if the Surviving Spouse
had been the Participant.
(iv) For purposes of this Section 7.02(e), distribution of a
Participant's interest is considered to begin on the Participant's
Required Beginning Date, as defined in Section 5.11(a)(v). If
distribution in the form of an annuity irrevocably
76
<PAGE>
commences to the Participant before such Required Beginning Date, the
date distribution is considered to begin is the date distribution
actually commences.
(v) For purposes of this Section 7.02(e), any amount paid to a
child of the Participant will be treated as if it had been paid to the
Participant's Surviving Spouse if the amount becomes payable to such
Surviving Spouse when the child reaches the age of majority.
(vi) If the Participant has not made an election pursuant to this
Section 7.02(e) by the time of his or her death, the Participant's
designated Beneficiary must elect the method of distribution no later
than the earlier of (i) December 31 of the calendar year in which
distributions would be required to begin under this Section or (ii)
December 31 of the calendar year which contains the fifth anniversary
of the date of death of the Participant. If the Participant has no
designated Beneficiary, or if the designated Beneficiary does not
elect a method of distribution, distribution of the Participant's
entire interest must be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
SECTION 7.03. LIFE INSURANCE.
(a) With the consent of the Administrator and upon such notice as the
Administrator may require, a Participant may direct that a portion of his
or her Account be used to pay premiums on life insurance on the
Participant's life; provided, however, that (a) the aggregate premiums paid
on ordinary life insurance must be less than 50% of the aggregate
contributions allocated to the Participant's Employer Accounts, (b) the
aggregate premiums paid on term life insurance contracts, universal life
insurance contracts and all other life insurance contracts which are not
ordinary life insurance may not exceed 25% of the aggregate contributions
allocated to the Participant's Employer Account and (c) the sum of one-half
of the premiums paid on ordinary life insurance and the total of all other
life insurance premiums may not exceed 25% of the aggregate contributions
allocated to the Employer Account of the Participant. For purposes of these
limitations, ordinary life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums.
(b) The Trustee shall be the owner of each life insurance contract
purchased under this Section 7.03 and the proceeds of each such contract
shall be payable to the Trustee, provided that all benefits, rights and
privileges under each contract on the life of a Participant which are
available while the Participant is living shall be exercised by the Trustee
only upon and in accordance with the written instructions of the
Participant. The proceeds of all such insurance on the life of a
Participant shall be paid over by the Trustee to the Participant's
Beneficiary in accordance with this Article VII. Under no circumstances
shall the Trustee retain any part of the proceeds.
77
<PAGE>
(c) Any dividends or credits earned on a life insurance contract shall
be applied when received in reduction of any premiums thereon, or, if no
premiums are due, applied to increase the proceeds of the insurance
contract.
(d) If a Participant is found by the Administrator to be insurable
only at a substandard premium rate, the policy shall provide a reduced
death benefit using the same premium as would be required if the
Participant were a standard risk, the amount of the death benefit being
determined in accordance with the amount of the rating.
(e) The cash surrender value of an insurance contract to the extent
deriving from Employer or Participant contributions, if any, shall be
included, respectively, in the Account Balance of the Account from which
the premiums were paid. Any death benefits under an insurance contract
payable before the Participant's termination of Employment will be paid to
the Trustee for addition to the relevant Account of the Participant for
distribution in accordance with Section 7.01.
(f) Any other provisions herein to the contrary notwithstanding, the
purchase of life insurance for any Participant shall be subject to such
minimum premium requirements as the Trustee may determine from time to
time.
(g) Premiums on life insurance contracts on a Participant's life shall
be paid by the Trustee, unless directed otherwise by the Participant, first
from cash in the Participant's Employer Accounts to the extent thereof, and
then from cash in the Participant's Participant Contributions Accounts, if
any, to the extent thereof. If there is insufficient cash in either Account
to pay premiums due, the Trustee shall notify the Participant of this fact.
If the Participant does not instruct the Trustee to sell sufficient assets
in an Account of the Participant to pay premiums due on a timely basis, the
Trustee shall not be obligated to take any further action with respect to
any life insurance contract on the Participant's life, whether as regards
continuing insurance on a paid-up basis, effecting a reduction of the
insurance in force, or otherwise, except at the direction of the
Participant.
(h) Prior to such time as a Participant becomes entitled to receive a
distribution of any benefits under this Plan for any reason other than the
Participant's death, the Trustee shall, pursuant to the written direction
of the Participant delivered to the Administrator within such period of
time as is acceptable to the Administrator, either convert all life
insurance contracts on the Participant's life into cash or an annuity to
provide current or future retirement income to the Participant or
distribute the contracts to the Participant as a part of a benefit
distribution; provided, however, that:
(i) The contracts shall not be distributed unless, if the
Participant is married at the time the distribution of the contracts
is to be made, and the Plan is a money purchase pension plan, a target
benefit plan or a profit-sharing plan to which Section 6.01(b) does
not apply, the Participant's Spouse at that time consents to a
distribution in the manner prescribed by Section 6.02(d); and
78
<PAGE>
(ii) If the cash value of any contracts at the time they become
distributable to a Participant exceeds a Participant's vested interest
in his or her Employer Accounts at that time, the Participant shall be
entitled to receive a distribution of such contracts only if the
Participant promptly pays such excess in cash to the Trust Fund.
Life insurance contracts on a Participant's life shall not continue to
be maintained under the Plan following the Participant's termination of
Employment or after Employer contributions have ceased.
If a Participant on whose life an insurance contract is held does not
make a timely and proper direction regarding the contract under this
Section 7.03(h), the Participant shall be deemed to have directed that the
contract be converted into cash to be distributed in the manner in which
the Participant's benefit is to be distributed.
(i) Anything contained herein to the contrary notwithstanding, in the
event of any conflict between the terms of the Plan and the terms of any
insurance contract purchased under this Section 7.03, the provisions of the
Plan shall control.
ARTICLE VIII
FIDUCIARIES
SECTION 8.01. NAMED FIDUCIARIES.
(a) The Administrator shall be a "named fiduciary" of the Plan, as
that term is defined in ERISA Section 402(a)(2), with authority to control
and manage the operation and administration of the Plan, other than
authority to manage and control Plan assets. The Administrator shall also
be the "administrator" and "plan administrator" with respect to the Plan,
as those terms are defined in ERISA Section 3(16)(A) and in Code Section
414(g), respectively.
(b) The Trustee, or Investment Committee if appointed by the Employer,
shall be a "named fiduciary" of the Plan, as that term is defined in ERISA
Section 402(a)(2), with authority to manage and control all Trust Fund
assets and to select an Investment Manager or Investment Managers. If
Merrill Lynch Trust Company is the Trustee, it shall be a nondiscretionary
trustee; an Investment Committee shall be appointed and shall be the
Employer, who may also remove such Investment Committee; and the Investment
Committee shall be the "named fiduciary" with respect to Trust Fund assets.
Anything in this Section 8.01(b) to the contrary notwithstanding, with
respect to Participant-Directed Assets, the Participant or Beneficiary
having the power to direct the investment of such assets shall be the
"named fiduciary" with respect thereto.
(c) The Trustee, or Investment Committee if appointed by the Employer,
shall have the power to make and deal with any investment of the Trust Fund
permitted in
79
<PAGE>
Section 10.04, except Participant-Directed Assets or assets for which an
Investment Manager has such power, in any manner which it deem advisable
and shall also:
(i) establish and carry out a funding policy and method
consistent with the objectives of the Plan and the requirements of
ERISA;
(ii) have the power to select Annuity Contracts, if applicable;
(iii) have the power to determine, if applicable, what
investments specified in Section 10.04, including, without limitation,
Qualified Employer Securities and regulated investment company shares,
are available as Participant-Directed Assets; and
(iv) have all the rights, powers, duties and obligations granted
or imposed upon it elsewhere in the Plan.
SECTION 8.02. EMPLOYMENT OF ADVISERS. A "named fiduciary," with respect to
the Plan (as defined in ERISA Section 402(a)(2)) and any "fiduciary" (as defined
in ERISA Section 3(4)) appointed by such a "named fiduciary," may employ one or
more persons to render advice with regard to any responsibility of such "named
fiduciary" or "fiduciary" under the Plan.
SECTION 8.03. MULTIPLE FIDUCIARY CAPACITIES. Any "named fiduciary" with
respect to the Plan (as defined in ERISA Section 402(a)(2)) and any other
"fiduciary" (as defined in ERISA Section 3(4)) with respect to the Plan may
serve in more than one fiduciary capacity.
SECTION 8.04. INDEMNIFICATION. To the extent not prohibited by state or
federal law, the Employer agrees to, and shall indemnify and save harmless, as
the case may be, each Administrator (if a person other than the Employer),
Trustee, Investment Committee and/or any Employee, officer or director of the
Employer, or an Affiliate, from all claims for liability, loss, damage or
expense (including payment of reasonable expenses in connection with the defense
against any such claim) which result from any exercise or failure to exercise
any of the indemnified person's with respect to the Plan, other than by reason
of gross negligence.
SECTION 8.05. PAYMENT OF EXPENSES.
(a) All Plan expenses, including, without limitation, expenses and
fees (including fees for legal services rendered and fees to the Trustee)
of the Sponsor, Administrator, Investment Manager, Trustee and any
insurance company shall be charged against and withdrawn from the Trust
Fund; provided, however, the Employer may pay any of such expenses or
reimburse the Trust Fund for any payment.
(b) All transactional costs or charges imposed or incurred (if any)
for Participant-Directed Assets shall be charged to the Account of the
directing Participant or Beneficiary. Transactional costs and charges shall
include, but shall not be limited to, charges for the acquisition or sale
or exchange of Participant-Directed brokerage commissions, service charges
and professional fees.
80
<PAGE>
(c) Any taxes which may be imposed upon the Trust Fund or the income
therefrom shall be deducted from and charged against the Trust Fund.
ARTICLE IX
PLAN ADMINISTRATION
SECTION 9.01. THE ADMINISTRATOR.
(a) The Employer may appoint one or more persons as Administrator, who
may also be removed by the Employer. If any individual is appointed as
Administrator, and the individual is an Employee, the individual will be
considered to have resigned as Administrator if he or she terminates
Employment and at least one other person continues to serve as
Administrator. Employees shall receive no compensation for their services
rendered to or as Administrator.
(b) If more than one person is designated as Administrator, the
Administrator shall act by a majority of its members at the time in office
and such action may be taken either by a vote at a meeting or in writing
without a meeting. However, if less than three members are appointed, the
Administrators shall act only upon the unanimous consent of its members. An
Administrator who is also a Participant shall not vote or act upon any
matter relating to himself or herself, unless such person is the sole
Administrator.
(c) The Administrator may authorize in writing any person to execute
any document or documents on the Administrator's behalf, and any interested
person, upon receipt of notice of such authorization directed to it, may
thereafter accept and rely upon any document executed by such authorized
person until the Administrator shall deliver to such interested person a
written revocation of such authorization.
SECTION 9.02. POWERS AND DUTIES OF THE ADMINISTRATOR.
(a) The Administrator shall have the power to construe the Plan and to
determine all questions of fact or interpretation that may arise
thereunder, and any such construction or determination shall be
conclusively binding upon all persons interested in the Plan.
(b) The Administrator shall have the power to promulgate such rules
and procedures, to maintain, or cause to be maintained such records and to
issue such forms as it shall deem necessary and proper for the
administration of the Plan.
(c) Subject to the terms of the Plan, the Administrator shall
determine the time and manner in which all elections authorized by the Plan
shall be made or revoked.
(d) The Administrator shall have all the rights, powers, duties and
obligations granted to or imposed upon it elsewhere in the Plan.
81
<PAGE>
(e) The Administrator shall exercise all of its responsibilities in a
uniform and nondiscriminatory manner.
SECTION 9.03. DELEGATION OF RESPONSIBILITY. The Administrator may designate
persons, including persons other than "named fiduciaries" (as defined in ERISA
Section 402(a)(2)) to carry out the specified responsibilities of the
Administrator and shall not be liable for any act or omission of a person so
designated.
ARTICLE X
TRUSTEE AND INVESTMENT COMMITTEE
SECTION 10.01. APPOINTMENT OF TRUSTEE AND INVESTMENT COMMITTEE.
(a) The Employer shall appoint one or more persons as a Trustee who
shall serve as such for all or a portion of the Trust Fund. By executing
the Adoption Agreement (i) the Employer represents that all necessary
action has been taken for the appointment of the Trustee; (ii) the Trustee
acknowledges that it accepts such appointment; and (iii) both the Employer
and the Trustee agree to act in accordance with the Trust provisions
contained in this Article X.
(b) An Employee appointed as Trustee or to the Investment Committee
shall receive no compensation for services rendered in such capacity and
will be considered to have resigned if he or she terminates Employment and
at least one other person continues to act as Trustee or as the Investment
Committee, as the case may be. If Merrill Lynch Trust Company is the
Trustee, the Employer shall appoint an Investment Committee and Merrill
Lynch Trust Company shall be a nondiscretionary trustee.
(c) If more than one person is acting as the Trustee, or as an
Investment Committee, such Trustee, or Investment Committee, shall act by a
majority of the persons at the time so acting and such action may be taken
either by a vote at a meeting or in writing without a meeting. If less than
three members are serving, the Trustee, or Investment Committee, shall act
only upon the unanimous consent of those serving.
The Trustee or Investment Committee may authorize in writing any person
to execute any document or documents on its behalf, and any interested person,
upon receipt of notice of such authorization directed to it, may thereafter
accept and rely upon any document executed by such authorized person until the
Trustee or Investment Committee shall deliver to such interested person a
written revocation of such authorization.
SECTION 10.02. THE TRUST FUND. The Trustee shall receive such sums of money
or other property acceptable to the Trustee which shall from time to time be
paid or delivered to the Trustee under the Plan. The Trustee shall hold in the
Trust Fund all such assets, without distinction between principal and income,
together with all property purchased therewith and the proceeds thereof and the
earnings and income thereon. The Trustee shall not be responsible for, or have
any duty to enforce, the collection of any contributions or assets to be paid or
transferred
82
<PAGE>
to it, or for verifying whether contributions or transfers to it are allowable
under the Plan, nor shall the Trustee be responsible for the adequacy of the
Trust Fund to meet or discharge liabilities under the Plan.
(a) The Trustee shall receive in cash or other assets acceptable to
the Trustee, so long as such assets received do not constitute a prohibited
transaction, all contributions paid or delivered to it which are allocable
under the Plan and to the Trust Fund and all transfers paid or delivered
under the Plan to the Trust Fund from a predecessor trustee or another
trust (including a trust forming part of another plan qualified under Code
Section 401(a); provided, however, that the Trustee shall not be obligated
to receive any such contribution or transfer unless prior thereto or
coincident therewith, as the Trustee may specify, the Trustee has received
such reconciliation, allocation, investment or other information
concerning, or such direction, contribution or representation with respect
to, the contribution or transfer or the source thereof as the Trustee may
require. The Trustee shall have no duty or authority to (i) require any
contributions or transfers to be made under the Plan or to the Trustee,
(ii) compute any amount to be contributed or transferred under the Plan to
the Trustee or (iii) determine whether amounts received by the Trustee
comply with the Plan.
(b) The Trust Fund shall consist of all money and other property
received by the Trustee pursuant to Section 10.02, increased by any income
or gains on or increment in such assets and decreased by any investment
loss or expense, benefit or disbursement paid pursuant to the Plan.
SECTION 10.03. RELATIONSHIP WITH ADMINISTRATOR.
(a) Neither the Trustee, nor the Investment Committee, if any, shall
be responsible in any respect for the administration of the Plan. Payments
of money or property from the Trust Fund shall be made by the Trustee upon
direction from the Administrator or its designee. Payments by the Trustee
shall be transmitted to the Administrator or its designee for delivery to
the proper payees or to payee addresses supplied by the Administrator or
its designee, and the Trustee's obligation to make such payments shall be
satisfied upon such transmittal. The Trustee shall have no obligation to
determine the identity of persons entitled to payments under the Plan or
their addresses.
(b) Directions from or on behalf of the Administrator or its designee
shall be communicated to the Trustee or the Trustee's designee for that
purpose only in a manner and in accordance with procedures acceptable to
the Trustee. The Trustee's designee shall not, however, be empowered to
implement any such directions except in accordance with procedures
acceptable to the Trustee. The Trustee shall have no liability for
following any such directions or failing to act in the absence of any such
directions. The Trustee shall have no liability for the acts or omissions
of any person making or failing to make any direction under the Plan or the
provisions of this Article X or any duty or obligation to review any such
direction, act or omission.
83
<PAGE>
(c) If a dispute arises over the propriety of the Trustee making any
payment from the Trust Fund, the Trustee may withhold the payment until the
dispute has been resolved by a court of competent jurisdiction or settled
by the parties to the dispute. The Trustee may consult legal counsel and
shall be fully protected in acting upon the advice of counsel.
SECTION 10.04. INVESTMENT OF ASSETS.
(a) Except as provided in Section 10.04(b) below, investments of the
Trust Fund shall be made in the following but only if compatible with the
Sponsor's administrative and operational requirement and framework:
(i) shares of any regulated investment company managed in whole
or in part by the Sponsor or any affiliate of the Sponsor;
(ii) any property purchased through the Sponsor or any affiliate
of the Sponsor, whether or not productive of income or consisting of
wasting assets, including, without limitation, by specification,
governmental, corporate or personal obligations, trust and
participation certificates, leaseholds, fee titles, mortgages and
other interests in realty, preferred and common stocks, convertible
stocks and securities, shares of regulated investment companies,
certificates of deposit, put and call options and other option
contracts of any type, foreign or domestic, whether or not traded on
any exchange, futures contracts and options on futures contracts
traded on or subject to the rules of an exchange which has been
designated as a contract market by the Commodity Futures Trading
Commission, an independent U.S. government agency, contracts relating
to the lending of property, evidences of indebtedness or ownership in
foreign corporations or other enterprises, or indebtedness of foreign
governments, group trust participations, limited or general
partnership interests, insurance contracts, annuity contracts, any
other evidences of indebtedness or ownership including oil, mineral or
gas properties, royalty interests or rights (including equipment
pertaining thereto); and
(iii) Qualifying Employer Securities or "qualifying employer real
properties" (as that term is defined in ERISA Section 407(d) to the
extent permitted in Section 10.04(c)).
(b) (i) Up to 25% or with the written consent of the Sponsor or its
representative, an additional percentage of each Plan Year's contributions
may be invested in property as specified in Section 10.04(a)(ii) acquired
through a person other than the Sponsor or an affiliate of the Sponsor.
(ii) Except as permitted by Section 10.04(b) and except as may
result from a Rollover Contribution or a trust to trust transfer,
without the written consent of the Sponsor or its representative,
property may not be acquired through a person other than the Sponsor
or an affiliate of the Sponsor if following such acquisitions the
value of the Property so acquired would exceed 25% of the value of the
Trust Fund.
84
<PAGE>
(c) In its sole discretion, the Investment Committee, or Trustee if
there is no Investment Committee:
(i) may permit the investment of up to 10% of the Trust Fund in
Qualifying Employer Securities or "qualifying employer real property"
(as that term is defined in ERISA Section 407(d)), to the extent such
investment is compatible with the Sponsor's administrative and
operational requirements and framework; and
(ii) may determine, subject to Section 10.04(b), that a
percentage of assets in excess of 10% of the Trust Fund may be
invested in Qualifying Employer Securities or "qualifying employer
real property" by a profit-sharing plan.
(d) This Plan will be recognized as a Prototype Plan by the Sponsor
only by complying with the provisions of this Section 10.04.
SECTION 10.05. INVESTMENT DIRECTION, PARTICIPANT-DIRECTED ASSETS AND
QUALIFYING EMPLOYER INVESTMENTS.
(a) The Trustee, or Investment Committee if appointed, shall manage
the investment of the Trust Fund except insofar as (a) an Investment
Manager has authority to manage Trust assets or (b) Participant-Directed
Assets are permitted as specified in the Adoption Agreement. Except as
required by ERISA, if an Investment Committee is acting, the Trustee shall
invest the Trust Fund as directed by the Investment Committee, an
Investment Manager or a Participant or Beneficiary, as the case may be, and
the Trustee shall have no discretionary control over, nor any other
discretion regarding, the investment or reinvestment of any asset of the
Trust. Participant-Directed Assets shall be invested in accordance with the
direction of the Participant or, in the event of the Participant's death
before an Account is fully paid out, the Participant's Beneficiary with
respect to the assets involved; provided, however, that
Participant-Directed Assets may not be invested in "collectibles" (as
defined in Code Section 408(m)(2)). If there are Participant-Directed
Assets, the investment of these assets shall be made in accordance with
such rules and procedures established by the Administrator which must be
consistent with the rules and procedures of the Sponsor or its affiliate as
the case may be.
(b) With respect to Participant-Directed Assets, neither the
Administrator, the Investment Committee nor the Trustee shall:
(i) make any investments or dispose of any investments without
the direction of the Participant or Beneficiary for whom the
Participant-Directed Assets are maintained, except as provided in
Section 8.05 so as to pay fees or expenses of the Plan;
85
<PAGE>
(ii) be responsible for reviewing any investment direction with
respect to Participant-Directed Assets or for making recommendations
on acquiring, retaining or disposing of any assets or otherwise
regarding any assets;
(iii) have any duty to determine whether any investment is an
authorized or proper one; or
(iv) be liable for following any investment direction or for any
losses, taxes or other consequences incurred as a consequence of
investments selected by any Participant or Beneficiary or for holding
assets uninvested until it receives proper instructions.
(c) If Participant-Directed Assets are permitted, a list of the
Participants and Beneficiaries and such information concerning them as the
Trustee may specify shall be provided by the Employer or the Administrator
to the Trustee and/or such person as are necessary for the implementation
of the directions in accordance with the procedure acceptable to the
Trustee.
(d) It is understood that the Trustee may, from time to time, have on
hand funds which are received as contributions or transfers to the Trust
Fund which are awaiting investment or funds from the sale of Trust Fund
assets which are awaiting reinvestment. Absent receipt by the Trustee of a
direction from the proper person for the investment or reinvestment of such
funds or otherwise prior to the application of funds in implementation of
such a direction, the Trustee shall cause such funds to be invested in
shares of such money market fund or other short term investment vehicle as
the Trustee, or Investment Committee if appointed, may specify for this
purpose from time to time. Any such investment fund may be sponsored,
managed or distributed by the Sponsor or an affiliate of the Sponsor.
(e) Directions for the investment or reinvestment of Trust assets of a
type referred to in Section 10.04 from the Investment Committee, an
Investment Manager or a Participant or Beneficiary, as the case may be,
shall, in a manner and in accordance with procedures acceptable to the
Trustee, be communicated to and implemented by, as the case may be, the
Trustee, the Trustee's designee or, with the Trustee's consent and if an
Investment Committee is operating, a broker/dealer designated for the
purpose by the Investment Committee. Communication of any such direction to
such a designee or broker/dealer shall conclusively be deemed an
authorization to the designee or broker/dealer to implement the direction
even though coming from a person other than the Trustee. The Trustee shall
have no liability for its or any other person's following such directions
or failing to act in the absence of any such directions. The Trustee shall
have no liability for the acts or omissions of any person directing the
investment or reinvestment of Trust Fund assets or making or failing to
make any direction referred to in Section 10.05(f).
(f) The voting and other rights in securities or other assets held in
the Trust shall be exercised by the Trustee; provided, however, that if an
Investment Committee is
86
<PAGE>
appointed, the Trustee shall act as directed by such person who at the time
has the right to direct the investment or reinvestment of the security or
other asset involved.
(g) With respect to any Qualifying Employer Securities allocated to an
Account, each Participant shall be entitled to direct the Trustee in
writing as to the manner in which Qualifying Employer Securities are to be
voted.
(h) With respect to any Qualifying Employer Securities allocated to an
Account, each Participant shall be entitled to direct the Trustee in
writing as to the manner in which to respond to a tender or exchange offer
or other decisions with respect to the Qualifying Employer Securities. The
Administrator shall utilize its best efforts to timely distribute or cause
to be distributed to each Participant such information received from the
Trustee as will be distributed to shareholders of the Employer in
connection with any such tender or exchange offer or other similar matter
or any vote referred to in Section 10.05(g).
(i) If an Investment Committee is appointed, notwithstanding any
provision hereof to the contrary, in the event the person with the right to
direct a voting or other decision with respect to any security, Qualifying
Employer Securities, or other asset held in the Trust does not communicate
any decision on the matter to the Trustee or the Trustee's designee by the
time prescribed by the Trustee or the Trustee's designee for that purpose
or if the Trustee notifies the Investment Committee, if applicable, either
that it does not have precise information as to the securities, Qualifying
Employer Securities or other assets involved allocated on the applicable
record date to the accounts of all Participants and Beneficiaries or that
time constraints make it unlikely that Participant, Beneficiary or
Investment Manager direction, as the case may be, can be received on a
timely basis, the decision shall be the responsibility of the Investment
Committee and shall be to the Trustee on a timely basis. In the event an
Investment Committee with any right under the Plan to direct a voting or
other decision with respect to any security, Qualifying Employer Securities
or other asset held in the Trust does not communicate any decision on the
matter to the Trustee or the Trustee's designee by the time prescribed by
the Trustee for that purpose, the Trustee may, at the cost of the Employer,
retain an Investment Manager with full discretion to make the decision.
Except as required by ERISA, the Trustee shall (i) follow all directions
above referred to in this section and (ii) shall have no duty to exercise
voting or other rights relating to any such security, Qualifying Employer
Security or other asset.
(j) The Administrator shall establish, or cause to be established, a
procedure acceptable to the Trustee for the timely dissemination to each
person entitled to direct the Trustee or its designee as to a voting or
other decision called for thereby or referred to therein of all proxy and
other materials bearing on the decision.
(k) Any person authorized to direct the investment of Trust assets
may, if the Trustee and the Investment Committee, if applicable, so permit
direct the Trustee to invest such assets in a common or collective trust
maintained by the Trustee for the
87
<PAGE>
investment of assets of qualified trusts under Section 401(a) of the Code,
individual retirement accounts under Section 408(a) of the Code and plans
or governmental units described in Section 818(a)(6) of the Code. The
documents governing any such common or collective trust fund maintained by
the Trustee, and in which Trust assets have been invested, are hereby
incorporated into this Article X by reference.
SECTION 10.06. VALUATION OF ACCOUNTS.
(a) A Participant's Accounts shall be valued at fair market value on
each Valuation Date. Subject to Section 10.06(b)(i), as of each Valuation
Date, the earnings and losses and expenses of the Trust Fund shall be
allocated to each Participant Account in the ratio that such Account
Balance in that category of Accounts bears to all Account Balances in that
category. With respect to Participant-Directed Assets, the earnings and
losses and expenses (including transactional expenses pursuant to Section
8.05(b)) of such Participant-Directed Assets shall be allocated to the
Account of the Participant or Beneficiary having authority to direct the
investment of the assets in his or her Account.
(b) The Valuation Date with respect to any distributions (including,
without limitation, loan distributions and purchase of annuities) from any
Account upon the occurrence of a Benefit Commencement Date or otherwise
shall be:
(i) with respect to Participant-Directed Asset, the date as of
which the Account distribution is made; and
(ii) with respect to other assets, the Valuation Date immediately
preceding the Benefit Commencement Date, if applicable, or immediately
preceding the proposed date of any other distribution from an Account.
With respect to any contribution allocable to an Account which has not
been made as of a Valuation Date determined pursuant to this Section
10.06(b), the principal amount of such contribution distributable because
of the occurrence of a Benefit Commencement Date shall be distributed as
soon as practicable after the date paid to the Trust Fund.
(c) The assets of the Trust shall be valued at fair market value as
determined by the Trustee based upon such sources of information as it may
deem reliable, including, but not limited to, stock market quotations,
statistical evaluation services, newspapers of general circulation,
financial publications, advice from investment counselors or brokerage
firms or any combination of sources. The reasonable costs incurred in
establishing values of the Trust Fund shall be a charge against the Trust
Fund unless paid by the Employer.
When the Trustee is unable to arrive at a value based upon information from
independent sources, it may rely upon information from the Employer,
Administrator, Investment Committee, appraisers or other sources and shall not
incur any liability for inaccurate valuation based in good faith upon such
information.
88
<PAGE>
SECTION 10.07. INSURANCE CONTRACTS. The Trustee, if an Investment Committee
is not appointed, Investment Committee or Participant or Beneficiary with
respect to Participant-Directed Assets, may appoint one or more insurance
companies to hold assets of the Plan, and may direct, subject to Section 7.03,
the purchase of insurance contracts or policies from one or more insurance
companies with assets of the Plan. Neither the Investment Committee, Trustee nor
the Administrator shall be liable for the validity of any such contract or
policy, the failure of any insurance company to make any payments or for any act
or omission of an insurance company with respect to any duties delegated to any
insurance company.
SECTION 10.08. THE INVESTMENT MANAGER.
(a) The Trustee, if an Investment Committee is not appointed,
Investment Committee or the Participant or Beneficiary with respect to
Participant-Directed Assets, may, by an instrument in writing, appoint one
or more Investment Managers, who may be an affiliate of the Merrill Lynch
Trust Company, to direct the Trustee in the investment of all or a
specified portion of the assets of the Trust in property specified in
Section 10.04. Any such Investment Manager shall be directed by the
Trustee, if an Investment Committee is not appointed, Investment Committee,
Participant or Beneficiary, as the case may be, to act in accordance with
the procedures referred to in Section 10.05(e). If appointed, the
Investment Committee shall notify the Trustee in writing before the
effectiveness of the appointment or removal of any Investment Manager. If
there is more than one Investment Manager whose appointment is effective
under the Plan at any one time, the Trustee shall, upon written
instructions from the Investment Committee, Participant or Beneficiary,
establish separate funds for control by each such Investment Manager. The
funds shall consist of those Trust Fund assets designated by the Investment
Committee, Participant or Beneficiary.
(b) Each person appointed as an Investment Manager shall be:
(i) an investment adviser registered under the investment
Advisers Act of 1940;
(ii) a bank as defined in that Act; or
(iii) an insurance company qualified to manage, acquire or
dispose of any asset of the Plan under the laws of more than one
state.
(c) Each Investment Manager shall acknowledge in writing that it is a
"fiduciary" (as defined in ERISA Section 3(21)) with respect to the Plan.
The Trustee, or the Investment Committee if appointed, shall enter into an
agreement with each Investment Manager specifying the duties and
compensation of such Investment Manager and the other term and conditions
under which such Investment Manager shall be retained. Neither the Trustee
nor the Investment Committee, if appointed, shall be liable for any act or
omission of any Investment Manager and shall not be liable for following
the advice of any Investment Manager with respect to any duties delegated
to any Investment Manager.
89
<PAGE>
(d) The Trustee, or Investment Committee if appointed, or the
participant or Beneficiary, if applicable with respect to
Participant-Directed Assets, shall have the power to determine the amount
of Trust Fund assets to be invested pursuant to the direction of a
designated Investment Manager and to set investment objectives and
guidelines for the Investment Manager.
(e) SECOND TRUST FUND. The Employer may appoint a second trustee under
the Plan with respect to assets which the Employer desires to contribute or
have transferred to the Trust Fund, but which the other Trustee does not
choose to accept; provided, however, that if a Merrill Lynch Trust Company
is a Trustee, its consent (which consent may be evidenced by its acceptance
of its appointment as Trustee) shall be required. In the event and upon the
effectiveness of the acceptance of the second Trustee's appointment, the
Employer shall be deemed to have created two trust funds under the Plan,
each with its own Trustee, each governed separately by this Article X. Each
Trustee under such an arrangement shall, however, discharge its duties and
responsibilities solely with respect to those assets of the Trust delivered
into its possession and except pursuant to ERISA, shall have no duties,
responsibilities or obligations with respect to property of the other Trust
nor any liability for the acts or omissions of the other Trustee. As a
condition to its consent to the appointment of a second trustee, the
Merrill Lynch Trust Company shall assure that recordkeeping, distribution
and reporting procedures are established on a coordinated basis between it
and the second trustee as considered necessary or appropriate with respect
to the Trusts.
SECTION 10.09. POWERS OF TRUSTEE.
(a) At the direction of the person authorized to direct such action as
referred to in Section 10.05(a), but limited to those assets or categories
of assets acceptable to the Trustee as referred to in Section 10.04, or at
its own discretion if no such person is so authorized, the Trustee, or the
Trustee's designee or a broker/dealer as referred to in Section 10.05(e),
is authorized and empowered:
(i) to invest and reinvest the Trust Fund, together with the
income therefrom, in assets specified in Section 10.04;
(ii) to deposit or invest all or any part of the assets of the
Trust in savings accounts or certificates of deposit or other deposits
in a bank or savings and loan association or other depository
institution, including the Trustee or any of its affiliates, provided
with respect to such deposits with the Trustee or an affiliate the
deposits bear a reasonable interest rate;
(iii) to hold, manage, improve, repair and control all property,
real or personal, forming part of the Trust Fund; to sell, convey,
transfer, exchange, partition, lease for any term, even extending
beyond the duration of this Trust and otherwise dispose of the same
from time to time;
90
<PAGE>
(iv) to have, respecting securities, all the rights, powers and
privileges of an owner, including the power to give proxies, pay
assessments and other sums deemed by the Trustee necessary for the
protection of the Trust Fund; to vote any corporate stock either in
person or by proxy, with or without power of substitution, for any
purpose; to participate in voting trusts, pooling agreements,
foreclosures, reorganizations, consolidations, mergers and
liquidations, and in connection therewith to deposit securities with
or transfer title to any protective or other committee; to exercise or
sell stock subscriptions or conversion rights; and, regardless of any
limitation elsewhere in this instrument relative to investments by the
Trustee, to accept and retain as an investment any securities or other
property received through the exercise of any of the foregoing powers;
(v) subject to Section 10.05(d) hereof, to hold in cash, without
liability for interest, such portion of the Trust Fund which it is
directed to so hold pending investments, payment of expenses or the
distribution of benefits;
(vi) to take such actions as may be necessary or desirable to
protect the Trust from loss due to the default on mortgages held in
the Trust, including the appointment of agents or trustees in such
other jurisdictions as may seem desirable, to transfer property to
such agents or trustees, to grant to such agents such powers as are
necessary or desirable to protect the Trust Fund, to direct such agent
or trustee, or to delegate such power to direct, and to remove such
agent or trustee;
(vii) to settle, compromise or abandon all claims and demands in
favor of or against the Trust Fund;
(viii) to invest in any common or collective trust fund of the
referred to in Section 10.05(h) hereof maintained by the Trustee;
(ix) to exercise all of the further rights, powers, options and
privileges granted, provided for, or vested in trustees generally
under the laws of the State of New Jersey, so that the powers
conferred upon the Trustee herein shall not be in limitation of any
authority conferred by law but shall be in addition thereto;
(x) to borrow money from any source and to execute promissory
notes, mortgages or other obligations and to pledge or mortgage any
trust assets as security, subject to applicable requirements of the
Code and ERISA; and
(xi) To maintain accounts at, execute transactions through, and
lend on an adequately secured basis stocks, bonds or other securities
to, any brokerage or other firm, including any firm which is an
affiliate of the Trustee.
(b) To the extent necessary or which it deems appropriate to implement
its powers under Section 10.09(a) or otherwise to fulfill any of its duties
and responsibilities
91
<PAGE>
as trustee of the Trust Fund, the Trustee shall have the following
additional powers and authority:
(i) to register securities, or any other property, in its name or
in the name of any nominee, including the name of any affiliate or the
nominee name designated by any affiliate, with or without indication
of the capacity in which property shall be held, or to hold securities
in bearer form and to deposit any securities or other property in a
depository or clearing corporation;
(ii) to designate and engage the services of, and to delegate
powers and responsibilities to, such agents, representatives,
advisers, counsel and accountants as the Trustee considers necessary
or appropriate, any of whom may be an affiliate of the Trustee or a
person who renders services to such an affiliate, and, as a part of
its expenses under this Trust Agreement, to pay their reasonable
expenses and compensation;
(iii) to make, execute and deliver, as Trustee, any and all
deeds, leases, mortgages, conveyances, waivers, releases or other
instruments in writing necessary or appropriate for the accomplishment
of any of the powers listed in this Trust Agreement; and
(iv) generally to do all other acts which the Trustee deems
necessary or appropriate for the protection of the Trust Fund.
(c) The Trustee shall have no duties or responsibilities other than
those specified in the Plan.
SECTION 10.10. ACCOUNTING AND RECORDS.
(a) The Trustee shall maintain or cause to be maintained accurate
records and accounts of all Trust transactions and assets. The records and
accounts shall be available at reasonable times during normal business
hours for inspection or audit by the Administrator, Investment Committee,
if appointed, or any person designated for the purpose by either of them.
(b) Within 90 days following the close of each fiscal year of the Plan
or the effective date of the removal or resignation of the Trustee, the
Trustee shall file with the Administrator a written accounting setting
forth all transactions since the end of the period covered by the last
previous accounting. The accounting shall include a listing of the assets
of the Trust showing the value of such assets at the close of the period
covered by the accounting. On direction of the Administrator, and if
previously agreed to by the Trustee, the Trustee shall submit to the
Administrator interim valuations, reports or other information pertaining
to the Trust.
The Administrator may approve the accounting by written approval delivered
to the Trustee or by failure to deliver written objections to the Trustee within
60 days after receipt of
92
<PAGE>
the accounting. Any such approval shall be binding on the Employer, the
Administrator, the Investment Committee and, to the extent permitted by ERISA,
all other persons.
SECTION 10.11. JUDICIAL SETTLEMENT OF ACCOUNTS. The Trustee can apply to a
court of competent jurisdiction at any time for judicial settlement of any
matter involving the Plan, including judicial settlement of the Group Trustee's
account. If it does so, the Trustee must give the Administrator the opportunity
to participate in the court proceedings but the Trustee can also involve other
persons. Any expenses the Trustee incurs in legal proceedings involving the
Plan, including attorneys' fees, are chargeable to the Trust Fund as an
administrative expense. Any judgment or decree which may be entered in such a
proceeding shall, subject to the provision of ERISA, be conclusive upon all
persons having or claiming to have any interest in the Trust Fund or under any
Plan.
SECTION 10.12. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) The Trustee may resign at any time upon at least 30 days' written
notice to the Employer.
(b) The Employer may remove the Trustee upon at least 30 days' written
notice to the Trustee.
(c) Upon resignation or removal of the Trustee, the Employer shall
appoint a successor trustee. Upon failure of the Employer to appoint, or
the failure of the effectiveness of the appointment by the Employer of, a
successor trustee by the effective date of the resignation or removal, the
Trustee may apply to any court of competent jurisdiction for the
appointment of a successor.
Promptly after receipt by the Trustee of notice of the effectiveness
of the appointment of the successor trustee: (i) the Trustee shall deliver
to the successor trustee such records as may be reasonably requested to
enable the successor trustee to properly administer the Trust Fund and all
property of the Trust after deducting therefrom such amounts as the Trustee
deems necessary to provide for expenses, taxes, compensation or other
amounts due to or by the Trustee not paid by the Employer prior to the
delivery; and (ii) except if the second Trustee is removed or resigns, the
Plan will no longer be considered a prototype plan.
(d) Upon resignation or removal of the Trustee, the Trustee shall have
the right to a settlement of its account, which settlement shall be made,
at the Trustee's option, either by an agreement of settlement between the
Trustee and the Employer or by a judicial settlement in an action
instituted by the Trustee. The Employer shall bear the cost of any such
judicial settlement, including reasonable attorneys' fees.
(e) The Trustee shall not be obligated to transfer Trust assets until
the Trustee is provided assurance by the Employer satisfactory to the
Trustee that all fees and expenses reasonably anticipated will be paid.
93
<PAGE>
(f) Upon settlement of the account and transfer of the Trust Fund to
the successor trustee, all rights and privileges under the Trust Agreement
shall vest in the successor trustee and all responsibility and liability of
the Trustee with respect to the Trust and assets thereof shall, except as
otherwise required by ERISA, terminate subject only to the requirement that
the Trustee execute all necessary documents to transfer the Trust assets to
the successor trustee.
SECTION 10.13. GROUP TRUST.
(a) If elected by the Employer in the Adoption Agreement, the Trustee
shall be the Trustee for this Plan and for each other qualified plan
specified in the Adoption Agreement; provided, however, that such other
qualified plan is in effect pursuant to an Adoption Agreement under this
Prototype Plan. Any reference to Trustee and to the Trust Fund in this Plan
shall mean the Trustee as the trustee of a Group Trust consisting of the
assets of each such plan. The Plan and each other qualified plans specified
in the Adoption Agreement shall be deemed to join in and adopt the Trust as
the trust for each such plan. By executing the Adoption Agreement the
Trustee accepts designation as Trustee of this Group Trust.
(b) The Trustee shall establish and maintain such accounting records
for each of the Plans as shall be necessary to reflect the interest in the
Group Trust applicable at any time or from time to time to each Plan. No
part of the corpus or income of the Group Trust allocable to an individual
Plan may be used for or diverted to any purposes other than for the
exclusive benefit of Participants and their Beneficiaries entitled to
benefits under that Plan. The allocable interest of a Plan in the Group
Trust may not be assigned.
ARTICLE XI
PLAN AMENDMENT OR TERMINATION
SECTION 11.01. PROTOTYPE PLAN AMENDMENT.
(a) The mass submitter, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and any successor thereto, may amend any part of the Prototype
Plan. For purposes of sponsoring organization amendments, the mass
submitter shall be recognized as the agent of the sponsoring organization.
If the sponsoring organization does not adopt the amendments made by the
mass submitter, it will no longer be identical to or a minor modifier of
the mass submitter plan.
(b) An Employer shall have the right at any time, by an instrument in
writing, effective retroactively or otherwise, to (i) change the choice of
options in the Adoption Agreement, in whole or in part, (ii) add overriding
language in the Adoption Agreement when such language is needed to satisfy
Code Section 415 or Code Section 416 because of the required aggregation of
multiple plans and (iii) add certain model amendments published by the
Internal Revenue Service which specifically provide that their adoption
will not cause the Plan to be treated as individually designed. No such
amendment,
94
<PAGE>
however, shall have any of the effects specified in Section 11.02(a). If
the adopting Employer amends the Plan or nonelective portions of the
Adoption Agreement except as previously provided, it will no longer
participate in the Prototype Plan but will be considered to have an
individually designed plan for purposes of qualification under Code Section
401(a). In the event the Employer is switching from an individually
designed plan or from one prototype plan to another, a list of the Section
"411(d)(6) protected benefits" that must be preserved may be attached and
such a list would not be considered an amendment to the plan.
(c) This Plan will be recognized as a Prototype Plan by the Sponsor
only by complying with the registration requirements as specified in the
Adoption Agreement.
SECTION 11.02. PLAN AMENDMENT.
(a) Except as provided in Section 11.02(b) no amendment pursuant to
Section 11.01 shall:
(i) authorize any part of the Trust Fund to be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries;
(ii) decrease the accrued benefits of any Participant or his or
her Beneficiary under the Plan; An amendment which has the effect of
(A) eliminating or reducing an Early Retirement benefit or a
retirement-type subsidy, or (B) eliminating an optional form of
benefit payment, with respect to benefits attributable to service
before the amendment shall be treated as reducing accrued benefits. In
the case of a retirement-type subsidy, the preceding sentence shall
apply only with respect to a Participant who satisfies (either before
or after the amendment) the preamendment conditions for the subsidy.
In general, a retirement-type subsidy is a subsidy that continues
after retirement but does not include a qualified disability benefit,
a medical benefit, a social security supplement, a death benefit
(including life insurance) or a plant shutdown benefit (that does not
continue after retirement age);
(iii) reduce the vested percentage of any Participant determined
without regard to such amendment as of the later of the date such
amendment is adopted or the date it becomes effective;
(iv) eliminate an optional form of benefit distribution with
respect to benefits attributable to service before the amendment; or
(v) change the vesting schedule, or in any way amend the Plan to
either directly or indirectly affect the computation of a
Participant's vested percentage, unless each Participant having not
less than three years of Vesting Service is permitted to elect, within
a reasonable period specified by the Administrator after the adoption
of such amendment, to have his or her vested percentage computed
without regard to such amendment.
95
<PAGE>
For Participants who do not have at least one Hour of Service in any
Plan Year beginning after December 31, 1988, the preceding sentence shall
be applied by substituting "Five Years of Vesting Service" for "Three Years
of Vesting Service" where such language appears. The period during which
the election may be made shall commence with the date the amendment is
adopted and shall end on the later of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective; or
(iii) 60 days after the Participant is issued written notice by
the Administrator.
(b) Anything contained in this Section 11.02 to the contrary
notwithstanding a Participant's benefit may be reduced to the extent
permitted under Code Section 412(c)(8).
SECTION 11.03. RIGHT OF THE EMPLOYER TO TERMINATE PLAN.
(a) The Employer intends and expects that from year to year it will be
able to and will deem it advisable to continue this Plan in effect and to
make contributions as herein provided. The Employer reserves the right,
however, to terminate the Plan with respect to its Employees at any time by
an instrument in writing delivered to the Administrator and the Trustee, or
to completely discontinue its contributions thereto at any time.
(b) The Plan will also terminate: (i) if the Employer is a sole
proprietorship, upon the death of the sole proprietor, (ii) if the Employer
is a partnership, upon termination of the partnership, (iii) if the
Employer is judicially declared bankrupt or insolvent; (iv) upon the sale
or other disposition of all or substantially all of the assets of the
business; or (v) upon any other termination of the business. Any successor
to or purchaser of the Employer's trade or business, after any event
specified in the prior sentence, may continue the Plan, in which case the
successor or purchaser will thereafter be considered the Employer for
purposes of the Plan. Such a successor or purchaser shall execute an
appropriate Adoption Agreement if and when requested by the Administrator.
(c) Anything contained herein to the contrary notwithstanding, if the
Employer fails to attain or retain qualification of the Plan under Code
Section 401(a), the Plan will not participate in this Prototype Plan and
will, instead, be considered an individually designed plan for purposes of
such qualification.
SECTION 11.04. EFFECT OF PARTIAL OR COMPLETE TERMINATION OR COMPLETE
DISCONTINUANCE OF CONTRIBUTIONS.
(a) DETERMINATION OF DATE OF COMPLETE OR PARTIAL TERMINATION. The date
of complete or partial termination shall be established by the
Administrator in accordance
96
<PAGE>
with the directions of the Employer (if then in existence) in accordance
with applicable law.
(b) EFFECT OF TERMINATION.
(i) As of the date of a partial termination of the Plan:
(A) The accrued benefit of each affected Participant, to the
extent funded, shall become nonforfeitable;
(B) No affected Participant shall be granted credit based on
Hours of Service after such date;
(C) Compensation paid to affected Participants after such
date shall not be taken into account; and
(D) No contributions by affected Participants shall be
required or permitted.
(ii) As of the date of the complete termination of the Plan or of
a complete discontinuance of contributions:
(A) The accrued benefit of each affected Participant to the
extent funded, shall become nonforfeitable;
(B) No affected Participant shall be granted credit based on
Hours of Service after such date;
(C) Compensation paid after such date shall not be taken
into account;
(D) No contributions by affected Participants shall be
required or permitted;
(E) No Eligible Employee shall become a Participant after
such date; and
(F) Except as may otherwise be required by applicable law,
all obligations of the Employer and Participating Affiliates to
fund the Plan shall terminate.
(iii) All other provisions of the Plan shall remain in effect
unless otherwise amended.
Upon the complete discontinuance of profit-sharing contributions under the
Plan, at the Employer's election, either the Trust Fund shall continue to be
held and distributed as if the Plan had not been terminated (in which case such
Plan shall continue to be subject to all requirements
97
<PAGE>
under Title I of ERISA, and qualification requirements under the Code) or any
and all assets remaining in the Trust Fund as of the date of such termination or
discontinuance, together with any earnings subsequently accruing thereon, shall
be distributed by the Trustee to the Participants at the Administrator's
direction. Upon the complete termination of the Plan, the Trust Fund shall be
distributed to Participants within one year after the date of termination. If
the Plan does not offer an annuity option (purchased from a commercial provider
and if the Employer or any Affiliate does not maintain another Defined
Contribution Plan (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7)), the Participant's benefit may, without the
Participant's consent, be distributed to the Participant. However, if any
Affiliate maintains another Defined Contribution Plan (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)), then the
Participant's Account(s) will be transferred, without the Participant's consent,
to the other plan if the Participant does not consent to an immediate
distribution. Distributions shall be made in compliance with the applicable
provisions, including restrictions, of Articles VI and VII. The Trust Fund shall
continue in effect until all distributions therefrom are complete. Upon the
completion of such distributions, the Trustee shall be relieved from all further
liability with respect to all amounts so paid or distributed.
SECTION 11.05. BANKRUPTCY. In the event that the Employer shall at any time
be judicially declared bankrupt or insolvent without any provisions being made
for the continuation of this Plan, the Plan shall be completely terminated in
accordance with this Article XI.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. EXCLUSIVE BENEFIT OF PARTICIPANTS. Notwithstanding anything
in the Plan to the contrary, the Trust Fund shall be held for the benefit of all
persons who shall be entitled to receive payments under the Plan. Subject to
Section 3.10, it shall be prohibited at any time for any part of the Trust Fund
(other than such part as is required to pay expenses) to be used for, or
diverted to, purposes other than for the exclusive benefit of Participants or
their Beneficiaries.
SECTION 12.02. PLAN NOT A CONTRACT OF EMPLOYMENT. The Plan is not a
contract of Employment, and the terms of Employment of any Employee shall not be
affected in any way by the Plan or related instruments except as specifically
provided therein.
SECTION 12.03. ACTION BY EMPLOYER. Any action by an Employer which is a
corporation shall be taken by the board of directors of the corporation or any
person or persons duly empowered to exercise the powers of the corporation with
respect to the Plan. In the case of an Employer which is a partnership, action
shall be taken by any general partner of the partnership, and in the case of an
Employer which is a sole proprietorship, action shall be taken by the sole
proprietor.
SECTION 12.04. SOURCE OF BENEFITS. Benefits under the Plan shall be paid or
provided for solely from the Trust Fund, and neither the Employer, any
Participating Affiliate, the Trustee, the Administrator nor any Investment
Manager or insurance company shall assume any liability under the Plan therefor.
98
<PAGE>
SECTION 12.05. BENEFITS NOT ASSIGNABLE. Benefits provided under the Plan
may not be assigned or alienated, either voluntarily or involuntarily. In the
event that a Participant or Beneficiary becomes individually liable with respect
to any expenses listed in Section 8.05, the provision of Section 401(a)(13) of
the Code shall be applicable with respect to any claim the Plan may have against
the Participant or Beneficiary individually with respect to such expenses. The
preceding sentence shall also apply to the creation, assignment or recognition
of a right to any benefit payable with respect to a Participant pursuant to a
"domestic relations order" (as defined in Code Section 414(p)) unless such order
is determined by the Administrator to be a "qualified domestic relations order"
(as defined in Code Section 414(p)) or, in the case of a "domestic relations
order" entered before January 1, 1985, if either payment of benefits pursuant to
the order has commenced as of that, date or the Administrator decides to treat
such order as a "qualified domestic relations order" within the meaning of Code
Section 414(p) even if it does not otherwise qualify as such.
SECTION 12.06. DOMESTIC RELATIONS ORDERS. Any other provision of the Plan
to the contrary notwithstanding, the Administrator shall have all powers
necessary with respect to the Plan for the proper operation of Code Section
414(p) with respect to "qualified domestic relations orders" (or "domestic
relations orders" treated as such) referred to in Section 12.05, including, but
not limited to, the power to establish all necessary or appropriate procedures,
to authorize the establishment of new accounts with such assets and subject to
such investment control by the Administrator as the Administrator may deem
appropriate, and the Administrator may decide upon and direct appropriate
distributions therefrom.
SECTION 12.07. CLAIM PROCEDURE. In the event that a claim by a Participant,
Beneficiary or other person for benefits under the Plan is deemed, the
Administrator will so notify the claimant, giving the reasons for the denial.
This notice will also refer to the specific provisions of the Plan on which the
denial was based, will specify whether any additional information is needed from
the Participant or Beneficiary and will explain the review procedure.
Within 60 days after receiving the denial, the claimant May submit directly
or through a duly authorized representative, a written request for
reconsideration of the application to the Administrator. Documents or records
relied on by the claimant should be filed with the request. The person making
the request may review relevant documents and submit issues and additional
comments in writing.
The Administrator will review the claim within 60 days (or 120 days if a
hearing is held because special circumstances exist) and provide a written
response to the appeal. The response will explain the reasons for the decision
and will refer to the Plan provisions on which the decision is based. The
decision of the Administrator is the final one under this claims procedure.
SECTION 12.08. RECORDS AND DOCUMENTS; ERRORS. Participants and
Beneficiaries must supply the Administrator with such personal history data as
may be required by the Administrator in the operation of the Plan. Proof of age,
when required, must be established by evidence satisfactory to the
Administrator, and the records of the Employer and Participating Affiliates
concerning length of service and compensation may be accepted by the
Administrator
99
<PAGE>
as conclusive for the purposes of the Plan. Should any error in the records
maintained under the Plan result in any Participant or Beneficiary receiving
from the Plan more or less than he or she would have been entitled to receive
had the records been correct, the Administrator, in its discretion, may correct
such error and, as far as practicable, may adjust benefits; in such manner that
the aggregate value of the benefit under the Plan shall be the amount to which
such Participant or Beneficiary was properly entitled.
SECTION 12.09. BENEFITS PAYABLE TO MINORS, INCOMPETENTS AND OTHERS. In the
event any benefit is payable to a minor or to a Participant or Beneficiary
declared incompetent by a court having jurisdiction over such matters and a
guardian, committee conservator or other legal representative of the estate of
such a person is appointed, benefits to which he or she is entitled shall be
paid to the legally appointed person. The receipt by any such person to whom any
such payment on behalf of any Participant or Beneficiary is made shall be a
sufficient discharge therefor.
SECTION 12.10. PLAN MERGER OR TRANSFER OF ASSETS.
(a) The merger or consolidation of the Employer with any other person,
or the transfer of the assets of the Employer to any other person, or the
merger of the Plan with any other plan shall not constitute a termination
of the Plan if provision is made for the continuation of the Plan.
(b) The Plan may not merge or consolidate with, or transfer any assets
or liabilities to, any other plan, unless each Participant would (if the
Plan had then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit he
or she would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan had then terminated). Any merger or
consolidation shall not constitute a termination of a Plan or require the
acceleration of vesting of Participants' Account Balances.
SECTION 12.11. PARTICIPATING AFFILIATES.
(a) With the consent of the Employer and by duly authorized action,
any Affiliate may adopt the Plan. Such Affiliate shall determine the
classes of its Employees who shall be Eligible Employees and the amount of
its contribution to the Plan on behalf of such Employees.
(b) With the consent of the Employer and by duly authorized action, a
Participating Affiliate may terminate its participation in the Plan or
withdraw from the Plan. Any such withdrawal shall be deemed an adoption by
such Participating Affiliate of a plan and trust identical to the Plan and
the Trust, except that all references to the Employer shall be deemed to
refer to such Participating Affiliate. At such time and in such manner as
the Employer directs, the assets of the Trust allocable to Employees of
such Participating Affiliate shall be transferred to the trust deemed
adopted by such Participating Affiliate.
100
<PAGE>
(c) A Participating Affiliate shall have no power with respect to the
Plan except as specifically provided herein.
SECTION 12.12. CONTROLLING LAW. The Plan is intended to qualify under Code
Section 401(a) and to comply with ERISA, and its terms shall be interpreted
accordingly. Otherwise, to the extent not preempted by ERISA, the laws of the
State of New York shall control the interpretation and performance of the Plan.
SECTION 12.13. SINGULAR AND PLURAL AND ARTICLE AND SECTION REFERENCES. As
used in the Plan, the singular includes the plural and the plural includes the
singular, unless qualified by the context. Titles of Articles and Sections of
the Plan are for convenience of reference only and are to be disregarded in
applying the provisions of the Plan. Any reference in this Prototype Plan to an
Article or Section is to the Article or Section so specified of the Prototype
Plan, unless otherwise indicated.
101
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS....................................................................3
ARTICLE II
PARTICIPATION
Section 2.01. Admission as a Participant......................................19
Section 2.02. Rollover Membership and Trust-to-Trust Transfer.................19
Section 2.03. Crediting of Service for Eligibility Purposes...................20
Section 2.04. Termination of Participation....................................20
Section 2.05. Limitation for Owner-Employee...................................20
Section 2.06. Corrections With Regard to Participation........................21
Section 2.07. Provision of Information........................................21
ARTICLE III
CONTRIBUTIONS AND ACCOUNT ALLOCATIONS
Section 3.01. Employer Contributions and Allocations..........................22
Section 3.02. Participant Voluntary Nondeductible Contributions...............23
Section 3.03. Rollover Contributions and Trust-to-Trust Transfers.............23
Section 3.04. Section 401(k) Contributions and Account Allocations............24
Section 3.05. Matching 401(k) Contributions...................................29
Section 3.06. Thrift Contributions............................................33
Section 3.07. Treatment of Forfeitures........................................33
Section 3.08. Establishing of Accounts........................................34
Section 3.09. Limitation on Amount of Allocations.............................35
Section 3.10. Return of Employer Contributions Under Special Circumstances....43
ARTICLE IV
VESTING
Section 4.01. Determination of Vesting........................................44
Section 4.02. Rules for Crediting Vesting Service.............................44
Section 4.03. Employer Accounts Forfeitures...................................45
Section 4.04. Top-Heavy Provisions............................................45
<PAGE>
ARTICLE V
AMOUNT AND DISTRIBUTION OF BENEFITS, WITHDRAWALS AND LOANS
Section 5.01. Distribution Upon Termination of Employment.....................49
Section 5.02. Amount of Benefits Upon a Fully Vested Separation...............49
Section 5.03. Amount of Benefits Upon a Partially Vested Separation...........49
Section 5.04. Amount of Benefits Upon a Nonvested Separation..................49
Section 5.05. Amount of Benefits Upon a Separation Due to Disability..........50
Section 5.06. Distribution and Restoration....................................50
Section 5.07. Withdrawals During Employment...................................51
Section 5.08. Loans...........................................................52
Section 5.09. Hardship Distributions..........................................54
Section 5.10. Limitation on Commencement of Benefits..........................55
Section 5.11. Distribution Requirements.......................................55
ARTICLE VI
FORMS OF PAYMENT OF RETIREMENT BENEFITS
Section 6.01. Methods of Distribution.........................................61
Section 6.02. Election of Optional Forms......................................65
Section 6.03. Change in Form of Benefit Payments..............................66
Section 6.04. Direct Rollovers................................................66
ARTICLE VII
DEATH BENEFITS
Section 7.01. Payment of Account Balances.....................................67
Section 7.02. Beneficiaries...................................................68
Section 7.03. Life Insurance..................................................71
ARTICLE VIII
FIDUCIARIES
Section 8.01. Named Fiduciaries...............................................73
Section 8.02. Employment of Advisers..........................................74
Section 8.03. Multiple Fiduciary Capacities...................................74
Section 8.04. Indemnification.................................................74
Section 8.05. Payment of Expenses.............................................74
ii
<PAGE>
ARTICLE IX
PLAN ADMINISTRATION
Section 9.01. The Administrator...............................................75
Section 9.02. Powers and Duties of the Administrator..........................75
Section 9.03. Delegation of Responsibility....................................76
ARTICLE X
TRUSTEE AND INVESTMENT COMMITTEE
Section 10.01. Appointment of Trustee and Investment Committee................76
Section 10.02. The Trust Fund.................................................76
Section 10.03. Relationship With Administrator................................77
Section 10.04. Investment of Assets...........................................78
Section 10.05. Investment Direction, Participant-Directed Assets and
Qualifying Employer Investments................................79
Section 10.06. Valuation of Accounts..........................................82
Section 10.07. Insurance Contracts............................................83
Section 10.08. The Investment Manager.........................................83
Section 10.09. Powers of Trustee..............................................84
Section 10.10. Accounting and Records.........................................86
Section 10.11. Judicial Settlement of Accounts................................87
Section 10.12. Resignation and Removal of Trustee.............................87
Section 10.13. Group Trust....................................................88
ARTICLE XI
PLAN AMENDMENT OR TERMINATION
Section 11.01. Prototype Plan Amendment.......................................88
Section 11.02. Plan Amendment.................................................89
Section 11.03. Right of the Employer To Terminate Plan........................90
Section 11.04. Effect of Partial or Complete Termination or Complete
Discontinuance of Contributions................................90
Section 11.05. Bankruptcy.....................................................92
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Exclusive Benefit of Participants..............................92
Section 12.02. Plan Not a Contract of Employment..............................92
Section 12.03. Action by Employer.............................................92
iii
<PAGE>
Section 12.04. Source of Benefits.............................................92
Section 12.05. Benefits Not Assignable........................................93
Section 12.06. Domestic Relations Orders......................................93
Section 12.07. Claim Procedure................................................93
Section 12.08. Records and Documents; Errors..................................93
Section 12.09. Benefits Payable to Minors, Incompetents and Others............94
Section 12.10. Plan Merger or Transfer of Assets..............................94
Section 12.11. Participating Affiliates.......................................94
Section 12.12. Controlling Law................................................95
Section 12.13. Singular and Plural and Article and Section References.........95
iv
<PAGE>
-----------------------------------------------------
MERRILL LYNCH
---------------
SPECIAL
---------------
PROTOTYPE DEFINED
CONTRIBUTION PLAN
ADOPTION AGREEMENT
-----------------------------------------------------
401(k) PLAN
EMPLOYEE THRIFT PLAN
PROFIT-SHARING PLAN
LETTER SERIAL NUMBER: D359287B
NATIONAL OFFICE LETTER DATE: 6/29/93
THIS PROTOTYPE PLAN AND ADOPTION AGREEMENT ARE IMPORTANT LEGAL INSTRUMENTS WITH
LEGAL AND TAX IMPLICATIONS FOR WHICH THE SPONSOR, MERRILL LYNCH, PIERCE, FENNER
& SMITH, INCORPORATED, DOES NOT ASSUME RESPONSIBILITY. THE EMPLOYER IS URGED TO
CONSULT WITH ITS OWN ATTORNEY WITH REGARD TO THE ADOPTION OF THIS PLAN AND ITS
SUITABILITY TO ITS CIRCUMSTANCES.
<PAGE>
ADOPTION OF PLAN
The Employer named below hereby establishes or restates a profit-sharing plan
that includes a |X| 401(k), [ ] profit-sharing and/or [ ] thrift plan feature
(the "Plan") by adopting the Merrill Lynch Special Prototype Defined
Contribution Plan and Trust as modified by the terms and provisions of this
Adoption Agreement.
EMPLOYER AND PLAN INFORMATION
Employer Name:* FLAGSTAR BANCORP, INC.
Business Address: 2600 TELEGRAPH RD.
BLOOMFIELD HILLS, MI 48302
Telephone Number: (248) 338-7700
Employer Taxpayer ID Number: 38-3150651
Employer Taxable Year ends on: DECEMBER 31ST
Plan Name: FLAGSTAR BANK 401(k) PLAN
Plan Number: 001
Effective Date of Adoption 401(k) PROFIT SHARING THRIFT
or Restatement: 02/01/99
Original Effective Date: 01/01/90
IF THIS PLAN IS A CONTINUATION OR AN AMENDMENT OF A PRIOR PLAN, ALL OPTIONAL
FORMS OF BENEFITS PROVIDED IN THE PRIOR PLAN MUST BE PROVIDED UNDER THIS PLAN TO
ANY PARTICIPANT WHO HAD AN ACCOUNT BALANCE, WHETHER OR NOT VESTED, IN THE PRIOR
PLAN.
- -----------------------------
* If there are any Participating Affiliates in this Plan, list below the proper
name of each Participating Affiliate.
FLAGSTAR BANK, FSB; DOUGLAS INSURANCE AGENCY, INC. FSSB REAL STATE DEVELOPMENT
CORPORATION; FLAGSTAR INVESTMENT GROUP, INC.; MORTGAGE AFFILIATED SERVICES,
INC.; MID-MICHIGAN SERVICE CORPORATION; SSB FUNDING CORPORATION AND EFFECTIVE
01/01/97 FSSB MORTGAGE CORPORATION.
2
<PAGE>
ARTICLE I. DEFINITIONS
A. "COMPENSATION"
(1) With respect to each Participant, except as provided below, Compensation
shall mean the (select all those applicable for each column):
401(k) AND/ PROFIT
OR THRIFT SHARING
- --------- -------
|X| [ ] (a) amount reported in the "Wages Tips and Other Compensation"
Box on Form W-2 for the applicable period selected in Item
5 below.
[ ] [ ] (b) compensation for Code Section 415 safe-harbor purposes
(as defined in Section 3.9.1 (H)(i) of basic plan
document #03) for the applicable period selected in Item 5
below.
[ ] [ ] (c) amount reported pursuant to Code Section 3401(a) for the
applicable period selected in Item 5 below.
|X| [ ] (d) all amounts received (under options (a)(b) or (c) above)
for personal services rendered to the Employer but
excluding (select one):
[ ] overtime
[ ] bonuses
[ ] commissions
[ ] amounts in excess of $____
|X| other (specify): reimbursements or other expense allowances,
fringe benefits (cash and noncash), moving expenses, deferred
compensation and welfare benefits.
(2) Treatment of Elective Contributions (select one):
|X| (a) For purposes of contributions, Compensation shall
include Elective Deferrals and amounts excludable from the
gross income of the Employee under Code Section 125, Code
Section 402(e)(3), Code Section 402(h) or Code Section
403(b) ("elective contributions").
[ ] (b) For purposes of contributions, Compensation shall not
include "elective contributions."
(3) CODA Compensation (select one):
|X| (a) For purposes of the ADP and ACP Tests, Compensation shall
include "elective contributions."
[ ] (b) For purposes of the ADP and ACP Tests, Compensation shall
not include "elective contributions."
(4) With respect to Contributions to an Employer Contributions Account,
Compensation shall include all Compensation (select one):
[ ] (a) during the Plan Year in which the Participant enters the
Plan.
3
<PAGE>
|X| (b) after the Participant's Entry Date.
(5) The applicable period for determining Compensation shall be (select one):
|X| (a) the Plan Year.
[ ] (b) the Limitation Year.
[ ] (c) the consecutive 12-month period ending on _____.
B. "DISABILITY"
(1) Definition
Disability shall mean a condition which results in the Participant's
(select one):
[ ] (a) inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment that can be expected to result in death or which
has lasted or can be expected to last for a continuous period
of not less than 12 months.
[ ] (b) total and permanent inability to meet the requirements of the
Participant's customary employment which can be expected to
last for a continuous period of not less than 12 months.
|X| (c) qualification for Social Security disability benefits.
[ ] (d) qualification for benefits under the Employer's long-term
disability plan.
(2) Contributions Due to Disability (select one):
|X| (a) No contributions to an Employer Contributions Account will be
made on behalf of a Participant due to his or her Disability.
[ ] (b) Contributions to an Employer Contributions Account will be
made on behalf of a Participant due to his or her Disability
provided that: the Employer elected option (a) or (c) above
as the definition of Disability, contributions are not made on
behalf of a Highly Compensated Employee, the contribution is
based on the Compensation each such Participant would have
received for the Limitation Year if the Participant had been
paid at the rate of Compensation paid immediately before his
or her Disability, and contributions made on behalf of such
Participant will be nonforfeitable when made.
C. "EARLY RETIREMENT" is (select one):
[ ] (1) not permitted.
4
<PAGE>
|X| (2) permitted if a Participant terminates Employment before Normal
Retirement Age and has (select one):
[ ] (a) attained age ____.
|X| (b) attained age 55 and completed 10 Years of Service.
[ ] (c) attained age ___ and completed ___ Years of Service
as a Participant.
D. "ELIGIBLE EMPLOYEES" (select one):
[ ] (1) All Employees are eligible to participate in the Plan.
|X| (2) The following Employees are not eligible to participate in
the Plan (select all those applicable):
[ ] (a) Employees included in a unit of Employees
covered by a collective bargaining agreement
between the Employer or a Participating Affiliate
and the Employee representatives (not including
any organization more than half of whose members
are Employees who are owners, officers, or
executives of the Employer or Participating
Affiliate) in the negotiation of which retirement
benefits were the subject of good faith
bargaining, unless the bargaining agreement
provides for participation in the Plan.
|X| (b) non-resident aliens who received no earned
income from the Employer or a Participating
Affiliate which constitutes income from sources
within the United States.
[ ] (c) Employees of an Affiliate.
|X| (d) Employees employed in or by the following
specified division, plant, location, job category
or other identifiable individual or group of
Employees: LEASED EMPLOYEES
E. "ENTRY DATE" Entry Date shall mean (select as applicable):
401(k) AND/ PROFIT
OR THRIFT SHARING
- --------- -------
[ ] [ ] (1) If the initial Plan Year is less than twelve months,
the ___ day of _____ and thereafter.
[ ] [ ] (2) the first day of the Plan Year following the date
the Employee meets the eligibility requirements. If
the Employer elects this option (2) establishing
only one Entry Date, the eligibility "age and service"
requirements elected in Article II must be no more
than age 20-1/2 and 6 months of service.
[ ] [ ] (3) the first day of the month following the date the
Employee meets the eligibility requirements.
|X| [ ] (4) the first day of the Plan Year and the first day of
the seventh month of the Plan Year following the date
the Employee meets the eligibility requirements.
5
<PAGE>
[ ] [ ] (5) the first day of the Plan Year, the first day of the
fourth month of the Plan Year, the first day of the
seventh month of the Plan Year, and the first day of
the tenth month of the Plan Year following the date
the Employee meets the eligibility requirements.
[ ] [ ] (6) other:
provided that the Entry Date or Dates selected are no
later than any of the options above.
F. "HOURS OF SERVICE"
Hours of Service for the purpose of determining a Participant's Period of
Severance and Year of Service shall be determined on the basis of the method
specified below:
(1) Eligibility Service: For purposes of determining whether a Participant
has satisfied the eligibility requirements, the following method shall
be used (select one):
401(k) AND/ PROFIT
OR THRIFT SHARING
--------- -------
[ ] [ ] (a) elapsed time method
|X| [ ] (b) hourly records method
(2) Vesting Service: A Participant's nonforfeitable interest shall be
determined on the basis of the method specified below (select one):
|X| (a) elapsed time method
[ ] (b) hourly records method
[ ] (c) If this item (c) is checked, the Plan only
provides for contributions that are always 100% vested
and this item (2) will not apply.
(3) Hourly Records: For the purpose of determining Hours of Service under
the hourly record method (select one):
|X| (a) only actual hours for which an Employee is paid or
entitled to payment shall be counted.
[ ] (b) an Employee shall be credited with 45 Hours of Service if
such Employee would be credited with at least 1 Hour of
Service during the week.
G. "INTEGRATION LEVEL"
|X| (1) This Plan is not integrated with Social Security.
[ ] (2) This Plan is integrated with Social Security. The
Integration Level shall be (select one):
[ ] (a) the Taxable Wage Base.
[ ] (b) $____ (a dollar amount less than the Taxable Wage Base).
[ ] (c) ____% of the Taxable Wage Base (not to exceed 100%).
[ ] (d) the greater of $10,000 or 20% of the Taxable Wage Base.
6
<PAGE>
H. "LIMITATION COMPENSATION"
For purposes of Code Section 415, Limitation Compensation shall be
compensation as determined for purposes of (select one):
[ ] (1) Code Section 415 Safe-Harbor as defined in Section 3.9.1(H)(i)
of basic plan document #03.
|X| (2) the "Wages, Tips and Other Compensation" Box on Form W-2.
[ ] (3) Code Section 3401(a) Federal Income Tax Withholding.
I. "LIMITATION YEAR"
For purposes of Code Section 415, the Limitation Year shall be (select one):
|X| (1) the Plan Year.
[ ] (2) the twelve consecutive month period ending on the ___ day of
the month of ___.
J. "NET PROFITS" are (select one):
|X| (1) not necessary for any contribution.
[ ] (2) necessary for (select all those applicable):
[ ] (a) Profit-Sharing Contributions.
[ ] (b) Matching 401(k) Contributions.
[ ] (c) Matching Thrift Contributions.
K. "NORMAL RETIREMENT AGE"
Normal Retirement Age shall be (select one):
|X| (1) attainment of age 65 (not more than 65) by the Participant.
[ ] (2) attainment of age ____ (not more than 65) by the Participant
or the ___ anniversary (not more than the 5th) of the first day
of the Plan Year in which the Eligible Employee became a
Participant, whichever is later.
[ ] (3) attainment of age ___ (not more than 65) by the Participant
or the ___ anniversary (not more than the 5th) of the first day
on which the Eligible Employee performed an Hour of Service,
whichever is later.
L. "PARTICIPANT DIRECTED ASSETS" are:
401(k) AND/ PROFIT
OR THRIFT SHARING
--------- -------
|X| [ ] (1) permitted.
[ ] [ ] (2) not permitted.
7
<PAGE>
M. "PLAN YEAR"
The Plan Year shall end on the 31ST day of DECEMBER.
N. "PREDECESSOR SERVICE"
Predecessor service will be credited (select one):
|X| (1) only as required by the Plan.
[ ] (2) to include, in addition to the Plan requirements and subject to
the limitations set forth below, service with the following
predecessor employer(s) determined as if such predecessors were
the Employer: ____.
Service with such predecessor employer applies [select either or both (a)
and/or (b); (c) is only available in addition to (a) and/or (b)]:
[ ] (a) for purposes of eligibility to participate;
[ ] (b) for purposes of vesting;
[ ] (c) except for the following service:_____.
O. "VALUATION DATE"
Valuation Date shall mean (select one for each column, as applicable):
401(k) AND/ PROFIT
OR THRIFT SHARING
- --------- -------
[ ] [ ] (1) the last business day of each month.
[ ] [ ] (2) the last business day of each quarter within the Plan
Year.
[ ] [ ] (3) the last business day of each semi-annual period
within the Plan Year.
[ ] [ ] (4) the last business day of the Plan Year.
|X| [ ] (5) other: DAILY BASIS.
ARTICLE II. PARTICIPATION
PARTICIPATION REQUIREMENTS
An Eligible Employee must meet the following requirements to become a
Participant (select one or more for each column, as applicable):
8
<PAGE>
401(k) AND/ PROFIT
OR THRIFT SHARING
- --------- -------
[ ] [ ] (1) Performance of one Hour of Service.
[ ] [ ] (2) Attainment of age ___ (maximum 20-1/2) and completion
of ____ (not more than 1/2) Years of Service. If this
item is selected, no Hours of Service shall be
counted.
|X| [ ] (3) Attainment of age 21 (maximum 21) and completion of 1
Year(s) of Service. If more than one Year of Service
is selected, the immediate 100% vesting schedule must
be selected in Article VII of this Adoption
Agreement.
[ ] [ ] (4) Attainment of age ___ (maximum 21) and completion of
___ Year(s) of Service. If more than one Year of
Service is selected, the immediate 100% vesting
schedule must be selected in Article VII of this
Adoption Agreement.
[ ] [ ] (5) Each Employee who is an Eligible Employee on ___ will
be deemed to have satisfied the participation
requirements on the effective date without regard to
such Eligible Employee's actual age and/or service.
ARTICLE III. 401(k) CONTRIBUTIONS AND ACCOUNT ALLOCATION
A. ELECTIVE DEFERRALS
If selected below, a Participant's Elective Deferrals will be (select all
applicable):
|X| (1) a dollar amount or a percentage of Compensation, as specified by
the Participant on his or her 401(k) Election form, which may not
exceed 6% of his or her Compensation.
[ ] (2) with respect to bonuses, such dollar amount or percentage as
specified by the Participant on his or her 401(k) Election form
with respect to such bonus.
B. MATCHING 401(k) CONTRIBUTIONS
If selected below, the Employer may make Matching 401(k) Contributions for
each Plan Year (select one):
[ ] (1) Discretionary Formula.
Discretionary Matching 401(k) Contribution equal to such a dollar
amount or percentage of Elective Deferrals, as determined by the
Employer, which shall be allocated (select one):
[ ] (a) based on the ratio of each Participant's Elective
Deferral for the Plan Year to the total Elective
Deferrals of all Participants for the Plan Year. If
inserted, Matching 401(k) Contributions shall be subject
to a maximum amount of $___ for each Participant or ____%
of each Participant's Compensation.
[ ] (b) in an amount not to exceed ____% of each Participant's
first ____% of Compensation contributed as Elective
Deferrals for the Plan Year. If any Matching 401(k)
Contribution remains, it is allocated to each such
Participant in an amount not to exceed ____% of the next
____% of each Participant's Compensation contributed as
Elective Deferrals for the Plan Year.
9
<PAGE>
Any remaining Matching 401(k) Contribution shall be allocated to
each such Participant in the ratio that such Participant's
Elective Deferral for the Plan Year bears to the total Elective
Deferrals of all such Participants for the Plan Year. If
inserted, Matching 401(k) Contributions shall be subject to a
maximum amount of $____ for each Participant or ____% of each
Participant's Compensation.
|X| (2) Nondiscretionary Formula:
A nondiscretionary Matching 401(k) Contribution for each Plan Year
equal to (select one):
[ ] (a) ____% of each Participant's Compensation contributed as
Elective Deferrals. If inserted, Matching 401(k)
Contributions shall be subject to a maximum amount of
$___ for each Participant or ____% of each Participant's
Compensation.
|X| (b) 100% of the first 3% of the Participant's Compensation
contributed as Elective Deferrals and ____% of the next
____% of the Participant's Compensation contributed as
Elective Deferrals. If inserted, Matching 401(k)
Contributions shall be subject to a maximum amount of
$____ for each Participant or ____% of each Participant's
Compensation.
C. PARTICIPANTS ELIGIBLE FOR MATCHING 401(k) CONTRIBUTION ALLOCATION
The following Participants shall be eligible for an allocation to their
Matching 401(k) Contributions Account (select all those applicable):
|X| (1) Any Participant who makes Elective Deferrals.
[ ] (2) Any Participant who satisfies those requirements elected by the
Employer for an allocation to his or her Employer Contributions
Account as provided in Article IV Section C.
[ ] (3) Solely with respect to a Plan in which Matching 401(k) Contributions
are made quarterly (or on any other regular interval that is more
frequent than annually) any Participant whose 401(k) Election is in
effect throughout such entire quarter (or other interval). _____
(quarterly, monthly or semi-annual).
D. QUALIFIED MATCHING CONTRIBUTIONS
If selected below, the Employer may make Qualified Matching Contributions
for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Matching
Contributions on behalf of (select one):
[ ] (a) all Participants who make Elective Deferrals in that Plan Year.
|X| (b) only those Participants who are Nonhighly Compensated Employees
and who make Elective Deferrals for that Plan Year.
10
<PAGE>
(2) Qualified Matching Contributions will be contributed and allocated
to each Participant in an amount equal to (select one):
[ ] (a) ____% of the Participant's Compensation contributed as
Elective Deferrals. If inserted, Qualified Matching
Contributions shall not exceed ____% of the Participant's
Compensation.
|X| (b) Such an amount, determined by the Employer, which is needed to
meet the ACP Test.
(3) In its discretion, the Employer may elect to designate all or any part
of Matching 401(k) Contributions as Qualified Matching Contributions
that are taken into account as Elective Deferrals - included in the ADP
Test and excluded from the ACP Test - on behalf of (select one):
[ ] (a) all Participants who make Elective Deferrals for that Plan
Year.
|X| (b) only Participants who are Nonhighly Compensated Employees who
make Elective Deferrals for that Plan Year.
E. QUALIFIED NONELECTIVE CONTRIBUTIONS
If selected below, the Employer may make Qualified Nonelective
Contributions for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Nonelective
Contributions on behalf of (select one):
[ ] (a) all Eligible Participants.
|X| (b) only Eligible Participants who are Nonhighly Compensated
Employees.
(2) Qualified Nonelective Contributions will be contributed and allocated
to each Eligible Participant in an amount equal to (select one):
[ ] (a) ____% (no more than 15%) of the Compensation of each Eligible
Participant eligible to share in the allocation.
|X| (b) Such an amount determined by the Employer, which is needed
to meet either the ADP Test or ACP Test.
(3) At the discretion of the Employer, as needed and taken into account as
Elective Deferrals included in the ADP Test on behalf of (select one):
[ ] (a) all Eligible Participants.
|X| (b) only those Eligible Participants who are Nonhighly Compensated
Employees.
11
<PAGE>
F. ELECTIVE DEFERRALS USED IN ACP TEST (select one):
|X| (1) At the discretion of the Employer, Elective Deferrals may be
used to satisfy the ACP Test.
[ ] (2) Elective Deferrals may not be used to satisfy the ACP Test.
G. MAKING AND MODIFYING A 401(k) ELECTION
An Eligible Employee shall be entitled to increase, decrease or resume his
or her Elective Deferral percentage with the following frequency during the
Plan Year (select one):
[ ] (1) annually.
|X| (2) semi-annually.
[ ] (3) quarterly.
[ ] (4) monthly.
[ ] (5) other (specify):____.
Any such increase, decrease or resumption shall be effective as of the
first payroll period coincident with or next following the first day of
each period set forth above. A Participant may completely discontinue
making Elective Deferrals at any time effective for the payroll period
after written notice is provided to the Administrator.
ARTICLE IV. PROFIT-SHARING CONTRIBUTIONS AND ACCOUNT ALLOCATION
A. PROFIT-SHARING CONTRIBUTIONS
If selected below, the following contributions for each Plan Year will be
made:
Contributions to Employer Contributions Accounts (select one):
[ ] (a) Such an amount, if any, as determined by the Employer.
[ ] (b) _____% of each Participant's Compensation.
B. ALLOCATION OF CONTRIBUTIONS TO EMPLOYER CONTRIBUTIONS ACCOUNTS (select one):
[ ] (1) Non-Integrated Allocation.
The Employer Contributions Account of each Participant eligible
to share in the allocation for a Plan Year shall be credited
with a portion of the contribution, plus any forfeitures if
forfeitures are reallocated to Participants equal to the ratio
that the Participant's Compensation for the Plan Year bears to
the Compensation for that Plan Year of all Participants
entitled to share in the contribution.
[ ] (2) Integrated Allocation.
Contributions to Employer Contributions Accounts with respect
to a Plan Year, plus any forfeitures are reallocated to
Participants, shall be allocated to the Employer Contributions
Account of each eligible Participant as follows:
12
<PAGE>
(a) First, in the ratio that each such eligible
Participant's Compensation for the Plan Year bears to
the Compensation for that Plan Year of all eligible
Participants but not in excess of 3% of each
Participant's Compensation.
(b) Second, any remaining contributions and forfeitures
will be allocated in the ratio that each eligible
Participant's Compensation for the Plan Year in
excess of the Integration Level bears to all such
Participants' excess Compensation for the Plan Year
but not in excess of 3%.
(c) Third, any remaining contributions and forfeitures
will be allocated in the ratio that the sum of each
Participant's Compensation and Compensation in excess
of the Integration Level bears to the sum of all
Participants' Compensation and Compensation in excess
of the Integration Level, but not in excess of the
Maximum Profit-Sharing Disparity Rate (defined
below).
(d) Fourth, any remaining contributions or forfeitures
will be allocated in the ratio that each
Participant's Compensation for that year bears to all
Participants' Compensation for that year.
The Maximum Profit-Sharing Disparity Rate is equal to the lesser
of:
(a) 2.7% or
(b) The applicable percentage determined in accordance
with the following table:
IF THE INTEGRATION LEVEL IS (AS A %
OF THE TAXABLE WAGE BASE ("TWB")). THE APPLICABLE PERCENTAGE IS:
20% (or $10,000 if greater)
or less of the TWB 2.7%
More than 20% (but not less
than $10,001 but not more
than 80% of the TWB) 1.3%
More than 80% but not less
than 100% of the TWB 2.4%
100% of the TWB 2.7%
C. PARTICIPANTS ELIGIBLE FOR EMPLOYER CONTRIBUTION ALLOCATION
The following Participants shall be eligible for an allocation to their
Employer Contributions Account (select all those applicable):
[ ] (1) Any Participant who was employed during the Plan Year.
[ ] (2) In the case of a Plan using the hourly record method for
determining Vesting Service, any Participant who was credited with
a Year of Service during the Plan Year.
[ ] (3) Any Participant who was employed on the last day of the Plan Year.
13
<PAGE>
[ ] (4) Any Participant who was on a leave of absence on the last day of
the Plan Year.
[ ] (5) Any Participant who during the Plan Year died or became Disabled
while an Employee or terminated employment after attaining
Normal Retirement Age.
[ ] (6) Any Participant who was credited with at least 501 Hours of Service
whether or not employed on the last day of the Plan Year.
[ ] (7) Any Participant who was credited with at least 1,000 Hours of
Service and was employed on the last day of the Plan Year.
ARTICLE V. THRIFT CONTRIBUTIONS
A. EMPLOYEE THRIFT CONTRIBUTIONS
If selected below, Employee Thrift Contributions, which are required for
Matching Thrift Contributions, may be made by a Participant in an amount
equal to (select one):
[ ] (1) A dollar amount or a percentage of the Participant's Compensation
which may not be less than ____% nor may not exceed ____% of his or
her Compensation.
[ ] (2) An amount not less than ____% of and not more than ____% of each
Participant's Compensation.
B. MAKING AND MODIFYING AN EMPLOYEE THRIFT CONTRIBUTION ELECTION
A Participant shall be entitled to increase, decrease or resume his or her
Employee Thrift Contribution percentage with the following frequency during
the Plan Year (select one):
[ ] (1) annually
[ ] (2) semi-annually
[ ] (3) quarterly
[ ] (4) monthly
[ ] (5) other (specify):____.
Any such increase, decrease or resumption shall be effective as of the
first payroll period coincident with or next following the first day of
each period set forth above. A Participant may completely discontinue
making Employee Thrift Contributions at any time effective for the payroll
period after written notice is provided to the Administrator.
C. THRIFT MATCHING CONTRIBUTIONS
If selected below, the Employer will make Matching Thrift Contributions for
each Plan Year (select one):
[ ] (1) Discretionary Formula:
A discretionary Matching Thrift Contribution equal to such a dollar
amount or percentage as determined by the Employer, which shall be
allocated (select one):
14
<PAGE>
[ ] (a) based on the ratio of each Participant's Employee Thrift
Contribution for the Plan Year to the total Employee Thrift
Contributions of all Participants for the Plan Year. If
inserted, Matching Thrift Contributions shall be subject to a
maximum amount of $___ for each Participant or ____% of each
Participant's Compensation.
[ ] (b) in an amount not to exceed ____% of each Participant's first
____% of Compensation contributed as Employee Thrift
Contributions for the Plan Year. If any Matching Thrift
Contribution remains, it is allocated to each such Participant
in an amount not to exceed ____% of the next ____% of each
Participant's Compensation contributed as Employee Thrift
Contributions for the Plan Year.
Any remaining Matching Thrift Contribution shall be allocated to each
such Participant in the ratio that such Participant's Employee Thrift
Contributions for the Plan Year bears to the total Employee Thrift
Contributions of all such Participants for the Plan Year. If inserted,
Matching Thrift Contributions shall be subject to a maximum amount of
$____ for each Participant or ____% of each Participant's
Compensation.
[ ] (2) Nondiscretionary Formula:
A nondiscretionary Matching Thrift Contribution for each Plan Year
equal to (select one):
[ ] (a) ____% of each Participant's Compensation contributed as
Employee Thrift Contributions. If inserted, Matching Thrift
Contributions shall be subject to a maximum amount of $____
for each Participant or ____% of each Participant's
Compensation.
[ ] (b) _____% of the first ____% of the Participant's Compensation
contributed as Employee Thrift Contributions and ____% of the
next ____% of the Participant's Compensation contributed as
Employee Thrift Contributions. If inserted, Matching Thrift
Contributions shall be subject to a maximum amount of $____
for each Participant or ____% of each Participant's
Compensation.
D. QUALIFIED MATCHING CONTRIBUTIONS
If selected below, the Employer may make Qualified Matching Contributions
for each Plan Year (select all those applicable):
(1) In its discretion, the Employer may make Qualified Matching
Contributions on behalf of (select one):
[ ] (a) all Participants who make Employee Thrift Contributions.
[ ] (b) only those Participants who are Nonhighly Compensated
Employees and who make Employee Thrift Contributions.
(2) Qualified Matching Contributions will be contributed and allocated
to each Participant in an amount equal to:
15
<PAGE>
[ ] (a) ____% of the Participant's Employee Thrift Contributions. If
inserted, Qualified Matching Contributions shall not exceed
____% of the Participant's Compensation.
[ ] (b) such an amount, determined by the Employer, which is needed to
meet the ACP Test.
ARTICLE VI. PARTICIPANT CONTRIBUTIONS
PARTICIPANT VOLUNTARY NONDEDUCTIBLE CONTRIBUTIONS
Participant Voluntary Nondeductible Contributions are (select one):
[ ] (a) permitted.
|X| (b) not permitted.
ARTICLE VII. VESTING
A. EMPLOYER CONTRIBUTION ACCOUNTS
(1) A Participant shall have a vested percentage in his or her
Profit-Sharing Contributions, Matching 401(k) Contributions and/or
Matching Thrift Contributions, if applicable, in accordance with the
following schedule (select one):
MATCHING 401(k)
AND/OR MATCHING PROFIT-SHARING
THRIFT CONTRIBUTIONS CONTRIBUTIONS
- -------------------- -------------
[ ] [ ] (a) 100% vesting immediately upon participation.
[ ] [ ] (b) 100% after ___ (not more than 5) years of
Vesting Service.
|X| [ ] (c) Graded vesting schedule:
0 % ____% after 1 year of Vesting Service;
-------
0 % ____% after 2 years of Vesting Service;
-------
20 % ____% (not less than 20%) after 3 years of Vesting
------ Service;
40 % ____% (not less than 40%) after 4 years of Vesting
------ Service;
60 % ____% (not less than 60%) after 5 years of Vesting
------ Service;
80 % ____% (not less than 80%) after 6 years of Vesting
------ Service;
100% after 7 years of Vesting Service.
16
<PAGE>
(2) Top-Heavy Plan
MATCHING 401(k)
AND/OR MATCHING PROFIT-SHARING
THRIFT CONTRIBUTIONS CONTRIBUTIONS
- -------------------- -------------
Vesting Schedule (Select one):
[ ] [ ] (a) 100% vesting immediately upon participation.
[ ] [ ] (b) 100% after ___ (not more than 3) years of
Vesting Service.
|X| [ ] (c) Graded vesting schedule:
0 % ____% after 1 year of Vesting Service;
-------
20 % ____% (not less than 20%) after 2 years of Vesting
------ Service;
40 % ____% (not less than 40%) after 3 years of Vesting
------ Service;
60 % ____% (not less than 60%) after 4 years of Vesting
------ Service;
80 % ____% (not less than 80%) after 5 years of Vesting
------ Service;
100% after 6 years of Vesting Service.
Top-Heavy Ratio:
(a) If the adopting Employer maintains or has ever maintained a
qualified defined benefit plan, for purposes of establishing
present value to compute the top-heavy ratio, any benefit
shall be discounted only for mortality and interest based on
the following:
Interest Rate: 8%
Mortality Table: UP '84
(b) For purposes of computing the top-heavy ratio, the valuation
date shall be the last business day of each Plan Year.
B. ALLOCATION OF FORFEITURES
Forfeitures shall be (select one from each applicable column):
MATCHING 401(k)
AND/OR MATCHING PROFIT-SHARING
THRIFT CONTRIBUTIONS CONTRIBUTIONS
- -------------------- -------------
|X| [ ] (1) used to reduce Employer contributions for
succeeding Plan Year.
[ ] [ ] (2) allocated in the succeeding Plan Year in the
ratio which the Compensation of each
Participant for the Plan Year bears to the
total Compensation of all Participants
entitled to share in the Contributions. If
17
<PAGE>
the Plan is integrated with Social Security,
forfeitures shall be allocated in accordance
with the formula elected by the Employer.
C. VESTING SERVICE
For purposes of determining Years of Service for Vesting Service [select (1)
or (2) and/or (3)]:
[ ] (1) All Years of Service shall be included.
[ ] (2) Years of Service before the Participant attained age 18 shall be
excluded.
|X| (3) Service with the Employer prior to the effective date of the Plan
shall be excluded.
ARTICLE VIII. DEFERRAL OF BENEFIT DISTRIBUTIONS,
IN-SERVICE WITHDRAWALS AND LOANS
A. DEFERRAL OF BENEFIT DISTRIBUTIONS
401(k) AND/ PROFIT
OR THRIFT SHARING
--------- -------
[ ] [ ] If this item is checked, a Participant's vested
benefit in his or her Employer Accounts shall be
payable as soon as practicable after the earlier of:
(1) the date the Participant terminates Employment
due to Disability or (2) the end of the Plan Year in
which a terminated Participant attains Early
Retirement Age, if applicable, or Normal Retirement
Age.
B. IN-SERVICE DISTRIBUTIONS
|X| (1) In-service distributions may be made from any of the
Participant's vested Accounts, at any time upon or after the
occurrence of the following events (select all applicable):
|X| (a) a Participant's attainment of age 59-1/2.
|X| (b) due to hardships as defined in Section 5.9 of the Plan.
[ ] (2) In-service distributions are not permitted.
C. LOANS ARE:
401(k) AND/ PROFIT
OR THRIFT SHARING
--------- -------
|X| [ ] (1) permitted.
[ ] [ ] (2) not permitted.
18
<PAGE>
ARTICLE IX. GROUP TRUST
[ ] If this item is checked, the Employer elects to establish a Group Trust
consisting of such Plan assets as shall from time to time be
transferred to the Trustee pursuant to Article X of the Plan. The Trust
Fund shall be a Group Trust consisting of assets of this Plan plus
assets of the following plans of the Employer or of an Affiliate: ____.
ARTICLE X. MISCELLANEOUS
A. IDENTIFICATION OF SPONSOR
The address and telephone number of the Sponsor's authorized representative
is 800 Scudders Mill Road, Plainsboro, New Jersey 08536; (609) 282-2272.
This authorized representative can answer inquiries regarding the adoption
of the Plan, the intended meaning of any Plan provisions, and the effect of
the opinion letter.
The Sponsor will inform the adopting Employer of any amendments made to the
Plan or the discontinuance or abandonment of the Plan.
B. PLAN REGISTRATION
1. Initial Registration
This Plan must be registered with the Sponsor, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, in order to be considered a Prototype
Plan by the Sponsor. Registration is required so that the Sponsor is
able to provide the Administrator with documents, forms and
announcements relating to the administration of the Plan and with Plan
amendments and other documents, all of which relate to administering
the Plan in accordance with applicable law and maintaining compliance
of the Plan with the law.
The Employer must complete and sign the Adoption Agreement. Upon
receipt of the Adoption Agreement, the Plan will be registered as a
Prototype Plan of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
The Adoption Agreement will be countersigned by an authorized
representative and a copy of the countersigned Adoption Agreement will
be returned to the Employer.
2. Registration Renewal
Annual registration renewal is required in order for the Employer to
continue to receive any and all necessary updating documents. There is
an annual registration renewal fee in the amount set forth with the
initial registration material. The adopting Employer authorizes
Merrill Lynch, Pierce, Fenner & Smith Incorporated to debit the
account established for the Plan for payment of agreed upon annual
fee; provided, however, if the assets of an account are vested solely
in Participant-Directed Assets, a notice for this annual fee will be
sent to the Employer annually. The Sponsor reserves the right to
change this fee from time to time and will provide written notice in
advance of any change.
19
<PAGE>
C. PROTOTYPE REPLACEMENT PLAN
This Adoption Agreement is a replacement prototype plan for the (1) Merrill
Lynch Special Prototype Defined Contribution Plan and Trust - 401(k) Plan
#03-004 and (2) Merrill Lynch Asset Management, Inc., Special Prototype
Defined Contribution Plan and Trust - 401(k) Plan Adoption Agreement
#03-004.
D. RELIANCE
The adopting Employer may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this Plan
is qualified under Code Section 401. In order to obtain reliance, the
Employer must apply to the appropriate Key District Director of the
Internal Revenue Service for a determination letter with respect to the
Plan.
20
<PAGE>
EMPLOYER'S SIGNATURE
Name of Employer: FLAGSTAR BANCORP, INC.
------------------------------------------------------ |X|
By: /s/ Mary Kay McGuire
------------------------------------------------------------ |X|
Authorized Signature
Mary Kay McGuire
------------------------------------------------------------ |X|
Print Name
Senior Vice President
------------------------------------------------------------ |X|
Title
DATED: JANUARY 11 , 19 99 |X|
----------------------------------------- --------
TO BE COMPLETED BY MERRILL LYNCH:
- ---------------------------------
SPONSOR ACCEPTANCE:
- -------------------
Subject to the terms and conditions of the Prototype Plan and this Adoption
Agreement, this Adoption Agreement is accepted by Merrill Lynch, Pierce, Fenner
& Smith Incorporated as the Prototype Sponsor.
Authorized
Signature: /s/ Donald Gabrielaitis
------------------------------------------------------
21
<PAGE>
TRUSTEE(S) SIGNATURE
This Trustee Acceptance is to be completed only if the Employer appoints one or
more Trustees and does not appoint a Merrill Lynch Trust Company as Trustee.
The undersigned hereby accepts all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.
AS TRUSTEE:
_________________________________ ___________________________________|X|
(Signature) (print or type name)
___________________________________ ___________________________________|X|
(Signature) (print or type name)
___________________________________ ___________________________________|X|
(Signature) (print or type name)
___________________________________ ___________________________________|X|
(Signature) (print or type name)
___________________________________ ___________________________________|X|
(Signature) (print or type name)
___________________________________ ___________________________________|X|
(Signature) (print or type name)
DATED: _____________________________. 19 _____|X|
22
<PAGE>
THE MERRILL LYNCH TRUST COMPANIES AS TRUSTEE
This Trustee Acceptance and designation of Investment Committee are to be
completed only when a Merrill Lynch Trust Company is appointed as Trustee.
TO BE COMPLETED BY THE EMPLOYER:
DESIGNATION OF INVESTMENT COMMITTEE
The Investment Committee for the Plan is (print or type names):
Name: Thomas J. Hammond
_____________________________________________________________________
Name: Mark T. Hammond
_____________________________________________________________________
Name: Mary Kay McGuire
_____________________________________________________________________
Name: _____________________________________________________________________
Name: _____________________________________________________________________
Name: _____________________________________________________________________
TO BE COMPLETED BY MERRILL LYNCH TRUST COMPANY:
- -----------------------------------------------
ACCEPTANCE BY TRUSTEE:
The undersigned hereby accepts all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.
SEAL MERRILL LYNCH TRUST BANK OF MICHIGAN
By: /s/ Melanie Madeira
_______________________________________
DATED: FEBRUARY 1, 1999
23
<PAGE>
THE MERRILL LYNCH TRUST COMPANIES AS ONE OF THE TRUSTEES
This Trustee Acceptance is to be completed only if, in addition to a Merrill
Lynch Trust Companies as Trustee, the Employer appoints an additional Trustee of
a second trust fund.
The undersigned hereby accept all of the terms, conditions, and obligations of
appointment as Trustee under the Plan. If the Employer has elected a Group Trust
in this Adoption Agreement, the undersigned Trustee(s) shall be the Trustee(s)
of the Group Trust.
AS TRUSTEE
- -------------------------------- ------------------------------------
(Signature) (print or type name)
DATED: _______________, 19____
SEAL MERRILL LYNCH TRUST COMPANY [_____________________]
By:__________________________________
DATED: ______________, 19____
DESIGNATION OF INVESTMENT COMMITTEE
The Investment Committee for the Plan is (print or type names);
Name: _____________________________________________________________________
Name: _____________________________________________________________________
Name: _____________________________________________________________________
Name: _____________________________________________________________________
24
<PAGE>
ADDENDUM TO THE FLAGSTAR BANK 401(k) PLAN
-----------------------------------------
PURSUANT TO ARTICLE 11.1.2 OF THE PLAN
--------------------------------------
411(d)(6) Protected Benefits Attachment to the Flagstar Bank 401(k) Plan
If you participated in the plan before and after January 1, 1996 then you will
receive vesting credit for your years of service with the Employer based upon
the following:
APPLICABLE YEARS METHOD MEASUREMENT
- ---------------- ------ -----------
Year(s) before 1996 General (Hourly) Jan. 1 to Dec. 31
1996 General or Elapsed Time* Jan. 1 to Dec. 31
Year(s) after 1996 Elapsed Time Whole Years Worked
*If you worked for an Employer during the 1996 Plan Year, you will receive
credit for this year based upon whichever method provides you with the most
service.
25
<PAGE>
EMPLOYER'S RESOLUTION OF PLAN RESTATEMENT
WHEREAS, the Employer did establish a 401(k) plan for its employees known as the
FLAGSTAR BANK 401(k) Plan (the "Plan") effective JANUARY, 1ST 1990; and
NOW THEREFORE, BE IT RESOLVED, that the Plan be and it is hereby amended and
restated in its entirety, effective FEBRUARY, 1ST, 1999, in order to qualify
under the provisions of the Internal Revenue Code of 1986, and any amendments
thereto, and under any rulings or regulations adopted by the Department of Labor
and/or the Department of the Treasury.
FURTHER RESOLVED, that the proper officers of the Employer are hereby authorized
and directed in the name of and on behalf of the Corporation, to execute and
deliver such amendment, and to execute any documents which may be otherwise
deemed necessary and proper in order to implement the foregoing resolutions.
Date: 01/11/99 /s/ Mary Kay McGuire
---------------- ---------------------------------------------
Signature
MARY KAY MCGUIRE
SENIOR VICE PRESIDENT
---------------------------------------------
Title
26
EXHIBIT 4.2
<PAGE>
FLAGSTAR BANK 401(k) PLAN
SUMMARY PLAN DESCRIPTION
**************************************************
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
**************************************************
<PAGE>
INTRODUCTION TO YOUR PLAN
Your Employer has instituted this Plan to reward efforts made by Employees who
contribute to the overall success of the Company. The Plan is exclusively for
the benefit of Participants and their Beneficiaries. The purpose of the Plan is
to help you build financial security for your retirement and to help protect you
and your Beneficiaries in the event of your death or Disability.
This Plan is a 401(k) plan. It offers you a built in savings system through
pre-tax payroll deductions. It also offers attractive tax advantages, the
freedom to choose investments according to your needs, the flexibility to change
your investments as your needs change, and a way to build capital for a secure
retirement.
Under the terms of this Plan, you may choose to defer a portion of your current
salary, which your Employer then contributes to the Plan on a pre-tax basis.
Contributions are not subject to Federal income tax, and in most cases are also
exempt from state or local income taxes. Since your contributions are not
subject to Federal income tax, your taxable income is reduced.
The laws governing plans like this one contain many provisions that may affect
your retirement. You should contact your Plan Administrator with any questions
about the Plan before you make any decisions related to your retirement. For
specific tax advice, you should contact your tax advisor.
This Summary Plan Description (SPD) summarizes the key features of your Plan,
and your rights, obligations and benefits under the Plan. Some of the statements
made in this SPD are dependent upon this Plan being "qualified", or approved by
the Internal Revenue Service. Please contact your Plan Administrator with any
questions you may have after you have read this summary.
Every effort has been made to make this description as accurate as possible.
However, this booklet is not a Plan document. This SPD is not meant to
interpret, extend, or change the provisions of the Plan in any way. The terms of
the Plan are stated in and will be governed in every respect by the Plan
document. Your right to any benefit depends on the actual facts and the terms
and conditions of the Plan document, and no rights accrue by reason of any
statement in this summary. A copy of the Plan document is available at the
principal office of your Employer for inspection. You, your Beneficiaries, or
your legal representatives may request to inspect the Plan Document at any
reasonable time.
2
<PAGE>
GENERAL INFORMATION ABOUT YOUR PLAN
Employer/Plan Sponsor Flagstar Bancorp, Inc.
and Plan Administrator: 2600 Telegraph Road
Bloomfield Hills, MI 48302
(248) 338-7700
Employer's Tax ID Number: 38-3150651
Plan Trustee(s): Merrill Lynch Trust Company
300 Davidson Avenue
2nd Floor West
Somerset, New Jersey 08873
Plan Name: Flagstar Bank 401(k) Plan
Plan Number: 001
Plan Restatement Date: February 1, 1999
Original Effective Date: January 1, 1990
Employer Tax Year: January 1st through December 31st
Plan Year End: December 31st
Type of Recordkeeping: Contract Administration
Type of Plan: 401(k)
The Plan Administrator keeps the records for the Plan, and is responsible for
the interpretation and administration of the Plan. All Plan Records will be kept
on the basis of the Plan Year. The Plan Administrator may hire a third party
record keeper to perform the administrative functions of the Plan. If you have
questions about the Plan you should write to the Plan Administrator. The Plan
Administrator and the Trustees are designated as the Agents for Service of Legal
Process.
3
<PAGE>
ELIGIBILITY AND PARTICIPATION
Eligibility: All Employees of the Employer and Participating
Affiliates are eligible to participate in this
Plan except non-resident aliens and Leased
Employees.
Participating Affiliates: Flagstar Bank, FSB; Douglas Insurance Agency, Inc.
FSSB Real Estate Development Corporation; Flagstar
Investment Group, Inc.; Mortgage Affiliated
Services, Inc.; Mid-Michigan Service Corporation;
SSB Funding Corporation and Effective 01/01/97
FSSB Mortgage Corporation
Participation Requirements
(401(k)): If you are not excluded from participation due to
the above, you will become eligible to participate
in the Plan upon attaining age 21 and completing
one (1) Year of Service.
A "Year of Service" is a twelve consecutive
month period, beginning on your date of hire,
during which you complete 1,000 "Hours of
Service". An Hour of Service is any hour for which
you are paid or entitled to payment.
If you fail to complete 1,000 Hours of Service
during your initial twelve months of employment,
you may still complete a Year of Service by being
credited with 1,000 Hours of Service during any
subsequent twelve-month period ending on your
employment anniversary date.
If you do not meet the eligibility requirements,
you will not be eligible to participate in this
Plan.
Entry Date: You will become a Participant in the Plan on the
Entry Date coincident with or next following the
date you meet the participation requirements.
The Entry Dates for this Plan are the first day of
the first and seventh month of the Plan Year.
YOUR CONTRIBUTIONS TO THE PLAN
Compensation: Compensation means the total salary or wages paid
to you as shown on your W-2, excluding
reimbursements or other expense allowances, fringe
benefits (cash and non-
4
<PAGE>
cash), moving expenses, deferred compensation and
welfare benefits.
For the first year you participate in the Plan,
only Compensation earned after your Entry Date
will be used to determine your share of your
Employer's Contribution.
Compensation is limited to a maximum of $160,000*
* Adjusted periodically for cost of living by the
IRS.
Elective Deferrals: Up to 6% of Annual Compensation, to a maximum of
$10,000* per calendar year.
* Adjusted periodically for cost of living by the
IRS.
This limitation is an aggregate limit that applies
to all deferrals you make to this Plan and to any
other elective deferral plan, including tax
sheltered annuity contracts, simplified pension
plans, or other 401(k) plans.
Making and Modifying 401(k) You may discontinue deferrals at any time, upon
Elections: written notice to the Plan Administrator. Your
instructions to cease Elective Deferrals will be
implemented as of the first payroll period
following the date you notified your Plan
Administrator.
To resume your Elective Deferral Contribution, you
must provide written notice to your Plan
Administrator, and wait until the next semi-annual
interval.
You may increase or decrease your Elective
Deferral Contribution Percentage at semi-annual
intervals throughout the Plan Year.
Investment of Contributions: As a Participant in this Plan, you direct the
investment of your account(s). Your Plan provides
a menu of investment options from which you may
select your investments. You may modify your
investment elections, transfer existing account
balances, and obtain information regarding your
investments on a daily basis.
You should be aware that your investment decisions will ultimately affect the
retirement benefits to which you will become entitled. Your Employer and the
Plan Trustee(s) cannot provide you with investment advice, nor are they
obligated to reimburse any participant for any investment
5
<PAGE>
loss that may occur as a result of his or her investment decisions. There is no
guarantee that any of the investment options available in this Plan will retain
their value or appreciate.
YOUR EMPLOYER'S CONTRIBUTIONS TO THE PLAN
Employer Matching Contributions: Your Employer will make a contribution to the
Plan known as a 401(k) Matching Contribution.
Your Employer's 401(k) Matching Contribution
will be an amount equal to 100% of the first
3% of your Compensation contributed as an
Elective Deferral.
Eligibility for Employer Any Participant who makes an Elective Deferral
Matching Contributions: Contribution will be eligible to receive an
Employer Matching Contribution.
Vesting: Vesting means that for each Year of Service
you complete, you become entitled to all or a
portion of your Employer Contributions
Account(s). For purposes of determining your
vested account balance, Years of Service prior
to the effective date of the Plan will not be
counted.
For example, if the effective date of the Plan
is January 1, 1998 and you were employed as of
that date, you will have completed a Year of
Service for vesting purposes on each January
1st for which you remain employed. If you were
employed after January 1, 1998, you will be
credited with a Year of Service for vesting
purposes on each anniversary of your Date of
Hire.
Vesting of Elective Deferrals: You are always 100% vested in your Elective
Deferrals.
Vesting Schedule for Employer 401(k) Matching Contributions
Years of Service Vested Percentage
1 0%
2 0%
3 20%
4 40%
5 60%
6 80%
7 100%
6
<PAGE>
Year of Service for Vesting
Defined: You will have completed a Year of Service for
vesting purposes on each anniversary of your
date of hire with your Employer.
If you participated in the Plan before and after January 1, 1996, then you will
receive vesting credit for your years of service with the Employer based upon
the following:
Applicable Years Method Measurement
- ---------------- ------ -----------
Year(s) before 1996 General (Hourly) Jan. 1 to Dec. 31
1996 General or Elapsed Time* Jan. 1 to Dec. 31
Year(s) after 1996 Elapsed Time Whole Years Worked
*If you worked for an Employer during the 1996 Plan Year, you will receive
credit for this year based upon whichever method provides you with the most
service.
If this is an amended or restated Plan, your vested percentage cannot be less
than your vested percentage prior to the amendment or restatement of this Plan.
Forfeitures: If you terminate service prior to being fully
vested in your Employer 401(k) Matching
Contribution Account, you forfeit the amount
in which you are not vested. Forfeitures will
be used to reduce future Employer 401(k)
Matching Contributions to the Plan.
7
<PAGE>
BENEFITS UNDER YOUR PLAN
Normal Retirement Age: Your Normal Retirement Age is age 65.
You are 100% vested in your Employer Contribution
Account(s) upon your Normal Retirement Date.
Early Retirement Age: This Plan also provides an Early Retirement Age, for
which you are eligible if you have attained age 55 and
completed 10 Years of Service with your Employer.
You are 100% vested in your Employer Contribution
Account(s) upon your Early Retirement Date.
Disability: You will be considered to be disabled if you qualify for
Social Security Disability benefits. Benefit payments
will begin as soon as feasible after your Disability
Retirement Date.
You are 100% vested in your Employer Contribution
Account(s) if you are deemed disabled.
In-Service
Distributions: As an active Participant in the Plan, you may, upon
attaining age 59 1/2, submit a written application to
the Plan Administrator to withdraw all or a portion of
your vested account balance.
Hardship Withdrawals: As an active Participant in the Plan, you may submit a
written application to the Plan Administrator for a
hardship withdrawal, if you are experiencing an immediate
and heavy financial need.
Events Which Qualify
For A Hardship 1. To cover medical expenses incurred by you, your
Distribution: spouse or your dependents;
2. For the purchase of a principal residence
(excluding mortgage payments);
3. For the payment of tuition and related educational
fees for the next twelve months of post-secondary
education for you, your spouse, your children or your
dependents;
4. For the payment of amounts necessary to prevent
eviction from or foreclosure on your principal residence.
8
<PAGE>
All other forms of financial assistance must be explored
and exhausted before a Hardship Distribution can be made.
If you take a hardship withdrawal, your Elective Deferral Contributions will be
suspended for a period of twelve months following the date of the withdrawal.
Tax Consequences for
Receiving A Distribution or withdrawal of your vested account
Distribution or balance may be subject to ordinary income taxes or
Withdrawal: early distribution penalties. Please consult your tax
advisor prior to taking any distribution or withdrawal.
Loan Availability: An active Participant in the Plan may request a loan
from the Plan. A loan allows you to borrow money from
your account without incurring a penalty. You must repay
the loan with interest, on an after-tax basis, usually
through payroll deduction.
Once you request a loan, your Employer is required to
approve the loan. After approval, you will receive a
check with an attached promissory note. By endorsing
the check, you agree to the terms and repayment
conditions in the promissory note.
As an active Participant in the Plan, you may request a
loan from the Plan. The loan amount is available by
calling the Voice Response System.
Loan Requirements: 1. Loans are available to all participants in the Plan
on a uniform and nondiscriminatory basis.
2. Loans must bear a reasonable rate of interest.
3. The loan must be adequately secured.
Loan Limitations: You may borrow any amount up to 50% of your vested
account balance. However, your loan can be no more
than $50,000 minus your highest outstanding loan
amount during the prior 12 months.
Loan Repayments: Repayment of a loan must be made at least quarterly,
on an after-tax basis, in level payments of principal
and interest, and repaid within five years, except
for the purchase of a primary residence.
9
<PAGE>
Tax Consequences
of Plan Loans: If you fail to make loan repayments when they are due,
you may be considered to have defaulted on the loan.
Defaulting on a loan may be considered a distribution to
you from the Plan, resulting in taxable income to you
and may ultimately reduce your benefit from the Plan.
Death Benefits: Your Employer Contribution Account(s) become 100% vested
upon your death.
Your Beneficiary will be entitled to receive your
account balance.
If you are married at the time of your death, your
surviving spouse is your Beneficiary unless:
o You elect otherwise in writing (with the consent of
your spouse).
o You establish to the satisfaction of the Plan
Administrator that your spouse cannot be located.
o Your spouse has validly waived any right to the death
benefit.
If you want to designate a Beneficiary other than your
spouse, (an "alternate Beneficiary") you must do so on a
form provided by the Plan Administrator. You may
revoke or change this designation at any time by
filing written notice with the Plan Administrator;
however, your spouse must consent, in writing, to any
alternate Beneficiary. A Notary Public or Plan
official must witness your spouse's consent.
It is important that you notify the Plan Administrator
of any change in your marital status or change in your
Beneficiary designation.
Distributions
Upon Death: If death occurs before Retirement Benefits begin, your
Beneficiary may choose to defer payment, or to receive
payment based on the following general guidelines:
o Payment may be made in the form of a life annuity
for Participants who transferred money from a prior
plan where this option was available;
10
<PAGE>
o Payment may be made in installments payable in cash
or in kind, or part in cash and part in kind over a
period not to exceed your expected future lifetime
or the joint expected future lifetime (based on
actuarial tables) of you and your spouse;
o The entire sum must be distributed no later than
the last day of the year of the fifth anniversary of
your death, if your Beneficiary is not your surviving
spouse;
o If your Beneficiary is your spouse, payment may be
postponed until December 31st of the calendar year
in which you would have attained age 65;
o Payment may be made in installments, as described
above, beginning on or before the December 31st
following the year in which you die.
If death occurs after Retirement Benefits begin, but before your entire
Retirement Benefit has been paid, the remaining portion of your Retirement
Benefit will continue in the same form and for the same period as you originally
elected. In any case, payments will continue to be made at least as rapidly as
such payments were being made prior to your death.
If you fail to designate an alternate Beneficiary, or
your alternate Beneficiary does not survive you, the
benefit payable from this Plan as a result of your
death will be payable to your Surviving Spouse. If you
have no Surviving Spouse, the death benefit will be
paid to your estate.
If the value of your account is $5,000 or less, death
benefits will be distributed to your Beneficiary without
your Beneficiary's consent as soon as practicable
following your death.
Forms of Benefit: The normal form of payment with respect to your vested
account balance under this Plan is a lump sum. If your
vested account balance is $5,000 or less, you will
receive a lump sum distribution as soon as feasible
following the date you terminated employment. If your
vested account balance is greater than $5,000, you (and
your spouse, if
11
<PAGE>
applicable) must give written consent before the
distribution can be made.
An optional form of payment with respect to your vested
account balance is installments payable in cash or in
kind, or part in cash and part in kind over a period
not to exceed your expected future lifetime, or the
joint expected future lifetime (based on actuarial
tables) of you and your spouse.
If you transferred money from a prior plan, another form
of benefit may be available. You should consult with
your tax advisor regarding those options.
You may request that all or part of any taxable distribution you receive from
the Plan, other than an annuity, installments paid over 10 or more years, or
required distributions after age 70-1/2, be rolled over directly from the
Trustees to the trustee or custodian of an eligible retirement plan. For this
purpose, an "eligible retirement plan" includes an individual retirement account
or annuity, or your new employer's qualified plan, if the plan accepts
rollovers. The Plan Administrator will notify you if any amount to be
distributed to you is an eligible rollover distribution. Special tax withholding
rules apply to any portion of the eligible rollover distribution which is not
rolled over directly to an eligible retirement plan.
Top-Heavy Defined: A plan becomes Top-Heavy when 60% or more of the Plan's
assets are allocated to Key Employees. Key Employees
are certain owners or officers of your Employer. If
the Plan becomes Top-Heavy certain rules apply.
Top-Heavy Rules: A minimum contribution will be required to Non-Key
Employees. This contribution is the lesser of:
o three percent (3%) of Compensation; or
o the largest percentage of Compensation contributed by
the Employer on behalf of Key Employees.
o If you are a Participant in more than one plan
maintained by your Employer, you may not be entitled
to minimum benefits in more than one plan.
12
<PAGE>
Top-Heavy Vesting Schedule for Employer 401(k) Matching Contributions
Years of Service Vested Percentage
1 0%
2 20%
3 40%
4 60%
5 80%
6 100%
Rollovers or
Transfers: o You must submit a written request to your Plan
Administrator, who will determine whether a rollover
or transfer is acceptable;
o You may make such a contribution to this Plan prior
to being eligible for the Plan;
o Any amount rolled over or transferred to this Plan
cannot include personal IRA contributions;
o Prior to making a rollover or transfer, you should
consult with your tax advisor.
Period of Severance: Under the elapsed time method, your Years of Service for
vesting purposes run from the date you first perform an
Hour of Service for your Employer until your severance
from service date. A Period of Severance begins on the
earlier of:
o The date you quit, retire, are discharged, or die.
OR
o The first anniversary of the first date of a period
in which you remain absent from service with your
Employer (with or without pay) for any reason other
than quitting, retirement, discharge, or death. These
reasons include vacation, holiday, sickness,
disability, leave of absence, or layoff.
If you are absent on military leave, you will not be
considered to have a Period of Severance if you return
to work within 90 days of your release from military
duty, or any longer period during which your
reemployment rights are protected by law.
13
<PAGE>
If you are on an authorized leave of absence (in
accordance with standard personnel policies), you will
not be considered to have a Period of Severance if you
return to work immediately upon the expiration of such
leave of absence.
If you are on a leave of absence because of maternity or
paternity, you will not be considered to have a Period
of Severance until the second anniversary of the first
date of your leave. For example, if you went on
maternity leave on October 1, 1995, you would not be
considered to have severed service with your Employer if
you returned to work and performed an Hour of Service
before October 1, 1997. If you did not return to work
on or before October 1, 1997, you would incur a Period
of Severance.
If you are reemployed after you incur a Period of
Severance and you were vested when you terminated
employment, upon your reemployment, you will be
immediately eligible for the Plan, and you will be
vested at the same percentage as when you left.
If you are reemployed after you incur a Period of
Severance and you were not vested when you terminated
employment, you will lose credit for service you
completed prior to your termination if your absence
is five years or longer.
If you are reemployed within five years after you incur
a Period of Severance, and you received a full or
partial distribution (including a "deemed" distribution
if you have a $0 account balance), you may return as a
Participant at the same vested percentage as when you
left, provided you repay the amount distributed to you
within five years of the date you are reemployed. After
repayment, your account balance will be restored to its
original amount as though there had been no
distribution, and any amount forfeited when you left
will be replaced by your Employer.
If you are reemployed after you incur a five-year Period
of Severance, you will not be given the opportunity to
repay the amount distributed to you and your vested
percentage will be determined based
14
<PAGE>
on your Years of Service beginning on your date of
reemployment.
If you terminate service prior to becoming a
Participant in the Plan, you will be treated as a new
employee upon your reemployment. To participate, you
must meet the Eligibility Requirements.
Qualified Domestic
Relations Orders: As a general rule, your account balance may not be
assigned. This means that your accounts cannot be sold,
used as collateral for a loan, given away, or otherwise
transferred. In addition, your creditors may not attach,
garnish or otherwise interfere with your account.
An exception to this general rule is a "qualified
domestic relations order" or QDRO. A QDRO is a court
order that can require the Plan Administrator to pay a
portion of your account balance to your former spouse,
child or other dependent.
Plan Amendment or
Termination: Your Employer reserves the right to amend the Plan at
any time. However, no amendment can deprive you of any
vested benefits.
Your Employer also reserves the right to terminate the
Plan. If the Plan is terminated, you will be 100%
vested in your total account balance under the Plan.
STATEMENT OF ERISA RIGHTS
As a Participant in the Plan, you are entitled to certain rights and protection
under the Employee Retirement Income Security Act of 1974 (ERISA). Your Employer
may not fire you or discriminate against you to prevent you from obtaining a
benefit from the Plan or exercising your rights under ERISA.
ERISA provides that all Plan Participants shall be entitled to:
o Examine, without charge, at your Plan Administrator's office, all Plan
documents, insurance contracts, if any, and copies of all documents filed
by your Plan with the U.S. Department of Labor, such as annual reports and
Plan descriptions.
o Obtain copies of all Plan documents and other Plan information upon written
request to your Plan Administrator. Your Plan Administrator may impose a
reasonable charge for the copies.
15
<PAGE>
o Receive a summary of the Plan's annual financial report. Your Plan
Administrator is required by law to provide each Participant with a copy of
the Plan's Summary Annual Report.
o Obtain an annual statement telling you whether you have a right to receive
a benefit under the Plan, and if so, what your benefits would be if you
stop working for your Employer now. If you do not have a right to a benefit
under the Plan, the statement must tell you how many years you have to work
to get a benefit under the Plan. The Plan may require a written request for
this statement, but it must be provided free of charge.
o File suit in Federal court if any materials requested are not received
within 30 days of your request unless the materials were not sent because
of matters beyond the control of your Plan Administrator. The court may
require your Plan Administrator to pay you up to $110 per day for each
day's delay until the materials are received by you.
In addition to creating rights for Plan participants, ERISA imposes obligations
upon the persons who are responsible for the operation of the Plan. These
persons are referred to as "fiduciaries". Fiduciaries must act solely in the
interest of Plan Participants and Beneficiaries and must exercise prudence in
the performance of their plan duties. Fiduciaries who do not comply with ERISA
may be removed and required to make good any losses they have caused the Plan.
If Plan fiduciaries are misusing the Plan's assets, as a Participant in the
Plan, you have the right to file suit in a Federal court or to request
assistance from the U.S. Department of Labor. If you are successful in your
lawsuit, the court may require the other party to pay your legal costs,
including attorney's fees. If you are unsuccessful in your lawsuit, or the court
finds your action frivolous, the court may order you to pay these costs and
fees.
CLAIMS PROCEDURES
When you terminate employment, you must complete a form that notifies the Plan
Administrator that you are making a claim for benefits. Your Employer has a
supply of these forms. Ideally this form should be completed on or before your
final day of work. This way, your Employer can send your claim for benefits
right away for processing.
If, after your claim for benefits is processed, you have questions or disagree
with the calculation of your benefit, you must notify the Plan Administrator in
writing. The Plan Administrator will, within 90 days (or within 180 days if
special circumstances exist) notify you in writing of its decision. If your
claim for a Plan benefit is denied in whole or in part, you must receive a
written explanation of the reason for the denial. That notification will
include:
1. How your benefit was calculated;
2. The specific reason that your claim is denied (in whole or in part) if it is
denied;
3. Specific references to Plan provisions on which the denial is based;
4. A description of any additional material or information necessary for you to
perfect your claim and an explanation of why such information is necessary;
5. An explanation of the Plan's claim review procedure.
16
<PAGE>
Within 60 days after you receive notice of the denial of part or your entire
claim for benefits, you may file a written appeal with the Plan Administrator.
You may seek representation by an attorney or other representation of your
choosing. You may submit written and oral evidence and arguments in support of
your claim. You may review all relevant documents. The Plan Administrator
generally makes a final decision within 60 days of your appeal. The Plan
Administrator's decision will include the specific reasons for its decision and
specific references to Plan provisions on which the decision is based.
PENSION BENEFIT GUARANTY CORPORATION
The type of Plan your Employer has adopted is a defined contribution plan.
Therefore, the Plan is not subject to or insured by the Pension Benefit Guaranty
Corporation (PBGC).
If you have any questions about this statement or about your rights under ERISA,
you should contact the nearest Area Office of the U.S. Department of Labor
Management Services Administration, Department of Labor.
17
EXHIBIT 4.3
<PAGE>
- --------------------------------------------------------------------------------
INITIAL ENROLLMENT FORM
- --------------------------------------------------------------------------------
FLAGSTAR BANK 401(k) PLAN PLAN #: ML200983
================================================================================
THIS FORM IS TO BE UTILIZED FOR INITIAL ENROLLMENT PURPOSES ONLY. DO NOT USE
THIS FORM FOR CURRENT PARTICIPANTS.
- --------------------------------------------------------------------------------
EMPLOYEE INFORMATION (please print)
- ----------------------------------------- ======================================
Name: SS#:
- ----------------------------------------- ======================================
Address: Date of Participation:
- ----------------------------------------- --------------------------------------
City: State: Zip:
- --------------------------- ------------- --------------------------------------
Date of Birth: Date of Hire:
- --------------------------- ------------- --------------------------------------
CONTRIBUTION ELECTION
I authorize my employer to make payroll deductions from my salary in the amount
indicated below to be used as my contributions to the Plan:
|_| I wish to contribute the following whole percentage of my compensation to
the Plan on a before-tax basis via payroll deduction (from 1 to 6%).__ __%
|_| I do not wish to contribute to the Plan at this time.
- --------------------------------------------------------------------------------
INVESTMENT ELECTION: FUTURE CHANGES MUST BE MADE BY CALLING MERRILL LYNCH AT
1(800) 229-9040. THIS INVESTMENT ELECTION WILL NOT BE APPLIED TO ANY EXISTING
FUNDS YOU MAY CURRENTLY HAVE IN THE PLAN.
IF YOU FAIL TO MAKE AN ELECTION, YOUR CONTRIBUTIONS WILL BE FULLY INVESTED IN
THE ML RETIREMENT PRESERVATION TRUST.
The contributions resulting from these elections
are to be transferred to the Plan and invested as INVESTMENT
follows. Your investment election percentages ELECTION
must be in multiples of 1% totaling 100%. FUND NAME PERCENTAGES
FLAGSTAR COMPANY STOCK __ __ __%
Investment elections may be modified at
any time by calling Merrill Lynch
at 1(800) 229-9040. ML RETIREMENT PRESERVATION TRUST __ __ __%
ML FEDERAL SECURITIES TRUST __ __ __%
ML CORPORATE BOND FUND-INTERMEDIATE TERM __ __ __%
ML CAPITAL FUND __ __ __%
PIMCO RENAISSANCE FUND __ __ __%
MASSACHUSETTS INVESTORS TRUST A __ __ __%
MASSACHUSETTS INVESTOR'S GROWTH STOCK FUND __ __ __%
ML S&P 500 INDEX FUND __ __ __%
ML GLOBAL VALUE FUND __ __ __%
TOTAL 1 0 0 %
- --------------------------------------------------------------------------------
AUTHORIZATION
My signature will serve as authorization for this and all future phone
transactions I make to my accounts. I AM NOT CURRENTLY A PARTICIPANT IN THE
PLAN.
- ------------------------------------- ---/---/---
EMPLOYEE SIGNATURE DATE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOR ADMINISTRATIVE USE ONLY:
NUMBER OF YEARS OF SERVICE (EXCLUDING THE CURRENT YEAR): ___________
- --------------------------------------- ---/---/--- ---/---/---
PLAN ADMINISTRATOR'S SIGNATURE DATE DATE FIRST ELIGIBLE
<PAGE>
- --------------------------------------------------------------------------------
BENEFICIARY DESIGNATION FORM
- --------------------------------------------------------------------------------
FLAGSTAR BANK 401(k) PLAN PLAN #: ML200983
================================================================================
EMPLOYEE INFORMATION (please print)
- ---------------------------------------------- ---------------------------------
Name: SS#:
- ---------------------------------------------- ---------------------------------
Your Plan account is payable to your beneficiary if you die. If you are married,
your primary beneficiary is automatically your spouse, unless your spouse
consents in writing to the designation of a different beneficiary. Your
secondary beneficiary(ies) will receive your benefit if your primary beneficiary
is not alive at the time of your death. If you are not married and you fail to
designate a beneficiary, the Plan Administrator will, in the event of your
death, identify your beneficiary in accordance with the terms of the Plan.
Please attach a second form if you wish to name more than one primary or more
than two secondary beneficiaries.
- --------------------------------------------------------------------------------
PRIMARY BENEFICIARY
- -------------------------------------------- ===================================
Name: SS#:
- -------------------------------------------- ===================================
Address:
- --------------------------------- --------------- ------------------------------
City: State: Zip:
- --------------------------------- --------------- ------------------------------
Date of Birth: Relationship:*
================================================================================
SECONDARY BENEFICIARY (IES)
- -------------------------------------------- ===================================
Name: Percentage: SS#:
- -------------------------------------------- ===================================
Address:
- --------------------------------- --------------- ------------------------------
City: State: Zip:
- --------------------------------- --------------- ------------------------------
Date of Birth: Relationship:*
================================================================================
- -------------------------------------------- ===================================
Name: Percentage: SS#:
- -------------------------------------------- ===================================
Address:
- --------------------------------- --------------- ------------------------------
City: State: Zip:
- --------------------------------- --------------- ------------------------------
Date of Birth: Relationship:*
================================================================================
* SPOUSAL CONSENT
<PAGE>
This section must be completed by your spouse if you are married and your
designated primary beneficiary is not your spouse.
I understand that by signing this form I am waiving my rights as beneficiary of
any payments due from the Plan and that I am consenting to the designation of
beneficiary(ies) named above. I further understand that this election is
irrevocable unless my spouse revokes the designation of the beneficiary(ies)
named above and appoints me as primary beneficiary.
- ----------------------------------------------- -----------------------
SPOUSE'S SIGNATURE DATE
- ----------------------------------------------- -----------------------
WITNESS (AUTHORIZED PLAN REPRESENTATIVE OR NOTARY) DATE
- --------------------------------------------------------------------------------
AUTHORIZATION
You may amend or revoke your designation at any time by filing another copy of
this form. The most recently dated form will always apply (as long as it is
witnessed, if applicable).
- ------------------------------------------------ -----------------------
EMPLOYEE SIGNATURE DATE
- ------------------------------------------------ -----------------------
PLAN ADMINISTRATOR'S SIGNATURE DATE
FOR PLAN SPONSOR USE ONLY: DO NOT SEND THIS FORM TO MERRILL LYNCH
<PAGE>
- --------------------------------------------------------------------------------
CHANGE FORM
- --------------------------------------------------------------------------------
FLAGSTAR BANK 401(k) PLAN PLAN #: ML200983
================================================================================
THIS FORM IS TO BE UTILIZED BY CURRENT PARTICIPANTS ONLY. DO NOT UTILIZE FOR
ENROLLMENT PURPOSES. ENTER YOUR SOCIAL SECURITY NUMBER AND ONLY THE INFORMATION
THAT IS CHANGING. THIS FORM MUST BE RETURNED TO YOUR BENEFITS REPRESENTATIVE.
- --------------------------------------------------------------------------------
IMPORTANT: IF YOU ARE CHANGING OR CORRECTING ANY OF THE FOLLOWING EMPLOYEE
INFORMATION, PLEASE ENTER THE CORRECT INFORMATION AND CHECK HERE: |_|
- --------------------------------------------------------------------------------
EMPLOYEE INFORMATION (please print) (SS# IS A REQUIRED FIELD)
- -------------------------------------------- ===================================
Name: SS#:
- -------------------------------------------- ===================================
Address:
- --------------------------------- --------------- ------------------------------
City: State: Zip:
- --------------------------------- --------------- ------------------------------
Date of Birth: Date of Hire:
================================================================================
CONTRIBUTION ELECTION
I authorize my employer to make payroll deductions from my salary in the amount
indicated below to be used as my contributions to the Plan:
|_| I wish to contribute the following whole percentage of my compensation to
the Plan on a before-tax basis via payroll deduction (from 1 to 6%). __ __%
|_| I wish to discontinue contributions to the Plan at this time.
- --------------------------------------------------------------------------------
INVESTMENT ELECTION: INVESTMENT ELECTIONS MUST BE MADE BY CALLING MERRILL LYNCH
AT 1(800) 229-9040.
- --------------------------------------------------------------------------------
AUTHORIZATION
My signature will serve as authorization for this and all future transactions I
make to my accounts.
- ------------------------------------- ---/---/---
EMPLOYEE SIGNATURE DATE
- --------------------------------------------------------------------------------
FOR PLAN SPONSOR USE ONLY: DO NOT SEND THIS FORM TO MERRILL LYNCH
- ------------------------------------- ---/---/---
PLAN ADMINISTRATOR'S SIGNATURE DATE
<PAGE>
- --------------------------------------------------------------------------------
CHECK DEPOSIT FORM
- --------------------------------------------------------------------------------
FLAGSTAR BANK 401(k) PLAN PLAN #: ML200983
================================================================================
TRADING ACCOUNT # 899-28L04
EMPLOYEE INFORMATION (please print)
- ------------------------------------------- ====================================
Name: SS#:
- ------------------------------------------- ====================================
Address:
- -------------------------------- --------------------------- -------------------
City: State: Zip:
- -------------------------------- --------------------------- -------------------
Deposit Amount: $ Day Phone #: ( ) -
- ----------------------------------------- ------------------------------------
INSTRUCTIONS:
o Make Check Payable to: Merrill Lynch Trust Company FBO `Participant's Name'
o Complete appropriate section of this form
o Obtain any necessary documentation
o Give to your Benefits Department
- --------------------------------------------------------------------------------
LOAN PAYOFF:
In order to FULLY SATISFY my current loan obligation, I am making a principal
loan repayment in the amount(s) below. Loan Number and Payoff Amount can be
obtained by calling (800) 229-9040. Loan Payoffs will be invested according to
the current investment direction. If you do not have an investment direction on
file, it will be deposited into ML Retirement Preservation Trust.
------------------------------ ============================================
Loan Number Payoff Amount
------------------------------ ============================================
$
------------------------------ --------------------------------------------
$
------------------------------ --------------------------------------------
------------------------------ --------------------------------------------
$
------------------------------ --------------------------------------------
$
------------------------------ ============================================
Total: $
------------------------------ ============================================
- --------------------------------------------------------------------------------
ROLLOVER CONTRIBUTION:
A distribution statement from your former Plan must accompany your check and
this form to properly qualify your rollover deposit and must state:
o Name, Social Security Number, Taxable Amount and Date of Distribution
o That the plan from which the distribution occurred is a qualified plan
o That the distribution was a qualified total distribution from a qualified
employer plan and
o That no part of the distribution is attributable to contributions made while
being a key employee in a top-heavy plan
If your distribution is from a rollover IRA, check here: |_|
Date of Birth:___/___/___Date of Hire:___/___/___Date of Plan Entry:___/___/___
<PAGE>
ROLLOVER CONTINUED:
Invest my ROLLOVER CONTRIBUTION according to the investment direction as
follows: Your investment election percentages must be in multiples of 1%
totaling 100%. IF YOU FAIL TO MAKE AN ELECTION, YOUR CONTRIBUTIONS WILL BE FULLY
INVESTED IN THE ML RETIREMENT PRESERVATION TRUST. THIS ELECTION WILL NOT CHANGE
ANY INVESTMENT DIRECTION THAT YOU CURRENTLY HAVE ON FILE.
================================================================================
THIS SECTION IS FOR ROLLOVERS ONLY.
DO NOT COMPLETE THIS SECTION FOR LOAN PAYOFFS.
INVESTMENT
ELECTION
FUND NAME PERCENTAGES
FLAGSTAR COMPANY STOCK __ __ __%
ML RETIREMENT PRESERVATION TRUST __ __ __%
ML FEDERAL SECURITIES TRUST __ __ __%
ML CORPORATE BOND FUND-INTERMEDIATE TERM PORTFOLIO __ __ __%
ML CAPITAL FUND __ __ __%
PIMCO RENAISSANCE FUND __ __ __%
MASSACHUSETTS INVESTORS TRUST A __ __ __%
ML S&P 500 INDEX FUND __ __ __%
MASSACHUSETTS INVESTOR'S GROWTH STOCK FUND __ __ __%
ML GLOBAL VALUE FUND __ __ __%
TOTAL 1 0 0 %
================================================================================
AUTHORIZATION:
I acknowledge that this deposit is being made in accordance with the provisions
of the plan. I further acknowledge that I have read the prospectuses for the
mutual funds and that this deposit will be processed in accordance with the
terms and conditions therein.
- ---------------------------------------------- --------------------
YOUR SIGNATURE DATE
- ---------------------------------------------- --------------------
PLAN ADMINISTRATOR'S SIGNATURE DATE
If you have any questions concerning your account, please contact Merrill
Lynch at 1 (800) 229-9040.
- --------------------------------------------------------------------------------
FOR OFFICE USE ONLY
-------------------------------------------------------------------
------------------------------- ----------------------------
PROCESSED BY VERIFIED BY
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
CHECK DEPOSIT FORM PAGE 2 OF 2
1
<PAGE>
WITHDRAWAL ROLLOVER/DISTRIBUTION ELECTION FORM
(to be used with the Hardship Withdrawal Request Form)
INSTRUCTIONS FOR COMPLETING THIS FORM: COMPLETE THIS FORM IF YOU WISH TO ROLL
OVER THE PORTION OF YOUR HARDSHIP WITHDRAWAL THAT IS NOT PAID FROM YOUR ELECTIVE
(PRE-TAX) DEFERRAL ACCOUNT IN THE PLAN.
PLAN NAME: FLAGSTAR BANK 401(k) PLAN
PLAN NUMBER: 200983
I. PARTICIPANT INFORMATION
Name: ______________________________ Social Security # ____________________
Last First MI
Address: ____________________________________________________________________
II. DISTRIBUTION METHOD
Any portion of your distribution that is eligible to be directly rolled over to
an IRA or a qualified retirement plan and is not directly rolled over, will
automatically be subject to 20% withholding for Federal Income Tax purposes.
Please indicate your rollover election by checking one box in Section A, B or C.
In conjunction with your rollover election, you may elect to roll over less than
100% of your distribution and elect a separate distribution option for the
balance. To elect to roll over less than 100%, indicate the percentage to be
rolled over below. Then, check another box in Section D or E to indicate whether
the balance should be paid to you or transferred to a Merrill Lynch brokerage
account. If you do not make an election in Section D or E but indicate that less
than 100% of your distribution should be rolled to an IRA or qualified
retirement plan, the portion of your distribution not paid in a direct rollover
will be paid directly to you in a cash distribution.
Percentage to be rolled over to an IRA or a qualified retirement plan:_________%
A) DIRECT ROLLOVER TO MERRILL LYNCH IRA -- The portion of your
distribution that is being directly rolled over will be transferred
into a Merrill Lynch IRA. If you need information about opening a
Merrill Lynch IRA, please call 1-800-MERRILL. Indicate the method of
payment for your direct rollover and account number of the IRA below:
|_| Company stock and cash - Whole shares of Company stock will be
transferred to your IRA for any portion of your withdrawal paid from
the Company stock fund. Shares or other interests in any other funds in
the Plan from which your withdrawal is paid, as well as fractional
shares of Company stock, will be sold/redeemed and the proceeds of the
sale/redemption will be transferred to your IRA.
|_| Cash - Shares or other interests in any fund in the Plan from which
your withdrawal is paid will be sold/redeemed and the proceeds of the
sale/redemption will be transferred to your IRA.
Merrill Lynch IRA Account Number -
-------------------------
<PAGE>
WITHDRAWAL ROLLOVER/DISTRIBUTION ELECTION FORM
(PAGE 2 OF 3)
B) DIRECT ROLLOVER TO A NON-MERRILL LYNCH IRA - A check and/or stock certificate
for the portion of your distribution that is being directly rolled over will be
made payable to your financial institution on your behalf and will be sent
directly to you. You are responsible for forwarding the check and/or stock
certificate to your financial institution for deposit in your IRA. Indicate the
method of payment for your direct rollover and the name of your financial
institution below:
|_| Company stock and cash - A certificate for whole shares of Company stock
will be issued for any portion of your withdrawal paid from the Company
stock fund. Shares or other interests in any other funds in the Plan from
which your withdrawal is paid, as well as fractional shares of Company
stock, will be sold/redeemed and a check will be issued for the proceeds of
the sale/redemption.
|_| Cash - Shares or other interests in any fund in the Plan from which your
withdrawal is paid will be sold/redeemed and a check will be issued for the
proceeds of the sale/redemption.
Name of Financial Institution: ____________________________________________
C) DIRECT ROLLOVER TO A QUALIFIED RETIREMENT PLAN - A check and/or stock
certificate for the portion of your distribution that is being directly
rolled over will be made payable to the qualified retirement plan on your
behalf and will be sent directly to you. You are responsible for forwarding
the check and/or stock certificate to the qualified retirement plan.
Indicate the method of payment and name of the qualified retirement plan
that will accept your rollover below:
|_| Company stock and cash - A certificate for whole shares of Company stock
will be issued for any portion of your withdrawal paid from the Company
stock fund. Shares or other interests in any other funds in the Plan from
which your withdrawal is paid, as well as fractional shares of Company
stock, will be sold/redeemed and a check will be issued for the proceeds of
the sale/redemption.
|_| Cash - Shares or other interests in any fund in the Plan from which your
withdrawal is paid will be sold/redeemed and a check will be issued for the
proceeds of the sale/redemption.
Name of Qualified Retirement Plan: ________________________________________
If you elected to roll over less than 100% of your distribution, please
complete either Section D or Section E below:
D) DIRECT PAYMENT TO YOU - Your distribution will be made payable and sent
directly to you. Indicate the method of payment below:
|_| Company stock and cash - A certificate for whole shares of Company stock
will be issued to you for any portion of your withdrawal paid from the
Company stock fund. Shares or other interests in any other funds in the
Plan from which your withdrawal is paid, as well as fractional shares of
Company stock, will be sold/redeemed and a check will be issued to you for
the proceeds of the sale/redemption.
<PAGE>
WITHDRAWAL ROLLOVER/DISTRIBUTION ELECTION FORM
(PAGE 3 OF 3)
|_| Cash -- Shares or other interests in any fund in the Plan from which your
withdrawal is paid will be sold/redeemed and a check will be issued to you
for the proceeds of the sale/redemption.
E) TRANSFER TO A MERRILL LYNCH BROKERAGE ACCOUNT - Your distribution will be
transferred into your Merrill Lynch brokerage account. If you need
information about opening a Merrill Lynch brokerage account, please call
1--800 MERRILL. Indicate the method of payment and the account number of
the brokerage account below:
|_| Company stock and cash -- Whole shares of Company stock will be transferred
to your brokerage account for any portion of your withdrawal paid from the
Company stock fund. Shares or other interests in any other funds in the
Plan from which your withdrawal is paid, as well as fractional shares of
Company stock, will be sold/redeemed and the proceeds of the
sale/redemption will be transferred to your brokerage account.
|_| Cash -- Shares or other interests in any fund in the Plan from which your
withdrawal is paid will be sold/redeemed and the proceeds of the
sale/redemption will be transferred to your brokerage account.
Merrill Lynch Brokerage Account Number -
------------------------
III. SIGNATURE
I hereby certify that I have received and read the Special Tax Notice Regarding
Plan Payments. I understand that I have the right to review this notice for at
least thirty (30) days before deciding whether I want to directly roll over my
distribution or have the distribution paid directly to me. I further understand
that, by executing and returning this distribution form in less than 30 days, I
have waived my right to the 30-day waiting period.
- ----------------------------------- --------------------------
Signature Date
<PAGE>
HARDSHIP WITHDRAWAL REQUEST FORM
(SAFE HARBOR)
- --------------------------------------------------------------------------------
PLAN NAME: FLAGSTAR BANK 401(k) PLAN
PLAN NUMBER: 200983
I. PARTICIPANT INFORMATION
Name: _________________________________ Social Security # ____________________
Last First MI
Address:________________________________________________________________________
II. WITHDRAWAL REQUEST (CHECK ONE BOX IN BOTH SECTIONS A AND B)
A. I understand that the amount of my withdrawal must be necessary to satisfy
an immediate and heavy financial need and that the amount of the withdrawal
cannot exceed the amount necessary to meet that need. I also understand
that my withdrawal will be paid on a pro-rata basis from all funds in which
I am invested in the Plan.
|_| I request a withdrawal in the amount of $_________________________
|_| I request the maximum withdrawal amount available.
B. My withdrawal is requested for the following reason:
|_| Unreimbursed medical expenses incurred or to be incurred by me, my
spouse, or any of my dependents.
|_| The purchase (excluding mortgage payments) of my principal residence.
|_| The payment of tuition, related educational fees, and room and board
expenses for the next 12 months of post-secondary education for
myself, my spouse, my children or my dependents.
|_| The need to prevent eviction from or mortgage foreclosure on my
principal residence.
Please attach supporting documentation for any of the requested reasons above
(bills, contracts, eviction notices, etc.).
In connection with my request for a hardship withdrawal from the Plan, (a) I
understand that I will not be allowed to make any contributions or deferrals to
the Plan or to any other plan maintained by the Company for a 12-month period
following the date I received my hardship withdrawal; (b) I understand that my
elective (pre-tax) deferrals to the Plan will also be limited in the taxable
year following the year in which I receive my hardship withdrawal in accordance
with Plan terms; and (c) I certify that I have obtained all other distributions
and non-taxable loans currently available to me under this Plan, as well as
available under other plans maintained by the Company.
<PAGE>
HARDSHIP WITHDRAWAL REQUEST FORM
(SAFE HARBOR - PAGE 2 OF 3)
III. DISTRIBUTION METHOD - APPLIES TO THE PORTION OF YOUR WITHDRAWAL MADE FROM
YOUR ELECTIVE DEFERRAL ACCOUNT IN THE PLAN AS WELL AS ANY OTHER PORTION OF YOUR
WITHDRAWAL THAT YOU DO NOT CHOOSE TO ROLL OVER.
ELECTIVE DEFERRALS MAY NOT BE DIRECTLY ROLLED OVER WHEN WITHDRAWN DUE TO
HARDSHIP. ANY PORTION OF YOUR DISTRIBUTION THAT IS ELIGIBLE TO BE DIRECTLY
ROLLED OVER TO AN IRA OR A QUALIFIED RETIREMENT PLAN AND IS NOT DIRECTLY ROLLED
OVER, WILL AUTOMATICALLY BE SUBJECT TO 20% WITHHOLDING FOR FEDERAL INCOME TAX
PURPOSES. PLEASE ALSO COMPLETE THE WITHDRAWAL ROLLOVER/DISTRIBUTION ELECTION
FORM IF YOU WISH TO ROLL OVER THE PORTION OF YOUR WITHDRAWAL NOT MADE FROM YOUR
ELECTIVE DEFERRAL ACCOUNT IN THE PLAN. FOR MORE INFORMATION REGARDING THE TAX
CONSEQUENCES OF YOUR DISTRIBUTION, PLEASE READ THE SPECIAL TAX NOTICE.
Please indicate your election by choosing one of the following:
A) DIRECT PAYMENT TO YOU - Your distribution will be made payable and sent
directly to you. Indicate the method of payment below:
|_| Company stock and cash - A certificate for whole shares of Company
stock will be issued to you for any portion of your withdrawal paid
from the Company stock fund. Shares or other interests in any other
funds in the Plan from which your withdrawal is paid, as well as
fractional shares of Company stock, will be sold/redeemed and a check
will be issued to you for the proceeds of the sale/redemption.
|_| Cash - Shares or other interests in any fund in the Plan from which
your withdrawal is paid will be sold/redeemed and a check will be
issued to you for the proceeds of the sale/redemption.
B) TRANSFER TO A MERRILL LYNCH BROKERAGE ACCOUNT - Your distribution will
be transferred into your Merrill Lynch brokerage account. If you need
information about opening a Merrill Lynch brokerage account, please
call 1-800-MERRILL. Indicate the method of payment and the account
number of the brokerage account below:
|_| Company stock and cash - Whole shares of Company stock will be
transferred to your brokerage account for any portion of your
withdrawal paid from the Company stock fund. Shares or other interests
in any other funds in the Plan from which your withdrawal is paid, as
well as fractional shares of Company stock, will be sold/redeemed and
the proceeds of the sale/redemption will be transferred to your
brokerage account.
|_| Cash - Shares or other interests in any fund in the Plan from which
your withdrawal is paid will be sold/redeemed and the proceeds of the
sale/redemption will be transferred to your brokerage account.
Merrill Lynch Brokerage Account Number -
------------------------
<PAGE>
HARDSHIP WITHDRAWAL REQUEST FORM
(SAFE HARBOR - PAGE 3 OF 3)
IV. FEDERAL TAX WITHHOLDING ELECTION
THIS ELECTION APPLIES ONLY TO THE PORTION OF YOUR WITHDRAWAL MADE FROM YOUR
ELECTIVE DEFERRAL ACCOUNT IN THE PLAN.
Under the provisions of the Internal Revenue Code, the taxable portion of your
distribution paid from your elective deferral account is subject to Federal
Income Tax withholding unless you elect not to have withholding apply. IF YOU DO
NOT MAKE AN ELECTION BY THE DATE YOUR DISTRIBUTION IS SCHEDULED TO OCCUR,
FEDERAL INCOME TAX WILL BE WITHHELD AT A RATE OF 10% FROM THE TAXABLE PORTION OF
YOUR DISTRIBUTION. If you elect not to have withholding apply, or if you do not
have enough Federal Income Tax withheld from your distribution, you may be
responsible for payment of estimated tax. You may be subject to tax penalties if
your payments of estimated tax and withholding are not adequate. You should
consider discussing this election with your tax advisor.
_____ Yes, withhold tax ______ No, do not withhold tax
Complete this section if you checked yes above and you want a rate of Federal
Income Tax withholding other than 10%:
Withhold Federal Income Tax at a rate of ______% or in the amount of
$_________________.
Note: Some states require tax withholding. If you reside in one of these states,
state taxes may be withheld as well.
V. SIGNATURE
I hereby certify that the information specified above has been examined by me
and that the information contained on this form is, to the best of my knowledge,
true, accurate and complete.
I also certify that I have received and read the Special Tax Notice. I
understand that I have the right to review this notice for at least thirty (30)
days before deciding whether I want to directly roll over the portion of my
withdrawal eligible to be rolled over or have the entire withdrawal paid
directly to me. I further understand that, by executing and returning this
withdrawal form in less than 30 days, I have waived my right to the 30-day
waiting period.
- ----------------------------- ------------------------
Participant Signature Date
Is a Withdrawal Rollover/Distribution Election Form attached? |_| Yes |_| No
FOR OFFICE USE ONLY
|_| Approved |_| Denied Plan Representative's Signature ___________Date ________
Note: Merrill Lynch will not process this withdrawal unless one box is checked
in each of the following sections: IIA, IIB and III. The withdrawal will also
not be processed unless this form is signed by both the participant and the plan
representative.
<PAGE>
FLAGSTAR BANK 401(k)
LOAN PROVISIONS
Effective May 3, 1999
(or as soon as practicable afterward)
An active Participant in the 401(k) Plan may request a loan from the Plan. A
loan allows you to borrow from your account without incurring a penalty
otherwise incurred with early withdrawal (unless loan payment is not paid off as
prescribed. If a loan goes in default, this is considered an early disbursement
and penalty provisions will take effect). You must repay the loan with interest,
on an after tax basis, through payroll deduction. The interest paid on the loan
goes directly into your account, so, in effect, you are paying yourself
interest.
TYPES OF LOANS
There are two categories of loans available:
1) The general purpose loan.
No reason need be given for this type of loan. The loan minimum is
$1,000.00 and the maximum is the lesser of $50,000.00 (less the highest
outstanding loan balance amount during the prior twelve (12) months) or 50% of
the vested balance (minus the highest outstanding loan balance amount during the
prior twelve (12) months).* Although there is no minimum time for repayment, the
maximum length of time for repayment of this type of loan is five (5) years.
2) The Real Estate loan.
This type of loan can only be used for the purchase of a principal
residence. Again, the loan minimum is $1,000.00 and the maximum is the lesser of
$50,000.00 (less the highest outstanding loan balance amount during the prior
twelve (12) months) or 50% of the vested balance (minus the highest outstanding
loan balance amount during the preceding twelve (12) months).* There is no
minimum time for repayment, but unlike the general purpose loan, the maximum
time of repayment is ten (10) years.
In order to qualify for this type of loan, the employee must provide a copy
of an executed real estate purchase agreement to the Human Resources Department.
**************************************************
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
**************************************************
<PAGE>
INTEREST RATE
The interest rate on all loans (both general purpose loans and real estate
loans) is the Prime Rate plus 1%. This rate will be set on the last business day
of the previous month based on the Wall Street Journal Prime Rate.
OTHER GENERAL PROVISIONS
All loan requests are made by calling the Plan Administrator, Merrill
Lynch, at their Voice Response System (1-800-229-9040). Once a loan is approved,
you will receive a check with an attached promissory note. By endorsing the
check, you agree to the terms and repayment conditions in the promissory note.
There is a loan origination fee of $50.00 to be paid by the employee
participant every time a loan is made. This origination fee will be included in
your loan amount. Loan payoff will be made biweekly through payroll deduction.
There is no penalty for early payoff. There may be only one loan outstanding per
employee applicant at any given time.
If you fail to make loan payments when they are due, you will be considered
to be in default of the loan. Defaulting on a loan may be considered a
distribution to you from the Plan, and could result in taxable income to you and
could ultimately reduce your benefit from the Plan.
Loan approval is made through the Plan Sponsor, Flagstar Bank. Loan
distribution is made through the Plan Administrator, Merrill Lynch.
* The amount available for you to borrow can be obtained by calling the Voice
Response System at 1-800-229-9040. Further information can be obtained at this
number as well.
2
<PAGE>
- --------------------------------------------------------------------------------
SPECIAL TAX NOTICE
- --------------------------------------------------------------------------------
This notice contains important information you will need in deciding how to
receive your benefits from Flagstar Bank 401(k) Plan (the "Plan").
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
A payment from the Plan that is eligible for "rollover" can be taken in two
ways. In most instances, you can have all or any portion of your payment from
the Plan either 1) PAID IN A "DIRECT ROLLOVER" or 2) PAID TO YOU. A rollover is
a payment of your Plan benefits to your individual retirement arrangement (IRA)
or to another employer plan. This choice will affect the tax you owe.
If you choose a DIRECT ROLLOVER:
o Your payment will not be taxed in the current year and no income tax will
be withheld.
o Your payment will be made directly to your IRA or, if you choose, to
another employer plan that accepts your rollover.
o Your payment will be taxed later when you take it out of the IRA or the
employer plan.
If you choose to have all or part of your Plan benefits PAID TO YOU:
o You will receive only 80% of the payment, because the Plan administrator is
required to withhold 20% of the payment and send it to the IRS as income
tax withholding to be credited against your taxes.
o Your payment will be taxed in the current year unless you roll it over. You
may be able to use special tax rules that could reduce the tax you owe.
However, if you receive the payment before age 59 1/2, you also may have to
pay an additional 10% tax.
o You can roll over the payment by paying it to your IRA or to another
employer plan that accepts your rollover within 60 days of receiving the
payment. The amount rolled over will not be taxed until you take it out of
the IRA or employer plan.
o If you want to roll over 100% of the payment to an IRA or employer plan,
you must find other money to replace the 20% that was withheld. If you roll
over only the 80% that you received, you will be taxed on the 20% that was
withheld and was not rolled over.
- --------------------------------------------------------------------------------
PAYMENTS THAT CAN AND CANNOT BE ROLLED OVER
- --------------------------------------------------------------------------------
Payments from the Plan may be "eligible rollover distributions." This means that
they can be rolled over to an IRA or to another employer plan that accepts
rollovers. Your Plan administrator should be able to tell you what portion of
your payment is an eligible rollover distribution.
<PAGE>
The following types of payments cannot be rolled over:
Non-Taxable Payments. In general, only the "taxable portion" of your payment is
an eligible rollover distribution. If you have made "after-tax" employee
contributions to the Plan, these contributions will be non-taxable when they are
paid to you and they cannot be rolled over. (After-tax employee contributions
generally are contributions you made from your own pay that were already taxed.)
Payments Spread Over Long Periods. You cannot roll over a payment if it is part
of series of equal (or almost equal) payments that are made at least once a year
and that will last for
o your lifetime (or your life expectancy), or
o your lifetime and your beneficiary's lifetime (or life expectancies), or
o a period of ten years or more.
Required Minimum Payments. Beginning in the later of the year you reach 70 1/2
or retire a certain portion of your payment cannot be rolled over because it is
a "required minimum payment" that must be paid to you.
Hardship Withdrawals. A hardship withdrawal of your 401(k) salary deferrals is
not an "eligible rollover distribution" for purposes of the direct rollover
rules and is not subject to mandatory income tax withholding. A hardship
withdrawal of your 401(k) salary deferrals is subject to voluntary income tax
withholding. For 1999, the IRS has indicated that you may choose to roll over
the distribution under the sixty-day rollover option even though it is not being
treated as an eligible rollover distribution. Direct rollovers, sixty-day
rollovers, mandatory and voluntary income tax withholding are described below.
- --------------------------------------------------------------------------------
DIRECT ROLLOVER
- --------------------------------------------------------------------------------
You can choose a direct rollover of all or any portion of your payment that is
an "eligible rollover distribution", as described above. In a direct rollover,
the eligible rollover distribution is made payable to an IRA or another employer
plan that accepts rollovers. If you choose a direct rollover, you are not taxed
on a payment until you later take it out of the IRA or the employer plan.
Direct Rollover to an IRA. You can open an IRA to receive the direct rollover.
(The term "IRA", as used in this notice, includes individual retirement accounts
and individual retirement annuities.) If you choose to have your payment made
directly to an IRA, contact an IRA sponsor (usually a financial institution) to
find out how to have your payment made in a direct rollover to an IRA at that
institution. If you are unsure of how to invest your money, you can temporarily
establish an IRA to receive the payment. However, in choosing an IRA, you may
wish to consider whether the IRA you choose will allow you to move all or a part
of your payment to another IRA at a later date, without penalties or other
limitations. See IRS Publication 590,
2
<PAGE>
Individual Retirement Arrangements, for more information on IRAs (including
limits on how often you can roll over between IRAs).
Direct Rollover to a Plan. If you are employed by a new employer that has a plan
and you want a direct rollover to that plan, ask the administrator of that plan
whether it will accept your rollover. An employer plan is not legally required
to accept your rollover. If your new employer's plan does not accept a rollover,
you can choose a direct rollover to an IRA.
Direct Rollover of a Series of Payments. If you receive eligible rollover
distributions that are paid in a series for less than ten years, your choice to
make or not make a direct rollover for a payment will apply to all later
payments in the series until you change your election. You are free to change
your election for any later payment in the series.
- --------------------------------------------------------------------------------
PAYMENT PAID TO YOU
- --------------------------------------------------------------------------------
If you have the payment made to you, it is subject to 20% income tax
withholding. The payment is taxed in the year you receive it unless, within 60
days, you roll it over to an IRA, or another plan that accepts rollovers. If you
do not roll it over, special tax rules may apply.
Income Tax Withholding:
Mandatory Income Tax Withholding. If any portion of the payment to you is an
eligible rollover distribution, the Plan is required by law to withhold 20% of
that amount. This amount is sent to the IRS as income tax withholding. For
example, if your eligible rollover distribution is $10,000, only $8,000 will be
paid to you because the Plan must withhold $2,000 as income tax. However, when
you prepare your income tax return for the year, you will report the full
$10,000 as a payment from the Plan. You will report the $2,000 as tax withheld,
and it will be credited against any income tax you owe for the year.
Voluntary Income Tax Withholding. If any portion of your payment is not an
eligible rollover distribution but is taxable, the mandatory withholding rules
described above do not apply. In this case, you may elect not to have
withholding apply to that portion. To elect out of withholding, ask the Plan
administrator for the election form and related information.
Sixty-Day Rollover Option. If you have an eligible rollover distribution paid to
you, you can still decide to roll over all or part of it to an IRA or another
employer plan that accepts rollovers. If you decide to roll over, you must make
the rollover within 60 days after you receive the payment. The portion of your
payment that is rolled over will not be taxed until you take it out of the IRA
or the employer plan.
You can roll over up to 100% of the eligible rollover distribution, including an
amount equal to the 20% that was withheld. If you choose to roll over 100%, you
must find other money within the 60-day period to contribute to the IRA or the
employer plan to replace the 20% that was withheld. On the other hand, if you
roll over only the 80% that you received, you will be taxed on the 20% that was
withheld.
3
<PAGE>
Example: Your eligible rollover distribution is $10,000, and you choose
to have it paid to you. You will receive $8,000, and $2,000 will be
sent to the IRS as income tax withholding. Within 60 days after
receiving the $8,000, you may roll over the entire $10,000 to an IRA or
employer plan. To do this, you roll over the $8,000 you received from
the Plan, and you will have to find $2,000 from other sources (your
savings, a loan, etc.). In this case, the entire $10,000 is not taxed
until you take it out of the IRA or employer plan. If you roll over the
entire $10,000, when you file your income tax return you may get a
refund of the $2,000 withheld.
If, on the other hand, you roll over only $8,000, the $2,000 you did
not roll over is taxed in the year it was withheld. When you file your
income tax return you may get a refund of part of the $2,000 withheld.
(However, any refund is likely to be larger if you roll over the entire
$10,000.)
Additional 10% Tax If You Are Under 59 1/2. If you receive a payment before you
reach age 59 1/2 and you do not roll it over, then, in addition to the regular
income tax, you may have to pay an extra tax equal to 10% of the taxable portion
of the payment. The additional 10% tax does not apply to your payment if it is
(1) paid to you because you separated from service with your employer during or
after the year you reach age 55, (2) paid because you retired due to disability,
(3) paid to you as equal (or almost equal) payments over your life expectancy
(or your and your beneficiary's lives or life expectancies) or (4) used to pay
certain medical expenses. See IRS Form 5329 for more information on the
additional 10% tax.
Special Tax Treatments. If your eligible rollover distribution is not rolled
over, it will be taxed in the year you received it. However, if it qualifies as
a "lump distribution", it may be eligible for special tax treatment. A lump sum
distribution is a payment, within one year, of your entire balance under the
Plan (and certain other similar plans of the employer) that is payable to you
because you have reached age 59 1/2 or have separated from service with your
employer (or, in the case of a self-employed individual), because you have
reached age 59 1/2 or have become disabled). For a payment to qualify as a lump
sum distribution, you must have been a participant in the Plan for at least five
years. The special tax treatment for lump sum distributions is described below.
Five-Year Averaging. If you receive a lump sum distribution after you
are age 59 1/2, you may be able to make a one-time election to figure
the tax on the payment by using "five-year averaging." Five-year
averaging often reduces the tax you owe because it treats the payment
much as if it were paid over five years.
Ten-Year Averaging If You Were Born Before January 1, 1936. If you
receive a lump sum distribution and you were born before January 1,
1936, you can make a one-time election to figure the tax on the payment
by using "ten-year averaging" (using 1986 tax rates) instead of
five-year averaging (using current tax rates). Like the five-year
averaging rules, ten-year averaging often reduces the tax you owe.
Capital Gain Treatment If You Were Born Before January 1, 1936. In
addition, if you receive a lump sum distribution and you were born
before January 1, 1936, you may elect
4
<PAGE>
to have the part of your payment that is attributable to your pre-1974
participation in the Plan (if any) taxed as a long-term capital gain
at a rate of 20%.
There are other limits on the special tax treatment for lump sum distributions.
For example, you can generally elect this special tax treatment only once in
your lifetime, and the election applies to all lump sum distributions that you
receive in that same year. If you have previously rolled over a payment from the
Plan (or certain other similar plans of the employer), you cannot use this
special tax treatment for later payments from the Plan. If you roll over your
payment to an IRA, you will not be able to use this special tax treatment for
later payments from the IRA. Also, if you roll over only a portion of your
payment to an IRA, this special tax treatment is not available for the rest of
the payment. Additional restrictions are described in IRS Form 4972, which has
more information on lump sum distributions and how you can elect the special tax
treatment.
Employer Stock or Securities. There is a special rule for a payment from the
Plan that includes employer stock (or other employer securities). To use this
special rule, 1) the payment must qualify as a lump sum distribution, as
described above (or would qualify except that you do not yet have five years of
participation in the Plan), or 2) the employer stock included in the payment
must be attributable to "after-tax" employee contributions, if any. Under this
special rule, you may have the option of not paying tax on the "net unrealized
appreciation" of the stock until you sell the stock. Net unrealized appreciation
generally is the increase in the value of the employer stock while it was held
by the Plan. For example, if at the time the Plan bought the stock it was worth
$1,000, but was worth $1,200 when you received it, you would not have to pay tax
on the $200 increase in value until you later sold the stock.
You may instead elect not to have the special rule apply to the net unrealized
appreciation. In this case, your net unrealized appreciation will be taxed in
the year you receive the stock, unless you roll over the stock. The stock
(including any net unrealized appreciation) can be rolled over to an IRA or
another employer plan that accepts stock rollovers either in a direct rollover
or a rollover that you make yourself.
If you receive employer stock in a payment that qualifies as a lump sum
distribution, the special tax treatment for lump sum distributions described
above (such as five-year averaging) also may apply. See IRS Form 4972 for
additional information on these rules.
- --------------------------------------------------------------------------------
SURVIVING SPOUSES, ALTERNATE PAYEES AND OTHER BENEFICIARIES
- --------------------------------------------------------------------------------
In general, the rules summarized above that apply to payments to participants
also apply to payments to surviving spouses of participants and to spouses or
former spouses who are "alternate payees". You are an alternate payee if your
interest in the Plan results from a "qualified domestic relations order", which
is an order issued by a court, usually in connection with a divorce or legal
separation. Some of the rules summarized above also apply to a deceased
participant's beneficiary who is not a spouse. However, there are some
exceptions for payments to surviving spouses, alternate payees, and other
beneficiaries that should be mentioned.
5
<PAGE>
If you are a surviving spouse, you may choose to have an eligible rollover
distribution paid in a direct rollover to an IRA or paid to you. If you have the
payment paid to you, you can keep it or roll it over yourself to an IRA, but you
cannot roll it over to an employer plan. If you are an alternate payee, you have
the same choices as the participant. Thus, you can have the payment paid as a
direct rollover or paid to you. If you have it paid to you, you can keep it or
roll it over yourself to an IRA or to another employer plan that accepts
rollovers.
If you are a beneficiary other than the surviving spouse, you cannot choose a
direct rollover, and you cannot roll over the payment yourself.
If you are a surviving spouse, an alternate payee, or another beneficiary, your
payment is not subject to the additional 10% penalty tax described above, even
if you are younger than age 59 1/2.
If you are a surviving spouse, an alternate payee, or another beneficiary, you
may be able to use the special tax treatment for lump sum distributions and the
special rule for payments that include employer stock, as described above. If
you receive a payment because of the employee's death, you may be able to treat
the payment as a lump sum distribution if the employee met the appropriate age
requirements, whether or not he/she had five years of participation in the Plan.
- --------------------------------------------------------------------------------
HOW TO OBTAIN ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
This notice summarizes only the federal (not state or local) tax rules that
might apply to your payment. The rules described above are complex and contain
many conditions and exceptions that are not included in this notice. Therefore,
you may want to consult with a professional tax advisor before you take a
payment of your benefits from the Plan. Also, you can find more specific
information on the tax treatment of payments from qualified retirement plans in
IRS Publication 575, Pension and Annuity Income, and IRS Publication 590,
Individual Retirement Arrangements. These publications are available from your
local IRS office or by calling 1-800-TAX-FORMS.
6
EXHIBIT 5
<PAGE>
April 30, 1999
Board of Directors
Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, Michigan 48302-0953
Re: Registration Statement on Form S-8
-------------------------------------------------
Flagstar Bank 401(k) Plan; Flagstar Bancorp, Inc.
1997 Employees and Directors Stock Option Plan
Dear Board Members:
We have acted as special counsel to Flagstar Bancorp, Inc. (the "Company")
and Flagstar Bank, in connection with the preparation of the Registration
Statement on Form S-8 filed with the Securities and Exchange Commission (the
"Registration Statement") under the Securities Act of 1933, as amended, relating
to participation interests in the Flagstar Bank 401(k) Plan (the "401kPlan") and
the sale to plan participants of 625,000 shares of common stock, $.01 per share
(the "Common Stock") of the Company, as well as to 672,500 shares of Common
Stock of the Company which may be issued pursuant to a 1999 amendment to the
Flagstar Bancorp, Inc. 1997 Employees and Directors Stock Option Plan (the
"Option Plan"), all as more fully described in the Registration Statement. You
have requested the opinion of this firm with respect to certain legal aspects of
the proposed offering.
We have examined such documents, records, and matters of law as we have
deemed necessary for purposes of this opinion and based thereon, we are of the
opinion that the Common Stock when issued pursuant to and in accordance with the
terms of the 401k Plan and the Option Plan will be legally issued, fully paid,
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8 and to references to our firm included under
the caption "Legal Opinion" in the Prospectuses which are part of the
Registration Statement.
Very truly yours,
/s/ KUTAK ROCK
EXHIBIT 23.2
<PAGE>
We have issued our report dated February 12, 1999 accompanying the
consolidated financial statements of Flagstar Bancorp, Inc. appearing in the
Company's Annual Report on form 10-K for the year ended December 31, 1998, which
are incorporated by reference in this Registration Statement. We consent to the
incorporation by reference in the Registration Statement of the aforementioned
report and to the use of our name as it appears under the caption "Experts."
/s/ GRANT THORNTON LLP
Detroit, Michigan
April 29, 1999
EXHIBIT 99.1
<PAGE>
FLAGSTAR BANCORP, INC.
1997 EMPLOYEES AND DIRECTORS STOCK OPTION PLAN
AS AMENDED 1
1. PURPOSE OF THE PLAN.
The purpose of this Flagstar Bancorp, Inc. (the "Company") 1997 Employees
and Directors Stock Option Plan is to advance the interests of the Company
through providing select key Employees and Directors of the Company and its
Affiliates with the opportunity to acquire Shares. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate the best available
personnel for positions of substantial responsibility and to provide additional
incentive to Directors and key Employees of the Company, the Bank or any
Affiliate to promote the success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Bank or the Company, as such terms are defined in
Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered into in
accordance with Paragraph 5(c).
(c) "Awards" shall mean Options unless the context clearly indicates a
different meaning.
(d) "Bank" shall mean Flagstar Bank, FSB.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Change in Control" shall mean any one of the following events:
(1) the ownership, holding or power to vote more than 25% of the
Company's or the Bank's voting stock, (2) the acquisition of control
of the election of a majority of the Company's or the Bank's
directors, (3) the exercise of a controlling influence over the
management or policies of the Company or the Bank by any person or by
persons acting as a group within the meaning of Section 13(d) of the
Securities Exchange Act of 1934 or (4) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company (the "Company Board")
(the "Continuing Directors") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose election
or nomination for election as a member of the Company Board was
approved by a vote of at least two-thirds of the Continuing Directors
then in
- --------
1 Includes the 1999 Amendment.
<PAGE>
office shall be considered a Continuing Director. For purposes of this
subparagraph only, the term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization or any
other form of entity not specifically listed herein. The decision of
the Committee as to whether a change in control has occurred shall be
conclusive and binding.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(h) "Committee" shall mean the Stock Option Committee appointed by the
Board in accordance with Paragraph 5(a) hereof.
(i) "Common Stock" shall mean the common stock, par value $.01 per
share, of the Company.
(j) "Continuous Service" shall mean the absence of any interruption or
termination of service as an Employee or Director of the Company or
the Bank or an Affiliate. Continuous Service shall not be considered
interrupted in the case of sick leave, military leave or any other
leave of absence, in the case of transfers between payroll locations
of the Bank or between the Bank, an Affiliate or a successor, or in
the case of a Director's performance of services in an emeritus or
advisory capacity.
(k) "Director" shall mean any member of the Board, and any member of
the board of directors of any Affiliate that the Board has by
resolution designated as being eligible for participation in this
Plan.
(l) "Disability" shall mean a physical or mental condition, which in
the sole and absolute discretion of the Committee, is reasonably
expected to be of indefinite duration and to prevent substantially a
Participant from fulfilling his or her duties or responsibilities to
the Bank or an Affiliate.
(m) "Effective Date" shall mean the date specified in Paragraph 13
hereof.
(n) "Employee" shall mean any person employed by the Company or an
Affiliate.
(o) "Exercise Price" shall mean the price per Optioned Share at which
an Option may be exercised.
(p) "ISO" shall mean an option to purchase Common Stock which meets
the requirements set forth in the Plan and which is intended to be and
is identified as an "incentive stock option" within the meaning of
Section 422 of the Code.
(q) "Market Value" shall mean the fair market value of the Common
Stock, as determined under Paragraph 7(b) hereof.
2
<PAGE>
(r) "Non-Employee Director" shall mean any member of the Board who is
a Non-Employee Director within the meaning of Rule 16b-3.
(s) "Non-ISO" shall mean an option to purchase Common Stock which
meets the requirements set forth in the Plan but which is not intended
to be and is not identified as an ISO.
(t) "Option" shall mean an ISO and a Non-ISO.
(u) "Optioned Shares" shall mean Shares subject to an Award granted
pursuant to this Plan.
(v) "Participant" shall mean any person who receives an Award pursuant
to the Plan.
(w) "Plan" shall mean this Flagstar Bancorp, Inc. 1997 Employees and
Directors Stock Option Plan.
(x) "Rule 16b-3" shall mean Rule l6b-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
(y) "Share" shall mean one share of Common Stock.
(z) "Year of Service" shall mean a full 12-month period of Continuous
Service, measured from the date of an Award and each annual
anniversary of that date, during which a Participant has been an
Employee or Director.
3. TERM OF THE PLAN AND AWARDS.
(a) Term of the Plan. The Plan shall continue in effect for a term of 10
years from the Effective Date, unless sooner terminated pursuant to
Paragraph 15 hereof. No Award shall be granted under the Plan after 10
years from the Effective Date.
(b) Term of Awards. The term of each Award granted under the Plan shall be
established by the Committee, but shall not exceed 10 years; provided,
however, that in the case of an Employee who owns Shares representing more
than 10% of the outstanding Common Stock at the time an ISO is granted, the
term of such ISO shall not exceed five years.
4. SHARES SUBJECT TO THE PLAN.
General Rule. The aggregate number of Shares deliverable pursuant to
Awards shall not exceed 1,345,000 Shares, as such number may be adjusted on
and after the Effective Date pursuant to Paragraph 10 hereof. Such Shares
may either be authorized but unissued Shares, Shares held in treasury, or
Shares held in a grantor trust created by the Company. If any Awards should
expire, become unexercisable, or be forfeited for any
3
<PAGE>
reason without having been exercised, the Optioned Shares shall, unless the
Plan shall have been terminated, be available for the grant of additional
Awards under the Plan. Effective on the date of adoption of the 1999
Amendment to the Plan, an additional 672,500 Shares shall be deliverable
pursuant to Options.
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be administered by the
Stock Option Committee, which shall consist of not less than two members of
the Board, all of whom shall be Non-Employee Directors. Members of the
Committee shall serve at the pleasure of the Board. In the absence of a
duly appointed Committee, the Plan shall be administered by those members
of the Board who are Non-Employee Directors. Notwithstanding the foregoing,
the Board may, at any time, act in lieu of the Committee.
(b) Powers of the Committee. Except as limited by the express provisions of
the Plan or by resolutions adopted by the Board, the Committee shall have
sole and complete authority and discretion (i) to select Participants and
grant Awards, (ii) to determine the form and content of Awards to be issued
in the form of Agreements under the Plan, (iii) to interpret the Plan, (iv)
to prescribe, amend and rescind rules and regulations relating to the Plan,
and (v) to make other determinations necessary or advisable for the
administration of the Plan. The Committee shall have and may exercise such
other power and authority as may be delegated to it by the Board from time
to time. A majority of the entire Committee shall constitute a quorum and
the action of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by all members of the
Committee without a meeting, shall be deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a written agreement
containing such provisions as may be approved by the Committee. Each such
Agreement shall constitute a binding contract between the Company and the
Participant and every Participant, upon acceptance of such Agreement, shall
be bound by the terms and restrictions of the Plan and of such Agreement.
The terms of each such Agreement shall be in accordance with the Plan, but
each Agreement may include such additional provisions and restrictions
determined by the Committee, in its discretion, provided that such
additional provisions and restrictions are not inconsistent with the terms
of the Plan. In particular, the Committee shall set forth in each Agreement
(i) the Exercise Price of an Option, (ii) the number of Shares subject to,
and the expiration date of, the Award, (iii) the manner, time and rate
(cumulative or otherwise) of exercise or vesting of such Award, and (iv)
the restrictions, if any, to be placed upon such Award or upon Shares which
may be issued upon exercise of such Award.
4
<PAGE>
The Chairman of the Committee and such other Directors and officers as
shall be designated by the Committee are hereby authorized to execute
Agreements on behalf of the Company and to cause them to be delivered to
the recipients of Awards.
(d) Effect of the Committee's Decisions. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all
persons affected thereby.
(e) Indemnification. In addition to such other rights of indemnification as
they may have, the members of the Committee shall be indemnified by the
Company in connection with any claim, action, suit or proceeding relating
to any action taken or failure to act under or in connection with the Plan
or any Award, to the full extent provided for under the Company's governing
instruments with respect to the indemnification of Directors.
6. GRANT OF OPTIONS.
(a) General Rule. In its sole discretion, the Committee may grant Awards to
select key Employees. In selecting those Employees to whom Awards will be
granted and the number of shares covered by such Awards, the Committee
shall consider their respective positions, duties and responsibilities, the
value of their services to the Company and its Affiliates, and any other
factors the Committee may deem relevant. Notwithstanding the foregoing, the
Committee shall automatically make the Awards specified in Paragraphs 6(b)
and 6(d) hereof.
(b) Automatic Grants to Employees. On the Effective Date, each of the
following Employees shall receive an Option (in the form of an ISO, to the
extent permissible under the Code) to purchase the number of Shares listed
below, at an Exercise Price per Share equal to the Market Value of a Share
on the Effective Date; provided that such grant shall not be made to an
Employee whose Continuous Service terminates on or before the Effective
Date:
EMPLOYEE SHARES
-------- ------
Thomas J. Hammond 400,000
Mark T. Hammond 250,000
Michael W. Carrie 45,000+20,000
Joan H. Anderson 45,000
Mary Kay McGuire 15,000+20,000
7 Senior Vice Presidents 15,000 each*
6 First Vice Presidents 5,000 each*
22 Vice Presidents 2,500 each*
52 Assistant Vice Presidents 1,500 each*
- ------------
* Additional names are set forth as an Attachment to the Plan.
5
<PAGE>
With respect to each of the above-named Employees, the Option granted
to the Employee hereunder (i) shall vest in accordance with the general
rule set forth in Paragraph 8(a) of the Plan, (ii) shall have a term of ten
years from the Effective Date, except as limited by Paragraph 3(b), and
(iii) shall be subject to the general rule set forth in Paragraph 8(c) with
respect to the effect of an Employee's termination of Continuous Service on
the Employee's right to exercise his Options.
(c) Special Rules for ISOs. The aggregate Market Value, as of the date the
Option is granted, of the Shares with respect to which ISOs are exercisable
for the first time by an Employee during any calendar year (under all stock
option plans, as defined in Section 422 of the Code, of the Company or any
present or future Affiliate of the Company) shall not exceed $100,000.
Notwithstanding the foregoing, the Committee may grant Options in excess of
the foregoing limitations, in which case such Options granted in excess of
such limitation shall be Options which are Non-ISOs.
(d) Automatic Grants to Directors. Notwithstanding any other provisions of
this Plan, each Director who is not an Employee but is a Director on the
dates specified below shall receive Options to purchase the number of
Shares indicated of the Shares reserved under Paragraph 4(a) hereof. Such
Options shall have an Exercise Price per Share equal to the Market Value of
a Share on the date of grant.
(1) each Non-Employee Director of the Company or the Bank in office
on the day immediately prior to the Effective Date shall receive
Options to purchase 1,000 Shares for each year of service on the
Board or that of the Bank;
(2) each Non-Employee Director who is elected to the Board of the
Company on or following the Effective Date shall upon taking
office receive Options to purchase 1,000 Shares;
(3) each Non-Employee Director of the Company shall receive on May 1,
1998 and each succeeding May 1, Options to purchase 1,000 Shares;
an individual serving on the Boards of both the Company and the
Bank shall be entitled to Options to purchase a total of 1,000
Shares per year.
7. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. The Exercise Price as to any particular
Option shall not be less than 50% of the Market Value of the Shares on the
date of grant (100% in the case of ISOs). In the case of an Employee who
owns Shares representing more than 10% of the Company's outstanding Shares
of Common Stock at the time an ISO is granted, the Exercise Price shall not
be less than 110% of the Market Value of the Shares at the time the ISO is
granted.
6
<PAGE>
(b) Standards for Determining Exercise Price. If the Common Stock is listed
on a national securities exchange (including the NASDAQ National Market) on
the date in question, then the Market Value per Share shall be the average
of the highest and lowest selling prices on such exchange on such date, or
if there were no sales on such date, then the Market Value per Share shall
be the average of the highest and lowest selling price on such exchange on
the trading day immediately preceding such date on which sales were
effected. If the Common Stock is traded otherwise than on a national
securities exchange on the date in question, then the Market Value per
Share shall be the average of the bid and asked price on such date, or, if
there is no bid and asked price on such date, then on the next prior
business day on which there was a bid and asked price. If no price is
available, then the Market Value per Share shall be its fair market value
as determined by the Committee, in its sole and absolute discretion.
Notwithstanding the foregoing, in the event that either (i) the Committee
exercises its discretion to impose transfer (or other) restrictions on the
Shares subject to an Option, or (ii) the Plan requires specified transfer
restrictions, the Committee shall make an appropriate adjustment in
determining the Market Value of the Shares subject to such an Option (in
order to take into account that their fair market value may be less than
the fair market value of unrestricted Shares).
8. EXERCISE OF OPTIONS BY EMPLOYEES.
(a) Generally. Unless otherwise provided by the Committee pursuant to an
applicable Agreement, each Option shall be fully (100%) exercisable after
the one year period following the date of its grant. An Option may not be
exercised for a fractional Share.
(b) Procedure for Exercise. An Employee may exercise Options, subject to
provisions relative to its termination and any limitations on its exercise,
only by (1) written notice of intent to exercise the Option with respect to
a specified number of Shares, and (2) payment to the Company
(contemporaneously with delivery of such notice) in cash, in Common Stock,
or a combination of cash and Common Stock, of the amount of the Exercise
Price for the number of Shares with respect to which the Option is then
being exercised. Each such notice (and payment where required) shall be
delivered, or mailed by prepaid registered or certified mail, addressed to
the Treasurer of the Company at the Company's executive offices. Common
Stock utilized in full or partial payment of the Exercise Price for Options
shall be valued at its Market Value at the date of exercise and may consist
of Shares subject to the Option being exercised. An Employee who exercises
Non-ISOs pursuant to this Paragraph may satisfy all applicable federal,
state and local income and employment tax withholding obligations, in whole
or in part, by irrevocably electing to have the Company withhold shares of
Common Stock, or to deliver to the Company shares of Common Stock that the
Employee already owns, having a value equal to the amount required to be
withheld; provided that to the extent not inconsistent
7
<PAGE>
herewith, such election otherwise complies with those requirements of
Paragraphs 8 and 18 hereof.
(c) Period of Exercisability. Except to the extent otherwise provided in
the terms of an Agreement, an Option may be exercised hereunder only while
the Employee is employed by the Company and has maintained Continuous
Service from the date of the grant of the Option, or until the later of
three months after termination of such Continuous Service or the date on
which the Option would otherwise expire, except if the Employee's
Continuous Service terminates by reason of -
(1) "Just Cause" which for purposes hereof shall have the meaning set
forth in any unexpired employment or severance agreement of the Employee
(and, in the absence of any such agreement, shall mean termination because
of the Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation
[other than traffic violations or similar offenses] or final
cease-and-desist order), then the Employee's rights to exercise such Option
shall expire on the date of such termination;
(2) death, then to the extent that the Employee would have been
entitled to exercise the Option immediately prior to his death, such Option
of the deceased Employee may be exercised within two years from the date of
his death (but not later than the date on which the Option would otherwise
expire) by the personal representatives of his estate or person or persons
to whom his rights under such Option shall have passed by will or by laws
of descent and distribution;
(3) Disability, then to the extent that the Employee would have been
entitled to exercise the Option immediately prior to his or her Disability,
such Option may be exercised within one year from the date of termination
of employment due to Disability, but not later than the date on which the
Option would otherwise expire.
(d) Effect of the Committee's Decisions. The Committee's determination
whether an Employee's Continuous Service has ceased, and the effective date
thereof, shall be final and conclusive on all persons affected thereby.
(e) Acceleration of Vesting. Notwithstanding the six-month period set forth
in Paragraph 8(a) hereof and except to the extent otherwise provided in the
terms of an Agreement, all Options held by an Employee whose service with
the Company or an Affiliate terminates due to death, Disability,
retirement, or a Change in Control shall be deemed fully exercisable and
non-forfeitable as of the Employee's last day of service.
8
<PAGE>
9. EXERCISE OF OPTIONS BY NON-EMPLOYEE DIRECTORS.
(a) Generally. Unless otherwise provided by the Committee pursuant to an
applicable Agreement, each Option shall be fully (100%) exercisable after
one year following the date of its grant.
(b) Terms of Exercise.
(i) Options received by Directors who are not Employees will
become exercisable in accordance with the general rule set forth in
Paragraph 8(a) hereof, and may be exercised from time to time in the
manner set forth in Paragraph 8(b).
(ii) Options granted to Non-Employee Directors shall have a term
of 5 years; provided that Options so granted shall expire one year
after the date on which a Director terminates Continuous Service on
the Board, but in no event later than the date on which such Options
would otherwise expire. In the event of such Director's death during
the term of his directorship, such Options shall become immediately
exercisable, and may be exercised within two years from the date of
his death by the personal representatives of his estate or person or
persons to whom his rights under such Options shall have passed by
will or by laws of descent and distribution, but in no event later
than the date on which such Options would otherwise expire. In the
event of such Director's Disability during his or her directorship,
the Director's Options shall become immediately exercisable, and such
Options may be exercised within one year of the termination of
directorship due to Disability, but not later than the date that the
Options would otherwise expire. Unless otherwise inapplicable or
inconsistent with the provisions of this Paragraph, the Options to be
granted to Directors hereunder shall be subject to all other
provisions of this Plan.
(c) Effect of the Committee's Decisions. The Committee's determination
whether a Director's Continuous Service has ceased, and the effective date
thereof, shall be final and conclusive on all persons affected thereby.
(d) Acceleration of Vesting. Notwithstanding the six-month period set forth
in Paragraph 9(a) hereof and except to the extent otherwise provided in the
terms of an Agreement, all Options held by a Director whose service with
the Bank terminates due to death, Disability, retirement or a Change in
Control shall be deemed fully exercisable and non-forfeitable as of the
Director's last day of service with the Bank.
9
<PAGE>
10. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.
(a) Recapitalizations; Stock Splits, Etc. The number and kind of Shares
reserved for issuance under the Plan, and the number and kind of Shares
subject to outstanding Awards, and the Exercise Price thereof, shall be
proportionately adjusted for any increase, decrease, change or exchange of
Shares for a different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapitalizations,
reorganization, reclassification, stock dividend, split-up, combination of
shares or similar event in which the number or kind of shares is changed
without the receipt or payment of consideration by the Company.
(b) Transactions in which the Company is Not the Surviving Entity. In the
event of (i) the liquidation or dissolution of the Company, (ii) a merger
or consolidation in which the Company is not the surviving entity, or (iii)
the sale or disposition of all or substantially all of the Company's assets
(any of the foregoing to be referred to herein as a "Transaction"), all
outstanding Awards, together with the Exercise Prices thereof, shall be
equitably adjusted for any change or exchange of Shares for a different
number or kind of shares or other securities which results from the
Transaction.
(c) Special Rule for ISOs. Any adjustment made pursuant to subparagraphs
(a) or (b) hereof shall be made in such a manner as not to constitute a
modification, within the meaning of Section 424(h) of the Code.
(d) Conditions and Restrictions on New, Additional, or Different Shares or
Securities. If, by reason of any adjustment made pursuant to this
Paragraph, a Participant becomes entitled to new, additional, or different
shares of stock or securities, such new, additional, or different shares of
stock or securities shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the Award
before the adjustment was made.
(e) Other Issuances. Except as expressly provided in this Paragraph, the
issuance by the Company of shares of stock of any class, or of securities
convertible into Shares or stock of another class, for cash or property or
for labor or services either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, shall not affect, and no
adjustment shall be made with respect to, the number, class, or Exercise
Price of Shares then subject to Awards or reserved for issuance under the
Plan.
11. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated, transferred
or disposed of in any manner other than by will or by the laws of descent
and distribution. Notwithstanding any other provision of this Plan to the
contrary, to the extent permissible under Rule 16b-3, and except to the
extent otherwise provided in the terms of an
10
<PAGE>
Agreement, a Participant who is granted Non-ISOs pursuant to this Plan may
transfer such Non-ISOs to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust, provided that Non-ISOs so
transferred may not again be transferred other than (i) to the Participant
originally receiving the grant of Non-ISOs, or (ii) to an individual or
trust to whom such Participant could have transferred Non-ISOs pursuant to
this Paragraph 11. Non-ISOs which are transferred pursuant to this
Paragraph 11 shall be exercisable by the transferee subject to the same
terms and conditions as would have applied to such Non-ISOs in the hands of
the Participant originally receiving the grant of such Non-ISOs.
12. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be the later of
the date on which the Committee makes the determination of granting such
Award and the Effective Date. Notice of the determination shall be given to
each Participant to whom an Award is so granted within a reasonable time
after the date of such grant.
13. EFFECTIVE DATE.
The Effective Date shall be the date of adoption of the 1999 Amendment
to the Plan.
14. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may authorize the
Committee to direct execution of an instrument providing for the
modification of any outstanding Award, provided no such modification shall
confer on the holder of said Award any right or benefit which could not be
conferred on him by the grant of a new Award at such time, or impair the
Award without the consent of the holder of the Award.
15. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the Plan and
suspend or terminate the Plans. No amendment, suspension or termination of
the Plan shall, without the consent of any affected holders of an Award,
alter or impair any rights or obligations under any Award theretofore
granted.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common Stock shall not be
issued with respect to any Award unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, any applicable state securities law and
the requirements of any stock exchange upon which the Shares may then be
listed.
11
<PAGE>
(b) Securities Laws. As a condition to the exercise of an Option, the
Company may require the person exercising the Option to make such
representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements of federal
or state securities law.
(c) Committee Discretion. The Committee shall have the discretionary
authority to impose in Agreements such restrictions on Shares as it may
deem appropriate or desirable, including but not limited to the authority
to impose a right of first refusal or to establish repurchase rights or
both of these restrictions.
17. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and keep
available for issuance a number of Shares sufficient to satisfy the
requirements of the Plan.
18. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise of Options
shall be subject to the Participant's satisfaction of all applicable
federal, state and local income and employment tax withholding obligations.
19. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's or Director's eligibility to
participate or participation in the Plan create or be deemed to create any
legal or equitable right of the Employee, Director or any other party to
continue service with the Company or any Affiliate. Except to the extent
provided in Paragraphs 6(b) and 6(d), no Employee or Director shall have a
right to be granted an Award or, having received an Award, the right to
again be granted an Award. However, an Employee or Director who has been
granted an Award may, if otherwise eligible, be granted an additional Award
or Awards.
20. GOVERNING LAW.
The Plan shall be governed by and construed in accordance with the
laws of the State of Michigan, except to the extent that federal law shall
be deemed to apply. Any action by an Employee arising with respect to any
claim regarding any award, any claim of right, or otherwise arising with
respect to this Plan or its administration, shall only be brought in a
court of competent jurisdiction with venue in the State of Michigan.
12
<PAGE>
SCHEDULE OF ADDITIONAL AWARDS
13
EXHIBIT 99.2
<PAGE>
FLAGSTAR BANCORP, INC.
EMPLOYEES AND DIRECTORS 1997 STOCK OPTION PLAN
-----------------------------------------
Agreement for Incentive Stock Options
-----------------------------------------
THIS STOCK OPTION (the "Option") grants ______________ (the "Optionee") the
right to purchase a total of _______ shares of Common Stock, par value $.01 per
share, of Flagstar Bancorp, Inc. (the "Company"), at the price set forth herein,
in all respects subject to the terms, definitions and provisions of the Flagstar
Bancorp, Inc. Employees and Directors 1997 Stock Option Plan (the "Plan") which
is incorporated by reference herein. This Option is intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code). The Optionee acknowledges, through signing below, the
receipt of the prospectus associated with the Plan.
Exercise Price. The exercise price per share is $_______, which equals
100%* of the fair market value, as determined by the Committee, of the Common
Stock on the date of grant of this Option.
1. Exercise of Option. This Option shall be exercisable in accordance with
the Plan and the following provisions:
(i) Schedule of rights to exercise. The Optionee may exercise this
Option with respect to the total shares specified above after the one-year
period following the date of its grant.
(ii) Method of Exercise. This Option shall be exercisable by a written
notice by the Optionee which shall:
(a) state the election to exercise the Option, the number of
shares with respect to which it is being exercised, the person in
whose name the stock certificate or certificates for such shares of
Common Stock is to be registered, his address and Social Security
Number (or if more than one, the names, addresses and Social Security
Numbers of such persons);
(b) contain such representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock
as may be satisfactory to the Company's counsel;
(c) be signed by the person or persons entitled to exercise the
Option and, if the Option is being exercised by any person or persons
other than the Optionee, be accompanied by proof, satisfactory to
counsel for the Company, of the right of such person or persons to
exercise the Option; and
- -----------------------
* 100% in the case of an Optionee who owns shares representing more than 10% of
the outstanding common stock of the Company on the date of grant of this Option.
<PAGE>
ISO Agreement
Page 2
(d) be in writing and delivered in person or by certified mail to
the Treasurer of the Company.
Payment of the purchase price of any shares with respect to which the
Option is being exercised shall be by cash, Common Stock, or such
combination of cash and Common Stock as the Optionee elects. In addition,
the Optionee may elect to pay for all or part of the exercise price of the
shares by having the Company withhold a number of shares that are both
subject to this Option and have a fair market value equal to the exercise
price. The certificate or certificates for shares of Common Stock as to
which the Option shall be exercised shall be registered in the name of the
person or persons exercising the Option.
(iii) Restrictions on exercise. This Option may not be exercised if
the issuance of the shares upon such exercise would constitute a violation
of any applicable federal or state securities or other law or valid
regulation. As a condition to the Optionee's exercise of this Option, the
Company may require the person exercising this Option to make any
representation and warranty to the Company as may be required by any
applicable law or regulation.
2. Withholding. The Optionee hereby agrees that the exercise of the Option
or any installment thereof will not be effective, and no shares will become
transferable to the Optionee, until the Optionee makes appropriate arrangements
with the Company for such tax withholding as may be required of the Company
under federal, state, or local law on account of such exercise.
3. Non-transferability of Option. This Option may not be transferred in any
manner otherwise than by will or the laws of descent or distribution. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
4. Term of Option. This Option may not be exercisable for more than ten**
years from the date of grant of this Option, as stated below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
FLAGSTAR BANCORP, INC.
STOCK OPTION PLAN COMMITTEE
____________________ By:__________________________________________
Date of Grant Authorized Member of the Committee
Witness:_____________________________________
- -------------------
** Five years in the case of an Optionee who owns shares representing more than
10% of the outstanding common stock of the Company on the date of grant of this
Option.
<PAGE>
FLAGSTAR BANCORP, INC.
EMPLOYEES AND DIRECTORS 1997 STOCK OPTION PLAN
-------------------------------
Form for Exercise of
Incentive Stock Options
-------------------------------
Treasurer
Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, Michigan 48302-0953
Re; Flagstar Bancorp, Inc. 1997 Employees and Directors Stock Option Plan
Dear Sir:
The undersigned elects to exercise the Incentive Stock Option to purchase
_______ shares, par value $.01, of Common Stock of Flagstar Bancorp, Inc. (the
"Company") under and pursuant to a Stock Option Agreement dated _____________,
199_.
Delivered herewith is a certified or bank cashier's or teller's check
and/or shares of Common Stock, valued at the fair market value of the stock on
the date of exercise, as set forth below.
$_____ of cash or check
$_____ in the form of ______ shares of Common Stock, valued at
$_______ per share
$ TOTAL
=====
The name or names to be on the stock certificate or certificates and the
address and Social Security Number of such person(s) is as follows:
Name __________________________________________________________________________
Address _______________________________________________________________________
Social Security Number ________________________________________________________
_____________________
Date
Very truly yours,
-------------------------
EXHIBIT 99.3
<PAGE>
FLAGSTAR BANCORP, INC.
1997 EMPLOYEES AND DIRECTORS STOCK OPTION PLAN
------------------------------------------
Agreement for Non-Incentive Stock Options
-------------------------------------------
THIS STOCK OPTION (the "Option") grants ___________________ (the
"Optionee") the right to purchase a total of ___________ shares of Common Stock,
par value $0.01 per share, of Flagstar Bancorp, Inc. (the "Company"), at the
price set forth herein, and in all respects subject to the terms, definitions
and provisions of the Flagstar Bancorp, Inc. 1997 Employees and Directors Stock
Option Plan (the "Plan") which is incorporated by reference herein. This Option
is intended not to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Optionee
acknowledges, through signing below, the receipt of the prospectus associated
with the Plan.
1. Option Price. The option price is $____ for each share, being ______% of
the fair market value, as determined by the Committee, of the Common Stock on
the date of grant of this Option.
2. Vesting and exercise of Option. This Option shall be vested and become
exercisable in accordance with provisions of the Plan as follows:
(i) Schedule of rights to exercise. The Optionee may exercise this Option
with respect to the total shares specified above after the one-year period
following the date of its grant.
(ii) Method of Exercise. This Option is exercisable by a written notice by
the Optionee which shall:
(a) state the election to exercise the Option, the number of shares with
respect to which it is being exercised, the person in whose name the stock
certificate or certificates for such shares of Common Stock is to be
registered, address and Social Security Number (or if more than one, the
names, addresses and Social Security Numbers of such persons);
(b) contain such representations and agreements as to the holder's
investment intent with respect to such shares of Common Stock as may be
satisfactory to the Company's counsel;
(c) be signed by the person entitled to exercise the Option and, if the
Option is being exercised by any person other than the Optionee, be
accompanied by proof satisfactory to counsel for the Company, of the right
of such person or persons to exercise the Option; and
<PAGE>
Non-ISO Agreement
Page 2
(d) be in writing and delivered in person or by certified mail to the
Secretary of the Company.
Payment of the purchase price of any shares with respect to which the
Option is being exercised shall be by cash, Common Stock, or such
combination of cash and Common Stock as the Optionee elects. In addition,
the Optionee may elect to pay for all or part of the exercise price of the
shares by having the Company withhold a number of shares that are both
subject to this Option and have a fair market value equal to the exercise
price. The certificate or certificates for shares of Common Stock as to
which the Option shall be exercised shall be registered in the name of the
person or persons exercising the Option.
(iii) Restrictions on exercise. This Option may not be exercised if the
issuance of the shares upon such exercise would constitute a violation of any
applicable federal or state securities or other law or valid regulation. As a
condition to the Optionee's exercise of this Option, the Company may require the
person exercising this Option to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
3. Withholding. The Optionee hereby agrees that the exercise of the Option
or any portion thereof will not be effective, and no shares will become
transferable to the Optionee, until the Optionee makes appropriate arrangements
with the Company for such tax withholding as may be required of the Company
under federal, state or local law on account of such exercise.
4. Non-transferability of Option. This Option may not be transferred in any
manner otherwise than by will or the laws of descent or distribution. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee. Notwithstanding any other terms of this
agreement, the Optionee may transfer this Option to the Optionee's spouse,
lineal ascendants, lineal descendents, or to a duly established trust for their
benefit, provided that such transferee shall be permitted to exercise this
Option subject to the same terms and conditions applicable to the Optionee.
5. Term of Option. This Option may not be exercisable for more than ten
years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
FLAGSTAR BANCORP, INC.
STOCK OPTION COMMITTEE
By: ________________________________________
Authorized Member of the Committee
_______________________
Date of Grant
Witness:____________________________________
<PAGE>
FLAGSTAR BANCORP, INC.
1997 EMPLOYEES AND DIRECTORS STOCK OPTION PLAN
------------------------------------------
Form for Exercise of
Non-Incentive Stock Options
------------------------------------------
Treasurer
Flagstar Bancorp, Inc.
2600 Telegraph Road
Bloomfield Hills, Michigan 48302-0953
Re: Flagstar Bancorp, Inc. 1997 Employees and Directors Stock Option Plan
Dear Sir:
The undersigned elects to exercise the Non-Incentive Stock Option to
purchase _______ shares, par value $.01, of Common Stock of Flagstar Bancorp,
Inc. (the "Company") under and pursuant to a Stock Option Agreement dated
_____________, _____.
Delivered herewith is a certified or bank cashier's or teller's check
and/or shares of Common Stock, valued at the fair market value of the stock on
the date of exercise, as set forth below.
$_____ of cash or check
$_____ in the form of _______ shares of Common Stock, valued at
$_____ per share
$ TOTAL
=====
[ ] In lieu of receiving _____ shares, the undersigned requests the
Company to pay cash in an amount equal to the fair market value of
such shares less their exercise price.
The name or names to be on the stock certificate or certificates and the
address and Social Security Number of such person(s) is as follows:
Name __________________________________________________________________________
Address _______________________________________________________________________
Social Security Number ________________________________________________________
_____________________
Date
Very truly yours,
-------------------------