<PAGE>
As filed with the Securities and Exchange Commission on October 26, 1994
Registration No.
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ZERO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-1718077
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
444 SOUTH FLOWER STREET, 90071
SUITE 2100 (Zip Code)
LOS ANGELES, CALIFORNIA
(Address of Principal
Executive Offices)
1994 STOCK OPTION PLAN
ZERO CORPORATION RETIREMENT SAVINGS PLAN
(Full Title of the Plan)
ANITA J. CUTCHALL
CORPORATE SECRETARY
ZERO CORPORATION
444 SOUTH FLOWER STREET, SUITE 2100
LOS ANGELES, CALIFORNIA 90071
(Name and address of agent for service)
(213) 692-7000
(Telephone number, including area code, of agent for service)
----------------
With a copy to:
PETER F. ZIEGLER, ESQ.
GIBSON, DUNN & CRUTCHER
333 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 229-7000
----------------
================================================================================
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER SHARE PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value 950,000 shares (1) $12.875 (2) $12,231,250.00 (2) $4,217.67 (2)
Interest in ZERO
Corporation Retirement (3) (3) (3) (3)
Savings Plan
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) 750,000 shares of Common Stock are reserved for issuance pursuant to the
1994 Stock Option Plan of ZERO Corporation. Based on ZERO Corporation's
estimate of the number of shares of Common Stock that will be purchased
pursuant to ZERO Corporation's Retirement Savings Plan, 200,000 shares are
also being registered. Pursuant to Rule 416, there is also being registered
such number of additional shares which may become available for purchase
pursuant to the foregoing plans in the event of certain changes in
outstanding shares, including reorganizations, recapitalizations, stock
splits, stock dividends and reverse stock splits.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) on the basis of the average of the high and low
prices off the Common Stock of ZERO Corporation as reported on the New York
Stock Exchange on October 21, 1994.
(3) An indeterminate amount of interests in ZERO Corporation's Retirement
Savings Plan is being registered pursuant to Rule 416(c) under the
Securities Act of 1933, as amended.
===============================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Not filed as part of this Registration Statement pursuant to Note
Item 1 of Form S-8.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not filed as part of this Registration Statement pursuant to Note to
Item 1 of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENT BY REFERENCE.
The following documents of the Registrant heretofore files with the
Securities and Exchange Commission (the "Commission") are hereby incorporated
in this Registration Statement by reference:
(1) The Registrant's Annual Report on Form 10-K for the fiscal year ended
March 31, 1994.
(2) The Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994.
(3) The description of the Common Stock set forth under the heading
"Description of Registrant's Securities to be Registered" in the Registrant's
Registration Statement on Form 8-B, as amended (Registration No. 1-5260),
together with any amendments or report filed with the Commission for the purpose
of updating such description.
All reports and other documents subsequently filed by the Registrant or
the ZERO Corporation Retirement Savings Plan pursuant to Sections 13(a) and (c),
14 and 15(d) of the Securities Exchange Act of 1934, as amended, prior to the
filing of a post-effective amendment which indicates that all securities offered
hereunder have been sold or which reference in this Registration Statement and
to be a part hereof from the date of filing of such reports and documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
1
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the issuance of the shares of Common Stock offered
pursuant to the prospectuses related hereto will be passed on for the Registrant
by Gibson, Dunn & Crutcher, Los Angeles, California.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he or she is a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as director, officer,
employee or agent of another corporation or enterprise. Depending on the
character of the proceeding, a corporation may indemnify against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action, suit or
proceeding if the person identifed acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interest of the
corporation and, with respect to any criminal action or proceeding, had no cause
to believe his or her conduct was unlawful. In the case of an action by or in
the right of the corporation, no indemnification may be made in respect to any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
corporation unless and only to the extent that a Court of Chancery or the court
in which such action or suit was brought shall determine that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145
further provides that to the extent that a director or officer of a corporation
has been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter herein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
The Certificate of Incorporation and By-laws of the Registrant
provide, in effect, that, to the fullest extent permitted by Delaware General
Corporation Law, the Registrant has the power to indemnify any person who was or
is a party or is threatened to be made a party to any action, suit or proceeding
of the type described above by reason of the fact that he or she is or was a
director, officer, employee or agent of the Registrant.
The Registrant's Certificate of Incorporation relieves its directors
from monetary damages to the Registrant or its stockholders for breach of such
director's fiduciary duty as director to the full extent permitted by the
Delaware General Corporation Law. Under Section 102(7) of the Delaware General
Corporation Law a corporation may relieve its directors from personal liability
to such corporation or its stockholders for monetary damages for any breach of
their fiduciary duty as directors except(i) for a breach of the duty of loyalty,
(ii) for failure to act in good faith, (iii) for intentional misconduct or
knowing violation of law (iv) for willful or negligent violations of certain
provisions in the Delaware General
2
<PAGE>
Corporation Law imposing certain requirements with respect to stock purchases,
redemptions and dividends or (v) for any transaction from which the director
derived an improper personal benefit.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
4.1 ZERO Corporation 1994 Stock Option Plan.
4.2 Form of Employee Non-Qualified Stock Option Agreement pursuant
to 1994 Stock Option Plan.
4.3 Form of Employee Incentive Stock Option Agreement pursuant to
1994 Stock Option Plan.
4.4 Form of Non-Employee Director Stock Option Agreement pursuant
to 1994 Stock Option Plan.
4.5 ZERO Corporation Retirement Savings Plan.
4.6 Certificate of Incorporation of the Registrant (previously
filed as an Exhibit to the Registrant's Registration Statement
on Form 8-B (No. 1-5260) and incorporated herein by
reference).
4.7 Bylaws of the Registrant (previously filed as an Exhibit to
the Registrant's Registration Statement on Form 8-B
(No. 1-5260) and incorporated herein by reference).
5.1 Opinion of Gibson, Dunn & Crutcher.
23.1 Consent of Deloitte & Touche.
23.2 Consent of Gibson, Dunn & Crutcher (included in Exhibit 5.1).
24 Power of Attorney (included on pages 8 and 9 of this
Registration Statement).
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement;
3
<PAGE>
(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 Registraton Statement; and
(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)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) 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 Section 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.
(c) 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
4
<PAGE>
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.
(d) The undersigned Registrant hereby undertakes to submit the
ZERO Corporation Retirement Savings Plan and any amendment thereto to the
Internal Revenue Service (the "IRS") in a timely manner and to make all changes
required by the IRS in order to qualify the plan.
5
<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 Los Angeles, State of California, on this 25th day of
October, 1994.
ZERO CORPORATION
By /s/ Wilford D. Godbold, Jr.
-----------------------------------
Wilford D. Godbold, Jr.
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature to
this Registration Statement appears below hereby constitutes and appoints
Wilford D. Godbold, Jr. and George A. Daniels as such person's true and lawful
attorney-in-fact and agent with full power of substitution for such person and
in such person's name, place and stead, in any and all capacities, to sign and
to file with the Securities and Exchange Commission, any and all amendments and
post-effective amendments to this Registration Statement, with exhibits thereto
and other documents in connection therewith, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or any
substitute therefor, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Wilford D. Godbold, Jr. President, Chief Executive October 25, 1994
- ----------------------------- Officer and Director
Wilford D. Godbold, Jr. (Principal Executive Officer)
/s/ George A. Daniels Vice President and Chief October 25, 1994
- ----------------------------- Financial Officer (Principal
George A. Daniels Financial Officer)
6
<PAGE>
/s/ Eric A. Sand Controller (Principal October 25, 1994
- ----------------------------- Accounting Officer)
Eric A. Sand
/s/ Howard W. Hill Chairman of the Board October 25, 1994
- -----------------------------
Howard W. Hill
/s/ Gary M. Cusumano Director October 25, 1994
- -----------------------------
Gary M. Cusumano
/s/ John B. Gilbert Director October 25, 1994
- -----------------------------
John B. Gilbert
/s/ Bruce J. DeBever Director October 25, 1994
- -----------------------------
Bruce J. DeBever
/s/ Bernard B. Heiler Director October 25, 1994
- -----------------------------
Bernard B. Heiler
/s/ Whitney A. McFarlin Director October 25, 1994
- -----------------------------
Whitney A. McFarlin
/s/ Clinton G. Gerlach Director October 25, 1994
- -----------------------------
Clinton G. Gerlach
7
<PAGE>
SIGNATURES
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 in its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on October 25, 1994.
ZERO CORPORATION RETIREMENT
SAVINGS PLAN
By:/s/ Howard W. Hill
-----------------------------------
Howard W. Hill
Chairman, Employee Benefits Committee
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature to
this Registration Statement appears below hereby constitutes and appoints
Wilford D. Godbold, Jr. and George A. Daniels as such person's true and lawful
attorney-in-fact and agent with full power of substitution for such person and
in such person's name, place and stead, in any and all capacities, to sign and
to file with the Securities and Exchange Commission, any and all amendments and
post-effective amendments to this Registration Statement, with exhibits thereto
and other documents in connection therewith, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or any
substitute therefor, may lawfully do or cause to be done by virtue thereof.
8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Howard W. Hill Chairman, ZERO Corporation October 25, 1994
- ---------------------------- Employee Benefits Committee
Howard W. Hill
/s/ Wilford D. Godbold, Jr. ZERO Corporation Employee October 25, 1994
- ---------------------------- Benefits Committee
Wilford D. Godbold, Jr.
/s/ Bruce J. DeBever ZERO Corporation Employee October 25, 1994
- ---------------------------- Benefits Committee
Bruce J. DeBever
/s/ Clinton G. Gerlach ZERO Corporation Employee October 25, 1994
- ---------------------------- Benefits Committee
Clinton G. Gerlach
9
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page*
- ------- ----------- -------------
4.1 ZERO Corporation 1994 Stock Option Plan.
4.2 Form of Employee Non-Qualified Stock Option Agreement
pursuant to 1994 Stock Option Plan.
4.3 Form of Employee Incentive Stock Option Agreement
pursuant to 1994 Stock Option Plan.
4.4 Form of Non-Employee Director Stock Option Agreement
pursuant to 1994 Stock Option Plan.
4.5 ZERO Corporation Retirement Savings Plan.
4.6 Certificate of Incorporation of the Registrant
(previously filed as an Exhibit to the Registrant's
Registration Statement on Form 8-B (No. 1-5260) and
incorporated herein by reference).
4.7 Bylaws of the Registrant (previously filed as an Exhibit
to the Registrant's Registration Statement on Form 8-B
(No. 1-5260) and incorporated herein by reference).
5.1 Opinion of Gibson, Dunn & Crutcher.
23.1 Consent of Deloitte & Touche.
23.2 Consent of Gibson, Dunn & Crutcher (included in Exhibit 5.1).
24 Power of Attorney (included on pages 8 and 9 of this
Registration Statement).
- ---------------------
* This information appears only in the manually signed copy of this
Registration Statement filed with the Securities and Exchange Commission.
10
<PAGE>
ZERO CORPORATION
1994 STOCK OPTION PLAN
SECTION 1. PURPOSE OF PLAN
The purpose of this 1994 Stock Option Plan (this "Plan") of ZERO
Corporation, a Delaware corporation (the "Company"), is to enable the Company
and its divisions and subsidiaries to attract, retain and motivate their
employees by providing for or increasing the proprietary interests of such
employees in the Company, and to enable the Company to attract, retain and
motivate its nonemployee directors and further align their interests with those
of the stockholders of the Company by providing for or increasing the
proprietary interests of such directors in the Company.
SECTION 2. PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is an employee of
the Company or any of its divisions or subsidiaries (an "Employee") shall be
eligible to be considered for the grant of Awards (as hereinafter defined)
hereunder. Any director of the Company who is not an Employee (a "Nonemployee
Director") shall automatically receive Nonemployee Director Options (as
hereinafter defined) pursuant to Section 4 hereof, but shall not otherwise
participate in this Plan.
SECTION 3. AWARDS
(a) The Committee (as hereinafter defined), on behalf of the Company, is
authorized under this Plan to enter into arrangements with eligible Employees
providing for options to purchase, or stock appreciation rights ("Stock
Appreciation Rights") relating to, shares of common stock, par value $.01 per
share, of the Company ("Common Shares"). The entering into of any such
arrangement is referred to herein as the "grant" of an "Award." Awards shall
contain such terms and conditions not inconsistent with the provisions of this
Plan as the Committee shall deem appropriate.
(b) Each Stock Appreciation Right shall relate to a specific stock option
granted under this Plan, and shall provide for the conditional right to
surrender all or part of an unexercised related option and to receive payment of
an amount equal to the excess of the fair market value of the underlying shares
on the date of surrender over the option exercise price. Such payment may be
made, in the sole discretion of the Committee, in shares of stock valued at
their fair market value on the date of surrender of the option or in cash, or
partly in shares and partly in cash. The exercise of a Stock Appreciation Right
and the manner of payment shall be in the sole discretion of the Committee and
any Stock Appreciation Right shall be subject to the condition that the
1
<PAGE>
Committee may at any time in its absolute discretion not allow the exercise of a
Stock Appreciation Right and instead require that the optionee exercise any
option granted under this Plan as if there were no Stock Appreciation Rights
with respect to such option. The Committee may further impose such conditions
on the exercise of Stock Appreciation Rights as may be required to comply with
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). A Stock Appreciation Right granted hereunder shall be exercisable at such
time or times and only to the extent that the related stock option is
exercisable, will not be transferable except to the extent that such related
stock option is transferable and shall expire no later than the expiration of
the related stock option.
(c) Common Shares may be issued pursuant to an Award for any lawful
consideration as determined by the Committee, including, without limitation,
services rendered by the recipient of such Award.
(d) Subject to the provisions of this Plan, the Committee, in its sole and
absolute discretion, shall determine all of the terms and conditions of each
Award granted under this Plan, which terms and conditions may include, among
other things:
(i) a provision permitting the recipient of such Award, including any
recipient who is a director or officer of the Company, to pay the purchase
price of the Common Shares issuable pursuant to such Award, or such
recipient's tax withholding obligation with respect to such issuance, in
whole or in part, by any one or more of the following:
(A) the delivery of previously owned shares of capital stock of
the Company (including the delivery of a small number of the shares
subject to the Award to be used automatically, in a series of
simultaneous transactions, to pay the exercise price for a larger
number of additional shares) or other property, provided that the
Company is not then prohibited from purchasing or acquiring shares of
its capital stock or such other property, or
(B) a reduction in the amount of Common Shares otherwise issuable
pursuant to such Award;
(ii) subject to Section 3(e), a provision conditioning or accelerating
the receipt of benefits pursuant to such Award, either automatically or in
the discretion of the Committee, upon the occurrence of specified events,
including, without limitation, a change of control of the Company an
acquisition
2
<PAGE>
of a specified percentage of the voting power of the Company, the
dissolution or liquidation of the Company, a sale of substantially all of
the property and assets of the Company or an event of the type described in
Section 8 hereof; or
(iii) a provision required in order for such Award to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code (an
"Incentive Stock Option"), provided that the recipient of such Award is
eligible under the Internal Revenue Code to receive an Incentive Stock
Option.
(e) Each Award that is subject to vesting shall provide that if the
recipient thereof shall cease to be an Employee within one year after a Change
of Control as a result of such recipient terminating or being terminated other
than for Cause, such recipient's Award shall become fully vested as of the date
on which such recipient ceases to be an Employee. A "Change of Control" shall
mean the first to occur of the following:
(i) the date upon which the directors of the Company who were
nominated by the Board of Directors of the Company (the "Board") for
election as directors cease to constitute a majority of the directors of
the Company;
(ii) the consummation of a reorganization, merger or consolidation of
the Company (other than a reorganization, merger or consolidation
contemplated by Section 4(h)(ii) or the sole purpose of which is to change
the Company's domicile solely within the United States) (1) as a result of
which the outstanding securities of the class then subject to such Award
are exchanged for or converted into cash, property and/or securities not
issued by the Company and (2) the terms of which provide that such Award
shall continue in effect thereafter; or
(iii) the date of the first public announcement that any person or
entity, together with all Affiliates and Associates (as such capitalized
terms are defined in Rule 12b-2 promulgated under the Exchange Act) of such
person or entity, shall have become the Beneficial Owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) of voting securities of the
Company representing more than 25% of the voting power of the Company (a
"25% Stockholder"); provided, however, that the terms "person" and
"entity," as used in this clause (iii), shall not include (1) the Company
or any of its subsidiaries, (2) any employee benefit plan of the Company or
any of its subsidiaries, (3) any entity holding voting securities of the
Company for or pursuant to the terms of any such plan or (4) any person or
entity if the transaction that resulted in such person or entity becoming a
25% Stockholder was approved in advance by the Board.
3
<PAGE>
"Cause" shall mean the Award recipient's (A) conviction by a court of competent
jurisdiction of a felony or serious misdemeanor involving moral turpitude, (B)
willful disregard of any written directive of the Board that is not inconsistent
with the Certificate of Incorporation or Bylaws of the Company or applicable
law, (C) breach of his or her fiduciary duty involving personal profit, or (D)
neglect of his or her duties that has a material adverse effect on the Company.
(f) Notwithstanding any other provision of this Plan, no Employee shall be
granted options during any one calendar year for in excess of 50,000 shares of
Common Stock, subject to adjustment pursuant to Section 8 hereof.
SECTION 4. NONEMPLOYEE DIRECTOR OPTIONS
(a) Each year, on the date of the annual meeting of stockholders of the
Company, or any adjournment thereof, at which directors of the Company are
elected (the "Date of Grant"), each Nonemployee Director shall automatically be
granted an option (a "Nonemployee Director Option") to purchase 2,000 Common
Shares. In addition, each person who becomes a Nonemployee Director after a Date
of Grant shall automatically be granted, upon the date he or she becomes a
Nonemployee Director (the "New Director Date"), a Nonemployee Director Option to
purchase a number of Common Shares, rounded to the nearest whole share, equal to
(i) 2,000 minus (ii) 2,000 multiplied by the quotient of (x) the number of days
from (1) the Date of Grant immediately preceding the New Director Date to (2)
the New Director Date divided by (y) 365 days. Each person who becomes a
Nonemployee Director after the Effective Date (as defined in Section 10 below)
of this Plan but prior to the first Date of Grant shall automatically be
granted, upon the date he or she becomes a Nonemployee Director, a Nonemployee
Director Option to purchase 500 Common Shares.
(b) If, on any date upon which Nonemployee Director Options are to be
automatically granted pursuant to this Section 4, the number of Common Shares
remaining available for option under this Plan is insufficient for the grant to
each Nonemployee Director of a Nonemployee Director Option to purchase the
entire number of Common Shares specified in this Section 4, then a Nonemployee
Director Option to purchase a proportionate amount of such available number of
Common Shares (rounded to the nearest whole share) shall be granted to each
Nonemployee Director on such date.
(c) Subject to Section 4(h) and Section 4(i) hereof, each Nonemployee
Director Option granted under this Plan shall not be exercisable until the first
anniversary of the Date of Grant of such Nonemployee Director Option and
thereafter shall become exercisable to purchase:
4
<PAGE>
(i) 33 1/3% of the Common Shares subject thereto (rounded to the
nearest whole share) as of the first anniversary of the Date of Grant of
such Nonemployee Director Option;
(ii) 66 2/3% of such Common Shares (rounded to the nearest whole
share) as of the second anniversary of such Date of Grant, and
(iii) 100% of such Common Shares as of the third anniversary of such
Grant Date;
provided, however, that (1) if the optionee shall cease to be a Nonemployee
Director as a result of death or permanent disability prior to the second
anniversary of such Date of Grant, such Nonemployee Director Option shall become
exercisable to purchase 100% of such Common Shares (rounded to the nearest whole
share) as of the date that such optionee ceases to be a Nonemployee Director and
such Nonemployee Director Option shall terminate with respect to the balance of
such Common Shares, or (2) if the optionee ceases to be a Nonemployee Director
as a result of not standing for re-election because of the policies of the Board
relating to age, such Nonemployee Director Option shall become exercisable to
purchase 100% of such Common Shares as of the date on which such optionee ceases
to be a Nonemployee Director.
(d) Each Nonemployee Director Option granted under this Plan shall expire
upon the first to occur of the following:
(i) The first anniversary of the date upon which the optionee shall
cease to be a Nonemployee Director as a result of death or permanent
disability;
(ii) The 90th day after the date upon which the optionee shall cease
to be a Nonemployee Director for any reason other than death or permanent
disability; or,
(iii) The eighth anniversary of the Date of Grant of such Nonemployee
Director Option.
(e) Each Nonemployee Director Option shall have an exercise price equal to
the aggregate Fair Market Value on the Date of Grant of such option of the
Common Shares but in no event less than the aggregate par value of such Common
Shares on such date.
(f) Payment of the exercise price of any Nonemployee Director Option
granted under this Plan and the optionee's tax withholding obligation, if any,
with respect to such Nonemployee Stock Option shall be made in full in cash
concurrently with the exercise of such Nonemployee Director Option; provided,
however, that the payment of such exercise price and/or tax withholding may
instead be made, in whole or in part, by any one or more of the following:
5
<PAGE>
(i) the delivery Of previously owned shares of capital stock of the
Company (including the delivery of a small number of the shares subject to
the Nonemployee Director Option to be used automatically, in a series of
simultaneous transactions, to pay the exercise price for a larger number of
additional
shares) or other property, provided that the Company is not then prohibited
from purchasing or acquiring shares of its capital stock or such other
property;
(ii) a reduction in the amount of Common Shares or other property
otherwise issuable pursuant to such Nonemployee Director Option; or
(iii) the delivery, concurrently with such exercise and in accordance
with Section 220.3(e)(4) of Regulation T promulgated under the Exchange
Act, of a properly executed exercise notice for such Nonemployee Director
Option and irrevocable instructions to a broker promptly to deliver to the
Company a specified dollar amount of the proceeds of a sale of the Common
Shares issuable upon exercise of such Nonemployee Director Option.
(g) The "Fair Market Value" of a Common Share or other security on any date
(the "Determination Date") shall be equal to the closing price per Common Share
or unit of such other security on the business day immediately preceding the
Determination Date, as reported in The Wall Street Journal, Western Edition, or,
if no closing price was so reported for such immediately preceding business day,
the closing price for the next preceding business day for which a closing price
was so reported, or, if no closing price was so reported for any of the 30
business days immediately preceding the Determination Date, the average of the
high bid and low asked prices per Common Share or unit of such other security on
the business day immediately preceding the Determination Date in the over-the-
counter market, as reported by the National Association of Securities Dealers,
Inc. Automated Quotations System ("NASDAQ") or such other system then in use,
or, if the Common Shares or such other security were not quoted by any such
organization on such immediately preceding business day, the average of the
closing bid and asked prices on such day as furnished by a professional market
maker making a market in the Common Shares or such other security selected by
the Board.
(h) All outstanding Nonemployee Director Options theretofore granted under
this Plan and not otherwise terminated or expired shall become fully exercisable
immediately prior to, and shall terminate upon the first to occur of the
following:
(i) the dissolution or liquidation of the Company;
6
<PAGE>
(ii) a reorganization, merger or consolidation of the Company (other
than a reorganization, merger or consolidation the sole purpose of which is
to change the Company's domicile solely within the United States) as a
result of which the outstanding securities of the class then subject to
such outstanding Nonemployee Director Options are exchanged for or
converted into cash, property and/or securities not issued by the Company,
unless such reorganization, merger or consolidation shall have been
affirmatively recommended to the stockholders of the Company by the Board
and the terms of such reorganization, merger or consolidation shall provide
that such Nonemployee Director Options shall continue in effect thereafter
and shall be exercisable to acquire the number and type of securities or
other consideration to which the Nonemployee Directors would have been
entitled had they exercised such Nonemployee Director Options immediately
prior to such reorganization, merger or consolidation; or
(iii) the sale of substantially all of the property and assets of the
Company.
(i) If the optionee shall cease to be a Nonemployee Director within one
year after a Change of Control as a result of such optionee not being nominated
for re-election or such optionee being removed from the Board other than for
Cause, such optionee's Nonemployee Director Option shall become exercisable to
purchase 100% of the Common Shares subject thereto as of the date on which such
optionee ceases to be a Nonemployee Director.
(j) Each Nonemployee Director Option shall be nontransferable by the
optionee other than by will or the laws of descent and distribution, and shall
be exercisable during the optionee's lifetime only by the optionee or the
optionee's guardian or legal representative.
(k) Nonemployee Director Options are not intended to qualify as Incentive
Stock Options.
SECTION 5. STOCK SUBJECT TO PLAN
(a) The aggregate number of Common Shares that may be issued pursuant to
all Incentive Stock Options granted under this Plan shall not exceed 750,000,
subject to adjustment as provided in Section 8 hereof.
(b) The aggregate number of Common Shares issued and issuable pursuant to
all Awards (including Incentive Stock Options) and Nonemployee Director Options
granted under this Plan shall not exceed 750,000, subject to adjustment as
provided in Section 8 hereof.
7
<PAGE>
(c) For purposes of Section 5(b) hereof, the aggregate number of Common
Shares issued and issuable pursuant to all Awards and Nonemployee Director
Options granted under this Plan shall at any time be deemed to be equal to the
sum of the following:
(i) the number of Common Shares which were issued prior to such time
pursuant to Awards and Nonemployee Director Options granted under this
Plan, other than Common Shares which were subsequently reacquired by the
Company pursuant to the terms and conditions of such Awards and with
respect to which the holder thereof received no benefits of ownership such
as dividends; plus
(ii) the number of Common Shares which were otherwise issuable prior
to such time pursuant to Awards granted under this Plan, but which were
withheld by the Company as payment of the purchase price of the Common
Shares issued pursuant to such Awards or as payment of the recipient's tax
withholding obligation with respect to such issuance; plus
(iii) the maximum number of Common Shares issuable at or after such
time pursuant to Awards and Nonemployee Director Options granted under this
Plan prior to such time.
SECTION 6. DURATION OF PLAN
Neither Awards nor Nonemployee Director Options shall be granted under this
Plan after April 22, 2004. Although Common Shares may be issued after April 22,
2004 pursuant to Awards and Nonemployee Director Options granted prior to such
date, no Common Shares shall be issued under this Plan after April 22, 2014.
SECTION 7. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by a committee of the Board (the
"Committee") consisting of two or more directors, each of whom is (i) a
"disinterested person" (as such term is defined in Rule 16b-3 promulgated under
the Exchange Act, as such Rule may be amended from time to time) and (ii) an
"outside" director for purposes of the proposed regulations under Section 162(m)
of the Internal Revenue Code (and any final regulations that may be adopted
under Section 162(m)) as the same may be amended from time to time.
(b) Subject to the provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in connection
with the administration of this Plan, including, without limitation, the
following:
(i) adopt, amend and rescind rules and regulations relating to this
Plan;
8
<PAGE>
(ii) determine which persons are Employees and to which of such
Employees, if any, Awards shall be granted hereunder;
(iii) grant Awards to Employees and determine the terms and conditions
thereof, including the number of Common Shares issuable pursuant thereto;
(iv) determine the terms and conditions of the Nonemployee Director
Options that are automatically granted hereunder, other than the terms and
conditions specified in Section 4 hereof;
(v) determine whether, and the extent to which, adjustments are
required pursuant to Section 8 hereof; and
(vi) interpret and construe this Plan and the terms and conditions of
all Awards and Nonemployee Director Options granted hereunder.
SECTION 8. ADJUSTMENTS
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of securities, or if cash, property or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular, quarterly cash
dividend) or other distribution, stock split, reverse stock split or the like,
or if substantially all of the property and assets of the Company are sold,
then, unless the terms of such transaction shall provide otherwise, the
Committee shall make appropriate and proportionate adjustments in (a) the number
and type of shares or other securities or cash or other property that may be
acquired pursuant to Incentive Stock Options and other Awards and Nonemployee
Director Options theretofore granted under this Plan, (b) the maximum number and
type of shares or other securities that may be issued pursuant to Incentive
Stock Options and other Awards and Nonemployee Director Options thereafter
granted under this Plan, and (c) the maximum number of Common Shares for which
options may be granted during any one calendar year.
SECTION 9. AMENDMENT AND TERMINATION OF PLAN
The Board may amend or terminate this Plan at any time and in any manner,
subject to the following limitations:
(a) no such amendment or termination shall deprive the recipient of any
Award or Nonemployee Director Option theretofore granted under this Plan,
without the consent of such recipient, of any of his or her rights thereunder or
with respect thereto; and
9
<PAGE>
(b) Section 4 hereof shall not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
SECTION 10. EFFECTIVE DATE OF PLAN
This Plan shall be effective as of April 22, 1994 (the "Effective Date"),
the date upon which it was approved by the Board; provided, however, that no
Common Shares may be issued under this Plan until it has been approved, directly
or indirectly, by the affirmative votes of the holders of a majority of the
securities of the Company present, or represented, and entitled to vote at a
meeting duly held in accordance with the laws of the State of Delaware.
10
<PAGE>
ZERO CORPORATION
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
PURSUANT TO THE
1994 STOCK OPTION PLAN
This Employee Nonqualified Stock Option Agreement (this "Agreement")
is made and entered into as of the Date of Grant indicated below by and between
ZERO Corporation, a Delaware corporation (the "Company"), and the person named
below as Employee.
WHEREAS, Employee is an employee of the Company and/or one or more of
its subsidiaries; and
WHEREAS, pursuant to the Company's 1994 Stock Option Plan (the
"Plan"), the committee of the Board of Directors of the Company administering
the Plan (the "Committee") has approved the grant to Employee of an option to
purchase shares of the common stock, par value $1.00 per share, of the Company
(the "Common Stock"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
---------------------------------------------
grants to Employee, and Employee hereby accepts, as of the Date of Grant, an
option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 o'clock p.m., Los Angeles time, on the Expiration Date
indicated below and shall be subject to all of the terms and conditions set
forth in this Agreement (the "Option"). On each anniversary of the Date of
Grant, the Option shall become exercisable to purchase ("vest with respect to")
that number of Option Shares (rounded to the nearest whole share) equal to the
total number of Option Shares multiplied by the Annual Vesting Rate indicated
below.
Employee: _____________________
Date of Grant: _______
Number of shares purchasable: _______
Exercise Price per share: _______
Expiration Date: _______
Annual Vesting Rate: _____%
<PAGE>
The Option is not intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code.
2. ACCELERATION OF VESTING AND TERMINATION OF OPTION.
-------------------------------------------------
(a) Termination of Employment.
-------------------------
(i) Retirement. If Employee ceases to be employed by reason of
Employee's retirement in accordance with the Company's then-current
retirement policy ("Retirement"), then (A) the portion of the Option that
has not vested on or prior to the date of such Retirement shall terminate
on such date and (B) the remaining vested portion of the Option shall
terminate upon the earlier of the Expiration Date or the first anniversary
of the date of such Retirement.
(ii) Death or Permanent Disability. If Employee ceases to be
employed by reason of the death or Permanent Disability (as hereinafter
defined) of Employee, then (A) the portion of the Option that has not
vested on or prior to the date of such Termination of Employment shall
terminate on such date and (B) the remaining vested portion of the Option
shall terminate upon the earlier of the Expiration Date or the first
anniversary of the date of Employee's death or Permanent Disability.
"Permanent Disability" shall mean the 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. Employee shall not be deemed to have a Permanent
Disability until proof of the existence thereof shall have been furnished
to the Board in such form and manner, and at such times, as the Board may
require. Any determination by the Board that Employee does or does not
have a Permanent Disability shall be final and binding upon the Company and
Employee.
(iii) Termination for Cause. If Employee is terminated for
Cause, both the vested and unvested portions of the Option shall terminate
immediately. "Cause" shall mean Employee's (A) conviction by a court of
competent jurisdiction of a felony or serious misdemeanor involving moral
turpitude, (B) willful disregard of any written directive of the Board that
is not inconsistent with the Certificate of Incorporation or Bylaws of the
Company or applicable law, (C) breach of his or her fiduciary duty
involving personal profit, or (D) neglect of his or her duties that has a
material adverse effect on the Company.
(iv) Other Termination. If Employee is terminated other than
for Cause, then (A) the portion of the Option that has not vested on or
prior to the date of such termination of employment shall terminate on such
date and (B) the remaining vested portion of the Option shall terminate
upon the earlier of the Expiration Date or the 30th day following the date
of such termination of employment; provided, however, that if Employee is
terminated without Cause within one year after a Change of Control, then
(x) the portion of the Option that has not vested on or prior to the date
on which Employee is terminated shall fully vest as of such date and (y)
the Option
2
<PAGE>
shall terminate upon the earlier of the Expiration Date or the 30thday
following the date on which Employee is terminated. A "Change of Control"
shall mean the first to occur of the following:
(1) the date upon which the directors of the Company who
were nominated by the Board for election as directors cease to
constitute a majority of the directors of the Company;
(2) the consummation of a reorganization, merger or
consolidation of the Company (other than a reorganization, merger or
consolidation contemplated by Section 2(d)(ii) or the sole purpose of
which is to change the Company's domicile solely within the United
States) (a) as a result of which the outstanding securities of the
class then subject to the Option are exchanged for or converted into
cash, property and/or securities not issued by the Company and (b) the
terms of which provide that the Option shall continue in effect
thereafter; or
(3) the date of the first public announcement that any
person or entity, together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
such person or entity, shall have become the Beneficial Owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of voting
securities of the Company representing more than 25% of the voting
power of the Company (a "25% Stockholder"); provided, however, that
the terms "person" and "entity," as used in this clause (3), shall not
include (a) the Company or any of its subsidiaries, (b) any employee
benefit plan of the Company or any of its subsidiaries, (c) any entity
holding voting securities of the Company for or pursuant to the terms
of any such plan or (d) any person or entity if the transaction that
resulted in such person or entity becoming a 25% Stockholder was
approved in advance by the Board.
(b) Death Following Termination of Employment. Notwithstanding
-----------------------------------------
anything to the contrary in this Agreement, if Employee shall die at any time
after the termination of his or her employment and prior to the date on which
the Option is terminated pursuant to Section 2(a), then the vested portion of
the Option shall terminate on the earlier of the Expiration Date or the first
anniversary of the date of Optionee's death.
(c) Acceleration of Option of Option by Committee. The Committee, in
---------------------------------------------
its sole discretion, may accelerate the exercisability of the Option at any time
and for any reason.
(d) Other Events Causing Acceleration and Termination of Option.
-----------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, the Option shall
become fully exercisable immediately prior to, and shall terminate upon, the
consummation of any of the following events:
(i) the dissolution or liquidation of the Company;
3
<PAGE>
(ii) a reorganization, merger or consolidation of the Company
(other than a reorganization, merger or consolidation the sole purpose of
which is to change the Company's domicile solely within the United States)
the consummation of which results in the outstanding securities of any
class then subject to the Option being exchanged for or converted into
cash, property and/or a different kind of securities, unless such
reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board and the terms
of such reorganization, merger or consolidation shall provide that the
Option shall continue in effect thereafter on terms substantially similar
to those under the Plan; or
(iii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise.
3. ADJUSTMENTS. In the event that the outstanding securities of the
-----------
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless such event shall cause the
Option to terminate pursuant to Section 2(d) hereof, the Committee shall make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option; provided, however, that any such adjustments in the
Option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.
4. EXERCISE. The Option shall be exercisable during Employee's
--------
lifetime only by Employee or by his or her guardian or legal representative, and
after Employee's death only by the person or entity entitled to do so under
Employee's last will and testament or applicable intestate law. The Option may
only be exercised by the delivery to the Company of a written notice of such
exercise (the "Exercise Notice"), which notice shall specify the number of
Option Shares to be purchased (the "Purchased Shares") and the aggregate
Exercise Price for such shares, together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided, however,
that payment of such aggregate Exercise Price may instead be made, in whole or
in part, by one or more of the following means:
(a) the delivery, concurrently with such exercise and in
accordance with Section 220.3(e)(4) of Regulation T promulgated under the
Exchange Act, of an irrevocable instructions to a broker promptly to
deliver to the Company a specified dollar amount of the proceeds of a sale
of the Option Shares issuable upon exercise of the Option; or
4
<PAGE>
(b) (i) the delivery to the Company of a certificate or
certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value (as
defined in the Plan) thereof on the date of such exercise), (ii) a
reduction in the amount of Option Shares or other property otherwise
issuable pursuant to the Option and/or (iii) the delivery of a small number
of the shares subject to the Option to be used automatically, in a series
of simultaneous transactions, to pay the exercise price for a large number
of additional shares (i.e., "pyramiding"), provided that in the case of
clause (i), clause (ii) or clause (iii) the Company is not then prohibited
from purchasing or acquiring such shares of Common Stock and provided
further that Optionee must exercise at least one-third of the Option in
order to take advantage of clause (iii).
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
----------------------------
withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax (the "Withholding Liability"), then Employee shall, on the date of exercise
and as a condition to the issuance of the Option Shares, pay the Withholding
Liability to the Company in cash or by check payable to the Company; provided,
however, that payment of the Withholding Liability may instead be made, in whole
or in part, by any means set forth in Section 4(b), provided that the Company is
not then prohibited from purchasing or acquiring such shares of Common Stock.
Employee hereby consents to the Company withholding the full amount of the
Withholding Liability from any compensation or other amounts otherwise payable
to Employee if Employee does not pay the Withholding Liability to the Company on
the date of exercise of the Option, and Employee agrees that the withholding and
payment of any such amount by the Company to the relevant taxing authority shall
constitute full satisfaction of the Company's obligation to pay such
compensation or other amounts to Employee.
6. NOTICES. All notices and other communications required or
-------
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company at
444 South Flower Street, Suite 2100, Los Angeles, California 90071, Attention:
Corporate Secretary, or to Employee at the address set forth beneath his or her
signature on the signature page hereto, or at such other addresses as they may
designate by written notice in the manner aforesaid.
7. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS. Notwithstanding
--------------------------------------------
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (b) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation
5
<PAGE>
of or to incur liability under any federal, state or other securities law, or
any requirement of any stock exchange listing agreement to which the Company is
a party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company.
8. NONTRANSFERABILITY. Neither the Option nor any interest therein
------------------
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution
9. PLAN. The Option is granted pursuant to the Plan, as in effect on
----
the Date of Grant, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive Employee, without his or her consent, of the Option or
of any of Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
Employee or any other person or entity then entitled to exercise the Option.
10. STOCKHOLDER RIGHTS. No person or entity shall be entitled to
------------------
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
11. EMPLOYMENT RIGHTS. No provision of this Agreement or of the
-----------------
Option granted hereunder shall (a) confer upon Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and each of its subsidiaries to terminate the employment of
Employee, with or without cause, or (c) confer upon Employee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. EMPLOYEE HEREBY
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR NO
REASON, UNLESS EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO A
WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
12. GOVERNING LAW. This Agreement and the Option granted hereunder
-------------
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware.
6
<PAGE>
IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement
as of the Date of Grant.
ZERO CORPORATION
By:________________________________
Title:
EMPLOYEE:
__________________________________
Signature
__________________________________
Street Address
__________________________________
City, State and Zip Code
__________________________________
Social Security Number
7
<PAGE>
ZERO CORPORATION
EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1994 STOCK OPTION PLAN
This Employee Incentive Stock Option Agreement (this "Agreement") is
made and entered into as of the Date of Grant indicated below by and between
ZERO Corporation, a Delaware corporation (the "Company"), and the person named
below as Employee.
WHEREAS, Employee is an employee of the Company and/or one or more of
its subsidiaries; and
WHEREAS, pursuant to the Company's 1994 Stock Option Plan (the
"Plan"), the committee of the Board of Directors of the Company administering
the Plan (the "Committee") has approved the grant to Employee of an option to
purchase shares of the common stock, par value $1.00 per share, of the Company
(the "Common Stock"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
---------------------------------------------
grants to Employee, and Employee hereby accepts, as of the Date of Grant, an
option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 o'clock p.m., Los Angeles time, on the Expiration Date
indicated below and shall be subject to all of the terms and conditions set
forth in this Agreement (the "Option"). On each anniversary of the Date of
Grant, the Option shall become exercisable to purchase ("vest with respect to")
that number of Option Shares (rounded to the nearest whole share) equal to the
total number of Option Shares multiplied by the Annual Vesting Rate indicated
below.
Employee: _____________________
Date of Grant: _______
Number of shares purchasable: _______
Exercise Price per share:* _______
Expiration Date:* _______
Annual Vesting Rate: _____%
_________________
* The Expiration Date shall not be more than 10 years after the Date of Grant
and the Exercise Price per share shall not be less than the Fair Market
Value (as defined in the Plan) per share on the Date of Grant; provided,
however, that if, on the Date of Grant, Employee owns (after application of
the family and other attribution rules of Section 425(d) of the Internal
Revenue Code) more than 10% of the total combined voting power of all
classes of stock of the Company or of its parent or subsidiary
corporations, then the Expiration Date shall not be more than five years
after the Date of Grant and the Exercise Price per share shall not be less
than 110% of the Fair Market Value per share on the Date of Grant.
<PAGE>
The Option is intended to qualify as an incentive stock option under Section 422
of the Internal Revenue Code (an "Incentive Stock Option"). Employee
understands that if the aggregate Fair Market Value (as defined in the Plan and
determined as of the date such options are granted) of the shares of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by Employee during any calendar year (under the Plan and all other
stock option plans of the Company and its parent and subsidiary corporations)
exceeds $100,000, such excess options (taking into account the order in which
they were granted) shall not be treated for tax purposes as Incentive Stock
Options.
2. ACCELERATION OF VESTING AND TERMINATION OF OPTION.
-------------------------------------------------
(a) Termination of Employment.
-------------------------
(i) Retirement. If Employee ceases to be employed by reason of
Employee's retirement in accordance with the Company's then-current
retirement policy ("Retirement"), then (A) the portion of the Option that
has not vested on or prior to the date of such Retirement shall terminate
on such date and (B) the remaining vested portion of the Option shall
terminate upon the earlier of the Expiration Date or 90 days after the date
of such Retirement.
(ii) Death or Permanent Disability. If Employee ceases to be
employed by reason of Employee's death or Permanent Disability (as
hereinafter defined), then (A) the portion of the Option that has not
vested on or prior to the date of Employee's death or Permanent Disability
shall terminate on such date and (B) the remaining vested portion of the
Option shall terminate upon the earlier of the Expiration Date or the first
anniversary of the date of Employee's death or Permanent Disability.
"Permanent Disability" shall mean the 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. Employee shall not be deemed to have a Permanent
Disability until proof of the existence thereof shall have been furnished
to the Board in such form and manner, and at such times, as the Board may
require. Any determination by the Board that Employee does or does not
have a Permanent Disability shall be final and binding upon the Company and
Employee.
(iii) Termination for Cause. If Employee is terminated for
Cause, both the vested and unvested portions of the Option shall terminate
immediately. "Cause" shall mean Employee's (A) conviction by a court of
competent jurisdiction of a felony or serious misdemeanor involving moral
turpitude, (B) willful disregard of any written directive of the Board that
is not inconsistent with the Certificate of Incorporation or Bylaws of the
Company or applicable law, (C) breach of his or her fiduciary duty
involving personal profit, or (D) neglect of his or her duties that has a
material adverse effect on the Company.
(iv) Other Termination. If Employee is terminated other than
for Cause, then (A) the portion of the Option that has not vested on or
prior to the date of such termination shall terminate on such date and (B)
the remaining vested portion of
2
<PAGE>
the Option shall terminate upon the earlier of the Expiration Date or
the 30th day following the date of such termination; provided, however,
that if Employee is terminated without Cause within one year after a Change
of Control, then (x) the portion of the Option that has not vested on or
prior to the date on which Employee is terminated shall fully vest as of
such date and (y) the Option shall terminate upon the earlier of the
Expiration Date or the 30th day following the date on which Employee is
terminated. A "Change of Control" shall mean the first to occur of the
following:.
(1) the date upon which the directors of the Company who
were nominated by the Board for election as directors cease to
constitute a majority of the directors of the Company;
(2) the consummation of a reorganization, merger or
consolidation of the Company (other than a reorganization, merger or
consolidation contemplated by Section 2(d)((ii) or the sole purpose of
which is to change the Company's domicile solely within the United
States) (a) as a result of which the outstanding securities of the
class then subject to the Option are exchanged for or converted into
cash, property and/or securities not issued by the Company and (b) the
terms of which provide that the Option shall continue in effect
thereafter; or
(3) the date of the first public announcement that any
person or entity, together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
such person or entity, shall have become the Beneficial Owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of voting
securities of the Company representing more than 25% of the voting
power of the Company (a "25% Stockholder"); provided, however, that
the terms "person" and "entity," as used in this clause (3), shall not
include (a) the Company or any of its subsidiaries, (b) any employee
benefit plan of the Company or any of its subsidiaries, (c) any entity
holding voting securities of the Company for or pursuant to the terms
of any such plan or (d) any person or entity if the transaction that
resulted in such person or entity becoming a 25% Stockholder was
approved in advance by the Board.
(b) Death Following Termination of Employment. Notwithstanding
-----------------------------------------
anything to the contrary in this Agreement, if Employee shall die at any time
after the termination of his or her employment and prior to the date on which
the Option is terminated pursuant to Section 2(a), then the vested portion of
the Option shall terminate on the earlier of the Expiration Date or the first
anniversary of the date of Optionee's death.
(c) Acceleration of Option by Committee. The Committee, in its sole
-----------------------------------
discretion, may accelerate the exercisability of the Option at any time and for
any reason.
(d) Other Events Causing Acceleration and Termination of Option.
-----------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, the Option shall
become fully
3
<PAGE>
exercisable immediately prior to, and shall terminate upon, the consummation of
any of the following events:
(i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the
Company (other than a reorganization, merger or consolidation the sole
purpose of which is to change the Company's domicile solely within the
United States) the consummation of which results in the outstanding
securities of any class then subject to the Option being exchanged for or
converted into cash, property and/or a different kind of securities, unless
such reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board and the terms
of such reorganization, merger or consolidation shall provide that the
Option shall continue in effect thereafter on terms substantially similar
to those under the Plan; or
(iii) a sale of substantially all of the property and assets
of the Company, unless the terms of such sale shall provide otherwise.
3. ADJUSTMENTS. In the event that the outstanding securities of
-----------
the class then subject to the Option are increased, decreased or exchanged
for or converted into cash, property and/or a different number or kind of
securities, or cash, property and/or securities are distributed in respect
of such outstanding securities, in either case as a result of a
reorganization, merger, consolidation, recapitalization, reclassification,
dividend (other than a regular, quarterly cash dividend) or other
distribution, stock split, reverse stock split or the like, or in the event
that substantially all of the property and assets of the Company are sold,
then, unless such event shall cause the Option to terminate pursuant to
Section 2(d) hereof, the Committee shall make appropriate and proportionate
adjustments in the number and type of shares or other securities or cash or
other property that may thereafter be acquired upon the exercise of the
Option; provided, however, that any such adjustments in the Option shall be
made without changing the aggregate Exercise Price of the then unexercised
portion of the Option.
4. EXERCISE. The Option shall be exercisable during Employee's
--------
lifetime only by Employee or by his or her guardian or legal representative, and
after Employee's death only by the person or entity entitled to do so under
Employee's last will and testament or applicable intestate law. The Option may
only be exercised by the delivery to the Company of a written notice of such
exercise (the "Exercise Notice"), which notice shall specify the number of
Option Shares to be purchased (the "Purchased Shares") and the aggregate
Exercise Price for such shares, together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided, however,
that payment of such aggregate Exercise Price may instead be made, in whole or
in part, by one or more of the following means:
(a) the delivery, concurrently with such exercise and in
accordance with Section 220.3(e)(4) of Regulation T promulgated under the
Exchange Act, of an irrevocable instructions to a broker promptly to
deliver to the Company a specified
4
<PAGE>
dollar amount of the proceeds of a sale of the Option Shares issuable upon
exercise of the Option; or
(b) (i) the delivery to the Company of a certificate or
certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value (as
defined in the Plan) thereof on the date of such exercise), (ii) a
reduction in the amount of Option Shares or other property otherwise
issuable pursuant to the Option and/or (iii) the delivery of a small number
of the shares subject to the Option to be used automatically, in a series
of simultaneous transactions, to pay the exercise price for a large number
of additional shares (i.e,. "pyramiding"), provided that in the case of
clause (i), clause (ii) or clause (iii) the Company is not then prohibited
from purchasing or acquiring such shares of Common Stock and provided
further that Optionee must exercise at least one-third of the Option in
order to take advantage of clause (iii).
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
----------------------------
withhold an amount on account of any tax imposed as a result of the exercise of
the Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax (the "Withholding Liability"), then Employee shall, on the date of exercise
and as a condition to the issuance of the Option Shares, pay the Withholding
Liability to the Company in cash or by check payable to the Company; provided,
however, that payment of the Withholding Liability may instead be made, in whole
or in part, by any means set forth in Section 4(b), provided that the Company is
not then prohibited from purchasing or acquiring such shares of Common Stock.
Employee hereby consents to the Company withholding the full amount of the
Withholding Liability from any compensation or other amounts otherwise payable
to Employee if Employee does not pay the Withholding Liability to the Company on
the date of exercise of the Option, and Employee agrees that the withholding and
payment of any such amount by the Company to the relevant taxing authority shall
constitute full satisfaction of the Company's obligation to pay such
compensation or other amounts to Employee.
6. NOTICES. All notices and other communications required or
-------
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company at
444 South Flower Street, Suite 2100, Los Angeles, California 90071, Attention:
Corporate Secretary, or to Employee at the address set forth beneath his or her
signature on the signature page hereto, or at such other addresses as they may
designate by written notice in the manner aforesaid.
7. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS. Notwithstanding
--------------------------------------------
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on
5
<PAGE>
each stock exchange upon which shares of that class are then listed or (b) in
the opinion of counsel to the Company, such issuance or delivery would cause the
Company to be in violation of or to incur liability under any federal, state or
other securities law, or any requirement of any stock exchange listing agreement
to which the Company is a party, or any other requirement of law or of any
administrative or regulatory body having jurisdiction over the Company.
8. NONTRANSFERABILITY. Neither the Option nor any interest therein
------------------
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution
9. PLAN. The Option is granted pursuant to the Plan, as in effect on
----
the Date of Grant, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive Employee, without his or her consent, of the Option or
of any of Employee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Employee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
Employee or any other person or entity then entitled to exercise the Option.
10. STOCKHOLDER RIGHTS. No person or entity shall be entitled to
------------------
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
11. EMPLOYMENT RIGHTS. No provision of this Agreement or of the
-----------------
Option granted hereunder shall (a) confer upon Employee any right to continue in
the employ of the Company or any of its subsidiaries, (b) affect the right of
the Company and each of its subsidiaries to terminate the employment of
Employee, with or without cause, or (c) confer upon Employee any right to
participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan. EMPLOYEE HEREBY
ACKNOWLEDGES AND AGREES THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY
TERMINATE THE EMPLOYMENT OF EMPLOYEE AT ANY TIME AND FOR ANY REASON, OR FOR NO
REASON, UNLESS EMPLOYEE AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO A
WRITTEN EMPLOYMENT AGREEMENT THAT EXPRESSLY PROVIDES OTHERWISE.
12. GOVERNING LAW. This Agreement and the Option granted hereunder
-------------
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware.
6
<PAGE>
IN WITNESS WHEREOF, the Company and Employee have duly executed this
Agreement as of the Date of Grant.
ZERO CORPORATION
By:_______________________________
Title:
EMPLOYEE:
__________________________________
Signature
__________________________________
Street Address
__________________________________
City, State and Zip Code
__________________________________
Social Security Number
7
<PAGE>
ZERO CORPORATION
NONEMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
PURSUANT TO THE
1994 STOCK OPTION PLAN
This Nonemployee Director Stock Option Agreement (this "Agreement") is
made and entered into as of the Date of Grant indicated below by and between
ZERO Corporation, a Delaware corporation (the "Company"), and the person named
below as Optionee.
WHEREAS, Optionee is a nonemployee director of the Company (a
"Nonemployee Director"); and
WHEREAS, pursuant to the Company's 1994 Stock Option Plan (the
"Plan"), an option to purchase shares of the common stock, par value $1.00 per
share, of the Company (the "Common Stock") has been granted to Optionee, on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. GRANT OF OPTION; CERTAIN TERMS AND CONDITIONS. The Company hereby
---------------------------------------------
grants to Optionee, and Optionee hereby accepts, as of the Date of Grant, an
option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 o'clock p.m., Los Angeles time, on the Expiration Date
indicated below and shall be subject to all of the terms and conditions set
forth in this Agreement (the "Option"). On each anniversary of the Date of
Grant, the Option shall become exercisable to purchase ("vest with respect to")
that number of Option Shares (rounded to the nearest whole share) equal to the
total number of Option Shares multiplied by the Annual Vesting Rate indicated
below.
Optionee: _____________________
Date of Grant: _______
Number of shares purchasable: _______
Exercise Price per share:* _______
Expiration Date:** _______
Annual Vesting Rate: 33-1/3%
___________________
* Greater of Fair Market Value (as defined in the Plan) on Date of Grant or
par value of Option Shares.
** Eighth anniversary of Date of Grant.
<PAGE>
The Option is not intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code.
2. ACCELERATION OF VESTING AND TERMINATION OF OPTION.
-------------------------------------------------
(a) Termination of Nonemployee Director Status.
------------------------------------------
(i) Retirement. If Optionee ceases to be a Nonemployee Director
as a result of not standing for re-election because of the policies of the
Board of Directors of the Company (the "Board") relating to age
("Retirement"), then (A) the portion of the Option that has not vested on
or prior to the date of such Retirement shall fully vest and (B) the Option
shall terminate upon the earlier of the Expiration Date or the 30th day
following the date of such Retirement.
(ii) Death or Permanent Disability. If Optionee shall cease to
be a Nonemployee Director by reason of the death or permanent disability of
Optionee, then (A) the portion of the Option that has not vested on or
prior to the date of death or disability shall terminate on such date,
unless such date is prior to the second anniversary of the Date of Grant,
in which case the Option shall vest with respect to 100% of the Option
Shares, and (B) the remaining vested portion of the Option shall terminate
upon the earlier of the Expiration Date or the first anniversary of the
date of Optionee's death or permanent disability.
(iii) Following a Change of Control. If Optionee ceases to be a
Nonemployee Director within one year after a Change of Control as a result
of Optionee not being nominated for re-election or Optionee being removed
from the Board other than for cause, then (A) the portion of the Option
that has not vested on or prior to the date on which Optionee ceases to be
a Nonemployee Director shall fully vest as of such date and (B) the Option
shall terminate upon the earlier of the Expiration Date or the 30th day
following the date on which Optionee ceases to be a Nonemployee Director.
A "Change of Control" shall mean the first to occur of the following:
(1) the date upon which the directors of the Company who
were nominated by the Board for election as directors cease to
constitute a majority of the directors of the Company;
(2) the consummation of a reorganization, merger or
consolidation of the Company (other than a reorganization, merger or
consolidation contemplated by Section 2(c)(ii) or the sole purpose of
which is to change the Company's domicile solely within the United
States) (a) as a result of which the outstanding securities of the
class then subject to the Option are exchanged for or converted into
cash, property and/or securities not issued by the Company and (b) the
terms of which provide that the Option shall continue in effect
thereafter; or
2
<PAGE>
(3) the date of the first public announcement that any
person or entity, together with all Affiliates and Associates (as such
capitalized terms are defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
such person or entity, shall have become the Beneficial Owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of voting
securities of the Company representing more than 25% of the voting
power of the Company (a "25% Stockholder"); provided, however, that
the terms "person" and "entity," as used in this clause (3), shall not
include (a) the Company or any of its subsidiaries, (b) any employee
benefit plan of the Company or any of its subsidiaries, (c) any entity
holding voting securities of the Company for or pursuant to the terms
of any such plan or (d) any person or entity if the transaction that
resulted in such person or entity becoming a 25% Stockholder was
approved in advance by the Board.
(b) Death Following Termination of Nonemployee Director Status.
----------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, if Optionee shall
die at any time after the date on which he or she ceases to be a Nonemployee
Director and prior to the date on which the Option is terminated pursuant to
Section 2(a), then the vested portion of the Option shall terminate on the
earlier of the Expiration Date or the first anniversary of the date of such
death.
(c) Other Events Causing Acceleration and Termination of Option.
-----------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, the Option shall
become exercisable in full immediately prior to, and shall terminate upon, the
consummation of any of the following events:
(i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the Company
(other than a reorganization, merger or consolidation the sole purpose of
which is to change the Company's domicile solely within the United States)
the consummation of which results in the outstanding securities of any
class then subject to the Option being exchanged for or converted into
cash, property and/or a different kind of securities, unless such
reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board and the terms
of such reorganization, merger or consolidation shall provide that the
Option shall continue in effect thereafter and shall be exercisable to
acquire the number and type of securities or other consideration to which
Optionee would have been entitled had he or she exercised the Option
immediately prior to such reorganization, merger or consolidation; or
(iii) a sale of substantially all of the property and assets of
the Company.
3
<PAGE>
3. ADJUSTMENTS. In the event that the outstanding securities of the
-----------
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of securities,
or cash, property and/or securities are distributed in respect of such
outstanding securities, in either case as a result of a recapitalization,
reclassification, dividend (other than a regular, quarterly cash dividend) or
other distribution, stock split, reverse stock split or the like, then, the
Committee shall make appropriate and proportionate adjustments in the number and
type of shares or other securities or cash or other property that may thereafter
be acquired upon the exercise of the Option; provided, however, that any such
adjustments in the Option shall be made without changing the aggregate Exercise
Price of the then unexercised portion of the Option.
4. EXERCISE. The Option shall be exercisable during Optionee's
--------
lifetime only by Optionee or by his or her guardian or legal representative, and
after Optionee's death only by the person or entity entitled to do so under
Optionee's last will and testament or applicable intestate law. The Option may
only be exercised by the delivery to the Company of a written notice of such
exercise (the "Exercise Notice"), which notice shall specify the number of
Option Shares to be purchased (the "Purchased Shares") and the aggregate
Exercise Price for such shares, together with payment in full of such aggregate
Exercise Price in cash or by check payable to the Company; provided, however,
that payment of such aggregate Exercise Price may instead be made, in whole or
in part, by one or more of the following means:
(a) the delivery, concurrently with such exercise and in
accordance with Section 220.3(e)(4) of Regulation T promulgated under the
Exchange Act, of an irrevocable instructions to a broker promptly to
deliver to the Company a specified dollar amount of the proceeds of a sale
of the Option Shares issuable upon exercise of the Option; or
(b) by (i) the delivery to the Company of a certificate or
certificates representing shares of Common Stock, duly endorsed or
accompanied by a duly executed stock powers, which delivery effectively
transfers to the Company good and valid title to such shares, free and
clear of any pledge, commitment, lien, claim or other encumbrance (such
shares to be valued on the basis of the aggregate Fair Market Value (as
defined in the Plan) thereof on the date of such exercise), (ii) a
reduction in the amount of Option Shares or other property otherwise
issuable pursuant to the Option and/or (iii) the delivery of a small number
of the shares subject to the Option to be used automatically, in a series
of simultaneous transactions, to pay the exercise price for a large number
of additional shares (i.e., "pyramiding"), provided that in the case of
clause (i), clause (ii) or clause (iii) the Company is not then prohibited
from purchasing or acquiring such shares of Common Stock and provided
further that Optionee must exercise at least one-third of the Option in
order to take advantage of clause (iii).
5. PAYMENT OF WITHHOLDING TAXES. If the Company becomes obligated to
----------------------------
withhold an amount on account of any tax imposed as a result of the exercise of
the Option,
4
<PAGE>
including, without limitation, any federal, state, local or other income tax, or
any F.I.C.A., state disability insurance tax or other employment tax (the
"Withholding Liability"), then Optionee shall, on the date of exercise and as a
condition to the issuance of the Option Shares, pay the Withholding Liability to
the Company in cash or by check payable to the Company; provided, however, that
payment of the Withholding Liability may instead be made, in whole or in part,
by any of the means set forth in Section 4(b), provided that the Company is not
then prohibited from purchasing or acquiring such shares of Common Stock.
Optionee hereby consents to the Company withholding the full amount of the
Withholding Liability from any compensation or other amounts otherwise payable
to Optionee if Optionee does not pay the Withholding Liability to the Company on
the date of exercise of the Option, and Optionee agrees that the withholding and
payment of any such amount by the Company to the relevant taxing authority shall
constitute full satisfaction of the Company's obligation to pay such
compensation or other amounts to Optionee.
6. NOTICES. All notices and other communications required or
-------
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company at
444 South Flower Street, Suite 2100, Los Angeles, California 90071, Attention:
Corporate Secretary, or to Optionee at the address set forth beneath his or her
signature on the signature page hereto, or at such other addresses as they may
designate by written notice in the manner aforesaid.
7. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS. Notwithstanding
--------------------------------------------
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (b) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
requirement of any stock exchange listing agreement to which the Company is a
party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company.
8. NONTRANSFERABILITY. Neither the Option nor any interest therein
------------------
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution
9. PLAN. The Option is granted pursuant to the Plan, as in effect on
----
the Date of Grant, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive Optionee, without his or her consent, of the Option or
of any of Optionee's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Optionee. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request
5
<PAGE>
therefor, send a copy of the Plan, in its then-current form, to Optionee or any
other person or entity then entitled to exercise the Option.
10. STOCKHOLDER RIGHTS. No person or entity shall be entitled to
------------------
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.
11. GOVERNING LAW. This Agreement and the Option granted hereunder
-------------
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware.
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement as of the Date of Grant.
ZERO CORPORATION
By:_______________________________
Title:
OPTIONEE:
__________________________________
Signature
__________________________________
Street Address
__________________________________
City, State and Zip Code
__________________________________
Social Security Number
6
<PAGE>
ZERO CORPORATION
RETIREMENT SAVINGS PLAN
AMENDMENT AND RESTATEMENT
TO ADD 401(K) CASH OR DEFERRED ARRANGEMENT
EFFECTIVE AS OF JANUARY 1, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I
GENERAL.................................................. 1
1.1 Plan Name....................................... 1
1.2 Effective Dates................................. 1
ARTICLE II
DEFINITIONS.............................................. 2
2.1 Accounts........................................ 2
2.2 Administrative Committee........................ 3
2.3 Affiliated Company.............................. 3
2.4 Annuity Starting Date........................... 3
2.5 Beneficiary..................................... 4
2.6 Board of Directors.............................. 4
2.7 Break in Service................................ 4
2.8 Code............................................ 5
2.9 Company......................................... 5
2.10 Company Additional Contributions................ 5
2.11 Company Basic Contributions..................... 6
2.12 Company Matching Contributions.................. 6
2.13 Company Stock................................... 6
2.14 Compensation.................................... 6
2.15 Computation Period.............................. 8
2.16 Distributable Benefit........................... 8
2.17 Disability Retirement Date...................... 8
2.18 Effective Date.................................. 8
2.19 Election Period................................. 8
2.20 Eligible Employee............................... 9
2.21 Employee........................................ 9
2.22 Employee Benefits Committee..................... 9
2.23 Employee-Plus Contributions..................... 9
2.24 Employment Commencement Date.................... 10
2.25 Entry Date...................................... 10
2.26 ERISA........................................... 10
2.27 Highly Compensated Employee..................... 10
2.28 Hour of Service................................. 13
2.29 Investment Manager.............................. 14
2.30 Leave of Absence................................ 14
2.31 Normal Retirement............................... 15
2.32 Normal Retirement Date.......................... 15
2.33 Participant..................................... 15
2.34 Participation Commencement Date................. 15
2.35 Participating Company........................... 15
2.36 Plan............................................ 16
2.37 Plan Administrator.............................. 16
2.38 Plan Year....................................... 16
2.39 Pre-Tax Contributions........................... 16
2.40 Prior Plan...................................... 16
2.41 Qualified Election.............................. 16
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
2.42 Qualified Joint and Survivor Annuity............ 18
2.43 Qualified Preretirement Survivor Annuity........ 18
2.44 Social Security Taxable Wage Base............... 18
2.45 Spouse.......................................... 18
2.46 Supplemental Employee Contributions............. 18
2.47 Total and Permanent Disability.................. 18
2.48 Trust and Trust Fund............................ 19
2.49 Trust Agreement................................. 19
2.50 Trust Gain or Loss.............................. 19
2.51 Trustee......................................... 19
2.52 Valuation Date.................................. 19
2.53 Vested Interest................................. 19
2.54 Year of Service................................. 19
ARTICLE III
ELIGIBILITY AND PARTICIPATION............................ 21
3.1 Eligibility to Participate....................... 21
3.2 Participation Commencement Date.................. 21
3.3 Participant Elections and Designations........... 21
3.4 Transfer of Participants......................... 22
3.5 Participation Upon Reemployment.................. 22
ARTICLE IV
PARTICIPANT CONTRIBUTIONS................................ 24
4.1 Election to Contribute........................... 24
4.2 Participant Contribution Amounts................. 24
4.3 Modification, Revocation or Termination of
Contribution Election.......................... 25
4.4 Limitation on Pre-Tax Contributions by Highly
Compensated Employees.......................... 26
4.5 Provisions for Disposition of Excess Pre-Tax
Contributions by Highly Compensated
Employees...................................... 29
4.6 Provisions for Return of Annual Pre-Tax
Contributions in Excess of the Deferral
Limitation..................................... 31
4.7 Character of Amounts Contributed as Pre-Tax
Contributions.................................. 32
4.8 Participant Rollover Contributions............... 32
ARTICLE V
PARTICIPATING COMPANY CONTRIBUTIONS...................... 34
5.1 General.......................................... 34
5.2 Company Basic Contributions...................... 34
5.3 Pre-Tax Contributions............................ 34
5.4 Company Matching Contributions................... 35
5.5 Application of Forfeitures....................... 35
5.6 Transfer Among Participating Companies........... 35
5.7 Requirement for Profits.......................... 35
5.8 Special Limitations on 401(m) Contributions...... 36
5.9 Provisions for Reduction of Excess 401(m)
Contributions by or on Behalf of Highly
Compensated Employees.......................... 39
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
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<C> <S> <C>
5.10 Forfeiture of Company Matching Contributions
Attributable to Excess Pre-Tax
Contributions................................. 41
5.11 Irrevocability.................................. 41
5.12 Adequacy of Trust Fund.......................... 42
ARTICLE VI
INVESTMENT AND VALUATION OF ACCOUNTS..................... 43
6.1 Investment of Participant Accounts............... 43
6.2 Valuation of Participant Accounts................ 44
6.3 Valuation of Distributable Benefits.............. 45
6.4 Accounting Procedures............................ 46
ARTICLE VII
SPECIAL PROVISIONS CONCERNING COMPANY STOCK.............. 47
7.1 Securities Transactions.......................... 47
7.2 Valuation of Company Securities.................. 47
7.3 Allocation of Stock Dividends, Splits and
Cash Dividends................................. 47
7.4 Reserved for Plan Modifications.................. 48
7.5 Voting of Company Stock.......................... 48
7.6 Confidentiality Procedures....................... 49
7.7 Election for Company Stock Distribution.......... 50
7.8 Securities Law Limitation........................ 50
7.9 Investment in Securities Issued by the
Company or an Affiliated Company............... 50
7.10 Rules Regarding Section 16 of the Securities
Exchange Act of 1934........................... 50
ARTICLE VIII
VESTING.................................................. 52
8.1 Vesting.......................................... 52
ARTICLE IX
WITHDRAWALS AND LOANS.................................... 53
9.1 Voluntary Withdrawal from Employee
Supplemental Contributions Account or
Employee IRA Account........................... 53
9.2 Withdrawal of Pre-Tax Contributions.............. 53
9.3 Loans............................................ 56
ARTICLE X
PAYMENT OF BENEFITS...................................... 59
10.1 Retirement Benefits............................. 59
10.2 Termination of Employment....................... 59
10.3 Payment Upon Termination of Employment Due to
Total and Permanent Disability;
Reinstatement................................. 60
10.4 Commencement of Benefits........................ 60
10.5 Normal Form of Benefits......................... 61
10.6 Optional Forms of Benefits...................... 62
10.7 Explanation of Qualified Joint and Survivor
Annuity....................................... 64
10.8 Lump Sum Distributions.......................... 64
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
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<C> <S> <C>
10.9 Election for Direct Rollover of Distributable
Benefit to Eligible Retirement Plan........... 65
10.10 Forfeitures, Repayment......................... 67
10.11 Facility of Payment............................ 68
10.12 Purchase of Annuity Contract To Provide
Benefits..................................... 68
ARTICLE XI
DEATH BENEFITS........................................... 69
11.1 Form of Death Benefits Provided................. 69
11.2 Elections With Respect to Qualified
Preretirement Survivor Annuity Applicable
to Participants Who Entered the Plan Prior
to January 1, 1995............................ 70
11.3 Designation of Beneficiary...................... 71
ARTICLE XII
OPERATION AND ADMINISTRATION OF THE PLAN................. 73
12.1 Plan Administration............................. 73
12.2 Employee Benefits Committee Powers.............. 73
12.3 Administrative Committee Powers................. 74
12.4 Investment Committee Powers..................... 75
12.5 Investment Manager.............................. 76
12.6 Committee Procedures............................ 76
12.7 Compensation of Committees...................... 77
12.8 Resignation and Removal of Members.............. 77
12.9 Appointment of Successors....................... 77
12.10 Records......................................... 78
12.11 Reliance Upon Documents and Opinions............ 78
12.12 Requirement of Proof............................ 79
12.13 Reliance on Committee Memorandum................ 79
12.14 Multiple Fiduciary Capacity..................... 79
12.15 Limitation on Liability......................... 79
12.16 Indemnification................................. 79
12.17 Bonding......................................... 80
12.18 Prohibition Against Certain Actions............. 80
12.19 Plan Expenses................................... 80
12.20 Form and Manner of Participant and
Beneficiary Elections......................... 81
ARTICLE XIII
MERGER OF COMPANY; MERGER OF PLAN........................ 82
13.1 Effect of Reorganization or Transfer of
Assets........................................ 82
13.2 Merger Restriction.............................. 82
ARTICLE XIV
PLAN TERMINATION......................................... 83
14.1 Plan Termination................................ 83
14.2 Rights of Participants.......................... 83
14.3 Trustee's Duties on Termination................. 83
14.4 Partial Termination............................. 84
</TABLE>
iv
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<C> <S> <C>
ARTICLE XV
APPLICATION FOR BENEFITS................................. 85
15.1 Application for Benefits........................ 85
15.2 Action on Application........................... 85
15.3 Appeals......................................... 85
ARTICLE XVI
LIMITATIONS ON CONTRIBUTIONS............................. 87
16.1 General Rule.................................... 87
16.2 Annual Additions................................ 87
16.3 Other Defined Contribution Plans................ 87
16.4 Combined Plan Limitation (Defined Benefit
Plan)......................................... 88
16.5 Adjustments for Excess Annual Additions......... 90
16.6 Affiliated Company.............................. 91
16.7 Compensation.................................... 91
ARTICLE XVII
RESTRICTION ON ALIENATION................................ 93
17.1 General Restrictions Against Alienation......... 93
17.2 Nonconforming Distributions Under Court
Order......................................... 93
ARTICLE XVIII
PLAN AMENDMENTS.......................................... 96
18.1 Amendments...................................... 96
18.2 Retroactive Amendments.......................... 96
ARTICLE XIX
MISCELLANEOUS............................................ 97
19.1 No Enlargement of Employee Rights............... 97
19.2 Mailing of Payments; Lapsed Benefits............ 97
19.3 Addresses....................................... 98
19.4 Notices and Communications...................... 99
19.5 Reporting and Disclosure........................ 99
19.6 Governing Law................................... 99
19.7 Interpretation.................................. 99
19.8 Withholding for Taxes............................100
19.9 Limitation on Company, Participating Company,
Committees and Trustee Liability...............100
19.10 Successors and Assigns...........................100
19.11 Counterparts.....................................100
ARTICLE XX
TOP-HEAVY PLAN RULES......................................101
20.1 Applicability....................................101
20.2 Definitions......................................101
20.3 Top-Heavy Status.................................102
20.4 Minimum Contributions............................105
20.5 Maximum Annual Addition..........................106
20.6 Vesting Rules....................................107
20.7 Non-Eligible Employees...........................107
</TABLE>
LT941720.029
v
<PAGE>
ZERO CORPORATION
RETIREMENT SAVINGS PLAN
ARTICLE I
GENERAL
1.1 Plan Name.
---------
Effective as of August 1, 1994, this instrument evidences the terms of the
"ZERO Corporation Retirement Savings Plan," a tax-qualified profit sharing plan
for the Eligible Employees of ZERO Corporation and other Participating
Companies.
For periods prior to August 1, 1994, this instrument evidences the terms
of the "ZERO Corporation Pension Plan," a tax-qualified money purchase plan for
the Eligible Employees of ZERO Corporation and other Participating Companies.
The Plan is intended to qualify under Code Section 401(a), and with
respect to the portion consisting of a cash or deferred arrangement, to qualify
under Code Section 401(k).
1.2 Effective Dates.
---------------
The original Effective Date of this Plan was April 1, 1955. This
Amendment and Restatement of the Plan includes all of the provisions of the Plan
as in effect as of January 1, 1994, and as of such other dates as expressly
provided herein, and in addition, with respect to the provisions of the Plan
relating to the qualified cash or deferred arrangement, within the meaning of
Code Section 401(k), and Company matching contributions, within the meaning of
Code Section 401(m), such provisions as in effect as of January 1, 1995.
<PAGE>
ARTICLE II
DEFINITIONS
2.1 Accounts.
--------
"Accounts" or "Participant's Accounts" shall mean the following Plan
accounts maintained by the Committee for each Participant, as required by
Article VI:
(a) "Company Basic Contributions Account" shall mean the account
established and maintained for each Participant under Article VI for
purposes of holding and accounting for amounts which are attributable to
Company Basic Contributions in accordance with Section 5.2.
(b) "Pre-Tax Contributions Account" shall mean the account
established and maintained for each Participant to reflect amounts held
in the Trust Fund on behalf of such Participant which are attributable to
Pre-Tax Contributions by a Participating Company on behalf of the
Participant in accordance with Code Section 401(k), as provided in
Section 5.3.
(c) "Company Matching Contributions Account" shall mean the
account established and maintained for each Participant to reflect
amounts held in the Trust Fund on behalf of such Participant which are
attributable to Company Matching Contributions by a Participating Company
under Section 5.4.
(d) "Employee-Plus Contributions Account" shall mean the account
established and maintained for each Participant under Article VI for
purposes of holding and accounting for amounts which are attributable to
the "Four Percent Contribution" in accordance with the provisions of the
Plan as in effect prior to January 1, 1982.
(e) "Company Additional Contributions Account" shall mean the
account established and maintained for each Participant under Article VI
for purposes of holding and accounting for amounts which are attributable
to the "Company Profit Sharing Contribution" in accordance with the
provisions of the Plan as in effect prior to January 1, 1982.
(f) "Employee Supplemental Contributions Account" shall mean the
account established and maintained for each Participant under Article VI
for purposes of holding and accounting for amounts which are attributable
to Employee Supplemental Contributions made prior to January 1, 1987.
2
<PAGE>
(g) "Rollover Account" shall mean the account established and
maintained for each Participant under Article VI for purposes of holding
and accounting for amounts which are attributable to any Participant
rollover contributions in accordance with Article IV.
(h) "Employee IRA Account" shall mean the account established and
maintained for each Participant under Article VI for purposes of holding
and accounting for amounts attributable to any Participant contributions
designated as "qualified deductible employee contributions," within the
meaning of Code Section 219 as in effect prior to January 1, 1987.
2.2 Administrative Committee.
------------------------
"Administrative Committee" shall mean the Committee as appointed from time
to time in accordance with Section 12.1.
2.3 Affiliated Company.
------------------
"Affiliated Company" shall mean:
(a) Any corporation which is included in a controlled group of
corporations, within the meaning of Section 414(b) of the Code, that
includes a Participating Company,
(b) Any trade or business which is under common control of a
Participating Company within the meaning of Section 414(c) of the Code,
(c) Any member of an affiliated service group, within the meaning
of Section 414(m) of the Code, that includes a Participating Company, and
(d) Any other entity required to be aggregated with a
Participating Company pursuant to regulations under Section 414(o) of the
Code.
Notwithstanding the foregoing, an entity shall be deemed to be an
Affiliated Company only with respect to periods during which the test of Code
Section 414(b), (c), (m), or (o), as applicable, is met.
2.4 Annuity Starting Date.
---------------------
"Annuity Starting Date" shall mean the first day of the first period for
which an amount is paid as an annuity or in any other form. If a Participant's
Distributable Benefit is not paid in the form of an annuity within the meaning
of Section 72 of the Code, or is not over
3
<PAGE>
Thirty-Five Hundred Dollars ($3,500), the date of distribution may be treated as
the Annuity Starting Date.
2.5 Beneficiary.
-----------
"Beneficiary" or "Beneficiaries" means the person or persons last
designated by a Participant in accordance with Section 11.3 or, if there is no
designated Beneficiary or surviving Beneficiary, the person or persons entitled
under Section 11.3 to receive the interest of a deceased Participant.
2.6 Board of Directors.
------------------
"Board of Directors" shall mean the Board of Directors (or its delegate)
of ZERO Corporation, as it may from time to time be constituted.
2.7 Break in Service.
----------------
"Break in Service" shall mean a Computation Period during which an
individual completes not more than 500 Hours of Service. A Break in Service
shall be sustained, or be deemed to occur, on the last day of such Computation
Period. Solely for purposes of determining whether an Employee sustains a Break
in Service, the provisions of Subsections 2.7(a)-(d) shall apply to an
Employee's period of absence for maternity or paternity reasons.
(a) An Employee's period of absence shall be for maternity or
paternity reasons if it is--
(i) By reason of the pregnancy of the Employee,
(ii) By reason of the birth of a child of the Employee,
(iii) By reason of the placement of a child with the
Employee in connection with the adoption of the child by the
Employee, or
(iv) For purposes of caring for the child for a period
beginning immediately following the birth or placement.
(b) The number of Hours of Service which shall be credited to an
Employee for a period of absence described in Section 2.7(a) above shall
be --
(i) The number which otherwise would normally have been
credited to the Employee but for the absence, or
4
<PAGE>
(ii) If the Administrative Committee determines that the
number described in (i) above can not be determined, eight (8) Hours
of Service per day of such absence;
provided, however, that the total number of hours treated as Hours of
Service under this Section 2.7(b) shall not exceed five hundred one (501)
and that these Hours of Service shall be taken into account solely for
purposes of determining whether or not the Employee has incurred a Break
in Service.
(c) The Hours described in Section 2.7(b) above shall be
credited to the Computation Period --
(i) In which the absence from work begins, if the Employee
would be prevented from incurring a Break in Service in that
Computation Period solely because of such crediting, or
(ii) In any other case, in the immediately following
Computation Period.
(d) Subsections 2.7(a)-(c) above shall not apply unless the
Employee provides such timely information as the Administrative Committee
may reasonably require to establish that --
(i) The absence is for reasons described in Section 2.7(a),
and
(ii) The number of days for which there was such an
absence.
2.8 Code.
----
"Code" shall mean the Internal Revenue Code of 1986 and amendments
thereto.
2.9 Company.
-------
"Company" shall mean ZERO Corporation or any successor thereof, if its
successor shall adopt this Plan.
2.10 Company Additional Contributions.
--------------------------------
"Company Additional Contributions" shall mean contributions by
Participating Companies in accordance with the provisions of the Plan as in
effect prior to January 1, 1982.
5
<PAGE>
2.11 Company Basic Contributions.
---------------------------
"Company Basic Contributions" shall mean contributions made by
Participating Companies pursuant to Section 5.1(a).
2.12 Company Matching Contributions.
------------------------------
"Company Matching Contributions" shall mean Participating Company
contributions that are geared to Participant Pre-Tax Contributions, as provided
in Section 5.3 of Article V.
2.13 Company Stock.
-------------
"Company Stock" shall mean any class of stock of the Company which both
constitutes "qualifying employer securities" as defined in Section 407(d) of
ERISA and "employer securities" as defined in Section 409(1) of the Code.
2.14 Compensation.
------------
(a) Except as otherwise provided in Section 16.7, "Compensation"
shall mean salary or wages, overtime, bonuses, gratuities (subject to
FICA tax), vacation and holiday pay paid by a Participating Company
during a Plan Year by reason of services performed by an Employee which
are subject to FICA taxes under Section 3121(a) of the Code, determined
before reduction pursuant to Section 401(k) of the Code, subject,
however, to the following special rules:
(i) Fringe benefits, and contributions by a Participating
Company to and benefits under any employee benefit plan shall not be
taken into account in determining Compensation;
(ii) Amounts deducted pursuant to authorization by an
Employee or pursuant to requirements of law shall be included in
compensation;
(iii) Amounts paid or payable by reason of services
performed during any period in which an Employee is not a
Participant under this Plan shall not be taken into account in
determining Compensation;
(iv) Amounts not included in the Employee's gross income
for his/her current taxable year pursuant to nonqualified deferred
compensation plans shall be taken into account in determining
Compensation;
6
<PAGE>
(v) Amounts included in any Employee's gross income with
respect to life insurance as provided by Code Section 79, car
allowance, or amounts attributable to personal use of Company-owned
automobiles shall not be taken into account in determining
Compensation;
(vi) Except for the Company's contribution on behalf of the
Participant to the ZERO Corporation Employee Stock Purchase Plan,
amounts attributed to a plan, program or other arrangement based on
or involving Company Stock which would otherwise be treated as
compensation shall not be taken into account in determining
Compensation.
(b) "Compensation" of any Employee taken into account under
Article IV or Article V for any Plan Year that begins on or after January
1, 1989 shall not exceed the annual compensation limit in effect under
Section 401(a)(17) of the Code on the January 1 coinciding with or
immediately preceding the first day of such Plan Year, as provided in
this Subsection.
(i) "Compensation" of any Employee taken into account for
any Plan Year that begins on or after January 1, 1994 shall not
exceed $150,000, as that amount is adjusted in accordance with
Section 401(a)(17)(B) of the Code.
(ii) "Compensation" of any Employee taken into account for
any Plan Year that begins on or after January 1, 1989 and before
January 1, 1994, shall not exceed $200,000, as that amount is
adjusted at the same time and in the same manner as under Section
415(d) of the Code.
(iii) If Compensation for a period of less than twelve (12)
months is used for any Plan Year, then the otherwise applicable
annual Compensation limit provided under this Subsection is reduced
in the same proportion as the reduction in the twelve-month period.
(iv) The family aggregation rules of Section 414(q)(6) of
the Code shall apply for purposes of the annual Compensation limit
provided under this Subsection, except in applying such rules, the
term "family" shall include only the Spouse of the Employee and any
lineal descendants of the Employee who have not attained age 19
before the close of the year. If, as a result of the application of
such rules the limit is exceeded, then, the limit shall be prorated
among
7
<PAGE>
the affected individuals in proportion to each such individual's
Compensation as determined under this Subsection prior to the
application of this limit.
2.15 Computation Period.
------------------
"Computation Period" shall mean the consecutive twelve-month period used
for purposes of determining whether the Employee is to be credited with a Break
in Service or a Year of Service. For purposes of determining eligibility to
participate in the Plan in accordance with Section 3.1 and a Participant's
Vested Interest in his/her Accounts in accordance with Section 8.1, an
individual's Computation Period shall be the twelve-month period commencing on
his/her Employment Commencement Date and each anniversary thereof.
2.16 Distributable Benefit.
---------------------
"Distributable Benefit" shall mean the value of a Participant's Vested
Interest in his/her Accounts under the Plan which is determined and
distributable to the Participant, or his/her Beneficiary, in accordance with the
provisions of this Plan upon termination of the Participant's employment for any
reason.
2.17 Disability Retirement Date.
--------------------------
"Disability Retirement Date" shall mean a Participant's retirement date
prior to the Normal Retirement Date which is established by a Participating
Company for a Participant who is found by the Administrative Committee to have
suffered Total and Permanent Disability.
2.18 Effective Date.
--------------
"Effective Date" shall mean the effective date of this amended and
restated Plan which is January 1, 1994, unless expressly provided herein;
provided, however, with respect to the portion of the Plan consisting of a
qualified cash or deferred arrangement, within the meaning of Code section
401(k), and matching contributions, within the meaning of Code Section 401(m),
"Effective Date" shall mean January 1, 1995.
2.19 Election Period.
---------------
"Election Period" shall mean:
(a) In the case of a Qualified Election to waive the Qualified
Joint and Survivor Annuity, the ninety (90) day period ending on the
Annuity Starting Date, or
8
<PAGE>
(b) In the case of a Qualified Election to waive the Qualified
Preretirement Survivor Annuity, the period that begins on the first day
the Participant satisfies the eligibility and participation requirements
of Article III and ends on the date of the Participant's death.
2.20 Eligible Employee.
-----------------
"Eligible Employee" shall include any individual who is employed by a
Participating Company, except any Employee who is
(i) covered by a collective bargaining agreement to which the
Participating Company is a party, unless the collective bargaining
agreement provides for coverage under this Plan, or
(ii) a leased employee as defined in Section 414(n) of the Code.
2.21 Employee.
--------
(a) "Employee" shall mean each person currently employed in any
capacity by a Participating Company or an Affiliated Company (including a
person deemed to be employed by a Participating Company pursuant to Code
Section 414(n)), any portion of whose income is subject to withholding of
income tax by a Participating Company or an Affiliated Company and/or for
whom Social Security contributions are made by a Participating Company or
Affiliated Company. The term "Employee" shall also include an Employee
who is on an approved Leave of Absence, as provided in Section 2.31.
(b) Although Eligible Employees are the only class of Employees
eligible to participate in this Plan, the term "Employee" is used to
refer to persons employed in a non-Eligible Employee capacity as well as
in the Eligible Employee category.
2.22 Employee Benefits Committee.
---------------------------
"Employee Benefits Committee" shall mean the ZERO Corporation Employee
Benefits Committee as appointed from time to time by the Board of Directors of
ZERO Corporation.
2.23 Employee-Plus Contributions.
---------------------------
"Employee-Plus Contributions" shall mean the Participant's contributions
in accordance with the provisions of the Plan as in effect prior to January 1,
1982.
9
<PAGE>
2.24 Employment Commencement Date.
----------------------------
"Employment Commencement Date" shall mean each of the following:
(a) The date on which an Employee first performs an Hour of
Service in any capacity for a Participating Company or an Affiliated
Company with respect to which the Employee is compensated or is entitled
to compensation by the Participating Company or the Affiliated Company.
(b) In the case of an Employee whose employment is terminated and
who is subsequently reemployed by a Participating Company or an
Affiliated Company after incurring a Break in Service, the term
"Employment Commencement Date" shall also mean the first day following
the termination of employment on which the Employee performs an Hour of
Service for a Participating Company or an Affiliated Company with respect
to which he/she is compensated or entitled to compensation by the
Participating Company or Affiliated Company.
2.25 Entry Date.
----------
"Entry Date" shall mean the first day of each calendar month.
2.26 ERISA.
-----
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
2.27 Highly Compensated Employee.
---------------------------
(a) "Highly Compensated Employee" shall mean any Employee who,
during the Plan Year, or the preceding Plan Year,
(i) was at any time a Five-Percent Owner, as defined in
Section 20.2(b),
(ii) received Compensation from a Participating Company in
excess of $75,000, as adjusted by the Secretary of the Treasury at
the same time and in the same manner as under Section 415(d) of the
Code,
(iii) received Compensation from a Participating Company in
excess of $50,000, as adjusted by the Secretary of the Treasury at
the same time and in the same manner as under
10
<PAGE>
Section 415(d) of the Code, and was in the top-paid group of
Employees for such Plan Year, or
(iv) was at any time an officer and received Compensation
greater than fifty percent (50%) of the amount in effect under
Section 415(b)(1)(A) of the Code for such Plan Year.
(b) Determination of a Highly Compensated Employee shall be in
accordance with the following special rules:
(i) In the case of the Plan Year for which the relevant
determination is being made, an Employee not described in Paragraph
(ii), (iii), or (iv) of (a) above for the preceding Plan Year
(without regard to Paragraph (i)) shall not be treated as described
in Paragraph (ii), (iii), or (iv) of (a) above unless such Employee
is a member of the group consisting of the 100 Employees paid the
greatest Compensation during the Plan Year for which such
determination is being made.
(ii) An Employee shall be treated as a Five-Percent Owner
for any Plan Year if at any time during such Plan Year such Employee
was a Five-Percent Owner (as defined in Section 20.2(b)).
(iii) An Employee is in the top-paid group of Employees for
any Plan Year if such Employee is in the group consisting of the top
twenty percent (20%) of the Employees when ranked on the basis of
Compensation paid during such Plan Year.
(iv) For purposes of Section 2.27(a)(iv), no more than
fifty (50) Employees (or, if lesser, the greater of three (3)
Employees or ten percent (10%) of the Employees) shall be treated as
officers. To the extent required by Code Section 414(q), if for any
Plan Year no officer of a Participating Company is described in
Section 2.27(a)(iv), the highest paid officer of a Participating
Company for such year shall be treated as described in that section.
(v) If any individual is a "family member" with respect to
a Five-Percent Owner or of a Highly Compensated Employee in the
group consisting of the ten (10) Highly Compensated Employees paid
the greatest Compensation during the Plan Year, then
11
<PAGE>
(A) such individual shall not be considered a separate
Employee, and
(B) any Compensation paid to such individual (and any
applicable contribution or benefit on behalf of such
individual) shall be treated as if it were paid to (or on
behalf of) the Five-Percent Owner or Highly Compensated
Employee.
For purposes of this Paragraph (v), the term "family member" means,
with respect to any Employee, such Employee's Spouse and lineal
ascendants or descendants and the spouses of such lineal ascendants
or descendants.
(vi) For purposes of this Section 2.27 the term
"Compensation" means Compensation as set forth in Section 16.7. The
determination under this Paragraph (vi) shall be made without regard
to Sections 125, 402(e)(3), and 401(h)(1)(B), and in the case of
Participating Company contributions made pursuant to a salary
reduction agreement, without regard to Section 403(b).
(vii) For purposes of determining the number of Employees
in the top-paid group under Section 2.27(a)(iii) above, the
following Employees shall be excluded:
(A) Employees who have not completed six (6) months of
service,
(B) Employees who normally work less than 17-1/2 hours
per week,
(C) Employees who normally work not more than six (6)
months during any Plan Year, and
(D) Employees who have not attained age 21,
(E) Except to the extent provided in Treasury
Regulations, Employees who are included in a unit of employees
covered by an agreement which the Secretary of Labor finds to
be a collective bargaining agreement between Employee
representatives and a Participating Company, and
(F) Employees who are nonresident aliens and who
receive no earned income (within the meaning of Section
911(d)(2))
12
<PAGE>
from a Participating Company which constitutes income from
sources within the United States (within the meaning of
Section 861(a)(3)).
A Participating Company may elect to apply Subparagraphs (A) through
(D) above by substituting a shorter period of service, smaller
number of hours or months, or lower age for the period of service,
number of hours or months, or (as the case may be) than as specified
in such Subparagraphs.
(viii) A former Employee shall be treated as a Highly
Compensated Employee if:
(A) such Employee was a Highly Compensated Employee
when such Employee terminated employment with a Participating
Company, or
(B) such Employee was a Highly Compensated Employee at
any time after attaining age fifty-five (55).
(ix) Code Sections 414(b), (c), (m), (n), and (o) shall be
applied before the application of this Section 2.27.
(c) To the extent permissible under Code Section 414(q), the
Administrative Committee may determine which Employees shall be
categorized as Highly Compensated Employees by applying a simplified
method prescribed by the Internal Revenue Service.
2.28 Hour of Service.
---------------
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by a
Participating Company or an Affiliated Company or entitled to
payment for the performance of services as an Employee.
(ii) Each hour in or attributable to a period of time
during which the Employee performs no duties (irrespective of
whether he/she has terminated his/her employment) due to a vacation,
holiday, illness, incapacity (including pregnancy or disability),
layoff, jury duty, military duty or a Leave of Absence, for which
he/she is so paid or so entitled to payment by the Participating
Company or an Affiliated Company, whether direct
13
<PAGE>
or indirect. However, no such hours shall be credited to an Employee
if such Employee is directly or indirectly paid or entitled to
payment for such hours and if such payment or entitlement is made or
due under a plan maintained solely for the purpose of complying with
applicable workers' compensation, unemployment compensation or
disability insurance laws or is a payment which solely reimburses
the Employee for medical or medically related expenses incurred by
him/her.
(iii) Each hour for which he/she is entitled to back pay,
irrespective of mitigation of damages, whether awarded or agreed to
by the Participating Company or an Affiliated Company, provided that
such Employee has not previously been credited with an Hour of
Service with respect to such hour under (a)(i) or (ii) above.
(b) Hours of Service under Section 2.28(a)(ii) and (a)(iii) shall
be calculated in accordance with Department of Labor Regulation 29 C.F.R.
(S) 2530.200b-2(b). Hours of Service shall be credited to the
appropriate computation period according to the Department of Labor
Regulation (S) 2530.200b-2(c). However, an Employee will not be
considered as being entitled to payment until the date when the
Participating Company or the Affiliated Company would normally make
payment to the Employee for such Hour of Service.
(c) In lieu of any other method of crediting Hours of Service, in
the case of an Employee for whom records of hours worked are not required
by applicable law to be kept, forty-five Hours of Service shall be deemed
earned for each week for which one or more Hours of Service would be
credited pursuant to the preceding provisions of this Section 2.28.
2.29 Investment Manager.
------------------
"Investment Manager" means the one or more Investment Managers, if any,
that may be appointed pursuant to Article X.
2.30 Leave of Absence.
----------------
"Leave of Absence" shall mean a leave granted by a Participating Company,
in accordance with rules uniformly applied to all Employees, for reasons of
health, military or public service or for reasons determined by the
Participating Company to be in its best interests. A Participant's employment
is not considered terminated for purposes of the Plan if the Employee has been
on leave of
14
<PAGE>
absence with the consent of a Participating Company, provided that
he/she returns to the employ of the Participating Company at the expiration of
such leave or such longer period as may be prescribed by law in the case of a
Participant who is a member of the armed forces of the United States.
Participants who do not return to the employ of the Participating Company within
ten days following the end of the leave of absence, or within the required time
in case of service with the armed forces, shall be deemed to have terminated
their employment as of the date when their leave began, unless such failure to
return was the result of their death, Total and Permanent Disability or Normal
Retirement.
2.31 Normal Retirement.
-----------------
"Normal Retirement" shall mean a Participant's termination of employment
on or after attaining the Plan's Normal Retirement Date.
2.32 Normal Retirement Date.
----------------------
"Normal Retirement Date" shall mean the Participant's sixty-fifth (65)
birthday.
2.33 Participant.
-----------
"Participant" shall mean
(a) any Eligible Employee who has satisfied the participation
requirements set forth in Section 3.1, and commenced participation in
accordance with Section 3.2, or
(b) any person for whom an Account is maintained under the Plan
and whose Account, representing such person's interest in the Trust Fund,
has not been distributed or otherwise disposed of in accordance with
applicable law.
2.34 Participation Commencement Date.
-------------------------------
"Participation Commencement Date" shall mean the Entry Date on which an
Employee's participation in this Plan may commence in accordance with the
provisions of Article III.
2.35 Participating Company.
---------------------
"Participating Company" shall mean the Company and any Affiliated Company
which may be included in this Plan by designation of the Board of Directors and
which Affiliated Company by appropriate action of its governing body adopts this
Plan.
15
<PAGE>
2.36 Plan.
----
"Plan" shall mean, effective as of August 1, 1994, the ZERO Corporation
Retirement Savings Plan herein set forth, and as it may be amended from time to
time. Prior to August 1, 1994, "Plan" shall mean the ZERO Corporation Pension
Plan, as herein set forth.
2.37 Plan Administrator.
------------------
"Plan Administrator" shall mean the administrator of the Plan, within the
meaning of Section 3(16)(A) of ERISA. The Plan Administrator shall be ZERO
Corporation.
2.38 Plan Year.
---------
"Plan Year" shall mean the calendar year.
2.39 Pre-Tax Contributions.
---------------------
"Pre-Tax Contributions" shall mean those amounts contributed to the Plan
as a result of a salary or wage reduction election made by the Participant in
accordance with Section 5.3 and other applicable provisions of the Plan, to the
extent such contributions qualify for treatment as contributions made under a
"qualified cash or deferred arrangement" within the meaning of Section 401(k) of
the Code.
2.40 Prior Plan.
----------
"Prior Plan" shall mean the ZERO Corporation Profit Sharing Plan as in
effect prior to April 1, 1978.
2.41 Qualified Election.
------------------
"Qualified Election" shall mean any Participant election relating to a
waiver of the Qualified Joint and Survivor Annuity or the Qualified
Preretirement Survivor Annuity, the election of an optional form, a designation
of a Beneficiary, or a consent to an Annuity Starting Date which is prior to
Normal Retirement Date, which election acknowledges the effect of such election
and is made during the applicable Election Period in accordance with the
requirements of this Section 2.41 and in the manner and form as prescribed by
the Administrative Committee.
(a) To the extent required under Section 417 of the Code, no
election by a Participant shall be deemed to be a Qualified Election
unless the Spouse, if any, of the Participant consents in writing to (i)
the designation of any Beneficiary in addition to or other than the
Spouse, (ii) the specified optional form of benefit elected by the
Participant (including remaining
16
<PAGE>
benefits that the Beneficiary may receive), and (iii) if the Annuity
Starting Date is prior to the Participant's Normal Retirement Date and
benefits are not paid as a Qualified Joint and Survivor Annuity, the
Annuity Starting Date. The consent of the Spouse shall acknowledge the
effect of such consent and shall be witnessed by a Plan representative or
a notary public.
(b) To the extent required under Section 411(a)(11) and Section
417 of the Code, no election by a Participant to an Annuity Starting Date
that is prior to the Participant's Normal Retirement Date shall be deemed
to be a Qualified Election unless the Qualified Election is made after
the Participant is notified of the right to defer payment to Normal
Retirement Date. Such notice must be given at least thirty (30) days and
not more than ninety (90) days prior to the Participant's Annuity
Starting Date.
(c) Notwithstanding the requirement for the consent of a Spouse,
if the Participant warrants to the Administrative Committee that such
written consent may not be obtained because there is no Spouse or the
Spouse cannot be located or for any other reason as the Administrative
Committee determines to be consistent with the requirements of Section
417 of the Code, a Participant's election without spousal consent may be
deemed a Qualified Election; provided, however, that the Administrative
Committee may require the Participant in such case to produce such
evidence of the Spouse's unavailability or other circumstances as the
Administrative Committee deems to be appropriate.
(d) A Qualified Election under this provision will be valid only
with respect to the Spouse who consented to the Qualified Election, or in
the event of a Qualified Election in which the Spouse's consent has not
been obtained, with respect to a designated Spouse (e.g., that Spouse who
cannot be located).
(e) Any election by a Participant to change a Qualified Election
shall be subject to the spousal consent requirements of this Section
2.41. Subject to the foregoing (relating to a change by a Participant),
the consent by a Spouse to a Qualified Election shall be irrevocable.
The number of changes in a Qualified Election by a Participant shall not
be limited during any applicable Election Period.
(f) An election by a Participant which, by reason of a failure to
obtain required spousal consent could not be given effect when made, may
later be given effect if at the relevant date the Participant has no
17
<PAGE>
Spouse or is not then otherwise required to have spousal consent.
2.42 Qualified Joint and Survivor Annuity.
------------------------------------
"Qualified Joint and Survivor Annuity" means an annuity for the life of
the Participant with a survivor annuity for the life of his/her Spouse which is
fifty percent (50%) of the amount of the annuity which is payable during the
joint lives of the Participant and the Spouse.
2.43 Qualified Preretirement Survivor Annuity.
----------------------------------------
"Qualified Preretirement Survivor Annuity" means a survivor annuity for
the life of the surviving Spouse of the Participant.
2.44 Social Security Taxable Wage Base.
---------------------------------
"Social Security Taxable Wage Base" shall mean the maximum amount of
"wages" taken into account under the Federal Insurance Contributions Act, as
defined and limited in Section 3l2l of the Code, as such amounts are determined
under Section 230 of the Social Security Act for each calendar year.
2.45 Spouse.
------
"Spouse" shall mean the person to whom a Participant is married as of the
Participant's Annuity Starting Date or, in the case of a Participant who dies
prior to his/her Annuity Starting Date, the person to whom the deceased
Participant is married on the date of his/her death.
2.46 Supplemental Employee Contributions.
-----------------------------------
"Supplemental Employee Contributions" means the Participant's
contributions made prior to January 1, 1987.
2.47 Total and Permanent Disability.
------------------------------
An individual shall be considered to be suffering from a Total and
Permanent Disability if the Administrative Committee determines that he/she is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment. An individual's disabled status
shall be determined by the Administrative Committee, based on such evidence as
the Administrative Committee determines to be sufficient.
18
<PAGE>
2.48 Trust and Trust Fund.
--------------------
"Trust" or "Trust Fund" shall mean the one or more trusts created for
funding purposes under the Plan.
2.49 Trust Agreement.
---------------
"Trust Agreement" shall mean that certain Agreement between the Company
and the Trustee, or any successor Trustee appointed by the Company, providing
for the investment and administration of the Trust Fund.
2.50 Trust Gain or Loss.
------------------
"Trust Gain or Loss" shall mean any realized net income or loss plus or
minus any increase or decrease of the fair market value of the assets of the
Trust Fund as of a Valuation Date compared with the valuation of the Trust Fund
as of the immediately preceding Valuation Date, excluding the amount of any
payments to or from the Trust Fund during the period. To the extent the assets
of the Trust Fund are allocated to segregated investment funds in accordance
with Section 6.1, Trust Gain or Loss shall be determined separately for each
such segregated investment fund.
2.51 Trustee.
-------
"Trustee" shall mean the Trustee under the Trust Agreement.
2.52 Valuation Date.
--------------
"Valuation Date" shall mean the date as of which the Trustee shall
determine the value of the assets in the Trust Fund for purposes of determining
the value of each Account therein. Such Valuation Date shall be any day that the
New York Stock Exchange is open for business.
2.53 Vested Interest.
---------------
"Vested Interest" shall mean the interest of a Participant in the Trust
Fund which has become vested and nonforfeitable pursuant to the provisions of
Article VIII.
2.54 Year of Service.
---------------
An Employee's Years of Service credit shall be determined in accordance
with the following provisions of this Section 2.54.
(a) "Year of Service" shall mean a Computation Period during
which the Employee completes one thousand (1,000) or more Hours of
Service for a Participating Company or an Affiliated Company.
19
<PAGE>
(b) In no instance will an Employee be credited with more than
one (1) Year of Service with respect to service performed in a single
Computation Period.
(c) In the case of an Employee who sustains one or more Breaks in
Service before he/she has any Vested Interest in his/her Accounts, Years
of Service prior to the first such Break shall be disregarded if the
number of consecutive Breaks in Service equals or exceeds the greater of
(i) five Breaks in Service (5), or (ii) the number of Years of Service
(computed taking this Subsection 2.54(c) into account) prior to the first
such Break.
20
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility to Participate.
--------------------------
(a) Every Eligible Employee shall become eligible to participate
in the Plan on the Entry Date coinciding with or immediately following
the date he/she completes at least one (1) Year of Service.
(b) If an Employee who is not an Eligible Employee becomes an
Eligible Employee, he/she shall become eligible to participate in the
Plan as of the Entry Date coinciding with or immediately following the
later of (i) the date he/she becomes an Eligible Employee, or (ii) the
date he/she completes at least one (1) Year of Service.
(c) Subject to the provisions of Section 3.5, if an Eligible
Employee ceases to be an Eligible Employee he/she shall again become
eligible to participate in the Plan as of the Entry Date coinciding with
or immediately following the later of (i) the date he/she again becomes
an Eligible Employee, or (ii) the date he/she completes at least one (1)
Year of Service.
3.2 Participation Commencement Date.
-------------------------------
The Participation Commencement Date of an Eligible Employee shall
be the Entry Date coinciding with or next following the date on which
he/she satisfies the requirements set forth in Section 3.1.
3.3 Participant Elections and Designations.
--------------------------------------
(a) An Eligible Employee who has satisfied the requirements of
Section 3.1 above may elect to make Pre-Tax Contributions effective as of
the first day of any full payroll period coinciding with or following
his/her Participation Commencement Date by filing a Pre-Tax Contribution
election prior to the first day of such payroll period in accordance with
rules and procedures established by the Administrative Committee pursuant
to the provisions of Article IV. To the extent required by the
Administrative Committee, a Pre-Tax Contribution election shall be filed
within a prescribed time period prior to becoming effective.
(b) Prior to his/her Participation Commencement Date, an Eligible
Employee shall take such actions and complete such forms as may be
prescribed or approved by the Administrative Committee, including the
designation of investment funds for the investment of
21
<PAGE>
contributions allocated to his/her Accounts, as provided in Article VI,
and the designation of a Beneficiary or Beneficiaries to receive any
payment which may be due under the Plan upon his/her death, as provided
in Section 11.3.
(c) It shall be the responsibility of each Participant to verify
that the investment of his/her Accounts under the Plan is in accordance
with his investment designation, and to periodically review his/her
Beneficiary designation. It shall also be the responsibility of an
Eligible Employee who elects to contribute to this Plan to verify that
amounts of his/her Pre-Tax Contributions are in accordance with his/her
Pre-Tax Contribution election.
3.4 Transfer of Participants.
------------------------
A Participant who is transferred from one Participating Company to another
Participating Company shall continue as a Participant, to vest in accordance
with Section 8.1, and if such Participant continues to be an Eligible Employee
following such transfer, Company Basic Contributions shall continue to be made
on his/her behalf as provided in Section 5.2 and such Participant shall be
eligible to make Pre-Tax Contributions in accordance with Article IV. A
Participant who is transferred from a Participating Company to an Affiliated
Company which has not elected to be a Participating Company shall continue as a
Participant and to vest in accordance with Section 8.1, but shall no longer have
Company Basic Contributions made on his/her behalf under Article V or be
eligible to make Pre-Tax Contributions under Article IV.
3.5 Participation Upon Reemployment.
-------------------------------
If an Employee's employment with a Participating Company terminates and
he/she is subsequently rehired as an Eligible Employee, he/she shall be eligible
to commence or recommence participation immediately, provided he/she satisfies
or has satisfied the requirements of Section 3.1.
22
<PAGE>
[PAGE 23 PURPOSELY LEFT BLANK]
23
<PAGE>
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.1 Election to Contribute.
----------------------
(a) Effective as of January 1, 1995, each Eligible Employee who
has satisfied the requirements of Section 3.1 may elect to make Pre-Tax
Contributions by filing a Pre-Tax Contribution election in accordance
with Section 3.2 in which he/she elects to have a whole percentage of
Compensation contributed to the Plan for each payroll period that the
contribution election is in effect, as provided in Section 4.2.
(b) A Participant's Pre-Tax Contribution election shall be
effective as of the date determined in accordance with Section 3.2. Such
contribution election shall remain in effect until it is modified,
revoked or terminated, pursuant to Section 4.3, or until the Participant
ceases to be an Eligible Employee. A Pre-Tax Contribution election shall
be made in such form and manner as the Administrative Committee shall
prescribe or approve.
(c) A Participant's Pre-Tax Contributions shall be made by
payroll deduction and an amount equal to such Pre-Tax Contributions shall
be paid by the Participating Company to the Trustee in accordance with
Section 5.3.
(d) Effective as of January 1, 1987, a Participant shall not be
permitted to make Supplemental Employee Contributions or any other
"after-tax" contributions to the Plan.
4.2 Participant Contribution Amounts.
--------------------------------
Participant Pre-Tax Contribution amounts shall be subject to the
limitations of this Section 4.2, in addition to such other limitations as may be
provided elsewhere in this Plan.
(a) The amount of a Participant's Pre-Tax Contributions for each
payroll period for which his/her election to make Pre-Tax Contributions
is in effect shall be in whole percentage amounts of the Participant's
Compensation for each such payroll period, up to the maximum amount
permissible under applicable law. The minimum permissible Pre-Tax
Contribution by a Participant for any payroll period shall be one percent
(1%) of Compensation for such payroll period.
24
<PAGE>
(b) In general, no Participant shall be permitted to make Pre-Tax
Contributions in excess of the dollar limitation on the exclusion of
elective deferrals from the Participant's gross income under Section
402(g) of the Code, as in effect with respect to the taxable year of the
Participant (hereinafter referred to as the "Deferral Limitation"). In
the event a Participant's Pre-Tax Contributions under this Plan, or the
total amount of his elective deferrals, within the meaning of Code
Section 402(g)(3), under all plans of the Participating Company and any
Affiliated Company, exceed the Deferral Limitation for any reason, such
excess elective deferrals, and any income allocable thereto, shall be
returned to the Participant in accordance with Section 4.6.
(c) The Administrative Committee may prescribe such rules as it
deems necessary or appropriate regarding a Participant's Pre-Tax
Contributions under this Plan, including rules regarding the maximum
amount that any Participant may contribute and the timing of a
contribution election. These rules shall apply to all Eligible
Employees, except to the extent that the Administrative Committee
prescribes special or more stringent rules applicable only to Highly
Compensated Employees.
4.3 Modification, Revocation or Termination of Contribution Election.
----------------------------------------------------------------
(a) Subject to the limitations of this Article IV, a Participant
may modify his/her Pre-Tax Contribution election, effective as of the
first day of a future payroll period that coincides with or immediately
follows any January 1 or July 1, by filing a notice of such modification
prior to the start of the payroll period.
(b) A Participant may revoke his/her Pre-Tax Contribution
election, effective as of the first day of any future payroll period, by
filing notice of such revocation prior to the start of the payroll
period. A Participant who revokes his/her Pre-Tax Contribution election
shall not be eligible to resume Pre-Tax Contributions for at least six
(6) months from the effective date of the revocation.
(c) The Administrative Committee may require the notice of
modification or revocation of a Pre-Tax Contribution election to be filed
within a prescribed time period prior to the effective date of such
modification or revocation. A Participant's modification or revocation
of his/her Pre-Tax Contribution election shall remain in effect
throughout
25
<PAGE>
that Plan Year and all subsequent Plan Years until the
Participant makes a new Pre-Tax Contribution election pursuant to Section
4.1.
(d) A Participant's Pre-Tax Contribution election shall
automatically terminate if he/she ceases to be an Eligible Employee. If
he/she again becomes an Eligible Employee and desires to again contribute
a portion of his/her Compensation, it shall be his/her responsibility to
make a new Pre-Tax Contribution election pursuant to Section 4.1 in order
to resume contributions.
(e) The Administrative Committee may prescribe such rules as it
deems necessary or appropriate regarding the modification, revocation or
termination of a Participant's Pre-Tax Contribution election.
4.4 Limitation on Pre-Tax Contributions by Highly Compensated Employees.
-------------------------------------------------------------------
With respect to each Plan Year, Participant Pre-Tax Contributions under
the Plan for the Plan Year shall not exceed the limitations on contributions on
behalf of Highly Compensated Employees under Section 401(k) of the Code, as
provided in this Section. In the event that Pre-Tax Contributions under this
Plan on behalf of Highly Compensated Employees for any Plan Year exceed the
limitations of this Section for any reason, such excess contributions and any
income allocable thereto shall be returned to the Participant as provided in
Section 4.5.
(a) The Pre-Tax Contributions by a Participant for a Plan Year
shall satisfy the Average Deferral Percentage test set forth in (i)(A)
below, or the alternative Average Deferral Percentage test set forth in
(i)(B) below, and to the extent required by regulations under Code
Section 401(m), also shall satisfy the test identified in (ii) below:
(i) (A) The "Actual Deferral Percentage" for Eligible
Employees who are Highly Compensated Employees shall not be
more than the "Actual Deferral Percentage" of all other
Eligible Employees multiplied by 1.25, or
(i) (B) The excess of the "Actual Deferral Percentage" for
Eligible Employees who are Highly Compensated Employees over
the "Actual Deferral Percentage" for all other Eligible
Employees shall not be more than two percentage points, and
the "Actual Deferral
26
<PAGE>
Percentage" for Highly Compensated Employees shall not be more
than the "Actual Deferral Percentage" of all other Eligible
Employees multiplied by 2.00.
(ii) Average Contribution Percentage for Highly Compensated
Employees eligible to participate in this Plan and a plan of the
Company or an Affiliated Company that is subject to the limitations
of Section 401(m) of the Code including, if applicable, this Plan,
shall be reduced in accordance with Section 5.9, to the extent
necessary to satisfy the requirements of Treasury Regulations
Section 1.401(m)-2.
(b) For the purposes of the limitations of this Section, the
following definitions shall apply:
(i) "Actual Deferral Percentage" means, with respect to
Eligible Employees who are Highly Compensated Employees and all
other Eligible Employees for a Plan Year, the average of the
Deferral Percentages, calculated separately for each Eligible
Employee in such group.
(ii) "Deferral Percentage" means for any Eligible Employee
the ratio of the amount of Pre-Tax Contributions under the Plan
allocated to the Eligible Employee for such Plan Year to such
Employee's "Compensation" for such Plan Year. An Eligible
Employee's Pre-Tax Contributions may be taken into account for
purposes of determining his Deferral Percentage for a particular
Plan Year only if such Pre-Tax Contributions are allocated to the
Eligible Employee as of a date within that Plan Year. For purposes
of this rule, an Eligible Employee's Pre-Tax Contributions shall be
considered allocated as of a date within a Plan Year only if (A) the
allocation is not contingent upon the Eligible Employee's
participation in the Plan or performance of services on any date
subsequent to that date, and (B) the Pre-Tax Contribution is
actually paid to the Trust no later than the end of the twelve month
period immediately following the Plan Year to which the contribution
relates. In accordance with regulations issued by the Secretary of
the Treasury, Participating Company contributions on behalf of an
Participant that satisfy the requirements of Code Section
401(k)(3)(D)(ii) shall also be taken into account for the purpose of
determining the Deferral Percentage of such Participant.
27
<PAGE>
(iii) "Eligible Employee" includes any Employee directly or
indirectly eligible to make Pre-Tax Contributions at any time during
the Plan Year, including any otherwise Eligible Employee during a
period of suspension due to a hardship withdrawal, as prescribed by
the Secretary of the Treasury in regulations under Code Section
401(k).
(iv) "Compensation" means Compensation determined by the
Administrative Committee in accordance with the requirements of
Section 414(s) of the Code, including, to the extent elected by the
Administrative Committee, amounts deducted from an Employee's wages
or salary that are excludable from income under Sections 125 and
402(e)(3) of the Code.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 401(a)(4) or 410(b) of the Code
only if aggregated with one or more other plans which include
arrangements under Code Section 401(k), then this Section shall be
applied by determining the Actual Deferral Percentages of Eligible
Employees as if all such plans were a single plan, in accordance with
regulations prescribed by the Secretary of the Treasury under Section
401(k) of the Code.
(d) For the purposes of this Section, the Deferral Percentage for
any Highly Compensated Employee who is a participant under two or more
Code Section 401(k) arrangements of the Company or an Affiliated Company
shall be determined by taking into account the Highly Compensated
Employee's Compensation under each such arrangement and contributions
under each such arrangement which qualify for treatment under Code
Section 401(k), in accordance with regulations prescribed by the
Secretary of the Treasury under Section 401(k) of the Code.
(e) If an Eligible Employee (who is also a Highly Compensated
Employee) is subject to the family aggregation rules in Section 2.27, the
combined Actual Deferral Percentage for the family group (which is
treated as one Highly Compensated Employee) shall be the Actual Deferral
Percentage determined by combining the Pre-Tax Contributions, amounts
treated as Pre-Tax Contributions under Code Section 401(k)(3)(D)(ii), and
Compensation of all eligible family members.
(f) For purposes of this Section, the amount of Pre-Tax
Contributions by a Participant who is not a Highly Compensated Employee
for a Plan Year shall be reduced by any Pre-Tax Contributions in excess
of the
28
<PAGE>
Deferral Limitation which have been distributed to the Participant
under Section 4.6, in accordance with regulations prescribed by the
Secretary of the Treasury under Section 401(k) of the Code.
(g) The determination of the Deferral Percentage of any
Participant shall be made after applying the provisions of Section 16.5
relating to certain limits on Annual Additions under Section 415 of the
Code.
(h) The determination and treatment of Pre-Tax Contributions and
the Actual Deferral Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of the Treasury.
(i) The Administrative Committee shall keep or cause to have kept
such records as are necessary to demonstrate that the Plan satisfies the
requirements of Code Section 401(k) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary of the Treasury.
4.5 Provisions for Disposition of Excess Pre-Tax Contributions by Highly
--------------------------------------------------------------------
Compensated Employees.
---------------------
(a) The Administrative Committee shall determine, as soon as is
reasonably possible following the close of each Plan Year, if the Actual
Deferral Percentage test is satisfied for the Plan Year. If, pursuant to
the determination by the Administrative Committee, any or all of a Highly
Compensated Employee's Pre-Tax Contributions must be reduced to enable
the Plan to satisfy the Actual Deferral Percentage test, then any excess
Pre-Tax Contributions by a Highly Compensated Employee, and any income
allocable thereto shall, if administratively feasible, be distributed to
the Participant not later than two and one-half (2-1/2) months following
the close of the Plan Year in which such excess Pre-Tax Contributions
were made, but in any event no later than the close of the first Plan
Year following the Plan Year in which such excess Pre-Tax Contributions
were made (after withholding any applicable income taxes due on such
amounts). Recharacterization of excess Pre-Tax Contributions as
Participant after-tax contributions shall not be permitted.
(b) The Administrative Committee shall determine the amount of
any excess Pre-Tax Contributions by Highly Compensated Employees for a
Plan Year by application of the leveling method set forth in Treasury
Regulation Section 1.401(k)-1(f)(2)
29
<PAGE>
under which the Deferral Percentage of the Highly Compensated Employee
who has the highest such percentage for such Plan Year is reduced to the
extent required (i) to enable the Plan to satisfy the Actual Deferral
Percentage test, or (ii) to cause such Highly Compensated Employee's
Deferral Percentage to equal the Deferral Percentage of the Highly
Compensated Employee with the next highest Deferral Percentage. This
process shall be repeated until the Plan satisfies the Actual Deferral
Percentage test. For each Highly Compensated Employee, the amount of
excess Pre-Tax Contributions shall be equal to the total Pre-Tax
Contributions (plus any amounts treated as Pre-Tax Contributions) made or
deemed to be made by such Highly Compensated Employee (determined prior
to the application of the foregoing provisions of this Subsection (b))
minus the amount determined by multiplying the Highly Compensated
Employee's Deferral Percentage (determined after application of the
foregoing provisions of this Subsection (b)) by his Compensation.
(c) The determination and correction of excess Pre-Tax
Contributions of a Highly Compensated Employee whose Actual Deferral
Percentage is determined under the family aggregation rules in Section
4.4 shall be accomplished by reducing the Actual Deferral Percentage as
required under Subsections (a) and (b) above and allocating the excess
Pre-Tax Contributions for the family unit in proportion to the Pre-Tax
Contributions of each family member that are combined to determine the
Actual Deferral Percentage.
(d) For purposes of satisfying the Actual Deferral Percentage
test, income allocable to a Participant's excess Pre-Tax Contributions,
as determined under (b) above, shall be determined in accordance with any
reasonable method used by the Plan for allocating income to Participant
Accounts, provided such method does not discriminate in favor of Highly
Compensated Employees and is consistently applied to all Participants for
all corrective distributions under the Plan for a Plan Year.
(e) The Administrative Committee shall not be liable to any
Participant (or his/her Beneficiary, if applicable) for any losses caused
by misestimating the amount of any Pre-Tax Contributions in excess of the
limitations of this Article IV and any income allocable to such excess.
(f) To the extent required by regulations under Section 401(k) or
415 of the Code, any excess Pre-Tax Contributions with respect to a
Highly
30
<PAGE>
Compensated Employee shall be treated as Annual Additions under
Article XVI for the Plan Year for which the excess Pre-Tax Contributions
were made, notwithstanding the distribution of such excess in accordance
with the provisions of this Section.
4.6 Provisions for Return of Annual Pre-Tax Contributions in Excess of the
----------------------------------------------------------------------
Deferral Limitation.
-------------------
In the event a Participant's elective deferrals, within the meaning of
Code Section 402(g)(3), for any calendar year exceed the Deferral Limitation,
such excess elective deferrals shall be returned to the Participant as provided
in this Section 4.6.
(a) In the event that due to error or otherwise, a Participant's
Pre-Tax Contributions under this Plan for any calendar year exceed the
Deferral Limitation for such calendar year (without regard to elective
deferrals under any other plan), the Administrative Committee shall
notify the Plan of the amount of the excess Pre-Tax Contributions, and
such excess Pre-Tax Contributions, together with income allocable
thereto, shall be distributed to the Participant on or before the first
April 15 following the close of the calendar year in which such excess
Pre-Tax Contributions were made.
(b) If in any calendar year, a Participant makes Pre-Tax
Contributions under this Plan and additional elective deferrals, within
the meaning of Code Section 402(g)(3), under any other plan maintained by
the Participating Company or an Affiliated Company, and the total amount
of the Participant's elective deferrals under this Plan and all such
other plans exceed the Deferral Limitation, the Participating Company and
each Affiliated Company maintaining a plan under which the Participant
made any elective deferrals shall notify the affected plans, and
corrective distributions of the excess elective deferrals, and any income
allocable thereto, shall be made from one or more such plans, to the
extent determined by the Participating Company and each Affiliated
Company. All corrective distributions of excess elective deferrals shall
be made on or before the first April 15 following the close of the
calendar year in which the excess elective deferrals were made.
(c) Income on Pre-Tax Contributions in excess of the Deferral
Limitation shall be calculated in accordance with 4.5(d).
31
<PAGE>
(d) The Administrative Committee shall not be liable to any
Participant (or his Beneficiary, if applicable) for any losses caused by
misestimating the amount of any Pre-Tax Contributions in excess of the
limitations of this Article IV and any income allocable to such excess.
(e) In the event a Participant's Pre-Tax Contributions for any
calendar year exceed the Deferral Limitation solely by reason of the
Participant's elective deferrals under a plan maintained by an unrelated
Participating Company, such excess Pre-Tax Contributions shall not be
returned to the Participant, but shall be held in the Participant's Pre-
Tax Contributions Account until distribution can be made in accordance
with the provisions of this Plan.
(f) To the extent required by regulations under Section 402(g) or
415 of the Code, Pre-Tax Contributions with respect to a Participant in
excess of the Deferral Limitation shall be treated as Annual Additions
under Article XVI for the Plan Year for which the excess Contributions
were made, unless such excess is distributed to the Participant in
accordance with the provisions of this Section.
4.7 Character of Amounts Contributed as Pre-Tax Contributions.
---------------------------------------------------------
Unless otherwise specifically provided to the contrary elsewhere in this
Plan, Pre-Tax Contributions pursuant to a Participant's contribution election
described above in Section 4.1 (and which qualify for treatment under Code
Section 401(k) and are contributed to the Trust Fund pursuant to Article VI)
shall be treated, for federal and state income tax purposes, as Participating
Company contributions.
4.8 Participant Rollover Contributions.
----------------------------------
(a) Subject to the approval of the Administrative Committee, all
or part of "eligible rollover distribution," as defined in Code Section
402(c)(4), from a plan that is a qualified plan under Code Section
401(a), may be transferred to this Plan by means of a direct rollover
contribution on behalf of an Eligible Employee. Any direct rollover
contribution on behalf of an Eligible Employee shall be in cash and shall
be credited to a Rollover Account established for such Eligible Employee
in accordance with rules which the Administrative Committee shall
prescribe from time to time. A Participant's Rollover Account shall not
be subject to distribution except as expressly provided under the terms
of this Plan.
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<PAGE>
(b) An Eligible Employee who makes a direct rollover contribution
to the Plan prior to the date he/she satisfies the eligibility and
participation requirements of Article III shall be treated as a
Participant for purposes of the Plan provisions relating to the
maintenance, valuation, investment and distribution of Accounts;
provided, however, such Employee shall not be treated as a Participant
for purposes of eligibility to receive an allocation of any Company Basic
Contributions under the Plan prior to his/her Participation Commencement
Date.
33
<PAGE>
ARTICLE V
PARTICIPATING COMPANY CONTRIBUTIONS
5.1 General.
-------
Subject to the requirements and restrictions of this Article V, and of
Article XVI, and subject also to the amendment or termination of the Plan, each
Participating Company shall contribute to the Plan in accordance with this
Article V.
5.2 Company Basic Contributions.
---------------------------
(a) As of the last day of each Plan quarter, a Participating
Company shall contribute to the Company Basic Contributions Account of a
Participant an amount equal to the sum of (i) plus (ii) below, where
(i) is equal to four percent (4%) of the Participant's
Compensation for such Plan quarter that does not exceed the Social
Security Taxable Wage Base, as determined by taking into account the
Participant's Plan Year Compensation to date, and
(ii) is equal to eight percent (8%) of the Participant's
Compensation for such Plan quarter that is in excess of the Social
Security Taxable Wage Base, as determined by taking into account the
Participant's Plan Year Compensation to date.
(b) Participating Company contributions for a Plan quarter in
accordance with this Section 5.1 shall be allocated to a Participant's
Company Basic Contributions Account as soon as administratively
practicable following the last day of such Plan quarter.
5.3 Pre-Tax Contributions.
---------------------
Each Participating Company shall make a Pre-Tax Contribution on behalf of
each Participant who is an Eligible Employee of such Participating Company in an
amount equal to the amount of the Pre-Tax Contribution elected by the
Participant in accordance with Article IV, provided such Pre-Tax Contribution
qualifies for tax treatment under Code Section 401(k). A Pre-Tax Contribution
on behalf of a Participant for a payroll period shall be paid to the Trustee and
allocated to the Participant's Pre-Tax Contribution Account as soon as
administratively practicable following the last day of such payroll period, but
in no
34
<PAGE>
event later than ninety (90) days following the last day of the payroll
period.
5.4 Company Matching Contributions.
------------------------------
(a) As of the last day of each pay period, the Participating
Company shall make a Company Matching Contribution for each Participant
who is an Eligible Employee of such Participating Company, and elects to
make Pre-Tax Contributions, in an amount equal to the "applicable
percentage" of the Participant's Pre-Tax Contributions for the pay
period. The "applicable percentage" for the pay period shall be equal to
fifty percent (50%) of the Participant's Pre-Tax Contributions with
respect to the first one percent (1%) of the Participant's Compensation
for the pay period, and twenty-five percent (25%) of the Participant's
Pre-Tax Contributions with respect to the next four percent (4%) of the
Participant's Compensation for the pay period.
(b) Any Company Matching Contributions for a pay period shall be
paid to the Trustee and allocated to the Participant's Company Matching
Contributions Account as soon as administratively practicable following
the last day of such pay period.
5.5 Application of Forfeitures.
--------------------------
Any amounts attributable to Company Basic Contributions that are forfeited
during the Plan Year in accordance with Section 8.10(a) shall be applied as soon
as practicable to reduce future Company Basic Contributions.
5.6 Transfer Among Participating Companies.
--------------------------------------
A Participant whose employment is transferred during a Plan Year from one
Participating Company to another Participating Company shall participate in the
allocation of the Basic Company Contribution under Section 5.2 of each such
Participating Company to the extent of his/her proportionate Compensation as an
Eligible Employee from each Participating Company during the Plan Year in
question. Any Pre-Tax Contribution election in effect for such Participant as
of the date of the transfer shall continue in effect with respect to
Compensation payable after the transfer, until modified or revoked by the
Participant in accordance with Section 4.3.
5.7 Requirement for Profits.
-----------------------
Any contributions by a Participating Company under this Plan may be made
without regard to current or accumulated profits for the Participating Company's
tax
35
<PAGE>
year; provided, however, the Plan is des igned to qualify as a profit sharing
plan for purposes of Section 401(a), et seq. of the Code.
-------
5.8 Special Limitations on 401(m) Contributions.
-------------------------------------------
With respect to each Plan Year, any Company Matching Contributions, as
defined in Section 401(m) of the Code, or employee "after-tax contributions," as
defined in regulations under Section 401(m) of the Code, under the Plan for the
Plan Year (hereafter referred to collectively as "401(m) Contributions") shall
not exceed the limitations on such contributions by or on behalf of Highly
Compensated Employees under Section 401(m) of the Code, as provided in this
Section. In the event that 401(m) Contributions under this Plan by or on behalf
of Highly Compensated Employees for any Plan Year exceed the limitations of this
Section for any reason, such excess 401(m) Contributions and any income
allocable thereto shall be disposed of in accordance with Section 5.9.
(a) 401(m) Contributions by and on behalf of Participants for a
Plan Year shall satisfy the Average Contribution Percentage test set
forth in (i)(A) below or the alternative Average Contribution Percentage
test set forth in (i)(B) below, or to the extent required by regulations
under Code Section 401(m), shall satisfy the test identified in (ii)
below.
(i) (A) The Average Contribution Percentage for Eligible
Employees who are Highly Compensated Employees shall not be
more than the Average Contribution Percentage of all other
Eligible Employees multiplied by 1.25, or
(i) (B) The excess of the Average Contribution Percentage
for Eligible Employees who are Highly Compensated Employees
over the Average Contribution Percentage for all other
Eligible Employees shall not be more than two (2) percentage
points, and the Average Contribution Percentage for the Highly
Compensated Employees shall not be more than the Average
Contribution Percentage of all other Eligible Employees
multiplied by 2.00.
(ii) The Average Contribution Percentage for Highly
Compensated Employees eligible to participate in this Plan and a
plan of the Participating Company or an Affiliated Company that
satisfies the requirements of Section 401(k) of the Code, including,
if applicable, this Plan,
36
<PAGE>
shall be reduced to the extent necessary to satisfy the requirements
of Treasury Regulations Section 1.401(m)-2 or similar such rule
relating to the multiple use of the alternative test described in
(i) (B) above.
(b) For purposes of this Article V, the following definitions
shall apply:
(i) "Average Contribution Percentage" means, with respect
to a group of Eligible Employees for a Plan Year, the average of the
Contribution Percentage, calculated separately for each Eligible
Employee in such group.
(ii) The "Contribution Percentage" means for any Eligible
Employee the percentage determined by dividing the sum of 401(m)
Contributions under the Plan on behalf of each Eligible Employee for
such Plan Year, by such Eligible Employee's Compensation for such
Plan Year in accordance with regulations prescribed by the Secretary
of the Treasury under Code Section 401(m). A Company Matching
Contribution shall be taken into account for a Plan Year only if it
is (A) made on account of a Participant's Pre-Tax Contributions for
the Plan Year; (B) allocated to the Participant's Company Matching
Contributions Account during that Plan Year; and (C) actually paid
to the Trust no later than the end of the twelve month period
immediately following the Plan Year to which the contribution
relates. To the extent determined by the Administrative Committee
and in accordance with regulations issued by the Secretary of the
Treasury under Code Section 401(m)(3), Pre-Tax Contributions on
behalf of an Eligible Employee and any qualified nonelective
contributions, within the meaning of Code Section 401(m)(4)(C), on
behalf of an Eligible Employee may also be taken into account for
purposes of calculating the Contribution Percentage of such Eligible
Employee, but shall not otherwise be taken into account. However,
if Company Matching Contributions are taken into account for
purposes of determining the Actual Deferral Percentage of an
Eligible Employee for a Plan Year under Section 4.4 then such
matching contributions shall not be taken into account under this
Section.
(iii) "Eligible Employee" means for a Plan Year, any
Eligible Employee directly or indirectly eligible to have a Company
Matching Contribution allocated to his account, including
37
<PAGE>
any otherwise Eligible Employee during a period of suspension due to
a Hardship withdrawal, in accordance with regulations prescribed by
the Secretary of the Treasury under Code Section 401(k).
(iv) "Compensation" means Compensation determined by the
Administrative Committee in accordance with Section 414(s) of the
Code, including to the extent determined by the Administrative
Committee, amounts deducted from an Employee's wages or salary that
are not currently includible in the Employee's gross income by
reason of the application of Code Section 402(e)(3), 125, or 129.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 410(b) of the Code only if
aggregated with one or more other plans, or if one or more other plans
satisfy the requirements of Section 410(b) of the Code only if aggregated
with this Plan, then this Section shall be applied by determining the
Contribution Percentages of Eligible Employees as if all such plans were
a single plan, in accordance with regulations prescribed by the Secretary
of the Treasury under Section 401(m) of the Code.
(d) For the purposes of this Section, the Contribution Percentage
for any Eligible Employee who is a Highly Compensated Employee under two
or more Code Section 401(a) plans of a Participating Company or an
Affiliated Company to the extent required by Code Section 401(m), shall
be determined in a manner taking into account the participant
contributions and matching contributions for such Eligible Employee under
each of such plans.
(e) If an Eligible Employee (who is also a Highly Compensated
Employee) is subject to the family aggregation rules in Section 2.27, the
combined Average Contribution Percentage for the family group (which is
treated as one Highly Compensated Employee) shall be the Average
Contribution Percentage determined by combining the 401(m) Contributions,
amounts treated as matching contributions under Code Section 401(m)(3),
and Compensation of all the eligible family members.
(f) The determination of the Contribution Percentage of any
Participant shall be made after first applying the provisions of Section
16.5 relating to certain limits on Annual Additions under Section 415 of
the Code, then applying the provisions of Section 4.6 relating to the
return of Pre-Tax Contributions in
38
<PAGE>
excess of the Deferral Limitation, then applying the provisions of
Section 4.5 relating to certain limits under Section 401(k) of the Code
imposed on Pre-Tax Contributions of Highly Compensated Employees and
last, applying the provisions of Section 5.10 relating to the forfeiture
of matching contributions attributable to excess deferrals or
contributions.
(g) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(h) The Administrative Committee shall keep or cause to have kept
such records as are necessary to demonstrate that the Plan satisfies the
requirements of Code Section 401(m) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary of the Treasury.
5.9 Provisions for Reduction of Excess 401(m)
-----------------------------------------
Contributions by or on Behalf of
---------------------------------
Highly Compensated Employees.
----------------------------
(a) The Administrative Committee shall determine, as soon as is
reasonably possible following the close of the Plan Year, if 401(m)
Contributions by or on behalf of Highly Compensated Employees satisfy the
Average Contribution Percentage test for such Plan Year. If, pursuant to
the determination by the Administrative Committee, 401(m) Contributions
by or on behalf of a Highly Compensated Employee must be reduced to
enable the Plan to satisfy the Average Contribution Percentage test, then
the Administrative Committee shall take the following steps:
(i) First, any excess after-tax contributions that were not
matched by matching contributions, and any income allocable thereto,
shall be distributed to the Highly Compensated Employee.
(ii) Second, if any excess remains after the provisions of
(i) above are applied, to the extent necessary to eliminate the
excess, any matching contributions on behalf of the Highly
Compensated Employee, any corresponding after-tax contributions, and
any income allocable thereto, shall be forfeited, to the extent
forfeitable under the Plan, or distributed to the Highly Compensated
Employee, to the extent nonforfeitable under the Plan (after
withholding any applicable income taxes on such amounts).
39
<PAGE>
(iii) If administratively feasible, excess 401(m)
Contributions including any income allocable thereto, shall be
distributed to Highly Compensated Employees, or, to the extent
forfeitable, forfeited, within two and one-half (2-1/2) months
following the close of the Plan Year for which the excess
Contributions were made, but in any event no later than the end of
the first Plan Year following the Plan Year for which the excess
Contributions were made, notwithstanding any other provision in this
Plan.
(iv) Any amounts of excess matching contributions forfeited
by Highly Compensated Employees under this Section, including any
income allocable thereto, shall be applied in accordance with
Section 5.6.
(b) The Administrative Committee shall determine the amount of
any excess 401(m) Contributions made by or on behalf of Highly
Compensated Employees for a Plan Year by application of the leveling
method set forth in Proposed Treasury Regulation Section 1.401(m)-1(e)(2)
under which the Contribution Percentage of the Highly Compensated
Employee who has the highest such percentage for such Plan Year is
reduced, to the extent required (i) to enable the Plan to satisfy the
Average Contribution Percentage test, or (ii) to cause such Highly
Compensated Employee's Contribution Percentage to equal the Contribution
Percentage of the Highly Compensated Employee with the next highest
Contribution Percentage. This process shall be repeated until the Plan
satisfies the Average Contribution Percentage test. For each Highly
Compensated Employee, the amount of excess 401(m) Contributions shall be
equal to the total 401(m) Contributions (plus any amounts treated as
matching contributions) made on behalf of such Highly Compensated
Employee (determined prior to the application of the foregoing provisions
of this Subsection (b)) minus the amount determined by multiplying the
Highly Compensated Employee's Contribution Percentage (determined after
the application of the foregoing provisions of this Subsection (b)) by
his Compensation.
(c) The determination and correction of excess 401(m)
Contributions made by and on behalf of a Highly Compensated Employee
whose Average Contribution Percentage is determined under the family
aggregation rules in Section 5.8 shall be accomplished by reducing the
Average Contribution Percentage as required under Subsections (a) and (b)
above and allocating the excess 401(m) Contributions for the family unit
in proportion
40
<PAGE>
to the 401(m) Contributions of each family member that are
combined to determine the Average Contribution Percentage.
(d) For purposes of satisfying the Average Contribution
Percentage test, income allocable to a Participant's excess 401(m)
Contributions, as determined under (b) above, shall be determined in
accordance with any reasonable method used by the Plan for allocating
income to Participant Accounts, provided such method does not
discriminate in favor of Highly Compensated Employees and is consistently
applied to all Participants for all corrective distributions under the
Plan for a Plan Year.
(e) The Administrative Committee shall not be liable to any
Highly Compensated Employee (or his Beneficiary, if applicable) for any
losses caused by misestimating the amount of any excess 401(m)
Contributions on behalf of a Highly Compensated Employee and the income
attributable to such excess.
(f) To the extent required by regulations under Section 401(m) or
415 of the Code, any 401(m) Contributions in excess of the limitations of
Section 5.8 forfeited by or distributed to a Highly Compensated Employee
in accordance with this Section shall be treated as an Annual Addition
under Article XV for the Plan Year for which the excess contribution was
made, notwithstanding such forfeiture or distribution.
5.10 Forfeiture of Company Matching Contributions
--------------------------------------------
Attributable to Excess Pre-TaxContributions.
--------------------------------------------
To the extent any Company Matching Contributions allocated to a
Participant's Company Matching Contributions Account are attributable to excess
Pre-Tax Contributions required to be distributed to the Participant in
accordance with Section 4.5 or 4.6, such Company Matching Contributions,
including any income allocable thereto, shall be forfeited and applied to reduce
future Company Matching Contributions, notwithstanding that such Company
Matching Contributions may otherwise be nonforfeitable under the terms of the
Plan.
5.11 Irrevocability.
--------------
A Participating Company shall have no right or title to, nor interest
in, the contributions made to the Trust Fund, and no part of the Trust Fund
shall revert to a Participating Company except that on and after the Effective
Date funds may be returned to a Participating Company as follows:
41
<PAGE>
(a) In the case of a Participating Company contribution which is
made by a mistake of fact, that contribution may be returned to the
Participating Company within one (1) year after it is made.
(b) All Participating Company contributions are hereby
conditioned upon the Plan initially satisfying all of the requirements of
Code Section 401(a) with respect to such Participating Company. If the
Plan does not initially qualify with respect to a Participating Company,
any or all such contributions with respect to such Participating Company
may be returned to the Participating Company within one year after the
date of IRS denial of the qualification of the Plan. Participant
contributions shall be returned to Participants.
(c) All Participating Company contributions to the Plan are
conditioned on deductibility under Code Section 404. In the event a
deduction is disallowed for any such contribution by a Participating
Company such contribution may be returned to such Participating Company.
5.12 Adequacy of Trust Fund.
----------------------
Except as provided above, the Company, Participating Companies, the
Committees and Trustee shall not be liable or responsible for the adequacy of
the Trust Fund to meet and discharge any or all payments and liabilities
hereunder. All Plan benefits will be paid only from the Trust assets, and
neither the Company, Participating Companies, the Committees nor the Trustee
shall have any duty or liability to furnish the Trust with any funds, securities
or other assets except as expressly provided in the Plan. Except as required
under the Plan or Trust or under Part 4 of Title I of ERISA, the Company and the
Participating Companies shall not be responsible for any decision, act or
omission of the Trustee, the Committees, or the Investment Manager (if
applicable), and shall not be responsible for the application of any moneys,
securities, investments or other property paid or delivered to the Trustee.
42
<PAGE>
ARTICLE VI
INVESTMENT AND VALUATION OF ACCOUNTS
6.1 Investment of Participant Accounts.
----------------------------------
(a) Except as provided in (b) or (c) below, the assets of the
Trust Fund shall be invested by the Trustee based on instructions from
the Investment Committee.
(b) Effective as of January 1, 1994, to the extent determined by
the Investment Committee, each Participant shall have the right to direct
the investment of all or a portion of his/her Accounts among segregated
investment funds made available for this purpose, subject to (c) below.
The Investment Committee shall select the investment funds that shall be
available for Participant-directed investments, and in its discretion may
add or reduce the number and type of investment funds that will be
available for investment in any Plan Year.
(c) In addition, effective as of January 1, 1995, each
Participant who elects to make Pre-Tax Contributions shall also have the
right to direct the investment of all or a portion of his/her Pre-Tax
Contributions Account and Company Matching Contributions Account in the
Company Stock investment fund established and maintained for this purpose
in accordance with Article VII. Investment in the Company Stock
investment fund shall be limited to Pre-Tax Contributions and Company
Matching Contributions Accounts and no Participant shall have the right
to direct the investment of any other Accounts in the Company Stock
investment fund.
(d) The Administrative Committee shall establish rules relating
to the investment direction of Participant Accounts in the segregated
investment funds, as follows:
(i) Each Participant shall file an investment direction
with the Administrative Committee that specifies one or more of the
available investment funds in which future contributions on his/her
behalf and his/her existing Account balances are to be invested.
Investments of future contributions by or on behalf of a Participant
in any available investment fund, and the transfer of all or a
portion of a Participant's existing Account balances between
investment funds, shall be in any
43
<PAGE>
percentage increments or dollar amounts permitted by the
Administrative Committee.
(ii) The Administrative Committee shall prescribe dates as
of which investment directions shall be effective, and time periods
within which such investment directions must be filed with the
Administrative Committee. A Participant's investment direction
shall continue to apply until the Participant files a new direction
with the Administrative Committee.
(iii) The Administrative Committee shall forward
Participant investment directions to the Trustee, or shall authorize
another procedure such as the use of telephonic communications, in
order to implement the Participant's directions.
(iv) If a Participant fails to designate the investment
funds in which any portion of his/her Accounts subject to his/her
investment direction is to be invested, the Administrative Committee
shall direct the Trustee to invest such portion of the Participant's
Accounts into a fund designated by the Investment Committee for such
purpose.
(e) Investment funds may, from time to time, hold cash or cash
equivalent investments (including interests in any fund maintained by the
Trustee as provided in the Trust Agreement) resulting from investment
transactions relating to the property of said Fund; provided, however,
that neither the Committees, the Company, a Participating Company, the
Trustee, nor any other person shall have any duty or responsibility to
cause such funds to be held in cash or cash equivalent investments for
investment purposes. In the case of any investment fund under the
management and control of an Investment Manager appointed by the Employee
Benefits Committee, in accordance with Section 10.5, neither the
Committees, the Company, a Participating Company, the Trustee, nor any
other person shall have any responsibility or liability for investment
decisions made by such Investment Manager.
6.2 Valuation of Participant Accounts.
---------------------------------
(a) In order to account for the allocated interest of each
Participant in the Trust Fund, there shall be established and maintained
for each Participant the Accounts described in Section 2.1.
(b) As of each Valuation Date, the Trustee shall determine the
fair market value of the assets of
44
<PAGE>
the Trust Fund. The Trustee also shall value the assets of the Trust Fund
sixty (60) days after the removal or resignation of the Trustee.
(c) As of each Valuation Date, the Administrative Committee shall
value or cause to have valued the Accounts of Participants so as to
reflect a proportionate share in any Trust Gain or Loss, as determined by
the Trustee as of that date.
(d) If any portion of a Participant's Pre-Tax Contribution
Account or Company Matching Contributions Account is invested in the
Company Stock investment fund, the value of such portion shall be
determined in accordance with Section 7.2, based upon the number of
shares of Company Stock, and fractional shares, if any, that are
allocated to such Participant's Accounts and the proportionate share of
any cash or cash equivalents held in such Company Stock investment fund.
6.3 Valuation of Distributable Benefits.
-----------------------------------
(a) For purposes of determining a Participant's Distributable
Benefit under this Plan, the value of a Participant's Accounts shall be
determined in accordance with rules prescribed by the Administrative
Committee, subject, however, to the following provisions:
(i) Unless the provisions of (ii) below apply, if a
Participant's employment terminates for any reason other than death,
the value of a Participant's Accounts shall be determined as soon as
administratively practicable after the quarterly Valuation Date
coinciding with or next following the date on which a properly
completed application for payment of the Participant's Distributable
Benefit, including the Participant's Qualified Election, and such
other forms as may be required by the Administrative Committee in
order to process the distribution, are received by the
Administrative Committee.
(ii) If a Participant's employment terminates for any
reason other than death and the value of such Participant's Accounts
at the Participant's Annuity Starting Date does not exceed Thirty-
Five Hundred Dollars ($3,500), the value of the Participant's
Accounts shall be determined as soon as administratively practicable
after the earlier of (A) the quarterly Valuation Date coinciding
with or next following the date the Administrative Committee
receives the
45
<PAGE>
Participant's properly completed application for the payment, and
such other forms as may be required by the Committee to process the
payment, or (B) the quarterly Valuation Date coinciding with or next
following the expiration of the ninety (90) day period after the
Participant is furnished with such application and forms, including
any tax notice required under Code Section 402(f).
(iii) In the case of a Participant's death, the value of
a Participant's Accounts for purposes of determining the
Participant's Distributable Benefit shall be determined as soon as
administratively practicable after the quarterly Valuation Date
coinciding with or next following the date on which the Committee
has been furnished with such forms as the Administrative Committee
may require and any documents and information (including but not
limited to proof of death, facts demonstrating the identity and
entitlement of any Beneficiary or other payee, and any and all
releases) necessary to distribute such Participant's Accounts.
(iv) The value of a Participant's Accounts shall be
increased or decreased (as appropriate) by any amounts properly
allocable under the terms of this Plan to his/her Accounts that
occurred on or after the most recent Valuation Date or for any other
reason were not otherwise reflected in the valuation of his/her
Accounts on such Valuation Date.
(b) Neither the Committees, the Company, a Participating Company,
nor the Trustee shall have any responsibility for any increase or
decrease in the value of a Participant's Accounts as a result of any
valuation made under the terms of this Plan.
6.4 Accounting Procedures.
---------------------
The Administrative Committee shall establish accounting procedures
for the purpose of making the allocations, valuations and adjustments to
Participants' Accounts provided for in this Article VI. From time to time the
Administrative Committee may modify such accounting procedures for the purpose
of achieving equitable, nondiscriminatory, and administratively feasible
allocations among the Accounts of Participants in accordance with the general
concepts of the Plan and the provisions of this Article VI.
46
<PAGE>
ARTICLE VII
SPECIAL PROVISIONS
CONCERNING COMPANY STOCK
7.1 Securities Transactions.
-----------------------
The Trustee may acquire Company Stock in the open market or from the
Company or any other person, including a party in interest. No commission will
be paid in connection with the Trustee's acquisition of Company Stock from a
party in interest. Neither the Company, nor the Administrative Committee, nor
any Trustee have any responsibility or duty to time any transaction involving
Company Stock in order to anticipate market conditions or changes in Company
Stock value. Neither the Company, nor the Administrative Committee nor any
Trustee have any responsibility or duty to sell Company Stock held in the Trust
Fund in order to maximize return or minimize loss.
7.2 Valuation of Company Securities.
-------------------------------
When it is necessary to value Company Stock held by the Plan, the
value will be the current fair market value of the Company Stock, determined in
accordance with applicable legal requirements.
(a) If the Company Stock is publicly traded, fair market value
will be based on the most recent closing price in public trading, as
reported in The Wall Street Journal or any other publication of general
-----------------------
circulation designated by the Administrative Committee, unless another
method of valuation is required by the standards applicable to prudent
fiduciaries.
(b) If the Company Stock cannot be valued on the basis of its
closing price in recent public trading, fair market value will be
determined by the Company in good faith based on all relevant factors for
determining the fair market value of securities. Relevant factors
include an independent appraisal by a person who customarily makes such
appraisals, if an appraisal of the fair market value of the Company Stock
as of the relevant date was obtained.
7.3 Allocation of Stock Dividends, Splits and Cash Dividends.
--------------------------------------------------------
Company Stock received by the Trust as a result of a Company Stock
dividend, Company Stock split or a cash dividend received by the Trustee on
Company Stock held in Participants' Accounts will be allocated following the
date of such dividend or split among such Participant Accounts
47
<PAGE>
pro rata in accordance with procedures established by the Administrative
Committee.
7.4 Reserved for Plan Modifications.
-------------------------------
7.5 Voting of Company Stock.
-----------------------
Unless otherwise required under applicable law, the Trustee shall
have no discretion or authority to vote Company Stock held in the Trust on any
matter presented for a vote by the stockholders of the Company except in
accordance with timely directions received by the Trustee from Participants.
(a) Each Participant shall be entitled to direct the Trustee as
to the voting of all Company Stock allocated and credited to his Account.
Each Participant shall be entitled to direct the voting of a portion of
unallocated Company Stock held in the Company Stock investment fund, with
such portion equal to the total number of shares of such unallocated
Company Stock multiplied by a fraction the numerator of which is the
value of the Account balance of such Participant invested in Company
Stock as of the most recent Valuation Date preceding the date on which
such vote occurs and the denominator of which is the total value of the
Account balances of all Participants invested in Company Stock as of the
most recent Valuation Date preceding the date as of which such vote
occurs.
(b) All Participants entitled to direct such voting shall be
notified by the Company, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Company or any other party regarding the exercise of such
rights. Such participants shall be so entitled to direct the voting of
fractional shares (or fractional interests in shares), provided, however,
that the Trustee may, to the extent possible, vote the combined
fractional shares (or fractional interests in shares) so as to reflect
the aggregate direction of all Participants giving directions with
respect to fractional shares (or fractional interests in shares). To the
extent that a Participant shall fail to direct the Trustee as to the
exercise of voting rights arising under any Company Stock credited to his
Accounts, the Trustee shall vote such stock in the same ratio that the
stock is voted by the Participants who exercised their voting rights,
unless otherwise required under applicable law. The Trustee shall
maintain
48
<PAGE>
confidentiality with respect to the voting directions of all
Participants.
(c) No Participant shall be a Named Fiduciary (as that term is
defined in ERISA Section 402(a)(2)) with respect to Company Stock for
which he/she has the right to direct the voting under the Plan solely by
reason of exercising voting rights pursuant to this Section 7.5.
(d) In the event a court of competent jurisdiction shall issue an
opinion or order to the Plan, the Company or the Trustee, which shall, in
the opinion of counsel to the Company or the Trustee, invalidate under
ERISA, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the manner in which
Company Stock held in the trust shall be voted or cause any such
provision or provisions to conflict with ERISA, then, upon notice thereof
to the Company or the Trustee, as the case may be, such invalid or
conflicting provisions of this Section shall be given no further force or
effect. In such circumstances the Trustee shall nevertheless have no
discretion to vote Company Stock held in the Trust unless required under
such order or opinion but shall follow instructions received from
Participants, to the extent such instructions have not been invalidated.
To the extent required to exercise any residual fiduciary responsibility
with respect to voting, the Trustee shall take into account in exercising
its fiduciary judgment, unless it is clearly imprudent to do so,
directions timely received from Participants.
7.6 Confidentiality Procedures.
In its sole discretion, the Administrative Committee may establish
procedures intended to ensure the confidentiality of information relating to
Participant transactions involving Company Stock, including the exercise of
voting, tender and similar rights. In the event the Administrative Committee
establishes such confidentiality procedures, the Administrative Committee shall
also be responsible for ensuring the adequacy of the confidentiality procedures
and monitoring compliance with such procedures. The Administrative Committee
may, in its sole discretion, appoint an independent fiduciary to carry out any
activities that it determines involve a potential for undue Company influence on
Participants with respect to the exercise of their rights as shareholders.
49
<PAGE>
7.7 Election for Company Stock Distribution.
---------------------------------------
If any portion of a Participant's Distributable Benefit is invested
in Company Stock, the Participant may elect to receive that portion of the
his/her Distributable Benefit in full shares of Company Stock in lieu of a
single sum cash payment of the value of such shares. The value of any partial
shares shall be distributed in cash. Within a reasonable period of time (at
least thirty (30) days) prior to the Participant's Annuity Starting Date, the
Administrative Committee shall notify the Participant of any right he/she may
have to elect to have payment made in the form of a Company Stock distribution
in lieu of a cash distribution. Any such election shall be irrevocable. If,
after receiving notification of his/her right to elect payment in the form of
Company Stock in lieu of cash, the Participant fails to file an election for a
Company Stock distribution, the value of the Participant's Distributable Benefit
held in the Company Stock investment fund shall be payable in cash in accordance
with the applicable provisions of this Plan.
7.8 Securities Law Limitation.
-------------------------
Neither the Administrative Committee nor the Trustee shall be
required to engage in any transaction, including, without limitation, directing
the purchase or sale of Company Stock, which either determines in its sole
discretion might tend to subject itself, its members, the Plan, the Company, or
any Participant or Beneficiary to a liability under federal or state securities
laws.
7.9 Investment in Securities Issued by the Company or an Affiliated Company.
-----------------------------------------------------------------------
Unless the appropriate registration statement is filed with the
Securities and Exchange Commission, no amount in excess of any Participating
Company contributions to the Plan shall be allocated to the purchase of
securities issued by the Company or any company directly or indirectly
controlling, controlled by, or under common control with the Company.
7.10 Rules Regarding Section 16 of the Securities Exchange Act of 1934.
-----------------------------------------------------------------
To the extent required to satisfy the requirements of 17 CFR Section
240.16b-3(c) or a successor to such provision having similar effect, the formula
set forth in the Plan that determines the amount, price, and timing of
contributions to any Participant in the Plan who is subject to Section 16 of the
50
<PAGE>
Securities Exchange Act of 1934 and provisions of the Plan that determine the
eligibility to participate of persons who are subject to Section 16 of the
Securities Exchange Act of 1934, shall not be amended more than once every six
(6) months, other than to comply with changes in the Code, ERISA, or the rules
thereunder.
To the extent consistent with the requirements of 17 CFR Section
240.16b-3 or a successor to such provision having similar effect, any
Participant-directed transaction pursuant to an election made by any Participant
in the Plan who is subject to Section 16 of the Securities Exchange Act of 1934
may, to the extent required by such rules, shall be deemed by such Participant
to be an irrevocable election and may be subject to other restrictive conditions
as are determined to be required by or not inconsistent with such provision.
With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, transactions under this Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under the Securities
Exchange Act of 1934. To the extent any provision of the Plan or action by the
Plan Administrator, or its delegate, fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Plan
Administrator, or its delegate.
51
<PAGE>
ARTICLE VIII
VESTING
8.1 Vesting.
-------
(a) Each Participant shall at all times have a one hundred
percent (100%) Vested Interest in his/her Accounts under the Plan other
than the Participant's Company Basic Contributions Account.
(b) Each Participant who completes an Hour of Service on or
after January 1, 1989 shall have a Vested Interest in his/her Company
Basic Contributions Account according to the table set forth below:
<TABLE>
<CAPTION>
<S> <C>
Number of Years Percentage of Vested Company
of Service Contributions Account Vested
--------------- ---------------------------
Less than five years 0%
Five years or more 100%
</TABLE>
(c) Each Participant who does not complete one Hour of Service
on or after January 1, 1989 shall have a Vested Interest in his/her
Company Basic Contributions Account in accordance with the provisions of
this Section 8.1 as in effect prior to January 1, 1989.
(d) Notwithstanding the foregoing, a Participant shall have a
one hundred percent (100%) Vested Interest in his/her Company Basic
Contributions Account upon attainment of his/her Normal Retirement Date
while an Employee of a Participating Company or an Affiliated Company,
or, if earlier, in the event of death or Total and Permanent Disability
while an Employee of a Participating Company or an Affiliated Company.
(e) If the vesting schedule under the Plan is amended or if the
Plan is amended in any way that directly or indirectly affects the
computation of a Participant's Vested interest, each Participant who has
completed at least three (3) Years of Service may elect, within a
reasonable time after the adoption of the amendment, to continue to have
his/her Vested Interest computed under the Plan without regard to such
amendment. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on the
latest of: (i) 60 days after the amendment is adopted; (ii) 60 days
after the amendment is effective; or (iii) 60 days after the Participant
is issued written notice of the amendment.
52
<PAGE>
ARTICLE IX
WITHDRAWALS AND LOANS
9.1 Voluntary Withdrawal from Employee Supplemental
-----------------------------------------------
Contributions Account or Employee IRA Account.
----------------------------------------------
(a) Subject to (c) below, a Participant may make a Qualified
Election during the applicable Election Period to withdraw from his/her
Employee Supplemental Contributions Account the lesser of
(i) the amount he/she has contributed to such Account and
to his/her Prior Plan "Savings Account" less any previous
withdrawals from such Account or from his/her Prior Plan "Savings
Account," or
(ii) the value of his/her Employee Supplemental
Contributions Account, determined by reference to the Valuation Date
coinciding with or next preceding the date on which the withdrawal
is paid to the Participant.
Any amount which cannot be withdrawn from an Employee Supplemental
Contributions Account because of the limitations set forth in (i) and
(ii) above, shall nevertheless remain in such Account, for subsequent
disposition in accordance with Article X.
(b) Subject to (c) below, a Participant may make a Qualified
Election to withdraw the value of his/her Employee IRA Account,
determined by reference to the Valuation Date coinciding with or next
preceding the date the withdrawal is paid to the Participant.
(c) No withdrawal may be made within twelve (12) months of
another withdrawal.
9.2 Withdrawal of Pre-Tax Contributions.
-----------------------------------
To the extent permissible under the provisions of this Section,
while still an Employee, a Participant may make a withdrawal of his/her Pre-Tax
Contributions.
(a) A Participant may make a withdrawal of his Pre-Tax
Contributions, exclusive of any earnings thereon, following a
determination by the Administrative Committee that such Participant has a
Hardship need and such withdrawal is necessary on account of such
Hardship need, as provided in this Section 9.2. Any determination of
Hardship shall be in accordance with regulations promulgated under
Section 401(k) of the Code and shall be in accordance
53
<PAGE>
with rules of uniform application which the Administrative Committee may
from time to time prescribe.
(b) "Hardship" shall mean a need created by an immediate and
heavy financial need of the Participant which is distributable to:
(i) expenses for medical care described in Section 213(d)
of the Code previously incurred by the Employee, the Employee's
Spouse, children, or dependents, or necessary for such persons to
obtain medical care described in Code Section 213(d).
(ii) costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the Employee.
(iii) payment of tuition and related educational fees for
the next twelve (12) months of post-secondary education for the
Employee, or the Employee's Spouse, children or dependents.
(iv) payments necessary to prevent the eviction of the
Employee from, or a foreclosure on the mortgage of, the Employee's
principal residence.
In addition to the above, a Hardship need may include any amounts
necessary to pay any federal, state, or local income taxes or penalties
anticipated to result from a Hardship distribution.
(c) A Hardship distribution shall be considered as necessary to
satisfy an immediate and heavy financial need of the Employee only if:
(i) The distribution is not in excess of the amount of the
Hardship need of the Participant.
(ii) The Employee has obtained all distributions, other
than Hardship distributions, and all nontaxable (at the time of the
loan) loans under all plans maintained by the Participating Company.
(iii) The Employee's Pre-Tax Contributions under this Plan
shall be suspended for at least twelve (12) months after the receipt
of the Hardship distribution, and any elective contributions and
employee contributions under all qualified and non-qualified plans
of deferred
54
<PAGE>
compensation maintained by the Participating Company, including a
stock option, stock purchase, or similar plan, or a cash or deferred
arrangement that is part of a cafeteria plan within the meaning of
Code Section 125, will be suspended under the terms of each such
plan, or in accordance with the terms of an otherwise legally
enforceable agreement, for at least twelve (12) months after the
receipt of the Hardship distribution.
(iv) The Plan and all other plans maintained by the
Participating Company limit the Employee's elective contributions
for the Employee's taxable year immediately following the taxable
year of the Hardship distribution to the Deferral Limitation under
Section 402(g) of the Code for such taxable year minus the amount of
such Employee's elective contributions for the taxable year of the
Hardship distribution.
For purposes of determining a Hardship need, a Participant's resources
shall be deemed to include those assets of his/her Spouse and minor
children that are reasonably available to the Participant.
(d) The minimum Hardship withdrawal amount shall be $1,000. A
Participant who makes a Hardship withdrawal shall not be eligible again
to make a Hardship withdrawal prior to the fifth anniversary of the date
of his/her most recent Hardship withdrawal.
(e) A Participant may request a Hardship withdrawal by
submitting a written request for such withdrawal in a form satisfactory
to the Administrative Committee, together with any supporting
documentation which the Administrative Committee in its sole discretion
may require. The applicable Valuation Date for purposes of determining
the amount available for withdrawal and processing such withdrawal shall
be a Valuation Date that is as soon as administratively practicable after
the Participant's properly completed form requesting distribution,
together with all required documentation, is received and approved by the
Administrative Committee. The distribution of a Hardship withdrawal shall
be made in cash.
(f) Subject to a determination by the Committee in accordance
with the requirements of this Section 9.2(f), in the event he/she incurs
a Total and Permanent Disability, a Participant who has not incurred a
severance may elect distribution of all or a part of the value of his/her
Pre-Tax Contributions Account. The applicable Valuation Date for
purposes of
55
<PAGE>
determining the amount available for distribution by reason of a
Participant's Total and Permanent Disability and processing such
distribution shall be a Valuation Date that is within a reasonable time
following the date the Participant's properly completed form requesting
distribution, together with all required documentation, is received and
approved by the Administrative Committee. The distribution shall be made
in cash as soon as administratively practicable after the applicable
Valuation Date.
(g) A Participant may elect the investment fund or funds from
which a Hardship withdrawal or disability distribution will be made, but
in the absence of such election, the distribution will be divided among
the funds in the same proportion as the Participant's Pre-Tax
Contributions Account is invested in such funds.
9.3 Loans.
-----
(a) The Administrative Committee shall adopt procedures whereby
a Participant who is employed by a Participating Company may borrow from
his/her Pre-Tax Contributions Account and any portion of his/her Rollover
Account attributable to a distribution of Pre-Tax Contributions from
another qualified plan. In addition to such other requirements as may be
imposed by applicable law, any loan by a Participant shall bear a
reasonable rate of interest, shall be adequately secured by proper
collateral, and shall be repaid within a specified period of time
according to a written repayment schedule, as provided in this Section.
(b) The Administrative Committee shall be solely responsible for
determining the interest rate for the loan. The interest rate shall be
reasonably equivalent to interest rates applicable to loans with similar
terms and collateral available on a commercial basis within the region of
the Company's principal place of business. The Administrative Committee
shall consult such sources and/or conduct such surveys as are thought
necessary to make the determination at the time the loan is made. The
interest rate shall be unchanged for the term of the loan.
(c) A loan by a Participant shall be secured by the
Participant's Pre-Tax Contributions Account and, if applicable, the
portion of his/her Rollover Account attributable to a distribution of
Pre-Tax Contributions from another qualified plan.
56
<PAGE>
(d) Any loan shall by its terms require repayment in
substantially level payments made not less frequently than quarterly over
a repayment period which may in the discretion of the Administrative
Committee be up to a maximum of five (5) years and not less than a
minimum period. Repayment of a loan shall be through payroll deduction;
provided, however, a Participant may at any time repay the total amount
of an outstanding loan directly to the Plan. As of the date of a
Participant's termination of employment for any reason, with or without
cause (including retirement or death), the amount of any outstanding loan
shall be due and payable, and the Participant's Distributable Benefit
shall be reduced by the amount of any outstanding loan, including any
accrued interest thereon, that is secured by the Participant's Vested
Interest in his/her Account.
(e) No Participant may have more than one loan outstanding under
this Plan on any date. In no event shall the principal amount of a loan
hereunder, at the time the loan is made exceed the lesser of:
(i) fifty percent (50%) of the value of the Participant's
Vested Interest in his/her Accounts under this Plan, determined as
of the Valuation Date coinciding with or immediately preceding the
date the Participant requests a loan application, or
(ii) fifty thousand dollars ($50,000) reduced by the excess
of the Participant's highest loan balance during the preceding 12-
month period, over the Participant's outstanding loan balance as of
the date of the new loan.
The amount of a loan from the Plan shall be not less than $1,000. A
Participant who borrows from his/her Accounts shall not be eligible to
again borrow from such Accounts prior to the third anniversary of the
date of his/her most recent loan.
(f) Each Participant desiring to enter into a loan agreement
pursuant to this Section shall apply for a loan by filing a properly
completed loan application with the Administrative Committee within the
time period prescribed by the Administrative Committee. To the extent
determined by the Administrative Committee, the Participant shall be
responsible for the payment of a loan application fee. Upon approval of
the application by the Administrative Committee, the Participant shall
enter into a loan agreement with the Trustee. Such Participant shall
execute such further written agreements as may be
57
<PAGE>
necessary or appropriate to establish a bona fide debtor-creditor
relationship between such Participant and the Trustee and to protect
against the impairment of any security for said loan. The amount of the
loan shall be paid to the Participant in a single sum in cash as soon as
administratively practicable following the Administrative Committee's
determination that the requirements of this Subsection (f) are satisfied.
(g) A Participant's loan shall constitute an investment of the
portion of the Participant's Accounts that are pledged as security for
the loan and repayments of principal and interest shall be allocated to
such Accounts in accordance with the Participant's investment designation
as in effect at the time of each repayment.
(h) In the event a Participant fails to repay a loan in
accordance with the terms of a loan agreement, and such failure continues
for ninety (90) days, such loan shall be treated as in default. The date
of the enforcement of the security interest due to a loan in default
shall be determined by the Administrative Committee, provided no loss of
principal or income shall result due to any delay in the enforcement of
the security interest. As of the date of the Participant's termination
of employment, the Participant's Pre-Tax Contributions Account and, if
applicable, Rollover Account, shall be reduced by the outstanding amount
of a loan which is then in default, including any accrued interest
thereon, that is secured by such Account. Any reasonable costs related
to collection of a loan made hereunder shall be borne by the Participant.
(i) To the extent required to comply with the requirements of
Code Section 401(a)(4), loans hereunder shall be made in a uniform and
nondiscriminatory manner.
(j) Subject to the foregoing provisions of this Section, to the
extent required by Section 408(b)(i) of ERISA, loans hereunder shall be
available on a reasonably equivalent basis to all Participants who are
parties in interest, as defined in Section 3(14) of ERISA, and shall not
be available to Participants who are Highly Compensated Employees in a
greater amount than the amount available to other Participants.
58
<PAGE>
ARTICLE X
PAYMENT OF BENEFITS
10.1 Retirement Benefits.
-------------------
Subject to the limitation of Section 10.8, a Participant whose
employment for a Participating Company and all Affiliated Companies terminates
on or after his/her Normal Retirement Date shall be entitled to receive payment
of his/her Distributable Benefit, as determined in accordance with Section 6.3,
in the form provided under Section 10.5, or to make a Qualified Election to
receive payment in a form provided under 10.6.
10.2 Termination of Employment.
-------------------------
(a) Subject to the limitation of Section 10.8 and the provisions
of (b) below, if a Participant's employment with a Participating Company
and all Affiliated Companies terminates for any reason other than death
or retirement in accordance with Section 10.1, the Participant shall be
entitled to make a Qualified Election to receive payment of his/her
Distributable Benefit, as determined in accordance with Section 6.3, in
one of the forms of distribution provided in Section 10.5 or 10.6.
(b) If the Participant does not have a one hundred percent
(100%) Vested Interest in his/her Company Basic Contributions Account
when his/her employment terminates, the portion of such Participant's
Account which is not vested as of such date shall be subject to
forfeiture in accordance with Section 10.10.
(c) To the ext ent permissible under Section 401(k) of the Code,
if a Participant ceases to be an Employee by reason of the sale or other
disposition by the Participating Company or an Affiliated Company of
either (i) substantially all of the assets used by the Participating
Company, or an Affiliated Company, as the case may be, in a trade or
business to an unrelated corporation, or (ii) the interest of the
Participating Company or an Affiliated Company, as the case may be, in a
subsidiary to an unrelated entity or individual, such Participant shall
be entitled to distribution of his/her Distributable Benefit as if, for
purposes of this Plan only, such event constitutes a termination of
employment.
59
<PAGE>
10.3 Payment Upon Termination of Employment Due to Total and Permanent
-----------------------------------------------------------------
Disability; Reinstatement.
-------------------------
(a) In the event the Administrative Committee shall determine
that a Participant has suffered a Total and Permanent Disability while an
Employee of the Company or an Affiliated Company, the Participant's
Distributable Benefit, as determined in accordance with Section 6.3,
shall be distributed in accordance with this Article X.
(b) In the event that an Employee described in (a) above shall
be reinstated or rehired as an Eligible Employee, he/she shall be
entitled to immediate participation in the Plan and such period of Total
and Permanent Disability shall not constitute a Break in Service, but
shall be credited as Years of Service for purposes of this Plan.
10.4 Commencement of Benefits.
------------------------
(a) A Participant's Distributable Benefit shall be paid or
commence to be paid as soon as administratively practicable following the
Valuation Date determined in accordance with Section 6.3. Subject to the
limitations of Section 10.8, if a Participant who has not attained
his/her Normal Retirement Date fails to make a Qualified Election to have
his/her Distributable Benefit paid or commence to be paid on an Annuity
Starting Date prior to such Normal Retirement Date, such Participant
shall be deemed to have elected to defer the payment to his/her Normal
Retirement Date.
(b) Subject to the rules of this Section 10.4, unless a
Participant elects otherwise, payment of the Participant's Distributable
Benefit shall be made or commence to be made as provided herein, but in
no event later than the sixtieth (60th) day after the later of the close
of the Plan Year in which occurs:
(i) The Participant's Normal Retirement Date;
(ii) The termination of the Participant's employment with
the Participating Company and its Affiliated Companies.
(c) Notwithstanding the foregoing provisions of this Section
10.4, if a Participant continues as an Employee after attainment of
his/her Normal Retirement Date, or if an Employee whose employment has
terminated makes an election to defer the commencement of benefits
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<PAGE>
beyond Normal Retirement Date, the following rules shall apply:
(i) Except as provided in (ii) below, payment of benefits with
respect to such a Participant shall in no event be made or commence later
than the April 1 next following the close of the calendar year in which
he/she attains age 70-1/2 without regard to whether his/her employment
with a Participating Company is then terminated, and notwithstanding the
Participant's election to the contrary. Payment shall be made in a form
described in this Article X.
(ii) Except in the case of a Participant who is a five-percent
owner (as defined in Section 18.2(b)) of a Participating Company or an
Affiliated Company with respect to the Plan Year ending in the calendar
year in which such Participant attains age 70-1/2, payment of benefits
(if any) with respect to a Participant who attained age 70-1/2 prior to
January 1, 1988 shall be made or commence not later than the April 1 next
following the later of (A) the close of the calendar year in which he/she
attains age 70-1/2, or (B) the close of the calendar year in which
his/her employment with a Participating Company terminates.
10.5 Normal Form of Benefits.
-----------------------
The normal form of payment of a Participant's Distributable Benefit
shall be determined in accordance with the following provisions of this Section
10.5.
(a) The normal form of payment of the portion of a Participant's
Distributable Benefit attributable to contributions under the Plan for
Plan Years commencing on and after January 1, 1995 shall be a single lump
sum in cash, unless the Participant is eligible to elect a Company Stock
distribution under Section 7.7 or an optional form of payment under
Section 10.6.
(b) The normal form of payment of the portion of a Participant's
Distributable Benefit attributable to contributions under the Plan for
Plan Years commencing prior to January 1, 1995 shall be as follows:
(i) In the case of a Participant who has a Spouse on his/her
Annuity Starting Date, except as otherwise provided in Sections 10.6 and
10.8, such portion of his/her Distributable
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<PAGE>
Benefit shall be payable in the form of a Qualified Joint and Survivor
Annuity.
(ii) In the case of a Participant who does not have a Spouse on
his/her Annuity Starting Date, except as otherwise provided in Sections
10.6 and 10.8, such portion of his/her Distributable Benefit shall be
payable in the form of a ten-year certain and life annuity so that if the
Participant dies before one hundred twenty (120) monthly payments have
been made, his/her designated Beneficiary shall receive such payments
until a total of one hundred twenty (120) monthly payments have been
made.
10.6 Optional Forms of Benefits.
--------------------------
Subject to Section 10.7 and Section 10.8, and in accordance with
procedures adopted by the Administrative Committee, the Participant may make a
Qualified Election during the applicable Election Period, in lieu of his/her
normal form of benefits under Section 10.5, as follows:
(a) To receive his/her Distributable Benefit in a series of
monthly installment payments not to exceed one hundred twenty (120),
calculated as nearly as practicable to be of equal amounts, provided,
however, that this optional form of payment may not be elected by a
Participant unless each monthly installment payable to the Participant is
at least Two Hundred Fifty Dollars ($250.00).
(b) To receive his/her Distributable Benefit in any standard form
permissible under Section 401(a)(9) of the Code and applicable Internal
Revenue Service Regulations, including but not limited to a single lump
sum distribution, a single life annuity or a contingent annuity or period
certain annuity with designated Beneficiaries other than the
Participant's Spouse (to the extent permissible under Section 11.3), or
in the form of any permissible combination of permissible forms.
62
<PAGE>
(c) No optional method of payment shall be permitted which would
require payments to extend beyond the life expectancy of the Participant (or
a period not extending beyond the life expectancy of the Participant); or
the life expectancy of the Participant and a designated Beneficiary (or a
period not extending beyond the life expectancies of the Participant and the
designated Beneficiary). If a Participant's benefit is to be distributed in
a series of installments over a specified number of years, the minimum
amount to be distributed each year shall be at least equal to the quotient
obtained by dividing the Participant's Distributable Benefit under the Plan
by the specified number of years. For purposes of this Subsection (c), life
expectancies may be computed by reference to the return multiples contained
in Treasury Regulation Section 1.72-9. For purposes of that computation, the
life expectancy of the Participant and/or his/her Spouse or non-Spouse
beneficiary may not be recalculated. The expected payments to the
Participant under any settlement option made must be more than fifty percent
(50%) of the total payments to be made to both the Participant and the
designated Beneficiary unless the benefit is payable in the form of a
Qualified Joint and Survivor Annuity or the designated Beneficiary is the
Participant's Spouse.
(d) If the Participant dies after his/her Annuity Starting Date and
before his/her entire benefit is distributed, the method of distributing the
remaining portion of his/her benefit shall be at least as rapid as that in
effect as of the date of his/her death.
(e) If a Participant dies before his/her Annuity Starting Date,
his/her entire benefit shall be distributed within five (5) years of his/her
death unless (i) the deceased Participant's benefit is distributed to a
designated Beneficiary over the life of the designated Beneficiary (or a
period not extending beyond the Beneficiary's life expectancy) and the
payments begin not later than one (1) year after the Participant's death or
(ii) his/her benefits are paid in the form of a Qualified Preretirement
Survivor Annuity.
(f) Notwithstanding any provision to the contrary in this Plan, all
distributions under this Plan shall be made in accordance with Section
401(a)(9) of the Code and the regulations issued thereunder, which
provisions shall override any distribution options under this Plan which may
be inconsistent with Code Section 401(a)(9). The Administrative Committee
shall, in its sole and absolute discretion, determine
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whether an optional method of payment of a Participant's Distributable
Benefit, as elected by the Participant, meets the requirements of Section
401(a)(9) of the Code, and applicable Internal Revenue Service regulations.
This discretion shall be exercised in a uniform and nondiscriminatory
manner.
10.7 Explanation of Qualified Joint and Survivor Annuity.
---------------------------------------------------
If the payment of any portion of a Participant's Distributable Benefit
is subject to the requirements of Code Section 417, within a reasonable period
of time before the Participant's Annuity Starting Date (and consistent with
regulations under Section 417(a)(3)(A) of the Code) the Administrative Committee
shall furnish to the Participant to whom the provisions of Section 417 apply a
written explanation of
(a) the terms and conditions of the Qualified Joint and Survivor
Annuity,
(b) the Participant's right to make, and the effect of, a
Qualified Election to waive the Qualified Joint and Survivor Annuity form of
benefit,
(c) the rights of the Participant's Spouse, and
(d) the right to make, and the effect of, a revocation of a
Qualified Election.
10.8 Lump Sum Distributions.
----------------------
(a) Notwithstanding the preceding provisions of this Article VIII
or the provisions of Article IX, if the value of the Participant's
Distributable Benefit does not exceed Thirty-Five Hundred Dollars ($3,500)
as of the earlier of his/her date of death or Annuity Starting Date, or did
not exceed Thirty-Five Hundred Dollars ($3,500) as of the date of any prior
distribution, the Administrative Committee shall direct that the
Distributable Benefit be paid in a single lump sum as soon as
administratively practicable following the Valuation Date determined in
accordance with Section 6.3. However, no such lump sum benefit shall be paid
after the Participant's Annuity Starting Date, unless the Participant and
his/her Spouse (or where the Participant has died, the surviving Spouse)
consent in writing to such distribution.
(b) If the value of the Participant's Distributable Benefit
exceeds Thirty-Five Hundred Dollars ($3,500) as of the Annuity Starting
Date, the
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Participant (or where the Participant has died, the surviving Spouse) may
make a Qualified Election to receive payment of the Distributable Benefit in
a single lump sum.
10.9 Election for Direct Rollover of Distributable Benefit to Eligible
-----------------------------------------------------------------
Retirement Plan.
---------------
(a) Effective as of January 1, 1993, to the extent required by
Section 401(a)(31) of the Code, a Participant whose Distributable Benefit
becomes payable in an "eligible rollover distribution," as defined in (b)(i)
below, shall be entitled to make an election for a direct rollover of all or
a portion of the taxable portion of such Distributable Benefit to an
"eligible retirement plan," as defined in (b)(ii) below. Any non-taxable
portion of a Participant's Distributable Benefit shall be payable to the
Participant, as provided in this Article X. For purposes of this Article X,
a Participant who makes a direct rollover election in accordance with this
Section 10.9 shall be deemed to have received payment of the portion of
his/her Distributable Benefit that is subject to such election as of the
date payment is made from the Plan.
(b) For purposes of this Section,
(i) an "eligible rollover distribution" shall mean any
distribution of all or any portion of a Participant's Distributable
Benefit, except that an eligible rollover distribution shall 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 Participant or the joint lives (or
joint life expectancies) of the Participant and the Participant's
designated Beneficiary, or for a specified period of ten years or more;
any distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any distribution that
is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities), and
(ii) an "eligible retirement plan" shall mean any plan
described in Code Section 402(c)(8)(B), the terms of which permit the
acceptance of a direct rollover from a qualified plan.
(c) A Participant's direct rollover election under this Section
shall be made in accordance with
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rules and procedures established by the Administrative Committee and shall
specify the dollar or percentage amount of the direct rollover, the name and
address of the eligible retirement plan selected by the Participant and such
additional information as the Administrative Committee deems necessary or
appropriate in order to implement the Participant's election. It shall be
the Participant's responsibility to confirm that the eligible retirement
plan designated in the direct rollover election will accept the eligible
rollover distribution. The Administrative Committee shall be entitled to
effect the direct rollover based on its reasonable reliance on information
provided by the Participant, and shall not be required to independently
verify such information, unless it is clearly unreasonable not to do so.
(d) At least thirty (30) days, but not more than ninety (90) days,
prior to a Participant's Annuity Starting Date, the Participant shall be
given written notice of any right he/she may have to elect a direct rollover
of his/her eligible rollover distribution; provided, however, a Participant
who has attained at least Normal Retirement Date or whose Distributable
Benefit does not exceed Thirty-Five Hundred Dollars ($3,500) may waive the
thirty (30) day advance notice requirement after his/her receipt of the
direct rollover notice by making an affirmative election to make or not to
make a direct rollover of all or a portion of his/her eligible rollover
distribution.
(e) If a Participant's Distributable Benefit becomes payable in an
eligible rollover distribution pursuant to Section 10.6 or 10.8, and such
Participant fails to file a direct rollover election with the Administrative
Committee prior to his/her Annuity Starting Date, or if the Administrative
Committee is unable to effect a direct rollover election within a reasonable
time after the election is filed with the Administrative Committee due to
the failure of the Participant to take such actions as may be required by
the eligible retirement plan before it will accept the rollover, the
Participant's entire Distributable Benefit shall be paid to him/her in
accordance with Section 10.6 or 10.8, as applicable, after withholding
applicable income taxes.
(f) If the eligible retirement plan specified by the Participant
will not accept a direct rollover of any Company Stock that the Participant
has elected to receive as part of his/her Distributable Benefit, such
Company Stock will be distributed to the Participant.
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(g) To the extent required by Section 401(a)(31) of the Code, if
all or a portion of a Participant's Distributable Benefit is payable his/her
surviving Spouse in an eligible rollover distribution, or to a former Spouse
in accordance with a "qualified domestic relations order," such surviving
Spouse or former Spouse shall be entitled to elect a direct rollover of all
or a portion of such distribution to an individual retirement account or an
individual retirement annuity in accordance with the provisions of this
Section.
10.10 Forfeitures, Repayment.
----------------------
(a) Any non-vested amounts subject to forfeiture in accordance
with Section 10.2(b) shall be forfeited as of the earlier of the date the
Participant's Vested Interest in his/her Company Basic Contributions Account
is distributed from the Plan, or the date such Participant incurs five (5)
consecutive Breaks in Service. If a Participant's Vested Interest in his/her
Company Basic Contributions Account equals zero as of the date of his/her
termination of employment, such Participant shall be deemed to have received
distribution of his/her Vested Interest in his/her Company Basic
Contributions Account as of the date of such termination of employment.
(b) Any amounts forfeited by Participants during the Plan Year in
accordance with Subsection (a) above shall be applied as soon as
administratively feasible to reduce Company Basic Contributions for such
Plan Year.
(c) A Participant who is deemed to have received distribution of
his/her Vested Interest in his/her Company Basic Contributions Account
solely because such Vested Interest equaled zero when his/her employment
terminated, as provided in Subsection (a) above, shall be fully restored in
the amount forfeited in the case of reemployment as an Eligible Employee
prior to the date on which he/she sustains five (5) consecutive Breaks in
Service. The amount required to be restored to Participant's Company Basic
Contributions Account shall be equal to the dollar amount forfeited upon the
Participant's prior termination of employment. No adjustment in such dollar
amount shall be made for any gains or losses of the Trust Fund between the
date of the forfeiture and the date of the restoration. Restored amounts
shall be paid from forfeitures in the Plan Year of reemployment, or if
forfeitures are not available, the Participating Company shall make an
additional contribution for this purpose.
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10.11 Facility of Payment.
-------------------
If any payee under the Plan is a minor, or if the Administrative
Committee reasonably believes that any payee is legally incapable of giving a
valid receipt and discharge for any payment due him/her, the Administrative
Committee may have such payment, or any part thereof, made to the person (or
persons or institution) whom it reasonably believes is caring for or supporting
such payee, unless it has received due notice of claim therefor from a duly
appointed guardian or committee of such payee. Any such payment shall be a
payment for the account of such payee and shall, to the extent thereof, be a
complete discharge of any liability under the Plan to such payee.
10.12 Purchase of Annuity Contract To Provide Benefits.
------------------------------------------------
The Administrative Committee may direct the Trustee to provide any of
the forms of benefits payable under Sections 10.5 or 10.6 or Section 11.1 (other
than a lump sum payable in cash or amounts payable in Company Stock) by the
application of the Participant's Distributable Benefit to the purchase of a
single premium non-transferable annuity or other insurance contract issued by an
insurance company authorized under one or more state insurance laws to conduct
an insurance business; provided, however, that such issuer is rated by one or
more national financial reporting or national financial rating services as
having a financial condition consistent with such service's highest "investment
grade" rating, or the equivalent thereof, and no representative of the Plan
shall have any obligation to direct the purchase of an annuity from any issuer
whose rating is not of such grade or who, in the sole and absolute discretion of
the Administrative Committee or its delegate, might be less financially secure,
whether or not more favorable annuity purchase rates may be available. Any
annuity or other insurance contract purchased by the Trustee and distributed to
a Participant or a Spouse to provide benefits under the Plan shall satisfy the
applicable requirements of this Article X and Article XI. The purchase of a
contract as provided herein shall, notwithstanding any other provisions of the
Plan, be deemed to be the purchase of benefits having an actuarial equivalent
value of the amount of Participant's Distributable Benefit applied to purchase
such contract. The purchase of any such contract shall be a full and complete
discharge of the Plan, the Trustee, the Company, the Participating Company, and
any Committee acting on behalf of the Plan, with respect to the payment of
benefits of the Participant under this Plan.
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ARTICLE XI
DEATH BENEFITS
11.1 Form of Death Benefits Provided.
-------------------------------
(a) In the case of a married Participant who entered the Plan
prior to January 1, 1995, and who dies before his/her Annuity Starting Date,
his/her Distributable Benefit shall be payable as provided in (i) and (ii)
below.
(i) The portion of his/her Distributable Benefit attributable
to contributions under the Plan for Plan Years commencing on an after
January 1, 1995 shall be paid to the Participant's surviving Spouse or
other Beneficiary as soon as administratively feasible following the
date the Administrative Committee receives all required documentation.
Payment shall be in the form of a lump sum distribution within the
meaning of Code Section 402(e)(4), unless the surviving Spouse or other
Beneficiary elects an optional form of benefit as provided in Section
10.6.
(ii) Except as otherwise provided under Section 11.2, the
portion of his/her Distributable Benefit atributable to contributions
under the Plan for Plan Years commencing prior to January 1, 1995 shall
be paid to his/her surviving Spouse in the form of a Qualified
Preretirement Survivor Annuity. The surviving Spouse shall be entitled
to direct the commencement of payment of the Qualified Preretirement
Survivor Annuity as soon as administratively feasible following the
date of the Participant's death. The failure of the Spouse to direct
payment prior to the date the Participant would have attained Normal
Retirement Date shall be deemed to be an election to defer payment to
such Normal Retirement Date.
(b) In the case of a Participant who enters the Plan on or after
January 1, 1995, or any Participant who does not have a Spouse, if such a
Participant dies before his/her Annuity Starting Date, his/her Distributable
Benefit shall be paid to the Participant's Beneficiary as soon as
administratively feasible following the date the Administrative Committee
receives all required documentation. Payment shall be in the form of a lump
sum distribution within the meaning of Code Section 402(e)(4), unless the
Beneficiary elects an optional form of benefit as provided in Section 10.6.
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(c) In the case of a Participant who dies after his/her Annuity
Starting Date, no benefits shall be payable except to the extent required
under the form of benefit as in effect on the date of the Participant's
death.
For purposes of this Section 11.1, a Participant's Distributable
Benefit shall be determined in accordance with Section 6.3.
11.2 Elections With Respect to Qualified Preretirement Survivor Annuity
------------------------------------------------------------------
Applicable to Participants Who Entered the Plan Prior to January 1, 1995.
------------------------------------------------------------------------
(a) At any time during the Election Period, a Participant who
entered the Plan before January 1, 1995 may make a Qualified Election to
waive the Qualified Preretirement Survivor Annuity payable under Section
11.1(a)(ii), to have his/her Distributable Benefit paid in an optional form
as described in Section 10.6, and to designate a Beneficiary in accordance
with Section 11.3 to receive any benefits payable after his/her death.
(b) Notwithstanding the foregoing, in the case of any Participant
who entered the Plan before January 1, 1995 and who completes an Hour of
Service on or after the first day of the Plan Year in which he/she attains
age thirty-five (35), any Qualified Election by such Participant under this
Section 11.2 relating to a waiver of the Qualified Preretirement Survivor
Annuity made prior to the first day of the Plan Year in which the
Participant attains age thirty-five (35) shall automatically become invalid
as of the first day of such Plan Year, and the provisions of Section
11.1(a)(ii) shall apply as of such date unless the Participant makes a new
Qualified Election in accordance with this Section.
(c) Each Participant who entered the Plan prior to January 1, 1995
shall receive, within a reasonable time after the date he/she satisfies the
eligibility requirements of Article III (and consistent with regulations
under Section 417(a)(3)(B) of the Code), a written explanation of (and
consistent with regulations under Section 417(a)(3)(A) of the Code)
(i) the terms and conditions of the Qualified Preretirement
Survivor Annuity,
(ii) the Participant's right to make, and the effect of, a
Qualified Election under
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Subsection (a) above to waive the Qualified Preretirement Survivor
Annuity form of benefit,
(iii) the rights of the Participant's Spouse, and
(iv) the right to make, and the effect of, a revocation of a
Qualified Election under Subsection (a) above.
The explanation specified in the preceding sentence shall also be given to
such Participant within the period beginning with the first day of the Plan
Year in which the Participant attains age thirty-two (32) and ending with
the close of the Plan Year preceding the Plan Year in which the Participant
attains age thirty-five (35). In the case of a Participant who is rehired,
the explanation shall be given to the Participant within one (1) year of the
date he/she recommences participation.
(d) Notwithstanding the foregoing, in the case of a surviving
Spouse of a Participant who failed to make a Qualified Election to waive the
Qualified Preretirement Survivor Annuity payable under Section 11.1(a)(ii)
prior to his/her date of death, such surviving Spouse shall be entitled to
elect to receive payment of the Participant's Distributable Benefit in any
optional form under Section 10.6 within a reasonable time following the date
of the Participant's death.
11.3 Designation of Beneficiary.
--------------------------
(a) Subject to the provisions of Sections 10.7 and 11.2, whenever
a Participant may be permitted to designate a Beneficiary to receive
benefits under this Plan, such designation shall be made in the form of a
Qualified Election in a form satisfactory to the Administrative Committee.
Subject to the provisions of Sections 10.7 and 11.2, a Participant shall
have the right to change or revoke any such Beneficiary designation by
filing a new Qualified Election with the Administrative Committee, and,
subject to the requirements for a Qualified Election, no notice to any
Beneficiary nor consent by any Beneficiary shall be required to effect any
such change or revocation.
(b) If a deceased Participant shall have failed properly to
designate a Beneficiary, or if the Administrative Committee shall be unable
to locate a designated Beneficiary after reasonable efforts have been made,
or if for any reason a designation shall be
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legally ineffective, or if the Beneficiary shall have predeceased the
Participant, any distribution required to be made under the provisions of
this Plan shall be made by payment in a lump sum within one (1) year after
his/her death to the person or persons included in the highest priority
category among the following, in order of priority:
(i) The Participant's surviving spouse;
(ii) The Participant's surviving children, including adopted
children;
(iii) The Participant's surviving parents; or
(iv) The Participant's estate, provided however, that if the
Administrative Committee cannot locate a qualified representative of
the deceased Participant's estate, or if administration of such estate
is not otherwise required, the Administrative Committee in its
discretion may make the distribution under this Paragraph (iv) to the
deceased Participant's heirs at law, other than those specified in
Paragraphs (i)-(iii), determined in accordance with California law in
effect as of the date of the Participant's death.
(c) The determination by the Administrative Committee as to which
persons, if any, qualify within the foregoing categories should be final and
conclusive upon all persons. In the event that the deceased participant was
not a resident of California at the date of his/her death, the
Administrative Committee, in its discretion, may require the establishment
of ancillary administration in California. In the event that a Participant
shall predecease his/her Beneficiary and on the subsequent death of such
Beneficiary a remaining distribution is payable under the applicable
provisions of this Plan, such distribution shall be payable in the same
order of priority categories as set forth above but determined with respect
to such Beneficiary, subject to the same provisions concerning non-
California residency, the unavailability of an estate representative and/or
the absence of administration of the Beneficiary's estate as are applicable
on the death of the Participant.
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ARTICLE XII
OPERATION AND ADMINISTRATION OF THE PLAN
12.1 Plan Administration.
-------------------
(a) Authority to control and manage the operation and
administration of the Plan shall be vested in the Employee Benefits
Committee. To the extent provided in this Article XII, such authority is
allocated to the Administrative Committee and the Investment Committee
appointed by the Employee Benefits Committee in accordance with Section
12.2.
(b) For purposes of ERISA Section 402(a), the members of the
Employee Benefits Committee, and to the extent applicable, the
Administrative Committee and the Investment Committee, shall be the Named
Fiduciaries of this Plan.
(c) Notwithstanding the foregoing, a Trustee with whom Plan assets
have been placed in trust or an Investment Manager appointed pursuant to
Section 12.5 may be granted exclusive authority and discretion to manage and
control all or any portion of the assets of the Plan in accordance with the
terms of a Trust Agreement or investment management agreement, as
applicable.
12.2 Employee Benefits Committee Powers.
----------------------------------
In addition to any powers and authority conferred on the Employee
Benefits Committee elsewhere in the Plan or by law, the Employee Benefits
Committee shall have, by way of illustration but not by way of limitation, the
following powers and authority:
(a) To appoint an Administrative Committee consisting of at least
three members, all of whom shall hold office until resignation, death or
removal by the Employee Benefits Committee. The Administrative Committee
shall exercise such powers and have such authority in administering the Plan
as provided in Section 12.3.
(b) To appoint an Investment Committee consisting of at least
three members, all of whom shall hold office until resignation, death or
removal by the Employee Benefits Committee. The Investment Committee shall
exercise such powers and have such authority in directing the investment of
the Trust Fund as provided in Section 12.4.
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(c) To allocate fiduciary responsibilities (other than trustee
responsibilities) among the Named Fiduciaries and to designate one or more
other persons to carry out fiduciary responsibilities (other than trustee
responsibilities). However, no allocation or delegation under this Section
12.2 shall be effective until the person or persons to whom the
responsibilities have been allocated or delegated agree to assume the
responsibilities. The term "trustee responsibilities" as used herein shall
have the meaning set forth in Section 405(c) of ERISA.
12.3 Administrative Committee Powers.
-------------------------------
Unless otherwise determined by the Employee Benefits Committee, the
Administrative Committee shall have all discretionary powers necessary to
supervise the administration of the Plan and control its operations. In
addition to any powers and authority conferred on the Administrative Committee
elsewhere in the Plan or by law, the Administrative Committee shall have, by way
of illustration but not by way of limitation, the following powers and
authority:
(a) to allocate fiduciary responsibilities to other persons and to
designate one or more other persons to carry out fiduciary responsibilities
(other than trustee responsibilities). However, no allocation or delegation
under this Section 12.3 shall be effective until the person or persons to
whom the responsibilities have been allocated or delegated agree to assume
the responsibilities. The term "trustee responsibilities" as used herein
shall have the meaning set forth in Section 405(c) of ERISA.
(b) To designate agents to carry out responsibilities relating to
the Plan, other than fiduciary responsibilities.
(c) To employ such legal, actuarial, medical, accounting, clerical
and other assistance as it may deem appropriate in carrying out the
provisions of this Plan, including one or more persons to render advice with
regard to any responsibility any Named Fiduciary or any other fiduciary may
have under the Plan.
(d) To establish rules and regulations from time to time for the
conduct of the Administrative Committee's business and the administration
and effectuation of this Plan.
(e) To administer, interpret, construe and apply this Plan and to
decide all questions which may
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<PAGE>
arise or which may be raised under this Plan by any Employee, Participant,
former Participant, Beneficiary or other person whatsoever, including but
not limited to all questions relating to eligibility to participate in the
Plan, the amount of service of any Participant, and the amount of benefits
to which any Participant or his/her Beneficiary may be entitled.
(f) To determine the manner in which the assets of this Plan, or
any part thereof, shall be disbursed.
(g) To perform or cause to be performed such further acts as it
may deem to be necessary, appropriate or convenient in the efficient
administration of the Plan.
Any action taken in good faith by the Administrative Committee in the exercise
of authority conferred upon it by this Plan shall be conclusive and binding upon
the Participants and their Beneficiaries. All discretionary powers conferred
upon the Administrative Committee shall be absolute.
12.4 Investment Committee Powers.
---------------------------
Unless otherwise determined by the Employee Benefits Committee, the
Investment Committee shall have all discretionary powers necessary to direct the
investment of the Trust Fund. In addition to any powers and authority conferred
on the Investment Committee elsewhere in the Plan or by law, the Investment
Committee shall have, by way of illustration but not by way of limitation, the
following powers and authority:
(a) to direct the Trustee in writing from time to time as to the
investment of the Trust Fund;
(b) to establish segregated investment funds under the Trust Fund;
(c) to borrow funds for investment purposes;
(d) to purchase for the Trust Fund any property or property
interest, real or personal, which the Investment Committee may designate;
(e) to retain, sell, exchange or lease any property of the Trust
Fund, including stock or securities of the Company which satisfy the
requirements for Qualifying Employer Securities as defined in ERISA Section
407, as amended from time to time.
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The Investment Committee, in directing the Trustee as to the investment
of the Trust Fund, shall not be bound as to the character of any investment by
any statute, rule of court or custom governing the investment of trust funds
other than ERISA and the Code, as amended from time to time, and any regulations
or rulings thereunder.
12.5 Investment Manager.
------------------
(a) The Employee Benefits Committee by action reflected in the
minutes thereof, may appoint one or more Investment Managers, as defined in
Section 3(38) of ERISA, to manage all or a portion of the assets of the
Plan.
(b) An Investment Manager shall discharge its duties in accordance
with applicable law and in particular in accordance with Section 404(a)(l)
of ERISA.
(c) An Investment Manager, when appointed, shall have full power
to manage the assets of the Plan for which it has responsibility, and
neither the Employee Benefits Committee, the Administrative Committee, any
Investment Committee, the Company, a Participating Company or the Trustee
shall thereafter have any responsibility for the management of those assets.
12.6 Committee Procedures.
--------------------
(a) A majority of the members of the Administrative Committee or
the Investment Committee, as constituted at any time, shall constitute a
quorum, and any action by a majority of the members of a Committee present
at any meeting, or authorized by a majority of the members in writing
without a meeting, shall constitute the action of such Committee.
(b) The Administrative Committee or the Investment Committee, as
constituted from time to time may designate certain of its members as
authorized to execute any document or documents on behalf of such Committee,
in which event such Committee shall notify the Trustee of this action and
the name or names of the designated members. The Trustee, the Company, a
Participating Company, Participants, Beneficiaries, and any other party
dealing with such Committee may accept and rely upon any document executed
by the designated members as representing action by the Committee until the
Committee shall file with the Trustee a written revocation of the
authorization of the designated members.
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12.7 Compensation of Committees.
--------------------------
(a) Members of the Administrative Committee or Investment
Committee, as constituted from time to time, shall serve without
compensation unless the Board of Directors shall otherwise determine.
However, in no event shall any member of the Administrative Committee or
Investment Committee who is an Employee receive compensation from the Plan
for his/her services as a member of such Committee.
(b) Any member of the Administrative Committee or Investment
Committee shall be reimbursed by the Company for any necessary or
appropriate expenditures incurred in the discharge of duties as a member of
such Committee.
(c) The compensation or fees, as the case may be, of all officers,
agents, counsel, the Trustee, or other persons retained or employed by the
Administrative Committee or Investment Committee shall be fixed by such
Committee.
12.8 Resignation and Removal of Members.
----------------------------------
(a) Any member of the Administrative Committee or Investment
Committee may resign at any time by giving written notice to the other
members and to the Employee Benefits Committee, effective as therein stated.
(b) If a member of the Administrative Committee or Investment
Committee who is an Employee terminates employment, such person shall no
longer be a member of such Committee.
12.9 Appointment of Successors.
-------------------------
(a) Upon the death, resignation, or removal of any Administrative
Committee or Investment Committee member, or other termination of a member's
status as a member of such Committee, the Employee Benefits Committee may
appoint a successor.
(b) Notice of appointment of a successor member of the
Administrative Committee or Investment Committee shall be given by the
Employee Benefits Committee in writing to the Trustee and to the members of
the Administrative Committee and the Investment Committee.
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12.10 Records.
-------
(a) The Administrative Committee and Investment Committee shall
each keep a record of all its proceedings and shall keep, or cause to be
kept, all such books, accounts, records or other data as may be necessary or
advisable in its judgment for the administration of the Plan and to properly
reflect the affairs thereof.
(b) However, nothing in this Section 12.10 shall require the
Administrative Committee, the Investment Committee, or any member thereof to
perform any act which, pursuant to law or the provisions of this Plan, is
the responsibility of the Plan Administrator, nor shall this Section 12.10
relieve the Plan Administrator from such responsibility.
12.11 Reliance Upon Documents and Opinions.
------------------------------------
(a) The members of any Committee acting on behalf of the Plan, the
Board of Directors, the Company, each Participating Company, and any person
delegated under the provisions hereof to carry out any fiduciary
responsibilities under the Plan ("delegated fiduciary"), shall be entitled
to rely upon any tables, valuations, computations, estimates, certificates
and reports furnished by any consultant, or firm or corporation which
employs one or more consultants, upon any opinions furnished by legal
counsel, and upon any reports furnished by the Trustee. The members of any
Committee acting on behalf of the Plan, the Board of Directors, the Company,
each Participating Company, and any delegated fiduciary shall be fully
protected and shall not be liable in any manner whatsoever for anything done
or action taken or suffered in reliance upon any such consultant or firm or
corporation which employs one or more consultants, Trustee, or counsel.
(b) Any and all such things done or actions taken or suffered by
any Committee acting on behalf of the Plan, the Board of Directors, the
Company, each Participating Company, and any delegated fiduciary shall be
conclusive and binding on all Employees, Participants, Beneficiaries, and
any other persons whomsoever, except as otherwise provided by law.
(c) Any Committee acting on behalf of the Plan, the Board of
Directors, the Company, each Participating Company, any delegated fiduciary
may, but are not required to, rely upon all records of the Company with
respect to any matter or thing whatsoever, and may likewise treat those
records as conclusive with respect to all Employees, Participants,
Beneficiaries,
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and any other persons whomsoever, except as otherwise provided by law.
12.12 Requirement of Proof.
--------------------
Any Committee acting on behalf of the Plan or the Company may require
satisfactory proof of any matter under this Plan from or with respect to any
Employee, Participant, or Beneficiary, and no person shall acquire any rights or
be entitled to receive any benefits under this Plan until the required proof
shall be furnished.
12.13 Reliance on Committee Memorandum.
--------------------------------
Any person dealing with a Committee acting on behalf of the Plan may
rely on and shall be fully protected in relying on a certificate or memorandum
in writing signed by any Committee member or other person so authorized, or by
the majority of the members of the Committee, as constituted as of the date of
the certificate or memorandum, as evidence of any action taken or resolution
adopted by such Committee.
12.14 Multiple Fiduciary Capacity.
---------------------------
Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.
12.15 Limitation on Liability.
-----------------------
(a) Except as provided in Part 4 of Title I of ERISA, no person
shall be subject to any liability with respect to his/her duties under the
Plan unless he/she acts fraudulently or in bad faith.
(b) No person shall be liable for any breach of fiduciary
responsibility resulting from the act or omission of any other fiduciary or
any person to whom fiduciary responsibilities have been allocated or
delegated, except as provided in Part 4 of Title I of ERISA.
(c) No action or responsibility shall be deemed to be a fiduciary
action or responsibility except to the extent required by ERISA.
12.16 Indemnification.
---------------
(a) To the extent permitted by law, the Company shall indemnify
each member of the Board of Directors, a Committee acting on behalf of the
Plan, and any other Employee of the Company with duties under the Plan,
against expenses (including any amount paid in settlement) reasonably
incurred by him/her in connection with any claims against him/her by reason
of
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his/her conduct in the performance of his/her duties under the Plan, except
in relation to matters as to which he/she acted fraudulently or in bad faith
in the performance of such duties. The preceding right of indemnification
shall pass to the estate of such a person.
(b) The preceding right of indemnification shall be in addition to
any other right to which the Board member or Committee member or other
person may be entitled as a matter of law or otherwise.
12.17 Bonding.
-------
(a) Except as is prescribed by the Board of Directors, as provided
in Section 412 of ERISA, or as may be required under any other applicable
law, no bond or other security shall be required by any member of the
Administrative Committee, any Investment Committee, or any other fiduciary
under this Plan.
(b) Notwithstanding the foregoing, for purposes of satisfying its
indemnity obligations under Section 12.16, the Company may (but need not)
purchase and pay premiums for one or more policies of insurance. However,
this insurance shall not release the Company of its liability under the
indemnification provisions.
12.18 Prohibition Against Certain Actions.
-----------------------------------
(a) To the extent prohibited by law, in administering this Plan no
Committee acting on behalf of the Plan shall discriminate in favor of any
class of Employees, and particularly it shall not discriminate in favor of
Highly Compensated Employees.
(b) No Committee acting on behalf of the Plan shall cause the Plan
to engage in any transaction that constitutes a nonexempt prohibited
transaction under Section 4975(c) of the Code or Section 406(a) of ERISA.
(c) All individuals who are fiduciaries with respect to the Plan
(as defined in Section 3(21) of ERISA) shall discharge their fiduciary
duties in accordance with applicable law, and in particular, in accordance
with the standards of conduct contained in Section 404 of ERISA.
12.19 Plan Expenses.
-------------
All expenses incurred in the establishment, administration and
operation of the Plan, including but not limited to the expenses incurred by the
members of any
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Committee acting on behalf of the Plan in exercising their duties, shall be paid
by the Company if not paid by the Trust Fund.
12.20 Form and Manner of Participant and Beneficiary Elections.
--------------------------------------------------------
Any elections, designations or applications for benefits by a
Participant or a Beneficiary under this Plan shall be filed in accordance with
any rules and procedures as may be established by the Administrative Committee
from time to time, and in the form and manner prescribed or approved by the
Administrative Committee. Any such elections, designations or applications by a
Participant or his/her Beneficiary under this Plan shall be filed in writing,
unless and to the extent permitted by applicable law, and not inconsistent with
the terms of the Plan, the Administrative Committee makes a telephonic
communication or other electronic filing method available to Participants for
certain elections, designations or applications for benefits.
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ARTICLE XIII
MERGER OF COMPANY; MERGER OF PLAN
13.1 Effect of Reorganization or Transfer of Assets.
----------------------------------------------
In the event of the consolidation or merger of the Company with or into
any other business enterprise, or the sale by the Company of its assets or
stock, the resulting successor enterprise may continue the Plan by adopting the
same by resolution of its board of directors and by executing a supplemental
agreement to the Trust Agreement satisfactory to the Trustee; provided, however,
that such continuation shall be allowed only with the express written
authorization of the Board of Directors of the Company; and provided; further,
that in the case of any merger or consolidation with or transfer of assets or
liabilities to any other plan, each Participant in the Plan must, if the Plan is
then terminated, receive a benefit immediately after the merger, consolidation,
or transfer which is equal to or greater then the benefit he/she would have been
entitled to receive immediately before the merger, consolidation or transfer.
If, within ninety (90) days from the effective date of such consolidation,
merger or sale of assets, the Board of Directors of the Company does not
authorize continuation or such successor does not adopt the Plan, the Plan shall
be terminated in accordance with Section 14.1.
13.2 Merger Restriction.
------------------
Notwithstanding any other provision in this Article, this Plan shall
not in whole or in part merge or consolidate with, or transfer its assets or
liabilities to any other plan unless each affected Participant in this Plan
would receive a benefit immediately after the merger, consolidation, or transfer
(if the Plan then terminated) which is equal to or greater than the benefit
he/she would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).
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ARTICLE XIV
PLAN TERMINATION
14.1 Plan Termination.
----------------
(a) (i) Subject to the following provisions of this Section 14.1,
the Company may terminate all or part of the Plan and the Trust Agreement at
any time by an instrument in writing executed in the name of the Company by
an officer or officers duly authorized to execute such an instrument, and
delivered to the Trustee.
(ii) The Plan and Trust Agreement may terminate if the
Company merges into any other corporation, if as the result of the
merger the entity of the Company ceases, and the Plan is terminated
pursuant to the rules of Section 13.1.
(b) Upon and after the effective date of the termination, no
Participating Company shall make any further contributions under the
terminated portion of the Plan, except as may otherwise be required by law.
(c) The rights of all affected Participants to benefits accrued to
the date of termination of all or a portion of the Plan, to the extent
funded as of the date of termination, shall automatically become fully
vested as of that date.
14.2 Rights of Participants.
----------------------
In the event of the termination of all or a portion of the Plan, for
any cause whatsoever, all assets of the Plan, after payment of expenses, shall
be used for the exclusive benefit of Participants and their Beneficiaries and no
part thereof shall be returned to a Participating Company, except as provided in
Section 5.11 of this Plan.
14.3 Trustee's Duties on Termination.
-------------------------------
(a) On or before the effective date of termination of this Plan,
the Trustee, in accordance with the directions of the Administrative
Committee, shall proceed as soon as possible, but in any event within six
months from the effective date, to reduce all of the assets of the Trust
Fund to cash and/or common stock and other securities in such proportions as
the Administrative Committee shall determine.
(b) After first deducting the estimated expenses for liquidation
and distribution chargeable to the Trust Fund, and after setting aside a
reasonable
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reserve for expenses and liabilities (absolute or contingent) of the Trust,
the Administrative Committee shall make required allocations of items of
income and expense to the Accounts.
(c) Following these allocations, the Trustee shall promptly, after
receipt of appropriate instructions from the Administrative Committee,
distribute in accordance with Article X to each former Participant a benefit
equal to the amount credited to his/her Accounts as of the date of
completion of the liquidation.
(d) The Trustee and the Administrative Committee shall continue to
function as such for such period of time as may be necessary for the winding
up of this Plan and for the making of distributions in accordance with the
provisions of this Plan.
(e) Notwithstanding the foregoing, distributions to Participants
upon Plan termination in accordance with this Section 14.3 shall not be made
if the Company establishes or maintains a "successor plan" as defined in
regulations issued under Section 401(k)(10) of the Code. In the event
benefits are not distributable upon the termination of the Plan, the
Administrative Committee shall direct the Trustee to hold the assets until
benefits become distributable under the Plan, or to transfer such benefits
to the successor plan in accordance with regulations prescribed by the
Secretary of the Treasury.
14.4 Partial Termination.
-------------------
(a) In the event of a partial termination of the Plan within the
meaning of Code Section 411(d)(3), the interests of affected Participants in
the Trust Fund, as of the date of the partial termination, shall become
nonforfeitable as of that date.
(b) That portion of the assets of the Plan affected by the partial
termination shall be used exclusively for the benefit of the affected
Participants and their Beneficiaries, and no part thereof shall otherwise be
applied.
(c) With respect to Plan assets and Participants affected by a
partial termination, the Administrative Committee and the Trustee shall
follow the same procedures and take the same actions prescribed in this
Article XIV in the case of a total termination of the Plan.
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ARTICLE XV
APPLICATION FOR BENEFITS
15.1 Application for Benefits.
------------------------
The Administrative Committee may require any person claiming benefits
under the Plan to submit an application therefor, together with such documents
and information as the Administrative Committee may require. In the case of any
person suffering from a disability which prevents the claimant from making
personal application for benefits, the Administrative Committee may, in its
discretion, permit another person acting on his/her behalf to submit the
application.
15.2 Action on Application.
---------------------
(a) Within thirty (30) days following receipt of an application
and all necessary documents and information, the Administrative Committee's
authorized delegate reviewing the claim shall furnish the claimant with
written notice of the decision rendered with respect to the application.
(b) In the case of a denial of the claimant's application, the
written notice shall set forth:
(i) The specific reasons for the denial, with reference to
the Plan provisions upon which the denial is based;
(ii) A description of any additional information or material
necessary for perfection of the application (together with an
explanation why the material or information is necessary); and
(iii) An explanation of the Plan's claim review procedure.
(c) A claimant who wishes to contest the denial of his/her
application for benefits or to contest the amount of benefits payable to
him/her shall follow the procedures for an appeal of benefits as set forth
in Section 15.3 below, and shall exhaust such administrative procedures
prior to seeking any other form of relief.
15.3 Appeals.
-------
(a) (i) A claimant who does not agree with the decision rendered
with respect to his/her
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application may appeal the decision to the Administrative Committee.
(ii) The appeal shall be made, in writing, within sixty (60)
days after the date of notice of the decision with respect to the
application.
(iii) If the application has neither been approved nor
denied within the thirty (30) day period provided in Section 15.2
above, then the appeal shall be made within sixty (60) days after the
expiration of the thirty (30) day period.
(b) The claimant may request that his/her application be given
full and fair review by the Administrative Committee. The claimant may
review all pertinent documents and submit issues and comments in writing in
connection with the appeal.
(c) The Administrative Committee shall within thirty days of the
receipt of the request hear the appeal and the decision of the
Administrative Committee shall be made promptly, and not later than fifteen
(15) days after the review, unless special circumstances require an
extension of time for processing, in which case a decision shall be rendered
as soon as possible, but not later than one hundred twenty days after the
review.
(d) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant with specific reference to the pertinent Plan
provisions upon which the decision is based.
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ARTICLE XVI
LIMITATIONS ON CONTRIBUTIONS
16.1 General Rule.
------------
(a) Notwithstanding anything to the contrary contained in this
Plan, effective for Plan Years commencing on and after January 1, 1987, the
total Annual Additions under this Plan to a Participant's Account for any
Plan Year shall not exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000) (or if greater, one-
fourth (1/4) of the defined benefit dollar limitation set forth in
Section 415(b) of the Code as in effect for the Limitation Year); or
(ii) Twenty-five percent of the Participant's total
Compensation from the Company and any Affiliated Companies for the
year, excluding amounts otherwise treated as Annual Additions under
Section 16.2.
(b) For purposes of this Article XVI, the "Limitation Year" means
the Plan Year.
16.2 Annual Additions.
----------------
For purposes of Section 16.1, the term "Annual Additions" shall mean,
for any Plan Year, the sum of (i) the amount credited to the Participant's
Accounts from Participating Company contributions for such Plan Year; (ii) to
the extent required under Code Section 415(c)(2), any Employee Contributions for
a Plan Year prior to January 1, 1987; and (iii) any amounts described in
Sections 415(l)(1) or 419(A)(d)(2) of the Code, but shall not include the amount
of any rollover contributions as that term is used in Section 415(c)(2) of the
Code or any transfers from another tax-qualified plan. The Annual Addition for
any Plan Year beginning before January 1, 1987 shall not be recomputed to treat
all Employee Contributions as Annual Additions. The term "Employee
Contributions," for purposes of this Section 16.2, shall mean amounts considered
contributed by the Employee and which do not qualify for tax deferral treatment
under Section 401(k) of the Code.
16.3 Other Defined Contribution Plans.
--------------------------------
If a Participating Company or an Affiliated Company is contributing to
any other defined contribution plan (as defined in Section 414(i) of the Code)
for its Employees, some or all of whom may be Participants in this
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Plan, then contributions to the other plan shall be aggregated with
contributions under this Plan for the purposes of applying the limitations of
Section 16.1.
16.4 Combined Plan Limitation (Defined Benefit Plan).
-----------------------------------------------
In the event a Participant hereunder also is a participant in any
qualified defined benefit plan (within the meaning of Section 415(k) of the
Code) of a Participating Company or an Affiliated Company, then the benefit
payable under such other defined benefit plan, or any of them, shall be reduced
for so long and to the extent necessary to provide that the sum of the "defined
benefit fraction" as defined in Subsection (a) below and the "defined
contribution fraction" as defined in Subsection (b) below, for any Plan Year
shall not exceed 1.
(a) "Defined Benefit Fraction" shall be a fraction, the numerator
of which is the projected benefit of a Participant under all qualified
defined benefit plans adopted by a Participating Company or an Affiliated
Company expressed as either an annual straight life annuity or a qualified
joint and survivor annuity providing the maximum permissible survivor
benefit (determined as of the close of the Plan Year), and the denominator
of which is the lesser of (i) the maximum dollar amount otherwise allowable
for such Plan Year under applicable law times 1.25 or (ii) the Percentage of
compensation limit for such Plan Year times 1.4.
(b) "Defined Contribution Fraction" shall be a fraction, the
numerator of which is the sum of the annual addition of the Participant's
account under this Plan and any other defined contribution plans adopted by
a Participating Company or an Affiliated Company for each Plan Year, and the
denominator of which is the lesser for each such Plan Year of (i) maximum
Annual Addition which could have been made under this Plan and any other
defined contribution plans adopted by the Company or an Affiliated Company
for such Plan Year and for each prior Plan Year of service with a
Participating Company or an Affiliated Company times 1.25 or (ii) the amount
determined under the percentage of compensation limit for such Plan Year
times 1.4. For purposes of this calculation, any employee contributions
under a defined benefit plan adopted by the Company or an Affiliated Company
shall be taken into account.
If the Plan satisfied the applicable requirements of Section 415 of the
Code as in effect for all Plan Years beginning before January 1, 1987, an amount
shall be subtracted from the numerator of the Defined Contribution
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Fraction (not exceeding such numerator) as prescribed by the Secretary of the
Treasury so that the sum of the Defined Benefit Fraction and Defined
Contribution Fraction computed under Section 415(e)(1) of the Code (as revised
by the Tax Reform Act of 1986) does not exceed 1.0 for such Plan Year.
Notwithstanding anything to the contrary in this Plan, in the case of a
Participant who was also a participant before January 1, 1982 in a defined
benefit plan which was in existence on July 1, 1982, and with respect to which
the requirements of Section 415(b) of the Code had been met for all Plan Years,
if such Participant's current accrued benefit under such plan exceeds the
limitation of Section 415(b) of the Code for Plan Years commencing after January
1, 1983, then for purposes of that plan and for purposes of this Section 16.4,
the limitations of Section 415(b) and (c) of the Code with respect to such
individual shall be equal to the Participant's current accrued benefit under
said plan. Solely for purposes of determining the amount of such limitation,
the term "current accrued benefit" shall mean the Participant's accrued benefit
under the defined benefit plan as of the close of the last Plan Year beginning
before January 1, 1983 when expressed as an annual benefit, within the meaning
of Section 415(b)(2) of the Code as in effect for such Plan Years; provided,
however, that such Participant's current accrued benefit is not changed after
July 1, 1982, and no cost of living adjustment occurring after July 1, 1982 is
taken into account.
In the case of a Participant who was also a participant as of January
1, 1987 in a defined benefit plan which was in existence on May 6, 1986, and
with respect to which the requirements of Section 415(b) of the Code had been
met for all Plan Years, if such Participant's current accrued benefit under such
plan exceeds the limitation of Section 415(b) of the Code for Plan Years
commencing on or after January 1, 1987, then for purposes of that plan and for
purposes of this Section 16.4, the limitations of Section 415(b) and (c) of the
Code with respect to such individual shall be equal to the Participant's current
accrued benefit under said plan. Solely for purposes of determining the amount
of such limitation, the term "current accrued benefit" shall mean the
Participant's accrued benefit under the defined benefit plan as of the close of
the last Plan Year beginning before January 1, 1986 when expressed as an annual
benefit, within the meaning of Section 415(b)(2) of the Code as in effect for
such Plan Years; provided, however, that such Participant's current accrued
benefit is not changed after May 5, 1986, and no cost of living adjustment
occurring after May 5, 1986 is taken into account.
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In applying the provisions of this Section 16.4 in the case of a
defined benefit plan which satisfied the requirements of Section 415 of the Code
for the last Plan Year commencing prior to January 1, 1983, or January 1, 1987,
as applicable, any reduction in a Participant's benefit shall be in accordance
with Section 415(e) of the Code, and any regulations promulgated thereunder by
the Secretary of the Treasury. The reduction of a Participant's benefit due from
qualified defined benefit plans shall be made in accordance with uniform rules
adopted jointly by the parties responsible for the control and management of the
operation and administration of such plans.
16.5 Adjustments for Excess Annual Additions.
---------------------------------------
In general, the amount of excess for any Plan Year under this Plan and
any other defined contribution plan (as defined in Code Section 414(i)) or
defined benefit plan (as defined in Code Section 414(j)) maintained by a
Participating Company or an Affiliated Company will be determined so as to avoid
Annual Additions in excess of the limitations set forth in Sections 16.1 through
16.4. However, if as a result of an administrative error in calculating
contributions, the Annual Additions to a Participant's Accounts under this Plan
(after giving effect to the maximum permissible adjustments under the other
plans) would exceed the applicable limitations described in Sections 16.1
through 16.4, the excess Annual Additions shall be corrected in the following
order of priority:
(a) If the Participant made any voluntary after-tax contributions
to this or any other defined contribution plan that is maintained by the
Participating Company or an Affiliated Company, which after-tax
contributions were not matched by matching contributions, within the meaning
of Code Section 401(m), such after-tax contributions shall be returned to
the Participant to the extent of any excess Annual Additions.
(b) If excess Annual Additions remain after the application of the
above rule, if the Participant made any Pre-Tax Contributions to this or any
other defined contribution plan that is maintained by the Participating
Company or an Affiliated Company, which Pre-Tax Contributions were not
matched by matching contributions, within the meaning of Code Section
401(m), such Pre-Tax Contributions shall be returned to the Participant to
the extent of any excess Annual Additions.
(c) If excess Annual Additions remain after the application of the
above rule, if the Participant made any after-tax contributions to this or
any other
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defined contribution plan that is maintained by the Participating Company or
an Affiliated Company, which after-tax contributions were matched by
matching contributions, within the meaning of Code Section 401(m), any such
after-tax contributions shall be returned to the Participant and any
matching contributions attributable thereto shall be reduced to the extent
necessary to eliminate any remaining excess Annual Additions.
(d) If excess Annual Additions remain after the application of the
above rule, if the Participant made any Pre-Tax Contributions to this or any
other defined contribution plan that is maintained by the Participating
Company or an Affiliated Company, which Pre-Tax Contributions were matched
by matching contributions, within the meaning of Code Section 401(m), any
such Pre-Tax Contributions shall be returned to the Participant and any
matching contributions attributable thereto shall be reduced to the extent
necessary to eliminate any remaining excess Annual Additions.
(e) In the event excess amounts remain after making the correction
provided under (a)-(d) above, to the extent of such excess amount, the
Company Basic Contributions on behalf of the Participant in accordance with
Section 5.2 hereof shall be reduced.
(f) Any excess Annual Additions other than excess amounts returned
to the Participant in accordance with this Section shall be applied to
reduce contributions by the appropriate Participating Company for the Plan
Year, and each succeeding Plan Year, if necessary. Until applied to reduce
Participating Company contributions, any such excess amounts shall be held
unallocated in a suspense account and no earnings or losses arising from
investments of the assets of the Plan shall be allocated to such suspense
account.
16.6 Affiliated Company.
------------------
For purposes of this Article XVI, the status of an entity as an
Affiliated Company shall be determined by reference to the percentage tests set
forth in Code Section 415(h).
16.7 Compensation.
------------
For the limited purpose of applying the provisions of this Article XVI
and Article XX, "compensation" means all wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with a Participating
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Company or an Affiliated Company of such Participating Company (including, but
not limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits, reimbursements, and expense allowances under a
nonaccountable plan (as described in Treas. Reg. Section 1.61-2(c)), and
excluding the following:
(a) 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 under a simplified employee pension plan to
the extent such contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(b) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(c) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(d) Other amounts which received special tax benefits, or
contributions made by the Participating Company or an Affiliated Company of
such Participating Company (whether or not under a salary reduction
agreement) towards 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).
Compensation for any Plan Year is the compensation actually paid or
includible in the Participant's gross income during such year.
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ARTICLE XVII
RESTRICTION ON ALIENATION
17.1 General Restrictions Against Alienation.
---------------------------------------
(a) The interest of any Participant or Beneficiary in the income,
benefits, payments, claims or rights hereunder, or in the Trust Fund shall
not in any event be subject to sale, assignment, hypothecation, or transfer.
Each Participant and Beneficiary is prohibited from anticipating,
encumbering, assigning, or in any manner alienating his/her interest under
the Trust Fund, and is without power to do so, except as may otherwise be
provided for in the Trust Agreement. The interest of any Participant or
Beneficiary shall not be liable or subject to his/her debts, liabilities, or
obligations, now contracted, or which may be subsequently contracted. The
interest of any Participant or Beneficiary shall be free from all claims,
liabilities, bankruptcy proceedings, or other legal process now or hereafter
incurred or arising; and the interest or any part thereof, shall not be
subject to any judgment rendered against the Participant or Beneficiary.
(b) In the event any person attempts to take any action contrary
to this Article XVII, that action shall be void and the Company, any
Participating Company, the Administrative Committee, the Trustees and all
Participants and their Beneficiaries, may disregard that action and are not
in any manner bound thereby, and they, and each of them separately, shall
suffer no liability for any disregard of that action, and shall be
reimbursed on demand out of the Trust Fund for the amount of any loss, cost
or expense incurred as a result of disregarding or of acting in disregard of
that action.
(c) The preceding provisions of this Section 17.1 shall be
interpreted and applied by the Administrative Committee in accordance with
the requirements of Code Section 401(a)(13) as construed and interpreted by
authoritative judicial and administrative rulings and regulations.
17.2 Nonconforming Distributions Under Court Order.
---------------------------------------------
(a) In the event that a court with jurisdiction over the Plan and
the Trust Fund shall issue an order or render a judgment requiring that all
or part of a Participant's interest under the Plan and in the Trust Fund be
paid to a Spouse, former Spouse and/or children of the Participant by reason
of or in
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connection with the marital dissolution and/or marital separation of the
Participant and the Spouse, and/or some other similar proceeding involving
marital rights and property interests, then notwithstanding the provisions
of Section 17.1 the Administrative Committee may, in its absolute
discretion, direct the applicable Trustee to comply with that court order or
judgment and distribute assets of the Trust Fund in accordance therewith.
(b) The Administrative Committee's decision with respect to
compliance with any such court order or judgment shall be made in its
absolute discretion and shall be binding upon the Trustee and all
Participants and their Beneficiaries, provided, however, that the
Administrative Committee in the exercise of its discretion shall not make
payments in accordance with the terms of an order which is not a qualified
domestic relations order or which the Administrative Committee determines
would jeopardize the continued qualification of the Plan and Trust under
Section 401 of the Code. Notwithstanding the foregoing, if a domestic
relations order requires payment to an alternate payee prior to the date the
Participant attains age fifty (50), but otherwise satisfies the requirements
for a qualified domestic relations order under Code Section 414(p), the
Administrative Committee may make a distribution to the alternate payee
prior to the date the Participant attains age fifty (50) as if such
distribution is required by a qualified domestic relations order.
(c) Neither the Plan, the Company, a Participating Company, the
Administrative Committee nor the Trustee shall be liable in any manner to
any person, including any Participant or Beneficiary, for complying with any
such court order or judgment.
(d) Nothing in this Section 17.2 shall be interpreted as placing
upon the Company, a Participating Company, the Administrative Committee or
any Trustee any duty or obligation to comply with any such court order or
judgment. The Administrative Committee may, if in its absolute discretion it
deems it to be in the best interests of the Plan and the Participants,
determine that any such court order or judgment shall be resisted by means
of judicial appeal or other available judicial remedy, and in that event the
Trustee shall act in accordance with the Administrative Committee's
directions.
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(e) The Administrative Committee shall adopt procedures and
provide notification to a Participant and alternate payees in connection
with a "qualified domestic relations order," to the extent required under
Code Section 414(p).
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ARTICLE XVIII
PLAN AMENDMENTS
18.1 Amendments.
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The Board of Directors may at any time, and from time to time, amend
the Plan by an instrument in writing executed in the name of the Company by an
officer or officers duly authorized to execute such instrument, and delivered to
the applicable Trustee. However, no amendment shall be made at any time, the
effect of which would be:
(a) To cause any assets of the Trust Fund to be used for or
diverted to purposes other than providing benefits to the Participants and
their Beneficiaries, and defraying reasonable expenses of administering the
Plan, except as provided in Section 5.11;
(b) To have any retroactive effect so as to deprive any
Participant or Beneficiary of any accrued benefit to which he/she would be
entitled under this Plan if his/her employment were terminated immediately
before the amendment, to the extent so doing would contravene Code Section
411(d)(6);
(c) To eliminate or reduce a subsidy or early retirement benefit
or an optional form of benefit to the extent so doing would contravene Code
Section 411(d)(6); or
(d) To increase the responsibilities or liabilities of a Trustee
or an Investment Manager without his/her written consent.
18.2 Retroactive Amendments.
----------------------
Notwithstanding any provisions of this Article XVIII to the contrary,
the Plan may be amended prospectively or retroactively (as provided in Section
401(b) of the Code) to make the Plan conform to any provision of ERISA, any Code
provisions dealing with tax-qualified employees' trusts, or any regulation under
either.
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ARTICLE XIX
MISCELLANEOUS
19.1 No Enlargement of Employee Rights.
---------------------------------
(a) This Plan is strictly a voluntary undertaking on the part of
the Company and any Participating Company and shall not be deemed to
constitute a contract between the Company and any Participating Company and
any Employee, or to be consideration for, or an inducement to, or a
condition of, the employment of any Employee.
(b) Nothing contained in this Plan or the Trust shall be deemed to
give any Employee the right to be retained in the employ of a Participating
Company or to interfere with the right of a Participating Company to
discharge or retire any Employee at any time.
(c) No Employee, nor any other person, shall have any right to or
interest in any portion of the Trust Fund other than as specifically
provided in this Plan.
19.2 Mailing of Payments; Lapsed Benefits.
------------------------------------
(a) All payments under the Plan shall be delivered in person or
mailed to the last address of the Participant or, in the case of the death
of the Participant, to the last address of the Beneficiary or any other
person entitled to such payments under the terms of the Plan.
(b) In the event that a benefit is payable under this Plan to a
Participant, a Beneficiary, or any other person, and after reasonable
efforts such person cannot be located for the purpose of paying the benefit,
the benefit shall be forfeited and as soon thereafter as practicable shall
be applied to reduce contributions by the Company. In the event any person
entitled to payment of a benefit that has been forfeited in accordance with
this Section 19.2 submits a claim for such benefit, the amount forfeited
shall be reinstated (without regard to any interest or investment earnings
on such amount) and paid to the claimant as soon as practicable following
the claimant's production of reasonable proof of his/her identity and
entitlement to such benefit. Payment shall be made out of current
forfeitures, or if necessary, the Company shall make an additional
contribution for purposes of paying such benefit.
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(c) For purposes of this Section 19.2, the term "Beneficiary"
shall include any person entitled under Section 11.3 to receive the interest
of a deceased Participant or deceased designated Beneficiary. It is the
intention of this provision that the benefit will be distributed to an
eligible Beneficiary in a lower priority category under Section 11.3 if no
eligible Beneficiary in a higher priority category can be located by the
Administrative Committee after reasonable efforts have been made.
(d) Notwithstanding the foregoing, in the event that the Plan is
terminated, the following rules shall apply:
(i) All Participants (including Participants who have not
previously claimed their benefits under the Plan) shall be notified of
their right to receive a distribution of their interests in the Plan;
(ii) All Participants shall be given a reasonable length of
time, which shall be specified in the notice, in which to claim their
benefits;
(iii) The benefits of any Participants (and their
Beneficiaries) who do not claim their benefits within the designated
time period shall escheat to the state in accordance with applicable
state law.
(iv) The Administrative Committee shall prescribe such rules
as it may deem necessary or appropriate with respect to the notice and
escheat rules stated above.
(e) Should it be determined that the preceding rules relating to
escheat of benefits upon Plan termination are inconsistent with any of the
provisions of the Code and/or ERISA, these provisions shall become
inoperative without the need for a Plan amendment and the Administrative
Committee shall prescribe rules that are consistent with the applicable
provisions of the Code and/or ERISA.
19.3 Addresses.
---------
Each Participant shall be responsible for furnishing the Administrative
Committee with his/her correct current address and the correct current name and
address of his/her Beneficiary or Beneficiaries.
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19.4 Notices and Communications.
--------------------------
(a) All applications, notices, designations, elections, and other
communications from Participants shall be in writing, on forms prescribed by
the Administrative Committee and shall be mailed or delivered to the office
designated by the Administrative Committee, and shall be deemed to have been
given when received by that office.
(b) Each notice, report, remittance, statement and other
communication directed to a Participant or Beneficiary shall be in writing
and may be delivered in person or by mail. An item shall be deemed to have
been delivered and received by the Participant when it is deposited in the
United States Mail with postage prepaid, addressed to the Participant or
Beneficiary at his/her last address of record with the Administrative
Committee.
19.5 Reporting and Disclosure.
------------------------
The Plan Administrator shall be responsible for the reporting and
disclosure of information required to be reported or disclosed by the plan
administrator pursuant to ERISA or any other applicable law.
19.6 Governing Law.
-------------
All legal questions pertaining to the Plan shall be determined in
accordance with the provisions of ERISA and the laws of the State of California.
All contributions made hereunder shall be deemed to have been made in
California.
19.7 Interpretation.
--------------
(a) Article and Section headings are for convenient reference only
and shall not be deemed to be part of the substance of this instrument or in
any way to enlarge or limit the contents of any Article or Section. Unless
the context clearly indicates otherwise, masculine gender shall include the
feminine, and the singular shall include the plural and the plural the
singular.
(b) The provisions of this Plan shall in all cases be interpreted
in a manner that is consistent with this Plan satisfying the requirements of
Code Section 401(a).
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19.8 Withholding for Taxes.
---------------------
Any payments out of the Trust Fund may be subject to withholding for
taxes as may be required by any applicable federal or state law.
19.9 Limitation on Company, Participating Company, Committees and Trustee
--------------------------------------------------------------------
Liability.
---------
Any benefits payable under this Plan shall be paid or provided for
solely from the Trust Fund and neither the Company, any Participating Company,
the Committees described in Article XII nor the Trustee assume any
responsibility for the sufficiency of the assets of the Trust to provide the
benefits payable hereunder.
19.10 Successors and Assigns.
----------------------
This Plan and the Trust established hereunder shall inure to the
benefit of, and be binding upon, the parties hereto and their successors and
assigns.
19.11 Counterparts.
------------
This Plan document may be executed in any number of identical
counterparts, each of which shall be deemed a complete original in itself and
may be introduced in evidence or used for any other purpose without the
production of any other counterparts.
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ARTICLE XX
TOP-HEAVY PLAN RULES
20.1 Applicability.
-------------
(a) Notwithstanding any provision in this Plan to the contrary,
the provisions of this Article XX shall apply in the case of any Plan Year
commencing on or after January 1, 1984 in which the Plan is determined to be
a Top-Heavy Plan under the rules of Section 20.3.
(b) Except as is expressly provided to the contrary, the rules of
this Article XX shall be applied after the application of the Affiliated
Company rules of Section 2.3.
20.2 Definitions.
-----------
(a) For purposes of this Article XX, the term "Key Employee" shall
mean any Employee or former Employee who, at any time during the Plan Year
or any of the four (4) preceding Plan Years, is or was --
(i) An officer of a Participating Company having an annual
compensation greater than fifty percent (50%) of the amount in effect
under Code Section 415(b)(1)(A) for this Plan Year. However, no more
than fifty (50) Employees (or, if lesser, the greater of three (3) or
ten percent (10%) of the Employees) shall be treated as officers;
(ii) One of the ten (10) employees having annual
compensation from a Participating Company of more than the limitation
in effect under Code Section 415(c)(1)(A) and owning (or considered as
owning within the meaning of Code Section 318) the largest interests in
the Company. For this purpose, if two (2) Employees have the same
interest in the Company, the employee having greater annual
compensation from the Company shall be treated as having a larger
interest;
(iii) A Five-Percent Owner of a Participating Company; or
(iv) A One Percent Owner of a Participating Company having
an annual compensation from the Company of more than one hundred fifty
thousand dollars ($150,000).
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(b) For purposes of this Section 20.2, the term "Five-Percent
Owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the outstanding
stock of a Participating Company or stock possessing more than five percent
(5%) of the total combined voting power of all stock of the Company. The
rules of Subsections (b), (c), and (m) of Code Section 414 shall not apply
for purposes of applying these ownership rules. Thus, this ownership test
shall be applied separately with respect to every Participating Company.
(c) For purposes of this Section 20.2, the term "One Percent
Owner" means any person who would be described in Subsection (b) if "one
percent (1%)" were substituted for "five percent (5%)" each place where it
appears therein.
(d) For purposes of this Section 20.2, the rules of Code Section
318(a)(2)(C) shall be applied by substituting "five percent (5%)" for "fifty
percent (50%)."
(e) For purposes of this Article XX, the term "Non-Key Employee"
shall mean any Employee who is not a Key Employee.
(f) For purposes of this Article XX, the terms "Key Employee" and
"Non-Key Employee" include their Beneficiaries. Any benefits payable from
the Plan following the death of a Participant shall be treated as payable to
the Participant.
20.3 Top-Heavy Status.
----------------
(a) The term "Top-Heavy Plan" means, with respect to any Plan
Year --
(i) Any defined benefit plan if, as of the Determination
Date, the present value of the cumulative accrued benefits under the
Plan for Key Employees exceeds sixty percent (60%) of the present value
of the cumulative accrued benefits under the plan for all Employees,
and
(ii) Any defined contribution plan if, as of the
Determination Date, the aggregate of the account balances of Key
Employees under the Plan exceeds sixty percent (60%) of the present
value of the aggregate of the account balances of all Employees under
the plan.
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For purposes of this Subsection (a), the term "Determination Date" means, with
respect to any Plan Year, the last day of the preceding Plan Year. In the case
of the first Plan Year of any plan, the term "Determination Date" shall mean the
last day of that Plan Year.
The present value of account balances under a defined contribution plan shall be
determined as of the most recent valuation date. The present value of accrued
benefits under a defined benefit plan shall be determined as of the same
valuation date as used for computing plan costs for minimum funding. The
present value of the cumulative accrued benefits of a Non-Key Employee shall be
determined under either:
(i) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by affiliated companies, within the
meaning of Code Sections 414(b), (c), (m) or (o); or
(ii) if there is no such method, as if such benefit accrued
not more rapidly than the lowest accrual rate permitted under the
fractional accrual rate of Section 411(b)(1)(C) of the Code.
(b) Each plan maintained by a Participating Company required to be
included in an Aggregation Group shall be treated as a Top-Heavy Plan if the
Aggregation Group is a Top-Heavy Group. If a plan maintained by a
Participating Company is part of an Aggregation Group which is not a Top-
Heavy Group, then notwithstanding anything to the contrary in this
Subsection (b), no plan of a Participating Company in that Aggregation Group
shall be treated as a Top-Heavy Plan.
(i) The term "Aggregation Group" means --
(A) Each Plan of a Participating Company in which a Key
Employee is a Participant, and
(B) Each other plan of a Participating Company which
enables any plan described in Subparagraph (A) to meet the
requirements of Code Sections 401(a)(4) or 410.
Also, any plan not required to be included in an Aggregation Group
under the preceding rules may be treated as being part of such group if
the group would continue to meet the requirements of Code
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Sections 401(a)(4) and 410 with the plan being taken into account.
(ii) The term "Top-Heavy Group" means any Aggregation Group
if the sum (as of the Determination Date) of --
(A) The present value of the cumulative accrued benefits
for Key Employees under all defined benefit plans included in the
group, and
(B) The aggregate of the account balances of Key
Employees under all defined contribution plans included in the
group exceeds sixty percent (60%) of a similar sum determined for
all Employees.
(iii) For purposes of determining --
(A) The present value of the cumulative accrued benefit
of any Employee, or
(B) The amount of the account balance of any Employee,
such present value or amount shall be increased by the aggregate
distributions made with respect to the Employee under the plan during
the five (5) year period ending on the Determination Date. The
preceding rule shall also apply to distributions under a terminated
plan which, if it had not been terminated, would have been required to
be included in an Aggregation Group. Also, any rollover contribution or
similar transfer initiated by the Employee and made after December 31,
1983 to a plan shall not be taken into account with respect to the
transferee plan for purposes of determining whether such plan is a Top-
Heavy Plan (or whether any Aggregation Group which includes such plan
is a Top-Heavy Group).
(c) If any individual is a Non-Key Employee with respect to any
plan for any Plan year, but the individual was a Key Employee with respect
to the plan for any prior Plan Year, any accrued benefit for the individual
(and the account balance of the individual) shall not be taken into account
for purposes of this Section 20.3.
(d) If any individual has not received any Compensation from a
Participating Company (other than benefits under the Plan) or performed any
services at
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any time during the five (5) year period ending on the Determination Date,
any accrued benefit for such individual (and the account balance of the
individual) shall not be taken into account for purposes of this Section
20.3.
20.4 Minimum Contributions.
---------------------
For each Plan Year in which the Plan is Top-Heavy, the minimum
contributions for that year shall be determined in accordance with the rules of
this Section 20.4.
(a) Except as provided below, the minimum contribution (excluding
amounts deferred under a cash or deferred arrangement under Section 401(k)
of the Code) for each Non-Key Employee who has not separated from service as
of the last day of the Plan Year, regardless of whether such Non-Key
Employee has less than 1,000 Hours of Service during the Plan Year, shall be
not less than three percent (3%) of his/her Compensation.
(b) Subject to the following rules of this Subsection (b), the
percentage set forth in Subsection (a) above shall not be required to exceed
the percentage at which contributions (including amounts deferred under a
cash or deferred arrangement under Section 401(k) of the Code) are made (or
are required to be made) under the Plan for the year for the Key Employee
for whom the percentage is the highest for the year. This determination
shall be made by dividing the contributions for each Key Employee by so much
of his/her total compensation for the year as does not exceed the maximum
permissible under Code Section 401(a)(17) for the year. For purposes of this
Subsection (b), all defined contribution plans required to be included in an
Aggregation Group shall be treated as one plan. However, the rules of this
Subsection (b) shall not apply to any plan required to be included in an
Aggregation Group if the plan enables a defined benefit plan to meet the
requirements of Code Section 401(a)(4) or 410.
(c) The requirements of this Section 20.4 must be satisfied
without taking into account contributions under chapter 2 or 21 of the Code,
Title II of the Social Security Act, or any other Federal or State law.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Participating
Company, both of which are determined to be Top-Heavy Plans, the defined
benefit minimum shall be provided under the defined
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benefit plan, but shall be offset by the benefits provided under the defined
contribution plan.
(e) For purposes of determining Participating Company
Contributions under Article V, in no instance may the Plan take into account
an Employee's Compensation in excess of the first two hundred thousand
dollars ($200,000) (or such greater amount as may be permitted pursuant to
Section 401(a)(17) of the Code). For purposes of this Section 20.4, an
Employee's Compensation shall be determined in accordance with Section 16.7.
20.5 Maximum Annual Addition.
-----------------------
(a) Except as set forth below, in the case of any Top-Heavy Plan
the rules of Code Section 415(e)(2)(B) and (3)(B) shall be applied by
substituting "1.0" for "1.25."
(b) The rule set forth in (a) above shall not apply if the
requirements of both (i) and (ii), below, are satisfied.
(i) The requirements of this Paragraph (i) are satisfied if
the rules of Section 20.4(a) above would be satisfied after
substituting "four percent (4%)" for "three percent (3%)" where it
appears therein with respect to participants covered only under a
defined contribution plan.
(ii) The requirements of this Paragraph (ii) are satisfied
if the Plan would not be a Top-Heavy Plan if "ninety percent (90%)"
were substituted for "sixty percent (60%)" each place it appears in
Subsection 20.3(a).
(c) The rules of Subsection (a) above shall not apply with respect
to any Employee as long as there are no --
(i) Company contributions, forfeitures, or voluntary
nondeductible contributions allocated to the Employee under a defined
contribution plan maintained by a Participating Company, or
(ii) Accruals by the Employee under a defined benefit plan
maintained by a Participating Company.
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20.6 Vesting Rules.
-------------
In the event that the Plan is determined to be Top-Heavy in accordance
with the rules of Section 20.3, then the vesting schedule of the Plan must be
changed to that set forth below:
<TABLE>
<CAPTION>
Nonforfeitable
Years of Service Percentage
---------------- --------------
<S> <C>
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
If the vesting provisions under Section 8.1 shift in or out of the
above schedule for any Plan Year because of the Plan's Top-Heavy status, such
shift is an amendment to the vesting provisions to which the election under
Section 8.1(d) applies.
20.7 Non-Eligible Employees.
----------------------
The rules of this Article XX shall not apply to any Employee included
in a unit of employees covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between employee representatives
and one or more employers if there is evidence that retirement benefits were the
subject of good-faith bargaining between such employee representatives and the
employer or employers.
IN WITNESS WHEREOF, in order to record the adoption of this Plan, ZERO
Corporation, has caused this instrument to be executed by its duly authorized
officers this _______ day of _______________, 19__, effective, however, as of
January 1, 1994 except as otherwise expressly provided herein.
ZERO CORPORATION
By:________________________
By:________________________
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[LETTERHEAD OF GIBSON, DUNN & CRUTCHER APPEARS HERE]
OCTOBER 25, 1994
C 99007-00935
ZERO Corporation
444 South Flower St.
Los Angeles, CA 90071
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen and Mesdames:
We have acted as counsel to ZERO Corporation, a Delaware corporation (the
"Company"), in connection with the preparation of a Registration Statement on
Form S-8 to be filed with the Securities and Exchange Commission (the
"Registration Statement") with respect to the registration under the Securities
Act of 1933, as amended, of (i) 750,000 shares (the "Option Shares") of Common
Stock, $.01 par value per share, of the Company (the "Common Stock") which have
been reserved for issuance from time-to-time pursuant to awards granted and to
be granted under the Company's 1994 Stock Option Plan (the "Plan"); (ii) 200,000
shares (the "Savings Plan Shares") of Common Stock to be issued under the ZERO
Corporation Retirement Savings Plan (the "Savings Plan"); and (iii) an
indeterminate number of interests in the Savings Plan.
We have examined, among other things, the Company's Certificate of
Incorporation and Bylaws, the Plan and related agreements, and records of
corporate proceedings and other actions taken and proposed to be taken by the
Company in connection with the authorization, issuance and sale of the Option
Shares. Based on the foregoing and in reliance thereon, it is our opinion that
the Option Shares, when issued pursuant to awards granted and exercised in
accordance with the provisions of the Plan and related agreements, will be
legally issued, fully paid and non-assessable.
<PAGE>
[LETTERHEAD OF GIBSON,DUNN & CRUTCHER APPEARS HERE]
ZERO Corporation
October 25, 1994
Page 2
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/Gibson, Dunn & Crutcher
GIBSON, DUNN & CRUTCHER
PFZ/SSH
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Zero Corporation on Form S-8 of the reports of Deloitte & Touche dated May 12,
1994, appearing in and incorporated by reference in the Annual Report on Form
10-K of Zero Corporation for the fiscal year ended March 31, 1994 and to the
reference to Deloitte & Touche LLP under the heading "Experts" in the
prospectus, which is part of this Registration Statement.
/s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Los Angeles, California
October 25, 1994
