<PAGE> 1
As filed with the Securities and Exchange Commission on December 29, 1995
Registration No. 33-________
_____________________________________________________________________________
FORM S-8
SECURITIES AND EXCHANGE COMMISSION
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BEARINGS, INC.
(Exact name of issuer as specified in its charter)
Ohio 34-0117420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3600 Euclid Avenue
Cleveland, Ohio 44115
(Address of Principal Executive Offices) (Zip Code)
BEARINGS, INC.
RETIREMENT SAVINGS PLAN
(Full title of the plan)
Robert C. Stinson
Vice President-Administration, Human Resources
General Counsel and Secretary
3600 Euclid Avenue
Cleveland, Ohio 44115
(Name and address of agent for service)
(216) 881-8900
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
_______________________________________________________________________________
Title of Proposed Maximum
Securities Amount maximum aggregate Amount of
to be to be offering offering registration
registered(1) registered price per share (2) price (2) fee (3)
_______________________________________________________________________________
Common Stock 700,000 $26.0625 $18,243,750 $6,291
without par value Shares
_______________________________________________________________________________
(1) Pursuant to Rule 416(c) under the Securities Act of 1933, as amended
(the "Act"), this registration statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the employee
benefit plan described herein.
(2) Based on the average of high and low prices of securities of the same
class as reported on the composite tape for securities listed on the
New York Stock Exchange on December 21, 1995.
(3) Computed in accordance with Rule 457(h) under the Act.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
- ---- -- ------------- -- --------- -- ---------
Bearings, Inc. (the "Company") incorporates by reference into
this registration statement the following documents:
(a) The Company's Annual Report on Form 10-K for the year
ended June 30, 1995.
(b) The Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1995.
(c) The description of the Company's Common Stock,
without par value, contained in the Company's
Registration Statement on Form 8-B dated October 18,
1988.
All documents subsequently filed by the Company or Bearings,
Inc. Retirement Savings Plan (the "Plan") pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), prior to
the filing of a post-effective amendment that indicates all securities offered
have been sold, or that deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this registration statement and to
be part hereof from the date of filing of such documents.
Item 4. Description of Securities
- ---- -- ----------- -- ----------
Not applicable.
Item 5. Interests of Named Experts and Counsel
- ---- -- --------- -- ----- ------- --- -------
Not applicable.
Item 6. Indemnification of Directors and Officers
- ---- -- --------------- -- --------- --- --------
Pursuant to Section 1701.13(E) of the Ohio Revised Code, the
Company will indemnify any director or officer and any former director or
officer of the Company, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement, actually and reasonably incurred by him
or her by reason of the fact that he or she is or was such a director or
officer, in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, to the
full extent permitted by applicable law.
Section 29 of the Code of Regulations of the Company provides
that the Company shall indemnify any person who is or was a director or officer
of the Company or who is serving at the request of the Company as a director,
officer or trustee of another enterprise (and his or her heirs, executors and
administrators) against expenses (including attorneys' fees, judgments, fines
and amounts paid in settlement) actually and reasonably incurred by him or her
by reason of the fact that he or she was such director, officer or
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<PAGE> 3
trustee in connection with any threatened, pending or contemplated action, suit
or proceeding, whether civil, criminal, administrative or investigative to the
full extent and according to the procedures and requirements in the Ohio
Revised Code as the same may be in effect from time to time.
The Company has purchased insurance policies indemnifying its
officers and directors and the officers and directors of its subsidiaries
against claims and liabilities (with stated exceptions) to which they may
become subject by reason of their positions with the Company as officers and
directors.
The Company has also entered into agreements with its
directors and certain of its officers which indemnify them against claims and
liabilities to which they may become subject by reason of their position with
the Company.
Item 7. Exemption from Registration Claimed
- ---- -- --------- ---- ------------ -------
Not applicable.
Item 8. Exhibits
- ---- -- --------
(4)(a) Amended and Restated Articles of Incorporation of
Bearings, Inc. filed with the Ohio Secretary of
State on October 18, 1988 (reference is made to
Exhibit (4)(a) to the Bearings, Inc. Form 8-K dated
October 21, 1988, SEC File No. 1-2299, which
exhibit is incorporated herein by reference).
(4)(b) Code of Regulations of Bearings, Inc. adopted
September 6, 1988 (reference is made to Exhibit
(4)(b) to the Bearings, Inc. Form 8-K dated October
21, 1988, SEC File No. 1-2299, which exhibit is
incorporated herein by reference).
(4)(c) Certificate of Amendment of Amended and Restated
Articles of Incorporation of Bearings, Inc. filed
with the Ohio Secretary of State on October 27,
1988 (reference is made to Exhibit (4)(c) to the
Bearings, Inc. Form 10-Q for the Quarter ended
September 30, 1988, SEC File No. 1-2299, which
exhibit is incorporated herein by reference).
(4)(d) Certificate of Merger of Bearings, Inc. (Ohio) and
Bearings, Inc. (Delaware) filed with the Ohio
Secretary of State on October 18, 1988 (reference
is made to Exhibit (4) to the Bearings, Inc. Annual
Report on Form 10-K for the fiscal year ended June
30, 1989, SEC File No. 1-2299, which exhibit is
incorporated herein by reference).
(4)(e) Certificate of Amendment of Amended and Restated
Articles of Incorporation of Bearings, Inc. filed
with the Ohio Secretary of State on October 17,
1990 (reference is made to Exhibit (4)(e) to the
Bearings, Inc. Form 10-Q for the quarter ended
September 30, 1990, SEC File No. 1-2299, which
exhibit is incorporated herein by reference).
(4)(f) $80,000,000 Maximum Aggregate Principal Amount Note
Purchase and Private Shelf Facility dated October
31, 1992 between Bearings,
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<PAGE> 4
Inc. and The Prudential Insurance Company of America
(reference is made to Exhibit (4)(f) to the Bearings, Inc.
Form 10-Q for the quarter ended September 30, 1992, SEC File
No. 1-2299, which exhibit is incorporated herein by
reference).
(5) Opinion of Squire, Sanders & Dempsey as to the legality of the
securities registered.
(23)(a) Consent of Deloitte & Touche LLP.
(23)(b) Consent of Squire, Sanders & Dempsey (contained in Exhibit 5).
(99) Bearings, Inc. Retirement Savings Plan.
(b) The Company hereby undertakes that it will submit the
Plan and any amendment thereto to the Internal Revenue Service ("IRS") in a
timely manner and will make all changes required by the IRS in order to qualify
the Plan.
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Item 9. Undertakings
- ---- -- ------------
(a) The Company hereby undertakes:
(1) To file, during any period in which offers and
sales are being made, a post-effective amendment to
this registration statement to include any material
information with respect to the plan of distribution
not previously disclosed in this registration
statement or any material change to such information
in this registration statement;
(2) That, for the purpose of determining any
liability under the Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered that remain unsold at the termination of
the offering.
(b) The Company hereby undertakes that, for purposes of
determining any liability under the Act, each filing of its annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act that is
incorporated by reference in this registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising
under the Act may be permitted to directors, officers and controlling persons
of the Company, the Company 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 Company of expenses incurred or paid by a director, officer or
controlling person of the Company 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 Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cleveland, State of Ohio, on the 29th day of
December 1995.
BEARINGS, INC.
By: /s/John C. Dannemiller
-------------------------------
John C. Dannemiller
Chairman of the Board and
Chief Executive Officer
By: /s/John R. Whitten
-------------------------------
John R. Whitten
Vice President-Finance and
Treasurer
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 dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ John C. Dannemiller Chairman of the Board, December 29, 1995
- ------------------------- Chief Executive Officer
John C. Dannemiller and Director
/s/ John C. Robinson President, Chief Operating December 29, 1995
- ------------------------- Officer and Director
John C. Robinson
/s/ John R. Whitten Vice President-Finance and December 29, 1995
- ------------------------- Treasurer (Principal Financial
John R. Whitten Officer)
Controller (Principal ____________, 1995
- ------------------------- Accounting Officer)
Mark O. Eisele
Director ____________, 1995
- -------------------------
Mark O. Eisele
</TABLE>
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<PAGE> 7
<TABLE>
<S> <C> <C>
Director ____________, 1995
- -------------------------
William E. Butler
/s/ Russel B. Every Director December 29, 1995
- -------------------------
Russel B. Every
/s/ Russell R. Gifford Director December 29, 1995
- -------------------------
Russell R. Gifford
/s/ L. Thomas Hiltz Director December 29, 1995
- -------------------------
L. Thomas Hiltz
Director ____________,1995
- -------------------------
John J. Kahl
/s/ Jerry Sue Thornton, Ph.D. Director December 29, 1995
- -------------------------
Jerry Sue Thornton, Ph.D.
</TABLE>
THE PLAN. Pursuant to the requirements of the Securities Act of 1933, the Plan
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cleveland, State of
Ohio, on the 29th day of December 1995.
BEARINGS, INC. RETIREMENT
SAVINGS PLAN
BY BEARINGS, INC., AS
PLAN ADMINISTRATOR
By: /s/ John C. Dannemiller
----------------------------
John C. Dannemiller
Chairman of the Board and
Chief Executive Officer
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<TABLE>
<CAPTION>
EXHIBIT INDEX
------------- Page in
Registration
Statement
---------
<S> <C> <C>
(4)(a) Amended and Restated Articles of Incorporation of *
Bearings, Inc. filed with the Ohio Secretary of State
on October 18, 1988.
(4)(b) Code of Regulations of Bearings, Inc. adopted September *
6, 1988.
(4)(c) Certificate of Amendment of Amended and Restated *
Articles of Incorporation of Bearings, Inc. filed with
the Ohio Secretary of State on October 27, 1988.
(4)(d) Certificate of Merger of Bearings, Inc. (Ohio) and *
Bearings, Inc. (Delaware) filed with the Ohio Secretary
of State on October 18, 1988.
(4)(e) Certificate of Amendment of Amended and Restated *
Articles of Incorporation of Bearings, Inc. filed with
the Ohio Secretary of State on October 17, 1990.
(4)(f) $80,000,000 Maximum Aggregate Principal Amount Note *
Purchase and Private Shelf Facility dated October 31,
1992 between Bearings, Inc. and The Prudential Insurance
Company of America.
(5) Opinion of Squire, Sanders & Dempsey as to the legality of the
securities registered.
(23)(a) Consent of Deloitte & Touche LLP.
(23)(b) Consent of Squire, Sanders & Dempsey (contained in Exhibit 5).
(99) Bearings, Inc. Retirement Savings Plan.
_________________________
* Incorporated herein by reference; See Item 8
</TABLE>
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<PAGE> 1
December 29, 1995
Bearings, Inc.
3600 Euclid Avenue
Cleveland, Ohio 44115
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
Reference is made to your Registration Statement on Forms S-8 filed
with the Securities and Exchange Commission on December 29, 1995 with respect
to 700,000 shares of common stock, without par value ("Common Stock"), of
Bearings,Inc. to be offered pursuant to Bearings, Inc. Retirement Savings Plan
(the "Plan"). We are familiar with the Plan, and we have examined such
documents and certificates and considered such matters of law as we deemed
necessary for the purpose of this opinion.
Based upon the foregoing, we are of the opinions that the Common Stock
and interests offered pursuant to the Plan, when issued in accordance with the
provisions of the Plan, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statements.
Respectfully submitted,
/s/ Squire, Sanders & Dempsey
<PAGE> 1
Exhibit 23 (a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation be reference in this Registration Statement of
Bearings, Inc. on Form S-8 of our reports dated August 4, 1995, appearing in
and incorporated by reference in the Annual Report on Form 10-K of Bearings,
Inc. for the year ended June 30, 1995.
DELOITTE & TOUCHE LLP
Cleveland, Ohio
December 29, 1995
<PAGE> 1
EXHIBIT (99)
BEARINGS, INC. RETIREMENT SAVINGS PLAN
(JANUARY 1, 1996 RESTATEMENT)
<PAGE> 2
BEARINGS, INC. RETIREMENT SAVINGS PLAN
(JANUARY 1, 1996 RESTATEMENT)
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Pronouns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II
HOURS OF SERVICE
2.1 Crediting of Hours of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Determination of Non-Duty Hours of Service . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Allocation of Hours of Service to Plan Years . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE III
EMPLOYEE PARTICIPATION AND SERVICE
3.1 Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 New Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Years of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 Changes in Employment Status; Transfers of Employment . . . . . . . . . . . . . . . . . . 14
3.5 Reemployment of a Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
CONTRIBUTIONS
4.1 401(k) Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Transferred Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Excess 401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Allocation of Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . 17
4.8 Changes in 401(k) Contribution Authorizations . . . . . . . . . . . . . . . . . . . . . . 18
4.9 Suspension of 401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.10 Deposit of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
LIMITATION ON CONTRIBUTIONS
5.1 Limitation on 401(k) Contributions and Matching Contributions . . . . . . . . . . . . . . 20
5.2 Contribution Limitation Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3 Adjustment of ADP and ACP Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Multiple Use Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Adjustment for Investment Gain or Loss . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Limitations on Matching Contributions and 401(k) Contributions . . . . . . . . . . . . . 24
</TABLE>
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ARTICLE VI
DEPOSIT AND INVESTMENT OF CONTRIBUTIONS
6.1 Deposit of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 Investment Elections for 401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Investment Change of Future 401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Election to Transfer Invested Past 401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . 26
6.5 Election to Transfer Rollover Contributions and Transferred Contributions . . . . . . . . . . . . . 26
6.6 Investment of Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7 Investment Elections for Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Investment Change of Future Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . 27
6.9 Election to Transfer Invested Past Profit Sharing Contributions . . . . . . . . . . . . . . . . . . 27
ARTICLE VII
MAINTENANCE OF FUNDS AND INVESTMENT OF CONTRIBUTIONS
7.1 Establishment and Maintenance of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2 Income on Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.3 Accounts and Subaccounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.4 Voting of Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.5 Investment Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VIII
VALUATIONS
8.1 Valuation of Participant's Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Finality of Trustee's Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.3 Account Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IX
LOANS AND WITHDRAWALS
9.1 Application and Approval of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 Terms and Conditions of a Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.3 Repayment of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.4 Withdrawal of Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Withdrawal of 401(k) Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X
TERMINATION OF PARTICIPATION AND DISTRIBUTION
10.1 Termination of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.2 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.3 Election of Former Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.4 Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.5 Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 Restriction on Alienation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.7 Reemployment of Former Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.8 Disposition of Forfeited Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.9 Buy Back of Forfeited Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.10 Distribution to Other Qualified Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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<TABLE>
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10.11 Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.12 Mandatory Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.13 Eligible Rollover Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.14 Securities Act Section 16 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XI
BENEFICIARIES
11.1 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.2 Beneficiary in the Absence of Designated Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.3 Spousal Consent to Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XII
ADMINISTRATION
12.1 Authority of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.2 Actions of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.3 Claims Review Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.5 Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.6 Administrative Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XIII
THE BEARINGS ESOP
13.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.2 Suspense Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.3 Exempt Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.4 Limitation on Allocations of Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.5 Allocations of Matching Contributions from the Bearings ESOP . . . . . . . . . . . . . . . . . . . . . 50
13.6 Transfer of Contributions from the Bearings ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
13.7 Restrictions on Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.2 Limitation of Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
14.4 Withdrawal of an Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.5 Effect of Plan Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
14.6 Corporate Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XV
ADOPTION BY SUBSIDIARIES; EXTENSION
TO NEW BUSINESS OPERATIONS 54
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 No Commitment as to Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.2 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.3 No Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.4 Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.5 Duty to Furnish Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.6 Merger, Consolidation or Transfer of Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.7 Transition Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16.8 Internal Revenue Service Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
16.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
APPENDIX A - LIMITATIONS ON CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B - TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
(iv)
<PAGE> 6
BEARINGS, INC. RETIREMENT SAVINGS PLAN
(JANUARY 1, 1996 RESTATEMENT)
WHEREAS, Bearings, Inc. (hereinafter referred to as the "Company")
established The Bearings, Inc. Employees' Profit-Sharing Plan and Trust
(hereinafter referred to as the "Profit-Sharing Plan") under a certain trust
agreement dated December 29, 1950, for the benefit of eligible employees of the
Company; and
WHEREAS, effective as of May 1, 1988, the Company established the
Bearings, Inc. 401(k) Savings Plan and Trust (hereinafter referred to as the
"Savings Plan") for the benefit of eligible employees of the Company; and
WHEREAS, the Profit-Sharing Plan was merged into the Savings Plan as of
July 1, 1995, to form the Bearings, Inc. Retirement Savings Plan (hereinafter
referred to as the "Plan"); and
WHEREAS, the Company desires to amend and restate the Plan as of
January 1, 1996;
NOW, THEREFORE, effective as of January 1, 1996, the Plan is hereby
amended and restated as hereinafter set forth with respect to Employees employed
by the Company or Related Corporations on and after said date.
<PAGE> 7
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following words and phrases as used herein shall
have the meanings hereinafter set forth, unless a different meaning is plainly
required by the context:
(1) The term "ACCOUNT" shall mean any of the accounts
established and maintained in accordance with the provisions of
Section 7.3 which reflects the interest of a Participant in the
Funds, including, but not limited, to a 401(k) Contribution
Account, a Matching Contribution Account, Profit Sharing
Contribution Account, and a Rollover Account.
(2) The term "BEARINGS ESOP" shall mean the stock bonus
portion of the Plan which constitutes an employee stock ownership
plan under Section 4975(e)(7) of the Code as well as a stock bonus
plan qualified under Section 401(a) of the Code.
(3) The term "BENEFICIARY" shall mean the person or persons
who, in accordance with the provisions of Article XI, shall be
entitled to receive distribution hereunder in the event a
Participant or former Participant dies before his interest shall
have been distributed to him in full.
(4) The term "BREAK IN SERVICE" shall mean any Plan Year
during which an Employee completes not more than 500 Hours of
Service; provided, however, that for purposes of Section 3.3(b) no
Employee shall incur a Break in Service solely by reason of an
absence due to (i) the birth of a child of the Employee, (ii) the
pregnancy of the Employee, (iii) the placement of a child with the
Employee on account of the adoption of such child by such
Employee, or (iv) the caring for a child of an Employee for a
period beginning following the birth or placement of such child,
with respect to the Plan Year in which such absence begins, if the
Employee otherwise would have incurred a Break in Service or, in
any other case, in the immediately following Plan Year.
(5) The term "CODE" shall mean the Internal Revenue Code of
1986, as amended from time to time. Reference to a section of the
Code shall include such section and any comparable section or
sections of any future legislation that amends, supplements, or
supersedes such section.
(6) The term "COMPANY" shall mean Bearings, Inc., its
corporate successors, and the surviving corporation resulting from
any merger, consolidation, or reorganization of Bearings, Inc.
with or into any other corporation or corporations.
(7) The term "COMPANY STOCK" shall mean common shares of
Bearings, Inc.
(8) The term "COMPANY STOCK FUND" shall mean the Fund which is
invested primarily in Company Stock and which is established and
maintained pursuant to the provisions of Section 7.1.
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<PAGE> 8
(9) The term "COMPENSATION" shall mean the total wages which
are paid to a Participant during a Plan Year by an Employer for
his services as an Employee while he is a Participant, including
incentive compensation, commissions, bonuses, and elective
contributions made on behalf of such Participant under the Plan or
any other plan that are not includible in gross income under
Sections 125 and 402(e)(3), but excluding moving or educational
reimbursement expenses, amounts deferred under any non-qualified
deferred compensation program, amounts realized from the exercise
of stock options, imputed income attributable to any fringe
benefit, and any amounts received in lieu of benefits under a plan
that meets the requirements of Section 125 of the Code; provided,
however, that for Plan Years beginning on or after January 1,
1994, the annual Compensation of a Participant taken into account
under the Plan shall not exceed the OBRA '93 annual compensation
limit of $150,000, as adjusted for increases in the cost of living
in accordance with the provisions of Section 401(a)(17)(B) of the
Code. The cost of living in effect for a calendar year applies to
any period, not exceeding 12 months, over which Compensation is
determined (a "determination period") beginning in such calendar
year. If a determination period consists of fewer than 12 months,
the OBRA '93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period and the denominator of which is 12.
Compensation of a Participant's "family members" (as defined in
paragraph (19)) shall be treated as Compensation of the
Participant in accordance with Section 414(q)(6) of the Code, as
modified by Section 401(a)(17) of the Code. If, as a result of the
application of such rules the adjusted Section 401(a)(17)
limitation is exceeded, then the limitation shall be prorated in
proportion to each such individual's compensation as determined
under such paragraph prior to the application of such limitation.
(10) The term "ELIGIBLE RETIREMENT PLAN" shall mean:
(a) an individual retirement account described in
Section 408(a) of the Code;
(b) an individual retirement annuity described in
Section 408(b) of the Code;
(c) a trust maintained pursuant to a plan that meets
the requirements of Section 401(a) of the Code;
and
(d) an annuity plan described in Section 403(a) of
the Code.
In the case of an Eligible Rollover Distribution to a beneficiary
who is a Participant's surviving spouse, an Eligible Retirement
Plan is only an individual retirement account or individual
retirement annuity described in (a) or (b) above.
(11) The term "ELIGIBLE ROLLOVER DISTRIBUTION" shall mean
all or any portion of a Plan distribution made to a Participant or
a Beneficiary who is a deceased Participant's surviving spouse or
an alternate payee under a qualified domestic relations order;
provided that such alternate
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<PAGE> 9
payee is a Participant's spouse or former spouse; and provided further
that such distribution is not (i) one of a series of substantially
equal periodic payments made at least annually for a specified period
of ten or more years or for the life of such Participant or Beneficiary
or the joint lives of the Participant and a designated beneficiary,
(ii) a distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; or (iii) the portion of any distribution
which is not includable in gross income (determined without regard to
any exclusion of net unrealized appreciation with respect to employer
securities).
(12) The term "EMPLOYEE" shall mean any common law employee who is
employed by an Employer; provided, however, that such term shall not
include any person who renders service to an Employer solely as a
director or as an independent contractor, any person who is covered by
a collective bargaining agreement unless such agreement specifically
provides for coverage by the Plan, and any person who is a nonresident
alien and who receives no earned income within the meaning of Section
911(b) of the Code from an Employer which constitutes income from
sources within the United States as defined in Section 861(a)(3) of the
Code.
(13) The term "EMPLOYER" shall mean the Company, Bruening Bearings,
Inc., Dixie Bearings Incorporated, King Bearing, Inc. or any Related
Corporation which adopts the Plan as herein provided so long as the
Related Corporation has not withdrawn from the Plan.
(14) The term "EMPLOYMENT COMMENCEMENT DATE" shall mean the first
date on which an Employee completes an Hour of Service.
(15) The term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time. Reference to a
section of ERISA shall include such section and any comparable section
or sections of any future legislation that amends, supplements, or
supersedes such section.
(16) The term "401(K) CONTRIBUTION ACCOUNT" shall mean the Account
of a Participant which reflects his interest in the Funds attributable
to Elective Deferral Contributions and which is established pursuant to
the provisions of Sections 6.1 and 7.3.
(17) The term "401(K) CONTRIBUTIONS" shall mean the cash or
deferred arrangement contributions made by an Employer on behalf of a
Participant in accordance with the provisions of Section 4.1 as well as
a duly executed and filed Compensation reduction election shall be
deposited to the 401(k) Contribution Account of such Participant in
accordance with the provisions of Section 6.1.
(18) The term "FUND" shall mean any of the funds established and
maintained for the investment of Plan assets in accordance with the
provisions of Article VII.
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<PAGE> 10
(19) The term "HIGHLY-COMPENSATED EMPLOYEE" shall mean any Employee
of an Employer for a Plan Year who is a "highly compensated employee"
within the meaning of Section 414(q) of the Code who during such Plan
Year or during the immediately preceding Plan Year:
(a) received compensation (as defined in Appendix A of the Plan
without regard to Sections 125, 402(e)(3), and 402(h)(1)(B) of
the Code) in excess of $75,000 (such dollar limitation shall
be adjusted automatically in accordance with the maximum
amount permitted under Section 414(q) of the Code); or
(b) received compensation (as defined in Appendix A of the Plan
without regard to Sections 125, 402(e)(3), and 402(h)(1)(B) of
the Code) in excess of $50,000 (such dollar limitation shall
be adjusted automatically in accordance with the maximum
amount permitted under Section 414(q) of the Code) and was in
the Top-Paid Group; or
(c) was at any time an officer of an Employer or a Related
Corporation and received compensation in excess of 50 percent
of the amount in effect under Section 415(b)(1)(A) of the
Code, except as otherwise hereinafter provided; or
(d) owned directly or indirectly 5% or more of an Employer (so
that he is a "5% owner" as defined in Section 416(i)(1) of the
Code);
provided, however, if an Employee was not a "Highly-Compensated
Employee" during the immediately preceding Plan Year, he shall not
be a Highly Compensated Employee pursuant to subparagraph (a), (b)
or (c) unless he is one of the 100 Employees with the highest
compensation (as defined in Appendix A of the Plan without regard
to Sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in
the case of Elective Deferral Contributions made pursuant to a
Compensation reduction agreement, without regard to Section 403(b)
of the Code) for such Plan Year. For purposes of subparagraph (c)
above, the number of employees who shall be counted as officers
shall be limited as follows:
<TABLE>
<CAPTION>
Total Number of Employees of Maximum Number of Officers
the Affiliated Group to be Counted
---------------------------- --------------------------
<S> <C>
30 or less 3
30 - 500 10% of total number of
Employees (fractions to be
rounded to next highest
whole number)
Over 500 50
</TABLE>
If the number of officers for any Plan Year exceeds the maximum
number that may be counted, the officers shall be ranked in order
of compensation (as defined in Appendix A of the Plan without
regard to
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<PAGE> 11
Sections 125, 402(e)(3), and 402(h)(1)(B) of the Code, and in the case
of Tax Deferred Contributions made pursuant to a salary reduction
agreement, without regard to Section 403(b) of the Code) for the Plan
Year, and only the maximum number with the highest such compensation
shall be counted as officers. If for any Plan Year no Employer has an
officer with compensation greater than the compensation specified in
subparagraph (c) above, the highest-paid officer among the Employers
shall nevertheless be treated as a Highly-Compensated Employee. If
during any Plan Year an Employee is a "family member" of a
Highly-Compensated Employee described above in subparagraph (d) or of a
Highly-Compensated Employee in the group consisting of the ten
Highly-Compensated Employees paid the greatest compensation during the
Plan Year, then such "family member" shall not be considered to be a
separate Employee and the compensation paid to such "family member" and
any applicable Employer contribution under the Plan paid to or on
behalf of such "family member" shall be treated as if it were paid to
(or on behalf of) the related Highly-Compensated Employee. As used
herein, the term "family member" means with respect to any Employee,
the Employee's spouse, parent, grandparent (and spouse), great
grandparent (and spouse), child (and spouse), grandchild (and spouse),
great grandchild (and spouse) and any other lineal ascendants or
descendants and their spouses and for purposes of applying the
limitation of Section 401(a)(17) to paragraph (9) of this Section 1.1
shall mean the spouse of any Employee and any lineal descendant thereof
who has not attained age 19 before the close of the Plan Year. In
addition, a former Employee shall be considered a Highly-Compensated
Employee if he was a Highly-Compensated Employee at the time his
employment terminated or at any time after attaining age 55.
Notwithstanding the foregoing provisions of this paragraph (19), the
sole purpose of this paragraph is to define and apply the term
Highly-Compensated Employee strictly (and only) to the extent necessary
to satisfy the minimum requirements of Section 414(q) of the Code
relating to "highly-compensated employees." This paragraph (19) shall
be interpreted, applied and, if and to the extent necessary, deemed
modified without formal amendments of language, so as to satisfy solely
the minimum requirements of Section 414(q) of the Code.
(20) The term "HOUR OF SERVICE" shall mean an hour which is
determined and credited to an Employee in accordance with the
provisions of Article II.
(21) The term "LEASED WORKER" shall be a person (other than a
person who is an employee without regard to this paragraph (21))
engaged in performing services for a Related Corporation (the
"recipient") pursuant to an agreement between the recipient and any
other person ("Leasing Organization") who meets the following
requirements:
(a) he has performed services for one or more recipients
(or for any other "related persons" determined in
accordance with Section 414(n)(6) of the Code) on a
substantially full-time basis for a period of at least
one year,
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<PAGE> 12
(b) such services are of a type historically performed in the
business field of the recipient, in the United States, by
employees, and
(c) he is not participating in a "safe harbor plan" of the Leasing
Organization. (For this purpose a "safe harbor plan" is a plan
that satisfies the requirements of Section 414(n)(5) of the
Code, which will be a money purchase pension plan with a
non-integrated employer contribution rate of at least 10% of
compensation and which provides for immediate participation
and full and immediate vesting).
A person who is a Leased Worker during any taxable year beginning
after December 31, 1983 shall be considered an employee of the
Company or a Related Corporation during such period (solely for
the purpose of determining length of service for eligibility and
vesting purposes, and shall also be considered to have been an
employee for any earlier period in which he was a Leased Worker)
but shall not be a Participant and shall not otherwise be eligible
to become covered by the Plan during any period in which he is a
Leased Worker. Notwithstanding the foregoing, the sole purpose of
this paragraph (21) is to define and apply the term "Leased
Worker" strictly (and only) to the extent necessary to satisfy the
minimum requirements of Section 414(n) of the Code relating to
"leased employees". This paragraph (21) shall be interpreted,
applied and, if and to the extent necessary, deemed modified
without formal amendment of language, so as to satisfy solely the
minimum requirements of Section 414(n) of the Code.
(22) The term "MATCHING CONTRIBUTIONS" shall mean the contributions
made by the Employers under the Plan in accordance with the provisions
of Section 4.2 and allocated to the Matching Contributions Accounts of
Participants pursuant to the provisions of Sections 4.2 and 6.1.
(23) The term "MATCHING CONTRIBUTION ACCOUNT" shall mean the
Account of a Participant which reflects his interest in the Funds
attributable to Matching Contributions and forfeitures, if any, and
which is established pursuant to the provisions of Sections 6.1 and
7.3.
(24) The term "OFFICER" shall mean an employee of the Company or a
Related Corporation who is designated as an "Officer" for the purposes
of Section 16 of the Securities Act.
(25) The term "PARTICIPANT" shall mean an Employee who participates
in the Plan in accordance with the provisions of Article III.
(26) The term "PLAN" shall mean the Bearings, Inc. Retirement
Savings Plan as herein set forth with all amendments, modifications,
and supplements hereafter made.
(27) The term "PLAN ADMINISTRATOR" shall mean the Company, which is
the administrator for purposes of the Code.
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<PAGE> 13
(28) The term "PLAN YEAR" shall mean each 12-month period beginning
each January 1 and terminating each subsequent December 31.
(29) The term "PREDECESSOR EMPLOYER" shall mean any entity the
stock of which or any assets of which were acquired by an Employer.
(30) The term "PROFIT SHARING CONTRIBUTIONS" shall mean the
discretionary contributions made by the Employers in accordance with
the provisions of Section 4.3 and deposited in the Profit Sharing
Contribution Account of such Participant in accordance with the
provisions of Sections 4.7 and 6.1.
(31) The term "PROFIT SHARING CONTRIBUTION ACCOUNT" shall mean the
Account of a Participant which reflects his interest in the Funds
attributable to Profit Sharing Contributions and which is established
pursuant to the provisions of Sections 6.1 and 7.3.
(32) The term "RELATED CORPORATION" shall mean any corporation
which is a member of a controlled group of corporations of which an
Employer is a member as determined under Section 414(b) of the Code,
each trade or business (whether or not incorporated) with which the
Company is under common control as determined under Section 414(c) of
the Code, and each organization that is a member of an affiliated
service group, within the meaning of Section 414(m) of the Code, of
which the Company is a member, and any other entity which is required
to be aggregated with the Company pursuant to the provisions of Section
414(o) of the Code.
(33) The term "ROLLOVER CONTRIBUTION ACCOUNT" shall mean the
Account of a Participant which reflects his interest in the Funds
attributable to Rollover Contributions and which is established
pursuant to the provisions of Sections 4.4 and 7.3.
(34) The term "ROLLOVER CONTRIBUTIONS" shall mean the contributions
of a Participant rolled into the Plan in accordance with the provisions
of Section 4.4 and deposited to the Rollover Account of such
Participant in accordance with the provisions of Sections 6.1 and 7.3.
(35) The term "SECURITIES ACT" shall mean the Securities Exchange
Act of 1934, as amended.
(36) The term "SETTLEMENT DATE" shall mean the date on which a
Participant ceases to be a Participant pursuant to the provisions of
Section 10.1.
(37) The term "TOP PAID GROUP" shall mean the group of employees of
the Company and its Related Corporation during a Plan Year which
consists of the top 20 percent of the employees during such Plan Year
when ranked on the basis of compensation (as defined in Section A.2(c)
of Appendix A) paid during such Plan Year. The number of employees to
be counted in the top 20 percent for the Plan Year shall be determined
by multiplying the "net number" of employees by 20 percent. The "net
number" of employees is the total number of
-8-
<PAGE> 14
employees in the Plan Year reduced by the aggregate number of employees
in the following categories:
(a) employees who have less than six months of Service;
(b) employees who normally work less than 17-1/2 hours per week;
(c) employees who normally work during not more than six months
during any year;
(d) employees who have not attained age 21;
(e) employees who are included in a unit of employees covered by a
collective bargaining agreement between a Related Corporation
and a union (except to the extent otherwise provided in
applicable regulations); and
(f) employees who are non-resident aliens and who receive no
earned income (within the meaning of Section 911(d)(2) of the
Code) from a Related Corporation which constitutes income from
sources within the United States (within the meaning of
Section 861(a)(3) of the Code).
(38) The term "TRANSFERRED CONTRIBUTIONS" shall mean the
contributions transferred to the Plan on behalf of a Participant in
accordance with the provisions of Section 4.5 and deposited to the
Rollover Account of such Participant in accordance with the provisions
of Sections 6.1 and 7.3.
(39) The term "TRUST" shall mean the trust maintained in
conjunction with the Plan and pursuant to a certain trust agreement
entered into with the Trustee.
(40) The term "TRUSTEE" shall mean Key Trust Company of Ohio, N.A.,
or any successor trustee which at the time is designated, qualified,
and acting hereunder.
(41) The term "VALUATION DATE" shall mean each business day of each
calendar year or such other date as may be designated as a Valuation
Date by the Company.
(42) The term "YEARS OF SERVICE" shall mean the years of service
with which a Participant is credited in accordance with the provisions
of Section 3.3 for the purpose of determining his interest in his
Profit Sharing Contribution Account and Matching Contribution Account
pursuant to the provisions of Section 10.2.
1.2 PRONOUNS. The masculine pronoun wherever used herein shall
include the feminine in any case so requiring.
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<PAGE> 15
ARTICLE II
HOURS OF SERVICE
2.1 CREDITING OF HOURS OF SERVICE. An Employee shall be credited with
an Hour of Service under the Plan for:
(a) each hour for which he is paid, or entitled to payment, for the
performance of duties for an Employer or a Related Corporation;
provided, however, that hours paid for at a premium rate shall be
treated as straight-time hours; and provided further, that if a record
of hours of employment is not available, the Employee shall be deemed
to have worked 45 hours for each week of employment in which he
performed an Hour of Service, regardless of whether the Employee has
actually worked fewer hours;
(b) each hour for which he is paid, or entitled to payment, by an
Employer or a Related Corporation on account of a period of time during
which no duties are performed (irrespective of whether he remains an
Employee) due to vacation, holiday, illness, incapacity (including
disability), lay-off, jury duty, military duty, or leave of absence, up
to a maximum of eight hours per day and 40 hours per week; provided,
however, that no more than 501 hours of service shall be credited to an
Employee on account of any single continuous period during which he
performs no duties (whether or not such period occurs in a single Plan
Year); provided further, that no hours of service shall be credited for
payment which is made or due under a program maintained solely for the
purpose of complying with applicable Workers' Compensation,
unemployment compensation, or disability insurance laws; and provided
further, that no hours of service shall be credited to an Employee for
payment which is made or due solely as reimbursement for medical or
medically-related expenses incurred by him;
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer or a Related
Corporation; provided, however, that the crediting of hours of service
for back pay awarded, or agreed to, with respect to a period of
employment or absence from employment described in any other paragraph
of this Section 2.1 shall be subject to the limitations set forth
therein and, if applicable, in Section 2.2; and
(d) each hour for which he would have been scheduled to work for an
Employer or a Related Corporation during the period of time that he is
absent from work because of service with the armed forces of the United
States, but only if he returns to work within the period during which
he retains reemployment rights pursuant to federal law, up to a maximum
of eight hours per day and 40 hours per week; provided, however, that
Hours of Service credited under this paragraph (d), when added to hours
of service credited under paragraph (b), if any, by reason of such
absence, shall not exceed a total of 1,000 Hours of Service for any one
Plan Year.
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<PAGE> 16
Notwithstanding anything to the contrary contained in this Section 2.1, no more
than one Hour of Service shall be credited to an Employee for any one hour of
his employment or absence from employment.
2.2 DETERMINATION OF NON-DUTY HOURS OF SERVICE. In the case of a
payment which is made or due from an Employer or a Related Corporation on
account of a period during which an Employee performs no duties, and which
results in the crediting of hours of service under paragraph (b) of Section 2.1,
or in the case of an award or agreement for back pay, to the extent that such
award or agreement is made with respect to a period described in such paragraph
(b), the number of Hours of Service to be credited shall be determined as
follows:
(a) In the case of a payment made or due which is calculated on the
basis of units of time, such as hours, days, weeks, or months, the
number of Hours of Service to be credited shall be the number of
regularly scheduled working hours included in the units of time on the
basis of which the payment is calculated.
(b) In the case of a payment made or due which is not calculated on
the basis of units of time, the number of Hours of Service to be
credited shall be equal to the amount of the payment divided by the
Employee's most recent hourly rate of compensation immediately prior to
the period to which the payment related.
(c) Notwithstanding the provisions of paragraphs (a) and (b), no
Employee shall be credited on account of a period during which no
duties are performed with a number of Hours of Service which is greater
than the number of regularly scheduled working hours during such
period.
(d) If an Employee is without a regular work schedule, the number
of "regularly scheduled working hours" shall mean the average number of
hours worked by Employees in the same job classification during the
period to which the payment relates, or if there are no other Employees
in the same job classification, the average number of hours worked by
the Employee during an equivalent, representative period.
For the purpose of crediting Hours of Service under paragraph (b) of Section
2.1, a payment shall be deemed to be made by or due from an Employer (i)
regardless of whether such payment is made by or due from an Employer or a
Related Corporation directly, or indirectly through (among others) a trust fund
or insurer to which an Employer contributes or pays premiums, and (ii)
regardless of whether contributions made or due to such trust fund, insurer, or
other entity are for the benefit of particular persons or are on behalf of a
group of persons in the aggregate.
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<PAGE> 17
2.3 ALLOCATION OF HOURS OF SERVICE TO PLAN YEARS. Hours of Service
credited under Section 2.1 shall be allocated to the appropriate Plan Year in
the following manner:
(a) Hours of Service described in paragraph (a) of Section 2.1
shall be allocated to the Plan Year or Years in which the duties are
performed.
(b) Hours of Service described in paragraph (b) of Section 2.1
shall be allocated as follows:
(i) Hours of Service credited to an Employee on account of a
payment which is calculated on the basis of units of time, such as
hours, days, weeks, or months, shall be allocated to the Plan Year
or Years in which the period during which no duties are performed
occurs, beginning with the first unit of time to which the payment
relates; and
(ii) Hours of Service credited to an Employee on account of a
payment which is not calculated on the basis of units of time shall
be allocated to the Plan Year in which the period during which no
duties are performed occurs, or if such period extends beyond a
Plan Year, such Hours of Service shall be allocated equally between
the first two such Plan Years.
(c) Hours of Service described in paragraph (c) of Section 2.1
shall be allocated to the Plan Year or Years to which the award or
agreement for back pay pertains, rather than to the Plan Year in which
the award, agreement, or payment is made.
(d) Hours of Service described in paragraph (d) of Section 2.1
shall be allocated to the Plan Year or Years during which such absence
occurred.
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ARTICLE III
EMPLOYEE PARTICIPATION AND SERVICE
3.1 PARTICIPATION. Each Employee who does not waive
participation in the Plan shall become a Participant as of the first day of the
month after he completes an Hour of Service.
3.2 NEW PARTICIPANTS. Upon becoming a Participant
hereunder, an Employee shall be entitled to benefits under the Plan and shall be
bound by all provisions of the Plan. Each such Employee may file with the
Company a written election in the form and manner prescribed by the Company
containing the following information:
(a) His authorization for his Employer to reduce his
Compensation for the purpose of making 401(k) contributions on his
behalf pursuant to the provisions of Section 4.1; and
(b) His election as to the investment of his 401(k)
Contributions pursuant to the provisions of Articles VI and VII.
3.3 YEARS OF SERVICE. For the purposes of the Plan, Years
of Service shall be determined in accordance with the following provisions:
(a) An Employee shall be credited with a Year of Service for
each Plan Year in which he completes at least 1,000 Hours of
Service.
(b) In the case of an Employee who has a Break in Service:
(i) if an Employee did not have a nonforfeitable right to
any portion of his Account attributable to Matching
Contributions or Profit Sharing Contributions before his Break
in Service commenced, Years of Service with an Employer or a
Related Corporation prior to the Break in Service shall be
disregarded for purposes hereof if the number of consecutive
one-year Breaks in Service is greater than five or is at least
equal to the aggregate number of Years of Service with which
the Employee had been credited prior to such Break in Service
(such aggregate number of Years of Service shall not include
any Years of Service not required to be taken into account due
to previous Breaks in Service); and
(ii) if an Employee's Years of Service are not excluded
under (i) above or if the Employee had a nonforfeitable right
to any portion of his Account attributable to Matching
Contributions or Profit Sharing Contributions before his Break
in Service commenced, his Years of Service before the Break in
Service commenced shall be reinstated upon his again
completing an Hour of Service as an Employee.
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Notwithstanding the foregoing, any Participant who is an Employee shall be
credited with Years of Service for employment with a Predecessor Employer
immediately preceding his Employment Commencement Date as though such employment
with such Predecessor Employer was with an Employer.
3.4 CHANGES IN EMPLOYMENT STATUS; TRANSFERS OF EMPLOYMENT.
If a Participant ceases to be an Employee but continues in the employment of an
Employer or a Related Corporation in some other capacity, he shall nevertheless
continue his participation in the Plan as an inactive Participant until his
participation is otherwise terminated in accordance with the provisions of the
Plan; provided, however, that such Participant shall share in Matching
Contributions and Profit Sharing Contributions for any Plan Year of such
participation only on the basis of his Compensation and 401(k) Contributions,
respectively, as an Eligible Employee during such Plan Year. Moreover, if a
person is transferred directly from employment (a) with an Employer in a
capacity other than as an Employee, or (b) with a Related Corporation to
employment with an Employer as an Employee, his Hours of Service with the
Employer or such Related Corporation shall be included in determining his Years
of Service under Section 3.3.
3.5 REEMPLOYMENT OF A PARTICIPANT. If a retired or former
Participant is reemployed by an Employer or a Related Corporation after he
incurs a Settlement Date and if his Years of Service are reinstated pursuant to
the provisions of Section 3.3, he shall again become a Participant on the date
he is reemployed by an Employer; provided, however, that if he is not reemployed
as an Employee, he shall again become a Participant on the first day thereafter
on which he does become an Employee. If a former Participant who incurs a
Settlement Date under Section 10.1 is thereafter reemployed as an Employee and
if his Years of Service are not reinstated pursuant to the provisions of Section
3.3, he shall become a Participant as of the first day of the calendar month
after he meets the eligibility requirements set forth in Section 3.1.
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ARTICLE IV
CONTRIBUTIONS
4.1 401(K) CONTRIBUTIONS. Except as otherwise provided in
this Section 4.1 and subject to the provisions of Article V, commencing with the
date as of which an Employee becomes a Participant, he may elect to have 401(k)
Contributions made to the Plan by his Employer which shall be an integral
percentage of his Compensation of not less than one percent nor more than 15
percent, or such other percentage as may be designated by the Chairman or
President and one other officer of the Company; provided, however, that in no
event shall such 401(k) Contributions of a Participant under the Plan and all
other qualified plans maintained by the Controlled Group during a calendar year
exceed the dollar limit set forth in Section 402(g)(1) of the Code as shall be
in effect for calendar year in accordance with the adjustment factor prescribed
under Sections 402(g)(5) and 415(d) of the Code; and provided further, that
401(k) Contributions made with respect to a Plan Year on behalf of a Highly
Compensated Employee shall not exceed the limitations set forth in Article V. In
the event a Participant elects to have his Employer make any 401(k) Contribution
on his behalf, the Compensation of such Participant shall be reduced by the
percentage he elected to have contributed on his behalf to the Plan in
accordance with the terms of this Section 4.1 and the Compensation reduction
authorization in effect for such Participant pursuant to the provisions of
paragraph (a) of Section 3.1 or Section 4.8. Notwithstanding the foregoing, the
Company may take such actions as it deems appropriate to limit the amount of
401(k) Contributions to the extent necessary to ensure that the limitation under
Section 401(k) of the Code is not exceeded.
4.2 MATCHING CONTRIBUTIONS. Subject to the provisions of
Article V, the Employers shall cause to be paid to the Trustee as its Matching
Contribution hereunder for each calendar quarter an amount which shall be
determined by the Employers and which shall be based upon the sum of the
aggregate 401(k) Contributions (not in excess of six percent of Compensation)
made on behalf of each Participant who makes 401(k) Contributions during such
quarter and who either is an Employee on the last day of such quarter or who
retired, died, or became disabled
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during such quarter. In addition to the foregoing quarterly Matching
Contribution, the Employers shall make an additional Matching Contribution each
Plan Year equal to ten percent of the amount of the 401(k) Contributions which
were made with respect to such Plan Year for each Participant (five percent for
each Officer) and which were invested in the Company Stock Fund.
4.3 PROFIT SHARING CONTRIBUTIONS. Subject to the
provisions of Article V, the Company may cause a Profit Sharing Contribution to
be paid to the Trustee for a Plan Year with respect to Participants who are
employed by the Employers as Employees on June 30 of such Plan Year and who have
completed at least one Year of Service as of such June 30, in an amount, if any,
as the Chairman or President shall determine.
4.4 ROLLOVER CONTRIBUTIONS. In accordance with procedures
established by the Company, a Participant who is entitled to make a rollover
contribution described in Section 402(a)(5), Section 403(a)(4), Section
403(b)(8), or Section 408(d)(3)(A) of the Code, may elect to make a Rollover
Contribution to the Plan by delivering, or causing to be delivered, to the
Trustee the assets in cash which constitute such Rollover Contribution at such
time or times and in such manner as shall be specified by the Company. Upon
receipt by the Trustee, such assets shall be deposited in the Fund or Funds
selected by the Participant in accordance with an investment election filed with
the Company by such Participant. Such election shall specify a combination in
five percent increments which, in the aggregate, equals 100 percent. The
investment option so selected by a Participant shall remain in effect until he
ceases to be an Employee or elects to change such election in accordance with
Section 6.4. As of the date of receipt of such property by the Trustee, a
Rollover Contribution Account shall be established in the name of the
Participant who has made a Rollover Contribution as provided in this Section 4.4
and shall be credited with such assets on such date. A Rollover Contribution by
a Participant pursuant to this Section 4.3 shall not be deemed to be a
contribution of such Participant for any purpose of the Plan and shall be fully
vested in the Employee at all times.
4.5 TRANSFERRED CONTRIBUTIONS. In accordance with procedures
established by the Company, any Participant who was previously a participant in
a plan qualified under Section 401
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or Section 403 of the Code (any such plan being hereinafter referred to as a
transferor plan) may request the Company to arrange for the transfer to the
Trustee of Transferred Contributions, which are funds held by the funding agent
of such transferor plan representing the Employee's vested account balance
thereunder; provided, however, that such transfer shall be made in such manner
and at such time as shall be specified by the Company; and provided further,
that no such transfer shall be permitted from a transferor plan on behalf of an
Employee who was at any time a five percent owner of the employer maintaining
such transferor plan or from a transferor plan which is subject to the joint and
survivor annuity requirements under Section 401(a)(11) of the Code; and provided
further, that any Transferred Contributions which were subject to restrictions
on withdrawal pursuant to Section 401(k) of the Code under the transferor plan
shall continue to be subject to such restrictions upon transfer to the Trustee.
The Trustee shall deposit all Transferred Contributions received by it in the
Trust and, unless specifically provided otherwise, shall credit the respective
Accounts of the Employee on whose behalf such funds were transferred in
accordance with the provisions of Section 4.4 applicable to Rollover
Contributions. In addition, unless specifically provided otherwise, the portion
of the Accounts of an Employee attributable to Transferred Contributions shall
be fully vested in the Employee at all times.
4.6 EXCESS 401(K) CONTRIBUTIONS. In the event a
Participant who had 401(k) Contributions made on his behalf for a taxable year
files with the Company, within the time limit prescribed by the Company after
the end of such year, a written statement that he has elective deferrals within
the meaning of Section 402(g) of the Code for the taxable year in excess of the
dollar limitation on elective deferrals in effect for such taxable year, and
specifying the amount of such excess the Participant claims as allocable to this
Plan, the amount of such excess, adjusted for income or loss attributable to
such excess elective deferrals, shall be distributed to the Participant by April
15 of the year following the year of the excess elective deferral.
4.7 ALLOCATION OF PROFIT SHARING CONTRIBUTIONS. Any Profit
Sharing Contribution made by the Company pursuant to Section 4.3 shall be
allocated as of June 30th of each Plan Year among Participants who are Employees
as of such June 30 of the Plan Year for which such
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Profit Sharing Contribution is contributed and who have completed at least one
Year of Service. Such allocation shall be made in the ratio which the
Compensation of each such Participant for the immediately preceding Plan Year
bears to the aggregate Compensation of all such Participants of such Employer
for such preceding Plan Year.
4.8 CHANGES IN 401(K) CONTRIBUTION AUTHORIZATIONS. Any
Participant may change the percentage of his Compensation which he causes to be
contributed on his behalf as 401(k) Contributions effective as of the first
payroll period ending in the subsequent month by timely filing an amended
Compensation reduction authorization with the Company in accordance with
procedures established by the Company; provided, however, that he shall be
limited to selecting an integral percentage of his Compensation which does not
exceed the applicable limitations set forth in Section 4.1.
4.9 SUSPENSION OF 401(K) CONTRIBUTIONS. Any Participant
who is making 401(k) Contributions, under Section 4.1 may suspend such
contributions by timely filing an advance written notice with the Company. Any
suspension which results in the cessation of 401(k) Contributions shall take
effect beginning with the first payment of Compensation to such Participant
following the filing of such notice and shall remain in effect until 401(k)
Contributions are resumed as hereinafter set forth. Any Participant who has
suspended his 401(k) Contributions in accordance with the foregoing provisions
of this Section 4.9 may resume such contributions only as of the first payroll
period of the calendar month after the effective date of such suspension and by
timely filing a written notice to such effect with the Company in advance of the
date as of which such contributions are to be resumed.
4.10 DEPOSIT OF CONTRIBUTIONS. Each Employer shall cause
to be deposited with the Trustee all 401(k) Contributions, Matching
Contributions, Profit Sharing Contributions, Rollover Contributions, and
Transferred Contributions made in accordance with the provisions of this Article
IV as soon as reasonably practicable; provided, however, that 401(k)
Contributions, Matching Contributions, and Profit Sharing Contributions for any
Plan Year shall be paid to the Trustee within the period of time established by
the Code in order that such contributions shall
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be deductible by the Employers in computing federal income taxes for such Plan
Year. Subject to the provisions of Appendix A, the Accounts of each Participant
shall be credited with his 401(k) Contributions, Matching Contributions, Profit
Sharing Contributions, Rollover Contributions and Transferred Contributions for
such Plan Year allocated to him under this Article IV.
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ARTICLE V
LIMITATION ON CONTRIBUTIONS
5.1 LIMITATION ON 401(k) CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS. Notwithstanding any other provision of the Plan to the
contrary, the Company shall take such action as it deems appropriate to limit
the amount of 401(k) Contributions and Matching Contributions under the Plan
made on behalf of each Highly Compensated Employee for each Plan Year to the
extent necessary to insure that the actual deferral percentage requirement and
average contribution percentage requirement under Sections 401(k) and 401(m) of
the Code, respectively, are not exceeded. The limitations set forth in this
Article V shall be interpreted, applied, and to the extent necessary, deemed
modified without formal amendment thereto so as to satisfy solely the minimum
requirements of Sections 401(k) and 401(m) of the Code.
5.2 CONTRIBUTION LIMITATION DEFINITIONS. For purposes of this
Article V, the following terms are defined as follows:
(a) The term "ACP Test" shall mean the test set forth in
Section 401(m)(2)(A) of the Code which limits the ACP of
the HCE Group.
(b) The term "ADP Test" shall mean the test set forth in
Section 401(k)(3) of the Code which limits the ADP of the
HCE Group.
(c) The term "Average Contribution Percentage" or "ACP" shall
mean the Average Percentage calculated for the HCE Group
and the NHCE Group using the Contributions allocated to
the Participant as of a date within the Plan Year.
(d) The term "Average Deferral Percentage" or "ADP" shall mean
the Average Percentage calculated for the HCE Group and
the NHCE Group using Deferrals allocated to the
Participant as of a date within the Plan Year.
(e) The term "Average Percentage" shall mean the average of
the calculated percentages for each Participant within the
specified group. The calculated percentage refers to
either the Deferrals or Contributions made on the
Participant's behalf for the Plan Year divided by his or
her Compensation for such year.
(f) The term "Contributions" shall mean Matching
Contributions.
(g) The term "Contribution Dollar Limit" shall mean the annual
limit placed on each Participant's Tax Deferred
Contributions,
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which shall be $7,000 per calendar year (as indexed for
cost of living adjustments, pursuant to Sections 402(g)(5)
and 415(d) of the Code.
(h) The term "Deferrals" shall mean 401(k) Contributions but
shall exclude, 401(k) Contributions made on behalf of an
NHCE in excess of the Contribution Dollar Limit.
(i) The term "HCE" shall mean a Highly Compensated Employee.
(j) The term "NHCE" shall mean a Participant who is not a
Highly Compensated Employee.
(k) The term "Family Member" shall mean a Participant who is
at any time during the determination year, a spouse,
lineal ascendant or descendant of (1) an active or former
Participant who at any time during the determination year
is a 5% Owner (within the meaning of the Code Section
414(q)(3)), or (2) an HCE who is among the ten Employees
with the highest Compensation for such year.
(l) The term "HCE Group" and "NHCE Group" shall mean, with
respect to the Company and its Related Corporations, the
respective group of HCEs and NHCEs who are eligible to
have amounts contributed to the Plan on their behalf for
the Plan Year, including Employees who would be eligible
but for their election not to participate or to
contribute, but subject to the following:
(1) If the Related Plans are subject to the ADP or
the ACP Test, and are considered as one plan
for purposes of Sections 401(a)(4) or 410(b)
of the Code, all such plans shall be
aggregated and treated as one plan for
purposes of meeting the ADP Test and the ACP
Test, provided that plans may only be
aggregated if they have the same Plan Year.
(2) If a HCE has any Family Members, the
Deferrals, Contributions and Compensation of
such HCE and his or her Family Members shall
be combined and treated as those of a single
HCE. In addition, such amounts for all other
Family Members shall be removed from the NHCE
Group Average Percentage calculation and be
combined with the Average Percentage
calculation of the HCE Group if the calculated
percentages used in calculating the ADP and
ACP for the HCE Group would increase, or not
be used in the ADP Test or the ACP Test.
(3) If a HCE is covered by more than one cash or
deferred arrangement under the Related Plans,
all such plans (other than plans that are not
required to be aggregated under Treas. Reg.
Section 1.401(k)-1(g)(1)(ii)(B)) shall be
aggregated and treated as one
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plan for purposes of calculating the separate
percentage for such HCE which is used in the
determination of the Average Percentage.
(m) The term "Related Plan" shall mean (a) with respect to
Section 415 of the Code, any other defined contribution
plan or a defined benefit plan (as defined in Section
415(k) of the Code) maintained by a Related Corporation,
and (b) with respect to Section 401(k) and 401(m) of the
Code, any plan or plans maintained by a Related
Corporation which is treated with the Plan as a single
plan for purposes of Section 401(a)(4) or 410(b) of the
Code (other than Section 410(b)(2)(A)).
5.3 ADJUSTMENT OF ADP AND ACP TESTS. If the ADP or ACP
Tests under Section 401(k) and Section 401(m) of the Code, respectively, are not
met, the Company shall determine a maximum percentage to be used in place of the
calculated percentage for each HCE that would reduce the ADP and/or ACP of the
HCE Group by a sufficient amount to meet the ADP and ACP Tests. For any HCE
Group who has a Family Member, the reduction amount shall be prorated among
Family Members as provided in Sections 401(k) and (m) of the Code.
(1) ADP Correction. Deferrals shall be refunded (including
amounts previously refunded because they exceeded the
Contribution Dollar Limit) to the Participant by the end
of the next Plan Year in an amount equal to the actual
Deferral minus the product of the maximum percentage for
that HCE and the HCE's Compensation. If Tax Deferred
Contributions are distributed more than 2-1/2 months after
the end of the Plan Year, an excise tax equal to ten
percent of such excess Tax Deferred Contributions will be
imposed on the Company. Excess Tax Deferred Contributions
shall be treated as Annual Additions for purposes of
Appendix A.
(2) ACP Correction. Contribution amounts in excess of the
maximum percentage of an HCE's Compensation shall, by the
end of the next Plan Year, be refunded to the Participant.
(3) Investment Fund Sources. Once the amount of excess
Deferrals and/or Contributions is determined by type of
Contribution, amounts shall then be taken by type of
investment in direct proportion to the market value of the
Participant's interest in each Fund as of the Valuation
Date as of which the correction is processed.
(4) Family Member Correction. To the extent any reduction is
necessary with respect to an HCE and his or her Family
Members that have been combined and treated for testing
purposes as a single Employee, the excess Contributions
from the ADP Test and/or ACP Test shall be prorated among
each
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such Participant in direct proportion to his or her
Deferrals or Contributions included in each test.
The Company shall determine the maximum percentage for each HCE whose calculated
percentage is the highest at any one time by reducing his calculated percentage
in the following manner until the ADP Test and/or the ACP Test are satisfied:
(a) The calculated percentage for each HCE under a Related
Plan shall be reduced to the extent permitted under such
Related Plan.
(b) If more reduction is needed, the calculated percentage of
each HCE whose calculated percentage is the greatest shall
be reduced by 1/100th of one percentage point.
(c) If more reduction is needed, the calculated percentage of
each HCE whose calculated percentage is the greatest
(including the calculated percentage of any HCE whose
calculated percentage was adjusted under subparagraph (b)
above shall be reduced by 1/100th of one percentage point.
(d) If more reduction is needed, the procedures of
subparagraph (c) shall be repeated.
5.4 MULTIPLE USE TEST. If the sum of the ADP and ACP for
the HCE Group exceeds the aggregate limit under Treas. Reg. Section
1.401(m)-2(b)(3) and the ADP for the HCE Group is more than 125 percent of the
ADP for the NHCE Group and the ACP for the HCE Group is more than 125 percent of
the ACP of the NHCE Group, the ADP and ACP for the HCE Group must also comply
with the requirements of Section 401(m)(9) of the Code, which require that the
sum of these two percentages (as determined after any corrections needed to meet
the ADP Test or ACP Test have been made) must not exceed the greater of:
(a) the sum of
(1) the larger of the ADP or ACP for the NHCE Group times
1.25; and
(2) the smaller of the ADP or ACP for the NHCE Group,
times two if the NHCE Average Percentage is less than
two percent, or plus two percent if it is two percent
or more; or
(b) the sum of
(1) the lesser of the ADP or ACP for the NHCE Group times
1.25; and
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(2) the greater of the ADP or ACP for the NHCE Group,
times two if the NHCE Average Percentage is less than
two percent, or plus two percent if it is two percent
or more.
If the multiple use limit is exceeded, the Company shall determine a maximum
percentage to be used in place of the calculated percentage for each HCE that
would reduce either or both the ADP or ACP for the HCE Group by a sufficient
amount to meet the multiple use limit. Any excess shall be treated in the same
manner that excess Contributions are treated.
5.5 ADJUSTMENT FOR INVESTMENT GAIN OR LOSS. The net
investment gain or loss associated with the excess Deferral or Contribution
amount shall be distributed or forfeited in the same manner as the excess
amount. Such gain or loss is calculated as follows:
E x G x (1 + (10% x M))
----
(AB-G)
where:
E = the total excess Deferrals or Contributions,
G = the net gain or loss for the Plan Year from all of a HCE's
affected Accounts,
AB = the total value of a HCE's affected Accounts, determined
as of the end of the Plan Year being corrected,
M = the number of full months from the Plan Year end to the
date excess amounts are paid, plus one for the month
during which payment is to be made if payment will occur
after the 15th day of the month.
5.6 LIMITATIONS ON MATCHING CONTRIBUTIONS AND 401(K)
CONTRIBUTIONS. The sum of Matching Contributions and 401(k) Contributions
for any Plan Year in no event shall exceed (i) the maximum amount which will
constitute an allowable deduction for such year to the Employers under Section
404 of the Code, (ii) the maximum amount which may be contributed by the
Employers under Section 415 of the Code, or (iii) the maximum amount which may
be contributed pursuant to any regulation, ruling, or order issued pursuant to
law.
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ARTICLE VI
DEPOSIT AND INVESTMENT OF CONTRIBUTIONS
6.1 DEPOSIT OF CONTRIBUTIONS. All 401(k) Contributions of
a Participant shall be deposited in the 401(k) Contribution Account of the
Participant. All Matching Contributions of a Participant shall be deposited in
the Matching Contribution Account of the Participant. All Profit Sharing
Contributions credited and allocated to a Participant shall be deposited by the
Trustee in the Profit Sharing Contribution Account of the Participant. All
Rollover Contributions and Transferred Contributions of a Participant shall be
deposited in the Rollover Account of the Participant. Moreover, such
contributions shall be invested by the Trustee among the Funds pursuant to the
provisions of this Article VI and Section 7.1.
6.2 INVESTMENT ELECTIONS FOR 401(K) CONTRIBUTIONS. Each
Participant, upon becoming a Participant under the Plan in accordance with the
provisions of Section 3.1, shall make an investment election directing the
manner in which his 401(k) Contributions shall be invested in the Funds. The
investment election of a Participant shall specify a combination which in the
aggregate equals 100 percent and conforms with procedures prescribed by the
Company, indicating in which Funds his 401(k) Contributions shall be invested.
The investment option so elected by a Participant shall remain in effect until
he changes his investment election pursuant to Section 6.3 or receives
distribution of his Account pursuant to Section 10.4.
6.3 INVESTMENT CHANGE OF FUTURE 401(K) CONTRIBUTIONS. Each
Participant may elect to change the manner in which contributions allocated to
his 401(k) Contribution Account are to be invested. Any such change in the
investment election of a Participant with respect to his 401(k) Contributions
shall specify a combination, with respect to his 401(k) Contribution Account
among the Funds, which, in the aggregate equals 100 percent. Such elections
shall be made in the manner specified by the Company and in accordance with
procedures prescribed by the Company. The investment options so elected by a
Participant shall remain in effect until he files another election change with
respect to future contributions in accordance with the provisions of the Plan.
Any such election which directs a change in an investment election
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heretofore in effect shall become effective in accordance with procedures
prescribed by the Company and in the form, time and manner specified by the
Company. Amounts credited to the Accounts of such Participant as of any date
prior to the date on which such change is to become effective shall not be
affected by any such change.
6.4 ELECTION TO TRANSFER INVESTED PAST 401(K)
CONTRIBUTIONS. Subject to any procedures adopted by the Company, a
Participant may elect to have the balance of his 401(k) Contribution Account
transferred from the Fund or Funds in which it is invested to one or more of the
other Funds. Any such election shall be made in the form, time, and manner
specified by the Company and in accordance with procedures prescribed by the
Company. Upon receipt of such election, the Company shall cause the Trustee to
transfer such amount as of the effective date of the election of the Participant
from the Fund or Funds in which it is invested to the Fund or Funds elected and
designated by the Participant.
6.5 ELECTION TO TRANSFER ROLLOVER CONTRIBUTIONS AND TRANSFERRED
CONTRIBUTIONS. Subject to any procedures adopted by the Company, a Participant
may elect to have the balance of his Rollover Account transferred from the Fund
or Funds in which it is invested and invested in one or more of the other Funds.
Any such election shall be made in the form, time and manner specified by the
Company and procedures prescribed by the Company. Upon receipt of such election,
the Company shall cause the Trustee to transfer such amount as of the effective
date of the election by the Participant, from the Fund or Funds in which it is
invested to the Fund or Funds elected and designated by the Participant.
6.6 INVESTMENT OF MATCHING CONTRIBUTIONS. All Matching
Contributions shall be invested in the Company Stock Fund.
6.7 INVESTMENT ELECTIONS FOR PROFIT SHARING CONTRIBUTIONS. Each
Participant, upon becoming a Participant under the Plan in accordance with the
provisions of Section 3.1, shall make an investment election directing the
manner in which his Profit Sharing Contributions shall be invested in the Funds.
The investment election of a Participant shall specify a combination which in
the aggregate equals 100 percent and conforms with procedures prescribed
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by the Company, indicating in which Funds his Profit Sharing Contributions shall
be invested. The investment option so elected by a Participant shall remain in
effect until he changes his investment election pursuant to Section 6.8 or
receives distribution of his Profit Sharing Account pursuant to Section 10.4.
6.8 INVESTMENT CHANGE OF FUTURE PROFIT SHARING CONTRIBUTIONS. Each
Participant may elect to change the manner in which contributions allocated to
his Profit Sharing Contribution Account are to be invested. Any such change in
the investment election of a Participant with respect to his Profit Sharing
Contributions shall specify a combination, with respect to his Profit Sharing
Contribution Account among the Funds, which, in the aggregate equals 100
percent. Such elections shall be made in the manner specified by the Company and
in accordance with procedures prescribed by the Company. The investment options
so elected by a Participant shall remain in effect until he files another
election change with respect to future contributions in accordance with the
provisions of the Plan. Any such election which directs a change in an
investment election heretofore in effect shall become effective in accordance
with procedures prescribed by the Company and in the form, time and manner
specified by the Company. Amounts credited to the Profit Sharing Account of such
Participant as of any date prior to the date on which such change is to become
effective shall not be affected by any such change.
6.9 ELECTION TO TRANSFER INVESTED PAST PROFIT SHARING
CONTRIBUTIONS. Subject to any procedures adopted by the Company, a Participant
may elect to have the balance of his Profit Sharing Contribution Account
transferred from the Fund or Funds in which it is invested to one or more of the
other Funds. Any such election shall be made in the form, time, and manner
specified by the Company and in accordance with procedures prescribed by the
Company. Upon receipt of such election, the Company shall cause the Trustee to
transfer such amount as of the effective date of the election of the Participant
from the Fund or Funds in which it is invested to the Fund or Funds elected and
designated by the Participant.
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ARTICLE VII
MAINTENANCE OF FUNDS AND INVESTMENT OF CONTRIBUTIONS
7.1 ESTABLISHMENT AND MAINTENANCE OF FUNDS. The Company
shall cause at least three Funds to be established and maintained at all times.
With the exception of the Company Stock Fund, each such Fund will be diversified
and have different risk and return characteristics from the other Funds. The
Company Stock Fund and any Fund which invests in investments with restrictions
regarding Funds to which investment transfers may be made or to which a minimum
investment period is applicable shall not be considered as one of such requisite
three Funds.
7.2 INCOME ON FUNDS. Unless specifically provided
otherwise, any dividends, interest, distributions, or other income received in
respect of a Fund shall be reinvested in the Fund with respect to which such
income was received by it.
7.3 ACCOUNTS AND SUBACCOUNTS. Accounts and subaccounts
shall be established in the name of each Participant. Such Accounts and
subaccounts shall be dependent upon the Funds in which contributions are
invested on his behalf under the Plan and upon the type of contributions so
invested on his behalf, and shall be maintained and administered for each
Participant in accordance with the provisions of the Plan.
7.4 VOTING OF COMPANY STOCK. Each Participant and
Beneficiary who has shares of Company Stock allocated to his Accounts shall be a
named fiduciary with respect to the voting of such Company Stock and shall have
the following powers and responsibilities:
(a) Prior to each annual or special meeting of the
shareholders of the Company, the Company shall cause to be sent to
each Participant and Beneficiary who has Company Stock which is
allocated to his Accounts and invested in the Company Stock Fund,
a copy of the proxy solicitation material therefor, together with
a form requesting confidential voting instructions, with respect
to the voting of such Company Stock as well as the voting of
Company Stock in the Company Stock Fund for which the Trustee does
not receive instructions and the voting of Company Stock in the
Company Stock Fund which is unallocated. Each such Participant and
Beneficiary shall instruct the Trustee with respect to the voting
of such Company Stock allocated to his Accounts. In addition, each
such Participant and Beneficiary shall instruct the Trustee with
respect to the voting of the number of such uninstructed shares
and such unallocated shares of Company Stock equal to the
proportion that the
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number of the shares of Company Stock allocated to his Accounts
bears to the total aggregate number of shares of allocated Company
Stock in the Company Stock Fund for which instructions are
received. Upon receipt of such a Participant's and Beneficiary's
instructions, the Trustee shall then vote in person, or by proxy,
such Company Stock as so instructed.
(b) The Company shall cause the Trustee to furnish to each
Participant and Beneficiary who has Company Stock credited to his
Accounts under the Company Stock Fund notice of any tender or
exchange offer for, or a request or invitation for tenders or
exchanges of, Company Stock made to the Trustee. The Trustee shall
request from each such Participant and Beneficiary instructions as
to the tendering or exchanging of Company Stock which is allocated
to his Accounts and invested in the Company Stock Fund as well as
the tendering or exchanging of Company Stock in the Company Stock
Fund for which the Trustee does not receive instructions and
Company Stock in the Company Stock Fund which is unallocated. Each
such Participant and Beneficiary shall instruct the Trustee with
respect to the tendering or exchanging of the number of such
uninstructed shares and such unallocated shares of Company Stock
equal to the proportion that the number of the shares of Company
Stock allocated to his Accounts or bears to the total aggregate
number of allocated shares of Company Stock in the Company Stock
Fund for which instructions are received. The Trustee shall
provide such Participants and Beneficiaries with a reasonable
period of time in which they may consider any such tender or
exchange offer for, or request or invitation for tenders or
exchanges of, Company Stock made to the Trustee. Within the time
specified by the Trustee, the Trustee shall tender or exchange
such Company Stock as to which the Trustee has received
instructions to tender or exchange from Participants and
Beneficiaries as set forth above.
(c) Instructions received from Participants and Beneficiaries
by the Trustee regarding the voting, tendering, or exchanging of
Company Stock shall be held in strictest confidence and shall not
be divulged to any other person, including officers or employees
of the Company, except as otherwise required by law, regulation or
lawful process.
7.5 INVESTMENT RESPONSIBILITY. The Plan is intended to
constitute a plan described in Section 404(c) of ERISA and DOL Regs. Section
2550.404c-1 and insofar as the Plan complies with said Section 404(c), Plan
fiduciaries shall be relieved of liability for any losses which are the direct
result of investment instructions given by Participants and Beneficiaries.
Notwithstanding the foregoing, to the extent that Section 404(c) of ERISA is not
applicable, Participants shall be named fiduciaries with respect to the
investment of their Accounts.
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ARTICLE VIII
VALUATIONS
8.1 VALUATION OF PARTICIPANT'S INTEREST. As of each
Valuation Date hereunder, the Company shall adjust each Account of each
Participant to reflect any increase or decrease in net worth of the Funds
hereunder since the immediately preceding Valuation Date, based on the valuation
of each Fund by the Trustee and determined in the following manner:
(a) The Trustee shall value all of the assets of each of the
Funds at fair market value.
(b) The Trustee shall then, on the basis of such valuation,
and after making appropriate adjustments for contributions,
distributions, withdrawals and transfers from or to the respective
Funds since the immediately preceding Valuation Date, ascertain
the net increase or decrease in net worth of the respective Funds
which is attributable to net earnings and all profits and losses,
realized and unrealized, since the immediately preceding Valuation
Date.
(c) The Trustee shall then allocate the net increase or
decrease in the net worth of the respective Funds as thus
determined among all Participants, inactive Participants, and
Beneficiaries who have an interest in the respective Funds,
separately with respect to each of such Funds, in the ratio that
the balance of each subaccount maintained under such Fund
immediately preceding such Valuation Date bears to the aggregate
of the balances of all such accounts immediately preceding such
Valuation Date, and shall credit or charge, as the case may be,
each such subaccount with the amount of its allocated share.
(d) The Trustee shall then credit to the appropriate Accounts
and subaccounts of each Participant with his 401(k) Contributions
and Rollover Contributions.
(e) If the Valuation Date is the last day of a Plan Year
quarter, the Trustee shall then credit the appropriate Accounts
and subaccounts of each Participant with his portion of Matching
Contributions which are allocated to him as of such Valuation
Date.
(f) If the Valuation Date is June 30th of a Plan Year, the
Trustee shall then credit to the appropriate Accounts and
subaccounts of each Participant with his portion of Profit Sharing
Contributions, which are allocated to him as of such Valuation
Date.
8.2 FINALITY OF TRUSTEE'S DETERMINATION. The Trustee shall
have exclusive responsibility for determining the value of the assets of the
Funds hereunder. The determination thereof by the Trustee shall be conclusive
upon the Employers, the Company, and all Participants and Beneficiaries
hereunder.
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8.3 ACCOUNT BALANCES. For all purposes of the Plan, the
balance of each Account and subaccount of a Participant as of any date shall be
the balance of each such Account and subaccount after all credits and charges
thereto, for and as of such date, have been made as provided in the Plan.
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ARTICLE IX
LOANS AND WITHDRAWALS
9.1 APPLICATION AND APPROVAL OF LOANS. Upon the written
application of a Participant in such form as the Company may specify, the
Company may direct the Trustee to make a loan to such Participant. The
application and the resulting loan must meet the terms and conditions set forth
in Section 9.2 as well as any procedures, specifications or requirements
established by the Company.
9.2 TERMS AND CONDITIONS OF A LOAN. Each loan must comply with
the following terms and conditions:
(a) The interest rate shall be reasonable and determined in
accordance with the provisions of 29 CFR Section 2550.408b-1.
(b) The term shall be no greater than five years (ten years,
if for the purchase of a primary residence).
(c) The principal of any loan shall be at least $1,000.00.
(d) A loan shall not be made that exceeds the lesser of
$50,000 (reduced by the amount, if any, of his highest outstanding
loan balance in the immediately preceding 12 months) or 50 percent
of the aggregate sum of the Participant's Accounts.
(e) A loan shall be made from a Participant's Accounts
attributable to 401(k) Contributions, Rollover Contributions, and
Transferred Contributions in the manner specified by the Company.
(f) The entire unpaid principal and interest may be declared
due and payable in full, at the option of the Company, if the
Participant is in default for more than 30 days under any of the
terms of the loan.
(g) Such other terms and conditions, including assessment of
costs, as the Company may prescribe and that are not inconsistent
with the terms of the Plan.
(h) Loans shall be made available to all Participants on a
reasonably equivalent basis.
(i) Loans shall not be made available to Highly Compensated
Employees in an amount greater than the amount made available to
other Employees.
(j) In the event of default, foreclosure on the note and
attachment of security shall not occur until a distributable event
occurs in the Plan.
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<PAGE> 38
9.3 REPAYMENT OF LOAN. The Trustee shall credit each
payment of principal and interest to the Accounts of the Participant and
allocate such repayment among the Accounts from which the loan was made and in
accordance with the Participant's most recent investment election.
9.4 WITHDRAWAL OF ROLLOVER CONTRIBUTIONS. Subject to the
provisions of the Code and regulations issued thereunder and in accordance with
procedures prescribed by the Company, a Participant may elect to withdraw in
cash and/or Company Stock contributions in his Account attributable to Rollover
Contributions; provided, however, that such a withdrawal shall be made from such
accounts in the order set forth in the procedures prescribed by the Company; and
provided further, that except in the event of a withdrawal which the Company
determines complies with the requirements of Section 401(k) of the Code, a
withdrawal made under this Section 9.4 may be made only once in any six-month
period.
9.5 WITHDRAWAL OF 401(K) CONTRIBUTIONS. Subject to the
provisions of this Section 9.5, a Participant may file a request with the
Company in the form prescribed by the Company for a withdrawal from his Account
attributable to 401(k) Contributions; provided, however, that no such withdrawal
shall be permitted unless the Participant has attained age 59-1/2 or it is
determined that such withdrawal complies with the hardship withdrawal
requirements of Section 401(k) of the Code and regulations issued thereunder;
and provided further, that no such withdrawal shall exceed an amount equal to:
(a) the aggregate balances of his Account attributable to
401(k) Contributions, or
(b) in the case of a hardship withdrawal, if less, the amount
required to meet the need for which the withdrawal is requested.
Notwithstanding the foregoing, in the event that a Participant is deemed to be
eligible for withdrawal under the provisions of this Section 9.5, a withdrawal
of the entire balance of his Accounts attributable to Rollover Contributions
shall be made prior to any withdrawal of 401(k) Contributions under this Section
9.5. Any amount withdrawn by a Participant in accordance with the provisions of
this Section 9.5 shall be made from his Accounts attributable to 401(k)
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<PAGE> 39
Contributions in the order set forth in procedures established by the Company,
first from contributions and then, if applicable, from the earnings thereon. In
the event a Participant withdraws any portion of his Accounts attributable to
401(k) Contributions under circumstances which satisfy the hardship withdrawal
requirements of Section 401(k) of the Code, he shall not be able to make 401(k)
Contributions for one year from the date of such withdrawal. Notwithstanding the
foregoing provisions, a withdrawal shall be deemed to be a hardship withdrawal
only if made for one of the following reasons:
(a) the payment of expenses incurred or necessary for medical
care, described in Section 213(d) of the Code, of the Participant,
or the Participant's spouse or dependents;
(b) the purchase (excluding mortgage payments) of a principal
residence for the Participant;
(c) the payment of tuition and related educational fees for
the next 12 months of post-secondary education for the
Participant, or the Participant's spouse, children or dependents;
(d) to prevent the eviction of the Participant from, or a
foreclosure on the mortgage of, the Participant's principal
residence; or
(e) to aid a Participant who is in the process of bankruptcy
proceedings.
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ARTICLE X
TERMINATION OF PARTICIPATION AND DISTRIBUTION
10.1 TERMINATION OF PARTICIPATION. Each Participant shall
cease to be an active Participant hereunder upon his Settlement Date which shall
be the first of the dates to occur hereinafter set forth:
(a) the date such Participant's employment with an Employer
or a Related Corporation is terminated due to retirement at or
after attainment of age 55;
(b) the date such Participant's employment with an Employer
or a Related Corporation is terminated because of physical or
mental disability preventing his continuing in the service of such
Employer or Related Corporation, as determined by the Company upon
the basis of a written certificate of a physician selected by it;
(c) the date such Participant's employment with an Employer
or a Related Corporation is terminated because of the death of
such Participant; or
(d) the date such Participant's employment with an Employer
or a Related Corporation is terminated under any other
circumstances.
Notwithstanding any other provision of the Plan to the contrary, a Participant's
right to receive distribution of the balance of each of his Accounts as of his
Settlement Date, in accordance with the provisions of this Article X, shall be
fully vested and nonforfeitable upon attainment of age 65.
10.2 VESTING. A Participant whose employment terminates in
accordance with paragraph (a), (b) or (c) of Section 10.1 shall be fully vested
in the balance of each of his Accounts. A Participant whose employment
terminates in accordance with paragraph (d) of Section 10.1 prior to attainment
of age 65 shall be vested in the balance of his Matching Contribution Account
and his Profit Sharing Contribution Account in accordance with the schedule
applicable to him set forth below:
<TABLE>
<CAPTION>
YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
<S> <C>
Less than one 0%
One but less than two 25%
Two but less than three 50%
Three but less than four 75%
Four or more 100%
</TABLE>
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<PAGE> 41
Any unvested portion of such Accounts shall be governed by the provisions of
Section 10.8.
10.3 ELECTION OF FORMER VESTING SCHEDULE. In the event the
Company adopts an amendment to the Plan that directly or indirectly affects the
computation of a Participant's nonforfeitable interest in his Account
attributable to Matching Contributions and Profit Sharing Contributions, any
Participant with three or more Years of Service shall have a right to have his
nonforfeitable interest in such accounts continue to be determined under the
vesting schedule in effect prior to such amendment rather than under the new
vesting schedule, unless the nonforfeitable interest of such Participant in such
accounts under the Plan, as amended, at any time is not less than such interest
determined without regard to such amendment. A Participant shall exercise such
right by giving written notice of his exercise thereof to the Company within 60
days after the latest of (i) the date he received notice of such amendment from
the Company, (ii) the effective date of the amendment, or (iii) the date the
amendment is adopted. Notwithstanding the foregoing provisions of this Section
10.3, the vested interest of each Participant on the effective date of such
amendment shall not be less than his vested interest under the Plan as in effect
immediately prior to the effective date thereof.
10.4 DISTRIBUTION. Except as otherwise set forth below with
respect to certain Accounts, the Company shall direct the Trustee to make
distribution to or for the benefit of a Participant, who incurs a Settlement
Date pursuant to the provisions of Section 10.1, from his interest under the
Plan which, on any date, shall be equal to the balance of his Accounts as of
such date. Such distribution shall be made in a single lump-sum payment or
installment payments payable to such Participant at such time and manner as set
forth in procedures adopted by the Company. Subject to the provisions of Section
10.12, distribution hereunder shall be made or commenced as soon as reasonably
practicable after such Participant's Settlement Date, but unless otherwise
elected by the Participant, in no event later than 60 days after the latest of
the close of the Plan Year in which:
(i) such Participant attains age 65,
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(ii) the tenth anniversary of the year in which such
Participant commenced participation in the Plan occurs,
or
(iii) such Participant incurs a Settlement Date.
In the event such Participant fails to consent to a distribution, such failure
shall be deemed to be an election to defer the payment of any benefits
sufficient to satisfy this Section 10.4 and payment of his benefit shall not
occur until the earlier of the receipt of his application for distribution or
his Mandatory Distribution Date. Notwithstanding the foregoing, unless the
Participant otherwise elects (or is deemed to elect otherwise because the
present value of such Participant's nonforfeitable benefit exceeds $3,500 or at
the time of any prior distribution exceeded $3,500 and he fails to consent to a
distribution while a benefit is immediately distributable within the meaning of
Treasury Regulations), payment of benefits under the Plan to such Participant
shall be made only if the Participant consents in writing to such distribution
not more than 90 days before commencement of distribution.
10.5 FORM OF DISTRIBUTION. All distributions under the
provisions of this Article X made to a Participant or to a Beneficiary shall be
made in cash unless the Participant or Beneficiary elects to receive any
interest of his Accounts invested in the Company Stock Fund in Company Stock.
10.6 RESTRICTION ON ALIENATION. Except as provided in
Sections 401(a)(13)(B) and 414(p) of the Code relating to qualified domestic
relations orders, no benefit under the Plan at any time shall be subject in any
manner to anticipation, alienation, assignment (either at law or in equity),
encumbrance, garnishment, levy, execution, or other legal or equitable process.
No person shall have power in any manner to anticipate, transfer, assign (either
at law or in equity), alienate, or subject to attachment, garnishment, levy,
execution, or other legal or equitable process, or in any way encumber his
benefits under the Plan, or any part thereof, and any attempt to do so shall be
void.
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10.7 REEMPLOYMENT OF FORMER PARTICIPANT. If a former
Participant is reemployed by an Employer, he shall be treated as a new Employee
for all purposes of the Plan, subject to the provisions hereof relating to the
reinstatement of Years of Service.
10.8 DISPOSITION OF FORFEITED BALANCES. Whenever a
distribution is made with respect to a former Participant of his vested interest
in his Matching Contribution Account and Profit Sharing Contribution Account in
accordance with the provisions of Sections 10.2 and 10.5, that portion of the
balance of his Matching Contribution Account and his Profit Sharing Contribution
Account which is not distributed to him shall be governed by the following
provisions.
(a) The unvested portion of such a Participant's Matching
Contribution Account and Profit Sharing Contribution
Account shall be forfeited at the earlier of the
following:
(i) the date on which the Participant's entire
vested interest in his Accounts is distributed
in a single sum or is considered distributed
under paragraph (c) below; or
(ii) the end of the fifth consecutive Break in Service.
(b) Forfeitures from Matching Contributions shall be
applied to the next Matching Contribution obligation
of the Employers and forfeitures from Profit Sharing
Contribution Accounts shall be allocated to the Profit
Sharing Contribution Accounts of all Participants in
the ratio that each Participant's Compensation bears
to the aggregate Compensation of all Participants.
(c) A zero invested balance of a Participant shall be
treated as though it were distributed immediately when
employment terminates.
(d) If a Participant is reemployed prior to five
consecutive Breaks in Service but after a forfeiture
under paragraph (a) above because of an imputed or
full distribution, the forfeited amount, unadjusted
for interim gains or losses, shall be subject to
restoration under paragraphs (f) and (g). No
restoration shall occur, if reemployment occurs after
five consecutive Breaks in Service or repayment does
not occur under paragraph (g).
(e) If a Participant who is not 100% vested in his
Matching Contribution Account and his Profit Sharing
Contribution Account, receives a distribution of the
vested portion of his Matching Contribution Account
and his Profit Sharing Contribution Account prior to
incurring five consecutive Breaks in Service with the
exception of distributions under paragraph (a)(i) or
(c) above, the vested portion of his Matching
Contribution Account and his Profit Sharing
Contribution Account at any time prior to five
consecutive
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Breaks in Service shall not be less than an amount (X)
determined in the following manner: X = P(AB + D) - D.
For purposes hereof, P is the vested percentage at the
relevant time; AB is the balance of the Matching
Contribution Account and his Profit Sharing Contribution
Account at the relevant time; and D is the amount of
distributions.
(f) An amount subject to restoration under paragraph (d)
shall be credited to the Participant's Matching
Contribution Account and his Profit Sharing
Contribution Account upon reemployment and shall be
made from the assets of a special contribution of the
Company which shall not constitute an "annual
addition" within the meaning of Section 415 of the
Code.
(g) A reemployed Participant who is rehired under the
conditions set forth in paragraph (d) may repay the
full amount previously distributed from his partially
vested Matching Contribution Account and his Profit
Sharing Contribution Account as follows:
(1) Repayment shall be made in a single sum.
(2) Repayment may only be made while the Participant
remains employed and may not be made later than
five years after reemployment.
(3) Repayment cannot be made in whole or in part by
rollover from another plan or individual
retirement account.
10.9 BUY BACK OF FORFEITED AMOUNTS. A Participant who incurs
a forfeiture pursuant to the provisions of Section 10.2 and 10.8 shall have such
forfeited amounts recredited to his Accounts upon his subsequent resumption of
employment covered under the Plan, without adjustment for interim gains or
losses experienced by the Fund or Funds, provided that he repays to the Plan the
full amount of any distribution attributable to Matching Contributions and
Profit Sharing Contributions that he received as a result of his prior
Settlement Date, and provided further, that such repayment occurs no later than
the earlier of the fifth anniversary of the end of the Plan Year in which his
Break in Service occurred or the earliest other date permitted by legislation,
ruling, or regulation. Funds required in any Plan Year to recredit the Accounts
of a reemployed Participant with the amounts of prior forfeitures in accordance
with the preceding sentence shall be made by way of a special Plan contribution
by the Employers. In the event of any such repayment and subsequent recrediting
of a prior forfeiture, the portion of such amount replacing Matching
Contributions and Profit Sharing Contributions shall be credited to the
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Accounts of the Participant currently applicable to the Matching Contributions
and Profit Sharing Contributions of such Participant.
10.10 DISTRIBUTION TO OTHER QUALIFIED PLANS. In the event a former
Participant whose interest in the Plan has not been fully distributed becomes an
active participant in a plan qualified under Section 401(a) of the Code
(including a self-employed retirement plan which is exempt from tax under
Section 501(a) of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified bond purchase plan described in Section 405(a) of the
Code), the Company may direct the Trustee to transfer the amount of such former
Participant's interest in the Plan to any such plan provided that the plan to
receive such transfer authorizes acceptance of such transfer, that assets
transferred shall be held in a separate account, and that the assets transferred
shall not be subject to any forfeiture provisions.
10.11 FACILITY OF PAYMENT. In the event that it shall be found that
any individual to whom an amount is payable hereunder is incapable of attending
to his financial affairs because of any mental or physical condition, including
the infirmities of advanced age, such amount (unless prior claim therefor shall
have been made by a duly qualified guardian or other legal representative) may,
in the discretion of the Company, be paid to another person for the use or
benefit of the individual found incapable of attending to his financial affairs
or in satisfaction of legal obligations incurred by or on behalf of such
individual. The Trustee shall make such payment only upon receipt of written
instructions to such effect from the Company. Any such payment shall be charged
to the Accounts from which any such payment would otherwise have been paid to
the individual found incapable of attending to his financial affairs and shall
be a complete discharge of any liability therefor.
10.12 MANDATORY DISTRIBUTIONS. Notwithstanding any other provision
of this Article X, in the event the vested aggregate balance of a Participant's
Accounts which are distributable to him do not exceed $3,500, such balance shall
be distributed to him in a single sum as soon as practicable after the
Settlement Date. If, however, the vested aggregate balance of a Participant's
Accounts exceeds, or at the time of any prior distribution exceeded, $3,500, no
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<PAGE> 46
distribution of such balance shall be made to him, unless such Participant
consents in writing to such distribution; provided, however, that, in no event
shall the distribution of the interest of a Participant commence later than such
a Participant's Mandatory Distribution Date or shall the interest of a
Participant be distributed later than his Mandatory Distribution Date and shall
be determined and made in accordance with the proposed regulations under Section
401(a)(9) of the Code, including the minimum distribution incidental benefit
requirements of Section 1.401(a)(9)-2 of the proposed regulations. Accordingly,
the Mandatory Distribution Date of a Participant shall be the first day of April
of the calendar year following the calendar year in which the later of such
Participant's termination of employment or attainment of age 70-1/2 occurs. In
the event that the interest of any Participant in his Accounts is to be
distributed in other than a single lump sum payment, the following minimum
distribution rules shall become applicable on his Mandatory Distribution Date:
(1) A Required Minimum Distribution for each calendar year
beginning with distributions for the first distribution calendar
year shall be made in the following manner:
(i) For calendar years prior to 1989, the quotient
obtained by dividing the Mandatory Distribution Value of
such a Participant's Accounts by the applicable life
expectancy, and if such Participant's spouse is not the
Beneficiary, the method of distribution selected must assure
that at least 50 percent of the present value of the amount
available for distribution is paid within the life
expectancy of such Participant.
(ii) For 1989 and subsequent calendar years, the
quotient obtained by dividing the Mandatory Distribution
Value of such a Participant's Accounts by the lesser of (1)
the applicable life expectancy or (2) if such Participant's
spouse is not the Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the proposed regulations under the Code.
Distributions after the death of such Participant shall be
distributed using the applicable life expectancy referred to
in clause (ii)(1), above as the relevant divisor without
regard to clause (ii)(2).
(2) The Required Minimum Distribution for such a
Participant's first distribution calendar year must be made on or
before such Participant's Mandatory Distribution Date. The Required
Minimum Distribution for other calendar years, including the
Required Minimum Distribution for the calendar year in which his
Mandatory Distribution Date occurs, must be made on or before
December 31 of such calendar year.
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(3) If such a Participant dies on or after his Mandatory
Distribution Date, the remaining portion of his Accounts must
continue to be distributed at least as rapidly as under the method
of distribution in effect at his death. If however, such a
Participant dies before his Mandatory Distribution Date,
distribution of his Accounts must be completed by December 31 of the
calendar year containing the fifth anniversary of the death of such
Participant. For purposes of this Section 10.12, the words and
phrases hereinafter set forth shall have the following meanings:
(1) APPLICABLE LIFE EXPECTANCY. The life
expectancy (or joint and last survivor expectancy)
calculated using the attained age of the Participant (or
Beneficiary) as of his birthday in the applicable calendar
year reduced by one for each calendar year which has elapsed
since the date life expectancy was first calculated.
(2) DISTRIBUTION CALENDAR YEAR; FIRST DISTRIBUTION
CALENDAR YEAR. A distribution calendar year is a
calendar year for which a minimum distribution is required.
For distributions beginning before the death of the
Participant, the first distribution calendar year is the
calendar year immediately preceding the calendar year which
contains his Mandatory Distribution Date. For distributions
beginning after the death of the Participant, the first
distribution calendar year is the calendar year in which
distributions are required to begin.
(3) LIFE EXPECTANCY. Life expectancy and joint
and last survivor expectancy shall be computed by use of the
expected return multiples in Tables V and VI of Treas. Reg.
Section 1.72-9 and shall be recalculated annually with
respect to a Participant after the first distribution
calendar year.
(4) MANDATORY DISTRIBUTION VALUES OF ACCOUNTS.
(i) The balance of the Accounts of a Participant
as of the last Valuation Date in the calendar year
immediately preceding the distribution calendar year
(the "valuation calendar year") increased by the
amount of any contributions or forfeitures allocated
to the Account balances as of dates in the valuation
calendar year after the Valuation Date and decreased
by distributions made in the valuation calendar year
after the Valuation Date.
(ii) For purposes of subparagraph (i), above, if
any portion of the minimum distribution for the first
distribution calendar year is made in the second
distribution calendar year on or before the Mandatory
Distribution Date, the amount of such minimum
distribution made in the second distribution calendar
year shall be treated as if it had been made in the
immediately preceding distribution calendar year.
10.13 ELIGIBLE ROLLOVER DISTRIBUTIONS. Each Participant and
Beneficiary who receives an Eligible Rollover Distribution may elect in the time
and in a manner prescribed by the Company to receive all or any portion of such
Eligible Rollover Distribution for transfer to an
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Eligible Retirement Plan; provided, however, that only one such transfer may be
made with respect to a Eligible Rollover Distribution to an Eligible Retirement
Plan. Notwithstanding the foregoing, the Participant may elect, after receiving
the notice required under Section 402(f) of the Code, to receive such Eligible
Rollover Distribution prior to the expiration of the 30-day period beginning on
the date such Participant is issued such notice; provided that the Participant
or beneficiary is permitted to consider his decision for at least 30 days and is
advised of such right in writing.
10.14 SECURITIES ACT SECTION 16 PROCEDURES. Notwithstanding
any other provision of the Plan to the contrary, the procedures established for
the Company and its Related Corporations in conjunction with rules promulgated
by the Securities and Exchange Commission under Section 16 of the Securities Act
with respect to transactions involving Company Stock held for the benefit of an
Officer under the Plan, including the election, suspension, transfer,
withdrawal, investment, and distribution thereof, shall be applicable to any
Officer who participates in the Plan; provided, however, that such procedures
shall not be administered in a manner that is discriminatory in favor of
Officers.
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ARTICLE XI
BENEFICIARIES
11.1 DESIGNATION OF BENEFICIARY. In the event of the death
of a Participant or former Participant prior to distribution in full of his
interest under the Plan, the spouse, if any, of such Participant or former
Participant shall be his Beneficiary and receive distribution of his remaining
interest pursuant to the provisions of Sections 10.3 and 10.12; provided,
however, that a Participant may designate a person or persons other than his
spouse as his Beneficiary if the requirements of Section 11.3 are met.
11.2 BENEFICIARY IN THE ABSENCE OF DESIGNATED BENEFICIARY.
If a Participant or former Participant who dies does not have a surviving spouse
and if no Beneficiary has been designated pursuant to the provisions of Section
11.1, or if no Beneficiary survives such Participant or former Participant, then
the Beneficiary shall be the estate of such Participant or former Participant.
If any Beneficiary designated pursuant to Section 11.1 dies after becoming
entitled to receive distribution hereunder and before such distributions are
made in full, and if no other person or persons have been designated to receive
the balance of such distributions upon the happening of such contingency, the
estate of such deceased Beneficiary shall become the Beneficiary as to such
balance.
11.3 SPOUSAL CONSENT TO BENEFICIARY DESIGNATION. In the
event a Participant or former Participant is married, any Beneficiary
designation, other than a designation of his spouse as Beneficiary, shall be
effective only if his spouse consents in writing thereto and such consent
acknowledges the effect of such action and is witnessed by a notary public or a
Plan representative, unless a Plan representative finds that such consent cannot
be obtained because the spouse cannot be located or because of other
circumstances set forth in Section 401(a)(11) of the Code and regulations issued
thereunder.
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ARTICLE XII
ADMINISTRATION
12.1 AUTHORITY OF THE COMPANY. The Company shall have the
authority and the power to perform the functions conferred upon it herein,
subject to the limitations hereinafter set forth. The Company shall have the
sole right to interpret and construe the Plan, to determine any disputes arising
thereunder, subject to the provisions of Section 12.3, and to take all necessary
actions it may deem necessary or advisable to correct any administrative error.
The decisions of the Company shall be upon all affected parties. In exercising
such powers and authorities, the Company shall at all times exercise good faith,
apply standards of uniform application, and refrain from arbitrary action. The
Company may employ such attorneys, agents, and accountants as it may deem
necessary or advisable to assist it in carrying out its duties hereunder. The
Company and the Trustee are hereby designated as "named fiduciaries" of the Plan
as such term is defined in Section 402(a)(2) of ERISA. The Company, by action of
its Board of Directors, may designate a person other than itself to carry out
any of such powers, authorities or responsibilities.
12.2 ACTIONS OF THE COMPANY. Any act authorized, permitted,
or required to be taken by the Company under the Plan, which has not been
delegated in accordance with Section 12.1, may be taken by a majority of the
members of the Board of Directors of the Company, either by vote at a meeting,
or in writing without a meeting. All notices, advices, directions,
certifications, approvals, and instructions required or authorized to be given
by the Company under the Plan shall be in writing and signed by either (i) a
majority of the members of the Board of Directors of the Company, or by such
member or members as may be designated by an instrument in writing, signed by
all the members thereof, as having authority to execute such documents on its
behalf, or (ii) a person who becomes authorized to act for the Company in
accordance with the provisions of Section 12.1. Subject to the provisions of
Section 12.3, any action taken by the Company which is authorized, permitted, or
required under the Plan shall be
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final and binding upon the Company and the Trustee, all persons who have or who
claim an interest under the Plan, and all third parties dealing with the Company
or the Trustee.
12.3 CLAIMS REVIEW PROCEDURE. Whenever the Company decides
for whatever reason to deny, whether in whole or in part, a claim for benefits
filed by any person (hereinafter referred to as the "Claimant"), the Plan
Administrator shall transmit to the Claimant a written notice of the Company's
decision, which shall be written in a manner calculated to be understood by the
Claimant and contain a statement of the specific reasons for the denial of the
claim and a statement advising the Claimant that, within 60 days of the date on
which he receives such notice, he may obtain review of the decision of the
Company in accordance with the procedures hereinafter set forth. Within such
60-day period, the Claimant or his authorized representative may request that
the claim denial be reviewed by filing with the Plan Administrator a written
request therefor, which request shall contain the following information:
(a) the date on which the Claimant's request was filed
with the Plan Administrator; provided, however, that the date on
which the Claimant's request for review was in fact filed with the
Plan Administrator shall control in the event that the date of the
actual filing is later than the date stated by the Claimant pursuant
to this paragraph (a);
(b) the specific portions of the denial of his claim
which the Claimant requests the Plan Administrator to review;
(c) a statement by the Claimant setting forth the
basis upon which he believes the Plan Administrator should reverse
the Trustee's previous denial of his claim for benefits and accept
his claim as made; and
(d) any written material (offered as exhibits) which
the Claimant desires the Plan Administrator to examine in its
consideration of his position as stated pursuant to paragraph (c).
Within 60 days of the date determined pursuant to paragraph (a) of this Section
12.3, the Plan Administrator shall conduct a full and fair review of the
Company's decision denying the Claimant's claim for benefits. Within 60 days of
the date of such hearing, the Plan Administrator shall render its written
decision on review, written in a manner calculated to be understood by the
Claimant, specifying the reasons and Plan provisions upon which its decision was
based.
12.4 INDEMNIFICATION. In addition to whatever rights of
indemnification the members of the Board of Directors of the Company, or any
other person or persons to whom any power,
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authority, or responsibility of the Company is delegated pursuant to Section
12.1, may be entitled under the articles of incorporation, regulations, or
by-laws of the Company, under any provision of law, or under any other
agreement, the Company shall satisfy any liability actually and reasonably
incurred by any such person or persons, including expenses, attorneys' fees,
judgments, fines, and amounts paid in settlement, in connection with any
threatened, pending, or completed action, suit, or proceeding which is related
to the exercise or failure to exercise by such person or persons of any of the
powers, authority, responsibilities, or discretion provided under the Plan, or
reasonably believed by such person or persons to be provided hereunder, and any
action taken by such person or persons in connection therewith.
12.5 QUALIFIED DOMESTIC RELATIONS ORDERS. The Company shall
establish reasonable procedures to determine the status of domestic relations
orders and to administer distributions under domestic relations orders which are
deemed to be qualified orders. Such procedures shall be in writing and shall
comply with the provisions of Section 414(p) of the Code and regulations issued
thereunder.
12.6 ADMINISTRATIVE EXPENSES. Each Fund shall be charged
with the administrative expenses, investment transfer fees, brokerage fees,
transfer taxes and other expenses incurred in connection with the sale, purchase
and management of the assets of the Fund. The fees of the Trustee and all other
administrative expenses of the Plan and Trust shall be paid by the Trustee from
the assets of the Trust unless the Company, in its discretion, elects to pay any
such fees and/or expenses.
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ARTICLE XIII
THE BEARINGS ESOP
13.1 PURPOSE. The Bearings ESOP, which is part of the Plan,
is intended to be an employee stock ownership plan under Section 4975(e)(7) of
the Code and Section 407(d)(6) of ERISA and shall be comprised of the Company
Stock Fund. The Bearings ESOP is established and maintained to enable
Participants to share in the growth and prosperity of the Company and to provide
such Participants with an additional opportunity to accumulate capital for their
future economic security.
13.2 SUSPENSE FUND. The Trustee shall establish a subfund,
herein referred to as the Suspense Fund, to hold and administer any Company
Stock which is purchased with the proceeds of an Exempt Loan made to the Trustee
for purposes of the Bearings ESOP and which is subject to recourse for the
payment of such Exempt Loan. In the event more than one class of Company Stock
is held in the Suspense Fund, any release thereof shall be made on a pro rata
basis as shall allocations thereof to the Accounts of Participants.
13.3 EXEMPT LOANS. The Trustee may finance or refinance the
acquisition of Company Stock for purposes of the Bearings ESOP through Exempt
Loans. An installment obligation incurred in connection with the purchase of
Company Stock shall constitute an Exempt Loan and shall be for a specific term,
bear a reasonable rate of interest, and shall not be payable on demand except in
the event of default. An Exempt Loan may be secured by a collateral pledge of
the shares of Company Stock so acquired. Any such pledged Company Stock shall be
placed in the Suspense Fund. No other Plan assets may be pledged as collateral
for an Exempt Loan, and no lender shall have recourse against the Plan other
than the Company Stock held in the Suspense Fund. All Exempt Loans which are
made or guaranteed by a disqualified person must satisfy all requirements
applicable to exempt loans set forth in Treas. Reg. Section 54.4975-7(b) and
Dept. of Labor Reg. Section 2550.408b-3. Any pledge of Company Stock must
provide for the release of shares so pledged on a pro rata basis in accordance
with the provisions of Treas. Reg. Section 54.4975-7(b)(8) as the Exempt Loan is
repaid by the Trustee and shares
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of Company Stock are allocated to Accounts of Participants as provided in the
Plan. Repayments of principal and interest on any Exempt Loan shall be made by
the Trustee only from Matching Contributions, from earnings attributable to such
Matching Contributions, from any cash dividends received by the Trustee on
Company Stock held in the Suspense Fund, and from the proceeds of another Exempt
Loan. Notwithstanding the previous sentence, the Trustee may, upon termination
of the Plan, sell shares of Company Stock that have been acquired pursuant to
this Section 13.3 and that are held in the Suspense Fund as of the date of the
termination of the Plan, and use the proceeds thereof to repay the Exempt Loan.
13.4 LIMITATION ON ALLOCATIONS OF EMPLOYER CONTRIBUTIONS.
Notwithstanding any other provision of the Plan to the contrary, Company Stock
held in the Suspense Fund shall be allocated to the Accounts of Participants as
payments of principal and interest on an Exempt Loan are made by the Trustee
pursuant to the provisions of Section 13.5 within the Plan Year for which such
payments are made by the Trustee. Company Stock which is released from the
Suspense Fund shall be allocated to the appropriate Account of each eligible
Participant only as needed to provide Matching Contributions pursuant to Section
4.2. The number of shares of Company Stock to be released from the Suspense Fund
for allocation to such Accounts shall be calculated in accordance with Treas.
Reg. Section 54.4975-7(b)(8). Principal and interest payable under an Exempt
Loan shall be satisfied out of (i) earnings attributable to Company Stock
purchased with the proceeds of the Exempt Loan, (ii) earnings attributable to
the investment of Matching Contributions, and (iii) Matching Contributions
(other than contributions of Company Stock) that are made hereunder for purposes
of being applied by the Trustee to satisfy its obligations under the Exempt
Loan; provided, however, that the payments made under the Exempt Loan by the
Trustee during any Plan Year shall not exceed an amount equal to the sum of such
contributions and earnings received during the Plan Year and prior Plan Years
minus payments made under the Exempt Loan in such Plan Years. Matching
Contributions and earnings that may be used by the Trustee to make payments
under the Exempt Loan shall be accounted for separately in the books and records
of the Trustee until the Exempt Loan is repaid in full.
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Notwithstanding any provision contained herein to the contrary, all Matching
Contributions (except contributions of Company Stock) made hereunder during the
term of an Exempt Loan shall be deemed to be made for the purpose of being used
(after earnings described in clauses (i) and (ii) are first used) by the Trustee
to satisfy its obligations under the Exempt Loan. Matching Contributions which
are not utilized by the Trustee to pay principal and interest of an Exempt Loan
shall be allocated to the applicable Separate Account of eligible Participants
pursuant to Section 13.5.
13.5 ALLOCATIONS OF MATCHING CONTRIBUTIONS FROM THE BEARINGS
ESOP. Matching Contributions allocated and credited to each Participant's
Accounts in the form of Company Stock that is released from the Suspense Fund
shall be allocated to such Participant's Accounts by multiplying the number of
shares of Company Stock so released for any Plan Year quarter by a fraction the
numerator of which is the Participant's allocated share of Matching
Contributions for such quarter and denominator of which is the aggregate of all
Participants' allocated shares of Matching Contributions for such quarter. In
the event the amount of Matching Contributions for any quarter exceeds the
amount attributable to the released shares, such excess contributions shall be
used to purchase Company Stock in the market. Such Company Stock shall then be
allocated to Participants' Accounts by multiplying the number of shares of
Company Stock so purchased for any Plan Year quarter by a fraction the numerator
of which is the Participant's allocated share of Matching Contributions for such
Plan Year quarter and the denominator of which is the aggregate of all
Participants' allocated shares of Matching Contributions and all Participants'
for such quarter. In the event the dividends on Company Stock held in
Participants' Accounts are used to make payments of principal and/or interest on
an Exempt Loan pursuant to the provisions of 13.3, Company Stock released from
the Suspense Fund as a result thereof shall be allocated to such Participants'
Accounts in such a manner that the aggregate fair market value of the Company
Stock so allocated is not less than the amount of the dividends that would have
otherwise been allocated to such Accounts.
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13.6 TRANSFER OF CONTRIBUTIONS FROM THE BEARINGS ESOP. Any
Participant in the Bearings ESOP who has attained age 55 as of the last day of a
Plan Year and who has participated in the Plan for at least ten years, shall
have the right to elect to have a portion of his Account invested in the Company
Stock Fund transferred to the other Funds for investment thereunder in
accordance with the provisions of Section 6.4. The number of shares eligible for
transfer hereunder by such a Participant with respect to a Plan Year shall be
determined as of the preceding December 31 and shall equal the number of shares
of Company Stock allocated to the Participant's Account plus the number of
shares of Company Stock previously transferred to other Funds pursuant to this
Section 13.6 multiplied by: 25 percent, if the eligible Participant is less than
age 60 on December 31, and 50 percent, if the eligible Participant is age 60 or
older on December 31; and such number then shall be reduced by the number of
shares, if any, previously transferred by the Participant from the Company Stock
Fund, which is Bearings ESOP pursuant to this Section 13.6. The number of shares
determined shall be rounded to the nearest whole share.
13.7 RESTRICTIONS ON COMPANY STOCK. No Company Stock shall
be subject to a put, call, or other option, or any buy-sell arrangement while
held by and when distributed from the Bearings ESOP, whether or not such plan is
an employee stock ownership plan at such time.
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ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 AMENDMENT. Subject to the provisions of Section 14.2,
the Company may at any time and from time to time, amend the Plan by resolution
or written action of its Board of Directors or by action of a committee to which
such authority has been delegated by the Board of Directors. Any such amendment
of the Plan shall be in writing and signed by individuals authorized by the
Board of Directors or its delegates.
14.2 LIMITATION OF AMENDMENT. The Company shall make no
amendment to the Plan which shall result in the forfeiture or reduction of the
interest of any Participant or person claiming under or through any one or more
of them pursuant to the Plan; provided, however, that nothing herein contained
shall restrict the right to amend the provisions hereof relating to the
administration of the Plan and Trust. Moreover, no amendment shall be made
hereunder which shall permit any part of the Trust property to revert to any
Employer or be used for or be diverted to purposes other than the exclusive
benefit of Participants and persons claiming under or through them pursuant to
the Plan.
14.3 TERMINATION. The Company reserves the right, by action
of its Board of Directors, to terminate the Plan as to all Employers at any
time, which termination shall become effective upon notice in writing to the
Trustee (the effective date of such termination being hereinafter referred to as
the "termination date"). The Plan shall terminate automatically if there shall
be a complete discontinuance of contributions hereunder by all Employers. In the
event of the termination of the Plan, written notice thereof shall be given to
all Participants and Beneficiaries having an interest under the Plan, and to the
Trustee. Upon any such termination of the Plan, the Trustee and the Company
shall take the following actions for the benefit of Participants, and
Beneficiaries:
(a) As of the termination date, the Trustee shall value the
Funds hereunder and the Company shall adjust all accounts in the
manner provided in Section 8.1. The termination date shall become a
Valuation Date for purposes of Article VIII. In determining the net
worth of the Funds hereunder, the Trustee shall include as a
liability such amounts as in its judgment shall be necessary to pay
all expenses in connection with the
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termination of the Trust and the liquidation and distribution of the
Trust property, as well as other expenses, whether or not accrued,
and shall include as an asset all accrued income.
(b) The Trustee, upon instructions from the Company, shall
then segregate and, subject to applicable provisions of the Code
relating to the distribution of Tax Deferred Contributions,
distribute an amount equal to the entire interest of each
Participant in the Funds to or for the benefit of each Participant
or Beneficiary in accordance with the provisions of Section 10.4.
Notwithstanding anything to the contrary contained in the Plan, upon any such
Plan termination, the interest of each Participant and Beneficiary shall become
fully vested and nonforfeitable; and, if there is a partial termination of the
Plan, the interest of each Participant and Beneficiary who is affected by such
partial termination shall become fully vested and nonforfeitable.
14.4 WITHDRAWAL OF AN EMPLOYER. An Employer other than the
Company may, by action of its Board of Directors, withdraw from the Plan, such
withdrawal to be effective upon notice in writing to the Company (the effective
date of such withdrawal being hereinafter referred to as the "withdrawal date"),
and shall thereupon cease to be an Employer for all purposes of the Plan. An
Employer shall be deemed automatically to withdraw from the Plan in the event of
its complete discontinuance of contributions, or (subject to Section 14.5) in
the event it ceases to be a Subsidiary.
14.5 EFFECT OF PLAN TERMINATION. Notwithstanding any other
provision of the Plan to the contrary, any termination of the Plan shall
terminate the liability of an Employer to make further Employer Contributions
hereunder.
14.6 CORPORATE REORGANIZATION. The merger, consolidation, or
liquidation of the Company or any Employer with or into the Company or any other
Employer shall not constitute a termination of the Plan as to the Company or
such Employer.
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ARTICLE XV
ADOPTION BY SUBSIDIARIES; EXTENSION
TO NEW BUSINESS OPERATIONS
Any Related Corporation which at the time is not an Employer may,
with the consent of the Company, adopt the Plan and become an Employer hereunder
by causing an appropriate written instrument evidencing such adoption to be
executed pursuant to the authority of its Board of Directors and to be filed
with the Company.
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ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 NO COMMITMENT AS TO EMPLOYMENT. Nothing herein
contained shall be construed as a commitment or agreement upon the part of any
Employee hereunder to continue his employment with an Employer, and nothing
herein contained shall be construed as a commitment on the part of any Employer
to continue the employment or rate of compensation of any Employee hereunder for
any period.
16.2 BENEFITS. Nothing in the Plan shall be construed to
confer any right or claim upon any person other than the parties hereto,
Participants and Beneficiaries.
16.3 NO GUARANTEES. Neither any Employer, including the
Company, nor the Trustee guarantees the Trust from loss or depreciation, nor the
payment of any amount which may become due to any person hereunder.
16.4 PRECEDENT. Except as otherwise specifically provided,
no action taken in accordance with the terms of the Plan, by an Employer or the
Company shall be construed or relied upon as a precedent for similar action
under similar circumstances.
16.5 DUTY TO FURNISH INFORMATION. Each of the Employers, the
Company, or the Trustee shall furnish to any of the others any documents,
reports, returns, statements, or other information that any other reasonably
deems necessary to perform its duties imposed hereunder or otherwise imposed by
law.
16.6 MERGER, CONSOLIDATION OR TRANSFER OF PLAN ASSETS. The
Plan shall not be merged or consolidated with any other plan, nor shall any of
its assets or liabilities be transferred to another plan, unless, immediately
after such merger, consolidation, or transfer of assets or liabilities, each
Participant in the Plan would receive a benefit under the Plan which is at least
equal to the benefit he would have received immediately prior to such merger,
consolidation, or transfer of assets or liabilities (assuming in each instance
that the Plan had then terminated).
16.7 TRANSITION PERIOD. Due to the amendment of the Plan as of
January 1, 1996 to provide increased opportunities for investment and
contribution changes, notwithstanding any
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other provision in the Plan to the contrary, all Profit Sharing Accounts in
existence as of the close of business on December 31, 1995 shall be maintained
until April 1, 1996 (unless the Company and Trustee agree upon an earlier date)
and no withdrawals, distributions, and investment change elections shall be
effective until such date.
16.8 INTERNAL REVENUE SERVICE DETERMINATION. Notwithstanding
any other provision of the Plan to the contrary, each contribution of the
Employer made to the Trust Fund is conditioned upon the requirement that the
amount of the contribution shall be deductible under Section 404 of the Code. In
the event that any contribution, or portion thereof, is disallowed such
contribution or portion shall be returned by the Trustee to the Employer, if
demand therefor is made by the Employer within one year of the date of such
disallowance.
16.9 GOVERNING LAW. The Plan shall be construed and interpreted in
accordance with the laws of the State of Ohio.
* * *
Executed at Cleveland, Ohio, this ______ day of
___________________, 1995.
BEARINGS, INC.
By_______________________________
Title:
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APPENDIX A
LIMITATIONS ON CONTRIBUTIONS
A.1 COMPLIANCE WITH TRA '86. The provisions set forth in
this Appendix A are intended solely to comply with the requirements of Section
415 of the Code, as amended by the Tax Reform Act of 1986, and shall be
interpreted, applied, and if and to the extent necessary, deemed modified
without further formal language so as to satisfy solely the minimum requirements
of said Section. For such purpose, the limitations of Section 415 of the Code,
as amended, are hereby incorporated by reference and made part hereof as though
fully set forth herein, but shall be applied only to particular Plan benefits in
accordance with the provisions of this Appendix A to the extent such provisions
are not consistent with said Section.
A.2 SECTION 415 DEFINITIONS. For purpose of this Appendix A the
following terms shall have the meaning hereinafter set forth.
(a) The term "RELATED CORPORATION" shall mean the
definition of Related Corporation contained in Article I of the
Plan, as modified by Section 415(h) of the Code.
(b) The term "ANNUAL ADDITIONS" shall mean the sum
for any Limitation Year of the following amounts:
(i) Contributions to the Plan made by an Employer for
such Limitation Year;
(ii) For Limitation Years prior to January 1, 1987, the
lesser of (A) the amount of such Participant's contributions,
but only to the extent that the sum of such Contributions
exceeds six percent of his Compensation paid for such
Limitation Year, or (B) one-half of the Participant's
contributions, if any; and for Limitation Years on and after
January 1, 1987, all contributions made by a Participant to
the Plan for such Limitation Year;
(iii) The amount, if any, of Employer contributions and
forfeitures which are credited to the Participant under any
other defined contribution plan (whether or not terminated)
maintained by an Employer or a Related Corporation
concurrently with the Plan;
(iv) Reallocated forfeitures;
(v) Contributions to an individual medical account as
defined in Section 415(l)(2) of the Code which is part of a
pension or annuity plan maintained by the Employer;
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(vi) Any amount derived from contributions paid after
December 31, 1985, in taxable years ending after such date,
which are attributable to post-retirement medical benefits
allocated to a separate account of a key employee (as defined
in Appendix B of the Plan) under a welfare benefit fund (as
defined in Section 419(e) of the Code) maintained by an
Employer or a Related Corporation.
(c) The term "COMPENSATION" shall mean a
Participant's wages, salaries, and other amounts received for
personal services actually rendered in the course of employment
with an Employer or a Related Corporation, excluding, however, (i)
contributions made by an Employer or a Related Corporation to a
plan of deferred compensation to the extent that, before the
application of the limitations of Section 415 of the Code to such
plan, the contributions are not includable in the gross income of
the Participant for the taxable year in which contributed, (ii)
contributions made by an Employer or a Related Corporation on his
behalf to a simplified employee pension plan described in Section
408(k) of the Code, (iii) any distributions from a plan of
deferred compensation (other than amounts received pursuant to an
unfunded non-qualified plan in the year such amounts are
includable in the gross income of the Participant), (iv) amounts
received from the exercise of a non-qualified stock option or when
restricted stock or other property held by the Participant becomes
freely transferable or is no longer subject to substantial risk of
forfeiture, (v) amounts received from the sale, exchange, or other
disposition of stock acquired under a qualified stock option, and
(vi) any other amounts that receive special tax benefits, such as
premiums for group term life insurance (but only to the extent
that the premiums are not includable in gross income of the
Participant).
(d) The term "LIMITATION YEAR" shall mean the
12-month period commencing each January 1 and ending each
subsequent December 31 or such other 12-month period elected by
the Employer pursuant to regulations under Section 415 of the
Code.
A.3 MAXIMUM ANNUAL ADDITIONS. For each Limitation Year,
the Annual Additions with respect to a Participant shall not exceed the lesser
of (i) $30,000 (except such amount shall be adjusted in accordance with
regulations prescribed by the Secretary of the Treasury for increases in the
cost of living), or (ii) 25 percent of such Participant's Compensation paid for
such Limitation Year. If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different 12-month consecutive
period, such Annual Additions shall not exceed $30,000 multiplied by a fraction,
the numerator of which is the number of months in the short Limitation year, and
the denominator of which is 12.
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A.4 ELIMINATION OF EXCESS CONTRIBUTIONS. If the Annual
Additions to the accounts of a Participant in any Limitation Year would exceed
the limitation contained in this Appendix A absent such limitation, the excess
shall be eliminated as follows:
(a) The 401(k) Contributions credited to the Accounts of such
Participant for such Limitation Year shall be returned to the
Participant unless the Participant has elected to have them
transferred and deposited under a deferred compensation program or
an excess benefit plan maintained by the Company; and
(b) Next, Matching Contributions credited to the Accounts of
such Participant for such Limitation Year shall be reduced and
returned to the Employers; and
(c) Next, Profit Sharing Contributions credited to the
Accounts of such Participant for such Limitation Year shall be
reduced and returned to the Employers.
In each case specified above, the amount to be reduced, returned,
or transferred shall be that amount as is necessary to permit the
maximum amount of the Annual Additions to the Participant's
Accounts for such year to be made under the Plan without violating
the restrictions of Section 415 of the Code. Notwithstanding the
foregoing, in the event that the limitations with respect to
Annual Additions prescribed hereunder are exceeded with respect to
any Participant and such excess arises as a consequence of the
allocations of forfeitures or a reasonable error in estimating the
Participant's annual Compensation, the portion of such excess
attributable to Matching Contributions or Profit Sharing
Contributions shall be held in a suspense account and, if such
Participant remains a Participant, shall be used to reduce
Matching Contributions or Profit Sharing Contributions for such
Participant, as the case may be, for the succeeding calendar
years, and, if such Participant ceases participating in the Plan,
shall be used to reduce Matching Contributions or Profit Sharing
Contributions, as the case may be, for all other Participants in
the calendar year in which he ceases to be a Participant and
succeeding calendar years, as necessary.
A.5 DEFINED BENEFIT PLAN COVERAGE. If any Participant in the
Plan also shall be covered by a qualified defined benefit plan (whether or not
terminated) maintained by an Employer or by a Related Corporation concurrently
with the Plan, the sum of the defined benefit plan fraction with respect to such
Participant and the defined contribution plan fraction with respect to such
Participant for any Limitation Year ending on or before December 31, 1982, shall
not exceed 1.4, and for any Limitation Year after December 31, 1982, shall not
exceed 1.0. For
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purposes of this Section A.5, defined benefit plan fraction and defined
contribution plan fraction shall mean the following:
(i) Defined benefit plan fraction shall mean a fraction, the
numerator of which is the projected annual benefit of
such Participant under all such plans (determined as of
the close of such Limitation Year) and the denominator
of which is the lesser of (i) the product of 1.25 (1.0
prior to 1983) multiplied by the dollar limitation in
effect under Section 415(b)(1)(A) of the Code for such
year or (ii) the product of 1.4 (1.0 prior to 1983)
multiplied by the amount which may be taken into account
under Section 415(b)(1)(B) of the Code with respect to
such Participant for such year; provided, however, that
(A) if a Participant was a participant prior to January
1, 1983, and on December 31, 1982, his accrued benefit
exceeded the maximum defined benefit dollar limitation
on January 1, 1983, or (B) if a Participant was a
participant prior to January 1, 1987, and his accrued
benefit on December 31, 1986 exceed the maximum defined
benefit dollar limitation on January 1, 1987, then such
limitation with respect to such Participant shall be
equal to the greater of his accrued benefits as of
December 31, 1982 or December 31, 1986, as the case may
be.
(ii) Defined contribution plan fraction shall mean a
fraction, the numerator of which is the sum of the
aggregate Annual Additions of the Participant under the
Plan and any other defined contribution plan as of the
close of the Limitation Year and the denominator of
which is the sum of the lesser of the following amounts
determined for such year and each prior year of service
with an Employer or a Related Corporation: (i) the
product of 1.25 (1.0 prior to 1983) multiplied by the
dollar limitation in effect under Section 415(c)(1)(A)
of the Code for such year, determined without regard to
Section 415(c)(6) of the Code, or (ii) the product of
1.4 (1.0 prior to 1983) multiplied by the amount which
may be taken into account under Section 415(c)(1)(B) of
the Code with respect to such Participant for such year;
provided, however, that the denominator may be
determined under any transitional rules for years ending
prior to January 1, 1983, prescribed by the Code
(including the special transitional rule set forth in
Section 415(e)(6) of the Code, if the Plan Administrator
so elects).
In the event the special limitation contained in this Section A.5 is exceeded,
the benefits otherwise payable to the Participant under any such qualified
defined benefit plan shall be reduced to the extent necessary to meet such
limitation.
A.6 AGGREGATION OF DEFINED CONTRIBUTION PLANS. In the
event that a Participant is covered by any other qualified defined contribution
plan (whether or not terminated)
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maintained by an Employer or a Related Corporation concurrently with the Plan,
then the total Annual Additions to the Participant's accounts under all such
plans shall not exceed the limitation set forth in Section A.3. For purposes of
this Section A.6, Annual Additions under the Plan shall be deemed to have been
made or provided after Annual Additions to all other defined contribution plans
subject to the limitations set forth in Section A.3. Thus contributions under
the Plan shall be affected by the limitations before contributions under all
other defined contribution plans are affected.
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APPENDIX B
TOP-HEAVY PROVISIONS
B.1 APPLICABILITY. Notwithstanding any other provision to the
contrary, in the event the Plan is deemed to be a top-heavy plan for any Plan
year, the provisions contained in this Appendix B with respect to contributions
of an Employer shall be applicable with respect to such Plan Year. In the event
that the Plan is determined to be a top-heavy plan and upon a subsequent
determination date is determined to no longer be a top-heavy plan, the
contribution provisions in effect immediately preceding the Plan Year in which
the Plan was determined to be a top-heavy plan shall again become applicable as
of such subsequent determination date.
B.2 TOP-HEAVY DEFINITIONS. For purposes of this Appendix B, the
following definitions shall apply:
(a) The term "DETERMINATION DATE" with respect to any
Plan Year shall mean the last day of the preceding Plan Year
(or, in the case of the first Plan Year of the Plan, the last
day of the first Plan Year). Distributions made and the
present value of accrued benefits are determined as of the
determination date. The present value of an accrued benefit
under a defined contribution plan as of a determination date
shall be the sum of (i) the account balance as of the most
recent valuation date occurring within a 12-month period
ending on the determination date, and (ii) an adjustment for
contributions due as the determination date. The present value
of an accrued benefit under a defined benefit plan as of a
determination date shall be determined as of the most recent
valuation date which is within the 12-month period ending on
the determination date. In the case of an aggregation group,
the present value of the accrued benefits is determined
separately for each plan as of each plan's determination date
and then aggregated by adding for such plans which fall within
the same calendar year.
(b) The term "KEY EMPLOYEE" shall mean any Participant
or former Participant who is a key employee pursuant to the
provisions of Section 416(i)(1) of the Code and any
Beneficiary of such Participant or former Participant.
(c) The term "NON-KEY EMPLOYEE" shall mean any
Participant who is not a key employee.
(d) The term "PERMISSIVE AGGREGATION GROUP" shall mean
those plans not included in an Employer's required aggregation
group in conjunction with any other plan or plans
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of such Employer, so long as the entire group of plans would
continue to meet the requirements of Sections 401(a)(4) and
410 of the Code.
(e) The term "REQUIRED AGGREGATION GROUP" shall include
(i) all plans of an Employer in which a key employee is a
participant or has participated at any time during the
determination period (regardless of whether the Plan has
terminated) and (ii) all other plans of an Employer which
enable a plan described in clause (i) hereof to meet the
requirements of Sections 401(a)(4) or 410 of the Code.
(f) The term "SUPER TOP-HEAVY GROUP" with respect to a
particular Plan Year shall mean a required or permissive
aggregation group that, as of the determination date, would
qualify as a top-heavy group under the definition in paragraph
(h) of this Section B.2 with "90 percent" substituted for "60
percent" each place where "60 percent" appears in such
definition.
(g) The term "SUPER TOP-HEAVY PLAN" with respect to a
particular Plan Year shall mean a plan that, as of the
determination date, would qualify as a top-heavy plan under
the definition in paragraph (i) of this Section B.2 with "90
percent" substituted for "60 percent" each place where "60
percent" appears in such definition. A plan is also a "super
top-heavy plan" if it is part of a super top-heavy group.
(h) The term "TOP-HEAVY GROUP" with respect to a
particular Plan Year shall mean a required or a permissive
aggregation group if the sum, as of the determination date, of
the present value of the cumulative accrued benefits for key
employees under all defined benefit plans included in such
group and the aggregate of the account balances of key
employees under all defined contribution plans included in
such group exceeds 60 percent of a similar sum determined for
all employees covered by the plans included in such group.
(i) The term "TOP-HEAVY PLAN" with respect to a
particular Plan Year shall mean (i), in the case of a defined
contribution plan, a plan for which, as of the determination
date, the aggregate of the accounts (within the meaning of
Section 416(g) of the Code and the regulations thereunder) of
key employees exceeds 60 percent of the aggregate of the
accounts of all Participants under the plan, with the accounts
valued as of the relevant Valuation Date, (ii), in the case of
a defined benefit plan, a plan for which, as of the
determination date, the present value of the cumulative
accrued benefits payable under the plan (within the meaning of
Section 416(g) of the Code and the regulations thereunder) to
key employees exceeds 60 percent of the present value of the
cumulative accrued benefits under the plan for all employees,
with present value of accrued benefits to be determined in
accordance with
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the actuarial assumptions specified in such defined benefit
plan, and (iii) a plan that is part of a top-heavy group.
Notwithstanding the foregoing provisions of this paragraph,
however, a plan shall be deemed not to be a top-heavy plan if
it is part of a required or permissive aggregation group that
is not a top-heavy group.
(j) The term "COMPENSATION" shall mean a Participant's
total wages and salary for services rendered to the Employers
less amounts realized from the exercise or disposition of
stock options paid by the Employers during a calendar year to
the extent it would be taken into account for Form W-2
purposes; provided, however, that such compensation shall not
exceed the dollar limitation set forth in Section 1.1(9) of
the Plan to comply with Section 401(a)(17) of the Code.
(k) The term "VALUATION DATE" shall mean the most recent
Valuation Date within a twelve month period ending on the
determination date.
(l) The term "TOP-HEAVY RATIO" shall mean as follows:
(i) If the Employer maintains one or more
defined contribution plans (including any simplified
employee pension plan) and the Employer has not maintained
any defined benefit plan which during the 5-year period
ending on the determination date(s) has or has had accrued
benefits, the top-heavy ratio for the Plan alone or for the
required or permissive aggregation group, as appropriate, is
a fraction, the numerator of which is the sum of the account
balances of all key employees as of the determination
date(s) including any part of any account balance
distributed in the 5-year period ending on the determination
date(s)), and the denominator of which is the sum of all
account balances (including any part of any account balance
distributed in the 5-year period ending on the determination
date(s)), both computed in accordance with Section 416 of
the Code. Both the numerator and denominator of the
top-heavy ratio are adjusted to reflect any contribution not
actually made as of the determination date, but which is
required to be taken into account on that date under Section
416 of the Code.
(ii) If the Employer maintains one or more
defined contribution plans (including any simplified
employee pension plans) and the Employer maintains or has
maintained one or more defined benefit plans which during
the 5-year period ending on the determination date(s) has or
has had any accrued benefits, the top-heavy ratio for any
required or permissive aggregation group as appropriate is a
fraction, the numerator of which is the sum of account
balances under the aggregated defined contribution plan or
plans for all key employees, determined in accordance with
subparagraph (i)
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above, and the present value of accrued benefits under the
aggregated defined benefit plan or plans for all key employees
as of the determination date(s), and the denominator of which
is the sum of the account balances under the aggregated
defined contribution plan or plans for all participants,
determined in accordance with subparagraph (i) above and the
present value of the accrued benefits under the defined
benefit plan or plans for all participants as of the
determination date(s), all determined in accordance with
Section 416 of the Code. The accrued benefits under a defined
benefit plan is both the numerator and denominator of the
top-heavy ratio are adjusted for any distribution of an
accrued benefit made in the five-year period ending on the
determination date.
(iii) For purposes of subparagraphs (i) and (ii)
above, the value of account balances and the present value of
accrued benefits will be determined as of the most recent
valuation date that falls within or ends with the 12-month
period ending on the determination date, except as provided in
Section 416 of the Code for the first and second plan years of
a defined benefit plan. The account balances and accrued
benefits of a participant (1) who is not a key employee but
who was a key employee in a prior year, or (2) who has not
performed services for the Employer maintaining the Plan at
any time during the 5-year period ending on the determination
date will be disregarded. The calculation of the top-heavy
ratio, and the extent to which distributions, rollovers and
transfers are taken into account will be made in accordance
with Section 416 of the Code. Deductible employee
contributions shall not be taken into account for purposes of
computing the top-heavy ratio. When aggregating plans the
value of account balances and accrued benefits will be
calculated with reference to the determination date(s) that
fall within the same calendar year.
B.3 MINIMUM EMPLOYER CONTRIBUTION. In the event the Plan
is determined to be a top-heavy plan with respect to any Plan Year, the
contributions of the Employers allocated with respect to such Plan Year to the
Accounts of each non-key employee who is a Participant and who is not separated
from service with an Employer as of the end of such Plan Year, regardless of
whether such non-key employee has completed less than 1,000 Hours of Service or
fails to make either mandatory employee contributions or elective contributions,
shall be no less than the lesser of (a) three percent of his compensation or (b)
the largest percentage of compensation that is allocated for such Plan Year to
the Accounts attributable to contributions of the Employers of any key employee,
except that, in the event the Plan is part of a required aggregation group, and
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the Plan enables a defined benefit plan included in such group to meet the
requirements of Section 401(a)(4) or 410 of the Code, the minimum allocation of
contributions of the Employers to the Accounts of each non-key employee shall be
three percent of the compensation of such non-key employees. Any minimum
allocation of contributions of the Employers with respect to a Participant
required by this Section B.3 shall be made without regard to any social security
contribution made by the Employers on behalf of the Participant and without
regard to whether or not a non-key employee withdraws 401(k) Contributions.
Notwithstanding the minimum top-heavy allocation requirements of this Section
B.3, in the event that the Plan is a top-heavy plan, each non-key employee
hereunder who is also covered under a top-heavy defined benefit plan maintained
by an Employer shall receive the top-heavy benefits provided for under such
defined benefit plan in lieu of the minimum top-heavy allocation under the Plan.
B.4 TOP-HEAVY VESTING SCHEDULE. A Participant shall be
entitled to the vested interest in his Accounts attributable to contributions of
the Employers calculated in accordance with the provisions of Article III (or,
if greater, in accordance with the provisions of Section B.3 above) determined
in accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
</TABLE>
If the Plan becomes Top-Heavy and subsequently ceases to be such, the vesting
schedule set for the above shall continue to apply in determining the rights to
benefits of any Participant who had at least five Years of Service as of
December 31 in the last Plan Year in which the Plan was Top-Heavy. For other
Participants, such schedule shall apply only to that portion of their Accounts
that became vested under the vesting schedule set forth above as of such
December 31.
B.5 ADJUSTMENTS TO SECTION 415 LIMITATIONS.
Notwithstanding the provisions of Section A.5, in the event that the Plan is a
top-heavy plan and an Employer maintains a defined benefit plan covering some or
all of the employees that are covered by the Plan, Section
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<PAGE> 72
415(e)(2)(B) and 415(e)(3)(B) of the Code shall be applied to the Plan by
substituting "1.0" for "1.25" and Section 415(e)(6)(B)(i) of the Code shall be
applied to the Plan by substituting "$41,500" for $51,875", except that such
substitutions shall not be applied to the Plan if (a) the Plan is not a super
top-heavy plan and (b) a Company Contribution for such Plan Year for each
non-key employee who is a Participant is not less than four percent of such
non-key employee's compensation.
B.6 COMPENSATION TAKEN INTO ACCOUNT. The annual
compensation of any Participant to be taken into account under the Plan during
any Plan Year in which the Plan is determined to be a top-heavy plan shall not
exceed $150,000 (or such adjusted amount determined by the Secretary of the
Treasury pursuant to Section 416(d)(2) of the Code).
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