As filed with the Securities and Exchange Commission on January 15, 1999.
REGISTRATION STATEMENT NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
CAROLINA POWER & LIGHT COMPANY
(Exact name of Registrant as specified in its Charter)
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
(919) 546-6111
(Address of principal executive office, including zip code)
North Carolina 56-0165465
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
INTERPATH COMMUNICATIONS, INC. 401(K) RETIREMENT SAVINGS PLAN
(Full title of the Plan)
----------------------
Mr. Robert B. McGehee
Senior Vice President and General Counsel
Carolina Power & Light Company
411 Fayetteville Street
Raleigh, North Carolina 27601-1748
(919) 546-6111
(Name, address, including zip code, and telephone number including area code,
of agent for service)
Copy to:
Timothy S. Goettel, Esq.
Hunton & Williams
421 Fayetteville Street Mall
Raleigh, North Carolina 27601
(919) 899-3094
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Proposed maximum Proposed maximum
Title of securities Amount to be offering price aggregate Amount of
to be registered (1) registered per share(2) offering registration
price(2) fee(2)
============================================================================================
<S> <C> <C> <C> <C>
Common Stock, 500,000 shares $43.69 $21,845,000.00 $6,072.91
$.01 par value
============================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of
1933, as amended (the "Securities 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) Estimated solely for the purpose of computing the registration fee.
Calculated pursuant to Rule 457(c) of the Securities Act based on the average of
the high and low prices of the Common Stock on the New York Stock Exchange on
January 14, 1999.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
Not required to be filed with the Securities and Exchange Commission
(the "Commission").
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be filed with the Commission.
I-1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Carolina Power & Light Company (the
"Company") with the Commission pursuant to the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), are hereby incorporated by reference into
this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1998;
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998;
(d) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998; and
(e) The description of the Company's Common Stock in the Company's Registration
Statement on Form 8-A filed under the Securities Exchange Act of 1934 with
respect to the Company's Common Stock, including all amendments and reports
filed for the purpose of updating such description.
In addition to the foregoing, all documents subsequently filed by (i)
the Company or (ii) the Interpath Communications, Inc. 401(k) Retirement Savings
Plan (the "Plan") pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act, prior to the filing of a post-effective amendment which indicates that all
securities registered hereunder have been issued or which deregisters all
securities offered then remaining unsold, shall be deemed incorporated by
reference in this Registration Statement and to be a part hereof from the date
of the filing of such documents. Any statement, including financial statements,
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
II-1
<PAGE>
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 55-8-51 through 55-8-57 of the General Statutes of North
Carolina and the Charter and By-Laws of CP&L provide for indemnification of the
registrant's directors and officers in a variety of circumstances, which may
include liabilities under the Securities Act. CP&L has insurance covering its
expenditures which might arise in connection with the lawful indemnification of
its directors and officers for their liabilities and expenses. Officers and
directors of CP&L also have insurance which insures them against certain
liabilities and expenses.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No.
* 4.1 Restated Charter of the Company, as amended May 10, 1995 (filed
as exhibit No. 3(i) to quarterly report on Form 10-Q for the
quarterly period ended June 30, 1995, File No. 1-3382).
* 4.1(a) Restated Charter of the Company, as amended May 10, 1996 (filed
as exhibit No. 3(i) to quarterly report on Form 10-Q for the
quarterly period ended June 30, 1997, File No. 1-3382).
* 4.2 By-Laws of the Company, as amended May 10, 1995 (filed as exhibit
No. 3(ii) to quarterly report on Form 10-Q for the quarterly
period ended June 30, 1995, File No. 1-3382).
* 4.2(a) By-Laws of the Company, as amended September 18, 1996 (filed as
exhibit No. 3(ii) to quarterly report on Form 10-Q for the
quarterly period ended June 30, 1997, File No. 1-3382).
4.3 Interpath Communications, Inc. 401(k) Retirement Savings Plan and
Trust Agreement.
5 Opinion of Hunton & Williams as to the legality of the securities
being registered.
23.1 Consent of Hunton & Williams (included in Exhibit 5).
23.2 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney (included on signature page).
- ----------
* Incorporated herein by reference as indicated.
II-2
<PAGE>
The undersigned registrant hereby undertakes to 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.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to include
any Prospectus required by Section 10(a)(3) of the Securities Act; (ii) to
reflect in the Prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such
information in this Registration Statement; provided, however, that the
registrant need not file a post-effective amendment to include the information
required to be included by subsection (i) or (ii) if such information is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
2. That, for the purpose of determining any liability under the
Securities 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.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's 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 herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question
II-3
<PAGE>
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
THE REGISTRANT
Pursuant to the requirements of the Securities Act, as amended, 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 Raleigh, State of North Carolina on December 9, 1998.
CAROLINA POWER & LIGHT COMPANY
/s/ William Cavanaugh III, President
-----------------------------------------
William Cavanaugh III, President
and Chief Executive Officer
POWER OF ATTORNEY
Each director and/or officer of the issuer whose signature appears below
hereby appoints William Cavanaugh III, Robert B. McGehee, and Timothy S.
Goettel, and each of them severally, as his attorney-in-fact to sign in his name
and behalf, in any and all capacities stated below, and to file with the
Commission, any and all amendments, including post-effective amendments, to this
Registration Statement.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William Cavanaugh III President and Chief December 9, 1998
-------------------------------------- Executive
William Cavanaugh III Officer and Director
/s/ Glenn E. Harder Executive Vice President December 9, 1998
-------------------------------------- and Chief Financial Officer
Glenn E. Harder
/s/ Bonnie V. Hancock Vice President and December 9, 1998
-------------------------------------- Controller
Bonnie V. Hancock
/s/ Sherwood H. Smith, Jr. Chairman of the Board December 9, 1998
--------------------------------------
Sherwood H. Smith, Jr.
/s/ Leslie M. Baker, Jr. Director December 9, 1998
--------------------------------------
Leslie M. Baker, Jr.
/s/ Edwin B. Borden Director December 9, 1998
--------------------------------------
Edwin B. Borden
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Charles W. Coker Director December 9, 1998
--------------------------------------
Charles W. Coker
/s/ Richard L. Daugherty Director December 9, 1998
--------------------------------------
Richard L. Daugherty
/s/ Walter Y. Elisha Director December 9, 1998
--------------------------------------
Walter Y. Elisha
/s/ Robert L. Jones Director December 9, 1998
--------------------------------------
Robert L. Jones
/s/ Estell C. Lee Director December 9, 1998
--------------------------------------
Estell C. Lee
/s/ William O. McCoy Director December 9, 1998
--------------------------------------
William O. McCoy
/s/ J. Tylee Wilson Director December 9, 1998
--------------------------------------
J. Tylee Wilson
</TABLE>
II-6
<PAGE>
THE PLAN
Pursuant to the requirements of the Securities Act, the Plan has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Raleigh, State of North
Carolina, on December 31, 1998.
INTERPATH COMMUNICATIONS, INC.
401(K) RETIREMENT SAVINGS PLAN
/s/ Moanica M. Casten
--------------------------------------
Moanica M. Casten, Plan Administrator
II-7
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Restated Charter of the Company, as amended May 10, 1995
(filed as exhibit No. 3(i) to quarterly report on Form 10-Q
for the quarterly period ended June 30, 1995, File No.
1-3382).
4.1(a) Restated Charter of the Company, as amended May 10, 1996
(filed as exhibit No. 3(i) to quarterly report on Form 10-Q
for the quarterly period ended June 30, 1997, File No.
1-3382).
4.2 By-Laws of the Company, as amended May 10, 1995 (filed as
exhibit No. 3(ii) to quarterly report on Form 10-Q for the
quarterly period ended June 30, 1995, File No. 1-3382).
4.2(a) By-Laws of the Company, as amended September 18, 1996 (filed
as exhibit No. 3(ii) to quarterly report on Form 10-Q for the
quarterly period ended June 30, 1997, File No. 1-3382).
4.3 Interpath Communications, Inc. 401(k) Retirement Savings Plan
and Trust Agreement.
5 Opinion of Hunton & Williams as to the legality of the
securities being registered.
23.1 Consent of Hunton & Williams (included in Exhibit 5).
23.2 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney (included on signature page).
- ----------
* Incorporated herein by reference as indicated.
INTERPATH COMMUNICATIONS, INC.
401(k) RETIREMENT SAVINGS PLAN
AND
TRUST AGREEMENT
<PAGE>
TABLE OF CONTENTS
Page
INTRODUCTION Name and Date of Agreement 1
SECTION 1 Definitions 1
SECTION 2 Administration of Plan by Committee 20
SECTION 3 Eligibility and Participation 28
SECTION 4 Employer Non-Elective Contributions
and Elective Contributions 30
SECTION 5 Allocation of Contributions and
Forfeitures 35
SECTION 6 Top Heavy Provision and Administration 44
SECTION 7 Retirement Benefits 47
SECTION 8 Death Benefits 48
SECTION 9 Disability Benefits 49
SECTION 10 Benefits and Vesting Upon Termination
of Employment Other Than By Reason of
Retirement, Death, or Disability 50
SECTION 11 Annuity Requirements 53
SECTION 12 Distribution Requirements 54
SECTION 13 Valuation Upon Distribution 61
SECTION 14 Trustee 62
SECTION 15 Amendment and Termination of Plan 75
SECTION 16 Limitation on Benefits and Contributions 78
SECTION 17 Rollovers and Other Transfers 81
SECTION 18 Miscellaneous Provisions 83
SECTION 19 Voluntary Non-Deductible Participant
Contributions 85
SECTION 20 Participant Loans 93
SECTION 21 Hardship Distributions 97
SECTION 22 Cash or Deferred Limitations 98
SECTION 23 Investment Direction By Participant 114
SECTION 24 Initial Qualification 118
SECTION 25 Withdrawal 118
<PAGE>
INTERPATH COMMUNICATIONS, INC.
401(k)RETIREMENT SAVINGS PLAN
AND TRUST AGREEMENT
AGREEMENT made this _____ day of December, 1998, by and between INTERPATH
COMMUNICATIONS, INC., a corporation organized and existing under the laws of the
State of North Carolina, (hereinafter called "Employer"), and KAREN A. McKAY, L.
LAURENCE LEVISON and PETER D. BORBELY, as Trustees of the Trust herein created,
(hereinafter called "Trustee").
WHEREAS, Employer desires to assist its employees in providing retirement
income and, to accomplish this purpose, has established the Plan and Trust
embodied herein for the exclusive benefit of its eligible employees and their
beneficiaries; and
WHEREAS, the establishment of a trust to receive contributions and make
distributions in accordance with the Plan is required as a condition for
qualification as a tax-exempt employee benefit plan under the Internal Revenue
Code.
NOW, THEREFORE, Employer and Trustee mutually do covenant and agree as
follows:
SECTION 1 - Definitions
When used herein, the following terms shall have the indicated meanings,
unless the context clearly indicates otherwise:
1.1 "Account" or "Accounts" includes a Participant's Account for Employer
Non-Elective Contributions which do not satisfy the Code Sections 401(k)(2)(B)
and (C) Provisions, Account for Employer Non-Elective Contributions which
satisfy the Code Sections 401(k)(2)(B) and (C) Provisions, the Participant's
Elective Account, the Participant's voluntary non-deductible contribution
Account and the Participant's Incentive Contribution Account, unless the context
indicates otherwise.
<PAGE>
1.2 "Accrued Benefit" shall mean the amount standing in a Participant's
Account (including his Non-Elective Account and Elective Account) as of any
particular date.
1.3 "Affiliated Employer" shall mean the Employer and any corporation
which is a member of a controlled group of corporations (as defined in Code
Section 414(b)) which includes the Employer; any trade or business (whether or
not incorporated) which is under common control (as defined in Code Section
414(c)) with the Employer; any organization (whether or not incorporated) which
is a member of an affiliated service group (as defined in Code Section 414(m))
which includes the Employer; and any other entity required to be aggregated with
the Employer pursuant to regulations under Code Section 414(o).
1.4 "Aggregate Account" shall mean, with respect to each Participant, the
value of all Accounts maintained on behalf of a Participant, whether
attributable to Employer or Employee contributions, subject to the Top Heavy
Provision and Administration Section.
1.5 "Anniversary Date" shall mean the first day of a Plan Year.
1.6 "Annuity" or "Annuity Contract" shall mean a qualified,
nontransferable Annuity Contract.
1.7 "Authorized Leave of Absence" shall mean a temporary cessation of
active employment with the Employer, provided the cessation was approved by the
Employer and the Employee returns to work for the Employer not later than the
expiration of such approved cessation of employment.
1.8 "Beneficiary" or "Beneficiaries" shall mean such person or persons or
legal entity as may be designated by a Participant
<PAGE>
to receive benefits hereunder after the Participant's death, or if the
Participant fails to designate a Beneficiary, then the estate of the
Participant, except as otherwise provided in the Death Benefits Section and
Annuity Requirements Section where the Participant's spouse is the required
Beneficiary.
1.9 "Code" shall mean the Internal Revenue Code of 1986, and any
amendments thereto.
1.10 "Code Section 415 Compensation" shall mean:
(a) a Participant's wages, salaries, and fees for professional
services, and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer maintaining
the Plan to the extent that the amounts are includable in gross
income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe benefits,
reimbursements, and expense allowances);
(b) in the case of a Participant who is an Employee within the
meaning of Code Section 401(c)(1) and the regulations thereunder,
the Participant's Earned income (as described in Code Section
401(c)(2) and the regulations thereunder);
(c) amounts described in Code Section 104(a)(3), 105(a) and 105(h),
but only to the extent that these amounts are includable in the
gross income of the Employee;
(d) amounts paid or reimbursed by the Employer for moving expenses
incurred by an Employee, but only to the extent that these amounts
are not deductible by the Employee under Code Section 217;
(e) the value of a non-qualified stock option granted to an Employee
by the Employer, but only to the extent that the value of the option
is includable in the gross income of the Employee for the taxable
year in which granted; and
(f) the amount includable in the gross income of an Employee upon
making the election described in Code Section 83(b).
(g) a Participant's elective deferral as defined in Code Section
402(g)(3); and
<PAGE>
(h) any amount which is contributed or deferred by the Employer at
the election of the Participant and which is not includible in the
gross income of the Participant by reason of Code Section 125 or
Code Section 457.
Subparagraphs (a) and (b) above include foreign earned income (as defined
in Code Section 911(b)), whether or not excludable from gross income under
Section 911.
Code Section 415 Compensation does not include the following:
(a) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Employee
either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(b) amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(c) other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in
Code Section 403(b) (whether or not the amounts are actually
excludable from the gross income of the Employee).
Code Section 415 Compensation for any Limitation Year is the compensation
actually paid or made available to a Participant within such Limitation Year.
For any Limitation Year beginning after December 31, 1991, Code Section 415
Compensation shall not include accrued compensation (other than de minimis
accrued compensation as provided for in Treasury Regulations).
1.11 "Code Sections 401(k)(2)(A), (B) and (C) Provisions" shall mean a
qualified cash or deferred arrangement under which
(a) a covered employee may elect to have the Employer make payments
as contributions to a trust under the plan on behalf of the
Employee, or to the Employee in cash;
<PAGE>
(b) the amounts held in the trust attributable to Employer
contributions made pursuant to the Employee's election may not be
distributable to the Participant or Beneficiary earlier than
separation from service, death, disability, termination of the Plan
without establishment of a successor plan, the attainment of age 59
1/2, or Hardship; and
(c) the Employee's right to his Accrued Benefit derived from
Employer contributions made to the trust pursuant to his election is
non-forfeitable.
1.12 "Code Sections 401(k)(2)(B) and (C) Provisions" shall mean a
qualified cash or deferred arrangement under which
(a) the amounts held in the trust attributable to Employer
contributions are treated as made pursuant to the Employee's
election may not be distributable to the Participant or Beneficiary
earlier than separation from service, death, disability, termination
of the Plan without establishment of a successor plan, or the
attainment of age 59 1/2; and
(b) the Employee's right to his Accrued Benefit derived from
Employer contributions when made to the trust pursuant to his
election is non-forfeitable.
1.13 "Committee" shall mean the Plan committee appointed by the Employer
pursuant to the Administration of Plan by Committee Section.
1.14 "Compensation" shall mean the entire amount paid to an Employee by
the Employer during the Plan Year as salary, hourly wages, commissions, overtime
pay, bonuses, performance awards, but excluding severance compensation, fees,
allowances, and any benefits and credits under this or any other employee
benefit plan of the Employer. Notwithstanding the preceding sentence, all Code
Section 415 Compensation during the entire Limitation Year shall be taken into
account for determining the required minimum allocation for a Non-Key Employee
if the Plan is a Top Heavy Plan and the required minimum benefit has not been
otherwise provided under Code Section 416(c). For years beginning after December
31, 1988 and before January 1, 1994, the annual
<PAGE>
Compensation of each Participant taken into account under the Plan for any Plan
Year shall not exceed $200,000. This limitation shall be adjusted by the
Secretary at the same time and in the same manner as under Code Section 415(d),
except that the dollar increase in effect on January 1 of any calendar year is
effective for years beginning in such calendar year and the first adjustment to
the $200,000 limitation is effected on January 1, 1990.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each Employee
taken into account under the Plan shall not exceed the $150,000, as adjusted for
increases in the cost of living in accordance with Code Section 401(a)(17)(B).
The cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding twelve (12) months, over which compensation is determined
(determination period) beginning in such calendar year. If a determination
period consists of fewer than twelve (12) months, the annual Compensation limit
is an amount equal to the otherwise applicable annual Compensation limit
multiplied by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall mean the
annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account
in determining the current Plan Year, the
<PAGE>
Compensation for such prior determination period is subject to the applicable
annual Compensation limit in effect for that prior determination period. For
this purpose, determining allocations in Plan Years beginning on or after
January 1, 1989, the annual Compensation limit is in effect for determination
periods beginning before that date is $200,000. In addition, in determining
allocations in Plan Years beginning on or after January 1, 1994, the applicable
annual compensation limit in effect for determination periods beginning before
that date is $150,000.
Compensation shall include Employer contributions made pursuant to a
salary reduction agreement which are not includible in the gross income of the
Employee under Code Sections 125, 402(e)(3), 402(h) and 403(b).
1.15 "Deferred Compensation" shall mean with respect to any Participant
that part of such Participant's Compensation paid or accrued by the Employer for
a Plan Year that such Participant has elected to defer pursuant to Section 4.2.
1.16 "Determination Date" shall mean (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last day of such Plan
Year.
1.17 "Disability" shall mean that the Participant is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
twelve (12) months. Such incapacity shall be established by a medical
examination by a medical doctor selected or approved by the Committee.
<PAGE>
1.18 "Effective Date" of this Plan and Trust shall be January 1, 1999.
1.19 "Elective Account" shall mean the account established and maintained
for each Participant with respect to his total interest in the Plan and Trust
resulting from Employer Elective Contributions and Employer Non-Elective
contributions which satisfy the Code Sections 401(k)(2)(B) and (C) Provisions.
1.20 "Elective Contribution" shall mean the Employer's contributions to
the Plan that are made pursuant to the Participant's cash or deferred election.
1.21 "Employee" shall mean any individual employed by the Employer
(including a Regular Full-Time Employee and Part-Time Employee as defined in
Section 3.1) other than an independent contractor. Any Leased Employee, as
defined in Code Section 414(n)(2), shall be treated as an Employee of the
Employer. The preceding sentence shall not apply to any Leased Employees if such
employees are covered by a money purchase pension plan as described in Code
Section 414(n)(5) providing (a) a nonintegrated employer contribution rate of at
least ten (10%) percent of compensation as defined in Code Section 415(c)(3) but
including amounts contributed pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under Code Sections 125, 402(a)(8),
402(h) or 403(b), (b) immediate participation, and (c) full and immediate
vesting, and such Leased Employees, with respect to services performed after
December 31, 1986, do not constitute more than twenty (20%) percent of the
Employer's Non-Highly Compensated Employee work force.
<PAGE>
1.22 "Employer" shall mean Interpath Communications, Inc. and any holding
company, subsidiary or affiliated company authorized by Interpath
Communications, Inc. to adopt and participate in this Plan and Trust.
1.23 "Five Percent Owner" shall mean any person who owns (or is considered
as owning within the meaning of Code Section 318) more than five (5%) percent of
the outstanding stock of the Employer or stock possessing more than five (5%)
percent of the total combined voting power of all stock of the Employer. In
determining percentage ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated as
separate employers.
1.24 "Hardship" shall mean a distribution that is made only if the
distribution is made both on account of an immediate and heavy financial need of
the Employee and is necessary to satisfy such financial need. A distribution
will be made on account of an immediate and heavy financial need of the Employee
only if the distribution is on account of:
(a) medical expenses described in Code Section 213(d) incurred by
the Employee, the Employee's spouse, children or any dependents of
the Employee (as defined in Code Section 152);
(b) costs (excluding mortgage payments) directly related to the
purchase of a principal residence for the Employee;
(c) payment of tuition for the next twelve (12) months of
post-secondary education for the Employee, his spouse, children, or
dependents (as defined in Code Section 152);
(d) the need to prevent the eviction of the Employee from his
principal residence or foreclose on the mortgage of the Employee's
principal residence; or
(e) a need designated by the Treasury Department which is a safe
harbor for Hardship distributions.
<PAGE>
A distribution will be considered necessary to satisfy an immediate and
heavy financial need of an Employee only if all of the following requirements
are satisfied:
(a) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Employee. The amount of an immediate
and heavy financial need may include any amounts necessary to pay
any federal, state, or local income taxes or penalties reasonably
anticipated to result from the distribution.
(b) The Employee has obtained all distributions, other than hardship
distributions, and all nontaxable (at the time of the loan) loans
currently available under all plans maintained by the Employer.
(c) All other plans maintained by the Employer limit the Employee's
elective contributions for the next taxable year to the applicable
limit under Code Section 402(g) for that year minus the Employee's
elective contributions for the year of the hardship distribution.
(d) The Employee is prohibited, under the terms of the Plan or an
otherwise legally enforceable agreement, from making elective
contributions and Employee contributions to the Plan and all other
plans maintained by the Employer for at least twelve (12) months
after receipt of the hardship distribution. For this purpose the
phrase "all other plans maintained by the Employer" means all
qualified and nonqualified plans of deferred compensation maintained
by the Employer. The phrase includes a stock option, stock purchase,
or similar plan, or a cash or deferred arrangement that is part of a
cafeteria plan within the meaning of Section 125. However, it does
not include the mandatory Employee contribution portion of a defined
benefit plan. It also does not include a health or welfare benefit
plan, including one that is part of a cafeteria plan within the
meaning of Code Section 125.
1.25 "Highly Compensated Employee" shall mean effective for Plan Years
beginning after December 31, 1996, any Employee who: (a) was a Five Percent
Owner at any time during the Plan Year or the preceding Plan Year, or (b) for
the preceding Plan Year had Compensation from the Employer in excess of $80,000
and, if the Employer so elects, was in the top-paid group for the preceding Plan
Year. The $80,000 amount is adjusted at the same time and
<PAGE>
in the same manner as under Code Section 415(d), except that the base period is
the calendar quarter ending September 30, 1996.
For this purpose the applicable year of the Plan for which a determination
is being made is called a determination year and the preceding twelve (12) month
period is called a look-back year.
A highly compensated former Employee is based on the rules applicable to
determining Highly Compensated Employee status as in effect for that
determination year, in accordance with Section 1.414(q)-1T, A-4 of the temporary
Income Tax Regulations and Notice 97-75.
In determining whether an Employee is a Highly Compensated Employee for
Plan Years beginning in 1997, the amendments to Code Section 414(q) stated above
are treated as having been in effect for Plan Years beginning in 1996.
In determining who is a Highly Compensated Employee the Employer makes a
top paid group election. The effect of this election is that an Employee (who is
not a Five Percent Owner at any time during the determination year or the
look-back year) with Compensation in excess of $80,000 (as adjusted) for the
look-back year is a Highly Compensated Employee only if the Employee was in the
top-paid group for the look-back year.
In determining who is a Highly Compensated Employee (other than as a Five
Percent Owner) the Employer makes a calendar year data election. The effect of
this election is that the look-back year is the calendar year beginning with or
within the look-back year.
1.26 "Hour of Service" shall mean:
<PAGE>
(a) each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer during the applicable
period.
(b) each hour for which an Employee is paid, or entitled to payment,
on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability
or pregnancy), layoff, jury duty, military duty or Authorized Leave
of Absence. Notwithstanding the foregoing:
(i) no more than 501 Hours of Service will be credited
to an Employee on account of any single continuous period
during which no duties are performed (whether or not such
period occurs in a single Plan Year or other period); and
(ii) no credit for an Hour of Service will be given for
which an Employee is directly or indirectly paid, or entitled
to payment, on account of a period during which no duties were
performed if such payment is made or due under a plan
maintained solely for the purpose of complying with applicable
workmen's compensation or unemployment compensation or
disability insurance laws; and
(iii) no credit for an Hour of Service will be given for
payment which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee.
For purposes of this subsection, a payment shall be deemed to
be made by or due from the Employer, regardless of whether such
payment is made by, or due from the Employer, directly or indirectly
through, among others, a trust fund, or insurer to which the
Employer contributes or pays premiums, and regardless of whether
contributions made or due to the trust fund, insurer or other entity
are for the benefit of a particular Employee or are on behalf of a
group of Employees in the aggregate.
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer.
Crediting of Hours of Service for back pay awarded or agreed to with
respect to the periods described in (b) above shall be subject to the
limitations of that Subsection.
<PAGE>
The same Hours of Service shall not be credited both under (a) or (b), as
the case may be, and under (c) above of this Section.
In the case of a payment which is made or due on account of a period
during which an Employee performs no duties, and which results in the crediting
of Hours of Service under (b) above of this Section, 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 such a period described in (b) above of this Section, the number
of Hours of Service to be credited shall be determined pursuant to applicable
Labor Department regulations.
The computation and crediting of Hours of Service shall be determined
pursuant to Department of Labor regulations section 2530.200b-2(b) and (c).
Nothing in this Section shall be construed as denying an Employee credit
for an Hour of Service if credit is required by separate federal law.
Military service shall mean service in the armed forces of the United
States if the Employer is required by applicable federal law to re-employ such
Employee and reinstate such Employee's rights and benefits.
Solely for purposes of determining whether a One-Year Break in Service for
participation and vesting purposes has occurred in a computation period for Plan
Years beginning after 1984, an individual who is absent from work for maternity
or paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such absence, or in any
case in which such Hours of Service cannot be determined, eight (8) Hours of
Service per day of such absence.
<PAGE>
For purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence (a) by reason of the pregnancy of the individual, (b)
by reason of a birth of a child of the individual, (c) by reason of the
placement of a child with the individual in connection with the adoption of such
child by such individual, or (d) for purposes of caring for such child for a
period beginning immediately following such birth or placement. The Hours of
Service credited under this paragraph shall be credited (a) in the computation
period in which the absence begins if the crediting is necessary to prevent a
One-Year Break in Service in that period, or (b) in all other cases, in the
following computation period.
An Hour of Service with an Affiliated Employer shall be credited as an
Hour of Service under this Plan. Hours of Service will also be credited for any
individual considered an Employee for purposes of this Plan under Code Section
414(n) or Code Section 414(o) and the regulations thereunder.
1.27 "Inactive Participant" shall mean any Employee or former Employee who
has ceased to be a Participant and on whose behalf an Account is maintained
under the Plan.
1.28 "Investment Manager" shall mean any party that (a) is either (i)
registered as an investment advisor under the Investment Advisors Act of 1940,
or (ii) a bank, or (iii) an insurance company; (b) acknowledges in writing that
it is a fiduciary with respect to the Plan; and (c) is granted the power to
manage, acquire, or dispose of any asset of the Plan.
1.29 "Key Employee" shall mean any Employee or former Employee (and his
Beneficiaries) who, at any time during the Plan
<PAGE>
Year containing the Determination Date or any of the preceding four (4) Plan
Years, is or was:
(a) an officer of an Employer having annual compensation greater
than fifty (50%) percent of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year;
(b) an owner (or considered an owner under Code Section 318) of one
of the ten largest interests in the Employer if such individual's
annual compensation exceeds one hundred (100%) percent of the dollar
limitation under Code Section 415(c)(1)(A);
(c) a "Five Percent Owner" of the Employer; or
(d) a "One Percent Owner" of the Employer having an annual
compensation from the Employer of more than $150,000.
Annual compensation means compensation as defined in Code Section
415(c)(3) but including amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's gross income under
Code Section 125, Code Section 402(a)(8), Code Section 402(h) or Code Section
403(b) of the Code. The determination of who is a Key Employee will be made in
accordance with Code Section 416(i)(1) and the regulations thereunder.
1.30 "Leased Employee" shall mean any person (other than an employee of
the recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one year
and such services are performed under primary direction or control of the
recipient. Contributions or benefits provided a Leased Employee by the leasing
organization which are
<PAGE>
attributable to services performed for the recipient employer shall be treated
as provided by the recipient employer.
A Leased Employee shall not be considered an employee of the recipient if:
(a) such employee is covered by money purchase pension plan providing: (1) a
nonintegrated employer contribution rate of at least ten (10%) percent of
compensation, as defined in Code Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Code Section 125, Code Section 402(e)(3), Code
Section 402(h)(1)(B) or Code Section 403(b),(2) immediate participation, and (3)
full and immediate vesting; and (ii) Leased Employees do not constitute more
than twenty (20%) percent of the recipient's nonhighly compensated work force.
1.31 "Limitation Year" shall mean the Plan Year.
1.32 "Named Fiduciary" shall be the Committee.
1.33 "Non-Elective Contribution" shall mean the Employer's contributions
to the Plan other than those made pursuant to the Participant's cash or deferred
election.
1.34 "Non-Highly Compensated Employee" shall mean an Employee of the
Employer who is neither a Highly Compensated Employee nor a Family Member.
1.35 "Non-Key Employee" means any Employee who is not a Key Employee.
1.36 "Normal Retirement Age" shall mean the day on which the Participant
attains his sixty-fifth (65th) birthday.
1.37 "Normal Retirement Date" shall mean the day on which the Participant
attains his sixty-fifth (65th) birthday, unless the Participant's employment is
continued beyond his sixty-fifth
<PAGE>
(65th) birthday in which case the Participant's Normal Retirement Date shall be
the day on which he actually retires.
1.38 "One Percent Owner" shall mean any person who owns (or is considered
as owning within the meaning of Code Section 318) more than one (1%) percent of
the outstanding stock of the Employer or stock possessing more than one (1%)
percent of the total combined voting power of all stock of the Employer. In
determining percentage ownership hereunder, employers that would otherwise be
aggregated under Code Sections 414(b), (c) and (m) shall be treated as separate
employers. However, in determining whether an individual has Compensation of
more than $150,000, Compensation from each employer required to be aggregated
under Code Sections 414(b),(c) and (m) shall be taken into account.
1.39 "One-Year Break in Service" shall mean the applicable computation
period during which an Employee has not completed more than 500 Hours of Service
with the Employer. An Authorized Leave of Absence shall not cause a One-Year
Break in Service. The applicable computation period shall mean the period or
periods used in the definition of Year of Service.
1.40 "Participant" shall mean any Employee of the Employer who has met the
eligibility requirements and participation requirements of this Plan and becomes
a Participant in this Plan.
1.41 "Plan" shall mean the profit-sharing and 401(k) plan of the Employer
as set forth in and by this document and all subsequent amendments thereto.
1.42 "Plan Administrator" shall be the Employer.
1.43 "Plan Name" shall be Interpath Communications, Inc. 401(k)
Retirement Savings Plan.
<PAGE>
1.44 "Plan Year" shall be the twelve (12) consecutive month period
beginning on January 1 and ending on December 31.
1.45 "Shareholder-Employee" shall mean a Participant who owns more than
five (5%) percent of the Employer's outstanding capital stock interest during
any year in which the Employer elects to be taxed as an "S" corporation under
the Code.
1.46 "Super Top Heavy Plan" shall mean, for Plan Years commencing after
December 31, 1983, that, as of the Determination Date, (a) the Present Value of
Accrued Benefits of Key Employees, and (b) the sum of the Aggregate Accounts of
Key Employees under this Plan and all plans of an Aggregation Group, exceeds
ninety (90%) percent of the Present Value of Accrued Benefits and the Aggregate
Accounts of all Participants under this Plan and all plans of an Aggregation
Group.
1.47 "Taxable Year" shall mean the twelve (12) consecutive month period
beginning on January 1 and ending on December 31.
1.48 "Top Heavy Group" shall mean an Aggregation Group in which, as of the
Determination Date, the sum of:
(a) the Present Value of Accrued Benefits of Key Employees under all
defined benefit plans included in the group, and
(b) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group, exceeds sixty (60%)
percent of a similar sum determined for all Participants.
1.49 "Top Heavy Plan" shall mean, for Plan Years commencing after December
31, 1983, that, as of the Determination Date, (a) the Present Value of Accrued
Benefits of Key Employees, and (b) the sum of the Aggregate Accounts of Key
Employees under this Plan and all plans of an Aggregation Group, exceeds sixty
(60%) percent of the Present Value of Accrued Benefits and the Aggre-
<PAGE>
gate Accounts of all Participants under this Plan and all plans of an
Aggregation Group.
1.50 "Top Heavy Plan Year" shall mean that for a particular Plan Year the
Plan is a Top Heavy Plan as defined herein.
1.51 "Trust" as herein used shall mean the legal entity resulting from the
agreement between the Employer and the Trustee by which the contributions
hereunder shall be made, received, held, invested, reinvested and disbursed to
or for the benefit of the Participants or their Beneficiaries, or both,
according to the terms of this Plan.
1.52 "Trust Fund" shall mean all funds received by the Trustee, together
with all income, profits, losses or increments thereon.
1.53 "Trustee" shall mean a corporation, association, individual, group of
individuals, or any combination of them, or any successor or successors who
shall accept the designation and enter into the duties of Trustee as
specifically set forth in this Trust Agreement.
1.54 "Valuation Date" shall mean each day during which the major United
States financial markets are open for the conduct of business.
1.55 "Year of Service" shall mean for purposes of
(a) eligibility to participate in this Plan, a period of twelve
consecutive months, as hereinafter set forth, during which an
Employee completes at least 1,000 Hours of Service. The initial
eligibility computation period to be taken into account for this
purpose shall be the twelve consecutive month period commencing with
the day on which the Employee first performs an Hour of Service
("employment year"). The eligibility computation period shall shift
to the Plan Year. The first Plan Year so used shall be the Plan Year
which includes the first anniversary of the day on which the
Employee first performs an Hour of Service. An Employee who is
credited with 1,000 Hours of Service in both the
<PAGE>
initial eligibility computation period and the first Plan Year which
commences prior to the first anniversary of the Employee's initial
eligibility computation period will be credited with two (2) Years
of Service for purposes of eligibility to participate.
(b) vesting in this Plan, a Plan Year during which an Employee
completes at least 1,000 Hours of Service.
(c) accrual of benefits in this Plan, a Plan Year during which a
Participant completes at least 1,000 Hours of Service, except as
otherwise specifically provided for herein.
A Year of Service with an Affiliated Employer and a predecessor employer
that maintained this Plan shall be credited as a Year of Service with the
Employer for purposes of vesting and eligibility to participate in this Plan.
SECTION 2 - Administration of Plan by Committee
2.1 The Employer hereby delegates its administrative duties and
responsibilities in connection with the administration of this Plan to the
Committee who shall be an individual or individuals designated by the Employer.
2.2 The Committee shall appoint a chairman and a secretary and may appoint
an acting chairman and an acting secretary. One person may hold more than one
position on the Committee.
2.3 The Committee shall hold meetings upon such notice, at such place and
at such times as they may from time to time determine. Notice of a meeting shall
not be required if waived in writing, or if all of the members are present at
the meeting. A majority of the members of the Committee at any time in office
shall constitute a quorum. All resolutions or other actions taken by the
Committee at any meeting shall be by vote of a majority present at any such
meeting and entitled to vote. Resolutions may be adopted or other action taken
without a meeting upon written consent signed by all of the members.
<PAGE>
2.4 The Committee shall maintain sufficient records of their deliberations
and decisions. The minutes of their proceedings shall be conclusive proof of the
facts of the operation of the Plan. Their records shall contain all relevant
data pertaining to individual Participants and their rights under the Plan and
in the Trust Fund.
2.5 The members of the Committee shall be bonded to the extent required by
law.
2.6 No fee or compensation shall be paid to any Committee member for his
services as such, but any out of pocket expenses properly incurred by the
Committee shall be paid or reimbursed by the Trust Fund unless voluntarily paid
by Employer.
2.7 The Committee shall have the duty and complete authority to interpret
and construe the provisions of the Plan and this Agreement, and to decide any
dispute which may arise regarding the rights and benefits of any Participant,
his legal representatives or Beneficiaries, which determinations shall apply
uniformly to all persons similarly situated and shall be binding and conclusive
upon all interested persons. The Committee may adopt rules, regulations or
by-laws for use in the administration of the Plan, appoint agents and compensate
them, and, in general, direct the administration of this Plan. Interpretation
and administration of this Plan and Trust shall always be made with the
fundamental purpose that the Plan and Trust is a retirement plan qualified under
Code Section 401.
2.8 Any member of the Committee may resign at any time or may be removed
with or without cause by the Employer. The Employer may (but shall not be
required to) appoint a successor to fill any vacancy in the membership of the
Committee.
<PAGE>
2.9 The Committee or its designee shall prior to a distribution to a
Participant notify such Participant concerning his benefits and options under
the Plan.
2.10 The Committee, or its designee, may correct errors and, so far as
practicable and in conformity with the Code and other applicable law and
regulations, may adjust any benefit or payment or credit accordingly.
2.11 The Committee, or its designee, shall determine the eligibility of
Employees in accordance with the provisions of this Plan from the information
furnished to it by Employer in accordance with the request of the Committee.
2.12 On or about the date upon which Employer shall make payment of any
contribution under the Plan by payment to the Trustee, the Committee, or its
designee, shall deliver to the Trustee a schedule showing the names of the
Participants, Inactive Participants and Beneficiaries, the Compensation of each
Participant for the Plan Year, the amount of Employer contributions, the amount
of each Participant's contributions, if any, the names of the Inactive
Participants whose employment was terminated during the Plan Year together with
forfeitures, if any, and such other information as shall be reasonably required
by the Trustee.
2.13 In any case involving termination of employment of a Participant or
any question as to vested interest, the Committee shall determine the percentage
of vesting and shall communicate its determination to the Trustee. If a
terminated Participant's benefits are to be received or invested in Annuity
Contracts (if Annuities are otherwise specifically permitted under the Annuity
Requirements Section), the Committee, or its designee, shall make
<PAGE>
proper application for such an Annuity to an insurance company and shall direct
the Trustee to purchase said Annuity Contract and deliver it in accordance with
the Committee's instructions after taking into account the consent requirements
of Code Section 401(a)(11), Code Section 417 and the Annuity Requirements
Section.
2.14 The Committee shall be the agent for service of legal process.
2.15 The Committee is authorized to secure such legal, medical,
accounting, actuarial, or other consultant's advice, and to appoint qualified
appraisers of real, personal, or intangible property, and to pay their
reasonable expenses and compensation from the Trust Fund, unless the Employer
voluntarily makes such payments.
2.16 In the event and to the extent not insured against by any insurance
company, the Employer shall indemnify and hold harmless the Committee members,
their assistants and representatives, from any and all claims, demands, suits,
losses, damages and any other liability arising from their responsibilities in
connection with the Plan or Trust, unless the same is determined to be due to
gross negligence or willful misconduct.
2.17 A Participant, Inactive Participant or Beneficiary shall have the
right to file a claim, inquire if he has any right to benefits and the amounts
thereof, or appeal the denial of a claim.
A claim will be considered as having been filed when a written
communication is made by the Participant or his authorized representative who
brings his claim request to the attention of the Plan Administrator or any
member of the Committee.
<PAGE>
The Committee shall notify the claimant in writing within ninety (90) days
after receipt of the claim if the claim is wholly or partially denied. If an
extension of time beyond the initial ninety (90) day period for processing the
claim is required, written notice of the extension shall be provided the
claimant prior to the termination of the initial ninety (90) day period. In no
event shall the extension exceed a period of ninety (90) days from the end of
the initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Committee
expects to render a final decision.
Notice of a wholly or partially denied claim for benefits will be in
writing in a manner calculated to be understood by the claimant and shall
include:
(a) The reason or reasons for denial;
(b) Specific reference to the Plan provisions that apply in the
case;
(c) A description of any additional material or information
necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary; and
(d) An explanation of the Plan's claim appeal procedure.
If a claim is denied, the claimant may file an appeal asking the Committee
to conduct a full and fair review of his claim. An appeal must be made in
writing no more than sixty (60) days after the claimant receives written notice
of the denial. The claimant may review any documents that apply to the case and
may also submit points of disagreement and other comments in writing along with
the appeal.
<PAGE>
The decision of the Committee regarding the appeal shall be given to the
claimant in writing no later than sixty (60) days following receipt of the
appeal. However, if the Committee, in its sole discretion, grants a hearing, or
there are special circumstances involved, the decision will be given no later
than one-hundred twenty (120) days after receiving the appeal. If such an
extension of time for review is required because of special circumstances,
written notice of the extension shall be furnished to the claimant prior to the
commencement of the extension. The decision shall include specific reasons for
the decision, written in a manner calculated to be understood by the claimant,
as well as specific references to the pertinent Plan provisions on which the
decision is based.
2.18 The Committee from time to time may appoint one or more Investment
Managers to direct or approve all investments and reinvestments of the Trust
Fund, by written notice to the Trustee. After the Committee has notified the
Trustee of its appointment of an Investment Manager to direct or approve
investments and reinvestments, the Investment Manager then shall become
responsible for any and all investments and reinvestments made by it. The
Trustee may rely upon the directions and instructions of the Committee and
Investment Manager without being in any way liable or responsible for the
consequences.
2.19 The Committee from time to time, either itself or through its duly
appointed agents, may direct or approve all investments and reinvestments of the
Trust Fund, by written notice to the Trustee. After the Committee has notified
the Trustee of its intention to direct or approve investments and reinvestments,
the Committee then shall become responsible for any and all in-
<PAGE>
vestments and reinvestments made pursuant to such direction or approval. The
Trustee may rely upon the directions and instructions of the Committee without
being in any way liable or responsible for the consequences.
2.20 The Committee shall have the responsibility for developing a funding
policy for the Plan, if required, and shall communicate such funding policy to
the Trustee, or other Investment Manager, and shall see to it that the funding
policy is carried out.
2.21 If a Participant or a Beneficiary receives a qualifying rollover
distribution from the Plan, the Committee, or its designee, shall provide a
written explanation to the recipient (a) that the distribution will not be taxed
currently to the extent transferred to another qualified plan or individual
retirement account within sixty (60) days after the date on which the recipient
received the distribution, and (b) of income averaging and capital gains
provisions, if applicable.
2.22 If any person entitled to receive any benefit hereunder shall be a
minor child or incompetent person, but no legal representative has been
appointed for him or her, the Committee may, in its discretion, cause any
benefit otherwise payable to such person to be paid to the conservator, parent
or guardian or spouse of such person, or to the institution maintaining such
person, or to the individual having custody of such person, or may otherwise
cause the same to be applied for the benefit of such person in any manner which
the Committee may deem proper, without regard to the duty of any person to
support such minor or incompetent person, and without regard to any other funds
which may be available for the purpose, and, in the case of any payment
<PAGE>
made for the benefit of such person in any of the manners just authorized, the
receipt by the person to whom the payment is made shall be in full discharge of
all liability under the Plan and Trust in respect of such payment. Deposit to
the credit of a Participant or Beneficiary in any bank, savings and loan or
trust company shall be deemed payment into the hands of such person.
2.23 Notwithstanding anything in this Plan and Trust to the contrary, the
Trustee and Committee may agree in writing that the Trustee will perform certain
record keeping functions delegated to the Committee herein such as allocating
contributions and in such event the Trustee shall be fully relieved of such
duties.
SECTION 3 - Eligibility and Participation
3.1 Any Regular Full-Time Employee (as defined below) (other than a
Part-Time Employee as defined below) who has attained the age of eighteen (18)
years shall be eligible to participate in this Plan as of the beginning of the
first pay period after such Regular Full-Time Employee's date of hire. Any
Part-Time Employee (as defined below) who has completed one (1) Year of Service
and has attained the age of eighteen (18) years shall be eligible to participate
in this Plan as of the earlier of the January 1 or July 1 next following the
date upon which the Part-Time Employee has completed the aforesaid service and
age requirements, provided such Part-Time Employee is so employed on such
January 1 or July 1. A Regular Full-Time Employee shall mean an Employee hired
to work forty (40) or more hours per week on an indefinite basis according to
the Employer's policies and procedures. A Part-Time Employee shall mean an
Employee hired to work less than forty (40) hours per week on an indefinite
basis according to the Employer's policies and procedures. A Leased
<PAGE>
Employee (whether or not constituting an Employee) shall not be eligible to
participate in this Plan. Further, any Employee who is not either a Regular
Full-Time Employee or a Part-Time Employee shall not be eligible to participate
in this Plan and Trust. Any Employee who is included in a unit of Employees
covered by an agreement in which retirement benefits are the subject of good
faith bargaining between Employee representatives and the Employer shall not be
eligible to participate in this Plan. Any Employee who is a nonresident alien
and who receives no earned income (within the meaning of Code Section 911(d)(2))
from the Employer which constitutes income from sources within the United States
(within the meaning of Code Section 861(a)(3)) shall not be eligible to
participate in this Plan.
3.2 Participants terminated due to layoff and eligible for recall shall be
eligible to actively participate in the Plan immediately upon rehire. An
Employee who satisfies the eligibility requirements to participate and whose
employment is subsequently terminated with the Employer shall again participate
effective with the Employee's re-employment commencement date. The re-employment
commencement date is the first day on which the Employee is credited an Hour of
Service for the performance of duties after the first eligibility computation
period in which the Employee incurs a One-Year Break in Service.
3.3 Participation in this Plan shall be mandatory on the part of each
eligible Employee. An Employee shall automatically participate in this Plan upon
first becoming eligible to participate.
3.4 If, in any Plan Year, any Employee who should have been included as a
Participant in the Plan is erroneously omitted and
<PAGE>
discovery of such omission is not made until after a contribution by the
Employer for the year has been made and allocated, the Employer shall make a
subsequent contribution with respect to the omitted Employee in the amount which
the Employer would have contributed with respect to him had he not been omitted.
Such contribution shall be made regardless of whether or not it is deductible in
whole or in part in any Taxable Year under applicable provisions of the Code by
such Employer.
3.5 If, in any Plan Year, any person who should not have been included as
a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has been
made and allocated, the Employer shall not be entitled to recover the
contribution made with respect to the ineligible person regardless of whether or
not a deduction is allowable with respect to such contribution. In such event,
the amount contributed with respect to the ineligible person shall constitute a
forfeiture for the Plan Year in which the discovery is made.
3.6 In the event a Participant is no longer a member of an eligible class
of Employees and becomes ineligible to participate, but has not incurred a
One-Year Break in Service, eligibility will be determined under the break in
service rules of the Plan. In the event an Employee who is not a member of the
eligible class of Employees becomes a member of the eligible class such Employee
will participate immediately if such Employee has satisfied the minimum age and
service requirements and would have otherwise previously become a Participant.
SECTION 4 - Employer Non-Elective Contributions and
Elective Contributions
<PAGE>
4.1 For each Taxable Year during the continuance of this Plan, the
Employer shall contribute such amount (if any) to the Trust Fund as the Employer
in its sole discretion shall determine; provided, however, Employer's aggregate
contributions of both Elective Contributions and Non-Elective Contributions for
any Taxable Year shall not exceed the maximum amount that can be allowed as a
deduction under the applicable provisions of the Code. Employer contributions
made under this Section 4.1 are generally referred to in this Plan and Trust as
"Employer Profit-Sharing Contributions" and shall be deemed an Employer
Non-Elective Contribution subject to the vesting requirements contained in
Section 10.
4.2 In addition to Employer Profit-Sharing Contributions, upon adoption
and execution of this Plan by the Employer each Participant in the Plan pursuant
to a uniform, non-discriminatory policy may elect to defer a portion of his
Compensation of not less than one (1%) percent and not more than fourteen (14%)
percent of Compensation or the maximum amount which will not cause the Plan to
violate the annual additions limitations under Code Section 415. However, under
no circumstances shall a Participant defer an amount of his Compensation which
causes the Plan to exceed the maximum amount allowable as a deduction to the
Employer under Code Section 404. Further, the Employee's deferrals shall be
further limited as provided in the Cash or Deferral Limitations Section.
Contributions under this Section 4.2 are generally referred to in this Plan and
Trust as the "Employee Elective Deferrals." The Committee may establish payroll
deduction procedures and other contribution procedures to facilitate the
Employee's contribution to the Plan. The Committee shall
<PAGE>
provide deferral forms and determine such time or times that a Participant may
commence deferral of his Compensation and cease deferral of his Compensation;
provided however, that at least once during each calendar year a Participant may
elect to commence and terminate (or modify) deferral of his Compensation. The
Employer shall contribute to the Trust Fund the amount of the Participant's
Deferred Compensation which shall be deemed an Employer Elective Contribution.
The Participant shall be 100% fully vested in and have a non-forfeitable right
to Employee Elective Deferrals made under this Section 4.2. Prior to the end of
each Plan Year, all Participants may commence, change or terminate their
deferral of Compensation for the next Plan Year, or such shorter period of time
as announced by the Committee. Additionally, the Committee may allow other time
periods during the Plan Year when all Participants may prospectively commence,
change or terminate their deferral of Compensation.
Employee Elective Deferrals shall satisfy the Code Sections 401(k)(2)(A),
(B) and (C) Provisions.
Employee voluntary non-deductible contributions are provided for in
Section 19.
4.3 In addition to Employer Profit-Sharing Contributions and Employee
Elective Deferral, for each Taxable Year during the continuance of this Plan,
the Employer may in its sole discretion contribute a discretionary amount to the
Trust Fund. Any contribution made by the Employer under this Section 4.3 are
generally referred to as Qualified Non-Elective Contributions (as defined in
Section 22.13) and must be specifically designated by the Employer to the
Trustee. The Participant shall be 100% fully vested in and have a nonforfeitable
right to Qualified Non-Elec-
<PAGE>
tive Contributions made under this Section 4.3. Further Qualified Non-Elective
Contributions shall satisfy the Code Sections 401(k)(2)(B) and (C) Provisions.
The Employer may direct that Qualified Non-Elective Contributions shall be
allocated only to Non-Highly Compensated Employees.
4.4 In addition to Employer Profit-Sharing Contributions, Employee
Elective Deferrals and Qualified Non-Elective Contributions, the Employer shall
make Matching Contributions to a Participant's Account for a Plan Year. The
Employer shall match fifty (50%) percent of the Participant's Employee Elective
Deferrals up to six (6%) percent of the Participant's Compensation for a Plan
Year; provided however that in no event shall such Matching Contributions exceed
an amount equal to three (3%) percent of the Participant's Compensation for such
Plan Year. No Matching Contributions shall be made on voluntary non-deductible
contributions made pursuant to Section 19. Further, in addition to the required
Matching Contribution at any time the Employer may make a bonus Matching
Contribution. Any Matching Contributions are generally referred to in this Plan
and Trust as "Employer Matching Contributions" and shall be deemed an Employer
Non-Elective Contribution subject to the vesting schedule requirements in
Section 10. The Plan shall meet the non-discrimination requirements set forth in
Code Section 401(m) and Regulations 1.401(m-1) and 1.401(m)-2 which are
incorporated herein by reference.
The Employer may also make Qualified Matching Contributions. Qualified
Matching Contributions shall satisfy the Code Sections 401(k)(2)(B) and (C)
Provisions. The Participant shall be 100% fully vested in and have a
non-forfeitable right to Qualified
<PAGE>
Matching Contributions. Further, Qualified Matching Contributions and Matching
Contributions shall be defined and meet the requirements of the Cash or Deferred
Limitation Section including Sections 22.10 and 22.11.
4.5 Except as provided below, the Employer may make payment of its
contributions for any Taxable Year on any date or dates it elects, provided only
that the total amount of its contributions for any Taxable Year shall be paid in
full not later than twelve (12) months (or within the time prescribed by
Treasury Department Regulations) after the Plan Year for which they are deemed
paid. Notwithstanding the preceding sentence, Employer Elective Contributions
resulting from a Participant's deferral of Compensation shall be paid to the
Trustee as soon as the Deferred Compensation can reasonably be segregated from
the Employer's assets.
4.6 The Employer may make payment of its Non-Elective Contribution for any
Taxable Year on any date or dates it elects, provided only that the total amount
of its contribution for any Taxable Year shall be paid in full on or before the
date required by law for filing its federal income tax return for such Taxable
Year, including any extensions.
4.7 The Employer's Non-Elective Contribution and Elective Contributions
for each Taxable Year shall be paid by the Employer directly to the Trustee. On
or about the date of such payment, the Committee shall be advised of the amount
of such payment upon which the allocation to Participants is to be calculated.
4.8 All contributions made to this Plan and Trust by the Employer are
expressly made upon the condition that such contributions are fully deductible
for income tax purposes unless the Employer otherwise specifies in writing.
Contributions made by
<PAGE>
the Employer to the Plan shall be made irrevocably and it shall be impossible
for the assets of the Plan to inure to the benefit of the Employer or to be used
in any manner other than for the exclusive purpose of providing benefits to
Participants, retired Participants, and Beneficiaries, and for defraying
reasonable expenses of administering the Plan; provided, however that
(a) if the Plan does not initially qualify by the Internal Revenue
Service, then any contribution made to the Plan by the Employer must
be returned to the Employer within one year after the date of denial
of qualification of the Plan;
(b) if a contribution is made by the Employer by a mistake of fact,
such contribution must be returned to the Employer within one year
after the payment of the contribution; or
(c) to the extent the deduction for a contribution under Code
Section 404 is disallowed, the contribution (to the extent
disallowed) must be returned to the Employer within one year after
the disallowance of the deduction.
4.9 Unless otherwise specifically provided in this Plan and Trust, a
Participant must have a Year of Service for accrual of benefits during a Plan
Year in order to accrue benefits for such Plan Year.
4.10 Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Code Section 414(u).
SECTION 5 - Allocation of Contributions and
Forfeitures
5.1 The Employer's Profit-Sharing Contribution for any Plan Year shall be
allocated and credited by the Committee, or its designee, among the Accounts of
the Participants as of the last day of such Plan Year in the proportion that
each Participant's
<PAGE>
Compensation bears to the total Compensation received by all the Participants
during the Plan Year.
5.2 The Employee Elective Deferrals shall be allocated and credited by the
Trustee to the Participant's Elective Contribution Account who made the
deferral.
5.3 The Employer Qualified Non-Elective Contributions shall be allocated
and credited by the Trustee among the Participant's Elective Accounts as of the
last day of the Plan Year in proportion that each Participant's Compensation
bears to the total Compensation received by all the Participants during the Plan
Year; provided, however, the Employer, in its sole discretion, may direct that
only Non-Highly Compensated Employees shall be eligible to receive an allocation
or credit of Qualified Non-Elective Contributions.
5.4 The Employer Matching Contribution shall be allocated and credited by
the Trustee to the Employee's Matching Contribution Account in such manner as
the Employer may designate in accordance with the Matching Contribution formula.
Qualified Matching Contributions shall be allocated to the Employee's Qualified
Matching Contribution Account as the Employer designates and may, in the
Employer's sole discretion, be allocated only to Non-Highly Compensated
Employees.
5.5 Any forfeitures for a Plan Year shall be allocated or credited as
follows:
(a) Any forfeitures in the Non-Elective Accounts resulting from the
Employer Profit-Sharing Contribution shall be allocated and credited
by the Trustee in the same manner as the Employer Profit-Sharing
Contribution is allocated and shall be subject to the same
restrictions as are applicable to the allocation and crediting of
Employer Profit-Sharing Contributions under Section 5.12.
<PAGE>
(b) Any forfeitures in the Non-Elective Accounts resulting from the
Employer Matching Contribution shall be used to reduce the
Employer's contribution and shall not be allocated among the
Participant's Accounts.
5.6 For any Top Heavy Plan Year, the total of the Employer's contribution
and, if otherwise permitted herein, forfeitures allocated to the Participant's
Account of each Non-Key Employee shall not be less than the lesser of (i) three
(3%) percent of such Non-Key Employee's compensation (as defined below), or (ii)
in the case where the Employer has no defined benefit plan which designates this
Plan to satisfy Code Section 401(a)(4) or Code Section 410, the largest
percentage of Employer contributions and forfeitures, as a percentage of the
first $200,000 (or $150,000, as adjusted by the Internal Revenue Service, for
Plan Years beginning after 1993) of the Key Employee's Code Section 415
Compensation (including any amounts contributed as a result of a salary
reduction agreement under a Code Section 401(k) plan), allocated on behalf of
any Key Employee for that year. Neither Elective Deferrals nor Employer Matching
Contributions shall be taken into account for purposes of satisfying the minimum
Top Heavy Plan minimum allocation requirements; provided, however, that any
Employer Matching Contributions not necessary to satisfy the non-discrimination
requirements of Code Sections 401(k) and 401(m) may be taken into account for
purposes of satisfying the Top Heavy Plan minimum allocation requirements. For
any Plan Year when (i) the Plan is a Top Heavy Plan but not a Super Top Heavy
Plan and (ii) a Key Employee is a Participant in both this Plan and a defined
benefit plan included in a Required Aggregation Group which is top heavy, the
extra minimum allocation (required by Code Section 416(h) to provide higher
limitations)
<PAGE>
shall be provided for each Non-Key Employee who is a Participant only in this
Plan by substituting four (4%) percent for three (3%) percent in the preceding
sentence. For purposes of determining the minimum allocation, all Code Section
415 Compensation during the entire Limitation Year shall be taken into account
for determining the required minimum allocation for such Non-Key Employee. The
minimum allocation is determined without regard to any Employer Social Security
contribution or the Non-Key Employee's level of Compensation. This Section shall
not apply to any Participant to the extent the Participant is covered under any
other plan or plans of the Employer and the Employer has provided that minimum
allocation or benefit requirements applicable to a Top Heavy Plan will be met in
the other plan or plans.
The minimum allocation required (to the extent required to be
non-forfeitable under Code Section 416(b)) may not be forfeited under Code
Sections 411(a)(3)(B) or 411(a)(3)(D). The minimum allocation required shall be
allocated to a Non-Key Employee's Account if the Non-Key Employee is a
Participant even though he has not completed a Year of Service and declined to
make mandatory contributions to the Plan, if required. Any Participant who is
not employed on the last day of the Plan Year shall not receive the minimum Top
Heavy Plan benefit allocation for such Plan Year. If the Employer maintains
another qualified plan and a Non-Key Employee participates in this Plan and the
other plan, then such other plan shall first satisfy the minimum Top Heavy Plan
benefits required herein.
5.7 The fact that an allocation shall be made and credited to the
Non-Elective Account of a Participant shall not vest in such Participant any
right, title, or interest in and to any
<PAGE>
assets of the Trust Fund, except at the time or times and upon such terms and
conditions as are expressly set forth in this Plan.
5.8 Any assets contributed by the Employer to the Trust Fund shall be
allocated only as set forth herein and, until allocated in accordance with the
provisions of this Plan, shall be held in suspense by the Trustee.
5.9 Notwithstanding any other provision of the Plan or the effect thereof,
this Plan and Trust shall comply with the annual additions limitations contained
in Code Section 415. The maximum annual additions that may be contributed or
allocated by the Employer (including any Affiliated Employer) to a Participant's
Account under the Plan for any Limitation Year shall not exceed the lesser of
(a) the Defined Contribution Dollar Limitation, or (b) twenty-five (25%) percent
of the Code Section 415 Compensation paid to the Participant by the Employer for
the Limitation Year, or such other limits as may, from time to time, be
prescribed by regulations promulgated by the Secretary of the Treasury. The
compensation limitation in (b) above shall not apply to (i) any contribution for
medical benefits (within the meaning of Section 419A(f)(2) of the Code) after
separation from service which is otherwise treated as an annual addition, or
(ii) any amount otherwise treated as an annual addition under Section 415(l)(1)
of the Code.
For purposes of this Section, the Defined Contribution Dollar Limitation
means $30,000.
For purposes of this Section, for any Limitation year "annual additions"
shall mean for this Plan (which shall include an Affiliated Employer's plan),
the sum of:
<PAGE>
(a) the Participant's share of the Employer contribution;
(b) the Participant's contributions, if any;
(c) the Participant's share of forfeitures, if any, added to his
Account;
(d) amounts allocated after March 31, 1984 to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a
pension or annuity plan maintained by the Employer; and
(e) amounts derived from contributions paid or accrued after
December 31, 1985, in Limitation Years ending after such date, which
are attributable to the separate account of a Key Employee, as
defined in Code Section 419A(d)(2).
Solely for purposes of determining the annual additions under this
Section, a Participant's contributions shall exclude any rollover amount or
rollover contribution and any contributions to a simplified employee pension
plan which are excludable from income under Code Section 408(k)(6).
In the event the Employer has two or more defined contribution plans which
allow aggregate contributions to exceed the limits of Code Section 415, as
amended, as the result of allocation of forfeitures, a reasonable error in
estimating a Participant's annual Compensation, or under other facts and
circumstances which the Commissioner of Internal Revenue Service determines
justifies the excess, then the defined contribution plan with the latest
effective date shall sufficiently reduce contributions and allocations to
prevent an excess annual addition.
For purposes of this Section and the annual additions limitations,
compensation used in this Section shall mean all Code Section 415 Compensation
paid during the Limitation Year and Employer means the Employer and all
Affiliated Employers.
<PAGE>
Further, this Section applies to all defined contribution plans (whether or not
terminated) of the Employer in the aggregate.
5.10 In the event that it is determined that the annual additions to a
Participant's Account for a Plan Year would be in excess of the limits contained
herein as the result of allocation of forfeitures, a reasonable error in
estimating a Participant's annual Compensation, a reasonable error in
determining the amount of elective deferrals under Code Section 402(g), or under
other facts and circumstances which the Commissioner of Internal Revenue Service
determines justifies the excess, such annual additions shall be reduced to the
extent necessary in the following order:
(a) Any contributions (including Elective Contributions) made by the
Participant during the Plan Year, including the earnings thereon,
which are included in such annual additions shall be returned to
such Participant to the extent necessary to reduce the annual
additions to the limitations contained herein.
(b) If the Participant has made no contributions, or if such
participant's contributions are not sufficient to reduce the annual
additions to the limitations contained herein, such Participant's
allocable share first of forfeitures, and next of Employer
contributions, for such Plan Year, shall be reduced, and the amount
of such reduction shall be allocated among the remaining
Participants in accordance with the method contained in this Plan
for the allocation of Employer contributions and forfeitures,
subject to the limitations with respect to annual additions to the
Accounts of Participants. This subparagraph (b) shall not be
applicable if this Plan provides that forfeitures are used to reduce
Employer contributions.
(c) If, after the allocations in accordance with (b) above of this
Section, there are any amounts remaining which cannot be allocated
to any Participant for the Limitation Year as a result of the
limitations contained herein, such amounts shall be maintained
unallocated in a suspended Account under the Trust Fund. If a
suspended Account is in existence at any time during a particular
Limitation Year, other than the Limitation Year described in the
preceding sentence, all amounts in the suspended Account must be
allocated and reallocated to participants' Accounts
<PAGE>
subject to Code Section 415 before any Employer contributions and
any Employee contributions which would constitute annual additions
may be made to the Plan for that Limitation Year. If forfeitures are
used to reduce Employer contributions, then such suspended amounts
shall be used to reduce contributions prior to any contributions by
the Employer.
(d) Upon termination of this Plan, any amounts held in a suspended
Account because such amounts cannot be allocated to the Participants
as a result of the limitations contained herein shall revert to the
Employer.
For purposes of the annual additions limitations used in this Section,
compensation used in this Section shall mean all Code Section 415 paid during
the Limitation Year.
5.11 For purposes of allocating Employer contributions and forfeitures, if
otherwise permitted herein, only Compensation paid after an Employee has
satisfied the initial eligibility requirements of the Plan and has entered the
Plan shall be taken into account. Notwithstanding the preceding sentence, all
compensation as defined in Code Section 415 during the entire Limitation Year
shall be taken into account for determining the required minimum allocation for
a Non-Key Employee if the Plan is a Top Heavy Plan.
5.12 Unless otherwise required in a Top Heavy Plan, except in the event of
death, Disability or attainment of Normal Retirement Date during the Plan Year,
a Participant shall not receive an allocation or credit of the Employer's
Profit-Sharing Contribution unless the Participant is employed with the Employer
as of the last day of the Plan Year and is credited with 1,000 Hours of Service
during such Plan Year. A Participant who terminates employment during a Plan
Year for reasons of death, Disability or after attainment of Normal Retirement
Date shall share in an allocation or credit of the Employer's Profit-Sharing
<PAGE>
Contribution for that Plan Year if he is credited with one (1) Hour of Service
for such Plan Year.
5.13 A Participant who terminates employment before the next Valuation
Date shall not be ineligible to receive an allocation or credit of the Employer
Matching Contribution solely because of the Participant's termination of
employment prior to such Valuation Date or such Participant failed to have a
Year of Service for accrual of benefits.
5.14 Notwithstanding anything in this Plan and Trust to the contrary, if
the Plan and Trust would violate either or both the participation test under
Code Section 401(a)(26) or the coverage test under Code Section 410(b) for a
particular Plan Year, then the following shall apply in the order designated to
the extent necessary to satisfy both the aforesaid participation test and
coverage test for such Plan Year:
(a) First, each Participant who is employed with the Employer on the
last day of the Plan Year that did not receive any accrual of
benefits for such Plan Year shall nevertheless receive an accrual of
benefits. If after complying with this subparagraph (a) the Plan and
Trust continues to violate either or both the participation test and
coverage test, then subparagraph (b) shall apply for such Plan Year.
(b) Second, each Participant who is not employed on the last day of
the Plan Year and did not receive an accrual of benefits for such
Plan Year but was credited with 501 or more Hours of Service during
such Plan Year shall receive an accrual of benefits.
In accruing benefits under subparagraphs (a) or (b) above, if the Plan is a Top
Heavy Plan for such Plan Year, then the Participant shall only receive the
minimum Top Heavy Plan benefit for such Plan Year if the minimum Top Heavy Plan
benefit is all that is required for the Plan and Trust to satisfy Code Sections
<PAGE>
401(a)(26) and 410(b), otherwise the Participant shall receive a full benefit
accrual.
SECTION 6 - Top Heavy Provision and Administration
6.1 For any Top Heavy Plan Year, the Plan hereby provides the following:
(a) special vesting requirements of Code Section 416(b);
(b) special minimum allocation requirements of Code Section 416(c);
and
(c) special Compensation requirements of Code Section 416(d) for
Plan Years beginning before January 1, 1989.
6.2 A Participant's Aggregate Account as of the Determination Date is the
sum of:
(a) The Participant's Account balance as of the most recent
valuation occurring within a twelve (12) month period ending on the
Determination Date. The Account balance and Accrued Benefit of a
Participant who is (i) not a Key Employee but who was a Key Employee
in a prior year, or (ii) has not been credited with at least one
Hour of Service with any Employer maintaining the Plan at any time
during the five (5) year period ending on the Determination Date
will be disregarded;
(b) An adjustment for any contributions due as of the Determination
Date. Such adjustment shall be the amount of any contributions
actually made after the valuation date but before the Determination
Date, except for the first Plan Year when such adjustment shall also
reflect the amount of any contributions made after the Determination
Date that are allocated as of the date in that first Plan Year;
(c) Any Plan distributions (including distributions from a
terminated plan) made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years.
However, in the case of distributions made after the valuation date
and prior to the Determination Date, such distributions are not
included as distributions for top heavy purposes to the extent that
such distributions are already included in the Participant's
Aggregate Account balance as of the valuation date. Notwithstanding
anything herein to the contrary, all distributions, including
distributions made prior to January 1, 1984, will be counted;
(d) Any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax
<PAGE>
deductible qualified employee contributions shall not be considered
to be a part of the Participant's Aggregate Account balance;
(e) With respect to unrelated rollovers and plan-to-plan transfers
(ones which are both initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by another
employer), if this Plan provides for rollovers or plan-to-plan
transfers, it shall always consider such rollover or plan-to-plan
transfer as a distribution for purposes of this Section. If this
Plan is the plan accepting such rollovers or plan-to-plan transfers,
it shall not consider such rollovers or plan-to-plan transfers
accepted after December 31, 1983 as part of the Participant's
Aggregate Account balance. However, rollovers or plan-to-plan
transfers accepted prior to January 1, 1984 shall be considered as
part of the Participant's Aggregate Account balance; and
(f) With respect to related rollovers and plan-to-plan transfers
(ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the rollover
or plan-to-plan transfer, it shall not be counted as a distribution
for purposes of this Section. If this Plan is the plan accepting
such rollover or plan-to-plan transfer, it shall consider such
rollover or plan-to-plan transfer as part of the Participant's
Aggregate Account balance, irrespective of the date on which such
rollover or plan-to-plan transfer is accepted.
6.3 Aggregation Group shall mean either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined:
(a) In determining a Required Aggregation Group hereunder, each plan
of the Employer in which at least one Key Employee participates, or
participated at any time during the determination period (regardless
of whether the plan has terminated), and each other plan of the
Employer which enables any plan in which a Key Employee participates
to meet the requirements of Code Sections 401(a)(4) or 410, will be
required to be aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan in the group
will be considered a Top Heavy Plan if the Required Aggregation
Group is a Top Heavy Group. No plan in the Required Aggregation
Group will be consid-
<PAGE>
ered a Top Heavy Plan if the Required Aggregation Group is not a Top
Heavy Group.
(b) The Employer may also include any other plan not required to be
included in the Required Aggregation Group, provided the resulting
group, taken as a whole, would continue to satisfy the provisions of
Code Section 401(a)(4) and 410. Such group shall be known as a
Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that is
part of the Required Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is a Top Heavy Group.
No plan in the Permissive Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is not a Top Heavy
Group.
(c) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
6.4 In the case of a defined benefit plan, a Participant's Present Value
of Accrued Benefit shall be as determined under the provisions of the applicable
defined benefit plan. Further, the accrued benefit in such defined benefit plan
of any Employee (other than a Key Employee) shall be determined
(a) under the method which is used for accrual purposes for all
Plans of the Employer; or
(b) if there is no method described in (a), as if such benefit
accrued not more rapidly than the slowest accrual rate permitted
under Code Section 411(b)(1)(C).
6.5 Annual Compensation of each Employee taken into account during any Top
Heavy Plan Year shall not exceed the sum of One Hundred Fifty Thousand
($150,000) Dollars (subject to an annual cost of living increase as determined
by Treasury regulations).
6.6 If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such Participant's
Present Value of Accrued Benefit or Aggregate Account balance shall not be taken
into account for purposes of determining whether this Plan is a Top Heavy Plan
(or
<PAGE>
whether any Aggregation Group which includes this Plan is a Top Heavy Group). If
a Participant has not performed services for any Employer maintaining the Plan
at any time during the five (5) year period ending on the Determination Date,
any Accrued Benefit for such Participant (and the Account of such Participant)
shall not be taken into account for purposes of determining whether this Plan is
a Top Heavy Plan.
SECTION 7 - Retirement Benefits
7.1 A Participant may retire from the employ of Employer as of his Normal
Retirement Date. If the Participant continues in the employ of the Employer
beyond his Normal Retirement Date, he shall for purposes of this Plan and Trust
continue to be treated in all respects as an Employee and Participant until his
actual retirement. A Participant shall be entitled to early retirement upon
attainment of age fifty-nine and one-half (59 1/2) and five (5) Years of Service
and if then employed with the Employer, shall be one hundred (100%) percent
fully vested in, and have a non-forfeitable right to his Account. A Participant
who satisfies the service requirement for early retirement, but who separates
from service (with any nonforfeitable right to an Accrued Benefit) before
satisfying the age requirement for early retirement, shall be entitled upon
satisfaction of such age requirement to receive a benefit equal in value to the
vested portion of his Account balance at such early retirement age. After
determination of the value of the Participant's Account, the early retirement
benefits and normal retirement benefits shall be handled and paid to the
Participant in accordance with the Annuity Requirements Section and the
Distribution Requirements Section.
<PAGE>
SECTION 8 - Death Benefits
8.1 In the event of the death of a Participant while employed with the
Employer, the Inactive Participant's Account shall be one hundred (100%) percent
fully vested and non-forfeitable. After determination of the value of the
Inactive Participant's Account, the Account (including the proceeds of any life
insurance on the Participant's life other than key man life insurance) shall be
paid to the Inactive Participant's surviving spouse in accordance with the
Distribution Requirements Section. If the Inactive Participant has no surviving
spouse, or the spouse has consented to the Account being paid to another
designated Beneficiary, then the Account shall be paid to such other designated
Beneficiary. Such consent shall acknowledge the specific non-spouse Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries. Any
consent by the spouse shall be in writing and shall acknowledge the effect of
such election. Prior to the death of the Participant, the Participant may revoke
such non-spouse Beneficiary designation at any time and cause the death benefit
to be payable to the Participant's spouse. Further, if all of the designated
non-spouse Beneficiaries predecease the Participant or if the designation of the
non-spouse Beneficiary is not legally effective to cause payment of the Account
to the non-spouse Beneficiary, then the Participant's spouse shall receive
payment of the Account if the spouse survives the Participant. The spouse's
consent shall be witnessed by a notary public or Committee member. Any consent
by the spouse shall be effective only with respect to such spouse. A former
spouse will be treated as the spouse, or surviving
<PAGE>
spouse, to the extent provided under a qualified domestic relations order as
described in Code Section 414(p).
8.2 Except as provided above, at any time, and from time to time, each
Participant or Inactive Participant shall have the unrestricted right to
designate a Beneficiary or Beneficiaries to receive his Account, and to revoke
any such designation at any time thereafter. Each such designation shall be in
writing, filed with the Committee, signed by the Participant or Inactive
Participant, and bearing the signature of at least one (1) witness. If no such
designation is on file at the death of the Participant, or if the designated
Beneficiary or Beneficiaries are not living at the death of the Participant,
then the estate of the Participant shall receive the Account.
8.3 The Committee or the Trustee, or both, may require the execution and
delivery of such documents, papers and receipts as may be deemed necessary in
order to be assured that the payment of any of said death benefits is properly
made and is made to the proper person or party entitled thereto.
SECTION 9 - Disability Benefits
9.1 In the event of termination of employment of a Participant by the
Employer by reason of Disability, the Participant's right to his Account shall
be one hundred (100%) percent fully vested and non-forfeitable. After
determination of the value of the Inactive Participant's Account, the Disability
benefit shall be paid to the Inactive Participant in accordance with the Annuity
Requirements Section and the Distribution Requirements Section.
SECTION 10 - Benefits and Vesting Upon Termination of
Employment Other Than By Reason of Retirement,
Death, or Disability
<PAGE>
10.1 Upon termination of employment (other than by reason of attainment of
Normal Retirement Date, early retirement, if applicable, death, or Disability),
a Participant shall be entitled to the percentage vesting of his Account
resulting from Employer Non-Elective Contributions and any Incentive Plan
Accounts transferred from the Stock Purchase - Saving Plan of Carolina Power &
Light Company, and if otherwise permitted herein, forfeitures as shown in the
following vesting schedule:
Credited Years Vested
of Service Percentage
-------------- ----------
Less than 1 0%
1 50%
2 or more 100%
Such vested percentage shall be determined as provided for herein and such
amount not vested either under this provision, or because of attainment of
Normal Retirement Date (or early retirement, if applicable), death, or
Disability, shall be forfeited and shall remain in the Trust Fund subject to all
the other provisions of this Plan. A Participant shall be one hundred (100%)
percent fully vested and non-forfeitable in his Account as of his Normal
Retirement Age if he is then employed with the Employer. Further, a Participant
shall be one-hundred (100%) percent fully vested and non-forfeitable in his
Elective Account at all times, including any Qualified Non-Elective
Contributions and Qualified Matching Contributions.
10.2 Notwithstanding anything in this Plan and Trust to the contrary, for
any Top Heavy Plan Year, a Participant shall be entitled to the percentage
vesting of his Account resulting from Employer Non-Elective Contributions (other
than Employer Matching
<PAGE>
Contributions) and if otherwise permitted herein, forfeitures as shown in the
following vesting schedule:
Credited Years Vested
of Service Percentage
-------------- ----------
Less than 2 None
2 20%
3 40%
4 60%
5 or more 100%
10.3 For purposes of crediting a Year of Service for vesting, all Years of
Service with the Employer shall be taken into account, except as follows:
(a) For Plan Years beginning after 1984, Years of Service prior to the
time an Employee attains age 18.
Any Employee whose status changes from being excluded from participation
in the Plan to an Employee eligible to participate in this Plan, shall receive
credit for vesting purposes for all Hours of Service and Years of Service with
the Employer, whether covered or non-covered, subject to the provisions of this
Section. Any Employee whose status changes from being eligible to participate in
this Plan to an Employee excluded from participation shall receive credit for
vesting purposes for all Hours of Service and Years of Service with the
Employer, whether covered or non-covered, subject to the provisions of this
Section.
10.4 After the employment of a Participant is terminated (other than by
reason of attainment of Normal Retirement Date, early retirement, if applicable,
death, or Disability), the Committee, or its designee, shall, if applicable,
determine and advise the Trustee of the percentage of vesting of the Inactive
Participant's Account. After determination of the value of the Inactive
Participant's Account, the vested portion of the Inactive Participant's Account
shall be paid to him in accordance
<PAGE>
with the Annuity Requirements Section and Distribution Requirements Section.
10.5 No amendment to the vesting schedule shall deprive a Participant of
his nonforfeitable right to benefits accrued to the date of the amendment, or
the date the amendment is effective, if later. Further, if the vesting schedule
of the Plan is amended or, if the Plan is deemed amended by an automatic change
to or from a Top Heavy Plan vesting schedule, each Participant with at least
three (3) Years of Service for vesting purposes (whether or not consecutive and
without regard to Years of Service which may be excluded) with the Employer may
elect, within a reasonable period after adoption of the amendment or change, to
have his nonforfeitable percentage computed under the Plan without regard to
such amendment, or change, unless the Participant's nonforfeitable percentage
computed under the Plan, as amended, at any time cannot be less than such
percentage determined without regard to such amendment. For Participants who do
not have at least one (1) Hour of Service in any Plan Year beginning after
December 31, 1988, the preceding sentence shall be applied by substituting "five
(5) Years of Service" for "three (3) Years of Service" where such language
appears. The period during which the election may be made commences with the
date the amendment is adopted and ends on the later of:
(a) Sixty (60) days after the amendment is adopted;
(b) Sixty (60) days after the amendment becomes effective; or
(c) Sixty (60) days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
<PAGE>
Further, no amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's Accrued Benefit. Notwithstanding
the preceding sentence, a Participant's Account balance may be reduced to the
extent permitted under Code Section 412(c)(8). For purposes of this paragraph, a
Plan amendment which has the effect of decreasing a Participant's Account
balance or eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment shall be treated as reducing an
Accrued Benefit. Furthermore, if the vesting schedule of the Plan is amended, in
the case of an Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's Employer derived
Accrued Benefit will not be less than the percentage computed under the Plan
without regard to such amendment.
SECTION 11 - Annuity Requirements
11.1 Notwithstanding anything in this Plan and Trust to the contrary, a
Participant, his spouse or other Beneficiary shall not receive payment of his
Accrued Benefit in any form of a life Annuity, specifically including a joint
and survivor Annuity. Further, if an insurance policy is distributed from the
Plan and Trust, such policy shall not be a life Annuity or contain any life
Annuity conversion option. Nothing in this Plan and Trust shall be construed as
allowing for the purchase or distribution of an Annuity.
SECTION 12 - Distribution Requirements
12.1 Except as otherwise provided in the Annuity Requirements Section, the
requirements of this Distribution Requirements
<PAGE>
Section shall apply to any distribution of a Participant's Accrued Benefit.
Except as provided below, the Trustee shall commence distribution of the
Participant's Accrued Benefit (to the extent vested) as soon as reasonably
practical after the Valuation Date coinciding with or next following the
Participant's termination of employment or death, whichever occurs first.
Notwithstanding the preceding, if the vested value of the Inactive
Participant's Accrued Benefit (including both Employer and Employee
contributions, if applicable) exceeds $3,500 (or at the time of any prior
distribution exceeded $3,500) for Plan Years beginning before August 6, 1997, or
exceeds $5,000 (or at the time of any prior distribution exceeded $5,000) for
Plan Years beginning after August 5, 1997, the Inactive Participant and, if
payment in the form of an Annuity is permitted in this Plan under Section 11.1,
the Participant's spouse (or the surviving spouse, as the case may be) must
consent to any such distribution if the distribution occurs prior to the
Inactive Participant's Normal Retirement Age or attainment of age sixty-two (62)
if later than Normal Retirement Age. If the distribution occurs after the
Participant's Normal Retirement Age, or attainment of age sixty-two (62) if
later than Normal Retirement Age, the Accrued Benefit shall be distributed
without the Inactive Participant's consent and if applicable, his spouse's
consent. Further, if payment in the form of an Annuity is not permitted in this
Plan under Section 11.1, then distribution of the Accrued Benefit upon the
Participant's death to the Participant's spouse (or other Beneficiary, if
applicable) shall not require the spouse's (or other Beneficiary's) consent.
Addi-
<PAGE>
tionally, in the event the date for commencing initial payment of benefits
specified above would not occur until after the Participant's Required Beginning
Date, then nevertheless distribution shall commence on such Required Beginning
Date for such Participant so as to not violate Code Section 401(a)(9).
Further, if the vested value of the Inactive Participant's Accrued Benefit
(including a qualified pre-retirement survivor annuity) is $5,000 or less, the
Trustee shall distribute the Accrued Benefit without the Participant's consent.
If the Inactive Participant (or his spouse if payment in the form of an
Annuity is permitted in this Plan under Section 11.1) does not initially consent
to the distribution in accordance with Committee procedures, the Inactive
Participant's Accrued Benefit shall not again be available for distribution
until after the Valuation Date following the earlier of the Inactive
Participant's consent, death or Normal Retirement Date.
If this Plan terminates and this Plan does not provide for payment of
benefits in the form of an Annuity under Section 11.1, then the Participant's
Accrued Benefit may be distributed without the Participant's consent if the
Employer (or any entity within the same controlled group as the Employer) does
not maintain another defined contribution plan (other than an employee stock
ownership plan as defined in Code Section 4975(e)(7)). If another defined
contribution plan is so maintained, the Participant's Accrued Benefit may be
transferred without the Participant's consent to such other plan if the
Participant does not consent to the immediate distribution from this Plan. If
this Plan does provide for payment of benefits in the form of an Annuity under
Section 11.1 and the Plan terminates, then the Plan shall pur-
<PAGE>
chase and distribute deferred Annuities as required in the Annuity Requirements
Section unless the Participant and his spouse (if applicable) properly elect
another form of payment as provided above.
In all events distribution to a Participant shall commence on or before
the Participant's Required Beginning Date. "Required Beginning Date" shall mean
the later of the April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2 or terminates employment, except that
benefit distributions to a Five Percent Owner must commence by the April 1 of
the calendar year following the calendar year in which the Participant attains
age 70 1/2 years.
A Participant is treated as a Five Percent Owner for purposes of this
Section if such Participant is a Five Percent Owner as defined in Code Section
416 at any time during the Plan Year ending with or within the calendar year in
which such owner attains age 70 1/2 or any subsequent Plan Year.
Once distributions have begun to a Five Percent Owner under this Section,
they must continue to be distributed, even if the Participant ceases to be a
Five Percent Owner in a subsequent year.
12.2 Subject to the Annuity Requirements Section the Voluntary Participant
Contributions Section, the Hardship Distributions Section and the Withdrawal
Section, and notwithstanding anything in this Distribution Requirements Section
to the contrary, a Participant's Accrued Benefit may only be distributed in the
form of a single lump sum payment.
All distributions under this Distribution Requirements Section shall
comply with the requirements of Code Section
<PAGE>
401(a)(9) and the regulations thereunder including the minimum incidental
benefit requirement of Regulation 1.401(a)(9)-2.
12.3 Subject to the Annuity Requirements Section, upon the death of the
Participant, if the Participant dies before distribution of his Accrued Benefit
commences, the Participant's entire Accrued Benefit will be distributed in a
single lump-sum payment as soon as reasonably practical after the Valuation Date
coinciding with or next following the Participant's date of death and in no
event later than the December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant.
12.4 Distribution of the Accrued Benefit to a Participant who is a Five
(5%) Percent Owner must commence no later than the Required Beginning Date.
Except as otherwise provided in the preceding sentence or unless specifically
permitted in this Plan, no distribution of an Employee's Accrued Benefit derived
from Employer contributions shall be made while the Employee is employed with
the Employer. Further, unless the Participant elects otherwise, payment of
Accrued Benefits must begin not later than the sixtieth (60th) day after the
close of the Plan Year in which the latest of the following events occur: (a)
the Participant attains age 65 (or Normal Retirement Age, if earlier), (b) the
occurrence of the tenth anniversary of the year in which the Participant
commences participation in the Plan, or (c) the Participant terminates his
service with the Employer.
12.5 For Plan Years beginning after 1984, a Participant shall not incur a
forfeiture until he has five (5) consecutive One-Year Breaks in Service.
Notwithstanding the preceding sentence or anything in this Plan to the contrary,
a Participant who
<PAGE>
terminates employment with the Employer pursuant to this Section and receives
(or is deemed to receive) a distribution of his Account prior to incurring five
(5) consecutive One-Year Breaks in Service for Plan Years beginning after 1984,
shall forfeit amounts that are not nonforfeitable immediately subsequent to such
distribution. However, if the Participant returns to the employment of the
Employer before five (5) consecutive One-Year Breaks in Service for Plan Years
beginning after 1984, any amounts so forfeited shall be reinstated to the
Participant's Account within a reasonable time after repayment by the
Participant of the amount of the distribution. Such repayment must be made
(a) in the case of a payment on account of separation from service
before the earlier of
(i) five (5) years after the first date on which the Participant
is subsequently re-employed by the Employer, or
(ii) the close of the first period of five (5) consecutive
One-Year Breaks in Service commencing after the withdrawal;
or
(b) in the case of any other withdrawal, within five (5) years after
the date of withdrawal.
For purposes of this Section, if the value of an Employee's vested Account
balance is zero, the Employee shall be deemed to have received a distribution of
such vested Account balance. If an Employee is deemed to receive a distribution
pursuant to the preceding sentence and the Employee resumes employment covered
under this Plan before the date the Participant incurs five (5) consecutive
One-Year Breaks in Service, upon the re-employment of such Employee, the
Employer-derived Account balance of the Employee will be restored to the amount
on the date of such deemed distribution. A Participant's vested Account balance
shall not
<PAGE>
include accumulated deductible Employee contributions within the meaning of Code
Section 72(o)(5)(B) for Plan Years beginning prior to January 1, 1989.
Notwithstanding anything in this Plan and Trust to the contrary, to
reinstate the Participant's Account, the Trustee, to the extent necessary, shall
allocate to the Participant's Account
(a) first, the amount, if any, of Participant forfeitures for the Plan
Year which would otherwise be allocated under the Allocation of
Contributions and Forfeiture Section; and
(b) second, the Employer contribution for the Plan Year to the extent
made under a discretionary formula.
12.6 In the event of a qualified domestic relations order (as defined in
Code Section 414(p)), distribution shall be made to the alternate payee pursuant
to the order at any time, irrespective of whether the Participant has attained
his earliest retirement age under the Plan. A distribution to an alternate payee
prior to the Participant's attainment of earliest retirement age is available
only if
(a) the order specifies distribution at that time or permits an
agreement between the Plan and the alternate payee to authorize an
earlier distribution, and
(b) if the present value of the alternate payee's benefits under the
Plan exceeds $5,000, and the order requires, the alternate payee
consents to any distribution occurring prior to the Participant's
attainment of earliest retirement age. Nothing in this Section
regarding earlier payment under a qualified domestic relations
order shall be construed or deemed to permit a Participant a right
to receive distribution at a time otherwise not permitted under
this Plan nor does it permit the alternate payee to receive a form
of payment not permitted under the Plan.
12.7 This Section 12.7 applies to distributions made on or after January
1, 1993. Notwithstanding any provision in this Plan and Trust to the contrary
that would otherwise limit a
<PAGE>
distributee's election under this Section, a distributee may elect, at the time
and in the manner prescribed by the Committee, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
When used in this Section 12.7, the following terms shall have the
indicated meanings:
(a) "Eligible rollover distribution" shall mean any distribution of
all or any portion of the Accrued Benefit of the distributee,
except that an eligible rollover distribution does not include:
any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the distributee and the
distributee's designated Beneficiary, or for a specified period of
ten (10) years or more; any distribution to the extent such
distribution is required under Code Section 401(a)(9); and the
portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities or Affiliated
Employer Stock).
(b) "Eligible retirement plan" shall mean an individual retirement
account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a), or a qualified trust described
in Code Section 401(a), that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.
(c) "Distributee" includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order, as
defined in Code Section 414(p) are distributees with regard to the
interest of the spouse or former spouse.
(d) "Direct rollover" shall mean a payment by the Plan to the eligible
retirement plan specified by the distributee.
SECTION 13 - Valuation Upon Distribution
<PAGE>
13.1 Upon the Participant's termination of employment, the value of the
amount credited to the Participant's Account for payment purposes (if payment is
otherwise to commence) shall be determined as of the Valuation Date coinciding
with or next following the date such termination of employment occurs; but in no
event shall such Valuation Date be later than the Required Beginning Date. If
payment prior to the Required Beginning Date is not to commence following the
aforesaid Valuation Date, then the amount credited to the Participant's Account
shall be determined as of the Valuation Date coinciding with or immediately
preceding the date payment is otherwise to commence. The Account shall include
the proceeds of any life insurance policy received as a result of the
Participant's death (other than a key man Employee policy). In the event the
Valuation Date specified above would not occur until after the Participant's
Required Beginning Date, then a reasonable estimate of the value shall be used
until a final value can be determined so that payment in all events shall
commence prior to such Required Beginning Date. Except for a Participant's
self-directed investment Account, no earnings or losses of the Trust shall be
applied to the Participant's Account after the value of the Account is
determined as provided above for purposes of paying the Account to the
Participant unless the Account is paid in installment payments over more than
one (1) Plan Year (if installment payments are otherwise specifically permitted
herein). The value of a Participant's self-directed investment Account shall be
its value as of the time it is either transferred in kind or liquidated to
provide for payment of benefits.
<PAGE>
13.2 Where the Trustee is directed by the Inactive Participant to defer
payment of the vested portion of the Inactive Participant's Account for any
period, or where the vested portion of the Account is to be paid in
installments, (if installment payments are otherwise specifically permitted
herein), the Inactive Participant (or his Beneficiary in the event of his death)
shall continue to direct the investment of his Account as provided for in the
Investment Direction By Participant Section.
SECTION 14 - Trustee
14.1 The Trustee hereby accepts the Trust created hereunder and agrees to
carry out its duties and responsibilities hereunder. The Trustee shall serve at
the pleasure of the Employer, or upon such length of term or terms as may be
determined by the Employer. Whenever more than one Trustee serves hereunder, the
decision of a majority of the Trustees shall control. Unless all of the Trustees
otherwise agree in writing, any documents, including checks, shall be valid if
signed by a majority of the Trustees, or such person or persons designated in
writing by the Trustees. The Trustee shall maintain a separate Account for each
Participant to which will be credited the Employer contributions and earnings
thereon.
14.2 Except as specifically provided for, all contributions voluntarily
paid by or in behalf of the Employer to the Trustee from time to time, and all
contributions voluntarily paid by Participants, and all income and enhancement
shall constitute and be held and administered by the Trustee as a single Trust
Fund; provided, however, that the Trustee may maintain separate trusts and
separate subtrusts subject to the provisions contained herein.
<PAGE>
14.3 The Committee, or its designee, shall allocate to each Participant
his share of the Employer contributions and if otherwise permitted herein,
forfeitures in accordance with the provisions of this Plan and Trust agreement,
based upon the information furnished by the Employer. The Trustee and the
Committee may agree in writing that the Trustee, and not the Committee, shall be
responsible for making such allocations.
14.4 Except as provided in the Investment Direction By Participant
Section, the Trustee shall invest and reinvest the Trust Fund and keep it
invested, without distinction between principal and income, and without
restriction to properties and securities authorized for investment by trustees
under any present or future law, in any and all common stocks, preferred stocks,
bonds, notes, debentures, mortgages, equipment trust certificates, options and
in such other property, real or personal, investments and securities of any
kind, class, or character, (specifically including any kind or class of savings
accounts, statement account, certificates of deposit, or any other types of
deposits of the Employer if the Employer is a bank or savings and loan
association) as the Trustee may deem advisable and suitable, including, but not
limited to, qualifying Employer securities, qualifying Employer real property,
Affiliated Employer Stock, partnership interests and stock or securities in
other companies, any common trust fund, or funds maintained by the Trustee,
insurance policies on the lives of key Employees of the Employer payable on
death to the Trust as beneficiary, and if the Employer permits, insurance
policies on the lives of Participants. After giving consideration to
diversifying the investment of assets, the Trustee shall not acquire or hold any
qualifying Employer
<PAGE>
securities or qualifying Employer real property if immediately after such
acquisition the aggregate fair market value of the Employer securities or
Employer real property exceeds one hundred (100%) percent of the fair market
value of the Plan assets. The Trustee, in its discretion, may keep such portion
of the Trust Fund in cash or cash balances as the Trustee from time to time may
deem to be in the best interests of the Plan and Trust. The Trustee is
authorized to invest in any type of deposit of the Trustee provided the Trustee
is a bank or savings and loan association and the deposit earns a reasonable
rate of interest. The Trustee shall apply for and be the owner of the insurance
policies. The proceeds of the insurance policies shall be payable to the Trustee
to provide the benefits required in this Plan. In the case of any conflict
between the terms of this Plan and an insurance policy, then the Plan's
provisions shall control. The Trustee shall, in its discretion, either convert
the entire value of any life insurance contract at or before a Participant's
retirement into cash, or distribute the life insurance contract to the
Participant at retirement. In no event shall any life insurance be continued for
the benefit of a Participant after his retirement.
Notwithstanding anything in this Plan and Trust to the contrary, the
Employer specifically authorizes the Trustee to invest all or any portion of the
assets comprising the Trust Fund in any group trust fund which at the time of
the investment provides for the pooling of the assets of plans qualified under
Code Section 401(a). This authorization applies solely to a group trust fund
exempt from taxation under Code Section 501(a) and the trust agreement of which
satisfies the requirements of
<PAGE>
Internal Revenue Service Revenue Ruling 81-100. The provisions of the group
trust fund agreement (if applicable), as amended from time to time, are by this
reference incorporated within this Plan and Trust. The provisions of the group
trust fund shall govern any investment of Plan assets in that fund. The Employer
shall specify in a resolution of its governing body the group trust funds to
which this authorization applies.
Furthermore, the Trustee, for collective investment purposes, may combine
into one (1) trust fund the Trust created under this Plan with the trust created
under any other qualified retirement plan the Employer maintains. However, the
Trustee shall maintain separate records of account for the assets of each Trust
in order to reflect properly each Participant's Accrued Benefit under the
plan(s) in which he is a Participant.
If payment of benefits in the form of an Annuity is otherwise permitted in
this Plan and Trust, any Annuity or insurance contract distributed hereunder
shall comply with the requirements set forth in the Code Section 401(a)(11),
Code Section 417 and the Annuity Requirements Section.
14.5 If the Employer consents to the purchase of life insurance policies
used to provide incidental life insurance for Plan Participants, then the
following limitations shall apply.
(a) If ordinary life insurance contracts are purchased, then less than
fifty (50%) percent of the aggregate Employer contributions
allocated to any Participant will be used to pay the premiums
attributable to them. Ordinary life insurance contracts for these
purposes are contracts with both nondecreasing death benefits and
nonincreasing premiums.
(b) No more than twenty-five (25%) percent of the aggregate Employer
contributions allocated to any Participant will be used to pay the
premiums on term life insurance contracts, universal life
insurance
<PAGE>
contracts, and all other life insurance contracts which are not
ordinary life contracts.
(c) The sum of fifty (50%) percent of the ordinary life insurance
premiums and all other life insurance premiums will not exceed
twenty-five (25%) percent of the aggregate Employer contributions
allocated to any Participant.
Premiums on each policy, after taking credit for any policy dividends,
shall be deemed paid from each Participant's Account, and shall be debited for
purposes of allocations under this Plan first to such Participant's voluntary
contribution Account, if any, and then to his other Account. Any life insurance
on the life of a Participant shall not violate the incidental benefits rule as
required under Treasury Department Regulations.
14.6 In addition to the powers conferred by common law or by statute, the
Trustee is authorized and empowered:
(a) To sell, exchange, convey, transfer, or otherwise dispose of any
property held by it, by private contract or at public auction, and
no person dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the validity,
expediency, or propriety of any such sale or other disposition;
(b) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without
power of substitution; to exercise any conversion privileges,
subscription rights, or other options and to make any payments
incidental thereto; to consent to or otherwise participate in
corporate reorganizations or other changes affecting corporate
securities and to delegate discretionary powers and to pay any
assessments or charges in connection therewith; and, generally, to
exercise any of the powers of an owner with respect to stocks,
bonds, securities, or other property held in the Trust Fund;
(c) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that
may be necessary or appropriate to carry out the powers herein
granted;
(d) To register any investment held in the Trust Fund in its own name
or in the name of a nominee and to hold any investment in bearer
form, but the books and rec-
<PAGE>
ords of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(e) To manage, administer, operate, lease for any number of years,
develop, improve, repair, alter, demolish, mortgage, pledge, grant
options with respect to, partition, build entire new structures
on, abandon, foreclose, or otherwise deal with any real property
or interest therein at any time held by it, including
specifically, qualifying Employer real property, using other Trust
assets for any of such purposes if deemed advisable;
(f) To employ suitable agents and counsel and to pay their reasonable
expenses and compensation;
(g) To borrow or raise monies for the purposes of the Trust and for
any sum so borrowed to issue its promissory note as Trustee and to
secure the repayment thereof by pledging all or any part of the
Trust Fund, but nothing herein contained shall obligate the
Trustee to render itself liable individually for the amount of any
such borrowing; and no person loaning money to the Trustee shall
be bound to see to the application of the money loaned or to
inquire into the validity, expediency, or propriety of any such
borrowing; and any borrowing against life insurance policies shall
be done on a pro rata basis so as to avoid discrimination; and
(h) To acquire real estate by purchase, exchange, or as the result of
any foreclosure, liquidation, or other salvage of any investment
previously made hereunder; to hold such real estate in such manner
and upon such terms as the Trustee may deem advisable; and to
manage, operate, repair, improve, partition, mortgage, build
entire new structures on, or lease for any term of years any such
real estate or any other real estate constituting a part of the
Trust Fund, upon such terms and conditions as the Trustee deems
proper, using other Trust assets for any of such purposes if
deemed advisable.
14.7 Notwithstanding the broad powers granted to the Trustee, the Trustee
and Committee are prohibited from engaging in certain transactions with a
party-in-interest. Such transactions include engaging in (a) selling,
exchanging, or leasing property between the Plan and Trust and a
party-in-interest, except qualifying Employer securities, Affiliated Employer
Stock, or Employer real property; (b) lending or extending credit between the
Plan
<PAGE>
and Trust and a party-in-interest; (c) furnishing goods, services or facilities
between the Plan and Trust and a party-in-interest; (d) transferring Plan and
Trust assets to a party-in-interest; (e) dealing with the income or assets of
the Plan and Trust for their own benefit; (f) receiving any consideration for
their own benefit from any party dealing with the Plan and Trust in connection
with a transaction involving Plan and Trust assets; or (g) acting in any
transaction (in any capacity) involving a Plan on behalf of a party whose
interests are adverse to the interests of the Plan and Trust, its Participants
or Beneficiaries.
14.8 The term "party in interest" means:
(a) any fiduciary (including, but not limited to, any administrator,
officer, Trustee, or custodian), counsel, or employee of the Plan;
(b) a person providing services to the Plan;
(c) an Employer any of whose Employees are covered by the Plan;
(d) an Employee organization any of whose members are covered by the
Plan;
(e) an owner, direct or indirect, of fifty (50%) percent or more of--
(i) the combined voting power of all classes of stock entitled
to vote or the total value of shares of all classes of stock
of a corporation; or
(ii) the capital interest or profits interest of a partnership;
or
(iii) the beneficial interest of a trust or unincorporated
enterprise which is an Employer or an Employee organization
described in subparagraphs (c) or (d).
(f) a relative as defined herein of any individual described in
subparagraphs (a), (b), (c) or (e);
(g) a corporation, partnership, trust or estate of which (or in which)
fifty (50%) percent or more of--
(i) the combined voting power of all classes of stock entitled
to vote, or the total value of shares of all classes of
stock of such corporation; or
<PAGE>
(ii) the capital interest or profits interest of such
partnership; or
(iii) the beneficial interest of such trust or estate, is owned,
directly or indirectly, or held by persons described in
subparagraphs (a), (b), (c), (d) or (e);
(h) an officer, director (or an individual having powers or
responsibilities similar to those of officers or directors), or a
ten (10%) percent or more shareholder, or a highly compensated
employee (earning ten (10%) percent or more of the yearly wages of
an employer) of a person described in subparagraphs (b), (c), (d),
(e) or (g); or
(i) a ten (10%) percent or more (directly or indirectly in capital or
profits) partner or joint venturer of a person described in
subparagraphs (b), (c), (d), (e), or (g).
The term "relative" means a spouse, ancestor, lineal descendant, or spouse of a
lineal descendant.
14.9 The Trustee shall keep accurate and detailed records of its
administration of the Trust Fund, which records shall be open to inspection at
all reasonable times by any person designated in writing by the Committee or the
Employer. Within ninety (90) days following the close of each Plan Year (and at
such other times as the Trustee shall determine in its sole discretion), the
Trustee shall value the Trust Fund (exclusive of Employer's contributions and
forfeitures for such Plan Year and segregated Accounts) as of the last day of
such Plan Year, at the current fair market value of the respective assets, but
life insurance policies shall be shown at their carrying value on the books of
the Trustee. As soon as practicable after making such valuation, but not more
than fifteen (15) days thereafter, the Trustee shall file with the Committee a
written report setting forth the valuation made and, in addition, setting forth
all investments made, together with disbursements and receipts and
<PAGE>
other transactions effected by it during such Plan Year, and securities and
investments held at the end of such Plan Year, and the cost of each item as
carried on the books of the Trustee.
14.10 Except as provided in the Investment Direction By Participant
Section, any earnings, gains, profits or losses of the Trust Fund since the
immediately preceding Valuation Date shall be credited or debited to the Account
of a Participant (or Inactive Participant as the case may be) as of a particular
Valuation Date in the proportion that such Account of such Participant on such
Valuation Date, exclusive of the Employer's contribution, any forfeitures, if
otherwise permitted herein, and any Employee voluntary contributions, if
otherwise permitted herein, since such immediately preceding Valuation Date,
bears to the total of all such Accounts. Any dividends or credits earned on
insurance contracts (other than a key man Employee policy) will be allocated to
the Participant's Account derived from Employer contributions for whose benefit
the contract is held.
14.11 If a corporate Trustee (other than the Employer) serves hereunder,
then the corporate Trustee shall be paid for its service rendered hereunder
compensation and other charges as agreed by the Employer and the Trustee, but if
no agreement is in effect then as stipulated in its regularly adopted schedules
of compensation in effect and applicable at the time of performance of such
services, together with all reasonable expenses incurred by the Trustee in and
about the execution of its duties hereunder, including counsel fees and
disbursements. Except as provided below, if a non-corporate Trustee serves
hereunder, then the non-corporate Trustee shall be entitled to such reasonable
compensation for services rendered by it as may from time to time be
<PAGE>
agreed upon between the Employer and the non-corporate Trustee, together with
all reasonable expenses incurred by the non-corporate Trustee in and about the
execution of its duties hereunder, including counsel fees and disbursements.
Unless the Employer agrees to pay the Trustee for services rendered, such
compensation and expenses shall be charged against and paid out of the Trust
Fund and any segregated (or self-directed) Accounts in an equitable manner among
the Participants' Accounts. If the Employer advises the Trustee in writing of
its determination to make no further contributions to the Trust Fund, and the
Employer decides not to continue payment of the Trustee compensation and
expenses, such compensation and expenses of the Trustee shall be charged against
and paid out of the Trust Fund and any segregated (or self-directed) Accounts in
an equitable manner among the Participants Accounts, and a lien for the payment
thereof shall be impressed upon any cash, securities or other property held by
the Trustee hereunder the same to be charged in an equitable manner against the
credit of each Participant. Notwithstanding anything herein to the contrary, no
compensation shall be paid to a fully paid Employee of the Employer or, if a
corporation, to a member of its Board of Directors, for serving as a fiduciary,
but such person may be reimbursed for expenses reasonably incurred.
14.12 The Trustee may consult with counsel, who may be counsel for the
Employer, in respect of any of its duties or obligations hereunder, and the
Trustee shall be fully protected in acting or refraining from acting in
accordance with the advice of such counsel.
14.13 Any determination or action of the Employer pursuant to the
provisions of this Agreement shall be evidenced in writing
<PAGE>
duly executed by the Employer and delivered to the Trustee. All authorizations,
directions, instructions, notices, or information given by the Committee to the
Trustee shall be in writing and signed in the name of the members of the
Committee or by such member or representative of the Committee as a majority of
it shall specify in writing. If the Trustee acts in accordance with
authorizations, directions, instructions, notices, or information given to it by
the Employer or the Committee, the Trustee shall be indemnified and held
harmless by the Employer, except for its own gross negligence or willful
misconduct.
14.14 If neither the Employer nor the Committee gives authorizations,
directions, instructions, notices, or information to the Trustee, the Trustee
may act without such authorizations, directions, instructions, notices, or
information as it, in its sole discretion, deems advisable and appropriate in
the circumstances for the carrying out of the provisions of this Agreement.
14.15 The Trustee shall not be responsible for the adequacy of the Trust
Fund to meet and discharge any and all payments and liabilities under the Plan.
All persons dealing with the Trustee are released from inquiry into the decision
or authority of the Trustee to act, and from responsibility for the application
of any monies, securities or other property paid or delivered to the Trustee.
The Trustee shall not be obligated to pay interest on uninvested cash balances.
14.16 The Trustee shall not be required to determine, or to make any
investigation to determine, the identity or mailing address of any person
entitled to benefits under this Agreement, and shall have discharged its
obligation in that respect when it
<PAGE>
shall have sent checks or other papers by ordinary mail to such persons and
addresses as may be furnished to it by the Committee.
14.17 The Trustee may be removed by the Employer at any time by the
delivery to the Trustee of a written notice duly executed by the Employer to
that effect and specifying the date of removal. The Trustee may resign as
Trustee hereunder upon written notice to that effect, delivered to the Employer.
Any such resignation shall become effective sixty (60) days from the date of the
delivery of such written notice, unless an earlier date is agreed upon by the
Employer and the Trustee. In the event of such removal or resignation (or in the
event the office of Trustee becomes vacant for any reason), a successor Trustee
or Trustees shall be appointed by the Employer and such successor Trustee or
Trustees, upon accepting such appointment by an instrument in writing delivered
to the Employer, shall become vested with all the duties, immunities, powers,
privileges and rights as Trustee hereunder as if it originally had been
designated Trustee in this Agreement. No successor Trustee shall be liable or
responsible in any way for any acts or defaults of any predecessor Trustee, but
such successor Trustee shall be liable only for its own acts and defaults with
respect to property actually received by it as such Trustee. The successor
Trustee may accept the accounting rendered and the assets and property delivered
to it by the predecessor Trustee and shall incur no liability or responsibility
to any Participant or Beneficiary under this Plan and Trust by reason of relying
thereon. The Employer may designate as many Trustees to serve hereunder as it
shall from time to time determine. Upon such appointment and acceptance, the
replaced Trustee shall assign, endorse, convey,
<PAGE>
deliver and transfer to the successor Trustee all of the funds, securities and
other property then held by it under this Trust Agreement and such records as
may reasonably be required in order that the successor Trustee may properly
administer the Trust hereunder. In the event of such removal or resignation of
any Trustee hereunder, within sixty (60) days from the date of such removal or
resignation such Trustee shall file with the Employer and with the Committee a
statement and report of its Accounts and proceedings covering the period since
the date of its last annual statement and report to the date of such removal or
resignation. The Employer shall decide from time to time the number of Trustees
which shall in no event be less than one (1).
14.18 In the event and to the extent not insured against by any insurance
company pursuant to provisions of any applicable insurance policy, the Employer
shall indemnify and hold harmless any Trustees who are natural persons, their
assistants and representatives, from any and all claims, demands, suits, losses,
damages, and any other liability arising from their responsibilities in
connection with this Plan or Trust, unless the same is determined to be due to
gross negligence or willful misconduct.
14.19 In the event an individual is sole Trustee of this Trust while a
beneficiary of this Trust, then the Employer shall appoint a Co-Trustee to serve
with the individual Trustee immediately before the individual Trustee becomes
the sole beneficiary of the Trust if a merger would occur under state law.
14.20 Unless the Employer agrees to pay Plan and Trust fees and expenses
such as custodial fees, administration fees and investment fees, such fees and
expenses not so paid shall be charged against and paid out of the Trust Fund and
any segregated
<PAGE>
(or self-directed) Accounts in an equitable manner among the Participants.
SECTION 15 - Amendment and Termination of Plan
15.1 The Board of Directors of the Employer, or any committee authorized
by the Board of Directors of the Employer, may amend this Plan and Trust at any
time and from time to time. However, it is the intention of the Employer and
Trustee that this Plan and Trust shall always be a retirement plan and trust
qualified under Code Section 401, et. seq. and this Plan and Trust shall be
interpreted and administered accordingly. Except to the extent permitted in Code
Section 412(c)(8), no amendment shall decrease a Participant's Accrued Benefit
or otherwise violate Code Section 411(d)(6). For purposes of the preceding
sentence, a Plan amendment which has the effect of (a) eliminating or reducing a
subsidy or an early retirement benefit, if applicable, (as defined in Treasury
Regulations), or (b) eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment, shall be treated as
reducing Accrued Benefits. In the case of a retirement-type subsidy, the
preceding sentence shall apply only with respect to a Participant who satisfies
(either before or after the amendment) the pre-amendment conditions for the
subsidy. Treasury Regulations may provide that this Section shall not apply to a
Plan amendment described in (b) above (other than a Plan amendment having an
effect described in (a) above).
Any amendment shall be in writing and shall be executed by a person or
entity duly authorized to execute the amendment. The amendment may, but need not
be, witnessed. The Trustee and the Plan Administrator shall be given a copy of
the amendment.
<PAGE>
15.2 No change may be made in the Plan and Trust which shall vest in the
Employer, directly or indirectly, any control, interest, or ownership in any of
the present or subsequent assets or funds of the Trust, or in any of the present
or subsequent assets or funds set aside for Participants pursuant to this Plan
and Trust.
15.3 No part of the Trust Fund shall, by reason of any amendment, be used
for or directed to purposes other than for the exclusive benefit of Participants
and their Beneficiaries or for administration expenses of the Plan. The corpus
or income of the Trust may not be diverted to or used for other than the
exclusive benefit of the Participants and their Beneficiaries.
15.4 It is the present intention of the Employer to continue this Plan
indefinitely; however, the Board of Directors of the Employer, or any committee
or person duly authorized by the Employer, may partially or completely terminate
this Plan, or completely discontinue contributions hereunder, in which events
the Accrued Benefit of all affected Participants in the Trust Fund shall vest
immediately and fully, without forfeiture. Any complete termination of this Plan
shall be in writing. Notice of the complete termination shall be given to each
Participant. In the event the Plan is terminated, the Accrued Benefit of all
Participants shall be distributed to them. In the event contributions are
completely discontinued, the Accrued Benefit of all Participants may be
distributed to them, or the Plan may continue to operate for the benefit of the
Participants pursuant to its terms without further contributions, in which case
the Accrued Benefits shall be paid upon attainment of Normal Retirement Date (or
early retirement, if applicable), death,
<PAGE>
Disability, or other termination of employment as provided in the Plan. Complete
discontinuance of contributions or termination of the Plan by an Employer,
including a partial termination, shall be considered a complete discontinuance
of contributions or termination of the Plan only with respect to that particular
Employer. Suspension of contributions on a temporary basis for reasons of
business deemed adequate by the Employer shall not be considered a complete
discontinuance of contributions or a termination of the Plan.
15.5 In any event, the liabilities of the Employer to make contributions
under the Plan shall automatically terminate upon dissolution of the Employer,
upon its adjudication as a bankrupt, upon its making a general assignment for
the benefit of creditors, or upon its merger or consolidation with any other
entity unless the Employer's liabilities to make further contributions under the
Plan are assumed by such other entity.
15.6 In the event of termination of the Employer's liabilities to make
further contributions under this Plan, such liabilities may be assumed by any
other entity which employs a substantial number of the Participants of the Plan.
Such assumption of liabilities shall be expressed in an agreement between such
other entity and the Employer.
15.7 In the event of any merger or consolidation with, or transfer of
assets or liabilities to, any other retirement plan of the Employer, its
affiliate, or of any Employer, each Participant in the Plan will (as if the Plan
then terminated) receive a benefit immediately after the merger, consolidation,
or transfer which is equal to or greater than the benefit he would have been
<PAGE>
entitled to receive immediately before the merger, consolidation, or transfer
(as if the Plan had then terminated).
SECTION 16 - Limitation on Benefits and Contributions
16.1 If an Employee is a Participant in one or more defined benefit plans
and one or more defined contribution plans (whether or not terminated)
maintained by the Employer or an Affiliated Employer, the sum of his defined
benefit plan fraction and his defined contribution plan fraction shall not
exceed 1.0 for any year. If the sum of the defined benefit plan fraction in the
Employer's defined benefit plan and the defined contribution plan fraction in
the Employer's defined contribution plan shall exceed 1.0 in any year of any
Participant in this Plan, the Employer shall adjust the numerator of the defined
contribution plan fraction so that the sum of the defined benefit plan fraction
and the defined contribution plan fraction shall not be in excess of 1.0 in any
year for such Participant in the order set forth in Section 5.10.
For the purpose of this Section, the term defined benefit plan fraction
for any year shall mean a fraction the numerator of which is the projected
annual benefits payable to a Participant under all such defined benefit plans as
of the close of the current year and the denominator of which is the lesser of:
(a) the product of 1.25 multiplied by $90,000, (or such other dollar
limitation in effect under Code Section 415(b)(1)(A) for such
year), or
(b) the product of 1.4 multiplied by the average Compensation of the
Participant.
Notwithstanding the above, if the Participant was a participant as of the
first day of the first Limitation Year beginning after December 31, 1986, in one
or more defined benefit plans
<PAGE>
maintained by the Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125 percent of the sum of the
annual benefits under such plans which the Participant had accrued as of the
close of the last Limitation Year beginning before January 1, 1987, disregarding
any changes in the terms and conditions of the plan after May 5, 1986. The
preceding sentence applies only if the defined benefit plans individually and in
the aggregate satisfied the requirements of Code Section 415 for all Limitation
Years beginning before January 1, 1987.
The term defined contribution plan fraction for any year shall mean a
fraction the numerator of which is the aggregate amount of annual additions
under all such defined contribution plans made to a Participant's Account
balances as of the close of the current year and the denominator of which is the
sum of the lesser of the following amounts determined for such year and for each
prior Year of Service with the Employer:
(a) the product of 1.25 multiplied by $30,000, (or such other dollar
limitation in effect under Code Section 415(c)(1)(A) for such
year, without regard to Code Section 415(c)(6)), or
(b) the product of 1.4 multiplied by twenty-five (25%) percent of the
Compensation of the Participant.
If the Employee was a participant as of the end of the first day of the
first Limitation Year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the defined benefit fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of (i)
the excess of the sum of the fractions over 1.0
<PAGE>
times (ii) the denominator of this fraction, will be permanently subtracted from
the numerator of this fraction. The adjustment is calculated using the fractions
as they would be computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the terms and conditions
of the plan made after May 5, 1986, but using the Code Section 415 limitation
applicable to the first Limitation Year beginning on or after January 1, 1987.
The annual addition for any Limitation Year beginning before January 1,
1987, shall not be recomputed to treat all Employee contributions as annual
additions.
For any Plan Year this Plan is a Top Heavy Plan or a Super Top Heavy Plan,
then 1.0 shall be substituted for 1.25 in both subparagraphs (a) of this
Section. However, 1.25 will continue to be used for any Plan Year that this Plan
is a Top Heavy Plan (but not a Super Top Heavy Plan) provided the minimum
allocation requirements of Code Section 416(c) are increased pursuant to Code
Section 416(h)(2)(A)(ii). Further, if the special minimum allocation of 7 1/2%
is provided for in Section 5.6, then 1.25 will continue to be used for any Plan
Year that this Plan is a Top Heavy Plan (but not a Super Top Heavy Plan). If
this Plan and a pre-Tax Equity and Fiscal Responsibility Act (TEFRA) defined
benefit plan are aggregated, a permanent adjustment will be made to the
numerator of the defined contribution fraction to insure that the sum of the
defined contribution fraction and defined benefit fraction does not exceed 1.0
as of the effective date of TEFRA. Annual additions in the numerator of the
defined contribution plan fraction shall not exceed annual additions in
<PAGE>
the denominator of the defined contribution plan fraction in any year beginning
prior to January 1, 1976.
SECTION 17 - Rollovers and Other Transfers
17.1 Any Employee may file a written petition with the Committee
requesting that the Trustee accept a rollover contribution from such Employee or
a direct transfer from another qualified plan or individual retirement account.
The Trustee may accept transfers from an Affiliated Employer plan. The
Committee, in its sole discretion, shall determine whether or not such Employee
shall be permitted to make a rollover contribution or direct transfer to the
Trust Fund. The Committee may require that the Employee be 100% vested in any
funds transferred from an Affiliated Employer plan. Any written petition shall
set forth the amount of the rollover amount, the nature of the property in the
rollover amount, and a statement, satisfactory to the Committee, that such
contribution constitutes a rollover amount as defined in this Section. The
Trustee shall hold any such contribution in a segregated Account for the
Employee making such contribution. The Employee shall at all times be one
hundred (100%) percent vested in his rollover contribution and any earnings
credited thereon; provided however that an Employee transferring from an
Affiliated Employer plan shall not be automatically one hundred (100%) percent
vested and shall be accounted for by source of funds. For transfers from an
Affiliated Employer Plan vesting shall be determined as provided for in Section
10. Unless the Employee is permitted to self-direct the investment of the
rollover amount, the Trustee may invest and reinvest the rollover amount with
the general Trust Fund, in which case it shall share on a pro-rata basis in any
<PAGE>
earnings, gains, profits, or losses, or the Trustee may separately invest such
rollover amount in a bank or savings and loan association, in United States
Treasury Bills or Bonds, or other fixed income securities, or any combination
thereof, as the Trustee shall decide, in which case it shall not share in any
earnings, gains, profits, or losses of the Trust Fund. The Committee shall
instruct the Trustee whether the rollover amount is to be invested as part of
the general Trust Fund. Any rollover or transfer shall meet the requirements of
Code Sections 402(a)(5)(E) and 411(d)(6).
17.2 The term rollover amount shall mean any rollover amount or rollover
contribution defined in (a) Code Section 402(a)(5) or Code Section 403(a)(4)
relating to certain lump sum distributions from a Trust or annuity described in
Code Section 401(a) or Code Section 403(a); or (b) Code Section 408(d)(3)
relating to certain distributions from an Individual Retirement Account or an
Individual Retirement Annuity; or (c) Code Section 409(b)(3)(C) relating to
certain distributions from a retirement bond.
17.3 The Trustee may, with the approval of the Committee, receive and hold
as a part of the Trust Fund assets transferred directly from the Trustee or
custodian of any other retirement plan which is qualified under Code Section
401, as amended or superseded, as evidenced by a current favorable determination
letter issued by the Commissioner of Internal Revenue or his proper delegate,
provided such transfer meets the requirements of Code Section 411(d)(6).
17.4 Notwithstanding anything herein to the contrary, unless the
distribution of payments in the form of an Annuity are
<PAGE>
allowed pursuant to the Annuity Requirements Section or the transfer does not
cause a reduction or elimination of any Code Section 411(d)(6) protected
benefit, this Plan shall not accept any direct or indirect transfers from a
defined benefit plan, money purchase plan (including a target benefit plan),
stock bonus plan, profit-sharing plan, 401(k) plan or any other qualified plan
which would otherwise have provided for a life annuity form of payment to the
Participant. In order for a transfer not to reduce or eliminate a Code Section
411(d)(6) protected benefit, the elective transfer provisions under Regulation
1.411(d)-4 must be complied with.
17.5 Any amount transferred or rolled over by an Employee to the Plan
under this Rollovers and Other Transfers Section shall be used to provide
additional benefits to such Employee at the time benefits are otherwise payable
under this Plan; provided, however, that such transferred or rollover amount
shall be an asset of the entire Trust.
SECTION 18 - Miscellaneous Provisions
18.1 The adoption and maintenance of this Plan shall not be deemed to
constitute a contract, express or implied, between the Employer and any Employee
or to be a consideration for, or inducement or condition of, the employment of
any person. Nothing herein contained shall be deemed to give any Employee the
right to be retained in the employ of the Employer or to interfere with the
right of the Employer to discharge any Employee at any time, nor shall it give
the Employer the right to require the Employee to remain in its employ.
<PAGE>
18.2 All benefits payable under this Plan shall be paid or provided for
solely from the Trust Fund. Neither the Employer nor the Trustee assumes any
liability or responsibility therefor.
18.3 Headings of Sections are included solely for convenience of
reference, and, if there is any conflict between such headings and the text, the
text shall control.
18.4 As used in this Plan and Trust, the masculine gender shall include
the feminine, and the singular shall include the plural, unless the context
clearly indicates otherwise.
18.5 All legal questions pertaining to the Plan shall be determined in
accordance with the laws of the State of North Carolina, unless pre-empted under
Federal law.
18.6 The right of any Participant or his Beneficiary to any benefit or to
any payment herein or to any separate Account or insurance contract shall not be
subject to alienation, assignment, attachment, garnishment, or other legal or
equitable process, and if such Participant shall attempt to assign, transfer, or
dispose of such right, or should an attempt be made to subject such right to
attachment, execution, garnishment, or other legal or equitable process, such
attempt shall be null and void. The preceding sentence shall also apply to the
creation, assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order, unless such
order is determined to be a qualified domestic relations order, as defined in
Code Section 414(p), or any domestic relations order entered into before January
1, 1985.
18.7 Every fiduciary of this Plan and Trust shall be bonded to the extent
required by law.
<PAGE>
18.8 No provision of this Plan and Trust is purported to relieve any
fiduciary from liability for any responsibilities, obligations, or duties
imposed on such fiduciary by the Employee Retirement Income Security Act of
1974, including any amendments thereto.
SECTION 19 - Voluntary Non-Deductible Participant Contributions
19.1 Any Participant may, but shall not be required to, contribute to the
Trust a total amount of not less than one (1%) percent and not more than two
(2%) percent of his Compensation for the Plan Year; provided however that the
Participant may not contribute more than ten (10%) percent of his total
Compensation received for all Plan Years that he has participated in the Plan in
this Trust and any other trusts established by the Employer. However, such
aggregate total amount shall be non-deductible by the Participant and shall be
reduced by any prior non-deductible voluntary contributions in the Trust. Such
contributions and the earnings thereon shall be nonforfeitable at all times and
shall be made at such times during the Plan Year, including the use of payroll
deductions, as the Committee shall determine by the adoption of reasonable rules
applicable uniformly to all Participants. At Normal Retirement Date or such
other time when the Participant is entitled to receive benefits from the Plan
and Trust, the voluntary contribution Account shall be used to provide
additional benefits to the Participant.
19.2 The Trustee shall hold any such contribution in a segregated Account
for the Participant making such contribution, designated as a voluntary
contribution Account, but it may invest and reinvest the amounts in any such
Account with the same rights and powers applicable thereto as herein provided
generally. The
<PAGE>
segregated Account shall not share in any contributions made by the Employer to
the Trust for any Plan Year, and it shall not share in any forfeitures occurring
during any Plan Year. However, the voluntary contribution Account shall share on
a pro rata basis in any earnings, gains, profits, or losses in any Plan Year,
provided, however, that the Committee shall establish such procedures as
necessary for allocation of earnings, gains, profits, or losses for voluntary
contributions made after the beginning of a Plan Year.
19.3 Any voluntary contributions and any earnings, gains, profits, or
losses attributable thereto shall be applied wholly to and vested in the
voluntary contribution Account of the Participant having made such contributions
and shall be used solely for the purposes of providing the benefits contemplated
by this Plan for such Participant or his Beneficiary in accordance with the
Plan.
19.4 A Participant may withdraw no more than twice in any Plan Year from
his voluntary contribution Account an amount not to exceed the lesser of (i) the
greater of $100 or his net voluntary contributions, or (ii) his voluntary
contribution Account balance. Net voluntary contributions shall mean the total
amount of voluntary contributions made by the Participant less any withdrawals.
No forfeitures will occur in this Plan and Trust solely as a result of a
Participant's withdrawal of his voluntary contributions.
19.5 The Committee shall establish such procedures as necessary for
facilitating voluntary Participant contributions.
19.6 Employee contributions for Plan Years will be limited so as to meet
the nondiscrimination test of Code Section 401(m).
<PAGE>
Accordingly, the Average Contribution Percentage (ACP) for Participants who are
Highly Compensated Employees for each Plan Year and the ACP for Participants who
are Non-Highly Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(a) The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are
Non-Highly Compensated Employees for the same Plan Year multiplied
by 1.25; or
(b) The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are
Non-Highly Compensated Employees for the same Plan Year multiplied
by two (2), provided that the ACP for Participants who are Highly
Compensated Employees shall not exceed the ACP for Participants
who are Non-Highly Compensated Employees by more than two (2)
percentage points.
The following special rules shall apply:
(a) If one or more Highly Compensated Employees participate in both a
cash or deferred arrangement (CODA) and a plan subject to the ACP
test maintained by the Employer (whether or not one or more plans
exist) and the sum of the ADP and ACP of those Highly Compensated
Employees subject to either or both tests exceeds the Aggregate
Limit, then the Average Deferral Percentage (ADP) of those Highly
Compensated Employees who also participate in a CODA will be
reduced (beginning with such Highly Compensated Employee whose ADP
is the highest) so that the limit is not exceeded. The amount by
which each Highly Compensated Employee's Contribution Percentage
Amounts is reduced shall be treated as an Excess Contribution. The
ADP and ACP of the Highly Compensated Employees are determined
after any corrections required to meet the ADP and ACP tests.
Multiple use does not occur if both the ADP and ACP of the Highly
Compensated Employees does not exceed 1.25 multiplied by the ADP
and ACP of the Non-Highly Compensated Employees.
(b) For purposes of this Section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is
eligible to have Contribution Percentage Amounts allocated to his
account under two or more plans described in Code Section 401(a),
or arrangements described in Code Section 401(k) that are
maintained by the Employer, shall be determined as if the total of
such
<PAGE>
Contribution Percentage Amounts was made under each plan. If a
Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different plan years, all cash or
deferred arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
(c) In the event that this Plan satisfies the requirements of Code
Sections 401(m), 401(a)(4) or 410(b) only if aggregated with one
or more other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated with
this Plan, then this Section shall be applied by determining the
Contribution Percentage of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989,
plans may be aggregated in order to satisfy Code Section 401(m)
only if they have the same Plan Year.
(d) For purposes of determining the Contribution Percentage of a
Participant who is a Five-Percent Owner or one of the ten most
highly-paid Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Participant shall
include the Contribution Percentage Amounts and Compensation for
the Plan Year of Family Members (as defined in Code Section
414(q)(6)). Family Members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Participants who
are Non-Highly Compensated Employees and for Participants who are
Highly Compensated Employees.
(e) For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in the
Plan Year in which contributed to the Trust. Matching
Contributions and Qualified Non-Elective Contributions will be
considered made for a Plan Year if made no later than the end of
the twelve (12) month period beginning on the day after the close
of the Plan Year.
(f) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both, used in such test.
(g) The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
When used in this Plan, the following terms shall have the indicated
meanings:
<PAGE>
(a) "Actual Deferral Percentage" shall mean, for a specified group of
Participants for a Plan Year, the average of the ratios
(calculated separately for each Participant in such group) of (i)
the amount of Employer contributions actually paid over to a
qualified plan and trust (maintained by the Employer) on behalf of
such Participant for the Plan Year to (ii) the Participant's
Compensation for such Plan Year (whether or not the Employee was a
Participant for the entire Plan Year). Employer contributions on
behalf of any Participant shall include: (1) any Elective
Deferrals made pursuant to the Participant's deferral election,
including excess elective deferrals, but excluding Elective
Deferrals that are taken into account in the Contribution
Percentage test (provided the ADP test is satisfied both with and
without exclusion of these Elective Deferrals); and (2) at the
election of the Employer, Qualified Non-Elective Contributions and
Qualified Matching Contributions. For purposes of computing Actual
Deferral Percentages, an Employee who would be a Participant but
for the failure to make Elective Deferrals shall be treated as a
Participant on whose behalf no Elective Deferrals are made.
(b) "Aggregate Limit" shall mean the sum of (i) 125 percent of the
greater of the ADP of the Non-Highly Compensated Employees for the
Plan Year or the ACP of Nonhighly Compensated Employees under the
Plan subject to Code Section 401(m) for the Plan Year beginning
with or within the Plan Year of the CODA and (ii) the lesser of
200% or two plus the lesser of such ADP or ACP. For Plan Years
beginning before the later of January 1, 1992 or the date that is
sixty (60) days after publication of final regulations regarding
multiple use, the Aggregate limit is increased to the greater of
the Aggregate Limit in the preceding sentence or the sum of 125
percent of the lesser of (i) the ADP of Non-Highly Compensated
Employees for the Plan Year or the ACP of Non-Highly Compensated
Employees under the Plan subject to Code Section 401(m) for the
Plan Year beginning with or within the Plan Year of the CODA and
(ii) the greater of 200% or two plus the greater of such ADP or
ACP.
(c) "Average Contribution Percentage" shall mean the average of the
Contribution Percentages of the Eligible Participants in a group.
(d) "Contribution Percentage" shall mean the ratio (expressed as a
percentage) of the Participant's Contribution Percentage Amounts
to the Participant's Compensation for the Plan Year (whether or
not the Employee was a Participant for the entire Plan Year).
(e) "Contribution Percentage Amounts" shall mean the sum of the
Employee Contributions, Matching Con-
<PAGE>
tributions, and Qualified Matching Contributions (to the extent
not taken into account for purposes of the ADP test) made under
the Plan on behalf of the Participant for the Plan Year. Such
Contribution Percentage Amounts shall include forfeitures of
Excess Aggregate Contributions or Matching Contributions allocated
to the Participant's account which shall be taken into account in
the year in which such forfeiture is allocated. The Employer may
include Qualified Non-Elective Contributions in the Contribution
Percentage Amounts. The Employer also may elect to use Elective
Deferrals in the Contribution Percentage Amounts so long as the
ADP test is met before the Elective Deferrals are used in the ACP
test and continues to be met following the exclusion of those
Elective Deferrals that are used to meet the ACP test.
(f) "Elective Deferrals" shall mean any Employer contributions made to
a plan at the election of the Participant, in lieu of cash
compensation, and shall include contributions made pursuant to a
salary reduction agreement or other deferral mechanism. With
respect to any taxable year, a Participant's Elective Deferral is
the sum of all Employer contributions made on behalf of such
Participant pursuant to an election to defer under any qualified
cash or deferred arrangement (CODA) as described in Code Section
401(k), any simplified Employee pension cash or deferred
arrangement as described in Code Section 402(h)(1)(B), any
eligible deferred compensation plan under Code Section 457, any
plan as described under Code Section 501(c)(18), and any Employer
contributions made on the behalf of a Participant for the purchase
of an annuity contract under Code Section 403(b) pursuant to a
salary reduction agreement.
(g) "Eligible Participant" shall mean any Employee who is eligible to
make an Employee Contribution, or an Elective Deferral (if the
Employer takes such contributions into account in the calculation
of the Contribution Percentage), or to receive a Matching
Contribution (including forfeitures) or a Qualified Matching
Contribution. If an Employee Contribution is required as a
condition of participation in the Plan, any Employee who would be
a Participant in the Plan if such Employee made such a
contribution shall be treated as an eligible Participant on behalf
of whom no Employee Contributions are made.
(h) "Employee Contribution" shall mean any contribution made to the
Plan by or on behalf of a Participant that is included in the
Participant's gross income in the year in which made and that is
maintained under a separate account to which earnings and losses
are allocated.
<PAGE>
(i) "Matching Contribution" shall mean an Employer contribution made
to any other defined contribution plan on behalf of a Participant
on account of an Employee Contribution made by such Participant,
or on account of a Participant's Elective Deferral, under a plan
maintained by the Employer.
(j) "Qualified Non-Elective Contributions" shall mean contributions
(other than Matching Contributions or Qualified Matching
Contributions) made by the Employer and allocated to Participant's
Accounts that the Participants may not elect to receive in cash
until distributed from a plan; that are nonforfeitable when made;
and that are distributable only in accordance with the
distribution provisions that are applicable to Elective Deferrals
and Qualified Matching Contributions under such plan maintained by
the Employer.
Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
distributed no later than the last day of each Plan Year to Participants to
whose accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions of Participants who are
subject to the family member aggregation rules of Code Section 414(q)(6) shall
be allocated among such Participants in proportion to Employee Contributions and
Matching Contributions of such Participants that are combined to determine the
ACP. If such Excess Aggregate Contributions are distributed more than 2 1/2
months after the last day of the Plan Year in which such excess amounts arose, a
ten (10%) percent excise tax will be imposed on the Employer maintaining the
Plan with respect to those amounts. Excess Aggregate Contributions shall be
treated as annual additions under the Plan.
Excess Aggregate Contributions shall be adjusted for any income or loss up
to the date of distributions. The income or loss allocable to Excess Aggregate
Contributions is the sum of:
<PAGE>
(a) income or loss allocable to the Participant's Employee Contribution account,
Matching Contribution account (if any, and if all amounts therein are not used
in the ADP test) and, if applicable, qualified Non-Elective Contribution account
and Elective Deferral account for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Aggregate Contributions for the
year and the denominator is the Participant's Account balance(s) attributable to
Contribution Percentage Amounts without regard to any income or loss occurring
during such Plan Year; and (b) ten (10%) percent of the amount determined under
(a) multiplied by the number of whole calendar months between the end of the
Plan Year and the date of distribution, counting the month of distribution if
distribution occurs after the fifteenth (15th) of such month.
Excess Aggregate Contributions shall be distributed on a pro-rata basis
from the Participant's Employee Contribution account, Matching Contribution
account, and Qualified Matching Contribution account (and, if applicable, the
Participant's Qualified Non-Elective Contribution account or Elective Deferral
account, or both).
When used in this Plan, "Excess Aggregate Contributions" shall mean, with
respect to any Plan Year, the excess of:
(i) The aggregate Contribution Percentage Amounts taken into account
in computing the numerator of the Contribution percentage actually
made on behalf of Highly Compensated Employees for such Plan Year,
over
(ii) The maximum Contribution Percentage Amounts permitted by the ACP
test (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
<PAGE>
Such determination shall be made after first determining Excess Elective
Deferrals and then determining Excess Contributions.
For purposes of this Section, compensation shall mean compensation as
defined in Code Section 414(s).
SECTION 20 - Participant Loans
20.1 The Committee, in accordance with its uniform non-discriminatory loan
policy, may direct the Trustee to make a loan or loans to a Participant, subject
to the limitations contained in this Section and Code Section 72(p), as amended.
The Committee is authorized to establish a loan program to carry out the
provisions of this Participant Loans Section. Loans shall not be made available
to Highly Compensated Employees in an amount greater than the amount made
available to other Employees; provided, however, the minimum loan amount shall
be $1,000 and all loans shall be in increments of $100. The loan shall allow for
a setoff of the Participant's Account. In no event shall the total of any such
loan to any Participant when added to the outstanding balance of all other loans
from this Plan, or any other Plan of the Employer, or a related company as
defined in Code Section 72(p)(2)(D), exceed the lesser of
(a) $50,000, reduced by the excess (if any) of the highest outstanding
balance of loans from the Plan during the one (1) year period
ending on the day before the date on which such loan was made over
the outstanding balance of loans from the Plan on the date on
which such loan was made, or
(b) one-half (1/2) of the present value of the non-forfeitable Accrued
Benefit of the Employee under the Plan.
For purposes of (b) above the present value of the non-forfeitable Accrued
Benefit shall be determined without regard to any
<PAGE>
accumulated deductible Employee contributions as defined in Code Section
72(o)(5)(B). With respect to any loan made prior to January 1, 1987, the $50,000
limit in (a) above shall be unreduced.
20.2 Any Participant may apply for a loan from the Plan. For purposes of
this Participant Loans Section, the term "Participant" includes any Participant
or Beneficiary who is a party in interest (as determined under ERISA ss. 3(14))
with respect to the Plan. A Participant must apply for each loan and shall
specify the amount of the loan desired, the requested duration for the loan and
the source of security for the loan. The Committee will not approve any loan if
a Participant is not creditworthy.
In order to be creditworthy, the Participant must have established in his
community, a reputation which would entitle him to a similar loan from a
commercial or business lender. In applying for the loan from the Plan, each
Participant must give full authority to investigate his creditworthiness.
20.3 All such loans to a Participant shall charge interest thereon at a
reasonable rate. The Committee will determine the appropriate interest rate or
rates of interest. The Committee's determination of what constitutes a
reasonable rate of interest shall be based on a rate of interest that provides
the Plan with a return commensurate with the prevailing rate charged by persons
in the business of lending money for loans which would be made under similar
circumstances. A loan may provide a fixed rate of interest or an adjustable rate
of interest. The Committee will determine whether the interest rate is
commercially reasonable at the time it approves the loan and, in the case of the
renewal of a loan, at the time of the renewal. Every loan applicant shall
<PAGE>
receive a clear statement of the charges involved in each loan transaction. This
statement shall include the dollar amount and the annual interest rate of the
finance charge.
20.4 Any such loan or loans shall be repaid by the Participant in such
manner as the Committee shall determine. Except as provided hereinbelow for
certain residential loans, in no event shall the repayment of a loan by its
terms exceed five (5) years from the date on which the loan is made, or the
Participant's Normal Retirement Date, whichever is the shorter period of time.
In the event any loan to a Participant is used to acquire a dwelling unit which
within a reasonable time is to be used as the principal residence of the
Participant (determined at the time the loan is made), then the repayment of
such loan by its terms may not exceed ten (10) years from the date on which the
loan is made, or the Participant's Normal Retirement Date, whichever is the
shorter period of time. The Participant shall provide evidence satisfactory to
the Committee that such loan qualifies for the extended repayment period under
Code Section 72(p)(2)(B)(ii) at the time the loan is made. In all circumstances,
the Trustee may, in its discretion, require full and immediate payment of the
outstanding loan balance and accrued and unpaid interest if the Participant dies
or his employment terminates for any reason. Except as provided by Treasury
Regulations, payment (principal and interest) of any loan shall be made in
substantially level amortization payments over the term of the loan (with
payments not less frequently than quarterly). Under no circumstances may the
repayment term of any loan be extended beyond its due date. Notwithstanding the
preceding, loans made prior to January 1, 1987 which were used to acquire,
construct,
<PAGE>
reconstruct or substantially rehabilitate the principal residence of a
Participant may provide for a repayment term in excess of five (5) years.
Further, loans made prior to January 1, 1987 may provide for periodic payments
which are made less frequently than annually and which do not necessarily result
in level amortization.
20.5 Such loan shall be adequately secured at all times. The Participant
must secure each loan with an irrevocable pledge and assignment of 50% of the
nonforfeitable amount of the borrowing Participant's Accrued Benefit under the
Plan or other security (e.g., principal residence) the Committee accepts and
finds to be adequate, or both 50% of the Participant's Accrued Benefit and other
security. The Committee may request the borrowing Participant to secure each
loan with additional collateral acceptable to the Committee or to substitute
collateral given for the loan. In the event that the Participant does not repay
such loan within the time prescribed by the Committee, and the loan is secured
by the Participant's Account in the Plan, and the Trustee does not accelerate
payment as provided herein, the Committee may deduct the total amount of such
loan or any portion thereof (including accrued and unpaid interest) from any
payment or distribution (including a distribution occurring as a result of the
Participant's death) from the Trust Fund to which such Participant or his
Beneficiary or Beneficiaries may be entitled; provided, however, that no
deduction shall be made from such Participant's Account until the Participant is
entitled to a distribution from the Plan. In the event that the amount of any
such payment or distribution is not sufficient to repay the remaining balance of
<PAGE>
any such loan, such Participant shall be liable for and continue to make
payments on any balance still due from such Participant.
20.6 The Committee will treat a loan in default if:
(a) any scheduled payment remains unpaid more than thirty (30) days;
(b) the making or furnishing of any representation or statement to the
Plan by or on behalf of the Participant which proves to have been
false in any material respect when made or furnished;
(c) loss, theft, damage, destruction, sale or encumbrance to or of any
of the collateral, or the making of any levy seizure or attachment
thereof or thereon; or
(d) death, dissolution, insolvency, business failure, appointment of
receiver of any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceeding
under any bankruptcy or insolvency laws of, by or against the
Participant.
The Participant will have the opportunity to repay the loan, and resume
current status of the loan by repaying any missed payment plus interest. If the
loan remains in default, the Committee has the option of foreclosing on any
other security it holds. Pending final disposition of the note, the Participant
remains obligated for any unpaid principal and accrued interest.
20.7 Each loan to a Participant shall be evidenced by a promissory note
from such Participant for the amount of the loan, including interest, payable to
the order of the Trustee.
20.8 Notwithstanding anything herein to the contrary, no loan shall be
made to a Shareholder-Employee.
20.9 Any interest resulting from a Participant's loan shall be credited to
the Participant's respective Accounts from which the loan originated.
SECTION 21 - Hardship Distributions
21.1 In the discretion of the Committee in accordance with uniform
non-discriminatory principles consistently applied, the
<PAGE>
Committee, upon application and consent of an Employee, may direct the Trustee
to make a Hardship distribution to an Employee. The consent shall be obtained
within the ninety (90) day period before the Hardship distribution is made.
Under no circumstances shall a Hardship distribution exceed the aggregate total
amount of the Participant's Deferred Compensation portion in the Participant's
Elective Account as of the Valuation Date coinciding with or immediately
preceding the Hardship withdrawal request. No earnings credited for any period
after December 31, 1988 shall be distributed as part of a Hardship withdrawal.
Hardship distributions shall be deemed to be made as of the Valuation Date
coinciding with or immediately preceding the Hardship withdrawal request and the
Employee's Elective Account shall be reduced accordingly.
21.2 If an Employee receives a Hardship distribution, then (i) the
Employee may not defer any Compensation in the Plan until at least twelve (12)
months after the Employee receives the Hardship distribution, and (ii) the
Employee shall not make Elective contributions for the Employee's taxable year
immediately following the taxable year of the Hardship distribution in excess of
the applicable limits under Code Section 402(g) for the next taxable year less
the amount of such Employee's Elective Contributions for the taxable year of the
Hardship distribution.
SECTION 22 - Cash or Deferred Limitations
22.1 No Participant shall be permitted to have Elective Deferrals made
under this Plan, or any other qualified plan maintained by the Employer, during
any taxable year, in excess of the dollar limitation contained in Code Section
402(g) in effect at the beginning of such taxable year.
<PAGE>
22.2 A Participant may assign to this Plan any Excess Elective Deferrals
made during a taxable year of the Participant by notifying the Committee in
writing on or before February 15 of the amount of the Excess Elective Deferrals
to be assigned to the Plan. A Participant is deemed to notify the Committee of
any Excess Elective Deferrals that arise by taking into account only those
Elective Deferrals made to this Plan and any other plans of this Employer.
Notwithstanding any other provision of the Plan, Excess Elective
Deferrals, plus any income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose Account Excess
Elective Deferrals were assigned for the preceding year and who claims Excess
Elective Deferrals for such taxable year.
When used in this Plan, the following terms shall have the indicated
meanings:
(a) "Elective Deferrals" shall mean any Employer contributions made to
the Plan at the election of the Participant, in lieu of cash
compensation, and shall include contributions made pursuant to a
salary reduction agreement or other deferral mechanism. With
respect to any taxable year, a Participant's Elective Deferral is
the sum of all Employer contributions made on behalf of such
Participant pursuant to an election to defer under any qualified
cash or deferred arrangement (CODA) as described in Code Section
401(k), any simplified Employee pension cash or deferred
arrangement as described in Code Section 402(h)(1)(B), any
eligible deferred compensation plan under Code Section 457, any
plan as described under Code Section 501(c)(18), and any Employer
contributions made on the behalf of a Participant for the purchase
of an annuity contract under Code Section 403(b) pursuant to a
salary reduction agreement. Elective Deferrals shall not include
any deferrals properly distributed as excess annual additions.
(b) "Excess Elective Deferrals" shall mean those Elective Deferrals
that are includible in a Participant's gross income under Code
Section 402(g) to the extent
<PAGE>
such Participant's Elective Deferrals for a taxable year exceed
the dollar limitation under such Code Section. Excess Elective
Deferrals shall be treated as annual additions under the plan,
unless such amounts are distributed no later than the first April
15 following the close of the Participant's taxable year.
22.3 Excess Elective Deferrals shall be adjusted for any income or loss up
to the date of distribution. The income or loss allocable to Excess Elective
Deferrals is the sum of: (a) income or loss allocable to the Participant's
Elective Deferral account for the taxable year multiplied by a fraction, the
numerator of which is such Participant's Excess Elective Deferrals for the year
and the denominator is the Participant's Account balance attributable to
Elective Deferrals without regard to any income or loss occurring during such
taxable year; and (b) ten (10%) percent of the amount determined under (a)
multiplied by the number of whole calendar months between the end of the
Participant's taxable year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
22.4 Qualified Matching Contributions and Qualified Non-Elective
Contributions may be taken into account as Elective Deferrals for purposes of
calculating the Actual Deferral Percentages. In determining Elective Deferrals
for the purpose of the Actual Deferral Percentage test, the Employer shall
include Qualified Matching Contributions and Qualified Non-Elective
Contributions under this Plan or any other plan of the Employer, as provided by
regulations under the Code.
The amount of Qualified Matching Contributions made under the Employer
Non-Elective Contributions and Elective Contributions Section of this Plan and
taken into account as Elective
<PAGE>
Deferrals for purposes of calculating the Actual Deferral Percentage, subject to
such other requirements as may be prescribed by the Secretary of the Treasury,
shall be:
Such Qualified Matching Contributions that are needed to meet the Actual
Deferral Percentage test stated in this Cash or Deferred Limitations Section.
The amount of Qualified Non-Elective Contributions made under the Employer
Non-Elective Contributions and Elective Contributions Section of this Plan and
taken into account as Elective Deferrals for purposes of calculating the Actual
Deferral Percentages, subject to such other requirements as may be prescribed by
the Secretary of the Treasury, shall be:
Such Qualified Non-Elective Contributions that are needed to meet the
Actual Deferral Percentage test stated in this Cash or Deferred Limitations
Section.
22.5 The Actual Deferral Percentage (hereinafter "ADP") for Participants
who are Highly Compensated Employees for each Plan Year and the ADP for
Participants who are Non-Highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(a) The ADP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ADP for Participants who are
Non-Highly Compensated Employees for the same Plan Year multiplied
by 1.25; or
(b) The ADP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ADP for Participants who are
Non-Highly Compensated Employees for the same Plan Year multiplied
by 2.0, provided that the ADP for Participants who are Highly
Compensated Employees does not exceed the ADP for Participants who
are Non-Highly Compensated Employees by more than two (2)
percentage points.
The following special rules shall apply:
(a) The ADP for any Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have Elective Deferrals
(and Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals for
purposes of the ADP test) allocated to his accounts under two or
more arrangements described
<PAGE>
in Code Section 401(k), that are maintained by the Employer, shall
be determined as if such Elective Deferrals (and, if applicable,
such Qualified Non-Elective Contributions or Qualified Matching
Contributions, or both) were made under a single arrangement. If a
Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
(b) In the event that this Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4), or 410(b) only if aggregated with one
or more other plans, or if one or more other plans satisfy the
requirements of such Code Sections only if aggregated with this
Plan, then this Section shall be applied by determining the ADP of
Employees as if all such plans were a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated in
order to satisfy Code Section 401(k) only if they have the same
Plan Year.
(c) For purposes of determining the ADP of a Participant who is a Five
Percent Owner or one of the ten most highly-paid Highly
Compensated Employees, the Elective Deferrals (and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP
test) and Compensation of such Participant shall include the
Elective Deferrals (and, if applicable, Qualified Non-Elective
Contributions and Qualified Matching Contributions, or both) and
Compensation for the Plan Year of Family Members (as defined in
Code Section 414(q)(6)). Family Members, with respect to such
Highly Compensated Employees, shall be disregarded as separate
Employees in determining the ADP both for Participants who are
Non-Highly Compensated Employees and for Participants who are
Highly Compensated Employees.
(d) For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-Elective Contributions and Qualified Matching
Contributions must be made before the last day of the twelve-month
period immediately following the Plan Year to which contributions
relate.
<PAGE>
(e) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified
Non-Elective Contributions or Qualified Matching Contributions, or
both, used in such test. Qualified Non-Elective Contributions and
Qualified Matching Contributions may only be used in the test if
they satisfy Regulation 1.401(k)-1(b)(3).
(f) The determination and treatment of the ADP amounts of any
Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
When used in this Plan, the following terms shall have the indicated
meaning:
(a) "Actual Deferral Percentage" shall mean, for a specified group of
Participants for a Plan Year, the average of the ratios
(calculated separately for each Participant in such group) of (i)
the amount of Employer contributions actually paid over to the
Trust on behalf of such Participant for the Plan Year to (ii) the
Participant's Compensation for such Plan Year. Employer
contributions on behalf of any Participant shall include: (1) any
Elective Deferrals made pursuant to the Participant's deferral
election (including Excess Elective Deferrals of Highly
Compensated Employees), but excluding (a) Excess Elective
Deferrals of Non-highly Compensated Employees that arise solely
from Elective Deferrals made under the plan or plans of this
Employer and (b) Elective Deferrals that are taken into account in
the Contribution Percentage test (provided the ADP test is
satisfied both with and without exclusion of these Elective
Deferrals); and (2) at the election of the Employer, Qualified
Non-Elective Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee
who would be a Participant but for the failure to make Elective
Deferrals shall be treated as a Participant on whose behalf no
Elective Deferrals are made.
22.6 Notwithstanding any other provision of this Plan, Excess
Contributions, plus any income and minus any loss allocable thereto, shall be
distributed no later than the last day of each Plan Year to Participants to
whose accounts such Excess Contributions were allocated for the preceding Plan
Year. Excess Contributions are allocated to the Highly Compensated Employees
with the largest amounts of Employer contributions taken into
<PAGE>
account in calculating the ADP test for the Plan Year in which the excess arose,
beginning with the Highly Compensated Employee with the largest amount of such
Employer contributions and continuing in descending order until all the Excess
Contributions have been allocated. For purposes of the preceding sentence, the
"largest amount" is determined after distribution of any Excess Contributions.
If such excess amounts are distributed more than 2 1/2 months after the last day
of the Plan Year in which such excess amounts arose, a ten (10%) percent excise
tax will be imposed on the Employer maintaining the Plan with respect to such
amounts.
22.7 Excess Contributions (including the amounts recharacterized if
otherwise allowed herein) shall be treated as annual additions under this Plan.
22.8 Excess Contributions shall be adjusted for any income or loss up to
the date of distribution. The income or loss allocable to Excess Contributions
is the sum of: (a) income or loss allocable to the Participant's Elective
Deferral account (and, if applicable, the Qualified Non-Elective Contribution
account or the Qualified Matching Contributions account or both) for the Plan
Year multiplied by a fraction, the numerator of which is such Participant's
Excess Contributions for the year and the denominator is the Participant's
Account balance attributable to Elective Deferrals (and Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to any income or loss
occurring during such Plan Year; and (b) ten (10%) percent of the amount
determined under (a) multiplied by the number of whole calendar months between
the end of the Plan Year
<PAGE>
and the date of distribution, counting the month of distribution if distribution
occurs after the 15th of such month.
Excess Contributions shall be distributed from the Participant's Elective
Deferral account and Qualified Matching Contribution account (if applicable) in
proportion to the Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the Plan Year. Excess
Contributions shall be distributed from the Participant's Qualified Non-Elective
Contribution account only to the extent that such Excess Contributions exceed
the balance in the Participant's Elective Deferral account and Qualified
Matching Contribution account. Excess Contributions shall be distributed to
Participants who are subject to the family member aggregation rules of Code
Section 414(q)(6) among the family members in proportion to the Elective
Contribution of each family member that is combined to determine the Actual
Deferral Percentage in accordance with Treasury regulations.
Excess Contributions shall be reduced by the amount of excess Elective
Deferrals already distributed.
When used in this Plan, the following terms shall have the indicated
meanings:
(a) "Excess Contribution" shall mean, with respect to any Plan Year,
the excess of:
(i) The aggregate amount of Employer contributions actually
taken into account in computing the ADP of Highly
Compensated Employees for such Plan Year, over
(ii) The maximum amount of such contributions permitted by the
ADP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of the ADPs,
beginning with the highest of such percentages).
<PAGE>
22.9 If this Plan and Trust otherwise specifically permit all Participants
to make voluntary non-deductible contributions, then a Participant may treat his
Excess Contributions as an amount distributed to the Participant and then
contributed by the Participant to the Plan. Recharacterized amounts will remain
nonforfeitable and subject to the same distribution requirements as Elective
Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee
to the extent that such amount in combination with other Employee Contributions
made by that Employee would exceed any stated limit under the Plan on Employee
Contributions.
Recharacterization must occur no later than two and one-half months after
the last day of the Plan Year in which such Excess Contributions arose and is
deemed to occur no earlier than the date the last Highly Compensated Employee is
informed in writing of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Participant for the Participant's
tax year in which the Participant would have received them in cash. Under no
circumstances shall recharacterization be permitted if the Plan and Trust does
not otherwise specifically permit voluntary non-deductible contributions by all
Participants.
22.10 The Employer may make Qualified Matching Contributions to the
Plan. "Qualified Matching Contributions" shall mean Matching Contributions which
are subject to the distribution and nonforfeitability requirements under Code
Section 401(k) when made. Further, after December 31, 1988 Qualified Matching
Contributions may not be distributed to a Participant or Beneficiary because of
Hardship, if Hardship distributions are otherwise specifically permitted in this
Plan and Trust.
22.11 The Actual Contribution Percentage (hereinafter "ACP") for a Plan
Year for Participants who are Highly Compensated Employees for each Plan Year
and the prior Plan Year's ACP for Participants who were Non-Highly Compensated
Employees for the prior Plan Year must satisfy one of the following tests:
(a) The ACP for a Plan Year for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the prior
Plan Year's ACP for Participants who were Non-Highly Compensated
Employees for the prior Plan Year multiplied by 1.25; or
(b) The ACP for a Plan Year for Participants who are Highly
Compensated Employees for the Plan Year shall not exceed the prior
Plan Year's ACP for Participants who were Non-Highly Compensated
Employees for the prior Plan Year multiplied by two (2), provided
that the ACP for Participants who are Highly Compensated Employees
exceed the ACP for Participants who were Non-Highly Compensated
Employees in the prior Plan Year by more than two (2) percentage
points.
For the first Plan Year this Plan permits any Participant to make Employee
Contributions, provides for Matching Contributions or both, and this Plan is not
a successor plan, for purposes of the foregoing tests, the prior Plan Year's
Non-highly Compensated Employees' ACP shall be three (3%) percent unless the
Employer has elected to use the Plan Year's ACP for these Participants.
<PAGE>
If elected by the Employer the ACP tests in (a) and (b) above, will be
applied by comparing the current Plan Year's ACP for Participants who are Highly
Compensated Employees for each Plan Year with the current Plan Year's ACP for
Participants who are Non-Highly Compensated Employees. Once made, this election
can only be undone if the Plan meets the requirements for changing to prior year
testing set forth in Notice 98-1 (or superseding guidance).
The following special rules shall apply:
(a) A Participant is a Highly Compensated Employee for a particular
Plan Year if he or she meets the definition of a Highly
Compensated Employee in effect for that Plan Year. Similarly, a
Participant is a Non-highly Compensated Employee for a particular
Plan Year if he or she does not meet the definition of a Highly
Compensated Employee in effect for that Plan Year.
(b) If one or more Highly Compensated Employees participate in both a
CODA and a plan subject to the ACP test maintained by the Employer
(whether or not one or more plans exist) and the sum of the ADP
and ACP of those Highly Compensated Employees subject to either or
both tests exceeds the Aggregate Limit, then the ADP of those
Highly Compensated Employees who also participate in a CODA will
be reduced in the manner described in this Plan so that the limit
is not exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts is reduced shall be
treated as an Excess Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections
required to meet the ADP and ACP tests and are deemed to be the
maximum permitted under such tests for the Plan Year. Multiple use
does not occur if both the ADP and ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP and ACP of
the Non-Highly Compensated Employees.
(c) For purposes of this Section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is
eligible to have Contribution Percentage Amounts allocated to his
account under two or more plans described in Code Section 401(a),
or arrangements described in Code Section 401(k) that are
maintained by the Employer, shall be determined as if the total of
such Contribution Percentage Amounts was under each plan.
<PAGE>
If a Highly Compensated Employee made participates in two or more
cash or deferred arrangements that have different plan years, all
cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
(d) In the event that this Plan satisfies the requirements of Code
Sections 401(m), 401(a)(4) or 410(b) only if aggregated with one
or more other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated with
this Plan, then this Section shall be applied by determining the
Contribution Percentage of Employees as if all such plans were a
single plan. Any adjustments to the Non-Highly Compensated
Employee ACP for the prior Plan Year will be made in accordance
with Notice 98-1 and any superseding guidance, unless the Employer
has elected to use the current year testing method. Plans may be
aggregated in order to satisfy Code Section 401(m) only if they
have the same Plan Year and use the same ACP testing method.
(e) For purposes of determining the Contribution Percentage of a
Participant who is a Five-Percent Owner or one of the ten most
highly-paid Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such participant shall
include the Contribution Percentage Amounts and Compensation for
the Plan Year of Family Members (as defined in Code Section
414(q)(6)). Family Members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Participants who
are Non-Highly Compensated Employees and for Participants who are
Highly Compensated Employees.
(f) For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in the
Plan Year in which contributed to the Trust. Matching
Contributions and Qualified Non-Elective Contributions will be
considered made for a Plan Year if made no later than the end of
the twelve (12) month period beginning on the day after the close
of the Plan Year.
(g) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified
Non-Elective Contributions or Elective Contributions, or both,
used in such test. Qualified Non-Elective Contributions and
Elective Contributions may only be used in the test if they
satisfy Regulation 1.401(m)-1(b)(2).
(h) The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such
<PAGE>
other requirements as may be prescribed by the Secretary of the
Treasury.
When used in this Plan, the following terms shall have the indicated
meanings:
(a) "Aggregate Limit" shall mean the sum of (i) 125 percent of the
greater of the ADP of the Non-Highly Compensated Employees for the
prior Plan Year or the ACP of Nonhighly Compensated Employees
under the Plan subject to Code Section 401(m) for the Plan Year
beginning with or within the prior Plan Year of the CODA and (ii)
the lesser of 200% or two plus the lesser of such ADP or ACP.
"Lesser" is substituted for "greater" in "(i)", above, and
"greater" is substituted for "lesser" after "2 plus the" in "(ii)"
if it would result in a larger Aggregate Limit. If the Employer
has elected to use the current year testing method, then, in
calculating the Aggregate Limit for particular Plan Year, the
Non-highly Compensated Employees' ADP and ACP for that Plan Year,
instead of for the prior Plan Year, is used.
(b) "Average Contribution Percentage" shall mean the average of the
Contribution Percentages of the Eligible Participants in a group.
(c) "Contribution Percentage" shall mean the ratio (expressed as a
percentage) of the Participant's Contribution Percentage Amounts
to the Participant's Compensation for the Plan Year (whether or
not the Employee was a Participant for the entire Plan Year).
(d) "Contribution Percentage Amounts" shall mean the sum of the
Employee Contributions, Matching Contributions, and Qualified
Matching Contributions (to the extent not taken into account for
purposes of the ADP test) made under the Plan on behalf of the
Participant for the Plan Year. Such Contribution Percentage
Amounts shall include forfeitures of Excess Aggregate
Contributions or Matching Contributions allocated to the
Participant's account which shall be taken into account in the
year in which such forfeiture is allocated. The Employer may
include Qualified Non-Elective Contributions in the Contribution
Percentage Amounts. The Employer also may elect to use Elective
Deferrals in the Contribution Percentage Amounts so long as the
ADP test is met before the Elective Deferrals are used in the ACP
test and continues to be met following the exclusion of those
Elective Deferrals that are used to meet the ACP test.
(e) "Eligible Participant" shall mean any Employee who is eligible to
make an Employee Contribution, or an Elective Deferral (if the
Employer takes such
<PAGE>
contributions into account in the calculation of the Contribution
Percentage), or to receive a Matching Contribution (including
forfeitures) or a Qualified Matching Contribution. If an Employee
Contribution is required as a condition of participation in the
Plan, any Employee who would be a Participant in the Plan if such
Employee made such a contribution shall be treated as an eligible
Participant on behalf of whom no Employee Contributions are made.
(f) "Employee Contribution" shall mean any contribution made to the
Plan by or on behalf of a Participant that is included in the
Participant's gross income in the year in which made and that is
maintained under a separate account to which earnings and losses
are allocated.
(g) "Matching Contribution" shall mean an Employer contribution made
to this or any other defined contribution plan on behalf of a
Participant on account of an Employee Contribution made by such
Participant, or on account of a Participant's Elective Deferral,
under a plan maintained by the Employer.
22.12 Notwithstanding any other provision of this Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed no later than the
last day of each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions are allocated to the Highly Compensated Employees with
the largest Contribution Percentage Amounts taken into account in calculating
the ACP test for the Plan Year in which the excess arose, beginning with the
Highly Compensated Employee with the largest amount of such Contribution
Percentage Amounts and continuing in descending order until all the Excess
Aggregate Contributions have been allocated. For purposes of the preceding
sentence, the "largest amount" is determined after distribution of any Excess
Aggregate Contributions. If such Excess Aggregate Contributions are distributed
more than 2 1/2
<PAGE>
months after the last day of the Plan Year in which such excess amounts arose, a
ten (10%) percent excise tax will be imposed on the Employer maintaining the
Plan with respect to those amounts. Excess Aggregate Contributions shall be
treated as annual additions under the Plan.
Excess Aggregate Contributions shall be adjusted for any income or loss up
to the date of distributions. The income or loss allocable to Excess Aggregate
Contributions allocated to each Participant is the sum of: (a) income or loss
allocable to the Participant's Employee Contribution account, Matching
Contribution account (if any, and if all amounts therein are not used in the ADP
test) and, if applicable, qualified Non-Elective Contribution account and
Elective Deferral account for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Aggregate Contributions for the
year and the denominator is the Participant's account balance(s) attributable to
Contribution Percentage Amounts without regard to any income or loss occurring
during such Plan Year; and (b) ten (10%) percent of the amount determined under
(a) multiplied by the number of whole calendar months between the end of the
Plan Year and the date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
Forfeitures of Excess Aggregate Contributions shall be applied to reduce
Employer contributions.
Excess Aggregate Contributions shall be forfeited, if forfeitable or
distributed on a pro-rata basis from the Participant's Employee Contribution
account, Matching Contribution account, and Qualified Matching Contribution
account (and, if
<PAGE>
applicable, the Participant's Qualified Non-Elective Contribution account or
Elective Deferral account, or both).
Matching Contributions (including Qualified Matching Contributions) shall
be forfeited if the contributions to which they relate are Excess Elective
Deferrals or Excess Contributions and such forfeiture shall be applied to reduce
Employer matching contributions.
When used in this Plan, the following terms shall have the indicated
meanings:
(a) "Excess Aggregate Contributions" shall mean, with respect to any
plan Year, the excess of:
(i) The aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over
(ii) The maximum Contribution Percentage Amounts permitted by the
ACP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining Excess Elective
Deferrals and then determining Excess Contributions.
22.13 In lieu of distributing Excess Contributions, or Excess Aggregate
Contributions, the Employer may make Qualified Non-Elective Contributions on
behalf of Non-Highly Compensated Employees that are sufficient to satisfy either
the Actual Deferral Percentage test or the Average Contribution Percentage test,
or both, pursuant to regulations under the Code. "Qualified Non-Elective
Contributions" shall mean contributions (other than Matching Contributions or
Qualified Matching Contributions) made by the Employer and allocated to
Participants' Accounts that the
<PAGE>
Participants may not elect to receive in cash until distributed from the Plan;
that are nonforfeitable when made; and that are distributable only in accordance
with the distribution provisions that are applicable to Elective Deferrals and
Qualified Matching Contributions. Further, after December 31, 1988 Qualified
Non-Elective Contributions may not be distributed to a Participant or
Beneficiary because of Hardship, if Hardship distributions are otherwise
specifically permitted in this Plan and Trust.
22.14 The Participant's Accrued Benefit derived from Elective Deferrals,
Qualified Non-Elective Contributions, Employee Contributions, and Qualified
Matching Contributions is nonforfeitable. Separate accounts for Elective
Deferrals, Qualified Non-Elective Contributions, Employees Contributions,
Matching Contributions, and Qualified Matching Contributions will be maintained
for each Participant. Each account will be credited with the applicable
contributions and earnings thereon.
22.15 Elective Deferrals, Qualified Non-Elective Contributions, and
Qualified Matching Contributions, and income allocable to each are not
distributable to a Participant or his Beneficiary, in accordance with such
Participant's or Beneficiary's selection, earlier than upon separation from
service, death, or disability. Such amounts may also be distributed upon:
(a) Termination of the plan without the establishment of another
defined contribution plan.
(b) The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Code
Section 409(d)(2)) used in a trade or business of such corporation
if such corporation continues to maintain this Plan after the
disposition, but only with respect to Employees who continue
employment with the corporation acquiring such assets.
<PAGE>
(c) The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of Code
Section 401(d)(3)) if such corporation continues to maintain this
Plan, but only with respect to Employees who continue employment
with such subsidiary.
<PAGE>
(d) The attainment of age 59 1/2 in the case of a profit-sharing plan
if otherwise specifically permitted in this Plan and Trust.
(e) The Hardship of the Participant if Hardship distributions are
otherwise specifically permitted in this Plan and Trust; provided,
however, that after December 31, 1988 only Elective Deferrals (and
earnings thereon accrued as of December 31, 1988) may be
distributed because of Hardship.
SECTION 23 - Investment Direction By Participant
23.1 A Participant shall direct the Trustee to invest the total amount
credited to his Account in such investments as shall be established by the
Committee from time to time. The Committee may establish minimum and/or maximum
limitations with regard to the amount a Participant may invest in an investment.
Such investment direction shall be made to the Trustee in such manner as
specified by the Committee. At such times as the Committee shall permit (but not
less than once each Plan Year), a Participant shall be permitted to change his
investment direction and transfer Account balances between investments pursuant
to the terms and conditions of this Investment Direction By Participant Section.
The Trustee shall carry out the Participant's investment direction as soon as
reasonably practical. The Committee shall have the sole authority for
establishing the investments.
23.2 In the event a Participant does not make a subsequent investment
direction of his Accounts then the prior investment direction shall continue to
apply, unless the Committee shall in a non-discriminatory manner determine
otherwise.
23.3 Any investment direction made by a Participant shall remain in effect
until another written direction has been made by the Participant, unless the
Committee shall in a non-
<PAGE>
discriminatory manner determine otherwise. The Participant shall be responsible
for his investment directions and the Committee, the Trustee and the Employer
shall be relieved of any liability of any kind therefor. Any investment
direction made by a Participant shall apply to present or future contributions,
earnings or losses in such fund until the investment direction is changed as
provided herein, unless the Committee in a non-discriminatory manner determines
otherwise. The Participant's directed investment Accounts shall not share in any
earnings, gains, profits or losses of the Trust Fund, but instead any earnings,
gains, profits or losses shall be credited or debited to the directed investment
Accounts as appropriate to properly reflect such directed investments.
23.4 All investments in the Affiliated Employer Stock Fund shall be made
by the Trustee by purchasing Affiliated Employer Stock from the Affiliated
Employer or in the open market at a price per share equal to the prevailing
market price at the time of the purchase, as determined by the Trustee, and if
such Affiliated Employer Stock is acquired from any party in interest (within
the meaning of Section 3(14) of ERISA), without payment of any commission. If
any options, rights, or warrants shall be granted or issued with respect to any
Affiliated Employer Stock held in the Affiliated Employer Stock Fund, the
Trustee shall exercise or sell such options, rights, or warrants in the open
market, as directed by the Participants according to their pro-rata investment
in the Affiliated Employer Stock Fund.
Voting rights with respect to any Registration-Type Securities held in
trust shall be exercised by the Trustee, subject to timely direction by a
Participant who may direct the Trustee on
<PAGE>
how to vote shares of Affiliated Employer Stock in his Accounts on any matter
submitted for a vote to the owners of the Affiliated Employer.
In the event that any Registration-Type Securities held in trust have not
been allocated to the Accounts of the Participants at the time of voting or
Registration-Type Securities held in trust have been allocated to the Accounts
of the Participants at the time of voting but the Participants have failed to
direct on how to vote such shares, the Trustee shall vote the shares.
Notwithstanding the directions by a Participant, the Trustee may, pursuant
to the written directions of the Committee, limit the amount that may be used to
acquire or sell Affiliated Employer Stock so as to maintain a prudent investment
policy for the Plan.
To the extent that a Participant exercises control over the assets by
directing them toward the purchase of Affiliated Employer Stock, neither the
Committee, the Trustee nor any other fiduciary shall be liable for any loss or
any breach of fiduciary duties as a result of the Participant's direction to
invest such funds in Affiliated Employer Stock, other than the responsibilities
of acquiring, holding, and disposing of such qualifying Affiliated Employer
Stock as directed by the Participant or a Beneficiary.
If a Participant directs investment of any portion of his Account in
Affiliated Employer Stock, any dividends paid on such Affiliated Employer Stock
shall either be invested in additional Affiliated Employer Stock or under
uniform rules which the Committee may establish from time to time.
<PAGE>
For purposes of this Plan the following definitions shall apply:
(a) "Registration-Type Securities" shall mean the shares of common
stock of the Affiliated Employer that are either (i) a class of
securities required to be registered under section 12 of the
Securities Exchange Act of 1934 or (ii) a class of securities
which would be required to be so registered except for the
exemption from registration provided in subsection (9)(2)(H) of
such section 12.
(b) "Affiliated Employer" shall mean Carolina Power and Light Company.
(c) "Affiliated Employer Stock" shall mean Carolina Power and Light
Company common stock.
(d) "Affiliated Employer Stock Fund" shall mean the investment fund
consisting of the common stock of the Carolina Power and Light
Company.
SECTION 24 - Initial Qualification
24.1 This Agreement is based upon the condition that it shall be approved
and qualified under the applicable provisions of the Internal Revenue Code with
respect to qualified employee retirement plans and trusts. Notwithstanding any
provision in this Agreement to the contrary, no Participant or Beneficiary shall
have any right or claim to any asset of the Trust or to any benefit under this
Plan before the Internal Revenue Service and Department of Labor determines that
the Plan and Trust qualify under the provisions of Code Section 401(a), as
amended by the Employee Retirement Income Security Act of 1974, or any statute
of similar import. Therefore, if the Plan and/or Trust fails to qualify
initially, notwithstanding any other provision herein to the contrary, the
Employer shall be entitled to recover contributions, adjusted for earnings,
gains and losses resulting from investments, made hereunder prior to such
initial determination by Internal Revenue Service, at which time the Trust shall
termi-
<PAGE>
nate and the Trustee shall be discharged from all obligations under the Trust.
Return of such contribution shall be made within one year after the date of
denial of qualification of the Plan.
SECTION 25 - Withdrawal
25.1 After a Participant or Inactive Participant attains age fifty-nine
and one-half (59 1/2), the Participant or Inactive Participant may withdraw no
more than twice each Plan Year all or any part of his Elective Account. The
minimum withdrawal shall be the lesser of $100 or the Participant's Elective
account. The amount of the Elective Account balance shall be determined as of
date of withdrawal. Any distribution shall be subject to the Annuity
Requirements Section.
IN WITNESS WHEREOF, the Employer, by its duly authorized officer, and the
Trustee, have caused this Plan and Trust Agreement to be executed as of the day
and year first above written.
Witnesses: INTERPATH COMMUNICATIONS, INC.
By:
- --------------------------- -------------------------------
Its:
- --------------------------- ------------------------------
Witnesses:
- ----------------------------- ---------------------------------
KAREN A. McKAY, Trustee
- ----------------------------- -----------------------------------
L. LAURENCE LEVISON, Trustee
- ----------------------------- -----------------------------------
PETER D. BORBELY, Trustee
EXHIBIT 5
HUNTON & WILLIAMS
Post Office Box 109
Raleigh, North Carolina 27602
January 15, 1999
Carolina Power & Light Company
411 Fayetteville Street
Raleigh, North Carolina 27601-6111
Registration Statement on Form S-8
Relating to 500,000 Shares of Common Stock to be Issued or Sold
Pursuant to the Interpath Communications, Inc. 401(k) Retirement Savings Plan
-----------------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Carolina Power & Light Company, a North
Carolina corporation (the "Company"), in connection with the registration by the
Company of 500,000 shares of its common stock (the "Securities") to be issued or
sold pursuant to the Interpath Communications, Inc. 401(k) Retirement Savings
Plan (the "Plan"), as set forth in the Registration Statement on Form S-8 (the
"Registration Statement") that is being filed on the date hereof with the
Securities and Exchange Commission (the "Commission") by the Company pursuant to
the Securities Act of 1933, as amended. The Securities are to be issued or sold
from time to time as set forth in the Registration Statement, the Plan and any
amendments or supplements thereto.
In rendering this opinion, we have relied upon, among other things, our
examination of such records of the Company and certificates of its officers and
of public officials as we have deemed necessary.
<PAGE>
Based upon the foregoing and the further qualifications stated below, we
are of the opinion that:
1. The Company is duly incorporated, validly existing and in good standing
under the laws of the State of North Carolina; and
2. In the case of newly issued Securities, when (a) such Securities have
been issued or sold upon the terms and conditions set forth in the Registration
Statement and the Plan and (b) the North Carolina Utilities Commission and the
South Carolina Public Service Commission have entered orders authorizing the
issuance and sale of such Securities, then the Securities will be legally
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement.
Very truly yours,
/s/ Hunton & Williams
--------------------------
Hunton & Williams
EXHIBIT NO. 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Carolina Power & Light Company on Form S-8 of our report dated February 9, 1998,
appearing in the Annual Report on Form 10-K of Carolina Power & Light Company
for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Raleigh, North Carolina
January 13, 1999
