<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended.............June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from............to...................
Commission file number...................................1-3268
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 14-0555980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
284 SOUTH AVENUE, POUGHKEEPSIE NEW YORK 12601-4879
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code (914) 452-2000
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable date.
Common stock, par value $5.00 per share; 17,092,071 shares
outstanding as of June 30, 1994.
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1994
INDEX
PART I - FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements
Consolidated Statement of Income -
Three Months Ended June 30, 1994 and 1993 1-2
Consolidated Statement of Income -
Six Months Ended June 30, 1994 and 1993 3-4
Consolidated Balance Sheet - June 30, 1994
and December 31, 1993 5-6
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1994 and 1993 7-8
Notes to Consolidated Financial Statements 9-10
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10-17
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 18-19
Item 5 - Other Information 19-23
Item 6 - Exhibits and Reports on Form 8-K 23-24
Signatures 24
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the 3 Months Ended
June 30,
1994 1993
(Thousands of Dollars)
Operating Revenues
Electric $ 91,680 $ 96,496
Gas 23,228 19,873
Total - own territory 114,908 116,369
Revenues from electric sales
to other utilities 2,306 1,375
117,214 117,744
Operating Expenses
Operation:
Fuel used in electric generation 14,295 13,396
Purchased electricity 11,441 14,216
Purchased natural gas 12,115 8,814
Other expenses of operation 24,855 24,281
Maintenance 9,174 8,078
Depreciation and amortization 10,118 10,392
Taxes, other than income tax 15,916 15,582
Federal income tax 1,372 3,653
Deferred income tax 3,428 2,078
102,714 100,490
Operating Income 14,500 17,254
Other Income and Deductions
Allowance for equity funds
used during construction 224 151
Federal income tax 433 41
Deferred income tax (169) 65
Other - net 1,890 1,570
2,378 1,827
Income Before Interest Charges 16,878 19,081
Interest Charges
Interest on mortgage bonds 5,231 5,661
Interest on other long-term debt 1,923 1,573
Other interest 361 234
Allowance for borrowed funds
used during construction (139) (142)
Amortization of premium and
expense on debt 574 543
7,950 7,869
-1-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the 3 Months Ended
June 30,
1994 1993
(Thousands of Dollars)
Net Income 8,928 11,212
Dividends Declared on
Preferred Stock 1,282 1,327
Income Available for Common Stock 7,646 9,885
Dividends Declared on
Common Stock 8,888 8,674
Balance Retained in the Business $ (1,242) $ 1,211
Common Stock:
Average Shares Outstanding (000s) 17,063 16,821
Earnings Per Share $ .45 $ .59
Dividends Declared $ .52 $.515
See Notes to Consolidated Financial Statements.
-2-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the 6 Months Ended
June 30,
1994 1993
(Thousands of Dollars)
Operating Revenues
Electric $ 202,285 $ 206,277
Gas 70,049 59,987
Total - own territory 272,334 266,264
Revenues from electric sales
to other utilities 7,716 4,852
280,050 271,116
Operating Expenses
Operation:
Fuel used in electric generation 37,542 36,568
Purchased electricity 21,794 23,710
Purchased natural gas 39,166 32,229
Other expenses of operation 50,264 48,145
Maintenance 16,989 16,688
Depreciation and amortization 20,237 20,784
Taxes, other than income tax 34,011 32,650
Federal income tax 14,575 13,423
Deferred income tax 2,798 2,954
237,376 227,151
Operating Income 42,674 43,965
Other Income and Deductions
Allowance for equity funds
used during construction 426 298
Federal income tax 831 300
Deferred income tax (93) 183
Other - net 3,110 2,308
4,274 3,089
Income Before Interest Charges 46,948 47,054
Interest Charges
Interest on mortgage bonds 10,516 11,322
Interest on other long-term debt 3,719 3,076
Interest on short-term debt - 13
Other interest 807 533
Allowance for borrowed funds
used during construction (264) (279)
Amortization of premium and
expense on debt 1,175 1,091
15,953 15,756
-3-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF INCOME
For the 6 Months Ended
June 30,
1994 1993
(Thousands of Dollars)
Net Income 30,995 31,298
Dividends Declared on
Preferred Stock 2,563 2,699
Income Available for Common Stock 28,432 28,599
Dividends Declared on
Common Stock 17,652 17,066
Balance Retained in the Business $ 10,780 $ 11,533
Common Stock:
Average Shares Outstanding (000s) 17,028 16,548
Earnings Per Share $ 1.67 $ 1.73
Dividends Declared $1.035 $1.015
See Notes to Consolidated Financial Statements.
-4-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
June 30, 1994 December 31, 1993
(Thousands of Dollars)
ASSETS
Utility Plant
Electric $1,092,425 $1,083,491
Gas 129,274 128,093
Common 81,154 80,485
Nuclear fuel 28,196 28,199
1,331,049 1,320,268
Less: Accumulated depreciation 443,624 427,504
Nuclear fuel amortization 22,120 20,646
865,305 872,118
Construction work in progress 51,972 42,741
917,277 914,859
Other Property and
Investments 10,240 8,465
Current Assets
Cash and temporary cash
investments 55,789 27,172
Special deposits 582 458
Accounts receivable from
customers-net 49,288 46,452
Accrued unbilled utility
revenues 10,307 16,931
Other receivables 2,342 2,255
Materials and supplies, at
average cost 30,571 35,417
Prepaid taxes and other
prepayments 12,033 10,910
160,912 139,595
Deferred Charges
Income taxes recoverable 71,692 71,121
Deferred finance charges
approved for amortization 37,296 37,868
Deferred finance charges -
Nine Mile 2 Plant 35,181 35,181
Unamortized debt expense 11,600 12,707
Deferred energy efficiency
costs 9,647 10,316
Deferred vacation 3,888 3,643
Other 23,006 30,485
192,310 201,321
Accumulated Deferred Income Tax 63,514 63,995
$1,344,253 $1,328,235
See Notes to Consolidated Financial Statements.
-5-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED BALANCE SHEET
June 30, 1994 December 31, 1993
(Thousands of Dollars)
LIABILITIES
Capitalization
Common Stock Equity
Common stock, 30,000,000
authorized; shares out-
standing ($5 par value):
1994 - 17,092,071
1993 - 16,953,147 $ 85,460 $ 84,766
Paid-in capital 274,216 270,848
Retained earnings 79,803 69,023
Capital stock expense (6,791) (6,791)
Unrealized gain on investments 793 -
433,481 417,846
Cumulative Preferred Stock
Not subject to mandatory
redemption 46,030 46,030
Subject to mandatory
redemption 35,000 35,000
81,030 81,030
Long-term Debt 391,777 391,810
906,288 890,686
Current Liabilities
Current maturities
of long-term debt 51,031 51,019
Accounts payable 20,829 28,554
Accrued taxes 7,785 249
Accrued interest 6,530 6,361
Dividends payable 10,169 9,906
Accrued vacation 4,081 3,836
Customer deposits 3,491 3,452
Other 5,459 4,716
109,375 108,093
Deferred Credits and Other
Liabilities
Income taxes refundable 28,817 28,935
Deferred finance charges -
Nine Mile 2 Plant 35,181 35,181
Deferred finance charges approved
for amortization 2,250 5,250
Accrued pension costs 10,719 11,733
Deferred unbilled gas revenues 738 5,814
Deferred Nine Mile 2 Plant
litigation proceeds 2,227 3,695
Other 13,356 7,069
93,288 97,677
Accumulated Deferred Income Tax 235,302 231,779
$1,344,253 $1,328,235
See Notes to Consolidated Financial Statements.
-6-
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 Months Ended
June 30,
1994 1993
(Thousands of Dollars)
Operating Activities
Net Income......................... $30,995 $31,298
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, amortization and
nuclear fuel amortization....... 22,352 23,303
Deferred income taxes, net....... 2,891 2,771
Allowance for equity funds used
during construction............. (426) (298)
Nine Mile 2 Plant deferred
finance charges, net............ (2,428) (1,121)
Provision for uncollectibles..... 1,586 1,500
Accrued pension costs............ (1,014) (1,281)
Gain on sale of long-term
investments..................... - (670)
Deferred gas costs............... 6,075 1,196
Other - net...................... 2,536 3,943
Changes in current assets and
liabilities, net:
Accounts receivable and unbilled
utility revenues................ 2,115 5,645
Materials and supplies........... 4,846 3,752
Special deposits, prepaid taxes
and other prepayments........... (1,247) (1,980)
Accounts payable................. (7,725) (8,726)
Accrued taxes and interest....... 7,705 3,748
Other current liabilities........ 1,027 (413)
Net cash provided by operating
activities........................ 69,288 62,667
Investing Activities
Additions to plant................. (23,305) (24,970)
Allowance for equity funds used
during construction............... 426 298
Net additions to plant............. (22,879) (24,672)
Investment activity of
subsidiaries...................... 50 (407)
Plant retirements, cost of removal
and other......................... (1,393) (911)
Nine Mile 2 Plant decommissioning
trust fund........................ (436) (420)
Proceeds from sale of long-term
investments....................... - 2,212
Net cash used in investing
activities........................ (24,658) (24,198)
-7-<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the 6 Months Ended
June 30,
1994 1993
(Thousands of Dollars)
Financing Activities
Proceeds from issuance of:
Long-term debt................. - 973
Common stock................... 4,062 26,463
Net repayments of short-term debt. - (15,000)
Retirement and redemption of
long-term debt and preferred
stock........................... (80) (1,608)
Dividends paid on preferred and
common stock.................... (19,952) (19,138)
Issuance and redemption costs.... (43) (321)
Net cash used in financing
activities....................... (16,013) (8,631)
Net change in Cash and Cash
Equivalents......................... 28,617 29,838
Cash and Cash Equivalents -
Beginning Year...................... 27,172 11,258
Cash and Cash Equivalents -
End of Period....................... $55,789 $41,096
Supplemental Disclosure of
Cash Flow Information
Interest paid (net of amounts
capitalized)..................... $14,354 $14,401
Federal income tax paid........... 5,900 5,900
See Notes to Consolidated Financial Statements.
-8-
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
Notes to Consolidated Financial Statements
1. General
The accompanying consolidated financial statements of Central
Hudson Gas & Electric Corporation (herein the Registrant or the
Company) are unaudited but, in the opinion of management, reflect
adjustments (which include only normal recurring adjustments)
necessary for a fair statement of the results for the interim
periods presented. These condensed unaudited quarterly
consolidated financial statements do not contain the detail or
footnote disclosure concerning accounting policies and other
matters which would be included in annual consolidated financial
statements and, accordingly, should be read in conjunction with the
audited consolidated financial statements (including the notes
thereto) included in the Company's Annual Report, on Form 10-K, for
the year ended December 31, 1993. Due to the seasonal nature of
the Company's operations, financial results for interim periods are
not necessarily indicative of trends for a twelve-month period.
2. Postemployment Benefits
Effective January 1, 1994, the Company adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" (SFAS 112) issued by the Financial
Accounting Standards Board (FASB). SFAS 112 requires a change in
the method of accounting for these benefits from the pay-as-you-go
method to an accrual method.
The adoption of SFAS 112 resulted in the recording of an
unfunded postemployment benefit obligation of $639,000. In
accordance with the Opinion and Order Determining Revenue
Requirement and Rate Design of the Public Service Commission of the
State of New York (PSC) issued and effective February 11, 1994, the
Company recorded a corresponding regulatory asset representing the
future recoverability of this cost. Accordingly, the adoption of
SFAS 112 did not have an impact on the Company's results of
operations.
3. Financial Instruments
Effective January 1, 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities"
(SFAS 115) issued by the FASB. The adoption of SFAS 115 resulted
in the recording of an unrealized net holding gain as an adjustment
to common stock equity. This unrealized net holding gain
represents the amount by which the market value of an investment
that the Company maintains in an insurance company exceeds its
cost, net of tax effects. This investment, which is classified as
-9-
<PAGE>
"available-for-sale" under SFAS 115, had a cost and market value at
June 30, 1994 of $775,000 and $1,995,000, respectively, and a
resulting unrealized net holding gain of $793,000. Common stock
equity will be adjusted to reflect periodic changes in the market
value of this investment. A realized gain or loss would be
recorded in the Consolidated Statement of Income upon sale or other
disposition of this investment.
4. Commitments and Contingencies
The Company faces a number of contingencies which arise during
the normal course of business and which have been fully discussed
in Note 9 (entitled "Commitments and Contingencies") to the
consolidated financial statements included in the Company's Annual
Report, on Form 10-K, for the year ended December 31, 1993. Except
as may be disclosed in Part II of this Quarterly Report, on Form
10-Q, for the quarterly period ended June 30, 1994, the Quarterly
Report, on Form 10-Q, for the quarterly period ended March 31,
1994, and in any Current Report, on Form 8-K, filed in 1994, there
have been no material changes in the subject matters discussed in
said Note 9.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
For the six months ended June 30, 1994, cash expenditures
related to the construction program of the Company amounted to
$22.6 million. The amount shown on the Consolidated Statement of
Cash Flows for "Net additions to plant" of $22.9 million includes
the debt portion of the allowance for funds used during
construction of $264,000. The cash requirements for such
expenditures were funded from internal sources and proceeds of
$4.1 million from the issuance of 138,924 shares of common stock
under the Company's Automatic Dividend Reinvestment and Stock
Purchase Plan and the Company's Customer Stock Purchase Plan.
These sales provided additional capital strength for the Company
by increasing the common equity ratio from 44.4% at December 31,
1993 to 45.3% at June 30, 1994 and the book value of common stock
from $24.65 at December 31, 1993 to $25.36 per share at June 30,
1994.
At June 30, 1994, the Company had no short-term debt outstanding,
$47.6 million invested in short-term securities, and $52.0 million
of short-term credit available.
-10-
<PAGE>
RESULTS OF OPERATIONS
The following tables report the variation in the results of
operations for the three months and six months ended June 30, 1994
compared to the same periods for 1993:
3 MONTHS ENDED JUNE 30,
INCREASE
1994 1993 (DECREASE)
(Thousands of Dollars)
Operating Revenues $117,214 $117,744 $ (530)
Operating Expenses 102,714 100,490 2,224
Operating Income 14,500 17,254 (2,754)
Other Income & Deductions 2,378 1,827 551
Income before Interest Charges 16,878 19,081 (2,203)
Interest Charges 7,950 7,869 81
Net Income 8,928 11,212 (2,284)
Dividends Declared on
Preferred Stock 1,282 1,327 (45)
Income Available for Common Stock $ 7,646 $ 9,885 $(2,239)
6 MONTHS ENDED JUNE 30,
INCREASE
1994 1993 (DECREASE)
(Thousands of Dollars)
Operating Revenues $280,050 $271,116 $ 8,934
Operating Expenses 237,376 227,151 10,225
Operating Income 42,674 43,965 (1,291)
Other Income & Deductions 4,274 3,089 1,185
Income before Interest Charges 46,948 47,054 (106)
Interest Charges 15,953 15,756 197
Net Income 30,995 31,298 (303)
Dividends Declared on
Preferred Stock 2,563 2,699 (136)
Income Available for Common Stock $ 28,432 $ 28,599 $ (167)
EARNINGS
Earnings per share of common stock were $.45 for the second
quarter of 1994, as compared to $.59 for the second quarter of
1993, a decrease of 24%. Earnings per share of common stock were
$1.67 for the six months ended June 30, 1994, as compared to $1.73
for the six months ended June 30, 1993, a decrease of 3%.
The decrease in per share earnings for both periods resulted
primarily from decreased electric net operating revenues
attributable primarily to decreased sales to industrial customers.
-11-
<PAGE>
Both periods were also impacted by the inclusion in 1993 earnings
of the gain from the sale of long-term investments. The decrease
in per share earnings for the six months ended June 30, 1994 was
also due to reduced earnings from the PSC incentive programs
related to fuel costs and energy efficiency. This decrease in
earnings per share for the six-month period was partially offset
by higher revenues from increased gas and electric sales to
residential and commercial customers experienced in the first
quarter of 1994.
OPERATING REVENUES
Operating revenues decreased $530,000 (.5%) for the second quarter
of 1994 as compared to the second quarter of 1993 and increased
$8.9 million (3%) for the six months ended June 30, 1994 as
compared to the six months ended June 30, 1993. Details of these
revenue changes by electric and gas departments are as follows:
INCREASE (DECREASE) FROM PRIOR PERIOD
SECOND QUARTER SIX MONTHS
Electric Gas Electric Gas
(Thousands of Dollars)
Customer Sales $(3,368) $ 1,480 * $(2,198) $ 4,050 *
Increases in Base
Rates 1,191 - 2,533 -
Sales to Other
Utilities 931 - 2,864 -
Fuel and Gas Cost
Adjustment (2,247) 1,925 (4,562) 6,518
Deferred Revenues (510) (336) 73 (488)
Miscellaneous 118 286** 162 (18)**
$(3,885) $ 3,355 $(1,128) $10,062
*Both firm and interruptible revenues.
**Includes revenues from transportation of customer-owned gas.
Revenues collected under the electric fuel and gas cost
adjustment clauses do not affect earnings since they are offset
in fuel costs, with the exception of revenues collected pursuant
to incentive mechanisms.
SALES
Total kilowatt-hour sales of electricity within the Company's
service territory decreased 5%, while firm sales of natural gas
increased 2%, for the second quarter of 1994 as compared to the
second quarter of 1993. For the six months ended June 30, 1994,
electric sales decreased 3% and firm gas sales increased 10%
compared to last year. Changes in sales from last year by major
customer classifications are set forth below:
-12-
<PAGE>
INCREASE (DECREASE) FROM PRIOR PERIOD
SECOND QUARTER SIX MONTHS
Electric Gas Electric Gas
Residential (1)% (2)% 3% 8%
Commercial 2 7 5 14
Industrial (14) (9) (16) 2
Interruptible N/A 84 N/A 7
Transportation of
Customer-owned
Gas N/A 7 N/A (45)
Billing degree days were 4% lower for the quarter ended June 30,
1994 and 5% higher for the six months ended June 30, 1994.
Sales of electricity to residential customers in the second
quarter of 1994 decreased 1% from the comparable prior year period
due primarily to a decrease in usage per customer. Commercial
sales in the second quarter of 1994 increased 2% as compared to
last year resulting primarily from an increase in the number of
customers. Electric sales to industrial customers decreased 14%
due primarily to a decrease in usage by International Business
Machines Corporation (IBM), which is the Company's largest
customer.
For a description of the continuing downsizing and employee
reduction program of IBM in the Company's service territory,
reference is made to Part I, Item 1 of the 10-K Report, under the
caption "Electric Sales to IBM". On or about July 27, 1994,
published reports indicated that IBM will close its mainframe
facility located in the Company's service territory in Kingston,
New York at the end of 1995, and will relocate 1,500 workers to
a similar plant located in the Company's service territory in
Poughkeepsie, New York. Based on published reports, the Company
does not believe that this action will have a material effect on
its electric revenues.
For the six months ended June 30, 1994, sales of electricity to
residential customers increased 3% resulting primarily from an
increase in usage per customer. Sales to commercial customers
increased 5% due to the combined effect of a 4% increase in usage
per customer and a 1% increase in the number of customers.
Electric sales to industrial customers decreased 16% due primarily
to a decline in usage by IBM.
Sales of gas to residential customers for the second quarter of
1994 decreased 2% attributable primarily to a decrease in usage
per customer. Sales of gas to commercial customers for the second
quarter of 1994 increased 7% resulting from the combined effect
of a 5% increase in usage per customer and a 2% increase in the
number of customers. Firm gas sales to industrial customers
-13-
<PAGE>
decreased 9% for the second quarter of 1994 due primarily to the
switch by a large customer from firm service to transportation gas
service.
For the six months ended June 30, 1994, residential gas sales
increased 8% resulting primarily from an increase in usage per
customer. Commercial gas sales increased 14% due to the combined
effect of a 12% increase in usage per customer and a 2% increase
in the number of customers. Firm gas sales to industrial
customers increased 2% for the six months ended June 30, 1994.
Interruptible gas sales increased 84% in the second quarter of
1994 and 7% for the six months ended June 30, 1994 due primarily
to the increase in the amount of natural gas sold to the other
cotenants for use as a boiler fuel at the Roseton Electric
Generating Station. The increase for the six months ended
June 30, 1994 was partially offset by decreased usage by IBM.
Transportation gas volumes increased 7% and decreased 45% for the
quarter and six months ended June 30, 1994, respectively. For the
second quarter, the increase was attributed primarily to the
transfer of a large industrial customer to transportation gas
service from firm gas service. The decrease for the six months
ended June 30, 1994 resulted from the interruption of
transportation service for approximately 35 days, in the first
quarter of 1994, in order to meet the high firm demand caused by
the quarter's cold weather.
OPERATING EXPENSES
The following table reports the variation in the operating
expenses for the three months and six months ended June 30, 1994
compared to the same periods for the prior year:
INCREASE (DECREASE) FROM PRIOR PERIOD
SECOND QUARTER SIX MONTHS
Amount Percent Amount Percent
(Dollars in Thousands)
Operating Expenses
Fuel and Purchased
Electricity $(1,876) (7)% $ (942) (2)%
Purchased Natural Gas 3,301 37 6,937 22
Other Expenses of Operation 441 2 2,462 6
Maintenance 1,118 15 (320) (2)
Nine Mile 2 Plant Operation
and Maintenance 111 3 278 4
Depreciation and Amortiza-
tion (274) (3) (547) (3)
Taxes, Other than
Federal Income Tax 334 2 1,361 4
Federal and Deferred Income
Tax (931) (16) 996 6
Total $ 2,224 2% $10,225 5%
-14-<PAGE>
The cost of fuel and purchased electricity decreased $1.9 million
(7%) for the second quarter of 1994 and $942,000 (2%) for the six
months ended June 30, 1994. The cost reductions for both periods
were due primarily to an overall lower cost mix of electric
generation and purchased electricity in 1994 driven by decreased
fuel prices.
Purchased natural gas costs increased $3.3 million (37%) for the
second quarter of 1994 and $6.9 million (22%) for the six months
ended June 30, 1994 primarily to meet the needs of increased sales
in both periods.
Other expenses of operation increased $441,000 (2%) for the
second quarter of 1994 and $2.5 million (6%) for the six months
ended June 30, 1994. The increases for both periods were related
primarily to an increase in employee welfare and payroll costs.
These increases were partially offset by a decrease in electric
distribution costs. Electric distribution costs were higher in
1993 due to a major wind storm in June of that year.
Maintenance expenses increased $1.1 million (15%) for the second
quarter of 1994 and decreased $320,000 (2%) for the six months
ended June 30, 1994. The increase in the second quarter was due
primarily to the scheduled major overhaul of Unit 4 of the
Danskammer Electric Generating Plant (Danskammer Plant) in 1994.
For the six months ended June 30, 1994, the decrease was
attributed primarily to the higher costs incurred in the first
quarter of 1993 for the scheduled major overhaul of Unit 4 of the
Danskammer Plant as compared to the costs incurred in 1994 for the
overhaul of Unit 4 of the Danskammer Plant. Also impacting the
six month period was a reduction in maintenance costs associated
with the Company's electric distribution system. These decreased
costs for the six month period were partially offset by increased
costs related to the gas distribution and transmission systems,
incurred to repair damage caused by the extremely cold weather in
the first quarter of 1994.
Depreciation and amortization expense decreased $274,000 (3%) for
the second quarter of 1994 and $547,000 (3%) for the six months
ended June 30, 1994, resulting primarily from a PSC approved
reduction in depreciation rates.
Taxes, other than income tax, increased $334,000 (2%) for the
second quarter of 1994 and $1.4 million (4%) for the six months
ended June 30, 1994 due primarily to increased property taxes.
The increase for the six-month period was further impacted by
higher revenue taxes resulting from increased revenues.
-15-
<PAGE>
Federal income taxes decreased $931,000 (16%) for the second
quarter of 1994 and increased $996,000 (6%) for the six months
ended June 30, 1994. The second quarter decrease resulted
primarily from a decrease in pre-tax income. The increase in the
six-month period was attributed primarily to the increase in the
federal income tax rate in 1993 from 34% to 35%.
OTHER INCOME AND DEDUCTIONS, INTEREST CHARGES AND PREFERRED
DIVIDENDS
Other income and deductions increased $551,000 (30%) for the second
quarter of 1994 and $1.2 million (38%) for the six months ended
June 30, 1994 due primarily to an increase in the amortization
to income of Mirror CWIP related to Unit No. 2 of the Nine Mile
Point Nuclear Station, a decrease in the deferral of revenues
associated with the Company's variable interest rate notes, and
an increase in interest earned on temporary cash investments.
These favorable variations for both periods were partially offset
by a decrease in Demand Side Management Equity Incentives. The
increase for the six months ended June 30, 1994 was also partially
offset by the 1993 gain from the sale of long-term investments and
the shareholders' contribution in 1994 for a gas system
replacement program and employee training center in accordance
with the settlement agreement with the PSC arising from the
"Catskill Incident" (reference is made to the Company's Current
Report, on Form 8-K, dated January 24, 1994, for further details
of such settlement agreement).
Total interest charges (excluding allowance for funds used during
construction) increased $78,000 (1%) for the second quarter of
1994 and $182,000 (1%) for the six months ended June 30, 1994,
resulting primarily from increased carrying charges on deferred
costs related to pensions and postretirement benefits other than
pensions.
Preferred Stock Dividends were $45,000 (3%) less for the second
quarter of 1994 and $136,000 (5%) less for the six months ended
June 30, 1994 than the comparable periods of the prior year due
to the optional redemption in 1993 of all of the Company's
outstanding shares of its 8.40% Cumulative Preferred Stock and its
Adjustable Rate Cumulative Preferred Stock, Series A. These
series were replaced with two series of lower rate serial
preferred stock, the 6.80% Redeemable Cumulative Preferred Stock
and the 6.20% Redeemable Cumulative Preferred Stock.
COMMON STOCK DIVIDENDS
Reference is made to the caption "Common Stock Dividends and Price
Ranges" contained in Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in Exhibit
-16-
<PAGE>
13 to the Company's 10-K Report, and which was incorporated by
reference in Part II, Item 5 of the Company's 10-K Report, for a
discussion of the Company's dividend policies. On June 24, 1994,
the Board of Directors of the Company declared a quarterly
dividend of $.52 per share, payable August 1, 1994 to shareholders
of record as of July 11, 1994, representing an increase of $.005,
or 1%, over the $.515 per share level established one year ago.
Such increase in the dividend was smaller than in recent years in
response to the trend toward more competition in the utility
industry. The Company presently intends to increase future
dividends by a modest amount if and to the extent supported by
sustained earnings growth, while at the same time gradually
reducing the Company's payout ratio; however, any determination
of future dividend declaration, and the amounts and dates of such
dividends, will depend on the circumstances known at the time of
consideration of such declaration.
-17-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Asbestos Litigation. Reference is made to Registrant's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993 ("10-K Report") and to the caption "Asbestos Litigation" in
Part I, Item 3 (Legal Proceedings) thereof for a discussion of the
litigation regarding asbestos currently pending against Registrant.
Since 1987, and as of July 15, 1994, the Registrant, along
with many other parties, has been a defendant or third-party
defendant in a total of 487 asbestos lawsuits commenced in New York
State and federal courts. Of such 487 asbestos lawsuits that had
been brought against the Company, only 234 remain pending, as of
July 15, 1994, as a result of the following: (1) the Company
negotiated voluntary dismissals in 23 cases and won summary
judgement dismissals in 9 cases; (2) 116 third-party claims were
extinguished with respect to the Company when the third-party
plaintiff, Owens-Corning Fiberglass ("OCF") settled the cases with
the plaintiffs; and (3) the Company settled 105 cases for an amount
that in the aggregate is not material to the Company's financial
condition.
By complaints dated February 7, 1994, February 28, 1994,
April 20, 1994, April 21, 1994, May 26, 1994, May 31, 1994 and June
7, 1994, the Registrant was made defendant in 46 new cases and a
third-party defendant in one other new case, all of which are
pending in New York State Supreme Court, County of New York. As of
July 15, 1994, 232 cases were pending against the Registrant in New
York State Supreme Court, County of New York and two cases were
pending against Registrant in the United States District Court for
the Southern District of New York. Two hundred twenty-four (224)
of these plaintiffs in these cases seek $10,000,000 in compensatory
damages, plus punitive damages, seven (7) plaintiffs seek
$10,500,000 in compensatory damages, plus punitive damages, one (1)
plaintiff seeks $27,000,000 in compensatory damages, plus punitive
damages, one (1) plaintiff seeks $70,000,000 in compensatory
damages, plus punitive damages, and, in one case, in which the
Registrant was joined as a third-party defendant by OCF, the
complaint alleges that the Registrant is responsible to OCF for the
amount of any recovery obtained by plaintiff against OCF in the
lawsuit.
In summary, as of July 15, 1994, the Registrant is a
defendant or third-party defendant in 234 asbestos lawsuits.
Although the Registrant is presently unable to assess the validity
of these 234 lawsuits, based on information known to the Registrant
at this time, including its experience in settling asbestos cases
and in obtaining dismissals of asbestos cases, the Registrant
-18-
<PAGE>
believes that the costs to be incurred in connection with these
lawsuits will not have a material adverse effect on the
Registrant's financial position. However, if the Registrant were
ultimately held liable under these lawsuits and insurance coverage
were not available, the cost thereof could have a material adverse
effect (a reasonable estimate of which cannot be made at this time)
on the financial condition of the Registrant if the Registrant
could not recover all or a substantial portion thereof through
rates.
Item 5. Other Information.
1. Labor Relations. Reference is made to Registrant's 10-
K Report, and to the discussion in Part I, Item 1 thereof under the
subcaption "Labor Relations", of Registrant's agreements with the
International Brotherhood of Electrical Workers for its unionized
employees, representing production and maintenance employees,
customer relations representatives, service workers and clerical
employees, excluding persons in managerial, professional or
supervisory positions. Such Agreements were renegotiated effective
July 1, 1994 and continue through June 30, 1998. These Agreements
include average general wage increases of 3.2 percent in each of
the first three years of the Agreements and a 3.5 percent in the
fourth year of the Agreements together with certain additional
fringe benefits.
2. Radioactive Waste. Reference is made to the caption
"Radioactive Waste" in Note 2 to Registrant's 1993 Financial
Statements appearing on pages 46 and 47 of Exhibit 13 to
Registrant's 10-K Report, and which was incorporated by reference
under the caption "Radioactive Waste" under Part I, Item 1 of
Registrant's 10-K Report. Published reports indicate that the low-
level radioactive waste repository in Barnwell, South Carolina will
no longer accept such waste. Niagara Mohawk Power Corporation
("Niagara Mohawk"), the managing co-tenant of Unit No. 2 of the
Nine Mile Point Nuclear Generating Station ("NMP2"), in which
Registrant owns a 9% interest, has informed Registrant that the
low-level radioactive waste produced at NMP2 (which has heretofore
been shipped to the Barnwell repository) can be stored on-site
until 2003, after which other arrangements would need to be made to
dispose of such waste.
3. INPO Monitoring. Reference is made to the caption
"Electric - Operational Matters", and to the subcaption "NRC and
INPO Monitoring" under Part I, Item 2 of Registrant's 10-K Report,
for a discussion of evaluations made by the Institute of Nuclear
Power Operations ("INPO") regarding the operation of NMP2. Niagara
Mohawk has reported to Registrant the results of an evaluation
conducted by INPO regarding overall performance at NMP2. INPO
rates nuclear performance from 1 (highest) to 5 (lowest). Niagara
-19-
<PAGE>
Mohawk reported to Registrant that the INPO team upgraded the NMP2
facility from category 3 to category 2, indicating an exemplary
overall performance.
4. Toxic Substances and Hazardous Wastes. Reference is
made to the caption "Environmental Quality" in Part I, Item 1 of
Registrant's 10-K Report, and to the subcaption "Toxic Substances
and Hazardous Wastes" therein, for a discussion of Registrant's
potential liability with reference to a certain landfill in the
Town of Poughkeepsie, New York, known as the FICA Landfill site.
A Consent Agreement has been entered into by numerous parties to
settle an action brought by New York State under the Comprehensive
Environmental Response Compensation Liability Act, known as
"CERCLA", against J&T Recycling, Inc., as the operator of the FICA
Landfill, to require the remediation of such landfill. As part of
such Consent Agreement, Registrant has agreed to provide coal fly
ash to be used in implementing the Approved Remedial Action Plan
contained in the Consent Agreement which sets forth the methodology
for the remediation of the FICA Landfill, and in return has been
given a full discharge and release by New York State from all past,
present and future claims and penalties relating to the FICA
Landfill site. The Consent Agreement has been approved by the
United States District Court for the Southern District of New York.
5. Dividends. Reference is made to Part I, Item 2 of this
report, under the caption "Common Stock Dividends" on Pages 16 and
17 therein for a discussion of Registrant's dividend policies.
6. Economic Development Power - Competition. Reference
is made to the captions "Other Matters - Competition" and "Other
Matters - Economic Development Power" in Part I, Item 1 of
Registrant's 10-K Report for a discussion of (i) the emergence of
competition in the electric industry and (ii) the "Economic
Development Power" ("EDP") generated by the Power Authority of the
State of New York ("PASNY") at its Fitzpatrick Nuclear Generating
Station to municipalities for municipal agencies on behalf of
businesses.
During June, 1994, Registrant submitted two proposed tariff
amendments to the New York State Public Service Commission ("PSC")
as part of Registrant's efforts to stimulate economic growth in its
franchise area. Registrant can make no prediction as to whether
the PSC will approve such filings.
The first such filing proposed an economic development
electric rate discount for large industrial customers (who exhibit
new annual electric load of 500 KW or more) who locate or expand
their business operations within Registrant's service territory.
Certain energy efficiency guidelines must also be met by eligible
customers. Qualifying customers would pay lower electric prices,
-20-
<PAGE>
with savings of between 20 and 25%. The discount would be for
incremental consumption and would be based on a 50% reduction of
the fixed cost of providing generating capacity and would be in
effect for a qualifying customer for 60 months. The proposed rate
is intended to encourage business expansion or relocation in
Registrant's service territory. Subject to PSC approval, this new
rate will become effective October 1, 1994.
The second such filing would enable Registrant to sell EDP
generated by PASNY to customers in Registrant's service territory
who have received an allocation from the New York State Economic
Development Power Allocation Board. Under the terms of this
filing, Registrant proposes to purchase the EDP directly from PASNY
and deliver the electricity to EDP customers. In addition to
PASNY's charge of approximately 4 cents per kilowatt hour for EDP,
Registrant proposes to charge 3.5 cents per kilowatt hour to cover
Registrant's applicable operating expenses. The price per kilowatt
hour which any individual customer would pay, however, will vary
depending upon the nature of its operations.
On June 8, 1994, PASNY announced that the New York State
Economic Development Power Allocation Board had recommended that
15,300 KW of EDP be allocated for 10 years for the joint venture
composed of Cirrus Logic and International Business Machine
("IBM"), located adjacent to IBM's East Fishkill, New York plant in
Registrant's franchise territory. The announcement indicated that
such allocation was an enticement for Cirrus Logic to undertake a
$215 million expansion to produce semi-conductors at such plant.
Cirrus Logic is reported to be a California-based company that
provides software and integrated circuits for communications,
graphics, mass storage and multimedia applications. Such EDP would
be delivered by the Registrant.
By Order issued and effective July 11, 1994, the PSC, in
a generic proceeding to address competitive opportunities available
to customers of electric and gas service and to develop criteria
for utility responses, adopted guidelines for the sale of
electricity at flexible rates to customers with competitive
opportunities for electric energy, which will be implemented in
rate cases. Among other things, such Order prohibits the use of
flexible rates in competition with EDP, except under certain
circumstances. Such Order contemplates a second phase of such
proceedings to explore issues related to future increasing
competition, in coordination with the State Energy Plan process,
including exploration of (1) wholesale competition with or without
a spinoff of generation assets and (2) partial and full retail
wheeling.
7. Energy Efficiency Program. Reference is made to
paragraph 1, entitled "Energy Efficiency Matters", of Item 5 of
-21-
Registrant's Current Report, on Form 8-K, dated April 21, 1994, for
a description of Registrant's filing with the PSC, on April 11,
1994, of its 1994-1996 Energy Efficiency Program which reflected
Registrant's revised Integrated Electric Resource Plan ("IERP").
Registrant in such filing concluded that its demand side management
budget and goals program (previously approved by the PSC in January
1994) was unsupported by its IERP and requested a substantial
reduction in its demand side management programs, including those
previously approved for 1994.
By Order, issued and effective July 12, 1994, the PSC
rejected Registrant's filing, including its downward modifications
of its demand side management plan for 1994, and ordered Registrant
to comply with the 1993-94 Energy Efficiency Program, as so
approved in January 1994. In such Order, the PSC instructed the
PSC Staff to work with the Office of the PSC Counsel to develop
possible penalty actions against Registrant or cost disallowances
which the PSC may wish to pursue. Registrant expects to discuss
its compliance with this Order with the PSC Staff in the immediate
future. Registrant can make no prediction as to what action the
PSC may ultimately take in this matter, but Registrant believes
that any penalty action or cost disallowance is unwarranted.
8. Medium-Term Note Program. Reference is made to
Registrant's Medium-Term Note Program pursuant to which $125
million aggregate principal amount of Debt Securities are being
offered by a Prospectus, dated April 13, 1992 ("Prospectus"), as
supplemented by two Prospectus Supplements, each dated May 28,
1992, filed as part of a "shelf" Registration Statement (No. 33-
46624), on Form S-3, under the Securities Act of 1933. Effective
as of October 22, 1993, Registrant suspended the operation of said
Medium-Term Note Program. Registrant presently expects to
reinstate said Program effective as of October 1, 1994.
The Ratio of Earnings to Fixed Charges, described in Item
503 of Regulation S-K of the Securities and Exchange Commission
("SEC"), is set forth in said Prospectus as of March 31, 1992.
Such information as of June 30, 1994 is as follows:
Twelve Months
Ended
Year Ended December 31, June 30,
1989 1990 1991 1992 1993 1994
Ratio of Earnings
to Fixed Charges*... 2.33 2.43 2.70 3.07 3.29 3.29 **
* Year-end figures are restated to conform to current (1994)
reporting which includes the interest portion of rent expense
as a component of interest charges.
** For the three months and six months ended June 30, 1994, such
ratios are 2.59 and 3.80, respectively, which reflect the
seasonal nature of the Company's business.
-22-<PAGE>
For purposes of this ratio (i) earnings consist of pretax
income from continuing operations to which fixed charges have been
added, and (ii) fixed charges consist of interest charges on first
mortgage bonds, other long-term debt and short-term debt, other
interest charges, amortization of premium and expense on debt and
the portion of rents representative of the interest factor.
9. Electric Sales to IBM. Reference is made to Part I,
Item 2 of this report, under the caption "Sales" on Page 13
therein, for a description of the continuing downsizing and
employee reduction program of IBM in Registrant's service
territory.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. The following exhibits are furnished in
accordance with the provisions of Item 601 of Regulation S-K:
Exhibit No.
Regulation S-K
Item 601
Designation Exhibit Description
(10) -- Material Contracts
(i) 99-- Second Amendment, effective as of September
1, 1994, to Fuel Oil Supply Contract,
effective as of September 1, 1992, between
Global Petroleum Corporation and Registrant,
Consolidated Edison Company of New York, Inc.
and Niagara Mohawk Power Corporation for the
Roseton Electric Generating Station.
(ii) 18-- Agreement, made March 14, 1994, by and
between Registrant and Mellon Bank, N.A.,
amending and restating, effective April 1,
1994, Registrant's Savings Incentive Plan and
related Trust Agreement with The Bank of New
York.
12-- Statement Showing Computation of the Ratio of Earnings
to Fixed Charges.
27-- Financial Data Schedules, pursuant to Item 601(c) of
Regulation S-K.
(b) Reports on Form 8-K. Registrant filed the following
Current Report on Form 8-K during the quarter for which this
Quarterly Report on Form 10-Q is filed:
-23-
<PAGE>
(1) Report on Form 8-K, dated April 21, 1994, (i) describing
in Item 5 (Other Events) the filing by Registrant, on April 11,
1994, with the PSC of its 1994-1996 Energy Efficiency Program; (ii)
describing in Item 5 (Other Events) the review with the PSC, on
April 7, 1994, of Registrant's Integrated Electric Resource Plan;
and (iii) describing in Item 5 (Other Events) (a) the agreement
between Niagara Mohawk and Registrant, made as of March 30, 1994,
to terminate and cancel the 1987 Roseton Amendment Agreement
relating to the purchase, over a ten-year period commencing in
December, 1994, of Niagara Mohawk's interest in the Roseton Steam
Electric Generating Station ("Roseton Plant"), (b) the motion filed
by Niagara Mohawk and Registrant on April 12, 1994 to close the
proceeding pending before the PSC to approve the 1987 Roseton
Amendment Agreement, and (c) the Letter of Understanding entered
into between Niagara Mohawk and Registrant on March 30, 1994, which
forms the basis for certain agreements to be entered into regarding
the Roseton Plant, and sales of capacity and energy from Niagara
Mohawk to Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunder duly authorized.
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
(Registrant)
By
John F. Drain,
Vice President - Finance and Controller
Authorized Officer and
Principal Financial Officer
Dated: August 5, 1994
-24-
</PAGE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF INCOME AND CONSOLIDATED
STATEMENT OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $917,277
<OTHER-PROPERTY-AND-INVEST> $10,240
<TOTAL-CURRENT-ASSETS> $160,912
<TOTAL-DEFERRED-CHARGES> $192,310
<OTHER-ASSETS> $63,514
<TOTAL-ASSETS> $1,344,253
<COMMON> $85,460
<CAPITAL-SURPLUS-PAID-IN> $267,425
<RETAINED-EARNINGS> $80,596
<TOTAL-COMMON-STOCKHOLDERS-EQ> $433,481
$35,000
$46,030
<LONG-TERM-DEBT-NET> $391,777
<SHORT-TERM-NOTES> $0
<LONG-TERM-NOTES-PAYABLE> $0
<COMMERCIAL-PAPER-OBLIGATIONS> $0
<LONG-TERM-DEBT-CURRENT-PORT> $51,031
$0
<CAPITAL-LEASE-OBLIGATIONS> $0
<LEASES-CURRENT> $0
<OTHER-ITEMS-CAPITAL-AND-LIAB> $386,934
<TOT-CAPITALIZATION-AND-LIAB> $1,344,253
<GROSS-OPERATING-REVENUE> $280,050
<INCOME-TAX-EXPENSE> $17,373
<OTHER-OPERATING-EXPENSES> $220,003
<TOTAL-OPERATING-EXPENSES> $237,376
<OPERATING-INCOME-LOSS> $42,674
<OTHER-INCOME-NET> $4,274
<INCOME-BEFORE-INTEREST-EXPEN> $46,948
<TOTAL-INTEREST-EXPENSE> $15,953
<NET-INCOME> $30,995
$2,563
<EARNINGS-AVAILABLE-FOR-COMM> $28,432
<COMMON-STOCK-DIVIDENDS> $17,652
<TOTAL-INTEREST-ON-BONDS> $0
<CASH-FLOW-OPERATIONS> $69,288
<EPS-PRIMARY> $1.67
<EPS-DILUTED> $0
</TABLE>
<PAGE>
EXHIBIT 12
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Six Months
Ended Ended
June 30, 1994 June 30, 1994
Earnings:
Net Income $ 8,928 $30,995
Fixed Charges 8,475 17,004
Federal Income Tax 1,372 14,575
Deferred Income Tax 3,428 2,798
Federal Income Tax-Credit (433) (831)
Deferred Income Tax 169 93
Total Earnings $21,939 $64,634
Fixed Charges:
Interest on Mortgage Bonds $ 5,231 $10,516
Interest on Other Long-term
Debt 1,923 3,719
Interest on Short-term
Debt - -
Other Interest 361 807
Amortization of Premium and
Expense on Debt 574 1,175
Portion of Rents Representative
of the Interest Factor 386 787
Total Fixed Charges $ 8,475 $17,004
Ratio of Earnings to Fixed
Charges 2.59 3.80
<PAGE>
EXHIBIT 12
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Twelve Months
Ended Year Ended
June 30, 1994 December 31, 1993
Earnings:
Net Income $ 50,087 $ 50,390
Fixed Charges 34,044 33,820
Federal Income Tax 15,654 14,502
Deferred Income Tax 13,946 14,101
Federal Income Tax-Credit (3,468) (2,937)
Deferred Income Tax 1,768 1,492
Total Earnings $112,031 $111,368
Fixed Charges:
Interest on Mortgage Bonds $ 21,585 $ 22,390
Interest on Other Long-term
Debt 7,129 6,487
Interest on Short-term
Debt - 13
Other Interest 1,465 1,191
Amortization of Premium and
Expense on Debt 2,331 2,247
Portion of Rents Representative
of the Interest Factor 1,534 1,492
Total Fixed Charges $ 34,044 $ 33,820
Ratio of Earnings to Fixed
Charges 3.29 3.29
<PAGE>
EXHIBIT 12
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31,
1992 1991
Earnings:
Net Income $ 47,688 $ 42,941
Fixed Charges 34,888 37,737
Federal Income Tax 5,467 10,514
Deferred Income Tax 19,644 12,099
Federal Income Tax-Credit 7,789 (2,454)
Deferred Income Tax (8,537) 1,202
Total Earnings $106,939 $102,039
Fixed Charges:
Interest on Mortgage Bonds $ 23,207 $ 25,236
Interest on Other Long-term
Debt 6,286 7,482
Interest on Short-term
Debt 582 590
Other Interest 1,372 1,979
Amortization of Premium and
Expense on Debt 2,085 1,584
Portion of Rents Representative
of the Interest Factor 1,356 866
Total Fixed Charges $ 34,888 $ 37,737
Ratio of Earnings to Fixed
Charges 3.07 2.70
<PAGE>
EXHIBIT 12
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Year Ended December 31,
1990 1989
Earnings:
Net Income $ 41,035 $ 39,117
Fixed Charges 42,906 43,523
Federal Income Tax 15,110 10,253
Deferred Income Tax 7,346 9,575
Federal Income Tax-Credit (4,198) (3,646)
Deferred Income Tax 2,116 2,736
Total Earnings $104,315 $101,558
Fixed Charges:
Interest on Mortgage Bonds $ 29,726 $ 30,055
Interest on Other Long-term
Debt 9,276 10,187
Interest on Short-term
Debt 184 5
Other Interest 1,767 1,345
Amortization of Premium and
Expense on Debt 1,097 1,059
Portion of Rents Representative
of the Interest Factor 856 872
Total Fixed Charges $ 42,906 $ 43,523
Ratio of Earnings to Fixed
Charges 2.43 2.33
</PAGE>
<PAGE>
EXHIBIT (10)(iii) 18
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
SAVINGS INCENTIVE PLAN
(As amended and restated as of April 1, 1994)
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
2.2 DETERMINATION OF TOP HEAVY STATUS
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
2.7 RECORDS AND REPORTS
2.8 APPOINTMENT OF ADVISERS
2.9 INFORMATION FROM EMPLOYER
2.10 PAYMENT OF EXPENSES
2.11 MAJORITY ACTIONS
2.12 CLAIMS PROCEDURE
2.13 CLAIMS REVIEW PROCEDURE
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
3.2 APPLICATION FOR PARTICIPATION
3.3 EFFECTIVE DATE OP PARTICIPATION
3.4 DETERMINATION OF ELIGIBILITY
3.5 TERMINATION OF ELIGIBILITY
3.6 OMISSION OF ELIGIBLE EMPLOYEE
3.7 INCLUSION OF INELIGIBLE EMPLOYEE
3.8 ELECTION NOT TO PARTICIPATE
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
4.9 MAXIMUM ANNUAL ADDITIONS
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
4.11 ROLLOVERS
4.12 VOLUNTARY CONTRIBUTIONS
4.13 DIRECTED INVESTMENT ACCOUNT
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
5.2 METHOD OF VALUATION
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
6.2 DETERMINATION OF BENEFITS UPON DEATH
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
6.5 DISTRIBUTION OF BENEFITS
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
6.7 TIME OF SEGREGATION OR DISTRIBUTION
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
6.10 ADVANCE DISTRIBUTION FOR FINANCIAL HARDSHIP
6.11 PRE-RETIREMENT DISTRIBUTION
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
7.2 LOANS TO PARTICIPANTS
7.3 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
7.4 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
7.5 ANNUAL REPORT OF THE TRUSTEE
7.6 AUDIT
7.7 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
7.8 TRANSFER OF INTEREST
7.9 TRUSTEE INDEMNIFICATION
7.10 DIRECT ROLLOVER
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
8.2 TERMINATION
8.3 MERGER OR CONSOLIDATION
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
9.2 ALIENATION
9.3 CONSTRUCTION OF PLAN
9.4 GENDER AND NUMBER
9.5 LEGAL ACTION
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
9.7 FIDELITY BOND
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
9.9 PROTECTIVE CLAUSE
9.10 RECEIPT AND RELEASE FOR PAYMENTS
9.11 ACTION BY THE EMPLOYER
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
9.13 HEADINGS
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
9.15 UNIFORMITY
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ADOPTION BY OTHER EMPLOYERS
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
10.3 DESIGNATION OF AGENT
10.4 EMPLOYEE TRANSFERS
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
10.6 AMENDMENT
10.7 DISCONTINUANCE OF PARTICIPATION
10.8 ADMINISTRATOR'S AUTHORITY
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
CENTRAL HUDSON GAS & ELECTRIC
CORPORATION SAVINGS INCENTIVE PLAN
THIS AGREEMENT, hereby made and entered into this 14th
day of March, 1994, by and between Central Hudson Gas & Electric
Corporation (herein referred to as the "Employer") and Mellon
Bank, N.A. (herein referred to as the "Trustee").
W I T N E S S E T H:
WHEREAS, the Employer heretofore established a Profit
Sharing Plan and Trust effective January 1, 1984 (hereinafter
called the "Effective Date") known as the Central Hudson Gas &
Electric Corporation Savings Incentive Plan (which, as thereafter
amended, is herein referred to as the "Plan") for the exclusive
benefit of its eligible employees; and
WHEREAS, the Employer entered into a Trust Agreement,
dated the Effective Date and thereafter amended (as amended
hereinafter called the "Trust Agreement") with Dutchess Bank &
Trust Company, as Trustee for the benefit of the Plan; The Bank
of New York being the current trustee thereunder; and
WHEREAS, it is proposed to amend the Plan and the Trust
Agreement and restate them as one instrument as hereinafter
provided; and
WHEREAS, the Employer has appointed the Trustee as the
successor Trustee under the Trust Agreement and the Trustee by
entering into this Agreement hereby accepts such successor
trusteeship;
NOW, THEREFORE, effective April 1, 1994, the Employer,
in accordance with the provisions of the Plan, and the Employer
and the Trustee, in accordance with the provisions of the Trust
Agreement, pertaining to amendments thereof, hereby, as
applicable, amend the Plan and the Trust Agreement in their
entirety and restate the Plan and the Trust Agreement, and
combine same into one document, to provide as follows:
ARTICLE I
DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act
of 1974, as it may be amended from time to time.
1.2 "Administrator" means the person(s) or entity designated
by the Employer pursuant to Section 2.4 to administer the Plan on
behalf of the Employer.
1.3 "Aetna" means The Aetna Life Insurance Company and any
affiliate thereof.
1.4 "Affiliated Employer" means 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 4l4(c))
with the Employer; any organization (whether or not incorporated)
which is a member of an affiliated service group (as defined in
Code Section 4l4(m)) which includes the Employer; and any other
entity required to be aggregated with the Employer pursuant to
Regulations under Code Section 414(o).
1.5 "Aggregate Account" means, 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 provisions of Section 2.2.
1.6 "Anniversary Date" means December 31.
1.7 "Beneficiary" means the person to whom the share of a
deceased Participant's total account is payable, subject to the
restrictions of Sections 6.2 and 6.6.
1.8 "Code" means the Internal Revenue Code of 1986, as
amended or replaced from time to time.
1.9 "Compensation" with respect to any Participant means
such Participant's wages as defined in Code Section 3401(a) and
all other payments of compensation by the Employer (in the course
of the Employer's trade or business) for a Plan Year for which
the Employer is required to furnish the Participant a written
statement under Code Sections 6041(d), 6051(a)(3) and 6052.
Compensation must be determined without regard to any rules under
Code Section 3401(a) that limit the remuneration included in
wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor
in Code Section 3401(a)(2)).
For purposes of this Section, the determination of
Compensation shall be made by:
(a) excluding (even if includible in gross income)
reimbursements or other expense allowances, fringe
benefits (cash or noncash), moving expenses, deferred
compensation, and welfare benefits.
(b) excluding overtime.
(c) excluding commissions.
(d) excluding bonuses.
(e) including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and
which are not includible in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h),
403(b) or 457, and Employee contributions described in
Code Section 414(h)(2) that are treated as Employer
contributions.
For a Participant's initial year of participation,
Compensation shall be recognized as of such Employee's effective
date of participation pursuant to Section 3.3.
Compensation in excess of $150,000 shall be
disregarded. Such amount shall be adjusted at the same time and
in such manner as permitted under Code Section 415(d), except
that the dollar increase in effect on January 1 of any calendar
year shall be effective for the Plan Year beginning with such
calendar year and the first adjustment to the $150,000 limitation
shall be effective on January 1, 1990. For any short Plan Year
the Compensation limit shall be an amount equal to the
Compensation limit for the calendar year in which the Plan Year
begins multiplied by the ratio obtained by dividing the number of
full months in the short Plan Year by twelve (12). In applying
this limitation, the family group of a Highly Compensated
Participant who is subject to the Family Member aggregation rules
of Code Section 414(q)(6) because such Participant is either a
"five percent owner" of the Employer or one of the ten (10)
Highly Compensated Employees paid the greatest "415 Compensation"
during the year, shall be treated as a single Participant, except
that for this purpose Family Members shall include only the
affected Participant's spouse and any lineal descendants who have
not attained age nineteen (19) before the close of the year. If,
as a result of the application of such rules the adjusted
$150,000 limitation is exceeded, then the limitation shall be
prorated among the affected Family Members in proportion to each
such Family Member's Compensation prior to the application of
this limitation, or the limitation shall be adjusted in
accordance with any other method permitted by Regulation.
If, as a result of such rules, the maximum "annual
addition". limit of Section 4.9(a) would be exceeded for one or
more of the affected Family Members, the prorated Compensation of
all affected Family Members shall be adjusted to avoid or reduce
any excess. The prorated Compensation of any affected Family
Member whose allocation would exceed the limit shall be adjusted
downward to the level needed to provide an allocation equal to
such limit. The prorated Compensation of affected Family Members
not affected by such limit shall then be adjusted upward on a pro
rata basis not to exceed each such affected Family Member's
Compensation as determined prior to application of the Family
Member rule. The resulting allocation shall not exceed such
individual's maximum "annual addition" limit. If, after these
adjustments, an "excess amount" still results, such "excess
amount" shall be disposed of in the manner described in Section
4.10(a) pro rata among all affected Family Members.
If, in connection with the adoption of this amendment
and restatement, the definition of Compensation has been
modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement,
Compensation means compensation determined pursuant to the Plan
then in effect.
For Plan Years beginning prior to January 1, 1989, the
$150,000 limit (without regard to Family Member aggregation)
shall apply only for Top Heavy Plan Years and shall not be
adjusted.
1.10 "Deferred Compensation" with respect to any Participant
means the amount of the Participant's total Compensation which
has been contributed to the Plan in accordance with the
Participant's deferral election pursuant to Section 4.2 excluding
any such amounts distributed as excess "annual additions"
pursuant to Section 4.10(a).
1.11 "Early Retirement Date" means the first day of the
month (prior to the Normal Retirement Date) coinciding with or
next following the date on which a Participant or Former
Participant attains age 55 and has completed at least 10 Years of
Service with the Employer (Early Retirement Age). A Participant
shall become fully Vested upon satisfying this requirement if
still employed at his Early Retirement Age.
A Former Participant who terminates employment after
satisfying the service requirement for Early Retirement and who
thereafter reaches the age requirement contained herein shall be
entitled to receive his benefits under this Plan.
1.12 "Elective Contribution" means the Employer's
contributions to the Plan of Deferred Compensation excluding any
such amounts distributed as excess "annual additions" pursuant to
Section 4.10(a). In addition, any Employer Qualified Non-
Elective Contribution made pursuant to Section 4.1(c) which are
used to satisfy the "Actual Deferral Percentage" and Section 4.6
shall be considered an Elective Contribution for purposes of the
Plan. Any such contributions deemed to be Elective Contributions
shall be subject to the requirements of Sections 4.2(b) and
4.2(c) and shall further be required to satisfy the
discrimination requirements of Regulation 1.401(k)-1(b)(5), the
provisions of which are specifically incorporated herein by
reference.
1.13 "Eligible Employee" means any Employee.
Directors of the Employer who are not Employees shall
not be eligible to participate in the Plan.
Employees of Affiliated Employers shall not be eligible
to participate in this Plan unless such Affiliated Employers have
specifically adopted this Plan in writing.
1.14 "Employee" means any person who is employed by the
Employer or Affiliated Employer, but excludes any person who is
an independent contractor. Employee shall include Leased
Employees within the meaning of Code Sections 4l4(n)(2) and
4l4(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 4l4(n)(5) and such Leased Employees do
not constitute more than 20% of the recipient's non-highly
compensated work force.
1.15 "Employer" means Central Hudson Gas & Electric
Corporation and any Participating Employer (as Defined in Section
10.1) which shall adopt this plan, and any successor which shall
maintain this Plan; and any predecessor which has maintained this
Plan. The Employer is a corporation, with principal offices in
the State of New York.
1.16 "Excess Aggregate Contributions" means, with respect to
any Plan Year, the excess of the aggregate amount of the Employer
matching contributions made pursuant to Section 4.1(b), voluntary
Employee contributions made pursuant to Section 4.12, Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 4.6(a), any forfeitures reallocated in the
same proportion that each Participant's elective contributions
for the year bears to the elective contributions for all
Participants for such year and any qualified non-elective
contributions or elective deferrals taken into account pursuant
to Section 4.7(c) on behalf of Highly Compensated Participants
for such Plan Year, over the maximum amount of such contributions
permitted under the limitations of Section 4.7(a).
1.17 "Excess Contributions" means, with respect to a Plan
Year, the excess of Elective Contributions and Qualified Non-
Elective Contributions made on behalf of Highly Compensated
Participants for the Plan Year over the maximum amount of such
contributions permitted under Section 4.5(a). Excess
Contributions, including amounts recharacterized pursuant to
Section 4.6(a)(2), shall be treated as an "annual addition"
pursuant to Section 4.9(b).
1.18 "Excess Deferred Compensation" means, with respect to
any taxable year of a Participant, the excess of the aggregate
amount of such Participant's Deferred Compensation and the
elective deferrals pursuant to Section 4.2(f) actually made on
behalf of such Participant for such taxable year, over the dollar
limitation provided for in Code Section 402(g), which is
incorporated herein by reference. Excess Deferred Compensation
shall be treated as an "annual addition" pursuant to Section
4.9(b) when contributed to the Plan unless distributed to the
affected Participant not later than the first April 15th
following the close of the Participant's taxable year.
Additionally, for purposes of Sections 2.2 and 4.4(f), Excess
Deferred Compensation shall continue to be treated as Employer
contributions even if distributed pursuant to Section 4.2(f).
However, Excess Deferred Compensation of Non-Highly Compensated
Participants is not taken into account for purposes of Section
4.5(a) to the extent such Excess Deferred Compensation occurs
pursuant to Section 4.2(d).
1.19 "Family Member" means, with respect to an affected
Participant, such Participant's spouse and such Participant's
lineal descendants and ascendants and their spouses, all as
described in Code Section 414(q)(6)(B).
1.20 "Fiduciary" means any person who (a) exercises any
discretionary authority or discretionary control respecting
management of the Plan or exercises any authority or control
respecting management or disposition of its assets, (b) renders
investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the
Plan or has any authority or responsibility to do so, or (c) has
any discretionary authority or discretionary responsibility in
the administration of the Plan, including, but not limited to,
the Employer and its representative body, and the Administrator.
1.21 "Fiscal Year" means the Employer's accounting year of
12 months commencing on January 1st of each year and ending the
following December 31st.
1.22 "Forfeiture." Under this Plan, Participant accounts
are 100% Vested at all times. Any amounts that may otherwise be
forfeited under the Plan pursuant to Section 3.7, 4.2(f) or 6.9
shall be used to reduce the contribution of the Employer.
1.23 "Former Participant" means a person who has been a
Participant, but who has ceased to be a Participant for any
reason.
1.24 "415 Compensation" with respect to any Participant
means such Participant's wages as defined in Code Section 3401(a)
and all other payments of compensation by the Employer (in the
course of the Employer's trade or business) for a Plan Year for
which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and
6052. "415 Compensation" must be determined without regard to
any rules under Code Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
If, in connection with the adoption of this amendment
and restatement, the definition of "415 Compensation" has been
modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement,
"415 Compensation" means compensation determined pursuant to the
Plan then in effect.
1.25 "414(s) Compensation" with respect to any Participant
means such Participant's Elective Contributions attributable to
Deferred Compensation recharacterized as voluntary Employee
contributions pursuant to Section 4.6(a) plus "415 Compensation"
paid during a Plan Year. The amount of "4l4(s) Compensation"
with respect to any Participant shall include "414(s)
Compensation" for the entire twelve (12) month period ending on
the last day of such Plan Year, except that "4l4(s) Compensation"
shall only be recognized for that portion of the Plan Year during
which an Employee was a Participant in the Plan.
For purposes of this Section, the determination of
"414(s) Compensation" shall be made by including amounts which
are contributed by the Employer pursuant to a salary reduction
agreement and which are not includible in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or
457, and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.
"414(s) Compensation" in excess of $150,000 shall be
disregarded. Such amount shall be adjusted at the same time and
in such manner as permitted under Code Section 415(d), except
that the dollar increase in effect on January 1 of any calendar
year shall be effective for the Plan Year beginning with or
within such calendar year and the first adjustment to the
$150,000 limitation shall be effective on January 1, 1990. For
any short Plan Year the "414(s) Compensation" limit shall be an
amount equal to the "414(s) Compensation" limit for the calendar
year in which the Plan Year begins multiplied by the ratio
obtained by dividing the number of full months in the short Plan
Year by twelve (12). In applying this limitation, the family
group of a Highly Compensated Participant who is subject to the
Family Member aggregation rules of Code Section 414(q)(6) because
such Participant is either a "five percent owner" of the Employer
or one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during the year, shall be treated as
a single Participant, except that for this purpose Family Members
shall include only the affected Participant's spouse and any
lineal descendants who have not attained age nineteen (19) before
the close of the year.
If, in connection with the adoption of this amendment
and restatement, the definition of "414(s) Compensation" has been
modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement,
"414(s) Compensation" means compensation determined pursuant to
the Plan then in effect.
1.26 "Highly Compensated Employee" means an Employee
described in Code Section 414(q) and the Regulations thereunder
and generally means an Employee who performed services for the
Employer during the "determination year" and is in one or more of
the following groups:
(a) Employees who at any time during the
"determination year" or "look-back year" were "five
percent owners" as defined in Section 1.34 (c).
(b) Employees who received "415 Compensation"
during the "look-back year" from the Employer in excess
of $75,000.
(c) Employees who received "415 Compensation"
during the "look-back year" from the Employer in excess
of $50,000 and were in the Top Paid Group of Employees
for the Plan Year.
(d) Employees who during the "look-back" years
were officers of the Employer (as that term is defined
within the meaning of the Regulations under Code
Section 416) and received "415 Compensation" during the
"look-back year" from the Employer greater than 50
percent of the limit in effect under Code Section
415(b)(l)(A) for any such Plan Year. The number of
officers shall be limited to the lesser of (i) 50
employees; or (ii) the greater of 3 employees or 10
percent of all employees. For the purpose of
determining the number of officers, Employees described
in Section 1.60(a), (b), (c) and (d) shall be excluded,
but such Employees shall still be considered for the
purpose of identifying the particular Employees who are
officers. If the Employer does not have at least one
officer whose annual "415 Compensation" is in excess of
50 percent of the Code Section 415(b)(1)(A) limit, then
the highest paid officer of the Employer will be
treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of
the 100 Employees paid the greatest "415 Compensation"
during the determination year and are also described in
(b), (c) or (d) above when these paragraphs are
modified to substitute "determination year" for "look-
back year".
The "determination year" shall be the Plan Year for
which testing is being performed, and the "look-back year" shall
be the immediately preceding twelve-month period. However, if
the Employer so elects, then the "look-back year" shall be the
calendar year ending with or within the Plan Year for which
testing is being performed, and the "determination year" (if
applicable) shall be the period of time, if any, which extends
beyond the "look-back year" and ends on the last day of the Plan
Year for which testing is being performed (the "lag period"). If
the "lag period" is less than twelve months long, the dollar
threshold amounts specified in (b), (c) and (d) above shall be
prorated based upon the number of months in the "lag period".
With respect to this election, it shall be applied on a uniform
and consistent basis to all plans, entities, and arrangements of
the Employer.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts which are
contributed by the Employer pursuant to a salary reduction
agreement and which are not includible in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or
457, and Employee contributions described in Code Section 4l4(h)
(2) that are treated as Employer contributions. Additionally,
the dollar threshold amounts specified in (b) and (c) above shall
be adjusted at such time and in such manner as is provided in
Regulations. In the case of such an adjustment, the dollar
limits which shall be applied are those for the calendar year in
which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee,
Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the
Employer constituting United States source income within the
meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, all Affiliated Employers shall be taken
into account as a single employer and Leased Employees within the
meaning of Code Sections 414(n)(2) and 414(o)(2) shall be
considered Employees unless such Leased Employees are covered by
a plan described in Code Section 414(n)(5) and are not covered in
any qualified plan maintained by the Employer. The exclusion of
Leased Employees for this purpose shall be applied on a uniform
and consistent basis for all of the Employer's retirement plans.
Highly Compensated Former Employees shall be treated as Highly
Compensated Employees without regard to whether they performed
services during the "determination year."
1.27 "Highly Compensated Former Employee" means a former
Employee who had a separation year prior to the "determination
year" and was a Highly Compensated Employee in the year of
separation from service or in any "determination year" after
attaining age 55. Notwithstanding the foregoing, an Employee who
separated from service prior to 1987 will be treated as a Highly
Compensated Former Employee only if during the separation year
(or year preceding the separation year) or any year after the
Employee attains age 55 (or the last year ending before the
Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner."
For purposes of this Section, "determination year," "415
Compensation" and "five percent owner" shall be determined in
accordance with Section 1.26. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees. The
method set forth in this Section for determining who is a "Highly
Compensated Former Employee" shall be applied on a uniform and
consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.28 "Highly Compensated Participant" means any Highly
Compensated Employee who is eligible to participate in the Plan.
1.29 "Hour of Service" means (1) each hour for which an
Employee is directly or indirectly compensated or entitled to
compensation by the Employer for the performance of duties during
the applicable computation period; (2) each hour for which an
Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the
employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, jury
duty, disability, lay-off, military duty or leave of absence)
during the applicable computation period; (3) each hour for which
back pay is awarded or agreed to by the Employer without regard
to mitigation of damages. These hours will be credited to the
Employee for the computation period or periods to which the award
or agreement pertains rather than the computation period in which
the award, agreement or payment is made. The same Hours of
Service shall not be credited both under (l) or (2), as the case
may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours
of Service are required to be credited to an Employee on account
of any single continuous period during which the Employee
performs no duties (whether or not such period occurs in a single
computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account
of a period during which no duties are performed is not required
to be credited to the Employee if such payment is made or due
under a plan maintained solely for the purpose of complying with
applicable worker's compensation, or unemployment compensation or
disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an
Employee for medical or medically related expenses incurred by
the Employee.
For purposes of this Section, 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 particular Employees or are
on behalf of a group of Employees in the aggregate.
An Hour of Service must be counted for the purpose of
determining a Year of Service, a year of participation for
purposes of accrued benefits, a l-Year Break in Service, and
employment commencement date (or reemployment commencement date).
In addition, Hours of Service will be credited for employment
with other Affiliated Employers. The provisions of Department of
Labor regulations 2530.200b-2(b) and (c) are incorporated herein
by reference.
Hours of Service will be credited for employment with
all Affiliated Employers and for any individual considered to be
a Leased Employee pursuant to Code Sections 4l4(n) or 4l4(o) of
the Regulations thereunder.
1.30 "Income" means the income or losses allocable to
"excess amounts" which shall equal the sum of the allocable gain
or loss for the "applicable computation period" and the allocable
gain or loss for the period between the end of the "applicable
computation period" and the date of distribution ("gap period").
The income allocable to "excess amounts" for the "applicable
computation period" and the "gap period" is calculated separately
and is determined by multiplying the income for the "applicable
computation period" or the "gap period" by a fraction. The
numerator of the fraction is the "excess amount" for the
"applicable computation period". The denominator of the fraction
is the total "account balance" attributable to "Employer
contributions" as of the end of the "applicable computation
period" or the "gap period", reduced by the gain allocable to
such total amount for the "applicable computation period" or the
"gap period" and increased by the loss allocable to such total
amount for the "applicable computation period" or the "gap
period". The provisions of this Section shall be applied:
(a) For purposes of Section 4.2(f), by substituting:
(1) "Excess Deferred Compensation" for "excess
amounts";
(2) "taxable year of the Participant" for
"applicable computation period";
(3) "Deferred Compensation" for "Employer
contributions"; and
(4) "Participant's Elective Account" for
"account balance."
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation
period";
(3) "Elective Contributions" for "Employer
contributions"; and
(4) "Participant's Elective Account" for
"account balance."
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess
amounts";
(2) "Plan Year" for "applicable computation
period";
(3) "Employer matching contributions made
pursuant to Section 4.1(b), voluntary Employee
contributions made pursuant to Section 4.12 and
any qualified non-elective contributions or
elective deferrals taken into account pursuant to
Section 4.7(c)" for "Employer contributions"; and
(4) "Participant's Account and Voluntary
Contribution Account" for "account balance."
In lieu of the "fractional method" described above, a
"safe harbor method" may be used to calculate the allocable
Income for the "gap period." Under the "safe harbor method,"
allocable Income for the "gap period" shall be deemed to equal
ten percent (10%) of the Income allocable to "excess amounts" for
the "applicable computation period" multiplied by the number of
calendar months in the "gap period". For purposes of determining
the number of calendar months in the "gap period", a distribution
occurring on or before the fifteenth day of the month shall be
treated as having been made on the last day of the preceding
month and a distribution occurring after such fifteenth day shall
be treated as having been made on the first day of the next
subsequent month.
Income allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the
Participant shall be calculated from the first day of the taxable
year of the Participant to the date on which the distribution is
made pursuant to either the "fractional method" or the "safe
harbor method." Under such "safe harbor method," allocable
Income for such period shall be deemed to equal ten percent (10%)
of the Income allocable to such Excess Deferred Compensation
multiplied by the number of calendar months in such period. For
purposes of determining the number of calendar months in such
period, a distribution occurring on or before the fifteenth day
of the month shall be treated as having been made on the last day
of the preceding month and a distribution occurring after such
fifteenth day shall be treated as having been made on the first
day of the next subsequent month.
The Income allocable to Excess Aggregate Contributions
resulting from the recharacterization of Elective Contributions
shall be determined and distributed as if such recharacterized
Elective Contributions had been distributed as Excess
Contributions.
Notwithstanding the above, for "applicable computation
periods" which began in 1987, Income during the "gap period"
shall not be taken into account.
1.31 "Insurer" means any legal reserve insurance company
which shall issue one or more contracts under the Plan.
1.32 "Investment Manager" means an entity that (a) has the
power to manage, acquire, or dispose of Plan assets and (b)
acknowledges fiduciary responsibility to the Plan in writing.
Such entity must be a person, firm, or corporation registered as
an investment adviser under the Investment Advisers Act of 1940,
a bank, or an insurance company.
1.33 "Investment Option" shall mean any investment funds,
accounts or contracts designated by the Employer.
1.34 "Key Employee" means an Employee as defined in Code
Section 416(i) and the Regulations thereunder. Generally, any
Employee or former Employee (as well as each of his
Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or
any of the preceding four (4) Plan Years, has been included in
one of the following categories:
(a) an officer of the Employer (as that term is
defined within the meaning of the Regulations under
Code Section 416) having annual "415 Compensation"
greater than 50 percent of the amount in effect under
Code Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415
Compensation" from the Employer for a Plan Year greater
than the dollar limitation in effect under Code Section
415(c)(1)(A) for the calendar year in which such Plan
Year ends and owning (or considered as owning within
the meaning of Code Section 318) both more than one-
half percent interest and the largest interests in the
Employer.
(c) a "five percent owner" of the Employer.
"Five percent owner" means any person who owns (or is
considered as owning within the meaning of Code Section
318) more than five percent (5%) of the total combined
voting power of all stock of the Employer or, in the
case of an unincorporated business, any person who owns
more than five percent (5%) of the capital or profits
interest in 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.
(d) a "one percent owner" of the Employer having
an annual "415 Compensation" from the Employer of more
than $150,000. "One percent owner" means any person
who owns (or is considered as owning within the meaning
of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing
more than one percent (1%) of the total combined voting
power of all stock of the Employer or, in the case of
an unincorporated business, any person who owns more
than one percent (1%) of the capital or profits
interest in 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. However, in
determining whether an individual has "415
Compensation" of more than $150,000, "415 Compensation"
from each employer required to be aggregated under Code
Sections 414(b), (c), (m) and (o) shall be taken into
account.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts which are
contributed by the Employer pursuant to a salary reduction
agreement and which are not includible in the gross income of the
Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or
457, and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.
1.35 "Late Retirement Date" means the first day of the
month coinciding with or next following a Participant's actual
Retirement Date after having reached his Normal Retirement Date.
1.36 "Leased Employee" means 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 of a type historically
performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee
by the leasing organization which are 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:
(a) if such employee is covered by a money
purchase pension plan providing:
(1) a non-integrated employer contribution rate
of at least 10% of compensation, as defined in
Code Section 415(c)(3), but including amounts
which are contributed by the Employer pursuant to
a salary reduction agreement and which are not
includible in the gross income of the Participant
under Code Sections 125, 402(e)(3), 402(h), 403(b)
or 457, and Employee contributions described in
Code Section 414(h)(2) that are treated as
Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more
than 20% of the recipient's non-highly compensated work
force.
1.37 "Net Profit" means with respect to any Fiscal Year the
Employer's net income or profit for such Fiscal Year determined
upon the basis of the Employer's books of account in accordance
with generally accepted accounting principles, without any
reduction for taxes based upon income, or for contributions made
by the Employer to this Plan.
1.38 "Non-Elective Contribution" means the Employer's
contributions to the Plan excluding, however, contributions made
pursuant to the Participant's deferral election provided for in
Section 4.2 and any Qualified Non-Elective Contribution.
1.39 "Non-Highly Compensated Participant" means any
Participant who is neither a Highly Compensated Employee nor a
Family Member.
1.40 "Non-Key Employee" means any Employee or former
Employee (and his Beneficiaries) who is not a Key Employee.
1.41 "Normal Retirement Age" means the Participant's 65th
birthday. A Participant shall become fully Vested in his
Participant's Account upon attaining his Normal Retirement Age.
1.42 "Normal Retirement Date" means the first day of the
month coinciding with or next following the Participant's Normal
Retirement Age.
1.43 "1-Year Break in Service" for eligibility purposes
means the applicable computation period during which an Employee
has not completed more than 1 Hour of Service with the Employer.
Further, solely for the purpose of determining whether a
Participant has incurred a 1-Year Break in Service, Hours of
Service shall be recognized for "authorized leaves of absence"
and "maternity and paternity leaves of absence." Years of Service
and 1-Year Breaks in Service shall be measured on the same
computation period.
"Authorized leave of absence" means an unpaid,
temporary cessation from active employment with the Employer
pursuant to an established non-discriminatory policy, whether
occasioned by illness, military service, or any other reason.
A "maternity or paternity leave of absence" means, for
Plan Years beginning after December 31, 1984, an absence from
work for any period by reason of the Employee's pregnancy, birth
of the Employee's child, placement of a child with the Employee
in connection with the adoption of such child, or any absence for
the purpose of caring for such child for a period immediately
following such birth or placement. For this purpose, Hours of
Service shall be credited for the computation period in which the
absence from work begins, only if credit therefore is necessary
to prevent the Employee from incurring a 1-Year Break in Service,
or, in any other case, in the immediately following computation
period. The Hours of Service credited for a "maternity or
paternity leave of absence" shall be those which would normally
have been credited but for such absence, or, in any case in which
the Administrator is unable to determine such hours normally
credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity
leave of absence" shall not exceed 501.
1.44 "Participant" means any Eligible Employee who
participates in the Plan as provided in Sections 3.2, 3.3, and
has not for any reason become ineligible to participate further
in the Plan.
1.45 "Participant's Account" means the account established
and maintained by the Administrator for each Participant with
respect to his total interest in the Plan and Trust resulting
from the Employer's Non-Elective Contributions.
A separate accounting shall be maintained with respect
to that portion of the Participant's Account attributable to
Employer matching contributions made pursuant to Section 4.1(b)
and Employer discretionary contributions made pursuant to Section
4.1(d).
1.46 "Participant's Combined Account" means the total
aggregate amount of each Participant's Elective Account and
Participant's Account.
1.47 "Participant's Elective Account" means the account
established and maintained by the Administrator for each
Participant with respect to his total interest in the Plan and
Trust resulting from the Employer's Elective Contributions. A
separate accounting shall be maintained with respect to that
portion of the Participant's Elective Account attributable to
Elective Contributions pursuant to Section 4.2 and any Employer
Qualified Non-Elective Contributions.
1.48 "Participant's Rollover Account" means the account
established and maintained by the Administrator for each
Participant with respect to his total interest in the Plan
resulting from amounts rolled over from another qualified plan or
"conduit" Individual Retirement Account in accordance with
Section 4.11.
1.49 "Plan" means this instrument, including all amendments
thereto.
1.50 "Plan Year" means the Plan's accounting year of twelve
(12) months commencing on January 1st of each year and ending the
following December 31st.
1.51 "Qualified Non-Elective Account" means the account
established hereunder to which Qualified Non-Elective
Contributions are allocated.
1.52 "Qualified Non-Elective Contribution" means the
Employer's contributions to the Plan that are made pursuant to
Section 4.1(c) which are used to satisfy the "Actual Deferral
Percentage" and Section 4.6. Such contributions shall be
considered an Elective Contribution for the purposes of the Plan
when used to satisfy the "Actual Deferral Percentage" tests.
In addition, the Employer's contributions to the Plan
that are made pursuant to Section 4.8(h) which are used to
satisfy the "Actual Contribution Percentage" tests shall be
considered Qualified Non-Elective Contributions and be subject to
the provisions of Sections 4.2(b) and 4.2(c).
1.53 "Regulation" means the Income Tax Regulations as
promulgated by the Secretary of the Treasury or his delegate, and
as amended from time to time.
1.54 "Retired Participant" means a person who has been a
Participant, but who has become entitled to retirement benefits
under the Plan.
1.55 "Retirement Date" means the date as of which a
Participant retires for reasons other than Total and Permanent
Disability, whether such retirement occurs on a Participant's
Normal Retirement Date, Early or Late Retirement Date (see
Section 6.1).
1.56 "Super Top Heavy Plan" means a plan described in
Section 2.2(b).
1.57 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than
by death, Total and Permanent Disability or retirement.
1.58 "Top Heavy Plan" means a plan described in Section 2.2
(a).
1.59 "Top Heavy Plan Year" means a Plan Year during which
the Plan is a Top Heavy Plan.
1.60 "Top Paid Group" means the top 20 percent of Employees
who performed services for the Employer during the applicable
year, ranked according to the amount of "415 Compensation"
(determined for this purpose in accordance with Section 1.26)
received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and
Leased Employees within the meaning of Code Sections 414(n)(2)
and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section
414(n)(5) and are not covered in any qualified plan maintained by
the Employer. Employees who are non-resident aliens and who
received no earned income (within the meaning of Code Section
861(a)(3)) shall not be treated as Employees. Additionally, for
the purpose of determining the number of active Employees in any
year, the following additional Employees shall also be excluded;
however, such Employees shall still be considered for the purpose
of identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of
service;
(b) Employees who normally work less than 17 1/2
hours per week;
(c) Employees who normally work less than six (6)
months during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of
the Employer are covered under agreements the Secretary of Labor
finds to be collective bargaining agreements between Employee
representatives and the Employer, and the Plan covers only
Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both
the total number of active Employees as well as from the
identification of particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section
shall be applied on a uniform and consistent basis for all
purposes for which the Code Section 414(q) definition is
applicable.
1.61 "Total and Permanent Disability" means a physical or
mental condition of a Participant resulting from bodily injury,
disease, or mental disorder which renders him incapable of
continuing any gainful occupation and which condition constitutes
total disability under the federal Social Security Acts or as
determined by the Employer based on medical reports and such
other evidence which the Employer determines to be satisfactory.
1.62 "Trustee" means the person or entity named as trustee
herein or in any separate trust forming a part of this Plan, and
any successors.
1.63 "Trust Fund" means the assets of the Plan and Trust as
the same shall exist from time to time.
1.64 "Vested" means the nonforfeitable portion of any
account maintained on behalf of a Participant.
1.65 "Voluntary Contribution Account" means the account
established and maintained by the Administrator for each
Participant with respect to his total interest in the Plan
resulting from the Participant's nondeductible voluntary
contributions made pursuant to Section 4.12.
Amounts recharacterized as voluntary Employee
contributions pursuant to Section 4.6(a) shall remain subject to
the limitations of Sections 4.2(b) and 4.2(c). Therefore, a
separate accounting shall be maintained with respect to that
portion of the Voluntary Contribution Account attributable to
voluntary Employee contributions made pursuant to Section 4.12.
1.66 "Year of Service" for eligibility purposes means the
computation period of twelve (12) consecutive months, herein set
forth, during which an Employee has at least 1 Hour of Service.
For purposes of eligibility for participation, the
initial computation period shall begin with the date on which the
Employee first performs an Hour of Service. The participation
computation period beginning after a 1-Year Break in Service
shall be measured from the date on which an Employee again
performs an Hour of Service. If as a result of a plan amendment,
the method of measuring Service changes from the General Method
to the Elapsed Time Method, affected Employees shall receive
credit for a Period of Service consisting of:
- a number of years equal to the number of
years of Service credited to the Employee
before the computation period during which
the change occurs; and
- the greater of: (1) the Period of Service
that would be credited to the Employee under
the Elapsed Time Method for his Service
during the entire computation period in which
the change occurs; or (2) the Service taken
into account under the General Method as of
the date of the change.
In addition, the Employee shall receive
credit for service subsequent to the change
commencing on the day after the last day of
the computation period in which the change
occurs.
For all other purposes, the computation period shall be
the Plan Year.
Notwithstanding the foregoing, for any short Plan Year,
the determination of whether an Employee has completed a Year of
Service shall be made in accordance with Department of Labor
regulation 2530.203-2(c).
Years of Service with any Affiliated Employer shall be
recognized.
The Administrator in accordance with a uniform non-
discriminatory policy, elects to credit Hours of Service pursuant
to this Agreement counting actual Hours of Service for which an
Employee is paid or entitled to payment.
ARTICLE II
TOP HEAVY AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the
special vesting requirements of Code Section 416(b) pursuant to
Section 6.4 of the Plan and the special minimum allocation
requirements of Code Section 416(c) pursuant to Section 4.4 of
the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan
Year in which, as of the Determination Date,
(1) the Present Value of Accrued Benefits of Key Employees
and (2) the sum of the Aggregate Accounts of Key Employees
under this Plan and all plans of an Aggregation Group,
exceeds sixty percent (60%) of the Present Value of Accrued
Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation
Group.
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 and/or Aggregate Account balance shall not be taken
into account for purposes of determining whether this Plan
is a Top Heavy or Super Top Heavy Plan (or whether any
Aggregation Group which includes this Plan is a Top Heavy
Group). In addition, for Plan Years beginning after
December 31, 1984, if a Participant or Former Participant
has not performed any services for any Employer maintaining
the Plan at any time during the five year period ending on
the Determination Date, any accrued benefit for such
Participant or Former Participant shall not be taken into
account for the purposes of determining whether this Plan is
a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any
Plan Year in which, as of the Determination Date, (1) the
Present Value of Accrued Benefits of Key Employees and (2)
the sum of the Aggregate Accounts of Key Employees under
this Plan and all plans of an Aggregation Group, exceeds
ninety percent (90%) of the Present Value of Accrued
Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation
Group.
(c) Aggregate Account: A Participant's Aggregate
Account as of the Determination Date is the sum of:
(1) his Participant's Combined Account balance as of
the most recent valuation occurring within a twelve
(12) month period ending on the Determination Date;
(2) 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 due on or 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 a date in that first Plan Year.
(3) any Plan distributions 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, and distributions under
a terminated plan which if it had not been terminated
would have been required to be included in an
Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value
of life insurance policies) of a Participant's account
balance because of death shall be treated as a
distribution for the purposes of this paragraph.
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax
deductible qualified voluntary employee contributions
shall not be considered to be a part of the
Participant's Aggregate Account balance.
(5) 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 the rollovers or plan-to-plan
transfers, it shall always consider such rollovers or
plan-to-plan transfers as a distribution for the
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 as part of the Participant's Aggregate
Account balance.
(6) 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.
(7) For the purposes of determining whether two
employers are to be treated as the same Employer in (5)
and (6) above, all employers aggregated under Code
Section 414 (b), (c), (m) and (o) are treated as the
same Employer.
(d) "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer, including any Simplified Employee Pension
Plan, in which a Key Employee is a participant in the
Plan Year containing the Determination Date or any of
the four preceding Plan Years, and each other plan of
the Employer which enables any plan in which a Key
Employee participates to meet the requirements of Code
Sections 401(a) (4) or 410, will be required to be
aggregated. Such group shall be known as a Required
Aggregation Group.
In the case of a Required Aggregation Group, each plan
in the group will be considered a Top Heavy Plan if the
Required Aggregation Group is a Top Heavy Group. No
plan in the Required Aggregation Group will be
considered a Top Heavy Plan if the Required Aggregation
Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan of the Employer, including
any Simplified Employee Pension Plan, not required to
be included in the Required Aggregation Group, provided
the resulting group, taken as a whole, would continue
to satisfy the provisions of Code Sections 401(a) (4)
and 410. Such group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation Group, only a
plan that is part of the Required Aggregation Group
will be considered a Top Heavy Plan if the Permissive
Aggregation Group is a Top Heavy Group. No plan in the
Permissive Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is not a
Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year
shall be aggregated in order to determine whether such
plans are Top Heavy Plans.
(4) An Aggregation Group shall include any terminated
plan of the Employer if it was maintained within the
last five (5) years ending on the Determination Date.
(e) "Determination Date" means (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.
(f) Present Value of Accrued Benefit: In the case of a
defined benefit plan, the Present Value of Accrued Benefit
for a Participant other than a Key Employee, shall be as
determined using the single accrual method used for all
plans of the Employer and Affiliated Employers, or if no
such single method exists, using a method which results in
benefits accruing not more rapidly than the slowest accrual
rate permitted under Code Section 411(b)(1)(C). The
determination of the Present Value of Accrued Benefit shall
be determined as of the most recent valuation date that
falls within or ends with the 12-month period ending on the
Determination Date except as provided in Code Section 416
and the Regulations thereunder for the first and second plan
years of a defined benefit plan.
(g) "Top Heavy Group" means an Aggregation Group in
which, as of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key
Employees under all defined benefit plans included
in the group, and
(2) the Aggregate Accounts of Key Employees
under all defined contribution plans included in
the group, exceeds sixty percent (60%) of a
similar sum determined for all Participants.
(h) The Administrator shall determine whether this
Plan is a Top Heavy Plan on the Anniversary Date. Such
determination of the top heavy ratio shall be in accordance
with Code Section 416 and the Regulations thereunder.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint
and remove the Trustee and/or the Administrator from
time to time as it deems necessary for the proper
administration of the Plan to assure that the Plan is
being operated for the exclusive benefit of the
Participants and their Beneficiaries in accordance with
the terms of the Plan, the Code, and the Act.
(b) The Employer shall establish a "funding
policy and method if required," i.e., it shall
determine whether the Plan has a short run need for
liquidity (e.g., to pay benefits) or whether liquidity
is a long run goal and investment growth (and stability
of same) is a more current need, or shall appoint a
qualified person to do so. Such "funding policy and
method shall be consistent with the objectives of this
Plan and with the requirements of Title I of the Act.
(c) The Employer may, in its discretion, appoint
an Investment Manager to manage all or a designated
portion of the assets of the Plan. In such event, the
Trustee shall follow the directive of the Investment
Manager in investing the assets of the Plan managed by
the Investment Manager.
(d) The Employer shall periodically review the
performance of any Fiduciary or other person to whom
duties have been delegated or allocated by it under the
provisions of this Plan or pursuant to procedures
established hereunder. This requirement may be
satisfied by formal periodic review by the Employer or
by a qualified person specifically designated by the
Employer, through day-to-day conduct and evaluation, or
through other appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators.
Any person, including, but not limited to, the Employees of the
Employer, shall be eligible to serve as an Administrator. Any
person so appointed shall signify his acceptance by filing
written acceptance with the Employer. An Administrator may
resign by delivering his written resignation to the Employer or
be removed by the Employer by delivery of written notice of
removal, to take effect at a date specified therein, or upon
delivery to the Administrator if no date is specified.
The Employer, upon the resignation or removal of an
Administrator, shall promptly designate in writing a successor to
this position. If the Employer does not appoint an
Administrator, the Employer will function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator,
the responsibilities of each Administrator may be specified by
the Employer and accepted in writing by each Administrator. In
the event that no such delegation is made by the Employer, the
Administrators may allocate the responsibilities among
themselves. The Employer shall notify the Trustee in writing of
such action and specify the responsibilities of each
Administrator. The Trustee thereafter shall accept and rely upon
any documents executed by the appropriate Administrator until
such time as the Employer or the Administrators file with the
Trustee a written revocation of such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants
and their Beneficiaries, subject to the specific terms of the
Plan. The Administrator shall administer the Plan in accordance
with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine any questions
arising in connection with the administration, interpretation,
and application of the Plan. Any such determination by the
Administrator shall be conclusive and binding upon all persons;
provided, however, that the Administrator must first obtain the
prior approval of the Trustee or Aetna regarding the
interpretation of any provisions of the Plan and Trust relating
to or affecting in any way the rights, duties and
responsibilities of the Trustee or Aetna, respectively. Such
prior approval shall not be unreasonably withheld and shall be
communicated on a timely basis by the Trustee and/or Aetna. The
Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such
manner and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan; provided,
however, that any procedure, discretionary act, interpretation or
construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be
consistent with the intent that the Plan shall continue to be
deemed a qualified plan under the terms of Code Section 401(a),
and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this
Plan.
The Administrator shall be charged with the duties of
the general administration of the Plan, including, bit not
limited to, the following:
(a) the discretion to determine all questions
relating to the eligibility of Employees to participate
or remain a Participant hereunder and to receive
benefits under the Plan;
(b) to compute, certify, and direct the Trustee
with respect to the amount and the kind of benefits to
which any Participant shall be entitled hereunder;
(c) to authorize and direct the Trustee with
respect to all nondiscretionary or otherwise directed
disbursements from the Trust;
(d) to maintain all necessary records for the
administration of the Plan;
(e) to interpret the provisions of the Plan and to
make and publish such rules for regulation of the Plan
as are consistent with the terms hereof;
(f) to determine the size and type of any contract
to be purchased from any Insurer, and to designate the
Insurer from which such contract shall be purchased;
(g) to consult with the Employer regarding the
short and long-term liquidity needs of the Plan;
(h) to prepare and implement a procedure to notify
Eligible Employees that they may elect to have a
portion of their Compensation deferred or paid to them
in cash;
(i) to assist any Participant regarding his
rights, benefits, or elections available under the
Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions
taken and shall keep all other books of account, records, and
other data that may be necessary for proper administration of the
Plan and shall be responsible for supplying all information and
reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator may appoint counsel, specialists,
advisers, and other persons as the Administrator deems necessary
or desirable in connection with the administration of this Plan.
2.9 lNFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions,
the Employer shall supply full and timely information to the
Administrator on all matters relating to the Compensation of all
Participants, their Hours of Service, their Years of Service,
their retirement, death, disability, or termination of
employment, and such other pertinent facts as the Administrator
may require; and the Administrator shall advise the Trustee of
such of the foregoing facts as may be pertinent to the Trustee's
duties under the Plan. The Administrator may rely upon such
information as is supplied by the Employer and shall have no duty
or responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the
Trust Fund unless paid by the Employer. Such expenses shall
include any expenses incident to the functioning of the
Administrator, including, but not limited to, fees of
accountants, counsel, and other specialists and their agents, and
other costs of administering the Plan. Until paid, the expenses
shall constitute a liability of the Trust Fund. Any
administration expenses paid to the Trust Fund as a reimbursement
shall not be considered an Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and
delegation of administrative authority pursuant to Section 2.5,
if there shall be more than one Administrator, they shall act by
a majority of their number, but may authorize one or more of them
to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in
writing with the Administrator. Written notice of the
disposition of a claim shall be furnished to the claimant within
90 days after the application is filed. In the event the claim
is denied, the reasons for the denial shall be specifically set
forth in the notice in language calculated to be understood by
the claimant, pertinent provisions of the Plan shall be cited,
and, where appropriate, an explanation as to how the claimant can
perfect the claim will be provided. In addition, the claimant
shall be furnished with an explanation of the Plan's claims
review procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of
either, who has been denied a benefit by a decision of the
Administrator pursuant to Section 2.12 shall be entitled to
request the Administrator to give further consideration to his
claim by filing with the Administrator a written request for a
hearing. Such request, together with a written statement of the
reasons why the claimant believes his claim should be allowed,
shall be filed with the Administrator no later than 60 days after
receipt of the written notification provided for in Section 2.12.
The Administrator shall then conduct a hearing within the next 60
days, at which the claimant may be represented by an attorney or
any other representative of his choosing and at which the
claimant shall have an opportunity to submit written and oral
evidence and arguments in support of his claim. At the hearing
(or prior thereto upon 5 business days written notice to the
Administrator) the claimant or his representative shall have an
opportunity to review all documents in the possession of the
Administrator which are pertinent to the claim at issue and its
disallowance. Either the claimant or the Administrator may cause
a court reporter to attend the hearing and record the
proceedings. In such event, a complete written transcript of the
proceedings shall be furnished to both parties by the court
reporter. The full expense of any such court reporter and such
transcripts shall be borne by the party causing the court
reporter to attend the hearing. A final decision as to the
allowance of the claim shall be made by the Administrator within
60 days of receipt of the appeal (unless there has been an
extension of 60 days due to special circumstances, provided the
delay and the special circumstances occasioning it are
communicated to the claimant within the 60 day period). Such
communication shall be written in a manner calculated to be
understood by the claimant and shall include specific reasons for
the decision and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has completed one (1) Year of
Service shall be eligible to participate hereunder as of the date
he has satisfied such requirements. However, any Employee who
was a Participant in the Plan prior to the effective date of this
amendment and restatement shall continue to participate in the
Plan. The Employer shall give each prospective Eligible Employee
written notice of his eligibility to participate in the Plan
prior to the close of the Plan Year in which he first becomes an
Eligible Employee.
3.2 APPLICATION FOR PARTICIPATION
In order to become a Participant hereunder, each
Eligible Employee shall make application to the Employer for
participation in the Plan and agree to the terms hereof. Upon
the acceptance of any benefits under this Plan, such Employee
shall automatically be deemed to have made application and shall
be bound by the terms and conditions of the Plan and all
amendments hereto.
3.3 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant
effective as of the first day of the month coinciding with or
next following the date on which such Employee met the
eligibility requirements of Section 3.1, provided said Employee
was still employed as of such date (or if not employed on such
date, as of the date of rehire if a 1-Year Break in Service has
not occurred).
In the event an Employee who is not a member of an
eligible class of Employees becomes a member of an 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.
3.4 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of
each Employee for participation in the Plan based upon
information furnished by the Employer. Such determination shall
be conclusive and binding upon all persons, as long as the same
is made pursuant to the Plan and the Act. Such determination
shall be subject to review per Section 2.13.
3.5 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a
classification of an Eligible Employee to an ineligible
Employee, such Former Participant shall continue to
vest in his interest in the Plan for each Year of
Service completed while a noneligible Employee, until
such time as his Participant's Account shall be
forfeited or distributed pursuant to the terms of the
Plan. Additionally, his interest in the Plan shall
continue to share in the earnings of the Trust Fund.
(b) 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 1-Year
Break in Service, such Employee will participate
immediately upon returning to an eligible class of
Employees. If such Participant incurs a 1-Year Break
in Service, eligibility will be determined under the
break in service rules of the Plan.
3.6 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be
included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution
by his Employer for the year has been made, the Employer shall
make a subsequent contribution, if necessary after the
application of Section, so that the omitted Employee receives a
total amount which the said Employee would have received 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.
3.7 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have
been included as a Participant in the Plan is erroneously
included and discovery of such incorrect inclusion is not made
until after a contribution for the year has been made, the
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 (except for
Deferred Compensation which shall be distributed to the
ineligible person) for the Plan Year in which the discovery is
made.
3.8 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the
Employer, elect voluntarily not to participate in the Plan. The
election not to participate must be communicated to the Employer,
in writing, at least thirty (30) days before the beginning of a
Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to
the Plan:
(a) The amount of the total salary reduction
elections of all Participants made pursuant to Section
4.2(a), which amount shall be deemed an Employer's
Elective Contribution.
(b) On behalf of each Participant who is
eligible to share in matching contributions for the
Plan Year, a discretionary matching contribution to be
determined by the Employer equal to a percentage of
each such Participant's Deferred Compensation, the
exact percentage to be determined each year by the
Employer, which amount shall be deemed an Employer's
Non-Elective Contribution.
Except, however, in applying the matching
percentage specified above, only salary reductions up
to 6% of Compensation shall be considered.
(c) On behalf of each Participant who is
eligible to share in the Qualified Non-Elective
Contribution for the Plan Year, a discretionary
Qualified Non-Elective Contribution equal to a
percentage of each eligible individual's Compensation,
the exact percentage to be determined each year by the
Employer.
(d) A discretionary amount which may or may not
out of its current or accumulated Net Profit, which
amount shall be deemed an Employer's Non-Elective
Contribution.
(e) Notwithstanding the foregoing, however, the
Employer's contributions for any Plan Year shall not
exceed the maximum amount allowable as a deduction to
the Employer under the provisions of Code Section 404.
All contributions by the Employer shall be made in cash
or in such property as is acceptable to the Trustee.
(f) Except, however, to the extent necessary to
provide the top heavy minimum allocations, the Employer
shall make a contribution even if it exceeds current or
accumulated Net Profit or the amount which is
deductible under Code Section 404.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer from 1%
to 10% of his Compensation which would have been
received in the Plan Year, but for the deferral
election. A deferral election (or modification of an
earlier election) may not be made with respect to
Compensation which is currently available on or before
the date the Participant executed such election.
The amount by which Compensation is reduced
shall be that Participant's Deferred Compensation and
be treated as an Employer Elective Contribution and
allocated to that Participant's Elective Account.
(b) The balance in each Participant's Elective
Account shall be fully Vested at all times and shall
not be subject to Forfeiture for any reason.
(c) Amounts held in the Participant's Elective
Account may be distributable as permitted under the
Plan but in no event prior to the earlier of:
(1) a Participant's termination of Employment,
Total and Permanent Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the proven financial hardship of a
Participant, subject to the limitations of Section
6.10;
(4) the termination of the Plan without the
establishment or existence of a "successor plan,"
as that term is described in Regulation 1.401(k)-
1(d)(3);
(5) the date of disposition by the Employer to
an entity that is not an Affiliated Employer 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 with respect to a Participant who
continues employment with the corporation
acquiring such assets; or
(6) the date of disposition by the Employer or
an Affiliated Employer who maintains the Plan of
its interest in a subsidiary (within the meaning
of Code Section 409(d)(3)) to an entity which is
not an Affiliated Employer but only with respect
to a Participant who continues employment with
such subsidiary.
(d) For each Plan Year beginning after December
31, 1987, a Participant's Deferred Compensation made
under this Plan and all other plans, contracts or
arrangements of the Employer maintaining this Plan
shall not exceed, during any taxable year of the
Participant, the limitation imposed by Code Section
402(g), as in effect at the beginning of such taxable
year. If such dollar limitation is exceeded, a
Participant will be deemed to have notified the
Administrator of such excess amount which shall be
distributed in a manner consistent with 4.2(f). The
dollar limitation shall be adjusted annually pursuant
to the method provided in Code Section 415(d) in
accordance with Regulations.
(e) In the event a Participant has received a
hardship distribution pursuant to Regulation 1.401(k)-
1(d)(2)(iv)(B) from any other plan maintained by the
Employer, then such Participant shall not be permitted
to elect to have Deferred Compensation contributed to
the Plan on his behalf for a period of twelve (12)
months following the receipt of the distribution.
Furthermore, the dollar limitation under Code Section
402(g) shall be reduced, with respect to the
Participant's taxable year following the taxable year
in which the hardship distribution was made, by the
amount of such Participant's Deferred Compensation, if
any, pursuant to this Plan (and any other plan
maintained by the Employer) for the taxable year of the
hardship distribution.
(f) If a Participant's Deferred Compensation
under this Plan together with any elective deferrals
(as defined in Regulation 1.402(g)-l(b)) under another
qualified cash or deferred arrangement (as defined in
Code Section 401(k)), a simplified employee pension (as
defined in Code Section 408(k)), a salary reduction
arrangement (within the meaning of Code Section
3121(a)(5)(D)), a deferred compensation plan under Code
Section 457, or a trust described in Code Section
501(c)(18) cumulatively exceed the limitation imposed
by Code Section 402(g) (as adjusted annually in
accordance with the method provided in Code Section
415(d) pursuant to Regulations) for such Participant's
taxable year, the Participant may, not later than March
1 following the close of the Participant's taxable
year, notify the Administrator in writing of such
excess and request that his Deferred Compensation under
this Plan be reduced by an amount specified by the
Participant. In such event, the Administrator may
direct the Trustee to distribute such excess amount
(and any Income allocable to such excess amount) to the
Participant not later than the first April 15th
following the close of the Participant's taxable year.
Distributions in accordance with this paragraph may be
made for any taxable year of the Participant which
begins after December 31, 1986. Any distribution of
less than the entire amount of Excess Deferred
Compensation and Income shall be treated as a pro rata
distribution of Excess Deferred Compensation and
Income. The amount distributed shall not exceed the
Participant's Deferred Compensation under the Plan for
the taxable year. Any distribution on or before the
last day of the Participant's taxable year must satisfy
each of the following conditions:
(1) the distribution must be made after the date
on which the Plan received the Excess Deferred
Compensation;
(2) the Participant shall designate the
distribution as Excess Deferred Compensation; and
(3) the Plan must designate the distribution as
a distribution of Excess Deferred Compensation.
Any distribution under this Section shall be
made first from unmatched Deferred Compensation and,
thereafter, from Deferred Compensation which is matched
to the extent that Matched Deferred Compensation is
distributed. Matching Contributions attributable to
such Deferred Compensation shall be forfeited or
distributed in a manner which is nondiscriminatory and
consistent with Regulations, including those relating
to permissible forfeitures.
For the purpose of this Section, "Income"
means the amount of income or loss allocable to a
Participant's Excess Deferred Compensation and shall be
equal to the sum of the allocable gain or loss for the
taxable year of the Participant and the allocable gain
or loss for the period between the end of the taxable
year of the Participant and the date of distribution (a
gap period). The income or loss allocable to each such
period is calculated separately and is determined by
multiplying the income or loss allocable to the
Participant's Deferred Compensation for the respective
period by a fraction. The numerator of the fraction is
the Participant's Excess Deferred Compensation for the
taxable year of the Participant. The denominator is
the balance, as of the last day of the respective
period, of the Participant's Elective Account that is
attributable to the Participant's Deferred Compensation
reduced by the gain allocable to such total amount for
the respective period and increased by the loss
allocable to such total amount for the respective
period.
In lieu of the "fractional method" described
above, a "safe harbor method" may be used to calculate
the allocable income or loss for the "gap period".
Under such "safe harbor method", allocable income or
loss for the "gap period" shall be deemed to equal ten
percent (10%) of the income or loss allocable to a
Participant's Excess Deferred Compensation for the
taxable year of the Participant multiplied by the
number of calendar months in the "gap period". For
purposes of determining the number of calendar months
in the "gap period", a distribution occurring on or
before the fifteenth day of the month shall be treated
as having been made on the last day of the preceding
month and a distribution occurring after such fifteenth
day shall be treated as having been made on the first
day of the next subsequent month.
Income or loss allocable to any distribution
on Excess Deferred Compensation on or before the last
day of the taxable year of the Participant shall be
calculated from the first day of the taxable year of
the Participant to the date on which the distribution
is made pursuant to either the "fractional method" or
the "safe harbor method".
Notwithstanding the above, for the 1987
calendar year, and for Plan Years beginning on or after
the date this Plan is adopted, Income during the "gap
period" shall not be taken into account.
(g) Notwithstanding the above, a Participant's
Excess Deferred Compensation shall be reduced, but not
below zero, by any distribution and/or
recharacterization of Excess Contributions pursuant to
Section 4.6(a) for the Plan Year beginning with or
within the taxable year of the Participant.
(h) At Normal Retirement Date, or such other date
when the Participant shall be entitled to receive
benefits, the fair market value of the Participant's
Elective Account shall be used to provide additional
benefits to the Participant or his Beneficiary.
(i) Employer Elective Contributions made
Pursuant to this Section may be segregated into a
separate account for each Participant, in accordance
with Section 7.1(1) until such time as the allocations
pursuant to Section 4.4 have been made.
(j) The Employer and the Administrator shall
adopt a procedure necessary to implement the salary
reduction elections provided for herein.
4.3 TIME OF PAYMENT OR EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its
contribution to the Plan for each Plan Year within the time
prescribed by law, including extensions of time, for the filing
of the Employer's federal income tax return for the Fiscal Year.
However, Employer Elective Contributions accumulated
through payroll deductions shall be paid to the Trustee as of the
earliest date on which such contributions can reasonably be
segregated from the Employer's general assets, but in any event
within ninety (90) days from the date on which such amounts would
otherwise have been payable to the Participant in cash. The
provisions of Department of Labor regulations 2510.3-102 are
incorporated herein by reference. Furthermore, any additional
Employer contributions which are allocable to the Participant's
Elective Account for a Plan Year shall be paid to the Plan no
later than the twelve-month period immediately following the
close of such Plan Year.
4.4 ALLOCATION OF CONTRIBUTION AND EARNINGS
(a) The Administrator shall establish and
maintain an account in the name of each Participant to
which the Administrator shall credit as of each
Anniversary Date, or other valuation date, all amounts
allocated to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator
with all information required by the Administrator to
make a proper allocation of the Employer's
contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the
Administrator of such information, the Administrator
shall allocate such contribution for any non-Top Heavy
Plan Year in accordance with paragraphs (1) and (2) and
for any Top Heavy Plan Year in accordance with
paragraphs (3) through (6) below:
(1) With respect to the Employer's Elective
Contribution made pursuant to Section 4.1(a), to
each Participant's Elective Account in an amount
equal to each such Participant's Deferred
Compensation for the year.
(2) With respect to the Employer's Non-Elective
Contribution made pursuant to Section 4.1(b), to
each Participant's Account in accordance with
Section 4.1(b).
Any Participant actively employed during the Plan
Year shall be eligible to share in the matching
contribution for the Plan Year.
(3) With respect to the Employer's Qualified
Non-Elective Contribution made pursuant to Section
4.1(c), to each Participant's Elective Account in
accordance with Section 4.1(c).
Any Participant actively employed during the Plan
Year shall be eligible to share in the Qualified
Non-Elective Contribution for the Plan Year.
(4) With respect to the Employer's Non-Elective
Contribution made pursuant to Section 4.1(d), to
each Participant's Account in the same proportion
that each such Participant's Compensation for the
year bears to the total Compensation of all
Participants for such year.
Any Participant actively employed during the Plan
Year shall be eligible to share in the discretionary
contribution for the year.
(c) For any Top Heavy Plan Year, Non-Key
Employees not otherwise eligible to share in the
allocation of contributions as provided above, shall
receive the minimum allocation provided for in Section
4.4(f) if eligible pursuant to the provisions of
Section 4.4(h).
(d) Notwithstanding the foregoing, Participants
who are not actively employed on the last day of the
Plan Year due to Retirement (Early, Normal or Late),
Total and Permanent Disability or death shall or shall
not share in the allocation of contributions for that
Plan Year.
(e) As of each Anniversary Date or other
valuation date, before allocation of Employer
contributions, any earnings or losses (net appreciation
or net depreciation) of the Trust Fund shall be
allocated in the same proportion that each
Participant's and Former Participant's nonsegregated
accounts bear to the total of all Participants' and
Former Participants' nonsegregated accounts as of such
date. If any nonsegregated account of a Participant
has been distributed prior to the Anniversary Date or
other valuation date subsequent to a Participant's
termination of employment, no earnings or losses shall
be credited to such account.
(f) Minimum Allocations Required for Top Heavy
Plan Years: Notwithstanding the foregoing, for any Top
Heavy Plan Year, the sum of the Employer's
contributions allocated to the Participant's Combined
Account of each Non-Key Employee shall be equal to at
least three percent (3%) of such Non-Key Employee's
"415 Compensation" (reduced by contributions and
forfeitures, if any, allocated to each Non-Key Employee
in any defined contribution plan included with this
plan in a Required Aggregation Group). However, if (1)
the sum of the Employer's contributions allocated to
the Participant's Combined Account of each Key Employee
for such Top Heavy Plan Year is less than three percent
(3%) of each Key Employee's "415 Compensation" and (2)
this Plan is not required to be included in an
Aggregation Group to enable a defined benefit plan to
meet the requirements of Code Section 401(a)(4) or 410,
the sum of the Employer's contributions allocated to
the Participant's Combined Account of each Non-Key
Employee shall be equal to the largest percentage
allocated to the Participant's Combined Account of any
Key Employee. However, in determining whether a Non-
Key Employee has received the required minimum
allocation, such Non-Key Employee's Deferred
Compensation and matching contributions needed to
satisfy the "Actual Contribution Percentage" tests
pursuant to Section 4.7(a) shall not be taken into
account.
However, no such minimum allocation shall be
required in this Plan for any Non-Key Employee who
participates in another defined contribution plan
subject to Code Section 412 providing such benefits
included with this Plan in a Required Aggregation
Group.
(g) For purposes of the minimum allocations set
forth above, the percentage allocated to the
Participant's Combined Account of any Key Employee
shall be equal to the ratio of the sum of the
Employer's contributions allocated on behalf of such
Key Employee divided by the "415 Compensation" for such
Key Employee.
(h) For any Top Heavy Plan Year, the minimum
allocations set forth above shall be allocated to the
Participant's Combined Account of all Non-Key Employees
who are Participants and who are employed by the
Employer on the last day of the Plan Year, including
Non-Key Employees who have (l) failed to complete a
Year of Service; and (2) declined to make mandatory
contributions (if required) or, in the case of a cash
or deferred arrangement, elective contributions to the
Plan.
(i) In lieu of the above, in any Plan Year in
which a Non-Key Employee is a Participant in both this
Plan and a defined benefit pension plan included in a
Required Aggregation Group which is top heavy, the
Employer shall not be required to provide such Non-Key
Employee with both the full separate defined benefit
plan minimum benefit and the full separate defined
contribution plan minimum allocation.
Therefore, for any Plan Year when the Plan
is a Top Heavy Plan, a Non-Key Employee who is
participating in this Plan and a defined benefit plan
maintained by the Employer shall receive a minimum
monthly accrued benefit in the defined benefit plan
equal to the product of (l) one-twelfth (1/12th) of
"415 Compensation" averaged over the five (5)
consecutive "limitation years" for actual "limitation
years," if less) which produce the highest average and
(2) the lesser of (i) two percent (2%) multiplied by
years of service when the plan is top heavy or (ii)
twenty percent (20%). Further, the extra minimum
allocation (required by Section 4.9(m) to provide
higher limitations) shall not be provided.
(j) For the purposes of this Section, "415
Compensation" shall be limited to $150,000. Such
amount shall be adjusted at the same time and in the
same manner as permitted under Code Section 415(d),
except that the dollar increase in effect on January 1
of any calendar year shall be effective for the Plan
Year beginning with such calendar year and the first
adjustment to the $150,000 limitation shall be
effective on January 1, 1990. For any short Plan Year
the "415 Compensation" limit shall be an amount equal
to the "415 Compensation" limit for the calendar year
in which the Plan Year begins multiplied by the ratio
obtained by dividing the number of full months in the
short Plan Year by twelve (12). However, for Plan
Years beginning prior to January 1, 1989, the $150,000
limit shall apply only for Top Heavy Plan Years and
shall not be adjusted.
(k) Notwithstanding anything herein to the
contrary, Participants who terminated employment for
any reason during the Plan Year shall share in the
salary reduction contributions made by the Employer for
the year of termination without regard to the Hours of
Service credited.
(l) If a Former Participant is reemployed after
five (5) consecutive l-Year Breaks in Service, then
separate accounts shall be maintained as follows:
(1) one account for nonforfeitable benefits
attributable to pre-break service; and
(2) one account representing his status in the
Plan attributable to post-break service.
(m) Notwithstanding anything to the contrary, for
Plan Years beginning after December 31, 1989, if this
is a Plan that would otherwise fail to meet the
requirements of Code Sections 401(a)(26), 410(b)(1) or
410(b)(2)(A)(i) and the Regulations thereunder because
Employer contributions would not be allocated to a
sufficient number or percentage of Participants for a
Plan Year, then the following rules shall apply:
(1) The group of Participants eligible to share
in the Employer's contribution for the Plan Year
shall be expanded to include the minimum number of
Participants who would not otherwise be eligible
as are necessary to satisfy the applicable test
specified above. The specific Participants who
shall become eligible under the terms of this
paragraph shall be those who are actively employed
on the last day of the Plan Year and, when
compared to similarly situated Participants, have
completed the greatest number of Hours of Service
in the Plan Year.
(2) If after application of paragraph (1) above,
the applicable test is still not satisfied, then
the group of Participants eligible to share in the
Employer's contribution for the Plan Year shall be
further expanded to include the minimum number of
Participants who are not actively employed on the
last day of the Plan Year as are necessary to
satisfy the applicable test. The specific
Participants who shall become eligible to share
shall be those Participants, when compared to
similarly situated Participants, who have
completed the greatest number of Hours of Service
in the Plan Year before terminating employment.
(3) Nothing in this Section shall permit the
reduction of a Participant's accrued benefit.
Therefore any amounts that have previously been
allocated to Participants may not be reallocated
to satisfy these requirements. In such event, the
Employer shall make an additional contribution
equal to the amount such affected Participants
would have received had they been included in the
allocations, even if it exceeds the amount which
would be deductible under Code Section 404. Any
adjustment to the allocations pursuant to this
paragraph shall be considered a retroactive
amendment adopted by the last day of the Plan
Year.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) The "Actual Deferral Percentage", for Plan
Years beginning after the later of the Effective Date
of this Plan or December 31, 1986, for the Highly
Compensated Participant group shall not exceed the
greater of:
(1) 125 percent of such percentage for the Non-
Highly Compensated Participant group; or
(2) the lesser of 200 percent of such percentage
for the Non-Highly Compensated Participant group,
or such percentage for the Non-Highly Compensated
Participant group plus two percentage points.
However, for Plan Years beginning after December
31, 1988, to prevent the multiple use of the
alternative method described in this paragraph and
Code Section 401(m)(9)(A), any Highly Compensated
Participant eligible to make elective deferrals
pursuant to Section 4.2 or any other cash or
deferred arrangement maintained by the Employer or
an Affiliated Employer and to make Employee
contributions or to receive matching contributions
under any plan maintained by the Employer or an
Affiliated Employer shall have his actual
deferral/contribution ratio reduced pursuant to
Regulation 1.401(m)-2. The provisions of Code
Section 401(k)(3) and Regulations 1.401(k)-1(b)
and 1.401(m)-2 are incorporated herein by
reference.
(b) For the purposes of this Section and Section
4.8, "Actual Deferral Percentage" for a Plan Year
means, with respect to the Highly Compensated
Participant group and Non-Highly Compensated
Participant group, the average of the ratios
(calculated separately for each Participant in each
group) of:
(1) the sum of Employer Elective Contributions
and Qualified Non-Elective Contributions, to the
extent such contributions are used to satisfy the
test set forth in this Section made pursuant to
Section 4.1(a) on behalf of each such Participant
for such Plan Year; to
(2) the Participant's "414(s) Compensation" for
such plan year.
(c) The actual deferral ratio for each
Participant and the "Actual Deferral Percentage" for
each group shall be calculated to the nearest one-
hundredth of one percent for Plan Years beginning after
December 31, 1988. Employer Elective Contributions
allocated to each Non-Highly Compensated Participant's
Elective Account shall be reduced by Excess Deferred
Compensation to the extent such excess amounts are made
under this Plan or any other plan maintained by the
Employer.
(d) For the purpose of determining the actual
deferral ratio of a Highly Compensated Employee who is
subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a
"five percent owner" of the Employer or one of the ten
(10) Highly Compensated Employees paid the greatest
"415 Compensation" during the year, the following shall
apply:
(1) The combined actual deferral ratio for the
family group (which shall be treated as one Highly
Compensated Participant) shall be determined by
aggregating Employer Elective Contributions and
"414(s) Compensation" of all eligible Family
Members (including Highly Compensated
Participants). However, in applying the $150,000
limit to "414(s) Compensation," for Plan Years
beginning after December 31, 1988, Family Members
shall include only the affected Employee's spouse
and any lineal descendants who have not attained
age 19 before the close of the Plan Year.
Notwithstanding the foregoing, with respect to
Plan Years beginning prior to January 1, 1990,
compliance with the Regulations then in effect
shall be deemed to be compliance with this
paragraph.
(2) The Employer Elective Contributions and
"414(s) Compensation" of all Family Members shall
be disregarded for purposes of determining the
"Actual Deferral Percentage" of the Non-Highly
Compensated Participant group except to the extent
taken into account in paragraph (1) above.
(3) If a Participant is required to be
aggregated as a member of more than one family
group in a plan, all Participants who are members
of those family groups that include the
Participant are aggregated as one family group in
accordance with paragraphs (1) and (2) above.
(e) For the purposes of this Section and Code
Sections 401(a)(4), 410(b) and 401(k), if two or more
plans which include cash or deferred arrangements are
considered one plan for the purposes of Code Section
401(a)(4) or 410(b) (other than Code Section
410(b)(2)(A)(ii) as in effect for Plan Years beginning
after December 31, 1988), the cash or deferred
arrangements included in such plans shall be treated as
one arrangement. In addition, two or more cash or
deferred arrangements may be considered as a single
arrangement for purposes of determining whether or not
such arrangements satisfy Code Sections 401(a)(4),
410(b) and 401(k). In such a case, the cash or
deferred arrangements included in such plans and the
plans including such arrangements shall be treated as
one arrangement and as one plan for purposes of this
Section and Code Sections 401(a)(4), 410(b) and 401(k).
Plans may be aggregated under this paragraph (e) for
Plan Years beginning after December 31, 1989 only if
they have the same plan year.
Notwithstanding the above, for Plan Years
beginning after December 31, 1988, an employee stock
ownership plan described in Code Section 4975(e)(7) or
409 may not be combined with this Plan for purposes of
determining whether the employee stock ownership plan
or this Plan satisfies this Section and Code Sections
401(a)(4), 410(b) and 401(k).
(f) For the purposes of this Section, if a Highly
Compensated Participant is a Participant under two or
more cash or deferred arrangements (other than a cash
or deferred arrangement which is part of an employee
stock ownership plan as defined in Code Section
4975(e)(7) or 409 for Plan Years beginning after
December 31, 1988) of the Employer or an Affiliated
Employer, all such cash or deferred arrangements shall
be treated as one cash or deferred arrangement for the
purpose of determining the actual deferral ratio with
respect to such Highly Compensated Participant.
However, for Plan Years beginning after December 31,
1988, if the cash or deferred arrangements have
different plan years, this paragraph shall be applied
by treating all cash or deferred arrangements ending
with or within the same calendar year as a single
arrangement.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL, PERCENTAGE TESTS
In the event that the initial allocations of the
Employer's Elective Contributions made pursuant to Section 4.4 do
not satisfy one of the tests set forth in Section 4.5(a) for Plan
Years beginning after December 31, 1986, the Administrator shall
adjust Excess Contributions pursuant to the options set forth
below:
(a) On or before the fifteenth day of the third
month following the end of each Plan Year but not later
than the date provided for in (l)(i) of this Section,
the Highly Compensated Participant having the highest
actual deferral ratio shall have his portion of Excess
Contributions distributed to him, forfeited and/or at
his election recharacterized as a voluntary Employee
contribution pursuant to Section 4.12 until one of the
tests set forth in Section 4.5(a) is satisfied, or
until his actual deferral ratio equals the actual
deferral ratio of the Highly Compensated Participant
having the second highest actual deferral ratio. This
process shall continue until one of the tests set forth
in Section 4.5(a) is satisfied. For each Highly
Compensated Participant, the amount of Excess
Contributions is equal to the Elective Contributions
and Qualified Non-Elective Contributions to the extent
such contributions are used to satisfy the test set
forth in Section 4.5, made on behalf of such Highly
Compensated Participant (determined prior to the
application of this paragraph) minus the amount
determined by multiplying the Highly Compensated
Participant's actual deferral ratio (determined after
application of this paragraph) by his "414(s)
Compensation." However, in determining the amount of
Excess Contributions to be distributed, forfeited
and/or recharacterized with respect to an affected
Highly Compensated Participant as determined herein,
such amount shall be reduced by any Excess Deferred
Compensation previously distributed to such affected
Highly Compensated Participant for his taxable year
ending with or within such Plan Year. Any
distribution, forfeiture and/or recharacterization of
Excess Contributions shall be made in accordance with
the following:
(1) with respect to the distribution of Excess
Contributions pursuant to (a) above, such distribution:
(i) may be postponed but not later than the
close of the Plan Year following the Plan Year to
which they are allocable;
(ii) shall be made first from the Participant's
unmatched from the Participant's unmatched
Elective Contribution, then from the Participant's
matched Elective Contributions, and from any
Qualified Matching Contributions (to the extent
used in the ADP test) in a nondiscriminatory
manner consistent with applicable regulations.
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 Contribution account and
Qualified Matching Contribution account. To the
extent that matched Elective Contributions are
distributed pursuant to this paragraph, matching
contributions (including Qualified Matching
Contributions) attributable to such Elective
Contributions shall be forfeited or distributed in
a manner which is nondiscriminatory and consistent
with regulations, including those relating to
permissible forfeitures.
(iii) shall be adjusted for Income; and
(iv) shall be designated by the Employer
as a distribution of Excess Contributions
(and Income).
(2) With respect to the recharacterization of Excess
Contributions pursuant to (a) above, such
recharacterized amounts:
(i) shall be deemed to have occurred on the date on
which the last of those Highly Compensated Participants
with Excess Contributions to be recharacterized is
notified of the recharacterization and the tax
consequences of such recharacterization;
(ii) for Plan Years ending on or before August 8, 1988,
may be postponed but not later than October 24, 1988;
(iii) shall not exceed the amount of Deferred
Compensation on behalf of any Highly Compensated
Participant for any Plan Year;
(iv) shall be treated as voluntary Employee
contributions for purposes of Code Section 401(a)(4)
and Regulation 1.401(k)-1(b). However, for purposes of
Sections 2.2 and 4.4(f), recharacterized Excess
Contributions continue to be treated as Employer
contributions that are Deferred Compensation. For Plan
Years beginning after December 31, 1988, Excess
Contributions recharacterized as voluntary Employee
contributions shall continue to be nonforfeitable and
subject to the same distribution rules provided for in
Section 4.2(c);
(v) which relate to Plan Years ending on or before
October 24, 1988, may be treated as either Employer
Contributions and therefore shall not be subject to the
restrictions of Section 4.2(c);
(vi) are not permitted if the amount recharacterized
plus voluntary Employee contributions actually made by
such Highly Compensated Participant, exceed the maximum
amount of voluntary Employee contributions (determined
prior to application of Section 4.7(a) that such Highly
Compensated Participant is permitted to make under the
Plan in the absence of recharacterization; and
(vii) shall be adjusted for Income.
(3) Any distribution and/or recharacterization of less than
the entire amount of Excess Contributions shall be treated
as a pro rata distribution and/or recharacterization of
Excess Contributions and Income.
(4) The determination and correction of Excess
Contributions of a Highly Compensated Participant whose
actual deferral ratio is determined under the family
aggregation rules shall be accomplished by reducing the
actual deferral ratio as required herein, and the Excess
Contributions for the family unit shall then be allocated
among the Family Members in proportion to the Elective
Contributions of each Family Member that were combined to
determine the group actual deferral ratio.
(b) Within twelve (12) months after the end of the
Plan Year, the Employer may make a special Qualified Non-
Elective Contribution on behalf of Non-Highly Compensated
Participants in an amount sufficient to satisfy one of the
tests set forth in Section 4.5(a). Such contribution shall
be allocated as permitted under the Code.
(c) For purposes of this Section, "Income" means the
income or loss allocable to Excess Contributions which shall
equal the sum of the allocable gain or loss for the Plan
Year and the allocable gain or loss for the period between
the end of the Plan Year and the date of distribution ("gap
period"). The income or loss allocable to Excess
Contributions for the Plan Year and the "gap period" is
calculated separately and is determined by multiplying the
income or loss for the Plan Year or the "gap period" by a
fraction. The numerator of the fraction is the Excess
Contributions for the Plan Year. The denominator of the
fraction is the total of the Participant's Elective Account
attributable to Elective Contributions and the Participant's
Qualified Non-Elective Account (to the extent such
contributions are used to satisfy the test set forth in this
Section) as of the end of the Plan Year or the "gap period",
reduced by the gain allocable to such total amount for the
Plan Year or the "gap period" and increased by the loss
allocable to such total amount for the Plan Year or the "gap
period".
In lieu of the "fractional method" described
above, a "safe harbor method" may be used to calculate the
allocable Income for the "gap period". Under such "safe
harbor method", allocable Income for the "gap periods shall
be deemed to equal ten percent (10%) of the Income allocable
to Excess Contributions for the Plan Year of the Participant
multiplied by the number of calendar months in the "gap
period". For purposes of determining the number of calendar
months in the "gap period", a distribution occurring on or
before the fifteenth day of the month shall be treated as
having been made on the last day of the preceding month and
a distribution occurring after such fifteenth day shall be
treated as having been made on the first day of the next
subsequent month.
Notwithstanding the above, for Plan Years which
began in 1987 and for Plan Years beginning on or after the
date this Plan is adopted, Income during the "gap period"
may be taken into account.
(d) Any amounts not distributed or
recharacterized within 2 1/2 months after the end of
the Plan Year shall be subject to the 10% Employer
excise tax imposed by Code Section 4979.
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for Plan
Years beginning after December 31, 1986 for the Highly
Compensated Participant group shall not exceed the
greater of:
(1) 125 percent of such percentage for the Non-
Highly Compensated Participant group; or
(2) the lesser of 200 percent of such percentage
for the Non-Highly Compensated Participant group,
or such percentage for the Non-Highly Compensated
Participant group plus 2 percentage points.
However, for Plan Years beginning after December
31, 1988, to prevent the multiple use of the
alternative method described in this paragraph and
Code Section 401 (m) (9) (A), any Highly
Compensated Participant eligible to make elective
deferrals pursuant to Section 4.2 or any other
cash or deferred arrangement maintained by the
Employer or an Affiliated Employer and to make
Employee contributions or to receive matching
contributions under this Plan or under any other
plan maintained by the Employer or an Affiliated
Employer shall have his actual contribution ratio
reduced pursuant to Regulation 1.401(m)-2. The
provisions of Code Section 401(m) and Regulations
1.401(m)-1(b) and 1.401(m)-2 are incorporated
herein by reference.
(b) For the purposes of this Section and Section
4.8, "Actual Contribution Percentage" for a Plan Year means,
with respect to the Highly Compensated Participant group and
Non-Highly Compensated Participant group, the average of the
ratios (calculated separately for each Participant in each
group) of:
(1) the sum of Employer matching contributions
made pursuant to Section 4.1(b) (to the extent
such matching contributions are not used to
satisfy the tests set forth in Section 4.5),
voluntary Employee contributions made pursuant to
Section 4.12, Excess Contributions recharacterized
as voluntary Employee contributions pursuant to
Section 4.6(a) and any forfeitures reallocated in
the same proportion that each Participant's
elective contributions for the year bears to the
elective contributions for all Participants for
such year on behalf of each such Participant for
such Plan Year; to
(2) the Participant's "414(s) Compensation" for
such Plan Year.
(c) For purposes of determining the "Actual
Contribution Percentage" and the amount of Excess Aggregate
Contributions pursuant to Section 4.8(d), only Employer
matching contributions contributed to the Plan prior to the
end of the succeeding Plan Year shall be considered. In
addition, the Administrator may elect to take into account,
with respect to Employees eligible to have Employer matching
contributions pursuant to Section 4.1(b) or voluntary
Employee contributions pursuant to Section 4.12 allocated to
their accounts. The Employer may include Qualified Non-
Elective contributions and any elective deferral
contributions under Section 401(k) of the Code in the
Contribution Percentage Amounts so long as the Actual
Deferral Percentage Test is met in the corresponding plan,
before such amounts are used in the Actual Contribution
Percentage Test under this Plan and continues to be met
following the exclusion of those deferrals used to meet the
Actual Contribution Percentage Test. However, for Plan
Years beginning after December 31, 1988, the Plan Year must
be the same as the plan year of the plan to which the
elective deferrals and the qualified non-elective
contributions are made.
(d) For the purpose of determining the actual
contribution ratio of a Highly Compensated Employee who is
subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Employee is either a "five
percent owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation"
during the year, the following shall apply:
(1) The combined actual contribution ratio for
the family group (which shall be treated as one
Highly Compensated Participant) shall be
determined by aggregating Employer matching
contributions made pursuant to Section 4.1(b) (to
the extent such matching contributions are not
used to satisfy the tests set forth in Section
4.5), voluntary Employee contributions made
pursuant to Section 4.12, Excess Contributions
recharacterized as voluntary Employee
contributions pursuant to Section 4.6(a), any
forfeitures reallocated in the same proportion
that each Participant's elective contributions for
that year bears to the elective contributions for
all Participants for such year and "414(s)
Compensation" of all eligible Family Members
(including Highly Compensated Participants).
However, in applying the $150,000 limit to "414(s)
Compensation" for Plan Years beginning after
December 31, 1988, Family Members shall include
only the affected Employee's spouse and any lineal
descendants who have not attained age 19 before
the close of the Plan Year.
(2) The Employer matching contributions made
pursuant to Section 4.1(b) (to the extent such
matching contributions are not used to satisfy the
tests set forth in Section 4.5), voluntary
Employee contributions made pursuant to Section
4.12, Excess Contributions recharacterized as
voluntary Employee contributions pursuant to
Section 4.6(a), any forfeitures reallocated in the
same proportion that each Participant's elective
contributions for that year bears to the elective
contributions for all Participants for such year
and "414(s) Compensation" of all Family Members
shall be disregarded for purposes of determining
the "Actual Contribution Percentage" of the Non-
Highly Compensated Participant group except to the
extent taken into account in paragraph (l) above.
(3) If a Participant is required to be
aggregated as a member of more than one family
group in a plan, all Participants who are members
of those family groups that include the
Participant are aggregated as one family group in
accordance with paragraphs (1) and (2) above.
(e) For purposes of this Section and Code
Sections 401(a)(4), 410(b) and 401(m), if two or more plans
of the Employer to which matching contributions, Employee
contributions, or both, are made are treated as one plan for
purposes of Code Sections 401(a)(4) or 410(b) (other than
the average benefits test under Code Section 410(b) (2) (A)
(ii) as in effect for Plan Years beginning after December
31, 1988), such plans shall be treated as one plan. In
addition, two or more plans of the Employer to which
matching contributions, Employee contributions, or both, are
made may be considered as a single plan for purposes of
determining whether or not such plans satisfy Code Sections
401(a)(4), 410(b) and 401(m). In such a case, the
aggregated plans must satisfy this Section and Code Sections
401(a)(4), 410(b) and 401(m) as though such aggregated plans
were a single plan. Plans may be aggregated under this
paragraph (e) for Plan Years beginning after December 31,
1988, only if they have the same plan year.
Notwithstanding the above, for Plan Years
beginning after December 31, 1988, an employee stock
ownership plan described in Code Section 4975(e)(7) or 409
may not be aggregated with this Plan for purposes of
determining whether the employee stock ownership plan or
this Plan satisfies this Section and Code Sections 401(a)
(4), 410(b) and 401(m).
(f) If a Highly Compensated Participant is a
Participant under two or more plans (other than an employee
stock ownership plan as defined in Code Section 4975(e)(7)
or 409 for Plan Years beginning after December 31, 1988)
which are maintained by the Employer or an Affiliated
Employer to which matching contributions, Employee
contributions, or both, are made, all such contributions on
behalf of such Highly Compensated Participant shall be
aggregated for purposes of determining such Highly
Compensated Participant's actual contribution ratio.
However, for Plan Years beginning after December 31, 1988,
if the plans have different plan years, this paragraph shall
be applied by treating all plans ending with or within the
same calendar year as a single plan.
(g) For purposes of Sections 4.7(a) and 4.8, a
Highly Compensated Participant and Non-Highly Compensated
Participant shall include any Employee eligible to have
Employer matching contributions made pursuant to Section
4.1(b) (whether or not a deferral election was made or
suspended pursuant to Section 4.2(e)) allocated to his
account for the Plan Year or to make salary deferrals
pursuant to Section 4.2 (if the Employer uses salary
deferrals to satisfy the provisions of this Section) or
voluntary Employee contributions pursuant to Section 4.12
(whether or not voluntary Employee contributions are made)
allocated to his account for the Plan Year.
(h) For purposes of this Section, "Matching
Contribution" shall mean an Employer contribution (including
forfeitures) made to the Plan, or to a contract described in
Code Section 403(b), on behalf of a Participant on account
of an Employee contribution made by such Participant, or on
account of a Participant's deferred compensation, under a
plan maintained by the Employer.
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that, for Plan Years beginning
after December 31, 1986, the "Actual Contribution
Percentage" for the Highly Compensated Participant group
exceeds the "Actual Contribution Percentage" for the Non-
Highly Compensated Participant group pursuant to Section
4.7(a), the Administrator (on or before the fifteenth day of
the third month following the end of the Plan Year, but in
no event later than the close of the following Plan Year)
shall direct the Trustee to distribute or to forfeit from
the Highly Compensated Participant having the highest actual
contribution ratio, his portion of Excess Aggregate
Contributions (and Income allocable to such contributions)
until either one of the tests set forth in Section 4.7(a) is
satisfied, or until his actual contribution ratio equals the
actual contribution ratio of the Highly Compensated
Participant having the second highest actual contribution
ratio. This process shall continue until one of the tests
set forth in Section 4.7(a) is satisfied. The distribution
and/or forfeiture of Excess Aggregate Contributions shall be
made in a manner which is non-discriminatory and consistent
with the regulations including those relating to permissible
forfeitures.
(b) Any distribution or forfeiture of less than
the entire amount of Excess Aggregate Contributions (and
Income) shall be treated as a pro rata distribution of
Excess Aggregate Contributions and Income. Distribution of
Excess Aggregate Contributions shall be designated by the
Employer as a distribution of Excess Aggregate Contributions
(and Income). Forfeitures of Excess Aggregate Contributions
shall be treated in accordance with Section 4.4. However,
no such forfeiture may be allocated to a Highly Compensated
Participant whose contributions are reduced pursuant to this
Section.
(c) Excess Aggregate Contributions attributable
to amounts other than voluntary Employee contributions,
including forfeited matching contributions, shall be treated
as Employer contributions for purposes of Code Sections 404
and 415 even if distributed from the Plan.
(d) For the purposes of this Section and Section
4.6 "Excess Aggregate Contributions" means, with respect to
any Plan Year, the excess of:
(1) the aggregate amount of Employer matching
contributions made pursuant to Section 11.1(b) (to
the extent such contributions are taken into
account pursuant to Section 4.5(a)), voluntary
Employee contributions made pursuant to Section
4.8, Excess Contributions recharacterized as
voluntary Employee contributions pursuant to
Section 4.6, forfeitures reallocated in the same
proportion that each Participant's elective
contribution for the year bears to the elective
contribution for all Participants for such year
and any Qualified Non-Elective Contributions or
elective deferrals taken into account pursuant to
Section 4.5(c) actually made on behalf of the
Highly Compensated Participant group for such Plan
Year, over
(2) the maximum amount of such contributions
permitted under the limitations of Section 4.5(a).
(e) For each Highly Compensated Participant, the
amount of Excess Aggregate Contributions is equal to the
Employer matching contributions made pursuant to Section
4.1(b) (to the extent taken into account pursuant to Section
4.5(a)), voluntary Employee contributions made pursuant to
Section 4.12, Excess Contributions recharacterized as
voluntary Employee contributions pursuant to Section 4.6(a),
forfeitures reallocated in the same proportion that each
Participant's elective contributions for the year bears to
the elective contributions for all Participants for such
year and any Qualified Non-Elective Contributions or
elective deferrals taken into account pursuant to Section
4.7(c) on behalf of the Highly Compensated Participant
(determined prior to the application of this paragraph)
minus the amount determined by multiplying the Highly
Compensated Participant's actual contribution ratio
(determined after application of this paragraph) by his
"414(s) Compensation." The actual contribution ratio must
be rounded to the nearest one-hundredth of one percent for
Plan Years beginning after December 31, 1988. In no case
shall the amount of Excess Aggregate Contribution with
respect to any Highly Compensated Participant exceed the
amount of Employer matching contributions made pursuant to
Section 4.1(b) (to the extent taken into account pursuant to
Section 4.5(a)), voluntary Employee contributions made
pursuant to Section 4.12, Excess Contributions
recharacterized as voluntary Employee contributions pursuant
to Section 4.6(a), forfeitures reallocated in the same
proportion that each Participant's elective contributions
for the year bears to the elective contributions for all
Participants for such year and any Qualified Non-Elective
Contributions or elective deferrals taken into account
pursuant to Section 4.7(c) on behalf of such Highly
Compensated Participant for such Plan Year.
(f) The determination of the amount of Excess
Aggregate Contributions with respect to any Plan Year shall
be made after first determining the Excess Contributions, if
any, to be treated as voluntary Employee contributions due
to recharacterization for the plan year of any other
qualified cash or deferred arrangement (as defined in Code
Section 401(k)) maintained by the Employer that ends with or
within the Plan Year or which are treated as voluntary
Employee contributions due to recharacterization pursuant to
Section 4.6(a).
(g) The determination and correction of Excess
Aggregate Contributions of a Highly Compensated Participant
whose actual contribution ratio is determined under the
family aggregation rules shall be accomplished by reducing
the actual contribution percentage ratio as required herein
and the Excess Aggregate Contributions for the family unit
shall be allocated among the Family Members in proportion to
the sum of Employer matching contributions made pursuant to
Section 4.1(b) (to the extent taken into account pursuant to
Section 4.5(a)), voluntary Employee contributions made
pursuant to Section 4.12, Excess Contributions
recharacterized as voluntary Employee contributions pursuant
to Section 4.6(a), forfeitures allocated in the same
proportion that each Participant's elective contributions
for the year bears to the elective contributions for all
Participants for such year and any qualified non-elective
contributions or elective deferrals taken into account
pursuant to Section 4.7(c) of each Family Member that were
combined to determine the group actual contribution ratio.
(h) Notwithstanding the above, within twelve (12)
months after the end of the Plan Year, the Employer may make
a special Qualified Non-Elective Contribution on behalf of
Non-Highly Compensated Participants in an amount sufficient
to satisfy one of the tests set forth in Section 4.7(a).
Such contribution shall be allocated to the Participant's
Qualified Non-Elective Account of each Non-Highly
Compensated Participant as permitted under the Code. A
separate account shall be maintained for contributions made
pursuant to this paragraph.
(i) For purposes of this Section, "Income" means
the income or loss allocable to Excess Aggregate
Contributions which shall equal the sum of the allocable
gain or loss for the Plan Year and the allocable gain or
loss for the period between the end of the Plan Year and the
date of distribution ("gap period"). The income or loss
allocable to Excess Aggregate Contributions for the Plan
Year and the "gap period" is calculated separately and is
determined by multiplying the income or loss for the Plan
Year or the "gap period" by a fraction. The numerator of
the fraction is the Excess Aggregate Contributions for the
Plan Year. The denominator of the fraction is the total
Participant's Account and Voluntary Contribution Account
attributable to Employer matching contributions subject to
Section 4.7, voluntary Employee contributions made pursuant
to Section 4.12, and any Qualified Non-Elective
Contributions and elective deferrals taken into account
pursuant to Section 4.7(c) as of the end of the Plan Year or
the "gap period" reduced by the gain allocable to such total
amount for the Plan Year of the "gap period" and increased
by the loss allocable to such total amount for the Plan Year
or the "gap period".
In lieu of the "fractional method" described
above, a "safe harbor method" may be used to calculate the
allocable Income for the "gap period". Under such "safe
harbor method", allocable Income for the "gap period" shall
be deemed to equal ten percent (10%) of the Income allocable
to Excess Aggregate Contributions for the Plan Year of the
Participant multiplied by the number of calendar months in
the "gap period". For purposes of determining the number of
occurring on or before the fifteenth day of the month shall
be treated as having been made on the last day of the
preceding month and a distribution occurring after such
fifteenth day shall be treated as having been made on the
first day of the next subsequent month.
The Income allocable to Excess Aggregate
Contributions resulting from recharacterization of Elective
Contributions shall be determined and distributed as if such
recharacterized Elective Contributions had been distributed
as Excess Contributions.
Notwithstanding the above, for Plan Years which
began in 1987, and for Plan Years beginning on or after the
date this Plan is adopted, Income during the "gap period"
may be taken into account.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum
annual additions credited to a Participant's accounts
for any "limitation year" shall equal the lesser of:
(1) $30,000 (or, if greater, one-fourth of the dollar
limitation in effect under Code Section 415(b)(1)(A))
or (2) twenty-five percent (25%) of the Participant's
"415 Compensation" for such "limitation year." For any
short "limitation year," the dollar limitation in (1)
above shall be reduced by a fraction, the numerator of
which is the number of full months in the short
limitation years and the denominator of which is twelve
(12).
(b) For purposes of applying the limitations of
Code Section 415, "annual addition" means the sum
credited to a Participant's accounts for any
"limitation year" of (1) Employer contributions, (2)
Employee contributions for limitation years beginning
after December 31, 1986, (3) forfeitures, (4) amounts
allocated, after March 31, 1984, to an individual
medical account, as defined in Code Section 415(1)(2)
which is part of a pension or annuity plan maintained
by the Employer and (5) amounts derived from
contributions paid or accrued after December 31, 1985,
in taxable years ending after such date, which are
attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as
defined in Code Section 419(A)(d)(3)) under a welfare
benefit plan (as defined in Code Section 4(9)(e))
maintained by the Employer. Except, however, the "415
Compensation" percentage limitation referred to in
paragraph (a)(2) above shall not apply to: (1) any
contribution for medical benefits (within the meaning
of Code Section 419(A)(f)(2)) after separation from
service which is otherwise treated as an "annual
addition," or (2) any amount otherwise treated as an
"annual additions" under Code Section 415(l)(1).
(c) For purposes of applying the limitations of
Code Section 415, the transfer of funds from one
qualified plan to another is not an "annual addition."
In addition, the following are not Employee
contributions for the purposes of Section 4.9(b)(2):
(l) rollover contributions (as defined in Code Sections
402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2)
repayments of loans made to a Participant from the
Plan; (3) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(7)(B) (cash-
outs); (4) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(3)(D)
(mandatory contributions); and (5) Employee
contributions to a simplified employee pension
excludable from gross income under Code Section
408(k)(6).
(d) For purposes of applying the limitations of
Code Section 415, the "limitation year" shall be the
Plan Year.
(e) The dollar limitation under Code Section
415(b)(1)(A) stated in paragraph (a)(l) above shall be
adjusted annually as provided in Code Section 415(d)
pursuant to the Regulations. The adjusted limitation
is effective as of January 1st of each calendar year
and is applicable to "limitation years" ending with or
within that calendar year.
(f) For the purpose of this Section, all
qualified defined benefit plans (whether terminated or
not) ever maintained by the Employer shall be treated
as one defined benefit plan, and all qualified defined
contribution plans (whether terminated or not) ever
maintained by the Employer shall be treated as one
defined contribution plan.
(g) For the purpose of this Section, if the
Employer is a member of a controlled group of
corporations, trades or businesses under common control
(as defined by Code Section 1563(a) or Code Section
414(b) and (c) as modified by Code Section 415(h)), is
a member of an affiliated service group (as defined by
Code Section 414(m)), or is a member of a group of
entities required to be aggregated pursuant to
Regulations under Code Section 414(o), all Employees of
such Employers shall be considered to be employed by a
single Employer.
(h) For the purpose of this Section, if this Plan
is a Code Section 413(c) plan, all Employers of a
Participant who maintain this Plan will be considered
to be a single Employer.
(i)(1) If a Participant participates in more than
one defined contribution plan maintained by the
Employer which have different Anniversary Dates, the
maximum "annual additions" under this Plan shall equal
the maximum "annual additions" for the "limitation
year" minus any "annual additions" previously credited
to such Participant's accounts during the "limitation
year."
(2) If a Participant participates in both a
defined contribution plan subject to Code Section
412 and a defined contribution plan not subject to
Code Section 412 maintained by the Employer which
have the same Anniversary Date, "annual additions"
will be credited to the Participant's accounts
under the defined contribution plan subject to
Code Section 412 prior to crediting "annual
additions" to the Participant's accounts under the
defined contribution plan not subject to Code
Section 412.
(3) If a Participant participates in more than
one defined contribution plan not subject to Code
Section 412 maintained by the Employer which have
the same Anniversary Date, the maximum "annual
additions" under this Plan shall equal the product
of (A) the maximum "annual additions" for the
"limitation year" minus any "annual additions"
previously credited under subparagraphs (1) or (2)
above, multiplied by (B) a fraction (i) the
numerator of which is the "annual additions" which
would be credited to such Participant's accounts
under this Plan without regard to the limitations
of Code Section 415 and (ii) the denominator of
which is such "annual additions" for all plans
described in this subparagraph.
(j) If an Employee is (or has been) a Participant
in one or more defined benefit plans and one or more
defined contribution plans maintained by the Employer,
the sum of the defined benefit plan fraction and the
defined contribution plan fraction for any "limitation
year" may not exceed 1.0.
(k) The defined benefit plan fraction for any
"limitation year" is a fraction, the numerator of which
is the sum of the Participant's projected annual
benefits under all the defined benefit plans (whether
or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of
the dollar limitation determined for the "limitation
year" under Code Sections 415(b) and (d) or 140 percent
of the highest average compensation, including any
adjustments under Code Section 415(b).
Notwithstanding the above, if the
Participant was a Participant as of the first day of
the first "limitation year" beginning after
December 31, 1986, in one or more defined benefit plans
maintained by the Employer 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.
(l) The defined contribution plan fraction for
any "limitation year" is a fraction, the numerator of
which is the sum of the annual additions to the
Participant's Account under all the defined
contribution plans (whether or not terminated)
maintained by the Employer for the current and all
prior "limitation years" (including the annual
additions attributable to the Participant's
nondeductible Employee contributions to all defined
benefit plans, whether or not terminated, maintained by
the Employer, and the annual additions attributable to
all welfare benefit funds, as defined in Code Section
419(e), and individual medical accounts, as defined in
Code Section 415(l)(2), maintained by the Employer),
and the denominator of which is the sum of the maximum
aggregate amounts for the current and all prior
"limitation years" of service with the Employer
(regardless of whether a defined contribution plan was
maintained by the Employer). The maximum aggregate
amount in any "limitation year" is the lesser of 125
percent of the dollar limitation determined under Code
Sections 415(b) and (d) in effect under Code Section
415(c)(1)(A) or 35 percent of the Participant's
Compensation for such year.
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
(1) the excess of the sum of the fractions over 1.0
times (2) 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.
(m) Notwithstanding the foregoing, for any
"limitation year" in which the Plan is a Top Heavy
Plan, 100 percent shall be substituted for 125 percent
in Sections 4.9(k) and 4.9(l) unless the extra minimum
allocation is being provided pursuant to Section 4.4.
However, for any "limitation year" in which the Plan is
a Super Top Heavy Plan, 100 percent shall be
substituted for 125 percent in any event.
(n) If the sum of the defined benefit plan
fraction and the defined contribution plan fraction
shall exceed 1.0 in any "limitation year" for any
Participant in this Plan, the Administrator shall
limit, to the extent necessary, the "annual additions"
to such Participant's accounts for such "limitation
year." If, after limiting the "annual additions" to
such Participant's accounts for the "limitation year,"
"the sum of the defined benefit plan fraction and the
defined contribution plan fraction still exceed 1.0,
the Administrator shall then adjust the numerator of
the defined benefit plan fraction so that the sum of
both fractions shall not exceed 1.0 in any "limitation
year" for such Participant.
(o) Notwithstanding anything contained in this
Section to the contrary, the limitations, adjustments
and other requirements prescribed in this Section shall
at all times comply with the provisions of Code Section
415 and the Regulations thereunder, the terms of which
are specifically incorporated herein by reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in
estimating a Participant's Compensation, a reasonable
error in determining the amount of elective deferrals
(within the meaning of Code Section 402(g)(3) that may
be made with respect to any Participant under the
limits of Section 4.9 or other facts and circumstances
to which Regulation 1.415-6(b)(6) shall be applicable,
the "annual additions" under this Plan would cause the
maximum "annual additions" to be exceeded for any
Participant, the Administrator shall (1) distribute any
elective deferrals plus interest (within the meaning of
Code Section 402(g)(3) or return any voluntary Employee
contributions plus interest credited for the
"limitation year" to the extent that the return would
reduce the "excess amount" in the Participant's
accounts (2) hold any "excess amount" plus interest
remaining after the return of any elective deferrals or
voluntary Employee contributions in a "Section 415
suspense account" (3) use the "Section 415" suspense
account" in the next "limitation year" (and succeeding
"limitation years" if necessary) to reduce Employer
contributions for that Participant if that Participant
is covered by the Plan as of the end of the "limitation
year," or if the Participant is not so covered,
allocate and reallocate the "Section 415 suspense
account" in the next "limitation year" (and succeeding
"limitation years" if necessary) to all Participants in
the Plan before any Employer or Employee contributions
which would constitute "annual additions" are made to
the Plan for such "limitation year" (4) reduce Employer
contributions to the Plan for such "limitation year" by
the amount of the "Section 415 suspense account"
allocated and reallocated during such "limitation
year."
(b) For purposes of this Article, "excess amount"
for any Participant for a "limitation year" shall mean
the excess, if any, of (1) the "annual additions" which
would be credited to his account under the terms of the
Plan without regard to the limitations of Code Section
415 over (2) the maximum "annual additions" determined
pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415
suspense account" shall mean an unallocated account
equal to the sum of "excess amounts" for all
Participants in the Plan during the "limitation year."
The "Section 415 suspense account" shall not share in
any earnings or losses of the Trust Fund.
4.11 ROLLOVERS
(a) With the consent of the Administrator,
amounts may be rolled over into this Plan by, provided
that the rollover will not jeopardize the tax exempt
status of the Plan or create adverse tax consequences
for the Employer. The amounts rolled over shall be set
up in a separate account herein referred to as a
"Participant's Rollover Account." Such account shall
be fully Vested at all times and shall not be subject
to Forfeiture for any reason. The Trustee shall have
no duty or responsibility to inquire as to the
propriety of the amount, value or type of assets
transferred, nor to conduct any due diligence with
respect to such assets; provided, however, that such
assets are otherwise eligible to be held by the Trustee
under the terms of this Plan.
(b) Amounts in a Participant's Rollover Account
shall be held by the Trustee pursuant to the provisions
of this Plan and may not be withdrawn by, or
distributed to the Participant, in whole or in part,
except as provided in paragraph (c) of this Section or
Section 6.11.
(c) At Normal Retirement Date, or such other date
when the Participant or his Beneficiary shall be
entitled to receive a distribution, the fair market
value of the Participant's Rollover Account shall be
used to provide additional benefits to the Participant
or his Beneficiary. Any distributions of amounts held
in a Participant's Rollover Account shall be made in a
manner which is consistent with and satisfies the
provisions of Section 6.5, including, but not limited
to, all notice and consent requirements of Code Section
411(a)(ll) and the Regulations thereunder.
Furthermore, such amounts shall be considered as part
of a Participant's benefit in determining whether an
involuntary cash-out of benefits without Participant
consent may be made.
(d) The Administrator may direct that employee
rollovers made after a valuation date be segregated
into a separate account for each Participant until such
time as the allocations pursuant to this Plan have been
made, at which time they may remain segregated or be
invested as part of the general Trust Fund, to be
determined by the Administrator.
(e) For purposes of this Section, the term
"rollover" shall mean (i) distributions received by an
Employee from another qualified plan which are eligible
rollover distributions and which are transferred by the
Employee to this Plan within sixty (60) days following
his receipt thereof; (ii) amounts transferred to this
Plan from a conduit individual retirement account
provided that the conduit individual retirement account
has no assets other than assets which (A) were
previously distributed to the Employee by another
qualified plan as a lump-sum distribution (B) were
eligible for tax-free rollover to a qualified plan and
(C) were deposited in such conduit individual
retirement account within sixty (60) days of receipt
thereof and other than earnings on said assets; and
(iii) amounts distributed to the Employee from a
conduit individual retirement account meeting the
requirements of clause (ii) above, and transferred by
the Employee to this Plan within sixty (60 days) of his
receipt thereof from such conduit individual retirement
account.
(f) Prior to accepting any rollovers to which
this Section applies, the Administrator may require the
Employee to establish that the amounts to be rolled
over to this Plan meet the requirements of this Section
and may also require the Employee to provide an opinion
of counsel satisfactory to the Employer that the
amounts to be transferred meet the requirements of this
Section.
4.12 VOLUNTARY CONTRIBUTIONS
(a) In order to allow all Participants the
opportunity to increase their retirement income, each
Participant may, at the discretion of the
Administrator, elect to voluntarily contribute from 1%
to 5% of his Compensation earned while a Participant
under this Plan. Such contributions shall be paid to
the Trustee within a reasonable period of time but in
no event later than ninety (90) days after the receipt
of the contribution. The balance in each Participant's
Voluntary Contribution Account shall be fully Vested at
all times and shall not be subject to Forfeiture for
any reason. A Participant may, by written notice to
the Employer increase or decrease the rate of Voluntary
Contributions as of the first day of each month.
(b) A Participant may elect to withdraw his
voluntary contributions from his Voluntary Contribution
Account and the actual earnings thereon in a manner
which is consistent with and satisfies the provisions
of Section 6.5 and Section 6.11, including, but not
limited to, all notice and consent requirements of Code
Section 411(a)(11) and the Regulations thereunder. If
the Administrator maintains sub-accounts with respect
to voluntary contributions (and earnings thereon) which
were made on or before a specified date, a Participant
shall be permitted to designate which sub-account shall
be the source for his withdrawal.
(c) At Normal Retirement Date, or such other date
when the Participant or his Beneficiary shall be
entitled to receive benefits, the fair market value of
the Voluntary Contribution Account shall be used to
provide additional benefits to the Participant or his
Beneficiary. Any distributions of amounts held in a
Voluntary Contribution Account shall be made in a
manner which is consistent with and satisfies the
provisions of Section 6.5, including, but not limited
to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder. If the
Administrator maintains sub-accounts with respect to
voluntary contributions and (earnings thereon) which
were made on or before a specified date, a Participant
shall be permitted to designate which sub-account shall
be the source for his withdrawal. No Forfeitures shall
occur solely as a result of an Employee's withdrawal of
Employee contributions.
(d) The Administrator may direct that voluntary
contributions made after a valuation date be segregated
into a separate account until such time as the
allocations pursuant to this Plan have been made, at
which time they may remain segregated or be invested as
part of the general Trust Fund, to be determined by the
Administrator.
(e) All amounts allocated to a Voluntary
Contribution Account may be treated as a Directed
Investment Account pursuant to Section 4.13.
4.13 DIRECTED INVESTMENT ACCOUNT
(a) The Administrator, in his sole discretion,
may determine that all Participants be permitted to
direct the Trustee as to the investment of all or a
portion of any one or more of their individual account
balances. Participants may direct the Trustee in
writing to invest their account in specific assets as
permitted by the Administrator provided such
investments are in accordance with the Department of
Labor regulations under Act Section 404(c) and are
permitted by the Plan. That portion of the account of
any Participant so directing will thereupon be
considered a "Directed Investment Account". The
Trustee shall not act as a Fiduciary with respect to
any Participant directions and shall have no duty to
inquire as to the permissibility or appropriateness of
the assets or the propriety of any such directions.
The Trustee shall accept Participant directions only in
accordance with the procedure established pursuant to
paragraph (c) below.
(b) A separate Directed Investment Account shall
be established and maintained by the Recordkeeper for
each Participant who has directed an investment.
Transfers between the Participant's regular account and
his Directed Investment Account shall be charged and
credited as the case may be to each account. The
Directed Investment Account shall not share in Trust
Fund earnings, but it shall be charged or credited as
appropriate with the net earnings, gains, losses and
expenses as well as any appreciation or depreciation in
market value during each Plan Year attributable to such
account.
(c) The Administrator shall designate Aetna to
receive, summarize and relay, in accordance with its
normal business procedures, to the Trustee, Participant
direction permitted under Section 4.13(a), to be
applied in a uniform and nondiscriminatory manner,
setting forth the permissible investment options under
this Section, how often changes between investments may
be made, and any other limitations that the
Administrator shall impose on a Participant's right to
direct investments.
(d) If a stable value investment option (e.g., a
plan investment option comprised in whole or in part of
GICs or other investment contracts which provide for
stable principal value) is available to Participants,
then interfund transfer rules governing Participant
transactions will be established and maintained to
conform with the most restrictive interfund transfer
rules contained in the contract(s) used to fund the
stable value investment option.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Trustee shall as of each Anniversary Date, and at
such other date or dates deemed necessary by the Administrator,
herein called "valuation date," to determine the net worth of the
assets comprising the Trust Fund as it exists on the "valuation
date." In determining such net worth, the Trustee shall value
the assets comprising the Trust Fund at their fair market value
as of the "valuation date" and shall deduct all expenses for
which the Trustee has not yet obtained reimbursement from the
Employer or the Trust Fund. Notwithstanding the foregoing, the
Trustee shall conclusively rely on any valuation of the assets
comprising the Trust Fund or any investment funds available to
the Plan as provided by Aetna or the Administrator as
appropriate.
5.2 METHOD OF VALUATION
In determining the fair market-value of securities held
in the Trust Fund which are listed on a registered stock
exchange, the Trustee shall value the same at the prices they
were last traded on such exchange preceding the close of business
on the "valuation date." If such securities were not traded on
the "valuation date," or if the exchange on which they are traded
was not open for business on the "valuation date," then the
securities shall be valued at the prices at which they were last
traded prior to the "valuation date." Any unlisted security held
in the "Trust Fund" shall be valued at its bid price next
preceding the close of business on the "valuation date," which
bid price shall be obtained from a registered broker or an
investment banker. In determining the fair market value of
assets other than securities for which trading or bid prices can
be obtained, the Trustee may appraise such assets as directed by
the Administrator, employ one or more appraisers for that purpose
and rely conclusively on the values established by such appraiser
or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the
Employer and retire for the purposes hereof on his Normal
Retirement Date or Early Retirement Date. However, a Participant
may postpone the termination of his employment with the Employer
to a later date, in which event the participation of such
Participant in the Plan, including the right to receive
allocations pursuant to Section 4.4, shall continue until his
Late Retirement Date. Upon a Participant's Retirement Date or
attainment of his Normal Retirement Date without termination of
employment with the Employer, or as soon thereafter as is
practicable, the Administrator shall distribute all amounts
credited to such Participant's Combined Account in accordance
with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his
Retirement Date or other termination of his employment,
all amounts credited to such Participant's Combined
Account shall become fully Vested. The Administrator
shall direct, in accordance with the provisions of
Sections 6.6 and 6.7, the distribution of the deceased
Participant's accounts to the Participant's
Beneficiary.
(b) Upon the death of a Former Participant, the
Administrator shall direct, in accordance with the
provisions of Sections 6.6 and 6.7, the distribution of
any remaining Vested amounts credited to the accounts
of such deceased Former Participant to such Former
Participant's Beneficiary.
(c) Any security interest held by the Plan by
reason of an outstanding loan to the Participant or
Former Participant shall be taken into account in
determining the amount of the death benefit.
(d) The Administrator may require such proper
proof of death and such evidence of the right of any
person to receive payment of the value of the account
of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's
determination of death and of the right of any person
to receive payment shall be conclusive.
(e) The Beneficiary of the death benefit payable
pursuant to this Section shall be the Participant's
spouse. Except, however, the Participant may designate
a Beneficiary other than his spouse if:
(1) the spouse has waived the right to be the
Participant's Beneficiary, or
(2) the Participant is legally separated or has
been abandoned (within the meaning of local law)
and the Participant has a court order to such
effect (and there is no "qualified domestic
relations order" as defined in Code Section 414(p)
which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a
Beneficiary shall be made on a form satisfactory to the
Administrator. A Participant may at any time revoke
his designation of a Beneficiary or change his
Beneficiary by filing written notice of such revocation
or change with the Administrator. However, the
Participant's spouse must again consent in writing to
any change in Beneficiary unless the original consent
acknowledged that the spouse had the right to limit
consent only to a specific Beneficiary and that the
spouse voluntarily elected to relinquish such right.
In the event no valid designation of Beneficiary exists
at the time of the Participant's death, the death
benefit shall be payable to his estate.
(f) Any consent by the Participant's spouse to
waive any rights to the death benefit must be in
writing, must acknowledge the effect of such waiver,
and be witnessed by a Plan representative or a notary
public. Further, the spouse's consent must be
irrevocable and must acknowledge the specific nonspouse
Beneficiary.
(g) In the event of any conflict between the
terms of this Plan and the terms of any contract issued
hereunder, the Plan provisions shall control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent
Disability prior to his Retirement Date or other termination of
his employment, all amounts credited to such Participant's
Combined Account shall become fully Vested. In the event of a
Participant's Total and Permanent Disability, the Administrator,
in accordance with the provisions of Sections 6.5 and 6.7, shall
direct the distribution to such Participant of all amounts
credited to such Participant's Combined Account as though he had
retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) In the event that a Participant's employment
is terminated for any reason other than death, Total
and Permanent Disability or retirement, the
Administrator may direct the Trustee to distribute the
amount of the Vested portion of such Terminated
Participant's Combined Account to such Participant as
soon as practicable in accordance with the form of
distribution selected by the Participant. The amount
of the portion of the Participant's Combined Account
that is not Vested may be credited to a separate
account (which will always share in gains and losses of
the Trust Fund) and at such time as the amount becomes
a Forfeiture shall be treated in accordance with the
provisions of the Plan regarding Forfeitures.
Distribution of the funds due to a
Terminated Participant shall be made on the occurrence
of an event which would result in the distribution had
the Terminated participant remained in the employ of
the Employer (upon the Participant's death, Total and
Permanent Disability, Early or Normal Retirement).
However, at the election of the Participant, the
Administrator shall direct that the entire Vested
portion of the Terminated Participant's Combined
Account be payable to such Terminated Participant. Any
distribution under this paragraph shall be made in a
manner which is consistent with and satisfies the
provisions of Section 6.5, including, but not limited
to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.
Notwithstanding the above, if the value of a
Terminated Participant's Vested benefit derived from
Employer and Employee contributions does not exceed,
and at the time of any prior distribution, has never
exceeded $3,500, the Administrator shall direct that
the entire Vested benefit be paid to such Participant
in a single lump sum without regard to the consent of
the Participant or the Participant's spouse.
(b) A Participant shall become fully Vested in
his Participant's Account immediately upon entry into
the Plan.
(c) The computation of a Participant's
nonforfeitable percentage of his interest in the Plan
shall not be reduced as the result of any direct or
indirect amendment to this Plan. For this purpose, the
Plan shall be treated as having been amended if the
Plan provides for an automatic change in vesting due to
a change in top heavy status. In the event that the
Plan is amended to change or modify any vesting
schedule, a Participant with at least three (3) Years
of Service as of the expiration date of the election
period may elect to have his nonforfeitable percentage
computed under the Plan without regard to such
amendment. If a Participant fails to make such
election, then such Participant shall be subject to the
new vesting schedule. The Participant's election
period shall commence on the adoption date of the
amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written
notice of the amendment from the Employer or
Administrator.
(d)(1) If any Former Participant shall be
reemployed by the Employer before a l-Year Break in
Service occurs, he shall continue to participate in the
Plan in the same manner as if such termination had not
occurred.
(2) A Former Participant shall participate in
the Plan as of his date of reemployment.
(3) If a Former Participant completes a Year of
Service (a l-Year Break in Service previously
occurred, but employment had not terminated), he
shall participate in the Plan retroactively from
the first day of the Plan Year during which he
completes one (1) Year of Service.
6.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election
of the Participant, shall direct the Trustee to
distribute to a Participant or his Beneficiary any
amount to which he is entitled under the Plan in one
lump-sum payment in cash.
(b) Any distribution to a Participant who has a
benefit which exceeds, or has ever exceeded at the time
of any prior distribution, $3,500, shall require such
Participant's consent if such distribution occurs prior
to the later of his Normal Retirement Age or the date
determined in Section 6.5(c)(1). With regard to this
required consent:
(1) The Participant must be informed of his
right to defer receipt of the distribution. If a
Participant fails to consent, it shall be deemed
an election to defer the distribution of any
benefit. However, any election to defer the
receipt of benefits shall not apply with respect
to distributions which are required under Section
6.5(c).
(2) Notice of the rights specified under this
paragraph shall be provided no less than 30 days
and no more than 90 days before the first day on
which all events have occurred which entitle the
Participant to such benefit.
(3) Written consent of the Participant to the
distribution must not be made before the
Participant receives the notice and must not be
made more than 90 days before the first day on
which all events have occurred which entitle the
Participant to such benefit.
(4) No consent shall be valid if a significant
detriment is imposed under the Plan on any
Participant who does not consent to the
distribution.
(c) Notwithstanding any provision in the Plan to
the contrary, the distribution of a Participant's
benefits made on or after January l, 1985 shall be made
in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder (including Regulation 1.401(a)
(9)-2), the provisions of which are incorporated herein
by reference:
(1) A Participant's benefits shall be
distributed to him not later than April 1st of the
calendar year following the later of (i) the
calendar year in which the Participant attains age
70 1/2 or (ii) the calendar year in which the
Participant retires, provided, however, that this
clause (ii) shall not apply in the case of a
Participant who is a "five (5) percent owner" at
any time during the five (5) Plan Year period
ending in the calendar year in which he attains
age 70 1/2 or, in the case of a Participant who
becomes a "five (5) percent owner" during any
subsequent Plan Year, clause (ii) shall no longer
apply and the required beginning date shall be the
April 1st of the calendar year following the
calendar year in which such subsequent Plan Year
ends. Notwithstanding the foregoing, clause (ii)
above shall not apply to any Participant unless
the Participant had attained age 70 1/2 before
January l, 1988 and was not a "five (5) percent
owner" at any time during the Plan Year ending
with or within the calendar year in which the
Participant attained age 66 1/2 or any subsequent
Plan Year.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance
with the incidental death benefit requirements of
Code Section 401(a)(9)(G) and the Regulations
thereunder.
(d) All annuity Contracts under this Plan shall
be non-transferable when distributed. Furthermore, the
terms of any annuity Contract purchased and distributed
to a Participant or spouse shall comply with all of the
requirements of the Plan.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) The death benefit payable pursuant to Section
6.2 shall be paid to the Participant's Beneficiary in
one lump-sum payment in cash subject to the rules of
Section 6.6(b).
(b) Notwithstanding any provision in the Plan to
the contrary, distributions upon the death of a
Participant made on or after January 1, 1985 shall be
made in accordance with the following requirements and
shall otherwise comply with Code Section 401(a)(9) and
the Regulations thereunder. If it is determined
pursuant to Regulations that the distribution of a
Participant's interest has begun and the Participant
dies before his entire interest has been distributed to
him, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of
distribution selected pursuant to Section 6.5 as of his
date of death. If a Participant dies before he has
begun to receive any distributions of his interest
under the Plan or before distributions are deemed to
have begun pursuant to Regulations, then his death
benefit shall be distributed to his Beneficiaries by
December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.
However, the 5-year distribution requirement
of the preceding paragraph shall not apply to any
portion of the deceased Participant's interest which is
payable to or for the benefit of a designated
Beneficiary. In such event, such portion shall be
distributed over a period not extending beyond the life
expectancy of such designated Beneficiary provided such
distribution begins not later than December 31st of the
calendar year immediately following the calendar year
in which the Participant died. However, in the event
the Participant's spouse (determined as of the date of
the Participant's death) is his Beneficiary, the
requirement that distributions commence within one year
of a Participant's death shall not apply. In lieu
thereof, distributions must commence on or before the
later of: (1) December 31st of the calendar year
immediately following the calendar year in which the
Participant died; or (2) December 31st of the calendar
year in which the Participant would have attained age
70 1/2. If the surviving spouse dies before
distributions to such spouse begin, then the 5-year
distribution requirement of this Section shall apply as
if the spouse was the Participant.
(c) In the event that less than 100% of a
Participant's interest in the Plan is distributed to
such Participant's spouse, the portion of the
distribution attributable to the Participant's
Voluntary Contribution Account shall be in the same
proportion that the Participant's Voluntary
Contribution Account bears to a Participant's total
interest in the Plan.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever a
distribution on or as of an Anniversary Date, the distribution
may be made on such date or as soon thereafter as is practicable.
However, unless a Former Participant elects in writing to defer
the receipt of benefits (such election may not result in a death
benefit that is more than incidental), the payment of benefits
shall occur not later than the 60th day after the close of the
Plan Year in which the latest of the following events occurs: (a)
the date on which the Participant attains the earlier of age 65
or the Normal Retirement Age specified herein: (b) the 10th
anniversary of the year in which the Participant commenced
participation in the Plan; or (c) the date the Participant
terminates his service with the Employer.
Notwithstanding the foregoing, the failure
of a Participant and, if applicable, the Participant's
spouse, to consent to a distribution pursuant to
Section 6.5(b), shall be deemed to be an election to
defer the commencement of payment of any benefit
sufficient to satisfy this Section.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor,
then the Administrator may direct that such distribution be paid
to the legal guardian, or if none, to a parent of such
Beneficiary or a responsible adult with whom the Beneficiary
maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if
such is permitted by the laws of the state in which said
Beneficiary resides. Such a payment to the legal guardian,
custodian or parent of a minor Beneficiary shall fully discharge
the Trustee, Employer, and Plan from further liability on account
thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the
distribution payable to a Participant or his Beneficiary
hereunder shall, at the later of the Participant's attainment of
age 62 or his Normal Retirement Age, remain unpaid solely by
reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known
address, and after further diligent effort, to ascertain the
whereabouts of such Participant or his Beneficiary, the amount so
distributable shall be treated as a Forfeiture pursuant to the
Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall
be restored, first from Forfeitures, if any, and then from an
additional Employer contribution if necessary.
6.10 ADVANCE DISTRIBUTION FOR FINANCIAL HARDSHIP
(a) The Administrator, at the election of the
Participant, shall direct the distribution to any
Participant in any one Plan Year up to the lesser of
100% of his account valued as of the last Anniversary
Date or other valuation date or the amount necessary to
satisfy the immediate and heavy financial need of the
Participant. Any distribution made pursuant to this
Section shall be deemed to be made as of the first day
of the Plan Year or, if later, the valuation date
immediately preceding the date of distribution, and the
account from which the distribution is made shall be
reduced accordingly. Withdrawal under this Section
shall be authorized if the distribution is on account
of:
(1) Expenses for medical care described in Code
Section 213(d) previously incurred by the
Participant, his spouse, or any of his dependents
(as defined in Code Section 152) or necessary for
these persons to obtain medical care;
(2) The costs directly related to the purchase
of a principal residence-for the Participant
(excluding mortgage payments);
(3) Funeral expenses for a member of the
Participant's family;
(4) Payment of tuition and related educational
fees for the next twelve (12) months of post-
secondary education for the Participant, his
spouse, children, or dependents; or
(5) Payments necessary to prevent the eviction
of the Participant from his principal residence or
foreclosure on the mortgage of the
Participant's principal residence.
(b) No distribution shall be made pursuant to
this Section unless the Administrator, based upon the
Participant's representation and such other facts as
are known to the Administrator, determines that all of
the following conditions are satisfied:
(1) The distribution is not in excess of the
amount of the immediate and heavy financial need
of the Participant. The amount of the 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;
(2) The Participant 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;
(3) The Plan, and all other plans maintained by
the Employer, provide that the Participant's
elective deferrals and voluntary Employee
contributions will be suspended for at least
twelve (12) months after receipt of the hardship
distribution or, the Participant, pursuant to a
legally enforceable agreement, will suspend his
elective deferrals and Voluntary 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; and
(4) The Plan, and all other plans maintained by
the Employer, provide that the Participant may not
make elective deferrals for the Participant's
taxable year immediately following the taxable
year of the hardship distribution in excess of the
applicable limit under Code Section 402(g) for
such next taxable year less the amount of such
Participant's elective deferrals for the taxable
year of the hardship distribution.
(c) The Administrator, at the election of the
Participant, shall make distributions pursuant to this
Section from the:
(1) Participant's Voluntary Contribution
Account.
(2) Participant's Rollover Account.
(3) Participant's Elective Account.
(d) Notwithstanding the above, for Plan Years
beginning after December 31, 1988, distributions from
the Participant's Elective Account pursuant to this
Section shall be limited as of the date of
distribution, to the Participant's Elective Account as
of the end of the last Plan Year ending before July 1,
1989, plus the total Participant's Deferred
Compensation after such date, reduced by the amount of
any previous distributions pursuant to this Section and
Section 6.11.
(e) Any distribution made pursuant to this
Section shall be made in a manner which is consistent
with and satisfies the provisions of Section 6.5,
including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the
Regulations thereunder.
6.11 PRE-RETIREMENT DISTRIBUTION
(a) The Administrator, at the election of the
Participant, shall direct the distribution of up to the
entire vested interest then credited to the account of the
Participant.
(b) Distributions made pursuant to this Section shall
be permitted:
(1) for any reason from the --
(i) Participant's Voluntary Contribution
Account.
(ii) Participant's Rollover Account.
(2) after attaining age 59 1/2 from the --
(i) Participant's Voluntary Contribution
Account.
(ii) Participant's Rollover Account.
(iii) Participant's Account - Employer
contributions.
(iv) Participant's Elective Account attributable
to Deferred Compensation and Qualified Non-
Elective Contributions.
Notwithstanding the above, pre-retirement
distributions from a Participant's Elective Account
shall not be permitted prior to the Participant
attaining age 59 1/2 except as otherwise permitted
under the terms of the Plan.
(c) In the event that the Administrator makes a
distribution pursuant to this Section, the Participant
shall continue to be eligible to participate in the
Plan on the same basis as any other Employee. Any
distribution made pursuant to this Section shall be
made in a manner consistent with Section 6.5,
including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the
Regulations thereunder.
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided
to a Participant in this Plan shall be subject to the rights
afforded to any "alternate payee" under a "qualified domestic
relations order." Furthermore, a distribution to an "alternate
payee" shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected
Participant has not reached the "earliest retirement age" under
the Plan. For the purposes of this Section, "alternate payee,"
"qualified domestic relations order" and "earliest retirement
age" shall have the meaning set forth under Code Section 414(p).
The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders
pursuant to Section 9.2.
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of
responsibilities:
The Trustee shall have no authority, control or
responsibility with respect to the Plan and Trust Fund other than
as specifically set forth in the Plan and Trust. The Trustee
shall have the following responsibilities:
(a) To hold legal title to all Trust Fund investments.
Such investments shall consist only of those Investment
Options designated by the Employer as accepted by the
Trustee and the Administrator. The Trustee shall have no
authority with respect to the investment and reinvestment of
the Trust Fund except upon receipt of investment directions
pursuant to this Section from:
(1) the Employer; or
(2) upon receipt or written notification by the
Employer, from the Administrator or Investment Manager.
(b) To receive and invest contributions and otherwise
invest the Trust Fund solely in accordance with the
investment directions transmitted to the Trustee as provided
for under Section 7.1(a).
(1) The Trustee shall be entitled to rely conclusively
on the directions transmitted in accordance with
Section 7.1(a), and shall be under no duty to inquire
as to the propriety or correctness of any such
direction.
(2) Notwithstanding anything in the Plan to the
contrary, investments under this Plan shall include
products of Aetna or any of its affiliates or
subsidiaries.
(c) As directed by the Administrator, to liquidate
investments for the purpose of paying benefits or making
disbursements or other payments required under the Plan and
Trust Fund. However, the Administrator or Trustee may
employ suitable agents for the purpose of paying benefits or
making disbursements or other payments required under the
Plan and Trust Funds;
(d) The Trustee may from time to time transfer to a
common, collective, or pooled trust fund maintained by any
corporate Trustee hereunder pursuant to Revenue Ruling 81-
100, 1981-1 C.B.326, all or such part of the Trust Fund as
the Administrator may direct, and such part or all of the
Trust Fund so transferred shall be subject to all the terms
and provisions of the common, collective, or pooled trust
fund which contemplate the commingling for investment
purposes of such trust assets with trust assets of other
trusts. The Trustee may withdraw from such common,
collective, or pooled trust fund all or such part of the
Trust Fund as directed pursuant to Section 7.1(a). The
Employer expressly understands and agrees that any such
common, collective or pooled trust fund may provide for the
lending of its securities by the Trustee and that such
Trustee will receive compensation for the lending of
securities that is separate from any compensation of the
Trustee hereunder, or any compensation of the funds trustee
for the management of such fund;
(e) To receive all proxy materials and forward them to
the Administrator. The Trustee shall vote all proxies as
directed by the Administrator;
(f) To cause any securities or other property to be
registered in the Trustee's own name or in the name of one
or more of the Trustee's nominees, and to hold any
investments in bearer form, but the books and records of the
Trustee shall at all times show that all such investments
are part of the Trust Fund;
(g) To keep such portion of the Trust Fund in cash or
cash balances as directed by the Administrator or as may be
necessary for the efficient administration of the Plan. The
Trustee shall invest such cash balances to the extent
possible in the investment options designated by the
Employer pursuant to Section 7.1(a);
(h) To appoint a custodian to hold investments within
the jurisdiction of the district courts of the United States
and to deposit securities with stock clearing corporations
or depositories or similar organizations;
(i) To accept and retain any securities received or
acquired as Trustee, but only to the extent such securities
are (1) investments in the Investment Options, or (2)
qualifying Employer securities as defined in Act Section 407
(d)(5), that are publicly traded;
(j) 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.
(k) To the extent directed by the Administrator, to
settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to
commence or defend suits or legal or administrative
proceedings, and to represent the Plan in all suits and
legal and administrative proceedings;
(l) To employ suitable custodians, agents and counsel
and to pay their reasonable expenses and compensation. Such
agent or counsel may or may not be agent or counsel for the
Administrator or Employer;
(m) To invest funds of the Trust in savings accounts,
certificates of deposit and other types of time deposits,
bearing a reasonable rate of interest based upon the
duration, amount, type and geographical area, with any
financial institution or quasi-financial institution or any
department of the same, either domestic or foreign, under
the supervision of the United States or any State, including
any such financial institution owned, operated or maintained
by the Trustee in its corporate or association capacity
(including any department or division of the same) or a
corporation or association affiliated with the same;
(n) To pool all or any of the Trust Fund, from time to
time, with assets belonging to any other qualified employee
pension benefit trust created by the Employer or any
Affiliated Employer, and to commingle such assets and make
joint or common investments and carry joint accounts on
behalf of this Plan and such other trust or trusts,
allocating individual shares or interests in such
investments or accounts or any pooled assets of the two or
more trusts in accordance with their respective interests.
7.2 LOANS TO PARTICIPANTS
(a) The Administrator may, in his sole
discretion, make loans (which shall be treated as
Directed Investments as provided in Section 4.13) to
Participants and Beneficiaries under the following
circumstances: (1) loans shall be made available to all
Participants and Beneficiaries on a reasonably
equivalent basis; (2) loans shall not be made available
to Highly Compensated Employees in an amount greater
than the amount made available to other Participants
and Beneficiaries; (3) loans shall bear a reasonable
rate of interest; (4) loans shall be adequately
secured; and (5) loans shall provide for periodic
repayment over a reasonable period of time. Unless
otherwise agreed upon, the Administrator shall act as
custodian on behalf of the Trust, of all documentation
of such loans.
(b) Loans shall not be granted to any Participant
that provide for a repayment period extending beyond
such Participant's Normal Retirement Age.
(c) Loans made pursuant to this Section (when
added to the outstanding balance of all other loans
made by the Plan to the Participant) shall be limited
to the lesser of:
(1) $50,000 reduced by the excess (if any) of
the highest outstanding balance of loans from the
Plan to the Participant during the one year period
ending on the day before the date on which such
loan is made, over the outstanding balance of
loans from the Plan to the Participant on the date
on which such loan was made, or
(2) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant
under the Plan.
For purposes of this limit, all plans of the Employer
shall be considered one plan. Additionally, with respect to any
loan made prior to January 1, 1987, the $50,000 limit specified
in (1) above shall be unreduced.
(d) Loans shall provide for level amortization with
payments to be made not less frequently than quarterly over a
period not to exceed five (5) years. However, loans used to
acquire any dwelling unit which, within a reasonable time, is to
be used (determined at the time the loan is made) as a principal
residence of the Participant shall provide for periodic repayment
over a reasonable period of time that may exceed five (5) years.
Notwithstanding the foregoing, loans made prior to January 1,
1987 which are used to acquire, construct, reconstruct or
substantially rehabilitate any dwelling unit which, within a
reasonable period of time is to be used (determined at the time
the loan is made) as a principal residence of the Participant or
a member of his family (within the meaning of Code Section
267(c)(4)) may provide for periodic repayment over a reasonable
period of time that may exceed five (5) years. Additionally,
loans made prior to January 1, 1987, may provide for periodic
payments which are made less frequently than quarterly and which
do not necessarily result in level amortization.
(e) With regard to any loans granted or renewed on or after
the last day of the first Plan Year beginning after December 31,
1988, a Participant loan program shall be established which must
include, but need not be limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) the $1,000 minimum and other limitations, if any, on
the types and amounts of loans offered;
(5) the procedure under the program for determining a
reasonable rate of interest:
(6) the types of collateral which may secure a Participant
loan; and
(7) the events constituting default and the steps that will
be taken to preserve Plan assets.
Such Participant loan program shall be contained in a
separate written document which, when properly executed, is
hereby incorporated by reference and made a part of the Plan.
Furthermore, such Participant loan program may be modified or
amended in writing from time to time without the necessity of
amending this Section. The Administrator is responsible for the
preparation of the loan documentation, as approved by the
Trustee, including any disclosure of interest rate information
required by Regulation Z of the Federal Reserve Board promulgated
by the Truth in Lending Act 15 U.S.C. Section 1601 et seq.
7.3 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
In accordance with the directions of the Administrator,
as conveyed by Aetna, the Trustee shall make payments out of the
Trust Fund from such Plan accounts as so directed. Neither the
Trustee nor Aetna shall be responsible in any way for the
application of such payments.
7.4 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation
as set forth in the Trustee's fee schedule (if the Trustee has
such a schedule) or as agreed upon in writing by the Employer and
the Trustee. An individual serving as Trustee who already
receives full-time pay from the Employer shall not receive
compensation from the Plan. In addition, the Trustee shall be
reimbursed for any reasonable expenses, including reasonable
counsel fees incurred by it as Trustee. Such compensation and
expenses shall be paid by the Employer, except that if the
Employer fails to pay such fees or expenses when due, the Trustee
may recover such fees or expenses from the Trust Fund. All taxes
of any kind and all kinds whatsoever that may be levied or
assessed under existing or future laws upon, or in respect of,
the Trust Fund or the income thereof, shall be paid from the
Trust Fund.
7.5 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after each Plan
Year, the Trustee, or its agent, shall furnish to the
Administrator a written statement of account with respect to the
Plan Year setting forth:
(a) the transfer of funds to the Trust Fund;
(b) the gains, or losses, realized by the Trust
Fund upon sales or other disposition of the assets;
(c) the increase, or decrease, in the value of the
Trust Fund;
(d) all transfer of funds from the Trust Fund; and
(e) such further reasonable information as the
Employer and/or Administrator may request, as agreed to
by the Trustee.
The Administrator, forthwith upon its
receipt of each such statement of account, shall
acknowledge receipt thereof in writing and advise the
Trustee of its approval or disapproval thereof.
Failure by the Administrator to disapprove any such
statement of account within thirty (30) days after its
receipt thereof shall be deemed an approval thereof.
The approval by the Administrator of any statement of
account shall be binding as to all matters embraced
therein as between the Administrator and the Trustee to
the same extent as if the account of the Trustee had
been settled by judgment or decree in an action for a
judicial settlement of its account in a court of
competent jurisdiction in which the Trustee, the
Administrator and all persons having or claiming an
interest in the Plan were parties; provided, however,
that nothing herein contained shall deprive the Trustee
of its right to have its accounts judicially settled if
the Trustee so desires.
7.6 AUDIT
(a) If an audit of the Plan's records shall be
required by the Act and the regulations thereunder for
any Plan Year, the Administrator shall engage on behalf
of all Participants an independent qualified public
accountant for that purpose. Such accountant shall,
after an audit of the books and records of the Plan in
accordance with generally accepted auditing standards,
within a reasonable period after the close of the Plan
Year, furnish to the Administrator a report of his
audit setting forth his opinion as to whether any
statements, schedules or lists that are required by Act
Section 103 or the Secretary of Labor to be filed with
the Plan's annual report, are presented fairly in
conformity with generally accepted accounting
principles applied consistently.
All auditing and accounting fees shall be an
expense of and may, at the election of the
Administrator, be paid from the Trust Fund.
(b) If some or all of the information necessary
to enable the Administrator to comply with Act Section
103 is maintained by a bank, insurance company or
similar institution, regulated and supervised, and
subject to periodic examination by a state or federal
agency, it shall transmit and certify the accuracy of
that information to the Administrator as provided in
Act Section 103(b) within one hundred twenty (120) days
after the end of the Plan Year or by such other date as
may be prescribed under regulations of the Secretary of
Labor.
7.7 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by
delivering to the Employer, a written notice of its
resignation at least thirty (30) days prior to the
effective date of such resignation.
(b) The Employer may remove the Trustee by
mailing by registered or certified mail, addressed to
such Trustee at its last known address, a written
notice of its removal at least thirty (30) days prior
to the effective date of such removal.
(c) Upon the death, resignation, incapacity or
removal of any Trustee, a successor Trustee shall be
appointed by the Employer; and such successor, upon
accepting such appointment in writing and delivering
same to the Employer, shall, without further act,
become vested with all the estate, rights, powers,
discretions, and duties of his predecessor with like
respect as if he were originally named as a Trustee
herein. Until such a successor is appointed, the
remaining Trustee or Trustees shall have full authority
to act under the terms of the Plan. The Trustee will
have a right to apply to a court of competent
jurisdiction for the appointment of a successor Trustee
if one is not appointed within thirty (30) days of the
effective date of the Trustee's removal or resignation.
(d) Whenever any Trustee hereunder leases to
serve as such, it shall furnish the Administrator a
written statement of account with respect to the
portion of the Plan Year during which he served as
Trustee. This statement shall be either (i) included
as part of the annual statement of account for the Plan
Year required under Section 7.5 or (ii) set forth in a
special statement. Any such special statement of
account should be rendered to the Administrator no
later than the due date of the annual statement of
account for the Plan Year. No successor to the Trustee
shall have any duty or responsibility to investigate
the acts or transactions of any predecessor.
7.8 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this
Plan, the Trustee at the written direction of the Administrator
shall transfer the Vested interest (as determined by the
Administrator), if any, of a Participant who requests a transfer
of his account to another trust forming part of a pension, profit
sharing or stock bonus plan maintained by such Participant's new
employer and represented by said employer in writing as meeting
the requirements of Code Section 401(a), provided that the trust
to which such transfers are made permits the transfer to be made.
7.9 TRUSTEE INDEMNIFICATION
(a) The Employer shall indemnify and save the
Trustee (and any employee thereof) harmless from and
against any claim of liability, costs or other expenses
(including payment of reasonable attorneys' fees) that
the Trustee may incur in connection with this Plan and
Trust unless it shall be established by a court of
competent jurisdiction that such liability, cost or
expense arises from the Trustee's own willful
misconduct or gross negligence.
(b) The Employer shall pay expenses (including
reasonable attorneys' fees and costs), judgments, fines
and amounts paid in settlement incurred by the Trustee
in connection with any matter described in Section
7.9(a) in advance of the final disposition of any
proceedings regarding such matter; provided however,
that the Trustee shall repay such advances to the
Employer if it is established by the final judgment of
a court of competent jurisdiction that the Trustee's
action or failure to act constituted willful misconduct
or gross negligence.
7.10 DIRECT ROLLOVER
(a) This Section applies to distributions made on
or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would
otherwise limit a distributee's election under this
Section, a distributee may elect, at the time and in
the manner prescribed by the Plan Administrator, to
have any portion of an eligible rollover distribution
paid directly to an eligible retirement plan specified
by the distributee in a direct rollover.
(b) For purposes of this Section the following
definitions shall apply:
(1) An eligible rollover distribution is any
distribution of all or any portion of the balance
to the credit of the distributee, except that an
eligible rollover distribution does not include:
any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or
life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the
distributee and the distributee's designated
beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under 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).
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any
time to amend the Plan, subject to the limitations of
this Section. However, any amendment which affects the
rights, duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and
Administrator's written consent. Any such amendment
shall become effective as provided therein upon its
execution. The Trustee shall not be required to
execute any such amendment unless the amendment affects
the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective
if it authorizes or permits any part of the Trust Fund
(other than such part as is required to pay taxes and
administration expenses) to be used for or diverted to
any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or
causes any reduction in the amount credited to the
account of any Participant; or causes or permits any
portion of the Trust Fund to revert to or become
property of the Employer.
(c) The Employer expressly delegates authority to
the sponsoring organization of this Plan, the right to
amend this Plan by submitting a copy of the amendment
to each Employer who has adopted this Plan after first
having received a ruling or favorable determination
from the Internal Revenue Service that the Plan as
amended qualifies under Code Section 401(a) and the
Act. For purposes of this Section, the mass submitter
shall be recognized as the agent of the sponsoring
organization. If the sponsoring organization does not
adopt the amendments made by the mass submitter, it
will no longer be identical to or a minor modifier of
the mass submitter plan.
(d) Except as permitted by Regulations (including
Regulation 1.411(d)-4), no Plan amendment or
transaction having the effect of a Plan amendment (such
as a merger, plan transfer or similar transaction)
shall be effective if it eliminates or reduces any
"Section 411(d)(6) protected benefits" or adds or
modifies conditions relating to "Section 411(d)(6)
protected benefits" the result of which is a further
restriction on such benefit unless such protected
benefits are preserved with respect to benefits accrued
as of the later of the adoption date or effective date
of the amendment. "Section 411(d)(6) protected
benefits" are benefits described in Code Section
411(d)(6)(A), early retirement benefits and retirement-
type subsidies, and optional forms of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time
to terminate the Plan by delivering to the Trustee and
Administrator written notice of such termination. Upon
any full or partial termination, all amounts credited
to the affected Participants' Combined Accounts shall
become 100% Vested and shall not thereafter be subject
to forfeiture, and all unallocated amounts shall be
allocated to the accounts of all Participants in
accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the
Employer shall direct the distribution of the assets to
Participants in a manner which is consistent with and
satisfies the provisions of Section 6.5. Distributions
to a Participant shall be made in cash or through the
purchase of irrevocable nontransferable deferred
commitments from an insurer. Except as permitted by
Regulations, the termination of the Plan shall not
result in the reduction of "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
(c) Prior to the distribution of the assets to
the Participants, upon the full termination of the
Plan, the expenses of administration may be paid out of
the Trust Fund pursuant to Section 2.10.
8.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its
assets and/or liabilities may be transferred to any other plan
only if the benefits which would be received by a Participant of
this Plan, in the event of a termination of the plan immediately
after such transfer, merger or consolidation, are at least equal
to the benefits the Participant would have received if the Plan
had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does
not otherwise result in the elimination or reduction of any
"Section 411(d)(6) protected benefits" in accordance with Section
8.1(c).
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract
between the Employer and any Participant or to be a consideration
or an inducement for the employment of any Participant or
Employee. Nothing contained in this Plan shall be deemed to give
any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the
Employer to discharge any Participant or Employee at any time
regardless of the effect which such discharge shall have upon him
as a Participant of this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below, no
benefit which shall be payable to any person (including
a Participant or his Beneficiary) shall be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any
attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, or charge the same shall be
void; and no such benefit shall in any manner be liable
for, or subject to, the debts, contracts, liabilities,
engagements, or torts of any such person, nor shall it
be subject to attachment or legal process for or
against such person, and the same shall not be
recognized except to such extent as may be required by
law.
(b) This provision shall not apply to the extent
a Participant or Beneficiary is indebted to the Plan,
for any reason, under any provision of this Plan. At
the time a distribution is to be made to or for a
Participant's or Beneficiary's benefit, such proportion
of the amount to be distributed as shall equal such
indebtedness shall be paid to the Plan, to apply
against or discharge such indebtedness. Prior to
making a payment, however, the Participant or
Beneficiary must be given written notice by the
Administrator that such loan indebtedness is to be so
paid in whole or part from his Participant's Combined
Account. If the Participant or Beneficiary does not
agree that the loan indebtedness is a valid claim
against his Vested Participant's Combined Account, he
shall be entitled to a review of the validity of the
claim in accordance with procedures provided in
Sections 2.12 and 2.13.
(c) This provision shall not apply to a
"qualified domestic relations order" defined in Code
Section 414(p), and those other domestic relations
orders permitted to be so treated by the Administrator
under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written
procedure to determine the qualified status of domestic
relations orders and to administer distributions under
such qualified orders pursuant to Section 6.12.
Further, to the extent provided under a "qualified
domestic relations order," a former spouse of a
Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
9.3 CONSTRUCTION OF PLAN
This Plan shall be construed and enforced according to
the Act and the laws of the State of New York and the Trust shall
be construed and enforced according to the Act and the laws of
the Commonwealth of Pennsylvania, other than its laws respecting
choice of law, to the extent not preempted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine,
feminine or neuter gender, they shall be construed as though they
were also used in another gender in all cases where they would so
apply, and whenever any words are used herein in the singular or
plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought
regarding the Trust and/or Plan established hereunder to which
the Trustee or the Administrator may be a party, and such claim,
suit, or proceeding is resolved in favor of the Trustee or
Administrator, they shall be entitled to be reimbursed from the
Trust Fund for any and all costs, attorney's fees, and other
expenses pertaining thereto incurred by them for which they shall
have become liable.
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise
specifically permitted by law, it shall be impossible
by operation of the Plan or of the Trust, by
termination of either, by power of revocation or
amendment, by the happening of any contingency, by
collateral arrangement or by any other means, for any
part of the corpus or income of any Trust Fund
maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to,
purposes other than the exclusive benefit of
Participants, Retired Participants, or their
Beneficiaries.
(b) In the event the Employer shall make a
contribution under a mistake of fact pursuant to Act
Section 403(c)(2)(A), the Employer may demand repayment
of such contribution at any time within one (1) year
following the time of payment and the Trustee shall
return such amount to the Employer within the one (1)
year period. Earnings of the Plan attributable to the
contributions may not be returned to the Employer but
any losses attributable thereto must reduce the amount
so returned.
9.7 FIDELITY BOND
Every Fiduciary, except a bank or an insurance company,
unless exempted by the Act and regulations thereunder, shall be
bonded in an amount not less than 10% of the amount of the funds
such Fiduciary handles; provided, however, that the minimum bond
shall be $1,000 and the maximum bond, $500,000. The amount of
funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or
class to be covered and their predecessors, if any, during the
preceding Plan Year, or if there is no preceding Plan Year
by the amount of the funds to be handled during the then current
year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary
alone or in connivance with others. The surety shall be a
corporate surety company (as such term is used in Act Section
412(a)(2)) and the bond shall be in a form approved by the
Secretary of Labor. Notwithstanding anything in the Plan to the
contrary, the cost of such bonds shall be an expense of and may,
at the election of the Administrator, be paid from the Trust Fund
or by the Employer.
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer nor the Trustee, nor their
successors, shall be responsible for the validity of any contract
issued hereunder or for the failure on the part of the Insurer to
make payments provided by any such contract, or for the action of
any person which may delay payment or render a contract null and
void or unenforceable in whole or in part.
9.9 PROTECTIVE CLAUSE
Neither the Trustee nor any Insurer who shall issue
contracts hereunder shall have any responsibility for the
validity of this Plan or for the tax or legal aspects of this
Plan. Such Insurer shall be protected and held harmless in
acting in accordance with any written direction of the Employer
or Administrator, as appropriate, and shall have no duty to see
to the application of any funds paid to the Trustee, nor be
required to question any actions directed by the Employer or the
Administrator, as appropriate. Regardless of any provision of
this Plan, Aetna shall not be required to take or permit any
action or allow any benefit or privilege contrary to the terms of
any contract which it issues hereunder, or the rules by which it
operates.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal
representative, Beneficiary, or to any guardian or committee
appointed for such Participant or Beneficiary in accordance with
the provisions of the Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and
the Employer.
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is
permitted or required to do or perform any act or matter or
thing, it shall be done and performed by a person duly authorized
by its legally constituted authority.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the
Employer, (2) the Administrator and (3) any Investment Manager
appointed hereunder. The named Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as are
specifically given them under the Plan. In general, the Employer
shall have the sole responsibility for making the contributions
provided for under Section 4.1; and shall have the sole authority
to appoint and remove the Trustee and the Administrator; to
formulate the Plan's "funding policy and method"; and to amend or
terminate, in whole or in part, the Plan. The Employer shall
also have the sole responsibility of management of the assets
held under the Trust Fund, including the selection of any
Investment Options, except those assets, (1) the management of
which has been assigned to an Investment Manager or
Administrator, who shall be solely responsible for the management
of the assets assigned to it, all as specifically provided in the
Plan; or (2) subject to Participant investment direction pursuant
to Section 4.13 and Section 7.1(n). The Administrator shall have
the sole responsibility for the administration of the Plan, which
responsibility is specifically described in the Plan. Each named
Fiduciary warrants that any directions given, information
furnished, or action taken by it shall be in accordance with the
provisions of the Plan, authorizing or providing for such
direction, information or action. Furthermore, each named
Fiduciary may rely upon any such direction, information or action
of another named Fiduciary as being proper under the Plan, and is
not required under the Plan to inquire into the propriety of any
such direction, information or action. It is intended under the
Plan that each named Fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and
obligations under the Plan. No named Fiduciary shall guarantee
the Trust Fund in any manner against investment loss or
depreciation in asset value. Any person or group may serve in
more than one Fiduciary capacity.
9.13 HEADINGS
The headings and subheadings of this Plan have been
inserted for convenience of reference and are to be ignored in
any construction of the provisions hereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the
contrary, if, pursuant to a timely application filed by
or in behalf of the Plan, the Commissioner of the
Internal Revenue Service or his delegate should
determine that the Plan does not initially qualify as a
tax-exempt plan under Code Sections 401 and 501, and
such determination is not contested, or if contested,
is finally upheld, then if the Plan is a new plan, it
shall be void ab initio and all amounts contributed to
the Plan, by the Employer, less expenses paid, shall be
returned within one year and the Plan shall terminate,
and the Trustee shall be discharged from all further
obligations. If the disqualification relates to an
amended plan, then the Plan shall operate as if it had
not been amended and restated.
(b) Except as specifically stated in the Plan,
any contribution by the Employer to the Trust Fund is
conditioned upon the deductibility of the contribution
by the Employer under the Code and, to the extent any
such deduction is disallowed, the Employer may within
one (1) year following a final determination of the
disallowance, whether by agreement with the Internal
Revenue Service or by final decision of a court of
competent jurisdiction, demand repayment of such
disallowed contribution and the Trustee shall return
such contribution within one (1) year following the
disallowance. Earnings of the Plan attributable to the
excess contribution may not be returned to the
Employer, but any losses attributable thereto must
reduce the amount so returned.
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and
applied in a uniform, nondiscriminatory manner.
9.16 DEEMED CODE COMPLIANCE
Notwithstanding anything in this Plan to the contrary,
this Plan shall automatically be deemed to be amended to comply
with all applicable provisions of the Code and regulations issued
thereunder, including, but not limited to, Code Sections
401(a)(17), 401(a)(31) and 414(p).
10.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with
the consent of the Employer and Trustee, any Affiliated Employer
may adopt this Plan and all of the provisions hereof, and
participate herein and be known as a Participating Employer, by a
properly executed document evidencing said intent and will of
such Participating Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required
to use the same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to,
commingle, hold and invest as one Trust Fund all
contributions made by Participating Employers, as well as
all increments thereof.
(c) The transfer of any Participant from or to an
Employer participating in this Plan, whether he be an
Employee of the Employer or a Participating Employer, shall
not affect such Participant's rights under the Plan, and all
amounts credited to such Participant's Elective Account as
well as his accumulated service time with the transferor or
predecessor, and his length of participation in the Plan,
shall continue to his credit.
(d) Any expenses of the Plan which are to be paid by
the Employer or borne by the Trust Fund shall be paid by
each Participating Employer in the same proportion that the
total amount standing to the credit of all Participants
employed by such Employer bears to the total standing to the
credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a
party to this Plan; provided, however, that with respect to all
of its relations with the Trustee and Administrator for the
purpose of this Plan, each Participating Employer shall be deemed
to have designated irrevocably the Employer as its agent. Unless
the context of the Plan clearly indicates the contrary, the word
"Employer" shall be deemed to include each Participating Employer
as related to its adoption of the Plan.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred
between Participating Employers, and in the event of any such
transfer, the Employee involved shall carry with him his
accumulated service and eligibility. No such transfer shall
effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall
thereupon become obligated hereunder with respect to such
Employee in the same manner as was the Participating Employer
from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION
Any contribution or Forfeiture subject to allocation
during each Plan Year shall be allocated among all Participants
of all Participating Employers in accordance with the provisions
of this Plan. On the basis of the information furnished by the
Administrator, the Recordkeeper shall keep separate books and
records concerning the affairs of each Participating Employer
hereunder and as to the accounts and credits of the Employees of
each Participating Employer. The Trustee may, but need not,
register contracts so as to evidence that a particular
Participating Employer is the interested Employer hereunder, but
in the event of an Employee transfer from one Participating
Employer to another, the employing Employer shall immediately
notify the Trustee thereof.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when
there shall be a Participating Employer hereunder shall only be
by the written action of each and every Participating Employer,
and where such amendment affects the rights, duties and
responsibilities of the Trustee or Administrator, with the
written consent of the Trustee or Administrator.
10.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to
discontinue or revoke its participation in the Plan at any time.
At the time of any such discontinuance or revocation,
satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee. The Trustee shall
thereafter transfer, deliver and assign contracts and other Trust
Fund assets allocable to the Participants of such Participating
Employer to such new Trustee as shall have been designated by
such Participating Employer in the event that it has established
a separate pension plan for its Employees, provided, however,
that no such transfer shall be made if the result is the
elimination or reduction of any "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c). If no successor is
designated, the Trustee shall retain such assets for the
Employees of said Participating Employer pursuant to the
provisions of Article VII hereof. In no such event shall any
part of the corpus or income of the Trust as it relates to such
Participating Employer be used for or diverted to purposes other
than for the exclusive benefit of the Employees of such
Participating Employer.
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and
all necessary rules or regulations, binding upon all
Participating Employers and Participants, to effectuate the
purpose of this Article.
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or
in part from making a contribution which it would otherwise have
made under the Plan by reason of having no current or accumulated
earnings or profits, or because such earnings or profits are less
than the contribution which it would otherwise have made, then,
pursuant to Code Section 404(a)(3)(B), so much of the
contribution which such Participating Employer was so prevented
from making may be made, for the benefit of the participating
employees of such Participating Employer, by the other
Participating Employers who are members of the same affiliated
group within the meaning of Code Section 1504 to the extent of
their current or accumulated earnings or profits, except that
such contribution by each such other Participating Employer shall
be limited to the proportion of its total current and accumulated
earnings or profits remaining after adjustment for its
contribution to the Plan made without regard to this paragraph
which the total prevented contribution bears to the total current
and accumulated earnings or profits of all the Participating
Employers remaining after adjustment for all contributions made
to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees a
contribution is made under this paragraph shall not be required
to reimburse the contribution of Participating Employers.
IN WITNESS WHEREOF, the Plan has been executed the day
and year first above written.
EMPLOYER: Central Hudson Gas & PARTICIPATING EMPLOYER:
Electric Corporation
________________________________ __________________________
(enter name) (enter name)
By: ___________________________ __________________________
John F. Drain (Participating Employer
Vice President - Finance Identification Number)
& Controller
TRUSTEE: Mellon Bank, N.A.
________________________________ By: _____________________
Trustee
________________________________ PARTICIPATING EMPLOYER:
Trustee
__________________________
(enter name)
________________________________
Trustee
__________________________
(Participating Employer
Identification Number)
By: ______________________
PARTICIPATING EMPLOYER:
__________________________
(enter name)
__________________________
(Participating Employer
Identification Number)
By: ____________________
</PAGE>
<PAGE>
EXHIBIT (10)(i) 99
SECOND AMENDMENT TO
FUEL OIL SUPPLY CONTRACT
BETWEEN
GLOBAL PETROLEUM CORPORATION
AND
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
AND
NIAGARA MOHAWK POWER CORPORATION
CENTRAL HUDSON CONTRACT NO. 16924
<PAGE>
This Second Amendment ("Amendment"), effective as of
September 1, 1994 to that Product Supply Contract ("Contract") made
and entered into as of September 1, 1992 by and between Central
Hudson Gas & Electric Corporation, Consolidated Edison Company of
New York, Inc. and Niagara Mohawk Power Corporation (collectively
"BUYER") and Global Petroleum Corporation ("SELLER").
WITNESSETH:
WHEREAS the Initial Term of the Contract ends on August
31, 1994; and
WHEREAS the First Amendment to the Contract, dated as of
October 1, 1993, also ends on August 31, 1994; and
WHEREAS BUYER and SELLER desire to extend the Term to
August 31, 1995 in accordance with Section 4.1 of the Contract and
to increase the Contract Volume commencing on September 1, 1994 and
continuing through the end of this Extended Term.
NOW, THEREFORE, in consideration of the mutual covenants
set forth herein, it is agreed that:
1. The Term will be extended to included a period
commencing on September 1, 1994 and ending on August 31, 1995
("Extended Term").
2. During the Extended Term, Section 5.1 of the Contract
shall be amended to read in its entirety as follows:
"5.1 Contract Volume
The Contract Volume of Product to be sold and purchased
hereunder beginning September 1, 1994 and continuing
through August 31, 1995 ("Extended Term") shall be one
hundred percent (100%) of BUYER's total Product
requirements for such Extended Term for its Roseton
Plant. In this regard, during the Extended Term, SELLER
will deliver all amounts of the Product requested by
BUYER for its Roseton Plant; but SELLER is not obligated
to so deliver the Product in excess of the Contract
Volume and BUYER will request from SELLER not less than
seventy percent (70%) of the Contract Volume. In the
event BUYER, from time to time during the Extended Term
of this Contract, seeks to purchase Product on the spot
market to be used at the Roseton Plant, SELLER shall be
entitled to submit a spot bid.
5.1.1 The Parties further agree that during the Extended Term,
BUYER shall schedule Product from SELLER with a weighted
average sulfur content not to exceed 1.40%.
3. The definitions in the Contract shall be applicable
to this Second Amendment except as may be otherwise set forth or
added herein.
4. All other terms and conditions of the Contract remain
in full force and effect during the Extended Term of the Contract
as provided therein.
IN WITNESS WHEREOF, the Parties hereto have caused this
Second Amendment to be signed by their duly authorized officers,
effective as of September 1, 1994.
GLOBAL PETROLEUM CORPORATION
WITNESS AS TO (SELLER): BY ______________________________
ALFRED SLIFKA
______________________________
DATE _______________________
CENTRAL HUDSON GAS & ELECTRIC
CORPORATION FOR ITSELF AND AS
AGENT FOR CONSOLIDATED EDISON
COMPANY OF NEW YORK, INC., AND
NIAGARA MOHAWK POWER CORPORATION
ATTEST AS TO (BUYER): BY ______________________________
PAUL J. GANCI
____________________________ PRESIDENT AND
ELLEN AHEARN CHIEF OPERATING OFFICER
SECRETARY
DATE May 20, 1994
</PAGE>
