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As filed with the Securities and Exchange Commission on May 11, 1998
Commission File No. 333-_______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
LAZARE KAPLAN INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2728690
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
529 FIFTH AVENUE, NEW YORK, NEW YORK 10017
(Address, including zip code of registrant's principal executive offices)
LAZARE KAPLAN 401(k) PLAN FOR
SAVINGS AND INVESTMENT
(Full title of the plan)
Sheldon L. Ginsberg
Executive Vice President and Chief Financial Officer
Lazare Kaplan International Inc.
529 Fifth Avenue
New York, New York 10017
(212) 972-9700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With a copy to:
Warshaw Burstein Cohen Schlesinger & Kuh, LLP
555 Fifth Avenue
New York, New York 10017
(212) 984-7700
Attention: Frederick R. Cummings, Jr., Esq.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
Proposed maximum Proposed maximum
Title of each class of Amount to be offering aggregate offering Amount of
securities to be registered registered price per share(3) price(3) registration fee(4)
--------------------------- ------------- ------------------ -------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 100,000 shares(1) $11.0625 $1,140,625 $336
par value
Interest in the Lazare Kaplan
401(k) Plan for Savings and
Investment (2) (2) (2) (2)
===============================================================================================================================
</TABLE>
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(1) This Registration Statement covers shares of common stock which may
be issued, offered, or sold pursuant to the Lazare Kaplan 401(k) Plan for
Savings and Investment, in each case subject to adjustment for antidilution as
provided therein.
(2) In addition, pursuant to Rule 416(c) under the Securities Act of
1933, as amended, this Registration Statement also covers an indeterminate
amount of interests to be offered or sold pursuant to the Lazare Kaplan 401(k)
Plan for Savings and Investment. Pursuant to Rule 457(h)(2), no separate
registration fee is required with respect to the interests in the Plan.
(3) Calculated solely for the purposes of determining the amount of the
registration fee pursuant to Rule 457(h)(1) under the Securities Act of 1993,
the offering price is based upon the average high and low sales prices of the
Common Stock on the American Stock Exchange on May 5, 1998.
(4) The registration fee has been calculated, pursuant to Section 6(b)
of the Securities Act of 1933, by multiplying .000295 by the proposed maximum
aggregate offering price of the shares of Common Stock being registered hereby.
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PART I
INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS
Information required by Part I to be contained in the Section
10(a) prospectuses is omitted from this Registration Statement in accordance
with Rule 428 under the Securities Act of 1933 (the "Securities Act") and the
Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed by Lazare
Kaplan International Inc. (the "Company") with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934
(the "Exchange Act") are incorporated by reference into this Registration
Statement:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended May 31, 1997.
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1997.
(c) The Company's Quarterly Report on Form 10-Q for the
quarter ended November 30, 1997.
(d) The Company's Quarterly Report on Form 10-Q for the
quarter ended February 28, 1998.
(e) The description of the Company's Common Stock set forth
under Item 1 of the Company's Registration Statement on Form 8-A, as filed with
the Commission on September 21, 1973, which incorporates by reference the
description set forth in the Prospectus, contained in the Company's Registration
Statement on Form S-1 filed with the Commission August 28, 1972 (File No.
2-45510), under the caption "Description of Common Stock."
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All documents subsequently filed by the Company with the Commission
after the date of this Registration Statement pursuant to Sections 13(a), 13(c),
14, and 15(d) of the Exchange Act and prior to the filing of a post-effective
amendment to this Registration Statement, which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference into this Registration
Statement and to be part hereof from the date of filing such documents;
provided, however, that the documents enumerated above or subsequently filed by
the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
in each year during which the offering made by this Registration Statement is in
effect and prior to the filing with the Commission of the Company's Annual
Report on Form 10-K covering such year, shall not be deemed to be incorporated
by reference in this Registration Statement or be a part hereof from and after
the filing of such Annual Report on Form 10-K.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein, or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement contained in this Registration Statement shall be
deemed to be modified or superseded to the extent that a statement contained in
a subsequently filed document, which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded
to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The following states the general effect of all statutes, charter
provisions, by-laws, contracts or other arrangements under which any
controlling person, director or officer of the Company is insured or
indemnified in any manner against liability which he may incur in his
capacity as such:
Section 145 of the Delaware General Corporation Law provides:
145. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS:
INSURANCE.
(a) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no
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reasonable cause to believe his conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (l) by a majority vote of the directors who
are not parties to such action, suit or proceeding, even though less
than a quorum, or (2) if there are no such directors, or, if such
directors so direct, by independent legal counsel in a written opinion,
or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized
in this section. Such expenses (including attorneys' fees) incurred by
other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such
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capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent
with respect to any employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this section.
(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person, who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or any bylaw,
agreement, vote of stockholders or disinterested directors, or
otherwise. The Court of Chancery may summarily determine a
corporation's obligation to advance expenses (including attorneys'
fees).
The Certificate of Incorporation of the Company provides:
SEVENTH: The Corporation shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of Delaware, as
the same may be amended and supplemented, indemnify any and all persons
whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters
referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights
to which those indemnified may be entitled under any by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
The Certificate of Incorporation further provides:
EIGHTH: No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for
breach of his fiduciary duty as a director, provided that nothing
contained herein shall eliminate or limit the liability of a director
(i) for any breach of such director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law or
any amendment thereto of any successor thereto, or (iv) for any
transaction
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from which the director derived an improper personal benefit. Neither
the amendment nor repeal of this Article EIGHTH nor the adoption of any
provision of the certificate of incorporation inconsistent with this
Article EIGHTH, shall eliminate or reduce the effect of this Article
EIGHTH in respect of any matter occurring, or any cause of action, suit
or claim that, but for this Article EIGHTH would accrue or arise, prior
to such amendment, repeal or adoption of an inconsistent provision.
The By-Laws of the Company provide:
ARTICLE VI
INDEMNIFICATION
1. EXECUTIVE OFFICERS. The corporation shall indemnify its
executive officers and those of its subsidiaries to the same extent as
they would have been insured under the terms of an insurance policy
issued to the corporation by National Union Fire Insurance Company of
Pittsburgh, Pennsylvania for the policy year beginning September 26,
1984 and ending September 26, 1985 had such policy been in effect at
the time a claim is made against any such executive officers. The
executive officers of the corporation and its subsidiaries entitled to
indemnification pursuant to this Article VI, Section l, shall include
such persons who may hold the offices, either currently or in the
future, as were covered under the aforementioned policy in the policy
year indicated.
Any indemnification pursuant to this Article VI, Section l
shall be applicable to acts or omissions that occurred prior to the
adoption of this Article VI, Section l provided they would have been
covered under the insurance policy mentioned above. The right to
indemnification under this Article VI, Section l shall continue after
any person has ceased to serve in the capacity which would have
entitled him to such indemnification. Any subsequent repeal or
amendment of this Article VI, Section l or any provision hereof, which
shall have the effect of limiting, qualifying or restricting the powers
or rights of indemnification provided or permitted hereunder shall not,
solely by reason of such repeal or amendment, eliminate, restrict or
otherwise affect the right or power of the corporation to indemnify any
person or affect any right of indemnification of such person with
respect to claims made prior to such repeal or amendment.
The indemnification provided under this Article VI, Section l
shall not be deemed exclusive of any other rights to which directors,
officers, agents or employees of the corporation may be entitled under
Article SEVENTH of the Certificate of Incorporation of the corporation,
or any agreement, vote of the stockholders or disinterested directors,
or otherwise.
The corporation shall have the right to impose, as conditions
to any indemnification provided or permitted pursuant to this Article
VI, Section l, such reasonable requirements and conditions as the Board
of Directors or stockholders may deem appropriate in each specific case
and circumstance, including but not limited to (i) that any counsel
representing the person to be indemnified in connection with the
defense or settlement of any action shall be selected by the
corporation, subject to the approval of the person to be indemnified,
which consent shall not be unreasonably withheld, (ii) that the
corporation shall have the right, at its option, to assume and control
the defense or settlement of any claim or proceeding made, initiated or
threatened against the person to be indemnified, and (iii) that the
corporation shall be subrogated, to the extent of any payments made by
way of indemnification, to all of the indemnified person's right of
recovery, and that the person to be indemnified shall execute all
writings and do everything necessary to assure such rights of
subrogation to the corporation.
2. OUTSIDE DIRECTORS. The corporation shall indemnify its
outside (i.e. non-officer) directors and those of its subsidiaries to
the same extent as they would have been insured under the terms of an
insurance policy issued to the corporation by National Union Fire
Insurance Company of Pittsburgh,
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Pennsylvania, for the policy year beginning September 26, 1984 and
ending September 26, 1985 had such policy been in effect at the time a
claim is made against any such outside director. The outside directors
of the corporation and its subsidiaries entitled to indemnification
pursuant to this Article VI, Section 2 shall include such persons who
may hold the offices, either currently or in the future, as were
covered under the aforementioned policy in the policy year indicated.
Any indemnification pursuant to this Article VI, Section 2
shall be applicable to acts or omissions that occurred prior to the
adoption of this Article VI, Section 2 provided they would have been
covered under the insurance policy mentioned above. The right to
indemnification under Article VI, Section 2 shall continue after any
person has ceased to serve in the capacity which would have entitled
him to such indemnification. Any subsequent repeal or amendment of this
Article VI, Section 2 or any provision hereof, which shall have the
effect of limiting, qualifying or restricting the powers or rights of
indemnification provided or permitted hereunder shall not, solely by
reason of such repeal or amendment, eliminate, restrict or otherwise
affect the right or power of the corporation to indemnify any person or
affect any right of indemnification of such person with respect to
claims made prior to such repeal or amendment.
The indemnification provided under this Article VI, Section 2
shall not be deemed exclusive of any other rights to which directors,
officers, agents or employees of the corporation may be entitled under
Article SEVENTH of the Certificate of Incorporation of the corporation,
or any agreement, vote of the stockholders or disinterested directors,
or otherwise.
The corporation shall have the right to impose, as conditions
to any indemnification provided or permitted pursuant to Article VI,
Section 2, such reasonable requirements and conditions as the Board of
Directors or stockholders may deem appropriate in each specific case
and circumstance, including but not limited to (i) that any counsel
representing the person to be indemnified in connection with the
defense or settlement of any action shall be selected by the
corporation, subject to the approval of the person to be indemnified,
which consent shall not be unreasonably withheld, (ii) that the
corporation shall have the right, at its option, to assume and control
the defense or settlement of any claim or proceeding made, initiated or
threatened against the person to be indemnified, and (iii) that the
corporation shall be subrogated, to the extent of any payments made by
way of indemnification, to all of the indemnified person's right of
recovery, and that the person to be indemnified shall execute all
writings and do everything necessary to assure such rights of
subrogation to the corporation.
3. EXECUTIVE OFFICERS AND DIRECTORS PRIOR TO APRIL 9, 1984.
The corporation shall indemnify its directors and executive officers
and those of its subsidiaries who were in office prior to April 9, 1984
to the same extent as they would have been insured under the terms of
an insurance policy issued to the corporation by National Union Fire
Insurance Company of Pittsburgh, Pennsylvania for the policy year
beginning September 26, 1984 and ending September 26, 1985 had such
policy been in effect at the time a claim is made against any such
director or officer. The directors and officers of the corporation and
its subsidiaries entitled to indemnification pursuant to this Article
VI, Section 3 shall include such persons who held the offices as were
covered under the aforementioned policy in the policy year indicated.
Any indemnification pursuant to this Article VI, Section 3
shall be applicable to acts or omissions that occurred prior to the
adoption of this Article VI, Section 3, provided they would have been
covered under the insurance policy mentioned above. The right to
indemnification under this Article VI, Section 3 shall continue after
any person has ceased to serve in the capacity which would have
entitled him to such indemnification hereunder. Any subsequent repeal
or amendment of this Article VI, Section 3 or any provision hereof,
which shall have the effect of limiting, qualifying or restricting the
powers or rights of indemnification provided or permitted hereunder
shall not, solely by reason of such repeal or amendment,
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eliminate, restrict or otherwise affect the right or power of the
corporation to indemnify any person or affect any right of
indemnification of such person with respect to claims made prior to
such repeal or amendment.
The indemnification provided under this Article VI, Section 3
shall not be deemed exclusive of any other rights to which directors,
officers, agents or employees of the corporation may be entitled under
Article SEVENTH of the Certificate of Incorporation of the corporation,
or any agreement, vote of the stockholders or disinterested directors,
or otherwise. The corporation shall have the right to impose, as
conditions to any indemnification provided or permitted pursuant to
this Article VI, Section 3, such reasonable requirements and conditions
as the Board of Directors or stockholders may deem appropriate in each
specific case and circumstance, including but not limited to (i) that
any counsel representing the person to be indemnified in connection
with the defense or settlement of any action shall be selected by the
corporation, subject to the approval of the person to be indemnified,
which consent shall not be unreasonably withheld, (ii) that the
corporation shall have the right, at its option, to assume and control
the defense or settlement of any claim or proceeding made, initiated or
threatened against the person to be indemnified, and (iii) that the
corporation shall be subrogated, to the extent of any payments made by
way of indemnification, to all of the indemnified person's right of
recovery, and that the person to be indemnified shall execute all
writings and do everything necessary to assure such rights of
subrogation to the corporation.
4. DIRECTORS. The corporation shall indemnify its existing
directors and those of its subsidiaries to the same extent as they
would have been insured under the terms of an insurance policy issued
to the corporation by National Union Fire Insurance Company of
Pittsburgh, Pennsylvania for the policy year beginning September 26,
1984 and ending September 26, 1985 had such policy been in effect at
the time a claim is made against any such director. The directors of
the corporation and its subsidiaries entitled to indemnification
pursuant to this Article VI, Section 4 shall include such persons who
may hold the offices, either currently or in the future, as were
covered under the aforementioned policy in the policy year indicated.
Any indemnification pursuant to this Article VI, Section 4
shall be applicable to acts or omissions that occurred prior to the
adoption of this Article VI, Section 4 provided they would have been
covered under the insurance policy mentioned above. The right to
indemnification under this Article VI, Section 4 shall continue after
any person has ceased to serve in the capacity which would have
entitled him to such indemnification hereunder. Any subsequent repeal
or amendment of this Article VI, Section 4 or any provision hereof,
which shall have the effect of limiting, qualifying or restricting the
powers or rights of indemnification provided or permitted hereunder
shall not, solely by reason of such repeal or amendment, eliminate,
restrict or otherwise affect the right or power of the corporation to
indemnify any person or affect any right of indemnification of such
person with respect to claims made prior to such repeal or amendment.
The indemnification provided under this Article VI, Section 4
shall not be deemed exclusive of any other rights to which directors,
officers, agents or employees of the corporation may be entitled under
Article SEVENTH of the Certificate of Incorporation of the corporation,
or any agreement, vote of the stockholders or disinterested directors,
or otherwise.
The corporation shall have the right to impose, as conditions
to any indemnification provided or permitted pursuant to this Article
VI, Section 4, such reasonable requirements and conditions as the Board
of Directors or stockholders may deem appropriate in each specific case
and circumstance, including but not limited to (i) that any counsel
representing the person to be indemnified in connection with the
defense or settlement of any action shall be selected by the
corporation, subject to the approval of the person to be indemnified,
which consent shall not be unreasonably withheld, (ii) that the
corporation shall have the right, at its option, to assume and control
the defense or settlement of any claim or proceeding made,
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initiated or threatened against the person to be indemnified, and (iii)
that the corporation shall be subrogated, to the extent of any payments
made by way of indemnification, to all of the indemnified person's
right of recovery, and that the person to be indemnified shall execute
all writings and do everything necessary to assure such rights of
subrogation to the corporation.
5. SEVERABILITY. If any of the provisions of this Article VI,
or any part hereof, is hereafter construed to be invalid or
unenforceable, the same shall not affect the remaining provisions of
this Article VI, which shall remain in full effect without regard to
the invalid portion or portions.
In addition, the By-Laws provide that the Company has the authority to
obtain liability insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit No. Description
4 Instruments defining the rights of security holders, including
indentures
4.1(a) (i) Certificate of Incorporation of the
Company, as amended (incorporated by
reference to Exhibit 3(a) to Company's
Annual Report on Form 10-K for the fiscal
year ended May 31, 1987 filed with the
Commission on August 26, 1987, as amended
January 14, 1988).
(ii) Certificate of Amendment of the Certificate
of Incorporation filed with the Secretary of
State of the State of Delaware on November
1, 1990 (incorporated by reference to
Exhibit 3(b) to Company's Annual Report on
Form 10-K for the fiscal year ended May 31,
1992 filed with the Commission on August 28,
1992).
(iii) Certificate of Amendment of the Certificate
of Incorporation filed with the Secretary of
State of the State of Delaware on November
6, 1997 (incorporated by reference to
Exhibit 4.1(a)(iii) to Company's
Registration Statement for the Lazare Kaplan
International Inc. 1997 Long Term Stock
Incentive Plan on Form S-8 filed with the
Commission on November 14, 1997).
4.1(b) Certificate of Designations of Series A Junior
Participating Preferred Stock filed with the
Secretary of State of the State of Delaware on
November 6, 1997 (incorporated by reference to
Exhibit 4.1(b) to the Company's Registration on Form
S-8 filed with the Commission on November 14, 1997.)
4.2 By-Laws of the Company, as currently in effect
(incorporated by reference to Exhibit 3(ii) to
Company's Registration Statement on Form S-1 filed
with the Commission on August 28 1972).
4.3 Form of certificate representing shares of the
Company's Common Stock (incorporated by reference to
Exhibit 4(a) to Amendment No. 1 to Registration
Statement on Form S-2 filed with the Commission on
October 4, 1990 ).
4.4 The Lazare Kaplan 401(k) Plan for Savings and
Investment.*
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5 Opinion re legality
5.1 Opinion of Warshaw Burstein Cohen Schlesinger &
Kuh, LLP*
5.2 (i) Internal Revenue Service Determination Letter
dated July 12, 1994.*
(ii) Commonwealth of Puerto Rico Department of
Treasury, Bureau of Income Tax Letter
dated October 11, 1994.*
15 Letter on unaudited interim financial information - not
applicable
23 Consent of experts and counsel
23.1 Consent of Warshaw Burstein Cohen Schlesinger &
Kuh, LLP (contained in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP*
24 Power of attorney (contained in the signature pages hereto)*
- ------------
*Filed herewith
ITEM 9. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement
(i) To include any prospectus required by
Sections 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represents a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-9
<PAGE>
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-10
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<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York on May 8, 1998.
LAZARE KAPLAN INTERNATIONAL INC.
By: /s/ Sheldon L. Ginsberg
-------------------------------
Sheldon L. Ginsberg,
Executive Vice President and
Chief Financial Officer
Each person whose signature appears below hereby constitutes and
appoints Leon Tempelsman and Lucien Burstein, and each of them, his true and
lawful attorney-in-fact, with full power of substitution and resubstitution, for
him in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission under the
Securities Act of 1933, hereby ratifying and confirming all that either such
attorneys-in-fact or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Maurice Tempelsman May 8, 1998
- --------------------------- Chairman of the Board
Maurice Tempelsman of Directors
/s/ Leon Tempelsman Vice Chairman of the May 8, 1998
- ------------------------------------ Board of Directors
Leon Tempelsman (principal executive
officer)
/s/ George R. Kaplan Vice Chairman of the May 8, 1998
- ------------------------------------ Board of Directors
George R. Kaplan
/s/ Lucien Burstein Director May 8, 1998
- ------------------------------------
Lucien Burstein
/s/ Myer Feldman Director May 8, 1998
- ------------------------------------
Myer Feldman
/s/ Michael W. Butterwick Director May 8, 1998
- ------------------------------------
Michael W. Butterwick
</TABLE>
II-11
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Sheldon L. Ginsberg Director, Executive Vice May 8, 1998
- --------------------------------- President and Chief Financial
Sheldon L. Ginsberg Officer (principal financial and
accounting officer)
/s/ Robert Speisman Director May 8, 1998
- ---------------------------------
Robert Speisman
</TABLE>
The Plan. Pursuant to the requirements of the Securities Act
of 1933, the trustees have duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York on May 8, 1998.
LAZARE KAPLAN 401(k) PLAN
FOR SAVINGS AND INVESTMENT
By: /s/ Sheldon L. Ginsberg
--------------------------
Sheldon L. Ginsberg,
Trustee
By: /s/ Leon Tempelsman
--------------------------
Leon Tempelsman
Trustee
By: /s/ Robert Speisman
--------------------------
Robert Speisman
Trustee
II-12
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4.4 (a) The Lazare Kaplan International Inc. 401(k) Plan for
Savings and Investment.
(b) Adoption Agreement, dated September 25, 1989.
(c) Adoption Agreement, dated March 28, 1998.
5.1 Opinion of Warshaw Burstein Cohen Schlesinger & Kuh, LLP.
5.2 (i) Internal Revenue Service Determination Letter dated
July 12, 1994.
(ii) Commonwealth of Puerto Rico Department of Treasury,
Bureau of Income Tax Letter Dated October 11, 1994.
23.2 Consent of Ernst & Young LLP
STATEMENT OF DIFFERENCES
The service mark symbol shall be expressed as................... 'sm'
<PAGE>
<PAGE>
Exhibit 4.4(a)
THE LAZARE KAPLAN
401(K) PLAN FOR SAVINGS AND INVESTMENTS
EFFECTIVE AS OF JANUARY 1, 1990
<PAGE>
<PAGE>
The Lazare Kaplan
401(k) Plan for Savings and Investments
DETAILED CONTENTS
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SECTION 1 PURPOSE........................................................... 1
1.1 Purpose........................................................... 1
1.2 Exclusive Benefit of Employees.................................... 1
1.3 Intent............................................................ 1
1.4 Plan Not Employment Contract...................................... 1
SECTION 2 DEFINITIONS....................................................... 2
2.1 Accounts.......................................................... 2
2.2 Adoption Agreement................................................ 2
2.3 Adjustment Factor................................................. 2
2.4 Affiliated Employer............................................... 2
2.5 Basic Plan........................................................ 2
2.6 Beneficiary....................................................... 2
2.7 Board............................................................. 2
2.8 Code.............................................................. 3
2.9 Company........................................................... 3
2.10 Compensation...................................................... 3
2.11 Discretionary Contribution Account................................ 4
2.12 Earned Income..................................................... 4
2.13 Effective Date with respect....................................... 4
2.14 Elective Deferral Account......................................... 5
2.15 Employee.......................................................... 5
2.16 Employee After-tax Contributions
Account........................................................... 5
2.17 Entry Date........................................................ 5
2.18 Family Member..................................................... 5
2.19 Funds............................................................. 6
2.20 Highly Compensated Employee....................................... 6
2.21 Inactive Participant.............................................. 7
2.22 Leave of Absence.................................................. 7
2.23 Limitation Year................................................... 7
2.24 Matching Contribution Account..................................... 7
2.25 Military Absence.................................................. 7
2.26 Net Income........................................................ 7
2.27 Non-highly Compensated Employee................................... 8
2.28 Owner-Employee.................................................... 8
2.29 Participant....................................................... 8
2.30 Plan.............................................................. 8
2.31 Plan Administrator................................................ 8
2.32 Plan Year......................................................... 8
2.33 Rollover Contribution Account..................................... 8
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2.34 Qualified Non-elective Contributions.............................. 8
2.35 Self-Employed Individual.......................................... 9
2.36 Service........................................................... 9
2.37 Shareholder-Employee.............................................. 9
2.38 Social Security Taxable Wage Base................................. 9
2.39 Sponsoring Organization........................................... 9
2.40 Transferred Contributions Account................................. 9
2.41 Total Disability.................................................. 9
2.42 Trust or Trust Fund.............................................. 10
2.43 Trust Agreement.................................................. 10
2.44 Trustee.......................................................... 10
2.45 Valuation Date................................................... 10
SECTION 3 SERVICE PROVISIONS............................................... 10
3.1 Total Service.................................................... 10
3.2 Service for Participation........................................ 10
3.3 Break in Service................................................. 11
3.4 Aggregation of Years of Service for
articipation..................................................... 11
3.5 Service for Vesting.............................................. 12
3.6 Aggregation of Years of Service for
Vesting.......................................................... 12
3.7 Hour(s) of Service............................................... 12
SECTION 4 PARTICIPATION.................................................... 14
4.1 Eligibility...................................................... 14
4.2 Compensation During Absence or in Year
of Retirement, Disability or Death ............................. 15
4.3 Contribution in Year of Termination of
Employment....................................................... 15
4.4 Election Not to Participate -
Withdrawal from Participation.................................... 15
4.5 Reparticipation.................................................. 15
4.6 Suspension From Participation.................................... 16
SECTION 5 COMPENSATION..................................................... 16
5.1 Compensation - Participation on
Effective Date................................................... 16
5.2 Compensation - Participation
Subsequent to Effective Date..................................... 17
5.3 Other Years of Participation..................................... 17
5.4 Compensation - Year of Termination of
Employment or Withdrawal from
Participation ................................................... 17
5.5 Compensation - Leave of Absence,
Retirement, Disability or Death.................................. 17
SECTION 6 CONTRIBUTIONS TO THE PLAN........................................ 18
6.1 Savings Plan..................................................... 18
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6.2 Company Contributions............................................ 26
6.3 Payroll Deduction................................................ 27
6.4 Payment of Contributions......................................... 27
6.5 Delay in Payments................................................ 27
6.6 Overall Limitation of Contribution............................... 27
6.7 Maximum Limitation - More Than One
Type of Plan..................................................... 33
6.8 Reduction of Contributions or
Benefits......................................................... 35
6.9 Aggregation of Plans............................................. 36
6.10 Distribution of Excess Deferrals................................. 36
6.11 Distribution of Excess Contributions............................. 37
6.12 Distribution of Excess Aggregate
Contributions.................................................... 38
6.13 Allocation of Forfeitures........................................ 40
6.14 Distributions upon Plan Termination.............................. 40
6.15 Distributions upon Sale of Assets................................ 40
6.16 Distributions upon Sale of Subsidiary............................ 40
SECTION 7 PARTICIPANTS' ACCOUNTS, INVESTMENT
FUNDS, ALLOCATION OF ASSETS AND
CONTRIBUTIONS .................................................. 41
7.1 Furnishing of Schedules.......................................... 41
7.2 Separate Accounts for Participants............................... 41
7.3 Investment Designation........................................... 41
7.4 Investment Distributions, Voting and
Registration..................................................... 42
7.5 Allocation of Participants' Elective
Deferrals........................................................ 42
7.6 Allocation of Company Contributions.............................. 43
7.7 Valuation of the Plan............................................ 44
7.8 Allocation of Plan Assets........................................ 44
7.9 Distribution..................................................... 45
7.10 Contributions - Terminated or
Withdrawn Participants........................................... 45
SECTION 8 DISTRIBUTIONS.................................................... 46
8.1 Retirement Dates................................................. 46
8.2 Methods of Payment Upon Retirement............................... 46
8.3 Methods of Payment from a Transferee
Account Upon Retirement.......................................... 47
8.4 Death Benefits................................................... 53
8.5 Disability Retirement............................................ 53
8.6 Beneficiary Designation.......................................... 54
8.7 Vesting and Other Termination of
Employment....................................................... 54
8.8 Former Participant............................................... 55
8.9 Segregated Accounts.............................................. 57
</TABLE>
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8.10 Discharge of Trustee's Obligation to
Make Payments.................................................... 58
8.11 Payment of Benefits - Timing..................................... 58
8.12 Incapacity....................................................... 60
8.13 Proof of Claim................................................... 60
8.14 Hardship Withdrawal.............................................. 60
8.15 Loans............................................................ 61
8.16 Withdrawal of Employee After-Tax
Contributions.................................................... 62
8.17 Direct Rollovers................................................. 63
8.18 Attainment of Age 59-1/2......................................... 64
SECTION 9 SERVICE PROVIDERS AND ALLOCATION OF
RESPONSIBILITIES................................................. 64
9.1 Service Providers................................................ 64
9.2 Allocation....................................................... 64
9.3 No Joint Service Provider
Responsibilities................................................. 75
9.4 Advisor to Service Provider...................................... 75
9.5 Service in Multiple Capacities................................... 75
SECTION 10 ADMINISTRATION OF THE PLAN....................................... 76
10.1 Appointment of Plan Administrator................................ 76
10.2 Powers of the Plan Administrator................................. 76
10.3 Duties of the Plan Administrator................................. 76
10.4 Action by the Plan Administrator................................. 77
10.5 Discretionary Action............................................. 77
10.6 Compensation and Expenses of Plan
Administrator.................................................... 77
10.7 Reliance on Others............................................... 77
10.8 Self Interest.................................................... 77
10.9 Personal Liability - Indemnification............................. 78
10.10 Insurance........................................................ 78
10.11 Claims Procedures................................................ 79
10.12 Claims Review Procedures......................................... 79
SECTION 11 AMENDMENT AND TERMINATION........................................ 80
11.1 General.......................................................... 80
11.2 Termination of Plan.............................................. 81
11.3 Liquidation of Plan Assets in the
Event of Termination or Partial
Termination ..................................................... 81
11.4 Partial Termination.............................................. 81
11.5 Solely for Benefit of Participants,
Terminated Participants and their
Beneficiaries ................................................... 82
</TABLE>
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11.6 Successor to Business of the Company ............................ 82
11.7 Merger, Consolidation and Transfers.............................. 82
11.8 Revocability..................................................... 83
SECTION 12 TOP HEAVY PROVISIONS............................................. 83
12.1 Top Heavy Requirements........................................... 83
12.2 Determination of Top Heavy Status................................ 83
12.3 Specific Top Heavy Provisions.................................... 86
12.4 Top Heavy Definitions............................................ 89
SECTION 13 MISCELLANEOUS PROVISIONS......................................... 91
13.1 Spendthrift Provision............................................ 91
13.2 Rollover Amounts................................................. 91
13.3 Plan to Plan Transfers........................................... 92
13.4 Amendment of Vesting Schedule.................................... 92
13.5 Plans for Owner-Employees........................................ 93
13.6 Construction..................................................... 94
13.7 Impossibility of Performance..................................... 94
13.8 Dissolution of the .............................................. 94
13.9 Definition of Words.............................................. 94
13.10 Titles........................................................... 94
</TABLE>
v
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SECTION 1
Purpose
1.1 Purpose
The purpose of this Plan is threefold:
a. To encourage the habit of savings
b. To permit Employees to share in the profits of the
Company
c. To provide retirement income to eligible Employees
from both their own savings and Company contributions
and earnings thereon.
1.2 Exclusive Benefit of Employees
This Plan has been adopted for the exclusive benefit of eligible
Employees and their Beneficiaries and should, so far as possible, he
interpreted in a manner consistent with such purpose. All benefits
payable under the Plan shall be paid or provided for solely from the
Trust Agreement held by the Trustee, and the Company assumes no
liability or responsibility therefor.
1.3 Intent
It is the intent of the Company in establishing this Plan that it
qualify under Section 401 and, Section 401(k) of the Internal Revenue
Code of 1986, as amended.
1.4 Plan Not Employment Contract
The adoption and maintenance of the Plan shall not be deemed to
constitute a contract between the Company and any Employee or
Participant, and nothing herein contained shall be deemed to give to
any Employee or Participant the right to be retained in the employ of
the Company or to interfere with the right of the Company to discharge
any Employee or Participant at any time.
<PAGE>
<PAGE>
SECTION 2
Definitions
The following words and phrases as used herein shall have the meanings specified
below and shall be interpreted as stated in this Section unless the context
otherwise requires:
2.1 "Accounts" shall mean the Elective Deferral Account, Discretionary
Contribution Account, Matching Contribution Account, Employee
After-tax Contributions Account, Transferred Contribution Account
and Rollover Contributions Account.
2.2 "Adoption Agreement" shall mean the document setting forth the specific
provisions of the Company's participation in the Plan which, when
executed, along with the Basic Document shall constitute the Plan.
2.3 "Adjustment Factor" shall mean the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d) of the
Code as applied to such items and in such manner as the Secretary shall
prescribe.
2.4 "Affiliated Employer" shall mean the Company and any corporation which
is a member of a controlled group of corporations (as defined in
Section 414(b) of the Code) which includes the Company; and trade or
business (whether or not incorporated) which is under common control
(as defined in Section 414(c) of the Code) with the Company; any
organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Section 414(m) of the Code)
which includes the Company; and any other entity required to be
aggregated with the Company pursuant to regulations under Section
414(o) of the Code,with such entity to be considered an Affiliated
Employer under the Plan (i) during such period of affiliated status,
and (ii) to extent specifically provided in the Plan, during any period
preceding a period of affiliated status.
2.5 "Basic Plan" shall mean the underlying plan document and Trust
Agreement setting forth the essential features of the Plan.
2.6 "Beneficiary" shall mean the person designated by the Participant to
receive any amount payable under the Plan on the death of the
Participant, as more fully set forth in Section 8.6 hereof.
2.7 "Board" shall mean the Board of Directors of the Company.
2
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2.8 "Code" shall mean the Internal Revenue Code of 1986 and
amendments thereto.
2.9 "Company" shall mean Lazare Kaplan International.
2.10 "Compensation" shall mean Earned income as defined in Section 2.12 for
a Self-Employed Individual, and for any other Employee shall mean wages
as defined in Code Section 3401(a) for the purposes of income tax
withholding at the source, but determined without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)(2)), paid by
the Company to the Participant during the calendar year ending with or
within the Plan Year, except for any amounts excluded in Section 6 of
the Adoption Agreement. For years beginning after December 31, 1988,
compensation shall not exceed the first $200,000 as adjusted for
changes in the cost-of-living as provided in section 415(d) of the
Code, except that the dollar increase in effect on January 1 of any
calendar year is effective for years beginning in such calendar year
and the first adjustment to the $200,000 limitation is effected on
January 1, 1990. If a plan determines compensation on a period of time
that contains fewer than 12 calendar months, then the annual
compensation limit is an amount equal to the annual compensation limit
for the calendar year in which the compensation period beings
multiplied by the ratio obtained by dividing the number of full months
in the period by 12. Compensation shall also include compensation which
is not currently includible in the Participant's gross income by reason
of the application of Sections 125, 402(a)(8), 402(h)(1)(B) and 403(b)
of the Code.
In determining the compensation of a Participant for purposes of the
$200,000 limitation, the rules of Section 414(q)(6) of the Code shall
apply, except in applying such rules, the term "family" shall include
only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year.
If, as a result of the application of such rules the adjusted $200,000
limitation is exceeded, then (except for purposes of determining the
portion of compensation up to the integration level, if this Plan
provides for permitted disparity,) the limitation shall he prorated
among the affected individuals in proportion to each such individual's
compensation as determined under this Section prior to the application
of this limitation.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan years beginning on or after
3
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January 1, 1994, the annual compensation of each employee taken into
account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000,
as adjusted by the Commissioner for increases in the cost of living in
accordance with section 401(a)(17)(B) of the Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period,
and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
the Plan to the limitation under section 401(a)(17) of the Code shall
mean the OBRA '93 annual compensation limit set forth in this
provision.
If compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current
plan year, the compensation for that prior determination period is
subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination periods
beginning before the first day of the first plan year beginning on or
after January 1, 1994, the OBRA '93 annual compensation limit is
$150,000.
2.11 "Discretionary Contribution Account" shall mean the contributions to
the Trust made by the Company in accordance with Section 6.2(b), and
the earnings thereon.
2.12 "Earned Income" shall mean the net earnings from self- employment in
the trade or business with respect to which the Plan is established for
which personal services of the individual are a material income
producing factor. Net earnings will be determined without regard to
items not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Company to a
qualified plan to the extent deductible under Section 404 of the Code.
Net earnings shall be determined with regard to the deduction allowed
to the Company by Section 164(f) of the Code for taxable years
beginning after December 31, 1989.
2.13 "Effective Date" with respect to the Company shall be the day specified
by the Company in Section 2.E of the Adoption Agreement.
4
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2.14 "Elective Deferral Account" shall mean contributions made to the Plan
by the Company at the election of the Participant pursuant to Section
6.1(a), or at the discretion of the Company in accordance with Section
6.2(c), and the earnings thereon.
2.15 "Employee" shall mean a person employed (as a common law employee) by
the Company. The term "Employee" shall include leased employees within
the meaning of Section 414- (n)(2) of the Code and any individual
considered an employee under Code Section 414(o).
The term "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 Section 414(n)(6) of the Code) 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
if: (i) such employee is covered by a money purchase pension plan
provided: (1) a nonintegrated employer contribution rate of at least 10
percent of compensation, as defined in Section 415(c)(3) of the Code,
but including amounts contributed pursuant to a salary reduction
agreement which are excludable from the employee's gross income under
Section 125, Section 402(a)(8), Section 402(h) of Section 403(b) of the
Code, (2) immediate participation, and (3) full and immediate vesting;
and (ii) leased employees do not constitute more than 20 percent of the
recipient's nonhighly compensated workforce.
2.16 "Employee After-tax Contributions Account" shall mean contributions to
the Trust made by a Participant pursuant to Section 6.1(b), and the
earnings thereon.
2.17 "Entry Date" shall mean the first day of the month specified by the
Company in Section 2.G of the Adoption Agreement.
2.18 "Family Member" shall mean an individual described in
Section 414(q)(6) of the Code.
5
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2.19 "Funds" shall mean registered investment company (mutual fund) shares
made available through the Sponsoring Organization for plans using the
Fidelity Master Plan for Savings and Investments. If selected by the
Company in its Adoption Agreement, the term "Fund" shall also he deemed
to include: (a) a group annuity contract issued by a legal reserve life
insurance carrier, (b) certificates of deposit and (c) a bank
commingled fund.
2.20 "Highly Compensated Employee" shall include highly compensated active
Employees and highly compensated former Employees.
A highly compensated active Employee includes any Employee who performs
service for the Company during the determination year and who, during
the look-back year: (i) received compensation from the Company in
excess of $75,000 (as adjusted pursuant to Section 415(d) of the Code);
(ii) received compensation from the in excess of $50,000 (as adjusted
pursuant to Section 415(d) of the Code) and was a member of the
top-paid group for such year; or (iii) was an officer of the and
received compensation during such year that is greater than 50 percent
of the dollar limitation in effect under Section 415(b)(1)(A) of the
Code. The term highly compensated Employee also includes: (i) Employees
who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and
the Employee is one of the 100 Employees who received the most
compensation from the Employee during the determination year, and (ii)
Employees who are 5 percent owners at any time during the look-back
year or determination year.
It no officer has satisfied the compensation of (iii) above during
either (iii) determination year or look-back year, the highest paid
officer for such year shall be treated as a highly compensated
Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding
the determination year.
A highly compensated former Employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the during the
determination year, and was a highly compensated active Employee for
either the separation year of any determination year ending on or after
the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a
family member of either a 5 percent owner who is an
6
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active or former Employee or a highly compensated Employee who is one
of the 10 most highly compensated Employees ranked on the basis of
compensation paid by the Company during such year, then the family
member and the 5 percent owner or top-ten highly compensated Employee
shall be aggregated. In such case, the family member and 5 percent
owner or top-ten highly compensated Employee shall be treated as a
single Employee receiving compensation and plan contributions or
benefits of the family member and 5 percent owner or top-ten highly
compensated Employee. For purposes of this Section, family member
includes the spouse, lineal ascendants and descendants of the Employee
or former Employee and the spouses of such lineal ascendants and
descendants.
The determination of who is a highly compensated Employee, including
the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated
as officers and the compensation that is considered, will be made in
accordance with Section 414(q) of the Code and the regulations
thereunder.
2.21 "Inactive Participant" shall mean any Employee or former Employee who
has ceased to be a Participant and on whose behalf an account is
maintained under the Plan.
2.22 "Leave of Absence" shall mean any absence from work which shall have
been approved by the Company of the Employee under uniform rules and
regulations.
2.23 "Limitation Year" shall mean the 12 consecutive month period which
corresponds with the Plan Year unless the Company specifies otherwise
in the Adoption Agreement.
2.24 "Matching Contribution Account" shall mean any contribution to the Plan
made by the and allocated to a Participant's account by reason of a
Participant's Elective Deferrals and/or Employee After-tax
Contributions, pursuant to Section 6.1(f)(ii)(f), and the earnings
thereon.
2.25 "Military Absence" shall mean absence for any period of military
service with the Armed Forces of the United States provided that the
Employee return to Employment with the within the period during which
the would be required to reemploy the Employee under federal law.
2.26 "Net Income" shall mean either (i) the net income as shown by the 's
books computed in accordance with generally accepted accounting
principles, before deducting federal income taxes and taxes imposed by
any state or county measured in whole or in part by income and before
deducting
7
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the annual contribution to the Plan or (ii) accumulated net income
as so determined by the 's accountant.
2.27 "Non-highly Compensated Employee" shall mean an Employee of the
who is neither a Highly Compensated Employee nor a Family Member.
2.28 "Owner-Employee" shall mean an individual who is a sole proprietor, or
who is a partner owning more than 10 percent of either the capital or
profits interest of the partnership.
2.29 "Participant" shall mean any Employee of the who becomes a participant
in accordance with Section 4 hereof.
2.30 "Plan" shall mean the completed Adoption Agreement executed by the
Company and the Company and the Basic Document.
2.31 "Plan Administrator" shall mean the "Administrator" designated in
accordance with Section 10.
2.32 "Plan Year" shall mean the 12-month period specified by the Company in
Section 2.D of the Adoption Agreement.
2.33 "Rollover Contribution Account" shall mean amounts contributed by a
Participant in accordance with Section 13.2, and the earnings thereon.
2.34 "Qualified Non-elective Contributions" shall mean contributions made by
the Company in accordance with Section 6.2, who have elected the 401(k)
feature in Section 2.C of the Adoption Agreement, that a Participant
may not elect to receive in cash until distributed from the Plan; which
are 100 percent vested and nonforfeitable when made; and which are not
distributable under the terms of the Plan to Participants or their
beneficiaries earlier than the earlier of:
(i) separation from service, death, or disability of a
Participant;
(ii) termination of the plan without the establishment of
another defined contribution plan;
(iii) the disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of Code
Section 409(d)(2)) used in the trade or business of such
corporation if such corporation continues to maintain this
plan after the disposition, but only with respect to the
employees
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who continue employment with the corporation acquiring
such assets; or
(iv) the disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the
meaning of Code Section 409(d)(3)) if such corporation
continues to maintain this plan, but only with respect to
employees who continue employment with such subsidiary.
2.35 "Self-Employed Individual" shall mean an individual who has Earned
Income for the taxable year from the trade or business for which the
Plan is established; also as individual who would have had Earned
Income but for the fact that the trade or business had no net profits
for the taxable year.
2.36 "Service" for purposes of this Plan document shall be governed by the
rules and definitions set forth in Section 3.
2.37 "Shareholder-Employee" shall mean any officer or employee of an
Electing Small Business Corporation within the meaning of Section 1362
of the Code, who owns (or is considered as owning under Section
318(a)(1) of the Code) on any day during a taxable year of the more
than 5% of the outstanding stock of the Company.
2.38 "Social Security Taxable Wage Base" shall mean the maximum amount
considered as wages under Section 312(a)(1) of the Code on the first
day of the Plan Year.
2.39 "Sponsoring Organization" shall mean Fidelity Management &
Research Company.
2.40 "Transferred Contributions Account" refers to the amounts transferred
from another qualified plan in accordance with Section 13.3, and the
earnings thereon.
2.41 "Total Disability" shall mean, in the case of an Owner-Employee or a
Self-Employed Individual, inability to engage in any substantial
gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less
than 12 months. The permanence and degree of such impairment shall he
supported by medical evidence. In the case of any other Employee, Total
Disability shall mean a Participant's permanent and total incapacity of
engaging in employment for the as evidenced by the Participant's
eligibility for benefits under the Company's Long Term Disability Plan,
unless specified otherwise by the Company in Section 9.C of the
Adoption Agreement.
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2.42 "Trust" or "Trust Fund" shall mean the fund created by the Company for
purposes of investing contributions made under this Plan.
2.43 "Trust Agreement" shall mean the agreement of trust incorporated in
this Plan entered into between the Company and the Trustee, with any
and all supplements and amendments thereto.
2.44 "Trustee" shall mean the Trustee in the Trust Agreement incorporated in
this Plan, executed by the Company or any duly appointed successor
trustee or trustees.
2.45 "Valuation Date" shall mean the close of business on the last day of
each quarter of the Plan Year unless specified otherwise by the Company
in Section 2.F of the Adoption Agreement.
2.46 "Year of Vesting Service" shall be as defined in Section 3.5.
In addition to the foregoing definitions, other terms as defined in the several
sections constituting the Basic Plan Document.
SECTION 3
Service Provisions
3.1 Total Service
All of an Employee's Service with the and an Affiliated Employer, as an
Employee or Participant, as the case may be, shall be taken into
account for purposes of the Plan except as expressly provided in this
Section 3.
3.2 Service for Participation
(a) For purposes of Section 4, the term "Year of Service" or "Year
of Service for Participation" means a 12-month period beginning
on the Employee's Employment Commencement Date, or anniversary
thereof, during which an Employee completes not less than 1,000
Hours of Service. For purposes of Section 3, Employment
Commencement Date means the day on which an Employee first
completes an Hour of Service pursuant to Section 3.7. Service
shall include service with a predecessor employer, unless
specified otherwise by the Company in Section 4.B of the
Adoption Agreement.
(b) If the Employee does not complete 1,000 Hours of Service in the
12-month period commencing with his
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Employment Commencement Date, the 12-month eligibility
computation period shall thereafter he computed with reference
to the first Plan Year beginning after the Employee's employment
commencement year.
3.3 Break in Service
An Employee, as an Employee or Participant, shall he charged with a
Break in Service for any eligibility computation period during which he
does not complete more than 500 Hours of Service.
3.4 Aggregation of Years of Service for Participation
(a) In the case of an Employee who does not have any nonforfeitable
right to the account balance derived from Company contributions,
Years of Service before a period of consecutive 1-year Breaks
in Service will not be taken into account in computing
eligibility service if the number of consecutive 1-year Breaks
in Service in such period equals or exceeds the greater of 5
or the aggregate number of Years of Service. Such aggregate
number of Years of Service will not include any Years of
Service disregarded under the preceding sentence by reason
of period Breaks in Service.
(b) If, at the time of incurring a Break in Service, an Employee
does not have a nonforfeitable right to an accrued benefit, his
Years of Service for Participation prior to the Break in Service
shall be aggregated with his Years of Service for Participation
subsequent to the Break in Service to determine his eligibility
to participate in the Plan.
(c) After a Break in Service or upon reemployment following
termination of employment that resulted in a Break in Service,
the following rules shall apply:
(i) If an Employee's Years of Service for Participation are
disregarded pursuant to subparagraph 3.4(a), above,
Service shall be determined in accordance with Section
3.2 as if he were a new Employee as of the date the
Break in Service terminated.
(ii) If an Employee's Years of Service for Participation are
not disregarded, pursuant to subparagraph 3.1(h) above,
his prior Service shall he counted immediately as of the
date the Break in Service terminated.
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3.5 Service for Vesting
For purposes of vesting, the term "Year of Service" means a 12-month
period (as defined in Section 5.B of the Adoption Agreement) during
which an Employee completes not less than 1,000 Hours of Service. For
purposes of determining Breaks in Service, the computation period shall
also be as specified in Section 5.B of the Adoption Agreement.
3.6 Aggregation of Years of Service for Vesting
In the case of a Participant who has five (5) consecutive 1-year Breaks
in Service, all Years of Service after such Breaks in Service will be
disregarded for the purpose of vesting the -derived account balance
that accrued before such breaks, but both pre-break and post-break
service will count for the purposes of vesting the -derived account
balance that accrues after such breaks. Both accounts will share in the
earnings and losses of the fund.
In the case of a Participant who does not have five (5) consecutive
1-Year Breaks in Service, both the pre-break and post-break service
will count in vesting both the pre-break and post-break
Company-derived account balance.
3.7 Hour(s) of Service
For purposes of Sections 3.2 and 3.5 (Service for Participation and
Service for Vesting), an Employee, as an Employee or as a Participant,
shall be credited with an Hour of Service for each hour for which:
(a) He is directly or indirectly paid by, or entitled to payment
from, the for performing duties during the appLicable 12-month
period.
(b) Back pay, irrespective of mitigation of damages, has either been
awarded or agreed to by the . These Hours of Service shall be
credited with respect to the applicable 12-month period to which
the award or agreement or payment pertains, rather than the
12-mo- nth period in which the award, agreement or payment is
made.
(c) He is absent from work (regardless of whether the employment
relationship has terminated) with the approval of the by
reason of sickness or disability of himself or his family,
or on holidays military duty, authorized vacation or jury
duty; provided, however, that neither periods of absence
nor periods following termination of employment for which the
Participant is receiving or eligible or entitled to
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receive worker's compensation, unemployment compensation or
disability insurance benefits under the laws of any state or
other unit of government shall be credited as Hours of Service
for any purposes of this Plan and provided further, no Hours of
Service shall be credited to an Employee for any purpose of this
Plan for a payment made to the Employee, either directly or
indirectly, by the which payment solely reimburses the Employee
for medical or medically-related expenses incurred by him.
(d) He is on paid Leave of Absence, provided, however, that not more
than 501 Hours of Service shall he credited to an Employee for
any one continuous period of Leave of Absence.
(e) The determination of the number of Hours of Service to be
credited to the member under subparagraphs (c) and (d), above,
shall, in the case of hourly paid Employees, be in accordance
with the provisions of paragraphs (b) and (c) of Regulations
2530.200b.2, Rules and Regulations for Minimum Standards for
Employee Pension Benefit Plans, U.S. Department of Labor, which
are incorporated herein by reference. For nonhourly paid
Employees, as Employees or Members, Hours of Service shall be
credited on the basis of 8 hours per day, 40 hours per week,
with either 125 work days or 25 work weeks completed in an
applicable 12-month period constituting 1,000 Hours of Service.
(f) Hours of Service will be credited for employment with any
Affiliated Employer as defined in Section 2.4.
(g) Hours of Service will also be credited for any individual
considered an Employee for purposes of this Plan under Section
414(n) of the Code.
(h) Solely for purposes of determining whether a Break in Service,
as defined in Section 3.3, for participation and vesting
purposes has occurred in a computation period, an individual who
is absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise
have been credited to such individual but for such absence, or
in any case in which such hours cannot be determined, 8 Hours of
Service per day for such absence. For purposes of this
paragraph, an absence from work for maternity or paternity
reasons means an absence (1) by reason of the pregnancy of
individual, (2) by reason of a birth of a child of the
individual, (3) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
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individual, or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
The Hours of Service credited under this paragraph shall be
credited is necessary to prevent a break in service in that
period, or (2) in all other cases, in the following computation
period.
(i) An Employee or Participant shall not be credited with Hours of
Service under subparagraph (a), (b), (c), (d), (e), (f), (g) and
(h) for the same period of service.
3.8 Hours of Service for Break in Service
For purposes of Section 3.3, in determining whether an Employee or
Participant has completed more than 500 Hours of Service in any Plan
Year, the Employee shall, in addition to being credited with Hours of
Service pursuant to Section 3.7, be credited with Hours of Service for
periods during which he is:
(a) on an unpaid leave of absence which is authorized by the ;
(b) temporarily laid off, provided, however, that no additional
Hours of Service shall be credited to the Participant after 12
consecutive calendar months of layoff; or
(c) absent due to service in the Armed Forces of the United States,
provided, however, that the Participant shall have returned to
Employment with the within 90 days after the termination of such
service or within such longer period as his Employment rights
are protected by law.
SECTION 4
Participation
4.1 Eligibility
Each Employee of the on the Effective Date who has satisfied the Plan's
eligibility requirements as set forth in the following sentence shall
automatically be eligible to participate in this Plan. Any other
Employee who belongs to the eligible class defined in Section 2.1 of
the Adoption Agreement shall be eligible to participate on the Entry
Date next following the completion of the age and
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service requirements, if any, specified in Section 4.A of the Adoption
Agreement. Participation in the Plan shall commence upon receipt by the
Plan Administrator of the Employee's application to participate and
Elective Contribution Agreement as described in Section 6.1 and as
provided for in procedures established by the Plan Administrator.
4.2 Compensation During Absence of in Year of Retirement, Disability or
Death
In the case of any Participant who retires, becomes disabled or dies
during a Plan Year, Compensation paid or accrued to such Participant by
the during such Plan Year shall he included in computing
the 's maximum contribution for such year under Section 6 and
in any Plan Year in which such Participant is paid Compensation by the
and he contributes to the Plan throughout the Plan Year he shall be
included on the schedule to be furnished pursuant to Section 7.1. In
no event, however, shall an Employee of the be entitled to share in
the contribution of the Company in any Plan Year in which he does not
receive Compensation from the Company or in which he elected not to
participate in the Plan.
4.3 Contribution in Year of Termination of Employment
If an Employee terminates employment other than by reason of death,
retirement or disability retirement, his entitlement to share in any
allocation of Company contributions for the Plan Year in which
termination occurs shall be determined by the Company's election in
Section 7.F of the Adoption Agreement.
4.4 Election Not to Participate - Withdrawal from Participation
No Employee shall be required to participate in the Plan and any
Participant may withdraw from participation. An Employee who does not
want to participate in the Plan, or a Participant who desires to
withdraw from participation, shall notify the Plan Administrator in
writing of his election not to participate or of his withdrawal from
participation. The election not to participate or withdrawal from
participation shall he effective as soon as administratively feasible
following the Participant's notification of withdrawal to the Plan
Administrator.
4.5 Reparticipation
An Employee who declined to participate or who withdrew from
participation in the Plan may become an active Participant by notifying
the Plan Administrator in writing of his desire to participate or
reparticipate in the Plan, and by
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furnishing the Plan Administrator with an Elective Contribution
Agreement. Such participation shall commence or recommence on the first
day of the month next following submission of a written application to
the Plan Administrator pursuant to Section 4.1
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 Break in Service, such Employee will participate immediately upon
returning to an eligible class of Employees. If such Participant incurs
a Break in Service, eligibility will be determined under the Break in
Service rules of the Plan.
In the event an Employee who is not a member of 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.
4.6 Suspension From Participation
An Employee who receives a hardship withdrawal pursuant to Section 8.14
will be suspended from participation in the Plan for a period of twelve
months following the month in which the hardship distribution is made.
Elective Deferrals and Employee After-tax Contributions pursuant to
Section 6.1(a) and (b) will not be permitted during the period of the
suspension. Following the period of the suspension, Maximum Elective
Deferrals pursuant to Section 6.1(a) for the Employee's taxable year
immediately following the taxable year of the hardship distribution
will be reduced by the amount of the Employee's Elective Deferrals in
the taxable year of the hardship withdrawal.
SECTION 5
Compensation
5.1 Compensation - Participation on Effective Date
For purposes of the contribution by the pursuant to Sections 6.2(a) and
(b) for the first Plan Year, the amount of Compensation earned by
Employees who become Participants on the Effective Date shall be that
amount of Compensation, as defined in Section 2.9, earned during the
first Plan Year.
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5.2 Compensation - Participation Subsequent to Effective Date
The amount of Compensation earned by a Participant during each Plan
Year of participation shall be used to determine the maximum amount of
the 's contribution to be allocated to his account for that
Plan Year pursuant to Sections 6.2(a) and (b).
5.3 Other Years of Participation
Except as provided in Section 5.4, no person shall share in the
contributions pursuant to Sections 6.2(a) and (b) for any Plan Year in
which he is credited with less than 1,000 Hours of Service.
Notwithstanding for foregoing, if the Company elects in Section 7.F of
the Adoption Agreement, each Participant shall be eligible for the
matching contribution pursuant to Section 6.2(a).
5.4 Compensation - Year of Termination of Employment or Withdrawal from
Participation
If the Employment of a Participant is terminated prior to the last day
of the Plan Year under circumstances other than as provided in Sections
8.1, 8.4 and 8.5, or if a Participant withdraws from participation
prior to the last day of the Plan Year pursuant to Section 4.3, he
shall not he entitled to share in the Company contribution for that
Plan Year pursuant to Sections 6.2(a) and (b). However, if the Company
elects in Section 7.F of the Adoption Agreement, each Participant shall
be eligible for a matching contribution pursuant to Section 6.2(a) if
he completes at least one Hour of Service in the Plan Year.
5.5 Compensation - Leave of Absence, Retirement, Disability or
Death
Any Participant who is on an authorized Leave of Absence or retires,
becomes disabled or dies during a Plan Year shall share in the
contribution pursuant to Sections 6.2(a) and (b) for the Plan Year.
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SECTION 6
Contributions to the Plan
6.1 Savings Plan
(a) Elective Deferrals
Commencing with the initial Plan Year and for each Plan Year of
the thereafter, except as provided in Section 4.6, a Participant
may elect to contribute from 1 to 20% of his Compensation to the
Plan, if the Company has elected the 401(k) feature in Section
2.C of the Adoption Agreement, or such lesser amount if so
specified by the Company in its Adoption Agreement, provided,
however, no Employee shall be permitted to have Elective
Deferrals made under this Plan during any calendar year in
excess of $7,979 multiplied by the Adjustment Factor as provided
by the Secretary of the Treasury and no Employee who has been
suspended from the Plan pursuant to Section 4.6 shall be
eligible to make Elective Deferrals during the period of such
suspension, provided further, that no Employee who is providing
services for Lazare Kaplan (Puerto Rico) Division shall be
permitted to have Elective Deferral made under the Plan in
excess of the lesser of ten percent (10%) or $7,000. The
Participant's election shall be included in his Elective
Deferral Agreement filed with the Plan Administrator at least 20
days prior to the beginning of the Plan Year and no Elective
Deferral may he made retroactively. The Elective Deferral Rate
designated by the Participant shall remain in effect for the
duration of the Plan Year unless elected otherwise by the
Participant in accordance with procedures established by the
Plan Administrator. A Participant may change his Elective
Deferral Rate, which shall be effective as of the next Valuation
Date each Plan Year, but not retroactively.
(b) Employee After-tax Contributions
In addition to the contribution made by a Participant pursuant
to the provisions of Section 6.1(a), unless the Company has
specified otherwise in Section 7.B of the Adoption Agreement,
each Participant may contribute an additional amount to the Plan
as a voluntary Employee contribution. An election to increase,
decrease or cease making Employee After-tax Contributions may be
made in accordance with procedures established by the Plan
Administrator and shall be effective as of the next Valuation
Date following notifica-
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tion to the Plan Administrator. However, such changes may not be
made retroactively. Employee After-tax Contributions may be made
by payroll deduction or by lump-sum payments, provided that: the
Plan Administrator must first determine the extent to which
lump-sum payments may be made; the lump-sum contribution must
not he less than $100, unless specified otherwise by the Company
in Section 7.C of the Adoption Agreement; and not more than one
lump-sum contribution may be made during any three-month period,
unless specified otherwise by the Company in its Adoption
Agreement. The provision of this subsection shall be
administered by the Plan Administrator in a uniform,
nondiscriminatory manner.
(c) Limitation on Elective Deferrals
Elective Deferrals made by a Participant pursuant to Section
6.1(a), shall be subject to the following conditions:
The Average Actual Deferral Percentage for Eligible Participants
who are Highly Compensated Employees for the Plan Year shall not
exceed the Average Actual Deferral Percentage for Eligible
Participants who are Non-highly Compensated Employees for the
Plan Year multiplied by 1.25; or the Average Actual Deferral
Percentage for Eligible Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the Average Actual
Deferral Percentage for Eligible Participants who are Non-highly
Compensated Employees for the Plan Year multiplied by 2,
provided that the Average Actual Deferral Percentage for
Eligible Participants who are Highly Compensated Employees does
not exceed the Average Actual Deferral Percentage for Eligible
Participants who are Non-highly Compensated Employees by more
than two (2) percentage points.
(d) Definitions
For the purposes of this Section 6 the following definitions
shall be used:
(i) "Actual Deferral Percentage ("ADP") shall mean the
ratio (expressed as a percentage), of Elective
Deferrals, including Excess Deferrals of Highly
Compensated Employees but excluding Elective Deferrals
that are taken into account in the Contribution
Percentage test (provided the ADP test is satisfied
both with and without exclusion of these Elective
Deferrals), and
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Qualified Non-elective Contributions on behalf of the
Eligible Participant for the Plan Year to the Eligible
Participant's Compensation for the Plan Year.
(ii) "Average Actual Deferral Percentage" shall mean the
average (expressed as a percentage) of the Actual
Deferral Percentage of the Eligible Participants in a
group. For purposes of computing Actual Deferral
Percentages, an Employee who would be a Participant but
for the failure to make Elective Deferrals shall be
treated as a Participant on whose behalf no Elective
Deferrals are made.
(iii) "Elective Deferral" shall mean contributions made to
the Plan by the Company at the election of an Eligible
Participant pursuant to Section 6.1(a).
(iv) "Elective Deferral Agreement" shall mean any agreement
entered into prior to the commencement of each Plan
Year in which an Eligible Participant agrees to defer a
portion of his Compensation as an Elective Deferral to
the Plan.
(v) "Elective Deferral Rate" shall mean the percentage of
Compensation an Eligible Participant elects to defer by
utilizing the Elective Deferral Agreement.
(vi) "Eligible Participant" shall mean any Employee of the
who is otherwise authorized under the terms of the Plan
to have Elective Deferrals or Qualified Non-elective
Contributions allocated to his account for the Plan
Year, even if the Employee does not elect to make
Elective Deferrals.
(vii) "Qualified Non-elective Contributions" shall mean as
defined in Section 2.35.
(e) Special Rules
For purposes of this Section 6.1, the Actual Deferral Percentage
for any Eligible Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have Elective
Deferrals or Qualified Employer Deferral Contributions allocated
to his account under two or more plans or arrangements described
in Section 401(k) of the Code that are maintained by the
or an Affiliated Employer shall be
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determined as if all such Elective Deferrals and Qualified
Employer Deferral Contribution were made under a single
arrangement. If the plans in question have different plan years,
all cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
For purposes of determining the Actual Deferral Percentage of a
Participant who is a 5-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the Elective
Deferrals, Qualified Employer Deferral Contributions and
Compensation of such Participant shall include the Elective
Deferrals, Qualified Employer Deferral Contributions and
Compensation for the Plan Year of Family Members, and such
Family Members shall be disregarded as separate employees in
determining the Actual Deferral Percentage both for Participants
who are Non-highly Compensated Employees and those who are
Highly Compensated Employees.
The determination and treatment of the Elective Deferrals,
Qualified Non-elective Contributions and Actual Deferral
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of Treasury.
In the event that this Plan satisfies the requirements of
Sections 401(k), 401(a)(4), or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such Sections of the Code only
if aggregated with this Plan, then this Section shall be applied
by determining the ADP of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989,
plans may be aggregated in order to satisfy Section 410(k) of
the Code only if they have the same Plan Year.
For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-elective Contributions and Qualified Matching
Contributions must be made before the last day of the
twelve-month period immediately following the Plan Year to which
contributions relate.
The shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified
Non-elective Contributions or Qualified Matching Contributions,
or both, used in such test.
(f) Limitations on Employee After-tax Contributions and
Matching Employer Contributions
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(i) Contribution Percentage
The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Contribution
Percentage for Eligible Participants who are Non-highly
Compensated Employees for the Plan Year multiplied by
1.25; or the Average Contribution Percentage for
Eligible Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the
Average Contribution Percentage for Eligible
Participants who are Non-highly Compensated Employees
for the Plan Year multiplied by 2, provided that the
Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees does
not exceed the Average Contribution Percentage for
Eligible Participants who are Non-highly Compensated
Employees by more than two (2) percentage points.
(ii) Definitions
(a) "Average Contribution Percentage ("ACP")" shall
mean the average (expressed as a percentage) of
the Contribution Percentages of the Eligible
Participants in a group.
(b) "Contribution Percentage" shall mean the ratio
(expressed as a percentage), of Employee
After-tax Contributions and Matching
Contributions on behalf of the Eligible
Participant for the Plan Year to the Eligible
Participant's Compensation for the Plan Year
(whether or not the Employee was a Participant
for the entire Plan Year). Such Contribution
Percentage amounts shall include forfeitures of
Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's
account which shall be taken into account in the
year in which such forfeiture is allocated.
(c) "Eligible Participant" shall mean any employee
who is eligible to make Employee After-tax
Contributions or an Elective Deferral (if the
takes such contributions into account in the
calculation of the Contribution Percentage), or
to receive a Matching Contribution (including
forfeitures) or a Qualified Matching
Contribution. If an Employee contribution is
required as a con-
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dition of participation in the Plan, any Employee
who would be a Participant in the Plan if such
Employee made such a contribution shall be
treated as an Eligible Participant on behalf of
whom no Employee contributions are made.
(d) "Aggregate Limit" shall mean the sum of (i) 125
percent of the greater of the ADP of the
Non-highly Compensated Employees for the Plan
Year or the ACP of Non-highly Compensated
Employees under the Plan subject to Code Section
401(m) for the Plan Year beginning with or within
the Plan Year of the CODA and (ii) the lesser of
200% or two plus the lesser of such ADP or ACP.
"Lesser" is substituted for "greater" in (i)
above, and "greater" is substituted for "lesser"
after "two plus the" in (ii) if it would result
in a larger Aggregate Limit.
(e) "Employee After-tax Contributions" shall mean any
contribution made to the Plan by or on behalf of
a Participant that is included in the
Participant's gross income in the year in which
made and that is maintained under a separate
account to which earnings and losses are
allocated.
(f) "Matching Contributions" shall mean the
Contribution made to this or any other defined
contribution plan on behalf of a Participant on
account of an Employee After-tax Contribution
made by such Participant, or on account of a
Participant's Elective Deferral under a plan
maintained by the .
(iii) Special Rules
For purposes of this subsection (f), the Contribution
Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is
eligible to make Employee Contributions, or to receive
Matching Contributions, Qualified Non-elective
Contributions or Elective Deferrals allocated to his
account under two or more plans or arrangements
described in Section 401(a) or the Code or arrangements
described in Section 401(k) of the Code that are
maintained by the or an Affiliated Employer shall be
determined as if all such contributions and Elective
Deferrals were a
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single plan. If a Highly Compensated Employee
participates in two or more cash or deferred
arrangements that have different plan years, all cash
or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
In the event that this Plan satisfies the requirements
of Sections 401(a)(4), 401(m) and 410(b) of the Code
only if aggregated with one or more other plans, or if
one or more other plans satisfy the requirements of
Sections 401(a)(4), 401(m) and 410 (b) of the Code only
if aggregated with this Plan, then this subsection (f)
shall be applied by determining the Contribution
Percentages of Eligible Participants as if all such
plans were a single plan. For plan years beginning
after December 31, 1989, plans may be aggregated in
order to satisfy Section 401(m) of the Code only if
they have the same Plan Year.
For purposes of determining the Contribution Percentage
of an Eligible Participant who is a five-percent owner
or one of the ten most highly-paid Highly Compensated
Employees, the Employee After-tax Contributions,
Matching Contributions (including forfeitures allocated
to Matching Contributions Account) and Compensation of
such Participant shall include the Employee After-tax
Contributions, Matching Contributions and Compensation
of Family Members. Family Members, with respect to
Highly Compensated Employees, shall be disregarded as
separate employees in determining the Contribution
Percentage both for Participants who are Non-highly
Compensated Employees and for Participants who are
Highly Compensated Employees.
The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of
the Treasury.
If one or more Highly Compensated Employees participate
in both a CODA and a plan subject to the ACP test
maintained by the and the sum of the ADP and ACP of
those Highly Compensated Employees subject to either or
both tests exceeds the Aggregate Limit, then the ACP of
those Highly Compensated Employees who also participate
in a CODA will be reduced (beginning with
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such Highly Compensated Employee whose ACP is the
highest) so that the limit is not exceeded. The amount
by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be
treated as an Excess Aggregate Contribution. The ADP
and ACP of the Highly Compensated Employees are
determined after any corrections required to meet the
ADP and ACP tests. Multiple use does not occur if
either the ADP or ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP
and ACP of the Non-highly Compensated Employees.
"Contribution Percentage Amounts" shall mean the sum of
the Employee Contributions, Matching Contributions, and
Qualified Matching Contributions (to the extent not
taken into account for purposes of the ADP test) made
under the Plan on behalf of the Participant for the
Plan Year. Such Contribution percentage Amounts shall
include forfeitures of Excess Aggregate Contributions
or Matching Contributions allocated to the
Participant's account which shall be taken into account
in the year in which such forfeiture is allocated. If
so elected in the Adoption Agreement the may include
Qualified Non-elective Contributions in the
Contribution Percentage Amounts. The also may elect to
use Elective Deferrals in the Contribution Percentage
Amounts so long as the ADP test is met before the
Elective Deferrals are used in the ADP test and
continues to be met following the exclusion of those
Elective Deferrals that are used to meet the ACP test.
For purposes of determining the Contribution Percentage
test, Employee Contributions are considered to have
been made in the Plan Year in which contributed to the
trust. Matching Contributions and Qualified
Non-elective Contributions will be considered made for
a Plan Year if made no later than the end of the
twelve-month period beginning on the day after the
close of the Plan Year.
The shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of
Qualified Non-Elective Contributions or Qualified
Matching Contributions, or both, used in such test.
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(g) Notwithstanding any provision to the contrary in the Plan, any
Participant performing services for Lazare Kaplan (Puerto Rico)
Division may not make Elective Deferrals, Matching
Contributions, and/or After Tax contributions that exceed the
limitations set forth in Section 6.1(c) and (f) calculated in
accordance with the provisions of Sections 6.1(c) through (f)
provided, however, that for purposes of calculating such
limitations for this Section 6.1(g) Highly Compensated Employees
for the Plan Year shall mean those Employees performing services
for Lazare Kaplan (Puerto Rico) Division whose compensation as
reported on Form W-2 for the Plan Year places them in the
highest compensated one third of all Employees performing
services for Lazare Kaplan (Puerto Rico) Division for the Plan
Year, and Non-highly Compensated Employees shall be those
Employees performing services for Lazare Kaplan (Puerto Rico)
Division who are not "Highly Compensated Employees," within the
meaning of "Highly Compensated Employees" set forth in this
Section 6.1(g).
(h) A Participant may not make withdrawals from his Elective
Deferral Account prior to Early Retirement Date or Normal
Retirement Date, except in the event of hardship, attainment of
age 59-1/2, termination of employment, death or disability as
described in Section 8.
(i) All Elective Deferrals made by Participants shall be transferred
to the Trustee not later than 90 days following the applicable
payroll period.
6.2 Company Contributions
(a) For each Plan Year, the Company shall make Matching
Contributions to the Trust on behalf of each Participant in
relation to the Participant's Elective Deferrals and Employee
After-tax Contributions for the Plan Year, based on the formula,
if any, elected by the Company in Section 7.D of the Adoption
Agreement.
(b) The may each year in its discretion contribute to the Trust an
additional amount out of its Net Income. Such Discretionary
Contributions shall be allocated to the accounts of Plan
Participants who are Employees of the Company on the basis
elected in Section 7.G of the Adoption Agreement.
(c) In addition, the may each year in its discretion contribute to
the Trust Qualified Non-elective Contributions for Non-Highly
Compensated Employees of the Company in such amounts as may be
necessary to satisfy
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the requirements of Section 6.1(c) for the Plan Year, if the
Company has elected the 401(k) feature in Section 2.C of the
Adoption Agreement.
6.3 Payroll Deduction
Participants' contributions shall be effected by payroll deductions
made from pay in respect of the pay period for each Participant
designated by the Plan Administrator. The amount of payroll deductions
so made shall be transferred to the Trustee and such amounts shall be
allocated by the Trustee to each Participant's accounts when received.
All such deductions and payments shall be reported to the Plan
Administrator and shall be credited to the proper account or accounts
of each Participant on the records maintained by the Plan
Administrator.
6.4 Payment of Contributions
The Company's contribution to the Plan for each Plan Year shall be made
within the time required by law in order to obtain a deduction of the
amount of such payment for federal income tax purposes for such Plan
Year, as determined under applicable provisions of the Internal Revenue
Code as now in effect or as the same may hereafter be amended.
6.5 Delay in Payments
In the event of any delay in payment or in determination of the amount
to be paid,the Company shall nevertheless pay to the Trust the
contribution as determined by the Company as provided above as soon as
may be practicable and any such delay shall not be considered as any
modification of the Company's obligation to contribute the amount so
determined.
6.6 Overall Limitation of Contribution
For each Limitation Year, the maximum annual addition ("The Maximum
Permissible amount") that may be contributed or allocated to a
Participant's account under the Plan shall not exceed the lesser of the
Defined Contribution Dollar Limitation or twenty-five percent (25%) of
the Participant's compensation from the Company for the Limitation
Year. The compensation limitation (25%) referred to in the preceding
sentence shall not apply to any contribution for medical benefits
(within the meaning of Code Sections 401(h) or 419A(f)(2)) which is
otherwise treated as an annual addition under Code Sections 415(1)(1)
or 419A(d)(2).
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As used in this Section 6.6:
(a) "Compensation" shall include a Participant's wages, salaries,
and fees for professional services and other amounts received
for personal services actually rendered in the course of
employment with the Company maintaining the Plan (including, but
not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on
insurance premiums, tips, bonuses, fringe benefits,
reimbursements and expense allowances), and excluding the
following:
(i) Company contributions to a plan of deferred
compensation which are not includible in the
Employee's gross income for the taxable year in
which contributed, or Company contributions
under a simplified employee pension plan to the
extent such contributions are deductible by the
Employee, or any distributions from a plan of
deferred compensation;
(ii) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by the Employee either becomes freely transferable
or is no longer subject to a substantial risk or
forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(iv) Other amounts which received special tax benefits, or
contributions made by the Company (whether or not under
a salary reduction agreement) towards the purchase of
an annuity described in section 403(b) of the Internal
Revenue Code (whether or not the amounts are actually
excludable from the gross income of the Employee).
For any Self-Employed Individual, Compensation will mean Earned
Income.
For purposes of applying the limitations of this Section,
compensation for a Limitation Year is the compensation actually
paid or includible in gross income during such Limitation Year.
Notwithstanding the above, compensation for a Participant in a
defined contribution plan who is permanently and totally
disabled (as defined in Section 22(e)(3)
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of the Internal Revenue Code) is the compensation such
Participant would have received for the Limitation Year if the
Participant had been paid at the rate of compensation paid
immediately before becoming permanently and totally disabled;
such imputed compensation for the disabled Participant may be
taken into account only if the Participant is not an officer, an
owner, or highly compensated, and contributions made on behalf
of such Participant are nonforfeitable when made.
(b) "annual additions" shall mean the sum of
(i) Company contributions,
(ii) Employee contributions,
(iii) Forfeitures, and
(iv) Amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section
415(1)(2) of the Code, which is part of a pension or
annuity plan maintained by the Company are treated as
annual additions to a defined contribution plan. Also
amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending after
such date, which are attributable to post-retirement
medical benefits, allocated to the separate account of
a key employee, as defined in section 419A(d)(3) of the
Code, under a welfare benefit fund, as defined in
Section 419(e) of the Code, maintained by the Company
or an Affiliated Employer are treated as annual
additions to a defined contribution plan.
For this purpose, any excess amount applied under subsections
1.4 and 2.6 of Section 6.6(d) in the Limitation Year to reduce
Company contributions will be considered annual additions for
such Limitation Year.
(c) The compensation limitation (25%) described in the first
sentence of this Section 6.6 shall not apply to:
(i) Any contribution for medical benefits (within the
meaning of Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an annual addition,
or
(ii) Any amount otherwise treated as an annual addition
under Section 415(1)(1) of the Code.
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(d) For purposes of Section 6.6, "Defined Contribution Dollar
Limitation" shall mean $30,000 or, if greater, one-fourth of the
defined benefit dollar limitation set forth in Section 415(b)(1)
of the Code as in effect for the Limitation Year. If a short
limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive month period, the
maximum permissible amount will not exceed $30,000 multiplied by
the following fraction:
Number of months in the short Limitation Year
_______________________________________________
12
For purposes of Sections 6.6, 6.7 and 6.8, all defined contribution
plans of the Company and Affiliated Employers, terminated or not, shall
be considered as one plan.
The following subsections shall be deemed part of this Section 6.6:
1.1 If the Participant does not participate in, and has never
participated in another qualified plan or a welfare benefit
fund, as defined in section 419(e) of the Code, maintained by
the Company, or an individual medical account, as defined in
Section 415(1)(2) of the Code, maintained by the Company, which
provides an annual addition as defined in Section 6.6(b), the
amount of annual additions which may be credited to the
Participant's account for any Limitation Year will not exceed
the lesser of the maximum permissible amount or any other
limitation contained in this Plan. If the Company contribution
that would otherwise be contributed or allocated to the
Participant's account would cause the annual additions for the
Limitation Year to exceed the maximum permissible amount, the
amount contributed or allocated will be reduced so that the
annual additions for the Limitation Year will equal the maximum
permissible amount.
1.2 Prior to determining the Participants actual compensation for
the Limitation Year,the Company may determine the maximum
permissible amount for a Participant on the basis of a
reasonable estimation of the Participant's compensation for the
Limitation Year, uniformly determined for all Participants
similarly situated.
1.3 As soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the
Limitation Year will be determined on the basis of the
Participant's actual compensation for the Limitation Year.
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1.4 If, pursuant to subsection 1.3 or as a result of the allocation
of forfeitures there is an excess amount, the excess will be
disposed of as follows:
(a) Any nondeductible voluntary Employee contributions, to
the extent they would reduce the excess amount, will
be returned to the Participant;
(b) If after the application of paragraph (a) an excess
amount still exists, and the Participant is covered by
the Plan at the end of the Limitation Year, the excess
amount in the Participant's account will be used to
reduce Company contributions (including any allocation
of forfeitures) for such Participant in the next
Limitation Year, and each succeeding Limitation Year if
necessary;
(c) If after the application of paragraph (a) an excess
amount still exists, and the Participant is not covered
by the Plan at the end of the Limitation year, the
excess amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce
future Company contributions (including allocation of
any for feitures) for all remaining Participants in the
next Limitation Year, and each succeeding Limitation
Year if necessary;
(d) If a suspense account is in existence at any time during
a Limitation Year pursuant to this Section, it will not
participate in the allocation of the Trust's investment
gains and losses. If a suspense account is in existence
at any time during a particular Limitation Year, all
amounts in the suspense account must be allocated and
reallocated to Participant's Accounts before the Company
or any Employee contributions may be made to the Plan
for that Limitation Year. Excess amounts may not be
distributed to Participants or former Participants.
2.1 This subsection applies if, in addition to this Plan maintained
by the Company, the Participant is covered under another
qualified master or prototype defined contribution plan, a
welfare benefit fund, as defined in Section 419(e) of the Code,
or an individual medical account, as defined in Section
415(1)(2) of the Code, maintained by the Company during any
Limitation Year. The annual additions which may be credited to a
Participant's account under this Plan for any such Limitation
Year will not exceed the maximum permissible amount reduced by
the annual additions credited to
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a Participant account under the other plans and welfare benefit
funds for the same Limitation Year. If the annual additions with
respect to the Participant under other defined contribution
plans and welfare benefit funds maintained by the Company are
less than the maximum permissible amount and the Company
contribution that would otherwise be contributed or allocated to
the Participant's account under this Plan would cause the annual
additions for the Limitation Year to exceed this limitation, the
amount contributed or allocated will be reduced so that the
annual additions under all such plans and funds for the
Limitation Year will equal the maximum permissible amount. If
the annual additions with respect to the Participant under such
other defined contribution plans and welfare benefit funds in
the aggregate are equal to or greater than the maximum
permissible amount, no amount will be contributed or allocated
to the Participant's account under this Plan for the Limitation
Year.
2.2 Prior to determining the Participant's actual compensation for
the Limitation Year,the Company may determine the maximum
permissible amount for a Participant in the manner described in
subsection 1.2.
2.3 As soon as is administratively feasible after the end of the
Limitation Year, the maximum permissible amount for the
Limitation Year will be determined on the basis of the
Participant's actual compensation for the Limitation Year.
2.4 If, pursuant to subsection 2.3 or as a result of the allocation
of forfeitures, a Participant's annual additions under this Plan
and such other plans would result in an excess amount for a
Limitation Year, the excess amount will be deemed to consist of
the annual additions last allocated, except that annual
additions attributable to a welfare benefit fund or individual
medical account will be deemed to have been allocated first
regardless of the actual allocation date.
2.5 If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation
date of another plan, the excess amount attributed to this Plan
will be the product of,
(a) the total excess amount allocated as of such date,
times
(b) the ratio of (i) the annual additions allocated to the
Participant for the Limitation Year as of such date
under this Plan to (ii) the total annu-
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al additions allocated to the Participant for the
Limitation Year as of such date under this and all the
other qualified master or prototype defined contribution
plans.
2.6 Any excess amount attributed to this Plan will be disposed in
the manner described in subsection 1.4.
3.1 If the Participant is covered under another qualified defined
contribution plan maintained by the Company which is not a
master or prototype plan, annual additions which may be credited
to the Participant's account under this Plan for any Limitation
Year will be limited in accordance with subsections 2.1 though
2.6 as though the other plan were a master or prototype plan
unless the Company provides other limitations in Section 12 of
the Adoption Agreement.
3.2 For purposes of these sub-sections, the term "excess amount"
refers to the excess of the Participant's annual additions for
the Limitation Year over the Maximum Permissible Amount.
6.7 Maximum Limitation - More Than One Type of Plan
The sum of a Participant's defined benefit fraction and his defined
contribution fraction shall not exceed 1.0 for any Plan Year. The
defined benefit plan fraction for any Plan Year is a fraction (a) the
numerator of which is the projected annual benefit under all the
defined benefit plans (whether or not terminated) maintained by the
Company of the Participant for the Plan Year (determined as of the
close of the year), and (b) the denominator which is the lesser of (i)
1.25 multiplied by the maximum benefit allowable under Section
415(b)(1)(A) of the Code or (ii) 1.4 multiplied by the average
compensation for the three consecutive Years of Service with the
Company that produces the highest average. A Year of Service with the
Company is the 12-consecutive month period defined in Section 5.B of
the Adoption Agreement.
For purposes of this Section, projected annual benefit shall mean an
annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form other than
a straight life annuity or qualified joint and survivor annuity) to
which the Participant would be entitled under the terms of the Plan
assuming:
(a) the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if later), and
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(b) the Participant's Compensation for the current Limitation Year
and all other relevant factors used to determine benefits under
the Plan will remain constant for all future Limitation Years.
The defined contribution fraction for any Plan Year is a fraction (a)
the numerator of which is the sum of the annual additions to the
Participant's account under a defined contribution plan, whether or not
terminated (including non-deductible contributions to a defined benefit
plan, whether or not terminated 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(1)(2),
maintained by the Company) as of the close of the Plan Year and (b) the
denominator of which is the sum of the lesser of the following amounts
determined for such year and for each prior Year of Service (i) 1.25
multiplied by the dollar amount determined under Section 6.6 hereof, or
(ii) 1.4 multiplied by the amount which may be taken into account
determined under the percentage limitation described in Section 6.6
hereof.
Notwithstanding the above, if the Participant was a Participant in one
or more defined benefit plans maintained by the Company which were in
existence on July 1, 1982, 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 later of September
30, 1983, or the end of the last Limitation Year beginning before
January 1, 1983. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the
requirements of section 415 as in effect at the end of the 1982
Limitation Year. For purposes of this paragraph, a master or prototype
plan with an opinion letter issued before January 1, 1983, which was
adopted by the Company on or before September 30, 1983, is treated as a
plan in existence on July 1, 1982.
If the Employee was a participant in one or more defined contribution
plans maintained by the Company which were in existence on July 1,
1982, 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
later of September 30, 1983, or the end of the last Limitation Year
beginning before January 1, 1983. This adjustment also will be made if
at the end of the last Limitation Year beginning before
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January 1, 1984, the sum of the fractions exceeds 1.0 because of
accruals or additions that were made before the limitations of this
article became effective to any plans of the Company in existence on
July 1, 1982. For purposes of this paragraph, a master or prototype
plan with an opinion letter issued before January 1, 1983, which is
adopted by the Company on or before September 30, 1983, is treated as a
plan in existence on July 1, 1982.
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 Company
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
Section 415 for all Limitation Years beginning before January 1, 1987.
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 Company 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 Section 415 limitation
applicable to the first Limitation Year beginning on or after January
1, 1987.
6.8 Reduction of Contributions or Benefits
(a) If a Participant is also a member of another defined
contribution plan maintained by the Company and contributions to
all such plans, when taken together, exceed the maximum annual
addition permitted under Section 6.6, a reduction in
contributions shall be made to one of the plans, as specified by
the Company
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in Section 12.A of the Adoption Agreement, so that the
limitation on contributions shall not be exceeded.
(b) If retirement income is payable to a Participant under one or
more defined contribution plans and one or more defined benefit
plans of the Company, the annual amount of retirement income
payable to a Participant at any date shall be reduced in a
manner specified by the Company in Section 12.A of the Adoption
Agreement.
6.9 Aggregation of Plans
For purposes of Sections 6.6, 6.7, and 6.8, all Employees of the
Company and other corporations which are members of a controlled group
of corporations, within the meaning of Section 1563(a) of the Internal
Revenue Code, without regard to Section 1563(a)(4) and (e)(3)(c), and
as modified by Section 415(h), and all Employees of trades and
business, whether or not incorporated, which are under control with the
Company, and of any other entity required to be aggregated with the
Company pursuant to regulations under Code Section 414(o), shall be
treated as employed by a single employer, under regulations prescribed
by the Secretary of the Treasury or his delegate.
6.10 Distribution of Excess Deferrals
Notwithstanding any other provision of the Plan, Excess Deferral
Amounts and income allocable thereto shall be distributed no later than
April 15 to Participants who claim such Allocable Excess Deferral
Amounts for the preceding calendar year.
The Participant's claim shall be in writing, shall be submitted to the
Plan Administrator no later than March 1; shall specify the
Participant's Excess Deferral Amount for the preceding calendar year;
and shall be accompanied by the Participant's written statement that if
such amounts are not distributed, such Excess Deferral Amount, when
added to amounts deferred under other plans or arrangement described in
Sections 401(k), 408(k) or 403(b) of the Code, exceeds the limit
imposed on the Participant by Section 402(g) of the Code for the year
in which the deferral occurred.
The Excess Deferral Amount distributed to a Participant with respect to
a calendar year shall be adjusted for income and, if there is a loss
allocable to the Excess Deferral, shall in no event be less than the
lesser of the Participant's account under the Plan or the Participant's
Elective Deferrals for the Plan Year.
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Excess Deferral Amounts shall be adjusted for any income or loss up to
the date of distribution. The income or loss allocable to Excess
Deferral Amounts is the sum of: (1) income or loss allocable to the
Participant's Elective Deferral Account for the taxable year multiplied
by a fraction the numerator of which is such Participant's Excess
Deferral Amounts for the year and the denominator is the Participant's
account balance attributable to Elective Deferrals without regard to
any income or loss occurring during such taxable year; and (2) ten
percent of the amount determined under (1) multiplied by the number of
whole calendar months between the end of the Participant's taxable year
and the date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
"Excess Deferral Amounts" shall mean those Elective Deferrals that are
includible in a Participant's gross income under Section 402(g) of the
Code to the extent such Participant's Elective Deferrals for a taxable
year exceed the dollar limitation under such Code Section. Excess
Deferral Amounts shall be treated as annual additions under the Plan.
6.11 Distribution of Excess Contributions
Notwithstanding any other provision of the Plan, Excess Contributions
and income allocable thereto shall be distributed no later than the
last day of each Plan Year to Participants on whose behalf such Excess
Contributions were made for the preceding Plan Year.
If such excess amounts are distributed more than 2-1/2 months after the
last day of the Plan Year in which such excess amounts arose, a ten
(10) percent excise tax will be imposed on the Company maintaining the
Plan with respect to such amounts. Such distributions shall be made to
Highly Compensated Employees on the basis of the respective portions of
the Excess Contributions attributable to each of such Employees. Excess
Contributions shall be allocated to Participants who are subject to the
family member aggregation rules of Section 414(g)(6) of the Code in the
manner prescribed by the regulations. Excess Contributions (including
the amounts recharacterized) shall be treated as annual additions under
the Plan.
Excess contributions shall be adjusted for any income or loss up to the
date of distribution. The income or loss allocable to Excess
Contributions is the sum of: (1) income or loss allocable to the
Participant's Elective Deferral Account (and, if applicable, the
Qualified Non-elective Contribution account or the Qualified Matching
Contribu-
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tions account or both) for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Contributions for the
year and the denominator is the Participant's account balance
attributable to Elective deferrals (and Qualified Non-elective
Contributions or Qualified Matching Contributions, or both, if any of
such contributions are included in the ADP test) without regard to any
income or loss occurring during such taxable year; and (2) ten percent
of the amount determined under (1) multiplied by the number of whole
calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution occurs
after the 15th of such month.
The Excess Contributions which would otherwise be distributed to the
Participant shall be adjusted for income; shall be reduced, in
accordance with regulations by the amount of Excess Deferrals
distributed to the Participant; shall if there is a loss allocable to
the Excess Contributions in no event be less than the lesser of the
Participant's account under the Plan or the Participant's Elective
Deferrals and Qualified Employer Deferral Contributions for the Plan
Year.
Excess Contributions shall be distributed from the Participant's
Elective Deferral Account and Qualified Matching Contribution account
(if applicable) in proportion to the Participant's Elective Deferrals
and Qualified Matching Contributions (to the extent used in the ADP
test) for the Plan Year. Excess Contributions shall be distributed from
the Participant's Qualified Non-elective Contribution account only to
the extent that such Excess Contributions exceed the balance in the
Participant's Elective Deferral Account and Qualified Matching
Contribution account.
"Excess Contributions" shall mean, with respect to any Plan
Year, the excess of:
(a) The aggregate amount of Company contributions actually taken
into account in computing the ADP of Highly Compensated
Employees for such Plan Year, over
(b) The maximum amount of such contributions permitted by the ADP
test (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of the ADPs, beginning
with the highest of such percentages).
6.12 Distribution of Excess Aggregate Contributions
Excess Aggregate Contributions and income allocable thereto
shall be forfeited, if otherwise forfeitable under the
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terms of this Plan, or if not forfeitable, distributed no later than
the last day of each Plan Year to Participants to whose accounts
Employee Contributions or Matching Contributions, if applicable to the
Company's Plan, were allocated to Participants who are subject to the
family member aggregation rules of Section 414(q)(6) of the Code in the
manner prescribed by the regulations. If such Excess Aggregate
Contributions are distributed more than 2-1/2 months after the last day
of the Plan Year in which such excess amounts arose, a ten (10) percent
excise tax will be imposed on the Company maintaining the Plan with
respect to those amounts. Excess Aggregate Contributions shall be
treated as annual additions under the Plan.
Excess Aggregate Contributions shall be adjusted for any income or loss
up to the date of distribution. The income or loss allocable to Excess
Aggregate Contributions is the sum of: (1) income or loss allocable to
the Participant's Employee Contribution account, Matching Contribution
account, Qualified Matching Contribution account (if any, and if all
amounts therein are not used in the ADP test) and, if applicable,
Qualified Non-elective Contribution account and Elective Deferral
Account for the Plan Year multiplied by a fraction, the numerator of
which is such Participant's Excess Aggregate Contributions for the year
and the denominator is the Participant's account balance(s)
attributable to Contribution Percentage Amounts without regard to any
income or loss occurring during such Plan Year; and (2) ten percent of
the amount determined under (1) multiplied by the number of whole
calendar months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution occurs
after the 15th of such month.
The Excess Aggregate Contributions to be distributed to the Participant
shall be adjusted for income and, if there is a loss allocable to the
Excess Aggregate Contribution, shall in no event be less than the
lesser of the Participant's account under the Plan or the Participant's
employee After-tax Contributions and Matching Contributions for the
Plan Year.
Excess Aggregate Contributions shall be forfeited, if forfeitable of
distributed on a pro-rata basis from the Participant's Employee
After-tax Contribution account, Matching Contribution account, and
Qualified Matching Contribution account (and, if applicable, the
Participant's Qualified Non-elective Contribution account, Matching
Contribution account, and Qualified Matching Contribution account (and,
if applicable, the Participant's Qualified Non-elective Contribution
account or Elective Deferral Account, or both).
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"Excess Aggregate Contributions" shall mean, with respect to any Plan
Year, the excess of:
(a) The aggregate Contribution Percentage Amounts taken into account
in computing the numerator of the Contribution Percentage
actually made on behalf of Highly Compensated Employees for such
Plan Year, over
(b) The maximum Contribution Percentage Amounts permitted by the ACP
test (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
Such determination shall be made after first determining Excess
Elective Deferrals pursuant to Section 6.10 and then determining Excess
Contributions pursuant to Section 6.11.
6.13 Allocation of Forfeitures
Any amounts forfeited by Highly Compensated Employees under Section
6.12 shall be:
(i) Allocated to Non-Highly Compensated Employees pursuant to the
formula elected by the Company in Section 7.G of the Adoption
Agreement; and
(ii) Treated as annual additions for such Participants under Section
6.6 of this Plan.
6.14 Distributions upon Plan Termination
Participant Accounts, and income attributable thereto, shall be
distributed to Participants or their beneficiaries as soon as
administratively feasible after the termination of the Plan, provided
that neither the Company nor an Affiliated Employer maintains a
successor plan.
6.15 Distributions upon Sale of Assets
All Participant Accounts, and income attributable thereto, shall be
distributed to Participants as soon as administratively feasible after
the sale to an entity that is not an Affiliated Employer, of
substantially all of the assets used by the Company in the trade or
business in which the Participant is employed.
6.16 Distributions upon Sale of Subsidiary
All Participant Accounts, and income attributable thereto, shall be
distributed as soon as administratively feasible after the sale to an
entity that is not an Affiliated
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Employer, of an incorporated Affiliated Employer's interest in a
subsidiary to Participants employed by such subsidiary.
SECTION 7
Participants' Accounts, Investment Funds,
Allocation of Assets and Contributions
7.1 Furnishing of Schedules
On the effective Date and not later than the beginning of each Plan
Year thereafter, the Plan Administrator shall update its records with
the names of each of the Employees and such other information as may be
required to determine which Employees became Participants during the
past Plan Year. As soon as practicable after the end of each Plan Year,
the Plan Administrator shall develop a schedule showing the name of
each Employee who is a Participant for all or part of such Plan Year,
including the names of each Participant, described in Section 4.1, and
all such other data as may e required for the purpose of allocating
contributions, investment earnings and forfeitures hereunder, including
the Participant's Elective Deferral and the amount of his Compensation.
The Plan Administrator shall furnish such information to the
recordkeeper as may be necessary for the recordkeeper to discharge its
responsibilities under this Plan.
7.2 Separate Accounts for Participants
The Plan Administrator shall create and maintain separate accounts for
each Participant. (Such accounts shall be primarily for accounting
purposes and shall not restrict the Trustee in investing Plan assets as
a single fund.) The account of each Participant shall reflect a
separate record of his contributions made pursuant to Sections 6.1(a)
and 6.1(b) and a separate record of the Company's total contributions
made pursuant to Section 6.2 and allocable to each Participant's
account.
7.3 Investment Designation
Unless the Company has elected to direct Plan investments as determined
in Section 3.A of the Adoption Agreement each Participant, at the time
of making written application to participate in the Plan shall have the
right to direct the investment of his Accounts among Funds made
available by the Company pursuant to Sections 3.B and 3.C of the
Adoption Agreement. The amount which may be allocated to each
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Fund shall be determined by the Company's election in Section 3.D of
the Adoption Agreement. Each Participant shall have the opportunity to
change the investment of his or her accounts during each Plan Year
according to the Company's election in Section 3.D of the Adoption
Agreement.
7.4 Investment Distributions, Voting and Registration
(a) Distribution on Investments. All dividends on securities or
mutual fund shares and capital gains or other distributions
received on any such investments credited to Participant's
accounts will be reinvested in securities or mutual fund shares
in full and fractional shares of the same investment at the
price determined as provided. The shares so received or
purchased upon such reinvestment will be credited to such
accounts. If any dividends or capital gains or other
distributions may be received on such securities or mutual fund
shares at the election of the shareholder in additional
securities, shares or in cash or other property, the Trustee
will elect to receive such dividends or distributions in
additional securities or mutual fund shares, whichever is
applicable.
(b) Voting on Securities or Mutual Fund Shares. Subject to any
requirements of applicable law, the Trustee will deliver to the
Participants the copies of any notices of shareholders meetings,
proxies and proxy-soliciting materials, prospectuses and the
annual or other reports to shareholders, with respect to
securities or mutual fund shares held in the Trust Fund. The
Trustee shall act in accordance with directions received from
such Participants or the Company, as the case may be, with
respect to matters to be voted upon by the shareholders of such
securities or mutual fund shares. Such directions must be in
writing on a form approved by the Trustee, signed by the
Participant or the Company and delivered to the Trustee within
the time prescribed by it. If the Trustee receives no written
directions with respect to such securities or mutual fund
shares, the Trustee will not vote such securities or mutual fund
shares.
(c) Registration of Securities or Mutual Fund Shares. All securities
or mutual fund shares shall be registered in the name of the
Trustee or its nominee.
7.5 Allocation of Participants' Elective Deferrals
The total market value of each Participant's contributions shall be
allocated to his account and shall at all times he
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nonforfeitable, but subject, nevertheless, to change in value resulting
from investment experience.
7.6 Allocation of Company Contributions
(a) After the Trustee has been notified of the total contribution to
be made by the Company for any Plan Year, the account balances
of the Participants shall be adjusted as provided in Section
7.8, and the Plan Administrator shall allocate Company
contributions among Participants of the Company based on the
Company's elections in Sections 7.D and 7.G of the Adoption
Agreement. The Plan Administrator shall determine the vested
portion of each Participant's Matching Contribution Account and
Discretionary Contribution Account according to the election(s)
in Section 5 of the Adoption Agreement.
(b) Forfeitures shall be allocated to those Participants entitled to
an allocation of Matching Contributions or other Company
contributions for the Plan Year in which the forfeiture occurs.
Forfeitures shall be allocated to such Participants based on the
Company's election in Section 10 of the Adoption Agreement. For
purposes of this Section 7.6, "forfeitures" shall mean those
nonvested amounts allocated to Participants' accounts that would
have been applied, if forfeited, to reduce Matching
Contributions or other Company contributions under the Plan.
(c) Forfeitures allocated to the account of a Participant during the
Plan's Limitation Year under this Section 7.6 shall be treated
as an annual addition for such Limitation Year for purposes of
Sections 6.6 and 6.7 of this Plan. If, after reallocation, there
remains an amount that cannot be allocated to the accounts of
Participants, such excess shall be held unallocated in a
suspense account, and shall be allocated and reallocated among
the accounts of Participants (subject to the limitations of
Section 415(c)(1) of the Code) before any Company Contributions,
including Matching Contributions, or Employee Contributions may
be made to the Plan for the succeeding Limitation Year.
If, at any time during the Limitation Year, a suspense account
is in existence pursuant to this Section 7.6(c), investment
gains and losses and other income shall be allocated to the
suspense account, and the entire amount allocated to the
Participants from such suspense account shall be considered as
an annual addition for purposes of Section 415(c)(1) of the
Code. Upon termination of the plan, unallocated
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amounts in the suspense account shall, notwithstanding any other
provision of this Plan, revert to the Company.
7.7 Valuation of the Plan
As of the end of each Plan Year and as of any other date which the Plan
Administrator in its discretion may direct, the Plan Administrator
shall determine the net worth of the Plan by evaluating all of its
posted assets and liabilities as of that date, excluding from the
posted assets in the case of each valuation as of the end of each Plan
Year then ending, all amounts segregated into the separate accounts for
terminated or withdrawn Participants and amounts representing the
contributions of Participants for the current Plan Year. Each date as
of which the net worth of the Plan is determined is hereinafter
referred to as a Valuation Date. There shall be included as of the
Valuation Date, without implied limitation, income on hand, income
accrued, dividends payable but not received, and unvested cash, whether
income or principal; and there shall be deducted as of the Valuation
Date, without implied limitation, liabilities accrued. A determination
by the Plan Administrator of the net worth of the Plan or any component
thereof shall be conclusive and binding upon all persons. In
discharging its obligations and responsibility under this Section 7.7
and under Section 7.8, the Plan Administrator shall obtain such
information from the Trustee as is necessary or desirable.
7.8 Allocation of Plan Assets
The total net worth of each of the investment funds of the Plan as
determined on each Valuation Date shall be compared with the total of
all amounts standing to the credit of the accounts of all Participants
in each of the investments funds in the Plan as of the last day of each
Plan Year, regardless of when paid to the Trustee. As of each Valuation
Date, the Plan Administrator shall:
(a) First, charge to the proper accounts all payments and
distributions made from Participants' accounts since the last
preceding Valuation Date that have not been charged previously,
as provided in Section 7.9, including any loans under Section
8.15.
(b) Second, charge the Participants' accounts for any forfeitures
occurring since the last preceding Valuation Date.
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(c) Third, allocate one-half of the Participant's Elective Deferrals
since the last Valuation Date to his Elective Deferral Account.
(d) Fourth, adjust the net credit balances in Participants' accounts
upward or downward, pro rata, according to the net credit
balances taking into account the charges and credits in steps
(a) and (b) above so that the totals of the net credit balances
will equal the then adjusted net worth of the Trust Fund.
(e) Fifth, allocate the other one-half of the Participant's Elective
Deferrals since the last Valuation Date to his Elective Deferral
Account.
(f) Sixth, allocate the principal and interest credited to any loan
account as provided in Section 8.15.
(g) Seventh, allocate any income, loss, appreciation or depreciation
attributable to a separate investment of a Rollover Contribution
Account pursuant to Section 13.2 or a Transferred Contributions
Account pursuant to Section 13.3.
(h) Finally, if the Valuation Date is coincident with the end of the
Plan Year, allocate and credit the Company Matching
Contributions and Qualified Non-elective Contributions and
forfeitures (as described in Section 6.1(d)), if any, that are
to be allocated and credited as of that date in accordance with
Section 7.6.
7.9 Distribution
Whenever any distribution shall be made to or in behalf of a
Participant in accordance with the provisions of Section 8, his
Accounts shall be charged with the amount of such distribution.
Whenever part or all of the amount standing to the credit of a
Participant's Accounts is to be segregated into a separate account for
a terminated Participant, the Account shall be charged with the amount
so applied or segregated.
7.10 Contributions - Terminated or Withdrawn Participants
As provided in Section 5.4, the Accounts of terminated or withdrawn
Participants shall not share in Company contributions, unless, pursuant
to Section 4, the Employees once again become Plan Participants.
SECTION 8
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Distributions
No money or other property of the Trust shall be paid out or distributed by the
Trustee except (a) for the purchase or other acquisition of investments; (b) for
defraying the expenses, including taxes, if any, of administering the Plan and
related Trust; or (c) for the purpose of making distributions to or for the
account of Participants in accordance with the rules set forth below.
8.1 Retirement Dates
A Participant may retire from active service with the Company on his
Normal Retirement Date as defined in Section 9.A of the Adoption
Agreement. Upon attainment of Normal Retirement Age, a Participant
shall be fully vested in the value of his Accounts.
A Participant may, on three months' written notice to the Company,
elect to retire at any time on or following his Early Retirement Date
as specified in Section 9.B of the Adoption Agreement. Upon satisfying
the requirements for early retirement, a Participant shall be vested in
the value of his Accounts in accordance with the provisions of Section
8.7 of the Plan. If the Company elects a Service requirement in Section
9.B of the Adoption Agreement, a Participant eligible for a vested
benefit under the Plan who satisfies the Service requirement for Early
Retirement but terminates employment with the Company prior to
satisfying the age requirement, may commence receiving such benefit
upon satisfaction of the age requirement for Early Retirement.
Any Participant who defers his retirement date beyond his Normal
Retirement Date in accordance with Company personnel policy, shall
continue to be a Participant for all purposes of the Plan, provided,
that the interest of each Participant must be distributed commencing no
later than his Required Beginning Date.
8.2 Methods of Payment Upon Retirement
The Plan Administrator shall furnish each Participant with a complete
written explanation of the terms and conditions and form of payments
from the Plan at least ninety (90) days prior to the commencement of
the scheduled payment of any benefits. Any distribution payment shall
be made by the Trustee subject to withholding of any income or other
taxes as required by law.
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Subject to Section 8.3, a retiring Participant may elect, in writing on
a form provided by the Plan Administrator for such purpose, to receive
his retirement benefit in a single lump sum payment in cash or in Fund
shares.
8.3 Methods of Payment from a Transferee Account Upon Retirement
(a) In the event that such other optional form(s) of benefit were
available to the Participant under a prior qualified pension or
profit sharing plan with respect to amounts allocated to a
Transferee Account, the Participant may elect to receive his
retirement benefits allocated to the Transferee Account:
(1) in periodic installments in accordance with
Section 8.3(e);
(2) as an annuity payable only for his lifetime; or
(3) as a Qualified Joint and Survivor Annuity as
defined in Section 8.3(g)(2).
(b) If a married Participant elects a single life annuity in
accordance with Section 8.3(a)(2), the Participant's vested
account balance shall be paid in the form of a Qualified Joint
and Survivor Annuity unless the Participant makes a Qualified
Election as define din Section 8.3(g)(1).
(c) With respect to a Participant who has a Transferee Account
attributable to a qualified plan subject to the survivor annuity
requirement of Code Sections 411(a)(11) and 417, the provisions
of this subsection (c) shall supersede the other provisions of
Section 8 where appropriate. Unless the Participant makes a
Qualified Election as defined in Section 8.3(g)(1), a married
Participant's Transferee Account will be paid in the form of a
Qualified and Joint Survivor Annuity and an unmarried
Participant's Transferee Account will be paid in the form of a
life annuity. The Participant may elect to have such annuity
distributed upon attainment of the earliest retirement age under
the Plan. Unless an optional form of benefit has been selected
within the election period pursuant to a qualified election, if
a Participant dies before the annuity starting date then the
Participant's vested Accounts shall be applied toward the
purchase of an annuity for the life of the surviving spouse. The
surviving spouse may elect to have such annuity distributed
within a reasonable period after the Participant's death.
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(d) In the case of a Qualified Joint and Survivor Annuity, the Plan
Administrator shall no less than 30 days and no more than 90
days prior to the annuity starting date provide each Participant
a written explanation of: (i) the terms and conditions of a
Qualified Joint and Survivor Annuity; (ii) the Participant's
right to make and the effect of an election to waive the
Qualified Joint and Survivor Annuity form of benefit; (iii) the
rights of a Participant's spouse; and (iv) the right to make,
and the effect of, a revocation of a previous election to waive
the Qualified Joint and Survivor Annuity.
In the case of a Qualified Pre-Retirement Survivor Annuity as
described in (c) above, the Plan Administrator shall provide
each Participant within the applicable period for such
Participant a written explanation of the Qualified
Pre-Retirement Survivor Annuity in such terms and in such manner
as would be comparable to the explanation provided for meeting
the requirements of a Qualified Joint and Survivor Annuity in
accordance with (d) above.
The applicable period, with respect to a Qualified
Pre-Retirement Survivor Annuity, for a Participant is whichever
of the following periods ends last: (i) the period beginning
with the first day of the Plan Year in which the Participant
attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35;
(ii) a reasonable period ending after the individual becomes a
Participant; (iii) a reasonable period ending after Section
8.3(f) ceases to apply to the Participant; (iv) a reasonable
period ending after this article first applies to the
Participant. Notwithstanding the foregoing, notice must be
provided within a reasonable period ending after separation from
Service in the case of a Participant who separates from service
before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (ii),
(iii) and (iv) is the end of the two-year period beginning one
year prior to the date the applicable event occurs, and ending
one year after that date. In the case of a Participant who
separates from Service before the Plan Year in which age 35 is
attained, notice shall be provided within the two-year period
beginning one year prior to separation and ending one year after
separation. If such a Participant thereafter returns to
employment with the Company
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the applicable period for such Participant shall be
redetermined.
For the purposes of (c) above, the election period begins on the
first day of the Plan Year in which the Participant attains age
35 and ends on the date of the Participant's death. If a
Participant separates from Service prior to the first day of the
Plan Year in which age 35 is attained, with respect to the
account balance as of the date of separation, the election
period shall begin on the date of separation.
(e) If a retiring Participant elects installment payments in
accordance with Section 8.3(a)(1), payment shall be made in
monthly, quarterly or other regular installments over a fixed
period of time, not exceeding in the case of benefits payable
upon retirement or disability, the longer of the life expectancy
of the Participant or the joint life expectancy of the
Participant and his designated Beneficiary. Initial payments
under any installment schedule shall be set in such amounts as
would complete the payment of total benefit in substantially
equal payments over the period of time fixed for such payments;
but the amounts of each installment may be adjusted by the
Trustee following each Valuation of the Trust Fund to reflect
the effect of net earnings, gains or losses credited to the
Participant's Account in accordance with this Plan. Payments
under any installment method shall not be subject to any
mortality risk or determination, but shall be continued in all
events to the Participant, his spouse or his designated
Beneficiaries or, if none, his estate, until the full amount of
his Account shall have been distributed; however, this sentence
does not constitute any guaranty by the Plan of the sufficiency
of the Account to meet all payments initially scheduled or any
guaranty against the diminution in value of assets retained in
the Account to meet installment obligations, whether such
diminution shall occur by losses in market values, operating
expenses of the Plan or any other charges properly made to such
Account while any part of its assets are retained in the Trust
Fund.
The amount to be distributed each year must be at least an
amount equal to the quotient obtained by dividing the
Participant's entire interest by the life expectancy of the
Participant or joint and last survivor expectancy of the
Participant and designated Beneficiary. Life expectancy and
joint and last survivor expectancy are computed by the use of
the return multiples contained in Tables V and VI of
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Section 1.72-9 of the Income Tax Regulations. Unless elected
otherwise by the Participant (or spouse, in the case of
distributions described in Section 8.3(c)) by the time
distributions are required to begin, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to
the Participant (or spouse) and shall apply to all subsequent
years; however, the life expectancy of a nonspouse Beneficiary
may not be recalculated. For calendar years beginning before
January 1, 1989, if the Participant's spouse is not the
designated Beneficiary, the method of distribution selected must
provide that at least 50 percent of the present value of the
amount available for distribution is paid within the life
expectancy of the Participant.
The life expectancy (or joint and last survivor expectancy)
shall be calculated using the attained age of the Participant
(or designated beneficiary) as of the Participant's (or
designated beneficiary's) birthday in the applicable calendar
year reduced by one for each calendar year which has elapsed
since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy
shall be the life expectancy as so recalculated. The applicable
calendar year shall be the first distribution calendar year, and
if life expectancy is being recalculated such succeeding
calendar year.
For calendar years beginning after December 31, 1988, the amount
to be distributed each year, beginning with distributions for
the first distribution calendar year shall not be less than the
quotient obtained by dividing the Participant's benefit by the
lesser of (1) the applicable life expectancy (as defined in the
paragraph immediately above) or (2) if the Participant's spouse
is not the designated beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the proposed regulations. Distributions after
the death of the Participant shall be distributed using the
applicable life expectancy in the preceding paragraph above as
the relevant divisor without regard to Proposed Regulations
Section 1.401(a)(9)-2.
For purpose of the preceding paragraph, entire interest refers
to the Participant's account balance as of the last Valuation
Date in the calendar year immediately preceding the distribution
calendar year (valuation calendar year) increased by the amount
of any contributions or forfeitures allocated to the account
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balance as of dates in the valuation calendar year after the
Valuation Date and decreased by distributions made in the
valuation calendar year after the Valuation Date. If any portion
of the minimum distribution for the first distribution calendar
year is made in the second distribution calendar year on or
before the Required Beginning Date, the amount of the minimum
distribution made in the second distribution calendar year shall
be treated as if it had been made in the immediately preceding
distribution calendar year.
A distribution calendar year is a calendar year for which a
minimum distribution is required. For distributions beginning
before the Participant's death, the first distribution calendar
year is the calendar year immediately preceding the calendar
year which contains the Participant's required beginning date.
For distributions beginning after the Participant's death, the
first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Section 8.4.
(f) Payment of a single life annuity or a Qualified Joint and
Survivor Annuity shall be provided by the purchase and
distribution of a nontransferable annuity issued by Fidelity
Investments Life Insurance Company or other legal reserve life
insurance company. If the Participant's benefit is distributed
in the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the
requirements of Code Section 401(a)(9) and the proposed
regulations thereunder.
(g) The following definitions shall apply for the purposes of
Section 8.3:
(1) "Qualified Election" means a waiver of a Qualified Joint
and Survivor Annuity. Any waiver of a Qualified Joint
and Survivor Annuity shall not be effective unless: (a)
the Participant's spouse consents in writing to the
election; (b) the election designates a specific
Beneficiary, including any class of Beneficiaries or any
contingent Beneficiaries, which may not be changed
without spousal consent (or the Spouse expressly permits
designations by the Participant without any further
spousal consent); and (d) the Spouse's consent
acknowledges the effect of the election; (c) the
Spouse's consent acknowledges the effect of the
election; and (d) the Spouse's consent is witness by a
Plan representative or
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notary public. Additionally, a Participant's waiver of
the Qualified Joint and Survivor Annuity shall not be
effective unless the election designates a form of
benefit payments which may not be changed without
spousal consent (or the Spouse expressly permits
designations by the Participant without any further
spousal consent). If it is established to the
satisfaction of a Plan representative that there is no
Spouse or that the Spouse cannot be located, a waiver
will be deemed a qualified election.
Any consent by a Spouse obtained this provision (or
establishment that the consent of a Spouse may not be
obtained) shall be effective only with respect to such
Spouse. A consent that permits designations by the
Participant without any requirement of further consent
by such Spouse must acknowledge that the Spouse has the
right to limit consent to a specific Beneficiary, and a
specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both
of such rights. A revocation of a prior waiver may be
made by a Participant without the consent of the Spouse
at any time before the commencement of benefits. The
number of revocations shall not be limited. No consent
obtained under this provision shall be valid unless the
Participant has received notice as provided in Section
8.3(d) above.
(2) "Qualified Joint and Survivor Annuity" means an
immediate annuity for the life of the Participant with a
survivor annuity for the life of the Spouse which is 50
percent of the amount of the annuity which is payable
during the joint lives of the Participant and the Spouse
and which is the amount of benefit which can be
purchased with the Participant's Vested Account Balance.
(3) "Spouse" means the spouse or surviving spouse of the
Participant, provided that a former spouse will be
treated as the spouse or surviving spouse and a current
spouse will not be treated as the spouse or surviving
spouse to the extent provided under a qualified domestic
relations order as described in Section 414(p) of the
Code.
(4) "Annuity Starting Date" means the first day of the first
period for which an amount is paid as an annuity or any
other form.
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(5) "Vested Account Balance" means the aggregate value of
the Participant's vested account balances derived from
Company and Employee contributions (including
rollovers), whether vested before or upon death,
including the proceeds of annuity contracts, if any, on
the Participant's life. The provisions of this Section
8.3 shall apply to a Participant who is vested in
amounts attributable to Company contributions, Employee
contribution (or both) at the time of death or
distribution.
(6) "Designated Beneficiary" means the individual who is
designated as the beneficiary under the Plan in
accordance with Code Section 401(a)(9) and the proposed
regulations thereunder.
8.4 Death Benefits
Subject to Section 8.6, the following distribution provisions shall
take effect upon the death of a Participant:
(a) If the Participant dies after his Required Beginning Date, the
remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(b) If the Participant dies before his Required Beginning Date, the
Participant's entire interest will be distributed no later than
5 years after the Participant's death.
For the purposes of this Section, any amount paid to a child of the
Participant will be treated as if it had been paid to the surviving
spouse if the amount becomes payable to the surviving spouse when the
child reaches the age of majority.
For the purposes of this Section, distribution of a Participant's
interest is considered to begin on the Participant's required beginning
date (as provided in Section 8.1 of the Plan). If distribution in the
form of an annuity irrevocably commences to the Participant before the
required beginning date, the date distribution is considered to begin
is the date distribution actually commences.
8.5 Disability Retirement
If the Plan Administrator shall determine that a Participant is unable
to continue in the employ of the Company by reason of the Total
Disability of such Participant, the
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Plan Administrator may, at the request of the Participant or his
authorized representative, direct the Trustee to apply the full amount
standing to the credit of such Participant's Accounts to payment
pursuant to the provisions of Section 8.2. A Participant shall be fully
vested in his or her Accounts upon satisfying the requirements for
Disability Requirement.
If any disabled Participant returns to the employ of the Company, he
shall become an active Participant upon completion of an Hour of
Service and his Service before and after his Disability shall be
aggregated for purposes of Sections 3.2 and 3.4.
8.6 Beneficiary Designation
Each Participant may designate one or more Beneficiaries, including
contingent Beneficiaries, who shall receive the amount payable on
behalf of such Participant under provisions of this Plan upon the
Participant's death. In the case of a married Participant, however, the
Participant's spouse will be deemed to be the designated Beneficiary,
unless the spouse provides written consent to another designation in
the same manner as a Qualified Election as defined in Section
8.3(g)(1). A Participant may change such designation from time to time
and may revoke such designation subject to the requirements of Section
8.3(g)(1). If a Participant dies without having a designated
Beneficiary, or if none of the designated Beneficiaries survives the
Participant, of if the Plan Administrator is in doubt as to the
effective status of a Beneficiary designation following reasonable
inquiry, the Plan Administrator shall direct the Trustee to make
payment of all amounts payable with respect to such Participant in one
single sum payment in cash as follows: to the Participant's surviving
spouse, or if none, in equal shares to the Participant's children, the
issue of any deceased children to take by right of representation the
share to which such child would have been entitled if surviving, or if
no such children or issue, to the duly appointed or administrator of
the Participant's estate.
8.7 Vesting and Other Termination of Employment
(a) A Participant shall be fully and immediately vested at all times
in Elective Deferrals, if any, made pursuant to Section 6.1(a),
and in his Rollover Contribution Account and his Transferred
Contribution Account, if any. Such amounts shall not be subject
to forfeiture for any reason. A Participant shall be vested in
Matching and Discretionary Contributions, if any, in accordance
with Section 5.A of the Adoption Agreement.
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(b) The determination of the amount to which a Participant whose
employment is terminated is entitled to in accordance with the
foregoing rules shall be made by the Plan Administrator and the
Plan Administrator's determination shall be conclusive and
binding upon all persons.
(c) The Plan Administrator shall direct the Trust to make
distribution to the terminated Participant of the entire benefit
to which such terminated participant is entitled pursuant to the
terms of this Section 8.7, in accordance with one of the methods
described in Section 8.2 or, with respect to the Transferee
Account, if any, in Section 8.3.
8.8 Former Participant
Upon the termination of a Participant's employment with the Company
(other than indefinite layoff) (other than as provided in Sections 8.1,
8.4 or 8.5) the Participant shall become a Former Participant and shall
become entitled to distributions from his Accounts in accordance with
this Section.
Distribution of the funds representing Company or Employee
contributions due to a Former Participant shall be made as soon as
practicable thereafter, but no later than the period described in
Section 8.11. However, a terminated Participant's benefits may not be
paid without his written consent (and the consent of his or her spouse
if applicable) if the value exceeds $3,500. The Plan Administrator
shall notify the Participant and the Participant's spouse of the right
to defer any distribution until the Participant's account balance is no
longer immediately distributable. Such notification shall include a
general description of the material features, and an explanation of the
relative values of, the optional forms of benefit available under the
Plan in a manner that would satisfy the notice requirements of Section
417(a)(3), and shall be provided no less than 30 days and no more than
90 days prior to the annuity starting date.
Notwithstanding the foregoing, only the Participant need consent to the
commencement of a distribution in the form of a qualified joint and
survivor annuity while the account balance is immediately
distributable. (Furthermore, if payment in the form of a qualified
joint and survivor annuity is not required with respect to the
Participant pursuant to Section 8.2 of the Plan, only the Participant
need consent to the distribution of an account balance that is
immediately distributable.) Neither the consent of the Participant nor
the Participant's spouse shall be required
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to the extent that a distribution is required to satisfy Section
401(a)(9) or Section 415 of the Code. In addition, upon termination of
this Plan if the Plan does not offer an annuity option (purchased from
a commercial provider), the Participant's account balance may, without
the Participant's consent, be distributed to the participant or
transferred to another defined contribution plan (other than an
employee stock ownership plan as defined in Section 4975(e)(7) of the
Code) within the same controlled group.
An account balance is immediately distributable if any part of the
account balance could be distributed to the Participant (or surviving
spouse) before the Participant attains or would have attained if not
deceased) the later of normal retirement age or age 62.
The Plan Administrator shall notify the Trustee of the date on which
the Participant shall have become a Former Participant and of the
amounts, if any, payable to him under this Section 8, and shall direct
the Trustee regarding the time and manner of payment.
Upon receipt of notification from the Plan Administrator that the
accounts of a Former Participant will be deferred, the Trustee shall
segregate the Former Participant's account balance, or so much thereof
as he is entitled to receive, from the accounts of other Participants,
and the Trustee may keep the unpaid balance of such account invested
for the benefit of the Former Participant in the Trust, but without
sharing in subsequent Company contributions or forfeitures in shares of
mutual funds under dividend investment accounts or otherwise.
A Former Participant with deferred accounts shall be advised annually
of the value of his account balance which has been so set aside.
If any Former Participant shall be reemployed by the Company before
five (5) consecutive 1-Year Breaks in Service, and such Former
Participant had received a distribution of his entire vested Company
Contribution Account prior to his reemployment, his forfeited account
shall be reinstated only if he repays the full amount distributed to
him before the earlier of five (5) years after the first date on which
the Participant is subsequently reemployed by the or the close of the
first period 5 consecutive 1-Year Breaks in Service commencing after
the distribution. In the event the former Participant does repay the
full amount distributed to him, the undistributed portion of the
Participant's Account must be restored in full, unadjusted by any gains
or losses occurring subsequent to the valuation date preceding his
termination.
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If a distribution is made at a time when a Participant has a
nonforfeitable right to less than 100 percent of the Account balance
derived from Company contributions and the Participant may increase the
nonforfeitable percentage in the Account;
(1) A separate Account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
(2) At any relevant time the Participant's nonforfeitable portion of
the separate Account will be equal to an amount ("X") determined
by the formula:
X = P(AB - (R x D)) - (R x D)
For purposes of applying the formula: P is the nonforfeitable
percentage at the relevant time, AB is the Account balance at the
relevant time, D is the amount of the distribution, and R is the ratio
of the Account balance at the relevant time to the Account balance
after distribution.
For purposes of this Section, if the value of an Employee's vested
account balance is zero, the Employee shall be deemed to have received
a distribution of such vested account balance. A Participant's vested
account balance shall not include accumulated deductible Employee
contributions within the meaning of Section 72(o)(5)(B) of the Code for
Plan Years beginning prior to January 1, 1989. If an Employee is deemed
to receive a distribution pursuant to this paragraph, and the Employee
resumes employment covered under this Plan before the date the
Participant incurs 5 consecutive 1-year Breaks in Service, upon the
reemployment of such Employee,the Company-derived account balance of
the Employee will be restored to the amount on the date of such deemed
distribution.
8.9 Segregated Accounts
Any amount standing to the credit of the Accounts of a Participant who
has terminated his employment with the Company under circumstances
other than as provided under Sections 8.1, 8.4 or 8.5 to which such
terminated Participant is entitled pursuant to Section 8.7, and which
will be paid to the Participant pursuant to Section 8.2 and any amount
standing to the credit of a Former Participant which will be deferred
pursuant to Section 8.8, shall be segregated into a separate account.
The Plan Administrator will direct the Trustee to keep the unpaid
balance of such Accounts invested for the benefit of such Participant
with the other assets of the Plan in shares of Funds under dividend
reinvestment accounts, or otherwise. Any account
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segregated in this manner shall be revalued periodically pursuant to
the market valuation method provided for in Section 7.8.
8.10 Discharge of Trustee's Obligation to Make Payments
Whenever the Trustee is required to make any payment of payments to any
person in accordance with the provisions of this Plan, the Plan
Administrator shall notify the Trustee in writing of such person's last
known address as it appears in the Plan Administrator's records; and
the Trustee's obligation to make such payments shall be fully
discharged by mailing the same to the address specified by the Plan
Administrator.
8.11 Payment of Benefits - Timing
(a) Payment of benefits attributable to Employee contributions
either to Participants who have terminated employment, retired
or become disabled, or to Beneficiaries of deceased Participants
shall be made as soon as possible following the retirement,
disability or death of the Participant, but, except as provided
in (b), below, not later than 60 days following the close of the
Plan Year in which such retirement, disability or death
occurred. Notwithstanding the preceding sentence, the failure of
a Participant (and spouse, if applicable) to consent to a
distribution while the benefit is immediately distributable (as
defined in Section 8.8), shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to
satisfy this Section.
(b) If the amount of benefit required to commence on the
commencement dates specified in (a) above cannot be ascertained
by any such date, payment shall be made not later than 60 days
after the earliest date on which the amount of benefit can be
ascertained under the Plan and related Trust.
(c) Notwithstanding any other provisions of this Section 8, the
account balance of an Employee must be distributed or commence
to be distributed no later than the Participant's Required
Beginning Date, which is defined as follows:
(a) General rule. The required beginning date of a
Participant is the first day of April of the calendar
year following the calendar year in which the
Participant attains age 70 1/2.
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(b) Transitional rules. The required beginning date of a
Participant who attains age 70 1/2 before January 1,
1988, shall be determined in accordance with (1) or (2)
below:
(1) Non-5-percent owners. The required beginning date
of a Participant who is not a 5-percent owner is
the first day of April of the calendar year
following the calendar year in which the later of
retirement or attainment of age 70 1/2 occurs.
(2) 5-percent owners. The required beginning date of
a Participant who is a 5-percent owner during any
year beginning after December 31, 1979, is the
first day of April following the later of:
(i) the calendar year in which the Participant
attains age 70 1/2, or
(ii) the earlier of the calendar year with or
within which ends the Plan Year in which the
Participant becomes a 5-percent owner, or
the calendar year in which the Participant
retires.
The required beginning date of a Participant who
is not a 5-percent owner who attains age 70 1/2
during 1988 and who has not retired as of January
1, 1989, is April 1, 1990.
(c) 5-percent owner. A Participant is treated as a 5-percent
owner for purposes of this Section if such Participant
is a 5-percent owner as defined in Section 416(i) of the
Code (determined in accordance with Section 416 but
without regard to whether the Plan is top-heavy) at any
time during the Plan Year ending with or within the
calendar year in which such owner attains age 66 1/2 or
any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner under
this Section, they must continue to be distributed, even
if the Participant ceases to be a 5-percent owner in a
subsequent year.
(d) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the
Participant's required beginning date. The minimum distribution
for other calendar years, including the minimum distribution for
the
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distribution calendar year in which the Employee's required
beginning date occurs, must be made on or before December 31 of
that distribution calendar year.
8.12 Incapacity
If any person to whom a benefit is payable hereunder is an infant or if
the Plan Administrator determines that any person to whom such benefit
is payable is incompetent by reason of physical or mental disability,
the Plan Administrator may cause the payments becoming due to such
person to be made to such person's legally appointed guardian or
conservator.
8.13 Proof of Claim
The Plan Administrator may require such proof of death and such
evidence of the right of any person to receive payment of the value of
the interest in the Plan of a deceased Participant or a terminated
Participant as the Plan Administrator may deem desirable.
8.14 Hardship Withdrawal
If so elected by the Company in Section 8.A of the Adoption Agreement,
the Plan Administrator may at such time and pursuant to such terms and
conditions as he or it may establish, permit hardship withdrawals to be
made under the Plan from an Employee's Elective Account attributable to
Elective Deferrals (and earnings thereon accrued as of December 31,
1988), on account of an immediate and heavy financial need, which shall
be limited to:
deductible medical expenses (within the meaning of Code Section
213(d)) for the Employee, spouse or dependents;
purchase of the Employee's principal residence (but not regular
mortgage payments);
tuition for the next semester or quarter of post-secondary
education for the Employee, spouse or dependents;
preventing foreclosure on or eviction from the Employee's
primary residence; and
any other case of financial need according to rulings or notices
issued by the IRS pursuant to income Tax Regulation Section
1.401(k)-1(d)(2)(ii)(B).
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Such hardship distribution cannot be in excess of the amount required
to relieve such financial needs, which amount cannot be reasonably
available from other resources of the Employee. Therefore, the Plan
Administrator may process such a withdrawal request only if the
following conditions are satisfied:
The Employee has already taken all other distributions and
nontaxable loans available from all plans sponsored by the
Company;
All Company plans require a suspension period of at least a year
after the hardship withdrawal, during which the Employee cannot
make Elective Deferrals or Voluntary Employee contributions; and
All Company plans adjust the maximum Elective Deferral in the
Employee's next tax year by offsetting the Elective Deferrals in
the taxable year of the hardship withdrawal.
The minimum hardship withdrawal shall be at least $500 unless specified
otherwise by the Company in Section 8.A of the Adoption Agreement. The
withdrawal will be based on the value of the Participant's Account as
of the most recent valuation date.
The rules and regulations that the Plan Administrator shall adopt with
respect to hardship withdrawals under this Section 8.14 shall be
applied in a uniform and nondiscriminatory manner.
8.15 Loans
If so elected by the Company in Section 11 of the Adoption Agreement,
subject to such uniform and nondiscriminatory rules as may be adopted
by the Plan Administrator, a Participant, other than a
Shareholder-Employee or Owner-Employee, may be permitted to apply for a
loan in an aggregate amount equal to, or less than, 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 shall loan
was made, or
(2) 50% of his vested Account balance, as of the most recent
valuation date, or, for loans granted or renewed before October
19, 1989, $10,000, if greater;
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however, the minimum loan permitted shall be the amount elected
by the Company in Section 11 of the Adoption Agreement.
Loans of Participants and Beneficiaries shall be made 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
determined by the Plan Administrator which will provide the Plan with a
return commensurate with the prevailing interest rate charged by
persons in the business of lending money for loans which would be made
under similar circumstances; (4)loans shall be secured by a
Participant's Account balance and shall not (for loans granted or
renewed after October 18, 1989) exceed 50% of a Participant's vested
Account balance; (5) loans shall provide for repayment schedule with
payments made at least quarterly; (6) loans shall be treated as an
investment of each Participant's Account from which a loan has been
extended; and (7) in the event of default, foreclosure on the note and
attachment of security will not occur until a distributable event
occurs in the Plan.
A Participant must obtain the consent of his or her spouse, if any, to
use of the Account balance as security for the loan, Spousal consent
shall be obtained no earlier than the beginning of the 90-day period
that ends on the date on which the loan is to be so secured. The
consent must be in writing, must acknowledge the effect of the loan and
must be witnessed by a Plan representative or notary public. Such
consent shall thereafter be binding with respect to the consenting
spouse or any subsequent spouse with respect to that loan. A new
consent shall be required if the A new consent shall be required if the
Account balance is used for renegotiation, extension, renewal, or other
revision of the loan.
8.16 Withdrawal of Employee After-Tax Contributions
A Participant may request the Plan Administrator to make withdrawals
from his Account representing Employee After-Tax Contributions made
pursuant to Section 6.1(b). Such requests may be made no more
frequently than once during each six month period based on Account
values as of the nearest Valuation Date and the minimum withdrawal must
be at least $500, unless specified otherwise by the Company in Section
8.B of the Adoption Agreement.
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8.17 Direct Rollovers
(a) Notwithstanding any provision to the contrary in this Plan, with
respect to distributions made on or after January 1, 1993, 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 that is equal to at least $500 dollars
paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(b) 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
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 section 401(a)(9) of the Code;
the portion of any other distribution(s) that is not includible
in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer
securities); and any other distribution(s) that is reasonably
expected to total less that $200 during a year.
(c) An eligible retirement plan is an individual retirement account
described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an
annuity described in section 403(a) of the Code, or a qualified
plan described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement
account or an individual retirement annuity.
(d) A distributee includes an employee or former employee. In
addition the employee's or former employee's surviving spouse
and the employee's or former employee's spouse or former spouse
who is an alternate payee under a qualified domestic relations
order as defined in section 414(p) of the Code are distributees
with regard to the interest of the spouse or former spouse.
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(e) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
8.18 Attainment of Age 59-1/2
A Participant who has attained age 59-1/2 may apply in writing any time
thereafter prior to retirement as defined in Section 8.1 for a lump sum
distribution of the entire value of his vested Accounts while remaining
in the active employ of the Company. Such a lump sum distribution will
be made as soon as practicable following such a request based on the
value of his Accounts as of the next subsequent Valuation Date. Such a
distribution will not limit the ability of the Participant to continue
making contributions pursuant to the enrollment form on file with the
Plan Administrator or limit the ability of the Participant to enter
into new enrollment form for so long as he shall remain in the employ
of the Company.
SECTION 9
Service Providers and Allocation of Responsibilities
9.1 Service Providers
The following persons are Service Providers under the Plan.
(a) The Trustee
(b) The Company
(c) The Plan Administrator or committee, appointed by the Company
pursuant to Section 9 of the Plan and designated as the "named
fiduciary" of the Plan and the Plan Administrator.
9.2 Allocation
(a) The Trustee
It shall be the duty of the Trustee to hold and, subject to the
provisions of this Plan, to invest and reinvest the funds of the
Trust, other than Funds, and to make payments therefrom in
accordance with the written directions of the Plan Administrator
appointed by the Company pursuant to the Plan to administer the
Plan, and to perform such other duties under the Plan as the
Plan Administrator may delegate to it. The Trustee shall have no
responsibility for the correct-
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ness under the terms of the Plan of any written directions which
it receives from the Plan Administrator.
The Trustee shall invest and reinvest the Funds of the Trust
other than funds and keep the same invested, without distinction
between principal and income, in accordance with the following
provisions:
(1) The Trustee shall invest assets of the Trust, other than
Funds, in such stocks, bonds or other securities or
certificates of participation, pooled fixed income
funds, pooled equity funds, insurance company contracts,
group annuities, or any other property of any kind, real
or personal, tangible or intangible, as it may deem
advisable, whether or not authorized under any present
or future laws for the investment of trust funds,
provided that the Trustee may hold funds of the Trust
uninvested if and to the extent that it may deem
advisable from time to time; and the Trustee is
authorized to commingle part or all of the assets of the
Trust in or with any one or more trusts, including its
own commingled funds, whether now existing or hereafter
created, for the investments or collective investment of
funds held under employees' pension or profit sharing
plans or trusts which are qualified within the meaning
of said exempt from tax under the revenue laws of the
United States, and permitted by existing or future
rulings of the United States Treasury Department to pool
their respective funds in a group trust, and the terms
of any such collective investment trust shall be deemed
incorporated herein and made a part thereof. The Trustee
shall direct the investment and reinvestment of
contributions to be invested in Funds at the direction
of the Company or Plan Participants, as determined by
the Company in Section 3.A of the Adoption Agreement.
Notwithstanding the foregoing, the Trustee shall
discharge its duties with respect to the Plan solely in
the interests of Participants an their Beneficiaries and
with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character
and with like aims. The Trustee shall diversify the
investments of the Plan so as to minimize the risk of
large losses, unless under the circumstances it is
clearly prudent not to do so.
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(2) The Trustee may keep any or all securities or other
property in the name of some other person, firm or
corporation or in its own name without disclosing its
fiduciary capacity.
The Trustee may sell at public auction or by private
contract, redeem, or otherwise realize upon, any
securities, investments or other property forming a part
of the Trust Fund and for such purposes may execute such
instruments and writings and do such things as it shall
deem proper.
(3) The Trustee is hereby authorized to vote upon any stock,
bonds or other securities of any corporation,
association or trust at any time comprising the Trust
Fund or otherwise consent to or request any action on
the part of such corporation, association or trust, and
to give general or special proxies of powers of
attorney, with or without power of substitution, and to
participate in reorganizations, recapitalizations,
consolidations, mergers and similar transactions with
respect to such securities; to deposit such stocks or
other securities in any voting trust, or with any
protective or like committee, or with a trustee, or with
a trustee, or with depositories designated thereby; and
generally to exercise any of the powers of an owner with
respect to stocks or other securities or property
comprising the Trust Fund which the Trustee deems to be
for the best interests of the Trusts to exercise.
(4) When instructed or directed by the Plan Administrator,
the Trustee is hereby authorized to borrow money for the
purposes of this Trust upon such terms and conditions as
the Plan Administrator, in its discretion, may direct,
and for any amount so borrowed to issue the promissory
note of the Trustee and to secure the repayment thereof
by pledge, mortgage, or hypothecation of all or any part
of the property of the Trust, and no person loaning
money to the Trustee shall be bound to see to the
application of the money loan or to inquire into the
validity of any such borrowing.
(5) No person dealing with the Trustee shall be required to
take any notice of this Plan, but all persons so dealing
shall be protected in treating the Trustee as the
absolute owner with full power
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of disposition of all the monies, securities and other
property of the Trust, and all persons dealing with the
Trustee are released from inquiry into the decision or
authority of the Trustee and from seeing to the
application of monies, securities or other property paid
or delivered to the Trustee.
Notwithstanding anything to the contrary herein, the
Trustee shall not engage in any transaction which it
knows or should know constitutes a direct or indirect:
(1) sale or exchange, or leasing, of any property
between the Trust and a Party in Interest or a
Disqualified Person;
(2) lending of money or other extension of credit
between the Trust and Party in Interest or a
Disqualified Person;
(3) Furnishing of goods, services, or facilities
between the Trust and a Party in Interest or
a Disqualified Person, of any assets of the
Trust; or
(4) acquisition, on behalf of the Trust, of any
employer security or employer real property in
violation of Section 407 of the Employee
Retirement Income Security Act of 1974.
Nor shall the Trustee, unless such transaction is
permissible under the Employee Retirement Income
Security Act of 1974, deal with the assets of the Trust
in its own interest or for its own account or act in any
transaction involving the Trust on behalf of a party (or
represent a party) whose interests are adverse to the
interests of the Trust or the interest of its
Participants or Beneficiaries. The Trustee shall not
receive any consideration for its own personal account
from any party dealing with the Trust in connection with
a transaction involving the assets of the Trust.
For purposes of this Trust Agreement, "Party in
Interest" shall mean:
(a)(1) any fiduciary (including, but not
limited to, any administrator, officer,
trustee, or custodian), counsel, or employee
of this employee benefit plan;
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(2) a person providing services to this
plan;
(3) an employer any of whose employees are
covered by this plan;
(4) an employee organization any of whose
members are covered by this plan;
(5) an owner, direct or indirect, of 50
percent or more of:
(i) the combined voting power of all
classes of stock entitled to vote
or the total value of shares of
all classes of stock of a
corporation,
(ii) the capital interest or profits
interest of such partnership, or
(iii) the beneficial interest of a trust
or unincorporated enterprise,
which is an employer or an employee
organization described in subparagraph
(3) or (4);
(6) a relative (as defined in subparagraph
(b)(6) below) of any individual described in
subparagraph (1), (2), (3), or (5);
(7) a corporation, partnership, or trust or
estate of which (or in which) 50 percent or
more of:
(i) the combined voting power of all
classes of stock entitled to vote
or the total value of shares of
all classes of stock of a
corporation,
(ii) the capital interest or profits
interest of such partnership, or
(iii) the beneficial interest of such
trust or estate, owned directly or
indirectly, or held by a person
described in subparagraph (1), (2),
(3), (4) or (5);
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(8) an employee, officer, director (or an
individual having powers or responsibilities
similar to those of officers or directors),
or a 10 percent or more shareholder directly
or indirectly, of a person described in
subparagraph (2), (3), (4), (5), or (7), or
of the employee benefit plan; or
(9) a 10 percent or more (directly or indirectly
in capital or profits) partner or joint
venturer of a person described in
subparagraph (2), (3), (4), (5), or (7).
(The percentage limit established in subparagraphs (5)
and (7) or (8) and (9) may be reduced pursuant to
regulation of the Secretaries of Labor or Treasury, or
both.)
"Disqualified Person" shall mean:
(b) (1) a fiduciary;
(2) a person providing services to the Plan;
(3) an employer any of whose members are
covered by the Plan;
(4) an employee organization any of whose
members are covered by the Plan;
(5) an owner, direct or indirect, of 50
percent or more of:
(i) the combined voting power of all
classes of stock entitled to vote
or the total value of shares of
all classes of stock of a
corporation,
(ii) the capital interest or profits
interest of a partnership, or
(iii) the beneficial interest of a trust
or unincorporated enterprise, which
is an employer or an employee
organization described in
subparagraph (3) or (4);
(6) a member of the family (defined for
purposes of this subparagraph and
subparagraph (a) above as the spouse, an-
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cestor, lineal descendant, and any
spouse of a lineal descendant) of any
individual described in subparagraph
(1), (2), (3) or (5);
(7) a corporation, partnership, or trust or
estate of which (or in which) 50 percent or
more of:
(i) the combined voting power of all
classes of stock entitled to vote
or the total value of shares of
all classes of stock of such
corporation,
(ii) the capital interests or profits
interest of such partnership, or
(iii) the beneficial interest of such
trust or estate, is owned directly
or indirectly, or held by persons
described in subparagraph (1), (2),
(3), (4) or (5);
(8) an officer, director (or an individual
having powers or responsibilities similar to
those of officers or directors), a 10
percent or more shareholder, or a highly
compensated employee (earning 10 percent or
more of the yearly wages of an employer) of
a person described in subparagraph (3), (4),
(5), or (7); or
(9) a 10 percent or more (in capital or profits)
partner or joint venturer of a person
described in subparagraph (3), (4), (5), or
(7).
(The percentage limit established in subparagraphs (5)
and (7) or (8) and (9) may be reduced pursuant to
regulation of the Secretaries of Labor or Treasury, or
both.)
The Trustee shall not be required to make any payments
hereunder in excess of the net realizable value of the
assets of the Trust at the time of such payment. The
Trustee shall not be required to make any payments in
cash unless there shall be in the Trust at the time an
amount of cash sufficient for the purpose. In case of
such deficiency in cash, the Trustee shall take such
action as to the disposition of securities or
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other property forming a part of the Trust as will
provide the amount of cash necessary for such payments.
Whenever the Trustee is required or authorized to take
any action hereunder pursuant to any written direction
or determination of the Company, or Plan Administrator
of the Company, such direction or determination shall be
sufficient protection to the Trustee if contained in
writing signed by any one or more of the persons
authorized to execute documents on behalf of the Company
pursuant to the Plan. By such writing the Company, or
Plan Administrator of the Company, may ratify, approve,
or confirm any action taken by the Trustee, and upon
such ratification, approval, or confirmation, the
Trustee shall be protected as though authorization or
determination by the Company had preceded such action.
In the absence of direction by the Company as to any
matter provided in this Agreement or the Plan, the
Trustee may in its discretion take such action as it
deems fit and proper with respect thereto after
reasonable attempts to secure Company direction. The
Trustee may deliver documents to the Company, or Plan
Administrator of the Company, by delivering the same to
the Company or by mailing the same, postage prepaid,
addressed to the Company at its principal office.
The Trustee shall keep accurate and detailed records of
its transactions hereunder, and all its accounts, books
and records relating thereto shall be open at all
reasonable times to the inspection of the Plan
Administrator open at all reasonable times to the
inspection of the Plan Administrator and its authorized
representatives. The Trustee shall render in writing, at
least once each twelve (12) months, accounts of its
transactions under this Agreement to the Company and the
Plan Administrator, and the Plan Administrator may
approve such accounts to the Trustee by an instrument in
writing delivered to the Trustee. In the absence of the
filing in writing with the Trustee by the Plan
Administrator of exceptions or objections to any such
account within sixty (60) days after the receipt by the
Plan Administrator of any such account, the Plan
Administrator shall be deemed to have approved such
account; and in such case, or upon the written approval
of the Plan Administrator of any such account, the
Trustee shall be released,
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relieved and discharged with respect to all matters and
things set forth in such account except as otherwise
required by law. No person interested in the Trust or
otherwise other than the Company or the Plan
Administrator may require an accounting or bring any
action against the Trustee with respect to the Trust and
its actions as Trustee. In any proceeding instituted by
the Trustee,the Company and/or the Plan Administrator,
only the Company, the Plan Administrator and the Trust
shall be the necessary parties. The Trustee shall from
time to time make such other reports and furnish such
other information concerning the Trust to the Plan
Administrator as it may in writing reasonably request.
The Trustee shall upon direction of the Plan
Administrator pay out of the Trust fund any and all
taxes of any and all kinds, including without limitation
property taxes and income taxes levied or assessed under
existing or future laws upon or in respect of the Trust
or any monies, securities or other property forming a
part thereof or the income therefrom subject to the
terms of any agreements or contracts made with respect
to trust investments which make other provision for such
tax payments. The Trustee may assume that any taxes
assessed on or in respect of the Trust or on income are
lawfully assessed unless the Plan Administrator shall in
writing advise the Trustee that in the opinion of
counsel for the Company such taxes are or may be
unlawfully assessed. In the event that the Plan
Administrator shall so advise the Trustee, the Trustee
will, if so requested in writing by the Plan
Administrator, contest the validity of such taxes in any
manner deemed appropriate by the Company or its counsel
but at the expense of the Trust; or the Company may
contest the validity of any such taxes at the expense of
the Trust and in the name of the Trustee; and the
Trustee agrees to execute all documents, instruments,
claims, and petitions necessary or advisable in the
opinion of the Company or its counsel for the refund,
abatement, reduction or elimination of any such taxes.
Any Trustee acting hereunder may resign at any time upon
thirty (30) days' written notice to the Company, and the
Company may remove any Trustee at any time upon thirty
(30) days' written notice to the Trustee; but the
parties may by written instrument waive such notice. If
any Trustee
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shall resign, be removed or for any other reason cease
to be Trustee,the Company shall appoint a successor
Trustee or Trustees, and if no such successor Trustee is
appointed, the Trustee may deliver the assets of the
Trust to the Plan Administrator or the Company as
successor Trustee. Subject to the foregoing provisions,
any resignation or removal of the Trustee or appointment
of a new Trustee shall be by instrument in writing and
shall become effective on the date therein specified.
Any successor Trustee shall have the same powers and
duties as the succeeded Trustee, subject to such changes
as the Company may then determine. The appointment of
any successor Trustee or Trustees hereunder shall
without any separate instrument or conveyance
immediately vest title to the assets of the Trust in
such successor Trustee or Trustees. Upon request of such
successor Trustee or Trustees,the Company and the
Trustee ceasing to act shall execute and deliver such
instruments of conveyance and further assurance and do
such other things as may reasonably be required for more
fully and certainly vesting and confirming in such
successor Trustee or Trustees all the right, title, and
interest of the retiring Trustee in and to the Trust
funds.
To the extent permitted by applicable law, the Trustee
shall not be liable for any losses which may be incurred
upon the investments of the Trust except for its lack of
good faith or due care or except as may be judicially
determined.
The Trustee shall not be required to institute any legal
action or to appear or participate in any legal action
to which it may be a party, except to contest taxes,
unless it shall have been first indemnified to its
satisfaction by the Company for all loss, cost and
liability.
The Company reserves the right at any time and from time
to time to amend or terminate this Trust Agreement by
delivering to the Trustee a copy of an amendment or
termination certified by an officer of the Company;
provided, however, that the Company shall have no power
to amend or terminate this Trust Agreement in such
manner as would cause the duties or liabilities of the
Trustee to be changed without its written consent.
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Any successor to all or a major part of the business of
the Trustee or the Company, by whatever form or manner
resulting, shall ipso facto succeed to all the rights,
powers and duties hereunder of the Trustee or the
Company, as the case may be.
The Trustee may be paid such reasonable compensation as
shall from time to time be agreed upon by the Company
and Trustee. The compensation of the Trustee and any
reasonable expenses, including reasonable attorney's
fees, incurred by the Trustee in the administration of
the Trust, shall be paid by the Company but until so
paid shall constitute a charge upon the Trust.
(b) The Company
The Company shall be empowered to appoint and remove the
Trustee and 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 this
Agreement, the Code, and the Act. The Company, upon the
resignation or removal of a Trustee or Plan
Administrator, shall promptly designate in writing a
successor to this position. If the Company does not
appoint a Plan Administrator, the Company will function
as the Plan Administrator.
The Company shall periodically review the performance of
any Fiduciary, including the Trustee and the Plan
Administrator, 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. Their requirement may be satisfied by formal
periodic review by the Company or by a qualified person
specifically designated by the Company, through day-to-
day conduct and evaluation, or through other
appropriate ways.
(c) The Plan Administrator
The Plan Administrator shall have responsibility and
authority to control the operation and administration of
the Plan including, without limiting the generality of
the foregoing:
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(1) the determination of eligibility for benefits and
the amount and certification thereof to the
Trustee;
(2) the hiring of persons to provide necessary
services to the Plan;
(3) the issuance of directions to the Trustee to
pay any fees, taxes, charges or other costs
incidental to the operation and management
of the Plan;
(4) the preparation and filing of all reports
required to be filed with respect to the
Plan with any governmental agency;
(5) the compliance with all disclosure requirements
imposed by state of federal law; and
(6) the maintenance of all records of the Plan other
than those required to be maintained by the
Trustee.
9.3 No Joint Service Provider Responsibilities
This Section 9 is intended to allocate to each service provider the
individual responsibility for the prudent execution of the functions
assigned to him, and none of such responsibilities or any other
responsibilities shall be shared by two or more of such service
providers unless such sharing is provided by a specific provision of
the Plan. Whenever one service provider is required to follow the
directions of another service provider, the two service providers shall
not be deemed to have been assigned a shared responsibility, but the
responsibility of the service provider giving the directions shall be
deemed his sole responsibility, and the responsibility of the service
provider receiving those directions shall be to follow them insofar as
such instructions are on their face proper under applicable law.
9.4 Advisor to Service Provider
A service provider may employ one or more persons to render advice
concerning any responsibility such service provider has under the Plan.
9.5 Service in Multiple Capacities
Any person or group of persons including fiduciaries may serve in more
than one capacity with respect to this Plan; provided, however, that no
person may service in a fiducia-
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ry capacity who is precluded from so serving pursuant to Section 411
of the Employee Retirement Income Security Act of 1974.
SECTION 10
Administration of the Plan
10.1 Appointment of Plan Administrator
The Company is designated as Plan Administrator, but acting through its
Board of Directors, the Company reserves the right at any time to
appoint and to remove any one or more of its officers or employees,
individually or in combination, as the Plan Administrator and such
appointment may be made without necessity of amendment to this Plan.
Reference to the Plan Administrator.
10.2 Powers of the Plan Administrator
The Plan Administrator is hereby vested with all powers and authority
necessary in order to carry out its duties and responsibilities in
connection with the administration of the Plan as herein provided, and
is authorized to make such rules and regulations as it may deem
necessary to carry out the provisions of the Plan. The Plan
Administrator may from time to time appoint agents to perform such
functions involved in the administration of the Plan as it may deem
advisable. The Plan Administrator shall determine any questions arising
in the administration, interpretation and application of the Plan,
including any questions submitted by the Trustee on a matter necessary
for it to properly discharge its duties; and the decision of the Plan
Administrator shall be conclusive and binding on all persons.
10.3 Duties of the Plan Administrator
The Plan Administrator shall keep on file a copy of this Plan including
any subsequent amendments and all annual reports of the Trustee, and
such annual reports or registration statements as may be required by
the laws of the United States, or other jurisdiction, for examination
by Participants in the Plan during reasonable business hours. Upon
request by any Participant, the Plan Administrator shall furnish him a
statement of his interest in the Plan as determined by the Plan
Administrator as of the close of the preceding Plan Year. Such
statement of interest shall be binding on the Participant if not
challenged in writing within 30 days following receipt unless the Plan
Administrator corrects such statement at a later date.
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10.4 Action by the Plan Administrator
In the event that there shall at any time be two or more persons who
constitute the Plan Administrator, such persons shall act by
concurrence of a majority thereof.
10.5 Discretionary Action
Wherever, under the provisions of this Plan, the Plan Administrator is
given any discretionary power or powers, such power or powers shall not
be exercised in such manner as to cause any discrimination prohibited
by the Internal Revenue Code of 1986, as amended, in favor of or
against any Participant, Employee or class of Employees. any
discretionary action taken by the Plan Administrator hereunder shall be
consistent with any prior discretionary action taken by it under
similar circumstances and to this end the Plan Administrator shall keep
a record of all discretionary action taken by it under any provision
hereof.
10.6 Compensation and Expenses of Plan Administrator
Employees of the Company shall serve without compensation for services
as Plan Administrator, but all expenses of the Plan Administrator shall
be paid by the Company. Such expenses shall include any expenses
incidental to the functioning of the Plan, including, but not limited
to, attorney's fees, accounting and clerical charges, and other costs
of administering the Plan. Non-Employee Plan Administrators shall
receive such compensation as the Company shall determine.
10.7 Reliance on Others
The Plan Administrator and the Company shall be entitled to rely upon
all valuations, certificates and reports furnished by the Trustee, upon
all certificates and reports made by any accountant selected by the
Plan Administrator and approved by the Company and upon all opinions
given by any legal counsel selected by the Plan Administrator and
approved by the Company, and the Plan Administrator and the Company
shall be fully protected in respect of any action taken or suffered by
them in good faith in reliance upon such Trustee, accountant, actuary
or counsel and all action so taken or suffered shall be conclusive upon
each of them and upon all Participants, retired Participants, and
Former Participants and their Beneficiaries, and all other persons.
10.8 Self Interest
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No person who is the Plan Administrator shall have any right to decide
upon any matter relating solely to himself or to any of his rights or
benefits under the Plan. Any such decision shall be made by another
Plan Administrator or the Company.
10.9 Personal Liability - Indemnification
The Plan Administrator shall not be personally liable by virtue of any
instrument executed by him, or on his behalf. Neither the Plan
Administrator,the Company, or any of its officers or directors, shall
be personally liable for any action or inaction with respect to any
duty or responsibility imposed upon such person by the terms of the
Plan unless such action or inaction is judicially determined to be a
breach of that person's fiduciary responsibility with respect to the
Plan under any applicable law. The limitation contained in the
preceding sentence shall not, however, prevent or preclude a compromise
settlement of any controversy involving the Plan, the Plan
Administrator, the Employee, or any of its officers and directors. the
Company may advance money in connection with questions of liability
prior to any final determination of a question of liability. Any
settlement made under this Section 10 shall not be determinative of any
breach of fiduciary duty hereunder.
The Company will indemnify every person who is or was a Plan
Administrator, officer or member of the Board or a person who provides
services without compensation to the Plan for any liability (including
reasonable costs of defense and settlement) arising by reason of any
act or omission affecting the Plan or affecting the Participants or
Beneficiaries thereof, including, without limitation, any damages,
civil penalty or excise tax imposed pursuant to the Employee Retirement
Income Security Act of 1974; provided, (1) that the act or omission
shall have occurred in the course of the person's service as Plan
administrator, officer of the Company or member of the board or was
within the scope of the employment of an Employee of the Company or in
connection with a service provided without compensation to the Plan,
(2) that the act or omission be in good faith as determined by the
Company, whose determination made in good faith and not arbitrarily or
capriciously shall be conclusive, and (3) that the Company's obligation
hereunder shall be offset to the extent of any otherwise applicable
insurance coverage, under a policy maintained by the Company, or any
other person, or other source of indemnification.
10.10 Insurance
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The Plan Administrator shall have the right to purchase such insurance
as it deems necessary to protect the Plan from loss due to any breach
of fiduciary responsibility by any person. Any premiums due on such
insurance may be paid from Plan assets provided that, if such premiums
are so paid, such policy of insurance must permit recourse by the
insurer against the person who breaches his fiduciary responsibility.
Nothing in this Section 10 shall prevent the Plan Administrator or the
Company, at its, or his, own expense, from providing insurance to any
person to cover potential liability of that person as a result of a
breach of fiduciary responsibility, nor shall any provisions of the
Plan preclude the Company from purchasing from any insurance company
the right of recourse under any policy issued by such insurance
company.
10.11 Claims Procedures
Claims for benefits under the Plan shall be filed with the Plan
Administrator on forms supplied by the Company. Written notice of the
disposition of a claim shall be furnished to the claimant within 90
days after the application thereof 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 procedures.
10.12 Claims Review Procedures
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Plan Administrator pursuant to
Section 10.11 shall be entitled to request the Plan Administrator to
give further consideration to his claim by filing with the Plan
Administrator to give further consideration to his claim by filing with
the Plan Administrator (on a form which may be obtained from the Plan
Administrator) a 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 Plan Administrator no later
than 60 days after receipt of the written notification provided for in
Section 10.11. The Plan Administrator shall then conduct a hearing
within the next 60 days in 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
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Plan Administrator) the claimant or his representative shall have an
opportunity to review all documents in the possession of the Plan
Administrator which are pertinent to the claim at issue and its
disallowance. Either the claimant or the Plan 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
disposition of the claim shall be made by the Plan Administrator within
60 days of receipt of the appeal unless there has been an extension of
60 days and shall be communicated in writing to the claimant. Such
communication shall be written in a manner calculated to be understood
by the claimant and shall include specific reasons for the disposition
and specific references to the pertinent Plan provisions on which the
disposition is based.
SECTION 11
Amendment and Termination
11.1 General
Subject to applicable law and to the further provisions of this Section
11.1 Lazare Kaplan International reserves the right from time to time,
without notice or action on the part of stockholders, to amend the Plan
by action of the Board of Directors, retroactively or otherwise, in any
way (whether or not the cost of the Plan to the Company be increased
thereby) and to suspend or terminate the Plan either (i) in its
entirety or (ii) with respect to Employees at any location of the
Company; provided, however, no amendments shall expand or increase the
duties or liabilities of the Trustee without its prior written consent.
At no time shall the corpus or income of the Trust be used for or
diverted to, purposes other than the exclusive benefit of the
Participants, and Beneficiaries and the payment of taxes and the
administrative expenses of the Plan.
Anything in this Section 11.1 to the contrary notwithstanding, any
amendment to the Plan may be made which in the opinion of the Board of
Directors of Lazare Kaplan International may be necessary or
appropriate to qualify or maintain the Plan as a plan and trust meeting
the require-
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ments of the applicable provisions of the Code and regulations or (ii)
to conform to any requirements of ERISA.
Any powers granted to the Board under this Section shall be exercised
by the [ ] (INSERT TITLE OF OFFICER OF COMPANY) to the extent
that such powers are delegated to him by resolution.
11.2 Termination of Plan
This Plan shall in any event terminate whenever all property held by
the Trustee shall have been distributed in accordance with the terms
hereof.
11.3 Liquidation of Plan Assets in the Event of Termination or
Partial Termination
In the event that the Board of Directors shall decide to terminate the
Plan, in the event of complete cessation of Company contributions, or
in the event of a partial termination the rights of effected
Participants to the amounts standing to their credit in their accounts
shall be deemed fully vested and the Plan Administrator shall direct
the Trustee to either continue the Plan in full force and effect and
continue so much of the Plan in full force and effect as is necessary
to carry out the orderly distribution of benefits to effected
Participants and their Beneficiaries upon retirement, disability, death
or termination of employment; or (a) reduce to cash such part or all of
the Plan assets as the Plan Administrator may deem appropriate; (b) pay
the liabilities, if any, of the Plan; (c) value the remaining assets of
the Plan as of the date of notification of termination or partial
termination and adjust Participants' account balances in the same
manner as provided in Section 7.8; (d) distribute such assets in cash
to the credit of their respective accounts as of the notification of
the termination or partial termination date; and (e) distribute all
balances which have been segregated into a separate fund to the persons
entitled thereto; provided that no person in the event of termination
or partial termination shall be required to accept distribution in any
form other than cash.
11.4 Partial Termination
The Company may terminate the Plan in part without causing a complete
termination of the Plan. In the event a partial termination occurs, the
Plan Administrator shall determine the portion of the Plan assets
attributable to the Participants affected by such partial termination
and the provisions of Section 11.8 shall apply with respect to such
portion as if it were a separate fund.
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11.5 Solely for Benefit of Participants, Terminated Participants
and their Beneficiaries
No changes may be made in the Plan which shall vest in the Company,
directly or indirectly, any interest, ownership or control in any of
the present or subsequent assets of the Trust Agreement.
No part of the funds of the Trust other than such part as may be
required to pay taxes, administration expenses and fees, shall by
reason of any amendment or otherwise be used for or diverted to
purposes other than for the exclusive benefit of Participants, retired
Participants, Former Participants, and their Beneficiaries, except
that:
(a) any contribution made to the Plan by the because of a mistake of
fact may be returned to the Company within one year after the
payment of such contribution, and
(b) any contribution made to the Plan by the which is conditional on
the deductibility of such contribution may be returned to the
Company, to the extent the deduction is disallowed, within one
year from such disallowance.
The contributions returned under (a) or (b) may not include any gains
on such excess contributions, but must be reduced by any losses.
11.6 Successor to Business of the Company
Unless this Plan be sooner terminated, a successor to the business of
the by whatever form or manner resulting may continue the Plan only by
action of the Board and executing in the appropriate manner and form an
appropriate Adoption Agreement and such successor shall thereupon
succeed to all the rights, powers and duties of the Company hereunder.
The employment of any Employee who has continued in the employ of such
successor shall not be deemed to have terminated or severed for any
purpose hereunder if such Adoption Agreement so provides.
11.7 Merger, Consolidation and Transfers
The Plan shall not be merged or consolidated, in whole or in part, with
any other plan, nor shall any assets or liabilities of the Plan be
transferred to any other plan unless the benefit that would be payable
to any affected Participant under such plan if it terminated
immediately after the merger, consolidation or transfer, is equal to or
greater than the benefit that would be payable to the
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affected Participant under this Plan if it terminated immediately
before the merger, consolidation or transfer.
11.8 Revocability
This Plan is based upon the condition precedent that it shall be
approved by the Internal Revenue Service as qualified under Section
401(a) of the Code and exempt from taxation under Section 501(a) of the
Code.
In the event that the Commissioner of Internal Revenue determines that
the Plan is not initially qualified under the Internal Revenue Code,
any contribution made incident to that initial qualification by the
Company must be returned to the Company within one year after the date
the initial qualification is denied, but only if the application for
the qualification is made by the time prescribed by law for filing the
Company's return for the taxable year in which the Plan is adopted, or
such later date as the Secretary of the Treasury may prescribe.
SECTION 12
Top Heavy Provisions
12.1 Top Heavy Requirements
For any Top Heavy Plan Year, the Plan shall provide the following:
(1) special vesting requirements of Code Section 416(b)
pursuant to this Section of the Plan;
(2) special minimum contribution and allocation requirements of Code
Section 416(c) pursuant to this Section of the Plan; and
(3) special Compensation requirements of Code Section 416(d)
pursuant to this Section of the Plan.
12.2 Determination of Top Heavy Status
For purposes of this Section, the determination of Top Heavy status
shall be made as follows:
(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, or (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and any plan of an
Aggregation Group, exceeds sixty percent (60%) of the Present
Value of
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Accrued Benefits or the Aggregate Accounts of all Participants
under this Plan and any Plan 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 Plan
(or whether Any Aggregation Group which includes this Plan is a
Top Heavy Group).
(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, or (2) the sum of the
Aggregate Accounts of Key Employees under this Plan and any plan
of an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Benefits or the Aggregate Accounts of
all Participants under this Plan and any Plan 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 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 contribution due as of the
Determination Date. Such adjustment shall be the amount
of any contribution actually made after the Valuation
Date but before the Determination Date, except for the
first Plan Year when such adjustment shall also reflect
the amount of any contributions made after the
Determination Date that are allocated as of 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;
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(4) any Employee contributions, whether voluntary or
mandatory, including elective 401(k) contributions.
However, amounts attributable to tax-deductible
qualified deductible 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 for rollovers or plan-to-plan transfers, it
shall always consider such rollover or plan-to-plan
transfer as a distribution for the purposes of this
Section.
(6) with respect to related rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee
and made from a plan maintained by the same employer),
if this Plan provides the rollover of plan-to-plan
transfer, it shall not be counted as a distribution for
the 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.
(d) "Aggregation Group" means either a Required Group or a
Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: Each plan of the Company or
any Affiliated Employer in which a Key Employee
participates or participated at any time during the
determination period (regardless of whether the Plan has
terminated), and each other plan of the Company or any
Affiliated Employer which enables any plan in which a
Key Employee participates to meet the requirement of
Code Sections 401(a)(4) or 410.
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 is not a Top Heavy
Group.
(2) Permissive Aggregation Group: The Company may also
include any other plan not required to be included in
the Aggregation Group, provided the
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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 Group if the Permissive Aggregation Group is not a
Top Heavy Group.
(3) Only those plans of the Company or an Affiliated
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.
(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" means the accrued benefit of
a Participant other than a Key Employee as determined in
accordance with section 416 of the Code and the regulations
thereunder,
(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 plans included in the
group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group, exceed
sixty percent (60%) of a similar sum determined for all
Participants.
(h) "Top Heavy Plan Year" means that, for a particular Plan Year
the Plan is a Top Heavy Plan.
12.3 Specific Top Heavy Provisions
If the Plan is a Top Heavy Plan as determined pursuant to Code Section
416 for any Plan Year in accordance with the provisions of this
Section, then notwithstanding any other provisions of this Plan to the
contrary, the Plan shall meet the following requirements for any such
Plan Year:
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(01) Minimum Vesting Requirements. A Participant's vested
interest will be determined under a schedule which is
not less favorable to each Participant than the following:
<TABLE>
<CAPTION>
Years of Service Completed
for Vesting Purposes Vested Interest
-------------------- ---------------
<S> <C>
Less than two 0%
Two but less than three 20%
Three but less than four 40%
Four but less than five 60%
Five but less than six 80%
Six or more 100%
</TABLE>
The minimum vesting schedule applies to all benefits within the
meaning of Section 411(a)(7) of the Code except those
attributable to Employee contributions, including benefits
accrued before the effective date of Section 416 and benefits
accrued before the Plan became top-heavy. Further, no decrease
in a Participant's nonforfeitable percentage may occur in the
event the Plan's status as top-heavy changes for any Plan Year.
However, this Section does not apply to the account balances of
any Employee who does not have an hour of service after the Plan
has initially become top-heavy and such Employee's account
balance attributable to Company contributions and forfeitures
will be determined without regard to this Section.
(02) Minimum Contribution Requirement. It is intended that the
Company will meet the minimum benefit and contribution
requirements of Code Section 416(c) by providing a minimum which
complies with Code Section 416(c)(1) for such Plan Year for
each Participant who is a Non-Key Employee, as elected in
Section 12.B of the Adoption Agreement.
If such minimum is not so provided under another plan, then this
Plan will provide a minimum contribution allocation (which may
include forfeitures otherwise allocable) for such Plan Year for
each Participant who is a Non-Key Employee in an amount equal to
at least three percent (3%) of such Participant's Compensation
for such Plan Year, regardless of whether such Non-Key Employees
have completed 1,000 Hours of Service during such Plan Year,
regardless of whether such Non-Key Employee has failed to make
mandatory contributions to the Plan or whether such Employee is
employed as of the last day of the Plan Year. Such three percent
(3%) minimum contribution requirement shall be increased to four
percent (4%) for any Plan Year in
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which the Plan is a Super Top Heavy Plan and for any Plan Year
in which the Participant also maintains a defined benefit
pension plan if necessary to avoid the application of Code
Section 416(h)(1), relating to special adjustments to the Code
Section 415 limits for Top Heavy Plans, if the adjusted
limitation of Code 416(h)(2) would otherwise be exceeded if such
minimum contribution were not so increased.
The minimum contribution requirements set forth herein above
shall be reduced in the following circumstances:
a. The percentage minimum contribution required hereunder
shall in no event exceed the percentage contribution
made for the Key Employee for whom such percentage is
the highest for the Plan Year after taking into account
contributions or benefits under other qualified Plans in
the Plan's aggregation group as provided pursuant to
Code Section 416(c)(2)(B)(iii); and
b. No minimum contribution will be required (or the minimum
contribution will be reduced, as the case may be) for a
Participant under this Plan for any Plan Year if the
Company maintains another qualified plan under which a
minimum benefit or contribution is being accrued or made
for such year in whole or in part for the Participant in
accordance with Code Section 416(c).
Notwithstanding (a) above, if this Plan enables a
defined benefit plan to satisfy the requirements of Code
Sections 401(a)(4) and 410, each Non-Key Employee shall
be entitled to a 3 percent contribution regardless of
the highest percentage of the Key Employees (five
percent if a minimum benefit is not provided under the
defined benefit plan).
(03) Maximum Compensation Limitation. The annual compensation of each
Participant under the Plan for such Plan Year shall not exceed
the first Two Hundred Thousand Dollars ($200,000) of such
Participant's Compensation; provided, however, that such dollar
limitation shall be adjusted to take into account any
adjustments made by the Secretary of the Treasury pursuant to
Code Section 416(d)(2).
(04) Limitations on Contributions. If the Plan shall be Super Top
Heavy for any Plan Year, 1.0 shall be substituted for 1.25 in
determining the maximum annual addition for each Participant
pursuant to Section 6.7.
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12.4 Top Heavy Definitions
For purposes of this Section 12, the definitions relating to "top heavy
plan" provisions are as follows:
1. The Plan is a "top heavy plan" if, as of the determination date,
the aggregate of the accounts of Key Employees under the Plan
exceeds sixty percent (60%) of the aggregate of the accounts of
all Employees under the Plan.
The determination of whether the Plan is top heavy shall be made
after aggregating all other Plans of the Company and Affiliates
which are required to be aggregated pursuant to Code Section
416(g)(2) and after aggregating any other such plan of the
Company or an Affiliate which may be taken into account under
the permissive aggregation rules of Code Section
416(g)(2)(A)(ii), if such permissive aggregation thereby
eliminates the top heavy status of any plan within such
permissive aggregation group. The Plan is a "super top heavy
plan" if, as of the determination date, the plan would meet the
test specified above for being a top heavy plan if ninety
percent (90%) were substituted for sixty percent (60%) in each
place it appears in the subsection 1.
2. The "determination date" for purposes of determining whether the
Plan is top heavy for a particular Plan Year is the last day of
the preceding Plan Year (or, in the case of the first Plan Year
of a Plan, the last day of the first Plan Year).
3. The "valuation date" for purposes of determining the value of
Plan accounts under this subsection 3 shall be the same date as
the determination date.
4. A "key employee" is any Participant in the Plan (including a
beneficiary of such Participant) who at any time during the Plan
Year or any of the four (4) preceding Plan Years is:
a. an officer of the Company (as that term is defined
within the meaning of the regulations under Code Section
416) having annual compensation greater than 150 percent
of the amount in effect under Code Section 415(c)(1)(A)
for any such Plan Year.
b. one of the ten Participants owning (or considered as
owning within the meaning of Code Section 318) the
largest interest in all employers required to
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be aggregated under Code Sections 414(b), (c), and (m).
However, a Participant will not be considered a top ten
owner for a Plan Year if the Participant earns less than
$30,000 (or such other amount adjusted in accordance
with Code Section 415(c)(1)(A) as in effect for the
calendar year in which the Determination Date falls).
c. a "five percent owner" of the Company. "Five percent
owner" means any person who owns (or is considered a
owning within the meaning of Code Section 318) more than
five percent (5%) of the outstanding stock of the
Company or stock possessing more than five percent (5%)
of the total combined voting power of all stock of the
Company 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 Company. In
determining percentage ownership hereunder, Companys
that would otherwise be aggregated under Code Sections
414(b), (c), and (m) shall be treated as separate
employers.
d. a "one percent owner" of the Company having an annual
compensation from the Company 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 Company or stock possessing more than one percent
(1%) of the total combined voting power of all stock of
the Company 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 Company. In
determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections
414-(b), (c), and (m) shall be treated as separate
employers. However, in determining whether an individual
has annual compensation of more than $150,000,
compensation from each employer required to be
aggregated under Code Sections 414-(b), (c), and (m)
shall be taken into account.
Annual compensation means compensation as defined in Section
415(c)(3) of the Code, but including amounts contributed by the
Company pursuant to a salary reduction agreement which are
excludible from the Employee's gross income under Section 125,
Section 402(A)(8), Section 402(h) or Section 403(b) of the
Code.
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For purposes of applying Code Section 318 to the provisions of
this subsection (4), subparagraph (c) of Code Section 318(a)(2)
shall be applied by substituting five percent (5%) for fifty
percent (50%). In addition, the rules of subsections (b), (c),
and (m) of Code Section 414 shall not apply for purposes of
determining ownership in the Company under this subsection 4.
5. A "non-key employee" is any Participant in the Plan
(including a beneficiary of such Participant) who is not a
"key employee".
SECTION 13
Miscellaneous Provisions
13.1 Spendthrift Provision
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily. The
preceding sentence shall also apply to the creation, assignment or
recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such order
is determined to be a qualified domestic relations order. Except as
required by nonpreempted state law or court order, a Participant's
beneficial interest in the Plan and Plan assets shall not be assignable
nor subject to attachment nor receivership nor shall they pass to any
trustee in bankruptcy or be reached or applied by any legal process for
the payment of any obligations of any Participant.
13.2 Rollover Amounts
With the permission of the Plan Administrator, and without regard to
Sections 6.7 and 6.8, the Plan may receive in the form of cash or Funds
any amount theretofore received by a Participant from qualified
employee benefit plan, either directly within sixty (60) days after
such receipt, or through the medium of an Individual Retirement
Account, provided that such Individual Retirement Account contains no
assets other than those attributable to Company contributions under
qualified plans.
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<PAGE>
13.3 Plan to Plan Transfers
The Company may cause to be transferred to the Trustee with the
approval of the Board all or any of the assets held in respect to any
other plan or trust which satisfies the applicable requirements of the
Code relating to qualified plans and trusts, which is maintained by the
Company for the benefit of its common law employees. Any such assets so
transferred shall be in the form of cash or Funds and shall be
accompanied by written instructions from the Company, or the Trustee or
the individual holding such assets, setting forth the Participants for
whose benefit such assets have been transferred and showing separately
the respective contributions by the Company and by the Participants and
the current value of the assets and instructions. The Trustee shall
allocate such assets to the Participant's Transferred Contribution
Account and thereafter proceed in accordance with the provisions of the
Company's Plan. Such transferred amounts shall be 100% vested in Plan
Participants at all times.
13.4 Amendment of Vesting Schedule
No amendment to the vesting schedule shall decrease a Participant's
benefits accrued to the date of the amendment. Further, if the vesting
schedule of the Plan is amended, or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule or if the Plan
is amended in any way that directly or indirectly affects the
computation of the Participant's nonforfeitable percentage, each
Participant with at least three (3) Years of Service with the Company
may elect, within a reasonable period after the adoption of the
amendment, to have his nonforfeitable percentage computed under the
Plan without regard to such amendment. The period during which the
election may be made will commence with the date the amendment is
adopted and will end on the later of:
(a) sixty (60) days after the amendment is adopted;
(b) sixty (60) days after the amendment becomes effective;
or
(c) sixty (60) days after the Participant is issued written notice
of the amendment by the Company or the Plan Administrator.
No amendment to the Plan shall decrease a Participant's account balance
or eliminate an optional form of distribution. Notwithstanding the
preceding sentence, a Participant's account balance may be reduced to
the extent permitted under Section 412(c)(8) of the Code. Furthermore,
no
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<PAGE>
amendment to the Plan shall have the effect of decreasing a
Participant's vested percentage determined without regard to such
amendment as of the later of the date such amendment is adopted or the
date it becomes effective.
13.5 Plans for Owner-Employees
If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and
the plan established for other trades or businesses must, when looked
at as a single plan, satisfy Code Sections 401(a) and (d) for the
Employees of this and all other trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for
Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or
benefits of the Employees under the plan of the trades or businesses
which are controlled must be as favorable as those provided for him
under the most favorable plan of the trade or business which is not
controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated trade or
business, or
(2) in the case of a partnership, own more than 50 percent of either
the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning any interest in
partnership which is owned, directly or indirectly, by a partnership
which such Owner-Employee or such two or more Owner-Employees, are
considered to control within the meaning of the preceding sentence.
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13.6 Construction
In any question of interpretation or other matter of doubt, the
Trustee, the Plan Administrator and the Company may rely upon the
opinion of counsel for the Company or any other attorney at law
designated by the Company. The provisions of this Plan shall be
construed, administered and enforced according to the laws of the state
of the Company, except to the extent such laws have been superseded by
federal law. All contributions to the Trust shall be deemed to take
place in the state of the adopting Company.
13.7 Impossibility of Performance
In case it becomes impossible for the Company, the Plan Administrator
or the Trustee to perform any act under this Plan, that act shall be
performed which in the judgment of the Company will most nearly carry
out the intent and purpose of the Plan. All parties to this Plan or in
any way interested in this Plan shall be bound by any acts performed
under such conditions.
13.8 Dissolution of the Company
In the event that the Company is dissolved by reason of bankruptcy or
insolvency, without any provisions being made for the continuance of
this Plan by a successor to the business of the Company, the Plan
hereunder shall terminate and the Trustee shall proceed in the same
manner as though the Plan were being terminated as provided in Section
11.3.
13.9 Definition of Words
Feminine or neuter pronouns shall be substituted for those of masculine
form, and the plural shall be substituted for the singular, in any
place or places herein where the context may require such substitution
or substitutions.
13.10 Titles
The titles of Sections and paragraphs are included only for convenience
and shall not be construed as part of this Plan or in any respect
affecting or modifying its provisions.
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Exhibit 4.4(b)
THE LAZARE KAPLAN 401(K) PLAN
FOR
SAVINGS AND INVESTMENTS
ADOPTION AGREEMENT
<PAGE>
<PAGE>
EMPLOYER INFORMATION
A. NAME OF EMPLOYER:
NAME LAZARE KAPLAN INTERNATIONAL INC. TAX I.D.# 13-2728690
------------------------------- ----------
ADDRESS 529 FIFTH AVENUE TELEPHONE (212) 972-9700
------------------------------------- ---------------
-----------------------
CITY NEW YORK STATE NEW YORK ZIP CODE 10017
-------- -------- -----
CONTACT PERSON SHELDON L. GINSBERG TELEPHONE (212) 972 9700
------------------------ ---------------
B. NAME OF PLAN ADMINISTRATOR:
NAME SHELDON L. GINSBERG
-------------------
ADDRESS 529 FIFTH AVENUE TELEPHONE (212) 972-9700
----------------------------- ---------------
-----------------------
CITY NEW YORK STATE NEW YORK ZIP CODE 10017
-------- --------- -----
IF NONE HAS BEEN NAMED, THE EMPLOYER WILL BECOME THE
ADMINISTRATOR USING THE EMPLOYER'S ADDRESS.
C. PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS:
NAME MR. FREDERICK CUMMINGS, C/O WARSHAW, BURSTEIN, COHEN,
-----------------------------------------------------
SCHLESINGER & KUH
------------------
ADDRESS 555 FIFTH AVENUE TELEPHONE (212) 972-9100
-----------------------
---------------- -------------
CITY NEW YORK STATE NEW YORK ZIP CODE 10017
-------- -------- -----
OR (X)
[ ] USE EMPLOYER'S ADDRESS.
D. KEY OPERATING DATES (X):
[ ] DATE BUSINESS COMMENCED / /1903
-- -- ----
[ ] INCORPORATION DATE 08 / 04 / 72
-- -- --
[ ] FISCAL YEAR END 05 / 31
-- --
E. BUSINESS FORM (X): CHECK ONE OR MORE, AS APPROPRIATE)
[X] CORPORATION
[ ] PROFESSIONAL SERVICE GROUP
[ ] S CORPORATION
[X] CONTROLLED GROUP (IF YES, ONE OR MORE OF THE ABOVE MUST BE
CHECKED)
<PAGE>
<PAGE>
II PLAN INFORMATION
A. NAME OF PLAN: LAZARE KAPLAN INTERNATIONAL INC. -
401k PLAN FOR SAVINGS AND INVESTMENT
-----------------------
(YOUR ORGANIZATION'S LEGAL NAME FIDELITY MASTER
PLAN'sm' FOR SAVINGS AND INVESTMENTS)
B. STATUS OF PLAN (X):
[X] NEW PLAN
[ ] AMENDMENT OR CONVERSION FROM ANOTHER DEFINED CONTRIBUTION
PLAN (NOT SUBJECT TO CODE SECTION 417)
C. TYPE OF PLAN:
401(k) AND PROFIT SHARING PLAN (MATCHING EMPLOYER
CONTRIBUTIONS AND DISCRETIONARY PROFIT SHARING
CONTRIBUTIONS).
OR (X)
[ ] 401(k) PLAN (NO MATCHING EMPLOYER CONTRIBUTIONS).
[ ] 401(k) PLAN (NO DISCRETIONARY PROFIT SHARING CONTRIBUTIONS).
[ ] PROFIT SHARING.
D. PLAN YEAR: THE EMPLOYER'S FISCAL YEAR.
OR (X)
[X] CALENDAR YEAR.
[ ] ____________ (OTHER).
E. EFFECTIVE DATE:
THE FIRST DAY OF THE CURRENT EMPLOYER FISCAL YEAR.
OR (X)
[X] JANUARY 1, 1990 (COMPLETE).
______________________
F. ENTRY DATE:
FIRST DAY OF THE MONTH FOLLOWING COMPLETION OF ELIGIBILITY
REQUIREMENTS.
[X] FIRST DAY OF THE MONTH JUST AFTER THE PLAN YEAR QUARTER
DURING WHICH ELIGIBILITY REQUIREMENTS ARE FIRST MET.
(QUARTERLY ENTRY DATES.)
[ ] FIRST DAY OF THE MONTH JUST AFTER THE FIRST OR SECOND HALF
OF THE PLAN YEAR DURING WHICH THE ELIGIBILITY REQUIREMENTS
ARE FIRST MET.
(SEMIANNUAL ENTRY DATES.)
G. LIMITATION YEAR: (FOR PURPOSES OF APPLYING THE ANNUAL MAXIMUM
CONTRIBUTION PER PERSON UNDER CODE SECTION 415.)
THE TWELVE MONTH PERIOD CORRESPONDING WITH THE PLAN YEAR.
OR (X)
[ ] THE TWELVE MONTH PERIOD CORRESPONDING WITH THE CALENDAR YEAR.
[ ] THE TWELVE MONTH PERIOD CORRESPONDING WITH THE FISCAL YEAR.
<PAGE>
<PAGE>
H. EMPLOYEES ELIGIBLE:
ALL EMPLOYEES OF THE EMPLOYER, EXCLUDING THOSE EMPLOYEES
FOR WHOM RETIREMENT BENEFITS HAVE BEEN THE SUBJECT OF GOOD
FAITH NEGOTIATIONS.
OR (X)
[X] ALL EMPLOYEES OF THE EMPLOYER.
[ ] EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENT.
[ ] OTHER_________________________
III INVESTMENT INFORMATION
A. INVESTMENT DIRECTION:
PARTICIPANTS MAY DIRECT THE INVESTMENT OF THEIR ACCOUNTS.
OR (X)
[ ] PARTICIPANTS MAY NOT DIRECT THE INVESTMENT OF THEIR
ACCOUNTS (I.E., THE EMPLOYER WILL DIRECT THE TRUSTEE).
B. NUMBER OF INVESTMENT FUNDS:
FIVE FUNDS.
OR (X)
[ ] ______________ FUNDS. (FEWER THAN FIVE.)
C. FUNDS TO INCLUDE GROUP ANNUITY CONTRACT(S):
GROUP ANNUITY CONTRACTS NOT PERMITTED.
OR (X)
[ ] GROUP ANNUITY CONTRACT(S) PERMITTED.
D. FUNDS TO INCLUDE CERTIFICATES OF DEPOSIT:
CERTIFICATES OF DEPOSIT NOT PERMITTED.
OR (X)
[ ] CERTIFICATES OF DEPOSIT PERMITTED.
E. FUNDS TO INCLUDE BANK COMMINGLED POOLED FUNDS:
BANK COMMINGLED POOLED FUNDS NOT PERMITTED.
OR (X)
[ ] BANK COMMINGLED POOLED FUNDS PERMITTED.
F. MULTIPLES OF FUNDS AND FREQUENCY OF INVESTMENT CHANGES:
MULTIPLES OF 10% WITH FOUR OPPORTUNITIES, EFFECTIVE AS OF
VALUATION DATES, TO CHANGE INVESTMENTS DURING PLAN YEAR.
OR (X) AND COMPLETE AS APPROPRIATE
[ ] MULTIPLES OF____________ WITH ___________ OPPORTUNITIES,
EFFECTIVE AS OF VALUATION DATES, TO CHANGE INVESTMENTS
DURING PLAN YEAR (MUST BE LESS THAN OR EQUAL TO THE
NUMBER OF PLAN VALUATIONS DURING PLAN YEAR).
<PAGE>
<PAGE>
IV ELIGIBILITY
A. ELIGIBILITY FOR ENROLLMENT:
ENTRY DATE AFTER ATTAINMENT OF AGE 21 AND COMPLETION OF
ONE YEAR OF SERVICE (1,000 HOURS).
OR (X) SELECT TWO (AGE AND LENGTH OF SERVICE),
AS APPROPRIATE
<TABLE>
<S> <C>
[X][X] NO AGE REQUIREMENT.
[ ] NO LENGTH OF SERVICE REQUIREMENT. NOTE: ALL EMPLOYEES EMPLOYED
[X][X] 12 (MONTHS OF SERVICE, NOT TO EXCEED 12) ON THE EFFECTIVE DATE
[ ] AGE ____ (NOT TO EXCEED 21). BECOME IMMEDIATELY
ELIGIBLE.
</TABLE>
B. ELIGIBILITY SERVICE:
MEASURED FROM DATE OF HIRE AND THEREAFTER MEASURED FROM
THE FIRST DAY OF THE PLAN YEAR WHICH INCLUDES AN
EMPLOYEE'S DATE OF HIRE (EXCLUDING SERVICE WITH A
PREDECESSOR EMPLOYER, I.E., EARLIER BUSINESS FORM OF
CURRENT EMPLOYER).
OR (X)
[ ] THE PERIOD DESCRIBED ABOVE BUT INCLUDING SERVICE WITH A
PREDECESSOR EMPLOYER.
[ ] THE TWELVE-MONTH PERIOD MEASURED FROM THE FIRST DAY OF THE
MONTH WHICH INCLUDES THE DATE OF HIRE (IF NO INITIALLY
SATISFIED DURING THE TWELVE MONTH PERIOD BEGINNING WITH
DATE OF HIRE, EXCLUDING SERVICE WITH A PREDECESSOR
EMPLOYER).
V. VESTING
A. VESTING FOR EMPLOYER CONTRIBUTIONS: (APPLIES TO MATCHING AND/OR
DISCRETIONARY EMPLOYER CONTRIBUTIONS.)
20% VESTING AFTER THREE YEARS OF SERVICE, INCREASED BY 20%
FOR EACH YEAR THEREAFTER WITH 100% VESTING AT SEVEN YEARS.
OR (X)
[ ] 100% IMMEDIATE VESTING.
[ ] 20% VESTING FOR EACH YEAR OF SERVICE WITH 100% VESTING
AFTER FIVE YEARS OF SERVICE.
[ ] 100% VESTING AT COMPLETION OF FIVE YEARS OF SERVICE.
[ ] OTHER: 33 1/3 AFTER TWO YEARS, 66 2/3 AFTER THREE YEARS,
100% AFTER FOUR YEARS OF SERVICE.
(Must be 100% no later than at completion of seven years
of service.)
B. VESTING SERVICE:
The twelve month period which corresponds with the plan
year during which eligibility requirements are first met
(excluding service with a predecessor employer, i.e.,
earlier business form of current Employer).
or (X)
<PAGE>
<PAGE>
[ ] The twelve month period described above but including
service with a predecessor employer.
[ ] The twelve month period beginning with the first day of
the month during which an Employee was hired (excluding
service with a predecessor employer).
VI COMPENSATION
Total compensation for W-2 purposes for each Employee during
taxable year ending on or within plan year.
or (X) one or more, as appropriate
[ ] Excluding overtime.
[X] Excluding bonuses.
[ ] Excluding commissions.
[ ] Excluding any other form of remuneration
(as described below):
INCOME FROM SURRENDER OF STOCK OPTIONS
______________________________________
VII CONTRIBUTIONS
A. EMPLOYEE PRE-TAX CONTRIBUTIONS: (Complete if item IIC includes
401(k) feature.)
Up to 20% of compensation (but not to exceed $7,313 in
1988 and adjusted thereafter by the Secretary of the
Treasury).
or (X)
[ ] Up to _____% of compensation (less than 20% but not to
exceed $7,313 in 1988 and adjusted thereafter by the
Secretary of the Treasury).
B. VOLUNTARY POST-TAX CONTRIBUTIONS:
Employees may make contributions from after-tax
compensation.
or (X)
[X] Voluntary contributions not permitted.
[ ] Voluntary contributions not permitted for "Highly
Compensated" Employees.*
- --------
* This option will simplify IRS discrimination testing.
Highly Compensated Employees include Employees who:
(1) are more than 5% owners of the Employer;
(2) receive more than $75,000 in compensation from
the Employer;
(3) received more than $50,000 in compensation from the
Employer and are one of the highest paid 20% of Employees;
or
(4) are officers of the Employer and receive compensation
greater than $45,000.
<PAGE>
<PAGE>
C. LUMP SUM POST-TAX VOLUNTARY CONTRIBUTIONS:
Minimum lump sum is $100 during any three month period.
or (X) and complete as appropriate
[ ] Minimum lump sum is $_______ during any ____ month period.
D. MATCHING EMPLOYER CONTRIBUTIONS:
To be determined annually as a number of cents per dollar
of Employee contributions up to a maximum of six percent
of Employee pre-tax contributions.
or (X) one of the following and complete as appropriate
[ ] No matching Employer contributions.
[ ] Matching Employer contributions will be equal to $____ for
each $1.00 contributed by employees up to a maximum of
______% of Employee compensation.
[ ] Matching Employer contributions will be equal to $____ for
each $1.00 contributed by Employees up to a maximum
of ____% of Employee pre- or post-tax contributions.
It is anticipated that the employer match will be:
Matching employer contribution will be equal to $.50 for
each $1.00 contribution by the employees up to a maximum
of 6% of employee compensation on the first $20,000.00 of
earnings provided that consolidated Lazare Kaplan
International Inc. pretax earnings for the fiscal year
contained within the current calendar year exceeds $3.5
million. Matching contribution will be made at the end of
each calendar year.
E. ELIGIBILITY FOR EMPLOYER CONTRIBUTIONS:
Participants must be employed as of the last day of the
plan year to be eligible for Employer contributions
(except for retirement, death or disability).
or (X)
[ ] Participants who have completed at least 1,000 hours of
service during the plan year will be eligible for an
Employer contribution (regardless of whether employed as
of the last day of the plan year).
VIII WITHDRAWALS
A. HARDSHIP WITHDRAWALS:
Permitted from Employee elective (i.e., pre-tax)
contributions ($500 minimum).
or (X)
[ ] Permitted from Employee elective (i.e., pre-tax)
contributions ($1,000 minimum).
[ ] Hardship withdrawals not permitted.
<PAGE>
<PAGE>
B. HARDSHIP WITHDRAWALS:
Documentation not required from Employees that funds are
not available from other sources (results in suspension
from Plan for 12 months).
or (X)
[ ] Documentation required from Employees that funds are not
available from other sources.
C. WITHDRAWAL OF VOLUNTARY CONTRIBUTIONS:
Employees may withdraw a minimum of $500 (including a pro
rata portion of earnings per IRS requirements).
OR (X) AND COMPLETE AS APPROPRIATE
[ ] Employees may withdraw a minimum of $__________ (not less
than $500 including a pro rata portion of earnings per IRS
requirements).
IX RETIREMENT INFORMATION
A. NORMAL RETIREMENT DATE:
First day of the month after attainment of age 65.
OR (X) AND COMPLETE AS APPROPRIATE
[ ] First day of the month after attainment of age _____.
(Benefits must begin by the end of the Plan Year in which
a participant attains age 65 unless the participant elects
to receive a distribution at a later date).
B. EARLY RETIREMENT DATE:
First day of the month after attainment of age 55.
OR (X) AND COMPLETE AS APPROPRIATE
[ ] First day of the month after attainment of age 55 and
completion of Four years of service.
C. DISABILITY RETIREMENT:
Employee must satisfy requirement for benefits under
Employer's Long-Term Disability Plan.
or (X)
[ ] Employee must be eligible for Social Security disability
benefits.
[ ] Employee must be determined disabled by a Physician
selected by the Plan Administrator.
X FORFEITURES
Will be added to accounts of remaining participants.
or (X)
[X] Will be applied to reduce Employer contributions in
subsequent years.
AND
<PAGE>
<PAGE>
Amounts forfeited by Highly Compensated Employees under
Section 6.12 will be added to the accounts of non-Highly
Compensated Participants.
or (X)
[ ] Will be allocated to the accounts of non-Highly
Compensated Participants entitled to an Employer Matching
contribution for the Plan Year as described in Section
6.13
XI PARTICIPANT LOANS
Permitted from all accounts to the extent vested ($500
minimum).
or (X)
[X] Permitted from all accounts ($1,000 minimum).
[ ] Permitted but only from Employee elective (i.e., pre-tax)
contributions ($__________ minimum).
[ ] Loans not permitted.
XII OTHER PLANS (Complete only if applicable. See Section 6.9 of the Basic
Plan Document.)
A. If the Employer maintains or ever maintained another qualified
Defined Contribution Plan (other than a master or prototype
plan), specify below a method to be used each year to assure that
total contributions for each Participant and forfeitures do not
exceed the allowable limits. The limit is 25% of Compensation, up
to $30,000, for profit sharing, money purchase pension or any
combination of plans. In addition, if the Employer maintains or
ever maintained a Defined Benefit Plan, indicate below how
contributions will be apportioned so that total contributions
(for all plans) do not exceed the limits described in Section 6.8
of the Basic Plan Document. In either case, the method must
operate automatically without any further action by the
Employer.*
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-----------------------------------------------------------------
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* If the Employer maintains another Defined Contribution
Plan specify to which Plan the reduction will be made so
that the limits described above will not be exceeded. If
the Employer maintains a Defined Benefit Plan the maximum
benefit under the Defined Benefit Plan and the maximum
contribution to this Plan may not exceed 125% of the
maximum allowable limits under Code Section 415 as
adjusted from time to time (for 1988 the maximum Defined
Benefit that may be provided is the lessor of $94,023 or
100% of compensation). In this situation specify which
Plan will be adjusted so that the overall limits described
above will not be exceeded. Normally the reduction should
be made to the Defined Benefit Plan.
<PAGE>
<PAGE>
B. The minimum allocation required under Section 12.3 of the Basic
Plan Document on behalf of each Participant who is not a Key
Employee and who is covered under another qualified plan
maintained by the Employer will be provided (X):
[ ] under the Plan.
[ ] under the ______________________________________ Plan.
(Indicate other Plan under which the requirement
will be satisfied.)
C. State the interest and mortality rates for any Defined Benefit
Plan maintained by the Employer (This determines the definition
of Present Value in Section 12.2 of the Basic Plan Document.)
Interest Rate _________%.
Mortality Table ________.
XIII ADDITIONAL EMPLOYER AGREEMENT
The Employer agrees that Plan contributions will be invested in a
majority of Fidelity mutual funds.
The Employer acknowledges that he has consulted his attorney with
reference to this Plan and Trust Agreement.
The Employer will file all reports and make all disclosures as to
this Plan required by Federal and State law.
If Participants may direct the investment of their accounts, the
Employer will ascertain that a Participant has received the
appropriate prospectus(es) before instructing the Trustee to
invest a contribution for the Participant in mutual fund(s).
An Employer which has ever maintained or later adopts any Plan
(including certain welfare benefits funds) in addition to this
Plan may not rely on the IRS opinion letter concerning this Plan
and must apply to an IRS Key District Office for a determination
letter if the Employer wishes assurance that this Plan is
qualified.
XIV EMPLOYER'S ADOPTION
Plan Number: 001
---
<PAGE>
<PAGE>
Employer signature(s) to adopt Plan:
/s/ Sheldon L. Ginsberg
------------------------------------------------
/s/ Leon Tempelsman
------------------------------------------------
Please print name(s) of authorized person(s) signing above:
S.L. GINSBERG Date 9/25/89
----------------------------------- -------
L. TEMPELSMAN Date 9/25/89
----------------------------------- -------
XV ACCEPTANCE OF TRUSTEE(S)
Acceptance as Trustee is agreed to in accordance with the terms
and conditions of the Plan, effective as of the date of execution
by the Employer as set forth above.
<TABLE>
<S> <C> <C>
By Trustee /s/ Sheldon L. Ginsberg 9/25/89
------------------------------ --------------------- -------
(Trustee's Tax I.D.#) (Date)
By Trustee /s/ Leon Tempelsman 9/25/89
----------------------------- --------------------- -------
(Trustee's Tax I.D.#) (Date)
By Trustee /s/ Robert Speisman 9/25/89
------------------------------- --------------------- -------
(Trustee's Tax I.D.#) (Date)
</TABLE>
Address of Trustee(s):
c/o LAZARE KAPLAN INTERNATIONAL INC.
--------------------------------------------------------------------
529 FIFTH AVENUE
--------------------------------------------------------------------
NEW YORK, NEW YORK 10017
--------------------------------------------------------------------
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NOTE: TAX I.D. # TO BE SUPPLIED
<PAGE>
<PAGE>
Exhibit 4.4(c)
LAZARE KAPLAN 401(K) PLAN
FOR
SAVINGS AND INVESTMENTS
ADOPTION AGREEMENT
<PAGE>
<PAGE>
1. EMPLOYER INFORMATION
A. NAME OF EMPLOYER:
Name Lazare Kaplan International Inc. Tax I.D.# 13-2728690
-------------------------------- -----------------------
Address 529 Fifth Avenue Telephone (212) 972-9700
------------------------------------ ---------------
-------------------------------------------------------------
City New York State New York Zip Code 10017
---------------------- ----------------- --------
Contact Person Sheldon L. Ginsberg Telephone (212) 972-9700
------------------------------ ---------------
B. NAME OF PLAN ADMINISTRATOR: (IF NONE HAS BEEN NAMED, THE EMPLOYER IS
DEEMED TO BE THE ADMINISTRATOR.)
Name Sheldon L. Ginsberg
-----------------------------------------------------------------
Address 529 Fifth Avenue Telephone (212) 972-9700
------------------------------------- ---------------
-----------------------------------------------------------------
City New York State New York Zip Code 10017
------------------ ----------------- -----
Contact Person Sheldon L. Ginsberg Telephone (212) 972-9700
----------------------------- ---------------
C. PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS (CHECK ONE):
[ ] Plan Administrator.
[ ] Employer.
[X] Other (complete below):
Name Frederick R. Cummings, Jr., Esq. c/o Warshaw Burstein et al
-----------------------------------------------------------------
Address 555 Fifth Avenue Telephone (212) 972-9700
------------------------------------- ---------------
-------------------------------------------------------------
City New York State New York Zip Code 10017
------------------------- -------------- --------
<PAGE>
<PAGE>
D. KEY OPERATING DATES:
Date Business Commenced / / 1903
-- -- ----
Incorporation or Partnership Effective Date (if applicable) 08/04/72.
-- -- --
Fiscal Year End 05/31 .
-- --
E. BUSINESS FORM OF EMPLOYER (CHECK ONE):
[X] Corporation
[ ] Professional Service Corporation
[ ] Subchapter S Corporation
[ ] Partnership
[ ] Sole Proprietorship
[_] Not-for-Profit Organization
2. PLAN INFORMATION
A. NAME OF PLAN:
Lazare Kaplan International Inc. - 401k Plan for Savings and Investment
----------------------------------------------------------------------
(Your organization's legal name & plan name)
B. STATUS OF PLAN:
[ ] New Plan.
[X] Amendment (including a conversion from another defined
contribution plan).
C. TYPE OF PLAN (CHECK ONE):
[X] 401(k) and Profit Sharing Plan (with Employer matching and
discretionary contributions).
[ ] 401(k) and Profit Sharing Plan (with Employer discretionary
contributions).
[ ] 401(k) Plan (with Employer matching contributions only).
[ ] 401(k) Plan (no Employer discretionary or matching
contributions).
[ ] Profit Sharing Plan.
[ ] Discretionary Contribution Plan (Not-for-Profit Organizations
only).
<PAGE>
<PAGE>
D. PLAN YEAR (CHECK ONE):
[ ] The Employer's fiscal year.
[X] Calendar year.
[ ] Other (complete) / / .
-- --
(must be yearly periods which begin on the first day of a
calendar month).
E. EFFECTIVE DATE (CHECK ONE):
[ ] The first day of the Employer's current fiscal year / / .
-- --
[ ] Other (complete) 01 / 01 / 90 .
-- -- --
F. VALUATION FREQUENCY (CHECK ONE):
[ ] Monthly
[X] Quarterly
[ ] Semiannually
[ ] Annually
G. ENTRY DATE (CHECK ONE):
[ ] First day of the month immediately following completion of
eligibility requirments (monthly entry dates).
[X] First day of the month immediately following the first or second
half of the plan year during which eligibility requirements are
first met (quarterly entry dates).
[ ] First day of the month immediately following the plan year
quarter during which eligibility requirements are first met
(semiannual entry dates).
[ ] First day of the plan year immediately following completion of
eligibility requirements (annual entry dates).
Note: The limits on the minimum age and service requirements in
Section 4.A of the Adoption Agreement are reduced by 1/2
year if the Plan uses annual entry dates.
H. LIMITATION YEAR (CHECK ONE):
[X] The 12 month period corresponding with the plan year.
[ ] The 12 month period corresponding with the calendar year.
[ ] The 12 month period corresponding with the fiscal year.
<PAGE>
<PAGE>
I. EMPLOYEES ELIGIBLE (CHECK ONE):
[ ] All Employees of the Employer, excluding those Employees included
in a unit of employees covered by a collective bargaining
agreement between the Employer and employee representatives if
retirement benefits were the subject of good faith bargaining.
For this purpose, the term "employee representatives" does not
include any organization more than half of whose members are
employees who are owners, officers, or executives of the
Employer.
[X] All Employees of the Employer.
[ ] All Employees covered by a collective bargaining agreement.
[ ] Other ______________________________________________________
3. INVESTMENT INFORMATION
A. INVESTMENT DIRECTION (ELECT WHO WILL DIRECT THE INVESTMENT OF THE
FOLLOWING):
<TABLE>
<CAPTION>
EMPLOYEE EMPLOYER
-------- --------
<S> <C> <C>
1. Employee Money
Elective/After-Tax Contributions [X]
---- ----
2. Employer Money
Matching Contributions [X]
---- ----
Discretionary Contributions [X]
---- ----
B. NUMBER OF INVESTMENT FUNDS (CHECK ONE):
[X] Five funds.
[X] Number of funds (fewer than five).
C. PLAN FUNDS IN ADDITION TO MUTUAL FUNDS:
[ ] Other investments not permitted.
[X] Group Annuity Contracts.
[ ] Certificates of Deposit.
[ ] Bank Commingled Fund.
<PAGE>
<PAGE>
D. INCREMENTS OF FUNDS AND FREQUENCY OF INVESTMENT CHANGES (CHECK ONE):
[X] Increments of 10% with four opportunities, effective as of
valuation dates, to change investments during plan year.
[ ] Increments of % with opportunities, effective as
of valuation dates, to change investments during plan year
(must be less than or equal to the number of plan valuations
during the plan year).
[ ] Not applicable (participant investment direction not permitted).
4. ELIGIBILITY
A. ELIGIBILITY FOR ENROLLMENT (CHECK AS MANY AS APPLY):
[ ] Entry date after attainment of age 21 and completion of one year
of service (at least 1,000 hours of service per year).
[X] Entry date after attainment of age N/A (not to exceed 21) and
completion of 12 (0-12) months of service. (No minimum Hours of
Service are required to be completed if the initial service
period is less than one year.)
[ ] FOR PROFIT SHARING PLANS ONLY. Entry date after attainment of age
(not to exceed 21) and completion of two years of service (at
least 1,000 hours of service per year, and 100% immediate vesting
must be selected in Section 5.A).
[ ] No age and service requirement.
B. ELIGIBILITY SERVICE (CHECK ONE):
[ ] Shall be determined in accordance with Section 3.2 of the Plan by
including service with a predecessor employer (i.e., earlier
business form of current employer).
[X] Shall always be measured from the Employee's employment
commencement date or on an anniversary thereof.
5. VESTING
A. VESTING FOR MATCHING AND/OR DISCRETIONARY EMPLOYER CONTRIBUTIONS (CHECK
APPLICABLE):
[ ] 20% vesting after three years of service, increased by 20% for
each year thereafter with 100% vesting after seven years.
<PAGE>
<PAGE>
OR elect separately for (1) "Matching" and (2) "Discretionary"
contributions.
(1) (2)
[ ] [ ] 20% vesting for each year with 100% vesting after five
years of service.
[ ] [ ] 100% immediate vesting.
[X] [X] Other (1) 33 1/3 after two years, 66 2/3 after three
years, 100% after four years of service
Must not be less in each year than under
both Options 1 and 2 above)
(2) see above (Must not be less in each year
than under both Options 1 and 2 above)
B. VESTING COMPUTATION PERIOD (ELECT SEPARATELY FOR (1) "MATCHING" AND (2)
DISCRETIONARY"):
(1) (2)
[ ] [ ] Shall be measured during the 12 month period
beginning with the first day of the month
during which an Employee was hired.
[X] [X] Shall be measured during the 12 month period which
corresponds with the Plan Year which includes an
Employee's employment commencement date.
C. VESTING SERVICE (ELECT SEPARATELY FOR (1) "MATCHING" AND (2)
"DISCRETIONARY":
(1) (2)
[ ] [ ] Shall be measured by excluding service with
a predecessor employer, such as an earlier
business form of current Employer.
[X] [X] Shall be measured by including service with a predecessor
employer.
6. COMPENSATION
Total base compensation (as defined in Section 2.9 of the Plan) for each
Employee during the calendar year ending on or within plan year (check
one or more as appropriate):
[ ] With no exclusions.
[ ] Excluding overtime.
[X] Excluding bonuses.*
[ ] Excluding commissions.
<PAGE>
<PAGE>
Note: None of the exclusions elected above, if any, will apply
for purposes of the top-heavy rules in Section 12.2 or
discrimination tests in Section 6.1 of the Basic Plan
Document.
*Also excluding income from the surrender of stock options.
7. CONTRIBUTIONS (SEE FOOTNOTE BELOW BEFORE COMPLETING ITEM B.)
A. ELECTIVE EMPLOYEE CONTRIBUTIONS (CHECK ONE):
[X] Up to 20% of compensation (but not to exceed $7,979 in
1990 and adjusted thereafter by the Secretary of the
Treasury).
[ ] Up to _____% of compensation (less than 20% but
not to exceed $7,979 in 1990 and ajusted thereafter by the
Secretary of the Treasury).
[ ] Not applicable; the Plan selected does not include a 401(k)
feature (see item 2.C).
B. AFTER-TAX EMPLOYEE CONTRIBUTIONS (CHECK ONE)1:
[ ] Employees may make contributions from after-tax compensation.
[ ] Employee after-tax contributions not permitted for "Highly
Compensated" Employees, as defined in Section 2.21 of the
Basic Plan Document.
[ ] Not applicable; After-Tax Employee contributions not
permitted.
C. LUMP SUM AFTER-TAX EMPLOYEE CONTRIBUTIONS (CHECK ONE)(1):
[ ] Minimum lump sum is $100 during any three month period.
[ ] Minimum lump sum is $_____ during any ______ month period.
[X] Not applicable; After-Tax Employee contributions not
permitted.
D. MATCHING EMPLOYER CONTRIBUTIONS (CHECK ONE):
[X] To be determined annually as a number of cents per dollar of
Elective Employee contributions up to a maximum of six percent
of Employee compensation.(2)
- --------
(1) An Employer may not elect to permit after-tax Employee Contributions if the
Employer does not elect a 401(k) feature in Item A above.
(2) It is anticipated that the employer match will be: Matching employer
contribution will be equal to $.50 for each $1.00 contribution by the employees
up to a maximum of 6% of employee compensation on the first $20,000 of
earnings; provided that consolidated Lazare Kaplan International Inc. pretax
earnings for the fiscal year contained within the current calendar year exceed
$3.5 million. Matching contributions will be made at the end of each calendar
year.
<PAGE>
<PAGE>
[ ] Matching Employer contributions will be equal to $______
for each $1.00 of Elective Employee contributions up to a
maximum of _____% of Employee compensation.
[ ] Matching Employer contributions will be equal to $_____ for
each $1.00 of Elective Employee contributions up to a maximum
of ______% of Employee compensation, but not to exceed
$__________ per employee.
[ ] Matching Employer contributions will be equal to $________ for
each $1.00 of Elective Employee contributions up to a maximum
of ______% of Employee compensation; $_____________ for each
additional $1.00 of Elective Employee Employee contributions
up to a maximum of _____% of Employee compensation.
[ ] Matching Employer contributions will be equal to $________ for
each $1.00 contributed by Employees up to a maximum of _____%
of Elective Employee and/or After-Tax Employee contributions.
[ ] Not applicable; matching Employer contributions not permitted.
E. EMPLOYER DISCRETIONARY (OR PROFIT SHARING) CONTRIBUTIONS (CHECK ONE):
[ ] Permitted.
[ ] Not permitted.
F. ELIGIBILITY FOR EMPLOYER CONTRIBUTIONS (ELECT SEPARATELY FOR (1)
"MATCHING" AND (2) "DISCRETIONARY" CONTRIBUTIONS):
(1) (2)
[ ] [ ] Those Employees employed as of every pay period.
[X] [X] Those Employees employed as of the last day of the plan
year quarter.
[ ] [ ] Those Employees employed as of the last day of the plan
year.
[ ] [ ] Those Employees who have completed at least 1,000 hours in
a plan year.
[ ] [ ] Not applicable.
G. ALLOCATION OF EMPLOYER DISCRETIONARY (OR PROFIT SHARING) CONTRIBUTIONS
(CHECK ONE):
[X] Employer discretinary contributions will be allocated to
participants in the same ratio that the compensation of
each participant bears to the compensation of all
participants.
<PAGE>
<PAGE>
[ ] Employer discretionary contributions will be allocated as
follows:
First, an amount equal to the lesser of 5.7% of
compensation or a base contribution equal to ____% (not
less than 3%) of compensation shall be allocated to the
account of each participant.
Second, an amount no greater than the lesser of 5.7% of
compensation or the base contribution (described above) in
excess of the Social Security Taxable Wage Base will be
allocated to the account of each participant.
Third, any remaining contribution will be allocated to the
account of each participant in the ratio that the
compensation of each participant bears to the compensation
of all participants.
IMPORTANT: AN EMPLOYER WHO ELECTS TO USE THIS TYPE OF
ALLOCATION FORMULA MAY NOT ELECT ANY OF THE EXCLUSIONS
FROM COMPENSATION IN SECTIN 6 ABOVE.
The 5.7% described above shall be adjusted upward, if necessary,
to equal the Employer Social Security contributions for Old Age,
Survivors Disability, and Health Insurance.
[ ] Not applicable, Employer discretionary contributions not
permitted.
8. WITHDRAWALS
A. HARDSHIP WITHDRAWALS (CHECK ONE):
[X] Permitted from Elective Employee contributions only
($500 minimum).
[ ] Permitted from Elective Employee contributions only
(1,000 minimum).
[ ] Not applicable, Elective Employee contributions not
permitted.
B. WITHDRAWAL OF AFTER-TAX EMPLOYEE CONTRIBUTIONS (CHECK ONE):
[X] Employees may withdraw a minimum of $500 only
(including a portion of earnings per IRS
regulations).
[X] Employees may withdraw a minimum of $______ (not
less than $500 and including a portion of earnings
per IRS regulations).
[ ] Not applicable, withdrawal of After-tax
contributions not permitted.
9. RETIREMENT INFORMATION
A. NORMAL RETIREMENT DATE (CHECK ONE):
[X] First day of the month after attainment of age 65.
<PAGE>
<PAGE>
[ ] First day of the month after attainment of age
____. (Benefits must begin by the end of the plan
year in which a participant attains age 65 unless
the participant elects to receive a distribution at
a later date).
B. EARLY RETIREMENT DATE (CHECK ONE):
[ ] First day of the month after attainment of age 55.
[X] First day of the month after attainment of age 55
and completion of 4 years of service.
[ ] Not applicable, early retirement not permitted.
C. DISABILITY RETIREMENT (CHECK ONE):
[X] Employee must satisfy requirement for benefits
under Employer's Long-Term Disability Plan.
[ ] Employee must be eligible for Social Security
disability benefits.
[ ] Employee must be determined disabled by a physician
selected by the Plan Administrator.
10. FORFEITURES
A. FORFEITURE OF EMPLOYER CONTRIBUTIONS (CHECK ONE):
[ ] Will be added to accounts of remaining participants.
[X] Will be applied to reduce Employer contributions in
subsequent years.
[ ] Not applicable, no Employer contributions (see
Section 7.D and/or 7.F).
B. FORFEITURE OF EXCESS MATCHING CONTRIBUTIONS (CHECK ONE):
Amounts forfeited by Highly Compensated Employees under Section
6.12 of the Plan:
[X] Will be added to the accounts of non-Highly
Compensated participants according to the formula
elected in 7.F of the Adoption Agreement.
[ ] Will be allocated to the accounts of non-Highly
Compensated Participants entitled to an Employer
Matching contribution for the plan year as described
in Section 6.13 of the Plan.
[ ] Not applicable, Matching contributions not
permitted.
11. LOANS
A. PARTICIPANT LOANS (CHECK ONE):
[ ] Permitted from all accounts ($500 minimum).
<PAGE>
<PAGE>
[X] Permitted from all acocunts ($1,000 minimum).
[ ] Permitted, but only from Elective Employee
contributions ($______ minimum).
[ ] Not applicable, loans not permitted.
B. LOAN REINVESTMENT (CHECK ONE):
[X] Investment of principal and interest in the same
percentage of elections at time of repayment.
[ ] Investment of principal and interest in the same
percentage as elections at time of initial loan
withdrawal.
12. OTHER PLANS (COMPLETE ONLY IF APPLICABLE, - SEE SECTION 6.9 OF THE BAIS
PLAN DOCUMENT.)
A. ANNUAL LIMITS ON CONTRIBUTIONS TO MORE THAN ONE PLAN:
If the Employer maintains or ever maintained another qualified plan in
which any Participant in this Plan (or was) a Particpant or could become
a Participant, the Employer must complete this section. The Employer
must also complete this section if it maintains a welfare benefit fund,
as defined in section 419(e) of the Code, or an individual medical
account, as defined in section 415(1)(2) of the Code, under which
amounts are treated as Annual Additions with respect to any Participant
in this Plan.
1. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan:
(a) The provisions of subsections 2.1 through 2.6 of Section 6
will apply as if the other plan were a master or prototype
plan.
(b) Provide the method under which the plans will limit total
Annual Additions to the maximum permissible amount, and
will property reduce any excess amounts, in a manner that
precludes Employer discretion.
<PAGE>
<PAGE>
B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer*:
-----------------------------------------------------------------
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B. TOP-HEAVY MINIMUM ALLOCATION:
The minimum allocation required under Section 12.3 of the Basic
Plan Document on behalf of each Participant who is not a Key
Employee and who is covered under another qualified plan
maintained by the Employer will be provided (check one):
[ ] under this Plan.
[ ] under the _________________________________ Plan.
(Indicate other Plan(s) under which the requirement would be
satisfied.)
C. EMPLOYER-SPONSORED DEFINED BENEFIT PLAN:
State the interest and morality rates for any defined plan
maintained by the Employer (this determines the definition of
Present Value in section 12.2 of the Basic Plan Document):
[ ] % Interest Rate
[ ] Morality Table.
- --------
* If the Employer currently maintains another defined contribution plan,
specify from which plan the reduction will be made so that the limits
described above will not be exceeded. If the Employer maintains a defined
benefit plan the maximum contribution to this plan may not exceed 125% of
the maximum allowable limits under Code Section 415 as adjusted from time to
time (for 1990 the maximum defined benefit that may be provided is the
lesser of $102,582 or 100% of compensation). In this situation specify which
plan will be adjusted so that the overall limits described above will not be
exceeded. Normally the reduction should be made to the defined benefit plan.
<PAGE>
<PAGE>
13. ADDITIONAL EMPLOYER AGREEMENT
The Employer agrees that a majority of the Funds used for Plan
investments shall be Fidelity mutual funds or Bank Commingled funds
managed by Fidelity Management Trust Company.
The Employer acknowledges that having consulted an attorney with referec
to this Plan and Trust Agreement.
The Employer will file all reports and make all disclosures as to theis
Plan required by Federal and State law.
If Participants may direct the investment of their accounts, the
Employer will ascertain that a Participant has receive the appropriate
prospectus(es) before instructing the Trustee to invest a contribution
for the Participant in mutual fund(s).
14. EMPLOYER'S ADOPTION
Plan Number: 0 0 1
------------
Employer Signature(s) to adopt the Plan:
------------------------------------------------------------------------
------------------------------------------------------------------------
PLEASE PRINT NAME(S) OF THE AUTHORIZED PERSON(S) SIGNING ABOVE:
Sheldon L. Ginsberg Date 3/28/91
---------------------------------------------- -----------------
Leon Tempelsman Date 3/28/91
---------------------------------------------- -----------------
The adopting Employer may not rely on any opinion letter issued by the
National Office of the Internal Revenue Servive as evidence that the
Plan is qualified under Section 401 of the Internal Revenue Code. In
order to obtain reliance with respect to Plan qualification, the
Employer must apply to the appropriate Key District Office for a
determination letter. This Adoption Agreement may be used only in
conjunctionwith Basic Plan Document #06.
15. ACCEPTANCE OF TRUSTEE(S)
<PAGE>
<PAGE>
Acceptance of Trustee is agreed to in accordance with the terms and
conditions of the Plan, effective as of the date of execution by the
Employer, as set forth above.
</TABLE>
<TABLE>
<S> <C> <C> <C>
By Trustee /s/ Leon Tempelsman
------------------------------------- -------------------- -----
(Trustee's Tax I.D. #) (Date)
Leon Tempelsman
---------------------------------------------------------------------------------
(Print Name)
By Trustee /s/ Sheldon L. Ginsberg
------------------------------------- --------------------- -----
(Trustee's Tax I.D. #) (Date)
Sheldon L. Ginsberg
----------------------------------------------------------------------------------
(Print Name)
By Trustee /s/ Robert Speisman
------------------------------------- -------------------- ----
(Trustee's Tax I.D. #) (Date)
Robert Speisman
----------------------------------------------------------------------------------
(Print Name)
</TABLE>
ADDRESS OF TRUSTEE(S):
c/o Lazare Kaplan International Inc.
529 Fifth Avenue
New York, New York 10017
<PAGE>
<PAGE>
Exhibit 5.1
WARSHAW BURSTEIN COHEN
SCHLESINGER & KUH, LLP
555 Fifth Avenue
New York, New York 10017
Telephone: (212) 984-7700
Facsimile: (212) 972-9150
May 8, 1998
Lazare Kaplan International Inc.
529 Fifth Avenue
New York, NY 10017
Re: Registration Statement on Form S-8
Gentlemen:
You have requested our opinion, as securities counsel for
Lazare Kaplan International Inc., a Delaware corporation (the "Registrant"), in
connection with a registration statement on Form S-8 (the "Registration
Statement"), under the Securities Act of 1933 (the "Act"), being filed by the
Registrant with the Securities and Exchange Commission (the "Commission"). The
Registration Statement relates to the registration of [100,000] shares (the
"Shares") of common stock, $1.00 par value per share (the "Common Stock"), of
the Registrant which may be acquired pursuant to and participation interests in
the Lazare Kaplan 401(k) Plan for Savings and Investment (the "Plan").
In preparation of this opinion, we have examined the original,
photostatic, conformed or certified copies of (1) the Certificate of
Incorporation, as amended to date, of the Registrant, (2) the By-Laws of the
Registrant, in effect on the date hereof, (3) the records of corporate
proceedings of the Registrant in our possession and as delivered to us by the
executive officers of the Registrant, (4) the Registration Statement, (5) the
Plan, (6) the Internal Revenue Service Determination Letter dated July 12, 1994
and (7) Commonwealth of Puerto Rico Department of Treasury, Bureau of Income Tax
Letter Dated October 11, 1994. In our examinations, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to the originals of all documents submitted to us
as certified, photostatic or conformed copies, and the authenticity of the
originals of all such latter documents.
Based upon the foregoing, we are of the opinion that the
Shares, when acquired in accordance with the terms of the Plan, will be validly
issued, fully paid and nonassessable.
We hereby consent to the filing of our opinion as an exhibit
to the Registration Statement. In so doing, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission promulgated thereunder.
Certain partners of our firm beneficially own shares of Common
Stock.
Sincerely yours,
WARSHAW BURSTEIN COHEN
SCHLESINGER & KUH, LLP
JWF/FRC/MDS
<PAGE>
<PAGE>
Exhibit 5.2(i)
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
G.P.O. BOX 1680
BROOKLYN, NY 11202
<TABLE>
<S> <C>
Date: July 12, 1994 Employer Identification Number:
13-2728690
File Folder Number:
LAZARE KAPLAN INTERNATIONAL INC 133001128
C/O BRIAN HOROWITZ Person to Contact:
C/O KPMG PEAT MARWICK STUART FIELDS
345 PARK AVENUE 39TH FLOOR Contact Telephone Number:
NEW YORK, NY 10154 (718) 488-2283
Plan Name:
THE LAZARE KAPLAN 401K PLAN
FOR SAVINGS AND INVESTMENTS
Plan Number: 001
</TABLE>
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend
on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the Plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may effect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination letter is applicable for the plan adopted on Sept.
28, 1989.
This letter may not be relied on with regard to whether any benefit,
right, or feature satisfies the nondiscriminatory current availability
requirement.
This plan has been mandatorily disagregated, permissively aggregated, or
restructured to satisfy the nondiscrimination requirements.
This plan satisfies the nondiscrimination in amount requirement of
section 1.401(a)(4)-1(b)(2) of the regulations on the basis of a design-based
safe harbor described in the regulations.
This letter is issued under Rev. Proc. 98-89 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise specified
in this letter.
We have sent a copy of this letter to your representative as indicated
in the power of attorney.
<PAGE>
<PAGE>
-2-
LAZARE KAPLAN INTERNATIONAL INC
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely yours,
Herbert J. Huff
District Director
Enclosures:
Publication 794
<PAGE>
<PAGE>
Exhibit 5.2(ii)
COMMONWEALTH OF PUERTO RICO
DEPARTMENT OF THE
TREASURY
P.O. BOX 5-4515 SAN JUAN PUERTO RICO 00905
BUREAU OF INCOME TAX
KPMG Peat Marwick
250 Munoz Rivera Avenue
American International Plaza 11th Floor
Hato Rey, Puerto Rico 00918
Name of Employer : Lazare Kaplan (Puerto Rico) Inc.
Account Number : 66-0404030
Effective Date : January 1, 1990
Name of Plan : Lazare Kaplan 401(k) Plan for
Savings and Investment
(Section 165(e))
Gentlemen:
It is the opinion of this Bureau, based upon the evidence submitted with
your request for ruling, that the plan referred to above meets the requirements
of Section 165(a) of our Income Tax Act of 1954, as amended, (the "Act") and
that the trust established thereunder will be entitled to exemption from local
income taxes. According to Article 165-1(a)(4) of the Regulations issued under
the Act "The law is concerned not so much with the form of any plan as it is
with its effect in operation".
The trust, being exempt under Section 165(a) of our Act, is subject to
the provisions of Section 404, relating to tax on unrelated business income, as
defined in Section 404A, of said Act. It is also required to file an annual
return, on the enclosed Form 480.70, stating specifically the items of gross
income, receipts and disbursements connected thereto, and any other pertinent
information.
The contributions to be made by the employer, pursuant to the terms of
the plan, will be subject to the conditions and limitations of Section 23(p)(1)
of the Act. The deductibility of
<PAGE>
<PAGE>
KPMG Peat Marwick
- 2 -
such contributions will be verified upon examination of the employer's return.
The information required by Article 23(p)-2 of the Regulations under our
Act must be submitted annually with the employer's and trust's return. However,
if in a particular taxable year said information has been filed by the employer
and he so notifies the trustee, the trustee, in lieu of the information required
under Article 23(p)-2, may file with the Secretary of the Treasury the following
information: (1) the names and addresses of the parties to the trust agreement
and the date thereof; (2) the taxable year involved; (3) a copy of the
notification from the employer with respect to the filing of such information;
and (4) a request for exemption of the trust under Section 165(a).
Any amendment to the plan must be notified immediately to this office so
that their tax effect may be determined. Moreover, this office must be notified
immediately in the event of suspension or discontinuance of contributions by the
employer, or termination of the plan (or trust).
You are informed that, since the Income Tax Act does not provide for the
top heavy plan or Top Heavy Group benefits under a pension plan, no opinion is
expressed regarding this matter under the subject plan.
No opinion is expressed as to the tax treatment of the above
transactions under any other provision of the Act (and the regulations
thereunder) that may also be applicable thereto, or to the tax treatment of any
condition existing at the time of the transactions, or any effect resulting
therefrom, that is not specifically covered by this ruling. The opinion
expressed herein shall be valid only upon the continued existence of the facts
as submitted for our consideration.
Cordially,
Dalia M. Velez Irizarry, Acting Chief
Pension Plan Section
HACIENDA AT YOUR SERVICE
<PAGE>
<PAGE>
Exhibit 23.2
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Lazare Kaplan 401(k) Plan for Savings and Investment of
our reports dated July 8, 1997, with respect to the consolidated financial
statements of Lazare Kaplan International Inc. incorporated by reference in its
Annual Report (Form 10-K) for the year ended May 31, 1997 and the related
financial statement schedule included therein, filed with the Securities and
Exchange Commission.
Ernst & Young LLP
New York, New York
May 8, 1998
