As filed with Securities and Exchange Commission on July 21, 1995
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CROWLEY, MILNER AND COMPANY
(Exact name of registrant as specified in its charter)
MICHIGAN 38-045910
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2301 W. Lafayette
Detroit, Michigan 48216-1891
(Address of principal executive offices, including zip code)
SECOND AMENDED AND RESTATED
CROWLEY, MILNER AND COMPANY
PROFIT SHARING PLAN
(Full title of the Plan)
Mark A. VandenBerg
Vice President-Finance, Treasurer and Secretary
2301 W. Lafayette
Detroit, Michigan 48216-1891
(313) 962-2400
(Name, address and telephone number,
including area code, of agent for service)
Copies to:
J. Michael Bernard
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Maximum Proposed Maximum Amount of
Securities to Amount to be Offering Aggregate Registration
be Registered Registered Price Per Share* Offering Price* Fee
<S> <C> <C> <C> <C>
Common Stock 100,000 shares $4.38 $438,000 $151.03
</TABLE>
* The price shown is the average of the high and low sale prices of the
Common Stock on the American Stock Exchange on July 14, 1995, in
accordance with Rule 457(h).
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by Crowley, Milner and Company (the
"Company") with the Securities and Exchange Commission ("SEC") are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
January 28, 1995;
(b) Quarterly Report on Form 10-Q for the quarter ended April 29,
1995;
(c) Description of the Company's Common Stock contained in the
Company's Registration Statement on Form 10, filed on May 29,
1935, as amended.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date
hereof and prior to the filing of a post-effective amendment which indicates
that all securities being offered have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by
reference and to be a part hereof from the date of filing of each such
document.
Item 4. DESCRIPTION OF SECURITIES
The Common Stock to be offered is registered under Section 12 of the
Securities Exchange Act.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") govern the indemnification of officers, directors and other persons.
In this regard, the MBCA provides for indemnification of directors and
officers acting in good faith and in a manner they reasonably believe to be
in, or not opposed to, the best interest of the Company or its shareholders
(and, with respect to a criminal proceeding, if they have no reasonable cause
to believe their conduct to be unlawful). Such indemnification may be made
against (a) expenses (including attorney's fees), judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred in connection
with any threatened, pending or completed action, suit or proceeding (other
than an action by, or in the right of, the Company) arising by reason of the
fact that they were serving as a director, officer, employee or agent of
<PAGE>
the Company (or some other entity at the Company's request), and (b) expenses
(including attorney's fees) and amounts paid in settlement actually and
reasonably incurred in connection with a threatened, pending or completed
action or suit by, or in the right of, the Company, unless the director or
officer is found liable to the Company and an appropriate court does not
determine that he or she is nevertheless fairly and reasonably entitled to
indemnification. The MBCA requires indemnification for expenses to the extent
that a director or officer is successful in defending against any such action,
suit or proceeding, and otherwise requires in general that the indemnification
provided for in (a) and (b) above be made only on a determination by a
majority vote of a quorum of the Board of Directors comprised of members who
were not parties to or threatened to be made parties to such action. In
certain circumstances, the MBCA further permits advances to cover such
expenses before a final determination that indemnification is permissible,
upon receipt of (i) a written affirmation by the director or officer of his or
her good faith belief that he or she has met the applicable standard of
conduct set forth in the MBCA, and (ii) a written undertaking by or on behalf
of the director or officer to repay such amounts unless it shall ultimately be
determined that he or she is entitled to indemnification and a determination
that the facts then known to those making the advance would not preclude
indemnification. The Company's articles of incorporation provide the same
indemnification rights as the MBCA.
Subject to the exceptions recited in the following sentence, the
Company's articles of incorporation provide that no director shall be
personally liable to the Company or its shareholders for damages for breach of
his or her duty as a director. Such exculpatory language does not, however,
eliminate or limit the liability of a director for (a) breach of the duty of
loyalty, (b) acts or omissions that are not in good faith or involve
intentional misconduct or a knowing violation of law, (c) certain other
violations of the Michigan Business Corporation Act, or (d) responsibility in
respect of any transaction from which the director has derived an improper
personal benefit.
The MBCA permits the Company to purchase insurance on behalf of its
directors and officers against liabilities arising out of their positions with
the Company, whether or not such liabilities would be within the
indemnification provisions of the MBCA. Under an insurance policy maintained
by the Company, the directors and officers of the Company are insured, within
the limits and subject to the limitations of the policy, against certain
expenses in connection with the defense of certain claims, actions, suits or
proceedings, and certain liabilities which might be imposed as a result of
such claims, actions, suits or proceedings, which may be brought against them
by reason of being or having served as directors and officers of the Company
or certain other entities.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
<PAGE>
Item 8. EXHIBITS
The following exhibits are filed with this registration statement:
4.1 Second Amended and Restated Crowley, Milner and Company Profit Sharing
Plan, dated September 20, 1994, and the First Amendment thereto, dated
June 14, 1995.
5 Opinion of Dykema Gossett PLLC with respect to the legality of the
Common Stock to be registered hereunder.
23.1 Consent of Ernst & Young LLP, independent accountants.
23.2 Consent of Dykema Gossett PLLC (contained in Exhibit 5 hereto).
24 Power of Attorney (contained on signature page).
Item 9. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes (a) 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, (b) 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, and (c) 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.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Detroit, State of Michigan on July
19, 1995.
CROWLEY, MILNER AND COMPANY
By: /S/ DENNIS P. CALLAHAN
Dennis P. Callahan
President (Principal Executive
Officer)
Each person whose signature appears below constitutes and appoints Mark
A. VandenBerg, his attorney-in-fact, each with power of substitution, for him,
in any and all capacities, to sign any amendments to this registration
statement (including post-effective amendments) and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each such attorney-in-fact or his substitute may 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
indicated capacities as of July 19, 1995.
Signature Title
/S/ DENNIS P. CALLAHAN Director, President and Chief
Dennis P. Callahan Executive Officer (Principal Executive Officer)
/S/ MARK A. VANDENBERG Vice President-Finance, Chief
Mark A. VandenBerg Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting
Officer)
/S/ ANDREW J. SOFFEL Director and Chairman of the Board
Andrew J. Soffel
JoAnn S. Cousino Director
/S/ CARROLL E. EBERT Director
Carroll T. Ebert
/S/ ALFRED M. ENTENMAN, JR. Director
Alfred M. Entenman, Jr.
<PAGE>
/S/ JOSEPH C. KEYS Director
Joseph C. Keys
/S/ RICHARD S. KEYS Director
Richard S. Keys
/S/ JULIUS L. PALLONE Director
Julius L. Pallone
/S/ PAUL R. RENTENBACH Director
Paul R. Rentenbach
/S/ JAMES L. SCHAYE, JR. Director
James L. Schaye, Jr.
INDEX TO EXHIBITS
Number Description
4.1 Second Amended and Restated Crowley, Milner and Company Profit Sharing
Plan, dated September 20, 1994, and the First Amendment
thereto, dated June 14, 1995
5 Opinion of Dykema Gossett PLLC with respect to the legality of the
Common Stock to be registered hereunder
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Dykema Gossett LLP (contained in Exhibit 5 hereto)
24 Power of Attorney (contained on signature page)
SECOND AMENDED AND RESTATED
CROWLEY, MILNER & COMPANY
PROFIT SHARING PLAN
EFFECTIVE FEBRUARY 1, 1990
ARTICLE 1. PREAMBLES
Section 1.01 Establishment of Prior Plan.
Effective February 1, 1984, Crowley, Milner & Company ("Employer")
established the Crowley, Milner & Company Profit Sharing Plan covering
eligible employees of the Employer. From time to time the Employer has
amended the plan as so established.
Section 1.02 Amendment and Restatement of Plan.
The Employer desires to amend and restate the plan in order to comply
with the Tax Reform Act of 1986, certain final regulations, and other laws
enacted after the Tax Reform Act of 1986, effective generally February 1,
1990, except as otherwise specifically provided in Section 1.03. This
document sets forth the amended and restated plan and is known as the Crowley,
Milner & Company Profit Sharing Plan ("Plan").
Section 1.03 Effective Dates.
The Plan is generally effective February 1, 1990. However, in order to
comply with certain provisions of the Tax Reform Act of 1986, the following
sections of the Plan are effective February 1, 1987: Sections 3.02(c)(1),
3.02(c)(3), 3.03(c)(2), 6.02(d), 6.04 (relating to loans), 6.07 (relating to
premature distributions), 7.03, 7.04, 7.05, and Section 12.06. Section
3.02(c)(4) is effective January 1, 1987. Sections 2.01 and 10.01(d) are
effective February 1, 1989. Certain other provisions are effective on the
dates stated therein.
Section 1.04 Applicable Law.
The Plan is intended to qualify as a profit sharing plan under Section
401(a) of the Internal Revenue Code of 1986, as amended ("Code") and to permit
tax-deferred voluntary savings by eligible Employees pursuant to Code Section
401(k). In addition, it is intended that the Plan meet the applicable
requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Where not governed by these laws, by regulations
promulgated under them, or by other federal laws, the Plan shall be
administered and construed in accordance with Michigan law.
Section 1.05 Defined Terms.
Throughout the Plan, various terms are used repeatedly, which terms have
very specific and definite meanings when capitalized in the text. For
convenience, these terms are collected and defined in Article 12. Wherever
these capitalized terms appear in the Plan, they shall have the meanings
specified in that Article.
ARTICLE 2. ELIGIBILITY AND PARTICIPATION
Section 2.01 Eligibility.
In order to be eligible to participate in the Plan, an individual must:
(a) be an Employee; and
(b) have completed one year Eligibility of Service (as defined in
Section 12.07); and
(c) have attained the age of 21.
Section 2.02 Participation.
(a) Meaning of Participation. Participation entitles an individual to
receive a summary plan description that describes the terms of the Plan in
simple language, and to obtain various other reporting and disclosure
documents concerning the Plan. A Participant also will have maintained on the
books and records of the Fund an Account in his name to which allocations may
be made in accordance with Article 3. However, mere participation in the Plan
does not entitle a Participant to an ultimate benefit from the Plan; a
Participant will receive a benefit only if allocations are made to his Account
over his period of participation pursuant to Article 3.
(b) Commencement of Participation. (1) An individual who was
participating in the Plan on January 31, 1990 and who had not ceased
participation for any reason as of February 1, 1990, shall continue
participating in this Plan as of February 1, 1990. Any other individual shall
commence participation in the Plan on the Entry Date coincident with or next
following the date he first satisfies the applicable eligibility requirements
of Section 2.01.
(2) For Plan Years prior to January 1, 1991, the Entry Dates are
February 1 and August 1. For Plan Years beginning on and after January 1,
1991, the Entry Dates are January 1 and July 1.
(c) Termination of Participation. Participation in the Plan shall
terminate for a Participant on the later of (1) his date of termination of
employment, or (2) the date he receives from the Plan a distribution, as a
terminated or retired Employee, representing the entire nonforfeitable balance
of his Account.
(d) Resumption of Participation. An individual whose participation
has terminated pursuant to subsection (c) above shall resume participation
only in accordance with the provisions of subsection (b).
ARTICLE 3. CONTRIBUTIONS AND ALLOCATIONS
Section 3.01 Sources of Contributions and Allocations to Accounts.
(a) Sources and Forms of Contributions. Both the Employer and
Employees may make contributions to the Plan. Contributions of the Employer
may be in the form of matching contributions, supplemental contributions and
fixed contributions. Subject to Section 3.07, contributions by Employees are
divided into before-tax, after-tax and rollover contributions.
(b) Allocation of Contributions and Individual Accounts.
Contributions made by the Employer and by Employees shall be allocated to
individual Accounts maintained on the books and records of the Fund for each
Participant. Credits to Accounts shall be made in accordance with the
allocation process described in this Article 3 for contributions; credits and
charges shall be made for the allocation of earnings, gains, and losses as
described in Article 4; and charges shall be made for distributions made
pursuant to Article 6.
The maintenance of individual accounts is only for accounting purposes,
and except as provided otherwise in the Plan or as determined by the Trustee
in accordance with the written powers granted to the Trustee, a segregation of
the assets of the Fund to each Account shall not be required. The fact that
individual accounts are maintained shall not be construed to mean that any
Participant or Beneficiary has title to any specific assets of the Fund. Each
Account may be further divided into separate sub-accounts, as described in
this Article 3, to receive and hold contributions having a particular
characterization.
Section 3.02 Before-Tax Employee Contributions.
(a) Amount. For each Plan Year, a Participant may, but is not
required to, direct the Employer to make cash contributions to a Before-Tax
Employee Contribution Account (which contributions are not includible in the
Participant's gross income for federal income tax purposes) in any whole
percentage, from 1% to a maximum of 20% of his Compensation actually paid for
the Plan Year (or such lower maximum percentage as permitted by the
limitations of subsection (c) below and Section 7.03). These contributions
are referred to as Before-Tax Employee Contributions or Before-Tax Contribu-
tions.
Each Participant shall file a written election with the Committee, on a
form prescribed by the Committee, specifying the percentage of his
Compensation to be contributed to the Plan by the Employer as Before-Tax
Employee Contributions. A Participant's first election as a new Participant
will become effective for the payroll period that begins after he begins Plan
participation, provided that the election is received by the Committee at
least 10 business days prior to such date. It shall remain in effect until
revoked or changed by the Participant.
A Participant may revoke his election and stop making all Before-Tax
Contributions at any time by filing a revocation with the Committee; such
revocation shall become effective for the next payroll date if
administratively possible.
A Participant may increase or decrease the percentage of his Before-Tax
Contributions by filing a new written election with the Committee. Any such
new election shall become effective on the February 1 or August 1 following if
received by the Committee during the January and/or July election period
established by the Committee, or in the case of demonstrated hardship, on such
earlier date as determined by the Committee. Effective February 1, 1990, any
such new election shall become effective on the January 1 or July 1 following
if received by the Committee during the December and/or June election periods
established by the Committee, or in the case of demonstrated hardship, on such
earlier date as determined by the Committee. If the election to increase or
decrease the percentage of Before-Tax Contributions is not timely received for
processing for a given payroll date, it shall be effective for the following
payroll date.
(b) Payment. Before-Tax Employee Contributions directed by
Participants under this Section shall be made during the Plan Year by the
Employer through payroll deductions, lump sum salary reductions in December or
March or such other method (including qualifying "bonus payments") pursuant to
procedures established by the Committee and shall be transferred to the Fund
not less frequently than monthly but in any event not later than 30 days after
the close of the Plan Year.
(c) Limitations. The Committee may reduce Before-Tax Employee
Contributions of all Participants so that the applicable limits of the Code
are not exceeded. In addition, Participant contributions made in accordance
with this Section are subject to the limitations of this paragraph.
(1) Actual Deferral Percentage Test ("ADP test"). Each Plan
Year, the Committee shall compute:
(A) the average actual deferral percentage of all Highly
Compensated Participants who are eligible to make Before-Tax
Contributions, whether or not any such contributions are made
("high-paid percentage"); and
(B) the average actual deferral percentage of the
remaining Participants who are eligible to make Before-Tax
Contributions, whether or not such contributions are made
("lower-paid percentage").
Subject to the family aggregation rules of paragraph (3) below,
the actual deferral percentage ("ADP") shall be computed for each
eligible Participant as set forth in Code Section 401(k)(3) and
applicable Treasury regulations by dividing the Participant's
Compensation for the Plan Year into the total amount of his Before-Tax
Contributions made during the Plan Year under this Section, including
any Excess Deferrals but excluding Before-Tax Contributions that are
taken into account in the ACP test set forth in Section 3.03(c)
(provided that this ADP test is satisfied both with and without
exclusion of these Before-Tax Contributions). A portion or all of the
Employer Matching and Fixed Contributions allocated to each
Participant's Account for the Plan Year also may be used in the ADP
calculation hereunder to the extent they qualify to be so used and are
not used in the ACP test under Section 3.03(c) below.
The separate average ADPs for the two groups of Participants
identified above must meet one of the following ADP tests:
(i) The high-paid percentage is not more than 1.25 times
the lower-paid percentage; or
(ii) The high-paid percentage is not more than 2.00 times
the lower-paid percentage, and the difference between
the two percentages does not exceed two percentage
points.
(2) Correction of ADP Test. If the separate percentages for the
two groups identified above fail to satisfy one of the ADP tests, or if
the Committee otherwise determines that a reduction of the amount of
Before-Tax Contributions is necessary in order to assure compliance with
Code Section 401(k), the Committee shall reduce the amount of the
Before-Tax Contributions for those Highly Compensated Participants who
made the greatest percentage contribution until the separate average
actual deferral percentages for the two groups of Participants satisfy
one of the ADP tests ("Excess Deferrals").
Any Excess Deferrals resulting from this reduction process, along
with income (or loss) of the Fund allocable to those contributions
(determined in accordance with Code Section 401(k)(8) and applicable
Treasury regulations), shall be refunded by the Trustee to the affected
Highly Compensated Participants. The amount of Excess Deferrals
refunded to Participants who are subject to the family aggregation rules
of paragraph (3) below and Code Section 414(q)(6) shall be determined as
prescribed by Treasury regulations. Further, notwithstanding Section
3.03(g) below, any Matching Contributions relating to such Participants'
Excess Deferrals, along with income of the Fund allocable to such
Matching Contributions, shall be forfeited by such Highly Compensated
Participants and used to reduce future Employer Matching Contributions.
If Excess Deferrals are refunded before the close of the first
2-1/2 months following the end of the Plan Year of deferral, the
refunded amounts, including the allocable income, shall be treated as
earned and received in the taxable year in which the Excess Deferral was
made. If the Excess Deferrals refunded hereunder, together with any
Excess Contributions refunded under Section 3.03(c) below, are less than
$100.00, then all such amounts refunded, including the allocable income,
shall be treated as earned and received in the Employee's tax year of
receipt. If such Excess Deferrals are refunded after the close of the
first 2-1/2 months following the end of the Plan Year of deferral, the
refunded amounts, including the allocable income, shall be treated as
earned and taxable in the year of receipt, and the Employer shall be
subject to the 10% penalty tax of Code Section 4979.
(3) Family Aggregation Rule. For purposes of determining the
ADP of a Participant who is a 5-Percent Owner or one of the ten most
highly-paid Highly Compensated Employees, the Before-Tax Employee
Contributions and Compensation of such Participant shall include the
Before-Tax Employee Contributions and Compensation for the Plan Year of
Family Members to the extent and in the manner provided in Treasury
regulations. Such Family Members shall be disregarded as separate
employees in determining the ADP for both Participants who are Highly
Compensated Employees and for all other Participants.
(4) Limits on Individual Before-Tax Contributions. On or before
March 1st of each year, each Participant shall notify the Committee in
writing of any Before-Tax Employee Contributions made under this Plan
(and under any other plans in which he partici- pates) in excess of
$7,000 (as adjusted annually in accordance with the procedures of Code
Section 415(d)) during the Participant's taxable year ending before such
date and shall specify the amount to be refunded to him. The amount in
excess of the foregoing limit shall be included in the Participant's
gross income and shall be refunded to the Participant by the Trustee,
along with any income of the Fund allocable to such amount, not later
than April 15th immediately following the March 1st notice deadline.
The allocable income which is refunded to the Participant shall be
treated as earned and received in the taxable year in which the excess
contribution was made. Any excess Before-Tax Employee Contribution made
by a Highly Compensated Participant, even though refunded under this
subparagraph (4), shall be included in the average ADP tests of Section
3.02(c)(1).
Notwithstanding Section 3.03(g) below, any Matching Contributions
relating to such refunded deferrals shall be forfeited and used to
reduce future Employer Matching Contributions.
(d) Reversion. Before-Tax Employee Contributions made by the Employer
shall be irrevocable, subject to subsection (c) and the exceptions provided in
Section 3.08.
Any Before-Tax Employee Contributions, other than those made by mistake
of fact in excess of the amount of a Participant's election for such
contributions, which are returned to the Employer under Section 3.08, and any
earnings thereon, shall be distributed in cash to the Participant on whose
behalf the contributions were made.
(e) Allocation. Subject to Section 7.03, the Trustee shall allocate a
contribution made pursuant to this Section to the Participant's Before-Tax
Employee Contribution Account as of the Accounting Date immediately following
the date the contribution was made.
(f) Vesting. A Participant's Before-Tax Employee Contribution Account
shall be 100% nonforfeitable at all times (subject, however, to investment
gains and losses and allocable expenses).
Section 3.03 Employer Matching Contributions.
(a) Amount. For each Plan Year, the Employer may, but is not required
to, contribute an amount equal to a percentage of the total Before-Tax
Contributions made by each Participant for the Plan Year. It is anticipated
that the Employer Matching Contribution shall be equal to one-half (1/2) of
the first $200 of each Participant's Before-Tax Employee Contributions for the
Plan Year. Notwithstanding anything in the Plan to the contrary, the
Employer, through its board of directors, shall have complete discretion to
determine the amount or level of Employer Matching Contributions. In no
event, shall Employer Matching Contributions be required with respect to any
given Plan Year.
(b) Payment. The Employer Matching Contribution, if any, as
determined under subsection (a), shall be paid to the Fund periodically
throughout the year, or as otherwise determined by the Employer's board of
directors. In no event shall the contribution be made later than the due date
(including extensions) for the Employer's federal income tax return for the
taxable year which corresponds to the Plan Year for which the Employer
Matching Contribution is made.
(c) Limitations. Contributions made in accordance with this Section
are subject to the limitations of this subsection.
(1) Deductibility. In no event shall the Employer deduct, for
federal income tax purposes, Employer Matching Contributions that, when
aggregated with Before-Tax Employee Contributions, Supplemental
Contributions and Employer Fixed Contributions made to the Fund, exceed
the amount deductible for the Employer's taxable year with respect to
which the contribution is made, as determined under Code Section 404.
(2) Actual Contribution Percentage Test ("ACP test"). Each Plan
Year, the Committee shall compute:
(A) the average actual contribution percentage of all Highly
Compensated Participants who are eligible to make Before-Tax or
After-Tax Contributions under Sections 3.02 and 3.07, whether or
not any such contributions are made ("high-paid percentage"); and
(B) the average actual contribution percentage of the remaining
Participants who are eligible to make Before-Tax or After-Tax
Contributions under Sections 3.02 and 3.07, whether or not such
contributions are made ("lower-paid percentage").
Subject to the family aggregation rules of paragraph (4) below,
the actual contribution percentage ("ACP") shall be computed for each
eligible Participant as set forth in Code Section 401(m)(3) and
applicable Treasury regulations by dividing the Participant's
Compensation for the Plan Year into the sum of the Employer Matching
Contributions paid into the Plan and allocated to the Participant's
Account for the Plan Year and the After-Tax Employee Contributions made
by him pursuant to Section 3.07 for the Plan Year.
A portion or all of each Participant's Before-Tax Contributions
also may be used in the ACP calculation as long as the ADP test is met
with respect to all Before-Tax Contributions and continues to be met
following the exclusion of the Before-Tax Contributions remaining after
excluding the Before-Tax Contributions used in this ACP test. The
separate average of ADPs for the two groups of Participants identified
above must meet one of the tests set forth in Section 3.02(c) above.
This Section shall be applied to determine any excess Employer
Matching and After-Tax Contributions only after first determining any
excess Before-Tax Contributions under Sections 3.02(c)(3) and then under
Section 3.02(c)(1) and (2).
(3) Correction of ACP Test. If the separate percentages for the
two groups identified above fail to satisfy one of the tests set forth
in Section 3.03(c)(2), the Committee shall reduce pro-rata the amount of
the After-Tax Employee Contributions, if any, and the Matching
Contributions for those Highly Compensated Participants who received the
greatest percentage allocation of such contributions until the separate
average ACP for the two groups satisfy one of the tests ("Excess
Contributions"). Any Excess Contributions resulting from this reduction
process, along with income (or loss) of the Fund allocable to those
contributions (determined in accordance with Code Section 401(m)(6) and
applicable Treasury regulations), shall be paid to such Highly
Compensated Participants in the case of Matching Contributions, and
refunded to such Highly Compensated Participants in the case of
After-Tax Contributions. However, the amount of Excess Contributions
paid or refunded to Highly Compensated Participants who are subject to
the family aggregation rules of paragraph (4) below and Code Section
414(q)(6) shall be determined as prescribed by Treasury regulations.
If any such excess Matching Contributions are paid before the
close of the first 2-1/2 months following the end of the Plan Year in
which the contribution was made, the amounts paid, including the
allocable income, shall be treated as earned and received in the taxable
year in which the excess Matching Contribution was made. If the amount
of the excess Matching Contributions, together with any After-Tax
Contributions refunded hereunder and Excess Deferrals refunded under
Section 3.02(c) above, is less than $100.00, then all such amounts,
including allocable income, shall be treated as earned and received in
the Employee's tax year of receipt. If excess Matching Contributions
are paid after the close of the first 2-1/2 months following the end of
the Plan Year of contribution, any such amounts, including the allocable
income, shall be treated as earned and taxable in the year of receipt,
and the Employer shall be subject to the 10% penalty tax of Code Section
4979.
(4) Family Aggregation Rule. For purposes of determining the
ACP of a Participant who is a 5-Percent Owner or one of the ten most
highly-paid Highly Compensated Employees, the contributions included in
the ACP and Compensation of such Partici- pant shall include the same
kind of contributions and the Compensation for the Plan Year of Family
Members to the extent and in the manner provided in Treasury
regulations. Such Family Members shall be disregarded as separate
employees in determining the ACP both for Participants who are Highly
Compensated Employees and for all other Participants.
(d) Multiple Use Test. Effective with respect to Plan Years specified
in Treasury Regulations, if the high-paid average ACP computed under
subsection (c) above exceeds 125% of the lower-paid average ACP and if the
high-paid average ADP computed under Section 3.02(c) also exceeds 125% of the
lower-paid average ADP computed under that section (but in each case, the
percentages otherwise satisfy the test set forth in Section 3.02(c)), then
such contributions and deferrals shall remain in the Plan only if the
aggregate limit of the multiple use test set forth in Proposed Income Tax
Regulation Section 1.401(m)-2(b) is met. If such aggregate limit is exceeded,
then the Employer Matching Contributions and the Employee After-Tax
Contributions, or the Before-Tax Employee Contribu- tions made by or on behalf
of Highly Compensated Participants, shall be reduced pro-rata as the Committee
deems necessary in the same manner as set forth in Sections 3.02 and 3.03,
until such aggregate limit is not exceeded.
(e) Reversion. Employer Matching Contributions shall be irrevocable,
subject to subsection (c) of this Section and to the exceptions provided in
Section 3.08.
(f) Allocation. Subject to Section 7.03, Employer Matching
Contributions made under this Section shall be allocated as of each Accounting
Date within the Plan Year to and among the Employer Matching Contribution
Accounts of those Participants who elected to make and who were allocated
Before-Tax Employee Contributions.
(g) Vesting. A Participant's Employer Matching Contribution Account
shall be 100% nonforfeitable at all times (subject, however, to investment
gains and losses and allocable expenses).
Section 3.04 Supplemental Contributions.
(a) Amount. The amount of the Employer's Supplemental Contribution to
the Plan for each Plan Year shall be determined by an annual resolution of the
Employer's board of directors.
(b) Payment. The Employer's Supplemental Contribution, as determined
under subsection (a), shall be paid to the Fund not later than the due date
(including extensions) for the Employer's federal income tax return for the
taxable year of the Employer with respect to which the contribution is made.
(c) Limitation. In no event shall the Employer deduct, for federal
income tax purposes, a Supplemental Contribution to the Fund, which, when
aggregated with Employer Matching Contributions, Employer Fixed Contribution
and Before-Tax Employee Contributions made to the Fund, exceeds the amount
deductible for the Employer's taxable year with respect to which the
contribution is made, as determined under Code Section 404.
(d) Reversion. Employer Supplemental Contributions shall be
irrevocable, subject to subsection (c) of this Section and to the exceptions
provided in Section 3.08.
(e) Allocation. Subject to Section 7.03, Employer Supplemental
Contributions made under this Section shall be allocated as of the last day of
the Plan Year to and among the Employer Supplemental Contribution Accounts of
those Participants who are Employees of the Employer on the last day of the
Plan Year and who have completed 1,000 Hours of Service during the Plan Year
in question.
(1) Allocations before January 1, 1994. Prior to January 1,
1994, Employer Supplemental Contributions shall be allocated in
proportion to the Compensation for the Plan Year of each such
Participant as compared to the total Compensation of all such
Participants for the Plan Year.
(2) Allocations after December 31, 1993. After December 31,
1993, Employer Supplemental Contributions shall be allocated in
proportion to the amount of Before-Tax Employee Contributions of each
such Participant for the Plan Year compared to the total Before-Tax
Employee Contributions of all such Participants for the Plan Year;
provided, that in no event shall the ratio of the amount allocated to
the Supplemental Contributions Account of any Highly Compensated
Employee to such Highly Compensated Employee's Compensation for the Plan
Year exceed the greater of:
(A) 125% of the contribution percentage [as defined in
Code Section 401(m)(3)] for all non-Highly Compensated Employees
who are eligible for an allocation for the Plan Year, and
(B) the lesser of 200% of the contribution percentage for
such non-Highly Compensated Employees, or such contribution
percentage for all such non-Highly Compensated Employees plus two
percentage points.
Allocations made under this Section 3.04 after December 31, 1993 shall
be included in the multiple use test set forth in Section 3.03(d).
Should the limitation in Section 3.03(d) be exceeded with respect to any
Plan Year, the allocations to Highly Compensated Employees of
contributions under this Section 3.04 shall be reduced to the extent
necessary to comply with such limitation.
In the Plan Year of a Participant's retirement, death, disability or
authorized leave of absence, the requirement for employment with the Employer
on the last day of the Plan Year shall be waived, but only if the Participant
completes at least 1,000 Hours of Service in and has some Compensation for the
Plan Year.
(f) Vesting. Subject to investment gains and losses and allocable
expenses, a Participant's Employer Supplemental Contribution Account shall
become 100% nonforfeitable upon the Participant's attainment of Normal
Retirement Age, upon his disability as provided in Section 5.02, upon his
death prior to termination of employment with the Employer or upon his
completion of five Years of Service. In all other cases, commencing January
1, 1994, a Participant's Employer Supplemental Account shall become 100%
nonforfeitable, subject to the provisions of Section 10.01(d) if applicable,
in accordance with the following schedule:
Percent Vested in Employer Supplemental
Participant's Years of Service Contributions:
less than 1 year 0%
at least 1 year but less than 2 years 20%
at least 2 years but less than 3 years 40%
at least 3 years but less than 4 years 60%
at least 4 years but less than 5 years 80%
5 or more years 100%
Any forfeiture that occurs shall occur in the manner specified by
Section 7.01(c) and shall be used to reduce future Employer Supplemental
Contributions.
Section 3.05 Employer Fixed Contributions.
(a) Amount. The amount of the Employer Fixed Contribution shall be
determined by the Company. Such determination shall be made no later than the
last day of each Plan Year.
(b) Payment. The Employer Fixed Contribution, if any, as determined
under subsection (a), shall generally be paid to the Plan as of the last day
of the Plan Year. In no event shall the Employer Fixed Contribution be paid
to the Plan later than the due date (including extensions) for the Employer's
federal income tax return for the taxable year for which such contribution is
made.
(c) Limitation. In no event shall the Employer deduct, for federal
income tax purposes, an Employer Fixed Contribution, which, when aggregated
with Employer Matching Contributions, Before-Tax Employee Contributions and
Supplemental Contributions, exceeds the amount deductible for the Employer's
taxable year with respect to which the contribution is made, as determined
under Code Section 404.
(d) Allocation. Subject to Section 7.03, the Employer Fixed
Contribution shall be allocated as of the last day of the Plan Year to and
among the Accounts of those Participants who are employees of the Employer on
the last day of the Plan Year and who have completed at least 1,000 Hours of
Service during the calendar year ending with or within such Plan Year. The
Employer Fixed Contribution shall be allocated equally among the eligible
Participants.
(e) Vesting. A Participant's Employer Fixed Contribu-
tions Account shall be 100% nonforfeitable at all times (subject, however, to
investment gains and losses and allocable expenses).
Section 3.06 Rollover Contributions and Direct Plan-to-Plan Transfers.
(a) Eligibility. Any Employee may pay to the Fund, or arrange for the
direct transfer to the Fund from another qualified retirement plan, provided
that in each case the Plan Administrator agrees, a contribution of an amount
that qualifies for rollover treatment under Code Section 402(c) or
408(d)(3)(A)(ii).
(b) Payment. An Employee's rollover contribution to the Plan, other
than a direct transfer, must be made to the Fund not later than the 60th day
after the day on which he received the distribution being rolled over.
(c) Limitation. An Employee may not roll over to the Plan: (1) a
contribution which exceeds in value the amount received (or the proceeds of
the sale of property received) in a distribution described in paragraph (a);
(2) any amounts representing non-deductible employee contributions made under
any other plan and in which the Employee has other than a zero income tax
basis; (3) any amount representing a lifetime annuity payment or a periodic
distribution over a period of ten years or more as described in Code Section
402(c)(4)(A); or (4) any amount that is a required distribution under Code
Section 401(a)(9).
(d) Reversion. Rollover contributions may in no event revert to the
Employer.
(e) Allocation. The Trustee shall allocate a contribution made
pursuant to this section to a Rollover Contribution Account as of the
Accounting Date immediately following the date the contribution was made.
Prior to such Accounting Date, or if the Employee has not yet become a
Participant under the Plan, any such contribution shall be allocated by the
Trustee to a temporary account, and as of the next Accounting Date, or if
later, as soon as the Employee does become a Participant, any such amount in
this temporary account shall become a regular Rollover Contribution Account
which shall be part of the Participant's Account.
(f) Vesting. A Participant's Rollover Contribution Account shall be
100% nonforfeitable at all times (subject, however, to investment gains and
losses and allocable expenses).
(g) Investment. An Employee may direct the investment of his
temporary rollover account and his Rollover Contribution Account in the manner
described in Section 4.01, even if he has not yet become a Participant in
accordance with Article 2.
Section 3.07 No After-Tax Employee Contributions. After-tax contributions by
Participants are no longer permitted for Plan Years commencing after December
31, 1990. Any after-tax Employee contributions made in prior Plan Years shall
be maintained in frozen accounts and shall be payable in accordance with the
applicable Plan provisions in the same manner as nonforfeitable amounts
derived from Employer contributions.
Section 3.08 Reversion of Contributions.
(a) Except as specifically provided in this Section 3.08, Section
3.02(d) and Section 3.03(e), all contributions made by the Employer shall be
irrevocable. All amounts paid to the Fund by the Employer shall be used and
applied for the exclusive benefit of Participants and Beneficiaries; provided,
however, that payment of administrative expenses of the Fund with assets of
the Fund shall be considered payment for the exclusive benefit of Participants
and Beneficiaries.
(b)(1) Notwithstanding subsection (a) or any other provision of the
Plan to the contrary, a contribution made to the Plan by the Employer may be
returned to the Employer if: (A) such contribution was made by the Employer
by mistake of fact, provided that the contribution is returned to the Employer
within one year after payment of the contribution; (B) subsequent to the
original effective date of the Plan, the Commissioner of Internal Revenue or
his representative issues a determination letter stating that the Plan does
not initially qualify under Section 401(a) of the Code, provided that all
contributions to which the letter relates are returned to the Employer within
one year after the denial of initial qualification of the Plan; or (C) the
Plan is terminated and there is a balance in a special suspense account
created under Section 7.03, in which case such balance, which may include
forfeitures, may be returned to the Employer.
(2) Employer contributions to the Plan are contingent on the
deductibility thereof for federal income tax purposes. Notwithstanding any
other provision of the Plan to the contrary, to the extent that a deduction
claimed by the Employer on its federal income tax return under Section 404 of
the Code for a contribution to the Plan is subsequently denied, in whole or in
part, the portion of the contribution for which the deduction is denied may be
returned to the Employer.
(3) The amount which may be returned to the Employer is the excess of
(A) the amount contributed by the Employer over (B) the amount that would have
been contributed if there had been no mistake in fact or a mistake in
determining the amount of the federal income tax deduction. Earnings
attributable to the excess contribution may not be returned and any losses
that are attributable to the excess contribution will reduce the amount that
may be returned to the Employer.
The return to the Employer of the amount involved must be made within
one year of the mistaken payment of the contribution, the date of denial of
qualification, or disallowance of the deduction, whichever is applicable.
ARTICLE 4. INVESTMENT AND VALUATION OF ACCOUNTS
Section 4.01 Investment Elections.
(a) Investment Options. A Participant who is in active employment of
the Employer, or who ceases to be so employed but elects a deferred
distribution of his Account, shall invest his Account among such investment
funds as are made available from time to time by the Trustee at the direction
of the Plan Administrator. The Plan Administrator from time to time may
change the available investment funds. In such event, the Plan Administrator
shall give reasonable notification to Participants of such change. A
Participant may invest all or part of his Account in any one or more of the
funds so established, but only in whole increments of five percent of the
value of such Account.
(b) Method of Election. Each Participant shall indicate his initial
election for investment of his Account by filing a written designation with
the Plan Administrator on a form provided by the Plan Administrator.
Thereafter, any changes shall be effected as permitted under procedures
established by the Trustee and the Plan Administrator.
(c) Frequency of Election.
(1) Future Contributions. With respect to future contributions,
a Participant who is actively employed by the Employer may change his
investment election at such times (not less frequently than once per
calendar quarter) as shall be determined and communicated to
Participants by the Plan Administrator. The new election shall become
effective with respect to contributions received by the Trustee after
receipt of the Participant's new election. In the absence of a new
election, future contributions shall be invested in the available funds
in the same proportions as specified in the Participant's most recent
election.
(2) Existing Accounts -- Interfund Transfers. With respect to
his existing Account balance, a Participant who is actively employed by
the Employer, or who ceases to be so employed but elects a deferred
distribution of his Account, may change his election and request a
transfer of monies among the available funds as of the first day of each
calendar quarter and at such additional times as shall be determined by
the Plan Administrator. The procedures for transferring monies among
the available investment funds shall be determined by the Trustee and
the Plan Administrator and shall be communicated to Participants. Such
transfers generally shall become effective on the date specified by the
Participant, subject to such limitations as may be imposed by the
various investment funds and to the notice requirements of the Trustee.
However, in the sole discretion of the Plan Administrator any transfer
may be made effective at such later date as is appropriate to effectuate
the Participant's new election without incurring significant losses or
transaction costs. The Plan Administrator shall direct the Trustee to
transfer monies or other property from the appropriate fund(s) to the
other fund(s) as may be necessary to appropriately reflect the aggregate
transfer transactions after the Plan Administrator has caused the
necessary entries to be made in the Participants' Accounts in the funds
and has reconciled offsetting transfer elections, in accordance with
uniform rules established by the Plan Administrator.
(d) Effect of Investment Directions. Except as provided by ERISA
Section 404(c) and the regulations thereunder, the Trustee shall have no
fiduciary responsibility with respect to the selection of the Plan's
investment funds, and neither the Employer, the Trustee, nor any other
fiduciary with respect to the Plan shall have any liability in connection with
any losses that are the direct and necessary result of the investment choices
made by Participants. The Trustee's only responsibility shall be with respect
to the individual investments of any investment funds that are offered and
operated by the Trustee and made available for Participant investments under
the Plan, and which are not controlled by an independent investment manager.
The only responsibility of the Employer shall be to review periodically, in
its capacity as Plan Administrator, the performance of the investment funds
made available under the Plan and to change the available funds offered when
appropriate.
(e) Effect of Distributions. A loan, hardship withdrawal or
in-service distribution shall be disbursed pro-rata from the investment fund
or funds in which the Participant's Account is invested. However, no amount
shall be disbursed from that portion, if any, of the Participant's Account
which is invested in guaranteed investments contracts issued by Maccabees Life
Insurance Company until all amounts in the other investment funds in which the
Participant's Account is invested have been disbursed. Loan repayments shall
be allocated to the investment funds in the same manner as the current
contributions being made to the Participant's Account.
Section 4.02 Valuations.
(a) Frequency of Valuations. The Committee shall direct the Trustee
to value the Fund at least annually or on regular Accounting Dates specified
by the Committee.
(b) Valuation at Fair Market Value. All assets shall be valued by the
Trustee on the basis of fair market value.
(c) Adjustment for Earnings, Gains, Expenses and Losses. Each
Participant's Account shall be adjusted as of each Accounting Date for
earnings, gains, expenses and losses with respect to the investments of that
Account, but taking into account, in a manner determined to be equitable by
the Trustee (with the consent of the Committee), any contributions to or
distributions from such Account since the immediately preceding Accounting
Date.
General expenses of the Plan that are not attributable to any particular
fund shall be allocated among Participants' Accounts in proportion to the
value of each such Account on the immediately preceding Accounting Date, but
again taking into account contributions to and distributions from such
Accounts since the immediately preceding Accounting Date, as determined by the
Trustee (with the consent of the Committee).
(d) Allocation of Contributions. Finally, after the valuation and
adjustment procedures of subsections (b) and (c) of this Section,
contributions made since the last Accounting Date shall be allocated to the
respective Accounts of Participants in accordance with the procedures
specified in Article 3.
Section 4.03 Statements of Value of Participants' Accounts.
The Committee shall, not less frequently than annually, deliver to each
Participant a statement setting forth the value of the Participant's Account,
including a breakdown of the various sub-accounts.
ARTICLE 5. RETIREMENT AND OTHER TERMINATION OF EMPLOYMENT
Section 5.01 Retirement.
A Participant may retire as of the first day of the month coincident
with or next following his 65th birthday, which day shall be called the
Participant's Normal Retirement Date. A Participant who continues to be
actively employed by the Employer after his Normal Retirement Date shall
continue to be a Participant in the Plan as long as he remains so employed by
the Employer. A Participant who attains Normal Retirement Age shall be 100%
vested in his Account, and if he retires under this Section, he shall be
entitled to distribution of his Account balance at the time and in the manner
provided by Article 6.
Section 5.02 Disability.
A Participant who is determined by the Committee to be under a Total and
Permanent Disability, as defined in this Section 5.02, shall be considered to
have taken a disability retirement as of the date the Committee so determines
the Participant to be Totally and Permanently Disabled. "Total and Permanent
Disability" and "Totally and Permanently Disabled" means a physical or mental
condition of a Participant resulting from bodily injury, disease or mental
disorder which renders him incapable of engaging in any occupation or
employment for wage or profit.
Total and Permanent Disability shall not include any condition arising
by reason of the Participant's (i) engagement in a felonious act, (ii)
self-infliction of an injury, or (iii) performance of military service.
Disability of a Participant shall be determined by a licensed physician chosen
by the Committee. Standards for the determination of disability shall be
uniformly applied to all Participants. A Participant who becomes disabled as
provided in this Section shall be entitled to distribution of 100% of his
Account balance at the time and in the manner provided by Article 6.
Section 5.03 Death and Designation of Beneficiary.
If a Participant dies prior to his termination of employment with the
Employer, the entire balance of such Participant's Account shall become
payable to the Participant's designated Beneficiary. Every Participant's
designation shall specify the share to be received by each Beneficiary and
shall indicate how any remaining balance is to be paid in the event of the
death of the designated Beneficiary or Beneficiaries. Such designation of a
Beneficiary may be changed from time to time by the Participant by filing a
new designation with the Committee.
If any Participant fails to designate a Beneficiary, or if all
Beneficiaries predecease the Participant, any balance in the Account shall be
paid to the Participant's surviving spouse, or if his spouse does not survive,
then to the Participant's estate. If a Beneficiary survives the Participant
but fails to collect all amounts payable on behalf of the Beneficiary from the
Participant's Account, the balance shall be paid to the Beneficiary's estate,
unless specified otherwise by the Participant in his Beneficiary designation.
A Participant's designation of Beneficiary shall be made on a form
prescribed by, provided by, and filed with the Committee. In any case where
the Participant is married and has designated a primary Beneficiary other than
his spouse, the Participant's spouse must sign the designation form which
either (a) must designate a specific beneficiary that cannot be changed
without subsequent spousal consent, or (b) must expressly permit subsequent
designations by the Participant without any requirement of further consent by
the spouse. In each case, the spouse's written consent must acknowledge the
effect of the Participant's designation of a beneficiary other than the
spouse, and the spouse's signature must be witnessed by a notary public.
Distribution of 100% of the deceased Participant's Account balance to
his Beneficiary shall be made at the time and in the manner provided by
Article 6.
Section 5.04 Termination of Employment prior to Retirement, Disability or
Death.
A Participant who terminates employment with the Employer, and who is
not entitled to distribution of his nonforfeitable Account balance under any
previous Section of this Article 5, shall be entitled to distribution of such
balance at the time and in the manner provided by Article 6.
ARTICLE 6. DISTRIBUTIONS
Section 6.01 Date of Distribution. Following a Participant's termination of
employment due to retirement, disability, death, or otherwise, distribution of
benefits from such Participant's Account shall be made to the Participant (or
to his Beneficiary) as of the date elected, or deemed elected, under Section
6.02.
Section 6.02 Distribution Options.
(a) Notice of Distribution Options. Each Participant (or in the case
of the death of a Participant, each Beneficiary) entitled to receive benefits
under the Plan shall be notified by the Plan Administrator of the distribution
options available. This notification shall be made at such time as is
required by law, or in the absence of applicable law, at such time as the Plan
Administrator deems practical under the circumstances. Along with such
notification, the Plan Administrator shall provide a form on which the
Participant (or Beneficiary) may apply for benefits and elect a distribution
option.
(b) Election. Subject to the restrictions in paragraph (d) below,
each Participant shall be entitled to elect, on a form prescribed by and filed
with the Plan Administrator prior to the commencement of benefits, the
distribution option by which the nonforfeitable portion of his Account shall
be distributed and the date on which payments should be made (subject,
however, to the limitations in (c) below and the cash-out rules in paragraph
(e) below). In the case of the death of a Participant, and subject to the
restrictions in paragraph (d) below, the Participant's Beneficiary shall be
entitled to indicate on a form prescribed by and filed with the Plan
Administrator that Beneficiary's election as to the date of distribution of
the deceased Participant's nonforfeitable Account balance. A Participant or
Beneficiary may elect only one distribution option, except that where a direct
rollover of less than the full nonforfeitable balance of the Account is
elected pursuant to paragraph (c)(2) below, another option for distribution of
the remaining balance may be made. The Plan Administrator, upon receipt of
forms filed pursuant to this section, shall direct the Trustee as to the time
and manner of distribution.
(c) Options. The following shall be the distribution options
available to a Participant (or his Beneficiary) who is entitled to receive
benefits, except as otherwise limited in paragraphs (c)(2) and (d) below:
(1) A single lump sum payment;
(2) On and after January 1, 1993, a direct rollover of all or a
portion of the Participant's nonforfeitable Account balance as specified
in Section 6.08.
Subject to the restrictions in paragraph (d) below and the cash-out rules in
paragraph (e) below, a Participant who has separated from employment may
elect, pursuant to rules established by the Committee, to defer distribution
of the nonforfeitable portion of his Account balance to any subsequent date.
(d) Restrictions. Distributions under this Article 6 shall be subject
to the following restrictions where applicable:
(1) Each Participant's Account balance must be distributed to
him in full no later than the April 1st following the calendar year in
which he attains age 70-1/2 ("Required Distribution Date"), except that
the Required Distribution Date of any Participant (other than a
5-Percent Owner described in the next sentence) who attained age 70-1/2
prior to January 1, 1988 shall be the April 1st following the calendar
year in which he retires; any Participant who at any time during or
after the Plan Year in which he attains age 66-1/2 is or becomes a
5-Percent Owner shall have, as his Required Distribution Date, the April
1st following the calendar year in which he attains age 70-1/2.
(2) If the Participant dies after his Required Distribution Date
but before his entire Account balance has been distributed, the
remaining amount shall be distributed as soon as possible to the
Participant's designated Beneficiary in a single lump sum payment. If a
Participant dies prior to his Required Distribution Date and before
distribution of his Account balance, or if the Participant's surviving
spouse dies before distribution of the Account balance has been made to
such surviving spouse, then the entire nonforfeitable Account balance
must be distributed to the Participant's designated Beneficiary by
December 31 of the year containing the fifth anniversary of the
Participant's death (or the death of his surviving spouse), except that
where the Beneficiary is the Participant's surviving spouse, the
required distribution date need not be earlier than December of the year
in which the Participant would have attained age 70-1/2.
(3) Notwithstanding paragraph (1) or (2) above or any other
provision of the Plan to the contrary, in no event shall distribution of
a Participant's Account be made later than the 60th day after the close
of the Plan Year in which occurs the latest of the following events:
(A) the date on which the Participant attains age 65, (B) the date which
is the 10th anniversary of the day the Participant commenced
participation in the Plan, (C) the date the Participant terminates
employment with the Employer, or (D) the date specified by the
Participant in his election made pursuant to this Section 6.02.
(4) In no event shall any distribution from a Participant's
Account, other than a hardship distribution under Section 6.05 or an
in-service distribution under Section 6.06, be made earlier than: (A)
the Participant's retirement, death, disability, separation from
service, or attainment of age 59-1/2; (B) the termination of the Plan
pursuant to Section 10.02 without establishment of a successor plan; (C)
the date of sale by the Employer of substantially all of its assets to a
corporation in whose employment the Participant continues; or (D) the
date of sale by the Employer of a subsidiary in whose employment the
Participant continues.
(5) In no event shall any provision of this Article 6 be
construed so as to allow any Participant to create a death benefit which
is more than incidental within the meaning of Treasury Regulation
Section 1.401(a)-14(b)(3).
(e) Cash-Outs. Notwithstanding the Participant's (or the
Participant's Beneficiary's) election to the contrary, if a Participant's
nonforfeitable Account balance at the time of distribution does not exceed,
and at the time of any prior distribution did not exceed, the amount of
$3,500, the Plan Administrator shall make an immediate lump sum distribution
to a Participant, or in the case of a Participant's death, to the
Participant's Beneficiary, or to such other plan, account or annuity as the
Participant or Beneficiary may direct under Section 6.02(c)(2) above, of the
Participant's entire nonforfeitable Account balance, provided that the
distribution is made no later than the close of the second Plan Year following
the Plan Year in which the Employee's participation in the Plan terminates.
In no event shall any Participant whose nonforfeitable Account balance
exceeds, or at the time of any prior distribution exceeded, the amount of
$3,500 be required, without the written consent of the Participant, to take a
distribution of his Account prior to his attainment of Normal Retirement Age.
Section 6.03 Valuation of Accounts, Forfeitures, and Subsequent
Distributions.
(a) Valuation of Account. Following the date of a Participant's
retirement, disability, death, or other termination of employment, the Plan
Administrator shall direct a valuation of the Fund for purposes of determining
the value of the Participant's Account and the forfeitable portion of such
Account, if any. The valuation shall be made as of the Accounting Date
coinciding with or immediately following the Participant's last day of
employment, unless distribution of the Account is to be deferred for any
reason, in which case the valuation shall be made as of the Accounting Date
coinciding with or immediately preceding the date of distribution. A
Participant who has been determined by the Committee to be Totally and
Permanently Disabled may request an immediate distribution of 50% of his
nonforfeitable Account balance as of the immediately preceding Accounting
Date. Such partial distribution shall be made as soon as practicable
following the Committee's receipt of the Participant's request and the balance
of the Participant's nonforfeitable Account (as adjusted for the partial
distribution) shall be distributed pursuant to Section 6.02.
(b) Forfeitures. The forfeitable portion of the retired, disabled,
deceased, or terminated Participant's Account, if any, shall be forfeited and
returned to the Fund (for allocation as provided in Article 3) at the time and
in the manner prescribed under the applicable service rules in Section 7.01.
(c) Subsequent Distributions. In the case of a Participant who,
pursuant to Article 3, is entitled to any allocations of Employer
contributions to his Account for the Plan Year in which he retires, becomes
disabled, or dies, and who receives a lump sum distribution for a date prior
to the date on which such allocations are determined and made, the Trustee, at
the direction of the Plan Administrator, shall either delay the distribution
until such time as all final allocations have been determined and made, or
make a separate distribution to the Participant (or to his Beneficiary in the
case of death) of the nonforfeitable amount finally allocated to the
Participant's Account for the Plan Year. Any separate distribution shall be
made in a single payment as soon as practical, as determined by the Plan
Administrator and the Trustee, after the final allocation.
Section 6.04 Loans to Participants.
(a) General Rules. In addition to the powers granted under Article 9,
the Committee shall have the power to establish a Participant loan program and
to direct the Trustee to make loans to Participants from their vested
Accounts. Subject to the special rules provided in subsection (d) below, the
general rules in the following paragraphs apply to Participant loans.
Any application by a Participant to borrow money from his Account shall
be made by written request to the Committee, on a form prescribed and provided
by the Committee. If, after appropriate investigation, the Committee approves
a loan application, the Committee shall direct the Trustee to withdraw from
the Participant's Account and disburse to the Participant by check the amount
requested and approved, but only upon the following terms and conditions:
(1) The loan shall be evidenced by a promissory note which shall
be in a form prescribed by the Committee;
(2) The loan shall be for a principal amount which, when added
to the outstanding balance of any other loan or loans of the Participant
from the Plan and from any other tax-qualified retirement plan of the
Employer (including plans of other employers required to be aggregated
with this Plan pursuant to Code Section 414(b), (c), or (m)) does not
exceed the lesser of:
(A) $50,000, reduced by the excess (if any) of the highest
outstanding balance of the Participant's Plan loans during the
one-year period ending on the day before the date on which the
loan is to be made, over the outstanding balance of Plan loans on
the date on which such loan is to be made, or
(B) 50% of the Participant's vested Account balance.
(3) The loan shall bear a reasonable rate of interest,
comparable to that being charged by local financial institutions on
loans of a similar character;
(4) The loan shall be for a prescribed term of no longer than
five years, unless the loan is for the purchase of the Participant's
principal residence;
(5) The loan shall provide for specific terms of repayment, in
substantially equal installments of principal and interest, made at
least quarterly, which terms the Committee may request the Employer to
implement by appropriate withholding from the Participant's regular
salary or wages;
(6) The loan shall be secured, notwithstanding any other
provision of the Plan to the contrary, by a pledge of the Participant's
Account balance as of the date of the loan, or if the Committee
otherwise determines to be appropriate, shall be secured by other
collateral comparable to that customarily required by local financial
institutions, and by an irrevocable wage assignment if permitted by
local law;
(7) The loan shall be subject to the availability of cash in the
Fund for making loans.
(b) Treatment of Repayments. For purposes of the allocation of
earnings, gains and losses of the Fund and the determination of the balance of
a Participant's Account on any Accounting Date under Article 4, a loan under
this Section shall be treated as a nontaxable withdrawal from the
Participant's Account on the date the loan proceeds are disbursed to the
extent of the principal amount borrowed, and each payment on the loan shall be
treated as an addition to the Account on the date received to the extent such
payment constitutes repaid principal. Interest paid by a Participant on any
loan shall be credited directly to the Account of that Participant.
(c) Default. The Committee may direct the Trustee to take any action
which may be necessary or appropriate to permit the Committee to enforce
collection of an unpaid loan. A loan shall be deemed to be in default upon
the Participant's failure to timely make any scheduled repayment of principal
or interest and expiration of any reasonable grace period that may be
permitted by the Committee and allowed by law. The Trustee, at the direction
of the Committee, shall report the amount of any defaulted loan as a taxable
distribution to the Participant at the time and to the extent required by law.
Upon the occurrence of any event permitting a distribution from the
Plan, any balance of the loan which still remains unpaid (including any unpaid
interest due) shall be recharacterized as a distribution, deducted from the
Participant's Account balance and reported by the Trustee as taxable income to
the Participant, if not previously reported as a taxable distribution pursuant
to the preceding sentence.
(d) Special Rules. In addition to the terms and conditions provided
in the preceding subsections of this Section, loans to Participants shall be
subject to the following terms and conditions:
(1) All loans under the Plan shall be made strictly in
accordance with the provisions of this Section and the specific
Participant loan provisions described in Section 2550.408b-1(d) of the
Department of Labor Rules and Regulations for Fiduciary Responsibility,
and any additional rules which may be adopted by the Committee;
(2) Loans shall be available to all Participants on a reasonably
equivalent basis in a uniform and nondiscriminatory manner, although the
Committee may make distinctions on the basis of credit-worthiness of the
Participant, the liquidity of the Participant's Account and of the Fund
at the time of receipt of the Participant's loan application, and such
other factors as the Committee deems relevant in protecting the
interests of all Participants in the Fund;
(3) The loan shall be disbursed only in whole increments of
$100, with a minimum loan of $1,000;
(4) The loan proceeds need not be disbursed to the Participant
by the Committee prior to the expiration of 30 days from the date of
receipt by the Committee of the Participant's loan application;
(5) The loan shall be subject to the ability of the Trustee to
liquidate prior investments directed by the Participant for his Account,
and all costs of liquidating the Account to cash for purposes of making
the loan; and
(6) No more than one loan may be outstanding to a Participant at
any time.
Section 6.05 Distribution Due to Hardship.
(a) Withdrawal Procedure. A Participant may apply for a distribution
because of a hardship (as defined in subsection (b) below) by filing a written
application with the Committee. The amount of any hardship distribution shall
be limited to the least of (1) the amount which the Committee determines is
required to relieve the financial need caused by the hardship, (2) the
Participant's Before-Tax Employee Contribution Account balance, including the
accumulated earnings thereon as of December 31, 1988, if any, plus the
cumulative total of the Participant's Before-Tax Employee Contributions to the
Plan after December 31, 1988, or (3) the Participant's current nonforfeitable
Account balance.
The amount approved by the Committee for withdrawal due to hardship
shall be disbursed as soon as is practicable following the end of the calendar
month in which the Committee approved the hardship withdrawal request.
However, a partial distribution of the amount approved as a hardship
withdrawal may be made prior to the date provided in the preceding sentence,
if requested by the Participant. Such partial distribution shall be equal to
the lesser of (i) 50% of the Participant's nonforfeitable Account balance as
of the immediately preceding Accounting Date, or (ii) the amount approved as a
hardship withdrawal. A partial distribution shall be disbursed as soon as is
practicable following the Committee's receipt of the Participant's written
request for such partial distribution and the balance, if any, of the approved
hardship withdrawal shall be disbursed as provided in the first sentence of
this paragraph.
(b) Hardship Definition. A hardship shall be considered to exist only
if (1) the Participant has an immediate and heavy financial need for the
funds, and (2) the hardship distribution requested is necessary to satisfy
such financial need.
(c) Financial Need. Subsection (b)(1) shall be satisfied where the
requested distribution is on account of:
(1) Medical expenses described in Code Section 213(d) that are
incurred by the Participant, the Participant's spouse, or any dependents
of the Participant (as defined in Code Section 152) and are not covered
by any medical program provided by the Employer;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) The payment of tuition and related education fees for the
next 12 months of post-secondary education for the Participant, his
spouse, children, or dependents (as defined in Code Section 152);
(4) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the Participant's
residence;
(5) Such other conditions that the Committee finds justify an
immediate and heavy financial need under rules published from time to
time by the Internal Revenue Service.
(d) Necessity. Subsection (b)(2) shall be deemed satisfied if, and
only if, all of the following conditions are satisfied:
(1) The Participant already has obtained all distributions,
other than hardship distributions and all nontaxable loans that
currently are available under all plans maintained by the Employer based
on his current credit situation;
(2) The Participant agrees, in writing, to suspend all
Before-Tax and any After-Tax Employee Contributions under this Plan and
any other plan of the Employer for a period of 12 months after receipt
of the hardship distribution; and
(3) The Participant further agrees, in writing, to a reduction
under this Plan and any other plans maintained by the Employer, of the
otherwise applicable limit (under Code Section 402(g)) on his Before-Tax
Employee Contributions for his taxable year following the taxable year
of the hardship distribution by an amount equal to his Before-Tax
Employee Contributions made to this Plan and any other plan of the
Employer in the taxable year of the hardship distribution.
(e) Determination of Hardship. A Participant's request for a hardship
distribution shall be accompanied or supplemented by such written evidence as
the Committee may reasonably request. The Committee, in its discretion, may
grant a request for a hardship distribution and may direct the Trustee to
permit such Participant to make a withdrawal if, in its discretion, the
Committee finds, based on all relevant facts and circumstances, that a
condition of hardship as defined above exists. In making its determinations,
the Committee shall adopt and follow uniform and non-discriminatory rules and
its decisions shall be final and binding.
(f) Costs. Any distribution pursuant to this Section shall be subject
to all costs of liquidating the Account, including but not limited to early
withdrawal penalties, brokerage fees, market value adjustments, and similar
charges.
Section 6.06 In-Service Distributions.
A Participant who has attained age 59-1/2 may request a distribution of
all or any portion of his nonforfeitable Account balance. A request for an
in-service distribution under this Section 6.06 shall be made in writing to
the Committee. A distribution so requested and approved by the Committee
shall be made as soon as practicable following the end of the calendar month
in which the Committee received the distribution request.
Section 6.07 Premature Distributions.
(a) General Rule. Any distribution made to a Participant prior to his
attainment of age 59-1/2, for any reason other than one described in
subsection (b) of this Section, shall be subject to the 10% penalty tax of
Code Section 72(t).
(b) Exceptions. The following distributions shall not be subject to
the 10% penalty tax described above:
(1) Any distribution made to a Beneficiary (or to the estate of
the Participant) on or after the death of the Participant;
(2) Any distribution made on account of the Participant's
disability within the meaning of Code Section 72(m)(7);
(3) Any distribution to the Participant after his separation
from service on or after attainment of age 55;
(4) Any distribution which is part of a series of substantially
equal periodic payments, made at least annually for the life (or life
expectancy) of the Participant or the joint lives (or joint life
expectancies) of such Participant and his Beneficiary, unless the
periodic payments are subsequently modified (other than by reason of the
Participant's death or disability) before the Participant reaches age
59-1/2 or at any time after that age but within the 5-year period
beginning with the date of the first payment, in which case the penalty
tax shall apply retroactively from the first payment;
(5) Any distribution made to the Participant (other than a
distribution described in (1) to (4) above) to the extent such
distribution does not exceed the amount allowable as a deduction under
Code Section 213 to the Participant for amounts paid during the taxable
year for medical care (determined without regard to whether the
Participant itemizes deductions for such taxable year);
(6) Any distribution to an alternate payee pursuant to a
qualified domestic relations order (within the meaning of Code Section
414(p)(1)); or
(7) Any distribution made to cure an excess Before-Tax Employee
Contribution or Employer Matching Contribution in accordance with the
procedures of Section 3.02(c) or 3.03(c).
Section 6.08 Distributions to Alternate Payees. In the event that a
qualified domestic relations order as defined in Code Section 414(p) ("QDRO")
is issued with respect to a Participant, any alternate payee as defined in
Code Section 414(p)(8) who is designated in the QDRO may elect to receive the
portion of the Participant's account awarded to him under the QDRO in an
immediate single lump sum payment. If the alternate payee elects such option,
payment shall be made as soon as administratively feasible after the Plan
Administrator has approved the QDRO, even though the Participant may not be
entitled to a concurrent Plan distribution under the provisions of Article 5.
If the alternate payee does not elect the immediate payment option, the
benefit awarded to him under the QDRO shall be paid to the alternate payee
when the Participant reaches his earliest retirement age (as defined in Code
Section 414(p)(4)) or when the Participant otherwise first becomes entitled to
a distribution under the terms of the Plan. Notwithstanding the preceding
sentence, if the portion of the Participant's account awarded to the alternate
payee has a present value of $3,500 or less, payment to the alternate payee
automatically shall be made in an immediate lump sum payment.
Section 6.09 Direct Rollovers after 1992.
(a) Application. This section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that otherwise would limit a distributee's election under the Plan, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a
direct rollover.
(1) Notice Requirement. Except as provided in paragraph (2), a
distribution shall not be made less than 30 days nor more than 90 days
after the distributee is given notice of the right to elect a direct
rollover, as specified in Section 1.411(a)-11(c) of the Income Tax
Regulations.
(2) Waiver of Notice. If a distribution is one to which
sections 401(a)(11) and 417 of the Code do not apply, such distribution
may commence less than 30 days after the notice required under Section
1.411(a)-11(c) of the Income Tax Regulations is given, provided that:
(A) The Plan Administrator clearly informs the distributee
that the distributee has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular
distribution option), and
(B) the distributee, after receiving the notice,
affirmatively elects a distribution.
(b) Definitions.
(1) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the balance to
the credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a series
of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or
the joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period of ten
years or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
employer securities).
(2) Eligible retirement plan: 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 plan described in Section 403(a) of the Code, or a
qualified trust 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
individual retirement annuity.
(3) Distributee: 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 the 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.
(4) Direct rollover: A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
ARTICLE 7. SPECIAL PROVISIONS
Section 7.01 Service Rules.
(a) Includible Service. Subject to the rules for crediting such
service, an Employee's Eligibility Service and Years of Service may include
periods during which the Employee was:
(1) Employed by the Employer in a category of employees excluded
from the Plan;
(2) Employed by an employer which is a member of a controlled
group of corporations (as defined in Code Section 1563(a) without regard
to Subsections (a)(4) and (e)(3)(C)) which includes the Employer, by an
employer which is a trade or business under common control (as defined
in Code Section 414(b) and (c)) with the Employer, or by an employer
which is part of an affiliated service group (as defined in Code Section
414(m)(2) and (5)) including the Employer;
(3) A leased employee (as defined in Code Section 414(n)(2)) who
performed services for the Employer, to the extent provided by Code
Section 414(n) and the regulations thereunder;
(4) Employed by a predecessor employer of the Employer, the plan
of which predecessor is the Plan maintained by the Employer; and
(5) Employed by a predecessor employer of the Employer, even
though the Plan is not the plan maintained by the predecessor employer,
but only if service with such predecessor employer is required to be
included in the individual's Year of Service by regulations under Code
Section 414(a)(2).
(b) Years of Service. An Employee shall not lose Years of Service
credit in any of the following situations:
(1) the Employee temporarily separates from employment but
returns before incurring a Break in Service;
(2) the Employee incurs a Break in Service but the Break is not
accompanied by an actual separation from employment; or
(3) the Employee incurs one or more Breaks in Service but at the
time had a nonforfeitable right to part or all of the portion of his
Account attributable to Employer contributions.
Years of Service prior to a Break in Service shall be dis- regarded only if
the Employee had no nonforfeitable right to the portion of his Account
attributable to Employer contributions and his number of consecutive one-year
Breaks in Service equals or exceeds the greater of five years or the
Employee's number of Years of Service at the time of the break (not taking
into account any Years of Service disregarded under a previous application of
this rule).
(c) Forfeitures. The forfeitable portion of a Participant's
Supplemental Contribution Account, if any, shall be forfeited and returned to
the Fund in accordance with the rules of this subsection.
(1) If the nonforfeitable balance of the Participant's Account
is distributed in a single lump sum payment no later than the close of
the Plan Year following the Plan Year in which participation in the Plan
terminates, the forfeiture shall occur as of the Accounting Date the
Account is valued for distribution pursuant to Article 6.
(2) If the nonforfeitable balance of the Participant's Account
exceeds $3,500, and if the Participant refuses to consent to payment of
this amount prior to his attainment of Normal Retirement Age, the
forfeiture shall occur as of the last day of the Plan Year in which the
Participant incurs his fifth consecutive one-year Break in Service.
(3) If a Participant incurs a Break in Service at a time when he
has no nonforfeitable right to any portion of his Account, a forfeiture
of his entire Supplemental Contribution Account balance shall occur on
the last day of the Plan Year in which he first incurs a Break in
Service.
Any amount previously forfeited from a Participant's Account pursuant to (1)
or (3) above shall be restored in full to that Participant's Account as of the
last day of the first Plan Year (after the Participant's Break in Service or
other separation from employment) in which he is credited with sufficient
Hours of Service so as not to incur a Break in Service. However, no
forfeiture shall be restored to the Account of a Participant who has incurred
five or more consecutive Breaks in Service or who fails to make repayment of
his prior distribution made pursuant to the rules below. Any amount so
restored shall be derived from forfeitures for that year, and then from
Employer contributions for the year or succeeding years, if necessary.
(d) Repayments. A Participant who has received a distribution of less
than the full balance of his Account, and who returns to employment covered by
the Plan prior to incurring five consecutive Breaks in Service, may elect to
repay to the Fund the full amount distributed. Such repayment must be made
before the earlier of: (1) five years after the date he resumes employment
with the Employer, or (2) the last day of the Plan Year in which he incurs the
fifth consecutive Break in Service after receiving a distribution of less than
the full balance of his Account. Any amount so repaid shall be aggregated in
the Participant's Account with any forfeiture restored pursuant to subsection
(c) above.
(e) Nonforfeitable Percentage. Except in the case of a Participant
(1) whose nonforfeitable percentage was 100% pursuant to Article 5, (2) who
had no prior Account balance, or (3) who had a prior Account balance that was
disbursed and who now is not entitled to make a repayment or to have a
previous forfeiture restored, there shall be created, for each Participant who
incurs a Break in Service or who receives a distribution (regardless of a
Break in Service), two sub-accounts within his Account. These sub-accounts
shall separate any additions to the Account made after the Break in Service
(or after the distribution) from the previous balance. The Participant's
nonforfeitable percentage shall be determined separately for these
sub-accounts, in accordance with the following rules:
(A) Years of Service earned by the Participant subsequent to any
Breaks in Service of less than five consecutive years shall be credited
for purposes of determining the nonforfeitable percentage of the
Participant's pre-Break sub-account;
(B) Years of Service earned by the Participant subsequent to any
five consecutive one-year Breaks in Service shall be disregarded for
purposes of determining the nonforfeitable percentage of the
Participant's pre-Break sub-account;
(C) Years of Service earned by the Participant subsequent to the
Break in Service, plus any Years of Service earned prior to the Break in
Service which are retained pursuant to subsection (b) above, shall be
used for purposes of determining the nonforfeitable percentage of the
Participant's post-Break sub-account; and
(D) Until a Participant entitled to make a repayment pursuant to
subsection (d) above makes the full repayment, or in any case for a
Participant who fails or is ineligible to make a repayment, the
Participant's nonforfeitable interest in his pre-Break sub-account (or
initial sub-account, where there has been a distribution but no Break in
Service) shall be equal to an amount, V, determined by the formula:
V = P(AB + D) - D, where:
P is the Participant's nonforfeitable percentage as otherwise determined
under the Plan at the relevant time,
AB is the Participant's pre-Break (or initial) sub-account balance at
the relevant time,
D is the amount of the distribution which was made to the Participant,
and
the relevant time is the time at which the Participant's nonforfeitable
percentage in his Account cannot increase.
Section 7.02 Transfers Between Related Entities.
(a) Employees from time to time may transfer or may be transferred to
Related Entities or may transfer or be transferred from such Entities to an
Employer. Such Employees are referred to in this Section 7.02 as "transferred
Employees." The participation status of any such transferred Employee who
transfers from one Employer maintaining the Plan to another Employer
maintaining the Plan shall not change as a result of such transfer except that
the Employer to whom the Employee transfers shall assume liability for
contributions on behalf of such Employee on the date of such employment
transfer with respect to Compensation earned by the Employee on and after the
date of transfer.
(b) The participation status of any transferred Employee who transfers
from one Employer maintaining the Plan to a Related Entity that does not
maintain the Plan shall be determined in accordance with the following rules:
(1) A transferred Employee shall cease to be an active
Participant in the Plan for purposes of contributions as of the date of
his transfer, and his Account shall be held by the Trustee and
distributed only upon occurrence of the events prescribed in the Plan,
but considering for such purpose that the Employer and all Related
Entities are a single employer.
(2) For purposes of determining the amount of any allocation
under Article 3 of the Plan, a transferred Employee's Account balance
shall be limited to his Account balance in the Plan at the time of the
allocation, adjusted from time to time for investment earnings, gains
and losses, and his Compensation shall be restricted to the Compensation
earned during the Plan Year from the Employer.
(3) In no event shall any of the foregoing provisions be
interpreted in such a way as to result in the duplication of
contributions or benefits for any transferred Employee under the Plan
and any other plan maintained by a Related Entity for the same period of
employment.
Section 7.03 Limitations on Annual Allocations to Accounts.
(a) Single Plan. Notwithstanding any provision of the Plan to the
contrary, the total additions made to the Account of any Participant in any
limitation year shall not exceed the lesser of:
(1) $30,000 (or, if greater, 25% of the dollar limitation under
Code Section 415(b)(1)(A) for the limitation year), or
(2) 25% of the Participant's compensation for such limitation
year,
except that such $30,000 limitation shall be adjusted automatically, without
the necessity of a specific Plan amendment, whenever the Secretary of the
Treasury increases this dollar limitation to reflect cost-of-living
adjustments in accordance with Code Section 415(d) and the regulations
thereunder.
(b) Special Definitions. For purposes of this section, the following
terms have the meanings indicated:
(1) "total additions" means, with respect to each limitation
year, the sum of:
(A) Employer contributions allocated to the Participant's
Account; and
(B) forfeitures (if any), allocated to the Participant's
Account; and,
(C) the total of the Participant's employee contributions,
if any, for the limitation year; and
(D) in addition, the following amounts shall be treated as
annual additions to a defined contribution plan of the Employer --
amounts allocated, after March 31, 1984, to an individual medical
account, as defined in section 415(1)(1) of the Code, which is
part of any pension or annuity plan maintained by the Employer,
and amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, which
are attributable to postretirement benefits allocated to the
separate account of a key employee, as defined in Code Section
419A(d)(3), under a welfare benefit fund, as defined in Code
Section 419(e), maintained by the Employer.
(2) "limitation year" means the calendar year ending with or
within the Plan Year.
(3) "compensation" means, with respect to each limitation year,
a Participant's total wages, salary, bonuses, overtime, commissions and
other amounts received for services rendered in the course of employment
for the Employer, including amounts received from accident or health
insurance for personal injuries or sickness to the extent includible in
the Participant's gross income, amounts received as disability payments
whether or not includible in the Participant's gross income, amounts
paid or reimbursed by the Employer for moving expenses to the extent not
deductible by the Participant, and amounts includible in the
Participant's gross income for making an election on the transfer of
property in connection with the performance of services.
Items not includible in compensation include Employer
contributions under this Plan or made to any other deferred compensation
plan on behalf of the Participant if the contributions are not
includible in the Participant's gross income before application of the
Code Section 415 limits, amounts realized from the Participant's
exercise of a non-qualified stock option or from the Participant's
transfer of stock acquired under a qualified stock option, and premiums
paid by the Employer on behalf of the Participant for group term life
insurance to the extent not includible in the Participant's gross
income.
(4) "employee contributions" means After-Tax Employee
Contributions, if any, and excludes rollover contributions and
Before-Tax Employee Contributions.
(5) "Employer contributions" means Employer Matching
Contributions, Supplemental Contributions, Before-Tax Employee
Contributions contributed on behalf of Participants and Employer Fixed
Contributions.
(c) Defined Benefit Plan also Maintained by the Employer. If the
Employer maintains or at any time maintained a defined benefit plan, as
defined by Section 3(35) of ERISA, in addition to this Plan, the otherwise
permissible total additions for any limitation year as determined under
subsection (a) above, for any Participant who is also a participant in such
defined benefit plan, may be reduced further so that the sum of the defined
benefit plan fraction and the defined contribution plan fraction for any
limitation year does not exceed 1.0. For purposes of this subsection, the
following terms have the meanings indicated:
(1) "defined benefit plan fraction" for any limitation year
means a fraction,
(A) the numerator of which is the projected annual benefit
of the Participant under the defined benefit plan (determined as
of the close of the limitation year), and
(B) the denominator of which, for each limitation year is
the lesser of -
(i) the product of 1.25 multiplied by the dollar
limitation on benefits under Code Section 415 in
effect for such year, or
(ii) the product of 1.40 multiplied by the percentage
limitation on benefits under Code Section 415 for such
year.
(2) "defined contribution plan fraction" for any limitation year
means a fraction,
(A) the numerator of which is the sum of the total
additions to the Participant's Account for all years of his
participation under this Plan as of the close of the limitation
year, and
(B) the denominator of which, for each limitation year is
the sum of the lesser of the following amounts for such year and
for all prior years of the Participant's employment with the
Employer (without regard to whether the Plan was in existence
during all such years) -
(i) the product of 1.25 multiplied by the applicable
dollar limitation on additions in effect under
subsection (a)(1) of this Section for such year, or
(ii) the product of 1.40 multiplied by the percentage
limitation on additions under subsection (a)(2) of
this Section for such year.
(d) Multiple Plans. If the Employer maintains one or more other
defined contribution plans, as defined by Section 3(34) of ERISA, in addition
to this Plan, or more than one defined benefit plan, as defined by Section
3(35) of ERISA, and any such plan covers one or more Participants in this
Plan, then the limitations of subsections (a), (b), and (c) above shall be
applied by treating all defined contribution plans, including this Plan, as a
single defined contribution plan, and all defined benefit plans as one defined
benefit plan.
(e) Multiple Employers. If the Employer is a member of a group of
employers constituting (1) a controlled group of corporations (within the
meaning of Code Section 414(b) as modified by Section 415(h)), (2) trades or
businesses, whether or not incorporated, under common control (within the
meaning of Code Section 414(c) as modified by Section 415(h)), or (3) an
affiliated service group (as defined in Code Section 414(m)), and any other
member of such group maintains a plan or plans covering one or more
Participants in this Plan, then the limitations of subsections (a), (b), and
(c) above, and the aggregation rules of subsection (d) above, shall be applied
by treating all the plans of such other employers as plans maintained by the
Employer.
(f) Employee Leasing. If the Employer is provided with services by
leased employees (within the meaning of Code Section 414(n)), then for
purposes of this Section, the leased employees shall be treated as
Participants in the Plan and contributions or benefits provided by the leasing
organization which are attributable to services performed for the Employer
shall be treated as provided by the Employer as permitted under Code Section
414 and regulations issued thereunder.
(g) Remedying Excess Total Additions. If for any limitation year, as
a result of the allocation of forfeitures or a reasonable error in estimating
a Participant's annual compensation, or on account of other limited facts and
circumstances that the Commissioner of Internal Revenue finds to justify the
availability of the rules set forth in this subsection (g), the total
additions to a Participant's Account exceed the applicable limitation as
determined under the foregoing subsections of this Section, then the excess
shall be allocated and reallocated to other eligible Participants as an
additional Employer contribution for the limitation year. If the total excess
additions cannot be allocated during the year in accordance with the foregoing
procedure without exceeding the applicable limitations of this section for one
or more Participants, any remaining amount shall be held unallocated in a
special suspense account to be allocated to eligible Participants in the
succeeding limitation year or years. However, (1) no Employer contributions
and no employee contributions shall be made in such succeeding limitation year
or years until such special suspense account is exhausted by allocations and
reallocations; (2) no investment gains and losses and other income shall be
allocated to the special suspense account; and (3) the amounts in the suspense
account shall be allocated as soon as possible without violating the
limitations of this Section.
(h) Additional Adjustments. The Employer shall have the right to make
any other adjustments to the Account of any Participant, or to the total
additions to any such Account, or to the Participant's accrued benefit under
any defined benefit plan or plans maintained by the Employer, which may be
required in order to prevent disqualification under Code Section 415 of the
Plan or any other plan maintained by the Employer. Where adjustments are
required, such adjustments will be made first in the contributions under this
Plan.
(i) Notice to Participants. The Employer shall advise affected
Participants of any adjustments to their Accounts required by the limitations
under this Section.
Section 7.04 Top-Heavy Plan Rules.
(a) General Rule. If, for any Plan Year, the Plan is a top-heavy plan
as determined under subsection (b), then the requirements in subsection (c)
shall apply to the extent indicated by that subsection. For purposes of this
section, the term "Employer" shall include any member of a group of employers
constituting (1) a controlled group of corporations (within the meaning of
Code Section 414(b) as modified by Code Section 415(h)), (2) trades or
businesses, whether or not incorporated, under common control (within the
meaning of Code Section 414(c) as modified by Code Section 415(h)), or (3) an
affiliated service group (as defined in Code Section 414(m)).
(b) Top-Heavy Test. The Plan's status as a top-heavy plan for any
Plan Year shall be determined in accordance with the following five step
procedure:
(1) Required Plan Aggregation. First, there shall be aggregated
with this Plan (A) each plan of the Employer in which a key employee is
a participant and (B) each other plan of the Employer which enables a
plan described in (A) to meet the requirements of Code Section 401(a)(4)
or Code Section 410, and (C) each plan described in (A) or (B) which was
terminated during the five consecutive Plan Year period ending with the
determination date.
(2) Key Employee Sum. Second, there shall be computed, as of
the determination date, the sum of the account balances of all key
employees under all defined contribution plans, including this Plan,
required to be aggregated under (1), and the present values of the
cumulative accrued benefits of all key employees under all defined
benefit plans required to be aggregated under (1).
For purposes of this computation "account balance" means the
account balance as of the most recent valuation date occurring within a
12-month period ending on the determination date, plus an adjustment for
contributions due as of the determination date. In the case of a profit
sharing plan or other plan not subject to the minimum funding
requirements of Code Section 412, the adjustment is the amount of any
contributions actually made after the valuation date but on or before
the determination date, except that in the first Plan Year, the
adjustment shall include any contributions made after the determination
date that are allocated as of a date within the first Plan Year. In the
case of a money purchase pension plan or other plan subject to the
minimum funding requirements of Code Section 412, the adjustment is the
amount of any contributions that would be allocated as of a date not
later than the determination date, even though such amount is not yet
required to be contributed, plus the amount of any contribution actually
made (or due to be made) after the valuation date but before the
expiration of the extended payment period under Code Section 412(c)(10).
Also for purposes of this computation, the present value of a
cumulative accrued benefit shall be determined as of the most recent
valuation date occurring within a 12-month period ending on the
determination date with the accrued benefit for a current participant
determined as if the individual had terminated employment as of such
valuation date, except that in the first Plan Year of a defined benefit
plan, the accrued benefit of a current participant must be determined as
if the individual had terminated employment as of the last day of the
Plan Year.
Finally, for purposes of this computation: (A) there shall be
included in the sum any distributions (other than rollover amounts or
plan-to-plan transfers not initiated by the employee or made to another
plan maintained by the Employer) made to an employee from this Plan,
from another plan required to be aggregated under (1), or from a
terminated plan which, if it had not been terminated, would have been
required to be aggregated under (1), within the five year period ending
on the determination date; (B) there shall be excluded from the sum any
rollover contribution and any plan-to-plan transfer initiated by the
employee and accepted after December 31, 1983 by this Plan, or by any
other plan required to be aggregated under (1), from a plan other than
one maintained by the Employer; (C) there shall be excluded from the sum
the account balance and present value of the accrued benefit of any
employee who formerly was a key employee but who is not a key employee
for the year ending on the determination date; and (D) there shall be
excluded from the sum the account balance and the present value of the
accrued benefit of any individual who has not performed service for the
Employer at any time during the five year period ending on the
determination date.
(3) All Employee Sum. Third, under the same procedures as set
forth in (2) above, including the special rules in (A), (B), (C), and
(D), there shall be computed the sum of account balances and present
values of accrued benefits for all employees.
(4) Top-Heavy Test Fraction. Fourth, the sum computed in (2)
shall be divided by the sum computed in (3), and if the resulting
fraction is 0.60 or less, neither the Plan nor any plan required to be
aggregated under (1) is a top-heavy plan for the Plan Year. If the
fraction is greater than 0.60, both the Plan and any plan required to be
aggregated under (1) are top-heavy plans for the Plan Year, unless after
the permissive plan aggregation described in (5) below, the recomputed
fraction is 0.60 or less.
(5) Permissive Plan Aggregation. At the election of the
Committee, plans of the Employer, other than those required to be
aggregated under (1), but which provide contributions or benefits
comparable to this Plan, may be aggregated with this Plan and the plans
required to be aggregated under (1), provided that such aggregated group
would meet the requirements of Code Sections 401(a)(4) and 410. Steps
(2) through (4) above may then be repeated, based on this permissively
aggregated group, and if the top-heavy test fraction computed in step
(4) is 0.60 or less for this group, then neither the Plan nor any plan
required to be aggregated under (1) is a top-heavy plan for the Plan
Year; however, if the top-heavy test fraction computed in step (4) is
still greater than 0.60, both the Plan and any plan required to be
aggregated under (1) will be top-heavy plans for the Plan Year, but no
plan which is permissively aggregated under this step (5) will be deemed
top-heavy for such reason.
(c) Superseding Rules. For each Plan Year that the Plan is a
top-heavy plan, the requirements in (1) and (2) below shall supersede any
other provisions of the Plan which otherwise would apply for that Plan Year.
For any Plan Year that the Plan is a top-heavy plan, the vesting schedule in
(3) below shall supersede the Plan's regular vesting schedule, but only to the
extent it provides a greater vested percentage for any level of Years of
Service than the Plan's regular vesting schedule, and only with respect to
employees who have at least one Hour of Service after the Plan becomes
top-heavy; if and when the Plan ceases to be a top-heavy plan, the Plan's
regular vesting schedule shall again apply (without regard to the schedule in
(3) below) as of the first day of the Plan Year after the last Plan Year for
which the Plan is a top-heavy plan, but subject to all Plan rules that apply
in the case of amendments to the vesting schedule.
(1) Adjusted Code Section 415 Limitations. In order to reduce
the overall limitations on combined plan contributions and benefits
under Code Section 415, the number 1.00 shall be substituted for 1.25 in
the definitions of defined contribution fraction and defined benefit
fraction in Section 7.03 of the Plan. Provided, however, that the
foregoing sentence shall not apply if (A) the top-heavy test fraction in
subsection (b)(4), or the recomputed fraction after applying subsection
(b)(5), is 0.90 or less and (B) each non-key employee receives an
additional minimum contribution or benefit under a plan of the Employer.
In the case of a non-key employee participating only in a defined
benefit plan, the additional minimum benefit for each year of service
counted is one percentage point, up to a maximum of ten percentage
points, of the employee's average compensation for the five consecutive
years when the employee had the highest aggregate compensation from the
Employer, computed as described in (2) below. In the case of a non-key
employee participating only in this or another defined contribution
plan, the additional minimum contribution is one percent of the
employee's compensation. In the case of a non-key employee
participating both in a defined benefit plan and this or another defined
contribution plan, there is no additional minimum benefit, but the
additional minimum contribution shall be 2-1/2 percent of the employee's
compensation.
(2) Minimum Contributions or Benefits for Non-Key Employees.
Employer contributions and forfeitures for the Plan Year beginning after
December 31, 1983 allocated on behalf of each non-key employee
Participant (A) who has not separated from employment with the Employer
at the end of the Plan Year, (B) who is eligible for an allocation of
Employer contributions under the Plan (without regard to any
requirements for a minimum number of hours of service during the Plan
Year, mandatory or voluntary contributions, or compensation for the Plan
Year in excess of a stated amount), and (C) who does not participate in
a defined benefit plan of the Employer, shall be equal to at least (i)
multiplied by (ii), where --
(i) is equal to 3%, or if less, the maximum percentage of Employer
contributions and forfeitures (as a percentage of compensation not in
excess of $200,000) allocated on behalf of any key employee Participant
for the Plan Year, and
(ii) is equal to the non-key employee Participant's compensation for the
Plan Year.
For purposes of this rule, Employer contributions and forfeitures
allocated under any other defined contribution plan of the Employer, in
which any key employee participates or which enables another defined
contribution plan to meet the requirements of Code Section 401(a)(4) or
Code Section 410, shall be considered contributions and forfeitures
allocated under this Plan. In the case of any non-key employee
Participant who is also a participant in any defined benefit plan of the
Employer, the foregoing provisions of this paragraph (2) shall be
applied, but with 5% substituted for 3%; for non-key employees who
participate in both this Plan and a defined benefit plan of the
Employer, the foregoing provisions of this paragraph (2) shall be
inapplicable, provided that each non-key employee eligible to
participate in this Plan has, at any time, a minimum accrued benefit
under the defined benefit plan, expressed as a life annuity commencing
at normal retirement age, equal to at least the product of (i) the
employee's average compensation for the five consecutive years when the
employee had the highest aggregate compensation from the Employer and
(ii) the lesser of 2% per year of service or 20%. For purposes of
computing the product in the foregoing sentence, compensation in years
before January 1, 1984 and in years after the close of the last Plan
Year in which the Plan is top-heavy shall be disregarded, and similarly,
years of service shall exclude years of service when the Plan was not
top-heavy (for any Plan Year ending during such year of service) and
years of service completed in a Plan Year beginning before January 1,
1984. Although accruals of Employer derived benefits, whether or not
attributable to years for which the Plan is top-heavy, may be used to
satisfy the defined benefit plan minimum, all accrued benefits
attributable to employee contributions shall be ignored.
(3) Accelerated Vesting. A Participant's vested percentage of
his Employer Contribution Account for purposes of his Termination
Benefit under the Plan shall be determined in accordance with the
following vesting schedule:
Years of Service Vested Percentage
Less than 3 0%
3 or more 100%
(d) Special Definitions. For purposes of this section, the
following terms shall have the meanings indicated:
(1) "compensation" means compensation as defined in Section
7.03(b)(3).
(2) "determination date" means, with respect to any Plan Year,
the last day of the preceding Plan Year, except that in the case of the
first Plan Year, the determination date shall be the last day of that
Plan Year. Where one or more plans are required or permitted to be
aggregated with this Plan, and where all plan years do not coincide, the
key employee and all employee sums in subsection (b) above each shall be
determined separately for each plan on the respective determination
dates, and the results shall then be combined for the determination
dates falling within the same calendar year.
(3) "employee" means (A) a common-law employee or partner of the
Employer who is or once was a Participant, or would have been a
Participant but for his failure to complete some minimum number of hours
of service in any Plan Year, if required, (after meeting the Plan's
initial eligibility requirements), to make mandatory employee
contributions, if required, or to receive compensation in excess of a
stated amount, and (B) any Beneficiary.
(4) "key employee" means each employee or former employee (or
Beneficiary of either) who, at any time during the Plan Year containing
the determination date or during any of the four preceding Plan Years,
--
(A) is an officer of the Employer and who has annual
compensation in the Plan Year, greater than 50% of the applicable
dollar limitation of Code Section 415(b)(1)(A) in effect for the
Plan Year;
(B) is one of the ten employees owning the largest
interests in the Employer and who has compensation from the
Employer greater than the applicable dollar limitation of Code
Section 415(b)(1)(A) in effect for the calendar year in which the
determination date falls;
(C) is a 5-Percent Owner of the Employer; or
(D) is a 1-Percent Owner of the Employer who has annual
compensation from the Employer of more than $150,000.
For purposes of (A), no more than 50 employees, or if less, the
greater of 3 employees or 10% of all employees, shall be treated as
officers.
For purposes of (B), (C), and (D), the con- structive ownership
rules of Code Section 318 shall apply with the modification that 5%
shall be substituted for 50% in Section 318(a)(2). Also, for purposes
of (B), if two employees have the same interest in the Employer, the
employee having the greater annual compensation from the Employer shall
be treated as having a larger interest; following application of this
rule, an employee shall be considered a key employee, even if he is not
among the first ten largest owners, if his ownership interest in the
Employer is not less than at least one of the top ten owners and
provided he has the requisite level of compensation described in (B).
Finally, for purposes of (C) and (D), each employer that otherwise
would be aggregated under this section's definition of "Employer" shall
be treated as a separate employer to determine ownership percentages.
(5) "valuation date" means the last day of the plan year in the
case of any defined contribution plan, including this Plan, and the date
used for computing plan costs for minimum funding in the case of any
defined benefit plan.
(e) Anti-Cutback Rule. Notwithstanding the foregoing rules of this
section, in no event shall any changes in the Plan's benefit structure,
including its vesting provisions, that result from a change in the Plan's
top-heavy status, cause the Account balance or accrued benefit of any
Participant to be reduced in violation of Code Section 411.
Section 7.05 Leased Employees.
(a) General Rule. Any leased employee of the Employer shall be
excluded from participation in the Plan but nonetheless shall be counted as an
employee of the Employer for certain Plan purposes as provided in Code Section
414(n). However, except as provided in (c) below, if by reason of counting
such leased individual as an employee for certain purposes as required by the
preceding sentence (and after taking into account contributions and benefits
provided by the leasing organization as described in this subsection), the
Plan fails to meet the requirements of Code Sections 401(a) or 410(b), the
leased individual will be eligible to participate in the Plan as if he or she
were a common-law Employee. Years of Service for such person shall be
calculated in accordance with the rules set forth in Code Section 414 and
regulations issued thereunder.
In all events, contributions to or benefits provided by any tax
qualified plan maintained by the leasing organiza- tion which are attributable
to services performed for the Employer shall be treated as provided by the
Employer.
(b) Definitions. For purposes of this Section, the term "leased
employee" means any person (other than an Employee of the Employer) who,
pursuant to an agreement between the Employer and any other person ("leasing
organization"), has performed services for the Employer (or for the Employer
and related persons determined in accordance with Code Section 414(n)(6)(A))
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 Employer.
(c) Excluded Employees. Except as provided in regulations prescribed
by the Secretary of Treasury, the Plan participation requirement of subsection
(a) of this Section shall not apply to any leased employee if: (1) such
employee is covered by a pension plan which is maintained by the leasing
organization and meets the requirements of subsection (d) of this Section, and
(2) all such leased employees constitute 20% or less of the Employer's
non-highly compensated work force. For purposes of this section, the term
"non-highly compensated work force" means the aggregate number of individuals
who are: (i) other than highly compensated employees of the Employer
determined in accordance with Code Section 414(q), and (ii) either (A)
employees of the Employer (without regard to subsection (a)) and have
performed services for the Employer (or for the Employer and related persons
determined in accordance with Code Section 414(n)(6)(A)) on a substantially
full time basis for a period of at least one year, or (B) leased employees of
the Employer.
(d) Plan Requirements. A pension plan meets the requirements of this
subsection if it is a money purchase pension plan providing: (1) a
nonintegrated employer contribution rate of at least 10% of compensation, (2)
full and immediate vesting, and (3) immediate participation for each employee
of the leasing organization (other than employees who perform substantially
all of their services for the leasing organization and individuals whose
compensation from the leasing organization during the plan year and the three
immediately preceding plan years is less than $1,000.)
For purposes of this Section, the term "compensation" means the total
compensation of the leased employee from the leasing organization for the
entire year, as described in Code Section 415(c)(3) and the regulations
thereunder, except that such term shall include (i) amounts excluded from
gross income under Code Section 402(a)(8) or 402(h)(l)(B), (ii) amounts which
could have been received in cash but for an election under a Code Section 125
cafeteria plan, and (iii) amounts contributed to a Code Section 403(b) annuity
contract pursuant to a salary reduction agreement within the meaning of Code
Section 3121(a)(5)(D).
(e) Recordkeeping Relief. Notwithstanding any other provision of the
Plan, if the Employer (1) does not maintain any top-heavy plans within the
meaning of Code Section 416(g) and (2) uses the services of leased employees
only for an insignificant percentage of its total workload, then the Employer
shall be exempt from the employee leasing recordkeeping requirements in
accordance with regulations prescribed by the Secretary of Treasury.
(f) Multiple Employers. If the Employer is a member of a group of
employers constituting (1) a controlled group of corporations (within the
meaning of Code Section 414(b)), (2) trades or businesses, whether or not
incorporated, under common control (within the meaning of Code Section
414(c)), (3) an affiliated service group (as defined in Code Section 414(m)),
or any other group of entities required to be aggregated as prescribed by
regulations under Code Section 414(o), then the foregoing rules of this
section shall be applied by treating all leased employees of such other
employers as leased employees of the Employer.
ARTICLE 8. TRUST FUND
Section 8.01 Establishment and Maintenance of Fund.
(a) Establishment of Fund and Selections of Trustee. The Employer
shall establish a trust fund by a trust agreement with a Trustee to carry out
the purposes of the Plan. The Employer shall select such Trustee, who may be
one or more individuals or a corporate trustee or both. The Employer may
modify any such trust agreement to accomplish the purposes of the Plan.
(b) Contributions to Fund and Investments by Trustee. Except as
provided in Section 8.06(d), all contributions by the Employer, and any
contributions by Employees, shall be paid to the Trustee of the Fund. The
Fund shall be invested as provided in Section 8.07 in such investments as are
permissible for trustees under ERISA. At the request of the Employer, the
Trustee shall prepare and submit an accounting of the Fund as of any date
specified, but the Trustee shall not be required to render more than four such
accountings during any Plan Year. In any event, the Trustee shall prepare and
render to the Employer an accounting of the Fund as of the last day of each
Plan Year. The Trustee shall not be required to render accounts to individual
Participants but only to the Employer, which may submit reports of the Fund to
the Participants from time to time.
(c) Limitation of Liability to Assets of Fund. Except as required
under applicable federal law, the benefits of the Plan shall be only such as
can be provided by the assets of the Fund, and there shall be no liability or
obligation on the part of the Employer to make any contributions or payments
to establish or maintain the Plan, whether in the event of termination of the
Plan or otherwise. No liability for the payment of benefits under the Plan
shall be imposed on the Employer or on the directors or officers of the
Employer.
Section 8.02 The Trustee.
The Trustee shall receive the contributions to the Fund and shall hold,
manage, invest, reinvest, and distribute the same plus any earnings thereon,
pursuant to the provisions of the Plan and of the trust agreement with the
Employer. The Trustee also shall determine all questions relating to
accounting and to the financial position of the Fund and the shares and
interests of the Participants in accordance with information supplied by the
Employer and Committee, and, in general, shall discharge all the duties and
functions imposed by the terms of the Plan either expressly or by implication.
The Trustee shall have the powers, rights and duties, as specified in the
trust agreement with the Employer, in addition to those specified elsewhere in
the Plan or prescribed by law.
Section 8.03 Resignation or Removal of Trustee.
Subject to notice provisions, if any, in the trust agreement with the
Employer, the Trustee may resign by delivering a written resignation to the
Employer; similarly, the Trustee may be removed by the Employer at any time,
upon written notice to the Trustee.
Section 8.04 Expenses.
The reasonable expenses of the Trustee relating to the Fund, including
such compensation for the Trustee as may be agreed to in writing from time to
time by the Employer and the Trustee, shall be paid to the Trustee and shall
be deducted from the Fund, except to the extent that the Employer pays the
Trustee directly from general assets of the Employer. Provided, however, in
no event shall any Trustee who is also an Employee be entitled to any separate
compensation, other than his regular remuneration from the Employer for
services as an Employee and reimbursement for expenses incurred on behalf of
the Fund.
Section 8.05 Taxes.
Any taxes assessed against the Fund or against any of its assets
(including income taxes, property taxes, transfer taxes, and other taxes)
shall, after reasonable notice to the Employer, be paid by the Trustee and
deducted from the Fund.
Section 8.06 Investment Manager and Custodian.
(a) Appointment of Investment Manager or Custodian. The Employer may
appoint one or more investment managers meeting the definition of "investment
manager" under Section 3(38) of ERISA. Furthermore, the Employer may appoint
one or more custodians to hold any part or all of the Fund. Any appointment
of an investment manager or a custodian shall be made only upon proper
authorization of the Employer and evidenced by a written designation signed by
one or more duly authorized officers of the Employer.
(b) Directions by Investment Manager. An investment manager appointed
pursuant to this Section may direct the Trustee to invest all or such portion
of the Fund placed in the discretion of the investment manager in securities
or other properties as are selected by the investment manager, and may direct
the Trustee to sell any securities or other property of the Fund placed in its
discretion. Where assets of the Fund are being held by a custodian appointed
pursuant to this section, the investment manager's direction shall be made to
such custodian and copied to the Trustee.
(c) Actions by Trustee or Custodian at Direction of Investment
Manager. The Trustee or custodian, as the case may be, shall act on all such
recommendations of the investment manager, and the Trustee and custodian shall
have no fiduciary liability for acting in accordance with such recommendations
or for the retention of any securities or properties so purchased. The Trustee
and custodian will be protected in relying upon any telegram or letter
purporting to have been sent by the invest- ment manager which the Trustee or
custodian believes in good faith to be genuine. In directing investments, the
investment manager shall diversify the investments so as to minimize the risk
of large losses, unless under the circumstances and in the opinion of the
investment manager, it is clearly prudent not to do so.
(d) Contributions to Trustee or Direct to Custodian. Contributions to
and disbursements from the Fund may be made to the Trustee or directly to and
from any custodian appointed pursuant to this section, as determined by the
Employer.
(e) Reliance by Trustee and Custodian. Notwithstanding
any other provision of the Plan or any trust agreement, the Trustee shall be
fully protected in relying upon the certification of the Employer with respect
to the appointment of such investment manager and it shall not be the
responsibility of the Trustee to determine or review investment instructions
given by the investment manager. Similarly, any custodian appointed pursuant
to this section shall assume no liability for acting in accordance with the
directions of the investment manager.
(f) Status of Investment Manager as Named Fiduciary. Each investment
manager shall be a named fiduciary under the Plan and shall acknowledge its
action as a fiduciary under the Plan in a writing delivered to the Trustee and
to the Employer.
Section 8.07 Participant Directed Investments.
(a) Direction of Investments. Participants and beneficiaries of the
Plan shall direct the investment of their individual accounts under the Plan
in accordance with procedures set forth in the Plan. It is the intention of
the Employer that the Plan and the administration of these directed
investments conform with the requirements of ERISA Section 404(c), such that
no Participant or Beneficiary shall be deemed a fiduciary by reason of his or
her control over assets in his or her Account, and neither the Trustee nor any
other person who is a fiduciary with respect to the Plan shall be liable for
any loss, or any breach of Part 4 of Title I of ERISA, that is the direct and
necessary result of such exercise of control. However, the Trustee shall be
obligated to comply with investment directions issued by Participants and
Beneficiaries, except as limited by ERISA Section 404(c).
(b) Available Investment Alternatives. The Plan Administrator shall
instruct the Trustee to make available for investment of Plan assets, at the
direction of Participants and Beneficiaries, at least three separate
investment alternatives which shall be constituted as common trust funds or
investment companies. The Plan Administrator may change the available
investment alternatives from time to time. However, at all times it shall be
the obligation of the Plan Administrator to assure that the available choices
meet the requirement for a broad range of investment alternatives under ERISA
Section 404(c).
ARTICLE 9. PROVISIONS RELATING TO ADMINISTRATION
AND FIDUCIARIES
Section 9.01 Plan Administration.
Although the Employer shall be the Plan Administrator for the purpose of
complying with the reporting and disclosure requirements of ERISA as well as
other actions and duties specified by ERISA for the Plan Administrator, the
Plan shall otherwise be administered by a Committee. The Employer shall
appoint the Committee, which shall consist of at least three members. Any
member of the Committee may be removed by the Employer at any time.
The Committee shall act by a majority, and any direction or other
instrument signed by two members may be considered by anyone concerned as the
act of the Committee. A Committee member who is also a Participant or
Beneficiary shall not take part in any decision of the Committee that affects
his eligibility, his right to a benefit, the payment option he is to receive,
or any other matter concerning his participation in the Plan. Members of the
Committee shall receive no compensa- tion for their services for the
Committee.
The Secretary of the Employer shall be prepared at all times to issue a
certificate as to the current personnel of the Committee. Any party acting on
the faith of such a certificate shall be fully protected.
The Committee shall have such powers and duties as may be necessary to
discharge its functions under the Plan, including, but not limited to the
following:
(a) Construction - to construe and interpret the Plan, decide
all questions of eligibility and determine the amount, manner and time
of payment of any benefits under the Plan;
(b) Forms - to require Participants to complete and file with it
such forms as the Committee finds necessary for the administration of
the Plan and to furnish all pertinent information requested by the
Committee, and to rely upon all such forms and information furnished,
including each Participant's mailing address;
(c) Procedures - to prescribe procedures to be followed by
Participants or Beneficiaries filing applications for benefits;
(d) Rules - to promulgate uniform rules and regulations whenever
in the opinion of the Committee such rules and regulations are required
by the terms of the Plan or would facilitate the effective operation of
the Plan;
(e) Information - to prepare and distribute, in such manner as
the Committee determines to be appropriate, information explaining the
Plan, and to receive from Participants such information as shall be
necessary for the proper administration of the Plan;
(f) Annual Reports - to furnish the Employer, upon request, such
annual reports with respect to the administration of the Plan as are
reasonable and appropriate; and
(g) Records Review - to receive and review the periodic
valuations of the Plan, and to receive, review and keep on file (as it
deems convenient and proper) reports of benefit payments by the Trustee
and reports of disbursements for expenses.
The Committee shall have no authority to add to, subtract from or modify
any of the terms of the Plan, or to change or add to any benefits provided by
the Plan, or to waive or fail to apply any requirements of eligibility for a
benefit under the Plan.
Section 9.02 Claims Procedure.
(a) Initial Claims. The Committee shall make all determinations as to
the right of any person to receive a distribution and as to other matters
affecting benefits. Each Employee, Participant, Beneficiary, or other person
(collectively referred to as "claimant") shall have the right to submit a
claim with respect to any benefit sought under the Plan, or with respect to
the claimant's eligibility, vesting, or other factor affecting benefits,
either personally or through a representative duly authorized in writing. All
claims shall be submitted in writing to the Committee and shall be accompanied
by such information and documentation as the Committee determines is required
to make a ruling on the claim. Upon receipt of a claim, the Committee shall
consider the claim and shall render a decision, which shall be in writing and
shall be delivered or mailed to the claimant within 90 days after receipt of
the claim, unless special circumstances require an extension of time for
processing the claim. If such an extension of time is required, written
notice of the extension shall be furnished to the claimant prior to the
termination of the initial 90-day period. In no event shall such extension
exceed a period of 90 days from the end of the initial period. Any notice of
a claim denial by the Committee shall set forth (1) the specific reasons for
the denial, (2) specific reference to pertinent provisions of the Plan upon
which the denial is based, (3) a description of any additional material or
information necessary for the claimant to perfect his claim, with an
explanation of why such material or information is necessary, and (4) an
explanation of the claim review procedures under the Plan, all written to the
best of the Committee's ability in a manner that may be understood without
legal or actuarial counsel. A failure of the Committee to render a written
decision within the time specified above shall be deemed to be a denial of the
claim.
(b) Limitation on Claims Procedure. Any claim under this claims
procedure must be submitted within twelve months from the earlier of (1) the
date on which the claimant learned of facts sufficient to enable him to
formulate such claim, or (2) the date on which the claimant reasonably should
have been expected to learn of facts sufficient to enable him to formulate
such claim.
(c) Review of Denied Claims. A claimant whose claim for benefits has
been wholly or partially denied by the Committee may request, within 90 days
following the date of such denial, a review of such denial. The request for
review must be in writing and must be delivered to the Committee within the
specified 90-day period. The request should set forth the reasons why the
claimant believes the denial of his claim is incorrect. The claimant shall be
entitled to submit such issues or comments, in writing or otherwise, as he
shall consider relevant to a determination of his claim, and may include a
request for a hearing in person before the Committee. Prior to submitting his
request, the claimant shall be entitled to review such documents as the
Committee shall agree are pertinent to his claim. The claimant may, at all
stages of review, be represented by counsel, legal or otherwise, of his
choice, provided that the fees and expenses of such counsel shall be borne by
the claimant. All requests for review shall be promptly resolved. The
Committee's decision with respect to any such review shall be set forth in
writing and shall be mailed to the claimant not later than 60 days following
receipt by the Committee of the claimant's request, unless special
circumstances, such as the need to hold a hearing, require an extension of
time for processing, in which case the Committee's decision shall be so mailed
not later than 120 days after receipt of such request. If no decision or
review is rendered within this 120-day period, the claimant's appeal shall be
deemed denied and the Committee's original denial of the claim affirmed.
(d) Finality of Decisions. The decision of the Committee upon review
of any claim under paragraph (c) above shall be binding upon the claimant, his
heirs and assigns, and all other persons claiming by, through or under him.
(e) Time Limits Affecting Jurisdiction. The timely filing of a
request for review in the manner specified by paragraph (c) above shall be a
condition precedent to obtaining review before the Committee, and the
Committee shall have no jurisdiction to entertain a request for review unless
so filed. A failure to file a claim and a request for review in the manner
and within the time limits set forth above shall be deemed a failure by the
aggrieved party to exhaust his administrative remedies and shall constitute a
waiver of the rights sought to be established under the Plan.
(f) Limitation on Court Action. Any suit brought to contest or set
aside a decision of the Committee shall be filed in a court of competent
jurisdiction within one year from the date of receipt of written notice of the
Committee's final decision or from the date the appeal is deemed denied, if
later. Service of legal process shall be made upon the Plan by service upon
the agent for service of legal process, upon the Trustee, or upon the
Committee at the respective addresses specified in the most recent summary
plan description. The Committee may engage legal counsel to defend the Plan
against lawsuits. Attorney fees and other costs attendant to suit shall be
borne by the Plan and shall be paid by the Trustee upon the written direction
of the Employer. If the Employer or Committee determines that it is in the
best interests of the Plan to initiate legal action, then it may employ
counsel to do so, and all expenses of suit shall be borne by the Plan as
provided above. No legal action to recover Plan benefits or to enforce or
clarify rights under the Plan shall be commenced under Section 502(a)(1)(B) of
ERISA, or under any other provision of law, whether or not statutory, until
the claimant first shall have exhausted the claims and review procedures
available to him hereunder.
Section 9.03 Special Ruling.
In order to resolve problems concerning the Plan and to apply the Plan
in unusual factual circumstances, the Committee may make special rulings.
Such special rulings shall be in writing on a form to be developed by the
Committee. In making its rulings, the Committee may consult with legal,
accounting, actuarial, investment, and other counsel or advisers. Once made,
special rulings shall be applied uniformly, except that the Committee shall
not be bound by such rulings in future cases unless the factual situation of a
particular case is identical to that involved in the special ruling.
Special rulings shall be made in accordance with all applicable law and
in accordance with the Plan. It is not intended that the special ruling
procedure will be a frequently used device, but that it should be followed
only in extra- ordinary situations. The Committee at all times shall have the
final decision as to whether resort shall be made to this special ruling
feature.
Section 9.04 Specific Allocation of Fiduciary Duties between Named
Fiduciaries.
The Employer, the Committee and the Trustee shall be the "named
fiduciaries" of the Plan, within the meaning of that term as described in
ERISA, and shall have only those duties, responsibilities, and obligations
(referred to collectively as "fiduciary duties") as specifically are given
them under the Plan or as otherwise are imposed by applicable law. The
fiduciary duties given by the Plan are as follows:
(a) The Employer (and its participating subsidiaries and divisions)
shall have the sole responsibility for making contributions to the Fund. The
Employer shall have the sole authority to appoint and remove the Trustee and
the members of the Committee, and to amend or terminate, in whole or in part,
the Plan. The Employer shall not be responsible for the management,
investment, or safe-keeping of the assets of the Fund. The Employer
periodically shall review the performance of the Committee and of the Trustee.
In this regard, the Employer is authorized to request such written reports
from the Committee and from the Trustee as it deems necessary.
(b) The Committee shall have the sole responsibility for the
administration of the Plan as described throughout the Plan, except in regard
to functions of the Committee as described in ERISA. The Committee shall not
be responsible for the management, investment, or safe-keeping of the assets
of the Fund. The Committee may allocate responsibility for its administrative
and fiduciary responsibilities among its members as they shall deem
appropriate.
(c) Except as otherwise provided in the Plan or in the trust agreement
with the Employer, the Trustee shall have the sole responsibility for the
management, investment, and safe-keeping of the assets of the Fund held by the
Trustee under the Plan and for the distribution of Participants' benefits in
accordance with written instructions from the Committee. In addition, the
Trustee shall provide to the Employer such information as the Employer or the
Committee may deem necessary or desirable to permit the timely filing of all
reports required by law.
Section 9.05 Authorization for Further Allocation of Fiduciary Duties.
The Employer, the Committee and the Trustee may, upon written agreement
between them, allocate their fiduciary duties under the Plan among themselves
in a manner different from that stated above. The Employer, the Committee and
the Trustee each warrants that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of the Plan,
authorizing or providing for such direction, information, or action.
Furthermore, each of them may rely upon any such direction, information or
action of another as being proper under the Plan, and is not required under
the Plan to inquire into the propriety of any such direction, information, or
action.
It is intended under the Plan that the Employer, the Committee and the
Trustee each shall be responsible for the proper exercise of its own powers,
duties, responsibilities, and obligations under the Plan and shall not be
responsible for any act or failure to act of another, and none of them
guarantees the Fund assets in any manner against investment loss or
depreciation of asset value.
Section 9.06 Employment of Advisers.
The Employer, the Committee and the Trustee shall have the authority to
employ such legal, accounting, actuarial, and financial counsel and advisers,
as they shall deem necessary in connection with the performance of their
duties under the Plan, and to act in accordance with the advice of such
counsel and advisers. Except as otherwise provided in the Plan, the fees and
expenses of such counsel and advisers shall, upon approval of the Employer's
board of directors, be paid by the Fund or by the Employer, as the Employer's
board of directors shall deem appropriate.
Section 9.07 Delegation to Officers or Employees.
The Employer and the Committee shall have the power to delegate their
fiduciary duties under the Plan to officers or employees of any Employer and
to other persons, all of whom, if officers or employees of the Employer, shall
serve without compensation other than their regular remuneration from their
Employer. In no event, however, shall the Trustee be permitted to delegate
any of the Trustee's fiduciary duties under the Plan.
Section 9.08 Indemnification.
The Employer may, to the extent not inconsistent with or in violation of
its bylaws and the laws of its state of incorporation, indemnify and hold
harmless such persons, other than the Trustee, as may be deemed "fiduciaries"
with respect to the Plan and as shall be specified in separate written
indemnification agreements with the Employer, from any and all claims, loss,
damages, expenses (including reasonable counsel fees approved by the
Employer), and liability (including reasonable amounts paid in settlement with
the Employer's approval) arising out of any act or omission of such
fiduciaries incurred in the capacity of fiduciary of the Plan. The Employer
shall not, however, indemnify any fiduciary whose conduct is finally
adjudicated by a court of competent jurisdiction to be due to the knowing or
willful misconduct of such fiduciary.
In no event shall the assets of the Fund be used for the purpose of
indemnification.
Section 9.09 Bonding.
The Employer shall purchase such surety bonds covering fiduciaries and
others as may be required pursuant to Section 412 of ERISA.
ARTICLE 10. AMENDMENT, TERMINATION AND MERGER
Section 10.01 Amendment of the Plan.
(a) Company's Right to Amend. The Company reserves the right to make
any amendments to the Plan, with or without retroactive effect. Amendment of
the Plan shall be made by resolution of the Company's board of directors, or
by any person or persons authorized by resolution of the board of directors to
make amendments.
(b) Operation of Amendments. Except as may be specifically provided
otherwise in the Plan, or in any amendment to the Plan, each amendment to the
Plan shall operate prospectively only from the effective date of the
amendment. The rights and obligations of an Employee, Participant, or
Beneficiary, who retires, becomes disabled, dies, or otherwise terminates
employment with the Employer prior to the effective date of any amendment,
shall be determined without regard to such amendment, on the basis of the Plan
terms in effect on the date of retirement, disability, death, or other
termination of employment.
(c) Prohibition against Reversion of Assets or Reduction of Benefits.
Except as provided in the Code, ERISA, and applicable regulations, and as
specified in Article 3 of the Plan, no amendment shall (1) cause any part of
the Fund to be used for, or diverted to, any purpose other than the exclusive
benefit of Participants and their Beneficiaries, (2) reduce the Account
balance or nonforfeitable rights of any Participant or Beneficiary, or (3)
eliminate an optional form of benefit or add an Employer consent or discretion
provision or any other condition which limits the availability of an optional
form of benefit which is attributable to the portion of the Participant's
Account accumulated before the amendment's adoption.
(d) Amendment to Vesting Provisions. In the case of any amendment to
the provisions of the Plan relating to nonforfeitable rights based on service,
each Participant (1) who has completed at least three Years of Service and (2)
whose nonforfeitable rights are adversely affected by the amendment, may
elect, during the election period, to have his nonforfeitable rights
determined without regard to such amendment. The election period must begin
no later than the date the amendment is adopted and end no later than the
latest of (A) the date which is 60 days after the day the amendment is
adopted, (B) the date which is 60 days after the day the amendment becomes
effective, or (C) the date which is 60 days after the day the Participant is
issued written notice of the amendment.
Section 10.02 Termination of the Plan.
(a) Termination. Although it is intended that the Plan shall be
permanent, the Employer reserves and shall have the right at any time to
discontinue its contributions under the Plan and to terminate or partially
terminate the Plan, by delivering to the Trustee written notice of such
discontinuance or termination, but only upon the condition that action is
taken, as shall render it impossible, except as specifically provided in
Article 3, for any part of the Fund to be used for, or diverted to purposes
other than for the exclusive benefit of Participants and their Beneficiaries.
If the Plan is terminated, or if there is a complete discontinuance of
contributions for any reason, the Employer may, in its sole discretion,
continue the Fund for the exclusive benefit of Participants and their
Beneficiaries or distribute the assets remaining in the Fund to Participants
and their Beneficiaries. In the event of the dissolution, merger,
consolidation, or reorganization of the Employer, the Plan shall terminate and
the Fund shall be liquidated unless the Plan is continued by a successor to
the Employer in accordance with Section 10.03(b).
(b) Termination and Transfer to New Plan. If the Employer notifies
the Trustee in writing (1) that it has established another plan providing
comparable benefits to this Plan, (2) that such other plan is qualified under
Code Section 401(a), and (3) that the Employer intends to discontinue
contributions under this Plan due to the liabilities created under the new
plan, then, upon further written direction from the Employer, the Trustee
shall cause the Fund to be transferred to such newly created plan.
Thereafter, this Plan shall cease to have any effect and the rights of all
parties shall be determined under the new plan.
(c) Rights upon Termination. If the Employer should terminate or
partially terminate the Plan as to the Employer's Employees, or if
contributions to the Fund are completely discontinued, or if the Employer
should liquidate and dissolve, or if a receiver of the Employer is appointed,
or if the Employer should terminate the Fund, or if the Plan should be wholly
or partially terminated for any other reason, the Accounts of all affected
Participants as then appearing upon the records of the Trustee (other than
Accounts of former Employees who have terminated employment and who have
incurred a Break in Service), or in the case of partial termination the
Accounts of affected Participants, shall become fully vested. The amounts
carried in said Accounts shall be revalued and adjusted as previously provided
in the Plan. Said Accounts (after payment of expenses properly chargeable to
the Fund and allocated among the Accounts) shall be distributed to affected
Participants and Beneficiaries or held in a wasting trust for distribution in
due course as otherwise provided by the Plan.
(d) Manner of Distribution. To the extent that no discrimination in
value results, any distribution after termination of the Plan may be made, in
whole or in part, in cash, in securities or other assets in kind, or in
nontransferable annuity contracts. All non-cash distributions shall be valued
at fair market value at the date of distribution. The Trustee shall not
effect such distribution until written evidence of approval of the
Commissioner of Internal Revenue or his delegate of such termination and
distribution shall have been submitted to the Trustee.
(e) Special Restriction. Notwithstanding the foregoing, distribution
on termination of the Plan to any Participant of that portion of his Account
attributable and subject to Code Section 401(k) shall be subject to the
special restrictions set forth in Section 6.02(d)(4).
Section 10.03 Predecessor and Successor Employers; Merger or Consolidation of
Plan.
(a) Predecessor Employer. Employment with a predecessor employer
acquired by the Employer shall be considered service with the Employer under
this Plan to the extent required by the Code and ERISA. Where such employment
with a predecessor employer is not required by the Code or ERISA to be
considered service with the Employer, the Employer may, nevertheless, in its
discretion, grant credit for such service under such uniform and
non-discriminatory rules as may be established from time to time by the
Employer.
(b) Successor Employer. In the event of the dissolution, merger,
consolidation, or reorganization of the Employer, provision may be made by
which the Plan will be continued by the successor, and in that event, such
successor shall be substituted for the Employer under the Plan. The
substitution of the successor shall constitute an assumption of Plan
liabilities by the successor, and the successor shall have all of the powers,
duties and responsibilities of the Employer under the Plan.
(c) Merger or Consolidation. In the event of any merger or
consolidation of the Plan with, or transfer in whole or in part of the assets
and liabilities of the Plan to, another plan of deferred compensation
maintained or to be established for the benefit of all or some of the
Participants of this Plan, the assets of the Plan applicable to such
Participants shall be transferred to the other plan only if:
(1) Each Participant would (if either this Plan or the other
plan then terminated) receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than the benefit
he would have been entitled to receive immediately before the merger,
consolidation, or transfer (if this Plan had been terminated);
(2) Resolutions of the board of directors of the Employer under
this Plan, and of the governing body of any new or successor employer of
the affected Participants, shall authorize such transfer of assets; and,
in the case of the new or successor employer of the affected
Participants, its resolutions shall include an assumption of liabilities
with respect to such Participants' inclusion in the new employer's plan;
and
(3) Such other plan is qualified under Code Sections 401(a) and
501(a).
Section 10.04 Notice.
Affected Participants shall be given notice of any amendments to, and
termination or merger of, the Plan in accordance with ERISA.
ARTICLE 11. MISCELLANEOUS PROVISIONS
Section 11.01 Plan Subject to Approval.
The Plan and any amendments are contingent upon and subject to obtaining
and retaining such approval of the Commissioner of Internal Revenue and of any
other federal agency with jurisdiction over the Plan as the Employer may find
necessary to establish the deductibility for federal income tax purposes of
contributions made by the Employer under the Plan, and qualification of the
Fund for tax exemption under the Code, and the qualification of the Plan under
ERISA.
Section 11.02 Payments for the Benefit of Payee.
If the Employer finds that any person to whom a benefit is payable under
the terms of the Plan is unable to care for his affairs because of illness or
accident, is otherwise mentally or physically incompetent, or is unable to
give a valid receipt, the Employer may cause the payments becoming due to such
person to be paid to another individual for such person's benefit, without
responsibility on the part of the Employer to follow the application of such
payment. Any such payment shall be a payment for the account of such person
and shall operate as a complete discharge of the Employer from all liability
under the Plan.
Section 11.03 Non-Alienation of Benefits.
No right or benefit provided for in the Plan shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void. No such
right or benefit shall be liable for or subject to the debts, contracts,
liabilities, engagements, or torts of any person entitled to such right or
benefit. No such right or benefit shall be subject to garnishment,
attachment, execution or levy of any kind. The foregoing provisions of this
section shall not apply to any qualified domestic relations order as defined
in ERISA 206(d)(3)(B) or to enforcement of federal tax levies as provided in
Treasury Regulation Section 1.401(a)-13(b)(2).
Section 11.04 Employer's Rights.
While the Employer believes in the benefits, policies and procedures
described in the Plan, the language used in the Plan is not intended to
create, nor is it to be construed to constitute, a contract of employment
between the Employer and any of its Employees. The Employer retains all of
its rights to discipline or discharge Employees or to exercise its rights as
to incidents and tenure of employment. Employees retain the right to
terminate their employment at any time and for any reason, and the Employer
retains a similar right.
Section 11.05 Litigation.
In order to protect the Fund against depletion as a result of
litigation, if any Participant, Employee, Beneficiary, or spouse brings a
legal or equitable action against the Plan or against any fiduciary of the
Plan, the result of which shall be adverse to such Participant, Employee,
Beneficiary, or spouse, or if the Plan or any fiduciary of the Plan finds it
necessary to bring any legal or equitable action against any Participant,
Employee, Beneficiary, or spouse, or any other person claiming an interest by
or through such person, the cost to the Plan or to a fiduciary of the Plan of
bringing or defending such suit, as the case may be, shall be charged, unless
the Employer determines that such course would be inequitable under all the
circumstances, to such extent as is possible, directly to the Account of such
Participant, Employee, Beneficiary, or spouse, if any, and only the excess, if
any, of such costs over and above the amount of such Account shall be included
in the expenses of the Fund or be paid by the particular fiduciary, as the
case may be.
Section 11.06 Addresses and Mailing of Notices and Checks.
Each recipient of benefits from the Plan shall be responsible for
furnishing the Employer with his address. Any notices required or permitted
to be given under the Plan shall be deemed given if directed to such address
and mailed by regular United States mail. If any check mailed by regular
United States mail to such address is returned, mailing of checks will be
suspended until a correct address is furnished by the intended recipient.
Section 11.07 Action by Employer.
Unless otherwise provided in the Plan, whenever the Employer under the
terms of the Plan is permitted or required to do or perform any act, such act
shall be done (a) by the authority of the Employer's board of directors and
evidenced by proper resolution in consent form or duly certified by the
secretary of the Employer, or (b) by such employee of the Employer who may, by
proper resolution, be duly authorized by the board of directors.
Section 11.08 Construction.
(a) Gender; Singular and Plural Words. Wherever any words are used in
the Plan in the masculine gender, they shall be construed as though they also
were used in the feminine gender in all cases where they would so apply, and
wherever any words are used in the Plan in the singular form, they shall be
construed as though they also were used in the plural form in all cases where
they would so apply.
(b) Headings. Headings of Sections and subsections of this instrument
are inserted for convenience of reference. They constitute no part of the
Plan and are not to be considered in the construction of the Plan.
(c) Savings Clause. The determination that any provision of the Plan
is invalid or unenforceable shall not affect or impair the enforceability or
validity of any other provision of the Plan.
ARTICLE 12. DEFINITIONS
Section 12.01 "Account" means the interest of a Participant in the Fund as
determined as of each Accounting Date and as reflected in the records
maintained for the Fund. Where appropriate, a Participant's Account also
means the various sub-accounts that may be established, including a Before-Tax
Employee Contribution Account, a Supplemental Contribution Account, an
Employer Matching Contribution Account, an After-Tax Employee Contribution
Account, an Employer Fixed Contribution Account, and a Rollover Contribution
Account, which may be mere bookkeeping entries or individually or collectively
segregated funds, as determined by the Trustee in accordance with the
Trustee's powers.
Section 12.02 "Accounting Date" means a date on which the Trustee values the
Fund and makes allocations to Accounts pursuant to Articles 3 and 4.
Section 12.03 "Beneficiary" means the beneficiary or beneficiaries of the
Participant as designated pursuant to the provisions in the Plan.
Section 12.04 "Break in Service" means a Plan Year in which an Employee fails
to complete more than 500 Hours of Service. Provided, that an Employee shall
not incur a Break in Service solely because of any period of leave to which
the Employee was entitled under the Family and Medical Leave Act of 1993.
Section 12.05 "Code" means the Internal Revenue Code of 1986, as amended.
Section 12.06 "Compensation."
(a) Compensation Included. "Compensation" means the Participant's
regular salary or other wages, plus overtime, bonuses, incentive payments and
commissions paid to the Participant within a calendar year. Except where
specifically provided otherwise, Compensation also includes any Before-Tax
Employee Contributions made to this Plan or any cafeteria plan under Code
Section 125 by the Employer at the election of the Participant through salary
reduction, but excludes any other contributions made by the Employer on behalf
of the Participant under this Plan or any other fringe benefit program of the
Employer.
(b) Compensation Excluded. For the purposes specified in Treasury
regulations under Code Section 401(a)(17), "Compensation" does not include
amounts in excess of:
(1) $200,000 per year (as adjusted from time to time by the
Secretary of Treasury) for calendar years commencing after December 31,
1988 and before January 1, 1994.
(2) $150,000 per year (as adjusted from time to time by the
Secretary of Treasury) for calendar years commencing after December 31,
1993.
(c) Family Aggregation Rules. For purposes of applying the
limitations in (b)(1) and (b)(2) to any Participant, the family aggregation
rules of Code Section 414(q)(6) shall apply, except that for this purpose the
term "family" shall include only the Participant's spouse and any lineal
descendants who have not attained age 19 before the close of the calendar
year. If, as a result of the application of such rules, the limitation in
(b)(1) or (b)(2) (as adjusted) is exceeded, then the limitation shall be
prorated among the affected individuals in proportion to each such
individual's Compensation, as determined under this Section prior to the
application of the limitation.
Section 12.07 "Eligibility Service" means the period of employment used to
determine an Employee's eligibility to participate in the Plan under Article
2. Eligibility Service shall be computed on the basis of elapsed time
measured from an Employee's Employment Commencement Date or Reemployment
Commencement Date to the Employee's Severance from Service Date.
An Employee shall be deemed to have satisfied the one year of
Eligibility Service requirement of Section 2.01(b) if the Employee's
Eligibility Service continues without a Period of Severance to the first
anniversary of his or her Employment Commencement Date.
An Employee who is rehired following a Period of Severance shall have
his or her prior Eligibility Service reinstated unless the Period of Severance
equals or exceeds the greater of five years or the Employee's period of
Eligibility Service before the Severance from Service Date.
If an Employee severs from service by reason of a quit, discharge or
retirement and is credited with an Hour of Service within 12 months of his
Severance from Service Date, then the Employee's Eligibility Service shall
include the Period of Severance.
An Employee's Period of Severance shall also be included as Eligibility
Service if the Employee severs from service by reason of a quit, discharge or
retirement within 12 months after the date the Employee is first absent from
service for any reason other than a quit, discharge, retirement or death and
is then credited with an Hour of Service within 12 months after the date the
Employee was first absent from service.
Section 12.08 "Effective Date" means February 1, 1990 with respect to this
amended and restated Plan; the original effective date of the Plan is February
1, 1984.
Section 12.09 "Employee" means any common-law employee of the Employer. Such
term shall include a leased employee only if required by Section 7.05.
Section 12.10 "Employer" means Crowley, Milner & Company.
Section 12.11 "Employment Commencement Date" means the date on which an
Employee is first credited with an Hour of Service.
Section 12.12 "ERISA" means the Employee Retirement Income Security Act of
l974, as amended.
Section 12.13 "Excess Deferrals" means amounts contributed by Highly
Compensated Participants which result in the failure to pass the ADP tests, as
described in Section 3.02(c)(2).
Section 12.14 "5-Percent Owner" means any person who owns (or who is
considered as owning within the meaning of Code Section 318) more than 5% of
the outstanding stock of the Employer or stock possessing more than 5% of the
total combined voting power of all stock of the Employer.
Section 12.15 "Family Member" means a member of a family as defined in Code
Section 414(q)(6) and regulations issued thereunder.
Section 12.16 "Fund" means the trust fund established pursuant to Article 8
and maintained pursuant to the Plan and any trust instrument(s) executed in
connection with such fund.
Section 12.17 "Highly Compensated Participant" means, with respect to any
Plan Year, each Participant who, during that Plan Year or the preceding Plan
Year (or calendar year, if the Employer so chooses as permitted under
applicable Treasury regulations), (a) was at any time a 5-Percent Owner, (b)
received annual compensation from the Employer in excess of $75,000 (as
adjusted by the Secretary of the Treasury), (c) received annual compensation
from the Employer in excess of $50,000 (as adjusted by the Secretary of the
Treasury) and was among the highest paid 20% of all Employees from such year,
or (d) was at any time an officer of the Employer and received annual
compensation in excess of 50% of the applicable dollar limitation of Code
Section 415(b)(1)(A) in effect for such year. The following special rules
also shall apply for purposes of the foregoing determination of Highly
Compensated Participants:
(1) A Participant shall be considered a Highly Compensated
Participant for the current year under (b), (c), or (d) above if he was
included within one of those categories in the preceding year or is
among the highest paid 100 Employees for the current year;
(2) Under (d) above, no more than 50 Employees (or if less, the
greater of 3 Employees or 10% of the Employees) shall be treated as
officers;
(3) If, for any year, no officer has compensation in excess of
the amount described in (d) above, then in any event the highest paid
officer of the Employer for the year shall be treated as being described
in (d);
(4) Under (c) and (d) above, there shall be excluded from the
highest paid 20% of all Employees:
(A) Employees who have not completed 6 months of service;
(B) Employees who normally work less than 17.5 hours per
week;
(C) Employees who normally work during not more than 6
months within any year; and
(D) Employees who have not attained age 21.
The term "Highly Compensated Employee" also shall include a former Employee
who separated from service prior to the Plan Year of determination and who was
an active Highly Compensated Employee (as previously defined) for either (A)
the Plan Year of the Employee's separation or (B) any Plan Year ending on or
after the Employee's 55th birthday. Provided, however, that any Employee who
separated from service prior to January 1, 1987 will be included as a Highly
Compensated Employee only if he was a 5-Percent Owner or received Compensation
in excess of $50,000 during either the Plan Year of his separation (or the
previous year) or any Plan Year ending on or after his 55th birthday (or the
last year ending before his 55th birthday).
Section 12.18 "Hour of Service" means:
(a)(1) each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer, credited to the
Employee for the computation period during which the duties are
performed;
(2) each hour for which an Employee is paid, or entitled
to payment, by the Employer on account of a period of time during
which no duties are performed due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military
duty, or leave of absence; and
(3) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer, credited to the Employee for the computation period or
periods to which the award or agreement pertains rather than the
computation period during which the award, agreement or payment is
made.
(b) Notwithstanding (a) above, an Employee's Hours of Service
shall not include:
(1) hours in excess of 501 Hours of Service under (a)(2)
above, or under (a)(3) above with respect to periods described in
(a)(2) above, on account of any single continuous period during
which the Employee performs no duties for the Employer, whether or
not such period occurs in a single Plan Year or other computation
period used under the Plan;
(2) hours for which the Employee is directly or indirectly
paid, or entitled to payment, on account of a period during which
no duties are performed, irrespective of whether the employment
relationship has terminated, if such payment is made or due under
a plan maintained solely for the purpose of complying with
applicable workmen's compensation, or unemployment compensation or
disability insurance laws;
(3) hours for a period during which payments are made to
the Employee solely to reimburse the Employee for medical or
medically related expenses incurred by the Employee; and
(4) hours credited under (a)(3) above if such hours also
are credited to the Employee under either (a)(1) or (a)(2) above.
(c) Any questions concerning the determination or crediting of
Hours of Service shall be resolved in accordance with Sections
2530.200b-2(a), (b), and (c) of the Department of Labor Rules and
Regulations for Minimum Standards, which are incorporated by reference.
Hours of Service shall be determined from records of the Employer for
hours worked and for hours for which payment is made or due.
(d) In lieu of the foregoing, the Employer shall determine Hours
of Service for Employees who are not paid on an hourly basis, or who do
not work a fixed number of hours for any period of time, by crediting to
an Employee 45 Hours of Service for each week for which the Employee
would be credited with at least one Hour of Service under the regular
definition for Hour of Service in subsections (a) to (c) of this
Section. Provided, however, that use of this equivalency shall be
subject to the special rules of Sections 2530.200b-3(e)(4) and (6) of
the Department of Labor Rules and Regulations for Minimum Standards in
the case of any payments to an Employee not made on the basis of units
of time, and in the case of periods of time which extend into two
computation periods under the Plan, respectively. Provided further,
that Hours of Service shall not be determined under the above
equivalency if such determination would result in discrimination
prohibited under Code Section 401(a)(4).
(e) Solely for purposes of determining whether a Break in
Service has occurred, there also shall be credited to an Employee, for
any child-related absence, the Hours of Service which otherwise normally
would have been credited to the Employee during the same period (or if
such hours cannot be determined, then 8 Hours of Service per day during
the absence), up to a maximum of 501 Hours of Service for any one
child-related absence. Hours so granted shall be credited in the Plan
Year in which the absence begins, but only if the hours are needed to
prevent the Employee's Break in Service during such year; in all other
cases, the hours shall be credited in the immediately following Plan
Year.
For purposes of this subsection (e), "child-related absence" means
an absence from work due to pregnancy of the Employee, birth of a child
of the Employee, placement of a child with the Employee in connection
with the child's adoption by the Employee, or caring for such child for
a period beginning immediately following the birth or placement.
Section 12.19 "Normal Retirement Age" means age 65.
Section 12.20 "Participant" means an Employee who has met the eligibility
requirements specified in Article 2, who has commenced participation in the
Plan in accordance with that Article, and whose participation has not
terminated under the other applicable provisions of the Plan.
Section 12.21 "Period of Service" means a period beginning on an Employee's
Employment Commencement Date or Reemployment Commencement Date, whichever
applies, and ending on his Severance from Service Date. Nonconsecutive
Periods of Service shall be aggregated on the basis that 12 months or 365 days
equal one year, and that 30 days equals one month.
Section 12.22 "Period of Severance" means the period of time beginning on an
Employee's Severance from Service Date and ending on his Reemployment
Commencement Date.
Section 12.23 "Plan" means the Crowley, Milner & Company Profit Sharing Plan
as described in this instrument and any subsequent amendments.
Section 12.24 "Plan Administrator" means the person(s) or organization(s)
specifically designated by the Employer pursuant to Article 9 as the
administrator of the Plan for purposes of ERISA.
Section 12.25 "Plan Year" means the 12-month period from each February 1 to
the following January 31. Effective January 1, 1991, the Plan Year shall
change to the calendar year. In order to effect the change, the period
beginning February 1, 1990 and ending on December 31, 1990 shall also be a
Plan Year.
Section 12.26 "Reemployment Commencement Date" means the first date following
a Period of Severance which is not required to be taken into account under the
service spanning rules of Section 12.07 on which the Employee is credited with
an Hour of Service.
Section 12.27 "Related Entity" or "Related Entities" means the Employer and
all corporations, partnerships, or sole proprietorships that become affiliated
with or under common ownership or control with the Employer within the meaning
of Code Section 414(b), (c), or (m).
Section 12.28 "Severance from Service Date" means the earlier of the date on
which an Employee quits, retires, is discharged or dies, or the first
anniversary of the first day of a period of absence for any reason other than
quit, retirement, discharge or death (such as vacation, holiday, sickness,
disability, leave of absence of layoff).
Section 12.29 "Trustee" means the person(s) or organization(s) acting as
trustee under the Plan and of the Fund in accordance with any trust
instrument(s) executed in such connection.
Section 12.30 "Year of Service" means a Plan Year during which an Employee is
credited with at least 1,000 Hours of Service.
IN WITNESS WHEREOF, CROWLEY, MILNER & COMPANY, INC. has caused the Plan
to be executed as of September 20, 1994.
CROWLEY, MILNER & COMPANY, INC.
/S/ MARK A. VANDENBERG
By: Mark A. VandenBerg
Witness: Its: Chief Financial Officer
/S/ PATRICIA KALAS
FIRST AMENDMENT
OF THE
SECOND AMENDED AND RESTATED
CROWLEY, MILNER & COMPANY PROFIT SHARING PLAN
Pursuant to Section 10.01 of the Second Amended and Restated Crowley,
Milner & Company Profit Sharing Plan, as effective February 1, 1990 (the
"Plan") and in accordance with authority granted by the Board of Directors,
Crowley, Milner and Company hereby adopts this First Amendment of the Plan
effective July 1, 1995.
1. Section 4.01(a) is amended in its entirety to read as follows:
(a) Investment Options. A Participant who is in active employment of
the Employer, or who ceases to be so employed but elects a deferred
distribution of his Account, shall invest his Account among Employer Stock (as
provided in Section 4.02) and such investment funds as are made available from
time to time by the Trustee at the direction of the Plan Administrator. The
Plan Administrator from time to time may change the available investment
funds. In such event, the Plan Administrator shall give reasonable
notification to Participants of such change. A Participant may invest all or
part of his Account in Employer Stock and/or in any one or more of the funds
so established, but only in whole increments of five percent of the value of
such Account.
2. Section 4.01(c) is amended in its entirety to read as follows:
(c) Frequency of Election.
(1) Future Contributions. With respect to future contributions,
a Participant who is actively employed by the Employer may change his
investment election at such times (not less frequently than once per calendar
quarter) as shall be determined and communicated to Participants by the Plan
Administrator. Except with respect to investments in Employer Stock, the new
election shall become effective with respect to contributions received by the
Trustee after receipt of the Participant's new election. Elections to
increase or decrease investments in Employer Stock shall be effective only in
the third month of each calendar quarter on a date determined by the Plan
Administrator and the Trustee and communicated to Participants. In the
absence of a new election, future contributions shall be invested in Employer
Stock and the available funds in the same proportions as specified in the
Participant's most recent election.
(2) Existing Accounts -- Interfund Transfers. With respect to
his existing Account balance, a Participant who is actively employed by the
Employer, or who ceases to be so employed but elects a deferred distribution
of his Account, may change his election and request a transfer of monies among
Employer Stock and the available funds at least once each calendar quarter
and, except with respect to Employer Stock, at such additional times as shall
be determined by the Plan Administrator. The procedures for transferring
monies among Employer Stock and the available investment funds shall be
determined by the Trustee and the Plan Administrator and shall be communicated
to Participants. Such transfers generally shall become effective on the date
specified by the Participant, subject to such limitations as may be imposed by
the various investment funds and to the notice requirements of the Trustee;
provided, that transfers into or out of Employer Stock shall be effective only
in the third month of each calendar quarter on a date determined by the Plan
Administrator and the Trustee and communicated to Participants. In the sole
discretion of the Plan Administrator any transfer may be made effective at
such later date as is appropriate to effectuate the Participant's new election
without incurring significant losses or transaction costs. The Plan
Administrator shall direct the Trustee to transfer monies or other property as
may be necessary to appropriately reflect the aggregate transfer transactions
after the Plan Administrator has caused the necessary entries to be made in
the Participants' Accounts and has reconciled offsetting transfer elections,
in accordance with uniform rules established by the Plan Administrator.
3. Section 4.01(e) is amended in its entirety to read as follows:
(e) Effect of Distributions. Subject to Section 6.04(d)(7), a loan,
hardship withdrawal or in-service distribution shall be disbursed pro-rata
from the investment fund or funds in which the Participant's Account is
invested. However, no amount shall be disbursed from that portion, if any, of
the Participant's Account which is invested in guaranteed investments
contracts issued by Maccabees Life Insurance Company until all amounts in the
other investment funds in which the Participant's Account is invested have
been disbursed. Loan repayments shall be allocated to the investment funds in
the same manner as the current contributions being made to the Participant's
Account.
4. Sections 4.02 and 4.03 are hereby renumbered 4.03 and 4.04, and a
new Section 4.02 is added to the Plan to read as follows:
Section 4.02 Investment in Employer Stock.
(a) Authorization to Invest. Each Participant who is actively
employed by the Employer, or who ceases to be so employed but elects a
deferred distribution of his Account, may, subject to the percentage
limitation in Section 4.01(a), direct the investment of all or any portion of
his Account in shares of Employer Stock. Pursuant to Participant direction,
the Trustee may invest up to 100% of the Fund in Employer Stock.
(b) Securities Transactions. The Trustee may acquire or sell shares
of Employer Stock in the open market, in transactions with the Employer, and
in any private transaction, including transactions between Participant
Accounts. The value of shares of Employer Stock which are the subject of
transactions between Participant Accounts or transactions with the Employer
shall be the average of the closing price of Employer Stock on the American
Stock Exchange for the three trading days immediately preceding the
transaction. The value of shares of Employer Stock which are purchased or
sold by the Trustee outside of the Plan and in transactions not involving the
Employer shall be the net price actually paid or received for such shares.
(c) Voting and Other Rights. Participants will be given the
opportunity to direct the Trustee to vote all shares of Employer Stock
(including fractional shares) held in their Accounts on all matters presented
to the Employer's shareholders for a vote. The Employer shall notify
Participants when voting rights may be exercised and shall furnish the Trustee
and Participants with information similar to that furnished to other
shareholders of the Employer, and within the time periods required by law or
by the Articles of Incorporation or Bylaws of the Employer. Management of the
Employer and others may solicit the vote of Participants under the same proxy
rules that are applicable to other shareholders of the Employer. The Trustee
shall vote allocated shares for which it has not received directions and any
shares which have not yet been allocated to the Accounts of Participants in
the same proportion as shares for which voting directions have been received.
Information regarding the purchase, holding and sale of Employer Stock for the
benefit of any Participant's Account and information regarding the exercise of
voting rights with respect to such stock shall be kept confidential except to
the extent necessary to comply with applicable federal and state law.
(d) Reinvestment of Dividends. Cash dividends paid on Employer Stock
shall be allocated to Participant's Accounts as of the record date for the
dividend and shall be reinvested by the Trustee in additional shares of
Employer Stock.
(e) Rights, Warrants, or Options. Stock rights, including warrants
and options, issued with respect to Employer Stock held in the Plan shall be
exercised by the Trustee on behalf of Participants to the extent that cash is
available, otherwise they shall be sold and the proceeds shall be invested in
Employer Stock.
(f) Commissions. Commissions incurred in connection with the purchase
or sale of shares of Employer Stock shall be charged to Participant Accounts
or shall be paid by the Employer, as determined by the Employer; provided that
no commissions shall be paid with respect to any transaction involving a
"party-in-interest" as defined in ERISA Section 3(14).
(g) Distributions. A Participant who is entitled to a distribution
under Article 6 may elect to receive shares of Employer Stock held in his
Account in the form of cash or in kind.
(h) Special Rules. The Employer and the Trustee shall have the power
to adopt and implement such uniform administrative rules regarding the
investment of plan assets in Employer Stock as they shall deem necessary or
appropriate.
5. Section 6.04(d) is amended by adding the following paragraph (7)
thereto:
(7) Loans shall not be available with respect to that portion of
a Participant's Account consisting of Employer Stock.
6. A new Section 12.31 is added to Article 12 to read as follows:
Section 12.31 "Employer Stock" means Crowley, Milner and Company Common
Stock, provided that such stock constitutes "qualifying employer securities"
as defined in ERISA Section 407(d)(5).
IN WITNESS WHEREOF, Crowley, Milner and Company has caused this First
Amendment to be executed this 14th day of July, 1995.
CROWLEY, MILNER AND COMPANY
By: /S/ DENNIS P. CALLAHAN
Witness: Its: President and Chief Executive
/S/ MARK A. VANDENBERG Officer
July 19, 1995
CROWLEY, MILNER AND COMPANY
2301 West Lafayette Boulevard
Detroit, Michigan 48216
Re: CROWLEY, MILNER AND COMPANY
Registration Statement on Form S-8
-- Profit Sharing Plan
Ladies and Gentlemen:
We have acted as counsel for Crowley, Milner and Company, a Michigan
corporation (the "Company"), in connection with the preparation and filing
with the Securities and Exchange Commission under the Securities Act of 1993,
as amended, of a Registration Statement on Form S-8 (the "Registrations
Statement") relating to the issuance of up to 100,000 shares of the Company's
Common Stock (the "Common Stock") pursuant to the Second Amended and Restated
Crowley, Milner and Company Profit Sharing Plan (the "Plan").
We have examined such corporate records, documents, certificates and
other instruments as we have considered appropriate for the purposes of this
opinion. In addition, you have stated that the Plan and all subsequent
amendments will be submitted or have been submitted to the Internal Revenue
Service.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the State of Michigan.
2. The shares of Common Stock registered pursuant to the Registration
Statement, when issued in accordance with the Plan, will be legally issued,
fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
DYKEMA GOSSETT PLLC
/S/ Theodore H. Oldham
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference on Form S-8 pertaining to
the Second Amended and Restated Crowley, Milner and Company Profit Sharing
Plan therein of our report dated March 10, 1995 with respect to the financial
statements and schedule of Crowley, Milner and Company incorporated by
reference and included in its Annual Report (Form 10-K) for the year ended
January 28, 1995, filed with the Securities and Exchange Commission.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
July 17, 1995
Detroit, Michigan
