<PAGE> 1
As filed with the Securities and Exchange Commission on January 4, 2000
REGISTRATION NO. 333-_______
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
SOUTHDOWN, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0296500
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1200 SMITH STREET, SUITE 2400
HOUSTON, TEXAS 77002
(713) 650-6200
(Address of registrant's Principal Executive Offices)
SOUTHDOWN, INC. RETIREMENT SAVINGS PLAN
(Full Title of Plan)
PATRICK S. BULLARD
SENIOR VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY
SOUTHDOWN, INC.
1200 SMITH STREET, SUITE 2400
HOUSTON, TEXAS 77002
(Name, and address of agent for service)
713-650-6200
(Telephone number, including area code, of agent for service)
Copy to:
R. DANIEL WITSCHEY, JR.
BRACEWELL & PATTERSON, L.L.P.
SOUTH TOWER, PENNZOIL PLACE
711 LOUISIANA STREET, SUITE 2900
HOUSTON, TEXAS 77002-2781
(713) 223-2900
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
PROPOSED
MAXIMUM PROPOSED AMOUNT OF
TITLE OF AMOUNT TO OFFERING MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED (1) (2) BE REGISTERED (2) PRICE PER SHARE (3) OFFERING PRICE (3) FEE
----------------------------------- ----------------- ------------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Common Stock, par value $1.25 per share 500,000 shares $49.03 $2,451,562.50 $6,472.13
======================================================================================================================
</TABLE>
(1) Includes the Preferred Stock Purchase Rights issuable pursuant to the
Rights Agreement dated as of March 4, 1991, between the Registrant and
American Stock Transfer & Trust Company. As no separate consideration
is payable with respect to the Preferred Stock Purchase Rights, the
registration fee with respect to such securities is included in the
registration fee for the Common Stock.
(2) Pursuant to Rule 457(h)(1) under the Securities Act of 1933, as
amended (the "Act"), the registration fee is calculated with respect
to shares of Common Stock, par value $1.25 per share, to be purchased
pursuant to the Southdown, Inc. Retirement Savings Plan (the "Plan").
In addition, pursuant to Rule 416(a) under the Act, this Registration
Statement also covers an indeterminate amount of interests in the Plan
to be offered or sold pursuant to the Plan which is described herein.
(3) The proposed maximum offering price per share and the proposed maximum
aggregate offering price are (a) calculated, pursuant to Rule
457(h)(1), by multiplying the number of shares to be registered by the
average of the high and low prices of a share of Common Stock, as
reported on The New York Stock Exchange, Inc., on December 29, 1999,
which was $49.03125, and (b) provided herein for the sole purpose of
determining the registration fee.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
* The documents containing the information specified in Part I will be
sent or given to Plan participants as specified by Rule 428(b). In
accordance with the instructions to Part I of Form S-8, these
documents are not being filed and will not be filed with the
Securities and Exchange Commission (the "Commission"), either as part
of this Registration Statement or as a prospectus or prospectus
supplement pursuant to Rule 424.
I-1
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Southdown, Inc., a Louisiana corporation (the "Company"), and the
Southdown, Inc. Retirement Savings Plan (the "Plan"), hereby incorporate by
reference into this registration statement (the "Registration Statement"):
(i) the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, as filed with
the Commission on March 29, 1999;
(ii) the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999, as filed with the
Commission on May 11, 1999, as amended by the Form
10-Q/A filed with the Commission on May 14, 1999;
(iii) the Company's Current Report on Form 8-K dated May
20, 1999, as filed with the Commission on June 3,
1999;
(iv) the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999, as filed with the
Commission on August 6, 1999;
(v) the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999, as filed with the
Commission on November 8, 1999; and
(vi) the description of the Company's Common Stock, par
value $1.25 per share, and Preferred Stock Purchase
Rights contained in the Company's Registration
Statement on Form 8-A/A, filed with the Commission
on April 1, 1998, including any amendment or report
filed for the purpose of updating such descriptions.
All documents filed by the Company or the Plan with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), subsequent to the filing date of this
Registration Statement and prior to the filing of a post-effective amendment to
this Registration Statement which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents.
The Company will provide, without charge, to each participant in the
Plan, on written or oral request of such person, a copy of any or all of the
documents (without exhibits, unless such exhibits are specifically incorporated
by reference), incorporated by reference pursuant to this Item 3. All such
requests should be directed to Southdown, Inc., 1200 Smith Street, Suite 2400,
Houston, Texas 77002, Attention: Patrick S. Bullard, Senior Vice
President--General Counsel and Secretary, phone number (713) 650-6200.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
<PAGE> 4
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Louisiana Business Corporation Law ("LBCL") generally gives a
corporation the power to indemnify any of its directors or officers against
certain expenses, judgments, fines and amounts paid in settlement in connection
with certain actions, suits or proceedings, provided generally that such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. In the case of an action by, or in the right of, the corporation, the
corporation may indemnify such person against expenses, including attorneys'
fees and amounts paid in settlement not exceeding, in the judgment of the board
of directors, the estimated expense of litigating the action to conclusion,
actually and reasonably incurred in connection with the defense or settlement
of such action, and no indemnification shall be made in respect of any claim,
issue, or matter as to which such person shall have been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for willful or intentional misconduct in the performance of his duty to the
corporation, unless, and only to the extent that the court shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, he is fairly and reasonably entitled to indemnity
for such expenses which the court shall deem proper.
Indemnification provided pursuant to the foregoing provisions is not,
under the LBCL, deemed exclusive of any other rights to which the person
indemnified is entitled under any bylaw, agreement, authorization of
shareholders or directors; however, no such other indemnification measure shall
permit indemnification of any person for the results of such person's willful
or intentional misconduct. In addition, the LBCL contains provisions to the
general effect that any director shall in the performance of his duties be
fully protected in relying in good faith upon the records of the corporation
and upon such information, opinions, reports or statements presented to the
corporation, the board of directors, or any committee thereof by any of the
corporation's officers or employees, or by any committee of the board of
directors, or by any counsel, appraiser, engineer (including a petroleum
reservoir engineer), or independent or certified public accountant selected by
the board of directors or any committee thereof with reasonable care, or by any
other person as to matters the director reasonably believes are within such
other person's professional or expert competence and which person is selected
by the board of directors or any committee thereof with reasonable care. A
director shall not be liable for the commission of a prohibited act if his
dissent was either noted in the minutes of the meetings or filed promptly
thereafter in the registered office of the corporation.
As permitted under Section 24(C)(4) of the LBCL, Article XIII of the
Restated Articles of Incorporation of the Company eliminates the personal
liability of any director or officer to the Company or its shareholders for
monetary damages for breach of fiduciary duty in such capacity, except for (i)
any breach of the duty of loyalty to the Company or its shareholders; (ii) acts
or omissions not in good faith or involving intentional misconduct or a knowing
violation of law; (iii) unlawful payment of dividends or unlawful stock
purchase or redemption; or (iv) any transaction from which the director or
officer derived an improper personal benefit.
Article VI, Section 6 of the Company's Bylaws contemplates that the
Company shall indemnify its directors and officers to the maximum extent
permitted by Louisiana law.
In addition, the Company has purchased a liability insurance policy
under which its directors and officers are indemnified against certain losses
arising from certain claims that may be made against them by reason of their
serving in such capacity.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
II-2
<PAGE> 5
ITEM 8. EXHIBITS.*
15 Letter of Deloitte & Touche LLP regarding unaudited interim financial
statements.
23.1 Consent of Deloitte & Touche LLP.
24 Power of Attorney (included on page II-5).
99.1 Retirement Savings Plan, Plan and Trust Agreement, as Amended and
Restated, generally effective as of January 1, 2000.
*The registrant will submit the Plan and any amendment thereto to the
Internal Revenue Service ("IRS") in a timely manner and will make all changes
required by the IRS in order to qualify the Plan. Because the securities being
registered pursuant to this Form S-8 are being acquired by the Plan through open
market purchases, pursuant to Item 8(a), no opinion of counsel is required.
ITEM 9. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of a prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in the registration statement
or any material change to such information in this
Registration Statement;
Provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii)
of this section do not apply if the information required to
be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, that are incorporated by reference in
this Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 6
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
B. 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.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the 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.
[SIGNATURE PAGES FOLLOW]
II-4
<PAGE> 7
SIGNATURES
THE REGISTRANT. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO
BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-8 AND HAS
DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF
TEXAS ON THE 31ST DAY OF DECEMBER, 1999.
SOUTHDOWN, INC.
(Registrant)
By: /s/ Clarence C. Comer
---------------------------------------
Clarence C. Comer
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Clarence C. Comer, Dennis M. Thies and Patrick S. Bullard, with full
power to each of them to act without the other, the undersigned's true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for the undersigned and in the undersigned's name, place and
stead, in any and all capacities (until revoked in writing), to sign this
Registration Statement and any and all amendments (including post-effective
amendments) thereto, to file the same, together with all exhibits thereto and
documents in connection therewith, with the Securities and Exchange Commission,
to sign any and all applications, registration statements, notices and other
documents necessary or advisable to comply with the applicable state securities
authorities, granting unto said attorney-in-fact and agent, or his or their
substitute or substitutes, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as the undersigned might or could do if personally present, thereby ratifying
and confirming all that said attorneys-in-fact and agents, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
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<S> <C> <C>
/s/ Clarence C. Comer President and Chief Executive December 31, 1999
- ----------------------------------- Officer and Director (Principal
Clarence C. Comer Executive Officer)
/s/ Dennis M. Thies Executive Vice President- December 31, 1999
- ----------------------------------- Finance and Chief Financial Officer
Dennis M. Thies (Principal Financial Officer)
/s/ Ricardo Arredondo Vice President and Controller December 31, 1999
- ----------------------------------- (Principal Accounting Officer)
Ricardo Arredondo
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ Robert S. Evans Director December 31, 1999
- -----------------------------------
Robert S. Evans
/s/ Robert G. Potter Director December 23, 1999
- -----------------------------------
Robert G. Potter
/s/ Frank J. Ryan Director December 31, 1999
- -----------------------------------
Frank J. Ryan
/s/ Whitson Sadler Director December 31, 1999
- -----------------------------------
Whitson Sadler
/s/ Robert J. Slater Director December 23, 1999
- -----------------------------------
Robert J. Slater
/s/ David J. Tippeconic Director December 31, 1999
- -----------------------------------
David J. Tippeconnic
/s/ J. Bruce Tompkins Director December 31, 1999
- -----------------------------------
J. Bruce Tompkins
/s/ George E. Uding, Jr. Director December 23, 1999
- -----------------------------------
George E. Uding, Jr.
/s/ V.H. Van Horn, III Director December 23, 1999
- -----------------------------------
V. H. Van Horn, III
/s/ Steven B. Wolitzer Director December 31, 1999
- -----------------------------------
Steven B. Wolitzer
</TABLE>
II-6
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SIGNATURES
THE PLAN. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
THE PLAN ADMINISTRATOR HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE
CITY OF HOUSTON, STATE OF TEXAS ON THE 31ST DAY OF DECEMBER, 1999.
SOUTHDOWN, INC. RETIREMENT SAVINGS PLAN
(PLAN)
BY: SOUTHDOWN, INC., AS PLAN ADMINISTRATOR
By: /s/ PATRICIA H. MILLER
---------------------------------------
Name: Patricia H. Miller
-------------------------------------
Title: Vice President, Human Resources
------------------------------------
II-7
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
15 Letter of Deloitte & Touche LLP regarding unaudited interim financial
statements.
23.1 Consent of Deloitte & Touche LLP.
24 Power of Attorney (included on page II-5).
99.1 Retirement Savings Plan, Plan and Trust Agreement, as Amended and
Restated, generally effective as of January 1, 2000.
</TABLE>
<PAGE> 1
EXHIBIT 15
January 4, 2000
Southdown, Inc.
1200 Smith Street, Suite 2400
Houston, Texas 77002
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Southdown, Inc. and subsidiary companies for the periods ended
March 31, 1999 and 1998, June 30, 1999 and 1998 and September 30, 1999 and
1998, as indicated in our reports dated April 20, 1999, July 20, 1999 and
October 19, 1999, respectively; because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, as
amended, June 30, 1999 and September 30, 1999, are being used in this
Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Southdown, Inc. on Form S-8 of our report dated January 27, 1999, incorporated
by reference in the Annual Report on Form 10-K of Southdown, Inc. for the year
ended December 31, 1998.
DELOITTE & TOUCHE LLP
Houston, Texas
January 4, 2000
<PAGE> 1
SOUTHDOWN, INC.
RETIREMENT SAVINGS PLAN
PLAN AND TRUST AGREEMENT
AS AMENDED AND RESTATED
GENERALLY EFFECTIVE JANUARY 1, 2000
<PAGE> 2
Southdown, Inc. Retirement Savings Plan and Trust
As Amended and Restated Generally Effective January 1, 2000
Southdown, Inc. previously established the Southdown, Inc. Retirement Savings
Plan for the benefit of eligible employees of the Company and its participating
affiliates. The Plan is intended to constitute a qualified profit sharing plan,
as described in Code section 401(a), which includes a qualified cash or deferred
arrangement, as described in Code section 401(k).
The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Southdown, Inc. and Merrill
Lynch Trust Company, FSB. The Trust is intended to be tax exempt as described
under Code section 501(a).
The Plan constitutes an amendment and restatement of the Southdown, Inc.
Retirement Savings Plan which was originally established effective as of July 1,
1990, and its related trust agreement. Effective July 1, 1990 the Transmix
Corporation Retirement Savings Plan and the Savings Plan for Employees of Moore
McCormack Cement, Inc. and Certain Subsidiary Companies were merged into this
Plan. Effective March 1, 1991 the Moore McCormack Resources & Lines Salaried
Employees Savings Plan was merged into this Plan.
Effective June 1, 1995, the Company acquired City Concrete Products, Inc.,
eligible employees thereof became eligible for this Plan effective October 1,
1995, subject to the Plan's eligibility requirements, and effective December 31,
1995, the City Concrete Products, Inc. 401(k) Profit Sharing Plan was merged
into the Plan.
The Plan is intended to comply with the qualification requirements as amended by
the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA),
the Uruguay Round Agreements Act (GATT), the Small Business Job Protection Act
of 1996 (SBJPA), the Taxpayer Relief Act of 1997 (TRA '97), and the
Restructuring and Reform Act of 1998 (RRA '98), and is intended to comply in
operation therewith. To the extent that the Plan, as set forth below, is
subsequently determined to be insufficient to comply with such requirements and
any regulations issued under these qualification requirements, the Plan shall
later be amended to so comply.
The Southdown, Inc. Retirement Savings Plan and Trust, as set forth in this
document, is hereby amended and restated generally effective as of January 1,
2000.
Date: , Southdown, Inc.
-------------------------- ----
By:
--------------------------------------
Title:
-----------------------------------
The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.
Date: , Merrill Lynch Trust Company, FSB
-------------------------- ----
By:
--------------------------------------
Title:
-----------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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1 DEFINITIONS ................................................. 1
2 ELIGIBILITY ................................................. 10
2.1 Eligibility ............................................. 10
2.2 Ineligible Employees .................................... 10
2.3 Ineligible or Former Participants ....................... 10
3 PARTICIPANT CONTRIBUTIONS ................................... 11
3.1 Pre-Tax Contribution Election ........................... 11
3.2 After-Tax Contribution Election ......................... 11
3.3 Changing a Contribution Election ........................ 11
3.4 Revoking and Resuming a Contribution Election ........... 11
3.5 Contribution Percentage Limits .......................... 11
3.6 Refunds When Contribution Dollar Limit Exceeded ......... 12
3.7 Timing, Posting and Tax Considerations .................. 12
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS ........................ 13
4.1 Rollovers ............................................... 13
4.2 Transfers From Other Qualified Plans .................... 13
5 EMPLOYER CONTRIBUTIONS ...................................... 14
5.1 Matching Contributions .................................. 14
6 ACCOUNTING .................................................. 15
6.1 Individual Participant Accounting ....................... 15
6.2 Sweep Account is Transaction Account .................... 15
6.3 Trade Date Accounting and Investment Cycle .............. 15
6.4 Accounting for Investment Funds ......................... 15
6.5 Payment of Fees and Expenses ............................ 15
6.6 Accounting for Participant Loans ........................ 16
6.7 Error Correction ........................................ 16
6.8 Participant Statements .................................. 16
6.9 Special Accounting During Conversion Period ............. 17
6.10 Accounts for QDRO Beneficiaries ........................ 17
7 INVESTMENT FUNDS AND ELECTIONS .............................. 18
7.1 Investment Funds ........................................ 18
7.2 Investment Fund Elections ............................... 18
7.3 Responsibility for Investment Choice .................... 18
7.4 Default if No Election .................................. 19
7.5 Timing .................................................. 19
7.6 Investment Fund Election Change Fees .................... 19
8 VESTING & FORFEITURES ....................................... 20
8.1 Fully Vested Contribution Accounts ...................... 20
8.2 Full Vesting Upon Certain Events ........................ 20
8.3 Vesting Schedule ........................................ 20
8.4 Forfeitures of Non-Vested Account Balances .............. 20
8.5 Use of Forfeiture Account Amounts ....................... 21
8.6 Rehired Employees ....................................... 21
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C>
9 PARTICIPANT LOANS ............................................... 22
9.1 Participant Loans Permitted ................................. 22
9.2 Loan Application, Note and Security ......................... 22
9.3 Spousal Consent ............................................. 22
9.4 Loan Approval ............................................... 22
9.5 Loan Funding Limits ......................................... 22
9.6 Maximum Number of Loans ..................................... 23
9.7 Source and Timing of Loan Funding ........................... 23
9.8 Interest Rate ............................................... 23
9.9 Repayment ................................................... 23
9.10 Repayment Hierarchy ........................................ 23
9.11 Repayment Suspension ....................................... 24
9.12 Loan Default ............................................... 24
9.13 Call Feature ............................................... 24
10 IN-SERVICE WITHDRAWALS .......................................... 25
10.1 In-Service Withdrawals Permitted ........................... 25
10.2 In-Service Withdrawal Application and Notice ............... 25
10.3 Spousal Consent ............................................ 25
10.4 In-Service Withdrawal Approval ............................. 25
10.5 Minimum Amount, Payment Form and Medium .................... 25
10.6 Source and Timing of In-Service Withdrawal Funding ......... 26
10.7 Hardship Withdrawals ....................................... 26
10.8 After-Tax Account Withdrawals .............................. 28
10.9 Over Age 59 1/2 Withdrawals ................................ 28
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW ........ 29
11.1 Benefit Information, Notices and Election .................. 29
11.2 Spousal Consent ............................................ 30
11.3 Payment Form and Medium .................................... 30
11.4 Distribution of Small Amounts .............................. 30
11.5 Source and Timing of Distribution Funding .................. 30
11.6 Latest Commencement Permitted .............................. 30
11.7 Payment Within Life Expectancy ............................. 31
11.8 Incidental Benefit Rule .................................... 31
11.9 Payment to Beneficiary ..................................... 32
11.10 Beneficiary Designation ................................... 32
12 ADP AND ACP TESTS ............................................... 33
12.1 Contribution Limitation Definitions ........................ 33
12.2 ADP and ACP Tests .......................................... 35
12.3 Correction of ADP and ACP Tests ............................ 36
12.4 Multiple Use Test .......................................... 37
12.5 Correction of Multiple Use Test ............................ 37
12.6 Adjustment for Investment Gain or Loss ..................... 37
12.7 Testing Responsibilities and Required Records .............. 37
12.8 Separate Testing ........................................... 38
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS .................... 39
13.1 "Annual Addition" Defined .................................. 39
</TABLE>
ii
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<TABLE>
<S> <C>
13.2 Maximum Annual Addition .................................... 39
13.3 Avoiding an Excess Annual Addition ......................... 39
13.4 Correcting an Excess Annual Addition ....................... 39
13.5 Correcting a Multiple Plan Excess .......................... 39
13.6 "Defined Benefit Fraction" Defined ......................... 40
13.7 "Defined Contribution Fraction" Defined .................... 40
13.8 Combined Plan Limits and Correction ........................ 40
14 TOP HEAVY RULES ................................................. 41
14.1 Top Heavy Definitions ...................................... 41
14.2 Special Contributions ...................................... 42
14.3 Adjustment to Combined Limits for Different Plans .......... 42
15 PLAN ADMINISTRATION ............................................. 43
15.1 Plan Delineates Authority and Responsibility ............... 43
15.2 Fiduciary Standards ........................................ 43
15.3 Company is ERISA Plan Administrator ........................ 43
15.4 Administrator Duties ....................................... 43
15.5 Advisors May be Retained ................................... 44
15.6 Delegation of Administrator Duties ......................... 44
16 MANAGEMENT OF INVESTMENTS ....................................... 46
16.1 Trust Agreement ............................................ 46
16.2 Investment Funds ........................................... 46
16.3 Authority to Hold Cash ..................................... 46
16.4 Trustee to Act Upon Instructions ........................... 47
16.5 Administrator Has Right to Vote
Registered Investment Company Shares ..................... 47
16.6 Custom Fund Investment Management .......................... 47
16.7 Authority to Segregate Assets .............................. 48
16.8 Maximum Permitted Investment in Company Stock .............. 48
16.9 Participants Have Right to Vote and Tender Company Stock ... 48
16.10 Registration and Disclosure for Company Stock ............. 48
17 TRUST ADMINISTRATION ............................................ 50
17.1 Trustee to Construe Trust .................................. 50
17.2 Trustee To Act As Owner of Trust Assets .................... 50
17.3 United States Indicia of Ownership ......................... 50
17.4 Tax Withholding and Payment ................................ 50
17.5 Trustee Duties and Limitations ............................. 51
17.6 Trust Accounting ........................................... 51
17.7 Valuation of Certain Assets ................................ 52
17.8 Legal Counsel .............................................. 52
17.9 Fees and Expenses .......................................... 52
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION ............... 53
18.1 Plan Does Not Affect Employment Rights ..................... 53
18.2 Compliance With USERRA ..................................... 53
18.3 Limited Return of Contributions ............................ 53
18.4 Assignment and Alienation .................................. 54
18.5 Facility of Payment ........................................ 54
18.6 Reallocation of Lost Participant's Accounts ................ 54
18.7 Claims Procedure ........................................... 54
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C>
18.8 Construction ............................................... 55
18.9 Jurisdiction and Severability .............................. 55
18.10 Indemnification by Employer ............................... 55
19 AMENDMENTS MERGER AND TERMINATION ............................... 57
19.1 Amendment .................................................. 57
19.2 Merger ..................................................... 57
19.3 Divestitures ............................................... 57
19.4 Plan Termination ........................................... 58
19.5 Amendment and Termination Procedures ....................... 58
19.6 Termination of Employer's Participation .................... 58
19.7 Replacement of the Trustee ................................. 59
19.8 Final Settlement and Accounting of Trustee ................. 59
APPENDIX A - INVESTMENT FUNDS ........................................ 60
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES ....................... 61
APPENDIX C - LOAN INTEREST RATE ...................................... 62
</TABLE>
iv
<PAGE> 7
1 DEFINITIONS
When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting for
a Participant's interest in the Plan. "Account" may refer to one
or all of the following accounts which have been created on
behalf of a Participant to hold specific types of Contributions
under the Plan or amounts transferred from a predecessor plan:
(a) "Pre-Tax Account". An account created to hold Pre-Tax
Contributions and amounts transferred as a result of a
plan merger from any plan, qualified under Code section
401(a) having a cash or deferred arrangement pursuant to
Code section 401(d), of a Related Company.
(b) "After-Tax Account". An account created to hold
After-Tax Contributions.
(c) "Rollover Account". An account created to hold Rollover
Contributions.
(d) "Matching Account". An account created to hold Matching
Contributions.
(e) "Prior Plan Matching Account". An account created to
hold amounts transferred from predecessor plans
including amounts transferred from the City Concrete
Products, Inc. 401(k) Profit Sharing Plan designated as
"Employer Match" and "Employer Basic" amounts
thereunder.
1.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a portion
of the duties of the Administrator under the Plan to a person or
persons in accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage calculated
in accordance with Section 12.1.
1.5 "Beneficiary". The person or persons who is to receive benefits
after the death of the Participant pursuant to the "Beneficiary
Designation" paragraph in Section 11, or as a result of a QDRO.
1.6 "Break in Service". The fifth anniversary (or sixth anniversary
if absence from employment was due to a Parental Leave) of the
date on which a Participant's employment ends.
1.7 "Code". The Internal Revenue Code of 1986, as amended. Reference
to any specific Code section shall include such section, any
valid regulation promulgated thereunder, and any comparable
provision of any future legislation amending, supplementing or
superseding such section.
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<PAGE> 8
1.8 "Company". Southdown, Inc. or any successor by merger, purchase
or otherwise.
1.9 "Company Stock". Shares of common stock of the Company, its
predecessor(s), or its successors or assigns, or any corporation
with or into which said corporation may be merged, consolidated
or reorganized, or to which a majority of its assets may be sold.
1.10 "Compensation". The sum of a Participant's Taxable Income and
salary reductions, if any, pursuant to Code sections 125,
402(e)(3), 402(h)(1)(B), 403(b), 408(p)(2)(A)(i) or 457.
For purposes of determining benefits under this Plan,
Compensation is limited to$150,000 per Plan Year (as adjusted for
cost of living increases pursuant to Code sections 401(a)(17) and
415(d)).
For the purposes of determining HCEs and key employees and for
Plan Years commencing after December 31, 1997, for purposes of
Sections 13.2 and 14.2, Compensation for the entire Plan Year
shall be used. For the purpose of determining ADP and ACP,
Compensation shall be limited to amounts paid to an Eligible
Employee while a Participant.
1.11 "Contribution". An amount contributed to the Plan by the Employer
or an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. Specific
types of contribution include:
(a) "Pre-Tax Contribution". An amount contributed by an
eligible Participant in conjunction with his or her Code
section 401(k) salary deferral election which shall be
treated as made by the Employer on an eligible
Participant's behalf.
(b) "After-Tax Contribution". An amount contributed by an
eligible Participant on an after-tax basis.
(c) "Rollover Contribution". An amount contributed by an
Eligible Employee which originated from another
employer's or an Employer's qualified plan.
(d) "Matching Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon
the amount contributed by the eligible Participant.
1.12 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre-Tax Contributions, which shall be $7,000 per
calendar year (as adjusted for cost of living increases pursuant
to Code section 402(g)(5) and 415(d)). For purposes of this
Section, a Participant's Pre-Tax Contributions shall include (i)
any Employer contribution made under any qualified cash or
deferred arrangement as defined in Code section 401(k) to the
extent not includible in gross income for the taxable year under
Code section 402(e)(3) (determined
2
<PAGE> 9
without regard to Code section 402(g)), and (ii) any employer
contribution to the extent not includible in gross income for the
taxable year under Code section 402(h)(1)(B) (determined without
regard to Code section 402(g)), (iii) any employer contribution
to purchase an annuity contract under Code section 403(b) under a
salary reduction agreement (within the meaning of Code section
3121(a)(5)(D)) and (iv) for calendar years commencing after
December 31, 1996, any elective employer contribution under Code
section 408(p)(2)(A)(i).
1.13 "Direct Rollover". A payment from the Plan to an Eligible
Retirement Plan specified by a Distributee.
1.14 "Disability". A Participant's total and permanent, mental or
physical disability resulting in termination of employment as
evidenced by presentation of medical evidence satisfactory to the
Administrator.
1.15 "Distributee". An Employee or former Employee, the surviving
spouse of an Employee or former Employee and a spouse or former
spouse of an Employee or former Employee determined to be an
alternate payee under a QDRO.
1.16 "Effective Date". January 1, 2000, unless stated otherwise. The
date upon which the provisions of this document become effective.
In general, the provisions of this document only apply to
Participants who are Employees on or after the Effective Date.
However, investment and distribution provisions apply to all
Participants with Account balances to be invested or distributed
after the Effective Date.
1.17 "Eligible Employee". An Employee of an Employer, except any
Employee:
(a) whose compensation and conditions of employment are
covered by a collective bargaining agreement to which an
Employer is a party unless the agreement calls for the
Employee's participation in the Plan;
(b) who is treated as an Employee because he or she is a
Leased Employee; or
(c) who is a nonresident alien who (i) either receives no
earned income (within the meaning of Code section
911(d)(2)), from sources within the United States under
Code section 861(a)(3); or (ii) receives such earned
income from such sources within the United States but
such income is exempt from United States income tax
under an applicable income tax convention.
1.18 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement
annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust described
in Code section 401(a), that accepts a Distributee's Eligible
Rollover Distribution, except that with regard to an Eligible
Rollover Distribution to a surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
3
<PAGE> 10
1.19 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding
(i) a 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; (ii) a distribution to the extent such
distribution is required under Code section 401(a)(9); (iii) the
portion of a distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities) and (iv)
Hardship Withdrawal amounts withdrawn form a Participant's
Pre-Tax Account.
As regards (iv) above, for the 1999 calendar year, the
Distributee may determine a distribution to be an Eligible
Rollover Distribution using the definition prior to 1999.
1.20 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom
any income for such employment is subject to withholding
of income or social security taxes, or
(b) a Leased Employee.
1.21 "Employer". The Company and any Subsidiary or other Related
Company of either the Company or a Subsidiary which adopts this
Plan with the approval of the Company.
1.22 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending,
supplementing or superseding such section.
1.23 "Execution Date". The date on which this Plan and Trust document
is executed.
1.24 "Forfeiture Account". An account holding amounts forfeited by
Terminated Participants, invested in interest bearing deposits
(which may include interest bearing deposits of the Trustee)
and/or money market type assets or funds, pending disposition as
provided in the Plan and Trust and as directed by the
Administrator.
1.25 "HCE" or "Highly Compensated Employee". An Employee described as
a Highly Compensated Employee in Section 12.
1.26 "Ineligible". The Plan status of an individual during the period
in which he or she is (1) an Employee of a Related Company which
is not then an Employer, (2) an Employee, but not an Eligible
Employee, or (3) not an Employee.
1.27 "Investment Fund" or "Fund". An investment fund as described in
Section 16.2. The Investment Funds authorized by the
Administrator to be offered as of the Execution Date to
Participants and Beneficiaries are as set forth in Appendix A.
4
<PAGE> 11
1.28 "Leased Employee". For Plan Years commencing after December 31,
1996, an individual, not otherwise an Employee, who, pursuant to
an agreement between a Related Company and a leasing
organization, has performed, on a substantially full-time basis,
for a period of at least 12 months, services under the primary
direction or control of the Related Company, unless:
(a) the individual is covered by a money purchase pension
plan maintained by the leasing organization and meeting
the requirements of Code section 414(n)(5)(B), and
(b) such individuals do not constitute more than 20% of all
Non-Highly Compensated Employees of all Related
Companies (within the meaning of Code section
414(n)(5)(C)(ii)).
1.29 "Leave of Absence". A period during which an individual is deemed
to be an Employee, but is absent from active employment, provided
that the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed
forces and the individual returns to active employment
within the period during which he or she retains
employment rights under federal law.
1.30 "NHCE" or "Non-Highly Compensated Employee". An Employee
described as a Non-Highly Compensated Employee in Section 12.
1.31 "Normal Retirement Date". The date of a Participant's 65th
birthday.
1.32 "Owner". A person with an ownership interest in the capital,
profits, outstanding stock or voting power of a Related Company
within the meaning of Code section 318 or 416 (which exclude
indirect ownership through a qualified plan).
1.33 "Participant". An Eligible Employee who begins to participate in
the Plan after completing the eligibility requirements as
described in Section 2.1. An Eligible Employee who makes a
Rollover Contribution prior to completing the eligibility
requirements as described in Section 2.1 shall also be considered
a Participant except for purposes of provisions related to
Contributions (other than a Rollover Contribution). A
Participant's participation continues until his or her employment
with all Related Companies ends and his or her Account is
distributed or forfeited.
1.34 "Pay". All cash compensation paid to an Eligible Employee by an
Employer while a Participant during the current period. Pay
excludes reimbursements or other expense allowances, cash and
non-cash fringe benefits, moving expenses, deferred compensation
and welfare benefits.
Pay is neither increased nor decreased by any salary credit or
reduction pursuant to Code sections 125 or 402(e)(3). Pay is
limited to $150,000 (as indexed for the cost of living pursuant
to Code sections 401(a)(17) and 415(d)) per Plan Year.
5
<PAGE> 12
1.35 "Period of Employment". The period beginning on the date an
Employee first performs an hour of service and ending on the date
his or her employment ends. Employment ends on the date the
Employee quits, retires, is discharged, dies or (if earlier) the
first anniversary of his or her absence for any other reason. The
period of absence starting with the date an Employee's employment
temporarily ends and ending on the date he or she is subsequently
reemployed is (1) included in his or her Period of Employment if
the period of absence does not exceed one year, and (2) excluded
if such period exceeds one year.
An Employee's service with a predecessor or acquired company
shall only be counted in the determination of his or her Period
of Employment for eligibility and/or vesting purposes if (1) the
Company directs that credit for such service be granted, or (2) a
qualified plan of the predecessor or acquired company is
subsequently maintained by any Employer or Related Company.
1.36 "Plan". The Southdown, Inc. Retirement Savings Plan set forth in
this document, as from time to time amended.
1.37 "Plan Year". The annual accounting period of the Plan and Trust
which ends on each December 31.
1.38 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the
meaning of Code section 414(p).
1.39 "Related Company". With respect to any Employer, that Employer
and any corporation, trade or business which is, together with
that Employer, a member of the same controlled group of
corporations, a trade or business under common control, or an
affiliated service group within the meaning of Code section
414(b), (c), (m) or (o).
1.40 "Required Beginning Date". The latest date benefit payments shall
commence to a Participant.
(a) For calendar years commencing before January 1, 1997,
such date shall mean:
(1) with regard to a Participant who (i) attained age
70 1/2 in 1996, (ii) did not terminate employment
with all Related Companies before January 1, 1997,
and (iii) is not or was not a 5% Owner, the April
1 that next follows (i) the calendar year in which
the Participant attained age 70 1/2, or (ii) if
the Participant elects to apply this clause (ii),
the calendar year in which the Participant
terminates employment with all Related Companies
(and any such election must be made prior to
January 1, 1998); and
(2) with regard to a Participant who attained age 70
1/2 after December 31, 1987 and before January 1,
1996 or, in 1996 if he or she (i) terminated
employment with all Related Companies before
January 1, 1997 or (ii) is or was a 5% Owner, the
April 1 that next follows the calendar year in
which the Participant attains age 70 1/2; and
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<PAGE> 13
(3) with regard to a Participant who attained age 70
1/2 before January 1, 1988 and who is not a 5%
Owner, the April 1 that next follows the later of
(i) the calendar year in which the Participant
attained age 70 1/2, or (ii) the calendar year in
which the Participant terminates employment with
all Related Companies; and
(4) with regard to a Participant who attained age 70
1/2 before January 1, 1988 and who is a 5% Owner,
the April 1 that next follows the later of (i) the
calendar year in which the Participant attained
age 70 1/2, or (ii) the earlier of the calendar
year in which or within which ends the Plan Year
in which the Participant becomes a 5% Owner or the
calendar year in which he or she terminates
employment with all Related Companies.
A Participant shall be considered a 5% Owner for this
purpose if such Participant is a 5% Owner as defined in
Code section 416(i) (determined in accordance with Code
section 416 but without regard to whether the Plan is
top-heavy) at any time during the Plan Year ending with
or within the calendar year in which the Participant
attains age 66 1/2 or in any subsequent Plan Year.
(b) For calendar years commencing after December 31, 1996
and before January 1, 1999, such date shall mean:
(1) with regard to a Participant who attained age 70
1/2 in 1997 or 1998, the April 1 that next follows
the calendar year in which he or she attained age
70 1/2, except that if the Participant (i) did not
terminate employment with all Related Companies
before January 1 of the calendar year following
the calendar year in which he or she attained age
70 1/2, (ii) is not a 5% Owner, such date shall
instead mean the April 1 that next follows (i) the
calendar year in which the Participant attained
age 70 1/2, or (ii) if the Participant elects to
apply this clause (ii), the calendar year in which
the Participant terminates employment with all
Related Companies (and any such election must be
made prior to the April 1 of the calendar year
following the calendar year in which he or she
attained age 70 1/2); and
(2) with regard to a Participant who is a 5% Owner,
the April 1 that next follows the calendar year in
which the Participant attains age 70 1/2.
A Participant shall be considered a 5% Owner for this
purpose if such Participant is a 5% Owner with respect
to the Plan Year ending in the calendar year in which
the Participant attains age 70 1/2.
(c) For calendar years commencing after December 31, 1998,
such date shall mean:
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<PAGE> 14
(1) with regard to a Participant who is not a 5%
Owner, the April 1 that next follows the later of
(i) the calendar year in which the Participant
attained age 70 1/2, or (ii) the calendar year in
which the Participant terminates employment with
all Related Companies; and
(2) with regard to a Participant who is a 5% Owner,
the April 1 that next follows the calendar year in
which the Participant attains age 70 1/2.
A Participant shall be considered a 5% Owner for this
purpose if such Participant is a 5% Owner with respect
to the Plan Year ending in the calendar year in which
the Participant attains age 70 1/2.
1.41 "SettlementDate". The date on which the transactions from the
most recent Trade Date are settled. Effective April 1, 1992 for
each Trade Date, the Trustee's next business day.
1.42 "Spousal Consent". The written consent given by a spouse to a
Participant's election or waiver of a specified form of benefit,
including a loan or in-service withdrawal, or Beneficiary
designation. The spouse's consent must acknowledge the effect on
the spouse of the Participant's election, waiver or designation
and be duly witnessed by a Plan representative or notary public.
Spousal Consent shall be valid only with respect to the spouse
who signs the Spousal Consent and only for the particular choice
made by the Participant which requires Spousal Consent. A
Participant may revoke (without Spousal Consent) a prior
election, waiver or designation that required Spousal Consent at
any time before payments begin. Spousal Consent also means a
determination by the Administrator that there is no spouse, the
spouse cannot be located, or such other circumstances as may be
established by applicable law.
1.43 "Subsidiary". A company which is 50% or more owned, directly or
indirectly, by the Company.
1.44 "Sweep Account". The subsidiary Account for each Participant
through which all transactions are processed, which is invested
in interest bearing deposits of the Trustee.
1.45 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the next Trade
Date.
1.46 "Taxable Income". Compensation in the amount reported by the
Employer as "Wages, tips, other compensation" on Form W-2, or any
successor method of reporting under Code section 6041(d).
1.47 "Trade Date". Each day the Investment Funds are valued, which is
the last business day of the month. Effective April 1, 1992, each
day the Investment Funds are valued, which is normally every day
the assets of such Funds are traded.
1.48 "Trust". The legal entity created by those provisions of this
document which
8
<PAGE> 15
relate to the Trustee. The Trust is part of the Plan and holds
the Plan assets which are comprised of the aggregate of
Participants' Accounts and any unallocated funds invested in
deposit or money market type assets pending allocation to
Participants' Accounts or disbursement to pay Plan fees and
expenses and the Forfeiture Account.
1.49 "Trustee". Merrill Lynch Trust Company, FSB.
1.50 "USERRA". The Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended.
1.51 "Year of Vesting Service". A 12 month Period of Employment.
9
<PAGE> 16
2 ELIGIBILITY
2.1 Eligibility
Effective January 1, 2000, each Eligible Employee shall become a
Participant the first day of the month after such Eligible
Employee completes a 3-month Period of Employment. The
eligibility period begins on the date an Employee's Period of
Employment commences."
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but
is Ineligible at the time participation would otherwise begin (if
he or she were not Ineligible), he or she shall become a
Participant on the first subsequent date on which he or she is an
Eligible Employee.
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions, nor
generally be eligible for a new Plan loan, during the period he
or she is Ineligible, but he or she shall continue to participate
for all other purposes. An Ineligible Participant or former
Participant shall automatically become an active Participant on
the date he or she again becomes an Eligible Employee.
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<PAGE> 17
3 PARTICIPANT CONTRIBUTIONS
3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
reduce his or her Pay by an amount which does not exceed the
Contribution Dollar Limit, within the limits described in the
Contribution Percentage Limits paragraph of this Section 3, and
have such amount contributed to the Plan by the Employer as a
Pre-Tax Contribution. The election shall be made as a whole
percentage of Pay in such manner and with such advance notice as
prescribed by the Administrator. In no event shall an Employee's
Pre-Tax Contributions under the Plan and all other plans,
contracts or arrangements of all Related Companies exceed the
Contribution Dollar Limit for the Employee's taxable year
beginning in the Plan Year.
3.2 After-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
make After-Tax Contributions to the Plan in an amount which does
not exceed the limits described in the Contribution Percentage
Limits paragraph of this Section 3. The election shall be made as
a whole percentage of Pay in such manner and with such advance
notice as prescribed by the Administrator.
3.3 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Pre-Tax and/or After-Tax Contribution election at any time in
such manner and with such advance notice as prescribed by the
Administrator. The changed percentage shall become effective with
the first payroll paid after such date. Participants'
Contribution election percentages shall automatically apply to
Pay increases or decreases.
3.4 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at any
time in such manner and with such advance notice as prescribed by
the Administrator, and such election shall be effective with the
first payroll paid after such date.
A Participant may resume Contributions by making a new
Contribution election at the same time in which a Participant may
change his or her election in such manner and with such advance
notice as prescribed by the Administrator, and such election
shall be effective with the first payroll paid after such date.
3.5 Contribution Percentage Limits
The Administrator may establish and change from time to time,
without the necessity of amending this Plan and Trust document,
the separate minimum, if applicable, and maximum Pre-Tax and
After-Tax Contribution percentages, and/or a maximum combined
Pre-Tax and After-Tax Contribution percentage, prospectively or
retrospectively (for the current Plan Year), for all
Participants. In addition, the Administrator may establish any
lower percentage limits for Highly Compensated Employees as it
deems necessary. As of the Effective Date, the maximum
Contribution percentages are:
11
<PAGE> 18
<TABLE>
<CAPTION>
HIGHLY
CONTRIBUTION COMPENSATED ALL OTHER
TYPE EMPLOYEES PARTICIPANTS
---- --------- ------------
<S> <C> <C>
Pre-Tax 16% 16%
After-Tax 16% 16%
Sum of Both 16% 16%
</TABLE>
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event
shall the contributions made by or on behalf of a Participant for
a Plan Year exceed the maximum allowable under Code section 415.
3.6 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar year
to this and any other qualified defined contribution plan in
excess of the Contribution Dollar Limit may notify the
Administrator in writing by the following March 1 (or as late as
April 14 if allowed by the Administrator) that an excess has
occurred. In this event, the amount of the excess specified by
the Participant, adjusted for investment gain or loss, shall be
refunded to him or her by April 15 and shall not be included as
an Annual Addition under Code section 415 for the year
contributed. Refunds and forfeitures shall not include investment
gain or loss for the period between the end of the applicable
Plan Year and the date of distribution or forfeitures. However,
for Plan Years ending before December 31, 1993, refunds shall
include investment gain or loss for the period between the end of
the applicable Plan Year and the date of distribution. Any
Matching Contributions attributable to refunded excess Pre-Tax
Contributions as described in this Section shall be deemed a
Contribution made by reason of a mistake of fact and removed from
the Participant's Account.
3.7 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover Contributions,
may only be made through payroll deduction. Such amounts shall be
paid to the Trustee in cash and posted to each Participant's
Account(s) as soon as such amounts can reasonably be separated
from the Employer's general assets and balanced against the
specific amount made on behalf of each Participant. In no event,
however, shall such amounts be paid to the Trustee more than 90
days after the date amounts are deducted from a Participant's
Pay. Except that effective February 3, 1997, such amounts shall
be paid to the Trustee 15 business days following the end of the
month that includes the date amounts are deducted from a
Participant's Pay (or as that maximum period may be otherwise
extended by ERISA). Pre-Tax Contributions shall be treated as
Contributions made by an Employer in determining tax deductions
under Code section 404(a).
12
<PAGE> 19
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS
4.1 Rollovers
The Administrator may authorize the Trustee to accept a rollover
contribution in cash, within the meaning of Code section 402(c)
or 408(d)(3)(A)(ii), directly from an Eligible Employee or
effective January 1, 1993, as a Direct Rollover from another
qualified plan on behalf of the Eligible Employee, even if he or
she is not yet a Participant. The Employee shall be responsible
for furnishing satisfactory evidence, in such manner as
prescribed by the Administrator, that the amount is eligible for
rollover treatment. A rollover contribution received directly
from an Eligible Employee must be paid to the Trustee in cash
within 60 days after the date received by the Eligible Employee
from a qualified plan or conduit individual retirement account.
Contributions described in this paragraph shall be posted to the
applicable Employee's Rollover Account as of the date received by
the Trustee.
If it is later determined that an amount contributed pursuant to
the above paragraph did not in fact qualify as a rollover
contribution under Code section 402(c) or 408(d)(3)(A)(ii), the
balance credited to the Employee's Rollover Account shall
immediately be (1) segregated from all other Plan assets, (2)
treated as a nonqualified trust established by and for the
benefit of the Employee, and (3) distributed to the Employee. Any
such nonqualifying rollover shall be deemed never to have been a
part of the Plan.
4.2 Transfers From Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in
cash or in kind directly from another qualified plan. The Trustee
may refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable;
(b) instructions for posting amounts to Participants'
Accounts are incomplete;
(c) any amounts are not exempted by Code section
401(a)(11)(B) from the annuity requirements of Code
section 417; or
(d) any amounts include benefits protected by Code section
411(d)(6) which would not be preserved under applicable
Plan provisions.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
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5 EMPLOYER CONTRIBUTIONS
5.1 Matching Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall
make Matching Contributions, as described in the
following Allocation Method paragraph, on behalf of each
Participant who contributed during the period.
(b) Allocation Method. The Matching Contributions (including
any Forfeiture Account amounts applied as Matching
Contributions in accordance with Section 8) for each
period shall total 75% of the sum of each eligible
Participant's combined Pre-Tax and After-Tax
Contributions for the period, provided that no Matching
Contributions (and Forfeiture Account amounts) shall be
made based upon a Participant's Contributions in excess
of 6% of his or her Pay.
(c) Timing, Medium and Posting. The Employer shall make each
period's Matching Contribution in cash as soon as is
feasible, and for purposes of deducting such
Contribution, not later than the Employer's federal tax
filing date, including extensions. The Trustee shall
post such amount to each Participant's Matching Account
once the total Contribution received has been balanced
against the specific amount to be credited to each
Participant's Matching Account.
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<PAGE> 21
6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts
for each Participant in order to reflect transactions both by
type of Contribution and investment medium. Financial
transactions shall be accounted for at the individual Account
level by posting each transaction to the appropriate Account of
each affected Participant. Participant Account values shall be
maintained in shares for the Investment Funds and in dollars for
their Sweep and Participant loan Accounts. At any point in time,
the Account value shall be determined using the most recent Trade
Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
will be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade
Date. For any transaction to be processed as of a Trade Date, the
Trustee must receive instructions for the transaction by the
Sweep Date. Such instructions shall apply to amounts held in the
Account on that Sweep Date. Financial transactions of the
Investment Funds shall be posted to Participants' Accounts as of
the Trade Date, based upon the Trade Date values provided by the
Trustee, and settled on the Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in
shares. The Trustee is responsible for determining the share
values of each Investment Fund as of each Trade Date. To the
extent an Investment Fund is comprised of collective investment
funds of the Trustee, or any other fiduciary to the Plan, the
share values shall be determined in accordance with the rules
governing such collective investment funds, which are
incorporated herein by reference. All other share values shall be
determined by the Trustee. The share value of each Investment
Fund shall be based on the fair market value of its underlying
assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, as set forth below, are paid by the Employer
directly, or indirectly, through the Forfeiture Account as
directed by the Administrator, such fees and expenses shall be
paid as set forth below. The Employer may pay a lower portion of
the fees and expenses allocable to the Accounts of Participants
who are no longer Employees.
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(a) Account Maintenance: Account maintenance fees and
expenses, may include but are not limited to,
administrative, Trustee, government annual report
preparation, audit, legal, nondiscrimination testing,
and fees for any other special services. Account
maintenance fees shall be charged to Participants on a
per Participant basis provided that no fee shall reduce
a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include
but are not limited to, recurring payment, Investment
Fund election change and loan fees. Transaction fees
shall be charged to the Participant's Account involved
in the transaction provided that no fee shall reduce a
Participant's Account balance below zero. After
migration to MLII there will be no limit on the number
of investment fund election changes and no fees assessed
on investment fund election changes by a Participant.
(c) Investment Fund Management and Maintenance: Management
and maintenance fees and expenses related to the
Investment Funds shall be charged at the Investment Fund
level and reflected in the net gain or loss of each
Fund.
As of the Effective Date, a breakdown of which Plan fees and
expenses shall generally be borne by the Trust (and charged to
individual Participants' Accounts) and those that shall be paid
by the Employer, directly or indirectly, is set forth in Appendix
B and may be changed from time to time, without the necessity of
amending this Plan and Trust Document.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from
the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Account of the
Participant and accounted for in dollars as an earmarked asset of
the borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had
no error or omission been made. Funds necessary for any such
restoration shall be provided through payment made by the
Employer, or by the Trustee to the extent the error or omission
is attributable to actions or inactions of the Trustee, or if the
restoration involves an Account holding amounts contributed by an
Employer, the Administrator may direct the Trustee to use amounts
from the Forfeiture Account.
6.8 Participant Statements
The Administrator shall provide Participants with statements of
their Accounts as soon after the end of each quarter of the Plan
Year as is administratively feasible.
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<PAGE> 23
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting methods
in performing their respective duties during the period of converting
the prior accounting system of the Plan and Trust to conform to the
individual Participant accounting system described in this Section.
This includes, but is not limited to, the method for allocating net
investment gains or losses and the extent, if any, to which
contributions received by and distributions paid from the Trust during
this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate payee entitled
to any portion of a Participant's Account under a QDRO as of the date
and in accordance with the directions specified in the QDRO. In
addition, a separate Account may be established during the period of
time the Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic relations order
qualifies as a QDRO. Such a separate Account shall be valued and
accounted for in the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an alternate
payee may be distributed, in a form as permissible under the
Distribution Once Employment Ends Section, to the alternate
payee at the time specified in the QDRO, regardless of whether
the Participant is entitled to a distribution from the Plan at
such time.
(b) Participant Loans. Except to the extent required by law, an
alternate payee, on whose behalf a separate Account has been
established, shall not be entitled to borrow from such
Account. If a QDRO specifies that the alternate payee is
entitled to any portion of the Account of a Participant who
has an outstanding loan balance, all outstanding loans shall
generally continue to be held in the Participant's Account and
shall not be divided between the Participant's and alternate
payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an alternate payee and has not yet
been distributed, the alternate payee may direct the
investment of such Account in the same manner as if he or she
were a Participant.
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<PAGE> 24
7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
Except for Participants' Sweep and loan Accounts, the Trust
shall be maintained in various Investment Funds. The
Administrator shall select the Investment Funds offered to
Participants and may change the number or composition of the
Investment Funds, subject to the terms and conditions agreed
to with the Trustee. As of the Execution Date, a list of the
Investment Funds offered to Participants is set forth in
Appendix A, and may be changed from time to time, without the
necessity of amending this Plan and Trust document.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or
her Contribution Accounts except for these Accounts:
Matching Account
which shall be entirely invested in the Investment Fund
specified by the Administrator, which Investment Fund as of
the Execution Date is set forth in Appendix A. Effective June
30, 1992 and anytime thereafter, a Participant who has
attained age 59 1/2 may direct the investment of the balances
in his or her Matching Account. Future amounts allocated to
his or her Matching Account will continue to be entirely
invested in the Investment Fund specified by the
Administrator, until otherwise directed by the Participant.
A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds
offered in accordance with the procedures established by the
Administrator and Trustee. However, during the period of
converting the prior accounting system of the Plan and Trust
to conform to the individual Participant accounting system
described in Section 6, Trust assets may be held in any
investment vehicle permitted by the Plan, as directed by the
Administrator, irrespective of Participant investment
elections.
The Administrator may set a maximum percentage of the total
election that a Participant may direct into any specific
Investment Fund, which maximum, if any, is set forth in
Appendix A, and may be changed from time to time, without the
necessity of amending this Plan and Trust document.
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the selection
of his or her Investment Fund choices. No fiduciary with
respect to the Plan is empowered to advise a Participant as to
the manner in which his or her Accounts are to be invested,
and the fact that an Investment Fund is offered shall not be
construed to be a recommendation for investment.
7.4 Default if No Election
The Administrator shall specify an Investment Fund for the
investment of that
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<PAGE> 25
portion of a Participant's Account which is not yet held in an
Investment Fund and for which no valid investment election is
on file. The Investment Fund specified as of the Execution
Date is as set forth in Appendix A, and may be changed from
time to time, without the necessity of amending this Plan and
Trust document.
7.5 Timing
A Participant shall make his or her initial investment
election upon becoming a Participant and may change his or her
election at any time in accordance with the procedures
established by the Administrator and Trustee. Investment
elections received by the Trustee by the Sweep Date will be
effective on the following Trade Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a
Participant's Account for Investment Fund election changes in
excess of a specified number per year as determined by the
Administrator. After migration to MLII there will be no limit
on the number of investment fund election changes and no fees
assessed on investment fund election changes by a Participant.
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8 VESTING & FORFEITURES
8.1 Fully Vested Contribution Accounts
All Participants hired prior to January 1, 2000, shall be
fully vested in all Accounts at all times.
All Participants hired after January 1, 2000, shall be fully
vested in these Accounts at all times:
Pre-Tax Account
After-Tax Account
Rollover Account
Prior Plan Matching Account
8.2 Full Vesting Upon Certain Events
A Participant's entire Account shall become fully vested once
he or she has attained his or her Normal Retirement Date while
an Employee or upon his or her terminating employment with all
Related Companies due to his or her Disability or death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's
Matching Account shall become vested in accordance with the
following schedule:
YEARS OF VESTING VESTED
SERVICE PERCENTAGE
------------------ ------------
Less than 5 0%
5 or more 100%
If this vesting schedule is changed, the vested percentage for
each Participant shall not be less than his or her vested
percentage determined as of the last day prior to this change,
and for any Participant with at least three Years of Vesting
Service when the schedule is changed, his or her vested
percentage shall be determined using the more favorable
vesting schedule.
8.4 Forfeitures of Non-Vested Account Balances
A Terminated Participant shall forfeit his or her non-vested
Account balance as soon as administratively feasible after the
earliest of the date he or she:
(a) is determined to be a Terminated Participant, if his
or her vested Account balance is zero;
(b) receives a complete distribution of his or her vested
Account balance; or
(c) incurs a Break in Service.
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<PAGE> 27
Forfeitures from all Accounts subject to vesting shall be
transferred to and maintained in the Forfeiture Account.
8.5 Use of Forfeiture Account Amounts
Forfeiture Account amounts, attributable to non-vested Account
balances forfeited prior to the January 1, 2000 in accordance
with the Plan provisions then in effect, shall be used to
restore Accounts, to pay Plan fees and expenses, and applied
to future Matching Contributions to be made, as directed by
the Administrator.
8.6 Rehired Employees
(a) Service Restoration. If a former Employee again
becomes an Employee, all Periods of Employment
credited when his or her employment last terminated
shall be counted in determining his or her vested
interest.
(b) Account Restoration. If a former Employee again
becomes an Employee before he or she incurs a Break
in Service, the amount forfeited after his or her
employment last terminated shall be restored to his
or her Account. The restoration shall include the
interest which would have been credited had such
forfeiture been invested in the Sweep Account from
the date forfeited until the date the restoration
amount is restored. The restoration amount shall come
from the Forfeiture Account to the extent possible,
and any additional amount needed shall be contributed
by the Employer. His or her vested interest in the
restored Account shall then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current Account balance
D = amount previously distributed from Account}
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<PAGE> 28
9 PARTICIPANT LOANS
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with
such advance notice as prescribed by the Administrator. All
loans shall be evidenced by a promissory note, secured only by
the portion of the Participant's Account from which the loan
is made, and the Plan shall have a lien on this portion of his
or her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to take out a loan under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee if otherwise authorized by
the Administrator and expressly agreed to by the Trustee, is
responsible for determining that an loan request conforms to
the requirements described in this Section and granting such
request.
9.5 Loan Funding Limits
The loan amount must meet all of the following limits as
determined as of the Sweep Date the loan is processed:
(a) Plan Minimum Limit. The minimum amount for any loan
is $1,000.
(b) Plan Maximum Limit. Subject to the legal limit
described in (c) below, the maximum a Participant may
borrow, including the outstanding balance of existing
Plan loans, is 100% of the following Accounts which
are fully vested:
Pre-Tax Account
Rollover Account
After-Tax Account
(c) Legal Maximum Limit. The maximum a Participant may
borrow, including the outstanding balance of existing
Plan loans, is 50% of his or her vested Account
balance, not to exceed $50,000. However, the $50,000
maximum is reduced by the Participant's highest
outstanding loan balance during the 12 month period
ending on the day before the Sweep Date as of which
the loan is made. For purposes of this paragraph, the
qualified plans of all Related Companies shall be
treated as though they are part of this Plan to the
extent it would decrease the maximum loan amount.
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<PAGE> 29
9.6 Maximum Number of Loans
A Participant may have a maximum of two loans outstanding at
any given time, except that a participant may have more than
two loans outstanding at any given time as a result of
transfer on his or her behalf of more than two loans from a
predecessor plan as merged herein. During any period such a
Participant has two or more loans outstanding, a new loan may
not be secured.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets
of his or her own Accounts. The available assets shall be
determined first by Account type and then by investment type
within each type of Account. The hierarchy for loan funding by
type of Account shall be the order listed in the preceding
Plan Maximum Limit paragraph. Within each Account used for
funding a loan, amounts shall first be taken from the Sweep
Account and then taken by type of investment in direct
proportion to the market value of the Participant's interest
in each Investment Fund as of the Trade Date on which the loan
is processed.
Loans will be funded on the Settlement Date following the
Trade Date as of which the loan is processed. The Trustee
shall make payment to the Participant as soon thereafter as
administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a
fixed reasonable rate of interest, determined from time to
time by the Administrator, which provides the Plan with a
return commensurate with the prevailing interest rate charged
by persons in the business of lending money for loans which
would be made under similar circumstances. As of the Effective
Date, the interest rate is determined as set forth in Appendix
C, and may be changed from time to time, without the necessity
of amending this Plan and Trust document.
9.9 Repayment
Substantially level amortization shall be required of each
loan with payments made at least monthly, generally through
payroll deduction. Loans may be prepaid in full or in part at
any time. The Participant may choose the loan repayment
period, not to exceed five years.
9.10 Repayment Hierarchy
Prior to migration to MLII, loan principal payments shall be
credited to the Participant's Accounts in the inverse of the
order used to fund the loan. After migration to MLII, loan
principal payments shall be credited to the Participants'
Accounts in the same order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in
direct proportion to the principal payment. Loan payments are
credited to the Investment Funds based upon the Participant's
current investment election for new Contributions.
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<PAGE> 30
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan payments
for up to 12 months for a Participant who is on a Leave of
Absence. During the suspension period interest shall continue
to accrue on the outstanding loan balance. At the expiration
of the suspension period all outstanding loan payments and
accrued interest thereon shall be due unless otherwise agreed
upon by the Administrator.
9.12 Loan Default
A loan is treated as in default if a scheduled loan payment is
not made at the time required. A Participant shall then have a
grace period to cure the default before it becomes final. Such
grace period shall be for a period that does not extend beyond
the last day of the calendar quarter following the calendar
quarter in which the scheduled loan payment was due or such
lesser or greater maximum period as may later be authorized by
Code section 72(p).
In the event a default is not cured within the grace period,
the Administrator may direct the Trustee to report the
outstanding principal balance of the loan and accrued interest
thereon as a taxable distribution to the Participant. As soon
as a Plan withdrawal or distribution to such Participant would
otherwise be permitted, the Administrator may instruct the
Trustee to execute upon its security interest in the
Participant's Account by distributing the note to the
Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant
loan once a Participant's employment with all Related
Companies has terminated or if the Plan is terminated.
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<PAGE> 31
10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in
this Section and pursuant to the terms and conditions set
forth in Section 11 with regard to an in-service withdrawal
made in accordance with a Participant's Required Beginning
Date.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in
such manner and with such advance notice as prescribed by the
Administrator. Effective for in-service withdrawals applied
for after December 31, 1992, the Participant shall be provided
the notice prescribed by Code section 402(f).
If an in-service withdrawal is one to which Code sections
401(a)(11) and 417 do not apply, such in-service withdrawal
may commence less than 30 days after the aforementioned notice
is provided, if:
(a) the Participant is clearly informed that he or she
has the right to a period of at least 30 days after
receipt of such notice to consider his or her option
to elect or not elect a Direct Rollover for the
portion, if any, of his or her in-service withdrawal
which will constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice,
affirmatively elects a Direct Rollover for the
portion, if any, of his or her in-service withdrawal
which will constitute an Eligible Rollover
Distribution or alternatively elects to have such
portion made payable directly to him or her, thereby
not electing a Direct Rollover.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to make an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee if otherwise authorized by
the Administrator and expressly agreed to by the Trustee, is
responsible for determining that an in-service withdrawal
request conforms to the requirements described in this Section
and granting such request.
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of withdrawal. For
withdrawals made after December 31, 1992, with regard to the
portion of a withdrawal representing an Eligible Rollover
Distribution, a Participant may elect a Direct Rollover. The
form of payment for an in-service withdrawal shall be a single
lump sum and payment shall be made in cash.
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<PAGE> 32
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely
from the assets of his or her own Accounts and will be based
on the Account values as of the Trade Date the in-service
withdrawal is processed. The available assets shall be
determined first by Account type and then by investment type
within each type of Account. Within each Account used for
funding an in-service withdrawal, amounts shall first be taken
from the Sweep Account and then taken by type of investment in
direct proportion to the market value of the Participant's
interest in each Investment Fund (which excludes Participant
loans) as of the Trade Date on which the in-service withdrawal
is processed.
In-Service withdrawals will be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal
is processed. The Trustee shall make payment as soon
thereafter as administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may
request the withdrawal of up to the amount necessary
to satisfy a financial need including amounts
necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result
from the withdrawal. Only requests for withdrawals
(1) on account of a Participant's "Deemed Financial
Need" or "Demonstrated Financial Need", and (2) which
are "Demonstrated as Necessary" to satisfy the
financial need will be approved.
(b) "Deemed Financial Need". Financial commitments
relating to:
(1) the payment of unreimbursable medical
expenses described under Code section 213(d)
incurred (or to be incurred) by the
Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments)
of the Employee's principal residence;
(3) the payment of unreimbursable tuition and
related educational fees for up to the next
12 months of post-secondary education for
the Employee, his or her spouse or
dependents;
(4) the payment of funeral expenses of an
Employee's family member;
(5) the payment of amounts necessary for the
Employee to prevent losing his or her
principal residence through eviction or
foreclosure on the mortgage; or
(6) any other circumstance specifically
permitted under Code section
401(k)(2)(B)(i)(IV).
(c) "Demonstrated Financial Need". A determination by the
Administrator that a severe financial hardship to the
Participant has resulted from:
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<PAGE> 33
(1) a sudden and unexpected illness or accident
to the Employee or his or her spouse or
dependents;
(2) the loss, due to casualty, of the Employee's
property other than nonessential property
(such as a boat or a television); or
(3) some other similar extraordinary and
unforeseeable circumstances arising as a
result of events beyond the control of the
Employee.
(d) "Demonstrated as Necessary". A withdrawal is
"demonstrated as necessary" to satisfy the financial
need only if the withdrawal amount does not exceed
the financial need, the Employee represents that he
or she is unable to relieve the financial need
(without causing further hardship) by doing any or
all of the following and the Administrator does not
have actual knowledge to the contrary:
(1) receiving any reimbursement or compensation
from insurance or otherwise;
(2) reasonably liquidating his or her assets and
the assets of his or her spouse or minor
children that are reasonably available to
the Employee;
(3) ceasing all of his or her contributions to
all qualified and nonqualified plans of
deferred compensation and all stock option
or stock purchase plans maintained by
Related Companies;
(4) obtaining all other possible withdrawals and
nontaxable loans available from all plans
maintained by Related Companies; and
(5) obtaining all possible loans from commercial
sources on reasonable commercial terms.
(e) Account Sources for Withdrawal. All available amounts
must first be withdrawn from a Participant's
After-Tax Account. The remaining withdrawal amount
shall come only from the Participant's fully vested
Accounts, in the following priority order:
Rollover Account
Prior Plan Employer Account
Pre-Tax Account
The amount that may be withdrawn from a Participant's
Pre-Tax Account shall not include any earnings
credited to his or her Pre-Tax Account after the
start of the first Plan Year beginning after December
31, 1988.
(f) Permitted Frequency. There is no restriction on the
number of Hardship withdrawals permitted to a
Participant.
(g) Suspension from Further Contributions. Upon making a
Hardship withdrawal a Participant may not make
additional Contributions for a
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period of twelve months from the date the withdrawal
payment is made.
10.8 After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee may
withdraw up to the entire balance from his or her
After-Tax Account.
(b) Permitted Frequency. The maximum number of After-Tax
Account withdrawals permitted to a Participant in any
12-month period is one.
(c) Suspension from Further Contributions. Upon making an
After-Tax Account withdrawal, a Participant may not
make additional Contributions for a period of three
months from the date the withdrawal payment is made.
10.9 Over Age 59 Withdrawals
(a) Requirements. A Participant who is an Employee and
over age 59 1/2 may withdraw from the Accounts listed
in paragraph (b) below.
(b) Account Sources for Withdrawal. The withdrawal amount
shall come only from the Participant's fully vested
Accounts, in the following priority order with the
exception that the Participant may instead choose to
have amounts taken from his or her After-Tax Account
first:
Rollover Account
Pre-Tax Account
Matching Account
Prior Plan Employer Account
After-Tax Account
(c) Permitted Frequency. The maximum number of Over Age
59 1/2 withdrawals permitted to a Participant in any
12-month period is one.
(d) Suspension from Further Contributions. An Over Age
59 1/2 withdrawal shall not affect a Participant's
ability to make or be eligible to receive further
Contributions.
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11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or
her death, shall be provided with information regarding all
optional times and forms of distribution available under the
Plan, including the notices prescribed by Code sections 402(f)
and 411(a)(11). Subject to the other requirements of this
Section, a Participant, or his or her Beneficiary in the case
of his or her death, may elect, in such manner and with such
advance notice as prescribed by the Administrator, to have his
or her vested Account balance distributed beginning upon any
Settlement Date following the Participant's termination of
employment with all Related Companies and a reasonable period
of time during which the Administrator shall process, and
inform the Trustee of, the Participant's termination or, if
earlier, at the time of the Participant's Required Beginning
Date.
Notwithstanding, if a Participant's termination of employment
with all Related Companies does not constitute a separation
from service for purposes of Code section 401(k)(2)(B)(i)(I)
or otherwise constitute an event set forth under Code section
401(k)(10)(A)(ii) or (iii) as described in Section 19.3, the
portion of a Participant's Account subject to the distribution
rules of Code section 401(k) may not be distributed until such
time as he or she separates from service for purposes of Code
section 401(k)(2)(B)(i)(I) or, if earlier, upon such other
event as described in Code section 401(k)(2)(B) and as
provided for in the Plan.
Code sections 401(a)(11) and 417 do not apply to distributions
under the Plan. A distribution may commence less than 30 days
after the aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she
has the right to a period of at least 30 days after
receipt of such notices to consider the decision as
to whether to elect a distribution and if so to elect
a particular form of distribution and to elect or not
elect a Direct Rollover for all or a portion, if any,
of his or her distribution which constitutes an
Eligible Rollover Distribution; and
(b) the Participant after receiving such notices,
affirmatively elects a distribution and a Direct
Rollover for all or a portion, if any, of his or her
distribution which constitutes an Eligible Rollover
Distribution or alternatively elects to have all or a
portion made payable directly to him or her, thereby
not electing a Direct Rollover for all or a portion
thereof; and
(c) if such distribution is one to which Code sections
401(a)(11) and 417 apply, the Participant's election
includes Spousal Consent.
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to receive a distribution under the Plan.
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<PAGE> 36
11.3 Payment Form and Medium
A Participant shall be paid in the form of a single lump sum.
Notwithstanding, a Participant who is an Employee at the time
he or she is required by law to commence distribution, or
anytime thereafter, may instead elect to be paid annually in a
lump sum an amount sufficient to comply with Code section
401(a)(9).
Distributions shall generally be made in cash. Alternatively,
a lump sum payment may be made in a combination of cash and
whole shares of Company Stock (to the extent invested in the
Company Stock Fund). With regard to the portion of a
distribution representing an Eligible Rollover Distribution, a
Distributee may elect a Direct Rollover for all or a portion
of such amount.
11.4 Distribution of Small Amounts
Effective for Plan Years beginning after August 5, 1997, if
after a Participant's employment with all Related Companies
ends, the Participant's vested Account balance is $5,000 or
less, the Participant's benefit shall be paid as a single lump
sum as soon as administratively feasible in accordance with
procedures prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the
assets of his or her own Accounts and will be based on the
Account values as of the Trade Date the distribution is
processed. The available assets shall be determined first by
Account type and then by investment type within each type of
Account. Within each Account used for funding a distribution,
amounts shall first be taken from the Sweep Account and then
taken by type of investment in direct proportion to the market
value of the Participant's interest in each Investment Fund as
of the Trade Date on which the distribution is processed.
Distributions will be funded on the Settlement Date following
the Trade Date as of which the distribution is processed. The
Trustee shall make payment as soon thereafter as
administratively feasible.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments
shall begin not later than 60 days after the end of the Plan
Year in which he or she attains his or her Normal Retirement
Date or retires, whichever is later. However, if the amount of
the payment or the location of the Participant (after a
reasonable search) cannot be ascertained by that deadline,
payment shall be made no later than 60 days after the earliest
date on which such amount or location is ascertained but in no
event later than the Participant's Required Beginning Date. A
Participant's failure to elect in such manner as prescribed by
the Administrator to have his or her vested Account balance
distributed, shall be deemed an election by the Participant to
defer his or her distribution but in no event shall his or her
benefit payments commence later than his or her Required
Beginning Date.
With regard to a Participant who is an Employee and who
commenced benefit payments in accordance with Code section
401(a)(9) as in effect prior to
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<PAGE> 37
January 1, 1997, and who is not a 5% Owner, he or she may, but
is not required to, discontinue such benefit payments until he
or she is otherwise required to again commence benefit
payments in accordance with Code section 401(a)(9) as in
effect for calendar years commencing after December 31, 1996.
A Participant who elects to discontinue such benefit payments
in accordance with the preceding sentence shall thereby render
his or her existing payment election and, if applicable, any
Spousal Consent to such election, as void and a new election
including, if applicable, Spousal Consent to such new
election, shall be required subject to the provisions of
Section 11 at the time he or she is required to again commence
benefit payments in accordance with Code section 401(a)(9) as
in effect for calendar years commencing after December 31,
1996.
Notwithstanding any provision of the Plan to the contrary,
distributions may be made pursuant to the terms of any method
of distribution elected by an Employee who was a Participant
prior to January 1, 1984, in accordance with the terms of the
Plan as in effect immediately prior to that date, provided
that the election shall remain in effect only until revoked
and (if revoked) may not later be reinstated.
If benefit payments cannot begin at the time required because
the location of the Participant cannot be ascertained (after a
reasonable search), the Administrator may, at any time
thereafter, treat such person's Account as forfeited subject
to the provisions of Section 18.6.
11.7 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to
be completed within a period not to exceed the lives or the
joint and last survivor life expectancy of the Participant and
his or her Beneficiary. The life expectancies of a Participant
and his or her Beneficiary, if such Beneficiary is his or her
spouse, may be recomputed annually.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or
her sole primary Beneficiary, the minimum annual distribution
for each calendar year, beginning with the calendar year
preceding the calendar year that includes the Participant's
Required Beginning Date, shall not be less than the quotient
obtained by dividing (a) the Participant's vested Account
balance as of the last Trade Date of the preceding year by (b)
the applicable divisor as determined under the incidental
benefit requirements of Code section 401(a)(9).
11.9 Payment to Beneficiary
Payment to a Beneficiary must be completed by the end of the
calendar year that contains the fifth anniversary of the
Participant's death, except that:
Payment to a Beneficiary must either (i) be completed by the
end of the calendar year that contains the fifth anniversary
of the Participant's death or (ii) begin by the end of the
calendar year that contains the first anniversary of the
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<PAGE> 38
Participant's death and be completed within the period of the
Beneficiary's life or life expectancy, except that:
(a) If the Participant dies after his or her Required
Beginning Date, payment to his or her Beneficiary
must be made at least as rapidly as provided in the
Participant's distribution election;
(b) If the surviving spouse is the Beneficiary, payments
need not begin until the later of (i) the end of the
calendar year that includes the first anniversary of
the Participant's death, or (ii) the end of the
calendar year in which the Participant would have
attained age 70 1/2 and must be completed within the
spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is
the Beneficiary die (i) before the Participant's
Required Beginning Date and (ii) before payments have
begun to the spouse, the spouse shall be treated as
the Participant in applying these rules.
11.10 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death. The
designation may be changed at any time. However, a
Participant's spouse shall be the sole primary Beneficiary
unless the designation includes Spousal Consent for another
Beneficiary. If no proper designation is in effect at the time
of a Participant's death or if the Beneficiary does not
survive the Participant, the Beneficiary shall be, in the
order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, per stirpes
(by right of representation), or
(c) Participant's estate.
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<PAGE> 39
12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12
(where a definition is contained in both Sections 1 and 12,
for purposes of Section 12 the Section 12 definition shall be
controlling):
(a) "ACP" or "Average Contribution Percentage". The
Average Percentage calculated using Contributions
allocated to Participants as of a date within the
Plan Year.
(b) "ACP Test". The determination of whether the ACP is
in compliance with the Basic or Alternative
Limitation for a Plan Year (as defined in Section
12.2).
(c) "ADP" or "Average Deferral Percentage". The Average
Percentage calculated using Deferrals allocated to
Participants as of a date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is
in compliance with the Basic or Alternative
Limitation for a Plan Year (as defined in Section
12.2).
(e) "Average Percentage". The average of the calculated
percentages for Participants within the specified
group. The calculated percentage refers to either the
"Deferrals" or "Contributions" (as defined in this
Section) made on each Participant's behalf for the
Plan Year, divided by his or her Compensation for the
portion of the Plan Year in which he or she was an
Eligible Employee while a Participant. (Pre-Tax
Contributions which will be refunded solely because
they exceed the Contribution Dollar Limit are
included in the percentage for the HCE Group but not
for the NHCE Group if such excess Pre-Tax
Contributions were made to plans of Related
Companies.)
(f) "Contributions" shall include Matching and After-Tax
Contributions. In addition, Contributions may include
Pre-Tax Contributions, but only to the extent that
(1) the Employer elects to use them, (2) they are not
used or counted in the ADP Test, and (3)
Contributions are fully vested when made, not
withdrawable by an Employee before he or she attains
age 59 1/2 and (4) they otherwise satisfy the
requirements as prescribed under Code section 401(m)
permitting treatment as Contributions for purposes of
the ACP Test, including with regard to Contributions,
satisfaction of the requirements of Code section
401(a) in the manner prescribed under Code section
401(m)(3) they are necessary to meet the ACP Test
Alternative Limitation (defined in Section 12.2 (b))
or the Multiple Use Test.
(g) "Current Year Testing Method". The use of the Plan
Year's ADP for the Plan Year's NHCE Group for
purposes of performing the Plan Year's ADP Test
and/or the use of the Plan Year's ACP for the Plan
Year's NHCE Group for purposes of performing the Plan
Year's ACP Test.
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<PAGE> 40
(h) "Deferrals" shall include Pre-Tax Contributions. In
addition, Deferrals may include Matching
Contributions, but only to the extent that (1) the
Employer elects to use them, (2) they are not used or
counted in the ACP Test, and (3) such Contributions
are fully vested when made and not withdrawable by an
Employee before he or she attains age 59 1/2.
(i) "HCE" or "Highly Compensated Employee". For Plan
Years commencing after December 31, 1996, with
respect to all Related Companies, an Employee who (in
accordance with Code section 414(q)):
(1) Was a more than 5% Owner (within the meaning
of Code section 414(q)(2)) at any time
during the Plan Year or the preceding Plan
Year; or
(2) Received Compensation during the preceding
Plan Year in excess of $80,000 (as adjusted
for such Year pursuant to Code sections
414(q)(1) and 415(d)).
A former Employee shall be treated as an HCE if (1)
such former Employee was an HCE when he or she
separated from service, or (2) such former Employee
was an HCE in service at any time after attaining age
55.
(j) "HCE Group" and "NHCE Group". With respect to all
Related Companies, the respective group of HCEs and
NHCEs who are eligible to have amounts contributed on
their behalf for the respective Plan Year, including
Employees who would be eligible but for their
election not to participate or to contribute, or
because their Pay is greater than zero but does not
exceed a stated minimum. For Plan Years commencing
after December 31, 1998, with respect to all Related
Companies, if the Plan permits participation prior to
an Eligible Employee's satisfaction of the minimum
age and service requirements of Code section
410(a)(1)(A), Eligible Employees who have not met the
minimum age and service requirements of Code section
410(a)(1)(A) may be excluded in the determination of
the NHCE Group, but not in the determination of the
HCE Group, for purposes of (i) the ADP Test, if Code
section 410(b)(4)(B) is applied in determining
whether the 401(k) portion of the Plan meets the
requirements of Code section 410(b), or (ii) the ACP
Test, if Code section 410(b)(4)(B) is applied in
determining whether the 401(m) portion of the Plan
meets the requirements of Code section 410(b).
(1) If the Related Companies maintain two or
more plans which are subject to the ADP or
ACP Test and are considered as one plan for
purposes of Code sections 401(a)(4) or
410(b), all such plans shall be aggregated
and treated as one plan for purposes of
meeting the ADP and ACP Tests, provided that
the plans may only be aggregated if they
have the same plan year.
(2) If an HCE is covered by more than one cash
or deferred arrangement maintained by the
Related Companies, all such
34
<PAGE> 41
plans shall be aggregated and treated as one
plan (other than those plans that may not be
permissively aggregated) for purposes of
calculating the separate percentage for the
HCE which is used in the determination of
the Average Percentage. For purposes of the
preceding sentence, if such plans have
different plan years, the plans are
aggregated with respect to the plan years
ending with or within the same calendar
year.
(k) "Multiple Use Test". The test described in Section
12.4 which a Plan must meet where the Alternative
Limitation (described in Section 12.2(b)) is used to
meet both the ADP and ACP Tests.
(l) "NHCE" or "Non-Highly Compensated Employee". An
Employee who is not an HCE.
(m) "Prior Year Testing Method". The use of the preceding
Plan Year's ADP for the preceding Plan Year's NHCE
Group for purposes of performing the Plan Year's ADP
Test and/or the use of the preceding Plan Year's ACP
for the preceding Plan Year's NHCE Group for purposes
of performing the Plan Year's ACP Test.
12.2 ADP and ACP Tests
For Plan Years commencing before January 1, 1997, for each
Plan Year, the Current Year Testing Method shall be used and
the ADP and ACP for the HCE Group must meet either the Basic
or Alternative Limitation when compared to the respective ADP
and ACP for the NHCE Group, defined below:
For Plan Years commencing after December 31, 1996, for each
Plan Year, the Prior Year Testing Method shall be used and the
ADP and ACP for the HCE Group must meet either the Basic or
Alternative Limitation when compared to the respective
preceding Plan Year's ADP and ACP for the preceding Plan
Year's NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage
may not exceed 1.25 times the NHCE Group Average
Percentage.
(b) Alternative Limitation. The HCE Group Average
Percentage is limited by reference to the NHCE Group
Average Percentage as follows:
IF THE NHCE GROUP THEN THE MAXIMUM HCE
AVERAGE PERCENTAGE IS: GROUP AVERAGE PERCENTAGE IS:
----------------------- ------------------------------
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
12.3 Correction of ADP and ACP Tests
For Plan Years commencing after December 31, 1996, for each
Plan Year, if the ADP or ACP Tests are not met, the
Administrator shall determine, no later than
35
<PAGE> 42
the end of the next Plan Year, a maximum percentage to be used
in place of the calculated percentage for all HCEs that would
reduce the ADP and/or ACP or the HCE Group by a sufficient
amount to meet the ADP and ACP Tests.
With regard to each HCE whose Deferral percentage and/or
Contribution percentage is in excess of the maximum
percentage, a dollar amount of excess Deferrals and/or excess
Contributions shall then be determined by Such amounts shall
then be aggregated to determine the total dollar amount of
excess Deferrals and/or excess Contributions. ADP and/or ACP
corrections shall be made in accordance with the leveling
method as described below.
(a) ADP Correction. The HCE with the highest Deferral dollar
amount shall have his or her Deferral dollar amount reduced in
an amount equal to the lesser of the dollar amount of excess
Deferrals for all HCEs or the dollar amount that would cause
his or her Deferral dollar amount to equal that of the HCE
with the next highest Deferral dollar amount. The process
shall be repeated until the total of the Deferral dollar
amount reductions equals the dollar amount of excess Deferrals
for all HCEs.
To the extent an HCE's Deferrals were determined to be reduced
as described in the paragraph above, Pre-Tax Contributions
shall, by the end of the next Plan Year, be refunded to the
HCE, except that such amount to be refunded shall be reduced
by Pre-Tax Contributions previously refunded because they
exceeded the Contribution Dollar Limit.
(b) ACP Correction. The HCE with the highest Contribution dollar
amount shall have his or her Contribution dollar amount
reduced in an amount equal to the lesser of the dollar amount
of excess Contributions for all HCEs or the dollar amount that
would cause his or her Contribution dollar amount to equal
that of the HCE with the next highest Contribution dollar
amount. The process shall be repeated until the total of the
Contribution dollar amount reductions equals the dollar amount
of excess Contributions for all HCEs.
To the extent an HCE's Contributions were determined to be
reduced as described in the paragraph above, Contributions
shall, by the end of the next Plan Year, be refunded to the
HCE to the extent such amounts were not vested, as of the end
of the Plan Year being tested. The excess amounts shall be
taken from unmatched After-Tax Contributions and then as a
proportional combination of matched After-Tax and Matching
Contributions.
(c) Investment Fund Sources. Once the amount of excess Deferrals
and/or Contributions is determined, within each Account from
which amounts are refunded amounts shall first be taken from
the Sweep Account and then taken by Investment Fund in direct
proportion to the market value of the Participant's interest
in each Investment Fund (which excludes his or her Loan
Account balance) as of the Trade Date on which the correction
is processed.
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<PAGE> 43
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is
used to meet both the ADP and ACP Tests, the ADP and ACP for
the HCE Group must also comply with the requirements of Code
section 401(m)(9). Such Code section requires that the sum of
the ADP and ACP for the HCE Group (as determined after any
corrections needed to meet the ADP and ACP Tests have been
made) not exceed the sum (which produces the most favorable
result) of:
(a) the Basic Limitation (defined in Section 12.2)
applied to either the ADP or ACP for the NHCE Group,
and
(b) the Alternative Limitation applied to the other NHCE
Group percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the
calculated percentage for all HCEs that would reduce either or
both the ADP or ACP for the HCE Group by a sufficient amount
to meet the multiple use limit. Any excess shall be handled in
the same manner that the distribution of excess Deferrals or
Contributions are handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant in accordance with Section 12.3 or 12.5 shall be
adjusted for investment gain or loss. Refunds or forfeitures
shall not include investment gain or loss for the period
between the end of the applicable Plan Year and the date of
distribution or forfeitures.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the
Plan meets the ADP, ACP and Multiple Use Tests and that the
Contribution Dollar Limit is not exceeded. In carrying out its
responsibilities, the Administrator shall have sole discretion
to limit or reduce Deferrals or Contributions at any time. The
Administrator shall maintain records which are sufficient to
demonstrate that the ADP, ACP and Multiple Use Tests have been
met for each Plan Year for at least as long as the Employer's
corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs,
and the performance of the ADP, ACP and Multiple Use
Tests and any corrective action resulting therefrom
shall be made separately with regard to the Employees
of each Employer (and its Related Companies) that is
not a Related Company with the other Employer(s).
(b) Collective Bargaining Units: For Plan Years beginning
after December 31, 1992, the performance of the ADP
Test, and if applicable, the ACP Test and Multiple
Use Test and any corrective action resulting
therefrom
37
<PAGE> 44
shall be applied separately to Employees who are
eligible to participate in the Plan as a result of a
collective bargaining agreement.
In addition, separate testing may be applied, at the
discretion of the Administrator and to the extent permitted
under Treasury regulations, to any group of Employees for whom
separate testing is permissible.
<PAGE> 45
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's Account for
a Plan Year. Amounts include contributions (except for rollovers
or transfers from another qualified plan), forfeitures and, if the
Participant is a Key Employee (pursuant to Section 14) for the
applicable or any prior Plan Year, medical benefits provided
pursuant to Code section 419A(d)(1). For purposes of this Section
13.1, "Account" also includes a Participant's account in all other
defined contribution plans currently or previously maintained by
any Related Company. The Plan Year refers to the year to which the
allocation pertains, regardless of when it was allocated. The Plan
Year shall be the Code section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this Plan
and any other defined contribution plan maintained by any Related
Company for any Plan Year shall not exceed the lesser of (1) 25%
of his or her Compensation or (2) $30,000 (as adjusted for the
cost of living pursuant to Code section 415(d).
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any
additional Contributions would produce an excess Annual Addition
for such year, Contributions to be made for the remainder of the
Plan Year shall be limited to the amount needed for each affected
Participant to receive the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a Participant's
Account (resulting from forfeitures, allocations, reasonable error
in determining Participant compensation or the amount of elective
contributions, or other facts and circumstances acceptable to the
Internal Revenue Service) the excess amount (adjusted to reflect
investment gains) shall first be returned to the Participant to
the extent of his or her After-Tax Contributions, and then to the
extent of his or her Pre-Tax Contributions (however to the extent
After-Tax and/or Pre-Tax Contributions were matched, the
applicable Matching Contributions shall be forfeited in proportion
to the returned matched After-Tax and/or Pre-Tax Contributions)
and the remaining excess, if any, plus returned Matching
Contributions, shall be forfeited by the Participant and used to
reduce subsequent Contributions as soon as is administratively
feasible.
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined
contribution plan, the excess shall be corrected by reducing the
Annual Addition to this Plan only after all possible reductions
have been made to the other defined contribution plans.
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<PAGE> 46
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the "projected
annual benefit" and the denominator is the greater of 125% of the
"protected current accrued benefit" or the normal limit which is the
lesser of (1) 125% of the maximum dollar limitation provided under Code
section 415(b)(1)(A) for the Plan Year or (2) 140% of the amount which
may be taken into account under Code section 415(b)(1)(B) for the Plan
Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided by the
Plan determined pursuant to Code section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit plan in
existence on (1) July 1, 1982, shall be the accrued annual benefit
provided for under Public Law 97-248, section 235(g)(4), as
amended, or (2) on May 6, 1986, shall be the accrued annual
benefit provided for under Public Law 99-514, section 1106(i)(3).
For Plan Years commencing after December 31, 1999, the provisions of the
preceding paragraph shall no longer be effective.
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's Annual
Addition for each Plan Year to date and the denominator is the sum of the
"annual amounts" for each year in which the Participant has performed
service with a Related Company. The "annual amount" for any Plan Year is
the lesser of (1) 125% of the Code section 415(c)(1)(A) dollar limitation
(determined without regard to subsection (c)(6)) in effect for the Plan
Year and (2) 140% of the Code section 415(c)(1)(B) amount in effect for
the Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code section
415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248, section
235(g)(3), as amended, or Public Law 99-514, section 1106(i)(4).
For Plan Years commencing after December 31, 1999, the provisions of the
preceding paragraph shall no longer be effective.
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit plan
maintained by a Related Company, the sum of the Defined Benefit Fraction
and the Defined Contribution Fraction for any Plan Year may not exceed
1.0. If the combined fraction exceeds 1.0 for any Plan Year, the
Participant's benefit under any defined benefit plan (to the extent it
has not been distributed or used to purchase an annuity contract) shall
be limited so that the combined fraction does not exceed 1.0 before any
defined contribution limits will be enforced.
For Plan Years commencing after December 31, 1999, the provisions of the
preceding paragraph shall no longer be effective.
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<PAGE> 47
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the
following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified
plan of an Employer (and its Related Companies) (1) in
which a Key Employee is a participant or was a participant
during the determination period (regardless of whether such
plan has terminated), or (2) which enables another plan in
the group to meet the requirements of Code sections
401(a)(4) and 410(b). The Employer may also treat any other
qualified plan as part of the group if the group would
continue to meet the requirements of Code sections
401(a)(4) and 410(b) with such plan being taken into
account.
(b) "Determination Date". The last Trade Date of the preceding
Plan Year or, in the case of the Plan's first year, the
last Trade Date of the first Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period
ending on the Determination Date was:
(1) an officer of a Related Company whose Compensation
(i) exceeds 50% of the amount in effect under Code
section 415(b)(1)(A) and (ii) places him within the
following highest paid group of officers:
<TABLE>
<CAPTION>
NUMBER OF EMPLOYEES NUMBER OF
NOT EXCLUDED UNDER CODE HIGHEST PAID
SECTION 414(q)(8) OFFICERS INCLUDED
----------------- -----------------
<S> <C>
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section 414(q)(8)
More than 500 50
</TABLE>
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds
$150,000, or
(4) a more than 0.5% Owner who is among the 10 Employees
owning the largest interest in a Related Company and
whose Compensation exceeds the amount in effect
under Code section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1)
an Employee's Account, (2) the present value of his or her
other accrued
41
<PAGE> 48
benefits provided by all qualified plans within the
Aggregation Group, and (3) the aggregate distributions made
within the five year period ending on such date. Plan
Benefits shall exclude rollover contributions and plan to
plan transfers made after December 31, 1983 which are both
employee initiated and from a plan maintained by a
non-related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits of
Key Employees account for more than 60% of the Plan
Benefits of all Employees who have performed services at
any time during the five year period ending on the
Determination Date. The Plan Benefits of Employees who
were, but are no longer, Key Employees (because they have
not been an officer or Owner during the five year period),
are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in
which the Plan is Top Heavy, the Employer shall not allow
any contributions (other than a Rollover Contribution) to
be made by or on behalf of any Key Employee unless the
Employer makes a contribution (other than Pre-Tax and
Matching Contributions) on behalf of all Participants who
were Eligible Employees as of the last day of the Plan Year
in an amount equal to at least 3% of each such
Participant's Compensation. The Administrator shall remove
any such contributions (including applicable investment
gain or loss) credited to a Key Employee's Account in
violation of the foregoing rule and return them to the
Employer or Employee to the extent permitted by the Limited
Return of Contributions paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding, contributions
shall be permitted on behalf of Key Employees if the
Employer also maintains a defined benefit plan which
automatically provides a benefit which satisfies the Code
section 416(c)(1) minimum benefit requirements, including
the adjustment provided in Code section 416(h)(2)(A), if
applicable. If this Plan is part of an aggregation group in
which a Key Employee is receiving a benefit and no minimum
is provided in any other plan, a minimum contribution of at
least 3% of Compensation shall be provided to the Employees
specified in the preceding paragraph of this plan. In
addition, the Employer may offset a defined benefit minimum
by contributions (other than Pre-Tax and Matching
Contributions) made to this Plan.
14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall be
substituted for 125% in determining the Defined Benefit Fraction
and the Defined Contribution Fraction.
For Plan Years commencing after December 31, 1999, the provisions
of the preceding paragraph shall no longer be effective.
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<PAGE> 49
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator and/or the
Trustee, as applicable, whose specific duties are delineated in
this Plan and Trust. In addition, Plan fiduciaries also include
any other person to whom fiduciary duties or responsibility is
delegated with respect to the Plan. Any person or group may serve
in more than one fiduciary capacity with respect to the Plan. To
the extent permitted under ERISA section 405, no fiduciary shall
be liable for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this Plan
and Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that
a prudent person acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise
of a like character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying
reasonable expenses of administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so
as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries in
a uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the meaning of ERISA
section 3(16), which is responsible for compliance with all
reporting and disclosure requirements, except those that are
explicitly the responsibility of the Trustee under applicable law.
The Administrator shall have any necessary authority to carry out
such functions through the actions of the Administrator or duly
appointed officers or other persons of the Company.
15.4 Administrator Duties
The Administrator shall have the discretionary authority to
construe this Plan and Trust, other than the provisions which
relate to the Trustee, and to do all things necessary or
convenient to effect the intent and purposes of the Plan, whether
or not such powers are specifically set forth in this Plan and
Trust. Actions taken in good faith by the Administrator shall be
conclusive and binding on all interested parties, and shall be
given the maximum possible deference allowed
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<PAGE> 50
by law. In addition to the duties listed elsewhere in this Plan
and Trust, the Administrator's authority shall include, but not be
limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, withdrawals
and distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant
(or such other period permitted under ERISA section
104(b)(1)), as well as informing each Participant of any
material modification to the Plan in a timely manner;
(c) make a copy of the following documents available to
Participants during normal work hours: this Plan and Trust
(including subsequent amendments), all annual and interim
reports of the Trustee related to the entire Plan, the
latest annual report and the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
interest based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy
bearing in mind both the short-run and long-run needs and
goals of the Plan. To the extent Participants may direct
their own investments, the funding policy shall focus on
which Investment Funds are available for Participants to
use; and
(f) adjudicate claims pursuant to the claims procedure
described in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of
ERISA section 412.
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, may delegate all or a
portion of the duties of the Administrator under the Plan to such
officers or such other persons of the Company as the Company in
its sole discretion may appoint. The Company shall provide the
Trustee with the names and specimen signatures of any such persons
authorized to serve and act on its behalf and the limits of the
duties so delegated. Such persons appointed by the Company shall
serve at the pleasure of the Company, but may resign by written
notice to the Company. Except to the extent that the Company
otherwise provides, any delegation of duties to such persons shall
carry with it the full discretionary authority of the
Administrator to complete such duties. The Trustee shall accept
such direction from such persons and rely upon it until notified
in writing that the Company has revoked the authorization of such
persons to give such discretion.
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<PAGE> 51
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in
accordance with those provisions of this Plan and Trust which
relate to the Trustee, for use in providing Plan benefits and
paying Plan expenses not paid directly by the Employer. Plan
benefits will be drawn solely from the Trust and paid by the
Trustee as directed by the Administrator. Notwithstanding, the
Administrator may appoint, with the approval of the Trustee,
another trustee to hold and administer Plan assets which do not
meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the
Trustee to invest Trust assets in one or more Investment Funds.
The number and composition of Investment Funds may be changed from
time to time, without the necessity of amending this Plan and
Trust document. The Trustee may establish reasonable limits on the
number of Investment Funds as well as the acceptable assets for
any such Investment Fund. Each of the Investment Funds may be
comprised of any of the following:
(a) shares of a registered investment company, whether or not
the Trustee or any of its affiliates is an advisor to, or
other service provider to, such company;
(b) collective investment funds maintained by the Trustee, or
any other fiduciary to the Plan, which are available for
investment by trusts which are qualified under Code
sections 401(a) and 501(a);
(c) individual equity and fixed income securities which are
readily tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or
insurance company;
(e) interest bearing deposits of the Trustee; and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment
fund, shall be subject to all the provisions of the instruments
establishing and governing such fund. These instruments, including
any subsequent amendments, are incorporated herein by reference.
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment
manager of each Investment Fund to maintain sufficient deposit or
money market type assets in each Investment Fund to handle the
Fund's liquidity and disbursement needs. Each Participant's and
Beneficiary's Sweep Account, which is used to hold assets pending
investment or disbursement, shall consist of interest bearing
deposits of the Trustee.
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16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions
are received from the Administrator, Participants, or
Beneficiaries. Such instructions shall remain in effect until
changed by the Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company
Shares
The Administrator shall be entitled to vote proxies or exercise
any shareholder rights relating to shares held on behalf of the
Plan in a registered investment company. Notwithstanding, the
authority to vote proxies and exercise shareholder rights related
to such shares held in a Custom Fund is vested as provided
otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee,
an investment manager for any Investment Fund established by the
Trustee solely for Participants of this Plan (a "Custom Fund").
The investment manager may be the Administrator, Trustee or an
investment manager pursuant to ERISA section 3(38). The
Administrator shall advise the Trustee in writing of the
appointment of an investment manager and shall cause the
investment manager to acknowledge to the Trustee in writing that
the investment manager is a fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund
consists solely of collective investment funds or shares of
a registered investment company (and sufficient deposit or
money market type assets to handle the Fund's liquidity and
disbursement needs), its' underlying instruments shall
constitute the guidelines.
(b) Authority of Investment Manager. The investment manager of
a Custom Fund shall have the authority to vote or execute
proxies, exercise shareholder rights, manage, acquire, and
dispose of Trust assets. Notwithstanding, if the Company
provides for a Company Stock Fund, the authority to vote
proxies and exercise shareholder rights related to shares
of Company Stock held in a Company Stock Fund is vested as
provided otherwise in Section 16.
(c) Custody and Trade Settlement. Unless otherwise expressly
agreed to by the Trustee, the Trustee shall maintain
custody of all Custom Fund assets and be responsible for
the settlement of all Custom Fund trades. For purposes of
this section, shares of a collective investment fund,
shares of a registered investment company and guaranteed
investment contracts issued by a bank or insurance company,
shall be regarded as the Custom Fund assets instead of the
underlying assets of such instruments.
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<PAGE> 53
(d) Limited Liability of Co-Fiduciaries. Neither the
Administrator nor the Trustee shall be obligated to invest
or otherwise manage any Custom Fund assets for which the
Trustee or Administrator is not the investment manager nor
shall the Administrator or Trustee be liable for acts or
omissions with regard to the investment of such assets
except to the extent required by ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment Fund
into two or more funds in the event any assets in the Fund are
illiquid or the value is not readily determinable. In the event of
such segregation, the Company shall give instructions to the
Trustee on what value to use for the split-off assets, and the
Trustee shall not be responsible for confirming such value.
16.8 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund, the Fund may be
comprised entirely of Company Stock and the Fund may be as large
as necessary to comply with Participants' and Beneficiaries'
investment elections, if the Company Stock Fund is authorized as
an Investment Fund available to Participants, as well the total
investment of Participants' and Beneficiaries' Matching Accounts.
16.9 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct the
Trustee as to the voting or tendering of any full or partial
shares of Company Stock held on his or her behalf in the Company
Stock Fund. Prior to such voting or tendering of Company Stock,
each Participant or Beneficiary shall receive a copy of the proxy
solicitation or other material relating to such vote or tender
decision and a blank form for the Participant or Beneficiary to
complete which confidentially instructs the Trustee to vote or
tender such shares in the manner indicated by the Participants or
Beneficiaries. Upon receipt of such instructions, the Trustee
shall act with respect to such shares as instructed. The
Administrator shall instruct the Trustee with respect to how to
vote or tender any shares for which instructions are not received
from Participants or Beneficiaries.
16.10 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the
requirements of the Securities Act of 1933, as amended, the
California Corporate Securities Law of 1968, as amended, and any
other applicable blue sky law. The Administrator shall also
specify what restrictive legend or transfer restriction, if any,
is required to be set forth on the certificates for the securities
and the procedure to be followed by the Trustee to effectuate a
resale of such securities.
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17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe
those provisions of this Plan and Trust which relate to the
Trustee and to do all things necessary or convenient to the
administration of the Trust, whether or not such powers are
specifically set forth in this Plan and Trust. Actions taken in
good faith by the Trustee shall be conclusive and binding on all
interested parties, and shall be given the maximum possible
deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in
this Plan and Trust, the Trustee shall have all the power,
authority, rights and privileges of an absolute owner of the Trust
assets and, not in limitation but in amplification of the
foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge,
mortgage, lease, grant options respecting, repair, alter,
insure, or distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription
or conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in
federal book entry form or in any other form as will permit
title thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or
claims in favor of or against the Trust; and
(d) lend, through a collective investment fund, any securities
held in such collective investment fund to brokers, dealers
or other borrowers and to permit such securities to be
transferred into the name and custody and be voted by the
borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any
Trust assets outside the jurisdiction of the United States, except
as authorized by ERISA section 404(b).
17.4 Tax Withholding and Payment
(a) Withholding. Effective for taxable distributions made on or
before December 31, 1992 the Trustee shall calculate and
withhold federal (and, if applicable, state) income taxes
in accordance with the Participant's withholding election
or as required by law if no election is made. Effective for
taxable distributions made after December 31, 1992,
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the Trustee shall calculate and withhold federal (and, if
applicable, state) income taxes with regard to any Eligible
Rollover Distribution that is not paid as a Direct Rollover
in accordance with Participant's withholding election or as
required by law if no election is made or the election is
less than the amount required by law. With regard to any
taxable distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and withhold
federal (and, if applicable, state) income taxes in
accordance with the Participant's withholding election or
as required by law if no election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from
the Investment Fund any taxes or assessments imposed by any
taxing or governmental authority on such Fund or its
income, including related interest and penalties.
17.5 Trustee Duties and Limitations
Unless otherwise agreed to by the Trustee, the Trustee's duties
shall be confined to construing the terms of the Plan and Trust as
they relate to the Trustee, receiving funds on behalf of and
making payments from the Trust, safeguarding and valuing Trust
assets, and investing and reinvesting Trust assets in the
Investment Funds as directed by the Administrator or Participants.
The Trustee shall have no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to enforce
collection or to compute or verify the accuracy or adequacy or any
amount to be paid to it by the Employer. The Trustee shall not be
liable for the proper application of any part of the Trust with
respect to any disbursement made at the direction of the
Administrator.
17.6 Trust Accounting
(a) Annual Report. Prior to migration to MLII, within 60 days
(or other reasonable period) following the close of the
Plan Year, the Trustee shall provide the Administrator with
an annual accounting of Trust assets and information to
assist the Administrator in meeting ERISA's annual
reporting and audit requirements. After migration to MLII,
within 90 days (or other reasonable period) following the
close of the Plan Year, the Trustee shall provide the
Administrator with an annual accounting of Trust assets and
information to assist the Administrator in meeting ERISA's
annual reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records and
provide sufficient reporting to allow the Administrator to
properly monitor the Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting
will automatically occur 90 days after such accounting has
been received by the Administrator, unless the
Administrator files a written objection with the Trustee
within such time period. Such approval shall be final as to
all matters and transactions stated or shown therein and
binding upon the Administrator.
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17.7 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended,
the Trustee may engage a qualified independent appraiser to
determine the fair market value of such property, and the
appraisal fees shall be paid from the Investment Fund containing
the asset.
17.8 Legal Counsel
The Trustee may consult with legal counsel of its choice,
including counsel for the Employer or counsel of the Trustee, upon
any question or matter arising under this Plan and Trust. When
relied upon by the Trustee, the opinion of such counsel shall be
evidence that the Trustee has acted in good faith.
17.9 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as
may be mutually agreed upon by the Company and the Trustee.
Trustee fees and all reasonable expenses of counsel and advisors
retained by the Trustee shall be paid in accordance with Section
6.
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18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any Employee.
The Employer expressly reserves the right to discharge an Employee
at any time, with or without cause, without regard to the effect
such discharge would have upon the Employee's interest in the
Plan.
18.2 Compliance With USERRA
Notwithstanding any provision of the Plan to the contrary,
effective October 13, 1996, with regard to an Employee who after
serving in the uniformed services is reemployed on or after
December 12, 1994, within the time required by USERRA,
contributions shall be made and benefits and service credit shall
be provided under the Plan with respect to his or her qualified
military service (as defined in Code section 414(u)(5)) in
accordance with Code section 414(u). Furthermore, notwithstanding
any provision of the Plan to the contrary, Participant loan
payments may be suspended during a period of qualified military
service.
18.3 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall not
revert to the Employer nor be diverted for any purpose other than
the exclusive benefit of Participants or their Beneficiaries; and
(2) a Participant's vested interest shall not be subject to
divestment. As provided in ERISA section 403(c)(2), the actual
amount of a Contribution made by the Employer (or the current
value of the Contribution if a net loss has occurred) may revert
to the Employer if:
(a) such Contribution is made by reason of a mistake of fact;
(b) initial qualification of the Plan under Code section 401(a)
is not received and a request for such qualification is
made within the time prescribed under Code section 401(b)
(the existence of and Contributions under the Plan are
hereby conditioned upon such qualification); or
(c) such Contribution is not deductible under Code section 404
(such Contributions are hereby conditioned upon such
deductibility) in the taxable year of the Employer for
which the Contribution is made.
The reversion to the Employer must be made (if at all) within one
year of the mistaken payment of the Contribution, the date of
denial of qualification, or the date of disallowance of deduction,
as the case may be. A Participant shall have no rights under the
Plan with respect to any such reversion.
18.4 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan may be
anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to a Participant pursuant to a QDRO, or
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(b) to use a Participant's vested Account balance as security
for a loan from the Plan which is permitted pursuant to
Code section 4975.
18.5 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally
incapable of giving a valid receipt and discharge for any payment
due him or her, the Administrator shall have the payment of the
benefit, or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for or
supporting the payee, unless it has received due notice of claim
therefor from a duly appointed guardian or conservator of the
payee. Any payment shall to the extent thereof, be a complete
discharge of any liability under the Plan to the payee.
18.6 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of
a Plan benefit after a reasonable search, the Administrator may at
any time thereafter treat such person's Account as forfeited and
use such amount to offset any Employer Contributions. If such
person subsequently presents the Administrator with a valid claim
for the benefit, such person shall be paid the amount treated as
forfeited, plus the interest that would have been earned in the
Sweep Account to the date of determination. The Administrator
shall pay the amount through an additional Employer Contribution
or direct the Trustee to pay the amount from the Forfeiture
Account.
18.7 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with
the Administrator's determination of his or her right to
Plan benefits must submit a written claim and exhaust this
claim procedure before legal recourse of any type is
sought. The claim must include the important issues the
interested party believes support the claim. The
Administrator, pursuant to the authority provided in this
Plan, shall either approve or deny the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to
the pertinent Plan provisions) and (2) the steps necessary
to perfect the claim and obtain a final review. (c)ab
Appeal of Denial and Final Review. The interested party may
make a written appeal of the Administrator's initial
decision, and the Administrator shall respond in the same
manner and form as prescribed for denying a claim
initially.
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(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the
following time table:
<TABLE>
<CAPTION>
Days to Respond
Action From Last Action
------ ----------------
<S> <C>
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
</TABLE>
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it
provides an explanation within the normal period of why an
extension is needed and when its decision will be
forthcoming.
18.8 Construction
Headings are included for reading convenience. The text shall
control if any ambiguity or inconsistency exists between the
headings and the text. The singular and plural shall be
interchanged wherever appropriate. References to Participant shall
include Beneficiary when appropriate and even if not otherwise
already expressly stated.
18.9 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not
otherwise preempted, by the laws of the State of New Jersey. If
any provision of this Plan and Trust shall become invalid or
unenforceable, that fact shall not affect the validity or
enforceability of any other provision of this Plan and Trust. All
provisions of this Plan and Trust shall be so construed as to
render them valid and enforceable in accordance with their intent.
18.10 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries
against any and all liabilities resulting from any action or
inaction, (including a Plan termination in which the Company fails
to apply for a favorable determination from the Internal Revenue
Service with respect to the qualification of the Plan upon its
termination), in relation to the Plan or Trust (1) including
(without limitation) expenses reasonably incurred in the defense
of any claim relating to the Plan or its assets, and amounts paid
in any settlement relating to the Plan or its assets, but (2)
excluding liability resulting from actions or inactions made in
bad faith, or resulting from the negligence or willful misconduct
of the Trustee. The Company shall have the right, but not the
obligation, to conduct the defense of any action to which this
Section applies. The Plan fiduciaries are not entitled to
indemnity from the Plan assets relating to any such action.
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19 AMENDMENT, MERGER AND TERMINATION
19.1 Amendment
The Company reserves the right to amend this Plan and Trust at any
time, to any extent and in any manner it may deem necessary or
appropriate. The Company (and not the Trustee) shall be
responsible for adopting any amendments necessary to maintain the
qualified status of this Plan and Trust under Code sections 401(a)
and 501(a). All interested parties shall be bound by any
amendment, provided that no amendment shall:
(a) become effective unless it has been adopted in accordance
with the procedures set forth in Section 19.5;
(b) except to the extent permissible under ERISA and the Code,
make it possible for any portion of the Trust assets to
revert to an Employer or to be used for, or diverted to,
any purpose other than for the exclusive benefit of
Participants and Beneficiaries entitled to Plan benefits
and to defray reasonable expenses of administering the
Plan;
(c) decrease the rights of any Employee to benefits accrued
(including the elimination of optional forms of benefits)
to the date on which the amendment is adopted, or if later,
the date upon which the amendment becomes effective, except
to the extent permitted under ERISA and the Code; nor
(d) permit an Employee to be paid the balance of his or her
Pre-Tax Account unless the payment would otherwise be
permitted under Code section 401(k).
19.2 Merger
This Plan and Trust may not be merged or consolidated with, nor
may its assets or liabilities be transferred to, another plan
unless each Participant and Beneficiary would, if the resulting
plan were then terminated, receive a benefit just after the
merger, consolidation or transfer which is at least equal to the
benefit which would be received if either plan had terminated just
before such event.
19.3 Divestitures
In the event of a sale by an Employer which is a corporation of:
(i) substantially all of the Employer's assets used in a trade or
business to an unrelated corporation, or (ii) a sale of such
Employer's interest in a subsidiary to an unrelated entity or
individual, lump sum distributions shall be permitted from the
Plan, except as provided below, to Participants with respect to
Employees who continue employment with the corporation acquiring
such assets or who continue employment with such subsidiary, as
applicable.
Notwithstanding, distributions shall not be permitted if the
purchaser agrees, in connection with the sale, to be substituted
as the Company as the sponsor of the Plan or to accept a transfer
in a transaction subject to Code section 414(l)(1) of the assets
and liabilities representing the Participants' benefits into
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a plan of the purchaser or a plan to be established by the
purchaser.
19.4 Plan Termination
The Company may, at any time and for any reason, terminate the
Plan in accordance with the procedures set forth in Section19.5,
or completely discontinue contributions. Upon either of these
events, or in the event of a partial termination of the Plan
within the meaning of Code section 411(d)(3), the Accounts of each
affected Employee shall be fully vested. If no successor plan is
established or maintained, lump sum distributions or withdrawals
will be made in accordance with the terms of the Plan as in effect
at the time of the Plan's termination or as thereafter amended
provided that a post-termination amendment will not be effective
to the extent that it violates Section 19.1 unless it is required
in order to maintain the qualified status of the Plan upon its
termination. The Trustee's and Employer's authority shall continue
beyond the Plan's termination date until all Trust assets have
been liquidated and distributed.
19.5 Amendment and Termination Procedures
The following procedural requirements shall govern the adoption of
any amendment or termination (a "Change") of the Plan and Trust:
(a) The Company may adopt any Change in accordance with its
established internal governance procedures.
(b) Any Change must be (1) set forth in writing, and (2) signed
and dated by an executive officer of the Company.
(c) If the effective date of any Change is not specified in the
document setting forth the Change, it shall be effective as
of the date it is signed by the last person whose signature
is required under clause (2) above, except to the extent
that another effective date is necessary to maintain the
qualified status of the Plan and Trust under Code sections
401(a) and 501(a).
(d) No Change shall become effective until it is accepted and
signed by the Trustee (which acceptance shall not
unreasonably be withheld).
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its
Plan participation by an action in accordance with its normal
internal governance procedures. Written notice of such action
shall be signed and dated by an executive officer of the Employer
and delivered to the Company. If the effective date of such action
is not specified, it shall be effective on, or as soon as
reasonably practicable, after the date of delivery. Upon the
Employer's request, the Company may instruct the Trustee and
Administrator to spin off all affected Accounts and underlying
assets into a separate qualified plan under which the Employer
shall assume the powers and duties of the Company. Alternatively,
the Company may treat the event as a partial termination described
above or continue to maintain the Accounts under the Plan.
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19.7 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust or may
be removed by the Company at any time upon at least 90 days
written notice (or less if agreed to by both parties). In such
event, the Company shall appoint a successor trustee by the end of
the notice period. The successor trustee shall then succeed to all
the powers and duties of the Trustee under this Plan and Trust. If
no successor trustee has been named by the end of the notice
period, the Company's chief executive officer shall become the
trustee, or if he or she declines, the Trustee may petition the
court for the appointment of a successor trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as is administratively feasible
after its resignation or removal as Trustee, the Trustee
shall transfer to the successor trustee all property
currently held by the Trust. However, the Trustee is
authorized to reserve such sum of money as it may deem
advisable for payment of its accounts and expenses in
connection with the settlement of its accounts or other
fees or expenses payable by the Trust. Any balance
remaining after payment of such fees and expenses shall be
paid to the successor trustee.
(b) Final Accounting. The Trustee shall provide a final
accounting to the Administrator within 90 days of the date
Trust assets are transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting
will automatically occur 90 days after such accounting has
been received by the Administrator, unless the
Administrator files a written objection with the Trustee
within such time period. Such approval shall be final as to
all matters and transactions stated or shown therein and
binding upon the Administrator.
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APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered to Participants and Beneficiaries as of the
Execution Date include this set of daily valued funds:
<TABLE>
<CAPTION>
Category Funds
-------- -----
<S> <C>
Income Income Accumulation
Balanced Asset Allocation
Equity S&P 500 Stock
Company Stock
Combination LifePath Series
</TABLE>
II. Default Investment Fund
The default Investment Fund as of the Execution Date is the Income
Accumulation Fund.
III. Contribution Accounts For Which Investment is Restricted
A Participant or Beneficiary may direct the investment of his or her
entire Account except for the following Contribution Accounts, and except
as otherwise provided in Section 7, which shall be invested as of the
Effective Date as follows:
Matching Company Stock Fund
IV. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of the Effective Date, there are no maximum percentage restrictions
applicable to any Investment Funds.
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APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
1) Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants, except that the Employer shall pay the fees related to the
Company Stock Fund. These are paid by the Employer on a quarterly basis.
2) Recordkeeping Fees: These are paid by the Employer on a quarterly basis.
3) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding
loan balance for loans that are set-up prior to migration to MLII. For
loans set-up after the migration to MLII, a one time $40.00 fee will be
assessed and billed/collected from the Participants' Account at the time
of the loan.
4) Investment Fund Election Changes: Prior to the migration to MLII, for
each Investment Fund election change, by a Participant, in excess of four
changes per year, a $10 fee shall be assessed and billed/collected
quarterly from the Participant's Account. After migration to MLII there
will be no limit on the number of investment fund election changes, and
no fees assessed on investment fund election changes by a Participant.
5) Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the
Administrator later elects that any such fees shall be borne by
Participants, estimates of the fees shall be determined and reconciled,
at least annually, and the fees will be assessed monthly and
billed/collected from Accounts quarterly.
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APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the U.S. Treasury rate for a note of the same maturity, plus 3%.
The rate may be determined once for all loans made in a month, and the maturity
may be determined to the nearest year.
On and after the migration to MLII, the interest rate charged on Participant
loans shall be provided by Merrill Lynch, shall be reviewed once each quarter
and shall be equal to the prime rate plus 3% published in the Wall Street
Journal (Citibank Prime) on the last business day of each quarter.
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