<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended FEBRUARY 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period to
Commission file number 1-8604
TEAM, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1765729
(State or other jurisdiction (I.R.S. Employer
of incorporation Identification Number)
or organization)
1019 South Hood Street, Alvin, Texas 77511
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 331-6154
------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
On April 1, 1996, there were 5,159,842 shares of the Registrant's common stock
outstanding.
<PAGE> 2
TEAM, INC.
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Balance Sheets -- 3
February 29, 1996 and May 31, 1995
Consolidated Statements of Operations -- 4
Three Months Ended
February 29, 1996 and February 28, 1995
Nine Months Ended
February 29, 1996 and February 28, 1995
Consolidated Statements of Cash Flows -- 5
Nine Months Ended
February 29, 1996 and February 28, 1995
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis 8
of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
2
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
February 29, May 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 2,775,000 $ 3,154,000
Accounts receivable, net of allowance for
doubtful accounts of $204,000 and $204,000 8,446,000 8,408,000
Materials and supplies 5,748,000 6,641,000
Prepaid expenses and other current assets 1,483,000 1,374,000
----------- -----------
Total current assets 18,452,000 19,577,000
Net Assets of Discontinued Operations -- 124,000
Property, Plant and Equipment:
Land and buildings 6,881,000 6,889,000
Machinery and equipment 11,300,000 10,864,000
----------- -----------
18,181,000 17,753,000
Less accumulated depreciation and amortization 12,535,000 11,641,000
----------- -----------
5,646,000 6,112,000
Military Housing Projects:
Restricted cash and other assets 1,707,000 2,897,000
Land and buildings, net of accumulated
depreciation of $5,804,000 and $4,710,000 41,487,000 42,581,000
----------- -----------
43,194,000 45,478,000
Goodwill, Net of Accumulated Amortization -- 5,583,000
Other Assets 3,781,000 3,184,000
----------- -----------
$71,073,000 $80,058,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $10,984,000 $ 1,344,000
Accounts payable 758,000 742,000
Other accrued liabilities 4,027,000 2,705,000
----------- -----------
Total Current Liabilities 15,769,000 4,791,000
Long-term Debt and Other Obligations 3,697,000 13,627,000
Military Housing Projects' Non-recourse Obligations:
Debt 38,765,000 39,722,000
Other 749,000 1,595,000
----------- -----------
39,514,000 41,317,000
Stockholder's Equity:
Preferred stock, cumulative, par value $100 per
share, 500,000 shares authorized, none issued -- --
Common stock, par value $.30 per share, 10,000,000
shares authorized, 5,169,542 shares issued 1,551,000 1,551,000
Additional paid-in capital 24,992,000 24,992,000
Accumulated deficit (14,353,000) (6,123,000)
Treasury stock at cost, 9,700 shares (97,000) (97,000)
----------- -----------
12,093,000 20,323,000
----------- -----------
$71,073,000 $80,058,000
=========== ===========
</TABLE>
See notes to consolidated financial statements 3
<PAGE> 4
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------- ---------------------------
February 29, February 28, February 29, February 28,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Operating revenue $11,747,000 $13,143,000 $35,340,000 $38,688,000
Military Housing
Project lease revenue 1,259,000 1,250,000 3,771,000 3,660,000
----------- ----------- ---------- -----------
13,006,000 14,393,000 39,111,000 42,348,000
Operating costs and expenses:
Operating expenses 6,228,000 6,841,000 19,000,000 20,219,000
Selling, general and
administrative expenses 7,802,000 5,558,000 18,119,000 17,594,000
Interest 287,000 367,000 913,000 1,130,000
Writedown of assets 5,997,000 -- 5,997,000 1,421,000
----------- ----------- ---------- -----------
20,314,000 12,766,000 44,029,000 40,364,000
Military Housing Project
Costs and Expenses:
Operating expenses 578,000 566,000 1,691,000 1,517,000
General and
administrative expenses 190,000 329,000 301,000 1,081,000
Interest 829,000 849,000 2,502,000 2,561,000
Writedown of assets -- -- -- 4,832,000
----------- ----------- ---------- -----------
1,597,000 1,744,000 4,494,000 9,991,000
Loss from Continuing Operations
before Income Taxes (8,905,000) (117,000) (9,412,000) (8,007,000)
Income Tax Benefit (1,189,000) (41,000) (1,182,000) (2,551,000)
----------- ----------- ---------- -----------
Loss from Continuing
Operations, Net of Income Taxes (7,716,000) (76,000) (8,230,000) (5,456,000)
Earnings (Loss) on Discontinued
Operations, Net of Income Taxes -- 116,000 -- (324,000)
Change in Estimated Loss on
Sale of Discontinued
Operations, Net of Income Taxes -- -- -- (457,000)
----------- ----------- ---------- -----------
Net Earnings (Loss) $(7,716,000) $ 40,000 $(8,230,000) $(6,237,000)
=========== =========== =========== ===========
Net Loss Per Common Share:
Loss from
Continuing Operations $ (1.50) $ (0.01) $ (1.59) $ (1.06)
Earnings (Loss) from
Discontinued Operations -- 0.02 -- (0.06)
Change in Estimated
Loss on Sale of
Discontinued Operations -- -- -- (0.09)
----------- ----------- ---------- -----------
Net Income (Loss) $ (1.50) $ 0.01 $ (1.59) $ (1.21)
=========== =========== =========== ===========
Weighted number of
shares outstanding 5,160,000 5,160,000 5,181,000 5,160,000
</TABLE>
See notes to consolidated financial statements 4
<PAGE> 5
TEAM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
----------------------------
February 29, February 28,
1996 1995
------------ ------------
<S> <C> <C>
Cash Flows From Operating Activities:
Loss from continuing
operations, net of income taxes $(8,230,000) $(5,456,000)
Adjustments to reconcile loss
from continuing operations, net of
income taxes, to net cash provided
by operating activities:
Depreciation and amortization 2,674,000 3,021,000
Provision for doubtful accounts -- 201,000
and notes receivable
(Gain) Loss on sale of assets 3,000 (14,000)
Writedown of assets 5,997,000 6,253,000
Noncurrent deferred income taxes (733,000) (1,798,000)
Change in assets and liabilities:
(Increase) decrease:
Accounts receivable (38,000) 1,228,000
Materials and supplies 493,000 711,000
Prepaid expenses and other assets (122,000) (306,000)
Increase (decrease):
Accounts payable 16,000 (1,062,000)
Other accrued liabilities 1,072,000 (1,072,000)
Income taxes payable -- (895,000)
----------- -----------
Net cash provided by operating activities 1,132,000 811,000
Cash Flows from Investing Activities:
Capital expenditures (434,000) (311,000)
Disposal of property and equipment 4,000 34,000
Cash received on sale of company -- 4,550,000
Decrease (increase) in other assets (18,000) 286,000
Decrease in net assets of discontinued operatio 124,000 838,000
Decrease in military housing projects'
restricted cash and other assets 1,190,000 1,059,000
----------- -----------
Net cash provided by
investing activities 866,000 6,456,000
Cash Flows From Financing Activities:
Payments under debt agreements
and capital lease obligations (2,329,000) (7,475,000)
Increase in other long term obligations 1,755,000 --
Borrowings under debt agreements -- 272,000
Payments on military housing
projects' non-recourse debt (957,000) (881,000)
Decrease in military housing projects'
other non-recourse obligations (846,000) (783,000)
----------- -----------
Net cash used in financing activities (2,377,000) (8,867,000)
----------- -----------
Net decrease in cash and cash equivalents (379,000) (1,600,000)
Cash and cash equivalents at beginning of year 3,154,000 3,728,000
----------- -----------
Cash and cash equivalents at end of period $ 2,775,000 $ 2,128,000
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest:
Operating interest $ 933,000 $ 1,445,000
Military housing projects 3,376,000 3,433,000
----------- -----------
$ 4,309,000 $ 4,878,000
=========== ===========
Taxes paid $ 122,000 $ 542,000
=========== ===========
Tax refunds $ 721,000 $ --
=========== ===========
</TABLE>
Supplemental schedule of non-cash financing activities:
During the periods ended February 29, 1996 and February 28, 1995, computer
hardware and software acquired under capital lease obligations amounted to
$195,000 and $254,000, respectively.
See notes to consolidated financial statements 5
<PAGE> 6
TEAM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Method of Presentation
General
The interim financial statements are unaudited, but in the opinion of
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of results for such periods.
The results of operations for any interim period are not necessarily
indicative of results for the full year. These financial statements should
be read in conjunction with the financial statements and notes thereto
contained in the Company's annual report for the fiscal year ended May 31,
1995.
The February 28, 1995 financial statements have been restated to reflect
the Transportation Services segment as discontinued operations.
2. Dividends
No dividends were paid during the first nine months of fiscal 1996 or 1995.
Pursuant to the Company's Credit Agreement, the Company may not pay
quarterly dividends without the consent of its senior lender. Future
dividend payments will depend upon the Company's financial condition and
other relevant matters.
3. Pre-Tax Charges
The loss from continuing operations for the third quarter included pre-tax
charges of $6.0 million representing writedowns in the carrying value of
certain of the Company's assets. This charge primarily reflected the $5.3
million write-off of goodwill as it pertained to the Environmental
Consulting and Engineering Division and a $400,000 writeoff of obsolete
inventory.
In addition, the Company recorded $2.3 million of additional general and
administrative expenses. These charges primarily represent certain
compensation arrangements with former employees.
4. Other
The Company's management continues to market the Military Housing Projects,
but currently no negotiations are in progress.
6
<PAGE> 7
5. Debt and Credit Arrangements
Team's credit facility with its primary lender consists of a Term Loan and
a revolving line of credit, both of which mature on December 1, 1996. The
balance due at February 29, 1996 on the Term Loan was $3,250,000, while the
balance on the revolving line of credit was $7,452,000. Both of these
amounts are included in the current portion of long term debt.
The Company has obtained a waiver for violation of a covenant of its credit
agreement which occurred as a result of the pre-tax charges and additional
general and administrative expenses as discussed in Note 3 herein.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company's primary operations consist of industrial repair services,
environmental engineering and consulting, and air emission monitoring services.
The Company also owns three Federal Section 801 housing projects ("Military
Housing" segment), which are presently leased to the Departments of the Army,
Navy and Air Force pursuant to long-term lease agreements.
The following table sets forth for the periods indicated (i) the percentage
which certain items in the financial statements of the Company bear to revenues
and (ii) the percentage change in the dollar amount of such items from period to
period:
<TABLE>
<CAPTION>
Percentage of Income Increase/(Decrease)
------------------------------------------------ -----------------------------
Three Months Ended Nine Months Ended Three Months Nine Months
Feb. 29, Feb. 28, Feb. 29, Feb. 28, Ended Ended
1996 1995 1996 1995 2/29 2/29
1996 1996
------ ----- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Core businesses 90.3 % 91.3 % 90.4 % 91.4 % (10.6) (8.7) %
Military housing
project lease revenue 9.7 8.7 9.6 8.6 0.7 3.0
------ ----- ------ ------
Total Revenue 100.0 % 100.0 % 100.0 % 100.0 % (9.6)% (7.6)%
Core Business
Costs and Expenses:
Operating expenses 47.9 % 47.5 % 48.6 % 47.7 % (9.0)% (6.0)%
SG&A expenses 60.0 38.6 46.3 41.5 40.4 3.0
Interest 2.2 2.6 2.3 2.7 (21.8) (19.2)
Writedown of assets 46.1 0 15.3 3.4 NM NM
------ ----- ------ ------
156.2 % 88.7 % 112.5 % 95.3 % 59.1 % 9.1 %
Military
Housing Projects:
Operating expenses 4.4 3.9 4.3 3.6 2.1 11.5
G&A expenses 1.5 2.3 0.8 2.6 (42.2) (72.2)
Interest 6.4 5.9 6.4 6.0 (2.4) (2.3)
Writedown of assets 0 0 0 11.4 0 (100.0)
------ ----- ------ ------
12.3 % 12.1 % 11.5 % 23.6 % (8.4)% (55.0)%
Loss from
continuing operations
before income taxes (68.5) (0.8) (24.0) (18.9) NM (17.5)
Income Tax Benefit (9.1) (0.3) (3.0) (6.0) NM (53.7)
------ ------ ------ ------
Earnings (Loss) from
continuing operations
net of income taxes (59.4)% (0.5)% (21.0)% (12.9)% NM (50.8)%
====== ====== ====== ====== ====== =======
</TABLE>
NM - not meaningful
8
<PAGE> 9
RESULTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 29, 1996 COMPARED
TO THREE MONTHS ENDED FEBRUARY 28, 1995
Primary Operations: For the three month period ended February 29, 1996,
revenues from the Company's environmental services business totaled $11.7
million, 10.6 percent lower than revenues of $13.1 million reported in the same
period of the prior fiscal year. This decrease resulted from lower revenues from
the Company's emissions monitoring and environmental consulting and engineering
services, primarily as a result of reduced reporting requirements by many of the
Company's customers, due to the slowdown in environmental regulatory activity.
In addition, some of the Company's customers have implemented internal reporting
for emissions control services. The Company's leak sealing services business
experienced a small increase in revenue.
Operating expenses in the Company's primary operations declined by 9.0 percent
from the third quarter of the prior year, primarily due to lower personnel
related costs. However, gross profit margins declined from 48.0 percent to 47.0
percent, as the Company was not able to reduce costs sufficiently to offset the
decline in revenues. Selling, general and administrative expenses of $7.8
million in the three month period ended February 29, 1996 were $2,244,000 or
40.4 percent higher than in the prior year. This increase was the result of $2.3
million of additional general and administrative expenses that related primarily
to certain compensation arrangements of former employees. Excluding these
expenses, general and administrative expenses are consistent with the same
period in the prior year. The writedown of assets of $6.0 million primarily
reflected a $5.3 million write-off of goodwill and a $400,000 write-off of
obsolete inventory.
Interest expense of $287,000 in the three month period ended February 29, 1996
was 21.8 percent lower than in the same period of the prior year due to reduced
average borrowing levels. The Company incurred a pre-tax operating loss on its
primary operations of $377,000 in the quarter ended February 28, 1995 compared
to a pre-tax operating loss of $8.6 million in the current year ($298,000
pre-tax operating loss in the current year excluding the effect of the writedown
of assets and the additional general and administrative expenses).
Military Housing Projects: For the three month period ended February 29, 1996,
revenues of $1.3 million were consistent with revenues in the prior year period.
The pre-tax loss from military housing was $338,000 compared to a loss of
$494,000 in the same quarter of the prior year. Reduced legal fees, associated
with the settlement of litigation with the general contractor of the projects in
March 1995, accounted for the change.
For the three month period ended February 29, 1996, the Company recorded a net
loss of $7,716,000 ($341,000 excluding the writedown of assets and the
additional general and administrative expenses) which compares to a loss from
continuing operations of $76,000 for the same period last year.
9
<PAGE> 10
NINE MONTHS ENDED FEBRUARY 29, 1996 COMPARED
TO NINE MONTHS ENDED FEBRUARY 28, 1995
Primary Operations: For the nine month period ended February 29, 1996, revenues
from the Company's environmental services business were $35.3 million, $3.4
million, or 8.7% lower than revenues of $38.7 million in the comparable period
last year. Reduced demand for the Company's emissions monitoring and
environmental consulting and engineering services accounted for the majority of
this decrease.
Operating expenses in the nine months ended February 29, 1996 were $19.0
million, 6.0% lower than operating expenses in the same period last year. The
Company has reduced personnel related costs; however, due to competitive
pressures, the cost decreases have not offset in full the decline in revenues.
Selling, general and administrative expenses were $18.1 million in the nine
month period ended February 29, 1996, $525,000 higher than in the prior year.
However, this increase was the result of $2.3 million of additional general and
administrative expenses that related primarily to certain compensation
arrangements of former employees. Excluding these expenses, general and
administrative expenses are $1.8 million lower than in the prior year, primarily
due to the continuing impact of cost reduction programs.
Military Housing Projects: For the nine months ended February 29, 1996, revenues
were $3.8 million, $111,000 higher than revenues in the prior year due to
increased maintenance revenues. The pre-tax loss was $723,000 in the nine month
period ended February 29, 1996, compared to a loss of $6.3 million ($1.5 million
excluding the effects of the writedown of assets) in the comparable period of
the prior year. Reduced legal fees accounted for the change.
The Company recorded a net loss for the nine months ended February 29, 1996 of
$8.2 million, $2.7 million higher than the $5.5 million net loss recorded in the
same period last year. Excluding the writedowns of $6.0 million and additional
general and administrative expenses of $2.3 million in 1996 and the $6.3 million
writedown in 1995, the net loss for the nine months ended February 29, 1996 was
$856,000, substantially lower than the net loss from continuing operations of
$1.3 million last year. Including the net change in estimate on sale of
discontinued operations of $457,000 and the net loss of $324,000 on the
discontinued transportation segment, the Company's net loss was $2.1 million for
the nine months ended February 28, 1995.
LIQUIDITY AND CAPITAL RESOURCES
At February 29, 1996, the Company's working capital totaled $2.7 million, a
decrease of $12.1 million from working capital of $14.8 million at May 31, 1995.
This decrease was primarily attributable to the reclassification of long term
debt to current debt due to our credit agreements maturing in December, 1996.
The Company has been able to finance its working capital requirements through
its internally generated cash flow.
10
<PAGE> 11
For the nine month period ended February 29, 1996, net cash provided from
operations totaled $1.1 million. Capital expenditures totaled $434,000 during
the nine month period ending February 29, 1996 as a result of the replacement of
equipment used in the Company's operations. The Company reduced its revolving
line of credit and other long-term debt by $2.0 million during the nine month
period ended February 29, 1996. Payments on military housing non-recourse debt
were $957,000 during the first three quarters. These payments were made with
rental receipts deposited in the military housing projects' restricted cash
account.
Management expects that capital expenditures for fiscal 1996 will be
approximately $750,000, as the Company plans to replace, upgrade and expand its
data collection, computer and other operating equipment. All planned capital
expenditures are discretionary and will be made based on the availability of
funds.
Management continues to market the Military Housing Projects, but currently no
negotiations are in progress.
The Company's current and long-term debt, excluding non-recourse debt of $38.8
million of the Military Housing Projects, was $12.9 million at February 29, 1996
compared to $14.9 million at May 31, 1995. Of this amount, $10.7 million was
owed to the Company's primary bank lender. At the end of the third quarter of
fiscal year 1996, the Company was in violation of a covenant under its credit
agreement with the bank, which has been waived by the bank. (See Note 5 to Notes
to Consolidated Financial Statements). Company management anticipates
negotiations with the bank to amend the credit agreement wherein maturity dates
would be extended and financial covenants would be revised so that the Company
will remain in compliance with the credit agreement.
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 First Amendment and Supplement to Amended and Restated Credit
Agreement, and Note Modification Agreement by and between Team,
Inc. and Texas Commerce Bank National Association effective as of
September 13, 1995.
10.2 Sixth Amendment and Restatement of the Team, Inc. Employee Stock
Ownership Plan.
10.3 Ninth Amendment and Restatement of the Team, Inc. Salary Deferral
Plan.
10.4 Letter Agreement dated April 12, 1996 by and between Texas
Commerce Bank National Association and Team, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no Form 8-K Reports filed during the quarter ended February
29, 1996.
12
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
TEAM, INC.
(Registrant)
Date: April 15, 1996
WILLIAM A. RYAN
--------------------------------------
William A. Ryan, Chairman of the Board,
President and Chief Executive Officer
MARGIE E. ROGERS
--------------------------------------
Margie E. Rogers, Treasurer and
Chief Accounting Officer
13
<PAGE> 14
EXHIBIT INDEX
10.1 First Amendment and Supplement to Amended and Restated Credit
Agreement, and Note Modification Agreement by and between Team,
Inc. and Texas Commerce Bank National Association effective as of
September 13, 1995.
10.2 Sixth Amendment and Restatement of the Team, Inc. Employee Stock
Ownership Plan.
10.3 Ninth Amendment and Restatement of the Team, Inc. Salary Deferral
Plan.
10.4 Letter Agreement dated April 12, 1996 by and between Texas
Commerce Bank National Association and Team, Inc.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT NO. 10.1
FIRST AMENDMENT AND SUPPLEMENT TO AMENDED AND RESTATED
CREDIT AGREEMENT, AND NOTE MODIFICATION AGREEMENT
THIS FIRST AMENDMENT AND SUPPLEMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT, AND NOTE MODIFICATION AGREEMENT ("First Amendment") effective as of
September 13, 1995 (the "First Amendment Effective Date") is made and entered
into by and among TEAM, INC. (the "Borrower"), a Texas corporation, and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association (the
"Lender").
RECITALS
WHEREAS, the Borrower and the Lender are parties to an Amended and
Restated Credit Agreement dated as of August 24, 1995 (the "Credit Agreement");
and
WHEREAS, the Borrower and the Lender have agreed, on the terms and
conditions herein set forth, to amend certain aspects of the Credit Agreement
and to modify the payment terms of the "Term Note" and the "Revolving Credit
Note" (as such terms are defined in the Credit Agreement);
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Borrower and the Lender hereby agree that the Credit
Agreement shall be amended as follows:
Section 1. Certain Definitions. As used in this First Amendment, the
terms "Borrower", "Credit Agreement", "First Amendment Effective Date", "First
Amendment" and "Lender" shall have the meanings indicated above; and unless
otherwise defined herein, all terms beginning with a capital letter which are
defined in the Credit Agreement shall have the same meanings herein as therein
unless the context hereof otherwise requires.
Section 2. Amendments to Credit Agreement.
Section 2.1. Defined Terms. The following terms, which are defined in
Section 1.02 of the Credit Agreement, are hereby amended as follows:
(a) The term "Agreement" is hereby amended to mean the
Amended and Restated Credit Agreement, as amended and supplemented by
this First Amendment and as the same may from time to time be further
amended or supplemented.
(b) The term "Final Maturity Date" is hereby amended to mean
December 1, 1996.
(c) The term "Revolving Credit Termination Date" is hereby
amended to mean December 1, 1996.
<PAGE> 2
Section 2.2. Additional Defined Terms. Section 1.02 of the Credit
Agreement is hereby further amended and supplemented by adding the following new
definitions, which read in their entirety as follows:
"'First Amendment' shall mean that certain First Amendment and
Supplement to Amended and Restated Credit Agreement, and Note
Modification Agreement effective as of September 13, 1995 between the
Lender and the Borrower."
Section 3. Amendments to the Credit Agreement. On and after the
First Amendment Effective Date, the Credit Agreement shall be amended as
follows:
(a) Section 2.06(b) Term Note. Section 2.06(b) of the Credit
Agreement is hereby amended by deleting the first paragraph thereof and
substituting therefore the following paragraph:
"(b) Term Note. The Loans to be made by the Lender to the
Borrower pursuant to Subsection 2.01(c) shall be evidenced by
the Term Note, being that certain promissory note of the
Borrower dated the Closing Date, in the original principal
amount of $3,950,000, payable to the order of the Lender in
six (6) consecutive quarterly installments commencing on
September 30, 1995, being in the amount of $350,000 each, and
the sixth and final installment in the amount of the unpaid
principal balance then owing thereunder being due and payable
on the Final Maturity Date. The Term Note shall otherwise be
in substantially the form of Exhibit A-2 hereto. The Term Note
represents a renewal, extension, rearrangement and
modification of the Prior Term Note."
(b) Section 2.07(b) Mandatory Prepayments. Section 2.07(b) of
the Credit Agreement is hereby amended by deleting clause (A) of
subsection (iii) thereof and substituting therefore the following
subsection:
"(A) 50% of the Net Cash Proceeds of the sale of Excluded
Subsidiaries (not including the Foreign Subsidiaries). In
addition, 100% of any deferred purchase price consideration
received in connection with the sale of such Excluded
Subsidiaries shall be assigned to the Lender."
(c) Section 7.15. Location of Business and Offices. Section
7.15 of the Credit Agreement is hereby deleted in its entirety and
restated as follows:
"Section 7.15 Location of Business and Offices. The
Borrower's principal place of business and chief executive
office are located at the address stated on the signature page
of the First Amendment. The principal place of business and
chief executive office of each consolidated Subsidiary are
located at the address stated on Schedule 7.15."
(d) Section 8.07. Key Man Life Insurance Policy. Section 8.07
of the Credit Agreement is hereby deleted in its entirety.
- 2 -
<PAGE> 3
(e) Section 8.08. Certain Subsidiaries. Section 8.08 of the
Credit Agreement is hereby amended by deleting the phrase "within 90
days from and after the Closing Date" and substituting therefor "by
December 31, 1995,".
(f) Article 8 Affirmative Covenants. Article 8 of the Credit
Agreement is hereby amended by adding the following section:
"Section 8.09 Chief Executive Officer. The Borrower
shall give Lender reasonable notice of any termination or
withdrawal of the Borrower's Chief Executive Officer, which
notice shall include the name of the Person to serve as the
Borrower's interim Chief Executive Officer, if any, until a
new Chief Executive Officer is appointed. If the Borrower
names an interim Chief Executive Officer after making such
notice, the Borrower shall give Lender subsequent notice of
the name of such interim Chief Executive Officer. The Borrower
shall give Lender notice of appointment of a new Chief
Executive Officer, together with a copy of a resume and
references of such new Chief Executive Officer, within a
reasonable period after such appointment."
(g) Section 9.13. Current Ratio. Section 9.13 of the Credit
Agreement is hereby deleted in its entirety and restated as follows:
"Section 9.13 Current Ratio. The Borrower will not permit
the ratio of (i) consolidated current assets less prepaid
expenses to (ii) consolidated current liabilities of the
Borrower and its Consolidated Subsidiaries, determined on the
last day of each three-month fiscal quarter of the Borrower,
to be less than 1.25 to 1.0 for the period from and after the
Closing Date through August 31, 1996, and 1.50 to 1.0
thereafter. As used in this Section 9.13, "current
liabilities" shall not include the entire Indebtedness, but
shall only include the scheduled principal payments due and
payable within the referenced period."
(h) Section 9.16 Fixed Charge Covenant Ratio. Section 9.16
of the Credit Agreement is hereby amended and supplemented to add the following
to the end thereof:
"As used in this Section 9.16, "current maturities of term
debt" shall not include the entire Indebtedness, but shall
only include the scheduled principal payments due and payable
within the referenced period."
(i) Section 10.01(k) Events of Default. Section 10.01(k) of the
Credit Agreement is hereby deleted in its entirety and restated as follows:
"(k) Any change is made in the individual holding the
position of Chief Executive Officer of Borrower
unless the Lender consents to such change within ten
(10) Business Days after the earlier of written
notice thereof from Borrower to Lender or the
appointment of election of a new Chief Executive
Officer, which consent will not be unreasonably
withheld; or"
(j) Section 7.15. Schedule 7.15. The Credit Agreement is
hereby amended by adding Schedule 7.15 as attached hereto as Schedule 7.15.
- 3 -
<PAGE> 4
Section 3. Revolving Credit Note Modification. Notwithstanding
anything to the contrary contained in the Revolving Credit Note or the Credit
Agreement, the maturity date of the Revolving Credit Note shall be due and
payable on December 1, 1996. Accrued interest at the rate or rates specified or
referred to in the Revolving Credit Note, shall remain due and payable and
payable on the dates specified or referred to in the Revolving Credit Note.
Section 4. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Credit Agreement, the
Notes or any of the other Security Instruments, or (b) except as expressly set
forth herein, prejudice any right or rights which the Lender may now have or may
have in the future under or in connection with the Credit Agreement, the Notes,
the Security Instruments or any of the other documents referred to therein.
Except as expressly supplemented, amended or modified hereby or by express
written amendments thereof, the terms and provisions of the Credit Agreement,
the Notes, and any other Security Instruments or any other documents or
instruments executed in connection with any of the foregoing are and shall
remain in full force and effect. In the event of a conflict between this First
Amendment and any of the foregoing documents, the terms of this First Amendment
shall be controlling.
Section 5. Payment of Expenses. The Borrower agrees, whether or not
the transactions hereby contemplated shall be consummated, to reimburse and save
the Lender harmless from and against liability for the payment of all reasonable
substantiated out-of-pocket costs and expenses arising in connection with the
preparation, execution, delivery, amendment, modification, waiver and
enforcement of, or the preservation of any rights under this First Amendment,
including, without limitation, the reasonable fees and expenses of any local or
other counsel for the Lender, and all stamp taxes (including interest and
penalties, if any), recording taxes and fees, filing taxes and fees, and other
charges which may be payable in respect of, or in respect of any modification
of, the Credit Agreement and the other Security Instruments. The provisions of
this Section shall survive the termination of the Credit Agreement and the
repayment of the Loans.
Section 6. Governing Law. This First Amendment and the rights and
obligations of the parties hereunder and under the Credit Agreement shall be
construed in accordance with and be governed by the laws of the State of Texas
and the United States of America.
Section 7. Descriptive Headings, etc. The descriptive headings of
the several Sections of this First Amendment are inserted for convenience only
and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
Section 8. Entire Agreement. This First Amendment and the documents
referred to herein represent the entire understanding of the parties hereto
regarding the subject matter hereof and supersede all prior and contemporaneous
oral and written agreements of the parties hereto with respect to the subject
matter hereof, including, without limitation, any commitment letters regarding
the transactions contemplated by this First Amendment.
Section 9. Counterparts. This First Amendment may be executed in
any number of counterparts and by different parties on separate counterparts and
all of such counterparts shall together constitute one and the same instrument.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed and delivered by their respective duly authorized offices as
of January , 1996, and effective as of the date first above written.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SECTION26.02
THIS FIRST AMENDMENT AND OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE
PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT AND REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NOT
UNWRITTEN ORAL AGREEMENT BETWEEN THE PARTIES.
TEAM, INC.
By: /s/ Valerie L. Banner
----------------------------------
Valerie L. Banner
Vice President
Address for Notice:
1019 South Hood Street
Alvin, Texas 77511
Attn: President
with a copy to:
Valerie L. Banner, Esq.
1019 South Hood Street
Alvin, Texas 77511
- 5 -
<PAGE> 6
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ C. D. Karges
------------------------------------
C. D. Karges
Senior Vice President
Address for Notices:
712 Main Street
Houston, Texas 77002
Attention: Mr. C. D. Karges
Lending Office for Base Rate and
Eurodollar Loans:
712 Main Street
Houston, Texas 77002
Telecopier No.: (713) 216-6004
Telephone No.: (713) 216-5929
Attention: C.D. Karges
with a copy to:
Loan Agreements
1111 Fannin, 10th Floor
Houston, Texas 77002
Telecopier No.: (713) 750-2951
Telephone No.: (713) 750-2990
Attention: Manager
- 6 -
<PAGE> 7
SCHEDULE 7.15
TEAM, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
William A. Ryan Chairman/President William A. Ryan
Chief Executive Officer Thomas N. Amonett
George W. Harrison Senior Vice President John L. Farrell, Jr.
Valerie L. Banner Vice President/Secretary Jack M. Johnson, Jr.
William B. Jacobs Vice President E. Theodore Laborde
James H. Teller Vice President Sidney B. Williams
Margie E. Rogers Treasurer/Assistant Secretary
BEACON SERVICES, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
COMPOSITE POLE REPAIR, INC
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
<PAGE> 8
HELLUMS SERVICES, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 313-4107 - fax
OFFICERS OFFICE DIRECTORS
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
LEAK REPAIRS,INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
PIPE REPAIRS, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
George W. Harrison President William A. Ryan
William A. Ryan Vice President
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
<PAGE> 9
TEAM ENVIRONMENTAL SERVICES, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
George W. Harrison President William A. Ryan
William A. Ryan Vice President George W. Harrison
Thomas J. Rappolt Vice President
William B. Jacobs Vice President
John P. Kearns Vice President
James H. Teller Vice President
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
TECO MANUFACTURING, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
George W. Harrison President William A. Ryan
William A. Ryan Vice President George W. Harrison
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
<PAGE> 10
USA FEDERAL SERVICES, INC.
(formerly Universal Federal Services, Inc.)
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
USA GUNITE SERVICES, INC.
(formerly General Gunite & Construction Co., Inc.)
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
USA MAINTENANCE AND REPAIR SERVICES, INC.
(formerly Universal Services Co., Inc.)
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
-4-
<PAGE> 11
USA PUBLIC SERVICES, INC.
(formerly Infrastructure Services, Inc.)
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 -- phone
(713) 331-4107 -- fax
<TABLE>
<CAPTION>
OFFICERS OFFICE DIRECTORS
- -------- ------ ---------
<S> <C> <C>
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
</TABLE>
USA WATER CONSULTING SERVICES, INC.
(formerly Water Company of America)
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 -- phone
(713) 331-4107 -- fax
<TABLE>
<CAPTION>
OFFICERS OFFICE DIRECTORS
- -------- ------ ---------
<S> <C> <C>
William A. Ryan President William A. Ryan
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
</TABLE>
801 COMPANIES
FIRST AMERICAN CAPITAL CORPORATION
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 -- phone
(713) 331-4107 -- fax
<TABLE>
<CAPTION>
OFFICERS OFFICE DIRECTORS
- -------- ------ ---------
<S> <C> <C>
William A. Ryan President William A. Ryan
D. Mike Anderson Vice President
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
</TABLE>
- 5 -
<PAGE> 12
FIRST AMERICA DEVELOPMENT CORPORATION
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
D. Mike Anderson President William A. Ryan
William A. Ryan Vice President
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
FT. BRAGG 801, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
D. Mike Anderson President William A. Ryan
William A. Ryan Vice President
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
FT. STEWART 801, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
D. Mike Anderson President William A. Ryan
William A. Ryan Vice President
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
-6-
<PAGE> 13
PENSACOLA 801, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
D. Mike Anderson President William A. Ryan
William A. Ryan Vice President
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
PORTALES 801, INC.
1019 South Hood Street
Alvin, Texas 77511
(713) 331-6154 - phone
(713) 331-4107 - fax
OFFICERS OFFICE DIRECTORS
D. Mike Anderson President William A. Ryan
William A. Ryan Vice President
Valerie L. Banner Secretary
Margie E. Rogers Treasurer/Assistant Secretary
-7-
<PAGE> 1
EXHIBIT NO 10.2
SIXTH AMENDMENT AND RESTATEMENT OF THE
TEAM, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
ORIGINAL EFFECTIVE DATE OF THE PLAN:
June 1, 1987
GENERAL EFFECTIVE DATE
OF THE
SIXTH AMENDMENT AND RESTATEMENT OF THE PLAN:
January 1, 1989
PLAN YEAR END:
May 31st
<PAGE> 2
SIXTH AMENDMENT AND RESTATEMENT OF THE
TEAM, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I. Definitions................................................. 2
1.1 "Account"................................................... 2
1.2 "Act"....................................................... 2
1.3 "Administrative Committee".................................. 2
1.4 "Affiliated Company"........................................ 2
1.5 "Aggregate Account"......................................... 3
1.6 "Annual Addition"........................................... 3
1.7 "Authorized Leave of Absence"............................... 3
1.8 "Beneficiary"............................................... 4
1.9 "Break-in-Service".......................................... 4
1.10 "Code"...................................................... 5
1.11 "Considered Compensation"................................... 6
1.12 "Determination Date"........................................ 8
1.13 "Effective Date"............................................ 8
1.14 "Employee".................................................. 8
1.15 "Employee Stock Ownership Plan"............................. 8
1.16 "Employer".................................................. 9
1.17 "Employer Contribution"..................................... 9
1.18 "Employer Real Property".................................... 9
1.19 "Employer Stock"............................................ 9
1.20 "Entry Date"................................................ 9
1.21 "Family Member,"............................................ 9
1.22 "Forfeiture"................................................ 9
1.23 "Hour of Service"........................................... 9
1.24 "Key Employee".............................................. 10
1.25 "Marketable Obligation"..................................... 12
1.26 "Member".................................................... 13
1.27 "Non-Key Employee".......................................... 13
1.28 "Plan"...................................................... 13
1.29 "Plan Year"................................................. 13
1.30 "Qualifying Employer Real Property"......................... 14
1.31 "Qualifying Employer Security".............................. 14
1.32 "Retired Member"............................................ 14
1.33 "Signatory Company"......................................... 14
1.34 "Total Permanent Disability"................................ 14
1.35 "Transferred"............................................... 15
1.36 "Trust"..................................................... 15
1.37 "Trust Fund"................................................ 15
1.38 "Trustee"................................................... 15
1.39 "Year of Service"........................................... 15
ARTICLE II. Employees Entitled to Participate........................... 16
2.1 Eligibility to Participate.................................. 16
2.2 Inactive Status............................................. 17
</TABLE>
i
<PAGE> 3
<TABLE>
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2.3 Participation and Service Upon Reemployment................ 17
2.4 Full Participation......................................... 18
2.5 Transferred Employee....................................... 20
2.6 Certification to Trustee................................... 20
2.7 Notice to Employees........................................ 21
ARTICLE III. Contributions.............................................. 21
3.1 Employer Contributions..................................... 21
3.2 Limitation on Amount....................................... 22
3.3 Form of Employer Contributions and
Time of Payment............................................ 22
3.4 Prohibition Against Reversion.............................. 23
ARTICLE IV. Allocation to Accounts..................................... 23
4.1 Certification by the Signatory Company..................... 23
4.2 Separate Account Maintained for Each Member................ 24
4.3 Allocation of Employer Contributions
and Forfeitures to Members' Accounts....................... 24
4.4 Annual Allocation of Trust Fund Income..................... 26
4.5 Annual Valuation of Trust Fund............................. 27
4.6 Special Allocation Upon Termination,
Partial Termination or Complete
Discontinuance of Employer Contributions................... 27
4.7 Entry of Adjustments to Each
Member's Account........................................... 28
4.8 Accounts for Transferred Members........................... 28
4.9 Rights in Trust Assets..................................... 29
ARTICLE V. Limitations on Annual Additions............................ 29
5.1 Limitation Under this Plan................................. 29
5.2 Limitation in Event of Member's
Participation in Defined Benefit Plan
and Defined Contribution Plan.............................. 29
5.3 Disposition of Excessive Annual Additions.................. 31
5.4 Combining of Plans......................................... 31
5.5 Transition Fraction........................................ 32
5.6 Right of Reversion......................................... 33
ARTICLE VI. Retirement and Designation of Beneficiary.................. 33
6.1 Normal Retirement Age...................................... 33
6.2 Designation of Beneficiary................................. 34
ARTICLE VII. Vesting of Members' Interests.............................. 36
7.1 Vesting.................................................... 36
7.2 Death...................................................... 37
7.3 Retirement................................................. 38
7.4 Disability................................................. 39
7.5 Termination of Employment.................................. 40
7.6 Disposition of Unvested Amounts............................ 42
7.7 Hardship Distribution...................................... 42
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
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<S> <C> <C>
7.8 Circumstances Rendering Vesting
Schedule Inapplicable..................................... 43
ARTICLE VIII. Claims for Plan Benefits.................................. 44
8.1 Application for Benefits.................................. 44
8.2 Processing of Claim....................................... 45
8.3 Notification to Claimant of Decision...................... 45
8.4 Review Procedure.......................................... 46
8.5 Decision on Review........................................ 47
8.6 Disputed Benefits......................................... 47
ARTICLE IX. Distributions from Trust Funds............................ 47
9.1 Occasions for Distributions............................... 47
9.2 Consent to Distribution; Special Rules
Upon Reemployment......................................... 48
9.3 Manner of Distributions................................... 49
9.4 Time of Distributions..................................... 51
9.5 Mandatory Distributions................................... 51
9.6 Distribution to Minors or Persons
under Disability.......................................... 53
9.7 Interest of Spouse of Member in the
Event of Divorce.......................................... 53
9.8 Form of Distributions..................................... 54
9.9 Restrictions on Distributed Stock of
Signatory Companies and Their Affiliated
Companies Which is not Publicly Traded.................... 55
9.10 Put Option................................................ 58
9.11 Direct Rollover of Distribution........................... 61
9.12 Missing Participant....................................... 62
ARTICLE X. Top Heavy Provisions...................................... 63
10.1 Determination of Top Heavy Plan Status.................... 63
10.2 Determination of Super Top Heavy
Plan Status............................................... 64
10.3 Aggregate Accounts........................................ 64
10.4 Aggregation Group......................................... 65
10.5 Top Heavy Plan Requirements............................... 66
10.6 Allocations to Non-Key Employees.......................... 66
ARTICLE XI. Other Qualified Plans..................................... 68
11.1 Transfers from Other Qualified Plans...................... 68
11.2 Transfers to Other Qualified Plans........................ 69
ARTICLE XII. Administrative Committee.................................. 70
12.1 Appointment, Resignation and Removal...................... 70
12.2 Rights, Powers and Authority.............................. 71
12.3 Administration............................................ 72
12.4 Annual Audit of Plan...................................... 73
12.5 Chairman and Secretary.................................... 74
12.6 Quorum and Voting Majority................................ 74
12.7 Limitation on Voting...................................... 74
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
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<S> <C> <C>
12.8 Delegation of Rights, Powers and Duties.............. 75
12.9 Liability............................................ 75
12.10 Compensation and Expense............................. 75
12.11 Bonds................................................ 76
12.12 Indemnity............................................ 76
12.13 Reporting and Disclosure............................. 77
12.14 Annual Statement to Members.......................... 78
12.15 Signatory Company to Supply Information.............. 78
12.16 Valuation of Employer Stock.......................... 78
ARTICLE XIII. Trustee.............................................. 79
13.1 Acceptance and Holding of Funds...................... 79
13.2 Responsibility for Actions........................... 79
13.3 Resolutions of Board of Directors.................... 81
13.4 Judicial Protection.................................. 81
13.5 Dealings with Third Parties.......................... 81
13.6 Annual Accounting by Trustee......................... 82
13.7 Preparation of Annual Statements to Members.......... 83
13.8 Resignation of Trustee............................... 83
13.9 Removal of Trustee................................... 83
13.10 Appointment of Successor Trustee..................... 84
13.11 Trustee's Compensation and Expenses.................. 84
13.12 Bonds................................................ 85
13.13 Indemnity............................................ 86
13.14 Voting of Employer Stock............................. 87
ARTICLE XIV. Investment Powers of Trustee......................... 88
14.1 Standards; Prudent Man Rule.......................... 88
14.2 The Investment Committee or Investment
Manager.............................................. 88
14.3 Powers of the Trustee................................ 90
14.4 Prohibited Transactions.............................. 95
ARTICLE XV. Loans to Members..................................... 97
15.1 No Plan Loans........................................ 97
ARTICLE XVI. Amendment and Termination............................ 97
16.1 Amendment General................................... 97
16.2 Amendments Necessary to Comply with
Intentions of Signatory Companies.................... 99
16.3 Termination with Respect to Signatory
Company.............................................. 99
16.4 Continuation of Plan and Trust by Successor.......... 101
ARTICLE XVII. Continuance of Plan by Successor..................... 101
17.1 Adoption of Plan by Successor........................ 101
ARTICLE XVIII. Merger of Plan or Transfer of Plan Assets............ 101
18.1 Transfer, Consolidation or Merger with
Another Plan......................................... 101
</TABLE>
iv
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[S] [C]
ARTICLE XIX. Adoption of Plan by a Signatory Company.................. 102
19.1 Method of Adoption....................................... 102
19.2 Withdrawal from the Plan................................. 103
ARTICLE XX. Recovery of Employer Contributions....................... 104
20.1 Initial Approval By Internal Revenue
Service.................................................. 104
20.2 Employer Contributions Conditioned Upon
Deductibility............................................ 105
20.3 Limitations.............................................. 105
ARTICLE XXI. Miscellaneous............................................ 106
21.1 Plan is a Voluntary Undertaking by the
Signatory Company........................................ 106
21.2 Benefit Provided Solely by the Trust Fund................ 106
21.3 Nonalienation............................................ 106
21.4 Applicable Law........................................... 108
21.5 Construction............................................. 108
21.6 Reference to Code or Act Sections........................ 108
21.7 Binding Agreement........................................ 109
21.8 No Joint Venture Implied................................. 109
21.9 Copies of Plan Available................................. 109
21.10 Titles and Headings...................................... 109
21.11 Counterparts............................................. 109
21.12 Severability............................................. 110
21.13 Agent for Service of Legal Process....................... 110
21.14 Withholding; Reports..................................... 110
21.15 Single Plan.............................................. 110
21.16 Acceptance............................................... 110
v
<PAGE> 7
SIXTH AMENDMENT AND RESTATEMENT OF THE
TEAM, INC.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
THIS SIXTH AMENDMENT AND RESTATEMENT of the Team, Inc. Employee Stock
Ownership Plan and Trust (hereinafter sometimes called the "Plan" and "Trust")
is made this the 15th day of April, 1996, to be effective as of the 1st day of
June, 1989 unless otherwise indicated below, by and between Team, Inc.
(hereinafter sometimes called "Corporation"), of Houston, Texas and Texas
Commerce Bank, National Association (hereinafter sometimes called "Trustee"), of
Houston, Texas:
W I T N E S S E T H:
WHEREAS, on April 26, 1988 the Corporation previously adopted the Plan
and Trust for the sole and exclusive benefit of its Employees and their
Beneficiaries, effective June 1, 1987; and
WHEREAS, the Plan was previously amended on November 23, 1988, such
amendment to be effective as of June 1, 1987; and amended effective on June 1,
1987; and amended May 30, 1989, effective May 31, 1989; and amended on December
31, 1991, effective December 31, 1991; and amended and restated on November 18,
1994, effective generally June 1, 1989; and
WHEREAS, the Corporation, through the action of its Board of Directors,
wishes to amend and restate the Plan and Trust effective the date set forth
above so it may continue to qualify under Sections 401(a) and 501(a) of the
Internal Revenue Code of 1986, as amended (including UCA '92 and OBRA '93); and
<PAGE> 8
WHEREAS, the Corporation wishes to amend and restate the Plan in order
to make certain technical changes requested by the IRS for issuance of a
favorable determination letter;
NOW, THEREFORE, pursuant to the provisions of Article XVI, Section 16.1
of the Plan, the Plan is hereby amended and restated as follows:
ARTICLE I.
Definitions
Unless the context reasonably requires a broader, narrower or different
meaning, as used herein the following words and phrases shall have the meanings
set forth below:
1.1 "Account" means, with respect to a Member, the one of several
ledger accounts maintained by the Trustee showing such Member's interest in the
Trust Fund.
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
1.3 "Administrative Committee" means the committee appointed by the
Corporation to administer the Plan hereby amended and restated.
1.4 "Affiliated Company" or "Affiliated Companies" means a corporation
or other organization which is a member of any controlled group of corporations,
trades or businesses (as defined in Sections 414(b) and 414(c) of the Code,
except that the phrase "fifty percent (50%) or more" shall be substituted for
the phrase "at least 80 percent" each place it appears in Section 1563(a)(1) of
the Code) or is a member of an affiliated service group (as defined in Section
414(m) of the Code).
-2-
<PAGE> 9
1.5 "Aggregate Account" means, with respect to each Member, the value
of the Account maintained on behalf of such Member, including all amounts
attributable to Employer Contributions and Member contributions.
1.6 "Annual Addition" means as to any Member the sum for any
"limitation year" of (a) Employer Contributions, (b) Forfeitures, (c) Employee
contributions as determined under Sections 415(c)(2), 415(l) and 419A(d)(2) of
the Code, (d) amounts allocated after March 31, 1984 to an individual medical
account as defined in Section 415(1)(2) of the Code which is part of a pension
or annuity plan maintained by the Employer and (e) amounts derived from
contributions paid or accrued after December 31, 1985, in taxable years ending
after such date, which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined in Section
419A(d)(3) of the Code) under a welfare benefit plan (as defined in Section
419(e) of the Code) maintained by the Employer. The percentage limitation
referred to in Article V, Section 5.1(b) shall not apply to: (1) any
contribution for medical benefits (within the meaning of Section 419A(f)(2) of
the Code) after separation from service which is otherwise treated as an "Annual
Addition", or (2) any amount otherwise treated as an "Annual Addition" under
Section 415(l)(1) of the Code.
1.7 "Authorized Leave of Absence" means the following periods
of absence:
(a) Absence due to accident, sickness or pregnancy as long as the
Employee is continued on the employment rolls of the Signatory Company
and remains eligible to return to work upon his recovery;
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(b) Absence due to membership in the Armed Forces of the
United States (but if such absence is not pursuant to orders issued by
the Armed Forces of the United States, only if with the consent of the
Signatory Company) provided that each such Employee shall apply for
reinstatement in the employment of the Signatory Company within ninety
(90) days after honorable discharge or after release to inactive duty,
as the case may be; or
(c) Absence due to an approved leave of absence granted by a
Signatory Company pursuant to established practices applied in a
consistent and nondiscriminatory manner, provided each such Employee
shall, prior to the expiration of such leave of absence, apply for
reinstatement in the employment of the Signatory Company.
1.8 "Beneficiary" or "Beneficiaries" means such natural person or
persons, or trustee of a trust for the benefit of a natural person or persons,
as may be determined pursuant to the provisions of Article VI, Section 6.2
hereof. For purposes of determining whether the Plan is a Top Heavy Plan, a
Beneficiary of a deceased member shall be considered as either a Key Employee or
a Non-Key Employee, depending upon whether such deceased Member was classified
as a Key Employee or Non-Key Employee.
1.9 "Break-in-Service" with respect to an Employee means any Plan Year
during which such Employee completes five hundred (500) or fewer Hours of
Service as defined in Section 1.23 hereof. Solely for the purpose of determining
whether a Member has incurred a one-year Break-in-Service, Hours of Service
shall be recognized for "maternity and paternity leaves of absence." A
"maternity or paternity leave of absence" shall mean, for Plan Years beginning
after December 31, 1984, an absence from work for any period by reason of the
Employee's pregnancy, birth of the Employee's child, placement of a child with
the Employee in connection with the adoption of such child, or any absence for
the purpose of caring
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for such child for a period immediately following such birth or placement. For
this purpose, Hours of Service shall be credited for the computation period in
which the absence from work begins, only if credit therefore is necessary to
prevent the Employee from incurring a one-year Break-in-Service, or, in any
other case, in the immediately following computation period. The Hours of
Service credited for a "maternity or paternity leave of absence" shall be those
which would normally have been credited but for such absence, or, in any case in
which the Administrative Committee is unable to determine such hours normally
credited, eight (8) Hours of Service per day. The total Hours of Service
required to be credited for a "maternity or paternity leave of absence" shall
not exceed Five Hundred One (501). No Hours of Service will be credited for a
"maternity or paternity leave of absence" unless the Employee furnishes to the
Administrative Committee such timely information as it may reasonably require to
substantiate the length and nature of such absence.
Notwithstanding the above, for Plan Years beginning after December 31,
1984, the severance from service date of an employee who is absent from service
beyond the first anniversary of the first date of absence by reason of a
maternity or paternity absence described in Code Section 410(a)(5)(E)(i) or
Section 411(a)(6)(E)(i) is the second anniversary of the first date of such
absence. The period between the first date of absence from work is neither a
period of service nor a period of severance.
1.10 "Code" means the Internal Revenue Code of 1986, as amended.
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1.11 "Considered Compensation" means, as to each Member, all
compensation paid or accrued to him after he becomes eligible for the Plan by
the Signatory Company during the Plan Year, including regular salary, hourly
base pay, overtime pay, contractual bonuses, bonuses derived by formula, salary
deferrals under the Team, Inc. Salary Deferral Plan and Trust or an I.R.C.
Section 125 plan, and commissions and discretionary bonuses, but excluding
credits or benefits under this Plan and other contingent compensation.
Considered Compensation shall not include:
(a) Employer contributions to a plan of deferred compensation which
are not included in the Employee's gross income for the taxable year in
which contributed or employer contributions under a simplified employee
pension plan to the extent such contributions are deductible by the
Eligible Employee, or any distributions from a plan of deferred
compensation;
(b) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the Employee
either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(c) Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
(d) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in
Section 403(b) of the Code (whether or not the amounts are actually
excludable from the gross income of the Employee).
Considered Compensation shall be limited to two hundred thousand dollars
($200,000) or such greater amount as may be determined pursuant to Section
415(d) and Section 401(a)(17) of the Code. There will be attributed to any five
percent (5%) owner or any of the ten (10) most Highly Compensated Employees any
compensation paid to, contributions made by or on behalf of, or benefits
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provided for any family member of such five percent (5%) owner or Highly
Compensated Employee, pursuant to Section 414(q)(6) of the Code and the
regulations thereunder. For this purpose in applying the $200,000 limit above,
such a Highly Compensated Employee and members of his family will be treated as
a single employee with one compensation and the $200,000 limit will be allocated
among the members of the family unit in proportion to each such family member's
compensation (except for the purpose of determining compensation below the
plan's integration level, if applicable). For this purpose the term "family
member" means with respect to the affected Member, such Member's spouse, such
Member's lineal descendants and ascendants and the spouses of such lineal
descendants and ascendants, as described in Section 414(q)(6)(B) of the Code.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a
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fraction, the numerator of which is the number of months in the determination
period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitations under Section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current Plan Year,
the compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
1.12 "Determination Date" means, with respect to any Plan Year, (a) the
last day of the preceding Plan Year, or (b) in the case of the first Plan Year,
the last day of such Plan Year.
1.13 "Effective Date" of the Plan means June 1, 1987.
1.14 "Employee" means any person who is now or shall hereafter become
employed by a Signatory Company but excluding independent contractors,
self-employed persons or employees who are nonresident aliens deriving no earned
income (constituting income earned from sources within the United States) from a
Signatory Company.
1.15 "Employee Stock Ownership Plan" means a non-leveraged employee
stock ownership plan (i.e. other than one within the meaning of Section
4975(e)(7) of the Code). This Plan is designed to make distributions of Employer
Stock.
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1.16 "Employer" means the Corporation and any Signatory Company or
Affiliated Company, and includes all trades and businesses, whether or not
incorporated, which are either under common control as determined under Sections
414(b) and 414(c) of the Code (as modified in Section 1.4 above) or an
affiliated service group as determined under Section 414(m) of the Code, and any
other entity required to be aggregated pursuant to the regulations under Section
414(o) of the Code.
1.17 "Employer Contribution" means the total amount which the Signatory
Company pays to the Trustee under the terms of this Plan.
1.18 "Employer Real Property" means real property (and related personal
property) which is leased to a Signatory Company or to an Affiliated Company of
any such Signatory Company.
1.19 "Employer Stock" means an equity security (preferred or common,
voting or nonvoting) issued by a Signatory Company or by an Affiliated Company
of any such Signatory Company.
1.20 "Entry Date" means, for each Plan Year, June 1st and December 1st
of such Plan Year.
1.21 "Family Member," unless defined differently elsewhere in this
Plan, means with respect to an affected Member such Member's lineal descendants
and ascendants and their spouses, as described in Code Section 414(q)(6)(B).
1.22 "Forfeiture" means the portion of a Member's Account which is
forfeited because of termination of employment before full vesting.
1.23 "Hour of Service" means a time of service determined under
regulations prescribed by the Secretary of Labor. For
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purposes of this determination, "Hours of Service" shall include each hour for
which an Employee is directly or indirectly paid by the Signatory Company for
performance of duties and for reasons other than performance of duties such as
vacation, holidays, sickness, disability, layoff, Authorized Leaves of Absence,
and similar paid periods; and each hour for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed to by a Signatory
Company. All "Hours of Service" shall be credited to the Employee for the
computation period or periods in which the duties were performed or, in cases
where the Employee is paid for reasons other than the performance of duties,
pursuant to the procedures outlined in Department of Labor Regulations
2530.200b2(b) and (c); provided, however, where back pay has been either awarded
or agreed to by the Signatory Company, such hours shall be credited to the
Employee for the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award, agreement or
payment is made.
If in a Plan Year a Signatory Company elects to credit hours by using
an equivalency thereof found in Department of Labor Regulation Section
2530.200b3(e), then "Hour of Service" shall mean, on the basis of days of
employment, ten (10) hours for each day for which the employee would be required
to be credited with at least one (1) Hour of Service under Department of Labor
Regulation Section 2530.200b2.
1.24 "Key Employee" means any Employee or former Employee (and any
Beneficiary of a Employee or former Employee) who, at any time
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during the Plan Year or any of the preceding four (4) Plan Years, is:
(a) an officer of the employer (as defined in Section 416 of the
Code and the regulations issued thereunder) having annual compensation
greater than one fifty percent (50%) of the amount in effect under
Section 415(b)(1)(A) of the Code for any such Plan Year. Only
incorporated employers will be considered as having officers;
(b) one of the ten Employees owning (or considered as owning
within the meaning of Section 318 of the Code) the largest interests in
all employers required to be aggregated under Code Sections 414(b),
414(c), and 414(m). However, an Employee shall not be considered a top
ten owner for a Plan Year under the preceding sentence if the Employee
earns no more than $30,000 in annual compensation (or such other amount
adjusted in accordance with Section 415(c)(1)(A) of the Code) as in
effect for the calendar year in which the Determination Date falls. For
this purpose, if two Employees have the same such interest, the
Employee having the greater Considered Compensation shall be treated as
having the larger interest;
(c) a "five percent owner" of the employer. "Five percent owner"
means any person who owns (or is con- sidered as owning within the
meaning of Section 318 of the Code) more than five percent (5%) of the
outstanding stock of the employer or stock possessing more than five
percent (5%) of the total combined voting power of all stock of the
employer. In determining the ownership percentage, employers which
would otherwise be aggregated under Sections 414(b), 414(c) and 414(m)
of the Code shall be treated as separate employers;
(d) a "one percent owner" of the employer having an annual
compensation from the employer of more than $150,000. "One percent
owner" means any person who owns (or is considered owning within the
meaning of Section 318 of the Code) more than one percent (1%) of the
outstanding stock of the employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
employer. In determining the ownership percentage, the employers which
would otherwise be aggregated under Sections 414(b), 414(c), and 414(m)
of the Code shall be treated as separate employers. However, in
determining whether an individual has compensation of more than
$150,000, compensation from each employer required to be aggregated
under Sections 414(b), 414(c) and 414(m) of the Code shall be
aggregated.
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In addition for Plan Years beginning after December 31, 1984, if a
Member or Former Member has not performed services for the Employer maintaining
the Plan at any time during the five (5) year period ending on the Determination
Date, the Aggregate Account for such Member or Former Member shall not be taken
into account for the purposes of determining whether this Plan is a Top Heavy or
Super Top Heavy Plan under Article X, Section 10.1 or Section 10.2.
1.25 "Marketable Obligation" means a bond, debenture, note,
certificate, or other evidence of indebtedness, referred to as an "obligation",
if:
(a) Such obligation is acquired:
(1) On the market
(A) At the price of the obligation prevailing on a
national securities exchange which is registered with the
Securities and Exchange Commission; or
(B) If the obligation is not traded on such a national
securities exchange, at a price not less favorable to the Plan
than the offering price for the obligation as established by
current bid and asked prices quoted by persons independent of
the issuer;
(2) From an underwriter, at a price
(A) Not in excess of the public offering price for the
obligation as set forth in a prospectus or offering circular
filed with the Securities and Exchange Commission; and
(B) At which a substantial portion of the same issue is
acquired by persons independent of the issuer; or
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(3) Directly from the issuer, at a price not less favorable to
the Plan than the price paid currently for a substantial portion
of the same issue by persons independent of the issuer;
(b) Immediately following acquisition of such obligation:
(1) Not more than twenty-five percent (25%) of the aggregate
amount of obligations issued in such issue and outstanding at the
time of acquisition is held by the Plan; and
(2) At least fifty percent (50%) of the aggregate amount
referred to in subparagraph (1) is held by persons independent of
the issuer; and
(c) Immediately following acquisition of the obligation, not more
than twenty-five percent (25%) of the assets of the Plan is invested in
obligations of the Signatory Company or an Affiliated Company of the
Signatory Company.
1.26 "Member" or "Members" means the person or persons employed by the
Signatory Company during the Plan Year and participating in this Plan.
1.27 "Non-Key Employee" is an Employee who is not a Key Employee at any
time during the Plan Year or any of the preceding four (4) Plan Years and the
Beneficiaries of such Employee.
1.28 "Plan" means the Team, Inc. Employee Stock Ownership Plan herein
set forth and all subsequent amendments thereto.
1.29 "Plan Year" corresponds to the fiscal year of the Corporation.
Accordingly, the Plan Year means the twelvemonth period which begins on June 1st
and ends on May 31st.
For purposes of the foregoing definition, "employer real property"
means real property (and related personal property) which is leased to a
Signatory Company or to an Affiliated Company of any such Signatory Company.
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1.30 "Qualifying Employer Real Property" means parcels of Employer Real
Property:
(a) If a substantial number of the parcels are dispersed
geographically;
(b) If each parcel of real property and the improvements thereon
are suitable (or adaptable without excessive cost) for more than one
use;
(c) Even if all of such real property is leased to one lessee
(which may be a Signatory Company or an Affiliated Company of a
Signatory Company); and
(d) If such acquisition and retention complies with the provisions
of the Act to the extent it requires diversification.
1.31 "Qualifying Employer Security" means a security issued by a
Signatory Company or by an Affiliated Company of any such Signatory Company
which is Employer Stock or a Marketable Obligation.
1.32 "Retired Member" means a person who was at one time a Member and
who has retired in accordance with the provisions of this Plan.
1.33 "Signatory Company" or "Signatory Companies" means the
Corporation, any of the Corporation's Affiliated Companies and any other
business organization which adopts this Plan.
1.34 "Total Permanent Disability" means a mental or physical disability
which, in the opinion of a physician selected by the Administrative Committee,
will prevent a Member from earning a reasonable livelihood and which:
(a) Was neither contracted, suffered or incurred while such Member
was engaged in, nor resulted from his having engaged in, a felonious
criminal enterprise;
(b) Did not result from the use of alcohol or narcotics by such
Member;
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(c) Did not result from an intentionally self-inflicted injury;
and
(d) Did not result from an injury incurred while a member of the
Armed Forces of the United States after the Effective Date of this Plan
and for which such Member receives a military pension.
1.35 "Transferred" as used with respect to an Employee and "Transfer of
an Employee" means the termination of the employment of an Employee by one
Signatory Company and the contemporaneous commencement of the employment of such
Employee by another Signatory Company.
1.36 "Trust" means the trust estate created herein as forming part of
the Plan.
1.37 "Trust Fund" means the cash, bonds, stocks and other properties
held by the Trustee pursuant to the Trust created under the Plan.
1.38 "Trustee" or "Trustees" means Texas Commerce Bank, National
Association (and its successors) and any individual(s) or corporation(s)
appointed by the Corporation as successor Trustee(s).
1.39 "Year of Service" means a period of twelve (12) consecutive months
during which an Employee has not less than one thousand (1,000) Hours of Service
with a Signatory Company or is on an Authorized Leave of Absence. For purposes
of determining eligibility under Article II, an Employee's initial twelve (12)
months of service with the Signatory Company, beginning with the day he first
performs an Hour of Service, shall be the computation period used initially to
determine whether he has a Year of Service. However, if an Employee does not
have at least one
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thousand (1,000) Hours of Service during his initial twelve (12) months of
service, the one thousand (1,000) Hours of Service requirement shall be measured
with respect to the Plan Year which includes the first anniversary of his
employment commencement date and, where necessary, subsequent Plan Years. The
computation of Years of Service before a Break-in-Service includes Years of
Service required for eligibility plus all vesting computation periods based on
one thousand (1,000) Hours of Service during a Plan Year. For all other purposes
the computation of such period shall be made with reference to the Plan Year.
Years of Service for eligibility and vesting purposes shall also include Hours
of Service with an Affiliated Company to the extent designated by the
Administrative Committee or otherwise required by law.
ARTICLE II.
Employees Entitled to Participate
2.1 Eligibility to Participate. Every Employee shall automatically
become a Member of the Plan on the Entry Date coincident with or next following
the completion of one (1) Year of Service. It shall not be necessary for the
Employee to make written application for membership to the Administrative
Committee in order to be entitled to benefits hereunder. In accepting such
benefits, however, the Employee shall be deemed for all purposes to have agreed
to participate, to conform to the requirements of the Plan and to furnish to the
Administrative Committee such information as is necessary to enable it to
fulfill its duties and responsibilities under the terms and provisions of the
Plan.
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2.2 Inactive Status. In the event that any Member shall fail, in any
Plan Year of his employment after the Effective Date, to accumulate one thousand
(1,000) Hours of Service but does not incur a one-year Break-in-Service, his
Account shall be placed on inactive status. In such case, such Plan Year shall
not be considered as a Year of Service for the purpose of determining the
Member's vested interest in accordance with Article VII, Section 7.1 hereof and
the Member shall not share in the Employer Contributions or Forfeitures for any
such Plan Year, but he shall continue to receive income allocations and
valuation adjustments in accordance with Article IV, Sections 4.4 and 4.5. In
the event such Member accumulates one thousand (1,000) Hours of Service in a
subsequent Plan Year, his Account shall revert to active status with full rights
and benefits under this Plan restored.
2.3 Participation and Service Upon Reemployment. Participation in the
Plan shall cease upon termination of employment with the Signatory Company.
Termination of employment may result from retirement, death, disability,
voluntary or involuntary termination of employment, unauthorized absence or
failure to return to active employment with the Signatory Company by the date on
which an Authorized Leave of Absence expires.
Upon the reemployment of any person after the Effective Date who had
previously been employed by the Signatory Company on or after the Effective
Date, the following rules shall apply in determining his participation in the
Plan:
(a) If the reemployed Employee was not a Member in the Plan during
his prior period of employment, he must meet the requirement of Section
2.1 for participation in the Plan as if he were a new Employee;
provided, however,
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that if the reemployment commencement date of such Employee occurs
within the twelve (12) consecutive month period beginning with the
Employee's employment commencement date, the eligibility computation
period for such reemployed Employee must be the twelve (12) consecutive
month period beginning with the Employee's employment commencement date
and not the date of his reemployment;
(b) If the reemployed Employee had previously satisfied the
requirement of Section 2.1 and had been a Member of the Plan prior to
his termination of employment, he shall become a Member on his
reemployment commencement date provided a one-year Break-in-Service has
not occurred prior to his resumption of employment;
(c) If the reemployed Employee had been a Member of the Plan prior
to his termination of employment but suffered a one-year
Break-in-Service prior to his resumption of employment, he shall not be
eligible to reparticipate in the Plan until he has completed a Year of
Service after his return. Upon completion of such Year of Service, the
reemployed Employee shall be considered to be a Member of the Plan for
purposes of determining eligibility and Years of Service for vesting
(but not for allocations) as of his reemployment commencement date.
For purposes of this Section, an Employee's employment commencement date shall
be the date he first performs an Hour of Service for the Signatory Company and
his reemployment commencement date shall be the date he first performs an Hour
of Service upon reemployment with the Signatory Company.
2.4 Full Participation. For Plan Years commencing on or after June 1,
1994 a Member who completes a Year of Service and who is employed on the last
day of the Plan Year shall participate fully in the Plan for such Plan Year. For
Plan Years commencing prior to June 1, 1994, a Member shall fully participate in
the Plan for the Plan Year if he completes one thousand (1,000) Hours of
Service. A Member who fully participates is eligible to share in the Employer
Contributions, Forfeitures, income allocations and valuation adjustments for
such Plan Year.
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Any Member who fails to complete a Year of Service during the Plan Year
in which he dies, retires, is determined to be suffering from a Total Permanent
Disability or otherwise terminates his employment with a Signatory Company shall
to the extent previously eligible:
(a) share in any Employer Contributions through the end of the Plan
Year preceding his termination of employment,
(b) continue to receive income allocations and valuation
adjustments to the amount in his Account pursuant to Article IV,
Sections 4.4 and 4.5 after his termination of employment through the
valuation date preceding the date his Account is completely
distributed, and
(c) share in any Forfeitures through the end of the Plan Year
preceding his termination of employment.
Conversely, if a Member completes a Year of Service during a Plan Year
in which such a terminating event occurs, he shall be eligible to participate
fully in Employer Contributions and Forfeitures for the Plan Year in which such
terminating event occurs; subject, however, to any additional requirements set
forth in Article III, Section 3.1 or Article IV, Section 4.3.
Notwithstanding any provision in the Plan to the contrary, if this Plan
would otherwise fail to meet the requirements of Code Sections 401(a)(26),
410(b)(1), or 410(b)(2)(A)(i) and the Regulations thereunder because Employer
Contributions have not been allocated to a sufficient number or percentage of
Members for a Plan Year, then the following rules shall apply:
(d) The group of Members eligible to share in the Employer
Contribution and Forfeitures for the Plan Year shall be expanded to
include the minimum number of Members who would not otherwise be
eligible as are necessary to satisfy the applicable test specified
above. The specific Members who shall become eligible under the
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terms of this paragraph shall be those who are actively employed on the
last day of the Plan Year and, when compared to similarly situated
Members, have completed the greatest number of Hours of Service in the
Plan Year.
(e) If after application of paragraph (d) above, the applicable
test is still not satisfied, then the group of Members eligible to
share in the Employer Contribution and Forfeitures for the Plan Year
shall be further expanded to include the minimum number of Members who
are not actively employed on the last day of the Plan Year as are
necessary to satisfy the applicable test. The specific Members who
shall become eligible to share shall be those Members, when compared to
similarly situated Members, who have completed the greatest number of
Hours of Service in the Plan Year before terminating employment.
Nothing in the preceding three paragraphs shall permit the reduction of
a Member's accrued benefit, expressed as his Account balance. Therefore any
amounts that have previously been allocated to Members may not be reallocated to
satisfy these requirements. In such event, the Employer shall make an additional
contribution equal to the amount such affected Members would have received had
they been included in the allocations, even if it exceeds the amount which would
be deductible under Code Section 404. Any adjustment to the allocations pursuant
to this paragraph shall be considered a retroactive amendment adopted by the
last day of the Plan Year.
2.5 Transferred Employee. An Employee's status as either an Employee or
a Member shall not be deemed to be interrupted or severed by the fact that he is
transferred from the employ of one Signatory Company to that of any other
Signatory Company or performs services for more than one Signatory Company.
2.6 Certification to Trustee. Eligibility shall be deter- mined and
certified to the Trustee by the Administrative Committee,
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based upon information furnished by the Signatory Company, as soon as
practicable after the end of each Plan Year.
2.7 Notice to Employees. The Administrative Committee shall notify each
Employee of his eligibility to participate as soon as practicable after he has
satisfied the service requirement provided for in Section 2.1 hereof, and each
such notice shall be accompanied by a description of the Plan written in a
manner reasonably calculated to be understood by the Employee if the Employee
has not previously received such notice. The Administrative Committee shall
notify each Member whose Account is placed on inactive status or restored to
active status pursuant to Section 2.2 hereof, as soon as practicable after such
action has been taken.
ARTICLE III.
Contributions
3.1 Employer Contributions. For each Plan Year beginning with the first
Plan Year with respect to which this Plan is adopted by a Signatory Company,
such Signatory Company shall, subject to the discretion of the Board of
Directors of the Corporation and pursuant to the limitations contained in
Section 3.2 hereof, contribute to the Trust a sum which the Board of Directors
of each such Signatory Company determines to be a proper Employer Contribution.
The amount of the Employer Contribution for each Plan Year may be established by
a resolution adopted by such Board of Directors and communicated to the Members
by the Signatory Company. No Member shall be required or permitted to make
contributions to the Plan or Trust.
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Notwithstanding any other provision of this Plan, pursuant to Article
IV, Section 4.3 a Member shall share in the Employer Contribution for any Plan
Year only if such Member is employed by a Signatory Company on the last day of
such Plan Year.
3.2 Limitation on Amount. In no event shall the Signatory Company's
Employer Contribution exceed a sum equal to fifteen percent (15%) of the total
Considered Compensation otherwise paid or accrued during such Plan Year to all
Members employed by such Signatory Company plus the maximum amount deductible
under the "carryover" provisions of the Code relating to Employer Contributions
in previous years of less than the maximum amount permissible. In addition, in
no event shall the aggregate of such Employer Contribution and the Signatory
Company's contributions to all other pension, profit sharing or stock bonus
plans for such Plan Year exceed the amount deductible from the Signatory
Company's income for such Plan Year under Section 404(a)(7) of the Code or any
statute of similar import. In the event the aggregate of the Signatory Company's
contributions under all plans would exceed such maximum deductible amount, and
the Employer Contribution has not yet been paid into the Trust, the Employer
Contribution under this Plan shall be reduced by the amount necessary to reduce
the Signatory Company's aggregate contribution under all such plans to the
maximum amount deductible under said section of the Code.
3.3 Form of Employer Contributions and Time of Payment. Employer
Contributions will be paid in cash or Qualifying Employer Securities as the
Signatory Company's Board of Directors may from
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time to time determine. Qualifying Employer Securities will be valued at their
then fair market value.
The Employer Contribution of each Signatory Company for each Plan Year
shall be paid to the Trustee in one or more installments as the Signatory
Company (subject to the consent of the Corporation) may from time to time
determine; provided, however, that all such installments shall be paid no later
than the time prescribed by law for filing such Signatory Company's federal
income tax return for such taxable year (including extensions thereof).
3.4 Prohibition Against Reversion. In no event, except as expressly
provided in Article XX, Sections 20.1 and 20.2 and in Article V, Section 5.6
hereof, shall the principal or income of the Trust herein created be paid to or
revert to the Signatory Company, or be used for any purpose other than for the
exclusive benefit of the Members or their Beneficiaries.
ARTICLE IV.
Allocation to Accounts
4.1 Certification by the Signatory Company. As soon as practicable
after the end of the Plan Year, the Signatory Company shall certify to the
Administrative Committee the amount of its Employer Contribution for the Plan
Year then ended, the names of the Members entitled to share therein, the amount
of Considered Compensation paid to each Member for such Plan Year and the amount
of Considered Compensation paid to all Members for such Plan Year. Such
certification shall be conclusive evidence of such facts.
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<PAGE> 30
4.2 Separate Account Maintained for Each Member. The Administrative
Committee shall create and maintain adequate records to disclose the interest in
the Trust Fund of each Member, Retired Member and Beneficiary. Such records
shall be in the form of individual Accounts, and credits and charges shall be
made to such Accounts in the manner herein described. The maintenance of
individual Accounts is only for accounting purposes and a segregation of the
assets of the Trust Fund to each Account shall not be required.
4.3 Allocation of Employer Contributions and Forfeitures to Members'
Accounts.
(a) The Administrative Committee shall allocate the aggregate of
Employer Contributions made by all the Signatory Companies for each
Plan Year among each Member employed by any such Signatory Company and
entitled under Section 2.4 above to receive an allocation for such Plan
Year in the proportion that the Considered Compensation of each Member
bears to the total Considered Compensation of all such Members for such
Plan Year. This allocation shall be a single allocation of the
aggregate annual Employer Contribution among all such eligible Members
for such Plan Year.
If a Member has been transferred or performs services for more than
one (1) Signatory Company during the Plan Year, such Member shall be
entitled to have allocated to his Account a portion of the Employer
Contribution made by each Signatory Company by whom such Member was
employed during such Plan Year and the amount
-24-
<PAGE> 31
allocated to the Member's Account shall be computed with respect to
each Signatory Company in the manner hereinabove provided based upon
the Considered Compensation earned from each Signatory Company during
the Plan Year. A Member shall not receive a lesser allocation to his
Account, by reason of having been transferred or having performed
services for more than one (1) Signatory Company during the Plan Year,
than such Member would have received had he received all of his
Considered Compensation during such Plan Year from one Signatory
Company. If an adjustment of the allocation to such Member's Account is
necessary in order to achieve this result, it shall be made by the
Signatory Company with whom such Member was employed for the greatest
portion of the Plan Year.
(b) The Administrative Committee shall, as soon as practicable
after the end of each Plan Year, determine the Members from the
Signatory Company who have forfeited all or part of their respective
interests in their Accounts pursuant to the provisions of Article VII,
Sections 7.1 and 7.6 hereof during such Plan Year. The Administrative
Committee shall then allocate among those Members employed by such
Signatory Company who are eligible to share in Employer Contributions
under Article II, Section 2.4 for such Plan Year, the total amount of
Forfeitures in the proportion that the Considered Compensation of each
Member bears to the total Considered
-25-
<PAGE> 32
Compensation of all Members employed by the Signatory
Company for such Plan Year. The allocation in this
Section 4.3(b) shall be made in the same manner, on a
single uniform aggregate basis, as in Section 4.3(a)
above.
4.4 Annual Allocation of Trust Fund Income. As soon as practicable
after the end of each Plan Year, the Administrative Committee shall determine
the amount of income (or loss) earned by the Trust for the Plan Year then ended.
The Administrative Committee shall allocate such remaining income (or loss)
among the Members' Accounts in the proportion that the total amount in each
Member's Account at the beginning of the Plan Year bears to the aggregate
combined total in all Members' Accounts at the beginning of such Plan Year.
However, in the event that a Member receives a distribution from his
Account during a Plan Year, the allocation of income to such Member's Accounts
for such Plan Year shall be based upon the balance in such Members' Accounts at
the beginning of the Plan Year minus all distributions paid during that Plan
Year. If a Member receives the total balance in his Accounts during a Plan Year,
he shall not be entitled to an income allocation for such Plan Year.
In the event an allocation of income under this Section 4.4 results in
an inequitable distortion of a Member's Account, the Administrative Committee in
its discretion (exercised pursuant to a uniform and nondiscriminatory policy)
may make an interim allocation of income at any time during the Plan Year.
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<PAGE> 33
4.5 Annual Valuation of Trust Fund. As of the end of each Plan Year the
Trustee shall revalue the Trust Fund at its then fair market value. For purposes
of this Section 4.5, the Trust Fund shall not include any Employer Contributions
made to the Trust during such Plan Year. The Administrative Committee shall
allocate any appreciation or depreciation in the Trust Fund among the Members in
the proportion that the amount in each Member's Account at the beginning of the
Plan Year bears to the aggregate of all Members' Accounts at the beginning of
such Plan Year.
However, in the event that a Member receives a distribution from his
Account during a Plan Year, the valuation adjustment allocated to such Member's
Account for such Plan Year shall be based upon his Account balance at the
beginning of the Plan Year minus all distributions paid during that Plan Year.
If a Member receives the total balance in his Account during a Plan Year, he
shall not be entitled to a valuation adjustment for such Plan Year.
In the event an allocation of income under this Section 4.5 would
result in an inequitable distortion of a Member's Account, the Administrative
Committee in its discretion may make an interim valuation and allocation at any
time during the Plan Year. Such Administrative Committee's discretion shall be
exercised pursuant to a uniform, nondiscriminatory policy adopted by it.
4.6 Special Allocation Upon Termination, Partial Termination or
Complete Discontinuance of Employer Contributions. Notwithstanding any other
provision of this instrument to the contrary, if:
(a) the Plan is terminated pursuant to Article XVI, Section 16.3
hereof; or
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<PAGE> 34
(b) the Plan is terminated with respect to a group of Members
resulting in a partial termination of the Plan; or
(c) there occurs a complete discontinuance of Employer
Contributions under the Plan,
all previously unallocated funds shall be allocated to the Accounts of the
Members at the time of such termination, partial termination or complete
discontinuance of Employer Contributions under the Plan using the allocation
methods prescribed by Sections 4.3 through 4.5 hereof as appropriate depending
on the nature and source of such unallocated funds.
4.7 Entry of Adjustments to Each Member's Account. The Administrative
Committee shall credit to each Member's Account such Member's portion of the
adjustments and allocations required by Sections 4.3 through 4.5 of this Plan,
so that all such adjustments and allocations become effective and shall be
entered into each Member's Account as of the end of the Plan Year to which they
are attributable unless required more frequently by the Trustee or the
Administrative Committee pursuant to Sections 4.4 and 4.5.
4.8 Accounts for Transferred Members. In the case of a Member who has
transferred or performs services for more than one Signatory Company during a
Plan Year, the Administrative Committee shall maintain on its books such
Member's Accounts and open or reopen Accounts for such Member with respect to
each Signatory Company to which the Member has transferred. In this fashion, the
Administrative Committee may maintain several different Accounts with respect to
each Transferred Member. However, the foregoing provisions of this Section 4.8
are for administrative convenience only.
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<PAGE> 35
4.9 Rights in Trust Assets. No such allocations, adjustments, credits
or transfers shall ever vest in any Member any right, title or interest in the
Trust Fund except at the times and upon the terms or conditions below set forth.
Such Trust Fund shall, as to all Accounts of Members, be a commingled fund, and
all securities purchased or otherwise acquired by the Trustee under the Plan
shall be issued in the name of the Trustee for the Plan, or in such other name
or names as the Trustee shall designate pursuant to the power granted the
Trustee in Article XIV, Section 14.3(b) hereof.
ARTICLE V.
Limitations on Annual Additions
5.1 Limitation Under this Plan. Notwithstanding any provisions herein
to the contrary, the Annual Addition to the Accounts of any Member under all
defined contribution plans of his Employer (as that term is defined in Section
5.4 hereof) for any Plan Year cannot exceed the lesser of:
(a) Thirty thousand dollars ($30,000) or such greater amount as may
be determined pursuant to Section 415(c)(1)(A) of the Code, as adjusted
under Section 415(d) of the Code; or
(b) Twenty-five percent (25%) of the Member's total compensation
from his Employer for such Plan Year, as determined under Section
415(c)(3) of the Code and the regulations thereunder.
5.2 Limitation in Event of Member's Participation in Defined Benefit
Plan and Defined Contribution Plan. In any case in which an Employee is a
participant in both a defined benefit plan and this Plan, the sum of the defined
benefit plan fraction and the defined contribution plan fraction for any year
may not exceed 1.0 except as may be permitted by Section 2004(a)(3) or otherwise
under
-29-
<PAGE> 36
the Act. The defined benefit plan fraction for any year is a fraction (a) the
numerator of which is the projected annual benefit of the Member under the plan
(determined as of the close of the Plan Year); and (b) the denominator of which
is the lesser of: (i) the product of 1.25, multiplied by the dollar limitation
in effect for such Plan Year under Section 415(b)(1)(A) of the Code, or (ii) the
product of 1.4, multiplied by the amount which may be taken into account under
Section 415(b)(1)(B) of the Code with respect to such Member for such Plan Year.
The defined contribution plan fraction for any year is a fraction (a) the
numerator of which is the sum of the Annual Additions to the Member's Accounts
as of the close of the Plan Year; and (b) the denominator of which is the sum of
the lesser of the following amounts determined for such Plan Year and for each
prior Year of Service: (i) the product of 1.25, multiplied by the dollar
limitation in effect for such Plan Year as may be determined pursuant to Section
415(c)(1)(A) of the Code, or (ii) the product of 1.4, multiplied by the amount
which may be taken into account under Section 415(c)(1)(B) of the Code for such
Plan Year. The Administrative Committee shall reduce the numerator of the
defined contribution plan fraction in order that their sum shall not exceed 1.0
for any Plan Year in accordance with Section 5.3 hereof.
However, 1.0 shall be substituted for 1.25 for any Top Heavy Plan Year
unless an extra minimum Employer Contribution equal to one percent (1%) of the
Considered Compensation of all Members who are Non-Key Employees is allocated
among such Members pursuant to Article IV, Section 4.4. Notwithstanding the
foregoing, 1.0 shall
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<PAGE> 37
be substituted for 1.25 for any Plan Year in which the Plan is a Super Top Heavy
Plan.
5.3 Disposition of Excessive Annual Additions. If as a result of either
the allocation of Forfeitures or a reasonable error in estimating a Member's
Considered Compensation, the Annual Additions under the terms of the Plan for a
particular Member would cause the limitations of Section 415 of the Code which
are applicable to that Member for that Plan Year to be exceeded, the excess
amounts shall not be deemed Annual Additions to such Member's Accounts in that
Plan Year, but shall be treated as follows:
(a) The excess amounts in the Member's Account must be held
unallocated in a suspense account for the Plan Year, and allocated and
reallocated in the following Plan Year to all Plan Members pursuant to
the provisions of Section 5.3(b) below. The excess amounts must be used
to reduce Employer Contributions for such following Plan Year (and
succeeding Plan Years, as necessary) for all Plan Members. Excess
amounts shall not be distributed to Members or former Members.
(b) The excess amounts in the Member's Account must be allocated
and reallocated to the Accounts of the other Members in the Plan
pursuant to the provisions of Article IV, Section 4.3. However, if the
allocation or reallocation of the excess amounts further causes the
limitations of Section 415 of the Code to be exceeded with respect to
each Plan Member for the Plan Year for which such allocation or
reallocation is made, then these amounts must be held unallocated in a
suspense account. If a suspense account is in existence at any time
during a particular Plan Year (other than the Plan Year described in
the preceding sentence), all amounts in the suspense account must first
be allocated and reallocated to Members' Accounts (subject to the
limitations of Section 415 of the Code) before any Employer
Contributions may be made to the Plan for that Plan Year.
5.4 Combining of Plans. For purposes of applying the limitations
contained in this Article, all defined contribution plans, terminated or not, of
an Employer shall be treated as one defined contribution plan and all defined
benefit plans, terminated or not,
-31-
<PAGE> 38
of an Employer shall be treated as one defined benefit plan. For purposes of
this Article, Employer shall mean all trades or businesses, whether or not
incorporated, which are either under common control as determined under Sections
414(b) or 414(c) of the Code or are an affiliated service group as determined
under Section 414(m) of the Code. For the purpose of applying the limitations
set forth above, as imposed by Section 415 of the Code, a Member's compensation
or annual benefit payable by the Signatory Company or any Affiliated Company of
the Signatory Company shall be treated as being from a single employer. For
purposes of the limitations of this section and of applying Sections 414(b) and
414(c) of the Code as they relate to Sections 415 and 1563(a)(1) of the Code,
the phrase "more than fifty percent (50%)" shall be substituted for the phrase
"at least eighty percent (80%)".
5.5 Transition Fraction. At the election of the Administrative
Committee, in applying the provision of Section 5.3 with respect to the defined
contribution fraction for any Plan Year ending after December 31, 1982, the
amount taken into account for the denominator for each Member for all Plan Years
ending before January 1, 1983 shall be an amount equal to the product of (a) the
amount of the denominator determined under Section 5.3 (as in effect for the
Plan Year ending in 1982) for Plan Years ending in 1982, multiplied by (b) the
"transition fraction".
For purposes of the preceding paragraph, the term "transition fraction"
shall mean a fraction (a) the numerator of which is the lesser of (1) $51,875 or
(2) 1.4 multiplied by twenty-five percent (25%) of the Member's compensation for
the Plan Year ending in
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<PAGE> 39
1981, and (b) the denominator of which is the lesser of (1) $41,500 or (2)
twenty-five percent (25%) of the Member's compensation for the Plan Year ending
in 1981.
Notwithstanding the foregoing, for any Plan Year in which the Plan is a
Top Heavy Plan, $41,500 shall be substituted for $51,875 in determining the
transition fraction.
5.6 Right of Reversion. Notwithstanding Article III, Section 3.4, in
the event of termination of the Plan as provided in Article XVI, Section 16.3
any amounts held in the suspense account shall revert to the Signatory Company.
ARTICLE VI.
Retirement and Designation of Beneficiary
6.1 Normal Retirement Age. "Normal Retirement Age" means the date on
which an Employee attains age sixty-five (65). Each Employee shall retire from
employment on the date he reaches his Normal Retirement Age; provided, however,
that an Employee may continue employment thereafter subject to the condition
that, in the event the Signatory Company has nineteen (19) or fewer employees,
such Employee must obtain the approval of the Board of Directors of the
Signatory Company to continue employment after attaining his Normal Retirement
Age. Each Employee who is employed by the Signatory Company on the date it
adopts the Plan shall be deemed for purposes of this Section 6.1 to have secured
the approval of the Board of Directors of the Signatory Company and shall
continue to be so deemed until such approval is affirmatively withdrawn. This
Section 6.1 shall be applied in a uniform, nondiscriminatory manner to all
Employees, present and future.
-33-
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6.2 Designation of Beneficiary. Each Member and each Retired Member
shall have the unrestricted right at any time, and from time to time, to
designate and to rescind or change any designation of a primary and contingent
Beneficiary or Beneficiaries to receive benefits in the event of his death,
except as hereinafter provided. A Member who is married at the time of his death
shall have the ability to designate a Beneficiary only with his spouse's written
consent. Such consent must designate a specific Beneficiary, must acknowledge
the effect of the Member's designation and must be witnessed either by a member
of the Administrative Committee or by a Notary Public. Otherwise the death
benefits of the Member shall be paid to the Member's spouse except as
hereinafter provided. A Member's designation of a Beneficiary other than such
Member's spouse, which is consented to by such Member's spouse as provided
above, may not be changed without subsequent spousal consent (unless the
spouse's consent to the original Beneficiary designation expressly permits
designations by the Member without further spousal consent). Any such
designation, change or rescission of designation shall be made in writing by
filling out and furnishing to the Administrative Committee the appropriate form
prescribed by it. A contingent Beneficiary or Beneficiaries shall be entitled to
receive any unpaid death benefits only if no primary Beneficiary is alive or
legally entitled to receive it on the date of payment of the benefit. Any
estate, assignee or appointee of either a primary or a contingent Beneficiary
shall have no interest in or right to receive any death benefit payment not
actually made before the death of such Beneficiary. The last such designation
received by
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<PAGE> 41
the Administrative Committee shall be controlling over any testamentary or other
disposition; provided, however, that no designation, rescission or change
thereof shall be effective unless received by the Administrative Committee prior
to the death of the Member. Upon the divorce of a Member or a retired Member,
any designation of his divorced spouse as a primary Beneficiary or as a
contingent Beneficiary hereunder shall automatically terminate and become
ineffective, and such divorced spouse shall have no interest in or right to
receive any death benefit hereunder unless such Member shall file with the
Administrative Committee, after the date of such divorce decree, a new
designation of Beneficiary naming his divorced spouse as a Beneficiary
hereunder. If there is no designated Beneficiary alive at the time of any
payment of the death benefit, then the death benefit or balance thereof shall be
paid to the surviving spouse of the deceased Member or, if there is no surviving
spouse, to the estate of the deceased Member. The Signatory Company employing a
Member shall not be named as his Beneficiary. If the Administrative Committee
shall be in doubt as to the right of any Beneficiary designated by a deceased
Member to receive any unpaid death benefit, the Administrative Committee may
direct the Trustee to pay the amount in question to the estate of such Member,
in which event the Trustee, the Signatory Company, the Administrative Committee
and any other person in any manner connected with the Plan shall have no further
liability in respect to the payment so made.
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<PAGE> 42
ARTICLE VII.
Vesting of Members' Interests
7.1 Vesting. Each Member's interest in the amount credited to his
Accounts attributable to Employer Contributions shall vest as provided in the
schedule set forth below and, once vested, shall not be forfeitable for any
reason.
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 3 0%
3, but less than 4 20%
4, but less than 5 40%
5, but less than 6 60%
6, but less than 7 80%
7 or more 100%
</TABLE>
The amount credited to a Member's Account which is not vested as of the
date such Member terminates employment shall be disposed of as provided in
Section 7.6 hereof.
Years of Service Computation. For purposes of determining the
Member's vested interest in the assets in his Account, all Years of
Service with the Signatory Company (including Years of Service prior to
the adoption of the Plan), or any Affiliated Company as of the date of
severance shall be taken into account except the following:
(i) Service during any period prior to the Effective Date of
the Plan or the effective date of participation in the Plan for the
Signatory Company which employs the Member;
(ii) With respect to Breaks-in-Service:
(A) If a Member does not have a vested interest in his
Account at the time he incurs a Break-in-Service, Years of
Service completed by such Member prior to such Break shall
not be taken into account if at such time the number of
consecutive one-year Breaks-in-Service included in his most
recent Break-in-Service equals or exceeds the aggregate
number of his Years of Service (whether or not consecutive)
completed before such Break, and for
-36-
<PAGE> 43
Plan Years beginning after December 31, 1984, or five (5), if
greater. In computing the aggregate number of Years of
Service prior to such Break, Years of Service which could
have been disregarded under this subsection by reason of a
prior Break-in-Service may be disregarded. Pre-Break and
post-Break Years of Service will not be aggregated until the
Member has completed one (1) Year of Service after his return
to employment;
(B) If a Member has a one-year Break-in-Service (five
(5) consecutive years of Break-in-Service for Plan Years
beginning after December 31, 1984), then any service after
such Break will not increase the Member's vested interest in
his Account before such Break; and
(C) If a Member has a vested interest in his Account and
his separation from employment and his subsequent
reemployment do not result in a one-year Break-in-Service
(five (5) consecutive years of Break-in-Service for Plan
Years beginning after December 31, 1984), his Account will
continue to vest, starting at the point on the vesting
schedule the Member had achieved prior to the date he left
employment.
7.2 Death. On the death of a Member (or a Retired Member prior to the
complete distribution of such Retired Member's Accounts) his death benefit shall
be one hundred percent (100%) of the amount credited to his Accounts at the end
of the Plan Year in which he dies. Payment of such death benefit to the Member's
designated Beneficiary or Beneficiaries shall commence within one hundred twenty
(120) days after the end of the Plan Year in which the Member dies or as soon
thereafter as administratively practicable. However, in the event that the
payment of his death
-37-
<PAGE> 44
benefit under this Section would violate Article IX, Section 9.4, then such
benefit shall commence no later than sixty (60) days after the end of the Plan
Year in which the Member dies. Notwithstanding any other provision of this Plan,
in the case of a Member who is married at the time of his death, the death
benefit under this Section (reduced by any security interest held by the Plan by
reason of a loan outstanding to such Member) shall be payable in full to such
Member's spouse, or, in the event there is no surviving spouse or such surviving
spouse has consented in the manner provided in Article VI, Section 6.2, to a
designated Beneficiary.
7.3 Retirement. Upon attaining his Normal Retirement Age as provided in
Article VI, Section 6.1, a Member shall have a nonforfeitable right to his
Accounts. Such retirement benefit shall be paid to the Member in the form of
benefit determined pursuant to Article IX, Section 9.3. The payment of his
retirement benefit shall commence within one hundred twenty (120) days after the
end of the Plan Year in which he retires after attaining his Normal Retirement
Age, or as soon thereafter as administratively practicable, unless the Member
requests otherwise in writing. However, in the event that the payment of his
retirement benefit under this Section would violate Article IX, Section 9.4,
then such benefit shall commence no later than sixty (60) days after the end of
the Plan Year in which such Member retires. The Administrative Committee may, in
its discretion (exercised pursuant to a uniform and nondiscriminatory policy),
make distribution(s) in accordance with Article IX, Section 9.3 to a Member who
remains in employment
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<PAGE> 45
with a Signatory Company after attaining Normal Retirement Age and who requests
such distribution(s).
7.4 Disability. In the event the Administrative Committee determines
that a Member is suffering from a Total Permanent Disability, his disability
benefit shall be one hundred percent (100%) of the amount credited to his
Account at the end of the Plan Year following such determination. Such
disability benefit shall be paid to the Member in the form of benefit determined
by the Administrative Committee pursuant to Article IX, Section 9.3. Payments
shall commence within one hundred twenty (120) days after the end of the Plan
Year in which the Member is determined to be totally, permanently disabled, or
as soon thereafter as administratively practicable, unless the Member requests
otherwise in writing. However, in the event that the payment of his disability
benefit under this Section would violate Article IX, Section 9.4, then such
benefit shall commence no later than sixty (60) days after the end of the Plan
Year in which such Member terminates employment, but in no event later than the
time prescribed in Section 9.4 below.
If a Member who had previously been determined to be totally disabled
returns to the employment of the Signatory Company prior to receiving the entire
balance in his Account, a separate ledger account shall be created for such
Member and the remaining portion of his Accounts shall be transferred to the
separate ledger account. Such separate ledger account shall share in income
allocations and valuation adjustments pursuant to Article IV, Sections 4.4 and
4.5 until the amount is distributed in full upon
-39-
<PAGE> 46
his subsequent death, retirement, determination of Total Permanent Disability or
severance of employment. Another, separate Plan Account shall be established for
the returning Member as if he were a new Member, and this Account shall vest
pursuant to Section 7.1 starting at the point on the vesting schedule the Member
had achieved prior to the determination of his Total Permanent Disability.
7.5 Termination of Employment. A Member whose employment is terminated
for any reason other than death, retirement at Normal Retirement Age or Total
Permanent Disability shall be entitled to elect commencement of a distribution
no later than one year after the close of the fifth Plan Year following the Plan
Year in which the Member terminated employment equal to the vested amount in
such Member's Accounts determined under Section 7.1 as of the date such Member's
employment terminates. In the event the Member dies or is determined by the
Administrative Committee to be totally disabled prior to attaining his Normal
Retirement Age, then such Member or his Beneficiary shall be entitled to elect
commencement of his severance benefit within one hundred twenty (120) days after
the end of the Plan Year in which he dies or is determined to be totally
disabled, or as soon thereafter as administratively practicable. However, in the
event that the payment of his severance benefit under this Section would violate
Article IX, Section 9.4, then such benefit shall commence no later than sixty
(60) days after the latest date determined under that section.
In the event that the Plan is amended to change the vesting schedule,
the Member's vested interest in the amount credited to
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<PAGE> 47
his Account shall not be less than his nonforfeitable vested interest as
computed under this Section 7.5. If a Member has at least three (3) Years of
Service, he shall have the right during the election period to elect to have the
nonforfeitable percentage of his benefit derived from Employer Contributions
computed under Section 7.1 and this Section 7.5 without regard to such
amendment. Notwithstanding the preceding sentence, no election need be provided
for any Member whose nonforfeitable percentage under the Plan, as amended, at
any time cannot be less than such percentage determined without regard to such
amendment. The election period shall begin the date the amendment is adopted and
end no earlier than the latest of (a) sixty (60) days after the date the
amendment is adopted, (b) sixty (60) days after the amendment becomes effective,
or (c) sixty (60) days after the Member is issued written notice of the Plan
amendment by the Employer, Signatory Company or Administrative Committee. Such
election must be made in writing and given to the Administrative Committee
within the election period. A Member shall be considered to have completed three
(3) Years of Service for purposes of this paragraph if such Member has completed
three (3) Years of Service as defined in Article I, whether or not consecutive,
without regard to the exceptions of Code Section 411(a)(4) prior to the
expiration of the election period.
For Plan Years commencing after May 31, 1994, a Member who is zero
percent (0%) vested upon termination of employment is deemed to have received a
distribution of his full entitlement under the
-41-
<PAGE> 48
Plan within one hundred twenty (120) days after the Member incurs a one-year
Break-in-Service.
7.6 Disposition of Unvested Amounts. After termination of employment,
the unvested amount in the Member's Account shall be maintained until forfeited
as provided in the next two sentences. The unvested portion of the Account
balance attributable to Employer Contributions shall be forfeited upon the
earlier of (a) the last day of the Plan Year in which the Member incurs five (5)
consecutive one-year Breaks-in-Service, or (b) the last day of the Plan Year in
which a Member who has terminated employment receives a distribution of his
vested Account balance. Notwithstanding the preceding sentence a Member who
terminates employment with a zero vested Account balance shall be deemed to have
received a zero distribution of such Account balance on the last day of the Plan
Year in which termination of employment occurred and on such last day the
Forfeiture of such Account balance will occur. As of the last day of the Plan
Year in which the Forfeiture occurs, the Forfeiture shall be applied as provided
in Article IV, Section 4.3 above.
7.7 Hardship Distribution. In the event that a Member or his
Beneficiary is entitled to the payment of benefits as a result of death,
retirement or Total Permanent Disability and such Member or Beneficiary
demonstrates an immediate urgent need for such benefits, the Administrative
Committee may authorize the commencement of benefit payments prior to the time
set forth in Sections 7.2, 7.3 or 7.4. However, any accelerated distribution
made pursuant to this Section 7.7 shall be based upon the Member's
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Account balance as of the end of the Plan Year preceding the date of such
distribution, in accordance with Article IV, Sections 4.5 and 4.6. The
Administrative Committee shall exercise the authority granted hereunder in a
uniform, nondiscriminatory manner.
7.8 Circumstances Rendering Vesting Schedule Inapplicable.
Notwithstanding any other provisions of this instrument to the contrary, if:
(a) the Plan is terminated pursuant to Article XVI, Section 16.3
hereof; or
(b) the Plan is terminated with respect to a group of Members
resulting in a partial termination of the Plan; or
(c) there occurs a complete discontinuance of Employer
Contributions under the Plan,
the vesting schedule contained in Section 7.1 of this Article shall be
inapplicable and each Member affected by such termination, partial termination
or complete discontinuance of Employer Contributions shall thereupon have a full
one hundred percent (100%) vested interest in the amount standing to his credit
in his Accounts at such time and in any amounts thereafter credited or allocated
to his Accounts; provided, however, that if the Signatory Company shall
thereafter resume making Employer Contributions hereunder, all amounts credited
or allocated to a Member's Accounts with respect to the Plan Year for which such
Employer Contributions are resumed and the Plan Years for which they are
continued, shall vest only in accordance with the vesting schedule contained in
Section 7.1 of this Article. For purposes of this Section 7.8, a complete
discontinuance of Employer Contributions under the Plan is contrasted with a
suspension of Employer Contributions under the
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Plan which is merely a temporary cessation of Employer Contributions by the
Signatory Company. During any such period of termination, partial termination or
complete discontinuance of Employer Contributions under the Plan, all other
provisions of this Plan shall nevertheless continue in full force and effect
other than provisions for Employer Contributions and allocations thereof to
Members' Accounts. The Signatory Company shall notify the District Director of
the Internal Revenue Service in the event it has completely discontinued making
Employer Contributions to the Plan or in the event of termination or partial
termination of the Plan.
ARTICLE VIII.
Claims for Plan Benefits
8.1 Application for Benefits. Each Member or designated Beneficiary
claiming benefits under this Plan must make written application therefor within
fifteen (15) days preceding or following (whichever is applicable) the actual
retirement, termination of employment (or incurrence of a one-year
Break-in-Service), death prior to retirement, determination of Total Permanent
Disability, or the happening of any other occurrence believed by the claimant to
entitle him to benefits hereunder. The date the claim shall be considered as
filed shall be the date a properly completed application is received by the
Administrative Committee. Each such application (a) shall be in writing on a
form to be provided by the Administrative Committee, (b) shall be signed by the
claimant or his personal representative, (c) shall be made to the Administrative
Committee, and (d) shall be filed in such a
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manner and with such persons as the Administrative Committee may specify. The
Administrative Committee may require that there be furnished to it in connection
with such application all relevant information. Failure to timely file such
application or to supply all relevant information shall not result in the
forfeiting of any rights claimed but shall excuse postponement of the orderly
processing of such claim and the time of commencing payment thereof.
8.2 Processing of Claim. Upon receipt by the Administrative Committee
of a properly completed application for benefits form, it shall be the duty and
responsibility of the Administrative Committee to verify the facts and claims
made therein with the appropriate Signatory Company and to determine whether the
claim is valid. In arriving at a decision, the Administrative Committee may
require additional relevant information from the claimant. In any event, within
one hundred twenty (120) days of receipt of the application, or as soon
thereafter as administratively practicable, the Administrative Committee shall
determine whether, when and in what amount distributions are to be paid from the
Plan to the claimant. If the Administrative Committee fails to act on the claim
within said one hundred twenty (120) day (or later) period, the claimant may
proceed to the review stage described in Section 8.4 hereof as if the claim had
been denied.
8.3 Notification to Claimant of Decision. If distributions are to be
made, the Administrative Committee shall immediately notify the claimant and the
Trustee of the amount and method of payment. It shall then be the responsibility
of the Trustee to
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arrange the distribution. If the claim is denied, in whole or in part, the
Administrative Committee shall send written notice of the denial to the
claimant. A notice that a claim has been denied shall set forth, in a manner
calculated to be understood by the claimant:
(a) The specific reason or reasons for the denial;
(b) Specific reference to the pertinent Plan provisions on which
the denial was based;
(c) A description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of
why such material is necessary; and
(d) An explanation of the Plan's claim review procedure.
8.4 Review Procedure. A claimant shall be entitled to a full and fair
review of a denial of claim for benefits. To avail himself of this right, the
claimant, or his duly authorized representative, must timely file an application
for review with the Administrative Committee. Such application must be in
writing and must be filed within ninety (90) days of receipt of the notice of
denial of benefits. If the claimant desires a personal appearance or hearing
before the Administrative Committee to present his case, he shall so state in
his application for review. An appeal shall be considered as filed on the date
it is received by the Administrative Committee. Subsequent to the filing of an
appeal and prior to the rendering of a decision thereon, the claimant, or his
duly authorized representative, may review pertinent documents and may submit
issues and comments in writing. If a hearing is held, the claimant may be
represented thereat by legal counsel or other duly authorized representative.
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8.5 Decision on Review. The Administrative Committee shall render a
decision promptly, within one hundred twenty (120) days after its receipt of a
request for review unless special circumstances, such as the need to hold a
hearing, require an extension of time for processing, in which case a decision
shall be rendered as soon as possible thereafter. The decision for review shall
be in writing and shall include the specific reasons for the decision, written
in a manner calculated to be understood by the claimant, with specific reference
to the pertinent Plan provisions on which the decision is based. The review
decision by the Administrative Committee shall be considered final.
8.6 Disputed Benefits. If any dispute shall arise between a Member,
or other person claiming under a Member, and the Administrative Committee after
the review of the claim for benefits, or if any dispute shall develop as to the
person to whom the payment of any benefit under the Plan shall be made, the
Trustee may withhold payment of all or any part of the benefits payable
hereunder to the Member, or other person claiming under the Member, until such
dispute has been resolved by a court of competent jurisdiction or settled by the
parties involved.
ARTICLE IX.
Distributions from Trust Funds
9.1 Occasions for Distributions. Distributions from the Trust shall
be made to Members or Beneficiaries only upon the death, retirement, Total
Permanent Disability or termination of employment of the Member as provided in
Article VII, Sections 7.2, 7.3, 7.4 and 7.5 hereof, respectively, or upon
termination of the
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Plan and Trust as provided in Article XVI hereof, and then only to the extent of
the Member's vested interest in his Account and subject to the conditions and
specifications hereinafter following.
Notwithstanding any other provision of this Plan, unless the Member
otherwise elects, the distribution to the Member shall commence no later than
one year after the end of the Plan Year --
(a) in which the Member terminates employment for any of
the events described in Section 7.2, 7.3 or 7.4 in Article VII of this
Plan,
(b) which is the fifth Plan Year following the Plan Year
in which the Member terminates employment for any other reason,
except in cases where the Member becomes reemployed by a Signatory Company
during this period.
9.2 Consent to Distribution; Special Rules Upon Reemployment.
(a) In those instances where a Member terminates his
employment with the Signatory Company for any reason other than death
or retirement and, as a result thereof, would otherwise be entitled to
a distribution of his vested interest in his Account, no such
distribution shall, under any circumstances, be authorized by the
Administrative Committee nor effected by the Trustee prior to the death
or retirement of such Member unless (i) the gross amount to be
distributed is $3,500 or less, or (ii) the gross amount is in excess of
$3,500 and the Member consents to the distribution and executes a
distribution form supplied by the Administrative Committee signifying
such consent. A certified copy of such distribution form shall be
transmitted to the Trustee for its records along with written
directions as to the amount, time and manner of distribution.
(b) In the event that a Member does not consent to a
distribution as required under this Section 9.2, a separate ledger
account shall be created for such Member. His Account shall be
transferred to the separate ledger account. Such separate ledger
account shall share in income and valuation adjustments pursuant to
Article IV, Sections 4.5 and 4.6 until the vested Account Balance is
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distributed in full upon the Member's subsequent death, attainment of
Normal Retirement Age or Total Permanent Disability.
(c) If an Employee returns to the employment of a
Signatory Company after incurring a Forfeiture under Article VII,
Section 7.6 and again becomes a Member under the Plan, a new Account
shall be established for him as if he were a new Member. The new
Account shall be maintained independently of the separate ledger
account. Such account shall share in Employer Contributions,
Forfeitures, income and valuation adjustments pursuant to Article IV
and shall vest as determined under Article VII, Section 7.1. Upon
subsequent termination of employment, the vested portion of the Account
shall be distributed upon the Member's entitlement to a distribution
under Article VII hereof or, if the Member again does not give the
necessary consent to a distribution, such vested amount shall be added
to the separate ledger account.
(d) If any reemployed Employee is reemployed before
incurring five (5) consecutive years of Break-in-Service, and such
Employee had received prior to his reemployment an entire distribution
of the vested portion of his Account which was less than fully vested,
the forfeited portion of his Account shall be reinstated only if he
repays the full amount distributed to him before the end of the earlier
of the following periods: (i) five (5) consecutive Years of
Break-in-Service, or (ii) the period ending on the fifth (5th)
anniversary of the Member's reemployment. If such Employee repays such
full amount distributed to him, the undistributed portion of his
Account must be restored in full, unadjusted by any gains or losses
occurring subsequent to the valuation date preceding his termination.
Such restoration shall be paid from Employer Contributions, Forfeitures
and income or gain to the Plan for the Plan Year of such restoration,
as determined by the Administrative Committee. A reemployed Member who
previously had a zero vested Account balance and thus received a deemed
zero distribution under Article VII, Section 7.6 above, shall be deemed
to have repaid his prior deemed zero distribution on the day of his
reemployment. This provision shall be interpreted in a manner
consistent with the transitional rules of Section 303(a)(2) of the
Retirement Equity Act as to service prior to Plan Years beginning
before January 1, 1985.
9.3 Manner of Distributions. The Administrative Committee shall
direct the Trustee, in writing, when to distribute the
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amounts referred to in Article VII, Sections 7.2, 7.3, 7.4 and 7.5, in
accordance with the election of the Member:
(a) Distribution of such Member's benefit in a single
payment; or
(b) Distributions in the manner provided in either
subdivision (i) or (ii) below; provided, that the monies in the
terminated Member's Account will be credited with their portion of the
gains or losses of the Trust pursuant to Article IV, Sections 4.4 and
4.5.
(i) Distribution of a portion of his Plan benefit
in a single distribution with the remainder distributed in
substantially equal annual, quarterly or monthly installments
plus income allocations and valuation adjustments pursuant to
Article IV, Sections 4.4 and 4.5, over a period equal to 5
years (or in the case of a Member with a Plan benefit in
excess of $500,000, 5 years plus one additional year (but not
to exceed 5 additional years) for each $100,000 or fraction
thereof by which the Member's Plan benefits exceed $500,000).
However, the Member may consent to a longer period in which
case the period will be any time period which does not exceed
the Member's life expectancy (or life expectancies of such
Member and his designated Beneficiary); provided that the
present value of the benefits to be distributed to the Member
shall exceed fifty percent (50%) of the present value of the
total benefit to be distributed to the Member and his
designated Beneficiary, or
(ii) Distribution of his entire Plan benefit in
substantially equal annual, quarterly or monthly installments
plus income allocations and valuation adjustments pursuant to
Article IV, Sections 4.4 and 4.5, over a period equal to 5
years (or in the case of a Member with a Plan benefit in
excess of $500,000, 5 years plus one additional year (but not
to exceed 5 additional years) for each $100,000 or fraction
thereof by which the Member's Plan benefits exceed $500,000).
However, the Member may consent to a longer period which does
not exceed the Member's life expectancy (or the life
expectancies of such Member and his designated Beneficiary);
provided that the present value of the benefits to be
distributed to the Member shall
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exceed fifty percent (50%) of the present value of the total
benefit to be distributed to the Member and his designated
Beneficiary.
Except as provided in Article VII, Section 7.5 amounts shall not be distributed
until the terminated Member incurs five consecutive years of Breaks-in-Service.
In the event of the Member's death, the benefit shall be paid according to the
method either set forth on the beneficiary designation on file with the
Administrative Committee or elected by the Beneficiary or Beneficiaries.
9.4 Time of Distributions. Distributions required by Section 9.3
hereof shall commence as soon as administratively feasible. Unless the Member
executes an election form consented to by the Administrative Committee which
states how and when benefits are to commence, payment of benefits to the Member
shall in no event begin later than the sixtieth (60th) day after the latest of
the close of the Plan Year in which:
(a) the Member attains age 65,
(b) the Member has his tenth (10th) anniversary of the
year in which he commenced participation in the Plan, and
(c) the Member's employment with a Signatory Company
terminates.
9.5 Mandatory Distributions. Notwithstanding any other provision
in the Plan to the contrary, benefits shall be distributed to the Member or his
Beneficiary no later than set forth in this Section.
(a) Mandatory Age Distribution. A Member's benefits shall
be distributed to him no later than the April 1st of the calendar year
following the calendar year in which the Member attains age 70 1/2. In
the alternative, distributions to a Member may commence in such
calendar year as set forth above, but the balance of his benefits must
be distributed over the life of such
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Member (or lives of such Member and his designated Beneficiary) or over
a time period not exceeding the Member's life expectancy (or the life
expectancies of the Member and his designated Beneficiary).
(b) Mandatory Death Distribution. If the distribution of
the member's benefits had commenced pursuant to Section 9.5(a) and the
Member dies before his entire benefit is distributed to him, the
remaining portion of his benefit will be distributed at least as
rapidly as under the method of distribution being used pursuant to
Section 9.5(a) as of the date of such Member's death. If a Member dies
prior to the commencement of his benefit distribution pursuant to
Section 9.5(a), the entire benefit of such Member will be distributed
within five (5) years after the death of such Member. However, such
five (5) year rule shall be disregarded for any portion of the Member's
benefit which is payable to (or for the benefit of) a designated
Beneficiary, such portion to be distributed (in accordance with
regulations issued by the Secretary) over the life of such designated
Beneficiary (or over a period not exceeding beyond the life expectancy
of such Beneficiary), and such distributions commence not later than
one (1) year after the date of the Member's death or such later date as
the Secretary may prescribe by regulations. In such a situation, the
benefit portion distributed to such Beneficiary shall be treated as
distributed on the date on which such distribution begins.
In the event that the designated Beneficiary is the deceased
Member's surviving spouse, the date on which the benefit distribution
is required to commence shall be no earlier than the date on which the
Member would have attained age 70 1/2. If the surviving spouse dies
before the distributions to such spouse commence, this subsection shall
be applied as if the surviving spouse were the Member. For purposes of
this subsection, any amount paid to a child shall be treated as if it
had been paid to the surviving spouse if such amount shall become
payable to the surviving spouse upon such child reaching majority (or
other designated event permitted under Treasury regulations).
(c) Recalculation of Life Expectancies. For purposes of
this Section, the life expectancy of a Member and a Member's spouse
may, in the discretion of the Administrative Committee, be redetermined
but no more frequently than annually and in accordance with such rules
as may be prescribed by Treasury regulations.
(d) Prior Irrevocable Election. If the Member made an
irrevocable election prior to December 31, 1983 to defer the
distribution of benefits beyond the dates set
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forth in Section 9.5(a) and (b), such election shall govern the
distribution so long as said election was pursuant to the terms of the
Plan at the time of the election.
To the extent the Administrative Committee has previously adopted a policy of
not distributing benefits (as required under this Section) in accordance with
any of the provisions of Prop. Reg. Section 1.401(a)(9)1 A4(c), then such
distributions under this document shall be administered in a manner consistent
with such previously-established policy.
9.6 Distribution to Minors or Persons under Disability. Should any
distribution hereunder become payable to a minor or to a person who, in the
opinion of the Administrative Committee, is incapable of taking care of his
affairs, the Administrative Committee may direct the Trustee to make such
distribution in any one or combination of the following ways: (1) directly to
such minor or person; (2) to the legal guardian of the person or estate of such
minor or person; or (3) to a person or financial institution serving as
Custodian for such Beneficiary under the Uniform Gifts to Minors Act of any
state. Any distribution so made shall constitute full and complete discharge of
any liability under the Plan with respect to the amount so distributed.
9.7 Interest of Spouse of Member in the Event of Divorce. In the
event of a divorce between a Member and his spouse and in the event that the
Divorce Decree entered by the Court having jurisdiction in the matter gives such
divorced spouse a portion of the Member's vested interest in his Account, the
Trustee shall, pursuant to the direction of the Administrative Committee,
segregate such amount in a separate account for the benefit of such
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spouse. Such account shall thereafter be held and administered as a part of the
Trust Fund (but such account shall only share in income allocations and
valuation adjustments of the Trust Fund). In the event the spouse is also
awarded a portion of the future Employer Contributions which normally would be
allocated to the Member's Account, the Administrative Committee, after it
receives a certified copy of such Divorce Decree, shall instruct the Trustee to
allocate such portion to the spouse's account. Within the period of time
specified therein after the entry of the final Qualified Domestic Relations
Order which complies with Section 414(p) of the Code (even if earlier than the
"earliest retirement age" as defined in Section 414(p)(4)(B) of the Code) or, if
no period of time is specified therein, at the time the Member or his
Beneficiary becomes entitled to a distribution hereunder, the amounts held by
the Trustee for the spouse shall be distributed to such spouse in a lump sum
unless elected otherwise by such spouse. If such spouse should die prior to the
time of distribution to such spouse hereunder, the amounts then held by the
Trustee shall be paid over to the estate of such spouse within six (6) months
after notification to the Trustee of the death of such spouse. All rights and
benefits, including elections, provided to a Member in this Plan shall be
subject to the rights afforded to any "alternate payee" under a "qualified
domestic relations order" as those terms are defined in Section 414(p) of the
Code.
9.8 Form of Distributions. Distributions from Accounts under this
Plan will be made entirely in whole shares of Employer Stock.
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The balance resulting from the value of any fractional shares will be
distributed in cash.
However, the Administrative Committee may distribute all of the
benefits in cash, unless the Member exercises his right to make a written demand
for Employer Stock on the form and in the manner prescribed by the
Administrative Committee for this purpose. In the event that a distribution of
cash is made, the Administrative Committee shall arrange for the sale of
Employer Stock in the account at a reasonable time prior to the date of
distribution and the net cash proceeds of the sale shall be the amount
distributed to the Member in lieu of such Employer Stock.
9.9 Restrictions on Distributed Stock of Signatory Companies and
Their Affiliated Companies Which is not Publicly Traded. Employer Stock
distributed to the Member from the Plan, to the extent such stock is not then
publicly traded, shall be restricted as to sale or transfer according to the
provisions of this Section 9.9, such other restrictions as provided in the
ByLaws or Articles of Incorporation of the Signatory Company or Affiliated
Company issuing the stock (hereinafter sometimes called "Issuing Corporation"),
and as required by applicable Federal or State Securities Laws.
(a) Right of First Refusal. In the event a shareholder receives an
offer (hereinafter referred to as the "Proposed Offer") for the purchase of all
or a portion of his shares of Employer Stock received from the Trust
(hereinafter referred to as "Offered Shares"), or any rights or interest therein
which the shareholder would like to accept, such shareholder (hereinafter
referred to as
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"Offering Shareholder") shall obtain from his offeror the Proposed Offer (which
by its terms must be open for a period of not less than thirty (30) days) in
writing, and shall transmit it along with a notice of his intention to accept
the Proposed Offer to the Trustee, said notice being made in the manner set
forth in subsection (c) below. Concurrent with the notice to the Trustee, the
Offering Shareholder shall also give notice to the Issuing Corporation in the
manner and at the address set forth in subsection (c) below.
(i) Upon receipt of the notice with respect to the Proposed
Offer, the Trustee shall have the exclusive right and option,
exercisable at any time during a period of fourteen (14) days from the
date of said notice, to elect to purchase any or all of the Offered
Shares at a price no less than the price in the Proposed Offer (unless
the price offered by the bona fide third party offeree is less than the
fair market value of the Offered Shares, in which case the price at
which the Trustee may acquire the stock shall be its fair market value)
and on the same terms and conditions as set out in such notice of
Proposed Offer. During such fourteen (14) day period, the Trustee shall
give written notification to the Offering Shareholder and the Issuing
Corporation specifying the number of shares which it shall purchase
from the Offering Shareholder.
(ii) In the event that the Trustee elects to purchase fewer
than all of the shares offered to it, the Issuing Corporation shall be
entitled during the remainder of such fourteen (14) day period to elect
to purchase the Offered Shares not purchased by the Trustee at a price
no less than the price in the Proposed Offer (unless the price offered
by the bona fide third party offeree is less than the fair market value
of the Offered Shares, in which case the price at which the Issuing
Corporation may acquire the stock shall be its fair market value) and
on the same terms and conditions as set out in such notice of Proposed
Offer. During such remainder of the fourteen (14) day period, the
Issuing Corporation shall give written notification to the Offering
Shareholder and the Trustee specifying the number of shares which it
shall purchase from the Offering Shareholder.
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At the time when all options are either exercised or have lapsed, the Offering
Shareholder shall have the right to transfer the Offered Shares not to be
purchased by either the Trustee or the Issuing Corporation to the prospective
purchaser at a price equal to or in excess of that price specified in the
Proposed Offer for a period of sixty (60) days following the date when all
options are either exercised or have lapsed, free and clear of any restrictions
against transfer that might otherwise have been created hereby. If a sale to the
prospective purchaser is not made within the sixty (60) day period herein, the
restrictions contained herein shall continue in effect. The right of the Issuing
Corporation to exercise its option to purchase shall be subject to the laws of
the State of Texas governing the rights of the Corporation to purchase its own
shares, and provided further, that the right of the Issuing Corporation or any
other person to purchase shares shall be subject to compliance with applicable
Federal and State Securities laws.
(b) Closing. Sales and purchases involving the Trustee or the
Issuing Corporation shall be consummated within thirty (30) days of the
expiration of the option period provided in subparagraphs (i) and (ii) of
subsection (a) hereof, at the time and place specified by the Issuing
Corporation by notice to all concerned parties.
(c) Notices. All notices required to be given hereunder shall be
deemed to be duly given by personally delivering such notice or by mailing it
via registered mail as follows:
(i) If to the Trustee, addressed to the Trustee at the
address provided by the Corporation creating this Plan and Trust; and
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(ii) If to the Issuing Corporation, addressed to the
Secretary at the Issuing Corporation's principal address.
(d) Restriction Legend. All certificates representing shares of
Employer Stock distributed as benefits from the Trust which are issued while
this Section 9.9 is in effect shall have endorsed upon them the following
legend:
The shares represented by this certificate are subject to
restrictions against transfer under the terms of Article IX, Section
9.9 of the Fifth Amendment and Restatement of the Team, Inc. Employee
Stock Ownership Plan and Trust to which the Corporation issuing these
shares is a signatory, which Fifth Amendment and Restatement requires,
among other things, that the holder hereof offer to sell his shares to
the Trustee and the Issuing Corporation prior to making any transfer of
his shares. The Corporation will furnish, without charge, to the holder
of this certificate, upon written request to it at its principal place
of business or registered office, a copy of Article IX, Section 9.9 of
the Fifth Amendment and Restatement.
The Trustee shall be responsible for seeing that all certificates issued as a
result of a distribution of benefits from the Trust contain the foregoing
legend.
9.10 Put Option.
(a) Grant of Option. Any Employer Stock either purchased by the
Trust or contributed by the Signatory Company shall be subject to a put option
if it is not publicly traded when distributed or if it is subject to a trading
limitation when distributed. For purposes of this Section 9.10, a trading
limitation shall be deemed to be any restriction under any federal or state
securities law, any regulation thereunder, or any agreement affecting the
Employer Stock which would make such Employer Stock not as freely tradable as
would be the case were it not subject to such restrictions. Under such option,
the holder of such Employer Stock shall be
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entitled to require that the Signatory Company purchase such Employer Stock
under the terms and conditions set forth herein. The holder of the Employer
Stock shall include not only a Member or former Member in that Plan, but also a
donee of such Member or former Member or a person to whom the Employer Stock
passes by reason of death of such Member or former Member.
(b) Duration of Option. The option described in this Section 9.10
shall be exercisable at any time during the sixty (60) day period beginning on
the date the Employer Stock subject to the option is distributed from the Plan.
If the Holder does not exercise this option, the option shall be exercisable for
an additional sixty (60) day period beginning on the first day of the Plan Year
immediately following the Plan Year in which the first sixty (60) day period
expired. In the event that the Employer Stock is publicly traded without
restrictions when distributed but ceases to be so traded before the expiration
of both option periods, the Signatory Company shall notify each holder of such
Employer Stock, in writing, that the Employer Stock has ceased to be so traded
and that the Employer Stock shall be subject to the option described herein for
a period of sixty (60) days from the date of such notice. The notice shall also
inform the holders of such Employer Stock of the terms of the option described
herein.
(c) Exercise. The put option described herein shall be exercised by
the holder of the Employer Stock by notifying the Signatory Company, in writing,
that the option is being exercised.
(d) Price. The price which the Signatory Company shall pay for the
Employer Stock upon exercise of the option described herein
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shall be the fair market value of the Employer Stock on the date the option is
exercised. The fair market value shall be determined in good faith and based
upon all relevant factors, including the latest annual valuation.
(e) Payment Terms. Within thirty (30) days following the exercise of
an option as described herein, the Signatory Company, in its discretion, shall
pay to the holder of the Employer Stock either (i) the total purchase price, or
(ii) an amount equal to one-sixth of the purchase price and shall execute a note
in the principal amount equal to the balance of the purchase price, payable to
the Holder of the Employer Stock. Such note shall bear a reasonable rate of
interest and shall be secured by adequate security. The term of such note shall
be for a period determined by the Signatory Company, but in no event for a term
in excess of five (5) years after the date the option is exercised. The
principal of such note shall be payable in accordance with its terms, but in no
event shall such principal amount be payable in more than five (5) equal annual
installments. The Signatory Company's discretion in determining the method of
payment shall be applied in a uniform, consistent and nondiscriminatory manner.
Notwithstanding the preceding provisions of this Section 9.10(e), payment shall
be in the form of the total purchase under clause (i) above and not deferred as
in clause (ii) above, if distribution is made in annual installments under
Article IX, Section 9.3(b)(i) and if such distribution is attributable to
Employer Stock acquired by the Plan after December 31, 1986.
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(f) Option Nonterminable. The option described herein shall apply to
all Employer Stock purchased by the Plan. Such put option shall be nonterminable
irrespective of whether the Plan continues to be a non-leveraged employee stock
ownership plan (i.e., other than one within the meaning of Section 4975(e)(7) of
the Code) which is a stock bonus plan. Notwithstanding any provision in this
Plan to the contrary, the Plan may not be amended in any fashion which would
have the effect of terminating such option, as long as required pursuant to
Section 401(a)(23) of the Code.
9.11 Direct Rollover of Distribution. This Section 9.11 applies to
all distributions made on or after January 1, 1993. Notwithstanding any
provision of the Plan to the contrary that would otherwise limit a distributee's
election under this Section 9.11, a distributee may elect at the time and in the
manner prescribed by the Administrative Committee, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
a) Eligible rollover distribution: For purposes of this Section
9.11, an eligible rollover distribution is any distribution of
all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or
for a specified period of ten years or more; any distribution to
the extent such distribution is required under Section 401(a)(9)
of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
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b) Eligible retirement plan: For purposes of this Section 9.11, an
eligible retirement plan is an individual retirement account
described in Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
c) Distributee: For purposes of this Section 9.11, a distributee
includes an employee or former employee. In addition, the
employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is
the alternate payee under a qualified domestic relations order,
as defined in Section 414(p) of the Code, are distributees with
regard to the interest of the spouse or former spouse.
d) Direct rollover: For purposes of this Section 9.11, a direct
rollover is a payment by the Plan to the eligible retirement plan
specified by the distributee.
If a distribution is one to which Sections 401(a)(11) and 417 of the
Code do not apply, such distribution may commence less than thirty (30) days
after the notice required under Treasury Regulation Section 1.411(a)11(c) is
given, provided that:
(1) the Administrative Committee clearly informs the
Member that the Member has a right to a period of at least
thirty (30) days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(2) the Member, after receiving the notice,
affirmatively elects a distribution.
9.12 Missing Participant. If at the time a distribution is due to be
made to a Member or Beneficiary under this Plan such Member or Beneficiary is
missing, unavailable, or whose whereabouts
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are otherwise unknown, after reasonable inquiries are made to locate such Member
or Beneficiary by the Administrative Committee including mailing a notice of
such distribution to the last known address, the total amount of such benefit
may be forfeited in or after the Plan Year (and such forfeiture will be applied
to defray administration costs of the Plan) in accordance with the provisions of
Reg. Section 1.411(a)4(b)(6) pursuant to which such benefit will be reinstated
if a claim is later made by such Member or Beneficiary therefor. Notwithstanding
the preceding sentence, in the event of the complete termination of the Plan,
amounts of Accounts and benefits under this Plan due to be distributed to
missing Members or Beneficiaries shall be preserved and protected outside the
Plan by purchase of annuity or other acceptable method including the
establishment of a individual retirement account or other bank or financial
institution interest bearing or fixed income account in the name of or for the
benefit of such missing Member or Beneficiary.
ARTICLE X.
Top Heavy Provisions
10.1 Determination of Top Heavy Plan Status. The Plan shall be
considered a Top Heavy Plan for any Plan Year commencing after December 31,
1983, in which, as of the Determination Date, the sum of the Aggregate Accounts
of Key Employees under this Plan and any plan of an Aggregation Group exceeds
sixty percent (60%) of the Aggregate Accounts of all Members under this Plan and
any plan of an Aggregation Group. If a Member, who was a Key Employee for any
prior Plan Year, is a Non-Key Employee for any Plan Year, such
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Member's Aggregate Account balance shall not be taken into account for purposes
of determining whether the Plan is a Top Heavy Plan (or whether any Aggregation
Group which includes the Plan is a Top Heavy Group). In addition, the Account
balance of any Member who has not within the past five (5) years performed any
services for the Signatory Company shall not be taken into account for purposes
of determining whether the Plan is a Top Heavy Plan (or whether any Aggregation
Group which includes the Plan is a Top Heavy Group).
10.2 Determination of Super Top Heavy Plan Status. The Plan shall be
considered a Super Top Heavy Plan for any Plan Year commencing after December
31, 1983, in which, as of the Determination Date, the sum of the Aggregate
Accounts of Key Employees under this Plan and any plan of an Aggregation Group
exceeds ninety percent (90%) of the Aggregate Accounts of all Members under this
Plan and any plan of an Aggregation Group. For purposes of determining if the
Plan is a Super Top Heavy Plan, a Member's inclusion in the Key Employee
grouping shall be determined in the manner set forth in Section 10.1.
10.3 Aggregate Accounts. A Member's Aggregate Account as of the
Determination Date shall be the sum of:
(a) his Account balance as of the most recent valuation
date occurring within a twelve (12) month period ending on the
Determination Date;
(b) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of any
contributions actually made after the valuation date but before the
Determination Date, except for the first Plan Year when such adjustment
shall also reflect the amount of any contributions made after the
Determination Date that are allocated as of a date in that first Plan
Year;
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(c) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4) preceding Plan
Years. However, in the case of distributions made after the valuation
date and prior to the Determination Date, such distributions are not
included as distributions for top heavy purposes to the extent that
such distributions are already included in the Member's Aggregate
Account balance as of the valuation date. Notwithstanding anything
herein to the contrary, all distributions, including distributions made
prior to January 1, 1984, will be counted, and distributions under a
terminated plan which if it had not been terminated would have been
required to be included in an Aggregation Group will be counted; and
(d) any Employee contributions whether voluntary or
mandatory. However, amounts attributable to tax deductible qualified
Employee contributions shall not be considered to be a part of the
Member's Aggregate Account balance.
10.4 Aggregation Group. An Aggregation Group for purposes of this
Article is either a Required Aggregation Group or a Permissive Aggregation Group
as hereinafter determined. In determining Aggregation Groups, "Employer" means
an employer as defined in Section 416 of the Code and the regulations issued
thereunder.
(a) Required Aggregation Group. In determining a Required
Aggregation Group hereunder, each plan of the Employer in which a Key
Employee is a participant, and each other plan of the Employer which
enables any plan in which a Key Employee participates to meet the
requirements of Code Sections 401(a)(4) or 410, will be required to be
aggregated. Such group shall be known as a Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the group
will be considered a Top Heavy Plan if the Required Aggregation Group
is a Top Heavy Group. No plan in the Required Aggregation Group will be
considered a Top Heavy Plan if the Required Aggregation Group is not a
Top Heavy Group.
(b) Permissive Aggregation Group. The Employer may also
include any other plan not required to be included in the Required
Aggregation Group, provided the resulting group, taken as a whole,
would continue to satisfy the provisions of Code Sections 401(a)(4) and
410. Such group shall be known as a Permissive Aggregation Group. In
the case of a Permissive Aggregation Group, only a plan that is part of
the Required Aggregation Group will be considered a Top Heavy Plan if
the Permissive
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Aggregation Group is a Top Heavy Group. No plan in the Permissive
Aggregation Group will be considered a Top Heavy Plan if the Permissive
Aggregation Group is not a Top Heavy Group.
(c) Aggregation of Multiple Plans. When more than one
plan is aggregated, the Aggregate Accounts (including distributions for
Key Employees and all Employees) are determined separately for each
plan as of each plan's Determination Date. The plans are then
aggregated by adding the results of each plan as of the Determination
Dates for such plans that fall within the same calendar year.
10.5 Top Heavy Plan Requirements. For any Plan Year in which the
Plan is considered to be a Top Heavy Plan, the Plan shall:
(a) require minimum allocations to Non-Key Employees
pursuant to Section 10.6; and
(b) use the following vesting schedule in determining the
"vested interest" of an Employee pursuant to Article VII, Section 7.1
for any Employee whose Account will vest faster in such Plan Year under
the following schedule:
<TABLE>
<CAPTION>
Percentage of
Participating Employee's
Years of Service Account that Becomes Vested
---------------- ---------------------------
<S> <C>
Less than two years. . . . . . . . . . . 0%
Two years, but
less than three years. . . . . . . . . . 20%
Three years, but
less than four years . . . . . . . . . . 40%
Four years, but
less than five years . . . . . . . . . . 60%
Five years, but
less than six years. . . . . . . . . . . 80%
Six years or more. . . . . . . . . . . . 100%
</TABLE>
10.6 Allocations to Non-Key Employees. For any Plan Year in which
the plan is determined to be a Top Heavy Plan, the following allocation
provisions shall be operational and supplement Article IV, Section 4.3.
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(a) Minimum Allocations Required for Top Heavy Plan Years.
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of
the total of the Employer Contributions and reallocated Forfeitures
allocated to the Member's Account of each Non-Key Employee shall be
equal to at least three percent (3%) of such Non-Key Employee's
Considered Compensation. However, should the sum of the total of the
Employer Contributions and reallocated Forfeitures allocated to the
Member's Account of each Key Employee for such Top Heavy Plan Year be
less than three percent (3%) of each Key Employee's Considered
Compensation, the sum of the total of the Employer Contributions and
reallocated Forfeitures allocated to the Member's Account of each
Non-Key Employee shall be equal to the largest percentage allocated to
the Member's Account of each Key Employee. For allocation purposes
where contributions to Key Employees are less than three percent (3%)
of Considered Compensation, amounts contributed by Key Employees to a
salary deferral plan must be included as part of such Key Employee's
Considered Compensation for purposes of determining contributions made
on behalf of Key Employees.
(b) Extra Minimum Allocation Permitted for Top Heavy Plans
other than Super Top Heavy Plans. If a Key Employee is a Member in both
a defined contribution plan and a defined benefit pension plan that are
both part of a Top Heavy Group (but neither of such plans is a Super
Top Heavy Plan), the defined contribution and the defined benefit
fractions set forth in Article V, Section 5.2 shall remain unchanged,
provided the Member's Account of each Non-Key Employee who is a Member
receives an extra allocation (in addition to the minimum allocation set
forth above) equal to not less than one percent (1%) of such Non-Key
Employee's Considered Compensation.
(c) Computation of the Minimum Contribution. For purposes
of the minimum allocations set forth above, the percentage allocated to
the Member's Account of any Key Employee shall be equal to the ratio of
the sum of the total of the Employer Contribution and reallocated
Forfeitures allocated on behalf of such Key Employee divided by the
Considered Compensation for such Key Employee.
(d) Eligibility for the Minimum Contribution. For any Plan
Year in which the Plan is a Top Heavy Plan, the minimum allocations set
forth above shall be allocated to the Members' Accounts of all Non-Key
Employees who are Members and who are employed by the Employer on the
last day of the Plan Year, including Non-Key Employees who are Members
but have failed to complete a Year of Service regardless of
compensation.
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(e) Alternative Methods of Complying with the Minimum
Benefit Requirement. Notwithstanding anything herein to the contrary,
in any Plan Year in which a Non- Key Employee is a Member in both this
Plan and a defined benefit pension plan, and both such plans are Top
Heavy Plans, the Employer shall not be required to provide a Non-Key
Employee with both the full separate minimum defined benefit plan
benefit and the full separate defined contribution plan allocations.
Therefore, for Non-Key Employees who are participating in a defined
benefit plan maintained by the Employer and the minimum benefits under
Section 416(c)(2) of the Code are accruing to a Non-Key Employee under
such Plan, the minimum allocations provided for above shall not be
applicable, and no minimum contribution shall be made to the Plan on
behalf of the Non-Key Employee. Alternatively, the Employer may satisfy
the minimum benefit requirement of Section 416(c)(1)(E) of the Code for
the Non-Key Employee by providing any combination of benefits and/or
contributions that satisfies the safe harbor rules contained in
Treasury Regulation Section 1.4161(M-12).
(f) Accounting. The Administrative Committee may establish
a second Account for each Member to which allocations are credited for
Plan Years in which the Plan is a Top Heavy Plan or a Super Top Heavy
Plan. Such separate Accounts shall be credited with income allocations
and earning adjustments pursuant to Article IV, Section 4.4 and 4.5.
ARTICLE XI.
Other Qualified Plans
11.1 Transfers from Other Qualified Plans. With the consent of the
Administrative Committee, assets compatible with the investment objectives of
this Plan may be transferred to this Plan and Trust from any other qualified
plan meeting the requirements of Section 401(a) of the Code which is maintained
by a Signatory Company or by a predecessor employer of the Member for the
benefit of the Member if he is one hundred percent (100%) vested in such assets,
or from an Individual Retirement Account ("IRA") to the extent that the assets
from such IRA had been previously rolled over from another qualified plan and
that such rollover into the
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Plan is permitted under the Code. However, in the event the Member rolls over
assets from his IRA to the Plan, he shall first certify to the Administrative
Committee the amount he rolled over into the IRA and both the name and
classification of the previous qualified plan. In no instance may assets be
transferred directly or indirectly from any other qualified plan meeting the
requirements of Section 401(a) of the Code which is not exempt from the joint
and survivor annuity requirements of Section 401(a)(11) of the Code; provided,
however, that if by mistake or otherwise any such benefits are transferred to
the Plan on behalf of a Member from (a) a defined benefit plan, (b) a defined
contribution plan subject to Section 412 of the Code, or (c) a defined
contribution plan which is subject to Sections 401(a)(11) and 417 of the Code
with respect to that Member, such benefits shall be subject to the requirements
of Prop. Reg. Section 1.401(a)11T Q & A 7 and 8, including the separate
accounting requirement for such benefits. The assets so transferred shall be
accompanied by written instructions from the Administrative Committee to the
Trustee identifying the other plan, the Member's IRA (if applicable), this Plan,
the name of the Member, his one hundred percent (100%) vested interest therein,
the actual contributions of the Member and the Signatory Company or predecessor
employer, as the case may be, and the current value of the assets attributable
thereto. Such transferred assets shall be credited to such Member's Account as a
fully vested portion thereof.
11.2 Transfers to Other Qualified Plans. The Administrative
Committee may, upon written request of a Member otherwise entitled
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to receive a distribution of benefits under Article IX, direct the Trustee to
transfer the vested amount of such Member's Account hereunder to another
qualified plan meeting the requirements of Section 401(a) of the Code which is
maintained by the Signatory Company or a successor employer of the Member and
which makes provision for receiving such transferred assets. The assets so
transferred shall be accompanied by written instructions from the Administrative
Committee identifying this Plan, the other plan, the name of the Member, his one
hundred percent (100%) vested interest, the actual Employer Contributions of the
Signatory Company and the current value of the assets attributable thereto.
Prior to the transfer of any assets, the Trustee must be satisfied that the
holding of such assets is permitted in the transferee trust. Upon receipt of
such written instructions, the Trustee shall effect the transfer of the Member's
Account. Such transferred assets shall be credited to such Member's Account in
the transferee plan and trust as a fully vested portion thereof.
ARTICLE XII.
Administrative Committee
12.1 Appointment, Resignation and Removal. The Board of Directors
of the Corporation shall appoint an Administrative Committee of one or more
persons, the members of which shall serve until resignation, death or removal.
Any member of the Administrative Committee may resign at any time by mailing
written notice of such resignation to the Board of Directors of the Corporation
thirty (30) days before the effective date of such resignation. Such notice may
be waived by written consent of the
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Corporation. Any member of the Administrative Committee may be removed by the
Board of Directors of the Corporation with or without cause. Vacancies in the
Administrative Committee arising by resignation, death, removal or otherwise
shall be filled by such persons as may be appointed by the Board of Directors of
the Corporation. Each member of the Administrative Committee shall, before
entering upon the performance of his duties, qualify by signing a consent to
serve as a member of the Administrative Committee under and pursuant to this
Plan and by filing such consent with the Corporation.
12.2 Rights, Powers and Authority. The Administrative Committee
shall have general supervision of the administration of the Plan and Trust
according to the terms and provisions of this document and shall have all powers
necessary to accomplish such purposes, including, but not limited to, the right,
power and authority:
(a) To make rules and regulations for the administration of
the Plan and Trust which are not inconsistent with the terms and
provisions hereof; provided, that such rules and regulations are
evidenced in writing and copies thereof are delivered to the Trustee
and to each Signatory Company;
(b) To construe all terms, provisions, conditions and
limitations of the Plan and Trust; and its construction thereof, made
in good faith and without discrimination in favor of or against any
Member, shall be final and conclusive on all parties at interest;
(c) To correct any defect or supply any omission or
reconcile any inconsistency which may appear in the Plan and Trust, in
such manner and to such extent as it shall deem expedient to carry the
Plan and Trust into effect for the greatest benefit of all parties at
interest, and its judgment of such expediency shall be final and
conclusive on all parties at interest;
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(d) To select, employ and compensate from time to time such
consultants, actuaries, accountants, attorneys and other agents and
employees as the Administrative Committee may deem necessary or
advisable for the proper and efficient administration of the Plan or
Trust; and any agent or employee so selected by the Administrative
Committee may be a person or firm then, theretofore, or thereafter
serving any Signatory Company in any capacity;
(e) To determine all questions relating to the eligibility
of Employees to become Members and to determine the Years of Service
and the amount of Considered Compensation upon which the benefits of
each Member shall be calculated;
(f) To determine all questions relating to the
administration of the Plan and Trust, including, but not limited to,
differences of opinion which may arise between a Signatory Company, the
Trustee, a Member or any of them; and, whenever it is deemed advisable,
to determine such questions in order to promote the uniform and
nondiscriminatory administration of the Plan and Trust for the benefit
of all parties at interest;
(g) To direct and instruct the Trustee in all matters
relating to the payment of Plan benefits;
(h) To direct and instruct the Trustee, in writing, how to
vote all shares of Employer Stock which the Trustee is authorized to
vote pursuant to Article XIV, Section 14.3; and
(i) To direct and instruct the Trustee in all matters
relating to the purchase of Qualifying Employer Securities.
12.3 Administration. Whenever, in the administration of the Plan,
any action is taken by the Administrative Committee, such action shall be
uniform in nature as applied to all persons similarly situated and no such
action shall be taken which will discriminate in favor of Members who are
officers, shareholders, partners or highly compensated. The Administrative
Committee shall keep records containing all relevant data pertaining to
individual Members and their rights under the Plan and is charged with the duty
of seeing that each Member receives the benefits to which he
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is entitled. Any Employee may consult with the Administrative Committee on any
matter or matters relating to the Plan. The Administrative Committee shall
supply each Member with a designation of beneficiary form which may be completed
and signed by the Member pursuant to Article VI, Section 6.2 and filed with the
Administrative Committee, with any other forms it shall require in connection
with the administration of the Plan.
12.4 Annual Audit of Plan. Unless otherwise relieved of the
responsibility to file audited financial statements with the Department of
Labor, if the Plan has one hundred (100) or more Members, it shall be the duty
and responsibility of the Administrative Committee to engage, on behalf of all
Members, an independent Certified Public Accountant who shall conduct an annual
examination of any financial statements of the Plan and Trust and of other books
and records of the Plan and Trust as the Certified Public Accountant may deem
necessary to enable him to form and provide a written opinion as to whether the
financial statements and related schedules required to be filed with the
Department of Labor or furnished to each Member are presented fairly and in
conformity with generally accepted accounting principles applied on a basis
consistent with that of the preceding Plan Year. Such examination shall be
conducted in accordance with generally accepted auditing standards and shall
involve such tests of the books and records of the Plan and Trust as the
Certified Public Accountant considers necessary. However, if the statements
required to be submitted as part of the reports to the Department of Labor are
prepared by a bank or similar institution or insurance
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carrier regulated and supervised and subject to periodic examination by a state
or federal agency and if such statements are certified by the preparer as
accurate and if such statements are, in fact, made a part of the annual report
to the Department of Labor, then the examination required by the foregoing
provisions of this Section shall be optional with the Administrative Committee.
12.5 Chairman and Secretary. The Administrative Committee may
select a Chairman from among its members who shall preside at all meetings of
the Administrative Committee and who shall be authorized to execute all
documents in the name of the Administrative Committee. In addition, it shall
select a Secretary who may or may not be a member of the Administrative
Committee and who shall keep the minutes of the Administrative Committee's
proceedings and all records, documents and data pertaining to the Administrative
Committee's supervision of the administration of the Plan and Trust.
12.6 Quorum and Voting Majority. A majority of the members of the
Administrative Committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present and voting at any
meeting shall decide any question brought before such meeting. The
Administrative Committee may decide any question by the vote, taken without a
meeting, of a majority of its members.
12.7 Limitation on Voting. A member of the Administrative
Committee who is also a Member hereunder shall not vote or act upon any matter
relating solely to himself.
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12.8 Delegation of Rights, Powers and Duties. The Chairman or the
Secretary of the Administrative Committee may execute any certificate or other
written evidence of the action of the Administrative Committee. The
Administrative Committee may delegate any of its rights, powers, and duties to
any one or more of its members, including the power to execute any document on
behalf of the Administrative Committee, in which event the Administrative
Committee shall notify the Trustee, in writing, of such action and the name or
names of its members so designated. The Trustee thereafter shall accept and may
rely upon any document executed by such member or members as representing action
by the Administrative Committee until the Administrative Committee shall file
with the Trustee a written revocation of such designation.
12.9 Liability. Except to the extent that such liability is created
by Section 405 of the Act, no member of the Administrative Committee shall be
liable for any act or omission of any other member of the Administrative
Committee, nor for any act or omission on his own part, except for his own gross
negligence or willful misconduct, nor for the exercise of any power or
discretion in the performance of any duty assumed by him hereunder.
12.10 Compensation and Expense. The members of the Administrative
Committee shall serve without compensation for their services, but all expenses
of the Administrative Committee, including premiums for bonds for each member
thereof as required by Section 12.11 hereof, shall be paid by each Signatory
Company in the proportion that the total amount in the Accounts of the Members
of such Signatory Company bears to the total amount in the Accounts
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of the Members of all Signatory Companies; provided, however, that at the
election of all of the Signatory Companies, such expenses (except the premiums
for the required bonds under Section 12.11) may be paid from the Trust Fund.
12.11 Bonds. Each and every member of the Administrative
Committee shall be required to give bond for the faithful performance of his
duties, the amount of which shall be fixed at the beginning of each Plan Year.
The amount of each bond shall be determined annually by the Board of Directors
of the Corporation but shall not be less than ten percent (10%) of the amount of
funds handled. Unless otherwise required by the Secretary of Labor, however, no
bond shall be less than one thousand dollars ($1,000) nor more than five hundred
thousand dollars ($500,000). For purposes of fixing the amount of the bond, the
amount of funds handled shall be determined by the funds handled by the
Administrative Committee during the preceding Plan Year, or, if the Plan had no
preceding Plan Year, the amount of funds to be handled during the current Plan
Year by the Administrative Committee. The bond shall provide protection to the
Plan against loss by reason of acts of fraud or dishonesty on the part of the
members of the Administrative Committee, directly or through connivance with
others.
12.12 Indemnity. The Signatory Companies shall indemnify and save
the members of the Administrative Committee, and each of them, harmless from any
and all claims, losses, damages, expenses (including counsel fees approved by
the Administrative Committee) and liabilities (including any amounts paid in
settlement with the
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Administrative Committee's approval) or other effects and consequences arising
from any act, omission or conduct in their official capacity, except when the
same is judicially determined to be due to the gross negligence or willful
misconduct of such member. Any amounts paid or owing under this Section 12.12
shall be considered as an expense of the Administrative Committee to be paid by
the respective Signatory Companies as provided in Section 12.10 hereof. It is
expressly provided, however, that any excise tax assessed against any member or
members of the Administrative Committee pursuant to the provisions of Section
4975 of the Code shall not, for the purposes of this Plan and Trust, be
considered an expense of the Administrative Committee to be paid by the
Signatory Companies as hereinabove provided.
12.13 Reporting and Disclosure. The Administrative Committee shall
file or cause to be filed with the appropriate office of the Internal Revenue
Service and the Department of Labor all reports, returns, notices and other
information required under the Act or Code, including, but not limited to, the
plan description, summary plan description, annual reports and amendments
thereto, requests for determination letters, annual reports and registration
statements required by Section 6057(a) of the Code, returns and reports required
by Section 6047(c) of the Code, and shall provide the Members and their
Beneficiaries with such information as may be required by the Act or Code.
Nothing contained in this document shall give any Member or Beneficiary the
right to examine any data or records reflecting the compensation paid to any
other Member or Beneficiary.
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12.14 Annual Statement to Members. Within one hundred twenty (120)
days after the end of each Plan Year, or as soon thereafter as administratively
feasible, the Administrative Committee shall transmit to each Member or
Beneficiary a written statement showing, as of the end of such Plan Year:
(a) The balance in his Account as of the last day of the
preceding Plan Year;
(b) The amount of Employer Contributions and Forfeitures
allocated to his Account for the Plan Year;
(c) The adjustment of his Account to reflect his share of
the income, valuation adjustments and expenses of the Trust for the
Plan Year;
(d) The new balance in his Account; and
(e) Such other information as may be required under the
Code and regulations thereunder.
12.15 Signatory Company to Supply Information. To enable the
Administrative Committee to perform its functions, the Signatory Company shall
supply full and timely information to the Administrative Committee on all
matters relating to the compensation of all Members, their Hours of Service,
their Years of Service, their retirement, death, disability, or termination of
employment and such other pertinent facts as the Administrative Committee may
require; and the Administrative Committee shall advise the Trustee of such of
the foregoing facts as may be pertinent to the Trustee's duties under the Plan.
The Administrative Committee may rely upon such information as is supplied by
the Signatory Company and shall have no duty or responsibility to verify such
information.
12.16 Valuation of Employer Stock. The Administrative Committee
shall annually, as of the last day of each Plan Year, and
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at such other times as the Trustee shall request, determine the fair market
value of the Employer Stock held by the Trust Fund. If the Employer Stock is not
traded on a national securities exchange or over-the-counter, the Administrative
Committee shall engage a "qualified independent appraiser" to determine the fair
market value of such securities. For this purpose the term "qualified
independent appraiser" shall satisfy the requirements set forth under Sections
401(a)(28)(C) and 170(a)(1) of the Code and the regulations thereunder. In each
instance the Administrative Committee shall have the appraiser prepare adequate
written documentation showing the scope of the evaluation and the valuation
method or methods used in arriving at the fair market value of the securities.
The expense incurred by the Administrative Committee with respect to such
valuation shall be considered an administrative expense of the Trust to be paid
by the Signatory Company as heretofore provided.
ARTICLE XIII.
Trustee
13.1 Acceptance and Holding of Funds. The Trustee shall retain,
manage, administer and hold the Trust Fund in accordance with the terms of this
Plan. The Trustee shall receive any securities or other property that are
tendered to the Trustee and that the Trustee deems acceptable. The Trustee shall
have no duty to compel any Employer Contribution to the Trust Fund by a
Signatory Company.
13.2 Responsibility for Actions. The Trustee shall not be
responsible for any acts or omissions of the Administrative
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Committee and may assume that the Administrative Committee is discharging its
duties under this Plan until and unless it is notified to the contrary, in
writing, by any person known to be a Member of the Plan or by a Signatory
Company. If the Trustee receives such notice, the Trustee may exercise its own
discretion and may apply to a court of competent jurisdiction for guidance with
respect to the disposition of the Trust Fund or any other matter. Any powers
granted to the Trustee that are to be exercised according to the direction of
the Administrative Committee shall be exercised by the Trustee exactly as
directed by the Administrative Committee in a written instrument signed by the
person or persons authorized to sign for the Administrative Committee and
delivered to the Trustee. The Trustee shall have absolutely no liability for any
loss or breach of trust of any kind which may result from any action or failure
of action due to its compliance with written direction from the Administrative
Committee (whether or not such action is to be taken solely at the direction of
the Administrative Committee) or for a failure on the part of the Administrative
Committee to give a written direction properly or within a required period of
time. The Trustee may accept as true all papers, certificates, statements and
representations of fact that are presented to it without investigation or
verification if the Trustee believes them to be genuine, to have been signed by
the Administrative Committee and to be the act of the Administrative Committee,
and may rely solely on the written advice of the Administrative Committee on any
question of fact. If at any time the Administrative Committee shall fail to give
directions or
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instructions to the Trustee or to express its consent and approval to proposed
action within a reasonable time after consent and approval is requested by the
Trustee, the Trustee, although being under no obligation to do so, may act (and
shall be protected in so acting) without such directions, instructions, consent
or approval and may exercise its own discretion and judgment as seems
appropriate and advisable under the circumstances in order to effectuate the
purposes of this document.
13.3 Resolutions of Board of Directors. The Trustee shall be fully
protected in relying upon a resolution of the Board of Directors of the
Corporation, which may be certified by the Corporation's secretary or assistant
secretary, as to the membership of the Administrative Committee until a
subsequent resolution is filed with the Trustee by the Board of Directors.
13.4 Judicial Protection. The Trustee may seek judicial protection
for any action or proceeding it deems necessary to settle the accounts of the
Trustee; a judicial determination or a declaratory judgment as to a question of
construction of the Plan or Trust; or judicial instruction as to action under
this Plan or Trust. The Trustee need join only the Administrative Committee and
the Signatory Company as parties defendant although the Trustee may join other
parties. The district court of Harris County, Texas shall have jurisdiction and
venue in all such matters. However, the Trustee may choose to bring suit in
either federal or state court.
13.5 Dealings with Third Parties. No person dealing with the
Trustee shall be required to verify the application by the Trustee for Trust
purposes of any money paid or other property delivered to
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the Trustee. All persons dealing with the Trustee shall be entitled to rely upon
the representations of the Trustee as to its authority and are released from any
duty of inquiry with respect thereto. Any action of the Trustee hereunder shall
be conclusively evidenced for all purposes of this document by a certificate
duly signed by the Trustee, and such certificate shall be conclusive evidence of
the facts recited therein and shall fully protect all persons relying upon the
truth thereof. Any person dealing with the Trustee in good faith shall not be
required to inquire whether the Administrative Committee has instructed the
Trustee or whether the Trustee is otherwise authorized to take or omit any
action. Any such person shall be fully protected in acting upon any notice,
resolution, instruction, direction, order, certificate, opinion, letter,
telegram or other document believed by such person to be genuine, to have been
signed by the Trustee and to be the act of the Trustee.
13.6 Annual Accounting by Trustee. Within one hundred twenty (120)
days after the end of each Plan Year, or as soon thereafter as administratively
feasible, the Trustee shall render to the Administrative Committee a written
accounting of its administration of the Trust Fund showing all receipts and
disbursements during the preceding Plan Year and the market value of the assets
of the Trust Fund as of the end of such Plan Year. The written approval of any
accounting by the Administrative Committee as to all matters and transactions
stated or shown therein relating to the Trust shall be final and binding upon
the Administrative Committee, each Signatory Company and upon all persons who
shall then be or shall thereafter
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become interested in such Trust, and the Trustee shall be released and
discharged as to all items, matters and things set forth in such accounting as
if such accounting had been settled by decree of a court of competent
jurisdiction. The failure of the Administrative Committee to notify the Trustee
of its disapproval of such accounting within sixty (60) days after receipt of
any such accounting shall be equivalent to written approval. The Trustee shall
have, nevertheless, the right to have its accounts settled by judicial
proceeding. The records of the Trustee as to the Trust Fund may be inspected by
the Administrative Committee or Signatory Company during normal business hours
of the Trustee.
13.7 Preparation of Annual Statements to Members. The Trustee shall
provide any assistance and information requested by the Administrative Committee
in conjunction with the preparation of the annual statements to Members in
accordance with Section 12.14.
13.8 Resignation of Trustee. The Trustee may resign at any time by
giving ninety (90) days' written notice to the Corporation. Such notice may be
waived by written consent of the Corporation. Upon such resignation, the Trustee
shall within a reasonable time after the effective date of such resignation
render to the Administrative Committee a written account of its administration
of the Trust for the period following that which was covered by the last annual
accounting, through the effective date of resignation.
13.9 Removal of Trustee. The Corporation may remove any Trustee at
any time by giving thirty (30) days' written notice. Such notice may be waived
by written consent of the Trustee being
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removed. In the event of removal, the Trustee shall be under the same duty to
settle its accounts as provided in Section 13.6 above.
13.10 Appointment of Successor Trustee. The resignation or removal
of a Trustee shall not terminate the Trust. In the event of a vacancy in the
position of Trustee at any time, the Corporation shall designate and appoint a
successor Trustee. Any successor Trustee, upon executing an acknowledged
acceptance of the trusteeship and upon settlement of the accounts and discharge
of the retiring Trustee, shall be vested, without further act on the part of
anyone, with all the estates, titles, rights, powers, duties and discretions
granted to the retiring Trustee. The retiring Trustee shall execute and deliver
such assignments or other instruments as may be deemed advisable by the
successor Trustee.
13.11 Trustee's Compensation and Expenses. The Trustee may receive
reasonable compensation as may be agreed upon from time to time; provided,
however, that no person serving as Trustee who receives full-time compensation
from a Signatory Company or group of Signatory Companies shall receive
compensation from the Trust Fund except for reimbursement of expenses properly
and actually paid. All brokerage costs, transfer taxes and expenses incurred in
connection with the investment and reinvestment of the Trust Fund, all income
taxes or other taxes of any kind whatsoever which may be levied or assessed
under existing or future laws upon or with respect to the Trust Fund, and any
interest which may be payable on money borrowed by the Trustee for the purposes
of the Trust, shall be paid from the Trust Fund, and, until paid, shall
constitute a
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charge upon the Trust Fund. All other administrative expenses incurred by the
Trustee in the performance of its duties, including fees for legal, appraisal
and accounting services rendered to the Trustee, such compensation to the
Trustee as may be agreed upon in writing from time to time between the
Corporation and the Trustee, all premiums for bonds required under Section 13.12
hereof and all other proper charges and disbursements of the Trustee, shall be
paid by each Signatory Company in the proportion that the total amount in the
Accounts of the Members of such Signatory Company bears to the total amount in
the Accounts of the Members of all Signatory Companies; provided, however, that
at the election of all of the Signatory Companies, such expenses (except
premiums for required bonds under Section 13.12 hereof) may be paid from the
Trust Fund. It is expressly provided, however, that any excise tax assessed
against any Trustee pursuant to the provisions of Section 4975 of the Code shall
not, for purposes of this Plan and Trust, be considered an expense of the Trust
to be paid by the Signatory Companies as hereinabove provided. In the instance
where Trustee's fees have been billed, but no payment has been received within
thirty days of invoicing, the Trustee may charge such outstanding fees to the
Trust balance.
13.12 Bonds. Unless otherwise specifically exempted by federal
statute or regulations promulgated thereunder, each and every Trustee shall be
required to give bond for the faithful performance of its duties, the amount of
which shall be fixed at the beginning of each Plan Year. The amount of each bond
shall be determined annually by the Board of Directors of the Corporation but
shall not
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be less than ten percent (10%) of the amount of funds handled. Unless otherwise
required by the Secretary of Labor, however, no bond shall be less than one
thousand dollars ($1,000) nor more than five hundred thousand dollars
($500,000). For purposes of fixing the amount of the bond, the amount of funds
handled by the Trustee shall be determined by the funds handled by the Trustee
during the preceding Plan Year, or, if the Plan had no preceding Plan Year, the
amount of funds to be handled during the current Plan Year by the Trustee. The
bond shall provide protection to the Plan against loss by reason of acts of
fraud or dishonesty on the part of the Trustee, directly or through connivance
with others. However, this Section 13.12 shall not apply as to any Trustee who
is also a member of the Administrative Committee and who has given bond as
required by Article XII, Section 12.11 hereof.
13.13 Indemnity. The Signatory Companies shall indemnify and save
the Trustee harmless from any and all claims, losses, damages, expenses
(including counsel fees approved by the Trustee) and liabilities (including any
amounts paid in settlement with the Trustee's approval) or other effects and
consequences arising from any act, omission or conduct in its official capacity,
except when the same is judicially determined to be due to the gross negligence
or willful misconduct of the Trustee. Any amounts paid or owing under this
Section 13.13 shall be considered as an expense of the Trustee to be paid by the
respective Signatory Companies as provided in Section 13.11 hereof. It is
expressly provided, however, that any excise tax assessed against the Trustee
pursuant to the provisions of Section 4975 of the Code shall not, for purposes
of
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this Plan and Trust, be considered an expense of the Trustee to be paid by the
Signatory Companies as hereinabove provided.
13.14 Voting of Employer Stock. If the Employer Stock is not
publicly traded, each Member shall have the right to direct the Trustee as to
the manner in which the shares of Employer Stock acquired by the Plan after
December 31, 1979 and allocated to the Account of such Member are to be voted,
to the extent required by Section 401(a)(22) of the Code; provided that if such
Employer Stock is not a "registration-type class of security" then for Plan
Years beginning after December 31, 1986 in which more than ten percent (10%) of
total assets are securities of the Employer, such right shall be limited to
corporate matters which involve the approval or disapproval of any corporate
merger or consolidation, recapitalization, reclassification, liquidation,
dissolution, sale of substantially all assets of a trade or business, or such
similar transaction as the Secretary may prescribe in regulations. A
"registration-type class of securities" means (A) a class of securities required
to be registered under section 12 of the Securities Exchange Act of 1934, and
(B) a class of securities which would be required to be so registered except for
the exemption from registration provided in subsection (g)(2)(H) of such section
12.
The Members shall receive all notices and information statements with
respect to those matters to which their voting rights apply from the Signatory
Company (or other person required to issue such notice or information under law)
directly (or indirectly through the Trustee if the Trustee so requests) in the
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same manner as other shareholders as required by the Signatory Company's
articles of incorporation and bylaws and other applicable law. This notice and
information shall be in writing and shall include the number of shares as to
which each Member may direct the Trustee. The Trustee shall vote Employer Stock
allocated to the Account of each Member in accordance with the written
instructions received from such Member on the form prescribed by the
Administrative Committee for this purpose. The Administrative Committee shall
have the right to direct the Trustee as to the voting of Employer Stock in all
cases where the Members' pass-through voting rights pursuant to this Section
13.14 do not apply. In the absence of any such instruction or direction, the
Trustee shall not vote such Employer Stock. Such voting rights shall apply only
to the extent required by Section 401(a)(22) of the Code.
ARTICLE XIV.
Investment Powers of Trustee
14.1 Standards; Prudent Man Rule. The Trustee shall, in discharging
its duties, act solely in the interest of the Members and Beneficiaries of the
Plan. It must act exclusively for the purpose of providing benefits to Members
and Beneficiaries and for defraying the reasonable expenses of the Plan. The
Trustee shall carry out its duties with the same care, skill, prudence and
diligence that a prudent man acting in a like capacity would use under
conditions prevailing at that time.
14.2 The Investment Committee or Investment Manager.
(a) Membership. The Corporation's Board of Directors may
appoint an Investment Committee or Investment Manager to establish an
investment policy and to recommend to the Trustee the investment of the
Trust
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Fund. The Investment Manager or the members of the Investment Committee
shall serve at the will of the Directors, and the number of members of
such Investment Committee may be changed at any time by the Directors.
Vacancies due to resignation, death, removal or other causes shall be
filled by the Directors.
(b) Organization and Procedure. The Investment Committee
may choose appropriate officers or appoint a Secretary who need not be
a member of such Investment Committee, and shall keep records of its
proceedings and determinations. The Investment Committee shall act by
majority vote of its members either at a meeting or in writing. By such
action it may authorize one or more of its officers or members to
execute documents on its behalf, and the Trustee, upon written
notification of such authorization, shall accept and rely upon such
documents until notified in writing that the authorization has been
revoked by the Investment Committee.
(c) Compensation and Expenses. Members of the Investment
Committee shall not receive compensation for the performance of their
duties, but all reasonable and necessary costs and expenses incurred by
such Investment Committee in the administration of the Plan and Trust
shall, if not paid directly by the Signatory Company, be paid by the
Trustee from the Trust Fund. Payment of expenses of a duly-appointed
Investment Manager shall be made from the Trust pursuant to the fee
schedule agreed upon by the Investment Manager and Corporation.
(d) Bonds. Unless otherwise specifically exempted by
federal statute or regulations promulgated thereunder, or if the
Investment Committee is a banking institution or similar institution
already bonded under federal regulations, the Investment Manager or
each and every member of the Investment Committee shall be required to
give bond for the faithful performance of his or her duties, the amount
of which shall be fixed at the beginning of each Plan Year. The amount
of each bond shall be determined annually by the Corporation's Board of
Directors but shall not be less than ten percent (10%) of the amount of
funds handled. Unless otherwise required by the Secretary of Labor,
however, no bond shall be less than one thousand dollars ($1,000) nor
more than five hundred thousand dollars ($500,000). For purposes of
fixing the amount of the bond, the amount of funds handled by the
Investment Manager or the Investment Committee shall be determined by
the funds handled by the Investment Manager or the Investment Committee
during the preceding Plan Year, or, if the Plan had no preceding Plan
Year, the amount of funds to be handled during the current Plan Year by
the Investment Manager or the Investment Committee. The bond shall
provide protection to the
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Plan against loss by reason of acts of fraud or dishonesty on the part
of the Investment Manager or the Investment Committee, directly or
through connivance with others. However, this subsection (d) shall not
apply as to any Investment Manager or member of the Investment
Committee who is also a member of the Administrative Committee or a
Trustee and has given bond as required by Article XII, Section 12.11 or
Article XIII, Section 13.12 hereof.
(e) Named Fiduciary Status. By appointment of an
Investment Manager under this Section 14.2, the Corporation intends
that such Investment Manager be an "investment manager" as defined
under Section 3(38) of the Act, and to transfer fiduciary
responsibility and liability under the Act and/or the Code for the
investment of Trust assets from the Trustee to the Investment Manager
so as to remove responsibility for co-fiduciary breaches of duty as set
forth in Section 405(c)(3) of the Act.
14.3 Powers of the Trustee. The Trustee shall have full discretion
and authority with regard to the investment of the Trust Fund, except with
respect to a Plan asset under the control or direction of the Investment
Committee or a properly appointed Investment Manager. The Trustee shall
coordinate its investment policy with the Plan's financial needs as communicated
to it by the Investment Committee. The Trustee shall have the following
authority, rights, privileges and powers in addition to the authority, rights,
privileges and powers elsewhere vested in the Trustee and those now or hereafter
conferred by law, subject to the limitations stated in this Plan:
(a) To hold, manage, control, collect, use (including the
power to hold any property unproductive of income) and dispose of the
Trust Fund in accordance with the terms of this instrument as if it
were the fee simple owner of such Trust Fund; and
(b) To keep any or all securities or other property in
bearer or Federal Reserve Book Entry form or in the name of some other
person, partnership including the name of any nominee used by any
system for the centralized handling of securities or corporation with a
power of
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attorney for transfer attached, or in its name without
disclosing its fiduciary capacity; and
(c) To invest and reinvest the Trust assets, as
instructed pursuant to Section 14.2 or otherwise, except to the extent
such power is placed with an Investment Manager or the Investment
Committee; and
(d) To join in and become a party to, to dissent from or
oppose, any reorganization, consolidation, sale or merger or other
capital readjustment of any corporation, the stocks or securities of
which may at any time be held in the Trust or any plan or agreement for
the protection of the interest of the holders of any such stock or
securities; to participate in any such protective plan, agreement,
reorganization, consolidation, sale, merger, or readjustment to the
same extent and as fully as though it were the absolute and individual
owner of such stock or securities; to deposit with any committee or
depository, pursuant to any plan or agreement of protection,
reorganization, consolidation, sale, merger, or readjustment, any
property held in the Trust; to make payment from the Trust of any
charges or assessments imposed by the terms of any plan or agreement of
protection, reorganization, consolidation, sale, merger or
readjustment; and to receive and continue to hold in the Trust any
property allotted to the Trust by reason of its participation therein;
and
(e) To invest, reinvest and hold up to one hundred
percent (100%) of the Trust assets in Qualifying Employer Securities.
Such securities may be purchased on the open market or in private
transactions, including, without limitation, the purchase of such
securities from current shareholders or the purchase, from time to
time, of authorized but unissued common stock or treasury shares
directly from the employer or by exercise of subscription, conversion
or other rights, in such amounts, at such prices and at such times, as,
in its sole and absolute discretion, it deems necessary or desirable to
most effectively accomplish the purpose of the Trust; provided,
however, that the purchase price of any Qualifying Employer Security
shall not exceed the fair market value of such security at the time of
its purchase. The determination of the fair market value shall be made
in good faith by the Administrative Committee in accordance with this
Section 14.3(e) and in accordance with any regulations which may be
promulgated by the Secretary of Labor pursuant to Section 3(18) of the
Act. In addition, the Trustee may acquire and hold as an asset of the
Trust any shares of stock of any corporation which may be acquired: (i)
in exchange for all or part of the stock held in the Trust pursuant to
the merger, reorganization or recapitalization of the
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corporation; (ii) as a dividend on stock held in the Trust; or (iii) by
the exercise of subscription, conversion, or other rights offered to
the Trustee as a holder of any stock held in the Trust; and
(f) To invest in Qualifying Employer Real Property;
provided that immediately following the acquisition of such Qualifying
Employer Real Property, not more than one hundred percent (100%) of the
aggregate fair market value of the Trust Fund is invested in Qualifying
Employer Real Property; and
(g) To invest, to the extent funds are thereafter
available, in savings accounts, certificates of deposit, high-grade
short-term securities, stocks, bonds, or other investments deemed by
the Trustee to be desirable for the Trust, or such funds may be held in
cash or cash equivalents; and
(h) To sell any assets of the Trust estate which are not
permitted to be distributed in kind to Beneficiaries under the United
States Internal Revenue laws and regulations dealing with qualified
employee stock ownership trusts, and to use the proceeds of the sale to
acquire assets which are permitted to be so distributed; and
(i) Except as provided in Article XIII, Section 13.14
with regard to Employer Stock, to vote, either in person or by proxy,
with or without power of substitution, any stocks, bonds or other
securities held by it; to exercise any options appurtenant to any
stocks, bonds or other securities for the conversion thereof into other
stocks, bonds or securities; to exercise any rights to subscribe for
additional stocks, bonds or other securities and to make any and all
necessary payments thereof; and
(j) To collect the principal and income of the Trust as
the same may become due and payable and to give binding receipt
therefor; and
(k) To institute, join in, maintain, defend, compromise,
submit to arbitration or settle any litigation, claim, obligation or
controversy in favor of or against the Trust Fund, all in the name of
the Trustee and without the joinder of any Member; and
(l) To invest all or any part of the Trust Fund in any
single, collective, or common trust fund permitted for employee benefit
plans qualified under Section 401(a) of the Code, maintained by the
Trustee or its affiliates and investment in any single, collective or
common trust fund which may hold securities issued by the Signatory
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Company or its affiliates. Specifically, the Trustee may invest and
reinvest the assets transferred to it in an interest in any group trust
fund that has been or shall be created and maintained by it as trustee
for the collective investment of funds of trusts for employee benefit
plans qualified under Section 401(a) of the Code, and to the extent
required by Revenue Ruling 81100 and further to the extent consistent
with this Trust Agreement, the instrument creating such trust fund,
together with any amendments thereto, is hereby incorporated and made a
part of this Trust Agreement; and
(m) To partition any property or interest held as part of
the Trust Fund and to pay or receive such money or property necessary
or advisable to equalize differences; to make any distribution from the
Trust Fund in cash or in kind, or both (including an undivided interest
in any property) or in any other manner (including composing shares
differently) and to value any property belonging to the Trust Fund,
which valuation at all times shall be binding upon the Signatory
Company and all Members; and
(n) To loan or borrow money in any manner (including
joint and several obligations) with or without security, upon such
terms as the Trustee may deem advisable regardless of the duration of
the Trust created by this instrument and to mortgage (including the
making of purchase money mortgages), pledge or in any other manner
encumber all or any part of the Trust Fund as the Trustee may deem
advisable. However, this Section 14.3(n) shall not apply to purchases
of Qualifying Employer Securities or Employer Stock; and
(o) To select, employ and compensate such lawyers,
brokers, banks, investment counsel or other agents or employees and to
delegate to them such of the duties, rights and powers of the Trustee
(including the power to vote shares of stock) as the Trustee deems
advisable in administering the Trust Fund; and
(p) To appoint any person or corporation in any state of
the United States to act as ancillary Trustee with respect to any
portion of the Trust Fund. Any ancillary Trustee shall have such
rights, powers, duties and discretions as are delegated to it by the
Trustee but shall exercise the same, subject to such limitations or
further directions of the Trustee as shall be specified in the
instrument evidencing its appointment. Any ancillary Trustee shall be
accountable solely to the Trustee and shall be entitled to reasonable
compensation; and
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(q) To exercise all the rights, powers, options and
privileges now or hereafter granted to trustees under the Texas Trust
Code, except such as conflict with the terms of this instrument. So far
as possible, no subsequent legislation or regulation shall limit the
rights, powers or privileges granted in this Plan or in the Texas Trust
Code, as it now exists. The Trustee shall have, hold, manage, control,
use, invest and reinvest, disburse and dispose of the Trust Fund as if
the Trustee were the owner thereof in fee simple instead of in trust,
subject only to such limitations as are contained herein or such of the
laws of the State of Texas as cannot be waived. The instrument shall
always be construed in favor of the validity of any act or omission of
the Trustee; and
(r) To keep such portion of the Trust Fund in cash or
cash balances as the Trustee may, from time to time, deem to be in the
best interests of the Plan, without liability for interest thereon; and
(s) To invest Trust funds in time deposits or savings
accounts, bearing a reasonable rate of interest, with itself as a bank
or its bank holding affiliate; and
(t) To deposit monies in federally insured savings
accounts or certificates of deposit maintained by
commercial banks or savings and loan associations; and
(u) To make a loan or loans to Members under such
terms and conditions as provided in Article XV hereof;
and
(v) To engage in any transaction with:
(i) a common or collective trust fund or pooled
investment fund which is authorized and permitted to receive
investments from the Trust and which is maintained by any
"party-in-interest", within the meaning of Section 3(14) of
ERISA, which is a bank or trust company supervised by a State
or Federal agency including, where otherwise permissible under
the applicable laws and regulations, any such fund as
maintained by the Trustee, its affiliates, any Investment
Manger appointed hereunder or another fiduciary hereunder
(provided such other fiduciary qualified as an Investment
Manger under Section 3(38) of ERISA, the provisions of which
as they may now or hereafter exist are hereby incorporated by
reference, or
(ii) a pooled investment fund of any insurance
company qualified to do business in
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a State, provided such fund is authorized and
permitted to receive investments from the
Trust,
if (A) the transaction is a sale or purchase of an interest in such
fund, and (B) the bank, trust company or insurance company receives not
more than reasonable compensation. This provision constitutes the
express permission required by Section 401(b)(8) of ERISA.
(w) From time to time, to transfer to a common or pooled
trust fund maintained by any corporate Trustee hereunder, all or such
part of the Trust Fund as the Trustee may deem advisable and such part
of all of the Trust Fund so transferred shall be subject to all terms
and provisions of the common or pooled trust fund which contemplate the
commingling for investment purposes of such trust assets with trust
assets of other employees' profit sharing and pension plans established
by other public institutions and organizations. The Trustee, may from
time to time, withdraw such common or pooled trust fund all or such
part of the Trust Fund as the Trustee may deem advisable; and
(x) To invest and reinvest the Trust assets, or any part
thereof, in any property of any kind or nature whatsoever (or in any
rights or interests therein or in any evidence or indicia thereof),
whether real, personal or mixed or whether tangible or intangible,
including, but not limited to, the following or anything of similar
kind, character or class: common or preferred stock, including
evidences of ownership in so-called Massachusetts Trusts; fees;
beneficiary interests; lease holds; bonds; mortgages; leases; notes or
obligations; oil and gas payments; oil and gas contracts and other
securities; instruments; commodities or property within or outside the
State of Texas; and hold cash uninvested at any time and in any amount.
The Trustee may make or hold investments of any part of the Trust Fund
in common or undivided interest with other persons or entities.
14.4 Prohibited Transactions. Except as elsewhere permitted in the
Act:
(a) The Trustee, Investment Manager or Investment
Committee shall not cause the Plan to engage in a transaction if he
knows, or should know, that such transaction constitutes a direct or
indirect:
(1) Sale, exchange or leasing of any property
between the Plan and a party in interest, except the sale of
Qualifying
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Employer Securities as provided in Section 14.3(e);
(2) Lending of money or other extension of
credit between the Plan and a party in interest, except as
provided in Section 14.3(u);
(3) Furnishing of goods, services or facilities
between the Plan and a party in interest;
(4) Transfer to, or use by or for the benefit
of, a party in interest of any assets of the Plan; or
(5) Acquisition on behalf of the Plan of any
Employer Security or Employer Real Property in violation of
Section 407(a) of said Act.
(b) The Trustee, Investment Manger or Investment
Committee who has authority or discretion to control or manage the
assets of a Plan shall not permit the Plan to hold any Employer
Security or Employer Real Property if he knows, or should know, that
holding such security or real property violates Section 407(a) of said
Act.
(c) The Trustee, Investment Manager or Investment
Committee shall not:
(1) Deal with the assets of the Plan in his own
interest or for his own account;
(2) In his individual capacity or any other
capacity act in any transaction involving the Plan on behalf
of a party (or represent a party) whose interests are adverse
to the interests of the Plan or the interests of its Members
or Beneficiaries; or
(3) Receive any consideration for his own
personal account from any party dealing with the Plan in
connection with a transaction involving the assets of the
Plan.
(d) A transfer of real or personal property by a party
in interest to the Plan shall be treated as a sale or exchange if the
property is subject to a mortgage or similar lien which the Plan
assumes, or if it is subject to a mortgage or similar lien which a
party in interest placed on the property within the ten-year period
ending on the date of the transfer.
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(e) Except as otherwise permitted in the Act:
(1) The Plan shall not acquire or hold:
(A) Any Employer Security which is not a
Qualifying Employer Security, or
(B) Any Employer Real Property which is
not Qualifying Employer Real Property.
(2) The Plan shall not acquire any Qualifying
Employer Security or Qualifying Employer Real Property if
immediately after such acquisition the aggregate fair market
value of Employer Securities and Employer Real Property held
by the Plan exceeds one hundred percent (100%) of the fair
market value of the assets of the Trust Fund.
(f) For purposes of determining the time at which a Plan
acquires Employer Real Property for purposes of this Section, such
property shall be deemed to be acquired by the Plan on the date on
which the Plan acquires the property or on the date on which the lease
to the Signatory Company (or Affiliated Company) is entered into,
whichever is later.
(g) The Trustee, Investment Manager or Investment
Committee shall not acquire any collectibles to the extent prescribed
by law. For purposes of this subsection, "collectibles" means any work
of art, any rug or antique, any metal or gem, any stamp or coin, any
alcoholic beverage, or any other tangible personal property specified
by the Secretary of Labor or Secretary of the Treasury.
ARTICLE XV.
Loans to Members
15.1 No Plan Loans. Loans to Members are not available under the
Plan.
ARTICLE XVI.
Amendment and Termination
16.1 Amendment General. The Corporation shall have the sole right
to amend this Plan. In the event of any such amendment, each
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other Signatory Company shall be deemed to have consented to the amendment
unless it notifies the Corporation, in writing, that it refuses to ratify the
amendment. In the event that a Signatory Company refuses to ratify any such
amendment, such refusal to ratify shall constitute a withdrawal from this Plan
by such Signatory Company. Upon the delivery by the Corporation to the Trustee
of a certified copy of the resolution authorizing an amendment to this Plan,
this Plan shall be deemed to have been so amended and all Members and other
persons claiming any interest hereunder shall be bound thereby; provided, that
no amendment:
(a) Shall have the effect of vesting in any Signatory
Company any interest in any property held subject to the terms of the
Trust; or
(b) Shall cause or permit any property held subject to
the terms of the Trust to be diverted to purposes other than the
exclusive benefit of the present or future Members and Beneficiaries;
(c) Shall increase the duties or liabilities of the
Trustee without its written consent; or
(d) Shall reduce benefits of a Member.
For purposes of this Section, a plan amendment which has the effect of
(1) eliminating or reducing an early retirement benefit or a retirement-type
subsidy, or (2) eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment shall be treated as
reducing benefits. In the case of a retirement-type subsidy, the preceding
sentence shall apply only with respect to a Member who satisfies (either before
or after the amendment) the preamendment conditions for the subsidy. In general,
a retirement-type subsidy is a subsidy that continues after retirement, but does
not include a qualified disability
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benefit, a medical benefit, a social security supplement, a death benefit
(including life insurance), or a plant shutdown benefit (that does not continue
after retirement age). Furthermore, no amendment to the Plan shall have the
effect of decreasing a Member's vested interest determined without regard to
such amendment as of the later of the date such amendment is adopted, or becomes
effective.
16.2 Amendments Necessary to Comply with Intentions of Signatory
Companies. It is the intention of each Signatory Company that its Employer
Contributions to this Plan be deductible under the applicable provisions of the
Code, that such Employer Contributions not be subject to withholding under the
Code or the Federal Insurance Contributions Act, and that such Employer
Contributions not be subject to the Fair Labor Standards Act of 1938, as
amended, as part of the "regular rate". The Corporation shall make such
amendments to this Plan as may be necessary to carry out these intentions. All
amendments to this Plan which may be required for the purpose of realizing the
intentions above stated may be made retroactively.
16.3 Termination with Respect to Signatory Company. A termination
of this Plan by any Signatory Company, as provided below in this Section 16.3,
without establishment of a successor plan, shall constitute a termination only
with respect to such Signatory Company and such termination shall not constitute
a termination of this Plan with respect to any other Signatory Company. This
Plan shall terminate as to a Signatory Company upon the happening of any of the
following events:
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(a) The approval of the Administrative Committee of
a written request by such Signatory Company to terminate
the Plan;
(b) Adjudication of the Signatory Company as a "debtor"
under the Bankruptcy Act of 1978 or general assignment by the Signatory
Company to or for the benefit of creditors or dissolution of the
Signatory Company; and/or
(c) Twenty-one (21) years following the death of the last
surviving original Member living at the time this Plan was adopted by
the Signatory Company; provided, however, that this Section 16.3(c)
shall be effective only in the event that the Rule Against Perpetuities
is applicable to the Trust established under this Plan.
Upon termination of this Plan by any Signatory Company without establishment of
a successor plan, the Administrative Committee and the Trust will continue until
the Plan benefit of each Member has been distributed in accordance with the
provisions of this Plan, which shall remain in effect notwithstanding the
termination of the Plan. Plan benefits shall be computed and, if necessary, the
Trust Fund shall be partially or totally converted to a liquid posture to permit
an efficient and equitable distribution. The Signatory Company may give written
notice to the District Director of the Internal Revenue Service of the fact that
the Signatory Company has terminated or partially terminated the Plan.
Upon termination of the Plan, a Member who is partially vested in his
Account as of such Plan termination shall immediately be fully vested in
accordance with the provisions of Article VII, Section 7.8 of the Plan.
Distributions made on account of Plan termination shall be in accordance with
the provisions of Article IX of the Plan and in compliance with any applicable
requirements of the Code or other statutory or regulatory agency.
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16.4 Continuation of Plan and Trust by Successor. This Trust shall
not be considered terminated upon the dissolution or liquidation of a Signatory
Company in the event that a successor to the Signatory Company, by operation of
law or by the acquisition of its business interests, shall elect to continue
this Plan and Trust as provided in Article XVII hereof.
ARTICLE XVII.
Continuance of Plan by Successor
17.1 Adoption of Plan by Successor. In the event of the
consolidation or merger of any Signatory Company or the sale by any Signatory
Company of its assets, the resulting successor person or persons, firm,
partnership or corporation may continue the Plan by direction from such person,
persons, firm or partnership (if not a corporation); or (if a corporation) by
adopting the same by resolution of its Board of Directors and by executing a
proper supplemental Trust Agreement with the Trustee. If, within ninety (90)
days from the effective date of such consolidation, merger or sale of assets,
such successor neither adopts this Plan as provided herein nor adopts a
successor plan for the benefit of the employees of the Signatory Company, then
the Plan automatically shall be terminated and the Trust Fund shall be
distributed exclusively to the Members or their Beneficiaries in the manner
provided in Article XVI, Section 16.3.
ARTICLE XVIII.
Merger of Plan or Transfer of Plan Assets
18.1 Transfer, Consolidation or Merger with Another Plan. In the
event of (1) a merger or consolidation of the Plan with any
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other plan or (2) a transfer of assets and liabilities of the Plan to any other
plan, then, if the Plan was then terminated, (a) each Member of the Plan will be
entitled to receive a benefit immediately after such merger, consolidation or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before such merger, consolidation or transfer
had the Plan then terminated and (b) the provisions comparable to the sections
set forth in Article XVI, Section 16.1 of this Plan shall continue to remain in
effect as to the assets from this Plan.
This Section 18.1 is intended to comply with the requirements of
Section 401(a)(12) of the Code and does not entitle any Member to a distribution
prior to the time set forth in Article VII.
ARTICLE XIX.
Adoption of Plan by a Signatory Company
19.1 Method of Adoption. Any Affiliated Company (or other business
organization) except those with a manual or other payroll system which is
incompatible with the Corporation's or otherwise (in the determination of the
Administrative Committee) incapable of making the computations and accountings
necessary to administer the Plan may, with the approval of the Corporation,
adopt this Plan for all or any classification of its Employees, as permitted by
Section 401(a) of the Code, in the manner set forth under procedures established
by the Administrative Committee and approved by the Trustee and the Employer.
This Plan may be so adopted on or before the end of any Plan Year and any
adoption instrument executed by any such Signatory Company shall become, as to
it and its Employees, a part of this Plan.
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19.2 Withdrawal from the Plan. Subject to the consent of the
Corporation, any Signatory Company may at any time withdraw from or discontinue
its participation in this Plan either by failure to ratify an amendment as
provided in Article XVI, Section 16.1 or by giving written notice of such
withdrawal to the Trustee, and may cause to be segregated from the Trust Fund
that part of the assets held in the Trust Fund for the Accounts of the Members
employed by such Signatory Company at the date of such discontinuance. A
withdrawal, whether or not voluntary, from this Plan by a Signatory Company
shall not of itself constitute a termination of the Plan with respect to such
Signatory Company. A Signatory Company which withdraws, voluntarily or
involuntarily, from this Plan shall, as soon as may be practicable, adopt a
comparable employee benefit plan and trust which shall qualify under Section
401(a) of the Code. The withdrawing Signatory Company shall then file with the
Trustee a written instrument evidencing its discontinuance in this Plan and
shall likewise file with the Trustee a certification by the Administrative
Committee authorizing the segregation from the Trust Fund of the assets
attributable to the Members employed by such Signatory Company. In the event of
segregation as hereinabove provided, the Trustee shall deliver to the successor
Trustee such part of the Trust Fund as may be determined by the Administrative
Committee to constitute the appropriate share of the Trust Fund then held with
respect to the Members employed by such Signatory Company. Such former Signatory
Company will thereafter exercise with respect to such Plan and Trust all of the
rights and powers which may be reserved to such Signatory Company under the
terms of
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the written instruments providing for such segregation as aforesaid. Such
segregating Signatory Company shall likewise file with the successor Trustee
such other written instruments as may be necessary in order to make effective
the continuance as a separate trust (as though such Signatory Company were the
sole creator thereof) of the assets so segregated in accordance with the
provisions of this Plan or in accordance with such other plan as may be mutually
agreed upon between such Signatory Company and a successor Trustee.
ARTICLE XX.
Recovery of Employer Contributions
20.1 Initial Approval By Internal Revenue Service. Notwithstanding
any other provision of this Plan and Trust document, it is specifically
understood that this Plan and Trust document is adopted and executed by the
Signatory Company upon the condition precedent that the Plan and Trust shall be
approved and qualified by the Internal Revenue Service as meeting the
requirements of the Code and the regulations and rulings issued thereunder with
respect to employee stock ownership plans and trusts so that the Signatory
Company will be permitted to deduct for federal income tax purposes the amount
of its Employer Contributions to the Trust under the Plan, that such Employer
Contributions will not be taxable to the Members as income when made and that
the Trust will be exempt from federal income tax. In the event the Internal
Revenue Service shall rule that the Plan and Trust are not so approved and
qualified, all Employer Contributions made to the Trust under the Plan by a
Signatory Company prior to the initial determination by
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the Internal Revenue Service as to the qualification of the Plan and Trust shall
revert and be repaid by the Trustee to the Signatory Company. No Member,
Employee or other person shall have any right to the Employer Contributions. If
the Corporation shall determine, however, in consultation with the
Commissioner's representatives, that such failure of qualification may be cured
by steps that the Corporation deems will be in the interest of it and its
Employees, the Corporation may elect to amend the Plan and/or Trust in order to
achieve such qualification rather than cause the reversion of Employer
Contributions as herein provided.
20.2 Employer Contributions Conditioned Upon Deductibility. In
the event that the Corporation, its attorneys, accountants, or other
professionals, or the Internal Revenue Service determines that all or part of
the Employer Contributions made by a Signatory Company for any Plan Year (after
initial approval from the Internal Revenue Service is obtained) are not
deductible under the Code and regulations then applicable, then, to the extent
such Employer Contribution is determined to be nondeductible it shall revert and
be repaid by the Trustee to the Signatory Company by which paid. No Member,
Employee or other person shall have any right to such nondeductible Employer
Contribution.
20.3 Limitations. In the event of the return of any Employer
Contributions to the contributing Employer for any reason permitted under law as
authorized by this Plan, the amount to be so returned shall not include any
income or other earnings while held in the Trust, and such amount to be so
returned shall not be reduced by any losses attributable to such amount while
held in the Trust.
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ARTICLE XXI.
Miscellaneous
21.1 Plan is a Voluntary Undertaking by the Signatory Company. The
adoption and maintenance of this Plan and Trust are strictly voluntary
undertakings on the part of the Signatory Company and shall not be deemed to be
a contract between the Signatory Company and any Employee. Nothing contained
herein shall be deemed to give any Employee the right to be retained in the
employment of the Signatory Company, to interfere with the rights of the
Signatory Company to discharge any Employee at any time or to interfere with an
Employee's right to terminate his employment at any time.
21.2 Benefit Provided Solely by the Trust Fund. All benefits
payable under this Plan shall be paid or provided for solely from the Trust and
the Signatory Company assumes no liability or responsibility therefor.
21.3 Nonalienation. No benefit payable or to become payable under
the Plan will, except as otherwise specifically provided by law, be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge the same by a Member or Beneficiary
prior to distribution as herein provided shall be absolutely and wholly void,
whether such conveyance, transfer, assignment, mortgage, pledge or encumbrance
be intended to take place or become effective before or after the expiration of
the period herein fixed for the continuance of the said Trust estate; nor will
any benefit be in any manner liable for or subject to the debts, contracts,
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liabilities, engagements or torts of the person entitled thereto. The Trustee
shall never under any circumstances be required to recognize any conveyance,
transfer, assignment, mortgage or pledge by a Member or Beneficiary hereunder of
any part of the Trust estate or any interest therein, and shall never be
required to pay any money or thing of value thereon or therefor, to any creditor
of a Member or Beneficiary or upon any debt created by a Member or Beneficiary
for any cause whatsoever. Pursuant to the Texas Trust Statute (as cited in
Article XIV, Section 14.3(q)), it is hereby declared that the interest of any
Member or Beneficiary of the Plan and the Trust shall be held subject to a
"spendthrift trust" and, as such, shall be deemed to be and shall be treated as
a spendthrift trust under Texas law. The Trustee shall not make any transfer
which would result in the disqualification of the Plan for income tax purposes
under Section 401(a)(13) of the Code. Any such transfer or attempt of such
transfer shall be void.
For purposes of this Section 21.3, a loan made to a Member or
Beneficiary pursuant to Article XV hereof shall not be treated as an assignment
or alienation if such loan is secured by the Member's vested interest in the
amount standing as a credit to his Account and is exempt from the tax imposed by
Section 4975 (relating to tax on prohibited transactions) of the Code, as
amended by the Act. This provision shall not apply to a "qualified domestic
relations order" defined in Section 414(p) of the Code, and those other domestic
relations orders permitted to be so treated by the Administrative Committee
under the provisions of the Retirement Equity Act of 1984. The Administrative
Committee shall establish
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a written procedure to determine the qualified status of domestic relations
orders and to administer distributions under such qualified orders. Further, to
the extent provided under a "qualified domestic relations order," a former
spouse of a Member shall be treated as the spouse or surviving spouse for all
purposes under the Plan.
21.4 Applicable Law. The provisions of this Plan shall be
construed, administered and enforced according to the Code, as amended, the Act,
and, to the extent applicable, the laws of the State of Texas. All contributions
to and distributions from the Trust shall be deemed to take place in the State
of Texas. The Trustee or Signatory Company may at any time initiate any legal
action or proceeding for the settlement of the accounts of the Trustee, for the
determination of any questions (including questions of construction which may
arise) or for instruction, and the only necessary parties to such action or
proceeding shall be the Trustee and the Signatory Company, except that any other
person or persons may be included as parties defendant at the elections of the
Trustee and the Signatory Company.
21.5 Construction. Unless the context clearly indicates to the
contrary, the masculine gender shall include the feminine and neuter, and the
singular shall include the plural. The words "hereof", "herein", hereunder" and
other similar compounds of the word "here" shall mean and refer to the entire
Plan and not to any particular provision or section.
21.6 Reference to Code or Act Sections. Reference to the
provisions of any particular Section of the Code or Act shall be
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deemed reference to any Section of the Code or Act which may hereafter contain
the same or similar provisions.
21.7 Binding Agreement. This Plan shall be binding upon the
adopting Signatory Companies, the Trustee and their respective successors and
assigns, and upon the Members, their Beneficiaries and their respective heirs
and legal representatives.
21.8 No Joint Venture Implied. The adoption of this Plan by any
Signatory Company shall not create a joint venture or partnership relationship
between it and any other party hereto, nor shall such action ever be construed
as having that effect. Any rights, duties, liabilities or obligations assumed
hereunder by each participating Signatory Company, or imposed upon it as a
result of the terms and provisions of this Plan, shall relate to and affect such
Signatory Company alone.
21.9 Copies of Plan Available. Copies of this Plan and any and all
amendments thereto shall be made available for inspection at all reasonable
times at the principal office of the Signatory Company to all Employees, and any
Employee may obtain a copy of them upon request and the payment of a reasonable
reproduction fee.
21.10 Titles and Headings. The titles to and headings of paragraphs
in this Plan are for convenience and reference only and, in the event of any
conflict, the text of this Plan and Trust, rather than such titles or headings,
shall control.
21.11 Counterparts. This Plan and all amendments thereto may be
executed in any number of counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but one
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and the same instrument which may be sufficiently evidenced by any
one counterpart.
21.12 Severability. If any provision of this Plan and Trust shall
be held illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining provisions hereof, but each provision shall be fully
severable and the Plan and Trust shall be construed and enforced as if said
illegal or invalid provision had never been inserted herein.
21.13 Agent for Service of Legal Process. The President of the
Corporation is hereby designated as agent of the Plan for the service of legal
process. Such designated agent may be changed from time to time by action of
the Board of Directors of the Corporation in writing, and such changes shall
become effective upon notification of the U.S. Secretary of Labor.
21.14 Withholding; Reports. Notwithstanding any provision of the
Plan to the contrary, the Administrative Committee shall withhold Federal income
tax from all distributions from the Trust Fund to any Distributee in accordance
with Section 3405 of the Code unless such Distributee elects to have any portion
of an eligible rollover distribution paid directly to an eligible retirement
plan specified by the Distributee in a direct rollover as provided for in
Article IX, Section 9.11.
21.15 Single Plan. The Plan shall be administered, accounted for
and otherwise treated as a single plan with respect to all the Signatory
Companies that adopt this Plan.
21.16 Acceptance. The Trustee hereby accepts this Trust, and
agrees to hold the Trust assets existing on the date of this
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document and all additions and accretions thereto, subject to all the terms and
conditions of this document.
IN WITNESS WHEREOF, the Corporation and the Trustee have caused this
Sixth Amendment and Restatement to be executed on this 15th day of April, 1996,
to be effective as of the 1st day of June, 1989.
TEAM, INC.
By: /s/ WILLIAM A. RYAN
------------------------------------
William A. Ryan, President
TRUSTEE:
Texas Commerce Bank,
National Association
---------------------------------------
Vice President and Trust Officer
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
William A. Ryan, known to me to be the person whose name is subscribed to the
foregoing instrument as President of Team, Inc., and acknowledged to me that he
executed the same for the purposes and consideration therein expressed and in
the capacity therein stated, as the act and deed of said Corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 15th day of April,
1996.
/s/ RENEE PIERCE
------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
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THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
____________________, known to me to be the person whose name is subscribed to
the foregoing instrument as Vice President and Trust Officer of Texas Commerce
Bank, National Association, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed and in the capacity therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
_______________, 1996.
------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
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Exhibit No. 10.3
NINTH AMENDMENT AND RESTATEMENT OF THE
TEAM, INC.
SALARY DEFERRAL PLAN AND TRUST
ORIGINAL EFFECTIVE DATE OF THE PLAN:
October 1, 1984
GENERAL EFFECTIVE DATE
OF THE
NINTH AMENDMENT AND RESTATEMENT OF THE PLAN:
January 1, 1989
PLAN YEAR END:
December 31st
<PAGE> 2
NINTH AMENDMENT AND RESTATEMENT OF THE
TEAM, INC.
SALARY DEFERRAL PLAN AND TRUST
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I. Definitions......................................... 2
1.1 "Account"........................................... 2
1.2 "Act"............................................... 2
1.3 "Actual Contribution Percentage".................... 2
1.4 "Actual Deferral Percentage"........................ 3
1.5 "Administrative Committee".......................... 5
1.6 "Affiliated Company" or "Affiliated
Companies".......................................... 6
1.7 "Aggregate Account"................................. 6
1.8 "Annual Additions".................................. 6
1.9 "Authorized Leave of Absence"....................... 7
1.10 "Beneficiary" or "Beneficiaries".................... 7
1.11 "Break-in-Service".................................. 7
1.12 "Code".............................................. 9
1.13 "Considered Compensation"........................... 9
1.14 "Deferral Contribution"............................. 12
1.15 "Determination Date"................................ 12
1.16 "Effective Date".................................... 12
1.17 "Eligible Employee"................................. 12
1.18 "Employee".......................................... 12
1.19 "Employer".......................................... 12
1.20 "Employer Matching Contribution" and
"Employer Contribution"............................. 13
1.21 "Employer Real Property"............................ 13
1.22 "Employer Stock".................................... 13
1.23 "Entry Dates"....................................... 13
1.24 "Excess Aggregate Contributions".................... 13
1.25 "Excess Contributions".............................. 14
1.26 "Family Member,".................................... 14
1.27 "Forfeiture"........................................ 14
1.28 "Highly Compensated Eligible Employee".............. 14
1.29 "Hour of Service"................................... 17
1.30 "Key Employee"...................................... 18
1.31 "Marketable Obligation"............................. 19
1.32 "Member" or "Members"............................... 20
1.33 "Net Income"........................................ 20
1.34 "Non-Key Employee".................................. 20
1.35 "Plan".............................................. 21
1.36 "Plan Year"......................................... 21
1.37 "Qualified Nonelective Contributions"............... 21
1.38 "Qualifying Employer Security"...................... 21
1.39 "Retired Member".................................... 21
1.40 "Signatory Company" or "Signatory
Companies".......................................... 21
1.41 "Total Permanent Disability"........................ 21
1.42 "Transferred"....................................... 22
1.43 "Trust"............................................. 22
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
1.44 "Trust Fund"........................................ 22
1.45 "Trustee" or "Trustees"............................. 22
1.46 "Year of Service"................................... 22
ARTICLE II. Employees Entitled to Participate................... 23
2.1 Eligibility to Participate.......................... 23
2.2 Participation Status................................ 24
2.3 Participation and Service Upon Reemployment......... 25
2.4 Full Participation.................................. 26
2.5 Transferred Employee................................ 26
2.6 Certification....................................... 27
2.7 Notice to Employees................................. 27
ARTICLE III. Contributions....................................... 27
3.1 Deferral Contributions.............................. 27
3.2 Employer Matching Contributions and Employer
Contributions....................................... 29
3.3 Actual Deferral Percentage Test..................... 31
3.4 Time of Payment..................................... 35
3.5 Administrative Committee to Prescribe Rules
Governing Deferral Contributions.................... 36
3.6 Prohibition Against Reversion....................... 36
3.7 Excess Deferral Contributions....................... 36
3.8 Actual Contribution Percentage Test................. 38
3.9 Affiliated Companies................................ 40
ARTICLE IV. Allocation to Accounts.............................. 42
4.1 Certification by the Signatory Company.............. 42
4.2 Separate Account Maintained for Each Member......... 42
4.3 Allocation of Deferral Contribution to
Members' Accounts................................... 42
4.4 Allocation of Employer Matching
Contributions, Employer Contributions to
Members' Accounts................................... 43
4.5 Daily Allocation of Trust Fund Income............... 44
4.6 Daily Valuation of Trust Fund....................... 45
4.7 Special Allocation Upon Termination, Partial
Termination, or Complete Discontinuance of
Employer Matching Contributions or Employer
Contributions....................................... 45
4.8 Entry of Adjustments to Each Member's
Account............................................. 46
4.9 Accounts for Transferred Members.................... 46
4.10 Rights in Trust Assets.............................. 47
4.11 Application of Forfeitures.......................... 47
ARTICLE V. Limitations on Annual Additions..................... 47
5.1 Limitation Under this Plan.......................... 47
5.2 Limitation in Event of Member's Participation
in Defined Benefit Plan and Defined
Contribution Plan................................... 48
5.3 Disposition of Excessive Annual Additions........... 49
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
5.4 Combining of Plans.................................. 50
5.5 Transition Fraction................................. 51
5.6 Right of Reversion.................................. 51
ARTICLE VI. Retirement and Designation of Beneficiary........... 52
6.1 Normal Retirement Date.............................. 52
6.2 Designation of Beneficiary.......................... 52
ARTICLE VII. Vesting of Members' Interests....................... 54
7.1 Vesting............................................. 54
7.2 Death............................................... 55
7.3 Retirement.......................................... 55
7.4 Disability.......................................... 56
7.5 Termination of Employment........................... 57
7.6 Disposition of Unvested Amounts..................... 59
7.7 Hardship Distribution............................... 60
ARTICLE VIII. Claims for Plan Benefits............................ 61
8.1 Application for Benefits............................ 61
8.2 Processing of Claim................................. 62
8.3 Notification to Claimant of Decision................ 63
8.4 Review Procedure.................................... 63
8.5 Decision on Review.................................. 64
8.6 Disputed Benefits................................... 64
ARTICLE IX. Distributions from Trust Funds...................... 65
9.1 Occasions for Distributions......................... 65
9.2 Consent to Distribution; Special Rules Upon
Reemployment........................................ 65
9.3 Manner of Distributions............................. 67
9.4 Time of Distributions............................... 68
9.5 Mandatory Distributions............................. 68
9.6 Distribution to Minors or Persons under
Disability.......................................... 69
9.7 Community Property Interests - Interest of
Spouse of Member in the Event of Divorce............ 70
9.8 Incorporation of Revenue Procedure 93-12
Model Amendment..................................... 71
ARTICLE X. Top Heavy Provisions................................ 73
10.1 Determination of Top Heavy Plan Status.............. 73
10.2 Determination of Super Top Heavy Plan Status........ 73
10.3 Aggregate Accounts.................................. 74
10.4 Aggregation Group................................... 74
10.5 Top Heavy Plan Requirements......................... 75
10.6 Allocations to Non-Key Employees.................... 76
ARTICLE XI. Other Qualified Plans............................... 78
11.1 Transfers from Other Qualified Plans................ 78
11.2 Transfers to Other Qualified Plans.................. 78
ARTICLE XII. Administrative Committee............................ 79
12.1 Appointment, Resignation and Removal................ 79
</TABLE>
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<TABLE>
<S> <C> <C>
12.2 Rights, Powers and Authority........................ 79
12.3 Administration...................................... 80
12.4 Annual Audit of Plan................................ 81
12.5 Chairman and Secretary.............................. 82
12.6 Quorum and Voting Majority.......................... 82
12.7 Limitation on Voting................................ 83
12.8 Delegation of Rights, Powers and Duties............. 83
12.9 Liability........................................... 83
12.10 Compensation and Expense............................ 84
12.11 Bonds............................................... 84
12.12 Indemnity........................................... 85
12.13 Reporting and Disclosure............................ 85
12.14 Quarterly Statement to Members...................... 86
12.15 Signatory Company to Supply Information............. 86
ARTICLE XIII. Trustee............................................. 87
13.1 Acceptance and Holding of Funds..................... 87
13.2 Responsibility for Actions.......................... 87
13.3 Resolutions of Board of Directors................... 88
13.4 Judicial Protection................................. 89
13.5 Dealings with Third Parties......................... 89
13.6 Annual Accounting by Trustee........................ 90
13.7 Preparation of Quarterly Statement to
Members............................................. 91
13.8 Resignation of Trustee.............................. 91
13.9 Removal of Trustee.................................. 91
13.10 Appointment of Successor Trustee.................... 91
13.11 Trustee's Compensation and Expenses................. 92
13.12 Bonds............................................... 93
13.13 Indemnity........................................... 94
ARTICLE XIV. Investment Powers of Trustee........................ 94
14.1 Standards; Prudent Man Rule......................... 94
14.2 Powers of Trustee................................... 95
14.3 Prohibited Transactions............................. 98
14.4 Investment of Contributions......................... 99
14.5 Investment Manager.................................. 100
ARTICLE XV. Loans to Members.................................... 101
15.1 Application and Limitation.......................... 101
15.2 Purposes of Loans................................... 103
15.3 Terms............................................... 103
15.4 Home Loans.......................................... 105
15.5 Recourse; Prohibition Against Distributions
While Loan Outstanding.............................. 105
15.6 Treatment of Loan Proceeds.......................... 106
15.7 Effect on Right to Participate in Plan.............. 106
15.8 Minimum Loan Amounts................................ 106
ARTICLE XVI. Amendment and Termination........................... 106
16.1 Amendment - General................................. 106
16.2 Amendments Necessary to Comply with
Intentions of Signatory Companies................... 108
</TABLE>
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<TABLE>
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16.3 Termination with Respect to Signatory Company
Without Establishment of a Successor Plan........... 108
16.4 Continuation of Plan and Trust by Successor......... 110
ARTICLE XVII. Continuance of Plan by Successor.................... 110
17.1 Adoption of Plan by Successor....................... 110
ARTICLE XVIII. Merger of Plan or Transfer of Plan Assets........... 111
18.1 Transfer, Consolidation or Merger with
Another Plan................................... 111
ARTICLE XIX. Adoption of Plan by a Signatory Company............. 111
19.1 Method of Adoption.................................. 111
19.2 Withdrawal from the Plan............................ 112
ARTICLE XX. Recovery of Employer Contributions.................. 113
20.1 Initial Approval By Internal Revenue Service........ 113
20.2 Conditioned on Deductibility........................ 114
20.3 Limitations......................................... 115
ARTICLE XXI. Miscellaneous....................................... 115
21.1 Plan is a Voluntary Undertaking by the
Signatory Company................................... 115
21.2 Benefit Provided Solely by the Trust Fund........... 115
21.3 Nonalienation....................................... 115
21.4 Applicable Law...................................... 117
21.5 Construction........................................ 117
21.6 Reference to Code or Act Sections................... 117
21.7 Binding Agreement................................... 118
21.8 No Joint Venture Implied............................ 118
21.9 Copies of Plan Available............................ 118
21.10 Titles and Headings................................. 118
21.11 Counterparts........................................ 118
21.13 Agent for Service of Legal Process.................. 119
21.14 Withholding; Reports................................ 119
21.15 Single Plan......................................... 120
</TABLE>
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<PAGE> 7
NINTH AMENDMENT AND RESTATEMENT OF THE
TEAM, INC.
SALARY DEFERRAL PLAN AND TRUST
THIS NINTH AMENDMENT AND RESTATEMENT of the Salary Deferral Plan and
Trust (hereinafter sometimes called the "Plan" and "Trust") is made this 15th
day of April, 1996, to be effective (except as otherwise indicated) as of
the 1st day of January 1989, by and between Team, Inc., (hereinafter sometimes
called the "Corporation") of Alvin, Texas and Clark A. Ingram (hereinafter
sometimes collectively called "Trustee") of Houston, Texas.
W I T N E S S E T H:
WHEREAS, on August 21, 1984 the Corporation previously adopted the Plan
and Trust for the sole and exclusive benefit of its Employees and their
Beneficiaries, effective October 1, 1984; and
WHEREAS, the Plan was previously amended and restated on October 22,
1985, effective October 1, 1984 and subsequently amended on March 19, 1987,
effective October 1, 1984; and amended March 9, 1988 effective January 1, 1988;
and amended May 30, 1989 effective May 31, 1989; and amended March 26, 1991
effective January 1, 1989; and amended October 10, 1991 effective October 1,
1991; and amended January 2, 1994, effective January 1, 1993; and amended and
restated on November 18, 1994, effective January 1, 1989; and
WHEREAS, the Corporation, through the action of its Board of Directors,
wishes to amend and restate the Plan and Trust effective the date set forth
above so it may continue to qualify under
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<PAGE> 8
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended
(including UCA '92 and OBRA '93); and
WHEREAS, the Corporation wishes to amend and restate the Plan in order
to make certain technical changes requested by the IRS for issuance of a
favorable determination letter;
NOW, THEREFORE, pursuant to the provisions of Article XVI, Section 16.1
of the Plan, the Plan is hereby amended and restated as follows:
ARTICLE I.
Definitions
Unless the context reasonably requires a broader, narrower or different
meaning, as used herein the following words and phrases shall have the meanings
set forth below:
1.1 "Account" means, with respect to a Member, the ledger account
showing such Member's interest in the Trust Fund.
1.2 "Act" means the Employee Retirement Income Security Act of 1974,
as amended.
1.3 "Actual Contribution Percentage" means, with respect to a specified
group of Eligible Employees, the average of the ratios (expressed as a
percentage, rounded to the nearest one-hundredth percent) calculated separately
for each Eligible Employee in such group of:
(a) the sum of the following contributions paid
under the Plan on behalf of each such Eligible Employee
for such Plan Year;
(i) Employer Matching Contributions or any
other matching contributions that are not Qualified
Nonelective Contributions;
(ii) any after-tax employee contributions
(including any Excess Contributions that are
2
<PAGE> 9
recharacterized pursuant to the provisions of
Article III, Section 3.3(2) of the Plan);
(iii) Qualified Nonelective Contributions
specifically designated for this purpose; and
(iv) Deferral Contributions specifically
designated for this purpose;
to
(b) the Eligible Employee's Considered Compensation
for such Plan Year.
For purposes of subsection (a)(i) above, "matching contribution" shall mean (I)
any Employer contribution made to the Plan on behalf of an Eligible Employee on
account of an after-tax employee contribution made by such employee, (II) any
Employer contribution made to the Plan on behalf of an Eligible Employee on
account of such Employee's Deferral Contribution, and (III) any forfeitures
allocated on the basis of after-tax employee contributions, Deferral
Contributions or matching contributions.
With respect to any Highly Compensated Eligible Employee who is
eligible to participate in two or more plans of the Corporation or an Affiliated
Company to which matching contributions, employee contributions or both are
made, all such contributions on behalf of such Highly Compensated Eligible
Employee must be aggregated for purposes of determining such Employee's Actual
Contribution Percentage.
1.4 "Actual Deferral Percentage" means, with respect to a specified
group of Eligible Employees for each Plan Year, the average of the ratios
(expressed as a percentage, rounded off to the nearest one-hundredth percent)
calculated separately for each Eligible Employee in such group of:
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<PAGE> 10
(a) the amount of Deferral Contributions (including any Excess
Deferrals as defined in Article III, Section 3.7 of the Plan and paid
under the Plan), and any Qualified Nonelective Contributions on behalf
of each such Eligible Employee for such Plan Year;
to
(b) the Eligible Employee's Considered Compensation
for such Plan Year.
With respect to any Highly Compensated Eligible Employee who participates in two
or more cash or deferred arrangements of the Corporation or Affiliated Company,
this ratio shall be calculated by treating all such cash or deferred
arrangements as one cash or deferred arrangement. The actual deferral ratio of
an Eligible Employee, with respect to whom neither a Deferral Contribution nor a
Qualified Nonelective Contribution is made, is zero.
For the purpose of determining the Actual Deferral Percentage of a
Highly Compensated Eligible Employee who is subject to the family aggregation
rules of Code Section 414(q)(6) because such Member is either a "five percent
owner" of the Corporation or one of the ten (10) Highly Compensated Eligible
Employees paid the greatest amount of compensation (as defined under Code
Section 415) during the Plan Year, the following shall apply:
(1) The combined Actual Deferral Percentage for the family
group (which shall be treated as one Highly Compensated Eligible
Employee) shall be the Actual Deferral Percentage determined by
aggregating elective contributions, compensation (as defined in Code
Section 414(s)), and amounts treated as elective contributions of all
Family Members. However, in applying the $200,000 limit to compensation
(as defined in Code Section 414(s)) through the Plan Year ending
December 31, 1993, and $150,000 limit to compensation (as defined in
Code Section 414(s)) for the Plan Year beginning January 1, 1994,
Family Members shall include only the affected Employee's spouse and
any lineal descendants who have not attained age nineteen (19) before
the close of the Plan Year.
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<PAGE> 11
(2) Elective contributions, compensation (as defined in Code
Section 414(s)), and amounts treated as elective contributions of all
Family Members shall be disregarded for purposes of determining the
Actual Deferral Percentage of the non-Highly Compensated Eligible
Employee group except to the extent taken into account in paragraph (1)
above.
(3) If an employee is required to be aggregated as a member of
more than one family group in a plan, all Eligible Employees who are
members of those family groups that include the employee are aggregated
as one family group in accordance with paragraphs (1) and (2) above.
(4) Except as provided in paragraph (1) above, "Family Member"
means, with respect to an affected Member, such Member's spouse, such
Member's lineal descendants and ascendants and their spouses, as
described in Code Section 414(q)(6)(B).
Paragraphs (1) through (4) above shall be administered in
accordance with Prop. Reg. Section 1.401(k)-1(g)(8)(iii) or its successor.
Qualified Nonelective Contributions and Employer Matching Contributions
may be treated as Deferral Contributions for purposes of determining a Member's
Actual Deferral Percentage only if such Qualified Nonelective Contributions and
Employer Matching Contributions (1) are nonforfeitable when made, and (2) are
subject to the same distribution restrictions that apply to Deferral
Contributions, without regard to whether they are actually taken into account as
Deferral Contributions for such purpose. Qualified Nonelective Contributions
and/or Employer Matching Contributions may be treated as Deferral Contributions
only if the conditions described in Prop. Reg. Section 1.401(k)-1(b)(3) or its
successor are satisfied.
1.5 "Administrative Committee" means the committee appointed
by the Corporation to administer the Plan.
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<PAGE> 12
1.6 "Affiliated Company" or "Affiliated Companies" means a corporation
or other organization which is a member of any controlled group of corporations,
trades or businesses (as defined in Sections 414(b) and 414(c) of the Code,
except that the phrase "fifty percent (50%) or more" shall be substituted for
the phrase "at least 80 percent" each place it appears in Section 1563(a)(1) of
the Code) or is a member of an affiliated service group (as defined in Section
414(m) of the Code).
1.7 "Aggregate Account" means, with respect to each Member, the value
of the Account maintained on behalf of such Member, including all amounts
attributable to Deferral Contributions, Employer Contributions, Employer
Matching Contributions and any after-tax employee contributions.
1.8 "Annual Additions" means the sum credited to a Member's Account for
any "limitation year" of (1) Employer contributions, (2) employee contributions
as determined under Sections 415(c)(2), 415(1) and 419A(d)(2) of the Code, (3)
Forfeitures, if any, (4) amounts allocated, after March 31, 1984, to an
individual medical account as defined in Section 415(l)(1) of the Code which is
part of a pension or annuity plan maintained by the Employer and (5) amounts
derived from contributions paid or accrued after December 31, 1985, in taxable
years ending after such date, which are attributable to post-retirement medical
benefits allocated to the separate account of a key employee (as defined in
Section 419A(d)(3) of the Code) under a welfare benefit plan (as defined in
Section 419(e) of the Code) maintained by the Employer. The percentage
limitation referred to in Article V, Section 5.1(b)
6
<PAGE> 13
shall not apply to: (1) any contribution for medical benefits (within the
meaning of Section 419A(f)(2) of the Code) after separation from service which
is otherwise treated as an "Annual Addition", or (2) any amount otherwise
treated as an "Annual Addition" under Section 415(l)(1) of the Code.
1.9 "Authorized Leave of Absence" means the following periods of
absence:
(a) Absence due to accident, sickness or pregnancy as long as
the Employee is continued on the employment rolls of the Signatory
Company and remains eligible to return to work upon his recovery;
(b) Absence due to membership in the Armed Forces of the
United States (but if such absence is not pursuant to orders issued by
the Armed Forces of the United States, only if with the consent of the
Signatory Com pany) provided that each such Employee shall apply for
reinstatement in the employment of the Signatory Company within ninety
(90) days after honorable discharge or after release to inactive duty,
as the case may be; or
(c) Absence due to an approved leave of absence granted by a
Signatory Company pursuant to established practices applied in a
consistent and nondiscriminatory manner, provided each such Employee
shall, prior to the expiration of such leave of absence, apply for rein
statement in the employment of the Signatory Company.
1.10 "Beneficiary" or "Beneficiaries" means such natural person or
persons, or trustee of a trust for the benefit of a natural person or persons,
as may be determined pursuant to the provisions of Article VI, Section 6.2
hereof. For purposes of determining whether the Plan is a Top Heavy Plan, a
Beneficiary of a deceased Member shall be considered as either a Key Employee or
a Non-Key Employee, depending upon whether such deceased Member was classified
as a Key Employee or Non-Key Employee.
1.11 "Break-in-Service" with respect to an Employee means any Plan Year
during which such Employee completes five hundred (500)
7
<PAGE> 14
or fewer Hours of Service. Solely for the purpose of determining whether a
Member has incurred a one-year Break-in-Service, Hours of Service shall be
recognized for "maternity and paternity leaves of absence." A "maternity or
paternity leave of absence" shall mean, for Plan Years beginning after December
31, 1984, an absence from work for any period by reason of the Employee's
pregnancy, birth of the Employee's child, placement of a child with the Employee
in connection with the adoption of such child, or any absence for the purpose of
caring for such child for a period immediately following such birth or
placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefor is necessary to prevent the Employee from incurring a one-year
Break-in-Service, or, in any other case, in the immediately following
computation period. The Hours of Service credited for a "maternity or paternity
leave of absence" shall be those which would normally have been credited but for
such absence, or, in any case in which the Administrative Committee is unable to
determine such hours normally credited, eight (8) Hours of Service per day. The
total Hours of Service required to be credited for a "maternity or paternity
leave of absence" shall not exceed Five Hundred One (501). No Hours of Service
will be credited for a "maternity or paternity leave of absence" unless the
Employee furnishes to the Administrative Committee such timely information as it
may reasonably require to substantiate the length and nature of such absence.
Notwithstanding the foregoing, the severance from service date of an
employee who is absent from service beyond the first
8
<PAGE> 15
anniversary of the first date of absence by reason of a maternity or paternity
absence described in Section 410(a)(5)(E)(i) or Section 411(a)(6)(E)(i) of the
Code is the second anniversary of the first date of such absence. The period
between the first and second anniversaries of the first date of absence from
work is neither a period of service nor a period of severance.
1.12 "Code" means the Internal Revenue Code of 1986, as amended.
1.13 "Considered Compensation" means, as to each Eligible Employee, all
compensation paid or accrued to him after he has become eligible for the Plan by
the Signatory Company during the Plan Year, including regular salary, hourly
base pay, overtime pay, contractual bonuses, bonuses derived by formula,
commissions, discretionary bonuses and Deferral Contributions, but excluding any
Employer Contributions or any Employer Matching Contributions under this Plan
and other contingent compensation. For Plan Years beginning on or after January
1, 1990 (or a later date permitted by Treasury regulations) for purposes of
calculating the Actual Deferral Percentage and Actual Contribution Percentage,
Considered Compensation shall be taken into account for the entire Plan Year of
each Eligible Employee without regard to whether that Employee was eligible to
participate in the Plan for the entire Plan Year.
Considered Compensation shall not include the following:
(a) Employer contributions to a plan of deferred compensation
which are not included in the Employee's gross income for the taxable
year in which contributed or employer contributions under a simplified
employee pension plan to the extent such contributions are deductible
by the Eligible Employee, or any distributions from a plan of deferred
compensation;
9
<PAGE> 16
(b) Amounts realized from the exercise of a non qualified
stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer subject to
a substantial risk of forfeiture;
(c) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified
stock option; and
(d) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in
Section 403(b) of the Code (whether or not the amounts are actually
excludable from the gross income of the Employee).
Considered Compensation shall be limited to two hundred thousand dollars
($200,000) or such greater amount as may be determined pursuant to Section
415(d) and Section 401(a)(17) of the Code. There will be attributed to any five
percent (5%) owner or any of the ten (10) most Highly Compensated Employees any
compensation paid to, contributions made by or on behalf of, or benefits
provided for any family member of such five percent (5%) owner or Highly
Compensated Employee, pursuant to Section 414(q)(6) of the Code and the
regulations thereunder. For this purpose in applying the $200,000 limit above,
such a Highly Compensated Employee and members of his family will be treated as
a single employee with one compensation and the $200,000 limit will be allocated
among the members of the family unit in proportion to each such family member's
compensation (except for the purpose of determining compensation below the
plan's integration level, if applicable). For this purpose the term "family
member" means with respect to the affected Member, such Member's spouse, such
Member's lineal descendants and ascendants and the spouses of such lineal
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<PAGE> 17
descendants and ascendants, as described in Section 414(q)(6)(B) of
the Code.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitations under Section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current Plan Year,
the compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first
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<PAGE> 18
Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
1.14 "Deferral Contribution" means the amount each Member elects to
have the Signatory Company pay to the Trustee on behalf of such Member pursuant
to Article III, Section 3.1 of this Plan.
1.15 "Determination Date" means, with respect to any Plan Year, (a) the
last day of the preceding Plan Year, or (b) in the case of the first Plan Year,
the last day of such Plan Year.
1.16 "Effective Date" of this Plan means October 1, 1984. The effective
date of this Fifth Amendment and Restatement is January 1, 1989, except as
otherwise set forth in Appendix A hereto.
1.17 "Eligible Employee" means an Employee other than a laborer who has
satisfied the service requirement of Article II, Section 2.1 and attained his
Entry Date. Laborers shall not be eligible to participate in the Plan.
1.18 "Employee" means any person who is now or shall hereafter become
employed by a Signatory Company but excluding independent contractors,
self-employed persons or employees who are nonresident aliens deriving no earned
income (constituting income earned from sources within the United States) from a
Signatory Company.
1.19 "Employer" means the Corporation and any Signatory Company or
Affiliated Company, and shall include all trades and businesses, whether or not
incorporated, which are either under common control as determined under Sections
414(b) and 414(c) of the Code (as modified in Section 1.6 above) or an
affiliated service group as determined under Section 414(m) of the Code, and
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any other entity required to be aggregated pursuant to the regulations under
Section 414(o) of the Code.
1.20 "Employer Matching Contribution" and "Employer Contribution" means
the amount contributed (if any) by the respective Signatory Companies on behalf
of each Member which is equal to a percentage of such Member's Deferral
Contribution and Considered Compensation, respectively. Any Employer Matching
Contribution or Employer Contribution intended to qualify under Section 401(k)
of the Code and intended to be included in the calculation of the Actual
Deferral Percentage shall also be designated as a Qualified Nonelective
Contribution.
1.21 "Employer Real Property" means real property (and related personal
property) which is leased to a Signatory Company or to an Affiliated Company of
any such Signatory Company.
1.22 "Employer Stock" means an equity security (preferred or common,
voting or nonvoting) issued by a Signatory Company or by an Affiliated Company
of any such Signatory Company.
1.23 "Entry Dates" for each Plan Year are January 1, April 1, July 1,
and October 1 of such Plan Year.
1.24 "Excess Aggregate Contributions" means, with respect to any Plan
Year, the excess of:
(a) the aggregate amount of the after-tax employee
contributions and Employer Matching Contributions that are not
designated as Qualified Nonelective Contributions (and any qualified
nonelective contribution or elective contribution such as a Deferral
Contribution which are taken into account in computing the Actual
Contribution Percentage) actually made on behalf of Highly Compensated
Eligible Employees for such Plan Year, over
(b) the maximum amount of contributions permitted
under the Actual Contribution Percentage Test for such
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<PAGE> 20
Plan Year, as determined under the provisions of Article III, Section
3.8 hereof.
1.25 "Excess Contributions" means, with respect to any Plan Year, the
excess of:
(a) the sum of the Deferral Contributions and Qualified
Nonelective Contributions made on behalf of Highly Compensated Eligible
Employees for such Plan year, over
(b) the maximum amount of contributions permitted under the
Actual Deferral Percentage test for such Plan Year, as determined under
the provisions of Article III, Section 3.3 hereof.
1.26 "Family Member," unless defined differently elsewhere in this
Plan, means with respect to an affected Member such Member's lineal descendants
and ascendants and their spouses, as described in Code Section 414(q)(6)(B).
1.27 "Forfeiture" means the nonvested balance of an Employee's Account
which is forfeited in accordance with Article VII, Section 7.6 of the Plan
because of termination from employment prior to full vesting.
1.28 "Highly Compensated Eligible Employee" means an Eligible Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) during the "determination year" or "look- back year" was a
five-percent owner of the Employer, as defined in Section 416 of the
Code and the regulations issued thereunder;
(b) received compensation during the "look-back year" from the
Employer in excess of $75,000 (or such other amount in effect under
Section 414(q)(1)(B) of the Code);
(c) received compensation during the "look-back year" from the
Employer in excess of $50,000 (or such other amount in effect under
Section 414(q)(1)(C) of the Code) and was in the top-paid group of
employees for such Plan Year. An Employee is in the "top-paid group" of
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employees for any Plan Year if such Employee is in the group consisting
of the top twenty percent (20%) of Employees when ranked on the basis
of compensation paid during such Plan Year. For purposes of determining
the "top-paid group" of Employees for any Plan Year, Section 414(q)(8)
of the Code and Q & A 9(b) of Treas. Reg. Section 1.414(q)-IT shall
apply to exclude certain employees; or
(d) was during the "look-back year" an officer of the Employer
(as defined in Section 416 of the Code and the regulations issued
thereunder) and received compensation greater than fifty percent (50%)
of the amount in effect under Section 415(b)(1)(A) for such Plan Year.
Notwithstanding the preceding sentence, for purposes of this subsection
(d) the following rules shall apply:
(1) the number of officers taken into account for
any year shall not exceed the lesser of
(A) fifty (50) employees; or
(B) the greater of three (3)
employees or ten percent (10%) of
employees; and
(2) if no officer of the Employer received
compensation greater than one hundred fifty percent (150%) of
the amount in effect under Section 415(c)(1)(A) of the Code
for such Plan Year, then the highest paid officer of the
Employer shall be treated as having received such amount of
compensation.
(e) were in the group consisting of the one hundred (100)
Eligible Employees paid the greatest compensation during the
"determination year" and were also described in (b), (c) or (d) above
when these paragraphs are modified to substitute "determination year"
for "look- back year" as discussed below.
The "determination year" shall be the Plan Year for which testing is being
performed, and the "look-back year" shall be the immediately preceding
twelve-month period or (if the Employer elects pursuant to Q & A 14 of Treas.
Reg. Section 1.414(q)-IT) the calendar ending with or within the determination
year. For
15
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purposes of this Section 1.28, "compensation" shall be defined under Section
414(q)(7) of the Code and the regulations thereunder.
There will be attributed to any five percent (5%) owner or any of the
ten (10) most highly compensated Eligible Employees any compensation paid to,
contributions made by or on behalf of, or benefits provided for any family
member of such five percent (5%) owner or highly compensated Eligible Employee,
pursuant to Section 414(q)(6) of the Code and the regulations thereunder.
"Family Member" for purposes of the preceding sentence means the spouse and the
lineal ascendants and descendants (and spouses of such ascendants and
descendants) of any employee or former employee. A former employee shall be
treated as a Highly Compensated Eligible Employee if such former employee was a
Highly Compensated Eligible Employee as defined herein at the time he separated
from service or at any time after attaining age fifty-five (55). Except as
provided by Section 416(i) of the Code, an Employee's status as a Highly
Compensated Eligible Employee is to be determined by reference to the controlled
group of corporations as provided in Section 414(b) of the Code, and employers
aggregated under Sections 414(b), (c), (m) or (o) are treated as a single
employer.
Notwithstanding the preceding paragraph, an Employee who was not a
Highly Compensated Eligible Employee, as defined in sub sections (b), (c) or
(d), for the immediately preceding Plan Year shall not be treated as a Highly
Compensated Eligible Employee, as defined in subsections (b), (c) or (d), for
the current Plan Year unless such Employee is a member of the group consisting
of the one
16
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hundred (100) Employees paid the highest Considered Compensation during the
current Plan Year.
1.29 "Hour of Service" means a time of service determined under
regulations prescribed by the Secretary of Labor. For purposes of this
determination, "Hours of Service" shall include each hour for which an Employee
is directly or indirectly paid by the Signatory Company for performance of
duties and for reasons other than performance of duties such as vacation,
holidays, sickness, disability, lay-off, Authorized Leaves of Absence, and
similar paid periods; and each hour for which back pay, irrespec tive of
mitigation of damages, has been either awarded or agreed to by a Signatory
Company. All "Hours of Service" shall be credited to the Employee for the
computation period or periods in which the duties were performed or, in cases
where the Employee is paid for reasons other than the performance of duties,
pursuant to the procedures outlined in Department of Labor Regulation Section
2530.200b-2(b) and (c); provided, however, where back pay has been either
awarded or agreed to by the Signatory Company, such hours shall be credited to
the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made. If in a Plan Year a Signatory Company elects to
credit hours by using an equivalency thereof found in Department of Labor
Regulations Section 2530.200(b)-3(e), then "Hour of Service" shall mean on the
basis of days of employment, ten (10) hours for each day for which the employee
would be required to be credited with at
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<PAGE> 24
least (1) Hour of Service under Department of Labor Regulation 2530.200(b)-2.
1.30 "Key Employee" means any Employee or former Employee (and any
Beneficiary of a Employee or former Employee) who, at any time during the Plan
Year or any of the preceding four (4) Plan Years, is:
(a) an officer of the employer (as defined in Section 416 of
the Code and the regulations issued thereunder) having annual
compensation greater than fifty percent (50%) of the amount in effect
under Section 415(b)(1)(A) of the Code for any such Plan Year. Only
incorporated employers will be considered as having officers;
(b) one of the ten Employees owning (or considered as owning
within the meaning of Section 318 of the Code) the largest interests in
all employers required to be aggregated under Code Sections 414(b),
414(c), and 414(m). However, an Employee shall not be considered a top
ten owner for a Plan Year under the preceding sentence if the Employee
earns less than $30,000 in annual compensation (or such other amount
adjusted in accordance with Section 415(c)(1)(A) of the Code) as in
effect for the calendar year in which the Determination Date falls. For
this purpose, if two Employees have the same such interest, the
Employee having the greater Considered Compensation shall be treated as
having the larger interest;
(c) a "five percent owner" of the employer. For this purpose
"five percent owner" means any person who owns (or is considered as
owning within the meaning of Section 318 of the Code) more than five
percent (5%) of the outstanding stock of the employer or stock
possessing more than five percent (5%) of the total combined voting
power of all stock of the employer. In determining the ownership
percentage, employers which would otherwise be aggregated under
Sections 414(b), 414(c) and 414(m) of the Code shall be treated as
separate employers; or
(d) a "one percent owner" of the employer having an annual
compensation from the employer of more than $150,000. For this
purpose "one percent owner" means any person who owns (or is
considered owning within the meaning of Section 318 of the Code) more
than one percent (1%) of the outstanding stock of the employer or
stock possessing more than one percent (1%) of the total combined
voting power of all stock of the employer. In
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<PAGE> 25
determining the ownership percentage, the employers which would
otherwise be aggregated under Sections 414(b), 414(c), and 414(m) of
the Code shall be treated as separate employers. However, in
determining whether an individual has compensation of more than
$150,000, compensation from each employer required to be aggregated
under Sections 414(b), 414(c) and 414(m) of the Code shall be
aggregated.
In addition, for Plan Years beginning after December 31, 1984, if a
Member or Former Member has not performed any services for any Employer
maintaining the Plan at any time during the five (5) year period ending on the
Determination Date, the Aggregate Account for such Member or Former Member shall
not be taken into account for the purposes of determining whether this Plan is a
Top Heavy or Super Top Heavy Plan under Article X, Section 10.1 or 10.2.
1.31 "Marketable Obligation" means a bond, debenture, note,
certificate, or other evidence of indebtedness, referred to as an "obligation",
if:
(a) Such obligation is acquired:
(1) On the market
(A) At the price of the obligation prevailing
on a national securities exchange which is registered with
the Securities and Exchange Commission; or
(B) If the obligation is not traded on such
a national securities exchange, at a price not less
favorable to the Plan than the offering price for the
obligation as established by current bid and asked
prices quoted by persons independent of the issuer;
(2) From an underwriter, at a price
(A) Not in excess of the public offering
price for the obligation as set forth in a prospectus
or offering circular filed with the Securities and
Exchange Commission; and
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<PAGE> 26
(B) At which a substantial portion of the
same issue is acquired by persons independent of
the issuer; or
(3) Directly from the issuer, at a price not less favorable to
the Plan than the price paid currently for a substantial portion of the
same issue by persons independent of the issuer;
(b) Immediately following acquisition of such obligation:
(1) Not more than twenty-five percent (25%) of the aggregate
amount of obligations issued in such issue and outstanding at the time
of acquisition is held by the Plan; and
(2) At least fifty percent (50%) of the aggregate amount
referred to in subparagraph (1) is held by persons independent of the
issuer; and
(c) Immediately following acquisition of the obligation, not more than
twenty-five percent (25%) of the assets of the Plan is invested in
obligations of the Signatory Company or an Affiliated Company of the
Signatory Company.
1.32 "Member" or "Members" means an Eligible Employee or Eligible
Employees who elects or elect to participate in the Plan during the Plan Year.
1.33 "Net Income" means, as to each Signatory Company, such Signatory
Company's taxable income as reflected on its federal income tax return for such
year before provision for federal or state taxes based upon income and before
Provision for the Signatory Company's Employer Matching Contribution or Employer
Contribution under this Plan, but excluding all capital gains and income
entitled to capital gains treatment included in such taxable income.
1.34 "Non-Key Employee" is an Employee who is not a Key Employee at any
time during the Plan Year or any of the preceding four (4) Plan Years and the
Beneficiaries of such Employee.
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1.35 "Plan" means the Team, Inc. Salary Deferral Plan herein set forth
and all subsequent amendments thereto.
1.36 "Plan Year" begins on January 1 and ends on December 31.
1.37 "Qualified Nonelective Contributions" means any Employer
Contribution or Employer Matching Contribution (other than a Deferral
Contribution) that satisfies the same vesting and distribution provisions
applicable to Deferral Contributions as provided in Article VII of the Plan and
is designated by the Administrative Committee as such.
1.38 "Qualifying Employer Security" means a security issued by a
Signatory Company or by an Affiliated Company of any such Signatory Company
which is Employer Stock or a Marketable Obligation.
1.39 "Retired Member" means a person who was at one time a Member and
who has retired in accordance with the provisions of this Plan.
1.40 "Signatory Company" or "Signatory Companies" means the
Corporation, any of the Corporation's Affiliated Companies (and any other
business organization) which adopts this Plan.
1.41 "Total Permanent Disability" means a mental or physical disability
which, in the opinion of a physician selected by the Administrative Committee,
will prevent a Member from earning a reasonable livelihood and which:
(a) Was neither contracted, suffered or incurred while such
Member was engaged in, nor resulted from his having engaged in, a
felonious criminal enterprise;
(b) Did not result from an intentionally self
inflicted injury;
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(c) Did not result from an injury incurred while a member of
the Armed Forces of the United States after the Effective Date of this
Plan and for which such Member receives a military pension; and
(d) Did not result (directly or indirectly) from the Member's
engaging in substance abuse as determined by the Administrative
Committee under standards set forth in the substance abuse policy
adopted by the Signatory Company which employs the Member.
1.42 "Transferred" as used with respect to an Employee and "Transfer of
an Employee" means the termination of employment of an Employee by one Signatory
Company and the contemporaneous commencement of the employment of such Employee
by another Signatory Company.
1.43 "Trust" means the trust estate created herein or by the separate
agreement of the Corporation and the Trustee.
1.44 "Trust Fund" means the cash, bonds, stocks and other properties
held by the Trustee pursuant to the Trust created under the Plan.
1.45 "Trustee" or "Trustees" means Clark A. Ingram and any
individual(s), corporation(s) or institution(s) appointed by the Corporation
as successor Trustee(s).
1.46 "Year of Service" means a period of twelve (12) consecutive months
during which an Employee has not less than one thousand (1,000) Hours of Service
with a Signatory Company or is on an Authorized Leave of Absence. For purposes
of determining eligibility under Article II, an Employee's initial twelve (12)
months of service with the Signatory Company, beginning with the day he first
performs an Hour of Service, shall be the computation period used initially to
determine whether he has a Year of
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Service. However, if an Employee does not have at least one thousand (1,000)
Hours of Service during his initial twelve (12) months of service, the one
thousand (1,000) Hours of Service requirement shall be measured with respect to
the Plan Year which includes the first anniversary of his employment
commencement date and, where necessary, subsequent Plan Years. The computation
of Years of Service before a Break-in-Service includes Years of Service required
for eligibility plus all vesting computation periods based on one thousand
(1,000) Hours of Service during a Plan Year. For all other purposes the
computation of such period shall be made with reference to the Plan Year. Years
of Service for eligibility and vesting and Years of Service for vesting purposes
shall also include Hours of Service with an Affiliated Company to the extent
designated by the Administrative Committee or as otherwise required by law.
ARTICLE II.
Employees Entitled to Participate
2.1 Eligibility to Participate. Every Employee except a laborer shall
become a Member of the Plan on the Entry Date coincident with or next following
the completion of one (1) Year of Service with a Signatory Company and the
filing of a written application for membership with the Administrative Committee
in which he authorizes payroll deductions, agrees to conform to the requirements
of the Plan and furnishes to the Administrative Committee such information as is
necessary to enable it to fulfill its duties and responsibilities under the
terms and provisions of the Plan. If an Eligible Employee does not elect to
participate in
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<PAGE> 30
the Plan, he may become a Member on a subsequent Entry Date by submitting the
required written application to the Administrative Committee prior to that Entry
Date. A Member's election to make Deferral Contributions under this Plan shall
in no way be made a direct or indirect condition of any other benefit provided
by the Employer to such Member under this or any other plan or arrangement. The
preceding sentence shall not apply to any Employer Matching Contribution made by
reason of such election.
2.2 Participation Status. In the event that any Member shall fail, in
any Plan Year of his employment after the Effective Date, to accumulate one
thousand (1,000) Hours of Service but does not incur a one (1) year
Break-in-Service, his Account shall be placed on inactive status. In such case,
such Plan Year shall not be considered as a Year of Service for the purpose of
determining the Member's vested interest in accordance with Article VII, 7.1
hereof and the Member shall not share in any Employer Contributions for any such
Plan Year, but he shall continue to receive Employer Matching Contributions and
income allocations and valuation adjustments in accordance with Article IV,
Sections 4.5 and 4.6 and shall continue to have the right to elect to make
Deferral Contributions in accordance with Article III, Section 3.1 until his
employment terminates as described in the following paragraph. In the event such
Member accumulates one thousand (1,000) Hours of Service in a subsequent Plan
Year, his Account shall revert to active status with full rights and benefits
under this Plan restored. In the event a Member terminates employment for any
reason, such Member shall (to the extent previously eligible):
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<PAGE> 31
(a) share in any Employer Matching Contributions
and Employer Contributions through the date of his
termination of employment,
(b) continue to receive income allocations and valuation
adjustments on the amount in his Account pursuant to Article IV,
Sections 4.5 and 4.6 after his termination of employment until the
complete distribution of his Account pursuant to Article IX, and
(c) continue to have the right to elect to make Deferral
Contributions in accordance with Article III, Section 3.1 until the
date of his termination of employment.
2.3 Participation and Service Upon Reemployment. Participation in the
Plan shall cease upon termination of employment with the Signatory Company.
Termination of employment may result from retirement, death, disability,
voluntary or involuntary termination of employment, unauthorized absence, or by
failure to return to active employment with the Signatory Company by the date on
which an Authorized Leave of Absence expires. Upon the reemployment of any
person after the Effective Date who had previously been employed by the
Signatory Company on or after the Effective Date, the following rules shall
apply in determining his participation in the Plan:
(a) If the reemployed Employee did not during his prior period
of employment satisfy the service requirement of Section 2.1 for
participation in the Plan, his service during reemployment will be
added to and counted with his service during the earlier employment in
satisfying the service requirement of Section 2.1, except if such
Employee incurred a one-year Break-in-Service prior to his reemployment
commencement date, the earlier service prior to such Break-in-Service
will not be counted and the eligibility computation period for such
reemployed Employee shall begin with the Employee's reemployment
commencement date and not his original date of employment; and
(b) If the reemployed Employee had previously satisfied the
requirements of Section 2.1 and had been a Member of the Plan prior to
his termination of employ-
25
<PAGE> 32
ment, he shall become an Eligible Employee on his reemployment
commencement date.
For purposes of this section, an Employee's employment commencement date shall
be the date he first performs an Hour of Service for the Signatory Company and
his reemployment commencement date shall be the date he first performs an Hour
of Service upon reemployment with the Signatory Company.
2.4 Full Participation. A Member who completes a Year of Service shall
participate fully in the Plan for such Plan Year. A Member who fails to complete
a Year of Service in a Plan Year shall still be eligible to receive Employer
Matching Contributions for such Plan Year. Employment for the full Plan Year
shall not be required in order for a Member to be eligible to participate fully
in the Plan for such Plan Year for purposes of sharing in Employer Matching
Contributions and Employer Contributions. The number of Hours of Service
completed by a Member during a particular Plan Year shall be the sole
determinant as to whether a Member shall be credited with a Year of Service and
thereby be entitled to participate fully in the Plan for such Plan Year. A
Member shall be eligible for Employer Matching Contributions based upon his
Considered Compensation earned during the portion of the Plan Year for which he
makes Deferral Contributions into the Plan. There shall be no condition to
participation in a Plan Year other than meeting the eligibility requirements of
Section 2.1 and attaining an Entry Date.
2.5 Transferred Employee. An Employee's status as either an Employee,
Eligible Employee or a Member shall not be deemed to be interrupted or severed
by the fact that he is transferred from the
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<PAGE> 33
employ of one Signatory Company to that of any other Signatory Company or
performs services for more than one Signatory Company.
2.6 Certification. Eligibility shall be determined and certified to the
Trustee by the Administrative Committee, based upon information furnished by the
Signatory Company, not later than thirty (30) days after each Entry Date.
2.7 Notice to Employees. The Administrative Committee shall notify each
Employee of his eligibility to participate within sixty (60) days before the
Entry Date on which he will become an Eligible Employee under Section 2.1
hereof, and each such notice shall be accompanied by an enrollment form and a
description of the Plan written in a manner reasonably calculated to be
understood by the Employee. The Administrative Committee shall notify each
Member whose Account is placed on inactive status, or restored to active status
pursuant to Section 2.2 hereof, within a reasonable time after such action has
been taken.
ARTICLE III.
Contributions
3.1 Deferral Contributions. For each Plan Year beginning with the first
Plan Year with respect to which this Plan is adopted by a Signatory Company,
each Member employed by such Signatory Company may elect to have allocated to
his Account as a Deferral Contribution any percentage (or dollar amount if
authorized by the Administrative Committee in its sole discretion), not to
exceed sixteen percent (16%) of his Considered Compensation for the Plan Year;
provided, however, that the Administrative Committee in its discretion may (1)
limit the percentage (or dollar amount) deferred
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<PAGE> 34
by any Member who is a Highly Compensated Eligible Employee. The Deferral
Contribution shall be paid through payroll deductions of the applicable
percentage (or dollar amount) by the Signatory Company, and the compensation
otherwise paid to the Member shall be reduced to the extent of such Deferral
Contribution.
The Member may change his Deferral Contribution percentage (or dollar
amount) by filing the required form with the Administrative Committee before any
Entry Date. The new Deferral Contribution shall become effective as of the Entry
Date coincident with or next following the day after the Administrative
Committee receives the form.
The Member shall have the right to suspend his Deferral Contribution at
any time by giving a written notification to the Administrative Committee. Such
suspension shall become effective for the payroll period next following the
payroll period during which such notification is received by the Administrative
Committee. If the Member suspends his Deferral Contribution, he shall forfeit
his right to elect to make additional Deferral Contributions until the next
Entry Date. As of this next or any subsequent Entry Date, the Member may resume
Deferral Contributions to his Account by filing the required form prior to an
Entry Date, to take effect for the next payroll period following such Entry
Date.
Elections to make Deferral Contributions, increase or decrease Deferral
Contributions, suspend Deferral Contributions or resume Deferral Contributions
shall be in writing, signed by the Member, on such form or forms as the
Administrative Committee shall
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<PAGE> 35
provide. Upon termination of employment, the amount attributable to the Deferral
Contribution allocated to the Member's Account shall be distributed pursuant to
Article VII of this Plan.
Each Member's Deferral Contribution for a Plan Year under this Plan
shall be limited to $7,000 (as adjusted for the cost of living, or such other
amount provided in Section 402(g)(5) of the Code). If a Member's total personal
deferral contributions exceed $7,000 (as adjusted for the cost of living, or
such other amount provided in Section 402(g)(5) of the Code) in any Plan Year,
the provisions of Article III, Section 3.7 hereof shall become applicable. The
term "total personal deferral contributions" means the sum of all Deferral
Contributions and any other "elective deferrals" by an Eligible Employee under
any other cash or deferred arrangements or (qualified plan type) elective
deferral vehicle of the Employer or any other employer, subject to any offset
rules provided under the Code or regulations.
No Deferral Contribution may be taken into account for purposes of
determining whether any other contributions under this Plan or any other plan
meet the requirements of Section 401(a) or Section 410(b) of the Code, or for
purposes of satisfying the ("top heavy") minimum allocation rules of Article X,
Section 10.6 of this Plan. The preceding sentence shall not apply for purposes
of determining whether a plan meets the percentage portion or average benefit
requirement of Section 410(b)(2)(A)(ii) of the Code.
3.2 Employer Matching Contributions and Employer Contributions. For
each Plan Year beginning with the first Plan Year with respect to which this
Plan is adopted by a Signatory
29
<PAGE> 36
Company, such Signatory Company shall, subject to the limitations contained in
Section 3.3 hereof, contribute to the Trust an Employer Matching Contribution
equal to a percentage of each Member's Deferral Contribution for such Plan Year,
such Employer Matching Contribution to be determined by the Board of Directors
of the Corporation, acting in its sole discretion. Effective October 1, 1991,
unless otherwise so determined for a Plan Year, the Employer Matching
Contribution shall be equal to an amount which is equal to fifty percent (50%)
of each Member's Deferral Contribution but not in excess of three percent (3%)
of such Member's Considered Compensation in such Plan Year (so that the annual
amount of such Employer Matching Contribution does not exceed one and one-half
percent (1.5%) of such Member's Considered Compensation in such Plan Year). The
Corporation's Board of Directors shall have the right to make a larger or
additional Employer Matching Contribution on behalf of Members who are not
Highly Compensated Members for the purpose of assuring the Plan's compliance
with the Actual Deferral Percentage Test of Section 3.3 of this Article and the
Actual Contribution Test of Section 3.8 of this Article, and such additional
Employer Matching Contribution for non-Highly Compensated Members shall be
immediately and fully nonforfeitable and shall not be subject to the vesting
schedule in Article VII, Section 7.1.
For each Plan Year beginning with the first Plan Year with respect to
which this Plan is adopted by a Signatory Company, such Signatory Company may,
subject to the limitations contained in Section 3.3 of this Article, contribute
to the Trust from the
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<PAGE> 37
Signatory Company's current or accumulated Net Income, but only to the extent
thereof, an Employer Contribution equal to a percentage of an Eligible
Employee's Considered Compensation, such sum to be determined by the
Corporation's Board of Directors, acting in its sole discretion. Such Employer
Contribution for any Plan Year will be allocated to an Eligible Employee
pursuant to Article IV, regardless of whether the Eligible Employee makes
Deferral Contributions for all or any part of such Plan Year.
The aggregate of the Deferral Contributions, Employer Contribution and
Matching Contribution for any Plan Year may not (subject to the provisions of
this Article III, Section 3.2) exceed the Signatory Company's current or
accumulated Net Income.
The amount of the Employer Matching Contribution and Employer
Contribution for each Plan Year shall be established by a resolution adopted by
the Corporation's Board of Directors. Such resolution will be communicated to
the Signatory Companies by the Corporation and to the Members by their
respective Signatory Companies.
3.3 Actual Deferral Percentage Test. If for the Plan Year the Actual
Deferral Percentage for the group of Highly Compensated Eligible Employees
(based upon Eligible Employee participation elections) would be more than the
greater of:
(a) the Actual Deferral Percentage of all other
Eligible Employees multiplied by 1.25; or
(b) the lesser of (i) two percentage (2%) points plus the
Actual Deferral Percentage of all other Eligible Employees, or (ii) the
Actual Deferral Percentage of all other Eligible Employees multiplied
by two (2),
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<PAGE> 38
such Excess Contribution shall be corrected in the manner set forth below. The
calculation described in the preceding sentence is referred to herein as the
"Actual Deferral Percentage Test." The Administrative Committee may, in its
discretion, select either of the following methods of correction or any
combination thereof in any Plan Year:
(1) The Excess Contributions (and income allocable thereto)
may, if such Excess Contributions are designated by the Administrative
Committee as distributions of Excess Contributions (and income), be
distributed to the appropriate Highly Compensated Eligible Employees
after the close of such Plan Year and within 12 months of the close of
such Plan Year. The income allocable to Excess Contributions includes
both income for the Plan Year for which the Excess Contributions were
made and income for the period between the end of the Plan Year and the
date of distribution, and will be calculated pursuant to Prop. Reg.
Section 1.401(k)-1(f)(4). If feasible, the Administrative Committee
shall in its sole discretion determine and distribute the amount of
Excess Contributions within two and one-half (2 1/2) months after the
end of the Plan Year. The Administrative Committee may distribute
Excess Contributions without regard to any notice or consent otherwise
required under the Plan or Section 411(a)(11) and Section 417 of the
Code limiting distributions. The amount of Excess Contributions for a
Highly Compensated Eligible Employee for a Plan Year is to be
determined by the following leveling method, under which the actual
deferral ratio of the Highly Compensated Eligible Employee with the
highest actual deferral ratio is reduced to the extent required to
satisfy the Actual Deferral Percentage Test set forth above or cause
such Highly Compensated Eligible Employee's actual deferral ratio to
equal the ratio of the Highly Compensated Eligible Employee with the
next highest actual deferral ratio. This process must be repeated until
the Actual Deferral Percentage Test is satisfied for such Plan Year.
Except to the extent otherwise provided in regulations, both refunded
Excess Deferrals and retained Excess Deferrals under Section 3.7 of
this Article are taken into account in determining a Member's Actual
Deferral Percentage for purposes of the above calculation.
(2) Any Employer Matching Contributions attributable or
related to any Excess Contribution distributed pursuant to the
provisions of the preceding paragraph (1) shall be forfeited and
applied in the manner provided for other Forfeitures under Sections
4.11 and 7.6 below.
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<PAGE> 39
(3) Within 2 1/2 months after the last day of the Plan Year,
the Excess Contributions for such Plan Year may be recharacterized as
after-tax employee contributions in accordance with the provisions of
Treas. Reg. Section 1.401(k)-1(f)(3). The preceding sentence shall only
be implemented if the Plan is amended to provide for the making of
after-tax employee contributions for such Plan Year. Recharacterized
Excess Contributions remain subject to the non-forfeitability
requirements and distribution limitations that apply to Deferral
Contributions. Excess Contributions will not be recharacterized with
respect to a Highly Compensated Eligible Employee to the extent that
the recharacterized amounts, in combination with employee contributions
actually made by such Highly Compensated Eligible Employee, exceed the
maximum amount of employee contributions (determined prior to the
application of Code Section 401(m)(2)(A)) that such Highly Compensated
Eligible Employee is permitted to make under the Plan in the absence of
recharacterization.
In no event shall the sum of the Deferral Contributions (including
recharacterized Excess Contributions), and the Signatory Company's Employer
Matching Contribution, and the Signatory Company's Employer Contribution exceed
an amount equal to fifteen percent (15%) of the total Considered Compensation
otherwise paid or accrued during such Plan Year of such Signatory Company plus
the maximum amount deductible under the "carry-over" provisions of the Code
relating to Employer Matching Contributions and Employer Contributions in
previous years of less than the maximum amount permissible. In addition, in no
event shall the aggregate of such Deferral Contribution, Employer Matching
Contribution, Employer Contribution and the Signatory Company's contributions to
all other qualified pension, profit sharing or stock bonus plans for such Plan
Year exceed the amount deductible from the Signatory Company's income for such
Plan Year under Section 404(a)(7) of the Code. In the event the aggregate of the
Signatory Company's contributions under all plans would exceed such maximum
deductible amount, the
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<PAGE> 40
Employer Matching Contribution and Employer Contribution to the Plans shall be
reduced by the amount necessary to reduce the Signatory Company's aggregate
contribution under all such plans to the maximum amount deductible under said
section of the Code.
Deferral Contributions will be taken into account under the Actual
Deferral Percentage Test for a Plan Year only if such Deferral Contributions are
allocated to the Eligible Employee as of a date within such Plan Year. For this
purpose, a Deferral Contribution is considered allocated as of a date within a
Plan Year if the allocation is not contingent on participation or performance of
services after such date and the Deferral Contribution is actually paid to the
Trust no later than twelve (12) months after the Plan Year to which the
contribution relates.
In the case of a Highly Compensated Eligible Employee whose Actual
Deferral Percentage is determined under the family aggregation rules of Code
Section 414(q)(6), the determination of the amount of Excess Contributions shall
be made as follows:
(3) If the Highly Compensated Eligible Employee's Actual
Deferral Percentage is determined under Article I, Section 1.4(l)(ii),
then the Actual Deferral Percentage is reduced in accordance with the
leveling method described in Treas. Reg. Section 1.401(k)-1(f)(2) and
the Excess Contributions for the family unit are allocated among the
Family Members in proportion to the elective contributions of each
Family Member that have been combined to determine the Actual Deferral
Percentage.
(4) If the Highly Compensated Eligible Employee's Actual
Deferral Percentage is determined under Article I, Section 1.4(1)(i),
then the Actual Deferral Percentage is reduced in accordance with the
leveling method described in Treas. Reg. Section 1.401(k)-1(f)(2) but
not below the Actual Deferral Percentage of Family Members who are
Non-Highly Compensated Eligible Employees without regard to family
aggregation. Excess Contributions are determined by taking into account
the contributions of the eligible Family Members who are Highly
Compensated Eligible
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<PAGE> 41
Employees without regard to family aggregation, and are allocated among
such Family Members in proportion to each such Family Member's elective
contributions. If further reduction of the Actual Deferral Percentage
is required, Excess Contributions resulting from this reduction are
determined by taking into account the contributions of all eligible
Family Members and are allocated among such Family Members in
proportion to the elective contribu tions of each Family Member.
Paragraphs (3) and (4) above shall be administered in accordance with Reg.
Section 1.401(k)-1(f)(5)(ii). Excess Contributions will be corrected in
accordance with this Section 3.3 in a timely fashion to avoid disqualification
of the Plan or other sanction imposed under the Code (including the imposition
of tax under Code Section 4979).
Excess Contributions will be corrected in accordance with this Section
3.3 in a timely fashion to avoid disqualification of the Plan or other sanction
imposed under the Code (including the imposition of tax under Code Section
4979).
3.4 Time of Payment. The Employer Matching Contribution and Employer
Contribution of each Signatory Company for each Plan Year shall be paid to the
Trustee in one or more installments as the Signatory Company (subject to the
consent of the Corporation) may from time to time determine; provided, however,
that all such installments shall be paid no later than the time prescribed by
law for filing such Signatory Company's federal income tax return for such
taxable year (including extensions thereof) and, if earlier with respect to the
Employer Matching Contribution, no later than 12 months after the close of the
Plan Year (or other period prescribed by final regulations).
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3.5 Administrative Committee to Prescribe Rules Governing Deferral
Contributions. Deferral Contributions may be made only in accordance with such
uniform rules and regulations as may be prescribed from time to time by the
Administrative Committee. Such uniform rules and regulations of the
Administrative Committee may, among other things and subject to the provisions
set forth in the Plan, restrict Deferral Contributions to those made through
authorized payroll deductions, require payroll deductions to be authorized on a
specified periodic basis and suspend, for a specified period, the right to
Deferral Contributions on the part of a Member who has discontinued his Deferral
Contributions.
3.6 Prohibition Against Reversion. In no event, except as expressly
provided in Article XX and Article V, Section 5.6 hereof, shall the principal or
income of the Trust herein created be paid to or revert to the Signatory
Company, or be used for any purpose other than for the exclusive benefit of the
Members or their Beneficiaries.
3.7 Excess Deferral Contributions. The amount by which an Eligible
Employee's Deferral Contribution (including for this purpose any other total
personal deferral contributions within the meaning of Section 3.1 above) in any
Plan Year exceeds the limitation in effect under Section 402(g)(1) of the Code
and referred to in Section 3.1 above for such Plan Year shall be known as the
Eligible Employee's Excess Deferral for such Plan Year. An Eligible Employee's
Excess Deferral for any Plan Year shall not be considered as reducing such
Eligible Employee's compensation under Article III, Section 3.1 to the extent of
such Excess Deferral.
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<PAGE> 43
An Eligible Employee's Excess Deferral is not required to be refunded
to such Eligible Employee. However, notwithstanding any other provision of law
or of this Plan limiting distributions, the Administrative Committee in its sole
discretion may refund any Eligible Employee's Excess Deferral (plus any
allocable income) to such Eligible Employee in accordance with the provisions
set forth below. If a Member has made an Excess Deferral for his taxable year,
the Member must notify the Administrative Committee in writing no later than the
March 15th following the end of such taxable year, on the form prescribed by the
Administrative Committee for this purpose, of the amount the Member requests to
be distributed. The distribution to the Member shall be made after such taxable
year but no later than the first April 15 following the close of such taxable
year. Alternatively, the Administrative Committee may also provide for a
distribution of the Excess Deferral during such taxable year, provided the
following conditions are satisfied:
(a) The Member designates the distribution as an
Excess Deferral;
(b) The distribution of the Excess Deferral is made
after the date in which the Plan received the Excess
Deferral; and
(c) The Administrative Committee designates the
distribution as a distribution of an Excess Deferral.
The amount of Excess Deferral to be distributed to a Member for the Member's
taxable year shall be reduced by any Excess Contribution previously distributed
or recharacterized as an after-tax employee contribution under Section 3.3 of
the Plan for the Plan Year beginning with or within such taxable year.
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<PAGE> 44
3.8 Actual Contribution Percentage Test. If for the Plan Year the
Actual Contribution percentage for the group of Highly Compensated Eligible
Employees would be more than the greater of:
(a) the Actual Contribution Percentage for all other
Eligible Employees multiplied by 1.25; or
(b) the lesser of (i) the Actual Contribution Percentage for
all other Eligible Employees plus two percentage (2%) points, or (ii)
the Actual Contribution Percentage for all other Eligible Employees
multiplied by two (2),
such Excess Aggregate Contributions, shall be corrected in the manner set forth
below. The calculation described in the preceding sentence is referred to herein
as the "Actual Contribution Percentage Test." The Excess Aggregate Contributions
(and income allocable thereto) shall be distributed to (or, if forfeitable, in
the discretion of the Administrative Committee uniformly applied, forfeited by)
Highly Compensated Eligible Employees after the close of the Plan Year in which
such Excess Aggregate Contributions arose and within 12 months after the close
of the following Plan Year. If feasible, the Administrative Committee shall in
its sole discretion determine and distribute the amount of Excess Aggregate
Contributions within two and one-half (2 1/2) months after the end of the Plan
Year. In the event of the complete termination of the Plan during such Plan
Year, the distributions described in the preceding sentence shall be made after
termination of the Plan and within the 12 months following such termination.
The amount of Excess Aggregate Contributions for a Highly Compensated
Eligible Employee for a Plan Year is to be determined by the following
contribution leveling method, under which the actual contribution ratio of the
Highly Compensated Eligible
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<PAGE> 45
Employee with the highest actual contribution ratio is reduced to the extent
required to satisfy the Actual Contribution Percentage Test set forth above or
to cause such Highly Compensated Eligible Employee's actual contribution ratio
to equal the ratio of the Highly Compensated Eligible Employee with the next
highest actual contribution ratio. This process must be repeated until the
Actual Contribution Percentage Test is satisfied for such Plan Year.
In determining the amount of Excess Aggregate Contributions under the
leveling method set forth above, actual contribution ratios must be rounded to
the nearest one-hundredth percent of the Eligible Employee's Considered
Compensation. In no case shall the amount of Excess Aggregate Contributions with
respect to any Highly Compensated Eligible Employee exceed the amount of the
after-tax employee contributions and Employer Matching Contributions on behalf
of such Highly Compensated Eligible Employee for such Plan Year. Excess
Aggregate Contributions for a Plan Year shall be distributed or forfeited in
accordance with the provisions set forth above and shall not remain unallocated
or allocated to a suspense account for allocation to one or more Employees in
any future year. The determination of the amount of Excess Aggregate
Contributions with respect to a Plan Year shall be made after the determination
and correction of Excess Deferrals under Article III, Section 3.7, and the
determination and correction of Excess Contributions under Article III, Section
3.3, respectively, have been made.
In the case of a Highly Compensated Eligible Employee whose Actual
Contribution Percentage is determined under the family
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<PAGE> 46
aggregation rules of Code Section 414(q), the determination of the amount of
Excess Aggregate Contributions shall be made as follows:
(1) If the Highly Compensated Eligible Employee's Actual
Contribution Percentage is determined by combining the contributions
and compensation of all Family Members, then the Actual Contribution
Percentage is reduced in accordance with the leveling method described
in Reg. Section 1.401(m)-1(e)(2) and the Excess Aggregate Contributions
for the family unit are allocated among the Family Members in
proportion to the contributions of each Family Member that have been
combined to determine the Actual Contribution Percentage.
(2) If the Highly Compensated Eligible Employee's Actual
Contribution Percentage is determined by combining the contributions of
only those Family Members who are Highly Compensated Eligible Employees
without regard to family aggregation, then the Actual Contribution
Percentage is reduced in accordance with the leveling method described
in Reg. Section1.401(m)- 1(e)(2) but not below the Actual Contribution
Percentage of Family Members who are Non-Highly Compensated Eligible
Employees without regard to family aggregation. Excess Aggregate
Contributions are determined by taking into account the contributions
of the eligible Family Members who are Highly Compensated Eligible
Employees without regard to family aggregation and are allocated among
such Family Members in proportion to each such Family Member's employee
contributions and Employer Matching Contributions. If further reduction
of the Actual Contribution Percentage is required, Excess Aggregate
Contributions resulting from this reduction are deter mined by taking
into account the contributions of all eligible Family Members and are
allocated among such Family Members in proportion to the employee
contribu tions and Employer Matching Contributions of each Family
Member.
Paragraphs (1) and (2) above shall be administered in accordance
with Reg. Section 1.401(m)-1(e)(2)(iii).
3.9 Affiliated Companies. If any Signatory Company is prevented in
whole or in part from making an Employer Matching Contribution or Employer
Contribution to the Trust, which it would otherwise have made under the Plan by
reason of having no current or accumulated Net Income or because such Net Income
is less than
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<PAGE> 47
the Employer Matching Contribution and Employer Contribution which it would
otherwise have made, then so much of the Employer Matching Contribution and
Employer Contribution which such Signatory Company was so prevented from making
may be made for the benefit of the Members employed by such Signatory Company by
the other Signatory Companies (subject to the approval of the Corporation) to
the extent of the current or accumulated Net Income of such other Signatory
Companies; except that the portion of the total prevented Employer Matching
Contribution and Employer Contribution which may be contributed by each such
other Signatory Company shall be limited to the proportion that its total
current Net Income remaining after adjustments for its own Employer Matching
Contribution and Employer Contribution to the Plan made without regard to this
Section 3.9 bears to the total current Net Income of all the Signatory Companies
remaining after adjustment for all Employer Matching Contributions and Employer
Contributions made to the Plan without regard to this Section. The foregoing,
however, shall apply only to those Signatory Companies which constitute an
"affiliated group" within the meaning of the provisions of the Code relating to
employer deductions for contributions to profit sharing plans. A Signatory
Company on behalf of whose Members an Employer Matching Contribution and
Employer Contribution is made under this Section 3.9 shall not unless otherwise
required by law or the Corporation reimburse the contributing Signatory Company.
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<PAGE> 48
ARTICLE IV.
Allocation to Accounts
4.1 Certification by the Signatory Company. As soon as practicable
after the end of the first Plan Year and the end of each succeeding Plan Year
thereafter, the Signatory Company shall certify to the Administrative Committee
the amount of its Employer Matching Contribution and Employer Contribution (if
any) for the Plan Year then ended and the names of the Members entitled to share
therein, the amount of Considered Compensation paid to each Member for such Plan
Year and the amount of Considered Compensation paid to all Members for such Plan
Year. Such certification shall be conclusive evidence of such facts.
4.2 Separate Account Maintained for Each Member. The Administrative
Committee shall create and maintain adequate records to disclose the interest in
the Trust Fund of each Member, Retired Member and Beneficiary. Such records
shall be in the form of individual Accounts, and credits and charges shall be
made to such Accounts in the manner herein described. The maintenance of
individual Accounts is only for accounting purposes and a segregation of the
assets of the Trust Fund to each Account shall not be required.
4.3 Allocation of Deferral Contribution to Members' Accounts. At the
end of each payroll period under procedures adopted by the Administrative
Committee, the Signatory Company shall transfer the Deferral Contributions to
the Trustee and shall certify to the Administrative Committee the names of the
Eligible Employees, the names of the Members, and the Deferral Contribution
amount for each
42
<PAGE> 49
Member. The Administrative Committee shall allocate the Deferral Contribution
made on behalf of a Member directly to such Member's Account.
4.4 Allocation of Employer Matching Contributions, Employer
Contributions to Members' Accounts. The Administrative Committee shall determine
the Deferral Contribution amount for each Member of the Plan. The Administrative
Committee shall then, under procedures adopted by it, allocate an amount from
the Signatory Company's Employer Matching Contribution (if any) to the Member's
Account which is equal to the matching percentage, as determined by the
Corporation's Board of Directors under Article III, Section 3.2 hereof, of the
Member's Deferral Contribution for the Plan Year.
The Administrative Committee shall allocate the aggregate of Employer
Contributions made by all the Signatory Companies for each Plan Year among each
Member employed by any such Signatory Company who has completed a Year of
Service for such Plan Year in the pro portion that the Considered Compensation
of each Member bears to the total Considered Compensation of all such Members
for such Plan Year. This allocation shall be a single allocation of the
aggregate annual Employer Contribution among all such eligible Members for such
Plan Year.
If a Member has been transferred or performs services for more than one
(1) Signatory Company during the Plan Year, such Member shall be entitled to
have allocated to his Account a portion of the Employer Matching Contribution
and Employer Contribution made by each Signatory Company by whom such Member was
employed during such Plan Year and the amount allocated to the Member's Account
shall be
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<PAGE> 50
computed with respect to each Signatory Company in the manner hereinabove
provided based (in the case of Employer Matching Contributions) upon the
Deferral Contribution made on his behalf by each Signatory Company during the
Plan Year and (in the case of Employer Contributions) upon the Considered
Compensation earned by the Member from each Signatory Company during the Plan
Year. A Member shall not receive a lesser allocation to his Account by reason of
having been transferred or having performed services for more than one (1)
Signatory Company during the Plan Year than such Member would have received had
his Deferral Contribution or Considered Compensation for the Plan Year been paid
by one Signatory Company. If an adjustment of the allocation to such Member's
Account is necessary in order to achieve this result, it shall be made by the
Signatory Company with whom such Member was employed for the greatest portion of
the Plan Year.
4.5 Daily Allocation of Trust Fund Income. The Administrative Committee
shall determine the amount of income earned by each class of investment on a
daily basis. The Administrative Committee shall allocate such income among the
Members in the proportion that the amount in each Member's Account invested in
each class of investment at the end of each day bears to the aggregate amount of
all Members' Accounts invested in such class of investments at the end of each
day.
However, in the event that a Member receives a distribution from his
Account during any day, the allocation of income to such Member's Account for
each day shall be based upon his reduced Account balance at the end of the day
and the amount invested in
44
<PAGE> 51
each class of investment as of the end of each day. If a Member receives the
total balance in his Account during each day, he shall not be entitled to an
income allocation for each day.
4.6 Daily Valuation of Trust Fund. The Trustee shall revalue the Trust
Fund at its then fair market value on a daily basis and allocate any
appreciation or depreciation in the Trust Fund among the Members in the
proportion that the amount in each Member's Account invested in such class of
investments bears to the aggregate amount of all Member's Accounts at the end of
each day after the allocation of income under Section 4.5.
However, in the event that a Member receives a distribution from his
Account during a day, the valuations adjustment allocated to such Member's
Account for the day shall be based upon his reduced Account balance at the end
of the day. If a Member receives the total balance in his Account during a day,
he shall not be entitled to a valuation adjustment for the day. However, the
Administrative Committee shall have the authority to change the number of times
the Trust Fund is revalued during the Plan Year, provided that such authority is
exercised in a non-discriminatory manner.
4.7 Special Allocation Upon Termination, Partial Termination, or
Complete Discontinuance of Employer Matching Contributions or Employer
Contributions. Notwithstanding any other provision of this instrument to the
contrary, if:
(a) the Plan is terminated pursuant to Article XVI,
Section 16.3 hereof; or
(b) the Plan is terminated with respect to a group
of Members resulting in a partial termination of the
Plan,
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<PAGE> 52
all previously unallocated funds shall be allocated to the Accounts of the
Members at the time of such termination, partial termination or Employer
Contributions under the Plan using the allocation methods prescribed by Sections
4.3 through 4.5 hereof as appropriate depending on the nature and source of such
unallocated funds.
4.8 Entry of Adjustments to Each Member's Account. The Administrative
Committee shall credit to each Member's Account such Member's portion of the
adjustments and allocations required by Sections 4.3 through 4.5 of this Plan,
so that all such adjustments and allocations become effective and shall be
entered into each Member's Account as of the end of the Plan Year to which they
are attributable unless required more frequently by the Administrative Committee
pursuant to Sections 4.4 and 4.5.
4.9 Accounts for Transferred Members. In the case of a Member who has
transferred or performs services for more than one Signatory Company during a
Plan Year, the Administrative Committee shall maintain on its books such
Member's Account and open or reopen an Account for such Member with respect to
each Signatory Company to which the Member has transferred. In this fashion, the
Administrative Committee may maintain several different Accounts with respect to
each Transferred Member. However, the foregoing provisions of this Section 4.9
are for administrative convenience only. For all other purposes under this Plan,
all Accounts of each Transferred Member shall be regarded as one Account, which
shall be attributable to the Signatory Company by whom such Transferred Member
is then employed.
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<PAGE> 53
4.10 Rights in Trust Assets. No such allocations, adjust ments, credits
or transfers shall ever vest in any Member any right, title or interest in the
Trust Fund except at the times and upon the terms or conditions below set forth.
Such Trust Fund shall, as to all Accounts of Members, be a commingled fund, and
all securities purchased or otherwise acquired by the Trustee under the Plan
shall be issued in the name of the Trustee for the Team, Inc. Salary Deferral
Plan, or in such other name or names as the Trustee shall designate.
4.11 Application of Forfeitures. The Administrative Committee shall,
within thirty (30) days after the end of each Plan Year, determine the Members
from the Signatory Company who have forfeited all or part of their respective
interests in their Accounts pursuant to the provisions of Article VII, Sections
7.5(a) and 7.6 hereof, during such Plan Year and shall certify such information
to the Trustee. The total amount of all Forfeitures shall then be used to reduce
such Signatory Company's current and future Employer Matching Contributions and
Employer Contributions under Article III, Section 3.2 of the Plan.
ARTICLE V.
Limitations on Annual Additions
5.1 Limitation Under this Plan. Notwithstanding any provi sions herein
to the contrary, the Annual Addition to the Accounts of any Member under all
defined contribution plans of his Employer (as that term is defined in Section
5.4 hereof) for any Plan Year cannot exceed the lesser of:
(a) Thirty thousand dollars ($30,000) or such greater
amount as may be determined pursuant to Section
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<PAGE> 54
415(c)(1)(A) of the Code, as adjusted under Section
415(d) of the Code; or
(b) Twenty-five percent (25%) of the Member's compensation
from his Employer for such Plan Year, as determined under Section
415(c)(3) of the Code and the regulations thereunder.
5.2 Limitation in Event of Member's Participation in Defined Benefit
Plan and Defined Contribution Plan. In any case in which an Employee is a
participant in both a defined benefit plan and this Plan, the sum of the defined
benefit plan fraction and the defined contribution plan fraction for any year
may not exceed 1.0 except as may be permitted by Section 2004(a)(3) or otherwise
under the Act. The defined benefit plan fraction for any year is a fraction (a)
the numerator of which is the projected annual benefit of the Member under the
plan (determined as of the close of the Plan Year); and (b) the denominator of
which is the lesser of: (i) the product of 1.25, multiplied by the dollar
limitation in effect for such Plan Year under Section 415(b)(1)(A) of the Code,
or (ii) the product of 1.4, multiplied by the amount which may be taken into
account under Section 415(b)(1)(B) of the Code with respect to such Member for
such Plan Year. The defined contribution plan fraction for any year is a
fraction (a) the numerator of which is the sum of the Annual Additions to the
Member's Account as of the close of the Plan Year; and (b) the denominator of
which is the sum of the lesser of the following amounts determined for such Plan
Year and for each prior Year of Service: (i) the product of 1.25, multiplied by
the dollar limitation in effect for such Plan Year as may be determined pursuant
to Section 415(c)(1)(A) of the Code, or (ii) the product of 1.4, multiplied by
the amount which may be
48
<PAGE> 55
taken into account under Section 415(c)(1)(B) of the Code for such Plan Year.
The Administrative Committee shall reduce the numerator of the defined
contribution plan fraction in order that their sum shall not exceed 1.0 for any
Plan Year in accordance with Section 5.3 hereof.
However, 1.0 shall be substituted for 1.25 for any Top Heavy Plan Year
unless an extra minimum Employer Matching Contribution equal to one percent (1%)
of the Considered Compensation of all Members who are Non-Key Employees is
allocated among such Members pursuant to Article IV, Section 4.3.
Notwithstanding the foregoing, 1.0 shall be substituted for 1.25 for any Plan
Year in which the Plan is a Super Top Heavy Plan.
5.3 Disposition of Excessive Annual Additions. If as a result of a
reasonable error in estimating a Member's Considered Compensation, the Annual
Additions under the terms of the Plan for a particular Member would cause the
limitations of Section 415 of the Code which are applicable to that Member for
that Plan Year to be exceeded, the excess amounts shall not be deemed Annual
Additions to such Member's Account in that Plan Year, but shall be treated as
follows:
(a) The excess amounts attributable to Employer Matching
Contributions or Employer Contributions in the Member's Account must be
allocated and reallocated to the Accounts of the other Members in the
Plan, pursuant to the provisions of Article IV, Section 4.3. However,
if the allocation or reallocation of the excess amounts further causes
the limitations of Section 415 of the Code to be exceeded with respect
to each Plan Member for that Plan Year, then these amounts must be held
unallocated in a suspense account. If a suspense account is in
existence at any time during a particular Plan Year (other than the
Plan Year described in the preceding sentence), all amounts in the
suspense account must first be allocated and reallocated to Members'
Accounts
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<PAGE> 56
(subject to the limitations of Section 415 of the Code) before any
Employer Matching Contributions or Employer Contributions may be made
to the Plan for that Plan Year.
(b) Notwithstanding the provisions of paragraph (a) above, to
the extent that Annual Additions in excess of the permissible limit of
Code Section 415 result from a reasonable error in determining total
elective deferrals as defined in Treas. Reg. Section 1.415-6(b)(6),
then such excess Annual Additions may be corrected by distributing
elective deferrals to the Member to the extent necessary to eliminate
the amount in excess of the Code Section 415 limitation. The amount
distributed is includible in the Member's income for the taxable year
in which it is distributed, and is characterized for tax and reporting
purposes as a corrective distribution rather than a distribution of
benefits. This paragraph (b) shall be administered in accordance with
the provisions of Treas. Reg. Section 1.415-b(b)(6)(iv) and Revenue
Procedure 92-93, 1992-2 C.B. 505.
5.4 Combining of Plans. For purposes of applying the limi tations
contained in this Article, all defined contribution plans, terminated or not, of
an Employer shall be treated as one defined contribution plan and all defined
benefit plans, terminated or not, of an Employer shall be treated as one defined
benefit plan. For purposes of this Article, Employer shall mean all trades or
businesses, whether or not incorporated, which are either under common control
as determined under Sections 414(b) or 414(c) of the Code or are an affiliated
service group as determined under Section 414(m) of the Code. For the purpose of
applying the limitations set forth above, as imposed by Section 415 of the Code,
a Member's compensation or annual benefit payable by the Signatory Company or
any Affiliated Company of the Signatory Company shall be treated as being from a
single employer. For purposes of the limitations of this section and of applying
Sections 414(b) and 414(c) of the Code as they relate to Sections 415 and
1563(a)(1) of the Code, the
50
<PAGE> 57
phrase "more than fifty percent (50%)" shall be substituted for the phrase "at
least eighty percent (80%)".
5.5 Transition Fraction. At the election of the Adminis trative
Committee, in applying the provisions of Section 5.3 with respect to the defined
contribution fraction for any Plan Year ending after December 31, 1982, the
amount taken into account for the denominator for each Member for all Plan Years
ending before January 1, 1983 shall be an amount equal to the product of (a) the
amount of the denominator determined under Section 5.3 (as in effect for the
Plan Year ending in 1982) for Plan Years ending in 1982, multiplied by (b) the
"transition fraction".
For purposes of the preceding paragraph, the term "transition fraction"
shall mean a fraction (a) the numerator of which is the lesser of (1) $51,875 or
(2) 1.4 multiplied by twenty-five percent (25%) of the Member's compensation for
the Plan Year ending in 1981, and (b) the denominator of which is the lesser of
(1) $41,500 or (2) twenty-five percent (25%) of the Member's compensation for
the Plan Year ending in 1981.
Notwithstanding the foregoing, for any Plan Year in which the Plan is a
Top Heavy Plan, $41,500 shall be substituted for $51,875 in determining the
"transition fraction."
5.6 Right of Reversion. Notwithstanding Article III, Section 3.6, in
the event of termination of the Plan as provided in Article XVI, Section 16.3
any amounts held in the suspense account shall revert to the Signatory Company.
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ARTICLE VI.
Retirement and Designation of Beneficiary
6.1 Normal Retirement Date. "Normal Retirement Age" means the date on
which an Employee attains age sixty-five (65). Each Employee shall retire from
employment on the date he reaches his Normal Retirement Age, such date to be his
Normal Retirement Date; provided, however, that an Employee may continue
employment there after subject to the condition that, in the event the Signatory
Company has nineteen (19) or fewer employees, such Employee must obtain the
approval of the Board of Directors of the Signatory Company to continue
employment after his Normal Retirement Date. Each Employee who is employed by
the Signatory Company on the date it adopts the Plan shall be deemed for the
purposes of this Section 6.1 to have secured the approval of the Board of
Directors of the Signatory Company and shall continue to be so deemed until such
approval is affirmatively withdrawn. This Section 6.1 shall be applied in a
uniform, nondiscriminatory manner to all Employees, present and future.
6.2 Designation of Beneficiary. Each Member and each Retired Member
shall have the unrestricted right at any time, and from time to time, to
designate and to rescind or change any designation of a primary and contingent
Beneficiary or Beneficiaries to receive benefits in the event of his death,
except as hereinafter provided. The designation by a Member who was married at
the time of his death of a Beneficiary other than the Member's spouse shall only
be permitted with such spouse's written consent. Such consent must designate a
specific beneficiary, must acknowledge the effect of
52
<PAGE> 59
the Member's designation and must be witnessed either by a member of the
Administrative Committee or by a Notary Public. Otherwise the death benefits of
the Member shall be paid to the Member's spouse, except as hereinafter provided.
A Member's designation of a Beneficiary other than such Member's spouse, which
is consented to by such Member's spouse as provided above, may not be changed
without subsequent spousal consent (unless the spouse's consent to the original
Beneficiary designation expressly permits designations by the Member without
further spousal consent). Any such designation, change or rescission of
designation shall be made in writing by filling out and furnishing to the
Administrative Committee the appropriate form prescribed by it. A contingent
Beneficiary or Beneficiaries shall be entitled to receive any unpaid death
benefits only if no primary Beneficiary is alive or legally entitled to receive
it on the date of payment of the benefit. Any estate, assignee or appointee of
either a primary or a contingent Beneficiary shall have no interest in or right
to receive any death benefit payment not actually made before the death of such
Beneficiary. The last such designation received by the Administrative Committee
shall be controlling over any testamentary or other disposition; provided,
however, that no designation, rescission or change thereof shall be effective
unless received by the Administrative Committee prior to the death of the
Member. Upon the divorce of a Member or a retired Member, any designation of his
divorced spouse as a primary Beneficiary or as a contingent Beneficiary
hereunder shall automatically terminate and become ineffective, and such
divorced spouse shall have no
53
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interest in or right to receive any death benefit hereunder unless such Member
shall file with the Administrative Committee, after the date of such divorce
decree, a new designation of Beneficiary naming his divorced spouse as a
Beneficiary hereunder. If there is no designated Beneficiary alive at the time
of any payment of the death benefit, then the death benefit or balance thereof
shall be paid to the surviving spouse of the deceased Member or, if there is no
surviving spouse, to the estate of the deceased Member. The Signatory Company
employing a Member shall not be named as his Beneficiary. If the Administrative
Committee shall be in doubt as to the right of any Beneficiary designated by a
deceased Member to receive any unpaid death benefit, the Administrative
Committee may direct the Trustee to pay the amount in question to the estate of
such Member, in which event the Trustee, the Signatory Company, the
Administrative Committee and any other person in any manner con nected with the
Plan shall have no further liability in respect to the payment so paid.
ARTICLE VII.
Vesting of Members' Interests
7.1 Vesting. Each Member who had completed at least 3 Years of Service
as of November 30, 1991, shall have a one hundred percent (100%) vested interest
in the amount credited to his Account attributable to Deferral Contributions,
Employer Matching Contributions and Employer Contributions. As to each other
Member
(a) there shall be a one hundred percent (100%) vested
interest in the amount credited to his Account attributable to
Deferral Contributions;
(b) there shall be a one hundred percent (100%)
vested interest in the amount credited to his Account
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attributable to Employer Matching Contributions and
Employer Contributions as of September 30, 1991; and
(c) the amount credited to his Account after September 30,
1991 attributable to Employer Matching Contributions and Employer
Contributions shall vest in accordance with the provision of Section
7.5 below.
7.2 Death. On the death of a Member (or a Retired Member prior to the
complete distribution of such Retired Member's Account) his death benefit shall
be one hundred percent (100%) of the amount credited to his Account at the end
of the calendar quarter in which he dies. Payment of such death benefit to the
Member's designated Beneficiary or Beneficiaries shall commence no later than
ninety (90) days after the end of the calendar quarter in which the Member dies.
However, in the event that the payment of his death benefit under this Section
would violate Article IX, Section 9.4, then such benefit shall commence no later
than sixty (60) days after the end of the Plan Year in which the Member dies.
Notwithstanding any other provision of this Plan, in the case of a
Member who is married at the time of his death, the death benefit under this
Section (reduced by any security interest held by the Plan by reason of a loan
outstanding to such Member) shall be payable in full to such Member's spouse, or
in the event there is no surviving spouse or such surviving spouse has consented
in the manner provided in Article VI, Section 6.2, to a designated Beneficiary.
7.3 Retirement. Upon attaining his Normal Retirement Date as provided
in Article VI, Section 6.1 and upon reaching his Normal Retirement Age, a Member
shall have a nonforfeitable right to his Account balance. Such retirement
benefit shall be paid to the
55
<PAGE> 62
Member in the form of benefit determined by the Administrative Committee
pursuant to Article IX, Section 9.3. The payment of his retirement benefit shall
commence no later than ninety (90) days after the end of the calendar quarter in
which he retires after attaining his Normal Retirement Date unless the Member
requests otherwise in writing. However, in the event that the payment of his
retirement benefit under this Section would violate Article IX, Section 9.4,
then payment of such benefit shall commence no later than sixty (60) days after
the end of the Plan Year in which such Member retires.
7.4 Disability. In the event the Administrative Committee determines
that a Member is suffering from a Total Permanent Disability, his disability
benefit shall be one hundred percent (100%) of the amount credited to his
Account at the end of the calendar quarter following such determination. Such
disability benefit shall be paid to the Member in the form of benefit determined
by the Administrative Committee pursuant to Article IX, Section 9.3. Payments
shall commence no later than ninety (90) days after the end of the calendar
quarter in which the Member is determined to be totally, permanently disabled
unless the Member requests otherwise in writing. However, in the event that the
payment of his disability benefit under this Section would violate Article IX,
Section 9.4, then such benefit shall commence no later than sixty (60) days
after the end of the Plan Year in which the Member is determined to be totally,
permanently disabled.
If a Member who had previously been determined to be totally,
permanently disabled returns to the employment of the Signatory
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<PAGE> 63
Company prior to receiving the entire balance in his Account, a separate ledger
account shall be created for such Member and the remaining portion of his
Account shall be transferred to such new Account, which shall share in income
allocations and valuation adjustments pursuant to Article IV, Sections 4.5 and
4.6 until the amount is distributed in full upon his subsequent death,
retirement, determination of Total Permanent Disability or severance of
employment. A new Account shall be established for the returning Member as if he
were a new Member, and said Account shall vest pursuant to Section 7.5 starting
at the point on the vesting schedule the Member had achieved prior to the
determination of his Total Permanent Disability.
7.5 Termination of Employment.
(a) Vesting Schedule. A Member whose employment is terminated
for any reason other than death, retirement under Section 7.3 above or
Total Permanent Disability shall be entitled to a severance benefit no
later than ninety (90) days after the end of the calendar quarter in
which he terminates employment equal to the vested interest
attributable to Deferral Contributions, Employer Matching Contributions
and Employer Contributions in such Member's Account at the end of the
Plan Year. However, in the event that the payment of his severance
benefit under this section would violate Article IX, Section 9.4, then
such benefit shall commence no later than sixty (60) days after the
latest date determined under that Section. For the purpose of this
Section 7.5(a), a Member's "vested interest" shall be determined using
the following schedule and shall be an amount equal to the percentage
of the balance of such Member's Account attributable to Employer
Matching Contributions and Employer Contributions for the number of
Years of Service as of the end of the Plan Year. As provided in Section
7.1, a Member's vested interest in his Account attributable to Deferral
Contributions shall at all times be one hundred percent (100%).
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<PAGE> 64
<TABLE>
<CAPTION>
Percentage of
Participating Employee's
Years of Service Account that Becomes Vested
---------------- ---------------------------
<S> <C> <C>
Less than one year . . . . . . . . . . . . 0%
One year . . . . . . . . . . . . . . . . . 20%
Two years . . . . . . . . . . . . . . . . 40%
Three years . . . . . . . . . . . . . . . 60%
Four years . . . . . . . . . . . . . . . . 80%
Five years or more . . . . . . . . . . . . 100%
</TABLE>
In the event that the vesting schedule contained in this
Section 7.5(a) is amended, and a Member has at least three (3) Years of
Service, he shall have the right during the election period to elect to
have the nonforfeitable percentage of his benefit derived from Employer
Matching Contributions and Employer Contributions computed under this
Section 7.5(a) without regard to such amendment. Notwithstanding the
preceding sentence, no election need be provided for any Member whose
nonforfeitable percentage under the Plan, as amended, at any time
cannot be less than such percentage determined without regard to such
amendment. The election period shall begin on the date the amendment is
adopted and shall end no earlier than the latest of (a) sixty (60) days
after the date the amendment is adopted, (b) sixty (60) days after the
date the amendment becomes effective, or (c) sixty (60) days after the
Member is issued written notice of the Plan amendment by the Employer,
Signatory Company or Administrative Committee. A Member shall be
considered to have completed three (3) Years of Service for purposes of
this paragraph if such Member has completed three (3) Years of Service
as defined in Article I, Section 1.46, whether or not consecutive,
without regard to the exceptions of Code Section 411(a)(4) prior to the
expiration of the election period. For any Employee who does not have
an Hour of Service in any Plan Year beginning after December 31, 1988,
"five (5) Years of Service" shall be substituted for "three (3) Years
of Service" in applying Section 7.5 and Section 7.1.
The amount credited to such Member's Account which is not
vested when he terminates employment shall be disposed of as provided
in Section 7.6 hereof.
(b) Years of Service Computation. For purposes of determining
the Member's vested interest in the assets in his Account, all Years of
Service with the Signatory Company, or any Affiliated Company, or any
Predecessor Employer as of the date of severance shall be taken into
account except the following with respect to Breaks-in-Service:
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<PAGE> 65
(i) If a Member does not have a vested interest in
his Account at the time he incurs a Break-in-Service, Years of
Service completed by such Member prior to such Break shall not
be taken into account if at such time the number of
consecutive one-year Breaks-in- Service included in his most
recent Break-in- Service equals or exceeds the aggregate
number of his Years of Service (whether or not consecutive)
completed before such Break, or five (5), if greater. In
computing the aggregate number of Years of Service prior to
such Break, Years of Service which could have been disregarded
under this subsection by reason of a prior Break-in-Service
may be disregarded. Pre-Break and post-Break Years of Service
will not be aggregated until the Member has completed one (1)
Year of Service after his return to employment;
(ii) If a Member has five consecutive years of
Breaks-in-Service for Plan Years, then any service after such
Break will not increase the Member's vested interest in his
Account before such Break; and
(iii) If a Member has a vested interest in his Account
and his separation from employment and his subsequent
reemployment do not incur five consecutive years of
Breaks-in-Service, his Account will continue to vest, starting
at the point in the vesting schedule where he left employment.
7.6 Disposition of Unvested Amounts. After termination of employment,
the unvested amount in the Member's Account shall be maintained until forfeited
as provided in the next two sentences. The unvested portion of the Account
balance attributable to Employer Contributions shall be forfeited upon the
earlier of (a) the last day of the Plan Year in which the Member incurs five (5)
consecutive one-year Breaks-in-Service, or (b) the last day of the Plan Year in
which a Member who has terminated employment receives a distribution of his
vested Account balance. Notwithstanding the preceding sentence a Member who
terminates employment with a zero
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<PAGE> 66
vested Account balance shall be deemed to have received a zero distribution of
such Account balance on the last day of the Plan Year in which termination of
employment occurred and on such last day the Forfeiture of such Account balance
will occur. As of the last day of the Plan Year in which a Forfeiture occurs,
the Forfeiture shall be applied as provided in Article IV, Section 4.11 above.
7.7 Hardship Distribution. In the event that a Member or his
Beneficiary is entitled to the payment of benefits as a result of death,
retirement, or Total Permanent Disability and such Member or Beneficiary
demonstrates an immediate and heavy financial need for such benefits, the
Administrative Committee may authorize the commencement of benefit payments
prior to the time set forth in Sections 7.2, 7.3, 7.4 and 7.5. The
Administrative Committee shall exercise this authority in a uniform,
nondiscriminatory manner.
7.8 Circumstances Rendering Vesting Schedule Inapplicable.
Notwithstanding any other provisions of this instrument to the contrary, if:
(a) the Plan is terminated pursuant to Article XVI,
Section 16.3 hereof; or
(b) the Plan is terminated with respect to a group
of Members resulting in a partial termination of the
Plan; or
(c) there occurs a complete discontinuance of Employer
Contributions under the Plan,
the vesting schedule contained in Section 7.5(a) hereof shall be inapplicable
and each Member affected by such termination, partial termination or complete
discontinuance of Employer contributions shall thereupon have a full one hundred
percent (100%) vested interest in the amount standing to his credit in his
Account at such time and in any amounts thereafter credited or allocated to his
Account; provided, however, that if the Signatory Company shall
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<PAGE> 67
thereafter resume making Employer Contributions hereunder, all amounts credited
or allocated to a Member's Account with respect to the Plan Year for which such
Employer Contributions are resumed and the Plan Years for which they are
continued, shall vest only in accordance with the vesting schedule contained in
Section 7.5(a) hereof. For purposes of this Section, a complete discontinuance
of Employer Contributions under the Plan is contrasted with a suspension of
Employer Contributions under the Plan which is merely a temporary cessation of
Employer Contributions by the Signatory Company. During any such period of
termination, partial termination or complete discontinuance of Employer
Contributions under the Plan, all other provisions of this Plan shall
nevertheless continue in full force and effect other than provisions for
Employer Contributions and allocations thereof to Members' Accounts. The
Signatory Company shall notify the District Director of the Internal Revenue
Service in the event it has completely discontinued to make Employer
Contributions to the Plan or in the event of termination or partial termination
of the Plan.
ARTICLE VIII.
Claims for Plan Benefits
8.1 Application for Benefits. Each Member or designated Beneficiary claiming
benefits under this Plan must make written application therefor within fifteen
(15) days preceding or following (whichever is applicable) the actual
retirement, termination of employment, death prior to retirement, determination
of Total Permanent Disability, or the happening of any other occurrence believed
by the claimant to entitle him to benefits
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<PAGE> 68
hereunder. The date the claim shall be considered as filed shall be the date a
properly completed application is received by the Administrative Committee. Each
such application (a) shall be in writing on a form to be provided by the
Administrative Committee, (b) shall be signed by the claimant or his personal
representative, (c) shall be made to the Administrative Committee, and (d) shall
be filed in such a manner and with such persons as the Administrative Committee
may specify. The Administrative Committee may require that there be furnished to
it in connection with such application all relevant information. Failure to
timely file such application or to supply all relevant information shall not
result in the forfeiting of any rights claimed but shall excuse postponement of
the orderly processing of such claim and the time of commencing payment thereof.
8.2 Processing of Claim. Upon receipt by the Administrative Committee of a
properly completed application for benefits form, it shall be the duty and
responsibility of the Administrative Committee to verify the facts and claims
made therein with the appropriate Signatory Company and to determine whether the
claim is valid. In arriving at a decision, the Administrative Committee may
require additional relevant information from the claimant. In any event, within
thirty (30) days of receipt of the application, the Administrative Committee
shall determine whether, when and in what amount distributions are to be paid
from the Plan to the claimant. If the Administrative Committee fails to act on
the claim within said thirty (30) day period, the claimant may proceed to the
review
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<PAGE> 69
stage described in Section 8.4 hereof as if the claim had been denied.
8.3 Notification to Claimant of Decision. If distributions are to be
made, the Administrative Committee shall immediately notify the claimant and the
Trustee of the amount and method of payment. It shall then be the responsibility
of the Trustee to arrange the distribution. If the claim is denied, in whole or
in part, the Administrative Committee shall send written notice of the denial to
the claimant. A notice that a claim has been denied shall set forth, in a manner
calculated to be understood by the claimant:
(a) The specific reason or reasons for the denial;
(b) Specific reference to the pertinent Plan
provisions on which the denial was based;
(c) A description of any additional material or
information necessary for the claimant to perfect the
claim and an explanation of why such material is
necessary; and
(d) An explanation of the Plan's claim review
procedure.
8.4 Review Procedure. A claimant shall be entitled to a full and fair
review of a denial of claim for benefits. To avail himself of this right, the
claimant, or his duly authorized representative, must timely file an application
for review with the Administrative Committee. Such application must be in
writing and must be filed within sixty (60) days of receipt of the notice of
denial of benefits. If the claimant desires a personal appearance or hearing
before the Administrative Committee to present his case, he shall so state in
his application for review. An appeal shall be considered as filed on the date
it is received by the
63
<PAGE> 70
Administrative Committee. Subsequent to the filing of an appeal and prior to the
rendering of a decision thereon, the claimant, or his duly authorized
representative, may review pertinent documents and may submit issues and
comments in writing. If a hearing is held, the claimant may be represented
thereat by legal counsel or other duly authorized representative.
8.5 Decision on Review. The Administrative Committee shall render a
decision no later than sixty (60) days after its receipt of a request for review
unless special circumstances, such as the need to hold a hearing, require an
extension of time for pro cessing, in which case a decision shall be rendered as
soon as possible, but not later than one hundred twenty (120) days after receipt
of a request for review. The decision for review shall be in writing and shall
include the specific reasons for the decision, written in a manner calculated to
be understood by the claimant, with specific reference to the pertinent Plan
provisions on which the decision is based. The review decision by the
Administrative Committee shall be considered final.
8.6 Disputed Benefits. If any dispute shall arise between a Member, or
other person claiming under a Member, and the Administrative Committee after the
review of the claim for benefits, or if any dispute shall develop as to the
person to whom the payment of any benefit under the Plan shall be made, the
Trustee may withhold payment of all or any part of the benefits payable
hereunder to the Member, or other person claiming under the Member, until such
dispute has been resolved by a court of competent jurisdiction or settled by the
parties involved.
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<PAGE> 71
ARTICLE IX.
Distributions from Trust Funds
9.1 Occasions for Distributions. Distributions from the Trust
shall be made to Members or Beneficiaries only upon the occurrence of one of the
following events:
(1) the Member's death, retirement at Normal Retirement Age, or
Total Permanent Disability as provided in Article VII,
Sections 7.2, 7.3 and 7.4 hereof, respectively;
(2) termination of employment as provided in Article
VII, Section 7.5 hereof;
(3) termination of the Plan and Trust as provided in
Article XVI;
(4) the sale or other disposition by a Signatory Company to an
unrelated corporation which does not maintain the Plan, of
substantially all of the Signatory company's assets (but only
with respect to Members who continue employment with the
acquiring corporation); or
(5) the sale or other disposition by a Signatory Company of its
interest in a subsidiary to an unrelated entity which does not
maintain the Plan (but only with respect to Members who
continue employment with the subsidiary).
A distribution pursuant to paragraphs (3), (4) or (5) above shall only be made
in the method provided under Section 9.3(a) below. All distribution events set
forth above are subject to the conditions and specifications set forth hereafter
in this Article IX.
9.2 Consent to Distribution; Special Rules Upon Reemployment.
(a) In those instances where a Member terminates his employment
with the Signatory Company for any reason other than death or
retirement and, as a result thereof, would otherwise be entitled
to a distribution of his vested interest in his Account, no such
distribution shall, under any circumstances, be authorized by the
Administrative Committee nor effected by the Trustee prior to the
death or retirement of such Member unless
65
<PAGE> 72
(i) the gross amount to be distributed is $3,500 or less, or (ii) the
gross amount is in excess of $3,500 and the Member consents to the
distribution and executes a distribution form supplied by the
Administrative Committee signifying such consent. A certified copy of
such distribution form shall be transmitted to the Trustee for its
records along with written directions as to the amount, time and
manner of distribution.
(b) In the event that a Member does not consent to a
distribution as required under this Section 9.2, a separate ledger
account shall be created for such Member. His Account shall be
transferred to the separate ledger account. Such separate ledger
account shall share in income and valuation adjustments pursuant to
Article IV, Sections 4.5 and 4.6 until the vested Account Balance is
distributed in full upon the Member's subsequent death, attainment of
Normal Retirement Age or Total Permanent Disability.
(c) If an Employee returns to the employment of a Signatory
Company after incurring a Forfeiture under Article VII, Section 7.6 and
again becomes a Member under the Plan, a new Account shall be
established for him as if he were a new Member. The new Account shall
be maintained independently of the separate ledger account. Such
account shall share in Employer Contributions, Forfeitures, income and
valuation adjustments pursuant to Article IV and shall vest as
determined under Article VII, Section 7.1. Upon subsequent termination
of employment, the vested portion of the Account shall be distributed
upon the Member's entitlement to a distribution under Article VII
hereof or, if the Member again does not give the necessary consent to a
distribution, such vested amount shall be added to the separate ledger
account.
(d) If any reemployed Employee is reemployed before incurring
five (5) consecutive years of Break-in-Service, and such Employee had
received prior to his reemployment an entire distribution of the vested
portion of his Account which was less than fully vested, the forfeited
portion of his Account shall be reinstated only if he repays the full
amount distributed to him before the end of the earlier of the
following periods: (i) five (5) consecutive Years of Break-in-Service,
or (ii) the period ending on the fifth (5th) anniversary of the
Member's reemployment. If such Employee repays such full amount
distributed to him, the undistributed portion of his Account must be
restored in full, unadjusted by any gains or losses occurring
subsequent to the valuation date preceding his termination. Such
restoration shall be paid from Employer Contributions, Forfeitures and
income or gain to the Plan for the Plan Year of such
66
<PAGE> 73
restoration, as determined by the Administrative Committee. A
reemployed Member who previously had a zero vested Account balance and
thus received a deemed zero distribution under Article VII, Section
7.6 above shall be deemed to have repaid his prior deemed zero
distribution on the day of his reemployment. This provision shall be
interpreted in a manner consistent with the transitional rules of
Section 303(a)(2) of the Retirement Equity Act as to service prior to
Plan Years beginning before January 1, 1985.
9.3 Manner of Distributions. The Administrative Committee shall direct
the Trustee, in writing, when to distribute the amounts referred to in Article
VII, Sections 7.2, 7.3, 7.4 and 7.5, in accordance with the Member's election,
with either of the following methods:
(a) A lump sum payment in cash or in kind or both (payable in
a form which is not an annuity);
(b) Distributions in the manner provided in the next sentence,
after having segregated the aggregate amount thereof in a special
account; provided, that the monies in such special account will earn
the going rate of interest paid by local banks on savings accounts
placed in insured depositories at interest, or, at the option of the
Member or Beneficiary (or Beneficiaries), be credited with their
portion of the gains or losses of the Trust pursuant to Article IV,
Sections 4.5 and 4.6. Distribution of his entire Plan benefit in
substantially equal annual, quarterly or monthly installments plus
income allocations and valuation adjustments pursuant to Article IV,
Sections 4.5 and 4.6, over any time period not exceeding the Member's
life expectancy (or the life expectancies of such Member and his
designated Beneficiary); provided further, that the present value of
the benefits to be distributed to the Member shall exceed fifty percent
(50%) of the present value of the total benefit to be distributed to
the Member and his designated Beneficiary.
In the event of the Member's death, the benefit shall be paid in a lump sum
payment in cash or in kind or both (payable in a form which is not an annuity)
to the Beneficiary designated pursuant to Article VI, Section 6.2 according to
the method either set forth on the beneficiary designation on file with the
Administrative Committee or elected by the Beneficiary or Beneficiaries.
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<PAGE> 74
9.4 Time of Distributions. Distributions required by Section 9.3 hereof
shall commence as soon as administratively feasible. Unless the Member executes
an election form consented to by the Administrative Committee which states how
and when benefits are to commence, payment of benefits to the Member shall in no
event begin later than the sixtieth (60th) day after the latest of the close of
the Plan Year in which:
(a) the Member attains age 65,
(b) the Member has his tenth (10th) anniversary of
the year in which he commenced participation
in the Plan, and
(c) the Member's employment with a Signatory
Company terminates.
9.5 Mandatory Distributions. Notwithstanding any other provision
in the Plan to the contrary, benefits shall be distributed to the Member or his
Beneficiary no later than set forth in this section.
(a) Mandatory Age Distribution. A Member's bene fits shall be
distributed to him no later than the April 1st of the calendar year
following the calendar year in which the Member attains age 70 1/2, but
the balance of his benefits must be distributed over the life of such
Member (or lives of such Member and his designated Beneficiary) or over
a time period not exceeding the Member's life expectancy (or the life
expectancies of the Member and his designated Beneficiary).
(b) Mandatory Death Distribution. If the distribution
of the Member's benefits had commenced pursuant to Section 9.5(a) and
the Member dies before his entire benefit is distributed to him, the
remaining portion of his benefit will be distributed at least as
rapidly as under the method of distribution being used pursuant to
Section 9.5(a) as of the date of such Member's death. If a Member dies
prior to the commencement of his benefit distribution pursuant to
Section 9.5(a), the entire benefit of such Member will be distributed
within five (5) years after the death of such Member. However, such
five (5) year rule shall be disregarded for any portion of the Member's
benefit which is payable to (or for the
68
<PAGE> 75
benefit of) a designated Beneficiary, such portion to be distributed
(in accordance with regulations issued by the Secretary) over the life
of such designated Beneficiary (or over a period not exceeding beyond
the life expectancy of such Beneficiary), and such distributions
commence not later than one (1) year after the date of the Member's
death or such later date as the Secretary may prescribe by regulations.
In such a situation, the benefit portion distributed to such
Beneficiary shall be treated as distributed on the date on which such
distribution begins.
In the event that the designated Beneficiary is the deceased
Member's surviving spouse, the date on which the benefit distribution
is required to commence shall be no earlier than the date on which the
Member would have attained age 70 1/2. If the surviving spouse dies
before the distributions to such spouse commence, this substantiation
shall be applied as if the surviving spouse were the Member. For
purposes of this subsection, any amount paid to a child shall be
treated as if it had been paid to the surviving spouse if such amount
shall become payable to the surviving spouse upon such child reaching
majority (or other designated event permitted under Treasury
regulations).
(c) Prior Irrevocable Election. If the Member made an
irrevocable election prior to December 31, 1983 to defer the
distribution of benefits beyond the dates set forth in Section 9.5(a)
and (b), such election shall govern the distribution so long as said
election was pursuant to the terms of the Plan at the time of the
election.
(d) Recalculation of Life Expectancies. For purposes of this
Section, the life expectancy of a Member and Member's spouse may, in
the discretion of the Administrative Committee, be redetermined but no
more frequently than annually and in accordance with such rules as may
be prescribed by Treasury regulations.
Notwithstanding any other provision of this Plan, the Plan shall in all
respects comply with the provisions of Prop. Reg. Section1.401(a)(9)-1 and the
minimum incidental death benefit limits of Prop. Reg Section1.401(a)(9)-2, which
are specifically incorporated herein by reference.
9.6 Distribution to Minors or Persons under Disability. Should any
distribution hereunder become payable to a minor or to
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<PAGE> 76
a person who, in the opinion of the Administrative Committee, is incapable of
taking care of his affairs, the Administrative Committee may direct the Trustee
to make such distribution in any one or combination of the following ways: (1)
directly to such minor or person (2) to the legal guardian of the person or
estate of such minor or person; or (3) to a person or financial institution
serving a Custodian for such Beneficiary under the Uniform Gifts to Minors Act
of any state. Any distribution so made shall constitute full and complete
discharge of any liability under the Plan with respect to the amount so
distributed.
9.7 Community Property Interests - Interest of Spouse of Member in the
Event of Divorce. In the event of a divorce between a Member and his spouse and
in the event that the Divorce Decree entered by the Court having jurisdiction in
the matter gives such divorced spouse a portion of the Member's vested interest
in his Account, the Trustee shall, pursuant to the direction of the
Administrative Committee, segregate such amount in a separate account for the
benefit of such spouse. Such Account shall thereafter be held and administered
as a part of the Trust Fund (but such account shall only share in income
allocations and valuation adjustments of the Trust Fund) until such time as the
Member or his Beneficiary becomes entitled to a distribution hereunder. In the
event the spouse is also awarded a portion of the future Deferral Contributions,
and/or future Employer Matching Contributions and/or future Employer
Contributions which normally would be allocated to the Member's Account, the
Administrative Committee after it receives a certified copy of such Divorce
70
<PAGE> 77
Decree, shall instruct the Trustee to allocate such portion to the spouse's
account. At the time the Member or his Beneficiary becomes entitled to a
distribution hereunder, the amounts held by the Trustee for the spouse shall be
distributed to such spouse in a lump sum. If such spouse should die prior to the
time of distribution to such spouse hereunder, such amounts then held by the
Trustee shall be paid over to the estate of such spouse within six (6) months
after notification to the Trustee of the death of such spouse. All rights and
benefits, including elections, provided to a Member in this Plan shall be
subject to the rights afforded any "alternate payee" under a "qualified domestic
relations order" as those terms are defined in Section 414(p) of the Code.
9.8 Incorporation of Revenue Procedure 93-12 Model Amendment. This
Section 9.8 applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Section 9.8, a distributee may elect
at the time and in the manner prescribed by the Administrative Committee, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
a) Eligible rollover distribution: For purposes of
this Section 9.8, an eligible rollover distribution
is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified
period of ten years
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or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and the portion
of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
b) Eligible retirement plan: For purposes of this
Section 9.8, an eligible retirement plan is an
individual retirement account described in Section
408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section
401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the
case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual
retirement annuity.
c) Distributee: For purposes of this Section 9.8, a
distributee includes an employee or former
employee. In addition, the employee's or former
employee's surviving spouse and the employee's or
former employee's spouse or former spouse who is
the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of
the Code, are distributees with regard to the
interest of the spouse or former spouse.
d) Direct rollover: For purposes of this Section 9.8,
a direct rollover is a payment by the Plan to the
eligible retirement plan specified by the
distributee.
If a distribution is one to which Sections 401(a)(11) and 417 of the
Code do not apply, such distribution may commence less than thirty (30) days
after the notice required under Treasury Regulation Section 1.411(a)-11(c) is
given, provided that:
(1) the Administrative Committee clearly
informs the Member that the Member has a right to a period of
at least thirty (30) days after receiving the notice to
consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution
option), and
(2) the Member, after receiving the
notice, affirmatively elects a distribution.
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<PAGE> 79
ARTICLE X.
Top Heavy Provisions
10.1 Determination of Top Heavy Plan Status. The Plan shall be
considered a Top Heavy Plan for any Plan Year in which, as of the Determination
Date, the sum of the Aggregate Accounts of Key Employees under this Plan and any
plan of an Aggregation Group exceeds sixty percent (60%) of the Aggregate
Accounts of all Members under this Plan and any plan of an Aggregation Group. If
a Member, who was a Key Employee for any prior Plan Year, is a Non- Key Employee
for any Plan Year, such Member's Aggregate Account balance shall not be taken
into account for purposes of determining whether the Plan is a Top Heavy Plan
(or whether any Aggregation Group which includes the Plan is a Top Heavy Group).
In addition, the Account balance of any Member who has not within the past five
(5) years performed any services for the Signatory Company shall not be taken
into account for purposes of determining whether the Plan is a Top Heavy Plan
(or whether any Aggregation Group which includes the Plan is a Top Heavy Group).
10.2 Determination of Super Top Heavy Plan Status. The Plan shall be
considered a Super Top Heavy Plan for any Plan Year in which, as of the
Determination Date, the sum of the Aggregate Accounts of Key Employees under
this Plan and any plan of an Aggregation Group exceeds ninety percent (90%) of
the Aggregate Accounts of all Members under this Plan and any plan of an
Aggregation Group. For purposes of determining if the Plan is a Super Top Heavy
Plan, a Member's inclusion in the Key Employee
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<PAGE> 80
grouping shall be determined in the manner set forth in Section 10.1.
10.3 Aggregate Accounts. A Member's Aggregate Account as of
the Determination Date shall be the sum of:
(a) his Account balance as of the most recent valuation
date occurring within a twelve (12) month period ending on the
Determination Date;
(b) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of any
contributions actually made after the valuation date but before the
Determination Date, except for the first Plan Year when such adjustment
shall also reflect the amount of any contributions made after the
Determination Date that are allocated as of a date in that First Plan
Year;
(c) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4) preceding Plan
Years. However, in the case of distributions made after the valuation
date and prior to the Determination Date, such distributions are not
included as distributions for top heavy purposes to the extent that
such distributions are already included in the Member's Aggregate
Account balance as of the valuation date. Notwithstanding anything
herein to the contrary, all distributions, including distributions made
prior to January 1, 1984, will be counted, and distributions under a
terminated plan which if it had not been terminated would have been
required to be included in an Aggregation Group will be counted; and
(d) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax deductible qualified
Employee contributions shall not be considered to be a part of the
Member's Aggregate Account balance.
10.4 Aggregation Group. An Aggregation Group for purposes of
this Article is either a Required Aggregation Group or a Permissive Aggregation
Group as hereinafter determined. In determining Aggregation Groups, "Employer"
means an employer as defined in Section 416 of the Code and the regulations
issued thereunder.
(a) Required Aggregation Group. In determining a Required
Aggregation Group hereunder, each plan of the
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<PAGE> 81
Employer in which a Key Employee is a participant, and each other plan
of the Employer which enables any plan in which a Key Employee
participates to meet the requirements of Code Sections 401(a)(4) or
410, will be required to be aggregated. Such group shall be known as a
Required Aggregation Group. In the case of a Required Aggregation
Group, each plan in the group will be considered a Top Heavy Plan if
the Required Aggregation Group is a Top Heavy Group. No plan in the
Required Aggregation Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group.
(b) Permissive Aggregation Group. The Employer may also
include any other plan not required to be included in the Required
Aggregation Group, provided the resulting group, taken as a whole,
would continue to satisfy the provisions of Code Sections 401(a)(4) and
410. Such group shall be known as a Permissive Aggregation Group. In
the case of a Permissive Aggregation Group, only a plan that is part of
the Required Aggregation Group will be considered a Top Heavy Plan if
the Permissive Aggregation Group is a Top Heavy Group. No plan in the
Permissive Aggregation Group will be considered a Top Heavy Plan if the
Permissive Aggregation Group is not a Top Heavy Group.
(c) Aggregation of Multiple Plans. When more than one plan is
aggregated, the Aggregate Accounts (including distributions for Key
Employees and all Employees) are determined separately for each plan as
of each plan's Determination Date. The plans are then aggregated by
adding the results of each plan as of the Determination Date for such
plans that fall within the same calendar year.
10.5 Top Heavy Plan Requirements. For any Plan Year in which
the Plan is considered to be a Top Heavy Plan, the Plan shall:
(a) limit the Considered Compensation maximum dollar amount
pursuant to Article I, Section 1.13; and
(b) require minimum allocations to Non-Key Employees pursuant
to Section 10.6; and
(c) replace the vesting schedule in Article VII, Section
7.5(a) of this Plan with the following:
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<TABLE>
<CAPTION>
Percentage of
Participating Employee's
Years of Service Account that Becomes Vested
---------------- ---------------------------
<S> <C> <C>
Less than two years . . . . . . . . . . 0%
Two years . . . . . . . . . . . . . . . 20%
Three years . . . . . . . . . . . . . . 40%
Four years . . . . . . . . . . . . . . 60%
Five years . . . . . . . . . . . . . . 80%
Six years or more . . . . . . . . . . . 100%
</TABLE>
10.6 Allocations to Non-Key Employees. For any Plan Year in which the
Plan is determined to be a Top Heavy Plan, the following allocation provisions
shall be operational and shall supplement Article IV, Section 4.3.
(a) Minimum Allocations Required for Top Heavy Plan Years.
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of
the total of the Employer Contributions, Employer Matching
Contributions, any reallocated Forfeitures and Deferral Contributions
allocated to the Member's Account of each Non-Key Employee shall be
equal to at least three percent (3%) of such Non-Key Employee's
Considered Compensation. However, should the sum of the total of the
Employer Contributions, Employer Matching Contributions, any
reallocated Forfeitures and Deferral Contributions allocated to the
Member's Account of each Key Employee for such Top Heavy Plan Year be
less than three percent (3%) of each Key Employee's Considered
Compensation, the sum of the total of the Employer Contributions and
Employer Matching Contributions, any reallocated Forfeitures allocated
to the Member's Account of each Non-Key Employee shall be equal to the
largest percentage allocated to the Member's Account of any Key
Employee. For allocation purposes, where contributions to Key Employees
are less than three percent (3%) of Considered Compensation amounts
contributed by Key Employees to a salary deferral plan must be included
as part of such Key Employee's Considered Compensation for purposes of
determining contributions made on behalf of Key Employees.
(b) Extra Minimum Allocation Permitted for Top Heavy Plans
other than Super Top Heavy Plans. If a Key Employee is a Member in both
a defined contribution plan and defined benefit pension plan that are
both part of a Top Heavy Group (but neither of such plans is a Super
Top Heavy Plan), the defined contribution and the defined benefit
fractions set forth in Article V, Section 5.2 shall remain unchanged,
provided the Member's Account of
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<PAGE> 83
each Non-Key Employee who is a Member receives an extra allocation (in
addition to the minimum allocation set forth above) equal to not less
than one percent (1%) of such Non-Key Employee's Considered
Compensation.
(c) Computation of the Minimum Contribution. For
purposes of the minimum allocations set forth above, the percentage
allocated to the Member's Account of any Key Employee shall be equal
to the ratio of the sum of the total of the Employer Contribution,
Employer Matching Contribution, any reallocated Forfeitures and
Deferral Contribution allocated on behalf of such Key Employee
divided by the considered Compensation for such Key Employee.
(d) Eligibility for the Minimum Contribution. For any
Plan Year in which the Plan is a Top Heavy Plan, the minimum
allocations set forth above shall be allocated to the Accounts of all
Non-Key Employees who are Members and who are employed by the Employer
on the last day of the Plan Year, including Non-Key Employees who are
Members but have failed to complete a Year of Service regardless of
compensation.
(e) Alternative Methods of Complying with the Minimum Benefit
Requirement. Notwithstanding anything herein to the contrary, in any
Plan Year in which a Non Key Employee is a Member in both this Plan and
a defined benefit pension plan, and both such plans are Top Heavy
Plans, the Employer shall not be required to provide a Non-Key Employee
with both the full separate minimum defined benefit plan benefit and
the full separate defined contribution plan allocations. Therefore, for
Non-Key Employees who are participating in a defined benefit plan
maintained by the Employer and the minimum benefits under Section
416(c)(2) of the Code are accruing to a Non-Key Employee under such
Plan, the minimum allocations provided for above shall not be
applicable, and no minimum contribution shall be made to the Plan on
behalf of the Non-Key Employee. Alternatively, the Employer may satisfy
the minimum benefit requirement of Section 416(c)(1)(E) of the Code for
the Non-Key Employee by providing any combination of benefits and/or
contributions that satisfy the safe harbor rules contained in Treasury
Regulation Section 1.416-1(M-12).
(f) Accounting. The Administrative Committee may establish a
second Account for each Member to which allocations are credited for
Plan Years in which the Plan is a Top Heavy Plan or a Super Top Heavy
Plan. Such separate Accounts shall be credited with income allocations
and earning adjustments pursuant to Article IV, Section 4.5 and 4.6.
Contributions to each Member's top heavy Account shall be invested
pursuant to such
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<PAGE> 84
Member's instruction regarding the investment of his Deferral
Contributions, Employer Matching Contributions (if any), Employer
Contributions (if any) and his non-top heavy Account.
ARTICLE XI.
Other Qualified Plans
11.1 Transfers from Other Qualified Plans. No transfers of any type
are allowed into this Plan from any other plan or from an Individual Retirement
Account.
11.2 Transfers to Other Qualified Plans. The Administrative Committee
may, upon written request of a Member otherwise entitled to receive a
distribution of benefits under Article IX, direct the Trustee to transfer the
vested amount of such Member's Account hereunder to another qualified plan
meeting the requirements of Section 401(a) of the Code which is maintained by
the Signatory Company or a successor employer of the Member and which makes
provision for receiving such transferred assets. The assets so transferred shall
be accompanied by written instructions from the Administrative Committee
identifying this Plan, the other plan, the name of the Member, his one hundred
percent (100%) vested interest, the actual Employer Contributions and Employer
Contributions of the Signatory Company and the current value of the assets
attributable thereto. Prior to the transfer of any assets, the Trustee must be
satisfied that the holding of such assets is permitted in the transferee trust.
Upon receipt of such written instructions, the Trustee shall effect the transfer
of the Member's Account. Such transferred assets shall be credited to such
Member's Account in the transferee plan and trust as a fully vested portion
thereof.
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<PAGE> 85
ARTICLE XII.
Administrative Committee
12.1 Appointment, Resignation and Removal. The Board of Directors of
the Corporation shall appoint an Administrative Committee of one or more
persons, the members of which shall serve until resignation, death or removal.
Any member of the Administrative Committee may resign at any time by mailing or
delivering written notice of such resignation to the Board of Directors of the
Corporation thirty (30) days before the effective date of such resignation. Such
notice may be waived by written consent of the Corporation. Any member of the
Administrative Committee may be removed by the Board of Directors of the
Corporation with or without cause. Vacancies in the Administrative Committee
rising by resignation, death, removal or otherwise shall be filled by such
persons as may be appointed by the Board of Directors of the Corporation. Each
member of the Administrative Committee shall, before entering upon the
performance of his duties, qualify by signing a consent to serve as a member of
the Administrative Committee under and pursuant to this Plan and by filing such
consent with the Corporation.
12.2 Rights, Powers and Authority. The Administrative Committee shall
have general supervision of the administration of the Plan and Trust according
to the terms and provisions of this Amendment and Restatement and shall have all
powers necessary to accomplish such purposes, including, but not limited to, the
right, power, discretion and authority:
(a) To make rules and regulations for the administration of
the Plan and Trust which are not
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<PAGE> 86
inconsistent with the terms and provisions hereof; provided, that such
rules and regulations are evidenced in writing and copies thereof are
delivered to the Trustee and to each Signatory Company;
(b) To construe in its sole and absolute discretion in a
manner that is not arbitrary or capricious all terms, provisions,
conditions and limitations of the Plan and Trust; and its construction
thereof, made in good faith and without discrimination in favor of or
against any Member, shall be final and conclusive on all parties at
interest;
(c) To correct any defect or supply any omission or reconcile
any inconsistency which may appear in the Plan and Trust, in such
manner and to such extent as it shall deem expedient to carry the Plan
and Trust into effect for the greatest benefit of all parties in
interest, and its judgment of such expediency shall be final and
conclusive on all parties at interest;
(d) To select, employ and compensate from time to time such
consultants, actuaries, accountants, attorneys and other agents and
employees as the Administrative Committee may deem necessary or
advisable for the proper and sufficient administration of the Plan or
Trust; and any agent or employee so selected by the Administrative
Committee may be a person or firm then, theretofore, or thereafter
serving any Signatory Company in any capacity;
(e) To determine in its sole and absolute discretion in a
manner that is not arbitrary or capricious all questions relating to
the eligibility of Employees to become Members, and to determine the
Years of Service and the amount of Considered Compensation upon which
the benefits of each Member shall be calculated;
(f) To determine all questions in its sole and absolute
discretion in a manner that is not arbitrary or capricious relating to
the administration of the Plan and Trust; including, but not limited
to, differences of opinion which may arise between a Signatory Company,
the Trustee, a Member or any of them; and, whenever it is deemed
advisable, to determine such questions in order to promote the uniform
and nondiscriminatory administration of the Plan and Trust for the
benefit of all parties at interest; and
(g) To direct and instruct the Trustee in all matters
relating to the payment of Plan benefits.
12.3 Administration. Whenever, in the administration of the
Plan, any action is taken action by the Administrative Committee,
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<PAGE> 87
such action shall be uniform in nature as applied to all persons similarly
situated and no such action shall be taken which will discriminate in favor of
Members who are officers, shareholders, partners or highly compensated. The
Administrative Committee shall keep records containing all relevant data
pertaining to individual Members and their rights under the Plan and is charged
with the duty of seeing that Member receives the benefits to which he is
entitled. Any Employee may consult with the Administrative Committee on any
matter or matters relating to the Plan. The Administrative Committee shall
supply each Member with a designation of beneficiary form which may be completed
and signed by the Member pursuant to Article VI, Section 6.2 and filed with the
Administrative Committee, and with any other forms it shall require in
connection with the administration of the Plan.
12.4 Annual Audit of Plan. Unless otherwise relieved of the
responsibility to file audited financial statements with the Department of
Labor, if the Plan has one hundred (100) or more Members, it shall be the duty
and responsibility of the Adminis trative Committee to engage, on behalf of all
Members, an independent Certified Public Accountant who shall conduct an annual
examination of any financial statements of the Plan and Trust and of other books
and records of the Plan and Trust as the Certified Public Accountant may deem
necessary to enable him to form and provide a written opinion as to whether the
financial statements and related schedules required to be filed with the
Department of Labor or furnished to each Member are presented fairly and in
conformity with generally accepted accounting principles applied on
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<PAGE> 88
a basis consistent with that of the preceding Plan Year. Such examination shall
be conducted in accordance with generally accepted auditing standards and shall
involve such tests of the books and records of the Plan and Trust as the
Certified Public Accountant considers necessary. However, if the statements
required to be submitted as part of the reports to the Department of Labor are
prepared by a bank or similar institution or insurance carrier regulated and
supervised and subject to periodic examination by a state or federal agency and
if such statements are certified by the preparer as accurate and if such
statements are, in fact, made a part of the annual report to the Department of
Labor, then the examination required by the foregoing provisions of this section
shall be optional with the Administrative Committee.
12.5 Chairman and Secretary. The Administrative Committee shall select
a Chairman from among its members who shall preside at all meetings of the
Administrative Committee and who shall be authorized to execute all documents in
the name of the Adminis trative Committee. In addition, it shall select a
Secretary who may or may not be a member of the Administrative Committee and who
shall keep the minutes of the Administrative Committee's proceedings and all
records, documents and data pertaining to the Administrative Committee's
supervision of the administration of the Plan and Trust.
12.6 Quorum and Voting Majority. A majority of the members of the
Administrative Committee shall constitute a quorum for the transaction of
business, and the vote of a majority of the members present and voting at any
meeting shall decide any question brought
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<PAGE> 89
before such meeting. The Administrative Committee may decide any question by the
vote, taken without a meeting, of a majority of its members.
12.7 Limitation on Voting. A member of the Administrative Committee
who is also a Member hereunder shall not vote or act upon any matter relating
solely to himself.
12.8 Delegation of Rights, Powers and Duties. The Chairman or the
Secretary of the Administrative Committee may execute any certificate or other
written evidence of the action of the Admin istrative Committee. The
Administrative Committee may delegate any of its rights, powers, and duties to
any one or more of its members, including the power to execute any document on
behalf of the Administrative Committee, in which event the Administrative
Committee shall notify the Trustee, in writing, of such action and the name or
names of its members so designated. The Trustee thereafter shall accept and may
rely upon any document executed by such member or members as representing action
by the Administrative Committee until the Administrative Committee shall file
with the Trustee a written revocation of such designation.
12.9 Liability. Except to the extent that such liability is created by
Section 405 of the Act, no member of the Administrative Committee shall be
liable for any act or omission of any other member of he Administrative
Committee, nor for any act or omission on his own part, except for his own gross
negligence or willful misconduct, nor for the exercise of any power or
discretion in the performance of any duty assumed by him hereunder.
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<PAGE> 90
12.10 Compensation and Expense. The members of the Administrative
Committee shall serve without compensation for their services, but all expenses
of the Administrative Committee, includ ing premiums for bonds for each member
thereof as required by Section 12.11 hereof, shall be paid by each Signatory
Company in the proportion that the total amount in the Accounts of the Members
of such Signatory Company bears to the total amount in the Accounts of the
Members of all Signatory Companies; provided, however, that at the election of
all of the Signatory Companies, such expenses (except the premiums for the
required bonds under Section 12.11) may be paid from the Trust Fund.
12.11 Bonds. Each and every member of the Administrative Committee
shall be required to give bond for the faithful performance of his duties, the
amount of which shall be fixed at the beginning of each Plan Year. The amount of
each bond shall be determined annually by the Board of Directors of the
Corporation but shall not be less than ten percent (10%) of the amount of funds
handled. Unless otherwise required by the Secretary of Labor, however, no bond
shall be less than one thousand dollars ($1,000) nor more than five hundred
thousand dollars ($500,000). For purposes of fixing the amount of the bond, the
amount of funds handled shall be determined by the funds handled by the
Administrative Committee during the preceding Plan Year, or, if the Plan had no
preceding Plan Year, the amount of funds to be handled during the current Plan
Year by the Administrative Committee. The bond shall provide protection to the
Plan against loss by reason of acts of fraud or dishonesty on the part of the
members of the
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<PAGE> 91
Administrative Committee, directly or through connivance with others.
12.12 Indemnity. The Signatory Companies shall indemnify and save the
members of the Administrative Committee, and each of them, harmless from any and
all claims, losses, damages, expenses (including counsel fees approved by the
Administrative Committee) and liabilities (including any amounts paid in
settlement with the Administrative Committee's approval) or other effects and
consequences arising from any act, omission or conduct in their official
capacity, except when the same is judicially determined to be due to the gross
negligence or willful misconduct of such member. Any amounts paid or owing under
this Section 12.12 shall be considered as an expense of the Administrative
Committee to be paid by the respective Signatory Companies as provided in
Section 12.10 hereof. It is expressly provided, however, that any excise tax
assessed against any member or members of the Administrative Committee pursuant
to the provisions of Section 4975 of the Code shall not, for the purposes of
this Plan and Trust, be considered an expense of the Administrative Committee to
be paid by the Signatory Companies as hereinabove provided.
12.13 Reporting and Disclosure. The Administrative Committee shall file
or cause to be filed with the appropriate office of the Internal Revenue Service
and the Department of Labor all reports, returns, notices and other information
required under the Act or Code, including, but not limited to, the plan
description, summary plan description, annual reports and amendments thereto,
requests for determination letters, annual
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<PAGE> 92
reports and registration statement required by Section 6057(a) of the Code,
returns and reports required by Section 6047(c) of the Code, and shall provide
the Members and their Beneficiaries with such information as may be required by
the Act or Code. Nothing contained in this Plan shall give any Member or
Beneficiary the right to examine any data or records reflecting the compensation
paid to any other Member or Beneficiary.
12.14 Quarterly Statement to Members. Within one hundred twenty (120)
days after the end of each calendar quarter, the Administrative Committee shall
transmit to each Member or Beneficiary a written statement showing, as of such
calendar quarter:
(a) The balance in his Account as of the last day of the
preceding calendar quarter;
(b) The amount of Deferral Contributions, and Employer
Matching Contributions (if any) and Employer Contributions (if any)
allocated to his Account for such calendar quarter;
(c) The adjustment of his Account to reflect his share of the
income, valuation adjustments and expenses of the Trust for such
calendar quarter;
(d) The new balance in his Account; and
(e) Such other information as may be required under
the Code and regulations thereunder.
12.15 Signatory Company to Supply Information. To enable the
Administrative Committee to perform its functions, the Signatory Company shall
supply full and timely information to the Administrative Committee on all
matters relating to the compensation of all Members, their Hours of Service,
their Years of Service, their retirement, death, disability, or termination of
employment and such other pertinent facts as the Administrative
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<PAGE> 93
Committee may require; and the Administrative Committee shall advise the Trustee
of such of the foregoing facts as may be pertinent to the Trustee's duties under
the Plan. The Administrative Committee may rely upon such information as is
supplied by the Signatory Company and shall have no duty or responsibility to
verify such information.
ARTICLE XIII.
Trustee
13.1 Acceptance and Holding of Funds. The Trustee shall retain, manage,
administer and hold the Trust Fund in accordance with the terms of this Plan and
Trust. The Trustee shall receive any securities or other property that are
tendered to the Trustee and that the Trustee deems acceptable. The Trustee shall
have no duty to compel any Employer Matching Contribution or Employer
Contribution to the Trust Fund by a Signatory Company.
13.2 Responsibility for Actions. The Trustee shall not be responsible
for any acts or omissions of the Administrative Committee and may assume that
the Administrative Committee is discharging its duties under this Plan until and
unless it is notified to the contrary, in writing, by any person known to be a
Member of the Plan or by a Signatory Company. If the Trustee receives such
notice, the Trustee may exercise its own discretion and may apply to a court of
competent jurisdiction for guidance with respect to the disposition of the Trust
Fund or any other matter. Any powers granted to the Trustee that are to be
exercised according to the direction of the Administrative Committee shall be
exercised by the Trustee exactly as directed by the Administrative
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<PAGE> 94
Committee in a written instrument signed by the person or persons authorized to
sign for the Administrative Committee and delivered to the Trustee. The Trustee
shall have absolutely no liability for any loss or breach of trust of any kind
which may result from any action or failure of action due to its compliance with
written direction from the Administrative Committee (whether or not such action
is to be taken solely at the direction of the Administrative Committee) or for a
failure on the part of the Administrative Committee to give a written direction
properly or within a required period of time. The Trustee may accept as true all
papers, certificates, statements and representations of fact that are presented
to it without investigation or verification if the Trustee believes them to be
genuine, to have been signed by the Administrative Committee and to be the act
of the Administrative Committee, and may rely solely on the written advice of
the Administrative Committee on any question of fact. If at any time the
Administrative Committee shall fail to give directions or instructions to the
Trustee or to express its consent and approval to proposed action within a
reasonable time after consent and approval is requested by the Trustee, the
Trustee, although being under no obligation to do so, may act (and shall be
protected in so acting) without such directions, instructions, consent or
approval and may exercise its own discretion and judgment as seems appropriate
and advisable under the circumstances in order to effectuate the purposes of
this Plan.
13.3 Resolutions of Board of Directors. The Trustee shall be fully
protected in relying upon a resolution of the Board of
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<PAGE> 95
Directors of the Corporation, duly certified by the Corporation's secretary or
assistant secretary, as to the membership of the Administrative Committee until
a subsequent resolution is filed with the Trustee by the Board of Directors.
13.4 Judicial Protection. The Trustee may seek judicial protection for
any action or proceeding it deems necessary to settle the accounts of the
Trustee; a judicial determination or a declaration judgment as to a question of
construction of the Plan or Trust; or judicial instruction as to action under
this Plan or Trust. The Trustee need join only the Administrative Committee and
the Signatory Company as parties defendant although the Trustee may join other
parties. The district court of Harris County, Texas, shall have jurisdiction and
venue in all such matters.
13.5 Dealings with Third Parties. No person dealing with the Trustee
shall be required to verify the application by the Trustee for Trust purposes of
any money paid or other property delivered to the Trustee. All persons dealing
with the Trustee shall be entitled to rely upon the representations of the
Trustee as to its authority and are released from any duty of inquiry with
respect thereto. Any action of the Trustee hereunder shall be conclusively
evidenced or all purposes of this Agreement by a certificate duly signed by the
Trustee, and such certificate shall be conclusive evidence of the facts recited
therein and shall fully protect all persons relying upon the truth thereof. Any
person dealing with the Trustee in good faith shall not be required to inquire
whether the Administrative Committee has instructed the Trustee or whether the
Trust is otherwise authorized to take or omit any action. Any
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<PAGE> 96
such person shall be fully protected in acting upon any notice, resolution
instruction, direction, order, certificate, opinion, letter, telegram or other
document believed by such person to be genuine, to have been signed by the
Trustee and to be the act of the Trustee.
13.6 Annual Accounting by Trustee. Within sixty (60) days after the end
of each Plan Year, the Trustee shall render to the Administrative Committee and
to each Signatory Company a written accounting of its administration of the
Trust Fund showing all receipts and disbursements during the preceding Plan Year
and the market value of the assets of the Trust Fund as of the end of such Plan
Year. The written approval of any accounting by the Administrative Committee as
to all matters and transactions stated or shown herein relating to the Trust
shall be final and binding upon the Administrative Committee, each Signatory
Company and upon all persons who shall then be or shall thereafter become
interested in such Trust and the Trustee shall be released and discharged as to
all items, matters and things set forth in such accounting as if such accounting
had been settled by decree of a court of competent jurisdiction. The failure of
the Administrative Committee to notify the Trustee of its disapproval of such
accounting within ninety (90) days after receipt of any such accounting shall be
equivalent to written approval. The Trustee shall have, nevertheless, the right
to have its accounts settled by judicial proceeding. The records of the Trustee
as to the Trust Fund may be inspected by the Administrative Committee or
Signatory Company during normal business hours of the Trustee.
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13.7 Preparation of Quarterly Statement to Members. The Trustee shall
provide any assistance and information requested by the Administrative Committee
in conjunction with the preparation of the quarterly statements to Members in
accordance with Section 12.14.
13.8 Resignation of Trustee. The Trustee may resign at any time by
giving sixty (60) days' written notice to the Corporation. Such notice may be
waived by written consent of the Corporation. Upon such resignation, the Trustee
shall within a reasonable time render to the Administrative Committee and to
each Signatory Company a written account of its administration of the Trust for
the period following that which was covered by the last annual accounting,
through the effective date of resignation.
13.9 Removal of Trustee. The Corporation may remove any Trustee at any
time by giving sixty (60) days' written notice. Such notice may be waived by
written consent of the Trustee being removed. In the event of removal, the
Trustee shall be under the same duty to settle it accounts as provided in
Section 13.6 above.
13.10 Appointment of Successor Trustee. The resignation or removal of
a Trustee shall not terminate the Trust. In the event of a vacancy in the
position of Trustee at any time, the Corporation shall designate and appoint a
successor Trustee. Any successor Trustee, upon executing an acknowledged
acceptance of the trusteeship and upon settlement of the accounts and discharge
of the retiring Trustee, shall be vested, without further act on the part of
anyone, with all the estates, titles, rights, powers, duties and discretions
granted to the retiring Trustee. The
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retiring Trustee shall execute and deliver such assignments or other instruments
as may be deemed advisable by the successor Trustee.
13.11 Trustee's Compensation and Expenses. The Trustee may receive such
reasonable compensation as may be agreed upon from time to time; provided,
however, that no person serving as Trustee who receives full-time compensation
from a Signatory Company or group of Signatory Companies shall receive
compensation from the Trust Fund except for reimbursement of expenses properly
and actually paid. All brokerage costs, transfer taxes and expenses incurred in
connection with the investment and reinvestment of the Trust Fund, all income
taxes or other taxes of any kind whatsoever which may be levied or assessed
under existing or future laws upon or with respect to the Trust Fund, and any
interest which may be payable on money borrowed by the Trustee for the purposes
of the Trust, shall be paid from the Trust Fund, and, until paid, shall
constitute a charge upon the Trust Fund. All other administrative expenses
incurred by the Trustee in the performance of its duties, including fees for
legal, appraisal and accounting services rendered to the Trustee, such
compensation to the Trustee as may be agreed upon in writing from time to time
between the Corporation and the Trustee, all premiums for bonds required under
Section 13.12 hereof and all other proper charges and disbursements of the
Trustee, shall be paid by each Signatory Company in the proportion that the
total amount in the Accounts of the Members of such Signatory Company bears to
the total amount in the Accounts of the Members of all Signatory Companies;
provided, however, that at the
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election of all of the Signatory Companies, such expenses (except premiums for
required bonds under Section 13.12 hereof) may be paid from the Trust Fund. It
is expressly provided, however, that any excise tax assessed against any Trustee
pursuant to the provisions of Section 4975 of the Code shall not, for the
purposes of this Plan and Trust, be considered an expense of the Trust to be
paid by the Signatory Companies as hereinabove provided.
13.12 Bonds. Unless otherwise specifically exempted by federal statute
or regulations promulgated thereunder, each and every Trustee shall be required
to give bond for the faithful performance of its duties, the amount of which
shall be fixed at the beginning of each Plan Year. The amount of each bond shall
be determined annually by the Board of Directors of the Corporation but shall
not be less than ten percent (10%) of the amount of funds handled. Unless
otherwise required by the Secretary of Labor, however, no bond shall be less
than one thousand dollars ($1,000) nor more than five hundred thousand dollars
($500,000). For purposes of fixing the amount of the bond, the amount of funds
handled by the Trustee shall be determined by the funds handled by the Trustee
during the preceding Plan Year, or, if the Plan had no preceding Plan Year, the
amount of funds to be handled during the current Plan Year by the Trustee. The
bond shall provide protection to the Plan against loss by reason of acts of
fraud or dishonesty on the part of the Trustee, directly or through connivance
with others. However, this Section 13.12 shall not apply as to any Trustee who
is also a member of the Administrative
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Committee and has given bond as required by Article XI, Section 12.11 hereof.
13.13 Indemnity. The Signatory Companies shall indemnify and save the
Trustee harmless from any and all claims, losses, damages, expenses (including
counsel fees approved by the Trustee) and liabilities (including any amounts
paid in settlement with the Trustee's approval) or other effects and
consequences arising from any act, omission or conduct in its official capacity,
except when the same is judicially determined to be due to the gross negligence
or willful misconduct of the Trustee. Any amounts paid or owing under this
Section 13.13 shall be considered as an expense of the Trustee to be paid by the
respective Signatory Companies as provided in Section 13.11 hereof. It is
expressly provided, however, that any excise tax assessed against the Trustee
pursuant to the provisions of Section 4975 of the Code shall not, for the
purposes of this Plan and Trust, be considered an expense of the Trustee to be
paid by the Signatory Companies as hereinabove provided.
ARTICLE XIV.
Investment Powers of Trustee
14.1 Standards; Prudent Man Rule. The Trustee shall, in discharging
its duties, act solely in the interest of the Members and Beneficiaries of the
Plan. It must act exclusively for the purpose of providing benefits to Members
and Beneficiaries and for defraying the reasonable expenses of the Plan. The
Trustee shall carry out its duties with the same care, skill, prudence and
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diligence that a prudent man acting in a like capacity would use under
conditions prevailing at that time.
14.2 Powers of Trustee. The Trustee shall have the following authority,
rights, privileges and powers in addition to the authority, rights, privileges
and powers elsewhere vested in the Trustee and those now or hereafter conferred
by law, subject to any limitations stated in this Plan:
(a) To hold, manage, control, collect, use (includ ing the
power to hold any property unproductive of income) and dispose of the
Trust Fund in accordance with the terms of this instrument as if it
were the fee simple owner of such Trust Fund; and
(b) To keep any or all securities or other property in the
name of some other person, partnership or corpora tion with a power of
attorney for transfer attached, or in its name without disclosing its
fiduciary capacity; and
(c) To invest and reinvest the Trust assets, as instructed
pursuant to Section 14.4, in a Money Market Fund primarily consisting
of high quality money market instruments; and
(d) To invest and reinvest the Trust assets, as instructed
pursuant to Section 14.4, in a U. S. Government Securities Fund
consisting of securities issued or guaranteed by the United States
Government and/or its agencies, including, but not limited to, Ginnie
Mae certificates, and other government securities and related
repurchase agreements; and
(e) To invest and reinvest the Trust assets, as instructed
pursuant to Section 14.4, in a Total Return Fund consisting of a
diversified portfolio of common stocks, preferred stocks, convertible
and non-convertible bonds and money market instruments; and
(f) To invest and reinvest the Trust assets, as instructed
pursuant to Section 14.4, in a Blue Chip Fund primarily consisting of
common stocks of large, well-established companies with market
capitalizations of at least $1 billion; and
(g) To invest and reinvest the Trust assets, as instructed
pursuant to Section 14.4, in a Growth Fund primarily consisting of
common stocks issued by Companies
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with consistent sales and earnings which are expected to show high
potential for long-term capital growth; and
(h) To invest and reinvest the Trust assets, as instructed
pursuant to Section 14.4, in a Company Stock Fund in which all amounts
are invested in Team, Inc. Common Stock; and
(i) To invest and reinvest the Trust assets, as instructed
pursuant to Section 14.4, in a Participant Loan Fund in which all
amounts are invested in Participant loans with each Participant's
contribution allocated to this fund equal to his or her loan from the
fund and with earnings based on interest earned by the fund on these
loans; and
(j) To vote, either in person or by proxy, with or without
power of substitution, any stocks, bonds or other securities held by
it; to exercise any options appurte nant to any stocks, bonds or other
securities for the conversion thereof into other stocks, bonds or secu
rities; to exercise any rights to subscribe for additional stocks,
bonds or other securities and to make any and all necessary payments
thereof; and
(k) To collect the principal and income of the Trust as the
same may become due and payable and to give binding receipt therefor;
and
(l) To institute, join in, maintain, defend, compromise,
submit to arbitration or settle any liti gation, claim, obligation or
controversy in favor of or against the Trust Fund, all in the name of
the Trustee and without the joinder of any Member; and
(m) From time to time transfer to a common or pooled trust
fund maintained by any corporate Trustee hereunder or any affiliate of
such Trustee, all or such part of the Trust Fund as the Trustee may
deem advisable and such part or all of the Trust Fund so transferred
shall be subject to all the terms and provisions of the common or
pooled trust fund which contemplate the commingling for investment
purposes of such trust assets with trust assets of other employees'
profit sharing and pension plans established by other public
institutions and organizations. The Trustee may, from time to time,
withdraw from such common or pooled trust fund all or such part of the
Trust Fund as the Trustee may deem advisable; and
(n) To partition any property or interest held as part of the
Trust Fund and to pay or receive such money or property necessary or
advisable to equalize differ ences; to make any distribution from the
Trust Fund in
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cash or in kind, or both (including an undivided interest in any
property) or in any other manner (including composing shares
differently) and to value any property belonging to the Trust Fund,
which valuation at all times shall be binding upon the Signatory
Company and all Members; and
(o) To loan or borrow money in any manner (includ ing joint
and several obligations) with or without security, upon such terms as
the Trustee may deem advis able regardless of the duration of the Trust
created by this instrument and to mortgage (including the making of
purchase money mortgages), pledge or in any other manner encumber all
or any part of the Trust Fund as the Trustee may deem advisable.
However, this Section shall not apply to purchases of Qualifying
Employer Securities or Employer Stock; and
(p) To select, employ and compensate such lawyers, brokers,
banks, investment counsel or other agents or employees and to delegate
to them such of the duties, rights and powers of the Trustee (including
the power to vote shares of stock) as the Trustee deems advisable in
administering the Trust Fund; and
(q) To appoint any person or corporation in any state of the
United States to act as ancillary Trustee with respect to any portion
of the Trust Fund. Any ancillary Trustee shall have such rights,
powers, duties and discretions as are delegated to it by the Trustee
but shall exercise the same, subject to such limitations or further
directions of the Trustee as shall be specified in the instrument
evidencing its appointment. Any ancillary Trustee shall be accountable
solely to the Trustee and shall be entitled to reasonable compensation;
and
(r) To exercise all the rights, powers, options and privileges
now or hereafter granted to trustees under the Texas Trust Code, except
such as conflict with the terms of this instrument. So far as possible,
no subsequent legislation or regulation shall limit the rights, powers
or privileges granted in this Plan or in the Texas Trust Code, as it
now exists. The Trustee shall have, hold, manage, control, use, invest
and reinvest, disburse and dispose of the Trust Fund as if the Trustee
were the owner thereof in fee simple instead of in trust, subject only
to such limitations as are contained herein or such of the laws of the
State of Texas as cannot be waived. The instrument shall always be
construed in favor of the validity of any act or omission of the
Trustee; and
(s) To make a loan or loans to Members under such terms and
conditions as provided in Article XV hereof.
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14.3 Prohibited Transactions. Except as elsewhere permitted
in the Act:
(a) The Trustee shall not cause the Plan to engage in a
transaction if it knows, or should know, that such transaction
constitutes a direct or indirect:
(1) Sale, exchange or leasing of any property between
the Plan and a party in interest;
(2) Lending of money or other extension of credit
between the Plan and a party in interest, except for exempt
and authorized transactions;
(3) Furnishing of goods, services or facilities
between the Plan and a party in interest;
(4) Transfer to, or use by or for the benefit of, a
party in interest of any assets of the Plan; or
(5) Acquisition on behalf of the Plan of any
Employer Security or Employer Real property in violation
of Section 407(a) of said Act.
(b) The Trustee who has authority or discretion to control or
manage the assets of a Plan shall not permit the Plan to hold any
Employer Security or Employer Real Property if it knows, or should
know, that holding such security or real property violates Section
407(a) of said Act.
(c) The Trustee shall not:
(1) Deal with the assets of the Plan in its own
interest or for its own account;
(2) In his individual capacity or any other capacity
act in any transaction involving the Plan on behalf of a party
(or represent a party) whose interests are adverse to the
interests of the Plan or the interests of its Members or
Beneficiaries; or
(3) Receive any consideration for its own personal
account from any party dealing with the Plan in connection
with a transaction involving the assets of the Plan.
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(d) A transfer of real or personal property by a party in
interest to the Plan shall be treated as a sale or exchange if the
property is subject to a mortgage or similar lien which the Plan
assumes or if it is subject to a mortgage or similar lien which a party
in interest placed on the property within the ten-year period ending on
the date of the transfer.
(e) Except as otherwise permitted in the Act:
(1) The Plan shall not acquire or hold:
(A) Any Employer Security
which is not a Qualifying Employer
Security, or
(B) Any Employer Real Property
or Qualifying Employer Real Property.
(f) For purposes of determining the time at which a Plan
acquires Employer Real Property for purposes of this section, such
property shall be deemed to be acquired by the Plan on the date on
which the Plan acquires the property or on the date on which the lease
to the Signatory Company (or Affiliated Company) is entered into,
whichever is later.
(g) The Trustee shall not acquire any collectibles. For
purposes for this subsection, "collectibles" means any work of art, any
rug or antique, any metal or gem, any stamp or coin, any alcoholic
beverage, or any other tangible personal property specified by the
Secretary of Labor or Secretary of the Treasury.
14.4 Investment of Contributions. Each Member shall have the right to
elect, in writing, on a form provided by the Administrative Committee to have
the Deferral Contributions and Employer Matching Contributions which are
allocated to his Account invested in such classes of investments as are selected
by the Administrative Committee and offered for Members' investment on a
uniform, nondiscriminatory basis. The Administrative Committee shall then
instruct the Trustee to invest the Deferral Contributions and Employer Matching
Contributions in the manner and proportions instructed by the Member. The Member
may elect any
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combination of investments in these Funds in increments of five percent (5%).
A Member may elect to change the investment of his present Kemper Fund
Account once each day by contacting Kemper. Such changes will be limited by the
rules governing each fund. The investment of future contributions and investment
in Team, Inc. stock to be made on his behalf may be changed by notifying the
Administrative Committee in writing. All investment election changes must be in
increments of five percent (5%). Investment election changes to a Member's
present Account or Kemper Fund shall be effective immediately. Investment
election changes to the investment of future contributions in Team, Inc. stock
shall be effective on the Entry Date coincident with or next following fifteen
days after the election change is received by the Administrative Committee.
As to any other contributions and amounts, including amounts
attributable to any Employer Contributions, the Administrative Committee shall
have the right to direct the Trustee as to the investment of these amounts in
any of the classes of investments made available to the Members under this Plan
including the fund containing Team, Inc. Stock. In addition, the Administrative
Committee shall retain this right of direction with respect to any other
contributions or funds in the Account of a Member for which the Administrative
Committee has not received a direction from such Member.
14.5 Investment Manager. The Corporation's Board of Directors may
appoint an Investment Manager as the named fiduciary to
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establish an investment policy and to recommend to the Trustee the investment of
the Trust Fund. The Investment Manager shall serve at the will of the Directors.
By appointment of an Investment Manager under this Section 14.5, the Corporation
intends that such Investment Manager be an "investment manager" as defined under
Section 3(38) of the Act and that such Investment Manager has acknowledged in
writing that he is a fiduciary with respect to this Plan.
ARTICLE XV.
Loans to Members
15.1 Application and Limitation. Upon the written application of any
Member, the Administrative Committee, in accordance with its uniform,
nondiscriminatory policy, may make a loan or loans to such Member. The Trustee
shall have no power or responsibility to administer or make interpretations
under this Article XV and shall be directed by the Administrative Committee in
any action it takes under this Article. If the Member is married at the time of
the application, written spousal consent regarding the amount of the loan and
the possible reduction of the Member's Account balance as a result of default
shall be obtained within the 90-day period ending on the date the loan is made,
and such consent shall meet requirements comparable to those set forth in
Section 417(a)(2) of the Code. The preceding sentence shall not apply if the
Administrative Committee does not have actual knowledge of such marriage or the
Member reasonably demonstrates that the whereabouts of his spouse is unknown.
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The aggregate amount of all such loans to any Member shall not exceed
the lesser of:
(a) $50,000, reduced by the excess (if any) of
(i) the highest outstanding balance of loans
from the Plan during the one-year period
ending on the day before the date on which a
loan is made, over
(ii) the outstanding balance of loans
from the Plan on the date on which a
loan is made, or
(b) one-half (1/2) of the amount in the Member's
Account,
as further limited under Article XV, Section 15.2, unless the Member receiving a
loan which exceeds said limitations and the Administrative Committee agree to
make such a loan, and further agree that the Member shall be responsible for the
payment of any taxes incurred by virtue of such loan. For purposes of computing
(i) the aggregate amount of all loans to any Member, and (ii) the amount in the
Member's Account with respect to Section 72(p) of the Code, and or all other
purposes of this Article XV with respect to Section 72(p) of the Code, this Plan
and all other plans maintained by the Employer, any Affiliated Company, or any
other related organization described in Sections 414(b), 414(c) and 414(m) of
the Code shall be aggregated and treated as one plan. The amount in the Member's
Account will be computed by the Trustee at the time of any such loan. The term
loan includes any amount received as a loan under a contract purchased by the
Plan, such as a life insurance policy, and any assignment or pledge with respect
to such contract.
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15.2 Purposes of Loans. Loans shall be made under the provision of this
Article XV: (a) for the purpose of enabling a Member to meet an emergency
condition in his financial affairs, such as may result from illness, disability,
accident, death, dependent care, or educational needs of the Member or a member
of his family or (b) for the purpose of establishing, preserving or improving
the residence of the Member or a member of his family. In addition, loans may be
made under the provisions of this Article XV one time in a 5-year period for any
legal purpose except for the purposes of purchasing securities. In no event can
there be more than one loan outstanding at any time. The authority herein
granted to the Administrative Committee to approve such loans from the Trust
Fund is for the purpose of assisting a Member to meet situations such as those
described above and shall not be used as a means of distributing benefits before
they otherwise become due. The Administrative Committee shall review Members'
applications for loans on case-by-case basis in accordance with its uniform,
nondiscriminatory policy.
15.3 Terms. All loans to Plan Members granted under this provision
shall be treated as a segregated composite investment pool of the Trust Fund (as
provided in Section 15.6 below) and shall be evidenced by the Member's
promissory note payable to the order of the Trustee. The Administrative
Committee shall have the right to make any reasonable interpretations to
implement the rate of interest charged and shall have the right to modify such
interpretations upon proper notice with respect to all future loans. Such loans
shall bear simple interest at the prime rate
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being charged at that time for loans to commercial borrowers by a major bank in
Harris County, designated by the Administrative Committee, but in no case shall
the Member pay more than the maxi mum legal rate of interest. The terms of any
loan shall be arrived at by mutual agreement between the Administrative
Committee and the Member pursuant to a uniform, nondiscriminatory policy. The
specified maturity date, including extensions, renewals, renego tiations, or
revisions, shall not be later than the earlier of (a) the Member's Normal
Retirement Date (or date of termination of employment, if earlier), or (b)
either five (5) years measured from the date the loan is made by the Trustee,
or, in the event of a home loan as described in Section 15.4, ten (10) years
measured from the date such home loan is made or such other reasonable period of
time as determined under the Code. However, a Member may request a loan with a
maturity date later than the above dates provided he agrees, in writing, to be
responsible for the payment of any taxes incurred by virtue of such maturity
date. Any loan granted under the terms of this Article XV shall be repaid on an
installment basis, with substantially equal determinable periodic payments in
principal and interest, not less often than quarterly. The borrowing Member's
Account shall serve as security for any such loan and the same shall be provided
in the promissory note made by the Member. Every loan applicant shall receive a
clear statement of the charges involved in each loan transaction. This statement
shall include the dollar amount and annual interest rate of the finance charge.
Expenses incurred by the Plan in processing a Member's loan shall be charged
against the borrowing Member.
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15.4 Home Loans. A home loan is any loan used to acquire any dwelling
unit (including, but not limited to, a house, apartment, condominium, or mobile
home not used on a transient basis) which within a reasonable time is to be used
(determined at the time the loan is made) as the principal residence of the
Member.
15.5 Recourse; Prohibition Against Distributions While Loan
Outstanding. No payment out of the Trust Fund shall ever be made to any Member,
Beneficiary, or other individual or entity under this Plan unless and until all
unpaid loans to such Member, and interest hereon, shall have been satisfied in
full. In the event a note is not paid and when due, the Administrative Committee
(or Trustee) may, in addition and without resort to such other remedies as it
may have under the law, give written notice to the Member sent to his last known
address. If the note is not paid within the thirty (30) days from the date of
such notice, the amount standing of the credit of the Member's Account in the
Trust will be charged with, but not actually reduced by, the amount of the
unpaid balance of the loan, together with the interest thereon, and the Member's
indebtedness shall thereupon be discharged. The Administrative Committee shall
then send a written notice to the Member at his last known address which
confirms the amount the Member must include in his income as a distribution from
the Plan. At the time an event requiring a distribution from the Trust Fund
occurs, such as death, disability, retirement or termination of employment, such
amount charged to the Member's Account will be applied to reduce the Member's
interest in such Account. If an event normally requiring a distribution, as
described above, occurs before any
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loan is repaid in full, the unpaid balance thereof, together with the interest
thereon, shall become due and payable and the Trustee shall first satisfy the
indebtedness from the amount in the Member's Account before making any payments
to the Member, or to such other individual or entity as determined under this
Plan.
15.6 Treatment of Loan Proceeds. All Member loans under this Article
shall be segregated into a separate pooled fund. Each member shall be credited
with his share of the repayments of interest received by this fund in proportion
to the outstanding balance of his loan to the aggregate of such balances in the
fund.
15.7 Effect on Right to Participate in Plan. Unless such Member leaves
the employ of a Signatory Company or withdraws from the Plan temporarily or
permanently, such Member shall remain a Member in good standing and shall
continue to participate in the Plan.
15.8 Minimum Loan Amounts. Notwithstanding any other provision of this
Plan, no Member shall be eligible for a loan under the provisions of this
Article XV unless the amount such loan, considered separately without regard to
or adding back to any other outstanding loans of the Member from the Plan,
exceeds the minimum limit uniformly prescribed by the Administrative Committee.
Under current Department of Labor regulations this limit may not be greater than
$1,000.00.
ARTICLE XVI.
Amendment and Termination
16.1 Amendment - General. The Corporation shall have the sole right to
amend this Plan. In the event of any such amendment, each
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other Signatory Company shall be deemed to have consented to the amendment
unless it notifies the Corporation, in writing, that it refuses to ratify the
amendment. In the event that a Signatory Company refuses to ratify to any such
amendment, such refusal to ratify shall constitute a withdrawal from this Plan
by such Signatory Company. Upon the delivery by the Corporation to the Trustee
of a certified copy of the resolution authorizing an amendment of this Plan,
this Plan shall be deemed to have been so amended and all Members and other
persons claiming any interest hereunder shall be bound thereby; provided, that
no amendment:
(a) Shall have the effect of vesting in any Signatory
Company any interest in any property held subject to the terms of
the Trust; or
(b) Shall cause or permit any property held subject to the
terms of the Trust to be diverted to purposes other than the exclusive
benefit of the present or future Members and Beneficiaries; or
(c) Shall substantially increase the duties or liabilities
of the Trustee without its written consent; or
(d) Shall (except as permitted by law) reduce benefits of a
Member.
For purposes of this paragraph, a plan amendment which has the effect
of (1) eliminating or reducing an early retirement benefit or a retirement-type
subsidy, or (2) eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment, shall be treated as
reducing benefits. In the case of a retirement-type subsidy, the preceding
sentence shall apply only with respect to a Member who satisfies (either before
or after the amendment) the preamendment conditions for the subsidy. In general,
retirement-type subsidy is a subsidy that continues after
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retirement, but does not include a qualified disability benefit, a medical
benefit, a social security supplement, a death benefit (including life
insurance), or a plant shutdown benefit (that does not continue after retirement
age). Furthermore, no amendment to the Plan shall have the effect of decreasing
a Member's vested Account balance determined without regard to such amendment as
of the later of the date such amendment is adopted, or becomes effective.
16.2 Amendments Necessary to Comply with Intentions of Signatory
Companies. It is the intention of each Signatory Company that its Employer
Matching Contributions and Employer Contributions to this Plan be deductible
under the applicable provisions of the Code, that such Employer Matching
Contributions and Employer Contributions not be subject to withholding under the
Code or the Federal Insurance Contributions Act; and that such Employer Matching
Contributions and Employer Contributions not be subject to the Fair Labor
Standards Act of 1938, as amended, as part of the "regular rate". The
Corporation shall make such amendments to this Plan as may be necessary to carry
out these intentions. All amend ments to his Plan which may be required for the
purpose of real izing the intentions above stated may be made retroactively.
16.3 Termination with Respect to Signatory Company Without
Establishment of a Successor Plan. A termination of this Plan by any Signatory
Company, as provided below in this Section 16.3, without establishment of a
successor plan, shall constitute a termination only with respect to such
Signatory Company and such termination shall not constitute a termination of
this Plan with
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respect to any other Signatory Company. This Plan shall terminate as to a
Signatory Company upon the happening of any of the following events:
(a) The approval of the Administrative Committee of a written
request by such Signatory Company to terminate the Plan, effective as
of the last day of the Plan Year in which such consent is issued;
(b) Adjudication of the Signatory Company as a "debtor" under
the Bankruptcy Act of 1978 or general assignment by the Signatory
Company to or for the benefit of creditors or dissolution of the
Signatory Company; and/:
(c) Twenty-one (21) years following the death of the last
surviving original Member living at the time this Plan was adopted by
the Signatory Company; provided, however, that this Section 16.3(c)
shall be effective only in the event that the Rule Against Perpetuities
is applicable to the Trust established under this Plan.
Upon termination of this Plan by any Signatory Company without establishment of
a successor plan, the Administrative Committee and the Trust will continue until
the Plan benefit of each Member has been distributed. Plan benefits shall be
computed and, if necessary, the Trust Fund shall be partially or totally
converted to a liquid posture to permit an efficient and equitable distribution.
The Signatory Company will give written notice to the District Director of the
Internal Revenue Service of the fact that the Signatory Company has terminated
or partially terminated the Plan.
Distributions made on account of Plan termination shall be in
accordance with the provisions of Article IX of the Plan and in compliance with
any applicable requirements of the Code or other statutory or regulatory agency.
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Upon termination of the Plan, a Member who is partially vested in
amounts in his Account attributable to Employer Matching Contributions and
Employer Contributions as of such Plan termination shall immediately be fully
vested in accordance with the provisions of Article VII, Section 7.8 of the
Plan. Distributions on account of termination of the Plan shall be made in
accordance with the distribution alternatives set forth in Article IX, Section
9.3 of the Plan.
16.4 Continuation of Plan and Trust by Successor. This Trust shall not
be considered terminated upon the dissolution or liquidation of a Signatory
Company in the event that a successor to the Signatory Company, by operation of
law or by the acquisition of its business interests, shall elect to continue
this Plan and Trust as provide in Article XVI hereof.
ARTICLE XVII.
Continuance of Plan by Successor
17.1 Adoption of Plan by Successor. In the event of the consolidation
or merger of any Signatory Company or the sale by any Signatory Company of its
assets, the resulting successor person, persons, or corporation may continue the
Plan by direction from such person, (if not a corporation); or (if a
corporation) by adopting the same resolution of its Board of Directors and by
executing a proper supplemental Trust Agreement with the Trustee. If, within
ninety (90) days from the effective date of such consolidation, merger or sale
of assets, such successor neither adopts this Plan as provided herein nor adopts
a successor plan for the benefit of the employees of the Signatory Company, then
the
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Plan automatically shall be terminated and the Trust Fund shall be distributed
exclusive to the Members or their Beneficiaries in the manner provided Article
XVI, Section 16.3.
ARTICLE XVIII.
Merger of Plan or Transfer of Plan Assets
18.1 Transfer, Consolidation or Merger with Another Plan. In the event
of (1) a merger or consolidation of the Plan with any other plan or (2) a
transfer of assets and liabilities of the Plan to any other plan, each Member of
the Plan will (if the Plan then terminated) be entitled to receive a benefit
immediately after such merger, consolidation or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before such merger, consolidation or transfer (if the Plan had then been
terminated).
ARTICLE XIX.
Adoption of Plan by a Signatory Company
19.1 Method of Adoption. Any Affiliated Company (or other business
organization) except those with a payroll system which is incompatible with the
Corporation's or otherwise, in the determination of the Administrative
Committee, incapable of making the computations and accountings necessary to
administer the Plan may, with the approval of the Corporation, adopt this Plan
for all or any classification of its Employees, as permitted by Section 401(a)
of the Code. The Plan should be adopted by the Affiliated Company in a manner
which indicates the following:
(a) The particular classification or classifications
of its Employees which are to be eligible for membership in
the Plan; and
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<PAGE> 118
(b) Its agreement to be bound as a Signatory Company by all
the terms, provisions, conditions and limitations of this Plan with
respect to its Employees eligible for membership in this Plan; and
(c) Any other information required by the Administrative
Committee or the Trustee with reference to Employees or Members.
This Plan may be adopted by compliance with the foregoing conditions on or
before the end of any Plan Year.
19.2 Withdrawal from the Plan. Subject to the consent of the
Corporation, any Signatory Company may at any time withdraw from or discontinue
its participation in this Plan either by failure to consent to an amendment as
provided in Article XVI, Section 16.1 or by giving written notice of such
withdrawal to the Trustee and may cause to be segregated from the Trust Fund
that part of the assets held in the Trust Fund for the Accounts of the Members
employed by such Signatory Company at the date of such discontinuance. A
withdrawal, whether or not voluntary, from this Plan by a Signatory Company
shall not of itself constitute a termination of the Plan with respect to such
Signatory Company. A Signatory Company which withdraws, voluntarily or
involuntarily, from this Plan shall, as soon as may be practicable, adopt a
comparable employee benefit plan and trust which shall qualify under Section
401(a) of the Code. The withdrawing Signatory Company shall then file with the
Trustee a written instrument evidencing its discontinuance in this Plan and
shall likewise file with the Trustee a certification by the Administrative
Committee authorizing the segregation from the Trust Fund of the assets
attributable to the Members employed by such Signatory Company. In the event of
segregation as hereinabove provided, the Trustee shall deliver to the successor
Trustee such
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<PAGE> 119
part of the Trust Fund as may be determined by the Administrative Committee to
constitute the appropriate share of the Trust Fund then held with respect to the
Members employed by such Signatory Company. Such former Signatory Company will
thereafter exercise with respect to such Plan and Trust all of the rights and
powers which may be reserved to such Signatory Company under the terms of the
written instruments providing for such segregation as aforesaid. Such
segregating Signatory Company shall likewise file with the successor Trustee
such other written instruments as may be necessary in order to make effective
the continuance as a separate trust (as though such Signatory Company were the
sole creator thereof) of the assets so segregated in accordance with the
provision of this Plan or in accordance with such other plan as may be mutually
agreed upon between such Signatory Company and a successor Trustee.
ARTICLE XX.
Recovery of Employer Contributions
20.1 Initial Approval By Internal Revenue Service. Not withstanding any
other provision of this Plan and Trust Agreement, it is specifically understood
that this Plan and Trust Agreement is adopted and executed by the Signatory
Company upon the condition precedent that the Plan and Trust shall be approved
and qualified by the Internal Revenue Service as meeting the requirements of the
Code and the regulations and rulings issued thereunder with respect to salary
deferral plans and trusts so that the Signatory Company will be permitted to
deduct for federal income tax purposes the amount of the Deferral Contributions,
Employer Contributions (if
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<PAGE> 120
any) and its Employer Matching Contributions (if any) to the Trust under the
Plan, that such Deferral Contributions, Employer Contributions (if any) and
Employer Matching Contributions (if any) will not be taxable to the Members as
income when made and that the Trust will be exempt from federal income tax. In
the event the Internal Revenue Service shall rule that the Plan and Trust are
not so approved and qualified, all Deferral Contributions, Employer
Contributions (if any) and all Employer Matching Contributions (if any) made to
the Trust under the Plan by a Signatory Company prior to the initial
determination by the Internal Revenue Service as to the qualification of the
Plan and Trust shall revert and be repaid by the Trustee to the Signatory
Company. No Member, Eligible Employee, Employee or other person shall have any
right to the Employer Matching Contributions (if any) or Employer Contributions
(if any). However, Deferral Contributions allocated to each Member's Account
shall be paid to such Member. If the Corporation shall determine, however, in
consultation with the Commissioner's representatives, that such failure of
qualification may be cured by steps that the Corporation deems will be in the
interest of it and its Employees, the Corporation may elect to amend the Plan
and/or Trust in order to achieve such qualification rather than cause the
reversion of Deferral Contributions, Employer Contributions (if any) and
Employer Matching Contributions (if any) as herein provided.
20.2 Conditioned on Deductibility. All employer contributions of any
kind to this Plan are expressly made conditioned on being
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<PAGE> 121
allowed a deduction to the Signatory Company for federal income tax purposes.
20.3 Limitations. In the event of the return of any Employer
Contributions to the contributing Employer for any reason permitted under law as
authorized by this Plan, the amount to be so returned shall not include any
income or other earnings while held in the Trust, and such amount to be so
returned shall not be reduced by any losses attributable to such amount while
held in the Trust.
ARTICLE XXI.
Miscellaneous
21.1 Plan is a Voluntary Undertaking by the Signatory Company. The
adoption and maintenance of this Plan and Trust are strictly voluntary
undertakings on the part of the Signatory Company and shall not be deemed to be
a contract between the Signatory Company and any Employee. Nothing contained
herein shall be deemed to give any Employee the right to be retained in the
employment of the Signatory Company, to interfere with the rights of the
Signatory Company to discharge any Employee at any time or to interfere with an
Employee's right to terminate his employment at any time.
21.2 Benefit Provided Solely by the Trust Fund. All benefits payable
under this Plan shall be paid or provided for solely from the Trust and the
Signatory Company assumes no liability or responsibility therefor.
21.3 Nonalienation. No benefit payable or to become payable under the
Plan will, except as otherwise specifically provided by law, be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any
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<PAGE> 122
attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge the same by a Member or Beneficiary prior to distribution as herein
provided shall be absolutely and wholly void, whether such conveyance, transfer,
assignment, mortgage, pledge or encumbrance be intended to take place or become
effective before or after the expiration of the period herein fixed for the
continuance of the said Trust estate; nor will any benefit be in any manner
liable for or subject to the debts, contracts, liabilities, engagements or torts
of the person entitled thereto. The Trustee shall never under any circumstances
be required to recognize any conveyance, transfer, assignment, mortgage or
pledge by a Member or Beneficiary hereunder of any part of the Trust estate or
any interest therein and shall never be required to pay any money or thing of
value thereon or therefor, to any creditor of a Member or Beneficiary or upon
any debt created by a Member or Beneficiary for any cause whatsoever. For
purposes of this Section 21.3, a loan made to a Member or Beneficiary pursuant
to Article XV hereof shall not be treated as an assignment or alienation if such
loan is secured by the Member's vested interest in the amount standing as a
credit to his Account and is exempt from the tax imposed by Section 4975
(relating to tax on prohibited transactions) of the Code, as amended by the Act.
This provision shall not apply to a "qualified domestic relations order" defined
in Section 414(p) of the Code, and those other domestic relations orders
permitted to be so treated by the Administrative Committee under the provisions
of the Retirement Equity Act of 1984. The Administrative Committee shall
establish a written procedure to
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<PAGE> 123
determine the qualified status of domestic relations orders and to administer
distributions under such qualified orders. Further, to the extent provided under
a "qualified domestic relations order," a former spouse of a Participant shall
be treated as the spouse of a surviving spouse for all purposes under the Plan.
21.4 Applicable Law. The provisions of this Plan shall be construed,
administered and enforced according to the Code, as amended, the Act, and, to
the extent applicable, the laws of the State of Texas. All contributions to and
distributions from the Trust shall be deemed to take place in the State of
Texas. The Trustee or Signatory Company may at any time initiate any legal
action or proceeding for the settlement of the accounts of the Trustee, or the
determination of any questions (including questions of construction which may
arise) or for instruction, and the only necessary parties to such action or
proceeding shall be the Trustee and the Signatory Company, except that any other
person or persons may be included as parties defendant at the elections of the
Trust and the Signatory Company.
21.5 Construction. Unless the context clearly indicates to the
contrary, the masculine gender shall include the feminine and neuter, and the
singular shall include the plural. The words "hereof," herein," hereunder" and
other similar compounds of the word "here" shall mean and refer to the entire
Plan and not to any particular provision or section.
21.6 Reference to Code or Act Sections. Reference to the provision of
any particular Section of the Code or Act shall be
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<PAGE> 124
deemed reference to any Section of the Code or Act which may hereafter contain
the same or similar provisions.
21.7 Binding Agreement. This Plan shall be binding upon the adopting
Signatory Companies, the Trustee and their respective successor and assigns, and
upon the Members, their Beneficiaries and their respective heirs and legal
representatives.
21.8 No Joint Venture Implied. The adoption of this Plan by any
Signatory Company shall not create a joint venture or partnership relationship
between it and any other party hereto, nor shall such action ever be construed
as having that effect. Any rights, duties, liabilities or obligations assumed
hereunder by each participating Signatory Company or imposed upon it as a result
of the terms and provisions of this Plan, shall relate to and affect such
Signatory Company alone.
21.9 Copies of Plan Available. Copies of this Plan and any and all
amendments thereto shall be made available for inspection at all reasonable
times at the principal office of the Signatory Company to all Employees, and any
Employee may obtain a copy of them upon request and the payment of a reasonable
reproduction fee.
21.10 Titles and Headings. The titles to and headings of paragraphs in
this Plan are for convenience and reference only and, in the event of any
conflict, the text of this Plan and Trust, rather the such titles or headings,
shall control.
21.11 Counterparts. This Plan and all amendments thereto may be
executed in any number of counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but
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<PAGE> 125
one and the same instrument which may be sufficiently evidenced by any one
counterpart.
21.12 Severability. If any provision of this Plan and Trust shall be
held illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining provisions hereof, but each provision shall be fully
severable and the Plan and Trust shall be construed and enforced as if said
illegal or invalid provision had never been inserted herein.
21.13 Agent for Service of Legal Process. The President of the
Corporation is hereby designated as agent of the Plan for the service of legal
process. Such designated agent may be changed from time to time by action of the
Board of Directors of the Corporation in writing, and such changes shall become
effective upon notification of the U.S. Secretary of Labor.
21.14 Withholding; Reports. The Trustee shall withhold Federal income
tax from all distributions from the Trust Fund to any Distributee (or,
alternatively direct the Trustee to do so, providing the Trustee with such
information as may be required under Treasury Regulations), unless such
Distributee elects a direct rollover of the distribution. For purposes of this
Sec tion 21.14, Distributee means the Member or other individual or entity
entitled to a distribution under this Plan. The manner and amount of withholding
will be determined pursuant to Section 3405 of the Code and the regulations
thereunder. The Distributee shall be timely provided with notice of
Distributee's right to elect a direct rollover to any distribution, notice of
the method of making such election, and notice of any other information required
under
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<PAGE> 126
Section 401(a)(31) or Section 3405 of the Code. Procedures with respect to such
notice requirements and the Distributee's election shall be determined pursuant
to Section 3405 of the Code and the regulations thereunder. The Trustee shall
maintain records, and make returns and reports with respect to distributions and
withholding thereof, if any, as required under Section 6047(e) of the Code and
the regulations thereunder. In addition, the Trustee shall make any reports
required under Sections 402(f) and 6652(j) pertaining to explanations to
recipients of lump sum distributions from the Plan.
21.15 Single Plan. The Plan shall be administered, accounted for and
otherwise treated as a single plan with respect to all the Signatory Companies
that adopt this Plan.
IN WITNESS WHEREOF, this Ninth Amendment and Restatement to the Team,
Inc. Salary Deferral Plan has been entered into and is effective on the dates
set forth above.
TEAM, INC.
By: /s/ WILLIAM A. RYAN
-------------------------------
William A. Ryan, President
/s/ CLARK A. INGRAM
-------------------------------
Clark A. Ingram, Trustee
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<PAGE> 127
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
William A. Ryan, known to me to be the person whose name is subscribed to the
foregoing instrument as President of Team, Inc., and acknowledged to me that he
executed the same for the purposes and consideration therein expressed and in
the capacity therein stated, as the act and deed of said Corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the 15th day of
April, 1996.
/s/ RENEE PIERCE
---------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF T E X A S
My Commission Expires:
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<PAGE> 128
THE STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, the undersigned authority, on this day personally appeared
Clark A. Ingram, known to me to be the person whose name is subscribed to the
foregoing instrument as Trustee, and acknow ledged to me that he executed the
same for the purposes and consideration therein expressed and in the capacity
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE on this the 15th day of
April, 1996.
/s/ RENEE PIERCE
----------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
My Commission Expires:
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<PAGE> 129
APPENDIX A
The following provisions of the Plan are effective January 1, 1987:
Sections 1.3, 1.4, 1.14, 1.20, 1.24, 1.25, 1.26, 1.27 and 1.36.
Article III
123
<PAGE> 1
Exhibit No. 10.4
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
CURT KARGES P.O. BOX 2558
SENIOR VICE PRESIDENT HOUSTON, TX 77252-8078
(713) 216-5929
FAX (713) 216-6004
April 12, 1996
Team, Inc.
1019 South Hood
Alvin, TX 77002
Re: Notification and Waiver under Credit Agreement, dated April 7, 1994, as
Amended and Restated August 24, 1995, (the "Agreement") by and between
Team, Inc. (the "Borrower") and Texas Commerce Bank National Association
(the "Bank")
Gentlemen:
As you know, the Borrower and the Bank entered into a Credit Agreement dated
April 7, 1994, as Amended and Restated on August 24, 1995, that contains certain
covenants and events of default. You are receiving this notice as the Borrower
under the Credit Agreement.
Pursuant to the Credit Agreement, the Borrower covenants in Section 9.14,
Tangible Net Worth, paragraph (i) to "not permit the tangible net worth of the
Borrower and its Subsidiaries to be less than $13,500,000...". This letter is to
advise you that your Tangible Net Worth of $12,100,000 for the quarter ended
February 29, 1996, is in violation of the aforementioned Financial Covenant in
the Credit Agreement for the quarter ended February 29, 1996. The Bank hereby
waives the defaults through the said period and that notwithstanding said
failure, no default or Event of Default shall be deemed to have occurred under
the Credit Agreement as of February 29, 1996, solely because of such failure.
Please understand that this letter does not waive any other requirements not
specifically mentioned in this letter. Except as specifically set forth herein,
all terms and conditions of the Credit Agreement remain in full force and
effect. This letter constitutes the only evidence of our waiver of the above
mentioned violation of the Financial Covenants of the Credit Agreement through
March 1, 1996.
[* Texas Commerce Bank LOGO]
PAGE 1 OF 2 PAGES
<PAGE> 2
TEAM, INC.
WAIVER LETTER APRIL 12, 1996
THIS LETTER, THE AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
This waiver will be effective when you execute and return to us the duplicate
original of this letter.
Sincerely,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
BY: /s/ C.D. Karges
---------------------------------
NAME: C.D. Karges
TITLE: Senior Vice President
AGREED AND ACCEPTED THIS 12TH DAY OF APRIL, 1996
BORROWER: TEAM, INC.
BY: /s/ Margie E. Rogers
----------------------
NAME: Margie E. Rogers
TITLE: Treasurer
PAGE 2 OF 2 PAGES
[* Texas Commerce Bank LOGO]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES OF TEAM, INC. AND
SUBSIDIARIES FOR THE NINE MONTHS ENDED FEBRUARY 29, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-END> FEB-29-1996
<CASH> 2,775,000
<SECURITIES> 0
<RECEIVABLES> 8,650,000
<ALLOWANCES> 204,000
<INVENTORY> 5,748,000
<CURRENT-ASSETS> 18,452,000
<PP&E> 65,472,000<F1>
<DEPRECIATION> 18,339,000<F1>
<TOTAL-ASSETS> 71,073,000
<CURRENT-LIABILITIES> 15,769,000
<BONDS> 42,462,000<F2>
0
0
<COMMON> 1,551,000
<OTHER-SE> 10,542,000
<TOTAL-LIABILITY-AND-EQUITY> 71,073,000
<SALES> 0
<TOTAL-REVENUES> 39,111,000
<CGS> 0
<TOTAL-COSTS> 20,691,000
<OTHER-EXPENSES> 24,417,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,415,000
<INCOME-PRETAX> (9,412,000)
<INCOME-TAX> (1,182,000)
<INCOME-CONTINUING> (8,230,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,230,000)
<EPS-PRIMARY> (1.59)
<EPS-DILUTED> (1.59)
<FN>
<F1>Property, plant and equipment consist of $18,181,000 for core operational fixed
assets and $47,291,000 for the Military Housing Projects' land and buildings.
Accumulated depreciation consists of $12,535,000 for core fixed assets and
$5,804,000 for the Military Housing Project's land and buildings.
<F2>Bonds, mortgages and similar debt consists of $3,697,000 of long-term debt and
other long term obligations and $38,765,000 of non-recourse debt pertaining to
Certificates of Participation financing the military housing projects.
</FN>
</TABLE>
