As filed with the Securities and Exchange Commission on _____________, 1999
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
The Titan Corporation
(Exact name of registrant as specified in its charter)
-------------------
Delaware 95-2588754
(State of incorporation) (IRS Employer Identification No.)
-------------------
3033 Science Park Road
San Diego, California 92121-1199
(858) 552-9500
(Address and telephone number of Principal Executive Offices)
Delfin Systems 401(k) Plan
(Full title of the plan)
--------------
Nicholas J. Costanza, Esq.
Senior Vice President,
General Counsel and Secretary
THE TITAN CORPORATION
3033 Science Park Road
San Diego, California 92121-1199
(858) 522-9500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Copies to:
Barbara Borden, Esq.
COOLEY GODWARD LLP
4365 Executive Drive, Suite 1100
San Diego, California 92121
(858) 550-6000
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================== =================== ============================= ============================= ==============
Title of securities to be Amount to be Proposed maximum Proposed maximum Amount of
registered registered(1) offering price per share(2) aggregate offering price(2) registration
fee
- ------------------------------------ ------------------- ----------------------------- ----------------------------- --------------
<S> <C> <S> <S> <S>
Common Stock (par value $0.01) and
participation interests in the 600,000 shares $15.09375 $9,056,250.00 $2,517.64
Delfin Systems 401(k) Plan (3)
</TABLE>
(1) The shares of Common Stock of The Titan Corporation (the "Registrant")
being registered consist of shares to be acquired in open market purchases
under the Delfin Systems 401(k) Plan (the "Plan").
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) and (h) of the Securities Act of
1933, as amended (the "Securities Act"). The price per share and the
aggregate offering price are based on the average of the high and the low
prices of Registrant's Common Stock on October 28, 1999, as reported on
the New York Stock Exchange.
(3) In addition, pursuant to Rule 416(c) under the Securities Act, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the Plan described herein.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") are incorporated by reference into this
Registration Statement:
1. Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998;
2. Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999;
3. Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999;
4. Registrant's Current Report on Form 8-K dated January 14,
1999;
5. Registrant's Current Report on Form 8-K dated June 9, 1999;
6. The description of the Registrant's Common Stock contained in
its Registration Statement on Form 8-A filed with the
Commission by Electronic Memories and Magnetics Corporation,
dated June 16, 1969; as amended by the Form 8 filed with the
Commission by the Registrant on January 22, 1986, and the Form
8-B/A filed with the Commission by the Registrant on July 31,
1995, are hereby incorporated by reference in this
Registration Statement except as superseded or modified
herein;
7. All documents subsequently filed by the Registrant or the
Delfin Systems 401(k) Plan pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") after the date of this
Registration Statement and prior to the filing of a
post-effective amendment which indicates that all shares of
Common Stock offered pursuant to this Registration Statement
have been sold or which deregisters all shares of Common Stock
then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be part hereof
from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's By-laws provide for indemnification (to the fullest
extent permitted by law) of directors, officers and other agents of the
Registrant against expenses, judgments, fines and amounts paid in settlements
actually and reasonably incurred in connection with any proceeding arising by
reason of the fact that such person is, or was, an officer, director, or agent
of the Registrant. The Registrant also maintains directors and officers
liability insurance coverage and has entered into indemnification agreements
with its directors and officers.
Section 145 of the Delaware General Corporation Law ("DGCL") provides
generally that a corporation shall have the power, and in some cases is
required, to indemnify an agent, including and officer or director, who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the corporation, against certain expenses, judgments, fines,
settlements, and other amounts under certain circumstances.
These indemnification provisions may be sufficiently broad to permit
indemnification of the Registrant's officers and directors for liabilities
(including reimbursement of expenses incurred) arising under the Securities Act.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
Exhibit
4.1 Delfin Systems 401(k) Plan and all amendments to such plan
4.2 Trust Agreement with respect to the trust forming a part of
the Delfin Systems 401(k) Plan
23.1 Consent of Arthur Andersen LLP
24.1 Power of Attorney. Reference is made to the signature pages.
UNDERTAKING PURSUANT TO ITEM 8(b). The Registrant undertakes to have the Plan
and all amendments to the Plan submitted to the Internal Revenue Service in a
timely manner and to make all changes required by the Internal Revenue Service
in order to maintain the qualification of the Plan under Section 401 of the
Internal Revenue Code of 1986, as amended.
<PAGE>
ITEM 9. UNDERTAKINGS
1. The undersigned Registrant hereby undertakes:
a. To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
i. To include any prospectus required by section
10(a)(3) of the Securities Act;
ii. To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
iii. To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in
the Registration Statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
b. That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
c. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
2. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on
_______________, 1999.
THE TITAN CORPORATION
By /s/ Nicholas J. Costanza
Nicholas J. Costanza, Esq.
Sention Vice President,
General Counsel and Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Nicholas J. Costanza, Esq. his or her
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or her substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Gene W. Ray Chairman of the October 29, 1999
- ------------------------------------ Board of Directors,
Gene W. Ray President and Chief
Executive Officer
/s/ Eric M. DeMarco Executive Vice October 29, 1999
- ------------------------------------ President and
Eric M. DeMarco Chief Financial
Officer
/s/ Deanna H. Petersen Vice President and October 29, 1999
- ------------------------------------ Corporate Controller
Deanna H. Petersen
/s/ Charles R. Allen Director October 29, 1999
- ------------------------------------
Charles R. Allen
/s/ Joseph F. Caligiuri Director October 29, 1999
- ------------------------------------
Joseph F. Caligiuri
/s/ Daniel J. Fink Director October 29, 1999
- ------------------------------------
Daniel J. Fink
/s/ Robert Hanisee Director October 29, 1999
- ------------------------------------
Robert Hanisee
/s/ Robert E. LaBlanc Director October 29, 1999
- ------------------------------------
Robert E. LaBlanc
/s/ Thomas G. Pownall Director October 29, 1999
- ------------------------------------
Thomas G. Pownall
/s/ James Roth Director October 29, 1999
- ------------------------------------
James Roth
The Plan.
Pursuant to the requirements of the Securities Act, Delfin Systems, the
administrator of the Delfin Systems 401(k) Plan, has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on
October 29, 1999.
DELFIN SYSTEMS 401(K) PLAN
By: /s/ Nicholas J. Costanza
----------------------------
Nicholas J. Costanza
Title: Senior Vice
President, General Counsel
and Secretary
EXHIBIT INDEX
Exhibit
4.1 Delfin Systems 401(k) Plan and all amendments to such plan
4.2 Trust Agreement with respect to the trust forming part of the
Delfin Systems 401(k) Plan
23.1 Consent of Arthur Andersen LLP
24.1 Power of Attorney. Reference is made to the signature pages.
- --------------------------------------------------------------------------------
Delfin Systems 401(k) Plan
Delfin Systems 401(k) Plan Document
1996 Charles Schwab & Co., Inc. Member SIPC/NYSE.
All rights reserved. Schwab Retirement Plan Services, Inc.
is an affiliate of Charles Schwab & Co., Inc.
<PAGE>
DELFIN SYSTEMS
401(k) PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
<PAGE>
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER.........................15
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY.............................16
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR..............................16
2.4 RECORDS AND REPORTS.................................................17
2.5 APPOINTMENT OF ADVISERS.............................................17
2.6 PAYMENT OF EXPENSES.................................................18
2.7 CLAIMS PROCEDURE....................................................18
2.8 CLAIMS REVIEW PROCEDURE.............................................18
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY...........................................19
3.2 EFFECTIVE DATE OF PARTICIPATION ....................................19
3.3 DETERMINATION OF ELIGIBILITY........................................19
3.4 TERMINATION OF ELIGIBILITY..........................................19
3.5 OMISSION OF ELIGIBLE EMPLOYEE ......................................20
3.6 INCLUSION OF INELIGIBLE EMPLOYEE ...................................20
3.7 ELECTION NOT TO PARTICIPATE ........................................20
<PAGE>
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION ......................20
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION ............................21
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION ...........................25
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND
EARNINGS............................................................25
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS ...................................28
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS......................31
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS................................32
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE
TESTS...............................................................35
4.9 MAXIMUM ANNUAL ADDITIONS............................................37
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS ..........................40
4.11 TRANSFERS FROM QUALIFIED PLANS .....................................41
4.12 DIRECTED INVESTMENT ACCOUNT ........................................43
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND.........................................45
5.2 METHOD OF VALUATION.................................................45
<PAGE>
ARTICLE V1
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT...........................45
6.2 DETERMINATION OF BENEFITS UPON DEATH................................46
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY....................47
6.4 DETERMINATION OF BENEFITS UPON TERMINATION..........................47
6.5 DISTRIBUTION OF BENEFITS 50
6.6 DISTRIBUTION OF BENEFITS UPON DEATH.................................52
6.7 TIME OF SEGREGATION OR DISTRIBUTION.................................53
6.8 DISTRIBUTION FOR MINOR BENEFICIARY..................................53
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY
UNKNOWN.............................................................53
6.10 PRE-RETIREMENT DISTRIBUTION ........................................54
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP ..................................54
6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION.....................56
6.13 DIRECT ROLLOVER ....................................................56
ARTICLE VII
AMENDMENT, TERMINATION, MERGERS AND LOANS
7.1 AMENDMENT...........................................................57
7.2 TERMINATION.........................................................58
7.3 MERGER OR CONSOLIDATION.............................................58
7.4 LOANS TO PARTICIPANTS...............................................58
<PAGE>
ARTICLE VIII
TOP HEAVY
8.1 TOP HEAVY PLAN REQUIREMENTS.........................................60
8.2 DETERMINATION OF TOP HEAVY STATUS...................................60
ARTICLE IX
MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS................................................64
9.2 ALIENATION..........................................................64
9.3 CONSTRUCTION OF PLAN................................................65
9.4 GENDER AND NUMBER...................................................65
9.5 LEGAL ACTION........................................................65
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS..............................65
9.7 BONDING.............................................................66
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE..........................66
9.9 INSURER'S PROTECTIVE CLAUSE.........................................66
9.10 RECEIPT AND RELEASE FOR PAYMENTS....................................66
9.11 ACTION BY THE EMPLOYER..............................................67
9.12 NAMED FIDUCIARIES AND ALLOCATION OF
RESPONSIBILITY......................................................67
9.13 HEADINGS............................................................68
9.14 APPROVAL BY INTERNAL REVENUE SERVICE................................68
9.15 UNIFORMITY..........................................................68
<PAGE>
DELFIN SYSTEMS 401(K) PLAN
THIS PLAN, hereby adopted this 1st day of January, 1997, by
Delfin Systems (herein referred to as the "Employer").
WITNESSETH
WHEREAS, the Employer heretofore established a Profit Sharing
Plan effective October 1, 1985, (hereinafter called the "Effective Date") known
as Delfin Systems 401(k) Plan (herein referred m as the "Plan") in recognition
of the contribution made to its successful operation by its employees and for
the exclusive benefit of its eligible employees; and
WHEREAS, under the terms of the Plan, the Employer has the
ability to amend the Plan, provided the Trustee joins in such amendment if the
provisions of the Plan affecting the Trustee are amended;
NOW, THEREFORE, effective January 1, 1997, except as otherwise
provided, the Employer in accordance with the provisions of the Plan pertaining
to amendments thereof, hereby amends the Plan in its entirety and restates the
Plan to provide as follows:
ARTICLE I DEFINITIONS
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
1.2 "Administrator" means the Employer unless another person or entity
has been designated by the Employer pursuant to Section 2.2 to administer the
Plan on behalf of the Employer.
1.3 "Affiliated Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.4 "Aggregate Account" means, with respect to each Participant, the
value of all accounts maintained on behalf of a Participant, whether
attributable to Employer or Employee contributions, subject to the provisions of
Section 8.2.
<PAGE>
1.5 "Anniversary Date" means December 31.
1.6 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of Sections
6.2 and 6.6.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.8 "Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments of
compensation by the Employer (in the course of the Employer's trade or business)
for a Plan Year for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. Compensation
must be determined without regard to any rules under Code Section 3401(a) that
limit the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of
Compensation shall be made by:
(a) excluding (even if includible in gross income)
reimbursements or other expense allowances, fringe benefits (cash or
noncash), moving expenses, deferred compensation, and welfare benefits.
(b) including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections
125,402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are treated as
Employer contributions.
For a Participant's initial year of participation,
Compensation shall be recognized as of such Employee's effective date of
participation pursuant to Section 3.2.
Compensation in excess of $150,000 shall be disregarded. Such
amount shall be adjusted for increases in the cost of living in accordance with
Code Section 401(a)(17), except that the dollar increase in effect on January 1
of any calendar year shall be effective for the Plan Year beginning with or
within such calendar year. For any short Plan Year the Compensation limit shall
be an amount equal to the Compensation limit for the calendar year in which the
Plan Year begins multiplied by the ratio obtained by dividing the number of full
months in the short Plan Year by twelve (12). In applying this limitation, the
family group of a Highly Compensated Participant who is subject to the Family
Member aggregation rules of Code Section 414(q)(6) because such Participant is
either a "five percent owner" of the Employer or one of the ten (10) Highly
Compensated Employees paid the greatest "415 Compensation" during the year,
shall be treated as a single Participant, except that for this purpose Family
Members shall include only the affected Participant's spouse and any lineal
descendants who have not attained age nineteen (19) before the close of the
year. If, as a
<PAGE>
result of the application of such rules the adjusted limitation is exceeded,
then the limitation shall be prorated among the affected Family Members in
proportion to each such Family Member's Compensation prior to the application of
this limitation, or the limitation shall be adjusted in accordance with any
other method permitted by Regulation.
If, as a result of such rules, the maximum "annual addition"
limit of Section 4.9(a) would be exceeded for one or more of the affected Family
Members, the prorated Compensation of all affected Family Members shall be
adjusted to avoid or reduce any excess. The prorated Compensation of any
affected Family Member whose allocation would exceed the limit shall be adjusted
downward to the level needed to provide an allocation equal to such limit. The
prorated Compensation of affected Family Members not affected by such limit
shall then be adjusted upward on a pro rata basis not to exceed each such
affected Family Member's Compensation as determined prior to application of the
Family Member rule. The resulting allocation shall not exceed such individual's
maximum "annual addition" limit. If, after these adjustments, an "excess amount"
still results, such "excess amount" shall be disposed of in the manner described
in Section 4.10(a) pro rata among all affected Family Members.
If, in connection with the adoption of this amendment and
restatement, the definition of Compensation has been modified, then, for Plan
Years prior to the Plan Year which includes the adoption date of this amendment
and restatement, Compensation means compensation determined pursuant to the Plan
then in effect.
1.9 "Contract" or "Policy" means any life insurance policy, retirement
income or annuity policy, or annuity contract (group or individual) issued
pursuant to the terms of the Plan.
1.10 "Deferred Compensation" with respect to any Participant means the
amount of the Participant's total Compensation which has been contributed to the
Plan in accordance with the Participant's deferral election pursuant to Section
4.2 excluding any such amounts distributed as excess "annual additions" pursuant
to Section 4.10(a).
1.11 "Designated Investment Alternative" means a specific investment
identified by name by a Fiduciary as an available investment under the Plan
which may be acquired or disposed of by the Trustee pursuant to the investment
direction by a Participant.
1.12 "Directed Investment Option" means one or more of the following:
(a) a Designated Investment Alternative.
(b) any other investment permitted by the Plan and the
Participant Direction Procedures and acquired or disposed of by the
Trustee pursuant to the investment direction of a Participant.
1.13 "Early Retirement Date" means the first day of the month (prior to
the Normal Retirement Date) coinciding with or following the date on which a
Participant or Former
<PAGE>
Participant attains age 55, and has completed at least 10 whole years of his
Period of Service with the Employer (Early Retirement Age). A Participant shall
become fully Vested upon satisfying this requirement if still employed at his
Early Retirement Age.
A Former Participant who terminates employment after
satisfying the service requirement for Early Retirement and who thereafter
reaches the age requirement contained herein shall be entitled to receive his
benefits under this Plan.
1.14 "Elective Contribution" means the Employer contributions to the
Plan of Deferred Compensation excluding any such amounts distributed as excess
"annual additions" pursuant to Section 4.10(a). In addition, any Employer
Qualified Non-Elective Contribution made pursuant to Section 4. l(c) and Section
4.6(b) which is used to satisfy the "Actual Deferral Percentage" tests shall be
considered an Elective Contribution for purposes of the Plan. Any contributions
deemed to be Elective Contributions (whether or not used to satisfy the "Actual
Deferral Percentage" tests) shall be subject to the requirements of Sections
4.2(b) and 4.2(e) and shall further be required to satisfy the nondiscrimination
requirements of Regulation 1.401(k)-l(b)(5), the provisions of which are
specifically incorporated herein by reference.
1.15 "Eligible Employee" means any Employee, except:
Employees whose employment is governed by the terms of a
collective bargaining agreement between Employee representatives (within the
meaning of Code Section 7701(a)(46)) and the Employer under which retirement
benefits were the subject of good faith bargaining between the parties unless
such agreement expressly provides for coverage in this Plan;
Individuals who performs services for a participating company
solely as a leased employee, independent contractor, consultant or employee of a
third-party employment agency or who is otherwise classified as such by the
participating company for whom such services are performed (whether or not such
classification is upheld upon governmental or judicial review); and
Employees who are nonresident aliens (within the meaning of
Code Section 7701(b)(1)(B)) and who receive no earned income (within the meaning
of Code Section 91 l(d)(2)) from the Employer which constitutes income from
sources within the United States (within the meaning of Code Section 861(a)(3)).
Employees of Affiliated Employers shall not be eligible to
participate in this Plan unless such Affiliated Employers have specifically
adopted this Plan in writing.
1.16 "Employee" means any person who is employed by the Employer or
Affiliated Employer, but excludes any person who is an independent contractor.
Employee shall include Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a plan
described in Code Section 414(n)(5) and such
<PAGE>
Leased Employees do not constitute more than 20% of the recipient's non-highly
compensated work force.
1.17 "Employer" means Delfin Systems and any successor which shall
maintain this Plan; and any predecessor which has maintained this Plan. The
Employer is a corporation, with principal offices in the State of California.
1.18 "Excess Aggregate Contributions" means, with respect to any Plan
Year, the excess of the aggregate amount of the Employer matching contributions
made pursuant to Section 4. l(b) and any qualified non-elective contributions or
elective deferrals taken into account pursuant to Section 4.7(c) on behalf of
Highly Compensated Participants for such Plan Year, over the maximum amount of
such contributions permitted under the limitations of Section 4.7(a).
1.19 "Excess Contributions" means, with respect to a Plan Year, the
excess of Elective Contributions used to satisfy the "Actual Deferral
Percentage" tests made on behalf of Highly Compensated Participants for the Plan
Year over the maximum amount of such contributions permitted under Section
4.5(a). Excess Contributions shall be treated as an "annual addition" pursuant
to Section 4.9(b).
1.20 "Excess Deferred Compensation" means, with respect to any taxable
year of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 4.2(t')
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.9(b) when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year. Additionally, for
purposes of Sections 8.2 and 4.4(g), Excess Deferred Compensation shall continue
to be treated as Employer contributions even if distributed pursuant to Section
4.2(f). However, Excess Deferred Compensation of Non-Highly Compensated
Participants is not taken into account for purposes of Section 4.5(a) to the
extent such Excess Deferred Compensation occurs pursuant to Section 4.2(d).
1.21 "Family Member" means, with respect to an affected Participant,
such Participant's spouse and such Participant's lineal descendants and
ascendants and their spouses, all as described in Code Section 414(q)(6)(B).
1.22 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and its representative body, and the
Administrator.
<PAGE>
1.23 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on October 1st of each year and ending the following September 30th.
1.24 "Forfeiture" means that portion of a Participant's Account that is
not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a
Terminated Participant's Account, or
(b) the last day of the Plan Year in which the Participant
incurs five (5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case
of a Terminated Participant whose Vested benefit is zero, such Terminated
Participant shall be deemed to have received a distribution of his Vested
benefit upon his termination of employment. Restoration of such amounts shall
occur pursuant to Section 6.4(f)(2). In addition, the term Forfeiture shall also
include amounts deemed to be Forfeitures pursuant to any other provision of this
Plan.
1.25 "Former Participant" means a person who has been a Participant,
but who has ceased to be a Participant for any reason.
1.26 "415 Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments of
compensation by the Employer (in the course of the Employer's trade or business)
for a Plan Year for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. "415
Compensation" must be determined without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural tabor in Code Section 3401(a)(2)).
If, in connection with the adoption of this amendment and
restatement, the definition of "415 Compensation" has been modified, then, for
Plan Years prior to the Plan Year which includes the adoption date of this
amendment and restatement, "415 Compensation" means compensation determined
pursuant to the Plan then in effect.
1.27 "414(s) Compensation" with respect to any Participant means such
Participant's "415 Compensation" paid during a Plan Year. The amount of "414(s)
Compensation" with respect to any Participant shall include "414(s)
Compensation" for the entire twelve (12) month period ending on the last day of
such Plan Year, except that "414(s) Compensation" shall only be recognized for
that portion of the Plan Year during which an Employee was a Participant in the
Plan.
For purposes of this Section, the determination of "414(s)
Compensation" shall be made by including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant
<PAGE>
under Code Sections 125,402(e)(3), 402(h)(l)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are treated as Employer
contributions.
"414(s) Compensation" in excess of $150,000 shall be
disregarded. Such amount shall be adjusted for increases in the cost of living
in accordance with Code Section 401(a)(17), except that the dollar increase in
effect on January 1 of any calendar year shall be effective for the Plan Year
beginning with or within such calendar year. For any short Plan Year the "414(s)
Compensation" limit shall be an amount equal to the "414(s) Compensation" limit
for the calendar year in which the Plan Year begins multiplied by the ratio
obtained by dividing the number of full months in the short Plan Year by twelve
(12). In applying this limitation, the family group of a Highly Compensated
Participant who is subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a "five percent owner" of
the Employer or one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during the year, shall be treated as a single
Participant, except that for this purpose Family Members shall include only the
affected Participant's spouse and any lineal descendants who have not attained
age nineteen (19) before the close of the year.
If, in connection with the adoption of this amendment and
restatement, the definition of "414(s) Compensation" has been modified, then,
for Plan Years prior to the Plan Year which includes the adoption date of this
amendment and restatement, "414(s) Compensation" means compensation determined
pursuant to the Plan then in effect.
1.28 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder, and generally means an Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the "determination year"
or "look-back year" were "five percent owners" as defined in Section
1.34(c).
(b) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $50,000 and were in the
Top Paid Group of Employees for the Plan Year.
(d) Employees who during the "look-back year" were officers of
the Employer (as that term is defined within the meaning of the
Regulations under Code Section 416) and received "415 Compensation"
during the "look-back year" from the Employer greater than 50 percent
of the limit in effect under Code Section 415(b)(1)(A) for any such
Plan Year. The number of officers shall be limited to the lesser of (i)
50 employees; or (ii) the greater of 3 employees or I0 percent of all
employees. For the purpose of determining the number of officers,
Employees described in Section 1.61(a), (b), (c) and (d)
<PAGE>
shall be excluded, but such Employees shall still be considered for the
purpose of identifying the particular Employees who are officers. If
the Employer does not have at least one officer whose annual "415
Compensation" is in excess of 50 percent of the Code Section
415(b)(l)(A) limit, then the highest paid officer of the Employer will
be treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the 100
Employees paid the greatest "415 Compensation" during the
"determination year" and are also described in (b), (c) or (d) above
when these paragraphs are modified to substitute "determination year"
for "look-back year."
The "look-back year" shall be the calendar year ending with or
within the Plan Year for which testing is being performed, and the
"determination year" (if applicable) shall be the period of time, if any, which
extends beyond the "look-back year" and ends on the last day of the Plan Year
for which testing is being performed (the "lag period"). If the "lag period" is
less than twelve months long, the dollar threshold amounts specified in (b), (e)
and (d) above shall be prorated based upon the number of months in the "lag
period."
If an Employee is, during a "determination year" or "look-back
year", a Family Member of either a "five percent owner" (whether active or
former) or a Highly Compensated Employee who is one of the 10 most Highly
Compensated Employees ranked on the basis of "415 Compensation" paid by the
Employer during such year, then the Family Member and the "five percent owner"
or top-ten Highly Compensated Employee shall be aggregated. In such case, the
Family Member and "five percent owner" or top-ten Highly Compensated Employee
shall be treated as a single Employee receiving "415 Compensation" and Plan
contributions or benefits equal to the sum of such "415 Compensation" and
contributions or benefits of the Family Member and "five percent owner" or
top-ten Highly Compensated Employee.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions. Additionally, the
dollar threshold amounts specified in (b) and (c) above shall be adjusted at
such time and in such manner as is provided in Regulations. In the case of such
an adjustment, the dollar limits which shall be applied are those for the
calendar year in which the "determination year" or "look-back year" begins.
In determining who is a Highly Compensated Employee, Employees
who are non-resident aliens and who received no earned income (within the
meaning of Code Section 91l(d)(2)) front the Employer constituting United States
source income within the meaning of Code Section 861(a)(3) shall not be treated
as Employees. Additionally, all Affiliated Employers shall be taken into account
as a single employer and Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall be considered Employees unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5)
<PAGE>
and are not covered in any qualified plan maintained by the Employer. The
exclusion of Leased Employees for this purpose shall be applied on a uniform and
consistent basis for all of the Employer's retirement plans. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees without regard
to whether they performed services during the "determination year."
1.29 "Highly Compensated Former Employee" means a former Employee who
had a separation year prior to the "determination year" and was a Highly
Compensated Employee in the year of separation from service or in any
"determination year" after attaining age 55. Notwithstanding the foregoing, an
Employee who separated from service prior to 1987 will be treated as a Highly
Compensated Former Employee only if during the separation year (or year
preceding the separation year) or any year after the Employee attains age 55 (or
the last year ending before the Employee's 55th birthday), the Employee either
received "415 Compensation" in excess of $50,000 or was a "five percent owner."
For purposes of this Section, "determination year," "415 Compensation" and "five
percent owner" shall be determined in accordance with Section 1.28. Highly
Compensated Former Employees shall be treated as Highly Compensated Employees.
The method set forth in this Section for determining who is a "Highly
Compensated Former Employee" shall be applied on a uniform and consistent basis
for all purposes for which the Code Section 414(q) definition is applicable.
1.30 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.31 "Hour of Service" means each hour for which an Employee is paid or
entitled to payment for the performance of duties for the Employer.
1.32 "Income" means the income or losses allocable to Excess Deferred
Compensation, Excess Contributions or Excess Aggregate Contributions which
amount shall be allocated in the same manner as income or losses are allocated
pursuant to Section 4.4(f).
1.33 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.34 "Key Employee" means an Employee as defined in Code Section 416(i)
and the Regulations thereunder. Generally, any Employee or former Employee (as
well as each of his Beneficiaries) is considered a Key Employee if he. at any
time during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 416) having annual
"415 Compensation" greater than 50 percent of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year.
<PAGE>
(b) one of the ten employees having annual "415 Compensation"
from the Employer for a Plan Year greater than the dollar limitation in
effect under Code Section 415(c)(1)(A) for the calendar year in which
such Plan Year ends and owning (or considered as owning within the
meaning of Code Section 318) both more than one-half percent interest
and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent
owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the
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 or, in the case of an unincorporated business, any person who
owns more than five percent (5 %) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c), (m)
and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual
"415 Compensation" from the Employer of more than $150,000. "One
percent owner" means any person who owns (or is considered as owning
within the meaning of Code Section 318) more than one percent (1%) of
the outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c), (m)
and (o) shall be treated as separate employers. However, in determining
whether an individual has "415 Compensation" of more than $150,000,
"415 Compensation" from each employer required to be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be taken into account.
For purposes of this Section, the determination of "415
Compensation" shall be made by including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125,402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
1.35 "Late Retirement Date" means the first day of the month coinciding
with or next following a Participant's actual Retirement Date after having
reached his Normal Retirement Date.
1.36 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time
<PAGE>
basis for a period of at least one year, and such services are of a type
historically performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer. A Leased
Employee shall not be considered an Employee of the recipient:
<PAGE>
(a) if such employee is covered by a money purchase pension
plan providing:
(1) a non-integrated employer contribution rate of at
least 10% of compensation, as defined in Code Section
415(c)(3), but including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which
are not includible in the gross income of the Participant
under Code Sections 125,402(e)(3), 402(h)(1)(B), 403(b) or
457(b), and Employee contributions described in Code Section
414(h)(2) that are treated as Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.37 "Non-Elective Contribution" means the Employer contributions to
the Plan excluding, however, contributions made pursuant to the Participant's
deferral election provided for in Section 4.2 and any Qualified Non-Elective
Contribution used in the "Actual Deferral Percentage" tests.
1.38 "Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.39 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.40 "Normal Retirement Age" means the Participant's 65th birthday. A
Participant shall become fully Vested in his Participant's Account upon
attaining his Normal Retirement Age.
1.41 "Normal Retirement Date" means the day on which the Participant
attains the Normal Retirement Age.
1.42 "l-Year Break in Service" means a Period of Severance of at least
12 consecutive months.
<PAGE>
1.43 "Participant" means any Eligible Employee who participates in the
Plan and has not for any reason become ineligible to participate further in the
Plan.
1.44 "Participant Direction Procedures" means such instructions,
guidelines or policies, the terms of which are incorporated herein, as shall be
established pursuant to Section 4.12 and observed by the Administrator and
applied and provided to Participants who have Participant Directed Accounts.
1.45 "Participant's Account" means the account established and
maintained by the Administrator for each Participant with respect m his total
interest in the Plan and Trust resulting from the Employer Non-Elective
Contributions.
A separate accounting shall be maintained with respect to that
portion of the Participant's Account attributable to Employer matching
contributions made pursuant to Section 4. l(b), Employer discretionary
contributions made pursuant to Section 4. l(d) and any Employer Qualified
Non-Elective Contributions.
1.46 "Participant's Combined Account" means the total aggregate amount
of each Participant's Elective Account and Participant's Account.
1.47 "Participant's Directed Account" means that portion of a
Participant's interest in the Plan with respect to which the Participant has
directed the investment in accordance with the Participant Direction Procedure.
1.48 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer Elective
Contributions used to satisfy the "Actual Deferral Percentage" tests. A separate
accounting shall be maintained with respect to that portion of the Participant's
Elective Account attributable to such Elective Contributions pursuant to Section
4.2 and any Employer Qualified Non-Elective Contributions.
1.49 "Period of Service" means the aggregate of all periods commencing
with the Employee's first day of employment or reemployment with the Employer or
Affiliated Employer and ending on the date a 1-Year Break in Service begins. The
first day of employment or reemployment is the first day the Employee performs
an Hour of Service. An Employee will also receive partial credit for any Period
of Severance of less than 12 consecutive months. Fractional periods of a year
will be expressed in terms of days.
1.50 "Period of Severance" means a continuous period of time during
which the Employee is not employed by the Employer. Such period begins on the
date the Employee retires, quits or is discharged, or if earlier, the 12 month
anniversary of the date on which the Employee was otherwise first absent from
service.
In the case of an individual who is absent from work for
maternity or paternity reasons, the 12-consecutive month period beginning on the
first anniversary of the first day of such absence shall not constitute a 1-Year
Break in Service. For purposes of this
<PAGE>
paragraph, an absence from work for maternity or paternity reasons means an
absence (a) by reason of the pregnancy of the individual, (b) by reason of the
birth of a child of the individual, (c) by reason of the placement of a child
with the individual in connection with the adoption of such child by such
individual, or (d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
1.51 "Plan" means this instrument, including all amendments thereto.
1.52 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on January 1st of each year and ending the following December 31st.
1.53 "Qualified Non-Elective Contribution" means any Employer
contributions made pursuant to Section 4. l(c) and Section 4.6(b) and Section
4.8(h). Such contributions shall be considered an Elective Contribution for the
purposes of the Plan and may be used to satisfy the "Actual Deferral Percentage"
tests or the "Actual Contribution Percentage" tests.
1.54 "Regulation" means the Income Tax Regulations as promulgated by
the Secretary of the Treasury or his delegate, and as amended from time to time.
1.55 "Retired Participant" means a person who has been a Participant,
but who has become entitled to retirement benefits under the Plan.
1.56 "Retirement Date" means the date as of which a Participant retires
for reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date, Early or Late Retirement Date
(see Section 6. 1).
1.57 "Super Top Heavy Plan" means a plan described in Section 8.2(b).
1.58 "Terminated Participant" means a person who has been a
Participant, but whose employment has been terminated other than by death, Total
and Permanent Disability or retirement.
1.59 "Top Heavy Plan" means a plan described in Section 8.2(a).
1.60 "Top Heavy Plan Year" means a Plan Year during which the Plan is
a Top Heavy Plan.
1.61 "Top Paid Group" means the top 20 percent of Employees who
performed services for the Employer during the applicable year, ranked according
to the amount of "415 Compensation" (determined for this purpose in accordance
with Section 1.28) received from the Employer during such year. Ail Affiliated
Employers shall be taken into account as a single employer, and Leased Employees
within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered
Employees unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the
Employer. Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the Employer
<PAGE>
constituting United States source income within the meaning of Code Section
861(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the following additional
Employees shall also be excluded; however, such Employees shall still be
considered for the purpose of identifying the particular Employees in the Top
Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per
week;
(c) Employees who normally work less than six (6) months
during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the
Employer are covered under agreements the Secretary of Labor finds to be
collective bargaining agreements between Employee representatives and the
Employer, and the Plan covers only Employees who are not covered under such
agreements, then Employees covered by such agreements shall be excluded from
both the total number of active Employees as well as from the identification of
particular Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be
applied on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable.
1.62 "Total and Permanent Disability" means a physical or mental
condition of a Participant resulting from bodily injury, disease, or mental
disorder which renders him incapable of continuing any substantial gainful
activity. The disability of a Participant shall be determined by a licensed
physician chosen by the Administrator. The physician must certify that the
condition: (a) has lasted (or is expected to last) at least twelve (12)
consecutive months; or (b) is expected to result in death. The determination
shall be applied uniformly to all Participants.
1.63 "Trustee" means the person or entity named as trustee herein or in
any separate trust forming a part of this Plan, and any successors.
1.64 "Trust Fund" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.65 "Valuation Date" means the Anniversary Date and such other date or
dates deemed necessary by the Administrator. The Valuation Date may include any
day during the Plan Year that the Trustee, any transfer agent appointed by the
Trustee or the Employer and any stock exchange used by such agent are open for
business.
<PAGE>
1.66 ;'Vested" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
ARTICLE II ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered to
appoint and remove the Trustee and the Administrator from time to time
as it deems necessary for the proper administration of the Plan to
ensure that the Plan is being operated for the exclusive benefit of the
Participants and their Beneficiaries in accordance with the terms of
the Plan, the Code, and the Act. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and
other persons as the Employer deems necessary or desirable in
connection with the exercise of its fiduciary duties under this Plan.
The Employer may compensate such agents or advisers from the assets of
the Plan as fiduciary expenses (but not including any business
(settlor) expenses of the Employer), to the extent not paid by the
Employer.
(b) The Employer may, by written agreement or designation,
appoint at its option an Investment Manager (qualified under the
Investment Company Act of 1940 as amended), investment adviser, or
other agent to provide direction to the Trustee with respect to any or
all of the Plan assets. Such appointment shall be given by the Employer
in writing in a form acceptable to the Trustee and shall specifically
identify the Plan assets with respect to which the Investment 'Manager
or other agent shall have authority to direct the investment.
(c) The Employer shall establish a "funding policy and
method," i.e., it shall determine whether the Plan has a short run need
for liquidity (e.g., to pay benefits) or whether liquidity is a long
run goal and investment growth (and stability of same) is a more
current need, or shall appoint a qualified person to do so. The
Employer or its delegate shall communicate such needs and goals to the
Trustee, who shall coordinate such Plan needs with its investment
policy. The communication of such a "funding policy and method" shall
not, however, constitute a directive to the Trustee as to investment of
the Trust Funds. Such "funding policy and method" shall be consistent
with the objectives of this Plan and with the requirements of Title I
of the Act.
(d) The Employer shall periodically review the performance of
any Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by
<PAGE>
the Employer or by a qualified person specifically designated by the
Employer, through day-to-day conduct and evaluation, or through other
appropriate ways.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall be the Administrator. The Employer may
appoint any person, including, but not limited to, the Employees of the
Employer, to perform the duties of the Administrator. Any person so appointed
shall signify his acceptance by filing written acceptance with the Employer.
Upon the resignation or removal of any individual performing the duties of the
Administrator, the Employer may designate a successor.
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to
administer the Plan for the exclusive benefit of the Participants and their
Beneficiaries, subject to the specific terms of the Plan. The Administrator
shall administer the Plan in accordance with its terms and shall have the power
and discretion to construe the terms of the Plan and to determine all questions
arising in connection with the administration, interpretation, and application
of the Plan. Any such determination by the Administrator shall be conclusive and
binding upon all persons. The Administrator may establish procedures, correct
any defect, supply any information, or reconcile any inconsistency in such
manner and to such extent as shall be deemed necessary or advisable to carry out
the purpose of the Plan; provided, however, that any procedure, discretionary
act, interpretation or construction shall be done in a nondiscriminatory manner
based upon uniform principles consistently applied and shall be consistent with
the intent that the Plan shall continue to be deemed a qualified plan under the
terms of Code Section 401(a), and shall comply with the terms of the Act and all
regulations issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited to, the
following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect
to the amount and the kind of benefits to which any Participant shall
be entitled hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration
of the Plan;
<PAGE>
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent with
the terms hereof;
(f) to determine the size and type of any Contract to be
purchased from any insurer, and to designate the insurer from which
such Contract shall be purchased;
(g) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
(h) to consult with the Employer and the Trustee regarding the
short and long-term liquidity needs of the Plan in order that the
Trustee can exercise any investment discretion in a manner designed to
accomplish specific objectives;
(i) to prepare and implement a procedure to notify Eligible
Employees that they may elect to have a portion of their Compensation
deferred or paid to them in cash;
(j) to act as the named Fiduciary responsible for
communications with Participants as needed to maintain Plan compliance
with ERISA Section 404(c), including but not limited to the receipt and
transmitting of Participant's directions as to the investment of their
account(s) under the Plan and the formulation of policies, rules, and
procedures pursuant to which Participants may give investment
instructions with respect to the investment of their accounts;
(k) to assist any Participant regarding his rights, benefits,
or elections available under the Plan.
2.4 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and
shall keep all other books of account, records, policies, and other data that
may be necessary for proper administration of the Plan and shall be responsible
for supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.
2.5 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, agents (including
nonfiduciary agents) and other persons as the Administrator or the Trustee deems
necessary or desirable in connection with the administration of this Plan,
including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other
<PAGE>
duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries and to Plan Participants.
2.6 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust
Fund unless paid by the Employer. Such expenses shall include any expenses
incident to the functioning of the Administrator, or any person or persons
retained or appointed by any Named Fiduciary incident to the exercise of their
duties under the Plan, including, but not limited to, fees of accountants,
counsel, Investment Managers, agents (including nonfiduciary agents) appointed
for the purpose of assisting the Administrator or the Trustee in carrying out
the instructions of Participants as to the directed investment of their accounts
and other specialists and their agents, and other costs of administering the
Plan. Until paid, the expenses shall constitute a liability of the Trust Fund.
2.7 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing
with the Administrator. Written notice of the disposition of a claim shall be
furnished m the claimant within 90 clays after the application is filed. In the
event the claim is denied, the reasons for the denial shall be specifically set
forth in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where appropriate, an
explanation as to how the claimant can perfect the claim will be provided. In
addition, the claimant shall be furnished with an explanation of the Plan's
claims review procedure.
2.8 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who
has been denied a benefit by a decision of the Administrator pursuant to Section
2.7 shall be entitled to request the Administrator m give further consideration
to his claim by filing with the Administrator (on a form which may be obtained
from the Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than 60 days after
receipt of the written notification provided for in Section 2.7. The
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to submit written
and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon 5 business days written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all documents
in the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter, The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made
<PAGE>
by the Administrator within 60 days of receipt of the appeal (unless there has
been an extension of 60 days due to special circumstances, provided the delay
and the special circumstances occasioning it are communicated to the claimant
within the 60 day period). Such communication shall be written in a manner
calculated to be understood by the claimant and shall include specific reasons
for the decision and specific references to the pertinent. Plan provisions on
which the decision is based.
ARTICLE III ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has attained age 18 shall be
eligible to participate hereunder as of the date he has satisfied such
requirements. However, any Employee who was a Participant in the Plan prior to
the effective date of this amendment and restatement shall continue to
participate in the Plan.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as
of the earliest of (a) the first day of the Plan Year, (b) the first day of the
fourth month of the Plan Year, (c) the first day of the seventh month of the
Plan Year, or (4) the first day of the tenth month of the Plan Year, coinciding
with or next following the date such Employee met the eligibility requirements
of Section 3.1. provided said Employee was still employed as of such date (or if
not employed on such date, as of the date of rehire if a 1-Year Break in Service
has not occurred).
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each
Employee for participation in the Plan based upon information furnished by the
Employer. Such determination shall be conclusive and binding upon all persons,
as long as the same is made pursuant to the Plan and the Act. Such determination
shall be subject to review per Section 2.8.
3.4 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification
of an Eligible Employee to an ineligible Employee, such Former
Participant shall continue to vest in his interest in the Plan for each
Period of Service completed while a noneligible Employee, until such
time as his Participant's Account shall be forfeited or distributed
pursuant to the terms of the Plan. Additionally, his interest in the
Plan shall continue to share in the earnings of the Trust Fund.
<PAGE>
(b) In the event a Participant is no longer a member of an
eligible class of Employees and becomes ineligible to participate, such
Employee will participate immediately upon returning to an eligible
class of Employees.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by his Employer for the year has been made,
the Employer shall make a subsequent contribution with respect to the omitted
Employee in the amount which the said Employer would have contributed with
respect to him had he not been omitted. Such contribution shall be made
regardless of whether or not it is deductible in whole or in part in any taxable
year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been
included as a Participant in the Plan is erroneously included and discovery of
such incorrect inclusion is not made until after a contribution for the year has
been made, the Employer shall not be entitled to recover the contribution made
with respect to the ineligible person regardless of whether or not a deduction
is allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
(except for Deferred Compensation which shall be distributed to the ineligible
person) for the Plan Year in which the discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer,
elect voluntarily not to participate in the Plan. The election not to
participate must be communicated to the Employer, in writing, at least thirty
(30) days before the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be
deemed an Employer Elective Contribution.
(b) On behalf of each Participant who is eligible to share in
matching contributions for the Plan Year, a discretionary matching
contribution equal to a uniform percentage of each such Participant's
Deferred Compensation, the exact percentage, if any, to be determined
each
<PAGE>
year by the Employer, which amount, if any, shall be deemed an Employer
Non-Elective Contribution. If, during the Plan Year, a Participant's
salary reduction election changes to an amount above or below any
threshold at which such contributions are matched, the Employer's
matching contribution shall change prospectively with the change in
such Participant's salary reduction election percentage.
(c) On behalf of each Non-Highly Compensated Participant who
is eligible to share in the Qualified Non-Elective Contribution for the
Plan Year, a discretionary Qualified Non-Elective Contribution equal to
a uniform percentage of each eligible individual's Compensation, the
exact percentage, if any, to be determined each year by the Employer.
Any Employer Qualified Non-Elective Contribution shall be deemed an
Employer Elective Contribution.
(d) A discretionary amount, which amount, if any, shall be
deemed an Employer Non-Elective Contribution.
(e) Additionally, to the extent necessary, the Employer shall
contribute to the Plan the amount necessary to provide the top heavy
minimum contribution. All contributions by the Employer shall be made
in cash.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer from 1% to 15% of his
Compensation which would have been received in the Plan Year, but for
the deferral election. A deferral election (or modification of an
earlier election) may not be made with respect to Compensation which is
currently available on or before the date the Participant executed such
election. For purposes of this Section, Compensation shall be
determined prior to any reductions made pursuant to Code Sections 125,
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee contributions
described in Code Section 414(h)(2) that are treated as Employer
contributions.
The amount by which Compensation is reduced shall be that
Participant's Deferred Compensation and be treated as an Employer
Elective Contribution and allocated to that Participant's Elective
Account.
(b) The balance in each Participant's Elective Account shall
be fully Vested at all times and shall not be subject to Forfeiture for
any reason.
(c) Notwithstanding anything in the Plan to the contrary,
amounts held in the Participant's Elective Account may not be
distributable (including any offset of loans) earlier than:
<PAGE>
(1) a Participant's separation from service, Total
and Permanent Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the
establishment or existence of a "successor plan," as that term
is described in Regulation 1.401(k)-l(d)(3);
(4) the date of disposition by the Employer to an
entity that is not an Affiliated Employer of substantially all
of the assets (within the meaning of Code Section 409(d)(2))
used in a trade or business of such corporation if such
corporation continues to maintain this Plan after the
disposition with respect to a Participant who continues
employment with the corporation acquiring such assets;
(5) the date of disposition by the Employer or an
Affiliated Employer who maintains the Plan of its interest in
a subsidiary (within the meaning of Code Section 409(d)(3)) to
an entity which is not an Affiliated Employer but only with
respect to a Participant who continues employment with such
subsidiary; or
(6) the proven financial hardship of a Participant,
subject to the limitations of Section 6.11.
(d) For each Plan Year, a Participant's Deferred Compensation
made under this Plan and all other plans, contracts or arrangements of
the Employer maintaining this Plan shall not exceed, during any taxable
year of the Participant, the limitation imposed by Code Section 402(g),
as in effect at the beginning of such taxable year. If such dollar
limitation is exceeded, a Participant will be deemed to have notified
the Administrator of such excess amount which shall be distributed in a
manner consistent with Section 4.2(f). The dollar limitation shall be
adjusted annually pursuant to the method provided in Code Section
415(d) in accordance with Regulations.
(e) In the event a Participant has received a hardship
distribution from his Participant's Elective Account pursuant to
Section 6.1 l(b) or pursuant to Regulation 1.401(k)-l(d)(2)(iv)(B) from
any other plan maintained by the Employer, then such Participant shall
not be permitted to elect to have Deferred Compensation contributed to
the Plan on his behalf for a period of twelve (12) months following the
receipt of the distribution. Furthermore, the dollar limitation under
Code Section 402(g) shall be reduced, with respect to the Participant's
taxable year following the taxable year in which the hardship
distribution was made, by the amount of such Participant's Deferred
Compensation, if any, pursuant to this Plan (and any
<PAGE>
other plan maintained by the Employer) for the taxable year of the
hardship distribution.
(f) If a Participant's Deferred Compensation under this Plan
together with any elective deferrals (as defined in Regulation
1.402(g)-l(b)) under another qualified cash or deferred arrangement (as
defined in Code Section 401(k)), a simplified employee pension (as
defined in Code Section 408(k)), a salary reduction arrangement (within
the meaning of Code Section 3121(a)(5)(D)), a deferred compensation
plan under Code Section 457(b), or a trust described in Code Section
501(c)(18) cumulatively exceed the limitation imposed by Code Section
402(g) (as adjusted annually in accordance with the method provided in
Code Section 415(d) pursuant to Regulations) for such Participant's
taxable year, the Participant may, not later than March 1 following the
close of the Participant's taxable year, notify the Administrator in
writing of such excess and request that his Deferred Compensation under
this Plan be reduced by an amount specified by the Participant. In such
event, the Administrator may direct the Trustee to distribute such
excess amount (and any Income allocable to such excess amount) to the
Participant not later than the first April 15th following the close of
the Participant's taxable year. Any distribution of less than the
entire amount of Excess Deferred Compensation and Income shall be
treated as a pro rata distribution of Excess Deferred Compensation and
Income. The amount distributed shall not exceed the Participant's
Deferred Compensation under the Plan for the taxable year (and any
Income allocable to such excess amount). Any distribution on or before
the last day of the Participant's taxable year must satisfy each of the
following conditions:
(1) the distribution must be made after the date on
which the Plan received the Excess Deferred Compensation;
(2) the Participant shall designate the distribution
as Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a
distribution of Excess Deferred Compensation.
Matching contributions which relate to Excess Deferred
Compensation which is distributed pursuant to this Section 4.2(0 shall
be forfeited.
(g) Notwithstanding Section 4.2(0 above, a Participant's
Excess Deferred Compensation shall be reduced, but not below zero, by
any distribution of Excess Contributions pursuant to Section 4.6(a) for
the Plan Year beginning with or within the taxable year of the
Participant.
<PAGE>
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Account shall be used to provide
additional benefits to the Participant or his Beneficiary.
(i) Employer Elective Contributions made pursuant to this
Section may be segregated into a separate account for each Participant
in a federally insured savings account, certificate of deposit in a
bank or savings and loan association, money market certificate, or
other short-term debt security acceptable to the Trustee until such
time as the allocations pursuant to Section 4.4 have been made.
(j) The Employer and the Administrator shall implement the
salary reduction elections provided for herein in accordance with the
following:
(1) A Participant must make his initial salary
deferral election within a reasonable time, not m exceed
thirty (30) days, after entering the Plan pursuant to Section
3.2. If the Participant fails to make an initial salary
deferral election within such time, then such Participant may
thereafter make an election in accordance with the rules
governing modifications. The Participant shall make such an
electron by entering into a written salary reduction agreement
with the Employer and filing such agreement with the
Administrator. Such election shall initially be effective
beginning with the pay period following the acceptance of the
salary reduction agreement by the Administrator, shall not
have retroactive effect and shall remain in force until
revoked.
(2) A Participant may modify a prior election at any
time during the Plan Year and concurrently make a new election
by filing a written notice with the Administrator. Any
modification shall be effective as of the first pay period of
the following month. Any modification shall not have
retroactive effect and shall remain in force until revoked.
(3) A Participant may elect to prospectively revoke
his salary reduction agreement in its entirety at any time
during the Plan Year by providing the Administrator with
thirty (30) days written notice of such revocation (or upon
such shorter notice period as may be acceptable to the
Administrator). Such revocation shall become effective as of
the beginning of the first pay period coincident with or next
following the expiration of the notice period. Furthermore,
the termination of the Participant's employment, or the
cessation of participation for any reason, shall be deemed to
revoke any salary reduction agreement then in effect,
effective immediately following
<PAGE>
the close of the pay period within which such termination or
cessation occurs.
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION
The Employer shall generally pay to the Trustee its
contribution to the Plan for each Plan Year within the time prescribed by law,
including extensions of time, for the filing of the Employer federal income tax
return for the Fiscal Year.
However, Employer Elective Contributions accumulated through
payroll deductions shall be paid to the Trustee as of the earliest date on which
such contributions can reasonably be segregated from the Employer general
assets, but in any event within ninety (90) days from the date on which such
amounts would otherwise have been payable to the Participant in cash. The
provisions of Department of Labor regulations 2510.3-102 are incorporated herein
by reference. Furthermore, any additional Employer contributions which are
allocable to the Participant's Elective Account for a Plan Year shall be paid to
the Plan no later than the twelve-month period immediately following the close
of such Plan Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account
in the name of each Participant to which the Administrator shall credit
as of each Anniversary Date all amounts allocated to each such
Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as
follows:
(1) With respect to the Employer Elective
Contribution made pursuant to Section 4.1 (a), to each
Participant's Elective Account in an amount equal to each such
Participant's Deferred Compensation for the year.
(2) With respect to the Employer Non-Elective
Contribution made pursuant to Section 4. l(b), to each
Participant's Account in accordance with Section 4. l(b).
Only Participants who are actively employed on the last day of
the Plan Year shall be eligible to share in the matching
contribution for the year.
(3) With respect to the Employer Qualified
Non-Elective Contribution made pursuant to Section 4. l(c), to
each Participant's
<PAGE>
Elective Account when used to satisfy the "Actual Deferral
Percentage" tests or Participant's Account in accordance with
Section 4.1 (c).
Only Non-Highly Compensated Participants who are actively
employed on the last day of the Plan Year shall be eligible to
share in the Qualified Non-Elective Contribution for the year.
(4) With respect m the Employer Non-Elective
Contribution made pursuant to Section 4. l(d), to each
Participant's Account in the same proportion that each such
Participant's Compensation for the year bears to the total
Compensation of all Participants for such year.
Only Participants who are actively employed on the last day of
the Plan Year shall be eligible to share in the discretionary
contribution for the year.
(c) As of each Anniversary Date any amounts which became
Forfeitures since the last Anniversary Date shall first be made
available to reinstate previously forfeited account balances of Former
Participants, if any, in accordance with Section 6.4(0(2). The
remaining Forfeitures, if any, shall be used to reduce the contribution
of the Employer hereunder for the Plan Year in which such Forfeitures
occur in the following manner:
(1) Forfeitures attributable to Employer matching
contributions made pursuant to Section 4.1(b) shall first be
used to pay reasonable Plan expenses, and any excess shall be
used to reduce the Employer matching contribution for the Plan
Year in which such Forfeitures occur.
(2) Forfeitures attributable to Employer
discretionary contributions made pursuant to Section 4.1(d)
shall first be used to pay reasonable Plan expenses, and any
excess shall be used to reduce the Employer's matching
contribution, or, if no matching contribution is made, shall
be added to the Employer discretionary contribution for the
Plan Year in which such Forfeitures occur.
(d) For any Top Heavy Plan Year, Non-Key Employees not
otherwise eligible to share in the allocation of contributions as
provided above, shall receive the minimum allocation provided for in
Section 4.4(g) if eligible pursuant to the provisions of Section
4.4(i).
(e) Notwithstanding the foregoing, Participants who are not
actively employed on the last day of the Plan Year due to Retirement
(Early, Normal or Late), Total and Permanent Disability or death shall
share in the allocation of contributions for that Plan Year.
<PAGE>
(f) On each business day of the Plan Year, a daily
determination of unrealized and realized gains and losses, interest,
dividends and capital gain distributions will be calculated and
allocated based on the actual activity in each Participant's account.
Activity includes, but is not limited to, allocation of contributions
and forfeitures, and distributions.
Participants' transfers from other qualified plans deposited in the
general Trust Fund shall share in any earnings and losses (net
appreciation or net depreciation) of the Trust Fund in the same manner
provided above. Each segregated account maintained on behalf of a
Participant shall be credited or charged with its separate earnings and
losses.
(g) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year. the sum of
the Employer contributions allocated to the Participant's Combined
Account of each Non-Key Employee shall be equal to at least three
percent (3%) of such Non-Key Employee's "415 Compensation" (reduced by
contributions and forfeitures, if any, allocated to each Non-Key
Employee in any defined contribution plan included with this plan in a
Required Aggregation Group). However, if (1) the sum of the Employer
contributions allocated to the Participant's Combined Account of each
Key Employee for such Top Heavy Plan Year is less than three percent
(3%) of each Key Employee's "415 Compensation" and (2) this Plan is not
required to be included in an Aggregation Group to enable a defined
benefit plan to meet the requirements of Code Section 401(a)(4) or 410,
the sum of the Employer contributions allocated to the Participant's
Combined Account of each Non-Key Employee shall be equal to the largest
percentage allocated to the Participant's Combined Account of any Key
Employee. However, in determining whether a Non-Key Employee has
received the required minimum allocation, such Non-Key Employee's
Deferred Compensation and matching contributions needed to satisfy the
"Actual Contribution Percentage" tests pursuant to Section 4.7(a) shall
not be taken into account.
However, no such minimum allocation shall be required in this Plan for
any Non-Key Employee who participates in another defined contribution
plan subject to Code Section 412 included with this Plan in a Required
Aggregation Group.
(h) For purposes of the minimum allocations set forth above,
the percentage allocated to the Participant's Combined Account of any
Key Employee shall be equal to the ratio of the sum of the Employer
contributions allocated on behalf of such Key Employee divided by the
"415 Compensation" for such Key Employee.
(i) For any Top Heavy Plan Year, the minimum allocations set
forth above shall be allocated to the Participant's Combined Account of
all
<PAGE>
Non-Key Employees who are Participants and who are employed by the
Employer on the last day of the Plan Year, including Non-Key Employees
who have (1) failed to complete a Period of Service; and (2) declined
to make mandatory contributions (if required) or, in the case of a cash
or deferred arrangement, elective contributions to the Plan.
(j) For the purposes of this Section, "415 Compensation" shall
be limited to $150,000. Such amount shall be adjusted for increases in
the cost of living in accordance with Code Section 401(a)(17), except
that the dollar increase in effect on January 1 of any calendar year
shall be effective for the Plan Year beginning with or within such
calendar year. For any short Plan Year the "415 Compensation" limit
shall be an amount equal to the "415 Compensation" limit for the
calendar year in which the Plan Year begins multiplied by the ratio
obtained by dividing the number of full months in the short Plan Year
by twelve (12).
(k) Notwithstanding anything herein to the contrary,
Participants who terminated employment for any reason during the Plan
Year shall share in the salary reduction contributions made by the
Employer for the year of termination without regard to the Hours of
Service credited.
(l) If a Former Participant is reemployed after five (5)
consecutive 1-Year Breaks in Service, then separate accounts shall be
maintained as follows:
(1) one account for nonforfeitable benefits
attributable to pre-break service; and
(2) one account representing his status in the Plan
attributable to post-break service.
<PAGE>
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
<PAGE>
(a) Maximum Annual Allocation: For each Plan Year, the annual
allocation derived from Employer Elective Contributions to a
Participant's Elective Account shall satisfy one of the following
tests:
(1) The "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not be more than the
"Actual Deferral Percentage" of the Non-Highly Compensated
Participant group multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage"
for the Highly Compensated Participant group over the 'Actual
Deferral Percentage" for the Non-Highly Compensated
Participant group shall not be more than two percentage
points. Additionally, the 'Actual Deferral
<PAGE>
Percentage" for the Highly Compensated Participant group shall
not exceed the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group multiplied by 2. The provisions
of Code Section 401(k)(3) and Regulation 1.401(k)-l(b) are
incorporated herein by reference.
However, in order to prevent the multiple use of the alternative method
described in (2) above and in Code Section 401(m)(9)(A), any Highly
Compensated Participant eligible to make elective deferrals pursuant to
Section 4.2 and to make Employee contributions or to receive matching
contributions under this Plan or under any other plan maintained by the
Employer or an Affiliated Employer shall have a combination of his
actual deferral ratio and his actual contribution ratio reduced
pursuant to Regulation 1.401(m)-2, the provisions of which are
incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral
Percentage" means, with respect to the Highly Compensated Participant
group and Non-Highly Compensated Participant group for a Plan Year, the
average of the ratios, calculated separately for each Participant in
such group, of the amount of Employer Elective Contributions allocated
to each Participant's Elective Account for such Plan Year, to such
Participant's "414(s) Compensation" for such Plan Year. The actual
deferral ratio for each Participant and the "Actual Deferral
Percentage" for each group shall be calculated to the nearest
one-hundredth of one percent. Employer Elective Contributions allocated
to each Non-Highly Compensated Participant's Elective Account shall be
reduced by Excess Deferred Compensation to the extent such excess
amounts are made under this Plan or any other plan maintained by the
Employer.
(c) For the purpose of determining the actual deferral ratio
of a Highly Compensated Employee who is subject to the Family Member
aggregation rules of Code Section 414(q)(6) because such Participant is
either a "five percent owner" of the Employer or one of the ten (10)
Highly Compensated Employees paid the greatest "415 Compensation"
during the year, the following shall apply:
(1) The combined actual deferral ratio for the family
group (which shall be treated as one Highly Compensated
Participant) shall be determined by aggregating Employer
Elective Contributions and "414(s) Compensation" of all
eligible Family Members (including Highly Compensated
Participants). However, in applying the $150,000 limit to
"414(s) Compensation," Family Members shall include only the
affected Employee's spouse and any lineal descendants who have
not attained age 19 before the close of the Plan Year.
<PAGE>
(2) The Employer Elective Contributions and "414(s)
Compensation" of all Family Members shall be disregarded for
purposes of determining the "Actual Deferral Percentage" of
the Non-Highly Compensated Participant group except to the
extent taken into account in paragraph (I) above.
(3) If a Participant is required to be aggregated as
a member of more than one family group in a plan, all
Participants who are members of those family groups that
include the Participant are aggregated as one family group in
accordance with paragraphs (1) and (2) above.
(d) For the purposes of Sections 4.5(a) and 4.6, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to make a deferral election pursuant to
Section 4.2, whether or not such deferral election was made or
suspended pursuant to Section 4.2.
(e) For the purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k), if two or more plans which include cash
or deferred arrangements are considered one plan for the purposes of
Code Section 401(a)(4) or 410(b) (other than Code Section
410(b)(2)(A)(ii)), the cash or deferred arrangements included in such
plans shall be treated as one arrangement. In addition, two or more
cash or deferred arrangements may be considered as a single arrangement
for purposes of determining whether or not such arrangements satisfy
Code Sections 401(a)(4), 410(b) and 401(k). In such a case, the cash or
deferred arrangements included in such plans and the plans including
such arrangements shall be treated as one arrangement and as one plan
for purposes of this Section and Code Sections 401(a)(4), 410(b) and
401(k). Plans may be aggregated under this paragraph (e) only if they
have the same plan year.
Notwithstanding the above, an employee stock ownership plan
described in Code Section 4975(e)(7) or 409 may not be combined with
this Plan for purposes of determining whether the employee stock
ownership plan or this Plan satisfies this Section and Code Sections
401(a)(4), 410(b) and 401(k).
(f) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two or more cash or deferred
arrangements (other than a cash or deferred arrangement which is part
of an employee stock ownership plan as defined in Code Section
4975(e)(7) or 409) of the Employer or an Affiliated Employer, all such
cash or deferred arrangements shall be treated as one cash or deferred
arrangement for the purpose of determining the actual deferral ratio
with respect to such Highly Compensated Participant. However, if the
cash or deferred arrangements
<PAGE>
have different plan years, this paragraph shall be applied by treating
all cash or deferred arrangements ending with or within the same
calendar year as a single arrangement.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer
Elective Contributions made pursuant to Section 4.4 do not satisfy one of the
tests set forth in Section 4.5(a), the Administrator shall adjust Excess
Contributions pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month
following the end of each Plan Year, the Highly Compensated Participant
having the highest actual deferral ratio shall have his portion of
Excess Contributions distributed to him until one of the tests set
forth in Section 4.5(a) is satisfied, or until his actual deferral
ratio equals the actual deferral ratio of the Highly Compensated
Participant having the second highest actual deferral ratio. This
process shall continue until one of the tests set forth in Section
4.5(a) is satisfied. For each Highly Compensated Participant, the
amount of Excess Contributions is equal to the Elective Contributions
used to satisfy the "Actual Deferral Percentage" tests on behalf Of
such Highly Compensated Participant (determined prior to the
application of this paragraph) minus the amount determined by
multiplying the Highly Compensated Participant's actual deferral ratio
(determined after application of this paragraph) by his "414(s)
Compensation." However, in determining the amount of Excess
Contributions to be distributed with respect to an affected Highly
Compensated Participant as determined herein, such amount shall be
reduced pursuant to Section 4.2(f) by any Excess Deferred Compensation
previously distributed to such affected Highly Compensated Participant
for his taxable year ending with or within such Plan Year.
(1) With respect to the distribution of Excess
Contributions pursuant to (a) above, such distribution:
(i) may be postponed but not later than the
close of the Plan Year following the Plan Year to
which they are allocable;
(ii) shall be adjusted for Income; and
(iii) shall be designated by the Employer as
a distribution of Excess Contributions (and Income).
(2) Any distribution of less than the entire amount
of Excess Contributions shall be treated as a pro rata
distribution of Excess Contributions and Income.
<PAGE>
(3) The determination and correction of Excess
Contributions of a Highly Compensated Participant whose actual
deferral ratio is determined under the family aggregation
rules shall be accomplished by reducing the actual deferral
ratio as required herein, and the Excess Contributions for the
family unit shall then be allocated among the Family Members
in proportion to the Elective Contributions of each Family
Member that were combined to determine the group actual
deferral ratio.
(4) Matching contributions which relate to Excess
Contributions shall be forfeited unless the related matching
contribution is distributed as an Excess Aggregate
Contribution pursuant to Section 4.8.
(b) Within twelve (12) months after the end of the Plan Year,
the Employer may make a special Qualified Non-Elective Contribution on
behalf of Non-Highly Compensated Participants in an amount sufficient
to satisfy one of the tests set forth in .Section 4.5(a). Such
contribution shall be allocated to the Participant's Elective Account
of each Non-Highly Compensated Participant in the same proportion that
each Non-Highly Compensated Participant's Compensation for the year
bears to the total Compensation of all Non-Highly Compensated
Participants.
(c) If during a Plan Year the projected aggregate amount of
Elective Contributions to be allocated to all Highly Compensated
Participants under this Plan would, by virtue of the tests set forth in
Section 4.5(a), cause the Plan to fail such tests, then the
Administrator may automatically reduce proportionately or in the order
provided in Section 4.6(a) each affected Highly Compensated
Participant's deferral election made pursuant to Section 4.2 by an
amount necessary to satisfy one of the tests set forth in Section
4.5(a).
<PAGE>
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage~ for the Highly
Compensated Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly
Compensated Participant group; or
(2) the lesser of 200 percent of such percentage for
the Non-Highly Compensated Participant group, or such
percentage for the Non-Highly Compensated Participant group
plus 2 percentage points. However, to prevent the multiple use
of the alternative method described in this paragraph and Code
Section 401(m)(9)(A), any Highly Compensated Participant
eligible to make elective deferrals pursuant to Section 4.2 or
any other cash or deferred arrangement maintained by the
Employer or an Affiliated Employer and to make Employee
contributions or to receive matching contributions under this
Plan or under any plan maintained by the Employer or an
Affiliated Employer shall have a combination of his actual
deferral ratio and his actual contribution ratio reduced
pursuant to Regulation 1.401(m)-2. The provisions of Code
Section 401(m) and Regulations 1.401(m)-l(b) and 1.401(m)-2
are incorporated herein by reference.
(b) For the purposes of this Section and Section 4.8, "Actual
Contribution Percentage" for a Plan Year means, with respect to the
Highly Compensated Participant group and Non-Highly Compensated
Participant group, the average of the ratios (calculated separately for
each Participant in each group) of:
(1) the sum of Employer matching contributions made
pursuant to Section 4. l(b) on behalf of each such Participant
for such Plan Year; to
(2) the Participant's "414(s) Compensation" for such
Plan Year.
(c) For purposes of determining the "Actual Contribution
Percentage" and the amount of Excess Aggregate Contributions pursuant
to Section 4.8(d), only Employer matching contributions contributed to
the Plan prior to the end of the succeeding Plan Year shall be
considered. In addition, the Administrator may elect to take into
account, with respect to Employees eligible to have Employer matching
contributions pursuant to Section 4. l(b) allocated to their accounts,
elective deferrals (as defined in Regulation 1.402(g)-l(b)) and
qualified non-elective contributions (as defined in Code Section
401(m)(4)(C)) contributed to any plan maintained by the Employer. Such
elective deferrals and qualified non-elective contributions shall be
treated as Employer matching contributions subject to Regulation
1.401(m)-l(b)(5) which is incorporated herein by reference. However,
the Plan Year must be the same as the plan year of the plan to which
the elective deferrals and the qualified non-elective contributions are
made.
(d) For the purpose of determining the actual contribution
ratio of a Highly Compensated Employee who is subject to the Family
Member aggregation rules of Code Section 414(q)(6) because such
Employee is either a "five percent owner" of the Employer or one of the
ten (i0) Highly Compensated Employees paid the greatest '415
Compensation" during the year, the following shall apply:
(1) The combined actual contribution ratio for the
family group (which shall be treated as one Highly Compensated
Participant) shall be determined by aggregating Employer
matching contributions made
<PAGE>
pursuant to Section 4. l(b) and "414(s) Compensation" of all
eligible Family Members (including Highly Compensated
Participants). However, in applying the $150,000 limit to
"414(s) Compensation", Family Members shall include only the
affected Employee's spouse and any lineal descendants who have
not attained age 19 before the close of the Plan Year.
(2) The Employer matching contributions made pursuant
to Section 4. l(b) and "414(s) Compensation" of all Family
Members shall be disregarded for purposes of determining the
"Actual Contribution Percentage" of the Non-Highly Compensated
Participant group except to the extent taken into account in
paragraph (1) above.
(3) If a Participant is required to be aggregated as
a member of more than one family group in a plan, all
Participants who are members of those family groups that
include the Participant are aggregated as one family group in
accordance with paragraphs (1) and (2) above.
(e) For purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(m), if two or more plans of the Employer to which
matching contributions, Employee contributions, or both, are made are
treated as one plan for purposes of Code Sections 401(a)(4) or 410('o)
(other than the average benefits test under Code Section
410(b)(2)(A)(ii)), such plans shall be treated as one plan. In
addition, two or more plans of the Employer to which matching
contributions, Employee contributions, or both, are made may be
considered as a single plan for purposes of determining whether or not
such plans satisfy Code Sections 401(a)(4), 410(b) and 401(m). In such
a case, the aggregated plans must satisfy this Section and Code
Sections 401(a)(4), 410(b) and 401(m) as though such aggregated plans
were a single plan. Plans may be aggregated under this paragraph (e)
only if they have the same plan year.
Notwithstanding the above, an employee stock ownership plan described
in Code Section 4975(e)(7) or 409 may not be aggregated with this Plan for
purposes of determining whether the employee stock ownership plan or this Plan
satisfies this Section and Code Sections 401(a)(4), 410(b) and 401(m).
(f) If a Highly Compensated Participant is a Participant under
two or more plans (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7) or 409) which are maintained by the
Employer or an Affiliated Employer to which matching contributions,
Employee contributions, or both, are made, all such contributions on
behalf of such Highly Compensated Participant shall be aggregated for
purposes of determining such Highly Compensated Participant's actual
contribution ratio.
<PAGE>
However, if the plans have different plan years, this paragraph shall
be applied by treating all plans ending with or within the same calendar year as
a single plan.
(g) For purposes of Sections 4.7(a) and 4.8, a Highly
Compensated Participant and Non-Highly Compensated Participant shall
include any Employee eligible to have Employer matching contributions
pursuant to Section 4.1(b) (whether or not a deferral election was made
or suspended pursuant to Section 4.2(e)) allocated to his account for
the Plan Year.
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
<PAGE>
(a) In the event that the "Actual Contribution Percentage" for
the Highly Compensated Participant group exceeds the "Actual
Contribution Percentage" for the Non-Highly Compensated Participant
group pursuant to Section 4.7(a), the Administrator (on or before the
fifteenth day of the third month following the end of the Plan Year,
but in no event later than the close of the following Plan Year) shall
direct the Trustee to distribute to the Highly Compensated Participant
having the highest actual contribution ratio, his Vested portion of
Excess Aggregate Contributions (and Income allocable to such
contributions) and, if forfeitable, forfeit such non-Vested Excess
Aggregate Contributions attributable to Employer matching contributions
(and Income allocable to such forfeitures) until either one of the
tests set forth in Section 4.7(a) is satisfied, or until his actual
contribution ratio equals the actual contribution ratio of the Highly
Compensated Participant having the second highest actual contribution
ratio. This process shall continue until one of the tests set forth in
Section 4.7(a) is satisfied.
If the correction of Excess Aggregate Contributions attributable to
Employer matching contributions is not in proportion to the Vested and
non-Vested portion of such contributions, then the Vested portion of the
Participant's Account attributable to Employer matching contributions after the
correction shall be subject to Section 6.5(f).
(b) Any distribution and/or forfeiture of less than the entire
amount of Excess Aggregate Contributions (and Income) shall be treated
as a pro rata distribution and/or forfeiture of Excess Aggregate
Contributions and Income. Distribution of Excess Aggregate
Contributions shall be designated by the Employer as a distribution of
Excess Aggregate Contributions (and Income). Forfeitures of Excess
Aggregate Contributions shall be treated in accordance with Section
4.4.
(c) Excess Aggregate Contributions, including forfeited
matching contributions, shall be treated as Employer contributions for
purposes of Code Sections 404 and 415 even if distributed from the
Plan.
Forfeited matching contributions that are reallocated to Participants'
Accounts for the Plan Year in which the forfeiture occurs shall be treated as an
"annual addition" pursuant to Section 4.9(b) for the Participants to whose
Accounts they are reallocated and for the Participants from whose Accounts they
are forfeited.
(d) For each Highly Compensated Participant, the amount of
Excess Aggregate Contributions is equal to the Employer matching
contributions made pursuant to Section 4.l(b) and any qualified
non-elective contributions or elective deferrals taken into account
pursuant to Section 4.7(c) on behalf of the Highly Compensated
Participant (determined prior to the application of this paragraph)
minus the amount determined by multiplying the Highly Compensated
Participant's actual contribution ratio (determined after application
of this paragraph) by his "414(s) Compensation." The actual
contribution ratio must be rounded to the nearest one-hundredth of one
percent. In no case shall the amount of Excess Aggregate Contribution
with respect to any Highly Compensated Participant exceed the amount of
Employer matching contributions made pursuant to Section 4. l(b) and
any qualified non-elective contributions or elective deferrals taken
into account pursuant to Section 4.7(c) on behalf of such Highly
Compensated Participant for such Plan Year.
(e) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as
voluntary Employee contributions due to recharacterization for the plan
year of any other qualified cash or deferred arrangement (as defined in
Code Section 401(k)) maintained by the Employer that ends with or
within the Plan Year.
(f) If the determination and correction of Excess Aggregate
Contributions of a Highly Compensated Participant whose actual
contribution ratio is determined under the family aggregation rules,
then the actual contribution ratio shall be reduced and the Excess
Aggregate Contributions for the family unit shall be allocated among
the Family Members in proportion to the sum of Employer matching
contributions made pursuant to Section 4. l(b) and any qualified
non-elective contributions or elective deferrals taken into account
pursuant to Section 4.7(c) of each Family Member that were combined to
determine the group actual contribution ratio.
(g) If during a Plan Year the projected aggregate amount of
Employer matching contributions to be allocated to all Highly
Compensated Participants under this Plan would, by virtue of the tests
set forth in Section 4,7(a), cause the Plan to fail such tests, then
the Administrator may automatically reduce proportionately or in the
order provided in Section 4.8(a) each affected Highly Compensated
Participant's projected share of
<PAGE>
such contributions by an amount necessary to satisfy one of the tests
set forth in Section 4.7(a).
(h) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year, the Employer may make a special Qualified
Non-Elective Contribution on behalf of Non-Highly Compensated
Participants in an amount sufficient to satisfy one of the tests set
forth in Section 4.7(a). Such contribution shall be allocated to the
Participant's Account of each Non-Highly Compensated Participant in the
same proportion that each Non-Highly Compensated Participant's
Compensation for the year bears to the total Compensation of all
Non-Highly Compensated Participants. A separate accounting of any
special Qualified Non-Elective Contribution shall be maintained in the
Participant's Account.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual
additions" credited to a Participant's accounts for any "limitation
year" shall equal the lesser of: (1) $30,000 adjusted annually as
provided in Code Section 415(d) pursuant to the Regulations, or (2)
twenty-five percent (25 %) of the Participant's "415 Compensation" for
such "limitation year." For any short "limitation year," the dollar
limitation in (1) above shall be reduced by a fraction, the numerator
of which is the number of full months in the short "limitation year"
and the denominator of which is twelve (12).
(b) For purposes of applying the limitations of Code Section
415, "annual additions" means the sum credited to a Participant's
accounts for any "limitation year" of (1) Employer contributions, (2)
Employee contributions, (3) forfeitures, (4) amounts allocated, after
March 31, 1984, to an individual medical account, as defined in Code
Section 415(1)(2) which is part of a pension or annuity plan maintained
by the Employer and (5) amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such
date, which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined in Code
Section 419A(d)(3)) under a welfare benefit plan (as defined in Code
Section 419(e)) maintained by the Employer. Except, however, the "415
Compensation" percentage limitation referred to in paragraph (a)(2)
above shall not apply to: (1) any contribution for medical benefits
(within the meaning of Code Section 419A(f)(2)) after separation from
service which is otherwise treated as an "annual addition," or (2) any
amount otherwise treated as an "annual addition" under Code Section
415(1)(1).
(c) For purposes of applying the limitations of Code Section
415, the transfer of funds from one qualified plan to another is not an
"annual addition." In addition, the following are not Employee
contributions for the purposes of Section 4.9(b)(2): (1) rollover
contributions (as defined in Code
<PAGE>
Sections 402(e)(6), 403(a)(4), 403(b)(8) and 408(d)(3)); (2) repayments
of loans made to a Participant from the Plan; (3) repayments of
distributions received by an Employee pursuant to Code Section 41
l(a)(7)(B) (cash-outs); (4) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(3)(D) (mandatory
contributions); and (5) Employee contributions to a simplified employee
pension excludable from gross income under Code Section 408(k)(6).
(d) For purposes of applying the limitations of Code Section
415, the "limitation year" shall be the Plan Year.
(e) For the purpose of this Section, all qualified defined
benefit plans (whether terminated or not) ever maintained by the
Employer shall be treated as one defined benefit plan, and all
qualified defined contribution plans (whether terminated or not) ever
maintained by the Employer shall be treated as one defined contribution
plan.
(f) For the purpose of this Section, if the Employer is a
member of a controlled group of corporations, trades or businesses
under common control (as defined by Code Section 1563(a) or Code
Section 414(b) and (c) as modified by Code Section 415(h)), is a member
of an affiliated service group (as defined by Code Section 414(m)), or
is a member of a group of entities required to be aggregated pursuant
to Regulations under Code Section 414(o), all Employees of such
Employers shall be considered to be employed by a single Employer.
(g) For the purpose of this Section, if this Plan is a Code
Section 413(c) plan, each Employer who maintains this Plan will be
considered to be a separate Employer.
(h)
(1) If a Participant participates in more than one
defined contribution plan maintained by the Employer which
have different Anniversary Dates, the maximum "annual
additions" under this Plan shall equal the maximum "annual
additions" for the "limitation year" minus any "annual
additions" previously credited to such Participant's accounts
during the "limitation year."
(2) If a Participant participates in both a defined
contribution plan subject to Code Section 412 and a defined
contribution plan not subject to Code Section 412 maintained
by the Employer which have the same Anniversary Date, "annual
additions" will be credited to the Participant's accounts
under the defined contribution plan subject to Code Section
412 prior to crediting 'annual additions" to the Participant's
accounts under the defined contribution plan not subject to
Code Section 412.
<PAGE>
(3) If a Participant participates in more than one
defined contribution plan not subject to Code Section 412
maintained by the Employer which have the same Anniversary
Date, the maximum "annual additions" under this Plan shall
equal the product of (A) the maximum "annual additions" for
the "limitation year" minus any "annual additions" previously
credited under subparagraphs (1) or (2) above, multiplied by
(B) a fraction (i) the numerator of which is the "annual
additions" which would be credited to such Participant's
accounts under this Plan without regard to the limitations of
Code Section 415 and (ii) the denominator of which is such
"annual additions" for all plans described in this
subparagraph.
(i) If an Employee is (or has been) a Participant in one or
more defined benefit plans and one or more defined contribution plans
maintained by the Employer, the sum of the defined benefit plan
fraction and the defined contribution plan fraction for any "limitation
year" may not exceed 1.0.
(j) The defined benefit plan fraction for any "limitation
year" is a fraction, the numerator of which is the sum of the
Participant's projected annual benefits under all the defined benefit
plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125 percent of the dollar
limitation determined for the "limitation year" under Code Sections
415(b) and (d) or 140 percent of the highest average compensation,
including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first "limitation year" beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125 percent of the sum of the annual benefits
under such plans which the Participant had accrued as of the close of the last
limitation year beginning before January 1, 1987, disregarding any changes in
the terms and conditions of the plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 for all "limitation years"
beginning before January 1, 1987.
(k) The defined contribution plan fraction for any "limitation
year" is a fraction, the numerator of which is the sum of the annual
additions to the Participant's Account under all the defined
contribution plans (whether or not terminated) maintained by the
Employer for the current and all prior "limitation years" (including
the annual additions attributable to the Participant's nondeductible
Employee contributions to all defined benefit plans, whether or not
terminated, maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined in Code Section
419(e), and individual medical accounts, as defined in Code
<PAGE>
Section 4150)(2), maintained by the Employer), and the denominator of
which is the sum of the maximum aggregate amounts for the current and
all prior "limitation years" of service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer).
The maximum aggregate amount in any "limitation year" is the lesser of
125 percent of the dollar limitation determined under Code Sections
415(b) and (d) in effect under Code Section 415(c)(1)(A) or 35 percent
of the Participant's Compensation for such year.
If the Employee was a Participant as of the end of the first
day of the first "limitation year" beginning after December 31, 1986, in one or
more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the defined benefit fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal to the
product of (1) the excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they would
be computed as of the end of the last "limitation year" beginning before January
I, 1987, and disregarding any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the Code Section 415 limitation applicable to
the first "limitation year" beginning on or after January 1, 1987. The annual
addition for any "limitation year" beginning before January 1, 1987 shall not be
recomputed to treat ail Employee contributions as annual additions.
(l) Notwithstanding anything contained in this Section to the
contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder, the
terms of which are specifically incorporated herein by reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in estimating a
Participant's Compensation, a reasonable error in determining the
amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any Participant under the
limits of Section 4.9 or other facts and circumstances to which
Regulation 1.415-6(b)(6) shall be applicable, the "annual additions"
under this Plan would cause the maximum "annual additions" to be
exceeded for any Participant, the Administrator shall
(1) distribute any elective deferrals (within the
meaning of Code Section 402(g)(3)) or return any Employee
contributions (whether voluntary or mandatory), and for the
distribution of gains attributable to those elective deferrals
and Employee contributions, to the extent that the
distribution or return would reduce the "excess amount" in the
Participant's accounts
<PAGE>
(2) hold any "excess amount" remaining after the
return of any elective -deferrals or voluntary Employee
contributions in a "Section 415 suspense account" (3) use the
"Section 415 suspense account" in the next "limitation year"
(and succeeding "limitation years" if necessary) to reduce
Employer contributions for that Participant if that
Participant is covered by the Plan as of the end of the
"limitation year," or if the Participant is not so covered,
allocate and reallocate the "Section 415 suspense account" in
the next "limitation year" (and succeeding "limitation years"
if necessary) to all Participants in the Plan before any
Employer or Employee contributions which would constitute
"annual additions" are made to the Plan for such "limitation
year" (4) reduce Employer contributions to the Plan for such
"limitation year" by the amount of the "Section 415 suspense
account" allocated and reallocated during such "limitation
year."
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if any, of
(1) the "annual additions" which would be credited to his account under
the terms of the Plan without regard to the limitations of Code Section
415 over (2) the maximum "annual additions" determined pursuant to
Section 4.9.
(c) For purposes of this Section, "Section 415 suspense
account" shall mean an unallocated account equal to the sum of "excess
amounts" for all Participants in the Plan during the "limitation year."
The "Section 415 suspense account" shall not share in any earnings or
losses of the Trust Fund.
4.11 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred from other qualified plans by Eligible Employees, provided
that the trust from which such funds are transferred permits the
transfer to be made and the transfer will not jeopardize the tax exempt
status of the Plan or Trust or create adverse tax consequences for the
Employer. The amounts transferred shall be set up in a separate account
herein referred to as a "Participant's Rollover Account." Such account
shall be fully Vested at all times and shall not be subject to
Forfeiture for any mason.
(b) Amounts in a Participant's Rollover Account shall be held
by the Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as provided in Section 6.10 and Section 6.11 and paragraphs (c)
and (d) of this Section.
(c) except as permitted by Regulations (including Regulation
1.411(d)4), amounts attributable to elective contributions (as defined
in Regulation 1.401(k)-l(g)(3)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-l(d).
<PAGE>
(d) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive benefits,
the fair market value of the Participant's Rollover Account shall be
used to provide additional benefits to the Participant or his
Beneficiary. Any distributions of amounts held in a Participant's
Rollover Account shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including, but not limited to,
all notice and consent requirements of Code Section 411(a)(ll) and the
Regulations thereunder. Furthermore, such amounts shall be considered
as part of a Participant's benefit in determining whether an
involuntary cash-out of benefits without Participant consent may be
made.
(e) The Administrator may direct that employee transfers made
after a valuation date be segregated into a separate account for each
Participant in a federally insured savings account, certificate of
deposit in a bank or savings and loan association, money market
certificate, or other short term debt security acceptable to the
Trustee until such time as the allocations pursuant to this Plan have
been made, at which time they may remain segregated or be invested as
part of the general Trust Fund, to be determined by the Administrator.
(f) For purposes of this Section, the term "qualified plan"
shall mean any tax qualified plan under Code Section 401(a). The term
"amounts transferred from other qualified plans" shall mean: (i)
amounts transferred to this Plan directly from another qualified plan;
(ii) distributions from another qualified plan which are eligible
rollover distributions and which are either transferred by the Employee
to this Plan within sixty (60) days following his receipt thereof or
are transferred pursuant to a direct rollover; (iii) amounts
transferred to this Plan from a conduit individual retirement account
provided that the conduit individual retirement account has no assets
other than assets which (A) were previously distributed to the Employee
by another qualified plan as a lump-sum distribution (B) were eligible
for tax-free rollover to a qualified plan and (C) were deposited in
such conduit individual retirement account within sixty (60) days of
receipt thereof and other than earnings on said assets; and (iv)
amounts distributed to the Employee from a conduit individual
retirement account meeting the requirements of clause (iii) above, and
transferred by the Employee to this Plan within sixty (60) days of his
receipt thereof from such conduit individual retirement account.
<PAGE>
(g) Prior to accepting any transfers to which this Section
applies, the Administrator may require the Employee to establish that
the amounts to be transferred to this Plan meet the requirements of
this Section and may also require the Employee to provide an opinion of
counsel satisfactory to the Employer that the amounts to be transferred
meet the requirements of this Section.
(h) This Plan shall not accept any direct or indirect
transfers (as that term is defined and interpreted under Code Section
401(a)(11) and the Regulations thereunder) from a defined benefit plan,
money purchase plan (including a target benefit plan), stock bonus or
profit sharing plan which would otherwise have provided for a life
annuity form of payment to the Participant.
(i) Notwithstanding anything herein to the contrary, a
transfer directly to this Plan from another qualified plan (or a
transaction having the effect of such a transfer) shall only be
permitted if it will not result in the elimination or reduction of any
"Section 41 l(d)(6) protected benefit" as described in Section 7.1.
4.12 DIRECTED INVESTMENT ACCOUNT
(a) Participants may, subject to a procedure established by
the Administrator (the Participant Direction Procedures) and applied in
a uniform nondiscriminatory manner, direct the Trustee to invest all of
their accounts in specific assets, specific funds or other investments
permitted under the Plan and the Participant Direction Procedures. That
portion of the interest of any Participant so directing will thereupon
be considered a Participant's Directed Account.
(b) As of each Valuation Date, all Participant Directed
Accounts shall be charged or credited with the net earnings, gains,
losses and expenses as well as any appreciation or depreciation in the
market value using publicly listed fair market values when available or
appropriate.
(1) To the extent that the assets in a Participant's
Directed Account are accounted for as pooled assets or
investments, the allocation of earnings, gains and losses of
each Participant's Directed Account shall be based upon the
total amount of funds so invested, in a manner proportionate
to the Participant's share of such pooled investment.
(2) To the extent that the assets in the
Participant's Directed Account are accounted for as segregated
assets, the allocation of earnings, gains and losses from such
assets shall be made on a separate and distinct basis.
<PAGE>
(c) The Participant Direction Procedures shall provide an
explanation of the circumstances under which Participants and their
Beneficiaries may give investment instructions, including, but need not
be limited to, the following:
(1) the conveyance of instructions by the
Participants and their Beneficiaries to invest Participant
Directed Accounts in Directed Investments;
(2) the name, address and phone number of the
Fiduciary (and, if applicable, the person or persons
designated by the Fiduciary to act on its behalf) responsible
for providing information to the Participant or a Beneficiary
upon request relating to the investments in Directed
Investments;
(3) applicable restrictions on transfers to and from
any Designated Investment Alternative;
(4) any restrictions on the exercise of voting,
tender and similar rights related to a Directed Investment by
the Participants or their Beneficiaries;
(5) a description of any transaction fees and
expenses which affect the balances in Participant Directed
Accounts in connection with the purchase or sale of Directed
Investments: and
(6) general procedures for the dissemination of
investment and other information relating to the Designated
Investment Alternatives as deemed necessary or appropriate,
including but not limited to a description of the following:
(i) the investment vehicles available under
the Plan, including specific information regarding
any Designated Investment Alternative;
(ii) any designated Investment Managers; and
(iii) a description of the additional
information which may be obtained upon request from
the Fiduciary designated to provide such information.
(d) Any information regarding investments available under the
Plan, to the extent not required to be described in the Participant
Direction Procedures, may be provided to the Participant in one or more
written documents which are separate from the Participant Direction
Procedures and are not thereby incorporated by reference into this
Plan.
<PAGE>
(e) The Administrator may, at its discretion, include in or
exclude by amendment or other action from the Participant Direction
Procedures such instructions, guidelines or policies as it deems
necessary or appropriate to ensure proper administration of the Plan,
and may interpret the same accordingly.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation Date,
to determine the net worth of the assets comprising the Trust Fund as it exists
on the Valuation Date. In determining such net worth, the Trustee shall value
the assets comprising the Trust Fund at their fair market value as of the
Valuation Date and shall deduct all expenses for which the Trustee has not yet
obtained reimbursement from the Employer or the Trust Fund. The Trustee may
update the value of any shares held in the Participant Directed Account by
reference to the number of shares held by that Participant, priced at the market
value as of the Valuation Date.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust
Fund which are listed on a registered stock exchange, the Administrator shall
direct the Trustee to value the same at the prices they were last traded on such
exchange preceding the close of business on the Valuation Date. If such
securities were not traded on the Valuation Date, or if the exchange on which
they are traded was not open for business on the Valuation Date, then the
securities shall be valued at the prices at which they were last traded prior to
the Valuation Date. Any unlisted security held in the Trust Fund shall be valued
at its bid price next preceding the close of business on the Valuation Date,
which bid price shall be obtained from a registered broker or an investment
banker. In determining the fair market value of assets other than securities for
which trading or bid prices can be obtained, the Trustee may appraise such
assets itself, or in its discretion, employ one or more appraisers for that
purpose and rely on the values established by such appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and
retire for the purposes hereof on his Normal Retirement Date or Early Retirement
Date. However, a Participant may postpone the termination of his employment with
the Employer to a later date, in which event the participation of such
Participant in the Plan, including the right to receive allocations pursuant to
Section 4.4, shall continue until his Late Retirement Date. Upon a Participant's
Retirement Date or attainment of his Normal Retirement Date
<PAGE>
without termination of employment with the Employer, or as soon thereafter as is
practicable, the Trustee shall distribute, at the election of the Participant,
all amounts credited to such Participant's Combined Account in accordance with
Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date
or other termination of his employment, all amounts credited to such
Participant's Combined Account shall become fully Vested. The
Administrator shall direct the Trustee, in accordance with the
provisions of Sections 6.6 and 6.7, to distribute the value of the
deceased Participant's accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct the Trustee, in accordance with the provisions of Sections
6.6 and 6.7, to distribute any remaining Vested amounts credited to the
accounts of a deceased Former Participant to such Former Participant's
Beneficiary.
(c) Any security interest held by the Plan by reason of an
outstanding loan to the Participant or Former Participant shall be
taken into account in determining the amount of the death benefit.
(d) The Administrator may require such proper proof of death
and such evidence of the right of any person to receive payment of the
value of the account of a deceased Participant or Former Participant as
the Administrator may deem desirable. The Administrator's determination
of death and of the right of any person to receive payment shall be
conclusive.
(e) The Beneficiary of the death benefit payable pursuant to
this Section shall be the Participant's spouse. Except, however, the
Participant may designate a Beneficiary other than his spouse if:
(1) the spouse has waived the right to be the
Participant's Beneficiary, or
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and there is no
"qualified domestic relations order" as defined in Code
Section 414(p) which provides otherwise), or
(3) the Participant has no. spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made
on a form satisfactory to the Administrator. A Participant may
at any time
<PAGE>
revoke his designation of a Beneficiary or change his
Beneficiary by filing written notice of such revocation or
change with the Administrator. However, the Participant's
spouse must again consent in writing to any change in
Beneficiary unless the original consent acknowledged that the
spouse had the right to limit consent only to a specific
Beneficiary and that the spouse voluntarily elected to
relinquish such right. In the event no valid designation of
Beneficiary exists at the time of the Participant's death, the
death benefit shall be payable to his estate.
(f) Any consent by the Participant's spouse to waive any
rights to the death benefit must be in writing, must acknowledge the
effect of such waiver, and be witnessed by a Plan representative or a
notary public. Further, the spouse's consent must be irrevocable and
must acknowledge the specific nonspouse Beneficiary.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior to
his Retirement Date or other termination of his employment, all amounts credited
to such Participant's Combined Account shall become fully Vested. In the event
of a Participant's Total and Permanent Disability, the Trustee, in accordance
with the provisions of Sections 6.5 and 6.7, shall distribute to such
Participant all amounts credited to such Participant's Combined Account as
though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is
terminated for any reason other than death, Total and Permanent
Disability or retirement, such Participant shall be entitled to such
benefits as are provided hereinafter pursuant to this Section 6.4.
Distribution of the funds due to a Terminated Participant
shall be made on the occurrence of an event which would result in the
distribution had the Terminated Participant remained in the employ of the
Employer (upon the Participant's death, Total and Permanent Disability, Early or
Normal Retirement). However, at the election of the Participant, the
Administrator shall direct the Trustee to cause the entire Vested portion of the
Terminated Participant's Combined Account to be payable to such Terminated
Participant. Any distribution under this paragraph shall be made in a manner
which is consistent with and satisfies the provisions of Section 6.5, including,
but not limited to, all notice and consent requirements of Code Section
41l(a)(11) and the Regulations thereunder.
If the value of a Terminated Participant's Vested benefit
derived from Employer and Employee contributions does not exceed $3,500 and has
never exceeded $3,500 at the time of any prior distribution, the
<PAGE>
Administrator shall direct the Trustee to cause the entire Vested benefit to be
paid to such Participant in a single lump sum.
(b) The Vested portion of any Participant's Account shall be a
percentage of the total amount credited to his Participant's Account
determined on the basis of the Participant's number of whole years of
his Period of Service according to the following schedule:
Vesting Schedule
Periods of Service Percentage
1 25 %
2 50 %
3 75 %
4 100 %
(c) Notwithstanding the vesting schedule above, the Vested
percentage of a Participant's Account shall not be less than the Vested
percentage attained as of the later of the effective date or adoption
date of this amendment and restatement.
(d) Notwithstanding the vesting schedule above, upon the
complete discontinuance of the Employer contributions to the Plan or
upon any full or partial termination of the Plan, all amounts credited
to the account of any affected Participant shall become 100% Vested and
shall not thereafter be subject to Forfeiture.
(e) The computation of a Participant's nonforfeitable
percentage of his interest in the Plan shall not be reduced as the
result of any direct or indirect amendment to this Plan. For this
purpose, the Plan shall be treated as having been amended if the Plan
provides for an automatic change in vesting due to a change in top
heavy status. In the event that the Plan is amended to change or modify
any vesting schedule, a Participant with at least three (3) whole years
of his Period of Service as of the expiration date of the election
period may elect to have his nonforfeitable percentage computed under
the Plan without regard to such amendment. If a Participant fails to
make such election, then such Participant shall be subject to the new
vesting schedule. The Participant's election period shall commence on
the adoption date of the amendment and shall end 60 days after the
latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice
of the amendment from the Employer or Administrator.
<PAGE>
(f)
(l) If any Former Participant shall be reemployed by
the Employer -before a 1-Year Break in Service occurs, he
shall continue to participate in the Plan in the same manner
as if such termination had not occurred.
(2) If any Former Participant shall be reemployed by
the Employer before five (5) consecutive 1-Year Breaks in
Service, and such Former Participant had received a
distribution of his entire Vested interest prior to his
reemployment, his forfeited account shall be reinstated only
if he repays the full amount distributed to him before the
earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer or the
close of the first period of five (5) consecutive 1-Year
Breaks in Service commencing after the distribution. In the
event the Former Participant does repay the full amount
distributed to him, the undistributed portion of the
Participant's Account must be restored in full, unadjusted by
any gains or losses occurring subsequent to the Valuation Date
coinciding with or preceding his termination. The source for
such reinstatement shall first be any Forfeitures occurring
during the year. If such source is insufficient, then the
Employer shall contribute an amount which is sufficient to
restore any such forfeited Accounts provided, however, that if
a discretionary contribution is made for such year pursuant to
Section 4. l(d), such contribution shall first be applied to
restore any such Accounts and the remainder shall be allocated
in accordance with Section 4.4.
(3) If any Former Participant is reemployed after a
1-Year Break in Service has occurred, Periods of Service shall
include Periods of Service prior to his 1-Year Break in
Service subject to the following rules:
(i) If a Former Participant has a l-Year
Break in Service, his pre-break and post-break
service shall be used for computing Periods of
Service for eligibility and for vesting purposes only
after he has been employed for one (1) Period of
Service following the date of his reemployment with
the Employer;
(ii) Any Former Participant who under the
Plan does not have a nonforfeitable right to any
interest in the Plan resulting from Employer
contributions shall lose credits otherwise allowable
under (i) above if his consecutive 1-Year Breaks in
Service equal or exceed the greater of (A) five (5)
or (B) the aggregate number of his pre-break Periods
of Service;
(iii) After five (5) consecutive 1-Year
Breaks in Service, a Former Participant's Vested
Account balance attributable to
<PAGE>
pre-break service shall not be increased as a result
of post-break service;
(iv) If a Former Participant is reemployed by the
Employer, he shall participate in the Plan
immediately on his date of reemployment;
(v) If a Former Participant (a 1-Year Break in
Service previously occurred, but employment had not
terminated) is credited with an Hour of Service after
the first eligibility computation period in which he
incurs a 1-Year Break in Service, he shall
participate in the Plan immediately.
6.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the
Participant, shall direct the Trustee to distribute to a Participant or
his Beneficiary any amount to which he is entitled under the Plan in
one lump-sum payment in cash or in property.
(b) Any distribution to a Participant who has a benefit which
exceeds, or has ever exceeded, $3,500 at the time of any prior
distribution shall require such Participant's consent if such
distribution occurs prior to the later of his Normal Retirement Age or
age 62. With regard to this required consent:
(1) The Participant must be informed of his right to
defer receipt of the distribution. If a Participant fails to
consent, it shall be deemed an election to defer the
distribution of any benefit. However, any election to defer
the receipt of benefits shall not apply with respect to
distributions which are required under Section 6.5(c).
(2) Notice of the rights specified under this
paragraph shall be provided no less than 30 days and no more
than 90 days before the date the distribution commences.
(3) Written consent of the Participant to the
distribution must not be made before the Participant receives
the notice and must not be made more than 90 days before the
date the distribution commences.
(4) No consent shall be valid if a significant
detriment is imposed under the Plan on any Participant who
does not consent to the distribution.
Any such distribution may commence less than 30 days after the
notice required under Regulation 1.411(a)-ll(c) is given, provided
that:
<PAGE>
(1) the Administrator clearly informs the Participant
that the Participant has a right to a period of at least 30
days after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable, a
particular distribution option), and (2) the Participant,
after receiving the notice, affirmatively elects a
distribution.
(c) Notwithstanding any provision in the Plan to the contrary,
the distribution of a Participant's benefits shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder (including
Regulation 1.401(a)(9)-2), the provisions of which are incorporated
herein by reference:
(1) A Participant's benefits shall be distributed or
must begin to be distributed to him not later than April 1st
of the calendar year following the later of (i) the calendar
year in which the Participant attains age 70 1/2 or (ii) the
calendar year in which the Participant retires, provided,
however, that this clause (ii) shall not apply in the case of
a Participant who is a "five (5) percent owner" at any time
during the five (5) Plan Year period ending in the calendar
year in which he attains age 70 1/2 or, in the case of a
Participant who becomes a "five (5) percent owner" during any
subsequent Plan Year, clause (ii) shall no longer apply and
the required beginning date shall be the April 1st of the
calendar year following the calendar year in which such
subsequent Plan Year ends. Such distributions shall be equal
to or greater than any required distribution. Notwithstanding
the foregoing, clause (ii) above shall not apply to any
Participant unless the Participant had attained age 70 1/2
before January 1, 1988 and was not a "five (5) percent owner"
at any time during the Plan Year ending with or within the
calendar year in which the Participant attained age 66 1/2 or
any subsequent Plan Year.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance with the
incidental death benefit requirements of Code Section
401(a)(9)(G) and the Regulations thereunder.
(d) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse shall be redetermined annually
in accordance with Regulations. Life expectancy and joint and last
survivor expectancy shall be computed using the return multiples in
Tables V and VI of Regulation 1.72-9.
(e) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of any
annuity Contract purchased and distributed to a Participant or spouse
shall comply with all of the requirements of the Plan.
<PAGE>
(f) If a distribution is made at a time when a Participant is
not fully Vested in his Participant's Account and the Participant may
increase the Vested percentage in such account:
(1) a separate account shall be established for the
Participant's interest in the Plan as of the time of the
distribution; and
(2) at any relevant time, the Participant's Vested
portion of the separate account shall be equal to an amount
("X") determined by the formula:
X equals P(AB plus (R x D)) - (R x D)
For purposes of applying the formula: P is the Vested
percentage at the relevant time, AB is the account balance at the
relevant time, D is the amount of distribution, and R is the ratio of
the account balance at the relevant time to the account balance after
distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) The death benefit payable pursuant to Section 6.2 shall be
paid to the Participant's Beneficiary in one lump-sum payment in cash
or in property subject to the roles of Section 6.6(b).
(b) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant shall be made in
accordance with the following requirements and shall otherwise comply
with Code Section 401(a)(9) and the Regulations thereunder. If it is
determined pursuant to Regulations that the distribution of a
Participant's interest has begun and the Participant dies before his
entire interest has been distributed to him, the remaining portion of
such interest shall be distributed at least as rapidly as under the
method of distribution selected pursuant to Section 6.5 as of his date
of death. If a Participant dies before he has begun to receive any
distributions of his interest under the Plan or before distributions
are deemed to have begun pursuant to Regulations, then his death
benefit shall be distributed to his Beneficiaries by December 31st of
the calendar year in which the fifth anniversary of his date of death
occurs.
However, the 5-year distribution requirement of the preceding paragraph
shall not apply to any portion of the deceased Participant's interest which is
payable to or for the benefit of a designated Beneficiary. In such event, such
portion shall be distributed over a period not extending beyond the life
expectancy of such designated. Beneficiary provided such distribution begins not
later than December 31st of the calendar year immediately following the calendar
year in which the Participant died. However, in the event the Participant's
spouse (determined as of the date of the Participant's death) is his
Beneficiary, the requirement that distributions commence within one year of a
Participant's death shall not apply. In lieu thereof, distributions must
commence on or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died; or (2)
December 31st of the calendar year in which the Participant would have attained
age 70 i/2. If the surviving spouse dies before distributions to such spouse
begin, then the 5-year distribution requirement of this Section shall apply as
if the spouse was the Participant.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the Trustee is to
make a distribution the distribution may be made as soon as is practicable.
However, unless a Former Participant elects in writing to defer the receipt of
benefits (such election may not result in a death benefit that is more than
incidental), the payment of benefits shall occur not later than the 60th day
after the close of the Plan Year in which the latest of the following events
occurs: (a) the date on which the Participant attains the earlier of age 65 or
the Normal Retirement Age specified herein; (b) the 10th anniversary of the year
in which the Participant commenced participation in the Plan; or (c) the date
the Participant terminates his service with the Employer.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian,
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to a
Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall be restored
unadjusted for earnings or losses.
<PAGE>
6.10 PRE-RETIREMENT DISTRIBUTION
At such time as a Participant shall have attained the age of 59 1/2
years, the Administrator, at the election of the Participant, shall direct the
Trustee to distribute all or a portion of the amount then credited to the
accounts maintained on behalf of the Participant. However, no distribution from
the Participant's Account shall occur prior to 100% vesting. In the event that
the Administrator makes such a distribution, the Participant shall continue to
be eligible to participate in the Plan on the same basis as any other Employee.
Any distribution made pursuant to this Section shall be made in a manner
consistent with Section 6.5, including, but not limited to, all notice and
consent requirements of Code Section 41 l(a)(11) and the Regulations thereunder.
Notwithstanding the above, pre-retirement distributions from a
Participant's Elective Account shall not be permitted prior to the Participant
attaining age 59 1/2 except as otherwise permitted under the terms of the Plan.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant,
shall direct the Trustee to distribute to any Participant in any one
Plan Year up to the lesser of 100% of his Vested Participant's Elective
Account and Participant's Account and Participant's Rollover Account
valued as of the last Valuation Date or the amount necessary to satisfy
the immediate and heavy financial need of the Participant. Any
distribution made pursuant to this Section shall be deemed to be made
as of the first day of the Plan Year or, if later, the Valuation Date
immediately preceding the date of distribution, and the Participant's
Elective Account and Participant's Account and Participant's Rollover
Account shall be reduced accordingly. Withdrawal under this Section
shall be authorized only if the distribution is on account of:
(1) Expenses for medical care described in Code
Section 213(d) previously incurred by the Participant, his
spouse, or any of his dependents (as defined in Code Section
152) or necessary for these persons to obtain medical care;
(2) The costs directly related to the purchase of a
principal residence for the Participant (excluding mortgage
payments);
(3) Payment of tuition, related educational fees, and
room and board expenses for the next twelve (12) months of
post-secondary education for the Participant, his spouse,
children, or dependents; or
(4) Payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the
mortgage of the Participant's principal residence.
<PAGE>
(b) No distribution shall be made pursuant to this Section
unless the Administrator, based upon the Participant's representation
and such other facts as are known to the Administrator. determines that
all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount
of the immediate and heavy financial need of the Participant.
The amount of the immediate and heavy financial need may
include any amounts necessary to pay any federal, state, or
local income taxes or penalties reasonably anticipated to
result from the distribution;
(2) The Participant has obtained all distributions,
other than hardship distributions, and all nontaxable (at the
time of the loan) loans currently available under all plans
maintained by the Employer;
(3) The Plan, and all other plans maintained by the
Employer, provide that the Participant's elective deferrals
and voluntary Employee contributions will be suspended for at
least twelve (12) months after receipt of the hardship
distribution or, the Participant, pursuant to a legally
enforceable agreement, will suspend his elective deferrals and
voluntary Employee contributions to the Plan and all other
plans maintained by the Employer for at least twelve (12)
months after receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by the
Employer, provide that the Participant may not make elective
deferrals for the Participant's taxable year immediately
following the taxable year of the hardship distribution in
excess of the applicable limit under Code Section 402(g) for
such next taxable year less the amount of such Participant's
elective deferrals for the taxable year of the hardship
distribution.
(c) Notwithstanding the above, distributions from the
Participant's Elective Account pursuant to this Section shall be
limited, as of the date of distribution, to the Participant's Elective
Account as of the end of the last Plan Year ending before July 1, 1989,
plus the total Participant's Deferred Compensation after such date,
reduced by the amount of any previous distributions pursuant to this
Section and Section 6.10.
(d) Any distribution made pursuant to this Section shall be
made in a manner which is consistent with and satisfies the provisions
of Section 6.5, including, but not limited to, all notice and consent
requirements of Code Section 41 l(a)(11) and the Regulations
thereunder.
<PAGE>
6.12 QUALIFIED. DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a Participant
in this Plan shall be subject to the rights afforded to any "alternate payee"
under a "qualified domestic relations order." Furthermore, a distribution to an
"alternate payee" shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected Participant has not
separated from service and has not reached the "earliest retirement age" under
the Plan. For the purposes of this Section, "alternate payee," "qualified
domestic relations order" and "earliest retirement age" shall have the meaning
set forth under Code Section 414(p).
6.13 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this Section,
a distributee may elect, at the time and in the manner prescribed by
the Administrator, to have any portion of an eligible rollover
distribution that is equal to at least $500 paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover.
(b) For purposes of this Section the following definitions
shall apply:
(1) An eligible rollover distribution is any
distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of
a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint
life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years
or more; any distribution to the extent such distribution is
required under Code Section 401(a)(9); the portion of any
other distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and any
other distribution that is reasonably expected to total less
than $200 during a year.
(2) An eligible retirement plan is an individual
retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section
408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts
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.
<PAGE>
(3) 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 Code Section
414(p), are distributees with regard to the interest of the
spouse or former spouse.
(4) A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
ARTICLE VII
AMENDMENT, TERMINATION, MERGERS AND LOANS
7.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the
Plan, subject to the limitations of this Section. However, any
amendment which affects the rights, duties or responsibilities of the
Trustee and Administrator, other than an amendment to remove the
Trustee or Administrator, may only be made with the Trustee's and
Administrator's written consent. Any such amendment shall become
effective as provided therein upon its execution. The Trustee shall not
be required to execute any such amendment unless the Trust provisions
contained herein are a part of the Plan and the amendment affects the
duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it
authorizes or permits any part of the Trust Fund (other than such part
as is required to pay taxes and administration expenses) to be used for
or diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any reduction
in the amount credited to the account of any Participant; or causes or
permits any portion of the Trust Fund to revert to or become property
of the Employer.
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger,
plan transfer or similar transaction) shall be effective to the extent
it eliminates or reduces any "Section 41 l(d)(6) protected benefit" or
adds or modifies conditions relating to "Section 411(d)(6) protected
benefits" the result of which is a further restriction on such benefit
unless such protected benefits are preserved with respect to benefits
accrued as of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 41 l(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit.
<PAGE>
7.2 TERMINATION
(a) The Employer shall have the right at any time to terminate
the Plan by delivering to the Trustee and Administrator written notice
of such termination. Upon any full or partial termination, all amounts
credited to the affected Participants' Combined Accounts shall become
100% Vested as provided in Section 6.4 and shall not thereafter be
subject to forfeiture, and all unallocated amounts shall be allocated
to the accounts of all Participants in accordance with the provisions
hereof.
(b) Upon the fall termination of the Plan, the Employer shall
direct the distribution of the assets of the Trust Fund to Participants
in a manner which is consistent with and satisfies the provisions of
Section 6.5. Distributions to a Participant shall be made in cash or in
property or through the purchase of irrevocable nontransferable
deferred commitments from an insurer. Except as permitted by
Regulations, the termination of the Plan shall not result in the
reduction of "Section 4.1 l(d)(6) protected benefits" in accordance
with Section 7. l(c).
7.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its assets and/or
liabilities may be transferred to any other plan and trust only if the benefits
which would be received by a Participant of this Plan, in the event of a
termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 41 l(d)(6) protected
benefits" in accordance with Section 7. l(c).
7.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion, make loans
to Participants and Beneficiaries under the following circumstances:
(1) loans shall be made available to all Participants and Beneficiaries
on a reasonably equivalent basis; (2) loans shall not be made available
to Highly Compensated Employees in an amount greater than the amount
made available to other Participants and Beneficiaries; (3) loans shall
bear a reasonable rate of interest; (4) loans shall be adequately
secured; and (5) shall provide for repayment over a reasonable period
of time.
(b) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the
Participant) shall be limited to the lesser of:
<PAGE>
(1) $50,000 reduced by the excess (if any) of the
highest outstanding balance of loans from the Plan to the
Participant during the one year period ending on the day
before the date on which such loan is made, over the
outstanding balance of loans from the Plan to the Participant
on the date on which such loan was made, or
(2) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant under the
Plan.
For purposes of this limit, all plans of the Employer shall be
considered one plan. Additionally, with respect to any loan made prior
to January 1, 1987, the $50,000 limit specified in (1) above shall be
unreduced.
(c) Loans shall provide for level amortization with payments
to be made not less frequently than quarterly over a period not to
exceed five (5) years. However, loans used to acquire any dwelling unit
which, within a reasonable time, is to be used (determined at the time
the loan is made) as a principal residence of the Participant shall
provide for periodic repayment over a reasonable period of time that
may exceed five (5) years but may not exceed ten (10) years. For this
purpose, a principal residence has the same meaning as a principal
residence under Code Section 1034. Notwithstanding the foregoing, loans
made prior to January 1, 1987 which are used to acquire, construct,
reconstruct or substantially rehabilitate any dwelling unit which,
within a reasonable period of time is to be used (determined at the
time the loan is made) as a principal residence of the Participant or a
member of his family (within the meaning of Code Section 267(c)(4)) may
provide for periodic repayment over a reasonable period of time that
may exceed five (5) years. Additionally, loans made prior to January I,
1987, may provide for periodic payments which are made less frequently
than quarterly and which do not necessarily result in level
amortization.
(d) Any loans granted or renewed on or after the last day of
the first Plan Year beginning after December 31, 1988 shall be made
pursuant to a Participant loan program. Such loan program shall be
established in writing and must include, but need not be limited to,
the following:
(1) the identity of the person or positions
authorized to administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or
denied;
(4) limitations, if any, on the types and amounts of
loans offered;
<PAGE>
(5) the procedure under the program for determining a
reasonable rate of interest;
(6) the types of collateral which may secure a
Participant loan; and
(7) the events constituting default and the steps
that will be taken to preserve Plan assets.
Such Participant loan program shall be contained in a separate
written document which, when properly executed, is hereby incorporated
by reference and made a part of the Plan. Furthermore, such Participant
loan program may be modified or amended in writing from time to time
without the necessity of amending this Section.
ARTICLE VIII TOP HEAVY
8.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special vesting
requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan and the
special minimum allocation requirements of Code Section 416(c) pursuant to
Section 4.4 of the Plan.
8.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate Accounts of
Key Employees under this Plan and all plans of an Aggregation Group,
exceeds sixty percent (60%) of the Present Value of Accrued Benefits
and the Aggregate Accounts of all Key and Non-Key Employees under this
Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such Participant's
Present Value of Accrued Benefit and/or Aggregate Account balance shall not be
taken into account for purposes of determining whether this Plan is a Top Heavy
or Super Top Heavy Plan (or whether any Aggregation Group which includes this
Plan is a Top Heavy Group). In addition, if a Participant or Former Participant
has not performed any services for any Employer maintaining the Plan at any time
during the five year period ending on the Determination Date, any accrued
benefit for such Participant or Former Participant shall not be taken into
account for the purposes of determining whether this Plan is a Top Heavy or
Super Top Heavy Plan.
<PAGE>
(b) This Plan shall be a Super Top Heavy Plan for any Plan
Year in which, as of the Determination Date, (1) the Present Value of
Accrued Benefits of Key Employees and (2) the sum of the Aggregate
Accounts of Key Employees under this Plan and all plans of an
Aggregation Group, exceeds ninety percent (90%) of the Present Value of
Accrued Benefits and the Aggregate Accounts of all Key and Non-Key
Employees under this Plan and all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of
the Determination Date is the sum of:
(1) his Participant's Combined Account balance as of
the most recent valuation occurring within a twelve (12) month
period ending on the Determination Date;
(2) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of any
contributions actually made after the Valuation Date but due
on or before the Determination Date, except for the first Plan
Year when such adjustment shall also reflect the amount of any
contributions made after the Determination Date that are
allocated as of a date in that first Plan Year.
(3) any Plan distributions made within the Plan Year
that includes the Determination Date or within the four (4)
preceding Plan Years. However, in the case of distributions
made after the Valuation Date and prior to the Determination
Date, such distributions are not included as distributions for
top heavy purposes to the extent that such distributions are
already included in the Participant's Aggregate Account
balance as of the Valuation Date. Notwithstanding anything
herein to the contrary, all distributions, including
distributions under a terminated plan which if it had not been
terminated would have been required to be included in an
Aggregation Group, will be counted. Further, distributions
from the Plan (including the cash value of life insurance
policies) of a Participant's account balance because of death
shall be treated as a distribution for the purposes of this
paragraph.
(4) any Employee contributions, whether voluntary or
mandatory. However, amounts attributable to tax deductible
qualified voluntary employee contributions shall not be
considered to be a part of the Participant's Aggregate Account
balance.
(5) with respect to unrelated rollovers and
plan-to-plan transfers (ones which are both initiated by the
Employee and made from a plan maintained by one employer to a
plan maintained by another employer), if this Plan provides
the rollovers or plan-to-plan transfers,
<PAGE>
it shall always consider such rollovers or plan-to-plan
transfers as a distribution for the purposes of this Section.
If this Plan is the plan accepting such rollovers or
plan-to-plan transfers, it shall not consider such rollovers
or plan-to-plan transfers as part of the Participant's
Aggregate Account balance.
(6) with respect to related rollovers and
plan-to-plan transfers (ones either not initiated by the
Employee or made to a plan maintained by the same employer),
if this Plan provides the rollover or plan-to-plan transfer,
it shall not be counted as a distribution for purposes of this
Section. If this Plan is the plan accepting such rollover or
plan-to-plan transfer, it shall consider such rollover or
plan-to-plan transfer as part of the Participant's Aggregate
Account balance, irrespective of the date on which such
rollover or plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two
employers are to be treated as the same employer in (5) and
(6) above, all employers aggregated under Code Section 414(b),
(c), (m) and (o) are treated as the same employer.
(d) "Aggregation Group" means either a Required Aggregation
Group or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a
Required Aggregation Group hereunder, each plan of the
Employer in which a Key Employee is a participant in the Plan
Year containing the Determination Date or any of the four
preceding Plan Years, and each other plan of the Employer
which enables any plan in which a Key Employee participates to
meet the requirements of Code Sections 401(a)(4) or 410, will
be required to be aggregated. Such group shall be known as a
Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the
group will be considered a Top Heavy Plan if the Required Aggregation
Group is a Top Heavy Group. No plan in the Required Aggregation Group
will be considered a Top Heavy Plan if the Required Aggregation Group
is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may
also include any other plan 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.
<PAGE>
In the case of a Permissive Aggregation Group, only a plan
that is part of the Required Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is a Top Heavy Group. No
plan in the Permissive Aggregation Group will be considered a Top Heavy
Plan if the Permissive Aggregation Group is not a Top Heavy Group.
(3) Only those plans of the Employer in which the
Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are Top
Heavy Plans.
(4) An Aggregation Group shall include any terminated
plan of the Employer if it was maintained within the last five
(5) years ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the
preceding Plan Year, or (b) in the case of the first Plan Year, the
last day of such Plan Year.
(f) Present Value of Accrued Benefit: In the case of a defined
benefit plan, the Present Value of Accrued Benefit for a Participant
other than a Key Employee, shall be as determined using the single
accrual method used for all plans of the Employer and Affiliated
Employers, or if no such single method exists, using a method which
results in benefits accruing not more rapidly than the slowest accrual
rate permitted under Code Section 411(b)(1)(C). The determination of
the Present Value of Accrued Benefit shall be determined as of the most
recent Valuation Date that falls within or ends with the 12-momh period
ending on the Determination Date except as provided in Code Section 416
and the Regulations thereunder for the first and second plan years of a
defined benefit plan.
(g) "Top Heavy Group" means an Aggregation Group in which, as
of the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key
Employees under all defined benefit plans included in the
group, and
(2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the group, exceeds
sixty percent (60%) of a similar sum determined for all
Participants.
<PAGE>
ARTICLE IX MISCELLANEOUS
9.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon him as a Participant of this Plan.
9.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which
shall be payable out of the Trust Fund to any person (including a
Participant or his Beneficiary) shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void;
and no such benefit shall in any manner be liable for, or subject to,
the debts, contracts, liabilities, engagements, or torts of any such
person, nor shall it be subject to attachment or legal process for or
against such person, and the same shall not be recognized by the
Trustee, except to such extent as may be required by law.
(b) This provision shall not apply to the extent a Participant
or Beneficiary is indebted to the Plan, as a result of a loan from the
Plan. At the time a distribution is to be made to or for a
Participant's or Beneficiary's benefit, such proportion of the amount
distributed as shall equal such loan indebtedness shall be paid by the
Trustee to the Trustee or the Administrator, at the direction of the
Administrator, to apply against or discharge such loan indebtedness.
Prior to making a payment, however, the Participant or Beneficiary must
be given written notice by the Administrator that such loan
indebtedness is to be so paid in whole or part from his Participant's
Combined Account. If the Participant or Beneficiary does not agree that
the loan indebtedness is a valid claim against his Vested Participant's
Combined Account, he shall be entitled to a review of the validity of
the claim in accordance with procedures provided in Sections 2.7 and
2.8.
(c) This provision shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to
<PAGE>
the extent provided under a "qualified domestic relations order," a
former spouse of a Participant shall be treated as the spouse or
surviving spouse for all purposes under the Plan.
9.3 CONSTRUCTION OF PLAN
This Plan shall be construed and enforced according to the Act and the
laws of the State of California, other than its laws respecting choice of law,
to the extent not preempted by the Act.
9.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter
gender, they shall be construed as though they were also used in another gender
in all cases where they would so apply, and whenever any words are used herein
in the singular or plural form, they shall be construed as though they were also
used in the other form in all cases where they would so apply.
9.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee, the Employer or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee, the Employer or the Administrator, they shall
be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
9.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically
permitted by law, it shall be impossible by operation of the Plan or of
the Trust, by termination of either, by power of revocation or
amendment, by the happening of any contingency, by collateral
arrangement or by any other means, for any part of the corpus or income
of any mast fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes other than
the exclusive benefit of Participants, Retired Participants, or their
Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such excessive
contribution at any time within one (1) year following the time of
payment and the Trustees shall return such amount to the Employer
within the one (1) year period. Earnings of the Plan attributable to
the excess contributions may not be returned to the Employer but any
losses attributable thereto must reduce the amount so returned.
<PAGE>
9.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless exempted
by the Act and regulations thereunder, shall be bonded in an amount not less
than 10% of the amount of the funds such Fiduciary handles; provided, however,
that the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount
of funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety company (as such
term is used in Act Section 412(a)(2)), and the bond shall be in a form approved
by the Secretary of Labor. Notwithstanding anything in the Plan to the contrary,
the cost of such bonds shall he an expense of and may, at the election of the
Administrator, be paid from the Trust Fund or by the Employer.
9.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer, the Administrator, nor the Trustee, nor their
successors shall be responsible for the validity of any Contract issued
hereunder or for the failure on the part of the insurer to make payments
provided by any such Contract, or for the action of any person which may delay
payment or render a Contract null and void or unenforceable in whole or in part.
9.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary,
or to any guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of the Plan, shall, m the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal representative, Beneficiary,
guardian or committee, as a condition precedent to such payment, to execute a
receipt and release thereof in such form as shall be determined by the Trustee
or Employer.
<PAGE>
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer and (2) the
Administrator. The Trustee shall be a fiduciary but not a named Fiduciary. The
named Fiduciaries shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given them under the Plan
or as accepted by or assigned to them pursuant to any procedure provided under
the Plan, including but not limited to any agreement allocating or delegating
their responsibilities, the terms of which are incorporated herein by reference.
In general, unless otherwise indicated herein or pursuant to such agreements,
the Employer shall have the duties specified in Article II hereof, as the same
may be allocated or delegated there, under, including but not limited to the
responsibility for making the contributions provided for under Section 4.1; and
shall have the authority to appoint and remove the Trustee and the
Administrator; to formulate the Plan's "funding policy and method"; and to amend
or terminate, in whole or in part, the Plan. The Administrator shall have the
responsibility for the administration of the Plan, including but not limited to
the items specified in Article II of the Plan, as the same may be allocated or
delegated thereunder. The Administrator shall act as the named Fiduciary
responsible for communicating with the Participant according to the Participant
Direction Procedures. The Trustee shall have the responsibility of management
and control of the assets held under the Trust, except to the extent directed
pursuant to Article II or with respect to those assets, the management of which
has been assigned to an Investment Manager, who shall be solely responsible for
the management of the assets assigned to it, all as specifically provided in the
Plan and any agreement with the Trustee. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan, authorizing or providing for such
direction, information or action. Furthermore, each named Fiduciary may rely
upon any such direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action. It is intended under
the Plan that each named Fiduciary shall be responsible for the proper exercise
of its own powers, duties, responsibilities and obligations under the Plan as
specified or allocated herein. No named Fiduciary shall guarantee the Trust Fund
in any manner against investment loss or depreciation in asset value. Any person
or group may serve in more than one Fiduciary capacity. In the furtherance of
their responsibilities hereunder, the "named Fiduciaries" shall be empowered to
interpret the Plan and Trust and to resolve ambiguities, inconsistencies and
omissions, which findings shall be binding, final and conclusive.
<PAGE>
9.13 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. If the Plan receives
an adverse determination with respect to its initial qualification,
then the Plan may return such contributions to the Employer within one
year after such determination, provided the application for the
determination is made by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan was adopted,
or such later date as the Secretary of the Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary, except
Sections 3.5, 3.6, and 4.1(e), any contribution by the Employer to the
Trust Fund is conditioned upon the deductibility of the contribution by
the Employer under the Code and, to the extent any such deduction is
disallowed, the Employer may, within one (1) year following the
disallowance of the deduction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution within one
(1) year following the disallowance. Earnings of the Plan attributable
to the excess contribution may not be returned to the Employer, but any
losses attributable thereto must reduce the amount so returned.
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any Contract purchased hereunder, the Plan provisions
shall control.
<PAGE>
IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
Signed, sealed, and delivered in the presence of:
/s/ Byron Rovegno /s/ Pat Yanez
- ------------------------------------ -----------------------------------
Byron Rovegno EMPLOYER
Vice President and Pat Yanez
Chief Financial Officer Vice President
Human Resources and
WITNESS AS TO EMPLOYER Administrative Services
<PAGE>
AMENDMENT TO DELFIN SYSTEMS 401(k) PLAN
Delfin Systems hereby adopts the following amendment to the Delfin
Systems 401(k) Plan (the "Plan"):
1. Section 1.28 of the Plan is hereby amended in its entirety to read
as follows:
"1.28. `Highly Compensated Employee' shall mean:
(a) Any Employee who performs services for the Company or any
Related Company who (i) was a 5% owner of the Company or any Related Company at
any time during the Plan Year or the preceding Plan Year; or (ii) for the
preceding Plan Year, received compensation from the Company or any Related
Company in excess of $80,000 (as adjusted pursuant to Section 415(d) of the
Code) and for the preceding Plan Year was a member of the "top-paid group" for
such year.
(b) Any Employee who separated from service (or was deemed to
have separated) prior to the current Plan Year, who performs no services for the
Company or any Related Company during the current Plan Year, and who met the
description in (a) above for the year of his separation or any year after he
attained age 55.
(c) The top-paid group for a Plan Year shall consist of the
top 20% of Employees ranked on the basis of compensation received during the
year excluding Employees described in Section 414(q)(5) of the Code and Treasury
Regulations thereunder. For purposes of this definition of `Highly Compensated
Employee', `compensation' means compensation within the meaning of Section
415(c)(3) of the Code, but including elective or salary reduction contributions
to a cafeteria plan, cash or deferred arrangement or tax-sheltered annuity.
(d) This definition of `Highly Compensated Employee' shall be
effective for Plan Years beginning on or after January 1, 1997, except that for
purposes of determining if an Employee was a Highly Compensated Employee in
1997, this definition will be treated as having been in effect in 1996"
2. Section 3.1 of the Plan is hereby amended to substitute "21" for
"18" with respect to Employees with an Employment Commencement Date after
December 3l, 1998.
3. The first sentence of Section 4.1(b) of the Plan is hereby deleted
and replaced with the following sentences:
"An Employer Matching Contribution made on behalf of each Participant
for a payroll period which shall equal the lesser of: (i) the Compensation
Deferrals made during such payroll period by such Participant; or (ii) four
percent of the Participant's Compensation for such payroll period. A portion of
each Participant's Employer Matching Contributions Account equal to fifty
percent of the aggregate Employer Matching Contributions (valued as of the date
of contribution) allocated to such Account after December 3 l, 1998 shall be
invested in Titan Stock."
<PAGE>
4. The second sentence of Section 4.2(j)(2) of the Plan is hereby
amended in its entirety to read as follows:
"Any modification shall be effective no earlier than the first day of
the calendar quarter following the Committee's receipt of notice of such
modification."
5. The second sentence of Section 4.2(j)(3) of the Plan is hereby
amended in its entirety to read as follows:
"Any revocation shall be effective no earlier than the first day of the
calendar quarter following the Committee's receipt of notice of such
revocation."
6. Section 4.4(c) of the Plan is hereby amended in its entirety to read
as follows:
"Any amount which has been forfeited under the Plan during the Plan
Year shall be used first to pay any expenses lawfully payable from the assets of
the Plan, second to reduce the amount of the Employer Matching Contributions to
be made by the Company for that Plan Year and third to restore forfeitures of
reemployed Participants in accordance with Section 6.4(f)(2).
7. Sections 4.5 and 4.7 of the Plan are hereby amended to provide that
the Actual Deferral Percentage or Actual Contribution Percentage for non-Highly
Compensated Employees shall be the percentage determined for the Plan Year
preceding the Plan Year being tested.
8. Sections 6.4(a) and 6.5(b) of the Plan are hereby amended to
substitute "$5,000" for "$3,500."
9. The Vesting Schedule set forth in Section 6.4 (b) of the Plan is
hereby amended to read as follows with respect to Participants with an
Employment Commencement Date after December 3l, 1998:
"Years of
Service Percentage Vested
less than 2 0%
2 25%
3 50%
4 75%
5 or more 100%"
10. Section 7.4 of the Plan is hereby amended in its entirety to read
as follows with respect to loans made after December 31, 1998.
"7.4 Loans to Participants.
(a) Each Participant shall have the right, subject to prior
approval by the Committee, to borrow from his Accounts. Application for a loan
must be submitted by a Participant to the Committee or its delegate on such
form(s) as the Committee may require. The Committee may permit loan applications
in writing, by telephone or by electronic mall. Approval shall be granted or
denied as specified in subsection (b), on the terms specified in
<PAGE>
subsection (c). For purposes of this Section, but only to the extent required by
Department of Labor Regulations Section 2550.408b-1, the term 'Participant'
shall include any Employee, former Employee, Beneficiary or alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of the
Code, who is a party in interest and has an interest in the Plan that is not
contingent.
(b) The Committee shall grant any loan which meets each of the
requirements of paragraphs (1), (2) and (3) below:
(1) The amount of the loan, when added to the
outstanding balance of all other loans to the Participant from all
qualified plans of the Company or any Related Company shall not exceed
the lesser of:
(i) $50,000, reduced by the excess, if any,
of a Participant's highest outstanding balance of all loans
from the Plan or any other qualified plan maintained by the
Company or any Related Company during the preceding 12 months
over the outstanding balance of such loans on the loan date,
or
(ii) 50 percent of the value of the vested
balance of the Participant's Accounts;
(2) The loan shall be for at least $1,000; and
(3) No more than one loan may be outstanding to a
Participant at any time.
(c) Each loan granted shall, by its terms, satisfy each of the
following additional requirements:
(1) Each loan must be for a minimum initial term of
one year and must be repaid within five years;
(2) Each loan must require substantially level
amortization over the term of the loan, with payments not less
frequently than quarterly; and
(3) Each loan must be adequately secured, with the
security to consist of the balance of the Participant's Accounts.
(i) In the case of any Participant who is an
active Employee, automatic payroll deductions shall be
required as additional security.
(ii) In the case of any other Participant,
the outstanding loan balance may at no time exceed 50 percent
of the outstanding vested balance of the Participant's
Accounts. If such limit is at any time exceeded, or if the
Participant fails to make timely repayment, the loan will be
treated as in default and become immediately payable in full.
(iii) The investment gain or loss
attributable to the loan shall not be included in the
calculation or allocation of the increase or decrease in fair
<PAGE>
market value of the Investment Funds. Instead, the entire gain
or loss (including any gain or loss attributable to interest
payments or default) shah be allocated to the Accounts of the
Participant.
(4) Each loan shall bear a reasonable rate of
interest, which rate shall be the prime rate (as determined by the
Committee) as of the last day of the calendar quarter preceding the
calendar quarter in which the loan is made, plus one percent.
Furthermore, the Participant's Accounts shall be charged a setup fee
not to exceed the fee charged by the Plan's record keeper at the time
the loan is made; such setup fee shall be paid to the Plan's record
keeper.
(d) All loan payments shall be transmitted by the Company to
the Trustee as soon as practicable but not later than the date of transmittal to
the Trustee of Compensation Deferrals withheld during the month during which
such loan amounts were received or withheld. Each loan may be prepaid in full at
any time. Any prepayment shall be paid directly to the Trustee in accordance
with procedures adopted by the Committee.
(e) Each loan shall be evidenced by a promissory note executed
by the Participant and payable in full to the Trustee, not later than the
earliest of(i) a fixed maturity date meeting the requirements of subsection
(c)(1) above, (ii) the Participant's death, (iii) the termination of the Plan or
(iv) the Participant's separation from service. Such promissory note shall
evidence such terms as are required by this Section.
(f) The Committee shall have the power to modify the above
rules or establish any additional rules with respect to loans extended pursuant
to this Section. Such rules may be included in a separate document or documents
and shall be considered a part of the Plan; provided, each rule and each loan
shall be made only in accordance with the regulations and rulings of the
Internal Revenue Service and Department of Labor and other applicable state or
federal law. The Committee shall act in its sole discretion to ascertain whether
the requirements of such regulations and rulings and this Section have been
met."
Unless otherwise specified, the amendments set forth above shall be effective as
of January 1, 1999. Capitalized terms within the text of amendments shall have
the same meaning as in the Titan Corporation Consolidated Retirement Plan except
that they shall be applied with respect to the Delfin Systems 401(k) Plan.
<PAGE>
IN WITNESS WHEREOF, Delfin Systems has caused this amendment to be
executed the 1st day of January, 1999.
Delfin Systems
By: /s/ Allen D. Branch
Its: Executive Vice President
<PAGE>
FIRST AMENDMENT
TO THE
DELFIN SYSTEMS
401(k) PLAN
WHEREAS, Delfin Systems (hereinafter, the "Employer") adopted a restatement of
the Delfin Systems 40l(k) Plan (hereinafter, the "Plan") effective as of January
1, 1997;
WHEREAS, the Employer has the ability to amend the Plan pursuant to Section 7.1
thereof; and
WHEREAS, the Employer now desires to amend the Plan in various respects;
NOW, THEREFORE, the Employer hereby amends the Plan in the following respects,
effective as of January 1, 1999 except for item 8, which shall be effective as
of April 1, 1999:
1. Section 1.13 is hereby amended to read as follows:
"1.13 "Early Retirement Date" means, for Participants and Former
Participants whose participation in the Plan commenced prior to January
1, 1999 only, the first day of the month (prior to the Normal
Retirement Date) coinciding with or following the date on which the
Participant or Former Participant attains age 55, and has completed at
least 10 whole years of his Period of Service with the Employer (Early
Retirement Age). A Participant shall become fully Vested upon
satisfying this requirement if still employed at his Early Retirement
Age.
A Former Participant who terminates employment after
satisfying the service requirement for Early Retirement and who
thereafter reaches the age requirement contained herein shall be
entitled to receive his benefits under this Plan."
2. Section 3.1 is hereby amended to read as follows:
"3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who has attained age 21 shall be
eligible to participate hereunder as of the date he has satisfied such
requirements."
3. Paragraph (2) of Section 4.2(j) is hereby amended to read as follows:
"(2) A Participant may modify a prior election during the Plan Year and
concurrently make a new election by filing a written notice with the
Administrator. However, modifications to a salary deferral election
shall only be permitted quarterly, during election periods established
by the Administrator prior to the first day of each Plan Year quarter.
Any modification shall not have retroactive effect and shall remain in
force until revoked."
4. Paragraph (2) of Section 4.4(b) is hereby amended to read as follows:
"(2) With respect to the Employer Non-Elective Contribution made
pursuant to Section 4.l(b), to each Participant's Account in accordance
with Section 4.l(b).
Any Participant actively employed during the Plan Year shall be
eligible to share in the matching contribution for the Plan Year."
<PAGE>
5. Subsection (a) of Section 4.12 is hereby amended to read as follows:
"(a) Participants may, subject to a procedure established by the
Administrator (the Participant Direction Procedures) and applied in a
uniform nondiscriminatory manner, direct the Trustee to invest all of
their accounts except the portion of the Participant's Account
attributable to matching contributions made on and after January 1,
1999, in specific assets, specific funds or other investments permitted
under the Plan and the Participant Direction Procedures. That portion
of the interest of any Participant so directing will thereupon be
considered a Participant's Directed Account. The portion of the
interest of any Participant not subject to self direction will be
invested in the Titan Corporation Common Stock Fund."
6. A new subsection (f) is hereby added to Section 4.12, to read as
follows:
"(f) With respect to a Participant's Directed Investment Account, the
Participant or Beneficiary shall direct the Administrator with regard
to any voting, tender and similar rights associated with the ownership
of such assets, (i.e., the "Stock Right(s)") as follows:
(1) Each Participant or Beneficiary shall direct the
Administrator to vote or otherwise exercise such Stock Rights
in accordance with the provisions, conditions and terms of any
such Stock Right(s),
(2) Such directions shall be provided to the Administrator by
the Participant or Beneficiary in accordance with the
procedure as established by the Administrator. The
Administrator shall vote or otherwise exercise such Stock
Right(s) with respect to which it has received directions to
do so under this subsection.
(3) To the extent to which a Participant or Beneficiary does
not instruct the Administrator or does not issue valid
directions to the Administrator to vote or otherwise exercise
such Stock Right(s), such Participants or Beneficiaries shall
be deemed to have directed the Administrator that such Stock
Rights remain nonvoted and unexercised."
7. Subsection (b) of Section 6.4 is hereby amended to read as follows:
"(b) The Vested Portion of a Participant's Account of any
Participant who was first employed by the Employer prior to January 1,
1999 shall be a percentage of the total amount credited to his
Participant's Account determined on the basis of the Participant's
number of whole years of his Period of Service according to the
following schedule:
Vesting Schedule
Periods of Service Percentage
1 25%
2 50%
3 75%
4 100%
The Vested portion of a Participant's Account of any
Participant who is first employed by the Employer on or after January
l, 1999 shall be a percentage of the total amount credited to his
Participant's Account determined on the basis of the participant's
number of whole years of his Period of Service according to the
following schedule:
<PAGE>
Vesting Schedule
Periods of Service Percentage
2 25%
3 50%
4 75%
5 100%"
8. A new Section 6.14 is hereby appended to Article VI, to read as
follows:
"6.14 Employer Securities and Real Property
The Trustee shall be empowered to acquire and hold "qualifying
Employer securities" and "qualifying Employer real property," as those
terms are defined in the Act, provided, however, that the Trustee shall
not be permitted to acquire any qualifying Employer securities or
qualifying Employer real property if, immediately after the acquisition
of such securities or property, the fair market value of all qualifying
Employer securities and qualifying Employer real property held by the
Trustee hereunder should amount to more than 100% of the fair market
value of all the assets in the Trust Fund."
9. Subsection (c) of Section 7.4 is hereby amended to read as follows:
"(c) Loans shall provide for level amortization with payments
to be made not less frequently than quarterly over a period not to
exceed five (5) years. However, loans granted prior to January 1, 1999
and used to acquire any dwelling unit which, within a reasonable time,
is to be used (determined at the time the loan is made) as a principal
residence of the Participant shall provide for periodic repayment over
a reasonable period of time that may exceed five (5) years but may not
exceed ten (10) years."
10. In all other respects, the terms of this Plan are hereby ratified and
confirmed.
IN WITNESS WHEREOF, the Employer has caused this First Amendment to be executed
in duplicate counterparts, each of which shall be considered as an original,
this 1st day of March, 1999.
DELFIN SYSTEMS
By: /s/ A.D. Branch
Witness Employer/Executive Vice President
- --------------------------------------------------------------------------------
Delfin Systems 401(k) Plan
Directed Employee Benefit Trust Agreement
1996 Charles Schwab & Co., Inc. Member SIPC/NYSE.
All rights reserved. Schwab Retirement Plan Services, Inc. is an affiliate
of Charles Schwab & Co., Inc.
<PAGE>
DIRECTED EMPLOYEE BENEFIT TRUST AGREEMENT
This TRUST AGREEMENT ("Trust Agreement" or "Agreement"), entered into this 1st
day of January, 1997, by and between Delfin Systems, a corporation, partnership
or sole proprietorship (the "Company"), and THE CHARLES SCHWAB TRUST COMPANY
(the "Trustee").
PURPOSE
The Company has adopted a plan called Delfin Systems 401(k) Plan (the
"Plan") for the exclusive purpose of providing benefits to certain of its
employees and their beneficiaries and defraying reasonable expenses of
administering the Plan. The Plan provides that, from time to time, cash and
other assets may be paid to the Trustee by the Company to be held and
administered as a trust (the "Trust Fund" or "Trust") for the uses and purposes
of the Plan The Company intends that the Plan shall qualify under section 401 of
the Internal Revenue Code of 1986, as amended (the "Code"), and that the Trust
shall constitute a part of the Plan, as a tax exempt entity within the meaning
of Code section 501(a)
Subject to specific conditions set forth in this Agreement, the Trustee
agrees that it will hold in the Trust and invest cash and other acceptable
property received pursuant to this Agreement and received as contributions from
the Company or transfers from another plan qualified under section 401(a) of the
Code upon the terms and conditions stated below.
ARTICLE 1
TRUST FUND
1.1 The Company's President or other duly authorized official shall
certify in writing to the Trustee tile names and specimen signatures of all
those persons who are authorized to act as or on behalf of the Plan's named
fiduciary, which term shall include the administrator of the Plan (the
"Administrator") and these names and specimen signatures shall be updated as
necessary by the President or other duly authorized official.
1.2 All contributions or transfers shall be received by the Trustee in
cash or in any other property acceptable to the Trustee as determined by the
Trustee under its Investment Guidelines, which are incorporated herein and made
part of the Agreement as amended from time to time. The Trust Fund shall consist
of the contributions and transfers received by the Trustee, together with the
income and earnings from them and any increments m them. The Trustee shall
manage and administer the Trust Fund without distinction between principal and
income. The Trustee shall have no duty to (i) compute any amount required to be
transferred or paid to it by the Company, (ii) collect any contributions or
transfers to the Trust Fund, or (iii) determine whether any contribution or
transfer complies with the terms of the Plan.
If the Company creates or maintains one or more employee benefit plans
qualified under Code section 401(a) in addition to the Plan, the Company may
request the Trustee to hold the assets of the additional plan or plans in the
Trust Fund. The Administrator shall keep records showing the interest of the
Plan and each additional plan in the Trust Fund unless the Trustee enters into
an agreement with the Company to keep separate accounts for each such plan. The
Company and the Administrator shall not permit or cause the assets of one plan
to be used to pay benefits or the administrative expenses of any other plan with
the assets in the Trust Fund.
1.3 The Trustee shall accept a contribution of cash or other property
otherwise acceptable to the Trustee that has been distributed to a participant
(or an eligible employee who is about to become a participant) from another
employee benefit plan qualified under Code section 401(a), or from an individual
retirement account or annuity described in Code section 408, at the direction of
the Administrator. The Administrator shall be solely responsible for determining
that such assets represent an eligible rollover contribution within the meaning
of Code section 402(C)(4) or 408(d)(3). The Trustee shall accept a transfer of
cash or other property acceptable to the Trustee on behalf of a participant (or
an employee who is about to become a participant) directly from the trustee of
an employee benefit plan qualified under Code section 401 (a) at the direction
of the Administrator.
ARTICLE 2
INVESTMENTS AND DISTRIBUTIONS
2.1 (a) Except as provided below, the Administrator shall have all
power over and responsibility for the management, disposition, and investment of
the Trust assets, and the Trustee shall comply with proper written directions of
the Administrator concerning those assets. The Administrator shall not issue
directions in violation of the terms of the Plan and Trust or prohibited by the
fiduciary responsibility rules of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Except to the extent required by ER/SA or otherwise
provided in this Agreement, the Trustee shall have no duly or responsibility to
review, initiate action, or make recommendations regarding Trust assets and
shall retain assets until directed in writing by the Administrator to dispose of
them.
The Administrator may delegate to any other person or persons any of
the Administrator's rights, powers or responsibilities with respect to the
operation and administration of the Trust Fund. Any such delegation shall be
made in writing and communicated to the Trustee. The Administrator shall not be
liable for any breach of fiduciary responsibility of a delegee that is not
proximately caused by the Administrator's failure to properly select or
supervise such delegee and in which the Administrator does not participate.
(b) If permissible under the Plan, each participant and/or
beneficiary may have investment power over the account maintained for him or
her, and may direct the investment and reinvestment of assets of the account
among the options authorized by the Administrator. Such direction shall be
furnished to the Trustee in writing under procedures agreed to by the Trustee
and the Administrator. To the extent provided under ERISA section 404(c), the
Trustee shall not be liable for any loss, or by reason of any breach, which
results from such participant's or beneficiary's exercise of control. If a
participant who has investment authority under the terms of the plan fails to
provide such directions, the Administrator shall direct the investment of the
participant's accounts. The Administrator shall maintain records showing the
interest of each participant and/or beneficiary in the Trust Fund unless the
Trustee enters into an agreement with thc Company to keep separate accounts for
each such participant and/or beneficiary. The Trustee shall have no duty or
responsibilit3' to review or make recommendations regarding investments made at
the direction of the Administrator or participant and shall be required to act
only upon receipt of proper written directions. A participant or beneficiary
shall not have authority to direct the investment of assets in his or her
account in a loan to any participant, including himself or herself, or
"collectibles" within the meaning of Code section 408(m)(2).
(c) The Administrator may appoint an investment manager or
managers w/thin the meaning of section 3(38) of ERISA to direct, control or
manage the investment of all or a portion of the Trust assets, as provided in
sections 3(38) and 403(a)(2) of ERISA. The Administrator shall notify the
Trustee in writing of the appointment of each investment manager, and the assets
over which each manager shall exercise control and cause the investment manager
to acknowledge to the Trustee in writing that the investment manager is a
fiduciary with respect to the Plan. If the foregoing conditions are met, the
investment manager shall have the power to manage, acquire, or dispose of any
Trust assets identified as under such manager's control, and the Trustee shall
not be liable for acts or omissions of the investment manager, or be under an
obligation to invest or otherwise manage any asset of the Trust that is subject
to the management of such investment manager. The Trustee shall act only upon
receipt of proper written directions from a duly appointed investment manager,
and shall have no liability to review or question any such directions.
(d) If the Plan authorizes loans to Plan participants, the
duties of the Trustee and Administrator may be covered by a separate agreement
to be incorporated as part of this Agreement.
2.2 (a) Subject to the Investment Guidelines of the Trustee, any
general or specific investment guidelines formulated by the Company or the
Administrator and the provisions of Section 2 1 above, the person with
investment responsibility ("Authorized Person") may cause the Trust Fund to be
invested and reinvested in every kind of investment including, without
limitation, publicly traded equity and debt interests of all kinds issued by
domestic or foreign governments, business organizations, limited partnerships,
investment companies and trusts or other entities, convertible securities of all
kinds, interest-bearing deposits in any depository institution (including the
Trustee or any affiliate of the Trustee), money market securities of all kinds,
collective investments as described in subsection Co) below and insurance
contracts as described in subsection (c) below. Notwithstanding anything in the
Trust Agreement to the contrary, the Trustee may hold uninvested and without
liability for interest such part of the Trust Fund as may be reasonably
necessary for the orderly administration of the Trust Fund.
(b) Subject to the following provisions, the assets of the
Trust Fund may be invested and reinvested, in whole or in par[ in any common or
collective investment fund (referred to as the "fund") maintained by the Trustee
or an investment manager in which the Trust Fund is eligible to participate.
Notwithstanding any other provision of this Agreement, to the extent Trust Fund
assets are invested in any such fund, the terms of the fund's governing
instrument shall govern the investment responsibilities and powers of the entity
responsible for management of the fund (referred to as "fund manager"), and the
terms of such governing instrument shall be incorporated into the Trust
Agreement. The value of any interest in a fund held by the Trust Fund shall be
the fair market value of the interest as determined by the fund manager in
accordance with the fund's governing instrument. For purposes of valuation of
the Trust Fund assets, the Trustee shall be entitled to rely conclusively on the
value reported by the fund manager.
The Trust Fund may be invested in a pooled investment vehicle funded by
contracts issued by an insurance company qualified to do business in a state
(within the meaning of ERISA section 3(10)) including, without limitation, group
annuity and guaranteed investment contracts. Any such contract may provide for
the allocation of mounts received by the insurance company to its general
account, one or more of its separate accounts (including pooled separate
accounts), or both. To the extent Trust Fund assets are allocated to a separate
account of an insurance company, the Administrator shall appoint the insurance
company as an investment manager as provided above. Notwithstanding any other
provision of the Trust Agreement, the terms of the contract(s) governing the
separate account(s) in which the Trust Fund is invested shall govern the
investment responsibilities and powers of the insurance company and, to the
extent required by law, the terms of such contract(s) shall be incorporated into
thc Trust Agreement.
(c) To the extent permitted by the Plan, the Authorized Person
may direct the Trustee to apply for and purchase life insurance or annuity
contracts (referred to as "contracts") from an insurance company, subject to the
following provisions:
(i) The Authorized Person shall be responsible for
ensuring that the purchases conform with the
requirements of the Plan and any rules and policies established by the
Administrator regarding the form, value, optional settlement methods and other
provisions of the contracts. The Trustee shall not be responsible for the
validity or proper execution of any contract delivered to it, or any act of any
persons which renders the contract void or voidable. The Trustee shall not be
responsible if the contract held in the Trust Fund fails to meet the
requirements of the Plan, and shall have no duty to inform participants of the
terms and conditions of any such contract.
(ii) The Administrator shall instruct the insurance
company to notify the Administrator of all premiums
becoming due under the contracts. The Plan Administrator shall deliver all
premium notices to the Trustee, together with a direction to the Trustee to pay
the premiums out of the Trust Fund. The Trustee shall have no responsibility for
paying the premium unless sufficient assets of the Trust Fund are available for
that purpose.
(iii) The Administrator shall cause the Trustee to be
designated as thc sole owner of any such contract,
with sole power to exercise all rights, privileges, options and other incidents
of ownership at the Administrator's direction. The Administrator from time to
time shall direct the Trustee regarding the designation of a beneficiary of the
death benefit payable under any such contract in accordance with the applicable
provisions of the Plan.
(d) To the extent permitted by the Plan and ERISA and subject
to the applicable federal and state securities laws, the Authorized Person may
direct the Trustee to invest in qualifying employer securities within the
meaning of ERISA section 407(d)(5) ("Employer Securities"). The Administrator
shall have full responsibility for determining that any such investment, and the
voting rights attributable to such investment, complies with applicable law.
Notwithstanding any other provision of the Plan or Trust Agreement, the
Administrator shall have responsibility for voting any shares or directing that
such shares shall be sold, exchange, or otherwise disposed of except to the
extent that such duties are made the responsibility of another person or persons
under the terms of the Plan or other governing document, and such person
performs according to such terms.
2.3 In its administration of the Trust Fund, the Trustee shall have and
exercise whatever powers are necessary to discharge its obligations and exercise
its rights under the Trust Agreement. Subject to the direction of the
Administrator, participants, or an investment manager as provided in Section
2.1, the Trustee shall have full power and authority with respect to property
held in the Trust Fund to do all such acts, take all proceedings, and exercise
all such rights and privileges, whether specifically referred to or not in this
document, as could be done, taken, or exercised by the absolute owner,
including, without limitation, the following:
(a) To collect income generated by the Trust Fund investments
and proceeds realized on the sale or disposition of assets and to hold the same
pending reinvestment or distribution in accordance with this Agreement;
(b) To register Trust Fund property in the Trustee's own name,
in the name of a nominee or in bearer form, provided the Trustee's records and
accounts show that such property is an asset of the Trust Fund;
(c) To deposit securities in a security depository and permit
the securities so deposited to be held in the name of the depository's nominee,
and to deposit securities issued or guaranteed by the U.S. government or any
agency or instrumentality thereof, including securities evidenced by book entry
rather than by certificate, with the U.S. Department of the Treasury, a Federal
Reserve Bank or other appropriate custodial entity, in the same account as the
Trustee's own property, provided the Trustee's records and accounts show that
such securities are assets of the Trust Fund;
(d) To hold securities issued by a foreign government or
business entity at a foreign office of the Trustee or any of its affiliates, or
to deposit such securities with a foreign securities depository or bank
regulated by a government agency or regulatory authority in the foreign
jurisdiction, and to permit the securities so deposited to be held in the
nominee name of the depository or bank, provided that the Trustee's records and
accounts show that such securities belong to the Trust Fund;
(e) To retain the property in the Trust;
(f) To sell Trust assets, at either public or private sale, at
such time or times and on such terms and conditions as it may deem appropriate;
(g) To consent to or participate in any plan for the
reorganization, consolidation, or merger of any business unit, any security of
which is held in the Trust Fund, to pay calls and assessments imposed upon the
owners of such securities as condition of their participating therein, and to
consent to any contract, lease, mortgage, purchase or sale of property, by or
between such business unit and any other party;
(h) To exercise or dispose of any right it may have as the
holder of any security, to convert the same into another security, to acquire
any additional security or securities, to make any payments, to exchange any
security, or to do any other act with reference thereto;
(i) To renew or extend the time of payment of any obligation
due or becoming due;
(j) To grant options to purchase properly held in the Trust;
(k) To compromise, arbitrate, or otherwise adjust or settle
claims in favor of or against the Trust and to deliver or accept consideration
in either total or partial satisfaction of any indebtedness or other obligation,
and to continue to hold property so received for the period of time that the
Trustee deems appropriate;
(l) To exchange any property for other property upon such
terms and conditions as the Trustee may deem proper, and to give or receive
money to effect equality in price;
(m) To foreclose any obligation by judicial proceeding or
otherwise;
(n) To sue or defend in connection with any and all securities
or property at any time received or held in the Trust Fund and to charge against
the Trust Fund all reasonable expenses and attorney's fees in connection
therewith;
(o) To manage any real property in the same manner as if the
Trustee were the absolute owner thereof, including the power to lease the same
for such term or terms, and upon such conditions including, but without
limitation, agreements for the purchase or disposal of buildings on the property
or options to the tenant to renew such lease from time to time or to purchase
such property as the Trustee deems proper; to make ordinary and extraordinary
repairs and alterations to any property that the Trustee deems proper; to make
ordinary and extraordinm3, repairs and alterations to any building, to raze old
buildings, to erect new buildings, to insure against loss by fire or other
casualties, and to employ agents and confer upon them authority with respect to
the management of such real property as the Trustee deems appropriate;
(p) To borrow money from any person other than a party in
interest of the Plan with or without giving security;
(q) To deposit any security with any protective or
reorganization committee, and to delegate to that committee such power and
authority as the Trustee may deem proper, and to agree to pay out of the Trust
Fund that portion of the expenses and compensation of that committee as the
Trustee may deem proper;
(r) To deliver to the Administrator, or the person or persons
identified by the Administrator, proxies and powers of attorney and related
informational material, for any shares or other property held in the Trust. The
Administrator shall have responsibility for voting such shares, by proxy or in
person, except to the extent such responsibility is delegated to another person,
under the terms of the Plan or Trust Agreement or under an agreement between the
named fiduciary of the Plan and an investment manager, in which case such
persons shall have such responsibility. The Trustee may use agents to effect
such delivery to the Administrator or the person or persons identified by the
Administrator. In no event shall the Trustee be responsible for the voting of
shares of securities held in the Trust or for ascertaining or monitoring
whether, or how, proxies are voted or whether the proper number of proxies is
received.
(s) To appoint agents as necessary or desirable, including
legal counsel who may be counsel for the Company;
(t) To hold that portion of the Trust Fund as the Trustee may
deem necessary for ordinary administration and for the disbursement of funds in
cash, without liability for interest, by depositing the same in any bank
(including deposits which bear a reasonable rate of interest in a bank or
similar financial institution supervised by the United States or a State, even
where a bank or financial institution is the Trustee, or otherwise is a
fiduciary of the Plan, including The Charles Schwab Trust Company), subject to
the rules and regulations governing such deposits, and without regard to the
amount of any such deposit;
(u) To retain group or individual insurance contracts of all
kinds authorized under the Plan;
(v) If directed by the Administrator, participant or
investment manager, to acquire, hold, and administer limited partnership
interests, or interests in other specialized investment vehicles, provided that
such Authorized Person signs any agreement or other necessary documents
requested by the Trustee prior to entering into the transaction;
(w) To write covered call options on securities where
appropriate for the Trust; provided that any such transaction is in conformity
with the Plan and all applicable rules, regulations and laws governing the
Trustee, the Plan, and this Trust;
(x) To the extent permitted under applicable laws, to invest
in deposits, long and short term debt instruments, stocks, and other securities,
including those of the Trustee, The Charles Schwab Corporation (the "Public
Company"), Charles Schwab & Co., Inc. (the "Broker/Dealer"), their affiliates
and subsidiaries.
(y) To lend securities from the Trust on a secured basis in
accordance with a separate written agreement between the Administrator and the
Trustee
2.4 The Trustee is authorized to contract or make other arrangements
with The Charles Schwab Corporation (the "Public Company"), Charles Schwab &
Co., Inc. (the "Banker/Dealer"), their affiliates and subsidiaries, successor
and assigns and any other organizations affiliated with or subsidiaries of the
Trustee or related entities, for the provision of services to the Trust or Plan,
except where such arrangements are prohibited by law or regulation.
2.5 The Trustee is authorized to place securities orders, settle
securities trades, hold securities in custody, and other related activities on
behalf of the Trust through or by the Broker/Dealer whenever possible, unless
the Authorized Person specifically instructs the use of another broker/dealer.
Trades (and related activities) conducted through the Broker/Dealer shall be
subject to fees and commissions established by the Broker/Dealer, which may be
paid from the Trust or netted from the proceeds of trades.
Trades shall not be executed through the Broker/Dealer unless the
Administrator and the Authorized Person have received disclosure concerning the
relationship of the Broker/Dealer to the Trustee, and fees and commissions which
may be paid to the Public Company, Broker/Dealer, the Trustee and/or their
affiliates or subsidiaries as a result of using the Broker/Dealer's execution or
other services.
The Trustee is authorized to disclose such information as is necessary
to the operation and administration of the Trust to the Public Company or any of
its affiliates, and to such other persons or organizations that the Trustee
determines have a legitimate business purpose for obtaining such information.
2.6 At the direction of the Authorized Person, the Trustee may purchase
shares of regulated investment companies (or other investment vehicles) advised
by the Public Company, Broker/Dealer or the Trustee or any affiliate of them
("Schwab Funds") except to the extent prohibited by law or regulation.
(a) Uninvested cash of the Trust will be invested in Schwab
Funds designated by the Authorized Person for that purpose, unless the
Authorized Person specifically instructs the use of another fund or account,
except to the extent prohibited by law or regulation.
Schwab Fund shares may not be purchased or held by the Trust unless the
Authorized Person has received disclosure concerning the Public Company's,
Broker/Dealer's, the Trustee's and/or their affiliate's or subsidiary's
relationship to the Funds, and any fees which may be paid m the Public Company,
Broker/Dealer, Trustee and/or their affiliates or subsidiaries.
2.7 The Administrator shall have responsibility for establishing and
carrying out a funding policy and method, as specified in section 402(b)(1) of
ERISA, consistent with the objectives of the Plan and the requirements of ERISA,
taking into consideration the Plan's short-term and long-term financial needs.
The Trustee shall not be responsible for proper diversification of the
assets of the Trust Fund. The Administrator or the person to whom such
responsibility has been properly delegated under the requirements of ERISA shall
be responsible for the funding policy, for diversification of assets held in
trust for the Plan, and for compliance of the Trust Fund with statutory
limitations on the amount of investment in securities or other property of the
Company or its affiliated companies.
2.8 No assets of the Trust Fund shall be invested in the securities of
the Company or its affiliates unless the Administrator determines that the
securities are exempt from registration under the federal Securities Act of
1933, as amended, and are exempt from registration or qualification under the
applicable state law, and of any other applicable blue sky law, or in the
alternative, that the securities have been so registered and/or qualified. The
Administrator shall also specify what restrictive legend on transfer, if any, is
required to be set forth on the certificates for the securities and the
procedure to be followed by the Trustee to effectuate a resale of such
securities. The Administrator shall not direct the investment in "employer
securities" or "employer real property", within the meaning of section 407 of
ERISA, if such investment would be prohibited by ERISA. The Administrator shall
only direct the investment of Trust funds into securities of the Company or an
affiliate (i) if those securities are traded on an exchange permitting a readily
ascertainable fair market value, or (ii) if the Administrator shall have
obtained a current valuation by a qualified independent appraiser.
2.9 The Trustee shall make distributions or transfers from the Trust as
specified in written directions from the Administrator. The Trustee is
authorized, to the extent required under applicable law, to withhold from
distributions to any payee an amount that the Trustee determines is necessary to
cover federal and state taxes, and the Trustee is required to withhold such
amounts if so directed by the Administrator. The Trustee shall have no liability
for making any distribution or transfer pursuant to the direction of the
Administrator (including amounts withheld pursuant to the previous sentence) and
shall be under no duty to make inquiry whether any distribution or transfer
directed by the Administrator is made pursuant to the provisions of the Plan.
The Administrator shall furnish to the Trustee all information necessary to
carry out such withholding, or, if such information is not provided to the
Trustee, the Company shall hold the Trustee harmless from and indemnify it for
any liability and related expenses that arise in connection with improper
withholding.
The Trustee shall not be liable for the proper application of any part
of the Plan or Trust if distributions or transfers are made in accordance with
the written directions of the Administrator including any distribution made
pursuant to a domestic relations order which the Administrator has determined to
be qualified within the meaning of section 414(p) of the Code, nor shall the
Trustee be responsible for the adequacy of the Trust Fund to discharge any and
all payments and liabilities under the Plan.
2.10 The Trustee may make any payment required to it under this
Agreement by mailing its check for the amount specified to the recipient at such
address last furnished to the Trustee by the Administrator, or if the Trustee
has never received an address, to the recipient in care of the Administrator.
2.11 All persons dealing with the Trustee are released from inquiring
into the decision or authority of the Trustee and from seeing to the proper
application of any monies paid or securities or other property delivered to the
Trustee.
2.12 The Trustee shall bear no liability for acting upon any
instruction or document believed by it to be genuine and to he presented or
signed by a party duly authorized to do so, and the Trustee shall be under no
duty to make any investigation or inquiry about the correctness of such
instruction or document.
2.13 The Trustee may consult with legal counsel of its choice,
including counsel for the Company, upon any question or matter arising hereunder
and the opinion of such counsel when relied upon by the Trustee shall be
evidence the Trustee was acting in good faith.
2.14 If as provided in the Plan, other trustees of separate trusts
under the Plan may be appointed, the Trustee under this Agreement shall have no
duties or responsibilities for Plan assets not held in the Trust by the Trustee,
except as required by applicable law.
ARTICLE 3
SETTLEMENT OF ACCOUNTS
3.1 (a) The Trustee shall maintain accurate records and detailed
accounts of all investments, receipts, disbursements, and other transactions
related to the Trust, and those records shall be available at all reasonable
times to the Administrator, the Company, or their authorized representatives.
(b) The Trustee, at the direction of the Administrator, shall
submit to the Administrator and any other person that the Administrator
designates those valuations, reports, or other information as the Administrator
may reasonably require. In any case, the Trust Fund shall be valued by the
Trustee at the frequency agreed to by the Trustee and the Company, but in any
event not less than annually at the fair market value as of the close of
business at the end of the last business day of the fiscal year of the Plan.
Except as specified below, in the absence of fraud or bad faith, the Trustee's
valuation of the Trust Fund shall be conclusive.
3.2 (a) Within sixty days following the close of each fiscal year of
the Plan or the close of any other period as may be agreed upon by the Trustee
and the Administrator, the Trustee shall file with the Administrator a written
account setting forth a description of all securities and other property
purchased and sold, all receipts, disbursements, and other transactions effected
by it during that fiscal year or other designated period, and listing the
securities and other property held by the Trustee at the end of such fiscal year
or other designated period, together with their then fair market values.
(b) The Administrator may approve an account by written notice
of approval delivered to the Trustee or by failure to deliver to the Trustee
express objections to the account in writing within sixty days from the date
upon which the account was mailed or otherwise delivered to the Administrator.
(c) The account shall be deemed approved upon receipt by the
Trustee of the Administrator's written approval of the account or upon the
passage of the sixty day period of time, except for any matters covered by
written objections that have been delivered to the Trustee by the Administrator
and for which the Trustee has not given an explanation or made an adjustment
satisfactory to the Administrator.
(d) If the account is not settled as provided above, the
Trustee, the Company or the Administrator shall have the right to apply to a
court of competent jurisdiction at the expense of the Trust Fund for a judicial
settlement of the accounting. Any judgment or decree entered in such proceedings
shall be conclusive on all persons interested in the Trust Fund.
3.3 Notwithstanding any other provision of this Article 3, if the
Trustee shall determine that the Trust Fund consists in whole or in part of
property not traded freely on a recognized market, or that information necessary
to ascertain the fair market value is not readily available, the Trustee may
request instructions from thc Administrator on the value of such property for
all purposes under the Plan and this Trust Agreement, and the Administrator
shall comply with that request. The Trustee shall be entitled to rely upon the
value placed upon such property by the Administrator. At the Trustee's option,
it may request that the Administrator hire an independent appraiser that meets
the requirements of Code section 401(a)(28)(C) to value the property.
Alternatively, it the Trustee chooses, or if the Administrator shall fail or
refuse to instruct the Trustee on the value of such property within a reasonable
time after receipt of the Trustee's request, the Trustee at its sole discretion
may engage an independent appraiser to determine the fair market value of such
property. Any expenses with respect to such appraisal shall be paid by the
Trustee out of the Trust Fund or, at the option of the Company, by the Company.
ARTICLE 4
INDEMNIFICATION
4.1 To the extent permitted under ERISA, the Company shall indemnify
and hold harmless the Trustee, its officers, employees, and agents from and
against all liabilities, losses, expenses, and claims (including reasonable
attorney's fees and costs of defense) arising out of (1) the acts or omissions
to act with respect to the Plan or Trust by persons unrelated to the Trustee
("unrelated persons"), (2) the Trustee's action or inaction with respect to the
Plan or Trust resulting from reliance on the action or inaction of unrelated
persons, including directions to invest or otherwise deal with Plan assets, or
(3) any violation by any unrelated person of the provisions of ERISA or the
regulations thereunder, unless the Trustee commits a breach of its duties by
reason of its negligence or willful misconduct. Expenses incurred by the Trustee
which it believes to be subject to indemnification under this Agreement shall be
paid by the Company upon the Trustee's request, provided that the Company may
delay payment of any amount in dispute until such dispute is resolved according
to the provisions of Sec. 8.5 of the Agreement. Such resolution may include the
award of interest on unpaid amounts determined to be payable to the Trustee
under tiffs Section.
ARTICLE 5
TAXES, EXPENSES AND COMPENSATION OF TRUSTEE
5.1 The Trustee shall notify the Plan Administrator of any tax levied
upon or assessed against the Trust Fund of which the Trustee has knowledge. If
the Trustee receives no instructions from thc Administrator, the Trustee may pay
the tax from the Trust Fund. If the Plan Administrator wishes to contest the tax
assessment, it shall give appropriate written instructions to the Trustee. The
Trustee shall not be required to bring any legal actions or proceedings to
contest the validity of any tax assessments unless the Trustee has been
indemnified to its satisfaction against loss or expense related to such actions
or proceedings, including reasonable attorney's fees.
5.2 The Company shall quarterly pay the Trustee, its expenses in
administering the Trust Fund and reasonable compensation for its services as
Trustee as described in the SchwabPlan(TM) Retirement Plan Services Agreement.
Reasonable compensation shall include compensation for any extraordinary
services or computations required, such as determination of the value of assets
when current market values are not published, and the covering of overdrafts.
The Trustee shall have a lien on the Trust Fund for compensation and for any
reasonable expenses including counsel, appraisal, or accounting fees, and such
amounts may be withdrawn from the Trust Fund unless paid by the Company within
thirty days after mailing of the written billing by the Trustee.
ARTICLE 6
RESIGNATION OR REMOVAL OF TRUSTEE
6.1 The Trustee may resign as Trustee hereunder or may be removed by
the Company. This resignation or removal may be accomplished at any time upon
the giving of sixty days written notice to the Trustee or Company, as applicable
(or less if the other party agrees to waive notice). Upon resignation or
removal, the Company shall appoint a successor trustee who shall then succeed to
all the powers and duties given to the Trustee by this Agreement. The
terminating Trustee shall transfer all property of the Trust Fund then held by
it to such successor Trustee. The terminating Trustee may require as a condition
of making such transfer that the successor Trustee present evidence that any
bonding requirement under ERISA section 412 has been met and/or may require that
the Company provide a writing indemnifying the Trustee against any losses
arising from the replacement of the Trustee. If either party has given notice of
termination as provided under this Agreement, and upon the expiration of the
advance notice period no other successor Trustee has been appointed and has
accepted such appointment, this provision shall serve as (i) notice of
appointment of the Chief Executive Officer of the Company as Trustee and (ii) as
acceptance by that person of that appointment. The Trustee is authorized to
reserve such sum of money as it may deem advisable for payment of its fees and
expenses in connection with the settlement of its accounts or other proper Trust
expenses, and any balance of such reserve remaining after the payment of such
fees and expenses shall be paid to the successor Trustee.
6.2 Within sixty days of the transfer to the successor Trustee, the
terminating Trustee shall provide the Company with an account in the form and
manner prescribed for the annual account by Article 3. Unless the Company files
with the Trustee written objections within sixty days after such account has
been mailed or otherwise delivered, the account shall be deemed to have been
approved.
<PAGE>
ARTICLE 7
AMENDMENT AND TERMINATION OF TRUST
7. l It is the intention of the Company that this Trust and the Plan of
which it is a part shall be permanently administered for the benefit of the
Plan's participants and their beneficiaries, and defraying reasonable expenses
of administering the Plan. This Trust is, accordingly, irrevocable except with
respect to Section 8.4; however, ft changing conditions require, this Trust may
be terminated at any time by the Company, and upon such termination, the Trust
Fund shall be distributed by the Trustee as and when directed by the
Administrator in accordance with the provisions of Section 2.9 and the Plan
document. From the date of termination of the Plan and until the final
distribution of the Trust assets, the Trustee shall continue to have all the
powers provided under this Agreement that are necessary or desirable for the
orderly liquidation and distribution of the Trust Fund. In no instance upon any
termination, or discontinuance, and subsequent distribution shall the Trust Fund
or any part of it be used for, or diverted to, purposes other than providing
benefits to participating employees and their beneficiaries, and defraying the
administrative expenses of the Plan until all Plan liabilities have been
satisfied, except in thc instance of the failure of the Trust initially to
qualify for tax-exempt status as set forth in Section 8.4.
7.2 This Trust Agreement, other than Section 7.1, may be amended at any
time by written agreement of the Company and the Trustee, provided, that such
amendment shall not operate:
(i) to cause any part of the Trust Fund to revert to or be
recoverable by the Company or to be used for or diverted to purposes other than
the exclusive benefit of participants and their beneficiaries, except to the
extent permitted by law and the Plan; or
(ii) to reduce the then accrued benefits or the mounts then
held for the benefit of any participant or beneficiary of the Plan.
7.3 The Trustee may condition the transfer or distribution of any
assets of the Trust Fund upon termination of the Trust on receipt of a favorable
determination letter from the Internal Revenue Service confirming that the
termination of the Plan docs not adversely affect the tax-exempt status of the
Trust Fund. Alternatively, the Trustee, in its sole discretion, may accept the
indemnification of the Trustee against any liability arising from such transfer
or distribution that is provided by the Company or may require the Company to
post a bond sufficient to protect the Trustee against such liability until such
time as a favorable determination letter is received.
ARTICLE 8
MISCELLANEOUS
8.1 The Trust will be administered in the State of California, and its
validity, construction, and all rights hereunder shall be governed by ERISA and,
to the extent not preempted, by the laws of California. If any provisions of
this Agreement shall be invalid or unenforceable, the remaining provisions shall
continue to be fully effective.
8.2 The headings in this instrument have been inserted for convenience
of reference only, and are to be ignored in any construction of the provisions
of this Agreement.
8.3 No person entitled to any benefit under this Trust and the Plan
shall have any right to assign, alienate, hypothecate, or encumber his interest
in any benefits under this Agreement (except as to any loans under the Plan) and
those benefits shall not in any way be subject to claim of his creditors or
liable to attachment, execution, or other process of law except to the extent
required under a qualified domestic relations order within the meaning of
section 414(p) of the Code.
8.4 It is intended that this Trust shall be tax exempt under section
501 of the Code and that the Plan referred to herein shall qualify under section
40l(a) of the Code. However, notwithstanding any other provisions of the Trust,
if the Internal Revenue Service is requested to issue to the Company a favorable
written determination or ruling with respect to the initial qualification of the
Plan and exemption of the Trust from tax and such request is denied, the Trustee
shall, after receiving a written direction from the Administrator, pay to each
participant that portion of the Trust Fund applicable to said participant's
voluntary contributions, if any, and provided the Plan so states, pay to the
Company any part of the Trust Fund attributable to Company contributions then
remaining in the Trustee's possession. As a condition to such repayment, the
Company must execute, acknowledge, and deliver to the Trustee its written
undertaking, in form satisfactory to the Trustee, to indemnify, defend, and hold
the Trustee harmless from all claims, actions, demands, or liabilities arising
in connection with such repayment, and provided further that such repayment will
occur within one year after the date the request for qualification is denied.
8.5 Any dispute under this Agreement shall be resolved by submission of
the issue to a member of the American Arbitration Association who is chosen by
the Company and the Trustee. If the Company and the Trustee cannot agree on such
a choice, each shall nominate a member of the American Arbitration Association,
and the two nominees will then select an arbitrator. Expenses of the arbitration
shall be paid as decided by the arbitrator.
8.6 This Trust Agreement is incorporated into and is a part of the
Plan. Anything in any other part of the Plan that is inconsistent with this
Trust Agreement is overridden, and in the case of such conflict, the terms of
this Trust Agreement shall govern.
8.7 The duties and responsibilities of the Trustee shall be solely
those set forth in this document. The Trustee shall not be a named fiduciary
under the Plan and shall not have the authority to interpret the Plan.
8.8 To the extent permitted by statutory or administrative exemption,
the Trustee may engage in actions that otherwise would violate section 406 of
ERISA.
8.9 Each fiduciary shall be solely responsible for the fiduciary's own
acts or omissions under the Plan or the Trust. Except to the extent otherwise
provided by ERISA, the parties specifically intend that no fiduciary shall be
liable for any breach of fiduciary responsibility of another fiduciary.
8.10 The Trustee is authorized to tape record conversations between the
Trustee and persons acting on behalf of the Plan or a participant in the Plan to
verify data on transactions.
<PAGE>
1N WITNESS WHEREOF, Delfin Systems and THE CHARLES SCHWAB TRUST COMPANY, have
caused this Agreement to be executed by their respective officers thereto duly
authorized as of the day and year first above written.
COMPANY: Delfin Systems
By: /s/ Pat Yanez
Printed Name: Pat Yanez
Title: Vice President, Human Resources
and Administrative Services
THE CHARLES SCHWAB TRUST COMPANY
Trustee
By: /s/ John Harabedian
Printed Name: John Harabedian
Title: V.P.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 15, 1999
included in The Titan Corporation's Form 10-K for the year ended December 31,
1998 and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
San Diego, California
October 28, 1999
