<PAGE>
As filed with the Securities and Exchange Commission on December 22, 1997
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
Form S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------------
GERBER SCIENTIFIC, INC.
(Exact name of registrant as specified in its charter)
Connecticut 06-0640743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
83 Gerber Road West
South Windsor, CT 06074
(860) 644-1551
(Address, including zip code, and telephone number
of Principal Executive Offices)
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
401(K) MAXIMUM ADVANTAGE PROGRAM AND TRUST
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997
and
GERBER SCIENTIFIC, INC. AND PARTICIPATING SUBSIDIARIES
DEFERRED COMPENSATION PLAN
(Full title of the plans)
----------------------------------------
Richard F. Treacy, Jr., Esq.
83 Gerber Road West
South Windsor, CT 06074
(860) 644-1551
(Name, address and telephone number of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------
Proposed Proposed Amount of
Title of maximum maximum registration
securities Amount offering aggregate fee
to be to be price offering
registered registered per share(2) price(2)
<S> <C>
Common Stock
($1 Par value) 500,000 shares(1)(3) $19.25 $9,625,000 $2,840
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) 350,000 of such shares are to be offered and sold pursuant to the 401(k)
Maximum Advantage Program and Trust and 150,000 of such shares are to be offered
and sold pursuant to the Deferred Compensation Plan.
(2) Pursuant to Rule 457(h), the proposed maximum offering price per share is
estimated solely for the purpose of calculating the registration fee and is
based upon the average of the high and low sales prices of the common stock of
the registrant as reported on the New York Stock Exchange on December 17, 1997,
a date within five business days of the date on which this registration
statement is being filed.
(3) Plus, (a) in accordance with Rule 416 of the Securities Act of 1933, as
amended, such indeterminate number of additional shares as may become issuable
pursuant to anti-dilution provisions of the Plans and (b) an indeterminate
amount of interests to be offered or sold pursuant to the Gerber Scientific,
Inc. (401)k Maximum Advantage Program and Trust and the Deferred Compensation
Plan.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
EXPLANATORY NOTE
As permitted by the rules of the Securities and Exchange Commission
(the "Commission"), this Registration Statement omits the information specified
in Part I of Form S-8. The documents containing the information specified in
Part I will be delivered to the participants in the Plan as required by
Securities Act Rule 428(b). Such documents are not being filed with the
Commission as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(1) the Company's Annual Report on Form 10-K for the year ended April
30, 1997.
(2) the Company's Quarterly Reports on Form 10-Q for the quarters ended
July 31, 1997 and October 31, 1997.
(3) all other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the filing of the Annual Report on Form 10-K.
(4) the description of the Company's Common Stock contained in the
Registration Statement on Form 8-A filed by the Company together with
all amendments or reports filed for the purpose of updating such
description.
All documents subsequently filed by the Company and the Plans pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities registered
hereunder have been sold or which deregisters all of the securities offered then
remaining unsold, shall be deemed to be incorporated herein by reference and to
be a 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.
Item 6. Indemnification of Directors and Officers
Sections 33-770 to 33-778 of the Connecticut Business Corporation Act
gives corporations the power to indemnify officers and directors under certain
circumstances. Article III of the Company's by-laws provides for indemnification
of officers and directors of the Company to the fullest extent permitted by
applicable law. Further, the 401(k) Maximum Advantage Program and Trust provides
for indemnification of all plan fiduciaries (which may include Company officers
and directors) by the Company against any and all liabilities resulting from any
action or inaction, (including a plan termination in which the Company fails to
apply for a favorable determination from the Internal Revenue Service with
respect to the qualification of the plan upon its termination), in relation to
the plan or trust (i) including (without limitation) expenses reasonably
incurred in the defense of any claim relating to the plan or its assets, and
amounts paid in any settlement relating to the plan or its assets, but (ii)
excluding liability resulting from actions or inactions made in bad faith, or
resulting from the negligence
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<PAGE>
or willful misconduct of the Trustee, or breaches by the Trustee of its
fiduciary duties or violations under ERISA. The Company shall have the right,
but not the obligation, to conduct the defense of any action to which such
indemnification applies. The plan fiduciaries are not entitled to indemnity from
the plan assets relating to any such action. The Deferred Compensation Plan
provides for indemnification of members of the Company's plan administrative
committee (which may include officers and directors), from and against any and
all losses, claims, damages or liabilities (including attorneys' fees and
amounts paid, with the approval of the Company's Board of Directors, in
settlement of any claim) arising out of or resulting from the implementation of
a duty, act or decision with respect to the plan, so long as such duty, act or
decisions does not involve gross negligence or willful misconduct on the part of
any such individual. In addition, the Company maintains directors' and officers'
reimbursement and liability insurance with National Union Fire Insurance Company
pursuant to standard form policies with an aggregate limit of $25 million.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
4.1 Gerber Scientific, Inc. and Participating Subsidiaries
401(k) Maximum Advantage Program and Trust
4.2 Gerber Scientific, Inc. and Participating Subsidiaries
Deferred Compensation Plan
5.1 (a) No opinion of counsel is required inasmuch as all shares of
the Company's Common Stock to be offered and sold under the
Plans will be obtained in open market transactions and none
will be original issue securities.
(b) The registrant will submit, or has submitted, the 401(k)
Maximum Advantage Program and Trust and any amendment thereto
to the Internal Revenue Service ("IRS") in a timely manner,
and has made or will make all changes required by the IRS in
order to qualify and/or continue to maintain the qualified
status of such Plan.
23.2 Consent of KPMG Peat Marwick LLP
24 Power of Attorney
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
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<PAGE>
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the
most recent post-effective amendment hereto) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in this 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)(1)(i) and (a)(1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) 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 therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, 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 therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling person of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the 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
- II-6 -
<PAGE>
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.
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<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of South Windsor, State of Connecticut, on December
12, 1997.
GERBER SCIENTIFIC, INC.
By: /s/ George M. Gentile
-----------------------------------------
George M. Gentile
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints George M. Gentile and Richard F. Treacy, Jr., and each of them, his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for him in his name, place and stead, in any and all
capacities, to sign any post-effective amendments to this Registration
Statement, and any and all documents in connection therewith, and to file the
same, with all exhibits thereto, and all documents in connection therewith with
the Securities and Exchange Commission under the Securities Act of 1933, grants
to said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done, as fully to all intents and purposes as he might or could do in person,
and hereby ratifies, approves and confirms all that each of such
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/s/ George M. Gentile Chairman of the Board December 22, 1997
- ------------------------ and Chief Executive Officer
George M. Gentile (Principal Executive Officer)
/s/ Gary K. Bennett Senior Vice President, December 22, 1997
- ------------------------ Finance; Treasurer and
Gary K. Bennett Corporate Controller
(Principal Financial and
Accounting Officer)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
/s/ Michael J. Cheshire
- ----------------------- Director December 22, 1997
Michael J. Cheshire
/s/ A. Robert Towbin
- ----------------------- Director December 22, 1997
A. Robert Towbin
/s/ David J. Gerber
- ----------------------- Director December 22, 1997
David J. Gerber
- ----------------------- Director December __, 1997
Edward E. Hood, Jr.
- ----------------------- Director December __, 1997
William Jerome Vereen
/s/ David J. Logan
- ----------------------- Director December 22, 1997
David J. Logan
/s/ Donald P. Aiken
- ----------------------- Director December 17, 1997
Donald P. Aiken
/s/ Carole F. St. Mark
- ----------------------- Director December 22, 1997
Carole F. St. Mark
</TABLE>
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the 401(k)
Maximum Advantage Program and Trust has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
Town of South Windsor, State of Connecticut, on December 22, 1997.
GERBER SCIENTIFIC, INC. AND PARTICIPATING
SUBSIDIARIES 401(k) MAXIMUM ADVANTAGE PROGRAM
AND TRUST
By /s/ Gary K. Bennett
------------------------------
Gary K. Bennett
Member of the Committee duly
authorized to administer the Plan
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Deferred Compensation Plan has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the Town
of South Windsor, State of Connecticut, on December 22, 1997.
GERBER SCIENTIFIC, INC. AND PARTICIPATING
SUBSIDIARIES DEFERRED COMPENSATION PLAN
By /s/ Gary K. Bennett
------------------------------
Gary K. Bennett
Member of the Committee duly
authorized to administer the Plan
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C>
Exhibit Number Description of Exhibit
4.1 Gerber Scientific, Inc. and Participating
Subsidiaries 401(k) Maximum Advantage Program and
Trust
4.2 Gerber Scientific, Inc. and Participating
Subsidiaries Deferred Compensation Plan
23.2 Consent of KPMG Peat Marwick LLP
24 Power of Attorney (included on signature page)
</TABLE>
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<PAGE>
EXHIBIT 4.1
Barclays
Global
Investors
Gerber Scientific, Inc. and
Participating Subsidiaries
401(k) Maximum Advantage Program
and Trust Agreement
Amended and Restated
Effective January 1, 1997
<PAGE>
TABLE OF CONTENTS
1 DEFINITIONS....................................................... 1
-----------
2 ELIGIBILITY....................................................... 10
-----------
2.1 Eligibility............................................. 10
2.2 Ineligible Employees.................................... 10
2.3 Ineligible, Terminated or Former Participants........... 10
3 PARTICIPANT CONTRIBUTIONS......................................... 11
-------------------------
3.1 Pre-Tax Contribution Election........................... 11
3.2 After-Tax Contribution Election......................... 11
3.3 Changing a Contribution Election........................ 11
3.4 Revoking and Resuming a Contribution Election........... 11
3.5 Contribution Percentage Limits.......................... 12
3.6 Refunds When Contribution Dollar Limit Exceeded......... 12
3.7 Timing, Posting and Tax Considerations.................. 13
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER
------------------------------------------------------
QUALIFIED PLANS................................................... 14
---------------
4.1 Rollover Contributions.................................. 14
4.2 Transfers From and To Other Qualified Plans............. 14
5 EMPLOYER CONTRIBUTIONS............................................ 15
----------------------
5.1 Matching Contributions.................................. 15
6 ACCOUNTING........................................................ 16
----------
6.1 Individual Participant Accounting....................... 16
6.2 Sweep Account is Transaction Account.................... 16
6.3 Trade Date Accounting and Investment Cycle.............. 16
6.4 Accounting for Investment Funds......................... 16
6.5 Payment of Fees and Expenses............................ 16
6.6 Accounting for Participant Loans........................ 17
6.7 Error Correction........................................ 17
6.8 Participant Statements.................................. 18
6.9 Special Accounting During Conversion Period............. 18
6.10 Accounts for Alternate Payees........................... 18
7 INVESTMENT FUNDS AND ELECTIONS.................................... 19
------------------------------
7.1 Investment Funds........................................ 19
7.2 Responsibility for Investment Choice.................... 19
7.3 Investment Fund Elections............................... 19
7.4 Default if No Valid Investment Election................. 20
7.5 Investment Fund Election Change Fees.................... 20
i
<PAGE>
8 VESTING............................................................ 21
-------
8.1 Fully Vested Accounts.................................... 21
9 PARTICIPANT LOANS.................................................. 22
-----------------
9.1 Participant Loans Permitted.............................. 22
9.2 Loan Application, Note and Security...................... 22
9.3 Spousal Consent.......................................... 22
9.4 Loan Approval............................................ 22
9.5 Loan Funding Limits, Account Sources and Funding Order... 22
9.6 Maximum Number of Loans.................................. 23
9.7 Source and Timing of Loan Funding........................ 23
9.8 Interest Rate............................................ 23
9.9 Loan Payment............................................. 23
9.10 Loan Payment Hierarchy................................... 24
9.11 Repayment Suspension..................................... 24
9.12 Loan Default............................................. 24
9.13 Call Feature............................................. 24
10 IN-SERVICE WITHDRAWALS............................................. 25
----------------------
10.1 In-Service Withdrawals Permitted......................... 25
10.2 In-Service Withdrawal Application and Notice............. 25
10.3 Spousal Consent.......................................... 25
10.4 In-Service Withdrawal Approval........................... 25
10.5 Payment Form and Medium.................................. 26
10.6 Source and Timing of In-Service Withdrawal Funding....... 26
10.7 Hardship Withdrawals..................................... 26
10.8 After-Tax Account Withdrawals............................ 29
10.9 Rollover Account Withdrawals............................. 29
10.10 Over Age 59 1/2 Withdrawals.............................. 30
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A
----------------------------------------------------
PARTICIPANT'S REQUIRED BEGINNING DATE.............................. 31
-------------------------------------
11.1 Benefit Information, Notices and Election................ 31
11.2 Spousal Consent.......................................... 32
11.3 Payment Form and Medium.................................. 32
11.4 Distribution of Small Amounts............................ 32
11.5 Source and Timing of Distribution Funding................ 33
11.6 Latest Commencement Permitted............................ 33
11.7 Payment Within Life Expectancy........................... 34
11.8 Incidental Benefit Rule.................................. 34
11.9 Payment to Beneficiary................................... 34
11.10 Beneficiary Designation.................................. 35
11.11 QJSA and QPSA Definitions, Information and Elections .... 35
12 ADP AND ACP TESTS.................................................. 38
-----------------
12.1 Contribution Limitation Definitions...................... 38
12.2 ADP and ACP Tests........................................ 40
ii
<PAGE>
12.3 Correction of ADP and ACP Tests.......................... 41
12.4 Multiple Use Test........................................ 42
12.5 Correction of Multiple Use Test.......................... 42
12.6 Adjustment for Investment Gain or Loss................... 42
12.7 Testing Responsibilities and Required Records............ 43
12.8 Separate Testing......................................... 43
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS....................... 44
--------------------------------------------
13.1 "Annual Addition" Defined................................ 44
13.2 Maximum Annual Addition.................................. 44
13.3 Avoiding an Excess Annual Addition....................... 44
13.4 Correcting an Excess Annual Addition..................... 44
13.5 Correcting a Multiple Plan Excess........................ 45
13.6 "Defined Benefit Fraction" Defined....................... 45
13.7 "Defined Contribution Fraction" Defined.................. 45
13.8 Combined Plan Limits and Correction...................... 46
14 TOP HEAVY RULES.................................................... 47
---------------
14.1 Top Heavy Definitions.................................... 47
14.2 Special Contributions.................................... 48
14.3 Adjustment to Combined Limits for Different Plans........ 49
15 PLAN ADMINISTRATION................................................ 50
-------------------
15.1 Plan Delineates Authority and Responsibility............. 50
15.2 Fiduciary Standards...................................... 50
15.3 Company is ERISA Plan Administrator...................... 50
15.4 Administrator Duties..................................... 51
15.5 Advisors May be Retained................................. 51
15.6 Delegation of Administrator Duties....................... 52
15.7 Committee Operating Rules................................ 52
16 MANAGEMENT OF INVESTMENTS.......................................... 53
-------------------------
16.1 Trust Agreement.......................................... 53
16.2 Investment Funds......................................... 53
16.3 Authority to Hold Cash................................... 54
16.4 Trustee to Act Upon Instructions......................... 54
16.5 Administrator Has Right to
Vote Registered Investment Company Shares................ 54
16.6 Custom Fund Investment Management ....................... 54
16.7 Master Custom Fund....................................... 55
16.8 Authority to Segregate Assets............................ 55
16.9 Maximum Permitted Investment in Company Stock............ 56
16.10 Participants Have Right to Vote and Tender Company Stock. 56
16.11 Confidentiality Procedures............................... 56
16.12 Registration and Disclosure for Company Stock............ 57
iii
<PAGE>
17 TRUST ADMINISTRATION............................................... 58
--------------------
17.1 Trustee to Construe Trust................................ 58
17.2 Trustee To Act As Owner of Trust Assets.................. 58
17.3 United States Indicia of Ownership....................... 58
17.4 Tax Withholding and Payment.............................. 59
17.5 Trust Accounting......................................... 59
17.6 Valuation of Certain Assets.............................. 59
17.7 Legal Counsel............................................ 60
17.8 Fees and Expenses........................................ 60
17.9 Trustee Duties and Limitations........................... 60
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION.................. 61
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights................... 61
18.2 Compliance With USERRA................................... 61
18.3 Limited Return of Contributions.......................... 61
18.4 Assignment and Alienation................................ 62
18.5 Facility of Payment...................................... 62
18.6 Reallocation of Lost Participant's Accounts.............. 63
18.7 Suspension of Certain Plan Provisions
During Conversion Period............................... 63
18.8 Suspension of Certain Plan Provisions During
Other Periods.......................................... 63
18.9 Claims Procedure......................................... 63
18.10 Construction............................................. 64
18.11 Jurisdiction and Severability............................ 64
18.12 Indemnification by Employer.............................. 65
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION.................... 66
-----------------------------------------------
19.1 Amendment................................................ 66
19.2 Merger................................................... 66
19.3 Divestitures............................................. 66
19.4 Plan Termination and Complete Discontinuance of
Contributions.......................................... 67
19.5 Amendment and Termination Procedures..................... 67
19.6 Termination of Employer's Participation.................. 68
19.7 Replacement of the Trustee............................... 68
19.8 Final Settlement and Accounting of Trustee............... 68
APPENDIX A - INVESTMENT FUNDS............................................... 70
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES.............................. 71
APPENDIX C - LOAN INTEREST RATE............................................. 72
iv
<PAGE>
1 DEFINITIONS
-----------
When capitalized, the words and phrases below have the following
meanings unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting
for a Participant's interest in the Plan. "Account" may refer
to one or all of the following accounts which have been
created on behalf of a Participant to hold amounts
attributable to specific types of Contributions under the
Plan and amounts transferred from the Microdynamics Plan and
the Cutting Edge Plan:
(a) "Pre-Tax Account". An account created to hold
amounts attributable to Pre-Tax Contributions and
amounts transferred from the Cutting Edge Plan
designated as "Salary Deferral Account" amounts
thereunder.
(b) "Prior Pre-Tax Account". An account created to hold
amounts attributable to amounts transferred from the
Microdynamics Plan designated as "Pre-Tax Account"
amounts thereunder.
(c) "After-Tax Account". An account created to hold
amounts attributable to After-Tax Contributions.
(d) "Rollover Account". An account created to hold
amounts attributable to Rollover Contributions and
amounts transferred from the Cutting Edge Plan
designated as "Rollover Account" amounts thereunder.
(e) "Matching Account". An account created to hold
amounts attributable to Matching Contributions and
amounts transferred from the Cutting Edge Plan
designated as "Employer Matching Account" amounts
thereunder.
1.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a
portion of the duties of the Administrator under the Plan to
a Committee in accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage
calculated in accordance with Section 12.1.
1.5 "Alternate Payee". Any spouse, former spouse, child or other
dependent (as defined in Code section 152) of a Participant
who is recognized by a domestic relations order as having a
right to receive all, or a portion, of the Participant's
Account under the Plan.
1
<PAGE>
1.6 "Annuity Eligible Balance". The vested balance of a Participant's
Prior Pre-Tax Account.
1.7 "Beneficiary". The person or persons who is to receive benefits
under the Plan after the death of the Participant pursuant to the
"Beneficiary Designation" paragraph in Section 11.
1.8 "Code". The Internal Revenue Code of 1986, as amended. Reference
to any specific Code section shall include such section, any
valid regulation promulgated thereunder, and any comparable
provision of any future legislation amending, supplementing or
superseding such section.
1.9 "Committee". If applicable, the committee which has been
appointed by the Administrator to administer the Plan in
accordance with Section 15.6.
1.10 "Company". Gerber Scientific, Inc. or any successor by merger,
purchase or otherwise.
1.11 "Company Stock". Shares of common stock of the Company, its
predecessor(s), or its successors or assigns, or any corporation
with or into which said corporation may be merged, consolidated
or reorganized, or to which a majority of its assets may be sold.
1.12 "Compensation". The sum of a Participant's Taxable Income and
salary reductions, if any, pursuant to Code section 125,
402(e)(3), 402(h)(1)(B), 403(b), 408(p)(2)(A)(i) or 457.
For purposes of determining benefits under the Plan, Compensation
is limited to $150,000 per Plan Year (as adjusted for cost of
living increases pursuant to Code sections 401(a)(17) and
415(d)).
For purposes of determining HCEs and key employees and for Plan
Years commencing after December 31, 1997, for purposes of Section
13.2, Compensation for the entire Plan Year shall be used. For
purposes of determining ADP and ACP, Compensation shall be
limited to amounts paid to an Eligible Employee while a
Participant and may instead be redefined for any Plan Year by the
Administrator in any manner permitted under Code sections 401(k)
and (m) and uniformly applied for this purpose for such Plan
Year.
1.13 "Contribution". An amount contributed to the Plan by the Employer
or an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. Specific
types of contribution include:
(a) "Pre-Tax Contribution". An amount contributed by an eligible
Participant in conjunction with his or her Code section
401(k) salary deferral election which shall be treated as
made by the Employer on the eligible Participant's behalf.
2
<PAGE>
(b) "After-Tax Contribution". An amount contributed by an
eligible Participant on an after-tax basis.
(c) "Rollover Contribution". An amount contributed by an Eligible
Employee which originated from another employer's or an
Employer's qualified plan.
(d) "Matching Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant.
For the calendar year ending December 31, 1997, for purposes of
Section 3.6, references to Pre-Tax Contributions shall include
contributions to the Cutting Edge Plan designated as "Salary
Deferral Contributions" thereunder and references to Matching
Contributions shall include contributions to the Cutting Edge
Plan designated as "Employer Matching Contributions" thereunder.
For the Plan Year ending December 31, 1997, for purposes of
Section 12 and Section 13.4, references to Pre-Tax Contributions
shall include contributions to the Cutting Edge Plan designated
as "Salary Deferral Contributions" thereunder and references to
Matching Contributions shall include contributions to the Cutting
Edge Plan designated as "Employer Matching Contributions"
thereunder.
1.14 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre-Tax Contributions, which shall be $7,000 per
calendar year (as adjusted for cost of living increases pursuant
to Code sections 402(g)(5) and 415(d)). For purposes of this
Section, a Participant's Pre-Tax Contributions shall include (i)
any employer contribution under a qualified cash or deferred
arrangement (as defined in Code section 401(k)) to the extent not
includible in gross income for the taxable year under Code
section 402(e)(3) (determined without regard to Code section
402(g)), (ii) any employer contribution to the extent not
includible in gross income for the taxable year under Code
section 402(h)(1)(B) (determined without regard to Code section
402(g)), (iii) any employer contribution to purchase an annuity
contract under Code section 403(b) under a salary reduction
agreement (within the meaning of Code section 3121(a)(5)(D)) and
(iv) any elective employer contribution under Code section
408(p)(2)(A)(i).
1.15 "Conversion Period". The period of converting the prior
accounting system of any plan and trust which is merged, in whole
or in part, into the Plan and Trust, to the accounting system
described in Section 6.
1.16 "Cutting Edge Plan". The Cutting Edge, Inc. 401(k) Profit Sharing
Plan, a qualified profit sharing plan, as described in Code
section 401(a), which included a qualified cash or deferred
arrangement, as described in Code section 401(k), originally
effective January 1, 1994 and merged herein effective March 26,
1997.
3
<PAGE>
1.17 "Direct Rollover". An Eligible Rollover Distribution that is paid
by the Plan directly to an Eligible Retirement Plan for the
benefit of a Distributee.
1.18 "Distributee". A Participant, a Beneficiary (if he or she is the
surviving spouse of a Participant) or an Alternate Payee under a
QDRO (if he or she is the spouse or former spouse of a
Participant).
1.19 "Effective Date". The date upon which the provisions of this
document become effective. This date is January 1, 1997, unless
stated otherwise and specifically except that provisions related
to Company Stock and the Company Stock Fund are instead effective
January 1, 1998 or, if later, as soon as practical after the
Administrator has complied with the filing requirements of the
Securities Act of 1933. In general, the provisions of this
document only apply to Participants who are Employees on or after
the Effective Date. However, investment and distribution
provisions apply to all Participants with Account balances to be
invested or distributed after the Effective Date.
1.20 "Eligible Employee". An Employee of an Employer, except any
Employee:
(a) whose compensation and conditions of employment are covered
by a collective bargaining agreement to which the Employer
is a party unless the agreement calls for the Employee's
participation in the Plan;
(b) who is treated as an Employee because he or she is a Leased
Employee; or
(c) who is a nonresident alien and who either (i) receives no
earned income (within the meaning of Code section
911(d)(2)) from any Related Company which constitutes
income from sources within the United States under Code
section 861(a)(3); or (ii) receives such earned income from
such sources within the United States but such income is
exempt from United States income tax under an applicable
income tax convention.
1.21 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement
annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust described
in Code section 401(a), that accepts a Distributee's Eligible
Rollover Distribution, except that, if the Distributee is the
surviving spouse of a Participant, an Eligible Retirement Plan is
an individual retirement account or individual retirement
annuity.
1.22 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding
(i) a distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the
Distributee's
4
<PAGE>
designated Beneficiary, or for a specified period of ten years or
more; (ii) a distribution to the extent such distribution is
required under Code section 401(a)(9); and (iii) the portion of a
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to Employer securities).
1.23 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom any
income for such employment is subject to withholding of
income or social security taxes, or
(b) a Leased Employee.
1.24 "Employer". The Company and any other Related Company which
adopts the Plan with the approval of the Company.
1.25 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific ERISA section shall include
such section, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation amending,
supplementing or superseding such section.
1.26 "Former Participant". The Plan status of an individual after he
or she is determined to be a Terminated Participant and his or
her Account is distributed or forfeited.
1.27 "HCE" or "Highly Compensated Employee". An Employee described as
a Highly Compensated Employee in Section 12.
1.28 "Hour of Service". Each hour for which an Employee is entitled
to:
(a) payment for the performance of duties for any Related
Company;
(b) payment from any Related Company on account of a period of
time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of
absence;
(c) back pay, irrespective of mitigation of damages, by award or
agreement with any Related Company (and these hours shall be
credited to the period to which the award or agreement
pertains); or
(d) no payment, but is on a Leave of Absence (and these hours
shall be based upon his or her normally scheduled hours per
week or a 40 hour week if there is no regular schedule).
5
<PAGE>
The crediting of Hours of Service for which no duties are
performed shall be solely to the extent required by the U.S.
Department of Labor regulation sections 2530.200b-2(b) and (c).
Actual hours shall be used whenever an accurate record of hours
are maintained for an Employee. Otherwise, an equivalent number
of hours shall be credited for each payroll period in which the
Employee would be credited with at least 1 Hour of Service. The
payroll period equivalencies are 45 hours weekly, 90 hours
biweekly, 95 hours semimonthly and 190 hours monthly.
With regard to an individual who became an Employee coincident to
the Company's acquisition of Microdynamics, Inc. his or her
service prior to such acquisition that would be taken into
account under the terms of the Microdynamics Plan shall be
included in the determination of his or her Hours of Service for
eligibility and/or vesting.
With regard to an individual who became an Employee coincident to
the Company's acquisition of Cutting Edge, Inc. his or her
service prior to such acquisition that would be taken into
account under the terms of the Cutting Edge Plan shall be
included in the determination of his or her Hours of Service for
eligibility and/or vesting.
An Employee's service with a predecessor or acquired company
shall only be counted in the determination of his or her Hours of
Service for eligibility and/or vesting purposes if (1) the
Company directs that credit for such service be granted, or (2) a
qualified plan of the predecessor or acquired company is
subsequently maintained by any Related Company.
1.29 "Ineligible". The Plan status of an individual who is (1) an
Employee of a Related Company which is not then an Employer, (2)
an Employee of an Employer, but not an Eligible Employee, or (3)
not an Employee.
1.30 "Ineligible Participant". The Plan status of a Participant who is
(1) an Employee of a Related Company which is not then an
Employer, or (2) an Employee of an Employer, but not an Eligible
Employee.
1.31 "Investment Fund". An investment fund as described in Section
16.2. The Investment Funds authorized by the Administrator to be
offered under the Plan as of the Effective Date or such other
date as stated are set forth in Appendix A.
1.32 "Leased Employee". An individual, not otherwise an Employee, who,
pursuant to an agreement between a Related Company and a leasing
organization, has performed, on a substantially full-time basis,
for a period of at least 12 months, services under the primary
direction or control of the Related Company, unless:
6
<PAGE>
(a) the individual is covered by a money purchase pension plan
maintained by the leasing organization and meeting the
requirements of Code section 414(n)(5)(B), and
(b) such individuals do not constitute more than 20% of all Non-
Highly Compensated Employees of all Related Companies
(within the meaning of Code section 414(n)(5)(C)(ii)).
1.33 "Leave of Absence". A period during which an individual is deemed
to be an Employee, but is absent from active employment, provided
that the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed
forces and the individual returns to active employment
within the period during which he or she retains employment
rights under federal law.
1.34 "Loan Account". The record maintained for purposes of accounting
for a Participant's loan and payments of principal and interest
thereon.
1.35 "Microdynamics Plan". The Microdynamics, Inc. 401(k) Employees
Savings Plan, a qualified profit sharing plan, as described in
Code section 401(a), which included a qualified cash or deferred
arrangement, as described in Code section 401(k), originally
effective September 1, 1987 and merged herein effective April 1,
1995.
1.36 "NHCE" or "Non-Highly Compensated Employee". An Employee
described as a Non-Highly Compensated Employee in Section 12.
1.37 "Normal Retirement Date". The date of a Participant's 65th
birthday.
1.38 "Owner". A person with an ownership interest in the capital,
profits, outstanding stock or voting power of a Related Company
within the meaning of Code section 318 or 416 (which exclude
indirect ownership through a qualified plan).
1.39 "Participant". The Plan status of an Eligible Employee after he
or she completes the eligibility requirements and enters the Plan
as described in Section 2.1 and any individual for whom assets
have been transferred from a predecessor plan merged, in whole or
in part, with the Plan. An Eligible Employee who makes a Rollover
Contribution prior to completing the eligibility requirements as
described in Section 2.1 shall also be considered a Participant,
except that he or she shall not be considered a Participant for
purposes of Plan provisions related to Contributions, other than
a Rollover Contribution, until he or she completes the
eligibility requirements and enters the Plan as described in
Section 2.1. A Participant's participation continues until his or
her employment with all Related Companies ends and his or her
Account is distributed or forfeited.
7
<PAGE>
1.40 "Pay". The base pay paid to an Eligible Employee by an Employer
while he or she is a Participant during the current period
including elective contributions pursuant to Code sections 125 or
402(e)(3). Effective January 1, 1998, "Wages and other
compensation reportable on Form W-2 (without regard to 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), excluding reimbursements or other expense
allowances, fringe benefits (cash and noncash, including
compensation related to stock option plans), moving expenses,
deferred compensation and welfare benefits (including severance
pay), but including elective contributions under Code sections
125 and 402(e)(3) and amounts deferred under a non-qualified
deferred compensation plan." shall be substituted for the
preceding sentence.
Pay is limited to $150,000 per Plan Year (as adjusted for cost of
living increases pursuant to Code sections 401(a)(17) and
415(d)).
1.41 "Plan". The Gerber Scientific, Inc. and Participating
Subsidiaries 401(k) Maximum Advantage Program set forth in this
document, as from time to time amended.
1.42 "Plan Year". The annual accounting period of the Plan and Trust
which ends on each December 31.
1.43 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the
meaning of Code section 414(p).
1.44 "Related Company". With respect to any Employer, that Employer
and any corporation, trade or business which is, together with
that Employer, a member of the same controlled group of
corporations, a trade or business under common control, or an
affiliated service group within the meaning of Code sections
414(b), (c), (m) or (o), except that for purposes of Section 13
"within the meaning of Code sections 414(b), (c), (m) or (o), as
modified by Code section 415(h)" shall be substituted for the
preceding reference to "within the meaning of Code sections
414(b), (c), (m) or (o)".
1.45 "Required Beginning Date". The latest date benefit payments shall
commence to a Participant. Such date shall mean the April 1 that
next follows the calendar year in which the Participant attains
age 70 1/2.
1.46 "Settlement Date". For each Trade Date, the Trustee's next
business day.
1.47 "Spousal Consent". The written consent given by a spouse to a
Participant's election or waiver of a specified form of benefit
or Beneficiary designation. The spouse's consent must acknowledge
the effect on the spouse of the Participant's election, waiver or
designation, and be duly witnessed by a Plan representative or
notary public. Spousal Consent shall be valid only with
8
<PAGE>
respect to the spouse who signs the Spousal Consent and only for
the particular choice made by the Participant which requires
Spousal Consent. A Participant may revoke (without Spousal
Consent) a prior election, waiver or designation that required
Spousal Consent at any time before payments begin. Spousal
Consent also means a determination by the Administrator that
there is no spouse, the spouse cannot be located, or such other
circumstances as may be established under Code section
417(a)(2)(B).
1.48 "Sweep Account". The subsidiary Account for each Participant
through which all transactions are processed, which is invested
in interest bearing deposits (which may include interest bearing
deposits of the Trustee) and/or money market type assets or
funds.
1.49 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the Trade Date.
1.50 "Taxable Income". Compensation in the amount reported by the
Employer or a Related Company as "Wages, tips, other
compensation" on Form W-2, or any successor method of reporting
under Code section 6041(d).
1.51 "Terminated Participant". The Plan status of a Participant who is
not an Employee and with respect to whom the Administrator has
reported to the Trustee that the Participant's employment has
terminated with all Related Companies.
1.52 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Investment Funds are
traded.
1.53 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the
Plan and holds the Plan assets which are comprised of the
aggregate of Participants' Accounts and any unallocated funds
invested in interest bearing deposits (which may include interest
bearing deposits of the Trustee) and/or money market type assets
or funds, pending allocation to Participants' Accounts or
disbursement to pay Plan fees and expenses.
1.54 "Trustee". Barclays Global Investors, National Association.
1.55 "USERRA". The Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended.
9
<PAGE>
2 ELIGIBILITY
-----------
2.1 Eligibility
All Participants as of January 1, 1997 shall continue their
eligibility to participate. Each other Eligible Employee shall
become a Participant on the first January 1, April 1, July 1 or
October 1 after the date he or she attains age 21, and completes
a 12-month eligibility period for which he or she is credited
with at least 1,000 Hours of Service. The initial eligibility
period begins on the date an Employee first performs an Hour of
Service. Subsequent eligibility periods begin with the start of
each Plan Year beginning after the first Hour of Service is
performed. Notwithstanding, the reference to "attains age 21,
and" in the preceding sentence shall not apply to an Eligible
Employee who became an Employee coincident to the Company's
acquisition of Cutting Edge, Inc. and who had satisfied the
participation requirements of the Cutting Edge Plan, which
requirements did not include a minimum age requirement.
Effective January 1, 1998, all Participants as of January 1, 1998
shall continue their eligibility to participate and each Employee
who is an Eligible Employee on January 1, 1998 shall become a
Participant on that date. Each other Eligible Employee shall
become a Participant on the first day of employment as an
Eligible Employee.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but
is Ineligible at the time participation would otherwise begin (if
he or she were not Ineligible), he or she shall become a
Participant on the first subsequent date on which he or she is an
Eligible Employee.
2.3 Ineligible, Terminated or Former Participants
An Ineligible, Terminated or Former Participant may not make or
share in any Contributions, other than such Contributions due to
be made on his or her behalf after the date he or she became an
Ineligible, Terminated or Former Participant for periods prior to
such date, nor may an Ineligible or Terminated Participant be
eligible for a new Plan loan (except as described in Section
9.1), during the period he or she is an Ineligible or Terminated
Participant, but he or she shall continue to participate for all
other purposes. An Ineligible, Terminated or Former Participant
shall automatically become an active Participant on the date he
or she again becomes an Eligible Employee.
10
<PAGE>
3 PARTICIPANT CONTRIBUTIONS
-------------------------
3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
reduce his or her Pay by an amount which does not exceed the
Contribution Dollar Limit or the limits described in the
Contribution Percentage Limits paragraph of this Section 3, and
have such amount contributed to the Plan by the Employer as a
Pre-Tax Contribution. The election shall be made in such manner
and with such advance notice as prescribed by the Administrator
and may be limited to a whole percentage of Pay. In no event
shall an Employee's Pre-Tax Contributions under the Plan and
comparable contributions to all other plans, contracts or
arrangements of all Related Companies exceed the Contribution
Dollar Limit for the Employee's taxable year beginning in the
Plan Year.
3.2 After-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
make After-Tax Contributions to the Plan in an amount which does
not exceed the limits described in the Contribution Percentage
Limits paragraph of this Section 3. The election shall be made in
such manner and with such advance notice as prescribed by the
Administrator and may be limited to a whole percentage of Pay.
3.3 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Pre-Tax and/or After-Tax Contribution election as of any January
1, April 1, July 1 or October 1 in such manner and with such
advance notice as prescribed by the Administrator, and such
election change shall be effective with the first payroll paid
after such date. Effective January 1, 1998, "at any time" shall
be substituted for the reference to "as of any January 1, April
1, July 1 or October" in the preceding sentence. A Participant's
Contribution election made as a percentage of Pay shall
automatically apply to Pay increases or decreases.
3.4 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Pre-Tax and/or After-Tax
Contribution election at any time in such manner and with such
advance notice as prescribed by the Administrator, and such
revocation shall be effective with the first payroll paid after
such date.
A Participant who is an Eligible Employee may resume Pre-Tax
and/or After-Tax Contributions by making a new election at the
same time in which a Participant may change his or her election
in such manner and with such advance notice as prescribed by the
Administrator, and such election shall be effective with the
first payroll paid after such date.
11
<PAGE>
3.5 Contribution Percentage Limits
The Administrator may establish and change from time to time,
in writing, without the necessity of amending the Plan and
Trust, the separate minimum, if applicable, and maximum
Pre-Tax and After-Tax Contribution percentages, and/or a
maximum combined Pre-Tax and After-Tax Contribution
percentage, prospectively or retrospectively (for the current
Plan Year), for all Participants. In addition, the
Administrator may establish any lower percentage limits for
Highly Compensated Employees as it deems necessary to satisfy
the tests described in Section 12. As of the Effective Date,
the minimum Pre-Tax and After-Tax Contribution percentages
are 2% and 1%, respectively, and the maximum Contribution
percentages are:
<TABLE>
<CAPTION>
Contribution
Type Percentages
---- -----------
<S> <C>
Pre-Tax 15%
After-Tax 10%
Sum of Both 25%
</TABLE>
Irrespective of the limits that may be established by the
Administrator in accordance with the paragraph above, in no
event shall the Contributions made by or on behalf of a
Participant for a Plan Year exceed the maximum allowable
under Code section 415.
3.6 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar
year to the Plan and comparable contributions to any other
qualified defined contribution plan in excess of the
Contribution Dollar Limit may notify the Administrator in
writing by the following March 1 (or as late as April 14 if
allowed by the Administrator) that an excess has occurred. If
the Administrator determines that an excess has occurred,
calculated by taking into account only a Participant's
Pre-Tax Contributions for a calendar year made to the Plan
and comparable contributions to any other qualified defined
contribution plan maintained by the Employer or a Related
Company, the Administrator may determine that the Participant
shall be deemed to have notified the Administrator that an
excess has occurred.
In either event, the amount of the excess, adjusted for
investment gain or loss, shall be refunded to him or her by
the April 15 following the year of deferral and shall not be
included as an Annual Addition (as defined in Section 13.1)
under Code section 415 for the year contributed. The excess
amounts shall first be taken from unmatched Pre-Tax
Contributions and then from matched Pre-Tax Contributions.
Any Matching Contributions attributable to refunded excess
Pre-Tax Contributions as described in this Section, adjusted
for investment gain or loss, shall be forfeited and used to
reduce future
12
<PAGE>
Contributions to be made by an Employer as soon as
administratively feasible. Refunds and forfeitures shall not
include investment gain or loss for the period between the
end of the applicable calendar year and the date of
distribution or forfeiture.
3.7 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover
Contributions, may only be made through payroll deduction.
Such amounts shall be paid to the Trustee in cash and posted
to each Participant's Account(s) as soon as such amounts can
reasonably be separated from the Employer's general assets
and balanced against the specific amount made on behalf of
each Participant. In no event, however, shall such amounts be
paid to the Trustee more than 90 days after the date amounts
are deducted from a Participant's Pay, except that effective
February 3, 1997, "15 business days following the end of the
month that includes the date amounts are deducted from a
Participant's Pay (or as that maximum period may be otherwise
extended by ERISA)" shall be substituted for the preceding
reference to "90 days after the date amounts are deducted
from a Participant's Pay". Pre-Tax Contributions shall be
treated as Contributions made by an Employer in determining
tax deductions under Code section 404(a).
13
<PAGE>
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
----------------------------------------------------------------------
4.1 Rollover Contributions
The Administrator may authorize the Trustee to accept a
Rollover Contribution in cash, directly from an Eligible
Employee or as a Direct Rollover from another qualified plan
on behalf of the Eligible Employee, even if he or she is not
yet a Participant. The Employee shall be responsible for
providing satisfactory evidence, in such manner as prescribed
by the Administrator, that such Rollover Contribution
qualifies as a rollover contribution, within the meaning of
Code section 402(c) or 408(d)(3)(A)(ii). Such amounts
received directly from an Eligible Employee must be paid to
the Trustee in cash within 60 days after the date received by
the Eligible Employee from a qualified plan or conduit
individual retirement account. Rollover Contributions shall
be posted to the Eligible Employee's Rollover Account as of
the date received by the Trustee.
If the Administrator later determines that an amount
contributed pursuant to the above paragraph did not in fact
qualify as a rollover contribution, within the meaning of
Code section 402(c) or 408(d)(3)(A)(ii), the balance credited
to the Participant's Rollover Account shall immediately be
(1) segregated from all other Plan assets, (2) treated as a
nonqualified trust established by and for the benefit of the
Participant, and (3) distributed to the Participant. Any such
amount shall be deemed never to have been a part of the Plan.
4.2 Transfers From and To Other Qualified Plans
The Administrator may instruct the Trustee to receive assets
in cash or in kind directly from another qualified plan or to
transfer assets in cash or in kind directly to another
qualified plan; provided that receipt of a transfer shall not
be directed if:
(a) any amounts are not exempted by Code section
401(a)(11)(B) from the annuity requirements of Code
section 417 unless the Plan complies with such
requirements; or
(b) any amounts include benefits protected by Code
section 411(d)(6) which would not be preserved under
applicable Plan provisions.
The Trustee may refuse to receive any such transfer if:
(a) the Trustee finds the in kind assets unacceptable;
or
(b) instructions for posting amounts to Participants'
Accounts are incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee. To the
extent a receipt of a transfer includes Participant loans,
such loans shall continue in effect subject to the terms and
conditions agreed to by the Administrator.
14
<PAGE>
5 EMPLOYER CONTRIBUTIONS
----------------------
5.1 Matching Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer
shall make Matching Contributions, as described in
the following Allocation Method paragraph, on behalf
of each Participant who made Pre-Tax Contributions
during the period other than for a Participant for
whom the maximum dollar Matching Contribution for
the Plan year has been made.
(b) Allocation Method. The Matching Contributions for
each period shall total 50% of each eligible
Participant's Pre-Tax Contributions for the period,
provided that no Matching Contributions shall be
made based upon a Participant's Contributions in
excess of 6% of his or her Pay and the maximum
dollar match that may be made for the Plan Year on
behalf of any Participant shall not exceed $400.
Effective January 1, 1998, "$800" shall be
substituted for the reference to "$400" in the
preceding sentence.
(c) Timing, Medium and Posting. The Employer shall make
each period's Matching Contribution in cash as soon
as administratively feasible, and for purposes of
deducting such Contribution, not later than the
Employer's federal income tax filing date, including
extensions. Such amounts shall be paid to the
Trustee and posted to each Participant's Matching
Account once the total Matching Contribution
received has been balanced against the specific
amount to be credited to each Participant's Matching
Account.
15
<PAGE>
6 ACCOUNTING
----------
6.1 Individual Participant Accounting
An individual set of Accounts shall be maintained for each
Participant in order to reflect transactions both by type of
Account and investment medium. Financial transactions shall
be accounted for at the individual Account level by posting
each transaction to the appropriate Account of each affected
Participant. Participant Account values shall be maintained
in shares for the Investment Funds and in dollars for the
Sweep and Loan Accounts. At any point in time, the Account
value shall be determined using the most recent Trade Date
values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep
Account shall be credited with interest up until the date on
which it is removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each
Trade Date. For any transaction to be processed as of a Trade
Date, the Trustee must receive instructions for the
transaction by the Sweep Date. Such instructions shall apply
to amounts held in the Account on that Sweep Date. Financial
transactions of the Investment Funds shall be posted to
Participants' Accounts as of the Trade Date, based upon the
Trade Date values provided by the Trustee, and settled on the
Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in
shares. The Trustee is responsible for determining the share
values of each Investment Fund as of each Trade Date. To the
extent an Investment Fund is comprised of collective
investment funds offered by the Trustee or any other entity
authorized to offer collective investment funds, the share
values shall be determined in accordance with the rules
governing such collective investment funds, which are
incorporated herein by reference. All other share values
shall be determined by the Trustee. The share value of each
Investment Fund shall be based on the fair market value of
its underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to
Account maintenance, transaction and Investment Fund
management and maintenance, set forth below, are paid by the
Employer directly, such fees and expenses shall be paid as
set forth below.
16
<PAGE>
(a) Account Maintenance: Account maintenance fees and
expenses, may include but are not limited to,
administrative, Trustee, government annual report
preparation, audit, legal, nondiscrimination testing
and fees for any other special services. Account
maintenance fees shall be charged to Participants on
a per Participant basis provided that no fee shall
reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may
include but are not limited to, periodic installment
payment, Investment Fund election change and loan
fees. Transaction fees shall be charged to the
Participant's Account involved in the transaction
provided that no fee shall reduce a Participant's
Account balance below zero.
(c) Investment Fund Management and Maintenance:
Management and maintenance fees and expenses related
to the Investment Funds shall be charged at the
Investment Fund level and reflected in the net gain
or loss of each Investment Fund.
The Trust shall pay all fees and expenses, unless paid by the
Employer as set forth in Appendix B. The Company may
determine that the Employers pay a lower portion of the fees
and expenses allocable to the Accounts of Participants who
are no longer Employees or who are not Beneficiaries. As of
the Effective Date, a breakdown of which Plan fees and
expenses shall be borne by the Trust (and charged to
individual Participants' Accounts or charged at the
Investment Fund level and reflected in the net gain or loss
of each Investment Fund) and those that shall be paid by the
Employer is set forth in Appendix B, which may be changed
from time to time by amending the Plan and Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account of
the Participant and accounted for in dollars as an earmarked
asset of the borrowing Participant's Account.
6.7 Error Correction
Any errors or omissions in the administration of the Plan may
be corrected by restoring any Participant's Account balance
with the amount that would be credited to the Account had no
error or omission been made. Funds necessary for any such
restoration shall be provided through payment made by the
Employer, or by the Trustee to the extent the error or
omission is attributable to actions or inactions of the
Trustee.
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6.8 Participant Statements
Participants shall be provided with statements of their
Accounts as soon after the end of each quarter of the Plan
Year as administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable
accounting methods in performing their respective duties
during any Conversion Period. This includes, but is not
limited to, the method for allocating net investment gains or
losses and the extent, if any, to which contributions
received by and distributions paid from the Trust during this
period share in such allocation.
6.10 Accounts for Alternate Payees
A separate Account shall be established for an Alternate
Payee entitled to any portion of a Participant's Account
under a QDRO as of the date and in accordance with the
directions specified in the QDRO. In addition, a separate
Account may be established during the period of time the
Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic
relations order qualifies as a QDRO. Such a separate Account
shall be valued and accounted for in the same manner as any
other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so
provides, the portion of a Participant's Account
payable to an Alternate Payee may be distributed, in
a form permissible under Section 11 and Code section
414(p), to the Alternate Payee at any time beginning
as soon as practicable after the QDRO determination
is made, regardless of whether the Participant is
entitled to a distribution from the Plan at such
time. The Alternate Payee shall be provided the
notice prescribed by Code section 402(f).
(b) Participant Loans. Except to the extent required by
law, an Alternate Payee, on whose behalf a separate
Account has been established, shall not be entitled
to borrow from such Account. If a QDRO specifies
that the Alternate Payee is entitled to any portion
of the Account of a Participant who has an
outstanding loan balance, all outstanding loans
shall generally continue to be held in the
Participant's Account and shall not be divided
between the Participant's and Alternate Payee's
Accounts.
(c) Investment Direction. Where a separate Account has
been established on behalf of an Alternate Payee and
has not yet been distributed, the Alternate Payee
may direct the investment of such Account in the
same manner as if he or she were a Participant.
18
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7 INVESTMENT FUNDS AND ELECTIONS
------------------------------
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts and any
unallocated funds invested in interest bearing deposits
(which may include interest bearing deposits of the Trustee)
and/or money market type assets or funds, pending allocation
to Participants' Accounts or disbursement to pay Plan fees
and expenses, the Trust shall be maintained in various
Investment Funds. The Administrator shall select the
Investment Funds offered to Participants and may change the
number or composition of the Investment Funds, subject to the
terms and conditions agreed to with the Trustee. As of the
Effective Date or such other date as stated, a list of the
Investment Funds offered under the Plan is set forth in
Appendix A, which may be changed from time to time by the
Administrator, in writing, and as agreed to by the Trustee,
without the necessity of amending the Plan and Trust.
The Administrator may set a maximum percentage of the total
election that a Participant may direct into any specific
Investment Fund, which maximum, if any, as of the Effective
Date is set forth in Appendix A, which may be changed from
time to time by the Administrator, in writing, without the
necessity of amending the Plan and Trust.
7.2 Responsibility for Investment Choice
Each Participant shall direct the investment of all of his or
her Accounts. Each Participant shall be solely responsible
for the selection of his or her Investment Fund choices. No
fiduciary with respect to the Plan is empowered to advise a
Participant as to the manner in which his or her Accounts are
to be invested, and the fact that an Investment Fund is
offered shall not be construed to be a recommendation for
investment.
The Plan is intended to constitute a plan described in ERISA
section 404(c). No person who is otherwise a fiduciary under
the Plan shall be liable for any loss, or by reason of any
breach, which results from a Participant's or Beneficiary's
exercise of control over the investment of his or her
Accounts.
During any Conversion Period, Trust assets may be held in any
investment vehicle permitted by the Plan, as directed by the
Administrator, irrespective of prior Participant investment
elections.
7.3 Investment Fund Elections
A Participant shall provide his or her initial investment
election upon becoming a Participant and may change his or
her investment election at any time in accordance with
procedures established by the Administrator and the Trustee.
A Participant shall make his or her investment election in
any combination of
19
<PAGE>
one or any number of the Investment Funds offered in
accordance with the procedures established by the
Administrator and Trustee. Investment elections received by
the Trustee by the Sweep Date shall be effective on the
following Trade Date.
7.4 Default if No Valid Investment Election
The Administrator shall specify an Investment Fund for the
investment of that portion of a Participant's Account which
is not yet held in an Investment Fund and for which no valid
investment election is on file. The Investment Fund specified
as of the Effective Date is set forth in Appendix A, which
may be changed from time to time by the Administrator, in
writing, without the necessity of amending the Plan and
Trust.
7.5 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a
Participant's Account for Investment Fund election changes in
excess of a specified number per year as determined by the
Administrator.
20
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8 VESTING
-------
8.1 Fully Vested Accounts
A Participant shall be fully vested in all Accounts at all
times.
21
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9 PARTICIPANT LOANS
-----------------
9.1 Participant Loans Permitted
Loans to Participants and Beneficiaries are permitted
pursuant to the terms and conditions set forth in this
Section, except that a loan shall not be permitted to a
Participant who is no longer an Employee or to a Beneficiary,
unless such Participant or Beneficiary is otherwise a party
in interest (as defined in ERISA section 3(14)).
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and
with such advance notice as prescribed by the Administrator.
Each loan shall be evidenced by a promissory note, secured
only by the portion of the Participant's Account from which
the loan is made, and the Plan shall have a lien on this
portion of his or her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to borrow from his or her Account under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee, if otherwise authorized by
the Administrator and agreed to by the Trustee, is
responsible for determining that a loan request conforms to
the requirements described in this Section and granting such
request.
9.5 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as
determined as of the Sweep Date the loan is processed and
shall be funded from the Participant's Accounts as follows:
(a) Plan Minimum Limit. The minimum amount for any loan is
$500.
(b) Plan Maximum Limit, Account Sources and Funding
Order. Subject to the legal limit described in (c)
below, the maximum a Participant may borrow,
including the aggregate outstanding balances of
existing Plan loans, is 100% of the following of the
Participant's Accounts which are fully vested in the
priority order as follows:
Pre-Tax Account
Matching Account
Prior Pre-Tax Account
Rollover Account
After-Tax Account
22
<PAGE>
(c) Legal Maximum Limit. The maximum a Participant may
borrow, including the aggregate outstanding balances
of existing Plan loans, is 50% of his or her vested
Account balance, not to exceed $50,000. However, the
$50,000 maximum is reduced by the Participant's
highest aggregate outstanding Plan loan balance
during the 12-month period ending on the day before
the Sweep Date as of which the loan is made. For
purposes of this paragraph, the qualified plans of
all Related Companies shall be treated as though
they are part of the Plan to the extent it would
decrease the maximum loan amount.
9.6 Maximum Number of Loans
A Participant may have only one loan outstanding at any given
time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets
of his or her own Account. The available assets shall be
determined first by Account and then within each Account used
for funding a loan, amounts shall first be taken from the
Sweep Account and then taken by Investment Fund in direct
proportion to the market value of the Participant's interest
in each Investment Fund as of the Trade Date on which the
loan is processed.
The loan shall be settled on the Settlement Date following
the Trade Date as of which the loan is processed. The Trustee
shall make payment to the Participant as soon thereafter as
administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a
fixed reasonable rate of interest, determined from time to
time by the Administrator, which provides the Plan with a
return commensurate with the prevailing interest rate charged
by persons in the business of lending money for loans which
would be made under similar circumstances. As of the
Effective Date, the interest rate is determined as set forth
in Appendix C, which may be changed from time to time by the
Administrator, in writing, without the necessity of amending
the Plan and Trust.
9.9 Loan Payment
Substantially level amortization shall be required of each
loan with payments made at least monthly, generally through
payroll deduction. Loans may be prepaid in full or in part at
any time. The Participant may choose the loan repayment
period, not to exceed five years, except that the repayment
period may be for any period not to exceed 20 years if the
purpose of the loan is to acquire the Participant's principal
residence.
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<PAGE>
9.10 Loan Payment Hierarchy
Loan principal payments shall be credited to the
Participant's Accounts in the inverse of the order used to
fund the loan. Loan interest shall be credited to the
Participant's Accounts in direct proportion to the principal
payment. Loan payments are credited to the Investment Funds
based upon the Participant's current investment election for
new Contributions.
9.11 Repayment Suspension
At the election of the Participant, the Administrator shall
agree to a suspension of loan payments for up to six months
for a Participant who is on a Leave of Absence without pay.
Effective January 1, 1998, "twelve" shall be substituted for
the reference to "six" in the preceding sentence. During the
suspension period, interest shall continue to accrue on the
outstanding loan balance. At the expiration of the suspension
period all outstanding loan payments and accrued interest
thereon shall be due unless otherwise agreed upon by the
Administrator.
9.12 Loan Default
A loan is treated as in default if a scheduled loan payment
is not made at the time required. A Participant shall have a
grace period to cure the default before it becomes final.
Such grace period shall be for a period that does not extend
beyond the last day of the calendar quarter following the
calendar quarter in which the scheduled loan payment was due
or such lesser or greater maximum period as may later be
authorized by Code section 72(p).
In the event a default is not cured within the grace period,
the Administrator may direct the Trustee to report the
outstanding principal balance of the loan and accrued
interest thereon as a taxable distribution to the
Participant. As soon as a Plan withdrawal or distribution to
such Participant would otherwise be permitted, the
Administrator may instruct the Trustee to execute upon its
security interest in the Participant's Account by
distributing the note to the Participant.
9.13 Call Feature
The Administrator shall call any Participant loan once a
Participant's employment with all Related Companies has
terminated, unless he or she is otherwise a party in interest
(as defined in ERISA section 3(14)), or if the Plan is
terminated.
24
<PAGE>
10 IN-SERVICE WITHDRAWALS
----------------------
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee
are permitted pursuant to the terms and conditions set forth
in this Section and pursuant to the terms and conditions set
forth in Section 11 with regard to an in-service withdrawal
made in accordance with a Participant's Required Beginning
Date.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in
such manner and with such advance notice as prescribed by the
Administrator. The Participant shall be provided the notice
prescribed by Code section 402(f).
Code sections 401(a)(11) and 417 do not apply to in-service
withdrawals under the Plan as described in this Section. An
in-service withdrawal may commence less than 30 days after
the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she
has the right to a period of at least 30 days after
receipt of such notice to consider his or her option
to elect or not elect a Direct Rollover for all or a
portion, if any, of his or her in-service withdrawal
which constitutes an Eligible Rollover Distribution;
and
(b) the Participant after receiving such notice,
affirmatively elects a Direct Rollover for all or a
portion, if any, of his or her in-service withdrawal
which constitutes an Eligible Rollover Distribution
or alternatively elects to have all or a portion
made payable directly to him or her, thereby not
electing a Direct Rollover for all or a portion
thereof.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in
order to receive an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized by
the Administrator and agreed to by the Trustee, is
responsible for determining whether an in-service withdrawal
request conforms to the requirements described in this
Section and granting such request.
25
<PAGE>
10.5 Payment Form and Medium
The form of payment for an in-service withdrawal shall be a
single lump sum and payment shall be made in cash. With
regard to the portion of an in-service withdrawal
representing an Eligible Rollover Distribution, a Participant
may elect a Direct Rollover for all or a portion of such
amount.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made
solely from the assets of his or her own Account and shall be
based on the Account values as of the Trade Date the
in-service withdrawal is processed. The available assets
shall be determined first by Account and then within each
Account used for funding an in-service withdrawal, amounts
shall first be taken from the Sweep Account and then taken by
Investment Fund in direct proportion to the market value of
the Participant's interest in each Investment Fund (which
excludes his or her Loan Account balance) as of the Trade
Date on which the in-service withdrawal is processed.
The in-service withdrawal shall be settled on the Settlement
Date following the Trade Date as of which the in-service
withdrawal is processed. The Trustee shall make payment to
the Participant or on behalf of the Participant as soon
thereafter as administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may
request the withdrawal of up to the amount necessary
to satisfy a financial need including amounts
necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result
from the withdrawal. Only requests for withdrawals
(1) on account of a Participant's "Deemed Financial
Need" or "Demonstrated Financial Need" and (2) which
are "Deemed Necessary" or "Demonstrated as
Necessary" to satisfy the financial need shall be
approved.
(b) "Deemed Financial Need". An immediate and heavy
financial need relating to:
(1) the payment of unreimbursed medical care
expenses (described under Code section
213(d)) incurred (or to be incurred) by the
Employee, his or her spouse or dependents
(as defined in Code section 152);
(2) the purchase (excluding mortgage payments)
of the Employee's principal residence;
26
<PAGE>
(3) the payment of unreimbursed tuition,
related educational fees and room and board
for up to the next 12 months of
post-secondary education for the Employee,
his or her spouse or dependents (as defined
in Code section 152);
(4) the payment of funeral expenses of an
Employee's family member;
(5) the payment of amounts necessary for the
Employee to prevent losing his or her
principal residence through eviction or
foreclosure on the mortgage; or
(6) any other circumstance specifically
permitted under Code section
401(k)(2)(B)(i)(IV).
(c) "Demonstrated Financial Need". A determination by
the Administrator that an immediate and heavy
financial need exists relating to:
(1) a sudden and unexpected illness or accident
to the Employee or his or her spouse or
dependents;
(2) the loss, due to casualty, of the
Employee's property other than nonessential
property (such as a boat or a television);
or
(3) some other similar extraordinary and
unforeseeable circumstances arising as a
result of events beyond the control of the
Employee.
(d) "Deemed Necessary". A withdrawal is "Deemed
Necessary" to satisfy the financial need only if the
withdrawal amount does not exceed the financial need
and all of these conditions are met:
(1) the Employee has obtained all possible
withdrawals (other than hardship
withdrawals) and nontaxable loans available
from the Plan and all other plans
maintained by Related Companies;
(2) the Administrator shall suspend the
Employee from making any contributions to
the Plan and all other qualified and
nonqualified plans of deferred compensation
and all stock option or stock purchase
plans maintained by Related Companies for
12 months from the date the withdrawal
payment is made; and
(3) the Administrator shall reduce the
Contribution Dollar Limit for the Employee
with regard to the Plan and all other plans
maintained by Related Companies, for the
calendar year next following the calendar
year of the withdrawal by the amount of the
Employee's Pre-Tax Contributions for the
calendar year of the withdrawal.
27
<PAGE>
(e) "Demonstrated as Necessary". A withdrawal is
"Demonstrated as Necessary" to satisfy the financial
need only if the withdrawal amount does not exceed
the financial need, the Employee represents that he
or she is unable to relieve the financial need
(without causing further hardship) by doing any or
all of the following and the Administrator does not
have actual knowledge to the contrary:
(1) receiving any reimbursement or compensation
from insurance or otherwise;
(2) reasonably liquidating his or her assets
and the assets of his or her spouse or
minor children that are reasonably
available to the Employee;
(3) ceasing his or her contributions to the
Plan;
(4) obtaining other withdrawals and nontaxable
loans available from the Plan, plans
maintained by Related Companies and plans
maintained by any other employer; and
(5) obtaining loans from commercial sources on
reasonable commercial terms.
(f) Account Sources and Funding Order. All available
amounts must first be withdrawn from a Participant's
After-Tax Account. The remaining withdrawal shall
come from the following of the Participant's fully
vested Accounts, in the priority order as follows:
Rollover Account
Matching Account
Prior Pre-Tax Account
Pre-Tax Account
The amount that may be withdrawn from a
Participant's Prior Pre-Tax Account shall not
include any amount attributable to earnings. The
amount that may be withdrawn from a Participant's
Pre-Tax Account shall not include any amount
attributable to earnings credited after December 31,
1988.
(g) Minimum Amount. The minimum amount for a hardship
withdrawal is $500. Effective January 1, 1998, "$500
or, if less, the amount available for withdrawal"
shall be substituted for the reference to "$500" in
the preceding sentence.
(h) Permitted Frequency. There is no restriction on the
number of hardship withdrawals permitted to a
Participant.
28
<PAGE>
(i) Suspension from Further Contributions. Upon making a
hardship withdrawal, a Participant may not make
additional Pre-Tax or After-Tax Contributions (or
additional contributions to all other qualified and
nonqualified plans of deferred compensation and all
stock option or stock purchase plans maintained by
Related Companies), if his or her hardship
withdrawal was "Deemed Necessary", for a period of
12 months from the date the withdrawal payment is
made.
10.8 After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee may
make an After-Tax Account withdrawal.
(b) Account Sources and Funding Order. The withdrawal
shall come from a Participant's After-Tax Account.
(c) Minimum Amount. The minimum amount for an After-Tax
Account withdrawal is $500.
(d) Permitted Frequency. The maximum number of After-Tax
Account withdrawals permitted to a Participant in
any 12-month period is one. Effective January 1,
1998, there is no restriction on the number of
After-Tax Account withdrawals permitted to a
Participant.
(e) Suspension from Further Contributions. An After-Tax
Account withdrawal shall not affect a Participant's
ability to make or be eligible to receive further
Contributions.
10.9 Rollover Account Withdrawals
(a) Requirements. A Participant who is an Employee may
make a Rollover Account withdrawal.
(b) Account Sources and Funding Order. The withdrawal
shall come from a Participant's Rollover Account.
(c) Minimum Amount. The minimum amount for a Rollover
Account withdrawal is $500.
(d) Permitted Frequency. The maximum number of Rollover
Account withdrawals permitted to a Participant in
any 12-month period is one. Effective January 1,
1998, there is no restriction on the number of
Rollover Account withdrawals permitted to a
Participant.
(e) Suspension from Further Contributions. A Rollover
Account withdrawal shall not affect a Participant's
ability to make or be eligible to receive further
Contributions.
29
<PAGE>
10.10 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an Employee and
over age 59 1/2 may make an Over Age 59 1/2
withdrawal.
(b) Account Sources and Funding Order. The withdrawal
shall come from the following of the Participant's
fully vested Accounts, in the priority order as
follows, except that the Participant may instead
choose to have amounts taken from his or her
After-Tax Account first:
Rollover Account
Pre-Tax Account
Matching Account
Prior Pre-Tax Account
After-Tax Account
Effective January 1, 1998, a Participant's Prior
Pre-Tax Account shall precede his or her Matching
Account in the priority order.
(c) Minimum Amount. The minimum amount for an Over Age
59 1/2 withdrawal is $500.
(d) Permitted Frequency. The maximum number of Over Age
59 1/2 withdrawals permitted to a Participant in any
12-month period is one. Effective January 1, 1998,
there is no restriction on the number of Over Age 59
1/2 withdrawals permitted to a Participant.
(e) Suspension from Further Contributions. An Over Age
59 1/2 withdrawal shall not affect a Participant's
ability to make or be eligible to receive further
Contributions.
30
<PAGE>
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A PARTICIPANT'S
------------------------------------------------------------------
REQUIRED BEGINNING DATE
-----------------------
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional
times and forms of distribution available under the Plan,
including the notices prescribed by Code sections 402(f) and
411(a)(11). Subject to the other requirements of this Section, a
Participant, or his or her Beneficiary in the case of his or her
death, may elect, in such manner and with such advance notice as
prescribed by the Administrator, to have his or her vested Account
balance paid to him or her beginning upon any Settlement Date
following the Participant's termination of employment with all
Related Companies and a reasonable period of time during which the
Administrator shall process, and inform the Trustee of, the
Participant's termination or, if earlier, at the time of the
Participant's Required Beginning Date.
Notwithstanding, if a Participant's termination of employment with
all Related Companies does not constitute a separation from
service for purposes of Code section 401(k)(2)(B)(i)(I) or
otherwise constitute an event set forth under Code section
401(k)(10)(A)(ii) or (iii) as described in Section 19.3, the
portion of a Participant's Account subject to the distribution
rules of Code section 401(k) may not be distributed until such
time as he or she separates from service for purposes of Code
section 401(k)(2)(B)(i)(I) or, if earlier, upon such other event
as described in Code section 401(k)(2)(B) and as provided for in
the Plan.
A distribution may commence less than 30 days, but more than seven
days (if such distribution is one to which Code sections
401(a)(11) and 417 apply), after the aforementioned notices are
provided, if:
(a) the Participant is clearly informed that he or she has
the right to a period of at least 30 days after receipt
of such notices to consider the decision as to whether to
elect a distribution and if so to elect a particular form
of distribution and to elect or not elect a Direct
Rollover for all or a portion, if any, of his or her
distribution which constitutes an Eligible Rollover
Distribution;
(b) the Participant after receiving such notices,
affirmatively elects a distribution and a Direct Rollover
for all or a portion, if any, of his or her distribution
which constitutes an Eligible Rollover Distribution or
alternatively elects to have all or a portion made
payable directly to him or her, thereby not electing a
Direct Rollover for all or a portion thereof; and
(c) if such distribution is one to which Code sections
401(a)(11) and 417 apply, the Participant's election
includes Spousal Consent.
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<PAGE>
11.2 Spousal Consent
A Participant is required to obtain Spousal Consent in order
to receive a distribution under the Plan if his or her
Account includes an Annuity Eligible Balance, he or she is
eligible for payment in the form of an annuity and elects
payment in the form of an annuity.
11.3 Payment Form and Medium
Except to the extent otherwise provided by Section 11.4, a
Participant may elect to be paid in any of these forms,
except that the form described in (c) is not effective until
January 1, 1998:
(a) a single lump sum;
(b) a portion paid in a lump sum, and the remainder paid
later (partial payment); or
(c) periodic installments over a period not to exceed
the life expectancy of the Participant and his or
her Beneficiary.
Notwithstanding, in addition to the forms described above, to
preserve benefits protected by Code section 411(d)(6), and
subject to Section 11.11, a Participant whose Account
includes an Annuity Eligible Balance in excess of $3,500, or
that exceeded $3,500 at the time of any prior in-service
withdrawal or distribution, may elect to have the portion of
his or her benefit attributable to his or her Annuity
Eligible Balance paid in the form of a single life annuity or
a joint and 50% survivor annuity. Effective January 1, 1998,
"$5,000" shall be substituted for each reference to "$3,500"
in the preceding sentence.
Any annuity option permitted shall be provided through the
purchase of a non-transferable single premium contract from
an insurance company which must conform to the terms of the
Plan and which shall be distributed to the Participant or
Beneficiary in complete satisfaction of the benefit due.
Distributions other than annuity contracts shall be made in
cash, except to the extent a distribution consists of a loan
call as described in Section 9. With regard to the portion of
a distribution representing an Eligible Rollover
Distribution, a Distributee may elect a Direct Rollover for
all or a portion of such amount.
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related
Companies ends, the Participant's vested Account balance is
$3,500 or less, and if at the time of any prior in-service
withdrawal or distribution the Participant's vested Account
balance did not exceed $3,500, the Participant's benefit
shall be paid as a
32
<PAGE>
single lump sum as soon as administratively feasible in
accordance with procedures prescribed by the Administrator.
Effective January 1, 1998, "$5,000" shall be substituted for
each reference to "$3,500" in the preceding sentence.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the
assets of his or her own Account and shall be based on the
Account values as of the Trade Date the distribution is
processed. The available assets shall be determined first by
Account and then within each Account used for funding a
distribution, amounts shall first be taken from the Sweep
Account and then taken by Investment Fund in direct
proportion to the market value of the Participant's interest
in each Investment Fund as of the Trade Date on which the
distribution is processed.
A distribution to a Participant shall be made from his or her
Accounts in the priority order as follows:
After-Tax Account
Rollover Account
Pre-Tax Account
Employer Account
Prior Pre-Tax Account
The distribution shall be settled on the Settlement Date
following the Trade Date as of which the distribution is
processed. The Trustee shall make payment to the Participant
or on behalf of the Participant as soon thereafter as
administratively feasible.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments
shall begin not later than 60 days after the end of the Plan
Year in which he or she attains his or her Normal Retirement
Date or retires, whichever is later. However, if the amount
of the payment or the location of the Participant (after a
reasonable search) cannot be ascertained by that deadline,
payment shall be made no later than 60 days after the
earliest date on which such amount or location is ascertained
but in no event later than the Participant's Required
Beginning Date. A Participant's failure to elect in such
manner as prescribed by the Administrator to have his or her
vested Account balance paid to him or her, shall be deemed an
election by the Participant to defer his or her distribution
but in no event shall his or her benefit payments commence
later than his or her Required Beginning Date.
33
<PAGE>
If benefit payments cannot begin at the time required because
the location of the Participant cannot be ascertained (after
a reasonable search), the Administrator may, at any time
thereafter, treat such person's Account as forfeited subject
to the provisions of Section 18.6.
11.7 Payment Within Life Expectancy
The Participant's payment election must be consistent with
the requirement of Code section 401(a)(9) that all payments
are to be completed within a period not to exceed the lives
or the joint and last survivor life expectancy of the
Participant and his or her Beneficiary. The life expectancies
of a Participant and his or her Beneficiary, if such
Beneficiary is his or her spouse, may be recomputed annually.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent with
the requirement that, if the Participant's spouse is not his
or her sole primary Beneficiary, the minimum annual
distribution for each calendar year, beginning with the
calendar year preceding the calendar year that includes the
Participant's Required Beginning Date, shall not be less than
the quotient obtained by dividing (a) the Participant's
vested Account balance as of the last Trade Date of the
preceding year by (b) the applicable divisor as determined
under the incidental benefit requirements of Code section
401(a)(9).
11.9 Payment to Beneficiary
Payment to a Beneficiary must either (i) be completed by the
end of the calendar year that contains the fifth anniversary
of the Participant's death or (ii) begin by the end of the
calendar year that contains the first anniversary of the
Participant's death and be completed within the period of the
Beneficiary's life or life expectancy, except that:
(a) If the Participant dies after his or her Required
Beginning Date, payment to his or her Beneficiary
must be made at least as rapidly as provided in the
Participant's distribution election;
(b) If the surviving spouse is the Beneficiary, payments
need not begin until the later of (i) the end of the
calendar year that includes the first anniversary of
the Participant's death, or (ii) the end of the
calendar year in which the Participant would have
attained age 70 1/2 and must be completed within the
spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is
the Beneficiary die (i) before the Participant's
Required Beginning Date and (ii) before payments
have begun to the spouse, the spouse shall be
treated as the Participant in applying these rules.
34
<PAGE>
11.10 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the
Participant's remaining Plan interest at the time of his or
her death. The designation may be changed at any time.
However, a Participant's spouse shall be the sole primary
Beneficiary unless the designation includes Spousal Consent
for another Beneficiary. If no proper designation is in
effect at the time of a Participant's death or if the
Beneficiary does not survive the Participant, the Beneficiary
shall be, in the order set forth below, the:
(a) Participant's surviving spouse;
(b) Participant's children, in equal shares, (or if a
child does not survive the Participant, and that
child leaves issue, the issue shall be entitled to
that child's share, by right of representation); or
(c) Participant's estate.
11.11 QJSA and QPSA Definitions, Information and Elections
The following definitions, information and election rules
shall apply to any Participant whose Account includes an
Annuity Eligible Balance, who is eligible for payment in the
form of an annuity and who elects payment in the form of an
annuity and only with regard to such Participant's Annuity
Eligible Balance:
(a) Annuity Starting Date. The first day of the first
period for which an amount is payable as an annuity,
or, in the case of a benefit not payable in the form
of an annuity, the first day on which all events
have occurred which entitle the Participant to such
benefit. Such date shall be a date no earlier than
the expiration of the seven-day period that
commences the day after the information described in
the QJSA Information to a Participant paragraph
below is provided to the Participant.
(b) "QJSA". A qualified joint and survivor annuity,
meaning for a married Participant, a form of benefit
payment which is the actuarial equivalent of the
Participant's vested Account balance at the Annuity
Starting Date, payable to the Participant in monthly
payments for life and providing that, if the
Participant's spouse survives him or her, monthly
payments equal to 50% of the amount payable to the
Participant during his or her lifetime shall be paid
to the spouse for the remainder of such person's
lifetime and for a single Participant, a form of
benefit payment which is the actuarial equivalent of
the Participant's vested Account balance at the
Annuity Starting Date, payable to the Participant in
monthly payments for life.
35
<PAGE>
(c) "QPSA". A qualified pre-retirement survivor annuity,
meaning that upon the death of a Participant before
the Annuity Starting Date, the vested portion of the
Participant's Account becomes payable to the
surviving spouse as a life annuity, except to the
extent of any Loan Account balance, unless Spousal
Consent has been given to a different Beneficiary or
the surviving spouse chooses a different form of
payment.
(d) QJSA Information to a Participant. The Administrator
shall provide each Participant a written explanation
of (1) the terms and conditions of the QJSA, (2) the
right to a period of at least 30 days after receipt
of the written explanation to make an election to
waive this form of payment and choose an optional
form of payment and the effect of this election, (3)
the right to revoke this election and the effect of
this revocation, and (4) the need for Spousal
Consent.
The Administrator shall provide such written
explanation no more than 90 days before the Annuity
Starting Date.
(e) QJSA Election by Participant. A Participant may
elect, and such election shall include Spousal
Consent if married, at any time within the 90 day
period ending on the Annuity Starting Date to (1)
waive the right to receive the QJSA and elect an
optional form of payment, or (2) to revoke or change
any such election.
(f) QPSA Beneficiary Information to a Participant. The
Administrator shall provide each married Participant
a written explanation stating (1) his or her death
benefit is payable to his or her surviving spouse,
(2) he or she may choose that the benefit be paid to
a different Beneficiary, (3) he or she has the right
to revoke or change a prior designation and the
effects of such revocation or change, and (4) the
need for Spousal Consent.
The Administrator shall provide such written
explanation no later than the later of (1) the end
of the period beginning with the first day of the
Plan Year in which the Participant attains age 32
and ending with the close of the Plan Year preceding
the Plan Year in which the Participant attains age
35, (2) the period beginning one year before and
ending one year after a Participant becomes a
Participant, (3) the period beginning one year
before and ending one year after Code section
401(a)(11) first applies to the Participant, or (4)
in the case of a Participant who terminates
employment with all Related Companies before
attaining age 35, the period beginning one year
before and ending one year after his or her
termination of employment with all Related
Companies.
36
<PAGE>
(g) QPSA Beneficiary Designation by a Participant. A
married Participant may designate, with Spousal
Consent, a non-spouse Beneficiary at any time after
the Participant has been given the information in
the QPSA Beneficiary Information to a Participant
paragraph above and upon the earlier of (1) the date
the Participant is no longer an Employee, or (2) the
beginning of the Plan Year in which the Participant
attains age 35.
(h) QPSA Information to a Surviving Spouse. Each
surviving spouse shall be given a written
explanation of (1) the terms and conditions of being
paid his or her Account balance in the form of a
single life annuity, (2) the right to make an
election to waive this form of payment and choose an
optional form of payment and the effect of this
election, and (3) the right to revoke this election
and the effect of this revocation.
(i) QPSA Election by Surviving Spouse. A surviving
spouse may elect, at any time up to the Annuity
Starting Date, to (1) waive the right to receive a
single life annuity and elect an optional form of
payment, or (2) revoke or change any such election.
37
<PAGE>
12 ADP AND ACP TESTS
-----------------
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12
(where a definition is contained in both Sections 1 and 12,
for purposes of Section 12 the Section 12 definition shall be
controlling):
(a) "ACP" or "Average Contribution Percentage". The
Average Percentage calculated using Contributions
allocated to Participants as of a date within the
Plan Year.
(b) "ACP Test". The determination of whether the ACP is
in compliance with the Basic or Alternative
Limitation for a Plan Year (as defined in Section
12.2).
(c) "ADP" or "Average Deferral Percentage". The Average
Percentage calculated using Deferrals allocated to
Participants as of a date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is
in compliance with the Basic or Alternative
Limitation for a Plan Year (as defined in Section
12.2).
(e) "Average Percentage". The average of the calculated
percentages for Participants within the specified
group. The calculated percentage refers to either
the "Deferrals" or "Contributions" (as defined in
this Section) made on each Participant's behalf for
the Plan Year, divided by his or her Compensation
for the portion of the Plan Year in which he or she
was an Eligible Employee while a Participant.
(Pre-Tax Contributions to the Plan or comparable
contributions to plans of Related Companies which
must be refunded solely because they exceed the
Contribution Dollar Limit are included in the
percentage for the HCE Group but not for the NHCE
Group.)
(f) "Contributions" shall include Matching and After-Tax
Contributions. In addition, Contributions may
include Pre-Tax Contributions, but only to the
extent that (1) the Administrator elects to use
them, (2) they are not used or counted in the ADP
Test and (3) they otherwise satisfy the requirements
as prescribed under Code section 401(m) permitting
treatment as Contributions for purposes of the ACP
Test.
(g) "Deferrals" shall include Pre-Tax Contributions.
(h) "HCE" or "Highly Compensated Employee". With respect
to all Related Companies, an Employee who (in
accordance with Code section 414(q)):
38
<PAGE>
(1) Was a more than 5% Owner (within the
meaning of Code section 414(q)(2)) at any
time during the Plan Year or the preceding
Plan Year; or
(2) Received Compensation during the preceding
Plan Year in excess of $80,000 (as adjusted
for such Year pursuant to Code sections
414(q)(1) and 415(d)) or, if the Company
elects for such preceding Plan Year, "in
excess of $80,000 (as adjusted for such
Year pursuant to Code sections 414(q)(1)
and 415(d)) and was a member of the
"top-paid group" (within the meaning of
Code section 414(q)(3)) for such preceding
Plan Year" shall be substituted for the
preceding reference to "in excess of
$80,000 (as adjusted for such Year pursuant
to Code sections 414(q)(1) and 415(d))".
A former Employee shall be treated as an HCE if (1)
such former Employee was an HCE when he or she
separated from service, or (2) such former Employee
was an HCE in service at any time after attaining
age 55.
The determination of who is an HCE and the
determination of the number and identity of
Employees in the top-paid group shall be made in
accordance with Code section 414(q).
(i) "HCE Group" and "NHCE Group". With respect to all
Related Companies, the respective group of HCEs and
NHCEs who are eligible to have amounts contributed
on their behalf for the Plan Year, including
Employees who would be eligible but for their
election not to participate or to contribute. For
Plan Years commencing after December 31, 1998, with
respect to all Related Companies, if the Plan
permits participation prior to an Eligible
Employee's satisfaction of the minimum age and
service requirements of Code section 410(a)(1)(A),
Eligible Employees who have not met the minimum age
and service requirements of Code section
410(a)(1)(A) may be excluded in the determination of
the NHCE Group, but not in the determination of the
HCE Group, for purposes of (i) the ADP Test, if Code
section 410(b)(4)(B) is applied in determining
whether the 401(k) portion of the Plan meets the
requirements of Code section 410(b), or (ii) the ACP
Test, if Code 410(b)(4)(B) is applied in determining
whether the 401(m) portion of the Plan meets the
requirements of Code section 410(b).
(1) If the Related Companies maintain two or
more plans which are subject to the ADP or
ACP Test and are considered as one plan for
purposes of Code sections 401(a)(4) or
410(b), all such plans shall be aggregated
and treated as one plan for purposes of
meeting the ADP and ACP Tests, provided
that the plans may only be aggregated if
they have the same plan year.
39
<PAGE>
(2) If an HCE is covered by more than one cash
or deferred arrangement, or more than one
arrangement permitting employee or matching
contributions, maintained by the Related
Companies, all such plans shall be
aggregated and treated as one plan (other
than those plans that may not be
permissively aggregated) for purposes of
calculating the separate percentage for the
HCE which is used in the determination of
the Average Percentage. For purposes of the
preceding sentence, if such plans have
different plan years, the plans are
aggregated with respect to the plan years
ending with or within the same calendar
year.
(j) "Multiple Use Test". The test described in Section
12.4 which a Plan must meet where the Alternative
Limitation (described in Section 12.2) is used to
meet both the ADP and ACP Tests.
(k) "NHCE" or "Non-Highly Compensated Employee". An
Employee who is not an HCE.
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must
meet either the Basic or Alternative Limitation when compared
to the respective preceding Plan Year's ADP and ACP for the
preceding Plan Year's NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage
may not exceed 1.25 times the NHCE Group Average
Percentage.
(b) Alternative Limitation. The HCE Group Average
Percentage is limited by reference to the NHCE Group
Average Percentage as follows:
<TABLE>
<CAPTION>
If the NHCE Group Then the Maximum HCE
Average Percentage is: Group Average Percentage is:
---------------------- ----------------------------
<S> <C>
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
</TABLE>
Alternatively, the Company may elect to use the Plan Year's
ADP for the NHCE Group for the Plan Year and/or the Plan
Year's ACP for the NHCE Group for the Plan Year. If such
election is made, such election may not be changed except as
provided by the Code.
40
<PAGE>
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a
maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce the ADP and/or ACP
for the HCE Group by a sufficient amount to meet the ADP and
ACP Tests.
With regard to each HCE whose Deferral percentage and/or
Contribution percentage is in excess of the maximum
percentage, a dollar amount of excess Deferrals and/or excess
Contributions shall then be determined by (i) subtracting the
product of such maximum percentage for the ADP and the HCE's
Compensation from the HCE's actual Deferrals and (ii)
subtracting the product of such maximum percentage for the
ACP and the HCE's Compensation from the HCE's actual
Contributions. Such amounts shall then be aggregated to
determine the total dollar amount of excess Deferrals and/or
excess Contributions. ADP and/or ACP corrections shall be
made in accordance with the leveling method as described
below.
(a) ADP Correction. The HCE with the highest Deferral
dollar amount shall have his or her Deferral dollar
amount reduced in an amount equal to the lesser of
the dollar amount of excess Deferrals for all HCEs
or the dollar amount that would cause his or her
Deferral dollar amount to equal that of the HCE with
the next highest Deferral dollar amount. The process
shall be repeated until the total of the Deferral
dollar amount reductions equals the dollar amount of
excess Deferrals for all HCEs.
To the extent an HCE's Deferrals were determined to
be reduced as described in the paragraph above,
Pre-Tax Contributions shall, by the end of the next
Plan Year, be refunded to the HCE, except that such
amount to be refunded shall be reduced by Pre-Tax
Contributions previously refunded because they
exceeded the Contribution Dollar Limit. The excess
amounts shall first be taken from unmatched Pre-Tax
Contributions and then from matched Pre-Tax
Contributions. Any Matching Contributions
attributable to refunded excess Pre-Tax
Contributions as described in this Section, adjusted
for investment gain or loss for the Plan Year to
which the excess Pre-Tax Contributions relate, shall
be forfeited and used to reduce future Contributions
to be made by an Employer as soon as
administratively feasible.
(b) ACP Correction. The HCE with the highest
Contribution dollar amount shall have his or her
Contribution dollar amount reduced in an amount
equal to the lesser of the dollar amount of excess
Contributions for all HCEs or the dollar amount that
would cause his or her Contribution dollar amount to
equal that of the HCE with the next highest
41
<PAGE>
Contribution dollar amount. The process shall be
repeated until the total of the Contribution dollar
amount reductions equals the dollar amount of excess
Contributions for all HCEs.
To the extent an HCE's Contributions were determined
to be reduced as described in the paragraph above,
Contributions shall, by the end of the next Plan
Year, be refunded to the HCE. The excess amounts
shall first be taken from After-Tax Contributions
and then from Matching Contributions.
(c) Investment Fund Sources. Once the amount of excess
Deferrals and/or Contributions is determined, and
with regard to excess Contributions, allocated by
type of Contribution, within each Account from which
amounts are refunded amounts shall first be taken
from the Sweep Account and then taken by Investment
Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund
(which excludes his or her Loan Account balance) as
of the Trade Date on which the correction is
processed.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is
used to meet both the ADP and ACP Tests, the ADP and ACP for
the HCE Group must also comply with the requirements of Code
section 401(m)(9). Such Code section requires that the sum of
the ADP and ACP for the HCE Group (as determined after any
corrections needed to meet the ADP and ACP Tests have been
made) not exceed the sum (which produces the most favorable
result) of:
(a) the Basic Limitation (defined in Section 12.2)
applied to either the ADP or ACP for the NHCE Group,
and
(b) the Alternative Limitation applied to the other NHCE
Group percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator
shall determine a maximum percentage to be used in place of
the calculated percentage for all HCEs that would reduce
either or both the ADP or ACP for the HCE Group by a
sufficient amount to meet the multiple use limit. Any excess
shall be corrected in the same manner that excess Deferrals
or Contributions are corrected.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant in accordance with this Section 12 shall be
adjusted for investment gain or loss. Refunds shall not
include investment gain or loss for the period between the
end of the applicable Plan Year and the date of distribution.
42
<PAGE>
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the
Plan meets the ADP Test, the ACP Test and the Multiple Use
Test, and that the Contribution Dollar Limit is not exceeded.
The Administrator shall maintain records which are sufficient
to demonstrate that the ADP Test, the ACP Test and the
Multiple Use Test, have been met for each Plan Year for at
least as long as the Employer's corresponding tax year is
open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs,
NHCEs, and the performance of the ADP Test, the ACP
Test and the Multiple Use Test, and any corrective
action resulting therefrom, shall be conducted
separately with regard to the Employees of each
Employer (and its Related Companies) that is not a
Related Company with respect to the other
Employer(s).
(b) Collective Bargaining Units: The performance of the
ADP Test, and if applicable, the ACP Test and the
Multiple Use Test, and any corrective action
resulting therefrom, shall be conducted separately
with regard to Employees who are eligible to
participate in the Plan as a result of a collective
bargaining agreement.
In addition, testing may be conducted separately, at the
discretion of the Administrator and to the extent permitted
under Treasury regulations, with regard to any group of
Employees for whom separate testing is permissible under such
regulations.
43
<PAGE>
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
--------------------------------------------
13.1 "Annual Addition" Defined
The sum for a Plan Year of all (i) contributions (excluding
rollover contributions) and forfeitures allocated to the
Participant's Account and his or her account in all other
defined contribution plans maintained by any Related Company,
(ii) amounts allocated to the Participant's individual
medical account (within the meaning of Code section
415(l)(2)) which is part of a defined benefit plan maintained
by any Related Company, and (iii) if the Participant is a key
employee (within the meaning of Code section 419A(d)(3)) for
the applicable or any prior Plan Year, amounts attributable
to post-retirement medical benefits allocated to his or her
separate account under a welfare benefit fund (within the
meaning of Code section 419(e)) maintained by any Related
Company. The Plan Year refers to the year to which the
allocation pertains, regardless of when it was allocated. The
Plan Year shall be the Code section 415 limitation year.
13.2 Maximum Annual Addition
A Participant's Annual Addition for any Plan Year shall not
exceed the lesser of (i) 25% of his or her Taxable Income or
(ii) $30,000 (as adjusted for cost of living increases
pursuant to Code section 415(d)); provided, however, that
clause (i) shall not apply to Annual Additions described in
clauses (ii) and (iii) of Section 13.1 and except that for
Plan Years commencing after December 31, 1997, "Compensation"
shall be substituted for the preceding reference to "Taxable
Income".
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any
additional Contributions would produce an excess Annual
Addition for such year, Contributions to be made for the
remainder of the Plan Year shall be limited to the amount
needed for each affected Participant to receive the maximum
Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a
Participant's Account (resulting from a reasonable error in
determining a Participant's compensation or the maximum
permissible amount of his or her elective deferrals (within
the meaning of Code section 402(g)(3)), or other facts and
circumstances acceptable to the Internal Revenue Service),
the excess amount (adjusted to reflect investment gains)
shall first be returned to the Participant to the extent of
his or her After-Tax Contributions, and then to the extent of
his or her Pre-Tax Contributions (however to the extent
Pre-Tax Contributions were matched, the applicable Matching
Contributions shall be forfeited in proportion to the
44
<PAGE>
returned matched Pre-Tax Contributions) and the remaining
excess, if any, shall be forfeited by the Participant and
together used to reduce future Contributions to be made by an
Employer as soon as administratively feasible.
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess
Annual Addition, received allocations to more than one
defined contribution plan, the excess shall be corrected by
reducing the Annual Addition to the Plan only after all
possible reductions have been made to the other defined
contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the
"projected annual benefit" and the denominator is the greater
of 125% of the "protected current accrued benefit" or the
normal limit which is the lesser of (i) 125% of the dollar
limitation in effect under Code section 415(b)(1)(A) for the
Plan Year or (ii) 140% of the amount which may be taken into
account under Code section 415(b)(1)(B) for the Plan Year,
where a Participant's:
(a) "projected annual benefit" is the annual benefit
provided by the plan determined pursuant to Code
section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined
benefit plan in existence (1) on July 1, 1982, shall
be the accrued annual benefit provided for under
Public Law 97-248, section 235(g)(4), as amended, or
(2) on May 6, 1986, shall be the accrued annual
benefit provided for under Public Law 99-514,
section 1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the
Participant's Annual Addition for each Plan Year to date and
the denominator is the sum of the "annual amounts" for each
year in which the Participant has performed service with a
Related Company. The "annual amount" for any Plan Year is the
lesser of (i) 125% of the dollar limitation in effect under
Code section 415(c)(1)(A) (determined without regard to
subsection (c)(6)) for the Plan Year or (ii) 140% of the
amount which may be taken into account under Code section
415(c)(1)(B) for the Plan Year, where:
(a) each Annual Addition is determined pursuant to the
Code section 415(c) rules in effect for such Plan
Year, and
(b) the numerator is adjusted pursuant to Public Law
97-248, section 235(g)(3), as amended, or Public
Law 99-514, section 1106(i)(4).
45
<PAGE>
13.8 Combined Plan Limits and Correction
The sum of a Participant's Defined Benefit Fraction and
Defined Contribution Fraction for any Plan Year may not
exceed 1.0. If the combined fraction exceeds 1.0 for any Plan
Year, the Participant's benefit under any defined benefit
plan (to the extent it has not been distributed or used to
purchase an annuity contract) shall be limited so that the
combined fraction does not exceed 1.0 before any defined
contribution limits shall be enforced.
For Plan Years commencing after December 31, 1999, the
provisions of the preceding paragraph shall no longer be
effective.
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<PAGE>
14 TOP HEAVY RULES
---------------
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the
following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each
qualified plan of the Related Companies (1) in which
a Key Employee is a participant or was a participant
during the determination period (regardless of
whether such plan has terminated), or (2) which
enables another plan in the group to meet the
requirements of Code sections 401(a)(4) or 410(b).
The Administrator may also treat any other qualified
plan of the Related Companies as part of the group
if the resulting group would continue to meet the
requirements of Code sections 401(a)(4) and 410(b)
with such plan being taken into account.
(b) "Determination Date". For any Plan Year, the last
Trade Date of the preceding Plan Year or, in the
case of the Plan's first Plan Year, the last Trade
Date of that Plan Year.
(c) "Key Employee". A current or former Employee (or his
or her Beneficiary) who at any time during the five
year period ending on the Determination Date was:
(1) an officer of a Related Company whose
Compensation (i) exceeds 50% of the amount
in effect under Code section 415(b)(1)(A)
and (ii) places him or her within the
following highest paid group of officers:
<TABLE>
<S> <C>
Number of Employees Number of
not Excluded Under Code Highest Paid
Section 414(q)(5) Officers Included
----------------- -----------------
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section 414(q)(8)
50
More than 500
</TABLE>
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation
exceeds $150,000, or
47
<PAGE>
(4) a more than 0.5% Owner who is among the 10
Employees owning the largest interest in a
Related Company and whose Compensation
exceeds the amount in effect under Code
section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date
of (1) an Employee's Account, (2) the present value
of his or her other accrued benefits provided by all
qualified plans within the Aggregation Group, and
(3) the aggregate distributions made within the five
year period ending on such Date. For this purpose,
the present value of the Employee's accrued benefit
in a defined benefit plan shall be determined by the
method that is used for benefit accrual purposes
under all such plans maintained by the Related
Companies or, if there is no such single method used
under all such plans, as if the benefit accrues no
more rapidly than the slowest rate permitted by the
fractional accrual rule in Code section
411(b)(1)(C). Plan Benefits shall exclude rollover
contributions and similar transfers made after
December 31, 1983 as provided in Code section
416(g)(4)(A).
(e) "Top Heavy". The Plan's status when the Plan
Benefits of Key Employees account for more than 60%
of the Plan Benefits of all Employees who have
performed services at any time during the five year
period ending on the Determination Date. The Plan
Benefits of Employees who were, but are no longer,
Key Employees (because they have not been an officer
or Owner during the five year period), are excluded
in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year
in which the Plan is Top Heavy, the Employer shall
not allow any contributions (other than a Rollover
Contribution from a plan maintained by a non Related
Company) to be made by or on behalf of any Key
Employee unless the Employer makes a contribution
(other than contributions made by an Employer in
accordance with a Participant's salary deferral
election or contributions made by an Employer based
upon the amount contributed by a Participant) on
behalf of all Participants who were Eligible
Employees as of the last day of the Plan Year in an
amount equal to at least 3% of each such
Participant's Taxable Income.
(b) Overriding Minimum Benefit. Notwithstanding,
contributions shall be permitted on behalf of Key
Employees if the Employer also maintains a defined
benefit plan which automatically provides a benefit
which satisfies the Code section 416(c)(1) minimum
benefit requirements, including the adjustment
provided in Code section 416(h)(2)(A), if
applicable. If the Plan is part of an Aggregation
Group under which a Key Employee is receiving a
benefit and no minimum contribution is
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provided under any other plan, a minimum
contribution of at least 3% of Taxable Income shall
be provided to the Participants specified in the
preceding paragraph. In addition, the Employer may
offset a defined benefit minimum by contributions
(other than contributions made by an Employer in
accordance with a Participant's salary deferral
election or contributions made by an Employer based
upon the amount contributed by a Participant) made
to the Plan.
14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall
be substituted for 125% in determining the Defined Benefit
Fraction and the Defined Contribution Fraction. For Plan
Years commencing after December 31, 1999, the provisions of
the preceding sentence shall no longer be effective.
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15 PLAN ADMINISTRATION
-------------------
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator, the
Committee and/or the Trustee, as applicable, whose specific
duties are delineated in the Plan and Trust. In addition,
Plan fiduciaries also include any other person to whom
fiduciary duties or responsibilities are delegated with
respect to the Plan. Any person or group may serve in more
than one fiduciary capacity with respect to the Plan. To the
extent permitted under ERISA section 405, no fiduciary shall
be liable for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with the
Plan and Trust to the extent they are consistent
with ERISA;
(b) use that degree of care, skill, prudence and
diligence that a prudent person acting in a like
capacity and familiar with such matters would use in
the conduct of an enterprise of a like character and
with like aims;
(c) act with the exclusive purpose of providing benefits
to Participants and their Beneficiaries, and
defraying reasonable expenses of administering the
Plan;
(d) diversify Plan investments, to the extent such
fiduciary is responsible for directing the
investment of Plan assets, so as to minimize the
risk of large losses, unless under the circumstances
it is clearly prudent not to do so; and
(e) treat similarly situated Participants and
Beneficiaries in a uniform and nondiscriminatory
manner.
15.3 Company is ERISA Plan Administrator
The Company is the administrator of the Plan (within the
meaning of ERISA section 3(16)) and is responsible for
compliance with all reporting and disclosure requirements,
except those that are explicitly the responsibility of the
Trustee under applicable law. The Administrator and/or
Committee shall have any necessary authority to carry out
such functions through the actions of the Administrator, duly
authorized officers of the Company and/or the Committee.
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15.4 Administrator Duties
The Administrator shall have the discretionary authority to
construe the Plan and Trust, other than the provisions which
relate to the Trustee, and to do all things necessary or
convenient to effect the intent and purposes thereof, whether
or not such powers are specifically set forth in the Plan and
Trust. The interpretation and construction by the
Administrator of any provisions of the Plan and its exercise
of any discretion granted under the Plan shall be conclusive
and binding on all interested parties, and shall be given the
maximum possible deference allowed by law. In addition to the
duties listed elsewhere in the Plan and Trust, the
Administrator's authority shall include, but not be limited
to, the authority to:
(a) determine who is eligible to participate, if a
contribution qualifies as a rollover contribution,
the allocation of Contributions, and the eligibility
for loans, in-service withdrawals and distributions;
(b) provide each Participant with a summary plan
description no later than 90 days after he or she
has become a Participant (or such other period
permitted under ERISA section 104(b)(1)), as well as
informing each Participant of any material
modification to the Plan in a timely manner;
(c) provide copies to Participants of documents required
to be made available under ERISA;
(d) determine the fact of a Participant's death and of
any Beneficiary's right to receive the deceased
Participant's interest based upon such proof and
evidence as it deems necessary;
(e) establish and review at least annually a funding
policy bearing in mind both the short-run and
long-run needs and goals of the Plan and to the
extent Participants may direct their own
investments, the funding policy shall focus on which
Investment Funds are available for Participants to
use; and
(f) adjudicate claims pursuant to the claims procedure
described in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors
(including attorneys, accountants, actuaries, consultants,
record keepers, investment counsel and administrative
assistants) as it considers necessary to assist it in the
performance of its duties. The Administrator shall also
comply with the bonding requirements of ERISA section 412.
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15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, has appointed a
Committee to administer the Plan on its behalf. The Company
shall provide the Trustee with the names and specimen
signatures of any persons authorized to serve as Committee
members and act as or on its behalf. Any Committee member
appointed by the Company shall serve at the pleasure of the
Company, but may resign by written notice to the Company.
Committee members shall serve without compensation from the
Plan for such services. Except to the extent that the Company
otherwise provides, any delegation of duties to the Committee
shall carry with it the full discretionary authority of the
Administrator to complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the
Company to the Committee may be done by a majority
of its members. The majority may be expressed by a
vote at a meeting or in writing without a meeting,
and a majority action shall be equivalent to an
action of all Committee members.
(b) Meetings. The Committee shall hold meetings upon
such notice, place and times as it determines
necessary to conduct its functions properly.
(c) Reliance by Trustee. The Committee may authorize one
or more of its members to execute documents on its
behalf and may authorize one or more of its members
or other individuals who are not members to give
written direction to the Trustee in the performance
of its duties. The Committee shall provide such
authorization in writing to the Trustee with the
name and specimen signatures of any person
authorized to act on its behalf. The Trustee shall
accept such direction and rely upon it until
notified in writing that the Committee has revoked
the authorization to give such direction. The
Trustee shall not be deemed to be on notice of any
change in the membership of the Committee, parties
authorized to direct the Trustee in the performance
of its duties, or the duties delegated to and by the
Committee until notified in writing.
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16 MANAGEMENT OF INVESTMENTS
-------------------------
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in
accordance with those provisions of the Plan and Trust which
relate to the Trustee, for use in providing Plan benefits and
paying Plan fees and expenses not paid directly by the
Employer. Plan benefits shall be drawn solely from the Trust
and paid by the Trustee as directed by the Administrator.
Notwithstanding, the Company may appoint, with the approval
of the Trustee, another trustee to hold and administer Plan
assets which do not meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the
Trustee to invest Trust assets in one or more Investment
Funds. The number and composition of Investment Funds may be
changed from time to time, without the necessity of amending
the Plan and Trust. The Trustee may establish reasonable
limits on the number of Investment Funds as well as the
acceptable assets for any such Investment Fund. Each of the
Investment Funds may be comprised of any of the following:
(a) shares of a registered investment company, whether
or not the Trustee or any of its affiliates is an
advisor to, or other service provider to, such
company;
(b) collective investment funds maintained by the
Trustee, or any other fiduciary to the Plan, which
are available for investment by trusts which are
qualified under Code sections 401(a) and 501(a);
(c) individual equity and fixed income securities which
are readily tradable on the open market;
(d) synthetic guaranteed investment contracts and
guaranteed investment contracts issued by an
insurance company and/or synthetic guaranteed
investment contracts and bank investment contracts
issued by a bank;
(e) interest bearing deposits (which may include
interest bearing deposits of the Trustee); and
(f) Company Stock.
Any Investment Fund assets invested in a collective
investment fund, shall be subject to all the provisions of
the instruments establishing and governing such fund. These
instruments, including any subsequent amendments, are
incorporated herein by reference.
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16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment
manager of each Investment Fund to maintain sufficient
deposit or money market type assets in each Investment Fund
to handle the Investment Fund's liquidity and disbursement
needs. Each Participant's and Beneficiary's Sweep Account,
which is used to hold assets pending investment or
disbursement, shall consist of interest bearing deposits
(which may include interest bearing deposits of the Trustee)
and/or money market type assets or funds.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in
the Investment Funds as soon as practicable after such
instructions are received from the Administrator,
Participants or Beneficiaries. Such instructions shall remain
in effect until changed by the Administrator, Participants or
Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company
Shares
The Administrator shall be entitled to vote proxies or
exercise any shareholder rights relating to shares held on
behalf of the Plan in a registered investment company.
Notwithstanding, the authority to vote proxies and exercise
shareholder rights related to such shares held in a Custom
Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the
Trustee, an investment manager for any Investment Fund
established by the Trustee solely for Participants of the
Plan and, subject to Section 16.7, any other qualified plan
of the Company or a Related Company (a "Custom Fund"). The
investment manager may be the Administrator, Trustee or an
investment manager pursuant to ERISA section 3(38). The
Administrator shall advise the Trustee in writing of the
appointment of an investment manager and shall cause the
investment manager to acknowledge to the Trustee in writing
that the investment manager is a fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the
Trustee, shall be established for a Custom Fund. If
a Custom Fund consists solely of collective
investment funds or shares of a registered
investment company (and sufficient deposit or money
market type assets to handle the Custom Fund's
liquidity and disbursement needs), its underlying
instruments shall constitute the guidelines.
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(b) Authority of Investment Manager. The investment
manager of a Custom Fund shall have the authority to
vote or execute proxies, exercise shareholder
rights, manage, acquire, and dispose of Trust
assets. Notwithstanding, if the Company provides for
a Company Stock Fund, the authority to vote proxies
and exercise shareholder rights related to shares of
Company Stock held in the Company Stock Fund is
vested as provided otherwise in Section 16.
(c) Custody and Trade Settlement. Unless otherwise
agreed to by the Trustee, the Trustee shall maintain
custody of all Custom Fund assets and be responsible
for the settlement of all Custom Fund trades. For
purposes of this Section, shares of a collective
investment fund, shares of a registered investment
company and synthetic guaranteed investment
contracts and guaranteed investment contracts issued
by an insurance company and/or synthetic guaranteed
investment contracts and bank investment contracts
issued by a bank, shall be regarded as the Custom
Fund assets instead of the underlying assets of such
instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the
Administrator nor the Trustee shall be obligated to
invest or otherwise manage any Custom Fund assets
for which the Trustee or Administrator is not the
investment manager nor shall the Administrator or
Trustee be liable for acts or omissions with regard
to the investment of such assets except to the
extent required by ERISA.
16.7 Master Custom Fund
The Trustee may establish, at the direction of the
Administrator, a single Custom Fund (the "Master Custom
Fund"), for the benefit of the Plan and any other qualified
plan of the Company or a Related Company for which the
Trustee acts as trustee pursuant to a plan and trust document
that contains a provision substantially identical to this
provision. The assets of the Plan, to the extent invested in
the Master Custom Fund, shall consist only of that percentage
of the assets of the Master Custom Fund represented by the
shares held by the Plan.
16.8 Authority to Segregate Assets
The Administrator may direct the Trustee to split an
Investment Fund into two or more funds in the event any
assets in the Investment Fund are illiquid or the value is
not readily determinable. In the event of such segregation,
the Administrator shall give instructions to the Trustee on
what value to use for the split-off assets, and the Trustee
shall not be responsible for confirming such value.
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16.9 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund, directly or
through a Master Custom Fund, the Company Stock Fund shall be
comprised of Company Stock and sufficient deposit or money
market type assets to handle the Company Stock Fund's
liquidity and disbursement needs. The Company Stock Fund may
be as large as necessary to comply with Participants' and
Beneficiaries' investment elections.
16.10 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct
the Trustee as to the voting or tendering of any full or
partial shares of Company Stock held on his or her behalf in
the Company Stock Fund. Prior to such voting or tendering of
Company Stock, each Participant or Beneficiary shall receive
a copy of the proxy solicitation or other material relating
to such vote or tender decision and a form for the
Participant or Beneficiary to complete which confidentially
instructs the Trustee to vote or tender such shares in the
manner indicated by the Participant or Beneficiary. Upon
receipt of such instructions, the Trustee shall act with
respect to such shares as instructed.
With regard to shares for which the Trustee receives no
voting instructions from Participants or Beneficiaries, the
Administrator shall instruct the Trustee with respect to how
to vote such shares and the Trustee shall act with respect to
such shares as instructed. With regard to shares for which
the Trustee receives no tendering instructions from
Participants or Beneficiaries, the Participant's or
Beneficiary's failure to instruct the Trustee shall be deemed
an instruction not to tender such shares and the Trustee
shall not tender such shares.
The Trustee shall hold a Participant's or Beneficiary's
instructions in confidence and will not divulge or release
specific information regarding a Participant's or
Beneficiary's instructions to any person, including officers
or Employees of the Company, except to the extent necessary
to comply with federal and state laws not preempted by ERISA.
16.11 Confidentiality Procedures
The Administrator shall establish Plan "Confidentiality
Procedures" that satisfy the requirements of Department of
Labor regulation 2550.404c-1(d)(2)(ii)(E)(4)(vii). The
Administrator is responsible for ensuring that (i) the
Confidentiality Procedures are sufficient to safeguard the
confidentiality of information relating to the purchase,
holding and sale of Company Stock by Participants and
Beneficiaries, and the exercise of voting, tender and similar
rights with respect to Company Stock by Participants and
Beneficiaries; (ii) the Confidentiality Procedures are being
followed; and (iii) an independent fiduciary is appointed to
carry out activities related to any situations which the
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Administrator determines involve a potential for undue
employer influence upon Participants and Beneficiaries with
regard to the direct or indirect exercise of shareholder
rights.
16.12 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the
requirements of the Securities Act of 1933, as amended, and
any other applicable blue sky law. The Administrator shall
also specify what restrictive legend or transfer restriction,
if any, is required to be set forth on the certificates for
the securities and the procedure to be followed by the
Trustee to effectuate a resale of such securities.
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17 TRUST ADMINISTRATION
--------------------
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to
construe those provisions of the Plan and Trust which relate
to the Trustee and to do all things necessary or convenient
to the administration of the Trust, whether or not such
powers are specifically set forth in the Plan and Trust.
Actions taken in good faith by the Trustee shall be
conclusive and binding on all interested parties, and shall
be given the maximum possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth
in the Plan and Trust, the Trustee shall have all the power,
authority, rights and privileges of an absolute owner of the
Trust assets and, not in limitation but in amplification of
the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell,
tender, exchange, dispose of, encumber, hypothecate,
pledge, mortgage, lease, grant options respecting,
repair, alter, insure, or distribute any and all
property in the Trust;
(b) borrow money, participate in reorganizations, pay
calls and assessments, vote or execute proxies,
exercise subscription or conversion privileges,
exercise options and register any securities in the
Trust in the name of the nominee, in federal book
entry form or in any other form as shall permit
title thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate,
adjust, settle, enforce or foreclose, by judicial
proceedings or otherwise, or defend against the
same, any obligations or claims in favor of or
against the Trust; and
(d) lend, through a collective investment fund, any
securities held in such collective investment fund
to brokers, dealers or other borrowers and to permit
such securities to be transferred into the name and
custody and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of
any Trust assets outside the jurisdiction of the United
States, except as authorized under ERISA section 404(b).
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17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and
withhold federal (and, if applicable, state) income
taxes with regard to any Eligible Rollover
Distribution that is not paid as a Direct Rollover
in accordance with the Participant's withholding
election or as required by law if no election is
made or the election is less than the amount
required by law. With regard to any taxable
distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and
withhold federal (and, if applicable, state) income
taxes in accordance with the Participant's
withholding election or as required by law if no
election is made.
(b) Taxes Due From Investment Funds. The Trustee shall
pay from the Investment Fund any taxes or
assessments imposed by any taxing or governmental
authority on such Investment Fund or its income,
including related interest and penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable
period) following the close of the Plan Year, the
Trustee shall provide the Administrator with an
annual accounting of Trust assets and information
sufficient to permit the Administrator to meet
ERISA's annual reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records
and provide sufficient reporting to allow the
Administrator to properly monitor the Trust's assets
and activity.
(c) Administrator Approval. Approval of any Trustee
accounting shall automatically occur 180 days after
such accounting has been received by the
Administrator, unless the Administrator files a
written objection with the Trustee within such time
period. Such approval shall be final as to all
matters and transactions stated or shown therein and
binding upon the Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is
not readily tradable and listed on a national securities
exchange registered under the Securities Exchange Act of
1934, as amended, the Trustee may engage a qualified
independent appraiser to determine the fair market value of
such property, and the appraisal fees shall be paid from the
Investment Fund containing the asset.
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17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice,
including counsel for the Employer or counsel of the Trustee,
upon any question or matter arising under the Plan and Trust.
When relied upon by the Trustee, the opinion of such counsel
shall be evidence that the Trustee has acted in good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such
as may be mutually agreed upon by the Company and the
Trustee. Trustee fees and all reasonable expenses incurred by
the Trustee in the administration of the Trust shall be paid
in accordance with Section 6.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the
Trustee, shall be confined to construing the terms of the
Plan and Trust as they relate to the Trustee, receiving funds
on behalf of and making payments from the Trust, safeguarding
and valuing Trust assets, investing and reinvesting Trust
assets in the Investment Funds as directed by the
Administrator, Participants or Beneficiaries, and those
duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain
whether Contributions are in compliance with the Plan, to
enforce collection or to compute or verify the accuracy or
adequacy of any amount to be paid to it by the Employer. The
Trustee shall not be liable for the proper application of any
part of the Trust with respect to any disbursement made at
the direction of the Administrator.
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18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights
Although it is intended that the Plan shall be continued and
that contributions shall be made as herein provided, the Plan
is entirely voluntary on the part of the Employer and the
continuance of the Plan and the payment of contributions
hereunder are not to be regarded as contractual obligations
of the Employer. The Employer does not guarantee or promise
to pay or to cause to be paid any of the benefits provided by
the Plan. Each person who shall claim the right to any
payment or benefit under the Plan shall be entitled to look
only to the Trust for any such payment or benefit and shall
not have any right, claim, or demand therefore against the
Employer, except as provided by law.
The Plan does not provide any employment rights to any
Employee and shall not be deemed to constitute a contract
between the Employer and any Employee or to be a
consideration for, or an inducement for, the employment of
any Employee by the Employer. The Employer expressly reserves
the right to discharge an Employee at any time, with or
without cause, without regard to the effect such discharge
would have upon the Employee's interest in the Plan.
18.2 Compliance With USERRA
Notwithstanding any provision of the Plan to the contrary,
with regard to an Employee who after serving in the uniformed
services is reemployed on or after December 12, 1994, within
the time required by USERRA, contributions shall be made and
benefits and service credit shall be provided under the Plan
with respect to his or her qualified military service (as
defined in Code section 414(u)(5)) in accordance with Code
section 414(u). Furthermore, notwithstanding any provision of
the Plan to the contrary, Participant loan payments may be
suspended during a period of qualified military service.
18.3 Limited Return of Contributions
Except as provided in this Section 18.3, (i) Plan assets
shall not revert to the Employer nor be diverted for any
purpose other than the exclusive benefit of Participants and
Beneficiaries and defraying reasonable expenses of
administering the Plan; and (ii) a Participant's vested
interest shall not be subject to divestment. As provided in
ERISA section 403(c)(2), the actual amount of a Contribution
or portion thereof made by the Employer (or the current value
of such if a net loss has occurred) may revert to the
Employer if:
(a) such Contribution or portion thereof is made by
reason of a mistake of fact;
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(b) a determination with respect to the initial
qualification of the Plan under Code section 401(a)
is not received and a request for such determination
is made within the time prescribed under Code
section 401(b) (the existence of and Contributions
under the Plan are hereby conditioned upon such
initial qualification); or
(c) such Contribution or portion thereof is not
deductible under Code section 404 (such
Contributions are hereby conditioned upon such
deductibility) in the taxable year of the Employer
for which the Contribution is made.
The reversion to the Employer must be made (if at all) within
one year of the mistaken payment, the date of denial of
qualification, or the date of disallowance of deduction, as
the case may be. A Participant shall have no rights under the
Plan with respect to any such reversion.
18.4 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan
may be anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any
benefit with respect to a Participant pursuant to a
QDRO; or
(b) to use a Participant's vested Account balance as
security for a loan from the Plan which is permitted
pursuant to Code section 4975.
18.5 Facility of Payment
If a Plan benefit is due to be paid to a Participant who is a
minor or adjudged to be legally incapable of giving valid
receipt and discharge of any payment due him or her, the
Administrator shall have payment of the benefit, or any part
thereof, made, first, to the guardian, committee or other
legal representative, wherever appointed, of such
Participant, and, if none, the payee shall be, in the order
set forth below, the:
(a) Participant's spouse;
(b) Participant's parents;
(c) the individual with whom the Participant resides;
(d) any individual having the care and control of the
Participant; or
(e) the Participant.
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Such payment shall, to the extent thereof, be deemed a
complete discharge of any liability for such payment under
the Plan.
18.6 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to
payment of a Plan benefit after a reasonable search, the
Administrator may at any time thereafter treat such person's
Account as forfeited and use such amount to reduce future
Contributions to be made by an Employer as soon as
administratively feasible. If such person subsequently
presents the Administrator with a valid claim for the
benefit, such person shall be paid the amount treated as
forfeited, plus the interest that would have been earned in
the Sweep Account to the date of determination. The
Administrator shall pay the amount through an additional
amount contributed by the Employer.
18.7 Suspension of Certain Plan Provisions During Conversion
Period
Notwithstanding any provision of the Plan to the contrary,
during any Conversion Period, in accordance with procedures
established by the Administrator and the Trustee, the
Administrator may temporarily suspend, in whole or in part,
certain provisions under the Plan, which may include, but are
not limited to, a Participant's right to change his or her
Contribution election, a Participant's right to change his or
her investment election and a Participant's right to borrow
or withdraw from his or her Account or obtain a distribution
from his or her Account.
18.8 Suspension of Certain Plan Provisions During Other Periods
Notwithstanding any provision of the Plan to the contrary, in
accordance with procedures established by the Administrator
and the Trustee, the Administrator may temporarily suspend a
Participant's right to borrow or withdraw from his or her
Account or obtain a distribution from his or her Account, if
the Administrator receives a domestic relations order and the
Participant's Account is a source of the payment for such
domestic relations order. Such suspension may continue for a
reasonable period of time (as determined by the
Administrator) which may include the period of time the
Administrator, a court of competent jurisdiction or other
appropriate person is determining whether the domestic
relations order qualifies as a QDRO.
18.9 Claims Procedure
(a) Right to Make Claim. An interested party who
disagrees with the Administrator's determination of
his or her right to Plan benefits must submit a
written claim and exhaust this claim procedure
before legal recourse of any type is sought. The
claim must include the important issues the
interested party believes support the claim. The
Administrator, pursuant to the authority provided in
the Plan, shall either approve or deny the claim.
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(b) Process for Denying a Claim. The Administrator's
partial or complete denial of an initial claim must
include an understandable, written response covering
(1) the specific reasons why the claim is being
denied (with reference to the pertinent Plan
provisions) and (2) the steps necessary to perfect
the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested
party may make a written appeal of the
Administrator's initial decision, and the
Administrator shall respond in the same manner and
form as prescribed for denying a claim initially.
(d) Time Frame. The initial claim, its review, appeal
and final review shall be made in a timely fashion,
subject to the following time table:
<TABLE>
<CAPTION>
Days to Respond
Action From Last Action
------ ----------------
<S> <C>
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
</TABLE>
However, the Administrator may take up to twice the
maximum response time for its initial and final
review if it provides an explanation within the
normal period of why an extension is needed and when
its decision shall be forthcoming.
18.10 Construction
Headings are included for reading convenience. The text shall
control if any ambiguity or inconsistency exists between the
headings and the text. The singular and plural shall be
interchanged wherever appropriate. References to Participant
shall include Alternate Payee and/or Beneficiary when
appropriate and even if not otherwise already expressly
stated.
18.11 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and
administered under ERISA and other applicable federal laws
and, where not otherwise preempted, by the laws of the State
of California with respect to issues affecting the Trustee's
responsibilities and by the laws of the State of Connecticut
with respect to all other matters. If any provision of the
Plan and Trust is or becomes invalid or otherwise
unenforceable, that fact shall not affect the validity or
enforceability of any other provision of the Plan and Trust.
All provisions of the Plan and Trust shall be so construed as
to render them valid and enforceable in accordance with their
intent.
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18.12 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries
against any and all liabilities resulting from any action or
inaction, (including a Plan termination in which the Company
fails to apply for a favorable determination from the
Internal Revenue Service with respect to the qualification of
the Plan upon its termination), in relation to the Plan or
Trust (i) including (without limitation) expenses reasonably
incurred in the defense of any claim relating to the Plan or
its assets, and amounts paid in any settlement relating to
the Plan or its assets, but (ii) excluding liability
resulting from actions or inactions made in bad faith, or
resulting from the negligence or willful misconduct of the
Trustee, or breaches by the Trustee of its fiduciary duties
or violations under ERISA. The Company shall have the right,
but not the obligation, to conduct the defense of any action
to which this Section applies. The Plan fiduciaries are not
entitled to indemnity from the Plan assets relating to any
such action.
65
<PAGE>
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
-----------------------------------------------
19.1 Amendment
The Company reserves the right to amend the Plan and Trust at
any time, to any extent and in any manner it may deem
necessary or appropriate. The Company (and not the Trustee)
shall be responsible for adopting any amendments necessary to
maintain the qualified status of the Plan and Trust under
Code sections 401(a) and 501(a). Notwithstanding the
foregoing, if the Committee is acting as the Administrator in
accordance with Section 15.6, it shall have the authority to
adopt Plan and Trust amendments which have no substantial
adverse financial impact upon any Employer or the Plan. All
interested parties shall be bound by any amendment, provided
that no amendment shall:
(a) become effective unless it has been adopted in
accordance with the procedures set forth in Section
19.5;
(b) except to the extent permissible under ERISA and the
Code, make it possible for any portion of the Trust
assets to revert to an Employer or to be used for,
or diverted to, any purpose other than for the
exclusive benefit of Participants and Beneficiaries
entitled to Plan benefits and to defray reasonable
expenses of administering the Plan;
(c) decrease the rights of any Participant to benefits
accrued (including the elimination of optional forms
of benefits) to the date on which the amendment is
adopted, or if later, the date upon which the
amendment becomes effective, except to the extent
permitted under ERISA and the Code; nor
(d) permit a Participant to be paid any portion of his
or her Account subject to the distribution rules of
Code section 401(k) unless the payment would
otherwise be permitted under Code section 401(k).
19.2 Merger
The Plan and Trust may not be merged or consolidated with,
nor may its assets or liabilities be transferred to, another
plan unless each Participant and Beneficiary would, if the
resulting plan were then terminated, receive a benefit just
after the merger, consolidation or transfer which is at least
equal to the benefit which would be received if either plan
had terminated just before such event.
19.3 Divestitures
Subject to Code section 401(k)(10), in the event of a sale by
an Employer which is a corporation of: (i) substantially all
of the Employer's assets used in
66
<PAGE>
a trade or business to an unrelated corporation, or (ii) a
sale of such Employer's interest in a subsidiary to an
unrelated entity or individual, lump sum distributions shall
be permitted from the Plan, except as provided below, to
Participants with respect to Employees who continue
employment with the corporation acquiring such assets or who
continue employment with such subsidiary, as applicable.
Notwithstanding, distributions shall not be permitted if the
purchaser agrees, in connection with the sale, to be
substituted as the Company as the sponsor of the Plan or to
accept a transfer in a transaction subject to Code section
414(l)(1) of the assets and liabilities representing the
Participants' benefits into a plan of the purchaser or a plan
to be established by the purchaser.
19.4 Plan Termination and Complete Discontinuance of Contributions
The Company may, at any time and for any reason, terminate
the Plan in accordance with the procedures set forth in
Section 19.5, or completely discontinue contributions.
In the event of the Plan's termination, if no successor plan
is established or maintained, lump sum distributions shall be
made in accordance with the terms of the Plan as in effect at
the time of the Plan's termination or as thereafter amended,
provided that a post-termination amendment shall not be
effective to the extent that it violates Section 19.1 unless
it is required in order to maintain the qualified status of
the Plan upon its termination. The Trustee's and Employer's
authority shall continue beyond the Plan's termination date
until all Trust assets have been liquidated and distributed.
19.5 Amendment and Termination Procedures
The following procedural requirements shall govern the
adoption of any amendment or termination (a "Change") of the
Plan and Trust:
(a) The Company may adopt any Change by action of its
board of directors in accordance with its normal
procedures.
(b) The Committee, if acting as Administrator in
accordance with Section 15.6, may adopt any
amendment within the scope of its authority provided
under Section 19.1 and in the manner specified in
Section 15.7(a).
(c) Any Change must be (1) set forth in writing, and (2)
signed and dated by an executive officer of the
Company or, in the case of an amendment adopted by
the Committee, at least one of its members.
67
<PAGE>
(d) If the effective date of any Change is not specified
in the document setting forth the Change, it shall
be effective as of the date it is signed by the last
person whose signature is required under clause (2)
above, except to the extent that another effective
date is necessary to maintain the qualified status
of the Plan and Trust under Code sections 401(a) and
501(a).
(e) No Change shall become effective until it is
accepted and signed by the Trustee (which acceptance
shall not unreasonably be withheld).
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate
its Plan participation by action of its board of directors in
accordance with its normal procedures. Written notice of such
action shall be signed and dated by an executive officer of
the Employer and delivered to the Company. If the effective
date of such action is not specified, it shall be effective
on, or as soon as reasonably practicable after, the date of
delivery. Upon the Employer's request, the Company may
instruct the Trustee and Administrator to spin off all
affected Accounts and underlying assets into a separate
qualified plan under which the Employer shall assume the
powers and duties of the Company. Alternatively, the Company
may continue to maintain the Accounts under the Plan.
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under the Plan and Trust or
may be removed by the Company at any time upon at least 90
days written notice (or less if agreed to by both parties).
In such event, the Company shall appoint a successor trustee
by the end of the notice period. The successor trustee shall
then succeed to all the powers and duties of the Trustee
under the Plan and Trust. If no successor trustee has been
named by the end of the notice period, the Committee shall
become the trustee, or if the Committee declines, the Trustee
may petition the court for the appointment of a successor
trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively
feasible after its resignation or removal as
Trustee, the Trustee shall transfer to the successor
trustee all property currently held by the Trust.
However, the Trustee is authorized to reserve such
sum of money as it may deem advisable for payment of
its accounts and expenses in connection with the
settlement of its accounts or other fees or expenses
payable by the Trust. Any balance remaining after
payment of such fees and expenses shall be paid to
the successor trustee.
68
<PAGE>
(b) Final Accounting. The Trustee shall provide a final
accounting to the Administrator within 90 days of
the date Trust assets are transferred to the
successor trustee.
(c) Administrator Approval. Approval of the final
accounting shall automatically occur 180 days after
such accounting has been received by the
Administrator, unless the Administrator files a
written objection with the Trustee within such time
period. Such approval shall be final as to all
matters and transactions stated or shown therein and
binding upon the Administrator.
69
<PAGE>
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date
include this set of daily valued funds, except that the Founders Growth
Fund, the Templeton Foreign Fund and the Strong Shafer Value Fund shall
not be offered under the Plan until January 1, 1998 and the Company
Stock Fund shall not be offered under the Plan until January 1, 1998
or, if later, as soon as practical after the Administrator has complied
with the filing requirements of the Securities Act of 1933:
<TABLE>
<CAPTION>
Category Funds
-------- -----
<S> <C>
Money Market Money Market
------------
Income U.S. Treasury Allocation
------
Balanced Asset Allocation
--------
Equity Company Stock
------ Founders Growth
Growth Stock
International Equity
S&P 500 Stock
Strong Shafer Value
Templeton Foreign
</TABLE>
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the Money
Market Fund.
III. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of the Effective Date, there are no maximum percentage restrictions
applicable to any Investment Funds.
70
<PAGE>
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
I. Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants, except that the Employer shall pay the fees related to
the Company Stock Fund.
II. Recordkeeping Fees: These are paid by the Employer on a quarterly
basis, except that with regard to a Participant who is no longer an
Employee or a Beneficiary, these are paid by the Participant and are
assessed monthly and billed/collected from Accounts quarterly.
III. Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding
loan balance for loans entered into on or after April 1, 1991. For
loans entered into prior to April 1, 1991, these are paid by the
Employer on a quarterly basis.
IV. Periodic Installment Payment Fees: A $3.00 per check fee shall be
assessed and billed/collected quarterly from the Account of each
Participant for whom a check is issued.
V. Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the
Administrator later elects that any such fees shall be borne by
Participants, estimates of the fees shall be determined and
reconciled, at least annually, and the fees shall be assessed monthly
and billed/collected from Accounts quarterly.
71
<PAGE>
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the prime rate published in The Wall Street Journal at the time the
loan is processed, plus 1%. If multiple prime rates are published in The Wall
Street Journal, the prime rate selected shall be the rate closest to the last
prime rate used for this purpose.
72
<PAGE>
EXHIBIT 4.2
GERBER SCIENTIFIC, INC. AND
PARTICIPATING SUBSIDIARIES
DEFERRED COMPENSATION PLAN
PLAN DOCUMENT
EFFECTIVE JANUARY 1, 1998
<PAGE>
Gerber Scientific, Inc. and Participating Subsidiaries
Deferred Compensation Plan
Effective January 1, 1998
Gerber Scientific, Inc., a Connecticut corporation, hereby establishes the
Gerber Scientific, Inc. and Participating Subsidiaries Deferred Compensation
Plan, effective January 1, 1998, for the benefit of a select group of management
and highly compensated employees of the Company and its participating
Affiliates, in order to provide such employees with certain deferred
compensation benefits. The Plan is an unfunded deferred compensation plan that
is intended to qualify for the exemptions provided in sections 201, 301, and 401
of ERISA.
IN WITNESS WHEREOF, Gerber Scientific, Inc., by its duly authorized officer, has
executed this Plan on the date indicated below.
Date: , 19 GERBER SCIENTIFIC, INC.
---------------------- ---
By:
-----------------------------------
Title: Senior Vice President, Finance
<PAGE>
TABLE OF CONTENTS
Page
----
1 DEFINITIONS............................................................... 1
-----------
2 PARTICIPATION............................................................. 4
-------------
2.1 Participation......................................................... 4
2.2 Hardship Suspension of Participation.................................. 4
2.3 Termination of Participation.......................................... 4
3 COMPENSATION DEFERRALS.................................................... 5
----------------------
3.1 Compensation Deferrals................................................ 5
3.2 Crediting of Compensation Deferrals................................... 5
3.3 Investment............................................................ 5
4 ACCOUNTING................................................................ 7
----------
4.1 Participants' Accounts................................................ 7
4.2 Participants Remain Unsecured Creditors............................... 7
4.3 Accounting Methods.................................................... 7
4.4 Reports............................................................... 7
5 DISTRIBUTIONS............................................................. 8
-------------
5.1 Normal Time for Distribution.......................................... 8
5.2 Beneficiary Designations.............................................. 8
5.3 Financial Hardship.................................................... 9
5.4 Payments to Incompetents.............................................. 9
5.5 Undistributable Accounts.............................................. 9
5.6 Committee Discretion.................................................. 10
6 VESTING AND TERMINATION OF EMPLOYMENT..................................... 11
-------------------------------------
6.1 Vesting in Compensation Deferrals..................................... 11
6.2 Termination........................................................... 11
6.3 Transfers of Employment............................................... 11
7 ADMINISTRATION OF THE PLAN................................................ 12
--------------------------
7.1 Plan Administrator.................................................... 12
7.2 Committee............................................................. 12
7.3 Actions by Committee.................................................. 12
7.4 Powers of Committee................................................... 12
7.5 Decisions of Committee................................................ 13
7.6 Administrative Expenses............................................... 13
7.7 Eligibility to Participate............................................ 13
7.8 Indemnification....................................................... 13
8 FUNDING................................................................... 14
-------
8.1 UNFUNDED PLAN......................................................... 14
- --------------------------------------------------------------------------------
i
December 16,1997
<PAGE>
9 AMENDMENT OR TERMINATION OF PLAN......................................... 15
--------------------------------
9.1 EMPLOYERS' OBLIGATIONS LIMITED....................................... 15
9.2 RIGHT TO AMEND OR TERMINATE.......................................... 15
9.3 EFFECT OF TERMINATION................................................ 15
9.4 DISPOSITION OF AFFILIATES............................................ 15
10 GENERAL PROVISIONS....................................................... 16
------------------
10.1 PARTICIPATION BY AFFILIATES......................................... 16
10.2 INALIENABILITY...................................................... 16
10.3 RIGHTS AND DUTIES................................................... 16
10.4 NO ENLARGEMENT OF EMPLOYMENT RIGHTS................................. 16
10.5 APPORTIONMENT OF COSTS AND DUTIES................................... 16
10.6 CONTRIBUTIONS NOT COUNTED UNDER OTHER EMPLOYEE BENEFIT PLANS........ 16
10.7 APPLICABLE LAW...................................................... 17
10.8 SEVERABILITY........................................................ 17
10.9 CONSTRUCTION........................................................ 17
10.10 TAX WITHHOLDING.................................................... 17
APPENDIX A - LIST OF PARTICIPATING EMPLOYERS................................ 18
APPENDIX B - INVESTMENT FUNDS............................................... 19
APPENDIX C - CLAIMS PROCEDURE; DISPUTE RESOLUTION........................... 20
- --------------------------------------------------------------------------------
ii
December 16,1997
<PAGE>
1 DEFINITIONS
-----------
The following words and phrases shall have the following meanings unless a
different meaning is plainly required by the context:
1.1 "401(k) Plan" shall mean the Gerber Scientific, Inc. and Participating
Subsidiaries 401(k) Maximum Advantage Program, as amended from time to
time.
1.2 "Account" shall mean as to any Participant the separate account
maintained on the books of the Employers in order to reflect his or
her interest under the Plan. Account may refer to one or all of the
following accounts which have been created on behalf of a Participant
to hold specific types of Contributions under the Plan:
(a) "Compensation Deferral Account". An account created to hold
Compensation Deferrals.
1.3 "Affiliate" shall mean a corporation, trade or business which is,
together with any Employer, a member of a controlled group of
corporations or an affiliated service group or under common control
(within the meaning of section 414(b), (c) or (m) of the Code), but
only for the period during which such other entity is so affiliated
with any Employer.
1.4 "Beneficiary" shall mean the person or persons entitled to receive
benefits under the Plan upon the death of a Participant, as provided
in Section 5.2.
1.5 "Board" shall mean the Board of Directors of the Company, as
constituted from time to time.
1.6 "Change of Control" shall mean that upon the occurence of any of the
following events:
(a) Acquisition. The acquisition by any person (including a group
within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934 (the "Exchange Act") but
excluding Gerber Scientific, Inc. ("Gerber") or any majority
owned subsidiary of Gerber (a "Subsidiary") or any employee
benefit plan of Gerber) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30%
or more of the combined voting power of Gerber's then
outstanding voting securities; or
(b) Change in Composition of Board of Directors. A change in the
composition of the Board of Directors of Gerber so that
individuals who on December 12, 1997 constituted such Board (or
the successors of
- --------------------------------------------------------------------------------
1 December 16,1997
<PAGE>
such individuals nominated by a Board of Directors on which such
individuals or such successors constituted a majority) are no
longer a majority; or
(c) Business Combination. Consummation of a complete liquidation or
dissolution of Gerber or a merger, consolidation or sale of all
or substantially all of Gerber's assets (collectively, a
"Business Combination") other than a Business Combination in
which all or substantially all of the stockholders of Gerber
receive 50 percent or more of the stock of the company resulting
from the Business Combination; or
(d) Merger or Consolidation of Subsidiary. Consummation of a merger
or consolidation of any Subsidiary of Gerber if immediately
after such merger or consolidation the stockholders of Gerber
immediately before the merger or consolidation own less than 50
percent of the stock of Gerber,
the aggregate amount credited to the Account of the Eligible Employee
shall become payable to the Eligible Employee in one lump sum.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending, supplementing
or superseding such section.
1.8 "Committee" shall mean the Company's Gerber Scientific, Inc. and
Participating Subsidiaries Employee Benefit Plans Committee, as it may
be constituted from time to time. The members of the Committee are
appointed by, and serve at the pleasure of, the Board.
1.9 "Company" shall mean Gerber Scientific, Inc., a Connecticut
corporation.
1.10 "Compensation" shall mean wages and other compensation reported on
Form W-2 (without regard to 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), excluding
reimbursements or other expense allowances, fringe benefits (cash and
noncash, including compensation related to stock option plans), moving
expenses, deferred compensation and welfare benefits (including
severance pay), but including elective contributions under Code
sections 125 and 402(e)(3) and amounts deferred under a non-qualified
deferred compensation plan.
1.11 "Compensation Deferrals" shall mean the amounts credited to
Participants' Accounts under the Plan pursuant to their deferral
elections made in accordance with Section 2.1.
1.12 "Eligible Employee" shall mean a highly compensated or management
employee of an Employer who is designated from time to time by the
Committee as an Eligible Employee.
1.13 "Employers" shall mean the Company and each of its Affiliates that
adopts the Plan with the approval of the Board. With respect to an
individual Participant, Employer shall mean the Company or its
Affiliate that has
- --------------------------------------------------------------------------------
2 December 16, 1997
<PAGE>
adopted the Plan with the approval of the Board and that directly
employs such Participant.
1.14 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended. Reference to a specific section of ERISA shall
include such section, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation amending,
supplementing or superseding such section.
1.15 "Financial Hardship" shall mean a severe financial emergency which is
caused by a sudden and unexpected accident, illness or other event
beyond the control of the Participant which, without a suspension of
deferrals or accelerated distribution (as the case may be), would
result in a severe financial burden to the Participant or a member of
his or her immediate family. A Financial Hardship does not exist to
the extent that the hardship may be relieved by (a) reimbursement or
compensation by insurance, or (b) by liquidation of the Participant's
other assets (to the extent such liquidation itself would not cause
severe financial hardship).
1.16 "Investment Funds" shall mean the investment options used for
tracking phantom investment results under the Plan. The number,
identity and composition of the Investment Funds shall be determined
from time to time by the Committee.
1.17 "Participant" shall mean an Eligible Employee who (a) has become a
Participant in the Plan pursuant to Section 2.1 and (b) has not ceased
to be a Participant pursuant to Section 2.3.
1.18 "Plan" shall mean the Gerber Scientific, Inc. and Participating
Subsidiaries Deferred Compensation Plan, as set forth in this
instrument and as hereafter amended from time to time.
1.19 "Plan Year" shall mean the calendar year.
- --------------------------------------------------------------------------------
3 December 16,1997
<PAGE>
2 PARTICIPATION
-------------
2.1 Participation. Each Eligible Employee's decision to become a
Participant shall be entirely voluntary.
(a) Initial Elections by Current Employees. An Eligible Employee may
elect to become a Participant in the Plan by electing, no later
than December 31, 1997 to make Compensation Deferrals under the
Plan.
(b) Elections for Subsequent Plan Years. An Eligible Employee may
elect to become a Participant (or to continue or reinstate his or
her active participation) in the Plan for any subsequent Plan
Year by electing, no later than December 31 of the preceding Plan
Year, to make Compensation Deferrals under the Plan; provided
that an Eligible Employee who is hired or is designated as an
Eligible Employee during a Plan Year may elect to become a
Participant during such Plan Year by electing no later than the
deadline prescribed by the Committee in accordance with Section
(d) to make Compensation Deferrals for the remainder of such Plan
Year. An election under this Section (b) to make Compensation
Deferrals shall be effective only for the Plan Year with respect
to which the election is made.
(c) No Election Changes During Plan Year. A Participant shall not be
permitted to change or revoke his or her election for a Plan Year
after the effective date of such election, except as provided in
Section 2.2.
(d) Specific Timing and Method of Election. Notwithstanding any
contrary provision of this Section (d), the Committee, in its
sole discretion, shall determine the manner and deadlines for
Eligible Employees to make Compensation Deferral elections. The
deadlines prescribed by the Committee may be earlier than the
deadlines specified in Sections (a), (b) and (c), but shall not
be later than the deadlines prescribed in such Sections.
2.2 Hardship Suspension of Participation. In the event that a Participant
incurs a Financial Hardship, the Committee, in its sole discretion,
may suspend the Participant's Compensation Deferrals for the remainder
of the Plan Year. However, an election to make Compensation Deferrals
under Section 2.1 shall be irrevocable as to amounts deferred as of
the effective date of any suspension made in accordance with this
Section 2.2.
2.3 Termination of Participation. An Eligible Employee who has become a
Participant shall remain a Participant until his or her entire vested
Account balance is distributed. However, an Eligible Employee who has
become a Participant may or may not be an active Participant making
Compensation Deferrals for a particular Plan Year, depending upon
whether he or she continues to be an Eligible Employee for such Plan
Year and has elected to make Compensation Deferrals for such Plan
Year.
- --------------------------------------------------------------------------------
4 December 16,1997
<PAGE>
3 COMPENSATION DEFERRALS
----------------------
3.1 Compensation Deferrals. Subject to Sections (a) and (b), at the times
and in the manner prescribed in Section 2.1, each Eligible Employee
may elect to defer portions of his or her Compensation and to have the
amounts of such deferrals credited to his or her Account under the
Plan on the books of the Employer. For each Plan Year, an Eligible
Employee may elect to defer an amount equal to any whole percentage of
the Participant's Compensation, provided that the amount elected by
the Participant shall not exceed 15% of Compensation less any amounts
that can be contributed to the 401(k) Plan.
(a) Annual Election. Each Eligible Employee who elects to
participate in this Plan shall make one election to participate
in both this Plan and the 401(k) Plan. An Eligible Employee may
not elect to participate in this Plan without having elected to
participate in the 401(k) Plan.
(b) Coordination with 401(k) Deferrals. In no event shall an Eligible
Employee make deferrals into this Plan for a Plan Year unless his
or her pre-tax contributions to the 401(k) Plan for such Plan
Year are reasonably expected to be limited, due to plan limits
(as defined above), or due to statutory limits as defined in
Section 402(g) of the Code (with respect to deferrals) or Section
401(a)(17) of the Code (with respect to limits on compensation),
or Section 401(k) of the Code (with respect to nondiscrimination
limits on deferrals).
3.2 Crediting of Compensation Deferrals. The amounts deferred pursuant to
Section 3.1 shall reduce the Participant's Compensation during the
Plan Year and shall be credited to the Participant's Account within a
reasonable period of time after the last day of each payroll period in
which the amounts (but for the deferral) would have been paid to the
Participant. For each payroll period, the exact dollar amount to be
deferred from each Compensation payment shall be determined by the
Committee under such formulae as it shall adopt from time to time.
3.3 Investment. Each Participant shall indicate on his or her deferral
election made pursuant to Section 3.1 the percentages of all amounts
to be credited to his or her Account that are to be deemed to be
invested in each of the Investment Funds. As to each Investment Fund,
the Participant may specify any whole percentage, provided that the
total of the percentages elected shall equal 100%.
(a) Changes. Pursuant to such procedures as the Committee may
specify from time to time, a Participant may reallocate the
deemed investment of his or her Account (past and/or future
contributions) at the beginning of each calendar quarter.
(b) Failure to Elect. If a Participant fails to direct the manner in
which the amounts credited to his or her Account are to be deemed
invested, such amounts shall be deemed invested in such manner as
shall be
- --------------------------------------------------------------------------------
5 December 16,1997
<PAGE>
designated by the Committee pursuant to the default fund
specified in Appendix B.
(c) Participants Remain General Creditors. All amounts credited to a
Participant's Account under the Plan shall continue for all
purposes to be a part of the general assets of the Employer.
Each Participant's interest in the Plan shall make him or her
only a general creditor of the Company and the Employer, and no
actual investments shall be made on behalf of the Participant.
- --------------------------------------------------------------------------------
6 December 16,1997
<PAGE>
4 ACCOUNTING
----------
4.1 Participants' Accounts. At the direction of the Committee, there shall
be established and maintained on the books of the Employer, a separate
Account for each Participant to which shall be credited all of the
Participant's Compensation Deferrals, together with the deemed
earnings and losses on such amounts. Each Participant's Account shall
be comprised of:
(a) A separate Compensation Deferral Account, to which the
Participant's Compensation Deferrals shall be credited, together
with the deemed earnings and losses thereon.
4.2 Participants Remain Unsecured Creditors. All amounts credited to a
Participant's Account under the Plan shall continue for all purposes
to be a part of the general assets of the Employer. Each Participant's
interest in the Plan shall make him or her only a general, unsecured
creditor of the Company and the Employer.
4.3 Accounting Methods. The accounting methods or formulae to be used
under the Plan for the purpose of maintaining the Participants'
Accounts, including the calculation and crediting of deemed investment
earnings and losses, shall be determined by the Committee, in its sole
discretion. The accounting methods or formulae selected by the
Committee may be revised from time to time.
4.4 Reports. Each Participant shall be furnished with periodic statements
of the amount credited to his or her Account, reflecting the status of
his or her interest in the Plan, at least annually.
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7 December 16,1997
<PAGE>
5 DISTRIBUTIONS
-------------
5.1 Normal Time for Distribution. Subject to Sections 1.6, 5.3 and 5.6,
upon termination of employment, distribution of the balance credited
to a Participant's Account shall be made as follows:
(a) Lump Sum Distribution. In a single lump sum no later than sixty
days following the Participant's termination of employment with
all Employers and Affiliates for any reason. The single lump sum
shall be paid in cash; or
(b) Installments. In annual, quarterly, or monthly installments over
a period not to exceed five years.
(c) Annual Election. Each Plan Year, at time of enrollment, a
Participant may elect in what manner he or she wishes to receive
a distribution in the event of termination of employment. Such
election shall apply to all amounts credited to a Participant's
Account under the Plan and shall continue in effect unless or
until replaced by a subsequent election. In the event of a
Participant's termination prior to one year from a change in
election, such election shall be considered null and void. The
distribution of accounts will then be made in accordance with the
election in place prior to the change.
5.2 Beneficiary Designations. Each Participant may, pursuant to such
procedures as the Committee may specify, designate one or more
Beneficiaries to receive a distribution of the balance credited to
each Participant's Account in the event of the Participant's death.
(a) Spousal Consent. If a Participant designates a person other than
or in addition to his or her spouse as a primary Beneficiary, the
designation shall be ineffective unless the Participant's spouse
consents to the designation. Spousal consent required under this
Section 5.2 shall not be effective unless it (a) is set forth in
writing, (b) acknowledges the effect of the Participant's
designation of another person as his or her Beneficiary under the
Plan, and (c) is signed by the spouse and witnessed by a notary
public. Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of the Committee that
written spousal consent may not be obtained because the spouse
cannot be located, his or her designation shall be effective
without a spousal consent. Any spousal consent required under
this Section 5.2 shall be valid only with respect to the spouse
who signs the consent. A Participant may revoke his or her
Beneficiary designation at any time, provided that such
revocation is in writing, and regardless of his or her spouse's
previous consent to the Beneficiary designation being revoked,
any such revoked designation shall be ineffective.
- --------------------------------------------------------------------------------
8 December 16,1997
<PAGE>
(b) Changes and Failed Designations. A Participant may designate
different Beneficiaries (or may revoke a prior Beneficiary
designation) at any time by delivering a new designation (or
revocation of a prior designation) in like manner. Any
designation or revocation shall be effective only if it is
received by the Committee. However, when so received, the
designation or revocation shall be effective as of the date the
notice is executed (whether or not the Participant still is
living), but without prejudice to the Committee on account of any
payment made before the change is recorded. The last effective
designation received by the Committee shall supersede all prior
designations. If a Participant dies without having effectively
designated a Beneficiary, or if no Beneficiary survives the
Participant, the Participant's Account shall be payable to his or
her surviving spouse, or, if the Participant is not survived by
his or her spouse, the Account shall be paid to his or her
estate.
(c) Form of Payment to Beneficiary. If the Participant has already
begun receiving distribution payments at the time of his or her
death, then such payments shall continue to the Beneficiary in
the same manner as elected by the Participant. If the Participant
dies prior to receiving distribution payments from his Account,
then payments shall begin within 60 days of the Participant's
death, in accordance with the latest valid distribution election
made under Section 5.1(c).
5.3 Financial Hardship. In the event that a Participant incurs a Financial
Hardship, the Committee, in its sole discretion and notwithstanding
any contrary provision of the Plan, may determine that all or part of
the Participant's Account shall be paid to him or her immediately;
provided, however, that the amount paid to the Participant pursuant to
this Section 5.3 shall be limited to the amount reasonably necessary
to alleviate the Participant's hardship. Also, payment under this
Section 5.3 may not be made to the extent that the hardship may be
relieved by suspension of the Participant's Compensation Deferrals in
accordance with Section 2.2.
5.4 Payments to Incompetents. If a Plan benefit is due to be paid to a
minor or if the Administrator reasonably believes that any payee is
legally incapable of receiving any payment due him or her, the
Administrator shall have the payment of the benefit, or any part
thereof, made to the person (or persons or institution) whom it
reasonably believes is caring for or supporting the payee, unless it
has received due notice of claim therefor from a duly appointed
guardian or conservator of the payee. Any payment shall to the extent
thereof, be a complete discharge of any liability under the Plan to
the payee.
5.5 Undistributable Accounts. Each Participant and (in the event of death)
his or her Beneficiary shall keep the Committee advised of his or her
current address. If the Committee is unable to locate the Participant
or Beneficiary to whom a Participant's Account is payable under this
Section 5, the Participant's Account shall continue to be credited
with deemed earnings and
- --------------------------------------------------------------------------------
9 December 16,1997
<PAGE>
losses in accordance with Section 3.3. Accounts that, in accordance
with the preceding sentence, have been undistributable for a period of
thirty-five months shall be forfeited as of the end of the thirty-
fifth month. If a Participant whose Account was forfeited under this
Section 5.5 (or his or her Beneficiary) files a claim for distribution
of the Account after the date that it was forfeited, and if the
Committee determines that such claim is valid, then the forfeited
balance shall be paid by the Employer as soon as practicable
thereafter.
5.6 Committee Discretion. Within the provisions of this Section 5, the
Committee shall have sole discretion to determine the specific timing
of the payment of any Account balance under the Plan.
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10 December 16,1997
<PAGE>
6 VESTING AND TERMINATION OF EMPLOYMENT
-------------------------------------
6.1 Vesting in Compensation Deferrals. Subject to Sections 8.1 (relating
to creditor status) and 9.2 (relating to amendment and/or termination
of the Plan), a Participant's interest in the balance credited to his
or her Compensation Deferral Account at all times shall be 100% vested
and nonforfeitable.
6.2 Termination. Upon termination of the Participant's employment with all
Employers and Affiliates for any reason at any time, the vested
portion of his or her Account shall be distributed to him or her in
the manner and at the time set forth in Section 5.
6.3 Transfers of Employment. The transfer of a Participant from employment
with an Employer to employment with another Affiliate shall not
constitute a termination of employment under the Plan. Upon
termination of his or her employment with such other Affiliate (other
than for transfer to employment with another Affiliate), the former
Participant's employment shall be deemed then to have terminated under
the Plan.
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11 December 16,1997
<PAGE>
7 ADMINISTRATION OF THE PLAN
--------------------------
7.1 Plan Administrator. The Company is hereby designated as the
administrator of the Plan (within the meaning of section 3(16)(A) of
ERISA).
7.2 Committee. The Plan shall be administered by the Committee. The
Committee shall have the authority to control and manage the operation
and administration of the Plan. Any member of the Committee may resign
at any time by notice in writing mailed or delivered to the Secretary
of the Company.
7.3 Actions by Committee. Each decision of a majority of the members of
the Committee then in office shall constitute the final and binding
act of the Committee. The Committee may act with or without a meeting
being called or held and shall keep minutes of all meetings held and a
record of all actions taken by written consent.
7.4 Powers of Committee. The Committee shall have all powers and
discretion necessary or appropriate to supervise the administration of
the Plan and to control its operation in accordance with its terms,
including, but not by way of limitation, the following powers:
(a) To interpret and determine the meaning and validity of the
provisions of the Plan and to determine any question arising
under, or in connection with, the administration, operation or
validity of the Plan or any amendment thereto;
(b) To determine any and all considerations affecting the eligibility
of any employee to become a Participant or remain a Participant
in the Plan;
(c) To cause one or more separate Accounts to be maintained for each
Participant;
(d) To cause Compensation Deferrals and deemed earnings and losses
thereon to be credited to Participants' Accounts;
(e) To establish and revise an accounting method or formula for the
Plan, as provided in Section 4.3;
(f) To determine the status and rights of Participants and their
spouses, Beneficiaries or estates;
(g) To employ such counsel, agents and advisers, and to obtain such
legal, clerical and other services, as it may deem necessary or
appropriate in carrying out the provisions of the Plan;
(h) To establish, from time to time, rules for the performance of its
powers and duties and for the administration of the Plan;
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12 December 16,1997
<PAGE>
(i) To arrange for at least an annual distribution to each
Participant of a statement of benefits accrued under the Plan;
(j) To publish a claims and appeal procedure, included as Appendix C
of this document and satisfying the minimum standards of section
503 of ERISA, pursuant to which individuals or estates may claim
Plan benefits and appeal denials of such claims;
(k) To delegate to any one or more of its members or to any other
person, severally or jointly, the authority to perform for and on
behalf of the Committee one or more of the functions of the
Committee under the Plan; and
(l) To decide all issues and questions regarding Account balances,
and the time, form, manner, and amount of distributions to
Participants.
7.5 Decisions of Committee. All actions, interpretations, exercises of
discretion, and decisions of the Committee shall be conclusive and
binding on all persons, and shall be given the maximum possible
deference allowed by law.
7.6 Administrative Expenses. All expenses incurred in the administration
of the Plan by the Committee, or otherwise, including legal fees and
expenses, shall be paid and borne by the Employers.
7.7 Eligibility to Participate. No member of the Committee who is also an
employee of an Employer shall be excluded from participating in the
Plan if otherwise eligible, but he or she shall not be entitled, as a
member of the Committee, to act or pass upon any matters pertaining
specifically to his or her own Account under the Plan.
7.8 Indemnification. Each of the Employers shall, and hereby does,
indemnify and hold harmless the members of the Committee, from and
against any and all losses, claims, damages or liabilities (including
attorneys' fees and amounts paid, with the approval of the Board, in
settlement of any claim) arising out of or resulting from the
implementation of a duty, act or decision with respect to the Plan, so
long as such duty, act or decision does not involve gross negligence
or willful misconduct on the part of any such individual.
- --------------------------------------------------------------------------------
13 December 16,1997
<PAGE>
8 FUNDING
-------
8.1 Unfunded Plan. All amounts credited to a Participant's Account under
the Plan shall continue for all purposes to be a part of the general
assets of the Employer. The interest of the Participant in his or her
Account, including his or her right to distribution thereof, shall be
an unsecured claim against the general assets of the Company and the
Employer. Nothing contained in the Plan shall give any Participant or
Beneficiary any interest in or claim against any specific assets of
the Company or the Employer. The Employers may establish and fund one
or more trusts for the purpose of paying some or all of the benefits
promised to Participants and Beneficiaries under the Plan; provided,
however, that (a) any such trusts(s) shall at all times be subject to
the claims of the Employer's general creditors in the event of the
insolvency or bankruptcy of the Employer and (b) notwithstanding the
creation or funding of any such trusts(s), the Company and the
Employer shall remain primarily liable for any obligation hereunder.
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14 December 16,1997
<PAGE>
9 AMENDMENT OR TERMINATION OF PLAN
--------------------------------
9.1 Employers' Obligations Limited. The Employers intend to continue the
Plan indefinitely, and to maintain each Participant's Account until it
is scheduled to be paid to him or her in accordance with the
provisions of the Plan. However, the Plan is voluntary on the part of
the Employers, and the Employers do not guarantee to continue the
Plan. The Board at any time may suspend or discontinue Compensation
Deferrals with or without cause.
9.2 Right to Amend or Terminate. The Company reserves the right to amend
the Plan at any time, to any extent and in any manner it may deem
necessary or appropriate. Notwithstanding the foregoing, the Committee
shall have the authority to adopt amendments that have no substantial
adverse financial impact on any Employer or the Plan. The Company may
also, at any time and for any reason terminate the Plan in accordance
with Section 9.3, or completely discontinue contributions. The
Trustee's and Employer's authority shall continue beyond the Plan's
termination date until all Trust assets have been liquidated and
distributed.
9.3 Effect of Termination. If the Plan is terminated pursuant to this
Section 9, the balances credited to the Accounts of the affected
Participants shall be distributed to them at the time and in the
manner set forth in Section 5; provided, however, that the Committee,
in its sole discretion, may authorize accelerated distribution of
Participants' Accounts as of any earlier date.
9.4 Disposition of Affiliates. Notwithstanding any contrary provision of
the Plan, in the event that one or more Participants transfer
employment to a non-Affiliate pursuant to an agreement regarding the
sale of the stock or assets of an Affiliate, or a spin-off, split-up
or other change in the capital structure of an Affiliate (each, an
"affected Participant"), the Board, in its sole discretion, may
determine that (a) the amounts credited to the affected Participant's
Account shall not be distributed and the liability for amounts
credited to such affected Participant's Account shall be assigned or
transferred to such non-Affiliate (or an affiliate thereof), and upon
acceptance by the non-Affiliate (or affiliate thereof) of such
liability, no Employer shall have any liability under the Plan to such
affected Participant, or (b) the amounts credited to an affected
Participant's Account shall be distributed to him or her in a single
lump sum or in annual installments over a period not to exceed five
years following the affected Participant's termination of employment
with all Employers and Affiliates.
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15 December 16,1997
<PAGE>
10 GENERAL PROVISIONS
------------------
10.1 Participation by Affiliates. One or more Affiliates of the Company may
become participating Employers by adopting the Plan and obtaining
approval for such adoption from the Board. By adopting the Plan, an
Affiliate is deemed to agree to all of its terms, including (but not
limited to) the provisions granting exclusive authority to the Board
and/or the Committee to amend or terminate the Plan and the provisions
granting exclusive authority to the Committee to administer and
interpret the Plan. Any Affiliate may terminate its participation in
the Plan at any time with the approval of the Board. All liabilities
incurred under the Plan to the Participants employed by each Employer
shall be the joint liabilities of the Company and the Employer under
the Plan. A list of participating Employers, and the effective dates
of their participation, is attached hereto as Appendix A.
10.2 Inalienability. In no event may either a Participant, a former
Participant or his or her Beneficiary, spouse or estate sell,
transfer, anticipate, assign, hypothecate, or otherwise dispose of any
right or interest under the Plan; and such rights and interests shall
not at any time be subject to the claims of creditors nor be liable to
attachment, execution or other legal process. Notwithstanding the
above sentence, a Participant's interest in the Plan may be
transferable pursuant to a qualified domestic relations order, as
defined in accordance with Code section 414(p).
10.3 Rights and Duties. Neither the Employers, the Board, nor the Committee
shall be subject to any liability or duty under the Plan except as
expressly provided in the Plan, or for any action taken, omitted or
suffered in good faith.
10.4 No Enlargement of Employment Rights. Neither the establishment or
maintenance of the Plan, the making of any Compensation Deferrals nor
any action of any Employer, the Board, or the Committee, shall be held
or construed to confer upon any individual any right to be continued
as an employee of the Employer nor, upon dismissal, any right or
interest in any specific assets of the Employers other than as
provided in the Plan. Each Employer expressly reserves the right to
discharge any employee at any time.
10.5 Apportionment of Costs and Duties. All acts required of the Employers
under the Plan may be performed by the Company for itself and its
Affiliates, and the costs of the Plan may be equitably apportioned by
the Committee among the Company and the other Employers. Whenever an
Employer is permitted or required under the terms of the Plan to do or
perform any act, matter or thing, it shall be done and performed by
any officer or employee of the Employer who is thereunto duly
authorized by the board of directors of the Employer.
10.6 Contributions Not Counted Under Other Employee Benefit Plans.
Compensation Deferrals will not be considered for purposes of
contributions
- --------------------------------------------------------------------------------
16 December 16,1997
<PAGE>
or benefits under any other employee benefit plan sponsored by the
Employers, except to the extent specifically provided therein.
10.7 Applicable Law. The provisions of the Plan shall be construed,
administered and enforced in accordance with ERISA, and to the extent
not preempted by ERISA, with the laws of the State of Connecticut.
10.8 Severability. If any provision of the Plan is held invalid or
unenforceable, its invalidity or unenforceability shall not affect any
other provisions of the Plan, and in lieu of each provision which is
held invalid or unenforceable, there shall be added as part of the
Plan a provision that shall be as similar in terms to such invalid or
unenforceable provision as may be possible and be valid, legal, and
enforceable.
10.9 Construction. The headings contained in and the table of contents
prefixed to the Plan are inserted only as a matter of convenience and
for reference and in no way define, limit, enlarge or describe the
scope or intent of the Plan nor in any way shall affect the
construction of any provision of the Plan. The singular and the plural
shall be interchanged wherever appropriate. References to Participant
shall include Alternate Payee and/or Beneficiary when appropriate and
even if not otherwise already expressly stated.
10.10 Tax Withholding. All benefits payable under this Plan shall be subject
to applicable federal, state and local income, payroll and estate tax
withholding requirements and all other applicable deductions required
by this Plan or by law.
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17 December 16,1997
<PAGE>
APPENDIX A - LIST OF PARTICIPATING EMPLOYERS
Effective Date
Employer Of Participation
-------- ----------------
Gerber Scientific Products, Inc. January 1, 1998
Gerber Garment Technology, Inc. January 1, 1998
Gerber Systems Corporation January 1, 1998
Gerber Optical, Inc. January 1, 1998
<PAGE>
APPENDIX B - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date
include this set of daily valued funds:
CATEGORY FUNDS
-------- -----
MONEY MARKET Money Market Fund (wfmm)
------------
INCOME US Treasury Allocation Fund (wftr)
------
BALANCED Asset Allocation Fund (wfaa)
--------
EQUITY S&P 500 Stock Fund (wfsp)
------ Growth Stock Fund (wfgs)
Founders Growth Fund (frgrx)
Strong Schafer Value Fund (schvx)
Templeton Foreign Fund (temfx)
In addition, Gerber Scientific, Inc. Common Stock is offered as an
investment option under the Plan as of the Effective Date.
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the Money Market
Fund.
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19 December 16,1997
<PAGE>
APPENDIX C - CLAIMS PROCEDURE; DISPUTE RESOLUTION
1. FILING A CLAIM
Any Participant or Beneficiary who believes he or she is entitled to
benefits under this Plan which he or she has not been granted, may
submit a written claim for such benefits to the Committee on behalf of
the Plan Administrator. The Committee shall notify the applicant in
writing of the action taken regarding such claim within 90 days
following its receipt. In the event the claim is denied, the
Committee shall furnish a written notification which shall include the
reasons for the denial, specific references to the Plan provisions on
which the denial is based, a description of any additional material or
information necessary for the applicant to perfect the claim,
including an explanation of why such material or information is
necessary, and an explanation of the review procedure set forth
hereunder.
2. APPEAL
In the event an applicant has received a written denial of a claim
submitted under this procedure, he or she may appeal by filing with
the Committee a written request for review. Such request must be made
within 60 days following the receipt of the written denial. In
connection with any request for review, the applicant may at any time
review pertinent documents and may submit issues and comments in
writing. The Committee shall notify the applicant of its
determination within 60 days following its receipt of the request for
review.
3. DISPUTE RESOLUTION
All disputes as to the proper amount and/or terms of any payment under
this Plan, which are not resolved in accordance with the above
paragraphs, shall be resolved conclusively by an independent certified
public accounting firm or an enrolled actuary selected by the Company
as promptly as reasonably possible after receipt by the Company of a
written notice from a Participant or Beneficiary setting forth the
nature of the dispute. All other controversies or claims arising out
of or relating to this Plan (including the question whether any
particular matter is arbitrable hereunder), shall be settled by
binding arbitration in the State of Connecticut, in accordance with he
Rules of the American Arbitration Association then in force. As a
condition of the receipt of benefits under this Plan, all potential
Participants and Beneficiaries shall abide by all awards rendered in
such arbitration proceedings and all such awards may be filed by the
prevailing party with a court having proper jurisdiction as a basis
for judgment and the issuance of execution thereon. All costs of any
such arbitration shall be borne by the Company; provided, however,
that each party shall bear its own legal fees and expenses in
connection therewith.
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20 December 16,1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Gerber Scientific, Inc.
We consent to the incorporation by reference of our audit report, dated May 22,
1997, relating to the consolidated balance sheet of Gerber Scientific, Inc. and
subsidiaries as of April 30, 1997 and 1996 and the related consolidated
statements of earnings, changes in shareholders' equity and cash flows for each
of the years in the three-year period ended April 30, 1997.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
December 22, 1997
