Registration No. 333-
_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
___________
M.A. HANNA COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 34-0232435
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
___________
Suite 36-5000, 200 Public Square, Cleveland, Ohio 44114-2304
(Address of principal executive office including zip code)
__________
Harwick Chemical Manufacturing Corporation Savings Plan
(Full title of plan)
___________
John S. Pyke, Jr., Esq.
Vice President, General Counsel and Secretary
M.A. Hanna Company
Suite 36-5000, 200 Public Square, Cleveland, OH 44114-2304
(216) 589-4000
(Name and address and telephone number including area code of agent for service)
__________
CALCULATION OF REGISTRATION FEE
Title of Amount Price per Maximum Amount of
securities registered share (4) aggregate registration
to be (2)(3) Offering fee (4)
registered Price (4)
(1)
Common 50,000 $25.1875 $1,259,375 $381.63
Stock,
Par Value
$1.00
(1) In addition, pursuant to Rule 416(c) under the Securities
Act of 1933 (the "Securities Act"), this Registration Statement
also covers an indeterminate amount of interests to be offered or
sold pursuant to the Harwick Chemical Manufacturing Corporation
Savings Plan (the "Plan").
(2) Maximum number of shares expected to be acquired in the Plan
through participant contributions prior to March 31, 2002.
(3) Pursuant to Rule 416 under the Securities Act, additional
shares of the Common Stock of the Company issued or which become
issuable in order to prevent dilution resulting from any future
stock split, stock dividend or similar transaction are also being
registered hereunder.
(4) Based upon the average of the high and low sales prices of
the Common Stock in the consolidated reporting system on November
5, 1997; determined in accordance with Rule 457(c) solely for the
purpose of determining the amount of the registration fee.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents and reports filed by M.A. Hanna
Company (File No. 1-5222) (the "Company") with the Securities and
Exchange Commission (the "Commission") are incorporated herein by
reference:
(a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
(c) Current Reports on Form 8-K dated June 24, 1997 and
September 19, 1997;
(d) The description of the Company's Common Stock contained
in the Registration Statement filed under Section 12 of the
Securities Exchange Act of 1934, including any amendment or
report filed for the purpose of
updating such description; and
(e) The description of the Company's Stock Purchase Rights
contained in the Rights Agreement filed as Exhibit 2 to Form 8-K
dated December 4, 1991, as amended.
All documents filed after the date of the filing of this
Registration Statement by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior
to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all
securities 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.
John S. Pyke, Jr., whose legal opinion is filed as an
exhibit to this registration statement is Vice President, General
Counsel and Secretary of the Registrant and is the beneficial
owner of approximately 51,127 shares of the Company's Common
Stock.
Item 6. Indemnification of Directors and Officers
Subsection (b)(7) of Section 102 of the Delaware General
Corporation Law (the "DGCL") empowers a corporation in its
original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit the
personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as
a director, provided that such provision cannot eliminate or
limit the liability of a director for (i) breach of the
director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or knowing violation of law, (iii)
payment of a dividend or approval of a stock repurchase which was
illegal under Section 174 of the DGCL, or (iv) any transaction
from which the director derived an improper personal benefit.
Articles Thirteenth and Fourteenth of the Registrant's
Certificate of Incorporation provide for limitation of liability
of directors, and indemnification of directors, officers and
others as follows:
"THIRTEENTH: To the full extent permitted by the
General Corporation Law of the State of Delaware
or any other applicable laws as presently or
hereafter in effect, no Director of the
Corporation shall be personally liable to the
Corporation or its stockholders for or with
respect to any acts or omissions in the
performance of his or her duties as a Director of
the Corporation. No amendment to or repeal of this
Article THIRTEENTH shall apply to or have any
effect on the liability or alleged liability of
any Director of the Corporation for or with
respect to any acts or omissions of such Director
occurring prior to such amendment."
"FOURTEENTH: Each person who is or was or had
agreed to become a Director or officer of the
Corporation, or each such person who is or was
serving or had agreed to serve at the request of
the Board of Directors or an officer of the
Corporation as an employee or agent of the
Corporation or as a Director, officer, employee or
agent of another corporation, partnership, joint
venture, trust or other enterprise (including the
heirs, executors, administrators or estate of such
person), shall be indemnified by the Corporation
to the full extent permitted by the General
Corporation Law of the State of Delaware or any
other applicable laws as presently or hereafter in
effect. Without limiting the generality or effect
of the foregoing, the Corporation may enter into
one or more agreements with any person which
provide for indemnification greater or different
than that provided in this Article. No amendment
to or repeal of this Article FOURTEENTH shall
apply to or have any effect on the right to
indemnity permitted or authorized hereunder for or
with respect to or have any effect on the right to
indemnity permitted or authorized hereunder for or
with respect to claims asserted before or after
such amendment or repeal arising from acts or
omissions occurring in whole or in part before the
effective date of such amendment or repeal."
Reference is made to Section 145 of the DGCL relating to the
indemnification of directors and officers of a Delaware
corporation.
The Company has entered into Indemnification Agreements with
all of the Company's directors (except Mr. Eyton) and all of the
Company's executive officers (the "Indemnitees") to specify the
extent to which Indemnitees may receive indemnification under
circumstances in which indemnity would not otherwise be provided
by the DGCL. Pursuant to the Indemnification Agreements, an
Indemnitee will be entitled to indemnification as provided by
Section 145 of the DGCL and to indemnification for any amount
which the Indemnitee is or becomes legally obligated to pay
relating to or arising out of any claim made against such person
because of any act, failure to act or neglect or breach of duty,
including any actual or alleged error, misstatement or misleading
statement, which such person commits, suffers, permits or
acquiesces in while acting in the Indemnitee's position with the
Company. The Indemnification Agreements provide specific
procedures for securing indemnification and the Company is
required to make payments in connection with any claim against
the Indemnitee only to the extent expressly provided by law.
The Company has purchased directors and officers liability
insurance that provides for indemnification of directors and
officers against certain liabilities.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
4.1 Registrant's Certificate of Incorporation, as amended
and restated as of May 1, 1996, and currently in effect
(filed as Exhibit 3(a) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31,
1996, File No. 1-5222) incorporated herein by
reference.
4.2 By-laws of the Company (filed as Exhibit 3(d) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, File No. 1-5222)
incorporated herein by reference.
4.3 Rights Agreement dated December 4, 1991 between the
Company and Ameritrust Company National Association
(filed as Exhibit 2 to Form 8-K of M. A. Hanna Company
on December 5, 1991, as amended and as Exhibit 8 to
Form 8 of the Company filed on December 24, 1991)
incorporated herein by reference.
5 Opinion of Counsel
23.1 Consent of Ernst & Young LLP
23.2 Consent of Price Waterhouse LLP
23.3 Consent of Counsel (included in Exhibit 5)
24 Powers of Attorney
99 Harwick Chemical Manufacturing Corporation Savings Plan
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes:
(1) To file during any period in which offers or sales are
being made a post-effective amendment to this registration
statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in
the registration statement; (iii) to include any material
information with respect to the plan of distribution not
previously disclosed in the registration statement or any
material change to such information in the registration
statement; provided, however, that paragraphs (A)(1)(i) and
(A)(1)(ii) do not apply if the registration statement is on Form
S-3 or on Form S-8, and the information required to be included
in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any securities being registered which remain
unsold at the termination of the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities Exchange Commission
such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-8 and has
duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of Cleveland, State of Ohio on this 7th day of November 1997.
M. A. HANNA COMPANY
By: /s/Valerie A. Gentile
Valerie A. Gentile
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities indicated as of the dates indicated.
Signatures Titles Date
/s/ D.J. McGregor* Chairman and Chief November 7, 1997
D.J. McGregor Executive Officer
(principal executive
officer) and
Director
/s/ M.S. Duffey Vice President and November 7, 1997
M.S. Duffey Chief Financial
Officer (principal
financial officer)
/s/ T.E. Lindsey Controller November 7, 1997
T.E. Lindsey (principal
accounting officer)
/s/ B.C. Ames* Director November 7, 1997
B.C. Ames
/s/ C.A. Cartwright* Director November 7, 1997
C.A. Cartwright
/s/ W.R. Embry* Director November 7, 1997
W.R. Embry
/s/ J.T. Eyton* Director November 7, 1997
J.T. Eyton
/s/ G.D. Harnett* Director November 7, 1997
G.D. Harnett
/s/ G.D. Kirkham* Director November 7, 1997
G. D. Kirkham
/s/ D.B. Lewis* Director November 7, 1997
D.B. Lewis
/s/ M.L. Mann* Director November 7, 1997
M.L. Mann
/s/ R.W. Pogue* Director November 7, 1997
R. W. Pogue
/s/ M.D. Walker* Director November 7, 1997
M. D. Walker
* Valerie A. Gentile, the undersigned attorney-in-fact, by
signing her name below, does hereby sign this registration
statement on behalf of the directors and officers of M. A. Hanna
Company indicated above by asterisk (constituting a majority of
the directors) pursuant to a power of attorney executed by such
persons and filed with the Securities and Exchange Commission
contemporaneously herewith.
By: /s/Valerie A. Gentile
Valerie A. Gentile, as attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933,
the administrators of the Plan have duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cleveland, State of
Ohio, on November 7, 1997.
HARWICK CHEMICAL MANUFACTURING-
CORPORATION SAVINGS PLAN
By: M. A. Hanna Company Committee
for Employee Benefits
Administration
By:
Lani L. Beach
By: /s/ Thomas W. Boothe
Thomas W. Boothe
By: /s/ Michael S. Duffey
Michael S. Duffey
By: /s/ Douglas R. Schrank
Douglas R. Schrank
By: /s/ John S. Pyke, Jr.
John S. Pyke, Jr.
EXHIBIT INDEX
Exhibit Exhibit
Number
4.1 Registrant's Certificate of Incorporation, as amended
and restated as of May 1, 1996, and currently in effect
(filed as Exhibit 3(a) to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31,
1996, File No. 1-5222) incorporated herein by
reference.
4.2 By-laws of the Company (filed as Exhibit 3(d) to the
Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1987, File No. 1-5222)
incorporated herein by reference.
4.3 Rights Agreement dated December 4, 1991 between the
Company and Ameritrust Company National Association
(filed as Exhibit 2 to Form 8-K of M. A. Hanna Company
on December 5, 1991, as amended and as Exhibit 8 to
Form 8 of the Company filed on December 24, 1991)
incorporated herein by reference.
5 Opinion of Counsel
23.1 Consent of Ernst & Young LLP
23.2 Consent of Price Waterhouse LLP
23.3 Consent of Counsel (included in Exhibit 5)
24 Powers of Attorney
99 Harwick Chemical Manufacturing Corporation Savings Plan
EXHIBIT 5
November 7, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Harwick Chemical Manufacturing Corporation Savings Plan
Form S-8 Registration Statement
Ladies and Gentlemen:
As Vice President, General Counsel and Secretary of M. A. Hanna
Company, a Delaware corporation (the "Company"), I am familiar
with the proceedings taken, and proposed to be taken, in
connection with the Harwick Chemical Manufacturing Corporation
Savings Plan (the "Plan") sponsored by Harwick Chemical
Manufacturing Corporation, a subsidiary of M. A. Hanna Company.
I have examined such documents, records and matters of law as I
have deemed necessary for the purposes of this opinion. Based on
the foregoing, I am of the opinion that (1) shares of common
stock, par value $1 each, of the Company which may be issued or
transferred and delivered pursuant to the Plan will be, when so
issued or transferred and delivered in accordance with the Plan,
duly authorized, validly issued, fully paid and nonassessable and
(2) the plan interests issuable pursuant to the Plan, when issued
upon receipt of the consideration provided for under the Plan and
in the manner contemplated by the Plan, will be validly issued,
fully paid, and nonassessable.
I hereby consent to the filing of this opinion as Exhibit 5 to
the Registration Statement on Form S-8 filed by the Company to
effect the registration under the Securities Act of 1933 of the
shares of common stock of the Company subject to the Plan and the
plan interests issuable pursuant to the Plan.
Very truly yours,
/s/John S. Pyke, Jr.
Vice President, General Counsel and Secretary
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to Harwick Chemical Manufacturing
Corporation Savings Plan of our report dated January 31, 1995,
with respect to the consolidated financial statements and
schedule of M. A. Hanna Company and subsidiaries for the year
ended December 31, 1994 incorporated by reference in its Annual
Report (Form 10-K) for the year ended December 31, 1996, filed
with the Securities and Exchange Commission.
/s/Ernst & Young LLP
Ernst & Young LLP
Cleveland, Ohio
November 6, 1997
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to Harwick Chemical Manufacturing
Corporation Savings Plan of our report dated January 29, 1997,
with respect to the consolidated financial statements of M. A.
Hanna Company and subsidiaries incorporated by reference in its
Annual Report (Form 10-K) for the year ended December 31, 1996
and the related financial statement schedules included therein,
filed with the Securities and Exchange Commission.
/s/Price Waterhouse LLP
Price Waterhouse LLP
Cleveland, Ohio
November 6, 1997
EXHIBIT 24
M. A. HANNA COMPANY
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS: That each person whose
signature appears below has made, constituted and appointed, and
by this instrument does make, constitute and appoint John S.
Pyke, Jr., Valerie A. Gentile and Glenn E. Morrical and each of
them, his or her true and lawful attorney, with full power of
substitution and resubstitution, to affix for him or her and in
his or her name, place and stead, as attorney-in-fact, his or her
signature as director (including as a member of any committee of
the board of directors) or officer, or both, of M. A. Hanna
Company, a Delaware corporation (the "Company"), to Registration
Statements on Form S-8 or any other form that may be used from
time to time, with respect to the issuance and sale of its Common
Stock and other securities pursuant to the Harwick Chemical
Manufacturing Corporation Savings Plan and to any and all
amendments, post-effective amendments and exhibits to such
Registration Statements, and to any and all applications and
other documents pertaining thereto, giving and granting to each
such attorney-in-fact full power and authority to do and perform
every act and thing whatsoever necessary to be done in the
premises, as fully as they might or could do if personally
present, and hereby ratifying and confirming all that each of
such attorney-in-fact or any such substitute shall lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney has been signed
this 5th day of November, 1997.
/s/ D. J. McGregor
D. J. McGregor M. S. Duffey
/s/ B. C. Ames
T. E. Lindsey B. C. Ames
/s/ C. A. Cartwright /s/ G. D. Harnett
C. A. Cartwright G. D. Harnett
/s/ J. T. Eyton /s/ W. R. Embry
J. T. Eyton W. R. Embry
/s/ M. L. Mann /s/ G. D. Kirkham
M. L. Mann G. D. Kirkham
/s/ M. D. Walker /s/ R. W. Pogue
M. D. Walker R. W. Pogue
/s/ D. B. Lewis
D. B. Lewis
EXHIBIT 99
Barclays
Global
Investors
Harwick Chemical
Manufacturing Corporation
Savings Plan and
Trust Agreement
Effective September 1, 1997
Harwick Chemical Manufacturing Corporation Savings Plan and Trust
Effective September 1, 1997
Harwick Chemical Manufacturing Corporation, a subsidiary of M.A.
Hanna Company (the "Company"), hereby establishes the Harwick
Chemical Manufacturing Corporation Savings Plan (the "Plan")
effective September 1, 1997, for the exclusive benefit of
eligible associates of the Company and its participating
affiliates. The Plan is intended to constitute a qualified
profit sharing plan, as described in Code section 401(a), which
includes a qualified cash or deferred arrangement, as described
in Code section 401(k). Assets attributable to the accounts of
participants in the Harwick Chemical Corporation Flexible
Retirement Savings Plan who are associates of the Company on
September 1, 1997 shall be transferred to the Plan as soon as
administratively feasible after September 1, 1997.
The provisions of the Plan and Trust relating to the Trustee
constitute the trust agreement which is entered into by and
between Harwick Chemical Manufacturing Corporation, a subsidiary
of M.A. Hanna Company and Barclays Global Investors, National
Association. The Trust is intended to be tax exempt, as
described in Code section 501(a).
The Plan is intended to comply with the qualification
requirements of the Small Business Job Protection Act of 1996
(the "SBJPA") and is intended to comply in operation therewith.
To the extent that the Plan, as set forth below, is subsequently
determined to be insufficient to comply with such requirements
and any regulations issued under the SBJPA, the Plan shall later
be amended to so comply.
The Harwick Chemical Manufacturing Corporation Savings Plan and
Trust, as set forth in this document, is hereby adopted effective
as of September 1, 1997.
Date: 8/29/1997 Harwick Chemical Manufacturing Corporation,
a subsidiary of M.A. Hanna Company
By: /s/ John S. Pyke Jr.
Title: Vice President & Secretary
The trust agreement set forth in those provisions of the Plan and
Trust which relate to the Trustee is hereby executed.
Date: 9/12/1997 Barclays Global Investors, National Association
By: /s/ Dolores Upton
By Merrill Lynch, Pierce, Fenner & Smith Inc.
Title: Asst. Vice President
Date: 9/12/1997 Barclays Global Investors, National Association
By: /s/ Pete H. Sorensen
By Merrill Lynch, Pierce, Fenner & Smith Inc.
Title: Vice Pres.
TABLE OF CONTENTS
1 DEFINITIONS 1
2 ELIGIBILITY 10
2.1 Eligibility 10
2.2 Ineligible Associates 10
2.3 Ineligible, Terminated or Former Participants 10
3 PARTICIPANT CONTRIBUTIONS 11
3.1 Associate Pre-Tax Contribution Election 11
3.2 Changing a Contribution Election 11
3.3 Revoking and Resuming a Contribution Election 11
3.4 Contribution Percentage Limits 11
3.5 Refunds When Contribution Dollar Limit Exceeded 12
3.6 Timing, Posting and Tax Considerations 12
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER
QUALIFIED PLANS 13
4.1 Rollover Contributions 13
4.2 Transfers From and To Other Qualified Plans 13
5 EMPLOYER CONTRIBUTIONS 14
5.1 Company Match Contributions 14
5.2 Profit Sharing Contributions 14
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 20
7.4 Default if No Valid Investment Election 20
7.5 Investment Fund Election Change Fees 20
8 VESTING & FORFEITURES 21
8.1 Fully Vested Accounts 21
8.2 Full Vesting Upon Certain Events 21
8.3 Vesting Schedule 21
8.4 Forfeitures of Non-Vested Account Balances 21
8.5 Use of Forfeiture Account Amounts 22
8.6 Rehired Associates 22
9 PARTICIPANT LOANS 23
9.1 Participant Loans Permitted 23
9.2 Loan Application, Note and Security 23
9.3 Spousal Consent 23
9.4 Loan Approval 23
9.5 Loan Funding Limits, Account Sources and Funding Order 23
9.6 Maximum Number of Loans 24
9.7 Source and Timing of Loan Funding 24
9.8 Interest Rate 24
9.9 Loan Payment 24
9.10 Loan Payment Hierarchy 25
9.11 Repayment Suspension 25
9.12 Loan Default 25
9.13 Call Feature 25
10 IN-SERVICE WITHDRAWALS 26
10.1 In-Service Withdrawals Permitted 26
10.2 In-Service Withdrawal Application and Notice 26
10.3 Spousal Consent 26
10.4 In-Service Withdrawal Approval 26
10.5 Payment Form and Medium 27
10.6 Source and Timing of In-Service Withdrawal Funding 27
10.7 Hardship Withdrawals 27
10.8 Associate 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 32
11.6 Deemed Distribution 33
11.7 Latest Commencement Permitted 33
11.8 Payment Within Life Expectancy 33
11.9 Incidental Benefit Rule 33
11.10 Payment to Beneficiary 34
11.11 Beneficiary Designation 34
12 ADP AND ACP TESTS 35
12.1 Contribution Limitation Definitions 35
12.2 ADP and ACP Tests 37
12.3 Correction of ADP and ACP Tests 38
12.4 Multiple Use Test 39
12.5 Correction of Multiple Use Test 40
12.6 Adjustment for Investment Gain or Loss 40
12.7 Testing Responsibilities and Required Records 40
12.8 Separate Testing 40
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS 41
13.1 "Annual Addition" Defined 41
13.2 Maximum Annual Addition 41
13.3 Avoiding an Excess Annual Addition 41
13.4 Correcting an Excess Annual Addition 41
13.5 Correcting a Multiple Plan Excess 42
13.6 "Defined Benefit Fraction" Defined 42
13.7 "Defined Contribution Fraction" Defined 42
13.8 Combined Plan Limits and Correction 43
14 TOP HEAVY RULES 44
14.1 Top Heavy Definitions 44
14.2 Special Contributions 45
14.3 Adjustment to Combined Limits for Different Plans 46
15 PLAN ADMINISTRATION 47
15.1 Plan Delineates Authority and Responsibility 47
15.2 Fiduciary Standards 47
15.3 Company is ERISA Plan Administrator 47
15.4 Administrator Duties 48
15.5 Advisors May be Retained 48
15.6 Delegation of Administrator Duties 49
15.7 Committee Operating Rules 49
16 MANAGEMENT OF INVESTMENTS 50
16.1 Trust Agreement 50
16.2 Investment Funds 50
16.3 Authority to Hold Cash 51
16.4 Trustee to Act Upon Instructions 51
16.5 Administrator Has Right to
Vote Registered Investment Company Shares 51
16.6 Custom Fund Investment Management 51
16.7 Master Custom Stock Fund 52
16.8 Authority to Segregate Assets 52
16.9 Maximum Permitted Investment in M.A. Hanna Company Stock 53
16.10 Participants Have Right to
Vote and Tender M.A. Hanna Company Stock 53
16.11 Registration and Disclosure for M.A. Hanna Company Stock 53
17 TRUST ADMINISTRATION 54
17.1 Trustee to Construe Trust 54
17.2 Trustee To Act As Owner of Trust Assets 54
17.3 United States Indicia of Ownership 54
17.4 Tax Withholding and Payment 55
17.5 Trust Accounting 55
17.6 Valuation of Certain Assets 55
17.7 Legal Counsel 56
17.8 Fees and Expenses 56
17.9 Trustee Duties and Limitations 56
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION 57
18.1 Plan Does Not Affect Employment Rights 57
18.2 Compliance With USERRA 57
18.3 Limited Return of Contributions 57
18.4 Assignment and Alienation 58
18.5 Facility of Payment 58
18.6 Reallocation of Lost Participant's Accounts 58
18.7 Suspension of Certain Plan Provisions During Conversion Period 58
18.8 Suspension of Certain Plan Provisions During Other Periods 59
18.9 Claims Procedure 59
18.10 Construction 60
18.11 Jurisdiction and Severability 60
18.12 Indemnification by Employer 60
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION 61
19.1 Amendment 61
19.2 Merger 61
19.3 Divestitures 61
19.4 Plan Termination and Complete Discontinuance of Contributions 62
19.5 Amendment and Termination Procedures 62
19.6 Termination of Employer's Participation 63
19.7 Replacement of the Trustee 63
19.8 Final Settlement and Accounting of Trustee 63
APPENDIX A - INVESTMENT FUNDS 65
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES 66
APPENDIX C - LOAN INTEREST RATE 67
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 by the
Administrator 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 Harwick Plan in accordance with Section 4.2:
(a) "Associate Pre-Tax Account". An account
created to hold amounts attributable to Associate
Pre-Tax Contributions and amounts transferred
from the Harwick Plan designated as amounts
attributable to "Salary Deferral contributions"
thereunder.
(b) "Associate After-Tax Account". An
account created to hold amounts transferred from
the Harwick Plan designated as amounts
attributable to "voluntary post-tax
contributions" thereunder.
(c) "Rollover Account". An account created
to hold amounts attributable to Rollover
Contributions and amounts transferred from the
Harwick Plan designated as attributable to
"rollover contributions" thereunder.
(d) "Company Cash Match Account". An
account created to hold amounts attributable to
Company Match Contributions.
(e) "Company Stock Match Account". An
account created to hold amounts attributable to
Company Match Contributions.
(f) "Profit Sharing Account". An account
created to hold amounts attributable to Profit
Sharing Contributions.
(g) "Pre-1996 Profit Sharing Account". An
account created to hold amounts transferred from
the Harwick Plan designated as attributable to
"profit sharing contributions" 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.
1.6 "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.
1.7 "Break in Service". The fifth anniversary (or
sixth anniversary if absence from employment was due
to a Parental Leave) of the date on which a
Participant's employment ends.
1.8 "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". Harwick Chemical Manufacturing
Corporation, a subsidiary of M.A. Hanna Company, or
any successor by merger, purchase or otherwise.
1.11 "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)). If a
Plan Year consists of fewer than 12 months, the
limitation on Compensation is an amount equal to the
otherwise applicable limit for such Plan Year
multiplied by a fraction, the numerator of which is
the number of months in the short Plan Year and the
denominator of which is 12.
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 Associate while a
Participant.
1.12 "Contribution". An amount contributed to the Plan
by the Employer or an Eligible Associate, and
allocated by contribution type to Participants'
Accounts, as described in Section 1.1. Specific types
of contribution include:
(a) "Associate 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.
(b) "Rollover Contribution". An amount
contributed by an Eligible Associate which
originated from another employer's or an
Employer's qualified plan.
(c) "Company Match Contribution". An amount
contributed by the Employer on an eligible
Participant's behalf based upon the amount
contributed by the eligible Participant.
(d) "Profit Sharing Contribution". An
amount contributed by the Employer on an eligible
Participant's behalf and allocated on a pay based
formula.
1.13 "Contribution Dollar Limit". The annual limit
placed on each Participant's Associate 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 Associate 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).
1.14 "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.
1.15 "Direct Rollover". An Eligible Rollover
Distribution that is paid by the Plan directly to an
Eligible Retirement Plan for the benefit of a
Distributee.
1.16 "Disability". A Participant's total and
permanent, mental or physical disability resulting in
termination of employment as evidenced by presentation
of medical evidence satisfactory to the Administrator.
1.17 "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).
1.18 "Effective Date". The date upon which the
provisions of this document become effective. This
date is September 1, 1997, unless stated otherwise. In
general, the provisions of this document only apply to
Participants who are Associates 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.
1.19 "Eligible Associate". An Associate of an
Employer, except any Associate:
(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 Associate's
participation in the Plan; or
(b) who is treated as an Associate because
he or she is a Leased Associate.
1.20 "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.
1.21 "Eligible Rollover Distribution". A distribution
of all or any portion of the balance to the credit of
a Distributee, excluding (i) a distribution that is
one of a series of substantially equal periodic
payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or
the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or
more; (ii) a distribution to the extent such
distribution is required under Code section 401(a)(9);
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).
1.22 "Associate". 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 Associate.
1.23 "Employer". The Company and any other Related
Company which adopts the Plan with the approval of the
Company.
1.24 "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.
1.25 "Forfeiture Account". An account holding amounts
forfeited by Terminated Participants, invested in
interest bearing deposits (which may include interest
bearing deposits of the Trustee) and/or money market
type assets or funds, pending disposition as provided
in the Plan and Trust and as directed by the
Administrator.
1.26 "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 "Harwick Plan". The Harwick Chemical Corporation
Flexible Retirement Savings Plan, a qualified profit
sharing plan, as described in Code section 401(a),
which includes a qualified cash or deferred
arrangement, as described in Code section 401(k),
originally effective January 1, 1972.
1.28 "HCE" or "Highly Compensated Employee". An
Associate described as a Highly Compensated Employee
in Section 12.
1.29 "Ineligible". The Plan status of an individual
who is (1) an Associate of a Related Company which is
not then an Employer, (2) an Associate of an Employer,
but not an Eligible Associate, or (3) not an
Associate.
1.30 "Ineligible Participant". The Plan status of a
Participant who is (1) an Associate of a Related
Company which is not then an Employer, or (2) an
Associate of an Employer, but not an Eligible
Associate.
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 Associate". An individual, not otherwise
an Associate, who, pursuant to an agreement between a
Related Company and a leasing organization, has
performed, on a substantially full-time basis, for a
period of at least 12 months, services under the
primary direction or control of the Related Company,
unless:
(a) the individual is covered by a money
purchase pension plan maintained by the leasing
organization and meeting the requirements of Code
section 414(n)(5)(B), and
(b) such individuals do not constitute more
than 20% of all Non-Highly Compensated Employees
of all Related Companies (within the meaning of
Code section 414(n)(5)(C)(ii)).
1.33 "Leave of Absence". A period during which an
individual is deemed to be an Associate, 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 "M.A. Hanna Company Stock". Shares of common
stock of the M.A. Hanna 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.
1.36 "NHCE" or "Non-Highly Compensated Employee". An
Associate 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 "Parental Leave". The period of absence from work
by reason of the pregnancy of an Associate, the birth
of the Associate's child, the placement of a child
with the Associate in connection with the child's
adoption, or the caring for such child immediately
after birth or placement as described in Code section
410(a)(5)(E).
1.40 "Participant". The Plan status of an Eligible
Associate 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
Associate 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.
1.41 "Pay". All cash compensation paid to an Eligible
Associate by an Employer while he or she is a
Participant during the current period. Pay excludes
reimbursements or other expense allowances, cash and
non-cash fringe benefits, moving expenses, deferred
compensation and welfare benefits.
Pay is neither increased by any salary credit or
decreased by any salary reduction pursuant to Code
sections 125 or 402(e)(3). 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)). If a Plan Year consists of fewer than 12
months, the limitation on Pay is an amount equal to
the otherwise applicable limit for such Plan Year
multiplied by a fraction, the numerator of which is
the number of months in the short Plan Year and the
denominator of which is 12.
1.42 "Period of Employment". The period beginning on
the date an Associate first performs an hour of
service and ending on the date his or her employment
ends. Employment ends on the date the Associate
quits, is discharged, retires or dies or (if earlier)
the first anniversary of his or her absence for any
other reason. The period of absence starting with the
date an Associate's employment ends and ending on the
date he or she next performs an hour of service is (1)
included in his or her Period of Employment if the
period of absence does not exceed one year, and (2)
excluded if such period exceeds one year.
Period of Employment includes the period prior to
a Break in Service.
With regard to an individual who is an Associate
on the Effective Date and who immediately preceding
such date was an employee of Harwick Chemical
Corporation or a member of its controlled group, if
applicable, his or her service prior to the Effective
Date, to the extent such service would otherwise be
eligible for credit under the Harwick Plan, shall be
included in the determination of his or her Period of
Employment for eligibility and/or vesting.
An Associate's service with a predecessor or
acquired company shall only be counted in the
determination of his or her Period of Employment for
eligibility and/or vesting purposes if (1) the Company
directs that credit for such service be granted, or
(2) a qualified plan of the predecessor or acquired
company is subsequently maintained by any Related
Company.
1.43 "Plan". The Harwick Chemical Manufacturing
Corporation Savings Plan set forth in this document,
as from time to time amended.
1.44 "Plan Year". The annual accounting period of the
Plan and Trust which ends on each December 31. The
Plan Year ending December 31, 1997 shall be a short
Plan Year commencing September 1, 1997.
1.45 "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).
1.46 "Reduction in Force". An Employer sponsored
program developed to reduce its workforce on a
permanent basis.
1.47 "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 section
414(b), (c), (m) or (o)".
1.48 "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.
1.49 "Settlement Date". For each Trade Date, the
Trustee's next business day.
1.50 "Spousal Consent". The written consent given by a
spouse to a Participant's Beneficiary designation.
The spouse's consent must acknowledge the effect on
the spouse of the Participant's designation, and be
duly witnessed by a notary public. Spousal Consent
shall be valid only with respect to the spouse who
signs the Spousal Consent and only for the particular
choice made by the Participant which requires Spousal
Consent. A Participant may revoke (without Spousal
Consent) a prior 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).
1.51 "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.
1.52 "Sweep Date". The cut off date and time for
receiving instructions for transactions to be
processed on the next Trade Date.
1.53 "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).
1.54 "Terminated Participant". The Plan status of a
Participant who is not an Associate and with respect
to whom the Administrator has reported to the Trustee
that the Participant's employment has terminated with
all Related Companies.
1.55 "Trade Date". Each day the Investment Funds are
valued, which is normally every day the assets of such
Investment Funds are traded.
1.56 "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, 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 and the Forfeiture Account.
1.57 "Trustee". Barclays Global Investors, National
Association.
1.58 "USERRA". The Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended.
1.59 "Year of Vesting Service". A 12-month Period of
Employment.
Years of Vesting Service shall include service
credited prior to September 1, 1997.
2 ELIGIBILITY
2.1 Eligibility
Each Eligible Associate shall become a Participant
on the later of September 1, 1997 or on the first day
of the next month after the date he or she completes a
six month Period of Employment. The eligibility
period begins on the date an Associate's Period of
Employment commences.
2.2 Ineligible Associates
If an Associate 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 Associate.
2.3 Ineligible, Terminated and 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 Associate.
3 PARTICIPANT CONTRIBUTIONS
3.1 Associate Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Associate
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 an
Associate 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
Associate's Associate 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
Associate's taxable year beginning in the Plan Year.
3.2 Changing a Contribution Election
A Participant who is an Eligible Associate may
change his or her Associate Pre-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. A Participant's Contribution
election made as a percentage of Pay shall
automatically apply to Pay increases or decreases.
3.3 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Associate Pre-
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 Associate may
resume Associate Pre-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.
3.4 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 minimum, if
applicable, and maximum Associate Pre-Tax Contribution
percentages, 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 Associate
Pre-Tax Contribution minimum percentage is 1% and the
maximum percentage is 15%.
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.
3.5 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Associate 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. In this event, the amount of the
excess specified by the Participant, adjusted for
investment gain or loss, shall be refunded to him or
her by 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 Associate Pre-Tax
Contributions and then from matched Associate Pre-Tax
Contributions. Any Company Match Contributions
attributable to refunded excess Associate Pre-Tax
Contributions as described in this Section, adjusted
for investment gain or loss, shall be forfeited and
used as described in Section 8. 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.
3.6 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 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). Associate
Pre-Tax Contributions shall be treated as
Contributions made by an Employer in determining tax
deductions under Code section 404(a).
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 Associate or as a Direct Rollover from
another qualified plan on behalf of the Eligible
Associate, even if he or she is not yet a Participant.
The Associate 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
Associate must be paid to the Trustee in cash within
60 days after the date received by the Eligible
Associate from a qualified plan or conduit individual
retirement account. Rollover Contributions shall be
posted to the Eligible Associate'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 in
effect as of the date of the transfer.
5. EMPLOYER CONTRIBUTIONS
As of the Effective Date the provisions of this Section 5
are not in effect.
5.1 Company Match Contributions
(a) Frequency and Eligibility. For each
quarter of the Plan Year, the Employer shall make
Company Match Contributions, as described in the
following Allocation Method paragraph, on behalf
of each Participant who contributed during the
period and was an Associate on the last day of
the period.
Such Company Match Contributions shall
also be made on behalf of each Participant who
contributed during the period but who ceased
being an Associate during the period after having
attained age 65 or by reason of a Reduction in
Force or his or her Disability or death.
(b) Allocation Method. The Company Match
Contributions (including any Forfeiture Account
amounts applied as Company Match Contributions in
accordance with Section 8) for each period shall
total 0% of each eligible Participant's Associate
Pre-Tax Contributions for the period. One-half of
each such eligible Participant's Company Match
Contribution for the period shall be designated
as for deposit to his or her Company Cash Match
Account and the other half of each such eligible
Participant's Company Match Contribution for the
period shall be designated as for deposit to his
or her Company Stock Match Account.
(c) Timing, Medium and Posting. The
Employer shall make each period's Company Match
Contribution in cash as soon as administratively
feasible, and for purposes of deducting such
Contribution, not later than the Employer's
federal tax filing date, including extensions,
for the Employer's taxable year that ends with or
within the Plan Year for which the Company Match
Contribution is made. Such amounts shall be paid
to the Trustee and posted to each Participant's
Company Cash Match Account and Company Stock
Match Account once the total Company Match
Contribution received has been balanced against
the specific amount to be credited to each
Participant's Company Cash Match Account and
Company Stock Match Account.
5.2 Profit Sharing Contributions
(a) Frequency and Eligibility. For each
Plan Year, the Employer may make a Profit Sharing
Contribution, as described in the following
Allocation Method paragraph, on behalf of each
Participant who was an Associate on the last day
of the period.
If such Profit Sharing Contributions are
made, such Contributions shall also be made on
behalf of each Participant who was an Eligible
Associate at any time during the period but who
ceased being an Associate during the period after
having attained age 65 or by reason of a
Reduction in Force or his or her Disability or
death.
(b) Allocation Method. The Profit Sharing
Contribution (including any Forfeiture Account
amounts applied as Profit Sharing Contributions
in accordance with Section 8) for each period,
shall be in an amount determined by the Employer
and allocated among eligible Participants in
direct proportion to their Pay.
(c) Timing, Medium and Posting. The
Employer shall make each period's Profit Sharing
Contribution in cash as soon as administratively
feasible, and for purposes of deducting such
Contribution, not later than the Employer's
federal tax filing date, including extensions,
for the Employer's taxable year that ends with or
within the Plan Year for which the Profit Sharing
Contribution is made. Such amounts shall be paid
to the Trustee and posted to each Participant's
Profit Sharing Account once the total Profit
Sharing Contribution received has been balanced
against the specific amount to be credited to
each Participant's Profit Sharing Account.
6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set
of Accounts for each Participant in order to reflect
transactions both by type of 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, or
indirectly, through the Forfeiture Account as directed
by the Administrator, such fees and expenses shall be
paid as set forth below.
(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 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
Associates or who are not Beneficiaries, unless doing
so would result in discrimination prohibited under
Code section 401(a)(4) or a significant detriment
prohibited by Code section 411(a)(11). As of the
Effective Date, a breakdown of which Plan fees and
expenses shall generally be borne by the Trust (and
charged to individual Participants' Accounts 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 the Company, in writing, without the necessity of
amending the Plan and Trust.
The Trustee shall have the authority to pay any
such fees and expenses, which remain unpaid by the
Employer for 60 days, from the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan
Account of the Participant and accounted for in
dollars as an earmarked asset of the borrowing
Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or
omissions in the administration of the Plan by
restoring any Participant's Account balance with the
amount that would be credited to the Account had no
error or omission been made. Funds necessary for any
such restoration shall be provided through payment
made by the Employer, or by the Trustee to the extent
the error or omission is attributable to actions or
inactions of the Trustee, or if the restoration
involves an Account holding amounts contributed by an
Employer, the Administrator may direct the Trustee to
use amounts from the Forfeiture Account.
6.8 Participant Statements
The Administrator shall provide Participants with
statements of their Accounts as soon after the end of
each quarter of the Plan Year as 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, 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.
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 and the
Forfeiture Account, 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,
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 except for his or her
Company Stock Match Account which shall be entirely
invested in the Investment Fund specified by the
Administrator, which Investment Fund as of the
Effective Date is set forth in Appendix A. In
accordance with procedures established by the
Administrator and the Trustee, periodically, at such
times and dates as determined by the Administrator and
agreed upon by the Trustee, but no more frequently
than bi-annually, a Participant's then existing
balance in his or her Company Stock Match Account
shall be released from the restriction that such
amount be entirely invested in the Investment Fund
specified by the Administrator. A Participant shall
thereafter direct the investment of such amount. Such
procedures may include transferring the Participant's
balance in his or her Company Stock Match Account to
his or her Company Cash Match Account.
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.
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 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.
8 VESTING & FORFEITURES
8.1 Fully Vested Accounts
A Participant shall be fully vested in these
Accounts at all times:
Associate Pre-Tax Account
Associate After-Tax Account
Rollover Account
Company Cash Match Account
Company Stock Match Account
Pre-1996 Profit Sharing Account
8.2 Full Vesting Upon Certain Events
A Participant's entire Account shall become fully
vested once he or she has attained his or her Normal
Retirement Date while an Associate or upon his or her
terminating employment with all Related Companies due
to a Reduction in Force or his or her Disability or
death.
8.3 Vesting Schedule
In addition to the vesting provided above, a
Participant's Profit Sharing Account shall become
vested in accordance with the following schedule:
Years of Vesting Vested
Service Percentage
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
If this vesting schedule is changed, the vested
percentage for each Participant shall not be less than
his or her vested percentage determined as of the last
day prior to this change, and for any Participant with
at least three Years of Vesting Service when the
schedule is changed, his or her vested percentage
shall be determined using the more favorable vesting
schedule.
8.4 Forfeitures of Non-Vested Account Balances
A Terminated Participant shall forfeit his or her
non-vested Account balance as of the Settlement Date
following the Sweep Date on which he or she is
determined to be a Terminated Participant.
Forfeitures from all Accounts subject to vesting shall
be transferred to and maintained in the Forfeiture
Account.
8.5 Use of Forfeiture Account Amounts
Forfeiture Account amounts shall be used to
restore Accounts, to pay Plan fees and expenses, to
reduce future Company Match Contributions to be made
or may increase the amount allocated as Profit Sharing
Contributions, as directed by the Administrator.
8.6 Rehired Associates
(a) Service Restoration. If a former
Associate again becomes an Associate, all Periods
of Employment credited when his or her employment
last terminated shall be counted in determining
his or her vested interest.
(b) Account Restoration. If a former
Associate again becomes an Associate before he or
she has a Break in Service, the amount forfeited
after his or her employment last terminated shall
be restored to his or her Account. The
restoration shall include the interest which
would have been credited had such forfeiture been
invested in the Sweep Account from the date
forfeited until the date the restoration amount
is restored. The restoration amount shall come
from the Forfeiture Account to the extent
possible, and any additional amount needed shall
be contributed by the Employer. His or her
vested interest in the restored Account shall
then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current Account balance
D = amount previously distributed from Account
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
Associate 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 $1,000.
(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:
Associate Pre-Tax Account
Company Stock Match Account
Company Cash Match Account
Profit Sharing Account
Pre-1996 Profit Sharing Account
Rollover Account
Associate After-Tax Account
(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 funded on the Settlement Date
following the Trade Date as of which the loan is
processed. The Trustee shall make payment to the
Participant as soon thereafter as administratively
feasible.
9.8 Interest Rate
The interest rate charged on Participant loans
shall be a fixed reasonable rate of interest,
determined from time to time by the Administrator,
which provides the Plan with a return commensurate
with the prevailing interest rate charged by persons
in the business of lending money for loans which would
be made under similar circumstances. As of the
Effective Date, the interest rate is determined as set
forth in Appendix C, 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 15 years if the
purpose of the loan is to acquire the Participant's
principal residence.
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
credited to Accounts for which the Participant directs
investment as described in Section 7 are credited to
the Investment Funds based upon the Participant's
current investment election for new Contributions.
Loan payments credited to Accounts for which the
Participant does not direct investment as described in
Section 7 are credited to the Investment Funds
specified by the Administrator for such Accounts.
9.11 Repayment Suspension
The Administrator may agree to a suspension of
loan payments for up to 12 months for a Participant
who is on a Leave of Absence without pay. During the
suspension period, interest shall continue to accrue
on the outstanding loan balance. At the expiration of
the suspension period all outstanding loan payments
and accrued interest thereon shall be due unless
otherwise agreed upon by the Administrator.
9.12 Loan Default
A loan is treated as in default if a scheduled
loan payment is not made at the time required. A
Participant shall then have a grace period to cure the
default before it becomes final. Such grace period
shall be for a period that does not extend beyond the
last day of the calendar quarter following the
calendar quarter in which the scheduled loan payment
was due or such lesser or greater maximum period as
may later be authorized by Code section 72(p).
In the event a default is not cured within the
grace period, the Administrator may direct the Trustee
to report the outstanding principal balance of the
loan and accrued interest thereon as a taxable
distribution to the Participant. As soon as a Plan
withdrawal or distribution to such Participant would
otherwise be permitted, the Administrator may instruct
the Trustee to execute upon its security interest in
the Participant's Account by distributing the note to
the Participant.
9.13 Call Feature
The Administrator shall have the right to call any
Participant loan once a Participant's employment with
all Related Companies has terminated, unless he or she
is otherwise a party in interest (as defined in ERISA
section 3(14)), or if the Plan is terminated.
10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an
Associate 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. 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.
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 funded 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
Associate 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" and (2) which are "Deemed 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 Associate, his or her spouse or
dependents (as defined in Code section 152);
(2) the purchase (excluding mortgage
payments) of the Associate's principal
residence;
(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 Associate,
his or her spouse or dependents (as defined
in Code section 152);
(4) the payment of funeral expenses of
an Associate's family member;
(5) the payment of amounts necessary
for the Associate 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) "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 Associate 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 Associate 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 Associate
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
Associate's Associate Pre-Tax Contributions
for the calendar year of the withdrawal.
(d) Account Sources and Funding Order. All
available amounts must first be withdrawn from a
Participant's Associate 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
Associate Pre-Tax Account
The amount that may be withdrawn from a
Participant's Associate Pre-Tax Account shall not
include any earnings credited to his or her
Associate Pre-Tax Account.
(e) Minimum Amount. There is no minimum
amount for a hardship withdrawal.
(f) Permitted Frequency. There is no
restriction on the number of hardship withdrawals
permitted to a Participant.
(g) Suspension from Further Contributions.
Upon making a hardship withdrawal, a Participant
may not make additional Associate Pre-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) for a period of 12 months from the
date the withdrawal payment is made.
10.8 Associate After-Tax Account Withdrawals
(a) Requirements. A Participant who is an
Associate may make an Associate After-Tax Account
withdrawal.
(b) Account Sources and Funding Order. The
withdrawal shall come from a Participant's
Associate After-Tax Account.
(c) Minimum Amount. There is no minimum
amount for an Associate After-Tax Account
withdrawal.
(d) Permitted Frequency. There is no
restriction on the number of Associate After-Tax
Account withdrawals permitted to a Participant.
(e) Suspension from Further Contributions.
An Associate 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
Associate 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. There is no minimum
amount for a Rollover Account withdrawal.
(d) Permitted Frequency. 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.
10.10 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an
Associate 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 Accounts, in the priority order as
follows, except that the Participant may instead
choose to have amounts taken from his or her
Associate After-Tax Account first:
Rollover Account
Associate Pre-Tax Account
Company Cash Match Account
Company Stock Match Account
Profit Sharing Account
Pre-1996 Profit Sharing Account
Associate After-Tax Account
(c) Minimum Amount. There is no minimum
amount for an Over Age 59 1/2 withdrawal.
(d) Permitted Frequency. 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.
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.
Code sections 401(a)(11) and 417 do not apply to
distributions under the Plan. A distribution may
commence less than 30 days after the aforementioned
notices are provided, if:
(a) the Participant is clearly informed that
he or she has the right to a period of at least
30 days after receipt of such notices to consider
the decision as to whether to elect a
distribution and if so to elect a particular form
of distribution and to elect or not elect a
Direct Rollover for all or a portion, if any, of
his or her distribution which constitutes an
Eligible Rollover Distribution; and
(b) the Participant after receiving such
notices, affirmatively elects a distribution and
a Direct Rollover for all or a portion, if any,
of his or her distribution which constitutes an
Eligible Rollover Distribution or alternatively
elects to have all or a portion made payable
directly to him or her, thereby not electing a
Direct Rollover for all or a portion thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal
Consent in order to receive a distribution under the
Plan.
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:
(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.
Distributions 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 $5,000 or less, and if at the time
of any prior in-service withdrawal or distribution the
Participant's vested Account balance did not exceed
$5,000, the Participant's benefit shall be paid as a
single lump sum as soon as administratively feasible
in accordance with procedures prescribed by the
Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made
solely from the assets of his or her own 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.
The distribution shall be funded 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 Deemed Distribution
For purposes of Section 8, if at the time a
Participant is determined to be a Terminated
Participant, his or her vested Account balance
attributable to Accounts subject to vesting as
described in Section 8 is zero, his or her vested
Account balance shall be deemed distributed as of the
Settlement Date following the Sweep Date on which he
or she is determined to be a Terminated Participant.
11.7 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.
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.
11.8 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.
11.9 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).
11.10 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.
11.11 Beneficiary Designation
Each Participant may complete a beneficiary
designation form indicating the Beneficiary who is to
receive the Participant's remaining Plan interest at
the time of his or her death. The designation may be
changed at any time. However, a Participant's spouse
shall be the sole primary Beneficiary unless the
designation includes Spousal Consent for another
Beneficiary. If no proper designation is in effect at
the time of a Participant's death or if the
Beneficiary does not survive the Participant, the
Beneficiary shall be, in the order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares,
(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.
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 Associate while a Participant.
(Associate 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 Company
Match Contributions. In addition, Contributions
may include Associate 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 Associate Pre-
Tax Contributions. In addition, Deferrals may
include Company Match Contributions, but only to
the extent that (1) the Administrator elects to
use them, (2) they are not used or counted in the
ACP Test, (3) they are fully vested when made,
not withdrawable by an Associate before he or she
attains age 59 1/2, and (4) they otherwise satisfy
the requirements as prescribed under Code section
401(k) permitting treatment as Deferrals for
purposes of the ADP Test.
(h) "HCE" or "Highly Compensated Employee".
With respect to all Related Companies, an
Associate who (in accordance with Code section
414(q)):
(1) Was a more than 5% Owner (within
the meaning of Code section 414(q)(2)) at
any time during the Plan Year or the
preceding Plan Year; or
(2) Received Compensation during the
preceding Plan Year in excess of $80,000 (as
adjusted for such Year pursuant to Code
sections 414(q)(1) and 415(d)) 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 Associate shall be treated as
an HCE if (1) such former Associate was an HCE
when he or she separated from service, or (2)
such former Associate 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
Associates in the top-paid group shall be made in
accordance with Code section 414(q).
For purposes of the above, the reference
to preceding Plan Year shall mean the 12 months
preceding September 1, 1997 with regard to the
Plan's initial Plan Year.
(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 Associates who would be eligible
but for their election not to participate or to
contribute, or because their Pay is greater than
zero but does not exceed a stated minimum. For
Plan Years commencing after December 31, 1998,
with respect to all Related Companies, if the
Plan permits participation prior to an Eligible
Associate's satisfaction of the minimum age and
service requirements of Code section
410(a)(1)(A), Eligible Associates 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.
(2) If an HCE is covered by more than
one cash or deferred arrangement, or more
than one arrangement permitting associate 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 Associate 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:
If the NHCE Group Then the Maximum HCE
Average Group Average Percentage
Percentage is: is:
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
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.
In the case of the first Plan Year in which the
Plan is subject to the requirements of Code section
401(k), the amount taken into account as the
"preceding Plan Year's ADP for the preceding Plan
Year's NHCE Group", shall be (i) 3%, or (ii) if the
Company elects, the Plan Year's ADP and in the case of
the first Plan Year in which the Plan is subject to
the requirements of Code section 401(m), the amount
taken into account as the "preceding Plan Year's ACP
for the preceding Plan Year's NHCE Group", shall be
(i) 3%, or (ii) if the Company elects, the Plan Year's
ACP.
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, Associate 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 Associate Pre-Tax
Contributions previously refunded because they
exceeded the Contribution Dollar Limit. The
excess amounts shall first be taken from
unmatched Associate Pre-Tax Contributions and
then from matched Associate Pre-Tax
Contributions. Any Company Match Contributions
attributable to refunded excess Associate Pre-Tax
Contributions as described in this Section,
adjusted for investment gain or loss for the Plan
Year to which the excess Associate Pre-Tax
Contributions relate, shall be forfeited and used
as described in Section 8.
(b) ACP Correction. The HCE with the
highest Contribution dollar amount shall have his
or her Contribution dollar amount reduced in an
amount equal to the lesser of the dollar amount
of excess Contributions for all HCEs or the
dollar amount that would cause his or her
Contribution dollar amount to equal that of the
HCE with the next highest Contribution dollar
amount. The process shall be repeated until the
total of the Contribution dollar amount
reductions equals the dollar amount of excess
Contributions for all HCEs.
To the extent an HCE's Contributions
were determined to be reduced as described in the
paragraph above, Company Match Contributions
shall, by the end of the next Plan Year, be
refunded to the HCE.
(c) Investment Fund Sources. Once the
amount of excess Deferrals and/or Contributions
is determined, within each Account from which
amounts are refunded or forfeited, 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 or forfeitures shall not include
investment gain or loss for the period between the end
of the applicable Plan Year and the date of
distribution.
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
Associates 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 Associates
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 Associates for whom separate
testing is permissible under such regulations.
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. For purposes of the preceding
sentence, the reference to "Plan Year" shall instead
be "the calendar year" with regard to the Plan's
initial Plan 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 Associate Pre-Tax Contributions
(however to the extent Associate Pre-Tax Contributions
were matched, the applicable Company Match
Contributions shall be forfeited in proportion to the
returned matched Associate Pre-Tax Contributions) and
the remaining excess, if any, shall be forfeited by
the Participant and together used as described in
Section 8.
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).
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.
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
Associate (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:
Number of Associates Number of
not Excluded Under Highest Paid
Code Section 414(q)(5) Officers Included
Less than 30 3
30 to 500 10% of the number of
Associates not excluded
under Code section
414(q)(8)
More than 500 50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose
Compensation exceeds $150,000, or
(4) a more than 0.5% Owner who is
among the 10 Associates 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 Associate'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 Associate'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 Associates
who have performed services at any time during
the five year period ending on the Determination
Date. The Plan Benefits of Associates 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 Associates 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 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.
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 appointed officers of the Company and/or the
Committee.
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. Actions taken in good faith by the
Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum
possible deference allowed 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 discretionary authority to:
(a) determine who is eligible to
participate, if a contribution qualifies as a
rollover contribution, the allocation of
Contributions, and the eligibility for loans, 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) make a copy of the following documents
available to Participants during normal work
hours: the Plan and Trust (including subsequent
amendments), all annual and interim reports of
the Trustee related to the entire Plan, the
latest annual report and the summary plan
description;
(d) determine the fact of a Participant's
death and of any Beneficiary's right to receive
the deceased Participant's interest based upon
such proof and evidence as it deems necessary;
(e) establish and review at least annually a
funding policy bearing in mind both the short-run
and long-run needs and goals of the Plan 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.
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.
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) M.A. Hanna Company Stock.
Any Investment Fund assets invested in a
collective investment fund, shall be subject to all
the provisions of the instruments establishing and
governing such fund. These instruments, including any
subsequent amendments, are incorporated herein by
reference.
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the
investment manager of each Investment Fund to maintain
sufficient deposit or money market type assets in each
Investment Fund to handle the 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 this 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.
(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, the
authority to vote proxies and exercise
shareholder rights related to shares of M.A.
Hanna Company Stock held in a Custom 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 Stock 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.
16.9 Maximum Permitted Investment in M.A. Hanna Company Stock
If the Company provides for a M.A. Hanna Company
Stock Fund, directly or through a Master Custom Fund,
the M.A. Hanna Company Stock Fund shall be comprised
of M.A. Hanna Company Stock and sufficient deposit or
money market type assets to handle the M.A. Hanna
Company Stock Fund's liquidity and disbursement needs.
The M.A. Hanna Company Stock Fund may be as large as
necessary to comply with Participants' and
Beneficiaries' investment elections as well the total
investment of Participants' and Beneficiaries' Company
Stock Match Accounts.
16.10 Participants Have Right to Vote and Tender M.A. Hanna
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 M.A. Hanna Company
Stock held on his or her behalf in the M.A. Hanna
Company Stock Fund. Prior to such voting or tendering
of M.A. Hanna 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 or tendering instructions from
Participants or Beneficiaries, the Administrator shall
instruct the Trustee with respect to how to vote or
tender such shares and the Trustee shall act with
respect to such shares as instructed.
16.11 Registration and Disclosure for M.A. Hanna Company Stock
The Administrator shall be responsible for
determining the applicability (and, if applicable,
complying with) the requirements of the Securities Act
of 1933, as amended, the California Corporate
Securities Law of 1968, as amended, and any other
applicable blue sky law. The Administrator shall also
specify what restrictive legend or transfer
restriction, if any, is required to be set forth on
the certificates for the securities and the procedure
to be followed by the Trustee to effectuate a resale
of such securities.
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).
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 to assist the
Administrator in meeting ERISA's annual reporting
and audit requirements.
(b) Periodic Reports. The Trustee shall
maintain records and provide sufficient reporting
to allow the Administrator to properly monitor
the Trust's assets and activity.
(c) Administrator Approval. Approval of any
Trustee accounting shall automatically occur 90
days after such accounting has been received by
the Administrator, unless the Administrator files
a written objection with the Trustee within such
time period. Such approval shall be final as to
all matters and transactions stated or shown
therein and binding upon the Administrator.
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.
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 of counsel and advisors retained
by the Trustee 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.
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to
any Associate. The Employer expressly reserves the
right to discharge an Associate at any time, with or
without cause, without regard to the effect such
discharge would have upon the Associate's interest in
the Plan.
18.2 Compliance With USERRA
Notwithstanding any provision of the Plan to the
contrary, with regard to an Associate 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;
(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 minor or
if the Administrator reasonably believes that any
payee is legally incapable of giving a valid receipt
and discharge for any payment due him or her, the
Administrator shall have the payment of the benefit,
or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for
or supporting the payee, unless it has received due
notice of claim therefor from a duly appointed
guardian or conservator of the payee. Any payment
shall to the extent thereof, be a complete discharge
of any liability under the Plan to the payee.
18.6 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person
entitled to payment of a Plan benefit after a
reasonable search, the Administrator may at any time
thereafter treat such person's Account as forfeited
and use such amount as described in Section 8. 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 or
direct the Trustee to pay the amount from the
Forfeiture Account.
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.
18.8Suspension 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 (i) the
Administrator receives a domestic relations order and
the Participant's Account is a source of the payment
for such domestic relations order, or (ii) if the
Administrator receives notice that a domestic
relations order is being sought by the Participant,
his or her spouse, former spouse, child or other
dependent (as defined in Code section 152) 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 a 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.
(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:
Days to Respond
Action From Last Action
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
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. 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.
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. 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.
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). 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
In the event of a sale by an Employer which is a
corporation of: (i) substantially all of the
Employer's assets used in a trade or business to an
unrelated corporation, or (ii) a sale of such
Employer's interest in a subsidiary to an unrelated
entity or individual, lump sum distributions shall be
permitted from the Plan, except as provided below, to
Participants with respect to Associates 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. Upon either of these events, or in the
event of a partial termination of the Plan within the
meaning of Code section 411(d)(3), the Accounts of
each affected Participant who has not yet incurred a
Break in Service shall be fully vested.
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 officer
of the Company or, in the case of an amendment
adopted by the Committee, at least one of its
members.
(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 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 Company's chief executive officer shall
become the trustee, or if he or she declines, the
Trustee may petition the court for the appointment of
a successor trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as
administratively feasible after its resignation
or removal as Trustee, the Trustee shall transfer
to the successor trustee all property currently
held by the Trust. However, the Trustee is
authorized to reserve such sum of money as it may
deem advisable for payment of its accounts and
expenses in connection with the settlement of its
accounts or other fees or expenses payable by the
Trust. Any balance remaining after payment of
such fees and expenses shall be paid to the
successor trustee.
(b) Final Accounting. The Trustee shall
provide a final accounting to the Administrator
within 90 days of the date Trust assets are
transferred to the successor trustee.
(c) Administrator Approval. Approval of the
final accounting shall automatically occur 90
days after such accounting has been received by
the Administrator, unless the Administrator files
a written objection with the Trustee within such
time period. Such approval shall be final as to
all matters and transactions stated or shown
therein and binding upon the Administrator.
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:
Category Funds
Money Market Money Market
Income U.S. Treasury Allocation
Balanced Asset Allocation
Equity M.A. Hanna Company Stock
Growth Stock
S&P 500 Stock
Templeton Foreign
Notwithstanding, a Participant may not direct that any
portion of his or her Account be invested in the M.A. Hanna
Company Stock Fund until such time as permitted by the
Administrator. Such date shall be after the Administrator
has complied with the registration requirements of the
Securities Act of 1933.
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the
Money Market Fund.
III. Accounts For Which Investment is Restricted
A Participant may direct the investment of his or her entire
Account except for his or her Company Stock Match Account
(and except as otherwise provided in Section 7), which shall
be invested as of the Effective Date in the M.A. Hanna
Company Stock Fund.
IV. Maximum Percentage Restrictions Applicable to Certain
Investment Funds
As of the Effective Date, a Participant may not elect to
invest in the M.A. Hanna Company Stock Fund. As soon as
practical after the Administrator has complied with the
registration requirements of the Securities Act of 1933 the
preceding sentence shall no longer apply.
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 M.A. Hanna
Company Stock Fund.
II. Recordkeeping Fees: These are paid by the Employer on a
quarterly basis.
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, except to
the extent such outstanding loan balance consists of a
balance attributable to a loan entered into prior to
September 1, 1997 in accordance with the terms of the
Harwick Plan.
IV. Periodic Installment Payment Fees: These are paid by the
Employer on a quarterly basis.
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.
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.
