<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report on
FORM 10-Q
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1995
--------------
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from_______ to _______
Commission File Number 1-7463
JACOBS ENGINEERING GROUP INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 95-4081636
- --------------------------------------------------------------------------------
(State of incorporation) (I.R.S. employer identification number)
251 South Lake Avenue, Pasadena, California 91101
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(818) 449 - 2171
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check-mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
[X] YES - [_] NO
Number of shares of common stock outstanding at May 11, 1995: 25,253,088
Page 1
<PAGE>
JACOBS ENGINEERING GROUP INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page No.
- --------------------------------------------------------------------------------
<S> <C>
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Condensed Balance
Sheets as of March 31, 1995
and September 30, 1994 3
Consolidated Condensed Statements
of Income for the Three Months
and Six Months Ended March 31,
1995 and 1994 4
Consolidated Condensed Statements of
Cash Flows for the Six Months
Ended March 31, 1995 and 1994 5
Notes to Consolidated Condensed
Financial Statements 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 10
Part II - Other Information
Item 4. Submission of Matters to a Vote
of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 12
</TABLE>
Page 2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
AT MARCH 31, 1995 AND SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 21,741,600 $ 45,611,600
Marketable securities 2,708,700 2,896,900
Receivables 291,938,600 288,095,200
Deferred income taxes 28,126,000 27,546,100
Prepaid expenses and other 2,670,700 3,334,800
------------ ------------
Total current assets 347,185,600 367,484,600
------------ ------------
Property, Equipment and
Improvements, Net 58,766,000 60,002,700
------------ ------------
Other Noncurrent Assets:
Goodwill, net 38,241,800 38,641,200
Other 44,141,700 38,235,700
------------ ------------
Total other noncurrent assets 82,383,500 76,876,900
------------ ------------
$488,335,100 $504,364,200
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 14,350,700 $ 9,238,100
Accounts payable 58,903,200 93,117,100
Accrued liabilities 106,239,700 102,205,600
Customers' advances in excess
of related revenues 53,709,100 47,369,300
Income taxes payable 8,837,000 8,469,600
Deferred income taxes 1,027,700 1,027,700
------------ ------------
Total current liabilities 243,067,400 261,427,400
------------ ------------
Long-term Debt 10,000,000 25,000,000
------------ ------------
Deferred Gains on Real Estate Transactions 2,255,000 2,665,000
------------ ------------
Other Deferred Liabilities 14,660,100 14,838,500
------------ ------------
Commitments and Contingencies
Stockholders' Equity:
Capital stock:
Preferred stock, $1 par value,
authorized - 1,000,000 shares,
issued and outstanding - none - -
Common stock, $1 par value,
authorized - 60,000,000 shares,
issued and outstanding -
25,246,488 and 25,094,874 shares,
respectively 25,246,500 25,094,900
Additional paid-in capital 39,514,800 37,251,400
Retained earnings 150,874,700 136,205,600
Other 2,716,600 1,881,400
------------ ------------
Total stockholders' equity 218,352,600 200,433,300
------------ ------------
$488,335,100 $504,364,200
============ ============
</TABLE>
See the accompanying notes.
Page 3
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended March 31, Ended March 31,
---------------------------- ----------------------------
1995 1994 1995 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $396,746,400 $272,646,100 $809,102,100 $533,256,000
------------ ------------ ------------ ------------
Costs and Expenses:
Direct costs of contracts 350,935,700 238,162,700 719,523,300 464,587,500
Selling, general and
administrative expenses 33,780,100 22,534,800 65,520,500 45,042,500
Interest (income)
expense, net (13,300) (25,200) 31,900 (215,900)
Other income, net (461,600) (197,600) (565,000) (668,500)
------------ ------------ ------------ ------------
384,240,900 260,474,700 784,510,700 508,745,600
------------ ------------ ------------ ------------
Income before taxes 12,505,500 12,171,400 24,591,400 24,510,400
------------ ------------ ------------ ------------
Provision for Income Taxes 4,953,500 4,871,400 9,739,400 9,930,400
------------ ------------ ------------ ------------
Net Income $ 7,552,000 $ 7,300,000 $ 14,852,000 $ 14,580,000
============ ============ ============ ============
Net Income Per Share $.30 $.29 $.59 $.58
============ ============ ============ ============
</TABLE>
See the accompanying notes.
Page 4
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 14,852,000 $ 14,580,000
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation and amortization 7,505,600 4,907,100
Amortization of deferred gains (410,000) (483,000)
Gains on disposals of property,
equipment and other assets (228,200) (1,057,900)
Changes in assets and liabilities, net:
Receivables (4,324,200) (460,200)
Prepaid expenses and other 678,000 (54,400)
Accounts payable (34,288,000) (17,434,700)
Accrued liabilities 3,691,700 1,696,200
Customers' advances 6,256,500 (229,600)
Income taxes payable 357,900 (1,071,100)
Deferred income taxes (579,900) (1,541,000)
------------ ------------
Net cash used (6,488,600) (1,148,600)
------------ ------------
Cash Flows from Investing Activities:
Additions to property and equipment, net
of disposals (5,240,300) (15,572,800)
Net increase in other noncurrent assets (2,312,200) (3,027,200)
Proceeds from sales of marketable
securities 188,200 17,559,800
Net increase in investments (2,727,400) (4,692,800)
------------ ------------
Net cash used (10,091,700) (5,733,000)
------------ ------------
Cash Flows from Financing Activities:
Exercise of stock options 3,183,400 4,094,900
Bank borrowings (repayments), net (10,233,400) 3,437,100
Other, net (320,800) -
------------ ------------
Net cash provided (used) (7,370,800) 7,532,000
------------ ------------
Effect of Exchange Rate Changes 81,100 (38,200)
------------ ------------
Increase (decrease) in Cash and Cash
Equivalents (23,870,000) 612,200
Cash and Cash Equivalents at the Beginning
of the Period 45,611,600 20,515,000
------------ ------------
Cash and Cash Equivalents at the End
of the Period $ 21,741,600 $ 21,127,200
============ ============
</TABLE>
See the accompanying notes.
Page 5
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1995
1. The accompanying consolidated condensed financial statements and financial
information included herein have been prepared by the Company, without
audit, pursuant to the interim period reporting requirements of Form 10-Q.
Consequently, certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Readers of this
report should refer to the consolidated financial statements and the notes
thereto incorporated into the Company's latest Annual Report on Form 10-K.
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting of only
normal recurring adjustments) necessary for the fair presentation of its
consolidated financial position at March 31, 1995 and September 30, 1994,
its consolidated results of operations for the three months and six months
ended March 31, 1995 and 1994, and its consolidated cash flows for the six
months ended March 31, 1995 and 1994.
The Company's interim results of operations are not necessarily indicative
of the results to be expected for the full year.
2. Included in receivables at March 31, 1995 and September 30, 1994 were
unbilled amounts totalling $71,774,000 and $70,252,200, respectively.
3. Property, equipment and improvements are stated at cost and consisted of
the following at March 31, 1995 and September 30, 1994:
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
------------ -------------
<S> <C> <C>
Land $ 6,963,600 $ 6,963,600
Buildings 24,922,800 24,549,500
Equipment 78,416,600 74,687,100
Leasehold improvements 12,808,300 11,948,800
------------ ------------
123,111,300 118,149,000
Less - accumulated depreciation
and amortization 64,345,300 58,146,300
------------ ------------
$ 58,766,000 $ 60,002,700
============ ============
</TABLE>
Page 6
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1995
4. Other assets consisted of the following at March 31, 1995 and September 30,
1994:
<TABLE>
<CAPTION>
March 31, September 30,
1995 1994
------------ -------------
<S> <C> <C>
Prepaid pension costs $11,707,800 $11,378,800
Cash surrender value of life
insurance policies 14,409,700 11,676,700
Investments 11,542,800 8,202,100
Miscellaneous 6,481,400 6,978,100
----------- -----------
$44,141,700 $38,235,700
=========== ===========
</TABLE>
5. During the six months ended March 31, 1995 and 1994, the Company made cash
payments of approximately $947,500 and $519,000, respectively, for interest
and approximately $9,493,000 and $11,521,000, respectively, for income
taxes.
6. Net income per share for the three and six months ended March 31, 1995 and
1994 has been computed based upon the weighted average number of shares of
common stock and, if dilutive, common stock equivalents outstanding as
follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
----------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Average number of
shares of common
stock outstanding 25,122,000 24,881,500 25,103,100 24,832,900
Average number of
shares of common
stock equivalents
outstanding 47,400 300,200 110,200 315,200
---------- ---------- ---------- ----------
25,169,400 25,181,700 25,213,300 25,148,100
========== ========== ========== ==========
</TABLE>
Page 7
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 1995
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with management's
discussion and analysis of financial condition and results of operations
incorporated by reference into the Company's latest Annual Report on Form 10-K.
Results of Operations
- ---------------------
Revenues for the three months ended March 31, 1995 (the "second quarter of
fiscal 1995") were $396.7 million; this was $124.1 million more than the amount
for the three months ended March 31, 1994 (the "second quarter of fiscal 1994").
Most of the increase was attributable to the operations of Jacobs - Sirrine
Engineers (the operating division formerly known as CRS Sirrine Engineers) and
CRSS Constructors, two businesses the Company acquired during the fourth quarter
of fiscal 1994 (together, the "CRSS acquisition"). Revenues from engineering
services for the second quarter of fiscal 1995 increased 29.0% as compared to
the second quarter of fiscal 1994. The Company billed approximately 3.0 million
professional services hours to projects during the second quarter of fiscal
1995; this was 0.7 million more hours than were billed during the corresponding
period last year. Revenues from construction and maintenance services for the
second quarter of fiscal 1995 were 55.5% higher as compared to the second
quarter of fiscal 1994.
For the six months ended March 31, 1995, revenues totaled $809.1 million; this
was $275.8 million more than the amount for the six months ended March 31, 1994.
Most of the increase was attributable to the CRSS acquisition. Revenues from
engineering services for the six months ended March 31, 1995 were 36.2% higher
than the amount for the corresponding period last year. The Company billed
approximately 5.8 million professional services hours to projects during the six
months ended March 31, 1995; this was 1.3 million more hours than were billed
during the corresponding period last year. Revenues from construction and
maintenance services for the six months ended March 31, 1995 were 60.7% higher
as compared to the corresponding period last year.
As a percent of revenues, direct costs of contracts were 88.5% for the second
quarter of fiscal 1995, as compared to 87.4% for the second quarter of fiscal
1994. The percentage relationship between direct costs of contracts and
revenues will fluctuate between reporting periods depending on a variety of
factors including the mix of business during the reporting periods being
compared, as well as the level of margins earned from the various services
provided by the Company. In general, the increase in this percentage
relationship during the current quarter as compared to the corresponding
period last year was due to a higher level of construction and maintenance
services relative to engineering services.
For the six months ended March 31, 1995, direct costs of contracts were 88.9% of
revenues, as compared to 87.1% for the six months ended March 31, 1994. The
increase in this percentage relationship during the current six-month period as
compared to the corresponding period last year was also due primarily to the
effects of an increasing portion of the Company's total business volume coming
from construction and maintenance services relative to engineering services.
Page 8
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 1995
Selling, general and administrative ("SG & A") expenses for the second quarter
of fiscal 1995 totalled $33.8 million; this was $11.2 million more than the
amount for the second quarter of fiscal 1994. For the six months ended March
31, 1995, SG & A expenses were $65.5 million; this was $20.5 million more than
the amount for the six months ended March 31, 1994. Most of the increase is
attributable to the CRSS acquisition. Also contributing to the increase was
slightly higher levels of S,G & A spending by the other operations of the
Company in support of an increased level of business activity in the current
fiscal year as compared to the corresponding periods last year.
The Company's operating profit (defined as income before taxes, other income,
net and interest income, net) was $24.1 for the six months ended March 31, 1995;
this was $0.4 million more than the amount of operating profit for the
corresponding period last year. Operating profits have not increased in line
with revenues because the increase in revenues was due primarily to the CRSS
acquisition, without a corresponding increase in operating profits at rates
comparable to the rates currently being experienced by the balance of the
Company. In addition, engineering services revenues continue to include the
workoff of contracts awarded last year that include very competitively-bid fee
arrangements.
Interest expense, net was $31,900 for the six months ended March 31, 1995, as
compared to net interest income of $215,900 for the corresponding period last
year. The shift from having net interest income last year to net interest
expense this year was due primarily to the long-term debt incurred last year in
connection with the CRSS acquisition. Also contributing to the change was
increased bank borrowings by the Company's foreign subsidiaries to fund
increased working capital requirements.
Other income, net totalled $0.5 million for the second quarter of fiscal 1995,
as compared to other income, net of $0.2 million for the second quarter of
fiscal 1994. This increase was due primarily to higher gains from sales of
investments during the second quarter of fiscal 1995 as compared to the
corresponding period last year.
Backlog Information
- -------------------
The following table summarizes the Company's backlog at the dates indicated (in
millions):
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
Engineering services backlog $ 824.8 $ 702.7
Total backlog 2,561.0 1,961.0
</TABLE>
Liquidity and Capital Resources
- -------------------------------
The Company's cash and cash equivalents decreased $23.9 million during the six
months ended March 31, 1995. This compares to a net increase of $0.6 million
during the corresponding period last year. The current year decrease in cash
and cash equivalents was comprised of cash used in operations ($6.5 million),
investing activities ($10.1 million) and financing activities ($7.4 million),
offset in part by the effects of exchange rate changes ($0.1 million).
Page 9
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 1995
Operations used $6.5 million of cash and cash equivalents during the six months
ended March 31, 1995. This compares to a net use of cash of $1.1 million during
the six months ended March 31, 1994. The $5.3 million increase in cash used by
operations was due primarily to the timing of cash receipts and payments on
receivables and accrued liabilities and payables, respectively.
The Company's investing activities used $10.1 million of cash and cash
equivalents during the six months ended March 31, 1995. This compares to a net
use of cash of $5.7 million for the six months ended March 31, 1994. Although
net additions to property and equipment were $10.3 million lower in the current
six-month period as compared to last year, sales and purchases of marketable
securities and investments generated a net of $15.4 million more cash last year
than in the current six-month period.
Cash flows from financing activities used $7.4 million in cash and cash
equivalents during the six months ended March 31, 1995. This compares to net
contributions of $7.5 million during the six months ended March 31, 1994. The
variance was due primarily to the Company's bank borrowings. During the six
months ended March 31, 1995, the Company was paying-down on its bank borrowings.
During the corresponding period last year, the Company was increasing its
borrowings from banks.
The Company believes it has adequate capital resources to fund its operations
for the remainder of 1995 and beyond. At March 31, 1995, the Company's short-
and long-term committed credit facilities totaled $88.8 million through banks in
the U.S. and the U.K., against which $24.3 million was outstanding at that date.
Page 10
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 1995
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of stockholders was held on February 14, 1995 at
3:30 p.m. as announced in its Notice of Annual Meeting of Shareholders and Proxy
Statement dated January 5, 1995, copies of which have been filed with the
Commission pursuant to Regulation 14A.
There were two matters voted upon by the stockholders at the annual meeting.
Those matters were:
1. To elect a slate of directors nominated in the proxy statement (Mr.
Joseph F. Alibrandi, Hon. Peter H. Dailey, Mr. Robert B. Gwyn and Dr.
Linda K. Jacobs); and
2. To approve the appointment of Ernst & Young LLP as independent
auditors for the year ending September 30, 1995.
The results of the shareholder voting were as follows (all shares voted were
voted by proxy):
With respect to the first matter, the following table presents the results of
the shareholder voting for each of the individual nominees:
<TABLE>
<CAPTION>
Nominee
-------------------------------------------------
Joseph F. Peter H. Robert B. Linda K.
Alibrandi Dailey Gwyn Jacobs
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares voting for
the nominee 21,127,760 21,128,507 21,126,343 21,114,310
Shares instructing
the proxy not to
vote for the
nominee 103,636 102,889 105,053 117,086
Shares not voted 3,884,511 3,884,511 3,884,511 3,884,511
---------- ---------- ---------- ----------
Total 25,115,907 25,115,907 25,115,907 25,115,907
========== ========== ========== ==========
</TABLE>
With respect to the second matter, there were 21,140,647 shares which voted in
favor of the appointment of Ernst & Young LLP as the Company's independent
auditors for the year ending September 30, 1995. There were 57,043 shares which
voted against the appointment, 33,706 shares instructed the proxy not to vote,
and there were 3,884,511 shares which were not present and for which no proxies
were received.
Page 11
<PAGE>
JACOBS ENGINEERING GROUP INC. AND SUBSIDIARIES
MARCH 31, 1995
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
10.5 Jacobs Engineering Group Inc. and Subsidiaries 1991 Executive
Deferral Plan, effective June 1, 1991.
10.6 Jacobs Engineering Group Inc. and Subsidiaries 1993 Executive
Deferral Plan, effective December 1, 1993.
10.11 Jacobs Engineering Group Inc. 401(k) Plus Savings Plan and Trust
Agreement - Second Complete Amendment and Restatement -
Generally Effective January 1, 1990.
27. Financial Data Schedule.
(b) Reports on Form 8-K:
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JACOBS ENGINEERING GROUP INC.
/s/ John W. Prosser, Jr.
- --------------------------------
John W. Prosser, Jr.
Senior Vice President, Finance
and Administration and Treasurer
Date: May 11, 1995
Page 12
<PAGE>
EXHIBIT 10.5
JACOBS ENGINEERING GROUP INC.
1991 EXECUTIVE DEFERRAL PLAN
(EDP)
Effective June 1, 1991
<PAGE>
TABLE OF CONTENTS
Page
----
Purpose ............................................................... 1
Article 1 - Definitions ................................................... 1
Article 2 - Eligibility ................................................... 4
2.1 Eligibility and Participation ................................. 4
2.2 Enrollment Requirements ....................................... 4
Article 3 - Deferral Commitments .......................................... 4
3.1 Minimum Deferral .............................................. 4
3.2 Maximum Deferral .............................................. 4
3.3 Fixed Deferral Amount ......................................... 4
3.4 Deferral Commitment Period .................................... 5
3.5 Withholding of Deferral Amounts ............................... 5
3.6 FICA Taxes .................................................... 5
3.7 Interest Crediting Prior to Distribution ...................... 5
3.8 Hardship ...................................................... 6
Article 4 - Pre-Retirement Distribution ................................... 6
4.1 Eligibility for Pre-Retirement Distribution ................... 6
4.2 Amount of Distribution ........................................ 6
Article 5 - Retirement Benefit ............................................ 7
5.1 Eligibility for Retirement Benefit ............................ 7
5.2 Retirement Benefit - Payment .................................. 7
5.3 Retirement Benefit - Amount ................................... 7
5.4 Death Prior to Completion of Retirement Benefit ............... 8
Article 6 - Survivor Benefit .............................................. 8
6.1 Eligibility for Survivor's Benefit ............................ 8
6.2 Survivor's Benefit - Method of Payment ........................ 8
6.3 Survivor's Benefit - Amount ................................... 8
6.4 Suicide ....................................................... 8
Article 7 - Termination Benefit ........................................... 9
7.1 Eligibility for Termination Benefit ........................... 9
7.2 Termination Benefit ........................................... 9
-i-
<PAGE>
Page
----
Article 8 - Disability .................................................... 9
8.1 Eligibility for Disability Waiver ............................. 9
8.2 Benefits ...................................................... 10
8.3 Long-Term Disability - Termination ............................ 10
Article 9 - Beneficiary ................................................... 10
9.1 Beneficiary ................................................... 10
9.2 Beneficiary Designation; Change ............................... 10
9.3 Acknowledgment ................................................ 10
9.4 No Beneficiary Designation .................................... 10
9.5 Doubt as to Beneficiary ....................................... 10
9.6 Discharge of Obligations ...................................... 10
Article 10 - Leave of Absence .............................................. 11
10.1 Authorized Leave of Absence ................................... 11
Article 11 - Employer/Participant Liability ................................ 11
11.1 General Assets ................................................ 11
11.2 Employer's Liability .......................................... 11
11.3 Limitation of Obligation ...................................... 11
11.4 Participant Cooperation ....................................... 11
11.5 Unsecured General Creditor .................................... 11
Article 12 - No Guarantee of Employment .................................... 12
12.1 No Guarantee of Employment .................................... 12
Article 13 - Termination, Amendment or Modification of the Plan ............ 12
13.1 Termination ................................................... 12
13.2 Amendment ..................................................... 12
13.3 Termination of Plan Agreement ................................. 12
13.4 Change in Control ............................................. 12
13.5 Termination, Modification or Amendment Following
Change in Control ............................................ 14
13.6 Legal Fees To Enforce Rights After Change in Control .......... 14
13.7 Vesting ....................................................... 15
Article 14 - Other Benefits and Agreements ................................. 15
14.1 Coordination with Other Benefits .............................. 15
Article 15 - Restrictions on Alienation of Benefits ........................ 15
15.1 Nonassignability .............................................. 15
-ii-
<PAGE>
Page
----
Article 16 - Administration of the Plan .................................... 15
16.1 Committee Administration ...................................... 15
16.2 Committee Authority ........................................... 15
16.3 Committee Indemnity ........................................... 15
16.4 Employer's Obligations to the Committee ....................... 16
16.5 Committee Discretion in Payment Schedule ...................... 16
Article 17 - Claims Procedures ............................................. 16
17.1 Presentation of Claim ......................................... 16
17.2 Notification of Decision ...................................... 16
17.3 Review of a Denied Claim ...................................... 17
17.4 Decision on Review ............................................ 17
Article 18 - Trust ......................................................... 17
18.1 Establishment of the Trust .................................... 17
18.2 Interrelationship of the Plan and the Trust ................... 17
Article 19 - Miscellaneous ................................................. 18
19.1 Notice ........................................................ 18
19.2 Successors .................................................... 18
19.3 Spouse's Interest ............................................. 18
19.4 Governing Law ................................................. 18
19.5 Pronouns ...................................................... 18
19.6 Headings ...................................................... 18
19.7 Validity ...................................................... 18
-iii-
<PAGE>
EXECUTIVE DEFERRAL PLAN
OF
JACOBS ENGINEERING GROUP INC.
Purpose
The purpose of this plan is to provide specified benefits to a select group of
key employees who contribute materially to the continued growth, development and
future business success of JACOBS ENGINEERING GROUP INC. and its subsidiaries.
Article 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated meanings:
1.1 "Account Balance" shall mean the sum of (i) the Deferral Amount and (ii)
interest credited in accordance with all the applicable interest crediting
provisions of this Plan, less all distributions made in accordance with the
Plan.
1.2 "Annual Bonus" shall mean any compensation paid under the Employer's
Incentive Bonus Plan.
1.3 "Base Annual Salary" shall mean the annual compensation that is to be paid
to a Participant for each Plan Year, determined as of the first day of that
year, excluding bonuses, commissions, overtime and non-monetary awards for
employment services to the Employer.
1.4 "Beneficiary" shall mean the person or persons, or the estate of a
Participant, designated in accordance with Article 9, who is entitled to
receive benefits under this Plan upon the death of a Participant.
1.5 "Beneficiary Designation Form" shall mean the form established from time to
time by the Board that a Participant completes, signs and returns to the
Committee to designate one or more Beneficiaries.
1.6 "Board" shall mean the Board of Directors of the Company.
1.7 "Change in Control" shall have the meaning set forth in Section 13.4.
1.8 "Claimant" shall have the meaning set forth in Section 17.1.
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1.9 "Committee" shall mean the administrative committee appointed to manage and
administer the Plan in accordance with the provisions of Article 16.
1.10 "Company" shall mean JACOBS ENGINEERING GROUP INC.
1.11 "Continuing Director" shall mean a director described in Section 13.4(b).
1.12 "Deferral Amount" shall be the sum of all of a Participant's Base Annual
Salary deferrals, Annual Bonus deferrals and, if applicable, Directors Fees
deferrals.
1.13 "Deferral Commitment Period" shall mean the period described in Section 3.4
of this Plan.
1.14 "Director" shall mean any member of the Board.
1.15 "Directors Fees" shall mean the annual fees paid by the Company, including
retainer fees and meetings fees, as compensation for serving on the Board.
1.16 "Disability" shall mean a period of disability during which a Participant
qualifies for benefits under the Company's or any of its subsidiaries'
long-term disability program.
1.17 "Election Form" shall mean the form established from time to time by the
Board that a Participant completes, signs and returns to the Committee to
make an election under the Plan.
1.18 "Employee" shall mean any person who is in the regular full-time employment
of an Employer as determined by the personnel policies and practices of the
Employer.
1.19 "Employer" shall mean the Company and any subsidiaries of the Company that
have been selected by the Board to participate in the Plan.
1.20 "Moody's Rate" shall mean the interest rate determined and announced by the
Committee at any time before the commencement of each Plan Year. The
Moody's Rate for a Plan Year shall be the most current monthly "Seasoned
Corporate Bond" rate published by Moody's Investors Service, Inc., or any
successor to that service, available prior to the announcement by the
Committee. For the first Plan Year, the Moody's Rate shall be 9.43%. The
Seasoned Corporate Bond rate is an economic indicator, based on an
arithmetic average of the yields of representative bonds, including
industrials, public utilities, Aaa, A, and Baa bonds, and is calculated as
a monthly average of the composite yield.
1.21 "Participant" shall mean any Employee or Director who (i) is selected to
participate in the Plan, (ii) elects to participate in the Plan, (iii)
signs a Plan Agreement, an Election Form and a Beneficiary Designation
Form, (iv) the signed Plan Agreement, Election Form and Beneficiary
Designation Form are returned to and accepted by the Committee and (v)
neither the Plan nor the Plan Agreement has terminated.
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1.22 "Participation Year" shall mean with respect to any Participant, any Plan
Year in which a Participant is at any time during such year a Participant.
Notwithstanding the previous sentence, "Participation Year" shall not
include any years prior to the first Plan Year in which a Participant
actually has any amount deferred under this Plan.
1.23 "Plan" shall mean the 1991 Executive Deferral Plan of the Employer which is
defined by this instrument and by each Plan Agreement.
1.24 "Plan Agreement" shall mean the form of written agreement which is entered
into by and between the Employer and a Participant. Each Plan Agreement
executed by a Participant shall provide for the entire benefit to which
such Participant is entitled to under the Plan, and the Plan Agreement
bearing the latest date shall govern such entitlement.
1.25 The "Plan Year" shall, for the first Plan Year, begin on June 1, 1991, and
end on December 31, 1991. For each Plan Year thereafter, the Plan Year
shall begin on January 1 of each year and continue through December 31 of
the same year.
1.26 "Pre-Retirement Distribution" shall mean the distribution provided for in
Article 4.
1.27 "Retirement Benefit" shall mean the retirement benefit provided for in
Article 5.
1.28 "Retirement Date" shall be the earlier of the first day of the month in
which the Participant (i) attains the age of sixty-five (65), (ii) is sixty
(60) years of age or older and has completed ten (10) Years of Service, or
(iii) is terminated as a result of a long-term disability under the
Employer's policies and practices.
1.29 "Retirement Distribution Date" shall mean the last day of the month in
which a Participant has both (i) reached or passed his or her Retirement
Date and (ii) has actually ceased being an Employee or Director other than
by death.
1.30 "Survivor's Benefit" shall mean the benefit provided for in Article 6.
1.31 "Termination Benefit" shall mean the termination benefit provided for in
Section 7.2.
1.32 "Termination of Employment" shall mean with respect to an Employee or
Director the cessation of employment or a Director's position, as the case
may be, voluntarily or involuntarily, and, except as provided in Article 8
and Article 10, shall exclude cessation as a result of an authorized leave
of absence, retirement, Disability or death. If a Participant is both an
Employee and a Director, Termination of Employment shall occur only upon
the termination of last held position.
1.33 "Trust" shall mean the trust established pursuant to that certain Trust
Agreement, dated as of June 1, 1991, between the Company and the Trustee
named therein, as amended from time to time.
1.34 "Unforeseeable Financial Emergency" shall have the meaning set forth in
Section 3.8(b).
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1.35 "Years of Service" shall mean the total number of years, that a Participant
is an Employee or a Director, including, without limitation, periods of
Disability and leaves of absence prior to Termination of Employment, as
provided under Article 8 and Article 10.
Article 2
Eligibility
2.1 Eligibility and Participation. The Committee, in its sole discretion, shall
-----------------------------
establish eligibility qualifications for participation in the Plan.
Participation shall be limited to a select group of management and highly
compensated employees of the Employer.
2.2 Enrollment Requirements. As a condition of participation, each Participant
-----------------------
so selected shall complete, sign and return to the Committee a Plan
Agreement, an Election Form and a Beneficiary Designation Form, and shall
comply with all further conditions that may be established by the
Committee.
Article 3
Deferral Commitments
3.1 Minimum Deferral. A Participant must defer during each Plan Year of the
----------------
Deferral Commitment Period at least one of the following minimum amounts:
(a) In the case of an Employee, $2,000 of his or her Base Annual Salary; or
(b) In the case of a Director who is not an Employee, a percentage that is
anticipated to equal $2,000 of his or her Directors Fees.
A Participant shall not be permitted to defer any portion of his or her
Annual Bonus unless he or she meets one of the minimum Deferral requirements
set forth in this Section. If a Participant first becomes a Participant
after the first day of a Plan Year, or in the case of the first Plan Year of
the Plan itself, at the election of the Employee on the Election Form, the
minimum deferral described in (a) shall be an amount equal to $2,000,
multiplied by a fraction, the numerator of which is the number of complete
months remaining in the Plan Year and the denominator of which is 12.
3.2 Maximum Deferral. For each Plan Year of the Deferral Commitment Period, a
----------------
Participant may defer up to fifty percent (50%) of his or her Base Annual
Salary, fifty percent (50%) of his or her Annual Bonus (except as noted in
Section 3.5) and, if applicable, up to one hundred percent (100%) of his or
her Directors Fees.
3.3 Fixed Deferral Amount. Except as provided in Section 3.5, the annual
---------------------
deferral selected by a Participant shall be the same for each Plan Year of
the Deferral Commitment Period. A Base Annual Salary deferral shall be a
fixed dollar amount, and an Annual Bonus or Directors Fees deferral shall
be a fixed percentage of the applicable annual bonus or fee.
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In no event shall an annual deferral amount be decreased during the
Deferral Commitment Period. An annual deferral amount may only be increased
(i) prior to the commencement of the Plan Year to which such annual
deferral amount relates and (ii) with the approval of the Committee.
3.4 Deferral Commitment Period. The "Deferral Commitment Period" for each
--------------------------
Participant shall be a fixed period of four (4) consecutive Plan Years
commencing with the 1991 Plan Year unless otherwise designated by the
Committee.
3.5 Withholding of Deferral Amounts. The portion of the Base Annual Salary
-------------------------------
elected to be deferred annually shall be withheld in equal amounts over the
Plan Year. The portion of Annual Bonus and Directors Fees being deferred
shall be withheld at the time the Annual Bonus or Directors Fees would
otherwise be paid to the Participant. Notwithstanding the above, for such
first Plan Year, Participants can elect to:
(a) Defer the total Base Annual Salary deferral in that first Plan Year,
(b) Defer an amount equal to the amount in Article 3.5(a) above multiplied
by a fraction, the numerator of which is the number of complete months
remaining in the first Plan Year, and the denominator of which is
twelve (12).
(c) Defer from Base Annual Salary an amount equal to Article 3.5(b),
above. In addition, the difference between Articles 3.5(a) and 3.5(b)
would be deferred from the Annual Bonus for the first Plan Year (in
addition to any Annual Bonus election). For the first Plan Year only,
the total Annual Bonus deferral could exceed fifty percent (50%) by
nature of this provision.
3.6 FICA Taxes. For each Plan Year of the Deferral Commitment Period, the
----------
Employer shall ratably withhold from that portion of the Participant's Base
Annual Salary and/or Annual Bonus that is not being deferred, the
Participant's share of FICA taxes based on an amount equal to the Base
Annual Salary and/or Annual Bonus before reduction by the amount deferred.
If necessary, the Committee shall reduce the amount deferred in order to
comply with this Section 3.6.
3.7 Interest Crediting Prior to Distribution.
----------------------------------------
(a) Except as provided in Section 3.7(b) and Section 3.7(c) below,
interest shall be credited annually on a Participant's Account Balance
at 125% of the Moody's Rate. For purposes of this crediting, all
amounts deferred during a Plan Year shall be treated as having been
deferred as of the beginning of the Plan Year. Such interest crediting
shall be made up to the date of the Pre-Retirement Distribution, the
Retirement Date, the date of the Participant's death or the date of
Termination of Employment, depending on whether the benefit is paid
under Article 4, 5, 6 or 7, respectively.
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(b) In the event of a Termination of Employment, interest shall be
credited in the manner provided in Section 3.7(a), but at the rate
provided for in Section 7.2.
(c) In the event of a Participant's suicide, interest shall be credited in
accordance with Section 6.4.
3.8 Hardship.
--------
(a) If a Participant experiences an Unforeseeable Financial Emergency as
described in Section 3.8(b) below, the Participant may petition the
Committee to (i) suspend any deferrals required by the Plan Agreement
and/or (ii) receive a distribution from the Plan. Any approval of such
a petition shall be made at the sole discretion of the Committee. If
the Committee approves a distribution, the distribution shall be made
within sixty (60) days of the date of approval. The distribution may
not exceed the Participant's Account Balance as of the last day of the
month prior to the date of the Committee's approval of the petition,
calculated as if such Participant were receiving a Termination Benefit
as of such date.
(b) An "Unforeseeable Financial Emergency" shall mean an unexpected need
for cash arising from an illness, casualty loss, sudden financial
reversal, transfer of place of employment or other such unforeseeable
occurrence, all as determined in the sole discretion of the Committee.
Article 4
Pre-Retirement Distribution
4.1 Eligibility for Pre-Retirement Distribution. A Participant may elect to
-------------------------------------------
receive a Pre-Retirement Distribution from the Plan to be received in or
after the eighth Participation Year. This election shall be irrevocable and
shall be made on the Election Form, which form is to be delivered to the
Committee prior to the commencement of the Deferral Commitment Period.
4.2 Amount of Distribution. The amount of the Pre-Retirement Distribution shall
----------------------
be any amount not to exceed the electing Participant's Account Balance at
the end of the Participation Year prior to the Participation Year selected
on the Election Form for the distribution. The Pre-Retirement Distribution
may not be made prior to the eighth (8th) Participation Year. At the
election of the Participant (on the Election Form), this amount shall be
distributed or, in the case of installment payments, shall start
distribution within ninety (90) days of the January 1st of the
Participation Year selected on the Election Form in one of the following
manners:
(a) In a lump sum equal to the Total Account Balance at the end of the
Participation Year prior to the Participation Year selected on the
Election Form for the distribution; or
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(b) In a lump sum equal to a fixed dollar amount. Such fixed dollar amount
shall be chosen by the Participant on the Election Form. Any remaining
amounts in the Account Balance, after completion of the Pre-Retirement
Distribution, shall remain in the Plan to be paid under the other
provisions of the Plan; or
(c) In four or fewer annual consecutive installments of a fixed dollar
amount. Such fixed dollar amount shall be chosen by the Participant on
the Election Form. Interest on the unpaid Account Balance shall be
credited at 125% of Moody's. Any remaining amounts in the Account
Balance, after completion of the Pre-Retirement Distribution, shall
remain in the Plan to be paid under the other provisions of the Plan;
or
(d) In four or fewer annual consecutive installments so that the total
Account Balance is completely distributed over the elected installment
period. Interest on the unpaid Account Balance shall be credited at
125% of Moody's.
If the amount of Pre-Retirement Distribution elected by the Participant
exceeds the total Account Balance at any time during the Pre-Retirement
Distribution period, only the amount remaining in the Account Balance shall
be distributed to the Participant and the Employer shall have no further
liability under the Plan.
Article 5
Retirement Benefit
5.1 Eligibility for Retirement Benefit. If the Participant ceases to be an
----------------------------------
Employee or a Director for any reason other than death, including without
limitation, retirement or a Termination of Employment after the Retirement
Date, the Employer shall pay the Retirement Benefit to the Participant (or
his or her Beneficiary) as provided in Section 5.2 and Section 5.3 below.
5.2 Retirement Benefit - Method of Payment. The Retirement Benefit may be paid
--------------------------------------
in a lump sum, or in installments over a period of 60, 120, or 180 months
at the sole discretion of the Committee. The lump sum payment shall be
made, or installment payments shall commence, within sixty (60) days of the
Retirement Distribution Date and in the case of installment payments, shall
continue until the Retirement Benefit is paid in full.
5.3 Retirement Benefit - Amount. If the Retirement Benefit is paid in a lump
---------------------------
sum, it shall be the retired Participant's Account Balance determined as of
the Retirement Distribution Date. If the Retirement Benefit is paid in
installments, it shall be a constant monthly payment, determined at the
beginning of each Plan Year by monthly amortization of the remaining
Account Balance over the remaining payment period. Interest on the unpaid
balance will be credited for the remaining periods at 125% of the Moody's
Rate established for each of the subsequent Plan Years.
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<PAGE>
5.4 Death Prior to Completion of Retirement Benefit. If the Participant dies
-----------------------------------------------
after the Retirement Date and prior to the completion of the Retirement
Benefit payments, the retired Participant's designated Beneficiary will
receive any unpaid Retirement Benefit payments due the Participant, either
at the times they were to be received by the Participant, or in a lump sum,
as determined by the Committee in its sole discretion. If this Section 5.4
applies, a designated Beneficiary shall not be entitled to any benefits
provided for under Article 6.
Article 6
Survivor Benefit
6.1 Eligibility for Survivor's Benefit. If a Participant dies before the
----------------------------------
Retirement Date and before Termination of Employment, the Employer shall
pay the Survivor's Benefit to the deceased Participant's Beneficiary,
provided that all of the following conditions are met:
(a) the Participant's death was determined not to be from a bodily or
mental cause or causes, the information about which was withheld,
knowingly concealed, or falsely provided by the Participant, when
requested by the Employer to furnish evidence of good health; and
(b) proof of the Participant's death is furnished to the Committee in such
form as determined acceptable by the Committee.
6.2 Survivor's Benefit - Method of Payment. The Survivor's Benefit may be paid
--------------------------------------
in a lump sum, or in installments over a period of 60, 120, or 180 months
at the sole discretion of the Committee. The lump sum payment shall be
made, or installment payments shall commence within sixty (60) days of the
date the Participant died and in the case of installment payments, shall
continue until the Survivor's Benefit is paid in full.
6.3 Survivor's Benefit - Amount. If the Survivor's Benefit is paid in a lump
---------------------------
sum, it shall be the retired Participant's Account Balance determined as of
the date the Participant died. If the Survivor's Benefit is paid in
installments, it shall be a constant monthly payment, determined at the
beginning of each Plan Year by monthly amortization of the remaining
Account Balance over the remaining payment period. Interest on the unpaid
balance will be credited for the remaining periods at 125% of the Moody's
Rate established for each of the subsequent Plan Years.
6.4 Suicide. In the event of a Participant's suicide within twenty-four months
-------
of the first deferral of any Deferral Commitment Period, the Employer shall
be obligated to pay to the Participant's designated Beneficiary the
Participant's portion of the Deferral Amount, without interest, and no
other Survivor's Benefit shall be payable.
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<PAGE>
Article 7
Termination Benefit
7.1 Eligibility for Termination Benefit. If a Participant experiences a
-----------------------------------
Termination of Employment prior to the Retirement Date, the Employer shall
pay to the Participant the Termination Benefit.
7.2 Termination Benefit. The Termination Benefit is a sum equal to the
-------------------
Participant's Account Balance determined as provided in this Section 7.2,
as of the date of Termination of Employment, and shall be paid in a lump
sum within ninety (90) days following the Termination of Employment. In
determining the Account Balance for purposes of this Article 7 only,
interest shall be calculated in the manner provided in Section 3.7(a)
above, but using the applicable interest rate set forth in the following
schedules:
Number of Interest
Participation Years Crediting Rate
------------------- --------------
For Employees:
- -------------
Less than 2 years 0
More than 2 but less than 7 Moody's Rate
7 or more 125% of Moody's Rate
For Directors:
- -------------
All years 125% of Moody's Rate
In the event a Participant is both an Employee and Director, interest
shall be credited under the Employee schedule.
Article 8
Disability
8.1 Eligibility for Disability Waiver. If a Participant suffers a Disability
---------------------------------
during any Plan Year during the Deferral Commitment Period, the
Participant's annual deferral amount for that Plan Year or any subsequent
Plan Year shall, except as provided in this Section 8.1, be as set forth in
his or her Election Form for the first six (6) months that a Participant
suffers from a Disability, and the withholding of the Participant's monthly
deferral amounts, calculated in accordance with Section 3.5, shall be met
from the Participant's taxable portion of the disability benefit under the
Employer's long-term disability program. Should the monthly deferral amount
exceed one hundred percent (100%) of the taxable disability benefit, the
Participant's deferral obligation shall be excused to the extent of that
excess. If a Participant's Disability exceeds six (6) consecutive months,
the Participant
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shall be excused from making any additional deferrals while he or she is
suffering from a Disability.
8.2 Benefits. A Participant suffering a Disability, but not terminated as a
--------
result of long-term disability under the Employer's policies and practices,
shall continue to be considered a Participant and shall be eligible for the
benefits provided for in Articles 4, 5, 6 or 7 in accordance with the
provisions of those Articles.
8.3 Long-Term Disability - Termination. For a Participant who is terminated as
----------------------------------
a result of disability under the Employer's policies and practices, the
provisions of Article 5 shall apply for purposes of Account Balance
distribution and interest crediting.
Article 9
Beneficiary
9.1 Beneficiary. Each Participant shall have the right, at any time, to
-----------
designate any person or persons as his or her Beneficiary or Beneficiaries
(both primary as well as contingent) to receive any benefits payable under
the Plan to a Beneficiary upon the death of a Participant.
9.2 Beneficiary Designation; Change. A Participant shall designate his or her
-------------------------------
Beneficiary or Beneficiaries by completing and signing the Beneficiary
Designation Form, and returning it to the Committee. A Participant shall
have the right to change a Beneficiary by completing, signing and otherwise
complying with the terms of the Beneficiary Designation Form.
9.3 Acknowledgment. No designation or change in designation of a Beneficiary
--------------
shall be effective until received, accepted and acknowledged in writing by
the Committee.
9.4 No Beneficiary Designation. If a Participant fails to designate a
--------------------------
Beneficiary as provided above, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant's benefits, then the Participant's designated Beneficiary shall
be deemed to be his or her surviving spouse. If the Participant has no
surviving spouse, the benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal representative of
the Participant's estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
-----------------------
Beneficiary to receive payments pursuant to this Plan, they shall have the
right to withhold such payments until this matter is resolved to their
satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the Plan to a
------------------------
Beneficiary shall fully and completely discharge the Employer from all
further obligations under this Plan with respect to the deceased
Participant and all of his or her Beneficiaries.
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Article 10
Leave of Absence
10.1 Authorized Leave of Absence. If a Participant is authorized by the Employer
---------------------------
for any reason to take a paid leave of absence from employment, such
Participant shall continue to be considered employed as an Employee or
Director and shall be required to maintain the level of deferrals set forth
in his or her Plan Agreement in order to keep the Plan Agreement in full
force and effect. If such leave of absence is unpaid, the Participant shall
continue to be considered employed as an Employee or Director and will be
excused from making deferrals until the unpaid leave of absence ends;
provided, however, that if the unpaid leave of absence continues beyond
three consecutive months, the Participant shall be treated as having
incurred a Termination of Employment as of the end of such three month
period and the Participant shall receive the Termination Benefit in
accordance with Article 7. In the case of a conflict between this Article
10 and Article 8, Article 8 shall prevail.
Article 11
Employer/Participant Liability
11.1 General Assets. Amounts payable to a Participant shall be paid from the
--------------
general assets of the Employer exclusively.
11.2 Employer's Liability. The Employer's liability for the payment of
--------------------
benefits shall be defined only by this Plan, as entered into between the
Employer and a Participant.
11.3 Limitation of Obligation. The Employer shall have no obligation to a
------------------------
Participant under the Plan, except as expressly provided for in the Plan.
11.4 Participant Cooperation. The Participant must cooperate with the Employer
-----------------------
and the Committee in furnishing all information requested by the Employer
and/or Committee in order to facilitate the payment of benefits, and the
administration and operations of this Plan. Such information may include
taking a physical examination, or other actions, and such cooperation
shall extend beyond the termination of the Plan Agreement and the
Employee's Participation in the Plan.
11.5 Unsecured General Creditor. Participants, their Beneficiaries and their
--------------------------
permitted heirs, successors and assigns shall have no legal or equitable
rights, interest or claims in any property or assets of the Employer. Any
and all of the Employer's assets shall be, and remain, the general,
unpledged unrestricted assets of the Employer. The Employer's obligations
under the Plan shall be merely that of an unfunded and unsecured promise
of the Employer to pay money in the future.
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<PAGE>
Article 12
No Guarantee of Employment
12.1 No Guarantee of Employment. Nothing in this Agreement shall be construed
--------------------------
as altering in any manner the employment relationship with an Employee or
Director, which is hereby acknowledged to be an "at will" employment
relationship that can be terminated at any time for any reason, with or
without cause, unless otherwise expressly provided in a written employment
agreement. All terms and conditions of an Employee's or Director's current
employment shall remain the same. Nothing in this Plan creates, or is
meant to create, any obligation on the part of the Employer to keep an
Employee or Director employed by the Employer or not to terminate an
Employee or Director at any time and for any reason.
Article 13
Termination, Amendment or Modification of the Plan
13.1 Termination. The Company reserves the right to terminate the Plan at any
-----------
time. Upon termination of the Plan, the Participant's Account Balance
shall be paid out in accordance with the benefits that the Participant
would receive if there had occurred a Termination of Employment with
respect to the Participant on the date of Plan termination or, if such
termination occurs after the Retirement Date, the Participant had retired
on the date of Plan termination. Notwithstanding the above, the
termination of the Plan shall not affect any Participant or Beneficiary
who has become entitled to the payment of benefits under the Plan as of
the date of termination.
13.2 Amendment. The Company may, at any time, amend or modify the Plan in whole
---------
or in part, provided, however, that no amendment or modification shall be
effective to decrease or restrict a Participant's Account Balance in
existence at the time the amendment or modification is made, calculated as
if there had occurred a Termination of Employment with respect to such
Participant as of the effective date of the amendment or, if such
amendment occurs after the Retirement Date, the Participant had retired as
of the effective date of the amendment. The amendment or modification of
the Plan shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under the Plan as of the date of the
amendment or modification.
13.3 Termination of Plan Agreement. Absent the earlier termination,
-----------------------------
modification or amendment of the Plan, the Plan Agreement of any
Participant shall terminate upon the full payment of the applicable
benefit provided under Articles 4, 5, 6, or 7, as the case may be.
13.4 Change in Control.
-----------------
(a) All benefits accrued under the Plan as of the date of a Change of
Control shall thereafter be paid in accordance with the terms and
conditions of this Plan. However, if at any time during a period of
three years following a Change of Control
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of the Company, the employment of a participant by the Employer is
terminated (i) by the Employer for any reason other than for Cause, or
(ii) by the Participant for just reason, then all benefits, including
all interest at the full 125% of Moody's rate shall apply and not at
the rates applicable in Section 7.2. Such amounts will thereupon be
immediately due and payable in full, less any withholdings required by
law, to such Participant, and within ten business days thereafter the
Employer, or any successor corporation of the Employer shall deliver
payment of such Account Balance to such Participant.
A Participant shall be deemed to have terminated his or her employment
for just reason if he or she resigns voluntarily after a demotion, a
material reduction in his or her authority or responsibility or any
reduction in his or her compensation or after being notified of a
relocation of his or her work place that would materially increase the
commuting distance from his or her then current principal residence.
A Participant shall be deemed to have been terminated by the Employer
for cause only if such participant has been terminated by reason of (i)
a willful failure by such Participant to substantially perform his or
her duties other than a failure resulting from the Participant's
incapacity due to physical or mental illness, or (ii) a willful act by
the Participant that constitutes gross misconduct and is materially
injurious to the Employer. No act or failure to act by a Participant
shall be considered "willful" unless committed without good faith and
without a reasonable belief that the act of omission was in the best
interests of the Employer.
(b) As used in this Plan, "Change of Control" means the occurrence of any
of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, hereinafter "Person")
becomes the beneficial owner, directly or indirectly, of
securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the Company's
then outstanding securities ordinarily (and apart from rights
accruing under special circumstances) having the right to vote
at elections of directors;
(ii) A change in the composition of the Board as a result of which
fewer than two-thirds (2/3rds) of the incumbent directors are
Continuing Directors; or
(iii) A change of control that would be required to be reported in a
proxy statement pursuant to Item 5(f) of Schedule 14A of
Regulation 14A under the Securities Exchange Act of 1934.
An individual shall be considered a "Continuing Director" on a
particular date if he or she either (i) had been a member of the
Board twenty-four (24) months prior to such date or (ii) was elected,
or nominated for election, to the Board with the affirmative votes of
at least a majority of the members of the Board twenty-four
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<PAGE>
(24) months prior to such date and who were still in office at
the time of the election or nomination.
13.5 Termination, Modification or Amendment Following Change in Control.
------------------------------------------------------------------
Following a Change in Control, neither the Company, any subsidiary of the
Company nor any corporation, trust or other Person that succeeds to all or
any substantial portion of the assets of the Company shall have the right
to terminate, modify, or amend a Plan Agreement in effect prior to such
Change in Control, and all benefits under such Plan Agreement shall
thereafter be paid in accordance with the terms of such Plan Agreement as
in effect immediately prior to such Change in Control. Any provision of
this Plan to the contrary shall be construed in accordance with this
Section 13.5.
13.6 Legal Fees To Enforce Rights After Change in Control. The Company is aware
----------------------------------------------------
that upon the occurrence of a Change in Control, the Board (which might
then be composed of new members) or a shareholder of the Company or of any
successor corporation might then cause or attempt to cause the Company or
such successor to refuse to comply with its obligations under the Plan and
might cause or attempt to cause the Company to institute, or may
institute, litigation seeking to deny Participants the benefits intended
under the Plan. In these circumstances, the purpose of the Plan could be
frustrated. It is the intent of the Company that Participants not be
required to incur the expenses associated with the enforcement of their
rights under the Plan by litigation or other legal action, because the
cost and expense thereof would substantially detract from the benefits
intended to be extended to Participants hereunder, and that Participants
not be bound to negotiate any settlement of their rights under the Plan
under threat of incurring such expenses. Accordingly, if, following a
Change in Control, it should appear to any Participant that the Company
has failed to comply with any of its obligations under the Plan or any
agreement thereunder or, if the Company or any other Person takes any
action to declare the Plan or any agreement hereunder void or
unenforceable or institutes any litigation or other legal action designed
to deny, diminish or to recover from any Participant the benefits intended
to be provided to each Participant under the Plan, and such Participant
has substantially complied with all of his or her obligations under the
Plan and any such agreement, then the Company irrevocably authorizes such
Participant from time to time to retain counsel of his or her choice at
the expense of the Company to represent such Participant in connection
with the initiation or defense of any litigation or other legal action,
whether by or against the Company or any director, officer, shareholder or
other person affiliated with the Company or any successor thereto in any
jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to each Participant's entering into an attorney-client
relationship with such counsel, and in that connection the Company and
each Participant agree that a confidential relationship shall exist
between each such Participant and his counsel. The Company shall pay or
reimburse each Participant for all reasonable fees and expenses of counsel
selected by such Participant from time to time on a regular, periodic
basis from presentation of a statement or statements prepared by such
counsel in accordance with its customary practices up to a maximum
aggregate amount of $500,000.
-14-
<PAGE>
13.7 Vesting. Notwithstanding anything that may be construed to the contrary in
-------
this Plan, a Participant shall at all times be 100% vested in his or her
Deferral Amount.
Article 14
Other Benefits and Agreements
14.1 Coordination with Other Benefits. The benefits provided for a Participant
--------------------------------
and Participant's Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan or program for
employees of the Employer. The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.
Article 15
Restrictions on Alienation of Benefits
15.1 Nonassignability. Neither a Participant nor any other person shall have
----------------
any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of
actual receipt, the amounts if any, payable hereunder, or any part
thereof. No part of the amounts payable shall, prior to actual payment, be
subject to any claims of creditors and, in particular, they shall not be
subject to attachment, garnishment, seizure or sequestration by any
creditor for the payment of any debts, judgments, obligations, alimony or
separate maintenance owed by a Participant.
Article 16
Administration of the Plan
16.1 Committee Administration. The general administration of this Plan, as well
------------------------
as construction and interpretation thereof, shall be the responsibility of
the Committee, the number of members of which shall be designated and
appointed from time to time by, and shall serve at the pleasure of the
Board.
16.2 Committee Authority. Subject to the Plan, the Committee shall from time to
-------------------
time establish rules, forms and procedures for the administration of the
Plan. Except as otherwise expressly provided, the Committee shall have the
exclusive right to interpret the Plan and to decide any and all matters
arising thereunder. The Committee's decisions shall be conclusive and
binding upon all persons having or claiming to have any right or interest
under the Plan.
16.3 Committee Indemnity. No member of the Committee shall be liable for any
-------------------
act or omission of any other member of the Committee, nor for any act or
omission on his own part, excepting his or her own willful misconduct. The
Employer shall indemnify and save harmless each member of the Committee
against any and all expenses and liabilities
-15-
<PAGE>
arising out of his or her membership on the Committee, with the exception
of expenses and liabilities arising out of his or her own willful
misconduct.
16.4 Employer's Obligations to the Committee. To enable the Committee to
---------------------------------------
perform its functions, each Employer shall supply full and timely
information to the Committee on all matters relating to the compensation
of all Participants, their retirement, death, Disability or Termination of
Employment, and such other pertinent facts as the Committee may require.
16.5 Committee Discretion in Payment Schedule. The Committee shall also have
----------------------------------------
the power, at its sole discretion, to change the manner and timing of
payments to be made to a Participant or Participant's Beneficiary from
that set forth in the Participant's Plan Agreement, if requested to do so
by such Participant or Beneficiary.
Article 17
Claims Procedures
17.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
---------------------
Participant (such Participant or Beneficiary being referred to below as a
"Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts (i) credited to (or deducted
from) such Claimant's Participant's Account Balance, or (ii) distributable
to such Claimant from the Plan. If such a claim relates to the contents of
a notice received by the Claimant, the claim must be made within 60 days
after such notice was received by the Claimant. The claim must state with
particularity the determination desired by the Claimant.
17.2 Notification of Decision. The Committee shall consider a Claimant's claim
------------------------
within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and that
the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or in
part, to the Claimant's requested determination, and such notice
must set forth in a manner calculated to be understood by the
Claimant:
(i) the specific reason(s) for the denial of the claim, or any
part of it;
(ii) specific reference(s) to pertinent provisions of the Plan
upon which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an
explanation of why such material or information is necessary;
and
-16-
<PAGE>
(iv) an explanation of the claim review procedure set forth in
Section 17.3.
17.3 Review of a Denied Claim. Within sixty (60) days after receiving a notice
------------------------
from the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file with
the Committee a written request for a review of the denial of the claim.
Thereafter, but not later than thirty (30) days after the review procedure
began, the Claimant (or the Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion,
may grant.
17.4 Decision on Review. The Committee shall render its decision on review
------------------
promptly, and not later than sixty (60) days after the filing of a written
request for review of the denial, unless a hearing is held or other
special circumstances require additional time, in which case the
Committee's decision must be rendered within 120 days after such date.
Such decision must be written in a manner calculated to be understood by
the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and
(c) such other matters as the Committee deems relevant.
Article 18
Trust
18.1 Establishment of the Trust. The Company shall establish the Trust. The
--------------------------
Employer shall at least annually transfer over to the Trust such assets as
the Committee determines, in its sole discretion, are necessary to provide
for the Employer's future liabilities created with respect to the Deferral
Amounts and interest credits for that year.
18.2 Interrelationship of the Plan and the Trust. The provisions of the Plan
-------------------------------------------
and the Plan Agreement shall govern the rights of a Participant to receive
distributions pursuant to the Plan. The provisions of the Trust shall
govern the rights of the Employer, Participant and the creditors of the
Employer to the assets transferred to the Trust. The Employer shall at all
times remain liable to carry out its obligations under the Plan. The
Employer's obligations under the Plan may be satisfied with Trust assets
distributed pursuant to the terms of the Trust.
-17-
<PAGE>
Article 19
Miscellaneous
19.1 Notice. Any notice given under the Plan shall be in writing and shall be
------
mailed to:
JACOBS ENGINEERING GROUP INC.
Employee Benefits
251 South Lake Avenue
Pasadena, California 91101
19.2 Successors. The Plan shall be binding upon the Employer and its respective
----------
successors or assigns, and upon a Participant, the Participant's
Beneficiaries and the Participant's permitted assigns, heirs, executors
and administrators.
19.3 Spouse's Interest. The interest in the benefits hereunder of a spouse of a
-----------------
Participant who has predeceased the Participant shall automatically pass
to the Participant and shall not be transferable by such spouse in any
manner including but not limited to such spouse's will, nor shall such
interest pass under the laws of intestate succession.
19.4 Governing Law. The Plan and Plan Agreement shall be governed by and
-------------
construed under the laws of the State of California, as in effect at the
time of their adoptions and executions, respectively.
19.5 Pronouns. Masculine pronouns wherever used shall include feminine
--------
pronouns and the singular shall include the plural.
19.6 Headings. The headings of the articles, sections and paragraphs of this
--------
Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
19.7 Validity. In the event any provision of this Plan shall be illegal or
--------
invalid for any reason, the illegality or invalidity of that provision
shall not affect the remaining parts hereof, but this Plan shall be
construed and enforced as if such illegal and invalid provision had never
been inserted herein.
IN WITNESS WHEREOF JACOBS ENGINEERING GROUP INC. has signed this Plan
document this 31st day of May, 1991.
"Company"
JACOBS ENGINEERING GROUP INC.
By: /s/ John W. Prosser Jr.
------------------------------------------------
Title: Senior Vice President Finance and Administration
------------------------------------------------
(Officer of the Company)
-18-
<PAGE>
EXHIBIT 10.6
JACOBS ENGINEERING GROUP INC.
1993 EXECUTIVE DEFERRAL PLAN
(EDP)
Effective December 1, 1993
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Purpose......................................................... 1
Article 1 - Definitions......................................... 1
Article 2 - Eligibility......................................... 4
2.1 Eligibility and Participation....................... 4
2.2 Enrollment Requirements............................. 4
Article 3 - Deferral Commitments................................ 4
3.1 Minimum Deferral.................................... 4
3.2 Maximum Deferral.................................... 5
3.3 Fixed Deferral Amount............................... 5
3.4 Deferral Commitment Period.......................... 5
3.5 Withholding of Deferral Amounts..................... 5
3.6 FICA Taxes.......................................... 5
3.7 Interest Crediting Prior to Distribution............ 5
3.8 Hardship............................................ 6
Article 4 - Pre-Retirement Distribution......................... 6
4.1 Eligibility for Pre-Retirement Distribution......... 6
4.2 Amount of Distribution.............................. 6
Article 5 - Retirement Benefit.................................. 7
5.1 Eligibility for Retirement Benefit.................. 7
5.2 Retirement Benefit - Method of Payment.............. 7
5.3 Retirement Benefit - Amount......................... 8
5.4 Death Prior to Completion of Retirement Benefit..... 8
Article 6 - Survivor Benefit.................................... 8
6.1 Eligibility for Survivor's Benefit.................. 8
6.2 Survivor's Benefit - Method of Payment.............. 8
6.3 Survivor's Benefit - Amount......................... 8
6.4 Suicide............................................. 9
Article 7 - Termination Benefit................................. 9
7.1 Eligibility for Termination Benefit................. 9
7.2 Termination Benefit................................. 9
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article 8 - Disability.......................................... 9
8.1 Eligibility for Disability Waiver................... 9
8.2 Benefits............................................ 10
8.3 Long-Term Disability - Termination.................. 10
Article 9 - Beneficiary......................................... 10
9.1 Beneficiary......................................... 10
9.2 Beneficiary Designation; Change; Spousal Consent.... 10
9.3 Acknowledgment...................................... 10
9.4 No Beneficiary Designation.......................... 10
9.5 Doubt as to Beneficiary............................. 10
9.6 Discharge of Obligations............................ 11
Article 10 - Leave of Absence.................................... 11
10.1 Authorized Leave of Absence......................... 11
Article 11 - Employer/Participant Liability...................... 11
11.1 General Assets...................................... 11
11.2 Employer's Liability................................ 11
11.3 Limitation of Obligation............................ 11
11.4 Participant Cooperation............................. 11
11.5 Unsecured General Creditor.......................... 11
Article 12 - No Guarantee of Employment.......................... 12
12.1 No Guarantee of Employment.......................... 12
Article 13 - Termination, Amendment or Modification of the Plan.. 12
13.1 Termination......................................... 12
13.2 Amendment........................................... 12
13.3 Termination of Plan Agreement....................... 12
13.4 Change in Control................................... 12
13.5 Termination, Modification or Amendment Following
Change in Control................................. 14
13.6 Legal Fees To Enforce Rights After Change in
Control........................................... 14
13.7 Vesting............................................. 15
Article 14 - Other Benefits and Agreements....................... 15
14.1 Coordination with Other Benefits.................... 15
Article 15 - Restrictions on Alienation of Benefits.............. 15
15.1 Nonassignability.................................... 15
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article 16 - Administration of the Plan.......................... 15
16.1 Committee Administration............................ 15
16.2 Committee Authority................................. 15
16.3 Committee Indemnity................................. 15
16.4 Employer's Obligations to the Committee............. 16
16.5 Committee Discretion in Payment Schedule............ 16
Article 17 - Claims Procedures................................... 16
17.1 Presentation of Claim............................... 16
17.2 Notification of Decision............................ 16
17.3 Review of a Denied Claim............................ 17
17.4 Decision on Review.................................. 17
Article 18 - Trust............................................... 17
18.1 Establishment of the Trust.......................... 17
18.2 Interrelationship of the Plan and the Trust......... 17
Article 19 - Miscellaneous....................................... 18
19.1 Notice.............................................. 18
19.2 Successors.......................................... 18
19.3 Spouse's Interest................................... 18
19.4 Governing Law....................................... 18
19.5 Pronouns............................................ 18
19.6 Headings............................................ 18
19.7 Validity............................................ 18
</TABLE>
iii
<PAGE>
1993 EXECUTIVE DEFERRAL PLAN
OF
JACOBS ENGINEERING GROUP INC.
Purpose
The purpose of this plan is to provide specified benefits to a select group of
key employees who contribute materially to the continued growth, development and
future business success of JACOBS ENGINEERING GROUP INC. and its subsidiaries.
Article 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the context, the
following phrases or terms shall have the following indicated meanings:
1.1 "Account Balance" shall mean the sum of (i) the Deferral Amount and (ii)
interest credited in accordance with all the applicable interest crediting
provisions of this Plan, less all distributions made in accordance with the
Plan.
1.2 "Annual Bonus" shall mean any compensation paid under the Employer's
Incentive Bonus Plan.
1.3 "Base Annual Salary" shall mean the annual compensation that is to be paid
to a Participant for each Plan Year, determined as of the first day of that
year, excluding bonuses, commissions, overtime and non-monetary awards for
employment services to the Employer.
1.4 "Beneficiary" shall mean the person or persons, or the estate of a
Participant, designated in accordance with Article 9, who is entitled to
receive benefits under this Plan upon the death of a Participant.
1.5 "Beneficiary Designation Form" shall mean the form established from time to
time by the Board that a Participant completes, signs and returns to the
Committee to designate one or more Beneficiaries.
1.6 "Board" shall mean the Board of Directors of the Company.
1.7 "Change in Control" shall have the meaning set forth in Section 13.4.
1.8 "Claimant" shall have the meaning set forth in Section 17.1.
1
<PAGE>
1.9 "Committee" shall mean the administrative committee appointed to manage and
administer the Plan in accordance with the provisions of Article 16.
1.10 "Company" shall mean JACOBS ENGINEERING GROUP INC.
1.11 "Continuing Director" shall mean a director described in Section 13.4(b).
1.12 "Deferral Amount" shall be the sum of all of a Participant's Base Annual
Salary deferrals, Annual Bonus deferrals and, if applicable, Directors Fees
deferrals.
1.13 "Deferral Commitment Period" shall mean the period described in Section 3.4
of this Plan.
1.14 "Director" shall mean any member of the Board.
1.15 "Directors Fees" shall mean the annual fees paid by the Company, including
retainer fees and meetings fees, as compensation for serving on the Board.
1.16 "Disability" shall mean a period of disability during which a Participant
qualifies for benefits under the Company's or any of its subsidiaries'
long-term disability program.
1.17 "Election Form" shall mean the form established from time to time by the
Board that a Participant completes, signs and returns to the Committee to
make an election under the Plan.
1.18 "Employee" shall mean any person who is in the regular full-time employment
of an Employer as determined by the personnel policies and practices of the
Employer.
1.19 "Employer" shall mean the Company and any subsidiaries of the Company that
have been selected by the Board to participate in the Plan.
1.20 "Moody's Rate" shall mean the interest rate determined and announced by the
Committee at any time before the commencement of each Plan Year. The
Moody's Rate for a Plan Year shall be the most current monthly "Seasoned
Corporate Bond" rate published by Moody's Investors Service, Inc., or any
successor to that service, available prior to the announcement by the
Committee. For the first Plan Year, the Moody's Rate shall be 6.98%. The
Seasoned Corporate Bond rate is an economic indicator, based on an
arithmetic average of the yields of representative bonds, including
industrials, public utilities, Aaa, A, and Baa bonds, and is calculated as
a monthly average of the composite yield.
1.21 "Participant" shall mean any Employee or Director who (i) is selected to
participate in the Plan, (ii) elects to participate in the Plan, (iii)
signs a Plan Agreement, an Election Form and a Beneficiary Designation
Form, (iv) the signed Plan Agreement, Election Form and Beneficiary
Designation Form are returned to and accepted by the Committee and (v)
neither the Plan nor the Plan Agreement has terminated.
2
<PAGE>
1.22 "Participation Year" shall mean with respect to any Participant, any Plan
Year in which a Participant is at any time during such year a Participant.
Notwithstanding the previous sentence, "Participation Year" shall not
include any years prior to the first Plan Year in which a Participant
actually has any amount deferred under this Plan.
1.23 "Plan" shall mean the 1993 Executive Deferral Plan of the Employer which is
defined by this instrument and by each Plan Agreement.
1.24 "Plan Agreement" shall mean the form of written agreement which is entered
into by and between the Employer and a Participant. Each Plan Agreement
executed by a Participant shall provide for the entire benefit to which
such Participant is entitled to under the Plan, and the Plan Agreement
bearing the latest date shall govern such entitlement.
1.25 The "Plan Year" shall, for the first Plan Year (the 1994 Plan Year), begin
on December 1, 1993, and end on December 31, 1994. For each Plan Year
thereafter, the Plan Year shall begin on January 1 of each year and
continue through December 31 of the same year.
1.26 "Pre-Retirement Distribution" shall mean the distribution provided for in
Article 4.
1.27 "Prior EDP" shall mean the 1991 Executive Deferral Plan of the Employer.
1.28 "Retirement Benefit" shall mean the retirement benefit provided for in
Article 5.
1.29 "Retirement Date" shall be the earlier of the first day of the month in
which the Participant (i) attains the age of sixty-five (65), (ii) is sixty
(60) years of age or older and has completed ten (10) Years of Service, or
(iii) is terminated as a result of a long-term disability under the
Employer's policies and practices.
1.30 "Retirement Distribution Date" shall mean the last day of the month in
which a Participant has both (i) reached or passed his or her Retirement
Date and (ii) has actually ceased being an Employee or Director other than
by death.
1.31 "Survivor's Benefit" shall mean the benefit provided for in Article 6.
1.32 "Termination Benefit" shall mean the termination benefit provided for in
Section 7.2.
1.33 "Termination of Employment" shall mean with respect to an Employee or
Director the cessation of employment or a Director's position, as the case
may be, voluntarily or involuntarily, and, except as provided in Article 8
and Article 10, shall exclude cessation as a result of an authorized leave
of absence, retirement, Disability or death. If a Participant is both an
Employee and a Director, Termination of Employment shall occur only upon
the termination of last held position.
3
<PAGE>
1.34 "Trust" shall mean the trust established pursuant to that certain Trust
Agreement, dated as of June 1, 1991, between the Company and the Trustee
named therein, as amended from time to time.
1.35 "Unforeseeable Financial Emergency" shall have the meaning set forth in
Section 3.8(b).
1.36 "Years of Service" shall mean the total number of years, that a Participant
is an Employee or a Director, including, without limitation, periods of
Disability and leaves of absence prior to Termination of Employment, as
provided under Article 8 and Article 10.
Article 2
Eligibility
2.1 Eligibility and Participation. The Committee, in its sole discretion,
-----------------------------
shall establish eligibility qualifications for participation in the Plan.
Participation shall be limited to a select group of management and highly
compensated employees of the Employer.
2.2 Enrollment Requirements. As a condition of participation, each Participant
-----------------------
so selected shall complete, sign and return to the Committee a Plan
Agreement, an Election Form and a Beneficiary Designation Form, and shall
comply with all further conditions that may be established by the
Committee.
Article 3
Deferral Commitments
3.1 Minimum Deferral. A Participant must defer during each Plan Year of the
----------------
Deferral Commitment Period at least one of the following minimum amounts:
(a) In the case of an Employee, $2,000 of his or her Base Annual Salary; or
(b) In the case of a Director who is not an Employee, a percentage that is
anticipated to equal $2,000 of his or her Directors Fees.
A Participant shall not be permitted to defer any portion of his or her
Annual Bonus unless he or she meets one of the minimum Deferral
requirements set forth in this Section. If a Participant first becomes a
Participant after the first day of a Plan Year, or in the case of the first
Plan Year of the Plan itself, at the election of the Employee on the
Election Form, the minimum deferral described in (a) shall be an amount
equal to $2,000, multiplied by a fraction, the numerator of which is the
number of complete months remaining in the Plan Year and the denominator of
which is 12.
4
<PAGE>
3.2 Maximum Deferral. For each Plan Year of the Deferral Commitment Period,
----------------
subject to the provisions of Section 3.6, a Participant may defer:
Deferral of. . . Maximum Percentage
Base Annual Salary 50%
Directors Fees 100%
Annual Bonus for Calendar Year 1993 100%
Annual Bonus for Calendar Years 1994-1997 50%
If the Participant is a Participant in the Prior EDP, the sum of his or her
deferrals under the Prior EDP and under this Plan may not exceed the above
maximums.
3.3 Fixed Deferral Amount. Except as provided in Section 3.6, the annual
---------------------
deferral selected by a Participant shall be the same for each Plan Year of
the Deferral Commitment Period. A Base Annual Salary deferral shall be a
fixed dollar amount, and an Annual Bonus or Directors Fees deferral shall
be a fixed percentage of the applicable annual bonus or fee. In no event
shall an annual deferral amount be decreased during the Deferral Commitment
Period. An annual deferral amount may only be increased (i) prior to the
commencement of the Plan Year to which such annual deferral amount relates
and (ii) with the approval of the Committee.
3.4 Deferral Commitment Period. The "Deferral Commitment Period" for each
--------------------------
Participant shall be a fixed period of four (4) consecutive Plan Years
commencing with the 1994 Plan Year unless otherwise designated by the
Committee.
3.5 Withholding of Deferral Amounts. The portion of the Base Annual Salary
-------------------------------
elected to be deferred annually shall be withheld in equal amounts over the
Plan Year. The portion of Annual Bonus and Directors Fees being deferred
shall be withheld at the time the Annual Bonus or Directors Fees would
otherwise be paid to the Participant.
3.6 FICA Taxes. For each Plan Year of the Deferral Commitment Period, the
----------
Employer shall ratably withhold from that portion of the Participant's Base
Annual Salary and/or Annual Bonus that is not being deferred, the
Participant's share of FICA taxes based on an amount equal to the Base
Annual Salary and/or Annual Bonus before reduction by the amount deferred.
If necessary, the Committee shall reduce the amount deferred in order to
comply with this Section 3.6.
3.7 Interest Crediting Prior to Distribution.
----------------------------------------
(a) Except as provided in Section 3.7(b) and Section 3.7(c) below, interest
shall be credited annually on a Participant's Account Balance at 125%
of the Moody's Rate. For purposes of this crediting, all amounts
deferred during a Plan Year shall be treated as having been deferred as
of the beginning of the Plan Year, except for the 1994 Plan Year which
shall be treated as though all amounts were deferred as of January 1,
1994. Such interest crediting shall be made up to the date of the
5
<PAGE>
Pre-Retirement Distribution, the Retirement Date, the date of the
Participant's death or the date of Termination of Employment, depending
on whether the benefit is paid under Article 4, 5, 6 or 7,
respectively.
(b) In the event of a Termination of Employment, interest shall be credited
in the manner provided in Section 3.7(a), but at the rate provided for
in Section 7.2.
(c) In the event of a Participant's suicide within twenty-four months of
the first deferral of any Deferral Commitment period, interest shall be
credited in accordance with Section 6.4. After the first twenty-four
months, interest will be credited in accordance with Sections 3.7(a)
and 3.7(b) above.
3.8 Hardship.
--------
(a) If a Participant experiences an Unforeseeable Financial Emergency as
described in Section 3.8(b) below, the Participant may petition the
Committee to (i) suspend any deferrals required by the Plan Agreement
and/or (ii) receive a distribution from the Plan. Any approval of such
a petition shall be made at the sole discretion of the Committee. If
the Committee approves a distribution, the distribution shall be made
within sixty (60) days of the date of approval. The distribution may
not exceed the Participant's Account Balance as of the last day of the
month prior to the date of the Committee's approval of the petition,
calculated as if such Participant were receiving a Termination Benefit
as of such date.
(b) An "Unforeseeable Financial Emergency" shall mean an unexpected need
for cash arising from an illness, casualty loss, sudden financial
reversal, transfer of place of employment or other such unforeseeable
occurrence, all as determined in the sole discretion of the Committee.
Article 4
Pre-Retirement Distribution
4.1 Eligibility for Pre-Retirement Distribution. A Participant may elect to
-------------------------------------------
receive a Pre-Retirement Distribution from the Plan to be received in or
after the eighth Participation Year. This election shall be irrevocable and
shall be made on the Election Form, which form is to be delivered to the
Committee prior to the commencement of the Deferral Commitment Period.
4.2 Amount of Distribution. The amount of the Pre-Retirement Distribution shall
----------------------
be any amount not to exceed the electing Participant's Account Balance at
the end of the Participation Year prior to the Participation Year selected
on the Election Form for the distribution. The Pre-Retirement Distribution
may not be made prior to the eighth (8th) Participation Year. At the
election of the Participant (on the Election Form), this amount shall be
distributed or, in the case of installment payments, shall start
distribution within
6
<PAGE>
ninety (90) days of the January 1st of the Participation Year selected on
the Election Form in one of the following manners:
(a) In a lump sum equal to the Total Account Balance at the end of the
Participation Year prior to the Participation Year selected on the
Election Form for the distribution; or
(b) In a lump sum equal to a fixed dollar amount. Such fixed dollar amount
shall be chosen by the Participant on the Election Form. Any remaining
amounts in the Account Balance, after completion of the Pre-Retirement
Distribution, shall remain in the Plan to be paid under the other
provisions of the Plan; or
(c) In four or fewer annual consecutive installments of a fixed dollar
amount. Such fixed dollar amount shall be chosen by the Participant on
the Election Form. Interest on the unpaid Account Balance shall be
credited at 125% of Moody's. Any remaining amounts in the Account
Balance, after completion of the Pre-Retirement Distribution, shall
remain in the Plan to be paid under the other provisions of the Plan;
or
(d) In four or fewer annual consecutive installments so that the total
Account Balance is completely distributed over the elected installment
period. Interest on the unpaid Account Balance shall be credited at
125% of Moody's.
If the amount of Pre-Retirement Distribution elected
by the Participant exceeds the total Account Balance at any time during
the Pre-Retirement Distribution period, only the amount remaining in
the Account Balance shall be distributed to the Participant and the
Employer shall have no further liability under the Plan.
Article 5
Retirement Benefit
5.1 Eligibility for Retirement Benefit. If the Participant ceases to be an
----------------------------------
Employee or a Director for any reason other than death, including without
limitation, retirement or a Termination of Employment after the Retirement
Date, the Employer shall pay the Retirement Benefit to the Participant (or
his or her Beneficiary) as provided in Section 5.2 and Section 5.3 below.
5.2 Retirement Benefit-Method of Payment. The Retirement Benefit may be paid in
a lump sum, or in installments over a period of 60, 120, or 180 months at
the sole discretion of the Committee. The lump sum payment shall be made,
or installment payments shall commence, within sixty (60) days of the
Retirement Distribution Date and in the case of installment payments, shall
continue until the Retirement Benefit is paid in full.
7
<PAGE>
5.3 Retirement Benefit-Amount. If the Retirement Benefit is paid in a lump sum,
-------------------------
it shall be the retired Participant's Account Balance determined as of the
Retirement Distribution Date. If the Retirement Benefit is paid in
installments, it shall be a constant monthly payment, determined at the
beginning of each Plan Year by monthly amortization of the remaining
Account Balance over the remaining payment period. Interest on the unpaid
balance will be credited for the remaining periods at 125% of the Moody's
Rate established for each of the subsequent Plan Years.
5.4 Death Prior to Completion of Retirement Benefit. If the Participant dies
after the Retirement Date and prior to the completion of the Retirement
Benefit payments, the retired Participant's designated Beneficiary will
receive any unpaid Retirement Benefit payments due the Participant, either
at the times they were to be received by the Participant, or in a lump sum,
as determined by the Committee in its sole discretion. If this Section 5.4
applies, a designated Beneficiary shall not be entitled to any benefits
provided for under Article 6.
Article 6
Survivor Benefit
6.1 Eligibility for Survivor's Benefit. If a Participant dies before the
----------------------------------
Retirement Date and before Termination of Employment, the Employer shall
pay the Survivor's Benefit to the deceased Participant's Beneficiary,
provided that all of the following conditions are met:
(a) the Participant's death was determined not to be from a bodily or
mental cause or causes, the information about which was withheld,
knowingly concealed, or falsely provided by the Participant, when
requested by the Employer to furnish evidence of good health; and
(b) proof of the Participant's death is furnished to the Committee in such
form as determined acceptable by the Committee.
6.2 Survivor's Benefit-Method of Payment. The Survivor's Benefit may be paid in
a lump sum, or in installments over a period of 60, 120, or 180 months at
the sole discretion of the Committee. The lump sum payment shall be made,
or installment payments shall commence within sixty (60) days of the date
the Participant died and in the case of installment payments, shall
continue until the Survivor's Benefit is paid in full.
6.3 Survivor's Benefit-Amount. If the Survivor's Benefit is paid in a lump sum,
it shall be the retired Participant's Account Balance determined as of the
date the Participant died. If the Survivor's Benefit is paid in
installments, it shall be a constant monthly payment, determined at the
beginning of each Plan Year by monthly amortization of the remaining
Account Balance over the remaining payment period. Interest on the unpaid
balance will be credited for the remaining periods at 125% of the Moody's
Rate established for each of the subsequent Plan Years.
8
<PAGE>
6.4 Suicide. In the event of a Participant's suicide within twenty-four months
-------
of the first deferral of any Deferral Commitment Period, the Employer shall
be obligated to pay to the Participant's designated Beneficiary the
Participant's portion of the Deferral Amount, without interest, and no
other Survivor's Benefit shall be payable.
Article 7
Termination Benefit
7.1 Eligibility for Termination Benefit. If a Participant experiences a
-----------------------------------
Termination of Employment prior to the Retirement Date, the Employer shall
pay to the Participant the Termination Benefit.
7.2 Termination Benefit. The Termination Benefit is a sum equal to the
-------------------
Participant's Account Balance determined as provided in this Section 7.2,
as of the date of Termination of Employment, and shall be paid in a lump
sum within ninety (90) days following the Termination of Employment. In
determining the Account Balance for purposes of this Article 7 only,
interest shall be calculated in the manner provided in Section 3.7(a)
above, but using the applicable interest rate set forth in the following
schedules:
Number of Interest
Participation Years Crediting Rate
------------------- --------------
For Employees:
- -------------
Less than 2 years 0
More than 2 but less than 7 Moody's Rate
7 or more 125% of Moody's Rate
For Directors:
- -------------
All years 125% of Moody's Rate
In the event a Participant is both an Employee and Director, interest shall
be credited under the Employee schedule.
Article 8
Disability
8.1 Eligibility for Disability Waiver. If a Participant suffers a Disability
---------------------------------
during any Plan Year during the Deferral Commitment Period, the
Participant's annual deferral amount for that Plan Year or any subsequent
Plan Year shall, except as provided in this Section 8.1, be as set forth in
his or her Election Form for the first six (6) months that a Participant
suffers from a Disability and shall be satisfied from supplemental sources
of disability income as provided by either the Company or the Participant.
If a Participant's Disability exceeds
9
<PAGE>
six (6) consecutive months, the Participant shall be excused from making
any additional deferrals while he or she is suffering from a Disability.
8.2 Benefits. A Participant suffering a Disability, but not terminated as a
--------
result of long-term disability under the Employer's policies and practices,
shall continue to be considered a Participant and shall be eligible for the
benefits provided for in Articles 4, 5, 6 or 7 in accordance with the
provisions of those Articles.
8.3 Long-Term Disability-Termination. For a Participant who is terminated as a
--------------------------------
result of disability under the Employer's policies and practices, the
provisions of Article 5 shall apply for purposes of Account Balance
distribution and interest crediting.
Article 9
Beneficiary
9.1 Beneficiary. Each Participant shall have the right, at any time, to
-----------
designate any person or persons as his or her Beneficiary or Beneficiaries
(both primary as well as contingent) to receive any benefits payable under
the Plan to a Beneficiary upon the death of a Participant.
9.2 Beneficiary Designation; Change; Spousal Consent. A Participant shall
------------------------------------------------
designate his or her Beneficiary or Beneficiaries by completing and signing
the Beneficiary Designation Form, and returning it to the Committee. A
Participant shall have the right to change a Beneficiary by completing,
signing and otherwise complying with the terms of the Beneficiary
Designation Form and the Committee's rules or procedures, as in effect from
time to time. Upon the acceptance of the Committee of a new Beneficiary
Designation form, all Beneficiary designations previously filed shall be
canceled. The Committee shall be entitled to rely on the last Beneficiary
Designation form filed by the Participant and accepted by the Committee
prior to his or her death.
9.3 Acknowledgment. No designation or change in designation of a Beneficiary
--------------
shall be effective until received, accepted and acknowledged in writing by
the Committee.
9.4 No Beneficiary Designation. If a Participant fails to designate a
--------------------------
Beneficiary as provided above, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant's benefits, then the Participant's designated Beneficiary shall
be deemed to be his or her surviving spouse. If the Participant has no
surviving spouse, the benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal representative of
the Participant's estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
-----------------------
Beneficiary to receive payments pursuant to this Plan, they shall have the
right to withhold such payments until this matter is resolved to their
satisfaction.
10
<PAGE>
9.6 Discharge of Obligations. The payment of benefits under the Plan to a
------------------------
Beneficiary shall fully and completely discharge the Employer from all
further obligations under this Plan with respect to the deceased
Participant and all of his or her Beneficiaries.
Article 10
Leave of Absence
10.1 Authorized Leave of Absence. If a Participant is authorized by the Employer
---------------------------
for any reason to take a paid leave of absence from employment, such
Participant shall continue to be considered employed as an Employee or
Director and shall be required to maintain the level of deferrals set forth
in his or her Plan Agreement in order to keep the Plan Agreement in full
force and effect. If such leave of absence is unpaid, the Participant shall
continue to be considered employed as an Employee or Director and will be
excused from making deferrals until the unpaid leave of absence ends;
provided, however, that if the unpaid leave of absence continues beyond
three consecutive months, the Participant shall be treated as having
incurred a Termination of Employment as of the end of such three month
period and the Participant shall receive the Termination Benefit in
accordance with Article 7. In the case of a conflict between this Article
10 and Article 8, Article 8 shall prevail.
Article 11
Employer/Participant Liability
11.1 General Assets. Amounts payable to a Participant shall be paid from the
--------------
general assets of the Employer exclusively.
11.2 Employer's Liability. The Employer's liability for the payment of benefits
--------------------
shall be defined only by this Plan, as entered into between the Employer
and a Participant.
11.3 Limitation of Obligation. The Employer shall have no obligation to a
------------------------
Participant under the Plan, except as expressly provided for in the Plan.
11.4 Participant Cooperation. The Participant must cooperate with the Employer
-----------------------
and the Committee in furnishing all information requested by the Employer
and/or Committee in order to facilitate the payment of benefits, and the
administration and operations of this Plan. Such information may include
taking a physical examination, or other actions, and such cooperation shall
extend beyond the termination of the Plan Agreement and the Employee's
Participation in the Plan.
11.5 Unsecured General Creditor. Participants, their Beneficiaries and their
--------------------------
permitted heirs, successors and assigns shall have no legal or equitable
rights, interest or claims in any property or assets of the Employer. Any
and all of the Employer's assets shall be, and remain, the general,
unpledged unrestricted assets of the Employer. The Employer's obligations
under the Plan shall be merely that of an unfunded and unsecured promise of
the Employer to pay money in the future.
11
<PAGE>
Article 12
No Guarantee of Employment
12.1 No Guarantee of Employment. Nothing in this Agreement shall be construed as
--------------------------
altering in any manner the employment relationship with an Employee or
Director, which is hereby acknowledged to be an "at will" employment
relationship that can be terminated at any time for any reason, with or
without cause, unless otherwise expressly provided in a written employment
agreement. All terms and conditions of an Employee's or Director's current
employment shall remain the same. Nothing in this Plan creates, or is meant
to create, any obligation on the part of the Employer to keep an Employee
or Director employed by the Employer or not to terminate an Employee or
Director at any time and for any reason.
Article 13
Termination, Amendment or Modification of the Plan
13.1 Termination. The Company reserves the right to terminate the Plan at any
-----------
time. Upon termination of the Plan, the Participant's Account Balance shall
be paid out in accordance with the benefits that the Participant would
receive if there had occurred a Termination of Employment with respect to
the Participant on the date of Plan termination or, if such termination
occurs after the Retirement Date, the Participant had retired on the date
of Plan termination. Notwithstanding the above, the termination of the Plan
shall not affect any Participant or Beneficiary who has become entitled to
the payment of benefits under the Plan as of the date of termination.
13.2 Amendment. The Company may, at any time, amend or modify the Plan in whole
---------
or in part, provided, however, that no amendment or modification shall be
effective to decrease or restrict a Participant's Account Balance in
existence at the time the amendment or modification is made, calculated as
if there had occurred a Termination of Employment with respect to such
Participant as of the effective date of the amendment or, if such amendment
occurs after the Retirement Date, the Participant had retired as of the
effective date of the amendment. The amendment or modification of the Plan
shall not affect any Participant or Beneficiary who has become entitled to
the payment of benefits under the Plan as of the date of the amendment or
modification.
13.3 Termination of Plan Agreement. Absent the earlier termination, modification
-----------------------------
or amendment of the Plan, the Plan Agreement of any Participant shall
terminate upon the full payment of the applicable benefit provided under
Articles 4, 5, 6, or 7, as the case may be.
13.4 Change in Control.
-----------------
(a) All benefits accrued under the Plan as of the date of a Change of
Control shall thereafter be paid in accordance with the terms and
conditions of this Plan. However, if at any time during a period of
three years following a Change of Control
12
<PAGE>
of the Company, the employment of a participant by the Employer is
terminated (i) by the Employer for any reason other than for Cause, or
(ii) by the Participant for just reason, then all benefits, including
all interest at the full 125% of Moody's rate shall apply and not at
the rates applicable in Section 7.2. Such amounts will thereupon be
immediately due and payable in full, less any withholdings required by
law, to such Participant, and within ten business days thereafter the
Employer, or any successor corporation of the Employer shall deliver
payment of such Account Balance to such Participant.
A Participant shall be deemed to have terminated his or her employment
for just reason if he or she resigns voluntarily after a demotion, a
material reduction in his or her authority or responsibility or any
reduction in his or her compensation or after being notified of a
relocation of his or her work place that would materially increase the
commuting distance from his or her then current principal residence.
A Participant shall be deemed to have been terminated by the Employer
for cause only if such participant has been terminated by reason of (i)
a willful failure by such Participant to substantially perform his or
her duties other than a failure resulting from the Participant's
incapacity due to physical or mental illness, or (ii) a willful act by
the Participant that constitutes gross misconduct and is materially
injurious to the Employer. No act or failure to act by a Participant
shall be considered "willful" unless committed without good faith and
without a reasonable belief that the act of omission was in the best
interests of the Employer.
(b) As used in this Plan, "Change of Control" means the occurrence of any
of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, hereinafter "Person")
becomes the beneficial owner, directly or indirectly, of
securities of the Company representing twenty-five percent (25%)
or more of the combined voting power of the Company's then
outstanding securities ordinarily (and apart from rights accruing
under special circumstances) having the right to vote at
elections of directors;
(ii) A change in the composition of the Board as a result of which
fewer than two-thirds (2/3rds) of the incumbent directors are
Continuing Directors; or
(iii) A change of control that would be required to be reported in a
proxy statement pursuant to Item 5(f) of Schedule 14A of
Regulation 14A under the Securities Exchange Act of 1934.
An individual shall be considered a "Continuing Director" on a
particular date if he or she either (i) had been a member of the Board
twenty-four (24) months prior to such date or (ii) was elected, or
nominated for election, to the Board with the affirmative votes of at
least a majority of the members of the Board twenty-four (24) months
prior to such date and who were still in office at the time of the
election or nomination.
13
<PAGE>
13.5 Termination, Modification or Amendment Following Change in Control.
------------------------------------------------------------------
Following a Change in Control, neither the Company, any subsidiary of the
Company nor any corporation, trust or other Person that succeeds to all or
any substantial portion of the assets of the Company shall have the right
to terminate, modify, or amend a Plan Agreement in effect prior to such
Change in Control, and all benefits under such Plan Agreement shall
thereafter be paid in accordance with the terms of such Plan Agreement as
in effect immediately prior to such Change in Control. Any provision of
this Plan to the contrary shall be construed in accordance with this
Section 13.5.
13.6 Legal Fees To Enforce Rights After Change in Control. The Company is aware
----------------------------------------------------
that upon the occurrence of a Change in Control, the Board (which might
then be composed of new members) or a shareholder of the Company or of any
successor corporation might then cause or attempt to cause the Company or
such successor to refuse to comply with its obligations under the Plan and
might cause or attempt to cause the Company to institute, or may institute,
litigation seeking to deny Participants the benefits intended under the
Plan. In these circumstances, the purpose of the Plan could be frustrated.
It is the intent of the Company that Participants not be required to incur
the expenses associated with the enforcement of their rights under the Plan
by litigation or other legal action, because the cost and expense thereof
would substantially detract from the benefits intended to be extended to
Participants hereunder, and that Participants not be bound to negotiate any
settlement of their rights under the Plan under threat of incurring such
expenses. Accordingly, if, following a Change in Control, it should appear
to any Participant that the Company has failed to comply with any of its
obligations under the Plan or any agreement thereunder or, if the Company
or any other Person takes any action to declare the Plan or any agreement
hereunder void or unenforceable or institutes any litigation or other legal
action designed to deny, diminish or to recover from any Participant the
benefits intended to be provided to each Participant under the Plan, and
such Participant has substantially complied with all of his or her
obligations under the Plan and any such agreement, then the Company
irrevocably authorizes such Participant from time to time to retain counsel
of his or her choice at the expense of the Company to represent such
Participant in connection with the initiation or defense of any litigation
or other legal action, whether by or against the Company or any director,
officer, shareholder or other person affiliated with the Company or any
successor thereto in any jurisdiction. Notwithstanding any existing or
prior attorney-client relationship between the Company and such counsel,
the Company irrevocably consents to each Participant's entering into an
attorney-client relationship with such counsel, and in that connection the
Company and each Participant agree that a confidential relationship shall
exist between each such Participant and his counsel. The Company shall pay
or reimburse each Participant for all reasonable fees and expenses of
counsel selected by such Participant from time to time on a regular,
periodic basis from presentation of a statement or statements prepared by
such counsel in accordance with its customary practices up to a maximum
aggregate amount of $500,000.
13.7 Vesting. Notwithstanding anything that may be construed to the contrary in
-------
this Plan, a Participant shall at all times be 100% vested in his or her
Deferral Amount.
14
<PAGE>
Article 14
Other Benefits and Agreements
14.1 Coordination with Other Benefits. The benefits provided for a Participant
--------------------------------
and Participant's Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan or program for
employees of the Employer. The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.
Article 15
Restrictions on Alienation of Benefits
15.1 Nonassignability. Neither a Participant nor any other person shall have
----------------
any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of actual
receipt, the amounts if any, payable hereunder, or any part thereof. No
part of the amounts payable shall, prior to actual payment, be subject to
any claims of creditors and, in particular, they shall not be subject to
attachment, garnishment, seizure or sequestration by any creditor for the
payment of any debts, judgments, obligations, alimony or separate
maintenance owed by a Participant.
Article 16
Administration of the Plan
16.1 Committee Administration. The general administration of this Plan, as well
------------------------
as construction and interpretation thereof, shall be the responsibility of
the Committee, the number of members of which shall be designated and
appointed from time to time by, and shall serve at the pleasure of the
Board.
16.2 Committee Authority. Subject to the Plan, the Committee shall from time to
-------------------
time establish rules, forms and procedures for the administration of the
Plan. Except as otherwise expressly provided, the Committee shall have the
exclusive right to interpret the Plan and to decide any and all matters
arising thereunder. The Committee's decisions shall be conclusive and
binding upon all persons having or claiming to have any right or interest
under the Plan.
16.3 Committee Indemnity. No member of the Committee shall be liable for any act
-------------------
or omission of any other member of the Committee, nor for any act or
omission on his own part, excepting his or her own willful misconduct. The
Employer shall indemnify and save harmless each member of the Committee
against any and all expenses and liabilities arising out of his or her
membership on the Committee, with the exception of expenses and liabilities
arising out of his or her own willful misconduct.
15
<PAGE>
16.4 Employer's Obligations to the Committee. To enable the Committee to perform
---------------------------------------
its functions, each Employer shall supply full and timely information to
the Committee on all matters relating to the compensation of all
Participants, their retirement, death, Disability or Termination of
Employment, and such other pertinent facts as the Committee may require.
16.5 Committee Discretion in Payment Schedule. The Committee shall also have the
----------------------------------------
power, at its sole discretion, to change the manner and timing of payments
to be made to a Participant or Participant's Beneficiary from that set
forth in the Participant's Plan Agreement, if requested to do so by such
Participant or Beneficiary.
Article 17
Claims Procedures
17.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
---------------------
Participant (such Participant or Beneficiary being referred to below as a
"Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts (i) credited to (or deducted
from) such Claimant's Participant's Account Balance, or (ii) distributable
to such Claimant from the Plan. If such a claim relates to the contents of
a notice received by the Claimant, the claim must be made within 60 days
after such notice was received by the Claimant. The claim must state with
particularity the determination desired by the Claimant.
17.2 Notification of Decision. The Committee shall consider a Claimant's claim
------------------------
within a reasonable time, and shall notify the Claimant in writing:
(a) that the Claimant's requested determination has been made, and that the
claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole or in
part, to the Claimant's requested determination, and such notice must
set forth in a manner calculated to be understood by the Claimant:
(i) the specific reason(s) for the denial of the claim, or any part
of it;
(ii) specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
(iii) a description of any additional material or information necessary
for the Claimant to perfect the claim, and an explanation of why
such material or information is necessary; and
(iv) an explanation of the claim review procedure set forth in Section
17.3.
16
<PAGE>
17.3 Review of a Denied Claim. Within sixty (60) days after receiving a notice
------------------------
from the Committee that a claim has been denied, in whole or in part, a
Claimant (or the Claimant's duly authorized representative) may file with
the Committee a written request for a review of the denial of the claim.
Thereafter, but not later than thirty (30) days after the review procedure
began, the Claimant (or the Claimant's duly authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole discretion, may
grant.
17.4 Decision on Review. The Committee shall render its decision on review
------------------
promptly, and not later than sixty (60) days after the filing of a written
request for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Committee's
decision must be rendered within 120 days after such date. Such decision
must be written in a manner calculated to be understood by the Claimant,
and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and
(c) such other matters as the Committee deems relevant.
Article 18
Trust
18.1 Establishment of the Trust. The Company shall establish the Trust. The
--------------------------
Employer shall at least annually transfer over to the Trust such assets as
the Committee determines, in its sole discretion, are necessary to provide
for the Employer's future liabilities created with respect to the Deferral
Amounts and interest credits for that year.
18.2 Interrelationship of the Plan and the Trust. The provisions of the Plan and
-------------------------------------------
the Plan Agreement shall govern the rights of a Participant to receive
distributions pursuant to the Plan. The provisions of the Trust shall
govern the rights of the Employer, Participant and the creditors of the
Employer to the assets transferred to the Trust. The Employer shall at all
times remain liable to carry out its obligations under the Plan. The
Employer's obligations under the Plan may be satisfied with Trust assets
distributed pursuant to the terms of the Trust.
17
<PAGE>
Article 19
Miscellaneous
19.1 Notice. Any notice given under the Plan shall be in writing and shall be
------
mailed to:
JACOBS ENGINEERING GROUP INC.
Employee Benefits
251 South Lake Avenue
Pasadena, California 91101
19.2 Successors. The Plan shall be binding upon the Employer and its respective
----------
successors or assigns, and upon a Participant, the Participant's
Beneficiaries and the Participant's permitted assigns, heirs, executors and
administrators.
19.3 Spouse's Interest. The interest in the benefits hereunder of a spouse of a
-----------------
Participant who has predeceased the Participant shall automatically pass to
the Participant and shall not be transferable by such spouse in any manner
including but not limited to such spouse's will, nor shall such interest
pass under the laws of intestate succession.
19.4 Governing Law. The Plan and Plan Agreement shall be governed by and
-------------
construed under the laws of the State of California, as in effect at the
time of their adoptions and executions, respectively.
19.5 Pronouns. Masculine pronouns wherever used shall include feminine pronouns
--------
and the singular shall include the plural.
19.6 Headings. The headings of the articles, sections and paragraphs of this
--------
Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
19.7 Validity. In the event any provision of this Plan shall be illegal or
--------
invalid for any reason, the illegality or invalidity of that provision
shall not affect the remaining parts hereof, but this Plan shall be
construed and enforced as if such illegal and invalid provision had never
been inserted herein.
18
<PAGE>
IN WITNESS WHEREOF JACOBS ENGINEERING GROUP INC. has signed this Plan document
this 1st day of December, 1993.
"Company"
JACOBS ENGINEERING GROUP INC.
By: /s/ John W.Prosser, Jr.
--------------------------------------
John W. Prosser, Jr.
Title: Senior Vice President, Finance
and Admin. and Treasurer
----------------------------------
(Officer of the Company)
19
<PAGE>
EXHIBIT 10.11
JACOBS ENGINEERING GROUP, INC.
401(k) PLUS SAVINGS PLAN
Plan and Trust Agreement
Second Complete
Amendment and Restatement
Generally Effective January 1, 1990
<PAGE>
Jacobs Engineering Group, Inc. 401(k) Plus Savings Plan and Trust
Second Complete Amendment and Restatement
Generally Effective January 1, 1990
Jacobs Engineering Group, Inc. previously established the Jacobs Engineering
Group Inc. Thrift Savings Retirement Plan as renamed the Jacobs Engineering
Group, Inc. 401(k) Plus Savings Plan effective January 1, 1990, for the benefit
of eligible employees of the Company and its participating affiliates. The Plan
is intended to constitute a qualified profit sharing plan, as described in Code
section 401(a), which includes a qualified cash or deferred arrangement, as
described in Code section 401(k).
The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Jacobs Engineering Group,
Inc. and Wells Fargo Bank, National Association. The Trust is intended to be
tax exempt as described under Code section 501(a).
The Plan constitutes an amendment and restatement of the Jacobs Engineering
Group Inc. Thrift Savings Retirement Plan as renamed the Jacobs Engineering
Group, Inc. 401(k) Plus Savings Plan effective January 1, 1990, which was
originally established effective as of October 1, 1974, and its related trust
agreement.
The Jacobs Engineering Group, Inc. 401(k) Plus Savings Plan and Trust, as set
forth in this document, is hereby amended and restated generally effective as of
January 1, 1990. This constitutes a second complete amendment and restatement
generally effective January 1, 1990.
Date: December 22, 1994 Jacobs Engineering Group, Inc.
By: /s/ Signature Appears Here
-----------------------------------------
Title: Sr. V.P. Finance and Administration
------------------------------------
The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.
Date: December 23, 1994 Wells Fargo Bank, National Association
By: /s/ Signature Appears Here
-----------------------------------------
Title: Vice President
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Date: December 23, 1994 Wells Fargo Bank, National Association
By: /s/ Signature Appears Here
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Title: Vice President
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TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
1 DEFINITIONS.............................................. 1
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2 ELIGIBILITY.............................................. 8
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2.1 Eligibility........................................ 8
2.2 Ineligible Employees............................... 8
2.3 Ineligible or Former Participants.................. 8
3 PARTICIPANT CONTRIBUTIONS................................ 9
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3.1 Pre-Tax Contribution Election...................... 9
3.2 Changing a Contribution Election................... 9
3.3 Revoking and Resuming a Contribution Election...... 9
3.4 Contribution Percentage Limits..................... 9
3.5 Refunds When Contribution Dollar Limit Exceeded.... 10
3.6 Timing, Posting and Tax Considerations............. 10
4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS..................... 11
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4.1 Rollovers.......................................... 11
4.2 Transfers From Other Qualified Plans............... 11
5 EMPLOYER CONTRIBUTIONS................................... 12
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5.1 Matching Contributions............................. 12
6 ACCOUNTING............................................... 13
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6.1 Individual Participant Accounting.................. 13
6.2 Sweep Account is Transaction Account............... 13
6.3 Trade Date Accounting and Investment Cycle......... 13
6.4 Accounting for Investment Funds.................... 13
6.5 Payment of Fees and Expenses....................... 13
6.6 Accounting for Participant Loans................... 14
6.7 Error Correction................................... 14
6.8 Participant Statements............................. 15
6.9 Special Accounting During Conversion Period........ 15
6.10 Accounts for QDRO Beneficiaries.................... 15
7 INVESTMENT FUNDS AND ELECTIONS........................... 16
------------------------------
7.1 Investment Funds................................... 16
7.2 Investment Fund Elections.......................... 16
7.3 Responsibility for Investment Choice............... 16
7.4 Default if No Election............................. 16
7.5 Timing............................................. 17
7.6 Investment Fund Election Change Fees............... 17
8 VESTING & FORFEITURES.................................... 18
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8.1 Fully Vested Contribution Accounts................. 18
8.2 Forfeitures Prior to the Effective Date............ 18
8.3 Rehired Employees.................................. 18
</TABLE>
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<TABLE>
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9 PARTICIPANT LOANS........................................ 19
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9.1 Participant Loans Permitted........................ 19
9.2 Loan Application, Note and Security................ 19
9.3 Spousal Consent.................................... 19
9.4 Loan Approval...................................... 19
9.5 Loan Funding Limits................................ 19
9.6 Maximum Number of Loans............................ 20
9.7 Source and Timing of Loan Funding.................. 20
9.8 Interest Rate...................................... 20
9.9 Repayment.......................................... 20
9.10 Repayment Hierarchy................................ 21
9.11 Repayment Suspension............................... 21
9.12 Loan Default....................................... 21
9.13 Call Feature....................................... 21
10 IN-SERVICE WITHDRAWALS................................... 22
----------------------
10.1 In-Service Withdrawals Permitted................... 22
10.2 In-Service Withdrawal Application and Notice....... 22
10.3 Spousal Consent.................................... 22
10.4 In-Service Withdrawal Approval..................... 22
10.5 Minimum Amount, Payment Form and Medium............ 22
10.6 Source and Timing of In-Service Withdrawal Funding. 23
10.7 Hardship Withdrawals............................... 23
10.8 After-Tax Account Withdrawals...................... 24
10.9 Rollover Account Withdrawals....................... 25
10.10 Over Age 59 1/2 Withdrawals........................ 25
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW. 26
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11.1 Benefit Information, Notices and Election.......... 26
11.2 Spousal Consent.................................... 26
11.3 Payment Form and Medium............................ 26
11.4 Source and Timing of Distribution Funding.......... 27
11.5 Latest Commencement Permitted...................... 27
11.6 Payment Within Life Expectancy..................... 27
11.7 Incidental Benefit Rule............................ 27
11.8 Payment to Beneficiary............................. 28
11.9 Beneficiary Designation............................ 28
12 ADP AND ACP TESTS........................................ 29
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12.1 Contribution Limitation Definitions................ 29
12.2 ADP and ACP Tests.................................. 32
12.3 Correction of ADP and ACP Tests.................... 32
12.4 Multiple Use Test.................................. 33
12.5 Correction of Multiple Use Test.................... 33
12.6 Adjustment for Investment Gain or Loss............. 33
12.7 Testing Responsibilities and Required Records...... 34
12.8 Separate Testing................................... 34
</TABLE>
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<TABLE>
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13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS............. 35
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13.1 "Annual Addition" Defined.......................... 35
13.2 Maximum Annual Addition............................ 35
13.3 Avoiding an Excess Annual Addition................. 35
13.4 Correcting an Excess Annual Addition............... 35
13.5 Correcting a Multiple Plan Excess.................. 36
13.6 "Defined Benefit Fraction" Defined................. 36
13.7 "Defined Contribution Fraction" Defined............ 36
13.8 Combined Plan Limits and Correction................ 36
14 TOP HEAVY RULES.......................................... 37
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14.1 Top Heavy Definitions.............................. 37
14.2 Special Contributions.............................. 38
14.3 Adjustment to Combined Limits for Different Plans.. 39
15 PLAN ADMINISTRATION...................................... 40
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15.1 Plan Delineates Authority and Responsibility....... 40
15.2 Fiduciary Standards................................ 40
15.3 Company is ERISA Plan Administrator................ 40
15.4 Administrator Duties............................... 41
15.5 Advisors May be Retained........................... 41
15.6 Delegation of Administrator Duties................. 42
15.7 Committee Operating Rules.......................... 42
16 MANAGEMENT OF INVESTMENTS................................ 43
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16.1 Trust Agreement.................................... 43
16.2 Investment Funds................................... 43
16.3 Authority to Hold Cash............................. 43
16.4 Trustee to Act Upon Instructions................... 44
16.5 Administrator Has Right to
Vote Registered Investment Company Shares.......... 44
16.6 Custom Fund Investment Management.................. 44
16.7 Authority to Segregate Assets...................... 45
17 TRUST ADMINISTRATION..................................... 46
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17.1 Trustee to Construe Trust.......................... 46
17.2 Trustee To Act As Owner of Trust Assets............ 46
17.3 United States Indicia of Ownership................. 46
17.4 Tax Withholding and Payment........................ 47
17.5 Trustee Duties and Limitations..................... 47
17.6 Trust Accounting................................... 47
17.7 Valuation of Certain Assets........................ 48
17.8 Legal Counsel...................................... 48
17.9 Fees and Expenses.................................. 48
</TABLE>
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<TABLE>
<C> <S> <C>
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION........ 49
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18.1 Plan Does Not Affect Employment Rights............. 49
18.2 Limited Return of Contributions.................... 49
18.3 Assignment and Alienation.......................... 49
18.4 Facility of Payment................................ 50
18.5 Reallocation of Lost Participant's Accounts........ 50
18.6 Claims Procedure................................... 50
18.7 Construction....................................... 51
18.8 Jurisdiction and Severability...................... 51
18.9 Indemnification by Employer........................ 51
19 AMENDMENT, MERGER AND TERMINATION........................ 52
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19.1 Amendment.......................................... 52
19.2 Merger............................................. 52
19.3 Plan Termination................................... 52
19.4 Termination of Employer's Participation............ 53
19.5 Replacement of the Trustee......................... 53
19.6 Final Settlement and Accounting of Trustee......... 53
APPENDIX A - INVESTMENT FUNDS.................................. 55
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES................. 56
APPENDIX C - LOAN INTEREST RATE................................ 57
</TABLE>
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1 DEFINITIONS
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When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting for a
Participant's interest in the Plan. "Account" may refer to one or all
of the following accounts which have been created on behalf of a
Participant to hold specific types of Contributions under the Plan or
to hold Contributions made under the plan of a Related Company in
which a Participant formerly participated and which have been
transferred to this Plan on behalf of a Participant:
(a) "Pre-Tax Account". An account created to hold Pre-Tax
Contributions.
(b) "After-Tax Account". An account created to hold After-Tax
Contributions.
(c) "Rollover Account". An account created to hold Rollover
Contributions.
(d) "Matching Account". An account created to hold Matching
Contributions.
(e) "Prior Plan Account". An account created to hold Prior Plan
Contributions.
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 "Beneficiary". The person or persons who is to receive benefits after
the death of the Participant pursuant to the "Beneficiary Designation"
paragraph in Section 11, or as a result of a QDRO.
1.6 "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.
1.7 "Committee". If applicable, the committee which has been appointed by
the Company to administer the Plan in accordance with Section 15.6.
1.8 "Company". Jacobs Engineering Group, Inc. or any successor by merger,
purchase or otherwise.
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1.9 "Compensation". The sum of a Participant's Taxable Income and salary
reductions, if any, pursuant to Code sections 125, 402(e)(3), 402(h),
403(b), 414(h)(2) or 457.
For purposes of determining benefits under this Plan, Compensation is
limited to $200,000 (as indexed for the cost of living pursuant to
Code sections 401(a)(17) and 415(d)) per Plan Year. For purposes of
determining benefits under this Plan for Plan Years beginning after
December 31, 1993, Compensation is limited to $150,000 (as indexed for
the cost of living pursuant to Code sections 401(a)(17) and 415(d))
per Plan Year.
For purposes of the preceding sentences, in the case of an HCE who is
a 5% Owner or one of the 10 most highly compensated Employees, (i)
such HCE and such HCE's family group (as defined below) shall be
treated as a single employee and the Compensation of each family group
member shall be aggregated with the Compensation of such HCE, and (ii)
the limitation on Compensation shall be allocated among such HCE and
his or her family group members in proportion to each individual's
Compensation before the application of this sentence. For purposes of
this Section, the term "family group" shall mean an Employee's spouse
and lineal descendants who have not attained age 19 before the close
of the year in question.
For the purpose of determining HCEs and key employees, Compensation
for the entire Plan Year shall be used. For the purpose of
determining ADP and ACP, Compensation shall be limited to amounts paid
to an Eligible Employee while a Participant.
1.10 "Contribution". An amount contributed to the Plan by the Employer or
an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. For purposes
below, references to Employer and Plan shall also include the employer
under the plan of a Related Company and the plan of a Related Company
described in the preceding sentence. Specific types of contribution
include:
(a) "Pre-Tax Contribution". An amount contributed by the Employer
on an eligible Participant's behalf in conjunction with a
Participant's Code section 401(k) salary deferral election.
(b) "After-Tax Contribution". An amount previously contributed by a
Participant on an after-tax basis under former Plan provisions,
which continue to be accounted for in the Plan.
(c) "Rollover Contribution". An amount contributed by an Eligible
Employee which originated from another employer's qualified
plan.
(d) "Matching Contribution". An amount contributed by the Employer
on an eligible Participant's behalf based upon the amount
contributed by the eligible Participant.
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(e) "Prior Plan Contribution". An amount previously contributed by
the Employer on an eligible Participant's behalf under former
Plan provisions, which continue to be accounted for in the Plan.
1.11 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre-Tax Contributions, which shall be $7,000 per
calendar year (as indexed for the cost of living pursuant to Code
sections 402(g)(5) and 415(d)). For purposes of this Section, a
Participant's Pre-Tax Contributions shall include (i) any Employer
contribution made under any qualified cash or deferred arrangement as
defined in Code section 401(k) to the extent not includible in gross
income for the taxable year under Code section 402(e)(3) or
402(h)(1)(B) (determined without regard to Code section 402(g)), and
(ii) 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)).
1.12 "Direct Rollover". A payment from the Plan to an Eligible Retirement
Plan specified by a Distributee.
1.13 "Disability". A Participant's total and permanent, mental or physical
disability resulting in termination of employment as evidenced by (a)
receipt of disability payments under the Employer's long-term
disability program or (b) presentation of medical evidence
satisfactory to the Administrator.
1.14 "Distributee". An Employee or former Employee, the surviving spouse
of an Employee or former Employee and a spouse or former spouse of an
Employee or former Employee determined to be an alternate payee under
a QDRO.
1.15 "Effective Date". January 1, 1990, unless stated otherwise. The date
upon which the provisions of this document become effective. In
general, the provisions of this document only apply to Participants
who are Employees on or after the Effective Date. However, investment
and distribution provisions apply to all Participants with Account
balances to be invested or distributed after the Effective Date.
1.16 "Eligible Employee". An Employee of an Employer, except any Employee:
(a) whose compensation and conditions of employment are covered by a
collective bargaining agreement to which an Employer is a party
unless the agreement calls for the Employee's participation in
the Plan;
(b) who is treated as an Employee because he or she is a Leased
Employee;
(c) who is a nonresident alien who (i) either receives no earned
income (within the meaning of Code section 911(d)(2)), from
sources within the United States under Code section 861(a)(3);
or (ii) receives such earned income from such sources within the
United States but such income is exempt from United States
income tax under an applicable income tax convention;
3
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(d) who is a temporary Employee; or
(e) who is a part-time Employee.
1.17 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section 401(a),
that accepts a Distributee's Eligible Rollover Distribution, except
that with regard to an Eligible Rollover Distribution to a surviving
spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
1.18 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding 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 a Distributee or the joint lives (or joint life
expectancies) of a Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; a
distribution to the extent such distribution is required under Code
section 401(a)(9); and 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).
1.19 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom any income
for such employment is subject to withholding of income or
social security taxes, or
(b) a Leased Employee.
1.20 "Employer". The Company and any Subsidiary or other Related Company
of either the Company or a Subsidiary which adopts this Plan with the
approval of the Company.
1.21 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending, supplementing
or superseding such section.
1.22 "Execution Date". The date on which this Plan and Trust document is
executed.
1.23 "Forfeiture Account". An account holding amounts forfeited by
Participants who have left the Employer, invested in interest bearing
deposits of the Trustee, pending disposition as provided in this Plan
and Trust and as directed by the Administrator.
1.24 "HCE" or "Highly Compensated Employee". An Employee described as a
Highly Compensated Employee in Section 12.
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1.25 "Hour of Service". Each hour for which an Employee is entitled to:
(a) payment for the performance of duties for any Related Company;
(b) payment from any Related Company for any period during which no
duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, sickness,
incapacity (including disability), layoff, leave of absence,
jury duty or military service;
(c) back pay, irrespective of mitigation of damages, by award or
agreement with any Related Company (and these hours shall be
credited to the period to which the agreement pertains); or
(d) no payment, but is on a Leave of Absence (and these hours shall
be based upon his or her normally scheduled hours per week or a
40 hour week if there is no regular schedule).
The crediting of hours for which no duties are performed shall be in
accordance with Department of Labor regulation sections 2530.200b-2(b)
and (c). Actual hours shall be used whenever an accurate record of
hours are maintained for an Employee. Otherwise, an equivalent number
of hours shall be credited for each payroll period in which the
Employee would be credited with at least 1 hour. The payroll period
equivalencies are 45 hours weekly, 90 hours biweekly, 95 hours
semimonthly and 190 hours monthly.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Hours of Service
for eligibility and/or vesting purposes if (1) the Company directs
that credit for such service be granted, or (2) a qualified plan of
the predecessor or acquired company is subsequently maintained by any
Employer or Related Company.
1.26 "Ineligible". The Plan status of an individual during the period in
which he or she is (1) an Employee of a Related Company which is not
then an Employer, (2) an Employee, but not an Eligible Employee, or
(3) not an Employee.
1.27 "Investment Fund" or "Fund". An investment fund as described in
Section 16.2. The Investment Funds authorized by the Administrator to
be offered as of the Execution Date to Participants and Beneficiaries
are as set forth in Appendix A.
1.28 "Leased Employee". An individual who is deemed to be an employee of
any Related Company as provided in Code section 414(n) or (o).
1.29 "Leave of Absence". A period during which an individual is deemed to
be an Employee, but is absent from active employment, provided that
the absence:
(a) was authorized by a Related Company; or
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(b) was due to military service in the United States armed forces
and the individual returns to active employment within the
period during which he or she retains employment rights under
federal law.
1.30 "NHCE" or "Non-Highly Compensated Employee". An Employee described as
a Non-Highly Compensated Employee in Section 12.
1.31 "Normal Retirement Date". The date of a Participant's 65th birthday.
1.32 "Owner". A person with an ownership interest in the capital, profits,
outstanding stock or voting power of a Related Company within the
meaning of Code section 318 or 416 (which exclude indirect ownership
through a qualified plan).
1.33 "Participant". An Eligible Employee who begins to participate in the
Plan after completing the eligibility requirements as described in
Section 2.1. An Eligible Employee who makes a Rollover Contribution
prior to completing the eligibility requirements as described in
Section 2.1 shall also be considered a Participant except for purposes
of provisions related to Contributions (other than a Rollover
Contribution). A Participant's participation continues until his or
her employment with all Related Companies ends and his or her Account
is distributed or forfeited.
1.34 "Pay". The base pay paid to an Eligible Employee by an Employer while
a Participant during the current period.
Pay is neither increased nor decreased by any salary credit or
reduction pursuant to Code sections 125 or 402(e)(3). Pay is limited
to $200,000 (as indexed for the cost of living pursuant to Code
sections 401(a)(17) and 415(d)) per Plan Year. Pay is limited to
$150,000 (as indexed for the cost of living pursuant to Code sections
401(a)(17) and 415(d)) per Plan Year effective for Plan Years
beginning after December 31, 1993.
1.35 "Plan". The Jacobs Engineering Group, Inc. 401(k) Plus Savings Plan
set forth in this document, as from time to time amended.
1.36 "Plan Year". The annual accounting period of the Plan and Trust which
ends on each December 31.
1.37 "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).
1.38 "Related Company". With respect to any Employer, that Employer and
any corporation, trade or business which is, together with that
Employer, a member of the same controlled group of corporations, a
trade or business under common control, or an affiliated service group
within the meaning of Code section 414(b), (c), (m) or (o).
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1.39 "Settlement Date". The date on which the transactions from the most
recent Trade Date are settled. Effective April 1, 1992, for each
Trade Date, the Trustee's next business day.
1.40 "Spousal Consent". The written consent given by a spouse to a
Participant's election or waiver of a specified form of benefit,
including a loan or in-service withdrawal, or Beneficiary designation.
The spouse's consent must acknowledge the effect on the spouse of the
Participant's election, waiver or designation and be duly witnessed by
a notary public. Spousal Consent shall be valid only with respect to
the spouse who signs the Spousal Consent and only for the particular
choice made by the Participant which requires Spousal Consent. A
Participant may revoke (without Spousal Consent) a prior election,
waiver or designation that required Spousal Consent at any time before
payments begin. Spousal Consent also means a determination by the
Administrator that there is no spouse, the spouse cannot be located,
or such other circumstances as may be established by applicable law.
1.41 "Subsidiary". A company which is 50% or more owned, directly or
indirectly, by the Company.
1.42 "Sweep Account". The subsidiary Account for each Participant through
which all transactions are processed, which is invested in interest
bearing deposits of the Trustee.
1.43 "Sweep Date". The cut off date and time for receiving instructions
for transactions to be processed on the next Trade Date.
1.44 "Taxable Income". Compensation in the amount reported by the Employer
as "Wages, tips, other compensation" on Form W-2, or any successor
method of reporting under Code section 6041(d).
1.45 "Trade Date". Each day the Investment Funds are valued, which is the
last business day of the month. Effective April 1, 1992, each day the
Investment Funds are valued, which is normally every day the assets of
such Funds are traded.
1.46 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan
and holds the Plan assets which are comprised of the aggregate of
Participants' Accounts and the Forfeiture Account.
1.47 "Trustee". Wells Fargo Bank, National Association.
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2 ELIGIBILITY
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2.1 Eligibility
All Participants as of January 1, 1990 shall continue their
eligibility to participate. Each other Eligible Employee shall become
a Participant on the first day of the next month after the date he or
she completes a 12 month eligibility period in which he or she is
credited with at least 1,000 Hours of Service. The initial
eligibility period begins on the date an Employee first performs an
Hour of Service. Subsequent eligibility periods begin with the start
of each Plan Year beginning after the first Hour of Service is
performed.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but is
Ineligible at the time participation would otherwise begin (if he or
she were not Ineligible), he or she shall become a Participant on the
first subsequent date on which he or she is an Eligible Employee.
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions, nor
generally be eligible for a new Plan loan, during the period he or she
is Ineligible, but he or she shall continue to participate for all
other purposes. An Ineligible Participant or former Participant shall
automatically become an active Participant on the date he or she again
becomes an Eligible Employee.
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3 PARTICIPANT CONTRIBUTIONS
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3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to reduce
his or her Pay by an amount which does not exceed the Contribution
Dollar Limit, within the limits described in the Contribution
Percentage Limits paragraph of this Section 3, and have such amount
contributed to the Plan by the Employer as a Pre-Tax Contribution.
The election shall be made as a whole percentage of Pay in such manner
and with such advance notice as prescribed by the Administrator. In
no event shall an Employee's Pre-Tax Contributions under the Plan and
all other plans, contracts or arrangements of all Related Companies
exceed the Contribution Dollar Limit for the Employee's taxable year
beginning in the Plan Year.
3.2 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her 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. The changed percentage shall become effective with
the first payroll paid after such date. Participants' Contribution
election percentages shall automatically apply to Pay increases or
decreases.
3.3 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at any time
in such manner and with such advance notice as prescribed by the
Administrator, and such election shall be effective with the first
payroll paid after such date.
A Participant may resume Contributions by making a new Contribution
election at the same time in which a Participant may change his or her
election in such manner and with such advance notice as prescribed by
the Administrator, and such election shall be effective with the first
payroll paid after such date.
3.4 Contribution Percentage Limits
The Administrator may establish and change from time to time, without
the necessity of amending this Plan and Trust document, the minimum,
if applicable, and maximum 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. As of the Effective Date, the maximum Contribution
percentages are:
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<TABLE>
<CAPTION>
Highly
Contribution Compensated All Other
Type Employees Participants
---- --------- ------------
<S> <C> <C>
Pre-Tax 6% 15%
</TABLE>
Effective April 1, 1992, the maximum Contribution percentages are:
<TABLE>
<CAPTION>
Highly
Contribution Compensated All Other
Type Employees Participants
---- --------- ------------
<S> <C> <C>
Pre-Tax 6% 185%
</TABLE>
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event shall the
contributions made by or on behalf of a Participant for a Plan Year
exceed the maximum allowable under Code section 415.
3.5 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar year to
this and any other qualified defined contribution plan in excess of
the Contribution Dollar Limit may notify the Administrator in writing
by the following March 1 (or as late as April 14 if allowed by the
Administrator) that an excess has occurred. In this event, the amount
of the excess specified by the Participant, adjusted for investment
gain or loss, shall be refunded to him or her by April 15 and shall
not be included as an Annual Addition under Code section 415 for the
year contributed. Refunds shall not include investment gain or loss
for the period between the end of the applicable Plan Year and the
date of distribution. However, for Plan Years ending before December
31, 1993, refunds shall include investment gain or loss for the period
between the end of the applicable Plan Year and the date of
distribution. Any Matching Contributions attributable to refunded
excess Pre-Tax Contributions as described in this Section shall be
deemed a Contribution made by reason of a mistake of fact and removed
from the Participant's Account.
3.6 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 90 days after the date amounts are deducted
from a Participant's Pay. Pre-Tax Contributions shall be treated as
employer contributions in determining tax deductions under Code
section 404(a).
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4 ROLLOVERS & TRUST-TO-TRUST TRANSFERS
------------------------------------
4.1 Rollovers
The Administrator may authorize the Trustee to accept a rollover
contribution in cash, within the meaning of Code section 402(c) or
408(d)(3)(A)(ii), directly from an Eligible Employee or effective
January 1, 1993, as a Direct Rollover from another qualified plan on
behalf of the Eligible Employee, even if he or she is not yet a
Participant. The Employee shall be responsible for furnishing
satisfactory evidence, in such manner as prescribed by the
Administrator, that the amount is eligible for rollover treatment. A
rollover contribution received directly from an Eligible Employee must
be paid to the Trustee in cash within 60 days after the date received
by the Eligible Employee from a qualified plan or conduit individual
retirement account. Contributions described in this paragraph shall
be posted to the applicable Employee's Rollover Account as of the date
received by the Trustee.
If it is later determined that an amount contributed pursuant to the
above paragraph did not in fact qualify as a rollover contribution
under Code section 402(c) or 408(d)(3)(A)(ii), the balance credited to
the Employee's Rollover Account shall immediately be (1) segregated
from all other Plan assets, (2) treated as a nonqualified trust
established by and for the benefit of the Employee, and (3)
distributed to the Employee. Any such nonqualifying rollover shall be
deemed never to have been a part of the Plan.
4.2 Transfers From Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in cash
or in kind directly from another qualified plan. The Trustee may
refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable;
(b) instructions for posting amounts to Participants' Accounts are
incomplete;
(c) any amounts are not exempted by Code section 401(a)(11)(B) from
the annuity requirements of Code section 417; or
(d) any amounts include benefits protected by Code section 411(d)(6)
which would not be preserved under applicable Plan provisions.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
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5 EMPLOYER CONTRIBUTIONS
----------------------
5.1 Matching Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall make
Matching Contributions as described in the following Allocation
Method paragraph on behalf of each Participant who contributed
during the period.
(b) Allocation Method. The Matching Contributions (including any
Forfeiture Account amounts applied as Matching Contributions in
accordance with Section 8.2) for each period shall total 50% of
each eligible Participant's Pre-Tax Contributions for the
period, provided that no Matching Contributions (and Forfeiture
Account amounts) shall be made based upon a Participant's
Contributions in excess of 6% of his or her Pay. The Employer
may change the 50% matching rate or the 6% of considered Pay to
any other percentages, including 0%, generally by notifying
eligible Participants in sufficient time to adjust their
Contribution elections prior to the start of the period for
which the new percentages apply.
(c) Timing, Medium and Posting. The Employer shall make each
period's Matching Contribution in cash as soon as is feasible,
and not later than the Employer's federal tax filing date,
including extensions, for deducting such Contribution. The
Trustee shall post such amount to each Participant's Matching
Account once the total Contribution received has been balanced
against the specific amount to be credited to each Participant's
Matching Account.
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6 ACCOUNTING
----------
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts for
each Participant in order to reflect transactions both by type of
Contribution and investment medium. Financial transactions shall be
accounted for at the individual Account level by posting each
transaction to the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares for the
Investment Funds and in dollars for their Sweep and Participant loan
Accounts. At any point in time, the Account value shall be determined
using the most recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
will be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade Date.
For any transaction to be processed as of a Trade Date, the Trustee
must receive instructions for the transaction by the Sweep Date. Such
instructions shall apply to amounts held in the Account on that Sweep
Date. Financial transactions of the Investment Funds shall be posted
to Participants' Accounts as of the Trade Date, based upon the Trade
Date values provided by the Trustee, and settled on the Settlement
Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in shares.
The Trustee is responsible for determining the share values of each
Investment Fund as of each Trade Date. To the extent an Investment
Fund is comprised of collective investment funds of the Trustee, or
any other fiduciary to the Plan, the share values shall be determined
in accordance with the rules governing such collective investment
funds, which are incorporated herein by reference. All other share
values shall be determined by the Trustee. The share value of each
Investment Fund shall be based on the fair market value of its
underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, as set forth below, are paid by the Employer directly, or
indirectly, through the Forfeiture
13
<PAGE>
Account as directed by the Administrator, such fees and expenses shall
be paid as set forth below. The Employer may pay a lower portion of
the fees and expenses allocable to the Accounts of Participants who
are no longer Employees.
(a) Account Maintenance: Account maintenance fees and expenses, may
include but are not limited to, administrative, Trustee,
government annual report preparation, audit, legal,
nondiscrimination testing, and fees for any other special
services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee
shall reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but are
not limited to, recurring payment, Investment Fund election
change and loan fees. Transaction fees shall be charged to the
Participant's Account involved in the transaction provided that
no fee shall reduce a Participant's Account balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds
shall be charged at the Investment Fund level and reflected in
the net gain or loss of each Fund.
As of the Effective Date, a breakdown of which Plan fees and expenses
shall generally be borne by the Trust (and charged to individual
Participants' Accounts) and those that shall be paid by the Employer,
directly or indirectly, is set forth in Appendix B and may be changed
from time to time, without the necessity of amending this Plan and
Trust Document.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from the
Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Account of the
Participant and accounted for in dollars as an earmarked asset of the
borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had no
error or omission been made. Funds necessary for any such restoration
shall be provided through payment made by the Employer, or by the
Trustee to the extent the error or omission is attributable to actions
or inactions of the Trustee, or if the restoration involves an
Employer Contribution Account, the Administrator may direct the
Trustee to use amounts from the Forfeiture Account.
14
<PAGE>
6.8 Participant Statements
The Administrator shall provide Participants with statements of their
Accounts as soon after the end of each quarter of the Plan Year as is
administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during the period of
converting the prior accounting system of the Plan and Trust to
conform to the individual Participant accounting system described in
this Section. This includes, but is not limited to, the method for
allocating net investment gains or losses and the extent, if any, to
which contributions received by and distributions paid from the Trust
during this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate payee
entitled to any portion of a Participant's Account under a QDRO as of
the date and in accordance with the directions specified in the QDRO.
In addition, a separate Account may be established during the period
of time the Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic relations order
qualifies as a QDRO. Such a separate Account shall be valued and
accounted for in the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an alternate payee
may be distributed, in a form as permissible under the
Distribution Once Employment Ends Section, to the alternate
payee at the time specified in the QDRO, regardless of whether
the Participant is entitled to a distribution from the Plan at
such time.
(b) Participant Loans. Except to the extent required by law, an
alternate payee, on whose behalf a separate Account has been
established, shall not be entitled to borrow from such Account.
If a QDRO specifies that the alternate payee is entitled to any
portion of the Account of a Participant who has an outstanding
loan balance, all outstanding loans shall generally continue to
be held in the Participant's Account and shall not be divided
between the Participant's and alternate payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an alternate payee and has not yet been
distributed, the alternate payee may direct the investment of
such Account in the same manner as if he or she were a
Participant.
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<PAGE>
7 INVESTMENT FUNDS AND ELECTIONS
------------------------------
7.1 Investment Funds
Except for Participants' Sweep and loan Accounts, the Trust shall be
maintained in various Investment Funds. The Administrator shall
select the Investment Funds offered to Participants and may change the
number or composition of the Investment Funds, subject to the terms
and conditions agreed to with the Trustee. As of the Execution Date,
a list of the Investment Funds offered to Participants is set forth in
Appendix A, and may be changed from time to time, without the
necessity of amending this Plan and Trust document.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or her
Contribution Accounts.
A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds offered in
accordance with the procedures established by the Administrator and
Trustee. However, during the period of converting the prior
accounting system of the Plan and Trust to conform to the individual
Participant accounting system described in Section 6, Trust assets may
be held in any investment vehicle permitted by the Plan, as directed
by the Administrator, irrespective of Participant investment
elections.
The Administrator may set a maximum percentage of the total election
that a Participant may direct into any specific Investment Fund, which
maximum, if any, is set forth in Appendix A, and may be changed from
time to time, without the necessity of amending this Plan and Trust
document.
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the selection of his
or her Investment Fund choices. No fiduciary with respect to the Plan
is empowered to advise a Participant as to the manner in which his or
her Accounts are to be invested, and the fact that an Investment Fund
is offered shall not be construed to be a recommendation for
investment.
7.4 Default if No Election
The Administrator shall specify an Investment Fund for the investment
of that portion of a Participant's Account which is not yet held in an
Investment Fund and for which no valid investment election is on file.
The Investment Fund specified as of the Execution Date is as set forth
in Appendix A, and may be changed from time to time, without the
necessity of amending this Plan and Trust document.
16
<PAGE>
7.5 Timing
A Participant shall make his or her initial investment election upon
becoming a Participant and may change his or her election at any time
in accordance with the procedures established by the Administrator and
Trustee. Investment elections received by the Trustee by the Sweep
Date will be effective on the following Trade Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a Participant's
Account for Investment Fund election changes in excess of a specified
number per year as determined by the Administrator.
17
<PAGE>
8 VESTING & FORFEITURES
---------------------
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in all Accounts at all times.
Notwithstanding, prior to the Effective Date a Participant's Matching
Account became vested in accordance with a vesting schedule then in
effect.
8.2 Forfeitures Prior to the Effective Date
Amounts representing forfeitures of non-vested Account balances from
Employer Contribution Accounts as forfeited prior to the Effective
Date in accordance with Plan provisions as then in effect, are
maintained in a single Forfeiture Account, and invested in interest
bearing deposits of the Trustee. Forfeiture Account amounts shall be
utilized to restore Accounts, to pay Plan fees and expenses, and to
reduce Matching Contributions as directed by the Administrator.
8.3 Rehired Employees
If a former Employee who last terminated prior to the Effective Date
is rehired subsequent to the Effective Date and before he or she has a
break in service, as such term was defined prior to the Effective Date
for this purpose, the amount forfeited when his or her employment last
terminated shall be restored to his or her Account. The amount shall
come from the Forfeiture Account to the extent possible, and any
additional amount needed shall be contributed by the Employer. The
Employee shall then be fully vested in his or her restored Account.
18
<PAGE>
9 PARTICIPANT LOANS
-----------------
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with such
advance notice as prescribed by the Administrator. All loans shall be
evidenced by a promissory note, secured only by the portion of the
Participant's Account from which the loan is made, and the Plan shall
have a lien on this portion of his or her Account.
9.3 Spousal Consent
A Participant is required to obtain Spousal Consent in order to take
out a loan under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee if otherwise authorized by the
Administrator and expressly agreed to by the Trustee, is responsible
for determining that a loan request conforms to the requirements
described in this Section and granting such request.
9.5 Loan Funding Limits
The loan amount must meet all of the following limits as determined as
of the Sweep Date the loan is processed:
(a) Plan Minimum Limit. The minimum amount for any loan is $1,000.
Effective April 1, 1992, the minimum amount for any loan is
$500.
(b) Plan Maximum Limit. Subject to the legal limit described in (c)
below, the maximum a Participant may borrow, including the
outstanding balance of existing Plan loans, is 100% of the
following Accounts which are fully vested:
Pre-Tax Account
Matching Account
Prior Plan Account
Rollover Account
After-Tax Account
19
<PAGE>
(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is 50%
of his or her vested Account balance, not to exceed $50,000.
However, the $50,000 maximum is reduced by the Participant's
highest outstanding loan balance during the 12 month period
ending on the day before the Sweep Date as of which the loan is
made. For purposes of this paragraph, the qualified plans of
all Related Companies shall be treated as though they are part
of this Plan to the extent it would decrease the maximum loan
amount.
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 Accounts. The available assets shall be determined first by
Account type and then by investment type within each type of Account.
The hierarchy for loan funding by type of Account shall be the order
listed in the preceding Plan Maximum Limit paragraph. Within each
Account used for funding a loan, amounts shall first be taken from the
Sweep Account and then taken by type of investment in direct
proportion to the market value of the Participant's interest in each
Investment Fund as of the Trade Date on which the loan is processed.
Loans will be funded on the Settlement Date following the Trade Date
as of which the loan is processed. The Trustee shall make payment to
the Participant as soon thereafter as administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the
Administrator, which provides the Plan with a return commensurate with
the prevailing interest rate charged by persons in the business of
lending money for loans which would be made under similar
circumstances. As of the Effective Date, the interest rate is
determined as set forth in Appendix C, and may be changed from time to
time, without the necessity of amending this Plan and Trust document.
9.9 Repayment
Substantially level amortization shall be required of each loan with
payments made at least monthly, generally through payroll deduction.
Loans may be prepaid in full or in part at any time. The Participant
may choose the loan repayment period, not to exceed five years.
20
<PAGE>
9.10 Repayment Hierarchy
Loan principal repayments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in direct
proportion to the principal payment. Loan payments are credited by
investment type based upon the Participant's current investment
election for new Contributions.
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan payments for up to
12 months for a Participant who is on a Leave of Absence. During the
suspension period interest shall continue to accrue on the outstanding
loan balance. At the expiration of the suspension period all
outstanding loan payments and accrued interest thereon shall be due
unless otherwise agreed upon by the Administrator.
9.12 Loan Default
A loan is treated as a default if scheduled loan payments are more
than 90 days late. A Participant shall then have 30 days from the
time he or she receives written notice of the default and a demand for
past due amounts to cure the default before it becomes final.
In the event of default, the Administrator may direct the Trustee to
report the default as a taxable distribution. As soon as a Plan
withdrawal or distribution to such Participant would otherwise be
permitted, the Administrator may instruct the Trustee to execute upon
its security interest in the Participant's Account by distributing the
note to the Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant loan
once a Participant's employment with all Related Companies has
terminated or if the Plan is terminated.
21
<PAGE>
10 IN-SERVICE WITHDRAWALS
----------------------
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and as required by law as set forth in Section 11.5.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such manner
and with such advance notice as prescribed by the Administrator.
Effective for in-service withdrawals applied for after December 31,
1992, the Participant shall be provided the notice prescribed by Code
section 402(f).
If an in-service withdrawal is one to which Code sections 401(a)(11)
and 417 do not apply, such in-service withdrawal may commence less
than 30 days after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notice to
consider his or her option to elect or not elect a Direct
Rollover for the portion, if any, of his or her in-service
withdrawal which will constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for the portion, if any, of his or her
in-service withdrawal which will constitute an Eligible Rollover
Distribution or alternatively elects to have such portion made
payable directly to him or her, thereby not electing a Direct
Rollover.
10.3 Spousal Consent
A Participant is required to obtain Spousal Consent in order to make
an in-service withdrawal under the Plan. Effective January 1, 1995, a
Participant is not required to obtain Spousal Consent in order to make
an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee if otherwise authorized by the
Administrator and expressly agreed to by the Trustee, is responsible
for determining that an in-service withdrawal request conforms to the
requirements described in this Section and granting such request.
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of withdrawal.
22
<PAGE>
For withdrawals made after December 31, 1992, with regard to the
portion of a withdrawal representing an Eligible Rollover
Distribution, a Participant may elect a Direct Rollover. The form of
payment for an in-service withdrawal shall be a single lump sum and
payment shall be made in cash.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely from
the assets of his or her own Accounts and will be based on the Account
values as of the Trade Date the in-service withdrawal is processed.
The available assets shall be determined first by Account type and
then by investment type within each type of Account. Within each
Account used for funding an in-service withdrawal, amounts shall first
be taken from the Sweep Account and then taken by type of investment
in direct proportion to the market value of the Participant's interest
in each Investment Fund (which excludes Participant loans) as of the
Trade Date on which the in-service withdrawal is processed.
In-Service withdrawals will be funded on the Settlement Date following
the Trade Date as of which the in-service withdrawal is processed.
The Trustee shall make payment as soon thereafter as administratively
feasible.
10.7 Hardship Withdrawals
No in-service withdrawals are permitted from a Participant's Account
because of hardship.
Effective April 1, 1992, withdrawals are permitted from a
Participant's Account because of hardship.
(a) Requirements. A Participant who is an Employee may request the
withdrawal of up to the amount necessary to satisfy a financial
need including amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to result
from the withdrawal. Only requests for withdrawals (1) on
account of a Participant's "Deemed Financial Need", and (2)
which are "Deemed Necessary" to satisfy the financial need will
be approved.
(b) "Deemed Financial Need". Financial commitments relating to:
(1) the payment of unreimbursable medical expenses described
under Code section 213(d) incurred (or to be incurred) by
the Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
(3) the payment of unreimbursable tuition and related
educational fees for up to the next 12 months of post-
secondary education for the Employee, his or her spouse or
dependents;
23
<PAGE>
(4) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through
eviction or foreclosure on the mortgage; or
(5) 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 Employee has obtained all other possible withdrawals
and nontaxable loans available from all plans maintained by
Related Companies;
(2) the Administrator shall suspend the Employee from making
any contributions to this Plan, all other qualified and
nonqualified plans of deferred compensation and all stock
option or stock purchase plans maintained by Related
Companies for 12 months from the date the withdrawal
payment is made; and
(3) the Administrator shall reduce the Contribution Dollar
Limit for the Employee for the calendar year next following
the calendar year of the withdrawal by the amount of the
Employee's Pre-Tax Contributions for the calendar year of
the withdrawal.
(d) Account Sources for Withdrawal. All available amounts must
first be withdrawn from a Participant's After-Tax Account. The
remaining withdrawal amount shall come only from the
Participant's fully vested Accounts, in the following priority
order:
Rollover Account
Matching Account
Prior Plan Account
Pre-Tax Account
The amount that may be withdrawn from a Participant's Pre-Tax
Account shall not include any earnings credited to his or her
Pre-Tax Contribution Account after the start of the first Plan
Year beginning after December 31, 1988.
(e) Permitted Frequency. There is no restriction on the number of
Hardship withdrawals permitted to a Participant.
10.8 After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee may withdraw up
to the entire balance from his or her After-Tax Account.
24
<PAGE>
(b) Permitted Frequency. There is no restriction on the number of
After-Tax Account withdrawals permitted to a Participant.
(c) Suspension from Further Contributions. An After-Tax Account
withdrawal shall not affect a Participant's ability to make or
be eligible to receive further Contributions.
10.9 Rollover Account Withdrawals
No in-service withdrawals are permitted from a Participant's Rollover
Account except as provided elsewhere in this Section.
Effective April 1, 1992, withdrawals from a Participant's Rollover
Account are permitted.
(a) Requirements. A Participant who is an Employee may withdraw up
to the entire balance from his or her Rollover Account.
(b) Permitted Frequency. There is no restriction on the number of
Rollover Account withdrawals permitted to a Participant.
(c) 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 Employee and over age 59
1/2 may withdraw from the Accounts listed in paragraph (b)
below.
(b) Account Sources for Withdrawal. The withdrawal amount shall
come only from the Participant's fully vested Accounts, in the
following priority order with the exception that the Participant
may instead choose to have amounts taken from his or her After-
Tax Account first, and except that prior to December 1, 1990, a
Participant's Pre-Tax Account preceded his or her Rollover
Account in the priority order:
Rollover Account
Pre-Tax Account
Matching Account
Prior Plan Account
After-Tax Account
(c) Permitted Frequency. The maximum number of Over Age 59 1/2
withdrawals permitted to a Participant in any 12-month period is
one.
(d) Suspension from Further Contributions. An Over Age 59 1/2
withdrawal shall not affect a Participant's ability to make or
be eligible to receive further Contributions.
25
<PAGE>
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
---------------------------------------------------------
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional times
and forms of distribution available, to include the notices prescribed
by Code section 402(f), effective January 1, 1993, and Code section
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 or, if earlier, at the time required by law as set forth in
Section 11.5.
If a distribution is one to which Code sections 401(a)(11) and 417 do
not apply, such 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 will constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a distribution and a Direct Rollover for all or a
portion, if any, of his or her distribution which will
constitute 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 required to obtain Spousal Consent in order to
receive a distribution under the Plan. Effective January 1, 1995, a
Participant is not required to obtain Spousal Consent in order to
receive a distribution under the Plan.
11.3 Payment Form and Medium
A Participant may elect to be paid in any of these forms:
(a) a single lump sum, or
(b) effective January 1, 1993, a portion paid in a lump sum, and the
remainder paid later, or
(c) periodic installments over a period not to exceed the life
expectancy of the Participant and his or her Beneficiary.
26
<PAGE>
Distributions shall generally be made in cash. For distributions made
after December 31, 1992, 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 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the assets
of his or her own Accounts and will be based on the Account values as
of the Trade Date the distribution is processed. The available assets
shall be determined first by Account type and then by investment type
within each type of Account. Within each Account used for funding a
distribution, amounts shall first be taken from the Sweep Account and
then taken by type of investment in direct proportion to the market
value of the Participant's interest in each Investment Fund as of the
Trade Date on which the distribution is processed.
Distributions will be funded on the Settlement Date following the
Trade Date as of which the distribution is processed. The Trustee
shall make payment as soon thereafter as administratively feasible.
11.5 Latest Commencement Permitted
In addition to any other Plan requirements and unless a Participant
elects otherwise, his or her benefit payments will 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 as described below.
Benefit payments shall begin by the April 1 immediately following the
end of the calendar year in which the Participant attains age 70 1/2
(whether or not he or she is an Employee), except that distribution
for an Employee who was born before July 1, 1917 does not need to
begin until his or her employment with all Related Companies ends.
11.6 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
11.7 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
27
<PAGE>
minimum annual distribution for each calendar year, beginning with the
year in which he or she attains age 70 1/2 (or such later date as
provided otherwise in Section 11), 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).
11.8 Payment to Beneficiary
Payment to a Beneficiary must either: (1) be completed by the end of
the calendar year that contains the fifth anniversary of the
Participant's death or (2) 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 the April 1 immediately following
the end of the calendar year in which he or she attains age 70
1/2, 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 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 (1) before the April 1 immediately following the
end of the calendar year in which the Participant would have
attained age 70 1/2 and (2) before payments have begun to the
spouse, the spouse will be treated as the Participant in
applying these rules.
11.9 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death. The
designation may be changed at any time. However, a Participant's
spouse shall be the sole primary Beneficiary unless the designation
includes Spousal Consent for another Beneficiary. If no proper
designation is in effect at the time of a Participant's death or if
the Beneficiary does not survive the Participant, the Beneficiary
shall be, in the order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, per stirpes (by right
-----------
of representation), or
(c) Participant's estate.
28
<PAGE>
12 ADP AND ACP TESTS
-----------------
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12 (where a
definition is contained in both Sections 1 and 12, for purposes of
Section 12 the Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to
Participants as of a date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average Percentage
calculated using Deferrals allocated to Participants as of a
date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(e) "Average Percentage". The average of the calculated percentages
for Participants within the specified group. The calculated
percentage refers to either the "Deferrals" or "Contributions"
(as defined in this Section) made on each Participant's behalf
for the Plan Year, divided by his or her Compensation for the
portion of the Plan Year in which he or she was an Eligible
Employee while a Participant. (Pre-Tax Contributions which will
be refunded solely because they exceed the Contribution Dollar
Limit are included in the percentage for the HCE Group but not
for the NHCE Group if such excess Pre-Tax Contributions were
made to plans of Related Companies.)
(f) "Contributions" shall include Matching Contributions. In
addition, Contributions may include Pre-Tax Contributions, but
only to the extent that (1) the Employer elects to use them, (2)
they are not used or counted in the ADP Test, and (3) they are
necessary to meet the ACP Test Alternative Limitation (defined
in Section 12.2 (b)) or the Multiple Use Test.
(g) "Deferrals" shall include Pre-Tax Contributions. In addition,
for Plan Years ending on or before December 31, 1991, Deferrals
may include Matching Contributions, but only to the extent that
(1) the Employer elects to use them, (2) they are not used or
counted in the ACP Test, and (3) such Contributions are fully
vested when made and not withdrawable by an Employee before he
or she attains age 59 1/2.
29
<PAGE>
(h) "Family Member". An Employee who is, at any time during the
Plan Year or Lookback Year, a spouse, lineal ascendant or
descendant, or spouse of a lineal ascendant or descendant of (1)
an active or former Employee who at any time during Plan Year or
Lookback Year is a more than 5% Owner (within the meaning of
Code section 414(q)(3)), or (2) an HCE who is among the 10
Employees with the highest Compensation for such Year.
(i) "HCE" or "Highly Compensated Employee". With respect to each
Employer and its Related Companies, an Employee during the Plan
Year or Lookback Year who (in accordance with Code section
414(q)):
(1) Was a more than 5% Owner at any time during the Lookback
Year or Plan Year;
(2) Received Compensation during the Lookback Year (or in the
Plan Year if among the 100 Employees with the highest
Compensation for such Year) in excess of (i) $75,000 (as
adjusted for such Year pursuant to Code sections 414(q)(1)
and 415(d)), or (ii) $50,000 (as adjusted for such Year
pursuant to Code sections 414(q)(1) and 415(d)) in the case
of a member of the "top-paid group" (within the meaning of
Code section 414(q)(4)) for such Year), provided, however,
that if the conditions of Code section 414(q)(12)(B)(ii)
are met, the Company may elect for any Plan Year to apply
clause (i) by substituting $50,000 for $75,000 and not to
apply clause (ii);
(3) Was an officer of a Related Company and received
Compensation during the Lookback Year (or in the Plan Year
if among the 100 Employees with the highest Compensation
for such Year) that is greater than 50% of the dollar
limitation in effect under Code section 415(b)(1)(A) and
(d) for such Year (or if no officer has Compensation in
excess of the threshold, the officer with the highest
Compensation), provided that the number of officers shall
be limited to 50 Employees (or, if less, the greater of
three Employees or 10% of the Employees); or
(4) Was a Family Member at any time during the Lookback Year or
Plan Year, in which case the Contributions and Compensation
of the HCE and his or her Family Members shall be
aggregated and they shall be treated as a single HCE.
A former Employee shall be treated as an HCE if (1) such former
Employee was an HCE when he separated from service, or (2) such
former Employee was an HCE in service at any time after
attaining age 55.
30
<PAGE>
The determination of who is an HCE, including the determinations
of the number and identity of Employees in the top-paid group,
the top 100 Employees and the number of Employees treated as
officers shall be made in accordance with Code section 414(q).
(j) "HCE Group" and "NHCE Group". With respect to each Employer and
its Related Companies, the respective group of HCEs and NHCEs
who are eligible to have amounts contributed on their behalf for
the Plan Year, including Employees who would be eligible but for
their election not to participate or to contribute, or because
their Pay is greater than zero but does not exceed a stated
minimum.
(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, for Plan Years beginning after December 31, 1989,
plans may only be aggregated if they have the same Plan
Year.
(2) If an HCE, who is one of the top 10 paid Employees or a
more than 5% Owner, has any Family Members, the Deferrals,
Contributions and Compensation of such HCE and his or her
Family Members shall be combined and treated as a single
HCE. Such amounts for all other Family Members shall be
removed from the NHCE Group percentage calculation and be
combined with the HCE's.
(3) If an HCE is covered by more than one cash or deferred
arrangement maintained by the Related Companies, all such
plans shall be aggregated and treated as one plan for
purposes of calculating the separate percentage for the HCE
which is used in the determination of the Average
Percentage.
(4) Employees who are eligible to participate in the Plan as a
result of a collective bargaining agreement shall be
excluded from both the HCE and NHCE Groups for Plan Years
beginning before January 1, 1993.
(k) "Lookback Year". Pursuant to Code section 414(q), the Company
elects as the Lookback Year the 12 months ending immediately
prior to the start of the Plan Year.
(l) "Multiple Use Test". The test described in Section 12.4 which a
Plan must meet where the Alternative Limitation (described in
Section 12.2(b)) is used to meet both the ADP and ACP Tests.
31
<PAGE>
(m) "NHCE" or "Non-Highly Compensated Employee". An Employee who is
not an HCE.
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must meet either
the Basic or Alternative Limitation when compared to the respective
ADP and ACP for the NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as
follows:
<TABLE>
<CAPTION>
If the NHCE Group Then the Maximum HCE
Average Percentage is: Group Average Percentage is:
------------------------ -----------------------------
<S> <C>
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
</TABLE>
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.
(a) ADP Correction. Pre-Tax Contributions shall, by the end of the
next Plan Year, be refunded (including amounts previously
refunded because they exceeded the Contribution Dollar Limit) to
the Participant in an amount equal to the actual Deferrals minus
the product of the maximum percentage and the HCE's
Compensation. Any Matching Contributions attributable to
refunded excess Pre-Tax Contributions as described in this
Section 12.3(a) shall be deemed a Contribution made by reason of
a mistake of fact and removed from the Participant's Account.
(b) ACP Correction. Matching Contributions shall, by the end of the
next Plan Year, be refunded to the Participant in an amount
equal to the actual Contributions minus the product of the
maximum percentage and the HCE's Compensation.
(c) Investment Fund Sources. Once the amount of excess Deferrals
and/or Contributions is determined amounts shall then be taken
by type of
32
<PAGE>
investment in direct proportion to the market value of the
Participant's interest in each Investment Fund (which excludes
Participant loans) at the time the correction is made.
(d) Family Member Correction. To the extent any reduction is
necessary with respect to an HCE and his or her Family Members
that have been combined and treated for testing purposes as a
single Employee, the excess Deferrals and Contributions from the
ADP and/or ACP Test shall be prorated among each such
Participant in direct proportion to his or her Deferrals or
Contributions included in each Test.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used to
meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group
must also comply with the requirements of Code section 401(m)(9). Such
Code section requires that the sum of the ADP and ACP for the HCE
Group (as determined after any corrections needed to meet the ADP and
ACP Tests have been made) not exceed the sum (which produces the most
favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to either
the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce either or both the ADP or
ACP for the HCE Group by a sufficient amount to meet the multiple use
limit. Any excess shall be handled in the same manner that the
distribution of excess Deferrals or Contributions are handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a Participant
in accordance with Section 12.3 or 12.5 shall be adjusted for
investment gain or loss. Refunds shall not include investment gain or
loss for the period between the end of the applicable Plan Year and
the date of distribution. However, for Plan Years ending before
December 31, 1993, refunds shall include investment gain or loss for
the period between the end of the applicable Plan Year and the date of
distribution.
33
<PAGE>
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP, ACP and Multiple Use Tests and that the Contribution
Dollar Limit is not exceeded. In carrying out its responsibilities,
the Administrator shall have sole discretion to limit or reduce
Deferrals or Contributions at any time. The Administrator shall
maintain records which are sufficient to demonstrate that the ADP, ACP
and Multiple Use Tests have been met for each Plan Year for at least
as long as the Employer's corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and the
performance of the ADP, ACP and Multiple Use Tests and any
corrective action resulting therefrom shall be made separately
with regard to the Employees of each Employer (and its Related
Companies) that is not a Related Company with the other
Employer(s).
(b) Collective Bargaining Units: For Plan Years beginning after
December 31, 1992, the performance of the testing and any
corrective action resulting therefrom shall be applied
separately to Employees who are eligible to participate in the
Plan as a result of a collective bargaining agreement.
In addition, separate testing may be applied, at the discretion of the
Administrator and to the extent permitted under Treasury regulations,
to any group of Employees for whom separate testing is permissible.
34
<PAGE>
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
--------------------------------------------
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's Account for a
Plan Year. Amounts include contributions (except for rollovers or
transfers from another qualified plan), forfeitures and, if the
Participant is a Key Employee (pursuant to Section 14) for the
applicable or any prior Plan Year, medical benefits provided pursuant
to Code section 419A(d)(1). For purposes of this Section 13.1,
"Account" also includes a Participant's account in all other defined
contribution plans currently or previously maintained by any Related
Company. The Plan Year refers to the year to which the allocation
pertains, regardless of when it was allocated. The Plan Year shall be
the Code section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this Plan and
any other defined contribution plan maintained by any Related Company
for any Plan Year shall not exceed the lesser of (1) 25% of his or her
Taxable Income or (2) the greater of $30,000 or one-quarter of the
dollar limitation in effect under Code section 415(b)(1)(A).
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any additional
Contributions would produce an excess Annual Addition for such year,
Contributions to be made for the remainder of the Plan Year shall be
limited to the amount needed for each affected Participant to receive
the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a Participant's
Account (resulting from forfeitures, allocations, reasonable error in
determining Participant compensation or the amount of elective
contributions, or other facts and circumstances acceptable to the
Internal Revenue Service) the excess amount (adjusted to reflect
investment gains) shall first be returned to the Participant to the
extent of his or her Pre-Tax Contributions (however to the extent Pre-
Tax Contributions were matched, the applicable Matching Contributions
shall be forfeited in proportion to the returned matched Pre-Tax
Contributions) and the remaining excess, if any, plus returned
Matching Contributions, shall be forfeited by the Participant and used
to reduce subsequent Contributions as soon as is administratively
feasible.
35
<PAGE>
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined contribution
plan, the excess shall be corrected by reducing the Annual Addition to
this Plan only after all possible reductions have been made to the
other defined contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the "projected
annual benefit" and the denominator is the greater of 125% of the
"protected current accrued benefit" or the normal limit which is the
lesser of (1) 125% of the maximum dollar limitation provided under
Code section 415(b)(1)(A) for the Plan Year or (2) 140% of the amount
which may be taken into account under Code section 415(b)(1)(B) for
the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided by the
Plan determined pursuant to Code section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit plan in
existence (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 (1) 125% of the Code section 415(c)(1)(A)
dollar limitation (determined without regard to subsection (c)(6)) in
effect for the Plan Year and (2) 140% of the Code section 415(c)(1)(B)
amount in effect for the Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code section
415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248, section
235(g)(3), as amended, or Public Law 99-514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit plan
maintained by a Related Company, the sum of the Defined Benefit
Fraction and the Defined Contribution Fraction for any Plan Year may
not exceed 1.0. If the combined fraction exceeds 1.0 for any Plan
Year, the Participant's benefit under any defined benefit plan (to the
extent it has not been distributed or used to purchase an annuity
contract) shall be limited so that the combined fraction does not
exceed 1.0 before any defined contribution limits will be enforced.
36
<PAGE>
14 TOP HEAVY RULES
---------------
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the following
meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified
plan of an Employer (and its Related Companies) (1) in which a
Key Employee is a participant or was a participant during the
determination period (regardless of whether such plan has
terminated), or (2) which enables another plan in the group to
meet the requirements of Code sections 401(a)(4) and 410(b).
The Employer may also treat any other qualified plan as part of
the group if the group would continue to meet the requirements
of Code sections 401(a)(4) and 410(b) with such plan being taken
into account.
(b) "Determination Date". The last Trade Date of the preceding Plan
Year or, in the case of the Plan's first year, the last Trade
Date of the first Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period ending
on the Determination Date was:
(1) an officer of a Related Company whose Compensation (i)
exceeds 50% of the amount in effect under Code section
415(b)(1)(A) and (ii) places him within the following
highest paid group of officers:
<TABLE>
<CAPTION>
Number of Employees Number of
not Excluded Under Code Highest Paid
Section 414(q)(8) Officers Included
----------------- -----------------
<S> <C>
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section
414(q)(8)
More than 500 50
</TABLE>
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds $150,000,
or
37
<PAGE>
(4) a more than 0.5% Owner who is among the 10 Employees owning
the largest interest in a Related Company and whose
Compensation exceeds the amount in effect under Code
section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1) an
Employee's Account, (2) the present value of his or her other
accrued benefits provided by all qualified plans within the
Aggregation Group, and (3) the aggregate distributions made
within the five year period ending on such date. Plan Benefits
shall exclude rollover contributions and plan to plan transfers
made after December 31, 1983 which are both employee initiated
and from a plan maintained by a non-related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits of Key
Employees account for more than 60% of the Plan Benefits of all
Employees who have performed services at any time during the
five year period ending on the Determination Date. The Plan
Benefits of Employees who were, but are no longer, Key Employees
(because they have not been an officer or Owner during the five
year period), are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in which
the Plan is Top Heavy, the Employer shall not allow any
contributions (other than a Rollover Contribution) to be made by
or on behalf of any Key Employee unless the Employer makes a
contribution (other than Pre-Tax and Matching Contributions) on
behalf of all Participants who were Eligible Employees as of the
last day of the Plan Year in an amount equal to at least 3% of
each such Participant's Taxable Income. The Administrator shall
remove any such contributions (including applicable investment
gain or loss) credited to a Key Employee's Account in violation
of the foregoing rule and return them to the Employer or
Employee to the extent permitted by the Limited Return of
Contributions paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding, contributions shall
be permitted on behalf of Key Employees if the Employer also
maintains a defined benefit plan which automatically provides a
benefit which satisfies the Code section 416(c)(1) minimum
benefit requirements, including the adjustment provided in Code
section 416(h)(2)(A), if applicable. If this Plan is part of an
aggregation group in which a Key Employee is receiving a benefit
and no minimum is provided in any other plan, a minimum
contribution of at least 3% of Taxable Income shall be provided
to the Employees specified in the preceding paragraph of this
plan. In addition, the Employer may offset a defined benefit
minimum by contributions (other than Pre-Tax and Matching
Contributions) made to this Plan.
38
<PAGE>
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.
39
<PAGE>
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 this Plan and Trust. In addition, Plan fiduciaries also
include any other person to whom fiduciary duties or responsibility is
delegated with respect to the Plan. Any person or group may serve in
more than one fiduciary capacity with respect to the Plan. To the
extent permitted under ERISA section 405, no fiduciary shall be liable
for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that a
prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable
expenses of administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so as
to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries in a
uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the meaning of ERISA
section 3(16), which is responsible for compliance with all reporting
and disclosure requirements, except those that are explicitly the
responsibility of the Trustee under applicable law. The Administrator
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.
40
<PAGE>
15.4 Administrator Duties
The Administrator shall have the discretionary authority to construe
this Plan and Trust, other than the provisions which relate to the
Trustee, and to do all things necessary or convenient to effect the
intent and purposes of the Plan, whether or not such powers are
specifically set forth in this Plan and Trust. Actions taken in good
faith by the Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum possible deference
allowed by law. In addition to the duties listed elsewhere in this
Plan and Trust, the Administrator's authority shall include, but not
be limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, withdrawals and
distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant (or
such other period permitted under ERISA section 104(b)(1)), as
well as informing each Participant of any material modification
to the Plan in a timely manner;
(c) make a copy of the following documents available to Participants
during normal work hours: this Plan and Trust (including
subsequent amendments), all annual and interim reports of the
Trustee related to the entire Plan, the latest annual report and
the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
interest based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy bearing
in mind both the short-run and long-run needs and goals of the
Plan. To the extent Participants may direct their own
investments, the funding policy shall focus on which Investment
Funds are available for Participants to use; and
(f) adjudicate claims pursuant to the claims procedure described in
Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of ERISA
section 412.
41
<PAGE>
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 a 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.
42
<PAGE>
16 MANAGEMENT OF INVESTMENTS
-------------------------
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in accordance
with those provisions of this Plan and Trust which relate to the
Trustee, for use in providing Plan benefits and paying Plan expenses
not paid directly by the Employer. Plan benefits will be drawn solely
from the Trust and paid by the Trustee as directed by the
Administrator. Notwithstanding, the Administrator may appoint, with
the approval of the Trustee, another trustee to hold and administer
Plan assets which do not meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the Trustee to
invest Trust assets in one or more Investment Funds. The number and
composition of Investment Funds may be changed from time to time,
without the necessity of amending this Plan and Trust document. The
Trustee may establish reasonable limits on the number of Investment
Funds as well as the acceptable assets for any such Investment Fund.
Each of the Investment Funds may be comprised of any of the following:
(a) shares of a registered investment company, whether or not the
Trustee or any of its affiliates is an advisor to, or other
service provider to, such company;
(b) collective investment funds maintained by the Trustee, or any
other fiduciary to the Plan, which are available for investment
by trusts which are qualified under Code sections 401(a) and
501(a);
(c) individual equity and fixed income securities which are readily
tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or insurance
company; and
(e) interest bearing deposits of the Trustee.
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
43
<PAGE>
in each Investment Fund to handle the Fund's liquidity and
disbursement needs. Each Participant's and Beneficiary's Sweep
Account, which is used to hold assets pending investment or
disbursement, shall consist of interest bearing deposits of the
Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions are
received from the Administrator, Participants, or Beneficiaries. Such
instructions shall remain in effect until changed by the
Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company Shares
The Administrator shall be entitled to vote proxies or exercise any
shareholder rights relating to shares held on behalf of the Plan in a
registered investment company. Notwithstanding, the authority to vote
proxies and exercise shareholder rights related to such shares held in
a Custom Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee, an
investment manager for any Investment Fund established by the Trustee
solely for Participants of this Plan (a "Custom Fund"). The
investment manager may be the Administrator, Trustee or an investment
manager pursuant to ERISA section 3(38). The Administrator shall
advise the Trustee in writing of the appointment of an investment
manager and shall cause the investment manager to acknowledge to the
Trustee in writing that the investment manager is a fiduciary to the
Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund
consists solely of collective investment funds or shares of a
registered investment company (and sufficient deposit or money
market type assets to handle the Fund's liquidity and
disbursement needs), its' underlying instruments shall
constitute the guidelines.
(b) Authority of Investment Manager. The investment manager of a
Custom Fund shall have the authority to vote or execute proxies,
exercise shareholder rights, manage, acquire, and dispose of
Trust assets.
(c) Custody and Trade Settlement. Unless otherwise expressly agreed
to by the Trustee, the Trustee shall maintain custody of all
Custom Fund
44
<PAGE>
assets and be responsible for the settlement of all Custom Fund
trades. For purposes of this section, shares of a collective
investment fund, shares of a registered investment company and
guaranteed investment contracts issued by a bank or insurance
company, shall be regarded as the Custom Fund assets instead of
the underlying assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the Administrator
nor the Trustee shall be obligated to invest or otherwise manage
any Custom Fund assets for which the Trustee or Administrator is
not the investment manager nor shall the Administrator or
Trustee be liable for acts or omissions with regard to the
investment of such assets except to the extent required by
ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment Fund into
two or more funds in the event any assets in the Fund are illiquid or
the value is not readily determinable. In the event of such
segregation, the Company shall give instructions to the Trustee on
what value to use for the split-off assets, and the Trustee shall not
be responsible for confirming such value.
45
<PAGE>
17 TRUST ADMINISTRATION
--------------------
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe those
provisions of this Plan and Trust which relate to the Trustee and to
do all things necessary or convenient to the administration of the
Trust, whether or not such powers are specifically set forth in this
Plan and Trust. Actions taken in good faith by the Trustee shall be
conclusive and binding on all interested parties, and shall be given
the maximum possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in this
Plan and Trust, the Trustee shall have all the power, authority,
rights and privileges of an absolute owner of the Trust assets and,
not in limitation but in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage,
lease, grant options respecting, repair, alter, insure, or
distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or
conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in federal
book entry form or in any other form as will permit title
thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or claims
in favor of or against the Trust; and
(d) lend, through a collective investment fund, any securities held
in such collective investment fund to brokers, dealers or other
borrowers and to permit such securities to be transferred into
the name and custody and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any Trust
assets outside the jurisdiction of the United States, except as
authorized by ERISA section 404(b).
46
<PAGE>
17.4 Tax Withholding and Payment
(a) Withholding. Effective for taxable distributions made on or
before December 31, 1992 the Trustee shall calculate and
withhold federal (and, if applicable, state) income taxes in
accordance with a Participant's withholding election. Effective
for taxable distributions made after December 31, 1992, 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.
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.
(b) Taxes Due From Investment Funds. The Trustee shall pay from the
Investment Fund any taxes or assessments imposed by any taxing
or governmental authority on such Fund or its income, including
related interest and penalties.
17.5 Trustee Duties and Limitations
Unless otherwise agreed to by the Trustee, the Trustee's duties shall
be confined to construing the terms of the Plan and Trust as they
relate to the Trustee, receiving funds on behalf of and making
payments from the Trust, safeguarding and valuing Trust assets, and
investing and reinvesting Trust assets in the Investment Funds as
directed by the Administrator or Participants. The Trustee shall have
no duty or authority to ascertain whether Contributions are in
compliance with the Plan, to enforce collection or to compute or
verify the accuracy or adequacy or any amount to be paid to it by the
Employer. The Trustee shall not be liable for the proper application
of any part of the Trust with respect to any disbursement made at the
direction of the Administrator.
17.6 Trust Accounting
(a) Annual Report. 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 will
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection
47
<PAGE>
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.
17.7 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, the
Trustee may engage a qualified independent appraiser to determine the
fair market value of such property, and the appraisal fees shall be
paid from the Investment Fund containing the asset.
17.8 Legal Counsel
The Trustee may consult with legal counsel of its choice, including
counsel for the Employer or counsel of the Trustee, upon any question
or matter arising under this Plan and Trust. When relied upon by the
Trustee, the opinion of such counsel shall be evidence that the
Trustee has acted in good faith.
17.9 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as may be
mutually agreed upon by the Company and the Trustee. Trustee fees and
all reasonable expenses of counsel and advisors retained by the
Trustee shall be paid in accordance with Section 6.
48
<PAGE>
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any Employee. The
Employer expressly reserves the right to discharge an Employee at any
time, with or without cause, without regard to the effect such
discharge would have upon the Employee's interest in the Plan.
18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall not revert
to the Employer nor be diverted for any purpose other than the
exclusive benefit of Participants or their Beneficiaries; and (2) a
Participant's vested interest shall not be subject to divestment. As
provided in ERISA section 403(c)(2), the actual amount of a
Contribution made by the Employer (or the current value of the
Contribution if a net loss has occurred) may revert to the Employer
if:
(a) such Contribution is made by reason of a mistake of fact;
(b) initial qualification of the Plan under Code section 401(a) is
not received and a request for such qualification is made within
the time prescribed under Code section 401(b) (the existence of
and Contributions under the Plan are hereby conditioned upon
such qualification); or
(c) such Contribution is not deductible under Code section 404 (such
Contributions are hereby conditioned upon such deductibility) in
the taxable year of the Employer for which the Contribution is
made.
The reversion to the Employer must be made (if at all) within one year
of the mistaken payment of the Contribution, the date of denial of
qualification, or the date of disallowance of deduction, as the case
may be. A Participant shall have no rights under the Plan with
respect to any such reversion.
18.3 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.
49
<PAGE>
18.4 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.
18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of a
Plan benefit after a reasonable search, the Administrator may at any
time thereafter treat such person's Account as forfeited and use such
amount to offset any Employer Contributions. If such person
subsequently presents the Administrator with a valid claim for the
benefit, such person shall be paid the amount treated as forfeited,
plus the interest that would have been earned in the Sweep Account to
the date of determination. The Administrator shall pay the amount
through an additional Employer Contribution.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with the
Administrator's determination of his or her right to Plan
benefits must submit a written claim and exhaust this claim
procedure before legal recourse of any type is sought. The
claim must include the important issues the interested party
believes support the claim. The Administrator, pursuant to the
authority provided in this Plan, shall either approve or deny
the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to the
pertinent Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) 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.
50
<PAGE>
(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the
following time table:
<TABLE>
<CAPTION>
Days to Respond
Action From Last Action
------ ----------------
<S> <C>
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
</TABLE>
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it provides an
explanation within the normal period of why an extension is
needed and when its decision will be forthcoming.
18.7 Construction
Headings are included for reading convenience. The text shall control
if any ambiguity or inconsistency exists between the headings and the
text. The singular and plural shall be interchanged wherever
appropriate. References to Participant shall include Beneficiary when
appropriate and even if not otherwise already expressly stated.
18.8 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 this Plan and Trust shall become invalid or unenforceable, that
fact shall not affect the validity or enforceability of any other
provision of this Plan and Trust. All provisions of this Plan and
Trust shall be so construed as to render them valid and enforceable in
accordance with their intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries against
any and all liabilities resulting from any action or inaction,
(including a Plan termination in which the Company fails to apply for
a favorable determination from the Internal Revenue Service with
respect to the qualification of the Plan upon its termination), in
relation to the Plan or Trust (1) including (without limitation)
expenses reasonably incurred in the defense of any claim relating to
the Plan or its assets, and amounts paid in any settlement relating to
the Plan or its assets, but (2) excluding liability resulting from
actions or inactions made in bad faith, or resulting from the
negligence or willful misconduct of the Trustee. The Company shall
have the right, but not the obligation, to conduct the defense of any
action to which this Section applies. The Plan fiduciaries are not
entitled to indemnity from the Plan assets relating to any such
action.
51
<PAGE>
19 AMENDMENT, MERGER AND TERMINATION
---------------------------------
19.1 Amendment
The Company reserves the right to amend this Plan and Trust at any
time, to any extent and in any manner it may deem necessary or
appropriate. The Company (and not the Trustee) shall be responsible
for adopting any amendments necessary to maintain the qualified status
of this Plan and Trust under Code sections 401(a) and 501(a). The
Administrator shall have the authority to adopt Plan and Trust
amendments which have no substantial adverse financial impact upon an
Employer or the Plan. All interested parties shall be bound by any
amendment, provided that no amendment shall:
(a) become effective until it is accepted in writing by the Trustee
(which acceptance shall not unreasonably be withheld);
(b) except to the extent permissible under ERISA and the Code, make
it possible for any portion of the Trust assets to revert to an
Employer or to be used for, or diverted to, any purpose other
than for the exclusive benefit of Participants and Beneficiaries
entitled to Plan benefits and to defray reasonable expenses of
administering the Plan;
(c) decrease the rights of any Employee to benefits accrued
(including the elimination of optional forms of benefits) to the
date on which the amendment is adopted, or if later, the date
upon which the amendment becomes effective, except to the extent
permitted under ERISA and the Code; nor
(d) permit an Employee to be paid the balance of his or her Pre-Tax
Account unless the payment would otherwise be permitted under
Code section 401(k).
19.2 Merger
This Plan and Trust may not be merged or consolidated with, nor may
its assets or liabilities be transferred to, another plan unless each
Participant and Beneficiary would, if the resulting plan were then
terminated, receive a benefit just after the merger, consolidation or
transfer which is at least equal to the benefit which would be
received if either plan had terminated just before such event.
19.3 Plan Termination
The Company may, at any time and for any reason, terminate the Plan,
or completely discontinue contributions. Upon either of these events,
or in the event of a partial termination of the Plan within the
meaning of Code section 411(d)(3), the Accounts of each affected
Employee shall be fully vested.
52
<PAGE>
Complete distributions or withdrawals will be made in accordance with
the terms of the Plan as in effect at the time of the Plan's
termination or as thereafter amended provided that a post-termination
amendment will not be effective to the extent that it violates Section
19.1 unless it is required in order to maintain the qualified status
of the Plan upon its termination. The Trustee's and Employer's
authority shall continue beyond the Plan's termination date until all
Trust assets have been liquidated and distributed.
19.4 Termination of Employer's Participation
Any Employer may terminate its Plan participation upon written notice
executed by the Employer and delivered to the Company. Upon the
Employer's request, the Company may instruct the Trustee and
Administrator to spin off all affected Accounts and underlying assets
into a separate qualified plan under which the Employer shall assume
the powers and duties of the Company. Alternatively, the Company may
treat the event as a partial termination described above or continue
to maintain the Accounts under the Plan.
19.5 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust or may be
removed by the Company at any time upon at least 90 days written
notice (or less if agreed to by both parties). In such event, the
Company shall appoint a successor trustee by the end of the notice
period. The successor trustee shall then succeed to all the powers
and duties of the Trustee under this Plan and Trust. If no successor
trustee has been named by the end of the notice period, the Company's
chief executive officer shall become the trustee, or if he or she
declines, the Trustee may petition the court for the appointment of a
successor trustee.
19.6 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as is administratively feasible after
its resignation or removal as Trustee, the Trustee shall
transfer to the successor trustee all property currently held by
the Trust. However, the Trustee is authorized to reserve such
sum of money as it may deem advisable for payment of its
accounts and expenses in connection with the settlement of its
accounts or other fees or expenses payable by the Trust. Any
balance remaining after payment of such fees and expenses shall
be paid to the successor trustee.
(b) Final Accounting. The Trustee shall provide a final accounting
to the Administrator within 90 days of the date Trust assets are
transferred to the successor trustee.
53
<PAGE>
(c) Administrator Approval. Approval of the final accounting will
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period.
Such approval shall be final as to all matters and transactions
stated or shown therein and binding upon the Administrator.
54
<PAGE>
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered to Participants and Beneficiaries as of the
Execution Date include this set of daily valued funds:
Category Funds
-------- -----
Money Market Money Market
------------
Fixed Income Income Accumulation
------------ Short-Intermediate Term
U.S. Treasury Allocation
Balanced Asset Allocation
--------
Equity Growth Stock
------ SEI International Equity
S&P 500 Stock
S&P MidCap Stock
II. Default Investment Fund
The default Investment Fund as of the Execution Date is the Money Market
Fund.
III. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of the Effective Date, there are no maximum percentage restrictions
applicable to any Investment Funds.
55
<PAGE>
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
1) Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants.
2) Recordkeeping Fees: These are paid by Participants and are assessed monthly
and billed/collected from Accounts quarterly.
3) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding loan
balance for loans entered into on or after January 1, 1990.
4) Investment Fund Election Changes: For each Investment Fund election change
by a Participant, in excess of 4 changes per year, a $10 fee will be
assessed and billed/collected quarterly from the Participant's Account.
5) Recurring Payment Fees: A $3.00 per check fee will be assessed and
billed/collected quarterly from the Participant's Account.
6) Additional Fees Paid by Participants: Trustee, nondiscrimination testing,
Form 5500 preparation and Participant Account statement handling and
postage fees shall be added to the recordkeeping fees and assessed against
Participants' Accounts, per 2) above. Estimates of the fees shall be
determined and reconciled, at least annually.
56
<PAGE>
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the U.S. Treasury rate for a note of the same maturity, plus 1%.
The rate may be determined once for all loans made in a month, and the maturity
may be determined to the nearest year.
57
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 21,742
<SECURITIES> 2,709
<RECEIVABLES> 291,939
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 347,186
<PP&E> 123,111
<DEPRECIATION> 64,345
<TOTAL-ASSETS> 488,335
<CURRENT-LIABILITIES> 243,067
<BONDS> 0
<COMMON> 25,247
0
0
<OTHER-SE> 193,106
<TOTAL-LIABILITY-AND-EQUITY> 488,335
<SALES> 0
<TOTAL-REVENUES> 809,102
<CGS> 0
<TOTAL-COSTS> 719,523
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32
<INCOME-PRETAX> 24,591
<INCOME-TAX> 9,739
<INCOME-CONTINUING> 14,852
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,852
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
</TABLE>
