UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1998 Commission File No. 0-1370
LONGVIEW FIBRE COMPANY
(Exact name of registrant as specified in its charter)
Washington 91-0298760
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Fibre Way, Longview, Washington 98632
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (360) 425-1550
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $1.50 Ascribed Value New York Stock Exchange
Rights to purchase Common Stock New York Stock Exchange _
Securities registered pursuant to Section 12(g) of the Act: None
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant. The aggregate market value shall be
computed by reference to the price at which the common equity was sold, or the
average bid and asked prices of such common equity, as of a specified date
within 60 days prior to the date of filing.
Market value per share $11.5625 as of December 31, 1998 Total $536,652,301
Indicate the number of shares outstanding of each of the issuer's class of
common stock as of December 31, 1998. 51,676,567 shares outstanding
DOCUMENTS INCORPORATED BY REFERENCE
PART III - NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
dated December 16, 1998.
PART IV - QUARTERLY REPORT ON FORM 10-Q dated April 30, 1998.
CURRENT REPORT ON FORM 8-K dated December 18, 1998.
Page 1<PAGE>
PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
Longview Fibre Company was incorporated in the State of Washington in
1990 as a successor to a company of the same name incorporated in the
State of Delaware in 1926. No general development of material importance
has occurred during the past fiscal year.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
This item is completed by reference to Note 10 of Item 8 of Part II of
this Form 10-K.
(c) NARRATIVE DESCRIPTION OF BUSINESS
(i-x) Principal Products, Markets and Methods of Distribution
TIMBER - The company owns and operates tree farms in Oregon and
Washington which produce logs for sale in the domestic and export
markets. The majority of domestic sales are to independent
sawmills and plywood plants within a reasonable hauling distance
from our tree farms. The company exports logs principally to Japan
through sales to U.S. exporters or directly to foreign importers.
The company does not believe that the loss of one customer or group
of customers would have a material effect on the company.
At October 31, 1998, the company owned in fee 570,863 acres of tree
farms which are managed on a sustained yield basis with rotations
of 40 years for hardwood and 55 to 70 years for coniferous species.
Based on recent large purchases and sales, we now estimate the
value of the tree farms to be between six and eight times book
value. Environmental regulations requiring set asides, buffer zones
and which otherwise limit our ability to harvest timber reduce the
value of our tree farms. The company estimates that the reduction
in value due to such regulations does not exceed twelve percent of
realizable value.
The company owns and operates a sawmill in Leavenworth, Washington.
Having a sawmill in this region has improved the log realization of
the Chelan tree farm. Residual wood chips are used at the
company's pulp and paper mill in Longview, Washington.
PAPER AND PAPERBOARD - The company's pulp and paper mill in
Longview, Washington produces pulp which is manufactured into kraft
paper and containerboard.
Sales of paper are made primarily in the domestic market with some
grades of paper sold in the export market. Containerboard is sold
in the export market and in the Pacific Coast states. The loss of
a single customer, or a few customers, would not have a material
effect on the company. Products are sold by the company's sales
force working out of San Francisco and Los Angeles, California;
Longview, Washington; Milwaukee, Wisconsin; and Atlanta, Georgia or
through paper merchants.
Page 2<PAGE>
The mill's raw material fibers come primarily from purchased wood
chips and sawdust with important contributions from fiber reclaimed
from post-consumer and post-industrial waste, purchased bleached
pulp, and augmented by log chipping operations owned by the company
and others. Wood chips, our principal raw material, and sawdust
and shavings are purchased from more than 60 sawmills, plywood
plants and whole-log chipping facilities within a 1,300-mile radius
from the Longview Mill. The company purchases bleached pulp from
various sources including an arrangement to purchase pressed
bleached pulp (which has not been dried) from a nearby mill which
has excess capacity. This has proven to be a beneficial
arrangement.
Modest rebuilds to improve paper machines are continuing, including
improved stock preparation equipment on No. 11 machine to benefit
the operation on extensible grades and replacement of an obsolete
drive on No. 9 machine for which parts are no longer manufactured.
To spread risk, the company has been engaged in a long campaign to
increase value added products, such as extensible paper, recycled
kraft paper, masking paper and colored kraft paper. Through the
years, paper machines of various trim widths and capabilities have
been added while the smaller and older machines have been kept in
service to make small lots of colors and other specialties. During
the course of this evolution, the basic commodity products
(paperboard and bag paper) were not neglected as this makes the
volume great enough to lower pulp and utility costs. Several
machines are swing machines which can produce paper or paperboard.
Due to current market conditions, a greater proportion of
paperboard is being produced.
CONVERTED PRODUCTS - The company's fifteen converting plants in ten
states produce shipping containers and merchandise bags. The
tonnage of paper and containerboard used in the converting plants
equals approximately 64% of the Longview mill production.
Bags are sold by the company's sales force working out of San
Francisco and Los Angeles, California; Longview, Washington; and
Waltham, Massachusetts. Sales are made directly or through paper
merchants.
Corrugated and solid fibre boxes are sold by the company's offices
located at Longview, Seattle and Yakima, Washington; Portland,
Oregon; San Francisco, Los Angeles and Oakland, California; Twin
Falls, Idaho; Spanish Fork and Cedar City, Utah; Milwaukee,
Wisconsin; Cedar Rapids, Iowa; Minneapolis, Minnesota; Atlanta,
Georgia; Amsterdam, New York; and Springfield, Massachusetts. The
loss of a single customer, or a few customers, would not have a
material effect on the business of the company.
The Rockford Box Plant has been shut down because of lack of
profitability. The building and some equipment will be sold, and
some equipment will be moved to other plants.
Plant modernization at our other box plants is essentially
complete. The sheet plant at Grand Forks, North Dakota, is in
operation. The building at Cedar Rapids is being enlarged to make
room for some essential large box equipment from Rockford.
Page 3<PAGE>
Manufacture of most sizes of grocery and carry bags at the Spanish
Fork plant has been discontinued because of continued losses. The
bulk of the equipment has been sold.
In the paper and paperboard segment, there is intense competition
among a significant number of competitors, including conventional
paper mills, and recycling mills that rely on recycled post-
consumer and industrial material as the principal fibre source.
The converted products segment also involves intense competition
among many competitors. Competition in these manufacturing
segments is based principally on price, quality of product, service
and reliability. The company emphasizes quality, service and
reliability, and has not competed aggressively on the basis of
price or sought out large national customer accounts that
frequently involve demands for discount pricing.
The following table sets forth the contribution to sales by each
class of similar products which accounted for more than 10% of
sales.
1998 1997 1996
Timber 22% 24% 23%
Paper and Paperboard 26% 25% 24%
Converted Products 52% 51% 53%
No material portion of the business of the company is seasonal.
The practice of the company and the industry does not require an
abnormal amount of working capital.
(xii) This item is completed by reference to Item 7 of Part II of this
Form 10-K.
(xiii) The company has approximately 3,700 employees.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
Segment information (including amount of export sales) is completed by
reference to Note 10 of Item 8 of Part II of this Form 10-K.
(e) The company electronically files the following reports with the
Securities and Exchange Commission: Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K and Proxy
Statement on Form DEF 14-A. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file
electronically with the SEC. The public may read and copy any materials
filed with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
ITEM 2. PROPERTIES
The principal plants and important physical properties of the company are held
without any major encumbrances and their respective locations by industry
segment are as follows:
Page 4<PAGE>
TIMBER - As of October 31, 1998, the company owned in fee 570,863 acres of
tree farms located in various counties of Washington and Oregon. The company
as a matter of policy has consistently acquired and intends to continue to
acquire more timberlands whenever available at acceptable prices dependent on
the location and quality of the site involved and the species and quality of
the merchantable timber and growing stock thereon. The company operates its
tree farms on a sustained yield basis with rotations of 40 years for hardwood
and 55 to 70 years for coniferous species. No large inventory of mature trees
is maintained.
PAPER AND PAPERBOARD - At Longview, Washington on a site of approximately 350
acres owned by the company with deep water frontage on the Columbia River and
featuring connections with two transcontinental railroads and adequate highway
access, there is an integrated operation for producing pulp and delivering it
to twelve paper and/or containerboard machines with full supporting
facilities.
Mill utilization was at 75% during fiscal 1998.
CONVERTED PRODUCTS - On the same site at Longview there is a box factory for
production of solid fibre and corrugated boxes.
At each of the following thirteen locations, there are factories for the
production of converted products:
Oakland, California Corrugated Boxes Only
Twin Falls, Idaho " " "
Cedar Rapids, Iowa " " "
Springfield, Massachusetts " " "
Minneapolis, Minnesota " " "
Amsterdam, New York " " "
Seattle, Washington " " "
Yakima, Washington " " "
Grand Forks, North Dakota Corrugated Boxes from Corrugated Sheets
Cedar City, Utah " " "
Spanish Fork, Utah Corrugated Boxes, Merchandise Bags
and Specialty Bags
Milwaukee, Wisconsin Corrugated and Solid Fibre Boxes
Waltham, Massachusetts Merchandise Bags and Specialty Bags
The volume of converted products sold decreased during the past fiscal year.
Capacity is available for increased sales.
ITEM 3. LEGAL PROCEEDINGS
The company is a party to various proceedings relating to the cleanup of
hazardous waste under the Comprehensive Environmental Response Compensation
and Liability Act, and similar state laws. The company is also a party to
other legal proceedings generally incidental to its business. Although the
final outcome of any legal proceeding cannot be predicted with any degree of
certainty, the company presently believes that any ultimate liability
resulting from any of the legal proceedings, or all of them combined, would
not have a material effect on the company's financial position or results of
operation. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Forward Looking Statements" in Item 7 of Part II
of this Form 10-K.
Page 5<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing was submitted during the fourth quarter of the fiscal year to a vote
of the shareholders.
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Office and Year First Elected
R. P. Wollenberg 83 (1) Chairman of the Board, President and
Chief Executive Officer (1953)
R. E. Wertheimer 70 (2) Executive Vice President (1960)
R. J. Parker 50 (3) Senior Vice President-Production (1994)
and Mill Manager
D. L. Bowden 63 (4) Senior Vice President-Timber (1989)
L. J. Holbrook 43 (5) Senior Vice President-Finance,
Secretary and Treasurer (1989)
D. C. Stibich 67 (6) Senior Vice President-Paper Sales (1981)
R. B. Arkell 67 (7) Vice President-Industrial Relations
and General Counsel (1986)
R. H. Wollenberg 45 (8) Senior Vice President-Production
Western Container Division (1996)
(1) R. P. Wollenberg
From 1985 Chairman, President and Chief Executive Officer
1978-1985 President and Chief Executive Officer
1969-1978 President
1960-1969 Executive Vice President
(2) R. E. Wertheimer
From 1985 Executive Vice President
1975-1985 Vice President-Container Division
1974-1975 Vice President-Production
1963-1974 Vice President-Container Sales
(3) R. J. Parker
From 1994 Senior Vice President-Production
1993-1994 Vice President and Assistant to the President
1992-1993 Pulp Mill Superintendent
1985-1992 Assistant Pulp Mill Superintendent
(4) D. L. Bowden
From 1992 Senior Vice President-Timber
1989-1992 Vice President-Timber
1980-1989 Assistant Timber Manager
Page 6<PAGE>
(5) L. J. Holbrook
From 1992 Senior Vice President-Finance, Secretary and Treasurer
1991-1992 Vice President-Finance, Secretary and Treasurer
1989-1991 Assistant Secretary and Assistant Treasurer
(6) D. C. Stibich
From 1986 Senior Vice President Paper Sales
1981-1986 Vice President Paper Sales
1968-1981 Manager Paper Sales
(7) R. B. Arkell
From 1979 Vice President Industrial Relations and General Counsel
(8) R. H. Wollenberg
From 1995 Senior Vice President-Production, Western Container
Division
1994-1995 Vice President-Production, Western Container Division
1993-1994 Manager-Production, Western Container Division
1988-1993 Assistant General Counsel
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Transaction prices per share as reported on the New York Stock Exchange are
reported below.
Fiscal 1998 1997
Quarter High Low High Low
1st $17.38 $14.31 $19.25 $16.50
2nd 17.13 15.00 17.25 15.00
3rd 17.44 11.75 19.50 16.13
4th 13.44 9.50 22.38 15.88
The company estimated it had approximately 11,000 shareholders on December 8,
1998.
Dividends per share paid in fiscal 1998, 1997 and 1996:
1998 1997 1996
January $0.16 $0.16 $0.15
April 0.16 0.16 0.15
July 0.14 0.16 0.15
October 0.08 0.16 0.19
$0.54 $0.64 $0.64
The Directors declared a regular dividend of $0.02 per share which was paid on
January 8, 1999, to shareholders of record on December 24, 1998.
Restrictions on the company's ability to pay cash dividends are completed by
reference to Note 4 of Item 8 of Part II of this Form 10-K.
Page 7<PAGE>
ITEM 6. SELECTED FINANCIAL AND OTHER DATA
<TABLE>
<S> <C> <C> <C> <C> <C>
(dollars in thousands except per share) 1998 1997 1996 1995 1994
STATEMENT OF INCOME
Net Sales . . . . . . . . . . . . . . . $ 753,244 $ 772,845 $ 822,722 $ 985,515 $ 790,874
Timber. . . . . . . . . . . . . . . . 166,037 186,814 186,405 207,735 197,978
Paper and paperboard. . . . . . . . . 193,154 196,192 199,827 308,356 223,920
Converted products. . . . . . . . . . 394,053 389,839 436,490 469,424 368,976
Cost of products sold, including
outward freight . . . . . . . . . . . 666,960 661,684 657,737 778,032 659,309
Gross profit. . . . . . . . . . . . . . 86,284 111,161 164,985 207,483 131,565
Selling, administrative and general
expenses. . . . . . . . . . . . . . . 64,693 63,760 60,199 59,709 54,769
Operating profit. . . . . . . . . . . . 21,591 47,401 104,786 147,774 76,796
Timber. . . . . . . . . . . . . . . . 74,470 101,740 104,449 121,738 111,907
Paper and paperboard. . . . . . . . . (13,009) (5,143) 4,300 7,442 (15,703)
Converted products. . . . . . . . . . (39,870) (49,196) (3,963) 18,594 (19,408)
Interest expensed . . . . . . . . . . . (39,935) (31,613) (29,506) (29,447) (24,384)
Other income. . . . . . . . . . . . . . 4,192 3,706 11,584 1,912 1,902
Income (loss) before income taxes . . . (14,152) 19,494 86,864 120,239 54,314
Provision for income taxes. . . . . . . (7,500) 6,800 30,500 44,200 20,900
Net income (loss) . . . . . . . . . . . (6,652) 12,694 56,364 76,039 33,414
PER SHARE
Net income (loss) . . . . . . . . . . . $ (0.13)$ 0.25 $ 1.09 $ 1.47 $ 0.64
Dividends . . . . . . . . . . . . . . . 0.54 0.64 0.64 0.60 0.52
Earnings reinvested in the business . . (0.67) (0.39) 0.45 0.87 0.12
Shareholders' equity at year-end. . . . 8.03 8.70 9.10 8.65 7.80
Average shares outstanding (thousands). 51,677 51,691 51,731 51,787 51,861
Shares outstanding at year-end (thousands) 51,677 51,677 51,706 51,751 51,830
BALANCE SHEET DATA
Total assets. . . . . . . . . . . . . . $1,263,343 $1,260,903 $1,197,280 $1,153,823 $1,022,049
Working capital . . . . . . . . . . . . 55,318 40,381 50,974 42,559 35,761
Capital assets. . . . . . . . . . . . . 1,004,837 1,013,361 951,137 906,586 815,509
Deferred taxes - net. . . . . . . . . . (142,827) (141,623) (135,106) (119,205) (103,234)
Long-term debt. . . . . . . . . . . . . 547,018 498,137 426,255 409,374 366,492
Shareholders' equity. . . . . . . . . . 414,949 449,506 470,412 447,899 404,253
OTHER DATA
Sales: Logs, thousands of board feet . 235,000 218,000 243,000 262,000 250,000
Lumber, thousands of board feet 76,000 65,000 33,000 32,000 36,000
Paper, tons . . . . . . . . . . 221,000 202,000 207,000 259,000 236,000
Paperboard, tons. . . . . . . . 140,000 177,000 129,000 212,000 181,000
Converted products, tons. . . . 524,000 548,000 542,000 572,000 549,000
Logs, $/thousand board feet . . $ 598 $ 724 $ 719 $ 753 $ 743
Lumber, $/thousand board feet . 336 443 367 313 352
Paper, $/ton FOB mill equivalent 610 638 664 698 592
Paperboard, $/ton FOB mill
equivalent. . . . . . . . . . 353 332 356 489 336
Converted products, $/ton . . . 752 711 805 821 672
Primary production, tons. . . . . . . . 903,000 958,000 905,000 1,058,000 968,000
Employees . . . . . . . . . . . . . . . 3,700 3,900 3,900 3,800 3,750
Funds: Used for plant and equipment. . $ 73,054 $ 139,727 $ 127,558 $ 138,613 $ 81,544
Used for timber and timberlands 15,622 15,716 3,822 35,046 43,494
</TABLE>
Page 8<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS fiscal 1998 vs. fiscal 1997
A net loss of $6,652,000 was incurred in fiscal 1998 as compared with net
income of $12,694,000 in fiscal 1997. The loss resulted from a significant
decrease in timber operating profit, continued operating losses in the
manufacturing segments of the business and increased interest expensed.
Operating profits for the timber segment declined 27% in fiscal 1998 to
$74,470,000 from $101,740,000 in fiscal 1997. The reduced operating profit
resulted from average log and lumber prices decreasing 17% and 24%,
respectively. Export log prices deteriorated during the latter half of 1997
due to the supply of logs in the marketplace exceeding end user demand in
Japan and the strong U.S. dollar. Export markets bottomed out early in 1998
as demand improved and prices stabilized. Fiscal year end export prices
remain below recent peak levels experienced in the first quarter 1997.
Despite a healthy housing market and strong end user demand, domestic lumber
prices declined. The decline in prices was caused by volume, displaced from
slow export markets (particularly Asia), entering the domestic market creating
excess supply. Domestic log prices declined 10% as a consequence of the weak
lumber prices.
The company operates its 570,863 acres on a sustained yield basis with
rotations of 40 years for hardwood and 55 to 70 years for coniferous species.
Based on recent large purchases and sales, we now estimate the value of the
tree farms to be between six and eight times book value. Environmental
regulations requiring set asides, buffer zones and which otherwise limit our
ability to harvest timber reduce the value of our tree farms. The company
estimates that the reduction in value due to such regulations does not exceed
12% of realizable value.
Operating losses for paper and paperboard increased from $5,143,000 in fiscal
1997 to $13,009,000 in fiscal 1998. The primary reasons for this change were
increased wood chip costs, lower operating rates, a 4% reduction in average
paper prices, and a 5% decrease in volume sold. Average paperboard prices
increased 6%.
Principal raw materials for paper and paperboard include wood chips, purchased
bleached pulp, sawdust and reclaimed fibers. Wood chip costs were about 20%
higher than the prior fiscal year. Old corrugated container ("OCC") prices
have remained low but may increase. Fiber costs are being reduced by
increased use of OCC and by reducing the portion of chips manufactured from
whole logs, which cost more than chips saved from sawmill wastes. Prices of
sawmill residual chips are also declining. Purchase of bleached pulp from a
variety of sources has proved to be a beneficial arrangement.
Export linerboard and paper markets, particularly in Asia, continue to be
slow. Average export linerboard prices improved during the first half of the
year, but deteriorated in the fourth quarter. Domestic markets were fair but
have been adversely affected by the soft Asian markets.
Page 9<PAGE>
Due to the current market conditions mill operations were rescheduled by
shutting down the equivalent of at least two machines and leveling production
at approximately 75% of total capacity. The number of paper machine crews has
been reduced to support the scaled down schedule. In addition to reducing
labor costs, this schedule should also improve operating efficiencies and
reduce energy and fiber costs. See "Forward-Looking Statements." During the
year, the mill operated at approximately 75% of capacity.
Operating losses from converted products decreased from $49,196,000 in fiscal
1997 to $39,870,000 in fiscal 1998 due primarily to a 6% increase in average
price, offset in part by higher costs for containerboard used to manufacture
boxes. Due to continued poor performance, the long term viability of certain
converting plants and product lines were studied. As a result of these
studies the Rockford box plant was closed in October 1998. The building and
some equipment will be sold and the balance of the equipment will be moved to
other box plant facilities. Most sizes of the grocery bag product line were
discontinued with the bulk of the equipment sold.
Demand for converted products was at satisfactory levels during the year but
some box price deterioration has occurred due to recent containerboard price
decreases. The company continues to develop its specialty and niche products
to improve margins.
Selling, administrative and general expenses were 9% of sales in fiscal 1998
and 8% of sales in fiscal 1997. Higher total borrowing and proportionately
less interest capitalized for uncompleted capital projects resulted in an
increase in interest expensed from $31,613,000 to $39,935,000.
The strength of the market for the company's log and manufactured products
will depend on recovery in Asia and general business conditions in the U.S.
Both of these are very difficult to forecast at this time. Fiber costs should
be moderate as long as partial operation continues. If full operation becomes
possible, higher product prices should be achievable to offset higher chip
costs. The company will make substantial efforts to reduce cost and improve
quality.
RESULTS OF OPERATIONS fiscal 1997 vs. fiscal 1996
Results in fiscal 1997 were increasingly unsatisfactory as earnings decreased
77% from fiscal 1996.
Timber profits declined from $104,449,000 to $101,740,000 in fiscal 1997
primarily because of a 10% reduction in log footage sold. Volume declined
because the company did not aggressively market its logs into a weakening
export market. Average log prices were 1% higher. Domestic log prices
remained firm. Export log prices declined during the year due to an increase
in the supply of export quality logs, reduced end user demand and the strength
of the U.S. dollar. Although export prices declined, they were at good
levels.
Operating results for paper and paperboard declined from an operating profit
in fiscal 1996 of $4,300,000 to an operating loss of $5,143,000 in fiscal
1997. The addition of new recycling containerboard mills increased industry
capacity and resulted in lower prices for containerboard. Average paperboard
and paper prices decreased 7% and 4%, respectively, while volume sold
increased 13%. Product prices improved modestly in the fourth quarter but not
to levels needed for profitable results.
Page 10<PAGE>
Wood chip costs were about 26% lower than the prior fiscal year. Chip costs
increased at the end of fiscal 1997. Maximum efforts continued to broaden
supply by greater recovery of woods wastes and going further distances for
sawmill wastes. Purchase of bleached pulp from a variety of sources has
proved to be a beneficial arrangement. OCC prices remained low.
Mill operation was at about 85% of capacity. Downtime was utilized for
vacations and displaced machine crews were reassigned as temporary mechanical
helpers so no lay-offs resulted. Reassigning machine crews reduced the
backlog of maintenance and installation work.
Operating losses from converted products increased from $3,963,000 in fiscal
1996 to $49,196,000 in fiscal 1997 due to a reduction in average price of 12%.
Corrugated box prices were driven down by lower containerboard prices
available in the marketplace due to increased industry capacity.
With an increasingly flexible national market for both electricity and natural
gas, some additional margin was achieved by shutting cogeneration down for
periods when spot replacement electricity costs were less and our purchased
gas was wheeled to others with some overall cost reduction. During fiscal
1996, miscellaneous income included $9,470,000 received as consideration for
the termination of an electrical power sales agreement.
Selling, administrative and general expenses were 8% of sales in fiscal 1997
and 7% of sales in fiscal 1996. Higher total borrowing resulted in an
increase in interest expensed from $29,506,000 to $31,613,000.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations was $69,369,000 in fiscal 1998 compared with
$116,635,000 in fiscal 1997. The decrease was primarily due to reduced
earnings and decreased levels of payables at year end.
Working capital was $55,318,000 at October 31, 1998 compared to $40,381,000 at
October 31, 1997.
Capital expenditures for the year exceeded available funds from cash flow and
were funded by borrowings. Therefore, long-term debt, current installments of
long-term debt and short-term borrowings increased by an aggregate of
$49,382,000 in fiscal 1998.
At October 31, 1998 the company had bank lines of credit totaling
$380,000,000. Of this amount, $260,000,000 was under a credit agreement with
a group of banks expiring February 28, 2001, with renewal provisions beyond
that date. The agreement provides for borrowings at the Offshore Rate (LIBOR
based) plus a spread, currently 0.60% , or the bank's Reference rate,
whichever the company selects. The credit agreement contains certain
financial covenants and provides for a facility fee, currently 0.275% per
year. The company had outstanding $260,000,000 of notes payable under this
agreement at October 31, 1998. At October 31, 1998, the company had an
outstanding balance of $81,500,000 under the remaining $120,000,000 of lines
of credit. The unused portion of all lines of credit was $38,500,000.
Also outstanding at October 31, 1998 were senior notes of $247,000,000 and
revenue bonds of $28,900,000. For further details regarding borrowing, see
Notes 3 and 4 of Item 8 of Part II of this Form 10-K.
Page 11<PAGE>
During the quarter ended July 31, 1998, the company obtained waivers from the
holders of certain senior notes with respect to compliance with covenants that
require the company to maintain a specified ratio of net income available for
fixed charges to fixed charges. The waiver reducing the coverage requirements
is effective beginning on July 31, 1998 until the date that the company makes
publicly available its financial statements for the quarter ending January 31,
1999. In connection with the grant of the waivers, the company agreed to
increase the interest rate of the notes by 0.25% during the waiver period and
to pay certain additional fees. In September 1998 the company prepaid,
through the use of existing bank credit lines, $30,000,000 of senior notes.
Capital expenditures for fiscal 1998 were $73,054,000 for plant and equipment
and $15,622,000 for timberlands. Capital expenditures for fiscal 1997 for
plant and equipment were $139,727,000 and for timberlands were $15,716,000.
The backlog of approved capital projects as of October 31, 1998 was
$16,000,000. With reduced cash flow from operations, the company plans to
reduce capital expenditures such that expenditures for capital projects will
be substantially less than depreciation charges, which should result in a
reduction of debt. See "Forward-Looking Statements." While much remains to
be done to optimize our manufacturing capabilities, we believe the most urgent
projects have been completed.
Capital expenditures for plant and equipment are expected to be between
$15,000,000 and $30,000,000 in fiscal 1999. Purchase of timberlands will
depend on offerings, price levels and competition. We expect any offers we
make will be at prices we believe to be conservative. We plan to fund capital
expenditures principally from internally generated funds.
During fiscal 1998, the company did not purchase shares of its stock. During
fiscal 1997, the company purchased 29,010 shares for an average price of
$17.85 per share. Purchases began in 1964; the total number of shares
acquired through fiscal 1998 is 21,403,633 shares for $97,090,164 at an
average cost of $4.54 per share. Stock purchases increase interest costs and
thus reduce corporate earnings. When earnings are good, stock purchases can
increase earnings per share. In a bad year, the interest cost can decrease
earnings per share slightly.
Dividends of $0.54 per share were paid in fiscal 1998 and $0.64 in fiscal
1997. The Board of Directors declared a dividend of $0.02 per share which was
paid on January 8, 1999, to shareholders of record on December 24, 1998. A
growing percentage of debt combined with a lack of earnings has necessitated
dividend cuts. Restoration of dividends to the prior level is a high
priority, but there can be no assurance that the company's future results will
support increased dividends.
YEAR 2000 ISSUES
The company is committed to reducing or eliminating the effects of the Year
2000 ("Y2K") issues on its systems and production processes. Y2K compliance is
not an issue for our products. In 1996 a company-wide program was started to
identify all aspects of our operations subject to Y2K issues and to provide
for a smooth transition into the next millennium. The plan is designed to
assess current compliance and to implement corrective measures for non-
compliant systems and equipment. We plan to have our systems that are
material to the conduct of our business compliant by September 1, 1999. See
"Forward-Looking Statements." The company plans to achieve compliance by
December 31, 1999. The identification phase, inventory, and action plan are
Page 12<PAGE>
complete. Of the systems and equipment identified and inventoried, an
estimated 80% of the inventory has been found to be compliant or has been
corrected. The estimated remediation cost is approximately $2,500,000 of
which $1,000,000 has been incurred to date. We are also in the process of
surveying our vendors, principal customers and business partners regarding
their Y2K compliance. Some aspects of the Y2K situation are beyond our
reasonable control; for example, compliance by our vendors, customers,
business partners and the possible effects of Y2K issues on national and
worldwide communications and banking services. As part of this process, we
are assessing possible Y2K risks and developing contingency plans.
OTHER
The company continually reviews any known environmental exposures including
the cost of remediation. At the present time, the company is not aware of any
environmental liabilities that would have a material impact on the
consolidated financial statements. See "Forward-Looking Statements."
The company believes it is in substantial compliance with Federal, State and
local laws regarding environmental quality. The Environmental Protection
Agency (EPA) has issued a final air and water quality rule referred to as the
"Cluster Rule." The company estimates that over the next 2 to 3 years
required pollution control capital expenditures could range from $10,000,000
to $20,000,000 with another $20,000,000 to $30,000,000 possible 5 years later.
See "Forward-Looking Statements."
Although future pollution control expenditures cannot be predicted with any
certainty because of continuing changes in laws and regulations and
uncertainty as to how they will be interpreted and applied, the company
believes that compliance with these regulations will not have a material
impact on its capital expenditures, earnings or competitive position. See
"Forward-Looking Statements."
New regulations are being developed to protect the salmon in the Pacific
Northwest which may further restrict our ability to harvest timber and
increase cost, but until the regulations are adopted, the magnitude cannot be
predicted with certainty.
The company's consolidated financial statements are prepared based on
historical costs and do not portray the effects of inflation. The impact of
inflation is most noticeable for inventories and capital assets, although most
of the inflationary effect on inventories is already portrayed in the
consolidated income statement by the use of the LIFO method of inventory
valuation.
FORWARD-LOOKING STATEMENTS
This Form 10-K contains forward-looking statements, including statements
concerning anticipated pricing and market conditions for the company's
products and certain raw materials, anticipated competitive conditions and the
actions of competitors, the expected results of planned paper mill improvement
projects and operating schedules, the anticipated cost of and availability of
financing for planned capital improvement projects, the anticipated cost of
compliance with certain environmental regulations and effects of environmental
contingencies and litigation on financial conditions and results of
operations, and the estimated cost, completion date and success of the
company's Y2K compliance program. Certain forward-looking statements are
Page 13<PAGE>
identified by a cross-reference to this section. Forward-looking statements
are based on the company's estimates and projections on the date when they are
made, and are subject to a variety of risks and uncertainties. Actual events
could differ materially from those anticipated by the company due to a variety
of factors, including, among others, developments in the world, national or
regional economy or involving the company's customers or competitors affecting
supply of or demand for the company's products or raw materials, changes in
product or raw material prices, changes in currency exchange rates between the
U. S. dollar and the currencies of important export markets, capital project
delays or cost overruns, weather, labor disputes, unforeseen adverse
developments involving environmental matters or other legal proceedings or
the assertion of additional claims, significant unforeseen developments in
the company's business, adverse changes in the capital markets or interest
rates affecting the cost or availability of financing or other unforeseen
events. The company does not undertake any obligation to update forward-
looking statements should circumstances or the company's estimates or
projections change.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company has not engaged in commodity, currency or interest rate hedging
arrangements or engaged in transactions involving derivatives.
Note 6 of Item 8 of Part II of this Report on Form 10-K is incorporated herein
by reference.
Page 14<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
PAGE
Financial Statements:
Report of Independent Accountants . . . . . . . . . . . . . . . . . 15
Consolidated Statement of Income for the
three years ended October 31, 1998 . . . . . . . . . . . . . . . 16
Consolidated Statement of Shareholders'
Equity for the three years ended October 31, 1998. . . . . . . . 16
Consolidated Balance Sheet at October 31,
1998, 1997 and 1996. . . . . . . . . . . . . . . . . . . . . . . 17
Consolidated Statement of Cash Flows for
the three years ended October 31, 1998 . . . . . . . . . . . . . 18
Notes to Consolidated Financial Statements. . . . . . . . . . . . . 19
Financial Statement Schedules:
Schedules have been omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes
thereto of this Form 10-K.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Longview Fibre Company
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Longview Fibre Company and its subsidiaries at October 31, 1998,
1997 and 1996, and the results of their operations and their cash flows for
each of the three years in the period ended October 31, 1998, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
\s\ PricewaterhouseCoopers
PricewaterhouseCoopers
Portland, Oregon
December 8, 1998
Page 15<PAGE>
CONSOLIDATED STATEMENT OF INCOME
Years Ended October 31
(thousands except per share) 1998 1997 1996
NET SALES. . . . . . . . . . . . . . . . . . . $753,244 $772,845 $822,722
Timber . . . . . . . . . . . . . . . . . 166,037 186,814 186,405
Paper and paperboard . . . . . . . . . . 193,154 196,192 199,827
Converted products . . . . . . . . . . . 394,053 389,839 436,490
Cost of products sold, including
outward freight . . . . . . . . . . . . . . . 666,960 661,684 657,737
GROSS PROFIT . . . . . . . . . . . . . . . . . 86,284 111,161 164,985
Selling, administrative and general expenses . 64,693 63,760 60,199
OPERATING PROFIT . . . . . . . . . . . . . . . 21,591 47,401 104,786
Timber . . . . . . . . . . . . . . . . . 74,470 101,740 104,449
Paper and paperboard . . . . . . . . . . (13,009) (5,143) 4,300
Converted products . . . . . . . . . . . (39,870) (49,196) (3,963)
Interest income. . . . . . . . . . . . . . . . 1,256 784 611
Interest expensed. . . . . . . . . . . . . . . (39,935) (31,613) (29,506)
Miscellaneous. . . . . . . . . . . . . . . . . 2,936 2,922 10,973
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . (14,152) 19,494 86,864
PROVISION FOR TAXES ON INCOME (see Note 9)
Current. . . . . . . . . . . . . . . . . . . . (8,503) (1,315) 14,861
Deferred . . . . . . . . . . . . . . . . . . . 1,003 8,115 15,639
(7,500) 6,800 30,500
NET INCOME (LOSS). . . . . . . . . . . . . . . $ (6,652) $ 12,694 $ 56,364
Per share. . . . . . . . . . . . . . . . $ (0.13) $ 0.25 $ 1.09
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(thousands) 1998 1997 1996
COMMON STOCK:
Balance at beginning of year . . . . . . $ 77,515 $ 77,558 $ 77,627
Ascribed value of stock purchased. . . . _- (43) (69)
Balance at end of year . . . . . . . . . $ 77,515 $ 77,515 $ 77,558
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year . . . . . . $ 3,306 $ 3,306 $ 3,306
Balance at end of year . . . . . . . . . $ 3,306 $ 3,306 $ 3,306
RETAINED EARNINGS:
Balance at beginning of year . . . . . . $368,685 $389,548 $366,966
Net income (loss). . . . . . . . . . . . (6,652) 12,694 56,364
Less cash dividends on common stock
($0.54, $0.64, $0.64 per share,
respectively) . . . . . . . . . . . . (27,905) (33,083) (33,107)
Less purchases of common stock . . . . . - (474) (675)
Balance at end of year . . . . . . . . . $334,128 $368,685 $389,548
COMMON SHARES:
Balance at beginning of year . . . . . . 51,677 51,706 51,751
Purchases. . . . . . . . . . . . . . . . - (29) (45)
Balance at end of year . . . . . . . . . 51,677 51,677 51,706
The accompanying notes are an integral part of the financial statements.
Page 16<PAGE>
CONSOLIDATED BALANCE SHEET
October 31
(dollars in thousands except per share) 1998 1997 1996
ASSETS
Current assets:
Accounts and notes receivable. . . . . . . . $ 99,823 $ 105,850 $ 99,147
Allowance for doubtful accounts. . . . . . 1,100 1,100 1,100
Taxes on income, refundable. . . . . . . . . 7,020 693 -
Inventories (see Note 2) . . . . . . . . . . 83,959 84,502 93,718
Other. . . . . . . . . . . . . . . . . . . . 8,136 7,739 11,923
Total current assets . . . . . . 197,838 197,684 203,688
Capital assets:
Buildings, machinery and equipment at cost . 1,629,580 1,572,089 1,456,432
Accumulated depreciation . . . . . . . . . 850,268 774,852 710,946
Costs to be depreciated in future
years (see Note 5). . . . . . . . . . . 779,312 797,237 745,486
Plant sites at cost. . . . . . . . . . . . . 3,041 3,041 2,909
782,353 800,278 748,395
Timber at cost less depletion. . . . . . . . 193,979 187,141 177,683
Roads at cost less amortization. . . . . . . 9,298 8,866 8,956
Timberland at cost . . . . . . . . . . . . . 19,207 17,076 16,103
222,484 213,083 202,742
Total capital assets . . . . . . 1,004,837 1,013,361 951,137
Other assets . . . . . . . . . . . . . . . . 60,668 49,858 42,455
$1,263,343 $1,260,903 $1,197,280
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . $ 10,042 $ 9,834 $ 13,031
Accounts payable . . . . . . . . . . . . . . 37,251 53,647 44,533
Short-term borrowings (see Note 3) . . . . . 50,500 56,000 38,000
Payrolls payable . . . . . . . . . . . . . . 14,309 13,206 11,125
Other taxes payable. . . . . . . . . . . . . 10,299 10,498 11,906
Current installments of long-term debt . . . 20,119 14,118 34,119
Total current liabilities . . . 142,520 157,303 152,714
Long-term debt (see Note 4). . . . . . . . . 547,018 498,137 426,255
Deferred taxes - net (see Note 9). . . . . . 142,827 141,623 135,106
Other liabilities. . . . . . . . . . . . . . 16,029 14,334 12,793
Commitments (see Note 12). . . . . . . . . . - - -
Shareholders' equity:
Preferred stock; authorized 2,000,000 shares - - -
Common stock, ascribed value $1.50 per share;
authorized 150,000,000 shares; issued
51,676,567, 51,676,567 and 51,705,577
shares, respectively (see Note 11). . . . . 77,515 77,515 77,558
Additional paid-in capital . . . . . . . . . 3,306 3,306 3,306
Retained earnings. . . . . . . . . . . . . . 334,128 368,685 389,548
Total shareholders' equity . . . 414,949 449,506 470,412
$1,263,343 $1,260,903 $1,197,280
The accompanying notes are an integral part of the financial statements.
Page 17<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended October 31
(thousands) 1998 1997 1996
CASH PROVIDED BY (USED FOR) OPERATIONS:
Net income (loss). . . . . . . . . . . . . . $ (6,652) $ 12,694 $ 56,364
Charges to income not requiring cash:
Depreciation . . . . . . . . . . . . . . 86,990 81,213 74,709
Depletion and amortization . . . . . . . 5,906 5,158 4,745
Deferred taxes - net . . . . . . . . . . 1,204 6,517 15,901
(Gain) loss on disposition of capital
assets . . . . . . . . . . . . . . . . . (551) 3,961 5,762
Change in:
Accounts and notes receivable - net . . . 6,027 (6,703) 19,017
Inventories . . . . . . . . . . . . . . . 543 9,216 (11,184)
Taxes on income, refundable . . . . . . . (6,327) (693) -
Other . . . . . . . . . . . . . . . . . . (397) 4,184 (2,551)
Other noncurrent assets . . . . . . . . . (10,810) (7,403) (4,188)
Accounts, payrolls and other
taxes payable . . . . . . . . . . . . . (8,259) 6,950 (16,109)
Federal income taxes payable. . . . . . . - - (2,475)
Other noncurrent liabilities. . . . . . . 1,695 1,541 1,859
Cash provided by operations. . . . . . . . . 69,369 116,635 141,850
CASH PROVIDED BY (USED FOR) INVESTING:
Additions to: Plant and equipment.. . . . . (73,054) (139,727) (127,558)
Timber and timberlands. . . . (15,622) (15,716) (3,822)
Proceeds from sale of capital assets . . . . 4,855 2,887 1,613
Cash used for investing. . . . . . . . . . . (83,821) (152,556) (129,767)
CASH PROVIDED BY (USED FOR) FINANCING:
Additions to long-term debt. . . . . . . . . 119,000 86,000 51,000
Reduction in long-term debt. . . . . . . . . (64,118) (34,119) (34,119)
Short-term borrowings. . . . . . . . . . . . (5,500) 18,000 2,000
Payable to bank resulting from
checks in transit . . . . . . . . . . . . . 208 (3,197) 2,759
Accounts payable for construction. . . . . . (7,233) 2,837 128
Cash dividends . . . . . . . . . . . . . . . (27,905) (33,083) (33,107)
Purchase of common stock . . . . . . . . . . - (517) (744)
Cash provided by (used for) financing. . . . 14,452 35,921 (12,083)
Change in cash position. . . . . . . . . . . - - -
Cash position, beginning of year . . . . . . - - -
Cash position, end of year . . . . . . . . . $ - $ - $ -
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest (net of amount capitalized) . . . $ 40,248 $ 32,037 $ 30,023
Capitalized interest . . . . . . . . . . . 1,344 3,290 3,230
Income taxes . . . . . . . . . . . . . . . (1,985) (3,197) 19,625
The accompanying notes are an integral part of the financial statements.
Page 18<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The financial statements include the accounts of the company and all
subsidiaries after elimination of intercompany balances and transactions.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined on
a last-in, first-out method except for supplies at current averages.
PROPERTY AND DEPRECIATION
Buildings, machinery and equipment are recorded at cost and include those
additions and improvements that add to production capacity or extend useful
life. Cost includes interest capitalized during the construction period on
all significant asset acquisitions. When properties are sold or otherwise
disposed, the cost and the related accumulated depreciation are removed from
the respective accounts and the resulting profit or loss is recorded in
income. The costs of maintenance and repairs are charged to income when
incurred.
Depreciation for financial accounting purposes is computed on the straight-
line basis over the estimated useful lives of the assets. The estimated
useful lives of assets range from 20 to 60 years for buildings and principally
from 12 to 16 years for machinery and equipment.
TIMBERLANDS, DEPLETION AND AMORTIZATION
Timber, timberlands and timber roads are stated at cost. Provision for
depletion of timber and amortization of logging roads represents charges per
unit of production (footage cut) based on the estimated recoverable timber.
No gain or loss is recognized on timberland exchanges since the earnings
process is not considered complete until timber is harvested and marketed.
EARNINGS PER SHARE
Net income (loss) per common share is computed on the basis of weighted
average shares outstanding of 51,676,567, 51,691,411 and 51,731,407 for 1998,
1997 and 1996, respectively.
PENSION AND OTHER BENEFIT PLAN COSTS
The company's policy is to accrue as cost an amount computed by the actuary
and to fund at least the minimum amount required by ERISA.
REVENUE RECOGNITION
The company recognizes revenues when goods are shipped.
MISCELLANEOUS INCOME
In fiscal 1996, $9,470,000 was recorded as miscellaneous income as
consideration for the termination of an electrical power sales agreement.
RECLASSIFICATIONS
Prior year amounts have been reclassified to conform to current year
classifications. These reclassifications have no impact upon net income or
shareholders' equity.
Page 19<PAGE>
NOTE 2 - INVENTORIES:
Inventories consist of the following:
October 31
(thousands) 1998 1997 1996
Finished goods . . . . . . . . $ 35,645 $ 43,571 $ 39,962
Goods in process. . . . . . . . 32,730 28,881 33,632
Raw materials . . . . . . . . . 20,676 11,879 22,505
Supplies (at average cost). . . 42,907 42,322 45,236
131,958 126,653 141,335
LIFO Reserve. . . . . . . . . . (47,999) (42,151) (47,617)
$ 83,959 $ 84,502 $ 93,718
NOTE 3 - SHORT-TERM BORROWINGS:
At October 31, 1998, the company had bank lines of credit totaling $380
million. Of this amount, $260 million was under a credit agreement with a
group of banks providing various methods of borrowing. The agreement provides
for borrowings at the Offshore Rate (LIBOR based) plus a spread, currently
0.60%, or the bank's Reference rate, whichever the company selects. The
credit agreement contains certain financial covenants and provides for a
facility fee, currently 0.275% per year. This agreement has an expiration
date of February 28, 2001 with renewal provisions beyond that date. At
October 31, 1998, the company had loans of $260 million under the credit
agreement.
Also available was a bank loan agreement providing a committed line of credit
totaling $25 million with an expiration date of February 28, 2001. At October
31, 1998 the company had loans of $25 million under this loan agreement.
Other lines of credit totaling $95 million were available for additional
borrowing needs. Included in this amount was a committed line of credit of
$20 million which expires March 31, 2000. The other $75 million is
uncommitted. At October 31, 1998, the company had an outstanding balance of
$56.5 million under these credit lines.
Short-term borrowings of $291 million, $244 million and $223 million at
October 31, 1998, 1997 and 1996, respectively, under the above agreements,
have been reclassified as long-term debt because they are to be renewed and
replaced with borrowings due beyond one year and into future periods.
Short-term borrowing activity including the amount reclassified as long-term
is summarized as follows:
(thousands) 1998 1997 1996
Notes payable October 31 . . . . $341,500 $300,000 $261,000
Interest rate October 31 . . . . 6.1% 6.2% 5.9%
Average daily amount of
notes payable outstanding
during year . . . . . . . . . . $319,133 $286,227 $253,893
Average* interest rate
during year . . . . . . . . . . 6.3% 6.1% 6.1%
Maximum amount of notes
payable at any month end. . . . $345,000 $303,000 $274,000
*Computed by dividing interest incurred by average notes payable outstanding.
Page 20<PAGE>
NOTE 4 - LONG-TERM DEBT:
Long-term debt consists of the following:
October 31
(thousands) 1998 1997 1996
Senior notes due through 2010
(6.17%-8.84%) - Note (a) . . . . $247,000 $239,000 $208,000
Revenue bonds payable through
2018 (floating rates, currently
3.20%-4.25%) - Note (b). . . . . 28,900 28,900 28,900
Other . . . . . . . . . . . . . . 237 355 474
Notes payable - banks -
Note 3 above . . . . . . . . . . 291,000 244,000 223,000
567,137 512,255 460,374
Less current installments . . 20,119 14,118 34,119
Net long-term debt. . . . . . . . $547,018 $498,137 $426,255
Scheduled maturities
2000 $ 36,118
2001 305,000
2002 45,000
2003 64,400
2004-2018 96,500
$547,018
Note (a) Covenants of the senior notes include tests of minimum net worth,
short-term borrowing, long-term borrowing, current ratio, fixed charge
coverage ratios and restrictions on payment of dividends. At October 31, 1998
waivers existed on fixed charge coverage ratios. At October 31, 1998,
approximately $18 million of consolidated retained earnings was unrestricted
as to the payment of dividends.
Note (b) Primarily incurred upon the purchase of manufacturing equipment. At
October 31, 1998, $28,900,000 was secured by liens on the equipment.
NOTE 5 - BUILDINGS, MACHINERY AND EQUIPMENT:
At cost - net of accumulated depreciation consist of the following:
October 31
(thousands) 1998 1997 1996
Buildings - net . . . . . . . . $ 72,621 $ 66,494 $ 61,914
Machinery and equipment - net . 706,691 730,743 683,572
$779,312 $797,237 $745,486
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS:
Accounts receivable, revenue bonds and notes payable to banks approximate
fair value as reported in the balance sheet. The fair value of senior notes
is estimated using discounted cash flow analyses, based on the company's
incremental borrowing rates for similar types of borrowing arrangements.
The fair value of the company's long-term debt exceeded the stated value by
approximately $1 million at October 31, 1998 and 1997 and $2 million at
October 31, 1996.
Page 21<PAGE>
NOTE 7 - RETIREMENT AND SAVINGS PLANS:
The company has two trusteed defined benefit pension programs which cover a
majority of employees who have completed one year of continuous service.
The plans provide benefits of a stated amount for each year of service with
an option for some employees to receive benefits based on an average
earnings formula.
The weighted-average discount rate and rate of increase in the future
compensation levels used in determining the actuarial present value of the
projected benefit obligation was 7.0% and 4.75% for 1998 and 7.5% and 5.25%
for 1997 and 1996. The expected long-term rate of return on assets was 10%
for 1998 and 1997 and 9% for 1996.
The following table sets forth the plans' funded status and amounts
recognized in the company's consolidated financial statements at October 31:
(thousands) 1998 1997 1996
Actuarial present value of benefit
obligations:
Vested . . . . . . . . . . . . . $204,422 $165,335 $155,770
Vested and nonvested . . . . . . $209,790 $171,314 $156,317
Effect of future increases in
compensation and service . . . $234,944 $196,510 $184,079
Plan assets at fair value,
primarily listed stocks. . . . . . 382,258 386,372 311,548
Excess plan assets. . . . . . . . . 147,314 189,862 127,469
Items not recognized in earnings:
Net (asset) at adoption of FAS 87. (3,317) (4,686) (6,056)
Unrecognized prior service cost. . 9,236 12,592 16,698
Unrecognized net (gain) . . . . . (102,087) (159,545) (107,542)
Pension asset recognized in the
consolidated balance sheet . . . . $ 51,146 $ 38,223 $ 30,569
Net pension (income) includes
the following:
Service cost . . . . . . . . . . $ 5,218 $ 5,189 $ 4,557
Interest cost. . . . . . . . . . 14,141 13,689 12,824
Actual (return) on plan assets . (6,294) (84,422) (51,069)
Net amortization and deferral. . (25,988) 57,890 29,186
Net pension (income). . . . . . . . $(12,923) $ (7,654) $ (4,502)
Voluntary savings plans are maintained for all employees who have completed
one year of continuous service. The plans allow salary deferrals in
accordance with IRC section 401(k) provisions. The company contribution as
a matching incentive was $1,386,000, $1,295,000 and $1,199,000 during 1998,
1997 and 1996, respectively.
Page 22<PAGE>
NOTE 8 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The company provides postretirement health care insurance benefits for all
salaried and certain non-salaried employees and their dependents.
Individual benefits generally continue until age 65. The company does not
pre-fund these benefits.
Postretirement benefit expense was $2,332,000, $2,095,000 and $2,271,000 in
1998, 1997 and 1996, respectively.
The components of expense were as follows:
(thousands) 1998 1997 1996
Service cost . . . . . . . . . . . . . . . $ 797 $ 718 $ 545
Interest cost. . . . . . . . . . . . . . . 1,234 1,125 1,227
Net amortization and deferral. . . . . . . 301 252 499
Net periodic postretirement benefit cost . $2,332 $2,095 $2,271
The accumulated postretirement benefit obligation consists of the following:
(thousands) 1998 1997 1996
Retirees . . . . . . . . . . . . . . . . . $ (2,463) $ (1,829) $ (2,954)
Fully eligible active plan participants. . (3,441) (3,844) (3,817)
Other active plan participants . . . . . . (12,335) (10,877) (10,494)
Total accumulated postretirement
benefit obligation . . . . . . . . . . . (18,239) (16,550) (17,265)
Unrecognized net(gain)loss . . . . . . . . (4,769) (5,262) (3,440)
Unrecognized transition obligation . . . . 6,979 7,478 7,976
Accrued postretirement benefit cost. . . . $(16,029) $(14,334) $(12,729)
The net periodic postretirement benefit cost was calculated using a health
care cost trend rate of 11% for the indemnity plan and 7% for the HMO plan.
The accrued postretirement benefit cost at October 31, 1998 was calculated
using a health care cost trend rate of 10% for the indemnity plan and 6.5%
for the HMO plan. The trend rate declines each year until the ultimate
health care cost trend rate, 5.5% is reached in the year 2003 for the
indemnity plan and the year 1999 for the HMO plan. A one percent change in
the health care cost trend rate assumption has a $2,216,000 effect on the
accumulated postretirement benefit obligation as of October 31, 1998 and a
$294,000 effect on the aggregate of the service and interest cost components
of the net periodic postretirement benefit cost. The weighted-average
discount rate used was 7.5% at October 31, 1998, 1997 and 1996.
NOTE 9 - INCOME TAXES:
Provision for taxes on income is made up of the following components:
(thousands) 1998 1997 1996
Current:
Federal. . . . . . . . . . . . . . $(7,925) $(1,293) $13,452
State. . . . . . . . . . . . . . . (578) (22) 1,409
(8,503) (1,315) 14,861
Deferred:
Federal. . . . . . . . . . . . . . 1,625 7,453 15,348
State. . . . . . . . . . . . . . . (622) 662 291
1,003 8,115 15,639
$(7,500) $ 6,800 $30,500
Page 23<PAGE>
An analysis of the effective income tax rate as compared to the expected
federal income tax rate is as follows:
1998 1997 1996
Expected federal income tax rate . . (35)% 35% 35%
Foreign Sales Corporation. . . . . . (1) (2) -
State income taxes less
federal income tax benefit . . . . (5) 2 1
Research benefit . . . . . . . . . . (12) - -
Other. . . . . . . . . . . . . . . . - - (1)
(53)% 35% 35%
The deferred income tax liabilities (assets) recorded in the Consolidated
Balance Sheet as of October 31, are as follows:
(thousands) 1998 1997 1996
Current:
Non-deductible accruals. . . . . . $ (4,756) $ (4,555) $ (6,153)
Non-current:
Depreciation . . . . . . . . . . . $151,177 $148,661 $139,951
Employee Benefit Plans . . . . . . 18,639 14,058 11,219
Alternative Minimum Tax. . . . . . (20,458) (12,672) (10,042)
Other. . . . . . . . . . . . . . . (6,531) (8,424) (6,022)
Non-current deferred tax . . . . . $142,827 $141,623 $135,106
Federal income tax returns through 1993 have been settled with the Internal
Revenue Service.
NOTE 10 - SEGMENT INFORMATION:
The company owns and operates tree farms in Oregon and Washington which
produce logs for sale and operates a sawmill in Washington. Its pulp and
paper mill at Longview, Washington produces pulp which is manufactured into
kraft paper and containerboard. The raw material fibers come primarily from
purchased wood chips and sawdust with important contributions from fiber
reclaimed from post-consumer and post-industrial waste, purchased bleach
pulp, and augmented by log chipping operations owned by the company and
others. The company's fifteen converting plants in ten states produce
shipping containers and merchandise bags. The tonnage of paper and
containerboard used in the converting plants equals approximately 64% of the
Longview mill production.
Included in sales to customers are export sales, principally to Japan, Hong
Kong and Southeast Asia, of $135,350,000, $169,055,000 and $153,878,000
during 1998, 1997 and 1996, respectively. All sales are made in U. S.
dollars.
There are no intersegment sales as all manufacturing operations to produce
primary or converted products for sale are considered integrated from the
purchased wood to the sale of the finished product.
Identifiable assets are segregated or allocated to segments as follows:
1. Assets used wholly within a segment are assigned to that segment.
Page 24<PAGE>
2. Assets used jointly by two segments are allocated to each segment on a
percentage determined by dividing total cost of product into cost of
product produced for each segment. Paper and paperboard assets of
$308,338,000, $309,562,000 and $306,101,000 have been allocated to
converted products at October 31, 1998, 1997 and 1996, respectively.
Depreciation, depletion and amortization and additions to capital assets
have been segregated and allocated similarly to the method used for
identifiable assets.
(thousands) 1998 1997 1996
SALES TO CUSTOMERS:
Timber . . . . . . . . . . . . . . . $ 166,037 $ 186,814 $186,405
Paper and paperboard . . . . . . . . 193,154 196,192 199,827
Converted products . . . . . . . . . 394,053 389,839 436,490
Total. . . . . . . . . . . . . . . 753,244 772,845 822,722
INCOME (LOSS) ON SALES:
Timber . . . . . . . . . . . . . . . 74,470 101,740 104,449
Paper and paperboard . . . . . . . . (13,009) (5,143) 4,300
Converted products . . . . . . . . . (39,870) (49,196) (3,963)
Interest expensed and other. . . . . (35,743) (27,907) (17,922)
Income (loss) before income taxes. (14,152) 19,494 86,864
IDENTIFIABLE ASSETS AT OCTOBER 31:
Timber . . . . . . . . . . . . . . . 275,379 260,832 255,529
Paper and paperboard . . . . . . . . 314,347 319,548 279,383
Converted products . . . . . . . . . 673,617 680,523 662,368
Total. . . . . . . . . . . . . . . 1,263,343 1,260,903 1,197,280
DEPRECIATION, DEPLETION AND
AMORTIZATION:
Timber . . . . . . . . . . . . . . . 9,330 8,669 7,921
Paper and paperboard . . . . . . . . 24,718 22,940 20,201
Converted products . . . . . . . . . 58,848 54,762 51,332
Total. . . . . . . . . . . . . . . 92,896 86,371 79,454
ADDITIONS TO CAPITAL ASSETS:
Timber . . . . . . . . . . . . . . . 20,254 17,608 7,939
Paper and paperboard . . . . . . . . 23,437 43,955 29,552
Converted products . . . . . . . . . 44,985 93,880 93,889
Total. . . . . . . . . . . . . . . $ 88,676 $ 155,443 $ 131,380
NOTE 11 - SHAREHOLDER RIGHTS PLAN:
On December 6, 1996, the company's Board of Directors amended the
Shareholder Rights Plan by lowering the ownership and tender offer
thresholds triggering a distribution of the rights certificates under the
rights agreement. With certain exceptions, the rights will become
exercisable only in the event that an acquiring party accumulates 10% or
more of the company's voting stock or a party announces an offer to acquire
10% or more of the voting stock. The rights expire on March 1, 1999, if not
previously redeemed or exercised. Each right entitles the holder to
purchase one-tenth of one common share at a price of $4.00 ($40 per whole
share), subject to adjustment under certain circumstances. In addition,
upon the occurrence of certain events, holders of the rights will be
entitled to purchase a defined number of shares of an acquiring entity or
the company's common shares at half their then current market value. The
company generally will be entitled to redeem the rights at $0.01 per right
at any time until the tenth business day following the acquisition of 10% or
more, or an offer to acquire 10% or more, of the company's voting stock.
Page 25<PAGE>
NOTE 12 - COMMITMENTS AND CONTINGENCIES:
Estimated costs to complete approved capital projects were approximately $16
million, $48 million and $103 million at October 31, 1998, 1997 and 1996,
respectively.
QUARTERLY FINANCIAL DATA (UNAUDITED)
Fiscal Year Quarters Total
Fiscal
(thousands except per share) 1st 2nd 3rd 4th Year
1998
Net sales. . . . . . . . . . $176,217 $185,938 $194,203 $196,886 $753,244
Gross profit . . . . . . . . 14,034 18,373 30,313 23,564 86,284
Net income (loss). . . . . . (7,073) (4,589) 3,989 1,021 (6,652)
Net income (loss) per
share (1) . . . . . . . . . (0.14) (0.09) 0.08 0.02 (0.13)
1997
Net sales. . . . . . . . . . $182,211 $185,860 $197,385 $207,389 $772,845
Gross profit . . . . . . . . 22,517 29,675 30,839 28,130 111,161
Net income . . . . . . . . . 28 4,626 4,142 3,898 12,694
Net income per share (1) . . - 0.09 0.08 0.08 0.25
1996
Net sales . . . . . . . . . $209,213 $199,716 $197,593 $216,200 $822,722
Gross profit . . . . . . . . 46,767 38,077 33,228 46,913 164,985
Net income . . . . . . . . . 15,539 10,035 13,924 16,866 56,364
Net income per share (1) . . 0.30 0.19 0.27 0.33 1.09
(1) Per share statistics have been computed on the average of number of shares
outstanding in the hands of the public. Per share statistics for the first
three quarters may vary slightly from amounts reported on an interim basis due
to changes in the number of shares outstanding.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There has been no change of accountants or disagreements on any matter of
accounting principles, practices or financial statement disclosures required
to be reported under this item.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Item 10 is contained in the Notice of Annual Meeting of Shareholders and
Proxy Statement dated December 16, 1998 which is hereby incorporated by
reference as part of this Form 10-K. See Part I of this Form 10-K for a
listing of the executive officers of the company.
Page 26<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
This item is completed by reference to Notice of Annual Meeting of
Shareholders and Proxy Statement dated December 16, 1998 which is hereby
incorporated by reference as part of this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This item is completed by reference to Notice of Annual Meeting of
Shareholders and Proxy Statement dated December 16, 1998 which is hereby
incorporated by reference as part of this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This item is completed by reference to Notice of Annual Meeting of
Shareholders and Proxy Statement dated December 16, 1998 which is hereby
incorporated by reference as part of this Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following financial statements, schedules and exhibits are filed as
part of this Form 10-K.
(1) Financial Statements:
The 1998, 1997 and 1996 consolidated financial statements are
included in Item 8 of Part II of this Form 10-K.
The individual financial statements of the company and its
subsidiaries have been omitted since the company is primarily an
operating company and all subsidiaries included in the
consolidated financial statements, in the aggregate, do not have
minority equity interest and/or indebtedness to any person other
than the company or its consolidated subsidiaries in amounts which
together exceed 5% of total consolidated assets at October 31,
1998.
(2) Financial Statement Schedules:
Schedules have been omitted because they are not applicable or the
required information is shown in the consolidated financial
statements or notes thereto in Item 8 of Part II of this
Form 10-K.
(3) Exhibits required to be filed by Item 601 of Regulation S-K:
3.1 Articles of Incorporation of Longview Fibre Company (b)
3.2 Bylaws of Longview Fibre Company (b)
4.1 Rights Agreement (a)
4.2 First Amendment to Rights Agreement (d)
Page 27<PAGE>
4.3 Second Amendment to Rights Agreement (f)
4.4 Long-term debts that do not exceed 10% of the total assets of
the company, details of which will be supplied to the
Commission upon request:
Senior Notes due through 2010 (6.17% - 8.84%) $247,000,000
Revenue Bonds payable through 2018 (floating rates,
3.20% through 4.25% at October 31, 1998) $28,900,000
Other $ 237,000
10.1 Form of Termination Protection Agreement (c)(*)
10.2 Credit Agreement (e)
23 Consent of Independent Accountants
27 Financial Data Schedule
99.1 Salary Savings Plan (*)
99.2 Salary Savings Plan - Amendment No. 1 (*)
99.3 Hourly Savings Plan
99.4 Branch Hourly Savings Plan
99.5 Branch Hourly Savings Plan - Amendment No. 1
99.6 Branch Hourly Savings Plan - Amendment No. 2
(a) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1989.
(b) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1990.
(c) Incorporated by reference to company's Annual Report on Form
10-K for the year ended October 31, 1994.
(d) Incorporated by reference to company's Current Report on
Form 8-K dated December 6, 1996.
(e) Incorporated by reference to company's Quarterly Report on
Form 10-Q for the quarter ended April 30, 1998.
(f) Incorporated by reference to company's Current Report on
Form 8-K dated December 18, 1998.
(*) Indicates management contract or compensatory plan or
arrangement.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended October 31,
1998.
Page 28<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
LONGVIEW FIBRE COMPANY
Registrant
\s\ L. J. Holbrook 1-26-99
L. J. Holbrook, Vice President-Finance, Date
Secretary and Treasurer
Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
\s\ R. P. Wollenberg 1-26-99
R. P. Wollenberg, Chief Executive Officer Date
and Director
\s\ L. J. Holbrook 1-26-99
L. J. Holbrook, Chief Financial Officer Date
and Director
\s\ A. G. Higgens 1-26-99
A. G. Higgens, Chief Accounting Officer Date
\s\ R. B. Arkell 1-26-99
R. B. Arkell, Director Date
\s\ D. L. Bowden 1-26-99
D. L. Bowden, Director Date
\s\ M. A. Dow 1-26-99
M. A. Dow, Director Date
\s\ J. R. Kretchmer 1-26-99
J. R. Kretchmer, Director Date
\s\ R. J. Parker 1-26-99
R. J. Parker, Director Date
\s\ D. A. Wollenberg 1-26-99
D. A. Wollenberg, Director Date
\s\ R. H. Wollenberg 1-26-99
R. H. Wollenberg, Director Date
Page 29<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
LONGVIEW FIBRE COMPANY
LONGVIEW, WASHINGTON
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-14358) and the Registration Statement on Form
S-8 (No. 33-37836) and the Registration Statement on Form S-8 (No. 33-56620)
of Longview Fibre Company of our report dated December 8, 1998, which
appears at Item 8 of Longview Fibre Company's Annual Report on Form 10-K.
\s\ PricewaterhouseCoopers
PricewaterhouseCoopers
Portland, Oregon
January 26, 1999
Page 30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM ITEM 8 OF THIS FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> OCT-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 99,823
<ALLOWANCES> 1,100
<INVENTORY> 83,959
<CURRENT-ASSETS> 197,838
<PP&E> 1,855,105
<DEPRECIATION> 850,268
<TOTAL-ASSETS> 1,263,343
<CURRENT-LIABILITIES> 142,520
<BONDS> 547,018
0
0
<COMMON> 77,515
<OTHER-SE> 337,434
<TOTAL-LIABILITY-AND-EQUITY> 1,263,343
<SALES> 753,244
<TOTAL-REVENUES> 753,244
<CGS> 666,960
<TOTAL-COSTS> 666,960
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,935
<INCOME-PRETAX> (14,152)
<INCOME-TAX> (7,500)
<INCOME-CONTINUING> (6,652)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,652)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
Barclays
Global
Investors
Longview Fibre Company
Salaried Savings Plan
and Trust Agreement
Amended and Restated
Effective November 1, 1997
Longview Fibre Company Salaried Savings Plan and Trust
As Amended and Restated Effective November 1, 1997
Longview Fibre Company (the "Company") previously established the Longview
Fibre Company Salaried Savings Plan (the "Plan"), for the exclusive 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 the Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Longview Fibre Company and
Barclays Global Investors, National Association. The Trust is intended to be
tax exempt, as described in Code section 501(a).
The Plan is intended to comply with the qualification requirements of the Small
Business Job Protection Act of 1996 (the "SBJPA") and is intended to comply in
operation therewith. To the extent that the Plan, as set forth below, is
subsequently determined to be insufficient to comply with such requirements and
any regulations issued under the SBJPA, the Plan shall later be amended to so
comply.
The Plan constitutes an amendment and restatement of the Longview Fibre Company
Salaried Savings Plan effective November 1, 1997, which was originally
established effective as of June 1, 1977, and its related trust agreement. The
Plan and Trust were last restated effective November 1, 1990 and amended seven
times thereafter.
The Longview Fibre Company Salaried Savings Plan and Trust, as set forth in
this document, is hereby amended and restated effective as of November 1, 1997.
Date: Dec 26 , 1997 Longview Fibre Company
\s\ L.J. Holbrook
By: L.J. Holbrook
Title: SR VP Finance
The trust agreement set forth in those provisions of the Plan and Trust which
relate to the Trustee is hereby executed.
Date: December 30 , 1997 Barclays Global Investors,
National Association
By Merrill Lynch, Pierce, Fenner &
Smith Inc.
\s\ Roger T. Meyer
By: Roger T. Meyer
Title: Vice President
Manager of Consulting Services
TABLE OF CONTENTS
1 DEFINITIONS 1
2 ELIGIBILITY 11
2.1 Eligibility 11
2.2 Ineligible Employees 11
2.3 Ineligible, Terminated or Former Participants 11
3 PARTICIPANT CONTRIBUTIONS 12
3.1 Pre-Tax Contribution Election 12
3.2 After-Tax Contribution Election 12
3.3 Changing a Contribution Election 12
3.4 Revoking and Resuming a Contribution Election 12
3.5 Contribution Percentage Limits 13
3.6 Refunds When Contribution Dollar Limit Exceeded 13
3.7 Timing, Posting and Tax Considerations 14
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED
PLANS 15
4.1 Rollover Contributions 15
4.2 Transfers From and To Other Qualified Plans 15
5 EMPLOYER CONTRIBUTIONS 17
5.1 Match Contributions 17
6 ACCOUNTING 18
6.1 Individual Participant Accounting 18
6.2 Sweep Account is Transaction Account 18
6.3 Trade Date Accounting and Investment Cycle 18
6.4 Accounting for Investment Funds 18
6.5 Payment of Fees and Expenses 18
6.6 Accounting for Participant Loans 19
6.7 Error Correction 19
6.8 Participant Statements 20
6.9 Special Accounting During Conversion Period 20
6.10 Accounts for Alternate Payees 20
7 INVESTMENT FUNDS AND ELECTIONS 22
7.1 Investment Funds 22
7.2 Responsibility for Investment Choice 22
7.3 Investment Fund Elections 23
7.4 Default if No Valid Investment Election 23
7.5 Investment Fund Election Change Fees 23
8 VESTING & FORFEITURES 24
8.1 Fully Vested Accounts 24
8.2 Full Vesting Upon Certain Events 24
8.3 Vesting Schedule 24
8.4 Non-Vested Account Balances of Terminated Participants 24
8.5 Forfeitures of Non-Vested Account Balances Upon Certain
Events 25
8.6 Use of Forfeiture Amounts 25
8.7 Rehired Employees 25
9 PARTICIPANT LOANS 27
9.1 Participant Loans Permitted 27
9.2 Limitations on Purpose of Participant Loan 27
9.3 Loan Application, Note and Security 27
9.4 Spousal Consent 27
9.5 Loan Approval 27
9.6 Loan Funding Limits, Account Sources and Funding Order 27
9.7 Maximum Number of Loans 28
9.8 Source and Timing of Loan Funding 28
9.9 Interest Rate 28
9.10 Loan Payment 29
9.11 Loan Payment Hierarchy 29
9.12 Repayment Suspension 29
9.13 Loan Default 29
9.14 Call Feature 30
10 IN-SERVICE WITHDRAWALS 31
10.1 In-Service Withdrawals Permitted 31
10.2 In-Service Withdrawal Application and Notice 31
10.3 Spousal Consent 31
10.4 In-Service Withdrawal Approval 31
10.5 Payment Form and Medium 31
10.6 Source and Timing of In-Service Withdrawal Funding 32
10.7 Hardship Withdrawals 32
10.8 After-Tax Account Withdrawals 34
10.9 Over Age 59.5 Withdrawals 35
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A PARTICIPANT'S
REQUIRED BEGINNING DATE 36
11.1 Benefit Information, Notices and Election 36
11.2 Spousal Consent 37
11.3 Payment Form and Medium 37
11.4 Distribution of Small Amounts 37
11.5 Source and Timing of Distribution Funding 37
11.6 Latest Commencement Permitted 38
11.7 Payment Within Life Expectancy 38
11.8 Incidental Benefit Rule 38
11.9 Payment to Beneficiary 38
11.10 Beneficiary Designation 39
12 ADP AND ACP TESTS 40
12.1 Contribution Limitation Definitions 40
12.2 ADP and ACP Tests 42
12.3 Correction of ADP and ACP Tests 43
12.4 Multiple Use Test 44
12.5 Correction of Multiple Use Test 44
12.6 Adjustment for Investment Gain or Loss 45
12.7 Testing Responsibilities and Required Records 45
12.8 Separate Testing 45
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS 46
13.1 "Annual Addition" Defined 46
13.2 Maximum Annual Addition 46
13.3 Avoiding an Excess Annual Addition 46
13.4 Correcting an Excess Annual Addition 46
13.5 Correcting a Multiple Plan Excess 47
13.6 "Defined Benefit Fraction" Defined 47
13.7 "Defined Contribution Fraction" Defined 47
13.8 Combined Plan Limits and Correction 48
14 TOP HEAVY RULES 49
14.1 Top Heavy Definitions 49
14.2 Special Contributions 50
14.3 Special Vesting 51
14.4 Adjustment to Combined Limits for Different Plans 51
15 PLAN ADMINISTRATION 52
15.1 Plan Delineates Authority and Responsibility 52
15.2 Fiduciary Standards 52
15.3 Company is ERISA Plan Administrator 52
15.4 Administrator Duties 53
15.5 Advisors May be Retained 53
15.6 Delegation of Administrator Duties 54
15.7 Committee Operating Rules 54
16 MANAGEMENT OF INVESTMENTS 55
16.1 Trust Agreement 55
16.2 Investment Funds 55
16.3 Authority to Hold Cash 56
16.4 Trustee to Act Upon Instructions 56
16.5 Administrator Has Right to
Vote Registered Investment Company Shares 56
16.6 Custom Fund Investment Management 56
16.7 Master Custom Fund 57
16.8 Authority to Segregate Assets 57
16.9 Investment in Company Stock 58
16.10 Participants Have Right to Vote and Tender Company Stock 58
16.11 Registration and Disclosure for Company Stock 58
17 TRUST ADMINISTRATION 59
17.1 Trustee to Construe Trust 59
17.2 Trustee To Act As Owner of Trust Assets 59
17.3 United States Indicia of Ownership 59
17.4 Tax Withholding and Payment 60
17.5 Trust Accounting 60
17.6 Valuation of Certain Assets 60
17.7 Legal Counsel 61
17.8 Fees and Expenses 61
17.9 Trustee Duties and Limitations 61
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION 62
18.1 Plan Does Not Affect Employment Rights 62
18.2 Compliance With USERRA 62
18.3 Limited Return of Contributions 62
18.4 Assignment and Alienation 63
18.5 Facility of Payment 63
18.6 Reallocation of Lost Participant's Accounts 63
18.7 Suspension of Certain Plan Provisions During Conversion
Period 63
18.8 Suspension of Certain Plan Provisions During Other Periods 64
18.9 Claims Procedure 64
18.10 Construction 65
18.11 Jurisdiction and Severability 65
18.12 Indemnification by Employer 65
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION 66
19.1 Amendment 66
19.2 Merger 66
19.3 Divestitures 66
19.4 Plan Termination and Complete Discontinuance of
Contributions 67
19.5 Amendment and Termination Procedures 67
19.6 Termination of Employer's Participation 68
19.7 Replacement of the Trustee 68
19.8 Final Settlement and Accounting of Trustee 68
APPENDIX A - INVESTMENT FUNDS 69
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES 70
APPENDIX C - LOAN INTEREST RATE 71
1 DEFINITIONS
When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
0.1 "Account". The records maintained by the Administrator for
purposes of accounting for a Participant's interest in the Plan. "Account" may
refer to one or all of the following accounts which have been created on behalf
of a Participant to hold amounts attributable to specific types of
Contributions under the Plan, contributions previously permitted under the Plan
and/or amounts transferred to the Plan from the Hourly Plan and/or the Branch
Plant Hourly Plan on behalf of a Participant who was formerly eligible to
participate in the Hourly Plan and/or the Branch Plant Hourly Plan:
(a) "Pre-Tax Account". An account created to hold amounts
attributable to Pre-Tax Contributions and amounts transferred from the Hourly
Plan and/or the Branch Plant Hourly Plan designated as "Pre-Tax Account"
amounts thereunder.
(b) "After-Tax Account". An account created to hold amounts
attributable to After-Tax Contributions and amounts transferred from the Hourly
Plan and/or the Branch Plant Hourly Plan designated as "After-Tax Account"
amounts thereunder.
(c) "Rollover Account". An account created to hold amounts
attributable to Rollover Contributions and amounts transferred from the Hourly
Plan and/or the Branch Plant Hourly Plan designated as "Rollover Account"
amounts thereunder.
(d) "Match Account". An account created to hold amounts
attributable to Match Contributions for periods after October 31, 1990 and
amounts transferred from the Hourly Plan and/or the Branch Plant Hourly Plan
designated as "Match Account" amounts thereunder.
(e) "Prior Match Account". An account created to hold amounts
attributable to amounts previously contributed by the Employer for periods
prior to November 1, 1990 on an eligible Participant's behalf based upon the
amount contributed by the Participant under former Plan provisions.
(f) "PAYSOP Account". An account created to hold amounts
attributable to amounts previously contributed by the Employer on an eligible
Participant's behalf and allocated on a pay based formula under former Plan
provisions.
0.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
0.3 "Administrator". The Company or the Committee to whom the Company
has delegated all or a portion of the duties of the Administrator under the
Plan in accordance with Section 15.6 or any delegate of the Committee.
0.4 "ADP" or "Average Deferral Percentage". The percentage calculated
in accordance with Section 12.1.
0.5 "Alternate Payee". Any spouse, former spouse, child or other
dependent (as defined in Code section 152) of a Participant who is recognized
by a domestic relations order as having a right to receive all, or a portion,
of the Participant's Account under the Plan.
0.6 "Beneficiary". The person or persons who is to receive benefits
under the Plan after the death of the Participant pursuant to the "Beneficiary
Designation" paragraph in Section 11.
0.7 "Board". The board of directors of the Company.
0.8 "Branch Plant Hourly Plan". The Longview Fibre Company Branch
Plant Hourly Employees' 401(k) Plan, a qualified profit sharing plan including
a cash or deferred arrangement, originally established March 1, 1993.
0.9 "Break in Service". The fifth anniversary (or sixth anniversary
if absence from employment was due to a Parental Leave) of the date on which a
Participant's employment ends in accordance with Section 1.44 and during which
he or she is not credited with an hour of service.
0.10 "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.
0.11 "Committee". If applicable, the committee or committees appointed
by the Administrator to administer the Plan in accordance with Section 15.6.
0.12 "Company". Longview Fibre Company or any successor by merger,
purchase or otherwise.
0.13 "Company Stock". Shares of common stock of the Company, its
predecessor(s), or its successors or assigns, or any corporation with or into
which said corporation may be merged, consolidated or reorganized, or to which
a majority of its assets may be sold.
0.14 "Compensation". The sum of a Participant's Taxable Income and
salary reductions, if any, pursuant to Code section 125, 402(e)(3),
402(h)(1)(B), 403(b), 408(p)(2)(A)(i) or 457.
For purposes of determining benefits under the Plan, Compensation
is limited to $150,000 per Plan Year (as adjusted for cost of living increases
pursuant to Code sections 401(a)(17) and 415(d)).
For purposes of determining HCEs and key employees and for Plan
Years commencing after December 31, 1997, for purposes of Section 13.2,
Compensation for the entire Plan Year shall be used. For purposes of
determining ADP and ACP, Compensation shall be limited to amounts paid to an
Eligible Employee while a Participant.
0.15 "Contribution". An amount contributed to the Plan by the Employer
or an Eligible Employee, and allocated by contribution type to Participants'
Accounts, as described in Section 1.1. Specific types of contribution include:
(a) "Pre-Tax Contribution". An amount contributed by an
eligible Participant in conjunction with his or her Code section 401(k) salary
deferral election which shall be treated as made by the Employer on the
eligible Participant's behalf.
(b) "After-Tax Contribution". An amount contributed by an
eligible Participant on an after-tax basis.
(c) "Rollover Contribution". An amount contributed by an
Eligible Employee which originated from another employer's or an Employer's
qualified plan.
(d) "Match Contribution". An amount contributed by the Employer
on an eligible Participant's behalf based upon the amount contributed by the
eligible Participant.
0.16 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre-Tax Contributions, which shall be $7,000 per calendar year
(as adjusted for cost of living increases pursuant to Code sections 402(g)(5)
and 415(d)). For purposes of this Section, a Participant's Pre-Tax
Contributions shall include (i) any employer contribution under a qualified
cash or deferred arrangement (as defined in Code section 401(k)) to the extent
not includible in gross income for the taxable year under Code section
402(e)(3) (determined without regard to Code section 402(g)), (ii) any employer
contribution to the extent not includible in gross income for the taxable year
under Code section 402(h)(1)(B) (determined without regard to Code section
402(g)), (iii) any employer contribution to purchase an annuity contract under
Code section 403(b) under a salary reduction agreement (within the meaning of
Code section 3121(a)(5)(D)) and (iv) for calendar years commencing after
December 31, 1996, any elective employer contribution under Code section
408(p)(2)(A)(i).
0.17 "Conversion Period". The period of converting the prior
accounting system of any plan and trust which is merged, in whole or in part,
into the Plan and Trust, to the accounting system described in Section 6.
0.18 "Direct Rollover". An Eligible Rollover Distribution that is paid
by the Plan directly to an Eligible Retirement Plan for the benefit of a
Distributee.
0.19 "Disability". A Participant's total and permanent, mental or
physical disability resulting in termination of employment as evidenced by
presentation of medical evidence satisfactory to the Administrator.
0.20 "Distributee". A Participant, a Beneficiary (if he or she is the
surviving spouse of a Participant) or an Alternate Payee under a QDRO (if he or
she is the spouse or former spouse of a Participant).
0.21 "Effective Date". The date upon which the provisions of this
document become effective. This date is November 1, 1997, unless stated
otherwise. 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.
0.22 "Eligible Employee". A salaried Employee of an Employer, except
any Employee who is treated as an Employee because he or she is a Leased
Employee.
An Eligible Employee shall not include any individual who is not
treated as a common-law employee on the Employer's payroll and personnel
records at the time he or she performs services for the Employer, regardless of
whether the Employer's relationship with such individual is later
recharacterized (by an agency, court, mutual agreement or otherwise) as a
employer/employee relationship.
0.23 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement annuity described in
Code section 408(b), an annuity plan described in Code section 403(a), or a
qualified trust described in Code section 401(a), that accepts a Distributee's
Eligible Rollover Distribution, except that, if the Distributee is the
surviving spouse of a Participant, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
0.24 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding (i) a
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated Beneficiary, or for a specified
period of ten years or more; (ii) a distribution to the extent such
distribution is required under Code section 401(a)(9); and (iii) the portion of
a distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to
Employer securities).
0.25 "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.
0.26 "Employer". The Company and any other Related Company which
adopts the Plan with the approval of the Company.
0.27 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific ERISA section shall include such section,
any valid regulation promulgated thereunder, and any comparable provision of
any future legislation amending, supplementing or superseding such section.
0.28 "Former Participant". The Plan status of an individual after he
or she is determined to be a Terminated Participant and his or her Account is
distributed or forfeited.
0.29 "HCE" or "Highly Compensated Employee". An Employee described as
a Highly Compensated Employee in Section 12.
0.30 "Hour of Service". Each hour for which an Employee is entitled
to:
(a) payment for the performance of duties for any Related
Company; or
(b) back pay, irrespective of mitigation of damages, by award or
agreement with any Related Company (and these hours shall be credited to the
period to which the award or agreement pertains).
The crediting of Hours of Service shall be in accordance with the
U.S. Department of Labor regulation sections 2530.200b-2 and 3. Actual hours
shall be used whenever an accurate record of hours are maintained for an
Employee. Otherwise, an equivalent number of hours shall be credited for each
payroll period in which the Employee would be credited with at least 1 Hour of
Service. The payroll period equivalencies are 45 hours weekly, 90 hours
biweekly, 95 hours semimonthly and 190 hours monthly.
An Employee's service described in Code section 414(n)(4)(B) shall
be included in the determination of his or her Hours of Service for eligibility
and/or vesting purposes.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Hours of Service for
eligibility and/or vesting purposes if (1) the Company directs that credit for
such service be granted, or (2) a qualified plan of the predecessor or acquired
company is subsequently maintained by any Related Company.
0.31 "Hourly Plan". The Longview Fibre Company Hourly Employees 401(k)
Plan, a qualified profit sharing plan including a cash or deferred arrangement,
originally established June 3, 1985.
0.32 "Ineligible". The Plan status of an individual who is (1) an
Employee of a Related Company which is not then an Employer, (2) an Employee of
an Employer, but not an Eligible Employee, or (3) not an Employee.
0.33 "Ineligible Participant". The Plan status of a Participant who is
(1) an Employee of a Related Company which is not then an Employer, or (2) an
Employee of an Employer, but not an Eligible Employee.
0.34 "Investment Fund". An investment fund as described in Section
16.2. The Investment Funds authorized by the Administrator to be offered under
the Plan as of the Effective Date are set forth in Appendix A.
0.35 "Leased Employee". An individual, not otherwise an Employee, who,
pursuant to an agreement between a Related Company and a leasing organization,
has performed, on a substantially full-time basis, for a period of at least 12
months, services under the primary direction or control of the Related Company,
unless:
(a) the individual is covered by a money purchase pension plan
maintained by the leasing organization and meeting the requirements of Code
section 414(n)(5)(B), and
(b) such individuals do not constitute more than 20% of all Non-
Highly Compensated Employees of all Related Companies (within the meaning of
Code section 414(n)(5)(C)(ii)).
0.36 "Leave of Absence". A period during which an individual is deemed
to be an Employee, but is absent from active employment, provided that the
absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed
forces and the individual returns to active employment within the period during
which he or she retains employment rights under federal law.
0.37 "Loan Account". The record maintained for purposes of accounting
for a Participant's loan and payments of principal and interest thereon.
0.38 "NHCE" or "Non-Highly Compensated Employee". An Employee
described as a Non-Highly Compensated Employee in Section 12.
0.39 "Normal Retirement Date". The date of a Participant's 65th
birthday.
0.40 "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).
0.41 "Parental Leave". The period of absence from work by reason of
the pregnancy of an Employee, the birth of the Employee's child, the placement
of a child with the Employee in connection with the child's adoption, or the
caring for such child immediately after birth or placement as described in Code
section 410(a)(5)(E).
0.42 "Participant". The Plan status of an Eligible Employee after he
or she completes the eligibility requirements and enters the Plan as described
in Section 2.1 and any individual for whom assets have been transferred from a
predecessor plan merged, in whole or in part, with the Plan. An Eligible
Employee who makes a Rollover Contribution prior to completing the eligibility
requirements as described in Section 2.1 shall also be considered a
Participant, except that he or she shall not be considered a Participant for
purposes of Plan provisions related to Contributions, other than a Rollover
Contribution, until he or she completes the eligibility requirements and enters
the Plan as described in Section 2.1. A Participant's participation continues
until his or her employment with all Related Companies ends and his or her
Account is distributed or forfeited.
0.43 "Pay". All cash compensation paid to an Eligible Employee by an
Employer while he or she is a Participant during the current period. Pay
excludes reimbursements or other expense allowances, cash and non-cash fringe
benefits, moving expenses, deferred compensation and welfare benefits.
Pay is neither increased by any salary credit or decreased by any
salary reduction pursuant to Code sections 125 or 402(e)(3). Pay is limited to
$150,000 per Plan Year (as adjusted for cost of living increases pursuant to
Code sections 401(a)(17) and 415(d)).
0.44 "Period of Employment". The period beginning on the date an
Employee first performs an hour of service and ending on the date his or her
employment ends. Employment ends on the date the Employee quits, is
discharged, retires or dies or (if earlier) the first anniversary of his or her
absence for any other reason. The period of absence starting with the date an
Employee's employment ends and ending on the date he or she next performs an
hour of service is (1) included in his or her Period of Employment if the
period of absence does not exceed one year, and (2) excluded if such period
exceeds one year.
An Employee's service described in Code section 414(n)(4)(B) shall
be included in the determination of his or her Period of Employment for
eligibility and/or vesting purposes.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Period of Employment for
eligibility and/or vesting purposes if (1) the Company directs that credit for
such service be granted, or (2) a qualified plan of the predecessor or acquired
company is subsequently maintained by any Related Company.
0.45 "Plan". The Longview Fibre Company Salaried Savings Plan set
forth in this document, as from time to time amended.
0.46 "Plan Year". The annual accounting period of the Plan and Trust
which ends on each October 31.
0.47 "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).
0.48 "Rehab Plan". The Plan of Rehabilitation of MBL Life Assurance
Corporation.
0.49 "Related Company". With respect to any Employer, that Employer
and any corporation, trade or business which is, together with that Employer, a
member of the same controlled group of corporations, a trade or business under
common control, or an affiliated service group within the meaning of Code
sections 414(b), (c), (m) or (o), except that for purposes of Section 13
"within the meaning of Code sections 414(b), (c), (m) or (o), as modified by
Code section 415(h)" shall be substituted for the preceding reference to
"within the meaning of Code sections 414(b), (c), (m) or (o)".
0.50 "Required Beginning Date". The latest date benefit payments shall
commence to a Participant. Such date shall mean the April 1 that next follows
the calendar year in which the Participant attains age 70.5, except with regard
to a Participant who attained age 70.5 before January 1, 1988 and who is not 5%
Owner, such date shall mean the April 1 that next follows the later of (i) the
calendar year in which the Participant attained age 70.5, or (ii) the calendar
year in which the Participant terminates employment with all Related Companies.
A Participant shall be considered a 5% Owner for this purpose if
such Participant is a 5% Owner as defined in Code section 416(i) (determined in
accordance with Code section 416 but without regard to whether the Plan is top-
heavy) at any time during the Plan Year ending with or within the calendar year
in which the Participant attains age 66.5 or in any subsequent Plan Year.
0.51 "Restricted Amounts". The Plan status of the portion of a
Participant's Account invested in the Mutual Benefit GIC Fund during any period
such Fund is not available to be liquidated for purposes of investment
transfers, loans, in-service withdrawals or distributions (other than in
accordance with the Rehab Plan).
0.52 "Settlement Date". For each Trade Date, the Trustee's next
business day.
0.53 "Spousal Consent". The written consent given by a spouse to a
Participant's Beneficiary designation. The spouse's consent must acknowledge
the effect on the spouse of the Participant's designation, and be duly
witnessed by a Plan representative or notary public. Spousal Consent shall be
valid only with respect to the spouse who signs the Spousal Consent and only
for the particular choice made by the Participant which requires Spousal
Consent. A Participant may revoke (without Spousal Consent) a prior
designation that required Spousal Consent at any time before payments begin.
Spousal Consent also means a determination by the Administrator that there is
no spouse, the spouse cannot be located, or such other circumstances as may be
established under Code section 417(a)(2)(B).
0.54 "Sweep Account". The subsidiary Account for each Participant
through which all transactions are processed, which is invested in interest
bearing deposits (which may include interest bearing deposits of the Trustee)
and/or money market type assets or funds.
0.55 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the next Trade Date.
0.56 "Taxable Income". Compensation in the amount reported by the
Employer or a Related Company as "Wages, tips, other compensation" on Form W-2,
or any successor method of reporting under Code section 6041(d).
0.57 "Terminated Participant". The Plan status of a Participant who is
not an Employee and with respect to whom the Administrator has reported to the
Trustee that the Participant's employment has terminated with all Related
Companies.
0.58 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Investment Funds are traded.
0.59 "Transition Account". An account consisting of the sum of the
sub-accounts of individual non-vested Account balances of Terminated
Participants.
0.60 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan and holds
the Plan assets which are comprised of the aggregate of Participants' Accounts,
any unallocated funds invested in interest bearing deposits (which may include
interest bearing deposits of the Trustee) and/or money market type assets or
funds, pending allocation to Participants' Accounts or disbursement to pay Plan
fees and expenses.
0.61 "Trustee". Barclays Global Investors, National Association.
0.62 "USERRA". The Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended.
0.63 "Year of Vesting Service". A 12-month Period of Employment.
Years of Vesting Service shall include service credited prior to
June 1, 1977.
2 ELIGIBILITY
2.1 Eligibility
All Participants as of November 1, 1997 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-consecutive month eligibility period for which he or she is
credited with at least 870 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, Terminated or Former Participants2.3 Ineligible,
Terminated or Former Participants2.3 Ineligible, Terminated or Former
Participants
An Ineligible, Terminated or Former Participant may not make or
share in any Contributions, other than such Contributions due to be made on his
or her behalf after the date he or she became an Ineligible, Terminated or
Former Participant for periods prior to such date, nor may an Ineligible or
Terminated Participant be eligible for a new Plan loan (except as described in
Section 9.1), during the period he or she is an Ineligible or Terminated
Participant, but he or she shall continue to participate for all other
purposes. An Ineligible, Terminated or Former Participant shall automatically
become an active Participant on the date he or she again becomes an Eligible
Employee.
3 PARTICIPANT CONTRIBUTIONS
3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
reduce his or her Pay by an amount which does not exceed the Contribution
Dollar Limit or the limits described in the Contribution Percentage Limits
paragraph of this Section 3, and have such amount contributed to the Plan by
the Employer as a Pre-Tax Contribution. The election shall be made in such
manner and with such advance notice as prescribed by the Administrator and may
be limited to a whole percentage of Pay. In no event shall an Employee's Pre-
Tax Contributions under the Plan and comparable contributions to all other
plans, contracts or arrangements of all Related Companies exceed the
Contribution Dollar Limit for the Employee's taxable year beginning in the Plan
Year.
3.2 After-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
make After-Tax Contributions to the Plan in an amount which does not exceed the
limits described in the Contribution Percentage Limits paragraph of this
Section 3. The election shall be made in such manner and with such advance
notice as prescribed by the Administrator and may be limited to a whole
percentage of Pay.
3.3 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Contribution election at any time in such manner and with such advance notice
as prescribed by the Administrator, and such election change shall be effective
with the first payroll paid after such date. A Participant who has changed his
or her Contribution election shall be required to wait at least six months
before he or she may again change his or her Contribution election.
A Participant's Contribution election made as a percentage of Pay
shall automatically apply to Pay increases or decreases.
3.4 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at any
time in such manner and with such advance notice as prescribed by the
Administrator, and such revocation shall be effective with the first payroll
paid after such date.
A Participant who has revoked his or her Contribution election
shall be required to wait at least six months before he or she may resume
Contributions to the Plan. Thereafter, a Participant who is an Eligible
Employee may resume Contributions by making a new 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.
3.5 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending the Plan and Trust, the separate
minimum, if applicable, and maximum Pre-Tax and After-Tax Contribution
percentages, and/or a maximum combined Pre-Tax and After-Tax Contribution
percentage, prospectively or retrospectively (for the current Plan Year), for
all Participants. In addition, the Administrator may establish any lower
percentage limits for Highly Compensated Employees as it deems necessary to
satisfy the tests described in Section 12. As of the Effective Date, the
minimum Pre-Tax and After-Tax Contribution percentages are 1%, and the maximum
Contribution percentages are:
Contribution
Type
Highly
Compensated
Employees
All Other
Participants
Pre-Tax
After-Tax
Sum of Both
10%
7%
12%
10%
7%
12%
Irrespective of the limits that may be established by the
Administrator in accordance with the paragraph above, in no event shall the
Contributions made by or on behalf of a Participant for a Plan Year exceed the
maximum allowable under Code section 415.
3.6 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar year
to the Plan and comparable contributions to any other qualified defined
contribution plan in excess of the Contribution Dollar Limit may notify the
Administrator in writing by the following March 1 (or as late as April 14 if
allowed by the Administrator) that an excess has occurred. In this event, the
amount of the excess specified by the Participant, adjusted for investment gain
or loss, shall be refunded to him or her by the April 15 following the year of
deferral and shall not be included as an Annual Addition (as defined in Section
13.1) under Code section 415 for the year contributed. The excess amounts
shall first be taken from unmatched Pre-Tax Contributions and then from matched
Pre-Tax Contributions. Any Match Contributions attributable to refunded excess
Pre-Tax Contributions as described in this Section, adjusted for investment
gain or loss, shall be forfeited and used as described in Section 8. Refunds
and forfeitures shall not include investment gain or loss for the period
between the end of the applicable calendar year and the date of distribution or
forfeiture.
3.7 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover Contributions,
may only be made through payroll deduction. Such amounts shall be paid to the
Trustee in cash and posted to each Participant's Account(s) as soon as such
amounts can reasonably be separated from the Employer's general assets and
balanced against the specific amount made on behalf of each Participant. In no
event, however, shall such amounts be paid to the Trustee more than 90 days
after the date amounts are deducted from a Participant's Pay, except that
effective February 3, 1997, "15 business days following the end of the month
that includes the date amounts are deducted from a Participant's Pay (or as
that maximum period may be otherwise extended by ERISA)" shall be substituted
for the preceding reference to "90 days after the date amounts are deducted
from a Participant's Pay". Pre-Tax Contributions shall be treated as
Contributions made by an Employer in determining tax deductions under Code
section 404(a).
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
4.1 Rollover Contributions
The Administrator may authorize the Trustee to accept a Rollover
Contribution in cash, directly from an Eligible Employee or as a Direct
Rollover from another qualified plan on behalf of the Eligible Employee, even
if he or she is not yet a Participant. The Employee shall be responsible for
providing satisfactory evidence, in such manner as prescribed by the
Administrator, that such Rollover Contribution qualifies as a rollover
contribution, within the meaning of Code section 402(c) or 408(d)(3)(A)(ii).
Such amounts received directly from an Eligible Employee must be paid to the
Trustee in cash within 60 days after the date received by the Eligible Employee
from a qualified plan or conduit individual retirement account. Rollover
Contributions shall be posted to the Eligible Employee's Rollover Account as of
the date received by the Trustee.
If the Administrator later determines that an amount contributed
pursuant to the above paragraph did not in fact qualify as a rollover
contribution, within the meaning of Code section 402(c) or 408(d)(3)(A)(ii),
the balance credited to the Participant's Rollover Account shall immediately be
(1) segregated from all other Plan assets, (2) treated as a nonqualified trust
established by and for the benefit of the Participant, and (3) distributed to
the Participant. Any such amount shall be deemed never to have been a part of
the Plan.
4.2 Transfers From and To Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in
cash or in kind directly from another qualified plan or to transfer assets in
cash or in kind directly to another qualified plan; provided that receipt of a
transfer shall not be directed if:
(a) any amounts are not exempted by Code section 401(a)(11)(B)
from the annuity requirements of Code section 417 unless the Plan complies with
such requirements; or
(b) any amounts include benefits protected by Code section
411(d)(6) which would not be preserved under applicable Plan provisions.
The Trustee may refuse to receive any such transfer if:
(a) the Trustee finds the in kind assets unacceptable; or
(b) instructions for posting amounts to Participants' Accounts
are incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee. To the extent a receipt
of a transfer includes Participant loans, such loans shall continue in effect
subject to the terms and conditions in effect as of the date of the transfer.
Such transfers from and to other qualified plans may be for the
purpose of transferring assets from the Branch Plant Hourly Plan and/or the
Hourly Plan representing assets attributable to the vested and non-vested
account balances of participants thereunder who are no longer eligible to
participate in the Branch Plant Hourly Plan and/or the Hourly Plan and are
eligible to participate in the Plan (which amounts shall then become subject to
the Plan's vesting schedule which schedule is the same as the vesting schedule
in the Branch Plant Hourly Plan and the Hourly Plan) or for the purpose of
transferring assets from the Plan to the Branch Plant Hourly Plan and/or the
Hourly Plan representing assets attributable to the vested and non-vested
Account balances of Participants hereunder who are no longer eligible to
participate in the Plan and who are eligible to participate in the Branch Plant
Hourly Plan or the Hourly Plan (which amounts shall then become subject to the
Branch Plant Hourly Plan's or the Hourly Plan's vesting schedule, respectively,
each of which is the same as the vesting schedule in the Plan).
5 EMPLOYER CONTRIBUTIONS
5.1 Match Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall make Match
Contributions, as described in the following Allocation Method paragraph, on
behalf of each Participant who contributed during the period.
(b) Allocation Method. The Match Contributions (including any
forfeiture amounts applied as Match Contributions in accordance with Section 8)
for each period shall total 60% of each eligible Participant's Pre-Tax
Contributions for the period, provided that no Match Contributions (and
forfeiture amounts) shall be made based upon a Participant's Contributions in
excess of 5% of his or her Pay. The Employer may change the 60% matching rate
or the 5% 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 Match Contribution in cash as soon as administratively feasible, and
for purposes of deducting such Contribution, not later than the Employer's
federal tax filing date, including extensions. Such amounts shall be paid to
the Trustee and posted to each Participant's Match Account once the total Match
Contribution received has been balanced against the specific amount to be
credited to each Participant's Match Account.
6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts for
each Participant in order to reflect transactions both by type of Account and
investment medium. Financial transactions shall be accounted for at the
individual Account level by posting each transaction to the appropriate Account
of each affected Participant. Participant Account values shall be maintained in
shares for the Investment Funds and in dollars for the Sweep and Loan Accounts.
At any point in time, the Account value shall be determined using the most
recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected Participant's Sweep
Account. Any amount held in the Sweep Account shall be credited with interest
up until the date on which it is removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade
Date. For any transaction to be processed as of a Trade Date, the Trustee must
receive instructions for the transaction by the Sweep Date. Such instructions
shall apply to amounts held in the Account on that Sweep Date. Financial
transactions of the Investment Funds shall be posted to Participants' Accounts
as of the Trade Date, based upon the Trade Date values provided by the Trustee,
and settled on the Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in shares.
The Trustee is responsible for determining the share values of each Investment
Fund as of each Trade Date. To the extent an Investment Fund is comprised of
collective investment funds offered by the Trustee or any other entity
authorized to offer collective investment funds, the share values shall be
determined in accordance with the rules governing such collective investment
funds, which are incorporated herein by reference. All other share values shall
be determined by the Trustee. The share value of each Investment Fund shall be
based on the fair market value of its underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and maintenance, set
forth below, are paid by the Employer directly, or indirectly, through
forfeiture amounts as directed by the Administrator, such fees and expenses
shall be paid as set forth below.
(a) Account Maintenance: Account maintenance fees and expenses,
may include but are not limited to, administrative, Trustee, government annual
report preparation, audit, legal, nondiscrimination testing and fees for any
other special services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee shall reduce a
Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but
are not limited to, periodic installment payment, Investment Fund election
change and loan fees. Transaction fees shall be charged to the Participant's
Account involved in the transaction provided that no fee shall reduce a
Participant's Account balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds shall be charged
at the Investment Fund level and reflected in the net gain or loss of each
Investment Fund.
The Company may determine that the Employers pay a lower portion
of the fees and expenses allocable to the Accounts of Participants who are no
longer Employees or who are not Beneficiaries, unless doing so would result in
discrimination prohibited under Code section 401(a)(4) or a significant
detriment prohibited by Code section 411(a)(11). As of the Effective Date, a
breakdown of which Plan fees and expenses shall generally be borne by the Trust
(and charged to individual Participants' Accounts or charged at the Investment
Fund level and reflected in the net gain or loss of each Investment Fund) and
those that shall be paid by the Employer is set forth in Appendix B, which may
be changed from time to time by the Company, in writing, without the necessity
of amending the Plan and Trust.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account of the
Participant and accounted for in dollars as an earmarked asset of the borrowing
Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account balance with
the amount that would be credited to the Account had no error or omission been
made. Funds necessary for any such restoration shall be provided through
payment made by the Employer, or by the Trustee to the extent the error or
omission is attributable to actions or inactions of the Trustee, or if the
restoration involves an Account holding amounts contributed by an Employer, the
Administrator may direct the Trustee to use forfeiture amounts.
6.8 Participant Statements
The Administrator shall provide Participants with statements of
their Accounts as soon after the end of each quarter of the Plan Year as
administratively feasible. With regard to a Terminated Participant, such
statements shall not include the portion, if any, of his or her non-vested
Account balance maintained in the Transition Account.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during any Conversion Period.
This includes, but is not limited to, the method for allocating net investment
gains or losses and the extent, if any, to which contributions received by and
distributions paid from the Trust during this period share in such allocation.
6.10 Accounts for Alternate Payees
A separate Account shall be established for an Alternate Payee
entitled to any portion of a Participant's Account under a QDRO as of the date
and in accordance with the directions specified in the QDRO. In addition, a
separate Account may be established during the period of time the
Administrator, a court of competent jurisdiction or other appropriate person is
determining whether a domestic relations order qualifies as a QDRO. Such a
separate Account shall be valued and accounted for in the same manner as any
other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an Alternate Payee may be
distributed, in a form permissible under Section 11, to the Alternate Payee at
any time beginning as soon as practicable after the QDRO determination is made,
regardless of whether the Participant is entitled to a distribution from the
Plan at such time. The Alternate Payee shall be provided the notice prescribed
by Code section 402(f).
(b) Participant Loans. Except to the extent required by law, an
Alternate Payee, on whose behalf a separate Account has been established, shall
not be entitled to borrow from such Account. If a QDRO specifies that the
Alternate Payee is entitled to any portion of the Account of a Participant who
has an outstanding loan balance, all outstanding loans shall continue to be
held in the Participant's Account and shall not be divided between the
Participant's and Alternate Payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an Alternate Payee and has not yet been distributed,
the Alternate Payee may direct the investment of such Account in the same
manner as if he or she were a Participant.
7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts and any
unallocated funds invested in interest bearing deposits (which may include
interest bearing deposits of the Trustee) and/or money market type assets or
funds, pending allocation to Participants' Accounts or disbursement to pay Plan
fees and expenses and the Transition Account, the Trust shall be maintained in
various Investment Funds. The Administrator shall select the Investment Funds
offered to Participants and may change the number or composition of the
Investment Funds, subject to the terms and conditions agreed to with the
Trustee. As of the Effective Date, a list of the Investment Funds offered
under the Plan is set forth in Appendix A, which may be changed from time to
time by the Administrator, in writing, and as agreed to by the Trustee, without
the necessity of amending the Plan and Trust.
The Administrator may set a maximum percentage of the total
election that a Participant may direct into any specific Investment Fund, which
maximum, if any, as of the Effective Date is set forth in Appendix A, which may
be changed from time to time by the Administrator, in writing, without the
necessity of amending the Plan and Trust.
7.2 Responsibility for Investment Choice
Each Participant shall direct the investment of all of his or her
Accounts except for his or her PAYSOP Account which shall be entirely invested
in the Investment Fund specified by the Administrator, which Investment Fund as
of the Effective Date is set forth in Appendix A.
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.
Notwithstanding, a Terminated Participant shall not direct the
investment of his or her non-vested Account balance. A Terminated
Participant's non-vested Account balance shall be held in the Transition
Account and invested in interest bearing deposits (which may include interest
bearing deposits of the Trustee) and/or money market type assets or funds.
During any Conversion Period, Trust assets may be held in any
investment vehicle permitted by the Plan, as directed by the Administrator,
irrespective of prior Participant investment elections.
7.3 Investment Fund Elections
A Participant shall provide his or her initial investment election
upon becoming a Participant and may change his or her investment election at
any time in accordance with procedures established by the Administrator and the
Trustee. A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds offered in accordance
with the procedures established by the Administrator and Trustee. Investment
elections received by the Trustee by the Sweep Date shall be effective on the
following Trade Date.
7.4 Default if No Valid Investment Election
The Administrator shall specify an Investment Fund for the
investment of that portion of a Participant's Account which is not yet held in
an Investment Fund and for which no valid investment election is on file. The
Investment Fund specified as of the Effective Date is set forth in Appendix A,
which may be changed from time to time by the Administrator, in writing,
without the necessity of amending the Plan and Trust.
7.5 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a
Participant's Account for Investment Fund election changes in excess of a
specified number per year as determined by the Administrator.
8 VESTING & FORFEITURES
8.1 Fully Vested Accounts
A Participant shall be fully vested in these Accounts at all
times:
Pre-Tax Account
After-Tax Account
Rollover Account
Prior Match Account
PAYSOP Account
8.2 Full Vesting Upon Certain Events
A Participant's entire Account shall become fully vested once he
or she has attained his or her Normal Retirement Date while an Employee or upon
his or her terminating employment with all Related Companies due to his or her
Disability or death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's Match
Account shall become vested in accordance with the following schedule:
Years of Vesting
Service
Vested
Percentage
Less than 5
5 or more
0%
100%
If this vesting schedule is changed, the vested percentage for
each Participant shall not be less than his or her vested percentage determined
as of the last day prior to this change, and for any Participant with at least
three Years of Vesting Service when the schedule is changed, his or her vested
percentage shall be determined using the more favorable vesting schedule.
8.4 Non-Vested Account Balances of Terminated Participants
The non-vested balance of a Terminated Participant's Account shall
be deposited to the Transition Account as of the Settlement Date following the
Sweep Date on which the Administrator has reported to the Trustee that the
Participant's employment has terminated with all Related Companies and shall be
maintained as a sub-account in the Transition Account. The Trustee shall
maintain records necessary to identify each Terminated Participant's non-vested
Account balance at least annually and as of the earlier of the date the
Administrator reports to the Trustee that the Terminated Participant is again
an Employee or the date the Terminated Participant incurs a forfeitable event
described in this Section.
If a Terminated Participant again becomes an Employee before
incurring a forfeitable event described in this Section, his or her non-vested
Account balance shall no longer be maintained as a sub-account in the
Transition Account and shall be recombined with his or her remaining Account
balance. The non-vested Account balance shall be credited to the Investment
Funds based upon the Participant's current investment election for new
Contributions.
8.5 Forfeitures of Non-Vested Account Balances Upon Certain Events
A Terminated Participant shall forfeit his or her non-vested
Account balance as soon as administratively feasible after the earliest of the
date he or she:
(a) is determined to be a Terminated Participant, if his or her
vested Account balance is zero;
(b) receives a complete distribution of his or her vested
Account balance; or
(c) incurs a Break in Service.
8.6 Use of Forfeiture Amounts
Forfeiture amounts shall be used to restore Accounts, to pay Plan
fees and expenses and to reduce future Match Contributions to be made as
directed by the Administrator.
8.7 Rehired Employees
(a) Service Restoration. If a former Employee is rehired before
incurring a Break in Service, or after incurring a Break in Service if (1) he
or she had a vested interest in his or her Accounts derived from Contributions
made by an Employer, or (2) the length of his or her break does not equal or
exceed his or her pre-break service, all Periods of Employment credited when
his or her employment last terminated shall be counted in determining his or
her vested interest. Otherwise, his or her Periods of Employment credited when
his or her employment last terminated shall not be counted in determining his
or her vested interest.
(b) Account Restoration. If a former Employee again becomes an
Employee before he or she incurs a Break in Service, but after he or she incurs
a forfeitable event as described in this Section, the amount forfeited after
his or her employment last terminated shall be restored to his or her Account
as if such Employee had repaid any vested portion of his or her Account from
which such amount was forfeited. The restoration shall include the interest
earned on such amount from the date deposited to the Transition Account until
the date the restoration amount is restored. The restoration amount shall come
from forfeiture amounts to the extent possible, and any additional amount
needed shall be contributed by the Employer. His or her vested interest in the
restored Account shall then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current Account balance
D = amount previously distributed from Account and deemed
repaid
9 PARTICIPANT LOANS
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section, except that a loan shall not be permitted
to a Participant who is no longer an Employee or to a Beneficiary or an
Alternate Payee, unless such Participant, Beneficiary or Alternate Payee is
otherwise a party in interest (as defined in ERISA section 3(14)).
9.2 Limitations on Purpose of Participant Loan
A Participant may only borrow to satisfy a financial need
determined to be a hardship as defined by the Administrator and communicated to
Participants.
9.3 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with
such advance notice as prescribed by the Administrator. Each loan shall be
evidenced by a promissory note, secured only by the portion of the
Participant's Account from which the loan is made, and the Plan shall have a
lien on this portion of his or her Account.
9.4 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to borrow from his or her Account under the Plan.
9.5 Loan Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for determining that
a loan request conforms to the requirements described in this Section and
granting such request.
9.6 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as
determined as of the Sweep Date the loan is processed and shall be funded from
the Participant's Accounts as follows:
(a) Plan Minimum Limit. The minimum amount for any loan is
$1,000.
(b) Plan Maximum Limit, Account Sources and Funding Order.
Subject to the legal limit described in (c) below, the maximum a Participant
may borrow, including the aggregate outstanding balances of existing Plan
loans, is 50% of the following of the Participant's Accounts which are fully
vested (excluding any Restricted Amounts) in the priority order as follows:
Pre-Tax Account
Match Account
Prior Match Account
Rollover Account
After-Tax Account
(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the aggregate outstanding balances of existing Plan loans, is 50% of
his or her vested Account balance, not to exceed $50,000. However, the $50,000
maximum is reduced by the Participant's highest aggregate outstanding Plan loan
balance during the 12-month period ending on the day before the Sweep Date as
of which the loan is made. For purposes of this paragraph, the qualified plans
of all Related Companies shall be treated as though they are part of the Plan
to the extent it would decrease the maximum loan amount.
9.7 Maximum Number of Loans
A Participant may have only one loan outstanding at any given
time.
9.8 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets of
his or her own Account. The available assets shall be determined first by
Account and then within each Account used for funding a loan, amounts shall
first be taken from the Sweep Account and then taken by Investment Fund in
direct proportion to the market value of the Participant's interest in each
Investment Fund as of the Trade Date on which the loan is processed. A
Participant's investment in the Mutual Benefit GIC Fund shall be excluded for
this purpose during any period such Fund is not available to be liquidated for
this purpose.
The loan shall be funded on the Settlement Date following the
Trade Date as of which the loan is processed. The Trustee shall make payment
to the Participant as soon thereafter as administratively feasible.
9.9 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the Administrator,
which provides the Plan with a return commensurate with the prevailing interest
rate charged by persons in the business of lending money for loans which would
be made under similar circumstances. As of the Effective Date, the interest
rate is determined as set forth in Appendix C, which may be changed from time
to time by the Administrator, in writing, without the necessity of amending the
Plan and Trust.
9.10 Loan Payment
Substantially level amortization shall be required of each loan
with payments made at least monthly, generally through payroll deduction.
Loans may be prepaid in full or in part at any time. The Participant may
choose the loan repayment period, not to exceed five years, except that the
repayment period may be for any period not to exceed 15 years if the purpose of
the loan is to acquire the Participant's principal residence.
9.11 Loan Payment Hierarchy
Loan principal payments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan interest
shall be credited to the Participant's Accounts in direct proportion to the
principal payment. Loan payments are credited to the Investment Funds based
upon the Participant's current investment election for new Contributions.
9.12 Repayment Suspension
The Administrator may agree to a suspension of loan payments for
up to 12 months for a Participant who is on a Leave of Absence without pay.
During the suspension period, interest shall continue to accrue on the
outstanding loan balance. At the expiration of the suspension period all
outstanding loan payments and accrued interest thereon shall be due unless
otherwise agreed upon by the Administrator.
9.13 Loan Default
A loan is treated as in default if a scheduled loan payment is not
made at the time required. A Participant shall then have a grace period to
cure the default before it becomes final. Such grace period shall be for a
period that does not extend beyond the last day of the calendar quarter
following the calendar quarter in which the scheduled loan payment was due or
such lesser or greater maximum period as may later be authorized by Code
section 72(p).
In the event a default is not cured within the grace period, the
Administrator may direct the Trustee to report the outstanding principal
balance of the loan and accrued interest thereon as a taxable distribution to
the Participant. As soon as a Plan withdrawal or distribution to such
Participant would otherwise be permitted, the Administrator may instruct the
Trustee to execute upon its security interest in the Participant's Account by
distributing the note to the Participant.
9.14 Call Feature
The Administrator shall have the right to call any Participant
loan once a Participant's employment with all Related Companies has terminated,
unless he or she is otherwise a party in interest (as defined in ERISA section
3(14)), or if the Plan is terminated.
10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this Section and
pursuant to the terms and conditions set forth in Section 11 with regard to an
in-service withdrawal made in accordance with a Participant's Required
Beginning Date.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such
manner and with such advance notice as prescribed by the Administrator. The
Participant shall be provided the notice prescribed by Code section 402(f).
Code sections 401(a)(11) and 417 do not apply to in-service
withdrawals under the Plan. An in-service withdrawal may commence less than 30
days after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such notice to consider
his or her option to elect or not elect a Direct Rollover for all or a portion,
if any, of his or her in-service withdrawal which constitutes an Eligible
Rollover Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of his or her in-service
withdrawal which constitutes an Eligible Rollover Distribution or alternatively
elects to have all or a portion made payable directly to him or her, thereby
not electing a Direct Rollover for all or a portion thereof.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to receive an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for determining
whether an in-service withdrawal request conforms to the requirements described
in this Section and granting such request.
10.5 Payment Form and Medium
The form of payment for an in-service withdrawal shall be a single
lump sum and payment shall be made in cash, except that a Participant may elect
that payment be made in the form of whole shares of Company Stock and cash in
lieu of fractional shares to the extent that such withdrawal is funded from the
Company Stock Fund. With regard to the portion of an in-service withdrawal
representing an Eligible Rollover Distribution, a Participant may elect a
Direct Rollover for all or a portion of such amount.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely
from the assets of his or her own Account and shall be based on the Account
values as of the Trade Date the in-service withdrawal is processed. The
available assets shall be determined first by Account and then within each
Account used for funding an in-service withdrawal, amounts shall first be taken
from the Sweep Account and then taken by Investment Fund in direct proportion
to the market value of the Participant's interest in each Investment Fund
(which excludes his or her Loan Account balance) as of the Trade Date on which
the in-service withdrawal is processed. A Participant's investment in the
Mutual Benefit GIC Fund shall be excluded for this purpose during any period
such Fund is not available to be liquidated for this purpose.
The in-service withdrawal shall be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal is processed.
The Trustee shall make payment to the Participant or on behalf of the
Participant as soon thereafter as administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request
the withdrawal of up to the amount necessary to satisfy a financial need
including amounts necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the withdrawal. Only requests
for withdrawals (1) on account of a Participant's "Deemed Financial Need" or
"Demonstrated Financial Need", and (2) which are "Deemed Necessary" or
"Demonstrated as Necessary" to satisfy the financial need shall be approved.
(b) "Deemed Financial Need". An immediate and heavy financial
need relating to:
(1) the payment of unreimbursed medical care expenses
(described under Code section 213(d)) incurred (or to be incurred) by the
Employee, his or her spouse or dependents (as defined in Code section 152);
(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
(3) the payment of unreimbursed tuition, related
educational fees and room and board for up to the next 12 months of post-
secondary education for the Employee, his or her spouse or dependents (as
defined in Code section 152);
(4) the payment of funeral expenses of an Employee's
family member;
(5) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through eviction or foreclosure
on the mortgage; or
(6) any other circumstance specifically permitted under
Code section 401(k)(2)(B)(i)(IV).
(c) "Demonstrated Financial Need". A determination by the
Administrator that an immediate and heavy financial need exists relating to:
(1) a sudden and unexpected illness or accident to the
Employee or his or her spouse or dependents;
(2) the loss, due to casualty, of the Employee's property
other than nonessential property (such as a boat or a television); or
(3) some other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Employee.
(d) "Deemed Necessary". A withdrawal is "Deemed Necessary" to
satisfy the financial need only if the withdrawal amount does not exceed the
financial need and all of these conditions are met:
(1) the Employee has obtained all possible withdrawals
(other than hardship withdrawals) and nontaxable loans available from the Plan
and all other plans maintained by Related Companies;
(2) the Administrator shall suspend the Employee from
making any contributions to the Plan and all other qualified and nonqualified
plans of deferred compensation and all stock option or stock purchase plans
maintained by Related Companies for 12 months from the date the withdrawal
payment is made; and
(3) the Administrator shall reduce the Contribution
Dollar Limit for the Employee with regard to the Plan and all other plans
maintained by Related Companies, for the calendar year next following the
calendar year of the withdrawal by the amount of the Employee's Pre-Tax
Contributions for the calendar year of the withdrawal.
(e) "Demonstrated as Necessary". A withdrawal is "Demonstrated
as Necessary" to satisfy the financial need only if the withdrawal amount does
not exceed the financial need, the Employee represents that he or she is unable
to relieve the financial need (without causing further hardship) by doing any
or all of the following and the Administrator does not have actual knowledge to
the contrary:
(1) receiving any reimbursement or compensation from
insurance or otherwise;
(2) reasonably liquidating his or her assets and the
assets of his or her spouse or minor children that are reasonably available to
the Employee;
(3) ceasing his or her contributions to the Plan;
(4) obtaining other withdrawals and nontaxable loans
available from the Plan, plans maintained by Related Companies and plans
maintained by any other employer; and
(5) obtaining loans from commercial sources on reasonable
commercial terms.
(f) Account Sources and Funding Order. All available amounts
must first be withdrawn from a Participant's After-Tax Account (excluding any
Restricted Amounts). The remaining withdrawal amount shall come from the
following of the Participant's fully vested Accounts (excluding any Restricted
Amounts), in the priority order as follows:
Rollover Account
Match Account
Prior Match Account
Pre-Tax Account
The amount that may be withdrawn from a Participant's Pre-
Tax Account shall not include any earnings credited after December 31, 1988.
(g) Minimum Amount. There is no minimum amount for a hardship
withdrawal.
(h) Permitted Frequency. There is no restriction on the number
of hardship withdrawals permitted to a Participant.
(i) Suspension from Further Contributions. Upon making a
hardship withdrawal, a Participant may not make additional Pre-Tax or After-Tax
Contributions (or additional contributions to all other qualified and
nonqualified plans of deferred compensation and all stock option or stock
purchase plans maintained by Related Companies), if his or her hardship
withdrawal was "Deemed Necessary" for a period of 12 months from the date the
withdrawal payment is made.
10.8 After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee may make an
After-Tax Account withdrawal.
(b) Account Sources and Funding Order. The withdrawal shall
come from a Participant's After-Tax Account (excluding any Restricted Amounts).
(c) Minimum Amount. There is no minimum amount for an After-Tax
Account withdrawal.
(d) Permitted Frequency. There is no restriction on the number
of After-Tax Account withdrawals permitted to a Participant.
(e) Suspension from Further Contributions. Upon making an
After-Tax Account withdrawal, a Participant may not make additional After-Tax
Contributions for a period of six months from the date the withdrawal payment
is made.
10.9 Over Age 59.5 Withdrawals
(a) Requirements. A Participant who is an Employee and over age
59.5 may make an Over Age 59.5 withdrawal.
(b) Account Sources and Funding Order. The withdrawal shall
come from the following of the Participant's fully vested Accounts (excluding
any Restricted Amounts), in the priority order as follows, except that the
Participant may instead choose to have amounts taken from his or her After-Tax
Account first:
Rollover Account
Pre-Tax Account
Match Account
Prior Match Account
After-Tax Account
(c) Minimum Amount. There is no minimum amount for an Over Age
59.5 withdrawal.
(d) Permitted Frequency. There is no restriction on the number
of Over Age 59.5 withdrawals permitted to a Participant.
(e) Suspension from Further Contributions. An Over Age 59.5
withdrawal shall not affect a Participant's ability to make or be eligible to
receive further Contributions.
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A PARTICIPANT'S
REQUIRED BEGINNING DATE
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional times and
forms of distribution available under the Plan, including the notices
prescribed by Code sections 402(f) and 411(a)(11). Subject to the other
requirements of this Section, a Participant, or his or her Beneficiary in the
case of his or her death, may elect, in such manner and with such advance
notice as prescribed by the Administrator, to have his or her vested Account
balance (excluding any Restricted Amounts unless otherwise permitted by the
Rehab Plan) paid to him or her beginning upon any Settlement Date following the
Participant's termination of employment with all Related Companies and a
reasonable period of time during which the Administrator shall process, and
inform the Trustee of, the Participant's termination or, if earlier, at the
time of the Participant's Required Beginning Date.
Notwithstanding, if a Participant's termination of employment with
all Related Companies does not constitute a separation from service for
purposes of Code section 401(k)(2)(B)(i)(I) or otherwise constitute an event
set forth under Code section 401(k)(10)(A)(ii) or (iii) as described in Section
19.3, the portion of a Participant's Account subject to the distribution rules
of Code section 401(k) may not be distributed until such time as he or she
separates from service for purposes of Code section 401(k)(2)(B)(i)(I) or, if
earlier, upon such other event as described in Code section 401(k)(2)(B) and as
provided for in the Plan.
Code sections 401(a)(11) and 417 do not apply to distributions
under the Plan. A distribution may commence less than 30 days after the
aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such notices to consider
the decision as to whether to elect a distribution and if so to elect a
particular form of distribution and to elect or not elect a Direct Rollover for
all or a portion, if any, of his or her distribution which constitutes an
Eligible Rollover Distribution; and
(b) the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a portion, if any, of
his or her distribution which constitutes an Eligible Rollover Distribution or
alternatively elects to have all or a portion made payable directly to him or
her, thereby not electing a Direct Rollover for all or a portion thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to receive a distribution under the Plan.
11.3 Payment Form and Medium
Except to the extent otherwise provided by Section 11.4, a
Participant may elect to be paid in any of these forms:
(a) a single lump sum;
(b) a partial payment, limited to four per Plan Year;
(c) quarterly periodic installments over a period not to exceed
the life expectancy of the Participant and his or her Beneficiary; or
(d) with regard to Restricted Amounts, in accordance with
procedures established by the Administrator and the Trustee, such forms (other
than an annuity) as are permitted under the Rehab Plan.
Distributions shall be made in cash, except to the extent a
distribution consists of a loan call as described in Section 9. Alternatively,
a Participant may elect that a distribution be made in the form of whole shares
of Company Stock and cash in lieu of fractional shares to the extent the
distribution consists of amounts from the Company Stock Fund. With regard to
the portion of a distribution representing an Eligible Rollover Distribution, a
Distributee may elect a Direct Rollover for all or a portion of such amount.
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related Companies
ends, the Participant's vested Account balance is $5,000 or less, and if at the
time of any prior in-service withdrawal or distribution the Participant's
vested Account balance did not exceed $5,000, the Participant's benefit shall
be paid as a single lump sum as soon as administratively feasible in accordance
with procedures prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the
assets of his or her own Account and shall be based on the Account values as of
the Trade Date the distribution is processed. The available assets shall be
determined first by Account and then within each Account used for funding a
distribution, amounts shall first be taken from the Sweep Account and then
taken by Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund as of the Trade Date on which
the distribution is processed. A Participant's investment in the Mutual
Benefit GIC Fund shall be excluded for this purpose during any period such Fund
is not available to be liquidated for this purpose.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments shall begin not later
than 60 days after the end of the Plan Year in which he or she attains his or
her Normal Retirement Date or retires, whichever is later. However, if the
amount of the payment or the location of the Participant (after a reasonable
search) cannot be ascertained by that deadline, payment shall be made no later
than 60 days after the earliest date on which such amount or location is
ascertained but in no event later than the Participant's Required Beginning
Date. A Participant's failure to elect in such manner as prescribed by the
Administrator to have his or her vested Account balance paid to him or her,
shall be deemed an election by the Participant to defer his or her distribution
but in no event shall his or her benefit payments commence later than his or
her Required Beginning Date.
If benefit payments cannot begin at the time required because the
location of the Participant cannot be ascertained (after a reasonable search),
the Administrator may, at any time thereafter, treat such person's Account as
forfeited subject to the provisions of Section 18.6.
11.7 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be completed
within a period not to exceed the lives or the joint and last survivor life
expectancy of the Participant and his or her Beneficiary. The life
expectancies of a Participant and his or her Beneficiary may not be recomputed
annually.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her sole primary
Beneficiary, the minimum annual distribution for each calendar year, beginning
with the calendar year preceding the calendar year that includes the
Participant's Required Beginning Date, shall not be less than the quotient
obtained by dividing (a) the Participant's vested Account balance as of the
last Trade Date of the preceding year by (b) the applicable divisor as
determined under the incidental benefit requirements of Code section 401(a)(9).
11.9 Payment to Beneficiary
Payment to a Beneficiary must either (i) be completed by the end
of the calendar year that contains the fifth anniversary of the Participant's
death or (ii) begin by the end of the calendar year that contains the first
anniversary of the Participant's death and be completed within the period of
the Beneficiary's life or life expectancy, except that:
(a) If the Participant dies after his or her Required Beginning
Date, payment to his or her Beneficiary must be made at least as rapidly as
provided in the Participant's distribution election;
(b) If the surviving spouse is the Beneficiary, payments need
not begin until the later of (i) the end of the calendar year that includes the
first anniversary of the Participant's death, or (ii) the end of the calendar
year in which the Participant would have attained age 70.5 and must be
completed within the spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is the
Beneficiary die (i) before the Participant's Required Beginning Date and (ii)
before payments have begun to the spouse, the spouse shall be treated as the
Participant in applying these rules.
11.10 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's remaining Plan
interest at the time of his or her death. The designation may be changed at
any time. However, a Participant's spouse shall be the sole primary
Beneficiary unless the designation includes Spousal Consent for another
Beneficiary. If no proper designation is in effect at the time of a
Participant's death or if the Beneficiary does not survive the Participant, the
Beneficiary shall be the Participant's surviving spouse or, if there is no
surviving spouse, the Participant's estate.
12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12 (where
a definition is contained in both Sections 1 and 12, for purposes of Section 12
the Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to Participants as of a
date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a Plan Year (as defined
in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average
Percentage calculated using Deferrals allocated to Participants as of a date
within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a Plan Year (as defined
in Section 12.2).
(e) "Average Percentage". The average of the calculated
percentages for Participants within the specified group. The calculated
percentage refers to either the "Deferrals" or "Contributions" (as defined in
this Section) made on each Participant's behalf for the Plan Year, divided by
his or her Compensation for the portion of the Plan Year in which he or she was
an Eligible Employee while a Participant. (Pre-Tax Contributions to the Plan
or comparable contributions to plans of Related Companies which must be
refunded solely because they exceed the Contribution Dollar Limit are included
in the percentage for the HCE Group but not for the NHCE Group.)
(f) "Contributions" shall include Match and After-Tax
Contributions. In addition, Contributions may include Pre-Tax Contributions,
but only to the extent that (1) the Administrator elects to use them, (2) they
are not used or counted in the ADP Test, and (3) they otherwise satisfy the
requirements as prescribed under Code section 401(m) permitting treatment as
Contributions for purposes of the ACP Test.
(g) "Deferrals" shall include Pre-Tax Contributions.
(h) "HCE" or "Highly Compensated Employee". With respect to all
Related Companies, an Employee who (in accordance with Code section 414(q)):
(1) Was a more than 5% Owner (within the meaning of Code
section 414(q)(2)) at any time during the Plan Year or the preceding Plan Year;
or
(2) Received Compensation during the preceding Plan Year
in excess of $80,000 (as adjusted for such Year pursuant to Code sections
414(q)(1) and 415(d)) or, if the Company elects for such preceding Plan Year,
"in excess of $80,000 (as adjusted for such Year pursuant to Code sections
414(q)(1) and 415(d)) and was a member of the "top-paid group" (within the
meaning of Code section 414(q)(3)) for such preceding Plan Year" shall be
substituted for the preceding reference to "in excess of $80,000 (as adjusted
for such Year pursuant to Code sections 414(q)(1) and 415(d))".
A former Employee shall be treated as an HCE if (1) such
former Employee was an HCE when he or she separated from service, or (2) such
former Employee was an HCE in service at any time after attaining age 55.
The determination of who is an HCE and the determination of
the number and identity of Employees in the top-paid group shall be made in
accordance with Code section 414(q).
(i) "HCE Group" and "NHCE Group". With respect to all Related
Companies, the respective group of HCEs and NHCEs who are eligible to have
amounts contributed on their behalf for the Plan Year, including Employees who
would be eligible but for their election not to participate or to contribute,
or because their Pay is greater than zero but does not exceed a stated minimum.
For Plan Years commencing after December 31, 1998, with respect to all Related
Companies, if the Plan permits participation prior to an Eligible Employee's
satisfaction of the minimum age and service requirements of Code section
410(a)(1)(A), Eligible Employees who have not met the minimum age and service
requirements of Code section 410(a)(1)(A) may be excluded in the determination
of the NHCE Group, but not in the determination of the HCE Group, for purposes
of (i) the ADP Test, if Code section 410(b)(4)(B) is applied in determining
whether the 401(k) portion of the Plan meets the requirements of Code section
410(b), or (ii) the ACP Test, if Code 410(b)(4)(B) is applied in determining
whether the 401(m) portion of the Plan meets the requirements of Code section
410(b).
(1) If the Related Companies maintain two or more plans
which are subject to the ADP or ACP Test and are considered as one plan for
purposes of Code sections 401(a)(4) or 410(b), all such plans shall be
aggregated and treated as one plan for purposes of meeting the ADP and ACP
Tests, provided that the plans may only be aggregated if they have the same
plan year.
(2) If an HCE is covered by more than one cash or
deferred arrangement, or more than one arrangement permitting employee or
matching contributions, maintained by the Related Companies, all such plans
shall be aggregated and treated as one plan (other than those plans that may
not be permissively aggregated) for purposes of calculating the separate
percentage for the HCE which is used in the determination of the Average
Percentage. For purposes of the preceding sentence, if such plans have
different plan years, the plans are aggregated with respect to the plan years
ending with or within the same calendar year.
(j) "Multiple Use Test". The test described in Section 12.4
which a Plan must meet where the Alternative Limitation (described in Section
12.2) is used to meet both the ADP and ACP Tests.
(k) "NHCE" or "Non-Highly Compensated Employee". An Employee
who is not an HCE.
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must meet
either the Basic or Alternative Limitation when compared to the respective
preceding Plan Year's ADP and ACP for the preceding Plan Year's NHCE Group,
defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as follows:
If the NHCE Group
Average Percentage
is:
Then the Maximum HCE
Group Average Percentage is:
Less than 2%
2% to 8%
More than 8%
2 times NHCE Group Average %
NHCE Group Average % plus 2%
NA - Basic Limitation applies
Alternatively, the Company may elect to use the Plan Year's ADP
for the NHCE Group for the Plan Year and/or the Plan Year's ACP for the NHCE
Group for the Plan Year. If such election is made, such election may not be
changed except as provided by the Code.
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a maximum percentage to
be used in place of the calculated percentage for all HCEs that would reduce
the ADP and/or ACP for the HCE Group by a sufficient amount to meet the ADP and
ACP Tests.
With regard to each HCE whose Deferral percentage and/or
Contribution percentage is in excess of the maximum percentage, a dollar amount
of excess Deferrals and/or excess Contributions shall then be determined by (i)
subtracting the product of such maximum percentage for the ADP and the HCE's
Compensation from the HCE's actual Deferrals and (ii) subtracting the product
of such maximum percentage for the ACP and the HCE's Compensation from the
HCE's actual Contributions. Such amounts shall then be aggregated to determine
the total dollar amount of excess Deferrals and/or excess Contributions. ADP
and/or ACP corrections shall be made in accordance with the leveling method as
described below.
(a) ADP Correction. The HCE with the highest Deferral dollar
amount shall have his or her Deferral dollar amount reduced in an amount equal
to the lesser of the dollar amount of excess Deferrals for all HCEs or the
dollar amount that would cause his or her Deferral dollar amount to equal that
of the HCE with the next highest Deferral dollar amount. The process shall be
repeated until the total of the Deferral dollar amount reductions equals the
dollar amount of excess Deferrals for all HCEs.
To the extent an HCE's Deferrals were determined to be
reduced as described in the paragraph above, Pre-Tax Contributions shall, by
the end of the next Plan Year, be refunded to the HCE, except that such amount
to be refunded shall be reduced by Pre-Tax Contributions previously refunded
because they exceeded the Contribution Dollar Limit. The excess amounts shall
first be taken from unmatched Pre-Tax Contributions and then from matched Pre-
Tax Contributions. Any Match Contributions attributable to refunded excess
Pre-Tax Contributions as described in this Section, adjusted for investment
gain or loss for the Plan Year to which the excess Pre-Tax Contributions
relate, shall be forfeited and used as described in Section 8.
(b) ACP Correction. The HCE with the highest Contribution
dollar amount shall have his or her Contribution dollar amount reduced in an
amount equal to the lesser of the dollar amount of excess Contributions for all
HCEs or the dollar amount that would cause his or her Contribution dollar
amount to equal that of the HCE with the next highest Contribution dollar
amount. The process shall be repeated until the total of the Contribution
dollar amount reductions equals the dollar amount of excess Contributions for
all HCEs.
To the extent an HCE's Contributions were determined to be
reduced as described in the paragraph above, Contributions shall, by the end of
the next Plan Year, be refunded to the HCE to the extent vested, and forfeited
and used as described in Section 8 to the extent such amounts were not vested,
as of the end of the Plan Year being tested. The excess amounts shall first be
taken from After-Tax Contributions and then from Match Contributions.
(c) Investment Fund Sources. Once the amount of excess
Deferrals and/or Contributions is determined, and with regard to excess
Contributions, allocated by type of Contribution, within each Account from
which amounts are refunded or forfeited, amounts shall first be taken from the
Sweep Account and then taken by Investment Fund in direct proportion to the
market value of the Participant's interest in each Investment Fund (which
excludes his or her Loan Account balance) as of the Trade Date on which the
correction is processed. A Participant's investment in the Mutual Benefit GIC
Fund shall be excluded for this purpose during any period such Fund is not
available to be liquidated for this purpose.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used to
meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group must also
comply with the requirements of Code section 401(m)(9). Such Code section
requires that the sum of the ADP and ACP for the HCE Group (as determined after
any corrections needed to meet the ADP and ACP Tests have been made) not exceed
the sum (which produces the most favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to
either the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the calculated percentage
for all HCEs that would reduce either or both the ADP or ACP for the HCE Group
by a sufficient amount to meet the multiple use limit. Any excess shall be
corrected in the same manner that excess Deferrals or Contributions are
corrected.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant or forfeited in accordance with this Section 12 shall be adjusted
for investment gain or loss. Refunds or forfeitures shall not include
investment gain or loss for the period between the end of the applicable Plan
Year and the date of distribution or forfeiture.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and the Multiple Use Test, and that the
Contribution Dollar Limit is not exceeded. The Administrator shall maintain
records which are sufficient to demonstrate that the ADP Test, the ACP Test and
the Multiple Use Test, have been met for each Plan Year for at least as long as
the Employer's corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and
the performance of the ADP Test, the ACP Test and the Multiple Use Test, and
any corrective action resulting therefrom, shall be conducted separately with
regard to the Employees of each Employer (and its Related Companies) that is
not a Related Company with respect to the other Employer(s).
(b) Collective Bargaining Units: The performance of the ADP
Test, and if applicable, the ACP Test and the Multiple Use Test, and any
corrective action resulting therefrom, shall be conducted separately with
regard to Employees who are eligible to participate in the Plan as a result of
a collective bargaining agreement.
In addition, testing may be conducted separately, at the
discretion of the Administrator and to the extent permitted under Treasury
regulations, with regard to any group of Employees for whom separate testing is
permissible under such regulations.
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
13.1 "Annual Addition" Defined
The sum for a Plan Year of all (i) contributions (excluding
rollover contributions) and forfeitures allocated to the Participant's Account
and his or her account in all other defined contribution plans maintained by
any Related Company, (ii) amounts allocated to the Participant's individual
medical account (within the meaning of Code section 415(l)(2)) which is part of
a defined benefit plan maintained by any Related Company, and (iii) if the
Participant is a key employee (within the meaning of Code section 419A(d)(3))
for the applicable or any prior Plan Year, amounts attributable to post-
retirement medical benefits allocated to his or her separate account under a
welfare benefit fund (within the meaning of Code section 419(e)) maintained by
any Related Company. The Plan Year refers to the year to which the allocation
pertains, regardless of when it was allocated. The Plan Year shall be the Code
section 415 limitation year.
13.2 Maximum Annual Addition
A Participant's Annual Addition for any Plan Year shall not exceed
the lesser of (i) 25% of his or her Taxable Income or (ii) $30,000 (as adjusted
for cost of living increases pursuant to Code section 415(d)); provided,
however, that clause (i) shall not apply to Annual Additions described in
clauses (ii) and (iii) of Section 13.1 and except that for Plan Years
commencing before November 1, 1995, "or one-quarter of the dollar limitation in
effect under Code section 415(b)(1)(A)" shall be substituted for the preceding
reference to "(as adjusted for cost of living increases pursuant to Code
section 415(d))" and for Plan Years commencing after December 31, 1997,
"Compensation" shall be substituted for the preceding reference to "Taxable
Income".
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any
additional Contributions would produce an excess Annual Addition for such year,
Contributions to be made for the remainder of the Plan Year shall be limited to
the amount needed for each affected Participant to receive the maximum Annual
Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a Participant's
Account (resulting from a reasonable error in determining a Participant's
compensation or the maximum permissible amount of his or her elective deferrals
(within the meaning of Code section 402(g)(3)), or other facts and
circumstances acceptable to the Internal Revenue Service), the excess amount
(adjusted to reflect investment gains) shall first be returned to the
Participant to the extent of his or her After-Tax Contributions, and then to
the extent of his or her Pre-Tax Contributions (however to the extent Pre-Tax
Contributions were matched, the applicable Match Contributions shall be
forfeited in proportion to the returned matched Pre-Tax Contributions) and the
remaining excess, if any, shall be forfeited by the Participant and together
used as described in Section 8.
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined contribution plan, the
excess shall be corrected by reducing the Annual Addition to the Plan only
after all possible reductions have been made to the other defined contribution
plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the
"projected annual benefit" and the denominator is the greater of 125% of the
"protected current accrued benefit" or the normal limit which is the lesser of
(i) 125% of the dollar limitation in effect under Code section 415(b)(1)(A) for
the Plan Year or (ii) 140% of the amount which may be taken into account under
Code section 415(b)(1)(B) for the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided by
the plan determined pursuant to Code section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit
plan in existence (1) on July 1, 1982, shall be the accrued annual benefit
provided for under Public Law 97-248, section 235(g)(4), as amended, or (2) on
May 6, 1986, shall be the accrued annual benefit provided for under Public Law
99-514, section 1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's
Annual Addition for each Plan Year to date (including the annual additions to
his or her account under any other defined contribution plan maintained by any
Related Company) and the denominator is the sum of the "annual amounts" for
each year in which the Participant has performed service with a Related
Company. The "annual amount" for any Plan Year is the lesser of (i) 125% of
the dollar limitation in effect under Code section 415(c)(1)(A) (determined
without regard to subsection (c)(6)) for the Plan Year or (ii) 140% of the
amount which may be taken into account under Code section 415(c)(1)(B) for the
Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code
section 415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248,
section 235(g)(3), as amended, or Public Law 99-514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
The sum of a Participant's Defined Benefit Fraction and Defined
Contribution Fraction for any Plan Year may not exceed 1.0. If the combined
fraction exceeds 1.0 for any Plan Year, the Participant's benefit under the
Plan (to the extent it has not been distributed) shall be limited so that the
combined fraction does not exceed 1.0 before any defined benefit limits shall
be enforced.
For Plan Years commencing after December 31, 1999, the provisions
of the preceding paragraph shall no longer be effective.
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the
following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified
plan of the Related Companies (1) in which a Key Employee is a participant or
was a participant during the determination period (regardless of whether such
plan has terminated), or (2) which enables another plan in the group to meet
the requirements of Code sections 401(a)(4) or 410(b). The Administrator may
also treat any other qualified plan of the Related Companies as part of the
group if the resulting group would continue to meet the requirements of Code
sections 401(a)(4) and 410(b) with such plan being taken into account.
(b) "Determination Date". For any Plan Year, the last Trade
Date of the preceding Plan Year or, in the case of the Plan's first Plan Year,
the last Trade Date of that Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period ending on the
Determination Date was:
(1) an officer of a Related Company whose Compensation
(i) exceeds 50% of the amount in effect under Code section 415(b)(1)(A) and
(ii) places him or her within the following highest paid group of officers:
Number of Employees
not Excluded Under Code
Section 414(q)(5)
Number of
Highest Paid
Officers Included
Less than 30
30 to 500
More than 500
3
10% of the number of
Employees not excluded
under Code section
414(q)(8)
50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds
$150,000, or
(4) a more than 0.5% Owner who is among the 10 Employees
owning the largest interest in a Related Company and whose Compensation exceeds
the amount in effect under Code section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1)
an Employee's Account, (2) the present value of his or her other accrued
benefits provided by all qualified plans within the Aggregation Group, and (3)
the aggregate distributions made within the five year period ending on such
Date. For this purpose, the present value of the Employee's accrued benefit in
a defined benefit plan shall be determined by the method that is used for
benefit accrual purposes under all such plans maintained by the Related
Companies or, if there is no such single method used under all such plans, as
if the benefit accrues no more rapidly than the slowest rate permitted by the
fractional accrual rule in Code section 411(b)(1)(C). Plan Benefits shall
exclude rollover contributions and similar transfers made after December 31,
1983 as provided in Code section 416(g)(4)(A).
(e) "Top Heavy". The Plan's status when the Plan Benefits of
Key Employees account for more than 60% of the Plan Benefits of all Employees
who have performed services at any time during the five year period ending on
the Determination Date. The Plan Benefits of Employees who were, but are no
longer, Key Employees (because they have not been an officer or Owner during
the five year period), are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in
which the Plan is Top Heavy, the Employer shall not allow any contributions
(other than a Rollover Contribution from a plan maintained by a non Related
Company) to be made by or on behalf of any Key Employee unless the Employer
makes a contribution (other than contributions made by an Employer in
accordance with a Participant's salary deferral election or contributions made
by an Employer based upon the amount contributed by a Participant) on behalf of
all Participants who were Eligible Employees as of the last day of the Plan
Year in an amount equal to at least 3% of each such Participant's Taxable
Income.
(b) Overriding Minimum Benefit. Notwithstanding, contributions
shall be permitted on behalf of Key Employees if the Employer also maintains a
defined benefit plan which automatically provides a benefit which satisfies the
Code section 416(c)(1) minimum benefit requirements, including the adjustment
provided in Code section 416(h)(2)(A), if applicable. If the Plan is part of
an Aggregation Group under which a Key Employee is receiving a benefit and no
minimum contribution is provided under any other plan, a minimum contribution
of at least 3% of Taxable Income shall be provided to the Participants
specified in the preceding paragraph, except that if the Aggregation Group
consists of a top heavy defined benefit plan "5%" shall be substituted for the
preceding reference to "3%" with regard to the Participants specified in the
preceding paragraph who are also covered under the defined benefit plan.
14.3 Special Vesting
If the Plan becomes Top Heavy after the Effective Date, vesting
for all Employees shall thereafter be accelerated to the extent the following
vesting schedule produces a greater vested percentage for the Employee than the
normal vesting schedule at any relevant time:
Years of Vesting
Service
Vested
Percentage
Less than 3
3 or more
0%
100%
14.4 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall be
substituted for 125% in determining the Defined Benefit Fraction and the
Defined Contribution Fraction. For Plan Years commencing after December 31,
1999, the provisions of the preceding sentence shall no longer be effective.
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator and the
Trustee, as applicable, whose specific duties are delineated in the Plan and
Trust. In addition, Plan fiduciaries also include any other person to whom
fiduciary duties or responsibilities are delegated with respect to the Plan.
Any person or group may serve in more than one fiduciary capacity with respect
to the Plan. To the extent permitted under ERISA section 405, no fiduciary
shall be liable for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with the Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that
a prudent person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable expenses of
administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so as to minimize the
risk of large losses, unless under the circumstances it is clearly prudent not
to do so; and
(e) treat similarly situated Participants and Beneficiaries in a
uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the administrator of the Plan (within the meaning
of ERISA section 3(16)) and is responsible for compliance with all reporting
and disclosure requirements, except those that are explicitly the
responsibility of the Trustee under applicable law. The Administrator shall
have any necessary authority to carry out such functions through the actions of
the duly appointed officers of the Company.
15.4 Administrator Duties
The Administrator shall have the discretionary authority to
construe the Plan and Trust, other than the provisions which relate to the
Trustee, and to do all things necessary or convenient to effect the intent and
purposes thereof, whether or not such powers are specifically set forth in the
Plan and Trust. Actions taken in good faith by the Administrator shall be
conclusive and binding on all interested parties, and shall be given the
maximum possible deference allowed by law. In addition to the duties listed
elsewhere in the Plan and Trust, the Administrator's authority shall include,
but not be limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of Contributions, and the
eligibility for loans, in-service withdrawals and distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant (or such other
period permitted under ERISA section 104(b)(1)), as well as informing each
Participant of any material modification to the Plan in a timely manner;
(c) make a copy of the following documents available to
Participants during normal work hours: the Plan and Trust (including subsequent
amendments), all annual and interim reports of the Trustee related to the
entire Plan, the latest annual report and the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's interest based upon
such proof and evidence as it deems necessary;
(e) establish and review at least annually a funding policy
bearing in mind both the short-run and long-run needs and goals of the Plan and
to the extent Participants may direct their own investments, the funding policy
shall focus on which Investment Funds are available for Participants to use;
and
(f) adjudicate claims pursuant to the claims procedure described
in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers, investment
counsel and administrative assistants) as it considers necessary to assist it
in the performance of its duties. The Administrator shall also comply with the
bonding requirements of ERISA section 412.
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, may appoint a Committee
to administer the Plan on its behalf. The Company shall provide the Trustee
with the names and specimen signatures of any persons authorized to serve as
Committee members and act as or on its behalf. Any Committee member appointed
by the Company shall serve at the pleasure of the Company, but may resign by
written notice to the Company. Committee members shall serve without
compensation from the Plan for such services. Except to the extent that the
Company otherwise provides, any delegation of duties to the Committee shall
carry with it the full discretionary authority of the Administrator to complete
such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company to
the Committee may be done by a majority of its members. The majority may be
expressed by a vote at a meeting or in writing without a meeting, and a
majority action shall be equivalent to an action of all Committee members.
(b) Meetings. The Committee shall hold meetings upon such
notice, place and times as it determines necessary to conduct its functions
properly.
(c) Reliance by Trustee. The Committee may authorize one or
more of its members to execute documents on its behalf and may authorize one or
more of its members or other individuals who are not members to give written
direction to the Trustee in the performance of its duties. The Committee shall
provide such authorization in writing to the Trustee with the name and specimen
signatures of any person authorized to act on its behalf. The Trustee shall
accept such direction and rely upon it until notified in writing that the
Committee has revoked the authorization to give such direction. The Trustee
shall not be deemed to be on notice of any change in the membership of the
Committee, parties authorized to direct the Trustee in the performance of its
duties, or the duties delegated to and by the Committee until notified in
writing.
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in
accordance with those provisions of the Plan and Trust which relate to the
Trustee, for use in providing Plan benefits and paying Plan fees and expenses
not paid directly by the Employer. Plan benefits shall be drawn solely from
the Trust and paid by the Trustee as directed by the Administrator.
Notwithstanding, the Company may appoint, with the approval of the Trustee,
another trustee to hold and administer Plan assets which do not meet the
requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the
Trustee to invest Trust assets in one or more Investment Funds. The number and
composition of Investment Funds may be changed from time to time, without the
necessity of amending the Plan and Trust. The Trustee may establish reasonable
limits on the number of Investment Funds as well as the acceptable assets for
any such Investment Fund. Each of the Investment Funds may be comprised of any
of the following:
(a) shares of a registered investment company, whether or not
the Trustee or any of its affiliates is an advisor to, or other service
provider to, such company;
(b) collective investment funds maintained by the Trustee, or
any other fiduciary to the Plan, which are available for investment by trusts
which are qualified under Code sections 401(a) and 501(a);
(c) individual equity and fixed income securities which are
readily tradable on the open market;
(d) synthetic guaranteed investment contracts and guaranteed
investment contracts issued by an insurance company and/or synthetic guaranteed
investment contracts and bank investment contracts issued by a bank;
(e) interest bearing deposits (which may include interest
bearing deposits of the Trustee); and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment
fund, shall be subject to all the provisions of the instruments establishing
and governing such fund. These instruments, including any subsequent
amendments, are incorporated herein by reference.
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment
manager of each Investment Fund to maintain sufficient deposit or money market
type assets in each Investment Fund to handle the Investment Fund's liquidity
and disbursement needs. Each Participant's and Beneficiary's Sweep Account,
which is used to hold assets pending investment or disbursement, shall consist
of interest bearing deposits (which may include interest bearing deposits of
the Trustee) and/or money market type assets or funds.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions are received
from the Administrator, Participants or Beneficiaries. Such instructions shall
remain in effect until changed by the Administrator, Participants or
Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company
Shares
The Administrator shall be entitled to vote proxies or exercise
any shareholder rights relating to shares held on behalf of the Plan in a
registered investment company. Notwithstanding, the authority to vote proxies
and exercise shareholder rights related to such shares held in a Custom Fund is
vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee,
an investment manager for any Investment Fund established by the Trustee solely
for Participants of the Plan and, subject to Section 16.7, any other qualified
plan of the Company or a Related Company (a "Custom Fund"). The investment
manager may be the Administrator, Trustee or an investment manager pursuant to
ERISA section 3(38). The Administrator shall advise the Trustee in writing of
the appointment of an investment manager and shall cause the investment manager
to acknowledge to the Trustee in writing that the investment manager is a
fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund consists solely of
collective investment funds or shares of a registered investment company (and
sufficient deposit or money market type assets to handle the Custom Fund's
liquidity and disbursement needs), its underlying instruments shall constitute
the guidelines.
(b) Authority of Investment Manager. The investment manager of
a Custom Fund shall have the authority to vote or execute proxies, exercise
shareholder rights, manage, acquire, and dispose of Trust assets.
Notwithstanding, the authority to vote proxies and exercise shareholder rights
related to shares of Company Stock held in a Custom Fund is vested as provided
otherwise in Section 16.
(c) Custody and Trade Settlement. Unless otherwise agreed to by
the Trustee, the Trustee shall maintain custody of all Custom Fund assets and
be responsible for the settlement of all Custom Fund trades. For purposes of
this Section, shares of a collective investment fund, shares of a registered
investment company and synthetic guaranteed investment contracts and guaranteed
investment contracts issued by an insurance company and/or synthetic guaranteed
investment contracts and bank investment contracts issued by a bank, shall be
regarded as the Custom Fund assets instead of the underlying assets of such
instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the
Administrator nor the Trustee shall be obligated to invest or otherwise manage
any Custom Fund assets for which the Trustee or Administrator is not the
investment manager nor shall the Administrator or Trustee be liable for acts or
omissions with regard to the investment of such assets except to the extent
required by ERISA.
16.7 Master Custom Fund
The Trustee may establish, at the direction of the Administrator,
a single Custom Fund (the "Master Custom Fund"), for the benefit of the Plan
and any other qualified plan of the Company or a Related Company for which the
Trustee acts as trustee pursuant to a plan and trust document that contains a
provision substantially identical to this provision. The assets of the Plan,
to the extent invested in the Master Custom Fund, shall consist only of that
percentage of the assets of the Master Custom Fund represented by the shares
held by the Plan.
16.8 Authority to Segregate Assets
The Administrator may direct the Trustee to split an Investment
Fund into two or more funds in the event any assets in the Investment Fund are
illiquid or the value is not readily determinable. In the event of such
segregation, the Administrator shall give instructions to the Trustee on what
value to use for the split-off assets, and the Trustee shall not be responsible
for confirming such value.
16.9 Investment in Company Stock
If the Company provides for a Company Stock Fund, directly or
through a Master Custom Fund, the Company Stock Fund shall be comprised of
Company Stock and sufficient deposit or money market type assets to handle the
Company Stock Fund's liquidity and disbursement needs. The Company Stock Fund
may be as large as necessary to comply with Participants' and Beneficiaries'
investment elections as well the total investment of Participants' and
Beneficiaries' PAYSOP Accounts.
16.10 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct the
Trustee as to the voting or tendering of any full or partial shares of Company
Stock held on his or her behalf in the Company Stock Fund. The Company shall
be responsible for distributing to each such Participant or Beneficiary on a
timely basis, such information as shall be distributed to shareholders of the
Company in connection with any shareholder vote or tender decision and for
informing each such Participant or Beneficiary of the following:
(a) a failure to instruct the Trustee with regard to a
shareholder vote shall be regarded as a direction to abstain with respect to
each matter or group of related matters to be acted upon (other than elections
to office) and to withhold authority to vote for any nominee for election to
office; and
(b) a failure to instruct the Trustee with regard to a tender
decision shall be regarded as a direction not to tender.
The Trustee shall be responsible for the tabulation of the
instructions furnished by such Participants and Beneficiaries. The Trustee
shall act with respect to such shares as instructed. The Trustee shall hold
any instructions it receives in confidence and shall not divulge or release any
specific information regarding such to any person, including officers or
Employees.
The Trustee will act in accordance with (a) or (b) set forth
above, as applicable, with regard to shares for which instructions are not
received from Participants or Beneficiaries.
16.11 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the requirements of the
Securities Act of 1933, as amended, the California Corporate Securities Law of
1968, as amended, and any other applicable blue sky law. The Administrator
shall also specify what restrictive legend or transfer restriction, if any, is
required to be set forth on the certificates for the securities and the
procedure to be followed by the Trustee to effectuate a resale of such
securities.
17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe
those provisions of the Plan and Trust which relate to the Trustee and to do
all things necessary or convenient to the administration of the Trust, whether
or not such powers are specifically set forth in the Plan and Trust. Actions
taken in good faith by the Trustee shall be conclusive and binding on all
interested parties, and shall be given the maximum possible deference allowed
by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in
the Plan and Trust, the Trustee shall have all the power, authority, rights and
privileges of an absolute owner of the Trust assets and, not in limitation but
in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage, lease, grant
options respecting, repair, alter, insure, or distribute any and all property
in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or conversion
privileges, exercise options and register any securities in the Trust in the
name of the nominee, in federal book entry form or in any other form as shall
permit title thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or otherwise, or defend
against the same, any obligations or claims in favor of or against the Trust;
and
(d) lend, through a collective investment fund, any securities
held in such collective investment fund to brokers, dealers or other borrowers
and to permit such securities to be transferred into the name and custody and
be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any
Trust assets outside the jurisdiction of the United States, except as
authorized under ERISA section 404(b).
17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold
federal (and, if applicable, state) income taxes with regard to any Eligible
Rollover Distribution that is not paid as a Direct Rollover in accordance with
the Participant's withholding election or as required by law if no election is
made or the election is less than the amount required by law. With regard to
any taxable distribution that is not an Eligible Rollover Distribution, the
Trustee shall calculate and withhold federal (and, if applicable, state) income
taxes in accordance with the Participant's withholding election or as required
by law if no election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from
the Investment Fund any taxes or assessments imposed by any taxing or
governmental authority on such Investment Fund or its income, including related
interest and penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall provide the
Administrator with an annual accounting of Trust assets and information to
assist the Administrator in meeting ERISA's annual reporting and audit
requirements.
(b) Periodic Reports. The Trustee shall maintain records and
provide sufficient reporting to allow the Administrator to properly monitor the
Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting
shall automatically occur 90 days after such accounting has been received by
the Administrator, unless the Administrator files a written objection with the
Trustee within such time period. Such approval shall be final as to all
matters and transactions stated or shown therein and binding upon the
Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradable and listed on a national securities exchange registered under
the Securities Exchange Act of 1934, as amended, the Trustee may engage a
qualified independent appraiser to determine the fair market value of such
property, and the appraisal fees shall be paid from the Investment Fund
containing the asset.
17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice,
including counsel for the Employer or counsel of the Trustee, upon any question
or matter arising under the Plan and Trust. When relied upon by the Trustee,
the opinion of such counsel shall be evidence that the Trustee has acted in
good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as
may be mutually agreed upon by the Company and the Trustee. Trustee fees and
all reasonable expenses of counsel and advisors retained by the Trustee shall
be paid in accordance with Section 6.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the Trustee,
shall be confined to construing the terms of the Plan and Trust as they relate
to the Trustee, receiving funds on behalf of and making payments from the
Trust, safeguarding and valuing Trust assets, investing and reinvesting Trust
assets in the Investment Funds as directed by the Administrator, Participants
or Beneficiaries, and those duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to enforce collection or to
compute or verify the accuracy or adequacy of any amount to be paid to it by
the Employer. The Trustee shall not be liable for the proper application of
any part of the Trust with respect to any disbursement made at the direction of
the Administrator.
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any 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 Compliance With USERRA
Notwithstanding any provision of the Plan to the contrary,
effective October 13, 1996, with regard to an Employee who after serving in the
uniformed services is reemployed on or after December 12, 1994, within the time
required by USERRA, contributions shall be made and benefits and service credit
shall be provided under the Plan with respect to his or her qualified military
service (as defined in Code section 414(u)(5)) in accordance with Code section
414(u). Furthermore, notwithstanding any provision of the Plan to the contrary,
Participant loan payments may be suspended during a period of qualified
military service.
18.3 Limited Return of Contributions
Except as provided in this Section 18.3, (i) Plan assets shall not
revert to the Employer nor be diverted for any purpose other than the exclusive
benefit of Participants and Beneficiaries and defraying reasonable expenses of
administering the Plan; and (ii) a Participant's vested interest shall not be
subject to divestment. As provided in ERISA section 403(c)(2), the actual
amount of a Contribution or portion thereof made by the Employer (or the
current value of such if a net loss has occurred) may revert to the Employer
if:
(a) such Contribution or portion thereof is made by reason of a
mistake of fact; or
(b) such Contribution or portion thereof is not deductible under
Code section 404 (such Contributions are hereby conditioned upon such
deductibility) in the taxable year of the Employer for which the Contribution
is made.
The reversion to the Employer must be made (if at all) within one
year of the mistaken payment or the date of disallowance of deduction, as the
case may be. A Participant shall have no rights under the Plan with respect to
any such reversion.
18.4 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan may be anticipated,
assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to an Alternate Payee pursuant to a QDRO; or
(b) to use a Participant's vested Account balance as security
for a loan from the Plan which is permitted pursuant to Code section 4975.
18.5 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally incapable of giving
a valid receipt and discharge for any payment due him or her, the Administrator
shall have the payment of the benefit, or any part thereof, made to the person
(or persons or institution) whom it reasonably believes is caring for or
supporting the payee, unless it has received due notice of claim therefor from
a duly appointed guardian or conservator of the payee. Any payment shall to
the extent thereof, be a complete discharge of any liability under the Plan to
the payee.
18.6 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of
a Plan benefit after a reasonable search, the Administrator may at any time
thereafter treat such person's Account as forfeited and use such amount as
described in Section 8. If such person subsequently presents the Administrator
with a valid claim for the benefit, such person shall be paid the amount
treated as forfeited, plus the interest that would have been earned in the
Sweep Account to the date of determination. The Administrator shall pay the
amount through an additional amount contributed by the Employer or direct the
Trustee to pay the amount from forfeiture amounts.
18.7 Suspension of Certain Plan Provisions During Conversion Period
Notwithstanding any provision of the Plan to the contrary, during
any Conversion Period, in accordance with procedures established by the
Administrator and the Trustee, the Administrator may temporarily suspend, in
whole or in part, certain provisions under the Plan, which may include, but are
not limited to, a Participant's right to change his or her Contribution
election, a Participant's right to change his or her investment election and a
Participant's right to borrow or withdraw from his or her Account or obtain a
distribution from his or her Account.
18.8 Suspension of Certain Plan Provisions During Other Periods
Notwithstanding any provision of the Plan to the contrary, in
accordance with procedures established by the Administrator and the Trustee,
the Administrator may temporarily suspend a Participant's right to borrow or
withdraw from his or her Account or obtain a distribution from his or her
Account, if (i) the Administrator receives a domestic relations order and the
Participant's Account is a source of the payment for such domestic relations
order, or (ii) if the Administrator receives notice that a domestic relations
order is being sought by the Participant, his or her spouse, former spouse,
child or other dependent (as defined in Code section 152) and the Participant's
Account is a source of the payment for such domestic relations order. Such
suspension may continue for a reasonable period of time (as determined by the
Administrator) which may include the period of time the Administrator, a court
of competent jurisdiction or other appropriate person is determining whether
the domestic relations order qualifies as a QDRO.
18.9 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with
the Administrator's determination of his or her right to Plan benefits must
submit a written claim and exhaust this claim procedure before legal recourse
of any type is sought. The claim must include the important issues the
interested party believes support the claim. The Administrator, pursuant to
the authority provided in the Plan, shall either approve or deny the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an understandable, written
response covering (1) the specific reasons why the claim is being denied (with
reference to the pertinent Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party may
make a written appeal of the Administrator's initial decision, and the
Administrator shall respond in the same manner and form as prescribed for
denying a claim initially.
(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the following time table:
Days to Respond
Action From Last Action
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it provides an explanation
within the normal period of why an extension is needed and when its decision
shall be forthcoming.
18.10 Construction
Headings are included for reading convenience. The text shall
control if any ambiguity or inconsistency exists between the headings and the
text. The singular and plural shall be interchanged wherever appropriate.
References to Participant shall include Alternate Payee and/or Beneficiary when
appropriate and even if not otherwise already expressly stated.
18.11 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not otherwise
preempted, by the laws of the State of California. If any provision of the
Plan and Trust is or becomes invalid or otherwise unenforceable, that fact
shall not affect the validity or enforceability of any other provision of the
Plan and Trust. All provisions of the Plan and Trust shall be so construed as
to render them valid and enforceable in accordance with their intent.
18.12 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries
against any and all liabilities resulting from any action or inaction,
(including a Plan termination in which the Company fails to apply for a
favorable determination from the Internal Revenue Service with respect to the
qualification of the Plan upon its termination), in relation to the Plan or
Trust (i) including (without limitation) expenses reasonably incurred in the
defense of any claim relating to the Plan or its assets, and amounts paid in
any settlement relating to the Plan or its assets, but (ii) excluding liability
resulting from actions or inactions made in bad faith, or resulting from the
negligence or willful misconduct of the Trustee. The Company shall have the
right, but not the obligation, to conduct the defense of any action to which
this Section applies. The Plan fiduciaries are not entitled to indemnity from
the Plan assets relating to any such action.
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
19.1 Amendment
The Company reserves the right to amend the Plan and Trust at any
time, to any extent and in any manner it may deem necessary or appropriate.
The Company (and not the Trustee) shall be responsible for adopting any
amendments necessary to maintain the qualified status of the Plan and Trust
under Code sections 401(a) and 501(a). The Administrator shall have the
authority to adopt Plan and Trust amendments which have no substantial adverse
financial impact upon any Employer or the Plan. All interested parties shall
be bound by any amendment, provided that no amendment shall:
(a) become effective unless it has been adopted in accordance
with the procedures set forth in Section 19.5;
(b) except to the extent permissible under ERISA and the Code,
make it possible for any portion of the Trust assets to revert to an Employer
or to be used for, or diverted to, any purpose other than for the exclusive
benefit of Participants and Beneficiaries entitled to Plan benefits and to
defray reasonable expenses of administering the Plan;
(c) decrease the rights of any Participant to benefits accrued
(including the elimination of optional forms of benefits) to the date on which
the amendment is adopted, or if later, the date upon which the amendment
becomes effective, except to the extent permitted under ERISA and the Code; nor
(d) permit a Participant to be paid any portion of his or her
Account subject to the distribution rules of Code section 401(k) unless the
payment would otherwise be permitted under Code section 401(k).
19.2 Merger
The Plan and Trust may not be merged or consolidated with, nor may
its assets or liabilities be transferred to, another plan unless each
Participant and Beneficiary would, if the resulting plan were then terminated,
receive a benefit just after the merger, consolidation or transfer which is at
least equal to the benefit which would be received if either plan had
terminated just before such event.
19.3 Divestitures
In the event of a sale by an Employer which is a corporation of:
(i) substantially all of the Employer's assets used in a trade or business to
an unrelated corporation, or (ii) a sale of such Employer's interest in a
subsidiary to an unrelated entity or individual, lump sum distributions shall
be permitted from the Plan, except as provided below, to Participants with
respect to Employees who continue employment with the corporation acquiring
such assets or who continue employment with such subsidiary, as applicable.
Notwithstanding, distributions shall not be permitted if the
purchaser agrees, in connection with the sale, to be substituted as the Company
as the sponsor of the Plan or to accept a transfer in a transaction subject to
Code section 414(l)(1) of the assets and liabilities representing the
Participants' benefits into a plan of the purchaser or a plan to be established
by the purchaser.
19.4 Plan Termination and Complete Discontinuance of Contributions
The Company may, at any time and for any reason, terminate the
Plan in accordance with the procedures set forth in Section 19.5, or completely
discontinue contributions. Upon either of these events, or in the event of a
partial termination of the Plan within the meaning of Code section 411(d)(3),
the Accounts of each affected Participant who has not yet incurred a
forfeitable event as described in Section 8 shall be fully vested.
In the event of the Plan's termination, if no successor plan is
established or maintained, lump sum distributions shall be made in accordance
with the terms of the Plan as in effect at the time of the Plan's termination
or as thereafter amended, provided that a post-termination amendment shall not
be effective to the extent that it violates Section 19.1 unless it is required
in order to maintain the qualified status of the Plan upon its termination.
The Trustee's and Employer's authority shall continue beyond the Plan's
termination date until all Trust assets have been liquidated and distributed.
19.5 Amendment and Termination Procedures
Any amendment to (including a termination of) the Plan and Trust
by the Company shall be made only pursuant to action of the Board or on behalf
of the Board by the Board's executive committee as authorized in the Company
bylaws in accordance with the Board's normal procedures and by written
instrument of amendment, signed and dated. Any amendment to the Plan and Trust
by the Committee, as Administrator, shall be made pursuant to action of the
Committee in accordance with the procedures set forth in Section 15.7(a) and by
written instrument of amendment, signed and dated.
The effective date of any amendment may be before, on or after the
date of such Board action or Committee action, as applicable. If no effective
date is specified, the effective date of the amendment shall be the date of the
Board action or the Committee action, as applicable. However, no amendment
shall become effective until it is accepted and signed by the Trustee (which
acceptance shall not be unreasonably withheld.)
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its
Plan participation by action of its board of directors in accordance with its
normal procedures. Written notice of such action shall be signed and dated by
an executive officer of the Employer and delivered to the Company. If the
effective date of such action is not specified, it shall be effective on, or as
soon as reasonably practicable after, the date of delivery. Upon the
Employer's request, the Company may instruct the Trustee and Administrator to
spin off all affected Accounts and underlying assets into a separate qualified
plan under which the Employer shall assume the powers and duties of the
Company. Alternatively, the Company may continue to maintain the Accounts
under the Plan.
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under the Plan and Trust or may
be removed by the Company at any time upon at least 90 days written notice (or
less if agreed to by both parties). In such event, the Company shall appoint a
successor trustee by the end of the notice period. The successor trustee shall
then succeed to all the powers and duties of the Trustee under the Plan and
Trust. If no successor trustee has been named by the end of the notice period,
the Company's chief executive officer shall become the trustee, or if he or she
declines, the Trustee may petition the court for the appointment of a successor
trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively feasible
after its resignation or removal as Trustee, the Trustee shall transfer to the
successor trustee all property currently held by the Trust. However, the
Trustee is authorized to reserve such sum of money as it may deem advisable for
payment of its accounts and expenses in connection with the settlement of its
accounts or other fees or expenses payable by the Trust. Any balance remaining
after payment of such fees and expenses shall be paid to the successor trustee.
(b) Final Accounting. The Trustee shall provide a final
accounting to the Administrator within 90 days of the date Trust assets are
transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting
shall automatically occur 90 days after such accounting has been received by
the Administrator, unless the Administrator files a written objection with the
Trustee within such time period. Such approval shall be final as to all
matters and transactions stated or shown therein and binding upon the
Administrator.
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date
include this set of daily valued funds:
Category Funds
Income Income Accumulation 1/
U.S. Treasury Allocation
Balanced Asset Allocation
Equity Company Stock
S&P 500 Stock
Combination LifePath Series
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the Income
Accumulation Fund.
III. Accounts For Which Investment is Restricted
A Participant may direct the investment of his or her entire Account
except for the following Accounts, which shall be invested as of the Effective
Date as follows:
PAYSOP Company Stock Fund
IV. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of the Effective Date, there are no maximum percentage restrictions
applicable to any Investment Funds.
1/ On July 16, 1991, New Jersey Insurance regulators took control of Mutual
Benefit Life Insurance Company. As of July 16, 1991, approximately 37% of the
Longview Income Accumulation Fund was invested in a GIC with Mutual Benefit.
Due to the uncertain condition of Mutual Benefit Life Insurance Company, the
portion of the Fund represented by the Mutual Benefit GIC was segregated into a
separate fund called the Mutual Benefit GIC Fund, to remain segregated until
such time as the ability of Mutual Benefit Life Insurance Company to meet its
obligations is known. The portion of a Participant's investment in the Longview
Income Accumulation Fund as of July 16, 1991 attributable to the Mutual Benefit
GIC was frozen in the separate Mutual Benefit GIC Fund and is not available for
investment transfers or for funding loans, in-service withdrawals or
distributions (other than in accordance with the Rehab Plan) until otherwise
permitted by MBL Life Assurance Corporation. Investments in the Longview
Income Accumulation Fund after July 1991 are not affected by the seizure of
Mutual Benefit Life Insurance Company by state insurance regulators.
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as
follows:
I. Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants.
II. Recordkeeping Fees: These are paid by the Employer on a quarterly basis,
except that with regard to a Participant who is no longer an Employee or a
Beneficiary, these are paid by the Participant and are assessed monthly and
billed/collected from Accounts quarterly.
III. Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding loan
balance.
IV. Investment Fund Election Changes: For each Investment Fund election
change by a Participant, in excess of four changes per year, a $10 fee shall be
assessed and billed/collected quarterly from the Participant's Account.
V. Periodic Installment Payment Fees: A $3.00 per check fee shall be
assessed and billed/collected quarterly from the Account of each Participant
for whom a check is issued.
VI. Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the Administrator
later elects that any such fees shall be borne by Participants, estimates of
the fees shall be determined and reconciled, at least annually, and the fees
shall be assessed monthly and billed/collected from Accounts quarterly.
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the U.S. Treasury rate for a note of the same maturity, plus 2%.
The rate may be determined once for all loans made in a month, and the maturity
may be determined to the nearest year.
10/29/97
Change of Trustee Amendment
To the
Longview Fibre Company Salaried Savings Plan with 401(k) Provisions
Whereas, Longview Fibre Company (the "Company") sponsors the Longview
Fibre Company Salaried Savings Plan with 401(k) Provisions (the "Plan") and
the Plan and its related trust (the "Trust") are maintained under the
Longview Fibre Company Salaried Savings Plan with 401(k) Provisions and Trust
Agreement, as amended to date (the "Plan Document");
Whereas, the provisions of the Plan Document relating to the Trustee
constitute the trust agreement (the "Trust Agreement") entered into by and
between the Company and Barclays Global Investors, National Association
("BGI"), as Trustee of the Trust:
Whereas, the Plan Document provides that the Company reserves the right
to amend the Trust Agreement with the approval of the Trustee:
Whereas, effective as of August 29, 1997, pursuant to a sale agreement
between BGI and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), (i) Merrill Lynch acquired the MasterWorks division of BGI
("MasterWorks") and Merrill Lynch became the successor to the business
formerly carried on by BGI through MasterWorks, and (ii) Merrill Lynch and
BGI agreed to cooperate to obtain the consents of the MasterWorks clients of
BGI to the substitution of Merrill Lynch's affiliated trust companies
(including Merrill Lynch Trust Company, FSB, a federal savings bank,
chartered under the laws of the United States ("Merrill Lynch Trust")) as
successor trustees of their qualified retirement plans maintained through
MasterWorks; and
Whereas, (i) the Company, BGI and Merrill Lynch Trust wish to amend the
Trust Agreement in order to reflect the effects of the transaction described
in the next preceding paragraph and to facilitate the transition of
responsibility for the custody of the Trust assets from BGI to Merrill Lynch
Trust, (ii) BGI wishes to resign as Trustee of the Trust, (iii) the Company
wishes to appoint Merrill Lynch Trust as successor Trustee of the Trust, and
(iv) Merrill Lynch Trust wishes to accept its appointment as successor
Trustee of the Trust;
Now Therefore, the Trust Agreement is amended, effective as of January
1, 1998 (except as otherwise specified below), as follows:
1. The "Trustee" definition of Section 1 is amended to read as follows:
"Trustee". Merrill Lynch Trust Company, FSB, a federal savings bank,
chartered under the law of the United States.
2. The first sentence of the "Jurisdiction and Severability" Section is
amended to read as follows:
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 New Jersey.
3. Effective as of December 31, 1997, (i) BGI hereby resigns as Trustee of
the Trust, (ii) the Company hereby accepts such resignation and appoints
Merrill Lynch Trust as successor Trustee of the Trust, and (iii) Merrill
Lynch Trust hereby accepts such appointment.
4. Effective as of January 1, 1998, or as soon thereafter as is reasonably
practicable, the Company agrees that all Plan assets that are to be
invested in interest bearing deposits of the Trustee and/or money market
type assets or funds pursuant to applicable provisions of the Plan and
Trust shall be invested, except as otherwise directed by the
Administrator and agreed by the Trustee, in the CMA Money Fund. The
Company hereby acknowledges that it has read and understood the Fund's
prospectus.
5. In order to evidence their mutual agreement to the foregoing matters, the
Company, BGI and Merrill Lynch Trust, by their respective duly authorized
officers or representatives, have executed this Trustee Transition
Agreement and Amendment on the dates indicated below.
Date: December 11, 1997 Longview Fibre Company
\s\ L.J. Holbrook
By: L. J. Holbrook
Title: Sr. VP Finance
Date: December 17, 1997 Barclays Global Investors,
National Association
\s\ James R, Sellers
By: James R. Sellars
Title: Principal
\s\ Carolyn R. Herman
By: Carolyn R. Herman
Title: Managing Director
Date: January 29, 1998 Merrill Lynch Trust Company, FSB
\s\ Thomas A. Panebianco Jr.
By: Thomas A. Panebianco Jr.
Title: Vice President
Longview Fibre Company Hourly Employees 401(k) Savings Plan and Trust
As Amended and Restated Effective January 1, 1998
Longview Fibre Company (the "Company") previously established the Longview
Fibre Company Hourly Employees 401(k) Savings Plan (the "Plan"), for the
exclusive 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 the Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Longview Fibre Company
and Merrill Lynch Trust Company, FSB. The Trust is intended to be tax exempt,
as described in Code section 501(a).
The Plan is intended to comply with the qualification requirements of the
Small Business Job Protection Act of 1996 (the "SBJPA") and is intended to
comply in operation therewith. To the extent that the Plan, as set forth
below, is subsequently determined to be insufficient to comply with such
requirements and any regulations issued under the SBJPA, the Plan shall later
be amended to so comply.
The Plan constitutes an amendment and restatement of the Longview Fibre
Company Hourly Employees 401(k) Savings Plan effective January 1, 1998, which
was originally established effective as of June 3, 1985, and its related trust
agreement. The Plan and Trust were last restated effective January 1, 1991 and
amended six times thereafter including a change in trustee amendment effective
January 1, 1998.
The Longview Fibre Company Hourly Employees 401(k) Savings Plan and Trust, as
set forth in this document, is hereby amended and restated effective as of
January 1, 1998.
Date: 12/18 , 1998 Longview Fibre Company
\s\ L.J. Holbrook
By: L.J. Holbrook
Title: Sr. VP Finance
The trust agreement set forth in those provisions of the Plan and Trust which
relate to the Trustee is hereby executed.
Date: 12/30 , 1998 Merrill Lynch Trust Company, FSB
\s\ Mary Galie
By: Mary Galie
Title: Consultant, AVP
TABLE OF CONTENTS
1 DEFINITIONS 1
2 ELIGIBILITY 11
2.1 Eligibility 11
2.2 Ineligible Employees 11
2.3 Ineligible, Terminated or Former Participants 11
3 PARTICIPANT CONTRIBUTIONS 12
3.1 Pre-Tax Contribution Election 12
3.2 After-Tax Contribution Election 12
3.3 Changing a Contribution Election 12
3.4 Revoking and Resuming a Contribution Election 12
3.5 Contribution Percentage Limits 13
3.6 Refunds When Contribution Dollar Limit Exceeded 13
3.7 Timing, Posting and Tax Considerations 14
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS 15
4.1 Rollover Contributions 15
4.2 Transfers From and To Other Qualified Plans 15
5 EMPLOYER CONTRIBUTIONS 17
5.1 Match Contributions 17
6 ACCOUNTING 18
6.1 Individual Participant Accounting 18
6.2 Sweep Account is Transaction Account 18
6.3 Trade Date Accounting and Investment Cycle 18
6.4 Accounting for Investment Funds 18
6.5 Payment of Fees and Expenses 18
6.6 Accounting for Participant Loans 19
6.7 Error Correction 19
6.8 Participant Statements 20
6.9 Special Accounting During Conversion Period 20
6.10 Accounts for Alternate Payees 20
7 INVESTMENT FUNDS AND ELECTIONS 21
7.1 Investment Funds 21
7.2 Responsibility for Investment Choice 21
7.3 Investment Fund Elections 21
7.4 Default if No Valid Investment Election 22
7.5 Investment Fund Election Change Fees 22
8 VESTING & FORFEITURES 23
8.1 Fully Vested Accounts 23
8.2 Full Vesting Upon Certain Events 23
8.3 Vesting Schedule 23
8.4 Non-Vested Account Balances of Terminated Participants 23
8.5 Forfeitures of Non-Vested Account Balances Upon Certain Events 24
8.6 Use of Forfeiture Amounts 24
8.7 Rehired Employees 24
9 PARTICIPANT LOANS 26
9.1 Participant Loans Permitted 26
9.2 Loan Application, Note and Security 26
9.3 Spousal Consent 26
9.4 Loan Approval 26
9.5 Loan Funding Limits, Account Sources and Funding Order 26
9.6 Maximum Number of Loans 27
9.7 Source and Timing of Loan Funding 27
9.8 Interest Rate 27
9.9 Loan Payment 27
9.10 Loan Payment Hierarchy 28
9.11 Repayment Suspension 28
9.12 Loan Default 28
9.13 Call Feature 28
10 IN-SERVICE WITHDRAWALS 29
10.1 In-Service Withdrawals Permitted 29
10.2 In-Service Withdrawal Application and Notice 29
10.3 Spousal Consent 29
10.4 In-Service Withdrawal Approval 29
10.5 Payment Form and Medium 29
10.6 Source and Timing of In-Service Withdrawal Funding 30
10.7 Hardship Withdrawals 30
10.8 After-Tax Account Withdrawals 33
10.9 Over Age 59.5 Withdrawals 33
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A PARTICIPANT'S
REQUIRED BEGINNING DATE 35
11.1 Benefit Information, Notices and Election 35
11.2 Spousal Consent 36
11.3 Payment Form and Medium 36
11.4 Distribution of Small Amounts 36
11.5 Source and Timing of Distribution Funding 36
11.6 Latest Commencement Permitted 37
11.7 Payment Within Life Expectancy 37
11.8 Incidental Benefit Rule 37
11.9 Payment to Beneficiary 37
11.10 Beneficiary Designation 38
12 ADP AND ACP TESTS 39
12.1 Contribution Limitation Definitions 39
12.2 ADP and ACP Tests 41
12.3 Correction of ADP and ACP Tests for Plan Years Commencing After
December 31, 1996 42
12.4 Multiple Use Test 43
12.5 Correction of Multiple Use Test 43
12.6 Adjustment for Investment Gain or Loss 44
12.7 Testing Responsibilities and Required Records 44
12.8 Separate Testing 44
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS 45
13.1 "Annual Addition" Defined 45
13.2 Maximum Annual Addition 45
13.3 Avoiding an Excess Annual Addition 45
13.4 Correcting an Excess Annual Addition 45
13.5 Correcting a Multiple Plan Excess 46
13.6 "Defined Benefit Fraction" Defined 46
13.7 "Defined Contribution Fraction" Defined 46
13.8 Combined Plan Limits and Correction 47
14 TOP HEAVY RULES 48
14.1 Top Heavy Definitions 48
14.2 Special Contributions 49
14.3 Special Vesting 50
14.4 Adjustment to Combined Limits for Different Plans 50
15 PLAN ADMINISTRATION 51
15.1 Plan Delineates Authority and Responsibility 51
15.2 Fiduciary Standards 51
15.3 Company is ERISA Plan Administrator 51
15.4 Administrator Duties 52
15.5 Advisors May be Retained 52
15.6 Delegation of Administrator Duties 53
15.7 Committee Operating Rules 53
16 MANAGEMENT OF INVESTMENTS 54
16.1 Trust Agreement 54
16.2 Investment Funds 54
16.3 Authority to Hold Cash 55
16.4 Trustee to Act Upon Instructions 55
16.5 Administrator Has Right to Vote Registered Investment Company
Shares 55
16.6 Custom Fund Investment Management 55
16.7 Master Custom Fund 56
16.8 Authority to Segregate Assets 56
16.9 Investment in Company Stock 57
16.10 Participants Have Right to Vote and Tender Company Stock 57
16.11 Registration and Disclosure for Company Stock 57
17 TRUST ADMINISTRATION 58
17.1 Trustee to Construe Trust 58
17.2 Trustee To Act As Owner of Trust Assets 58
17.3 United States Indicia of Ownership 58
17.4 Tax Withholding and Payment 59
17.5 Trust Accounting 59
17.6 Valuation of Certain Assets 59
17.7 Legal Counsel 60
17.8 Fees and Expenses 60
17.9 Trustee Duties and Limitations 60
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION 61
18.1 Plan Does Not Affect Employment Rights 61
18.2 Compliance With USERRA 61
18.3 Limited Return of Contributions 61
18.4 Assignment and Alienation 62
18.5 Facility of Payment 62
18.6 Reallocation of Lost Participant's Accounts 62
18.7 Suspension of Certain Plan Provisions During Conversion Period 62
18.8 Suspension of Certain Plan Provisions During Other Periods 63
18.9 Claims Procedure 63
18.10 Construction 64
18.11 Jurisdiction and Severability 64
18.12 Indemnification by Employer 64
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION 65
19.1 Amendment 65
19.2 Merger 65
19.3 Divestitures 65
19.4 Plan Termination and Complete Discontinuance of Contributions 66
19.5 Amendment and Termination Procedures 66
19.6 Termination of Employer's Participation 67
19.7 Replacement of the Trustee 67
19.8 Final Settlement and Accounting of Trustee 67
APPENDIX A - INVESTMENT FUNDS 68
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES 69
APPENDIX C - LOAN INTEREST RATE 70
1 DEFINITIONS
When capitalized, the words and phrases below have the following
meanings unless different meanings are clearly required by the context:
1.1 "Account". The records maintained by the Administrator for
purposes of accounting for a Participant's interest in the Plan.
"Account" may refer to one or all of the following accounts
which have been created on behalf of a Participant to hold
amounts attributable to specific types of Contributions under the
Plan and/or amounts transferred to the Plan from the Salaried
Plan and/or the Branch Plant Hourly Plan on behalf of a
Participant who was formerly eligible to participate in the
Salaried Plan and/or the Branch Plant Hourly Plan:
(a) "Pre-Tax Account". An account created to hold amounts
attributable to Pre-Tax Contributions and amounts
transferred from the Salaried Plan and/or the Branch Plant
Hourly Plan designated as "Pre-Tax Account" amounts
thereunder.
(b) "After-Tax Account". An account created to hold amounts
attributable to After-Tax Contributions and amounts
transferred from the Salaried Plan and/or the Branch Plant
Hourly Plan designated as "After-Tax Account" amounts
thereunder.
(c) "Rollover Account". An account created to hold amounts
attributable to Rollover Contributions and amounts
transferred from the Salaried Plan and/or the Branch Plant
Hourly Plan designated as "Rollover Account" amounts
thereunder.
(d) "Match Account". An account created to hold amounts
attributable to Match Contributions and amounts transferred
from the Salaried Plan and/or the Branch Plant Hourly Plan
designated as "Match Account" amounts thereunder.
(e) "Prior Match Account". An account created to hold amounts
attributable to amounts transferred from the Salaried Plan
(or from the Branch Plant Hourly Plan if such amounts were
originally transferred from the Salaried Plan to the Branch
Plant Hourly Plan) designated as "Prior Match Account"
amounts thereunder.
1.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
1.3 "Administrator". The Company or the Committee to whom the
Company has delegated all or a portion of the duties of the
Administrator under the Plan in accordance with Section 15.6 or
any delegate of the Committee.
1.4 "ADP" or "Average Deferral Percentage". The percentage
calculated in accordance with Section 12.1.
1.5 "Alternate Payee". Any spouse, former spouse, child or other
dependent (as defined in Code section 152) of a Participant who
is recognized by a domestic relations order as having a right to
receive all, or a portion, of the Participant's Account under the
Plan.
1.6 "Beneficiary". The person or persons who is to receive benefits
under the Plan after the death of the Participant pursuant to the
"Beneficiary Designation" paragraph in Section 11.
1.7 "Board". The board of directors of the Company.
1.8 "Branch Plant Hourly Plan". The Longview Fibre Company Branch
Plant Hourly Employees' 401(k) Plan, a qualified profit sharing
plan including a cash or deferred arrangement, originally
established March 1, 1993.
1.9 "Break in Service". The fifth anniversary (or sixth anniversary
if absence from employment was due to a Parental Leave) of the
date on which a Participant's employment ends in accordance with
Section 1.43 and during which he or she is not credited with an
hour of service.
1.10 "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.
1.11 "Committee". If applicable, the committee or committees
appointed by the Administrator to administer the Plan in
accordance with Section 15.6.
1.12 "Company". Longview Fibre Company or any successor by merger,
purchase or otherwise.
1.13 "Company Stock". Shares of common stock of the Company, its
predecessor(s), or its successors or assigns, or any corporation
with or into which said corporation may be merged, consolidated
or reorganized, or to which a majority of its assets may be sold.
1.14 "Compensation". The sum of a Participant's Taxable Income and
salary reductions, if any, pursuant to Code section 125,
402(e)(3), 402(h)(1)(B), 403(b), 457 or, for Plan Years
commencing after December 31, 1996, 408(p)(2)(A)(i).
For purposes of determining benefits under the Plan, Compensation
is limited to $150,000 per Plan Year (as adjusted for cost of
living increases pursuant to Code sections 401(a)(17) and
415(d)). For Plan Years commencing before January 1, 1997, for
purposes of the preceding sentence, 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 purposes of determining HCEs and key employees and for
purposes of Section 13.2, Compensation for the entire Plan Year
shall be used. For purposes of determining ADP and ACP,
Compensation shall be limited to amounts paid to an Eligible
Employee while a Participant.
1.15 "Contribution". An amount contributed to the Plan by the
Employer or an Eligible Employee, and allocated by contribution
type to Participants' Accounts, as described in Section 1.1.
Specific types of contribution include:
(a) "Pre-Tax Contribution". An amount contributed by an
eligible Participant in conjunction with his or her Code
section 401(k) salary deferral election which shall be
treated as made by the Employer on the eligible
Participant's behalf.
(b) "After-Tax Contribution". An amount contributed by an
eligible Participant on an after-tax basis.
(c) "Rollover Contribution". An amount contributed by an
Eligible Employee which originated from another employer's
or an Employer's qualified plan.
(d) "Match Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant.
1.16 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre-Tax Contributions, which shall be $7,000 per
calendar year (as adjusted for cost of living increases pursuant
to Code sections 402(g)(5) and 415(d)). For purposes of this
Section, a Participant's Pre-Tax Contributions shall include (i)
any employer contribution under a qualified cash or deferred
arrangement (as defined in Code section 401(k)) to the extent not
includible in gross income for the taxable year under Code
section 402(e)(3) (determined without regard to Code section
402(g)), (ii) any employer contribution to the extent not
includible in gross income for the taxable year under Code
section 402(h)(1)(B) (determined without regard to Code section
402(g)), (iii) any employer contribution to purchase an annuity
contract under Code section 403(b) under a salary reduction
agreement (within the meaning of Code section 3121(a)(5)(D)) and
(iv) for calendar years commencing after December 31, 1996, any
elective employer contribution under Code section
408(p)(2)(A)(i).
1.17 "Conversion Period". The period of converting the prior
accounting system of any plan and trust which is merged, in whole
or in part, into the Plan and Trust, to the accounting system
described in Section 6.
1.18 "Direct Rollover". An Eligible Rollover Distribution that is
paid by the Plan directly to an Eligible Retirement Plan for the
benefit of a Distributee.
1.19 "Disability". A Participant's total and permanent, mental or
physical disability resulting in termination of employment as
evidenced by presentation of medical evidence satisfactory to the
Administrator.
1.20 "Distributee". A Participant, a Beneficiary (if he or she is the
surviving spouse of a Participant) or an Alternate Payee under a
QDRO (if he or she is the spouse or former spouse of a
Participant).
1.21 "Effective Date". The date upon which the provisions of this
document become effective. This date is January 1, 1998, unless
stated otherwise. 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.
1.22 "Eligible Employee". An Employee of an Employer whose terms of
employment are covered by an agreement with the Association of
Western Pulp and Paper Workers Local #153.
1.23 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement
annuity described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust described
in Code section 401(a), that accepts a Distributee's Eligible
Rollover Distribution, except that, if the Distributee is the
surviving spouse of a Participant, an Eligible Retirement Plan is
an individual retirement account or individual retirement
annuity.
1.24 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding
(i) a distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancies) of the Distributee and the
Distributee's designated Beneficiary, or for a specified period
of ten years or more; (ii) a distribution to the extent such
distribution is required under Code section 401(a)(9); and (iii)
the portion of a distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities).
1.25 "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.
1.26 "Employer". The Company and any other Related Company which
adopts the Plan with the approval of the Company.
1.27 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific ERISA section shall include
such section, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation amending,
supplementing or superseding such section.
1.28 "Former Participant". The Plan status of an individual after he
or she is determined to be a Terminated Participant and his or
her Account is distributed or forfeited.
1.29 "HCE" or "Highly Compensated Employee". An Employee described as
a Highly Compensated Employee in Section 12.
1.30 "Hour of Service". Each hour for which an Employee is entitled
to:
(a) payment for the performance of duties for any Related
Company; or
(b) back pay, irrespective of mitigation of damages, by award
or agreement with any Related Company (and these hours
shall be credited to the period to which the award or
agreement pertains).
The crediting of Hours of Service shall be in accordance with the
U.S. Department of Labor regulation sections 2530.200b-2 and 3.
Actual hours shall be used whenever an accurate record of hours
are maintained for an Employee. Otherwise, an equivalent number
of hours shall be credited for each payroll period in which the
Employee would be credited with at least 1 Hour of Service. The
payroll period equivalencies are 45 hours weekly, 90 hours
biweekly, 95 hours semimonthly and 190 hours monthly.
An Employee's service described in Code section 414(n)(4)(B)
shall be included in the determination of his or her Hours of
Service for eligibility and/or vesting purposes.
An Employee's service with a predecessor or acquired company
shall only be counted in the determination of his or her Hours of
Service for eligibility and/or vesting purposes if (1) the
Company directs that credit for such service be granted, or (2) a
qualified plan of the predecessor or acquired company is
subsequently maintained by any Related Company.
1.31 "Ineligible". The Plan status of an individual who is (1) an
Employee of a Related Company which is not then an Employer, (2)
an Employee of an Employer, but not an Eligible Employee, or (3)
not an Employee.
1.32 "Ineligible Participant". The Plan status of a Participant who
is (1) an Employee of a Related Company which is not then an
Employer, or (2) an Employee of an Employer, but not an Eligible
Employee.
1.33 "Investment Fund". An investment fund as described in Section
16.2. The Investment Funds authorized by the Administrator to be
offered under the Plan as of the Effective Date are set forth in
Appendix A.
1.34 "Leased Employee". An individual, not otherwise an Employee,
who, pursuant to an agreement between a Related Company and a
leasing organization, has performed, on a substantially full-time
basis, for a period of at least 12 months, services of any type
historically performed by Employees in the business field of the
Related Company, unless:
(a) the individual is covered by a money purchase pension plan
maintained by the leasing organization and meeting the
requirements of Code section 414(n)(5)(B), and
(b) such individuals do not constitute more than 20% of all
Non-Highly Compensated Employees of all Related Companies
(within the meaning of Code section 414(n)(5)(C)(ii)).
For Plan Years commencing after December 31, 1996, "services
under the primary direction or control of the Related Company"
shall be substituted for the preceding reference to "services of
any type historically performed by Employees in the business
field of the Related Company".
1.35 "Leave of Absence". A period during which an individual is
deemed to be an Employee, but is absent from active employment,
provided that the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed
forces and the individual returns to active employment
within the period during which he or she retains employment
rights under federal law.
1.36 "Loan Account". The record maintained for purposes of accounting
for a Participant's loan and payments of principal and interest
thereon.
1.37 "NHCE" or "Non-Highly Compensated Employee". An Employee
described as a Non-Highly Compensated Employee in Section 12.
1.38 "Normal Retirement Date". The date of a Participant's 65th
birthday.
1.39 "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).
1.40 "Parental Leave". The period of absence from work by reason of
the pregnancy of an Employee, the birth of the Employee's child,
the placement of a child with the Employee in connection with the
child's adoption, or the caring for such child immediately after
birth or placement as described in Code section 410(a)(5)(E).
1.41 "Participant". The Plan status of an Eligible Employee after he
or she completes the eligibility requirements and enters the Plan
as described in Section 2.1 and any individual for whom assets
have been transferred from a predecessor plan merged, in whole or
in part, with the Plan. An Eligible Employee who makes a
Rollover Contribution prior to completing the eligibility
requirements as described in Section 2.1 shall also be considered
a Participant, except that he or she shall not be considered a
Participant for purposes of Plan provisions related to
Contributions, other than a Rollover Contribution, until he or
she completes the eligibility requirements and enters the Plan as
described in Section 2.1. A Participant's participation continues
until his or her employment with all Related Companies ends and
his or her Account is distributed or forfeited.
1.42 "Pay". All cash compensation paid to an Eligible Employee by an
Employer while he or she is a Participant during the current
period. Pay excludes reimbursements or other expense allowances,
cash and non-cash fringe benefits, moving expenses, deferred
compensation and welfare benefits.
Pay is neither increased by any salary credit or decreased by any
salary reduction pursuant to Code sections 125 or 402(e)(3). Pay
is limited to $150,000 per Plan Year (as adjusted for cost of
living increases pursuant to Code sections 401(a)(17) and
415(d)).
1.43 "Period of Employment". The period beginning on the date an
Employee first performs an hour of service and ending on the date
his or her employment ends. Employment ends on the date the
Employee quits, is discharged, retires or dies or (if earlier)
the first anniversary of his or her absence for any other reason.
The period of absence starting with the date an Employee's
employment ends and ending on the date he or she next performs an
hour of service is (1) included in his or her Period of
Employment if the period of absence does not exceed one year, and
(2) excluded if such period exceeds one year.
An Employee's service described in Code section 414(n)(4)(B)
shall be included in the determination of his or her Period of
Employment for eligibility and/or vesting purposes.
An Employee's service with a predecessor or acquired company
shall only be counted in the determination of his or her Period
of Employment for eligibility and/or vesting purposes if (1) the
Company directs that credit for such service be granted, or (2) a
qualified plan of the predecessor or acquired company is
subsequently maintained by any Related Company.
1.44 "Plan". The Longview Fibre Company Hourly Employees 401(k)
Savings Plan set forth in this document, as from time to time
amended.
1.45 "Plan Year". The annual accounting period of the Plan and Trust
which ends on each December 31.
1.46 "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).
1.47 "Related Company". With respect to any Employer, that Employer
and any corporation, trade or business which is, together with
that Employer, a member of the same controlled group of
corporations, a trade or business under common control, or an
affiliated service group within the meaning of Code sections
414(b), (c), (m) or (o), except that for purposes of Section 13
"within the meaning of Code sections 414(b), (c), (m) or (o), as
modified by Code section 415(h)" shall be substituted for the
preceding reference to "within the meaning of Code sections
414(b), (c), (m) or (o)".
1.48 "Required Beginning Date". The latest date benefit payments
shall commence to a Participant. Such date shall mean the April
1 that next follows the calendar year in which the Participant
attains age 70.5, except with regard to a Participant who attained
age 70.5 before January 1, 1988 and who is not 5% Owner, such date
shall mean the April 1 that next follows the later of (i) the
calendar year in which the Participant attained age 70.5, or (ii)
the calendar year in which the Participant terminates employment
with all Related Companies.
A Participant shall be considered a 5% Owner for this purpose if
such Participant is a 5% Owner as defined in Code section 416(i)
(determined in accordance with Code section 416 but without
regard to whether the Plan is top-heavy) at any time during the
Plan Year ending with or within the calendar year in which the
Participant attains age 66.5 or in any subsequent Plan Year.
1.49 "Salaried Plan". The Longview Fibre Company Salaried Savings
Plan, a qualified profit sharing plan including a cash or
deferred arrangement, originally established June 1, 1977.
1.50 "Settlement Date". For each Trade Date, the Trustee's next
business day.
1.51 "Spousal Consent". The written consent given by a spouse to a
Participant's Beneficiary designation. The spouse's consent must
acknowledge the effect on the spouse of the Participant's
designation, and be duly witnessed by a Plan representative or
notary public. Spousal Consent shall be valid only with respect
to the spouse who signs the Spousal Consent and only for the
particular choice made by the Participant which requires Spousal
Consent. A Participant may revoke (without Spousal Consent) a
prior designation that required Spousal Consent at any time
before payments begin. Spousal Consent also means a
determination by the Administrator that there is no spouse, the
spouse cannot be located, or such other circumstances as may be
established under Code section 417(a)(2)(B).
1.52 "Sweep Account". The subsidiary Account for each Participant
through which all transactions are processed, which is invested
in interest bearing deposits (which may include interest bearing
deposits of the Trustee) and/or money market type assets or
funds.
1.53 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the next Trade
Date.
1.54 "Taxable Income". Compensation in the amount reported by the
Employer or a Related Company as "Wages, tips, other
compensation" on Form W-2, or any successor method of reporting
under Code section 6041(d).
1.55 "Terminated Participant". The Plan status of a Participant who
is not an Employee and with respect to whom the Administrator has
reported to the Trustee that the Participant's employment has
terminated with all Related Companies.
1.56 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Investment Funds are
traded.
1.57 "Transition Account". An account consisting of the sum of the
sub-accounts of individual non-vested Account balances of
Terminated Participants.
1.58 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the
Plan and holds the Plan assets which are comprised of the
aggregate of Participants' Accounts, any unallocated funds
invested in interest bearing deposits (which may include interest
bearing deposits of the Trustee) and/or money market type assets
or funds, pending allocation to Participants' Accounts or
disbursement to pay Plan fees and expenses.
1.59 "Trustee". Merrill Lynch Trust Company, FSB, a federal savings
bank, chartered under the laws of the United States.
1.60 "USERRA". The Uniformed Services Employment and Reemployment
Rights Act of 1994, as amended.
1.61 "Year of Vesting Service". A 12-month Period of Employment.
Years of Vesting Service shall include service credited prior to
June 3, 1985.
2 ELIGIBILITY
2.1 Eligibility
All Participants as of January 1, 1998 shall continue their
eligibility to participate. Each other Eligible Employee shall
become a Participant on the first day of the next payroll period
after the date he or she completes a 12-consecutive month
eligibility period for which he or she is credited with at least
870 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, Terminated or Former Participants
An Ineligible, Terminated or Former Participant may not make or
share in any Contributions, other than such Contributions due to
be made on his or her behalf after the date he or she became an
Ineligible, Terminated or Former Participant for periods prior to
such date, nor may an Ineligible or Terminated Participant be
eligible for a new Plan loan (except as described in Section
9.1), during the period he or she is an Ineligible or Terminated
Participant, but he or she shall continue to participate for all
other purposes. An Ineligible, Terminated or Former Participant
shall automatically become an active Participant on the date he
or she again becomes an Eligible Employee.
3 PARTICIPANT CONTRIBUTIONS
3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
reduce his or her Pay by an amount which does not exceed the
Contribution Dollar Limit or the limits described in the
Contribution Percentage Limits paragraph of this Section 3, and
have such amount contributed to the Plan by the Employer as a
Pre-Tax Contribution. The election shall be made in such manner
and with such advance notice as prescribed by the Administrator
and may be limited to a whole percentage of Pay. In no event
shall an Employee's Pre-Tax Contributions under the Plan and
comparable contributions to all other plans, contracts or
arrangements of all Related Companies exceed the Contribution
Dollar Limit for the Employee's taxable year beginning in the
Plan Year.
3.2 After-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
make After-Tax Contributions to the Plan in an amount which does
not exceed the limits described in the Contribution Percentage
Limits paragraph of this Section 3. The election shall be made
in such manner and with such advance notice as prescribed by the
Administrator and may be limited to a whole percentage of Pay.
3.3 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Contribution election at any time in such manner and with such
advance notice as prescribed by the Administrator, and such
election change shall be effective with the first payroll paid
after such date. A Participant who has changed his or her
Contribution election shall be required to wait at least six
months before he or she may again change his or her Contribution
election.
A Participant's Contribution election made as a percentage of Pay
shall automatically apply to Pay increases or decreases.
3.4 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at any
time in such manner and with such advance notice as prescribed by
the Administrator, and such revocation shall be effective with
the first payroll paid after such date.
A Participant who has revoked his or her Contribution election
shall be required to wait at least six months before he or she
may resume Contributions to the Plan. Thereafter, a Participant
who is an Eligible Employee may resume Contributions by making a
new 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.
3.5 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending the Plan and Trust,
the separate minimum, if applicable, and maximum Pre-Tax and
After-Tax Contribution percentages, and/or a maximum combined
Pre-Tax and After-Tax Contribution percentage, prospectively or
retrospectively (for the current Plan Year), for all
Participants. In addition, the Administrator may establish any
lower percentage limits for Highly Compensated Employees as it
deems necessary to satisfy the tests described in Section 12. As
of the Effective Date, the minimum Pre-Tax and After-Tax
Contribution percentages are 1%, and the maximum Contribution
percentages are:
Contribution
Type
Highly
Compensated
Employees
All Other
Participants
Pre-Tax
After-Tax
Sum of Both
19%
19%
19%
19%
19%
19%
Irrespective of the limits that may be established by the
Administrator in accordance with the paragraph above, in no event
shall the Contributions made by or on behalf of a Participant for
a Plan Year exceed the maximum allowable under Code section 415.
3.6 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar year
to the Plan and comparable contributions to any other qualified
defined contribution plan in excess of the Contribution Dollar
Limit may notify the Administrator in writing by the following
March 1 (or as late as April 14 if allowed by the Administrator)
that an excess has occurred. In this event, the amount of the
excess specified by the Participant, adjusted for investment gain
or loss, shall be refunded to him or her by the April 15
following the year of deferral and shall not be included as an
Annual Addition (as defined in Section 13.1) under Code section
415 for the year contributed. The excess amounts shall first be
taken from unmatched Pre-Tax Contributions and then from matched
Pre-Tax Contributions. Any Match Contributions attributable to
refunded excess Pre-Tax Contributions as described in this
Section, adjusted for investment gain or loss, shall be forfeited
and used as described in Section 8. Refunds and forfeitures
shall not include investment gain or loss for the period between
the end of the applicable calendar year and the date of
distribution or forfeiture.
3.7 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover Contributions,
may only be made through payroll deduction. Such amounts shall
be paid to the Trustee in cash and posted to each Participant's
Account(s) as soon as such amounts can reasonably be separated
from the Employer's general assets and balanced against the
specific amount made on behalf of each Participant. In no event,
however, shall such amounts be paid to the Trustee more than 90
days after the date amounts are deducted from a Participant's
Pay, except that effective February 3, 1997, "15 business days
following the end of the month that includes the date amounts are
deducted from a Participant's Pay (or as that maximum period may
be otherwise extended by ERISA)" shall be substituted for the
preceding reference to "90 days after the date amounts are
deducted from a Participant's Pay". Pre-Tax Contributions shall
be treated as Contributions made by an Employer in determining
tax deductions under Code section 404(a).
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
4.1 Rollover Contributions
The Administrator may authorize the Trustee to accept a Rollover
Contribution in cash, directly from an Eligible Employee or as a
Direct Rollover from another qualified plan on behalf of the
Eligible Employee, even if he or she is not yet a Participant.
The Employee shall be responsible for providing satisfactory
evidence, in such manner as prescribed by the Administrator, that
such Rollover Contribution qualifies as a rollover contribution,
within the meaning of Code section 402(c) or 408(d)(3)(A)(ii).
Such amounts received directly from an Eligible Employee must be
paid to the Trustee in cash within 60 days after the date
received by the Eligible Employee from a qualified plan or
conduit individual retirement account. Rollover Contributions
shall be posted to the Eligible Employee's Rollover Account as of
the date received by the Trustee.
If the Administrator later determines that an amount contributed
pursuant to the above paragraph did not in fact qualify as a
rollover contribution, within the meaning of Code section 402(c)
or 408(d)(3)(A)(ii), the balance credited to the Participant's
Rollover Account shall immediately be (1) segregated from all
other Plan assets, (2) treated as a nonqualified trust
established by and for the benefit of the Participant, and (3)
distributed to the Participant. Any such amount shall be deemed
never to have been a part of the Plan.
4.2 Transfers From and To Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in
cash or in kind directly from another qualified plan or to
transfer assets in cash or in kind directly to another qualified
plan; provided that receipt of a transfer shall not be directed
if:
(a) any amounts are not exempted by Code section 401(a)(11)(B)
from the annuity requirements of Code section 417 unless
the Plan complies with such requirements; or
(b) any amounts include benefits protected by Code section
411(d)(6) which would not be preserved under applicable
Plan provisions.
The Trustee may refuse to receive any such transfer if:
(a) the Trustee finds the in kind assets unacceptable; or
(b) instructions for posting amounts to Participants' Accounts
are incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee. To the
extent a receipt of a transfer includes Participant loans, such
loans shall continue in effect subject to the terms and
conditions in effect as of the date of the transfer.
Such transfers from and to other qualified plans may be for the
purpose of transferring assets from the Salaried Plan and/or the
Branch Plant Hourly Plan representing assets attributable to the
vested and non-vested account balances of participants thereunder
who are no longer eligible to participate in the Salaried Plan
and/or the Branch Plant Hourly Plan and are eligible to
participate in the Plan (which amounts shall then become subject
to the Plan's vesting schedule which schedule is the same as the
vesting schedule in the Salaried Plan and the Branch Plant Hourly
Plan) or for the purpose of transferring assets from the Plan to
the Salaried Plan and/or the Branch Plant Hourly Plan
representing assets attributable to the vested and non-vested
Account balances of Participants hereunder who are no longer
eligible to participate in the Plan and who are eligible to
participate in the Salaried Plan or the Branch Plant Hourly Plan
(which amounts shall then become subject to the Salaried Plan's
or the Branch Plant Hourly Plan's vesting schedule, respectively,
each of which is the same as the vesting schedule in the Plan).
5 EMPLOYER CONTRIBUTIONS
5.1 Match Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall
make Match Contributions, as described in the following
Allocation Method paragraph, on behalf of each Participant
who contributed during the period.
(b) Allocation Method. The Match Contributions (including any
forfeiture amounts applied as Match Contributions in
accordance with Section 8) for each period shall total 10%
of each eligible Participant's Pre-Tax Contributions for
the period, provided that no Match Contributions (and
forfeiture amounts) shall be made based upon a
Participant's Contributions in excess of 2% of his or her
Pay. The Employer may change the 10% matching rate or the
2% 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 Match Contribution in cash as soon as
administratively feasible, and for purposes of deducting
such Contribution, not later than the Employer's federal
tax filing date, including extensions. Such amounts shall
be paid to the Trustee and posted to each Participant's
Match Account once the total Match Contribution received
has been balanced against the specific amount to be
credited to each Participant's Match Account.
6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts
for each Participant in order to reflect transactions both by
type of Account and investment medium. Financial transactions
shall be accounted for at the individual Account level by posting
each transaction to the appropriate Account of each affected
Participant. Participant Account values shall be maintained in
shares for the Investment Funds and in dollars for the Sweep and
Loan Accounts. At any point in time, the Account value shall be
determined using the most recent Trade Date values provided by
the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
shall be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade
Date. For any transaction to be processed as of a Trade Date, the
Trustee must receive instructions for the transaction by the
Sweep Date. Such instructions shall apply to amounts held in the
Account on that Sweep Date. Financial transactions of the
Investment Funds shall be posted to Participants' Accounts as of
the Trade Date, based upon the Trade Date values provided by the
Trustee, and settled on the Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in
shares. The Trustee is responsible for determining the share
values of each Investment Fund as of each Trade Date. To the
extent an Investment Fund is comprised of collective investment
funds offered by the Trustee or any other entity authorized to
offer collective investment funds, the share values shall be
determined in accordance with the rules governing such collective
investment funds, which are incorporated herein by reference. All
other share values shall be determined by the Trustee. The share
value of each Investment Fund shall be based on the fair market
value of its underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund
management and maintenance, set forth below, are
paid by the Employer directly, or indirectly,
through forfeiture amounts as directed by the
Administrator, such fees and expenses shall be
paid as set forth below.
(a) Account Maintenance: Account maintenance fees and expenses,
may include but are not limited to, administrative,
Trustee, government annual report preparation, audit,
legal, nondiscrimination testing and fees for any other
special services. Account maintenance fees shall be charged
to Participants on a per Participant basis provided that no
fee shall reduce a Participant's Account balance below
zero.
(b) Transaction: Transaction fees and expenses, may include but
are not limited to, periodic installment payment,
Investment Fund election change and loan fees. Transaction
fees shall be charged to the Participant's Account involved
in the transaction provided that no fee shall reduce a
Participant's Account balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment
Funds shall be charged at the Investment Fund level and
reflected in the net gain or loss of each Investment Fund.
The Company may determine that the Employers pay a lower portion
of the fees and expenses allocable to the Accounts of
Participants who are no longer Employees or who are not
Beneficiaries, unless doing so would result in discrimination
prohibited under Code section 401(a)(4) or a significant
detriment prohibited by Code section 411(a)(11). As of the
Effective Date, a breakdown of which Plan fees and expenses shall
generally be borne by the Trust (and charged to individual
Participants' Accounts or charged at the Investment Fund level
and reflected in the net gain or loss of each Investment Fund)
and those that shall be paid by the Employer is set forth in
Appendix B, which may be changed from time to time by the
Company, in writing, without the necessity of amending the Plan
and Trust.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from
the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account of the
Participant and accounted for in dollars as an earmarked asset of
the borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had
no error or omission been made. Funds necessary for any such
restoration shall be provided through payment made by the
Employer, or by the Trustee to the extent the error or omission
is attributable to actions or inactions of the Trustee, or if the
restoration involves an Account holding amounts contributed by an
Employer, the Administrator may direct the Trustee to use
forfeiture amounts.
6.8 Participant Statements
The Administrator shall provide Participants with statements of
their Accounts as soon after the end of each quarter of the Plan
Year as administratively feasible. With regard to a Terminated
Participant, such statements shall not include the portion, if
any, of his or her non-vested Account balance maintained in the
Transition Account.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during any
Conversion Period. This includes, but is not limited to, the
method for allocating net investment gains or losses and the
extent, if any, to which contributions received by and
distributions paid from the Trust during this period share in
such allocation.
6.10 Accounts for Alternate Payees
A separate Account shall be established for an Alternate Payee
entitled to any portion of a Participant's Account under a QDRO
as of the date and in accordance with the directions specified in
the QDRO. In addition, a separate Account may be established
during the period of time the Administrator, a court of competent
jurisdiction or other appropriate person is determining whether a
domestic relations order qualifies as a QDRO. Such a separate
Account shall be valued and accounted for in the same manner as
any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides,
the portion of a Participant's Account payable to an
Alternate Payee may be distributed, in a form permissible
under Section 11, to the Alternate Payee at any time
beginning as soon as practicable after the QDRO
determination is made, regardless of whether the
Participant is entitled to a distribution from the Plan at
such time. The Alternate Payee shall be provided the
notice prescribed by Code section 402(f).
(b) Participant Loans. Except to the extent required by law,
an Alternate Payee, on whose behalf a separate Account has
been established, shall not be entitled to borrow from such
Account. If a QDRO specifies that the Alternate Payee is
entitled to any portion of the Account of a Participant who
has an outstanding loan balance, all outstanding loans
shall continue to be held in the Participant's Account and
shall not be divided between the Participant's and
Alternate Payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an Alternate Payee and has not yet
been distributed, the Alternate Payee may direct the
investment of such Account in the same manner as if he or
she were a Participant.
7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts and any
unallocated funds invested in interest bearing deposits (which
may include interest bearing deposits of the Trustee) and/or
money market type assets or funds, pending allocation to
Participants' Accounts or disbursement to pay Plan fees and
expenses and the Transition Account, the Trust shall be
maintained in various Investment Funds. The Administrator shall
select the Investment Funds offered to Participants and may
change the number or composition of the Investment Funds, subject
to the terms and conditions agreed to with the Trustee. As of
the Effective Date, a list of the Investment Funds offered under
the Plan is set forth in Appendix A, which may be changed from
time to time by the Administrator, in writing, and as agreed to
by the Trustee, without the necessity of amending the Plan and
Trust.
The Administrator may set a maximum percentage of the total
election that a Participant may direct into any specific
Investment Fund, which maximum, if any, as of the Effective Date
is set forth in Appendix A, which may be changed from time to
time by the Administrator, in writing, without the necessity of
amending the Plan and Trust.
7.2 Responsibility for Investment Choice
Each Participant shall direct the investment of all of his or her
Accounts. 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.
Notwithstanding, a Terminated Participant shall not direct the
investment of his or her non-vested Account balance. A
Terminated Participant's non-vested Account balance shall be held
in the Transition Account and invested in interest bearing
deposits (which may include interest bearing deposits of the
Trustee) and/or money market type assets or funds.
During any Conversion Period, Trust assets may be held in any
investment vehicle permitted by the Plan, as directed by the
Administrator, irrespective of prior Participant investment
elections.
7.3 Investment Fund Elections
A Participant shall provide his or her initial investment
election upon becoming a Participant and may change his or her
investment election at any time in accordance with procedures
established by the Administrator and the Trustee. A Participant
shall make his or her investment election in any combination of
one or any number of the Investment Funds offered in accordance
with the procedures established by the Administrator and Trustee.
Investment elections received by the Trustee by the Sweep Date
shall be effective on the following Trade Date.
7.4 Default if No Valid Investment Election
The Administrator shall specify an Investment Fund for the
investment of that portion of a Participant's Account which is
not yet held in an Investment Fund and for which no valid
investment election is on file. The Investment Fund specified as
of the Effective Date is set forth in Appendix A, which may be
changed from time to time by the Administrator, in writing,
without the necessity of amending the Plan and Trust.
7.5 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a
Participant's Account for Investment Fund election changes in
excess of a specified number per year as determined by the
Administrator.
8 VESTING & FORFEITURES
8.1 Fully Vested Accounts
A Participant shall be fully vested in these Accounts at all
times:
Pre-Tax Account
After-Tax Account
Rollover Account
Prior Match Account
8.2 Full Vesting Upon Certain Events
A Participant's entire Account shall become fully vested once he
or she has attained his or her Normal Retirement Date while an
Employee or upon his or her terminating employment with all
Related Companies due to his or her Disability or death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's Match
Account shall become vested in accordance with the following
schedule:
Years of Vesting
Service
Vested
Percentage
Less than 5
5 or more
0%
100%
If this vesting schedule is changed, the vested percentage for
each Participant shall not be less than his or her vested
percentage determined as of the last day prior to this change,
and for any Participant with at least three Years of Vesting
Service when the schedule is changed, his or her vested
percentage shall be determined using the more favorable vesting
schedule.
8.4 Non-Vested Account Balances of Terminated Participants
The non-vested balance of a Terminated Participant's Account
shall be deposited to the Transition
Account as of the Settlement Date
following the Sweep Date on which the
Administrator has reported to the Trustee
that the Participant's employment has
terminated with all Related Companies and
shall be maintained as a sub-account in
the Transition Account. The Trustee shall
maintain records necessary to identify
each Terminated Participant's non-vested
Account balance at least annually and as
of the earlier of the date the
Administrator reports to the Trustee that
the Terminated Participant is again an
Employee or the date the Terminated
Participant incurs a forfeitable event
described in this Section.
If a Terminated Participant again becomes an Employee before
incurring a forfeitable event described in this Section, his or
her non-vested Account balance shall no longer be maintained as a
sub-account in the Transition Account and shall be recombined
with his or her remaining Account balance. The non-vested
Account balance shall be credited to the Investment Funds based
upon the Participant's current investment election for new
Contributions.
8.5 Forfeitures of Non-Vested Account Balances Upon Certain Events
A Terminated Participant shall forfeit his or her non-vested
Account balance as soon as administratively feasible after the
earliest of the date he or she:
(a) is determined to be a Terminated Participant, if his or her
vested Account balance is zero;
(b) receives a complete distribution of his or her vested
Account balance; or
(c) incurs a Break in Service.
8.6 Use of Forfeiture Amounts
Forfeiture amounts shall be used to restore Accounts, to pay Plan
fees and expenses and to reduce future Match Contributions to be
made as directed by the Administrator.
8.7 Rehired Employees
(a0 Service Restoration. If a former Employee is rehired
before incurring a Break in Service, or after incurring a
Break in Service if (1) he or she had a vested interest in
his or her Accounts derived from Contributions made by an
Employer, or (2) the length of his or her break does not
equal or exceed his or her pre-break service, all Periods
of Employment credited when his or her employment last
terminated shall be counted in determining his or her
vested interest. Otherwise, his or her Periods of
Employment credited when his or her employment last
terminated shall not be counted in determining his or her
vested interest.
(b0 Account Restoration. If a former Employee again becomes an
Employee before he or she incurs a Break in Service, but
after he or she incurs a forfeitable event as described in
this Section, the amount forfeited after his or her
employment last terminated shall be restored to his or her
Account as if such Employee had repaid any vested portion
of his or her Account from which such amount was forfeited.
The restoration shall include the interest earned on such
amount from the date deposited to the Transition Account
until the date the restoration amount is restored. The
restoration amount shall come from forfeiture amounts to
the extent possible, and any additional amount needed shall
be contributed by the Employer. His or her vested interest
in the restored Account shall then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current Account balance
D = amount previously distributed from Account and deemed
repaid
9 PARTICIPANT LOANS
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section, except that a loan shall
not be permitted to a Participant who is no longer an Employee or
to a Beneficiary or an Alternate Payee, unless such Participant,
Beneficiary or Alternate Payee is otherwise a party in interest
(as defined in ERISA section 3(14)).
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with
such advance notice as prescribed by the Administrator. Each
loan shall be evidenced by a promissory note, secured only by the
portion of the Participant's Account from which the loan is made,
and the Plan shall have a lien on this portion of his or her
Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to borrow from his or her Account under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that a loan request conforms to the requirements
described in this Section and granting such request.
9.5 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as
determined as of the Sweep Date the loan is processed and shall
be funded from the Participant's Accounts as follows:
(a0 Plan Minimum Limit. The minimum amount for any loan is
$1,000.
(b0 Plan Maximum Limit, Account Sources and Funding Order.
Subject to the legal limit described in (c) below, the
maximum a Participant may borrow, including the aggregate
outstanding balances of existing Plan loans, is 50% of the
following of the Participant's Accounts which are fully
vested in the priority order as follows:
Pre-Tax Account
Match Account
Prior Match Account
Rollover Account
After-Tax Account
(c0 Legal Maximum Limit. The maximum a Participant may borrow,
including the aggregate outstanding balances of existing
Plan loans, is 50% of his or her vested Account balance,
not to exceed $50,000. However, the $50,000 maximum is
reduced by the Participant's highest aggregate outstanding
Plan loan balance during the 12-month period ending on the
day before the Sweep Date as of which the loan is made.
For purposes of this paragraph, the qualified plans of all
Related Companies shall be treated as though they are part
of the Plan to the extent it would decrease the maximum
loan amount.
9.6 Maximum Number of Loans
A Participant may have only one loan outstanding at any given
time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets of
his or her own Account. The available assets shall be determined
first by Account and then within each Account used for funding a
loan, amounts shall first be taken from the Sweep Account and
then taken by Investment Fund in direct proportion to the market
value of the Participant's interest in each Investment Fund as of
the Trade Date on which the loan is processed.
The loan shall be funded on the Settlement Date following the
Trade Date as of which the loan is processed. The Trustee shall
make payment to the Participant as soon thereafter as
administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the
Administrator, which provides the Plan with a return commensurate
with the prevailing interest rate charged by persons in the
business of lending money for loans which would be made under
similar circumstances. As of the Effective Date, the interest
rate is determined as set forth in Appendix C, which may be
changed from time to time by the Administrator, in writing,
without the necessity of amending the Plan and Trust.
9.9 Loan Payment
Substantially level amortization shall be required of each loan
with payments made at least monthly, generally through payroll
deduction. Loans may be prepaid in full or in part at any time.
The Participant may choose the loan repayment period, not to
exceed five years, except that the repayment period may be for
any period not to exceed 15 years if the purpose of the loan is
to acquire the Participant's principal residence.
9.10 Loan Payment Hierarchy
Loan principal payments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in
direct proportion to the principal payment. Loan payments are
credited to the Investment Funds 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
without pay. During the suspension period, interest shall
continue to accrue on the outstanding loan balance. At the
expiration of the suspension period all outstanding loan payments
and accrued interest thereon shall be due unless otherwise agreed
upon by the Administrator.
9.12 Loan Default
A loan is treated as in default if a scheduled loan payment is
not made at the time required. A Participant shall then have a
grace period to cure the default before it becomes final. Such
grace period shall be for a period that does not extend beyond
the last day of the calendar quarter following the calendar
quarter in which the scheduled loan payment was due or such
lesser or greater maximum period as may later be authorized by
Code section 72(p).
In the event a default is not cured within the grace period, the
Administrator may direct the Trustee to report the outstanding
principal balance of the loan and accrued interest thereon as a
taxable distribution to the Participant. As soon as a Plan
withdrawal or distribution to such Participant would otherwise be
permitted, the Administrator may instruct the Trustee to execute
upon its security interest in the Participant's Account by
distributing the note to the Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant
loan once a Participant's employment with all Related Companies
has terminated, unless he or she is otherwise a party in interest
(as defined in ERISA section 3(14)), or if the Plan is
terminated.
10 IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and pursuant to the terms and conditions set forth in
Section 11 with regard to an in-service withdrawal made in
accordance with a Participant's Required Beginning Date.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such
manner and with such advance notice as prescribed by the
Administrator. The Participant shall be provided the notice
prescribed by Code section 402(f).
Code sections 401(a)(11) and 417 do not apply to in-service
withdrawals under the Plan. An in-service withdrawal may
commence less than 30 days after the aforementioned notice is
provided, if:
(a0 the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such
notice to consider his or her option to elect or not elect
a Direct Rollover for all or a portion, if any, of his or
her in-service withdrawal which constitutes an Eligible
Rollover Distribution; and
(b0 the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of
his or her in-service withdrawal which constitutes an
Eligible Rollover Distribution or alternatively elects to
have all or a portion made payable directly to him or her,
thereby not electing a Direct Rollover for all or a portion
thereof.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to receive an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining whether an in-service withdrawal request conforms to
the requirements described in this Section and granting such
request.
10.5 Payment Form and Medium
The form of payment for an in-service withdrawal shall be a
single lump sum and payment shall be made in cash.
Notwithstanding, to preserve benefits protected by Code section
411(d)(6), a Participant for whom amounts were transferred from
the Salaried Plan (or from the Branch Plant Hourly Plan if such
amounts were originally transferred from the Salaried Plan to the
Branch Plant Hourly Plan) may elect that payment be made in the
form of whole shares of Company Stock and cash in lieu of
fractional shares to the extent that such withdrawal is funded
from the Company Stock Fund and includes an Account type in the
funding hierarchy for which amounts were transferred to the Plan
from the Salaried Plan (or from the Branch Plant Hourly Plan if
such amounts were originally transferred from the Salaried Plan
to the Branch Plant Hourly Plan) on behalf of the Participant.
With regard to the portion of an in-service withdrawal
representing an Eligible Rollover Distribution, a Participant may
elect a Direct Rollover for all or a portion of such amount.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely
from the assets of his or her own Account and shall be based on
the Account values as of the Trade Date the in-service withdrawal
is processed. The available assets shall be determined first by
Account and then within each Account used for funding an in-
service withdrawal, amounts shall first be taken from the Sweep
Account and then taken by Investment Fund in direct proportion to
the market value of the Participant's interest in each Investment
Fund (which excludes his or her Loan Account balance) as of the
Trade Date on which the in-service withdrawal is processed.
The in-service withdrawal shall be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal is
processed. The Trustee shall make payment to the Participant or
on behalf of the Participant as soon thereafter as
administratively feasible.
10.7 Hardship Withdrawals
(a0 Requirements. A Participant who is an Employee may request
the withdrawal of up to the amount necessary to satisfy a
financial need including amounts necessary to pay any
federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal. Only
requests for withdrawals (1) on account of a Participant's
"Deemed Financial Need" or "Demonstrated Financial Need",
and (2) which are "Deemed Necessary" or "Demonstrated as
Necessary" to satisfy the financial need shall be approved.
(b0 "Deemed Financial Need". An immediate and heavy financial
need relating to:
(10 the payment of unreimbursed medical care expenses
(described under Code section 213(d)) incurred (or
to be incurred) by the Employee, his or her spouse
or dependents (as defined in Code section 152);
(20 the purchase (excluding mortgage payments) of the
Employee's principal residence;
(30 the payment of unreimbursed tuition, related
educational fees and room and board for up to the
next 12 months of post-secondary education for the
Employee, his or her spouse or dependents (as
defined in Code section 152);
(40 the payment of funeral expenses of an Employee's
family member;
(50 the payment of amounts necessary for the Employee to
prevent losing his or her principal residence
through eviction or foreclosure on the mortgage; or
(60 any other circumstance specifically permitted under
Code section 401(k)(2)(B)(i)(IV).
(c0 "Demonstrated Financial Need". A determination by the
Administrator that an immediate and heavy financial need
exists relating to:
(10 a sudden and unexpected illness or accident to the
Employee or his or her spouse or dependents;
(20 the loss, due to casualty, of the Employee's
property other than nonessential property (such as a
boat or a television); or
(30 some other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond
the control of the Employee.
(d0 "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:
(10 the Employee has obtained all possible withdrawals
(other than hardship withdrawals) and nontaxable
loans available from the Plan and all other plans
maintained by Related Companies;
(20 the Administrator shall suspend the Employee from
making any contributions to the Plan and all other
qualified and nonqualified plans of deferred
compensation and all stock option or stock purchase
plans maintained by Related Companies for 12 months
from the date the withdrawal payment is made; and
(30 the Administrator shall reduce the Contribution
Dollar Limit for the Employee with regard to the
Plan and all other plans maintained by Related
Companies, for the calendar year next following the
calendar year of the withdrawal by the amount of the
Employee's Pre-Tax Contributions for the calendar
year of the withdrawal.
(e0 "Demonstrated as Necessary". A withdrawal is "Demonstrated
as Necessary" to satisfy the financial need only if the
withdrawal amount does not exceed the financial need, the
Employee represents that he or she is unable to relieve the
financial need (without causing further hardship) by doing
any or all of the following and the Administrator does not
have actual knowledge to the contrary:
(10 receiving any reimbursement or compensation from
insurance or otherwise;
(20 reasonably liquidating his or her assets and the
assets of his or her spouse or minor children that
are reasonably available to the Employee;
(30 ceasing his or her contributions to the Plan;
(40 obtaining other withdrawals and nontaxable loans
available from the Plan, plans maintained by Related
Companies and plans maintained by any other
employer; and
(50 obtaining loans from commercial sources on
reasonable commercial terms.
(f0 Account Sources and Funding Order. All available amounts
must first be withdrawn from a Participant's After-Tax
Account. The remaining withdrawal amount shall come from
the following of the Participant's fully vested Accounts,
in the priority order as follows:
Rollover Account
Match Account
Prior Match Account
Pre-Tax Account
The amount that may be withdrawn from a Participant's Pre-
Tax Account shall not include any earnings credited after
December 31, 1988.
(g0 Minimum Amount. There is no minimum amount for a hardship
withdrawal.
(h0 Permitted Frequency. There is no restriction on the number
of hardship withdrawals permitted to a Participant.
(i0 Suspension from Further Contributions. Upon making a
hardship withdrawal, a Participant may not make additional
Pre-Tax or After-Tax Contributions (or additional
contributions to all other qualified and nonqualified plans
of deferred compensation and all stock option or stock
purchase plans maintained by Related Companies), if his or
her hardship withdrawal was "Deemed Necessary" for a period
of 12 months from the date the withdrawal payment is made.
10.8 After-Tax Account Withdrawals
(a0 Requirements. A Participant who is an Employee may make an
After-Tax Account withdrawal.
(b0 Account Sources and Funding Order. The withdrawal shall
come from a Participant's After-Tax Account.
(c0 Minimum Amount. There is no minimum amount for an After-
Tax Account withdrawal.
(d0 Permitted Frequency. There is no restriction on the number
of After-Tax Account withdrawals permitted to a
Participant.
(e0 Suspension from Further Contributions. Upon making an
After-Tax Account withdrawal, a Participant may not make
additional After-Tax Contributions for a period of six
months from the date the withdrawal payment is made.
10.9 Over Age 59.5 Withdrawals
(a0 Requirements. A Participant who is an Employee and over
age 59.5 may make an Over Age 59.5 withdrawal.
(b0 Account Sources and Funding Order. The withdrawal shall
come from the following of the Participant's fully vested
Accounts, in the priority order as follows, except that the
Participant may instead choose to have amounts taken from
his or her After-Tax Account first:
Rollover Account
Pre-Tax Account
Match Account
Prior Match Account
After-Tax Account
(c0 Minimum Amount. There is no minimum amount for an Over Age
59.5 withdrawal.
(d0 Permitted Frequency. There is no restriction on the number
of Over Age 59.5 withdrawals permitted to a Participant.
(e0 Suspension from Further Contributions. An Over Age 59.5
withdrawal shall not affect a Participant's ability to make
or be eligible to receive further Contributions.
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A PARTICIPANT'S
REQUIRED BEGINNING DATE
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or
her death, shall be provided with information regarding all
optional times and forms of distribution available under the
Plan, including the notices prescribed by Code sections 402(f)
and 411(a)(11). Subject to the other requirements of this
Section, a Participant, or his or her Beneficiary in the case of
his or her death, may elect, in such manner and with such advance
notice as prescribed by the Administrator, to have his or her
vested Account balance paid to him or her beginning upon any
Settlement Date following the Participant's termination of
employment with all Related Companies and a reasonable period of
time during which the Administrator shall process, and inform the
Trustee of, the Participant's termination or, if earlier, at the
time of the Participant's Required Beginning Date.
Notwithstanding, if a Participant's termination of employment
with all Related Companies does not constitute a separation from
service for purposes of Code section 401(k)(2)(B)(i)(I) or
otherwise constitute an event set forth under Code section
401(k)(10)(A)(ii) or (iii) as described in Section 19.3, the
portion of a Participant's Account subject to the distribution
rules of Code section 401(k) may not be distributed until such
time as he or she separates from service for purposes of Code
section 401(k)(2)(B)(i)(I) or, if earlier, upon such other event
as described in Code section 401(k)(2)(B) and as provided for in
the Plan.
Code sections 401(a)(11) and 417 do not apply to distributions
under the Plan. A distribution may commence less than 30 days
after the aforementioned notices are provided, if:
(a0 the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such
notices to consider the decision as to whether to elect a
distribution and if so to elect a particular form of
distribution and to elect or not elect a Direct Rollover
for all or a portion, if any, of his or her distribution
which constitutes an Eligible Rollover Distribution; and
(b0 the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a
portion, if any, of his or her distribution which
constitutes an Eligible Rollover Distribution or
alternatively elects to have all or a portion made payable
directly to him or her, thereby not electing a Direct
Rollover for all or a portion thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to receive a distribution under the Plan.
11.3 Payment Form and Medium
Except to the extent otherwise provided by Section 11.4, a
Participant may elect to be paid in any of these forms:
(a0 a single lump sum;
(b0 a partial payment, limited to four per Plan Year; or
(c0 quarterly periodic installments over a period not to exceed
the life expectancy of the Participant and his or her
Beneficiary.
Distributions shall be made in cash, except to the extent a
distribution consists of a loan call as described in Section 9.
Alternatively, a Participant may elect that a distribution be
made in the form of whole shares of Company Stock and cash in
lieu of fractional shares to the extent the distribution consists
of amounts from the Company Stock Fund. With regard to the
portion of a distribution representing an Eligible Rollover
Distribution, a Distributee may elect a Direct Rollover for all
or a portion of such amount.
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related Companies
ends, the Participant's vested Account balance is $5,000 or less,
and if at the time of any prior in-service withdrawal or
distribution the Participant's vested Account balance did not
exceed $5,000, the Participant's benefit shall be paid as a
single lump sum as soon as administratively feasible in
accordance with procedures prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the
assets of his or her own Account and shall be based on the
Account values as of the Trade Date the distribution is
processed. The available assets shall be determined first by
Account and then within each Account used for funding a
distribution, amounts shall first be taken from the Sweep Account
and then taken by Investment Fund in direct proportion to the
market value of the Participant's interest in each Investment
Fund as of the Trade Date on which the distribution is processed.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments shall
begin not later than 60 days after the end of the Plan Year in
which he or she attains his or her Normal Retirement Date or
retires, whichever is later. However, if the amount of the
payment or the location of the Participant (after a reasonable
search) cannot be ascertained by that deadline, payment shall be
made no later than 60 days after the earliest date on which such
amount or location is ascertained but in no event later than the
Participant's Required Beginning Date. A Participant's failure
to elect in such manner as prescribed by the Administrator to
have his or her vested Account balance paid to him or her, shall
be deemed an election by the Participant to defer his or her
distribution but in no event shall his or her benefit payments
commence later than his or her Required Beginning Date.
If benefit payments cannot begin at the time required because the
location of the Participant cannot be ascertained (after a
reasonable search), the Administrator may, at any time
thereafter, treat such person's Account as forfeited subject to
the provisions of Section 18.6.
11.7 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be
completed within a period not to exceed the lives or the joint
and last survivor life expectancy of the Participant and his or
her Beneficiary. The life expectancies of a Participant and his
or her Beneficiary may not be recomputed annually.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her
sole primary Beneficiary, the minimum annual distribution for
each calendar year, beginning with the calendar year preceding
the calendar year that includes the Participant's Required
Beginning Date, shall not be less than the quotient obtained by
dividing (a) the Participant's vested Account balance as of the
last Trade Date of the preceding year by (b) the applicable
divisor as determined under the incidental benefit requirements
of Code section 401(a)(9).
11.9 Payment to Beneficiary
Payment to a Beneficiary must either (i) be completed by the end
of the calendar year that contains the fifth anniversary of the
Participant's death or (ii) begin by the end of the calendar year
that contains the first anniversary of the Participant's death
and be completed within the period of the Beneficiary's life or
life expectancy, except that:
(a0 If the Participant dies after his or her Required Beginning
Date, payment to his or her Beneficiary must be made at
least as rapidly as provided in the Participant's
distribution election;
(b0 If the surviving spouse is the Beneficiary, payments need
not begin until the later of (i) the end of the calendar
year that includes the first anniversary of the
Participant's death, or (ii) the end of the calendar year
in which the Participant would have attained age 70.5 and
must be completed within the spouse's life or life
expectancy; and
(c0 If the Participant and the surviving spouse who is the
Beneficiary die (i) before the Participant's Required
Beginning Date and (ii) before payments have begun to the
spouse, the spouse shall be treated as the Participant in
applying these rules.
11.10 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death. The
designation may be changed at any time. However, a Participant's
spouse shall be the sole primary Beneficiary unless the
designation includes Spousal Consent for another Beneficiary. If
no proper designation is in effect at the time of a Participant's
death or if the Beneficiary does not survive the Participant, the
Beneficiary shall be the Participant's surviving spouse or, if
there is no surviving spouse, the Participant's estate.
12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12
(where a definition is contained in both Sections 1 and 12, for
purposes of Section 12 the Section 12 definition shall be
controlling):
(a0 "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to
Participants as of a date within the Plan Year.
(b0 "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).
(c0 "ADP" or "Average Deferral Percentage". The Average
Percentage calculated using Deferrals allocated to
Participants as of a date within the Plan Year.
(d0 "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).
(e0 "Average Percentage". The average of the calculated
percentages for Participants within the specified group.
The calculated percentage refers to either the "Deferrals"
or "Contributions" (as defined in this Section) made on
each Participant's behalf for the Plan Year, divided by his
or her Compensation for the portion of the Plan Year in
which he or she was an Eligible Employee while a
Participant. (Pre-Tax Contributions to the Plan or
comparable contributions to plans of Related Companies
which must be refunded solely because they exceed the
Contribution Dollar Limit are included in the percentage
for the HCE Group but not for the NHCE Group.)
(f0 "Contributions" shall include Match and After-Tax
Contributions. In addition, Contributions may include Pre-
Tax Contributions, but only to the extent that (1) the
Administrator elects to use them, (2) they are not used or
counted in the ADP Test, and (3) they otherwise satisfy the
requirements as prescribed under Code section 401(m)
permitting treatment as Contributions for purposes of the
ACP Test.
(g0 "Deferrals" shall include Pre-Tax Contributions.
(h0 "HCE" or "Highly Compensated Employee". For Plan Years
commencing after December 31, 1996, with respect to all
Related Companies, an Employee who (in accordance with Code
section 414(q)):
(1) Was a more than 5% Owner (within the meaning of Code
section 414(q)(2)) at any time during the Plan Year
or the preceding Plan Year; or
(2) Received Compensation during the preceding Plan Year
in excess of $80,000 (as adjusted for such Year
pursuant to Code sections 414(q)(1) and 415(d)) or,
if the Company elects for such preceding Plan Year,
"in excess of $80,000 (as adjusted for such Year
pursuant to Code sections 414(q)(1) and 415(d)) and
was a member of the "top-paid group" (within the
meaning of Code section 414(q)(3)) for such
preceding Plan Year" shall be substituted for the
preceding reference to "in excess of $80,000 (as
adjusted for such Year pursuant to Code sections
414(q)(1) and 415(d))".
A former Employee shall be treated as an HCE if (1) such
former Employee was an HCE when he or she separated from
service, or (2) such former Employee was an HCE in service
at any time after attaining age 55.
The determination of who is an HCE and the determination of
the number and identity of Employees in the top-paid group
shall be made in accordance with Code section 414(q).
(i0 "HCE Group" and "NHCE Group". With respect to all Related
Companies, the respective group of HCEs and NHCEs who are
eligible to have amounts contributed on their behalf for
the Plan Year, including Employees who would be eligible
but for their election not to participate or to contribute,
or because their Pay is greater than zero but does not
exceed a stated minimum. For Plan Years commencing after
December 31, 1998, with respect to all Related Companies,
if the Plan permits participation prior to an Eligible
Employee's satisfaction of the minimum age and service
requirements of Code section 410(a)(1)(A), Eligible
Employees who have not met the minimum age and service
requirements of Code section 410(a)(1)(A) may be excluded
in the determination of the NHCE Group, but not in the
determination of the HCE Group, for purposes of (i) the ADP
Test, if Code section 410(b)(4)(B) is applied in
determining whether the 401(k) portion of the Plan meets
the requirements of Code section 410(b), or (ii) the ACP
Test, if Code section 410(b)(4)(B) is applied in
determining whether the 401(m) portion of the Plan meets
the requirements of Code section 410(b).
(10 If the Related Companies maintain two or more plans
which are subject to the ADP or ACP Test and are
considered as one plan for purposes of Code sections
401(a)(4) or 410(b), all such plans shall be
aggregated and treated as one plan for purposes of
meeting the ADP and ACP Tests, provided that the
plans may only be aggregated if they have the same
plan year.
(20 If an HCE is covered by more than one cash or
deferred arrangement, or more than one arrangement
permitting employee or matching contributions,
maintained by the Related Companies, all such plans
shall be aggregated and treated as one plan (other
than those plans that may not be permissively
aggregated) for purposes of calculating the separate
percentage for the HCE which is used in the
determination of the Average Percentage. For
purposes of the preceding sentence, if such plans
have different plan years, the plans are aggregated
with respect to the plan years ending with or within
the same calendar year.
(j0 "Multiple Use Test". The test described in Section 12.4
which a Plan must meet where the Alternative Limitation
(described in Section 12.2) is used to meet both the ADP
and ACP Tests.
(k0 "NHCE" or "Non-Highly Compensated Employee". An Employee
who is not an HCE.
12.2 ADP and ACP Tests
For Plan Years commencing after December 31, 1996, for each Plan
Year, the ADP and ACP for the HCE Group must meet either the
Basic or Alternative Limitation when compared to the respective
preceding Plan Year's ADP and ACP for the preceding Plan Year's
NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage
is limited by reference to the NHCE Group Average
Percentage as follows:
If the NHCE Group
Average Percentage
is:
Then the Maximum HCE
Group Average Percentage is:
Less than 2%
2% to 8%
More than 8%
2 times NHCE Group Average %
NHCE Group Average % plus 2%
NA - Basic Limitation applies
Alternatively, the Company may elect to use the Plan Year's ADP
for the NHCE Group for the Plan Year and/or the Plan Year's ACP
for the NHCE Group for the Plan Year. If such election is made,
such election may not be changed except as provided by the Code.
12.3 Correction of ADP and ACP Tests for Plan Years Commencing After
December 31, 1996
For Plan Years commencing after December 31, 1996, if the ADP or
ACP Tests are not met, the Administrator shall determine, no
later than the end of the next Plan Year, a maximum percentage to
be used in place of the calculated percentage for all HCEs that
would reduce the ADP and/or ACP for the HCE Group by a sufficient
amount to meet the ADP and ACP Tests.
With regard to each HCE whose Deferral percentage and/or
Contribution percentage is in excess of the maximum percentage, a
dollar amount of excess Deferrals and/or excess Contributions
shall then be determined by (i) subtracting the product of such
maximum percentage for the ADP and the HCE's Compensation from
the HCE's actual Deferrals and (ii) subtracting the product of
such maximum percentage for the ACP and the HCE's Compensation
from the HCE's actual Contributions. Such amounts shall then be
aggregated to determine the total dollar amount of excess
Deferrals and/or excess Contributions. ADP and/or ACP
corrections shall be made in accordance with the leveling method
as described below.
(a0 ADP Correction. The HCE with the highest Deferral dollar
amount shall have his or her Deferral dollar amount reduced
in an amount equal to the lesser of the dollar amount of
excess Deferrals for all HCEs or the dollar amount that
would cause his or her Deferral dollar amount to equal that
of the HCE with the next highest Deferral dollar amount.
The process shall be repeated until the total of the
Deferral dollar amount reductions equals the dollar amount
of excess Deferrals for all HCEs.
To the extent an HCE's Deferrals were determined to be
reduced as described in the paragraph above, Pre-Tax
Contributions shall, by the end of the next Plan Year, be
refunded to the HCE, except that such amount to be refunded
shall be reduced by Pre-Tax Contributions previously
refunded because they exceeded the Contribution Dollar
Limit. The excess amounts shall first be taken from
unmatched Pre-Tax Contributions and then from matched Pre-
Tax Contributions. Any Match Contributions attributable to
refunded excess Pre-Tax Contributions as described in this
Section, adjusted for investment gain or loss for the Plan
Year to which the excess Pre-Tax Contributions relate,
shall be forfeited and used as described in Section 8.
(b0 ACP Correction. The HCE with the highest Contribution
dollar amount shall have his or her Contribution dollar
amount reduced in an amount equal to the lesser of the
dollar amount of excess Contributions for all HCEs or the
dollar amount that would cause his or her Contribution
dollar amount to equal that of the HCE with the next
highest Contribution dollar amount. The process shall be
repeated until the total of the Contribution dollar amount
reductions equals the dollar amount of excess Contributions
for all HCEs.
To the extent an HCE's Contributions were determined to be
reduced as described in the paragraph above, Contributions
shall, by the end of the next Plan Year, be refunded to the
HCE to the extent vested, and forfeited and used as
described in Section 8 to the extent such amounts were not
vested, as of the end of the Plan Year being tested. The
excess amounts shall first be taken from After-Tax
Contributions and then from Match Contributions.
(c) Investment Fund Sources. Once the amount of excess
Deferrals and/or Contributions is determined, and with
regard to excess Contributions, allocated by type of
Contribution, within each Account from which amounts are
refunded or forfeited, amounts shall first be taken from
the Sweep Account and then taken by Investment Fund in
direct proportion to the market value of the Participant's
interest in each Investment Fund (which excludes his or her
Loan Account balance) as of the Trade Date on which the
correction is processed.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used
to meet both the ADP and ACP Tests, the ADP and ACP for the HCE
Group must also comply with the requirements of Code section
401(m)(9). Such Code section requires that the sum of the ADP and
ACP for the HCE Group (as determined after any corrections needed
to meet the ADP and ACP Tests have been made) not exceed the sum
(which produces the most favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to
either the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the
calculated percentage for all HCEs that would reduce either or
both the ADP or ACP for the HCE Group by a sufficient amount to
meet the multiple use limit. Any excess shall be corrected in
the same manner that excess Deferrals or Contributions are
corrected.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant or forfeited in accordance with this Section 12 shall
be adjusted for investment gain or loss. Refunds or forfeitures
shall not include investment gain or loss for the period between
the end of the applicable Plan Year and the date of distribution
or forfeiture.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and the Multiple Use Test, and
that the Contribution Dollar Limit is not exceeded. The
Administrator shall maintain records which are sufficient to
demonstrate that the ADP Test, the ACP Test and the Multiple Use
Test, have been met for each Plan Year for at least as long as
the Employer's corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and
the performance of the ADP Test, the ACP Test and the
Multiple Use Test, and any corrective action resulting
therefrom, shall be conducted separately with regard to the
Employees of each Employer (and its Related Companies) that
is not a Related Company with respect to the other
Employer(s).
(b) Collective Bargaining Units: The performance of the ADP
Test, and if applicable, the ACP Test and the Multiple Use
Test, and any corrective action resulting therefrom, shall
be conducted separately with regard to Employees who are
eligible to participate in the Plan as a result of a
collective bargaining agreement.
In addition, testing may be conducted separately, at the
discretion of the Administrator and to the extent permitted under
Treasury regulations, with regard to any group of Employees for
whom separate testing is permissible under such regulations.
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
13.1 "Annual Addition" Defined
The sum for a Plan Year of all (i) contributions (excluding
rollover contributions) and forfeitures allocated to the
Participant's Account and his or her account in all other defined
contribution plans maintained by any Related Company, (ii)
amounts allocated to the Participant's individual medical account
(within the meaning of Code section 415(l)(2)) which is part of a
defined benefit plan maintained by any Related Company, and (iii)
if the Participant is a key employee (within the meaning of Code
section 419A(d)(3)) for the applicable or any prior Plan Year,
amounts attributable to post-retirement medical benefits
allocated to his or her separate account under a welfare benefit
fund (within the meaning of Code section 419(e)) maintained by
any Related Company. The Plan Year refers to the year to which
the allocation pertains, regardless of when it was allocated.
The Plan Year shall be the Code section 415 limitation year.
13.2 Maximum Annual Addition
A Participant's Annual Addition for any Plan Year shall not
exceed the lesser of (i) 25% of his or her Taxable Income or (ii)
$30,000 (as adjusted for cost of living increases pursuant to
Code section 415(d)); provided, however, that clause (i) shall
not apply to Annual Additions described in clauses (ii) and (iii)
of Section 13.1 and for Plan Years commencing before January 1,
1995, "or one-quarter of the dollar limitation in effect under
Code section 415(b)(1)(A)" shall be substituted for the preceding
reference to "(as adjusted for cost of living increases pursuant
to Code section 415(d))" and for Plan Years commencing after
December 31, 1997, "Compensation" shall be substituted for the
preceding reference to "Taxable Income.
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any
additional Contributions would produce an excess Annual Addition
for such year, Contributions to be made for the remainder of the
Plan Year shall be limited to the amount needed for each affected
Participant to receive the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a
Participant's Account (resulting from a reasonable error in
determining a Participant's compensation or the maximum
permissible amount of his or her elective deferrals (within the
meaning of Code section 402(g)(3)), or other facts and
circumstances acceptable to the Internal Revenue Service), the
excess amount (adjusted to reflect investment gains) shall first
be returned to the Participant to the extent of his or her After-
Tax Contributions, and then to the extent of his or her Pre-Tax
Contributions (however to the extent Pre-Tax Contributions were
matched, the applicable Match Contributions shall be forfeited in
proportion to the returned matched Pre-Tax Contributions) and the
remaining excess, if any, shall be forfeited by the Participant
and together used as described in Section 8.
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined
contribution plan, including the Salaried Plan and/or the Branch
Plant Hourly Plan, the excess shall be corrected by reducing the
Annual Addition to the Plan before any reduction is made to the
Salaried Plan and after all possible reductions have been made to
the Branch Plant Hourly Plan and the other defined contribution
plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the
"projected annual benefit" and the denominator is the greater of
125% of the "protected current accrued benefit" or the normal
limit which is the lesser of (i) 125% of the dollar limitation in
effect under Code section 415(b)(1)(A) for the Plan Year or (ii)
140% of the amount which may be taken into account under Code
section 415(b)(1)(B) for the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided
by the plan determined pursuant to Code section
415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit
plan in existence (1) on July 1, 1982, shall be the accrued
annual benefit provided for under Public Law 97-248,
section 235(g)(4), as amended, or (2) on May 6, 1986, shall
be the accrued annual benefit provided for under Public Law
99-514, section 1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's
Annual Addition for each Plan Year to date (including the annual
additions to his or her account under any other defined
contribution plan maintained by any Related Company) and the
denominator is the sum of the "annual amounts" for each year in
which the Participant has performed service with a Related
Company. The "annual amount" for any Plan Year is the lesser of
(i) 125% of the dollar limitation in effect under Code section
415(c)(1)(A) (determined without regard to subsection (c)(6)) for
the Plan Year or (ii) 140% of the amount which may be taken into
account under Code section 415(c)(1)(B) for the Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code
section 415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248,
section 235(g)(3), as amended, or Public Law 99-514,
section 1106(i)(4).
13.8 Combined Plan Limits and Correction
The sum of a Participant's Defined Benefit Fraction and Defined
Contribution Fraction for any Plan Year may not exceed 1.0. If
the combined fraction exceeds 1.0 for any Plan Year, the
Participant's benefit under the Plan (to the extent it has not
been distributed) shall be limited so that the combined fraction
does not exceed 1.0 before any defined benefit limits shall be
enforced.
For Plan Years commencing after December 31, 1999, the provisions
of the preceding paragraph shall no longer be effective.
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the
following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each
qualified plan of the Related Companies (1) in which a Key
Employee is a participant or was a participant during the
determination period (regardless of whether such plan has
terminated), or (2) which enables another plan in the group
to meet the requirements of Code sections 401(a)(4) or
410(b). The Administrator may also treat any other
qualified plan of the Related Companies as part of the
group if the resulting group would continue to meet the
requirements of Code sections 401(a)(4) and 410(b) with
such plan being taken into account.
(b) "Determination Date". For any Plan Year, the last Trade
Date of the preceding Plan Year or, in the case of the
Plan's first Plan Year, the last Trade Date of that Plan
Year.
(c) "Key Employee". A current or former Employee (or his or
her Beneficiary) who at any time during the five year
period ending on the Determination Date was:
(1) an officer of a Related Company whose Compensation
(i) exceeds 50% of the amount in effect under Code
section 415(b)(1)(A) and (ii) places him or her
within the following highest paid group of officers:
Number of Employees
not Excluded Under
Code
Section 414(q)(5)
Number of
Highest Paid
Officers Included
Less than 30
30 to 500
More than 500
3
10% of the number of
Employees not excluded
under Code section
414(q)(5)
50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds
$150,000, or
(4) a more than 0.5% Owner who is among the 10 Employees
owning the largest interest in a Related Company and
whose Compensation exceeds the amount in effect
under Code section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of
(1) an Employee's Account, (2) the present value of his or
her other accrued benefits provided by all qualified plans
within the Aggregation Group, and (3) the aggregate
distributions made within the five year period ending on
such Date. For this purpose, the present value of the
Employee's accrued benefit in a defined benefit plan shall
be determined by the method that is used for benefit
accrual purposes under all such plans maintained by the
Related Companies or, if there is no such single method
used under all such plans, as if the benefit accrues no
more rapidly than the slowest rate permitted by the
fractional accrual rule in Code section 411(b)(1)(C). Plan
Benefits shall exclude rollover contributions and similar
transfers made after December 31, 1983 as provided in Code
section 416(g)(4)(A).
(e) "Top Heavy". The Plan's status when the Plan Benefits of
Key Employees account for more than 60% of the Plan
Benefits of all Employees who have performed services at
any time during the five year period ending on the
Determination Date. The Plan Benefits of Employees who
were, but are no longer, Key Employees (because they have
not been an officer or Owner during the five year period),
are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in
which the Plan is Top Heavy, the Employer shall not allow
any contributions (other than a Rollover Contribution from
a plan maintained by a non Related Company) to be made by
or on behalf of any Key Employee unless the Employer makes
a contribution (other than contributions made by an
Employer in accordance with a Participant's salary deferral
election or contributions made by an Employer based upon
the amount contributed by a Participant) on behalf of all
Participants who were Eligible Employees as of the last day
of the Plan Year in an amount equal to at least 3% of each
such Participant's Taxable Income.
(b) Overriding Minimum Benefit. Notwithstanding, contributions
shall be permitted on behalf of Key Employees if the
Employer also maintains a defined benefit plan which
automatically provides a benefit which satisfies the Code
section 416(c)(1) minimum benefit requirements, including
the adjustment provided in Code section 416(h)(2)(A), if
applicable. If the Plan is part of an Aggregation Group
under which a Key Employee is receiving a benefit and no
minimum contribution is provided under any other plan, a
minimum contribution of at least 3% of Taxable Income shall
be provided to the Participants specified in the preceding
paragraph, except that if the Aggregation Group consists of
a top heavy defined benefit plan "5%" shall be substituted
for the preceding reference to "3%" with regard to the
Participants specified in the preceding paragraph who are
also covered under the defined benefit plan.
14.3 Special Vesting
If the Plan becomes Top Heavy after the Effective Date, vesting
for all Employees shall thereafter be accelerated to the extent
the following vesting schedule produces a greater vested
percentage for the Employee than the normal vesting schedule at
any relevant time:
Years of Vesting
Service
Vested
Percentage
Less than 3
3 or more
0%
100%
14.4 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall be
substituted for 125% in determining the Defined Benefit Fraction
and the Defined Contribution Fraction. For Plan Years commencing
after December 31, 1999, the provisions of the preceding sentence
shall no longer be effective.
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator and the
Trustee, as applicable, whose specific duties are delineated in
the Plan and Trust. In addition, Plan fiduciaries also include
any other person to whom fiduciary duties or responsibilities are
delegated with respect to the Plan. Any person or group may
serve in more than one fiduciary capacity with respect to the
Plan. To the extent permitted under ERISA section 405, no
fiduciary shall be liable for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with the Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that
a prudent person acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise
of a like character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying
reasonable expenses of administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so
as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries in
a uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the administrator of the Plan (within the meaning
of ERISA section 3(16)) and is responsible for compliance with
all reporting and disclosure requirements, except those that are
explicitly the responsibility of the Trustee under applicable
law. The Administrator shall have any necessary authority to
carry out such functions through the actions of the duly
appointed officers of the Company.
15.4 Administrator Duties
The Administrator shall have the discretionary authority to
construe the Plan and Trust, other than the provisions which
relate to the Trustee, and to do all things necessary or
convenient to effect the intent and purposes thereof, whether or
not such powers are specifically set forth in the Plan and Trust.
Actions taken in good faith by the Administrator shall be
conclusive and binding on all interested parties, and shall be
given the maximum possible deference allowed by law. In addition
to the duties listed elsewhere in the Plan and Trust, the
Administrator's authority shall include, but not be limited to,
the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, in-service
withdrawals and distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant
(or such other period permitted under ERISA section
104(b)(1)), as well as informing each Participant of any
material modification to the Plan in a timely manner;
(c) make a copy of the following documents available to
Participants during normal work hours: the Plan and Trust
(including subsequent amendments), all annual and interim
reports of the Trustee related to the entire Plan, the
latest annual report and the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
interest based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy
bearing in mind both the short-run and long-run needs and
goals of the Plan and to the extent Participants may direct
their own investments, the funding policy shall focus on
which Investment Funds are available for Participants to
use; and
(f) adjudicate claims pursuant to the claims procedure
described in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of
ERISA section 412.
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, may appoint a
Committee to administer the Plan on its behalf. The Company
shall provide the Trustee with the names and specimen signatures
of any persons authorized to serve as Committee members and act
as or on its behalf. Any Committee member appointed by the
Company shall serve at the pleasure of the Company, but may
resign by written notice to the Company. Committee members shall
serve without compensation from the Plan for such services.
Except to the extent that the Company otherwise provides, any
delegation of duties to the Committee shall carry with it the
full discretionary authority of the Administrator to complete
such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company to
the Committee may be done by a majority of its members.
The majority may be expressed by a vote at a meeting or in
writing without a meeting, and a majority action shall be
equivalent to an action of all Committee members.
(b) Meetings. The Committee shall hold meetings upon such
notice, place and times as it determines necessary to
conduct its functions properly.
(c) Reliance by Trustee. The Committee may authorize one or
more of its members to execute documents on its behalf and
may authorize one or more of its members or other
individuals who are not members to give written direction
to the Trustee in the performance of its duties. The
Committee shall provide such authorization in writing to
the Trustee with the name and specimen signatures of any
person authorized to act on its behalf. The Trustee shall
accept such direction and rely upon it until notified in
writing that the Committee has revoked the authorization to
give such direction. The Trustee shall not be deemed to be
on notice of any change in the membership of the Committee,
parties authorized to direct the Trustee in the performance
of its duties, or the duties delegated to and by the
Committee until notified in writing.
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in
accordance with those provisions of the Plan and Trust which
relate to the Trustee, for use in providing Plan benefits and
paying Plan fees and expenses not paid directly by the Employer.
Plan benefits shall be drawn solely from the Trust and paid by
the Trustee as directed by the Administrator. Notwithstanding,
the Company may appoint, with the approval of the Trustee,
another trustee to hold and administer Plan assets which do not
meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the
Trustee to invest Trust assets in one or more Investment Funds.
The number and composition of Investment Funds may be changed
from time to time, without the necessity of amending the Plan and
Trust. The Trustee may establish reasonable limits on the number
of Investment Funds as well as the acceptable assets for any such
Investment Fund. Each of the Investment Funds may be comprised
of any of the following:
(a) shares of a registered investment company, whether or not
the Trustee or any of its affiliates is an advisor to, or
other service provider to, such company;
(b) collective investment funds maintained by the Trustee, or
any other fiduciary to the Plan, which are available for
investment by trusts which are qualified under Code
sections 401(a) and 501(a);
(c) individual equity and fixed income securities which are
readily tradable on the open market;
(d) synthetic guaranteed investment contracts and guaranteed
investment contracts issued by an insurance company and/or
synthetic guaranteed investment contracts and bank
investment contracts issued by a bank;
(e) interest bearing deposits (which may include interest
bearing deposits of the Trustee); and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment
fund, shall be subject to all the provisions of the instruments
establishing and governing such fund. These instruments,
including any subsequent amendments, are incorporated herein by
reference.
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment
manager of each Investment Fund to maintain sufficient deposit or
money market type assets in each Investment Fund to handle the
Investment Fund's liquidity and disbursement needs. Each
Participant's and Beneficiary's Sweep Account, which is used to
hold assets pending investment or disbursement, shall consist of
interest bearing deposits (which may include interest bearing
deposits of the Trustee) and/or money market type assets or
funds.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions
are received from the Administrator, Participants or
Beneficiaries. Such instructions shall remain in effect until
changed by the Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company
Shares
The Administrator shall be entitled to vote proxies or exercise
any shareholder rights relating to shares held on behalf of the
Plan in a registered investment company. Notwithstanding, the
authority to vote proxies and exercise shareholder rights related
to such shares held in a Custom Fund is vested as provided
otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee,
an investment manager for any Investment Fund established by the
Trustee solely for Participants of the Plan and, subject to
Section 16.7, any other qualified plan of the Company or a
Related Company (a "Custom Fund"). The investment manager may be
the Administrator, Trustee or an investment manager pursuant to
ERISA section 3(38). The Administrator shall advise the Trustee
in writing of the appointment of an investment manager and shall
cause the investment manager to acknowledge to the Trustee in
writing that the investment manager is a fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund
consists solely of collective investment funds or shares of
a registered investment company (and sufficient deposit or
money market type assets to handle the Custom Fund's
liquidity and disbursement needs), its underlying
instruments shall constitute the guidelines.
(b) Authority of Investment Manager. The investment manager of
a Custom Fund shall have the authority to vote or execute
proxies, exercise shareholder rights, manage, acquire, and
dispose of Trust assets. Notwithstanding, the authority to
vote proxies and exercise shareholder rights related to
shares of Company Stock held in a Custom Fund is vested as
provided otherwise in Section 16.
(c) Custody and Trade Settlement. Unless otherwise agreed to
by the Trustee, the Trustee shall maintain custody of all
Custom Fund assets and be responsible for the settlement of
all Custom Fund trades. For purposes of this Section,
shares of a collective investment fund, shares of a
registered investment company and synthetic guaranteed
investment contracts and guaranteed investment contracts
issued by an insurance company and/or synthetic guaranteed
investment contracts and bank investment contracts issued
by a bank, shall be regarded as the Custom Fund assets
instead of the underlying assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the
Administrator nor the Trustee shall be obligated to invest
or otherwise manage any Custom Fund assets for which the
Trustee or Administrator is not the investment manager nor
shall the Administrator or Trustee be liable for acts or
omissions with regard to the investment of such assets
except to the extent required by ERISA.
16.7 Master Custom Fund
The Trustee may establish, at the direction of the Administrator,
a single Custom Fund (the "Master Custom Fund"), for the benefit
of the Plan and any other qualified plan of the Company or a
Related Company for which the Trustee acts as trustee pursuant to
a plan and trust document that contains a provision substantially
identical to this provision. The assets of the Plan, to the
extent invested in the Master Custom Fund, shall consist only of
that percentage of the assets of the Master Custom Fund
represented by the shares held by the Plan.
16.8 Authority to Segregate Assets
The Administrator may direct the Trustee to split an Investment
Fund into two or more funds in the event any assets in the
Investment Fund are illiquid or the value is not readily
determinable. In the event of such segregation, the
Administrator shall give instructions to the Trustee on what
value to use for the split-off assets, and the Trustee shall not
be responsible for confirming such value.
16.9 Investment in Company Stock
If the Company provides for a Company Stock Fund, directly or
through a Master Custom Fund, the Company Stock Fund shall be
comprised of Company Stock and sufficient deposit or money market
type assets to handle the Company Stock Fund's liquidity and
disbursement needs. The Company Stock Fund may be as large as
necessary to comply with Participants' and Beneficiaries'
investment elections.
16.10 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct the
Trustee as to the voting or tendering of any full or partial
shares of Company Stock held on his or her behalf in the Company
Stock Fund. The Company shall be responsible for distributing to
each such Participant or Beneficiary on a timely basis, such
information as shall be distributed to shareholders of the
Company in connection with any shareholder vote or tender
decision and for informing each such Participant or Beneficiary
of the following:
(a) a failure to instruct the Trustee with regard to a
shareholder vote shall be regarded as a direction to
abstain with respect to each matter or group of related
matters to be acted upon (other than elections to office)
and to withhold authority to vote for any nominee for
election to office; and
(b) a failure to instruct the Trustee with regard to a tender
decision shall be regarded as a direction not to tender.
The Trustee shall be responsible for the tabulation of the
instructions furnished by such Participants and Beneficiaries.
The Trustee shall act with respect to such shares as instructed.
The Trustee shall hold any instructions it receives in
confidence and shall not divulge or release any specific
information regarding such to any person, including officers or
Employees.
The Trustee will act in accordance with (a) or (b) set forth
above, as applicable, with regard to shares for which
instructions are not received from Participants or Beneficiaries.
16.11 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the
requirements of the Securities Act of 1933, as amended, the
California Corporate Securities Law of 1968, as amended, and any
other applicable blue sky law. The Administrator shall also
specify what restrictive legend or transfer restriction, if any,
is required to be set forth on the certificates for the
securities and the procedure to be followed by the Trustee to
effectuate a resale of such securities.
17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe
those provisions of the Plan and Trust which relate to the
Trustee and to do all things necessary or convenient to the
administration of the Trust, whether or not such powers are
specifically set forth in the Plan and Trust. Actions taken in
good faith by the Trustee shall be conclusive and binding on all
interested parties, and shall be given the maximum possible
deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in
the Plan and Trust, the Trustee shall have all the power,
authority, rights and privileges of an absolute owner of the
Trust assets and, not in limitation but in amplification of the
foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge,
mortgage, lease, grant options respecting, repair, alter,
insure, or distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription
or conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in
federal book entry form or in any other form as shall
permit title thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or
claims in favor of or against the Trust; and
(d) lend, through a collective investment fund, any securities
held in such collective investment fund to brokers, dealers
or other borrowers and to permit such securities to be
transferred into the name and custody and be voted by the
borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any
Trust assets outside the jurisdiction of the United States,
except as authorized under ERISA section 404(b).
17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold
federal (and, if applicable, state) income taxes with
regard to any Eligible Rollover Distribution that is not
paid as a Direct Rollover in accordance with the
Participant's withholding election or as required by law if
no election is made or the election is less than the amount
required by law. With regard to any taxable distribution
that is not an Eligible Rollover Distribution, the Trustee
shall calculate and withhold federal (and, if applicable,
state) income taxes in accordance with the Participant's
withholding election or as required by law if no election
is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay
from the Investment Fund any taxes or assessments imposed
by any taxing or governmental authority on such Investment
Fund or its income, including related interest and
penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall
provide the Administrator with an annual accounting of
Trust assets and information to assist the Administrator in
meeting ERISA's annual reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records and
provide sufficient reporting to allow the Administrator to
properly monitor the Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting
shall automatically occur 90 days after such accounting has
been received by the Administrator, unless the
Administrator files a written objection with the Trustee
within such time period. Such approval shall be final as
to all matters and transactions stated or shown therein and
binding upon the Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended,
the Trustee may engage a qualified independent appraiser to
determine the fair market value of such property, and the
appraisal fees shall be paid from the Investment Fund containing
the asset.
17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice,
including counsel for the Employer or counsel of the Trustee,
upon any question or matter arising under the Plan and Trust.
When relied upon by the Trustee, the opinion of such counsel
shall be evidence that the Trustee has acted in good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as
may be mutually agreed upon by the Company and the Trustee.
Trustee fees and all reasonable expenses of counsel and advisors
retained by the Trustee shall be paid in accordance with Section
6.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the Trustee,
shall be confined to construing the terms of the Plan and Trust
as they relate to the Trustee, receiving funds on behalf of and
making payments from the Trust, safeguarding and valuing Trust
assets, investing and reinvesting Trust assets in the Investment
Funds as directed by the Administrator, Participants or
Beneficiaries, and those duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to enforce
collection or to compute or verify the accuracy or adequacy of
any amount to be paid to it by the Employer. The Trustee shall
not be liable for the proper application of any part of the Trust
with respect to any disbursement made at the direction of the
Administrator.
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any 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 Compliance With USERRA
Notwithstanding any provision of the Plan to the contrary,
effective October 13, 1996, with regard to an Employee who after
serving in the uniformed services is reemployed on or after
December 12, 1994, within the time required by USERRA,
contributions shall be made and benefits and service credit shall
be provided under the Plan with respect to his or her qualified
military service (as defined in Code section 414(u)(5)) in
accordance with Code section 414(u). Furthermore, notwithstanding
any provision of the Plan to the contrary, Participant loan
payments may be suspended during a period of qualified military
service.
18.3 Limited Return of Contributions
Except as provided in this Section 18.3, (i) Plan assets shall
not revert to the Employer nor be diverted for any purpose other
than the exclusive benefit of Participants and Beneficiaries and
defraying reasonable expenses of administering the Plan; and (ii)
a Participant's vested interest shall not be subject to
divestment. As provided in ERISA section 403(c)(2), the actual
amount of a Contribution or portion thereof made by the Employer
(or the current value of such if a net loss has occurred) may
revert to the Employer if:
(a) such Contribution or portion thereof is made by reason of a
mistake of fact; or
(b) such Contribution or portion thereof is not deductible
under Code section 404 (such Contributions are hereby
conditioned upon such deductibility) in the taxable year of
the Employer for which the Contribution is made.
The reversion to the Employer must be made (if at all) within one
year of the mistaken payment or the date of disallowance of
deduction, as the case may be. A Participant shall have no
rights under the Plan with respect to any such reversion.
18.4 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan may be
anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to an Alternate Payee pursuant to a QDRO; or
(b) to use a Participant's vested Account balance as security
for a loan from the Plan which is permitted pursuant to
Code section 4975.
18.5 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally
incapable of giving a valid receipt and discharge for any payment
due him or her, the Administrator shall have the payment of the
benefit, or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for or
supporting the payee, unless it has received due notice of claim
therefor from a duly appointed guardian or conservator of the
payee. Any payment shall to the extent thereof, be a complete
discharge of any liability under the Plan to the payee.
18.6 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment
of a Plan benefit after a reasonable search, the Administrator
may at any time thereafter treat such person's Account as
forfeited and use such amount as described in Section 8. If such
person subsequently presents the Administrator with a valid claim
for the benefit, such person shall be paid the amount treated as
forfeited, plus the interest that would have been earned in the
Sweep Account to the date of determination. The Administrator
shall pay the amount through an additional amount contributed by
the Employer or direct the Trustee to pay the amount from
forfeiture amounts.
18.7 Suspension of Certain Plan Provisions During Conversion Period
Notwithstanding any provision of the Plan to the contrary, during
any Conversion Period, in accordance with procedures established
by the Administrator and the Trustee, the Administrator may
temporarily suspend, in whole or in part, certain provisions
under the Plan, which may include, but are not limited to, a
Participant's right to change his or her Contribution election, a
Participant's right to change his or her investment election and
a Participant's right to borrow or withdraw from his or her
Account or obtain a distribution from his or her Account.
18.8 Suspension of Certain Plan Provisions During Other Periods
Notwithstanding any provision of the Plan to the contrary, in
accordance with procedures established by the Administrator and
the Trustee, the Administrator may temporarily suspend a
Participant's right to borrow or withdraw from his or her Account
or obtain a distribution from his or her Account, if (i) the
Administrator receives a domestic relations order and the
Participant's Account is a source of the payment for such
domestic relations order, or (ii) if the Administrator receives
notice that a domestic relations order is being sought by the
Participant, his or her spouse, former spouse, child or other
dependent (as defined in Code section 152) and the Participant's
Account is a source of the payment for such domestic relations
order. Such suspension may continue for a reasonable period of
time (as determined by the Administrator) which may include the
period of time the Administrator, a court of competent
jurisdiction or other appropriate person is determining whether
the domestic relations order qualifies as a QDRO.
18.9 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees
with the Administrator's determination of his or her right
to Plan benefits must submit a written claim and exhaust
this claim procedure before legal recourse of any type is
sought. The claim must include the important issues the
interested party believes support the claim. The
Administrator, pursuant to the authority provided in the
Plan, shall either approve or deny the claim.
(b) Process for Denying a Claim. The Administrator's partial
or complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to
the pertinent Plan provisions) and (2) the steps necessary
to perfect the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party
may make a written appeal of the Administrator's initial
decision, and the Administrator shall respond in the same
manner and form as prescribed for denying a claim
initially.
(d) Time Frame. The initial claim, its review, appeal and
final review shall be made in a timely fashion, subject to
the following time table:
Days to Respond
Action From Last Action
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it
provides an explanation within the normal period of why an
extension is needed and when its decision shall be
forthcoming.
18.10 Construction
Headings are included for reading convenience. The text shall
control if any ambiguity or inconsistency exists between the
headings and the text. The singular and plural shall be
interchanged wherever appropriate. References to Participant
shall include Alternate Payee and/or Beneficiary when appropriate
and even if not otherwise already expressly stated.
18.11 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not
otherwise preempted, by the laws of the State of California. If
any provision of the Plan and Trust is or becomes invalid or
otherwise unenforceable, that fact shall not affect the validity
or enforceability of any other provision of the Plan and Trust.
All provisions of the Plan and Trust shall be so construed as to
render them valid and enforceable in accordance with their
intent.
18.12 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries
against any and all liabilities resulting from any action or
inaction, (including a Plan termination in which the Company
fails to apply for a favorable determination from the Internal
Revenue Service with respect to the qualification of the Plan
upon its termination), in relation to the Plan or Trust (i)
including (without limitation) expenses reasonably incurred in
the defense of any claim relating to the Plan or its assets, and
amounts paid in any settlement relating to the Plan or its
assets, but (ii) excluding liability resulting from actions or
inactions made in bad faith, or resulting from the negligence or
willful misconduct of the Trustee. The Company shall have the
right, but not the obligation, to conduct the defense of any
action to which this Section applies. The Plan fiduciaries are
not entitled to indemnity from the Plan assets relating to any
such action.
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
19.1 Amendment
The Company reserves the right to amend the Plan and Trust at any
time, to any extent and in any manner it may deem necessary or
appropriate. The Company (and not the Trustee) shall be
responsible for adopting any amendments necessary to maintain the
qualified status of the Plan and Trust under Code sections 401(a)
and 501(a). The Administrator shall have the authority to adopt
Plan and Trust amendments which have no substantial adverse
financial impact upon any Employer or the Plan. All interested
parties shall be bound by any amendment, provided that no
amendment shall:
(a) become effective unless it has been adopted in accordance
with the procedures set forth in Section 19.5;
(b) except to the extent permissible under ERISA and the Code,
make it possible for any portion of the Trust assets to
revert to an Employer or to be used for, or diverted to,
any purpose other than for the exclusive benefit of
Participants and Beneficiaries entitled to Plan benefits
and to defray reasonable expenses of administering the
Plan;
(c) decrease the rights of any Participant to benefits accrued
(including the elimination of optional forms of benefits)
to the date on which the amendment is adopted, or if later,
the date upon which the amendment becomes effective, except
to the extent permitted under ERISA and the Code; nor
(d) permit a Participant to be paid any portion of his or her
Account subject to the distribution rules of Code section
401(k) unless the payment would otherwise be permitted
under Code section 401(k).
19.2 Merger
The Plan and Trust may not be merged or consolidated with, nor
may its assets or liabilities be transferred to, another plan
unless each Participant and Beneficiary would, if the resulting
plan were then terminated, receive a benefit just after the
merger, consolidation or transfer which is at least equal to the
benefit which would be received if either plan had terminated
just before such event.
19.3 Divestitures
In the event of a sale by an Employer which is a corporation of:
(i) substantially all of the Employer's assets used in a trade or
business to an unrelated corporation, or (ii) a sale of such
Employer's interest in a subsidiary to an unrelated entity or
individual, lump sum distributions shall be permitted from the
Plan, except as provided below, to Participants with respect to
Employees who continue employment with the corporation acquiring
such assets or who continue employment with such subsidiary, as
applicable.
Notwithstanding, distributions shall not be permitted if the
purchaser agrees, in connection with the sale, to be substituted
as the Company as the sponsor of the Plan or to accept a transfer
in a transaction subject to Code section 414(l)(1) of the assets
and liabilities representing the Participants' benefits into a
plan of the purchaser or a plan to be established by the
purchaser.
19.4 Plan Termination and Complete Discontinuance of Contributions
The Company may, at any time and for any reason, terminate the
Plan in accordance with the procedures set forth in Section 19.5,
or completely discontinue contributions. Upon either of these
events, or in the event of a partial termination of the Plan
within the meaning of Code section 411(d)(3), the Accounts of
each affected Participant who has not yet incurred a forfeitable
event as described in Section 8 shall be fully vested.
In the event of the Plan's termination, if no successor plan is
established or maintained, lump sum distributions shall be made
in accordance with the terms of the Plan as in effect at the time
of the Plan's termination or as thereafter amended, provided that
a post-termination amendment shall not be effective to the extent
that it violates Section 19.1 unless it is required in order to
maintain the qualified status of the Plan upon its termination.
The Trustee's and Employer's authority shall continue beyond the
Plan's termination date until all Trust assets have been
liquidated and distributed.
19.5 Amendment and Termination Procedures
Any amendment to (including a termination of) the Plan and Trust
by the Company shall be made only pursuant to action of the Board
or on behalf of the Board by the Board's executive committee as
authorized in the Company bylaws in accordance with the Board's
normal procedures and by written instrument of amendment, signed
and dated. Any amendment to the Plan and Trust by the Committee,
as Administrator, shall be made pursuant to action of the
Committee in accordance with the procedures set forth in Section
15.7(a) and by written instrument of amendment, signed and dated.
The effective date of any amendment may be before, on or after
the date of such Board action or Committee action, as applicable.
If no effective date is specified, the effective date of the
amendment shall be the date of the Board action or the Committee
action, as applicable. However, no amendment shall become
effective until it is accepted and signed by the Trustee (which
acceptance shall not be unreasonably withheld.)
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its
Plan participation by action of its board of directors in
accordance with its normal procedures. Written notice of such
action shall be signed and dated by an executive officer of the
Employer and delivered to the Company. If the effective date of
such action is not specified, it shall be effective on, or as
soon as reasonably practicable after, the date of delivery. Upon
the Employer's request, the Company may instruct the Trustee and
Administrator to spin off all affected Accounts and underlying
assets into a separate qualified plan under which the Employer
shall assume the powers and duties of the Company.
Alternatively, the Company may continue to maintain the Accounts
under the Plan.
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under the Plan and Trust or may
be removed by the Company at any time upon at least 90 days
written notice (or less if agreed to by both parties). In such
event, the Company shall appoint a successor trustee by the end
of the notice period. The successor trustee shall then succeed
to all the powers and duties of the Trustee under the Plan and
Trust. If no successor trustee has been named by the end of the
notice period, the Company's chief executive officer shall become
the trustee, or if he or she declines, the Trustee may petition
the court for the appointment of a successor trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively feasible
after its resignation or removal as Trustee, the Trustee
shall transfer to the successor trustee all property
currently held by the Trust. However, the Trustee is
authorized to reserve such sum of money as it may deem
advisable for payment of its accounts and expenses in
connection with the settlement of its accounts or other
fees or expenses payable by the Trust. Any balance
remaining after payment of such fees and expenses shall be
paid to the successor trustee.
(b) Final Accounting. The Trustee shall provide a final
accounting to the Administrator within 90 days of the date
Trust assets are transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting
shall automatically occur 90 days after such accounting has
been received by the Administrator, unless the
Administrator files a written objection with the Trustee
within such time period. Such approval shall be final as
to all matters and transactions stated or shown therein and
binding upon the Administrator.
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date
include this set of daily valued funds:
Category Funds
Money Market U.S. Government Money Market
Balanced Asset Allocation
Equity Company Stock
S&P 500 Stock
Combination LifePath Series
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the U.S.
Government 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.
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as
follows:
I. Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants.
II. Recordkeeping Fees: These are paid by the Employer on a quarterly
basis, except that with regard to a Participant who is no longer an
Employee or a Beneficiary, these are paid by the Participant and are
assessed monthly and billed/collected from Accounts quarterly.
III. Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding
loan balance.
IV. Investment Fund Election Changes: For each Investment Fund election
change by a Participant, in excess of four changes per year, a $10 fee
shall be assessed and billed/collected quarterly from the
Participant's Account.
V. Periodic Installment Payment Fees: A $3.00 per check fee shall be
assessed and billed/collected quarterly from the Account of each
Participant for whom a check is issued.
VI. Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the
Administrator later elects that any such fees shall be borne by
Participants, estimates of the fees shall be determined and
reconciled, at least annually, and the fees shall be assessed monthly
and billed/collected from Accounts quarterly.
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the U.S. Treasury rate for a note of the same maturity, plus 2%.
The rate may be determined once for all loans made in a month, and the
maturity may be determined to the nearest year.
Barclays
Global
Investors
Longview Fibre Company Branch
Plant Hourly Employees' 401(k)
Plan and Trust Agreement
As Amended and Restated
Effective January 1, 1996
Longview Fibre Company Branch Plant Hourly Employees' 401(k) Plan and Trust
As Amended and Restated Effective January 1, 1996
Longview Fibre Company previously established the Longview Fibre Company Branch
Plant Hourly Employees' 401(k) Plan effective March 1, 1993, 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 the Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between Longview Fibre Company and
Barclays Global Investors, National Association. The Trust is intended to be
tax exempt as described under Code section 501(a).
The Plan includes changes related to the Small Business Job Protection Act of
1996 and is intended to comply in operation therewith. To the extent the Plan
as stated is not sufficient to comply with such changes or is in conflict with
such changes, the Plan shall later be amended to comply with such changes or
correct the provisions found to be in conflict.
The Plan constitutes an amendment and restatement of the Longview Fibre Company
Branch Plant Hourly Employees' 401(k) Plan effective January 1, 1996, which was
originally established effective as of March 1, 1993, and its related trust
agreement.
The Longview Fibre Company Branch Plant Hourly Employees' 401(k) Plan and
Trust, as set forth in this document, is hereby amended and restated effective
as of January 1, 1996.
Date: as of December 31 , 1996 Longview Fibre Company
\s\ L.J. Holbrook
By: L.J. Holbrook
Title: SR VP Finance
The trust agreement set forth in those provisions of the Plan and Trust which
relate to the Trustee is hereby executed.
Date: 7/14 , 1997 Barclays Global Investors,
National Association
\s\ Dolores Upton
By: Dolores Upton
Title: Princiapl
Date: 7/14 ,1997 Barclays Global Investors,
National Association
\s\ Pete H. Sorensen
By: Pete H. Sorensen
Title: Managing Director
TABLE OF CONTENTS
1 DEFINITIONS 1
2 ELIGIBILITY 10
2.1 Eligibility 10
2.2 Ineligible Employees 10
2.3 Ineligible or Former Participants 10
3 PARTICIPANT CONTRIBUTIONS 11
3.1 Pre-Tax Contribution Election 11
3.2 After-Tax Contribution Election 11
3.3 Changing a Contribution Election 11
3.4 Revoking and Resuming a Contribution Election 11
3.5 Contribution Percentage Limits 12
3.6 Refunds When Contribution Dollar Limit Exceeded 12
3.7 Timing, Posting and Tax Considerations 13
4.1 Rollover Contributions 14
4.2 Transfers From and To Other Qualified Plans 14
5 EMPLOYER CONTRIBUTIONS 16
5.1 Match Contributions 16
6 ACCOUNTING 17
6.1 Individual Participant Accounting 17
6.2 Sweep Account is Transaction Account 17
6.3 Trade Date Accounting and Investment Cycle 17
6.4 Accounting for Investment Funds 17
6.5 Payment of Fees and Expenses 17
6.6 Accounting for Participant Loans 18
6.7 Error Correction 18
6.8 Participant Statements 19
6.9 Special Accounting During Conversion Period 19
6.10 Accounts for Alternate Payees 19
7 INVESTMENT FUNDS AND ELECTIONS 20
7.1 Investment Funds 20
7.2 Investment Fund Elections 20
7.3 Responsibility for Investment Choice 20
7.4 Default if No Election 21
7.5 Timing 21
7.6 Investment Fund Election Change Fees 21
8 VESTING & FORFEITURES 22
8.1 Fully Vested Accounts 22
8.2 Full Vesting Upon Certain Events 22
8.3 Vesting Schedule 22
8.4 Non-Vested Account Balances of Terminated Participants 22
8.5 Forfeitures Of Non-Vested Account Balances Upon Certain Events. 23
8.6 Use of Forfeiture Account Amounts 23
8.7 Rehired Employees 23
9 PARTICIPANT LOANS 25
9.1 Participant Loans Permitted 25
9.2 Limitations on Purpose of Participant Loan 25
9.3 Loan Application, Note and Security 25
9.4 Spousal Consent 25
9.5 Loan Approval 25
9.6 Loan Funding Limits, Account Sources and Funding Order 25
9.7 Maximum Number of Loans 26
9.8 Source and Timing of Loan Funding 26
9.9 Interest Rate 26
9.10 Loan Payment 27
9.11 Loan Payment Hierarchy 27
9.12 Repayment Suspension 27
9.13 Loan Default 27
9.14 Call Feature 27
10 IN-SERVICE WITHDRAWALS 28
10.1 In-Service Withdrawals Permitted 28
10.2 In-Service Withdrawal Application and Notice 28
10.3 Spousal Consent 28
10.4 In-Service Withdrawal Approval 28
10.5 Minimum Amount, Payment Form and Medium 28
10.6 Source and Timing of In-Service Withdrawal Funding 29
10.7 Hardship Withdrawals 29
10.8 After-Tax Account Withdrawals 32
10.9 Over Age 59.5 Withdrawals 32
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY CODE SECTION
401(a)(9) 33
11.1 Benefit Information, Notices and Election 33
11.2 Spousal Consent 33
11.3 Payment Form and Medium 34
11.4 Distribution of Small Amounts 34
11.5 Source and Timing of Distribution Funding 34
11.6 Deemed Distribution 35
11.7 Latest Commencement Permitted 35
11.8 Payment Within Life Expectancy 36
11.9 Incidental Benefit Rule 36
11.10 Payment to Beneficiary 36
11.11 Beneficiary Designation 37
12 ADP AND ACP TESTS 38
12.1 Contribution Limitation Definitions 38
12.2 ADP and ACP Tests 42
12.3 Correction of ADP and ACP Tests for
Plan Years Commencing Before January 1,1997 43
12.4 Correction of ADP and ACP Tests for
Plan Years Commencing After December 31, 1996 44
12.5 Multiple Use Test 45
12.6 Correction of Multiple Use Test 46
12.7 Adjustment for Investment Gain or Loss 46
12.8 Testing Responsibilities and Required Records 46
12.9 Separate Testing 46
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS 47
13.1 "Annual Addition" Defined 47
13.2 Maximum Annual Addition 47
13.3 Avoiding an Excess Annual Addition 47
13.4 Correcting an Excess Annual Addition 47
13.5 Correcting a Multiple Plan Excess 48
13.6 "Defined Benefit Fraction" Defined 48
13.7 "Defined Contribution Fraction" Defined 48
13.8 Combined Plan Limits and Correction 49
14 TOP HEAVY RULES 50
14.1 Top Heavy Definitions 50
14.2 Special Contributions 51
14.3 Special Vesting 52
14.4 Adjustment to Combined Limits for Different Plans 52
15 PLAN ADMINISTRATION 53
15.1 Plan Delineates Authority and Responsibility 53
15.2 Fiduciary Standards 53
15.3 Company is ERISA Plan Administrator 53
15.4 Administrator Duties 54
15.5 Advisors May be Retained 54
15.6 Delegation of Administrator Duties 55
15.7 Committee Operating Rules 55
16 MANAGEMENT OF INVESTMENTS 56
16.1 Trust Agreement 56
16.2 Investment Funds 56
16.3 Authority to Hold Cash 57
16.4 Trustee to Act Upon Instructions 57
16.5 Administrator Has Right to
Vote Registered Investment Company Shares 57
16.6 Custom Fund Investment Management 57
16.7 Master Custom Fund 58
16.8 Authority to Segregate Assets 58
16.9 Investment in Company Stock 58
16.10 Participants Have Right to Vote and Tender Company Stock 59
16.11 Registration and Disclosure for Company Stock 59
17 TRUST ADMINISTRATION 60
17.1 Trustee to Construe Trust 60
17.2 Trustee To Act As Owner of Trust Assets 60
17.3 United States Indicia of Ownership 60
17.4 Tax Withholding and Payment 61
17.5 Trust Accounting 61
17.6 Valuation of Certain Assets 61
17.7 Legal Counsel 62
17.8 Fees and Expenses 62
17.9 Trustee Duties and Limitations 62
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION 63
18.1 Plan Does Not Affect Employment Rights 63
18.2 Compliance With USERRA 63
18.3 Limited Return of Contributions 63
18.4 Assignment and Alienation 63
18.5 Facility of Payment 64
18.6 Reallocation of Lost Participant's Accounts 64
18.7 Claims Procedure 64
18.8 Construction 65
18.9 Jurisdiction and Severability 65
18.10 Indemnification by Employer 65
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION 66
19.1 Amendment 66
19.2 Merger 66
19.3 Divestitures 66
19.4 Plan Termination or Complete Discontinuance of Contributions 67
19.5 Amendment and Termination Procedures 67
19.6 Termination of Employer's Participation 68
19.7 Replacement of the Trustee 68
19.8 Final Settlement and Accounting of Trustee 68
APPENDIX A - INVESTMENT FUNDS 69
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES 70
APPENDIX C - LOAN INTEREST RATE 71
SCHEDULE A - MATCH CONTRIBUTIONS GRAPHIC COMMUNICATIONS UNION AND
DISTRICT COUNCIL NO. 2 - OAKLAND 72
SCHEDULE B - MATCH CONTRIBUTIONS GRAPHIC COMMUNICATIONS UNION AND
DISTRICT COUNCIL NO. 2 - TWIN FALLS 73
SCHEDULE C - MATCH CONTRIBUTIONS GRAPHIC COMMUNICATIONS UNION AND
DISTRICT COUNCIL NO. 2 - YAKIMA FALLS 74
1 DEFINITIONS
When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting for
a Participant's interest in the Plan. "Account" may refer to one or all of the
following accounts which have been created on behalf of a Participant to hold
amounts attributable to specific types of Contributions under the Plan and/or
amounts transferred to the Plan from the Salaried Plan and/or the Hourly Plan
on behalf of a Participant who was formerly eligible to participate in the
Salaried Plan and/or the Hourly Plan:
(a) "Pre-Tax Account". An account created to hold amounts
attributable to Pre-Tax Contributions and amounts transferred from the Salaried
Plan and the Hourly Plan designated as "Pre-Tax Account" amounts thereunder.
(b) "After-Tax Account". An account created to hold amounts
attributable to After-Tax Contributions and amounts transferred from the
Salaried Plan and the Hourly Plan designated as "After-Tax Account" amounts
thereunder.
(c) "Rollover Account". An account created to hold amounts
attributable to Rollover Contributions and amounts transferred from the
Salaried Plan and the Hourly Plan designated as "Rollover Account" amounts
thereunder.
(d) "Match Account". An account created to hold amounts
attributable to Match Contributions and amounts transferred from the Salaried
Plan and the Hourly Plan designated as "Match Account" amounts thereunder.
(e) "Prior Match Account". An account created to hold amounts
attributable to amounts transferred from the Salaried Plan (or from the Hourly
Plan if such amounts were originally transferred from the Salaried Plan to the
Hourly Plan) designated as Prior Match Account amounts thereunder.
1.2 "ACP" or "Average Contribution Percentage". The percentage
calculated in accordance with Section 12.1.
1.3 "Administrator". The Company or the Committee to whom the Company
has delegated all or a portion of the duties of the Administrator under the
Plan in accordance with Section 15.6 or any delegate of the Committee.
1.4 "ADP" or "Average Deferral Percentage". The percentage calculated
in accordance with Section 12.1.
1.5 "Alternate Payee". Any spouse, former spouse, child or other
dependent of a Participant recognized by a domestic relations order as having a
right to receive all, or a portion of, a Participant's benefits under the Plan.
1.6 "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.
1.7 "Board". The board of directors of the Company.
1.8 "Break in Service". The fifth anniversary (or sixth anniversary
if absence from employment was due to a Parental Leave) of the date on which a
Participant's employment ends.
1.9 "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.
1.10 "Committee". If applicable, the committee or committees appointed
by the Company to administer the Plan in accordance with Section 15.6.
1.11 "Company". Longview Fibre Company or any successor by merger,
purchase or otherwise.
1.12 "Company Stock". Shares of common stock of the Company, its
predecessor(s), or its successors or assigns, or any corporation with or into
which said corporation may be merged, consolidated or reorganized, or to which
a majority of its assets may be sold.
1.13 "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) or 457.
For purposes of determining benefits under the Plan, Compensation
is limited to $150,000, (as adjusted for the cost of living pursuant to Code
sections 401(a)(17) and 415(d)) per Plan Year. For Plan Years commencing
before January 1, 1997, for purposes of the preceding sentence, 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 purposes of determining HCEs and key employees and for Plan
Years commencing after December 31, 1997, for purposes of Section 13.2,
Compensation for the entire Plan Year shall be used. For purposes of
determining ADP and ACP, Compensation shall be limited to amounts paid to an
Eligible Employee while a Participant.
1.14 "Contribution". An amount contributed to the Plan by the Employer
or an Eligible Employee, and allocated by contribution type to Participants'
Accounts, as described in Section 1.1. Specific types of contribution include:
(a) "Pre-Tax Contribution". An amount contributed by an
eligible Participant in conjunction with his or her Code section 401(k) salary
deferral election which shall be treated as made by the Employer on an eligible
Participant's behalf.
(b) "After-Tax Contribution". An amount contributed by an
eligible Participant on an after-tax basis.
(c) "Rollover Contribution". An amount contributed by an
Eligible Employee which originated from another employer's or an Employer's
qualified plan.
(d) "Match Contribution". An amount contributed by the Employer
on an eligible Participant's behalf based upon the amount contributed by the
eligible Participant.
1.15 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre-Tax Contributions, which shall be $7,000 per calendar year
(as adjusted for 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)).
1.16 "Conversion Period". The period of converting the prior
accounting system of any plan and trust which is merged, in whole or in part,
into the Plan and Trust to the accounting system described in Section 6.
1.17 "Direct Rollover". An Eligible Rollover Distribution that is paid
directly to an Eligible Retirement Plan for the benefit of a Distributee.
1.18 "Disability". A Participant's total and permanent, mental or
physical disability resulting in termination of employment as evidenced by
presentation of medical evidence satisfactory to the Administrator.
1.19 "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.
1.20 "Effective Date". The date upon which the provisions of this
document become effective. This date is January 1, 1996, unless stated
otherwise. 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.
1.21 "Eligible Employee". An Employee of an Employer who is not
otherwise eligible for a Company sponsored profit sharing plan as described in
Code section 401(a), which includes a cash or deferred arrangement, as
described in Code section 401(k).
1.22 "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.
1.23 "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).
1.24 "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.
1.25 "Employer". The Company and any Related Company which adopts the
Plan with the approval of the Company.
1.26 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific ERISA section shall include such section,
any valid regulation promulgated thereunder, and any comparable provision of
any future legislation amending, supplementing or superseding such section.
1.27 "Forfeiture Account". A sub-account of the Transition Account
holding amounts forfeited by Terminated Participants, invested in interest
bearing deposits, money market type assets or funds, pending disposition as
provided in the Plan and Trust and as directed by the Administrator.
1.28 "HCE" or "Highly Compensated Employee". An Employee described as
a Highly Compensated Employee in Section 12.
1.29 "Hourly Plan". The Longview Fibre Company Hourly Employees 401(k)
Plan, a qualified profit sharing plan including a cash or deferred arrangement,
originally established June 3, 1985.
1.30 "Hour of Service". Each hour for which an Employee is entitled
to:
(a) payment for the performance of duties for any Related
Company; or
(b) 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).
The crediting of hours shall be in accordance with Department of
Labor regulation sections 2530.200b-2 and 3. 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 described in Code section 414(n)(4)(B) shall
be included in the determination of his or her Hours of Service for eligibilty
and/or vesting purposes.
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.
1.31 "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.
1.32 "Investment Fund" or "Fund". An investment fund as described in
Section 16.2. The Investment Funds authorized by the Administrator to be
offered under the Plan as of the Effective Date are set forth in Appendix A.
1.33 "Leased Employee". An individual not otherwise an Employee, who,
pursuant to an agreement between a Related Company and a leasing organization,
has performed, on a substantially full-time basis, for a period of at least 12
months, services of any type historically performed by Employees in the
business field of the Related Company, unless:
(a) the individual is covered by a money purchase pension plan
maintained by the leasing organization and meeting the requirements of Code
section 414(n)(5)(B), and
(b) such individuals do not constitute more than 20% of all Non-
Highly Compensated Employees of all Related Companies within the meaning of
Code section 414(n)(5)(C)(ii).
For Plan Years commencing after December 31, 1996, "services under
the primary direction of the Related Company" shall be substituted for the
preceding reference to "services of any type historically performed by
Employees in the business field of the Related Company".
1.34 "Leave of Absence". A period during which an individual is deemed
to be an Employee, but is absent from active employment, provided that the
absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed
forces and the individual returns to active employment within the period during
which he or she retains employment rights under federal law.
1.35 "Loan Account". The record maintained for purposes of accounting
for a Participant's loan and payments of principal and interest thereon.
1.36 "NHCE" or "Non-Highly Compensated Employee". An Employee
described as a Non-Highly Compensated Employee in Section 12.
1.37 "Normal Retirement Date". The date of a Participant's 65th
birthday.
1.38 "Owner". A person with an ownership interest in the capital,
profits, outstanding stock or voting power of a Related Company within the
meaning of Code section 318 or 416 (which exclude indirect ownership through a
qualified plan).
1.39 "Parental Leave". The period of absence from work by reason of
pregnancy, the birth of an Employee's child, the placement of a child with the
Employee in connection with the child's adoption, or caring for such child
immediately after birth or placement as described in Code section 410(a)(5)(E).
1.40 "Participant". The Plan status of an Eligible Employee after he
or she completes 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 that he or she shall not be considered a Participant for
purposes of provisions related to Contributions, other than a Rollover
Contribution, until he or she completes the eligibility requirements as
described in Section 2.1. A Participant's participation continues until his or
her employment with all Related Companies ends and his or her Account is
distributed or forfeited.
1.41 "Pay". All cash compensation paid to an Eligible Employee by an
Employer while a Participant during the current period. Pay excludes
reimbursements or other expense allowances, cash and non-cash fringe benefits,
moving expenses, deferred compensation and welfare benefits.
Pay is neither increased by any salary credit or decreased by any
salary reduction pursuant to Code sections 125 or 402(e)(3). Pay is limited to
$150,000 (as adjusted for the cost of living pursuant to Code sections
401(a)(17) and 415(d)) per Plan Year.
1.42 "Period of Employment". The period beginning on the date an
Employee first performs an hour of service and ending on the date his or her
employment ends. Employment ends on the date the Employee quits, retires, is
discharged, dies or (if earlier) the first anniversary of his or her absence
for any other reason. The period of absence starting with the date an
Employee's employment temporarily ends and ending on the date he or she is
subsequently reemployed is (1) included in his or her Period of Employment if
the period of absence does not exceed one year, and (2) excluded if such period
exceeds one year.
An Employee's service described in Code section 414(n)(4)(B) shall
be included in the determination of his or her Period of Employment for
eligibilty and/or vesting purposes.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Period of Employment for
eligibility and/or vesting purposes if (1) the Company directs that credit for
such service be granted, or (2) a qualified plan of the predecessor or acquired
company is subsequently maintained by any Employer or Related Company.
1.43 "Plan". The Longview Fibre Company Branch Plant Hourly Employees'
401(k) Plan set forth in this document, as from time to time amended.
1.44 "Plan Year". The annual accounting period of the Plan and Trust
which ends on each December 31.
1.45 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the meaning of
Code section 414(p).
1.46 "Related Company". With respect to any Employer, that Employer
and any corporation, trade or business which is, together with that Employer, a
member of the same controlled group of corporations, a trade or business under
common control, or an affiliated service group within the meaning of Code
sections 414(b), (c), (m) or (o), except that for purposes of Section 13
"within the meaning of Code sections 414(b), (c), (m) or (o), as modified by
Code section 415(h)" shall be substituted for the preceding reference to
"within the meaning of Code section 414(b), (c), (m) or (o)".
1.47 "Salaried Plan". The Longview Fibre Company Salaried Savings Plan
with 401(k) Provisions, a qualified profit sharing plan including a cash or
deferred arrangement, originally established June 1, 1977.
1.48 "Settlement Date". For each Trade Date, the Trustee's next
business day.
1.49 "Spousal Consent". The written consent given by a spouse to a
Participant's Beneficiary designation. The spouse's consent must acknowledge
the effect on the spouse of the Participant's designation, and be duly
witnessed by a Plan representative or notary public. Spousal Consent shall be
valid only with respect to the spouse who signs the Spousal Consent and only
for the particular choice made by the Participant which requires Spousal
Consent. A Participant may revoke (without Spousal Consent) a prior
designation that required Spousal Consent at any time before payments begin.
Spousal Consent also means a determination by the Administrator that there is
no spouse, the spouse cannot be located, or such other circumstances as may be
established by applicable law.
1.50 "Sweep Account". The subsidiary Account for each Participant
through which all transactions are processed, which is invested in interest
bearing deposits, money market type assets or funds.
1.51 "Sweep Date". The cut off date and time for receiving
instructions for transactions to be processed on the next Trade Date.
1.52 "Taxable Income". Compensation in the amount reported by the
Employer or a Related Company as "Wages, tips, other compensation" on Form W-2,
or any successor method of reporting under Code section 6041(d).
1.53 "Terminated Participant". A Participant who is not an Employee
and for whom the Administrator has reported to the Trustee that the
Participant's employment has terminated with all Related Companies.
1.54 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Funds are traded.
1.55 "Transition Account". An account consisting of the sum of the
sub-accounts of individual non-vested Account balances of Terminated
Participants and the Forfeiture Account.
1.56 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan and holds
the Plan assets which are comprised of the aggregate of Participants' Accounts,
any unallocated funds invested in interest bearing deposits, money market type
assets or funds pending allocation to Participants' Accounts or disbursement to
pay Plan fees and expenses and the Forfeiture Account.
1.57 "Trustee". Barclays Global Investors, National Association, known
as BZW Barclays Global Investors, National Association prior to October 15,
1996.
1.58 "USERRA". The Uniformed Services Employment and Reemployment
Rights Act of 1994.
1.59 "Year of Vesting Service". A 12 month Period of Employment.
Years of Vesting Service shall include service credited prior to
March 1, 1993.
2 ELIGIBILITY
2.1 Eligibility
All Participants as of January 1, 1996 shall continue their
eligibility to participate. Each other Eligible Employee shall become a
Participant on the first day of the next payroll period after the date he or
she completes a 12 month eligibility period in which he or she is credited with
at least 870 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.
3 PARTICIPANT CONTRIBUTIONS
3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
reduce his or her Pay by an amount which does not exceed the Contribution
Dollar Limit, 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 comparable contributions to all other plans, contracts or
arrangements of all Related Companies exceed the Contribution Dollar Limit for
the Employee's taxable year beginning in the Plan Year.
3.2 After-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
make After-Tax Contributions to the Plan in an amount which does not exceed the
limits described in the Contribution Percentage Limits paragraph of this
Section 3. The election shall be made as a whole percentage of Pay in such
manner and with such advance notice as prescribed by the Administrator.
3.3 Changing a Contribution Election
A Participant who is an Eligible Employee may change 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 who has changed his or
her Contribution election shall be required to wait at least six months before
he or she may again change his or her Contribution election.
Participants' Contribution election percentages shall
automatically apply to Pay increases or decreases.
3.4 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 revocation shall be effective with the first payroll
paid after such date.
A Participant who has revoked his or her Contribution election
shall be required to wait at least six months before he or she may resume
Contributions to the Plan. Thereafter, a Participant who is an Eligible
Employee may resume Contributions by making a new 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.
3.5 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending the Plan and Trust, the separate
minimum, if applicable, and maximum Pre-Tax and After-Tax Contribution
percentages, and/or a maximum combined Pre-Tax and After-Tax Contribution
percentage, prospectively or retrospectively (for the current Plan Year), for
all Participants. In addition, the Administrator may establish any lower
percentage limits for Highly Compensated Employees as it deems necessary to
satisfy the tests described in Section 12. As of the Effective Date, the
minimum Pre-Tax and After-Tax Contribution percentages are 1%, and the maximum
Contribution percentages are:
Contribution
Type
Highly
Compensated
Employees
All Other
Participants
Pre-Tax
After-Tax
Sum of Both
19%
19%
19%
19%
19%
19%
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.
3.6 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar year
to the Plan and comparable contributions to any other qualified defined
contribution plan in excess of the Contribution Dollar Limit may notify the
Administrator in writing by the following March 1 (or as late as April 14 if
allowed by the Administrator) that an excess has occurred. 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 calendar year and the date of distribution. The excess amounts
shall first be taken from unmatched Pre-Tax Contributions and then from matched
Pre-Tax Contributions. Any Match Contributions attributable to refunded excess
Pre-Tax Contributions as described in this Section shall be forfeited and used
as described in Section 8.6.
3.7 Timing, Posting and Tax Considerationss
Participants' Contributions, other than Rollover Contributions,
may only be made through payroll deduction. Such amounts shall be paid to the
Trustee in cash and posted to each Participant's Account(s) as soon as such
amounts can reasonably be separated from the Employer's general assets and
balanced against the specific amount made on behalf of each Participant. In no
event, however, shall such amounts be paid to the Trustee more than 90 days
after the date amounts are deducted from a Participant's Pay, except that
effective February 3, 1997, "15 business days following the end of the month
that includes the date amounts are deducted from a Participant's Pay (or as
that maximum period may be otherwise extended by ERISA)" shall be substituted
for the preceding reference to "90 days after the date amounts are deducted
from a Participant's Pay". Pre-Tax Contributions shall be treated as
Contributions made by an Employer in determining tax deductions under Code
section 404(a).
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
4.1 Rollover Contributions
The Administrator may authorize the Trustee to accept a Rollover
Contribution in cash, directly from an Eligible Employee or as a Direct
Rollover from another qualified plan on behalf of the Eligible Employee, even
if he or she is not yet a Participant. The Employee shall be responsible for
furnishing satisfactory evidence, in such manner as prescribed by the
Administrator, that the amount qualifies as a rollover contribution, within the
meaning of Code section 402(c) or 408(d)(3)(A)(ii). Such amounts received
directly from an Eligible Employee must be paid to the Trustee in cash within
60 days after the date received by the Eligible Employee from a qualified plan
or conduit individual retirement account. Rollover Contributions shall be
posted to the Eligible Employee's Rollover Account as of the date received by
the Trustee.
If the Administrator later determines that an amount contributed
pursuant to the above paragraph did not in fact qualify as a rollover
contribution, within the meaning of Code section 402(c) or 408(d)(3)(A)(ii),
the balance credited to the Participant's Rollover Account shall immediately be
(1) segregated from all other Plan assets, (2) treated as a nonqualified trust
established by and for the benefit of the Participant, and (3) distributed to
the Participant. Any such amount shall be deemed never to have been a part of
the Plan.
4.2 Transfers From and To Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in
cash or in-kind directly from another qualified plan or transfer assets in cash
or in-kind directly to another qualified plan; provided that receipt of a
transfer should not be directed if:
(a) any amounts are not exempted by Code section 401(a)(11)(B)
from the annuity requirements of Code section 417 unless the Plan complies with
such requirements; or
(b) any amounts include benefits protected by Code section
411(d)(6) which would not be preserved under applicable Plan provisions.
The Trustee may refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable; or
(b) instructions for posting amounts to Participants' Accounts
are incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
Such transfers from and to other qualified plans may be for the
purpose of transferring assets from the Salaried Plan and/or the Hourly Plan
representing assets attributable to the vested and non-vested account balances
of participants thereunder who are no longer eligible to participate in the
Salaried Plan and/or the Hourly Plan and are eligible to participate in the
Plan (which amounts shall then become subject to the Plan's vesting schedule
which schedule is the same as the vesting schedule in the Salaried Plan and the
Hourly Plan) or for the purpose of transferring assets from the Plan to the
Salaried Plan and/or the Hourly Plan representing assets attributable to the
vested and non-vested Account balances of Participants hereunder who are no
longer eligible to participate in the Plan and who are eligible to participate
in the Salaried Plan or the Hourly Plan (which amounts shall then become
subject to the Salaried Plan's or the Hourly Plan's vesting schedule,
respectively, each of which is the same as the vesting schedule in the Plan).
5 EMPLOYER CONTRIBUTIONS
5.1 Match Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall make Match
Contributions, as described in the following Allocation Method paragraph, on
behalf of each Participant who contributed during the period and whose terms
and conditions of employment are governed by a collective bargaining agreement
which provides for Match Contributions. The related provisions of such
agreements are set forth in the attached Schedules.
(b) Allocation Method. The Match Contributions (including any
Forfeiture Account amounts applied as Match Contributions in accordance with
Section 8.6)shall be in an amount determined by and allocated in accordance
with the governing collective bargaining agreement. The related provisions of
such agreements are set forth in the attached Schedules.
(c) Timing, Medium and Posting. The Employer shall make each
period's Match Contribution in cash as soon as administratively feasible, and
for purposes of deducting such Contribution, not later than the Employer's
federal tax filing date, including extensions. The Trustee shall post such
amount to each Participant's Match Account once the total Contribution received
has been balanced against the specific amount to be credited to each
Participant's Match Account.
6 ACCOUNTING
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts for
each Participant in order to reflect transactions both by type of Account and
investment medium. Financial transactions shall be accounted for at the
individual Account level by posting each transaction to the appropriate Account
of each affected Participant. Participant Account values shall be maintained
in shares for the Investment Funds and in dollars for the Sweep and Loan
Accounts. At any point in time, the Account value shall be determined using
the most recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected Participant's Sweep
Account. Any amount held in the Sweep Account shall be credited with interest
up until the date on which it is removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade
Date. For any transaction to be processed as of a Trade Date, the Trustee must
receive instructions for the transaction by the Sweep Date. Such instructions
shall apply to amounts held in the Account on that Sweep Date. Financial
transactions of the Investment Funds shall be posted to Participants' Accounts
as of the Trade Date, based upon the Trade Date values provided by the Trustee,
and settled on the Settlement Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in shares.
The Trustee is responsible for determining the share values of each Investment
Fund as of each Trade Date. To the extent an Investment Fund is comprised of
collective investment funds 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 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 or who are not Beneficiaries, unless doing so would result in
discrimination.
(a) Account Maintenance: Account maintenance fees and expenses,
may include but are not limited to, administrative, Trustee, government annual
report preparation, audit, legal, nondiscrimination testing and fees for any
other special services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee shall reduce a
Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but
are not limited to, periodic installment payment, Investment Fund election
change and loan fees. Transaction fees shall be charged to the Participant's
Account involved in the transaction provided that no fee shall reduce a
Participant's Account balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds shall be charged
at the Investment Fund level and reflected in the net gain or loss of each
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 or charged at the Investment Fund level and reflected in
the net gain or loss of each Fund) and those that shall be paid by the Employer
is set forth in Appendix B and may be changed from time to time by the
Administrator, in writing, without the necessity of amending the Plan and
Trust.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from the Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account of the
Participant and accounted for in dollars as an earmarked asset of the borrowing
Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account balance with
the amount that would be credited to the Account had no error or omission been
made. Funds necessary for any such restoration shall be provided through
payment made by the Employer, or by the Trustee to the extent the error or
omission is attributable to actions or inactions of the Trustee, or if the
restoration involves an Account holding amounts contributed by an Employer, the
Administrator may direct the Trustee to use amounts from the Forfeiture
Account.
6.8 Participant Statements
The Administrator shall provide Participants with statements of
their Accounts as soon after the end of each quarter of the Plan Year as
administratively feasible. With regard to a Terminated Participant, such
statements shall not include the portion, if any, of his or her non-vested
Account balance maintained in the Transition Account.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during any Conversion Period.
This includes, but is not limited to, the method for allocating net investment
gains or losses and the extent, if any, to which contributions received by and
distributions paid from the Trust during this period share in such allocation.
6.10 Accounts for Alternate Payees
A separate Account shall be established for an Alternate Payee
entitled to any portion of a Participant's Account under a QDRO as of the date
and in accordance with the directions specified in the QDRO. In addition, a
separate Account may be established during the period of time the
Administrator, a court of competent jurisdiction or other appropriate person is
determining whether a domestic relations order qualifies as a QDRO. Such a
separate Account shall be valued and accounted for in the same manner as any
other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an Alternate Payee may be
distributed, in a form as permissible under Section 11, 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. The Alternate Payee
shall be provided the notice prescribed by Code section 402(f).
(b) Participant Loans. Except to the extent required by law, an
Alternate Payee, on whose behalf a separate Account has been established, shall
not be entitled to borrow from such Account. If a QDRO specifies that the
Alternate Payee is entitled to any portion of the Account of a Participant who
has an outstanding loan balance, all outstanding loans shall generally continue
to be held in the Participant's Account and shall not be divided between the
Participant's and Alternate Payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an Alternate Payee and has not yet been distributed,
the Alternate Payee may direct the investment of such Account in the same
manner as if he or she were a Participant.
7 INVESTMENT FUNDS AND ELECTIONS
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts and any
unallocated funds invested in interest bearing deposits, money market type
assets or funds, pending allocation to Participants' Accounts or disbursement
to pay Plan fees and expenses and the Transition Account, the Trust shall be
maintained in various Investment Funds. The Administrator shall select the
Investment Funds offered to Participants and may change the number or
composition of the Investment Funds, subject to the terms and conditions agreed
to with the Trustee. As of the Effective Date, a list of the Investment Funds
offered under the Plan is set forth in Appendix A, and may be changed from time
to time by the Administrator, in writing, and as agreed to by the Trustee,
without the necessity of amending the Plan and Trust.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or her
Accounts. Notwithstanding, a Terminated Participant shall not direct the
investment of his or her non-vested Account balance. A Terminated
Participant's non-vested Account balance shall be held in the Transition
Account and invested in an interest bearing deposit, money market type asset or
fund.
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 any Conversion Period, 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, as of the Effective Date is set forth in Appendix A, and may
be changed from time to time by the Administrator, in writing, without the
necessity of amending the Plan and Trust.
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 Effective Date is set forth in Appendix A,
and may be changed from time to time by the Administrator, in writing, without
the necessity of amending the Plan and Trust.
7.5 Timing
A Participant shall make his or her initial investment election upon
becoming a Participant and may change his or her investment 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 shall
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.
8 VESTING & FORFEITURES
8.1 Fully Vested Accounts
A Participant shall be fully vested in these Accounts at all
times:
Pre-Tax Account
After-Tax Account
Rollover Account
Prior Match Account
8.2 Full Vesting Upon Certain Events
A Participant's entire Account shall become fully vested once he
or she has attained his or her Normal Retirement Date as an Employee or upon
his or her terminating employment with all Related Companies due to his or her
Disability or death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's Match
Account shall become vested in accordance with the following schedule:
Years of Vesting
Service
Vested
Percentage
Less than 5
5 or more
0%
100%
If this vesting schedule is changed, the vested percentage for
each Participant shall not be less than his or her vested percentage determined
as of the last day prior to this change, and for any Participant with at least
three Years of Vesting Service when the schedule is changed, vesting shall be
determined using the more favorable vesting schedule.
8.4 Non-Vested Account Balances of Terminated Participants
The non-vested balance of a Terminated Participant's Account shall
be deposited to the Transition Account as of the Settlement Date following the
Sweep Date on which the Administrator has reported to the Trustee that the
Participant's employment has terminated with all Related Companies and shall be
maintained as a sub-account in the Transition Account. The Trustee shall
maintain records necessary to identify each Terminated Participant's non-vested
Account balance at least annually and as of the earlier of the date the
Administrator reports to the Trustee that the Terminated Participant is rehired
or the date the Terminated Participant incurs a forfeitable event.
If a Terminated Participant is rehired before incurring a
forfeitable event, his or her non-vested Account balance shall no longer be
maintained as a sub-account in the Transition Account and shall be recombined
with his or her remaining Account balance. The non-vested Account balance is
credited to the Investment Funds based upon the Participant's current
investment elections for new Contributions.
8.5 Forfeitures Of Non-Vested Account Balances Upon Certain Events
A Terminated Participant shall forfeit his or her non-vested
Account balance as soon as administratively feasible after the earliest of the
date he or she:
(a) is determined to be a Terminated Participant if his or her
vested Account balance is zero;
(b) receives a complete distribution of his or her vested
Account balance; or
(c) incurs a Break in Service.
Forfeitures from all Accounts subject to vesting shall be
transferred to and maintained in the Forfeiture Account. At any time, the
balance of the Forfeiture Account shall equal the total of the Transition
Account less any non-vested amounts maintained as sub-accounts in the
Transition Account on behalf of Terminated Participants, not yet forfeited.
8.6 Use of Forfeiture Account Amounts
Forfeiture Account amounts shall be utilized to restore Accounts,
to pay Plan fees and expenses and to reduce Match Contributions as directed by
the Administrator.
8.7 Rehired Employees
(a) Service Restoration. If a former Employee is rehired before
incurring a Break in Service, or after incurring a Break in Service if (1) he
or she had a vested interest in his or her Accounts derived from Contributions
made by an Employer or (2) the length of his or her break does not equal or
exceed his or her pre-break service, all Periods of Employment credited when
his or her employment last terminated shall be counted in determining his or
her vested interest. Otherwise, his or her Periods of Employment credited when
his or her employment last terminated shall not be counted in determining his
or her vested interest.
(b) Account Restoration. If a former Employee is rehired before
he or she incurs a Break in Service, but after he or she incurs a forfeitable
event as described in this Section, the amount forfeited after his or her
employment last terminated shall be restored to his or her Account and such
Employee shall be deemed to have repaid any vested portion of his or her
Account from which such amount was forfeited. The restoration shall include the
interest earned on such amount from the date deposited to the Transition
Account until the date the restoration amount is restored. The amount shall
come from the Forfeiture Account to the extent possible, and any additional
amount needed shall be contributed by the Employer. The vested interest in his
or her restored Account shall then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current Account balance
D = amount previously distributed from Account and deemed
repaid
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 Limitations on Purpose of Participant Loan
A Participant may only borrow to satisfy a financial need
determined to be a hardship as defined by the Administrator and communicated to
Participants.
9.3 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.
9.4 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to borrow from his or her Account under the Plan.
9.5 Loan Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for determining that
a loan request conforms to the requirements described in this Section and
granting such request.
9.6 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as
determined as of the Sweep Date the loan is processed and shall be funded from
the Participant's Accounts as follows:
(a) Plan Minimum Limit. The minimum amount for any loan is
$1,000.
(b) Plan Maximum Limit, Account Sources and Funding Order.
Subject to the legal limit described in (c) below, the maximum a Participant
may borrow, including the outstanding balance of existing Plan loans, is 50% of
the following of the Participant's Accounts which are fully vested in the
priority order as follows:
Pre-Tax Account
Match Account
Prior Match Account
Rollover Account
After-Tax Account
(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 the Plan to the extent it
would decrease the maximum loan amount.
9.7 Maximum Number of Loans
A Participant may have only one loan outstanding at any given
time.
9.8 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets of
his or her own Account. The available assets shall be determined first by
Account type and then within each Account used for funding a loan, amounts
shall first be taken from the Sweep Account and then taken by Investment Fund
in direct proportion to the market value of the Participant's interest in each
Investment Fund as of the Trade Date on which the loan is processed.
The loan shall be funded on the Settlement Date following the
Trade Date as of which the loan is processed. The Trustee shall make payment
to the Participant as soon thereafter as administratively feasible.
9.9 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 by the Administrator, in writing, without the necessity of amending the
Plan and Trust.
9.10 Loan Payment
Substantially level amortization shall be required of each loan
with payments made at least monthly, generally through payroll deduction.
Loans may be prepaid in full or in part at any time. The Participant may
choose the loan repayment period, not to exceed 5 years, except that the
repayment period may be for any period not to exceed 15 years if the purpose of
the loan is to acquire the Participant's principal residence.
9.11 Loan Payment Hierarchy
Loan principal payments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan interest
shall be credited to the Participant's Accounts in direct proportion to the
principal payment. Loan payments are credited to the Investment Funds based
upon the Participant's current investment election for new Contributions.
9.12 Repayment Suspension
The Administrator may agree to a suspension of loan payments for
up to 12 months for a Participant who is on a Leave of Absence without pay.
During the suspension period interest shall continue to accrue on the
outstanding loan balance. At the expiration of the suspension period all
outstanding loan payments and accrued interest thereon shall be due unless
otherwise agreed upon by the Administrator.
9.13 Loan Default
A loan is treated as a default if a scheduled loan payment is not
made at the time required. A Participant shall then have a grace period to
cure the default before it becomes final. Such grace period shall be for a
period that does not extend beyond the last day of the calendar quarter
following the calendar quarter in which the scheduled loan payment was due or
such lessor or greater maximum period as may later be authorized by Code
section 72(p).
In the event of default, the Administrator may direct the Trustee
to report the outstanding principal balance of the loan and accrued interest
thereon 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.
9.14 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.
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 Code section 401(a)(9) pursuant to the terms and conditions set
forth in Section 11.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such
manner and with such advance notice as prescribed by the Administrator. The
Participant shall be provided the notice prescribed by Code section 402(f).
Code sections 401(a)(11) and 417 do not apply to in-service
withdrawals under the Plan. An in-service withdrawal may therefore commence
less than 30 days after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the
right to a period of at least 30 days after receipt of such notice to consider
his or her option to elect or not elect a Direct Rollover for all or a portion,
if any, of his or her in-service withdrawal which shall constitute an Eligible
Rollover Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of his or her in-service
withdrawal which shall 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.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order
to receive an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for determining 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 in-service withdrawal.
The form of payment for an in-service withdrawal shall be a single
lump sum and payment shall be made in cash. Notwithstanding, to preserve
benefits protected by Code section 411(d)(6), a Participant for whom amounts
were transferred to the Plan from the Salaried Plan (or from the Hourly Plan if
such amounts were originally transferred from the Salaried Plan to the Hourly
Plan), designated as After-Tax Account amounts thereunder, may, with regard to
an After-Tax Account withdrawal, elect that payment be made in the form of
whole shares of Company Stock and cash in lieu of fractional shares to the
extent that such After-Tax Account withdrawal is funded from the Company Stock
Fund.
With regard to the portion of an in-service withdrawal
representing an Eligible Rollover Distribution, a Participant may elect a
Direct Rollover for all or a portion of such amount.
10.6 Source and Timing of In-Service Withdrawal Funding10
An in-service withdrawal to a Participant shall be made solely
from the assets of his or her own Account and shall be based on the Account
values as of the Trade Date the in-service withdrawal is processed. The
available assets shall be determined first by Account type and then within each
Account used for funding an in-service withdrawal, amounts shall first be taken
from the Sweep Account and then taken by Investment Fund in direct proportion
to the market value of the Participant's interest in each Investment Fund
(which excludes his or her Loan Account balance) as of the Trade Date on which
the in-service withdrawal is processed.
The in-service withdrawal shall be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal is processed.
The Trustee shall make payment as soon thereafter as administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request
the withdrawal of up to the amount necessary to satisfy a financial need
including amounts necessary to pay any federal, state or local income taxes or
penalties reasonably anticipated to result from the withdrawal. Only requests
for withdrawals (1) on account of a Participant's "Deemed Financial Need" or
"Demonstrated Financial Need", and (2) which are "Deemed Necessary" or
"Demonstrated as Necessary" to satisfy the financial need shall be approved.
(b) "Deemed Financial Need". An immediate and heavy financial
need relating to:
(1) the payment of 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, related
educational fees and room and board for up to the next 12 months of post-
secondary education for the Employee, his or her spouse or dependents;
(4) the payment of funeral expenses of an Employee's
family member;
(5) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through eviction or foreclosure
on the mortgage; or
(6) any other circumstance specifically permitted under
Code section 401(k)(2)(B)(i)(IV).
(c) "Demonstrated Financial Need". A determination by the
Administrator that an immediate and heavy financial need exists relating to:
(1) a sudden and unexpected illness or accident to the
Employee or his or her spouse or dependents;
(2) the loss, due to casualty, of the Employee's property
other than nonessential property (such as a boat or a television); or
(3) some other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Employee.
(d) "Deemed Necessary". A withdrawal is "deemed necessary" to
satisfy the financial need only if the withdrawal amount does not exceed the
financial need and all of these conditions are met:
(1) the Employee has obtained all possible withdrawals
(other than hardship withdrawals) and nontaxable loans available from the Plan
and all other plans maintained by Related Companies;
(2) the Administrator shall suspend the Employee from
making any contributions to the Plan and all other qualified and nonqualified
plans of deferred compensation and all stock option or stock purchase plans
maintained by Related Companies for 12 months from the date the withdrawal
payment is made; and
(3) the Administrator shall reduce the Contribution
Dollar Limit for the Employee with regard to the Plan and all other plans
maintained by Related Companies, for the calendar year next following the
calendar year of the withdrawal by the amount of the Employee's Pre-Tax
Contributions for the calendar year of the withdrawal.
(e) "Demonstrated as Necessary". A withdrawal is "demonstrated
as necessary" to satisfy the financial need only if the withdrawal amount does
not exceed the financial need, the Employee represents that he or she is unable
to relieve the financial need (without causing further hardship) by doing any
or all of the following and the Administrator does not have actual knowledge to
the contrary:
(1) receiving any reimbursement or compensation from
insurance or otherwise;
(2) reasonably liquidating his or her assets and the
assets of his or her spouse or minor children that are reasonably available to
the Employee;
(3) ceasing his or her contributions to the Plan;
(4) obtaining other withdrawals and nontaxable loans
available from the Plan, plans maintained by Related Companies and plans
maintained by any other employer; and
(5) obtaining loans from commercial sources on reasonable
commercial terms.
(f) Account Sources and Funding Order. All available amounts
must first be withdrawn from a Participant's After-Tax Account. The remaining
withdrawal amount shall come from the following of the Participant's fully
vested Accounts, in the priority order as follows:
Rollover Account
Match Account
Prior Match 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
Account after December 31, 1988.
(g) Permitted Frequency. There is no restriction on the number
of Hardship withdrawals permitted to a Participant
(h) Suspension from Further Contributions. Upon making a
Hardship withdrawal, a Participant may not make additional Pre-Tax or After-Tax
Contributions (or additional contributions to all other qualified and
nonqualified plans of deferred compensation and all stock option or stock
purchase plans maintained by Related Companies), if his or her Hardship
withdrawal was "Deemed Necessary", for a period of 12 months from the date the
withdrawal payment is made.
10.8 After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee may withdraw
from the Accounts listed in paragraph (b) below.
(b) Account Sources and Funding Order. The withdrawal amount
shall come from a Participant's After-Tax Account.
(c) Permitted Frequency. There is no restriction on the number
of After-Tax Account withdrawals permitted to a Participant.
(d) Suspension from Further Contributions. Upon making an
After-Tax Account withdrawal, a Participant may not make additional After-Tax
Contributions for a period of six months from the date the withdrawal payment
is made.
10.9 Over Age 59.5 Withdrawals
(a) Requirements. A Participant who is an Employee and over age
59.5 may withdraw from the Accounts listed in paragraph (b) below.
(b) Account Sources and Funding Order. The withdrawal amount
shall come from the following of the Participant's fully vested Accounts, in
the priority order as follows, except that the Participant may instead choose
to have amounts taken from his or her After-Tax Account first:
Rollover Account
Pre-Tax Account
Match Account
Prior Match Account
After-Tax Account
(c) Permitted Frequency. There is no restriction on the number
of Over Age 59.5 withdrawals permitted to a Participant.
(d) Suspension from Further Contributions. An Over Age 59.5
withdrawal shall not affect a Participant's ability to make or be eligible to
receive further Contributions.
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY CODE SECTION 401(a)(9)
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
sections 402(f) and 411(a)(11). Subject to the other requirements of this
Section, a Participant, or his or her Beneficiary in the case of his or her
death, may elect, in such manner and with such advance notice as prescribed by
the Administrator, to have his or her vested Account balance paid to him or her
beginning upon any Settlement Date following the Participant's termination of
employment with all Related Companies or, if earlier, at the time required by
Code section 401(a)(9) as set forth in Section 11.7.
Notwithstanding, if a Participant's termination of employment with
all Related Companies does not constitute a separation from service for
purposes of Code section 401(k)(2)(B)(i)(I) or otherwise constitute an event
set forth under Code section 401(k)(A)(10)(ii) or (iii) as described in Section
19.3, the portion of a Participant's Account subject to the distribution rules
of Code section 401(k) may not be distributed until such time as he or she
separates from service for purposes of Code section 401(k)(2)(B)(i)(I) or, if
earlier, upon such other event as described in Code section 401(k)(2)(B) and as
provided for in the Plan.
Code sections 401(a)(11) and 417 do not apply to distributions
under the Plan. A distribution may therefore 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 shall constitute an
Eligible Rollover Distribution; and
(b) the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a portion, if any, of
his or her distribution which shall 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 not required to obtain Spousal Consent in order
to receive a distribution under the Plan.
11.3 Payment Form and Medium
Except to the extent otherwise provided by Section 11.4, a
Participant may elect to be paid in any of these forms:
(a) a single lump sum,
(b) partial payment, limited to four per Plan Year, or
(c) quarterly periodic installments over a period not to exceed
the life expectancy of the Participant and his or her Beneficiary.
Distributions shall be made in cash, except to the extent a
distribution consists of a loan call as described in Section 9. Alternatively,
a Participant may elect that a single lump sum payment be made in the form of
whole shares of Company Stock and cash in lieu of fractional shares to the
extent invested in the Company Stock Fund, except that with regard to a
Participant for whom amounts were transferred to the Plan from the Salaried
Plan or the Hourly Plan, the preceding reference to "a single lump sum" shall
not apply.
With regard to the portion of a distribution representing an
Eligible Rollover Distribution, a Distributee may elect a Direct Rollover for
all or a portion of such amount.
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related Companies
ends, the Participant's vested Account balance is $3,500 or less, and if at the
time of any prior in-service withdrawal or distribution the Participant's
vested Account balance did not exceed $3,500, the Participant's benefit shall
be paid as a single lump sum as soon as administratively feasible in accordance
with procedures prescribed by the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the
assets of his or her own Account and shall be based on the Account values as of
the Trade Date the distribution is processed. The available assets shall be
determined first by Account type and then within each Account used for funding
a distribution, amounts shall first be taken from the Sweep Account and then
taken by Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund as of the Trade Date on which
the distribution is processed.
The distribution shall be funded on the Settlement Date following
the Trade Date as of which the distribution is processed. The Trustee shall
make payment as soon thereafter as administratively feasible.
11.6 Deemed Distribution
For purposes of Section 8.5, if at the time a Participant is
determined to be a Terminated Participant, his or her vested Account balance is
zero, his or her vested Account balance shall be deemed distributed as of the
Settlement Date following the Sweep Date on which he or she is determined to be
a Terminated Participant.
11.7 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments shall begin not later
than 60 days after the end of the Plan Year in which he or she attains his or
her Normal Retirement Date or retires, whichever is later. However, if the
amount of the payment or the location of the Participant (after a reasonable
search) cannot be ascertained by that deadline, payment shall be made no later
than 60 days after the earliest date on which such amount or location is
ascertained but in no event later than as described below. A Participant's
failure to elect in such manner as prescribed by the Administrator to have his
or her vested Account balance paid to him or her, shall be deemed an election
by the Participant to defer his or her distribution.
For calendar years commencing before January 1, 1997, a
Participant's Code section 401(a)(9) required beginning date by which benefit
payments shall commence is the April 1 immediately following the end of the
calendar year in which the Participant attains age 70.5, whether or not he or
she is an Employee. For calendar years commencing after December 31, 1996,
except with regard to a Participant who is a 5% Owner, a Participant's Code
section 401(a)(9) required beginning date by which benefit payments shall
commence is the April 1 of the calendar year following the later of (i) the
calendar year in which the Participant attains age 70.5, or (ii) the calendar
year in which the Participant terminates employment with all Related Companies.
A Participant shall be considered a 5% Owner for this purpose if such
Participant is a 5% Owner as defined in Code section 416(i) (determined in
accordance with Code section 416 but without regard to whether the Plan is top-
heavy) at any time during the Plan Year ending with or within the calendar year
in which he or she attains age 66.5 or in any subsequent Plan Year.
With regard to a Participant who is a 5% Owner, his or her Code
section 401(a)(9) required beginning date by which benefit payments shall
commence is the April 1 of the calendar year following the later of (i) the
calendar year in which the Participant attains age 70.5 or (ii) the earlier of
the calendar year with or within which ends the Plan Year in which the
Participant becomes a 5% Owner or the calendar year in which the Participant
terminates employment with all Related Companies. Once distributions commence
to a 5% Owner in accordance with the preceding sentence, such distributions may
not be discontinued without regard to whether in any subsequent calendar year
he or she is an Employee and no longer a 5% Owner.
With regard to a Participant who is an Employee (other than a 5%
Owner) and who prior to January 1, 1997 commenced distribution in accordance
with Code section 401(a)(9) as then in effect, he or she may, but is not
required to, suspend such distributions until he or she is otherwise required
to again commence distribution in accordance with Code section 401(a)(9) as in
effect for calendar years beginning after December 31, 1996.
If benefit payments cannot begin at the time required because the
location of the Participant cannot be ascertained (after a reasonable search),
the Administrator may, at any time thereafter, treat such person's Account as
forfeited subject to the provisions of Section 18.6.
11.8 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be completed
within a period not to exceed the lives or the joint and last survivor life
expectancy of the Participant and his or her Beneficiary. The life
expectancies of a Participant and his or her Beneficiary may not be recomputed
annually.
11.9 Incidental Benefit Rule11
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her sole primary
Beneficiary, the minimum annual distribution for each calendar year, beginning
with the calendar year preceding the calendar year that includes the
Participant's Code section 401(a)(9) required beginning date by which benefit
payments shall commence, shall not be less than the quotient obtained by
dividing (a) the Participant's vested Account balance as of the last Trade Date
of the preceding year by (b) the applicable divisor as determined under the
incidental benefit requirements of Code section 401(a)(9).
11.10 Payment to Beneficiary
Payment to a Beneficiary must either: (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 of the calendar
year that includes the Participant's Code section 401(a)(9) required beginning
date by which benefit payments shall commence, 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 70.5 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 of the calendar year that includes the
Participant's Code section 401(a)(9) required beginning date by which benefit
payments shall commence and (2) before payments have begun to the spouse, the
spouse shall be treated as the Participant in applying these rules.
11.11 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's remaining Plan
interest at the time of his or her death. The designation may be changed at
any time. However, a Participant's spouse shall be the sole primary
Beneficiary unless the designation includes Spousal Consent for another
Beneficiary. If no proper designation is in effect at the time of a
Participant's death or if the Beneficiary does not survive the Participant, the
Beneficiary shall be the Participant's surviving spouse or if there is no
surviving spouse, the Participant's estate.
12 ADP AND ACP TESTS
12.1 Contribution Limitation Definitions12
The following definitions are applicable to this Section 12 (where
a definition is contained in both Sections 1 and 12, for purposes of Section 12
the Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to Participants as of a
date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a Plan Year (as defined
in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average
Percentage calculated using Deferrals allocated to Participants as of a date
within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a Plan Year (as defined
in Section 12.2).
(e) "Average Percentage". The average of the calculated
percentages for Participants within the specified group. The calculated
percentage refers to either the "Deferrals" or "Contributions" (as defined in
this Section) made on each Participant's behalf for the Plan Year, divided by
his or her Compensation for the portion of the Plan Year in which he or she was
an Eligible Employee while a Participant. (Pre-Tax Contributions to the Plan
or comparable contributions to plans of Related Companies which shall be
refunded solely because they exceed the Contribution Dollar Limit are included
in the percentage for the HCE Group but not for the NHCE Group.)
(f) "Contributions" shall include Match and After-Tax
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 otherwise satisfy the
requirements as prescribed under Code section 401(m) permitting treatment as
Contributions for purposes of the ACP Test.
(g) "Deferrals" shall include Pre-Tax Contributions.
(h) "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 the 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". For Plan Years
commencing before January 1, 1997, with respect to each Employer and its
Related Companies, an Employee who (in accordance with Code section 414(q)):
(1) Was a more than 5% Owner (within the meaning of Code
section 414(q)(3)) 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 Deferrals, 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.
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).
For Plan Years commencing after December 31, 1996, with
respect to each Employer and its Related Companies, an Employee who (in
accordance with Code section 414(q)):
(1) Was a more than 5% Owner (within the meaning of Code
section 414(q)(2)) at any time during the Plan Year or the preceding Plan Year;
or
(2) Received Compensation during the preceding Plan Year
in excess of $80,000 (as adjusted for such Year pursuant to Code sections
414(q)(1) and 415(d)) or, if the Company elects for such preceding Plan Year,
"in excess of $80,000 (as adjusted for such Year pursuant to Code sections
414(q)(1) and 415(d)) and was a member of the "top-paid group" (within the
meaning of Code section 414(q)(3)) for such preceding Plan Year" shall be
substituted for the preceding reference to "in excess of $80,000 (as adjusted
for such Year pursuant to Code sections 414(q)(1) and 415(d))".
A former 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.
The determination of who is an HCE and the determination of
the number and identity of Employees in the top-paid group shall be made in
accordance with Code section 414(q).
(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. For Plan Years commencing after December 31,
1998, with respect to each Employer and its Related Companies, if the Plan
permits participation prior to an Eligible Employee's satisfaction of the
minimum age and service requirements of Code section 410(a)(1)(A), Eligible
Employees who have not met the minimum age and service requirements of Code
section 410(a)(1)(A) may be excluded in the determination of the NHCE Group,
but not in the determination of the HCE Group, for purposes of (i) the ADP
Test, if Code section 410(b)(4)(B) is applied in determining whether the 401(k)
portion of the Plan meets the requirements of Code section 410(b), or (ii) the
ACP Test if Code 410(b)(4)(B) is applied in determining whether the 401(m)
portion of the Plan meets the requirements of Code section 410(b).
(1) If the Related Companies maintain two or more plans
which are subject to the ADP or ACP Test and are considered as one plan for
purposes of Code sections 401(a)(4) or 410(b), all such plans shall be
aggregated and treated as one plan for purposes of meeting the ADP and ACP
Tests, provided that the plans may only be aggregated if they have the same
Plan Year.
(2) If an HCE is covered by more than one cash or
deferred arrangement, or more than one arrangement permitting employee or
matching contributions, maintained by the Related Companies, all such plans
shall be aggregated and treated as one plan (other than those plans that may
not be permissively aggregated) for purposes of calculating the separate
percentage for the HCE which is used in the determination of the Average
Percentage. For purposes of the preceding sentence, if such plans have
different plan years, all such plans with a plan year ending with or within the
same calendar year shall be aggregated.
(3) For Plan Years commencing before January 1, 1997, 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.
(k) "Lookback Year". For Plan Years commencing before January
1, 1997, 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 12.5
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.
(m) "NHCE" or "Non-Highly Compensated Employee". An Employee
who is not an HCE.
12.2 ADP and ACP Tests
For Plan Years commencing before January 1, 1997, 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:
If the NHCE Group
Average Percentage
is:
Then the Maximum HCE
Group Average Percentage is:
Less than 2%
2% to 8%
More than 8%
2 times NHCE Group Average %
NHCE Group Average % plus 2%
NA - Basic Limitation applies
For Plan Years commencing after December 31, 1996, for each Plan
Year, the ADP and ACP for the HCE Group must meet either the Basic or
Alternative Limitation when compared to the respective preceding Plan Year's
ADP and ACP for the preceding Plan Year's NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as follows:
If the NHCE Group
Average Percentage
is:
Then the Maximum HCE
Group Average Percentage is:
Less than 2%
2% to 8%
More than 8%
2 times NHCE Group Average %
NHCE Group Average % plus 2%
NA - Basic Limitation applies
Alternatively, the Company may elect to use the Plan Year's ADP
for the NHCE Group for the Plan Year and/or the Plan's Years ACP for the NHCE
Group for the Plan Year. If such election is made, such election may not be
changed except as provided by the Code.
12.3 Correction of ADP and ACP Tests for Plan Years Commencing Before
January 1,1997
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. ADP and/or ACP corrections shall be made in accordance with the
leveling method as described below.
(a) ADP Correction. The HCE with the highest Deferral
percentage shall have his or her Deferral percentage reduced to the lesser of
the extent required to meet the ADP Test or to cause his or her Deferral
percentage to equal that of the HCE with the next highest Deferral percentage.
The process shall be repeated until the ADP Test is met.
To the extent an HCE's Deferrals were determined to be
reduced as described in the paragraph above, Pre-Tax Contributions shall, by
the end of the next Plan Year, be refunded to the HCE in an amount equal to the
actual Deferrals minus the product of the maximum percentage and the HCE's
Compensation, except that such amount to be refunded shall be reduced by Pre-
Tax Contributions previously refunded because they exceeded the Contribution
Dollar Limit. The excess amounts shall first be taken from unmatched Pre-Tax
Contributions and then from matched Pre-Tax Contributions. Any Match
Contributions attributable to refunded excess Pre-Tax Contributions as
described in this Section shall be forfeited and used as described in Section
8.6.
(b) ACP Correction. The HCE with the highest Contribution
percentage shall have his or her Contribution percentage reduced to the lesser
of the extent required to meet the ACP Test or to cause his or her Contribution
percentage to equal that of the HCE with the next highest Contribution
percentage. The process shall be repeated until the ACP Test is met.
To the extent an HCE's Contributions were determined to be
reduced as described in the paragraph above, Contributions shall, by the end of
the next Plan Year, be refunded to the HCE to the extent vested, and forfeited
and used as described in Section 8.6 to the extent such amounts were not
vested, as of the end of the Plan Year being tested, in an amount equal to the
actual Contributions minus the product of the maximum percentage and the HCE's
Compensation. The excess amounts shall first be taken from After-Tax
Contributions and then from Match Contributions.
(c) Investment Fund Sources. Once the amount of excess
Deferrals and/or Contributions is determined and with regard to excess
Contributions, allocated by type of Contribution, amounts shall first be taken
from the Sweep Account and then taken by Investment Fund in direct proportion
to the market value of the Participant's interest in each Investment Fund
(which excludes his or her Loan Account balance) as of the Trade Date on which
the correction is processed.
(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 Correction of ADP and ACP Tests for Plan Years Commencing After
December 31, 1996
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a maximum percentage to
be used in place of the calculated percentage for all HCEs that would reduce
the ADP and/or ACP for the HCE group by a sufficient amount to meet the ADP and
ACP Tests.
With regard to each HCE whose Deferral percentage and/or
Contribution percentage is in excess of the maximum percentage, a dollar amount
of excess Deferrals and/or excess Contributions shall then be determined by (i)
subtracting the product of such maximum percentage for the ADP and the HCE's
Compensation from the HCE's actual Deferrals and (ii) subtracting the product
of such maximum percentage for the ACP and the HCE's Compensation from the HCEs
actual Contributions. Such amounts shall then be aggregated to determine the
total dollar amount of excess Deferrals and/or excess Contributions. ADP
and/or ACP corrections shall be made in accordance with the leveling method as
described below.
(a) ADP Correction. The HCE with the highest Deferral dollar
amount shall have his or her Deferral dollar amount reduced in an amount equal
to the lesser of the dollar amount of excess Deferrals for all HCEs or the
dollar amount that would cause his or her Deferral dollar amount to equal that
of the HCE with the next highest Deferral dollar amount. The process shall be
repeated until the total of the Deferral dollar amount reductions equals the
dollar amount of excess Deferrals for all HCEs.
To the extent an HCE's Deferrals were determined to be
reduced as described in the paragraph above, Pre-Tax Contributions shall, by
the end of the next Plan Year, be refunded to the HCE, except that such amount
to be refunded shall be reduced by Pre-Tax Contributions previously refunded
because they exceeded the Contribution Dollar Limit. The excess amounts shall
first be taken from unmatched Pre-Tax Contributions and then from matched Pre-
Tax Contributions. Any Match Contributions attributable to refunded excess
Pre-Tax Contributions as described in this Section shall be forfeited and used
as described in Section 8.6.
(b) ACP Correction. The HCE with the highest Contribution
dollar amount shall have his or her Contribution dollar amount reduced in an
amount equal to the lesser of the dollar amount of excess Contributions for all
HCEs or the dollar amount that would cause his or her Contribution dollar
amount to equal that of the HCE with the next highest Contribution dollar
amount. The process shall be repeated until the total of the Contribution
dollar amount reductions equals the dollar amount of excess Contributions for
all HCEs.
To the extent an HCE's Contributions were determined to be
reduced as described in the paragraph above, Contributions shall, by the end of
the next Plan Year, be refunded to the HCE to the extent vested, and forfeited
and used as described in Section 8.6 to the extent such amounts were not
vested, as of the end of the Plan Year being tested. The excess amounts shall
first be taken from After-Tax Contributions and then from Match Contributions.
(c) Investment Fund Sources. Once the amount of excess
Deferrals and/or Contributions is determined and with regard to excess
Contributions, allocated by type of Contribution, amounts shall first be taken
from the Sweep Account and then taken by Investment Fund in direct proportion
to the market value of the Participant's interest in each Investment Fund
(which excludes his or her Loan Account balance) as of the Trade Date on which
the correction is processed.
12.5 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.
12.6 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.
12.7 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a
Participant or forfeited in accordance with this Section 12 shall be adjusted
for investment gain or loss. Refunds or forfeitures shall not include
investment gain or loss for the period between the end of the applicable Plan
Year and the date of distribution.
12.8 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and the Multiple Use Test, and that the
Contribution Dollar Limit is not exceeded. The Administrator shall maintain
records which are sufficient to demonstrate that the ADP Test, the ACP Test and
the Multiple Use Test, have been met for each Plan Year for at least as long as
the Employer's corresponding tax year is open to audit.
12.9 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and
the performance of the ADP Test, the ACP Test and the Multiple Use Test, and
any corrective action resulting therefrom, shall be 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: The performance of the ADP
Test, and if applicable, the ACP Test and the Multiple Use Test, and any
corrective action resulting therefrom, shall be 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, with
regard to any group of Employees for whom separate testing is permissible.
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 the 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), except that effective for Plan Years beginning
after December 31, 1994, "$30,000 (as adjusted for the cost of living pursuant
to Code section 415(d))" shall be substituted for the preceding reference to
"the greater of $30,000 or one-quarter of the dollar limitation in effect under
Code section 415(b)(1)(A)" and effective for Plan Years beginning after
December 31, 1997, "25% of his or her Compensation" shall be substituted for
the preceding reference to "25% of his or her Taxable Income".
13.3 Avoiding an Excess Annual Addition13
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 Addition13
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 After-Tax
Contributions, and then to the extent of his or her Pre-Tax Contributions
(however to the extent Pre-Tax Contributions were matched, the applicable Match
Contributions shall be forfeited in proportion to the returned matched Pre-Tax
Contributions) and the remaining excess, if any, shall be forfeited by the
Participant and used as described in Section 8.6.
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,
including the Hourly Plan and/or the Salaried Plan, the excess shall be
corrected by reducing the Annual Addition to the Plan prior to reducing the
Annual Addition to the Hourly Plan and/or the Salaried Plan and 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 the Plan (to the extent it has not been distributed ) shall be limited so
that the combined fraction does not exceed 1.0 before any defined benefit
limits shall be enforced.
For Plan Years commencing after December 31, 1999, the provisions
of the preceding paragraph shall no longer be effective.
14 TOP HEAVY RULES
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the
following meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified
plan of 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) or 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:
Number of Employees
not Excluded Under Code
Section 414(q)(8)
Number of
Highest Paid
Officers Included
Less than 30
30 to 500
More than 500
3
10% of the number of
Employees not excluded
under Code section
414(q)(8)
50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds
$150,000, or
(4) a more than 0.5% Owner who is among the 10 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 from a plan maintained by a non-related
employer) to be made by or on behalf of any Key Employee unless the Employer
makes a contribution (other than contributions made by an Employer in
accordance with a Participant's salary deferral election or contributions made
by an Employer based upon the amount contributed by a Participant) on behalf of
all Participants who were Eligible Employees as of the last day of the Plan
Year in an amount equal to at least 3% of each such Participant's Taxable
Income. 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 the 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 Participants specified in the preceding
paragraph. In addition, the Employer may offset a defined benefit minimum by
contributions (other than contributions made by an Employer in accordance with
a Participant's salary deferral election or contributions made by an Employer
based upon the amount contributed by a Participant) made to the Plan.
14.3 Special Vesting
If the Plan becomes Top Heavy after the Effective Date, vesting
for all Employees shall thereafter be accelerated to the extent the following
vesting schedule produces a greater vested percentage for the Employee than the
normal vesting schedule at any relevant time:
Years of Vesting
Service
Vested
Percentage
Less than 3
3 or more
0%
100%
14.4 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.
15 PLAN ADMINISTRATION
15.1 Plan Delineates Authority and Responsibility15
Plan fiduciaries include the Company, the Administrator and the
Trustee, as applicable, whose specific duties are delineated in the Plan and
Trust. In addition, Plan fiduciaries also include any other person to whom
fiduciary duties or 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 Standards15
Each fiduciary shall:
(a) discharge his or her duties in accordance with the Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that
a prudent person acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable expenses of
administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so as to minimize the
risk of large losses, unless under the circumstances it is clearly prudent not
to do so; and
(e) treat similarly situated Participants and Beneficiaries in a
uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the 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 shall have any necessary
authority to carry out such functions through the actions of the duly appointed
officers of the Company.
15.4 Administrator Duties
The Administrator shall have the discretionary authority to
construe the Plan and Trust, other than the provisions which relate to the
Trustee, and to do all things necessary or convenient to effect the intent and
purposes thereof, whether or not such powers are specifically set forth in the
Plan and Trust. Actions taken in good faith by the Administrator shall be
conclusive and binding on all interested parties, and shall be given the
maximum possible deference allowed by law. In addition to the duties listed
elsewhere in the Plan and Trust, the Administrator's authority shall include,
but not be limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of Contributions, and the
eligibility for loans, in-service withdrawals and distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant (or such other
period permitted under ERISA section 104(b)(1)), as well as informing each
Participant of any material modification to the Plan in a timely manner;
(c) make a copy of the following documents available to
Participants during normal work hours: the Plan and Trust (including subsequent
amendments), all annual and interim reports of the Trustee related to the
entire Plan, the latest annual report and the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's interest based upon
such proof and evidence as it deems necessary;
(e) establish and review at least annually a funding policy
bearing in mind both the short-run and long-run needs and goals of the Plan and
to the extent Participants may direct their own investments, the funding
policy shall focus on which Investment Funds are available for Participants to
use; and
(f) adjudicate claims pursuant to the claims procedure described
in Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers, investment
counsel and administrative assistants) as it considers necessary to assist it
in the performance of its duties. The Administrator shall also comply with the
bonding requirements of ERISA section 412.
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, may appoint 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.
16 MANAGEMENT OF INVESTMENTS
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in
accordance with those provisions of the Plan and Trust which relate to the
Trustee, for use in providing Plan benefits and paying Plan fees and expenses
not paid directly by the Employer. Plan benefits shall be drawn solely from
the Trust and paid by the Trustee as directed by the Administrator.
Notwithstanding, the Company may appoint, with the approval of the Trustee,
another trustee to hold and administer Plan assets which do not meet the
requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the
Trustee to invest Trust assets in one or more Investment Funds. The number and
composition of Investment Funds may be changed from time to time, without the
necessity of amending the Plan and Trust. The Trustee may establish reasonable
limits on the number of Investment Funds as well as the acceptable assets for
any such Investment Fund. Each of the Investment Funds may be comprised of any
of the following:
(a) shares of a registered investment company, whether or not
the Trustee or any of its affiliates is an advisor to, or other service
provider to, such company;
(b) collective investment funds maintained by the Trustee, or
any other fiduciary to the Plan, which are available for investment by trusts
which are qualified under Code sections 401(a) and 501(a);
(c) individual equity and fixed income securities which are
readily tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or
insurance company;
(e) interest bearing deposits; and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment
fund, shall be subject to all the provisions of the instruments establishing
and governing such fund. These instruments, including any subsequent
amendments, are incorporated herein by reference.
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment
manager of each Investment Fund to maintain sufficient deposit or money market
type assets in each Investment Fund to handle the 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, money market type assets or funds.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions are received
from the Administrator, Participants or Beneficiaries. Such instructions shall
remain in effect until changed by the Administrator, Participants or
Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company
Shares
The Administrator shall be entitled to vote proxies or exercise
any shareholder rights relating to shares held on behalf of the Plan in a
registered investment company. Notwithstanding, the authority to vote proxies
and exercise shareholder rights related to such shares held in a Custom Fund is
vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee,
an investment manager for any Investment Fund established by the Trustee solely
for Participants of the Plan and, subject to Section 16.7, any other qualified
plan of the Company or a Related Company, (a "Custom Fund"). The investment
manager may be the Administrator, Trustee or an investment manager pursuant to
ERISA section 3(38). The Administrator shall advise the Trustee in writing of
the appointment of an investment manager and shall cause the investment manager
to acknowledge to the Trustee in writing that the investment manager is a
fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund consists solely of
collective investment funds or shares of a registered investment company (and
sufficient deposit or money market type assets to handle the Fund's liquidity
and disbursement needs), its underlying instruments shall constitute the
guidelines.
(b) Authority of Investment Manager. The investment manager of
a Custom Fund shall have the authority to vote or execute proxies, exercise
shareholder rights, manage, acquire, and dispose of Trust assets.
Notwithstanding, the authority to vote proxies and exercise shareholder rights
related to shares of Company Stock held in a Custom Fund is vested as provided
otherwise in Section 16.
(c) Custody and Trade Settlement. Unless otherwise agreed to by
the Trustee, the Trustee shall maintain custody of all Custom Fund assets and
be responsible for the settlement of all Custom Fund trades. For purposes of
this section, shares of a collective investment fund, shares of a registered
investment company and 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 Master Custom Fund
The Trustee may establish, at the direction of the Company, a
single Custom Fund (the "Master Custom Fund"), for the benefit of the Plan and
any other qualified plan of the Company or a Related Company for which the
Trustee acts as trustee pursuant to a plan and trust document that contains a
provision substantially identical to this provision. The assets of the Plan,
to the extent invested in the Master Custom Fund, shall consist only of that
percentage of the assets of the Master Custom Fund represented by the shares
held by the Plan.
16.8 Authority to Segregate Assets
The 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.
16.9 Investment in Company Stock
If the Company provides for a Company Stock Fund directly or
through a Master Custom Fund the Fund shall be comprised of Company Stock and
sufficient deposit or money market type assets to handle the Fund's liquidity
and disbursement needs. The Fund may be as large as necessary to comply with
Participants' and Beneficiaries' investment elections.
16.10 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct the
Trustee as to the voting or tendering of any full or partial shares of Company
Stock held on his or her behalf in the Company Stock Fund. The Company shall
be responsible for distributing to each such Participant or Beneficiary on a
timely basis, such information as shall be distributed to shareholders of the
Company in connection with any shareholder vote or tender decision and for
informing each such Participant or Beneficiary of the following:
(a) a failure to instruct the Trustee with regard to a
shareholder vote shall be regarded as a direction to abstain with respect to
each matter or group of related matters to be acted upon (other than elections
to office) and to withhold authority to vote for any nominee for election to
office; and
(b) a failure to instruct the Trustee with regard to a tender
decision shall be regarded as a direction not to tender.
The Trustee shall be responsible for the tabulation of the
instructions furnished by such Participants and Beneficiaries. The Trustee
shall act with respect to such shares as instructed. The Trustee shall hold
any instructions it receives in confidence and shall not divulge or release any
specific information regarding such to any person, including officers or
Employees. The Trustee will act in accordance with (a) or (b) set forth above,
as applicable, with regard to shares for which instructions are not received
from Participants or Beneficiaries.
16.11 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the requirements of the
Securities Act of 1933, as amended, the California Corporate Securities Law of
1968, as amended, and any other applicable blue sky law. The Administrator
shall also specify what restrictive legend or transfer restriction, if any, is
required to be set forth on the certificates for the securities and the
procedure to be followed by the Trustee to effectuate a resale of such
securities.
17 TRUST ADMINISTRATION
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe
those provisions of the Plan and Trust which relate to the Trustee and to do
all things necessary or convenient to the administration of the Trust, whether
or not such powers are specifically set forth in the Plan and Trust. Actions
taken in good faith by the Trustee shall be conclusive and binding on all
interested parties, and shall be given the maximum possible deference allowed
by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in
the Plan and Trust, the Trustee shall have all the power, authority, rights and
privileges of an absolute owner of the Trust assets and, not in limitation but
in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage, lease, grant
options respecting, repair, alter, insure, or distribute any and all property
in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or conversion
privileges, exercise options and register any securities in the Trust in the
name of the nominee, in federal book entry form or in any other form as shall
permit title thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or otherwise, or defend
against the same, any obligations or claims in favor of or against the Trust;
and
(d) lend, through a collective investment fund, any securities
held in such collective investment fund to brokers, dealers or other borrowers
and to permit such securities to be transferred into the name and custody and
be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any
Trust assets outside the jurisdiction of the United States, except as
authorized by ERISA section 404(b).
17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold
federal (and, if applicable, state) income taxes with regard to any Eligible
Rollover Distribution that is not paid as a Direct Rollover in accordance with
the Participant's withholding election or as required by law if no election is
made or the election is less than the amount required by law. With regard to
any taxable distribution that is not an Eligible Rollover Distribution, the
Trustee shall calculate and withhold federal (and, if applicable, state) income
taxes in accordance with the Participant's withholding election or as required
by law if no election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from
the Investment Fund any taxes or assessments imposed by any taxing or
governmental authority on such Fund or its income, including related interest
and penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall provide the
Administrator with an annual accounting of Trust assets and information to
assist the Administrator in meeting ERISA's annual reporting and audit
requirements.
(b) Periodic Reports. The Trustee shall maintain records and
provide sufficient reporting to allow the Administrator to properly monitor the
Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting
shall automatically occur 90 days after such accounting has been received by
the Administrator, unless the Administrator files a written objection with the
Trustee within such time period. Such approval shall be final as to all
matters and transactions stated or shown therein and binding upon the
Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradeable and listed on a national securities exchange registered under
the Securities Exchange Act of 1934, as amended, the Trustee may engage a
qualified independent appraiser to determine the fair market value of such
property, and the appraisal fees shall be paid from the Investment Fund
containing the asset.
17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice,
including counsel for the Employer or counsel of the Trustee, upon any question
or matter arising under the Plan and Trust. When relied upon by the Trustee,
the opinion of such counsel shall be evidence that the Trustee has acted in
good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as
may be mutually agreed upon by the Company and the Trustee. Trustee fees and
all reasonable expenses of counsel and advisors retained by the Trustee shall
be paid in accordance with Section 6.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the Trustee,
shall be confined to construing the terms of the Plan and Trust as they relate
to the Trustee, receiving funds on behalf of and making payments from the
Trust, safeguarding and valuing Trust assets, investing and reinvesting Trust
assets in the Investment Funds as directed by the Administrator, Participants
or Beneficiaries and those duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to enforce collection or to
compute or verify the accuracy or adequacy of any amount to be paid to it by
the Employer. The Trustee shall not be liable for the proper application of
any part of the Trust with respect to any disbursement made at the direction of
the Administrator.
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any 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 Compliance With USERRA
Notwithstanding any provision of the Plan to the contrary, with
regard to an Employee who after serving in the uniformed services is reemployed
within the time required by USERRA, contributions shall be made and benefits
and service credit shall be provided with respect to his or her qualified
military service (as defined in Code section 414(u)(5)) in accordance with Code
section 414(u). Furthermore, notwithstanding any provision of the Plan to the
contrary, Participant loan payments may be suspended during a period of
qualified military service.
18.3 Limited Return of Contributions
Except as provided in this 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; or
(b) 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.
18.4 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan may be anticipated,
assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as security
for a loan from the Plan which is permitted pursuant to Code section 4975.
18.5 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally incapable of giving
a valid receipt and discharge for any payment due him or her, the Administrator
shall have the payment of the benefit, or any part thereof, made to the person
(or persons or institution) whom it reasonably believes is caring for or
supporting the payee, unless it has received due notice of claim therefor from
a duly appointed guardian or conservator of the payee. Any payment shall to
the extent thereof, be a complete discharge of any liability under the Plan to
the payee.
18.6 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of
a Plan benefit after a reasonable search, the Administrator may at any time
thereafter treat such person's Account as forfeited and use such amount as
described in Section 8.6. If such person subsequently presents the
Administrator with a valid claim for the benefit, such person shall be paid the
amount treated as forfeited, plus the interest that would have been earned in
the Sweep Account to the date of determination. The Administrator shall pay
the amount through an additional amount contributed by the Employer or direct
the Trustee to pay the amount from the Forfeiture Account.
18.7 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with
the Administrator's determination of his or her right to Plan benefits must
submit a written claim and exhaust this claim procedure before legal recourse
of any type is sought. The claim must include the important issues the
interested party believes support the claim. The Administrator, pursuant to
the authority provided in the Plan, shall either approve or deny the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an understandable, written
response covering (1) the specific reasons why the claim is being denied (with
reference to the pertinent Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party may
make a written appeal of the Administrator's initial decision, and the
Administrator shall respond in the same manner and form as prescribed for
denying a claim initially.
(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the following time table:
Days to Respond
Action From Last Action
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it provides an explanation
within the normal period of why an extension is needed and when its decision
shall be forthcoming.
18.8 Construction
Headings are included for reading convenience. The text shall
control if any ambiguity or inconsistency exists between the headings and the
text. The singular and plural shall be interchanged wherever appropriate.
References to Participant shall include Alternate Payee and/or Beneficiary when
appropriate and even if not otherwise already expressly stated.
18.9 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not otherwise
preempted, by the laws of the State of California. If any provision of the
Plan and Trust shall become invalid or unenforceable, that fact shall not
affect the validity or enforceability of any other provision of the Plan and
Trust. All provisions of the Plan and Trust shall be so construed as to
render them valid and enforceable in accordance with their intent.
18.10 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.
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
19.1 Amendment
The Company reserves the right to amend the Plan and Trust at any
time, to any extent and in any manner it may deem necessary or appropriate.
The Company (and not the Trustee) shall be responsible for adopting any
amendments necessary to maintain the qualified status of the Plan and Trust
under Code sections 401(a) and 501(a). The Administrator shall have the
authority to adopt Plan and Trust amendments which have no substantial adverse
financial impact upon any Employer or the Plan. All interested parties shall
be bound by any amendment, provided that no amendment shall:
(a) become effective unless it has been adopted in accordance
with the procedures set forth in Section 19.5;
(b) except to the extent permissible under ERISA and the Code,
make it possible for any portion of the Trust assets to revert to an Employer
or to be used for, or diverted to, any purpose other than for the exclusive
benefit of Participants and Beneficiaries entitled to Plan benefits and to
defray reasonable expenses of administering the Plan;
(c) decrease the rights of any 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 any portion of his or her
Account subject to the distribution rules of Code section 401(k) unless the
payment would otherwise be permitted under Code section 401(k).
19.2 Merger
The Plan and Trust may not be merged or consolidated with, nor may
its assets or liabilities be transferred to, another plan unless each
Participant and Beneficiary would, if the resulting plan were then terminated,
receive a benefit just after the merger, consolidation or transfer which is at
least equal to the benefit which would be received if either plan had
terminated just before such event.
19.3 Divestitures
In the event of a sale by an Employer which is a corporation of:
(1) substantially all of the Employer's assets used in a trade or business to
an unrelated corporation, or (2) a sale of such Employer's interest in a
subsidiary to an unrelated entity or individual, lump sum distributions shall
be permitted from the Plan, except as provided below, to Participants with
respect to Employees who continue employment with the corporation acquiring
such assets or who continue employment with such subsidiary, as applicable.
Notwithstanding, distributions shall not be permitted if the
purchaser agrees, in connection with the sale, to be substituted as the Company
as the sponsor of the Plan or to accept a transfer in a transaction subject to
Code section 414(l) of the assets and liabilities representing the
Participants' benefits into a plan of the purchaser or a plan to be established
by the purchaser.
19.4 Plan Termination or Complete Discontinuance of Contributions
The Company may, at any time and for any reason, terminate the
Plan in accordance with the procedures set forth in Section 19.5, or completely
discontinue contributions. Upon either of these events, or in the event of a
partial termination of the Plan within the meaning of Code section 411(d)(3),
the Accounts of each affected Participant who has not yet incurred a
forfeitable event as described in Section 8.5 shall be fully vested.
In the event of termination of the Plan, if no successor plan is
established or maintained, lump sum distributions shall be made in accordance
with the terms of the Plan as in effect at the time of the Plan's termination
or as thereafter amended provided that a post-termination amendment shall not
be effective to the extent that it violates Section 19.1 unless it is required
in order to maintain the qualified status of the Plan upon its termination.
The Trustee's and Employer's authority shall continue beyond the Plan's
termination date until all Trust assets have been liquidated and distributed.
19.5 Amendment and Termination Procedures
Any amendment to (including a termination of) the Plan and Trust
by the Company shall be made only pursuant to action of the Board or on behalf
of the Board by the Board's executive committee as authorized in the Company
bylaws in accordance with the Board's normal procedures and by written
instrument of amendment, signed and dated. Any amendment to the Plan and Trust
by the Committee, as Administrator, shall be made pursuant to action of the
Committee in accordance with the procedures set forth in Section 15.7(a) and by
written instrument of amendment, signed and dated.
The effective date of any amendment may be before, on or after the
date of such Board action or Committee action, as applicable. If no effective
date is specified, the effective date of the amendment shall be the date of the
Board action or the Committee action, as applicable. However, no amendment
shall become effective until it is accepted and signed by the Trustee (which
acceptance shall not be unreasonably withheld.)
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its
Plan participation by action of its board of directors in accordance with its
normal procedures. Written notice of such action shall be signed and dated by
an executive officer of the Employer and delivered to the Company. If the
effective date of such action is not specified, it shall be effective on, or as
soon as reasonably practicable after, the date of delivery. Upon the
Employer's request, the Company may instruct the Trustee and Administrator to
spin off all affected Accounts and underlying assets into a separate qualified
plan under which the Employer shall assume the powers and duties of the
Company. Alternatively, the Company may continue to maintain the Accounts
under the Plan.
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under the Plan and Trust or may
be removed by the Company at any time upon at least 90 days written notice (or
less if agreed to by both parties). In such event, the Company shall appoint a
successor trustee by the end of the notice period. The successor trustee shall
then succeed to all the powers and duties of the Trustee under the Plan and
Trust. If no successor trustee has been named by the end of the notice period,
the Company's chief executive officer shall become the trustee, or if he or she
declines, the Trustee may petition the court for the appointment of a successor
trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively feasible
after its resignation or removal as Trustee, the Trustee shall transfer to the
successor trustee all property currently held by the Trust. However, the
Trustee is authorized to reserve such sum of money as it may deem advisable for
payment of its accounts and expenses in connection with the settlement of its
accounts or other fees or expenses payable by the Trust. Any balance remaining
after payment of such fees and expenses shall be paid to the successor trustee.
(b) Final Accounting. The Trustee shall provide a final
accounting to the Administrator within 90 days of the date Trust assets are
transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting
shall automatically occur 90 days after such accounting has been received by
the Administrator, unless the Administrator files a written objection with the
Trustee within such time period. Such approval shall be final as to all
matters and transactions stated or shown therein and binding upon the
Administrator.
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date
include this set of daily valued funds:
Category Funds
Money Market U.S. Government Money Market
Balanced Asset Allocation
Equity Company Stock
S&P 500 Stock
Combination LifePath
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the U.S.
Government 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.
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 the Employer on a quarterly basis,
except that with regard to a Participant who is no longer an Employee or a
Beneficiary, these are paid by the Participant and are assessed monthly and
billed/collected from Accounts quarterly.
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.
4) Investment Fund Election Changes: For each Investment Fund election
change by a Participant, in excess of 4 changes per year, a $10 fee shall be
assessed and billed/collected quarterly from the Participant's Account.
5) Periodic Installment Payment Fees: A $3.00 per check fee shall be
assessed and billed/collected quarterly from the Participant's Account.
6) Additional Fees Paid by Employer: All other Plan related fees and
expenses shall be paid by the Employer. To the extent that the Administrator
later elects that any such fees shall be borne by Participants, estimates of
the fees shall be determined and reconciled, at least annually, and the fees
shall be assessed monthly and billed/collected from Accounts quarterly.
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the U.S. Treasury rate for a note of the same maturity, plus 2%.
The rate may be determined once for all loans made in a month, and the maturity
may be determined to the nearest year.
SCHEDULE A - MATCH CONTRIBUTIONS
GRAPHIC COMMUNICATIONS UNION AND DISTRICT COUNCIL NO. 2 - OAKLAND
("OAKLAND PLANT")
(a) Conditions for Match Contributions. Effective January 1, 1996, if as of
such date, seventy percent of the Eligible Employees of the Oakland Plant who
have met the eligibility requirements of Section 2.1 and are therefore
Participants, have made a Pre-Tax Contribution election in accordance with
Section 3.1, for each period for which Participants' Contributions are made,
the Employer shall make Match Contributions, as described in the following
Allocation Method paragraph, on behalf of each such Participant who contributed
during the period.
(b) Amount of and Allocation of Match Contributions. The Match Contributions
for each period shall total 50% of each such eligible Participant's Pre-Tax
Contributions for the period, provided that no Match Contributions shall be
made based upon a Participant's Contributions in excess of 2% of his or her
Pay, subject to a maximum dollar match of $600 for the Plan Year.
Notwithstanding, the foregoing Match Contribution shall continue in effect only
so long as provided under the governing collective bargaining agreement.
SCHEDULE B - MATCH CONTRIBUTIONS
GRAPHIC COMMUNICATIONS UNION AND DISTRICT COUNCIL NO. 2 - TWIN FALLS
("TWIN FALLS PLANT")
(a) Conditions for Match Contributions. Effective March 1, 1996, if as of
such date, seventy percent of the Eligible Employees of the Twin Falls Plant
who have met the eligibility requirements of Section 2.1 and are therefore
Participants, have made a Pre-Tax Contribution election in accordance with
Section 3.1, for each period for which Participants' Contributions are made,
the Employer shall make Match Contributions, as described in the following
Allocation Method paragraph, on behalf of each such Participant who contributed
during the period.
(b) Amount of and Allocation of Match Contributions. The Match Contributions
for each period shall total 50% of each such eligible Participant's Pre-Tax
Contributions for the period, provided that no Match Contributions shall be
made based upon a Participant's Contributions in excess of 2% of his or her
Pay, subject to a maximum dollar match of $600 for the Plan Year.
Notwithstanding, the foregoing Match Contribution shall continue in effect only
so long as provided under the governing collective bargaining agreement.
SCHEDULE C - MATCH CONTRIBUTIONS
GRAPHIC COMMUNICATIONS UNION AND DISTRICT COUNCIL NO. 2 - YAKIMA FALLS
("YAKIMA PLANT")
(a) Conditions for Match Contributions. Effective March 1, 1996, if as of
such date, seventy percent of the Eligible Employees of the Yakima Plant who
have met the eligibility requirements of Section 2.1 and are therefore
Participants, have made a Pre-Tax Contribution election in accordance with
Section 3.1, for each period for which Participants' Contributions are made,
the Employer shall make Match Contributions, as described in the following
Allocation Method paragraph, on behalf of each such Participant who contributed
during the period.
(b) Amount of and Allocation of Match Contributions. The Match Contributions
for each period shall total 50% of each such eligible Participant's Pre-Tax
Contributions for the period, provided that no Match Contributions shall be
made based upon a Participant's Contributions in excess of 2% of his or her
Pay, subject to a maximum dollar match of $600 for the Plan Year.
Notwithstanding, the foregoing Match Contribution shall continue in effect only
so long as provided under the governing collective bargaining agreement.
Execution Copy
Amendment No. 1
to the
Longview Fibre Company
Branch Plant Hourly Employees' 401(k) Plan and Trust
WHEREAS, Longview Fibre Company (the "Company"), approved and adopted the
Longview Fibre Company Branch Plant Hourly Employees' 401(k) Plan (the "Plan")
and Trust Agreement (the "Trust") which were originally effective March 1, 1993
and most recently restated effective January 1, 1996;
WHEREAS, Section 19.1 of the Plan and Trust provides that the Company
reserves the right to amend the Plan and Trust;
NOW THEREFORE RESOLVED, that Sections 1, 2, 5, 6, 8, 10, 11, 14 and 18
are amended effective January 1, 1996 and Section 11 is amended effective
January 1, 1998 as follows:
Effective January 1, 1996:
1. Section 1 is amended to restate Subsection 1.8 in its entirety, to
restate the first paragraph of Subsection 1.13, to restate Subsection
1.15 in its entirety, to hereby delete Subsection 1.27, to redesignate
each subsequent Subsection, to restate the last paragraph of Subsection
1.32 (formerly Subsection 1.33) in its entirety, to add a new Subsection
1.46, to redesignate each subsequent Subsection, to restate Subsections
1.55 and 1.56 each in its entirety as follows:
1.8 "Break in Service". The fifth anniversary (or sixth anniversary if
absence from employment was due to Parental Leave) of the date on
which a Participant's employment ends in accordance with Section
1.41 (formerly Section 1.42) and during which he or she is not
credited with an hour of service.
1.13 "Compensation". The sum of a Participant's Taxable Income and
salary reductions, if any, pursuant to Code section 125, 402(e)(3),
402(h)(1)(B), 403(b), 457 or, for Plan Years commencing after
December 31, 1996, 408(p)(2)(A)(i).
1.15 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre-Tax Contributions, which shall be $7,000 per
calendar year (as adjusted for cost of living increases pursuant to
Code sections 402(g)(5) and 415(d)). For purposes of this Section,
a Participant's Pre-Tax Contributions shall include (i) any
employer contribution under a qualified cash or deferred
arrangement (as defined in Code section 401(k)) to the extent not
includible in gross income for the taxable year under Code section
402(e)(3) (determined without regard to Code section 402(g)), (ii)
any employer contribution to the extent not includible in gross
income for the taxable year under Code section 402(h)(1)(B)
(determined without regard to Code section 402(g)), (iii) any
employer contribution to purchase an annuity contract under Code
section 403(b) under a salary reduction agreement (within the
meaning of Code section 3121(a)(5)(D)) and (iv) for calendar years
commencing after December 31, 1996, any elective employer
contribution under Code section 408(p)(2)(A)(i).
1.32 "Leased Employee".
For Plan Years commencing after December 31, 1996, "services under
the primary direction or control of the Related Company" shall be
substituted for the preceding reference to "services of any type
historically performed by Employees in the business field of the
Related Company".
1.46 "Required Beginning Date". The latest date benefit payments shall
commence to a Participant. Such date shall mean the April 1 that
next follows the calendar year in which the Participant attains age
70.5.
1.55 "Transition Account". An account consisting of the sum of the sub-
accounts of individual non-vested Account balances of Terminated
Participants.
1.56 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan
and holds the Plan assets which are comprised of the aggregate of
Participants' Accounts, any unallocated funds invested in interest
bearing deposits (which may include interest bearing deposits of
the Trustee) and/or money market type assets or funds, pending
allocation to Participants' Accounts or disbursement to pay Plan
fees and expenses.
2. Section 2 is amended to restate Subsection 2.1 in its entirety as
follows:
2.1 Eligibility
All Participants as of January 1, 1996 shall continue their
eligibility to participate. Each other Eligible Employee shall
become a Participant on the first day of the next payroll period
after the date he or she completes a 12-consecutive month
eligibility period in which he or she is credited with at least 870
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.
3. Section 5 is amended to hereby change the reference in item (b) of
Subsection 5.1 from "Forfeiture Account amounts" to "forfeiture amounts".
4. Section 6 is amended to hereby change the reference in Subsection 6.5
from "through the Forfeiture Account" to "through forfeiture amounts" and
to hereby change the reference in Subsection 6.7 from "use amounts from
the Forfeiture Account" to "use forfeiture amounts".
5. Section 8 is amended to hereby delete the last paragraph of Subsection
8.5, to hereby change the title of Subsection 8.6 from "Use of Forfeiture
Account Amounts" to "Use of Forfeiture Amounts", to hereby change the
reference in Subsection 8.6 from "Forfeiture Account amounts" to
"Forfeiture amounts" and to hereby change the reference in item (b) of
Subsection 8.7 from "the Forfeiture Account" to "forfeiture amounts".
6. Section 10 is amended to restate Subsections 10.1 and 10.5 each in its
entirety as follows:
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and pursuant to the terms and conditions set forth in
Section 11 with regard to an in-service withdrawal made in
accordance with a Participant's Required Beginning Date.
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of in-service withdrawal.
The form of payment for an in-service withdrawal shall be a single
lump sum and payment shall be made in cash. Notwithstanding, to
preserve benefits protected by Code section 411(d)(6), a
Participant for whom amounts were transferred from the Salaried
Plan (or from the Hourly Plan if such amounts were originally
transferred from the Salaried Plan to the Hourly Plan ) may elect
that payment be made in the form of whole shares of Company Stock
and cash in lieu of fractional shares to the extent that such
withdrawal is funded from the Company Stock Fund and includes an
Account type in the funding hierarchy for which amounts were
transferred to the Plan from the Salaried Plan (or from the Hourly
Plan if such amounts were originally transferred from the Salaried
Plan to the Hourly Plan) on behalf of the Participant.
7. Section 11 is amended to restate the Heading thereof and to restate the
first paragraph of Subsection 11.1 each in its entirety, to hereby change
the reference in the second paragraph of Subsection 11.1 from
"401(k)(A)(10)(ii)" to "401(k)(10)(A)(ii)", to hereby delete Subsection
11.6, to redesignate each subsequent Subsection, and to restate
Subsections 11.6 and 11.8 and items (a) and (c) of Subsection 11.9 each
in its entirety as follows:
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A
PARTICIPANT'S REQUIRED BEGINNING DATE
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his
or her death, shall be provided with information regarding
all optional times and forms of distribution available under
the Plan, including the notices prescribed by Code sections
402(f) and 411(a)(11). Subject to the other requirements of
this Section, a Participant, or his or her Beneficiary in the
case of his or her death, may elect, in such manner and with
such advance notice as prescribed by the Administrator, to
have his or her vested Account balance paid to him or her
beginning upon any Settlement Date following the
Participant's termination of employment with all Related
Companies and a reasonable period of time during which the
Administrator shall process, and inform the Trustee of, the
Participant's termination or, if earlier, at the time of the
Participant's Required Beginning Date.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless a
Participant elects otherwise, his or her benefit payments
shall begin not later than 60 days after the end of the Plan
Year in which he or she attains his or her Normal Retirement
Date or retires, whichever is later. However, if the amount
of the payment or the location of the Participant (after a
reasonable search) cannot be ascertained by that deadline,
payment shall be made no later than 60 days after the
earliest date on which such amount or location is ascertained
but in no event later than the Participant's Required
Beginning Date. A Participant's failure to elect in such
manner as prescribed by the Administrator to have his or her
vested Account balance paid to him or her, shall be deemed an
election by the Participant to defer his or her distribution
but in no event shall his or her benefit payments commence
later than his or her Required Beginning Date.
If benefit payments cannot begin at the time required because
the location of the Participant cannot be ascertained (after
a reasonable search), the Administrator may, at any time
thereafter, treat such person's Account as forfeited subject
to the provisions of Section 18.6.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent with
the requirement that, if the Participant's spouse is not his
or her sole primary Beneficiary, the minimum annual
distribution for each calendar year, beginning with the
calendar year preceding the calendar year that includes the
Participant's Required Beginning Date, shall not be less than
the quotient obtained by dividing (a) the Participant's
vested Account balance as of the last Trade Date of the
preceding year by (b) the applicable divisor as determined
under the incidental benefit requirements of Code section
401(a)(9).
11.9 Payment to Beneficiary
(a) If the Participant dies after his or her Required
Beginning Date, payment to his or her Beneficiary must
be made at least as rapidly as provided in the
Participant's distribution election;
(c) If the Participant and the surviving spouse who is the
Beneficiary die (i) before the Participant's Required
Beginning Date and (ii) before payments have begun to
the spouse, the spouse shall be treated as the
Participant in applying these rules.
8. Section 14 is amended to restate item (b) of Subsection 14.2 in its
entirety as follows:
14.2 Special Contributions
(b) Overriding Minimum Benefit. Notwithstanding, contributions
shall be permitted on behalf of Key Employees if the Employer
also maintains a defined benefit plan which automatically
provides a benefit which satisfies the Code section 416(c)(1)
minimum benefit requirements, including the adjustment
provided in Code section 416(h)(2)(A), if applicable. If the
Plan is part of an aggregation group in which a Key Employee
is receiving a benefit and no minimum is provided under any
other plan, a minimum contribution of at least 3% of Taxable
Income shall be provided to the Participants specified in the
preceding paragraph, except that if the aggregation group
consists of a top heavy defined benefit plan, "5%" shall be
substituted for the preceding reference to "3%" with regard
to the Participants specified in the preceding paragraph who
are also covered under the defined benefit plan.
9. Section 18 is amended to hereby delete the reference in the last
paragraph of Subsection 18.3 to ", the date of denial of qualification,"
and to hereby change the reference in Subsection 18.6 from "the
Forfeiture Account" to "forfeiture amounts".
Effective January 1, 1998:
1. Section 11 is amended to restate Subsection 11.4 in its entirety as
follows:
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related Companies
ends, the Participant's vested Account balance is $5,000 or less,
and if at the time of any prior in-service withdrawal or
distribution the Participant's vested Account balance did not
exceed $5,000, the Participant's benefit shall be paid as a single
lump sum as soon as administratively feasible in accordance with
procedures prescribed by the Administrator.
Dated: March 4, 1998 Longview Fibre Company
\s\ L.J. Holbrook
By: L. J. Holbrook
Title: SR VP Finance
The provisions of the above amendment which relate to the Trustee are hereby
approved and executed.
Dated: March 5, 1998 Barclays Global Investors, National Association
By Merrill Lynch, Pierce, Fenner & Smith Inc.
\s\ Roger T. Meyer
By: Roger T. Meyer
Title: Vice President
Change of Trustee Amendment
To The
Longview Fibre Company Branch Plant Hourly Employees' 401(k) Plan
Whereas, Longview Fibre Company (the "Company") sponsors the Longview
Fibre Company Branch Plant Hourly Employees' 401(k) Plan (the "Plan") and the
Plan and its related trust (the "Trust") are maintained under the Longview
Fibre Company Branch Plant Hourly Employees' 401(k) Plan and Trust Agreement,
as amended to date (the "Plan Document");
Whereas, the provisions of the Plan Document relating to the Trustee
constitute the trust agreement (the "Trust Agreement") entered into by and
between the Company and Barclays Global Investors, National Association
("BGI"), as Trustee of the Trust:
Whereas, the Plan Document provides that the Company reserves the right
to amend the Trust Agreement with the approval of the Trustee:
Whereas, effective as of August 29, 1997, pursuant to a sale agreement
between BGI and Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), (i) Merrill Lynch acquired the MasterWorks division of BGI
("MasterWorks") and Merrill Lynch became the successor to the business
formerly carried on by BGI through MasterWorks, and (ii) Merrill Lynch and
BGI agreed to cooperate to obtain the consents of the MasterWorks clients of
BGI to the substitution of Merrill Lynch's affiliated trust companies
(including Merrill Lynch Trust Company, FSB, a federal savings bank,
chartered under the laws of the United States ("Merrill Lynch Trust")) as
successor trustees of their qualified retirement plans maintained through
MasterWorks; and
Whereas, (i) the Company, BGI and Merrill Lynch Trust wish to amend the
Trust Agreement in order to reflect the effects of the transaction described
in the next preceding paragraph and to facilitate the transition of
responsibility for the custody of the Trust assets from BGI to Merrill Lynch
Trust, (ii) BGI wishes to resign as Trustee of the Trust, (iii) the Company
wishes to appoint Merrill Lynch Trust as successor Trustee of the Trust, and
(iv) Merrill Lynch Trust wishes to accept its appointment as successor
Trustee of the Trust;
Now Therefore, the Trust Agreement is amended, effective as of January
1, 1998 (except as otherwise specified below), as follows:
1. The "Trustee" definition of Section 1 is amended to read as follows:
"Trustee". Merrill Lynch Trust Company, FSB, a federal savings bank,
chartered under the law of the United States.
2. The first sentence of the "Jurisdiction and Severability" Section is
amended to read as follows:
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 New Jersey.
3. Effective as of December 31, 1997, (i) BGI hereby resigns as Trustee of
the Trust, (ii) the Company hereby accepts such resignation and appoints
Merrill Lynch Trust as successor Trustee of the Trust, and (iii) Merrill
Lynch Trust hereby accepts such appointment.
4. Effective as of January 1, 1998, or as soon thereafter as is reasonably
practicable, the Company agrees that all Plan assets that are to be
invested in bearing deposits of the Trustee and/or money market type
assets or funds pursuant to applicable provisions of the Plan and Trust
shall be invested, except as otherwise directed by the Administrator and
agreed by the Trustee, in the CMA Money Fund. The Company hereby
acknowledges that it has read and understood the Fund's prospectus.
5. In order to evidence their mutual agreement to the foregoing matters, the
Company, BGI and Merrill Lynch Trust, by their respective duly authorized
officers or representatives, have executed this Trustee Transition
Agreement and Amendment on the dates indicated below.
Dated: December 11, 1997 Longview Fibre Company
\s\ L.J. Holbrook
By: L. J. Holbrook
Title: SR VP Finance
Dated: December 17, 1997 Barclays Global Investors,
National Association
\s\ James R. Sellars
By: James R. Sellars
Title: Principal
\s\ Carolyn R. Herman
By: Carolyn R. Herman
Title: Managing Director
Dated: January 29, 1998 Merrill Lynch Trust Company, FSB
\s\ Thomas A. Panebianco Jr.
By: Thomas A. Panebianco Jr.
Title: Vice President
