As filed with the Securities and Exchange Commission on January 10, 1997.
Registration No.____________
----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
---------------
LADD FURNITURE, INC.
(Exact name of issuer as specified in its charter)
North Carolina 56-1311320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Plaza Center, Box HP-3
High Point, North Carolina 27261-1500
(Address of principal executive offices) (Zip Code)
LADD FURNITURE, INC.
RETIREMENT SAVINGS PLAN FOR HOURLY EMPLOYEES
(Full title of the plan)
William S. Creekmuir
Executive Vice President, Secretary, Treasurer
and Chief Financial Officer
LADD Furniture, Inc.
One Plaza Center, Box HP-3
High Point, North Carolina 27261-1500
(910) 889-0333
(Name, address and telephone number of agent for service)
Copies to
Robert E. Esleeck, Esq.
Petree Stockton, L.L.P.
1001 West Fourth Street
Winston-Salem, North Carolina 27101
Approximate date of proposed commencement of sales pursuant to the plan:
Promptly after the effectiveness of this Registration Statement.
---------------------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered Offering Price Aggregate Offering Registration Fee
Per Share Price
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 300,000 shares $15.4375(1) $4,631,250 $1,403.41
$0.30 par value
====================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee. The
maximum offering price per share is based upon the average of the high
and low sales prices of the common stock on January 7, 1997.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a)
PROSPECTUS
Item 1. Plan Information *
Item 2. Registrant Information and Employee Plan Annual Information *
* The documents containing the information required by Part I of
Form S-8 will not be filed with the Commission as part of this
Registration Statement.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents filed by LADD Furniture, Inc. (the "Company")
with the Securities and Exchange Commission are incorporated in this
Registration Statement by reference: (i) the Annual Report of the Company filed
on Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the year ended December 30, 1995, containing audited consolidated
financial statements for the fiscal year of the Company then ended; (ii) the
Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended March 30,
1996, June 29, 1996 and September 28, 1996; and (iii) the description of the
common stock of the Company contained in the Registration Statement of the
Company filed on Form 8-A pursuant to Section 12 of the Securities Exchange Act
of 1934, including any amendments or reports which have been filed for the
purpose of updating such description. In addition, all documents subsequently
filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Certain legal matters in connection with this offering will be passed
upon for the Company by Petree Stockton, L.L.P., Winston-Salem, North Carolina.
Petree Stockton, L.L.P. serves as general counsel to the Company and has
received and is expected to receive payment for legal services rendered or to be
rendered on an ongoing basis to the Company. As of December 31, 1996, attorneys
at Petree Stockton, L.L.P. owned 12,262 shares of the common stock of the
Company.
Item 6. Indemnification of Directors and Officers
Article VII of the Company's bylaws provides for the indemnification of
officers and directors to the fullest extent permitted under North Carolina
corporate law, as follows:
3
<PAGE>
ARTICLE VII
INDEMNIFICATION AND REIMBURSEMENT
OF DIRECTORS AND OFFICERS
1. Indemnification for Expenses and Liabilities.
(a) Any person who at any time serves or has served:
(1) as a director, officer, employee or agent of the Corporation, (2)
at the request of the Corporation as a director, officer, partner,
trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, or other enterprise, or (3) at the
request of the Corporation as a trustee or administrator under an
employee benefit plan, shall have a right to be indemnified by the
Corporation to the fullest extent from time to time permitted by law
against Liability and Expenses in any Proceeding (including without
limitation a Proceeding brought by or on behalf of the Corporation
itself) arising out of his status as such or activities in any of the
foregoing capacities or results from him being called as a witness at a
time when he was not a named defendant or respondent to any Proceeding.
(b) The Board of Directors of the Corporation shall
take all such action as may be necessary and appropriate to authorize
the Corporation to pay the indemnification required by this provision,
including, without limitation, to the extent needed, making a good
faith evaluation of the manner in which the claimant for indemnity
acted and of the reasonable amount of indemnity due him.
(c) Any person who at any time serves or has served
in any of the aforesaid capacities for or on behalf of the Corporation
shall be deemed to be doing or to have done so in reliance upon, and as
consideration for, the rights provided for herein. Any repeal or
modification of these indemnification provisions shall not affect any
rights or obligations existing at the time of such repeal or
modification. The rights provided for herein shall inure to the benefit
of the legal representatives of any such person and shall not be
exclusive of any other rights to which such person may be entitled
apart from this provision.
(d) The rights granted herein shall not be limited by
the provisions contained in Sections 55-8-51 through 55-8-56 of the
North Carolina Business Corporation Act or any successor to such
statutes.
2. Advance Payment of Expenses. The Corporation shall (upon
receipt of an undertaking by or on behalf of the Director, officer,
employee or agent involved to repay the Expenses described herein
unless it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation against such Expenses) pay Expenses
incurred by such Director, officer, employee or
4
<PAGE>
agent in defending a Proceeding or appearing as a witness at a time
when he has not been named as a defendant or a respondent with respect
thereto in advance of the final disposition of such Proceeding.
3. Insurance. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer,
partner, trustee, employee, or agent of another domestic or foreign
corporation, partnership, joint venture, trust, or other enterprise or
as a trustee or administrator under an employee benefit plan against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him or her against such
liability.
4. Definitions. The following terms as used in this Article
shall have the following meanings. "Proceeding" means any threatened,
pending or completed action, suit, or proceeding and any appeal therein
(and any inquiry or investigation that could lead to such action, suit,
or proceeding), whether civil, criminal, administrative, investigative
or arbitrative and whether formal or informal. "Expenses" means
expenses of every kind, including counsel fees. "Liability" means the
obligation to pay a judgment, settlement, penalty, fine (including an
excise tax assessed with respect to an employee benefit plan),
reasonable expenses incurred with respect to a Proceeding and all
reasonable expenses incurred in enforcing the indemnification rights
provided herein. "Director," "officer," "employee," and "agent" include
the estate or personal representative of a Director, officer, employee,
or agent. "Corporation" shall include any domestic or foreign
predecessor of this Corporation in a merger or other transaction in
which the predecessor's existence ceased upon consummation of the
transaction.
Item 7. Exemption from Registration Claimed
Not Applicable.
5
<PAGE>
Item 8. Exhibits
The following exhibits, listed in accordance with the number assigned
to each in the exhibit table of Item 601 of Regulation S-K, are included in Part
II of this Registration Statement. Exhibit numbers omitted are not applicable.
<TABLE>
<CAPTION>
Exhibit No. Exhibits
<S> <C>
4 LADD Furniture, Inc. Retirement Savings Plan for Hourly Employees.
5 Form of legal opinion of Petree Stockton, L.L.P. with respect to the
legality of the securities being registered hereunder.
24.a Consent of KPMG Peat Marwick LLP.
24.b Consent of Petree Stockton, L.L.P. (Contained in their opinion filed as
Exhibit 5 hereto.)
</TABLE>
Item 9. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(i) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
6
<PAGE>
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
in the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of High Point, State of North Carolina, on December 31,
1996.
LADD FURNITURE, INC.
By s/ William S. Creekmuir
------------------------------------------
William S. Creekmuir, Executive Vice
President, Secretary, Treasurer and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
s/ Richard R. Allen
_____________________________ Chairman of the Board and December 31, 1996
Richard R. Allen Director
s/ William B. Cash
_____________________________ Director December 31, 1996
William B. Cash
s/ James H. Corrigan, Jr.
_____________________________ Director December 31, 1996
James H. Corrigan, Jr.
s/ O. William Fenn, Jr.
_____________________________ Director December 31, 1996
O. William Fenn, Jr.
s/ L. Glenn Orr
_____________________________ Director December 31, 1996
L. Glenn Orr
s/ Don A. Hunziker
_____________________________ Director December 31, 1996
Don A. Hunziker
s/ Dr. Thomas F. Keller
_____________________________ Director December 31, 1996
Dr. Thomas F. Keller
s/ Fred L. Schuermann, Jr.
_____________________________ President, Chief Executive December 31, 1996
Fred L. Schuermann, Jr. Officer and Director
s/ William S. Creekmuir
_____________________________ Executive Vice President, December 31, 1996
William S. Creekmuir Secretary, Treasurer and
Chief Financial Officer
s/ Daryl B. Adams
_____________________________ Vice President, Corporate December 31, 1996
Daryl B. Adams Controller and Chief
Accounting Officer
</TABLE>
<PAGE>
<PAGE>
LADD FURNITURE, INC.
RETIREMENT SAVINGS PLAN
FOR
HOURLY EMPLOYEES
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . 1
1.1 "Account" . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Account Balance" . . . . . . . . . . . . . . . . . 1
1.3 "Affiliated Employer" . . . . . . . . . . . . . . . 1
1.4 "After-Tax Account" . . . . . . . . . . . . . . . . 2
1.5 "Annuity Starting Date" . . . . . . . . . . . . . . 2
1.6 "Before-Tax Account" . . . . . . . . . . . . . . . 2
1.7 "Beneficiary" . . . . . . . . . . . . . . . . . . . 2
1.8 "Break in Service" . . . . . . . . . . . . . . . . 2
1.9 "Code" . . . . . . . . . . . . . . . . . . . . . . 3
1.10 "Committee" . . . . . . . . . . . . . . . . . . . . 3
1.11 "Compensation" . . . . . . . . . . . . . . . . . . 3
1.12 "Contract" . . . . . . . . . . . . . . . . . . . . 5
1.13 "Disability" . . . . . . . . . . . . . . . . . . . 5
1.14 "Effective Date" . . . . . . . . . . . . . . . . . 6
1.15 "Employee" . . . . . . . . . . . . . . . . . . . . 6
1.16 "Employee After-Tax Contributions" . . . . . . . . 6
1.17 "Employer" . . . . . . . . . . . . . . . . . . . . 6
1.18 "Employer Stock" . . . . . . . . . . . . . . . . . 6
1.19 "Employer Stock Fund" . . . . . . . . . . . . . . . 6
1.20 "Employment Commencement Date" . . . . . . . . . . 6
1.21 "Entry Date" . . . . . . . . . . . . . . . . . . . 6
1.22 "Excluded Employee" . . . . . . . . . . . . . . . . 7
1.23 "ERISA" . . . . . . . . . . . . . . . . . . . . . . 7
1.24 "Highly Compensated Employee" . . . . . . . . . . . 7
1.25 "Hour of Service" . . . . . . . . . . . . . . . . . 8
1.26 "Insider" . . . . . . . . . . . . . . . . . . . . . 9
1.27 "Leased Employee" . . . . . . . . . . . . . . . . . 9
1.28 "Limitation Year" . . . . . . . . . . . . . . . . . 10
1.29 "Matching Contributions" . . . . . . . . . . . . . 10
1.30 "Matching Contributions Account" . . . . . . . . . 10
1.31 "Named Fiduciary" . . . . . . . . . . . . . . . . . 10
1.32 "Nonforfeitable" . . . . . . . . . . . . . . . . . 10
1.33 "Nonhighly Compensated Employee" . . . . . . . . . 10
1.34 "Normal Retirement Age" . . . . . . . . . . . . . . 11
1.35 "Participant" . . . . . . . . . . . . . . . . . . . 11
1.36 "Plan" . . . . . . . . . . . . . . . . . . . . . . 11
1.37 "Plan Administrator" . . . . . . . . . . . . . . . 11
1.38 "Plan Year" . . . . . . . . . . . . . . . . . . . . 11
1.39 "Qualified Voluntary Employee Contribution
Account" . . . . . . . . . . . . . . . . . . . . . 11
1.40 "Salary Reduction Contributions" . . . . . . . . . 11
1.41 "Service" . . . . . . . . . . . . . . . . . . . . . 11
1.42 "Taxable Year" . . . . . . . . . . . . . . . . . . 11
1.43 "Trust" . . . . . . . . . . . . . . . . . . . . . . 12
1.44 "Trust Fund" . . . . . . . . . . . . . . . . . . . 12
1.45 "Trustee" . . . . . . . . . . . . . . . . . . . . . 12
1.46 "Valuation Date" . . . . . . . . . . . . . . . . . 12
1.47 "Year of Service" . . . . . . . . . . . . . . . . . 12
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ARTICLE II
ELIGIBILITY AND PARTICIPATION . . . . . . . 12
2.1 PARTICIPATION OF EMPLOYEES ON EFFECTIVE DATE . . . 12
2.2 PARTICIPATION OF EMPLOYEES AFTER EFFECTIVE DATE . . 12
2.3 STATUS DURING LEAVE OF ABSENCE . . . . . . . . . . 13
2.4 PARTICIPATION UPON RE-EMPLOYMENT . . . . . . . . . 13
2.5 CHANGE IN EMPLOYEE STATUS . . . . . . . . . . . . . 13
2.6 INCLUSION OF INELIGIBLE EMPLOYEE . . . . . . . . . 14
2.7 OMISSION OF ELIGIBLE EMPLOYEE . . . . . . . . . . . 14
2.8 PARTICIPATION DURING MILITARY SERVICE . . . . . . . 14
ARTICLE III
PARTICIPANT CONTRIBUTIONS . . . . . . . . 15
3.1 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS . . . . . . 15
3.2 ROLLOVER CONTRIBUTIONS . . . . . . . . . . . . . . 15
3.3 TRUSTEE-TO-TRUSTEE TRANSFERS TO THE PLAN . . . . . 16
3.4 NONFORFEITABILITY OF PARTICIPANT CONTRIBUTIONS . . 17
3.5 PARTICIPANT CONTRIBUTIONS - ACCOUNT BALANCE . . . . 17
ARTICLE IV
EMPLOYER CONTRIBUTIONS . . . . . . . . 17
4.1 EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . 17
4.2 CODE ss 401(k) ARRANGEMENT . . . . . . . . . . . . 17
4.3 MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . 18
4.4 ACCRUAL OF BENEFIT . . . . . . . . . . . . . . . . 19
4.5 RETURN OF EMPLOYER CONTRIBUTIONS . . . . . . . . . 19
4.6 TIME OF PAYMENT OF CONTRIBUTION . . . . . . . . . . 20
4.7 ANNUAL SALARY REDUCTION CONTRIBUTION LIMITATION . . 20
4.8 ALLOCABLE INCOME ATTRIBUTABLE TO EXCESS SALARY
REDUCTIONS . . . . . . . . . . . . . . . . . . . . 21
4.9 ACTUAL SALARY REDUCTION PERCENTAGE ("ADP") TEST . . 21
4.10 CALCULATION OF AVERAGE SALARY REDUCTION
PERCENTAGE . . . . . . . . . . . . . . . . . . . . 22
4.11 AGGREGATION OF CERTAIN CODE ss 401(k) ARRANGEMENTS . 23
4.12 CHARACTERIZATION OF EXCESS CONTRIBUTIONS . . . . . 23
4.13 DISTRIBUTION OF EXCESS CONTRIBUTIONS . . . . . . . 23
4.14 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING
CONTRIBUTIONS/PARTICIPANT NONDEDUCTIBLE
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 25
4.15 CALCULATION OF AVERAGE CONTRIBUTION PERCENTAGE . . 25
4.16 AGGREGATION OF CERTAIN PLANS . . . . . . . . . . . 26
4.17 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS . . 27
4.18 CHARACTERIZATION OF EXCESS AGGREGATE
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 28
4.19 MULTIPLE USE LIMITATION . . . . . . . . . . . . . . 28
4.20 LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . 29
4.21 DETERMINATION OF MAXIMUM PERMISSIBLE AMOUNT . . . . 29
4.22 ELIMINATION OF EXCESS AMOUNT . . . . . . . . . . . 30
4.23 DEFINED BENEFIT PLAN LIMITATION . . . . . . . . . . 31
4.24 DEFINITIONS - ARTICLE IV . . . . . . . . . . . . . 31
4.25 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS . . . . 35
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ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING . . . 36
5.1 BEFORE-TAX ACCOUNT, ROLLOVER ACCOUNT, AFTER-TAX
ACCOUNT AND QVEC ACCOUNT . . . . . . . . . . . . . 36
5.2 MATCHING CONTRIBUTIONS ACCOUNT . . . . . . . . . . 36
ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS . . . . 37
6.1 TIME OF PAYMENT OF ACCOUNT BALANCE . . . . . . . . 37
6.2 SEPARATION FROM SERVICE FOR ANY REASON . . . . . . 37
6.3 DEATH OF THE PARTICIPANT . . . . . . . . . . . . . 38
6.4 METHOD OF PAYMENT . . . . . . . . . . . . . . . . . 38
6.5 DISTRIBUTION FOR MINOR BENEFICIARY . . . . . . . . 45
6.6 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN . . 45
6.7 DIRECT ROLLOVER TO ANOTHER QUALIFIED PLAN . . . . . 46
6.8 DISTRIBUTION RESTRICTIONS . . . . . . . . . . . . . 47
6.9 TRANSITIONAL ELECTIONS . . . . . . . . . . . . . . 47
6.10 REQUIRED BEGINNING DATE . . . . . . . . . . . . . . 48
6.11 LIMITATIONS ON DISTRIBUTIONS - INCIDENTAL BENEFIT
RULE . . . . . . . . . . . . . . . . . . . . . . . 49
6.12 RESTRICTIONS ON PAYMENTS AFTER DEATH OF
PARTICIPANT . . . . . . . . . . . . . . . . . . . . 50
6.13 CODE ss 401(a)(9) . . . . . . . . . . . . . . . . . 50
ARTICLE VII
IN-SERVICE WITHDRAWALS AND LOANS . . . . . . 51
7.1 AFTER-TAX ACCOUNT - WITHDRAWAL/DISTRIBUTION . . . . 51
7.2 IN-SERVICE WITHDRAWALS FOR PENNSYLVANIA HOUSE
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . 51
7.3 ATTAINMENT OF AGE 59 1/2. . . . . . . . . . . . . . 52
7.4 HARDSHIP DISTRIBUTIONS - GENERAL PROVISIONS . . . . 52
7.5 HARDSHIP DISTRIBUTIONS - FINANCIAL NEED . . . . . . 53
7.6 PROCEDURES AND RESTRICTIONS . . . . . . . . . . . . 54
7.7 LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . 54
7.8 LOAN POLICY . . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII
EMPLOYER ADMINISTRATIVE PROVISIONS . . . . . 55
8.1 IN GENERAL . . . . . . . . . . . . . . . . . . . . 55
8.2 INFORMATION TO PLAN ADMINISTRATOR . . . . . . . . . 55
8.3 NO LIABILITY . . . . . . . . . . . . . . . . . . . 56
8.4 INDEMNITY OF CERTAIN FIDUCIARIES . . . . . . . . . 56
8.5 INVESTMENT FUNDS . . . . . . . . . . . . . . . . . 56
8.6 AMENDMENT TO VESTING SCHEDULE . . . . . . . . . . . 57
ARTICLE IX
PARTICIPANT ADMINISTRATIVE PROVISIONS . . . . . 58
9.1 BENEFICIARY DESIGNATION . . . . . . . . . . . . . . 58
9.2 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY . . 58
9.3 PERSONAL DATA TO PLAN ADMINISTRATOR . . . . . . . . 59
9.4 ADDRESS FOR NOTIFICATION . . . . . . . . . . . . . 59
9.5 NOTICE OF CHANGE IN TERMS . . . . . . . . . . . . . 59
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9.6 LITIGATION AGAINST THE TRUST . . . . . . . . . . . 59
9.7 INFORMATION AVAILABLE . . . . . . . . . . . . . . . 60
9.8 PARTICIPANT DIRECTION OF INVESTMENT . . . . . . . . 60
ARTICLE X
PLAN ADMINISTRATOR -
DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS . . . 60
10.1 ADMINISTRATOR . . . . . . . . . . . . . . . . . . . 60
10.2 ADMINISTRATIVE POWERS AND DUTIES . . . . . . . . . 60
10.3 FUNDING POLICY . . . . . . . . . . . . . . . . . . 62
10.4 RULES AND DECISIONS . . . . . . . . . . . . . . . . 62
10.5 MANNER OF ACTION . . . . . . . . . . . . . . . . . 62
10.6 INDIVIDUAL ACCOUNTS . . . . . . . . . . . . . . . . 62
10.7 VALUE OF PARTICIPANT'S ACCOUNT BALANCE . . . . . . 63
10.8 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR
LOSS . . . . . . . . . . . . . . . . . . . . . . . 63
10.9 DETERMINATION AS TO ELIGIBILITY . . . . . . . . . . 64
10.10 AUTHORIZATION OF BENEFIT PAYMENTS . . . . . . . . 64
10.11 PAYMENT FOR BENEFIT OF DISABLED OR INCAPACITATED
PERSON . . . . . . . . . . . . . . . . . . . . . . 64
10.12 BOND . . . . . . . . . . . . . . . . . . . . . . . 65
10.13 INDIVIDUAL STATEMENT . . . . . . . . . . . . . . . 65
10.14 ACCOUNT CHARGED . . . . . . . . . . . . . . . . . 65
10.15 UNCLAIMED ACCOUNT PROCEDURE . . . . . . . . . . . 65
10.16 TERMS TO BE COMMUNICATED . . . . . . . . . . . . . 66
10.17 SIGNATURE AUTHORITY . . . . . . . . . . . . . . . 67
10.18 FIDUCIARY NOTICE REQUIREMENTS . . . . . . . . . . 67
10.19 RELIANCE . . . . . . . . . . . . . . . . . . . . . 67
10.20 SUCCESSOR FIDUCIARY . . . . . . . . . . . . . . . 67
10.21 UNIFORM APPLICATION . . . . . . . . . . . . . . . 67
ARTICLE XI
TRUSTEE POWERS AND DUTIES . . . . . . . . 68
11.1 TRUST . . . . . . . . . . . . . . . . . . . . . . . 68
11.2 TRUST FUND . . . . . . . . . . . . . . . . . . . . 68
11.3 ESTABLISHMENT OF TRUST . . . . . . . . . . . . . . 68
11.4 ACCEPTANCE . . . . . . . . . . . . . . . . . . . . 69
11.5 RECEIPT OF CONTRIBUTIONS . . . . . . . . . . . . . 69
11.6 INVESTMENT POWERS . . . . . . . . . . . . . . . . . 69
11.7 INVESTMENT IN QUALIFYING EMPLOYER SECURITIES AND
QUALIFYING EMPLOYER REAL PROPERTY . . . . . . . . . 72
11.8 RECORDS AND STATEMENTS . . . . . . . . . . . . . . 72
11.9 FEES AND EXPENSES FROM FUND . . . . . . . . . . . . 72
11.10 EXERCISE OF POWERS . . . . . . . . . . . . . . . . 72
11.11 POWER TO DO ANY NECESSARY ACTS . . . . . . . . . . 73
11.12 ACCOUNTING . . . . . . . . . . . . . . . . . . . . 73
11.13 PARTIES TO LITIGATION . . . . . . . . . . . . . . 73
11.14 PROFESSIONAL AGENTS . . . . . . . . . . . . . . . 73
11.15 DISTRIBUTION OF CASH OR PROPERTY . . . . . . . . . 73
11.16 DISTRIBUTION DIRECTIONS . . . . . . . . . . . . . 74
11.17 THIRD PARTY/MULTIPLE TRUSTEES . . . . . . . . . . 74
11.18 RESIGNATION . . . . . . . . . . . . . . . . . . . 74
iv
<PAGE>
11.19 REMOVAL . . . . . . . . . . . . . . . . . . . . . 74
11.20 INTERIM DUTIES AND SUCCESSOR TRUSTEE . . . . . . . 74
11.21 VALUATION OF TRUST . . . . . . . . . . . . . . . . 75
11.22 AUTHORITY OF TRUSTEE . . . . . . . . . . . . . . . 75
11.23 DOCUMENTS AND NOTICES . . . . . . . . . . . . . . 75
11.24 POSTPONEMENT OF ACTION . . . . . . . . . . . . . . 75
11.25 DELEGATION OF RESPONSIBILITIES . . . . . . . . . . 75
11.26 DETERMINATION OF ELIGIBILITY . . . . . . . . . . . 76
11.27 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER,
ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY
APPOINTED . . . . . . . . . . . . . . . . . . . . . 76
11.28 INVESTMENT IN GROUP TRUST FUND . . . . . . . . . . 76
11.29 APPOINTMENT OF ANCILLARY TRUSTEE OR INDEPENDENT
FIDUCIARY . . . . . . . . . . . . . . . . . . . . 77
11.30 PROHIBITED TRANSACTIONS . . . . . . . . . . . . . 78
ARTICLE XII
CLAIMS PROCEDURE . . . . . . . . . . 79
12.1 FILING A CLAIM . . . . . . . . . . . . . . . . . . 79
12.2 NOTIFICATION TO CLAIMANT . . . . . . . . . . . . . 79
12.3 CLAIMS REVIEW PROCEDURE . . . . . . . . . . . . . . 80
12.4 DECISION ON REVIEW . . . . . . . . . . . . . . . . 80
12.5 ACTION BY AUTHORIZED REPRESENTATIVE OF CLAIMANT . . 81
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . 81
13.1 PURPOSE OF PLAN AND TRUST . . . . . . . . . . . . . 81
13.2 ALTERNATIVE ACTS . . . . . . . . . . . . . . . . . 81
13.3 NECESSARY ACTS . . . . . . . . . . . . . . . . . . 81
13.4 MAXIMUM DURATION . . . . . . . . . . . . . . . . . 81
13.5 BINDING EFFECT . . . . . . . . . . . . . . . . . . 81
13.6 EVIDENCE . . . . . . . . . . . . . . . . . . . . . 81
13.7 NO RESPONSIBILITY FOR EMPLOYER ACTION . . . . . . . 82
13.8 FIDUCIARIES NOT INSURERS . . . . . . . . . . . . . 82
13.9 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . 82
13.10 SUCCESSORS . . . . . . . . . . . . . . . . . . . . 82
13.11 NONALIENATION OF BENEFITS . . . . . . . . . . . . 82
13.12 RIGHTS TO TRUST ASSETS . . . . . . . . . . . . . . 83
13.13 HEADINGS . . . . . . . . . . . . . . . . . . . . . 83
13.14 GENDER AND NUMBER . . . . . . . . . . . . . . . . 83
13.15 STATE LAW . . . . . . . . . . . . . . . . . . . . 83
13.16 EMPLOYMENT NOT GUARANTEED . . . . . . . . . . . . 83
ARTICLE XIV
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION . . . . 84
14.1 EXCLUSIVE BENEFIT . . . . . . . . . . . . . . . . . 84
14.2 AMENDMENT BY EMPLOYER . . . . . . . . . . . . . . . 84
14.3 CODE ss 411(d)(6) PROTECTED BENEFITS . . . . . . . 85
14.4 DISCONTINUANCE . . . . . . . . . . . . . . . . . . 85
14.5 FULL VESTING ON TERMINATION . . . . . . . . . . . . 85
14.6 MERGER/DIRECT TRANSFER . . . . . . . . . . . . . . 85
14.7 ELECTIVE TRANSFERS . . . . . . . . . . . . . . . . 86
v
<PAGE>
14.8 TERMINATION . . . . . . . . . . . . . . . . . . . . 87
14.9 EXERCISE OF AUTHORITY . . . . . . . . . . . . . . . 88
ARTICLE XV
PARTICIPATING EMPLOYERS . . . . . . . . 88
15.1 PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . 88
15.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS . . . . . . 89
15.3 DESIGNATION OF AGENT . . . . . . . . . . . . . . . 89
15.4 TRANSFERS . . . . . . . . . . . . . . . . . . . . 89
15.5 PARTICIPATING EMPLOYER'S CONTRIBUTION . . . . . . . 90
15.6 AMENDMENT . . . . . . . . . . . . . . . . . . . . . 91
15.7 DISCONTINUANCE OF PARTICIPATION . . . . . . . . . . 91
15.8 ADMINISTRATOR'S AUTHORITY . . . . . . . . . . . . . 91
15.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE . 91
ARTICLE XVI
QUALIFIED DOMESTIC RELATIONS ORDERS . . . . . 92
16.1 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS . . . 92
ARTICLE XVII
TOP-HEAVY PLAN PROVISIONS . . . . . . . . 93
17.1 EFFECT OF ARTICLE XVII ON PLAN . . . . . . . . . . 93
17.2 DETERMINATION OF TOP-HEAVY STATUS . . . . . . . . . 93
17.3 DEFINITIONS . . . . . . . . . . . . . . . . . . . . 95
17.4 TOP-HEAVY ALLOCATIONS . . . . . . . . . . . . . . . 96
vi
<PAGE>
LADD FURNITURE, INC.
RETIREMENT SAVINGS PLAN FOR HOURLY EMPLOYEES
WHEREAS, LADD Furniture, Inc. ("Company"), a corporation
organized under the laws of the State of North Carolina, previously
established the Savings Plan for Hourly Employees of the Divisions and
Subsidiaries of LADD Furniture, Inc. ("Plan") effective January 1,
1993, for the exclusive benefit of its employees; and
WHEREAS, the portion of the Choice Plus Plan of Pennsylvania
House, Inc., (the "Choice Plus Plan") and The Pilliod Furniture, Inc.
401 (k) Plan (the "Pilliod Plan") covering hourly employees are being
merged into the Plan effective January 1, 1997; and
WHEREAS, the Company desires to amend and rename the Plan to
reflect the merger of the Choice Plus Plan and the Pilliod Plan into
this Plan; and
NOW, THEREFORE, effective January 1, 1997, except as otherwise
expressly provided herein, the LADD Furniture, Inc. Retirement Savings
Plan for Hourly Employees shall be amended and restated to read as
follows:
ARTICLE I
DEFINITIONS
1.1 "Account" means the separate account(s) which the Plan
Administrator or the Trustee maintains for a Participant under the
Employer's Plan, whether attributable to Employer or Participant
contributions.
1.2 "Account Balance" means the total amount standing in a
Participant's Account(s) as of any date derived from both Employer
contributions and Participant contributions, if any.
1.3 "Affiliated Employer" means the Employer and any corporation
which is a member of a controlled group of corporations (as defined in
Code ss 414(b)) which includes the Employer; any trade or business
(whether or not incorporated) which is under common control (as
defined in Code ss 414(c)) with the Employer; any organization
(whether or not incorporated) which is a member of an affiliated
service group (as defined in Code ss 414(m) or 414(o)) which
includes the Employer; and any other entity required to be
aggregated with the Employer pursuant to regulations under Code
ss 414(o).
1.4 "After-Tax Account" means the account established for a
Participant to which Employee After-Tax Contributions made pursuant to
Section 3.1 are credited.
1
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1.5 "Annuity Starting Date" means the first day on which all
events have occurred which entitle the Participant to receive a
distribution from the Plan.
1.6 "Before-Tax Account" means the account established for a
Participant to which Salary Reduction Contributions made pursuant to
Section 4.2 are credited.
1.7 "Beneficiary" is a person or persons or legal entity
designated by a Participant who is or may become entitled to a benefit
under the Plan after the Participant's death. If a Participant is
married, his Beneficiary shall be his spouse unless he names someone
other than his spouse as his Beneficiary and:
(a) The Participant's spouse consents in writing to such
election, such consent acknowledges the effect of the election
(including naming the specific nonspouse beneficiary, and such
consent is witnessed by a Plan representative or acknowledged
before a notary public; or
(b) It is established to the satisfaction of the Plan
Administrator that such spouse's consent cannot be obtained
because there is no spouse, because the spouse cannot be located,
or because of other circumstances prescribed in Treasury
regulations.
The Participant shall have the right to revoke any election made
under this Section 1.7 at any time. Any consent given by a
Participant's spouse shall be irrevocable.
A Beneficiary who becomes entitled to a benefit under the Plan
remains a Beneficiary under the Plan until the Trustee has fully
distributed his benefit to him. A Beneficiary's right to (and the Plan
Administrator's or Trustee's duty to provide to the Beneficiary)
information or data concerning the Plan does not arise until he first
becomes entitled to receive a benefit under the Plan.
1.8 "Break in Service" means a twelve (12) consecutive month
period during which a Participant completes five hundred (500) or
fewer Hours of Service with the Employer (excluding, however, any
period covered by an authorized leave of absence). The "twelve
consecutive month period" is the same twelve (12) consecutive month
period for which the Plan measures "Years of Service" under Section
1.47. For purposes of vesting, if, pursuant to Section 1.47, the Plan
does not require more than 500 Hours of Service to receive credit for
a Year of Service, a Participant incurs a Break of Service in a
vesting computation period in which he fails to complete a Year of
Service.
1.9 "Code" means the Internal Revenue Code of 1986, as
amended.
2
<PAGE>
1.10 "Committee" means the Retirement Plan Committee
appointed by the Plan Administrator.
1.11 "Compensation" means the Participant's wages, salaries,
commissions paid to sales persons not treated as independent
contractors, bonuses, and any other similar earned compensation
approved by the Plan Administrator. Compensation also includes
Elective Contributions in the definition of Compensation. "Elective
Contributions" are amounts excludable from the Employee's gross income
under Code ssss 125, 402(a)(8), 402(h) or 403(b), and contributed by
the Employer, at the Employee's election, to a Code ss 401(k)
arrangement (other than this Plan), a simplified employee pension
plan, cafeteria plan or tax-sheltered annuity. The term "Compensation"
does not include:
(a) Employer contributions (other than "Elective
Contributions to a plan of deferred compensation to the extent
the contributions are not includable in the gross income of the
Employee for the Taxable Year in which contributed, on behalf of
an Employee to a simplified employee pension plan to the extent
such contributions are excludable from the Employee's gross
income, and any distributions from a plan of deferred
compensation, regardless of whether such amounts are includable
in the gross income of the Employee when distributed;
(b) Amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a stock option described in
Part II, Subchapter D, Chapter 1 of the Code; and
(d) Other amounts which receive special tax benefits, such
as moving allowances, premiums for group life insurance
(including premiums that are includable in the gross income of
the Employee ) or contributions made by the Employer (whether or
not under a salary reduction agreement) towards the purchase of
an annuity contract described in Code ss 403(b) (whether or not
the amounts are actually excludable from the gross income of the
Employee), other than "Elective Contributions."
Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.11, unless the Plan reference specifies a
modification to this definition. The Plan Administrator will take into
account only Compensation paid for the relevant period. A Compensation
payment includes Compensation by the Employer through another person
under the common paymaster provisions in Code ssss 3121 and 3306.
3
<PAGE>
For Plan Years beginning after December 31, 1988, the annual
Compensation of each Participant taken into account under the Plan
shall not exceed $200,000. This limitation shall be adjusted by the
Secretary at the same time and in the same manner as under Code ss
415(d), except that the dollar increase in effect on January 1 of any
calendar year is effective for Plan Years beginning in such calendar
year and the first adjustment to the $200,000 limitation is effected
on January 1, 1990. If the Plan determines Compensation on a period of
time that contains fewer than twelve (12) calendar months, then the
annual Compensation limit is an amount equal to the annual
Compensation limit for the calendar year in which the Compensation
period begins, multiplied by the ratio obtained by dividing the number
of full months in the period by twelve (12).
In determining the Compensation of a Participant for purposes of
this limitation, the rules of Code ss 414(q)(6) shall apply, except in
applying such rules, the term "family" shall include only the spouse
of the Participant and any lineal descendants of the Participant who
have not attained age nineteen (19) before the close of the year. If,
for a Plan Year, the combined Compensation of the Employee and such
Family Members who are Participants entitled to an allocation for that
Plan Year exceeds the $200,000 (or adjusted) limitation,
"Compensation" for each such Participant, for purposes of the
contribution and allocation provisions of Article IV, means his
Adjusted Compensation. "Adjusted Compensation" is the amount which
bears the same ratio to the $200,000 (or adjusted) limitation as the
affected Participant's Compensation (without regard to the $200,000
Compensation limitation) bears to the combined Compensation of all the
affected Participants in the family unit. If the Plan uses permitted
disparity, the Plan Administrator must determine the integration level
of each affected Family Member Participant prior to the proration of
the $200,000 Compensation limitation, but the combined integration
level of the affected Participants may not exceed $200,000 (or the
adjusted limitation). The combined Excess Compensation of the affected
Participants in the family unit may not exceed $200,000 (or the
adjusted limitation) minus the affected Participants' combined
integration level (as determined under the preceding sentence). If the
combined Excess Compensation exceeds this limitation, the Plan
Administrator will prorate the Excess Compensation limitation among
the affected Participants in the family unit in proportion to each
such individual's Adjusted Compensation minus his integration level.
For purposes of determining whether the Plan discriminates in
favor of Highly Compensated Employees, Compensation means Compensation
as defined in this Section 1.11 may elect to exclude from this
nondiscrimination definition of Compensation, any items of
Compensation excludable under Code ss 414(s) and the applicable
Treasury regulations, provided such adjusted definition conforms to
the nondiscrimination requirements of those regulations.
4
<PAGE>
In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Employee taken into account under the Plan
shall not exceed the annual compensation limit set forth under the
Omnibus Budget Reconciliation Act of 1993 ("OBRA'93"). The OBRA'93
annual compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Code ss
401(a)(17)(B). The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding twelve (12) months, over
which Compensation is determined (determination period) beginning in
such calendar year. If a determination period consists of fewer than
twelve (12) months, the OBRA'93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is
twelve (12).
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Code ss 401(a)(17)
shall mean the OBRA'93 annual compensation limit set forth in this
provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current
Plan Year, the Compensation for that prior determination period is
subject to the OBRA'93 annual compensation limit in effect for that
prior determination period. For this purpose, for determination
periods beginning before the first day of the first Plan Year
beginning on or after January 1, 1994, the OBRA'93 annual compensation
limit is $150,000.
1.12 "Contract" means any annuity contract issued pursuant
to the terms of the Plan.
1.13 "Disability" means the Participant, because of a physical or
mental disability, will be unable to perform the duties of his
customary position of employment (or is unable to engage in any
substantial gainful activity) for an indefinite period which the Plan
Administrator considers will be of long continued duration. A
Participant also is disabled if he incurs the permanent loss or loss
of use of a member or function of the body, or is permanently
disfigured, and incurs a Separation from Service. The Plan considers a
Participant disabled on the date the Plan Administrator determines the
Participant satisfies the definition of Disability, based on a
determination by the Social Security Administration. The Plan
Administrator will apply the provisions of this Section 1.13 in a
nondiscriminatory, consistent and uniform manner.
1.14 "Effective Date" means January 1, 1997, unless otherwise
specified.
5
<PAGE>
1.15 "Employee" means any employee who is compensated on a hourly
basis (excluding Self-Employed Individuals, temporary employees and,
before January 1, 1995, part-time employees) of the Employer
maintaining this Plan, or of any Affiliated Employer which adopts this
Plan in accordance with the terms and provisions of Section 15.1.
Notwithstanding anything herein to the contrary, collectively
bargained employees shall not be eligible to participate in the Plan.
This exclusion applies to any employee of the Employer included in a
unit of employees covered by an agreement which the Secretary of Labor
finds to be a collective bargaining agreement between employee
representatives and one or more employers, unless (a) the collective
bargaining agreement requires the employee to be included within the
Plan; or (b) the Employer authorizes the unit to participate in the
Plan. The term "employee representatives" does not include any
organization, more than half the members of which are owners,
officers, or executives of the Employer. In addition, nonresident
aliens who do not receive any earned income (as defined in Code ss
911(d)(2)) which constitutes U.S. source income (as defined in Code ss
861(a)(3)) are excluded from participation in the Plan.
1.16 "Employee After-Tax Contributions" mean contributions
made by a Participant on a nondeductible after-tax basis, whether
voluntary or mandatory, and designated, at the time of
contribution, as an Employee (or nondeductible) contribution.
Salary Reduction Contributions are not Employee After-Tax
Contributions.
1.17 "Employer" means LADD Furniture, Inc., including any
Affiliated Employer which adopts this Plan and becomes a
"Participating Employer" hereunder, as defined in Section 15.1, by
executing a Participation Agreement to the Plan, and any successor
which shall maintain this Plan or any predecessor which has maintained
this Plan.
1.18 "Employer Stock" means common stock of LADD Furniture,
Inc.
1.19 "Employer Stock Fund" means the investment fund under the
Plan consisting of Employer Stock.
1.20 "Employment Commencement Date" means the date on which the
Employee first performs an Hour of Service for the Employer.
1.21 "Entry Date" means the beginning of the first payroll period
following an Employee's completion of the eligibility requirements set
forth in Section 2.1.
1.22 "Excluded Employee" mean an employee of the Employer who
does not satisfy the definition of Employee in Section 1.15.
6
<PAGE>
1.23 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.24 "Highly Compensated Employee" includes Highly Compen-
sated active Employees and Highly Compensated former Employees.
A Highly Compensated active Employee includes any Employee who
performs service for the Employer during the determination year and
who, during the look-back year:
(a) received Compensation from the Employer in excess
of $75,000 (as adjusted pursuant to Code ss 415(d));
(b) received Compensation from the Employer in excess of
$50,000 (as adjusted pursuant to Code ss 415(d)) and was a member
of the top-paid group for such year; or
(c) was an officer of the Employer and received Compensation
during such year that is greater than fifty percent (50%) of the
dollar limitation in effect under Code ss 415(b)(1)(A).
The term "Highly Compensated Employee" also includes: (i)
Employees who are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back year" and
the Employee is one of the one hundred (100) Employees who received
the most Compensation from the Employer during the determination year;
and (ii) Employees who are five percent (5%) owners at any time during
the look-back year or determination year. The number of officers taken
into account under clause (c) above will not exceed the greater of
three (3) or ten percent (10%) of the total number (after application
of Code ss 414(q) exclusions) of Employees, but in no event more than
fifty (50) officers. If no officer has satisfied the Compensation
requirement of (c) above during either a determination year or
look-back year, the highest paid officer for such year shall be
treated as a Highly Compensated Employee.
For purposes of this Section 1.24, the determination year shall
be the Plan Year and the look-back year shall be the twelve (12) month
period immediately preceding the determination year.
A Highly Compensated former Employee includes any Employee who
separated from Service (or was deemed to have separated from Service,
as determined under Treasury regulations) prior to the determination
year, performs no Service for the Employer during the determination
year, and was a Highly Compensated active Employee for either the
separation year or any determination year ending on or after the
Employee's fifty-fifth (55th) birthday. If the former Employee's
Separation from Service occurred prior to January 1, 1987, he is a
Highly Compensated Employee only if he satisfied clause (a) of this
Section 1.24 or received Compensation in excess
7
<PAGE>
of $50,000 during: (1) the year of his Separation from Service (or the
prior year); or (2) any year ending after his fifty-fourth (54th)
birthday.
If an Employee is, during a determination year or look-back year,
a Family Member of either a five percent (5%) owner who is an active
or former Employee or a Highly Compensated Employee who is one of the
ten (10) most Highly Compensated Employees ranked on the basis of
Compensation paid by the Employer during such year, then the Family
Member and the five percent (5%) owner or top-ten Highly Compensated
Employee shall be aggregated. For purposes of determining Highly
Compensated Employees, "Family Member" shall mean a spouse, lineal
ascendant or descendant, or a spouse of a lineal ascendant or
descendant. In such case, the Family Member and five percent (5%)
owner or top-ten Highly Compensated Employee shall be treated as a
single Employee receiving Compensation and Plan contributions or
benefits equal to the sum of such Compensation and contributions or
benefits of the Family Member and five percent (5%) owner or top-ten
Highly Compensated Employees. This aggregation rule applies to a
Family Member even if that Family Member is a Highly Compensated
Employee without family aggregation.
Effective January 1, 1997, a Participant shall be considered to
be a Highly Compensated Employee if he (1) was a five-percent owner at
any time during the current Plan Year or the preceding Plan Year; or
(2) had Compensation from the Employer in excess of $80,000 (as
adjusted for inflation) during the preceding Plan Year and was in the
Top Paid Group. The family aggregation rules described above are not
in effect after December 31, 1996.
1.25 "Hour of Service" means:
(a) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for which the
Employee is entitled to payment, for the performance of duties
for the Employer. The Hours of Service under this subparagraph
(a) will be credited to the Employee for the computation period
in which the Employee performs the duties, irrespective of when
paid;
(b) Each Hour of Service for which the Employer, either
directly or indirectly, pays an Employee, or for which the
Employee is entitled to payment (irrespective of whether the
employment relationship is terminated), for reasons other than
for the performance of duties during a computation period, such
as leave of absence (including maternity or paternity leave),
vacation, holiday, sick leave, illness, incapacity (including
disability), layoff, jury duty or military duty. No more than 501
Hours of Service will be credited under this subparagraph (b) to
an Employee on account of any single continuous period during
which the Employee does not perform any
8
<PAGE>
duties (whether or not such period occurs during a single
computation period). Hours of Service under this subparagraph (b)
will be calculated and credited in accordance with the rules of
paragraphs (b) and (c) of Labor Regulation ss 2530.200b-2, which
the Plan, by this reference, specifically incorporates in full
within this subparagraph (b); and
(c) Each Hour of Service for back pay, irrespective of
mitigation of damages, to which the Employer has agreed or for
which the Employee has received an award. The same Hours of
Service will not be credited both under subparagraph (a) or
subparagraph (b), as the case may be, and under this subparagraph
(c). Hours of Service will be credited under this subparagraph
(c) to the Employee for the computation period(s) to which the
award or the agreement pertains rather than for the computation
period in which the award, agreement or payment is made.
A computation period for purposes of this Section 1.25 is the
Plan Year, Year of Service period, Break in Service period or other
period, as determined under the Plan provision for which the
Employee's Hours of Service are being measured.
Hours of Service will be credited for employment with other
members of an affiliated service group (under Code ss 414(m)), a
controlled group of corporations (under Code ss 414(b)), or a group of
trades or businesses under common control (under Code ss 414(c)) of
which the Employer is a member, and any other entity required to be
aggregated with the Employer pursuant to Code ss 414(o). Hours of
Service will also be credited for any individual considered an
Employee for purposes of this Plan under Code ss 414(n) or 414(o).
The Plan Administrator will use in crediting an Employee with
Hours of Service the "actual" method based on hours worked and hours
for which the Employer makes payment or for which payment is due from
the Employer.
1.26 "Insider" means any person subject to the reporting
requirements under Section 16(a) of the Securities Exchange Act of
1934, as amended.
1.27 "Leased Employee" means an individual (who otherwise is not
an Employee of the Employer) who, pursuant to a leasing agreement
between the Employer and any other person, has performed services for
the Employer (or for the Employer and any persons related to the
Employer within the meaning of Code ss 414(n)(6)) on a substantially
full time basis for at least one (1) year and who performs services
historically performed by employees in the Employer's business field.
Unless the Leased Employee is otherwise covered in a safe harbor plan
as provided below, the Plan treats a Leased Employee as an Employee of
the Employer for purposes of determining the number or identity of
Highly Compensated Employees,
9
<PAGE>
and for purposes of the pension requirements of Code ss 414(n)(3). If
a Leased Employee is treated as an Employee by reason of this Section
1.27, "Compensation" includes Compensation from the leasing
organization which is attributable to services performed for the
Employer.
The Plan does not treat a Leased Employee as an Employee if the
leasing organization covers the employee in a safe harbor plan and,
prior to application of this safe harbor plan exception, twenty
percent (20%) or less of the Employer's Employees (other than Highly
Compensated Employees) are Leased Employees. A safe harbor plan is a
money purchase pension plan providing immediate participation, full
and immediate vesting, and a nonintegrated contribution formula equal
to at least ten percent (10%) of the employee's compensation without
regard to employment by the leasing organization on a specified date.
The safe harbor plan must determine the ten percent (10%) contribution
on the basis of compensation as defined in Code ss 415(c)(3) plus
Elective Contributions (as defined in Section 1.11).
1.28 "Limitation Year" means the twelve (12) consecutive month
period ending on December 31. All qualified plans maintained by the
Employer must use the same Limitation Year. If the Limitation Year is
amended to a new different twelve (12) consecutive month period, the
new Limitation Year must begin on a date within the Limitation Year in
which the amendment is made.
1.29 "Matching Contributions" mean contributions made by the
Employer on account of a Participant's Salary Reduction Contributions.
1.30 "Matching Contributions Account" means the account
established and maintained by the Administrator for each Participant
with respect to his total interest in the Plan and Trust resulting
from the Employer's Matching Contributions made pursuant to Section
4.1 of the Plan. The Matching Contributions Account shall be subject
to the vesting schedule set forth in Section 5.2 of the Plan.
1.31 "Named Fiduciary" means the person, designated as
hereinafter provided, who shall be in charge of the operation and
administration of the Plan.
1.32 "Nonforfeitable" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to the
Participant's Account Balance.
1.33 "Nonhighly Compensated Employee" means any Employee who
is not a Highly Compensated Employee.
1.34 "Normal Retirement Age" means age 65 and "Normal Retirement
Date" means the first day of the month following attainment of
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age 65. A Participant shall become fully vested in his Account Balance
upon attaining his Normal Retirement Age, and shall become eligible to
receive a distribution of his Account Balance upon his Normal
Retirement Date.
1.35 "Participant" is an Employee who is eligible to be and
becomes a Participant in accordance with the provisions of Section 2.1
and shall have acquired either a forfeitable or Nonforfeitable
interest in the Trust Fund pursuant to the provisions of the Plan.
1.36 "Plan" means the retirement savings plan established or
continued by the Employer in the form of this Agreement. All section
references within the Plan are Plan section references unless the
context clearly indicates otherwise.
1.37 "Plan Administrator" means the Named Fiduciary with
authority to control and manage the operation and administration of
the Plan. In addition to its other duties, the Plan Administrator has
full responsibility for compliance with the reporting and disclosure
requirements under ERISA as respects this Agreement.
1.38 "Plan Year" means the twelve (12) consecutive month period
ending on December 31.
1.39 "Qualified Voluntary Employee Contribution Account" means
the account established and maintained by the Administrator of each
Participant with respect to his total interest in the Plan resulting
from the Participant's tax deductible qualified voluntary employee
contributions made pursuant to Section 4.25.
1.40 "Salary Reduction Contributions" mean the contributions made
to the Plan by the Employer subject to the election by a Participant
to defer receipt of all or any portion of such contribution by a
reduction in his Compensation, pursuant to the terms and provisions of
Section 4.2. Salary Reduction Contributions are 100% Nonforfeitable at
all times and are subject to the distribution restrictions described
in Section 6.11.
1.41 "Service" means any period of time the Employee is in the
employ of the Employer, including any period the Employee is on an
unpaid leave of absence authorized by the Employer under a uniform,
nondiscriminatory policy applicable to all Employees. "Separation from
Service" means the Employee no longer has an employment relationship
with the Employer maintaining this Plan.
1.42 "Taxable Year" means the twelve (12) consecutive month
period ending December 31. If, at any time, the term "Employer" shall
include more than one separate entity and all such separate entities
shall not have the same fiscal year, then such fiscal year of each
separate entity shall be the "Taxable Year" for each such separate
entity.
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1.43 "Trust" means the legal entity created under the Employer's
Plan by which the contributions to the Plan shall be received, held,
invested and disbursed to or for the benefit of Plan Participants or
Beneficiaries.
1.44 "Trust Fund" means all property of every kind held or
acquired by the Employer's Plan, other than incidental benefit
insurance contracts, together with all income, profits or increments
thereon.
1.45 "Trustee" means the person(s), corporation, association, or
combination of them, who as Trustee execute the Trust Agreement, or
any successor in office who in writing accepts the position of
Trustee.
1.46 "Valuation Date" means each day of the Plan year, as of
which Plan allocations may be made and Accounts are valued, which
dates shall be in addition to the Plan's Adjustment Date.
1.47 "Year of Service" means any Plan Year in which the
Participant earns at least one Hour of Service during each calendar
month during the Plan year (including service from the date the
individual first becomes an Eligible Employee until the date the
individual first becomes a Participant. Furthermore, Years of Service
completed by any Employee with any corporation, partnership, or
proprietorship which is a member of a controlled group of corporations
within the meaning of Code ss 1563(a), determined without regard to
Code ssss 1563(a)(4) and 1563(e)(3)(C), or is a member of an
affiliated service group with the Employer, or has adopted the Plan
as a Participating Employer, in accordance with Section 15.1, shall
be recognized as Years of Service with any other Employer.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 PARTICIPATION OF EMPLOYEES ON EFFECTIVE DATE. All
Participants in the Plan or in any qualified plan merged into this
Plan on December 31, 1996 shall continue as Participants in the Plan
as of the Effective Date.
2.2 PARTICIPATION OF EMPLOYEES AFTER EFFECTIVE DATE. Each
Employee who becomes employed by the Company on or after January 1,
1997 shall become a Participant as of the Entry Date coincident with
or next following his attainment of age 21 and completion of 90 days
of employment.
Leased Employees and temporary employees are not eligible to
participate in the Plan. Effective January 1, 1995, a part-time
Employee shall participate in the Plan during a Plan Year if (1) he
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satisfies the normal requirements for participation; and (2) completes
1,000 Hours of Service in the Plan Year.
The Plan Administrator shall notify an Employee of his
eligibility to participate in the Plan prior to the date an Employee
becomes eligible to participate. An eligible Employee may begin
contributing to the Plan by submitting to the Plan Administrator an
authorization to make payroll deductions for his contributions to the
Plan 15 days prior to the Entry Date on which he may commence
participation in the Plan. Authorizations will remain in force unless
specifically modified or revoked by the Participant.
2.3 STATUS DURING LEAVE OF ABSENCE. If a Participant is on an
authorized leave of absence, including but not limited to, any leave
of absence pursuant to the Family and Medical Leave Act of 1993, he
shall continue to remain a Participant during such leave of absence.
During an authorized leave of absence, however, no Employer
contributions shall be allocated to the credit of the Participant's
Account, except upon the basis of such Compensation as the Participant
may receive from the Employer during the leave of absence. A
Participant on a leave of absence may receive credit for purposes of
eligibility, vesting and allocation purposes as provided by the Family
and Medical Leave Act of 1993, as determined by the Plan Administrator
in its discretion. For purposes of the Plan, if a Participant does not
return to the employ of the Employer on or prior to the expiration of
the leave of absence, it shall be conclusively presumed that his
employment was terminated as of the date of the expiration of such
leave of absence. If, however, the death of such Participant occurs
prior to the expiration of such leave of absence, the death benefit
provided in Section 1.7 shall be payable to the Participant's
designated Beneficiary.
2.4 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose
employment with the Employer terminates will re-enter the Plan as a
Participant on the date of his re-employment. An Employee who
satisfies the Plan's eligibility conditions but who terminates
employment with the Employer prior to becoming a Participant will
become a Participant on the later of the Entry Date on which he would
have entered the Plan had he not terminated employment or the date of
his re-employment. Any Employee who terminates employment prior to
satisfying the Plan's eligibility conditions shall be treated as a new
Employee upon his re-employment.
2.5 CHANGE IN EMPLOYEE STATUS. If a Participant has not incurred
a Separation from Service but ceases to be eligible to participate in
the Plan by reason of ceasing to be an hourly Employee, the Plan
Administrator must treat the Participant as an Excluded Employee
during the period such a Participant is not eligible. The Plan
Administrator determines a Participant's sharing in the allocation of
Employer contributions by disregarding his Compensation paid by the
Employer for services rendered in his capacity as an Excluded
Employee. However, during such period of
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exclusion, the Participant's Account continues to share fully in Trust
Fund allocations under Section 10.8. If an Excluded Employee who is
not a Participant becomes eligible to participate in the Plan by
reason of a change in employment classification, he will participate
in the Plan immediately if he has satisfied the eligibility conditions
of Section 2.1 and would have been a Participant had he not been an
Excluded Employee during his period of Service. Matching Contributions
made under another 401(k) plan maintained by the Employer shall offset
any Matching Contributions otherwise due under this Plan.
2.6 INCLUSION OF INELIGIBLE EMPLOYEE. If, in any Plan Year, any
person who should not have been included as a Participant in the Plan
is erroneously included and discovery of such incorrect inclusion is
not made until after a contribution for the year has been made, the
Employer shall not be entitled to recover the contribution made with
respect to the ineligible person regardless of whether or not a
deduction is allowable with respect to such contribution. In such
event, the amount contributed with respect to the ineligible person
shall constitute a forfeiture (except for Deferred Compensation which
shall be distributed to the ineligible person) for the Plan Year in
which the discovery is made and shall be used to reduce the Employer's
Matching Contribution obligation.
2.7 OMISSION OF ELIGIBLE EMPLOYEE. If, in any Plan Year, any
Employee who should be included as a Participant in the Plan is
erroneously omitted and discovery of such omission is not made until
after a contribution by his Employer for the year has been made, the
Employer shall make a subsequent contribution with respect to the
omitted Employee in the amount which the said Employer would have
contributed with respect to him had he not been omitted. Such
contribution shall be made regardless of whether or not it is
deductible in whole or in part in any taxable year under applicable
provisions of the Code.
2.8 PARTICIPATION DURING MILITARY SERVICE. If an Employee departs
for military service after providing advance notice to the Employer;
returns to employment with the Employer within five (5) years of the
date he terminated active employment; and is not dishonorably
discharged from the military, such Employee shall be treated as a
Participant during the same period of time he would have been a
Participant in the Plan had he not departed for military service. As a
"deemed Participant," such Employee shall be entitled to receive
contributions under the Plan based on the amount of contributions that
would have been made on his behalf had he remained in active
employment with the Employer. The Employee's Compensation shall be
determined based on the amount of Compensation the Employee would have
received from the Employer but for the military service absence.
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ARTICLE III
PARTICIPANT CONTRIBUTIONS
3.1 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. Prior to January 1,
1991, certain Participants could elect to make voluntary nondeductible
contributions to the Plan on an after-tax basis. Such Employee
After-Tax Contributions shall be separately accounted for at all times
as the Participant's "After-Tax" Account. Any voluntary nondeductible
Employee After-Tax Contributions made after December 31, 1986 are
required to satisfy the requirements of Code ss 401(m), in accordance
with Section 4.15 of the Plan. Participant nondeductible contributions
under the Plan shall be deducted on an after-tax basis from the
Participant's paycheck. Upon the Participant's Normal Retirement Date,
or such other date when the Participant shall be entitled to receive
benefits under the Plan, the fair market value of the voluntary
nondeductible Employee After-Tax Contributions shall be used to
provide additional benefits to the Participant or his beneficiary.
Employee After-Tax Contributions are not permitted after June 30,
1991.
3.2 ROLLOVER CONTRIBUTIONS.
(a) Any Employee who receives a lump sum distribution as
defined by Code ss 402(e)(4)(A), or a qualified total
distribution as defined by Code ss 402(a)(5) (E)(i), the maximum
amount of which constitutes the balance to the credit of the
Employee in the qualified plan reduced by nondeductible Employee
Contributions (other than accumulated deductible Employee
Contributions within the meaning of Code ss 72(o)(5)), may roll
over such distribution into this Plan, in whole or in part,
either directly from such other qualified plan, or by the
Employee individually, or through the medium of a conduit
individual retirement account or individual retirement annuity,
provided such distribution qualifies for tax-free rollover
treatment within the meaning of Code ss 402 or 403, and subject
to the following requirements and limitations:
(1) Any rollover of a distribution from a prior
qualified plan into this Plan must occur within sixty (60)
days after the Employee receives the distribution from the
qualified plan.
(2) If a conduit individual retirement account or
individual retirement annuity is used, no amount in the
individual retirement account or individual retirement
annuity may be attributable to a source other than a
qualified total distribution or a lump sum distribution from
a qualified plan.
(b) The Trustee will invest rollover contributions as part
of the Trust Fund, however, a Participant's rollover contribution
Account shall remain separately accounted for at all
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times. The Participant, from time to time, may direct the Trustee
in writing, in the form and manner prescribed by the Plan
Administrator, in its discretion, as to the investment of his
rollover Account. The Trustee is not liable nor responsible for
any loss resulting to any Beneficiary, nor to any Participant, by
reason of any sale or investment made or other action taken
pursuant to and in accordance with the direction of the
Participant. In all other respects, the Trustee will hold,
administer and distribute a rollover contribution in the same
manner as any Employer contribution made to the Trust. A rollover
contribution is not an Annual Addition under Article IV.
(c) If an Employee makes a rollover contribution to the
Trust prior to satisfying the Plan's eligibility conditions, the
Plan Administrator and Trustee must treat the Employee as a
Participant for all purposes of the Plan except the Employee is
not a Participant for purposes of making contributions or sharing
in Employer contributions under the Plan until he actually
becomes a Participant in the Plan. If the Employee has a
Separation from Service prior to becoming a Participant, the
Trustee will distribute his rollover contribution Account to him
as if it were an Employer contribution Account.
3.3 TRUSTEE-TO-TRUSTEE TRANSFERS TO THE PLAN.
(a) The Employer shall permit trustee-to-trustee transfers
to be made to the Plan. If a Participant of the Plan is or was
previously a participant of another plan qualified under Code ss
401(a), including another qualified plan of the Employer, the
Trustee shall be authorized to accept the balance to the credit
of the Participant if transferred by the trustee of such other
plan upon the following conditions:
(1) the trustee of the other plan is authorized
to distribute the balance to the credit of the
Participant in the other plan;
(2) for record-keeping and accounting purposes,
the transferred account of the Participant shall be
separately accounted for; and
(3) the balance to the credit of the Participant
transferred to this Plan shall not in any way reduce any
obligations of the Employer under this Plan.
(b) The Plan Administrator may direct the Trustee to
transfer as a direct trustee-to-trustee transfer the balance to
the credit of a Participant to the trustee of another qualified
plan, if the trustee of the other plan is authorized to accept
such a transfer.
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3.4 NONFORFEITABILITY OF PARTICIPANT CONTRIBUTIONS. A
Participant's Account Balance is, at all times, one hundred percent
(100%) Nonforfeitable to the extent the value of his Account Balance
is derived from his Participant contributions described in this
Article III.
3.5 PARTICIPANT CONTRIBUTIONS - ACCOUNT BALANCE. The Trustee must
maintain a separate Account(s) in the name of each Participant to
reflect the Participant's Account Balance under the Plan derived from
his Participant contributions. A Participant's Account Balance derived
from his Participant contributions as of any applicable date is the
balance of his separate Participant contribution Account(s).
ARTICLE IV
EMPLOYER CONTRIBUTIONS
Part 1 - Amount of Employer Contributions and Plan Allocations
4.1 EMPLOYER CONTRIBUTIONS. For each Plan Year, the Employer,
from its records, determines the amount of any contributions to be
made by it to the Trust in accordance with Sections 4.2 and 4.3. The
Employer may not make a contribution to the Trust for any Plan Year to
the extent the contribution would exceed the Participant's Maximum
Permissible Amount, as defined in Section 4.24(i).
To make allocations under the Plan, the Plan Administrator must
establish a Before-Tax Account, and a Matching Contributions
Account for each Participant, and any other accounts which the Plan
Administrator may deem necessary from time to time.
4.2 CODE ss 401(k) ARRANGEMENT. The Plan Administrator will
allocate to each Participant's Before-Tax Account the amount of Salary
Reduction Contributions the Employer makes to the Trust on behalf of
the Participant.
(a) Salary Reduction Arrangement. Any Employee eligible to
participate in the Plan may file a salary reduction agreement
with the Plan Administrator to defer 1- 15% (in whole percentage
increments) of his Compensation earned during the pay period for
which the election is in effect. The salary reduction agreement
may not be effective earlier than the following date which occurs
last: (i) the Employee's Plan Entry Date (or, in the case of a
reemployed Employee, his reparticipation date under Article II);
or (ii) the execution date of the Employee's salary reduction
agreement. A salary reduction agreement must specify the amount
of Compensation (as defined in Section 1.11) or percentage of
Compensation the Employee wishes to defer. The salary reduction
agreement will apply only to Compensation which becomes currently
available to the Employee after the effective date of the salary
reduction agreement. The Employer will apply a reduction
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election to all Compensation (and to increases in such
Compensation), including cash bonuses received within two and
one-half months following the end of the Plan Year. The Plan
Administrator may adopt uniform and nondiscriminatory rules and
restrictions applicable to the Employees' salary reduction
agreements.
(b) Any cash bonus attributable to services performed by the
Participant for the Employer during a given Plan Year and which
are received by the Participant on or before two and one-half
months following the end of the Plan Year shall be subject to the
salary reduction agreement of such Employee in effect for the
Plan Year during which the bonus payment is received. A deferral
election may not be made with respect to cash bonuses which are
currently available on or before the date the Participant
executed such election.
4.3 MATCHING CONTRIBUTIONS.
(a) Basic Matching Contribution. The Employer shall make a
Matching Contribution on behalf of each Participant actively employed
on the last business day of a calendar quarter equal to 50% of each
Participant's Salary Reduction Contributions for such quarter on up to
the first 4% of Compensation.
(b) Supplemental Matching Contributions. The Employer
shall make a supplemental Matching Contribution on behalf of each
Participant actively employed on the last day of the Plan Year equal
to the percentage of each Participant's Salary Reduction Contributions
for such Plan Year up to the first 4% of Compensation. The amount of
the supplemental Matching Contribution shall be determined in
accordance with the following schedule:
EBIT (less all
Matching Contributions)/ Amount of Supplemental
Net Sales in Matching Contribution
Plan Year
7.0% 12.5%
7.5% 25.0%
8.0% or more 50.0%
(c) Form of Matching Contributions. The Employer shall make
Matching Contributions in the form of cash or Employer Stock, as
determined in its discretion; provided, however, that all Matching
Contributions made after the Effective Date shall be invested in
Employer Stock in accordance with Section 8.5. The
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Plan Administrator will allocate Matching Contributions to the
Matching Contributions Account of each Participant.
4.4 ACCRUAL OF BENEFIT. The Plan Administrator will determine the
amounts to be contributed to the Plan on the basis of the Plan Year.
The Compensation the Plan Administrator is to take into account in
allocating an Employer Contribution to a Participant's Account for the
Plan Year in which the Employee first becomes a Participant shall be
Compensation earned after an Employee becomes a Participant. For all
other Plan Years, the Plan Administrator will take into account only
the Compensation determined for the portion of the Plan Year in which
the Employee actually is a Participant. Notwithstanding anything
herein to the contrary, the Plan Administrator must take into account
the Employee's entire Compensation for a Plan Year to determine
whether the Plan satisfies the top-heavy minimum allocation
requirement of Section 17.4.
4.5 RETURN OF EMPLOYER CONTRIBUTIONS.
(a) The Employer contributes to this Plan on the condition
that its contribution is not due to a mistake of fact and that
the Internal Revenue Service will provide a favorable letter of
determination on the initial qualification of the Plan and will
not disallow the deduction for its contribution. The Trustee,
upon written request from the Employer, must return to the
Employer the amount of the Employer's contribution made by the
Employer by mistake of fact or the amount of the Employer's
contribution disallowed as a deduction under Code ss 404, as well
as all amounts contributed by the Employer if the Plan is denied
its initial contribution. The Trustee will not return any portion
of the Employer's contribution under the provisions of this
Section 4.5 more than one (1) year after:
(1) The Employer made the contribution by mistake
of fact; or
(2) The disallowance of the contribution as a
deduction, and then, only to the extent of the
disallowance.
(b) The Trustee will not increase the amount of the Employer
contribution returnable under this Section 4.5 for any earnings
attributable to the contribution, but the Trustee will decrease
the Employer contribution returnable for any losses attributable
to it. The Trustee may require the Employer to furnish whatever
evidence the Trustee deems necessary to enable the Trustee to
confirm the amount the Employer has requested be returned is
properly returnable under ERISA.
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4.6 TIME OF PAYMENT OF CONTRIBUTION. The Employer shall make
Salary Reduction Contributions to the Trust within an administratively
reasonable period of time after withholding the corresponding
Compensation from the Participant. Furthermore, the Employer must make
Salary Reduction Contributions and Employer Matching Contributions no
later than the time prescribed by the Code or by applicable Treasury
regulations. Salary Reduction Contributions are Employer contributions
for all purposes under this Plan, except to the extent the Code or
Treasury regulations prohibit the use of these contributions to
satisfy the qualification requirements of the Code. Subject to the
consent of the Trustee, the Employer may make its contribution in
property rather than in cash, provided that the contribution of
property is not a prohibited transaction under the Code or under
ERISA.
Part 2 - Limitations on Allocations
4.7 ANNUAL SALARY REDUCTION CONTRIBUTION LIMITATION.
(a) An Employee's Salary Reduction Contributions for a
calendar year may not exceed the Code ss 402(g) limitation. The
Code ss 402(g) limitation is the greater of $7,000 or the
adjusted amount determined by the Secretary of the Treasury. If,
pursuant to a salary reduction agreement or pursuant to a cash or
deferred election, the Employer determines the Employee's Salary
Reduction Contributions to the Plan for a calendar year would
exceed the Code ss 402(g) limitation, the Employer will suspend
the Employee's salary reduction agreement, if any, until the
following January 1 and pay in cash to the Employee the portion
of a cash or deferred election which would result in the
Employee's Salary Reductions for the calendar year exceeding the
Code ss 402(g) limitation. If the Plan Administrator determines
that an Employee's Salary Reduction Contributions already
contributed to the Plan for a calendar year exceed the Code ss
402(g) limitation, the Plan Administrator will distribute the
amount in excess of the Code ss 402(g) limitation (the "excess
deferral"), as adjusted for allocable income, no later than April
15 of the following calendar year. If the Plan Administrator
distributes the excess deferral by the appropriate April 15, it
may make the distribution irrespective of any other provision
under this Plan or under the Code. The Plan Administrator will
reduce the amount of excess deferrals for a calendar year
distributable to the Employee by the amount of excess
contributions, if any, previously distributed to the Employee for
the Plan Year beginning in that calendar year.
(b) If an Employee participates in another plan under which
he makes Salary Reduction Contributions pursuant to a Code ss
401(k) arrangement, Salary Reduction Contributions under a
Simplified Employee Pension, or Salary Reduction Contributions to
a tax-sheltered annuity, irrespective of
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whether the Employer maintains the other plan, he may provide the
Plan Administrator a written claim for excess deferrals made for
a calendar year. The Employee must submit the claim no later than
the March 1 following the close of the particular calendar year
and the claim must specify the amount of the Employee's Salary
Reduction Contributions under this Plan which are excess
deferrals. If the Plan Administrator receives a timely claim, it
will distribute the excess deferral (as adjusted for allocable
income) the Employee has assigned to this Plan, in accordance
with the distribution procedure described in the immediately
preceding paragraph.
4.8 ALLOCABLE INCOME ATTRIBUTABLE TO EXCESS SALARY REDUCTIONS.
For purposes of making a distribution of excess deferrals pursuant to
this Section, allocable income means net income or net loss allocable
to the excess deferrals for the calendar year in which the Employee
made the excess deferral. Allocable income shall include the "gap
period" income measured from the beginning of the calendar year
following the calendar year of the excess deferral to the date of the
distribution. If the distribution of the excess deferral occurs during
the calendar year in which the Employee made the excess deferral, the
Plan Administrator will treat as a "gap period" the period from
the first day of that calendar year to the date of the distribution.
The Plan Administrator will determine allocable income in the same
manner as described in Section 4.13 for excess contributions, except
the numerator of the allocation fraction will be the amount of the
Employee's excess deferrals and the denominator of the allocation
fraction will be the Employee's Account Balance attributable to his
Salary Reduction Contributions.
4.9 ACTUAL SALARY REDUCTION PERCENTAGE ("ADP") TEST. For each Plan
Year, the Plan Administrator must determine whether the Plan's Code ss
401(k) arrangement satisfies either of the following ADP tests:
(a) The average ADP for those Participants who are Highly
Compensated Employees (the "Highly Compensated Group") does not
exceed 1.25 times the average ADP of those Participants who are
Nonhighly Compensated Employees (the "Nonhighly Compensated
Group"); or
(b) The average ADP for the Highly Compensated Group does
not exceed the average ADP for the Nonhighly Compensated Group by
more than two percentage points (or the lesser percentage
permitted by the multiple use limitation in Section 4.20) and the
average ADP for the Highly Compensated Group is not more than
twice the average ADP for the Nonhighly Compensated Group.
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4.10 CALCULATION OF AVERAGE SALARY REDUCTION PERCENTAGE.
(a) The average ADP for a group is the average (expressed as
percentage calculated to the nearest one-hundredth (1/100) of one
percent (1%)) of the separate ADPs calculated for each Eligible
Employee who is a member of that group. An Eligible Employee's
ADP for a Plan Year is the ratio (expressed as percentage
calculated to the nearest one-hundredth (1/100) of one percent
(1%)) of the Eligible Employee's Salary Reduction Contributions
for the Plan Year to the Employee's Compensation for the Plan
Year. For aggregated Family Members, as defined in Section 1.24,
treated as a single Highly Compensated Employee, the ADP of the
family unit is the greater of: (i) the ADP determined by
combining the Salary Reduction Contributions and Compensation of
the Family Members who are Highly Compensated Employees without
family aggregation; or (ii) the ADP determined by combining the
Salary Reduction Contributions and Compensation of all aggregated
Family Members. A Nonhighly Compensated Employee's ADP does not
include Salary Reduction Contributions made to this Plan or to
any other Plan maintained by the Employer, to the extent such
Salary Reduction Contributions exceed the Code ss 402(g)
limitation described in Section 4.7.
(b) The Plan Administrator may determine (in a manner
consistent with Treasury regulations) the ADPs of the Eligible
Employees by taking into account Matching Contributions made to
this Plan or to any other qualified Plan maintained by the
Employer if the Matching Contributions are made Nonforfeitable
and subject to the distribution restrictions in Section 6.11. For
Plan Years beginning after December 31, 1989, the Plan
Administrator may not include in the ADP test any Matching
Contributions under another qualified plan unless that plan has
the same plan year as this Plan. The Plan Administrator must
maintain records to demonstrate compliance with the ADP test,
including the extent to which the Plan used Matching
Contributions to satisfy the test.
(c) To determine the ADP of any Highly Compensated Employee,
the Salary Reduction Contributions taken into account must
include any elective Salary Reductions made by the Highly
Compensated Employee under any other Code ss 401(k) arrangement
maintained by the Employer, unless the elective Salary Reductions
are to an ESOP. If the plans containing the Code ss 401(k)
arrangements have different plan years, the Plan Administrator
will determine the combined Salary Reduction Contributions on the
basis of the plan years ending in the same calendar year.
Effective for Plan Years beginning on or after January 1,
1997, the non-discrimination testing described in this Section
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4.10 shall be performed by reference to data for the previous
Plan Year.
4.11 AGGREGATION OF CERTAIN CODE ss 401(k) ARRANGEMENTS. If the
Employer treats two plans as a unit for coverage or nondiscrimination
purposes, the Employer must combine the Code ss 401(k) arrangements
under such plans to determine whether either plan satisfies the ADP
test. This aggregation rule applies to the ADP determination for all
Eligible Employees, irrespective of whether an Eligible Employee is a
Highly Compensated Employee or a Non-highly Compensated Employee. The
Plan Administrator also may elect to aggregate the Code ss 401(k)
arrangements under plans which the Employer does not treat as a unit
for coverage or nondiscrimination purposes. For Plan Years beginning
after December 31, 1989, an aggregation of Code ss 401(k) arrangements
under this paragraph does not apply to plans which have different plan
years and, for Plan Years beginning after December 31, 1988, the Plan
Administrator may not aggregate an ESOP (or the ESOP portion of a
plan) with a non-ESOP plan (or non-ESOP portion of a plan).
4.12 CHARACTERIZATION OF EXCESS CONTRIBUTIONS. If, pursuant
to Section 4.11, the Plan Administrator has elected to include
Matching Contributions in the average ADP, the Plan Administrator will
treat excess contributions as attributable proportionately to Salary
Reduction Contributions and to Matching Contributions allocated on the
basis of those Salary Reduction Contributions. The Plan Administrator
will reduce the amount of excess contributions for a Plan Year
distributable to a Highly Compensated Employee by the amount of excess
deferrals (as determined in Section 4.8), if any, previously
distributed to that Employee for the Employee's taxable year ending in
that Plan Year.
4.13 DISTRIBUTION OF EXCESS CONTRIBUTIONS.
(a) If the Plan Administrator determines the Plan fails to
satisfy the ADP test for a Plan Year, it must distribute the
excess contributions, as adjusted for allocable income, during
the next Plan Year. However, the Employer will incur an excise
tax equal to 10% of the amount of excess contributions for a Plan
Year not distributed to the appropriate Highly Compensated
Employees during the first 2 1/2 months of that next Plan Year.
The excess contributions are the amount of Salary Reduction
Contributions made by the Highly Compensated Employees which
causes the Plan to fail to satisfy the ADP test. The Plan
Administrator will distribute to each Highly Compensated Employee
his respective share of the excess contributions. The Plan
Administrator will determine the respective shares of excess
contributions by starting with the Highly Compensated Employee(s)
who has the greatest ADP, reducing his ADP to the next highest
ADP, then, if necessary, reducing the ADP of the Highly
Compensated Employee(s) at the
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next highest ADP level (including the ADP of the Highly
Compensated Employee(s) whose ADP the Plan Administrator already
has reduced), and continuing in this manner until the average ADP
for the Highly Compensated Group satisfies the ADP test. If the
Highly Compensated Employee is part of an aggregated family
group, the Plan Administrator, in accordance with the applicable
Treasury regulations, will determine each aggregated Family
Member's allocable share of the excess contributions assigned to
the family unit.
Effective for Plan Years beginning on or after January 1,
1997, the distribution of excess contributions (and excess
aggregate contributions under the average contribution percentage
("ACP") test) shall be made on the basis of the amount of
contribution by, or on behalf of, each Highly Compensated
Employee. Excess contributions (and excess aggregate
contributions) are considered to be attributable first to those
Highly-Compensated Employees who have the greatest dollar amount
of Salary Reduction Contributions, regardless of the ADP of any
particular Employee or Employees.
(b) To determine the amount of the corrective distribution
required under this Section, the Plan Administrator must
calculate the allocable income for the Plan Year in which the
excess contributions arose. Allocable income shall include the
"gap period" income measured from the beginning of the Plan Year
following the Plan Year of the excess contribution to the date of
the distribution. "Allocable income" means net income or net
loss. The Plan Administrator will calculate allocable income for
the Plan Year by: (1) first determining the net income or net
loss for the Plan Year on the Highly Compensated Employee's
Account Balance attributable to Salary Reduction Contributions;
and (2) then multiplying this net income or net loss by the
following fraction:
Amount of the Highly Compensated Employee's
Excess Contributions
Account Balance attributable to
Salary Reduction Contributions
(c) The Account Balance attributable to Salary Reduction
Contributions includes the Account Balance attributable to
Matching Contributions taken into account in the ADP test for the
Plan Year or for any prior Plan Year. For purposes of the
denominator of the fraction, the Plan Administrator will
calculate the Account Balance attributable to Salary Reduction
Contributions as of the last day of the Plan Year (without regard
to the net income or net loss for the Plan Year on that Account
Balance).
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(d) To calculate allocable income for the "gap period," the
Plan Administrator will perform the same calculation as described
in paragraph (b) above, except in clause (1) the Plan
Administrator will determine, as of the last day of the month
preceding the date of distribution, the net income or net loss
for the "gap period" and in clause (2) will calculate the Account
Balance attributable to Salary Reduction Contributions as of the
day before the distribution. If the Plan does not perform a
valuation on the last day of the month preceding the date of
distribution, the Plan Administrator, in lieu of the calculation
described in this paragraph, will calculate allocable income for
each month in the "gap period" as equal to 10% of the allocable
income for the Plan Year. Under this alternate calculation, the
Plan Administrator will disregard the month in which the
distribution occurs, if the Plan makes the distribution no later
than the 15th day of that month.
4.14 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING CONTRIBU-
TIONS/PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. For Plan Years
beginning after December 31, 1986, the Plan Administrator must
determine whether the annual Employer Matching Contributions (other
than Matching Contributions used in the ADP under Section 4.11), if
any, and the Contributions, if any, satisfy either of the following
ACP tests:
(a) The ACP for those Participants who are Highly
Compensated Employees (the "Highly Compensated Group") does not
exceed 1.25 times the ACP of those Participants who are Nonhighly
Compensated Employees (the "Nonhighly Compensated Group"); or
(b) The ACP for the Highly Compensated Group does not exceed
the ACP for the Nonhighly Compensated Group by more than two (2)
percentage points (or the lesser percentage permitted by the
multiple use limitation in Section 4.20) and the ACP for the
Highly Compensated Group is not more than twice the ACP for the
Nonhighly Compensated Group.
4.15 CALCULATION OF AVERAGE CONTRIBUTION PERCENTAGE.
(a) The ACP for a group is the average (expressed as a
percentage calculated to the nearest one-hundredth (1/100) of one
percent (1%)) of the separate contribution percentages calculated
for each Eligible Employee who is a member of that group. An
Eligible Employee's contribution percentage for a Plan Year is
the ratio (expressed as a percentage calculated to the nearest
one-hundredth (1/100) of one percent (1%)) of the Eligible
Employee's aggregate contributions for the Plan Year to the
Employee's Compensation for the Plan Year. "Aggregate
contributions" are Employer Matching Contributions (other than
Matching Contributions used in the ADP test under
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Section 4.11) and Employee Contributions (as defined in Section
1.16) made under the Plan on behalf of the Participant for a Plan
Year. Such aggregate contributions shall not include Matching
Contributions that are forfeited either to correct Excess
Aggregate Contributions or because the contributions to which
they relate are Excess Salary Reductions, excess contributions or
excess aggregate contributions. 'Total Compensation' means
Compensation as defined by Code ss 414(s), without regard to the
reductions in compensation provided by Code ssss 125, 402(a)(8),
402(h)(1)(B) and 403(b), which for Plan Years beginning on or
after December 31, 1988, shall not exceed $200,000, adjusted
pursuant to Code ss 401(a)(17). For aggregated Family Members, as
defined in Section 1.24, treated as a single Highly Compensated
Employee , the contribution percentage of the family unit is the
greater of: (i) the contribution percentage determined by
combining the aggregate contributions and Compensation of the
Family Members who are Highly Compensated Employees without
family aggregation; or (ii) the contribution percentage
determined by combining the aggregate contributions and
Compensation of all aggregated Family Members.
(b) The Plan Administrator, in a manner consistent with
Treasury regulations, may determine the contribution percentages
of the Eligible Employees by taking into account Salary Reduction
Contributions made to this Plan or to any other qualified Plan
maintained by the Employer. The Plan Administrator may not
include Salary Reduction Contributions in the ACP test, unless
the Plan which includes the Salary Reduction Contributions
satisfies the ADP test both with and without the Salary Reduction
Contributions included in this ACP test. For Plan years beginning
after December 31, 1989, the Plan Administrator may not include
in the ACP test any Salary Reduction Contributions under another
qualified plan unless that plan has the same plan year as this
Plan. The Plan Administrator must maintain records to demonstrate
compliance with the ACP test, including the extent to which the
Plan used Salary Reduction Contributions to satisfy the test.
(c) To determine the contribution percentage of any Highly
Compensated Employee, the aggregate contributions taken into
account must include any Matching Contributions (other than
Matching Contributions used in the ADP test) and any Employee
Contributions made on his behalf to any other plan maintained by
the Employer, unless the other plan is an ESOP. If the plans have
different plan years, the Plan Administrator will determine the
combined aggregate contributions on the basis of the plan years
ending in the same calendar year.
4.16 AGGREGATION OF CERTAIN PLANS. If the Employer treats two (2)
plans as a unit for coverage or nondiscrimination purposes, the
Employer must combine the plans to determine whether either plan
26
<PAGE>
satisfies the ACP test. This aggregation rule applies to the
contribution percentage determination for all Eligible Employees,
irrespective of whether an Eligible Employee is a Highly Compensated
Employee or a Nonhighly Compensated Employee. The Plan Administrator
also may elect to aggregate plans which the Employer does not treat as
a unit for coverage or nondiscrimination purposes. For Plan Years
beginning after December 31, 1989, an aggregation of plans under this
Section does not apply to plans which have different plan years and,
for Plan Years beginning after December 31, 1988, the Plan
Administrator may not aggregate an ESOP (or the ESOP portion of plan)
with a non-ESOP plan (or non-ESOP portion of a plan).
4.17 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(a) The Plan Administrator will determine excess aggregate
contributions after determining excess deferrals under Section
4.7 and excess contributions under Section 4.12. If the Plan
Administrator determines the Plan fails to satisfy the ACP test
for a Plan Year, it must distribute the excess aggregate
contributions, as adjusted for allocable income. However, the
Employer will incur an excise tax equal to ten percent (10%) of
the amount of excess aggregate contributions for a Plan Year not
distributed to the appropriate Highly Compensated Employees
during the first two and one-half (2-1/2) months of that next
Plan Year.
(b) The excess aggregate contributions are the amount of
aggregate contributions allocated on behalf of the Highly
Compensated Employees which causes the Plan to fail to satisfy
the ACP test. The Plan Administrator will distribute to each
Highly Compensated Employee his respective share of the excess
aggregate contributions. The Plan Administrator will determine
the respective shares of excess aggregate contributions by
starting with the Highly Compensated Employee(s) who has the
greatest contribution percentage, reducing his contribution
percentage to the next highest contribution percentage, then, if
necessary, reducing the contribution percentage of the Highly
Compensated Employees(s) at the next highest contribution
percentage level (including the contribution percentage of the
Highly Compensated Employees(s) whose contribution percentage the
Plan Administrator already has reduced), and continuing in this
manner until the ACP for the Highly Compensated Group satisfies
the ACP test. If the Highly Compensated Employee is part of an
aggregated family group, the Plan Administrator, in accordance
with the applicable Treasury regulations, will determine each
aggregated Family Member's allocable share of the excess
aggregate contributions assigned to the family unit.
(c) To determine the amount of the corrective distribution
required under this Section, the Plan Administrator must
27
<PAGE>
calculate the allocable income for the Plan Year in which the
excess aggregate contributions arose. Allocable income shall
include the "gap period" income measured from the beginning of
the next Plan Year to the date of the distribution. "Allocable
income" means net income or net loss. The Plan Administrator will
determine allocable income in the same manner as described in
Section 4.13 for excess contributions, except the numerator of
the allocation fraction will be the Highly Compensated Employee's
excess aggregate contributions and the denominator of the
allocation fraction will be the Employee's Account Balance
attributable to aggregate contributions and, if applicable, to
Salary Reduction Contributions included in the ACP test for the
Plan Year or for any prior Plan Year.
4.18 CHARACTERIZATION OF EXCESS AGGREGATE CONTRIBUTIONS. The Plan
Administrator will treat a Highly Compensated Employee's allocable
share of excess aggregate contributions in the following priority: (1)
first as attributable to his Employee Contributions which are
voluntary contributions, if any; (2) then as Matching Contributions
allocable with respect to excess contributions determined under the
ADP test described in Section 4.9; (3) then on a pro rata basis to
Matching Contributions and to the Salary Reduction Contributions
relating to those Matching Contributions which the Plan Administrator
has included in the ACP test; and (4) last on a pro rata basis to
Mandatory Contributions, if any, and to the Matching Contributions
allocated on the basis of those Mandatory Contributions.
4.19 MULTIPLE USE LIMITATION. For Plan Years beginning after
December 31, 1988, if at least one Highly Compensated Employee is
includable in the ADP test under Section 4.9 and in the ACP test under
Section 4.14, the sum of the Highly Compensated Group's ADP and ACP
may not exceed the multiple use limitation.
The multiple use limitation is the greater of:
(a) the sum of:
(1) 125% of the greater of: (A) the ADP of the
Nonhighly Compensated Group under the Code ss 401(k)
arrangement; or (B) the ACP of the Nonhighly Compensated
Group for the Plan Year beginning with or within the Plan
year of the Code ss 401(k) arrangement; and
(2) 2% plus the lesser of (1)(A) or (1)(B), but
not more than twice the lesser of (1)(A) or (1)(B); or
(b) the sum of:
(1) 125% of the lesser of: (A) the ADP of the Nonhighly
Compensated Group under the Code ss 401(k) arrangement; or
(B) the ACP of the Nonhighly Compensated Group
28
<PAGE>
for the Plan Year beginning with or within the Plan Year of
the Code ss 401(k) arrangement; and
(2) 2% plus the greater of (1)(A) or (1)(B), but not
more than twice the greater of (1)(A) or (1)(B).
The Plan Administrator will determine whether the Plan satisfies
the multiple use limitation after applying the ADP test under Section
4.9 and the ACP test under Section 4.14 and after making any
corrective distributions required by those Sections. If, after
applying this Section 4.19, the Plan Administrator determines the Plan
has failed to satisfy the multiple use limitation, the Plan
Administrator will correct the failure by treating the excess amount
as excess aggregate contributions under Section 4.18. This Section
4.19 does not apply unless, prior to application of the multiple use
limitation, the ADP and the ACP of the Highly Compensated Group each
exceeds one hundred twenty-five percent (125%) of the respective
percentages for the Nonhighly Compensated Group.
4.20 LIMITATIONS ON ALLOCATIONS. The amount of Annual Additions
which may be credited under this Plan on a Participant's behalf for a
Limitation Year may not exceed the lesser of the Maximum Permissible
Amount or any other limitation contained in this Plan. If the amount
the Employer otherwise would contribute or allocate to the
Participant's Account would cause the Annual Addition for the
Limitation Year to exceed the Maximum Permissible Amount, the Employer
will reduce the amount of its contribution or allocation so the Annual
Additions for the Limitation Year will equal the Maximum Permissible
Amount. If an allocation of Employer contributions would result in an
Excess Amount (other than an Excess Amount resulting from the
circumstances described in Section 4.23) to the Participant's Account,
the Plan Administrator will reallocate the Excess Amount to the
remaining Participants who are eligible for an allocation of Employer
contributions for the Plan Year in which the Limitation Year ends. The
Plan Administrator will make this reallocation on the basis of the
allocation method under the Plan as if the Participant whose Account
otherwise would receive the Excess Amount is not eligible for an
allocation of Employer contributions.
4.21 DETERMINATION OF MAXIMUM PERMISSIBLE AMOUNT.
(a) Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Plan Administrator may
determine the Maximum Permissible Amount on the basis of the
Participant's estimated annual Compensation for such Limitation
Year. The Plan Administrator must make this determination on a
reasonable and uniform basis for all Participants similarly
situated. The Plan Administrator must reduce any Employer
contributions based on estimated annual Compensation by any
Excess Amounts carried over from prior years.
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<PAGE>
(b) As soon as is administratively feasible after the end of
the Limitation Year, the Plan Administrator will determine the
Maximum Permissible Amount for such Limitation Year on the basis
of the Participant's actual Compensation for such Limitation
Year.
(c) Effective for the Plan Year beginning January 1, 1998,
for purposes of calculating the maximum permissible amount,
"compensation" shall include Salary Reduction Contributions,
elective contributions to a nonqualified deferred compensation
arrangement under Code Section 457, and salary reduction
contributions to a cafeteria plan under Code section 125.
4.22 ELIMINATION OF EXCESS AMOUNT. If, pursuant to Section 4.21,
there is an Excess Amount with respect to a Participant for a
Limitation Year, the Plan Administrator will dispose of such Excess
Amount as follows:
(a) The Plan Administrator will return any voluntary
Employee Contributions to the Participant to the extent the
return would reduce the Excess Amount.
(b) If, after the application of subparagraph (a) above, an
Excess Amount still exists, and the Plan covers the Participant
at the end of the Limitation Year, then the Plan Administrator
will use the Excess Amount(s) to reduce future Employer
contributions under the Plan for the next Limitation Year and for
each succeeding Limitation Year, as is necessary, for the
Participant.
(c) If, after the application of subparagraph (b) above, an
Excess Amount still exists, and the Plan does not cover the
Participant at the end of the Limitation Year, then the Plan
Administrator will hold the Excess Amount unallocated in a
suspense account. The Plan Administrator will apply the suspense
account to reduce Employer contributions for all remaining
Participants in the next Limitation Year, and in each succeeding
Limitation Year if necessary.
(d) If a suspense account is in existence at any time during
a Limitation Year pursuant to this Section, it will not
participate in the allocation of the Trust's investment gains and
losses. If a suspense account is in existence at any time during
a particular Limitation Year, all amounts in the suspense account
must be allocated and reallocated to Participants' Accounts
before any Employer or Participant contributions may be made to
the Plan for that Limitation Year.
(e) The Plan Administrator will not distribute any Excess
Amount(s) to Participants or to former Participants.
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<PAGE>
4.23 DEFINED BENEFIT PLAN LIMITATION. If the Employer main-
tains a qualified defined benefit plan, or has ever maintained a
qualified defined benefit plan covering any Participant in the
Plan, then the sum of the defined benefit plan fraction and the
defined contribution plan fraction, as defined in Section 4.24(n), for
any Participant for any Limitation Year must not exceed 1.0. The Plan
will satisfy this limitation by reducing allocations to the
Participant under this Plan to the extent necessary. The Plan will
satisfy the top-heavy requirements of Code ss 416 after taking into
account the existence (or prior maintenance) of the defined benefit
plan by making any necessary additional contributions under this Plan.
4.24 DEFINITIONS - ARTICLE IV. For purposes of Article IV,
the following terms means:
(a) "Annual Addition" - The sum of the following amounts
allocated on behalf of a Participant for a Limitation Year: (1)
Employer contributions; and (2) Participant contributions. Except
to the extent provided in Treasury regulations, Annual Additions
include excess contributions described in Code ss 401(k), Excess
Aggregate Contributions described in Code ss 401(m) and excess
deferrals described in Code ss 402(g), irrespective of whether
the Plan distributes or forfeits such excess amounts. Annual
Additions also include Excess Amounts reapplied to reduce
Employer contributions under Section 4.23. Amounts allocated
after March 31, 1984, to an individual medical account (as
defined in Code ss 415(1)(2)) included as part of a pension or
annuity plan maintained by the Employer are treated as Annual
Additions. Furthermore, amounts derived from contributions paid
or accrued after December 31, 1985, for Taxable Years ending
after December 31, 1985, attributable to post-retirement medical
benefits allocated to the separate account of a key employee (as
defined in Code ss 419A(d)(3)) under a welfare benefit fund (as
defined in Code ss 419(e)) maintained by the Employer are treated
as Annual Additions to a defined contribution plan. For purposes
of this Section 4.24(a), any Excess Amount applied pursuant to
Section 4.24(n) in the Limitation Year to reduce Employer
contributions will be considered Annual Additions for such
Limitation Year.
(b) "Average contribution percentage" shall mean the average
of the aggregate contributions of the Eligible Employees in a
group.
(c) "Eligible Employee" means, for purposes of the ADP test
described in Section 4.9, an Employee who is eligible to enter
into a salary reduction agreement for the Plan Year, irrespective
of whether he actually enters into such an agreement. For
purposes of the ACP test described in Section 4.14, an "Eligible
" means a Participant who is eligible to receive an allocation of
Matching Contributions (or would be eligible
31
<PAGE>
if he made the type of contributions necessary to receive an
allocation of Matching Contributions) and a Participant who is
eligible to make nondeductible contributions, irrespective of
whether he actually makes nondeductible contributions. An
Employee continues to be an Eligible Employee during a period the
Plan suspends the Employee's right to make Salary Reduction
Contributions or nondeductible contributions following a hardship
distribution.
(d) "Employer" - The Employer and any Affiliated Employers.
Solely for purposes of applying the limitations on allocations in
this Article IV, the Plan Administrator will determine Affiliated
Employers described in Section 15.1 by modifying Code ssss 414(b)
and (c) in accordance with Code ss 415(h).
(e) "Excess Amount" - The excess of the Participant's
Annual Additions for the Limitation Year over the Maximum
Permissible Amount.
(f) "Defined Contribution Dollar Limitation" - $30,000 or,
if greater, one-fourth (1/4) of the defined benefit dollar
limitation set forth in Code ss 415(b)(1) as in effect for the
Limitation Year. If there is a short Limitation Year because of a
change in Limitation Years, the Plan Administrator will multiply
the Defined Contribution Dollar Limitation by the following
fraction:
Number of months in the short Limitation Year
12
(g) "Highly Compensated Employee" means an Eligible Employee
who satisfies the definition in Section 1.24 of the Plan.
Employee Family Members aggregated as a single Employee under
Section 1.24 constitute a single Highly Compensated Employee,
whether a particular Family Member is a Highly Compensated
Employee or a Nonhighly Compensated Employee without the
application of family aggregation.
(h) "Master or Prototype Plan" - A plan the form of which is
the subject to a favorable notification letter or a favorable
opinion letter from the Internal Revenue Service.
(i) "Maximum Permissible Amount" - The lesser of (1) the
defined contribution dollar limitation, or (2) twenty-five
percent (25%) of the Participant's Compensation for the
Limitation Year. The Compensation limitation referred to in (2)
shall not apply to any contribution for medical benefits (within
the meaning of Code ss 401(h) or 419A(f)(2)) which is otherwise
treated as an Annual Addition under Code ss 415(l)(1) or
419A(d)(2).
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(j) "Nonhighly Compensated Employee" means an Eligible
Employee who is not a Highly Compensated Employee and who is not
a Family Member treated as a Highly Compensated Employee.
(k) "Defined contribution plan" - A retirement plan which
provides for an individual account for each Participant and for
benefits based solely on the amount contributed to the
Participant's Account, and any income, expenses, gains or losses,
and any forfeitures of accounts of other Participants which the
Plan may allocate to such Participant's Account. The Plan
Administrator must treat all defined contribution plans (whether
or not terminated) maintained by the Employer as a single plan.
Solely for purposes of the limitations on allocations in this
Article IV, the Plan Administrator will treat Participant
contributions made to a defined benefit plan maintained by the
Employer as a separate defined contribution plan. The Plan
Administrator also will treat as a defined contribution plan an
individual medical account (as defined in Code ss 415(l)(2))
included as part of a defined benefit plan maintained by the
Employer and, for Taxable Years ending after December 31, 1985, a
welfare benefit fund under Code ss 419(e) maintained by the
Employer to the extent there are post- retirement medical
benefits allocated to the separate account of a key employee (as
defined in Code ss 419A(d)(3)).
(l) "Defined benefit plan" - A retirement plan which does
not provide for individual accounts for Employer contributions.
The Plan Administrator must treat all defined benefit plans
(whether or not terminated) maintained by the Employer as a
single plan.
(m) "Defined benefit plan fraction" - A fraction, the
numerator of which is the sum of projected annual benefits of the
Participant under the defined benefit plan(s) maintained by the
Employer (whether or not terminated), and the denominator of
which is the lesser of one hundred twenty-five percent (125%) of
the dollar limitation determined under Code ssss 415(b) and (d)
for the Limitation Year, or one hundred forty percent (140%) of
the Participant's average Compensation for his high three (3)
consecutive Years of Service, including any adjustments under
Code ss 415(b).
To determine the denominator of this fraction, the Plan
Administrator will make any adjustment required under Code ss
415(b) and will determine a Year of Service as a Plan Year in
which the Employee completed at least 1,000 Hours of Service. The
"projected annual benefit" is the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if
the plan expresses such benefit in a form other than a straight
life annuity or qualified joint and survivor annuity) of the
Participant under the terms of the defined benefit plan on the
assumptions he continues employment until
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<PAGE>
his normal retirement age (or current age, if later) as stated in
the defined benefit plan, his compensation continues at the same
rate as in effect in the Limitation Year under consideration
until the date of his normal retirement age and all other
relevant factors used to determine benefits under the defined
benefit plan remain constant as of the current Limitation Year
for all future Limitation Years.
If the Participant accrued benefits in one or more defined
benefit plans maintained by the Employer which were in existence
on May 6, 1986, the dollar limitation used in the denominator of
this fraction will not be less than the Participant's current
Account Balance. A Participant's current Account Balance is the
sum of the annual benefits under such defined benefit plans which
the Participant had accrued as of the end of the 1986 Limitation
Year (the last Limitation Year beginning before January 1, 1987),
determined without regard to any change in the terms or
conditions of the Plan made after May 5, 1986, and without regard
to any cost of living adjustment occurring after May 5, 1986.
This current Account Balance rule applies only if the defined
benefit plans individually and in the aggregate satisfied the
requirements of Code ss 415 as in effect at the end of the 1986
Limitation Year.
(n) "Defined contribution plan fraction" - A fraction, the
numerator of which is the sum, as of the close of the Limitation
Year, of the Annual Additions to the Participant's Account under
the defined contribution plan(s) maintained by the Employer
(whether or not terminated) for the current and all prior
Limitation Years (including the annual additions attributable to
the Participant's nondeductible Employee Contributions to all
defined benefit plans, whether or not terminated, maintained by
the Employer, and the annual additions attributable to all
welfare benefit funds, as defined in Code ss 419(e), and
individual medical accounts, as defined in Code ss 415(l)(2),
maintained by the Employer), and the denominator of which is the
sum of the lesser of the following amounts determined for the
Limitation Year and for each prior Year of Service with the
Employer: one hundred twenty-five percent (125%) of the dollar
limitation in effect under Code ssss 415(b) and (d) in effect
under Code ss 415(c)(1)(A) for the Limitation Year (determined
without regard to the special dollar limitations for employee
stock ownership plans), or thirty-five percent (35%) of the
Participant's Compensation for the Limitation Year.
For purposes of determining the defined contribution plan
fraction, the Plan Administrator will not recompute Annual
Additions in Limitation Years beginning prior to January 1, 1987,
to treat all Participant contributions as Annual Additions. If
the Plan satisfied Code ss 415 for Limitation Years
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<PAGE>
beginning prior to January 1, 1987, the Plan Administrator will
redetermine the defined contribution plan fraction and the
defined benefit plan fraction as of the end of the 1986
Limitation Year, in accordance with this Section. If the sum of
the redetermined fractions exceeds 1.0, the Plan Administrator
will subtract permanently from the numerator of the defined
contribution plan fraction, an amount equal to the product of (1)
the excess of the sum of the fractions over 1.0, times (2) the
denominator of the defined contribution plan fraction. In making
the adjustment, the Plan Administrator must disregard any accrued
benefit under the defined benefit plan which is in excess of the
current Account Balance. This Plan continues any transitional
rules applicable to the determination of the defined contribution
plan fraction under the Employer's Plan as of the end of the 1986
Limitation Year.
4.25 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS.
(a) Any voluntary employee contribution made in cash after
December 31, 1987, shall be treated as a "Qualified Voluntary
Employee Contribution" ("QVEC") within the meaning of Code
section 219(e)(2) as it existed prior to the enactment of the Tax
Reform Act of 1986, and held in a separate QVEC.
(b) The balance in each Participant's QVEC Account shall be
fully vested at all times and shall not be subject to forfeiture
for any reason.
(c) A Participant may, upon written request delivered to the
Administrator, make withdrawals from his QVEC Account. Any
distribution shall be made in a manner which is consistent with
and satisfies the provisions of Section 6.5, including, but not
limited to, all notice and consent requirements of Code section
411(a)(11) and the Regulations thereunder.
(d) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive
benefits, the fair market value of the QVEC Account shall be used
to provide additional benefits to the Participant or his
Beneficiary.
(e) Unless the Administrator directs Qualified Voluntary
Employee Contributions made pursuant to this Section be
segregated into a separate account for each Participant in a
federally insured savings account, certificate of deposit in a
bank or savings and loan association, money market certificate or
other short term debt security acceptable to the Trustee, they
shall be invested as part of the general Trust Fund and share in
earnings and losses.
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(f) All amounts allocated to a QVEC Account may be treated
as a Participant pursuant to Section 9.8.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.1 BEFORE-TAX ACCOUNT, ROLLOVER ACCOUNT, AFTER-TAX ACCOUNT AND
QVEC ACCOUNT. A Participant's is always one hundred percent (100%)
vested in his Before-Tax Account, Rollover Account, After-Tax Account
and QVEC Account.
5.2 MATCHING CONTRIBUTIONS ACCOUNT. If the employment of a
Participant is terminated before he is eligible for retirement for any
reason other than death, disability, plant closing, sale or purchase
of Employer, or induction into the Armed Forces of the United States,
the Participant shall have a Nonforfeitable right to receive the
following applicable percentage of his Matching Contributions Account
depending upon the number of his Years of Service with the Company as
of the date of the termination of employment:
Nonforfeitable
Years of Service Percentage
Less than 1 year 0%
1 year or more 100%
A Participant shall be entitled to 100% of the value of his Matching
Contribution Account, regardless of his Periods of Service, if the
separation occurs for any of the following reasons:
(1)Induction into the Armed Forces of,
or service with, the United States
Government; or
(2)Involuntary separation due to the
sale, destruction, or shutdown or
closing out of an activity of the
Employer; or
(3) Sale of an Employer or
substantially all of the assets of
an Employer regardless of whether
the Participant separates from
service on account of such sale.
Any amounts credited to a Participant's Matching Contributions
Account which are not Nonforfeitable shall be forfeited by the
Participant. All forfeited amounts shall be used to reduce the
Employer's obligation to make Matching Contributions under Section
4.3.
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ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS
6.1 TIME OF PAYMENT OF ACCOUNT BALANCE. The Plan Administrator
shall direct the Trustee to commence distribution of a Participant's
Nonforfeitable Account Balance in accordance with the provisions of
this Article VI. The Participant's spouse must also consent in writing
to any distribution for which this Article VI requires spousal
consent. A distribution date under this Article VI is the date or
dates the Employer specifies in this Article with respect to the event
giving rise to the Participant's Separation from Service or attainment
of age 59 1/2, or as soon as administratively practicable thereafter.
For purposes of the consent requirements under this Article VI, if the
amount of Participant's Nonforfeitable Account Balance, at the time of
any distribution, exceeds $3,500, the Plan Administrator must treat
that amount as exceeding $3,500 for purposes of all subsequent Plan
distributions to the Participant.
6.2 SEPARATION FROM SERVICE FOR ANY REASON.
(a) If a Participant separates from Service for any reason
and his Nonforfeitable Account Balance does not exceed $3,500,
nor has ever exceeded $3,500, the Plan Administrator will direct
the Trustee to distribute the Participant's Nonforfeitable
Account Balance in a lump sum as soon as reasonably practical,
but in no event later than the sixtieth (60th) day following the
close of the Plan Year in which the Participant attains Normal
Retirement Age. No consent is required for a distribution not
exceeding $3,500.
(b) If a Participant separates from Service for any reason
and his Nonforfeitable Account Balance exceeds $3,500, the Plan
Administrator will direct the Trustee to commence distribution of
the Participant's Nonforfeitable Account Balance, in accordance
with the form and timing elected by the Participant. The
Participant may elect to have the Trustee commence distribution
as of any date within a reasonably practical period of time after
the Participant's separation from Service and prior to the
Annuity Starting Date. A Participant may not receive such a
distribution if, prior to the time the Trustee actually
makes the distribution, the Participant returns to employment
with the Employer. Following his attainment of Normal Retirement
Age, a Participant who has separated from Service may elect
distribution as of any distribution date.
In the absence of an election by the Participant, the Plan
Administrator will direct the Trustee to distribute the
Participant's Nonforfeitable Account Balance in a lump sum on the
sixtieth (60th) day following the close of the Plan Year in which
the latest of the following events occurs:
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(1) the Participant attains Normal Retirement
Age; or
(2) the Participant's Separation from Service.
6.3 DEATH OF THE PARTICIPANT. In the event of the death of the
Participant prior to distribution of his Account Balance, the Plan
Administrator will direct the Trustee, in accordance with this Section
6.3, to distribute to the Participant's Beneficiary, the Participant's
Account Balance remaining in the Trust as set forth below:
(a) If the deceased Participant's Nonforfeitable Account
Balance does not exceed $3,500, nor has ever exceeded $3,500, the
Plan Administrator, subject to the requirements of Section 6.8,
shall direct the Trustee to distribute the deceased Participant's
Account Balance in a lump sum as soon as reasonably practical.
(b) If the deceased Participant's Nonforfeitable Account
Balance exceeds $3,500, the Plan Administrator will direct the
Trustee to distribute the deceased Participant's Account Balance
at the time and in the form elected by the Participant or, if
applicable, by the Beneficiary, as permitted under this Article
VI. In the absence of an election, subject to the requirements of
Section 6.8, the Plan Administrator will direct the Trustee to
distribute the Participant's undistributed Account Balance in a
lump sum as soon as reasonably possible following the
Participant's death.
(c) If the amount of the deceased Participant's Account
Balance exceeds $3,500, the Participant's Beneficiary may elect
to have the Trustee distribute the Participant's Account Balance
in a form and within a period permitted under Section 6.4 and
Section 6.8 or 6.9, whichever is applicable. The Beneficiary's
election is subject to any restrictions designated in writing by
the Participant and not revoked as of his date of death.
6.4 METHOD OF PAYMENT.
(a)(1) Normal Method. The normal method of benefit
payment under the Plan shall be one lump-sum payment in
cash. The Administrator, pursuant to the election of
the Participant, shall direct the Trustee to distribute
to a Participant or his Beneficiary any amount to which
he is entitled under the Plan. Any amounts to be
distributed from the Matching Contributions Account
that are invested in the Employer Stock Fund shall be
converted to cash before such distribution is made.
Such conversion shall be accomplished by either (i)
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determining the value of the Employer Stock Fund using
the closing price at which Employer Stock was listed on
the NASDAQ Exchange on the Valuation Date used for
distribution purposes, and providing the cash
equivalent from other uninvested assets of the Plan; or
(ii) selling the number of shares of Employer Stock
necessary to provide the cash equivalent of the value
of the Matching Contributions Account invested in the
Employer Stock Fund as of the applicable Valuation
Date.
(2) Optional Methods. A Participant may
elect to receive his benefit under the Plan in
(A) Approximately equal installments over a fixed
reasonable period of time, not exceeding the life
expectancy of the Participant, or the joint life
and last survivor expectancy of the Participant
and his Beneficiary.
To facilitate installment payments to a
Participant or Beneficiary under this Section
6.4(a)(2), the Plan Administrator may direct the
Trustee to segregate all or any part of the
Participant's Account Balance in a separate
Account. The Trustee will invest the Participant's
segregated Account in Federally insured interest
bearing savings account(s) or time deposit(s) (or
a combination of both), or in other fixed income
investments. A segregated Account remains a part
of the Trust, but it alone shares in any income it
earns, and it alone bears any expense or loss it
incurs. The Participant or Beneficiary, at any
time, may elect to accelerate the payment of all,
or any portion, of the Participant's unpaid
Nonforfeitable Account Balance.
(B) An annuity. The remaining provisions of this
Section 6.4(2)(B) concerning annuity payments
shall apply if a Participant elects the annuity
method of payment.
If a Participant elects to receive an annuity, as
described above, unless otherwise elected as
provided below, a Participant who is married on
the Annuity Starting Date and who does not die
before the "Annuity Starting Date" shall receive
the value of all of his benefits in the form of a
joint and survivor annuity. The joint and survivor
annuity is an annuity that commences immediately
and shall
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<PAGE>
be equal in value to a single life annuity. Such
joint and survivor benefits following the
Participant's death shall continue to the spouse
during the spouse's lifetime at a rate equal to
50% of the rate at which such benefits were
payable to the Participant. This joint and 50%
survivor annuity shall be considered the
designated qualified joint and survivor annuity
and automatic form of payment for purposes of this
Plan if a Participant does not receive one
lump-sum payment. However, the Participant may
elect to receive a smaller annuity benefit with
continuation of payments to the spouse at a rate
of seventy-five percent (75%) or one hundred
percent (100%) of the rate payable to a
Participant during his lifetime, which alternative
joint and survivor annuity shall be equal in value
to the automatic joint and 50% survivor annuity.
An unmarried Participant shall receive the value
of his benefit in the form of a life annuity. Such
unmarried Participant, however, may elect in
writing to waive the life annuity. The election
must comply with the provisions of his Section as
if it were an election to waive the joint and
survivor annuity by a married Participant, but
without the spousal consent requirement. The
Participant may elect to have any annuity provided
for in this Section distributed upon the
attainment of the "earliest retirement age" under
the Plan. The "earliest retirement age" is the
earliest date on which, under the Plan, the
Participant could elect to receive retirement
benefits.
Any election to waive the joint and survivor
annuity must be made by the Participant in writing
during the election period and be consented to by the
Participant's spouse. If the spouse is legally
incompetent to give consent, the spouse's legal
guardian, even if such guardian is the Participant, may
give consent. Such election shall designate a
Beneficiary (or a form of benefits) that may not be
changed without spousal consent (unless the consent of
the spouse expressly permits designations by the
Participant without the requirement of further consent
by the spouse). Such spouse's consent shall be
irrevocable and must acknowledge the effect of such
election and be witnessed by a Plan representative or a
notary public. Such consent shall not be required if it
is established to the
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satisfaction of the Administrator that the required
consent cannot be obtained because there is no spouse,
the spouse cannot be located, or other circumstances
that may be prescribed by Regulations. The election
made by the Participant and consented to by his spouse
may be revoked by the Participant in writing without
the consent of the spouse at any time during the
election period. The number of revocations shall not be
limited. Any new election must comply with the
requirements of this paragraph. A former spouse's
waiver shall not be binding on a new spouse.
(3) The election period to waive the joint and survivor
annuity shall be the 90 day period ending on the
Annuity Starting Date.
(4) For purposes of this Section, the Annuity Starting
Date means the first day of the first period for which
an amount is paid as an annuity, or, in the case of a
benefit not payable in the form of an annuity, the
first day on which all events have occurred which
entitle the Participant to such benefit.
(5) With regard to the elections described in
Subsections (1) and (2) above, the Administrator shall
provide to the Participant no less than 30 days and no
more than 90 days before the Annuity Starting Date a
written explanation of:
(i) the terms and conditions of the joint
and survivor annuity, and
(ii) the Participant's right to make, and the
effect of, an election to waive the joint and
survivor annuity, and
(iii) the right of the Participant's spouse
to consent to any election to waive the joint
and survivor annuity, and
(iv) the right of the Participant to revoke
such election, and the effect of such
revocation.
(C) Partial distribution. A Participant who
becomes entitled to receive a distribution
from the Plan because of death, disability,
termination of employment or attainment of
age 59 1/2 and whose Account is not subject
to
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<PAGE>
the automatic lump sum distribution provision
of Section 6.2(a) may request a partial
distribution of his Account. Any such partial
distribution shall be made on a pro rata
basis from the Participant's interest in the
Employer Stock Fund and the remainder of the
Participant's Account.
(b) The present value of a Participant's joint and
survivor annuity derived from Employer and contributions may
not be paid without his written consent if the value
exceeds, or has ever exceeded, $3,500 at the time of any
prior distribution. Further, the spouse of a Participant
must consent in writing to any immediate distribution. If
the value of the Participant's benefit derived from Employer
and contributions does not exceed $3,500 and has never
exceeded $3,500 at the time of any prior distribution, the
Administrator may immediately distribute such benefit
without such Participant's consent. No distribution may be
made under the preceding sentence after the Annuity Starting
Date unless the Participant and his spouse consent in
writing to such distribution. Any written consent required
under this paragraph must be obtained not more than 90 days
before commencement of the distribution and shall be made in
a manner consistent with Section 6.4(a)(2).
(c) Any distribution to a Participant who has a benefit
which exceeds, or has ever exceeded, $3,500 at the time of
any prior distribution shall require such Participant's
consent. With regard to this required consent:
(1) No consent shall be valid unless the Participant
has received a general description of the material
features and an explanation of the relative values of
the optional forms of benefit available under the Plan
that would satisfy the notice requirements of Code
section 417.
(2) The Participant must be informed of his right to
defer receipt of the distribution. If a Participant
fails to consent, it shall be deemed an election to
defer the commencement of payment of any benefit.
However, any election to defer the receipt of benefits
shall not apply with respect to distributions which are
required under Section 6.4(e).
(3) Notice of the rights specified under this paragraph
shall be provided no less than 30 days
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<PAGE>
and no more than 90 days before the "annuity starting
date."
(4) Written consent of the Participant to the
distribution must not be made before the Participant
receives the notice and must not be made more than 90
days before the "annuity starting date."
(5) No consent shall be valid if a significant
detriment is imposed under the Plan on any Participant
who does not consent to the distribution.
(d) If a distribution is one to which Code ssss 401(a)(11)
and 417 do not apply, such distribution may commence less than 30
days after the notice required under section 1.411(a)-11(C) of
the Income Tax Regulations is given, provided that:
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right to a period of
at least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option); and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
(e) Notwithstanding any provision in the Plan to the
contrary, the distribution of a Participant's benefits made on or
after January 1, 1985, whether under the Plan or through the
purchase of an annuity contract, shall be made in accordance with
the following requirements and shall otherwise comply with Code
section 401(a)(9) and the Regulations thereunder (including
Regulation 1.401(a)(9)-2), the provisions of which are
incorporated herein by reference:
(1) A Participant's benefits shall be distributed to
him not later than April 1st of the calendar year following
the later of (i) the calendar year in which the Participant
attains age 70 1/2 or (ii) the calendar year in which the
Participant retires, provided, however, that this clause
(ii) shall not apply in the case of a participant who is a
"five (5) percent owner" at any time during the five (5)
Plan Year period ending in the calendar year in which he
attains age 70 1/2 or, in the case of a Participant who
becomes a "five (5) percent owner" during any subsequent
Plan Year, clause (ii) shall no longer apply and the
required beginning date shall be the April 1st of the
calendar year following the calendar year in which such
subsequent Plan Year ends. Alternatively, if the
distribution is to be in the form of a joint and survivor
annuity or single life annuity as
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<PAGE>
provided in Section 6.4(a)(1) above, then distributions must
begin no later than the applicable April 1st as determined
under the preceding sentence and must be made over the life
of the Participant (or the lives of the Participant and the
Participant's designated Beneficiary) in accordance with
Regulations.
(2) Distributions to a Participant and his
Beneficiaries shall only be made in accordance with the
incidental death benefit requirements of Code section
401(a)(9)(G) and the Regulations thereunder.
(f) Subject to the spouse's right of consent afforded under
the Plan, the restrictions imposed by this Section shall not
apply if a Participant has, prior to January 1, 1984, made a
written designation to have his retirement benefit paid in an
alternative method acceptable under Code section 401(a) as in
effect prior to the enactment of the Tax Equity and Fiscal
Responsibility Act of 1982.
(g) All annuity Contracts under this Plan shall be
non-transferrable when distributed. Furthermore, the terms of any
annuity Contract purchased and distributed to a Participant or
spouse shall comply with all of the requirements of the Plan.
(h) Death After Election of Joint and Survivor
Annuity. If a Participant who had made a valid election of
a qualified joint and survivor annuity with a survivorship
portion payable to his Spouse greater than 50% dies before
his Annuity Starting Date, the survivor annuity otherwise payable
under this Article shall not be less than the monthly amount the
Spouse would have received under the method of payment elected
had the Participant died on the day after his Annuity Starting
Date.
(i) If the value of the Pre-Retirement Survivor Annuity
derived from Employer and Employee contributions does not exceed
$3,500 and has never exceeded $3,500 at the time of any prior
distribution, the Administrator shall direct the immediate
distribution of such amount to the Participant's Beneficiary. No
distribution may be made under the preceding sentence after the
annuity starting date unless the Beneficiary consents in writing.
If the value exceeds, or has ever exceeded, $3,500 at the time of
any prior distribution, an immediate distribution of the entire
amount may be made to the Beneficiary, provided such Beneficiary
consents in writing to such distribution. Any written consent
required under this paragraph must be obtained not more than 90
days before commencement of the distribution and shall be made in
a manner consistent with Section 6.4(a)(2).
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(j) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant made on
or after January 1, 1985 shall be made in accordance with the
following requirements and shall otherwise comply with Code
section 401(a)(9) and the Regulations thereunder. If the death
benefit is paid in the form of a Pre-Retirement Survivor Annuity,
then distributions to the Participant's surviving spouse must
commence on or before the later of: (1) December 31st of the
calendar year immediately following the calendar year in which
the Participant died; or (2) December 31st of the calendar year
in which the Participant would have attained age 70 1/2. If it is
determined pursuant to Regulations that the distribution of a
Participant's interest has begun and the Participant dies before
his entire interest has been distributed to him, the remaining
portion of such interest shall be distributed at least as rapidly
as under the method of distribution selected pursuant to Section
6.4 as of his date of death. If a Participant dies before he has
begun to receive any distributions of his interest under the Plan
or before distributions are deemed to have begun pursuant to
Regulations (and distributions are not to be made in the form of
a Pre-Retirement Survivor Annuity), then his death benefit shall
be distributed to his Beneficiaries by December 31st of the
calendar year in which the fifth anniversary of his date of death
occurs.
(k) Subject to the spouse's right of consent afforded
under the Plan, the restrictions imposed by this Section
shall not apply if a Participant has, prior to January 1, 1984,
made a written designation to have his death benefits paid in an
alternative method acceptable under Code section 401(a) as in
effect prior to the enactment of the Tax Equity and Fiscal
Responsibility Act of 1982.
6.5 DISTRIBUTION FOR MINOR BENEFICIARY. In the event a
distribution is to be made to a minor, then the Administrator may
direct that such distribution be paid to the legal guardian, or if
none, to a parent of such Beneficiary or a responsible adult with whom
the Beneficiary maintains his residence, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act or Gift to Minors
Act, if such is permitted by the laws of the state in which said
Beneficiary resides. Such a payment to the legal guardian, custodian
or parent of a minor Beneficiary shall fully discharge the Trustee,
Employer, and Plan from further liability on account thereof.
6.6 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN. In the event
that all, or any portion, of the distribution payable to a Participant
or his Beneficiary hereunder shall, at the Participant's Normal
Retirement Age, remain unpaid solely by reason of the inability of the
Administrator, after sending a registered letter, return receipt
requested, to the last known address, and
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<PAGE>
after further diligent effort, to ascertain the whereabouts of such
Participant or his Beneficiary, the amount so distributable shall be
treated as a Forfeiture pursuant to the Plan. In the event a
Participant or Beneficiary is located subsequent to his benefit being
reallocated, such benefit shall be restored.
6.7 DIRECT ROLLOVER TO ANOTHER QUALIFIED PLAN.
(a) Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election
under this Section 6.7, a Distributee may elect, at the time and
in the manner prescribed by the Plan Administrator, to have any
portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a direct
rollover.
(b) The following definitions apply to this Section
6.7:
(1) "Eligible Rollover Distribution." An Eligible
Rollover Distribution is any distribution of all or any
portion of the balance to the credit of the Distributee,
except that an Eligible Rollover Distribution does not
include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's Designated
Beneficiary, or for a specified period of ten (10) years or
more; any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; and the
portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer
securities).
(2) "Eligible Retirement Plan." An Eligible Retirement
Plan is an individual retirement account described in
section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified
trust described in section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover Distribution. However,
in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
(3) "Distributee." A Distributee includes an Employee
or former Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate
payee under a Qualified Domestic Relations
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<PAGE>
Order, as defined in section 414(p) of the Code, are
Distributees with regard to the interest of the spouse or
former spouse.
(4) "Direct Rollover." A Direct Rollover is a payment
by the Plan to the Eligible Retirement Plan specified by the
Distributee.
(c) For distributions made prior to January 1, 1993, the
Plan Administrator may direct the Trustee to transfer as a direct
trustee-to-trustee transfer the balance to the credit of a
Participant to the trustee of another qualified plan, if the
trustee of the other plan is authorized to accept such a
transfer.
6.8 DISTRIBUTION RESTRICTIONS. Notwithstanding anything herein to
the contrary, the events giving rise to a distribution pursuant to the
provisions of Sections 6.2 through 6.4 applicable to the Participant's
Before-Tax Account and Matching Employee Contributions Account must
satisfy the distribution restrictions of this Section 6.8.
"Distribution restrictions" means the Employee may not receive a
distribution of the specified contributions (nor earnings on those
contributions) except in the event of (1) the Participant's death,
disability or termination of employment, (2) financial hardship
satisfying the requirements of Code ss 401(k) and the applicable
Treasury regulations, (3) a plan termination, without establishment of
a successor defined contribution plan (other than an ESOP), (4) a sale
of substantially all of the assets (within the meaning of Code ss
401(d)(2)) used in a trade or business, but only to an employee who
continues employment with the corporation acquiring those assets, (5)
a sale by a corporation of its interest in a subsidiary (within the
meaning of Code ss 409(d)(3)), but only to an employee who continues
employment with the subsidiary, or (6) attainment of age 59<<. For
Plan Years beginning after December 31, 1988, a distribution on
account of financial hardship, as directed in clause (2), may not
include earnings on Salary Reduction Contributions credited as of a
date later than December 31, 1988, and may not include Matching
Contributions used in performing the ADP test under Section 4.10, nor
any earnings on such contributions, irrespective of when credited. A
distribution described in clauses (3), (4) or (5), if made after March
31, 1988, must be a lump sum distribution, as required under Code ss
401(k)(10).
6.9 TRANSITIONAL ELECTIONS. Notwithstanding the provisions of
this Article VI, if the Participant (or Beneficiary) signed a written
distribution designation prior to January 1, 1984, the Plan
Administrator must distribute the Participant's Nonforfeitable Account
Balance in accordance with that designation. This Section 6.9 does not
apply to a pre-1985 distribution designation, and the Plan
Administrator will not comply with that designation, if any of the
following applies: (1) the method of distribution would have
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<PAGE>
disqualified the Plan under Code ss 401(a)(9) as in effect on December
31, 1983; (2) the Participant did not have an Account Balance as of
December 31, 1983; (3) the distribution designation does not specify
the timing and form of the distribution and the death Beneficiaries
(in order of priority); (4) the substitution of a Beneficiary modifies
the payment period of the distribution; or (5) the Participant (or
Beneficiary) modifies or revokes the distribution designation. In the
event of a revocation, the Plan must distribute, no later than
December 31 of the calendar year following the year of revocation, the
amount which the Participant (or Beneficiary) would have received
under Code ss 401(a)(9) if the distribution designation had not been
in effect. The Plan Administrator will apply this Section 6.9 to
rollovers and transfers in accordance with Part J of the Code ss
401(a)(9) Treasury regulations.
6.10 REQUIRED BEGINNING DATE.
(a) If any distribution commencement date described under
this Section 6.10, either by Plan provision or by Participant
election (or nonelection), is later than the Participant's
Required Beginning Date, the Plan Administrator instead must
direct the Trustee to make distribution on the Participant's
Required Beginning Date, subject to the transitional election, if
applicable, under Section 6.9.
(b) "Required Beginning Date" shall mean:
(1) The Required Beginning Date of a Participant shall
be determined in accordance with (A) or (B) below:
(A) Non-five percent (5%) owners. The Required
Beginning Date of a Participant who is not a five
percent (5%) owner is the first day of April of the
calendar year following the calendar year in which the
later of termination of employment, retirement or
attainment of age 70 1/2 occurs.
(B) Five percent (5%) owners. The Required
Beginning Date of a Participant who is a five percent
(5%) owner during any year beginning after December 31,
1979, is the first day of April following the later of:
(i) the calendar year in which the Par-
ticipant attains age 70 1/2; or
(ii) the earlier of the calendar year with or
within which ends the Plan Year in which the
Participant becomes a five percent
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(5%) owner, or the calendar year in which the
Participant terminates employment.
(C) Five percent (5%) owner. A Participant is
treated as a five percent (5%) owner for purposes of
this Article if such Participant is a five percent (5%)
owner as defined in Code ss 416(i) (determined in
accordance with Code ss 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 such owners attains age sixty-six and one-half
(66 1/2) or any subsequent Plan Year.
(i) Once distributions have begun to a five
percent (5%) owner under this Article, they must
continue to be distributed, even if the
Participant ceases to be a five percent (5%) owner
in a subsequent year.
(c) A mandatory distribution at the Participant's
Required Beginning Date will be in a lump sum (or, if appli-
cable, the normal annuity form of distribution required under
Section 6.7(b)) unless the Participant, pursuant to the
provisions of this Article VI, makes a valid election to receive
an alternative form of payment. Notwithstanding the previous
sentence, as of the first distribution calendar year,
distributions, if not made in a single lump sum, may only be made
over one of the following periods (or a combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and a designated
Beneficiary,
(3) a period certain not extending beyond the
life expectancy of the Participant, or
(4) a period certain not extending beyond the joint and
last survivor expectancy of the Participant and a
Beneficiary.
6.11 LIMITATIONS ON DISTRIBUTIONS - INCIDENTAL BENEFIT RULE.
(a) The Participant shall not select any form of benefit for
which the present value of the retirement benefits expected to be
paid solely to the Participant does not exceed fifty percent
(50%) of the present value of the total retirement benefits
payable to the Participant and his Beneficiaries. This rule is
subject to an exception for distributions made consistent with
subparagraph (b)(2) below where the designated Beneficiary is the
Participant'sspouse.
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(b) Subject to subparagraph (a) above, the Participant may
not select a method of payment unless under that method
distribution will be made:
(1) Over a period not extending beyond the life
or life expectancy of the Participant; or
(2) Over a period not extending beyond the lives or
life expectancies of the Participant and an individual
designated Beneficiary.
Where the designated Beneficiary is the Participant's
spouse, the life expectancies of the Participant and his spouse
may be recalculated on an annual basis and payments adjusted
accordingly.
6.12 RESTRICTIONS ON PAYMENTS AFTER DEATH OF PARTICIPANT.
(a) Notwithstanding any election a Participant may make, in
the event of the death of such Participant after installment
payments have commenced to him (or the death of his spouse if
distribution has commenced to such spouse), the Participant's
remaining Account Balance must be distributed to the
Participant's Beneficiaries at least as rapidly as under the
method of distribution that was in effect at the date of his
death.
(b) If a Participant dies before receiving any
distributions, his Account Balance must be distributed within
five (5) years after his death; provided that the five (5) year
requirement shall not be applied: (1) where his spouse has
survived him, benefits are payable to the spouse, and
distributions begin no later than the date on which the
Participant would have reached age 70<<; or (2) where the Account
Balance is payable to a designated Beneficiary over a period not
extending beyond the life expectancy of such Beneficiary the
distributions begin no later than one (1) year after the
Participant's death or such later date as IRS regulations permit.
6.13 CODE ss 401(a)(9). The provisions of Article VI are intended
to comply with Code ss 401(a)(9) and the regulations thereunder,
including the rules on incidental death benefits. Code ss 401(a)(9)
applies to all distributions from the Plan, notwithstanding any
inconsistent provision or election otherwise permissible under this
Article VI.
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ARTICLE VII
IN-SERVICE WITHDRAWALS AND LOANS
7.1 AFTER-TAX ACCOUNT - WITHDRAWAL/DISTRIBUTION.
(a) A Participant, by giving prior written notice to the
Trustee, may withdraw all or any part of the value of his
After-Tax Account subject to the requirements of this Article
VII. The Trustee, in accordance with the direction of the Plan
Administrator, will distribute a Participant's unwithdrawn
After-Tax Account in accordance with the provisions of Article VI
applicable to the distribution of the Participant's
Nonforfeitable Account Balance.
(b) Prior to January 1, 1987, withdrawals were limited to
After-Tax Contributions and treated as a nontaxable return of
basis. Effective January 1, 1987, any withdrawals shall consist
of both voluntary Employee Contributions and any earnings
thereon. The pro rata basis recovery rules of ss 72(e) shall
apply to withdrawals of voluntary Employee Contributions after
December 31, 1986. In accordance with the grandfather rule of
Code ss 72(e)(8)(D), which is available because the Plan
permitted withdrawals of voluntary Employee Contributions on May
5, 1986, withdrawals shall be treated as a nontaxable return of
basis up to the amount of the Participant's pre-1987 Employee
Contributions (those made after December 31, 1986), the amount of
each withdrawal treated as a nontaxable return of basis shall be
determined by multiplying the amount of the withdrawal by a
fraction, the numerator of which is the Participant's total
amount of voluntary Employee Contributions, and the denominator
of which is the total amount in his voluntary Employee
Contributions Account. The remainder of the withdrawal shall be
treated as taxable income to the Participant for the taxable year
of the Participant in which the withdrawal was made.
7.2 IN-SERVICE WITHDRAWALS FOR PENNSYLVANIA HOUSE
EMPLOYEES.
An Employee may elect to withdraw funds from his Matching
Contribution Account to the extent that such funds are attributable to
contributions made before January 1, 1988 and to the extent vested by
filing a request for a regular in-service withdrawal on a form
provided by the Plan Administrator, provided that such a withdrawal
may not be made sooner than six months following a previous regular
in-service withdrawal. An Employee may elect to withdraw funds from
his Qualified Voluntary Employee Contributions Account by filing a
request for withdrawal with the Plan Administrator on a form provided
it. An Employee may elect to withdraw funds from his After-Tax Account
and his Rollover Account by filing a request for a regular in-service
withdrawal with the Plan Administrator on a form provided by it,
provided that such a withdrawal may not be made sooner than six months
following a
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previous regular in-service withdrawal. Such authorization must be
filed with the Plan Administrator, or its delegate, prior to the
Employer's payroll cutoff date in order to become effective on the
first day of the next calendar month. The dollar amount of the
withdrawal shall be based on the value of the above Accounts as of the
Adjustment Date prior to the effective date of the withdrawal
application. Provisions for withdrawals are as follows:
(a) A Participant may elect to withdraw funds in an amount
equal to from 1% to 100% (in whole percentage increments) of the
value of his After-Tax Account, rollover Account, and the vested
portion of his Company Contribution Account, attributable to
contributions made before January 1, 1988, by either specifying
the actual percentage to be withdrawn or the actual dollar amount
to be withdrawn. The amount of his Company Contribution Account
which is available for withdrawal hereunder shall be determined
by multiplying the portion of his Company Contribution Account
attributable to contributions made before January 1, 1988 by the
vesting percentage applicable to those amounts.
(b) Until he has been a Plan Participant for at least five
years (counting participation in the Voluntary Investment Plan of
General Mills, Inc., or any predecessor plan from which funds
were transferred to this Plan), the amount which can be withdrawn
by a Participant from his Company Contribution Account shall not
exceed the amount of Company contributions made to this Account
at the beginning of the second calendar year immediately
preceding the calendar year in which the withdrawal is made.
(c) A period of at least six months shall elapse between
regular in-service withdrawals; however, in the case of an
emergency, a Participant may petition the Plan Administrator, in
writing, to grant one additional withdrawal in a Plan Year. The
Plan Administrator, acting insofar as possible on a uniform
basis, shall consider and act upon such petition.
(d) Any withdrawal made by a Participant who has elected to
have contributions under the affected Accounts invested in more
than one Fund shall be made on a pro rata basis in equal
proportions from each such Fund.
7.3 ATTAINMENT OF AGE 59 1/2. If a Participant attains age
59 1/2, he may request the complete or partial distribution of his
Account as of any date thereafter.
7.4 HARDSHIP DISTRIBUTIONS - GENERAL PROVISIONS. The Employer
shall permit distributions on account of a Participant's immediate and
heavy financial need. Such hardship distributions may be made to
either an active Participant or a terminated Participant not currently
eligible to receive a distribution under the Plan.
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The distribution shall be made from the Participant's Before-Tax
Account. Such a withdrawal shall be granted only if the Plan
Administrator determines that the purpose of the withdrawal is to meet
an immediate and heavy financial need of the Participant of more than
$100.00 for which there is a lack of resources reasonably available,
and the amount of the withdrawal does not exceed the financial need,
including any amounts necessary to pay any federal, state or local
income tax or penalties reasonably anticipated to result from such
distribution. Distributions made pursuant to this Section shall be
made as soon as administratively possible. Accounts shall be adjusted
as of the Adjustment Date, or other Valuation Date, on or before the
withdrawal unless the Plan Administrator elects, in its discretion, to
have a special valuation, which will then control. Any distribution
made pursuant to this Section shall be made in a manner which is
consistent with and satisfies the provisions of Article VI, including,
but not limited to, the notice and consent requirements of Code ssss
417, if applicable, and 411(a)(11) and the regulations thereunder.
7.5 HARDSHIP DISTRIBUTIONS - FINANCIAL NEED. The Plan
Administrator, in making its determination of the existence of a heavy
and immediate financial need for which there is a lack of resources
reasonably available, may reasonably rely on the Participant's
representation that such need cannot be met by (1) insurance; (2)
reasonable liquidation of the assets of the Participant or his spouse
and assets held by their children to the extent not protected by the
Uniform Transfers to Minors Act; (3) other distributions or loans from
the Plan or any other plan maintained by the Employer or any prior
employer of the Participant or by a loan from any commercial source on
reasonable terms. A hardship withdrawal shall not be denied solely
because a Participant does not receive a nontaxable loan pursuant to
Section 7.7 if the loan is not made on account of a determination by
the Plan Administrator that the loan cannot be adequately secured, or
if the loan would increase the amount of the financial need. Any
Participant receiving a hardship distribution shall be ineligible to
make further deferrals or Participant contributions under this Plan or
any other plan maintained by the Employer until the first pay period
following the expiration of six (6) months following the date of the
hardship distribution. For the taxable year of the Participant
following the taxable year of the hardship distribution, such
Participant's elective contributions under any Plan maintained by the
Employer may not exceed the applicable limit under Code ss 402(g),
less the amount of the Participant's elective contributions for the
taxable year of the hardship distribution.
"Financial hardship" under this Section 7.5 shall mean a
Participant's immediate and heavy financial need that cannot be met
from other reasonably available resources and is caused by one or more
of the following:
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(a) Medical expenses incurred as the result of accident or
illness incurred by the Participant, or the Participant's spouse
or dependents, or the cost of such medical care if a hardship
distribution is necessary to obtain medical care;
(b) The cost of purchasing or preserving the principal
residence of the Participant, excluding mortgage payments;
(c) Payment of tuition and related educational fees for the
next twelve (12) months of post-secondary education for the
Participant or the Participant's spouse, children, or dependents;
(d) The cost of preventing the Participant's eviction
from, or foreclosure on the mortgage of, the Participant's
principal residence; or
(e) Other unexpected or unusual expenses creating a
financial need, as provided in published revenue rulings, notices
or other documents of general applicability.
7.6 PROCEDURES AND RESTRICTIONS. To make a withdrawal, a
Participant shall give written notice to the Plan Administrator. A
withdrawal shall be made using the Account balance as of the Valuation
Date preceding the expiration of the notice period. Not more than one
withdrawal may be made in any Plan Year except that a withdrawal under
Section 7.4 may be made in addition to any other withdrawal made
during the Plan Year. The minimum withdrawal shall be $1,000 or the
total value of the vested portion of his Accounts available for
withdrawal, if less. The amount of the withdrawal shall be allocated
among the investment funds in proportion to the value of the
Participant's Accounts from which the withdrawal is made in each
investment fund as of the date of the withdrawal. All payments to
Participants under this section shall be made in cash as soon as
practicable.
7.7 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee's discretion, make loans
to Participants and Beneficiaries under the following
circumstances: (1) loans shall be made available to all active
Participants on a reasonably equivalent basis; (2) loans shall
not be made available to Highly Compensated Employees in an
amount greater than the amount made available to other
Participants; (3) loans shall bear a reasonable rate of interest;
(4) loans shall be adequately secured; and (5) shall provide for
repayment over a reasonable period of time.
(b) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the
Participant) shall be limited to the lesser of:
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(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the
Participant during the one year period ending on the day
before the date on which such loan is made, over the
outstanding balance of loans from the Plan to the
Participant on the date on which such loan was made, or
(2) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Participant under the
Plan.
(c) Loans shall provide for level amortization with payments
to be made not less frequently than quarterly over a period not
to exceed five (5) years. However, loans used to acquire any
dwelling unit which, within a reasonable time, is to be used
(determined at the time the loan is made) as a principal
residence of the Participant shall provide for periodic repayment
over a reasonable period of time not to exceed 15 years.
(d) Any loans granted or renewed shall be made pursuant to a
Plan loan policy described below in Section 7.6.
7.8 LOAN POLICY. If the Plan Administrator adopts a loan policy,
pursuant to subparagraph 10.02(j), the loan policy must be a written
document and must include: (a) the identity of the person or positions
authorized to administer the Participant loan program; (b) a procedure
for applying for the loan; (c) the criteria for approving or denying a
loan; (d) the limitations, if any, on the types and amounts of loans
available; (e) the procedure for determining a reasonable rate of
interest; (f) the types of collateral which may secure the loan; and
(g) the events constituting default and the steps the Plan will take
to preserve Plan assets in the event of default. This Section 7.8
specifically incorporates the written loan policy as part of the
Employer's Plan.
ARTICLE VIII
EMPLOYER ADMINISTRATIVE PROVISIONS
8.1 IN GENERAL. The Employer shall have the sole responsibility
for making the contributions provided for under Article IV and the
authority to terminate its participation in this Plan. The Employer
shall have the sole authority to appoint and remove the Trustee and
any Investment Manager or Managers which it may elect to provide for
managing all or any portion of the Trust, and to appoint the Plan
Administrator.
8.2 INFORMATION TO PLAN ADMINISTRATOR. If the Employer is not
serving as the Plan Administrator, the Employer shall supply current
information to the Plan Administrator as to the name, date of birth,
date of employment, annual compensation, leaves of absence, Years of
Service and date of termination of employment of
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each Employee who is, or who will be eligible to become, a Participant
under the Plan, together with any other information which the Plan
Administrator considers necessary. The Employer's records as to the
current information the Employer furnishes to the Plan Administrator
are conclusive as to all persons.
8.3 NO LIABILITY. The Employer assumes no obligation or
responsibility to any of its Employees, Participants or Benefi-
ciaries for any act of, or failure to act, on the part of its
Plan Administrator (unless the Employer is the Plan Administrator), or
the Trustee.
8.4 INDEMNITY OF CERTAIN FIDUCIARIES. To the extent permitted by
law, the Employer indemnifies and holds harmless the Plan
Administrator, and any person or persons serving in the capacity of
Plan Administrator, as provided in Section 10.1, from and against any
and all loss resulting from liability to which the Plan Administrator
may be subjected by reason of any act or conduct (except willful
misconduct or gross negligence) in its official capacity in the
administration of this Trust or Plan or both, including all expenses
reasonably incurred in its defense, in case the Employer fails to
provide such defense. No Plan assets may be used for any such
indemnification. The indemnification provisions of this Section 8.4 do
not relieve the Plan Administrator or any person serving as a Plan
Administrator from any liability he may have under ERISA for breach of
a fiduciary duty. Furthermore, the Plan Administrator and the Employer
may execute a letter agreement further delineating the indemnification
agreement of this Section 8.4, provided the letter agreement must be
consistent with and does not violate ERISA. The indemnification
provisions of this Section 8.4 extend to the Trustee solely to the
extent provided by a letter agreement executed by the Trustee and the
Employer.
8.5 INVESTMENT FUNDS. The Employer shall authorize the use of one
or more specified investment funds. Each active Participant shall be
entitled to direct the Trustee as to the investment and reinvestment
of the amount credited to his Account pursuant to a policy established
and maintained by the Plan Administrator. Such policy shall include,
but not by way of limitation, (i) the available investment fund
options; (ii) that portion of the Participant's Account subject to
such investment options; (iii) the percentage increments of a
Participant's Account which may be allocated to each available
investment fund; and (iv) the manner and timing of elections by
Participants. Each Eligible Employee shall be permitted prior to his
Entry Date to elect how his Account shall be invested in accordance
with uniform rules adopted by the Plan Administrator. If no investment
direction is received, the Plan Administrator shall direct the
investment of the Participant's Account in a uniform and
nondiscriminatory manner. Each Participant may elect to change the
manner in which his Account Balance is being invested at such time and
in such manner as prescribed by the Plan Administrator. This Section
8.5 specifically
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incorporates a written Investment Fund Election Policy as part of the
Plan. The Plan Administrator reserves the right to amend or modify the
Policy.
Notwithstanding the above, the Plan Administrator may from time
to time suspend the normal operation of the direction of investments
by Participants in connection with changing the investment fund
options available to Participants if this is deemed necessary to
accomplish such change. Any such "blackout" of the right of
Participants to direct the investment of their Accounts shall be
designed to be as efficient and brief as possible. In addition, if the
Plan Administrator changes the investment funds made available to
Participants, the Plan Administrator is authorized to convert the
investment elections made by Participants to what is in the Plan
Administrator's best judgment corresponding investment elections under
the new investment options.
Also notwithstanding the above, all Matching Contributions made
after the Effective Date shall be allocated to Participants' Matching
Contributions Accounts in the form of Employer Stock (held in the
Employer Stock Fund) and shall not be subject to a Participant's
investment direction pursuant to this Section. Matching Contributions
made before the Effective Date in the form of cash are subject to a
Participant's direction of investment pursuant to this Section.
The Employer Stock Fund shall consist of shares of Employer
Stock. To the extent the Employer has elected to make Matching
Contributions in the form of cash rather than in the form of Employer
Stock, the Trustee shall purchase shares of Employer Stock as soon as
practicable following the end of the calendar quarter in the open
market in accordance with a non-discretionary purchasing program or,
at the direction of the Employer, shall purchase authorized but
unissued shares of Employer Stock. Shares of authorized but unissued
Employer Stock or treasury shares purchased with contributions for any
quarter and with dividends received by the Trustee, and any such
shares contributed by the Employer during such month, shall be
purchased or carried by the Trustee at a price equal to the closing
price at which Employer Stock was listed on the NASDAQ Exchange on the
day the transaction occurred. In no event shall a Participant have the
right to vote, either directly or through proxy, the shares of
Employer Stock allocated to his Matching Contributions Account. (Such
vote shall be by the Trustee.)
8.6 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves
the right to amend the vesting schedule at any time, the Plan
Administrator will not apply the amended vesting schedule to reduce
the Nonforfeitable percentage of any Participant's Account Balance
derived from Employer contributions (determined as of the later of the
date the Employer adopts the amendment, or the date the amendment
becomes effective) to a percentage less than the
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Nonforfeitable percentage computed under the Plan without regard to
the amendment. An amended vesting schedule will apply to a Participant
only if the Participant receives credit for at least one Hour of
Service after the new schedule becomes effective. If the Employer
makes a permissible amendment to the vesting schedule, each
Participant having at least three (3) Years of Service with the
Employer may elect to have the percentage of his Nonforfeitable
Account Balance computed under the Plan without regard to the
amendment. For Plan Years beginning prior to January 1, 1989, or with
respect to Employees who fail to complete at least one (1) Hour of
Service in a Plan Year beginning after December 31, 1998, the election
described in the preceding sentence applies only to Participants
having at least five (5) Years of Service with the Employer. The
Participant must file his election with the Plan Administrator within
sixty (60) days of the latest of (a) the Employer's adoption of the
amendment; (b) the effective date of the amendment; or (c) the date
the Participant receives written notice of the amendment from the
Employer or Plan Administrator. The Plan Administrator, as soon as
practicable, must forward written notice of any amendment to the
vesting schedule to each affected Participant, together with an
explanation of the effect of the amendment, the appropriate form upon
which the Participant may make an election to remain under the vesting
schedule provided under the Plan prior to the amendment and notice of
the time within which the Participant must make an election to remain
under the prior vesting schedule. The election described in this
Section 8.6 does not apply to a Participant if the amended vesting
schedule provides for vesting at least as rapid at all times as the
vesting schedule in effect prior to the amendment. For purposes of
this Section 8.6, an amendment to the vesting schedule includes any
Plan amendment which directly or indirectly affects the computation of
the Nonforfeitable percentage of an Employee's rights to his Employer
derived Account Balance. Furthermore, the Plan Administrator must
treat any shift in the vesting schedule, due to a change in the Plan's
top-heavy status, as an amendment to the vesting schedule for purposes
of this Section 8.6.
ARTICLE IX
PARTICIPANT ADMINISTRATIVE PROVISIONS
9.1 BENEFICIARY DESIGNATION. Subject to Section 1.7, any
Participant may from time to time designate, in writing, any person or
persons, contingently or successively, to whom the Trustee will pay
his Nonforfeitable Account Balance in the event of his death and the
Participant may designate the form and method of payment. The Plan
Administrator will prescribe the form for the written designation of
Beneficiary and, upon the Participant's filing the form with the Plan
Administrator, the form effectively revokes all designations filed
prior to that date by the same Participant.
9.2 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY. If a
Participant fails to name a Beneficiary in accordance with Section
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9.1, or if the Beneficiary named by a Participant predeceases him,
then the Trustee will pay the Participant's Nonforfeitable Account
Balance in accordance with Section 6.4 in the following order of
priority to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including
adopted children, in equal shares;
(c) The Participant's surviving parents, in equal
shares; or
(d) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies
prior to distribution of the Participant's entire Nonforfeitable
Account Balance, the Trustee will pay the remaining Nonforfeitable
Account Balance to the Beneficiary's estate unless the Participant's
Beneficiary designation provides otherwise.
9.3 PERSONAL DATA TO PLAN ADMINISTRATOR. Each Participant and
each Beneficiary of a deceased Participant must furnish to the Plan
Administrator such evidence, data or information as the Plan
Administrator considers necessary or desirable for the purpose of
administering the Plan. The provisions of this Plan are effective for
the benefit of each Participant upon the condition precedent that each
Participant will furnish promptly full, true and complete evidence,
data and information when requested by the Plan Administrator,
provided the Plan Administrator advises each Participant of the effect
of his failure to comply with its request.
9.4 ADDRESS FOR NOTIFICATION. Each Participant and each
Beneficiary of a deceased Participant must file with the Plan
Administrator from time to time, in writing, his post office address
and any change of post office address. Any communication, statement or
notice addressed to a Participant, or Beneficiary, at his last post
office address filed with the Plan Administrator, or as shown on the
records of the Employer, binds the Participant, or Beneficiary, for
all purposes of this Plan.
9.5 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the
time prescribed by ERISA and the applicable regulations, must furnish
all Participants and Beneficiaries a summary description of any
material amendment to the Plan or notice of discontinuance of the Plan
and all other information required by ERISA to be furnished without
charge.
9.6 LITIGATION AGAINST THE TRUST. A court of competent
jurisdiction may authorize any appropriate equitable relief to redress
violations of ERISA or to enforce any provisions of ERISA or the terms
of the Plan. A fiduciary may receive reimbursement of
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expenses properly and actually incurred in the performance of his
duties with the Plan.
9.7 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual
report, any bargaining agreement, this Plan and Trust, contract or any
other instrument under which the Plan was established or is operated.
The Plan Administrator will maintain all of the items listed in this
Section 9.7 in its office, or in such other place or places as it may
designate from time to time in order to comply with the regulations
issued under ERISA, for examination during reasonable business hours.
Upon the written request of a Participant or Beneficiary, the Plan
Administrator must furnish him with a copy of any item listed in this
Section 9.7. The Plan Administrator may make a reasonable charge to
the requesting person for the copy so furnished.
9.8 PARTICIPANT DIRECTION OF INVESTMENT. The Plan Administrator,
to the extent provided in a written loan policy adopted under Section
7.8, will treat a loan made to a Participant as a Participant
direction of investment. To the extent of the loan outstanding at any
time, the borrowing Participant's Account alone shares in any interest
paid on the loan, and it alone bears any expense or loss it incurs in
connection with the loan. The Trustee may retain any principal or
interest paid on the borrowing Participant's loan in an interest
bearing segregated Account on behalf of the borrowing Participant
until the Trustee deems it appropriate to add the amount paid to the
Participant's separate Account under the Plan. The Trustee is not
liable for any loss, nor is the Trustee liable for any breach,
resulting from a Participant's direction of the investment of any part
of his Account.
ARTICLE X
PLAN ADMINISTRATOR -
DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS
10.1 ADMINISTRATOR. The Employer shall be the Plan Adminis-
trator.
10.2 ADMINISTRATIVE POWERS AND DUTIES. The Plan Adminis-
trator shall administer the Plan in a uniform and
nondiscriminatory manner in accordance with its terms, and shall
have all powers necessary to exercise its discretion in carrying
out the terms and provisions of the Plan. The Plan Administrator
has the following powers and duties:
(a) To establish the funding policy of the Plan in
accordance with Section 10.3;
(b) To determine the rights of eligibility of an Employee to
participate
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in the Plan, the value of a Participant's Account Balance and the
Nonforfeitable percentage of each Participant's Account Balance;
(c) To adopt rules of procedure and regulations necessary
for the proper and efficient administration of the Plan, provided
the rules are not inconsistent with the terms of the Agreement;
(d) To construe and enforce the terms of the Plan and the
rules and regulations it adopts, including interpretation of the
Plan documents and documents related to the Plan's operation;
(e) To direct the Trustee as respects the crediting
and distribution of the Trust;
(f) To review and render decisions respecting a claim
for (or denial of a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the
Employer may require for tax or other purposes;
(h) To engage the service of agents whom it may deem
advisable to assist it with the performance of its duties;
(i) To engage the services of an Investment Manager or
Managers (as defined in ERISA ss 3(3)), each of whom will have
full power and authority to manage, acquire or dispose (or direct
the Trustee with respect to acquisition or disposition) of any
Plan asset under its control;
(j) To establish, in its sole discretion, a
nondiscriminatory policy (see Section 7.8) which the Trustee must
observe in making loans, if any, to Participants and
Beneficiaries; and
(k) To direct the Trustee as to the voting of stock,
including Employer Stock, held in the Trust Fund established
hereby, or as to any other actions that may be appropriate with
respect thereto (such as participation in reorganizations, etc.);
provided that in the absence of any such direction, the Trustee
shall have the right to vote such stock and take such other
actions in its sole discretion.
(l) To appoint a Retirement Plan Committee to which the Plan
Administrator may delegate all or any portion of its duties under
the Plan.
The Plan Administrator shall have no power to add to, subtract
from or modify any of the terms of the Plan, or to change or add to
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any benefits provided by the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit under the Plan.
10.3 FUNDING POLICY. The Committee shall have the authority and
responsibility for establishing and implementing a funding method and
policy consistent with the needs of the Plan and the requirements of
ERISA. The funding method and policy so established shall be in
writing, and a copy thereof shall be delivered to the Trustee. The
Committee will review, not less often than annually, all pertinent
information and Plan data in light of the funding policy of the Plan
and to determine the appropriate methods of carrying out the Plan's
objectives. The Committee must communicate periodically, as it deems
appropriate, to the Trustee and to any Plan Investment Manager the
Plan's short-term and long-term financial needs so the investment
policy can be coordinated with the Plan's financial requirements.
10.4 RULES AND DECISIONS. The Plan Administrator and the
Committee may adopt such by-laws, rules and regulations as it deems
necessary, desirable, or appropriate, provided that same shall not be
inconsistent with or contrary to the express terms of the Plan. All
such by-laws, rules, regulations and decisions of the Plan
Administrator and the Committee shall be applied uniformly in all
circumstances.
10.5 MANNER OF ACTION. If more than one person is designated as
the Committee, the decision of a majority of such individuals
appointed and qualified controls. The Committee may authorize any one
of its members, or its secretary, to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers,
letters or other documents. The Committee must evidence this authority
by an instrument signed by all members and filed with the Trustee. A
member of the Committee who is a Participant shall not vote on any
issue relating specifically to himself, and any such action shall be
decided or voted by the majority of the remaining committee members
(except that such member may sign unanimous written consent to
resolutions adopted or other action taken without a meeting).
10.6 INDIVIDUAL ACCOUNTS.
(a) The Plan Administrator will maintain, or direct the
Trustee to maintain, for purposes of administering the Plan, a
separate Account, or multiple Accounts, with respect to Employer
contributions and Participant contributions, in the name of each
Participant to reflect the Participant's Account Balance under
the Plan. Separate records shall be kept as to all transactions
affecting the respective accounts. Except when specifically
designated otherwise, the above accounts shall be collectively
referred to as the Participant's Account. All contributions and
the proportionate part of profits and losses attributable
thereto, and withdrawals
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therefrom, shall be credited or debited respectively against each
respective account. Nevertheless, the respective accounts need
not be segregated and held by the Trustee as a separate fund but
may be held as a commingled Trust Fund together with the other
funds of the Plan.
(b) If a Participant re-enters the Plan subsequent to his
having a Forfeiture Break in Service, the Plan Administrator, or
the Trustee, must maintain a separate Account for the
Participant's pre-Forfeiture Break in Service Account Balance and
a separate Account for his post-Forfeiture Break in Service
Account Balance, unless the Participant's entire Account Balance
under the Plan is 100% Nonforfeitable.
(c) The Plan Administrator will make its allocations, or
request the Trustee to make its allocations, to the Accounts of
the Participants in accordance with the provisions of Section
10.8. The Plan Administrator may direct the Trustee to maintain a
temporary segregated investment Account in the name of a
Participant to prevent a distortion of income, gain or loss
allocations under Section 10.8. The Plan Administrator must
maintain records of its activities.
10.7 VALUE OF PARTICIPANT'S ACCOUNT BALANCE. The value of each
Participant's Account Balance consists of that proportion of the net
worth (at fair market value) of the Employer's Trust Fund which the
net credit balance in his Account bears to the total net credit
balance in the Accounts of all Participants. For purposes of a
distribution under the Plan, the value of a Participant's Account
Balance is its value as of the Valuation Date immediately preceding
the date of the distribution is processed.
10.8 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. A
"Valuation Date" under this Plan is each day of the Plan year. As of
each Valuation Date the Plan Administrator shall adjust Accounts to
reflect net income, gain or loss since the preceding day.
(a) With respect to all Participant Accounts other than
segregated investment Accounts, the Plan Administrator first will
adjust the Participant Accounts, as those Accounts stood at the
beginning of the current day, by reducing the Accounts for any
forfeitures arising under Section 10.15, for amounts charged
during the valuation period to the Accounts in accordance with
Section 10.14 (relating to distributions), and for the cash value
of incidental benefit insurance contracts. The Plan Administrator
then, subject to the restoration allocation requirements of
Section 10.15, will allocate the net income, gain or loss pro
rata to the adjusted Participant Accounts. The allocable net
income, gain or loss is the net income (or net loss), including
the increase or decrease in the fair market value of assets,
since the last Valuation
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Date. Notwithstanding anything herein to the contrary, no gains
or losses shall be credited to a Participant's Account between
the date such Account is valued for payment and the actual date
it is paid.
(b) A segregated investment Account receives all income it
earns and bears all expense or loss it incurs. The Plan
Administrator will adopt uniform and nondiscriminatory procedures
for determining income or loss of a segregated investment Account
in a manner which reasonably reflects investment directions
relating to pooled investments and investment directions
occurring during a valuation period. As of the Valuation Date,
the Plan Administrator must reduce a segregated Account for any
forfeiture arising after the Plan Administrator has made all
other allocations, changes or adjustments to the Account for the
Plan Year.
(c) An Excess Amount or suspense account described in
Article IV does not share in the allocation of net income, gain
or loss described in this Section 10.8. This Section 10.8 applies
solely to the allocation of net income, gain or loss of the
Trust. The Plan Administrator will allocate the Employer
contributions in accordance with Article IV.
10.9 DETERMINATION AS TO ELIGIBILITY. Any question as to the
eligibility of any Employee hereunder shall be determined by the Plan
Administrator in accordance with the terms hereof and such
determination shall be final and conclusive for all purposes. The Plan
Administrator shall determine the eligibility of Employees in
accordance with the provisions of this Plan from the books and records
of the Employer, or from such other information or evidence as it may
deem sufficient, and shall provide notice to each Employee when he
becomes eligible to participate hereunder.
10.10 AUTHORIZATION OF BENEFIT PAYMENTS. The Plan Administrator
shall issue directions to the Trustee concerning all benefits which
are to be paid from the Trust Fund pursuant to the provisions of the
Plan. The Plan Administrator may require a Participant to complete and
file with the Plan Administrator an application for a benefit and all
other forms approved by the Plan Administrator, and to furnish all
pertinent information requested by the Plan Administrator. The Plan
Administrator may rely upon all such information so furnished,
including but not limited to the Participant's current mailing
address.
10.11 PAYMENT FOR BENEFIT OF DISABLED OR INCAPACITATED
PERSON. Whenever in the opinion of the Plan Administrator a
person entitled to receive any payment of a benefit hereunder or
installment thereof is under a legal disability or is physically,
mentally, or legally incapable of acknowledging receipt of such
payment, the Plan Administrator may direct the Trustee to make
payments to such person or to his legal representative or to a
relative or friend of
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such person for his benefit, or to an institution maintaining him if
no guardian or committee has been appointed for him, or the Plan
Administrator may direct the Trustee to apply the payment for the
benefit of such person in such manner as the Plan Administrator
considers advisable. Any payment of a benefit or installment thereof
in accordance with the provisions of this Section shall be a complete
discharge of any liability for the making of such payment under the
provisions of the Plan.
10.12 BOND. To the extent required by ERISA, a fidelity bond or
other surety shall be required of the Employer and any other party at
any time serving as a fiduciary with respect to the Plan, and shall be
in an amount equal to the greater of $1,000, or ten percent (10%) of
the assets in the Plan, but need not be greater than $500,000, unless
provided otherwise by the Secretary of Labor or ERISA. The payment of
premiums of such bond or other surety shall be paid by the Employer
within a reasonable time or, upon its failure to do so, by the Trustee
from the Trust Fund. The amount of such bond shall be fixed at the
beginning of each Plan Year in accordance with the provisions of ss
412(a) of ERISA.
10.13 INDIVIDUAL STATEMENT. As soon as practicable after the
Adjustment Date of each Plan Year, but within the time prescribed by
ERISA and the regulations under ERISA, the Plan Administrator will
deliver to each Participant (and to each Beneficiary, in the case of a
deceased Participant) a statement reflecting the condition of his
Account Balance in the Trust as of that date and such other
information ERISA requires to be furnished to the Participant or
Beneficiary. No Participant, except an individual designated in
Section 10.1 to serve as Plan Administrator, has the right to inspect
the records reflecting the Account of any other Participant.
10.14 ACCOUNT CHARGED. The Plan Administrator may charge a
Participant's Account for all distributions made from that Account to
the Participant, to his Beneficiary or to an alternate payee. The Plan
Administrator may also charge a Participant's Account for any
administrative expenses incurred by the Plan directly related to that
Account.
10.15 UNCLAIMED ACCOUNT PROCEDURE.
(a) The Plan does not require either the Trustee or the Plan
Administrator to search for, or to ascertain the whereabouts of,
any Participant or Beneficiary. At the time the Participant's or
Beneficiary's benefit becomes distributable under Article VI, the
Plan Administrator, by certified or registered mail addressed to
his last known address of record with the Plan Administrator or
the Employer, must notify any Participant, or Beneficiary, that
he is entitled to a distribution under this Plan. The notice must
quote the provisions of this Section 10.15 and otherwise must
comply with the
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notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his
whereabouts known in writing to the Plan Administrator within six
(6) months from the date of mailing of the notice, the Plan
Administrator will treat the Participant's or Beneficiary's
unclaimed payable Account Balance as forfeited and will
reallocate the unclaimed payable Account Balance in accordance
with Section 4.7. A forfeiture under this Section will occur at
the end of the notice period or, if later, the earliest date
applicable Treasury regulations would permit the forfeiture.
Pending forfeiture, the Plan Administrator, following the
expiration of the notice period, may direct the Trustee to
segregate the Nonforfeitable Account Balance in a segregated
Account and to invest that segregated Account in Federally
insured interest bearing savings accounts or time deposits (or in
a combination of both), or in other fixed income investments.
(b) If a Participant or Beneficiary who has incurred a
forfeiture of his Account Balance under the provisions of this
Section 10.15 makes a claim, at any time, for his forfeited
Account Balance, the Plan Administrator must restore the
Participant's or Beneficiary's forfeited Account Balance to the
same dollar amount as the dollar amount of the Account Balance
forfeited, unadjusted for any gains or losses occurring
subsequent to the date of the forfeiture. The Plan Administrator
will make the restoration during the Plan Year in which the
Participant or Beneficiary makes the claim, first from the
amount, if any, of Participant forfeitures the Plan Administrator
otherwise would allocate for the Plan Year, then from the amount,
if any, of the Trust Fund net income or gain for the Plan Year
and then from the amount, or additional amount, the Employer
contributes to enable the Plan Administrator to make the required
restoration. The Plan Administrator must direct the Trustee to
distribute the Participant's or Beneficiary's restored Account
Balance to him not later than sixty (60) days after the close of
the Plan Year in which the Plan Administrator restored the
forfeited Account Balance. The forfeiture provisions of this
Section 10.15 apply solely to the Participant's or the
Beneficiary's Account Balance derived from Employer
contributions.
10.16 TERMS TO BE COMMUNICATED. The principal terms of the
Plan shall be communicated to the Employees by the Plan Adminis-
trator, and the Plan Administrator shall notify each Employee of
his rights and benefits hereunder. The Participants shall be
conclusively deemed for all purposes to have consented to all of the
terms and provisions of this Plan and shall be bound thereby with the
same force and effect as if they had executed this Plan. A copy of the
Plan shall be available to each Participant hereunder by having a copy
available at the principal office of each Employer during business
hours.
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10.17 SIGNATURE AUTHORITY. If the Plan Administrator shall
delegate specific fiduciary responsibilities, it may designate and
authorize one or more of the persons being so delegated to sign
documents; and shall further notify the Trustee of such action and the
name or names of the person or persons so designated. The Trustee
shall thereafter accept and rely upon any document executed by such
person or persons as representing action by the Plan Administrator
until the Plan Administrator shall deliver to the Trustee a written
revocation of such designation.
10.18 FIDUCIARY NOTICE REQUIREMENTS. The Plan Administrator and
those to whom it has delegated fiduciary duties shall notify the
Trustee of any action taken with respect to the Plan, and when
required to do so, shall notify any other interested party. The Plan
Administrator and those to whom it has delegated fiduciary duties
shall maintain all books of account, records, and other data as shall
be necessary to properly administer the Plan and satisfy the
disclosure and reporting requirements of ERISA and the Code. The Plan
Administrator shall ensure that the Plan is in compliance with the
various reporting requirements set forth in ERISA, the Code and the
regulations thereunder.
10.19 RELIANCE. The Plan Administrator shall be entitled to rely
conclusively upon, and shall be fully protected in any actions taken
by it in good faith and in reliance upon any opinions or reports which
shall be furnished to it by an accountant, actuary, counsel, or other
specialist. The Plan Administrator shall not incur any liability for
its action or failure to act, excepting only liability for its own
gross negligence or willful misconduct. The Plan Administrator shall
indemnify each person to whom it has delegated fiduciary duties
against all claims, losses, damages, expenses, and liabilities arising
from any action or failure to act, except when the same is judicially
determined to be due to the gross negligence or willful misconduct of
such person.
10.20 SUCCESSOR FIDUCIARY. Upon the death, resignation, or
inability to serve of any person to whom the Employer or Plan
Administrator has delegated fiduciary duties, a successor fiduciary
shall be appointed within thirty (30) days. If the Employer shall
cease to exist, or be dissolved, voluntarily or involuntarily, or have
a receiver or trustee in bankruptcy appointed, a successor fiduciary
shall be appointed within thirty (30) days by the then remaining
persons (if any) to whom fiduciary duties have been delegated. If
there are no remaining persons to whom the Employer has delegated
fiduciary duties, or in the event of the inability, failure, or
refusal of the then remaining fiduciaries to make such appointment, a
successor fiduciary shall be selected by a majority of the
Participants under the Plan who are Employees of the Employer at the
time of the occurrence of the foregoing events.
10.21 UNIFORM APPLICATION. The provisions of this Plan
shall apply to all Participants uniformly.
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ARTICLE XI
TRUSTEE POWERS AND DUTIES
11.1 TRUST. All assets of the Plan shall be held in the Trust
forming part of this Plan, which shall be administered as a fund to
provide for the payment of benefits as provided in the Plan to the
Participants or their successors in interest, out of the income and
principal of the Trust. The Employer may establish the Trust through a
"Master Trust" agreement with the Trustee. If such a Master Trust is
established, the terms of the Master Trust Agreement shall supersede
the terms of this Article XI if there is any conflict between the
terms of this Article XI and the terms of the Master Trust. The
Trustee shall discharge its duties as such solely in the interest of
the Participants and their successors in interest. The Trustee shall
act:
(a) For the exclusive purposes of providing benefits to
Participants and their successors in interest and defraying
reasonable expenses of administering the Plan, including the
Trust, which is a part of the Plan;
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct
of an enterprise of like character and with like aims; and
(c) In accordance with the Plan and Trust agreement, except
to the extent such document may be inconsistent with ERISA.
11.2 TRUST FUND. The Trustee shall hold the funds received from
the Employer subject to the terms of this Plan and upon the uses and
trusts, and for the purposes herein set forth. The funds subject to
the provisions of this Trust shall include, but shall not be limited
to, all monies, properties, securities, investments, notes, bonds,
mortgages, debentures, shares of stock, accounts, and evidences of
indebtedness of whatsoever kind or nature at any time or from time to
time acquired or held by the Trustee pursuant to the terms of this
Plan; however, the Trustee shall be responsible only for such funds as
shall actually be received by it as Trustee hereunder.
11.3 ESTABLISHMENT OF TRUST.
(a) The Trustee shall hold and manage the assets of the Plan
and shall receive to be included in the Trust Fund any
contributions paid to it in cash, or other property approved by
the Plan Administrator and acceptable to the Trustee, and shall
retain, manage, administer, hold, and distribute the same,
together with the income therefrom, in accordance with the terms
and provisions of this Plan. No part of the corpus
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or income of the Trust Fund shall be used for any purpose except
for the exclusive benefit of Employees of the Employer or their
surviving spouses or other Beneficiaries, and payment of the
expenses of administration of the Plan and Trust.
(b) All contributions so received together with the income
therefrom shall be managed, invested and reinvested by the
Trustee, subject, however, to the right of the Employer to
appoint and employ any Investment Manager or Managers to manage
and/or invest and reinvest the Trust Fund, or any part thereof,
as provided in Section 8.1.
11.4 ACCEPTANCE. The Trustee accepts the Trust created under the
Plan and agrees to perform the obligations imposed. The Trustee must
provide bond for the faithful performance of its duties under the
Trust to the extent required by ERISA.
11.5 RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the
Employer for the funds contributed to it by the Employer, but does not
have any duty to see that the contributions received comply with the
provisions of the Plan. The Trustee is not obliged to collect any
contributions from the Employer, nor is obliged to see that funds
deposited with it are deposited according to the provisions of the
Plan.
11.6 INVESTMENT POWERS. The Trustee has full discretion and
authority with regard to the investment of the Trust Fund, except with
respect to a Plan asset under the control or direction of a properly
appointed Investment Manager or with respect to a Plan asset properly
subject to Employer, Participant or Plan Administrator direction of
investment. The Trustee must coordinate its investment policy with
Plan financial needs as communicated to it by the Plan Administrator.
The Trustee is authorized and empowered, but not by way of limitation,
with the following powers, rights and duties:
(a) To invest any part or all of the Trust Fund in any
common or preferred stocks, open-end or closed-end mutual funds,
put and call options traded on a national exchange, United States
retirement plan bonds, corporate bonds, debentures, convertible
debentures, commercial paper, U.S. Treasury bills, U.S. Treasury
notes and other direct or indirect obligations of the Unites
States Government or its agencies, improved or unimproved real
estate situated in the United States, limited partnerships,
insurance contracts of any type, mortgages, notes or other
property of any kind, real or personal, to buy or sell options on
common stock on a nationally recognized exchange with or without
holding the underlying common stock, to buy and sell commodities,
commodity options and contracts for the future delivery of
commodities, and to make any other investments the Trustee deems
appropriate, as a prudent man would do under like circumstances
with due
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regard for the purposes of this Plan. Any investment made or
retained by the Trustee in good faith is proper but must be of a
kind constituting a diversification considered by law suitable
for trust investments.
(b) To retain in cash so much of the Trust Fund as it may
deem advisable to satisfy liquidity needs of the Plan and to
deposit any cash held in the Trust Fund in a bank account at
reasonable interest.
(c) To invest, if the Trustee is a bank or similar financial
institution supervised by the United States or by a State, in any
type of deposit of the Trustee (or of a bank related to the
Trustee within the meaning of Code ss 414(b)) at a reasonable
rate of interest or in a common trust fund, as described in Code
ss 584, or in a collective investment fund, the provisions of
which govern the investment of such assets and which the Plan
incorporates by this reference, which the Trustee (or its
affiliate, as defined in Code ss 1504) maintains exclusively for
the collective investment of money contributed by the bank (or
the affiliate) in its capacity as trustee and which conforms to
the rules of the Comptroller of the Currency.
(d) To manage, sell, contract to sell, grant options to
purchase, convey, exchange, transfer, abandon, improve, repair,
insure, lease for any term even though commencing in the future
or extending beyond the term of the Trust, and otherwise deal
with all property, real or personal, in such manner, for such
considerations and on such terms and conditions as the Trustee
decides.
(e) To credit and distribute the Trust as directed by the
Plan Administrator. The Trustee is not obliged to inquire as to
whether any payee or distributee is entitled to any payment or
whether the distribution is proper or within the terms of the
Plan, or as to the manner of making any payment or distribution.
The Trustee is accountable only to the Plan Administrator for any
payment or distribution made by it in good faith on the order or
direction of the Plan Administrator.
(f) To borrow money, to assume indebtedness, extend
mortgages and encumber by mortgage or pledge.
(g) To compromise, contest, arbitrate or abandon
claims and demands, in its discretion.
(h) To have with respect to the Trust all of the rights of
an individual owner, including the power to give proxies, to
participate in any voting trusts, mergers, consolidations or
liquidations, and to exercise or sell stock subscriptions or
conversion rights.
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(i) To lease for oil, gas and other mineral purposes and to
create mineral severances by grant or reservation; to pool or
unitize interests in oil, gas and other minerals; and to enter
into operating agreements and to execute division and transfer
orders.
(j) To hold any securities or other property in the name of
the Trustee or its nominee, with depositories or agent
depositories or in another form as it may deem best, with or
without disclosing the trust relationship.
(k) To perform any and all other acts in its judgment
necessary or appropriate for the proper and advantageous
management, investment and distribution of the Trust.
(l) To retain any funds or property subject to any dispute
without liability for the payment of interest, and to decline to
make payment or delivery of the funds or property until final
adjudication is made by a court of competent jurisdiction.
(m) To file all tax returns required of the Trustee.
(n) To furnish to the Employer and the Plan Administrator an
annual statement of account showing the condition of the Trust
Fund and all investments, receipts, disbursements and other
transactions effected by the Trustee during the Plan Year covered
by the statement and also stating the assets of the Trust held at
the end of the Plan Year, which accounts are conclusive on all
persons, including the Employer and the Plan Administrator,
except as to any act or transaction concerning which the Employer
or the Plan Administrator files with the Trustee written
exceptions or objections within ninety (90) days after the
receipt of the accounts or for which ERISA authorizes a longer
period within which to object.
(o) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the
Trustee is not obliged or required to do so unless indemnified to
its satisfaction.
The powers granted to the Trustee shall be exercised in the sole
fiduciary discretion of the Trustee; provided, however, each
Participant may direct the Trustee to separate and keep separate all
or a portion of his interest in the Plan; and further, each
Participant is authorized and empowered, in his sole and absolute
discretion, to give directions to the Trustee in such form as the
Trustee may require concerning the investment of the Participant's
directed investment Account, which directions must be followed by the
Trustee, subject, however, to restrictions on payment of life
insurance premiums. Neither the Trustee nor any other persons,
including the Plan Administrator, shall be under any duty to ques-
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tion any such direction of the Participant or to review any securities
or other property, real or personal, or to make any suggestions to the
Participant in connection therewith, and the Trustee shall comply as
promptly as practicable with directions given by the Participant
hereunder. The Trustee may refuse to comply with any direction from
the Participant in the event the Trustee, in its sole discretion,
deems such directions improper by virtue of applicable law, and in
such event, the Trustee shall not be responsible or liable for any
loss or expense which may result.
Notwithstanding anything herein to the contrary, the Trustee
shall not, at any time after December 31, 1981, invest any portion of
a Participant's directed investment Account in "collectibles" as that
term is defined in Code ss 408(m).
11.7 INVESTMENT IN QUALIFYING EMPLOYER SECURITIES AND QUALIFYING
EMPLOYER REAL PROPERTY. The investment options in this Section 11.7
include the ability to invest in qualifying Employer securities or
qualifying Employer real property, as defined in and as limited by
ERISA.
11.8 RECORDS AND STATEMENTS. The records of the Trustee
pertaining to the Plan must be open to the inspection of the Plan
Administrator and the Employer at all reasonable times and may be
audited from time to time by any person or persons as the Employer or
Plan Administrator may specify in writing. The Trustee must furnish
the Plan Administrator with whatever information relating to the Trust
Fund the Plan Administrator considers necessary.
11.9 FEES AND EXPENSES FROM FUND. A Trustee will receive
reasonable annual compensation as may be agreed upon from time to time
between the Employer and the Trustee. No person who is compensated on
a full-time basis from the Employer may receive compensation for
services as Trustee. The Trustee will pay from the Trust Fund,
pursuant to the provisions of ERISA, all fees and expenses reasonably
incurred by the Plan, to the extent such fees and expenses are for the
ordinary and necessary administration and operation of the Plan,
unless the Employer pays such fees and expenses. Any fee or expense
paid, directly or indirectly, by the Employer is not an Employer
contribution to the Plan, provided the fee or expense relates to the
ordinary and necessary administration of the Trust Fund.
11.10 EXERCISE OF POWERS. The powers granted the Trustee under
Sections 11.6 and 11.7 shall be exercised by the Trustee in its
discretion insofar as such exercise does not contravene any written
direction from the Employer or Investment Manager or the policy for
the funding of the Plan developed by the Employer. The decision of the
Trustee in matters within its jurisdiction shall be final, binding,
and conclusive upon the Employer, and upon each Employee, Participant,
Beneficiary, and every other interested person.
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11.11 POWER TO DO ANY NECESSARY ACTS. The Trustee is authorized
in its discretion to do any and all acts and to make, execute, and
deliver, as Trustee, any and all instruments in writing necessary or
proper for the effective exercise of any of the Trustee's powers as
stated herein or otherwise necessary to accomplish the purposes of the
Trust.
11.12 ACCOUNTING.
(a) The Trustee shall keep accurate and detailed accounts of
all investments, receipts, disbursements, and other transactions
hereunder. All accounts, books and records relating thereto shall
be open for inspection and audit at all reasonable times by the
Plan Administrator, Investment Manager or by any other person
designated by the Employer.
(b) Within ninety (90) days following the close of each
fiscal year of the Trust and within ninety (90) days after the
removal or resignation of the Trustee, the Trustee shall file
with the Plan Administrator a written account setting forth all
investments, receipts, disbursements, and other transactions
effected by it during such fiscal year or during the period from
the close of the last fiscal year to the date of such removal or
resignation, and setting forth the current value of the Trust
Fund. As of the close of business at the end of the fiscal year
of the Trust, the Trustee shall value the assets of the Trust
Fund at prevailing market values and shall render a statement
thereof promptly to the Plan Administrator. Nothing herein
contained, however, shall preclude the Trustee from having any of
its accounts judicially settled by a court of competent
jurisdiction.
11.13 PARTIES TO LITIGATION. Except as otherwise provided by
ERISA, no Participant or Beneficiary is a necessary party or is
required to receive notice of process in any court proceeding
involving the Plan, the Trust Fund or any fiduciary of the Plan. Any
final judgment entered in any proceeding will be conclusive upon the
Employer, the Plan Administrator, the Trustee, Participants and
Beneficiaries.
11.14 PROFESSIONAL AGENTS. The Trustee may employ and pay from
the Trust Fund reasonable compensation to agents, attorneys,
accountants and other persons to advise the Trustee as, in its
opinion, may be necessary. The Trustee may delegate to any agent,
attorney, accountant or other person selected by it any non-Trustee
power or duty vested in it by the Plan, and the Trustee may act or
refrain from acting on the advice or opinion of any agent, attorney,
accountant or other person so selected.
11.15 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may
make distribution under the Plan in cash or property, or partly
in each, at its fair market value as determined by the Trustee.
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11.16 DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Trust, the Trustee must promptly notify the
Plan Administrator and then dispose of the payment in accordance with
the subsequent direction of the Plan Administrator.
11.17 THIRD PARTY/MULTIPLE TRUSTEES. No person dealing with the
Trustee is obligated to see to the proper application of any money
paid or property delivered to the Trustee, or to inquire whether the
Trustee has acted pursuant to any of the terms of the Plan. Each
person dealing with the Trustee may act upon any notice, request or
representation in writing by the Trustee, or by the Trustee's duly
authorized agent, and is not liable to any person in so acting. The
certificate of the Trustee that it is acting in accordance with the
Plan will be conclusive in favor of any person relying on the
certificate. If more than two persons act as Trustee, a decision of
the majority of such persons controls with respect to any decision
regarding the administration or investment of the Trust Fund or of any
portion of the Trust Fund with respect to which such persons act as
Trustee. However, the signature of only one Trustee is necessary to
effect any transaction on behalf of the Trust.
11.18 RESIGNATION. The Trustee may resign its position at any
time by giving thirty (30) days' written notice in advance to the
Employer; provided, however, the Employer may agree to waive such
thirty (30) day advance written notice. If the Employer fails to
appoint a successor Trustee within sixty (60) days of its receipt of
the Trustee's written notice of resignation, the Trustee will treat
the Employer as having appointed itself as Trustee and as having filed
its acceptance of appointment with the former Trustee.
11.19 REMOVAL. The Employer, by giving thirty (30) days' written
notice in advance to the Trustee, may remove any Trustee; provided,
however, the Employer may elect to waive such thirty (30) day advance
written notice. In the event of the resignation or removal of a
Trustee, the Employer must appoint a successor Trustee if it intends
to continue the Plan; provided, however, if, following such
resignation or removal, there is at least one person serving as a
Trustee, no appointment of a successor trustee shall be required. If
two or more persons hold the position of Trustee, in the event of the
removal of one such person, during any period the selection of a
replacement is pending, or during any period such person is unable to
serve for any reason, the remaining person or persons will act as the
Trustee.
11.20 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor
Trustee succeeds to the title to the Trust vested in his predecessor
by accepting in writing his appointment as successor Trustee and by
filing the acceptance with the former Trustee and the Plan
Administrator with the signing or filing of any further statement. The
resigning or removed Trustee, upon receipt of acceptance in writing of
the Trust by the successor Trustee, must execute all
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documents and do all acts necessary to vest the title of record in any
successor Trustee. Each successor Trustee has and enjoys all of the
powers, both discretionary and ministerial, conferred under this Plan
upon his predecessor. A successor Trustee is not personally liable for
any act or failure to act of any predecessor Trustee, except as
required under ERISA. With the approval of the Employer, a successor
Trustee, with respect to the Plan, may accept the account rendered and
the property delivered to it by a predecessor Trustee without
incurring any liability or responsibility for so doing.
11.21 VALUATION OF TRUST. The Trustee must value the Trust Fund
as of each Adjustment Date (or other Valuation Date) to determine the
fair market value of each Participant's Account Balance in the Trust.
The Trustee also must value the Trust Fund on any other valuation
dates which may be directed in writing by the Plan Administrator.
11.22 AUTHORITY OF TRUSTEE. All persons dealing with the Trustee
are hereby released from any necessity for questioning the authority
of the Trustee hereunder or to see to the application of any monies,
securities or other property paid or delivered to the Trustee as a
purchase price or otherwise.
11.23 DOCUMENTS AND NOTICES. All documents, notices, infor-
mation, accountings, or other correspondence shall be submitted
by the Trustee in writing over the signature of a duly authorized
officer of the Trustee if the Trustee is a corporate Trustee; and the
Employer, the Plan Administrator, or any other person or persons to
whom such matters are directed may rely upon the genuineness of the
matter submitted without any duty to inquire into its genuineness.
11.24 POSTPONEMENT OF ACTION. If any dispute shall arise as to
any act to be performed by the Trustee, the Trustee may postpone the
performing of such act until actual adjudication of such dispute shall
have been made in a court of competent jurisdiction or it shall be
indemnified to its satisfaction against loss arising out of such
dispute.
11.25 DELEGATION OF RESPONSIBILITIES. The Trustee and any other
party serving as a fiduciary with respect to the Plan shall act
prudently in the delegation or allocation of responsibilities to other
persons, and if at any time there is more than one authorized Trustee
serving, each Trustee shall exercise reasonable care to prevent the
other Trustees from committing a breach of such other Trustees'
obligations and responsibilities hereunder. The Trustee shall conduct
a periodic review to assure that delegated functions are carried out
properly. Neither the Trustee nor any other person serving at any time
as a fiduciary with respect to the Plan shall be liable for the
actions of any other Trustee or fiduciary unless he participates,
approves, acquiesces in or conceals
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a breach of obligations and responsibilities committed by the other.
11.26 DETERMINATION OF ELIGIBILITY. The Trustee shall not be
required to determine the facts concerning the eligibility of
Employees for participation, their identity, the eligibility of
Participants or their designated Beneficiaries for benefits under the
Plan, or the manner and method of payment or disbursement of benefits.
In such matters the Trustee shall rely solely upon the written advice
and direction of the Employer or the Plan Administrator, and shall not
be required to question or verify the facts in any manner or at any
time.
11.27 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER,
ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY APPOINTED.
(a) The Trustee is not liable for the acts or omissions of
any Investment Manager the Plan Administrator may appoint, nor is
the Trustee under any obligation to invest or otherwise manage
any asset of the Plan which is subject to the management of a
properly appointed Investment Manager. The Plan Administrator,
the Trustee and any properly appointed Investment Manager may
execute a letter agreement as a part of this Plan delineating the
duties, responsibilities and liabilities of the Investment
Manager with respect to any part of the Trust Fund under the
control of the Investment Manager.
(b) The limitation on liability described in this Section
11.27 also applies to the acts or omissions of any ancillary
trustee or independent fiduciary properly appointed under Section
11.29 of the Plan. However, if the Trustee, pursuant to the
delegation described in Section 11.29 of the Plan, appoints an
ancillary trustee, the Trustee is responsible for the periodic
review of the ancillary trustee's actions and must exercise its
delegated authority in accordance with the terms of the Plan and
in a manner consistent with ERISA. The Employer, the Trustee and
an ancillary trustee may execute a letter agreement as a part of
this Plan delineating any indemnification agreement between the
parties.
11.28 INVESTMENT IN GROUP TRUST FUND.
(a) The Employer, by adopting this Plan, specifically
authorizes the Trustee to invest all or any portion of the assets
comprising the Trust Fund in any group trust fund which at the
time of the investment provides for the pooling of the assets of
plans qualified under Code ss 401(a). This authorization applies
solely to a group trust fund exempt from taxation under Code ss
501(a) and the trust agreement of which satisfies the
requirements of Revenue Ruling 81-100. The provisions of the
group trust fund agreement, as amended from time to time, are by
this reference incorporated within this
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Plan and Trust. The provisions of the group trust fund will
govern any investment of Plan assets in that fund. Pursuant to
Section 11.7, a Trustee has the authority to invest in certain
common trust funds and collective investment funds without the
need for the authorizing addendum described in this Section
11.28.
(b) Furthermore, at the Employer's direction, the Trustee,
for collective investment purposes may combine into one trust
fund the Trust created under this Plan with the Trust created
under any other qualified retirement plan the Employer maintains.
However, the Trustee must maintain separate records of account
for the assets of each Trust in order to reflect properly each
Participant's Account Balance under the plan(s) in which he is a
Participant.
11.29 APPOINTMENT OF ANCILLARY TRUSTEE OR INDEPENDENT
FIDUCIARY.
(a) The Employer, in writing, may appoint any person in any
State to act as ancillary trustee with respect to a designated
portion of the Trust Fund. An ancillary trustee must acknowledge
in writing its acceptance of the terms and conditions of its
appointment as ancillary trustee and its fiduciary status under
ERISA. The ancillary trustee has the rights, powers, duties and
discretion as the Employer may delegate, subject to any
limitations or directions specified in the instrument evidencing
appointment of the ancillary trustee and to the terms of the Plan
or of ERISA. The investment powers delegated to the ancillary
trustee may include any investment powers available under Section
11.6 of the Plan including the right to invest any portion of the
assets of the Trust Fund in a common trust fund, as described in
Code ss 584, or in any collective investment fund, the provisions
of which govern the investment of such assets and which the Plan
incorporates by this reference, but only if the ancillary trustee
is a bank or similar financial institution supervised by the
United States or by a State and the ancillary trustee (or its
affiliate, as defined in Code ss 1504) maintains the common trust
fund or collective investment fund exclusively for the collective
investment of money contributed by the ancillary trustee (or its
affiliate) in a trustee capacity and which conforms to the rules
of the Comptroller of the Currency. The Employer also may appoint
as an ancillary trustee, the trustee of any group trust fund
designated for investment pursuant to the provisions of Section
11.28 of the Plan.
(b) The ancillary trustee may resign its position at any
time by providing at least thirty (30) days' advance written
notice to the Employer, unless the Employer waives this notice
requirement. The Employer, in writing, may remove an ancillary
trustee at any time. In the event of resignation or
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removal, the Employer may appoint another ancillary trustee,
return the assets to the control and management of the Trustee or
receive such assets in the capacity of ancillary trustee. The
Employer may delegate its responsibilities under this Section
11.29 to the Trustee under the Plan, subject to the acceptance by
the Trustee of that delegation.
(c) If the U.S. Department of Labor (the "Department")
requires engagement of an independent fiduciary to have control
or management of all or a portion of the Trust Fund, the Employer
will appoint such independent fiduciary, as directed by the
Department. The independent fiduciary will have the duties,
responsibilities and powers prescribed by the Department and will
exercise those duties, responsibilities and powers in accordance
with the terms, restrictions and conditions established by the
Department and, to the extent not inconsistent with ERISA, the
terms of the Plan. The independent fiduciary must accept its
appointment in writing and must acknowledge its status as a
fiduciary of the Plan.
11.30 PROHIBITED TRANSACTIONS. Notwithstanding anything
herein to the contrary, neither the Trustee, nor any other party
at any time serving as a fiduciary with respect to the Plan,
shall cause the Plan to engage in any "prohibited transactions" as
defined and applicable to this Plan under ss 406 of ERISA, subject to
any available and applicable exemption contained in or allowed by
ERISA, and in complying with such limitations, neither the Trustee nor
any other fiduciary shall engage in any transaction which it knows or
should know constitutes a direct or indirect:
(a) Sale or exchange, or leasing, of any property between
the Trust Fund and a "party-in-interest" or a "disqualified
person" (such terms as used in this Plan shall have the meanings
which they have under ERISA);
(b) Lending of money or other extension of credit
between the Trust Fund and a party-in-interest or a
disqualified person;
(c) Furnishing of goods, services, or facilities
between the Trust Fund and a party-in-interest or a
disqualified person;
(d) Transfer to, or use by or for the benefit of, a
party-in-interest or a disqualified person, of any assets of
the Trust Fund; or
(e) Acquisition, on behalf of the Trust Fund, of any
Employer security or real property which would violate section
407 of ERISA.
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Unless such transaction is permissible under ERISA, neither the
Trustee nor any other fiduciary shall deal with the assets of the
Trust Fund in its own interest of for its own account or act in any
transaction involving the Trust Fund on behalf of a party (or
represent a party) whose interests are adverse to the interests of the
Trust Fund or the interests of its Participants or Beneficiaries. No
fiduciary shall receive any consideration for its own personal account
from any party dealing with the Trust Fund in connection with a
transaction involving the assets of the Trust Fund.
ARTICLE XII
CLAIMS PROCEDURE
12.1 FILING A CLAIM. A Participant or Beneficiary shall have the
right to file a claim, inquire if he has any right to benefits, or
appeal the denial of a claim. A Participant or Beneficiary (the
"claimant") shall make a claim for the benefits provided under the
Plan by filing a written claim with the Plan Administrator. If the
Plan Administrator is a committee and if any member of the committee
shall be the claimant, all actions which are required to be taken by
the Plan Administrator pursuant to this Article shall be taken instead
by another member of the committee as designated by the Employer.
12.2 NOTIFICATION TO CLAIMANT. The Plan Administrator shall
notify the claimant of its decisions with respect to a claim within
ninety (90) days following the receipt of the claim by the Plan
Administrator or any member of a committee serving as Plan
Administrator (or within ninety (90) days following the expiration of
the initial ninety (90) day period, in a case where there are special
circumstances requiring extension of time for processing the claim).
If special circumstances require an extension of time for processing
the claim, written notice of the extension shall be furnished by the
Plan Administrator to the claimant prior to the expiration of the
initial ninety (90) day period. The notice of extension shall indicate
the special circumstances requiring the extension and the date by
which the notice of decision with respect to the claim shall be
furnished. Commencement of benefit payments shall constitute notice of
approval of a claim to the extent of the amount of the approved
benefit. If such claim shall be wholly or partially denied, such
notice shall be in writing and worded in a manner calculated to be
understood by the claimant, and shall set forth:
(a) The specific reason or reasons for the denial;
(b) Specific reference to the Plan provisions that
apply in the case;
(c) A description of any additional material or information
necessary for the claimant to perfect the claim and an
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explanation of why such material or information is necessary; and
(d) An explanation of the Plan's claims review proce-
dure.
If the Plan Administrator fails to notify the claimant of the decision
regarding his claim in accordance with this Article, the claim shall
be deemed denied and the claimant shall then be permitted to proceed
with the claims review procedure provided in Section 12.3.
12.3 CLAIMS REVIEW PROCEDURE. Within sixty (60) days following
receipt by the claimant of notice of the claim denial, or within sixty
(60) days following the close of the ninety (90) day period referred
to in Section 12.2, if the Plan Administrator fails to notify the
claimant of the decision within such ninety (90) day period, the
claimant may appeal the denial by filing a written application for
review with the Plan Administrator. Following such request for review,
the Plan Administrator shall fully and fairly review the decision
denying the claim. Prior to the decision of the Plan Administrator
pursuant to Section 12.4, the claimant shall be given an opportunity
to review pertinent documents and to submit issues and comments in
writing.
12.4 DECISION ON REVIEW. The decision on review of a denied
claim shall be made in the following manner:
(a) The Plan Administrator shall make its decision regarding
the merits of the denied claim promptly, and within sixty (60)
days following receipt by the Plan Administrator of the request
for review (or within one hundred twenty (120) days after such
receipt, in a case where there are special circumstances
requiring extension of time for reviewing the appealed claim),
shall deliver the decision to the claimant in writing. If an
extension of time for reviewing the appealed claim is required
because of special circumstances, written notice of the extension
shall be furnished to the claimant prior to the commencement of
the extension. If the decision on review is not furnished within
the prescribed time, the claim shall be deemed denied on review.
(b) The decision on review shall set forth specific reasons
for the decision, shall be written in a manner designed to be
understood by the claimant, and shall cite specific references to
the pertinent Plan provisions on which the decision is based.
(c) The decision of the Plan Administrator shall be
final and conclusive.
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12.5 ACTION BY AUTHORIZED REPRESENTATIVE OF CLAIMANT. All actions
set forth in this Article to be taken by the claimant may likewise be
taken by a representative of the claimant duly authorized by him to
act in his behalf on such matters. The Plan Administrator may require
such evidence as it may reasonably deem necessary or advisable of any
such representative's authority to act.
ARTICLE XIII
MISCELLANEOUS
13.1 PURPOSE OF PLAN AND TRUST. This Plan is created for the
exclusive benefit of Employees of the Employer and their Beneficiaries
and shall be interpreted in a manner consistent with its being an
Employees' Trust as defined in Code ss 401(a). At no time prior to the
satisfaction of all liabilities with respect to Employees and their
Beneficiaries shall any part of the corpus or income of this Trust be
used for, or diverted to, purposes other than for the exclusive
benefit of Employees of the Employer hereunder, or their
beneficiaries. This Section cannot be altered or amended except to
accord with any amendment of Code ss 401(a)(2).
13.2 ALTERNATIVE ACTS. If it becomes impossible for the Employer
or the Trustee to perform any act under this Trust, that act shall be
performed in a manner which in the judgment of the Plan Administrator
will most nearly carry out the intent and purpose of this Trust. All
parties to this Trust or in any way interested herein shall be bound
by any acts performed under such conditions.
13.3 NECESSARY ACTS. All parties to this Trust and all persons
claiming any interest whatsoever hereunder agree to perform any and
all acts and execute any and all documents and papers which may be
necessary or desirable for the carrying out of this Trust or any of
its provisions.
13.4 MAXIMUM DURATION. If the indefinite continuance of this
Trust would be in violation of the law, then this Trust shall continue
for the maximum period permitted by law and shall then terminate,
whereupon distribution of its assets shall be made as provided under
the provisions of this Plan with respect to the termination of the
Trust.
13.5 BINDING EFFECT. The Plan shall be binding upon the
successors and assigns of any and all parties hereto, present and
future.
13.6 EVIDENCE. Anyone required to give evidence under the terms
of the Plan may do so by certificate, affidavit, document or other
information which the person to act in reliance may consider
pertinent, reliable and genuine, and to have been signed, made or
presented by the proper party or parties. The Plan Administrator
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and the Trustee are fully protected in acting and relying upon any
evidence described under the immediately preceding sentence.
13.7 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee
nor the Plan Administrator has any obligation or responsibility with
respect to any action required by the Plan to be taken by the
Employer, any Participant or eligible Employee, or for failure of any
of the above persons to act or make any payment or contribution, or to
otherwise provide any benefit contemplated under this Plan.
Furthermore, the Plan does not require the Trustee or the Plan
Administrator to collect any contribution required under the Plan, or
to determine the correctness of the amount of any Employer
contribution. Neither the Trustee nor the Plan Administrator need
inquire into or be responsible for any action or failure to act on the
part of the others, or on the part of any other person who has any
responsibility regarding the management, administration or operation
of the Plan, whether by the express terms of the Plan or by a separate
agreement authorized by the Plan or by the applicable provisions of
ERISA. Any action required of a corporate Employer must be by its
Board of Directors or its designate.
13.8 FIDUCIARIES NOT INSURERS. The Trustee, the Plan
Administrator and the Employer in no way guarantee the Trust Fund from
loss or depreciation. The Employer does not guarantee the payment of
any money which may be or become due to any person from the Trust
Fund. The liability of the Plan Administrator and the Trustee to make
any payment from the Trust Fund at any time and all times is limited
to the then available assets of the Trust.
13.9 WAIVER OF NOTICE. Any person entitled to notice under the
Plan may waive the notice, unless the Code or Treasury regulations
prescribe the notice or ERISA specifically or impliedly prohibits such
a waiver.
13.10 SUCCESSORS. The Plan is binding upon all persons entitled
to benefits under the Plan, their respective heirs and legal
representatives, upon the Employer, its successors and assigns, and
upon the Trustee, the Plan Administrator and their successors.
13.11 NONALIENATION OF BENEFITS.
(a) Benefits payable under this Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution,
or levy of any kind, either voluntary or involuntary (unless such
liability is for alimony or other payments for the support of a
spouse or former spouse, or for any other relative of the
Participant under a qualified domestic relations order), prior to
actually being received by the person entitled to the benefit
under the terms of the
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Plan. Any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge or otherwise dispose of any
right to benefits payable hereunder, shall be void. The Trust
Fund shall not in any manner be liable for, or subject to, the
debts, contracts, liabilities, engagements or torts of any person
entitled to benefits hereunder.
(b) In any action or proceeding involving the Trust Fund, or
any property constituting part or all thereof, or the
administration thereof, the Employer, the Plan Administrator, and
the Trustee shall be the only necessary parties, and no Employees
or former Employees of the Employer or their beneficiaries or any
other person having or claiming to have an interest in the Trust
Fund or under the Plan shall be entitled to any notice or service
of process.
(c) Any final judgment which is not appealed or appealable
that may be entered in any such action or proceeding shall be
binding and conclusive on the parties hereto, the Plan
Administrator and all persons having or claiming to have any
interest in the Trust Fund or under the Plan.
13.12 RIGHTS TO TRUST ASSETS. No Participant shall have any right
to, or interest in, any assets of the Trust Fund upon termination of
employment or otherwise, except as provided for under the terms of
this Plan, and then only to the extent of the benefits payable under
the Plan to such Participant out of the assets of the Trust Fund.
Except as otherwise may be provided under Title IV of ERISA, all
payments of benefits as provided for in this Plan shall be made solely
out of the assets of the Trust Fund and none of the fiduciaries shall
be liable therefor in any manner.
13.13 HEADINGS. The headings of Articles and Sections are for the
ease of reference only and shall in no way be construed to limit or
modify the detailed provisions hereof.
13.14 GENDER AND NUMBER. Masculine pronouns shall include the
feminine gender (and vice versa), and the singular shall include the
plural (and vice versa) unless the context indicates otherwise. The
pronouns "it" and "its" shall refer to a natural person (and vice
versa) if the context so requires.
13.15 STATE LAW. The law of the state of North Carolina will
determine all questions arising with respect to the provisions of this
Plan except to the extent superseded by Federal law.
13.16 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan,
or with respect to the establishment of the Trust, or any modification
or amendment to the Plan or Trust, or in the creation of any Account,
or the payment of any benefit, gives any Employee, -Participant or any
Beneficiary any right to continue employment, any legal or equitable
right against the Employer, or Employee of
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the Employer, or against the Trustee, or its agents or Employees, or
against the Plan Administrator, except as expressly provided by the
Plan, the Trust, ERISA or by a separate agreement.
ARTICLE XIV
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
14.1 EXCLUSIVE BENEFIT. Except as provided under Article IV, the
Employer has no beneficial interest in any asset of the Trust and no
part of any asset in the Trust may ever revert to or be repaid to an
Employer, either directly or indirectly; nor, prior to the
satisfaction of all liabilities with respect to the Participants and
their Beneficiaries under the Plan, may any part of the corpus or
income of the Trust Fund, or any asset of the Trust, be (at any time)
used for, or diverted to, purposes other than the exclusive benefit of
the Participants or their Beneficiaries. However, if the Commissioner
of Internal Revenue, upon the Employer's request for initial approval
of this Plan, determines the Trust created under the Plan is not a
qualified trust exempt from Federal income tax, then (and only then)
the Trustee, upon written notice from the Employer, will return the
Employer's contributions (and increment attributable to the
contributions) to the Employer. The Trustee must make the return of
the Employer contribution under this Section 14.1 within one (1) year
of a final disposition of the Employer's request for initial approval
of the Plan. The Employer's Plan and Trust will terminate upon the
Trustee's return of the Employer's contributions.
14.2 AMENDMENT BY EMPLOYER. The Employer has the right at
any time and from time to time:
(a) To amend the Plan in any manner it deems necessary or
advisable in order to qualify (or maintain qualification of) this
Plan and the Trust created under it under the provisions of
Code ss 401(a);
(b) To amend the Plan to allow the Plan to operate
under a waiver of the minimum funding requirement; and
(c) To amend this Agreement in any other manner.
No amendment may authorize or permit any of the Trust Fund (other
than the part which is required to pay taxes and administration
expenses) to be used for or diverted to purposes other than for the
exclusive benefit of the Participants or their Beneficiaries or
estates. No amendment may cause or permit any portion of the Trust
Fund to revert to or become a property of the Employer. The Employer
also may not make any amendment which affects the rights, duties or
responsibilities of the Trustee or the Plan Administrator without the
written consent of the affected Trustee or the Plan Administrator. The
Employer must make all amendments in writing. Each amendment must
state the date to which it is
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either retroactively or prospectively effective. See Section 13.16
for the effect of certain amendments adopted by the Employer.
14.3 CODE ss 411(d)(6) PROTECTED BENEFITS. An amendment
(including the adoption of this Plan as a restatement of an existing
plan) may not decrease a Participant's Account Balance, except to the
extent permitted under Code ss 412(c)(8), and may not reduce or
eliminate Code ss 411(d)(6) protected benefits determined immediately
prior to the adoption date (or, if later, the effective date) of the
amendment. An amendment reduces or eliminates Code ss 411(d)(6)
protected benefits if the amendment has the effect of either (a)
eliminating or reducing an early retirement benefit or a retirement-
type subsidy (as defined in Treasury regulations), or (b) except as
provided by Treasury regulations, eliminating an optional form of
benefit. The Plan Administrator must disregard an amendment to the
extent application of the amendment would fail to satisfy this
Section. If the Plan Administrator must disregard an amendment
because the amendment would violate clause (a) or clause (b), the
Plan Administrator must maintain a schedule of the early retirement
option or other optional forms of benefit the Plan must continue for
the affected Participants.
14.4 DISCONTINUANCE. The Employer has the right, at any time, to
suspend or discontinue its contributions under the Plan, and to
terminate, at any time, this Plan and the Trust created under this
Agreement. The Plan will terminate upon the first to occur of the
following:
(a) The date terminated by action of the Employer;
(b) The dissolution or merger of the Employer, unless the
successor makes provision to continue the Plan, in which event
the successor must substitute itself as the Employer under this
Plan. Any termination of the Plan resulting from this
subparagraph (b) is not effective until compliance with any
applicable notice requirements under ERISA.
14.5 FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete
discontinuance of profit sharing plan contributions to the Plan, an
affected Participant's right to his Account Balance is one hundred
percent (100%) Nonforfeitable, irrespective of the Nonforfeitable
percentage which otherwise would apply under Article V.
14.6 MERGER/DIRECT TRANSFER.
(a) The Trustee may not consent to, or be a party to, any
merger or consolidation with another plan, or to a transfer of
assets or liabilities to another plan, unless immediately after
the merger, consolidation or transfer, each Participant's Account
under the surviving Plan is equal to or greater than the benefit
each Participant would have received
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had the Plan terminated immediately before the merger or
consolidation or transfer. The Trustee possesses the specific
authority to enter into merger agreements or direct transfer of
assets agreements with the trustees of other retirement plans
described in Code ss 401(a), including an elective transfer, and
to accept the direct transfer of plan assets, or to transfer
plan assets, as a party to any such agreement.
(b) The Trustee may accept a direct transfer of plan
assets on behalf of an Employee prior to the date the
Employee satisfies the Plan's eligibility conditions. If
the Trustee accepts such a direct transfer of plan assets, the
Plan Administrator and Trustee must treat the Employee as a
Participant for all purposes of the Plan except the Employee is
not a Participant for purposes of sharing in Employer
contributions under the Plan until he actually becomes a
Participant in the Plan.
(c) If the Plan receives a direct transfer (by merger or
otherwise) of Elective Contributions (or amounts treated as
Salary Reduction Contributions) under a Plan with a Code
ss 401(k) arrangement, the distribution restrictions of Code
ssss 401(k)(2) and (10) continue to apply to those transferred
Elective Contributions.
14.7 ELECTIVE TRANSFERS. The Trustee, after August 9, 1988, may
not consent to, or be a party to a merger, consolidation or transfer
of assets with a defined benefit plan, except with respect to an
elective transfer, or unless the transferred benefits are in the form
of paid-up individual annuity contracts guaranteeing the payment of
the transferred benefits in accordance with the terms of the
transferor plan and in a manner consistent with the Code and with
ERISA. The Trustee will hold, administer and distribute the
transferred assets as a part of the Trust Fund and the Trustee must
maintain a separate Employer contribution Account for the benefit of
the Employee on whose behalf the Trustee accepted the transfer in
order to reflect the value of the transferred assets. Unless a
transfer of assets to this Plan is an elective transfer, the Plan will
preserve all Code ss 411(d)(6) protected benefits with respect to
those transferred assets, in the manner described in Section 14.3. A
transfer is an elective transfer if:
(a) the transfer satisfies the first paragraph of this
Section 14.7;
(b) the transfer is voluntary, under a fully informed
election by the Participant;
(c) the Participant has an alternative that retains his Code
ss 411(d)(6) protected benefits (including an option to leave his
benefit in the transferor plan, if that plan is not terminating);
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(d) the transfer satisfies the applicable spousal con-
sent requirements of the Code;
(e) the transferor plan satisfies the joint and survivor
annuity notice requirements of the Code, if the Participant's
transferred benefit is subject to those requirements;
(f) the Participant has a right to immediate distribu-
tion from the transferor plan, in lieu of the elective
transfer;
(g) the transferred benefit is at least the greater of the
single sum distribution provided by the transferor plan for which
the Participant is eligible or the Participant's accrued benefit
under the transferor plan payable at that plan's normal
retirement age;
(h) the Participant has a one hundred percent (100%)
Nonforfeitable interest in the transferred benefit; and
(i) the transfer otherwise satisfies applicable
Treasury regulations.
14.8 TERMINATION.
(a) If the Employer decides it is impossible or inadvisable
to make contributions as herein provided, the Employer shall have
the power to terminate the Plan with respect to its Employees by
appropriate resolution. A certified copy of such resolution or
resolutions shall be delivered to the Trustee, and as soon as
possible thereafter, the Plan Administrator shall send or deliver
a copy of said resolutions to each Participant, or otherwise
notify each Participant whose membership arises by reason of his
employment with the Employer. After the date specified in such
resolutions, the Employer shall make no further contributions
under the Plan. The Trust, however, shall remain in existence as
well as all other provisions of the Plan, except for provisions
for contributions by the Employer. All Account Balances of
Participants shall continue to be held, administered and
distributed by the Trustee in accordance with the provisions of
the Plan.
(b) If the Employer shall decide to terminate completely the
Plan and the Trust with respect to its Employees, such
termination shall be effective as of a date to be specified in
certified copies of its resolutions to be delivered to its
Participants and the Trustee, conditioned on the satisfaction of
all applicable regulatory requirements. Upon termination of the
Plan and Trust, and after payment of all expenses and
proportional adjustment of Accounts of Employees to reflect such
expenses, Trust fund profit or losses, and reallocations to the
date of termination, each employed or retired Partici-
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pant entitled to receive benefits shall be entitled to receive
his Account Balance. The Trustee shall make payment of such
amounts to the Participants in accordance with the provisions of
Article VI above, unless the Employer shall direct that
payment be made in a Trustee-to-Trustee transfer to another
qualified plan.
(c) The portion of the Participant's Nonforfeitable Account
Balance attributable to Elective Contributions (or to amounts
treated under the Code ss 401(k) arrangement as Elective
Contributions) is not distributable on account of Plan
termination, as described in this Section 14.8, unless: (a) the
Participant otherwise is entitled under the Plan to a
distribution of that portion of his Nonforfeitable Account
Balance; or (b) the Plan termination occurs without the
establishment of a successor plan. A successor plan under clause
(b) is a defined contribution plan (other than an ESOP)
maintained by the Employer (or by an Affiliated Employer) at the
time of the termination of the Plan or within the period ending
twelve (12) months after the final distribution of assets. A
distribution made after March 31, 1988, pursuant to clause (b),
must be part of a lump sum distribution to the Participant of his
Nonforfeitable Account Balance.
14.9 EXERCISE OF AUTHORITY. To the extent that the Employer has
the authority to amend or terminate the Plan, including the adoption
of amendments authorized by Section 14.2 and the termination of the
Plan as authorized by Sections 14.4 and 14.8, such authority shall be
exercised by resolution of the Employer's board of directors.
ARTICLE XV
PARTICIPATING EMPLOYERS
15.1 PARTICIPATING EMPLOYERS.
(a) The term "Employer" shall include any Affiliated
Employer for purposes of crediting Hours of Service, determining
Years of Service and Breaks in Service under Articles III and VI,
applying the participation and coverage tests described in
Article IV, applying the limitations on allocations in Article
IV, applying the top-heavy rules and the minimum allocation
requirements of Article IV, the definitions of Employee, Highly
Compensated Employee, Compensation and Leased Employee, and for
any other purpose required by the applicable Code section or by a
Plan provision.
(b) An Affiliated Employer may contribute to the Plan only
by being a signatory to a Participation Agreement to the Plan (a
"Participating Employer"). If one or more of the Affiliated
Employers become Participating Employers by executing a
Participation Agreement to the Plan, the term
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"Employer" includes the Participating Employer for all purposes
of the Plan, and "Plan Administrator" means the Employer that is
the signatory to the Execution Page of the Plan, or such other
person or entity designated by that Employer pursuant to Section
10.1 of the Plan.
(c) Employees of Affiliated Employers that are not
Participating Employers are not eligible to participate in the
Plan. The Employer may elect to exclude from the definition of
"Compensation" for allocation purposes any Compensation received
from an Affiliated Employer that has not executed a Participation
Agreement and whose employees are not eligible to participate in
the Plan.
15.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS.
(a) Each such Participating Employer shall be required to
use the same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to,
commingle, hold and invest as one Trust Fund all contributions
made by Participating Employers, as well as all increments
thereof.
(c) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an Employee of the
Employer or a Participating Employer, shall not affect such
Participant's rights under the Plan, and all amounts credited to
such Participant's Account as well as his accumulated service
time with the transferor or predecessor, and his length of
participation in the Plan, shall continue to his credit.
(d) Any expenses of the Trust which are to be paid by the
Employer or borne by the Trust Fund shall be paid by each
Participating Employer in the proportion directed by the Plan
Administrator.
15.3 DESIGNATION OF AGENT. Each Participating Employer shall be
deemed to be a part of this Plan; provided, however, that with
respect to all of its relations with the Trustee and Plan
Administrator for the purpose of this Plan, each Participating
Employer shall be deemed to have designated irrevocably the Employer
as its agent. Unless the context of the Plan clearly indicates the
contrary, the word "Employer" shall be deemed to include each
Participating Employer as related to its adoption of the Plan.
15.4 TRANSFERS. In the event of a transfer of an Employee between
Affiliated Employers which are Participating Employers, whether or not
the Employer to which the Participant is transferred is the Employer
or a Participating Employer, the Employee transferred shall not be
considered to have terminated employment
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for purposes of the Plan. If the Employer to which the Employee is
transferred is not the Employer or a Participating Employer, then
the Participant's Account will continue to be accounted for under
the account for the Employer or Participating Employer from
which the Participant transferred, and service with all Affiliated
Employers shall be credited for purposes of determining Years of
Service for vesting. No Employer contributions shall be allocated to
the Account of the Participant who transferred to an Affiliated
Employer which is not the Employer or a Participating Employer,
however, earnings and losses shall be allocated to the Participant's
Account in the manner provided in Section 10.8. Distribution of the
Participant's Account shall be made at such time and in such manner as
is otherwise provided by the terms and provisions of the Plan as
though such Participant's employment with the Affiliated Employer was
considered employment with the Employer or a Participating Employer.
If a Participant is transferred to the Employer or a
Participating Employer and, if taking into account accumulated service
for all Affiliated Employers as provided above, the Participant would
be entitled to an allocation in the Plan Year of his transfer, the
Employer and each Participating Employer for which the Participant was
employed, will make a pro rata allocation on behalf of the Participant
from any Employer or Participating Employer contribution. The pro rata
allocation, as determined by the Administrator in a uniform and
nondiscriminatory manner and consistent with applicable provisions of
the Code, shall be based on the Participant's Compensation paid from
the Employer and each Participating Employer.
15.5 PARTICIPATING EMPLOYER'S CONTRIBUTION. All contributions
made by a Participating Employer, as provided for in this Plan, shall
be determined separately by each Participating Employer, and shall be
paid to and held by the Trustee for the exclusive benefit of the
Employees of such Participating Employer and the Beneficiaries of such
Employees, subject to all the terms and conditions of this Plan. Any
Forfeiture by an Employee of a Participating Employer subject to
allocation during each Plan Year shall be used to reduce the
contribution of such Participating Employer. On the basis of the
information furnished by the Plan Administrator, the Trustee shall
keep separate books and records concerning the affairs of each
Participating Employer hereunder and as to the accounts and credits of
the Employees of each Participating Employer. The Trustee may, but
need not, register Contracts so as to evidence that a particular
Participating Employer is the interested Employer hereunder.
Matching Contributions shall be in the form of Employer Stock or
shall be used to purchase Employer Stock, as provided in Section 4.3.
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15.6 AMENDMENT. Amendment of this Plan by the Employer at any
time when there shall be a Participating Employer hereunder shall be
binding on each and every Participating Employer and with the consent
of the Trustee where such consent is necessary in accordance with the
terms of this Plan.
15.7 DISCONTINUANCE OF PARTICIPATION. Any Participating Employer
shall be permitted to discontinue or revoke its participation in the
Plan. At the time of any such discontinuance or revocation,
satisfactory evidence thereof and of any applicable conditions imposed
shall be delivered to the Trustee. The Trustee shall thereafter
transfer, deliver and assign Contracts and other Trust Fund assets
allocable to the Participants of such Participating Employer to such
new Trustee as shall have been designated by such Participating
Employer, in the event that it has established a separate pension plan
for its Employees. If no successor is designated, the Trustee shall
retain such assets for the Employees of said Participating Employer
pursuant to the provisions of Article VIII hereof. In no such event
shall any part of the corpus or income of the Trust as it relates to
such Participating Employer be used for or diverted for purposes other
than for the exclusive benefit of the Employees of such Participating
Employer.
15.8 ADMINISTRATOR'S AUTHORITY. The Administrator shall have
authority to make any and all necessary rules or regulations, binding
upon all Participating Employers and all Participants, to effectuate
the purpose of this Article.
15.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE. If any
Participating Employer is prevented in whole or in part from making a
contribution to the Trust Fund which it would otherwise have made
under the Plan by reason of having no current or accumulated earnings
or profits, or because such earnings or profits are less than the
contribution which it would otherwise have made, then, pursuant to
Code ss 404(a)(3)(B), so much of the contribution which such
Participating Employer was so prevented from making may be made, for
the benefit of the participating employees of such Participating
Employer, by the other Participating Employers who are members of the
same affiliated group within the meaning of Code ss 1504 to the extent
of their current or accumulated earnings or profits.
A Participating Employer on behalf of whose Employees a
contribution is made under this Section shall reimburse the
contributing Participating Employers.
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ARTICLE XVI
QUALIFIED DOMESTIC RELATIONS ORDERS
16.1 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS.
(a) Nothing contained in this Plan prevents the Trustee, in
accordance with the direction of the Plan Administrator, from
complying with the provisions of a qualified domestic relations
order (as defined in Code ss 414(o)). This Plan specifically
permits distribution to an alternate payee under a qualified
domestic relations order ("QDRO") at any time, irrespective of
whether the Participant has attained his earliest retirement age
(as defined under Code ss 414(p)) under the Plan. A distribution
to an alternate payee prior to the Participant's attainment of
earliest retirement age is available only if: (1) such
distribution shall not otherwise violate the provisions of Code
ss 414(p); (2) the order specifies distribution at that time or
permits an agreement between the Plan and the alternate payee to
authorize an earlier distribution; and (3) if the amount of the
alternate payee's benefits under the Plan exceeds $3,500, and the
order requires, the alternate payee consents to any distribution
occurring prior to the Participant's attainment of earliest
retirement age. Nothing in this Section 16.1 gives a Participant
a right to receive distribution at a time otherwise not permitted
under the Plan nor does it permit the alternate payee to receive
a form of payment not otherwise permitted under the Plan. An
alternate payee shall have the same right under Section 8.5 to
direct the investment of amounts credited to his Account under
the Plan as a Participant.
(b) The Plan Administrator must establish reasonable
procedures to determine the qualified status of a QDRO. Upon
receiving a QDRO, the Plan Administrator promptly will notify the
Participant and any alternate payee named in the order, in
writing, of the receipt of the order and the Plan's procedures
for determining the qualified status of the order. Within a
reasonable period of time after receiving the QDRO, the Plan
Administrator must determine the qualified status of the order
and must notify the Participant and each alternate payee, in
writing, of its determination. The Plan Administrator must
provide notice under this Section by mailing to the individual's
address specified in the QDRO, or in a manner consistent with
Department of Labor regulations.
(c) If any portion of the Participant's Nonforfeitable
Account Balance is payable during the period the Plan Admin-
istrator is making its determination of the qualified status
of the QDRO, the Plan Administrator must make a separate
accounting of the amounts payable. If the Plan Administrator
determines the order is a qualified QDRO within eighteen (18)
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months of the date amounts first are payable following receipt
of the order, the Plan Administrator will direct the Trustee
to distribute the payable amounts in accordance with the order.
If the Plan Administrator does not make its determination of the
qualified status of the order within the eighteen (18) month
determination period, the Plan Administrator will direct the
Trustee to distribute the payable amounts in the manner the
Plan would distribute if the order did not exist and will
apply the order prospectively if the Plan Administrator later
determines the order is a qualified QDRO.
(d) To the extent it is not inconsistent with the provisions
of the qualified QDRO, the Plan Administrator may direct the
Trustee to invest any partitioned amount in a segregated
subaccount or separate account and to invest the account in
Federally insured, interest-bearing savings account(s) or time
deposit(s) (or a combination of both), or in other fixed income
investments. A segregated subaccount remains a part of the Trust,
but it alone shares in any income it earns, and it alone bears
any expense or loss it incurs. The Trustee will make any payments
or distributions required under this Article by separate benefit
checks or other separate distribution to the alternate payee(s).
ARTICLE XVII
TOP-HEAVY PLAN PROVISIONS
17.1 EFFECT OF ARTICLE XVII ON PLAN. Notwithstanding any contrary
provisions contained in any other Article of the Plan, if at any time
the Plan shall be a Top-Heavy Plan (as hereinafter defined), this
Article shall control; and any contrary terms of the Plan shall be
deemed replaced by the provisions of this Article. However, this
Article shall not be effective for any subsequent Plan Year in which
the Plan is determined not to be a Top-Heavy Plan. Definitions
applicable to this Article XVII are set out in Section 17.3.
17.2 DETERMINATION OF TOP-HEAVY STATUS.
(a) If this Plan is the only qualified plan maintained by
the Employer, the Plan is top-heavy for a Plan Year if the
Top-Heavy Ratio as of the Determination Date exceeds sixty
percent (60%). The Plan Administrator must include in the
Top-Heavy Ratio, as part of the Account Balances, any
contribution not made as of the Determination Date but includable
under Code ss 416 and the applicable Treasury regulations, and
distributions made within the Determination Period. The Plan
Administrator must calculate the Top-Heavy Ratio by disregarding
the Account Balance (and distributions, if any, of the Account
Balance) of any Non-Key Employee who was formerly a Key Employee,
and by disregarding the Account Balance
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(including distributions, if any, of the Account Balance) of
an individual who has not received credit for at least one Hour
of Service with the Employer during the Determination Period.
The Plan Administrator must calculate the Top-Heavy Ratio,
including the extent to which it must take into account
distributions, rollovers and transfers, in accordance with Code
ss 416 and the regulations thereunder.
(b) If the Employer maintains other qualified plans
(including a simplified employee pension plan), or maintained
another such plan which now is terminated, this Plan is top-heavy
only if it is part of the Required Aggregation Group, and the
Top-Heavy Ratio for the Required Aggregation Group and for the
Permissive Aggregation Group, if any, each exceeds sixty percent
(60%). The Plan Administrator will calculate the Top-Heavy Ratio
in the same manner as required in subparagraph (a) of this
Section 17.2, taking into account all plans within the
Aggregation Group. To the extent the Plan Administrator must take
into account distributions to a Participant, the Plan
Administrator must include distributions from a terminated plan
which would have been part of the Required Aggregation Group if
it were in existence on the Determination Date. The Plan
Administrator will calculate the present value of accrued
benefits under defined benefit plans or simplified employee
pension plans included within the group in accordance with the
terms of those plans, Code ss 416 and the regulations thereunder.
If a Participant in a defined benefit plan is a Non-Key Employee,
the Plan Administrator will determine his accrued benefit under
the accrual method, if any, which is applicable uniformly to all
defined benefit plans maintained by the Employer or, if there is
no uniform method, in accordance with the slowest accrual rate
permitted under the fractional rule accrual method described in
Code ss 416(b) (1)(C). If an aggregated plan does not have a
valuation date coinciding with the Determination Date, the Plan
Administrator must value the Account Balances in the aggregated
plan as of the most recent valuation date falling within the
twelve (12) month period ending on the Determination Date, except
as Code ss 416 and applicable Treasury regulations require for
the first and second plan year of a defined benefit plan. The
Plan Administrator will calculate the Top-Heavy Ratio with
reference to the Determination Dates that fall within the
same calendar year.
(c) The Account Balance of a Participant other than a Key
Employee shall be determined under (1) the method, if any, that
uniformly applies for accrual purposes under all defined benefit
plans maintained by the Employer, or (2) if there is no such
method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of
Code ss 411(b)(1)(C).
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17.3 DEFINITIONS. For purposes of applying the provisions
of this Article XVII:
(a) "Top-Heavy Ratio" is a fraction, the numerator of which
is the sum of the Account Balances of all Key Employees as of the
Determination Date and the denominator of which is a similar sum
determined for all Employees.
(b) "Key Employee " means, as of any Determination Date, any
Employee or former Employee (or Beneficiary of such ) who, for
any Plan Year in the Determination Period: (i) has Compensation
in excess of fifty percent (50%) of the dollar amount prescribed
in Code ss 416(b)(1)(A) (relating to defined benefit plans) and
is an officer of the Employer; (ii) has Compensation in excess of
the dollar amount prescribed in Code ss 415(c)(1)(A) (relating to
defined contribution plans) and is one of the Employees owning
the ten (10) largest interests in the Employer; (iii) is a more
than five percent (5%) owner of the Employer; or (iv) is a more
than one percent (1%) owner of the Employer and has Compensation
of more than $150,000. The constructive ownership rules of Code
ss 318 (or the principles of that Section, in the case of an
unincorporated Employer) will apply to determine ownership in the
Employer. The number of officers taken into account under clause
(i) will not exceed the greater of three (3) or ten percent (10%)
of the total number (after application of the Code ss 414(q)
exclusions) of Employees, but no more than fifty (50) officers.
The Plan Administrator will make the determination of who is a
Key Employee in accordance with Code ss 416(i)(1) and the
regulations thereunder.
(c) "Non-Key Employee" is an Employee who does not
meet the definition of Key Employee.
(d) "Compensation" means Compensation as determined under
Section 1.11 for purposes of identifying Highly Compensated
Employees.
(e) "Required Aggregation Group" means: (i) each qualified
plan of the Employer in which at least one Key Employee
participates at any time during the Determination Period; and
(ii) any other qualified plan of the Employer which enables a
plan described in clause (i) to meet the requirements of Code ss
401(a)(4) or 410.
(f) "Permissive Aggregation Group" is the Required
Aggregation Group plus any other qualified plans maintained by
the Employer, but only if such group would satisfy in the
aggregate the requirements of Code ssss 401(a)(4) and 410.
The Plan Administrator will determine the Permissive
Aggregation Group.
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(g) "Employer" means the Employer that adopts this Plan and
any Affiliated Employers described in Section 16.1.
(h) "Determination Date" for any Plan Year is the Adjustment
Date of the preceding Plan Year or, in the case of the first Plan
Year of the Plan, the Adjustment Date of that Plan Year. The
"Determination Period" is the five (5) year period ending on the
Determination Date.
17.4 TOP-HEAVY ALLOCATIONS.
(a) Top-Heavy Minimum Allocation. The Plan must comply with
the provisions of this Section 17.4. The top-heavy minimum
allocation requirement applies only in Plan Years for which the
Plan is top-heavy. If the Plan is top-heavy in any Plan Year:
(1) Each Non-Key Employee who is a Participant and is
employed on the last day of the Plan Year will receive a
top-heavy minimum allocation for that Plan Year,
irrespective of whether he satisfies the Hours of Service
condition under Section 4.4 of the Plan; and
(2) The top-heavy minimum allocation is the lesser of
three percent (3%) of the Non-Key Employee's Compensation
for the Plan Year or the highest contribution rate for the
Plan Year made on behalf of any Key Employee. However, if a
defined benefit plan maintained by the Employer which
benefits a Key Employee depends on this Plan to satisfy the
nondiscrimination rules of Code ss 401(a)(4) or the coverage
rules of Code ss 410 (or another plan benefiting the Key
Employee so depends on such defined benefit plan), the
top-heavy minimum allocation is three percent (3%) of the
Non-Key Employee's Compensation regardless of the
contribution rate for the Key Employees.
(b) Special Definitions. For purposes of this Section 17.4,
the term "Participant" includes any Employee otherwise eligible
to participate in the Plan but who is not a Participant because
of his Compensation level or because of his failure to make
Salary Reduction Contributions under a Code ss401(k) arrangement
or because of his failure to make Mandatory Contributions. For
purposes of subparagraph (a)(2), "Compensation" means
Compensation as defined in Section 1.11, except Compensation does
not include Elective Contributions, as defined in Section 1.11.
(c) Determining Contribution Rates. For purposes of this
Section 17.4, a Participant's contribution rate is the sum of all
Employer contributions (not including Employer contributions to
Social Security) allocated to the Partici-
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pant's Account for the Plan Year, divided by his Compensation
for the entire Plan Year. To determine a Participant's
contribution rate, the Plan Administrator must treat all
top-heavy defined contribution plans maintained by the Employer
or by any Affiliated Employer described in Section 16.1 as a
single plan.
(d) No Allocations. If, for a Plan Year, there are no
allocations of Employer contributions for any Key Employee (for
purposes of Section 17.4(a)(2)), the Plan does not require any
top-heavy minimum allocation for the Plan Year, unless a
top-heavy minimum allocation applies because of the maintenance
by the Employer of more than one plan.
(e) Election of Method. The Plan will satisfy the top-heavy
minimum allocation requirement, by making any necessary
additional contribution to the Plan. The Plan Administrator first
will allocate the Employer contributions for the Plan Year in
accordance with the provisions of Section 4.4. The Employer then
will contribute an additional amount for the Account of any
Participant entitled under this Section 17.4 to a top-heavy
minimum allocation and whose contribution rate for the Plan Year,
under this Plan and any other plan aggregated under subparagraph
(c), is less than the top-heavy minimum allocation. The
additional amount is the amount necessary to increase the
Participant's contribution rate to the top-heavy minimum
allocation. The Plan Administrator will allocate the additional
contribution to the Account of the Participant on whose behalf
the Employer makes the contribution.
IN WITNESS WHEREOF, the Employer has caused this Plan to be
executed by it upon the authority granted by its Board of Directors by
the signing and attesting of its appropriate officers and the affixing
of the corporate seal hereunto, all as of this the 9th day of
January, 1997.
LADD FURNITURE, INC.
By:
President
ATTEST:
By:
Secretary
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TRUSTEE:
FRANK RUSSELL TRUST COMPANY
By:
President
ATTEST:
By:
Secretary
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Exhibit 5
January 10, 1997
Board of Directors
LADD Furniture, Inc.
One Plaza Center, Box HP-3
High Point, North Carolina 27261
Re: LADD Furniture, Inc. -
Registration Statement on Form S-8/
Retirement Savings Plan for Hourly Employees
----------------------------------------
Gentlemen:
We have been requested to advise regarding the legality of shares being
offered under the LADD Furniture, Inc. Retirement Savings Plan for Hourly
Employees (the "Plan").
We are general counsel for LADD Furniture, Inc. ("LADD") and as such
are familiar with its business and affairs. As to matters of fact, we have
examined and relied upon originals or copies certified to our satisfaction of
such corporate records, certificates of corporate officers and certificates of
public officials and have conducted such investigation as in our judgment is
necessary or appropriate to enable us to render the opinion expressed below.
Based on the foregoing, we are of the opinion that:
Three Hundred Thousand (300,000) shares of Common Stock, $.30 par
value, of LADD have been reserved for issuance pursuant to the Plan. All such
reserved shares have been duly authorized and will be validly issued, fully paid
and nonassessable when delivered against proper payment therefor in
accordance with the terms of the Plan.
We consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8.
Very truly yours,
PETREE STOCKTON, L.L.P.
<PAGE>
Exhibit 24.a
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
LADD Furniture, Inc.:
We consent to incorporation by reference in the registration statement filed on
January 10, 1997 on Form S-8 of LADD Furniture, Inc. in connection with the
LADD Furniture, Inc. Retirement Savings Plan for Hourly Employees of our report
dated February 16, 1996, except for paragraph 4 of note 2 which is as of
February 26, 1996, relating to the consolidated balance sheets of LADD
Furniture, Inc. and subsidiaries as of December 31, 1994 and December 30, 1995,
and the related consolidated statements of operations, shareholders' equity and
cash flows for each of the years in the three-year period ended December 30,
1995, and related schedule, which report appears in the December 30, 1995 annual
report on Form 10-K of LADD Furniture, Inc. contained in the appendix to the
Proxy Statement for the 1996 Annual Shareholders Meeting.
KPMG Peat Marwick LLP
Greensboro, North Carolina
January 9, 1997
<PAGE>
