UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Mark One
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended JANUARY 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission File No. 0-13365
OshKosh B'Gosh, Inc.
A DELAWARE Corporation 39-0519915
(I.R.S. ID)
112 Otter Avenue
Oshkosh, Wisconsin 54901
Telephone number: (920) 231-8800
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, Par Value $.01 per share
Indicate by check mark whether the Company (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Company was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Company's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 13, 2000, there were outstanding 10,361,239 shares of
Class A Common Stock and 2,240,555 shares of Class B Common
Stock, of which 9,898,898 shares and 1,136,317 shares,
respectively, were held by non-affiliates of the Company. Based
upon the closing sales price as of March 13, 2000, the aggregate
market value of the Class A Common Stock held by non-affiliates
was $176,936,546. The Class B Common Stock is no longer listed
or quoted on any established trading market, but it is
convertible into Class A Common Stock on a share-for-share basis.
Based on that conversion right, the value of Class B Common
Stock held by non-affiliates was $20,311,666.
DOCUMENTS INCORPORATED BY REFERENCE
OshKosh B'Gosh, Inc. definitive Proxy Statement for its annual
meeting to be held on May 5, 2000 (or such later date as the
directors may determine), incorporated into Part III
INDEX
PART I PAGE
Item 1. Business 5
(a) General Development of Business 5
(b) Financial Information About Industry Segments 6
(c) Narrative Description of Business 6
Product 6
Raw Materials, Manufacturing and Sourcing 7
Sales and Marketing 9
International Licensing and Distribution 10
Trademarks 10
Seasonality 10
Working Capital 11
Backlog 11
Competitive Conditions 11
Environmental Matters 12
Employees 12
Item 2. Properties 12
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
PART II
Item 5. Market for the Company's Common Stock and
Related Stockholder Matters 13
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Conditions 14
Item 7A. Quantitative and Qualitative Disclosures About
Market Ris 22
Item 8. Financial Statements and Supplementary Data 23
Item 9. Disagreements on Accounting and Financial Disclosure 39
PART III
Item 10. Directors and Executive Officers of the Company 40
Item 11. Executive Compensation 40
Item 12. Security Ownership of Certain Beneficial Owners
and Management 40
Item 13. Certain Relationships and Related Transactions 40
PART IV
Item 14. Exhibits, Financial Statement Schedule, and
Reports on Form 8-K 41
PART I
ITEM 1. BUSINESS
(a) General Development of Business
OshKosh B'Gosh, Inc. (together with its subsidiaries, the
"Company") was founded in 1895 and was incorporated in the state
of Delaware in 1929. The Company designs, manufactures, sources,
and markets apparel primarily for the children's wear and youth
wear markets. The Company also offers a children's footwear
collection. While its heritage began in the men's work wear
market, the Company is currently best known for its line of high
quality children's wear. It is the Company's vision to become
the dominant global marketer of branded products for children
ages newborn to ten through leverage of the existing brand
franchise in OshKosh B'Gosh and utilization of the
Company's core competencies to supply the market with all
appropriate product for children where quality, durability, and
fashion innovation are important. The Company is also pursuing
niche opportunities in adult apparel, where the Company's century
old heritage can provide meaningful differential advantage to
address the needs of the marketplace.
The success of the children's wear business can be attributed to
the Company's core themes: quality, durability, style, trust, and
Americana. These themes have propelled the Company to the
position of market leader in the branded children's wear
industry. The Company strategically extends the product line and
also leverages the economic value of the OshKosh B'Gosh name via
both domestic and international licensing agreements.
In addition to the Company's wholesale business, the Company also
operates a chain of 130 domestic OshKosh B'Gosh branded stores,
including 124 factory outlet stores, four showcase stores, and
two stripmall stores. The Company operates an OshKosh B'Gosh
showcase store in New York City to feature a full line of OshKosh
product in a signature environment designed to reinforce brand
awareness among consumers. The Company's retail product line in
its OshKosh B'Gosh branded stores includes OshKosh B'Gosh branded
product in sizes from newborn to girls 6X and boys 7 and youth
wear for girls and boys under the trade names Genuine Girl (girls
sizes 7-16) and Genuine Blues (boys sizes 8-16). Based on the
sales performance of the Genuine Girl line in the OshKosh B'Gosh
operated retail stores, the Company expanded the distribution of
this product line to wholesale customers beginning with the
Spring 1998 season. The Company is also currently distributing
to wholesale customers, on a test basis, the Genuine Blues line.
The Company's comprehensive strategic planning initiative guides
the Company's business focus. Under this initiative, combined
with management's commitment to more efficiently utilize working
capital, the Company continues to take steps to improve product
marketability, streamline operations, reduce its capital base and
cost structure, and improve delivery performance. These actions
included an analysis of product extensions, commitment to
the wholesale customer base, periodic review of significant licensee
arrangements, and continued development of an effective global
sourcing strategy.
The Company designs and closely manages the manufacture of
all of its apparel and footwear. Company designers develop
fabrication, trim accessories, and detailed manufacturing
specifications. The product is then manufactured according to
detailed Company specifications and production schedules in
Company-owned manufacturing facilities or at third party
contractor locations worldwide. Product sourcing is based on
manufacturing capacity, quality, and lead times, in addition to
capabilities of specific manufacturing facilities.
The Company leverages its name and brand equity into a wide
variety of children's products including children's apparel
accessory items such as hats, socks and eyewear, bedding and
other nursery decor, juvenile products including car seats and
strollers, and developmental toys. The Company regularly reviews
the seasonal offerings of all related products both locally and
internationally for consistency, brand image, and quality. The
Company earns royalties for use of its name on children's and
men's wear products throughout the world, and from related
accessories distributed in the United States and worldwide.
(b) Financial Information About Industry Segments
The Company is engaged in only one line of business, namely, the
apparel industry.
(c) Narrative Description of Business
Products
The Company designs, manufactures, sources and markets a broad
range of children's clothing as well as lines of youth wear and
footwear under the OshKosh, OshKosh B'Gosh, Genuine
Girl, and Genuine Blues labels. The products are
distributed primarily through better quality department and
specialty stores, 130 Company owned domestic stores, and foreign
retailers.
The children's wear and youth wear business is targeted to reach
the middle to upper middle segment of the sportswear market
through the use of innovative designs, quality fabrics, and
classic styling. The Company believes that its trade name is a
valuable asset in the marketing of its apparel, signifying
apparel that is classic in design and of high quality
construction. The Company tradename and trademarks are generally
displayed prominently on OshKosh product. Children's wear is
marketed in size ranges from layette/newborn and infant/toddler
to girls 6X and boys 7. Youth wear is in size ranges girls 7 to
16 and boys 8 to 16.
The Company's children's wear and youth wear business includes a
broad range of product categories, which are offered in two main
groups: Fashion and Classics. The Fashion group is organized
primarily in a collection format of seasonal themes, developed by
an in-house product development staff. The products in a
collection share a primary design theme which is carried out
through fabric design and the distinctive use of colors,
screenprint, embroidery, and trim applications. These
collections are generally presented as three to five small groups
within each merchandising season.
The Company also offers a Classics product line, consisting
primarily of staple denim products with multiple wash treatments
and coordinating garments. The Classics product offerings for
each season will typically consist of a variety of clothing items
including bib overalls, pants, jeans, shorts and shortalls
(overalls with short pant legs), shirts, blouses and knit tops,
skirts, jumpers, sweaters, dresses, playwear, and fleece. This
product line is developed to be somewhat less seasonal, with
signature OshKosh B'Gosh classic styling. These styles are
available to retail customers for replenishment throughout the
year. Some Classics items are also designed to serve as a
foundation for the Fashion group, with seasonal colors and styles
to complement the Company's Fashion product offering.
Most products are designed by an in-house staff. Product design
requires long lead times, with products generally being designed
a year in advance of the time they actually reach the retail
market. While the Company's products are generally traditional in
nature and not intended to be "designer" items, the Company
attempts to incorporate current trends and consumer preferences
in its designs.
In selecting fabric and prints for its products, the Company
seeks, where possible, to obtain exclusive rights to unique fabric
designs from its suppliers in order to provide the Company, for a
limited period of time, with some protection from imitation by
competitors.
Raw Materials, Manufacturing, and Sourcing
All raw materials used in the manufacture of Company products are
purchased from unaffiliated suppliers. The Company purchases its
raw materials directly for its owned manufacturing facilities and
may also procure and retain ownership of fabric related to
garments cut and assembled by contract manufacturers. In other
circumstances, fabric is procured by the contract manufacturer
directly but in accordance with the Company's specifications. In
1999, approximately 88% of the Company's direct expenditures for
raw materials (fabric) were from its five largest suppliers, with
the largest such supplier accounting for approximately 48% of
total raw material expenditures. Fabric and various non-fabric
items, such as thread, zippers, rivets, buckles, and snaps, are
purchased from a variety of domestic and foreign sources, based
on quality, pricing, and availability. The fabric and accessory
market in which OshKosh B'Gosh purchases its raw materials is
composed of a substantial number of suppliers with similar
products and capabilities, and is characterized by a high degree
of competition. As is customary in its industry, the Company has
no long-term contracts with its suppliers. To date, the Company
has experienced little difficulty in satisfying its requirements
for raw materials, considers its sources of supply to be
adequate, and believes that it would be able to obtain sufficient
raw materials should any one of its product suppliers become
unavailable.
Product development and administration are primarily coordinated
from the Company's headquarters facility in Oshkosh, WI or its
design studio in New York City. The majority of the product
engineering and sample making, allocation of production among
plants and independent contractors, material purchases, and
invoice payments is done through the Company's Oshkosh
headquarters. Substantially all designs and specifications
utilized by independent manufacturers are provided by the
Company.
In 1999, approximately 64% of the Company's product line
(excluding footwear) was sourced from off-shore Company-operated
facilities and numerous third party contractors throughout the
world, in accordance with the Company's specifications. Most
domestic production takes place in the Company's three Tennessee
and two Kentucky plants. The Company also leases sewing plants in
Honduras and Mexico, where cut apparel pieces are received from
the United States and are reimported by OshKosh B'Gosh as
finished goods under Section 9802 (previously Section 807). In
recent years, as part of the Company's review of manufacturing
capacity and utilization, the Company closed or downsized certain
domestic manufacturing facilities and continued to expand its use
of offshore manufacturing capabilities. These actions were part
of the Company's on-going effort to improve its product cost
structure. The Company has established guidelines for each of
its third party manufacturers in order to monitor product
quality, labor practices, and financial viability. It also
employs agents, based in regional locations abroad, to monitor
compliance with design specifications and quality standards. The
Company believes that its overall global manufacturing strategy
gives the Company maximum flexibility to properly balance the
need for timely shipments, high quality products, and competitive
pricing.
While no long-term, formal arrangements exist with its third-
party manufacturers, the Company considers these relationships to
be satisfactory. The Company believes it could, over a period of
time, obtain adequate alternative production capacity if any of
its independent manufacturers become unavailable. As part of the
Company's product sourcing strategy, it routinely contracts for
apparel products produced by contractors in Asia. If financial,
political or other related difficulties were to adversely impact
the Company's contractors in Asia, it could disrupt the supply of
products contracted for by the Company. A sustained disruption
of such sources of supply could, particularly on a short-term
basis, have an adverse impact on the Company's operations.
Because higher quality apparel manufacturing is generally labor
intensive (sewing, pressing, finishing and quality control), the
Company has continually sought to take advantage of time saving
technical advances in areas like computer-assisted design,
computer-controlled fabric cutting, computer evaluation and
matching of fabric colors, automated sewing processes, and
computer-assisted inventory control and shipping. In order to
realize economies of operation within the domestic production
facilities, cutting operations are located in one of the
Company's five plants, with all domestic product washing,
pressing, and finishing done in one facility in Tennessee and all
screenprint and embroidery done in one facility in Kentucky.
Quality control inspections of both semi-finished and finished
products are required at each plant, including those of
independent manufacturers, to assure compliance.
Customer orders for Fashion products are booked from three to six
months in advance of shipping. Because most Company production
of styled products is scheduled to fill orders already booked,
the Company believes that it is better able to plan its
production and delivery schedules than would be the case if
production were in advance of actual orders. In order to secure
necessary fabrics on a timely basis and to obtain manufacturing
capacity from independent suppliers, the Company must make
substantial advance commitments, sometimes as much as five to
seven months prior to receipt of customer orders. Inventory
levels therefore depend on Company judgment of market demand.
Sales and Marketing
In order to meet the diverse needs of its broad customer base,
the Company uses a wide variety of distribution channels to
market its products. Wholesale distribution is made primarily
through better quality department and specialty stores, although
sales are also made through direct mail catalog companies,
foreign retailers, and other outlets. In 1999, the Company's
products were sold to approximately 1,000 wholesale customers
(approximately 6,500 stores) throughout the United States, and a
sizable number of international accounts.
Product sales to better quality department and specialty stores
are made primarily by the Company's sales force. In addition to
the central sales office in Oshkosh, the Company maintains a
regional sales office in New York and Dallas. A portion of the
Company's sales force is assigned specific large national accounts,
while others are assigned to defined geographic territories. In
sparsely populated areas and new markets, manufacturer's
representatives represent the Company on a non-exclusive basis.
In addition to its wholesale activities, OshKosh B'Gosh products
are also sold through 130 Company-owned domestic retail stores,
operating under three formats: factory outlet stores, four
showcase stores, and two strip mall stores. The Company
operates 124 domestic factory outlet stores, which carry a large
selection of first quality Company branded apparel at a discount
to conventional retail prices. The factory outlet stores also
provide a means of distributing excess and out-of-season product,
reducing the amount of such product sold to discounters at
excessively low prices. The four showcase stores are full price,
full service stores featuring a full line of OshKosh B'Gosh
product in a signature environment designed to convey the total
OshKosh image and build brand recognition among customers. The
stores are also used to test new styles and merchandising
strategies. The Company also began testing a new strip center
retail prototype by opening two strip mall stores in 1999. These
strip mall stores will feature a large selection of OshKosh
B'Gosh products that are consistently value priced.
The Company's broad distribution base insulates the Company from
reliance on any one customer. The Company's largest wholesale
customer, Kids "R" Us, accounted for 12% of the Company's 1999
sales, while the Company's largest ten and largest 100 customers
accounted for approximately 46% and 55% of 1999 sales,
respectively.
Domestic marketing programs are aimed at both the Company's
retail accounts and ultimate consumers, with a main goal of
increasing overall brand awareness. A national marketing program
includes advertising in both consumer and trade publications,
local cooperative advertising, promotions, and in-store
merchandising.
The Company is partnering with department store customers to
enhance brand presentation and availability of the OshKosh B'Gosh
brand through the creation of "showcase" environments. The
showcase environment is a focused merchandising strategy that
creates a highly impactful retail presentation of the OshKosh
brand. By the use of custom fixtures, comprehensive in-store
merchandising support, focused advertising, and promotions, the
Company, along with its key customers, is able to communicate a
powerful and consistent brand presence to the consumer.
International Licensing and Distribution
The Company's products are distributed worldwide through
approximately 36 licensees and distributors in over 75 countries.
Licensing and distribution agreements allow the Company to
develop international markets without the need to maintain a
capital commitment in localized warehousing, offices, personnel,
and inventory.
The Company provides design assistance to its licensees to ensure
products are appropriate to each foreign market and consistent
with the Company's brand image. The licensees and distributors
either purchase fabric or finished product directly from the
Company, manufacture their own product, or contract the
production of the product from third-party manufacturers. Each
licensee and distributor is responsible for the marketing and
distribution of specific product categories within defined
regions specified in the licensing or distribution agreement.
Distribution must be through marketing channels consistent with
the Company's domestic operations and as approved by the Company.
The Company also provides advertising guidelines and support in
the development of localized marketing programs.
Trademarks
The Company utilizes the OshKosh, OshKosh B'Gosh, Genuine
Girl, or Genuine Blues trademarks on most of its
products. Other significant trademarks include a white
triangular patch on the back of bib garments and the Genuine
Article. The Company currently has approximately 47 trademark
registrations and four pending trademark applications in the
United States and has trademark registrations in approximately
110 countries outside the U.S. These trademarks and universal
awareness of the OshKosh B'Gosh name are significant in marketing
the products. Therefore, it is the Company's policy to
vigorously defend its trademarks against infringement under the
laws of the U.S. and other countries. The Company is not aware
of any material infringing uses.
Seasonality
Products are designed and marketed primarily for three principal
selling seasons:
PRIMARY
RETAIL SALES SEASON BOOKING PERIOD SHIPPING PERIOD
Spring/Summer August-September January-May
Fall/Back-to-School January-February June-August
Winter/Holiday April-May September-December
The Company's business is increasingly seasonal, with highest
sales and income in the third quarter, which is the Company's
peak wholesale shipping period and a major retail selling season
at its retail stores. The Company's second quarter sales and
income are the lowest because of both relatively low domestic
wholesale unit shipments and relatively modest retail store sales
during this period. The Company anticipates this seasonality
trend to continue to impact 2000 quarterly sales and income.
Working Capital
Working capital needs are affected primarily by inventory levels,
outstanding accounts receivable, and trade payables. In
November, 1999, the Company entered into a new unsecured credit
agreement with a number of banks that provides for a five year
$125 million term loan for the repurchase of shares of its common
stock through May, 2000, and a three year $75 million revolving
credit facility available for general corporate purposes,
including cash borrowings and issuances of letters of credit.
The revolving credit facility expires November 3, 2002. There
were no outstanding borrowings against the revolving credit
arrangement at January 1, 2000, with $44 million outstanding on
the term loan.
Inventory levels are affected by order backlog and anticipated
sales. Accounts receivable are affected by payment terms
offered. It is general practice in the apparel industry to offer
payment terms of ten to sixty days from date of shipment. The
Company offers net 30 days terms only.
The Company believes that its working capital requirements and
financing resources are comparable with those of other major,
financially sound apparel companies.
Backlog
The dollar amount of backlog of orders believed to be firm as of
the end of the Company's fiscal year and as of the preceding
fiscal year end is not material for an understanding of the
business of the Company taken as a whole.
Competitive Conditions
The apparel industry is highly competitive and consists of a
number of domestic and foreign companies. Some competitors have
assets and sales greater than those of the Company. In addition,
the Company competes with a number of firms that produce and
distribute only a limited number of products similar to those
sold by the Company, or sell only in certain geographic areas
being supplied by the Company.
A characteristic of the apparel industry is the requirement that
a marketer recognize fashion trends and adequately provide
products to meet such trends. Competition within the apparel
industry is generally in terms of quality, price, service, style,
and with respect to branded product lines, consumer recognition,
and to a lesser extent on the basis of service and price. The
Company is focusing attention on the issues of price and service,
and has taken, and will continue to take, steps to reduce costs,
become more competitive in the eyes of value conscious consumers,
and deliver the service expected by its customers.
The Company's share of the overall children's wear market is
quite small. This is due to the diverse structure of the market
where there is no truly dominant producer of children's garments
across all size ranges and garment types. The Company believes
that in its primary channel of distribution, department and
specialty stores, it holds the largest share of the branded
children's wear market.
Environmental Matters
The Company's compliance with Federal, State, and local
environmental laws and regulations had no material effect upon
its capital expenditures, earnings, or competitive position. The
Company does not anticipate any material capital expenditures for
environmental control in either the current or succeeding fiscal
years.
Employees
At January 1, 2000, the Company employed approximately 3,600
persons. Approximately 17% of the Company's personnel are
covered by collective bargaining agreements with the United
Food and Commercial Workers Union.
ITEM 2. PROPERTIES
Approximate
Floor Area in
Location Square Feet Principal Use
Albany, KY 20,000 Manufacturing
Byrdstown, TN 32,000 Manufacturing
Celina, TN 38,250 Laundering/Pressing
Choloma, Honduras (2) 47,000 Manufacturing
Gainesboro, TN 61,000 Sample Production/Distribution
Jamestown, TN 43,000 Manufacturing
Liberty, KY 218,000 Manufacturing/Warehousing
New York City, NY (1) 18,255 Sales Offices/Showroom Design Studio
Oshkosh, WI 99,000 Exec. & Operating Offices
Oshkosh, WI 88,000 Leased to Outside Party
Oshkosh, WI 128,000 Distribution/Warehousing
Uman, Mexico (3) 134,000 Manufacturing
White House, TN 284,000 Distribution/Warehousing
All properties are owned by the Company with the exception of:
(1) Lease expiration date--2007, (2) Lease expiration date--2001,
(3) Lease expiration date--2006.
The Company believes that its properties are well maintained and
its manufacturing equipment is in good operating condition and
adequate for current production. The Company's retail stores
occupy leased premises, with lease terms generally in the range
of 5 - 7 years. These leasehold interests are generally well
suited for the Company's retail operations. For information
regarding the terms of the leases and rental payments thereunder,
refer to Note 6 to the consolidated financial statements of this
Form 10-K.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in various claims and lawsuits incidental
to its business. In the opinion of management, these claims and
lawsuits will not have a material adverse effect on the Company's
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Quarterly Common Stock Data 1
1999 1998
Stock price Dividends Stock price Dividends
High Low per share High Low Per share
Class A Common Stock
1st $ 20-1/4 $14-15/16 $0.05 $20-1/4 $14-1/2 $0.035
2nd 22-3/4 17-1/8 0.05 23 17-3/4 0.035
3rd 20-7/8 14-1/4 0.05 24-9/16 18-1/4 0.05
4th 22-3/8 18-7/8 0.05 24-1/4 17-7/8 0.05
Class B Common Stock
1st - - $0.0425 - - $0.03
2nd - - 0.0425 - - 0.03
3rd - - 0.0425 - - 0.0425
4th - - 0.0425 - - 0.0425
1 Adjusted for the two-for-one stock split in September 1998.
The Company's Class A common stock trades on the Over-The-Counter
market and is quoted on NASDAQ under the symbol GOSHA. The table
reflects the "last" price quotation on the NASDAQ National Market
System and does not reflect mark-ups, mark-downs, or commissions
and may not represent actual transactions. The Company's Class B
common stock is not currently traded on the Over-The-Counter
market.
As of February 15, 2000, there were 1,202 Class A common stock
shareholders of record and 131 Class B common stock shareholders
of record.
ITEM 6. SELECTED FINANCIAL DATA
Financial Highlights
(Dollars in thousands, except per share amounts)
Year Ended
January 1, January 2, December 31, December 31, December 31,
2000 1999 1997 1996 1995
Financial results
Net sales $429,786 $423,232 $395,196 $444,766 $432,266
Net income 32,448 29,335 22,558 1,119 10,947
Return on sales 7.5% 6.9% 5.7% 0.3% 2.5%
Financial condition
Working capital $ 27,342 $ 76,876 $ 82,762 $104,641 $ 95,414
Total assets 129,699 162,568 174,788 196,033 208,579
Shareholders'equity 23,439 103,017 113,157 138,077 150,078
Data per common share
Net income
Basic $ 2.01 $ 1.54 $ 1.02 $ .05 $ .43
Diluted 1.99 1.52 1.02 .05 .43
Cash dividends declared
Class A .20 .17 .14 .14 .14
Class B .17 .145 .12 .12 .12
Shareholders'equity 1.86 5.75 5.74 5.86 6.03
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated,
selected Company income statement data expressed as a percentage
of net sales.
As a Percentage of Net Sales
for the Year Ended
January 1,* January 2,* December 31,
2000 1999 1997
Net sales 100.0% 100.0% 100.0%
Cost of products sold 58.1% 60.9% 63.5%
Gross profit 41.9% 39.1% 36.5%
Selling, general and
administrative expenses 31.2% 29.5% 29.2%
Royalty income, net (1.7%) (2.0%) (2.0%)
Operating income 12.4% 11.6% 9.3%
Other income (expense) - net (0.1%) 0.1% 0.3%
Income before income taxes 12.3% 11.7% 9.6%
Income taxes 4.8% 4.8% 3.9%
Net income 7.5% 6.9% 5.7%
* Effective January 1, 1998, the Company changed its fiscal year
to a 52/53 week period ending on the Saturday closest to
December 31. Accordingly, the Company's fiscal year 1998
ended January 2, 1999, while the Company's 1999 fiscal year
ended January 1, 2000. This change did not have a material
impact on the comparability of the Company's annual results of
operations.
1999 COMPARED TO 1998
Net Sales
Net sales in 1999 were $429.8 million, a $6.6 million (1.5%)
increase over 1998 net sales of $423.2 million. A summary of the
Company's net sales for the years ended January 1, 2000 and
January 2, 1999 follows:
Net Sales
(in millions)
Domestic
Wholesale Retail International Total
1999 $212.3 $ 210.4 $ 7.1 $ 429.8
1998 226.1 191.4 5.7 423.2
Increase (decrease) (13.8) 19.0 1.4 6.6
Percent increase (decrease) (6.1%) 9.9% 24.6% 1.5%
The Company's 1999 domestic wholesale unit shipments were down
approximately 0.3% compared to 1998. The decrease in unit
shipments resulted from a combination of less closeout
merchandise sold during the year and lower demand for the
Company's classics product offering. The decrease in wholesale
sales dollars resulted from a combination of lower average
selling prices, increased promotional programs, and product mix
(a higher mix of lighter weight, lower unit cost garments). The
Company currently anticipates wholesale unit shipments for the
first half of 2000 to be down approximately 3-5% as compared to
the first half of 1999.
The Company's 1999 increased retail sales resulted from a
combination of a 4.5% comparable store sales gain and sales
volume from newly opened stores. During 1999, the Company opened
11 factory outlet stores, closed 4 factory outlet stores, and
closed 1 showcase store. The Company also began testing a new
store concept by opening 2 strip mall stores in 1999. At January
1, 2000, the Company operated 130 domestic OshKosh B'Gosh retail
stores, including 124 factory outlet stores, 4 showcase stores
and 2 strip mall stores.
Current Company plans for 2000 call for the addition of
approximately 14 new OshKosh B'Gosh retail stores including 6
strip mall stores, and the closing of 8 to 11 factory outlet
stores. For 2000, the Company currently anticipates low single
digit comparable store sales gains.
Gross Profit
The Company's gross profit margin as a percentage of net sales
increased to 41.9% in 1999 compared with 39.1% in 1998. This
gross profit margin improvement was due primarily to continued
implementation and execution of the Company's global sourcing
strategy, operating efficiencies at the Company's domestic sewing
facilities, the Company's ongoing focus on product design and
development activities, and the favorable impact of liquidation
of certain LIFO inventory layers. During 1999, approximately 64%
of units sourced were from off-shore venues as compared to 58% in
1998. The Company's current 2000 sourcing plan indicates that
approximately 79% of units will be sourced outside of the United
States.
Substantially all of the Company's inventories are stated at the
lower of cost or market using the last-in, first-out (LIFO)
basis. As a result of a substantial reduction of the Company's
inventory levels at January 1, 2000, the 1999 gross profit margin
was favorably impacted by an approximate $2.2 million benefit
related to the liquidation of certain LIFO layers. This compares
with an approximate $.6 million benefit in 1998. The Company
does not currently anticipate further significant liquidation of
LIFO layers in the foreseeable future.
Selling, General and Administrative Expenses (S,G&A)
The Company's S,G&A expenses for 1999 of $134.0 million were $9.2
million over 1998 S,G&A expenses of $124.8 million. As a percent
of net sales, S,G&A expenses were 31.2% in 1999 as compared to
29.5% in 1998. The primary reasons for these increased expenses
relate to a combination of continued expansion of the Company's
retail operations, costs associated with the Company's transition
to an updated product distribution system and related processes,
and expansion of the Company's brand enhancing activities.
Royalty Income
The Company licenses the use of its trade name to selected
licensees in the U.S. and in foreign countries. The Company's
net royalty income was $7.4 million in 1999, a $.8 million
decrease compared to 1998 net royalty income of $8.2 million.
Royalty income from domestic licensees was approximately $2.3
million in 1999 as compared to $2.8 million in 1998 and reflects
the Company's decision not to renew its domestic outerwear
license (which expired in May, 1998). Royalty income from
foreign licensees was approximately $5.1 million in 1999 as
compared to $5.4 million in 1998. The Company's 1999 foreign
licensee royalty income was negatively impacted by adverse
economic conditions in Latin America and the Company's decision
not to renew the Japanese license agreement (which ended in
March, 1998).
The Company currently anticipates modest growth in its net
royalty income from licensees in 2000.
Operating Income
As a result of the factors described above, the Company's 1999
operating income improved to $53.7 million. This represents a
9.7% increase over 1998 operating income of $48.9 million.
Other Income (Expense) -Net
The Company's 1999 net other income (expense) was a $.5 million
expense compared to $.4 million income in 1998. Interest expense
increased by approximately $1.1 million in 1999 as a result of
borrowings to help finance the Company's Dutch Auction tender
offer in November, 1999 and other stock repurchase transactions.
Income Taxes
The Company's 1999 effective income tax rate was approximately
39.0% as compared to approximately 40.5% in 1998. The Company
currently anticipates an effective income tax rate of
approximately 39.0% for 2000. The rate reduction in 1999
compared to 1998 is due primarily to the implementation of
certain income taxation strategies.
Net Income
Net income for the year ended January 1, 2000 of $32.4 million
represented a $3.1 million (10.6%) increase over net income for
the year ended January 2, 1999 of $29.3 million. The Company's
ongoing stock repurchase programs and Dutch Auction tender offer
resulted in a significant reduction in its weighted-average
diluted shares outstanding during 1999. This decrease, combined
with the 10.6% increase in net income, resulted in a 30.9%
increase in diluted earnings per share for 1999 of $1.99 as
compared to $1.52 in 1998.
1998 COMPARED TO 1997
Net Sales
Net sales in 1998 were $423.2 million, a $28.0 million (7.1%)
increase over 1997 net sales of $395.2 million. A summary of the
Company's net sales for the years ended January 2, 1999 and
December 31, 1997 follows:
Net Sales
(in millions)
Domestic
Wholesale Retail International Total
1998 $ 226.1 $ 191.4 $ 5.7 $ 423.2
1997 214.1 173.9 7.2 395.2
Increase (decrease) 12.0 17.5 (1.5) 28.0
Percent increase (decrease) 5.6% 10.1% (20.8%) 7.1%
The Company's 1998 domestic wholesale unit shipments were up
approximately 7.8% over 1997. The increases in unit shipments and
sales dollars were the result of increased demand for the
Company's fashion and classics product offerings.
The Company's 1998 increased retail sales resulted from a
combination of a 4.9% comparable store sales gain and sales
volume from newly opened stores. Comparable store sales for 1998
were favorably impacted by increased sales of Genuine Girl and
Genuine Blues branded products for the entire period. These
bigger sizes were introduced during the first quarter of 1997.
During 1998, the Company opened 10 factory outlet stores, closed
4 factory outlet stores, and closed 3 showcase stores. At
January 2, 1999, the Company operated 122 domestic OshKosh B'Gosh
retail stores, including 117 factory outlet stores and 5 showcase
stores.
Gross Profit
The Company's gross profit margin as a percent of net sales
increased to 39.1% in 1998 compared with 36.5% in 1997. This
gross profit margin improvement was due primarily to continued
implementation and execution of the Company's global sourcing
strategy, improved operating efficiencies at the Company's
domestic sewing facilities, and the Company's continuing focus on
product design and development activities. During 1998,
approximately 58% of units sourced were outside of the United
States as compared to 53% in 1997.
Selling, General and Administrative Expenses (S,G&A)
The Company's S,G&A expenses for 1998 of $124.8 million were $9.4
million over 1997 S,G&A expenses of $115.4 million. As a percent
of net sales, S,G&A expenses were 29.5% in 1998 as compared to
29.2% in 1997. The primary reasons for these increased expenses
relate to a combination of continued expansion of the Company's
retail operations, increased volume of wholesale unit shipments,
and expansion of the Company's brand enhancing activities.
Royalty Income
The Company licenses the use of its trade name to selected
licensees in the U.S. and in foreign countries. The Company's
net royalty income was $8.2 million in 1998, a $.3 million
increase over 1997 net royalty income of $7.9 million. Royalty
income from domestic licensees was approximately $2.8 million in
1998 as compared to $2.6 million in 1997. Royalty income from
foreign licensees was approximately $5.4 million in 1998 as
compared to $5.3 million in 1997. The Company's 1998 foreign
licensee royalty income was negatively impacted by adverse
economic conditions in Asia and the Company's decision not to
renew its Japanese license arrangement (which ended in March,
1998). These adverse conditions were offset by increased royalty
income from the Company's Canadian and European licensees.
Operating Income
As a result of the factors described above, the Company's 1998
operating income improved to $48.9 million. This represents a
32.6% improvement over 1997 operating income of $36.9 million.
Other Income (Expense) -Net
The Company's 1998 net other income decreased to $.4 million as
compared to $1.3 million in 1997. The Company's interest income
in 1998 was approximately $.9 million lower than in 1997 as a
result of significantly lower cash and short-term investments
carried by the Company in 1998.
Income Taxes
The Company's 1998 effective income tax rate was approximately
40.5% as compared to approximately 41% in 1997.
Net Income
Net income for the year ended January 2, 1999 of $29.3 million
represented a $6.7 million (30%) increase over net income for the
year ended December 31, 1997 of $22.6 million. The Company's
ongoing stock repurchase programs resulted in a reduction in its
weighted-average diluted shares outstanding during 1998. This
decrease, combined with the 30% increase in net income, resulted
in a 49% increase in diluted earnings per share for 1998 of $1.52
as compared to $1.02 in 1997.
SEASONALITY OF BUSINESS
The Company's business is increasingly seasonal, with highest
sales and income in the third quarter, which is the Company's
peak wholesale shipping period and a major retail selling season
at its retail stores. The Company's second quarter sales and
income are the lowest both because of relatively low domestic
wholesale unit shipments and relatively modest retail store sales
during this period. The Company anticipates this seasonality
trend to continue to impact 2000 quarterly sales and income.
YEAR 2000 CONSIDERATIONS
The Company did not experience any significant operating problems
as a result of Year 2000. The Company executed its Year 2000
program primarily with existing internal resources and some
outside consultants. The Company spent an aggregate of
approximately $1 million on its remediation efforts. All costs
associated with the Year 2000 compliance were funded with cash
flow generated from operations and were expensed as incurred.
These amounts did not have a material impact on the Company's
business, operations, or financial condition.
FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY
At January 1, 2000, the Company's cash, cash equivalents, and
investments were $9.6 million, compared to $16.8 million at the
end of 1998. This reduction is attributable to the Company's
stock repurchases, offset in part by cash generated from
operations. Net working capital at January 1, 2000 was $27.3
million compared to $76.9 million at January 2, 1999, and $82.8
million at December 31, 1997. Accounts receivable at January 1,
2000 were $16.5 million compared to $24.0 million at January 2,
1999. The decrease in accounts receivable is attributable to
reduced wholesale shipments in the fourth quarter of 1999.
Inventories at January 1, 2000 were $48.5 million, compared to
$65.6 million at the end of 1998 as part of a planned reduction
in inventory levels. Management believes that January 1, 2000
inventory levels are generally appropriate for anticipated 2000
business activities. The reduction in working capital is
attributable to reductions in accounts receivable and
inventories, and reflecting the current portion of long term debt
related to the Company's stock repurchases.
Cash provided by operations amounted to approximately $70.0
million in 1999, compared to $42.2 million in 1998 and $35.9
million in 1997. The increase in cash provided by operating
activities in 1999 over 1998 is primarily attributable to reduced
accounts receivable and inventory levels. The increase in cash
provided by operating activities in 1998 compared to 1997 is
primarily attributable to improved net income in 1998.
Cash used in investing activities totaled $6.2 million in 1999,
compared to $2.2 million in 1998, and $6.5 million in 1997.
Capital expenditures were $7.1 million in 1999, compared with
$11.4 million in 1998, and $6.6 million in 1997, and are
currently budgeted at $10.0 million for 2000. Capital
expenditures in 1999 related primarily to retail store expansions
and remodeling, while capital expenditures in 1998 related
primarily to the Company's upgrade of its distribution systems
and Whitehouse, Tennessee distribution facilities. These capital
expenditures were offset by reductions in the levels of
investments. Depreciation and amortization are currently budgeted
at $8.0 million for 2000.
Cash used in financing activities totaled $69.0 million in 1999,
compared to $39.5 million in 1998, and $46.9 million in 1997.
The Company's primary financing activities consisted of stock
repurchase transactions, dividends, and borrowings under the
Company's new credit agreement.
In November, 1999, the Company acquired 3,498,300 shares of its
Class A common stock and 6,805 shares of its Class B common stock
in conjunction with its Dutch Auction tender offer. Under the
term of the Dutch Auction tender offer, all shares purchased were
at $21 per share, which totals approximately $72.9 million.
On December 6, 1999 the Company's Board of Directors authorized a
repurchase program for up to 1.5 million shares of its Class A
common stock. During 1999, the Company repurchased 253,900
shares of its Class A common stock under this program for
approximately $4.8 million. For all of 1999, the Company
repurchased 5,446,642 shares of its Class A common stock and
6,805 shares of its Class B common stock under its current and
prior repurchase programs and Dutch Auction tender offer for
approximately $110.4 million.
During 1998, the Company repurchased 1,888,500 shares of its
Class A common stock under its current and prior repurchase
programs for approximately $37.6 million and during 1997, the
Company repurchased approximately 3,796,000 shares of its Class A
common stock and approximately 84,000 shares of its Class B
common stock for approximately $44 million.
On August 10, 1998, the Company's Board of Directors declared a
two-for-one stock split for Class A and Class B common stock,
effected in the form of a stock dividend.
Dividends on the Company's Class A and Class B common stock
totaled $.20 per share and $.17 per share, respectively, in 1999
and $.17 per share and $.145 per share, respectively, in 1998.
In November, 1999, the Company entered into a new unsecured
credit agreement with a number of banks that provides for a five
year $125 million term loan for the repurchase of shares of its
common stock through May, 2000 and a three year $75 million
revolving credit facility available for general corporate
purposes, including cash borrowings and issuances of letters of
credit. The revolving credit facility expires November 3, 2002.
There were no outstanding borrowings against the revolving credit
arrangement at January 1, 2000, with $44 million outstanding on
the term loan. The Company believes that the new credit
facilities, along with cash generated from operations, will be
sufficient to finance the Company's seasonal working capital
needs as well as its capital expenditures, required payments on
long term debt, and business development needs.
FORWARD-LOOKING STATEMENTS
This report contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, including statements regarding future unit shipments,
planned store expansions and store closings, future comparable
store net sales, future inventory levels and valuation
implications, future growth in royalty income, future effective
income tax rate, planned capital expenditures and depreciation
and amortization expenses, and future cash needs. In addition,
from time to time, the Company may issue press releases and other
written communications, and representatives of the Company may
make oral statements which contain forward-looking information.
Except for historical information, matters discussed in such oral
and written communications, including this report, are forward-
looking statements. Such forward-looking statements are based on
current assumptions and expectations that involve risks and
uncertainties. Actual results may differ materially.
The Company's future results of operations and financial position
can be influenced by such factors as the level of consumer
spending for apparel, particularly in the children's wear
segment, overall consumer acceptance of the Company's product
styling, the financial strength of the retail industry,
including, but not limited to, business conditions and the
general economy, natural disasters, competitive factors, risk of
non-payment of accounts receivable, the unanticipated loss of a
major customer, failure of Company suppliers to timely deliver
needed raw materials, as well as risk associated with foreign
operations. In addition, the inability to ship Company products
within agreed timeframes due to unanticipated manufacturing
delays or the failure of Company contractors to deliver products
within scheduled timeframes are risk factors in ongoing business.
As a part of the Company's product sourcing strategy, it
routinely contracts for apparel products produced by contractors
in Asia. If financial, political or other related difficulties
were to adversely impact the Company's contractors in the Asian
region, it could disrupt the supply of products contracted for by
the Company.
The forward-looking statements included herein are only made as
of the date of this report. The Company undertakes no obligation
to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Interest Rate Risk
The credit agreement entered into by the Company in November,
1999 provides for $125 million to finance repurchases of the
Company's common stock and a $75 million revolving credit
facility available for general corporate purposes. Borrowings
under this agreement bear interest at a variable rate, based on
the London Interbank Offered Rates. Accordingly, the Company is
affected by interest rate changes on its long-term debt.
Management monitors this risk by carefully analyzing the short-
term rates on its long-term debt portfolio and comparable long-
term interest rates. The Company does not presently hedge its
interest rate risk. With respect to this debt, a 1% change in
interest rates would not have a material impact on the Company's
interest expense for fiscal 2000.
Foreign Currency Risk
The Company contracts for the manufacture of apparel with
contractors in Asia, Central America, and Mexico. While these
contracts are stated in terms of U.S. dollars, there can be no
assurance that the cost for the production of the Company's
products will not be affected by exchange fluctuations between
the United States and the local currencies of these contractors.
Due to the number of currencies involved, the Company cannot
quantify the potential impact of future currency fluctuations on
net income in future years. The Company does not hedge its
exchange rate risk.
Inflation Risk
The Company manages its inflation risks by ongoing review of
product selling prices and production costs. Management does not
believe that inflation risks are material to the Company's
business, its consolidated financial position, results of
operations, or cash flows.
Investment Risk
The Company does not believe it has material exposure to market
risk with respect to any of its investments; the Company does not
utilize market rate sensitive instruments for trading or other
purposes. For information regarding the Company's investments,
refer to the "Cash equivalents" and "Investments" notes to the
consolidated financial statements on page 19 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Financial Statements:
Report of Independent Auditors 24
Consolidated Balance Sheets - January 1, 2000 and
January 2, 1999 25
Consolidated Statements of Income - years ended
January 1, 2000, January 2, 1999 and December 31, 199 26
Consolidated Statements of Changes in Shareholders' Equity -
years ended January 1, 2000, January 2, 1999 and
December 31, 1997 27
Consolidated Statements of Cash Flows - years ended
January 1, 2000, January 2, 1999 and December 31, 1997 28
Notes to Consolidated Financial Statements 29
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
OshKosh B'Gosh, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets
of OshKosh B'Gosh, Inc. and subsidiaries (the Company) as of
January 1, 2000 and January 2, 1999 and the related consolidated
statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended January 1,
2000. Our audits also included the financial statement schedule
listed in the Index at Item 14(a). These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing
standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of the Company at January 1, 2000 and January
2, 1999, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended
January 1, 2000, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion,
the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.
Milwaukee, Wisconsin
January 28, 2000
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
January 1, January 2,
2000 1999
ASSETS
Current assets
Cash and cash equivalents $ 9,093 $ 14,308
Investments 511 2,500
Accounts receivable, less allowances of $3,790
in 1999 and $4,240 in 1998 16,514 24,008
Inventories 48,495 65,584
Prepaid expenses and other current assets 774 862
Deferred income taxes 14,200 16,700
Total current assets 89,587 123,962
Property, plant and equipment, net 31,648 32,380
Deferred income taxes 5,400 4,900
Other assets 3,064 1,326
Total assets $ 129,699 $ 162,568
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 15,000 $ --
Accounts payable 10,269 7,638
Accrued liabilities 36,976 39,448
Total current liabilities 62,245 47,086
Long-term debt 29,000 --
Employee benefit plan liabilities 15,015 12,465
Commitments -- --
Shareholders' equity
Preferred stock, par value $.01 per share:
Authorized-1,000,000 shares;
Issued and outstanding-None -- --
Common stock, par value $.01 per share:
Class A, authorized-30,000,000 shares;
Issued and outstanding- 10,361,189 shares
in 1999, 15,668,859 shares in 1998 104 157
Class B, authorized-3,750,000 shares;
Issued and outstanding-2,240,605 shares
in 1999, 2,260,522 shares in 1998 23 23
Retained earnings 23,312 102,837
Total shareholders' equity 23,439 103,017
Total liabilities and shareholders' equity $ 129,699 $ 162,568
See notes to consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
For the Year Ended
January 1, January 2, December 31,
2000 1999 1997
Net sales $ 429,786 $ 423,232 $ 395,196
Cost of products sold 249,592 257,700 250,815
Gross profit 180,194 165,532 144,381
Selling, general and administrative
expenses 133,977 124,798 115,439
Royalty income, net (7,435) (8,186) (7,945)
Operating income 53,652 48,920 36,887
Other income (expense):
Interest expense (1,469) (399) (305)
Interest income 1,092 871 1,797
Miscellaneous (88) (67) (192)
Other income (expense) - net (465) 405 1,300
Income before income taxes 53,187 49,325 38,187
Income taxes 20,739 19,990 15,629
Net income $ 32,448 $ 29,335 $ 22,558
Net income per common share
Basic $ 2.01 $ 1.54 $ 1.02
Diluted 1.99 1.52 1.02
See notes to consolidated financial statements.
<TABLE>
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders' Equity
(Dollars and shares in thousands, except per share amounts)
Common Stock Additional Other
Class A Class B Paid-In Retained Comprehensive
Shares Amount Shares Amount Capital Earnings Income
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - December 31, 1996 21,050 $211 2,522 $25 $ -- $137,231 $610
Net income -- -- -- -- -- 22,558 --
Dividends
- Class A ($.14 per share) -- -- -- -- -- (2,698) --
- Class B ($.12 per share) -- -- -- -- -- (293) --
Foreign currency translation
Adjustments -- -- -- -- -- -- (610)
Conversions of common shares 74 -- (74) -- -- -- --
Stock options exercised 18 -- -- -- 126 -- --
Repurchase and retirement of
common shares, net (3,796) (38) (84) (1) (126) (43,838) --
Balance - December 31, 1997 17,346 173 2,364 24 -- 112,960 --
Net income -- -- -- -- -- 29,335 --
Dividends
- Class A ($.17 per share) -- -- -- -- -- (2,850) --
- Class B ($.145 per share) -- -- -- -- -- (337) --
Conversions of common shares 104 1 (104) (1) -- -- --
Stock options exercised 110 1 -- -- 779 -- --
Income tax benefit from stock
options exercised (2) -- -- -- 550 -- --
Repurchase and retirement of
common shares, net (1,889) (18) -- -- (1,329) (36,271) --
Balance - January 2, 1999 15,669 157 2,260 23 -- 102,837 --
Net Income -- -- -- -- -- 32,448 --
Dividends
- Class A ($.20 per share) -- -- -- -- -- (2,730) --
- Class B ($.17 per share) -- -- -- -- -- (383) --
Conversions of common shares 13 -- (13) -- -- -- --
Stock options exercised 126 1 -- -- 812 --
Income tax benefit from stock
options exercised -- -- -- -- 650 -- --
Repurchase and retirement of
common shares,net (5,447) (54) (6) -- (1,462) (108,860) --
Balance - January 1, 2000 10,361 $104 2,241 $23 $ -- $ 23,312 $--
See notes to consolidated financial statements.
</TABLE>
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
For the Year Ended
January 1, January 2, December 31,
2000 1999 1997
Cash flows from operating activities
Net income $ 32,448 $ 29,335 $ 22,558
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 7,093 8,776 12,301
Amortization 965 630 707
Loss on disposal of assets 96 160 275
Deferred income taxes 2,000 (300) 600
Benefit plan expense, net of contributions 2,550 (880) (318)
Changes in operating assets and liabilities:
Accounts receivable 7,494 (730) (2,774)
Inventories 17,089 2,642 (1,427)
Prepaid expenses and other current assets 88 403 625
Accounts payable 2,631 (2,635) 4,865
Accrued liabilities (2,472) 4,840 (1,482)
Net cash provided by operating activities 69,982 42,241 35,930
Cash flows from investing activities
Additions to property, plant and equipment (7,148) (11,420) (6,602)
Proceeds from disposal of assets 691 3,054 2,853
Sale of investments, net 1,989 6,200 1,340
Changes in other assets (1,703) (71) (4,075)
Net cash used in investing activities (6,171) (2,237) (6,484)
Cash flows from financing activities
Principal from long-term borrowings 44,000 -- --
Dividends paid (3,113) (3,187) (2,991)
Net proceeds from issuance of common shares 1,463 1,330 126
Repurchase of common shares (110,376) (37,618) (44,003)
Other (1,000) -- --
Net cash used in financing activities (69,026) (39,475) (46,868)
Net increase (decrease) in cash and
cash equivalents (5,215) 529 (17,422)
Cash and cash equivalents at beginning
of year 14,308 13,779 31,201
Cash and cash equivalents at end of year $ 9,093 $ 14,308 $ 13,779
Supplementary disclosures
Cash paid for interest $ 512 $ 224 $ 178
Cash paid for income taxes $ 19,182 $ 20,112 $ 13,565
See notes to consolidated financial statements.
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share amounts)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Business
OshKosh B'Gosh, Inc. and its wholly-owned subsidiaries
(the Company) are engaged primarily in the design,
sourcing, and marketing of apparel to wholesale customers
and through Company owned retail stores.
Principles of consolidation
The consolidated financial statements include the accounts
of all wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated
in consolidation.
Cash equivalents
Cash equivalents consist of highly liquid debt instruments
such as money market accounts and commercial paper with
original maturities of three months or less. The
Company's policy is to invest cash in conservative
instruments as part of its cash management program and to
evaluate the credit exposure of any investment. Cash
equivalents are stated at cost, which approximates market
value.
Investments
Investments are classified as available-for-sale
securities and are highly liquid debt instruments. These
investments are stated at cost, which approximates market
value.
Inventories
Inventories are stated at the lower of cost or market.
Inventories stated on the last-in, first-out (LIFO) basis
represent 99.5% of total 1999 and 99.1% of total 1998
inventories. Remaining inventories are valued using the
first-in, first-out (FIFO) method.
Property, plant and equipment
Property, plant and equipment are carried at cost or at
management's estimate of fair market value if considered
impaired under the provisions of Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of." Depreciation and amortization for
financial reporting purposes are calculated using the
straight-line method based on the following useful lives:
Years
Land improvements 10 to 15
Buildings 10 to 40
Leasehold improvements 5 to 10
Machinery and equipment 3 to 10
Revenue recognition
Revenue within wholesale operations is recognized at the
time merchandise is shipped to customers. Retail store
revenues are recognized at the time of sale.
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the amounts reported in the financial statements and
accompanying notes. Actual results could differ from
those estimates.
Advertising
Advertising costs are expensed as incurred and totaled
$13,803, $12,377, and $11,165, in 1999, 1998, and 1997,
respectively.
Earnings per share
The numerator for the calculation of basic and diluted
earnings per share is net income. The denominator is
computed as follows (in thousands):
1999 1998 1997
Denominator for basic earnings per share-
weighted average shares 16,112 19,072 22,033
Employee stock options (treasury stock method) 208 289 151
Denominator for diluted earnings per share 16,320 19,361 22,184
In 1999, the Company had 361,000 employee stock options
that are antidilutive and, accordingly, are not included
in the diluted earnings per share calculations. No
options were antidilutive in 1998 or 1997.
Fiscal year
The Company adopted a change in its fiscal year during
1998 from a calendar year to a 52/53 week year ending on
the Saturday closest to December 31. Fiscal 1999 included
52 weeks and ended on January 1, 2000. Fiscal 1998
included 52 weeks plus three days and ended on January 2,
1999. Fiscal 1997 was a calendar year ended on December
31. All references to years in this report refer to the
fiscal years described above.
Comprehensive income
Comprehensive income equaled net income in 1999 and 1998,
and amounted to $21,948 in 1997. The difference between
net income and comprehensive income in 1997 represents
foreign currency translation adjustments.
NOTE 2. INVENTORIES
A summary of inventories follows:
January 1, January 2,
2000 1999
Finished goods $ 37,262 $ 55,005
Work in process 9,352 9,333
Raw materials 1,881 1,246
Total $ 48,495 $ 65,584
The replacement cost of inventory exceeds the above LIFO
costs by $11,381 and $13,899 at January 1, 2000
and January 2, 1999, respectively.
Partial liquidation of certain LIFO layers in 1999,
1998, and 1997 increased net income by
approximately $1,338, $391, and $577, respectively.
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
January 1, January 2,
2000 1999
Land and improvements $ 3,191 $ 3,246
Buildings 13,972 13,822
Leasehold improvements 15,613 14,659
Machinery and equipment 34,342 33,861
Total 67,118 65,588
Less: accumulated depreciation and amortization 35,470 33,208
Property, plant and equipment, net $ 31,648 $ 32,380
NOTE 4. CREDIT AGREEMENTS
In November, 1999, the Company entered into a new
unsecured credit agreement with a number of banks that
provides for a five year $125,000 term loan for the
repurchase of shares of its common stock through May,
2000, and a three year $75,000 revolving credit facility
available for general corporate purposes, including cash
borrowings and issuances of letters of credit. The
revolving credit facility expires November 3, 2002.
Under the terms of the agreement, interest rates are
determined at the time of borrowing and are based on
London Interbank Offered Rates plus additional basis
points based on the Company's financial ratios
(effectively 8.0% at January 1, 2000). Commitment fees of
.275% are required on the unused revolving credit facility
and term loan. The Company is required to maintain
certain financial ratios in connection with this
agreement.
There were no outstanding borrowings against the revolving
credit arrangement at January 1, 2000, with $44,000
outstanding on the term loan which is payable in annual
installments of $15,000. Letters of credit of
approximately $22,509 were outstanding at January 1, 2000,
with $52,491 of the unused revolving credit facility
available for borrowing.
Annual maturities of principal on long-term debt are as
follows:
Fiscal Year
2000 $ 15,000
2001 15,000
2002 14,000
Total $ 44,000
NOTE 5. ACCRUED LIABILITIES
A summary of accrued liabilities follows:
January 1, January 2,
2000 1999
Compensation $ 5,780 $ 5,051
Workers' compensation 9,550 10,250
Income taxes 5,468 6,627
Restructuring costs 2,976 4,032
Other 13,202 13,488
Total $ 36,976 $ 39,448
In 1996, the Company recorded special charges related to
the discontinuance of the Company's Genuine Kids retail
store chain, wind down of the Company's European
subsidiary and closing certain manufacturing facilities.
The restructuring reserve at January 1, 2000 is considered
adequate for remaining plans and related contingencies.
NOTE 6. LEASES
The Company leases certain property and equipment
including retail sales facilities and regional sales
offices under operating leases. Certain leases provide the
Company with renewal options. Leases for retail sales
facilities provide for minimum rentals plus contingent
rentals based on sales volume.
Minimum future rental payments under noncancellable
operating leases are as follows:
Fiscal Year
2000 $ 12,706
2001 10,698
2002 9,003
2003 7,402
2004 4,643
Thereafter 3,857
Total minimum lease payments $ 48,309
Total rent expense charged to operations for all operating
leases is as follows:
1999 1998 1997
Minimum rentals $ 15,754 $ 16,352 $ 15,005
Contingent rentals 1,191 961 800
Total rent expense $ 16,945 $ 17,313 $ 15,805
NOTE 7. INCOME TAXES
Income tax expense (benefit) is comprised of the
following:
1999 1998 1997
Current:
Federal $ 15,322 $ 16,666 $ 12,396
State and local 3,417 3,624 2,633
Deferred 2,000 (300) 600
Total $ 20,739 $ 19,990 $ 15,629
Deferred tax assets and liabilities relate to temporary
differences between the financial reporting and income tax
basis of Company assets and liabilities, and include the
following components:
January 1, January 2,
2000 1999
[Assets (Liabilities)]
Current deferred taxes
Accounts receivable allowances $ 1,274 $ 1,225
Inventory valuation 3,841 4,964
Accrued liabilities 6,169 6,584
Restructuring costs 1,153 2,052
Valuation reserves and other 1,763 1,875
Total net current deferred tax assets $ 14,200 $ 16,700
Non-current deferred taxes
Depreciation $ (195) $ 61
Deferred employee benefits 5,758 4,940
Trademark 478 501
Other (641) (602)
Total net non-current deferred tax assets $ 5,400 $ 4,900
Substantially all income is subject to United States
taxation. A reconciliation of the federal statutory
income tax rate to the effective tax rates reflected in
the consolidated statements of income follows:
1999 1998 1997
Federal statutory tax rate 35.0% 35.0% 35.0%
Differences resulting from:
State and local income taxes, net of
federal income tax benefit 4.5 4.6 4.7
Other (.5) .9 1.2
Total 39.0% 40.5% 40.9%
NOTE 8. RETIREMENT PLANS
The Company has defined contribution and defined benefit
pension plans covering substantially all employees.
Charges to operations by the Company for these plans
totaled $3,454, $3,017, and $2,950 for 1999, 1998, and
1997, respectively.
Defined benefit plans
The Company sponsors several defined benefit pension
plans covering certain hourly and salaried employees.
The Company also sponsors an unfunded defined benefit
postretirement life and health insurance plan that covers
qualifying salaried employees.
The actuarial computations utilized the following
assumptions as applicable for the most significant plans:
1999 1998 1997
Discount rate 7.5% 6.5% 7.0%
Expected long-term rate of return on assets 9.0% 9.0% 9.0%
Rates of increase in compensation levels 0-4.5% 0-4.5% 0-4.5%
Net periodic pension cost was comprised of:
1999 1998 1997
Service cost $ 2,276 $ 2,052 $ 1,685
Interest cost 2,248 2,006 2,004
Expected return on plan assets (2,841) (2,531) (2,123)
Amortization of prior service cost 468 347 457
Amortization of transition obligation (156) (156) (156)
Recognized actuarial gain (313) (401) (165)
Net periodic pension cost $ 1,682 $ 1,317 $ 1,702
A reconciliation of changes in pension benefit obligation
and plan assets follows:
1999 1998
Change in benefit obligation
Benefit obligation at beginning of year $ 34,501 $ 31,252
Service cost 2,276 2,052
Interest cost 2,248 2,006
Amendments 270 30
Actuarial (gain) loss (5,850) 764
Benefits paid (1,171) (1,603)
Benefit obligation at end of year 32,274 34,501
Change in plan assets
Fair value of plan assets at beginning of year 28,865 27,864
Actual return on plan assets 4,592 2,188
Company contributions 2,534 416
Benefits paid (1,171) (1,603)
Fair value of plan assets at end of year 34,820 28,865
Funded status
Funded status of plan (underfunded) 2,546 (5,636)
Unrecognized net actuarial loss (12,944) (4,599)
Unrecognized prior service cost 2,316 2,514
Unrecognized transition obligation (615) (771)
Prepaid (accrued) benefit cost $ (8,697) $ (8,492)
Amounts recognized in the Consolidated Balance Sheets:
1999 1998
Accrued benefit liability $ (9,217) $ (8,940)
Prepaid benefit cost 520 448
$ (8,697) $ (8,492)
Amounts applicable to the Company's pension plans with
projected benefit obligations (PBO) or accumulated
benefit obligation (ABO) in excess of plan assets are as
follows:
PBO and PBO > ABO >
ABO > Assets Assets Assets
January 1, January 2, January 2,
2000 1999 1999
Projected benefit obligations $ 5,293 $ 33,244 $ 6,744
Accumulated benefit obligations 4,524 24,600 5,768
Fair value of plan assets 2,523 27,582 4,134
Defined contribution plans
The Company maintains a defined contribution retirement
plan covering certain salaried employees. Annual
contributions are discretionary and are determined by the
Company's Executive Committee. Charges to operations by
the Company for contributions under this plan totaled
$1,125, $1,179, and $828, for 1999, 1998, and 1997,
respectively.
The Company maintains a retirement plan covering certain
salaried and hourly employees pursuant to Section 401(k)
of the Internal Revenue Code, whereby participants may
contribute a percentage of compensation, but not in
excess of the maximum allowed under the Code. The plan
provides for a matching contribution by the Company which
amounted to approximately $427, $413, and $376, for 1999,
1998, and 1997, respectively.
The Company also has a supplemental retirement program
for designated employees. Annual provisions to this
unfunded plan are discretionary and are determined by the
Company's Executive Committee. Charges to operations by
the Company for additions to this plan totaled $220,
$108, and $44 for 1999, 1998, and 1997, respectively.
Deferred employee benefit plans
The Company has deferred compensation and supplemental
retirement arrangements with certain key officers.
NOTE 9. COMMON STOCK
The Company maintains a stock conversion plan whereby
shares of Class B common stock may be converted to an
equal number of Class A common shares.
The Company's common stock authorization provides that
dividends be paid on both the Class A and Class B common
stock at any time that dividends are paid on either.
Whenever dividends (other than dividends of Company
stock) are paid on the common stock, each share of Class
A common stock is entitled to receive 115% of the
dividend paid on each share of Class B common stock.
The Class A common stock shareholders are entitled to
receive a liquidation preference of $1.875 per share
before any payment or distribution to holders of the
Class B common stock. Thereafter, holders of the Class B
common stock are entitled to receive $1.875 per share
before any further payment or distribution to holders of
the Class A common stock. Thereafter, holders of the
Class A common stock and Class B common stock share on a
pro rata basis in all payments or distributions upon
liquidation, dissolution, or winding up of the Company.
The Class A common stock shareholders have the right to
elect or remove, as a class, 25% of the entire board of
directors of the Company. Class B common stock
shareholders are entitled to elect or remove, as a class,
the other 75% of the directors (subject to any rights
granted to any series of preferred stock) and are
entitled to one vote per share on all matters (including
an increase or decrease in the unissued authorized
capital stock of any class) presented to the shareholders
for vote.
In November, 1999, the Company acquired 3,498,300 shares
of its Class A common stock and 6,805 shares of its Class
B common stock in conjunction with its Dutch Auction
tender offer. Under the term of the Dutch Auction tender
offer, all shares purchased were at $21 per share, which
totals approximately $72,900.
On December 6, 1999, the Company's Board of Directors
authorized a repurchase program for up to 1.5 million
shares of its Class A common stock. During 1999, the
Company repurchased 253,900 shares of its Class A common
stock under this program for approximately $4,800. For
all of 1999, the Company repurchased 5,446,642 shares of
its Class A common stock and 6,805 shares of its Class B
common stock under its current and prior repurchase
programs and Dutch Auction tender offer for approximately
$110,400.
During 1998, the Company repurchased 1,888,500 shares of
its Class A common stock under its current and prior
repurchase programs for approximately $37,600 and during
1997, the Company repurchased approximately 3,796,000
shares of its Class A common stock and approximately
84,000 shares of its Class B common stock for
approximately $44,000.
On August 10, 1998, the Company's Board of Directors
declared a two-for-one stock split for Class A and Class
B common stock, effected in the form of a stock dividend.
Shareholders' equity and all share and per share data
have been restated to reflect this dividend.
Options
The Company has elected to follow Accounting Principles
Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees," in accounting for its employee stock
options. Under APB No. 25, because the exercise price of
the Company's employee stock options equals the market
price of the underlying stock on the date of grant and
the number of shares granted is fixed, no compensation
expense is recognized.
The Company's 1994 Incentive Stock Option Plan has
authorized the grant of options to management personnel
and directors for up to 2,940,000 of the Company's Class
A common stock. As of January 1, 2000, 1,263,100 shares
are available for grant. Options granted generally have
10 year terms and vest ratably over a four year period
following date of grant.
The following pro forma information regarding net income
and net income per share required by SFAS No. 123,
"Accounting for Stock Based Compensation," has been
determined as if the Company had accounted for its
employee stock options under the fair value method of
that statement. The fair value for these options was
estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average
assumptions for 1999, 1998, and 1997, respectively: risk-
free interest rates of 5.10%, 5.57%, and 6.42%;
dividends of $.20 in 1999 and 1998, and $.14 in 1997;
volatility factors of the expected market price of the
Company's common stock of .575, .472, and .406; and a
weighted-average expected life of the option of
approximately 8 years. Changes in these subjective
assumptions can significantly affect the fair value
calculations.
The estimated fair value of the options is amortized to
expense over the options' vesting period:
1999 1998 1997
Net income as reported $ 32,448 $ 29,335 $ 22,558
Pro forma net income 31,947 28,560 22,230
Net income per common share as reported
Basic 2.01 1.54 1.02
Diluted 1.99 1.52 1.02
Pro forma net income per common share
Basic 1.98 1.50 1.01
Diluted 1.97 1.48 1.00
A summary of the Company's stock option activity and related
information follows:
<TABLE>
1999 1998 1997
Weighted- Weighted- Weighted-
Options average Options average Options average
(000) exercise price (000) exercise price (000) exercise price
<S> <C> <C> <C> <C> <C> <C>
Outstanding-
beginning of year 1,082 $ 11 864 $ 8 604 $ 7
Granted 342 19 347 19 340 8
Exercised (207) 8 (110) 8 (18) 8
Forfeited (24) 14 (19) 13 (62) 8
Outstanding-
end of year 1,193 $ 14 1,082 $ 11 864 $ 8
Exerciseable
at end of year 448 $ 11 370 $ 8 206 $ 8
Weighted-average
fair value of options
granted during year $7.70 $ 7.25 $ 2.47
</TABLE>
<TABLE>
Options outstanding Options exerciseable
Weighted-
average Weighted- Weighted-
Range of Number remaining average Number Average
exercise prices outstanding contract life exercise price outstanding exercise
<S> <C> <C> <C> <C> <C>
$ 7 to $ 9 530 6.4 $ 8 330 $ 8
$ 18 to $ 21 663 8.7 $ 19 118 $ 19
1,193 448
</TABLE>
NOTE 10. BUSINESS AND CREDIT CONCENTRATIONS
The Company operates principally in one segment: the
design, sourcing, and marketing of apparel. Operations
of the Company occur primarily within the United States
and its customers are not concentrated in any geographic
region.
The Company provides credit, in the normal course of
business, to department and specialty stores. The
Company performs ongoing credit evaluations of its
customers and maintains allowances for potential credit
losses.
In 1999, 1998, and 1997, sales to a wholesale customer,
as a percentage of net sales, amounted to approximately
12%, 12%, and 11%, respectively.
NOTE 11. LITIGATION
The Company is subject to various legal actions and
proceedings in the normal course of business. Although
litigation is subject to many uncertainties and the
ultimate exposure with respect to these matters cannot be
ascertained, management does not believe the final
outcome will have a significant effect on the
consolidated financial statements.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information required by this item is incorporated
by reference to the definitive Proxy Statement of
OshKosh B'Gosh, Inc. for its annual meeting to be held on May 5, 2000.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated
by reference to the definitive Proxy Statement of
OshKosh B'Gosh, Inc. for its annual meeting to be held on
May 5, 2000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this item is incorporated
by reference to the definitive Proxy Statement of
OshKosh B'Gosh, Inc. for its annual meeting to be held on
May 5, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated
by reference to the definitive Proxy Statement of
OshKosh B'Gosh, Inc. for its annual meeting to be held on
May 5, 2000.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON
FORM 8-K
(a) (1) Financial Statements
Financial statements for OshKosh B'Gosh, Inc. listed in
the Index to Financial Statements and Supplementary
Data are filed as part of this Annual Report.
(2) Financial Statement Schedule:
Schedule II - Valuation and Qualifying Accounts
Schedules not included have been omitted because they
are not applicable, immaterial, or the required
information is included in the consolidated financial
statements or notes thereto.
(3) Index to Exhibits
(b) Reports on Form 8-K
None
(c) Exhibits
3.1 Certificate of Incorporation of OshKosh B'Gosh, Inc.,
as restated, May 7, 1993, previously filed as
Exhibit 99.3 to the Company's Current Report on
Form 8-K dated October 25, 1995, Commission File
Number 0-13365, is incorporated herein by reference.
3.2 By-laws of OshKosh B'Gosh, Inc., as amended, previously
filed as exhibit 3.2 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997,
Commission File Number 0-13365, is incorporated herein
by reference.
*10.1 OshKosh B'Gosh, Inc. Profit Sharing Plan, as amended.
*10.2 OshKosh B'Gosh, Inc. Pension Plan, as amended.
*10.3 OshKosh B'Gosh, Inc. Executive Non-Qualified Profit
Sharing Plan, as amended.
*10.4 OshKosh B'Gosh, Inc. Excess Benefit Plan, as amended.
*10.5 OshKosh B'Gosh, Inc. Executive Deferred Compensation
Plan, as amended.
*10.6 OshKosh B'Gosh, Inc. Officers Medical and Dental
Reimbursement Plan, as amended, previously filed as
Exhibit 10.18 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994,
Commission File Number 0-13365, is incorporated herein
by reference.
*10.7 OshKosh B'Gosh, Inc. 1994 Incentive Stock Plan, as amended.
10.8 OshKosh B'Gosh, Inc. 1995 Outside Director's Stock Option
Plan, as amended, previously filed as Exhibit 10.14 to
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, Commission File Number
0-13365, is incorporated herein by reference.
*10.9 OshKosh B'Gosh, Inc. Flexible Nonstandardized 401(k)
Adoption Agreement and Smith Barney Prototype Defined
Contribution Plan Document #05, as amended.
10.10 Credit agreement between OshKosh B'Gosh, Inc. and
Firstar Bank Milwaukee, N.A. and participating banks,
dated as of November 3, 1999.
21. The following is a list of subsidiaries of the Company
as of January 1, 2000. The consolidated financial
statements reflect the operations of all subsidiaries
as they existed on January 1, 2000.
State or Other
Jurisdiction of
Incorporation or
Name of Subsidiary Organization
Grove Industries, Inc. Delaware
Manufacturera International Apparel, S.A. Honduras
OshKosh B'Gosh International Sales, Inc. Virgin Islands
OshKosh B'Gosh Asia/Pacific Ltd. (Inactive) Hong Kong
OshKosh B'Gosh Deutschland GmbH (Inactive) Germany
OshKosh B'Gosh Investments, Inc. Nevada
Oshkosh B'Gosh Retail, Inc. Delaware
Millennia Manufacturing SRL de CV Mexico
23. Consent of Ernst & Young LLP, Independent Auditors
27. Financial Data Schedule
* Represents a plan that covers compensation, benefits
and/or related arrangements for executive management.
SIGNATURES
Date: March 28, 2000
Pursuant to the requirements of Section 13 of 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
OSHKOSH B'GOSH, INC.
By: /s/DOUGLAS W. HYDE
Chairman of the Board, President and Chief Executive Officer
By: /s/DAVID L. OMACHINSKI
Vice President-Finance, Treasurer and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Company and in the capacities and
on the dates indicated.
Signature Title
/S/ DOUGLAS W. HYDE Chairman of the Board,
President and Chief Executive Officer
/S/ MICHAEL D. WACHTEL Executive Vice President,
Chief Operating Officer
/S/ DAVID L. OMACHINSKI Vice President-Finance, Treasurer
and Chief Financial Officer
/S/ STEVEN R. DUBACK Secretary and Director
/S/ WILLIAM F. WYMAN Vice President Domestic Licensing
/S/ ORREN J. BRADLEY Chairman, Audit Committee
Date: March 28, 200
OSHKOSH B'GOSH, INC. AND SUBSIDIARIES
Schedule II
Valuation and Qualifying Accounts
(Dollars in Thousands)
1999 1998 1997
Accounts receivable - allowances:
Balance at beginning of period $ 4,240 $ 4,225 $ 5,474
Charged to costs and expenses 17,437 15,997 11,836
Deductions - bad debts written off,
net of recoveries and other allowances (17,887) (15,982) (13,085)
Balance at end of period $ 3,790 $ 4,240 $ 4,225
1999 1998 1997
Restructuring costs:
Balance at beginning of period $ 4,032 $ 7,938 $ 10,694
Actual restructuring costs incurred (1,056) (3,906) (2,756)
Balance at end of period $ 2,976 $ 4,032 $ 7,938
EXHIBIT 23
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Forms S-8 No. 333-01051 and No. 333-01053) of OshKosh
B'Gosh, Inc. of our report dated January 28, 2000, with respect
to the consolidated financial statements and schedule of OshKosh
B'Gosh, Inc. and Subsidiaries included in this Annual Report
(Form 10-K) for the year ended January 1, 2000.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
March 28, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-END> JAN-01-2000
<CASH> 9093
<SECURITIES> 511
<RECEIVABLES> 20304
<ALLOWANCES> 3790
<INVENTORY> 48495
<CURRENT-ASSETS> 89587
<PP&E> 67118
<DEPRECIATION> 35470
<TOTAL-ASSETS> 129699
<CURRENT-LIABILITIES> 62245
<BONDS> 0
0
0
<COMMON> 127
<OTHER-SE> 23312
<TOTAL-LIABILITY-AND-EQUITY> 129699
<SALES> 429786
<TOTAL-REVENUES> 437221
<CGS> 249592
<TOTAL-COSTS> 133977
<OTHER-EXPENSES> 88
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1469
<INCOME-PRETAX> 53187
<INCOME-TAX> 20739
<INCOME-CONTINUING> 32448
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32448
<EPS-BASIC> 2.01
<EPS-DILUTED> 1.99
</TABLE>
EXHIBIT 10.1
OSHKOSH B'GOSH, INC.
PROFIT SHARING PLAN
Generally Effective: January 1, 1998 (unless otherwise stated)
OSHKOSH B'GOSH, INC.
PROFIT SHARING PLAN
TABLE OF CONTENTS
Chapter Page
INTRODUCTION iv
I DEFINITIONS 1
II ELIGIBILITY AND PARTICIPATION 9
2.01 Eligibility 9
2.02 Re-Employment 9
2.03 Exclusion of Collective Bargaining Employees 9
2.04 Change in Participant Status 9
2.05 Employees Not in Eligible Class 9
III CONTRIBUTIONS AND ALLOCATIONS 10
3.01 Discretionary Employer Contributions 10
3.02 Allocation of Employer Contributions and Forfeitures 10
IV CONTRIBUTION LIMITATIONS 11
4.01 Definitions 11
4.02 Maximum Annual Additions 12
4.03 Reduction of Annual Additions 13
4.04 Limitations if Participant in Other Plan(s) 13
V INVESTMENT OF ACCOUNTS 15
5.01 Funding Policy 15
5.02 Employee Direction of Investments 15
5.03 Expenses 15
VI VESTING OF ACCOUNTS 16
6.01 100% Vesting Situations 16
6.02 Vesting Schedule 16
6.03 Bad-Boy Provision 16
6.04 Forfeitures 17
6.05 Resumption of Participation 18
VII PAYMENT OF BENEFITS 19
7.01 Commencement of Benefits 19
7.02 Form of Payment 20
7.03 Incidental Death Benefits 20
7.04 Transfers 21
7.05 Distribution of Small Amounts 21
7.06 Direct Rollover 21
VIII TOP-HEAVY PROVISIONS 23
8.01 Provisions Will Control 23
8.02 Definitions 23
8.03 Minimum Allocation 25
8.04 Nonforfeitability of Minimum Allocation 26
8.05 Minimum Vesting Schedules 26
8.06 Compensation Limitation 27
IX ADJUSTMENT OF ACCOUNTS 28
9.01 Allocation of Trust Earnings 28
9.02 Allocation of Employer Contributions and Forfeitures 28
X DESIGNATION OF BENEFICIARY 29
10.01 Beneficiary Designation 29
10.02 Priority If No Designated Beneficiary 29
XI AMENDMENT OF THE PLAN 30
11.01 Amendment by Employer 30
11.02 Conformance to Law 31
11.03 Right to Terminate 31
11.04 Merger, Consolidation, or Transfer 31
XII CLAIMS PROCEDURE 32
12.01 Written Claim 32
12.02 Claim Denial 32
12.03 Request for Review of Denial 32
12.04 Decision on Review 32
12.05 Additional Time 32
XIII MISCELLANEOUS PROVISIONS 33
13.01 Reversion of Assets 33
13.02 Equitable Adjustment 33
13.03 Reasonable Compensation 33
13.04 Indemnification 33
13.05 Protection from Loss 33
13.06 Protection from Liability 34
13.07 Adoption of Rules and Procedures 34
13.08 Assignment of Benefits 34
13.09 Mental Competency 34
13.10 Authentication 35
13.11 Not an Employment Contract 35
13.12 Appointment of Auditor 35
13.13 Uniform Treatment 35
13.14 Interpretation 35
13.15 Plural and Gender 35
13.16 Headings 35
13.17 Expenses 35
13.18 Unclaimed Accounts 36
13.19 Special Provisions Respecting Military Service 36
13.20 Participation of Affiliated Employers 36
XIV EMPLOYER STOCK SAVINGS ACCOUNTS AND INVESTMENTS 37
14.01 Stock Savings Accounts 37
14.02 Employer Stock Defined 37
14.03 Distributions from Stock Savings Accounts 37
14.04 Employer Stock Valuation 37
INTRODUCTION
The name of this Plan is the OshKosh B'Gosh, Inc. Profit
Sharing Plan.
The validity, construction, and all rights granted under
this Plan and Trust will be governed, interpreted, and
administered by the laws of the United States under the Employee
Retirement Income Security Act of 1974 (ERISA, as it may be
amended) and the Internal Revenue Code of 1986 (the Internal
Revenue Code, as it may be amended). However, regardless of the
preceding, to the extent that ERISA and/or the Internal Revenue
Code do not preempt local law, the Plan and Trust will be
governed, interpreted, construed, and enforced according to the
laws of the State of Wisconsin.
If the U.S. Department of Labor or the Internal Revenue
Service, or both, determines at any time that this Plan does not
meet these requirements or that it is being administered or
interpreted in a manner inconsistent with these requirements, the
Employer may make the appropriate amendments or adjustments, or
both, which may be retroactive, to correct the situation, or
terminate the Plan.
If any provisions of the Plan and Trust are held to be
invalid or unenforceable, the remaining provisions will continue
to be fully effective.
CHAPTER I
DEFINITIONS
I.1 Unless the context requires otherwise, the capitalized
terms defined below will have the following meanings throughout
the Plan:
(a) Account is any or all of a Participant's
Account(s) as may be established by the Committee from time
to time to administer the Plan, depending upon the context
of the sentence in which it is used. Account(s) shall
include:
(1) Regular Account (the Account to which are
credited Employer Contributions and earnings thereon).
(2) Employee Contributions Account (the Account
to which are credited voluntary Employee Contributions
and earnings thereon).
(b) Affiliated Employer means (i) each corporation
which is included as a member of a controlled group with the
Employer and trades or businesses, whether or not
incorporated, which are under common control by or with the
Employer within the meanings of Sections 414(b) and (c) of
the Internal Revenue Code of 1986, or any amendments thereof
and (ii) any other corporation not described in clause (i)
acquired by the Employer and designated by it as an
Affiliated Employer, except that for purposes of the
limitation on Annual Additions, the term shall also include
trades or businesses on the basis of a more than 50% test
rather than an 80% test. Further, the term shall include
any members of the same affiliated service group within the
meaning of Code Section 414(m) and any other entity required
to be aggregated with the Employer under Code Sections
414(n) or (o).
(c) Anniversary Date is December 31.
(d) Beneficiary is the person or entity designated in
Chapter X to receive any death benefits of a Participant
which become payable under the Plan.
(e) Break in Service shall mean, as to any Participant
who, as of December 31, 1988 or earlier, had incurred a One
Year Break in Service after termination of employment. A
One Year Break in Service means a Plan Year in which the
Employee does not complete an aggregate of more than 500
Hours of Service with the Employer or Affiliated Employers.
As to any Participant who, as of December 31, 1988 or
earlier, has not incurred a Break in Service under the rules
then in existence, and as to terminations of employment on
and after January 1, 1989, a Break in Service shall be any
subsequently ending and consecutive five One Year Breaks in
Service.
Special provisions with respect to military service are
contained in Section 13.19 hereof.
(f) Code means the Internal Revenue Code of 1986, as
amended and as it may be amended.
(g) Committee is the organization appointed by the
Board of Directors of the Employer (which may name itself as
the Committee) for purposes of overseeing the administration
of the Plan, and performing any other duties specified in
this Plan. A Committee member may resign or be removed at
any time by the Board of Directors of the Employer by
written notice. To assist it in its duties, the Committee
may employ agents or legal counsel.
Any such Committee may in its regulations or by action
delegate the authority to any one or more of its members to
take any action on behalf of the Committee and as to such
actions, no meetings or unanimous consent shall be required.
The Committee may also act at a meeting or by its unanimous
written consent. A majority of the members of the Committee
shall constitute a quorum for the transaction of business
and shall have full power to act hereunder. All decisions
shall be made by vote of the majority present at any meeting
at which a quorum is present, except for actions in writing
without a meeting which must be unanimous. The Committee
may appoint a Secretary who may, but need not, be a member
of the Committee. The Committee may adopt such bylaws and
regulations as it deems desirable for the conduct of its
affairs. Any absent Committee member, and any dissenting
Committee member who (at the time of the making of any
decision by the majority) registers his dissent in writing
delivered at that time to the other Committee members, shall
be immune to the fullest extent permitted by law from any
and all liability occasioned by or resulting from the
decision of the majority. All rules and decisions of the
Committee shall be uniformly and consistently applied to all
persons in similar circumstances. The Committee shall be
entitled to rely upon the Participating Employers' records
as to information pertinent to calculations or
determinations made pursuant to the Plan. A member of the
Committee may not vote or decide upon any matter relating
solely to himself or vote in any case in which his
individual right of claim to any benefit under the Plan is
particularly involved. If, in any case in which a Committee
member is so disqualified to act, the remaining members
cannot agree, then, the President of the Employer will
appoint a temporary substitute member to exercise all of the
powers of the disqualified member concerning the matter in
which that member is disqualified to act.
In the event a dispute arises under the Plan and Trust,
the Committee will be the authorized agent for the service
of legal process.
(h) "Compensation" means total wages, salaries, fees
and other amounts received for a particular Plan Year
(without regard to whether or not an amount is paid in cash)
for personal services actually rendered in the course of
employment by the Participant from a Participating Employer
to the extent that the amounts are includable in gross
income (or such Compensation paid or accrued for Plan Years
prior to January 1, 1991), and including any elective
contributions not otherwise includable in income under a
Code Section 125 cafeteria plan or Section 401(k) plan, but
excluding reimbursements or other allowances, fringe
benefits (cash and non-cash, including, without limitation,
any income arising in connection with any stock options,
restricted stock or other equity based incentives relating
to stock of the Employer), moving expenses, deferred
compensation and welfare benefits. In the Plan Year in
which an Employee becomes a Participant, for purposes of
allocating Employer Contributions, Compensation includes
only his Compensation after he becomes a Participant under
Chapter II.
However, for any Plan Year beginning after December 31,
1988, Compensation in excess of $200,000 (as adjusted as
permitted under Code Section 401(a)(17) from time to time)
shall be disregarded.
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 OBRA
`93 annual compensation limit. The OBRA `93 annual
compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in
accordance with Section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination
period) beginning in such calendar year. If a determination
period consists of fewer than 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 12.
For Plan Years beginning on or after January 1, 1994,
any reference in this Plan to the limitation under Section
401(a)(17) of the Code 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 of the OBRA `93 annual
compensation limit in effect for that prior determination
period. For this purpose, for determination periods
beginning before the first day to the first Plan Year
beginning on or after January 1, 1994, the OBRA `93 annual
compensation limit is $150,000.
From and after January 1, 1999, in determining the
Compensation of a Participant who is a highly compensated
employee as defined in Code Section 414(q) for a Plan Year,
all Compensation in excess of $100,000 shall be disregarded.
(i) Contributions to the Plan by the Employer and the
Participant shall include:
(1) "Employer Contributions" shall mean
contributions made to the Plan by a Participating
Employer.
(2) "Employee Contributions" shall mean voluntary
Employee contributions made on an after-tax basis.
(j) Date of Employment means:
(1) the day on which the Employee performs his
first Hour of Service on or after the date on which he
is employed by the Employer or an Affiliated Employer,
or
(2) the date on which the Employee performs his
first Hour of Service on or after the date on which he
is re-employed following a One Year Break in Service.
(k) Effective Date of the Plan is January 1, 1952.
The Effective Date of this amendment and restatement is
January 1, 1998, unless otherwise provided herein.
(l) Employee is any person employed directly by the
Employer or an Affiliated Employer and for whom the Employer
or an Affiliated Employer pays Social Security taxes and who
is a salaried employee, but excluding account executives,
national account executives, account representatives, sales
representatives, store managers, district sales managers,
and regional sales managers. By amendment to the Plan
effective January 1, 1989, certain classes of employees were
excluded from the Plan (the Excluded Group). Individuals
who were in the Excluded Group with an undistributed account
under the Plan as of July 1, 1989 became 100% vested as of
that date, regardless of their years of vesting service,
notwithstanding any other provision of this Plan. No
further Employer Contributions or forfeitures shall be
allocated to the accounts of Participants in the Excluded
Group after January 1, 1989, for so long as such individuals
remain in the Excluded Group after January 1, 1989, but such
account shall continue to be adjusted for investment results
of the Trust Fund and become subject to distribution in
accordance with Chapter VII hereof. Any individual who was
in the Excluded Group but who again became an eligible
Employee because of the amendment of this Section as of
January 1, 1995 shall be treated from and after that date
the same as any other eligible Employee hereunder and if any
such individual is not already 100% vested, a separate
Regular Account shall be established for such individual
subject to the vesting schedule under Section 6.02 and the
other vesting provisions of this Plan. Also excluded is any
person who is classified by the Employer or an Affiliated
Employer as other than as an Employee, for the entire period
of such classification, without regard to any subsequent
reclassification which may occur by operation of law or
otherwise.
Leased Employees (as defined in Code Section 414(n))
shall not be included even though it is recognized that such
leased employees shall be included for purposes of
nondiscriminatory testing under Code Section 410.
(m) Employer is OshKosh B'Gosh, Inc. and any successor
corporation or partnership by merger, purchase, or
otherwise. Unless specifically included, Absorba, Inc. and
Essex Outfitters, Inc. and other subsidiaries of OshKosh
B'Gosh, Inc. are not considered as an Employer. Due to the
change of Essex Outfitters from a subsidiary to a division
as of May 31, 1994, and notwithstanding the preceding
sentence, Essex Outfitters shall be deemed an Employer as of
June 1, 1994. Employees of Essex Outfitters shall become
Participants the first of the month coincident with or next
following their satisfaction of the Plan's minimum age and
service requirements after May 31, 1994. Such employees
shall receive Years of Vesting Service credit for service
prior to June 1, 1994.
The Employer will be the named fiduciary as defined in
ERISA.
(n) Employment Year means a 12-month period following
an Employee's most recent Date of Employment.
(o) ERISA is the Employee Retirement Income Security
Act of 1974, as amended.
(p) Hours of Service means any of the following hours
(assuming a 190 hour month for any Employee not paid on an
hourly basis who works one hour during the month):
(1) Each hour for which an Employee is directly
or indirectly paid, or entitled to payment, for the
performance of duties for the Employer. These hours
will be credited to the Employee for the computation
period in which the duties are performed; and
(2) Each hour for which an Employee is directly
or indirectly paid, or entitled to payment, by the
Employer on account of a period of time during which no
duties are performed (irrespective of whether the
employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave
of absence. No more than 501 Hours of Service will be
credited under this paragraph for a single computation
period (whether or not the period occurs in a single
computation period). Hours under this paragraph will
be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by this reference; and
(3) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to
by the Employer. The same Hours of Service will not be
credited both under (1) or (2) above, as the case may
be, and under this definition 3. These hours will be
credited to the Employee for the computation period or
periods to which the award or agreement pertains rather
than the computation period in which the award,
agreement, or payment is made.
For purposes of determining whether a One Year Break in
Service has occurred for participation and vesting purposes,
an Employee who is absent from work
a. by reason of her pregnancy,
b. by reason of the birth of a child of the
Employee,
c. by reason of the placement of a child in
connection with the adoption of the child by the
Employee,
d. for purposes of caring for the child during
the period immediately following the birth or placement
for adoption,
Hours of Service shall be credited according to the
following rule. During the period of absence, the Employee
shall be deemed to have completed the number of hours that
normally would have been credited but for the absence. If
the normal work hours are unknown, eight hours of service
shall be credited for each normal work day during the leave.
The Hours of Service to be credited under this paragraph
shall be credited in the year in which the absence begins if
such crediting is necessary to prevent a One Year Break in
Service in that year or in the following year. Provided,
however, the total number of Hours of Service credited by
this paragraph shall not exceed 501.
Hours of Service will be credited for employment with
the Employer and any Affiliated Employer.
Hours of Service will also be credited for any
individual considered an employee under Section 414(n).
If records of employment with respect to an Employee's
service with the Employer before the effective date of this
restatement are insufficient to determine his exact Hours of
Service, the Committee will make reasonable estimates of
said Hours of Service based on such records of employment.
Any such Hours of Service estimates will be made in a
uniform, nondiscriminatory manner and will be binding on all
Employees.
(q) Normal Retirement Age is the date an Employee is
65 years old.
(r) Participant is an Employee who has met the
eligibility requirements of Chapter II, or a person who has
an Account balance under this Plan.
(s) Participating Employer means the Employer and any
Affiliated Employer authorized by the Employer to
participate in this Plan, by extending the same to such
Affiliated Employer's eligible Employees.
(t) Plan means the OshKosh B'Gosh, Inc. Profit Sharing
Plan as it may be amended from time to time.
(u) Plan Administrator is OshKosh B'Gosh, Inc.
(v) Plan Year is January 1 to December 31.
(w) Suspense Account is the separate Account within a
Regular Account consisting of the forfeiture (under Section
6.04) of a Participant who terminates employment and who
returns to the employ of the Employer or an Affiliated
Employer before he incurs five One Year Breaks in Service.
(x) Suspense Amount is the dollar amount of the
non-Vested portion, if any, of a terminated Participant's
Regular Account. The crediting, if any, of Trust earnings
to the Suspense Amount will be determined by the Committee
in a uniform and nondiscriminatory manner.
(y) Trust means the OshKosh B'Gosh, Inc. Profit
Sharing Trust, as it may be amended from time to time.
(z) Trustee is the person(s), corporation, or
combination thereof (and any duly appointed successor) named
in the Trust document.
(aa) Trust Fund is the total of contributions made to
the Trust, increased by profits, income, refunds, and other
recoveries received, and decreased by losses and expenses
incurred, and benefits paid. Trust Fund may also include
any assets transferred to the Trust Fund from the qualified
corporate retirement trust of the Employer or any other
employer, if permitted by applicable law, and, if permitted
by the Committee, the individual retirement account (as
defined by the Internal Revenue Code and referred to as IRA
in the Plan and Trust) of an Employee, or a distribution to
a Participant from the qualified corporate retirement plan
of the Employer or another employer.
(bb) Valuation Date is any date on which the market
valuation of the Trust Fund is made. This valuation must be
made on each March 31st, June 30th, September 30th, and
December 31st of the Plan Year if there is a need to make a
benefit distribution as of such date, as determined by the
Committee. If it desires, the Committee in its discretion,
may also instruct the Trustee to make valuations at other
times.
(cc) Vested is that portion of an Account to which a
Participant has a nonforfeitable right.
(dd) Year of Eligibility Service is the Employment Year
of an Employee, provided he completes at least 1,000 Hours
of Service during such Employment Year. For an Employee who
does not complete at least 1,000 Hours of Service in his
Employment Year, a Year of Eligibility Service is a Plan
Year, starting with the Plan Year next following his Date of
Employment, during which he completes at least 1,000 Hours
of Service.
(ee) Year of Vesting Service is any Plan Year, starting
with the Plan Year in which an Employee is hired by the
Employer or an Affiliated Employer, during which such
Employee completes at least 1,000 Hours of Service.
CHAPTER II
ELIGIBILITY AND PARTICIPATION
II.1 Eligibility. On and after January 1, 1989, each
Employee of a Participating Employer shall become eligible to
participate in the Plan on the first day of the pay period
coincident with or next following his completion of both of the
following requirements:
(a) one Year of Eligibility Service following his most
recent Date of Employment; and
(b) attainment of age 21.
II.2 Re-Employment. Notwithstanding the provisions of
Section 2.01, any Participant who terminated employment with a
Participating Employer after the effective date of this
restatement, and is later rehired, shall again become eligible to
become a Participant on his most recent Date of Employment.
II.3 Exclusion of Collective Bargaining Employees. An
Employee who is covered by a collective bargaining agreement to
which a Participating Employer is a party will not be eligible to
participate in this Plan unless that collective bargaining
agreement specifically provides for coverage of such Employee
under this Plan. Also, a Participant who becomes covered by a
collective bargaining agreement to which a Participating Employer
is a party will not be eligible to share in any Employer
Contributions and forfeiture reallocations for any Plan Year
during which he is covered for the entire Plan Year by that
collective bargaining agreement, unless such collective
bargaining agreement specifically provides to the contrary.
II.4 Change in Participant Status. In the event a
Participant is no longer a member of an eligible class of
Employees (as defined in Section 1.01(l)) and becomes ineligible
to participate, such employee will participate immediately upon
returning to an eligible class of Employees.
II.5 Employees Not in Eligible Class. In the event an
employee who is not a member of the eligible class of Employees
(as defined in Section 1.01(l)) becomes a member of the eligible
class, such employee will participate immediately if such
employee has satisfied the minimum age and service requirements
and would have otherwise previously become a Participant.
CHAPTER III
CONTRIBUTIONS AND ALLOCATIONS
III.1 Discretionary Employer Contributions.
This Plan is intended to be a discretionary contribution
plan, not dependent upon the existence of Employer profits,
pursuant to Code Section 401(a)(27). Notwithstanding the
preceding, this Plan shall be treated as a profit sharing plan
for purpose of Code Sections 401(a), 402, 412, and 417.
The Participating Employers agree to pay to the Trustee with
respect to each Plan Year such amount, if any, as may be
determined by the Board of Directors of the Employer each year.
The Employer Contributions for any particular Plan Year shall not
exceed the amount (including the amount of any credit-carryovers
from prior years available to the Participating Employers) which
the Participating Employers may lawfully deduct for federal
income tax purposes.
Employer Contributions shall be made before or as soon as
reasonably possible after the close of the Employer's fiscal
year, without interest and within the time limit for
deductibility thereof by the Employer as specified by the
Internal Revenue Code.
III.2 Allocation of Employer Contributions and
Forfeitures.
Except as provided in Section 6.04, the Employer
Contributions shall be allocated to the Regular Accounts of all
Participants who are Employees on the last day of the Plan Year
or who terminated employment during the Plan Year due to death,
retirement (on or after either the attainment of age 65, or the
attainment of age 60 and the completion of 10 Years of Vesting
Service) or disability, in the proportion that the Compensation
of each such Participant bears to the total Compensation of all
such Participants. Any forfeitures which become reallocable
during the Plan Year under any other provision of this Plan shall
be applied to reduce the amount of Employer Contributions
otherwise determined for such Plan Year. To the extent any
unapplied balance of forfeitures remain, the same shall be
similarly applied as soon as possible in the immediately
following Plan Years. On the effective date of any total
termination of the Plan or complete discontinuance of any
contributions to the Trust, any unapplied forfeitures shall be
allocated to the Regular Accounts of all Participants who are
Employees on such effective date pro rata to Compensation as
provided above.
CHAPTER IV
CONTRIBUTION LIMITATIONS
IV.1 Definitions. For purposes of this Chapter IV only, the
capitalized terms defined below will have the following meaning
when capitalized:
Annual Additions means the total of the following
amounts, if any, which are allocated to the Combined
Accounts of a Participant:
(a) Employer Contributions (excluding Employer
Contributions arising from an award of back pay by
agreement with the Participating Employer or by court
order);
(b) Amounts forfeited by non-vested previous
Participants; and
(c) Non-deductible voluntary Employee
Contributions.
For purposes of determining Annual Additions, a
rollover contribution from an IRA of a Participant, or from
his account in the qualified retirement plan of his previous
employer will not be included.
Average Compensation of a Participant is his Total
Compensation during the three consecutive Limitation Year
period in which he earned a year of service and which
produced the highest average.
Combined Accounts means the total of all accounts of a
Participant in all of the Defined Contribution Plans of the
Participating Employer.
Defined Benefit Plan is a retirement plan which does
not provide for benefits from an individual account of a
Participant, but rather such benefits are based on a benefit
formula provided by the Plan.
Defined Contribution Plan is a retirement plan which
provides for an individual account for each Participant and
for benefits based entirely on the balance of that account.
The account balance is usually derived from contributions,
income, expenses, market value increases or decreases, and
sometimes non-Vested amounts from Participants who quit
before retirement.
Employer means the employer that adopts this Plan. All
members of a controlled group of corporations (as defined in
Section 414(h) as modified by Section 415(h) of the Code),
all trades or businesses (whether or not incorporated) under
common control (as defined by Section 414(c) as modified by
Section 415(h) of the Code), or all members of an affiliated
service group (as defined in Section 414(m) of the Code),
will be considered a single employer for the purposes of
applying the limitations of this Chapter.
Limitation Year is the Plan Year.
Total Compensation includes a Participant's earned
income, wages, salaries, and fees for professional service
and other amounts received for personal services actually
rendered in the course of employment with an Employer
maintaining the plan (including but not limited to,
commissions paid salesmen, compensation for services on the
basis or a percentage of profits, commissions on insurance
premiums, tips and bonuses) and excluding the following:
a. Employer contributions to a plan of deferred
compensation which are not included in the gross income
of the Employee for the taxable year in which
contributed, or on behalf of an Employee to a
simplified employee pension plan to the extent such
contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
b. Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock
(or property) held by an 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 qualified
stock option; and
d. Other amounts which receive special tax
benefits, or contributions made by the Employer
(whether or not under a salary reduction agreement)
towards the purchase of a 403(b) annuity contract
(whether or not the contributions are excludable from
the gross income of the Employee).
Notwithstanding the above definition, from and after
January 1, 1998, Total Compensation shall include any
elective deferral contributions (as defined in Code Section
402(g)(3)) and any amounts contributed or deferred by the
Employer at the election of the Participant which are not
includable in the gross income of the Participant by reason
of Code Sections 125 or 457.
IV.2 Maximum Annual Additions. The maximum amount of Annual
Additions which can be made to the Combined Accounts of a
Participant for any Limitation Year is equal to the lesser of:
(a) 25% of his Total Compensation for that period; or
(b) $30,000 (or such other dollar amount as is
specified annually by the Secretary of the Treasury, or his
delegate or any other federal law or regulations).
IV.3 Reduction of Annual Additions. If the Annual Additions
to any Participant's Combined Accounts exceed this maximum for
any Limitation Year, the Committee will reduce the amount of his
Annual Additions in the following order of priority until the
Annual Additions equal the maximum allowed:
(a) First, any amounts of voluntary Employee
Contributions shall be returned, to the extent required, to
the Participant.
(b) Second, the forfeitures credited to his Account
for the Limitation Year will be reallocated to the
appropriate Accounts of all other Participants to the extent
required, in the same manner as the other forfeitures for
the Limitation Year.
(c) Third, and subject to Section 4.02, Employer
Contributions shall be reallocated to other Participants
covered by the Plan in that Limitation Year.
IV.4 Limitations if Participant in Other Plan(s). If a
Participant is also a participant in a Defined Benefit Plan (or
plans) maintained by the Employer, the decimal equivalent of the
sum of the fractions determined as follows for all Defined
Benefit Plans and Defined Contribution Plans maintained by the
Employer in which he participates shall not exceed 1.0 for any
Limitation Year:
(a) A defined benefit fraction, the numerator being
the projected total annual benefits of the Participant under
all Employer-sponsored Defined Benefit Plans (whether or not
terminated), and the denominator being the lesser of:
(1) the product of 1.25 multiplied by $90,000
(or, if permitted by applicable law, such other dollar
amount as is specified annually by the Secretary of the
Treasury, or his delegate); or
(2) the product of 1.4 multiplied by the
Participant's Average Compensation.
(b) A defined contribution fraction, the numerator
being the sum of the actual Annual Additions to the
Participant's Combined Accounts under all Defined
Contribution Plans (whether or not terminated) maintained by
the Employer for the current and all prior Limitation Years,
and the denominator being the sum of the lesser of the
following amounts determined for such Limitation Year and
all prior Limitation Years of the Participant's service with
the Employer (regardless of whether a Defined Contribution
Plan was maintained by the Employer):
(1) the product of 1.25 multiplied by $30,000
(or, if permitted by applicable law, such other dollar
amount as is specified annually by the Secretary of the
Treasury, or his delegate); or
(2) the product of 1.4 multiplied by 25% of his
Total Compensation for such Limitation Year.
In the event the projected annual benefits of a
Participant under all Defined Benefit Plans cause the total
of the fractions determined under (a) and (b) above to
exceed 1.0, the benefits under such Defined Benefit Plans
will be reduced to the extent required so that the total of
such fractions equals 1.0.
From and after January 1, 2000, the special limitations
set forth in this Section 4.04 shall no longer apply.
CHAPTER V
INVESTMENT OF ACCOUNTS
V.1 Funding Policy. In order to implement and carry out
the provisions of the Plan and to finance the benefits under the
Plan, the Employer will establish and maintain a funding policy
with respect to the Trust Fund in a manner consistent with
applicable law.
V.2 Employee Direction of Investments. The Committee may,
in its discretion, direct the Trustee to establish "separate
investment funds" within the Trust Fund according to Committee
specification for the investment of Accounts. The Committee will
then establish uniform, nondiscriminatory rules permitting each
Participant to direct the percentage of his Account(s) to be
invested in each of these separate investment funds. Any such
written direction will remain in effect for a Participant until
it is replaced by his subsequent written direction filed with the
Committee.
The Committee may also provide for the transfer of funds
within an Account from one separate investment fund to another
under uniform rules established by the Committee.
If a Participant makes no written direction under this
provision, the Committee will direct the Trustee to place 100% of
his Account(s) in a separate investment fund chosen by the
Committee under uniform, nondiscriminatory rules.
V.3 Expenses. The Participating Employers may pay the
expenses of administering the Plan, if desired. However, if they
do not pay these expenses directly, then, to the extent permitted
by law, the payments will be made from the Trust Fund.
CHAPTER VI
VESTING OF ACCOUNTS
VI.1 100% Vesting Situations. A Participant will be fully
(100%) Vested in his Regular Account upon the occurrence of any
of the following events; provided such event occurs while he is
an Employee:
(a) either his attainment of his Normal Retirement
Age, or his attainment of age 60 and the completion of 10
Years of Vesting Service;
(b) his death;
(c) his total and permanent disability as determined
by a physician selected by the Committee. For purposes of
this paragraph, a Participant will be considered totally and
permanently disabled if he incurs a mental or physical
disability which may be expected to be of a long continued
duration or which may be expected to result in death and
which prevents him from satisfactorily performing his duties
with the Employer or an Affiliated Employer; or
(d) the termination (either full or partial) of this
Plan or the complete discontinuance of Employer
Contributions to this Plan, provided however, that in the
event of a partial termination, only those Participants to
whom the partial termination applied will be 100% Vested.
VI.2 Vesting Schedule. A Participant who is not yet fully
Vested under Section 6.01 will be Vested (subject to Section
6.03) in his Regular Account according to the following vesting
schedule:
Years of Vesting Service Vested Percentage
Less than 3 0%
3 or more 100%
VI.3 Bad-Boy Provision. Prior to his eligibility for full
Vesting under Section 6.01, and whether or not he is eligible to
be Vested in his Regular Account under Section 6.02, a
Participant with fewer than 5 years of Vesting Service will have
no Vested interest in his Regular Account if prior to or after
his termination of employment with the Employer or an Affiliated
Employer, he commits an act which would constitute a crime
against the Employer or an Affiliated Employer under federal law
or the laws of the State of Wisconsin.
VI.4 Forfeitures. As to any Participant who terminates
employment with the Employer and all Affiliated Employers prior
to his Retirement Date or earlier death, and prior to becoming
fully vested in his Account:
(a) If distribution of the vested portion of such a
Participant's Regular Account is not made until after he
incurs a Break in Service, then the unvested portion of his
Account shall be forfeited as of the Anniversary Date of the
last Plan Year in such Break in Service and reallocated as
provided in Section 3.02 hereof.
(b) If such Participant receives distribution of the
vested portion of his Regular Account (and his Employee
Contributions Account, if any) prior to incurring a Break in
Service, then that part of his Account in which he is not
vested at the date of such distribution shall be considered
a forfeiture as of the date of distribution and shall be
reallocated as provided in Section 3.02 hereof as of the
Anniversary Date of the Plan Year in which the distribution
occurs. A Participant with no vested interest in his
Regular Account at his termination shall be deemed to have
received a distribution as of his date of termination.
(c) The number of Years of Vesting Schedule Service of
a terminated Participant who incurs a Break in Service shall
not thereafter be increased for purposes of measuring his
vested interest in his Regular Account as it exists at the
end of such Break in Service.
(d) If a Participant terminates his employment with a
Participating Employer before he is fully Vested in his
Regular Account, receives a distribution and he is later
rehired by a Participating Employer before he incurs five
One Year Breaks in Service, the Committee will instruct the
Trustee to create a Suspense Account for him (prior to any
allocations under Section 3.02) in an amount equal to the
forfeiture specified in 6.04(b) above. Then, if he is not
fully vested in his Regular Account when he subsequently
terminates his employment with the Participating Employer,
the value of his Regular Account will be calculated
according to Sections 6.02 or 6.03, and the value of his
Vested Suspense Account will be calculated by multiplying
the balance of the Suspense Account by the ratio of:
(i) the difference between the Vested percentage
under Sections 6.02 or 6.03 and the prior Vested
percentage. The prior Vested percentage shall mean the
Vested percentage at the prior termination date; and
(ii) the difference between 100% and the prior
Vested percentage.
(e) Any amounts which must be restored to a rehired
Participant's Suspense Account pursuant to the foregoing
shall first come out of forfeitures and Employer
Contributions which would otherwise be applied pursuant to
subsection 3.02 for the Plan Year in which the restoration
is made, and only thereafter and to the extent necessary, by
a special Employer Contribution made solely for this
purpose.
VI.5 Resumption of Participation.
(a) Except as otherwise provided in paragraph (b)
below, upon re-employment of any Participant a new Account
shall be created to which all allocations of contributions
and forfeitures after he is re-employed shall be made. If a
Participant had any vested interest in his Regular Account
at his termination, all his Years of Vesting Service shall
be aggregated to determine the Participant's vested interest
in such new Regular Account. If the Participant terminated
employment prior to being credited with any vested interest
and incurs a Break in Service, only his Years of Vesting
Service after his re-employment shall be used to determine
his vested interest in such new Regular Account.
(b) If a Participant is re-employed before incurring a
Break in Service without having received distribution of the
vested portion of his Regular Account, then any subsequent
allocations of Employer Contributions and forfeitures may be
made to the same Account, and the Participant's vested
interest in such Account shall be determined under Sections
6.02 or 6.03 based upon his Years of Vesting Service both
before and after his re-employment.
CHAPTER VII
PAYMENT OF BENEFITS
VII.1 Commencement of Benefits. Unless a Participant
elects in writing to further defer the starting date of any
benefit payable under the Plan and Trust, benefits must begin to
be paid within 60 days after the later of:
(a) the last day of the Plan Year in which he attains
age 65;
(b) the last day of the Plan Year in which he
terminates his employment with the Employer or an Affiliated
Employer.
Effective January 1, 2000, and notwithstanding any other
provisions of this Plan but subject to the special rules
pertaining to 5% owners and certain other Participants set forth
below, any benefit payable to a Participant shall commence no
later than the "Required Beginning Date" for a Participant under
Code Section 401(a)(9), as amended by the Small Business Job
Protection Act of 1996, which is the 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 or terminates service with the
Employer or an Affiliated Employer.
However, any benefit payable to (i) a Participant who is a
more than 5% owner of the "employer" as defined in Code Section
416 with respect to the Plan Year ending in the calendar year in
which such Participant attains age 70 1/2 shall commence no later
than the April 1st of the calendar year following the calendar
year in which such Participant attains age 70 1/2, even if he has
not separated from service as of such date.
Further, any Participant continuing in the service of the
Employer or an Affiliated Employer who attained age 70 1/2 after
December 31, 1996 but before January 1, 2000 shall have an option
to elect either to begin receiving benefits starting no later
than April 1st of the calendar year in which such Participant
attains age 70 1/2 or to defer the commencement thereof (and, if
applicable, to stop the current receipt of benefits) until
retirement or termination of service.
If a distribution is one to which Sections 401(a)(11) and
417 of the Internal Revenue Code 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:
(a) 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
(b) the Participant, after receiving the notice,
affirmatively elects a distribution.
VII.2 Form of Payment. All distributions under this
Plan will be made in one, or a combination of, the following
forms, as selected by the Participant or his Beneficiary:
(a) By payment in a series of substantially equal
installments not less frequently than annually;
(b) By payment in a lump sum.
Distributions will be based on the Account values as of the
most recent Valuation Date.
VII.3 Incidental Death Benefits. Regardless of any
statement to the contrary, the ability of any Participant or
Beneficiary to select the timing and method of a distribution
option will be limited by the following provisions:
(a) If the Participant's entire interest is to be
distributed in other than a lump sum, then the amount to be
distributed each year must be at least an amount equal to
the quotient obtained by dividing the Participant's entire
interest by the life expectancy of the Participant or joint
and last survivor expectancy of the Participant and
designated Beneficiary. Life expectancy and joint and last
survivor expectancy are computed by the use of the return
multiples contained in Section 1.72-9 of the Income Tax
Regulations. For purposes of this computation, a
Participant's life expectancy may be recalculated no more
frequently than annually, however, the life expectancy of a
non-spouse Beneficiary may not be recalculated. If the
Participant's spouse is not the designated Beneficiary, the
method of distribution selected must satisfy the minimum
death incidental benefit requirements of Regulation
Section 1.401(a)(9)-2.
(b) If the Participant dies after distribution of his
or her interest has commenced, the remaining portion of such
interest will continue to be distributed at least as rapidly
as under the method of distribution being used prior to the
Participant's death.
(c) If the Participant dies before distribution of his
or her interest commences, the Participant's entire interest
will be distributed no later than five years after the
Participant's death except to the extent that an election is
made to receive distributions in accordance with (1) or (2)
below:
(1) If any portion of the Participant's interest
is payable to a designated Beneficiary, distributions
may be made in substantially equal installments over
the life or life expectancy of the designated
Beneficiary commencing no later than one year after the
Participant's death;
(2) If the designated Beneficiary is the
Participant's surviving spouse, the date distributions
are required to begin in accordance with (1) above
shall not be earlier than the date on which the
Participant would have attained age 70+, and, if the
spouse dies before payments begin, subsequent
distributions shall be made as if the spouse had been
the Participant.
(d) For purposes of 7.04(c) above, payments will be
calculated by use of the return multiples specified in
Section 1.72-9 of the regulations. Life expectancy of a
surviving spouse may be recalculated annually, however, in
the case of any other designated Beneficiary, such life
expectancy will be calculated at the time payment first
commences without further recalculation.
VII.4 Transfers. In addition to the other methods of
distribution described in this Chapter, the Committee may direct
the Trustee to make distribution of Account balances under this
Plan directly to the IRA of a Participant, if such Participant
files a written request to that effect with the Committee and
such distribution is permitted by law. To the extent permitted
by applicable law, neither the Participating Employer, the
Committee, the Plan Administrator, nor the Trustee will incur any
liability under this Plan for Account distributions made in the
specified amount to a Participant's IRA in accordance with such
written request, regardless of any adverse tax consequences which
may be incurred by the Participant as a result of such
distribution.
The Plan will not accept the transfer into the Trust Fund of
IRA's or distributions to Participants from other qualified
retirement plans.
VII.5 Distribution of Small Amounts. Notwithstanding
the other provisions of this Chapter VII, if the vested portion
of all of the Accounts of a Participant who terminates, retires,
or dies does not exceed $3,500 (or such other sum as may be
permitted from time to time by applicable governmental
regulations) as of the Valuation Date preceding the Participant's
termination, such vested interest shall be distributed in the
form of a single sum cash distribution as soon as practicable
following the Participant's termination.
VII.6 Direct Rollover.
(a) This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a
Distributee's election under this Section, 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) Definitions
(i) 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:
1 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 years or more;
2 any distribution to the extent such
distribution is required under Section
401(a)(9) of the Code;
3 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);
4 returns of Section 401(k) elective
deferrals that are returned as a result of
the Section 415 limitations;
5 corrective distributions of excess
contributions, excess deferrals, and excess
aggregate contributions, together with the
income allocable to these corrective
distributions;
6 loans treated as distributions
under Section 72(p) and not excepted by
Section 72(p)(2);
7 loans in default that are deemed
distributions;
8 a distribution less than $200; and
9 similar items designated by the IRS
in revenue rulings, notices, and other
guidance of general applicability.
(ii) 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.
(iii) 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
Employees' spouse or former spouse who is the
alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of
the Code, are Distributees with regard to the
interest of the spouse or former spouse.
(iv) Direct Rollover: A Direct Rollover is a
payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
CHAPTER VIII
TOP-HEAVY PROVISIONS
VIII.1 Provisions Will Control. If the Plan is or
becomes Top-Heavy in any Plan Year beginning after December 31,
1983, the provisions of Chapter VIII will supersede any
conflicting provisions in the Plan.
VIII.2 Definitions. For purposes of this Chapter VIII
the following definitions shall apply:
(a) Employer: Means all Participating Employers and
all Affiliated Employers.
(b) Key Employee: Any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time
during the Determination Period was:
(1) an officer of the Employer having annual
compensation from the Employer greater than 50% of the
amount in effect under Section 415(b)(1)(A) for any
such Plan Year;
(2) an owner (or considered an owner under
Section 318 of the Code) of one of the ten largest
interests in the Employer if such individual's
compensation exceeds the dollar limitation under
Section 415(c)(1)(A) of the Code;
(3) a 5% owner of the Employer; or
(4) a 1% owner of the Employer who has an annual
compensation of more than $150,000.
The Determination Period is the Plan Year containing
the Determination Date and the 4 preceding Plan Years. The
determination of who is a Key Employee will be made in
accordance with Section 416(i)(l) of the Code and the
regulations thereunder.
(c) Top-Heavy Plan: For any Plan Year beginning after
December 31, 1983, this Plan is Top-Heavy if any of the
following conditions exist:
(1) If the Top-Heavy Ratio for this Plan exceeds
60% and this Plan is not part of any Required
Aggregation Group or Permissive Aggregation Group of
Plans.
(2) If this Plan is a part of a Required
Aggregation Group of plans but not part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the group
of plans exceeds 60%.
(3) If this Plan is a part of Required
Aggregation Group and part of Permissive Aggregation
Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(d) Top-Heavy Ratio:
(1) If the Employer maintains one or more defined
benefit plans and the Employer has not maintained any
defined contribution plans (including any Simplified
Employee Pension Plan) which during the 5-year period
ending on the Determination Date(s) has or has had
account balances, the Top-Heavy Ratio for this Plan
alone or for the Required or Permissive Aggregation
Group, as appropriate, is a fraction, the numerator of
which is the sum of the Present Value of accrued
benefits of all Key Employees as of the Determination
Date(s) (including any part of any accrued benefit
distribution in the 5-year period ending on the
Determination Date(s)), and the denominator of which is
the sum of all accrued benefits distributed in the
5-year period ending on the Determination Date(s)
determined in accordance with Section 416 of the Code
and the regulations thereunder.
(2) If the Employer maintains one or more defined
benefit plans and the Employer maintains or has
maintained one or more defined contribution plans
(including any Simplified Employee Pension Plan) which
during the 5-year period ending on the Determination
Date(s) has or has had account balances, the Top-Heavy
Ratio for any Required or Permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which
is the sum of account balances under the aggregate
defined contribution plan or plans for all Key
Employees and the Present Value of accrued benefits
under the aggregate defined benefit plan or plans for
all Key Employees, and the denominator of which is the
sum of the account balances under the aggregate defined
contribution plan or plans for all Participants and the
Present Value of accrued benefits under the aggregate
defined benefit plan or plans for all Participants as
determined in accordance with Section 416 of the Code
and the regulations thereunder. The account balances
under a defined contribution plan and the Present Value
of accrued benefits under a defined benefit plan in
both the numerator and denominator of the Top-Heavy
Ratio are adjusted for any distribution made in the
5-year period ending on the Determination Date.
(3) For purposes of (1) and (2) above, the value
of account balances and the Present Value of accrued
benefits will be determined as of the most recent
Valuation Date that falls within or ends with the
12-month period ending on the Determination Date except
as provided in Section 416 of the Code and the
regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances
and accrued benefits of a Participant who:
(i) is not a Key Employee but who was a Key
Employee in a prior year; or
(ii) has not received any compensation from
any employer maintaining the Plan at any time
during the 5-year period ending on the
Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent
to which distributions, rollovers, and transfers
are taken into account will be made in accordance
with Section 416 of the Code and the regulations
thereunder. Deductible employee contributions
will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating
plans the value of account balances and accrued
benefits will be calculated with reference to the
Determination Dates that fall within the same
calendar year.
(e) Permissive Aggregation Group: The Required
Aggregation Group of plans plus any other plan or plans of
the Employer which, when considered as a group with the
Required Aggregation Group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
(f) Required Aggregation Group:
(1) Each qualified plan of the Employer in which
at least one Key Employee participates, and
(2) any other qualified plan of the Employer
which enables a plan described in (1) to meet the
requirements of Sections 401(a)(4) or 410 of the Code.
(g) Determination Date: For any Plan Year subsequent
to the first Plan Year, the last day of the preceding Plan
Year. For the first Plan Year of the Plan, the last day of
that year.
(h) Valuation Date: December 31st of each Plan Year,
as of which account balances or accrued benefits are valued
for purposes of calculating the Top-Heavy Ratio.
(i) Present Value: Present Value shall be based only
on the interest and mortality rates specified in the defined
benefit plan.
VIII.3 Minimum Allocation.
(a) Except as otherwise provided in (c) and (d) below,
the Employer Contributions and forfeitures allocated on
behalf of any Participant who is not a Key Employee shall
not be less than the lesser of three percent of such
Participant's Compensation or in the case where the Employer
has no defined benefit plan which designates this Plan to
satisfy Section 401 of the Code, the largest percentage of
Employer Contributions, as a percentage of the first
$200,000 of the Key Employee's Compensation, allocated on
behalf of any Key Employee for that year. The minimum
allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be
made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation in
that year because of the Participant's failure to complete
1,000 Hours of Service (or any equivalent provided in the
Plan).
(b) For purposes of computing the Minimum Allocation,
Compensation will mean Compensation as defined in Section
1.01(h).
(c) The provisions in (a) above shall not apply to any
Participant who was not employed by the Employer on the last
day of the Plan Year.
(d) The provisions in (a) above shall not apply to any
Participant to the extent that the Participant is covered
under any other plan or plans of the Employer and the
Employer has provided that the minimum allocation or benefit
requirement applicable to Top-Heavy plans will be met in the
other plan or plans.
VIII.4 Nonforfeitability of Minimum Allocation. The
minimum allocation required (to the extent required to be
nonforfeitable under Section 416(b)) may not be forfeited due to
any suspension of benefits upon re-employment of retiree.
VIII.5 Minimum Vesting Schedules. For any Plan Year in
which this Plan is Top-Heavy, the following vesting schedule will
automatically apply to the Plan:
Years of Vesting Service Vested Percentage
1 0%
2 20%
3 or more 100%
The minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code, including benefits
accrued before the effective date of Section 416 and benefits
accrued before the Plan became Top-Heavy. Further, no reduction
in vested benefits may occur in the event the Plan's status as
Top-Heavy changes for any Plan Year. However, this Section does
not apply to the account balances of any Employee who does not
have an Hour of Service after the Plan has initially become
Top-Heavy and such Employee's account balances attributable to
Employer Contributions will be determined without regard to this
Section. If the vesting schedule under the Plan shifts in or out
of the above schedule for any Plan Year because of the Plan's
Top-Heavy status, such shift is an amendment to the vesting
schedule and the election in Section 11.01(c) of the Plan
applies.
VIII.6 Compensation Limitation. For any Plan Year in
which the Plan is Top-Heavy, only the first $200,000 (or such
larger amount as may be prescribed by the Secretary or his
delegate) of a Participant's annual Compensation shall be taken
into account for purposes of determining Employer Contributions
under the Plan.
CHAPTER IX
ADJUSTMENT OF ACCOUNTS
IX.1 Allocation of Trust Earnings. As of each Valuation
Date, the Committee will charge the Trustee to value the Trust at
its fair market value and any gains or losses will be allocated
to the Account of each Participant in proportion to the value of
each such Account as of the previous Valuation Date. In making
such allocations, the Committee will adjust the beginning or
ending Account balances to reflect the amount and timing of any
Employee Contributions, withdrawals, and benefit payments under
uniform and nondiscriminatory rules established by the Committee.
IX.2 Allocation of Employer Contributions and Forfeitures.
As of each Anniversary Date, the Committee will allocate Employer
Contributions (and forfeitures, if any, which shall be used to
reduce Employer Contributions) for the Plan Year ending on that
Anniversary Date to the Regular Account of Participants.
CHAPTER X
DESIGNATION OF BENEFICIARY
X.1 Beneficiary Designation. Each Participant may name, or
change the name of his Beneficiary(ies) who will receive any
death benefits payable to such Beneficiary(ies) under the Plan
and Trust. If the Participant designates someone other than his
spouse as the primary Beneficiary, then the spouse must give
written consent (witnessed by a Plan representative or notary
public) to such designation. To be effective, a Beneficiary
designation form (available from the Committee) must be on file
with the Committee on the Participant's date of death.
X.2 Priority If No Designated Beneficiary. If there is no
Beneficiary designation form on file, or if the designated
Beneficiary(ies) predeceases the Participant, benefit payments
required under the Plan and Trust to be payable on death to the
Beneficiary(ies) will be distributed in the following order of
priority:
(a) to the surviving spouse; or, if none
(b) to the surviving issue (per stirpes and not per
capita); or, if none
(c) to the surviving parents equally, or, if one is
deceased, to the survivor of them; or, if none
(d) to the estate of the Participant.
CHAPTER XI
AMENDMENT OF THE PLAN
XI.1 Amendment by Employer. The Employer may, by resolution
of the Board of Directors, amend this Plan at any time. Any
amendment by the Employer will be subject to the following rules:
(a) Without its written consent, no amendment may
increase the duties or liabilities of the Trustee.
(b) Except as permitted by law, no amendment may
provide for the use of funds or assets under the Plan and
Trust other than for the exclusive benefit of Participants
or their Beneficiaries. In addition, no amendment may allow
Trust Fund assets to revert to or be used or enjoyed by any
Participating Employer unless otherwise permitted by law.
(c) If an amendment changes the vesting schedule of
the Plan, or if the Plan is amended in any way that directly
or indirectly affects the computation of a Participant's
nonforfeitable percentage, any Participant in the employ of
the Participating Employer or an Affiliated Employer on the
date such amendment is adopted (or the date it is effective,
if later) who has completed at least three years of service
at the end of the election period specified below, may make
an irrevocable election to remain under the vesting schedule
of the Plan as in existence immediately prior to said
amendment. If such Participant does not make this election
during the election period starting on the date such
amendment is adopted, and ending 60 days following the
latest of the following dates, he will be subject to the new
vesting schedule provided by said amendment:
(1) the date the amendment is adopted;
(2) the date the amendment is effective; or
(3) the date written notice of the amendment is
given to the Participant.
However, the failure to make an election described
above will not result in the forfeiture of any benefits
which are already Vested.
(d) No amendment may reduce the Vested percentage of a
Participant.
(e) No amendment may reduce the Account balance of a
Participant.
XI.2 Conformance to Law. Regardless of the provisions of
Section 11.01, the Employer has the right to make whatever
amendments are necessary to this Plan or the Trust to bring it
into conformity with applicable law.
XI.3 Right to Terminate. The Board of Directors of the
Employer may, by resolution, terminate the Trust and/or this Plan
at any time. However, if the Plan is terminated (either wholly
or partially), or if there is a complete discontinuance of
Employer Contributions to the Trust, each Participant who is an
Employee on the effective date of such total Plan termination or
complete discontinuance of contributions (or, if a partial
termination, whose severance causes or is a result of such
partial termination) will then become 100% Vested in his
Accounts. In the event that the Plan is terminated or
contributions are discontinued as provided above, all
distributions will be made in accordance with the provisions of
Chapter VII and, except as provided in Section 7.05, remaining
Accounts will continue to share in the experience of the Trust
Fund on each Valuation Date as provided in Section 9.01.
XI.4 Merger, Consolidation, or Transfer. If the Plan and
Trust are merged or consolidated with, or the assets or
liabilities are transferred to, any other plan and trust, the
benefits payable to each Participant immediately after such
action (if the Plan was then terminated) will be equal to or
greater than the benefits to which he would have been entitled if
the Plan had terminated immediately before such action.
CHAPTER XII
CLAIMS PROCEDURE
XII.1 Written Claim. A Participant or Beneficiary(ies)
may make a claim for Plan benefits by filing a written request
with the Committee, on a form provided by the Committee.
XII.2 Claim Denial. If a claim is wholly or partially
denied, the Committee will furnish the Participant or
Beneficiary(ies) with written notice of the denial within 60 days
of the date the original claim was filed. The notice of denial
will specify:
(a) the reason for denial;
(b) specific reference to pertinent Plan and Trust
provisions on which the denial is based;
(c) a description of any additional information or
requirements needed to be eligible to obtain the denied
benefit and an explanation of why such information or
requirements are necessary; and
(d) an explanation of the claim procedure.
XII.3 Request for Review of Denial. The Participant or
Beneficiary(ies) will have 60 days from receipt of a denial
notice in which to make written application for review by the
Committee. The Participant or Beneficiary may request that the
review be in the nature of a hearing. The Participant or
Beneficiary(ies) will have the rights to representation, to
review pertinent documents, and to submit comments in writing.
XII.4 Decision on Review. The Committee will issue a
decision on such review within 60 days after receipt of an
application for review.
The Plan Administrator shall have full and complete
discretionary authority to determine eligibility for benefits, to
construe the terms of the Plan and to decide any matter presented
through the claims review procedure. Any final determination by
the Plan Administrator shall be binding on all parties. If
challenged in court, such determination shall not be subject to
de novo review and shall not be overturned unless proven to be
arbitrary and capricious upon the evidence considered by the Plan
Administrator at the time of such determination.
XII.5 Additional Time. The Committee may take
additional time, as provided by government regulations, under
this Chapter XII, if such time is needed to gather data, perform
calculations or reach decisions in the processing of a claim.
The Participant or Beneficiary(ies) will be informed by the
Committee, in writing, of the need for such additional time prior
to the date such extension begins.
CHAPTER XIII
MISCELLANEOUS PROVISIONS
XIII.1 Reversion of Assets. This Plan and Trust are for
the exclusive benefit of the Employees of the Participating
Employers and none of the assets may be used for any other
purpose. Notwithstanding the above, there may be a reversion of
assets to the Employer (or the Employee) in the event one of the
following occurs:
(a) If, in the course of administering the Plan and
Trust, errors in accounting arise due to factual errors in
information supplied by any Participating Employer, the
Committee, the Plan Administrator or the Trustee, equitable
adjustments may be made to correct these errors. Excess
contributions arising from such adjustments may be returned
to the Participating Employer (or Employee, if such
contributions are attributable to Employee contributions)
within one year after such contributions were made.
(b) All Employer Contributions made to the Plan are
conditioned on deductibility. For any year(s) that all or a
part of the deduction for Employer Contributions to the Plan
is disallowed by the Secretary of the Treasury, the amount
of the contributions so disallowed must be returned to the
Participating Employer within one year after such
disallowance.
(c) The Plan is terminated as provided for in Chapter
XI.
XIII.2 Equitable Adjustment. The Committee may make
equitable adjustments, which may be retroactive, to correct for
mathematical, accounting, or factual errors made in good faith.
Such adjustments will be final and binding upon all Participants
and other parties in interest.
XIII.3 Reasonable Compensation. If for any Plan Year,
the Internal Revenue Service determines that the total
compensation of a Participant exceeds the amount which can be
considered "reasonable" for purposes of the federal income tax
return of the Participating Employer, then the Committee will
readjust the Account of such Participant to reflect only the
"reasonable" compensation of said Participant.
XIII.4 Indemnification. To the extent permitted by law,
the Employer will indemnify each member of the Committee and any
others to whom the Employer has delegated fiduciary duties
(except corporate trustees, insurers, or "investment managers"
(as defined in ERISA)) against any and all claims, losses,
damages, expenses and liabilities arising from their
responsibilities in connection with the Plan, unless the same are
determined to be due to gross negligence or willful misconduct.
XIII.5 Protection from Loss. Neither the Trustee, the
Plan Administrator, the Committee nor the Employer guarantee the
Trust Fund in any way from loss or depreciation. To the extent
permitted by applicable law, the liability of any of these
persons, groups of persons, or entities to make any payment under
the Plan and Trust is limited to the available assets of the
Trust Fund.
XIII.6 Protection from Liability. To the maximum extent
allowed by law, the Plan Administrator and all Participating
Employers, and their agents, designees and employees, shall be
free from all liability, joint or several, for their acts,
omissions, and conduct, except in the case of their own willful
misconduct, gross negligence or bad faith. Specifically and
without limitation other than as follows, nothing in the first
sentence of this Section or elsewhere in the Plan and Trust shall
be construed to relieve any Fiduciary from responsibility or
liability for any responsibility, obligation or duty under Part 4
of Title 1 of ERISA (except as provided in Sections 405(b)(1) and
405(d) of ERISA).
XIII.7 Adoption of Rules and Procedures. Any group of
people acting in a specified capacity under the Plan and Trust
(such as the Named Fiduciary, Trustee, Committee, Plan
Administrator, "investment manager" (as defined by ERISA) if any,
and so on) may create and abide by whatever rules and procedures
they desire, so long as these rules and procedures are not
inconsistent with the Plan, the Trust and applicable law. If
these rules specifically limit the duties and responsibilities of
the members of any of these groups, then to the extent permitted
by applicable law, the liability to each member under the Plan
and Trust will be limited to his specific duties.
XIII.8 Assignment of Benefits. A Participant's interest
in this Plan may not be assigned or alienated, either voluntarily
or involuntarily. This shall not preclude the Trustee from
complying with: (i) a qualified domestic relations order (as
defined in Section 414(p) of the Code) made pursuant to a
domestic relations law requiring deduction from the benefits of a
Participant for alimony, child support, or marital property
payments, or (ii) on or after August 5, 1997 and pursuant to Code
Section 401(a)(13)(c), any court order, judgment, decree, or
settlement agreement requiring that a Participant's benefits be
reduced where the Participant has committed a breach of fiduciary
duty to the Plan or committed a criminal act against the Plan.
Notwithstanding any restrictions on the timing of
distributions and withdrawals under this Plan, distribution shall
be made to an alternate payee in accordance with the terms of an
order described in the preceding paragraph, or as determined by
the Plan Administrator and alternate payee if provided in the
order, even if such distribution is made prior to the
Participant's attainment of the earliest retirement age (as
defined in Code Section 414(p)(4)).
XIII.9 Mental Competency. Every person receiving or
claiming benefits under the Plan and Trust will be presumed to be
mentally competent until the date on which the Committee receives
a written notice (in a form and manner acceptable to it) that
such person is incompetent, and that a guardian, conservator or
other person legally vested with his care or the care of his
estate has been appointed. If the Committee receives acceptable
notice that a person to whom a benefit is payable under this Plan
and Trust is unable to care for his affairs because of
incompetency, any payment due (unless a prior claim for it has
been made by duly appointed legal representative) may be paid to
the spouse, a child, a parent, a brother or a sister or to any
person determined by the Committee to have incurred expenses for
such person. Any such payment will be a complete discharge of
the obligation of the Participating Employer, Committee, Plan
Administrator and Trustee to provide benefits under the Plan and
Trust.
In the event that the Plan benefits of a person receiving or
claiming them are garnished or attached by order of any court,
the Committee may bring an action for a declaratory judgment in a
court of competent jurisdiction to determine the proper recipient
of the benefits to be paid under the Plan. While this action is
pending, any benefits that become payable under this Plan will be
paid into the court as they become payable. The court will then
make the benefit distributions to the recipient it deems proper
at the close of said action.
XIII.10 Authentication. The Participating Employer,
Committee, Plan Administrator and Trustee will be fully protected
in acting and relying upon such certificate, affidavit, document
or other information which that person requesting such
information may consider pertinent, reliable and genuine.
Any notice required to be made under the Plan and Trust may
be waived, in writing, to the person entitled thereto. In
addition, the time period specified in this Plan for filing any
such notice may be modified or waived, in writing, by the person
entitled thereto.
XIII.11 Not an Employment Contract. This Plan and Trust
will not be construed as creating or modifying any contract of
employment between any Participating Employer and the Employee.
XIII.12 Appointment of Auditor. The Employer shall have
the right to appoint an independent auditor to audit the books,
records, and accounts of the Trustee as they relate to the Plan
and Trust.
XIII.13 Uniform Treatment. All interpretations made in
connection with this Plan and Trust are intended to be exercised
in a nondiscriminatory manner so that all Employees in similar
circumstances are treated alike.
XIII.14 Interpretation. The provisions of the Plan and
Trust are to be construed as a whole and not construed separately
without relation to the context of the entire agreement.
XIII.15 Plural and Gender. When appropriate, the singular
nouns in this Plan and Trust may include the plural, and vice
versa. Also, wherever the male gender is used in the Plan and
Trust, the female gender may be included, and vice versa.
XIII.16 Headings. Headings at the beginnings of any
Chapter, Section, or subsection are for convenience only and are
not to influence the construction of this Plan and Trust.
XIII.17 Expenses. The Participating Employers may pay the
expenses of administering the Plan, if desired. However, if they
do not pay these expenses directly, then, to the extent permitted
by law, the payments will be made from the Trust Fund.
XIII.18 Unclaimed Accounts. Any Account which is payable
without Participant consent in accordance with Article VII, but
which cannot be paid due to an inability to locate the applicable
Participant or Beneficiary, shall be forfeited and reallocated in
accordance with Section 4.03. Prior to any forfeiture, the Plan
Administrator shall make reasonable attempts to locate the person
entitled to any distribution. Any Account forfeited pursuant to
this Section 13.18 shall be restored and paid to the applicable
Participant or Beneficiary upon the making of a valid claim by
such person in accordance with Plan Section 9.05. The amount to
be restored shall equal the vested amount in the Account as of
the Valuation Date coincident with or immediately preceding the
forfeiture under Section 4.03, then from the Participating
Employers' discretionary contribution for a Plan Year, and
finally, if necessary from a special one-time Employer
Contribution made solely for this purpose.
XIII.19 Special Provisions Respecting Military Service.
Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with
Section 414(u) of the Code, effective for individuals whose
reemployment occurs after December 11, 1994.
XIII.20 Participation of Affiliated Employers. The
administrative powers and control of the Employer, as provided in
this Plan and the Trust agreement, as well as the sole and
exclusive right of amendment and termination (as covered in
Chapter XI), and of appointment and removal of the Plan
Administrator, the Trustee, and their successors, shall remain
solely with OshKosh B'Gosh, Inc. and shall not be diminished in
any way by reason of the participation of any Affiliated Employer
in the Plan and the Trust agreement.
CHAPTER XIV
EMPLOYER STOCK SAVINGS ACCOUNTS AND INVESTMENTS
XIV.1 Stock Savings Accounts. The Employer Contribution
and forfeitures, if any, for the Plan Year ending December 31,
1990, and for each subsequent Plan Year shall be allocated to
Participants' Regular Accounts as provided in Article III. Any
amounts accumulated in a Participant's Stock Savings Account
(pursuant to Employer Contributions and forfeitures, if any,
allocated on or after December 31, 1984 but before January 1,
1990) will continue to be held in such Account. Any income,
loss, appreciation, and/or depreciation attributable to amounts
held in Stock Savings Accounts will be allocated only to such
Stock Savings Accounts.
XIV.2 Employer Stock Defined. For purposes of this
Article XIV, the term "Employer Stock" means any common stock of
OshKosh B'Gosh, Inc. The Trustee, or any investment manager or
any Special Investment Committee appointed by the Employer under
Section 2.05 or Section 2.06 of the Trust, may invest up to 100%
of the fair market value of the Trust Fund in Employer Stock
("qualifying employer securities" of the Company, as that term is
defined by ERISA).
XIV.3 Distributions from Stock Savings Accounts. To the
extent Employer Stock is held in Participants' Stock Savings
Accounts, a terminating Participant shall be entitled to request,
in writing on a form acceptable to the Plan Administrator, that
the full value of his Stock Savings Account (or any portion
thereof) that becomes distributable under Article VII be
distributed in full shares of Employer Stock (any partial share
will be paid in cash).
XIV.4 Employer Stock Valuation. For purposes of any
distribution under the Plan, valuation of the Stock Savings
Account shall be made as of the Valuation Date coincident with or
immediately preceding the date of distribution. Valuation of any
Employer Stock distributed pursuant to an election under Section
14.03 shall be based on the closing price reported by NASDAQ on
the last day immediately preceding the date of distribution
during which a sale of the Employer Stock was completed.
IN WITNESS WHEREOF, this Plan is executed by the Employer,
acting through its duly authorized officers, on this _____ day of
_______________, 2000.
By:
Attest:
EXHIBIT 10.2
OSHKOSH B'GOSH, INC.
PENSION PLAN
Generally Effective: January 1, 1998 (unless otherwise stated)
OSHKOSH B'GOSH, INC.
PENSION PLAN
TABLE OF CONTENTS
Chapter Page
INTRODUCTION v
I DEFINITIONS 1
II ELIGIBILITY AND PARTICIPATION 11
2.01 Eligibility 11
2.02 Re-Employment 11
2.03 Exclusion of Collective Bargaining Employees 11
2.04 Change in Participant Status 11
2.05 Employees Not in Eligible Class 11
III CONTRIBUTIONS 12
3.01 Employer Contributions 12
3.02 Funding Policy 12
3.03 Employee Contributions 12
IV RETIREMENT BENEFITS 13
4.01 Normal Retirement Benefit 13
4.02 Early Retirement 14
4.03 Late Retirement 14
4.04 Non-Duplication of Benefit 15
4.05 Re-Employment 15
V BENEFIT LIMITATIONS 16
5.01 Definitions 16
5.02 General Limitations 17
5.03 Less Than 10 Years 18
5.04 Limitations if Participant in Other Plan(s) 18
VI PRE-RETIREMENT DEATH BENEFITS 20
6.01 Death Benefits 20
6.02 Death Benefit Limitations 20
6.03 Pre-Retirement Death Benefit for Surviving Spouse;
Post-Retirement Death Benefits 20
VII OTHER TERMINATION AND VESTING 21
7.01 Full Vesting Dates 21
7.02 Vesting Schedule 21
7.03 Commencement of Benefits 21
7.04 Forfeiture 21
7.05 Resumption of Participation 21
VIII PAYMENT OF BENEFITS 22
8.01 Commencement of Benefits 22
8.02 Automatic Joint and Survivor Benefits 23
8.03 Optional Forms of Payment 24
8.04 Incidental Death Benefits 24
8.05 Transfers 25
8.06 No Other Benefits 26
8.07 Direct Rollover 26
IX DESIGNATION OF BENEFICIARY 28
9.01 Beneficiary Designation; Election of Non-Spouse
Beneficiary 28
9.02 Priority If No Designated Beneficiary 29
X TOP-HEAVY PROVISIONS 30
10.01 Provisions Will Control 30
10.02 Definitions 30
10.03 Minimum Accrued Benefit 32
10.04 Adjustment for Benefit Form Other Than Life Annuity 33
10.05 Nonforfeitability of Minimum Accrued Benefit 33
10.06 Minimum Vesting Schedules 33
10.07 Compensation Limitation 34
XI AMENDMENT OF THE PLAN 35
11.01 Amendment by Employer 35
11.02 Conformance to Law 35
11.03 Merger, Consolidation, or Transfer 36
XII TERMINATION OF THE PLAN 37
12.01 Right to Terminate 37
12.02 Termination Priorities 37
12.03 Reversion to Employer 38
12.04 Subsequent Benefit Payments 38
XIII CLAIMS PROCEDURE 39
13.01 Written Claim 39
13.02 Claim Denial 39
13.03 Request for Review of Denial 39
13.04 Decision on Review 39
XIV CONTRIBUTION AND BENEFIT LIMITS TO HIGH PAID EMPLOYEES 40
14.01 When Applicable 40
14.02 Limitations 40
14.03 Limitations if Plan Amended 40
14.04 Alternate Limitations 41
XV MISCELLANEOUS PROVISIONS 42
15.01 Reversion of Assets 42
15.02 Equitable Adjustment 42
15.03 Reasonable Compensation 42
15.04 Indemnification 42
15.05 Protection From Loss 42
15.06 Protection From Liability 43
15.07 Adoption of Rules and Procedures 43
15.08 Assignment of Benefits 43
15.09 Mental Competency 43
15.10 Authentication 44
15.10 Authentication 44
15.11 Not an Employment Contract 44
15.12 Appointment of Auditor 44
15.13 Uniform Treatment 44
15.14 Interpretation 44
15.15 Plural and Gender 44
15.16 Headings 44
15.17 Expenses 44
15.18 Prevention of Escheat 45
15.19 Special Provisions Respecting Military Service 45
15.20 Participation of Affiliated Employers 45
INTRODUCTION
The validity, construction, and all rights granted under
this Plan and Trust will be governed, interpreted, and
administered by the laws of the United States under the Employee
Retirement Income Security Act of 1974 (ERISA, as it may be
amended) and the Internal Revenue Code of 1986 (the Internal
Revenue Code, as it may be amended). However, regardless of the
preceding, to the extent that ERISA and/or the Internal Revenue
Code do not preempt local law, the Plan and Trust will be
governed, interpreted, construed, and enforced according to the
laws of the State of Wisconsin.
If the U.S. Department of Labor or the Internal Revenue
Service, or both, determines at any time that this Plan does not
meet these requirements or that it is being administered or
interpreted in a manner inconsistent with these requirements, the
Employer may either make the appropriate amendments or
adjustments, or both, which may be retroactive, to correct the
situation, or terminate the Plan.
If any provisions of the Plan and Trust are held to be
invalid or unenforceable, the remaining provisions will continue
to be fully effective.
CHAPTER I
DEFINITIONS
I.1 Unless the context requires otherwise, the capitalized
terms defined below will have the following meanings throughout
this Plan when capitalized:
(a) Accrued Benefit means a Participant's Normal
Retirement Benefit earned under the Plan payable at a
Participant's Normal Retirement Date based on his Years of
Benefit Service and monthly Compensation up to the date for
which the Accrued Benefit is being determined.
Unless otherwise provided under the Plan, each Section
401(a)(17) employee's Accrued Benefit under this Plan will
be the greater of the Accrued Benefit determined for the
employee under (1) or (2) below:
(1) the employee's Accrued Benefit determined
with respect to the benefit formula applicable for the
Plan Year beginning on or after January 1, 1994, as
applied to the employee's total years of service taken
into account under the Plan for the purposes of benefit
accruals, or
(2) the sum of:
a. the employee's Accrued Benefit as of the
last day of the last Plan Year beginning before
January 1, 1994, frozen in accordance with Section
1.401(a)(4)-13 of the regulations, and
b. the employee's Accrued Benefit
determined under the benefit formula applicable
for the Plan Year beginning on or after January 1,
1994, as applied to the employee's years of
service credited to the employee for the Plan
Years beginning on or after January 1, 1994, for
purposes of benefit accruals.
A Section 401(a)(17) employee means an employee
whose current Accrued Benefit as of a date on or after
the first day of the first Plan Year beginning on or
after January 1, 1994, is based on Compensation for a
year beginning prior to the first day of the first Plan
Year beginning on or after January 1, 1994, that
exceeded $150,000.
(b) Actuary is any person or firm selected by the
Employer (as provided by applicable law) to make
calculations required by law or otherwise desired to be made
under the Plan. The Actuary is also responsible for
calculating the Actuarial Equivalents required by the Plan
in accordance with generally accepted actuarial principles.
An Actuary may be removed by the Employer or resign at any
time by written notice.
(c) Actuarial Equivalent. Two benefits are said to be
Actuarial Equivalents if they have the same present value as
determined by the Actuary in accordance with generally
accepted actuarial principles applied in a uniform and
nondiscriminatory manner. The actuarial assumptions to be
used in determining Actuarial Equivalents are as follows:
(1) For purposes of the small amount cash-out
provision of Section 8.01 (relating to amounts not in
excess of $3,500) and for purposes of any lump sum
payment which may become due because of the
pre-retirement death of the Participant, the actuarial
assumptions to be used shall be the `applicable
mortality table" and the "applicable interest rate."
The term "applicable mortality table" means the table
prescribed by the IRS from time to time under Section
417(e)(3) of the Code. The term "applicable interest
rate" means the annual rate of interest on 30-year
Treasury securities as published by the IRS for the
second full calendar month preceding the calendar month
that contains the annuity starting date (distribution
date). However, at any time on or after July 1, 1998,
the single sum distribution payable under such small
account cash-out provision or because of the
pre-retirement death of the Participant must be no less
than the single sum distribution calculated using the
Unisex Pension 1984 Mortality Table and an interest
rate of 5.5%, based upon the Participant's Accrued
Benefit under the Plan through June 30, 1997 and based
upon the Participant's age on the annuity starting date
(distribution date) or the date of death.
(2) For purposes of any lump sum payment under
the provisions of Section 8.03(d), excluding only any
lump sum payment which may become due because of the
pre-retirement death of the Participant, the actuarial
assumptions to be used shall be the `applicable
mortality table" and the "applicable interest rate," as
such terms are defined in subsection (1) above.
(3) For purposes of optional forms of payment, in
circumstances other than those covered by the special
rules set forth in paragraphs (1) and (2) above, the
actuarial assumptions to be used are the Unisex Pension
1984 Mortality Table and 5.5% interest; provided,
however, that in no event may the interest rate exceed
the PBGC rates in effect at the date of distribution.
(4) For purposes of the benefit increase covered
in Plan Section 4.03, the actuarial assumptions to be
used are the Unisex Pension 1984 Mortality Table and
5.5% interest; provided, however, that in no event may
the interest rate exceed the PBGC rates in effect at
the date of distribution.
(d) Affiliated Employer. Affiliated Employer means
each corporation which is included as a member of a
controlled group with the Employer, and trades and
businesses whether or not incorporated, which are under
common control by or with the Employer within the meanings
of Sections 414(b) and (c) of the Internal Revenue Code of
1986, or any amendments thereof. Further, the term shall
include any members of the same "affiliated service group"
within the meaning of Code Section 414(m) and any other
entity required to be aggregated with the Employer under
Code Section 414(o).
(e) Annuity Starting Date means the first day of the
first period for which an amount is payable as an annuity or
in any other form, all as provided in Section 417(f) of the
Code and regulations thereunder.
(f) Beneficiary is the person or entity designated in
Chapter IX to receive any death benefits of a Participant
which become payable under the Plan.
(g) Break in Service shall mean as to any Participant
who, as of December 31, 1988 or earlier, had incurred a One
Year Break in Service after termination of employment. A
One Year Break in Service means a Plan Year in which the
Employee does not complete an aggregate of more than 500
Hours of Service with the Employer or Affiliated Employers.
As to any Participant who, as of December 31, 1988 or
earlier, has not incurred a Break in Service under the rules
then in existence, and as to terminations of employment on
and after January 1, 1989, a Break in Service shall be any
subsequently ending and consecutive five One Year Breaks in
Service.
Special provisions with respect to military service are
contained in Section 15.19 hereof.
(h) Code means the Internal Revenue Code of 1986, as
amended and as it may be amended.
(i) Committee is the organization appointed by the
Board of Directors of the Employer (which may name itself as
the Committee) for purposes of overseeing the administration
of the Plan, and performing any other duties specified in
this Plan. A Committee member may resign or be removed at
any time by the Board of Directors of the Employer by
written notice. To assist it in its duties, the Committee
may employ agents or legal counsel.
Any such Committee may in its regulations or by action on behalf
of the Committee and as to such actions, no meetings or unanimous
consent shall be required. The Committee may also act at a meeting
or by its unanimous written consent. A majority of the members of
the Committee shall constitute a quorum for the transaction of business
and shall have full power to act hereunder. All decisions
shall be made by vote of the majority present at any meeting
at which a quorum is present, except for actions in writing
without a meeting which must be unanimous. The Committee
may appoint a Secretary who may, but need not, be a member
of the Committee. The Committee may adopt such bylaws and
regulations as it deems desirable for the conduct of its
affairs. Any absent Committee member, and any dissenting
Committee member who (at the time of the making of any
decision by the majority) registers his dissent in writing
delivered at that time to the other Committee members, shall
be immune to the fullest extent permitted by law from any
and all liability occasioned by or resulting from the
decision of the majority. All rules and decisions of the
Committee shall be uniformly and consistently applied to all
persons in similar circumstances. The Committee shall be
entitled to rely upon the Employer's records as to
information pertinent to calculations or determinations made
pursuant to the Plan. A member of the Committee may not
vote or decide upon any matter relating solely to himself or
vote in any case in which his individual right of claim to
any benefit under the Plan is particularly involved. If, in
any case in which a Committee member is so disqualified to
act, the remaining members cannot agree, then, the President
of the Employer will appoint a temporary substitute member
to exercise all of the powers of the disqualified member
concerning the matter in which that member is disqualified
to act.
In the event a dispute arises under the Plan and Trust,
the Committee will be the authorized agent for the service
of legal process.
(j) Compensation is the quotient of total wages,
salaries, fees and other amounts received for a particular
Plan Year (without regard to whether or not an amount is
paid in cash) for personal services actually rendered in the
course of employment by the Participant from a Participating
Employer to the extent that the amounts are includable in
gross income (or such Compensation paid or accrued for Plan
Years prior to January 1, 1991), and including any elective
contributions not otherwise includable in income under a
Code Section 125 cafeteria plan or Section 401(k) plan, but
excluding reimbursements or other allowances, fringe
benefits (cash and noncash, including, without limitation,
any income arising in connection with any stock options,
restricted stock or other equity based incentives relating
to stock of the Employer), moving expenses, deferred
compensation and welfare benefits, divided by 12 (or the
number of actual completed calendar months for purposes of
the first or last Plan Years of employment).
For Employees who are salespersons receiving any
commissions during the Plan Year, no more than $50,000 of
Compensation while so employed (as adjusted under Code
Section 414(q)(1)(C); $54,480 in 1989, $56,990 in 1990,
$60,535 in 1991, $62,345 in 1992, $64,245 in 1993, and
$66,000 in 1994) will be used for purposes of determining
benefits under the Plan. This restriction shall not apply
to District or Regional Sales Managers.
Notwithstanding any provision of the Plan to the
contrary, prior to January 1, 1989, "Compensation" will be
determined under the terms of the Plan then in effect;
provided, however, that with respect to any Employee with an
Hour of Service after December 31, 1988, a special rule will
apply. For any given Plan Year commencing on or after
January 1, 1989, if such Employee is not a "Highly
Compensated Employee" (within the meaning of Code Section
414(q)) during such Plan Year, then the five year average
monthly Compensation will be determined without regard to
(i) the adjusted $50,000 limit provided above, and (ii) the
Compensation limitations that were applicable to
salespersons under the terms of the Plan as in effect prior
to January 1, 1989, for each prior Plan Year during which
the Employee was not a Highly Compensated Employee.
However, for any Plan Year beginning after December 31,
1988, Compensation in excess of $200,000 (as adjusted as
permitted under Code Section 401(a)(17) from time to time)
shall be disregarded.
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 OBRA
`93 annual compensation limit. The OBRA `93 annual
compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in
accordance with Section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination
period) beginning in such calendar year. If a determination
period consists of fewer than 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 12.
For Plan Years beginning on or after January 1, 1994,
any reference in this plan to the limitation under Section
401(a)(17) of the Code 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.
(k) Date of Employment means:
(1) the day on which the Employee performs his
first Hour of Service on or after the date on which he
is employed by the Employer or an Affiliated Employer,
or
(2) the date on which the Employee performs his
first Hour of Service on or after the date on which he
is re-employed following a Break in Service.
(l) Disability is any impairment which arises before a
Participant's termination of employment with the Employer or
an Affiliated Employer which may be expected to be of a long
continued duration or which may be expected to result in
death and which prevents him from satisfactorily performing
his duties with the Employer or an Affiliated Employer.
Determination of such Disability will be made by a physician
selected by the Committee.
(m) Early Retirement occurs on the first day of any
month coinciding with or next following the Early Retirement
Date of a Participant in which he incurs a Termination of
Employment, provided he has not then attained his Normal
Retirement Date.
(n) Early Retirement Date is the date on which the
Participant has attained the age of 60 and completed 5 years
of Vesting Service.
(o) Effective Date of the Plan is January 1, 1947.
The Effective Date of this amendment and restatement is
January 1, 1998, unless otherwise provided herein.
(p) Employee is any person employed directly by the
Employer or an Affiliated Employer and for whom the Employer
or an Affiliated Employer pays Social Security taxes and who
in each case is not excluded by the provisions of Section
2.03 hereof relating to collective bargaining employees.
"Leased employees" as defined in Code Section 414(n) shall
not be eligible to participate in the Plan although it is
recognized that such leased employees, if any, must be
treated as employees of the Employer or an Affiliated
Employer for purposes of certain nondiscrimination,
coverage, and other rules under the Code. Also excluded is
any person who is classified by the Employer or an
Affiliated Employer as other than as an Employee, for the
entire period of such classification, without regard to any
subsequent reclassification which may occur by operation of
law or otherwise.
It is recognized that the definition of an eligible
"Employee" was significantly expanded as to certain classes
of Employees (the "Newly Included Group") by amendment to
this Plan effective as of January 1, 1989. Notwithstanding
any other provisions of this Plan, individuals in the Newly
Included Group shall have all past periods of service with
the Employer counted as Years of Eligibility and Vesting
Service for purposes of this Plan. Such past service shall
also be counted as Years of Benefit Service for purposes of
this Plan, except for Years covered under another private
defined benefit pension plan sponsored by the Employer.
(q) Employer is OshKosh B'Gosh, Inc. and any successor
corporation by merger, purchase, or otherwise. Unless
specifically included, Absorba, Inc. and Essex Outfitters,
Inc. and other subsidiaries of OshKosh B'Gosh, Inc. are not
considered as an Employer.
(r) Employment Year means a 12-month period following
an Employee's most recent Date of Employment.
(s) Hours of Service means any of the following hours
(assuming a 190 hour month for any Employee not employed on
an hourly basis who works one hour during the month):
(1) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for
the Employer. These hours will be credited to the
Employee for the computation period in which the duties
are performed; and
(2) Each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a
period of time during which no duties are performed
(irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty,
military duty or leave of absence. No more than 501
Hours of Service will be credited under this paragraph
for a single computation period (whether or not the
period occurs in a single computation period). Hours
under this paragraph will be calculated and credited
pursuant to Section 2530.200b-2 of the Department of
Labor Regulations which are incorporated herein by this
reference; and
(3) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to
by the Employer. The same Hours of Service will not be
credited both under (1) or (2) above, as the case may
be, and under this definition (3). These hours will be
credited to the Employee for the computation period or
periods to which the award or agreement pertains rather
than the computation period in which the award,
agreement, or payment is made.
For purposes of determining whether a One Year Break in
Service has occurred for participation and vesting purposes,
an employee who is absent from work (i) by reason of her
pregnancy, (ii) by reason of the birth of a child of the
employee, (iii) by reason of the placement of a child in
connection with the adoption of the child by the Employee or
(iv) for purposes of caring for the child during the period
immediately following the birth or placement for adoption,
Hours of Service shall be credited according to the
following rule. During the period of absence, the Employee
shall be deemed to have completed the number of hours that
normally would have been credited but for the absence. If
the normal work hours are unknown, eight hours of service
shall be credited for each normal workday during the leave.
Provided, however, the total number of Hours of Service
required by this paragraph to be treated as completed for
any period shall not exceed 501. The Hours of Service to be
credited under this Section shall be credited in the year in
which the absence begins if such crediting is necessary to
prevent a One Year Break in Service in that year or in the
following year.
Hours of Service will also be credited for any
individual considered an Employee under Section 414(n).
If records of employment with respect to an Employee's
service with the Employer before January 1, 1984 are
insufficient to determine his exact Hours of Service, the
Committee will make reasonable estimates of said Hours of
Service based on such records of employment. Any such Hours
of Service estimates will be made in a uniform,
nondiscriminatory manner and will be binding on all
Employees.
Hours of Service attributable to employment with the
Employer and any Affiliated Employer shall be counted for
all purposes of this Plan, except for the determination of
Years of Benefit Service under Section 1.01(ii), which
credits only Hours of Service accrued while an Employee in
the service of a Participating Employer.
(t) Joint and Survivor Annuity is an annuity for the
life of the Participant, with a survivor annuity for the
life of a Participant's spouse which is 50% of the amount of
the annuity payable for the life of the Participant and
which is the Actuarial Equivalent of the Normal Form of
Benefit.
(u) Non-Vested or Forfeited means that portion of a
benefit to which a Participant would not be entitled under
Section 7.02 if he incurred a Termination of Employment.
(v) Normal Form of Benefit is a benefit payable
monthly for the life of a Participant with no benefits
payable to a Beneficiary upon the Participant's death.
(w) Normal Retirement Date is the first of the month
coinciding with or next following the Participant's
attainment of age 65. A Participant will be fully Vested at
age 65.
(x) Normal Retirement Benefit is the monthly benefit
described in Section 4.01 payable beginning the first of the
month following the Normal Retirement Date.
(y) Participant is an Employee who has met the
eligibility requirements of Chapter II.
(z) Participating Employer means the Employer and any
Affiliated Employer authorized by the Employer to
participate in this Plan, by extending the same to such
Affiliated Employer's eligible Employees.
(aa) Plan means the OshKosh B'Gosh, Inc. Pension Plan
as it may be amended from time to time.
(bb) Plan Administrator is OshKosh B'Gosh, Inc.
(cc) Plan Year is January 1 to December 31.
(dd) Termination of Employment of an Employee for
purposes of the Plan shall be deemed to occur upon his
resignation, discharge, retirement, death, disability,
failure to return to active work at the end of an authorized
leave of absence, or the authorized extension or extensions
thereof, failure to return to work when duly called
following a temporary layoff, failure to return from
military service within the time prescribed by any law
protecting employment rights, or upon the happening of any
other event or circumstance, which, under the policy of the
Employer or an Affiliated Employer, as in effect from time
to time, results in the termination of the employer/employee
relationship.
(ee) Trust means the OshKosh B'Gosh, Inc. Pension Trust
as it may be amended from time to time.
(ff) Trustee is the person(s), corporation, or
combination thereof, and any duly appointed successor or
successors, named as Trustee in the Trust document.
(gg) Trust Fund is the total of contributions made to
the Trust, increased by profits, income, refunds, and other
recoveries received, and decreased by losses and expenses
incurred, and benefits paid.
(hh) Vested is that portion of an Accrued Benefit to
which a Participant has a nonforfeitable right.
(ii) Year of Benefit Service for an Employee means a
Plan Year during which he completes at least 1,000
Hours of Service in the employ of a Participating
Employer. In the event that a Participant is not
employed for the entire Plan Year, a partial Year
of Benefit Service will be earned as follows:
Number of Hours of Service
During a Plan Year Year of Benefit Service
1,000 or more 1.0
900 but less than 1,000 .9
800 but less than 900 .8
700 but less than 800 .7
600 but less than 700 .6
500 but less than 600 .5
400 but less than 500 .4
300 but less than 400 .3
200 but less than 300 .2
100 but less than 200 .1
less than 100 0
Years of Benefit Service prior to January 1, 1984 will
be determined according to the provisions of the Plan in
effect prior to January 1, 1984.
Effective January 1, 1991, Employees at the Employer's
McEwen facility who become Participants under Section 2.01
may earn a Year of Benefit Service or a partial Year of
Benefit Service under the above definition.
(jj) Year of Eligibility Service is the Employment Year
of an Employee, provided he completes at least 1,000 Hours
of Service during such Employment Year. For an Employee who
does not compete at least 1,000 Hours of Service in his
Employment Year, a Year of Eligibility Service is a Plan
Year, starting with the Plan Year next following his Date of
Employment, during which he completes at least 1,000 Hours
of Service.
(kk) Year of Vesting Service is any Plan Year, starting
with the Plan Year in which an Employee is hired by the
Employer or an Affiliated Employer during which such
Employee completes at least 1,000 Hours of Service.
CHAPTER II
ELIGIBILITY AND PARTICIPATION
II.1 Eligibility. On and after January 1, 1989, each
Employee of a Participating Employer will become a Participant in
the Plan the first of the month coincident with or next
following:
(a) his attainment of at least age 21; and
(b) his completion of one Year of Eligibility Service.
Effective May 21, 1991, this Plan is merged with the OshKosh
B'Gosh, Inc. McEwen Hourly Employees' Pension Plan (the "McEwen
Plan"). Employees participating in the McEwen Plan on May 20,
1991, will become Participants in this Plan on May 21, 1991.
Otherwise, Employees at the McEwen facility will become
Participants in this Plan as provided in this Section 2.01.
II.2 Re-Employment. Notwithstanding the provisions of
Section 2.01, any Participant who terminated employment with a
Participating Employer after the effective date of this
restatement, and is later rehired, shall again become eligible to
become a Participant on his most recent Date of Employment.
II.3 Exclusion of Collective Bargaining Employees. An
Employee who is covered by a collective bargaining agreement to
which a Participating Employer is a party will not be eligible to
participate in this Plan unless that collective bargaining
agreement specifically provides for coverage of such Employees
under this Plan.
II.4 Change in Participant Status. In the event a
Participant is no longer a member of the eligible class of
Employees and becomes ineligible to participate, such employee
will participate immediately upon returning to the eligible class
of Employees.
II.5 Employees Not in Eligible Class. In the event an
employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such employee will
participate immediately if such employee has satisfied the
minimum age and service requirements and would have otherwise
previously become a Participant.
CHAPTER III
CONTRIBUTIONS
III.1 Employer Contributions. Upon advice from the
Actuary, the Participating Employers will contribute from time to
time amounts sufficient to fund the benefits under the Plan and
Trust. Such contributions will be paid over to the Trustees of
the Trust Fund. To the extent any contributions are not
deductible under Code Section 404, such contributions shall be
returned to the Participating Employers.
III.2 Funding Policy. In order to implement and carry
out the provisions of the Plan and finance the benefits under the
Plan, the Employer will establish and maintain a funding policy
with respect to the Trust Fund in a manner consistent with
applicable law.
III.3 Employee Contributions. Employee contributions
are not permitted under this Plan.
CHAPTER IV
RETIREMENT BENEFITS
IV.1 Normal Retirement Benefit.
(a) A Participant who retires from a Participating
Employer on his Normal Retirement Date is entitled to a
monthly Normal Retirement Benefit, payable in the Normal
Form of Benefit, in an amount equal to the sum of 1% of the
Participant's five-year average monthly compensation (the
average of any five consecutive Plan Years or if the actual
number of such Years is less than five, the average based on
the number of completed months, which produce the highest
average) multiplied by his Years of Benefit Service.
(b) A Participant who terminates from employment
before January 1, 1992, and who was transferred by the
Employer from employment covered by another pension plan of
the Employer to employment covered by this Plan, will have
his retirement benefits calculated based on his Years of
Benefit Service earned after his date of transfer.
(c) A Participant who terminates on or after
January 1, 1992, but before January 1, 1993, and who was
transferred by the Employer from employment covered by
another pension plan of the Employer to employment covered
by this Plan, will have his retirement benefits determined
as follows: the Normal Retirement Benefit will be the
greater of the amount determined under paragraph (a) of this
Section 4.01 (based on his Years of Benefit Service earned
after his date of transfer) or an amount equal to the
product of (1) times (2), with such product reduced by (3),
as follows:
(1) the unit benefit (e.g., the dollar amount
that is multiplied by Years of Benefit Service), as of
the Employee's Termination of Employment from this
Plan, payable from the plan under which the Employee
was covered prior to the transfer;
(2) the Employee's total Years of Benefit Service
(including service under the plan which the Employee
was covered prior to the transfer);
(3) the actual benefit payable from the plan
under which the Employee was covered prior to the
transfer.
(d) A Participant who terminates from employment on or
after January 1, 1993, and who, before January 1, 1989, was
transferred by the Employer from employment covered by
another pension plan of the Employer to employment covered
by this Plan, will have his retirement benefits calculated
based on all of his Years of Benefit Service earned
including employment covered by the other pension plan.
(e) A Participant who terminates on or after
January 1, 1993, and who, on or after January 1, 1989, was
transferred by the Employer from employment covered by
another pension plan of the Employer to employment covered
by this Plan, will have his retirement benefits determined
under paragraph (c) of this Section 4.01.
(f) The retirement benefits under this Plan of an
Employee who is transferred by the Employer from employment
covered by this Plan to employment covered by another
pension plan of a Participating Employer, will be calculated
up to his date of transfer.
(g) Effective May 21, 1991, this Plan and the McEwen
Plan are merged. Any Accrued Benefit earned under the terms
of the McEwen Plan before May 21, 1991, shall be payable
under this Plan. The retirement benefits under this Plan
applicable to Employees at the Employer's McEwen facility
will be calculated based on Years of Benefit Service on or
after January 1, 1991. For the Plan Year ending
December 31, 1991, such Employees shall accrue a benefit
equal to the greater of the benefit accrued under this Plan
(including all service on or after January 1, 1991) or the
benefit accrued under the McEwen Plan between January 1,
1991 and May 20, 1991. For purposes of calculating a
Participant's five year average monthly compensation for any
Plan Year before January 1, 1991, this Plan will take into
account compensation earned under the terms of the McEwen
Plan then in effect.
IV.2 Early Retirement. A Participant who is eligible for
Early Retirement may retire from the employ of a Participating
Employer at any time prior to his Normal Retirement Date. Such
Participant may elect to begin receiving his early retirement
benefit on or after his Early Retirement Date, subject to the
provisions of Section 8.01. For purposes of this Section 4.02,
the amount of a Participant's early retirement benefit is equal
to his Accrued Benefit. Such benefit will be reduced to its
Actuarial Equivalent for each month that benefits commence before
Normal Retirement Date.
IV.3 Late Retirement. If a Participant remains in the
employ of a Participating Employer after his Normal Retirement
Date, unless an election to the contrary is made under Section
8.01, his benefit payments will begin no later than his Required
Beginning Date, as defined in Section 8.01. The amount of the
benefit payable when such Participant actually retires from the
employ of a Participating Employer will be calculated in the same
manner as the Normal Retirement Benefit including Compensation
and Years of Benefit Service after the Participant's Normal
Retirement Date. Such benefit will be offset by the Actuarial
Equivalent of any benefit previously paid under this Plan to such
Participant.
However, if a Participant remains in the employ of a
Participating Employer after his Normal Retirement Date, such
Participant, upon his subsequent retirement, shall have the value
of his benefit in the Normal Form increased by the Actuarial
Equivalent of the monthly benefit in the Normal Form to which he
would have been entitled had he not continued in employment, for
any month after his Normal Retirement Date until the date that
benefits actually commence. In the event of such Participant's
death while continuing in the employ of a Participating Employer
after his Normal Retirement Date, the Actuarial Equivalent value
of the additional benefit that would have been provided under the
preceding sentence shall be added to the value of his benefit for
purposes of any death benefit that may be payable under Chapter
VI or VIII.
IV.4 Non-Duplication of Benefit. Under no circumstances
will the benefit of any Employee who has incurred a Termination
of Employment and is later rehired by a Participating Employer be
greater than the benefit he would have received if the
Termination of Employment had not occurred and he had been
continuously employed. Upon such Participant's later retirement
or Termination of Employment, the Participant's Normal Retirement
Benefit shall be reduced by the Actuarial Equivalent of any
benefit previously paid under this Plan to such Participant.
IV.5 Re-Employment. If a former Employee who is receiving
benefits from the Plan and Trust returns to the employ of the
Employer or an Affiliated Employer, his benefit payments shall
continue uninterrupted.
CHAPTER V
BENEFIT LIMITATIONS
V.1 Definitions. For purposes of this Chapter V, the
capitalized terms defined below will have the following meaning
when capitalized:
Annual Additions means the total of the following amounts,
if any, which are allocated to the Combined Accounts of a
Participant:
(a) Employer contributions (excluding Employer
contributions arising from an award of back pay by agreement
with the Employer or by court order);
(b) Amounts forfeited by non-Vested previous
Participants;
(c) Non-deductible voluntary Employee contributions.
For purposes of determining Annual Additions, a rollover
contribution from an IRA of a Participant, or from his account in
the qualified retirement plan of his previous employer will not
be included.
Average Compensation of a Participant is his Total
Compensation during the three consecutive Limitation Year period
in which he earned a Year of Vesting Service and which produces
the highest average.
Combined Accounts means the total of all accounts of a
Participant in all of the Defined Contribution Plans of the
Employer.
Defined Benefit Plan is a retirement plan which does not
provide for benefits from an individual account of a Participant,
but rather such benefits are based on a benefit formula provided
by the Plan.
Defined Contribution Plan is a retirement plan which
provides for an individual account for each Participant and for
benefits based entirely on the balance of that account. The
account balance is usually derived from contributions, income,
expenses, market value increases or decreases, and sometimes
non-Vested (Forfeited) amounts from Participants who terminate
employment before retirement.
Employer means the employer that adopts this Plan. All
members of a controlled group of corporations (as defined in
Section 414(h) as modified by Section 415(h) of the Code), all
trades or businesses (whether or not incorporated) under common
control (as defined by Section 414(c) as modified by Section
415(h) of the Code), or all members of an affiliated service
group (as defined in Section 414(m) of the Code), will be
considered a single employer for the purposes of applying the
limitations of this Chapter.
Limitation Year is the Plan Year.
Total Compensation includes a Participant's earned income,
wages, salaries, and fees for professional service and other
amounts received for personal services actually rendered in the
course of employment with an Employer maintaining the plan
(including but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips and bonuses) and
excluding the following:
(a) Employer contributions to a plan of deferred
compensation which are not included in the gross income of
the Employee for the taxable year in which contributed, or
on behalf of an Employee to a simplified employee pension
plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
(b) Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock (or
property) held by an 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 qualified stock
option; and
(d) Other amounts which receive special tax benefits,
or contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of a
403(b) annuity contract (whether or not the contributions
are excludable from the gross income of the Employee).
Notwithstanding the above definition, from and after
January 1, 1998, Total Compensation shall include any
elective deferral contributions (as defined in Code Section
402(g)(3)) and any amounts contributed or deferred by the
Employer at the election of the Participant which are not
included in the gross income of the Participant by reason of
Code Section 125 or 457.
V.2 General Limitations. Under no circumstances will the
total annual benefits (which, for purposes of this Chapter means
benefits payable in the form of a straight life annuity, without
ancillary benefits, or if payable in some other form, the
Actuarial Equivalent (computed using an interest rate of 5%) of
such form) derived from Employer contributions and payable under
all Combined Plans to a Participant who retires at or after the
Social Security Retirement Age (as defined in Code Section
415(b)(8)) exceed the lesser of the following for any Limitation
Year:
(a) $90,000 (the "Dollar Limitation") (effective on
January 1, 1988, and each January 1 thereafter, the $90,000
limitation above will be automatically adjusted to the new
dollar limitation determined by the Commissioner of Internal
Revenue for that calendar year. The new limitation will
apply to Limitation Years ending within the calendar year of
the date of the adjustment.)
(b) 100% of his Average Compensation (as defined in
Section 5.01) (the "Compensation Limitation").
If the annual benefit commences after the Social Security
Retirement Age, the benefit may not exceed the Actuarial
Equivalent of a single life annuity equal to the Dollar
Limitation commencing on the Participant's Social Security
Retirement Age. To determine Actuarial Equivalence after the
Social Security Retirement Age, in the preceding sentence, an
interest rate assumption of 5% will be used.
If the annual benefit commences before a Participant's
attainment of his Social Security Retirement Age, the Dollar
Limitation applicable to such benefit shall be reduced to an
amount which is equal to a single life annuity commencing at the
same time which is the Actuarial Equivalent of a single life
annuity equal to the Dollar Limitation commencing on the
Participant's Social Security Retirement Age.
Notwithstanding the above, if the Participant was a
Participant in a plan in existence on July 1, 1982, the maximum
permissible amount shall not be less than the Participant's
accrued benefit as of September 30, 1983.
Notwithstanding the foregoing provisions of this Section 5,
if the maximum limitations on retirement benefits, with respect
to any person who was a Participant prior to January 1, 1987 and
whose retirement benefit (determined without regard to any
changes in the Plan after May 6, 1986 and without regard to
cost-of-living adjustments occurring after December 31, 1986)
exceeds the limitations set forth in this Section, then, for
purposes of such Section and Section 415(b) and (e) of the Code,
the Dollar Limitations with respect to such Participant shall be
equal to such Participant's retirement benefit as of December 31,
1986; provided that such Participant's retirement benefit did not
exceed the maximum limitation as in effect for all the Plan Years
prior to January 1, 1987.
Regardless of anything to the contrary, the limitations
described in Section 5.02(a) and (b) above will not apply if the
annual benefits of a Participant under all Combined Defined
Benefit Plans do not exceed $10,000 in the Plan Year or any prior
Plan Year, and if he has never been a Participant in any Defined
Contribution Plan of the Employer.
V.3 Less Than 10 Years. If the annual benefit commences
when the Participant has completed less than ten years of Vesting
Service with the Employer, the limitations described in Section
5.02 will be reduced by 10% for each Year of Vesting Service less
than ten.
V.4 Limitations if Participant in Other Plan(s). If a
Participant is also a Participant in a Defined Contribution Plan
(or Plans) maintained by the Employer, the decimal equivalent of
the sum of the fractions determined as follows for all Defined
Benefit Plans and Defined Contribution Plans maintained by the
Employer in which he participates shall not exceed 1.0 for any
Limitation year:
(a) A defined benefit fraction, the numerator being
the projected total annual benefits of the Participant under
all Employer-sponsored Defined Benefit Plans (whether or not
terminated), and the denominator being the lesser of:
(1) the product of 1.25 multiplied by $90,000
(or, if permitted by applicable law, such other dollar
amount as is specified annually by the Secretary of the
Treasury, or his delegate); or
(2) the product of 1.4 multiplied by the
Participant's Average Compensation.
(b) A defined contribution fraction, the numerator
being the sum of the actual Annual Additions to the
Participant's Combined Accounts under all Defined
Contribution Plans (whether or not terminated) maintained by
the Employer for the current and all prior Limitation Years,
and the denominator being the sum of the lesser of the
following amounts determined for such Limitation Year and
all prior Limitation Years of the Participant's service with
the Employer (regardless of whether a Defined Contribution
Plan was maintained by the Employer):
(1) the product of 1.25 multiplied by $30,000
(or, if greater, one-fourth of the Dollar Limitation in
effect under Code Section 415(b)(1)(A)); or
(2) the product of 1.4 multiplied by 25% of his
Total Compensation for such Limitation Year.
In the event the projected annual benefits of a Participant
under all Defined Benefit Plans cause the total of the fractions
determined under (a) and (b) above to exceed 1.0, the annual
benefits under the Employer-sponsored Defined Benefit Plans will
be reduced to the extent necessary so that the sum of the defined
benefit plan fraction and defined contribution plan fraction do
not exceed 1.0.
From and after January 1, 2000, the special limitations set
forth in this Section 5.04 shall no longer apply.
CHAPTER VI
PRE-RETIREMENT DEATH BENEFITS
VI.1 Death Benefits. Except as provided in Section 6.03 and
Chapter VIII, any death benefits payable under the Plan and Trust
will be according to the provisions of this Section 6.01.
The Beneficiary of any Participant (including former
Participants with deferred vested benefits) who dies before his
Annuity Starting Date will be entitled to a lump sum death
benefit, payable as soon as administratively possible after the
Participant's death, equal to the present Actuarial Equivalent
value (as determined by the Actuary) of the Accrued Benefit of
such Participant on his date of death.
VI.2 Death Benefit Limitations. Except as provided in
Sections 6.01, 6.03 and Chapter VIII, the Beneficiary or spouse
of any Participant who dies will not be entitled to any death
benefit under the Plan and Trust.
VI.3 Pre-Retirement Death Benefit for Surviving Spouse;
Post-Retirement Death Benefits. Unless the Participant has
designated someone other than his spouse as the primary
Beneficiary under the provisions of Section 9.01, the death
benefit payable to the spouse of a Participant (including a
former Participant with deferred vested benefits) who dies before
his Annuity Starting Date will be in the form of a single life
annuity for the life of such spouse which is the Actuarial
Equivalent of the Accrued Benefit of such Participant. The
surviving spouse may elect to commence payment of such annuity
within a reasonable period after the Participant's death. Absent
an election by the surviving spouse, payment of such annuity will
start on the later of the Participant's date of death or the date
when the Participant would have attained age 62. The surviving
spouse may also elect the lump sum death benefit specified in
Section 6.01 above in lieu of such annuity. If the Participant
dies after benefits have commenced under one of the forms
specified in Chapter VIII, the death benefits payable, if any,
will be in accordance with the form of payment then in effect.
CHAPTER VII
OTHER TERMINATION AND VESTING
VII.1 Full Vesting Dates. Upon the date of a
Participant's death, retirement or incurrence of a Disability, he
will be fully Vested in his Accrued Benefit.
VII.2 Vesting Schedule. A Participant who has completed
at least 5 Years of Vesting Service and who terminates his
employment with the Employer or an Affiliated Employer for
reasons other than death, Disability, or retirement will be fully
Vested in his Accrued Benefit. If a Participant terminates his
employment with the Employer or an Affiliated Employer for
reasons other than death, Disability, or retirement before he has
completed 5 Years of Vesting Service, he will not be Vested in
any benefit in this Plan and his entire Accrued Benefit will be
forfeited.
VII.3 Commencement of Benefits. The payment of any
Vested Accrued Benefit determined under this Chapter will start
on the date specified in Section 8.01, and will be adjusted for
either or both of the following reasons:
(a) If payments start on a date prior to the
Participant's Normal Retirement Date, such payments will be
adjusted as specified in Section 4.02;
(b) If payments are in a form other than the Normal
Form of Benefits, such payments will have an Actuarial
Equivalent adjustment made.
VII.4 Forfeiture. Any Non-Vested Accrued Benefit
determined under this Chapter, or any other benefit forfeited by
a Participant who dies but is not eligible for death benefits
under the Plan and Trust will be retained in the Trust Fund and
will be used to reduce the future Participating Employer
contributions to the Plan.
VII.5 Resumption of Participation. If an Employee
returns to the employ of a Participating Employer following a
Break in Service, his Years of Vesting Service and Years of
Benefit Service which occurred before such Break in Service will
be aggregated with his Years of Vesting Service and Years of
Benefit Service occurring after such Break in Service if he also
meets either of the following requirements:
(a) If he was Vested in some or all of his Accrued
Benefit under this Plan at the time his Break in Service
occurred; or
(b) Even if he was not Vested in his Accrued Benefit
at the time of his Break in Service, if the number of
consecutive One Year Breaks in Service is less than the
Years of Vesting Service which occurred before such Break in
Service.
CHAPTER VIII
PAYMENT OF BENEFITS
VIII.1 Commencement of Benefits. Unless a Participant
elects in writing to further defer the starting date of any
benefit payable under the Plan and Trust, benefits must begin to
be paid within 60 days after the later of:
(a) the last day of the Plan Year in which he attains
age 65; or
(b) the last day of the Plan Year in which he incurs a
Termination of Employment.
Effective January 1, 2000, and notwithstanding any other
provisions of this Plan but subject to the special rules
pertaining to 5% owners and certain other Participants set forth
below, any benefit payable to a Participant shall commence no
later than the "Required Beginning Date" for a Participant under
Code Section 401(a)(9), as amended by the Small Business Job
Protection Act of 1996, which is the 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 or terminates service with the
Employer or an Affiliated Employer.
However, any benefit payable to a Participant who is a more
than 5% owner of the "employer" as defined in Code Section 416
with respect to the Plan Year ending in the calendar year in
which such Participant attains age 70 1/2 shall commence no later
than the April 1st of the calendar year following the calendar
year in which such Participant attains age 70 1/2, even if he has
not separated from service as of such date.
Further, any Participant continuing in the service of the
Employer or an Affiliated Employer who attained age 70 1/2 after
December 31, 1996 but before January 1, 2000 shall have an option
to elect either to begin receiving benefits starting no later
than April 1st of the calendar year following the calendar year
in which such Participant attains age 70 1/2 or to defer the
commencement thereof (and, if applicable, to stop the current
receipt of benefits) until retirement or termination of service.
Any distribution of benefits that was being made to such a
Participant in the Joint and Survivor Annuity form may be stopped
under the preceding sentence only if consent of the person who
was such Participant's spouse when the benefit payments initially
commenced is obtained and such consent acknowledges the effect of
the election to stop. Any commencement or recommencement of
benefits starting after retirement or termination of service of a
Participant who has elected to defer (and, if applicable to stop
the current receipt of benefits) shall be subject to all of the
provisions of Section 8.02 dealing with the mandatory Joint and
Survivor Annuity form of distribution for married Participants
and the single life annuity form for single Participants and the
circumstances under which some other form of distribution may be
elected.
Any Participant who incurs a Termination of Employment and
who later attains the age specified as an Early Retirement Date
may elect in writing to the Committee to have his benefit
payments begin at any time following such age. Once such
election is made, benefit payments must begin within 60 days
after the date specified in the election.
Notwithstanding any provision of the Plan to the contrary,
if the Vested portion of the Accrued Benefit of a Participant who
terminates, retires, or dies does not exceed $3,500, the Vested
Accrued Benefit shall be distributed in the form of a single sum
cash distribution as soon as practicable following the
Participant's termination.
If a distribution is one to which Sections 401(a)(11) and
417 of the Internal Revenue Code 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:
(a) 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
(b) the Participant, after receiving the notice,
affirmatively elects a distribution.
VIII.2 Automatic Joint and Survivor Benefits. Unless an
optional form of benefit is selected pursuant to a qualified
election within the 90-day period ending on the Annuity Starting
Date, a married Participant's Vested Accrued Benefit will be paid
in the form of a Joint and Survivor Annuity. A qualified
election is a waiver of a Joint and Survivor Annuity. The waiver
must be in writing and must be consented to by the Participant's
spouse. The spouse's consent to a waiver must acknowledge the
designation of a specific alternative beneficiary in writing
signed by the spouse and witnessed by a Plan representative or
notary public. Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of a Plan
representative that such written consent may not be obtained
because there is no spouse or the spouse cannot be located,
waiver will be deemed a qualified election. Any consent
necessary under this provision will be valid only with respect to
the spouse who signs the consent, or in the event of a deemed
qualified election, the designated spouse. Additionally, a
revocation of a prior waiver may be made by a Participant without
the consent of the spouse at any time before the commencement of
benefit. The number of revocations shall not be limited.
In the case of a Joint and Survivor Annuity as described
above, the Committee shall provide each Participant within a
reasonable period under applicable regulations (currently, not
less than 30 and no more than 90 days) prior to the Annuity
Starting Date a written explanation of:
(a) the terms and conditions of a Joint and Survivor
Annuity;
(b) the Participant's right to make and the effect of
an election to waive the Joint and Survivor Annuity form of
benefit;
(c) the rights of a Participant's spouse; and
(d) the right to make, and the effect of, a revocation
of a previous election to waive the Joint and Survivor
Annuity. If the Participant, after having received the
above written explanation, affirmatively elects a form of
distribution (with spousal consent if the form is other than
the Joint and Survivor Annuity), the Plan may treat such
election as a waiver of any remaining portion of the 30-day
notice period, provided the distribution does not commence
before the expiration of a 7-day period beginning the day
after the Participant has received the above written notice
and other requirements of applicable regulations are
satisfied.
Unless an optional form of benefit is selected, an unmarried
Participant's Vested Accrued Benefit will be paid in the form of
a single life annuity under Section 8.03.
VIII.3 Optional Forms of Payment. Except where a Joint
and Survivor Annuity is required by Section 6.01 or Section 8.02,
all benefit payments will be made in the Normal Form of Benefit
unless the Participant (or his Beneficiary, if he is deceased)
selects in writing one, or a combination of, the following
optional forms of benefits:
(a) life income annuity;
(b) a joint and survivor annuity providing a survivor
benefit to any Beneficiary which is at least 50% but not
greater than 100% of the Participant's benefit;
(c) a term certain annuity for 120 months, or 180
months;
(d) a lump sum payment, but only if Termination of
Employment is due to retirement, death, or Disability.
(e) if the Participant was employed at the McEwen
facility, then he or his Beneficiary may select a life
annuity with 120 or 180 monthly benefits guaranteed.
Any benefit payable in a form other than the Normal Form of
Benefit will be the Actuarial Equivalent of the benefit which
would have been payable in the Normal Form of Benefit.
Any annuity contracts which may be purchased to provide Plan
benefits will be nontransferable.
VIII.4 Incidental Death Benefits. Regardless of any
statement (with the exception of Section 8.02) to the contrary,
the ability of any Participant or any Beneficiary to select the
timing and method of a distribution option will be limited by the
following provisions:
(a) If the Participant's entire interest is to be
distributed in other than a lump sum, then the amount to be
distributed each year must be at least an amount equal to
the quotient obtained by dividing the Participant's entire
interest by the life expectancy of the Participant or joint
and last survivor expectancy of the Participant and
designated Beneficiary. Life expectancy and joint and last
survivor expectancy are computed by the use of the return
multiples contained in Section 1.72-9 of the Income Tax
Regulations. For purposes of this computation, a
Participant's life expectancy may be recalculated no more
frequently than annually, however, the life expectancy of a
nonspouse Beneficiary may not be recalculated. If the
Participant's spouse is not the designated Beneficiary, the
method of distribution selected must satisfy the minimum
death incidental benefit requirements of Section
1.401(a)(9)-2 of the regulations which are incorporated
herein by this reference.
(b) If the Participant dies after distribution of his
or her interest has commenced, the remaining portion of such
interest will continue to be distributed at least as rapidly
as under the method of distribution being used prior to the
Participant's death.
(c) If the Participant dies before distribution of his
or her interest commences, the Participant's entire interest
will be distributed no later than five years after the
Participant's death except to the extent that an election is
made to receive distribution in accordance with (1) or (2)
below:
(1) If any portion of the Participant's interest
is payable to a designated Beneficiary, distributions
may be made in substantially equal installments over
the life or life expectancy of the designated
Beneficiary commencing no later than one year after the
Participant's death;
(2) If the designated Beneficiary is the
Participant's surviving spouse, the date distributions
are required to begin in accordance with (1) above
shall not be earlier than the date on which the
Participant would have attained age 70 1/2, and, if the
spouse dies before payments begin, subsequent
distributions shall be made as if the spouse had been
the Participant.
(d) For purposes of 8.04(c) above, payments will be
calculated by use of the return multiples specified in
Section 1.72-9 of the regulations. Life expectancy of a
surviving spouse may be recalculated annually, however, in
the case of any other designated Beneficiary, such life
expectancy will be calculated at the time payment first
commences without further recalculation.
(e) For purposes of this Section 8.04, any amount paid
to a child of the Participant will be treated as if it had
been paid to the surviving spouse if the amount becomes
payable to the surviving spouse when the child reaches the
age of majority.
VIII.5 Transfers. The Plan will not accept the transfer
into the Trust Fund of IRA's or distributions to Participants
from other retirement plans.
VIII.6 No Other Benefits. Except as provided in Chapter
XII, no payments shall be made from the Plan and Trust to a
Participant except for retirement, death, Disability, or other
Termination of Employment.
VIII.7 Direct Rollover.
(a) This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a
Distributee's election under this Section, 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) Definitions
(i) 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:
1 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
years or more;
2 any distribution to the extent such
distribution is required under Section 401(a)(9)
of the Code;
3 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);
4 returns of Section 401(k) elective
deferrals that are returned as a result of the
Section 415 limitations;
5 corrective distributions of excess
contributions, excess deferrals, and excess
aggregate contributions, together with the income
allocable to these corrective distributions;
6 loans treated as distributions under
Section 72(p) and not excepted by Section
72(p)(2);
7 loans in default that are deemed
distributions;
8 a distribution less than $200; and
9 similar items designated by the IRS in
revenue rulings, notices, and other guidance of
general applicability.
(ii) 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.
(iii) 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 Employees'spouse or former
spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p)
of the Code, are Distributees with regard to the
interest of the spouse or former spouse.
(iv) Direct Rollover: A Direct Rollover is a
payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.
CHAPTER IX
DESIGNATION OF BENEFICIARY
IX.1 Beneficiary Designation; Election of Non-Spouse
Beneficiary. Each Participant may name or change the name of his
Beneficiary(ies) who will receive any death benefits payable
under Chapters VI or VIII of the Plan. However, any designation
by a married Participant of someone other than his spouse as the
primary Beneficiary for any pre-retirement death benefit payable
under Section 6.01 of the Plan is an election to waive the
pre-retirement surviving spouse death benefit under Section 6.03
and must be made by the Participant in writing during the
election period described below and shall not be effective
unless:
(a) the Participant's spouse consents in writing to
the election;
(b) the election designates a specific alternate
Beneficiary, including any class of Beneficiaries or any
contingent Beneficiaries, which may not be changed without
spousal consent (or the spouse expressly permits
designations by the Participant without any further spousal
consent);
(c) the spouse's consent acknowledges the effect of
the election; and
(d) the spouse's consent is witnessed by a plan
representative or notary public.
If it is established to the satisfaction of a plan
representative that such written consent may not be obtained
because there is no spouse or the spouse cannot be located, a
waiver will be deemed a qualified election.
The election period to waive the pre-retirement surviving
spouse death benefit begins on the first day of the Plan Year in
which the Participant attains age 35 or the date of the
Participant's termination of service, if earlier, and ends on the
date of the Participant's death. An earlier waiver (with spousal
consent) may be made, but it will become invalid at the beginning
of the Plan Year in which the Participant attains age 35 or the
date of a vested Participant's termination of service, if
earlier. However, a new waiver and consent form may be signed
thereafter at any time during the election period.
With regard to the election, the Committee shall provide
each Participant within the applicable period, with respect to
such Participant (and consistent with regulations), a written
explanation of the pre-retirement surviving spouse death benefit
containing comparable information to that required pursuant to
Section 8.02. For the purposes of this paragraph, the term
"applicable period" means, with respect to a Participant,
whichever of the following periods ends last:
(a) The period beginning with the first day of the
Plan Year in which the Participant attains age 32 and ending
with the close of the Plan Year preceding the Plan Year in
which the Participant attains age 35;
(b) One year ending after the individual becomes a
Participant;
(c) One year ending after the Plan no longer fully
subsidizes the cost of the pre-retirement surviving spouse
death benefit with respect to the Participant; or
(d) One year ending after Code Section 401(a)(11)
first applies to the Participant.
Notwithstanding the foregoing, notice must be provided
within a reasonable period ending after separation from service
in the case of a Participant who separates before attaining age
35. For this purpose, the Committee must provide the explanation
within a period beginning one year before the separation from
service and ending one year after such separation. If such a
Participant thereafter returns to employment with a Participating
Employer, the applicable period for such Participant shall be
redetermined.
IX.2 Priority If No Designated Beneficiary. If there is no
Beneficiary designation form on file, or if the designated
Beneficiary(ies) predeceases the Participant, benefit payments
required under the Plan and Trust to be payable on death to the
Beneficiary(ies) will be distributed in the following order of
priority:
(a) to the surviving spouse; or if none
(b) to the surviving issue (per stirpes and not per
capita); or, if none
(c) to the surviving parents equally, or, if one is
deceased, to the survivor of them; or, if none
(d) to the estate of the Participant.
CHAPTER X
TOP-HEAVY PROVISIONS
X.1 Provisions Will Control. If the Plan is or becomes
Top-Heavy in any Plan Year beginning after December 31, 1983, the
provisions of Chapter X will supersede any conflicting provisions
in the Plan.
X.2 Definitions. For purposes of this Chapter X the
following definitions shall apply:
(a) Employer: Means all Participating Employers and
all Affiliated Employers.
(b) Key Employee: Any Employee or former Employee
(and the Beneficiaries of such Employee) who at any time
during the Determination Period was:
(1) an officer of the Employer having annual
compensation from the Employer greater than 1.5 times
the amount in effect under Section 415(c)(1)(A) for any
such Plan Year;
(2) an owner (or considered an owner under
Section 318 of the Code) of one of the ten largest
interests in the Employer if such individual's
compensation exceeds the dollar limitation under
Section 415(c)(1)(A) of the Code;
(3) a 5% owner of the Employer; or
(4) a 1% owner of the Employer who has an annual
compensation of more than $150,000.
The Determination Period is the Plan Year containing
the Determination Date and the 4 preceding Plan Years. The
determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
(c) Top-Heavy Plan: For any Plan Year beginning after
December 31, 1983, this Plan is Top-Heavy if any of the
following conditions exist:
(1) If the Top-Heavy Ratio for this Plan exceeds
60% and this Plan is not part of any Required
Aggregation Group or Permissive Aggregation Group of
Plans.
(2) If this Plan is a part of a Required
Aggregation Group of plans but not part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the group
of plans exceeds 60%.
(3) If this Plan is a part of a Required
Aggregation Group and part of a Permissive Aggregation
Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(d) Top-Heavy Ratio:
(1) If the Employer maintains one or more defined
benefit plans and the Employer has not maintained any
defined contribution plans (including any Simplified
Employee Pension Plan) which during the 5-year period
ending on the Determination Date(s) has or has had
account balances, the Top-Heavy Ratio for this Plan
alone or for the Required or Permissive Aggregation
Group, as appropriate, is a fraction, the numerator of
which is the sum of the Present Value of Accrued
Benefits of all Key Employees as of the Determination
Date(s) (including any part of any Accrued Benefit
distributed in the 5-year period ending on the
Determination Date(s)), and the denominator of which is
the sum of all Accrued Benefits (including any part of
any Accrued Benefits distributed in the 5-year period
ending on the Determination Date(s)) determined in
accordance with Section 416 of the Code and the
regulations thereunder.
(2) If the Employer maintains one or more defined
benefit plans and the Employer maintains or has
maintained one or more defined contribution plans
(including any Simplified Employee Pension Plan) which
during the 5-year period ending on the Determination
Date(s) has or has had account balances, the Top-Heavy
Ratio for any Required or Permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which
is the sum of account balances under the aggregate
defined contribution plan or plans for all Key
Employees and the Present Value of Accrued Benefits
under the aggregate defined benefit plan or plans for
all Key Employees, and the denominator of which is the
sum of the account balances under the aggregate defined
contribution plan or plans for all Participants and the
Present Value of Accrued Benefits under the aggregate
defined benefit plan or plans for all Participants as
determined in accordance with Section 416 of the Code
and the regulations thereunder. The account balances
under a defined contribution plan and the Accrued
Benefits under a defined benefit plan in both the
numerator and denominator of the Top-Heavy Ratio are
adjusted for any distribution made in the 5-year period
ending on the Determination Date.
(3) For purposes of (1) and (2) above, the value
of account balances and the Present Value of Accrued
Benefits will be determined as of the most recent
Valuation Date that falls within or ends with the
12-month period ending on the Determination Date except
as provided in Section 416 of the Code and the
regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances
and Accrued Benefits of a Participant who:
(v) is not a Key Employee but who was a Key
Employee in a prior year; or
(vi) has not received any compensation from
any Employer maintaining the Plan at any time
during the 5-year period ending on the
Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent
to which distributions, rollovers, and transfers
are taken into account will be made in accordance
with Section 416 of the Code and the regulations
thereunder. Deductible employee contributions
will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating
plans the value of account balances and Accrued
Benefits will be calculated with reference to the
Determination Dates that fall within the same
calendar year.
(e) Permissive Aggregation Group: The Required
Aggregation Group of plans plus any other plan or plans of
the Employer which, when considered as a group with the
Required Aggregation Group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
(f) Required Aggregation Group:
(4) Each qualified plan of the Employer in which
at least one Key Employee participates, and
(5) any other qualified plan of the Employer
which enables a plan described in (1) to meet the
requirements of Sections 401(a)(4) or 410 of the Code.
(g) Determination Date: For any Plan Year subsequent
to the first Plan Year, the last day of the preceding Plan
Year. For the first Plan Year of the Plan, the last day of
that year.
(h) Valuation Date: The first day of the Plan Year,
as of which account balances or Accrued Benefits are valued
for purposes of calculating the Top-Heavy Ratio.
(i) Present Value: Present Value shall be based only
on the Actuarial Equivalent interest and mortality rates
specified in Section 1.01(c)
X.3 Minimum Accrued Benefit:
(a) Notwithstanding any other provision in this Plan
except (c), (d), and (e) below, for any Plan Year in which
this Plan is Top-Heavy, each Participant who is employed on
the last day of the Plan Year will accrue a benefit (to be
provided solely by Employer contributions and payable in the
Normal Form of Benefit) of 2.0% of his or her highest
average compensation for the five consecutive years for
which the Participant had the highest compensation. The
minimum accrual is determined without regard to any Social
Security contribution. The minimum accrual applies even
though under other Plan provisions the Participant would not
otherwise be entitled to receive an accrual, or would have
received a lesser accrual for the year.
(b) For purposes of computing the minimum accrued
benefit, compensation will include all wages subject to tax
under Section 3101(a) without the dollar limitation of
Section 3121(a), but not including deferred compensation
other than contributions through a salary reduction
agreement to a cash or deferred plan under Section 401(k) or
to a tax deferred annuity under Section 403(b) of the Code.
(c) No additional benefit accruals shall be provided
pursuant to (a) above to the extent that the total accruals
on behalf of the Participant attributable to Employer
contributions will provide a benefit expressed as a life
annuity commencing at the Normal Retirement Date that equals
or exceeds 20% of the Participant's highest average
compensation for the five consecutive years for which the
Participant had the highest compensation.
(c) The provisions in (a) above shall not apply to any
Participant to the extent that the Participant is covered
under any other plan or plans of the Employer. In such
case, the minimum allocation or benefit requirement
applicable to this Top-Heavy plan will be met in the other
plan or plans.
(d) All accruals of Employer derived benefit, whether
or not attributable to years for which the Plan is
Top-Heavy, may be used in computing whether the minimum
accrual requirements of paragraph (c) above are satisfied.
X.4 Adjustment for Benefit Form Other Than Life Annuity.
If the Normal Form of Benefit is other than a single life
annuity, the Employee must receive an amount that is the
Actuarial Equivalent of the minimum single life annuity benefit.
If the benefit commences at a date other than the Normal
Retirement Date, the Employee must receive at least an amount
that is the Actuarial Equivalent of the minimum single life
annuity benefit commencing at the Normal Retirement Date.
X.5 Nonforfeitability of Minimum Accrued Benefit. The
minimum accrued benefit required (to the extent required to be
nonforfeitable under Section 416(b)) may not be forfeited due to
any suspension of benefits upon re-employment of retiree.
X.6 Minimum Vesting Schedules. For any Plan Year in which
this Plan is Top-Heavy, the following vesting schedule will
automatically apply to the Plan:
Years of Vesting Service Vested Percentage
1 0%
2 20%
3 40%
4 60%
5 100%
The minimum vesting schedule applies to all benefits within
the meaning of Section 411(a)(7) of the Code, including benefits
accrued before the effective date of Section 416 and benefits
accrued before the Plan became Top-Heavy. Further, no reduction
in Vested benefits may occur in the event the Plan's status as
Top-Heavy changes for any Plan Year. However, this Section does
not apply to the Accrued Benefits of any Employee who does not
have an Hour of Service after the Plan has initially become
Top-Heavy and such Employee's Accrued Benefits attributable to
Employer contributions will be determined without regard to this
Section. If the vesting schedule under the Plan shifts in or out
of the above schedule for any Plan Year because of the Plan's
Top-Heavy status, such shift is an amendment to the vesting
schedule and the election in Section 11.01(c) of the Plan
applies.
X.7 Compensation Limitation. For any Plan Year in which
the Plan is Top-Heavy, only the first $200,000 (or such larger
amount as may be prescribed by the Secretary or his delegate) of
a Participant's annual Compensation shall be taken into account
for purposes of determining benefits under the Plan.
CHAPTER XI
AMENDMENT OF THE PLAN
XI.1 Amendment by Employer. The Employer may, by resolution
of its Board of Directors, amend this Plan at any time. Any
amendment by the Employer will be subject to the following rules:
(a) Without its written consent, no amendment may
increase the duties or liabilities of the Trustee.
(b) Except as permitted by law, no amendment may
provide for the use of funds or assets under the Plan and
Trust other than for the exclusive benefit of Participants
or their Beneficiaries. In addition, no amendment may allow
Trust Fund assets to revert to or be used or enjoyed by any
Participating Employer unless otherwise permitted by law.
(c) If an amendment changes the vesting schedule of
the Plan, or if the Plan is amended in any way that directly
or indirectly affects the computation of a Participant's
nonforfeitable percentage, any Participant in the employ of
a Participating Employer on the date such amendment is
adopted (or the date it is effective, if later) who has
completed at least three Years of Vesting Service at the end
of the election period specified below, may make an
irrevocable election to remain under the vesting schedule of
the Plan as in existence immediately prior to said
amendment. If such Participant does not make this election
during the election period starting on the date such
amendment is adopted, and ending 60 days following the
latest of the following dates, he will be subject to the new
vesting schedule provided by said amendment:
(6) the date the amendment is adopted;
(7) the date the amendment is effective; or
(8) the date written notice of the amendment is
given to the Participant.
However, the failure to make an election described
above will not result in the forfeiture of any benefits
which are already Vested.
(c) No amendment may reduce the Accrued Benefit or
Vested percentage of a Participant.
XI.2 Conformance to Law. Regardless of the provisions of
Section 11.01, the Employer has the right to make whatever
amendments are necessary to this Plan or the Trust to bring it
into conformity with applicable law.
XI.3 Merger, Consolidation, or Transfer. If the Plan and
Trust are merged or consolidated with, or the assets or
liabilities are transferred to, any other plan and trust, the
benefits payable to each Participant immediately after such
action (if the Plan was then terminated) will be equal to or
greater than the benefits to which he would have been entitled if
the Plan had terminated immediately before such action.
CHAPTER XII
TERMINATION OF THE PLAN
XII.1 Right to Terminate. It is the expectation of the
Employer that it will continue the Plan and the payment of
contributions indefinitely, but continuance of the Plan is not
assumed as a contractual obligation of the Employer, and the
right is reserved by the Employer, by resolution of its Board of
Directors, at any time to reduce, suspend, or discontinue its
contributions, or terminate the Plan with respect to certain or
all of its Employees. Further, any other Participating Employer
may terminate its participation in this Plan by resolution of its
Board of Directors. If the Plan is terminated or partially
terminated, the Accrued Benefit of each Participant who is in the
employ of the Participating Employer on the effective date of the
Plan termination or partial termination (as specified by the
Participating Employer unless otherwise specified by the PBGC)
and whose employment is affected by such termination or partial
termination will thereafter be fully vested and nonforfeitable.
Such Participant will have recourse only to the assets of the
Trust Fund and the PBGC for the payment of such Vested Accrued
Benefit.
XII.2 Termination Priorities. If the Plan is terminated
or partially terminated (whether by the Employer or the PBGC),
and the PBGC has notified the Employer that it may proceed with
benefit payments under this Plan, the Trust Fund assets (or
portion thereof, in the case of partial termination) will be
allocated to the appropriate Participants (all Participants in
the event of complete Plan termination, in the event of partial
termination, only those Participants whose Termination of
Employment caused or was the result of such partial termination)
in the following order of priority:
(a) to provide for the return of Employee
contributions, if any;
(b) to provide for any benefit of a Participant which
was payable as an annuity in either of the following
categories:
(9) the benefit of a Participant which was in pay
status as of the first day of the 3-year period
immediately preceding the date the Plan was terminated,
as specified by the PBGC;
(10) the benefit of a Participant which could have
been in pay status as of the first day of the 3-year
period immediately preceding the date the Plan was
terminated, as specified by the PBGC.
For purposes of this Sub-Section (b), such benefit will
be determined on the basis of the Plan's provisions which
were in effect at any time during the 5-year period ending
on such date of Plan termination under which the benefit
would be the least;
(c) to provide for any other benefit of a Participant
(not covered by any of the two previous priority
classifications) which is insured and guaranteed by the
PBGC;
(c) to provide for all other nonforfeitable benefits;
(d) to provide for all other benefits.
Any allocations provided for under the above priority
classifications will be payable to either a Participant or his
Beneficiary, whichever is appropriate. In addition, with respect
to priority classifications (b), (c), (d), and (e), the amount of
an allocation to a Participant under a specified priority
classification will be reduced by the amount of such
Participant's allocation under a previous priority
classification.
XII.3 Reversion to Employer. In the event assets remain
in the Trust Fund after the complete satisfaction of all
liabilities of the Plan and Trust, as specified in Section 12.02,
distribution may be made to the Employer of such remaining
assets, which will be deemed attributable to the difference
between the actuarial assumptions used by the Actuary to
determine the funding requirements of the Plan and Trust and the
actual experience of the Trust Fund during its operation.
XII.4 Subsequent Benefit Payments. Unless otherwise
specified by law, the timing, form (with the addition of lump sum
distributions), and amount of any benefit payments provided under
this Chapter will be made in accordance with the provisions of
Chapter VIII.
CHAPTER XIII
CLAIMS PROCEDURE
XIII.1 Written Claim. A Participant or Beneficiary(ies)
may make a claim for Plan benefits by filing a written request
with the Committee, on a form provided by the Committee.
XIII.2 Claim Denial. If a claim is wholly or partially
denied, the Committee will furnish the Participant or
Beneficiary(ies) with written notice of the denial within 60 days
of the date the original claim was filed. The notice of denial
will specify:
(a) the reason for denial;
(b) specific reference to pertinent Plan and Trust
provisions on which the denial is based;
(c) a description of any additional information or
requirements needed to be eligible to obtain the denied
benefit and an explanation of why such information or
requirements are necessary; and
(c) an explanation of the claim procedure.
XIII.3 Request for Review of Denial. The Participant or
Beneficiary(ies) will have 60 days from receipt of denial notice
in which to make written application for review by the Committee.
The Participant or Beneficiary may request that the review be in
the nature of a hearing. The Participant or Beneficiary(ies)
will have the rights to representation, to review pertinent
documents, and to submit comments in writing.
XIII.4 Decision on Review. The Committee will issue a
decision on such review within 60 days after receipt of an
application for review.
The Committee shall have full and complete discretionary
authority to determine eligibility for benefits, to construe the
terms of the Plan and to decide any matter presented through the
claims review procedure. Any final determination by the
Committee shall be binding on all parties. If challenged in
court, such determination shall not be subject to de novo review
and shall not be overturned unless proven to be arbitrary and
capricious upon the evidence considered by the Committee at the
time of such determination.
XIII.5 Additional Time. The Committee may take
additional time, as provided by government regulations, under
this Chapter XIII, if such time is needed to gather data, perform
calculations or reach decisions in the processing of a claim.
The Participant or Beneficiary(ies) will be informed by the
Committee, in writing, of the need for such additional time prior
to the date such extension begins.
CHAPTER XIV
CONTRIBUTION AND BENEFIT LIMITS
TO HIGH PAID EMPLOYEES
XIV.1 When Applicable. Participating Employer
contributions on behalf of any of the 25 highest paid Employees
at the time the Plan is established and whose anticipated annual
benefit exceeds $1,500 will be restricted as provided in Section
14.02 upon the occurrence of the following conditions:
(a) The Plan is terminated within 10 years after its
establishment;
(b) The benefits of such highest paid Employee become
payable within 10 years after the establishment of the Plan;
or
(c) If Section 412 of the Code (without regard to
Section 412(h)(2)) does not apply to this Plan, the benefits
of such Employee become payable after the Plan has been in
effect for 10 years, and the full current costs of the Plan
for the first 10 years have not been funded.
XIV.2 Limitations. Participating Employer contributions
which may be used for the benefit of an Employee described in
Section 14.01 shall not exceed the greater of $20,000, or 20% of
the first $50,000 of the Employee's compensation multiplied by
the number of years between the date of the establishment of the
Plan and:
(a) if 14.0l(a) applies, the date of the termination
of the plan;
(b) if 14.0l(b) applies, the date the benefit becomes
payable; or
(c) if 14.0l(c) applies, the date of the failure to
meet the full current costs.
XIV.3 Limitations if Plan Amended. If the Plan is
amended so as to increase the benefit actually payable in event
of the subsequent termination of the Plan, or the subsequent
discontinuance of contributions thereunder, then the provisions
of the above Sections shall be applied to the Plan as so changed
as if it were a new Plan established on the date of the change.
The original group of 25 Employees (as described in Section 14.01
above) will continue to have the limitations in Section 14.02
apply as if the Plan had not been changed. The restriction
relating to the change of Plan should apply to benefits or funds
for each of the 25 highest paid Employees on the effective date
of the change except that such restrictions need not apply with
respect to any Employee in this group for whom the normal annual
pension or annuity provided by Participating Employer
contributions prior to that date and during the ensuing ten
years, based on his rate of compensation on that date, could not
exceed $1,500.
The Participating Employer contributions which may be used
for the benefit of the new group of 25 Employees will be limited
to the greater of:
(a) The Participating Employer contributions (or funds
attributable thereto) which would have been applied to
provide the benefits for the Employees if the previous Plan
had been continued without change;
(b) $20,000; or
(c) The sum of:
(11) the Participating Employer contributions (or
funds attributable thereto) which would have been
applied to provide benefits for the Employees under the
previous Plan if it had been terminated the day before
the effective date of change, and
(12) an amount computed by multiplying the number
of years (for which the current costs of the Plan after
that date are met) by 20% of his annual compensation,
or $10,000, whichever is smaller.
XIV.4 Alternate Limitations. Notwithstanding the above
limitations the following limitations will apply if they would
result in a greater amount of Participating Employer
contributions to be used for the benefit of the restricted
Employee:
(a) In the case of a substantial owner (as defined in
Section 4022(b)(5) of ERlSA), a dollar amount which equals
the present value of the benefit guaranteed for such
Employee under Section 4022 of ERISA, or if the Plan has not
terminated, the present value of the benefit that would be
guaranteed if the Plan terminated on the date the benefit
commences, determined in accordance with regulations of the
PBGC; and
(b) In the case of the other restricted Employees, a
dollar amount which equals the present value of the maximum
benefit described in Section 4022(b)(3)(B) of ERISA
(determined on the earlier of the date the Plan terminates
or the date benefits commence, and determined in accordance
with regulations of the PBGC) without regard to any other
limitations in Section 4022 of ERISA.
CHAPTER XV
MISCELLANEOUS PROVISIONS
XV.1 Reversion of Assets. This Plan and Trust are for the
exclusive benefit of the Employees of the Participating Employers
and none of the assets may be used for any other purpose.
Notwithstanding the above, there may be a reversion of assets to
the Employer (or the Employee) in the event one of the following
occurs:
(a) If, in the course of administering the Plan and
Trust, errors in accounting arise due to factual errors in
information supplied by any Participating Employer, the
Committee, the Plan Administrator or the Trustee, equitable
adjustments may be made to correct these errors. Excess
contributions arising from such adjustments may be returned
to the Participating Employer within one year after such
contributions were made.
(b) All Participating Employer contributions made to
the Plan under Code Section 412(m) are conditioned on
deductibility. For any year(s) that all or a part of a
deduction for Participating Employer contributions to the
Plan is disallowed by the Secretary of the Treasury, the
amount of the contributions so disallowed shall be returned
to the Participating Employer within one year after such
disallowance.
(c) The Plan is terminated as provided for in Chapter
XII.
XV.2 Equitable Adjustment. The Committee may make equitable
adjustments, which may be retroactive, to correct for
mathematical, accounting, or factual errors made in good faith.
Such adjustments will be final and binding on all Participants
and other parties in interest.
XV.3 Reasonable Compensation. If for any Plan Year, the
Internal Revenue Service determines that the total compensation
of a Participant exceeds the amount which can be considered
"reasonable" for purposes of the federal income tax return of the
Participating Employer, then the Committee will readjust the
Accrued Benefit of such Participant to reflect only the
"reasonable" compensation of said Participant.
XV.4 Indemnification. To the extent permitted by law, the
Employer will indemnify each member of the Committee and any
others to whom the Employer has delegated fiduciary duties
(except corporate trustees, insurers or "investment managers" (as
defined in ERlSA)) against any and all claims, losses, damages,
expenses and liabilities arising from their responsibilities in
connection with the Plan, unless the same are determined to be
due to gross negligence or willful misconduct.
XV.5 Protection From Loss. Neither the Trustee, the Plan
Administrator, the Committee nor the Employer guarantee the Trust
Fund in any way from loss or depreciation. To the extent
permitted by applicable law, the liability of any of these
persons, groups of persons, or entities to make any payment under
the Plan and Trust is limited to the available assets of the
Trust Fund.
XV.6 Protection From Liability. To the maximum extent
allowed by law, the Plan Administrator and the Participating
Employers, and their agents, designees and employees, shall be
free from all liability, joint or several, for their acts,
omissions, and conduct, except in the case of their own willful
misconduct, gross negligence or bad faith. Specifically and
without limitation other than as follows, nothing in the first
sentence of this Section or elsewhere in the Plan and Trust shall
be construed to relieve any Fiduciary from responsibility or
liability for any responsibility, obligation or duty Under Part 4
of Title 1 of ERISA (except as provided in Sections 405(b)(1) and
405(d) of ERlSA).
XV.7 Adoption of Rules and Procedures. Any group of people
acting in a specified capacity under the Plan and Trust (such as
the Named Fiduciary, Trustee, Committee, Plan Administrator,
"investment manager" (as defined by ERISA) if any, and so on) may
create and abide by whatever rules and procedures they desire, so
long as these rules and procedures are not inconsistent with the
Plan, the Trust and applicable law. If these rules specifically
limit the duties and responsibilities of the members of any of
these groups, then to the extent permitted by applicable law, the
liability to each member under the Plan and Trust will be limited
to his specific duties.
XV.8 Assignment of Benefits. A Participant's interest in
this Plan may not be assigned or alienated, either voluntarily or
involuntarily. This shall not preclude the Trustee from
complying with: (i) a qualified domestic relations order (as
defined in Section 414(p) of the Code) made pursuant to a
domestic relations law requiring deduction from the benefits of a
Participant for alimony, child support, or marital property
payments, or (ii) on or after August 5, 1997 and pursuant to Code
Section 401(a)(13)(c), any court order, judgment, decree, or
settlement agreement requiring that a Participant's benefits be
reduced where the Participant has committed a breach of fiduciary
duty to the Plan or committed a criminal act against the Plan.
Notwithstanding any restrictions on the timing of
distributions and withdrawals under this Plan, distribution shall
be made to an alternate payee in accordance with the terms of an
order described in the preceding paragraph, or as determined by
the Plan Administrator and alternate payee if provided in the
order, even if such distribution is made prior to the
Participant's attainment of the earliest retirement age (as
defined in Code Section 414(p)(4)).
XV.9 Mental Competency. Every person receiving or claiming
benefits under the Plan and Trust will be presumed to be mentally
competent until the date on which the Committee receives a
written notice (in a form and manner acceptable to it) that such
person is incompetent, and that a guardian, conservator or other
person legally vested with his care or the care of his estate has
been appointed. If the Committee receives acceptable notice that
a person to whom a benefit is payable under the Plan and Trust is
unable to care for his affairs because of incompetency, any
payment due (unless a prior claim for it has been made by duly
appointed legal representative) may be paid to the spouse, a
child, a parent, a brother or a sister or to any person
determined by the Committee to have incurred expenses for such
person. Any such payment will be a complete discharge of the
obligation of the Participating Employer, Committee, Plan
Administrator and Trustee to provide benefits under the Plan and
Trust.
In the event that the Plan benefits of a person receiving or
claiming them are garnished or attached by order of any court,
the Committee may bring an action for a declaratory judgment in a
court of competent jurisdiction to determine the proper recipient
of the benefits to be paid under the Plan. While the action is
pending, any benefits that become payable under this plan will be
paid into the court as they become payable. The court will then
make the benefit distributions to the recipient it deems proper
at the close of said action.
XV.10 Authentication. The Participating Employer,
Committee, Plan Administrator and Trustee will be fully protected
in acting and relying upon such certificate, affidavit, document
or other information which that person requesting such
information may consider pertinent, reliable and genuine.
Any notice required to be made under the Plan and Trust may
be waived, in writing, by the person entitled thereto. In
addition, the time period specified in this Plan for filing any
such notice may be modified or waived, in writing, by the person
entitled thereto.
XV.11 Not an Employment Contract. The Plan and Trust
will not be construed as creating or modifying any contract of
employment between any Participating Employer and the Employee.
XV.12 Appointment of Auditor. The Employer shall have
the right to appoint an independent auditor to audit the books,
records, and accounts of the Trustee as they relate to the Plan
and the Trust.
XV.13 Uniform Treatment. All interpretations made in
connection with the Plan and Trust are intended to be exercised
in a nondiscriminatory manner so that all Employees in similar
circumstances are treated alike.
XV.14 Interpretation. The provisions of the Plan and
Trust are to be construed as a whole and not construed separately
without relation to the context of the entire agreement.
XV.15 Plural and Gender. When appropriate, the singular
nouns in the Plan and Trust may include the plural, and vice
versa. Also, wherever the male gender is used in the Plan and
Trust, the female gender may be included, and vice versa.
XV.16 Headings. Headings at the beginnings of any
Chapter, Section, or Sub-Section are for convenience only and are
not to influence the construction of this Plan and Trust.
XV.17 Expenses. The Participating Employers may pay the
expenses of administering the Plan, if desired. However, if they
do not pay these expenses directly, then, to the extent permitted
by law, the payments will be made from the Trust Fund.
XV.18 Prevention of Escheat. If the Participating
Employer cannot ascertain the whereabouts of any person to whom a
payment is due under the Plan, and if a notice of such payment
due is mailed to the last known address of such person, as shown
on the records of the Participating Employer, and within three
months after such mailing such person has not made written claim
therefor, the Participating Employer, if it so elects, may direct
that such payment and all remaining payments otherwise due to
such person be canceled on the records of the Plan and the amount
thereof applied to reduce the contributions of the Participating
Employer. The Plan and the Trust shall have no further liability
therefor, except that, in the event such person later notifies
the Participating Employer of his whereabouts and requests the
payment due to him under the Plan, the amount so applied shall be
paid to him.
XV.19 Special Provisions Respecting Military Service.
Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with
Section 414(u) of the Code, effective for individuals whose
re-employment occurs after December 11, 1994.
XV.20 Participation of Affiliated Employers. The
administrative powers and control of the Employer, as provided in
this Plan and the Trust agreement, as well as the sole and
exclusive right of amendment and termination (as covered in
Chapters XI and XII) and of appointment and removal of the Plan
Administrator, the Trustee, and their successors, shall remain
solely with OshKosh B'Gosh, Inc. and shall not be diminished in
any way by reason of the participation of any Affiliated Employer
in the Plan and the Trust agreement.
IN WITNESS WHEREOF, this Plan is executed by the Employer
through its duly authorized officers, on this _____ day of
_______________, 2000.
By:
Attest:
EXHIBIT 10.3
OSHKOSH B'GOSH, INC.
EXECUTIVE NON-QUALIFIED PROFIT SHARING PLAN
(As Amended and Restated As Of January 1, 2000)
WHEREAS, OshKosh B'Gosh, Inc. (the "Company") maintains the
OshKosh B'Gosh, Inc. Profit Sharing Plan (the "Profit Sharing
Plan"), a tax-qualified deferred profit sharing plan, and amended
such Profit Sharing Plan effective as of January 1, 1989 to
exclude certain classes of employees formerly eligible from
continuing participation therein including the President, all
Vice Presidents and any employee whose title includes designation
as a director of a particular aspect of the Company's business
(the "Excluded Key Employee Group"), and continued such exclusion
until January 1, 1995 (the period from January 1, 1989 to
January 1, 1995 being hereafter referred to as the "Exclusion
Period"), and
WHEREAS, the members of the Excluded Key Employee Group
during the Exclusion Period will continue to have their account
balances held in the Profit Sharing Plan pending ultimate
distribution upon their separation of service from the Company or
otherwise in accordance with the terms of such Plan and such
accounts will continue to share in the investment experience of
the Plan until such distribution, but after January 1, 1989 and
during the Exclusion Period, will no longer receive any further
allocations of Company contributions or forfeitures, and
WHEREAS, the Company wishes to provide by means of this
document both (i) a "make whole" non-qualified plan that will
provide for payments to certain identified members of the
Excluded Key Employee Group equivalent to the additional sums
they would have been able to accrue under the Profit Sharing Plan
but for their exclusion from continuing participation as of
January 1, 1989, or beginning participation at any later date and
during the Exclusion Period; and (ii) a non-qualified profit
sharing plan for certain identified key management or highly
compensated employees of the Company or a Participating Employer
who are not otherwise eligible for participation in the Profit
Sharing Plan, and
WHEREAS, the Company amended the Profit Sharing Plan as of
January 1, 1999 to exclude consideration of all compensation in
excess of $100,000 paid to any participant who is a highly
compensated employee as defined in Section 414(q) of the Internal
Revenue Code (the "$100,000 Participant Compensation Ceiling")
and wishes to provide by means of this document a "make whole"
non-qualified profit sharing plan benefit equivalent to the
additional sums such participants would have been able to accrue
under the Profit Sharing Plan but for the $100,000 Participant
Compensation Ceiling,
NOW, THEREFORE, the Company hereby establishes such a "make
whole" program, to be known as the Oshkosh B'Gosh, Inc. Executive
Non-Qualified Profit Sharing Plan (the "Non-Qualified Plan"), as
follows:
1. Objectives. The Non-Qualified Plan is intended to
provide for (i) a "make whole" payment to certain members of the
Excluded Key Employee Group, (ii) benefits for certain other key
management or highly compensated employees of the Company or a
Participating Employer who are not otherwise eligible for
participation in the Profit Sharing Plan, and (iii) benefits for
certain individuals affected by the $100,000 Participant
Compensation Ceiling. Each of the individuals from each of the
foregoing three categories are listed on Exhibit A attached
hereto, including such executives and key employees as the Board
of Directors or Executive Committee may determine to add from
time to time (the "Participants").
2. Bookkeeping Accounts. The Company or a Participating
Employer shall cause bookkeeping reserve accounts (the "Account")
to be established for each Participant which shall be established
solely as a device for determining the amounts which may become
payable to a Participant hereunder. Such Account shall not
constitute or be treated as a trust fund of any kind, it being
expressly provided that the amounts credited to the Account shall
at all times be and remain the sole property of the Company or a
Participating Employer. The Participant shall have no
proprietary rights of any nature with respect thereto, unless and
until such time as a payment thereof is made to the Participant
(or beneficiary) as provided herein. Amounts shall be credited
(or debited, as the case may be) to each Participant's Account as
follows:
(a) For each Plan Year from and after January 1,
1989, for which a Participant would have
received an allocation of Company
contribution or forfeiture or both under the
terms of the Profit Sharing Plan if such
Participant had not been excluded therefrom
and for each Plan Year from and after
January 1, 1999 for which a Participant would
have qualified for an allocation of Company
contribution or forfeiture under the terms of
the Profit Sharing Plan but for the $100,000
Participant Compensation Ceiling (the
"Prevented Allocations"), such Participant's
Account shall be credited with a dollar
amount equal to such Prevented Allocations.
(b) For each Plan Year from and after January 1,
1989, for which a Participant's Account has
been credited with Prevented Allocations such
Account shall also be adjusted to reflect the
additions or subtractions that would have
resulted from actual investment experience
under the Profit Sharing Plan had the
Prevented Allocations been made under that
Plan (the "Prevented Investment
Adjustments").
(c) With respect to a Participant who has served in
the employ of the Company and of a Participating
Employer, separate bookkeeping Accounts will be
maintained by each employer to reflect the
bookkeeping accruals attributable to the service
of the Participant with each employer. Benefits
accrued by a Participant while in the employ of
the Company will be the sole obligation of the
Company, and benefits accrued by such Participant
while in the employ of a Participating Employer
will be the sole obligation of the Participating
Employer. Neither employer shall have any
liability for the portion of benefits accrued by
the Participant while in the employ of the other
employer.
The intent hereof is that the balance in each
Participant's Account under this Non-Qualified Plan
from time to time shall be equal to the balance that
would have existed in the Profit Sharing Plan from time
to time reflecting post-January 1, 1989 Company or
Participating Employer contributions, forfeitures and
investment adjustments thereon that would have occurred
under the terms of the Profit Sharing Plan if the
Participant had been able to continue thereunder or, as
the case may be, begin participation thereunder at any
later date and continue until the date of termination
of service with the Company and all Affiliated
Employers, in either case as if the Profit Sharing Plan
had not included the $100,000 Participant Compensation
Ceiling.
3. Vesting. All individuals who are Participants as of
December 31, 1996 shall at all times have a 100% vested interest
in the Account balance established for them under this Non-
Qualified Plan. All individuals who become Participants on or
after January 1, 1997 shall become vested in their Account
balances established hereunder on the same terms and conditions
as apply in the Profit Sharing Plan, all of which are hereby
incorporated by reference."
4. Participating Employer. A Participating Employer is an
Affiliated Employer, as that term is defined in the Profit
Sharing Plan, authorized by the Company to participate in this
Non-Qualified Plan, by extending the same to such Affiliated
Employer's eligible employees.
5. Incorporation by Reference of Profit Sharing Plan. The
terms and conditions of the Profit Sharing Plan, as amended from
time to time, are hereby incorporated by reference into this Non-
Qualified Plan (subject however to the 100% vesting provision for
accounts as set forth in paragraph 3 above). It is intended that
the Accounts in this Non-Qualified Plan be subject to all of the
terms and conditions of the Profit Sharing Plan, subject only to
the following special limitations:
(a) Prevented Allocations and Prevented Investment
Adjustments shall be determined and credited or
debited to Accounts hereunder, as the case may be,
at the same time and in like amount as if the
Account were held under the Profit Sharing Plan.
(b) The Company or Participating Employer shall
commence payments of the vested Account balances
under this Non-Qualified Plan on or about March
15th of the year following the year in which the
Participant's service terminates, in accordance
with (c) below.
(c) Account balances under the Non-Qualified Plan
shall be paid to the Participant (or Beneficiary,
as the case may be), in one of the following
methods:
(i) In annual installments, to commence on or
about March 15th of the year following the
year of termination of service with the
Company and all Affiliated Employers, with
one-tenth of the balance in the Account
becoming then payable and with the remaining
installments being paid on each anniversary
thereof according to the following schedule:
Anniversary of Portion of Participant's Account
First Payment Date to be Paid
1st 1/9
2nd 1/8
3rd 1/7
4th 1/6
5th 1/5
6th 1/4
7th 1/3
8th 1/2
9th Remainder
(ii) Any other payment plan approved by the
Company on its sole discretion.
(d) Participants may designate any person or persons
(including, but not limited to, a trust) to be the
"Beneficiary" hereunder. Such designation shall
be effected by filing written notification with
the Company in the form prescribed by it and may
be changed from time to time by similar action.
If no Beneficiary is designated, the benefits
shall be distributed to the Participant's estate.
6. Claims Procedure. The claims procedure in the Profit
Sharing Plan shall apply in full to this Non-Qualified Plan.
7. Company or Committee to Administer. The Company or the
Committee (as defined under the Profit Sharing Plan) shall have
full and complete discretionary power and authority to construe
and interpret this Non-Qualified Plan and to resolve all
questions hereunder. Neither the Company, the Participating
Employers, nor any member of the Committee or any other person
shall be liable for any act or failure to act hereunder, except
for gross negligence or fraud.
8. Unsecured Creditor. To the extent that any person
acquires a right to receive payments from the Company or a
Participating Employer under this Plan, such right shall be no
greater than the right of an unsecured creditor.
9. Amendment or Termination. The Board of Directors of
the Company reserves the right to amend, terminate or discontinue
this Non-Qualified Plan at any time; provided, however, no such
action shall reduce or eliminate any amounts accrued in any
Accounts hereunder prior to the date of such action and which
also would otherwise ultimately have become payable hereunder.
EXHIBIT A
The following is a listing of employees currently (as of
1/1/00) participating in the Oshkosh B'Gosh, Inc. Executive Non-
Qualified Profit Sharing Plan:
(LIST)
EXHIBIT 10.4
OSHKOSH B'GOSH, INC.
EXCESS BENEFIT PLAN
(As Amended and Restated as of January 1, 2000)
PREAMBLE
WHEREAS, OshKosh B'Gosh, Inc., a Delaware corporation (the
"Company"), has heretofore maintained the OshKosh B'Gosh, Inc.
Profit Sharing Plan (the "Profit Sharing Plan"), and the OshKosh
B'Gosh Pension Plan (the "Pension Plan") as tax-qualified
retirement plans for the benefit of its eligible employees and
their beneficiaries; and
WHEREAS, the Company has heretofore established the Oshkosh
B'Gosh, Inc. Excess Benefit Plan, effective as of January 1, 1983
(the "Excess Benefit Plan") to provide make whole benefits for
participants in either or both of the Profit Sharing Plan or the
Pension Plan which would have otherwise become payable thereunder
but for Section 415 of the Internal Revenue Code which places
certain limitations on the amount of annual additions to any
participant's account(s) in the Profit Sharing Plan, on the
amount of benefits receivable by any participant in the Pension
Plan and on the total combined amount of both such annual
additions and benefits receivable in the case of an individual
who is a participant in both such Plans; and
WHEREAS, effective as of January 1, 1989, Section 401(a)(17)
of the Internal Revenue Code limits the amount of annual
compensation which may be taken into account in the calculation
of contributions to such Plans; and
WHEREAS, effective January 1, 1989, the Company established
the Oshkosh B'Gosh Executive Non-Qualified Profit Sharing Plan
(the "Non-Qualified Plan") to provide benefits to certain
employees who were excluded from further participation in the
Profit Sharing Plan in an amount equal to the benefits such
excluded employees otherwise would have been entitled to under
the Profit Sharing Plan; and
WHEREAS, effective as of January 1, 1991, "accrued"
compensation is no longer included in the calculation of benefits
under the Pension Plan, or the calculation of contributions to be
credited under the Profit Sharing Plan or Non-Qualified Plan; and
WHEREAS, the Company wishes to maintain such levels of
retirement benefits for its employees who are eligible to
participate in the Profit Sharing Plan, the Pension Plan, or the
Non-Qualified Plan as would otherwise become payable, but for the
limitations under Sections 415 and 401(a)(17) of the Internal
Revenue Code, by means of supplementary unfunded payments made by
the Company under the Excess Benefit Plan as herein amended and
restated; and
WHEREAS, the Company wishes to maintain such levels of
retirement benefits for its employees who are eligible to
participate in the Pension Plan or the Non-Qualified Plan as
would otherwise become payable, but for the limitations related
to "accrued" compensation by means of supplementary unfunded
payments made by the Company under the Excess Benefit Plan as
herein amended and restated; and
WHEREAS, the Company wishes to make the Excess Benefit Plan
available to Affiliated Employers who become Participating
Employers hereunder;
NOW, THEREFORE, the Company hereby amends and restates the
Excess Benefit Plan as of January 1, 2000, upon the following
terms and conditions:
ARTICLE I
Definitions
1.1 "Account" shall mean the bookkeeping reserve account
for a Participant which shall be established by the
Company or a Participating Employer under Article IV
hereof solely as a device for determining the amount of
supplementary profit sharing benefits under either the
Profit Sharing Plan or Non-Qualified Plan which may
become payable thereunder.
1.2 "Actuarial Equivalent" shall have the same meaning as
used in the Pension Plan.
1.3 "Beneficiary" shall be any person or persons
(including, but not limited to, a trust) designated by
the Participant. Such designation shall be effected by
filing written notification with the Company in the
form prescribed by it and may be changed from time to
time by similar action. If no Beneficiary is
designated, the benefits shall be distributed to the
Participant's estate.
1.4 "Effective Date" means January 1, 1983.
1.5 "IRS Limitations" means the limits on contributions or
benefits imposed under Sections 415 and 401(a)(17) of
the Internal Revenue Code and any reduction in benefits
under the Pension Plan or decrease in the amount
credited under the Non-Qualified Plan (but not the
Profit Sharing Plan) due to the exclusion of accrued
compensation in 1991 including, but not limited to,
bonuses under the Key Employee Incentive Bonus Plan.
1.6 "Firstar Bank Milwaukee, N.A. Prime Rate" means the
rate of interest adopted by the Firstar Bank Milwaukee,
N.A., from time to time, as the base rate for interest
rate determinations.
1.7 "Non-Qualified Plan" means the Oshkosh B'Gosh, Inc.
Executive Non-Qualified Profit Sharing Plan established
January 1, 1989.
1.8 "Normal Form of Benefit" shall have the same meaning as
used in the Pension Plan.
1.9 "Joint and Survivor Annuity" shall have the same
meaning as used in the Pension Plan.
1.10 "Participant" shall have the same meaning as used in
the Profit Sharing Plan, the Pension Plan or the Non-
Qualified Plan as the case may be.
1.11 "Participating Employer" shall mean an Affiliated
Employer, as that term is defined in the Profit Sharing
Plan and the Pension Plan, authorized by the Company to
participate in this Excess Benefit Plan, by extending
the same to such Affiliated Employer's eligible
employees.
ARTICLE II
Purpose
2.1 This Plan is intended to provide benefits to eligible
persons in a manner so as to maintain the level of total
retirement benefits which, but for the IRS Limitations, would
otherwise have been payable under the Profit Sharing Plan,
Pension Plan or Non-Qualified Plan. This Plan shall maintain
such total retirement benefit levels by means of supplementary
unfunded payments made by the Company and any Participating
Employer to the individuals eligible for such payments, as set
forth in Articles III and IV hereof.
ARTICLE III
Supplementary Pension Benefits
3.1 Any Participant or Beneficiary who qualifies for
commencement of a benefit under the terms of the Pension Plan on
or after the Effective Date and whose benefit pursuant thereto is
less than what it otherwise would be because of the IRS
Limitations shall be eligible to receive supplementary pension
benefits hereunder.
3.2 The amount of such supplementary pension benefits shall
be an amount equal in value to the reduction in the benefits
payable under the terms of the Pension Plan resulting from the
application of IRS Limitations calculated as if payable in the
Normal Form of Benefit.
With respect to a Participant who has served in the employ
of the Company and of a Participating Employer, the total
supplementary pension benefit for such Participant shall be
computed based on the Participant's aggregate years of service
and aggregate compensation received from the Company and the
Participating Employer. Once the total amount of such
supplementary benefit has been determined, the obligation to pay
it will be divided between the respective employers based on
years of "Benefit Service" as defined in the Pension Plan
rendered to each employer. Each employer shall be solely liable
for its own portion of the obligation, but shall have no
liability for the portion of the supplementary benefit payable by
the other employer.
3.3 Payment of such supplementary pension benefits shall be
accomplished by unfunded payments directly from the Company or
Participating Employer to the Participant or the Beneficiary (as
the case may be) in one of the forms determined by the Company,
in its sole discretion, as follows:
(a) in the Normal Form of Benefit if the Participant
is not married on the later of the date such
Participant first receives a benefit from the
Pension Plan or the date of the Participant's
termination of service with the Company and all
Affiliated Employers, or
(b) as a Joint and Survivor Annuity if such
Participant is married on such date or if such
Participant is married and dies while in the
employ of the Company or an Affiliated Employer
under circumstances such that such Participant's
spouse is his Beneficiary and such spouse becomes
entitled to a benefit under the terms of the
Pension Plan because of such Participant's death,
or
(c) in a single lump sum of Actuarial Equivalent
value, but only if Termination of Employment is
due to retirement, death, or disability (but under
circumstances where small amount lump sums are the
automatic form of distribution from the Pension
Plan or would be if the supplementary pension
benefit were the only benefit considered, such
small amount lump sum payments may also be made
hereunder, even if the Participant or Beneficiary
has not yet qualified for commencement of a
benefit under the terms of the Pension Plan), or
(d) a term certain annuity for 120 months, or 180
months.
All forms of payment of supplementary pension benefits under
this Plan shall be Actuarial Equivalents in value.
ARTICLE IV
Supplementary Profit Sharing Benefits
4.1 Any Participant or Beneficiary who qualifies for
commencement of a benefit under the terms of the Profit Sharing
Plan or Non-Qualified Plan on or after the Effective date whose
benefit pursuant thereto is less than what it otherwise would be
because of the IRS Limitations shall be eligible to receive
supplementary profit sharing benefits hereunder.
4.2 The amount of such supplementary profit sharing
benefits shall be an amount equal to the difference between the
aggregate amount of employer contributions and forfeitures which
would have been allocated to the Participant's account in the
Profit Sharing Plan or to the employer's bookkeeping account for
purposes of the Non-Qualified Plan if the IRS Limitations had
been disregarded. The amount of such difference for a
Participant shall be determined annually and shall be credited to
his Account as of the end of the fiscal year quarter during which
the amount of such difference can first be determined. The
amount so credited to such Participant's Account shall be further
credited as of the end of each succeeding quarter with an amount
equal to interest at the average Firstar Bank Milwaukee, N.A.
Prime Rate in effect during such quarter (an "Interest Equivalent
Credit") and all amounts standing to the credit of the
Participant's Account as of the end of each fiscal year quarter
including any prior Interest Equivalent Credits, shall receive an
Interest Equivalent Credit.
4.3 With respect to a Participant who has served in the
employ of the Company and of a Participating Employer, separate
bookkeeping Accounts will be maintained by each employer to
reflect the bookkeeping accruals attributable to the service of
the Participant with each employer. Supplementary profit sharing
benefits accrued by a Participant while in the employ of the
Company will be the sole obligation of the Company, and
supplementary profit sharing benefits accrued by such Participant
while in the employ of a Participating Employer will be the sole
obligation of the Participating Employer. Neither employer shall
have any liability for the portion of supplementary profit
sharing benefits accrued by the Participant while in the employ
of the other employer.
4.4 Payment of such supplementary profit sharing benefits
shall be accomplished by unfunded payments directly from the
Company or Participating Employer to the Participant or the
Beneficiary (as the case may be) in one of the following methods:
(a) in annual installments to commence on about March
15th of the year following the year in which the
Participant's service with the Company and all
Affiliated Employers terminates, with one-tenth of
the balance in his Account becoming then payable
and with the remaining installments being paid on
each anniversary thereof according to the
following schedule:
Anniversary of First Portions of Participant's Account
Payment Date to be Paid
1st 1/9
2nd 1/8
3rd 1/7
4th 1/6
5th 1/5
6th 1/4
7th 1/3
8th 1/2
9th Remainder
Interest Equivalent Credits shall continue to be
applied on the balance in the Participant's
Account in accordance with Section 4.2 until final
payment thereof has been made.
(b) in any other payment plan approved by the Company
in its sole discretion.
It shall be the obligation of any Participant under
this Section 4.3 hereof to keep the Company and any
Participating Employer advised of his current address
and neither employer shall have any obligation to
commence payout of such Participant's Account unless
and until it shall have received the written request
therefor specifying his current address.
ARTICLE V
Amendment or Termination
5.1 The Board of Directors of the Company reserves the
right to amend, terminate or discontinue this Plan at any time;
provided, however, no such action shall reduce or eliminate any
supplementary pension benefits under Article III hereof or
supplementary profit sharing benefits under Article IV hereof
which are in pay status or which have accrued hereunder prior to
the date of such action and which also would otherwise ultimately
have become payable hereunder.
5.2 It is recognized and acknowledged that as cost of
living adjustments are made from time to time in the IRS
Limitations under the provisions of the Internal Revenue Code,
accruals of what otherwise would have been needed supplementary
pension benefits under Article III hereof may be eliminated in
whole or in part because the same can be provided under the terms
of the Pension Plan, but that under present law, future cost of
living changes in those parts of the IRS Limitations dealing with
the Profit Sharing Plan will not eliminate or reduce the need for
any otherwise required accruals of supplementary profit sharing
benefits under Article IV hereof. No Participant or Beneficiary
shall ever be entitled to any benefit payments whatsoever under
this Plan unless and until such Participant or Beneficiary first
qualifies for a benefit under the Pension Plan (as required by
Section 3.1 hereof), under the Profit Sharing Plan (as required
by Section 4.1 hereof) or under the Non-Qualified Plan (as
required by Section 4.1 hereof).
ARTICLE VI
Miscellaneous
6.1 Any amount payable to a Participant or Beneficiary
hereunder shall not be subject in any manner to alienation, sale,
transfer, assignment, pledge, attachment, garnishment or
encumbrance of any kind, by will, or by inter vivos instrument.
Any attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber any such payment, whether present or
thereafter payable, shall not be recognized by the Company or a
Participating Employer. Any payment due hereunder shall not in
any manner be subject to the debts or liabilities of the
Participant or Beneficiary. If the Participant or Beneficiary
shall attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber his or her payments under this Plan or any
part thereof, or if by reason of his or her bankruptcy or other
event happening at any time, such payments would devolve upon
anyone else or would not be enjoyed by him or her, then the
Company, in its sole discretion, may terminate his or her
interest in any such benefit, and hold or apply it to or for the
benefit of the Participant or Beneficiary, his or her spouse,
children, or other dependents, or any of them, in such manner as
the Company may deem proper.
6.2 Every person receiving or claiming payments under this
Plan shall be conclusively presumed to be mentally competent
until the date on which the Company or a Participating Employer
receives a written notice, in form and manner acceptable to it,
that such person is incompetent and that a guardian, conservator,
or other person legally vested with the care of his estate has
been appointed. In the event a guardian or conservator of the
estate of any person receiving or claiming payments under the
Plan shall be appointed by a court of competent jurisdiction,
payments may be made to such guardian or conservator provided
that proper proof of appointment and continuing qualification is
furnished in a form and manner acceptable to the Company. Any
such payment so made shall be a complete discharge of any
liability therefor.
6.3 Participation in this Plan, or any modifications
thereof, or the payments of any benefits hereunder, shall not be
construed as giving to the Participant any right to be retained
in the service of the Company or any Participating Employer,
limiting in any way the right of the Company or any Participating
Employer to terminate the Participant's employment at any time,
evidencing any agreement or understanding, express or implied,
that the Company or any Participating Employer will employ the
Participant in any particular position or at any particular rate
of compensation and/or guaranteeing the Participant any right to
receive a salary increase in any fiscal year, such increase being
granted only at the sole discretion of the Board of Directors of
the Company or a Participating Employer.
6.4 All payments hereunder shall be paid in cash from the
general funds of the Company and all Participating Employers and
no special or separate fund shall be established and no other
segregation of assets shall be made to assure the payment of
benefits hereunder. A Participant or Beneficiary shall have no
right or title or interest whatever in or to any investments
which the Company or any Participating Employer may make to aid
it in meeting its obligations hereunder. Nothing in this Plan
and no action taken pursuant hereto shall create or be construed
to create a trust of any kind or a fiduciary relationship between
the Company or any Participating Employer, and any Participant or
Beneficiary. To the extent that any person acquires a right to
receive payments from the Company or any Participating Employer
under this Plan, such right shall be no greater than the right of
an unsecured creditor.
6.5 To the extent not pre-empted by the laws of the United
States, this document shall be construed, administered and
governed under and by the internal laws of the State of
Wisconsin.
6.6 Neither the Company, the Participating Employers, nor
any officer or director of the Company, any Participating
Employer or any other person shall be liable for any act or
failure to act hereunder, except for gross negligence or fraud.
6.7 Any benefits payable under the Pension Plan and the
Profit Sharing Plan shall be paid solely in accordance with the
terms of such Plans and nothing in this document shall operate or
be construed in any way to modify, amend or affect the terms of
such Plans.
6.8 The claims procedure provided in the Profit Sharing
Plan shall apply in full to this Excess Benefits Plan.
EXHIBIT 10.5
OSHKOSH B'GOSH, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
(As Amended and Restated as of January 1, 2000)
WHEREAS, OshKosh B'Gosh, Inc., a Delaware corporation (the
"Company") wishes to establish a deferred compensation program
for certain of its key management employees in order to aid the
Company and any Participating Employer in attracting and
retaining qualified personnel upon whose efforts the continued
successful operation of the Company and any Participating
Employer will depend,
NOW, THEREFORE, the Company hereby establishes such a
program, to be known as the OshKosh B'Gosh, Inc. Executive
Deferred Compensation Plan (the "Plan"), upon the following terms
and conditions:
ARTICLE I
Definitions
1.1 "Account" means the bookkeeping reserve account for
each Participant which shall be established by the
Company or a Participating Employer solely as a device
for determining the amounts which may become payable to
the Participant hereunder. Such Account shall not
constitute or be treated as a trust fund of any kind,
it being expressly provided that the amounts credited
to such Account shall at all times be and remain the
sole property of the Company or a Participating
Employer. The Participant shall have no proprietary
rights of any nature whatsoever with respect thereto,
unless and until such time as a payment thereof is made
to the Participant (or his beneficiaries) as provided
in this Plan. Separate Accounts shall be maintained by
each Participant's employer, whether the Company or a
Participating Employer, to reflect the bookkeeping
accruals attributable to the deferrals made by the
Participant while in the employ of each employer and
any Supplemental Contributions (as defined in Section
2.2 hereof).
1.2 "Deferred Compensation" means the portion of a
Participant's compensation for any Fiscal Year, or part
thereof that has been deferred pursuant to this Plan.
1.3 "Officer" means an employee of the Company or a
Participating Employer who is either an elected or
appointed officer of the Company.
1.4 "Fiscal Year" means the fiscal year of the Company.
1.5 "Interest Equivalent Credits" means such amounts as
shall have been credited to a Participant's Account
pursuant to Article III hereof.
1.6 "Participant" means an Officer participating in this
Plan whose Deferred Compensation amounts, Supplemental
Contributions (as defined in Section 2.2 hereof) and
Interest Equivalent Credits have not been wholly
distributed.
1.7 "Early Retirement Date" and "Disability" shall have the
same meanings as used in the Company's qualified
pension plan covering Participants, as the same exists
from time to time.
1.8 "Participating Employer" shall mean an Affiliated
Employer, as that term is defined in the OshKosh
B'Gosh, Inc. Profit Sharing Plan, authorized by the
Company to participate in this Executive Deferral
Compensation Plan, by extending the same to such
Affiliated Employer's eligible officers.
ARTICLE II
Deferred Compensation Election
2.1 Each Officer may elect to have a designated amount or a
percentage (subject to Company or Participating Employer
approval) of his total compensation, including bonuses, if any,
otherwise receivable by him or paid to him on account of services
performed, during any Fiscal Year commencing on or after January
1, 1984 deferred in accordance with the terms of this Plan. An
Officer desiring to exercise such election as to any such Fiscal
Year shall, prior to the beginning of such Fiscal Year (or prior
to the beginning of the Officer's initial employment if such
employment is to commence other than at the beginning of a Fiscal
Year), notify the Company or the Participating Employer in
writing of his election of the amount or percentage of such total
compensation for such Fiscal Year that he elects to be so
deferred by completing, signing and delivering to such employer a
deferral election form substantially in the form attached hereto
as Exhibit A. The Officer may revoke or change any prior
deferral election form by giving at least 30 days prior written
notice of such revocation or change to such employer. Any such
revocation or change will be given prospective effect only and
will not affect prior deferrals.
2.2 The Company or the Participating Employer (whichever is
the employer of the Participant of the relevant time) shall make
a contribution for each Fiscal Year, which shall be credited to
each Participant's Account, of an amount equal to the decrease,
if any, in the amount of contributions and forfeitures allocable
to the Participant's account under any defined contribution plan
(e.g., a profit sharing plan) of the Company (or which would have
been allocated as a contribution or forfeiture but for the fact
that the Participant is excluded from continuing or commencing
participation in such defined contribution plan because of the
exclusions in the definition of the eligible class of employees
made by the Company in 1989), resulting from the fact that
compensation which the Participant elects to defer under this
plan is not taken into account as "wages," "salary" or
"compensation" in determining the amount of the Company's or a
Participating Employer's contribution under such a defined
contribution plan and the allocation of that contribution to the
Participant's account under such plan. The amount to be so
credited is hereinafter referred to as a "Supplemental
Contribution." Such Supplemental Contribution shall become
nonforfeitable pursuant to the vesting schedule, if any, provided
under the Company's defined contribution plan for which the
Supplemental Contribution is made.
2.3 The amount of a Participant's Deferred Compensation
shall be credited to his Account as of the date, absent an
election under this Plan, on which he would have received such
amount. The amount of any Supplemental Contribution for a
Participant shall be credited to his Account once a year as of
the end of the quarter during which the proper amount of such
Supplemental Contribution can be determined.
ARTICLE III
Interest Equivalent Credits
3.1 Any and all amounts of Deferred Compensation,
Supplemental Contributions and previously credited interest
standing to the credit of each Participant's Account as of the
end of each quarter of the Fiscal Year shall receive an Interest
Equivalent Credit based upon the average Firstar Bank Milwaukee,
N.A. prime rate of interest in effect during such quarter. In
calculating such quarterly Interest Equivalent Credit, the
amounts which comprise Participant's Account balance as of the
end of such quarter shall earn interest commencing with the date
such amounts were credited to the Participant's Account (but in
no event earlier than the first day of such quarter). By way of
illustration, if a Participant's Account had been credited with
Deferred Compensation on January 15 of a Fiscal Year, such
Deferred Compensation would be entitled to be credited with
interest on March 31 of such year based on the period between
January 15 and March 31 of such year. The phrase "average
Firstar Bank Milwaukee, N.A. prime rate of interest in effect
during each quarter" means the weighted average rate of interest
adopted by the Firstar Bank Milwaukee, N.A., from time to time
during such quarter, as the base rate for interest rate
determinations.
ARTICLE IV
Payments From Account
4.1 The Participant shall become entitled to commence
receiving the nonforfeitable amounts credited to his Account upon
his termination of employment with the Company at or after his
Early Retirement Date or because of his death or Disability. Any
Account balances accrued by a Participant while in the employ of
the Company will be the sole obligation of the Company and any
such balances accrued by a Participant while in the employ of a
Participating Employer will be the sole obligation of the
Participating Employer. Section 5.1 hereof provides a special
rule for determining the separate obligation of the Company and
any Participating Employer regarding the supplemental payments
therein specified in the case of a Participant who has served in
the employ of both. Neither employer shall have any liability
for the portion of such Account balances accrued by the
Participant while in the employ of the other employer.
4.2 The nonforfeitable amounts credited to a Participant's
Account shall be paid to him in one of the following methods:
(a) In annual installments, to commence on or about
March 15th of the year following the year of
termination of service, with one-tenth of the
balance in his Account becoming then payable and
with the remaining installments being paid on each
anniversary thereof according to the following
schedule:
Anniversary of First Portion of Participant's Account
Payment Date to be Paid
1st 1/9
2nd 1/8
3rd 1/7
4th 1/6
5th 1/5
6th 1/4
7th 1/3
8th 1/2
9th Remainder
(b) Any other payment plan approved by the Company in
it sole discretion.
4.3 Should the Participant's employment with the Company or
a Participating Employer terminate for reasons other than
specified in Section 4.1 above or other than because of death
while in the employ of either employer, the Participant shall
become entitled to commence receiving the nonforfeitable amounts
credited to his Account on or after his attainment of age 65 in
the manner described in Section 4.2 above. Notwithstanding the
foregoing, the Company, in its sole discretion, may commence an
earlier payout of such Participant's Account. It shall be the
obligation of any Participant under this Section 4.3 to keep the
Company or a Participating Employer advised of his current
address and such employer shall have no obligation to commence
payout of such Participant's Account unless and until it shall
have received the written request therefor specifying his current
address.
4.4 Interest Equivalent Credits shall continue to be
applied on the balance in the Participant's Account in accordance
with Section 3.1 until the Participant or his designated
beneficiary or beneficiaries have received the final payment of
such balance.
4.5 The Participant shall have the right to designate a
beneficiary or beneficiaries to receive any portion of his
Account remaining unpaid at his death. Such designation shall be
effected by filing a written notification with the Company in the
form prescribed by it and may be changed from time to time by
similar action. If the Participant fails to make such
designation, any such unpaid portion of his Account shall be paid
to his estate. The nonforfeitable balance in a Participant's
Account shall become distributable in accordance with this
Section 4.5 upon a Participant's death while in the Company's or
a Participating Employer's employ or upon his death after
termination of employment with the Company or a Participating
Employer.
4.6 The Company may, in its sole discretion, on request of
a Participant who remains in the Company's or a Participating
Employer's employ, determine to make a distribution and the
manner of the distribution to such Participant of a portion or
all of his nonforfeitable Account, on the basis of personal
financial hardship. In the case of personal financial hardship,
distribution may be made only when such Participant has
established to the satisfaction of the Company that a severe
personal financial hardship exists necessitating his request.
Without limitation, such a personal financial hardship may arise
from unusual or extraordinary medical expenses not covered by
insurance of the Participant, of other persons who rely upon the
Participant for financial support or education expenses. The
purchase or maintenance of a principal residence for the
Participant, or other investment opportunities will not be
considered financial hardship.
ARTICLE V
Supplemental Payments
5.1 By way of a payment supplemental to the payments
provided for by Article IV hereof, the Company agrees to also pay
to a Participant (or to anyone else entitled thereto as a
beneficiary of the Participant under the terms of any defined
benefit plan (e.g., a pension plan of the Company) an amount or
amounts equal to the decrease, if any, in the amounts payable
under any such defined benefit plan, resulting from the fact that
compensation which the Participant elects to defer under this
Plan is not taken into account as "wages," "salary" or
"compensation" in determining the amount of any benefit payment
under such a defined benefit plan. With respect to a Participant
who has served in the employ of the Company and of a
Participating Employer, the total supplementary pension benefit
shall be computed based on the Participant's aggregate
compensation (as if the same had not been reduced by deferrals
under this Plan) from both such employers. Once the total amount
of such supplementary pension benefit has been determined, the
obligation to pay it will be divided between the respective
employers based on the ratio of the total deferrals made at each
employer that are taken into account in the supplementary pension
benefit calculation compared to the total deferrals at both
employers that are so taken into account. Each employer shall be
solely liable for its own portion of the obligation, but shall
have no liability for the portion of the supplementary benefit
payable by the other employer. The Company shall determine, in
its sole discretion, the method of payment under this Section
5.1. The purpose of this provision is to assure to a Participant
that he receive the same total pension benefits that he would
have received had he not elected to defer any of his compensation
under this Plan.
ARTICLE VI
Miscellaneous
6.1 Any amount payable from the Participant's Account shall
not be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment, garnishment or encumbrance of any
kind, by will, or by inter vivos instrument (other than permitted
beneficiary designations under Section 4.5 hereof). Any attempt
to alienate, sell, transfer, assign, pledge or otherwise encumber
any such payment, whether presently or thereafter payable, shall
not be recognized by the Company or a Participating Employer.
Any payment due hereunder shall not in any manner be subject to
the debts or liabilities of the Participant. If the Participant
shall attempt to alienate, sell, transfer, assign, pledge or
otherwise encumber his payments under this Plan or any part
thereof, or if by reason of his bankruptcy or other event
happening at any time, such payments would devolve upon anyone
else or would not be enjoyed by him, then the Company, in its
sole discretion, may terminate his interest in any such benefit,
and hold or apply it to or for the benefit of the Participant,
his spouse, children, or other dependents, or any of them, in
such manner as the Company may deem proper.
6.2 Every person receiving or claiming payments under this
Plan shall be conclusively presumed to be mentally competent
until the date on which the Company or a Participating Employer
receives a written notice, in form and manner acceptable to it,
that such person is incompetent and that a guardian, conservator,
or other person legally vested with the care of his estate has
been appointed. In the event a guardian or conservator of the
estate of any person receiving or claiming payments under the
Plan shall be appointed by a court of competent jurisdiction,
payments may be made to such guardian or conservator provided
that proper proof of appointment and continuing qualification is
furnished in a form and manner acceptable to the Company. Any
such payment so made shall be a complete discharge of any
liability therefor.
6.3 Participation in this Plan, or any modifications
thereof, or the payments of any benefits hereunder, shall not be
construed as giving to the Participant any right to be retained
in the service of the Company or any Participating Employer,
limiting in any way the right of the Company or any Participating
Employer to terminate the Participant's employment at any time,
evidencing any agreement or understanding, express or implied,
that the Company or any Participating Employer will employ the
Participant in any particular position or at any particular rate
of compensation and/or guaranteeing the Participant any right to
receive a salary increase in any Fiscal Year, such increase being
granted only at the sole discretion of the Board of Directors of
the Company or any Participating Employer.
6.4 By electing to participate in this Plan, the Officer
agrees that any of his compensation which he elects to defer
under this Plan will not be taken into account as "wages,"
"salary" or "compensation" in determining the amount of any
payment or allocation, or for any other purpose, under any
pension, retirement or deferred profit sharing plan of the
Company or any Participating Employer.
6.5 The Plan shall be construed, administered and governed
in all respects under and by the laws of the State of Wisconsin.
6.6 Neither the Company, any Participating Employer nor any
officer or director of either or any other person shall be liable
for any act or failure to act hereunder, except for gross
negligence or fraud.
6.7 The Board of Directors of the Company reserves the
right to amend, modify, terminate, or discontinue this Plan at
any time; provided, however, no such action shall reduce the
amount then credited to the Participant's Account or change the
time and manner of payment of such amount, without the consent of
the Participant, if living, or his designated beneficiary or
beneficiaries, if the Participant is not living.
6.8 The claims procedure provided in the OshKosh B'Gosh,
Inc. Profit Sharing Plan shall apply in full to this Plan.
EXHIBIT A
OSHKOSH B'GOSH, INC. EXECUTIVE DEFERRED COMPENSATION PLAN
DEFERRAL ELECTION
In accordance with the terms and conditions of the OshKosh
B'Gosh, Inc. Executive Deferred Compensation Plan I hereby elect
that the following percentages (or amount) of any salary and
bonuses which may become payable to me on account of services
performed for OshKosh B'Gosh, Inc. during the calendar year
19____ and future calendar years, shall be deferred for payment
at a later time, and credited to the Account established in my
name, in accordance with and subject to the terms and conditions
of such Plan:
______% or $_____ of regular gross salary to be taken
out of each monthly paycheck.
_____% or $_____ of any bonus which may be declared by
OshKosh B'Gosh, Inc. and which is payable to me.
I understand that this deferral election shall remain in
full force and effect until I revoke and/or change it by properly
executing the filing a new deferral election in accordance with
the terms and conditions of the Plan.
I hereby expressly revoke all prior deferral elections by me
and reserve the right to revoke and/or change this deferral
election in the manner provided under the terms and conditions of
the Plan.
Dat
Received by OshKosh B'Gosh, Inc. on , 19____.
By:
OSHKOSH B'GOSH, INC.
1994 INCENTIVE STOCK PLAN
(as amended through 2/23/00)
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Oshkosh B'Gosh,
Inc. 1994 Incentive Stock Plan (the "Plan"). The purpose of the
Plan is to provide an incentive for key employees of Oshkosh
B'Gosh, Inc. and its Subsidiaries to improve corporate performance
on a long-term basis, and to attract and retain key employees. It
is intended that the Plan and its operation comply with the
provisions of Rule 16b-3 under the Securities Exchange Act of 1934
(or any successor rule).
1.02 Effective Date. The effective date of the Plan shall be
August 8, 1994, subject to approval of the Plan by shareholders of
the Company. Any Award granted prior to such shareholder approval
shall be expressly conditioned upon shareholder approval of the
Plan.
II. PLAN DEFINITIONS
2.01 Definitions. For Plan purposes, except where the context
clearly indicates otherwise, the following terms shall have the
meanings set forth below:
(a) "Award" shall mean the grant of any form of stock option or
restricted stock.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(d) "Committee" shall mean the Committee described in Section
4.01.
(e) "Company" shall mean Oshkosh B'Gosh, Inc., a Wisconsin
corporation.
(f) "Company Stock" shall mean the Company's Class A Common Stock
and such other stock and securities as may be substituted
therefor pursuant to Section 3.02.
(g) "Eligible Employee" shall mean any regular salaried employee
of the Company or a Subsidiary who satisfies the requirements
of Section 5.01.
(h) "Fair Market Value" on any date shall mean, with respect to
Company Stock, if the stock is then listed and traded on a
registered national securities exchange, or is quoted in the
NASDAQ National Market System, the mean of the high and low
sale prices recorded in composite transactions as reported in
the Wall Street Journal (Midwest Edition) for such date or the
preceding business day if such date is not a business day. In
the absence of reported sales or if the stock is not so listed
or quoted, but is traded in the over-the-counter market, Fair
Market Value shall be the mean of the closing bid and asked
prices for such shares on the relevant date.
(i) "Grantee" shall mean any person who has been granted an Award
under the Plan.
(j) "Option Period" shall mean the period of time provided
pursuant to Section 6.04 within which a stock option may be
exercised.
(k) "Subsidiary" shall mean any corporation now or hereafter in
existence in which the Company owns, directly or indirectly,
a voting stock interest of more than fifty percent (50%).
III. SHARES SUBJECT TO AWARD
3.01 Available Shares. The total number of shares of Company
Stock that may be issued under the Plan shall not exceed one
million four hundred thousand (1,400,000) shares. Shares subject
to and not issued under an option which expires, terminates, is
canceled or forfeited for any reason under the Plan and shares of
restricted Company Stock which have been forfeited before the
Grantee has received any benefits of ownership, such as dividends
from the forfeited shares, shall again become available for the
granting of Awards.
3.02 Changes in Common Stock. If any stock dividend is
declared upon the Company Stock, or if there is any stock split,
stock distribution, or other recapitalization of the Company with
respect to the Company Stock, resulting in a split or combination
or exchange of shares, the aggregate number and kind of shares
which may thereafter be granted under the Plan shall be propor-
tionately and appropriately adjusted and the number and kind of
shares then subject to options granted to employees under the Plan
and the per share option price therefor shall be proportionately
and appropriately adjusted, without any change in the aggregate
purchase prices to be paid therefor.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be
administered by a committee designated by the Board to administer
the Plan and shall initially be the Compensation Committee of the
Board. The Committee shall be constituted to permit the Plan to
comply with the provisions of Rule 16b-3 under the Securities
Exchange Act of 1934 (or any successor rule). A majority of the
members of the Committee shall constitute a quorum. The approval
of such a quorum, expressed by a vote at a meeting held either in
person or by conference telephone call, or the unanimous consent of
all members in writing without a meeting, shall constitute the
action of the Committee and shall be valid and effective for all
purposes of the Plan.
4.02 Committee Powers. The Committee is empowered to adopt
such rules, regulations and procedures and take such other action
as it shall deem necessary or proper for the administration of the
Plan and, in its discretion, may modify, extend or renew any Award
theretofore granted. The Committee shall also have authority to
interpret the Plan, and the decision of the Committee on any
questions concerning the interpretation of the Plan shall be final
and conclusive. The Committee may consult with counsel, who may be
counsel for the Company, and shall not incur any liability for any
action taken in good faith in reliance upon the advice of counsel.
Subject to the provisions of the Plan, the Committee shall
have full and final authority to:
(a) designate the persons to whom Awards shall be granted;
(b) grant Awards in such form and amount as the Committee
shall determine;
(c) impose such limitations, restrictions and conditions upon
any such Award as the Committee shall deem appropriate,
and
(d) waive in whole or in part any limitations, restrictions
or conditions imposed upon any such Award as the
Committee shall deem appropriate.
V. PARTICIPATION
5.01 Eligibility. Key employees of the Company and its
Subsidiaries (including officers and employees who may be members
of the Board) who, in the sole opinion of the Committee, contribute
significantly to the growth and success of the Company or a
Subsidiary shall be eligible for Awards under the Plan. From among
all such Eligible Employees, the Committee shall determine from
time to time those Eligible Employees to whom Awards shall be
granted. No eligible employees shall be granted an Award or Awards
covering more than 50,000 shares of Company Stock in any calendar
year. No Eligible Employee shall have any right whatsoever to
receive an Award unless so determined by the Committee.
5.02 No Employment Rights. The Plan shall not be construed as
conferring any rights upon any person for a continuation of
employment, nor shall it interfere with the rights of the Company
or any Subsidiary to terminate the employment of any person or to
take any other action affecting such person.
VI. STOCK OPTIONS
6.01 General. Stock options granted under the Plan may be in
the form of incentive stock options (within the meaning of Code
Section 422) or nonqualified stock options. Each option granted
under the Plan shall be evidenced by a stock option agreement
between the Company and the Grantee which shall contain the terms
and conditions required by this Article VI, and such other terms
and conditions, not inconsistent herewith, as the Committee may
deem appropriate in each case. The holder of an option shall not
have any rights as a stockholder with respect to the shares covered
by an option until such shares have been delivered to him or her.
6.02 Option Price. The price at which each share of Company
Stock covered by an option may be purchased shall be determined in
each case by the Committee and set forth in each stock option
agreement. In no event shall such price be less than one hundred
percent (100%) of the Fair Market Value of the Company Stock when
the option is granted. Employees who own, directly or indirectly,
within the meaning of Code Section 425(d), more than 10% of the
voting power of all classes of stock of the Company or any parent
or subsidiary corporation shall not be eligible to receive an
incentive stock option hereunder unless the purchase price per
share under such option is at least 110% of the Fair Market Value
of the stock subject to the option and such option by its terms is
not exercisable after the expiration of 5 years from the date such
option is granted.
6.03 Date Option Granted. For purposes of the Plan, a stock
option shall be considered as having been granted on the date on
which the Committee authorized the grant of the option, except
where the Committee has designated a later date, in which event the
later date shall constitute the date of grant of the option;
provided, however, that in either case notice of the grant of the
option shall be given to the employee within a reasonable time.
6.04 Period for Exercise of Options. Each stock option
agreement shall state the period or periods of time within which
the option may be exercised by the Grantee, in whole or in part,
which shall be the period or periods of time as may be determined
by the Committee, provided that: (a) No option granted under this
Plan may be exercised until at least six months from the later of
(i) the date of grant or (ii) shareholder approval of the Plan, (b)
No Option Period for an incentive stock option may exceed ten (10)
years from the date the option is granted, and (c) No option may be
treated as an incentive stock option unless the Grantee exercises
the option while employed by the Company or a Subsidiary or within
three months after termination of employment, or if termination is
caused by death or disability, within one year after such
termination.
6.05 Special Rule for Incentive Stock Options. For so long as
Section 422 (or any successor provision) of the Code so provides,
the aggregate Fair Market Value (determined as of the date the
incentive stock option is granted) of the number of shares with
respect to which incentive stock options are exercisable for the
first time by a Grantee during any calendar year shall not exceed
One Hundred Thousand Dollars ($100,000) or such other limit as may
be required by the Code.
6.06 Method of Exercise. Subject to Section 6.04, each option
may be exercised in whole or in part from time to time as specified
in the stock option agreement. Each Grantee may exercise an option
by giving written notice of the exercise to the Company, specifying
the number of shares to be purchased, accompanied by payment in
full of the purchase price therefor. The purchase price may be paid
in cash, by check, or, with the approval of the Committee, by
delivering shares of Company Stock which have been beneficially
owned by the Grantee, the Grantee's spouse, or both of them for a
period of at least six months prior to the time of exercise
("Delivered Stock) or a combination of cash and Delivered Stock.
Delivered Stock shall be valued at its Fair Market Value
determined as of the date of exercise of the option. No Grantee
shall be under any obligation to exercise any option hereunder.
6.07 Merger, Consolidation or Reorganization. In the event
of a merger, consolidation or reorganization with another
corporation in which the Company is not the surviving corporation,
the Committee shall, subject to the approval of the Board of
Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company hereunder, take
action regarding each outstanding and unexercised option pursuant
to either clause (a) or (b) below:
(a) Appropriate provision may be made for the protection of
such option by the substitution on an equitable basis of
appropriate shares of the surviving corporation, provided
that the excess of the aggregate Fair Market Value of the
shares subject to such option immediately before such
substitution over the exercise price thereof is not more
than the excess of the aggregate fair market value of the
substituted shares made subject to option immediately
after such substitution over the exercise price thereof;
or
(b) The Committee may cancel such option. In such event, the
Company, or the corporation assuming the obligations of
the Company hereunder, shall pay the employee an amount
of cash (less normal withholding taxes) equal to the
excess of the highest Fair Market Value per share of the
Company Stock during the 60-day period immediately
preceding the merger, consolidation or reorganization
over the option exercise price, multiplied by the number
of shares subject to such option.
6.08 Dissolution or Liquidation. Anything contained herein to
the contrary notwithstanding, on the effective date of any
dissolution or liquidation of the Company, the holder of each then
outstanding and unexercised option shall receive the cash amount
described in 6.07(b) hereof and such option shall be cancelled.
6.09 Conditional Cashless Exercise. In connection with the
Company's tender offer to purchase shares of Company stock to be
dated on or about October 4, 1999 (the "Offer"), a Grantee may
elect a conditional cashless exercise of the Grantee's options
which are then exercisable. The conditional cashless exercise will
permit a Grantee to exercise the option only if, and to the extent,
the Company will actually purchase the option shares in the Offer.
If after taking into account any proration, the Company purchases
less than all of the option shares which the Grantee has tendered
in the Offer, the options will be exercised, and the option shares
purchased, in the order designated by the Grantee in an option
election form. If any of the tendered option shares are not
purchased, the related options will not be considered to have been
exercised and will remain outstanding. The Grantee will not be
required to pay cash for the exercise price, and the consideration
received by the Grantee whose option shares are purchased in a
conditional cashless exercise will be the difference between the
purchase price per share in the Offer and the exercise price per
share relating to the option shares so purchased (less applicable
tax withholding).
VII. RESTRICTED STOCK.
7.01 Administration. Shares of restricted stock may be issued
either alone or in addition to other Awards granted under the Plan.
The Committee shall determine the Eligible Employees to whom and
the time or times at which grants of restricted stock will be made,
the number of shares to be awarded, the time or times within which
such Awards may be subject to forfeiture and any other terms and
conditions of the Awards. The Committee may condition the grant of
restricted stock upon the attainment of specified performance goals
or such other factors or criteria as the Committee shall determine.
The provisions of restricted stock Awards need not be the same
with respect to each recipient.
7.02 Awards and Certificates. Each individual receiving a
restricted stock Award shall be issued a certificate in respect of
such shares of restricted stock. Such certificate shall be
registered in the name of such individual and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award, substantially in the
following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Oshkosh B'Gosh, Inc.
1994 Incentive Stock Plan and a Restricted Stock Agreement.
Copies of such Plan and Agreement are on file at the offices
of Oshkosh B'Gosh, Inc."
The Committee may require that the certificates evidencing
such shares be held in custody by the Company until the
restrictions thereon shall have lapsed and that, as a condition of
any restricted stock Award, the Grantee shall have delivered a
stock power, endorsed in blank, relating to the Company Stock
covered by such Award.
7.03 Terms and Conditions. Shares of restricted stock shall
be subject to the following terms and conditions:
(a) Until the applicable restrictions lapse, the Grantee
shall not be permitted to sell, assign, transfer, pledge
or otherwise encumber shares of restricted stock.
(b) The Grantee shall have, with respect to the shares of
restricted stock, all of the rights of a stockholder of
the Company, including the right to vote the shares and
the right to receive any cash dividends. Unless
otherwise determined by the Committee, cash dividends
shall be automatically paid in cash and dividends payable
in Company Stock shall be paid in the form of additional
restricted stock.
(c) Except to the extent otherwise provided in the applicable
Restricted Stock Agreement and (d) below, all shares
still subject to restriction shall be forfeited by the
Grantee upon termination of a Grantee's employment for
any reason.
(d) In the event of hardship or other special circumstances
of a Grantee whose employment is involuntarily terminated
(other than for cause), the Committee may waive in whole
or in part any or all remaining restrictions with respect
to such Grantee's shares of restricted stock.
(e) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the
Grantee.
(f) Each Award shall be confirmed by, and be subject to the
terms of, a Restricted Stock Agreement.
VIII. WITHHOLDING TAXES.
8.01 General Rule. Pursuant to applicable federal and state
laws, the Company is or may be required to collect withholding
taxes upon the exercise of an option or the lapse of stock
restrictions. The Company may require, as a condition to the
exercise of an option or the issuance of a stock certificate, that
the Grantee concurrently pay to the Company (either in cash or, at
the request of Grantee but in the discretion of the Committee and
subject to such rules and regulations as the Committee may adopt
from time to time, in shares of Delivered Stock) the entire amount
or a portion of any taxes which the Company is required to withhold
by reason of such exercise or lapse of restrictions, in such amount
as the Committee or the Company in its discretion may determine.
8.02 Withholding from Shares to be Issued. In lieu of part or
all of any such payment, the Grantee may elect, subject to such
rules and regulations as the Committee may adopt from time to time,
or the Company may require that the Company withhold from the
shares to be issued that number of shares having a Fair Market
Value equal to the amount which the Company is required to
withhold.
8.03 Special Rule for Insiders. Any such request or election
(to satisfy a withholding obligation using shares) by an individual
who is subject to the provisions of Section 16 of the Securities
Exchange Act of 1934 shall be made in accordance with the rules and
regulations of the Securities and Exchange Commission promulgated
thereunder.
IX. GENERAL
9.01 Nontransferability. Unless otherwise specified by the
Committee, no Award granted under the Plan shall be transferable or
assignable except by last will and testament or the laws of descent
and distribution. During the Grantee's lifetime, options shall be
exercisable only by the Grantee or by the Grantee's guardian or
legal representative.
9.02 General Restriction. Each Award shall be subject to the
requirement that if at any time the Board or the Committee shall
determine, in its discretion, that the listing, registration, or
qualification of securities upon any securities exchange or under
any state or federal law, or the consent or approval of any
government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option or
the issue or purchase of securities thereunder, such option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board or the
Committee.
9.03 Expiration and Termination of the Plan. Awards may be
granted under the Plan at any time and from time to time, prior to
August 8, 2004, the date on which the Plan will expire, except as
to Awards then outstanding under the Plan, which shall remain in
effect until they have been exercised, the restrictions have lapsed
or the Awards have expired or been forfeited. The Plan may be
abandoned or terminated at any time by the Board of Directors of
the Company, except with respect to any Awards then outstanding
under the Plan.
9.04 Amendments. The Board may from time to time amend,
modify, suspend or terminate the Plan; provided, however, that no
such action shall (a) impair without the Grantee's consent any
Award theretofore granted under the Plan or deprive any Grantee of
any shares of Company Stock which he or she may have acquired
through or as a result of the Plan or (b) be made without share-
holder approval where such approval would be required as a condi-
tion of compliance with Rule 16b-3.
9.05 Construction. Except as otherwise required by
applicable federal laws, the Plan shall be governed by, and
construed in accordance with, the laws of the State of Wisconsin.
EXHIBIT 10.9
Flexible Nonstandardized 401(k) Adoption Agreement (#007) 062493
I. Employer Information
A. Name: OshKosh B'Gosh, Inc.
B. Address: 112 Otter Avenue
Oshkosh, WI 54902
C. Taxable Year: 1996
D. EIN: 39-0519915
II. Plan Information
A. Plan Name: OshKosh B'Gosh, Inc. 401(k) Plan
B. Plan Year: the period which ends on 12/31
C. Construction. Except as provided in Section 1.2, the Plan
and the Trust Agreement will be subject to the laws of the
State of Wisconsin.
D. Plan Adoption. The Plan is hereby adopted as [Check one.
See Section 14.1.]
1. [ x ] a new profit sharing plan (with cash or deferred
arrangement).
2. [ ] an amendment and restatement of the ("Pre-Existing Plan")
which was originally effective , 19 .
E. Effective Date of this Adoption Agreement: October 1, 1996.
III. Eligibility and Participation
A. Eligible Employees. All Employees of the Employer and all
Employees of the Participating Affiliates who satisfy the
Participation Requirement generally will be eligible to
participate in the Plan except certain nonresident aliens
and: [Check one. See Section 2.19.]
1. [ ] Standard: no other exclusions.
2. [ x ] the following additional categories of Employees:
[The Plan must satisfy the nondiscrimination,
minimum coverage and minimum participation rules
on a continuing basis. See Section 2.19(b).]
1. Exclude retail store employee is store is scheduled
to close within 60 days after start date of Plan and
exclude Celina Mfg. facility employees.
However, notwithstanding any contrary language, participation
in this Plan by Employees who are covered by a collective
bargaining agreement and the extend of such participation, if
any, will be determined by collective bargaining.
B. Participation Requirement. In order to participate in this
Plan, an Eligible Employee must [Check one. See Section
2.46, Section 4 and Part V.B.1. Enter "N/A" if there will be
no minimum age or no waiting period, as applicable.]
1. [ x ] Standard: reach minimum age of 21 and complete
waiting period of 1 Year of Service.
2. [ ] no minimum age or waiting period.
3. [ ] reach minimum age of [not to exceed 21] and
complete waiting period of Year of Service
[not to exceed 1].
4. [ ] reach minimum age of [not to exceed 21] and
complete waiting period of Year of Service [not
to exceed 1]; however, each Employee who is an
Eligible Employee on the Effective Date will be
deemed to satisfy the Participation Requirement on
the Effective Date regardless of such Employee's
actual age or service.
C. Entry Date: [Check one. See Section 2.26 and Section 4.]
1. [ ] Standard; the first day of each Plan Year and the
first day of the seventh month of each Plan year.
2. [ ] the date on which the Participant satisfies the
Participation Requirement.
3. [ x ] other: first day of the month [Specify date(s).
If a single Entry Date is entered, the minimum age
in Part III.B cannot exceed 20-1/2 and the maximum
waiting period in Part III.B cannot exceed 1/2
year.]
IV. Vesting.
A. Death, Disability or Retirement. [See Section 8.1(b).]
1. [ x ] Standard. A Participant's Employer Account and
Matching Account will be 100% vested if, while an
Employee, that Participant dies, becomes Disabled,
or reaches Normal Retirement Age or, if
applicable, Early Retirement Age.
2. [ ] A Participant's Employer Account and Matching
Account will be 100% vested if, while an Employee,
that Participant reaches Normal Retirement Age or
if the Participant satisfies the following
condition: [Check one or more only if desired.]
a. [ ] dies while an Employee
b. [ ] becomes Disabled while an Employee
c. [ ] reaches Early Retirement Age while an
Employee.
B. General Vesting Schedule. [See Section 8.1 and Section
14.3(c). Generally, the vesting schedule under this Plan
must be at least as favorable at the completion of each year
as the vesting schedule under the Pre-Existing Plan. The
Top-Heavy Vesting Schedule selected in Part XI.A will apply
for all Plan Years in which the Plan is a Top-Heavy Plan.
See Section 12.4.]
1. Matching Account. [Check one. "Full and Immediate
Vesting" must be selected if the 2-year requirement for
Matching Contributions is selected in Part VII.A.2.b.5.]
a. [ ] Standard. Full and Immediate Vesting. 100%
at all times.
b. [ x ] Cliff Vesting. 100% after completion of 3
Years of Service [not to exceed 5] or after
completion of 0 Years of Service in the event
of involuntary termination due to reduction
in force or a facility closure, provided
either such event occurs at a manufacturing
plant, distribution center, (which does not
include retail stores), or a finishing
center.
c. [ ] Graded Vesting.
Years of Service Nonforfeitable Percentage
Less than 1 %
1 %
2 %
3 % [at least 20%]
4 % [at least 40%]
5 % [at least 60%]
6 % [at least 80%]
7 or more 100%
d. [ ] Top-Heavy. The Top-Heavy Vesting Schedule in
Part XI.A will apply for all Plan Years.
2. Employer Account. [Check one. "Full and Immediate
Vesting" must be selected if the 2-year requirement for
Employer Contributions is selected in Part VII.D.2.b.5.]
a. [ ] Standard. Full and Immediate Vesting. 100%
at all times.
b. [ x ] Cliff Vesting. 100% after completion of 3
Years of Service [not to exceed 5] or after
completion of 0 Years of Service in the event
of involuntary termination due to reduction
in force or a facility closure, provided
either such event occurs at a manufacturing
plant, distribution center, (which does not
include retail stores), or a finishing
center.
c. [ ] Graded Vesting.
Years of Service Nonforfeitable Percentage
Less than 1 %
1 %
2 %
3 % [at least 20%]
4 % [at least 40%]
5 % [at least 60%]
6 % [at least 80%]
7 or more 100%
d. [ ] Top-Heavy. The Top-Heavy Vesting Schedule in
Part XI.A will apply for all Plan Years.
C. Normal Retirement Age. [Check one. See Section 2.43 and
Part XIII.B.]
1. [ x ] Standard. age 65
2. [ ] age [not to exceed 65]
3. [ ] the later of age [not to exceed 65] or the
[not to exceed 5th] anniversary of the date on
which the Participant commenced participation in
the Plan.
D. Early Retirement Age: [The designation of an Early
Retirement Age may accelerate vesting and distribution.
Early Retirement Age cannot exceed Normal Retirement Age.
Check one. See Section 2.13 and Section 9.1.]
1. [ x ] Standard: No Early Retirement Age.
2. [ ] age
3. [ ] the later of age or the completion of
Years of Service (for vesting purposes).
V. Service for Participation and Vesting.
A. Method for Crediting Service. [Check one. See Section 3.]
1. [ x ] Standard: "Hour of Service" method. [See Section
3.1.]
a. Crediting Hours. Hours will be credited during each
Computation Period [Check one. See Section 3.1(c).]
(1) [ ] Standard: by maintaining records of the
actual hours worked. [See Section
3.1(c)(2)(i).]
(2) [ x ] by using the following equivalency
[Check one. See Section 3.1(c)(2)(ii).]
[ ] 10 Hours of Service for each day.
[ ] 45 Hours of Service for each week.
[ ] 95 Hours of Service for each semi-
monthly payroll period.
[ x ] 190 Hours of Service for each month for
any employee not paid on an hourly basis.
b. Vesting Computation Period. The Computation Period
for vesting purposes will be [Check one. See Section
3.1(b)(2).]
(1) [ x ] Standard: the Plan Year
(2) [ ] the 12 month period beginning on the
Participant's hire date and each
anniversary of that hire date.
c. Participation Computation Period. The initial
Computation Period for participation purposes will be
the 12 month period beginning on the Participant's
hire date. Each subsequent Computation Period after
the initial 12 months of employment will be [Check
one. See Section 3.1(b)(3).]
(1) [ x ] Standard: Plan years beginning after the
Participant's hire date.
(2) [ ] subsequent 12 month periods beginning on
the anniversaries of the Participant's
hire date.
d. Year of Service for Vesting. For vesting purposes,
an Employee will be credited with a Year of Service
if, during a Computation Period, the Employee
completes at least [Check one. See Section 3.1(d).]
(1) [ x ] Standard: 1,000 Hours of Service
(2) [ ] [not more than 1,000] Hours of
Service.
e. Year of Service for Participation. For participation
purposes, an Employee will be credited with a Year of
Service [Check one. See Section 3.1(b)(3) and
Section 3.1(d).]
(1) [ x ] Standard: at the end of the Computation
Period in which the Employee completes at
least 1,000 Hours of Service.
(2) [ ] on the date on which the Employee
completes at least [not more than
1,000] Hours of Service.
(3) [ ] at the end of the Computation Period on
which the Employee completes at least
[not more than 1,000] Hours of Service.
Notwithstanding the foregoing, if a partial Year of
Service is selected in Part III.B, no minimum number
of Hours of Service will be required.
2. [ ] "Elapsed Time" method. [See Section 3.2.]
For purposes of determining whether a Participant
is entitled to an allocation of contributions or
forfeitures, the Participant will be deemed to
have completed more than 500 Hours of Service in a
Plan Year if the Participant completes the
following period of employment in the Plan Year:
[Check one. See Section 2.2(d) and Part VII.]
a. [ ] Standard: more than 91 consecutive
calendar days.
b. [ ] more than 3 consecutive months.
B. Special Rules.
1. Vesting Service Exclusions. [See Section 3.8.] In
addition to any service that is disregarding under the
Break in Service rules described below and in Section
3.7(c), the following service will be excluded for
vesting purposes:
a. [ x ] Standard: No other exclusions.
b. [ ] Years of Service before age 18.
c. [ ] Years of Service before the Employer or an
Affiliate maintained this Plan or a
predecessor plan.
d. [ ] Years of Service during a period for which the
Employee made no mandatory contributions under
a Pre-Existing Plan.
2. Predecessor Employer Service (Vesting and
Participation). Generally, unless the Employer
maintains the plan of a predecessor employer (for
example, an acquired company), service for a predecessor
employer will not be credited as service under this
Plan. [Check and attach appropriate addendum only if
desired. See Section 3.4.]
[ ] Service credit will be given under this Plan for
certain predecessor employers for participation and/or
vesting purposes to the extent provided in Addendum
V.B.2.
3. Break in Service Rules. [See Section 3.7 and Section
8.2.] Generally, all service completed before a Break
in Service will be credited upon reemployment. Certain
service may be excluded under the following rules:
a. [ x ] Standard: No exclusions. [See Section
3.7(a).]
b. [ ] "One Year Hold Out Rule." [See Section
3.7(b)(1).] This rule, generally, requires
rehired Employees to complete a Year of Service
before prior vesting and participation service
is restored.
c. [ ] "Rule of Parity". [See Section 3.7(b)(3).]
This rule, generally, disregards vesting and
participation service completed before 5
uninterrupted Breaks in Service.
d. [ ] "Alternative Maternity/Paternity Rule." [Not
applicable if "Elapsed Time" is selected. See
Section 3.7(b)(4).] This rule, generally,
increases the number of Breaks in Service from
5 to 6 for all Employees in lieu of crediting
service for maternity/paternity leave.
e. [ ] Alternative to "Buy Back Rule". [See Section
8.2(b).] This rule, generally, does not
require former participants (less than 100%
vested) to pay back previous distributions upon
reemployment (vesting only). A rehired
Participant's vested interest in restored
amounts will be determined under: [Check one.
See Section 8.2(a), Section 8.2(b) and Section
8.2(c).]
(1) [ ] Standard: Formula A
(2) [ ] Formula B
VI. Employee Contributions.
A. Elective Deferrals. [See Section 5.3(f). Check one.]
1. [ x ] Standard: will be allowed. [Complete formula
below; enter "N/A" if not applicable.]
a. Minimum Amount. Not less than 1% of a
Participant's Compensation or $ N/A.
b. Maximum Amount. For Plan Years ending on and
before 12/31/96, not more than 15% of a
Participant's Compensation or $ , and for
each Plan Year thereafter, not more than 15%
of a Participant's Compensation or $ .
2. [ ] will not be allowed.
B. Employee Contributions. Employee Contributions [See Section
5.3(g). Check one.]
1. [ x ] Standard: will not be allowed.
2. [ ] will be allowed. [Complete formula below; enter
"N/A" if not applicable.]
a. Minimum Amount. Not less than % of a
Participant's Compensation or $ .
b. Maximum Amount. For Plan years ending on and
before , not more than % of a
Participant's Compensation or $ , and for
each Plan Year thereafter, not more than %
of a Participant's Compensation or $ .
C. Election Rules. [Check one. See Section 5.3(h).]
1. [ ] Standard: If a Participant does not elect to
begin Elective Deferrals or Employee Contributions
on the Participant's Entry Date, the Participant
may elect to begin such contributions as of any
following pay date. A Participant's election can
be revised (prospectively only) as of any pay
date. A Participation who terminates
contributions may elect to resume contributions
prospectively as of any pay date.
2. [ x ] Alternatives to Standard: A Participant's
elections may be made as follows: [Must include
at least one day in each calendar year.]
a. [ x ] Commencement. [See Section
5.3(h)(2).] effective only as of any
first day of any month following the
Participant's Entry Date.
b. [ x ] Revision. [See Section 5.3(h)(3).]
effective only as of any following
last day of any month.
c. [ x ] Resumption. [See Section 5.3(h)(5).]
effective only as of any following a
minimum suspension of deferrals of six
months.
D. Rollover Contributions. Rollover Contributions [Check one.
See Section 5.5.]
1. [ x ] Standard: will be allowed and may be made by
[Check one.]
a. [ x ] Standard: any Eligible Employee.
b. [ ] any Eligible Employee who is a
Participant.
2. [ ] will not be allowed.
E. Limitations on Elective Deferrals.
1. Claims. Claims for a refund of Excess Elective
Deferrals must be made no later than [See Section
7.3(f). Check one.]
a. [ x ] Standard: March 1.
b. [ ] [no earlier than March 1 and no later
than April 15.]
2. Deemed Claims. Corrections of Excess Elective Deferrals
will be made [See Section 7.3(f)(2). Check one.]
a. [ x ] Standard: from this Plan.
b. [ ] from the following plan(s):
3. "Gap Period" Income. The income or loss allocable to
the "gap period" [Check one. See Section 7.3(e),
Section 7.4(d)(2) and Section 7.5(d)(2).]
a. [ x ] Standard: shall not be distributed.
b. [ ] shall be distributed.
4. Highly Compensated Employees. The following special
rules in the temporary Code Section 414(q) regulations
and in Code Section 414(q)(12) will apply: [Check one.
See Section 7.4(a)(5)(v).]
a. [ x ] Standard: no special rules.
b. [ ] The special rules set forth in Addendum
V.E.3.
5. Recharacterization. Recharacterization of Excess
Contributions as Employee Contributions [See Section
7.4(e). Check one.]
a. [ x ] Standard: will not be allowed.
b. [ ] [Do not check this option 2 if Employee
Contributions are not allowed in Part VI.B]
will be allowed.
VII. Employer Contributions.
A. Matching Contributions. [See Section 5.3(b) and Part VII.F.]
1. Formula. [Check one.]
a. [ ] Standard: No Matching Contributions will be
made.
b. [ x ] Matching Contributions will be made on
account of: [Check one or both.]
[ x ] Elective Deferrals
[ ] Employee Contributions
under the following formula: [Check and
complete one. Enter "N/A" if not applicable.
The formula specified and completed must not
provide a higher rate of Matching
Contributions for Participants who make a
higher amount of contributions.]
[ ] % of the Participant's
contributions which do not exceed $
or % of the Participant's
Compensation plus % of the
Participant's contributions which
exceed $ or %, but
contributions in excess of $ or
% of the Participant's Compensation
will not be matched.
[ x ] such percentage of the Participant's
contributions as determined by the
Employer in its discretion for each
Plan Year.
[ ] in an amount equal to .
2. Eligible Participant. The Matching Contribution for any
Allocation Date will be made only for each Participant
who makes Elective Deferrals or Employee Contributions,
as applicable, during the period ending on the
Allocation Date and who satisfies all of the following
requirements: [Check one.]
a. [ x ] Standard: no additional requirements.
b. [ ] Alternative: [Check one or more.]
(1) [ ] the Participant is employed (or on
an authorized leave of absence) on
the Allocation Date.
(2) [ ] the Participant is credited with at
least 1,000 Hours of Service in the
Plan Year ending on such Allocation
Date. [Do not check if "Elapsed
Time" is selected or Allocation
Date is not Standard Option.]
(3) [ ] the Participant is a Nonhighly
Compensated Employee.
(4) [ ] the Participant is not employed as
of the last day of the Plan Year
but is credited with more than 500
Hours of Service in the Plan Year.
[Do not check if Allocation Date is
not Standard Option. Special Hour
of Service equivalencies apply if
"Elapsed Time" is selected. See
Part V.A.2.]
(5) [ ] the Participant is credited with at
least 2 Years of Service (for
participation purposes) on such
Allocation Date.
(6) [ ] notwithstanding anything to the
contrary in clause (1), (2) or (4)
of this Part VII.A.2.b, a
Participant who died, retired or
became disabled during the period
ending on the Allocation Date will
be eligible [Check one.]
[ ] without regard to the number
of Hours of Service.
[ ] only if he completes the
Hours of Service specified in
clause (2) or (4), as
applicable. [Do not check if
Allocation Date is not
Standard Option.]
3. Allocation Date. Matching Contributions will be made
and allocated as of [Check one.]
a. [ ] Standard: the last day of each Plan year.
b. [ x ] each month.
4. Forfeitures. Forfeitures attributable to Matching
Accounts. [Check one. See Section 6.3(c)(2)(ii).]
a. [ x ] Standard: will be applied to reduce Matching
Contributions as of the Allocation Date:
[Check one. See Section 8.2(e).]
(1) [ x ] Standard: which immediately
follows the date the Forfeiture
occurs.
(2) [ ] which immediately follows the last
day of the Plan Year in which the
Forfeiture occurs.
b. [ ] will be reallocated to Active Participants as
of the last day of each Plan Year. [Complete
Part VII.D.2 to specify who is an Active
Participant for this purpose.]
c. [ ] will be allocated in accordance with the
formula set forth in Addendum VII.A.4.c.
[The addendum should describe Allocation
Date, eligible Participants and allocation
formula.]
B. Qualified Matching Contributions. [See Section 5.3(c) and
Part VII.F.]
1. Formula. [Check one.]
a. [ x ] Standard: No Qualified Matching
Contributions will be made.
b. [ ] Qualified Matching Contributions will be made
on account of: [Check one or both.]
[ ] Elective Deferrals
[ ] Employee Contributions
under the following formula: [Check and
complete one. Enter "N/A" if not applicable.
The formula specified and completed must not
provide a higher rate of Qualified Matching
Contributions for Participants who make a
higher amount of contributions.]
[ ] % of the Participant's
contributions which do not exceed $
or % of the Participant's
Compensation plus % of the
Participant's contributions which
exceed $ or %, but
contributions in excess of $ or
% of the Participant's Compensation
will not be matched.
[ ] such percentage of the Participant's
contributions as determined by the
Employer in its discretion for each
Plan Year.
[ ] in an amount equal to .
2. Eligible Participant. The Qualified Matching
Contribution for any Allocation Date will be made only
for each Participant who makes Elective Deferrals or
Employee Contributions, as applicable, during the period
ending on the Allocation Date and who satisfies all of
the following requirements: [Check one.]
a. [ ] Standard: no additional requirements.
b. [ ] Alternative: [Check one or more.]
(1) [ ] the Participant is employed (or on
an authorized leave of absence) on
the Allocation Date.
(2) [ ] the Participant is credited with at
least 1,000 Hours of Service in the
Plan Year ending on such Allocation
Date. [Do not check if "Elapsed
Time" is selected or Allocation
Date is not Standard Option.]
(3) [ ] the Participant is a Nonhighly
Compensated Employee.
(4) [ ] the Participant is not employed as
of the last day of the Plan Year
but is credited with more than 500
Hours of Service in the Plan Year.
[Do not check if Allocation Date is
not Standard Option. Special Hour
of Service equivalencies apply if
"Elapsed Time" is selected. See
Part V.A.2.]
(5) [ ] the Participant is credited with at
least 2 Years of Service (for
participation purposes) on such
Allocation Date.
(6) [ ] notwithstanding anything to the
contrary in clause (1), (2) or (4)
of this Part VII.B.2.b, a
Participant who died, retired or
became disabled during the period
ending on the Allocation Date will
be eligible [Check one.]
[ ] without regard to the number
of Hours of Service.
[ ] only if he completes the
Hours of Service specified in
clause (2) or (4), as
applicable. [Do not check if
Allocation Date is not
Standard Option.]
3. Allocation Date. Qualified Matching Contributions will
be made and allocated as of [Check one.]
a. [ ] Standard: the last day of each Plan Year.
b. [ ] each .
C. Qualified Nonelective Contributions. [See Section 5.3(d) and
Part VII.F.]
1. Formula. In addition to the Qualified Nonelective
Contributions which may be made for Nonhighly
Compensated Employees to satisfy the ADP or ACP limits,
[Check one.]
a. [ x ] Standard: no additional Qualified
Nonelective Contributions will be made.
b. [ ] additional Qualified Nonelective
Contributions will be made in an amount equal
to .
2. Eligible Participant. The Additional Qualified
Nonelective Contribution described in this Part VII.C
for any Allocation Date will be made only for each
Participant who is an Eligible Employee at any time
during the period ending on the Allocation Date and who
satisfies all of the following requirements: [Check
one.]
a. [ ] Standard: no additional requirements.
b. [ ] Alternative: [Check one or more.]
(1) [ ] the Participant is employed (or on
an authorized leave of absence) on
the Allocation Date.
(2) [ ] the Participant is credited with at
least 1,000 Hours of Service in the
Plan Year ending on such Allocation
Date. [Do not check if "Elapsed
Time" is selected or Allocation
Date is not Standard Option.]
(3) [ ] the Participant is a Nonhighly
Compensated Employee.
(4) [ ] the Participant is not employed as
of the last day of the Plan Year
but is credited with more than 500
Hours of Service in the Plan Year.
[Do not check if Allocation Date is
not Standard Option. Special Hour
of Service equivalencies apply if
"Elapsed Time" is selected. See
Part V.A.2.]
(5) [ ] the Participant is credited with at
least 2 Years of Service (for
participation purposes) on such
Allocation Date.
(6) [ ] notwithstanding anything to the
contrary in clause (1), (2) or (4)
of this Part VII.C.2.b, a
Participant who died, retired or
became disabled during the period
ending on the Allocation Date will
be eligible [Check one.]
[ ] without regard to the number
of Hours of Service.
[ ] only if he completes the
Hours of Service specified in
clause (2) or (4), as
applicable. [Do not check if
Allocation Date is not
Standard Option.]
3. Allocation Date. The Qualified Nonelective
Contributions described in this Part VII.C will be made
and allocated as of [Check one.]
a. [ ] Standard: the last day of each Plan Year.
b. [ ] each .
D. Discretionary Employer Contributions.
1. Allocation Formula. The discretionary Employer
Contributions will be allocated among Active
Participants as follows: [Check one. See Section
5.3(e), Section 6.3(a), Section 6.3(c)(4) and Part
VII.F. Do not select an integrated formula for Plan
years beginning on and after the Final Compliance Date
if the Employer also maintains another integrated plan
for such Plan Year.]
a. [ x ] Standard: Nonintegrated. [See Section
6.3(a)(1) and Section 6.3(c)(4)(i)(A).]
b. [ ] Integrated. [See Section 6.3(a)(2), Section
6.3(c)(4)(i)(B) and Section 12.3(h).]
(1) Integration Percentage. [Check one. If
the Integration Level is less than the
Taxable Wage Base, the Maximum Disparity
Rate must be reduced. See Section
2.39.]
[ ] Standard: the Maximum Disparity
Rate.
[ ] % [not to exceed the Maximum
Disparity Rate.]
(2) Integration Level. [Check one. See
Section 2.35.]
[ ] Standard: the Taxable Wage Base.
[ ] $ or % of the Taxable Wage
Base [not to exceed the Taxable
Wage Base.]
2. Active Participant. The discretionary Employer
Contributions and Forfeitures, if applicable, will only
be allocated to: [Check one. See Section 2.2, Section
5.3(e) and Part VII.F.]
a. [ x ] Standard: each Participant who is an
Eligible Employee at any time during the Plan
Year and (1) who is employed (or on an
authorized leave of absence) on the last day
of the Plan Year and (if the "Hours of
Service" method is selected) who is credited
with more than 1,000 Hours of Service during
the Plan Year or (2) who terminated
employment during the Plan Year due to death,
disability or retirement.
b. [ ] Alternatives to standard: [Check one or
more.]
(1) [ ] The last day employment
requirement will not apply.
(2) [ ] The 1,000 hours requirement will
not apply.
(3) [ ] The exceptions for death,
disability and retirement will
not apply.
(4) [ ] Each Participant who is not
employed on the last day of the
Plan Year but is credited with
more than 500 Hours of Service
during the Plan Year will be an
Active Participant. [Special
equivalencies apply if "Elapsed
Time" is selected. See Part
V.A.2.]
(5) [ ] The Participant must also be
credited with at least 2 Years of
Service on the last day of the
Plan Year.
3. Forfeitures. Forfeitures attributable to Employer
Accounts [Check one. See Section 5.3(i) and Section
6.3(c)(4)(ii).]
a. [ x ] Standard: will be reallocated to Active
Participants as of the last day of each Plan
Year in the same manner as Employer
Contributions.
b. [ ] will be applied to reduce Matching
Contributions, Qualified Matching
Contributions and/or Qualified Nonelective
Contributions.
E. Net Profits.
1. General. [Check one. See Section 5.3(a).]
a. [ ] Standard: All Employer contributions other
than Elective Deferrals will be made out of
Net Profits.
b. [ x ] Alternatives to Standard: In addition to
Elective Deferrals, the following
contributions will be made without regard to
Net Profits: [Check one or more.]
1. [ x ] Matching Contributions
2. [ ] Qualified Matching Contributions
3. [ x ] Qualified Nonelective Contributions
4. [ x ] Discretionary Employer Contributions
2. Definition. For this purpose, Net Profits will be as
defined [Check one. See Section 2.41.]
a. [ ] Standard: in Section 2.41(a).
b. [ ] in the attached Addendum VII.E.2.
F. Minimum Allocations. Each Active Participant (determined
without regard to the Participant's completed Hours of
Service) who is not a Key Employee, generally, will receive
the minimum top-heavy allocation if the Plan is top-heavy.
[See Section 6.3(e) and Section 12.] Requiring a Participant
to complete a minimum number of hours or to be employed on
the last day of a period may result in a failure to satisfy
the nondiscrimination rules, minimum coverage rules and
minimum participation rules. [See Section 2.2 and Section
2.19.]
VIII. Compensation. Compensation for any Plan Year generally
means total compensation (not to exceed $200,000 indexed for
inflation after 1989) actually paid to a Participant during such
Plan Year (unless another determination period is selected).
[See Section 2.10.]
A. Basic Definition: Total compensation means: [Check one. See
Section 2.10(a).]
1. [ x ] Standard: wages, tips and other compensation
reportable on Form W-2. [See Section 2.10(a)(1).]
2. [ ] wages subject to federal income tax withholding.
[See Section 2.10(a)(2)(i).]
3. [ ] general Code Section 415 compensation. [See
Section 2.10(a)(2)(ii) and Section
7.2(a)(2)(ii)(B).]
4. [ ] regular or base salary or wages, including [This
option may not be selected if the integrated
formula is selected in Part VII.D.1.b. Check one
or more only if desired.]
a. [ ] overtime
b. [ ] bonuses
c. [ ] commissions
d. [ ] other:
Reimbursements or other expense allowances, fringe benefits
(cash and noncash), moving expenses, deferred compensation
and welfare benefits (even if includible in gross income):
[Check one. See Section 2.10(a)(2)(iv).]
[ ] Standard: will [ x ] will not
be included in Compensation as determined in accordance with
the definition selected above.
B. Determination Period: [Check one. See Section 2.10(d).]
1. [ x ] Standard: the Plan Year
2. [ ] the calendar year ending in the Plan Year.
3. [ ] a period beginning each [Enter the
day and month the period begins. The
determination period must end with or within the
Plan Year, must be at least 12 consecutive months
in duration and must apply uniformly to all
Employees in the Plan.]
C. Salary Reductions. Participant salary reduction
contributions (for example, Section 401(k) or flexible
benefit plan contributions) [Check one. See Section
2.10(f).]
1. [ x ] Standard: will
2. [ ] will not
be included in total compensation.
D. Special Rules. [Complete only if desired. See Section
2.10(g).]
1. [ ] Compensation for periods ending before the Entry
Date on which an Eligible Employee becomes a
Participant will be excluded. [See Section 2.10
(g)(1).]
2. [ ] If this is an amendment to a Pre-Existing Plan,
the definition of Compensation will be effective
as of [No later than the first day
of the first Plan Year after this Plan is adopted.
See Section 2.10(g)(2). The definition in the
Pre-Existing Plan will continue to apply until
that date.]
3. [ ] Compensation for any Plan Year in excess of $
will be excluded. [See Section 2.10(g)(3).]
4. [ ] The following shall be excluded when determining
Compensation of Highly Compensated Employee: .
[See Section 2.10(g)(4).]
IX. Distributions.
A. Timing. Vested Plan benefits, generally, will be distributed
as follows: [Check one. See Section 9.1(a).]
1. [ x ] Standard: as soon as practical after the
Participant separates from service subject to the
Participant's consent, if required.
2. [ ] no earlier than the Participant's Normal
Retirement Age, Early Retirement Age or
Disability, whichever is earlier.
B. Elections to Defer. A Participant whose Account is more than
$3500 may elect that distribution of vested Plan benefits be
deferred until: [Check one. See Section 9.1(e).]
1. [ x ] Standard: the Participant's Required Beginning
Date (generally age 70.5).
2. [ ] the later of the Participant's Normal Retirement
Age or age 62.
C. In-Service Distributions. [See Section 9.2(b).]
1. Elective Deferral Accounts. In-service distributions
from Elective Deferral Accounts will be allowed as
follows: [Check applicable box(es).]
a. [ ] Standard: no distributions before separation
from service.
b. [ ] on or after age 59.5. [See Section 9.2(b)(4).]
c. [ x ] for the following financial hardship(s): [See
Section 9.2(b)(3). Check one or more.]
(1) [ x ] medical expenses [See Section
9.2(b)(3)(ii)(A).]
(2) [ x ] purchase of principal residence [See
Section 9.2(b)(3)(ii)(B).]
(3) [ x ] tuition [See Section
9.2(b)(3)(ii)(C).]
(4) [ x ] foreclosure or eviction [See Section
9.2(b)(3)(ii)(D).]
(5) [ x ] other IRS "deemed" financial hardship
[See Section 9.2(b)(3)(ii)(E).]
2. Matching Accounts. In-service distributions from
Matching Accounts will be allowed as follows: [Check
applicable box(es).]
a. [ x ] Standard: no distributions before separation
from service.
b. [ ] on or after age .
c. [ ] after the anniversary of Plan
participation.
d. [ ] for a financial hardship under the safe harbor
tests. [See Section 9.2(b)(3).]
e. [ ] in accordance with the rules set forth in
Addendum IX.C.2. [See Section 9.2(b)(5). The
addendum should describe nondiscriminatory
objective standards for an in-service
distribution after a fixed number of years or
upon the prior occurrence of some event such as
layoff, illness or hardship.]
3. Employer Accounts. In-service distributions from
Employer Accounts will be allowed as follows: [Check
applicable box(es).]
a. [ x ] Standard: no distributions before separation
from service.
b. [ ] on or after age .
c. [ ] after the anniversary of Plan
participation.
d. [ ] for a financial hardship under the safe harbor
tests. [See Section 9.2(b)(3).]
e. [ ] in accordance with the rules set forth in
Addendum IX.C.3. [See Section 9.2(b)(5). The
addendum should describe nondiscriminatory
objective standards for an in-service
distribution after a fixed number of years or
upon the prior occurrence of some event such as
layoff, illness or hardship.]
4. Qualified Nonelective and Qualified Matching Accounts.
In-service distributions from Qualified Nonelective and
Qualified Matching Accounts will be allowed as follows:
[Check applicable box(es).]
a. [ x ] Standard: no distributions before separation
from service.
b. [ ] on or after age 59.5.
c. [ ] for financial hardship (pre-89 amounts only).
[See Section 9.2(b)(3).]
5. Employee Accounts. Withdrawals from Employee Accounts
[See Section 9.2(d). Check one.]
a. [ x ] Standard: will be allowed.
b. [ ] will not be allowed.
D. Joint and Survivor Annuity Rules. [Check one. See Section
10.]
1. [ ] Standard: The entire vested balance will be paid
(a) to married Participants as a 50% joint and
survivor annuity, (b) to single Participants as a
100% life annuity and (c) to the surviving Spouse
of a married Participant who dies before
retirement as a 100% preretirement survivor
annuity.
2. [ ] The entire vested balance will be paid under the
standard joint and survivor annuity rules except
the percentages will be: [Percentages must not be
less than 50% nor more than 100%.]
a. Qualified Joint and Survivor Annuity: % [See
Section 10.1(f).]
b. Qualified Preretirement Survivor Annuity: %
[See Section 10.1(g).]
3. [ x ] The standard joint and survivor annuity rules will
not apply. [Check only if the safe harbor rule
described in Section 10.5 will be satisfied. This
option generally is not available if this Plan or
a Pre-Existing Plan provides annuities and
separate accounts are not maintained for such Pre-
Existing Plan balances. Under this option, the
entire vested balance eligible for the safe harbor
will be paid to the surviving Spouse of a married
Participant who dies before retirement. See
Section 10.5.]
E. Optional Distribution Forms. [See Section 10.6(c).] In
addition to single sum distributions in cash, Participants
may also request:
1. [ ] Installments [See Section 10.6(c)(2)(ii).]
2. [ ] Annuity contracts [See Section 10.6(c)(2)(iii).]
3. [ ] The optional forms or in kind distributions
offered under a Pre-Existing Plan as described in
Addendum XIII.A.
4. [ ] Single sum distributions in kind [See Section
10.6(e).]
X. Investment Provisions.
A. Individually Directed Investments. An individual's direction
of the investment of that individual's Account. [Check one.
See Section 13.2.]
1. [ ] Standard: will not be allowed.
2. [ x ] will be allowed and will apply: [Check one.]
a. [ x ] Standard: to the entire Account
b. [ ] only to the following:
B. Participant Loans. Participant loans [Check one. See
Section 13.3.]
1. [ ] Standard: will not be allowed.
2. [ x ] will be allowed.
a. Accounting. Loans will be treated as an
asset of [See Section 13.3(e). Check one.]
(1) [ x ] Standard: the Participant's
Account.
(2) [ ] the Fund.
b. Amounts. The $10,000 exception for loans in
excess of 50% of Account value [Check one.
See Section 13.3(f)(2).]
(1) [ x ] Standard: shall not apply.
(2) [ ] shall apply. [Note: Loans under
this exception must be secured by
collateral in addition to the
Participant's vested Account.]
C. Insurance. A Participant's direction to purchase insurance
contracts [Check one. See Section 13.1.]
1. [ x ] Standard: will not be allowed.
2. [ ] will be allowed.
XI. Top-Heavy Rules. [See Section 12.]
A. Top-Heavy Vesting Schedule. The vesting schedule for any
Plan Year in which this plan is a Top-Heavy Plan will be:
[Check one. See Section 12.4.]
1. [ ] Standard. Full and Immediate Vesting. 100% of
all times.
2. [ x ] Cliff. 100% after completion of 3 Years of
Service [not to exceed 3].
3. [ ] Graded.
Years of Service Nonforfeitable Percentage
Less than 1 %
1 %
2 % [at least 20%]
3 % [at least 40%]
4 % [at least 60%]
5 % [at least 80%]
6 or more 100%
B. Other Plans. [Complete only if the Employer maintains or has
ever maintained another plan.]
1. Minimum Allocation. The minimum top-heavy contributions
or benefit, if any, will be made under [Check one. See
Section 12.3(d) and (g).]
a. [ ] Standard: this Plan.
b. [ x ] the following plan(s): The OshKosh B'Gosh,
Inc. Pension Plan
2. Present Value. [See Section 12.2(f)(3)(iii). Complete
only if Employer maintains a defined benefit plan.]
"Present value" will be determined using an interest rate
of % and the following mortality table: as specified
in the defined benefit plan, currently 5.5% and the
Unisex Pension 1984 mortality table.
3. Valuation Date. The Top-Heavy Valuation Date for each
other plan will be: [See Section 12.2(g). Check one.]
a. [ x ] Standard: the most recent valuation date.
b. [ ] Other:
XII. Limitations on Allocations (Code Section 415). [See Section
7.2.]
A. Compensation. For Code Section 415 purposes, Compensation
means: [Check one. See Section 7.2(a)(2).]
1. [ x ] Standard: wages, tips and other compensation
reportable on Form W-2. [See Section
7.2(a)(2)(i).]
2. [ ] wages, subject to federal income tax withholding.
[See Section 7.2(a)(2)(ii)(A) and Section
2.10(a)(2)(i).]
3. [ ] general Code Section 415 compensation. [See
Section 7.2(a)(2)(ii)(B).]
B. Limitation Year. The Limitation Year will be: [Check one.
See Section 7.2(a)(9).]
1. [ x ] Standard: the Plan Year.
2. [ ] the 12 consecutive month period which ends on each
C. Other Plans. [Complete only if the Employer maintains or has
ever maintained another plan.]
1. Other Defined Contribution Plan. The Annual Additions
attributable to this Plan will be determined: [Check one.
See Section 7.2(d).]
a. [ x ] Standard: by treating the other plan as a
Master or Prototype Plan.
b. [ ] by using the method described in Addendum
XII.C.1.b.
2. Defined Benefit Plan. [Check and attach appropriate
addendum only if applicable. See Section 7.2(a)(3),
Section 7.2(a)(11), Section 7.2(e) and Section 12.3(g).]
[ x ] The Annual Additions attributable to this Plan
will be limited by using the method described in
Addendum XII.C.2.
XIII. Special Provisions for Amendment and Restatement of Pre-
Existing Plan, Mergers or Transfers.
A. Vesting or Distribution Rules. [Check and attach appropriate
description only if applicable. See Section 10.6, Section
14.1(b) and Section 14.5.]
[ ] The special vesting or distribution rules which must be
preserved under Code Section 411 are described in Addendum
XIII.A.
B. Normal Retirement Age. [Check only if the normal retirement
age under the Pre-Existing Plan was determined with reference
to the participation commencement date and the special
transitional rule in Section 2.43 is desired. See Section
2.43.]
[ ] The Normal Retirement Age of a Participant who
commenced participation in the Pre-Existing Plan in a
Plan Year beginning before 1988 will be determined
under the transitional rule described in Section 2.43.
C. Effective Dates. [Check and attach appropriate addendum only
if any of the selections made in this Adoption Agreement will
become effective as of a date other than the Effective Date
set forth in Part II.E. However, the addendum shall in no
event delay the effective date of any Plan provisions beyond
the latest effective date required for such provision under
TRA 86 or other applicable law or regulations.]
[ ] Certain elections in this Adoption Agreement shall be
effective as of the date(s) specified in Addendum XIII.C.
XIV. Trustee Appointment and Trust Agreement. [Check one. See
Section 2.66 and Section 2.68.]
A. [ x ] Standard Trust Agreement. The standard Trust Agreement
will apply and the Trustee will be the following
individual(s), bank(s) or other person(s) who can serve
as a fiduciary and trustee under the laws of the State
shown in Part II.C.
Smith Barney Corporate Trust Company
[If Smith Barney Shearson Trust Company ("SBSTC") is
the Trustee, SBSTC will charge a fee and may require
the Employer to complete other documents prior to
accepting its appointment as Trustee. Further, SBSTC
will act only as a nondiscretionary Trustee and the
investment of the Fund will be made as directed by the
Plan Administrator or the Employer. See Section 15 and
the Trust Agreement.]
B. [ ] Alternate Trust Agreement. The alternate Trust
Agreement for 401(k) Plans will apply and the Trustee
will be , which is a bank or
trust company organized under the laws of the State of
and which is authorized to serve as
a fiduciary and trustee under the laws of such State.
[The trustee will charge a fee and will require the
Employer to complete other documents, including
execution of the alternate Trust Agreement, prior to
accepting its appointment as Trustee. Except as
described in the Trust Agreement, the Trustee will act
only as a nondiscretionary Trustee and will be subject
to the directions of the Plan Administrator as a named
fiduciary under the Plan in the control and management
of the assets of the Fund. Such directions will be
communicated to the Trustee by the Recordkeeper as
described in the Trust Agreement.]
XV. IRS Approval
This Plan is a "nonstandardized" plan and an adopting Employer
may not rely on the opinion letter issued to the Prototype
Sponsor by the National Office of the Internal Revenue Service as
evidence that this Plan is qualified under Code Section 401.
Any Employer who wishes to obtain reliance that this Plan as
adopted by the Employer is qualified must apply to the
appropriate Key District Office for a favorable determination
letter on this Plan.
Smith Barney Shearson will notify each adopting Employer of any
amendments that have been made to the Plan by Smith Barney
Shearson as Prototype Sponsor or of any intention to discontinue
or abandon its sponsorship of the Plan as a prototype plan.
SIGNATURES
Important:
In order to have a valid plan and trust, this Adoption
Agreement must be signed by individuals authorized to sign
for the Employer and, if applicable, the Trustee and each
Participating Affiliate. If the alternate Trust Agreement
is specified in Part XIV.B, the Trust Agreement must be
signed by the Employer, and Trustee and, if applicable, each
Participating Affiliate.
This Adoption Agreement will not become effective as a
prototype plan unless and until it is accepted by Smith
Barney Shearson as the Prototype Sponsor but, upon such
acceptance, will be effective as a prototype plan
retroactive to the Effective Date.
An Affiliate (i.e., member of a controlled group of
corporations, commonly controlled group of trades or
businesses, or an affiliated service group within the
meaning of Code Section 414) may adopt this Plan as a
Participating Affiliate.
Employer Representations. The undersigned hereby certifies that
the adoption of the Plan and the Trust Agreement is authorized by
(1) a Board of Directors' resolution for an Employer which is a
corporation, or (2) a written authorization by the person or
persons duly authorized to act on behalf of an Employer which is
not a corporation. If this Adoption Agreement amends and
restates a Pre-Existing Plan, the undersigned hereby certifies
that such amendment is duly authorized by the Employer. The
undersigned hereby acknowledges that the Prototype Sponsor (1) is
not responsible for the elections made in this Adoption
Agreement, (2) shall have no responsibility whatsoever with
respect to the Fund or the operation and administration of this
Plan, and (3) has advised the Employer to consult with legal
counsel for the Employer regarding the adoption and operation of
this Plan. The undersigned further acknowledges that the
Employer is solely responsible for the elections made in this
Adoption Agreement and for the operation and administration of
this Plan. Finally, the undersigned acknowledges that the
Prototype Sponsor will charge an annual prototype maintenance fee
and hereby authorizes the Prototype Sponsor to charge such fees
against any brokerage account maintained for the Plan.
Employer Execution. Subject to the terms and conditions of the
Plan, the Trust Agreement and this Adoption Agreement, the
undersigned hereby has executed this Adoption Agreement to
evidence its adoption (or, if applicable, amendment) of the Plan
and the Trust Agreement.
Signature: /s/David L. Omachinski
Title: CFO Date: September 24, 1996
Trustee Execution. Subject to the terms and conditions of the
Plan, the Trust Agreement and this Adoption Agreement, the
undersigned hereby accepts its appointment as Trustee and has
executed this Adoption Agreement to evidence its adoption of the
Trust Agreement. [Attach additional signature pages if there are
more than three Trustees. If the alternate Trust Agreement is
specified in Part XIV.B, the Trustee should execute the alternate
Trust Agreement in lieu of executing the Adoption Agreement in
this section.]
Signature: /s/Marianne Quinn, SBSTC Date: October 1, 1996
Signature: Date:
Signature: Date:
Participating Affiliates Execution. [Attach additional signature
pages if there are more than three Participating Affiliates. An
Affiliate which adopts this Plan after this Adoption Agreement is
executed should evidence its adoption of this Plan by executing
and attaching to this Adoption Agreement a signature page which
includes the information set forth below.]
Subject to the terms and conditions of the Plan, the Trust
Agreement and this Adoption Agreement, the undersigned hereby has
executed this Adoption Agreement to evidence its adoption (or, if
applicable, amendment) of the Plan and the Trust Agreement.
AFFILIATE NAME: OshKosh B'Gosh Retail, Inc.
Signature: /s/David L. Omachinski Date: January 1, 2000
Effective Date of Adoption of Plan by Affiliate (if different
from the Effective Date in Part II.E.): January 1, 2000
Affiliate Name:
Signature: Date:
Effective Date of Adoption of Plan by Affiliate (if different
from the Effective Date in Part II.E.):
Affiliate Name:
Signature: Date:
Effective Date of Adoption of Plan by Affiliate (if different
from the Effective Date in Part II.E.):
Prototype Sponsor Acceptance. Subject to the terms and
conditions of the Plan, the Trust Agreement and this Adoption
Agreement, this Adoption Agreement is accepted by the Prototype
Sponsor.
Authorized Signature: /s/M. Quinn Date: October 1, 1996
Smith Barney
Prototype Defined Contribution
Plan Document #05
TABLE OF CONTENTS
Page
Part 1. Defined Contribution Plan Document # 05
Section 1 Introduction and Construction 1
Section 2. Definitions 1
Section 3. Service Definitions and Rules 6
Section 4. Participation 8
Section 5. Contributions 9
Section 6. Allocations to Accounts 13
Section 7. Statutory Limitations on Allocations 14
Section 8. Vesting and Forfeitures 21
Section 9. Account Distribution - General Rules 22
Section 10. Benefit Payment Forms - Joint and
Survivor Annuity Requirements 24
Section 11. Minimum Distribution Requirements 27
Section 12. Top-Heavy Plan Rules 29
Section 13. Insurance, Individually Directed
Investments and Participant Loans 31
Section 14. Adoption, Amendment, Withdrawal &
Conversion, Merger, Asset Transfers and
Termination 33
Section 15. Administration 35
Section 16. Miscellaneous 35
Appendix One to the Smith Barney
Prototype Defined Contribution Plan 36
SMITH BARNEY
DEFINED CONTRIBUTION PLAN
DOCUMENT #05
SECTION 1. INTRODUCTION AND CONSTRUCTION
1.1 Introduction. This Smith Barney Prototype Defined
Contribution Plan is established and maintained as a prototype
plan by the Prototype Sponsor for its customers and the customers
of its subsidiaries and affiliates. This Plan shall be adopted as
a prototype plan only with the consent of the Prototype Sponsor
or one of its subsidiaries or affiliates as set forth in the
related Adoption Agreements and shall be maintained as a
prototype plan only in accordance with the terms and conditions
set forth in this Plan.
1.2 Controlling Laws. To the extent such laws are not
preempted by federal law, this Plan and the related Adoption
Agreement and Trust Agreement shall be construed and interpreted
under the laws of the state specified in the Adoption Agreement;
provided, if Smith Barney Corporate Trust Company has been
appointed as Trustee, the Trust Agreement shall be governed by
and construed in accordance with the laws of the State of
Delaware.
1.3 Construction. The headings and subheadings in this Plan
have been inserted for convenience of reference only and are to
be ignored in the construction of its provisions. Wherever
appropriate, the masculine shall be read as the feminine, the
plural as the singular, and the singular as the plural.
References in this Plan to a section shall be to a section in
this Plan unless otherwise indicated. References in this Plan to
a section of the Code, ERISA or any other federal law shall also
refer to the regulations issued under such section. Unless an
alternative option is specified in the Adoption Agreement, the
option identified as the "Standard Option" will control.
The Employer intends that this Plan and the related Trust
Agreement and Adoption Agreement which are part of this Plan
satisfy the requirements for tax exempt status under Code section
401(a), Code section 501(a)and related Code sections and that the
provisions of this Plan, the Trust Agreement and the Adoption
Agreement be construed and interpreted in accordance with the
requirements of the Code and the regulations under the Code.
Further, except as expressly stated otherwise, no provision of
this Plan or the related Trust Agreement or Adoption Agreement is
intended to nor shall grant any rights to Participants or
Beneficiaries or any interest in the Fund in addition to those
minimum rights or interests required to be provided under ERISA
and the Code and the regulations under ERISA and the Code.
Nothing in this Plan or the related Trust Agreement or Adoption
Agreement shall be construed to prohibit the adoption or the
maintenance of this Plan or the Trust Agreement as an
individually designed plan or as a trust agreement which is part
of an individually designed plan, but in such event, the Employer
may not rely on the opinion letter issued to the Prototype
Sponsor and the Prototype Sponsor shall have absolutely no
responsibility for such individually designed plan.
Finally, in the event of any conflict between the terms of this
Plan and the terms of the Trust Agreement or the Adoption
Agreement, the terms of this Plan shall control.
1.4 TRA 86 Amendments. If this Plan is adopted as an
amendment to a Pre-Existing Plan in order to satisfy the
requirements of TRA 86, the retroactive effective date of any
provision required under TRA 86 is intended solely to comply with
the Code and is not intended to grant any substantive rights
under ERISA to the extent that such provision is different from
the Pre-Existing Plan as in effect between the applicable
effective date of TRA 86 and the effective date in the final
regulations ("transition years").
SECTION 2. DEFINITIONS
The capitalized terms in this Plan and the related Adoption
Agreement and Trust Agreement shall have the meanings shown
opposite those terms in this section 2 and in section 3 for
purposes of this Plan.
2.1 Account - means the bookkeeping account maintained under
this Plan to show as of any Valuation Date a Participant's
interest in the Fund attributable to the contributions made by or
on behalf of such Participant and the Fund Earnings on such
contributions, and an Account shall cease to exist when exhausted
through forfeiture or distributions made in accordance with this
Plan.
2.2 Active Participant - means for purposes of eligibility to
receive an allocation of the Employer Contribution or Forfeitures
for each Plan Year, each Participant who is an Eligible Employee
at any time during the Plan Year and who satisfies the following
conditions:
2.2(a) Standard Option.
2.2(a)(1) Standardized Plans. If this Plan is adopted as a
standardized Plan, such Participant (i) is employed as an
Eligible Employee (or on an authorized leave of absence as an
Eligible Employee) on the last day of such Plan Year, (ii)
terminated employment as an Eligible Employee during such Plan
Year on or after Normal Retirement Age or Early Retirement Age or
by reason of death or Disability, or (iii) such Participant is
not employed on the last day of such Plan Year but completed more
than 500 Hours of Service during such Plan Year (or the
equivalent period described in section 2.2(d) if the "Elapsed
Time" method is specified in the Adoption Agreement).
Notwithstanding the foregoing, if the "Hours of Service" method
is specified in the Adoption Agreement for a Plan Year beginning
before the Final Compliance Date, section 2.2(a)(1)(iii) shall
not apply and a Participant who satisfies the requirements of
section 2.2(a)(1)(i) shall not be eligible to receive an
allocation of the Employer Contribution or Forfeitures for such
Plan Year unless such Participant also is credited with at least
1,000 Hours of Service in such Plan Year.
2.2(a)(2) Nonstandardized Plans. If this Plan is adopted as
a nonstandardized Plan, such Participant (i) is employed as an
Eligible Employee (or on an authorized leave of absence as an
Eligible Employee) on the last day of such Plan Year and, if the
"Hours of Service" method is specified in the Adoption Agreement,
is credited with at least 1,000 Hours of Service in such Plan
Year, or (ii) terminated employment as an Eligible Employee
during such Plan Year on or after Normal Retirement Age or Early
Retirement Age or by reason of death or Disability.
2.2(b) Alternative. Such Participant satisfies the alternative
conditions specified in the Adoption Agreement.
2.2(c) Minimum Coverage Requirement. If this Plan is adopted as a
nonstandardized Plan and fails to satisfy the minimum coverage
and participation requirements of Code section 401(a)(26) and
section 410(b)for any Plan Year beginning on and after the Final
Compliance Date as a result of the application of the minimum
hours or last day employment requirements in this section 2.2,
such minimum participation and coverage requirements shall be
retroactively amended by executing a new Adoption Agreement
within the applicable retroactive correction period in the
regulations or, if no such amendment is made, shall be satisfied
as follows:
2.2(c)(1) If the Plan utilizes both the minimum hours and
last day employment requirements:
(i) Step 1 - Each Participant who completes at least
1,000 Hours of Service without regard to whether such Participant
is employed on the last day of the Plan Year shall be deemed to
be an Active Participant for such Plan Year.
(ii) Step 2 - If the minimum participation and coverage
requirements are not satisfied after the application of Step 1,
then each Participant who completes more than 500 Hours of
Service and who is employed on the last day of the Plan Year
shall be deemed to be an Active Participant for such Plan Year.
(iii) Step 3 - If the minimum participation and coverage
requirements are not satisfied after the application of Step 1
and Step 2, then each Participant who is not employed on the last
day of the Plan Year but who completed more than 500 Hours of
Service in such Plan Year also shall be deemed to be an Active
Participant.
(iv) Step 4 - If the minimum participation and coverage
requirements are not satisfied after the application of Steps 1
through 3, then each Participant who satisfies the last day of
employment requirement also shall be deemed to be an active
participant without regard to the number of Hours of Service
actually completed by such Participant during such Plan Year.
2.2(c)(2) If the Plan utilizes only the last day employment
requirement, each Participant who is not employed on the last day
of the Plan Year but who completed more than 500 Hours of Service
in such Plan Year (or the equivalent period described in section
2.2(d) if the "Elapsed Time" method is specified in the Adoption
Agreement) also shall be deemed to be an Active Participant.
2.2 (c) (3)If the Plan utilizes only the minimum hours
requirement:
(i) Step 1 - Each Participant who completes more than 500
Hours of Service without regard to whether such Participant is
employed on the last day of the Plan Year shall be deemed to be
an Active Participant.
(ii) Step 2 - If the minimum participation and coverage
requirements are not satisfied after the application of Step 1,
then each Participant who is employed on the last day of the Plan
Year shall be deemed to be an Active Participant.
2.2(d) Special Elapsed Time Equivalency Rule. If the "Elapsed
Time" method is specified in the Adoption Agreement, a
Participant shall be treated as completing more than 500 Hours of
Service during such Plan Year for purposes of this section 2.2
if, during such Plan year, the Participant completes more than
(A) Standard Option - 91 consecutive calendar days of
employment, or
(B) Alternative - if so specified in the Adoption
Agreement, 3 consecutive calendar months of employment.
2.3 Adoption Agreement - means the agreement by which the
Employer adopted this Plan.
2.4 Affiliate - means at any time (a) any parent, subsidiary
or sister corporation which at such time is a member of a
controlled group of corporations (as defined in Code section
414(b)) with the Employer, (b) any trade or business, whether or
not incorporated, which at such time is considered to be under
common control (as defined in Code section 414(c)) with the
Employer, (c) any person or organization which at such time is a
member of an affiliated service group (as defined in Code section
414(m)) with the Employer, and (d) any other organization which
at such time is required to be aggregated with the Employer under
Code section 414(o).
2.5 Allocation Date - means for a 401(k) Plan the respective
dates specified in the Adoption Agreement as of which Matching
Contributions, Qualified Matching Contributions and Qualified
Nonelective Contributions, as applicable, are made.
2.6 Average Annual Compensation - means for a Target Benefit
Plan the average of an Employee's Compensation for the
consecutive Plan Year period specified in the Adoption Agreement
during which such average is the highest, or if such Employee's
entire period of participation in the Plan is less than the
number of Plan Years so specified, the Employee's Average Annual
Compensation shall be determined by averaging (on an annual
basis) the Employee's Compensation for his or her actual period
of participation. For purposes of determining a Participant's
Average Annual Compensation for any Plan Year beginning after the
Final Compliance Date, the annual Compensation taken into account
for any prior Plan Year shall not exceed (a) for Plan Years
beginning before January 1, 1990, $200,000 and (b) for Plan Years
beginning on or after January 1, 1990, the annual Compensation
limit described in section 2.1 O(e) in effect for such prior Plan
Year.
2.7 Beneficiary - means for each Participant the person or
persons so designated in writing by the Participant on a properly
completed Election Form. However, if no such designation is made,
if no person so designated survives the Participant, or if after
checking the last known mailing address the whereabouts of the
person so designated is unknown and no death benefit claim is
submitted to the Plan Administrator by such person within one
year after the Participant's date of death, the Beneficiary shall
be deemed to be (a) the Participant's surviving Spouse, or if
there is no surviving Spouse, (b) the personal representative of
such Participant in his or her fiduciary capacity, if any has
qualified within one year from the date of the Participant's
death, or if no personal representative has so qualified or
remains so qualified, (c) any person determined by a court of
competent jurisdiction to be the Participant's Beneficiary for
this purpose. If a Beneficiary is not identified and located
within 3 years of the Participant's date of death, section 9.6,
Missing Person, shall control the distribution of the
Participant's Account.
2.8 Board - means (a) for any Employer which is a
corporation, the Board of Directors of such Employer and (b) for
any Employer which is not a corporation, the person or persons
duly authorized to act on behalf of such Employer.
2.9 Code - means the Internal Revenue Code, as amended.
2.10 Compensation.
2.1 0(a) Common Law Employees. For an Employee who is not a
Self-Employed Individual or a Leased Employee, the term
"Compensation" means for any determination period
2.10(a)(1) Standard Option - the total compensation which is
actually paid (in cash or other benefits) by the Employer or any
Participating Affiliate to such Employee for such period and
which is reportable to the Internal Revenue Service on Form W-2
as wages within the meaning of Code section 3401(a) and all other
payments of compensation to such Employee from the Employer or
Participating Affiliate (in the course of its trade or business)
for which a written statement is required to be furnished to the
Employee under Code section 6041(d), Code section 6051 (a)(3) and
Code section 6052. Such Compensation shall be determined without
regard to any rules under Code section 3401 (a) that limit the
remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception
for agricultural labor in Code section 3401 (a)(2)), or
2.10(a)(2) Alternative - if so specified in the Adoption
Agreement, the total compensation which is actually paid (in cash
or other benefits) by the Employer or any Participating Affiliate
to such Employee for such period and which is
(i) considered as wages within the meaning of Code
section 3401(a) for the purposes of federal income tax
withholding at the source but determined without regard to any
rules under Code section 3401(a) that limit the remuneration
included in wages based on the nature or location of the
employment or the services performed (such as the exception for
agricultural labor in Code section 3401(a)(2)),
(ii) considered as compensation within the meaning of
Code section 415(c)(3) as described in section 7.2(a)(2)(ii)(B),
(iii) for a nonintegrated nonstandardized Plan (other
than a Target Benefit Pension Plan), compensation identified on
the payroll records of the Employer or Participating Affiliate as
regular or base salary or wages (whether hourly, weekly, monthly,
annually or otherwise) and, if so specified in the Adoption
Agreement, overtime, bonuses, commissions, and/or other specific
compensation, or
(iv) compensation as described in section 2.10(a)(1),
section 2.10(a)(2)(i) or section 2.10(a)(2)(ii), reduced by all
of the following items (even if includable in gross income):
reimbursements or other expense allowances, fringe benefits (cash
and noncash), moving expenses, deferred compensation and welfare
benefits, or
2.10(b) Self-Employed. For an Employee who is a Self-Employed
Individual, the term "Compensation" means the Employee's Earned
Income for such period.
2.10(c) Leased Employees. All compensation paid by a leasing
organization to a Leased Employee for personal services rendered
to the Employer or a Participating Affiliate for such period
shall be treated as Compensation to the extent required under
Code section 414(n).
2.10(d) Determination Period. For purposes of this definition and
unless otherwise specified in this Plan or the Adoption
Agreement, the phrase "determination period" means
2.1 0(d)(1) Standard Option - the Plan Year or
2.10(d)(2) Alternative - the calendar year or other 12
consecutive month period ending with or within the Plan Year
specified in the Adoption Agreement.
2.10(e) Limitation. No more than $200,000 (as adjusted in
accordance with Code section 401(a)(17)) shall be taken into
account under this Plan for any determination period beginning on
or after January 1, 1989. The annual Compensation limit under
this section 2.10(e) for any determination period shall be
adjusted in accordance with Code section 401(a)(17) for the
calendar year in which such determination period begins.
If the determination period is less than 12 months as a result of
a short Plan Year, the annual Compensation limit under this
section 2.10(e) shall equal the annual limit for such
determination period multiplied by a fraction, the numerator of
which is the number of full months in such period and the
denominator of which is 12.
For purposes of this Compensation limit, the family aggregation
rules of Code section 414(q)(6) shall be applied by aggregating
only the Participant's spouse and lineal descendants who have not
reached age 19 before the end of such determination period. If
the limit is exceeded for any determination period as a result of
the application of the family aggregation rule, the limit shall
be prorated among the individuals affected by this limit in
proportion to each such individual's Compensation for such
determination period as determined under this section 2.10 before
the application of this section 2.10(e).
However, if this Plan is adopted as an integrated plan, the
preceding sentence shall not apply for purposes of determining
the portion of compensation which does not exceed the Integration
Level.
2.10(f) Salary Reductions. Any amount which is contributed by the
Employer or any Participating Affiliate pursuant to a salary
reduction agreement which is not currently includable in an
Employee's gross income under Code section 125, section
402(e)(3), section 402(h) or section 403(b)
2.10(f)(1) Standard Option - shall be included in an Employee's
Compensation, or
2.10(f)(2) Alternative - if so specified in the Adoption
Agreement, shall not be included in an Employee's Compensation.
2.10(g) Special Rules.
2.10(g)(1) If so specified in the Adoption Agreement, an
Employee's Compensation shall not include Compensation which is
paid to the Employee for periods ending before the Entry Date on
which the Employee becomes a Participant.
2.10(g)(2) If this Plan is adopted as an amendment and
restatement of a Pre-Existing Plan, this definition shall be
effective for Plan Years beginning on or after January 1, 1989
unless a later effective date is specified in the Adoption
Agreement; provided, the $200,000 limitation of section 2.10(e)
shall not be effective later than the first day of the first Plan
Year beginning on or after January 1, 1989 and any such later
effective date specified in the Adoption Agreement for the other,
provisions of this section 2.10 shall not be later than the Final
Compliance Date.
2.10(g)(3) If so specified in the Adoption Agreement for a
nonstandardized Plan, a Participant's Compensation in excess of
the dollar amount or percentage specified in the Adoption
Agreement shall not be taken into account for purposes of
determining the amount or allocation of any contributions made by
or on behalf of such Participant under this Plan.
2.10(g)(4) If so specified in the Adoption Agreement for a
nonstandardized Plan, the Compensation of a Participant who is a
Highly Compensated Employee shall not include the specific types
of Compensation specified in the Adoption Agreement.
2.11 Covered Compensation - means for each Participant for
each Plan Year beginning on or after January 1, 1989, the average
(without indexing) of the Taxable Wage Bases in effect under the
Social Security Act for each calendar year during the 35-year
period ending with the last day of the calendar year in which the
Participant attains (or will attain) Social Security Retirement
Age, determined by assuming that the Taxable Wage Base for all
future years shall be the same as the Taxable Wage Base in effect
as of the beginning of such Plan Year.
A Participant's Covered Compensation for a Plan Year beginning
before the 35-year period ending with the last day of the
calendar year in which the Participant attains Social Security
Retirement Age is the Taxable Wage Base in effect as of the
beginning of the Plan Year. A Participant's Covered Compensation
for a Plan Year beginning after such 35-year period is the
Participant's Covered Compensation for the Plan Year during which
the 35-year period ends.
However, a Participant's Covered Compensation shall automatically
be adjusted each Plan Year and any increase in a Participant's
Covered Compensation shall not result in a decrease in the
Participant's accrued benefit which would be impermissible under
Code section 411(b)(1)(G) or section 411(d)(6).
For purposes of this section 2.11, Social Security Retirement Age
means (a) age 65 in the case of a Participant who was born before
January 1, 1938, (b) age 66 for a Participant who was born after
December 31, 1937, but before January 1, 1955, and (c) age 67 for
a Participant who was born after December 31, 1954.
2.12 Disability or Disabled - means an individual's inability
to engage in any substantially gainful activity at the
individual's customary level of compensation or competence and
responsibility as an Employee due to any medically determinable
physical or mental impairment or impairments which may be
expected to result in death or to last for a continuous period of
at least 12 months as determined by a qualified physician or
other medical practitioner selected by the Plan Administrator for
this purpose in accordance with uniform and nondiscriminatory
standards.
2.13 Early Retirement Age - means
2.13(a) Standard Option - the Normal Retirement Age or
2.13(b) Alternative - the alternative Early Retirement Age
specified in the Adoption Agreement.
2.14 Earned Income - means for any Self-Employed Individual
for any period the net earnings from self-employment (as defined
in Code section 1402(a)) for such period from the Employer or any
Participating Affiliate for which the personal services of such
Employee are a material income-producing factor, where such net
earnings are (a) determined without regard to items not included
in gross income for purposes of Chapter 1 of the Code and the
deductions properly attributable to such items, (b) determined
with regard to the deduction allowed to the Self-Employed
Individual under Code section 164(f) for taxable years beginning
after December 31, 1989, and (c) reduced by the contributions
made on behalf of such Employee to any qualified plan (as
described in Code 4401 (a)) maintained by the Employer or any
Participating Affiliate to the extent such contributions are
deductible under Code section 404.
2.15 Effective Date - means the effective date of the
Employer's adoption or amendment of this Plan as specified in the
Adoption Agreement. However, if this Plan is adopted as an
amendment and restatement of a Pre-Existing Plan, certain
provisions of this Plan may be effective retroactive to Plan
Years beginning before such Effective Date or may be effective at
a date later than such Effective Date as specified in this Plan
document or in the Adoption Agreement.
2.16 Election Form - means the form or forms provided by or
acceptable to the Plan Administrator for making the elections and
designations called for under this Plan and no such form shall
become effective unless properly completed and timely delivered
to the Plan Administrator in accordance with the terms of this
Plan and such rules as the Plan Administrator shall adopt from
time to time.
2.17 Elective Deferral - means the nonforfeitable
contribution made to the Fund by the Employer or a Participating
Affiliate on a Participant's behalf under section 5.3(f).
2.18 Elective Deferral Account - means the subaccount
established as part of a Participant's Account to record the
Participant's Elective Deferrals and the Fund Earnings
attributable to such contributions,
2.19 Eligible Employee - means
2.19(a) Standard Option - each Employee of the Employer or a
Participating Affiliate other than
2.19(a)(1) an Employee who is included in a unit of
employees covered by a collective bargaining agreement between
the Employer and employee representatives which agreement does
not provide for participation in this Plan if retirement benefits
under this Plan were the subject of good faith bargaining;
provided, however, that
(i) the term "employee representatives" shall not
include an organization more than half of whose members are
employees who are owners, officers or executives of the Employer,
and
(ii) an Employee shall not be treated as covered under a
collective bargaining agreement if more than 2% of the Employees
covered under such agreement are "professionals" (as defined in
section 1.410(b)-9(g) of the Federal Income Tax Regulations); and
2.19(a)(2) an Employee who is a nonresident alien (within
the meaning of Code section 7701(b)(1)(B) and who receives no
earned income (within the meaning of Code section 911(d)(2)) from
the Employer or any Participating Affiliate which constitutes
income from sources within the United States (within the meaning
of Code section 861(a)(3)).
2.19(b) Alternative - If this Plan is adopted as a
nonstandardized Plan, the Employer may specify in the Adoption
Agreement a category of Employees who shall not be treated as
Eligible Employees under this Plan. However, the Plan must
satisfy on a continuing basis the nondiscrimination rules under
Code section 401(a)(4), the coverage rules under Code section
410(b), and the minimum participation rules under Code section
401(a)(26).
2.20 Employee - means each person who is treated as an
employee of the Employer or an Affiliate which is required to be
aggregated with the Employer under Code section 414(b), section
414(c), section 414(m) or section 414(o) including (a) a common-
law employee (whether full-time, part-time, regular, temporary or
otherwise), (b) a Self-Employed Individual, (c) an Owner-
Employee, (d) a Leased Employee and (e) each person who is deemed
to be an employee under Code section 414(o).
2.21 Employee Account - means the subaccount established as
part of a Participant's Account to record (1) the Participant's
Employee Contributions under this Plan, (2) the Participant's
nondeductible employee contributions, if any, under a Pre-
Existing Plan or a plan which is merged into this Plan under
section 14.5, and (3) the Fund Earnings attributable to such
contributions. It a separate account was not maintained for
contributions under other plans as described in clause (2) above,
the account balance attributable to such contributions shall be
the Participant's total account balance under such other plans
multiplied by a fraction, the numerator of which is the total
amount of the Participant's nondeductible employee contributions
(less withdrawals) and the denominator of which is the sum of the
numerator and the total contributions made by the Employer on
behalf of the Participant (less withdrawals). For purposes of
calculating such fraction, contributed amounts used to provide
ancillary benefits shall be treated as contributions and only
amounts actually distributed to the Participant (but not amounts
which reflect the cost of any death benefits) shall be treated as
withdrawals.
2.22 Employee Contribution - means any contribution made by
or on behalf of a Participant to the Fund under section 5.3(g)
that is includable in the Participant's gross income for the year
in which made.
2.23 Employer - means the sole proprietorship, partnership or
corporation identified as the Employer in the Adoption Agreement
and any successor in interest to such organization.
2.24 Employer Account - means the subaccount established as
part of a Participant's Account to record the Participant's share
of the Employer Contributions and Forfeitures and the Fund
Earnings attributable to such amounts.
2.25 Employer Contribution - means the contributions made by
the Employer and by any Participating Affiliate to the Fund under
section 5.1, section 5.2, section 5.3(e) or section 5.4.
2.26 Entry Date - means
2.26(a) Standard Option - the first day of each Plan Year
and the first day of the 7th month in each Plan Year or
2.26(b) Alternative - the alternative Entry Date specified
in the Adoption Agreement.
2.27 ERISA - means the Employee Retirement Income Security Act of
1974, as amended.
2.28 Family Members - means for any year, with respect to a
Highly Compensated Employee who is a 5% owner or who is in the
group consisting of the 10 Highly Compensated Employees paid the
greatest Compensation during such year, (a) such individual's
spouse, (b) such individual's lineal ascendants and lineal
descendants and (c) the spouses of such lineal ascendants or
descendants as determined under Code section 414(q)(6).
2.29 Final Compliance Date - means the first day of the first
Plan Year beginning after December 31, 1993 or such other
applicable effective date of the final nondiscrimination and
other TRA 86 regulations.
2.30 Forfeiture - means the portion of an Account of a
Participant which is deducted from such Account in accordance
with the terms of this Plan.
2.31 401(k) Plan - means this Plan as adopted by entering
into the Standardized 401(k) Plan Adoption Agreement or the
Nonstandardized 401(k) Plan Adoption Agreement.
2.32 Fund - means the trust fund created in accordance with
this Plan and the Trust Agreement which is a part of this Plan.
2.33 Fund Earnings - means for each period ending on a
Valuation Date the investment gains and losses (whether realized
or unrealized), income and expenses (other than expenses
allocable directly to a specific Account) of the Fund for such
period as determined based on the fair market value of the assets
of the Fund on such Valuation Date.
2.34 Highly Compensated Employee - means a highly compensated
employee within the meaning of Code section 414(q) (as described
in section 7.4(a)(5)).
2.35 Integration Level - means the amount of Compensation
specified in the Adoption Agreement at or below which the rate of
contributions or benefits (expressed as a percentage of such
Compensation) provided under the Plan is less than the rate of
contributions or benefits (expressed as a percentage of such
Compensation) provided under the Plan with respect to
Compensation above such amount. The Integration Level for any
Plan Year shall not exceed the Taxable Wage Base in effect at the
beginning of such Plan Year.
2.36 Leased Employee - means for each Plan Year beginning on
or after January 1, 1987 each person who is not a common-law
employee of the Employer or an Affiliate, but who, pursuant to an
agreement between the Employer or an Affiliate ("recipient") and
any other person ("leasing organization"), has performed services
for the recipient or the recipient and a related person (as
determined in accordance with Code section 414(n)(6)) on a
substantially full-time basis for a period of at least one year,
which services are of a type historically performed by employees
in the business field of the recipient or related person for whom
such services are being performed. However, subject to the rules
set forth in the regulations under Code section 414(n), such
person shall not be treated as a Leased Employee it (a) the total
number of such persons does not constitute more than 20% of the
total nonhighly compensated work force of the recipient and (b)
such person is covered by a money purchase pension plan which is
maintained by the leasing organization and which provides for (1)
a nonintegrated employer contribution rate of at least 10% of
compensation (as defined in Code section 415(c)(3) but including
amounts contributed pursuant to a salary reduction agreement
which are excludable from the individual's gross income under
Code section 125, section 402(e)(3), section 402(h) or section
403(b)), (2) immediate participation and (3) full and immediate
vesting.
2.37 Matching Account - means the subaccount established as
part of a Participant's Account to record the Matching
Contributions made on the Participant's behalf under this Plan
and the Fund Earnings attributable to such contributions.
2.38 Matching Contribution - means the contribution made by
the Employer and by any Participating Affiliate to the Fund under
section 5.3(b) by reason of a Participant's Elective Deferrals or
Employee Contributions.
2.39 Maximum Disparity Rate - means
2.39(a) Standard Option - if the Integration Level is equal to
the Taxable Wage Base, the greater of 5.7% or the portion of the
tax rate under Code section 3111(a) which is attributable to old-
age insurance as in effect on the first day of such Plan Year,
and
2.39(b) Alternative - if the Integration Level is less than the
Taxable Wage Base, the applicable percentage determined in
accordance with the following table, where
X = the greater of $10,000 or 20% of the Taxable Wage Base
TWB = the Taxable Wage Base
If the Integration Level:
Is More Than But Not More Than Applicable Percentage
$0 X 5.7%
X 80% of TWB 4.3%
80% of TWB 100% of TWB 5.4%
or, if the portion of the tax rate under Code 3111(a) which is
attributable to old-age insurance as in effect on the first day
of such Plan Year is greater than 5.7%, the applicable percentage
in the table above shall be such portion of the tax rate,
proportionately reduced in the same manner as the 5.7% amount in
the table above.
2.40 Money Purchase Pension Plan - means this Plan as adopted
by entering into the Standardized Money Purchase Pension Plan
Adoption Agreement or the Nonstandardized Money Purchase Pension
Plan Adoption Agreement.
2.41 Net Profits -
2.41(a) Standard Option. The term "Net Profits" means
2.41(a)(1) for an Employer or Participating Affiliate other than
a non-profit entity, the current or accumulated earnings for the
taxable year for which the Employer contribution is made as
determined before federal and state taxes and contributions to
this Plan or any other qualified plan, or
2.41(a)(2) for an Employer or Participating Affiliate which is a
non-profit entity, the current or accumulated excess of receipts
over disbursements for the fiscal year for which the Employer
contribution is made.
2.41(b) Alternative. The Employer may specify in an alternative
definition of Net Profits in the Adoption Agreement.
2.42 Nonhighly Compensated Employee - means each Employee who
is neither a Highly Compensated Employee nor a Family Member.
2.43 Normal Retirement Age -
2.43(a) General. The term "Normal Retirement Age" means
2.43(a)(1) Standard Option - age 65 or
2.43(a)(2) Alternative - the alternative Normal Retirement Age
specified in the Adoption Agreement.
2.43(b) Special Rules.
2.43(b)(1) Mandatory Retirement Age. If, consistent with
applicable age discrimination law, the Employer enforces a
mandatory retirement age, the Normal Retirement Age shall be the
earlier of (1) the date the Participant reaches such mandatory
retirement age or (2) the date the Participant reaches age 65 or,
if an alternative is specified in the Adoption Agreement, the
date the Participant reaches Normal Retirement Age as specified
in the Adoption Agreement.
2.43(b)(2) Transitional Rule. If
(i) the normal retirement age under the terms of the Pre-
Existing Plan as in effect for Plan Years beginning before
January 1, 1988 was determined with reference to an anniversary
of the date on which a Participant commenced participation in
such plan ("participation commencement date"),
(ii) such anniversary was later than the 5th anniversary of
the participation commencement date,
(iii) the Normal Retirement Age specified in the Adoption
Agreement is determined with reference to an anniversary of the
participation commencement date, and
(iv) this transitional rule is specified in the Adoption
Agreement,
then the anniversary for any Participant whose participation
commencement date occurred in a Plan Year beginning before
January 1, 1988 shall be the earlier of (A) the anniversary under
the terms of the Pre-Existing Plan, or (B) the 5th anniversary of
the first day of the first Plan Year beginning after December 31,
1987.
2.44 Owner-Employee - means each Self-Employed Individual
who is (a) a sole proprietor of the Employer or a Participating
Affiliate or (b) a partner owning more than 10% of either the
capital or profits interest of the Employer or a Participating
Affiliate.
2.45 Paired Plans - means (a) a combination of two or more
standardized defined contribution Plans under this Smith Barney
Prototype Defined Contribution Plan (Plan Document #05) or (b) a
combination of one or more such standardized defined contribution
Plans with a standardized defined benefit plan under the Smith
Barney Prototype Defined Benefit Plan (Plan Document #06).
However, such Plans shall be treated as Paired Plans only if (1)
such Paired Plans have the same Plan Year, and (2) no more than
one such plan is integrated with social security.
2.46 Participant - means (a) an Eligible Employee who has
satisfied the Participation Requirement specified in the Adoption
Agreement and has become a Participant in accordance with 4, and
(b) any individual for whom an Account continues to exist under
the Plan.
2.47 Participating Affiliate - means (a) if this Plan is a
standardized Plan, each Affiliate of the Employer or (b) if this
Plan is a nonstandardized Plan, each Affiliate which participates
in this Plan, as set forth in section l4.1(c) of the Plan;
provided, an Affiliate automatically shall cease to be a
Participating Affiliate it, and at the time, it ceases to be an
Affiliate as set forth in section 14.6(a).
2.48 Participation Requirement - means
2.48(a) Standard Option - attainment of age 21 and
completion of a waiting period equal to one Year of Service or
2.48(b) Alternative - the alternative minimum age and
waiting period requirement specified in the Adoption Agreement.
2.49 Plan - means this Smith Barney Prototype Defined
Contribution Plan, as adopted by the Employer in the form of a
Profit Sharing Plan, a 401(k) Plan, a Money Purchase Pension Plan
or a Target Benefit Pension Plan, and as amended from time to
time in accordance with section 14.2.
2.50 Plan Administrator -means
2.50(a) Standard Option - the Employer or
2.50(b) Alternative - the person or persons designated in
writing by the Employer as the Plan Administrator for this Plan.
2.51 Plan Year - means the 12 consecutive month period or the
52/53 week period which ends on the date specified in the
Adoption Agreement; provided, however, if this Plan is adopted as
a new Plan, the first Plan Year shall be the period beginning on
the Effective Date and ending on the date specified in the
Adoption Agreement.
2.52 Pre-Existing Plan - means the Employer's prior defined
contribution plan and the related trust agreement or other
funding arrangement which is described in the Adoption Agreement
and which is amended and restated in the form of this Plan.
2.53 Profit Sharing Plan - means this Plan as adopted by
entering into the Standardized Profit Sharing Plan Adoption
Agreement or the Nonstandardized Profit Sharing Plan Adoption
Agreement.
2.54 Prototype Sponsor - means Smith Barney Inc. and any
successor to such corporation.
2.55 Qualified Matching Contribution - means the contribution
made by the Employer and by any Participating Affiliate to the
Fund under section 5.3(c) by reason of a Participant's Elective
Deferrals or Employee Contributions.
2.56 Qualified Matching Account - means the subaccount
established as part of a Participant's Account to record the
Qualified Matching Contributions made on the Participant's behalf
under this Plan and the Fund Earnings attributable to such
contributions.
2.57 Qualified Nonelective Contribution - means the
contribution (other than Matching Contributions, Qualified
Matching Contributions and Employer Contributions) made by the
Employer and by any Participating Affiliate to the Fund under
section 5.3(d).
2.58 Qualified Nonelective Account - means the subaccount
established as part of a Participant's Account to record the
Qualified Nonelective Contributions made on the Participant's
behalf under this Plan and the Fund Earnings attributable to such
contributions.
2.59 Rollover Account - means the subaccount established as
part of a Participant's Account to record the Participant's
Rollover Contributions and the Fund Earnings attributable to such
contributions.
2.60 Rollover Contribution - means (a) a contribution of an
amount, or more than one amount, which satisfies the applicable
rollover requirements under Code section 402 or Code section 408
made by a Participant to the Fund under section 5.5 and (b)
effective January 1, 1993, an eligible rollover distribution
which is directly transferred to the Fund on or after such date
pursuant to a Participant's election under Code section 401
(a)(31).
2.61 Self-Employed Individual - means an individual who is
self-employed and who receives Earned Income from the Employer or
a Participating Affiliate or who would have received such Earned
Income but for the fact that the Employer or the Participating
Affiliate did not have Net Profits.
2.62 Spouse - means the person who is lawfully married to the
Participant on the date the Participant's Account becomes payable
under this Plan or, if a Participant dies before such date, the
person who was lawfully married to such Participant on the
Participant's date of death. However, a former spouse shall be
treated as the Spouse and a current spouse shall not be treated
as the Spouse to the extent provided under a qualified domestic
relations order as described in Code section 414(p).
2.63 Target Benefit Pension Plan - means this Plan as adopted
by entering into the Standardized Target Benefit Pension Plan
Adoption Agreement or the Nonstandardized Target Benefit Pension
Plan Adoption Agreement.
2.64 Taxable Wage Base - means for any Plan Year the
contribution and benefit base in effect under section 230 of the
Social Security Act at the beginning of such Plan Year.
2.65 TRA 86 - means the Tax Reform Act of 1986 ("Act") and
any other legislation and related regulations, notices or other
guidance for which amendments are required to be made at the same
time as amendments for such Act.
2.66 Trust Agreement - means the trust agreement between the
Employer and the Trustee which is established as part of this
Plan and which is set forth in the attached Smith Barney
Prototype Defined Contribution Plan Trust Agreement or, if so
specified in the Adoption Agreement for a 401(k) Plan, the Smith
Barney Prototype Defined Contribution Plan Alternative Trust
Agreement for 401(k) Plans.
2.67 Trustee - means the person or persons specified in the
Adoption Agreement who serve as the trustee for the Fund under
the Trust Agreement and any successor to such person or persons.
2.68 Valuation Date - means (a) the last day of each Plan
Year and (b) each other date, if any, agreed upon in advance by
the Employer and the Trustee, provided the selection of such
other date does not result in discrimination in favor of Highly
Compensated Employees which would be prohibited under Code
section 401(a).
SECTION 3. SERVICE DEFINITIONS AND RULES
The definitions and rules in this section 3 shall apply for
purposes of measuring an Employee's service (a) for participation
purposes - to determine when the Employee has satisfied the
Participation Requirement and (b) for vesting purposes - to
determine the nonforfeitable interest in his or her Account.
3.1 Hour of Service Method (Standard Option). The definitions
and rules in this section 3.1 shall apply unless the "Elapsed
Time" method of crediting service is specified in the Adoption
Agreement.
3.1(a) Break in Service.
3.1 (a)(1) General. The term "Break in Service" means
each Computation Period during which an Employee fails to
complete more than 500 Hours of Service.
3.1(a)(2) Maternity/Paternity Rule. Solely for purposes of
determining whether an Employee has a Break in Service, an
Employee who is absent from work for "maternity or paternity
reasons" and who timely furnishes proof of the reason for such
absence (in accordance with such nondiscriminatory rules as may
be established by the Plan Administrator and communicated to
Employees) shall be credited with each Hour of Service for which
the Employee would otherwise have been credited but for such
absence, or if such Hours of Service cannot be determined, with 8
Hours of Service for each day of such absence. However, the total
number of Hours of Service so credited to such Employee shall not
exceed 501 Hours of Service. The Hours of Service so credited
shall be credited to the Computation Period in which such absence
begins if such credit is necessary to prevent a Break in Service
in such Computation Period or, if such credit is unnecessary, in
the immediately following Computation Period. For purposes of
this special maternity/paternity rule, an absence for "maternity
or paternity reasons" means an absence (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child
of the Employee, (iii) by reason of the placement of a child with
the Employee in connection with the adoption of such child by
such Employee, or (iv) for purposes of caring for such child for
a period beginning immediately following such birth or placement.
3.1(b) Computation Period.
3.1(b)(1) General. The term "Computation Period' for
purposes of determining Years of Service and Breaks in Service
means the applicable period described in this section 3.1(b).
3.1(b)(2) Vesting. The relevant Computation Period for
measuring Years of Service and Breaks in Service for vesting
purposes shall be
(i)Standard Option - the Plan Year or
(ii)Alternative - if so specified in the Adoption Agreement,
(A) the 12 consecutive month period which begins on the
date the Employee first performs an Hour of Service ("hire date")
and ends on the date immediately preceding the first anniversary
of such hire date and (B) each 12 consecutive month period
thereafter beginning on each anniversary of such hire date and
ending on the date immediately preceding the next anniversary of
such date.
3.1(b)(3) Participation. The initial Computation Period for
measuring Years of Service and Breaks in Service for
participation purposes shall be the 12 consecutive month period
which begins on the first day an Employee first performs an Hour
of Service as an Employee ("hire date") and ends on the date
immediately preceding the first anniversary of such date. Each
subsequent Computation Period shall be
(i) Standard Option - each Plan Year, beginning with the
Plan Year which begins before the first anniversary of the
Employee's hire date (regardless of whether the Employee is
credited with 1,000 Hours of Service in the Employee's initial
Computation Period). An Employee shall be credited with two Years
of Service for participation purposes if the Employee completes
1,000 or more Hours of Service in both the initial Computation
Period and the first Plan Year which begins within such initial
Computation Period, or
(ii) Alternative - if so specified in the Adoption
Agreement, the 12 consecutive month period which begins on each
anniversary of an Employee's hire date and ends on the date
immediately preceding the next anniversary of the Employee's hire
date.
For participation purposes, an Employee shall be credited with a
Year of Service
(A) Standard Option - on the last day of the
Computation Period in which the Employee is credited with at
least 1,000 Hours of Service (or such lesser number of hours
specified in the Adoption Agreement) or
(B) Alternative - on the first date on which the
Employee is credited with at least 1,000 Hours of Service (or
such lesser number of hours specified in the Adoption Agreement)
provided the Employee completes such specified number of Hours of
Service in one Computation Period.
Notwithstanding the foregoing, if the Participation Requirement
includes a partial Year of Service, no minimum number of Hours of
Service shall be required for such partial year and an Employee
shall be credited with such partial Year of Service on the date
on which such partial period of service is completed.
3.1(b)(4) Change in Computation Period. If an amendment results
in a change in the Computation Period, the first Computation
Period established under such amendment shall begin before the
last day of the preceding Computation Period and each Employee to
whom both such Computation Periods apply and who completes 1,000
or more Hours of Service in both such Computation Periods shall
be credited with one Year of Service for each such Computation
Period.
3.1(c) Hour of Service.
3.1(c)(1) General. The term `Hour of Service" means
(i) each hour for which an Employee is paid, or entitled to
payment, by the Employer or an Affiliate for the performance of
duties as an Employee, which hours shall be credited to the
Employee for the relevant Computation Period in which such duties
are performed;
(ii) each hour for which an Employee is paid, or entitled to
payment, by the Employer or an Affiliate on account of a period
of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty or leave of absence; provided
(A) no more than 501 hours shall be credited under this clause
(ii) for any single continuous period during which no duties are
performed (whether or not such period covers more than one
relevant Computation Period) and (B) hours under this clause (ii)
shall be calculated and credited pursuant to section 2530.200b-2
of the Department of Labor Regulations which are incorporated as
part of this Plan by this reference; and
(iii) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer or an Affiliate; provided (A) no credit shall be given
for an hour described in this clause (iii) it credit also is
given for such hour under clause (i) or clause (ii), and (B) an
hour described in this clause (iii) shall be credited to the
Employee for the relevant Computation Period or Computation
Periods to which the award or agreement pertains rather than to
the Computation Period in which the award, agreement or payment
is made.
3.1(c)(2) Determination. The Employer shall determine an
Employee's Hours of Service
(i) Standard Option - by actually counting hours and
maintaining records which reflect the actual hours worked, or
(ii) Alternative - if so specified in the Adoption Agreement,
by crediting each such Employee with
(A)10 Hours of Service for each day,
(B)45 Hours of Service for each week,
(C)95 Hours of Service for each semi-monthly payroll period,
or
(D) 190 Hours of Service for each month
during which the Employee otherwise would be credited with at
least one Hour of Service.
3.1 (d) Year of Service. The term "Year of Service" means each
Computation Period during which an Employee completes at least
3.1(d)(1) Standard Option - 1,000 Hours of Service or
3.1(d)(2) Alternative - such lesser number of Hours of
Service specified in the Adoption Agreement.
Notwithstanding the foregoing, if the Participation Requirement
includes a partial Year of Service, no minimum number of Hours of
Service shall be required for such partial year.
3.1(e) Change in Service Calculation Method. If an amendment
changes the method of crediting service from the "Elapsed Time"
method to the "Hours of Service" method, each Employee who was
credited with service under the "Elapsed Time" method shall be
credited with service
3.1(e)(1)for the Employee's employment before the
Computation Period in which such amendment is adopted, as
determined on the basis that one Year of Service credited to the
Employee under the "Elapsed Time" method for such employment
shall equal one Year of Service under this section 3.1,
3.1(e)(2) for the Employee's employment during the Computation
Period in which such amendment is adopted, for a number of Hours
of Service determined by uniformly applying one of the
equivalencies set forth in section 3.1(c)(2)(ii) to any
fractional part of a year credited to the Employee under the
"Elapsed Time" method as of the effective date of the amendment,
and
3.1(e)(3) for the Employee's employment on and after the
effective date of the amendment, as determined under the rules in
this section 3.l.
3.2 Elapsed Time Method (Alternative). If the "Elapsed Time"
method of crediting service is specified in the Adoption
Agreement, the definitions and rules in this section 3.2 shall
apply in lieu of the definitions and rules in section 3.1.
3.2(a) Break in Service.
3.2(a)(1) General. The term "Break in Service" means a
Period of Severance of at least 12 consecutive months.
3.2(a)(2) Maternity/Paternity Rule. If an Employee is absent
from service for "maternity or paternity reasons" and the
Employee timely furnishes proof of the reason for such absence
(in accordance with such nondiscriminatory rules as may be
established by the Plan Administrator and communicated to
Employees), the 12 consecutive month period beginning on the
first anniversary of the first date of such absence shall not
constitute a Break in Service. Such 12 consecutive month period
shall be neither a Period of Severance nor a period of Service.
For purposes of this special maternity/paternity rule, an absence
for "maternity or paternity reasons" means an absence (i) by
reason of the pregnancy of the Employee, (ii) by reason of the
birth of a child of the Employee, (iii) by reason of the
placement of a child with the Employee in connection with the
adoption of such child by the Employee, or (iv) for purposes of
caring for such child for a period beginning immediately
following such birth or placement.
3.2(b) Hour of Service. The term "Hour of Service" means each
hour for which an Employee is paid, or entitled to payment, by
the Employer or an Affiliate for the performance of duties as an
Employee during any period of employment.
3.2(c) Period of Severance. The term "Period of Severance" means
a continuous period of time during which an Employee is not
employed by the Employer or an Affiliate beginning on the date
the Employee retires, quits or is discharged, or if earlier, the
12 month anniversary of the date on which the Employee was
otherwise first absent from service.
3.2(d) Period of Service.
3.2(d)(1) General. For participation purposes and for
vesting purposes, the term "Period of Service" means an
Employee's employment completed as an Employee of the Employer
and any Affiliate beginning on such Employee's first day of
employment or reemployment and ending on the date a Break in
Service begins. An Employee's first day of employment or
reemployment shall be the first day the Employee performs an Hour
of Service. A Period of Service also shall include any Period of
Severance of less than 12 consecutive months.
3.2(d)(2) Aggregation. An Employee's employment completed in
all Periods of Service shall be aggregated (to the extent that
such service is not disregarded under section 3.7 or section 3.8)
and the number of days in each Period of Service in excess of a
whole year of employment (or, if there is no whole year of
employment in any such period, the number of days in such period)
shall be aggregated into additional whole years of employment on
the assumption that 365 days equals one whole year of employment.
3.2(e) Year of Service. The term "Year of Service" means
each 12 consecutive month period of employment completed in any
Period of Service beginning on the date an Employee first
completes an Hour of Service ("hire date") and ending on the date
immediately preceding the anniversary of such hire date.
Subsequent Years of Service shall begin on each anniversary of
the Employee's hire date and end on the date immediately
preceding the next anniversary of such hire date.
3.2(f) Change in Service Calculation Method. If an amendment
changes the method of crediting service from the "Hour of
Service" method to the "Elapsed Time" method, each Employee who
had any service credit under the "Hour of Service" method shall
be credited with service
3.2(f)(1) for the Employee's employment before the
Computation Period in which such amendment is adopted, as
determined on the basis that one Year of Service credited to the
Employee under the "Hour of Service" method for such employment
shall equal one Year of Service under this section 3.2,
3.2(f)(2) for the Employee's employment during the
Computation Period in which such amendment is adopted, as
determined under the rules in this section 3.2 or, if greater, as
determined for such period under the "Hour of Service" method as
converted to Years of Service under the assumption that 365 days
equals one Year of Service, and
3.2(f)(3) for the Employee's employment after the last day
of the Computation Period in which such amendment is adopted, as
determined under the rules in this section 3.2.
3.3 Service Before Effective Date. For participation purposes
all periods of employment with the Employer or an Affiliate
completed before the Employer adopted this Plan or a predecessor
plan ("pre-effective date employment") shall be included (to the
extent such service is not disregarded under section 3.7). For
vesting purposes all periods of pre-effective date employment
shall be included unless such service is disregarded under
section 3.7 or section 3.8. Notwithstanding the foregoing,
service credit for vesting purposes automatically shall be
granted for pre-effective date employment to the extent required
by Code section 411(a) for periods during which the Employer or
an Affiliate maintained a predecessor plan.
3.4 Service with Predecessor Employer. All periods of
employment with a predecessor employer or employers shall be
included in calculating an Employee's service to the extent
required by Code section 414(a) if the Employer or an Affiliate
maintains a plan of such predecessor employer. However, if the
Employer or an Affiliate does not maintain a plan of such
predecessor employer, periods of employment with such predecessor
employer shall be included in calculating an Employee's service
3.4(a) Standard Option - only to the extent required under
regulations under Code section 414(a) or
3.4(b) Alternative - only if so specified in the Adoption
Agreement.
3.5 Leased Employees. A Leased Employee shall be credited
with service as an Employee of the Employer or an Affiliate in
accordance with Code section 414(n) or section 414(o).
3.6 Service with Affiliates. An Employee shall be credited
with all service with any Affiliate and any other entity which is
required to be aggregated with the Employer under Code section
414(o).
3.7 Special Break in Service Rules.
3.7(a) Standard Option. Except as provided in section 3.7(c)
and section 8.2, an Employee who has a Break in Service shall be
credited after such Break in Service for both participation and
vesting purposes with all Years of Service completed before such
Break in Service.
3.7(b) Alternative. In addition to the exceptions in section
3.7(c) and section 8.2, the Employer may specify in the Adoption
Agreement that certain service completed before a Break in
Service may be disregarded under one or more of the rules set
forth in this section 3.7(b).
3.7(b)(1) One Year Hold-Out Rule. If the "One Year Hold-Out
Rule" is specified in the Adoption Agreement for a
nonstandardized Plan, an Employee who has a Break in Service (two
Breaks in Service if the Alternative Maternity/Paternity Rule
applies) shall not be credited after such Break in Service for
participation purposes or vesting purposes with any Year of
Service completed before such Break in Service until the Employee
completes a Year of Service after such Break in Service.
In applying this rule for participation purposes, such Year of
Service shall be measured by the Computation Period which begins
on an Employee's "reemployment commencement date" and, if
necessary, subsequent Computation Periods beginning
(i) with the Plan Year which includes the first
anniversary of the "reemployment commencement date" if the
standard Computation Period in section 3.1(b)(3)(i) is specified
in the Adoption Agreement, or
(ii) on anniversaries of the "reemployment commencement
date" if the alternative Computation Period in section
3.1(b)(3)(ii) is specified in the Adoption Agreement.
The "reemployment commencement date" shall be the first day on
which the Employee is credited with an Hour of Service for the
performance of duties after the first Computation Period in which
the Employee incurs a Break in Service. If an Employee who was a
Participant before his or her Break in Service completes a Year
of Service in accordance with this provision, such Employee's
participation shall be reinstated as of his or her reemployment
commencement date.
3.7(b)(2) Pre-Participation Rule. If the "Pre-Participation Rule"
is specified in the Adoption Agreement, an Employee who has a
Break in Service (two Breaks in Service if the Alternative
Maternity/Paternity Rule applies) before the Employee satisfies
the Participation Requirement shall not be credited for
participation purposes with any Year of Service completed before
such Break in Service. However, this rule shall only apply if the
Participation Requirement for the Plan requires more than
one Year of Service and the vesting schedule specified in the
Adoption Agreement provides for full and immediate vesting.
3.7(b)(3)Rule of Parity. If the "Rule of Parity" is specified in
the Adoption Agreement, the following rules shall apply:
(i)General. If an Employee does not have any nonforfeitable
interest in the portion of the Employee's Account which is
attributable to Employer contributions, the Employee's Years of
Service before a period of consecutive Breaks in Service shall
not be taken into account in computing service for participation
or vesting purposes if the number of consecutive Breaks in
Service in such period equals or exceeds the greater of 5 (6 if
the Alternative Maternity/Paternity Rule applies) or the
aggregate number of Years of Service completed before such Breaks
in Service ("pre-break service"). Such pre-break service shall
not include any pre-break service disregarded under the preceding
sentence by reason of prior breaks in Service.
(ii) Participation. If an Employee's Years of Service
are disregarded under this rule of parity, the Employee shall be
treated as a new Employee for participation purposes. If the
Employee's Years of Service are not disregarded under this rule,
the Employee shall continue to participate in the Plan, or, if
the Employee separated from service, shall participate
immediately upon the Employee's reemployment.
(iii) Vesting. If a Participant's Years of Service are
disregarded under this rule of parity, the Participant's pre-
break Years of Service shall be disregarded for purposes of
determining the Participant's nonforfeitable interest in the
Participant's post-break Employer Account. If a Participant's
pre-break Years of Service are not disregarded under this rule of
parity, the Participant's pre-break Years of Service shall be
counted for purposes of determining the Participant's
nonforfeitable interest in the Participant's post-break Employer
Account.
3.7(b)(4) Alternative Maternity/Paternity Rule. If the
"Alternative Maternity/Paternity Rule" is specified in the
Adoption Agreement, the special Maternity/Paternity rule set
forth in section 3.1(a)(2) shall not apply and the minimum period
of consecutive Breaks in Service required to disregard any
service or to deprive any Employee of any right under this Plan
shall be increased by one as specified in the parentheticals in
this section 3.7 and in section 8.2.
3.7(c) Vesting on Reemployment After Break in Service. If a
Participant has 5 or more consecutive Breaks in Service (6 or
more consecutive Breaks in Service if the Alternative
maternity/Paternity Rule applies), all Years of Service completed
after such Breaks in Service shall be disregarded for purposes of
determining the Participant's nonforfeitable interest in the
Participant's Employer Account and Matching Account that accrued
before such Breaks in Service. Accordingly, as set forth in 8.2,
the Employer shall not be required to restore a Forfeiture upon
such reemployment. Unless the Adoption Agreement specifies the
Rule of Parity, both the Participant's pre-break service and
post-break service shall count for purposes of determining the
nonforfeitable interest in the Participant's post-break Employer
Account and Matching Account. If the Adoption Agreement specifies
the Rule of Parity and the Participant's pre-break Years of
Service are disregarded under that rule, then the Participant's
pre-break Years of Service shall not count for purposes of
determining the nonforfeitable interest in the Participant's
post-break Employer Account and Matching Account. As provided in
8.2, separate accounts shall be maintained for the Participant's
pre-break and post-break Employer Account and Matching Account
and such accounts shall share in Fund Earnings.
If a Participant does not have 5 consecutive Breaks in Service (6
or more consecutive Breaks in Service if the Alternative
Maternity/Paternity Rule applies), both the Participant's pre-
break and post-break Years of Service shall count in determining
the nonforfeitable interest in both the pre-break and post-break
Employer Account and Matching Account balance. However, unless
the Adoption Agreement s edifies the "Alternative to the Buy Back
Rule" (as described in section 8.2(b)), a Participant's pre-break
Employer Account and Matching Account balance shall be zero
unless the Participant repays any distribution as provided in
section 8.2(a).
3.8 Service Exclusions for Vesting Purposes.
3.8(a) Standard Option - An Employee shall be credited with
all Years of Service for vesting purposes (to the extent such
service is not disregarded under section 3.7 and section 8.2).
3.8(b) Alternative - The Employer may specify in the
Adoption Agreement service which is expressly excluded for
vesting purposes.
SECTION 4. PARTICIPATION
4.1 General Rule. Each Eligible Employee shall become a
Participant in this Plan on the Entry Date which coincides with
or immediately follows the date on which the Eligible Employee
satisfies the Participation Requirement (provided he or she is an
Eligible Employee on such Entry Date).
4.2 Special Rules.
4.2(a) Pre-Existing Plan. Any Employee who was a participant in
the Pre-Existing Plan on the date immediately preceding the
Effective Date or who would have become a participant in the Pre-
Existing Plan on the Effective Date shall become a Participant
under this Plan on such Effective Date. However, no contributions
shall be made by or on behalf of such Participant unless the
Participant is otherwise entitled to a contribution under section
5.
4.2(b) Reemployment Before Satisfying Participation
Requirement. If an Employee separates from service prior to
satisfying the Participation Requirement and is thereafter
reemployed, all employment completed by such Employee prior to
such separation shall be aggregated with such Employee's
employment completed after reemployment for purposes of
satisfying the Participation Requirement unless such prior
employment is excluded under the rules set forth in section 3.
4.2(c) Reemployment After Satisfying Participation Requirement.
If an Employee satisfies the Participation Requirement before he
or she separates from service and the Employee thereafter is
reemployed, the Employee shall become a Participant on the later
of (1) the first day he or she completes an Hour of Service as an
Eligible Employee upon reemployment or (2) the first Entry Date
following the date on which he or she satisfies the Participation
Requirement. However, any such Employee whose prior service is
disregarded under section 3 shall be treated as a new Employee
for participation purposes.
4.2(d) Status Change. If the status of an Eligible Employee for
whom no Account is maintained changes to that of an Employee
(other than an Eligible Employee) and such person's status
thereafter changes back to that of an Eligible Employee, such
person shall become a Participant on the later of (1) the date
the status changes back to that of an Eligible Employee or (2)
the first Entry Date which coincides with or immediately follows
the date on which he or she satisfies the Participation
Requirement.
4.3 Participant Information. Each Participant shall file with
the Plan Administrator such personal information and data as the
Plan Administrator deems necessary for the orderly administration
of this Plan.
4.4 No Employment Rights. This Plan is not a contract of
employment and participation in this Plan shall not give any
Employee or former Employee the right to be retained in the
employ of the Employer or any Affiliate or, upon termination of
such employment, to have any interest or right in the Fund other
than as expressly provided in this Plan.
SECTION 5. CONTRIBUTIONS
5.1 Profit Sharing Plan. If this Plan is adopted as a Profit
Sharing Plan, the Employer Contribution made by the Employer and
each Participating Affiliate for each Plan Year shall equal such
amount, if any, as the Board determines in its discretion that
the Employer and each Participating Affiliate shall contribute
for such year. Employer Contributions under this section 5.1
shall be made
5.1 (a) Standard Option - from Net Profits or
5.1(b) Alternative - if so specified in the Adoption Agreement,
without regard to Net Profits. Notwithstanding any such election,
the Employer intends that this Plan shall be a "profit-sharing
plan" for purposes of the Code and ERISA.
5.2 Money Purchase Pension Plan. If this Plan is adopted as a
Money Purchase Pension Plan, the Employer Contribution made by
the Employer and each Participating Affiliate for each Plan Year
shall be an amount equal to the sum of the contribution for each
Active Participant as determined under the formula specified in
the Adoption Agreement. The Forfeitures for each Plan Year shall
be
5.2(a) Standard Option - applied to reduce the Employer
Contribution for such Plan Year or
5.2(b) Alternative - if so specified in the Adoption Agreement,
allocated to the Employer Account of each Active Participant in
accordance with section 6.3(b). Notwithstanding any such
election, the Employer intends that this Plan shall be a "money
purchase pension plan" for purposes of the Code and ERISA.
5.3 401(k) Plan.
5.3(a) General. If this Plan is adopted as a 401(k) Plan,
the contributions made by the Employer and each Participating
Affiliate shall be determined in accordance with the elections
made by the Employer in the Adoption Agreement and the rules set
forth in this section 5.3. Contributions made under this section
5.3 other than Elective Deferrals and Employee Contributions
shall be made
5.3(a)(1) Standard Option - from Net Profits or
5.3(a)(2) Alternative - if so specified in the Adoption
Agreement, without regard to Net Profits.
Elective Deferrals and Employee Contributions shall be made
without regard to Net Profits. Notwithstanding any such election,
the Employer intends that this Plan shall be a "profit-sharing
plan" for purposes of the Code and ERISA.
5.3(b) Matching Contributions. If the Employer specifies in the
Adoption Agreement that Matching Contributions shall be made to
the Plan, the Employer and each Participating Affiliate shall
make a Matching Contribution for each eligible Participant based
on the Employee Contributions and Elective Deferrals made by or
on behalf of such eligible Participant in such amount and as of
each Allocation Date as specified in the Adoption Agreement.
Notwithstanding the foregoing,
5.3(b)(1) for Plan Years beginning on or after the Final
Compliance Date, no Matching Contribution shall be made on
account of a Participant's Elective Deferrals or Employee
Contributions which are Excess Elective Deferrals under section
7.3, Excess Contributions under section 7.4 or Excess Aggregate
Contributions under section 7.5, and
5.3(b)(2) for Plan Years beginning before the Final
Compliance Date, no Matching Contribution shall be made on
account of such excess amounts unless specified in the formula
for Matching Contributions set forth in the Adoption Agreement.
5.3(c) Qualified Matching Contributions. If the Employer
specifies in the Adoption Agreement that Qualified Matching
Contributions s shall be made to the Plan, the Employer and each
Participating Affiliate shall make a Qualified Matching
Contribution for each eligible Participant based on the Employee
Contributions and Elective Deferrals made by or on behalf of such
eligible Participant in such amount and as of each Allocation
Date as specified in the Adoption Agreement. Qualified Matching
Contributions shall be subject to the following special rules:
5.3(c)(1) the Participant may not elect to receive such
contributions in cash until distributed from the Plan;
5.3(c)(2) such contributions shall be completely
nonforfeitable when made;
5.3(c)(3) such contributions shall be subject to the same
distribution and withdrawal restrictions applicable to Elective
Deferrals set forth in section 9.2(b);
5.3(c)(4) for Plan Years beginning on and after the Final
Compliance Date, no Qualified Matching Contribution shall be made
on account of a Participant's Elective Deferrals or Employee
Contributions which are Excess Elective Deferrals under section
7.3, Excess Contributions under section 7.4 or Excess Aggregate
Contributions under section 7.5; and
5.3(c)(5) for Plan Years beginning before the Final
Compliance Date, no Qualified Matching Contribution shall be made
on account of such excess amounts unless specified in the formula
for Qualified Matching Contributions set forth in the Adoption
Agreement.
5.3(d) Qualified Nonelective Contribution. If the Employer
specifies in the Adoption Agreement that Qualified Nonelective
Contributions shall be made to the Plan, the Employer and each
Participating Affiliate shall make Qualified Nonelective
Contributions for each eligible Participant in such amount and as
of each Allocation Date specified in the Adoption Agreement.
In addition, in lieu of distributing Excess Contributions as
provided in section 7.4(d) or Excess Aggregate Contributions as
provided in section 7.5(d), the Employer and each Participating
Affiliate may contribute on behalf of each Participant who is a
Nonhighly Compensated Employee on the last day of each Plan Year
such amount, if any, as the Employer and each Participating
Affiliate determine in their discretion to contribute for such
Plan Year to satisfy the ADP limit of section 7.4(b) or the ACP
limit of section 7.5(b), or both, pursuant to the regulations
under Code section 401(k) and Code section 401(m).
Qualified Nonelective Contributions shall be subject to the
following special rules:
5.3(d)(1) the Participant may not elect to receive such
contributions in cash until distributed from the Plan;
5.3(d)(2) such contributions shall be completely
nonforfeitable when made; and
5.3(d)(3) such contributions shall be subject to the same
distribution and withdrawal restrictions applicable to Elective
Deferrals set forth in section 9.2(b).
5.3(e) Discretionary Employer Contribution. If the Employer
specifies in the Adoption Agreement that discretionary Employer
Contributions shall be made, the Employer Contribution made by
the Employer and each Participating Affiliate for each Plan Year
shall equal such amount, if any, as the Board determines in its
discretion that the Employer and each Participating Affiliate
shall contribute for such year.
5.3(f) Elective Deferrals. If the Employer specifies in the
Adoption Agreement that Elective Deferrals may be made, each
Participant who is an Eligible Employee may elect pursuant to a
cash or deferred election that the Employer and each
Participating Affiliate make Elective Deferrals to the Plan on
the Participant's behalf in lieu of cash compensation for each
pay period ending on any date on or after he or she becomes a
Participant and on which he or she is an Eligible Employee in
such amounts as specified in the Adoption Agreement. All Elective
Deferrals shall be made exclusively through payroll withholding
and shall be transferred by the Employer or Participating
Affiliate to the Trustee as soon as practicable after the date
such Elective Deferrals are withheld.
5.3(g) Employee Contributions. If the Employer specifies in the
Adoption Agreement that Employee Contributions may be made, each
Participant who is an Eligible Employee may elect to make
Employee Contributions to the Plan for each pay period ending on
any date on or after he or she becomes a Participant and on which
he or she is an Eligible Employee in such amounts as specified in
the Adoption Agreement. All Employee Contributions shall be made
exclusively through payroll withholding and shall be transferred
by the Employer or Participating Affiliate to the Trustee as soon
as practicable after the date such Employee Contributions are
withheld.
5.3(h) Election Rules and Limitations.
5.3(h)(1) General. The Plan Administrator from time to time
shall establish and shall communicate in writing to Participants
who are Eligible Employees such reasonable nondiscriminatory
deadlines, rules and procedures for making the elections
described in this 5.3 as the Plan Administrator deems
appropriate under the circumstances for the proper administration
of this Plan. A Participant's election shall be made on an
Election Form and no election shall be effective unless such
Election Form is properly completed and timely filed in
accordance with such established deadlines, rules and procedures.
The Plan Administrator shall have the right at any time
unilaterally to reduce the amount or percentage of Elective
Deferrals or Employee Contributions elected under this section
5.3 if the Plan Administrator determines that such reduction is
necessary to satisfy the limitations under section 7 of the Plan.
5.3(h)(2) Commencement of Election. A Participant's initial
election to make Elective Deferrals or Employee Contributions
under this section 5.3 for any period of employment may be
effective as early as the Entry Date on which he or she becomes a
Participant in the Plan. If a Participant does not make a proper
election to make Elective Deferrals or Employee Contributions as
of such Entry Date, the Participant may thereafter make an
election
(i)Standard Option - effective on any date or
(ii)Alternative - effective only as of the dates specified
in the Adoption Agreement.
A Participant's election shall remain in effect until
revised or terminated in accordance with this section 5.3(h).
5.3(h)(3) Revision of Election. An election, once effective,
can thereafter be revised by a Participant
(i)Standard Option - effective on any date or
(ii)Alternative - effective only as of the dates specified
in the Adoption Agreement.
5.3(h)(4) Termination of Election. A Participant shall have
the right to completely terminate an election under this section
5.3 at any time, and any such termination shall become effective
as of the first day of the first pay period following the date he
or she timely files a properly completed Election Form
terminating such election. Any Participant whose status as an
Eligible Employee terminates shall be deemed to have completely
terminated his or her election, if any, under this section 5.3 as
of the date the Participant's status as such so terminates.
5.3(h)(5) Resumption after termination. A Participant whose
election terminates may thereafter elect to resume contributions
under this section 5.3
(i)Standard Option - effective as of any date, or
(ii)Alternative - effective only as of the dates specified
in the Adoption Agreement.
5.3(h)(6) Effective Dates of Elections. A Participant's
initial, revised or resumed election shall be effective only if
he or she is an Eligible Employee on the effective date of such
elections set forth in this section 5.3(h). Elective Deferrals
and Employee Contributions made pursuant to a Participant's
elections shall be withheld from Compensation which otherwise
would be paid on pr after the effective date of such election and
while he or she is an Eligible Employee. Under no circumstances
shall a Participant's Elective Deferral election apply to defer
Compensation which has been paid to the Participant or which he
or she is currently eligible to receive (in cash or otherwise) at
his or her discretion.
5.3(i) Application of Forfeitures. The Forfeitures attributable
to Matching Contributions and Employer Contributions shall be
5.3(i)(1) Standard Option - applied to reduce the Matching
Contributions, Qualified Matching Contributions and Qualified
Nonelective Contributions, if any, in accordance with section
6.3(c)(2)(ii)(A) or
5.3(i)(2) Alternative - if so specified in the Adoption
Agreement,
(i) allocated to the Employer Account or Matching
Account, as applicable, of each Active Participant in accordance
with section 6.3(c)(2)(ii)(B)(1), or
(ii) for a nonstandardized Plan, allocated in accordance
with the formula specified in the Adoption Agreement.
5.4 Target Benefit Pension Plan.
5.4(a) General. If this Plan is adopted as a Target Benefit
Pension Plan, the Employer Contribution made by the Employer and
each Participating Affiliate for each Plan Year shall be an
amount equal to the sum of the contributions required to fund
each Active Participant's "Target Benefit" specified in the
Adoption Agreement. The Forfeitures for each Plan Year shall be
applied to reduce the Employer Contribution for such Plan Year.
Such contribution shall be determined as of the last day of such
Plan Year under the individual level premium funding method,
using the interest rate and mortality table specified in the
Adoption Agreement, the Participant's age on his or her last
birthday and the assumption of a constant rate of future
Compensation, in accordance with the following:
5.4(a)(1) Step 1. If the Participant has not reached the
Plan's Normal Retirement Age, calculate the present value of the
"Target Benefit" specified in the Adoption Agreement by
multiplying the "Target Benefit" by the product of (1) the
applicable factor from Table l(a) or (b), whichever is
appropriate, in Exhibit A to the Adoption Agreement and (2) the
applicable factor from Table 111(a) or (b), whichever is
appropriate, in Exhibit A to the Adoption Agreement. It the
Participant is at or beyond the Plan's Normal Retirement Age,
calculate the present value of the "Target Benefit" specified in
the Adoption Agreement by multiplying the "Target Benefit" by the
applicable factor from Table IV(a) or (b), whichever is
appropriate, in Exhibit A to the Adoption Agreement.
5.4(a)(2) Step 2. Calculate the excess, if any, of the
amount determined in Step 1 over the theoretical reserve.
5.4(a)(3) Step 3. Amortize the result in Step 2 by
multiplying it by the applicable factor from Table 11 in Exhibit
A to the Adoption Agreement. For the Plan Year in which the
Participant attains Normal Retirement Age and for subsequent Plan
Years, the applicable factor is 1.0.
5.4(b) Theoretical Reserve. For purposes of this section
5.4, the theoretical reserve is determined as follows:
5.4(b)(1) A Participant's theoretical reserve as of the last
day of the first Plan Year in which the Participant participates
in the Plan, and as of the last day of the first Plan Year after
any Plan Year in which the Plan either did not satisfy the safe
harbor in section 1.401(a)(4)-8(b)(3) of the Federal Income Tax
Regulations or was not a Prior Safe Harbor Plan, is zero. In all
other cases, in the first Plan Year in which this theoretical
reserve provision is adopted or made effective, if later, as
specified in the Adoption Agreement ("year 1"), the initial
theoretical reserve is determined as follows:
(i) Calculate as of the last day of the Plan Year
immediately preceding year 1 the present value of the "Target
Benefit", using the actuarial assumptions, the provisions of the
Plan, and the Participant's Average Annual Compensation as of
such date; provided, however, for a Participant who is beyond
Normal Retirement Age in year 1, the straight life annuity factor
used for such determination shall be the factor applicable for
such Normal Retirement Age.
(ii) Calculate as of the last day of the Plan Year
immediately preceding year 1 the present value of future Employer
Contributions, i.e., the contributions due each Plan Year using
the actuarial assumptions, the provisions of the Plan
(disregarding those provisions of the Plan providing for the
limitations of Code section 415 or the minimum contributions
under Code section 416), and the Participant's Average Annual
Compensation as of such date, beginning with year 1 through the
end of the Plan Year in which the Participant attains Normal
Retirement Age.
(iii) Subtract the amount determined in clause (ii) from
the amount determined in clause (i).
5.4(b)(2) Accumulate the initial theoretical reserve in
section 5.4(b)(1) and the Employer Contribution (as limited by
Code section 415, but without regard to any required minimum
contributions under Code section 416) for each Plan Year
beginning in year 1 up through the last day of the current Plan
Year (excluding contributions, if any, made for the current Plan
Year) using the Plan's interest assumption in effect for each
such year. In any Plan Year following the Plan Year in which the
Participant attains Normal Retirement Age, the accumulation is
calculated assuming an interest rate of 0%.
5.4(b)(3) The calculations in this section 5.4(b) shall be
made as of the last day of each Plan Year, on the basis of the
Participant's age on his or her last birthday and the interest
rate in effect on the last day of the prior Plan Year.
5.4(c) Past Service Credits. If the Plan is adopted as a
standardized Plan, upon initial adoption of this Plan or upon a
Plan amendment which is effective on or after the Final
Compliance Date, no more than 5 years of credit shall be granted
for service completed before the effective date of such adoption
or amendment, and any such past service credit shall be granted
on a uniform basis to all Participants in the Plan on such
effective date.
5.4(d) TRA 86 Amendment. A Participant's Account balance shall
not be reduced as a result of an amendment to this Plan or a Pre-
Existing Plan to satisfy the requirements of TRA 86. To the
extent that contributions actually made on a Participant's behalf
for Plan Years beginning after December 31, 1988 exceed the
contributions that would have been required under the formula as
effective for such years as a result of the amendment of this
Plan or a Pre-Existing Plan to satisfy TRA 86, such excess shall
be applied to offset contributions required to such Participant's
Account for Plan Years beginning after the date such TRA 86
amendment is adopted or, if later, the date such TRA 86 amendment
is effective consistent with ERISA 204(h).
5.4(e) Special Definitions and Rules. The special definitions and
rules in this section 5.4(e) shall apply for purposes of
determining the Employer Contributions under a Target Benefit
Pension Plan.
5.4(e)(1) Cumulative Disparity Limit. For a Plan with a Unit
Benefit Formula, a Participant's Cumulative Disparity Limit is
equal to 35 minus (1) the number of the Participant's Years of
Participation under this Plan during which this Plan did not
satisfy the safe harbor for target benefit plans in section 1.401
(a)(4)-8(b)(3) of the Federal Income Tax Regulations or was not a
Prior Safe Harbor Plan, and (2) the number of years during which
the Participant participated in one or more qualified plans or
simplified employee pension plans ever maintained by the Employer
(other than years counted in clause (1) or counted toward a
Participant's total Years of Projected Participation). The
Cumulative Disparity Limit shall be determined taking into
account only those Years of Participation in this Plan beginning
after December 31, 1988 when this Plan had an integrated benefit
formula and those years of participation in such other qualified
plans and simplified employee pension plans beginning after
December 31, 1988 during which the Participant actually received
an allocation under an integrated defined contribution plan
(other than a target benefit pension plan), during which the
Participant was eligible to receive a benefit under an integrated
defined benefit pension plan or an integrated target benefit
pension plan), or during which the Participant received an
allocation or accrued a benefit under a plan which imputed
permitted disparity pursuant to section 1.401(a)-7 of the Federal
Income Tax Regulations.
5.4(e)(2) Cumulative Disparity Reduction. For a Plan with a Fixed
Benefit Formula, the Excess Benefit Percentage will further be
reduced as set forth in this section 5.4(e)(2) for a Participant
with more than 35 "cumulative disparity years." A Participant's
"cumulative disparity years" consist of the sum of (1) the
Participant's total Years of Projected Participation, (2) the
Participant's Years of Participation during which this Plan did
not satisfy the safe harbor for target benefit plans in
regulations section 1.401(a)(4)-8(b)(3) of the Federal Income Tax
Regulations or was not a Prior Safe Harbor Plan, and (3) the
number of years during which the Participant participated in one
or more qualified plans or simplified employee pension plans ever
maintained by the Employer (other than years in clause (1) or (2)
above); provided that the cumulative disparity years shall be
determined taking into account only those Years of Participation
in this Plan beginning after December 31, 1988 when this Plan had
an integrated benefit formula and those years of participation in
such other qualified plans and simplified employee pension plans
beginning after December 31, 1988 during which the Participant
actually received an allocation under an integrated defined
contribution plan (other than a target benefit pension plan),
during which the Participant was eligible to receive a benefit
under an integrated defined benefit pension plan (or an
integrated target benefit pension plan), or during which the
Participant received an allocation or accrued a benefit under a
plan which imputed permitted disparity pursuant to section 1.401
(a)-7 of the Federal Income Tax Regulations.
If this Cumulative Disparity Reduction applies, the Excess
Benefit Percentage will be reduced as follows:
(A)Subtract the Participant's Base Benefit Percentage from
the Participant's Excess Benefit Percentage (after modification
as required in the Adoption Agreement for less than 35 Years of
Projected Participation).
(B)Multiply the results determined in (A) by a fraction (not
less than 0), the numerator of which is 35 minus the sum of the
years in clauses (2) and (3) of this Section 5.4(e)(2), and the
denominator of which is 35.
(C)The Participant's Excess Benefit Percentage is equal to
the sum of the result in (B) and the Participant's Base
Benefit Percentage, as otherwise modified in the Adoption
Agreement.
5.4(e)(3) Current Stated Benefit. Each Participant's Current
Stated Benefit will be the product of (1) the amount derived from
the formula specified in the Adoption Agreement, and (2) a
fraction, the numerator of which is the Participant's number of
Years of Participation from the latest Fresh-Start Date (if any)
through and including the later of the year in which the
Participant attains Normal Retirement Age or the current Plan
Year, and the denominator of which is the Participant's total
Years of Projected Participation. If this Plan has not had a
Fresh-Start Date, such fraction will equal 1.0 for all
Participants. In any event, for those Participants who first
participated in the Plan after the latest Fresh-Start Date, such
fraction will equal 1.0. For purposes of determining the
numerator of the fraction described in clause (2), only those
current and prior years during which a Participant was eligible
to receive a contribution under the Plan will be taken into
account.
5.4(e)(4) Fresh-Start Date. Fresh-Start Date means the last day
of a Plan Year preceding a Plan Year for which provisions that
would affect the amount of the Current Stated Benefit are
amended. If applicable, the latest Fresh-Start Date of the Plan
shall be designated in the Adoption Agreement.
5.4(e)(5) Frozen Accrued Stated Benefit. A Participant's Frozen
Accrued Stated Benefit is determined as of the Plan's latest
Fresh-Start Date as if the Participant terminated employment with
the Employer as of that date, without regard to any amendment
made to the Plan after that date except as permitted under
regulations.
A Participant's Frozen Accrued Stated Benefit is equal to the
amount of the Current Stated Benefit in effect on the latest
Fresh-Start Date that a Participant has accrued as of that date,
assuming that such Current Stated Benefit accrues ratably from
the year in which the Participant first participated in this Plan
(or, if later, the immediately preceding Fresh-Start Date under
this Plan) through and including the Plan Year in which the
Participant attains Normal Retirement Age.
The amount of the Current Stated Benefit in effect on the latest
Fresh-Start Date that a Participant is assumed to have ratably
accrued is determined by multiplying the Plan's Current Stated
Benefit in effect on that date by a fraction, the numerator of
which is the number of Years of Participation from the later of
the Participant's first Year of Participation in this Plan or the
immediately preceding Fresh-Start Date (if any) through and
including the year that contains the latest Fresh-Start Date, and
the denominator of which is the number of Years of Participation
from the later of the Participant's first Year of Participation
in this Plan or the immediately preceding Fresh-Start Date (if
any) through and including the later of the year in which the
Participant attains Normal Retirement Age or the current Plan
Year. For purposes of this paragraph, only those Years of
Participation during which a Participant was eligible to receive
a contribution under the Plan will be taken into account.
If this Plan has had a preceding Fresh-Start Date, each
Participant's Frozen Accrued Stated Benefit as of the latest
Fresh-Start Date will equal the sum of the amount of the Current
Stated Benefit in effect on the latest Fresh-Start Date that a
Participant is assumed to have ratably accrued as of that date
under the preceding paragraph, and the Frozen Accrued Stated
Benefit determined as of the preceding Fresh-Start Date(s).
If (1) the Current Stated Benefit formula in effect on the latest
Fresh-Start Date was not expressed as a straight life annuity for
all Participants, and/or (2) the Normal Retirement Age for any
Participant on the latest Fresh-Start Date was greater than the
Normal Retirement Age for that Participant under the Current
Stated Benefit formula in effect after the latest Fresh-Start
Date, the Frozen Accrued Stated Benefit will be converted to an
actuarially equivalent straight life annuity commencing at the
Participant's Normal Retirement Age under the Current Stated
Benefit formula in effect after the latest Fresh-Start Date,
using the actuarial assumptions in effect under the Current
Stated Benefit formula in effect on the latest Fresh-Start Date.
Notwithstanding the above, if in the immediately preceding Plan
Year this Plan did not satisfy the safe harbor for target benefit
plans in section 1.401(a)(4)-8(b)(3) of the Federal Income Tax
Regulations or was not a Prior Safe Harbor Plan, the Frozen
Accrued Stated Benefit for any Participant in the Plan,
determined for the next Plan Year during 9 which section 1.401
(a)(4)-8(b)(3) of the Federal Income Tax Regulations is
satisfied until the year following the next Fresh-Start Date, if
any, will be zero.
5.4(e)(6) Maximum Excess Allowance. The Maximum Excess
Allowance is equal to the lesser of the Base Benefit Percentage
or
(1) for a Plan with a Unit Benefit Formula, the Applicable
Factor determined from Table A or Table B in Exhibit B to
the Adoption Agreement, and
(2) for a Plan with a Fixed Benefit Formula, 35 times the
Applicable Factor determined from Table A or Table B in Exhibit B
to the Adoption Agreement.
5.4(e)(7) Overall Permitted Disparity Limit. If for any Plan
Year this Plan benefits any Participant who also benefits under
another qualified plan or simplified employee pension plan
maintained by the Employer that provides for permitted disparity
(or imputes permitted disparity), the Current Stated Benefit for
all Participants under this Plan will be equal to the Excess
Benefit Percentage set forth in the Adoption Agreement multiplied
times
(1) for a Plan with a Unit Benefit Formula, the
Participant's total Average Annual Compensation times the
Participant's total Years of Projected Participation under the
Plan up to the maximum total Years of Projected Participation
specified in the Adoption Agreement, and
(2) for a Plan with a Fixed Benefit Formula, the
Participant's total Average Annual Compensation (prorated for
years less than 35).
If this paragraph is applicable, this Plan will have a Fresh-
Start Date on the last day of the Plan Year preceding the Plan
Year in which this paragraph is first applicable. In addition, if
in any subsequent Plan Year this Plan no longer benefits any
Participant who also benefits under another plan of the Employer,
this Plan will have a Fresh-Start Date on the last day of the
Plan Year preceding the Plan Year in which this paragraph is no
longer applicable.
5.4(e)(8) Prior Safe Harbor Plan. Prior Safe Harbor Plan
means a Plan adopted and in effect on September 19, 1991, that
satisfied the applicable nondiscrimination requirements for
target benefit plans on that date and in all prior periods
(taking into account no amendments to the Plan after September
19, 1991, other than amendments necessary to satisfy Code section
401(1)).
5.4(e)(9) Year of Participation - means each Year of Service
(as determined in the same manner as a Year of Service for
vesting purposes) completed after the Participant first becomes a
Participant in this Plan or the Pre-Existing Plan.
5.4(e)(10) Years of Projected Participation. For purposes of
determining a Participant's Current Stated Benefit, a
Participant's total Years of Projected Participation under the
Plan is the sum of the Participant's total number of Years of
Participation under this Plan for the years this Plan
consecutively satisfies the safe harbor for target benefit plans
in section 1.401(a)(4)-8(b)(3) of the Federal Income Tax
Regulations or was a Prior Safe Harbor Plan , if applicable,
projected through the later of the end of the Plan Year in which
the Participant attains Normal Retirement Age or the end of the
current Plan Year. For purposes of determining a Participant's
total Years of Projected Participation, only those current and
prior years during which a Participant was eligible to receive a
contribution under the Plan will be taken into account.
5.5 Rollover Contributions.
5.5(a) Standard Option - An Eligible Employee may contribute
on his or her own behalf (or elect a direct transfer of) a
Rollover Contribution to the Fund, provided (1) such contribution
shall be made (or transferred) in cash or in a form which is
acceptable to the trustee,(2) such contribution shall be made in
accordance with such rules as the Plan Administrator and the
Trustee deem appropriate under the circumstances, and (3) if so
specified in the Adoption Agreement, no Rollover Contribution may
be made prior to the Entry Date on which the Eligible Employee
becomes a Participant in this Plan.
5.5(b) Alternative - The Employer may specify in the
Adoption Agreement that no Rollover Contributions may be made.
5.6 No Employee or Matching Contributions. Unless this Plan
is adopted as a 401(k) Plan which permits Employee Contributions,
no nondeductible employee contributions or matching contributions
(as defined in Code section 401(m)) shall be made to this Plan
after the Plan Year in which this Plan is adopted by the
Employer. Any nondeductible employee contributions and matching
contributions made under a Pre-Existing Plan or under this Plan
(in accordance with the preceding sentence) for Plan Years
beginning after December 31, 1986 shall be subject to the
nondiscrimination limitations under Code section 401(m) as set
forth in section 7.5.
5.7 No Deductible Voluntary Employee Contributions. No
voluntary deductible employee contributions shall be made to this
Plan for a taxable year beginning after December 31, 1986. Any
voluntary deductible employee contributions made under a Pre-
Existing Plan prior to such date shall be maintained in a
separate account under this Plan. Such account shall be
nonforfeitable at all times and shall share in the Fund Earnings
in the same manner as described in section 6.2. No part of such
account shall be used to purchase life insurance. Subject to
section 10, Joint and Survivor Annuity Requirements (if
applicable), a Participant may withdraw any part of the
Participant's voluntary deductible employee contribution account
by making a written application to the Plan Administrator,
5.8 General Rules Applicable to All Contributions.
5.8(a) Limitations on Contributions. The contributions made
under this section 5 and the allocation of those contributions
under section 6 shall be subject to the limitations set forth in
the Adoption Agreement, this section 5 and section 7.
5.8(b) Code section 415. The contributions for any Plan Year
shall not (based on the Employer's understanding of the facts at
the time the contribution is made) exceed the total amount
allocable for such year among the Accounts of all Participants in
light of the restrictions in Code section 415 as set forth in
section 7.2. If a suspense account as described in section 7.2(b)
is in existence at any time during a particular Limitation Year
(1) no Employer Contribution shall be made for such
Limitation Year if (based on the Employer's understanding of the
facts at the time the contribution is made) the allocation of the
amount in such suspense account would be precluded by Code
section 415 for such Limitation Year and (2) if this Plan is
adopted as a Money Purchase Pension Plan or a Target Benefit
Pension Plan, the Employer Contribution required under this
section 5 shall be reduced by the amount in such suspense
account.
5.8(c) Code section 416. If this Plan is a Top-Heavy Plan
(as defined in section l2) for any Plan Year, the minimum
allocation required under Code section 416 shall be made in
accordance with section 12.
5.8(d) Leased Employees. Contributions or benefits which are
provided by a leasing organization on behalf of a Participant who
is a Leased Employee and which are attributable to services
performed by such Participant for the Employer or a Participating
Affiliate shall be credited against the contribution, if any, due
to be allocated to such Participant under this Plan in accordance
with Code section 414(n).
5.8(e) Owner-Employees.
5.8(e)(1) General. If this Plan provides contributions or
benefits for one or more Owner-Employees who control the Employer
or a Participating Affiliate, then
(i) if such Owner-Employee, or Owner-Employees, also
control one or more other trades or businesses,
(A) this Plan and the plans established for such
other trades or businesses shall, when viewed as a single plan,
satisfy the applicable requirements of Code section 401(a) and
Code section 401(d) for the employees of the Employer or the
Participating Affiliate and such other trades or businesses, and
(B) the employees of such other trades or
businesses shall be included in a plan which satisfies the
applicable requirements of Code section 401(a) and Code section
401(d) and which provides contributions and benefits which are at
least as favorable as those provided under this Plan for such
Owner-Employees, or
(ii) it such Owner-Employee is covered as an owner-
employee (within the meaning of Code section 401(c)(3)) under the
plans of two or more other trades or businesses which such Owner-
Employee does not control, then the contributions or benefits
provided under this Plan must be at least as favorable as those
provided for such Owner-Employee under the most favorable plan of
such other trade or business.
5.8(e)(2) Control. For purposes of this section 5.8(e), an
Owner-Employee, or two or more such Owner-Employees, shall be
considered to control a trade or business if such Owner-
Employee, or such Owner-Employees together,
(i) own the entire interest in an unincorporated trade
or business, or
(ii) in the case of a partnership, own more than 50% of
either the capital interest or the profits interest in such
partnership. Such Owner-Employee, or such Owner-Employees, shall
be treated as owning any interest in a partnership which is
owned, directly or indirectly, by a partnership which is
controlled by such Owner-Employee, or such Owner-Employees,
within the meaning of clause (ii).
SECTION 6. ALLOCATIONS TO ACCOUNTS
6.1 Establishment and Maintenance of Accounts. An Account
shall be established and maintained for each Participant under
the Plan and the Plan Administrator shall establish reasonable
and nondiscretionary procedures under which (a) any Forfeitures,
insurance premium payments, loans, withdrawals, distributions and
other charges properly allocable to such Account shall be debited
from such Account and (b) any insurance contract dividends,
insurance contract surrender proceeds, loan repayments and other
amounts properly allocable to such Account (other than amounts
described in section 6.2 and section 6.3) shall be credited to
such Account.
6.2 Allocation of Fund Earnings.
6.2(a) General. As of each Valuation Date the fair market
value of the Fund and the Fund Earnings for the period which ends
on such Valuation Date shall be determined. Such Fund Earnings
shall be allocated (and posted) among all Accounts in the
proportion that the balance in each such Account (determined in
accordance with section 6.2(b)) bears to the total balance in all
such Accounts in order that each Account shall proportionately
benefit from any earnings or appreciation in the value of the
Fund assets in which such Account is invested or proportionately
suffer any losses or depreciation in the value of the Fund assets
in which such Account is invested. Subject to section 13, each
Participant shall have a ratable interest in all assets of
the Fund.
6.2(b) Allocation Procedures. The Plan Administrator shall
establish nondiscretionary allocation procedures for purposes of
the allocation of Fund Earnings under section 6.2(a), which
procedures shall be set forth in writing with the records of this
Plan. If so specified in such procedures, the balance in each
Account shall be determined after adjusting for all or a portion
of the contributions and other amounts credited to or debited
from such Account since the preceding Valuation Date. Further, if
so provided in such allocation procedures, Fund Earnings shall
not be allocated to any Forfeiture or to the balance in any
suspense account described in section 7.2(b).
6.3 Allocation of Contributions and Forfeitures. Subject to the
limitations in section 7, the Forfeitures (and any amount deemed
to be a Forfeiture under the terms of this Plan) and the
contributions shall be allocated (and posted) in accordance with
the following rules:
6.3(a) Profit Sharing Plan.
6.3(a)(1) Nonintegrated. If this Plan is adopted as a Profit
Sharing Plan and the nonintegrated allocation formula is
specified in the Adoption Agreement, the Forfeitures and the
Employer Contribution for each Plan Year shall be allocated (and
posted) as of the last day of such Plan Year to the Employer
Account of each Active Participant in the same ratio that each
Active Participant's Compensation for such Plan Year bears to the
total Compensation of all Active Participants for such Plan Year.
6.3(a)(2) Integrated. If this Plan is adopted as a Profit Sharing
Plan and the integrated allocation formula is specified in the
Adoption Agreement, the Forfeitures and the Employer Contribution
shall be allocated (and posted) as of the last day of each Plan
Year to the Employer Account of each Active Participant in
accordance with the following:
(i) Step One - First, the lesser of (A) the sum of the
Employer Contribution and Forfeitures for such Plan Year or (B)
the Integration Amount for such Plan Year shall be allocated to
the Employer Account of each Active Participant in the same ratio
that the sum of the total Compensation and Excess Compensation of
each Active Participant for such Plan Year bears to the sum of
the total Compensation and Excess Compensation of all Active
Participants for such Plan Year.
(ii) Step Two - Second, the remaining Employer
Contribution and the Forfeitures, it any, for such Plan Year
shall be allocated to the Employer Account of each Active
Participant (whether or not he or she had Excess Compensation) in
the same ratio that each Active Participant's total Compensation
for such Plan Year bears to the total Compensation of all Active
Participants for such Plan Year.
(iii)Special Definitions - For purpose of this 6.3(a)(2),
(A) "Integration Amount" means the product of (1) the total
Compensation and the total Excess Compensation of all Active
Participants and (2) the Integration Percentage specified in the
Adoption Agreement, but in no event shall the Integration
Percentage exceed the Maximum Disparity Rate for any Plan Year
beginning after December 31, 1988.
(B) "Excess Compensation" means the amount, if any, of a
Participant's Compensation for such Plan Year which exceeds the
Integration Level for such Plan Year.
(iv) Top-Heavy. If this Plan is a Top-Heavy Plan for any
Plan Year, the allocation formula in section 12.3(h)(1) shall
apply in lieu of the formula in this section 6.3(a)(2) for such
Plan Year.
6.3(b) Money Purchase Pension Plan. If this Plan is adopted as
a Money Purchase Pension Plan, the Forfeitures and the Employer
Contribution actually made under section 5.2 (as adjusted, if
applicable, in accordance with section 12.3(h)(2) for a Top-Heavy
Plan) shall be allocated (and posted) as of the last day of each
Plan Year to the Employer Account of each Active Participant in
accordance with the formula specified in the Adoption Agreement.
If Forfeitures are applied to reduce the Employer Contribution
and the Forfeitures available under section 8.2(e) for any Plan
Year exceed the contribution specified in the Adoption Agreement
for such Plan Year, such excess shall be held in a separate
account and shall be applied in full as a Forfeiture to offset
such contributions in the future until such account is exhausted
under this section 6.3(b). If Forfeitures are to be allocated to
Active Participants, such Forfeitures shall be allocated (and
posted) to the Employer Account of each Active Participant in the
same ratio that such Active Participant's Compensation for such
Plan Year bears to the total Compensation of all such Active
Participants for such Plan Year.
6.3(c) 401(k) Plan. If this Plan is adopted as a 401(k) Plan,
Forfeitures and contributions made under section 5.3 shall be
allocated (and posted) in accordance with the following:
6.3(c)(1) Elective Deferrals and Employee Contributions. Elective
Deferrals made on a Participant's behalf for the period ending on
each Valuation Date shall be credited to the Participant's
Elective Deferral Account as of such Valuation Date and the
Employee Contributions made by a Participant for such period
shall be credited to the Participant's Employee Account as of
such Valuation Date.
6.3(c)(2) Matching Contributions and Qualified Matching
Contributions.
(i) Allocation. Matching Contributions and Qualified
Matching Contributions made on a Participant's behalf shall be
credited to the Participant's Matching Account and Qualified
Matching Account, respectively,
(A)Standard Option - as of the last day of each Plan
Year or
(B)Alternative - only as of each Allocation Date
specified in the Adoption Agreement.
(ii) Forfeitures. Forfeitures attributable to Matching
Accounts shall be allocated or applied in accordance with the
following rules; provided, no Forfeitures attributable to Excess
Aggregate Contributions under section 7.5(d) shall be allocated
to the Account of any Highly Compensated Employee:
(A) Forfeitures to Reduce Matching Contribution (Standard
Option). Forfeitures attributable to Matching Accounts shall be
applied to reduce the Matching Contributions for the applicable
Allocation Date (as specified in 8.2 and the Adoption
Agreement). If the Forfeitures exceed the Matching Contribution
specified in the Adoption Agreement for any Allocation Date, such
excess shall be held in a separate account and shall be applied
in full as a Forfeiture to offset Matching Contributions as of
the next Allocation Date (and succeeding Valuation Dates) until
such account is exhausted under this section 6.3(c)(2).
(B) Forfeitures to be Allocated (Alternative). If so
specified in the Adoption Agreement, Forfeitures attributable to
Matching Accounts shall be allocated (and posted)
(I) as of the last day of such Plan Year to the Matching
Account of each Active Participant in the same ratio that such
Active Participant's Compensation for such Plan Year bears to the
total Compensation of all such Active Participants for such Plan
Year, or
(II) in accordance with the formula specified in the
Adoption Agreement for a nonstandardized Plan.
6.3(c)(3) Qualified Nonelective Contributions. Qualified
Nonelective Contributions made on behalf of a Participant shall
be credited to the Participant's Qualified Nonelective Account
(i) Standard Option - as of the last day of each Plan
Year or
(ii) Alternative - only as of each Allocation Date
specified in the Adoption Agreement.
6.3(c)(4) Discretionary Employer Contribution.
(i) Allocation. As of the last day of each Plan Year,
the Employer Contribution, it any, for such Plan Year shall be
allocated (and posted) to the Employer Account of each Active
Participant
(A) Standard Option - in the nonintegrated method
described in section 6.3(a)(1).
(B) Alternative - if so specified in the Adoption
Agreement, in the integrated method described in 6.3(a)(2).
(ii) Forfeitures. Forfeitures attributable to Employer
Accounts shall be allocated or applied in accordance with the
following:
(A) Standard Option. Forfeitures attributable to
Employer Accounts shall be allocated (and posted) as of the last
day of each Plan Year to the Employer Account of each Active
Participant in the same manner as the Employer Contribution under
section 6.3(c)(4)(i).
(B) Alternative. If so specified in the Adoption
Agreement, Forfeitures attributable to Employer Accounts shall be
(I) applied to reduce Matching Contributions, Qualified
Matching Contributions and Qualified Nonelective Contributions
for the applicable Allocation Date (as specified in section 8.2
and the Adoption Agreement) and succeeding Allocation Dates, if
necessary, or
(II) allocated (and posted) in accordance with the formula
specified in the Adoption Agreement for a nonstandardized Plan.
6.3(d) Target Benefit Pension Plan. If this Plan is adopted as a
Target Benefit Pension Plan, the Forfeitures and the Employer
Contribution actually made under section 5.4 for each Plan Year
shall be allocated (and posted) as of the last day of each Plan
Year to the Employer Account of each Active Participant as
specified in the Adoption Agreement. The Forfeitures for each
Plan Year shall be applied to reduce the Employer Contribution
for such Plan Year. If Forfeitures for any Plan Year exceed the
Employer Contributions determined under section 5.4 for such Plan
Year, such excess shall be held in a separate account and shall
be applied in full to offset Employer Contributions in the future
until such account is exhausted under this section 6.3(d).
6.3(e) Top Heavy Minimum Allocation. It this Plan is a Top-Heavy
Plan (as defined in section 12), the minimum allocation required
to be made under this Plan under section 12.3, if any, shall be
allocated (and posted) as of the last day of the Plan Year (1) to
the Employer Account of each Participant who is not an Active
Participant but for whom a minimum allocation is required under
section 12.3 and (2) to each Active Participant for whom a
minimum allocation is required to be made in this Plan under
section l2.3 to the extent such minimum allocation is not
otherwise satisfied by the allocation under this section 6.3. If
this Plan is adopted as a Profit Sharing Plan, the minimum
allocation may be made by reallocating the Employer Contribution
and Forfeitures allocated under section 6.3(a) in a manner which
satisfies this section 6.3(e) or by contributing an additional
amount which will be allocated in accordance with this section
6.3(e). If this Plan is adopted as a Money Purchase Pension Plan,
a Target Benefit Pension Plan or a 401(k) Plan, an additional
Employer Contribution shall be made to satisfy this section
6.3(e).
6.3(f) Rollover Contributions. Rollover Contributions made by a
Participant during the period ending on each Valuation Date shall
be credited to the Participant's Rollover Contribution Account as
of such Valuation Date.
6.4 Allocation Report. The Plan Administrator shall maintain
records of the allocations and adjustments made to Accounts under
this section 6 and shall at least annually prepare and forward to
each such Participant and Beneficiary a statement which shows the
new balance in such person's Account.
6.5 Allocation Corrections. If an error or omission is
discovered in any Account, then as of the first Valuation Date in
the Plan Year in which the error or omission is discovered, the
Plan Administrator shall make (and post) an adjustment to such
Account as the Plan Administrator deems necessary to remedy in an
equitable manner such error or omission.
SECTION 7. STATUTORY LIMITATIONS ON ALLOCATIONS
7.1 Effective Date. Except as otherwise expressly provided,
this section 7 shall be effective retroactive to Plan Years
beginning on or after January 1, 1987.
7.2 Limitations on Annual Additions Under Code section 415.
7.2(a) Special Definitions. For purposes of this section 7.2, the
terms defined in this section 7.2(a) shall have the meanings
shown opposite such terms.
7.2(a)(1) Annual Additions - means for each Participant for any
Limitation Year
(i) the sum of the employer contributions, forfeitures,
and nondeductible employee contributions creditable (without
regard to the application of this section 7.2) to the
Participant's account under this Plan or under any other defined
contribution plan (including a Master or Prototype Plan and any
defined benefit plan which provides for employee contributions)
maintained by the Employer for such Limitation Year; and for this
purpose, any Excess Amount allocated under section 7.2(b), any
Excess Elective Deferrals under section 7.3 (unless such excess
is distributed by the deadline set forth in section 7.3(d)), any
Excess Contributions under section 7.4 and any Excess Aggregate
Contributions under section 7.5 shall be considered Annual
Additions for such Limitation Year;
(ii) amounts allocated on behalf of such Participant
after March 31, 1984 to an individual medical account (as defined
in Code section 415(l)(2)) which is part of a pension or annuity
plan maintained by the Employer; and
(iii) amounts derived from contributions paid or accrued
after December 31, 1985 in taxable years ending after such date
which are attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined
in Code section 419A(d)(3)) under a welfare benefit fund (as
described in Code section 419(e)) maintained by the Employer; and
(iv) allocations under a simplified employee pension (as
defined in Code section 408(k).
7.2(a)(2) Compensation - means for a Self-Employed Individual,
such individual's Earned Income, and for each other Employee
(i) Standard Option - compensation reportable on Form W-
2 as defined in 2.1 0(a)(1), or
(ii)Alternative - if so specified in the Adoption Agreement,
(A) compensation subject to withholding as defined in
section 2.10(a)(2)(i), or
(B) the Employee's wages, salaries, fees for
professional services and other amounts received (without regard
to whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with the
Employer maintaining the Plan to the extent that the amounts are
includable in gross income during the Limitation Year (including,
but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on
insurance premiums, tips, bonuses, fringe benefits and
reimbursements or other expense allowances under a nonaccountable
plan as described in section 1.62-2(c) of the Federal Income Tax
Regulations). Compensation shall not include the following:
(I) Employer contributions to a plan of deferred
compensation which are not includable in the Participant's gross
income for the taxable year in which contributed, or Employer
contributions under any simplified employee pension plan, or any
distributions from a plan of deferred compensation;
(II) amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or property)
held by the Participant either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture;
(III) amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified
stock option; and
(IV) other amounts which receive special tax benefits, or
contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code 403(b) (whether or not the contributions are
actually excludable from the gross income of the Participant).
For purposes of applying the limitations of this section 7.2, an
Employee's Compensation for Limitation Years beginning on and
after the Final Compliance Date shall not include any
Compensation which is accrued for such Limitation Year.
However, for purposes of applying the limitations of this section
7.2 to a Participant in a defined contribution plan who is
permanently and totally disabled (as defined in Code section
22(e)(3)), the term "Compensation" shall mean the compensation
such Participant would have received for the Limitation Year if
the Participant had been paid at the Participant's rate of
Compensation (as defined in this section 7.2(a)(2)) paid
immediately before becoming permanently and totally disabled,
and, further, such imputed compensation for the disabled
Participant may be taken into account only if the Participant is
not a Highly Compensated Employee and contributions made on
behalf of such Participant are nonforfeitable when made.
7.2(a)(3) Defined Benefit Fraction - means a fraction, (i) the
numerator of which shall be the sum of the Participant's
Projected Annual Benefits under all defined benefit plans
(whether or not terminated) maintained by the Employer, and (ii)
the denominator of which shall be the lesser of (A) 125% of the
dollar limitation determined for the Limitation Year under Code
section 415(b) and section 415(d) or (B) 140% of the
Participant's Highest Average Compensation, including any
adjustments under Code section 415(b). However, if the
Participant was a participant as of the first day of the first
Limitation Year beginning after December 31, 1986 in one or more
defined benefit plans maintained by the Employer which were in
existence on May 6, 1986 and which individually and in the
aggregate satisfied the requirements of Code section 415 for all
Limitation Years beginning before January 1, 1987, the
denominator of such fraction shall be not less than 125% of the
sum of the annual benefits under such plans which the Participant
had accrued as of the end of the last Limitation Year beginning
before January 1, 1987 disregarding any changes in the terms and
conditions in the plan after May 5, 1986. Notwithstanding the
foregoing, "100%" shall be substituted for "l 25%" in any
Limitation Year for which this Plan is a Top-Heavy Plan (as
defined in section 12) unless otherwise specified in the Adoption
Agreement.
7.2(a)(4) Defined Contribution Dollar Limitation - means for each
Limitation Year the greater of (i) $30,000 or (ii) one-fourth of
the defined benefit dollar limitation under Code section
415(b)(1) as in effect for such Limitation Year.
7.2(a)(5) Defined Contribution Fraction - means a fraction, (i)
the numerator of which shall (subject to the adjustment rules set
forth below) be the sum of the Annual Additions credited to the
Participant's accounts under all defined contribution plans
(whether or not terminated) maintained by the Employer 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 described
in Code section 419(e)) and all individual medical accounts (as
described in Code section 415(i)(2)) maintained by the Employer
and (ii) the denominator of which shall be the sum of the Maximum
Aggregate Amounts for the current and all prior Limitation Years
of service with the Employer (without regard to whether a defined
contribution plan was maintained by the Employer). The numerator
of such fraction shall be adjusted if the Participant was a
participant as of the first day of the first Limitation Year
beginning after December 31, 1986 in one or more defined
contribution plans maintained by the Employer which were in
existence on May 6, 1986 and the sum of this fraction and the
Defined Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. The adjustment shall be made by taking an
amount equal to the product of (A) the excess of the sum of the
fractions over 1.0, times (B) the denominator of this fraction,
and by permanently subtracting such product from the numerator of
this fraction. The adjustment shall be calculated using the
fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987 and disregarding
any changes in the terms and conditions of the Plan made after
May 5, 1986 but using the Code section 415 limitation applicable
to the first Limitation Year beginning on or after January 1,
1987. The Annual Addition for any Limitation Year beginning
before January 1, 1987 shall not be recomputed to treat all
employee contributions as an Annual Addition.
7.2(a)(6) Employer - means the Employer that adopts this Plan and
all members of a controlled group of corporations (as defined in
Code section 414(b) as modified by Code section 415(h)), all
commonly controlled trades or businesses (as defined in Code
section 414(c) as modified by Code section 415(h)) or affiliated
service groups (as defined in Code section 414(m)) of which the
adopting Employer is a part and any other entity required to be
aggregated with the Employer pursuant to the regulations under
Cede section 414(o).
7.2(a)(7) Excess Amount - means the excess of a Participant's
Annual Additions for the Limitation Year over the Maximum
Permissible Amount.
7.2(a)(8) Highest Average Compensation - means the Participant's
average Compensation for the three consecutive Plan Years of
employment with the Employer (without regard to whether such Plan
Years were before the Effective Date) that produces the highest
average.
7.2(a)(9) Limitation Year - means
(i)Standard Option - the Plan Year or
(ii) Alternative - the alternative 12 consecutive month
period specified in the Adoption Agreement.
All qualified plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is amended to a different
12 consecutive month period, the new Limitation Year must begin
on a date within the Limitation Year in which the amendment is
made.
7.2(a)(10) Master or Prototype Plan - means a plan the form of
which is the subject of a favorable opinion letter from the
Internal Revenue Service.
7.2(a)(11) Maximum Aggregate Amount - means for any Limitation
Year the lesser of (i) 125% of the dollar limitation determined
under Code section 415(c)(1)(A) or (ii) 35% of the Participant's
Compensation for such year. Notwithstanding the foregoing, "l00%"
shall be substituted for 125% in any Limitation year for which
this Plan is a Top-Heavy Plan (as defined in section 12) unless
otherwise specified in the Adoption Agreement.
7.2(a)(12) Maximum Permissible Amount - means the lesser of (i)
the Defined Contribution Dollar Limitation or (ii) 25% of a
Participant's Compensation for the Limitation Year; provided,
(A) the compensation limitation referred to in clause
(ii)shall not apply to any contribution for medical benefits
(within the meaning of Code section 401(h) or section 419A(f)(2))
which is otherwise treated as an Annual Addition under Code
section 415(l)(1) or section 419(A)(d)(2); and
(B) if a short Limitation Year is created because of an
amendment changing the Limitation Year to a different 12
consecutive month period, the Maximum Permissible Amount shall
not exceed the Defined Contribution Dollar Limitation multiplied
by a fraction, the numerator of which shall be the number of
months in the short Limitation Year and the denominator of which
shall be 12.
7.2(a)(13) Projected Annual Benefit - means the annual retirement
benefit (adjusted to an actuarially equivalent straight life
annuity if such benefit is expressed in a form other than a
straight life annuity or qualified joint and survivor annuity) to
which a Participant would be entitled under the terms of a
defined benefit plan assuming:
(i) the Participant will continue employment until
normal retirement age under the plan (or current age, if later),
and
(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to determine
benefits under the plan will remain constant for all future
Limitation Years.
7.2(b) Limitation If No Other Plans. If a Participant does not
participate in, and has never participated in, another qualified
plan maintained by the Employer or a welfare benefit fund (as
described in Code section 419(e)) or individual medical account
(as described in Code section 415(1)(2)) maintained by the
Employer which provides an Annual Addition as defined in section
7.2(a)(1) or a simplified employee pension (as defined in Code
section 408(k)) maintained by the Employer, the amount of Annual
Additions which actually may be credited to the Account of any
Participant for any Limitation Year shall not exceed the lesser
of the Maximum Permissible Amount or any other limitation set
forth in this Plan. It the Employer Contribution that would
otherwise be credited to the Participant's Account would cause
the Annual Additions for the Limitation Year to exceed the
Maximum Permissible Amount, such amount shall be reduced so that
the Annual Additions actually credited for the Limitation Year
shall equal the Maximum Permissible Amount. If pursuant to
section 7.2(f) or as a result of the allocation of Forfeitures a
Participant's Annual Additions under this Plan would result in an
Excess Amount, such Excess Amount shall be disposed of as
follows:
7.2(b)(1) Profit Sharing Plan. If this Plan is adopted as a
Profit Sharing Plan,
(i) such Excess Amount shall be deemed a Forfeiture
which shall be allocated and reallocated as provided in section
6.3(a) subject to the restrictions of this section 7.2 among the
Employer Accounts of the remaining Active Participants until such
amount has been allocated in its entirety; and
(ii) if the restrictions in this section 7.2 apply
before such amount has been reallocated in its entirety, as the
final allocation step such unallocable Excess Amount shall be
transferred to a suspense account.
7.2(b)(2) Money Purchase Pension Plan or Target Benefit Pension
Plan. If this Plan is adopted as a Money Purchase Pension Plan or
Target Benefit Pension Plan,
(i) Standard Option - such Excess Amount shall be held
unallocated in a suspense account which shall be applied to
offset future Employer Contributions for Active Participants in
the next Limitation Year (and in each succeeding Limitation Year
if necessary).
(ii)Alternative - it so specified in the Adoption Agreement,
(A) for any Participant who is an Active
Participant at the end of the Limitation Year, such Excess Amount
shall be held unallocated in a suspense account which shall be
applied to offset the Employer Contribution for such Active
Participant in the next Limitation Year (and in each succeeding
Limitation Year if necessary); and
(B) for any Participant who is not an Active
Participant at the end of such Limitation Year, such Excess
Amount shall be held unallocated in a suspense account which
shall be applied to offset future Employer Contributions for all
remaining Active Participants in the next Limitation Year (and in
each succeeding Limitation Year if necessary).
7.2(b)(3) 401(k) Plan. If this Plan is adopted as a 401(k)
Plan, any Elective Deferrals and Employee Contributions made by
the Participant during the Limitation Year (and, to the extent
required under regulations, gains attributable to such Employee
Contributions) shall be refunded to the extent such refund would
reduce the Excess Amount and, if an Excess Amount still exists
after such refund,
(i) any such Excess Amount which is attributable to
discretionary Employer Contributions shall be disposed of in the
same manner as an Excess Amount under a Profit Sharing Plan as
described in section 7.2(b)(1), and
(ii) any such Excess Amount which is attributable to a
Matching Contribution, Qualified Nonelective Contribution or
Qualified Matching Contribution shall be held unallocated in a
suspense account which shall be used to offset future Matching
Contributions, Qualified Nonelective Contributions or Qualified
Matching Contributions in the next Limitation Year (and in each
succeeding Limitation Year if necessary).
7.2(b)(4) Suspense Account. A suspense account established
pursuant to this section 7.2(b) shall not be subject to any
allocation of Fund Earnings under section 6.2, and the balance of
such account shall be returned to the Employer in the event this
Plan is terminated prior to the date such account has been
allocated in its entirety as a Forfeiture. In no event shall
Excess Amounts be distributed to Participants or former
Participants.
7.2(c) Limitation If Other Defined Contribution Master or
Prototype Plan. This section 7.2(c) applies if, in addition to
this Plan, a Participant is covered under another defined
contribution Master or Prototype Plan maintained by the Employer
or a welfare benefit fund (as described in Code section 419(e))
or an individual medical account (as described in Code section
415(l)(2)) maintained by the Employer which provides for an
Annual Addition as defined in section 7.2(a)(1) or a simplified
employee pension (as defined in Code section 408(k)) maintained
by the Employer during any Limitation Year. The Annual Additions
which may be credited to a Participant's Account under this Plan
for any such Limitation Year shall not exceed the Maximum
Permissible Amount reduced by the Annual Additions credited to a
Participant's account under such other defined contribution
Master or Prototype Plan and welfare benefit funds for the same
Limitation Year.
7.2(c)(1) If for any Limitation Year (1) the Employer also
maintains another defined contribution Paired Plan, (2) the
Employer does not maintain any other defined contribution Master
or Prototype Plan (other than such Paired Plan) and (3) a
Participant's Annual Additions under such Paired Plans would
result in an Excess Amount for such Limitation Year, the
allocation adjustment required to satisfy the limitations of Code
415 shall be made under such Plans in the following order:
(i) Standard Option - first, under the Profit Sharing
Plan, if any; second under the Money Purchase Pension Plan, if
any; third under the Target Benefit Pension Plan, if any; and
finally, under the 401(k) Plan, if any; or
(ii) Alternative - in the alternative order specified in
the Adoption Agreement.
7.2(c)(2) If the Annual Additions with respect to any
Participant under such other defined contribution Master or
Prototype Plan (other than a defined contribution Paired Plan)
and welfare benefit funds maintained by the Employer are less
than the Maximum Permissible Amount and the Employer Contribution
that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation, the
amount contributed or allocated shall be reduced so that the
Annual Additions under all such plans and funds for the
Limitation Year shall equal the Maximum Permissible Amount.
7.2(c)(3) If the Annual Additions with respect to the
Participant under such other defined contribution Master and
Prototype Plan (other than a defined contribution Paired Plan)
and welfare benefit funds in the aggregate are equal to or
greater than the Maximum Permissible Amount, no amount shall be
credited to the Participant's Account under this Plan for the
Limitation Year.
7.2(c)(4) If pursuant to section 7.2(f) or as a result of
the allocation of Forfeitures a Participant's Annual Additions
under this Plan and such other defined contribution Master or
Prototype Plan (other than a Paired Plan) and welfare benefit
funds would result in an Excess Amount for any Limitation Year,
(i) the Excess Amount shall be deemed to consist of the
Annual Additions last allocated and the Annual Additions
attributable to a welfare benefit fund or an individual medical
account shall be deemed to have been allocated prior to all other
Annual Additions, and
(ii) if an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an
allocation date of such other Master or Prototype Plan, then the
Excess Amount attributed to this Plan shall be the product of
(A) the total Excess Amount allocated as of such
date, times
(B) a fraction, the numerator of which shall be the
Annual Additions allocated to the Participant for the Limitation
Year as of such date under this Plan and the denominator of which
is the total Annual Additions allocated to the Participant for
the Limitation Year as of such date under this and all such other
defined contribution Master or Prototype Plans.
7.2(c)(5) Any Excess Amount attributed to this Plan will be
disposed of in the manner described in section 7.2(b).
7.2(d) Limitation If Other Defined Contribution Plan. If any
Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a
Master or Prototype Plan, the Annual Additions which may be
credited to the Participant's Account under this Plan for any
Limitation Year shall be limited
7.2(d)(1) Standard Option - as specified in section 7.2(c) as
though the other plan was a Master or Prototype Plan or
7.2(d)(2) Alternative - under the alternative method specified in
the Adoption Agreement for limiting the Annual Additions under
this Plan.
7.2(e) Limitation If Other Defined Benefit Plan. If the Employer
maintains, or at any time maintained, a qualified defined benefit
plan (other than a defined benefit Paired Plan) covering any
Participant in this Plan, the sum of the Participant's Defined
Benefit Fraction and Defined Contribution Fraction shall not
exceed 1.0 in any Limitation Year. The Annual Additions which may
be credited to any Participant's Account under this Plan for any
Limitation Year shall be limited as specified in the Adoption
Agreement. If the Employer maintains a defined benefit Paired
Plan, any adjustments to satisfy the requirements of Code section
415(e) shall be made only under such defined benefit Paired Plan.
7.2(f) Compensation for Determination of Maximum Permissible
Amount. Prior to determining a Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on the basis of a reasonable
estimation of the Participant's Compensation for the Limitation
Year, and, if applicable, a reasonable estimation of the amount
of elective deferrals (within the meaning of Code section
402(g)(3)) that the Participant may make for the Limitation Year,
uniformly determined for all similarly situated Participants. As
soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the
Limitation Year shall be determined on the basis of the
Participant's actual Compensation for the Limitation Year.
7.3 Individual Limitation on Elective Deferrals Under Code
section 402(g).
7.3(a) General. A Participant's Elective Deferrals under
this Plan and all other qualified plans, contracts and
arrangements maintained by the Employer or an Affiliate during
any taxable year of the Participant shall not exceed the dollar
limitation under Code section 402(g) in effect at the beginning
of such taxable year.
7.3(b) Elective Deferrals. For purposes of the dollar
limitation under Code section 402(g) and this section 7.3, the
term "Elective Deferrals" shall include all employer
contributions made on behalf of a Participant pursuant to an
election to defer under any qualified cash or deferred
arrangement as described in Code section 401(k), any simplified
employee pension cash or deferred arrangement as described in
Code section 402(h)(1)(B), any plan described under Code section
501(c)(18), and any salary reduction agreement for the purchase
of an annuity contract under Code section 403(b). However, the
term shall not include Elective Deferrals which are properly
distributed to the Participant from this Plan under section 7.2
or such other plans or arrangements to correct for excess annual
additions.
7.3(c) Excess Elective Deferrals. For purposes of this
section 7.3, the term "Excess Elective Deferrals" means for each
Participant the Elective Deferrals that are includable in gross
income under Code section 402(g) to the extent the Participant's
Elective Deferrals for a taxable year exceed the dollar
limitations under Code section 402(g) for such taxable year.
7.3(d) Distribution of Excess Elective Deferrals.
Notwithstanding any other provision of this Plan restricting the
timing of distributions, Excess Elective Deferrals, plus any
income and minus any loss allocable thereto, shall be distributed
no later than April 15 of any calendar year to Participants (1)
whose Excess Elective Deferrals for the preceding taxable year
were assigned to this Plan and (2) who claim (or are deemed to
have claimed) such allocable Excess Elective Deferrals for such
taxable year in accordance with the claims procedure set forth in
section 7.3(f).
7.3(e) Determination of Income or Loss. A corrective
distribution of Excess Elective Deferrals under this section 7.3
shall include the income or loss allocable to such Excess
Elective Deferrals for the Participant's taxable year in which
such excess occurred and, if so specified in the Adoption
Agreement, for the period between the end of such taxable year
and the date of distribution ("gap period"). The income or loss
for such taxable year and gap period, if applicable, shall be
determined in accordance with the regulations under Code section
402(g). In lieu of using the safe harbor method or the
alternative method in the regulations for allocating such income
or loss, the Plan Administrator may use any reasonable method for
computing such income or loss, provided that such method does not
violate Code section 401(a)(4), is used consistently for all
Participants and for all corrective distributions under the Plan
for the Plan Year, and is used by the Plan for allocating income
or loss to Participant's Accounts.
7.3(f) Claims Procedure.
7.3(f)(1) General. A Participant may assign to this Plan any
Excess Elective Deferral made during a taxable year by filing a
claim with the Plan Administrator on or before
(i)Standard Option - March 1 or
(ii)Alternative - the alternative date for filing such
claims specified in the Adoption Agreement,
Unless otherwise provided in administrative procedures
established by the Plan Administrator, such claim shall be in
writing, shall specify the dollar amount of the Participant's
Excess Elective Deferrals assigned to this Plan for such taxable
year, and shall be accompanied by the Participant's written
statement that such amounts, if not distributed to such
Participant, will exceed the limit imposed on the Participant by
Code section 402(g) for the taxable year in which the deferral
occurred.
7.3(f)(2) Deemed Claim. A Participant automatically shall be
deemed to have filed a claim under this section 7.3(f) to the
extent that such Excess Elective Deferrals occurred solely as a
result of Elective Deferrals under this Plan and any other plans
of the Employer and the Affiliates, unless the Employer specifies
in the Adoption Agreement that such Excess Elective Deferrals
shall be distributed from one or more of such other plans.
7.4 Limitations on Elective Deferrals for Highly Compensated
Employees under Code section 401(k).
7.4(a) Special Definitions. For purposes of this section
7.4, the terms defined in this section 7.4(a) shall have the
meanings shown opposite such terms.
7.4(a)(1) Actual Deferral Percentage - means for each Plan Year
for each Participant who is an Eligible Employee at any time
during such Plan Year the ratio (expressed as a percentage and
determined in accordance with section 7.4(c)) of Employer
Contributions made on behalf of such Participant for such Plan
Year to such Participant's Compensation for such Plan Year. The
Actual Deferral Percentage of a Participant who is an Eligible
Employee, but does not make an Elective Deferral and does not
receive an allocation of a Qualified Nonelective Contribution or
a Qualified Matching Contribution, shall be zero.
7.4(a)(2) ADP (or Average Actual Deferral Percentage) -
means for each Plan Year separately for the group of Participants
who are Highly Compensated Employees during such Plan Year and
for the group of Participants who are Nonhighly Compensated
Employees during such Plan Year, the average (expressed as a
percentage) of the Actual Deferral Percentages of the
Participants in each such group who are Eligible Employees at any
time during such Plan Year.
7.4(a)(3) Employer Contributions - means for purposes of
determining a Participant's Actual Deferral Percentage for each
Plan Year, the sum of (i) the Elective Deferrals made pursuant to
the Participant's deferral election, including Excess Elective
Deferrals (as defined in section 7.3(c)) of Highly Compensated
Employees, but excluding Excess Elective Deferrals of Nonhighly
Compensated Employees that arise solely from Elective Deferrals
made under this Plan or any other plans of the Employer and the
Affiliates, and excluding Elective Deferrals that are taken into
account in the ADP test described in section 7.5(b) (provided the
ADP test is satisfied both with and without exclusion of such
Elective Deferrals), and (ii) at the election of the Employer,
Qualified Nonelective Contributions and Qualified Matching
Contributions.
7.4(a)(4) Excess Contributions - means for each Plan Year for
each Highly Compensated Employee the excess of the aggregate
amount of Employer Contributions actually taken into account in
computing the Average Deferral Percentage of such Highly
Compensated Employee for such Plan Year over the maximum amount
of such contributions permitted for such Plan Year under the ADP
limit as set forth in section 7.4(b) (determined by reducing
Elective Deferrals, Qualified Nonelective Contributions and
Qualified Matching Contributions made on behalf of Highly
Compensated Employees in order of their Actual Deferral
Percentages, beginning with the highest of such percentages).
7.4(a)(5) Highly Compensated Employee - means any Employee who is
either a "highly compensated active employee" or a "highly
compensated former employee" as described below.
(i) A "highly compensated active employee" means any Employee
who performs services for the Employer or any Affiliate during
the "determination year" and who, during the "look-back year":
(A) received compensation from the Employer or any Affiliate in
excess of $75,000 (as adjusted pursuant to Code section 415(d));
(B) received compensation from the Employer or any Affiliate in
excess of $50,000 (as adjusted pursuant to Code section 415(d))
and was a member of the "top-paid group" for such year; or (C)
was an officer of the Employer or any Affiliate and received
compensation during such year that is greater than 50% of the
dollar limitation in effect under Code section 415(b)(1)(A). The
term "highly compensated employee" shall also include: (I) an
Employee who is both described in the preceding sentence if the
term "determination year" is substituted for the term "look-back
year" and is one of the 100 Employees who received the most
compensation from the Employer or any Affiliate during the
determination year; and (II) an Employee who is a 5% owner at any
time during the look-back year or determination year. If no
officer has satisfied the compensation requirement of clause (C)
above during either a determination year or look-back year, the
highest paid officer for each such year shall be treated as a
Highly Compensated Employee.
(ii) A "highly compensated former employee" means any
Employee who separated (or was deemed to have separated) from
service prior to the determination year, performs no services for
the Employer or any Affiliate 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 55th birthday.
(iii) For purposes of this definition, the "determination
year" shall mean the Plan Year and the "look-back year" shall
mean the 12-month period immediately preceding the determination
year.
(iv) If an Employee is, during a determination year or look-
back year, a Family Member of either a 5% owner who is an active
or former Employee or a Highly Compensated Employee who is one of
the 10 most Highly Compensated Employees ranked on the basis of
compensation paid by the Employer during such year ("top-ten
Highly Compensated Employee"), then the Family Member and the 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 the 5% owner
or top-ten Highly Compensated Employee.
(v) The determination of who is a Highly Compensated
Employee, including the determination of the number and identity
of Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the compensation that
is considered, shall be made in accordance with Code section
414(q) including any available operational transition rules and
any elections provided in the regulations under Code section
414(q) and specified in the Adoption Agreement.
7.4(b) ADP Limit. The ADP for Highly Compensated Employees for
any Plan Year shall not exceed
7.4(b)(1) the ADP for Nonhighly Compensated Employees for
such Plan Year multiplied by 1.25, or
7.4(b)(2) the ADP for Nonhighly Compensated Employees for
such Plan Year multiplied by 2, provided that the ADP for Highly
Compensated Employees does not exceed the ADP for Nonhighly
Compensated Employees by more than 2 percentage points.
7.4(c) Special Rules.
7.4(c)(1) Other Plans. The Actual Deferral Percentage for
any Participant who is a Highly Compensated Employee for the Plan
Year and who is eligible to participate in more than one cash or
deferred arrangement maintained by the Employer or an Affiliate
shall be determined by treating all such arrangements as a single
arrangement. If a Highly Compensated Employee participates in two
or more cash or deferred arrangements that have different plan
years, all such arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, plans which are mandatorily
disaggregated under regulations under Code section 401(k) shall
be treated as separate.
7.4(c)(2) Aggregation. In the event that this Plan satisfies
the requirements of Code section 410(b) only if aggregated with
one or more other plans, or if one or more other plans satisfy
the requirements of such Code section only if aggregated with
this Plan, then this section 7.4 shall be applied by determining
the Actual Deferral Percentages and ADP as if all such plans were
a single plan. For Plan Years beginning on and after the Final
Compliance Date, such plans may be aggregated only if they have
the same plan years and are not mandatorily disaggregated under
regulations under Code section 401(k).
7.4(c)(3) Family Members. For purposes of determining the
Actual Deferral Percentage of a Participant who is a 5% owner or
one of the 10 most highly paid Highly Compensated Employees and
who is an Eligible Employee at any time during the Plan Year, the
Employer Contributions and Compensation of such Participant shall
include the Employer Contributions and Compensation of his or her
Family Members, and such Family Members shall be disregarded as
separate Participants in determining the ADP both for Nonhighly
Compensated Employees and for Highly Compensated Employees.
7.4(c)(4) Timing. For purposes of determining the Actual
Deferral Percentages for any Plan Year, Elective Deferrals,
Qualified Nonelective Contributions and Qualified Matching
Contributions shall be considered made for such Plan Year only if
such contributions are allocated as of a date within such Plan
Year and are actually paid to the Fund by the last day of the 12
month period immediately following such Plan Year.
7.4(c)(5) Records. The Plan Administrator shall maintain
records which are sufficient to demonstrate that the Plan
complied with the ADP limits, including the extent to which
Qualified Nonelective Contributions and Qualified Matching
Contributions are taken into account to satisfy such ADP limits.
7.4(c)(6) Other Requirements. The determination and
treatment of the Elective Deferrals and Actual Deferral
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
7.4(d) Distribution of Excess Contributions.
7.4(d)(1) General. Notwithstanding any other provision of
this Plan restricting the timing of distributions, Excess
Contributions for any Plan Year, plus any income and minus any
loss allocable thereto, shall be distributed no later than the
last day of the immediately following Plan Year to Participants
on whose behalf such Excess Contributions were made. If such
Excess Contributions are distributed more than 2 1/2 months after
the last day of the Plan Year in which such excess occurred, a
10% excise tax shall be imposed under Code section 4979 on the
Employer with respect to such excess. Such distributions shall be
made to such Participants on the basis of the respective portions
of the Excess Contributions attributable to each such
Participant. Excess Contributions shall be allocated to
Participants who are subject to the Family Member aggregation
rules under Code section 414(q)(6) in the manner prescribed by
the regulations under Code section 401(k).
7.4(d)(2) Determination of Income or Loss. A corrective
distribution of Excess Contributions under this section 7.4 shall
include the income or loss allocable to such Excess Contributions
for the Plan Year in which such excess occurred and, if so
specified in the Adoption Agreement, for the period between the
end of such Plan Year and the date of distribution ("gap
period"). The income or loss for such Plan Year and gap period,
if applicable, shall be determined in accordance with the
regulations under Code section 401(k). In lieu of using the safe
harbor method or the alternative method in the regulations for
allocating such income or loss, the Plan Administrator may use
any reasonable method for computing such income or loss, provided
that such method does not violate Code section 401(a)(4), is used
consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year, and is used by
the Plan for allocating income or loss to Participant's Accounts.
7.4(d)(3) Order for Determining Excess Contributions. Excess
Contributions shall be determined after first determining Excess
Elective Deferrals under section 7.3. The Excess Contributions
which would otherwise be distributed to the Participant shall be
reduced, in accordance with regulations, by the Excess Elective
Deferrals distributed to the Participant under section 7.3.
7.4(d)(4) Accounting for Excess Contributions. Excess
Contributions shall be distributed proportionately from the
Participant's Elective Deferral Account and Qualified Matching
Account in the same ratio that such Participant's Elective
Deferrals and Qualified Matching Contributions for the Plan Year
in which such Excess Contributions were made bears to the sum of
the Participant's Elective Deferrals and Qualified Matching
Contributions for such Plan Year. Excess Contributions shall be
distributed from the Participant's Qualified Nonelective Account
only to the extent that such Excess Contributions exceed the
balance in the Participant's Elective Deferral Account and
Qualified Matching Account. Notwithstanding the foregoing, Excess
Contributions may be distributed from the applicable subaccounts
in accordance with procedures established by the Plan
Administrator provided such procedures do not result in
discrimination in favor of Highly Compensated Employees which
would be prohibited under Code section 401(a)(4).
7.4(e) Recharacterization. If the Employer specifies in the
Adoption Agreement that Excess Contributions may be
recharacterized, a Participant may elect to treat Excess
Contributions as an amount distributed to the Participant and
then contributed as an Employee Contribution to the Plan. Any
such Excess Contribution which is so recharacterized as an
Employee Contribution shall remain nonforfeitable and shall
thereafter be subject to the same distribution restrictions
applicable to Elective Deferrals under section 9.2(b). Excess
Contributions shall not be recharacterized by a Participant to
the extent that such amounts, in combination with other Employee
Contributions, would exceed any limits on Employee Contributions
set forth in the Plan or in the Adoption Agreement.
Any such recharacterization must occur no later than 2 1/2 months
after the end of the Plan Year in which such Excess Contribution
occurred and shall be deemed to occur no earlier than the date on
which the last Highly Compensated Employee is informed in writing
of the amount recharacterized and the consequences of such
recharacterization. Any Excess Contributions which are so
recharacterized shall be taxable to the Participant for the
taxable year in which the Participant would have received such
amount in cash but for the deferral election.
7.5 Limitations on Employee Contributions and Matching
Contributions under Code section 401(m).
7.5(a) Special Definitions. For purposes of this section 7.5, the
terms defined in this section 7.5(a) shall have the meanings
shown opposite such terms.
7.5(a)(1) Aggregate Limit - means the sum of
(i) 125% of the greater (or lesser, if it would result
in a larger Aggregate Limit) of
(A) the ADP for Nonhighly Compensated Employees under
the plan subject to Code section 401(k) for the plan year or
(B) the ACP for Nonhighly Compensated Employees under
the plan subject to Code section 401(m) for the plan year
beginning with or within the plan year of the plan which is
subject to Code section 401(k) and
(ii)the lesser of
(A) 200% of such ADP or ACP or
(B) two plus the lesser (or greater, if it would result in
a larger Aggregate Limit) of such ADP or ACP
7.5(a)(2) ACP (or Average Contribution Percentage) - means for
each Plan Year separately for the group of Participants who are
Highly Compensated Employees during such Plan Year and for the
group of Participants who are Nonhighly Compensated Employees
during such Plan Year, the average (expressed as a percentage) of
the Contribution Percentages of the Participants in each such
group who are Eligible Employees at any time during such Plan
Year.
7.5(a)(3) Contribution Percentage - means for each Plan Year for
each Participant who is an Eligible Employee at any time during
such Plan Year, the ratio (expressed as a percentage and
determined in accordance with section 7.5(c)) of such
Participant's Contribution Percentage Amount for such Plan Year
to such Participant's Compensation for such Plan Year. The
Contribution Percentage of a Participant who is eligible to, but
does not, make Employee Contributions or Elective Deferrals and
who, as a result of such failure to make such contributions, does
not receive an allocation of a Matching Contribution or Qualified
Matching Contribution shall be zero.
7.5(a)(4) Contribution Percentage Amount - means for each Plan
Year for each Participant who is an Eligible Employee at any time
during such Plan Year the sum of
(i) the Employee Contributions, Matching Contributions
and Qualified Matching Contributions (to the extent not taken
into account for purposes of the ADP test described in section
7.4) made on behalf of such Participant for such Plan Year, other
than Matching Contributions which are forfeited either to correct
Excess Aggregate Contributions or because the contributions to
which they relate are Excess Elective Deferrals, Excess
Contributions or Excess Aggregate Contributions,
(ii) the Forfeitures allocated to such Participant's
Account for such Plan Year which are attributable to Matching
Contributions and Excess Aggregate Contributions,
(iii) at the election of the Employer, the Qualified
Nonelective Contributions made on behalf of such Participant for
such Plan Year (to the extent not taken into account for purposes
of the ADP test described in section 7.4), and
(iv) at the election of the Employer, Elective Deferrals
(provided the ADP limit described in section 7.4 is met both
including and excluding the Elective Deferrals that are used to
meet the ACP limit).
7.5(a)(5) Employee Contribution - means for purposes of
determining a Participant's Contribution Percentage Amount any
contributions made by the Participant which are included in gross
income for the taxable year in which made and which are
maintained in a separate account to which earnings and losses are
allocated.
7.5(a)(6) Excess Aggregate Contribution - means for each Plan
Year for each Highly Compensated Employee the excess of the
aggregate Contribution Percentage Amounts actually taken into
account in computing the ACP of such Highly Compensated Employee
for such Plan Year over the maximum Contribution Percentage
Amounts permitted for such Plan Year under the ACP limit as set
forth in section 7.5(b) (determined by reducing contributions and
Forfeitures on behalf of Highly Compensated Employees in order of
their Contribution Percentages, beginning with the highest of
such percentages).
7.5(a)(7) Matching Contribution - means for purposes of
determining a Participant's Contribution Percentage Amount any
Employer contribution made to this Plan or any other defined
contribution plan on account of an Employee Contribution or
Elective Deferral made by or on behalf of the Participant under a
plan maintained by the Employer.
7.5(b) ACP Limit. The ACP for Participants who are Highly
Compensated Employees for any Plan Year shall not exceed
7.5(b)(1) the ACP for Participants who are Nonhighly Compensated
Employees for such Plan Year multiplied by 1.25, or
7.5(b)(2) the ACP for Participants who are Nonhighly Compensated
Employees for such Plan Year multiplied by 2, provided that the
ACP for Participants who are Highly Compensated Employees does
not exceed the ACP for Participants who are Nonhighly Compensated
Employees by more than 2 percentage points.
7.5(c) Special Rules.
7.5(c)(1) Multiple Use. For Plan Years beginning after the Final
Compliance Date, if
(i) one or more Highly Compensated Employees
participates both in a plan with a qualified cash or deferred
arrangement which is subject to the ADP limitations under Code
section 401(k) as described in section 7.4 and in a plan which is
subject to the ACP limitations under Code section 401(m) as
described in this section 7.5,
(ii) the sum of the ADP of the eligible Highly
Compensated Employees in the plan subject to Code section 401(k)
and the ACP of the eligible Highly Compensated Employees in the
plan subject to Code section 401(m) exceeds the Aggregate Limit,
and
(iii) both the ADP and the ACP of the eligible Highly
Compensated Employees in such plans exceed 125% of the ADP or ACP
respectively of the eligible Nonhighly Compensated Employees in
such plans, then the Contribution Percentages of the Highly
Compensated Employees who participate in both such plans shall be
reduced (beginning with the highest of such percentages) so that
the Aggregate Limit for such plans is not exceeded. Any such
reduction shall be treated as an Excess Aggregate Contribution.
The determination of the limitations under this special rule
shall be made after any corrections required to meet the ADP
limits and the ACP limits and in accordance with the regulations
under Code section 401(m).
7.5(c)(2) Other Plans. The Contribution Percentage for any
Participant who is a Highly Compensated Employee for the Plan
Year and who is eligible to participate in more than one plan
maintained by the Employer or an Affiliate to which "employee
contributions" (within the meaning of Code section 401(m)) or
"matching contributions" (as described in Code section 401(m)(4))
are made shall be determined by treating all such plans as one
plan. If a Highly Compensated Employee participates in two or
more such plans that have different plan years, all such plans
ending with or within the same calendar year shall be treated as
a single plan. Notwithstanding the foregoing, plans which are
mandatorily disaggregated under regulations under Code section
401 (m) shall be treated as separate.
7.5(c)(3) Aggregation. In the event that this Plan satisfies the
requirements of Code section 410(b) only if aggregated with one
or more other plans, or it one or more other plans satisfy the
requirements of such Code sections only if aggregated with this
Plan, then this section 7.5 shall be applied by determining the
Contribution Percentages and ACP as if all such plans were a
single plan. For Plan Years beginning on and after the Final
Compliance Date, such plans may be aggregated only if they have
the same plan years and they are not mandatorily disaggregated
under regulations under Code section 401(m).
7.5(c)(4) Family Members. For purposes of determining the
Contribution Percentage of a Participant who is a 5% owner or one
of the 10 most highly paid Highly Compensated Employees, the
Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage Amounts and
Compensation of his or her Family Members, and such Family
Members shall be disregarded as separate Participants in
determining the ACP both for Participants who are Nonhighly
Compensated Employees and for Participants who are Highly
Compensated Employees.
7.5(c)(5) Timing. For purposes of determining the ACP for any
Plan Year, Employee Contributions shall be considered made in the
Plan Year in which they are actually contributed to the Fund and
Matching Contributions (and, if applicable, Qualified Matching
Contributions and Qualified Nonelective Contributions) shall be
considered made for such Plan Year only if such contributions are
allocated as of a date within such Plan Year and are actually
paid to the Fund by the last day of the 12-month period
immediately following such Plan Year.
7.5(c)(6) Records. The Plan Administrator shall maintain records
which are sufficient to demonstrate that the Plan complied with
the ACP limits, including the extent to which Elective Deferrals,
Qualified Nonelective Contributions and Qualified Matching
Contributions are taken into account to satisfy such ACP limits.
7.5(c)(7) Other Requirements. The determination and treatment of
the Contribution Percentage of any Participant shall satisfy such
other requirements as may be prescribed by the Secretary of the
Treasury.
7.5(d) Distribution of Excess Aggregate Contributions.
7.5(d)(1) General. Notwithstanding any other provision of this
Plan restricting the timing of distributions, Excess Aggregate
Contributions for any Plan Year, plus any income and minus any
loss allocable thereto, shall be forfeited (if otherwise
forfeitable under the Plan) or distributed (if not forfeitable)
from the Accounts of Participants on whose behalf such Excess
Aggregate Contributions were made no later than the last day of
the immediately following Plan Year. If such Excess Aggregate
Contributions are distributed more than 2 1/2 months after the
last day of the Plan Year in which such excess occurred, a 10%
excise tax shall be imposed under Code section 4979 on the
Employer with respect to such excess. Excess Aggregate
Contributions shall be allocated to Participants who are subject
to the Family Member aggregation rules under Code section
414(q)(6) in the manner prescribed by the regulations under Code
section 401(m).
7.5(d)(2) Determination of Income or Loss. A corrective
distribution of Excess Aggregate Contributions under this section
7.5 shall include the income or loss allocable to such Excess
Aggregate Contributions for the Plan Year in which such excess
occurred and, if so specified in the Adoption Agreement, for the
period between the end of such Plan Year and the date of
distribution ("gap period"). The income or loss for such Plan
Year and gap period, if applicable, shall be determined in
accordance with the regulations under Code section 401(m). In
lieu of using the safe harbor method or the alternative method in
the regulations for allocating such income or loss, the Plan
Administrator may use any reasonable method for computing such
income or loss, provided that such method does not violate Code
section 401(a)(4), is used consistently for all Participants and
for all corrective distributions under the Plan for the Plan
Year, and is used by the Plan for allocating income or loss to
Participant's Accounts.
7.5(d)(3) Order for Determining Excess Aggregate Contributions.
Excess Aggregate Contributions shall be determined after first
determining Excess Elective Deferrals under section 7.3 and then
determining Excess Contributions under section 7.4.
7.5(d)(4) Accounting for Excess Aggregate Contributions. Excess
Aggregate Contributions shall be forfeited (if otherwise
forfeitable) or distributed (if not forfeitable) to the Highly
Compensated Employee from the Participant's Employee Account,
Matching Account, Qualified Matching Account, Qualified
Nonelective Account and Elective Deferral Account in the same
ratio that the contributions made on the Participant's behalf to
such account (to the extent such contributions are used in the
ACP test) for the Plan Year in which such Excess Aggregate
Contributions were made bears to the total of all such
contributions. Notwithstanding the foregoing, Excess Aggregate
Contributions may be distributed from the applicable subaccounts
in accordance with procedures established by the Plan
Administrator provided such procedures do not result in
discrimination in favor of Highly Compensated Employees which
would be prohibited under Code section 401(a)(4).
7.5(d)(5) Allocation of Forfeitures. Amounts forfeited by Highly
Compensated Employees under this section 7.5 shall be allocated
or applied in accordance with section 6.3(c)(2); provided, no
Forfeitures arising under this section 7.5 shall be allocated to
the Account of any Highly Compensated Employee.
SECTION 8. VESTING AND FORFEITURES
8.1 Determination of Nonforfeitable Percentage.
8.1 (a) Fully Vested Accounts. Each Rollover Account, Employee
Account, Elective Deferral Account, Qualified Matching Account
and Qualified Nonelective Account shall be completely
nonforfeitable at all times.
8.1(b) Death, Disability and Retirement. The Employer Account and
Matching Account of each Participant who reaches Early Retirement
Age or Normal Retirement Age while an Employee shall become
completely nonforfeitable on such date. The Employer Account and
Matching Account of each Participant who dies while an Employee
or who becomes Disabled while an Employee
8.1(b)(1) Standard Option - shall become completely
nonforfeitable on such date.
8.1(b)(2) Alternative - if so specified in the Adoption
Agreement, shall be determined in accordance with the vesting
schedule under section 8.1(c).
8.1(c) Other Separation From Service. Subject to section l2.4,
the nonforfeitable percentage of the Employer Account and
Matching Account of a Participant other than a Participant
described in section 8.1(b) shall be based on the Participant's
Years of Service and on the following vesting schedule:
8.1(c)(1) Standard Option - the full and immediate vesting
schedule.
8.1(c)(2) Alternative - the alternative vesting schedule
specified in the Adoption Agreement;
provided, however, if the Participation Requirement (or the
requirement to receive an allocation of Employer contributions
under a 401(k) Plan) consists of a minimum period of service
which exceeds one year, the full and immediate vesting schedule
shall automatically apply notwithstanding any election to the
contrary in the Adoption Agreement.
8.1(d) Employee Contribution Withdrawals. No Forfeiture shall
occur solely as a result of a Participant's withdrawal of
Employee Contributions.
8.2 Forfeiture and Special Reemployment Rules.
8.2(a) Buy Back Rule (Standard Option).
8.2(a)(1) Forfeiture. The forfeitable portion, if any, of the
Employer Account and Matching Account of a Participant who
separates from service shall become a Forfeiture on the earlier
of
(i) the date as of which the Participant receives (or is
deemed to receive under section 8.2(c)) a distribution of the
Participant's entire nonforfeitable Account balance derived from
Employer Contributions, or
(ii) the date he or she has 5 consecutive Breaks in
Service (6 consecutive Breaks in Service if the Alternative
Maternity/Paternity Rule applies).
If a Participant elects to have distributed less than the entire
nonforfeitable balance of the Participant's Employer Account and
Matching Account, the part of such accounts that shall be treated
as a Forfeiture is the total forfeitable portion of such Accounts
multiplied by a fraction, the numerator of which is the amount of
the distribution from the Participant's Employer Account or
Matching Account and the denominator of which shall be the total
nonforfeitable balance of the Participant's Employer Account or
Matching Account at the time of the distribution.
Any such Forfeiture shall be allocated or applied in accordance
with section 6 on the Valuation Date specified in section 8.2(e).
8.2(a)(2) Reemployment. If a Participant receives a distribution
and resumes employment covered under this Plan before the
Participant has 5 consecutive Breaks in Service (6 consecutive
Breaks in Service if the Alternative Maternity/Paternity Rule
applies), the Employer shall restore to the Participant's
Employer Account and Matching Account an amount equal to the
dollar amount of the Forfeitures from such accounts if the
Participant repays to the Plan an amount equal to the dollar
amount of the distributions from the Participant's Employer
Account and Matching Account in accordance with this section
8.2(a). Such repayment must be made before the earlier of (a) 5
years after the first date on which the Participant is
subsequently reemployed by the Employer or a Participating
Affiliate or (b) the date the Participant incurs 5 consecutive
Breaks in Service (6 consecutive Breaks in Service if the
Alternative Maternity/ Paternity Rule applies) following the date
of the distribution.
If a Participant whose nonforfeitable Account balance is zero is
deemed to receive a distribution under section 8.2(c) and he or
she resumes employment covered under this Plan before he or she
has 5 consecutive Breaks in Service (6 consecutive Breaks in
Service if the Alternative Maternity/Paternity Rule applies), the
forfeitable portion of the Participant's Employer Account and
Matching Account shall automatically be restored by the Employer
upon the Participant's reemployment.
Any amount restored by the Employer under this section 8.2(a)
shall be restored upon repayment from the sources specified in
section 8.2(d). Such restored or repaid amount shall not be
treated as an Annual Addition under section 7.2 and shall be
credited to the Participant's Employer Account and Matching
Account in the same proportion as the distribution was made from
such accounts.
8.2(b) Automatic Restoration (Alternative). This section 8.2(b)
shall apply if the Employer specifies the use of the "Alternative
to the Buy Back Rule" in the Adoption Agreement.
8.2(b)(1) Forfeiture. The forfeitable portion, if any, of the
Employer Account and Matching Account of a Participant who
separates from service shall become a Forfeiture on the earlier
of
(i) the date as of which payment of the nonforfeitable
percentage of the Participant's Account derived from Employer
contributions begins or is deemed to begin under section 8.2(c)
or
(ii) the date he or she has 5 consecutive Breaks in Service
(6 consecutive Breaks in Service if the Alternative
Maternity/Paternity Rule applies) and such Forfeiture shall be
allocated or applied in accordance with section 6 on the
allocation date specified in section 8.2(e) unless he or she is
reemployed on or before such allocation date.
8.2(b)(2) Reemployment. If a Participant is reemployed before the
Participant incurs 5 consecutive Breaks in Service (6 consecutive
Breaks in Service if the Alternative Maternity/ Paternity Rule
applies) but after the date of a Forfeiture under section
8.2(b)(1), the Employer shall restore to such Participant as of
the last day of the Plan Year in which he or she is reemployed an
amount equal to the dollar amount of such Forfeiture.
Any amount restored by the Employer under this section 8.2(b)
shall be restored from the sources specified in section 8.2(d).
Such restored amount shall not be treated as an Annual Addition
under section 7.2 for such Plan Year. The restored amount,
together with any remaining balance of the nonforfeitable portion
of the Employer Account and Matching Account attributable to the
Participant's service prior to reemployment, shall be maintained
thereafter as separate special subaccounts of the Participant's
Employer Account and Matching Account (until such time as it
becomes completely nonforfeitable or again becomes a Forfeiture),
and the dollar amount of the Participant's nonforfeitable
percentage in each such special subaccount thereafter shall be
determined in accordance with Formula A unless Formula B is
specified in the Adoption Agreement:
(i)Formula A (Standard Option): X = P (AB + D) - D
(ii)Formula B (Alternative): X = P (AB + (R x D)) - (R x D)
For purposes of these formulas:
X = The current dollar amount, if any, of the nonforfeitable
percentage in the Participant's special subaccount;
P = The Participant's current nonforfeitable percentage as
determined under section 8.1;
AB = Such dollar amount, if any, as evidenced by the last balance
posted to the Participant's special subaccount;
D = The dollar amount previously paid to the Participant under
section 9 from the Participant's original Employer Account or
Matching Account, as applicable; and
R = The ratio of AB to the dollar amount, if any, posted to the
Participant's Employer Account or Matching Account, as
applicable, immediately after the distribution.
8.2(c) Deemed Distribution. If the nonforfeitable portion of a
Participant's Account balance derived from Employer and Employee
contributions is zero, the Participant shall be deemed to have
received a distribution of the nonforfeitable portion of the
Participant's Account upon the Participant's separation from
service.
A Participant's nonforfeitable Account balance derived from
Employee contributions shall not include accumulated deductible
employee contributions within the meaning of Code section
72(o)(5)(B) for Plan Years beginning prior to January 1, 1989.
8.2(d) Restoration Sources. Any amount restored under this
section 8.2 shall be restored from the following sources in the
following order: first, from Forfeitures occurring in the Plan
Year in which such amounts are restored, if any; second, from
Employer Contributions for such Plan Year, if any; third from
Fund Earnings for such Plan Year; and finally, from additional
Employer Contributions. However, at the election of the Employer,
such amounts shall be restored entirely from additional Employer
Contributions.
8.2(e) Date Forfeitures Applied or Allocated. Any amounts which
become a Forfeiture under this section 8.2 shall be allocated or
applied as of the allocation date specified in section 6 which
coincides with or immediately follows the date such Forfeiture
occurs, except that the Employer may specify in the Adoption
Agreement that Forfeitures which are applied to reduce Employer
Contributions, Matching Contributions, Qualified Matching
Contributions or Qualified Nonelective Contributions shall be so
applied as of the allocation date for such contributions which
immediately follows the last day of the Plan Year in which such
Forfeiture occurs.
8.2(f) In-service Distributions. The provisions of this section
8.2(f) shall apply if the Plan permits in-service distribution
under section 9.2.
If a distribution is made at a time when a Participant has a
nonforfeitable right to less than 100% of his or her Employer
Account or Matching Account and the Participant may increase the
nonforfeitable percentage in such Account:
8.2(f)(1) A separate special subaccount of the Participant's
Employer Account and Matching Account shall be established to
record the Participant's interest in such accounts as of the time
of the distribution; and
8.2(f)(2) At any relevant time the Participant's nonforfeitable
portion of each such special subaccount shall be determined in
accordance with the formula specified in section 8.2(b).
SECTION 9. ACCOUNT DISTRIBUTION - GENERAL RULES
9.1 After Separation From Service. Subject to the rules in
this section 9, section l0, Benefit Payment Forms - Joint and
Survivor Annuity Requirements, and section 11, Minimum
Distribution Requirements, the nonforfeitable portion of each
Participant's Account (as determined in accordance with section
8) shall not be payable to such Participant before he or she
separates from service with the Employer and all Affiliates.
9.1(a) Timing. A Participant who has separated from service with
the Employer and all Affiliates
9.1 (a)(1) Standard Option - may request a distribution of the
nonforfeitable portion of his or her Account as soon as
practicable after such separation from service.
9.1 (a)(2) Alternative - if so specified in the Adoption
Agreement, may not request a distribution of the nonforfeitable
portion of his or her Account until Normal Retirement Age, Early
Retirement Age or Disability, whichever is earlier.
9.1(b) Reemployment. Except as required in section 11, no payment
shall be made under this section 9.1 it the Participant who
separates from service is reemployed as an Employee before
payment is made. If a Participant is reemployed as an Employee
after payment of the nonforfeitable portion of the Participant's
Account has begun but before the entire balance attributable to
such nonforfeitable portion has been paid (or applied to purchase
an annuity), payments to the Participant from such balance shall
be terminated on the date he or she is so reemployed and no
further payments shall be made to the Participant until he or she
is subsequently entitled to such payments in accordance with the
terms of this Plan.
9.1(c) $3500 Cashout. The nonforfeitable portion of a
Participant's Account shall be distributed in a single sum to
such Participant (or to the Participant's Beneficiary in the
event of the Participant's death) as soon as administratively
practicable following the Participant's separation from service
with the Employer and all Affiliates for any reason if the
nonforfeitable portion of such Account is (and at the time of any
prior distribution was) $3500 or less. Any such distributions
made on or after January 1, 1993 shall be made in accordance with
any applicable rules regarding the period for providing notices
under Code section 402(f) and for making direct rollover
elections under Code section 401(a)(31).
9.1(d) Claim. Except as provided in this section 9 and section
11, no payment shall be made until a written claim for such
payment is filed with the Plan Administrator on an Election Form.
The Plan Administrator shall process each such claim in
accordance with the claims procedure described in the summary
plan description for this Plan. If no such claim is submitted and
the Participant does not defer payment pursuant to section
9.1(e), payment may be made as soon as the benefit is not
immediately distributable (within the meaning of section 9.3) and
shall, in any event, begin no later than 60 days following the
end of the Plan Year in which
9.1 (d)(1) the Participant separates from service as an Employee,
9.1(d)(2) the Participant reaches age 65 or Normal Retirement
Age, if earlier, or
9.1(d)(3) occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan, whichever occurs
last.
9.1(e) Election to Defer Payment. If a Participant has separated
from service with the Employer and all Affiliates and the
nonforfeitable portion of the Participant's Account is (or at the
time of any prior distribution was) more than $3500, the
Participant may defer distribution of that nonforfeitable
portion, but in no event beyond
9.1(e)(1) Standard Option - the Participant's Required Beginning
Date (as defined in section 11).
9.1(e)(2) Alternative - if so specified in the Adoption
Agreement, the later of the Participant's Normal Retirement Age
or age 62.
The failure of a Participant and his or her Spouse, if
applicable, to consent to a distribution or make a written
request to defer payment while a benefit is immediately
distributable (within the meaning of section 9.3) shall be deemed
to be an election to defer commencement of payment of any benefit
under this section 9 until the benefit is no longer immediately
distributable or, if section 9.1(e)(1) applies, until the
Required Beginning Date.
Nothing in this section 9.1(e) shall prevent the Plan
Administrator from paying in the normal form a benefit which is
not immediately distributable without regard to whether the
Participant and his or her Spouse consent to such distribution,
unless the Participant has requested a deferral pursuant to
section 9.1(e)(2).
9.1(f) Early Retirement Age. If the Early Retirement Age includes
both an age and service requirement, any Participant who
separates from service before satisfying such age requirement,
but after the Participant has satisfied the service requirement,
may request a distribution of the nonforfeitable portion of his
or her Account upon satisfaction of such age requirement.
9.1(g) Death. In the event of the Participant's death, the
nonforfeitable portion of the Participant's Account shall be
payable to the Participant's Beneficiary as soon as
administratively practicable after the Participant's death.
9.2 Before Separation From Service. Subject to the rules in
this section 9, section 10, Joint and Survivor Annuity
Requirements, and section 11, Minimum Distribution Requirements,
the nonforfeitable portion of a Participant's Account may be paid
to the Participant before he or she separates from service with
the Employer and all Affiliates if so specified in the Adoption
Agreement or by the Board in accordance with section 9.2(b)(2) or
section 9.2(e).
9.2(a) Money Purchase Pension Plan or target Benefit Pension
Plan. If this Plan is adopted as a Money Purchase Pension Plan or
a Target Benefit Pension Plan,
9.2(a)(1) Standard Option - except as provided in section 9.2(d)
or (e), no distributions shall be made before a Participant
separates from service with the Employer and all Affiliates, or
9.2(a)(2) Alternative - if so specified in the Adoption
Agreement, a Participant may request a distribution of all or a
portion of the nonforfeitable portion of the Participant's
Account on or after he or she reaches Normal Retirement Age
without regard to whether he or she has separated from service.
9.2(b) 401(k) Plan.
9.2(b)(1) Distribution Restrictions. If this Plan is adopted as a
401(k) Plan, then, except as provided in this section 9.2(b), a
Participant's Elective Deferral Account, Qualified Nonelective
Account and Qualified Matching Account shall not be distributable
to the Participant or the Participant's Beneficiary earlier than
upon the Participant's separation from service with the Employer
and all Affiliates, death, or Disability.
9.2(b)(2) Termination of Plan or Disposition of Assets or
Subsidiary. Notwithstanding section 9.2(b)(1) and subject to the
Participant and spousal consent rules in section 9.3 and section
10, the Employer may, by action of its Board, make lump sum
distributions (within the meaning of Code section
401(k)(10)(B)(ii)) of a Participant's Account, including the
Participant's Elective Deferral Account, Qualified Nonelective
Account and Qualified Matching Account in accordance with Code
section 401(k) by reason of
(i) the termination of the Plan without the establishment of
another defined contribution plan (other than an employee stock
ownership plan as defined in Code section 4975(e) or Code section
409 or a simplified employee pension as defined in Code section
408(k));
(ii) the disposition by the Employer or a Participating
Affiliate to an unrelated entity of substantially all of the
assets (within the meaning of Code section 409(d)(2)) used by the
Employer or such Participating Affiliate in a trade or business
of the Employer or a Participating Affiliate, if the transferor
continues to maintain this Plan after such disposition, but such
distributions shall be made only with respect to a Participant
who continues employment with the entity acquiring such assets;
or
(iii) the disposition by the Employer or a Participating
Affiliate which is a corporation to an unrelated entity of
interest in a subsidiary (within the meaning of Code section
409(d)(3)), if the transferor continues to maintain this Plan
after such disposition, but such distributions shall be made only
with respect to a Participant who continues employment with such
former subsidiary.
9.2(b)(3) Hardship Distribution.
(i) General. If the Employer specifies in the Adoption
Agreement that hardship distributions shall be permitted, a
Participant may request a hardship distribution before he or she
separates from service from the Participant's Elective Deferral
Account (and, if applicable, from the nonforfeitable portion of
the other subaccounts of such Account specified in the Adoption
Agreement). The Plan Administrator shall grant such request if,
and to the extent that, the Plan Administrator determines that
such distribution is "necessary" to satisfy an "immediate and
heavy financial need" of the Participant as determined in
accordance with this section 9.2(b)(3). Any such request shall be
made in writing, shall set forth in detail the nature of such
hardship and the amount of the distribution needed as a result of
such hardship, and shall include adequate documentation of the
type of financial need and the amount of the need. If the Plan
Administrator grants such request, such application shall be
processed and such distribution shall be made in a single sum as
soon as administratively practicable.
(ii) Safe Harbor Test for Financial Need. An "immediate and
heavy financial need" shall mean one or more of the following, as
specified in the Adoption Agreement,
(A) expenses for medical care described in Code section
213(d) incurred by the Participant or the Participant's spouse or
dependents (as defined in Code section 152) and amounts necessary
for such individuals to obtain such care,
(B) the purchase of (but not the mortgage payments
for) a principal residence of the Participant,
(C) the payment of tuition and related educational fees
for the next 12 months of post-secondary education for
the Participant or the Participant's spouse, children or
dependents (as defined in Code section l52),
(D) the prevention of the eviction of the Participant from
the Participant's principal residence or the foreclosure on the
mortgage of the Participant's principal residence, or
(E) such other events as the Internal Revenue Service deems
to constitute an "immediate and heavy financial need" under Code
section 401(k).
(iii) Safe Harbor Test for Distribution Necessary to
Satisfy Need. A distribution shall be deemed to be "necessary" to
satisfy an immediate and heavy financial need only if all of the
following requirements are satisfied:
(A) the distribution is not in excess of the amount of
such need, including any amounts necessary to pay any federal,
state or local income taxes or penalties reasonably anticipated
to result from such withdrawal;
(B) the Participant has obtained all distributions
(other than hardship distributions) and all nontaxable loans
currently available under this Plan and all other plans
maintained by the Employer or an Affiliate;
(C) the Participant's Elective Deferrals and Employee
Contributions under this Plan and elective deferrals and employee
contributions under all other plans maintained by the Employer or
an Affiliate shall be suspended for the 12-month period following
the date of receipt of such hardship distribution; and
(D) the Participant's Elective Deferrals under this Plan
and elective deferrals under all other plans maintained by the
Employer or an Affiliate for the Participant's taxable year
immediately following the taxable year in which such hardship
distribution was made shall not exceed the applicable dollar
limitation under Code section 402(g) for such following taxable
year less the amount of the Participant's Elective Deferrals
under this Plan and elective deferrals under all such other plans
for the taxable year in which such hardship distribution was
made.
(iv) Account Limitations. For Plan Years beginning after
December 31, 1988, no hardship distribution shall be made under
this section 9.2(b)(3) to a Participant from
(A)the Participant's Qualified Nonelective Account,
(B)the Participant's Qualified Matching Account, or
(C)the Fund Earnings allocated to the Participant's
Elective Deferral Account
except to the extent of amounts credited to such Accounts as of
the end of the last Plan Year ending before July 1, 1989.
9.2(b)(4) Distributions on or after Age 59 1/2. If the Employer
specifies in the Adoption Agreement that distributions shall be
permitted on or after age 59 1/2, a Participant may request a
distribution of all or a portion of the nonforfeitable portion of
the subaccounts of the Participant's Account specified in the
Adoption Agreement at any time on or after he or she reaches age
59 1/2. Any such request shall be made in writing on an Election
Form and such distribution shall be made in a single sum as soon
as practicable in accordance with such reasonable
nondiscretionary procedures as the Plan Administrator deems
appropriate under the circumstances for the proper administration
of the Plan.
9.2(b)(5) Employer Account and Matching Account. If so specified
in the Adoption Agreement, a Participant may request in
accordance with reasonable and nondiscriminatory procedures a
distribution of all or a portion of the nonforfeitable portion of
the Participant's Employer Account and Matching Account after a
fixed number of years, the attainment of a stated age or upon the
occurrence of some prior event as specified in the Adoption
Agreement.
9.2(c) Profit Sharing Plan. It this Plan is adopted as a Profit
Sharing Plan, then, if so specified in the Adoption Agreement, a
Participant may request in accordance with reasonable and
nondiscriminatory procedures a distribution of all or a portion
of the nonforfeitable portion of the Participant's Account after
a fixed number of years, the attainment of a stated age or upon
the occurrence of some prior event as specified in the Adoption
Agreement.
9.2(d) Withdrawals from Employee Account.
9.2(d)(1) Standard Option. A Participant may request a withdrawal
of all or a portion of the Participant's Employee Account at any
time. Any such request shall be made in writing on an Election
Form and such withdrawal shall be made in a single sum as soon as
administratively practicable in accordance with such reasonable
nondiscretionary procedures as the Plan Administrator deems
appropriate under the circumstances for the proper administration
of this Plan.
9.2(d)(2) Alternative. The Employer may specify in the Adoption
Agreement that withdrawals from Employee Accounts shall not be
permitted before the nonforfeitable portion of a Participant's
Account otherwise becomes distributable under this section 9 or
under section 11 or may specify other rules and conditions under
which such withdrawals may be made.
Notwithstanding the foregoing, any portion of a Participant's
Employee Account which is attributable to recharacterized Excess
Contributions under section 7.4(e) may only be withdrawn in
accordance with the rules set forth in section 9.2(b) applicable
to an Elective Deferral Account.
9.2(e) Plan Termination. If this Plan is terminated under
section 14.6 and if the Board so specifies in its written action
effecting such termination, distribution of the nonforfeitable
portion of each Account shall be made as soon as administratively
practical after the Plan is terminated subject to the rules in
section 9.2(b) and to Code section 411.
9.3 Consent.
9.3(a) General. If the nonforfeitable portion of a
Participant's Account exceeds (or at the time of any prior
distribution exceeded) $3500, and such Account is "immediately
distributable", the Participant and the Participant's Spouse, if
any, (or where the Participant has died, the surviving Spouse, if
any) must consent to any distribution from such Account. The
consent of the Participant and the Participant's Spouse shall be
obtained in writing within the 90 day period ending on the
Annuity Starting Date (as defined in section 10.1). The Plan
Administrator shall notify the Participant and the Participant's
Spouse of the right to defer any distribution until the
Participant's Account is no longer "immediately distributable".
Such notification shall include a general description of the
material features, and an explanation of the relative values of,
the optional forms of benefit available under the Plan in a
manner that would satisfy the notice requirements of Code section
417(a)(3) and shall be provided no less than 30 days and no more
than 90 days prior to the Annuity Starting Date.
9.3(b) Exceptions. Notwithstanding the foregoing, only the
Participant need consent to the commencement of a distribution in
the form of a Qualified Joint and Survivor Annuity while the
Participant's Account is immediately distributable. Furthermore,
if payment in the form of a Qualified Joint and Survivor Annuity
is not required with respect to the Participant pursuant to
section 10, only the Participant need consent to the distribution
from an Account that is immediately distributable. The consent of
the Participant and the Participant's Spouse shall not be
required to the extent that a distribution is required to satisfy
Code section 401(a)(9), section 401(k), section 401(m), section
402(g) or section 415. In addition, upon termination of this Plan
if the Plan is not required to offer an annuity option (purchased
from a commercial provider), the nonforfeitable portion of the
Participant's Account shall, without the Participant's consent,
be distributed to the Participant unless the Employer or an
Affiliate maintains another defined contribution plan (other than
an employee stock ownership plan as defined in Code section
4975(e)(7)), in which event, the Account of a Participant who
does not consent to an immediate distribution shall be
transferred to such other plan.
9.3(c) Immediately Distributable. An Account is "immediately
distributable" if any part of the Account could be distributed to
the Participant (or the surviving Spouse) before the Participant
reaches (or would have reached if not deceased) the later of
Normal Retirement Age or age 62.
9.3(d) Accumulated Deductible Employee Contributions. For
purposes of determining the applicability of the consent
requirements under this section 9.3 to distributions made before
the first day of the first Plan Year beginning after December 31,
1988, the nonforfeitable portion of the Participant's Account
shall not include amounts attributable to accumulated deductible
employee contributions within the meaning of Code section
72(o)(5)(B).
9.4 Form of Distribution. All distributions (including
distributions before separation from service under section 9.2
but excluding corrective distributions under section 7) shall be
made in the form specified in section 10.
9.5 Minimum Distributions. The Plan shall satisfy the minimum
distribution requirements of Code section 401(a)(9) as set forth
in section 11.
9.6 Missing Person. In the event that an Account becomes
payable under this Plan pursuant to section 9.1(c), section
9.1(d) or section 9.1(e) and the Plan Administrator is unable to
locate the Participant or his or her Beneficiary after sending
written notice to the last known mailing address and to the
United States Social Security Administration, such Participant or
Beneficiary shall be presumed dead and such Account shall become
a Forfeiture on the third anniversary of the date such Account
first became payable under this Plan. However, the amount of such
Forfeiture shall be paid to such missing Participant or
Beneficiary in the event that such person files a claim for such
benefit while this Plan remains in effect and demonstrates to the
satisfaction of the Plan Administrator that such person in fact
is such missing Participant or Beneficiary.
9.7 No Estoppel of Plan. No person is entitled to any benefit
under this Plan except and to the extent expressly provided under
this Plan. The fact that payments have been made from this Plan
in connection with any claim for benefits under this Plan does
not (1) establish the validity of the claim, (2) provide any
right to have such benefits continue for any period of time, or
(3) prevent this Plan from recovering the benefits paid to the
extent that the Plan Administrator determines that there was no
right to payment of the benefits under this Plan. Thus, if a
benefit is paid under this Plan and it is thereafter determined
by the Plan Administrator that such benefit should not have been
paid (whether or not attributable to an error by the Participant,
the Plan Administrator, the Employer or any other person), then
the Plan Administrator may take such action as the Plan
Administrator deems necessary or appropriate to remedy such
situation, including without limitation by (1) deducting the
amount of any overpayment theretofore made to or on behalf of
such Participant from any succeeding payments to or on behalf of
such Participant under this Plan or from any amounts due or owing
to such Participant by the Employer or any Affiliate or under any
other plan, program or arrangement benefiting the employees or
former employees of the Employer or any Affiliate, or (2)
otherwise recovering such overpayment fro whoever has benefited
from it.
If the Plan Administrator determines that an underpayment of
benefits has been made, the Plan Administrator shall take such
action as it deems necessary or appropriate to remedy such
situation. However, in no event shall interest be paid on the
amount of any underpayment other than the investment gains (or
losses) credited to the Participant's Account pending payment.
9.8 Administration. All distributions shall be made in
accordance with such uniform and nondiscriminatory administrative
and operational procedures for Account distributions as the Plan
Administrator deems Appropriate under the circumstances for the
proper administration of the Plan.
SECTION 10. BENEFIT PAYMENT FORMS - JOINT AND SURVIVOR ANNUITY
REQUIREMENTS
10.1 Application and Special Definitions. This section 10
shall apply to a Participant who is vested at the time of death
or at the time of a distribution from the Participant's Account
in any portion of the Participant's Account, whether such portion
is attributable to Employer contributions, Employee
contributions, or both. For purposes of this section 10, the
terms defined in this section 10.1 shall have the meanings shown
opposite such terms.
10.1(a) Annuity Starting Date - means the first day of the
first period for which an amount is paid as an annuity or any
other form.
10.1(b) Earliest Retirement Age - means
10.1(b)(1) if distributions are permitted only upon
separation from service, the earliest age at which the
Participant could separate from service and receive a
distribution;
10.1(b)(2) if distributions are permitted before separation
from service, the earliest age at which such distribution could
be made; or
10.1(b)(3) if clauses (1) and (2) do not apply, the Early
Retirement Age.
10.1(c) Election Period - means
10.1(c)(i) for a Qualified Preretirement Survivor Annuity,
the period which begins on the earlier of (i) the first day of
the Plan Year in which the Participant attains age 35 or (ii) the
date such Participant separates from service and ends on the date
of the Participant's death and
10.1(c)(2) for a Qualified Joint and Survivor Annuity or a
Life Annuity, the 90 day period ending on the Annuity Starting
Date.
Notwithstanding the foregoing, a Participant who has not yet
reached age 35 (and who will not reach age 35 as of the end of
the current Plan Year) may make a special Qualified Election to
waive the Qualified Preretirement Survivor Annuity for the period
beginning on the date of such election and ending on the first
day of the Plan Year in which the Participant will reach age 35.
Such election shall not be valid unless the Participant receives
a written explanation of the Qualified Preretirement Survivor
Annuity in such terms as are comparable to the explanation
required under section 10.4. Qualified Preretirement Survivor
Annuity coverage shall be automatically reinstated as of the
first day of the Plan Year in which the Participant reaches age
35. Any new waiver on or after such date shall be subject to the
full requirements of this section 10.
10.1(d) Life Annuity - means a nontransferable immediate annuity
payable for the life of the Participant, which is the amount of
benefit which can be purchased with such Participant's Vested
Account Balance as of the Annuity Starting Date.
10.1(e) Qualified Election - means a Participant's selection to
waive the Qualified Joint and Survivor Annuity or the Qualified
Preretirement Survivor Annuity which election shall not be
effective unless (1) the election designates a specific
Beneficiary (including any class of Beneficiaries or any
contingent Beneficiaries) and, for an election to waive a
Qualified Joint and Survivor Annuity, the particular form of
benefit payment, which designations cannot be changed without the
Spouse's consent (or the Spouse expressly permits designations by
the Participant without any further spousal consent); (2) such
Participant's Spouse consents in writing to such election on an
Election Form; (3) such consent acknowledges the effect of such
election; and (4) such consent is witnessed by a notary public;
provided,
(i) if the Participant establishes to the satisfaction of a
Plan representative that such written consent may not be obtained
because there is no Spouse or the Spouse cannot be located or
because of such other circumstances as may be described in the
regulations under Code section 417, a Participant's election
shall be deemed to be a Qualified Election;
(ii) a Spouse's written consent under this section 10.1(e)
shall be irrevocable as to such Spouse and shall be binding only
as against such Spouse;
(iii) no consent shall be valid unless the Participant
received notice as provided in section 10.4;
(iv) a consent that permits designations by the Participant
without any further spousal consent must acknowledge that the
Spouse has the right to limit consent to a specific Beneficiary,
and, if applicable, a specific form of benefit payment, and that
the Spouse voluntarily elects to relinquish either or both of
such rights; and
(v) a Participant may revoke (without the consent of his or
her Spouse) an election to waive the Qualified Joint and Survivor
Annuity or the Qualified Preretirement Survivor Annuity on an
Election Form at any time prior to the date as of which the
Participant's Account becomes payable under section 9.
10.1(f) Qualified Joint and Survivor Annuity - means a
nontransferable immediate annuity payable for the life of the
Participant which is the amount of benefit which can be purchased
with the Participant's Vested Account Balance on the Annuity
Starting Date with a survivor annuity payable for the life of the
Participant's surviving Spouse which is
10.1(f)(1) Standard Option - 50% or
10.1(f)(2) Alternative - such greater percentage (not to exceed
100%) specified in the Adoption Agreement
of the amount of the annuity which is payable during the joint
lives of the Participant and such Spouse.
10.1(g) Qualified Preretirement Survivor Annuity - means a
nontransferable annuity payable for the life of the surviving
Spouse, which is the amount of benefit which can be purchased
with
10.1(g)(1) Standard Option - 100% of the Participant's Vested
Account Balance as of the Annuity Starting Date or
10.1(g)(2) Alternative - such lesser percentage (not less than
50%) specified in the Adoption Agreement of such Participant's
Vested Account Balance (determined by allocating the portion of
such balance which is attributable to employee contributions
proportionately to such annuity and to the remainder of such
balance).
10.1(h) Vested Account Balance - means the nonforfeitable portion
of a Participant's Account derived from Employer contributions
and Employee contributions (including Rollover Contributions),
whether vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life and
reduced, if applicable, for outstanding loans in accordance with
section 13.3(d)(1)(iv).
10.2 Distribution to Participant. Unless a Participant waives
the Qualified Joint and Survivor Annuity and elects an optional
method of distribution (as described in section 10.6) on an
Election Form pursuant to a Qualified Election within the
Election Period, any distribution of such Participant's Vested
Account Balance shall be paid in the form of (a) a Qualified
Joint and Survivor Annuity for each such married Participant and
his or her Spouse or (b) a Life Annuity for each such unmarried
Participant. A Participant may elect that such annuity be
distributed upon attainment of the Earliest Retirement Age.
10.3 Distribution to Surviving Spouse. Unless a Participant
waives the Qualified Preretirement Survivor Annuity and elects an
optional method of distribution (as described in section 10.6) on
an Election Form pursuant to a Qualified Election within the
Election Period, such Participant's Vested Account Balance shall,
in the event of the Participant's death before the Participant's
Annuity Starting Date, be applied to purchase a Qualified
Preretirement Survivor Annuity for the surviving Spouse. If the
Qualified Preretirement Survivor Annuity is less than 100%, the
remaining portion of the Participant's Vested Account Balance
shall be payable to the Participant's Beneficiary under section
9. The surviving Spouse may elect that such Qualified
Preretirement Survivor Annuity be distributed to such Spouse
within a reasonable period following the death of the
Participant. Notwithstanding the foregoing, a surviving Spouse
entitled to a Qualified Preretirement Survivor Annuity may elect
in writing after the Participant's death to have the
Participant's Vested Account Balance distributed in an optional
form of benefit in accordance with section 10.6.
10.4 Notice Requirements.
10.4(a) Qualified Joint and Survivor Annuity and Life Annuity.
The Plan Administrator shall no less than 30 days and no more
than 90 days before the Annuity Starting Date provide each
Participant with a written explanation of the Qualified Joint and
Survivor Annuity and the Life Annuity, which explanation shall
describe
10.4(a)(1) the terms and conditions of such annuity;
10.4(a)(2) the Participant's right to make a Qualified
Election to waive such annuity and the effect of such election;
10.4(a)(3) the rights of the Participant's Spouse, if any;
10.4(a)(4) the right to revoke such election and the effect
of such a revocation; and
10.4(a)(5) the relative values of the various optional forms
of benefits under the Plan.
10.4(b) Qualified Preretirement Survivor Annuity. The Plan
Administrator shall provide to each Participant within the
"applicable period" for such Participant a written explanation of
the Qualified Preretirement Survivor Annuity which includes the
type of information described in section 10.4(a). The "applicable
period" for a Participant is 10.4(b)(1) the period beginning on
the first day of the Plan Year in which such Participant attains
age 32 and ending with the close of the Plan Year preceding the
Plan Year in which the Participant attains age 35,
10.4(b)(2) a reasonable period ending after he or she
becomes a Participant, or
10.4(b)(3) a reasonable period ending after this section l0
applies to such Participant,
whichever period ends last. However, if a Participant separates
from service before he or she reaches age 35, such notice shall
be provided within the two year period beginning one year before
the Participant's separation from service and ending one year
after such separation and if such Participant is subsequently
reemployed, the applicable period for such Participant shall be
redetermined under section 10.4(b)(1) through section 10.4(b)(3).
For purposes of section 10.4(b)(2) and section 10.4(b)(3), a
"reasonable period" is the two year period which begins one year
prior to the occurrence of the event and ends one year after the
occurrence of the event.
10.5 Safe Harbor Rules.
10.5(a) Application. If so specified in the Adoption Agreement,
the provisions in this section 10.5 shall apply in lieu of
section 10.1 through section 10.4 to (1) a Participant in a
Profit Sharing Plan or a 401(k) Plan, and (2) to any distribution
made on or after the first day of the first Plan Year beginning
after December 31, 1988 from or under a separate account
attributable solely to accumulated deductible employee
contributions (as defined in Code section 72(o)(5)(B)) and
maintained on behalf of a Participant in a Money Purchase Pension
Plan or Target Benefit Pension Plan provided that the conditions
specified in section 10.5(b) are satisfied.
10.5(b) Conditions. In order to fit within this safe harbor (1)
the Participant does not or cannot elect payments in the form of
a Life Annuity with respect to the Participant's Vested Account
Balance; (2) on the death of a Participant, the Participant's
Vested Account Balance shall be paid to the Participant's
surviving Spouse, or if there is no surviving Spouse or if the
surviving Spouse has consented in a manner conforming to a
Qualified Election, to the Participant's Beneficiary; and (3)
with respect to a Participant in a Profit Sharing Plan or a
401(k) Plan, the Plan is not a direct or indirect transferee of a
defined benefit plan, money purchase pension plan, target benefit
pension plan, stock bonus plan, or profit sharing plan which is
subject to the survivor annuity requirements of Code section 401
(a)(11) and Code section 417 ("Transferee Plan"), or the Plan
maintains separate bookkeeping accounts for such Participant's
Transferee Plan benefits and all other benefits of the
Participant under the Plan and gains, losses, withdrawals,
contributions, forfeitures, and other credits or charges are
allocated on a reasonable and consistent basis between the
Transferee Plan benefits (which are subject to the survivor
annuity requirements in section 10.1 through section 10.4) and
the other Plan benefits (which are subject to the safe harbor
rule in this section 10.5).
10.5(c) Surviving Spouse. The surviving Spouse may elect to have
distribution of the Vested Account Balance commence within the
90-day period following the date of the Participant's death. The
Vested Account Balance shall be adjusted for Fund Earnings
occurring after the Participant's death in accordance with
section 6.2 in the same manner that Accounts are adjusted for
other types of distributions.
10.5(d) Waiver of Spousal Benefit. The Participant may waive the
spousal death benefit described in this section l0.5 at any time;
provided, no such waiver shall be effective unless it satisfies
the conditions described in section 10.1(e) (other than the
notification requirement referred to in such section) that would
apply to the Participant's Qualified Election to waive the
Qualified Preretirement Survivor Annuity.
10.5(e) Vested Account Balance. For purposes of this section
10.5, Vested Account Balance shall mean, (1) in the case of a
Money Purchase Pension Plan or Target Benefit Pension Plan, the
Participant's separate account balance attributable solely to
accumulated deductible employee contributions within the meaning
of Code section 72(o)(5)(B) and (2) in the case of a Profit
Sharing Plan or 401(k) Plan, the Participant's Vested Account
Balance as defined in section 10.1(h), excluding the portion of
such Vested Account Balance which is attributable to Transferee
Plan benefits described in section l0.5(b).
10.6 Optional Forms.
10.6(a) General. If a Participant properly and timely waives the
Qualified Joint and Survivor Annuity as described in section l0.2
or to the extent the safe harbor rules of section 10.5 apply to a
distribution, such distribution shall be made in the form
specified in this section 10.6 as selected by the Participant (or
his or her Beneficiary in the event of the Participant's death).
10.6(b) Before Separation From Service. Any distribution made
pursuant to section 9.2 shall, subject to section 10.2, be made
in a single sum.
10.6(c) After Separation From Service.
10.6(c)(1) Standard Option. The optional benefit form
available to any Participant after separation from service with
the Employer and all Affiliates or to his or her Beneficiary in
the event of the Participant's death shall be a single sum.
10.6(c)(2) Alternative. If specified in the Adoption
Agreement, the following optional benefit forms shall be
available to any Participant (or to his or her Beneficiary in the
event of the Participant's death):
(I) Single Sum - by payment in a single sum.
(ii) Installments - by payment in annual installments
(or more frequent installments) over a specified period in
accordance with the minimum distribution rules in section l1.
(iii) Annuity - in the form of an annuity contract under
which the amount of benefits shall be that which can be provided
by applying the nonforfeitable portion of such Participant's
Account to the applicable settlement option or annuity purchase
rate under such contract; or
(iv) Other Forms - under one of the optional forms of
distribution, if any, under the Pre-Existing Plan or a plan
described in section 14.5 which are required to be preserved
under Code section 411(d)(6). Such optional forms shall be
described in the Adoption Agreement and, unless otherwise
specified in the Adoption Agreement, such other forms shall apply
to the Participant's entire Account balance. Notwithstanding the
foregoing, if the Plan Administrator separately accounts for
benefits under a Pre-Existing Plan or a plan described under
section 14.5 or, if applicable, under section 10.5, the optional
forms may be limited to such separate accounts.
10.6(d) No Method Selected. If the safe harbor rules of section
10.5 apply to a distribution, but the Participant or the
Participant's Spouse or Beneficiary fails to specify the method
of distribution, then any distribution made to such Participant,
Spouse or Beneficiary shall be made in a single sum.
10.6(e) Single Sum. A distribution made on account of a
Participant's death or separation from service with the Employer
and all Affiliates which is made in more than one payment shall
be deemed to be a single sum distribution for purposes of this
Plan if the additional payment or payments are necessary to
reflect allocations completed following the Participant's death
or separation from service.
10.6(f) In Kind Distributions. A distribution shall be made in
kind only to the extent provided in the Adoption Agreement and
only to the extent an "in kind" distribution is permissible under
ERISA.
10.7 Annuity Contracts. Any annuity contract distributed by
the Plan to a Participant or a Beneficiary shall be
nontransferable and the terms of such contract shall comply with
the applicable requirements of this Plan and the Code.
10.8 Transitional Rules.
10.8(a) Any living Participant not receiving benefits on
August 23, 1984, who would otherwise not receive the benefits
prescribed by the previous sections of this section l0 must be
given the opportunity to elect to have such sections apply (1) if
such Participant is credited with at least one Hour of Service
under this Plan or a predecessor plan in a Plan Year beginning on
or after January 1, 1976, and (2) such Participant had at least
10 years of vesting service when he or she separated from
service.
10.8(b) Any living Participant not receiving benefits on
August 23, 1984, who was credited with at least one Hour of
Service under this Plan or a predecessor plan on or after
September 2, 1974, and who is not otherwise credited with any
service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have his or her benefits paid in
accordance with section 10.8(d).
10.8(c) The respective opportunities to elect (as described
in section 10.8(a) and (b) above) must be afforded to the
appropriate Participants during the period commencing on August
23, 1984, and ending on the date benefits would otherwise
commence to such Participants.
10.8(d) Any Participant who has elected pursuant to section
10.8(b) and any Participant who does not elect under section
10.8(a) or who meets the requirements of section 10.8(a) except
that such Participant does not have at least 10 years of vesting
service when he or she separates from service, shall have his or
her benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a
life annuity:
10.8(d)(1) If benefits in the form of a life annuity become
payable to a married Participant who:
(i) begins to receive payments under the Plan on or
after Normal Retirement Age; or
(ii) dies on or after Normal Retirement Age while still
working for the Employer; or
(iii) begins to receive payments on or after the
"qualified early retirement age"; or
(iv) separates from service on or after attaining Normal
Retirement Age (or the "qualified early retirement age") and
after satisfying the eligibility requirements for the payment of
benefits under the Plan and thereafter dies before beginning to
receive such benefits;
then such benefits shall be received under this Plan in the form
of a Qualified Joint and Survivor Annuity, unless the Participant
has elected otherwise during the election period. The election
period must begin at least 6 months before the Participant
attains "qualified early retirement age" and end not more than 90
days before the commencement of benefits. Any such election shall
be in writing and may be changed by the Participant at any time.
10.8(d)(2) A Participant who is employed after attaining the
qualified early retirement age shall be given the opportunity to
elect, during the election period, to have a survivor annuity
payable on death. The election period begins on the later of (i)
the 90th day before the Participant attains the "qualified early
retirement age", or (ii) the date on which participation begins,
and ends on the date the Participant separates from service. Any
such election shall be in writing and may be changed by the
Participant at any time. If the Participant elects the survivor
annuity, payments under such annuity must not be less than the
payments which would have been made to the Spouse under the
Qualified Joint and Survivor Annuity if the Participant had
retired on the day before the Participant's death.
10.8(d)(3) For purposes of this section 10.8(d), "qualified early
retirement age" means the latest of:
(i) the earliest date under the Plan on which the
Participant may elect to receive retirement benefits,
(ii) the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
(iii)the date the Participant begins participation.
10.9 Direct Rollovers.
10.9(a) General. This section 10.9 applies to distributions made
on or after January 1, 1993. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Distributee's
election under this section 10, 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 by the Plan to an Eligible Retirement Plan specified by
the Distributee in a direct rollover in accordance with Code
section 401(a)(31).
10.9(b) Definitions.
10.9(b)(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 years or more; any
distribution to the extent such distribution is required under
Code section 401(a)(9); 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),
10.9(b)(2) Eligible Retirement Plan. An Eligible Retirement
Plan is an individual retirement account described in Code
section 408(a), an individual retirement annuity described in
Code section 408(b), an annuity plan described in Code section
403(a), or a qualified trust described in Code section 401(a),
that accepts 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.
10.9(b)(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 order, as defined in Code
section 414(p), are Distributees with regard to the interest of
the spouse or former spouse.
SECTION 11, MINIMUM DISTRIBUTION REQUIREMENTS
11.1 General. Subject to section 10, Benefit Payment Forms -
Joint and Survivor Annuity Requirements, the requirements of this
section 11 shall apply to any distribution of a Participant's
Account and shall take precedence over any inconsistent
provisions of this Plan. Unless otherwise specified, the
provisions of this section 11 shall apply to calendar years
beginning after December 31, 1984. All distributions required
under this section 11 shall be determined and made in accordance
with the proposed regulations under Code section 401(a)(9),
including the minimum distribution incidental benefit requirement
of section 1.401(a)(9)-2 of the proposed regulations.
11.2 Special Definitions.
11.2(a) Applicable Calendar Year - means the first
Distribution Calendar Year, and if life expectancy is being
recalculated, each succeeding calendar year.
11.2(b) Applicable Life Expectancy - means the life expectancy
(or joint and last survivor expectancy) calculated using the
attained age of the Participant (or Designated Beneficiary) as of
the Participant's (or Designated Beneficiary's) birthday in the
Applicable Calendar Year reduced by one for each calendar year
which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the
Applicable Life Expectancy shall be the life expectancy as so
recalculated.
11.2(c) Designated Beneficiary - means the individual who is
designated as the Beneficiary under this Plan in accordance with
Code section 401(a)(9) and the regulations under such Code
section.
11.2(d) Distribution Calendar Year - means a calendar year for
which a minimum distribution is required. For distributions
beginning before the Participant's death, the first Distribution
Calendar Year shall be the calendar year immediately preceding
the calendar year which contains the Participant's Required
Beginning Date. For distributions beginning after the
Participant's death, the first Distribution Calendar Year shall
be the calendar year in which distributions are required to begin
pursuant to section 11.6.
11.2(e) Life Expectancy - means the life expectancy (or joint and
last survivor expectancy) as computed by use of the expected
return multiples in Tables V and VI of section 1.72-9 of the
Federal Income Tax Regulations. Unless otherwise elected by the
Participant (or Spouse, in the case of distributions described in
section 11.6(b)(2)) by the time distributions are required to
begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or Spouse)
and shall apply to all subsequent years. The life expectancy of a
nonspouse Beneficiary may not be recalculated.
11.2(f) Participant's Benefit - means the nonforfeitable portion
of a Participant's Account determined as of the last Valuation
Date in the calendar year immediately preceding the Distribution
Calendar Year ("valuation calendar year") increased by the amount
of any contributions or forfeitures allocated to the Account as
of dates in the valuation calendar year after such Valuation Date
and decreased by distributions made in the valuation calendar
year after such Valuation Date. If any portion of the minimum
distribution for the first Distribution Calendar Year is made in
the second Distribution Calendar Year on or before the Required
Beginning Date, the amount of the minimum distribution made in
the second Distribution Calendar Year shall be treated as if it
had been made in the immediately preceding Distribution Calendar
Year.
11.2(g) Required Beginning Date.
11.2(g)(1) General Rule. The Required Beginning Date of a
Participant who reaches age 70 1/2 after December 31, 1987 is the
first day of April of the calendar year following the calendar
year in which the Participant reaches age 70 1/2.
11.2(g)(2) Age 70 1/2 Before 1988. The Required Beginning Date of
a Participant who reaches age 70 1/2 before January 1, 1988 shall
be,
(i) for a Participant who is not a 5% owner, the first
day of April of the calendar year following the calendar year in
which occurs the later of retirement or reaching age 70 1/2; or
(ii) for a Participant who is a 5% owner during any year
beginning after December 31, 1979, the first day of April
following the later of:
(A) the calendar year in which the Participant reaches
age 70 1/2, or
(B) the earlier of the calendar year with or within
which ends the Plan Year in which the Participant becomes a 5%
owner, or the calendar year in which the Participant retires.
11.2(g)(3) Age 70 1/2 During 1988. The Required Beginning Date of
a Participant who is not a 5% owner, who reaches age 70 1/2
during 1988 and who has not retired before January 1, 1989 shall
be April 1, 1990. The Required Beginning Date of a Participant
who is a 5% owner or who retired before January 1, 1989 and who
reaches age 70 1/2 during 1988 shall be determined in accordance
with section 11.2(g)(1).
11.2(g)(4) 5% Owner. A Participant shall be treated as a 5% owner
for purposes of this section 11.2(g) if such Participant is a 5%
owner as defined in Code section 416(i) (determined in accordance
with Code section 416 but without regard to whether the Plan is
top-heavy) at any time during the Plan Year ending with or within
the calendar year in which such individual attains age 66 1/2 or
any subsequent Plan Year. Once distributions have begun to a 5%
owner under this section 11, they must continue to be
distributed, even if the Participant ceases to be a 5% owner in a
subsequent year.
11.3 Required Beginning Date. The entire nonforfeitable interest
of a Participant must be distributed or begin to be distributed
no later than the Participant's Required Beginning Date. Such
distribution shall be made
11.3(a) in the form of a Qualified Joint and Survivor Annuity as
described in section 10.2, or
11.3(b) if the Qualified Joint and Survivor Annuity is properly
waived or to the extent the safe harbor rules in section 10.5
apply, in the optional benefit form in section 10.6 selected by
the Participant.
Notwithstanding the foregoing, even if installment distributions
are not otherwise available as an optional benefit form, a
Participant who has not separated from service with the Employer
and all Affiliates as of the Required Beginning Date (or as of
the end of any Distribution Calendar Year thereafter) may elect
to receive the minimum distribution amount for each such
Distribution Calendar Year as described in section 11.5.
11.4 Limits on Distribution Periods. As of the first
Distribution Calendar Year, distributions (if not made in a
single sum) may only be made over one of the following periods
(or a combination thereof):
11.4(a) the life of the Participant,
11.4(b) the life of the Participant and a Designated Beneficiary,
11.4(c) a period certain not extending beyond the life expectancy
of the Participant, or
11.4(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a Designated
Beneficiary.
11.5 Determination of Amount to be Distributed Each Year. If
the Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply
on or after the Required Beginning Date:
11.5(a) Individual Account.
11.5(a)(1) General. If a Participant's Benefit is to be
distributed over (i) a period not extending beyond the life
expectancy of the Participant or the joint life and last survivor
expectancy of the Participant and the Participant's Designated
Beneficiary or (ii) a period not extending beyond the life
expectancy of the Designated Beneficiary, the amount required to
be distributed for each calendar year, beginning with
distributions for the first Distribution Calendar Year, must at
least equal the quotient obtained by dividing the Participant's
Benefit by the Applicable Life Expectancy.
11.5(a)(2) Incidental Death Benefit Rules.
(i) For calendar years beginning before January 1, 1989, if
the Participant's Spouse is not the Designated Beneficiary,
the method of distribution selected must assure that at least
50% of the present value of the amount available for distribution
is paid within the life expectancy of the Participant.
(ii) For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning with
distributions for the first Distribution Calendar Year, shall not
be less than the quotient obtained by dividing the Participant's
Benefit by the lesser of (A) the Applicable Life Expectancy or
(B) if the Participant's Spouse is not the Designated
Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of section 1.401(a)(9)-2 of the proposed
regulations. Distributions after the death of the Participant
shall be distributed using the Applicable Life Expectancy in
section 11.5(a)(1) as the relevant divisor without regard to
section 1.401(a)(9)-2 of the proposed regulations.
11.5(a)(3) Timing. The minimum distribution required for the
Participant's first Distribution Calendar Year must be made on or
before the Participant's Required Beginning Date. The minimum
distribution for subsequent Distribution Calendar Years,
including the minimum distribution for the Distribution Calendar
Year in which the Participant's Required Beginning Date occurs,
must be made on or before December 31 of that Distribution
Calendar Year.
11.5(b) Annuity Contracts. If the Participant's Benefit is
distributed in the form of an annuity purchased from an insurance
company, distributions under such annuity shall be made in
accordance with the requirements of Code section 401(a)(9).
11.6 Death Distribution Provisions.
11.6(a) Distribution Beginning Before Death. If the Participant
dies after distribution of his or her nonforfeitable interest has
begun, the remaining portion of such nonforfeitable interest
shall continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's
death.
11.6(b) Distribution Beginning After Death. If the Participant
dies before distribution of his or her nonforfeitable interest
begins, distribution of the Participant's entire nonforfeitable
interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death
except to the extent that an election is made to receive
distributions in accordance with (1) or (2) below:
11.6(b)(1) if any portion of the Participant's
nonforfeitable interest is payable to a Designated Beneficiary,
distributions may be made over the life or over a period certain
not greater than the life expectancy of the Designated
Beneficiary and shall commence on or before December 31 of the
calendar year immediately following the calendar year in which
the Participant died;
11.6(b)(2) if the Designated Beneficiary is the
Participant's surviving Spouse, distributions may be made over
the period described in clause (1) above but the required
commencement date may be deferred until the later of (i) December
31 of the calendar year immediately following the calendar year
in which the Participant died or (ii) December 31 of the calendar
year in which the Participant would have reached age 70 1/2.
If the Participant has not made an election pursuant to this
section 11.6(b) by the time of the Participant's death, the
Participant's Designated Beneficiary must elect the method of
distribution no later than the earlier of (A) December 31 of the
calendar year in which distributions would be required to begin
under this section 11.6, or (B) December 31 of the calendar year
which contains the fifth anniversary of the date of death of the
Participant. If the Participant has no Designated Beneficiary, or
if the Designated Beneficiary does not elect a method of
distribution, distribution of the Participant's entire interest
must be completed by December 31 of the calendar year containing
the fifth anniversary of the Participant's death.
11.6(c) Special Rules.
11.6(c)(1) For purposes of section 11.6(b), if the surviving
Spouse dies after the Participant, but before payments to such
Spouse begin, the provisions of section 11.6(b), with the
exception of section 11.6(b)(2), shall be applied as if the
surviving Spouse were the Participant.
11.6(c)(2) For purposes of this section 11.6, any amount paid to
a child of the Participant shall be treated as if it had been
paid to the surviving Spouse if the amount becomes payable to the
surviving Spouse when the child reaches the age of majority.
11.6(c)(3) For the purposes of this section 11.6, distribution of
a Participant's interest shall be considered to begin on the
Participant's Required Beginning Date (or, if section 11.6(c)(1)
above is applicable, the date distribution is required to begin
to the surviving Spouse pursuant to section 11.6(b)). If
distribution in the form of an annuity irrevocably commences to
the Participant before the Required Beginning Date, the date
distribution is considered to begin shall be the date
distribution actually commences.
11.7 Special Pre-TEFRA Distribution Election.
11.7(a) General Rule. Subject to section 10, Benefit Payment
Forms - Joint and Survivor Annuity Requirements, the
nonforfeitable percentage of the Account of any Participant
(including a "5% owner" as described in section 11.2(g)(4)) who
has in effect a Special Pre-TEFRA Distribution Election (as
described in section 11.7(b)) shall be paid only to the
Participant, or in the case of the Participant's death, only to
his or her beneficiary in accordance with the method of
distribution specified in such election without regard to the
distribution rules set forth in section 11.1 through section
11.6.
11.7(b) Special Pre-TEFRA Distribution Election. For purposes of
this section 11.7, a Special Pre-TEFRA Distribution Election
means a designation in writing, signed by the Participant or his
or her beneficiary, made before January 1, 1984 by a Participant
in this Plan or a Participant in a Pre-Existing Plan who had
accrued a benefit under such plan as of December 31, 1983 which
designation specifies
11.7(b)(1) a distribution method which was permissible under
Code section 401(a)(9) as in effect prior to amendment by the
Deficit Reduction Act of 1984,
11.7(b)(2) the time at which such distribution will
commence,
11.7(b)(3) the period over which such distribution will be
made, and
11.7(b)(4) if such designation is to be effective for a
beneficiary, the beneficiaries of the Participant in order of
priority.
A distribution to be made upon the death of a Participant shall
not be covered under this section 11.7(b) unless the information
in the designation with respect to such distribution satisfies
the requirements of this section 11.7(b).
11.7(c) Current Distributions. Any distribution which began
before January 1, 1984 and continues after such date shall be
deemed to be made pursuant to a Special Pre-TEFRA Distribution
Election if the method of distribution was set forth in writing
and such method satisfies the requirements of section 11.7(b)(1)
through (4).
11.7(d) Revocation. A Participant who made a Special Pre-
TEFRA Distribution Election shall have the right to revoke such
election by completing and filing a distribution Election Form
under section 9. Furthermore, any change (other than the mere
substitution or addition of a beneficiary not originally
designated in such election which does not directly or indirectly
alter the period over which distributions are to be made) to a
Special Pre-TEFRA Distribution Election shall be deemed to be a
revocation of such election. Upon revocation, any subsequent
distribution shall be made in accordance with Code section
401(a)(9). If a designation is revoked subsequent to the date
distributions are required to begin, the Plan must distribute by
the end of the calendar year following the calendar year in which
the revocation occurs the total amount not yet distributed which
would have been required to have been distributed to satisfy Code
section 401(a)(9), but for the Special Pre-TEFRA Distribution
Election. For calendar years beginning after December 31, 1988,
such distributions must meet the minimum distribution incidental
benefit requirements in section 1.401(a)(9)-2 of the proposed
regulations. If an amount is transferred or rolled over from one
plan to another plan, the rules in Q&A J-2 and Q&A J-3 of section
1.401(a)(9)-l of the proposed regulations shall apply.
SECTION 12. TOP-HEAVY PLAN RULES
12.1 Application. The rules set forth in this section 12
shall supersede any provisions of this Plan or the Adoption
Agreement which are inconsistent with these rules as of the first
day of the first Plan Year beginning after December 31, 1983
during which the Plan is or becomes a Top-Heavy Plan and such
rules shall continue to supersede such provisions for so long as
the Plan is a Top-Heavy Plan unless the Code permits such rules
to cease earlier or requires them to remain in effect for a
longer period.
12.2 Special Definitions. For purposes of this section 12,
the terms defined in this section 12.2 shall have the meanings
shown opposite such terms.
12.2(a) Determination Date - means
12.2(a)(1) for the first Plan Year of a Plan which is
adopted as a new Plan under the Adoption Agreement, the last day
of such Plan Year, and
12.2(a)(2) for any subsequent Plan Year, the last day of the
immediately preceding Plan Year, and
12.2(a)(3) for any plan year of each other qualified plan
maintained by the Employer or an Affiliate which is part of a
Permissive Aggregation Group or a Required Aggregation Group, the
date determined under this section 12.2(a) as if the term "Plan
Year" means the plan year for each such qualified plan.
12.2(b) Key Employee - means any Employee or former Employee (and
the Beneficiaries of such Employee) (as determined in accordance
with Code 416(i)(1)) who at any time during the Plan Year or any
of the 4 immediately preceding Plan Years was
12.2(b)(1) an officer of the Employer or an Affiliate whose
compensation for such Plan Year exceeds 50% of the dollar
limitation under Code section 415(b)(1)(A),
12.2(b)(2) an owner (or considered to be an owner within the
meaning of Code section 318) of one of the 10 largest interests
in the Employer or an Affiliate whose compensation for such Plan
Year exceeds the 100% of the dollar limitation under Code section
415(c)(1)(A); provided that the value of such Employee's
ownership interest is more than one half of one percent,
12.2(b)(3) a 5% owner of the Employer or an Affiliate, or
12.2(b)(4) a 1% owner of the Employer or an Affiliate whose
compensation for such Plan Year exceeds $150,000.
For purposes of this section 12.2(b), an Employee's compensation
means compensation within the meaning of Code section 415(c)(3)
(as defined in section 7.2(a)(2)) but including amounts
contributed by the Employer or an Affiliate pursuant to a salary
reduction agreement which are excluded from gross income under
Code section 125, section 402(e)(3), section 402(h) or section
403(b).
12.2(c) Permissive Aggregation Group - means a Required
Aggregation Group and any other qualified plan or plans (as
described in Code section 401(a)) maintained by the Employer or
an Affiliate which, when considered with the Required Aggregation
Group, would continue to satisfy the requirements of Code section
401(a)(4) and Code section 410.
12.2(d) Required Aggregation Group - means (1) each qualified
plan (as described in code section 401(a)) maintained by the
Employer or an Affiliate in which at least one Key Employee
participates or participated at any time during the 5 year period
ending on the Determination Date (without regard to whether such
plan has terminated) and (2) any other qualified plan maintained
by the Employer or an Affiliate which enables any such plan to
satisfy the requirements of Code section 401(a)(4) or Code
section 410.
12.2(e) Top-Heavy Plan - means this Plan if, for any Plan Year
beginning after December 31, 1983, either
12.2(e)(1) this Plan is not part of a Required Aggregation Group
or a Permissive Aggregation Group and the Top-Heavy Ratio for
this Plan exceeds 60%;
12.2(e)(2) this Plan is part of a Required Aggregation Group but
not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the Required Aggregation Group exceeds 60%; or
12.2(e)(3) this Plan is part of a Required Aggregation Group and
part of a Permissive Aggregation Group and the Top-Heavy Ratio
for the Permissive Aggregation Group exceeds 60%.
12.2(f) Top-Heavy Ratio.
12.2(f)(1) If the Employer or an Affiliate maintains one or more
defined contribution plans (including any simplified employee
pension plan) and the Employer or an Affiliate has never
maintained a defined benefit plan under which benefits have been
accrued for a Participant in this Plan during the 5 year period
ending on the Determination Date, "Top-Heavy Ratio" means for
this Plan alone or for the Required Aggregation Group or
Permissive Aggregation Group, as appropriate, a fraction, the
numerator of which shall be the sum of the account balances of
all Key Employees as of the Determination Date under this and all
other such defined contribution plans and the denominator of
which shall be the sum of the account balances of all employees
as of the Determination Date under this and all other such
defined contribution plans.
12.2(f)(2) If the Employer or an Affiliate maintains one or more
defined contribution plans (including any simplified employee
pension plan) and the Employer or an Affiliate maintains or has
ever maintained one or more defined benefit plans under which
benefits have been accrued for a Participant in this Plan during
the 5 year period ending on the Determination Date, "Top-Heavy
Ratio" means for the Required Aggregation Group or the Permissive
Aggregation Group, as appropriate, a fraction, the numerator of
which shall be the sum of the account balances for all Key
Employees as of the Determination Date under this and all other
such defined contribution plans and the sum of the present value
of the accrued benefits for all Key Employees as of the
Determination Date under all defined benefit plans maintained by
the Employer or an Affiliate and the denominator of which shall
be the sum of the account balances for all employees as of the
Determination Date under this and all other such defined
contribution plans and the sum of the present value of the
accrued benefits for all employees as of the Determination Date
under all defined benefit plans maintained by the Employer or an
Affiliate.
12.2(f)(3) The following rules shall apply for purposes of
calculating the Top-Heavy Ratio:
(i) The value of any account balance and the present
value of any accrued benefit shall be determined as of the most
recent Top-Heavy Valuation Date that falls within, or ends with,
the 12 month period ending on the Determination Date (or, if
plans are aggregated, the Determination Dates that fall within
the same calendar year), except as provided under the regulations
under Code section 416 for the first and second years of a
defined benefit plan;
(ii) The value of any account balance and the present
value of any accrued benefit shall include the value of any
distributions made during the 5 year period ending on such
Determination Date and any contributions due but as yet unpaid as
of the Determination Date which are required to be taken into
account on that date under Code section 416;
(iii) The present value of an accrued benefit under a
defined benefit plan shall be determined in accordance with the
interest rate and mortality assumptions specified in the Adoption
Agreement or, if this Plan and such defined benefit plan are
Paired Plans, as specified in the Adoption Agreement for such
defined benefit Paired Plan;
(iv) The account balance or accrued benefit of a
Participant who is not a Key Employee for the current Plan Year
but who was a Key Employee in a prior Plan Year or who has not
performed an Hour of Service for the Employer or any Affiliate at
any time during the 5 year period ending on the Determination
Date shall be disregarded;
(v) Deductible employee contributions shall be
disregarded;
(vi) The calculation of the Top-Heavy Ratio and the
extent to which contributions, distributions, rollovers, and
transfers are taken into account shall be determined in
accordance with Code section 416; and
(vii) If the Employer maintains more than one defined
benefit plan, the accrued benefit of a Participant other than a
Key Employee shall be determined under the method, if any, that
uniformly applies for accrual purposes under all such defined
benefit plans maintained by the Employer or an Affiliate, or 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 section 411(b)(1)(C).
12.2(g) Top-Heavy Valuation Date - means for this Plan, the last
day of each Plan Year and for each other qualified plan
maintained by the Employer or an Affiliate,
12.2(g)(1) Standard Option - the most recent valuation date
for such plan or
12.2(g)(2) Alternative - the valuation date specified in the
Adoption Agreement.
12.3 Minimum Allocation.
12.3(a) General. Except as otherwise provided in this section
12.3, for any Plan Year in which this Plan is a Top-Heavy Plan,
the "minimum allocation" for each Participant who is not a Key
Employee means an allocation of Employer Contributions and
Forfeitures made in accordance with section 12.3(d) which shall
not be less than the lesser of
12.3(a)(1) 3% of such Participant's Compensation for such
Plan Year or,
12.3(a)(2) if the Employer or an Affiliate has no defined
benefit plan which uses this Plan to satisfy the requirements of
Code section 401(a)(4) or Code section 410, the largest
percentage of the Employer Contributions and Forfeitures
allocated on behalf of any Key Employee (expressed as a
percentage of the first $200,000 of Compensation) for such Plan
Year.
12.3(b) Defined Benefit Paired Plan. If this Plan is adopted in
combination with a defined benefit Paired Plan, the Employer and
the Participating Affiliates shall make a contribution under this
Plan (or, if this Plan is adopted in combination with another
defined contribution Paired Plan, under any combination of
defined contribution Paired Plans) for each Participant who is an
Eligible Employee at any time during such Plan Year who is also a
Participant in the defined benefit Paired Plan equal to at least
5% (or such greater percentage as is specified in the adoption
agreement for the defined benefit Paired Plan) of Compensation
for such Plan Year unless the Employer elects under such defined
benefit Paired Plan to provide the minimum benefit accrual under
such defined benefit Paired Plan.
If this section 12.3(b) applies and the Employer has not elected
to provide the minimum benefit accrual under the defined benefit
Paired Plan, the minimum allocation required under this section
12.3(b) for Plan Years beginning on and after the Final
Compliance Date shall, subject to the ordering rules in section
12.3(c), be made under this Plan without regard to whether the
Participant also benefits under the defined benefit Paired Plan.
Further, if this Plan and the defined benefit Paired Plan do not
benefit the same participants for such Plan Year, the minimum
allocation described in section 12.3(a) shall, subject to the
ordering rules in section 12.3(c), be made under this Plan for
each Participant described in section 12.3(d)(1) and the minimum
benefit accrual shall be made for each participant in the defined
Benefit Paired Plan in accordance with the terms of such Paired
Plan.
12.3(c) Defined Contribution Paired Plan. If this Plan is adopted
in combination with one or more defined contribution Paired
Plans, the minimum allocation required under this section 12.3,
if any, shall be made under such Paired Plans in the following
order:
12.3(c)(1) Standard Option - First, under the Money Purchase
Pension Plan, if any; second, under the Target Benefit Pension
Plan, if any; third, under the Profit Sharing Plan, if any; and
finally, under the 401(k) Plan, if any.
12.3(c)(2) Alternative - in the order specified in the Adoption
Agreement,
12.3(d) Participants Entitled to Allocation. The minimum
allocation required for any Plan Year under this section 12.3
12.3(d)(1) shall be made for each Participant who is not a Key
Employee and who is employed as an Eligible Employee (or on an
authorized leave of absence as an Eligible Employee) on the last
day of such Plan Year, without regard to the number of Hours of
Service actually completed by such Participant in such Plan Year;
and
12.3(d)(2) shall not apply to any Participant (i) who is covered
under any other plan or plans maintained by the Employer or an
Affiliate and the Employer has specified in the Adoption
Agreement that the minimum allocation or the minimum benefit
required under Code section 416 for any Plan Year for which this
Plan is a Top-Heavy Plan shall be made under such other plan or
plans or (ii) to the extent such Participant receives such
minimum allocation or minimum benefit under this Plan or any
other plans maintained by the Employer or an Affiliate.
Notwithstanding section 12.3(d)(2), if this Plan is adopted as a
nonstandardized Plan that intends to satisfy the safe harbor in
the Code section 401(a)(4) regulations, the minimum allocation
required under section 12.3 for Plan Years beginning on and after
the Final Compliance Date must be made for each Participant
described in section 12.3(d)(1) without regard to whether the
Participant also benefits under another plan, but only to the
extent that such minimum allocation is not otherwise received
under this Plan.
12.3(e) Nonforfeitability. The minimum allocation required under
this section 12.3 (to the extent required to be nonforfeitable
under Code section 416(b)) shall not be forfeited under Code
section 411(a)(3)(B) or Code section 411(a)(3)(D).
12.3(f) Compensation. For purposes of computing the minimum
allocation under this section 12.3, the term "Compensation" shall
mean Compensation within the meaning of Code section 415(c)(3) as
described in section 7.2(a)(2).
12.3(g) Multiple Plans. If the Employer or an Affiliate also
maintains another plan, the Employer shall specify in the
Adoption Agreement how the minimum allocation, if any, required
under Code section 416 will be satisfied and, if the Employer or
an Affiliate maintains or has maintained a defined benefit plan,
the method of satisfying Code section 416(h).
12.3(h) Integrated Plans.
12.3(h)(1) Profit Sharing Plan. If this Plan is adopted as a
integrated Profit Sharing Plan, the following allocation formula
shall apply in lieu of the formula in section 6.3(a)(2) for each
Plan Year in which such Plan is a Top-Heavy Plan.
The Forfeitures and the Employer Contribution shall be allocated
(and posted) as of the last day of such Plan Year to the Employee
Account of each Active Participant and each other Participant for
whom a minimum allocation is required to be made under this
section 12.3 in accordance with the following:
Step One - First, the lesser of (A) the sum of the Employee
Contribution and Forfeitures for such Plan Year or (B) the
product of the Top-Heavy Percentage and the total Compensation of
all such Participants shall be allocated i the same ratio that
each such Participant's total Compensation for such Plan Year
bears to the total Compensation of all such Participants for such
Plan Year.
Step Two - Second, the lesser of (A) the remaining Employer
Contribution and Forfeitures for such Plan Year o (B) the product
of the Top-Heavy Percentage (or the Maximum Disparity Rate, if
less) and the total Excess Compensation of all such Participants
shall be allocated in the same ratio that each such Participant's
Excess Compensation for such Plan Year bears to the total Excess
Compensation of all such Participants for such Plan Year.
Step Three - Third, the lesser of (A) the remaining Employer
Contribution and Forfeitures for such Plan Year or (B) the
Integration Amount shall be allocated in the same ratio that the
sum of the total Compensation and Excess Compensation of each
such Participant for such Plan Year bears to the sum of the total
Compensation and Excess Compensation of all such Participants for
such Plan Year.
Step Four - Finally the remaining Employer Contribution and
Forfeitures for such Plan Year shall be allocated in the same
ratio that each such Participant's total Compensation for such
Plan Year bears to the total Compensation of all such
Participants for such Plan Year.
12.3(h)(2) Money Purchase Pension Plan. If this Plan is
adopted as an integrated Money Purchase Pension Plan, (i) the
"Base Contribution Percentage" specified in the Adoption
Agreement, if less than the Top-Heavy Percentage, shall be
increased to equal the Top-Heavy Percentage and (ii) the Employer
Contribution required under section 5.2 (as adjusted in (i)
above) shall be made for each Active Participant and each other
Participant for whom an allocation is required to be made under
this section 12.3.
12.3(h)(3) Special Definitions. For purposes of this section
12.3(h),
(i) "Excess Compensation" means the amount, if any, of a
Participant's Compensation for such Plan Year which exceeds the
Integration Level for such Plan Year.
(ii) "Integration Amount" means the product of (1) the
total Compensation and the total Excess Compensation of all such
Participants and (2) the excess, if any, of the Integration
Percentage specified in the Adoption Agreement over the Top-Heavy
Percentage.
(iii) "Top-Heavy Percentage" means 3% or such greater
percentage required under this section 12.3 or specified in the
Adoption Agreement.
12.4 Vesting Schedule. For any Plan Year in which this Plan is a
Top-Heavy Plan, the Top-Heavy vesting schedule specified in the
Adoption Agreement automatically shall apply to all benefits
under the Plan within the meaning of Code section 411(a)(7)
(other than benefits which are attributable to Employee
Contributions or Rollover Contributions or other contributions
which are nonforfeitable when made), including benefits accrued
before the effective date of Code section 416 and before this
Plan became a Top-Heavy Plan, unless the regular vesting schedule
is at least as favorable as such Top-Heavy vesting schedule.
However, the provisions of this section 12.4 shall not apply to
the Account balance of any Participant who does not complete an
Hour of Service after the Plan first becomes a Top-Heavy Plan and
such Participant's Account balance attributable to Employer
contributions and Forfeitures shall be determined without regard
to this section 12.4. Further, no change in the vesting schedule
as a result of a change in this Plan's status to a Top-Heavy Plan
or to a plan which is not a-Top-Heavy Plan shall deprive a
Participant of the nonforfeitable percentage of the Participant's
Account balance accrued to the date of the change, and any such
change to the vesting schedule shall be subject to the provisions
of section 14.3(c).
12.5 401(k) Plan. Notwithstanding any contrary provision, the
following rules shall apply if this Plan adopted as a 401(k)
Plan:
12.5(a) Qualified Nonelective Contributions shall be treated as
Employer contributions for purposes of satisfying the minimum
allocation under section 12.3.
12.5(b) Matching Contributions allocated to the Account of a Key
Employee shall be treated as Employer contributions for purposes
of determining the amount of the minimum allocation required
under section 12.3. The Plan may use Matching Contributions
allocated on behalf of a non-Key Employee to satisfy the minimum
allocation under section 12.3; provided, however, that for Plan
Years beginning on and after the Final Compliance Date, such
contributions shall not be treated as Matching Contributions for
purposes of satisfying the limitations of section 7.4 and section
7.5 but shall instead be subject to the general nondiscrimination
rules of Code section 401(a)(4).
12.5(c) Elective Deferrals allocated to the Account of a Key
Employee shall be treated as Employer contributions for purposes
of determining the amount of the minimum allocation required
under section 12.3. However, for Plan Years beginning on and
after the Final Compliance Date, Elective Deferrals allocated on
behalf of non-Key Employees shall not be treated as Employer
contributions for purposes of satisfying the minimum allocation
required under section 12.3.
SECTION 13. INSURANCE, INDIVIDUALLY DIRECTED INVESTMENTS AND
PARTICIPANT LOANS
13.1 Insurance Contracts.
13.1(a) Elections and Existing Life Insurance Contracts.
13.1(a)(1) Standard Option. No Participant shall have the right
to elect to have the Trustee purchase an insurance contract on
his or her life for his or her Account under this Plan; however,
any life insurance contract purchased under the terms of a Pre-
Existing Plan, which is acceptable to the Trustee, shall continue
to be held by the Trustee for the benefit of the Participant
subject to the conditions of this section 13.1.
13.1(a)(2) Alternative. If so specified in the Adoption Agreement
each Participant who is an Eligible Employee may elect (subject
to this section 13.1) to have the Trustee purchase an insurance
contract on his or her life for his or her Account under the Plan
by completing and filing an Election Form with the Plan
Administrator.
13.1(b) Premiums. The aggregate annual premiums on any life
insurance contracts held for a Participant's Account under this
Plan shall be subject to the following limitations:
13.1(b)(1) Ordinary Life. If the life insurance contracts are
ordinary whole life insurance contracts which are contracts with
both nondecreasing death benefits and nonincreasing premiums,
such premiums shall be less than one half of the aggregate
Employer Contributions plus Forfeitures credited to the
Participant's Employer Account and Matching Account.
13.1(b)(2) Term and Universal Life. If the life insurance
contracts are term life insurance contracts, universal life
insurance contracts and any other life insurance contracts (other
than whole life), then such premiums shall not exceed one fourth
of the aggregate Employer Contributions plus Forfeitures credited
to the Participant's Employer Account and Matching Account.
13.1(b)(3) Combination. If the life insurance contracts either
combine features of ordinary whole life and other life insurance
or consist of ordinary whole life and other life insurance
contracts, the sum of one half of the ordinary whole life
premiums plus all other life insurance premiums shall not exceed
one fourth of the aggregate Employer Contributions plus
Forfeitures credited to the Participant's Employer Account and
Matching Account.
13.1(c) Owner and Beneficiary. The Trustee shall apply for and be
the owner of each life insurance contract held under this Plan
and also shall be named as the beneficiary of each such life
insurance contract. In the event of the Participant's death prior
to the date as of which the Participant's Account becomes payable
under the Plan, the Trustee, as beneficiary, shall pay the entire
proceeds of such life insurance contracts to the Participant's
Account which shall then be distributed to the surviving Spouse
or, if applicable, to the Participant's Beneficiary in accordance
with section 10. Under no circumstances shall the Fund retain any
part of the proceeds of any life insurance contracts. In the
event of a conflict between the terms of the Plan and the terms
of any life insurance contracts held under this Plan, the Plan
provisions shall control.
13.1(d) Allocations. Any dividends or credits earned on a life
insurance contract held under this Plan shall be allocated to the
Account of the Participant for whom the contract was purchased
and may be applied to pay the annual premium on such life
insurance contract. The amount of the annual premium on each such
insurance contract shall be charged against the Account of the
insured Participant. The value of any such insurance contract
shall be deemed to be zero for the purposes of allocating the
Employer Contribution, Forfeitures or the Fund Earnings for any
Plan Year as provided in section 6.
13.1(e) Distribution to Participant. Subject to section 10, Joint
and Survivor Annuity Requirements, the life insurance contracts
held as part of a Participant's Account shall be distributed in
kind to the Participant upon retirement or other termination of
employment as an Employee for reasons other than death (1) if
such Account is completely nonforfeitable or (2) if the cash
surrender value of such contracts is equal to or less than the
nonforfeitable portion of the Participant's Account. If neither
one of these conditions is satisfied and the Participant does not
elect to purchase the life insurance contracts under section 13.1
(f), the Trustee shall surrender such contracts, add the proceeds
to the Participant's Account and distribute the nonforfeitable
percentage of the Participant's Account in accordance with
section 10.
13.1(f) Termination of Insurance Election. A Participant may
direct the Trustee to stop making premium payments on a life
insurance contract held as part of The Participant's Account and
to surrender such contract or to sell such contract to the
Participant by completing and filing an Election Form with the
Plan Administrator. If the Participant purchases the contract, he
or she shall prepare and deliver to the Trustee all papers needed
to properly effect that purchase and shall pay to the Trustee an
amount equal to the cash surrender value of the contract at the
time of the purchase. The amount paid either by the Participant
for the purchase or by the insurance company in connection with
the surrender of a contract shall be credited to the
Participant's Account as of the date payment is made to the
Trustee. A Participant automatically shall be deemed to have
directed the Trustee to stop premium payments and to surrender a
life insurance contract immediately before a premium due date if
the premium due on that date would exceed the premium payment
limits in section 13.1(b).
13.2 Individually Directed Investments.
13.2(a) General.
13.2(a)(1) Standard Option. No Participant or Beneficiary may
direct the investment of such individual's Account,
13.2(a)(2) Alternative. If so specified in the Adoption
Agreement, a Participant or a Beneficiary may elect how such
individual's Account shall be invested between the investment
alternatives available under the Plan from time to time. The Plan
Administrator shall furnish to each Participant and Beneficiary
sufficient information to make informed decisions with regard to
investment alternatives and, if this Plan is intended to satisfy
ERISA section 404(c), information which satisfies the
requirements of the regulations under ERISA section 404(c). An
individual's investment direction shall apply
(i) Standard Option - to the individual's entire Account or
(ii) Alternative - only to the portion of the individual's
Account specified in the Adoption Agreement.
13.2(b) Election Rules. The Plan Administrator from time to time
shall establish and shall communicate in writing to such
individuals such reasonable restrictions and procedures for
making individual investment elections as the Plan Administrator
deems appropriate under the circumstances for the proper
administration of this Plan. Such restrictions and procedures
shall be applied on a uniform and nondiscriminatory basis to all
similarly situated individuals and, if this Plan is intended to
satisfy ERISA section 404(c), shall be in accordance with the
regulations under ERISA section 404(c).
13.2(c) No Election. The Account of an individual for whom no
investment election is in effect under this section 13.2, either
because such individual failed to make a proper election or
terminated an election under this section 13.2 shall be invested
as designated by the Plan Administrator.
13.3 Participant Loans. This section 13.3 shall apply only if
the Employer specifies in the Adoption Agreement that loans shall
be permitted. However, if loans are not permitted in the Adoption
Agreement, any outstanding loans made under the terms of the Pre-
Existing Plan shall be subject to this section 13.3.
13.3(a) Administration and Procedures. The Plan Administrator
shall establish objective nondiscriminatory written procedures
for the administration of the loan program under this section
13.3 (which written procedures, together with any written
amendments to such procedures, hereby are expressly incorporated
by reference as a part of this Plan), including, but not limited
to,
13.3(a)(1) the class of Participants and Beneficiaries who
are eligible for a loan;
13.3(a)(2) the identity of the person or position authorized
to administer the loan program;
13.3(a)(3) the procedures for applying for a loan;
13.3(a)(4) the basis on which loans will be approved or
denied;
13.3(a)(5) the limitations, if any, on the types and amounts
of loans offered;
13.3(a)(6) the procedures for determining a reasonable rate
of interest;
13.3(a)(7) the types of collateral which may be used as
security for a loan; and
13.3(a)(8) the events constituting default and the steps
that will be taken to preserve Plan assets in the event of such
default.
13.3(b) No Loans to Certain Owners and Family Members. No loan
shall b e made under this Plan to a Participant or Beneficiary
who is
13.3(b)(1) an Owner-Employee,
13.3(b)(2) an employee or officer of an Employer or an
Affiliate which is an electing small business corporation within
the meaning of Code section 1361 ("S Corporation") who owns (or
is considered to own within the meaning of Code section 31
B(a)(1)) on any day during any taxable year of such corporation
for which it is an S Corporation more than 5% of the outstanding
stock of such corporation, or
13.3(b)(3) a member of the family (as defined in
Code section 267(c)(4) of a Participant or Beneficiary described
in clause (1) or (2).
13.3(c) General Conditions. If loans are made available after
October 18, 1989 to any Participant or Beneficiary who is a
"party in interest" (as defined in ERISA section 3(14)) with
respect to the Plan, then loans shall be made available to all
Participants and Beneficiaries who are parties in interest with
respect to the Plan. All loans which are made under this Plan
shall comply with the following requirements under Code section
4975(d)(1) and ERISA section 408(b)(1):
13.3(c)(1) such loans shall be made available to
Participants and Beneficiaries who are eligible for a loan on a
reasonably equivalent basis;
13.3(c)(2) such loans shall not be made available to Highly
Compensated Employees in an amount greater than the amount made
available to other Employees;
13.3(c)(3) such loans shall be made in accordance with
specific provisions regarding such loans set forth in the Plan
and the written procedures described in section 13.3(a);
13.3(c)(4) such loans shall bear a reasonable rate of
interest; and
13.3(c)(5) such loans shall be adequately secured.
13.3(d) Other Conditions. All loans made under this Plan
shall be subject to the following conditions:
13.3(d)(1) If the loan is secured by any portion of the
Participant's Account and section 10.5 does not apply to any
portion of the Participant's Account, the Participant's Spouse,
if any, must consent in writing to the granting of such security
interest or to any increase in the amount of security no earlier
than the beginning of the 90 day period before such loan is made;
provided
(i) such consent must be in writing before a notary public
and must acknowledge the effect of such loan;
(ii) such consent shall be irrevocable and shall be binding
against the person, if any, identified as the Participant's
spouse at the time of such consent and any individual who may
subsequently become the Participant's Spouse;
(iii) a new consent shall be required in the event of any
renegotiation, extension, renewal, or other revision of such a
loan; and
(iv) if a valid spousal consent has been obtained, then,
notwithstanding any other provision of this Plan, the portion of
the Participant's vested Account balance used as a security
interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of
determining (and may reduce) the amount of the Account balance
payable at the time of death or distribution, but only if the
reduction is used as repayment of the loan. If less than 100% of
the Participant's vested Account balance (determined without
regard to the preceding sentence) is parable to the surviving
Spouse, then the vested Account balance shall be adjusted by
first reducing the vested Account balance by the amount of the
security used as repayment of the loan, and then determining the
benefit payable to the surviving Spouse.
13.3(d)(2) The loan shall provide for the repayment of
principal and interest in substantially level installments with
payments not less frequently than quarterly over a period of 5
years or less unless such loan is classified as a "home loan" (as
described in Code section 72(p));
13.3(d)(3) If the loan is secured by any portion of the
Participant's Account, such Account balance shall not be reduced
as a result of a default until a distributable event occurs under
the Plan; and
13.3(d)(4) The Participant or Beneficiary shall agree to
such other terms and conditions as are required under the written
procedures described in section 13.3(a).
13.3(e) Crediting of Loan Payments.
13.3(e)(1) Account Asset (Standard Option). The loan to a
Participant whose loan request is granted under this section 13.3
shall be made from, and shall be an asset of, the Participant's
Account and all principal and interest payments on such loan
shall be credited exclusively to the Participant's Account.
13.3(e)(2) Fund Asset (Alternative). If the Employer
specifies in the Adoption Agreement that loans shall be treated
as an asset of the Fund or, if any loan which was made under a
Pre-Existing Plan was treated as an asset of the Fund, such loans
shall be treated under this Plan as a general Fund investment and
an asset of the Fund, and all principal and interest payments on
such loan shall be credited exclusively to the Fund as a general
Fund investment.
13.3(f) Limitations on Amounts. The principal amount of any loan
(when added to the outstanding principal balance of any
outstanding loans made under this Plan or under any other plan
which is tax exempt under Code section 401 and which is
maintained by the Employer or an Affiliate) to the Participant
shall not exceed the lesser of (1) and (2) below:
13.3(f)(1) Dollar Limit - $50,000 reduced by the excess, if
any, of
(i) the highest outstanding principal balance of previous
loans to the Participant from the Plan (and any other plan
maintained by the Employer or an Affiliate) during the one year
period ending immediately before the date such current loan is
made, over
(ii) the current outstanding principal balance of such
previous loans on the date such current loan is made, or
13.3(f)(2) Account Limit
(i) Standard Option - 50% of the nonforfeitable interest
in the Participant's Account at the time the loan is made or
(ii) Alternative - if so specified in the Adoption
Agreement, the greater of $10,000 or the amount specified in
section 13.3(f)(2)(i), but in no event more than the
nonforfeitable interest in the Participant's Account.
An assignment or pledge of any portion of the Participant's
interest in the Plan and a loan, pledge or assignment with
respect to any insurance contract purchased under the Plan shall
be treated as a loan for purposes of the limitations in this
section 13.3(f).
13.3(g) Failure to Repay. If (1) the terms of the loan provide
that it shall become due and payable in full if the Participant's
or Beneficiary's obligation to repay the loan has been discharged
through a bankruptcy or any other legal process or action which
did not actually result in payment in full and (2) such loan is
not actually repaid in full, such loan shall be canceled on the
Fund's books and records and the amount otherwise distributable
to such Participant or Beneficiary under this Plan shall be
reduced by the principal amount of the loan plus accrued but
unpaid interest due as determined without regard to whether the
loan had been discharged through a bankruptcy or any other legal
process or action which did not actually result in payment in
full. The Plan Administrator shall have the power to direct the
Trustee to take such action as the Plan Administrator deems
necessary or appropriate to stop the payment of an Account to or
on behalf of a Participant who fails to repay a loan (without
regard to whether the obligation to repay such loan had been
discharges through a bankruptcy or any other legal process or
action) until the Participant's Account has been reduced by the
principal plus accrued but unpaid interest due (without regard to
such discharge) on such loan or to distribute the note which
evidences such loan in full satisfaction of that portion of such
Account which is represented by the value of such note.
Notwithstanding the foregoing, in the event of default,
foreclosure on the note and execution of the Plan's security
interest in the Account shall not occur until a distributable
event occurs under this Plan and interest shall continue to
accrue only to the extent permissible under applicable law.
13.3(h) Distributions. In the event the Participant's Account
becomes distributable before the loan is repaid in full, then the
vested Account balance shall be adjusted by first reducing the
vested Account balance by the amount of the security interest in
the Account and then determining the benefit payable. Nothing
shall preclude the Trustee from canceling the Plan's security
interest in the Account and distributing the note in lieu of any
other Plan assets in full satisfaction of that portion of the
Participant's Account represented by the value of the outstanding
balance of the loan or the amount which would have been
outstanding but for a discharge in bankruptcy or through any
other legal process.
SECTION 14. ADOPTION, AMENDMENT, WITHDRAWAL AND CONVERSION,
MERGER, ASSET TRANSFERS AND TERMINATION
14.1 Adoption.
14.1(a) General. Subject to the terms and conditions of this
Plan, the Trust Agreement and the Adoption Agreement, any sole
proprietorship, partnership or corporation may adopt this Plan by
completing and executing the Adoption Agreement. The Plan as
adopted by the Employer shall be effective for all purposes
(other than as a "prototype plan") as of the Effective Date.
However, the status of the Plan as a "prototype plan" shall be
conditioned upon acceptance of the Adoption Agreement by the
Prototype Sponsor and, upon such acceptance, such status as a
"prototype plan" shall be effective retroactive to the Effective
Date except as provided in section 14.4.
14.1(b) Pre-Existing Plan. If this Plan is adopted as an
amendment and restatement of a Pre-Existing Plan, (1) the Trust
Agreement shall be substituted for the trust or other funding
arrangement under the Pre-Existing Plan, (2) the assets held
under such trust or other funding arrangement shall become assets
of the Fund, (3) an Account shall be established for each person
who is a participant or beneficiary in the Pre-Existing Plan, and
(4) the dollar value assigned to such participant's or
beneficiary's Pre-Existing Plan account or accounts shall be
credited to such person's Account under this Plan (or to one or
more subaccounts under such Account). All optional forms of
benefit available under the Pre-Existing Plan which must be
preserved under Code section 411(d)(6) shall be available to the
Participant under this Plan. Further, such optional forms shall
be described in the Adoption Agreement and shall apply to the
Participant's entire Account balance. Notwithstanding the
foregoing, if the Employer so specifies in the Adoption Agreement
and separately accounts for the benefits attributable to the Pre-
Existing Plan as described in section 14.5(c) or, if applicable,
section 10.5, the optional forms which must be preserved may be
limited to such separate accounts.
14.1(c) Participating Affiliates. If this Plan is adopted as a
standardized Plan, each Affiliate shall automatically become a
Participating Affiliate effective as of the later of the
Effective Date or the date such entity first becomes an
Affiliate. If this Plan is adopted as a nonstandardized Plan, an
Affiliate of the Employer may adopt the Employer's Plan effective
as of any date on or after the Effective Date. An Affiliate's
execution of the Adoption Agreement (or a separate signature page
to the Adoption Agreement) shall evidence the Participating
Affiliate's adoption of the Plan and the effective date of such
adoption. In adopting this Plan, each Participating Affiliate is
deemed to have authorized the Employer to effect all actions
under this Plan on its behalf, including but not limited to the
powers reserved to the Employer under this section 14 and the
power to enter into such agreements with the Trustee or others as
may be necessary or appropriate under the Plan.
14.2 Amendment.
14.2(a) Prototype Sponsor. Subject to the restrictions of section
14.3, the Prototype Sponsor shall have the right at any time and
from time to time to amend this Plan in any respect whatsoever in
writing. To the extent required under the procedures and rules in
effect for master and prototype plans at the time of any such
amendment, notice of such amendment shall be given to the
Employer by the Prototype Sponsor as soon as practicable under
the circumstances.
14.2(b) Employer. Subject to the restrictions of section 14.3,
the Employer shall have no right to amend this Plan except (1) by
entering into a new Adoption Agreement with the Prototype
Sponsor, (2) by adding such language to the Adoption Agreement as
is necessary to allow the Plan to continue to satisfy the
requirements of Code section 415 or Code section 416 because of
the required aggregation of multiple plans, (3) by adopting
certain model amendments published by the Internal Revenue
Service which specifically provide that such adoption would not
cause the Plan to be treated as an individually designed plan, or
(4) by withdrawing this Plan as a prototype and converting it
into an individually designed plan as provided in section 14.4.
14.3 Certain Amendment Restrictions.
14.3(a) General. No amendment to the Plan shall be made which
would (1) deprive a Participant of the nonforfeitable percentage
of his or her Account balance accrued to the later of the
effective date of the amendment or the date the amendment is
adopted, or (2) decrease a Participant's Account balance or
eliminate an optional form of benefit except to the extent
permissible under Code section 412(c)(8), section 401(a)(4) and
section 411(d)(6) and the regulations under those sections.
14.3(b) Change in Service Calculation Method. It an amendment
changes the method of calculating service, each Employee who had
any service credit under such prior method shall be credited with
any service for any computation period during which such
amendment was effective in accordance with the rules in section
3.
14.3(c) Change in Vesting Schedule. It an amendment directly or
indirectly affects the computation of a Participant's
nonforfeitable percentage of his or her Account or it the Plan's
vesting schedule changes as a result of a change in the Plan's
status as a Top-Heavy Plan (as described in section 12.4), each
Participant with at least 3 years of service with the Employer or
an Affiliate may elect, within a reasonable period after the
adoption of the amendment, to have the nonforfeitable percentage
of his or her Account computed under this Plan without regard to
such amendment. In the case of a Participant who does not have at
least one Hour of Service in any Plan Year beginning after
December 31, 1988, the preceding sentence shall be applied by
substituting 5 years of service for 3 years of service. The
period during which the election may be made shall commence with
the date the amendment is adopted and shall end on the later of
14.3(c)(1) 60 days after the amendment is adopted;
14.3(c)(2) 60 days after the amendment becomes effective; or
14.3(c)(3) 60 days after the Participant is issued written
notice of the amendment by the Plan Administrator.
Furthermore, if an amendment changes the Plan's vesting schedule,
the nonforfeitable percentage (determined as of the later of the
date the amendment is adopted or the date it becomes effective)
of the employer-derived Account balance of each Employee who is a
Participant as of such date shall not be less than the percentage
computed under the Plan without regard to such amendment.
14.4 Withdrawal as a Prototype and Conversion to Individually
Designed Plan.
14.4(a) Voluntary Conversion. The Employer may voluntarily
withdraw this Plan as a "prototype plan" and convert it to an
individually designed plan by written notice filed with the
Trustee and the Prototype Sponsor. For purposes of this section
14.4, such withdrawal shall be effective with respect to the
Employer's plan and the Trustee as of the effective date of such
withdrawal, but such withdrawal shall not relieve the Employer of
any responsibilities or liabilities to the Prototype Sponsor
until 60 days after the date the Prototype Sponsor receives
written notice of such withdrawal unless the Prototype Sponsor
agrees in writing to an earlier effective date for such
withdrawal.
14.4(b) Involuntary Conversion. The Employer shall be deemed to
have withdrawn this Plan as a "prototype plan " and converted it
to an individually designed plan effective as of the earlier of
the date
14.4(b)(1) the Internal Revenue Service or a court
determines that this Plan fails to meet the requirements of Code
section 401;
14.4(b)(2) the Trustee ceases to maintain a brokerage
account for the Plan with the Prototype Sponsor or with an
approved subsidiary of the Prototype Sponsor;
14.4(b)(3) the Prototype Sponsor notifies the Employer in
writing that the Prototype Sponsor for reasons sufficient to the
Prototype Sponsor has terminated its sponsorship of its prototype
plan program or of this Plan for the Employer; or
14.4(b)(4) the Employer amends any provision of this Plan or
the Adoption Agreement (other than in accordance with section
14.2(b)(1) through (3)) including an amendment because of a
waiver of the minimum funding requirement under Code section
412(d),
14.4(c) Effect of Withdrawal and Conversion. If this Plan is
withdrawn as a prototype and converted to an individually
designed Plan under this section 14.4, the Employer as of the
effective date of such withdrawal shall assume the right and
responsibility to amend the Plan under section 14.2(a) and
thereafter only the Employer shall make amendments to this Plan;
provided, (1) no such amendment shall affect the Trustee's rights
or duties under this Plan without the Trustee's prior written
consent and (2) any such amendment shall be subject to the
restrictions of section 14.3.
14.5 Merger, Consolidation or Asset Transfers.
14.5(a) General. In the case of any Plan merger or consolidation
with, or transfer of assets or liabilities to or from, any other
employee benefit plan, each person for whom an Account then is
maintained shall be entitled to receive a benefit from such plan,
if it is then terminated, which is equal to or greater than the
benefit such person would have been entitled to receive
immediately before such merger, consolidation or transfer, it
this Plan then had been terminated.
14.5(b) Authorization. The Plan Administrator may authorize the
Trustee to accept a transfer of assets from or transfer Fund
assets to the trustee, custodian or insurance company of any
other plan which satisfies the requirements of Code section
401(a) in connection with a merger or consolidation with, or
other transfer of assets and liabilities to or from any such
plan, provided that the transfer will not affect the
qualification of this Plan under Code section 401(a) and the
assets to be transferred are acceptable to the Trustee.
14.5(c) Separate Account. The Plan Administrator may establish
separate bookkeeping accounts for any assets transferred to the
Trustee under this section 14.5 and shall establish such separate
bookkeeping accounts if required under this Plan. If separate
accounts are maintained with respect to transferred assets, no
contributions or Forfeitures under this Plan shall be credited to
such separate accounts, but such accounts shall share in the Fund
Earnings on the same basis as each other Account under section
6.2. Any individual for whom an Account is established under this
section 14.5 shall become a Participant in this Plan as of the
effective date of the merger, consolidation or asset transfer;
however, no contributions shall be made by or on behalf of such
individual under this Plan unless such individual is otherwise
entitled to such contributions under the terms of this Plan.
14.5(d) Code section 411(d)(6) Protected Benefits. All optional
forms of benefit available under the transferor plan which must
be preserved under Code section 411(d)(6) shall be available to
the Participant under this Plan unless such transfer meets the
requirements of Code section 414(i) and the Participant has made
an elective transfer which satisfies the requirements set forth
in Q&A-3(b) of section 1.411(d)-4 of the Federal Income Tax
Regulations. Further, such optional forms shall be described in
the Adoption Agreement and, generally, shall apply to the
Participant's entire Account balance. Notwithstanding the
foregoing, if the Employer so specifies in the Adoption Agreement
and separately accounts for such transferred assets, the optional
forms which must be preserved may be limited to such separate
account.
14.6 Termination.
14.6(a) Right to Terminate. The Employer may terminate or
partially terminate this Plan or discontinue contributions to
this Plan at any time by written action of the Board filed with
the Trustee and the Prototype Sponsor. The Employer reserves the
right to terminate the participation in this Plan by any
Participating Affiliate at any time by written action.
Furthermore, a Participating Affiliate's participation in this
Plan automatically shall terminate if (and at such time as) its
status as an Affiliate terminates for any reason whatsoever
(other than through a merger or consolidation into another
Participating Affiliate). However, a Participating Affiliate's
termination of participation in this Plan shall not be deemed to
be a termination or partial termination of the Plan except to the
extent required under the Code. Upon complete termination of this
Plan, any unallocated amounts (other than amounts in a Code
section 415 suspense account described in section 7.2(b)) shall
be allocated in accordance with the Plan terms but, if the Plan
terms do not address the allocation of such amounts, they shall
be allocated in a nondiscriminatory manner prior to distribution
of Plan assets.
14.6(b) Full Vesting Upon Termination. If this Plan is
terminated or partially terminated under this section 14.6 or if
there is a complete discontinuance of contributions under this
Plan, the Account of each affected Employee of the Employer or an
Affiliate shall become nonforfeitable on the effective date of
such termination or partial termination or complete
discontinuance of contributions, as the may be. In the event of a
complete termination of this Plan or a complete discontinuance of
contributions, each other Account (except to the extent otherwise
nonforfeitable under the terms of this Plan) shall become a
Forfeiture and shall be allocated as such under section 6.3 as of
the effective date of such complete termination or complete
discontinuance as if such date was the last day of a Plan Year.
SECTION 15. ADMINISTRATION
15.1 Named Fiduciaries. The Plan Administrator and the
Employer (if the Plan Administrator is not the Employer) shall be
the Named Fiduciaries responsible to the extent of their powers
and responsibilities assigned in the Plan for the control,
management and administration of the Plan. The Plan
Administrator, the Employer and the Trustee (other than Smith
Barney Corporate Trust Company) shall be the Named Fiduciaries
responsible to the extent of their respective powers and
responsibilities assigned to them in the Trust Agreement for the
safekeeping, control, management, investment and administration
of the assets of the Fund. Any power or responsibility for the
control, management or administration of the Plan or the Fund
which is not expressly assigned to a Named Fiduciary under the
Plan or the Trust Agreement, or with respect to which the proper
assignment is in doubt, shall be deemed to have been assigned to
the Employer as a Named Fiduciary. One Named Fiduciary shall have
no responsibility to inquire into the acts and omissions of
another Named Fiduciary in the exercise of powers or the
discharge of responsibilities assigned to such other Named
Fiduciary under the Plan or the Trust Agreement. Any person may
serve in more than one fiduciary capacity under the Plan or the
Trust Agreement and a fiduciary may be a Participant provided
such individual otherwise satisfies the requirements of section
4.
A Named Fiduciary, by written instrument filed by the Plan
Administrator with the records of the Plan, may designate a
person who is not a Named Fiduciary to carry out any of its
responsibilities under the Plan or Trust Agreement, other than
the responsibilities of the Trustee for the safekeeping, control,
management, investment and administration of the assets of the
Fund, except to the extent the Trustee's responsibility for
investment decisions is delegated to the Employer, the Plan
Administrator, or an investment manager.
15.2 Administrative Powers and Duties. Except to the extent
expressly reserved under the Plan or the Trust Agreement to the
Employer, the Board, or the Trustee, the Plan Administrator shall
have the exclusive responsibility and complete discretionary
authority to control the operation, management and administration
of the Plan, with all powers necessary to enable it properly to
carry out such responsibilities, including (but not limited to)
the power to construe the Plan, the related Adoption Agreement,
and the Trust Agreement, to determine eligibility for benefits
and to resolve all interpretative, equitable or other questions
that arise under the Plan or the Trust Agreement, The decisions
of the Plan Administrator on all matters within the scope of its
authority shall be final and binding. To the extent a
discretionary power or responsibility under the Plan or Trust
Agreement is expressly assigned to a person other than the Plan
Administrator, such person shall have complete discretionary
authority to carry out such power or responsibility and such
person's decisions on all matters within the scope of such
person's authority shall be final and binding.
15.3 Agent for Service of Process. The agent for service of
process for this Plan shall be the person who is identified as
the agent for service of process in the summary plan description
for this Plan. Neither the Prototype Sponsor nor any of its
affiliates shall be the agent for service of process for the
Plan.
15.4 Reporting and Disclosure. All records regarding the
operation, management and administration of this Plan shall be
maintained by the Plan Administrator. The Plan Administrator
shall satisfy any federal or state requirement to report and
disclose any information regarding this Plan to any federal or
state department or agency, or to any Participant or Beneficiary.
SECTION 16. MISCELLANEOUS
16.1 Spendthrift Clause and Qualified Domestic Relations
Orders. Except to the extent permitted by law, no Account,
benefit, payment or distribution under this Plan or Trust
Agreement shall be subject to attachment, garnishment, levy
execution or any claim or legal process of any creditor of a
Participant or Beneficiary, and no Participant or Beneficiary
shall have any right to alienate, commute, anticipate or assign
all or any part of such individual's Account, benefit, payment or
distribution under this Plan or Trust Agreement. The preceding
sentence also shall apply to the creation, alienation,
assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order
unless such order is determined to be a qualified domestic
relations order ("QDRO") within the meaning of Code section
414(p) and such order is entered on or after January 1, 1985. The
Plan Administrator shall establish uniform and nondiscriminatory
procedures regarding the determination of whether a domestic
relations order constitutes a QDRO, the timing of distributions
made pursuant to a QDRO and the treatment of any separate account
established under this Plan pursuant to a QDRO. Unless otherwise
expressly specified in such procedures, (1) the Plan
Administrator shall treat a domestic relations order entered
before January 1, 1985 as a QDRO in accordance with Code section
414(p) and (2) a distribution may be made to an alternate payee
pursuant to a QDRO prior to the earliest date that a distribution
could be made to a Participant under the terms of this Plan and
prior to a Participant's "earliest retirement age" under Code
section 414(p). The determinations and the distributions made by,
or at the direction of, the Plan Administrator under this section
16.1 shall be final and binding on the Participant and on all
other persons interested in such order,
16.2 Benefits Supported Only by Trust Fund. Any person having
any claim for any benefit under this Plan shall look solely to
the assets of the Fund for the satisfaction of that claim. In no
event shall the Prototype Sponsor, the Trustee, the Plan
Administrator, the Employer or a Participating Affiliate or any
of their employees, officers, directors or their agents be liable
in their individual capacities to any person whomsoever for the
payment of any benefits under this Plan.
16.3 Discrimination. The Plan Administrator shall administer
the Plan in a manner which it deems equitable under the
circumstances for all similarly situated Employees, Participants,
Spouses and Beneficiaries; provided, the Plan Administrator shall
not permit discrimination in favor of Highly Compensated
Employees of the Employer or any Participating Affiliate which
would be prohibited under Code section 401(a).
16.4 Claims. Any payment to a Participant or Beneficiary or
the legal representative or heirs-at-law of any such person made
in accordance with the provisions of this Plan shall to the
extent of such payment be in full satisfaction of all claims
under this Plan against the Trustee, Plan Administrator, a Named
Fiduciary, the Employer and any Participating Affiliate, any of
whom may require such person, such person's legal representative
or heirs-at-law, as a condition precedent to such payment, to
execute a receipt and release in such form as shall be determined
by the Trustee, Plan Administrator, a Named Fiduciary, the
Employer or a Participating Affiliate, as the case may be.
16.5 Nonreversion. Except as provided in section 7.2(b) and
in this section 16.5, neither the Employer nor any Participating
Affiliate shall have any present or prospective right, claim, or
interest in the Fund or in any Employer contribution made to the
Trustee.
To the extent permitted by the Code and ERISA, the Employer
contributions described in this section 16.5, less any losses on
such contributions, shall be returned by the Trustee to the
Employer or to any Participating Affiliate upon the written
direction of the Plan Administrator in the event that:
16.5(a) an Employer contribution is made by a mistake of fact,
provided such return is effected within one year after the
payment of such contribution;
16.5(b) a final judicial or Internal Revenue Service
determination is made that this Plan fails to satisfy the
requirements of Code section 401 with respect to its initial
qualification (provided, if the Employer is not entitled to rely
on the Prototype Sponsor's opinion letter, the application for
the initial qualification of the Plan is made on or before the
date prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as
the Secretary of the Treasury may prescribe), in which event all
Employer contributions made before such judicial or
administrative determination (whichever last occurs) plus any
earnings and minus any losses shall be returned within one year
after such determination, all such contributions being hereby
conditioned upon this Plan satisfying all applicable requirements
under Code section 401 from and after its adoption; or
16.5(c) a deduction for an Employer contribution is disallowed
under Code section 404, in which event such contribution shall be
returned within one year after such disallowance, all such
contributions being hereby conditioned upon being deductible
under Code section 404.
16.6 Exclusive Benefit. The corpus or income of the Fund
shall not be diverted to or used for any purpose other than the
exclusive benefit of Participants or Beneficiaries.
16.7 Expenses. Any expenses of the Fund which are properly
allocable to an individual's Account (including, but not limited
to, expenses related to an individual's investment directions,
annuity contract purchases and other transactional fees for
processing distributions) may be charged directly against such
individuals Account it so provided in the administrative
procedures established by the Plan Administrator.
16.8 Section 16 of Securities Exchange Act of 1934. If this
Plan is invested in employer securities and this Plan permits
employees of the Employer who are subject to the reporting
requirements of section 16 of the Securities Act of 1934, as
amended ("Act") to receive awards, then notwithstanding any other
provision of this Plan, the provisions of this Plan that set
forth the formula or formulas that determine the amount, price or
timing of awards to such persons and any other provisions of this
Plan of the type referred to in section 16b-3(c)(2)(ii) of the
Act shall not be amended more than once every six months, other
than to comport with changes in the Code, ERISA, or the rules
thereunder. Further, to the extent required, the employees
described in the preceding sentence shall be subject to such
withdrawal, investment and other restrictions necessary to
satisfy Rule 16b-3 under the Act. This section 16.8 is intended
to comply with Rule 16b-3 under the Act and shall be effective
only to the extent required by such rule and shall be interpreted
and administered in accordance with such rule.
16.9 Arbitration. Any claims or controversies with the
Prototype Sponsor related to this Plan are subject to arbitration
in accordance with the arbitration provisions of the Smith Barney
Qualified Retirement Plan and IRA Client Agreement or any
successor to such agreement, which provisions hereby are
expressly incorporated herein by reference.
APPENDIX ONE TO THE SMITH BARNEY PROTOTYPE DEFINED CONTRIBUTION
PLAN
OBRA'93 ANNUAL COMPENSATION LIMIT
The Plan is amended by adding the following to the end of section
2.10:
2.10(h) OBRA `93 Annual Compensation Limit. 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 OBRA `93 annual compensation limit. The OBRA `93 annual
compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period,
not exceeding 12 months, over which Compensation is determined
determination period) beginning in such calendar year. If a
determination period consists of fewer than 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 12.
For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17)
of the Code 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.
Waiver of 30-Day Notice Period
[Note to Employer: The following amendment will apply only to
distributions from a Profit Sharing Plan or 401(k) Plan that are
not subject to the qualified joint and survivor annuity rules of
Code section 401(a)(11) and Code section 417. In order for this
amendment to apply to a Plan, the Employer must have selected
Option IX.D.3 in the Adoption Agreement and the distribution must
satisfy the Safe Harbor Rules in section 10.5.]
The Plan is amended by adding the following to the end of section
9.3:
9.3(e) Waiver of 30-Day Notice Period. If a distribution is
one to which Sections 401(a)(11) and 417 of the Internal Revenue
Code 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:
9.3(e)(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
9.3(e)(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
EXHIBIT 10.10
OshKosh B'Gosh, Inc.
112 Otter Avenue
Oshkosh, Wisconsin 54901-5008
CREDIT AGREEMENT
as of November 3, 1999
Firstar Bank, BankBoston, N.A.
National Association, individually and as Co-Agent
individually and as Agent 100 Federal Street
777 East Wisconsin Avenue Boston, Massachusetts 02110
Milwaukee, Wisconsin 53202
Harris Trust and Savings Bank, Bank One, NA
individually and as Co-Agent individually and as Co-Agent
111 West Monroe Street 111 East Wisconsin Avenue
Chicago, Illinois 60690 Milwaukee, Wisconsin 53202
The Banks named in Appendix A hereto
Ladies/Gentlemen:
OshKosh B'Gosh, Inc., a Delaware corporation with its
principal offices located in the City of Oshkosh, Wisconsin (the
"Company"), hereby agrees with each of you (collectively the
"Banks" and individually a "Bank"), Firstar Bank, National
Association, as Agent (the "Agent") and Harris Trust and Savings
Bank, Bank One, NA and BankBoston, N.A., as Co-Agents (the "Co-
Agents"), as follows:
ARTICLE I
LOANS AND NOTES
1.1 Revolving Credit. From time to time prior to
November 3, 2002 or the earlier termination in full of the
Commitments (in either case the "Termination Date"), the Company
may obtain loans from each of the Banks ("Revolving Credit
Loans"), pro rata according to each Bank's Percentage Interest,
up to an aggregate principal amount equal to the amount by which
(i) $75,000,000 (the "Aggregate Revolver Commitment" and as to
each Bank's respective Percentage Interest thereof, its "Revolver
Commitment"), as terminated or reduced pursuant to section 1.8,
exceeds (ii) the sum of (A) the aggregate amount of Letter of
Credit Obligations, and (B) the aggregate amount of outstanding
Swingline Loans (as defined in Section 1.3 below). The Revolver
Commitment and Percentage Interest of each Bank therein is set
forth in Appendix A hereto. The failure of any one or more of
the Banks to lend in accordance with its Revolver Commitment
shall not relieve the other Banks of their several obligations
hereunder, but no Bank shall be liable in respect to the
obligation of any other Bank hereunder or be obligated in any
event to lend in excess of its Revolver Commitment. Subject to
all of the terms and conditions hereof the Company may repay such
Loans and reborrow hereunder from time to time prior to the
Termination Date. Each Revolving Credit Loan shall be in a
minimum amount of $1,000,000 or any multiple of $100,000 in
excess of such amount (except that any Adjusted LIBOR Rate Loan
shall be in a minimum amount of $5,000,000 or any multiple of
$250,000 in excess of such amount). Revolving Credit Loans from
each Bank shall be evidenced by a single promissory note of the
Company (each a "Revolving Credit Note", and collectively with
the Term Notes (as defined in section 1.2 below) and the
Swingline Note (as defined in Section 1.3 below), sometimes
called the "Notes") in the form of Exhibit 1.1 annexed hereto,
payable to the order of the lending Bank. Outstanding Revolving
Credit Loans and Swingline Loans shall be reduced to zero dollars
($0) at least for sixty (60) consecutive days each calendar year.
Effective on the date of this Agreement, the Commitments of the
Banks party to the Credit Agreement dated June 24, 1994, as
amended (the "1994 Credit Agreement"), among the Company, such
Banks and Firstar Bank, N.A., as agent for such Banks, shall
automatically terminate without further action on the part of the
Company or any of such Banks.
1.2 Term Loan. At any time on or prior to May 22,
2000 (the "Drawdown Period"), the Company may obtain one or more
Loans (collectively, the "Term Loan") from each of the Banks, pro
rata according to each Bank's Percentage Interest, up to an
aggregate principal amount of $125,000,000 (the "Term Loan
Commitment" and as to each Bank's respective Percentage Interest
thereof, its "Term Loan Commitment"). Each advance of the Term
Loan from all of the Banks shall be in a minimum principal amount
of $5,000,000, except that the final advance of the Term Loan
which utilizes the entire remaining portion of the Term Loan
Commitment may be in any minimum amount. The Term Loan
Commitment shall terminate at the expiration of the Drawdown
Period as to any portion thereof which has not been advanced to
the Company on or prior to such date and any such unused portion
of the Term Loan Commitment may not thereafter be borrowed by the
Company. Repayments of the Term Loan may not be reborrowed
hereunder. Each Bank's Term Loan Commitment shall be evidenced
by a single promissory note (a "Term Note" and, collectively with
the Revolving Credit Notes and the Swingline Note (as defined in
Section 1.3 below), sometimes called the "Notes"), payable to the
order of the lending Bank in a principal amount equal to such
Bank's Term Loan Commitment, dated as of the Closing Date, in
substantially the form set forth in Exhibit 1.2 attached hereto.
1.3 Swingline Credit.
(a) Swingline Commitment. From time to time
prior to the Termination Date, the Company may obtain
Swingline Loans ("Swingline Loans") from the Agent (in
such capacity, the "Swingline Lender") up to an
aggregate amount of $5,000,000 at any time outstanding,
repay such Swingline Loans and reborrow hereunder;
provided, however, that the Swingline Lender shall not
advance any Swingline Loan if (i) any Default or Event
of Default has occurred and is continuing, or (ii)
after giving effect thereto, the aggregate amount of
outstanding Revolving Credit Loans would thereby exceed
the maximum amount permitted by section 1.1. Each
Swingline Loan shall be in a multiple of $1,000 and the
Swingline Loans shall be evidenced by a single
promissory Note of the Company (the "Swingline Note",
and collectively with the Revolving Credit Notes and
the Term Notes, sometimes called the "Notes") in the
form of Exhibit 1.3 annexed hereto, payable to the
order of the Swingline Lender.
(b) Refunding Revolving Credit Loans. In its
sole and absolute discretion, the Swingline Lender may
at any time after the occurrence and during the
continuance of a Default or Event of Default, on behalf
of the Company (which hereby irrevocably authorizes the
Swingline Lender to act on its behalf for such
purpose), request each Bank to make a Revolving Credit
Loan in an amount equal to such Bank's Percentage
Interest of the Swingline Loans outstanding on the date
such notice is given. Each Bank shall make the
proceeds of its requested Revolving Credit Loan
available to the Swingline Lender, in immediately
available funds, at the office of the Swingline Lender
specified herein before 11:00 a.m. (Milwaukee time) on
the Business Day following the day such notice is
given. The proceeds of such Revolving Credit Loans
shall be immediately applied to repay the outstanding
Swingline Loans.
(c) Participations. If any Bank refuses or
otherwise fails to make a Revolving Credit Loan when
requested by the Swingline Lender pursuant to section
1.3(b) above, such Bank will, by the time and in the
manner such Revolving Credit Loan was to have been
funded to the Swingline Lender, purchase from the
Swingline Lender an undivided participating interest in
the outstanding Swingline Loans in an amount equal to
its Percentage Interest of the aggregate principal
amount of Swingline Loans that were to have been repaid
with such Revolving Credit Loans. Each Bank that so
purchases a participation in a Swingline Loan shall
thereafter be entitled to receive its Percentage
Interest of each payment of principal received on the
Swingline Loan and of interest received thereon
accruing from the date such Bank funded to the
Swingline Lender its participation in such Swingline
Loan.
1.4 Notes. The Notes shall be executed by the Company
and delivered to the Banks on or prior to the Closing Date.
Although the Notes shall be expressed to be payable in the full
amounts specified above, the Company shall be obligated to pay
only the amounts actually disbursed to or for the account of the
Company, together with interest on the unpaid balance of sums so
disbursed which remains outstanding from time to time, at the
rates and on the dates specified herein and in the Notes,
together with the other amounts provided herein and therein.
1.5 Letters of Credit.
(a) Issuance; Bank Participations. Firstar Bank,
National Association and such other Bank or Banks as
the Company may from time to time designate with the
consent of the Agent and such Bank or Banks (each an
"LOC Bank") shall from time to time when so requested
by the Company issue standby and commercial letters of
credit, respectively (each a "Letter of Credit" and
collectively the "Letters of Credit") for the account
of the Company up to an aggregate face amount of
$45,000,000; provided, however, that the LOC Bank shall
not issue any Letter of Credit if (i) any Default or
Event of Default has occurred and is continuing, or
(ii) after giving effect thereto, the aggregate amount
of outstanding Revolving Credit Loans would thereby
exceed the maximum amount permitted by Section 1.1.
All outstanding letters of credit issued pursuant to
the 1994 Credit Agreement shall automatically be deemed
to be Letters of Credit issued pursuant to this section
1.5(a). Each LOC Bank hereby grants to each other
Bank, and each other Bank hereby agrees to take, a pro
rata participation in each Letter of Credit issued
hereunder and all rights (including rights to
reimbursement from the Company under paragraph (c)
below) and obligations associated therewith in
accordance with the Percentage Interest of each Bank.
In the event of any drawing on a Letter of Credit which
is not reimbursed by or on behalf of the Company, each
Bank shall pay to the appropriate LOC Bank a
proportionate amount of such drawing equal to its
Percentage Interest therein. Each LOC Bank shall
divide the proceeds of any reimbursement of a drawing
on a Letter of Credit with the other Banks that have
made payment to the LOC Bank pursuant to the foregoing
sentence, pro rata according to the respective
contributions of such other Banks.
(b) Cash Collateral. In the event that any
Letter of Credit remains outstanding beyond the
fifteenth day prior to the Termination Date, the
Company shall upon demand of the Required Banks (or the
Agent acting with the consent of the Required Banks)
either (i) pay to the Agent the sum of the largest
draft which could then or thereafter be drawn under
such Letter of Credit, which sum the Agent may hold for
the account of the Company, without interest, for the
purpose of paying any draft presented, with the excess,
if any, to be returned to the Company upon termination
or expiration of such Letter of Credit or (ii) deliver
a back-up letter of credit to the Agent securing the
Company's reimbursement obligations with respect to
such Letter of Credit in form and substance acceptable
to the Agent and from a creditworthy financial
institution acceptable to the Agent.
(c) Standby Letter of Credit Fees. The Company
agrees to pay to the Agent for the pro rata benefit of
the Banks a letter of credit fee in respect of each
standby Letter of Credit at a per annum rate equal to
the Applicable Margin on the undrawn face amount of
such standby Letter of Credit. Such fees shall be
payable quarterly in arrears on the first day of each
calendar quarter.
(d) Reimbursement. The Company hereby
unconditionally promises to pay to the appropriate LOC
Bank upon demand, without defense, setoff or
counterclaim, the amount of each drawing under Letters
of Credit issued by such LOC Bank plus interest on the
foregoing from the date due at the Prime Rate.
(e) Reliance on Documents. Delivery to the LOC
Banks of any documents complying on their face with the
requirements of any Letter of Credit shall be
sufficient evidence of the validity, genuineness and
sufficiency thereof and of the good faith and proper
performance of drawers and users of such Letter of
Credit, their agents and assignees; and the LOC Banks
may rely thereon without liability or responsibility
with respect thereto, even if such documents should in
fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged.
(f) Non-Liability for Other Matters. The LOC
Banks shall not be liable to the Company for (i)
honoring any requests for payment under any Letter of
Credit which strictly comply on their face with the
terms of such Letter of Credit, (ii) any delay in
giving or failing to give any notice, (iii) errors,
delays, misdeliveries or losses in transmission of
telegrams, cables, letters or other communications or
documents or items forwarded in connection with any
Letter of Credit or any draft, (iv) accepting and
relying upon the name, signature or act of any party
who is or purports to be acting in strict compliance
with the terms of any Letter of Credit; or (v) any
other action taken or omitted by the LOC Banks in good
faith in connection with any Letter of Credit or any
draft; except only that an LOC Bank shall be liable to
the Company to the extent of damages suffered by the
Company determined by final judgment in a court of
competent jurisdiction to have been caused by (A) the
LOC Bank's willful misconduct or gross negligence or
(B) the LOC Bank's willful and wrongful failure to pay
under any Letter of Credit after the presentation to it
of documents strictly complying with the terms and
conditions of the Letter of Credit.
(g) Obligations Absolute. The Company's and the
other Banks' obligations to reimburse any LOC Bank for
a drawing made on a Letter of Credit shall be absolute,
unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this
Agreement, under any and all circumstances whatsoever;
provided, however, that payment of such drawing by the
LOC Bank shall not have constituted gross negligence or
willful misconduct of such LOC Bank.
1.6 Use of Proceeds. The Company represents, warrants
and agrees that:
(a) The proceeds of the Loans made hereunder will
be used solely for the following purposes: (i)
proceeds of Revolving Credit Loans shall be used for
general corporate purposes; and (ii) proceeds of the
Term Loan shall be used to finance the repurchase of
the Company's outstanding common stock.
(b) No part of the proceeds of any Loan made
hereunder will be used to "purchase" or "carry" any
"margin stock" or to extend credit to others for the
purpose of "purchasing" or "carrying" any "margin
stock" (as such terms are defined in the Regulation U
of the Board of Governors of the Federal Reserve
System), and the assets of the Company and its
Subsidiaries do not include, and neither the Company
nor any Subsidiary has any present intention of
acquiring, any such security.
1.7 Commitment Fee. The Company shall pay to the
Agent for the account of the Banks, pro rata according to their
respective Percentage Interests, a commitment fee computed at a
rate per annum equal to the Applicable Margin on the difference
existing from time to time between (a) the Aggregate Commitment,
and (b) the outstanding unpaid principal balance of Revolving
Credit Loans and the Term Loan. Such commitment fees shall
accrue during the period from the Closing Date to and including
the Termination Date and be payable quarterly in arrears on the
last day of each calendar month.
1.8 Termination or Reduction. The Company shall have
the right, upon five Business Days' prior written notice to each
Bank, to ratably reduce in part the Aggregate Revolver
Commitment, provided, however, that (i) each partial reduction of
the Aggregate Revolver Commitment shall be in the amount of
$1,000,000 or an integral multiple thereof, and (ii) no reduction
shall reduce the Aggregate Revolver Commitment to an amount less
than the sum of (A) the aggregate principal amount of outstanding
Revolving Credit Loans, (B) the aggregate principal amount of
outstanding Swingline Loans, and (C) the aggregate amount of
outstanding Letter of Credit Obligations. Subject to the
limitations of the preceding sentence, the Aggregate Revolver
Commitment may be terminated in whole at any time upon five
Business Days' prior written notice to each Bank. The Company
shall also have the right, upon five (5) Business Days' notice to
each Bank, to ratably reduce in part the Term Loan Commitment at
any time prior to the end of the Drawdown Period, provided,
however, that (i) each partial reduction of the Term Loan
Commitment shall be in the amount of $1,000,000 or an integral
multiple thereof, and (ii) no reduction shall reduce the Term
Loan Commitment to an amount less than the outstanding principal
balance of the Term Loan.
ARTICLE II
ADMINISTRATION OF CREDIT
2.1 Elective Rates of Interest on Loans. The unpaid
principal balance of the Notes may be comprised of Variable Rate
Loans and/or Adjusted LIBOR Rate Loans as elected by the Company
from time to time in accordance with the procedures set forth
below; provided, however, that each Adjusted LIBOR Rate Loan must
be in a minimum amount of $5,000,000 and in increments of
$250,000 above that amount; provided, further, that no election
of an Adjusted LIBOR Rate Loan shall become effective if any
Default or Event of Default has occurred and is continuing; and
provided, further, that no more than ten (10) different Interest
Periods for Adjusted LIBOR Rate Loans may be outstanding at any
one time. Each notice of election of an Adjusted LIBOR Rate Loan
shall be irrevocable. Swingline Loans shall at all times bear
interest at the Variable Rate or, at the Company's election, such
other rate quoted to the Company by the Swingline Lender when a
Swingline Loan is requested.
2.2 Borrowing Procedure. The Company will request a
Loan hereunder by written notice in the form of Exhibit 2.2
annexed hereto, or by telephonic notice (which notice shall be
confirmed in writing if the Agent so requests), which notices
will be irrevocable, to the Agent not later than 11:00 a.m.,
Milwaukee time, on the proposed Borrowing Date, or, in the case
of an Adjusted LIBOR Rate Loan, not less than two Business Days
before the proposed Borrowing Date. In the event of any
inconsistency between the telephonic notice and the written
confirmation thereof, the telephonic notice will control. Each
such request will be effective upon receipt by the Agent and will
specify (i) the amount of the requested Loan; (ii) the proposed
Borrowing Date; (iii) whether such Loan will bear interest at the
Variable Rate or at the Adjusted LIBOR Rate; and (iv) in the case
of an Adjusted LIBOR Rate Loan, the Interest Period therefor.
Upon its receipt of such notice from the Company, the
Agent shall promptly give notice to the other Banks, each of
which shall have its respective portion of the requested Loan
available to the Agent in Milwaukee in immediately available
funds not later than 2:00 p.m., Milwaukee time, on the Borrowing
Date. Out of the funds received from each Bank for the making of
the Loans hereunder, the Agent will make a Loan to the Company in
such amount on behalf of such Banks. Notes and other required
documents delivered to the Agent for the account of each Bank
shall be promptly delivered to such Bank, or in accordance with
instructions received from it, together with copies of such other
documents received in connection with the borrowing as such Bank
shall request.
Unless the Agent shall have been notified by telephone,
confirmed promptly thereafter in writing, by a Bank not later
than 1:00 p.m., Milwaukee time, on a Borrowing Date that such
Bank will not make available to the Agent such Bank's pro rata
share of a requested Loan, the Agent may assume that such Bank
has made such amount available to the Agent and, in reliance upon
such assumption, make available to the Company on such Borrowing
Date a corresponding amount. If and to the extent that such
Bank, without giving such notice, shall not have so made such
amount available to the Agent, such Bank and the Company
severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day
from the date the Agent made such amount available to the Company
to the date such amount is repaid to the Agent, at (i) in the
case of the Company, the rate applicable to such Loan, and (ii)
in the case of such Bank, the Federal Funds Rate for each of the
first three days (or fraction thereof) after the date of demand
and the Variable Rate for each day (or fraction thereof)
thereafter.
2.3 Conversion. The Company may elect from time to
time, subject to the terms and conditions of the Notes and this
Agreement, to convert all or a portion of a Variable Rate Loan
into an Adjusted LIBOR Rate Loan or to convert all or a portion
of an Adjusted LIBOR Rate Loan into a Variable Rate Loan;
provided, however, that any conversion of an Adjusted LIBOR Rate
Loan will occur on the last day of the Interest Period applicable
thereto.
2.4 Automatic Conversion. A Variable Rate Loan will
continue as a Variable Rate Loan unless and until converted into
an Adjusted LIBOR Rate Loan. At the end of the applicable
Interest Period for an Adjusted LIBOR Rate Loan, such Adjusted
LIBOR Rate Loan will automatically be converted into a Variable
Rate Loan unless the Company shall have given the Agent notice in
accordance with Section 2.5 requesting that, at the end of such
Interest Period, all or a portion of such Adjusted LIBOR Rate
Loan be continued as an Adjusted LIBOR Rate Loan for an
additional Interest Period.
2.5 Conversion and Continuation Procedure. The
Company will give the Agent written notice in the form of Exhibit
2.5 annexed hereto, or telephonic notice (confirmed in writing if
the Agent so requests), which notices will be irrevocable, of
each conversion of a Variable Rate Loan or continuation of an
Adjusted LIBOR Rate Loan not later than 10:00 a.m., Milwaukee
time, on a Business Day which is not less than two Business Days
before the date of the requested conversion or continuation,
specifying (i) the requested date (which must be a Business Day)
of such conversion or continuation; (ii) the amount of the Loan
to be converted or continued; (iii) whether such Loan currently
bears interest at the Variable Rate or the Adjusted LIBOR Rate;
and (iv) the duration of the Interest Period to be applicable
thereto.
2.6 Basis for Determining Interest Rate Inadequate or
Unfair. If with respect to an Interest Period for any Adjusted
LIBOR Rate Loan:
(a) any Bank determines in good faith (which
determination will be binding and conclusive on the
Company) that by reason of circumstances affecting the
London interbank market adequate and reasonable means
do not exist for ascertaining the applicable Adjusted
LIBOR Rate; or
(b) any Bank reasonably determines (which
determination will be binding and conclusive on the
Company) that the Adjusted LIBOR Rate will not
adequately and fairly reflect the cost of maintaining
or funding such Adjusted LIBOR Rate Loan for such
Interest Period, or that the making or funding of
Adjusted LIBOR Rate Loans has become impracticable as a
result of an event occurring after the date of this
Agreement which in the opinion of such Bank materially
affects Adjusted LIBOR Rate Loans;
then, [a] such Bank will promptly notify the Company thereof, and
[b] so long as such circumstances continue, such Bank will not be
under any obligation to make any new Adjusted LIBOR Rate Loan so
affected.
2.7 Changes in Law Rendering Certain Loans Unlawful.
In the event that any Regulatory Change should make it (or, in
the good faith judgment of a Bank, should raise substantial
questions as to whether it is) unlawful for such Bank to make,
maintain or fund an Adjusted LIBOR Rate Loan, (i) such Bank will
promptly notify each of the other parties hereto; (ii) the
obligation of such Bank to make Adjusted LIBOR Rate Loans shall,
upon the effectiveness of such event, be suspended for the
duration of such unlawfulness; and (iii) upon such notice, any
outstanding Adjusted LIBOR Rate Loan made by such Bank will
automatically convert into a Variable Rate Loan to the extent
that it is unlawful for such Bank to maintain such outstanding
Adjusted LIBOR Rate Loan.
2.8 Increased Costs. If any Regulatory Change,
(a) shall subject any Bank to any tax, duty or
other charge with respect to any of its Loans or any
Letter of Credit hereunder, or shall change the basis
of taxation of payments to any Bank of the principal or
interest on its Loans or Letters of Credit hereunder,
or any other amounts due under this Agreement in
respect of such Loans, or its obligation to make Loans
or issue Letters of Credit hereunder (except for
changes in the rate of tax on the overall net income of
such Bank);
(b) shall impose, modify or make applicable any
reserve (including, without limitation, any reserve
imposed by the Board of Governors of the Federal
Reserve System, but excluding any reserve included in
the determination of the Adjusted LIBOR Rate), special
deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended
by, any Bank; or
(c) shall impose on any Bank any other condition
affecting its Loans or Letters of Credit hereunder;
and the result of any of the foregoing is to increase the cost to
(or in the case of Regulation D or any other analogous law, rule
or regulation, to impose a cost on) such Bank of making or
maintaining any Loans or issuing Letters of Credit hereunder, or
to reduce the amount of any sum received or receivable by such
Bank under this Agreement and any document or instrument related
hereto; then upon notice from such Bank (which notice shall be
sent to the Agent and the Company and shall be accompanied by a
statement setting forth in reasonable detail the basis of such
increased cost or other effect on the Loans or Letters of
Credit), the Company shall pay directly to such Bank, on demand,
such additional amount or amounts as will compensate such Bank
for such increased cost or such reduction.
2.9 Discretion of Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary,
each Bank shall be entitled to fund and maintain its funding of
all or any part of its Loans hereunder in any manner it sees fit.
2.10 Capital Adequacy. If any Regulatory Change
affects the treatment of any Loan or Letter of Credit hereunder
of a Bank as an asset or other item included for the purpose of
calculating the appropriate amount of capital to be maintained by
such Bank or any corporation controlling such Bank and has the
effect of reducing the rate of return on such Bank's or such
corporation's capital as a consequence of the obligations of such
Bank hereunder to a level below that which such Bank or such
corporation could have achieved but for such Regulatory Change
(taking into account such Bank's or such corporation's policies
with respect to capital adequacy) by an amount deemed in good
faith by such Bank to be material, then the Company shall pay to
such Bank, on demand, such additional amount or amounts as will
compensate such Bank or such corporation, as the case may be, for
such reduction Such Bank shall submit, to the Agent and the
Company, a statement as to the amount of such compensation,
prepared in good faith and in reasonable detail. Each of the
Banks represents to the Company that, as of the date hereof, it
is not aware of any fact or circumstance that would give rise to
a claim for compensation under this section 2.10.
2.11 Limitation on Prepayment. A Variable Rate Loan
may be prepaid at the option of the Company in whole or in part
at any time without premium or penalty. An Adjusted LIBOR Rate
Loan may be prepaid at any time at the option of the Company;
provided, however, that prepayment prior to the last day of the
Interest Period applicable thereto will require the payment by
Company of the amount (if any) required by section 2.12. All
prepayments shall be accompanied by interest accrued on the
amount prepaid through the date of prepayment. In case of
prepayment of less than all of the outstanding principal amount
of the Term Notes, all prepayments made shall be in multiples of
$1,000,000, and shall be applied upon the principal installments
of the Term Notes in the inverse order of their maturities.
2.12 Funding Losses. The Company hereby agrees that
upon demand by any Bank (which demand shall be sent to the Agent
and the Company and shall be accompanied by a statement setting
forth in reasonable detail the basis for the calculations of the
amount being claimed) the Company will indemnify such Bank
against any loss or expense which such Bank may sustain or incur
(including, without limitation, any net loss or expense incurred
by reason of the liquidation or reemployment of deposits or other
funds acquired by such Bank to fund or maintain Adjusted LIBOR
Rate Loans and any loss of anticipated return), as reasonably
determined by such Bank, as a result of (i) any payment,
prepayment or conversion of any Adjusted LIBOR Rate Loan on a
date other than the last day of an Interest Period for such Loan
whether not required by any other provisions of this Agreement,
or (ii) any failure of the Company to obtain an Adjusted LIBOR
Rate Loan on a Borrowing Date or to convert a Variable Rate Loan
to an Adjusted LIBOR Rate Loan or to continue an Adjusted LIBOR
Rate Loan at the end of any Interest Period, as specified by the
Company in a notice to the Agent as set forth above.
2.13 Conclusiveness of Statements; Survival of
Provisions. Determinations and statements of any Bank pursuant
to Sections 2.6, 2.7, 2.8, 2.10 and 2.12 shall be rebuttably
presumptive evidence of the correctness of the determinations and
statements and shall be conclusive absent manifest error. The
provisions of section 2.8, 2.10 and 2.12 shall survive the
obligation of the Banks to extend credit under this Agreement and
the repayment of the Loans; provided that the Company shall not
be under any obligation to compensate any Bank under Section 2.8
or 2.10 above with respect to increased costs or reductions
arising from any period prior to the date that is three months
prior to the date of such request if such Bank knew or could
reasonably have been expected to be aware of the circumstances
giving rise to such increased costs or reductions and of the fact
that such circumstances would in fact result in a claim for
increased compensation by reason of such increased costs or
reductions; provided further that the foregoing limitation shall
not apply to any increased costs or reductions arising out of the
retroactive application of any law, regulation, rule, guideline
or directive as aforesaid within such three-month period.
2.14 Obligation of Banks to Mitigate; Replacement of
Bank.
(a) Each Bank agrees that, as promptly as
practicable after the officer of such Bank responsible
for administering the Loans of such Bank becomes aware
of the occurrence of an event or the existence of a
condition that would entitle such Bank to receive
payments under Section 2.8, 2.10 or 2.12, it will, to
the extent not inconsistent with the internal policies
of such Bank and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make,
issue, fund or maintain the Commitment of such Bank or
the affected Loans of such Bank through another lending
office of such Bank, or (ii) take such other measures
as such Bank may deem reasonable, if as a result
thereof the additional amounts which would otherwise be
required to be paid to such Bank pursuant to Section
2.8, 2.10 or 2.12 would be materially reduced and if,
as determined by such Bank in its sole discretion, the
making, issuing, funding or maintaining of such
Commitment or Loans through such other lending office
or in accordance with such other measures, as the case
may be, would not otherwise materially adversely affect
such Commitment or Loans or the interests of such Bank.
(b) If the Company receives a notice from a Bank
pursuant to Section 2.6, 2.7, 2.8, 2.10 or 2.12, so
long as (i) no Default or Event of Default shall have
occurred and be continuing and the Company has obtained
a commitment from one or more of the Banks or another
financial institution acceptable to the Company and the
Agent to purchase at par such Bank's Loans, Commitment
and other obligations and to assume all obligations of
the Bank to be replaced, (ii) at such time the Bank to
be replaced is not an LOC Bank with respect to any
Letters of Credit outstanding and (iii) such Bank to be
replaced is unwilling to withdraw the notice delivered
to the Company, upon 30 days' prior written notice to
such Bank and Agent, the Company may require the Bank
giving such notice to assign all of its Loans,
Commitment and other obligations to such other
financial institution; provided that, prior to or
concurrently with such replacement, the Company has
paid to the Bank giving such notice all amounts under
Sections 2.8, 2.10 and 2.12 through such date of
replacement.
2.15 Computations of Interest. All computations of
interest and other amounts due under the Notes and fees and other
amounts due under this Agreement will be based on a 360-day year
using the actual number of days occurring in the period for which
such interest, fees or other amounts are payable.
2.16 Payments. Interest on all Loans will be due and
payable (i) in the case of a Variable Rate Loan, monthly
beginning on the last Business Day of the month in which the
Company obtains such Variable Rate Loan and on the last Business
Day of each month thereafter; (ii) in the case of an Adjusted
LIBOR Rate Loan, on the last Business Day of the applicable
Interest Period; and (iii) in the case of any Loan, at the
respective maturity of such Loan, whether by acceleration or
otherwise. All payments and prepayments of principal, interest
and fees (other than Agent's Fees) under this Agreement and the
Notes shall be made to the Agent prior to 1:00 p.m., Milwaukee
time, in immediately available funds for the ratable account of
the Banks and the holders of the Notes then outstanding, as
appropriate. All payments and prepayments of principal and all
payments of interest, fees and other amounts payable hereunder
shall be made by the Company without counterclaim or setoff and
free and clear of, and without any deduction or withholding for,
any taxes or other payments.
2.17 Application of Payments. The Agent shall promptly
distribute to each such Bank or holder pro rata the amount of
principal, interest or fees (other than Agent's Fees) received
by the Agent for the account of such holder. Any payment to the
Agent for the account of a Bank or a holder of a Note under this
Agreement shall constitute a payment by the Company to such Bank
or holder of the amount so paid to the Agent, and any Notes or
portions thereof so paid shall not be considered outstanding for
any purpose after the date of such payment to the Agent.
2.18 Pro Rata Treatment. In the event that any Bank
shall receive from the Company or any other source (other than
the sale of a participation to another commercial lender in the
ordinary course of business) any payment (other than a payment of
Agent's fees) of, on account of, or for any obligation of the
Company hereunder or under the Notes (whether pursuant to the
exercise of any right of set off, banker's lien, realization upon
any security held for or appropriated to such obligation,
counterclaim or otherwise) other than as above provided, then
such Bank shall immediately purchase, without recourse and for
cash, an interest in the obligations of the same nature held by
the other Banks so that each Bank shall thereafter have a
percentage interest in all of such obligations equal to the
percentage interest which such Bank held in the Notes outstanding
immediately before such payment; provided, that if any payment so
received shall be recovered in whole or in part from such
purchasing Bank, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without
interest. The Company specifically acknowledges and consents to
the preceding sentence.
2.19 Interest Following Event of Default. From and
after the occurrence and during the continuance of an Event of
Default, the unpaid principal amount of all Loans and all other
amounts due and unpaid under this Agreement and the Notes will
bear interest until paid computed at a rate equal to 2% per annum
in excess of the rate or rates otherwise payable hereunder (the
"Default Rate").
2.20 Deposits; Set Off. If any Event of Default occurs
hereunder, each Bank may offset and apply any such security
toward the payment of the Note or Notes held by such Bank,
whether or not such Note or Notes, or any part thereof, shall
then be due. Promptly upon its charging any account of the
Company pursuant to this section, such Bank shall give the
Company notice thereof.
ARTICLE III
CONDITIONS OF BORROWING
Without limiting any of the other terms of this
Agreement, none of the Banks shall be required to make any Loan
to the Company hereunder or issue any Letter of Credit unless
each of the following conditions has been satisfied:
3.1 Representations. The representations and
warranties contained in Article IV hereof continue to be true and
correct in all material respects on the date of such Loan and no
Default or Event of Default hereunder shall have occurred and be
continuing.
3.2 Insurance Certificate. Prior to the initial Loan
the Banks shall have received satisfactory evidence that the
Company maintains hazard and liability insurance coverage
reasonably satisfactory to the Banks.
3.3 Form U-1. Prior to the initial Loan the Company
shall have executed and delivered to the Agent a Federal Reserve
Form U-l provided for in Regulation U of the Board of Governors
of the Federal Reserve System, and the statements made therein
shall be such, in the reasonable opinion of the Banks, as to
permit the transactions contemplated hereby without violation of
Regulation U.
3.4 Counsel Opinion. Prior to the initial Loan the
Banks shall have received from Company's counsel satisfactory
opinions as to such matters relating to the Company and its
Subsidiaries, the validity and enforceability of this Agreement,
the Loans to be made hereunder and the other documents required
by this Article III as the Banks shall reasonably require. The
Company shall execute and/or deliver to the Banks or their
respective counsel such documents concerning its corporate status
and the authorization of such transactions as may be requested.
3.5 Proceedings Satisfactory. All proceedings taken
in connection with the transactions contemplated by this
Agreement, and all instruments, authorizations and other
documents applicable thereto, shall be satisfactory in form and
substance to the Banks and their respective counsel.
3.6 Violation of Environmental Laws. In the
reasonable opinion of the Banks there shall not exist any
uncorrected violation by the Company or any Subsidiary of an
Environmental Law or any condition which requires, or may
require, a cleanup, removal or other remedial action by the
Company or any Subsidiary under any Environmental Laws costing
$2,500,000 or more in the aggregate.
3.7 Closing Fee. The Agent shall have received the
closing fee required pursuant to the fee letter of even date
herewith between the Company and the Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to make the Loans as
provided herein, the Company represents and warrants to the Banks
as follows, except as set forth in a letter (the "Information and
Exceptions Letter") delivered to the Banks not later than three
(3) Business Days prior to the date of this Agreement.
4.1 Organization. The Company and each of its
Subsidiaries is a corporation duly organized and existing in good
standing under the laws of the jurisdiction under which it was
incorporated, and has all requisite power and authority,
corporate or otherwise, to conduct its business and to own its
properties. Set forth in the Information and Exceptions Letter
is a complete and accurate list of all of its Subsidiaries,
showing as of the date hereof (as to each such Subsidiary) the
jurisdiction of its incorporation, the percentage of the
outstanding shares of each class of capital stock owned (directly
or indirectly) by the Company and the number of shares covered by
all outstanding options, warrants, rights of conversion or
purchase, and similar rights. All of the outstanding stock of
all of the Subsidiaries has been legally and validly issued, is
fully paid and non-assessable except as provided by section
180.0622(2)(b) of the Wisconsin Business Corporation Law and its
predecessor statute, as judicially interpreted, and is owned by
the Company or one or more other Subsidiaries free and clear of
all pledges, liens, security interests and other charges or
encumbrances. The Company is duly licensed or qualified to do
business in all jurisdictions in which such qualification is
required, and failure to so qualify could have a material adverse
effect on the property, financial condition or business
operations of the Company.
4.2 Authority. The execution, delivery and
performance of this Agreement, the Notes and the documents
required by Article III (the "Collateral Documents") are within
the corporate powers of the Company, have been duly authorized by
all necessary corporate action and do not and will not (i)
require any consent or approval of the stockholders of the
Company, (ii) violate any provision of the articles of
incorporation or by-laws of the Company or of any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability
to the Company or any Subsidiary; (iii) require the consent or
approval of, or filing or registration with, any governmental
body, agency or authority; or (iv) result in a breach of or
constitute a default under, or result in the imposition of any
lien, charge or encumbrance upon any property of the Company or
any Subsidiary pursuant to, any indenture or other agreement or
instrument under which the Company or any Subsidiary is a party
or by which it or its properties may be bound or affected. This
Agreement constitutes, and each of the Notes and each of the
Collateral Documents when executed and delivered hereunder will
constitute, legal, valid and binding obligations of the Company
or other signatory enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy or
similar laws affecting the enforceability of creditors' rights
generally.
4.3 Investment Company Act of 1940. Neither the
Company nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
4.4 Employee Retirement Income Security Act. All
Plans are in compliance in all material respects with the
applicable provisions of ERISA. Neither the Company nor any
Subsidiary has incurred any material "accumulated funding
deficiency" within the meaning of section 302(a)(2) of ERISA in
connection with any Plan. There has been no Reportable Event for
any Plan, the occurrence of which would have a materially adverse
effect on the Company or any Subsidiary, nor has the Company or
any Subsidiary incurred any material liability to the Pension
Benefit Guaranty Corporation under section 4062 of ERISA in
connection with any Plan. The Unfunded Liabilities of all Plans
do not in the aggregate exceed $2,500,000.
4.5 Financial Statements. The audited consolidated
and consolidating balance sheets of the Company and its
Subsidiaries as of December 31, 1998, and the consolidated and
consolidating statements of income and cash flow of the Company
and its Subsidiaries for the year ended on that date, as prepared
by the Company and certified by Ernst & Young and heretofore
furnished to the Banks, present fairly the financial condition of
the Company and such Subsidiaries as of that date, and the
results of their operations for the fiscal year ended on that
date. Since December 31, 1998, there has been no material
adverse change in the property, financial condition or business
operations of the Company and its Subsidiaries, taken as a whole.
4.6 Liens. The Company and each Subsidiary has good
and marketable title to all of its assets, real and personal,
free and clear of all liens, security interests, mortgages and
encumbrances of any kind, except Permitted Liens. To the best of
the Company's knowledge and belief, all owned and leased
buildings and equipment of the Company and its Subsidiaries are
in good condition, repair and working order in all material
respects and conform in all material respects to all applicable
laws, regulations and ordinances.
4.7 Contingent Liabilities. Neither the Company nor
any Subsidiary has any guarantees or other contingent liabilities
outstanding (including, without limitation, liabilities by way of
agreement, contingent or otherwise, to purchase, to provide funds
for payment, to supply funds to or otherwise invest in the debtor
or otherwise to assure the creditor against loss), except those
permitted by section 5.7 hereof.
4.8 Taxes. Except as expressly disclosed in the
financial statements referred to in section 4.5 above, neither
the Company nor any Subsidiary has any material outstanding
unpaid tax liability (except for taxes which are currently
accruing from current operations and ownership of property, which
are not delinquent), and no tax deficiencies have been proposed
or assessed against the Company or any Subsidiary. The most
recent completed audit of the Company's federal income tax
returns was for the Company's income tax year ending December 31,
1989, and all taxes shown by such returns (together with any
adjustments arising out of such audit, if any) have been paid.
4.9 Absence of Litigation. Neither the Company nor
any Subsidiary is a party to any litigation or administrative
proceeding, nor so far as is known by the Company is any
litigation or administrative proceeding threatened against it or
any Subsidiary, which in either case (i) challenges the Company's
execution, delivery or performance of this Agreement, the Notes,
or any of the Collateral Documents, (ii) could, if adversely
determined, cause any material adverse change in the property,
financial condition or the conduct of the business of the Company
and its Subsidiaries taken as a whole, (iii) asserts or alleges
the Company or any Subsidiary violated Environmental Laws, (iv)
asserts or alleges that Company or any Subsidiary is required to
cleanup, remove, or take remedial or other response action due to
the disposal, depositing, discharge, leaking or other release of
any hazardous substances or materials, or (v) asserts or alleges
that Company or any Subsidiary is required to pay all or a
portion of the cost of any past, present or future cleanup,
removal or remedial or other response action which arises out of
or is related to the disposal, depositing, discharge, leaking or
other release of any hazardous substances or materials by Company
or any Subsidiary, except with respect to violations, cleanups,
removals and other remedial and response actions referred to
clauses (iii), (iv) and (v) above which will cost the Company and
its Subsidiaries less than $2,500,000 in the aggregate.
4.10 Absence of Default. No event has occurred which
either of itself or with the lapse of time or the giving of
notice or both, would give any creditor of the Company or any
Subsidiary the right to accelerate the maturity of any
indebtedness of the Company or any Subsidiary for borrowed money,
in each case in excess of $1,000,000. Neither the Company nor
any Subsidiary is in default under any other lease, agreement or
instrument, or any law, rule, regulation, order, writ,
injunction, decree, determination or award, non-compliance with
which could materially adversely affect its property, financial
condition or business operations.
4.11 No Burdensome Agreements. Neither the Company nor
any Subsidiary is a party to any agreement, instrument or
undertaking, or subject to any other restriction, (i) which
materially adversely affects the property, financial condition or
business operations of the Company and its Subsidiaries taken as
a whole, or (ii) under or pursuant to which the Company or any
Subsidiary is or will be required to place (or under which any
other person may place) a lien upon any of its properties
securing indebtedness either upon demand or upon the happening of
a condition, with or without such demand, other than Permitted
Liens.
4.12 Trademarks, etc. The Company and its Subsidiaries
possess adequate trademarks, trade names, copyrights, patents,
permits, service marks and licenses, or rights thereto, for the
present and planned future conduct of their respective businesses
substantially as now conducted, without any known conflict with
the rights of others which might result in a material adverse
effect on the Company and its Subsidiaries taken as a whole.
4.13 Partnerships; Joint Ventures. Neither the Company
nor any Subsidiary is a member of any partnership or joint
venture except as permitted under section 5.4.
4.14 Full Disclosure. No information, exhibit or
report furnished by the Company or any Subsidiary to any Bank in
connection with the negotiation or execution of this Agreement
contained any material misstatement of fact as of the date when
made or omitted to state a material fact or any fact necessary to
make the statements contained therein not misleading as of the
date when made.
4.15 Fiscal Year. The fiscal year of the Company and
each Subsidiary ends on the Saturday which is closest to December
31 of each year.
4.16 Environmental Conditions. To the Company's
knowledge after reasonable investigation, there are no conditions
existing currently or likely to exist during the term of this
Agreement which would subject the Company or any Subsidiary to
damages, penalties, injunctive relief or cleanup costs under any
Environmental Laws or which require or are likely to require
cleanup, removal, remedial action or other response pursuant to
Environmental Laws by the Company or any Subsidiary, except for
such matters which will cost the Company and its Subsidiaries
less than $2,500,000 in the aggregate.
4.17 Environmental Judgments, Decrees and Orders.
Neither the Company nor any Subsidiary is subject to any
judgment, decree, order or citation related to or arising out of
Environmental Laws and neither the Company nor any Subsidiary has
been named or listed as a potentially responsible party by any
governmental body or agency in a matter arising under any
Environmental Laws, except for such matters which will cost the
Company and its Subsidiaries less than $2,500,000 in the
aggregate.
4.18 Year 2000. The Company has conducted a review of
its material computer systems and equipment containing embedded
microchips to determine whether they are Year 2000 Compliant (as
defined below). The Company has plans in place to complete all
system upgrades or reprogramming necessary to make its material
computer systems and equipment containing embedded microchips
Year 2000 Compliant, and to complete the testing thereof, by the
Closing Date. The Company has received confirmation from what it
believes to be all of its significant vendors and customers as to
whether their systems are Year 2000 Compliant and has taken
necessary steps to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure
to remedy their own year 2000 issues. The aggregate cost to the
Company of such reprogramming, system upgrades and testing, and
the reasonably foreseeable consequences of year 2000 to the
Company, (including, without limitation, reprogramming errors and
failure of others' systems or equipment), will not result in a
material adverse effect on the business, operations or financial
condition of the Company. For purposes of the foregoing, "Year
2000 Compliant" shall mean the ability of the system to provide
all of the following functions:
(a) Handle date information before, during and
after January 1, 2000, including but not limited to
accepting date input, providing date output, and
performing calculations on dates or portions of dates;
(b) Function accurately and without interruption
before, during and after January 1, 2000, without any
change in operations associated with the advent of the
new century;
(c) Respond to two-digit, year-date input in a
way that resolves the ambiguity as to century in a
disclosed, defined and predetermined manner; and
(d) Store and provide output of date information
in ways that are unambiguous as to century.
ARTICLE V
NEGATIVE COVENANTS
While any part of the credit granted to the Company is
available and while any part of the principal of or interest on
any Note remains unpaid or any Letter of Credit Obligation
remains outstanding, the Company shall not do any of the
following, or permit any Subsidiary to do any of the following,
without the prior written consent of the Required Banks:
5.1 Restriction of Indebtedness. Create, incur,
assume or have outstanding any indebtedness for borrowed money or
the deferred purchase price of any asset (including obligations
under Capitalized Leases), except:
(a) the Notes issued under this Agreement;
(b) outstanding indebtedness in respect of
industrial revenue bond financing shown on the
financial statements referred to in section 4.5 above,
provided that such indebtedness shall not be renewed,
extended or increased;
(c) additional long-term indebtedness incurred
pursuant to an offering of long-term notes, bonds or
similar obligations of the Company; provided that,
simultaneously with the closing of such debt offering,
the Term Loan shall be prepaid by an amount equal to
the net proceeds to the Company of such long-term
indebtedness;
(d) indebtedness described in clause (v) of the
definition of Permitted Liens in section 9.1, provided
such indebtedness does not exceed an aggregate of
$5,000,000 outstanding at any one time;
(e) unsecured indebtedness which is subordinated
to the prior payment of the Company's obligations under
this Agreement and the Notes in a manner satisfactory
to the Banks;
(f) indebtedness in respect of Capitalized
Leases, provided that the aggregate lease payments
thereunder do not exceed $1,000,000 in any fiscal year
of the Company; and
(g) other indebtedness not exceeding $5,000,000
in aggregate principal amount at any time outstanding.
5.2 Restriction on Liens. Create or permit to be
created or allow to exist any mortgage, pledge, encumbrance or
other lien upon or security interest in any property or asset now
owned or hereafter acquired by the Company or any Subsidiary,
except Permitted Liens.
5.3 Sale and Leaseback. Enter into any agreement
providing for the leasing by the Company or a Subsidiary of
property which has been or is to be sold or transferred by the
Company or a Subsidiary to the lessor thereof, or which is
substantially similar in purpose to property so sold or
transferred, except for agreements relating to sales of property
not exceeding $5,000,000 (in gross sales proceeds to the Company)
in the aggregate.
5.4 Acquisitions and Investments. Acquire any other
business or make any loan, advance or extension of credit to, or
investment in, any other person, corporation or other entity
(including without limitation Subsidiaries, partnerships and
joint ventures), including investments acquired in exchange for
stock or other securities or obligations of any nature of the
Company or any Subsidiary, except:
(a) investments in (i) bank repurchase
agreements; (ii) savings accounts or certificates of
deposit in a financial institution of recognized
standing; (iii) obligations issued or fully guaranteed
by the United States; (iv) prime commercial paper
maturing within 90 days of the date of acquisition by
the Company or a Subsidiary; and (v) other short-term
fixed income investments of high credit quality
selected by the Company;
(b) loans and advances made to employees and
agents in the ordinary course of business, such as
travel and entertainment advances and similar items;
(c) investments in the Company by a Subsidiary;
(d) credit extended to customers in the ordinary
course of business;
(e) other investments outstanding on December 31,
1998, and shown on the financial statements referred to
in section 4.5 above, provided that such investments
shall not be increased;
(f) investments by the Company (whether by making
a capital contribution, acquiring an equity interest or
making a loan or other extension of credit) in a
wholly-owned Subsidiary or by a wholly-owned Subsidiary
in another wholly-owned Subsidiary; provided that if
and when the aggregate investment of the Company or
another wholly-owned Subsidiary in a wholly-owned
Subsidiary exceeds $5,000,000, such wholly-owned
Subsidiary shall guaranty all Loans, Reimbursement
Obligations and other obligations of the Company under
this Agreement by executing and delivering a guaranty,
in the form of Exhibit 5.4 attached hereto, and the
Agent shall receive such certificates and opinions of
counsel as the Agent shall reasonably request relating
to the corporate existence and authority of such
Subsidiary and the validity and enforceability of such
guaranty;
(g) additional acquisitions and investments in
present and future Subsidiaries and joint ventures,
provided that all such acquisitions and investments
(valued at original cost without regard to subsequent
increases or decreases in the value thereof) shall not
exceed (i) $15,000,000 in the aggregate and (ii)
$5,000,000 with respect to any single entity; and
(h) for purposes of this Section 5.4, the amount
of any investment made with property other than cash
shall be equal to the fair market value of such
property as reasonably determined by the board of
directors of the Company.
5.5 Liquidation; Merger; Disposition of Assets.
Liquidate or dissolve; or merge with or into or consolidate with
or into any other corporation or entity except a merger of a
wholly-owned Subsidiary into the Company or another wholly-owned
Subsidiary; or sell, lease, transfer or otherwise dispose of all
or any substantial part of its property, assets or business
(other than sales made in the ordinary course of business), or
any stock of any Subsidiary, except for sales, leases, transfers
or other dispositions to wholly-owned Subsidiaries to the extent
permitted by Section 5.4 (f) above.
5.6 Accounts Receivable. Discount or sell with
recourse, or sell for less than the face amount thereof, any of
its notes or accounts receivable, whether now owned or hereafter
acquired.
5.7 Contingent Liabilities. Guarantee or become a
surety or otherwise contingently liable (including, without
limitation, liable by way of agreement, contingent or otherwise,
to purchase, to provide funds for payment, to supply funds to or
otherwise invest in the debtor or otherwise to assure the
creditor against loss) for any obligations of others, except (i)
pursuant to the deposit and collection of checks and similar
items in the ordinary course of business, and (ii) other
contingent liabilities in respect of obligations not exceeding an
aggregate of $5,000,000 outstanding at any one time.
5.8 Affiliates. Suffer or permit any transaction with
any Affiliate, except on terms not less favorable to the Company
or Subsidiary than would be usual and customary in similar
transactions with non-affiliated persons.
5.9 Dividends and Redemptions. Pay or declare any
dividend, or make any other distribution on account of any shares
of any class of its stock, or redeem, purchase or otherwise
acquire directly or indirectly, any shares of any class of its
stock, except for:
(a) dividends payable in shares of stock of the
Company;
(b) dividends paid to the Company by a wholly-
owned Subsidiary and dividends paid to a wholly-owned
Subsidiary by a wholly-owned Subsidiary of such
Subsidiary;
(c) redemptions of stock of the Company made with
the proceeds of sales of stock of the Company occurring
within 30 days of the date of any such redemption;
(d) repurchases of up to $125,000,000 in
aggregate fair market value of the Company's common
stock made on or before May 22, 2000; and
(e) cash dividends paid by the Company consistent
with past practices, provided that immediately after
giving effect to any such dividend payment no Default
or Event of Default shall exist.
ARTICLE VI
AFFIRMATIVE COVENANTS
While any part of the credit granted to the Company is
available and while any part of the principal of or interest on
any Note remains unpaid or any Letter of Credit Obligation is
outstanding, and unless waived in writing by the Required Banks,
the Company shall:
6.1 Financial Status. Maintain:
(a) At the end of each fiscal quarter occurring
in each period set forth in the table below, a
Consolidated Fixed Charge Coverage Ratio for the four
consecutive fiscal quarters then ended of at least the
amount set forth opposite such period:
Period Fixed Charge
Coverage Ratio
Closing Date through the day before Fiscal Year End 2001 1.75 : 1.0
Fiscal Year End 2001 through the day before Fiscal Year
End 2002 2.00 : 1.0
Fiscal Year End 2002 through the day before Fiscal Year
End 2003 2.25 : 1.0
Fiscal Year End 2003 and thereafter 2.50 : 1.0
(b) At the end of each fiscal quarter, a
Consolidated Interest Coverage Ratio for the four
consecutive fiscal quarters then ended of at least 3.00
to 1.0.
(c) At the end of each fiscal quarter set forth
in the table below, a Consolidated Debt to EBITDA Ratio
for the four consecutive fiscal quarters then ended not
greater than the applicable amount set forth below for
such fiscal quarter:
1999 2000 2001 2002 2003 2004
Fiscal Quarters 1, 2, 3 N/A 3.50 3.00 2.50 2.25 2.00
Fiscal Year End 2.75 2.50 2.25 2.00 1.75 N/A
6.2 Insurance. Maintain insurance in such amounts and
against such risks as is customary by companies engaged in the
same or similar businesses and similarly situated.
6.3 Corporate Existence; Obligations. Do, and cause
each Subsidiary to do, all things necessary to: (i) maintain its
corporate existence (except for mergers permitted by section 5.5)
and all rights and franchises necessary or desirable for the
conduct of its business; (ii) comply in all material respects
with all applicable laws, rules, regulations and ordinances, and
all restrictions imposed by governmental authorities, including
those relating to environmental standards and controls; and (iii)
pay, before the same become delinquent and before penalties
accrue thereon, all taxes, assessments and other governmental
charges against it or its property, and all of its other
liabilities, except to the extent and so long as the same are
being contested in good faith by appropriate proceedings in such
manner as not to cause any material adverse effect upon its
property, financial condition or business operations, with
adequate reserves provided for such payments.
6.4 Business Activities. Continue to carry on its
business activities in substantially the manner such activities
are conducted on the date of this Agreement and not make any
material change in the nature of its business.
6.5 Properties. Keep and cause each Subsidiary to
keep its properties (whether owned or leased) in good condition,
repair and working order, ordinary wear and tear and obsolescence
excepted, and make or cause to be made from time to time all
necessary repairs thereto (including external or structural
repairs) and renewals and replacements thereof consistent with
the exercise of its reasonable business judgment.
6.6 Accounting Records; Reports. Maintain and cause
each Subsidiary to maintain a standard and modern system for
accounting in accordance with generally accepted principles of
accounting consistently applied throughout all accounting periods
and consistent with those applied in the preparation of the
financial statements referred to in section 4.5; and furnish to
the Agent such information respecting the business, assets and
financial condition of the Company and its Subsidiaries as any
Bank may reasonably request and, without request, furnish to the
Agent:
(a) Within 45 days after the end of each of the
first three quarters of each fiscal year of the Company
(i) consolidated and consolidating balance sheets of
the Company and all of its Subsidiaries as of the close
of such quarter and of the comparable quarter in the
preceding fiscal year; and (ii) consolidated and
consolidating statements of income and cash flow of the
Company and all of its Subsidiaries for such quarter
and for that part of the fiscal year ending with such
quarter and for the corresponding periods of the
preceding fiscal year; all in reasonable detail and
certified as true and correct (subject to audit and
normal year-end adjustments) by the chief financial
officer of the Company; and
(b) As soon as available, and in any event within
90 days after the close of each fiscal year of the
Company, a copy of the audit report for such year and
accompanying consolidated and consolidating financial
statements of the Company and its Subsidiaries, as
prepared by independent public accountants of
recognized standing selected by the Company and
reasonably satisfactory to the Required Banks, which
audit report shall be accompanied by an opinion of such
accountants, in form reasonably satisfactory to the
Required Banks, to the effect that the same fairly
present the financial condition of the Company and its
Subsidiaries and the results of its and their
operations as of the relevant dates thereof; and
(c) As soon as available, copies of all reports
or materials submitted or distributed to shareholders
of the Company or filed with the Securities and
Exchange Commission or other governmental agency having
regulatory authority over the Company or any Subsidiary
or with any national securities exchange; and
(d) Promptly, and in any event within 10 days
after an officer of the Company has actual knowledge
thereof a statement of the chief financial officer of
the Company describing: (i) any Default or Event of
Default hereunder, or any other event which, either of
itself or with the lapse of time or the giving of
notice or both, would constitute a default under any
other material agreement to which the Company or any
Subsidiary is a party, together with a statement of the
actions which the Company proposes to take with respect
thereto; (ii) any pending or threatened litigation or
administrative proceeding of the type described in
section 4.9; and (iii) any fact or circumstance which
is materially adverse to the property, financial
condition or business operations of the Company and its
Subsidiaries taken as a whole; and
(e) (i) Promptly, and in any event within 30
days, after an officer of the Company acquires actual
knowledge that any material Reportable Event with
respect to any Plan has occurred, a statement of the
chief financial officer of the Company setting forth
details as to such Reportable Event and the action
which the Company proposes to take with respect
thereto, together with a copy of any notice of such
Reportable Event given to the Pension Benefit Guaranty
Corporation if a copy of such notice is available to
the Company, (ii) promptly after the filing thereof
with the Internal Revenue Service, copies of each
annual report with respect to each Plan administered by
the Company and (iii) promptly after receipt thereof, a
copy of any notice (other than a notice of general
application) the Company, any Subsidiary or any member
of the Controlled Group may receive from the Pension
Benefit Guaranty Corporation or the Internal Revenue
Service with respect to any Plan administered by the
Company.
The financial statements referred to in (a) and (b)
above shall be accompanied by a certificate by the chief
financial officer of the Company demonstrating compliance with
the covenants in section 6.1 during the relevant period and
stating that, as of the close of the last period covered in such
financial statements, no condition or event had occurred which
constitutes a Default hereunder or which, after notice or lapse
of time or both, would constitute a Default hereunder (or if
there was such a condition or event, specifying the same). The
audit report referred to in (b) above shall be accompanied by a
certificate by the accountants who prepared the audit report, as
of the date of such audit report, stating that in the course of
their audit, nothing has come to their attention suggesting that
a condition or event has occurred which constitutes a Default
hereunder or which, after notice or lapse of time or both, would
constitute a Default hereunder (or if there was such a condition
or event, specifying the same); but such accountants shall not be
liable for any failure to obtain knowledge of any such condition
or event. The Agent shall promptly furnish to each of the Banks
(i) copies of the certificates delivered to the Agent pursuant to
this paragraph, and (ii) copies of any statements delivered to
the Agent pursuant to section 6.6(d) or (e) above.
6.7 Inspection of Records. Permit representatives of
the Banks at their own expense to visit and inspect any of the
properties and examine any of the books and records of the
Company and its Subsidiaries at any reasonable time and as often
as may be reasonably desired.
6.8 Compliance with Environmental Laws. Timely comply
in all material respects, and cause each Subsidiary to comply in
all material respects, with all applicable Environmental Laws.
6.9 Environmental Audit. Permit, at its expense, at
the request of the Required Banks, an Environmental Audit solely
for the benefit of the Banks, to be conducted by the Banks or an
independent agent selected by the Banks, but only in the event of
a circumstance or condition of the nature described in section
6.10 below which, in the reasonable judgment of the Required
Banks, will cost the Company $2,500,000 or more in the aggregate.
This provision shall not relieve the Company or any Subsidiary
from conducting its own Environmental Audits or taking any other
steps necessary to comply with Environmental Laws.
6.10 Orders, Decrees and Other Documents. Provide to
the Agent, immediately upon receipt, copies of any
correspondence, notice, pleading, citation, indictment,
complaint, order, decree, or other document from any source
asserting or alleging a circumstance or condition which requires
or may require a financial contribution by the Company or any
Subsidiary or a cleanup, removal, remedial action, or other
response by or on the part of the Company or any Subsidiary under
Environmental Laws or which seeks damages or civil, criminal or
punitive penalties from the Company or any Subsidiary for an
alleged violation of Environmental Laws; provided, however, such
documentation need not be delivered to the Agent unless and until
the circumstances or conditions referred to therein will,
individually or in the aggregate with any other such matters,
likely result in costs to the Company and its Subsidiaries of
$1,000,000 or more.
ARTICLE VII
DEFAULTS
7.1 Defaults. The occurrence of any one or more of
the following events shall constitute an "Event of Default":
(a) The Company shall fail to pay (i) any
interest due on any Note, or any other amount payable
hereunder (other than a principal payment on any Note
or a Reimbursement Obligation) by five days after the
same becomes due; or (ii) any principal amount due on
any Note or any Reimbursement Obligation when due;
(b) The Company shall default in the performance
or observance of any agreement, covenant, condition,
provision or term contained in Article V (other than
section 5.8) or section 6.1 of this Agreement;
(c) The Company shall default in the performance
or observance of any of the other agreements,
covenants, conditions, provisions or terms in this
Agreement or any Collateral Document and such default
continues for a period of thirty days after written
notice thereof is given to the Company by any of the
Banks;
(d) Any representation or warranty made by the
Company herein or any certificate delivered pursuant
hereto, or any financial statement delivered to any
Bank hereunder, shall prove to have been false in any
material respect as of the time when made or given;
(e) The Company or any Subsidiary shall fail to
pay as and when due and payable (whether at maturity,
by acceleration or otherwise) all or any part of the
principal of or interest on any indebtedness of or
assumed by it, or of the rentals due under any lease or
sublease, or of any other obligation for the payment of
money, in each case where such payments aggregate
$1,000,000 or more, and such default shall not be cured
within the period or periods of grace, if any,
specified in the instruments governing such
obligations; or default shall occur under any evidence
of, or any indenture, lease, sublease, agreement or
other instrument governing such obligations, and such
default shall continue for a period of time sufficient
to permit the acceleration of the maturity of any such
indebtedness or other obligation or the termination of
such lease or sublease, unless the Company or such
Subsidiary shall be contesting such default in good
faith by appropriate proceedings;
(f) A final judgment which, together with all
other outstanding final judgments against the Company
and its Subsidiaries, or any of them, exceeds an
aggregate of $100,000 shall be entered against the
Company or any Subsidiary and shall remain outstanding
and unsatisfied, unbonded, unstayed or uninsured after
60 days from the date of entry thereof;
(g) The Company or any Subsidiary shall: (i)
become insolvent; or (ii) be unable, or admit in
writing its inability to pay its debts as they mature;
or (iii) make a general assignment for the benefit of
creditors or to an agent authorized to liquidate any
substantial amount of its property; or (iv) become the
subject of an "order for relief" within the meaning of
the United States Bankruptcy Code; or (v) become the
subject of a creditor's petition for liquidation,
reorganization or to effect a plan or other arrangement
with creditors; or (vi) apply to a court for the
appointment of a custodian or receiver for any of its
assets; or (vii) have a custodian or receiver appointed
for any of its assets (with or without its consent); or
(viii) otherwise become the subject of any insolvency
proceedings or propose or enter into any formal or
informal composition or arrangement with its creditors;
(h) This Agreement, any Note or any Collateral
Document shall, at any time after their respective
execution and delivery, and for any reason, cease to be
in full force and effect or be declared null and void,
or be revoked or terminated, or the validity or
enforceability thereof or hereof shall be contested by
the Company, or the Company shall deny that it has any
or further liability or obligation thereunder or
hereunder, as the case may be;
(i) Any Reportable Event, which the Required
Banks determine in good faith to constitute grounds for
the termination of any Plan by the Pension Benefit
Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee
to administer any Plan, shall have occurred, or any
Plan shall be terminated within the meaning of Title IV
of ERISA, or a trustee shall be appointed by the
appropriate United States District Court to administer
any Plan, or the Pension Benefit Guaranty Corporation
shall institute proceedings to terminate any Plan or to
appoint a trustee to administer any Plan, and in case
of any event described in the preceding provisions of
this subsection (i) the Required Banks determine in
good faith that the aggregate amount of the Company's
liability to the Pension Benefit Guaranty Corporation
under ERISA shall exceed $1,000,000 and such liability
is not covered, for the benefit of the Company, by
insurance; or
(j) A Change of Control.
7.2 Termination of Aggregate Commitment and
Acceleration of Obligations. Upon the occurrence of any Event of
Default:
(a) As to any Event of Default (other than an
Event of Default under section 7.1(g)) and at any time
thereafter, and in each case, the Required Banks (or
the Agent with the written consent of the Required
Banks) may, by written notice to the Company,
immediately terminate the obligation of the Banks to
make Loans and issue Letters of Credit hereunder and
declare the unpaid principal balance of the Notes,
together with all interest accrued thereon, to be
immediately due and payable; and the unpaid principal
balance of such Notes and all unreimbursed amounts
drawn on Letters of Credit, together with all interest
accrued thereon and all accrued fees and other amounts
due hereunder, shall thereupon be due and payable
without further notice of any kind, all of which are
hereby waived, and notwithstanding anything to the
contrary herein or in the Notes contained;
(b) As to any Event of Default under section
7.1(g), the obligation of the Banks to make Loans and
issue Letters of Credit hereunder shall immediately
terminate and the unpaid principal balance of all Notes
and all unreimbursed amounts drawn on Letters of
Credit, together with all interest accrued thereon and
all accrued fees and other amounts due hereunder, shall
immediately and forthwith be due and payable, all
without presentment, demand, protest, or further notice
of any kind, all of which are hereby waived,
notwithstanding anything to the contrary herein or in
the Notes contained;
(c) As to each Event of Default, the Banks shall
have all the remedies for default provided by the
Collateral Documents, as well as applicable law.
(d) In the event that the unpaid principal
balance of the Notes becomes immediately due and
payable pursuant to this section 7.2, the Company shall
pay to the appropriate LOC Bank the sum of the largest
drafts which could then or thereafter be drawn under
all outstanding Letters of Credit, which sum the LOC
Bank may hold for the account of the Company, without
interest, for the purpose of paying any draft
presented, with the excess, if any, to be returned to
the Company upon termination or expiration of such
Letters of Credit.
ARTICLE VIII
THE AGENT
8.1 Appointment and Powers. Each of the Banks hereby
appoints Firstar Bank, National Association as Agent for the
Banks hereunder, and authorizes the Agent to take such action as
Agent on its behalf and to exercise such powers as are
specifically delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. The
duties of the Agent shall be entirely ministerial; the Agent
shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or
conditions of this Agreement, the Notes or any related document,
or to enforce such performance, or to inspect the property
(including the books and records) of the Company or any of its
subsidiaries; and the Agent shall not be required to take any
action which exposes the Agent to personal liability (unless
indemnification with respect to such action satisfactory to the
Agent in its sole discretion is provided to the Agent by the
Required Banks) or which is contrary to this Agreement or the
Notes or applicable law. Firstar Bank, National Association
agrees to act as Agent upon the express terms and conditions
contained in this Article VIII. Each of the Banks hereby
appoints Harris Trust and Savings Bank, BankBoston, N.A. and Bank
One, NA (Main Office Chicago) as Co-Agents hereunder, but such
Co-Agents shall not have any duties or responsibilities under
this Agreement.
8.2 Responsibility. The Agent (i) makes no
representation or warranty to any Bank and shall not be
responsible to any Bank for any oral or written recitals,
reports, statements, warranties or representations made in or in
connection with this Agreement or any Note; (ii) shall not be
responsible for the due execution, legality, validity,
enforceability, genuineness, sufficiency, collectability or value
of this Agreement or any Note or any other instrument or document
furnished pursuant thereto; (iii) may treat the payee of any Note
as the owner thereof until the Agent receives written notice of
the assignment or transfer thereof signed by such payee and in
form satisfactory to the Agent; (iv) may execute any of its
duties under this Agreement by or through employees, agents and
attorneys in fact and shall not be answerable for the default or
misconduct of any such employee, agent or attorney in fact
selected by it with reasonable care; (v) may (but shall not be
required to) consult with legal counsel (including counsel for
the Company), independent public accountants and other experts
selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with advice
of such counsel, accountants or experts; (vi) shall be entitled
to rely upon any note, notice, consent, waiver, amendment,
certificate, affidavit, letter, telegram, telex, cable or other
document or communication believed by it to be genuine and signed
or sent by the proper party or parties, and may rely on
statements contained therein without further inquiry or
investigation. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection
with this Agreement or the Notes, except for its or their own
gross negligence or willful misconduct.
8.3 Agent's Indemnification. The Banks agree to
indemnify and reimburse the Agent (to the extent not reimbursed
by the Company), ratably from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent as such in any way relating to or
arising out of this Agreement or any action taken or omitted by
the Agent under this Agreement, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each
Bank agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel
fees) incurred by the Agent in connection with the preparation,
execution, administration or enforcement of, or the preservation
of any rights under, this Agreement to the extent that the Agent
is not reimbursed for such expenses by the Company.
8.4 Rights as a Lender. With respect to its
Commitment and the Notes issued to it, Firstar Bank, National
Association, in its individual capacity as a Bank, shall have,
and may exercise, the same rights and powers under this Agreement
and the Notes payable to it as any other Bank has under this
Agreement and Notes, and the terms "Bank" and "Banks", unless the
context otherwise requires, shall include Firstar Bank, National
Association in its individual capacity as a Bank. Firstar Bank,
National Association and its affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally
engage in any kind of banking or trust business with, the Company
or any of its Subsidiaries and any person, firm or corporation
who may do business with or own securities of the Company or any
Subsidiary, all as if it were not the Agent, and without any duty
to account therefor to the Banks.
8.5 Credit Investigation. Each of the Banks severally
represents and warrants to each of the other Banks and to the
Agent that it has made its own independent investigation and
evaluation of the financial condition and affairs of the Company
and its Subsidiaries in connection with such Bank's execution and
delivery of this Agreement and the making of its Loans and has
not relied on any information or evaluation provided by any other
Bank or the Agent in connection with any of the foregoing (other
than information provided by the Company to the Agent for
transmittal to the Banks in connection with the foregoing); and
each Bank represents and warrants to each other Bank and to the
Agent that it shall continue to make its own independent
investigation and evaluation of the credit-worthiness of the
Company and its Subsidiaries while the Commitments and/or the
Notes are outstanding.
8.6 Compensation. The Agent shall receive such
compensation for its services as Agent under this Agreement as
may be agreed from time to time by the Company and the Agent.
ARTICLE IX
MISCELLANEOUS
9.1 Accounting Terms; Definitions. Except as
otherwise provided, all accounting terms shall be construed in
accordance with generally accepted accounting principles
consistently applied and consistent with those applied in the
preparation of the financial statements referred to in section
4.5, and financial data submitted pursuant to this Agreement
shall be prepared in accordance with such principles. As used
herein:
(a) the term "Adjusted LIBOR Rate" means, for any
Interest Period with respect to an Adjusted LIBOR Rate
Loan, a rate per annum (rounded upward, if necessary,
to the nearest 1/100 of 1%) determined pursuant to the
following formula:
Adjusted LIBOR Rate = LIBOR Rate + Applicable Margin
1 - LIBOR Reserve Requirement
(b) the term "Adjusted LIBOR Rate Loan" means all
or part of any Loan which bears interest at or by
reference to the Adjusted LIBOR Rate.
(c) the term "Affiliate" means, with respect to
any Person, any other Person, which, directly or
indirectly, controls, is controlled by, or is under
common control with, such Person.
(d) the term "Aggregate Commitment" means the sum
of the Aggregate Revolver Commitment plus the Term Loan
Commitment.
(e) the term "Applicable Margin" means, at any
time, the percent per annum specified below for
Adjusted LIBOR Rate Loans, Commitment Fees and standby
Letter of Credit fees, as the case may be, at the level
corresponding to the Consolidated Debt to EBITDA Ratio
of the Company for the four consecutive fiscal quarters
most recently ended, as shown by the financial
statements delivered pursuant to Sections 6.6(a) and
6.6(b):
Applicable Margin
Consolidated Debt Standby
to Adjusted LIBOR Commitment Letter of Credit
Level EBITDA Ratio Rate Loans Fees Fees
1 >/=2.00% 1.50% 0.275% 1.225%
2 >/=1.50<2.00 1.25% 0.250% 1.000%
3 >/=1.00<1.50 1.00% 0.225% 0.775%
4 <1.00 0.75% 0.200% 0.550%
The Applicable Margin shall, in each case, be
determined and adjusted if necessary on the fifth
Business Day after receipt by the Agent of the
financial statements of the Company for each fiscal
quarter or fiscal year (as the case may be) delivered
pursuant to Sections 6.6(a) and 6.6(b) (each a
"Calculation Date"). Each determination of the
Applicable Margin shall be effective from one
Calculation Date until the next Calculation Date.
Notwithstanding the foregoing, however, (i) the
Applicable Margin shall be at Level 1 at all times
until the end of the Drawdown Period, (ii) for the
period from the day after the end of the Drawdown
Period until delivery of the annual audited financial
statements for the Company's fiscal year ending
December 30, 2000, the Applicable Margin shall be set
at the level corresponding to the Consolidated Debt to
EBITDA Ratio as of the Company's 1999 fiscal year-end,
calculated as if the Term Loan outstanding at the end
of the Drawdown Period had been outstanding at such
1999 fiscal year end, and (iii) the Applicable Margin
shall be at Level 1 at all times during the
continuation of an Event of Default or during any
failure by the Company to deliver financial statements
by the deadlines set forth in Sections 6.6(a) and
6.6(b).
(f) the term "Borrowing Date" means each date
(which must be a Business Day) on which Loans are made
to the Company or on which any Loan bearing interest at
one rate is converted into a Loan bearing interest at
another rate or is continued.
(g) the term "Business Day" means any date other
than a Saturday, Sunday or other day on which banks in
the States of Wisconsin, Illinois, or Massachusetts are
required or authorized to close; provided, however,
that for purposes of determining the applicable
Interest Period for an Adjusted LIBOR Rate Loan,
references to Business Day will include only those days
on which dealings in United States Dollar deposits are
carried out by United States financial institutions in
the London interbank market.
(h) the term "Capitalized Lease" means any lease
which is capitalized on the books of the lessee, or
should be so capitalized under generally accepted
accounting principles.
(i) the term "Change of Control" means any event
or series of events resulting in the Members of the
Wyman and Hyde Families failing to own, directly or
indirectly, with full power to vote or to direct the
voting of an aggregate of more than fifty percent
(50%) of the voting power of the Class B Common Stock
of the Company (or any class or series having
equivalent rights, powers and preferences). As used
herein, the term "Members of the Wyman and Hyde
Families" means the descendants of Earl W. Wyman, their
spouses and children, together with any and all trusts
of which they are beneficiaries; partnerships, limited
partnerships or limited liability partnerships in which
they, or entities 100% owned by them, are partners;
limited liability companies in which they, or entities
100% owned by them, are members; or charitable not-for-
profit foundations of which they have voting control.
(j) the term "Closing Date" means November 3,
1999 or such other date agreed to by the Company and
the Banks on which the first advance of the Term Loan
is made hereunder.
(k) the term "Commitment" means, with respect to
each Bank, its Revolver Commitment plus its Term Loan
Commitment.
(l) the term "Consolidated Debt to EBITDA Ratio"
means, for any period, the relationship, expressed as a
numerical ratio; between:
(1) Consolidated Total Debt as of the end of
such period, and
(2) EBITDA for such period,
all as determined in accordance with generally accepted
accounting principles applied on a consolidated basis to the
Company and its Subsidiaries.
(m) the term "Consolidated Fixed Charge Coverage
Ratio" means, for any period, the relationship,
expressed as a numerical ratio, between:
(1) EBITDA of the Company and its
Subsidiaries for such period, and
(2) the sum of (A) net interest expense on
indebtedness of the Company and its
Subsidiaries (including the interest
component of Capitalized Leases) for
such period, (B) scheduled principal
payments on indebtedness of the Company
and its Subsidiaries during such period,
and (C) the principal component of
required payments in respect of
Capitalized Leases during such period,
all as determined in accordance with generally accepted
accounting principles applied on a consolidated basis to the
Company and its Subsidiaries.
(n) the term "Consolidated Interest Coverage
Ratio: means, for any period, the relationship,
expressed as a numerical ratio, between:
(1) EBIT of the Company and its Subsidiaries
for such period, and
(2) net interest expense on indebtedness of
the Company and its Subsidiaries
(including the interest component of
Capitalized Leases) for such period,
all as determined in accordance with generally accepted
accounting principles applied on a consolidated basis to the
Company and its Subsidiaries.
(o) the term "Consolidated Net Earnings" means:
(1) all revenues and income derived from
operations in the ordinary course of
business (excluding extraordinary gains
and profits upon the disposition of
investments and fixed assets),
Minus:
(2) all expenses and other proper charges
against income (including payment or
provision for all applicable income and
other taxes, but excluding extraordinary
losses and losses upon the disposition
of investments and fixed assets),
all as determined in accordance with generally accepted
accounting principles as applied on a consolidated basis to the
Company and its Subsidiaries.
(p) the term "Consolidated Total Debt" means all
of the following determined on a consolidated basis
with respect to the Company and its Subsidiaries in
accordance with generally accepted accounting
principles: (i) indebtedness for borrowed money, (ii)
obligations representing the deferred purchase price of
property or services other than (x) accounts payable
arising in the ordinary course of business on terms
customary in the trade and (y) obligations related to
employee benefit plans and deferred compensation plans
of the Company, (iii) obligations evidenced by notes,
bonds, acceptances, or other instruments or arising in
connection with letters of credit issued for the
account of the Company or a Subsidiary, (iv)
obligations, whether or not assumed, secured by liens
or payable out of the proceeds or production from
property now or hereafter owned or acquired by the
Company or a Subsidiary and (v) Capitalized Leases.
(q) the term "Controlled Group" means a
controlled group of corporations as defined in Section
1563 of the Internal Revenue Code of 1986, as amended,
of which the Company is a part.
(r) the term "Default" means any condition or
event which with the passage of time or the giving of
notice or both would constitute an Event of Default.
(s) the term "EBIT" means, for any period,
Consolidated Net Earnings of the Company for such
period plus the sum of the following (all to the extent
deducted in arriving at such Consolidated Net Earnings
for such period): (A) net interest expense on
indebtedness of the Company and its Subsidiaries
(including the interest component of Capitalized
Leases) for such period, and (B) payment or provision
for income and other taxes for such period, all as
determined in accordance with generally accepted
accounting principles applied on a consolidated basis
to the Company and its Subsidiaries.
(t) the term "EBITDA" means, for any period,
Consolidated Net Earnings of the Company for such
period plus the sum of the following (all to the extent
deducted in arriving at such Consolidated Net Earnings
for such period): (A) depreciation, amortization and
all other non-cash deductions arising in the normal
course of operations and shown on the Company's
financial statements for such period, (B) net interest
expense on indebtedness of the Company and its
Subsidiaries (including the interest component of
Capitalized Leases) for such period and (C) payment or
provision for income and other taxes for such period,
all as determined in accordance with generally accepted
accounting principles as applied on a consolidated
basis to the Company and its Subsidiaries.
(u) the term "Eligible Assignee" means (a) a
Bank; (b) an Affiliate of a Bank; and (c) any other
Person approved by the Agent, each LOC Bank and the
Company (such approval not to be unreasonably withheld
or delayed); provided that (i) the Company's consent
shall not be required during the existence and
continuation of an Event of Default, (ii) approval by
the Company shall be deemed given if no objection is
received by the assigning Bank and the Agent from the
Company within five Business Days after notice of such
proposed assignment has been received by the Company;
and (iii) neither the Company nor an Affiliate of the
Company shall qualify as an Eligible Assignee.
(v) The term "Environmental Audit" means a review
for the purpose of determining whether the Company and
each Subsidiary complies with Environmental Laws and
whether there exists any condition or circumstance
which requires or will require a cleanup, removal, or
other remedial action under Environmental Laws on the
part of the Company or any Subsidiary including, but
not limited to, some or all of the following:
(1) on site inspection including review of
site geology, hydrogeology, demography,
land use and population;
(2) taking and analyzing soil borings and
installing ground water monitoring wells
and analyzing samples taken from such
wells;
(3) taking and analyzing of air samples and
testing of underground tanks;
(4) reviewing plant permits, compliance
records and regulatory correspondence,
and interviewing enforcement staff at
regulatory agencies;
(5) reviewing the operations, procedures and
documentation of the Company and its
Subsidiaries; and
(6) interviewing past and present employees
of the Company and its Subsidiaries.
(w) The term "Environmental Laws" means all
federal, state and local laws including rules of common
law, statutes, regulations, ordinances, codes, rules
and other governmental restrictions and requirements
relating to the discharge of air pollutants, water
pollutants or process waste water or otherwise relating
to the environment or hazardous substances including,
but not limited to, the Federal Solid Waste Disposal
Act, the Federal Clean Air Act, the Federal Clean Water
Act, the Federal Resource Conservation and Recovery Act
of 1976, the Federal Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the
Toxic Substances Control Act, the Hazardous Materials
Transportation Act, regulations of the Environmental
Protection Agency, regulations of the Nuclear
Regulatory Agency, and regulations of any state
department of natural resources or state environmental
protection agency now or at any time hereafter in
effect.
(x) the term "ERISA" means the Employee
Retirement Income Security Act of 1974, as the same may
be in effect from time to time.
(y) the term "Federal Funds Rate" means, for any
day, an interest rate per annum equal to the weighted
average of the rates on overnight federal funds
transactions conducted by brokers in federal funds, as
published for such day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any
day which is a Business Day, the average of the
quotations for such day on such transactions received
by the Agent from three federal funds brokers of
recognized standing selected by it. In the case of a
day which is not a Business Day, the Federal Funds Rate
for such day shall be the Federal Funds Rate for the
preceding Business Day.
(z) the term "Interest Period" means with respect
to each Adjusted LIBOR Rate Loan, the period commencing
on the applicable Borrowing Date and ending one, two or
three months thereafter, as specified by the Company in
the related notice of borrowing pursuant to Section
2.2, and with respect to a Variable Rate Loan converted
to an Adjusted LIBOR Rate Loan, or in the case of a
continuation of an Adjusted LIBOR Rate Loan for an
additional Interest Period, the period commencing on
the date of such conversion or continuation and ending
one, two or three months thereafter, as specified by
the Company in the related notice pursuant to Section
2.5, provided that:
(1) any Interest Period which would
otherwise end on a day which is not a
Business Day will be extended to the
next succeeding Business Day unless such
Business Day falls in another calendar
month, in which case such Interest
Period will end on the immediately
preceding Business Day;
(2) any Interest Period which begins on the
last Business Day of a calendar month
(or on a day for which there is no
numerically corresponding day in a
calendar month at the end of such
Interest Period) will, subject to clause
(3) below, end on the last Business Day
of a calendar month; and
(3) in no event may any Interest Period
extend beyond the Termination Date (with
respect to Revolving Credit Loans) or
the maturity of the Term Loan.
(aa) the term "Letter of Credit Obligations" means
the aggregate undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement
Obligations.
(bb) the term "LIBOR Rate" means, for any Interest
Period with respect to an Adjusted LIBOR Rate Loan, the
per annum rate of interest determined by the Agent to
be the arithmetic average (rounded upward, if
necessary, to the nearest 1/100 of 1%) of the offered
rates for deposits in United States Dollars for the
applicable Interest Period which appear on the Telerate
Screen Page 3750 (or such other page of Telerate or
such other service on which the appropriate information
may be displayed), on the electronic communications
terminals in the Agent's money center, as of 11 a.m.,
London time, on the Business Day which is two Business
Days before the applicable Borrowing Date ("Calculation
Date"), except as provided below. If fewer than two
offered rates appear for the applicable Interest Period
or if the appropriate screen is not accessible as of
such time, or if the Agent determines that such offered
rates will not adequately and fairly reflect the Banks'
cost of funding or maintaining such Adjusted LIBOR Rate
Loan for such Interest Period, the term "LIBOR Rate"
shall mean the per annum rate of interest determined by
the Agent to be the average (rounded up, if necessary,
to the nearest 1/100 of 1%) of the rates at which
deposits in U.S. dollars are offered to the Agent by
four major banks in the offshore interbank market, as
selected by the Agent ("Reference Banks"), at
approximately 12:00 noon, Milwaukee time, on the
Calculation Date for the applicable Interest Period and
in an amount equal to the principal amount of the
applicable Adjusted LIBOR Rate Loan. The Agent will
request the principal offshore office of each of such
Reference Banks to provide a quotation of its rate. If
at least two such quotations are provided, the
applicable rate will be the arithmetic mean of the
quotations. If fewer than two quotations are provided
as requested, the applicable rate will be the
arithmetic mean of the rates quoted by major banks in
New York City, selected by the Agent, at approximately
1:00 p.m., New York City time, on the Calculation Date
for Loans in United States Dollars to leading European
banks for the applicable Interest Period and in an
amount equal to the principal amount of the applicable
Adjusted LIBOR Rate Loan.
(cc) the term "LIBOR Reserve Requirement" means,
for any Interest Period with respect to an Adjusted
LIBOR Rate Loan, the stated maximum rate of all reserve
requirements (including all basic, supplemental,
marginal, emergency and other reserves and taking into
account any transitional adjustments or other scheduled
changes in reserve requirements during such Interest
Period) that is specified on the first day of such
Interest Period by the Board of Governors of the
Federal Reserve System for determining the maximum
reserve requirement with respect to eurocurrency
funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of such Board of
Governors) applicable to the class of banks of which
any Bank is a member.
(dd) the term "Loans" means Revolving Credit
Loans, the Term Loan and Swingline Loans.
(ee) the term "Multiemployer Plan" means a
multiemployer pension plan within the meaning of the
Multiemployer Pension Plan Amendment Act, as amended
from time to time.
(ff) the term "Notes" shall mean, collectively,
the Revolving Credit Notes, the Term Notes and the
Swingline Note.
(gg) the term "Percentage Interests" shall mean
the respective interests of the Banks in the Aggregate
Commitment and the outstanding principal amount of
Loans made under this Agreement, as set forth on
Appendix A, subject to adjustment from time to time on
account of assignments made pursuant to Section 9.11.
(hh) the term "Permitted Liens" means:
(i) liens outstanding on December 31, 1998,
and shown or reflected on the financial statements
referred to in section 4.5 above;
(ii) liens on property financed with the
proceeds of industrial revenue bonds permitted by
Section 5.1(b) given to secure indebtedness
evidenced by such bonds and other obligations of
the Company directly relating thereto;
(iii) liens for taxes, assessments or
governmental charges, and liens incident to
construction, which are either not delinquent or
are being contested in good faith by the Company
or a Subsidiary by appropriate proceedings which
will prevent foreclosure of such liens, and
against which adequate reserves have been
provided; and easements, restrictions, minor title
irregularities and similar matters which have no
adverse effect as a practical matter upon the
ownership and use of the affected property by the
Company or any Subsidiary;
(iv) liens or deposits in connection with
worker's compensation or other insurance or to
secure customs' duties, public or statutory
obligations in lieu of surety, stay or appeal
bonds, or to secure performance of contracts or
bids (other than contracts for the payment of
money borrowed), or deposits required by law or
governmental regulations or by any court order,
decree, judgment or rule as a condition to the
transaction of business or the exercise of any
right, privilege or license; or other liens or
deposits of a like nature made in the ordinary
course of business; provided that the aggregate
amount of liabilities (including interest and
penalties, if any) of the Company secured by any
stay or appeal bond shall not exceed $10,000,000
at any one time outstanding; and
(v) purchase money liens on property (other
than inventory) acquired in the ordinary course of
business, to finance or secure a portion of the
purchase price thereof, and liens on property
acquired existing at the time of acquisition;
provided that in each case such lien shall be
limited to the property so acquired and the
liability secured by such lien does not exceed
either the purchase price or the fair market value
of the asset acquired and the indebtedness secured
by such lien is permitted by Section 5.1(d).
(ii) the term "Person" means any individual,
partnership, joint venture, firm, corporation,
association, trust, limited liability company or other
enterprise (whether or not incorporated), or any
government or political subvision or any agency,
department or instrumentality thereof.
(jj) the term "Plan" means any employee pension
benefit plan subject to Title IV of ERISA maintained by
the Company, any of its Subsidiaries, or any member of
the Controlled Group, or any such plan to which the
Company, any of its Subsidiaries, or any member of the
Controlled Group is required to contribute on behalf of
any of its employees.
(kk) the term "Prime Rate" means the rate of
interest announced by the Agent as its prime or
reference rate for interest rate calculations, as such
rate may change from time to time. The Prime Rate may
not be the lowest interest rate charged by the Agent.
(ll) the term "Regulatory Change" means any change
enacted or issued after the date of this Agreement of
any (or the adoption after the date of this Agreement
of any new) federal or state law, regulation,
interpretation, direction, policy or guideline, or any
court decision, which affects the treatment of any
extensions of credit of the Banks.
(mm) the term "Reimbursement Obligations" means
all obligations of the Company to reimburse each LOC
Bank for all drawings under Letters of Credit.
(nn) the term "Reportable Event" means a
reportable event as that term is defined in Title IV of
ERISA.
(oo) the term "Required Banks" means Banks holding
at least 66 2/3% of the Aggregate Commitment, or if the
Aggregate Commitment has been terminated, Banks holding
at least 66 2/3% of the aggregate principal amount of
all Loans and Letter of Credit Obligations outstanding
hereunder.
(pp) The term "Revolver Commitment" is defined in
section 1.1.
(qq) the term "Subsidiary" means a corporation,
partnership or other entity of which the Company owns,
directly or through another Subsidiary, at the date of
determination, more than 50% of the outstanding stock
(or other shares of beneficial interest) having
ordinary voting power for the election of directors,
irrespective of whether or not at such time stock of
any other class or classes might have voting power by
reason of the happening of any contingency, or holds at
least a majority of partnership or similar interests,
or is a general partner with control over such
partnership under the terms of the applicable
partnership agreement.
(rr) The term "Term Loan Commitment" is defined in
section 1.2.
(ss) the term "Unfunded Liabilities" means, with
regard to any Plan, the excess of the current value of
the Plan's benefits guaranteed under ERISA over the
current value of the Plan's assets allocable to such
benefits.
(tt) the term "Variable Rate" means the rate per
annum equal to the Prime Rate.
(uu) the term "Variable Rate Loan" means any Loan
which bears interest at or by reference to the Variable
Rate.
9.2 Expenses; Indemnity.
(a) The Company shall pay or reimburse each Bank
and the Agent for (i) all reasonable out-of-pocket
costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses, including the
fees and expenses of in-house counsel) paid or incurred
by the Agent or such Bank in connection with the
negotiation, preparation, execution, delivery, and
administration of this Agreement, the Notes, the
Letters of Credit, the Collateral Documents and any
other document required hereunder or thereunder,
including without limitation any amendment, supplement,
modification or waiver of or to any of the foregoing;
provided that such costs and expenses of each Bank
(other than the Agent) in connection with the
negotiation, preparation and delivery of this
Agreement, the Notes, the Letters of Credit, the
Collateral Documents and any other document required
hereunder or thereunder shall not exceed $2500; (ii)
all reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys'
fees and expenses, including the fees and expenses of
in-house counsel) paid or incurred by the Agent or such
Bank before and after judgment in enforcing, protecting
or preserving its rights under this Agreement, the
Notes, the Letters of Credit, the Collateral Documents
and any other document required hereunder or
thereunder, including without limitation the
enforcement of rights against, or realization on, any
collateral or security therefor or in defending against
any claim made against the Agent or such Bank by the
Company, any Subsidiary or any third party as a result
of or in any way relating to any matter referred to in
subsection (i) or (ii) of this section; and (iii) any
and all recording and filing fees and any and all
stamp, excise, intangibles and other taxes, if any,
(including, without limitation, any sales, occupation,
excise, gross receipts, franchise, general corporation,
personal property, privilege or license taxes, but not
including taxes levied upon the net income of the Agent
such or Bank by the federal government or the state (or
political subdivision of a state) where the Agent or
such Bank's principal office is located), which may be
payable or determined to be payable in connection with
the negotiation, preparation, execution, delivery,
administration or enforcement of this Agreement, the
Notes, the Letters of Credit, the Collateral Documents
or any other document required hereunder or thereunder
or any amendment, supplement, modification or waiver of
or to any of the foregoing, or consummation of any of
the transactions contemplated hereby or thereby,
whether such taxes are levied by reason of the acts to
be performed by the Company hereunder or are levied
upon the Agent, a Bank, the Company, the property of a
Bank or otherwise, including all costs and expenses
incurred in contesting the imposition of any such tax,
and any and all liability with respect to or resulting
from any delay in paying the same, whether such taxes
are levied upon the Agent, such Bank, the Company or
otherwise.
(b) The Company agrees to indemnify each Bank
against any and all losses, claims, damages,
liabilities and expenses, (including, without
limitation, reasonable attorneys' fees and expenses)
incurred by such Bank arising out of, in any way
connected with, or as a result of (i) any acquisition
or attempted acquisition of the Company's stock or of
the stock or assets of another person or entity by the
Company or any Subsidiary, (ii) the use of any of the
proceeds of any Loans made hereunder by the Company or
any Subsidiary for the making or furtherance of any
such acquisition or attempted acquisition, (iii) the
construction or operation of any facility owned or
operated by the Company or any Subsidiary, or resulting
from any pollution or other environmental condition on
the site of, or caused by, any such facility, (iv) the
negotiation, preparation, execution, delivery,
administration, and enforcement of this Agreement, the
Notes, the Letters of Credit, the Collateral Documents
and any other document required hereunder or
thereunder, including without limitation any amendment,
supplement, modification or waiver of or to any of the
foregoing or the consummation or failure to consummate
the transactions contemplated hereby or thereby, or the
performance by the parties of their obligations
hereunder or thereunder, (v) any claim, litigation,
investigation or proceedings related to any of the
foregoing, whether or not any Bank is a party thereto;
provided, however, that such indemnity shall not apply
to any such losses, claims, damages, liabilities or
related expenses arising from (A) any unexcused breach
by such Bank of its obligations under this Agreement or
any Collateral Document, (B) any prior commitment made
by such Bank to a person other than the Company or any
Subsidiary which would be breached by the performance
of such Bank's obligations under this Agreement or (C)
gross negligence or willful misconduct of such Bank.
(c) The foregoing agreements and indemnities
shall remain operative and in full force and effect
regardless of termination of this Agreement, the
consummation of or failure to consummate either the
transactions contemplated by this Agreement or any
amendment, supplement, modification or waiver, the
repayment of any Loans made hereunder, the termination
of the Letter of Credit Obligations, the invalidity or
unenforceability of any term or provision of this
Agreement or any of the Notes or any Collateral
Document, or any other document required hereunder or
thereunder, any investigation made by or on behalf of
any Bank, the Company or any Subsidiary, or the content
or accuracy of any representation or warranty made
under this Agreement, any Collateral Document or any
other document required hereunder or thereunder.
(d) The foregoing indemnities shall remain
operative and in full force and effect regardless of
the termination of this Agreement, the consummation of
the transactions contemplated by this Agreement, the
repayment of the Loans made hereunder, the invalidity
or unenforceability of any term or provision of this
Agreement or any of the Notes, any investigation made
by or on behalf of the Bank or the Company, and the
content of accuracy of any representation or warranty
made under this Agreement.
9.3 Amendments, Etc. No waiver, amendment, settlement
or compromise of any of the rights of any Bank under this
Agreement, any Note or any of the Collateral Documents shall be
effective for any purpose unless it is in a written instrument
executed and delivered by the parties authorized to act by this
section 9.3. Subject to the provisions of this section 9.3, the
Required Banks (or the Agent with the written consent of the
Required Banks) and the Company may enter into agreements
supplemental hereto for the purpose of adding or modifying any
provisions to this Agreement, the Notes, or the Collateral
Documents or changing in any manner the rights of the Banks or
the Company hereunder or thereunder or waiving any Event of
Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of all of the Banks:
(a) Extend the maturity of any Note or reduce the
principal amount thereof, or change the date of any
principal installment due on any Note or reduce the
rate or amount or change the time of payment of
interest or fees payable on any Note or otherwise under
this Agreement.
(b) Amend the definition of Required Banks.
(c) Extend the Termination Date, or increase the
amount of the Commitment of any Bank hereunder, or
permit the Company to assign its rights under this
Agreement.
(d) Alter the provisions of section 2.18 of this
Agreement.
(e) Amend any provision of this Agreement
requiring a pro rata sharing among the Banks.
(f) Amend this section 9.3.
No amendment of any provision of this Agreement relating to the
Agent, any LOC Bank or the Swingline Lender shall be effective
without the written consent of the Agent, such LOC Bank, or the
Swingline Lender, respectively.
9.4 Securities Act of 1933. Each Bank represents that
it is acquiring the Notes payable to it without any present
intention of making a sale or other distribution of such Notes,
provided each Bank reserves the right to sell its Notes or
participations therein.
9.5 No Agency. Except as expressly provided herein,
nothing in this Agreement and no action taken pursuant hereto
shall cause any Bank to be treated as the agent of any other
Bank, or shall be deemed to constitute the Banks a partnership,
association, joint venture or other entity.
9.6 Successors. The provisions of this Agreement
shall inure to the benefit of any holder of one or more of the
Notes, and shall inure to the benefit of and be binding upon any
successor to any of the parties hereto. No delay on the part of
any Bank or any holder of any of the Notes in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any right,
power or privilege hereunder preclude other or further exercise
thereof or the exercise of any other right, power or privilege.
The rights and remedies herein specified are cumulative and are
not exclusive of any rights or remedies which the Banks or the
holder of any of the Notes would otherwise have.
9.7 Survival. All agreements, representations and
warranties made herein shall survive the execution of this
Agreement, the making of the Loans hereunder and the execution
and delivery of the Notes.
9.8 Wisconsin Law. This Agreement and the Notes
issued hereunder shall be governed by and construed in accordance
with the internal laws of the State of Wisconsin, except to the
extent superseded by federal law.
9.9 Counterparts. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures
thereto and hereto were upon the same instrument.
9.10 Notices. All communications or notices required
under this Agreement shall be deemed to have been given on the
date when deposited in the United States mail, postage prepaid,
and addressed as follows (unless and until any of such parties
advises the other in writing of a change in such address): (a)
if to the Company, with the full name and address of the Company
as shown on this Agreement below; and (b) if to any of the Banks
with the full name and address of such Bank as shown in Appendix
A, to the attention of the officer of the Bank executing the form
of acceptance of this Agreement.
9.11 Assignment; Participations.
(a) Assignments. Each Bank may assign to one or
more Eligible Assignees all or a portion of its rights
and obligations under this Agreement (including,
without limitation, all or a portion of its Loans, its
Notes, and its Commitment); provided, however, that:
(1) each such assignment shall be to an
Eligible Assignee;
(2) except in the case of an assignment to
another Bank or an Affiliate of such
Bank or an assignment of all of a Bank's
rights and obligations under this
Agreement, any such partial assignment
shall be in an amount at least equal to
$5,000,000 (or, if less, the remaining
amount of the Commitment being assigned
by such Bank) and an integral multiple
of $1,000,000 in excess thereof;
(3) each such assignment by a Bank shall be
of a constant, and not varying,
percentage of all of its rights and
obligations under this Agreement and the
Notes; and
(4) the parties to such assignment shall
deliver to the Agent for its acceptance
a processing fee from the assignor of
$3,500.
Upon execution, delivery, and acceptance of such
assignment, the assignee thereunder shall be a party
hereto and, to the extent of such assignment, have the
obligations, rights, and benefits of a Bank hereunder
and the assigning Bank shall, to the extent of such
assignment, relinquish its rights and be released from
its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section
9.11(a), the assignor, the Agent and the Company shall
make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee.
(b) Participations. Each Bank may sell
participations to one or more Persons in all or a
portion of its rights, obligations or rights and
obligations under this Agreement (including all or a
portion of its Commitment, its Notes and its Loans);
provided, however, that (i) such Bank's obligations
under this Agreement shall remain unchanged, (ii) such
Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations,
(iii) the participant shall be entitled to the benefit
of the yield protection provisions contained in Article
II, inclusive, and the right of set-off contained in
Section 2.20, and (iv) the Company shall continue to
deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this
Agreement, and such Bank shall retain the sole right to
enforce the obligations of the Company relating to its
Loans and its Notes and to approve any amendment,
modification, or waiver of any provision of this
Agreement (other than amendments, modifications, or
waivers decreasing the amount of principal of or the
rate at which interest is payable on such Loans or
Notes, extending any scheduled principal payment date
or date fixed for the payment of interest on such Loans
or Notes, or extending its Commitment).
(c) Nonrestricted Assignments. Notwithstanding
any other provision set forth in this Agreement, any
Bank may at any time assign and pledge all or any
portion of its Loans and its Notes to any Federal
Reserve Bank as collateral security pursuant to
Regulation A and any operating circular issued by such
Federal Reserve Bank. No such assignment shall release
the assigning Bank from its obligations hereunder.
(d) Information. Any Bank may furnish any
financial information concerning the Company in the
possession of such Bank from time to time to assignees
and participants (including financial institutions that
are prospective assignees and participants).
9.12 Entire Agreement; No Agency. This Agreement and
the other documents referred to herein contain the entire
agreement between the Banks and the Company with respect to the
subject matter hereof, superseding all previous communications
and negotiations, and no representation, undertaking, promise or
condition concerning the subject matter hereof shall be binding
upon the Banks unless clearly expressed in this Agreement or in
the other documents referred to herein. Nothing in this
Agreement or in the other documents referred to herein and no
action taken pursuant hereto shall cause the Company to be
treated as an agent of any Bank, or shall be deemed to constitute
the Banks and the Company a partnership, association, joint
venture or other entity.
9.13 No Third Party Benefit. This Agreement is solely
for the benefit of the parties hereto and their permitted
successors and assigns. No other person or entity shall have any
rights under, or because of the existence of, this Agreement.
9.14 Consent to Jurisdiction. The Company hereby
consents to the jurisdiction of any state or federal court
situated in Milwaukee County, Wisconsin, and waives any objection
based on lack of personal jurisdiction, improper venue or forum
non conveniens, with regard to any actions, claims, disputes or
proceedings relating to this Agreement, any Note, any of the
Collateral Documents, or any other document delivered hereunder
or in connection herewith, or any transaction arising from or
connected to any of the foregoing. Nothing herein shall affect
the right of the Banks, or any of them, to serve process in any
manner permitted by law, or limit the right of any Banks, or any
of them, to bring proceedings against the Company or its property
or assets in the competent courts of any other jurisdiction or
jurisdictions.
9.15 Waiver of Jury Trial. The Company and the Banks
hereby jointly and severally waive any and all right to trial by
jury in any action or proceeding relating to this Agreement, any
Note, any of the Collateral Documents, or any other document
delivered hereunder or in connection herewith, or any transaction
arising from or connected to any of the foregoing. The Company
and the Banks each represent that this waiver is knowingly,
willingly and voluntarily given.
[Remainder of Page Intentionally Left Blank]
If the foregoing is satisfactory to you, please sign
the form of acceptance below and return a signed counterpart
hereof to the Company. When this instrument has been executed
and delivered by all of the Banks, it will evidence a binding
agreement between the Banks and the Company.
Very truly yours,
OSHKOSH B'GOSH, INC.
Address: 112 Otter Avenue
Oshkosh, WI 54901-5008
By
(CORPORATE SEAL) Name:
Title:
[Bank signature pages follow]
The foregoing Agreement is hereby confirmed and
accepted as of the date thereof.
FIRSTAR BANK,
NATIONAL ASSOCIATION,
as the Agent and as a Bank
By:
Name:
Title:
BANK ONE, NA
(Main Office Chicago)
as Co-Agent and as a Bank
Name:
Title:
BANKBOSTON, N.A.
as Co-Agent and as a Bank
By:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
as Co-Agent and as a Bank
By:
Name:
Title:
LASALLE BANK NATIONAL
ASSOCIATION
By:
Name:
Title:
M&I MARSHALL & ILSLEY BANK
By:
Name:
Title:
And By:
Name:
Title:
U.S. BANK, NATIONAL ASSOCIATION
By:
Name:
Title:
WELLS FARGO HSBC
TRADE BANK N.A.
By:
Name:
Title:
EXHIBIT 1.1
(Form of Revolving Credit Note)
REVOLVING CREDIT NOTE
$ , 19
FOR VALUE RECEIVED, OshKosh B'Gosh, Inc., a Delaware
corporation, promises to pay to the order of
________________________________________________, the principal
sum of __________________ Dollars ($_______________) at the main
office of Firstar Bank, National Association in Milwaukee,
Wisconsin, on the Termination Date (as defined in the Credit
Agreement referred to below). The unpaid principal balance
hereof shall bear interest, payable on the dates and at the rate
or rates set forth in the Credit Agreement referred to below.
Principal of and interest on this Note shall be payable in lawful
money of the United States of America.
This Note constitutes one of the Revolving Credit Notes
issued under a Credit Agreement dated as of [__________], as
amended from time to time, among the undersigned and Firstar
Bank, National Association, for itself and as Agent, and the
other Banks party thereto, to which Agreement reference is hereby
made for a statement of the terms and conditions on which Loans
in part evidenced hereby were or may be made, and for a
description of the conditions upon which this Note may be
prepaid, in whole or in part, or its maturity accelerated.
This Note shall be construed in accordance with laws of
the State of Wisconsin, except to the extent superseded by
federal law. The undersigned waives presentment, protest, and
notice of dishonor and agrees, in the event of default hereunder,
to pay all costs and expenses of collection, including reasonable
attorneys' fees.
OSHKOSH B'GOSH, INC.
By:
Vice President of Finance
(CORPORATE SEAL)
EXHIBIT 1.2
(Form of Term Note)
PROMISSORY NOTE
$_______________ [_________________]
FOR VALUE RECEIVED, OshKosh B'Gosh, Inc., a Delaware
corporation, promises to pay to the order of
[____________________________________] the principal sum of
_______________________________ Dollars ($_____________), at the
main office of Firstar Bank, National Association, in Milwaukee,
Wisconsin, payable in four (4) equal annual installments of
_______________ Dollars ($__________) each, payable on the
[____________] day of each [____________] commencing [__________,
2000] and a final installment of all unpaid principal and accrued
interest on ______________, 2004.
The unpaid principal balance hereof shall bear
interest, payable on the dates and at the rate or rates provided
for in the Credit Agreement referred to below. Principal and
interest on this Note shall be payable in lawful money of the
United States.
This Note constitutes one of the Term Notes issued
under a Credit Agreement dated as of [__________________] among
the undersigned, Firstar Bank, National Association, for itself
and as Agent, and the other Banks party thereto, to which Credit
Agreement reference is hereby made for a statement of the terms
and conditions on which Loans in part evidenced hereby were made
and for a description of the terms and conditions upon which this
Note may be prepaid, in whole or in part, or its maturity
accelerated.
This Note shall be construed in accordance with laws of
the State of Wisconsin, except to the extent superseded by
federal law. The undersigned waives presentment, protest, and
notice of dishonor and agrees, in the event of default hereunder,
to pay all costs and expenses of collection, including reasonable
attorneys' fees.
OSHKOSH B'GOSH, INC.
By:
Vice President of Finance
EXHIBIT 1.3
(Form of Swingline Note)
SWINGLINE NOTE
$5,000,000 __________, 1999
FOR VALUE RECEIVED, OshKosh B'Gosh, Inc., a Delaware
corporation, promises to pay to the order of Firstar Bank,
National Association, without setoff or counterclaim, the
principal sum of (a) Five Million Dollars ($5,000,000) or, if
less, (b) the aggregate unpaid principal amount of all Swingline
Loans made to the undersigned pursuant to section 1.3 of the
Credit Agreement referred to below, at the Main Office of Firstar
Bank, National Association, in Milwaukee, Wisconsin, on the
Termination Date (as defined in the Credit Agreement referred to
below). This Note shall bear interest payable on the dates and
at the rate or rates set forth in the Credit Agreement referred
to below. All amounts payable under this Note and the Credit
Agreement shall be payable in lawful money of the United States
of America.
This Note constitutes the Swingline Note issued under a
Credit Agreement dated as of ____________, 1999 (the "Credit
Agreement"), among the undersigned, Firstar Bank, National
Association, for itself and as Agent, and the Banks from time to
time party thereto, to which Credit Agreement reference is hereby
made for a statement of the terms and conditions on which
Swingline Loans evidenced hereby were or may be made, and for a
description of the conditions upon which this Note may be
prepaid, in whole or in part, or its maturity accelerated.
This Note shall be construed in accordance with laws of
the State of Wisconsin, except to the extent superseded by
federal law. The undersigned waives presentment, protest, and
notice of dishonor and agrees, in the event of default hereunder,
to pay all costs and expenses of collection, including reasonable
attorneys' fees.
OSHKOSH B'GOSH, INC.
By:
Vice President of Finance
EXHIBIT 2.2
LOAN REQUEST
_______________, ____
Firstar Bank,
National Association
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Re: Credit Agreement Dated as of ____________________
(the "Agreement")
Gentlemen:
The undersigned hereby applies to you, as Agent, for
[Revolving Credit Loans] [a Term Loan] under the above Agreement
to be made on ____________, ____ in the aggregate principal
amount of $_______________.
The undersigned hereby certifies as follows:
(a) All of the representations and warranties set
forth in Article IV of such Agreement continue to be
true on the date hereof.
(b) At the date hereof, no Default or Event of
Default under said Agreement has occurred and is
continuing.
(c) There has been no material adverse change in
the business, operations or financial condition of the
undersigned or any of its Subsidiaries since the date
of the most recent audited financial statements of the
Company delivered pursuant to the Agreement.
The loans will bear interest at the:
[check appropriate box]
[_____] Variable Rate
[_____] Adjusted LIBOR Rate
If the loans will bear interest at the Adjusted LIBOR
Rate, the Interest Period shall be ____ months (one, two or three
months).
Capitalized definitional terms used and not otherwise
defined herein shall have the meanings ascribed to them in the
Agreement.
Very truly yours,
OSHKOSH B'GOSH, INC.
By:
Vice President of Finance
EXHIBIT 2.5
CONVERSION/CONTINUATION REQUEST
_______________, ____
Firstar Bank, National Association
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Re: Credit Agreement Dated as of __________, 19__
(the "Agreement")
Gentlemen:
The undersigned elects to convert/continue the
following portion of the outstanding Loans under the Agreement:
1 The type of Loans to be converted/continued is currently:
[check appropriate box]
[_____] Variable Rate Loans
[_____] Adjusted LIBOR Rate Loans
2 The amount of Loans to be converted/continued:
$_________________________
3 The type of Loans into which the current loans shall be converted:
[check appropriate box]
[_____] Variable Rate Loans
[_____] Adjusted LIBOR Rate Loans
4 Date of Conversion/Continuation: ________________
5 Duration of Interest Period: _____ months
[one, two or three months] (applicable only to Adjusted
LIBOR Rate Loans).
6 The amount of the Adjusted LIBOR Rate Loans
into which such loans are converted/continued:
$_____________________ (applicable only to Adjusted LIBOR Rate Loans)
7 Capitalized definitional terms used and not
otherwise defined herein shall have the meanings ascribed to
them in the Agreement.
Very truly yours,
OSHKOSH B'GOSH, INC.
By:
Vice President of Finance
EXHIBIT 5.4
(Form of Corporate Guaranty)
CORPORATE GUARANTY AGREEMENT
THIS AGREEMENT is made as of __________________, ____,
by _______________________________, a _______________ corporation
(hereinafter called "Guarantor").
R E C I T A L S :
A. The Banks listed in Appendix I to the Credit
Agreement (as defined below) (the "Creditors") have required, as
a condition to making certain credit available to OshKosh B'Gosh,
Inc., a Delaware corporation (whether one or more, hereinafter
called "Debtor") that the Guarantor guarantee the Obligations (as
hereinafter defined) on the terms stated herein.
B. It is necessary for the business purposes of the
Guarantor that Debtor obtain such credit from the Creditors. The
Guarantor is a direct or indirect wholly-owned subsidiary of the
Debtor.
C. The term "Obligations" includes any and all debts,
obligations, and liabilities of Debtor to Creditors, heretofore,
now, or hereafter made, incurred, or created, under that certain
Credit Agreement by and between Debtor and Creditors, dated
November 3, 1999 (the "Credit Agreement").
C O V E N A N T S :
IN CONSIDERATION OF these premises and any credit or
financial accommodation now or hereafter granted by Creditors to
any Debtor, it is agreed that:
1. The Guarantor hereby (a) unconditionally
guarantees the full and prompt payment and performance of the
Obligations when due, whether by acceleration or otherwise, or
(if earlier) at the time Debtor becomes the subject of bankruptcy
or other insolvency proceedings; (b) agrees to pay all costs,
expenses and reasonable attorneys' fees incurred by Creditors in
enforcing this Agreement and the Obligations and realizing on any
collateral for either; and (c) agrees to pay to the Creditors the
amount of any payments made to Creditors or another in connection
with any of the Obligations which are recovered from Creditors by
a trustee, receiver, Creditors or other party pursuant to
applicable law.
2. This is a guarantee of payment, and not of
collection. The Creditors shall not be obligated to: (a) take
any steps whatsoever to collect from, or to file any claim of any
kind against, the Debtor, any guarantor, or any other person or
entity liable for payment or performance of any of the
Obligations; or (b) take any steps whatsoever to protect, accept,
obtain, enforce, take possession of, perfect its interest in,
foreclose or realize on collateral or security, if any, for the
payment or performance of any of the Obligations or any guarantee
of any of the Obligations; or (c) in any other respect exercise
any diligence whatever in collecting or attempting to collect any
of the Obligations by any means.
3. The Guarantor's liability for payment and
performance of the Obligations shall be absolute and
unconditional; the Guarantor unconditionally and irrevocably
waives each and every defense which, under principles of
guarantee or suretyship law, would otherwise operate to impair or
diminish such liability; and nothing whatever except actual full
payment and performance to the Creditors of the Obligations (and
all other debts, obligations and liabilities of Guarantor under
this Agreement) shall operate to discharge the Guarantor's
liability hereunder. Without limiting the generality of the
foregoing, the Creditors shall have the exclusive right, which
may be exercised from time to time without diminishing or
impairing the liability of the Guarantor in any respect, and
without notice of any kind to the Guarantor, to: (a) extend any
additional credit to Debtor; (b) accept any collateral, security
or guarantee for any Obligations or any other credit; (c)
determine how, when and what application of payments, credits and
collections, if any, shall be made on the Obligations and any
other credit and accept partial payments; (d) determine what, if
anything, shall at any time be done with respect to any
collateral or security; subordinate, sell, transfer, surrender,
release or otherwise dispose of all or any of such collateral or
security; and purchase or otherwise acquire any such collateral
or security at foreclosure or otherwise; and (e) with or without
consideration grant, permit or enter into any waiver, amendment,
extension, modification, refinancing, indulgence, compromise,
settlement, subordination, discharge or release of: (i) any of
the Obligations and any agreement relating to any of the
Obligations, (ii) any obligations of any guarantor or other
person or entity liable for payment or performance of any of the
Obligations, and any agreement relating to such obligations and
(iii) any collateral or security or agreement relating to
collateral or security for any of the foregoing.
4. The Guarantor hereby unconditionally waives (a)
presentment, notice of dishonor, protest, demand for payment and
all notices of any kind, including without limitation: notice of
acceptance hereof; notice of the creation of any of the
Obligations; notice of nonpayment, nonperformance or other
default on any of the Obligations; and notice of any action taken
to collect upon or enforce any of the Obligations; (b) any
subrogation to the rights of the Creditors against the Debtor and
any other claim against the Debtor which arises as a result of
payments made by the Guarantor pursuant to this Agreement, until
the Obligations have been paid or performed in full and such
payments are not subject to any right of recovery; (c) any claim
for contribution against any co-guarantor, until the Obligations
have been paid or performed in full and such payments are not
subject to any right of recovery; and (d) any setoffs or
counterclaims against Creditors which would otherwise impair the
Creditors' rights against the Guarantor hereunder.
5. Guarantor has made an independent investigation
and evaluation of the financial condition of the Debtor and the
value of any collateral, and has not relied (and will not rely)
on any information or evaluation provided by Creditors regarding
such condition or value.
6. Guarantor represents and warrants that:
(a) The execution, delivery and performance of this
Agreement by the Guarantor are within the
corporate powers of the Guarantor, have been duly
authorized by all necessary corporate action and
do not and will not (i) require any consent or
approval of the stockholders of the Guarantor
which has not been obtained, (ii) violate any
provision of the articles of incorporation or
by-laws of the Guarantor or of any law, rule,
regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect
having applicability to the Guarantor or any
subsidiary of the Guarantor; (iii) require the
consent or approval of, or filing or registration
with, any governmental body, agency or authority,
or (iv) result in a breach of or constitute a
default under, or result in the imposition of any
lien, charge or encumbrance upon any property of
the Guarantor or any subsidiary of the Guarantor
pursuant to, any indenture or other agreement or
instrument under which the Guarantor or any
subsidiary of the Guarantor is a party or by which
it or any of its properties may be bound or
affected.
(b) This Agreement constitutes the legal, valid and
binding obligation of the Guarantor enforceable in
accordance with its terms, except that such
enforceability may be limited by bankruptcy or
similar laws affecting the enforceability of
Creditors' rights generally.
(c) The financial statements of the Guarantor
furnished to the Creditors fairly present the
financial condition of the Guarantor for the
periods shown therein, and since the dates covered
by the most recent of such financial statements,
there has been no material adverse change in the
Guarantor's assets or the conduct of its business.
Except as expressly shown on such financial
statements, the Guarantor owns all of its assets
free and clear of all liens except liens in favor
of the Creditors; is not a party to any
litigation, nor is any litigation threatened to
the knowledge of the Guarantor which would, if
adversely determined, cause any material adverse
change in its business or assets; and has no
delinquent tax liabilities, nor have any tax
deficiencies been proposed against it.
7. The Guarantor shall provide to the Creditors such
information regarding the financial condition of the Guarantor as
the Creditors may reasonably request from time to time.
8. This Agreement shall inure to the benefit of the
Creditors and their successors and assigns, including every
holder or owner of any of the Obligations, and shall be binding
upon the Guarantor and Guarantor's successors and assigns. This
is a continuing guarantee and shall continue in effect until the
Creditors shall have received written notice of termination from
Guarantor; provided that this guarantee shall continue in effect
thereafter with respect to all Obligations which arise or are
committed for prior to Creditors' receipt of such notice of
termination (including all subsequent extensions and renewals
thereof, including extensions and renewals at increased rates,
and all subsequently accruing interest and other charges thereon)
until all such Obligations and all obligations of Guarantor
hereunder shall be paid or performed in full and such payments
are not subject to any right of recovery.
9. This Agreement constitutes the entire agreement
between the Creditors and Guarantor with respect to the subject
matter hereof, superseding all previous communications and
negotiations, and no representation, understanding, promise or
condition concerning the subject matter hereof shall be binding
upon Creditors unless expressed herein. This Agreement shall be
governed by the internal laws of the State of Wisconsin.
10. The provisions of this Guaranty are severable, and
in any action or proceeding involving any state corporate law, or
any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of Creditors
generally, if the obligations of the Guarantor under this
Guaranty would otherwise be held or determined to be avoidable,
invalid or unenforceable on account of the amount of the
Guarantor's liability under this Guaranty, then, notwithstanding
any other provision of this Guaranty to the contrary, the amount
of such liability shall, without any further action by the
Guarantor or the Creditors, be automatically limited and reduced
to the highest amount that is valid and enforceable as determined
in such action or proceeding.
11. The Guarantor hereby consents to the exclusive
jurisdiction of any state or federal court situated in Milwaukee
County, Wisconsin, and waives any objection based on lack of
personal jurisdiction, improper venue or forum non conveniens,
with regard to any actions, claims, disputes or proceedings
relating to this Agreement, or any document delivered hereunder
or in connection herewith, or any transaction arising from or
connected to any of the foregoing. Nothing herein shall affect
the right of the Creditors to serve process in any manner
permitted by law, or limit the right of the Creditors to bring
proceedings against the Guarantor or its property or assets in
the competent courts of any other jurisdiction or jurisdictions.
12. The Guarantor hereby waives any and all right to
trial by jury in any action or proceeding relating to this
Agreement, or any document delivered hereunder or in connection
herewith, or any transaction arising from or connected to any of
the foregoing. The Guarantor represents that this waiver is
knowingly, willingly and voluntarily given.
By:
Title:
(CORPORATE SEAL)
Attest:
Title:
APPENDIX A
Schedule of Banks
<TABLE>
Bank Address for Notice Revolver Term Loan Percentage Interest
Commitment Amount Commitment Amount
<S> <C> <C> <C> <C>
Firstar Bank, National Mr. Jeffrey J. Janza $15,000,000 $25,000,000 20%
Assocation Vice President
Firstar Bank, N.A.
Agent 777 East Wisconsin Avenue
Milwaukee, WI 53202
(414) 765-6999
(414) 765-4632 FAX
[email protected]
Bank One, NA Mr. Anthony F. Maggiore $11,250,000 $18,750,000 15%
(Main Office Chicago) Managing Director
Bank One, NA
Co-Agent 111 East Wisconsin Avenue
Milwaukee, WI 53202
(414) 765-3111
(414) 765-2625 FAX
[email protected]
Harris Trust and Mr. George M. Dluhy $11,250,000 $18,750,000 15%
Savings Bank Vice President
Harris Trust and Savings Bank
Co-Agent Midwest Group - Tenth floor West
111 West Monroe Street
Chicago, IL 60603
(312) 461-7788
(312) 293-5040 FAX
[email protected]
BankBoston, N.A. Mr. Peter L. Griswold $11,250,000 $18,750,000 15%
Director - Retail Group
Co-Agent 100 Federal Street
Mail Stop 010905
Boston, MA 02110
(617) 434-8312
(617) 434-0630 FAX
[email protected]
Kathleen A. Dimock
Vice President
(617) 434-3830
[email protected]
Wells Fargo HSBC Mr. Peter Loeffler $7,500,000 $12,500,000 10%
Trade Bank N.A. Vice President
1445 Ross Avenue Suite 450
Dallas, TX 75202
(214) 740-1565
(214) 220-2166
[email protected]
LaSalle Bank National Mr. James A. Meyer $7,500,000 $12,500,000 10%
Association First Vice President
LaSalle Bank, N.A.
411 East Wisconsin Avenue
Milwaukee, WI 53202
(414) 224-0380
(414) 224-0071 FAX
[email protected]
U.S. Bank, Mr. Michael M. Fordney $5,625,000 $9,375,000 7.5%
Senior Vice President
National Association 201 West Wisconsin Avenue
Milwaukee, WI 53259
(920) 830-1646
(920) 830-7814 FAX
[email protected]
M&I Marshall & Ilsley Mr. Ronald J. Carey $5,625,000 $9,375,000 7.5%
Bank Vice President
M&I Marshall & Ilsley Bank
770 North Water Street
Milwaukee, WI 53202
(414) 765-7439
(414) 765-7625 FAX
[email protected]
</TABLE>
