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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 1-8951
M.D.C. HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 84-0622967
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
3600 South Yosemite Street, Suite 900 80237
Denver, Colorado (Zip code)
(Address of principal executive offices)
(303) 773-1100
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of July 30, 1999, 22,295,000 shares of M.D.C. Holdings,
Inc. common stock were outstanding.
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<PAGE>
M.D.C. HOLDINGS, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
INDEX
Page
No.
----
Part I. Financial Information:
Item 1. Condensed Consolidated Financial Statements:
Balance Sheets as of June 30, 1999 (Unaudited)
and December 31, 1998........................ 1
Statements of Income (Unaudited) for the three
and six months ended June 30, 1999 and 1998.. 3
Statements of Cash Flows (Unaudited) for the
six months ended June 30, 1999 and 1998...... 4
Notes to Condensed Consolidated Financial
Statements (Unaudited)....................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................... 8
Part II. Other Information:
Item 1. Legal Proceedings.............................. 19
Item 4. Submission of Matters to a Vote of Shareowners. 19
Item 5. Other Information.............................. 19
Item 6. Exhibits and Reports on Form 8-K............... 19
(i)
<PAGE>
M.D.C. HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
ASSETS (Unaudited)
<S> <C> <C>
Corporate
Cash and cash equivalents................................................... $ 11,000 $ 2,460
Property and equipment, net................................................. 2,604 2,901
Deferred income taxes....................................................... 18,218 17,949
Deferred debt issue costs, net.............................................. 2,493 2,589
Other assets, net........................................................... 5,675 5,670
---------- -----------
39,990 31,569
Homebuilding
Cash and cash equivalents................................................... 8,145 7,279
Home sales and other accounts receivable.................................... 11,814 12,771
Inventories, net
Housing completed or under construction................................... 360,330 294,104
Land and land under development........................................... 254,605 217,180
Prepaid expenses and other assets, net...................................... 52,657 58,981
---------- -----------
687,551 590,315
Financial Services
Cash and cash equivalents................................................... 474 340
Mortgage loans held in inventory, net....................................... 83,401 84,548
Other assets, net........................................................... 5,296 7,241
---------- -----------
89,171 92,129
Total Assets.......................................................... $ 816,712 $ 714,013
========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
-1-
<PAGE>
M.D.C. HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
LIABILITIES (Unaudited)
<S> <C> <C>
Corporate
Accounts payable and accrued expenses....................................... $ 35,671 $ 32,378
Income taxes payable........................................................ 18,237 14,568
Senior notes, net........................................................... 174,364 174,339
----------- -----------
228,272 221,285
Homebuilding
Accounts payable and accrued expenses....................................... 150,751 131,374
Line of credit.............................................................. 55,000 21,871
Notes payable............................................................... 1,044 866
----------- -----------
206,795 154,111
Financial Services
Accounts payable and accrued expenses....................................... 15,448 12,152
Line of credit.............................................................. 26,076 28,334
----------- -----------
41,524 40,486
Total Liabilities..................................................... 476,591 415,882
----------- -----------
COMMITMENTS AND CONTINGENCIES.................................................. - - - -
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 25,000,000 shares authorized; none issued.. - - - -
Common stock, $.01 par value; 100,000,000 shares authorized; 28,125,000 and
27,858,000 shares issued, respectively, at June 30, 1999 and
December 31, 1998......................................................... 281 279
Additional paid-in capital.................................................. 179,268 175,160
Retained earnings........................................................... 196,782 160,291
Accumulated comprehensive income............................................ 3,001 1,785
----------- -----------
379,332 337,515
Less treasury stock, at cost; 5,850,000 and 5,876,000 shares, respectively,
at June 30, 1999 and December 31, 1998.................................... (39,211) (39,384)
----------- -----------
Total Stockholders' Equity............................................ 340,121 298,131
----------- -----------
Total Liabilities and Stockholders' Equity............................ $ 816,712 $ 714,013
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
-2-
<PAGE>
M.D.C. HOLDINGS, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
REVENUES
<S> <C> <C> <C> <C>
Homebuilding.......................................... $ 391,130 $ 293,420 $ 681,010 $ 532,017
Financial services.................................... 7,011 10,149 13,925 14,820
Corporate............................................. 1,618 310 1,949 543
----------- ----------- ----------- -----------
Total Revenues.................................... 399,759 303,879 696,884 547,380
----------- ----------- ----------- -----------
COSTS AND EXPENSES
Homebuilding.......................................... 347,134 276,513 611,860 500,966
Financial services.................................... 3,714 2,987 7,080 5,633
Corporate general and administrative.................. 7,659 4,040 13,964 7,552
----------- ----------- ----------- -----------
Total Costs and Expenses.......................... 358,507 283,540 632,904 514,151
----------- ----------- ----------- -----------
Income before income taxes and extraordinary
item.................................................. 41,252 20,339 63,980 33,229
Provision for income taxes............................... (16,295) (7,758) (25,272) (12,720)
----------- ----------- ----------- -----------
Income before extraordinary item......................... 24,957 12,581 38,708 20,509
Extraordinary loss from early extinguishment of debt, net
of income tax benefit of $9,587....................... - - - - - - (15,314)
----------- ----------- ----------- -----------
NET INCOME............................................... 24,957 12,581 38,708 5,195
Unrealized holding gains on securities arising during the
period, net........................................... 21 314 1,216 1,395
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME..................................... $ 24,978 $ 12,895 $ 39,924 $ 6,590
=========== =========== =========== ===========
EARNINGS PER SHARE
Basic
Income before extraordinary item.................. $ 1.12 $ .70 $ 1.74 $ 1.14
=========== =========== =========== ===========
Net Income........................................ $ 1.12 $ .70 $ 1.74 $ .29
=========== =========== =========== ===========
Diluted
Income before extraordinary item.................. $ 1.10 $ .58 $ 1.71 $ .95
=========== =========== =========== ===========
Net Income........................................ $ 1.10 $ .58 $ 1.71 $ .27
=========== =========== =========== ===========
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic................................................. 22,274 18,042 22,189 17,981
=========== =========== =========== ===========
Diluted............................................... 22,695 22,469 22,630 22,472
=========== =========== =========== ===========
DIVIDENDS PAID PER SHARE................................. $ .05 $ .04 $ .10 $ .07
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE>
M.D.C. HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income........................................................... $ 38,708 $ 5,195
Adjustments to reconcile net income to net cash used in operating
activities
Loss from the early extinguishment of debt..................... - - 24,901
Depreciation and amortization.................................. 9,276 9,107
Homebuilding asset impairment charges.......................... - - 3,000
Deferred income taxes.......................................... (269) (3,824)
Gains on sales of mortgage-related assets...................... - - (4,509)
Net changes in assets and liabilities
Home sales and other accounts receivable.................. 957 (13,837)
Homebuilding inventories.................................. (102,942) (56,117)
Mortgage loans held in inventory.......................... 1,147 (24,165)
Accounts payable and accrued expenses and income taxes
payable................................................. 29,479 36,821
Prepaid expenses and other assets......................... 1,963 (11,584)
Other, net..................................................... 1,831 (2,885)
----------- -----------
Net cash used in operating activities................................ (19,850) (37,897)
----------- -----------
INVESTING ACTIVITIES
Net proceeds from sale of office building............................ - - 13,250
Net proceeds from mortgage-related assets and liabilities............ - - 4,636
Other, net........................................................... 529 (2,524)
----------- -----------
Net cash provided by investing activities............................ 529 15,362
----------- -----------
FINANCING ACTIVITIES
Lines of credit
Advances....................................................... 718,300 579,235
Principal payments............................................. (687,429) (532,254)
Notes payable
Principal payments............................................. (574) (12,614)
Senior notes
Proceeds from issuance......................................... - - 171,541
Repurchase and defeasance...................................... - - (152,000)
Premium on repurchase and defeasance........................... - - (17,592)
Retirement of subordinated notes..................................... - - (10,230)
Dividend payments.................................................... (2,217) (1,258)
Proceeds from stock issuance......................................... 781 1,414
----------- -----------
Net cash provided by financing activities............................ 28,861 26,242
----------- -----------
Net increase in cash and cash equivalents............................ 9,540 3,707
Cash and cash equivalents
Beginning of period............................................ 10,079 11,678
----------- -----------
End of period.................................................. $ 19,619 $ 15,385
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE>
M.D.C. HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
A. Presentation of Financial Statements
The condensed consolidated financial statements of M.D.C. Holdings,
Inc. ("MDC" or the "Company," which refers to M.D.C. Holdings, Inc. and its
subsidiaries) have been prepared, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. These statements reflect
all adjustments (including all normal recurring accruals) which, in the opinion
of management, are necessary to present fairly the financial position, results
of operations and cash flows of MDC as of June 30, 1999 and for all of the
periods presented. These statements are condensed and do not include all of the
information required by generally accepted accounting principles in a full set
of financial statements. These statements should be read in conjunction with
MDC's financial statements and notes thereto included in MDC's Annual Report on
Form 10-K for its fiscal year ended December 31, 1998.
B. Corporate and Homebuilding Interest Activity (in thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest capitalized in homebuilding
inventory, beginning of period....... $ 24,533 $ 35,546 $ 26,332 $ 37,991
Interest incurred....................... 5,231 5,727 9,951 11,499
Interest expensed....................... - - - - - - - -
Previously capitalized interest included
in cost of sales..................... (7,581) (7,957) (14,100) (16,174)
----------- ----------- ----------- -----------
Interest capitalized in homebuilding
inventory, end of period............. $ 22,183 $ 33,316 $ 22,183 $ 33,316
=========== =========== =========== ===========
</TABLE>
C. Stockholders' Equity
In the fourth quarter of 1998, all $28,000,000 outstanding principal
amount of the Company's 8 3/4% convertible subordinated notes due 2005 (the
"Convertible Subordinated Notes") converted into approximately 3,612,900 shares
of MDC common stock at a conversion price of $7.75 per share.
D. Extraordinary Item
Net income for the first six months of 1998 included an extraordinary
loss of $15,314,000, net of an income tax benefit of $9,587,000, recognized in
connection with the Company's repurchase and defeasance of the remaining
$152,000,000 principal amount of 11 1/8% senior notes due 2003 (the "Old Senior
Notes").
-5-
<PAGE>
E. Information on Business Segments
The Company operates in two business segments: homebuilding and
financial services. A summary of the Company's segment information is shown
below (in thousands).
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Homebuilding
Home sales......................... $ 389,144 $ 291,752 $ 677,228 $ 524,515
Land sales......................... 1,439 1,276 2,825 6,803
Other revenues..................... 547 392 957 699
----------- ----------- ----------- -----------
391,130 293,420 681,010 532,017
----------- ----------- ----------- -----------
Home cost of sales................. 312,065 243,253 546,813 439,522
Land cost of sales................. 984 1,179 2,023 4,285
Asset impairment charges........... - - 3,000 - - 3,000
Marketing.......................... 21,226 18,146 38,109 33,396
General and administrative......... 12,859 10,935 24,915 20,763
----------- ----------- ----------- -----------
347,134 276,513 611,860 500,966
----------- ----------- ----------- -----------
Homebuilding Operating Profit.. 43,996 16,907 69,150 31,051
----------- ----------- ----------- -----------
Financial Services
Mortgage Lending Revenues
Net interest income................ $ 616 $ 502 $ 1,277 $ 1,033
Origination fees................... 3,217 2,275 5,720 4,140
Gains on sales of mortgage servicing 1,026 692 2,289 927
Gains on sales of mortgage loans,
net.............................. 2,010 2,012 4,350 4,016
Mortgage servicing and other....... 142 72 289 102
Asset Management Revenues............ - - 4,596 - - 4,602
----------- ----------- ----------- -----------
7,011 10,149 13,925 14,820
General and Administrative Expenses.. 3,714 2,987 7,080 5,633
----------- ----------- ----------- -----------
Financial Services Operating
Profit....................... 3,297 7,162 6,845 9,187
----------- ----------- ----------- -----------
Total Operating Profit................. 47,293 24,069 75,995 40,238
----------- ----------- ----------- -----------
Corporate
Interest and other revenues........ (1,618) (310) (1,949) (543)
General and administrative......... 7,659 4,040 13,964 7,552
----------- ----------- ----------- -----------
Net Corporate Expenses......... 6,041 3,730 12,015 7,009
----------- ----------- ----------- -----------
Income Before Income Taxes and
Extraordinary Item................... $ 41,252 $ 20,339 $ 63,980 $ 33,229
=========== =========== =========== ===========
</TABLE>
-6-
<PAGE>
F. Earnings Per Share
Pursuant to Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," the computation of diluted earnings per share takes into
account the effect of dilutive stock options and for the quarter and six months
ended June 30, 1998, assumed the conversion into MDC common stock of all of the
$28,000,000 outstanding principal amount of the Convertible Subordinated Notes
at a conversion price of $7.75 per share of MDC common stock. The basic and
diluted earnings per share calculations are shown below (in thousands, except
per share amounts).
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Basic Earnings Per Share
Income before extraordinary item................. $ 24,957 $ 12,581 $ 38,708 $ 20,509
Extraordinary loss, net of taxes................. - - - - - - (15,314)
----------- ----------- ----------- -----------
Net income.................................. $ 24,957 $ 12,581 $ 38,708 $ 5,195
=========== =========== =========== ===========
Basic weighted-average shares outstanding........ 22,274 18,042 22,189 17,981
=========== =========== =========== ===========
Per share amounts
Income before extraordinary item............ $ 1.12 $ .70 $ 1.74 $ 1.14
Extraordinary loss, net of taxes............ - - - - - - (.85)
----------- ----------- ----------- ----------
Net income.................................. $ 1.12 $ .70 $ 1.74 $ .29
=========== =========== =========== ===========
Diluted Earnings Per Share
Income before extraordinary item................. $ 24,957 $ 12,581 $ 38,708 $ 20,509
Conversion of Convertible Subordinated Notes..... - - 392 - - 783
----------- ----------- ----------- -----------
Adjusted income before extraordinary item........ 24,957 12,973 38,708 21,292
Extraordinary loss, net of taxes................. - - - - - - (15,314)
----------- ----------- ----------- -----------
Adjusted net income......................... $ 24,957 $ 12,973 $ 38,708 $ 5,978
=========== =========== =========== ===========
Basic weighted-average shares outstanding........ 22,274 18,042 22,189 17,981
Stock options, net............................... 421 814 441 878
Conversion of Convertible Subordinated Notes..... - - 3,613 - - 3,613
----------- ----------- ----------- -----------
Diluted weighted-average shares outstanding. 22,695 22,469 22,630 22,472
=========== =========== =========== ===========
Per share amounts
Income before extraordinary item............ $ 1.10 $ .58 $ 1.71 $ .95
Extraordinary loss, net of taxes............ - - - - - - (.68)
----------- ----------- ----------- ----------
Net income.................................. $ 1.10 $ .58 $ 1.71 $ .27
=========== =========== =========== ===========
</TABLE>
G. Supplemental Disclosure of Cash Flow Information (in thousands)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
---------------------------
1999 1998
----------- ------------
<S> <C> <C>
Cash paid during the period for
Interest.................................................. $ 8,324 $ 5,749
Income taxes.............................................. $ 23,734 $ 5,189
Non-cash investing and financing activities
Land purchases financed by seller......................... $ 752 $ - -
Land sales financed by MDC................................ $ 43 $ 744
</TABLE>
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
INTRODUCTION
M.D.C. Holdings, Inc. is a Delaware corporation originally
incorporated in Colorado in 1972. We refer to M.D.C. Holdings, Inc. as the
"Company" or as "MDC" in this Form 10-Q. The "Company" or "MDC" includes our
subsidiaries unless we state otherwise. MDC's primary business is owning and
managing subsidiary companies that build and sell homes under the name "Richmond
American Homes." We also own and manage HomeAmerican Mortgage Corporation
("HomeAmerican"), which originates mortgage loans primarily for MDC's home
buyers.
RESULTS OF OPERATIONS
The table below summarizes MDC's results of operations (in thousands,
except per share amounts).
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues.................................... $ 399,759 $ 303,879 $ 696,884 $ 547,380
Income Before Income Taxes and Extraordinary
Item...................................... $ 41,252 $ 20,339 $ 63,980 $ 33,229
Income Before Extraordinary Item............ $ 24,957 $ 12,581 $ 38,708 $ 20,509
Net Income.................................. $ 24,957 $ 12,581 $ 38,708 $ 5,195
Earnings Per Share
Basic
Income Before Extraordinary Item....... $ 1.12 $ .70 $ 1.74 $ 1.14
Net Income............................. $ 1.12 $ .70 $ 1.74 $ .29
Diluted
Income Before Extraordinary Item....... $ 1.10 $ .58 $ 1.71 $ .95
Net Income............................. $ 1.10 $ .58 $ 1.71 $ .27
</TABLE>
Revenues for the second quarter and first half of 1999 increased
$95,880,000 and $149,504,000, respectively, compared with the same periods in
1998, primarily due to higher home sales revenues resulting from (1) record
levels of home closings; and (2) increases of more than 10% in the average
selling prices of homes closed.
Income before extraordinary item increased 98% and 89%, respectively,
in the second quarter and first half of 1999, compared with the same periods in
1998. These increases primarily were a result of increased operating profit from
the Company's homebuilding segment, due to the home sales revenue increases
described above and 320 and 310 basis point increases, respectively, in Home
Gross Margins (as hereinafter defined).
-8-
<PAGE>
Net income for the first six months of 1998 included an extraordinary
loss of $15,314,000, net of an income tax benefit of $9,587,000, recognized in
connection with the Company's repurchase and defeasance of the then remaining
$152,000,000 principal amount of Old Senior Notes.
Homebuilding Segment
The tables below set forth information relating to the Company's
homebuilding segment (dollars in thousands).
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Home Sales Revenues......................... $ 389,144 $ 291,752 $ 677,228 $ 524,515
Operating Profit............................ $ 43,996 $ 16,907 $ 69,150 $ 31,051
Average Selling Price Per Home Closed..... $ 208.8 $ 186.8 $ 204.5 $ 185.2
Home Gross Margins.......................... 19.8% 16.6% 19.3% 16.2%
Excluding Interest in Home Cost of Sales 21.8% 19.3% 21.3% 19.0%
Orders For Homes, net (units)
Colorado............................. 759 687 1,604 1,597
California........................... 407 310 800 620
Arizona.............................. 413 430 938 951
Nevada............................... 146 163 274 305
Virginia............................. 194 163 461 427
Maryland............................. 110 96 198 225
----------- ----------- ----------- -----------
Total........................... 2,029 1,849 4,275 4,125
=========== =========== =========== ===========
Homes Closed (units)
Colorado............................. 691 631 1,193 1,111
California........................... 317 194 540 375
Arizona.............................. 469 365 855 691
Nevada............................... 115 106 256 196
Virginia............................. 190 163 310 285
Maryland............................. 82 103 157 174
----------- ----------- ----------- -----------
Total........................... 1,864 1,562 3,311 2,832
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1999 1998 1998
----------- ------------ -----------
<S> <C> <C> <C>
Backlog (units)
Colorado............................. 1,766 1,355 1,366
California........................... 586 326 515
Arizona.............................. 779 696 653
Nevada............................... 164 146 204
Virginia............................. 405 254 353
Maryland............................. 194 153 234
----------- ----------- -----------
Total........................... 3,894 2,930 3,325
=========== =========== ===========
Estimated Sales Value........... $ 800,000 $ 580,000 $ 640,000
=========== =========== ===========
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1999 1998 1998
----------- ------------ -----------
<S> <C> <C> <C>
Active Subdivisions
Colorado............................. 46 45 46
California........................... 20 21 16
Arizona.............................. 22 24 27
Nevada............................... 9 9 9
Virginia............................. 17 20 20
Maryland............................. 8 11 14
----------- ----------- -----------
Total........................... 122 130 132
=========== =========== ===========
</TABLE>
Home Sales Revenues - Home sales revenues in the second quarter and
first half of 1999 represented the highest revenue levels for comparable periods
in the Company's history and were 33% and 29% higher, respectively, than home
sales revenues for the same periods in 1998. The improved revenues were a result
of increased home closings and higher average selling prices per home closed, as
further discussed below.
Homes Closed - Home closings for the quarter and six months ended June
30, 1999, which were higher in all of the Company's markets except Maryland,
increased 19% and 17%, respectively, compared with the same periods in 1998.
Home closings in the second quarter and first half of 1999, compared with the
same periods in 1998, particularly were strong in (1) Phoenix (increases of 34%
and 24%, respectively), Southern California (increases of 33% and 27%,
respectively) and Colorado (increases of 10% and 7%, respectively) as a result
of the strong demand for homes in these markets; and (2) Northern California,
where the Company has opened six new active subdivisions in the San Francisco
Bay area. Home closings decreased in the second quarter and first half of 1999
in Maryland, compared with the same periods in 1998, primarily due to the
decreased number of active subdivisions in this market.
Looking forward, the Company's record Backlog (as hereinafter defined)
at June 30, 1999 and its strong orders for new homes in July 1999 have
positioned the Company to close more than 7,000 homes in 1999. See "Forward
Looking Statements" below.
Average Selling Price Per Home Closed - The average selling prices per
home closed in the second quarter and first half of 1999 increased $22,000 and
$19,300, respectively, compared with the same periods in 1998. Each of the
Company's markets realized higher average selling prices for the 1999 periods.
The increases primarily were due to (1) a greater number of homes closed in
higher-priced subdivisions in Southern and Northern California; (2) a higher
proportion of detached homes closed in Virginia, which generally have higher
selling prices than townhomes; (3) selling price increases in each of the
Company's markets, particularly in Colorado, Southern California and Phoenix;
and (4) increased sales volume per home from the Company's design centers in
Colorado, Phoenix, Las Vegas and Southern California.
Home Gross Margins - We define "Home Gross Margins" to mean home sales
revenues less cost of goods sold (which primarily includes land and construction
costs, capitalized interest, financing costs, and a reserve for warranty
expense) as a percent of home sales revenues. Home Gross Margins reached record
levels and increased by 320 and 310 basis points, respectively, during the
quarter and six months ended June 30, 1999, compared with the same periods in
1998. The increases largely were due to (1) in Colorado and Phoenix, selling
price increases and reduced incentives offered to home buyers due to the
-10-
<PAGE>
continued strong demand for new homes in these markets; (2) in Maryland,
management's continued efforts to close out under-performing subdivisions and
improve profitability; (3) reduced levels of interest in home cost of sales, as
discussed below; (4) increases in higher-margin revenues generated through the
Company's design centers; (5) a higher proportion of presold homes closed, which
generally have higher Home Gross Margins than spec homes; and (6) initiatives
implemented in each of the Company's markets designed to improve operating
efficiency, control costs and increase rates of return.
Looking forward, the Company believes that Home Gross Margins for the
third and fourth quarters in 1999 will exceed 18%, which represent increases of
at least 50 basis points from the Home Gross Margins achieved by the Company for
the comparable periods in 1998. Future growth in Home Gross Margins may be
impacted adversely by (1) increased competition; (2) increases in the costs of
subcontracted labor, finished lots, building materials and other resources, to
the extent that market conditions prevent the recovery of increased costs
through higher selling prices; (3) adverse weather; and (4) shortages of
subcontractor labor. See "Forward Looking Statements" below.
Interest in Home Cost of Sales - Interest in home cost of sales as a
percent of home sales revenues in the second quarter and first half of 1999
decreased to 2.0%, compared with 2.7% and 2.8% for the same periods in 1998.
These reductions primarily resulted from lower levels of capitalized interest in
homebuilding inventories at the beginning of 1999, compared with the beginning
of 1998. Despite increases in the amount of the Company's homebuilding
inventories, interest capitalized in homebuilding inventories at June 30, 1999
decreased to $22,183,000, compared with $33,316,000 at June 30, 1998. This
reduction in interest capitalized in homebuilding inventories primarily was due
to lower levels of interest incurred over the last year resulting from (1) lower
effective interest rates on the Company's outstanding debt primarily resulting
from the January 1998 refinancing of the Old Senior Notes; and (2) the continued
reduction in homebuilding and corporate debt levels.
Orders for Homes and Backlog - Orders for homes in the second quarter
and six months ended June 30, 1999 increased 10% and 4%, respectively, compared
with the same periods in 1998, despite a decrease in the number of active
subdivisions to 122 at June 30, 1999 from 132 at June 30, 1998. As a result,
1999 second quarter and first half home orders were approximately 20% and 13%
higher, respectively, on a "same store" basis than home orders for the same
periods in 1998. The strong 1999 second quarter and first half home orders
compared favorably with the same periods in 1998 despite difficult
year-over-year comparisons as 1998 second quarter and first half home orders
increased 23% and 36%, respectively, compared with home orders received in the
same periods in 1997. Home orders in the second quarter of 1999 particularly
were strong in (1) Virginia and Colorado, as a result of the continued strong
demand for homes in these markets; and (2) Northern California, where second
quarter 1999 home orders increased by 100, compared with second quarter 1998,
due to the addition of six new active subdivisions in this market. On a
same-store basis, orders for new homes increased by more than 50% in Maryland,
primarily due to improving market conditions and the close-out of
under-performing projects.
The increased orders for homes in the second quarter and first half of
1999 contributed to a 17% increase in the Company's homes under contract but not
yet delivered ("Backlog") at June 30, 1999 to 3,894 units with an estimated
sales value of $800,000,000, compared with a Backlog of 3,325 units with an
estimated sales value of $640,000,000 at June 30, 1998. Assuming no significant
change in market conditions or mortgage interest rates, the Company expects
approximately 75% of its June 30, 1999 Backlog to close under existing sales
contracts during the second half of 1999 and first quarter of 2000. The
remaining 25% of the homes in Backlog are not expected to close under existing
contracts due to cancellations. See "Forward-Looking Statements" below.
-11-
<PAGE>
The Company received approximately 645 orders for homes in July 1999,
compared with 525 orders for July 1998. The July 1999 year-over-year increase of
23% (33% on a same-store basis) is attributable to improved home orders in most
of the Company's markets, with particular strength in Southern California and
Colorado, which were up 53% and 39%, respectively, on a same-store basis.
Northern California, which is now selling in six new subdivisions, recorded 54
more home orders than in July 1998. The Company is unable to predict whether
higher year-over-year home orders in 1999, compared with 1998, will continue in
the future. See "Forward-Looking Statements" below.
Marketing - Marketing expenses (which include amortization of deferred
marketing, model home expenses, sales commissions and other costs) totalled
$21,226,000 and $38,109,000, respectively, for the quarter and six months ended
June 30, 1999, compared with $18,146,000 and $33,396,000, respectively, for the
same periods in 1998. The increases in 1999 primarily were volume related,
resulting from higher (1) marketing-related salaries and benefits; (2) sales
commissions; (3) deferred marketing costs amortized in connection with the
increased number of home closings; and (4) product advertising and other costs
incurred in connection with the Company's expanded operations. These expenses
declined as a percentage of home sales revenues to 5.5% and 5.6%, respectively,
for the second quarter and first half of 1999, compared with 6.2% and 6.4%,
respectively, for the same periods in 1998.
General and Administrative - General and administrative expenses
increased to $12,859,000 and $24,915,000, respectively, during the second
quarter and first half of 1999, compared with $10,935,000 and $20,763,000,
respectively, for the same periods in 1998, primarily due to increased
compensation costs resulting from MDC's increased profitability and expanded
homebuilding operations. These expenses declined as a percentage of home sales
revenues to 3.3% and 3.7%, respectively, for the second quarter and first half
of 1999, compared with 3.7% and 4.0%, respectively, for the same periods in
1998.
Asset Impairment Charges
No asset impairment charges were recorded during the first half of
1999. Operating results during the second quarter and first half of 1998 were
reduced by asset impairment charges of $3,000,000 related to certain of the
Company's homebuilding assets in suburban Maryland. The asset impairment charges
resulted from (1) the recognition of losses anticipated from the closing of
certain homes in Backlog and from the reduction of selling prices and the
offering of increased incentives to stimulate sales of certain completed unsold
homes in inventory; and (2) the write-down to fair value of certain subdivisions
which experienced slow sales and negative Home Gross Margins.
-12-
<PAGE>
Land Inventory
The table below shows the carrying value of land and land under
development, by market, the total number of lots owned and lots controlled under
option agreements, and total option deposits (dollars in thousands).
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1999 1998 1998
----------- ----------- -----------
<S> <C> <C> <C>
Colorado................................ $ 54,012 $ 53,720 $ 47,986
California.............................. 132,838 100,754 53,304
Arizona................................. 17,358 25,178 27,068
Nevada.................................. 31,771 20,027 19,722
Virginia................................ 8,734 11,292 14,032
Maryland................................ 9,892 6,209 10,788
----------- ----------- -----------
Total.............................. $ 254,605 $ 217,180 $ 172,900
=========== =========== ===========
Total Lots Owned........................ 9,191 8,925 8,358
Total Lots Controlled Under Option...... 7,950 7,729 6,198
----------- ----------- -----------
Total Lots Owned and Controlled... 17,141 16,654 14,556
=========== =========== ===========
Total Option Deposits................... $ 8,677 $ 12,504 $ 8,770
=========== =========== ===========
</TABLE>
Financial Services Segment
Operating profits from the financial services segment were $3,297,000
and $6,845,000, respectively, for the second quarter and first half of 1999,
compared with $7,162,000 and $9,187,000, respectively, for the same periods in
1998. The 1998 periods benefited from the recognition of a $4,450,000 pre-tax
gain related to the sale of the Company's asset management business.
The table below summarizes the results of HomeAmerican's operations (in
thousands).
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Origination Fees............................ $ 3,217 $ 2,275 $ 5,720 $ 4,140
Gains on Sales of Mortgage Loans, net....... $ 2,010 $ 2,012 $ 4,350 $ 4,016
Gains on Sales of Mortgage Servicing, net... $ 1,026 $ 692 $ 2,289 $ 927
Operating Profit............................ $ 3,297 $ 2,572 $ 6,845 $ 4,596
Principal Amount of Originations and
Purchases
MDC home buyers.......................... $ 225,694 $ 173,205 $ 387,417 $ 314,329
Spot..................................... 10,239 16,563 22,526 28,553
Correspondent............................ - - 35,997 12,074 76,674
----------- ----------- ----------- -----------
Total.............................. $ 235,933 $ 225,765 $ 422,017 $ 419,556
=========== =========== =========== ===========
Capture Rate................................ 71% 71% 70% 72%
=========== =========== =========== ===========
Including Brokered Loans................. 83% 78% 81% 78%
=========== =========== =========== ===========
</TABLE>
-13-
<PAGE>
HomeAmerican's operating profits for the second quarter and first half
of 1999 increased, compared with the same periods in 1998, primarily due to
increases of (1) $942,000 and $1,580,000, respectively, in origination fees; and
(2) $334,000 and $1,362,000, respectively, in gains from sales of mortgage
servicing. These increases partially were offset by higher general and
administrative expenses resulting from the increased mortgage lending activity.
HomeAmerican continues to benefit from the Company's homebuilding growth as MDC
home buyers were the source of approximately 96% and 92%, respectively, of the
principal amount of mortgage loans originated by HomeAmerican in the second
quarter and first half of 1999.
Mortgage loans originated by HomeAmerican for MDC home buyers as a
percentage of total MDC home closings ("Capture Rate") remained approximately
the same for the quarter and six months ended June 30, 1999, compared with the
Capture Rate for the same periods in 1998. However, the number of mortgage loans
brokered by HomeAmerican for origination by outside lending institutions for MDC
home buyers with non-agency-qualified credit has increased. These brokered
mortgage loans, for which HomeAmerican receives a fee, have been excluded from
the computation of the Capture Rate. Mortgage loans brokered by HomeAmerican as
a percentage of total MDC home closings increased to approximately 12% and 11%,
respectively, for the second quarter and first half of 1999, compared with
approximately 6% for the same periods in 1998.
Forward Sales Commitments - HomeAmerican's operations are affected by,
among other things, changes in mortgage interest rates. HomeAmerican utilizes
forward mortgage securities contracts to manage the interest rate risk on its
fixed-rate mortgage loans owned and rate-locked mortgage loans in the pipeline.
Such contracts are the only significant financial derivative instrument utilized
by MDC.
Other Operating Results
Corporate Other Revenues - In the second quarter of 1999, the Company
recognized income of approximately $1,500,000 related to its share of a gain
from the sale of substantially all of the assets of a partnership in which it
was an investor. The Company does not anticipate earning income or receiving
distributions from this partnership in the future.
Interest Expense - The Company capitalizes interest on its homebuilding
inventories during the period of active development and through the completion
of construction. Corporate and homebuilding interest incurred but not
capitalized is reflected as interest expense and totalled zero for both the
second quarter and first half of 1999 and 1998.
Corporate and homebuilding interest incurred decreased 9% and 13%,
respectively, to $5,231,000 and $9,951,000, respectively, for the second quarter
and first half of 1999, compared with $5,727,000 and $11,499,000, respectively,
for the same periods in 1998, primarily due to lower levels of outstanding debt
and more favorable effective interest rates in 1999.
For a reconciliation of interest incurred, capitalized and expensed,
see Note B to the Company's Condensed Consolidated Financial Statements.
Corporate General and Administrative Expenses - Corporate general and
administrative expenses increased to $7,659,000 and $13,964,000, respectively,
during the second quarter and first half of 1999, compared with $4,040,000 and
$7,552,000, respectively, for the same periods in 1998, primarily due to (1)
greater compensation expense in 1999 related to the Company's increased
profitability and expanding operations; (2) the recognition in the first six
months of 1998 of an $836,000 credit to health
-14-
<PAGE>
insurance expense related to a reduction in incurred but not reported
liabilities of the employee medical plan sponsored by the Company; and (3)
approximately $200,000 and $1,000,000, respectively, for the quarter and six
months ended June 30, 1999 in expenses primarily resulting from the development
of new processes, controls and computer systems relative to the Company's "best
practices" endeavors.
"Year 2000" Issue - The Company began assessing the possible impact of
the Year 2000 ("Y2K") issue on its business operations in 1997. The issue arises
because of information technology ("IT") which utilizes a two digit date field.
Y2K introduces the potential for errors and miscalculations related to IT and
non-IT systems which were not designed to accommodate a date of year 2000 and
beyond.
The Company has identified the following six phases in its Y2K
remediation program: (1) assessment of the Y2K capabilities of its IT and non-IT
systems; (2) acquisition of new IT and non-IT systems or modification of
existing IT and non-IT systems to meet Y2K requirements; (3) testing; (4)
evaluation of efforts to meet Y2K requirements; (5) adjustments as identified in
the evaluation phase; and (6) implementation and integration of modified IT and
non-IT systems into the Company's business operations.
The Company has completed all six phases with respect to its
homebuilding information system and believes this system has been Y2K compliant
since the third quarter of 1998. Management information systems for the
Company's financial services activities are now in the implementation phase.
Implementation of these systems is expected to be completed in the third quarter
of 1999. Given the nature of the homebuilding industry, the Company is only
minimally dependent upon non-IT systems such as telephone, security systems and
time clocks. With respect to such non-IT systems, the Company has completed the
implementation phase and believes these systems to be Y2K compliant.
The Company is presently evaluating other potential Y2K issues. As part
of this evaluation, the Company has requested and received representations from
certain financial institutions and third party vendors which indicate their
progress toward Y2K compliance. The Company has sent Y2K compliance surveys to
certain significant subcontractors, vendors and municipalities and has received
responses to approximately 70% of the surveys. To date, the survey responses
have not indicated any Y2K compliance issues that would result in a material
adverse effect on the Company's financial position or results of operations.
The Company incurred costs for outside consultants and internal costs
in the first half of 1999 and all of 1998 and 1997 related to Y2K which
aggregated approximately $800,000, and future consulting and internal costs are
expected to be approximately $50,000 during the balance of 1999. These costs,
which are expensed as incurred, have been and will continue to be funded from
operations. The costs incurred through June 30, 1999 did not have a material
adverse effect on the Company's financial position or results of operations.
The Company could be impacted materially by widespread economic or
financial market disruptions or by Y2K computer system failures at government
agencies on which the Company is dependent for utilities, zoning, building
permits and related items. However, the most likely worst-case Y2K scenario
would include instances of construction delays caused by the Company's inability
to secure building permits, zoning and utilities as well as closing delays
caused by the inability of home buyers to obtain financing. In addition, there
could be instances of subcontractors experiencing construction delays due to
their inability to secure building materials on a timely basis. The Company
-15-
<PAGE>
typically uses several subcontractors within a given trade. As a result, the
Company believes that it will be able to replace subcontractors that may not be
able to perform due to Y2K deficiencies.
The Company believes that, based upon its assessment of the Y2K
phenomena, certain subcontractors, vendors and government agencies may encounter
Y2K problems that impact the Company and that may require MDC to take alternate
or additional steps. In order to address Y2K concerns which may originate from
subcontractors, third party vendors and governmental agencies, the Company
intends to prepare contingency plans by the end of the third quarter of 1999.
See "Forward-Looking Statements" below.
Income Taxes - The Internal Revenue Service ("IRS") has completed its
examinations of the Company's federal income tax returns for the years 1991
through 1995 and has proposed adjustments to the taxable income reflected in
such returns. The Company is protesting certain of these proposed adjustments.
The IRS currently is examining the Company's federal income tax returns for the
years 1996 and 1997. No audit report has been issued by the IRS in connection
with this latter examination. In the opinion of management adequate provision
has been made for additional income taxes and interest, if any, which may arise
as a result of these examinations.
MDC's overall effective income tax rate increased to 39.5% for the
second quarter and first half of 1999 compared with 38.1% and 38.3%,
respectively, for the same periods in 1998, due to an increase in the Company's
effective state income tax rate. The 1999 and 1998 rates differed from the
federal statutory rate of 35% primarily due to the impact of state income taxes.
LIQUIDITY AND CAPITAL RESOURCES
MDC uses its liquidity and capital resources to, among other things,
(1) support its operations, including its inventories of homes, home sites and
land; (2) provide working capital; and (3) provide mortgage loans for its home
buyers. Liquidity and capital resources are generated internally from operations
and from external sources.
Capital Resources
The Company's capital structure is a combination of (1) permanent
financing, represented by stockholders' equity; (2) long-term financing,
represented by publicly traded 8 3/8% senior notes due 2008 (the "New Senior
Notes"); and (3) current financing, primarily lines of credit, as discussed
below. The Company believes that its current financial condition is both
balanced to fit its current operating structure and adequate to satisfy its
current and near-term capital requirements. See "Forward-Looking Statements"
below.
MDC anticipates acquiring finished lots and partially developed land
for use in its future homebuilding operations during the remainder of 1999. The
Company currently intends to acquire a portion of the land inventories required
in future periods through takedowns of lots subject to option contracts entered
into in prior periods and under new option contracts. The use of option
contracts lessens the Company's land-related risk and improves liquidity.
Because of increased demand for partially developed and finished lots in certain
of the markets where the Company builds homes, the Company's ability to acquire
lots using option contracts has been reduced or has become more expensive. See
"Forward-Looking Statements" below.
-16-
<PAGE>
Based upon its current capital resources and additional credit
available under existing credit agreements, MDC anticipates that it has adequate
financial resources to satisfy its current and near-term capital requirements,
including the acquisition of land. The Company believes that it can meet its
long-term capital needs (including meeting future debt payments and refinancing
or paying off other long-term debt as it becomes due) from operations and
external financing sources, assuming that no significant adverse changes in the
Company's business occur as a result of the various risk factors described
elsewhere in this report. See "Forward-Looking Statements" below.
Lines of Credit and Other
Homebuilding - The Company maintains a $300,000,000 unsecured revolving
line of credit (the "Homebuilding Line") with a group of banks to support its
homebuilding operations. The Homebuilding Line matures on June 30, 2003,
although, pursuant to the terms of the related credit agreement, a term-out of
this credit may commence earlier under certain circumstances. At June 30, 1999,
$55,000,000 was borrowed and $9,024,000 in letters of credit were outstanding
under the Homebuilding Line.
Mortgage Lending - To provide funds to originate and purchase mortgage
loans and to finance these mortgage loans on a short-term basis, HomeAmerican
utilizes its mortgage lending bank line of credit (the "Mortgage Line"). These
mortgage loans normally are sold within 40 days after origination or purchase.
During the first half of 1999 and 1998, HomeAmerican sold $422,279,000 and
$395,152,000, respectively, principal amount of mortgage loans and
mortgage-backed certificates to unaffiliated purchasers.
Available borrowings under the Mortgage Line are collateralized by
mortgage loans and mortgage-backed certificates and are limited to the value of
eligible collateral, as defined. The aggregate amount available under the
Mortgage Line at June 30, 1999 was $51,000,000. At June 30, 1999, $26,076,000
was borrowed and an additional $24,924,000 was collateralized and available to
be borrowed. The Mortgage Line is cancelable upon 90 days' notice.
General - The agreements for the Company's New Senior Notes and bank
lines of credit require compliance with certain representations, warranties and
covenants. These agreements are on file with the Securities and Exchange
Commission and are listed in the Exhibit Table in Part IV of MDC's Annual Report
on Form 10-K for its fiscal year ended December 31, 1998. The Company believes
that it is in compliance with these representations, warranties and covenants.
The financial covenants contained in the loan agreement for the
Homebuilding Line include a leverage test and a consolidated tangible net worth
test. Under the leverage test, generally MDC's consolidated indebtedness is not
permitted to exceed 2.15 times MDC's "adjusted consolidated tangible net worth,"
as defined in the loan agreement. Under the consolidated net worth test, MDC's
"tangible net worth," as defined, must not be less than $170,000,000 plus 50% of
"consolidated net income," as defined, after January 1, 1996.
The Company's New Senior Notes indenture does not contain financial
covenants. However, there are covenants that limit transactions with affiliates,
limit the amount of additional indebtedness that MDC may incur, restrict certain
payments on, or the redemptions of the Company's securities, restrict certain
sales of assets and limit incurring liens. In addition, under certain
circumstances, in the event of a change of control (generally a sale, transfer,
merger or acquisition of MDC or substantially all of its assets), MDC may be
required to offer to repurchase the New Senior Notes.
-17-
<PAGE>
Pursuant to the Mortgage Line, HomeAmerican must maintain a
"consolidated tangible net worth," as defined in the Mortgage Line, of at least
$5,000,000 and may only pay up to 50% of its net income to MDC in the form of
dividends.
Consolidated Cash Flow
During the first six months of 1999, the Company used $19,850,000 of
cash in its operating activities, primarily due to increases in homebuilding
inventories, partially offset by internally generated funds, in conjunction with
its expanded homebuilding operations. The Company financed these operating cash
requirements primarily through borrowings on its lines of credit.
During the first six months of 1998, the Company used $37,897,000 of
cash in its operating activities, primarily due to increases in homebuilding and
mortgage loan inventories in conjunction with its expanded homebuilding
operations. The Company financed these operating cash requirements primarily
through borrowings on its lines of credit as well as the $13,250,000 proceeds
from the sale of the Company's headquarters office building and the collection
of $4,450,000 in notes receivable with respect to the sale of the Company's
asset management business.
OTHER
Forward-Looking Statements
Certain statements in this Form 10-Q Quarterly Report, the Company's
Annual Report on Form 10-K for its fiscal year ended December 31, 1998, the
Company's Annual Report to Shareowners, as well as statements made by the
Company in periodic press releases, oral statements made by the Company's
officials to analysts and shareowners in the course of presentations about the
Company and conference calls following quarterly earnings releases, constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among other things, (1)
general economic and business conditions; (2) interest rate changes; (3) the
relative stability of debt and equity markets; (4) competition; (5) the
availability and cost of land and other raw materials used by the Company in its
homebuilding operations; (6) demographic changes; (7) shortages and the cost of
labor; (8) weather related slowdowns; (9) slow growth initiatives; (10) building
moratoria; (11) governmental regulation, including the interpretation of tax,
labor and environmental laws; (12) changes in consumer confidence and
preferences; (13) required accounting changes; (14) the impact on the Company of
Y2K compliance by the Company and its vendors, suppliers and subcontractors and
by various governmental and regulatory agencies; and (15) other factors over
which the Company has little or no control.
-18-
<PAGE>
M.D.C. HOLDINGS, INC.
FORM 10-Q
PART II
ITEM 1. LEGAL PROCEEDINGS.
The Company and certain of its subsidiaries and affiliates have been
named as defendants in various claims, complaints and other legal actions
arising in the normal course of business. In the opinion of management, the
outcome of these matters will not have a material adverse effect upon the
financial condition, results of operations or cash flows of the Company.
Because of the nature of the homebuilding business, and in the ordinary
course of its operations, the Company from time to time may be subject to
product liability claims.
The Company is not aware of any litigation, matter or pending claim
against the Company which would result in material contingent liabilities
related to environmental hazards or asbestos.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREOWNERS.
MDC held its Annual Meeting of Shareowners (the "Meeting") on
May 24, 1999. At the Meeting, Messrs. Gilbert Goldstein and William B. Kemper
were elected as directors to serve three-year terms.
ITEM 5. OTHER INFORMATION.
On July 23, 1999, the Company's board of directors declared a dividend
of five cents per share for the quarter ended June 30, 1999, payable August 12,
1999, to shareowners of record on July 30, 1999. Future dividend payments are
subject to the discretion of the Company's board of directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit:
10.1 M.D.C. Holdings, Inc. 401(k) Savings
Plan Prototype Retirement Plan and
Trust.
-19-
<PAGE>
10.2 M.D.C. Holdings, Inc. 401(k) Savings
Plan Prototype Retirement Plan &
Trust Adoption Agreement between
M.D.C. Holdings, Inc. and Key Trust
Company National Association effective
as of July 1, 1998.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
(1) Form 8-K dated April 20, 1999
reporting the Company's results for
the first quarter ended March 31,
1999, including unaudited summary
financial statements and other
financial information.
(2) Form 8-K dated June 3, 1999 reporting
the Company's home orders for
April and May 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 4, 1999 M.D.C. HOLDINGS, INC.
-------------- (Registrant)
By: /s/ Paris G. Reece III
----------------------------
Paris G. Reece III,
Executive Vice President,
Chief Financial Officer and
Principal Accounting Officer
-20-
EXHIBIT 10.1
PRISM(R) PROTOTYPE RETIREMENT PLAN AND TRUST
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless the context indicates otherwise, the following
terms, when used herein with initial capital letters, shall have the
meanings set forth below:
(A) Accounting Date: The date which is the last business day of
each month of the Employer's Plan Year or such other date as
may be agreed upon between the Employer and the Trustee, but
only if the Employer has specifically requested the Trustee to
prepare an accounting on or before such date. Notwithstanding
the foregoing, the Trustee shall value the assets held in the
Trust on each business day that the Trustee and the New York
Stock Exchange are open for business.
(B) Adoption Agreement: The Adoption Agreement adopting this Plan
which has been executed by the Employer and accepted by the
Trustee, including any amendment thereof, which is
incorporated herein by reference.
(C) Basic Plan Document: This document, which, in connection with
the Adoption Agreement forms the Plan.
(D) Beneficiary: The person or persons to whom a deceased
Participant's benefits are payable under the Plan.
(E) Break In Service: A 12-consecutive month period during which
the Participant does not complete more than one-half of the
Hours of Service with the Employer required for a Year of
Service, as elected in the Adoption Agreement. For
eligibility purposes, the initial 12-consecutive month
period is the period beginning on the Employees date of hire.
Subsequent 12-consecutive month periods for eligibility
purposes will be either the period ending on the annual
anniversary of the Employee's date of hire or the Plan
Year, as selected in the Adoption Agreement. For all other
purposes, the 12-consecutive month period shall be the Plan
Year, or other computation period as selected in the Adoption
Agreement. If the elapsed time method of crediting service
is elected in the Adoption Agreement, "Break In Service"
will mean a Period of Severance of at least 12 consecutive
months.
(F) Code: The Internal Revenue Code of 1986, and amendments
thereto.
(G) Committee: The Committee provided for in Article XI, which
shall be a Named Fiduciary as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
To the extent that the Employer does not appoint a Committee,
the Employer shall have the duty of the day to day
administration of the Plan and shall be the Named Fiduciary
for that purpose.
(H) Compensation: Compensation shall have the following various
definitions, as may be appropriate within the context of the
Plan:
<PAGE>
(1) Compensation as that term is defined in Section
6.6(A) of the Plan. For any Self-Employed Individual
covered under the Plan, Compensation will mean Earned
Income. Compensation shall include only that
compensation which is actually paid to the
Participant during the determination period. Except
as provided elsewhere in this Plan, the determination
period shall be the period elected by the Employer in
the Adoption Agreement. If the Employer makes no
election, the determination period shall be the Plan
Year. For purposes of allocations of Employer Profit
Sharing or Matching Contributions, the definition of
Compensation in Section 6.6(A)(2)(a) shall be used,
as modified in the Adoption Agreement.
Notwithstanding the above, if elected by the Employer
in the Adoption Agreement, Compensation for
allocation purposes shall include any amount which is
contributed by the Employer pursuant to a salary
reduction agreement and which is not includible in
the gross income of the employee under Sections 125,
402(e)(3), 402(h)(1)(B) or 403(b) of the Code.
(2) For years beginning after December 31, 1988, and
prior to January 1, 1994, the annual Compensation of
each Participant taken into account for determining
all benefits provided under the Plan for any
determination period shall not exceed $200,000. This
limitation shall be adjusted by the Secretary at the
same time and in the same manner as under Section
415(d) of the Code except that the dollar increase in
effect on January 1 of any calendar year is effective
for plan years beginning in such calendar year and
the first adjustment to the $200,000 limitation is
effective on January 1, 1990. After December 31,
1993, the annual Compensation of each Participant
taken into account for determining all benefits
provided under the Plan for any determination period
shall not exceed $150,000, or such other lesser
amount as may be specified in the Adoption Agreement.
This limitation shall be adjusted by the Secretary at
the same time and in the same manner as under Section
415(d) of the Code. If a Plan determines Compensation
on a period of time that contains fewer than 12
calendar months, then the annual Compensation limit
is an amount equal to the annual Compensation limit
for the calendar year in which the Compensation
period begins multiplied by a ratio obtained by
dividing the number of full months in the period by
12.
In determining the Compensation of a Participant for
purposes of this limitation, the rules of Section
414(q)(6) of the Code shall apply, except in applying
such rules, the term "family" shall include only the
Spouse of the Participant and any lineal descendants
of the Participant who have not attained age 19
before the close of the year. If, as a result of the
application of such rules the adjusted annual
compensation limitation is exceeded, then (except for
purposes of determining the portion of Compensation
up to the integration level if this Plan provides for
permitted disparity), the limitation shall be
prorated among the affected individuals in proportion
to each such individual's Compensation as determined
under this Section prior to the application of this
limitation.
If compensation for any prior determination period is
taken into account in determining an Employee's
allocations or benefits for the current determination
period, the compensation for such prior year is
subject to the applicable annual compen-
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sation limit in effect for that prior year. For this
purpose, for years beginning before January 1, 1990,
the applicable compensation limit is $200,000. In
addition, in determining allocations in plan years
beginning on or after January 1, 1994, the annual
compensation limit in effect for determination
periods beginning before that date is $150,000.
(I) Disability: The inability to engage in any substantial gainful
activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months. The permanence and
degree of such impairment shall be supported by medical
evidence. The Employer shall determine the existence of a
Disability based on its current disability policy, applied on
a uniform and nondiscriminatory basis.
(J) Earned Income: The net earnings from self-employment in the
trade or business with respect to which the Plan is
established, for which personal services of the individual are
a material income-producing factor. Net earnings will be
determined without regard to items not included in gross
income and the deductions allocable to such items. Net
earnings are reduced by contributions by the Employer to a
qualified Plan to the extent deductible under Section 404 of
the Code. Net earnings shall be determined with regard to the
deduction allowed to the taxpayer by Section 164(f) of the
Code for taxable years beginning after December 31, 1989.
(K) Early Retirement Date: The date specified in the Adoption
Agreement at which a participating Employee may receive an
early retirement benefit.
(L) Effective Date: The date specified in the Adoption Agreement
which shall be the effective date of the provisions of this
Plan, unless modified in Item B(18) of the Adoption Agreement.
If the Plan is a restatement of an existing Plan, the original
effective date of the Plan shall be as specified in the
Adoption Agreement.
(M) Eligible Employee: Any Employee who is eligible to receive an
Employer contribution (including forfeitures), as defined in
Item B(6) of the Adoption Agreement.
(N) Eligibility Computation Period: For purposes of determining
Years of Service and Breaks in Service for purposes of
eligibility, the initial Eligibility Computation Period is the
12-consecutive month period beginning on the Employee's
Employment Commencement Date.
(1) For plans in which the Eligibility Computation
Periods commence on the 12-consecutive month
anniversary of the Employee's Employment Commencement
Date, the succeeding 12-consecutive month periods
commence with the first anniversary of the Employee's
Employment Commencement Date.
(2) For plans in which the Eligibility Computation Period
shifts to the Plan Year, the succeeding
12-consecutive month periods commence with the first
Plan Year which commences prior to the first
anniversary of the Employee's Employment Commencement
Date regardless of whether the Employee is entitled
to be credited with number of Hours of Service
specified in the Adoption Agreement during the
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initial Eligibility Computation Period. An Employee
who is credited with number of Hours of Service
specified in the Adoption Agreement in both the
initial Eligibility Computation Period and the first
Plan Year which commences prior to the first
anniversary of the Employee's initial Eligibility
Computation Period will be credited with two Years of
Service for purposes of eligibility to participate.
Years of Service and Breaks in Service will be
measured on the same Eligibility Computation Period.
(3) Notwithstanding any other provisions of this section,
if the elapsed time method of crediting service is
elected in the Adoption Agreement for purposes of
eligibility, an Employee will receive credit for the
aggregate of all time periods completed (as may be
elected in the Adoption Agreement) beginning with the
Employee's Employment Commencement Date or
Reemployment Commencement Date and ending on the date
a Break In Service begins. The Employee will receive
credit for any Period of Severance of less than 12
consecutive months.
(O) Employee: Any employee, including any Self Employed
Individual, of the Employer maintaining the Plan or of any
other employer required to be aggregated with such Employer
under Sections 414(b), (c), (m) or (o) of the Code.
The term Employee shall also include any Leased Employee
deemed to be an Employee of any Employer described in the
previous paragraph as provided in Sections 414(n) or (o) of
the Code.
(P) Employer: The Employer specified in the Adoption Agreement and
any successor to the business of the Employer establishing the
Plan, which shall be the Plan Administrator for purposes of
Section 3(16) of ERISA, a Named Fiduciary as defined in ERISA,
and which may delegate all or any part of its powers, duties
and authorities in such capacity without ceasing to be such
Plan Administrator.
(Q) Employment Commencement Date: The date on which an Employee
first performs an Hour of Service for the Employer.
(R) Entry Date: The date selected by the Employer in Item B(6)(d)
of the Adoption Agreement, which shall be:
(1) The Effective Date of the Plan, for any Employee who
has satisfied the eligibility requirements set forth
in the Adoption Agreement;
(2) The first day of the month which coincides with or
immediately follows the date on which the Employee
satisfies the eligibility requirements set forth in
the Adoption Agreement;
(3) The first day of the Plan Year or the fourth,
seventh, or tenth month of the Plan Year which
coincides with or immediately follows the date on
which the Employee satisfies such eligibility
requirements;
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(4) The first day of the Plan Year or the seventh month
of the Plan Year which coincides with or immediately
follows the date on which the Employee satisfies such
eligibility requirements;
(5) The first day of the Plan Year, but only if the
eligibility service requirements specified in Item
B(6)(d) are six months or less; or,
(6) As soon as practicable after the Employee satisfies
such eligibility requirements specified in the
Adoption Agreement, but in no event beyond the date
which would be six months following the date on which
the Employee first completes the eligibility
requirements specified in the Adoption Agreement.
(S) ERISA: The Employee Retirement Income Security Act of 1974,
as amended.
(T) Highly Compensated Employee: The term Highly Compensated
Employee includes highly compensated active employees and
highly compensated former employees.
A highly compensated active employee includes any Employee who
performs service for the Employer during the determination
year and who, during the look-back year: (i) received
Compensation from the Employer in excess of $75,000 (as
adjusted pursuant to Section 415(d) of the Code); (ii)
received Compensation from the Employer in excess of $50,000
(as adjusted pursuant to Section 415(d) of the Code) and was a
member of the top-paid group for such year; or (iii) was an
officer of the Employer and received Compensation during such
year that is greater than 50 percent of the dollar limitation
in effect under section 415(b)(1)(A) of the Code. The term
Highly Compensated Employee also includes: (i) Employees who
are both described in the preceding sentence if the term
"determination year" is substituted for the term "look-back
year" and the Employee is one of the 100 Employees who receive
the most compensation from the Employer during the
determination year; and (ii) Employees who are 5 percent
owners at any time during the look-back year or determination
year.
If no officer has satisfied the Compensation requirement of
(iii) above during either a determination year or look-back
year, the highest paid officer for such year shall be treated
as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan
Year. The look-back year shall be the twelve-month period
immediately preceding the determination year. A highly
compensated former employee includes any Employee who
separated from service (or was deemed to have separated) prior
to the determination year, performs no service for the
Employer during the determination year, and was a highly
compensated active employee for either the separation year or
any determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back
year, a family member of either a 5 percent 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, then the family member and the 5 percent owner or
top-ten Highly Compensated Employee shall be aggregated. In
such
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case, the family member and 5 percent 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 5 percent
owner or top-ten Highly Compensated Employee.
For purposes of this Section, family member includes the
Spouse, lineal ascendants and descendants of the employee or
former employee and the spouses of such lineal ascendants and
descendants.
The determination of who is a Highly Compensated Employee,
including the determinations 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, will be made in accordance with Section
414(q) of the Code and the regulations thereunder.
(U) Hour of Service:
(1) Each hour for which an Employee is paid, or entitled
to payment, for the performance of duties for the
Employer. These hours shall 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 shall be credited under this
paragraph for any single continuous period (whether
or not such period occurs in a single computation
period). Hours under this paragraph shall be
calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations
which are incorporated herein by 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 shall not
be credited both under subparagraph (1) or
subparagraph (2), as the case may be, and under this
subparagraph (3). These hours shall be credited to
the Employee for the computation period or periods to
which the award or agreement pertains rather than for
the computation period in which the award, agreement
or payment is made.
Hours of Service will be credited for employment with
other members of an affiliated service group (under
Section 414(m)), a controlled group of corporations
(under Section 414(b)), or a group of trades or
businesses under common control (under Section
414(c)) of which the adopting Employer is a member,
and any other entity required to be aggregated with
the Employer pursuant to Section 414(o).
Hours of Service will also be credited for any
individual considered an Employee for purposes of
this Plan under Sections 414(n) or 414(o).
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(4) Where the Employer maintains the Plan of a
predecessor employer, service for such predecessor
employer shall be treated as service for the
Employer. If the Employer does not maintain the Plan
of a predecessor employer, the Plan does not credit
service with the predecessor employer, unless the
Employer identifies the predecessor in its Adoption
Agreement and specifies the purposes for which the
Plan will credit service with that predecessor
employer.
(5) Solely for purposes of determining whether a
Break-in-Service, as defined in Section 1.1(E), for
participation and vesting purposes has occurred in a
computation period, an individual who is absent from
work for maternity or paternity reasons shall receive
credit for the Hours of Service which would otherwise
have been credited to such individual but for such
absence, or in any case in which such hours cannot be
determined, 8 Hours of Service per day of such
absence. For purposes of this paragraph, an absence
from work for maternity or paternity reasons means an
absence (1) by reason of the pregnancy of the
individual, (2) by reason of a birth of a child of
the individual, (3) by reason of the placement of a
child with the individual in connection with the
adoption of such child by such individual, or (4) for
purposes of caring for such child for a period
beginning immediately following such birth or
placement. The Hours of Service credited under this
paragraph shall be credited (1) in the computation
period in which the absence begins if the crediting
is necessary to prevent a Break-in-Service in that
period, or (2) in all other cases, in the following
computation period.
(6) Hours of Service will be determined on the basis
of the method selected in the Adoption Agreement.
(V) Investment Fund: One of the funds provided for in Section
10.7, and as selected by the Employer, as a Named Fiduciary,
on the Investment Fund Designation portion of the Adoption
Agreement.
(W) Leased Employee: Any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient
and any other person ("leasing organization") has performed
services for the recipient (or for the recipient and related
persons determined in accordance with Section 414(n)(6) of the
Code) on a substantially full time basis for a period of at
least one year, and such services are of a type historically
performed by employees in the business field of the recipient
employer. Contributions or benefits provided a leased employee
by the leasing organization which are attributable to services
performed for the recipient employer shall be treated as
provided by the recipient employer.
A leased employee shall not be considered an employee of the
recipient if: (i) such employee is covered by a money purchase
pension Plan providing: (1) a nonintegrated employer
contribution rate of at least 10 percent of compensation, as
defined in Section 415(c)(3) of the Code, but including
amounts contributed pursuant to a salary reduction agreement
which are excludable from the employee's gross income under
Section 125, Section 402(e)(3), Section 402(h)(1)(B) or
Section 403(b) of the Code, (2) immediate participation, and
(3) full and immediate vesting; and (ii) leased employees do
not constitute more than 20 percent of the recipient's
nonhighly compensated workforce.
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(X) Net Profits: Current and accumulated earnings of the Employer
before Federal and state taxes and contributions to this and
any other qualified Plan, determined by the Employer in
accordance with generally accepted accounting principles.
(Y) Nonhighly Compensated Employee: An Employee of the Employer
who is neither a Highly Compensated Employee nor a Family
Member.
(Z) Normal Retirement Date: The date specified in the Adoption
Agreement at which a participant shall become fully vested in
his account balances, as provided for in this document.
(AA) Owner-Employee: An individual who is a sole proprietor, or who
is a partner owning more than 10 percent of either the capital
or profits interest of the partnership.
(BB) Paired Plans: The Employer has adopted Plan #001 and Plan #
003, both using this basic Plan document, which constitutes a
set of "paired plans" as defined by the Internal Revenue
Service in Revenue Procedure 89-9, or any successor thereto.
(CC) Participant: A person who becomes eligible to participate in
accordance with the provisions of Article II, and whose
participation has not been terminated.
(DD) Permitted Disparity Level: The level selected in the Adoption
Agreement, not to exceed the Taxable Wage Base in effect at
the beginning of the Plan Year. The Taxable Wage Base is the
contribution and benefit base under section 230 of the Social
Security Act at the beginning of the year.
(EE) Period of Service: The period beginning on the Employee's
Employment Commencement Date or Reemployment Commencement
Date, and ending on the date a Period of Severance begins. The
Employee will receive credit for any Period of Service of less
than 12 consecutive months. Fractional periods of a year will
be expressed in days.
(FF) Period of Severance: A continuous period of time during which
the Employee is not employed by the Employer. A Period of
Severance begins on the date the Employee retires, quits, or
is discharged, or dies, or if earlier, the twelve month
anniversary of the date on which the Employee was first absent
from work for any other reason; provided, that if an Employee
is absent from work for any other reason and retires, quits,
is discharged, or dies within 12 months, the Period of
Severance begins on the day the Employee quits, retires, is
discharged, or dies.
(GG) Plan: This Plan established by the Employer as embodied in
this agreement and in the Adoption Agreement, and all
subsequent amendments thereto.
(HH) Plan Year: The 12-consecutive month period designated by the
Employer in the Adoption Agreement. In the event that the
original Effective Date is not the first day of the Plan Year,
the first Plan Year shall be a short Plan Year, beginning on
the original Effective Date, and ending on the last day of the
Plan Year as specified in the Adoption Agreement.
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(II) Qualified Distribution Date: For purposes of Section 7.13, the
Qualified Distribution Date, if selected in the Adoption
Agreement, shall be the earliest retirement date specified in
Code Section 414(p) and shall operate to allow a distribution
to an Alternate Payee at the time a domestic relations order
is determined to be qualified.
(JJ) Reemployment Commencement Date: The date on which an Employee
completes an Hour of Service with the Employer after a Break
In Service or a Period of Severance.
(KK) Related Employers: Any employer related to the Employer as a
controlled group of corporations (as defined in Section 414(b)
of the Code), a group of trades or businesses (whether or not
incorporated) which are under common control (as defined in
Section 414(c)) or an affiliated service group (as defined in
Section 414(m)or in Section 414(o) of the Code). If the
Employer is a member of a related group, the term "Employer"
includes the related group members for purposes of crediting
Hours of Service, determining Years of Service and Breaks in
Service under Article II, applying participation and coverage
testing, applying the limitations on allocations in Section
6.6, applying the top heavy rules and the minimum allocation
requirements of Article IX, the definitions of Employee,
Highly Compensated Employee, Compensation and Leased Employee,
and for any other purpose required by the applicable Code
section or by a Plan provision. However, an Employer may
contribute to the Plan only by signing the Adoption Agreement
or a Participation Agreement to the Employer's Adoption
Agreement. If one or more of the Employer's related group
members become Participating Employers by executing a
Participation Agreement to the Employer's Adoption Agreement,
the term "Employer" includes the participating related group
members for all purposes of the Plan, and "Plan Administrator"
means the Employer that is the signatory to the
Adoption Agreement.
If the Employer's Plan is a standardized Plan, all Employees
of the Employer or of any member of the Employer's related
group, are eligible to participate in the Plan, irrespective
of whether the related group member directly employing the
Employee is a Participating Employer. If the Employer's Plan
is a nonstandardized Plan, the Employer must specify in Item
B(5) of its Adoption Agreement, whether the Employees of
related group members that are not Participating Employers are
eligible to participate in the Plan. Under a nonstandardized
Plan, the Employer may elect to exclude from the definition of
"Compensation" for allocation purposes any Compensation
received from a related employer that has not executed a
Participation Agreement and whose Employees are not eligible
to participate in the Plan.
(LL) Self-employed Individual: An individual who has Earned Income
for the taxable year from the trade or business for which the
Plan is established; also, an individual who would have had
Earned Income but for the fact that the trade or business had
no Net Profits for the taxable year.
(MM) Spouse: The person to whom the Participant is legally married
at the relevant time. Notwithstanding the foregoing, if
selected in the Adoption Agreement, Spouse shall only refer to
an individual to whom a Participant has been married to for a
period of at least one year, ending at the relevant time.
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(NN) Stockholder-Employee: An employee or officer of an electing
small business (Subchapter S) corporation who owns (or is
considered as owning within the meaning of Section 318(a)(1)
of the Code), on any day during the taxable year of such
corporation, more than 5% of the outstanding stock of the
corporation.
(OO) Termination Date: The date on which a Participant's
employment is terminated as provided in Section 5.1.
(PP) Trustee: The entity specified in Item B(17) of the Adoption
Agreement, which shall be any bank or trust company which is
affiliated with KeyCorp. within the meaning of Section 1504 of
the Code, each of which with full trust powers, and its
successors by merger or reorganization.
(QQ) Trust Fund: All assets held under the Plan by the Trustee.
(RR) Valuation Date. The date on which the assets of the Trust
shall be valued, as provided for herein, with earning or
losses since the previous Valuation Date being credited, as
appropriate to Participant accounts. Notwithstanding anything
to the contrary in the Plan, the Valuation date shall be each
business day that the Trustee and the New York Stock Exchange
are each open for business, provided, however, that the
Trustee shall not be obligated to value the Trust in the
event, through circumstances beyond its control, appropriate
prices may not be obtained for the assets held in the
Investment Funds.
(SS) Vesting Computation Period. The Vesting Computation Period
shall be the 12-consecutive month period selected by the
Employer in the Adoption Agreement.
(TT) Year of Participation: For purposes of vesting, a twelve (12)
month period in which an Employee has a balance in an account
established under a 401(k)/401(m) arrangement regardless of
whether the Employee is currently making contributions under
the arrangement.
(UU) Year of Service: (i) If the elapsed time method of crediting
service is elected in the Adoption Agreement, a Year of
Service will mean a one-year Period of Service. If the actual
hours method of crediting service is elected in the Adoption
Agreement, a Year of Service will mean a 12-consecutive month
period as specified in the Adoption Agreement during which the
Employee completes the number of Hours of Service (not to
exceed 1000) specified in the Adoption Agreement.
1.2 Gender and Number. Unless the context indicates otherwise, the
masculine shall include the feminine, and the use of any words herein
in the singular shall include the plural and vice versa.
1.3 Control of Trades or Businesses by Owner-Employee. If this Plan
provides contributions or benefits for one or more Owner-Employees who
control both the business for which this Plan is established and one or
more other trades or businesses, this Plan and the Plan established for
other trades or businesses must, when looked at as a single Plan,
satisfy Sections 401(a) and (d) for the employees of this and all other
trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be in-
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cluded in a Plan which satisfies Sections 401(a) and (d) and which
provides contributions and benefits not less favorable than provided
for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or
benefits of the employees under the Plan of the trades or businesses
which are controlled must be as favorable as those provided for him
under the most favorable Plan of the trade or business which is not
controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or business
if the Owner-Employee, or two or more Owner-Employees together:
(1) Own the entire interest in an unincorporated trade or
business, or
(2) In the case of a partnership, own more than 50 percent of
either capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or
two or more Owner-Employees shall be treated as owning any
interest in a partnership which is owned, directly or
indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
ARTICLE II
ELIGIBILITY AND VESTING
2.1 Eligibility.
(A) Participation. Every Employee who meets the eligibility
requirements specified by the Employer in the Adoption
Agreement shall become eligible to commence participation in
this Plan.
(B) Commencement of Participation.
(1) For purposes of Money Purchase Pension Plans, Profit
Sharing Plans and 401(k) Plans with Profit Sharing
Contributions, each Eligible Employee shall commence
participation on the Entry Date.
(2) For purposes of 401(k) and 401(m) arrangements, an
Eligible Employee may, but is not required to, enroll
as a Participant as of the Entry Date on which such
Employee is initially eligible by filing with the
Committee before such date, an enrollment form
prescribed by the Committee. The time period for
filing an enrollment form shall be determined by the
Committee. The form shall include an authorization
and request to the Employer to deduct from such
Participant's Compensation in each pay period the
designated After Tax Contributions, and/or to reduce
such Participant's Compensation in each pay period by
the amount of the designated Before Tax
Contributions.
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(C) Years of Service Counted Towards Eligibility. All Years of
Service with the Employer are counted toward eligibility
except the following:
(1) In a Plan which (a) requires an Employee to complete
more than one Year of Service as an eligibility
requirement and (b) provides immediate 100% vesting
in a Participant's Employer Contribution Account
after not more than two (2) Years of Service, if an
Employee has a 1-year Break in Service before
satisfying the Plan's requirement for eligibility,
service before such break will not be taken into
account.
(2) In the case of a Participant who does not have any
nonforfeitable right to the account balance derived
from Employer contributions, Years of Service before
a period of consecutive 1-year Breaks in Service will
not be taken into account in computing eligibility
service if the number of consecutive 1-year Breaks in
Service in such period equals or exceeds the greater
of 5 or the aggregate number of Years of Service.
Such aggregate number of Years of Service will not
include any Years of Service disregarded under the
preceding sentence by reason of prior Breaks in
Service.
(3) If a Participant's Years of Service are disregarded
pursuant to the preceding paragraph, such Participant
will be treated as a new Employee for eligibility
purposes. If a Participant's Years of Service may not
be disregarded pursuant to the preceding paragraph,
such Participant shall continue to participate in the
Plan, or, if terminated, shall participate
immediately upon reemployment.
(D) Eligibility Break in Service, One Year Hold-Out Rule. If the
Plan is a nonstandardized Plan, then:
(1) In the case of any Participant who has a 1-year Break
in Service or Severance, years of eligibility service
before such break will not be taken into account
until the Employee has completed a Year of Service
after returning to employment.
(2) For plans in which the eligibility computation is
measured with reference to the Employment
Commencement Date, such Year of Service will be
measured beginning on the Employee's Reemployment
Commencement Date and, if necessary, subsequent
12-consecutive month periods beginning on
anniversaries of the Reemployment Commencement Date.
(3) For plans which shift the Eligibility Computation
Period to the Plan Year, such Year of Service will be
measured by the 12-consecutive month period beginning
on the Employee's Reemployment Commencement Date and,
if necessary, Plan Years beginning with the Plan Year
which includes the first anniversary of the
Reemployment Commencement Date.
(4) If a Participant completes a Year of Service in
accordance with this provision, his or her
participation will be reinstated as a Participant as
of the Reemployment Commencement Date.
(E) Participation Upon Return to Eligible Class.
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<PAGE>
(1) In the event a Participant is no longer a member of
an eligible class of Employees and becomes ineligible
to participate but has not incurred a Break In
Service, such Employee shall participate immediately
upon returning to an eligible class of Employees. If
such Participant incurs a Break In Service
eligibility will be determined under the Break in
Service rules of the Plan.
(2) In the event an Employee who is not a member of an
eligible class of Employees becomes a member of an
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.
2.2 Vesting.
(A) Vesting Schedule. In the case of an Employee who terminates
participation under this Plan for any reason other than death,
Disability, or employment at the Normal Retirement Date, such
Participant, as of the last day of his participation under
this Plan, shall have a vested interest in his Employer
Contribution Account pursuant to the formula specified by the
Employer in the Adoption Agreement.
(B) Vesting Upon Normal Retirement Date. Notwithstanding the
vesting schedule elected by the Employer in Items B(7)(a) or
C(4)(d) of the Adoption Agreement, an Employee's right to his
or her Employer Contribution balance shall be nonforfeitable
at the Employee's Normal Retirement Date.
(C) Vesting Break in Service - 1 Year Holdout. In the case of any
Participant who has incurred a 1-year Break in Service, Years
of Service before such break will not be taken into account
until the Participant has completed a Year of Service after
such Break in Service.
(D) Vesting for Pre-Break and Post-Break Account. In the case of a
Participant who has 5 or more consecutive 1-year Breaks in
Service, all service after such Breaks in Service will be
disregarded for the purpose of vesting the employer-derived
account balance that accrued before such Breaks in Service.
Such Participant's pre-break service will count in vesting the
post-break employer-derived account balance only if either:
(1) such Participant has any nonforfeitable interest in
the account balance attributable to employer
contributions at the time of separation from service;
or
(2) upon returning to service the number of consecutive
1-year Breaks in Service is less than the number of
Years of Service. Separate accounts will be
maintained for the Participant's pre-break and
post-break Employer Contribution Account balance.
Both accounts will share in the earnings and losses
of the Trust Fund.
(E) Amendment of Vesting Schedule. If the Plan's vesting schedule
is amended, or the Plan is amended in any way that directly or
indirectly affects the computation of the Participant's
nonforfeitable percentage or if the Plan is deemed amended by
an automatic change to or from a top-heavy vesting schedule,
each Participant with at least three (3) Years of Service with
the Employer may elect within a reasonable period after the
adoption of the amend-
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ment or change, to have the nonforfeitable percentage computed
under this Plan without regard to such amendment or change.
For Participants who do not have at least 1 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" where such language
appears.
This period during which the election may be made shall
commence with the date the amendment is adopted or deemed to
be made and shall end on the latest of:
(1) Sixty (60) days after the amendment is adopted;
(2) Sixty (60) days after the amendment becomes
effective; or
(3) Sixty (60) days after the Participant is issued
written notice of the amendment by the Employer or
Committee.
(F) Amendment Affecting Vested and/or Accrued Benefits. No
amendment to the Plan shall be effective to the extent
that it has the effect of decreasing a Participant's
accrued benefit. Notwithstanding the preceding sentence, a
Participant's account balance may be reduced to the extent
permitted under Section 412(c)(8) of the Code. For purposes
of this paragraph, a Plan amendment which has the effect of
decreasing a Participant's account balance or eliminating
an optional form of benefit, with respect to benefits
attributable to service before the amendment shall be treated
as reducing an accrued benefit. Furthermore, if the vesting
schedule of a Plan is amended, in the case of an Employee who
is a Participant as of the later of the date such amendment
is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of
such Employee's Employer-derived accrued benefit will not
be less than the percentage computed under the Plan
without regard to such amendment.
ARTICLE III
CODE 401(k) AND CODE 401(m) ARRANGEMENTS
3.1 Provision Relating to Both Before Tax Contributions and After Tax
Contributions.
(A) Definitions: The following definitions are applicable to this
Article of the Plan.
(1) Actual Deferral Percentage or ADP: for a specified
group of Participants for a Plan Year, the average of
the ratios (calculated separately for each
Participant in such group) of (1) the amount of
Employer contributions actually paid over to the
trust on behalf of such Participant for the Plan Year
to (2) the Participant's Compensation for such Plan
Year (whether or not the Employee was a Participant
for the entire Plan Year, but limited to that portion
of the Plan Year in which the Employee was an
Eligible Participant if the Employer so elects for
such Plan Year to so limit Compensation for all
Eligible Employees). Employer contributions on behalf
of any Participant shall include (1) any Before Tax
Contributions made pursuant to the Participant's
deferral election, including Excess Before Tax
Contributions, but excluding Before Tax Contributions
that are taken into account in the Contribution
Percentage test (provided the ADP test is satisfied
both with and without exclusion of these Before Tax
Contributions); and (2) at the election of the
Employer, Qualified Non-elective Contributions and
Qualified Matching
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Contributions. For purposes of computing Actual
Deferral Percentages, an Employee who would be a
Participant but for the failure to make Before Tax
Contributions shall be treated as a participant on
whose behalf no Before Tax Contributions are made.
(2) After Tax Contributions ("Employee Contributions"):
Any contribution made to the Plan by or on behalf of
a Participant that is included in the Participant's
gross income in the year in which made and that is
maintained under a separate account to which earnings
and losses are allocated.
(3) Aggregate Limit: The sum of (i) 125 percent of the
greater of the ADP of the Non-highly Compensated
Employees for the Plan Year or the ACP of Non-highly
Compensated Employees under the Plan subject to Code
Section 401(m) for the Plan Year beginning with or
within the Plan Year of the cash or deferred
arrangement and (ii) the lesser of 200% or two plus
the lesser of such ADP or ACP. "Lesser" is
substituted for "greater" in "(i)", above, and
"greater" is substituted for "lesser" after "two plus
the" in "(ii)" if it would result in a larger
Aggregate Limit.
(4) Average Contribution Percentage or ACP: the average
(expressed as a percentage) of the Contribution
Percentages of the Eligible Participants in a group.
(5) Before Tax Contributions ("Elective Deferrals"):
Employer contributions made to the Plan at the
election of the Participant, in lieu of cash
compensation, which shall include contributions made
pursuant to a salary reduction agreement or other
deferral mechanism. With respect to any taxable year,
a Participant's Before Tax Contributions are the sum
of all Employer contributions made on behalf of such
Participant pursuant to an election to defer under
any qualified cash or deferred arrangement as
described in Section 401(k) of the Code, any
simplified employee pension cash or deferred
arrangement as described in Code Section
402(h)(1)(B), any eligible deferred compensation Plan
under Code Section 457, any Plan as described under
Code Section 457, any Plan as described under Code
Section 501(c)(18), and any Employer contributions
made on behalf of a Participant for the purchase of
an annuity contract under Code Section 403(b)
pursuant to a salary reduction agreement.
(6) Contribution Percentage: The ratio (expressed as a
percentage) of the Participant's Contribution
Percentage Amounts to the Participant's Compensation
for the Plan Year (whether or not the Employee was a
Participant for the entire Plan Year, but limited to
that portion of the Plan Year in which the Employee
was an Eligible Participant if the Employer so elects
for such Plan Year to so limit Compensation for all
Eligible Employees).
(7) Contribution Percentage Amounts: The sum of the After
Tax Contributions, Matching Contributions, and
Qualified Matching Contributions (to the extent not
taken into account for purposes of the ADP test) made
under the Plan on behalf of the Participant for the
Plan Year. Such Contribution Percentage Amounts shall
not include Matching Contributions that are forfeited
either to correct Excess Aggregate Contributions or
because the contributions to which they relate are
Excess
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<PAGE>
Before Tax Contributions, Excess Contributions
or Excess Aggregate Contributions. If so elected in
the Adoption Agreement the Employer may include
Qualified Non-elective Contributions in the
Contribution Percentage Amounts. The Employer also
may elect to use Before Tax Contributions in the
Contribution Percentage Amounts so long as the ADP
test is met before the Before Tax Contributions are
used in the ACP test and continues to be met
following the exclusion of those Before Tax
Contributions that are used to meet the ACP test.
(8) Eligible Participant: Any Employee who is eligible to
make an After Tax Contribution or a Before Tax
Contribution (if the Employer takes such
contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching
Contribution (including forfeitures) or a Qualified
Matching Contribution. If an After Tax Contribution
is required as a condition of participation in the
Plan, any Employee who would be a Participant in the
Plan if such Employee made such a contribution shall
be treated as an eligible Employee on behalf of whom
no After Tax Contributions are made.
(9) Excess Aggregate Contributions: With respect to any
Plan Year, the excess of:
(a) The aggregate Contribution Percentage
Amounts taken into account in computing the
numerator of the Contribution Percentage
actually made on behalf of Highly
Compensated Employees for such Plan Year,
over
(b) The maximum Contribution Percentage Amounts
permitted by the ACP test (determined by
reducing contributions made on behalf of
Highly Compensated Employees in order of
their Contribution Percentages beginning
with the highest of such percentages).
Such determination shall be made after first
determining Excess Before Tax Contributions
pursuant to Section 3.2(D) and (E) and then
determining Excess Contributions pursuant to
section 3.2(F), (G) and (H).
(10) Excess Before Tax Contributions ("Excess Elective
Deferrals"): Those Before Tax Contributions that are
includible in a Participant's gross income under
Section 402(g) of the Code to the extent such
Participant's Before Tax Contributions for a taxable
year exceed the dollar limitation under such Code
section. Excess Before Tax Contributions shall be
treated as Annual Additions under the Plan, unless
such amounts are distributed no later than the first
April 15 following the close of the Participants
taxable year. Excess Before Tax Contributions shall
be adjusted for income or loss up to the end of the
taxable year of the Employee, and if elected in the
Adoption Agreement, for the income or loss
attributable to the period from the end of the
Employee's taxable year to the date of distribution
(the "Gap Period"). The income or loss allocable to
Excess Before Tax Contributions is (1) the income or
loss allocable to the Participant's Before Tax
Contribution Account for the taxable year multiplied
by a fraction, the numerator of which is such
Participant's Excess Before Tax Contributions for the
year and the denominator is the Participant's account
balance attributable to Before Tax Contributions
without regard to any income or loss occurring during
such taxable year plus, (2) if Gap
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<PAGE>
Period income or loss applies, ten percent of the
amount determined under (1) multiplied by the number
of whole calendar months between the end of the
Participant's taxable year and the date of
distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
(11) Excess Contributions: With respect to any Plan Year,
the excess of:
(a) The aggregate amount of Employer
contributions actually taken into account in
computing the ADP of Highly Compensated
Employee for such Plan Year, over
(b) The maximum amount of such contributions
permitted by the ADP test (determined by
reducing contributions made on behalf of
Highly Compensated Employee in order of the
ADPs, beginning with the highest of such
percentages).
(12) Matching Contributions: An Employer contribution made
to this or any other defined contribution Plan on
behalf of a Participant on account of an After Tax
Contribution made by such Participant, or on account
of a Participant's Before Tax Contribution, under a
Plan maintained by the Employer.
(13) Qualified Matching Contributions: Matching
Contributions which are subject to the distribution
and nonforfeitability requirements under Section
401(k) of the Code when made. Qualified Matching
Contributions shall be allocated, in the discretion
of Employer, to the accounts of all Employees, or
only to the accounts of Non-highly Compensated
Employees.
(14) Qualified Non-elective Contributions: Contributions
(other than Matching Contributions or Qualified
Matching Contributions) made by the Employer and
allocated to Participants' accounts that the
Participants may not elect to receive in cash until
distributed from the Plan; that are nonforfeitable
when made; and that are distributable only in
accordance with the distribution provisions that are
applicable to Before Tax Contributions and Qualified
Matching Contributions. Qualified Non-elective
Contributions shall be allocated, in the discretion
of Employer, to the accounts of all Employees, or
only to the accounts of Non-highly Compensated
Employees.
(B) Nonforfeitability and Vesting. The Participant's accrued
benefits derived from Before Tax Contributions and After Tax
Contributions are nonforfeitable and fully vested.
(C) Notice to Committee. The Committee shall set the time period
during which a Participant may provide written notice to
increase, decrease or terminate Before Tax Contributions and
After Tax Contributions.
(D) Suspension After Receipt of Hardship Distribution. If the
Employer has elected in the Adoption Agreement to have the
"safe harbor" hardship rules apply, an Employee's Before Tax
Contributions and After Tax Contributions shall be suspended
for twelve months after
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<PAGE>
the receipt by such Employee of a Hardship distribution
(as defined in Section 3.9) from this Plan or any other Plan
maintained by the Employer.
(E) Separate Accounts. Separate accounts for Before Tax
Contributions and After Tax Contributions will be maintained
for each Participant. Each account will be credited with the
applicable contributions and earnings thereon.
3.2 Before Tax Contributions. (Elective Deferrals).
(A) Allocation of Before Tax Contributions. If the Employer
selects Item C(2) in the Adoption Agreement, for each Plan
Year the Employer will contribute and allocate to each
Participant's Before Tax Contribution Account an amount
equal to the amount of the Participant's Before Tax
Contributions. The provisions of the cash or deferred
arrangement may be made effective as of the first day of the
Plan Year in which the cash or deferred option is adopted,
however, under no circumstances may a salary reduction
agreement or other deferral mechanism be adopted
retroactively. Before Tax Contributions must be contributed
and allocated to the Plan no later than thirty (30) days
after the close of the Plan Year for which the contributions
are deemed to be made, or such other time as provided in
applicable regulations under the Code.
(B) Before Tax Contributions Pursuant to a Salary Reduction
Agreement. To the extent provided in the Adoption Agreement, a
Participant may elect to have Before Tax Contributions made
under this Plan. Before Tax Contributions shall be continuing
contributions through payroll deduction made pursuant to a
salary reduction agreement.
(1) Commencement of Before Tax Contributions. An Employee
may elect to commence Before Tax Contributions as of
his or her Entry Date as described in Section 2.1(B).
Such election shall not become effective before the
Entry Date. Such election may not be made
retroactively.
(2) Modification and Termination of Before Tax
Contributions. A Participant's election to commence
Before Tax Contributions shall remain in effect until
modified or terminated. A Participant may increase or
decrease his or her Before Tax Contributions as of
any date as selected by the Employer in Item C(3) of
the Adoption Agreement upon notice to the Committee.
A Participant may terminate his or her election to
make Before Tax Contributions as of the Participant's
next wage payment date upon notice to the Committee.
Any Participant who terminates Before Tax
Contributions may elect to recommence making Before
Tax Contributions as of the date selected by the
Employer in Item C(3) of the Adoption Agreement
following his or her suspension of contributions.
(C) Cash bonuses. If Item C(2)(c) of the Adoption Agreement is
selected, a Participant may also enter into a salary reduction
agreement on cash bonuses that, directing that the amount of
such salary reduction be contributed to the Plan as a Before
Tax Contribution, or received by the Participant in cash. A
Participant shall be afforded a reasonable period to elect to
defer amounts described in this Section 3.2 to the Plan. Such
election shall not become effective before the Participant's
Entry Date.
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<PAGE>
(D) Maximum Amount of Before Tax Contributions. A Participant's
Before Tax Contributions are subject to any limitations
imposed in Item C(2) of the Adoption Agreement, calculated on
an annual basis, and any further limitations under the Plan.
No Participant shall be permitted to have Before Tax
Contributions made under this Plan, or any other qualified
Plan maintained by the Employer, during any taxable year in
excess of the dollar limitation contained in Code Section
402(g) in effect at the beginning of such taxable year.
Furthermore, if an Employee receives a Hardship distribution
(as defined in Section 3.9, utilizing the "safe harbor" rules)
from this Plan or any other Plan maintained by the Employer,
the Employee may not make Before Tax Contributions for the
Employee's taxable year immediately following the taxable year
of the Hardship distribution in excess of the applicable limit
under Section 402(g) of the Code for such taxable year less
the amount of the Employee's Before Tax Contributions for
the taxable year of the Hardship distribution.
(E) Distribution of Excess Before Tax Contributions. If a
Participant makes Before Tax Contributions to this Plan and to
another Plan, and the Participant has made Excess Before Tax
Contributions to one or more of the plans, the Participant may
assign the amount of any such Excess Before Tax Contributions
among the plans under which such Before Tax Contributions were
made. The Participant may assign to this Plan any Excess
Before Tax Contributions made during a taxable year of the
Participant to this Plan by notifying the Committee on or
before the date specified in the Adoption Agreement of the
amount of the Excess Before Tax Contributions to be assigned
to the Plan. A Participant is deemed to notify the Committee
of any Excess Before Tax Contributions that arise by taking
into account only those Before Tax Contributions made under
the Plan or Plans of this Employer.
Notwithstanding any other provision of the Plan, Excess Before
Tax Contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than April 15
to any Participant to whose account Excess Before Tax
Contributions were assigned for the preceding year and who
claims Excess Before Tax Contributions for such taxable year.
The Participant's claim shall be in writing; shall be
submitted to the Committee not later than the date elected in
Item CC of the Adoption Agreement; shall specify the amount of
the Participant's Excess Before Tax Contribution for the
preceding calendar year; and shall be accompanied by the
Participant's written statement that if such amounts are not
distributed, such Excess Before Tax Contributions, when added
to amounts deferred under other plans or arrangements
described in Sections 401(k), 408(k), or 403(b) of the Code,
will exceed the limit imposed on the Participant by Section
402(g) of the Code for the year in which the deferral
occurred.
(F) Actual Deferral Percentage. The ADP for Participants who are
Highly Compensated Employees for each Plan Year and the ADP
for Non-highly Compensated Employees for the same Plan Year
must satisfy one of the following tests:
(1) 1.25 Limit. The ADP for Participants who are Highly
Compensated Employees for the Plan Year shall not
exceed the ADP for Participants who are Non-highly
Compensated Employees for the same Plan Year
multiplied by 1.25; or
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<PAGE>
(2) 2.0 Limit. The ADP for Participants who are Highly
Compensated Employees for the Plan Year shall not
exceed the ADP for Participants who are Non-highly
Compensated Employees for the same Plan Year
multiplied by 2.0, provided that the ADP for
Participants who are Highly Compensated Employees
does not exceed the ADP for Participants who are
Non-highly Compensated Employees by more than two (2)
percentage points.
(3) Special Rules.
(a) The ADP for any Participant who is a Highly
Compensated Employee for the Plan Year and
who is eligible to have Before Tax
Contributions (and Qualified Non-elective
Contributions, or Qualified Matching
Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP
test) allocated to his or her accounts
under two or more arrangements described in
Section 401(k) of the Code, that are
maintained by the Employer, shall be
determined as if such Before Tax
Contributions (and, if applicable, such
Qualified Non-elective Contributions or
Qualified Matching Contributions, or both,)
were made under a single arrangement. If a
Highly Compensated Employee participates in
two or more cash or deferred arrangements
that have different Plan Years, all cash or
deferred arrangements ending with or within
the same calendar year shall be treated as a
single arrangement.
(b) In the event that this Plan satisfies the
requirements of Sections 401(k), 401(a)(4),
or 410(b) of the Code only if aggregated
with one or more other plans, or if one or
more other plans satisfy the requirements of
such Sections of the Code only if aggregated
with this Plan, then this section shall be
applied by determining the ADP of Employees
as if all such plans were a single Plan. For
Plan Years beginning after December 31,
1989, plans may be aggregated in order to
satisfy Section 401(k) of the Code only if
they have the same Plan Year.
(c) For purposes of determining the ADP of a
Participant who is a 5-percent owner or one
of the ten most highly-paid Highly
Compensated Employees, the Before Tax
Contributions (and Qualified Non-elective
Contributions or Qualified Matching
Contributions, or both, if treated as Before
Tax Contributions for purposes of the ADP
test) and Compensation of such Participant
shall include the Before Tax Contributions
(and, if applicable, Qualified Non-elective
Contributions) and Compensation for the
Plan Year of Family Members (as defined in
Section 414(q)(6) of the Code). Family
Members, with respect to such Highly
Compensated Employees, shall be disregarded
as separate employees in determining the
ADP both for Participants who are Non-highly
Compensated Employees and for Participants
who are Highly Compensated Employees.
(d) For purposes of determining the ADP test,
Before Tax Contributions if treated as
Before Tax Contributions and Qualified
Non-elective Contributions must be made
before the last day of the twelve-month
period immediately following the Plan Year
to which contributions relate.
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<PAGE>
(e) The Employer shall maintain records
sufficient to demonstrate satisfaction of
the ADP test and the amount of Qualified
Non-elective Contributions used in such
test.
(f) The determination and treatment of the ADP
amounts of any Participant shall satisfy
such other requirements as may be prescribed
by the Secretary of the Treasury.
(G) Distribution of Excess Contributions. Notwithstanding
any other provision of the Plan, Excess Contributions,
plus any income and minus any loss allocable thereto, shall
be distributed no later than the last day of each Plan Year to
Participants to whose accounts Excess Contributions were
allocated for the preceding Plan Year. If such excess amounts
are distributed more than 2-1/2 months after the last day
of the Plan Year in which such excess amounts arose, a ten
(10) percent excise tax will be imposed on the Employer
maintaining the Plan with respect to such amounts. Such
distributions shall be made to Highly Compensated Employees
on the basis of the respective portions of the Excess
Contributions attributable to each of such Employees. Excess
Contributions of Participants who are subject to the Family
Member aggregation rules shall be allocated among the
Family Members in proportion to the Before Tax Contributions
(and amounts treated as Before Tax Contributions) of each
Family Member that is combined to determine the combined ADP.
Excess Contributions (including the amounts recharacterized)
shall be treated as Annual Additions under the Plan.
(1) Determination of Income or Loss. The Excess
Contributions shall be adjusted for income or loss up
to the date of distribution. The income or loss
allocable to Excess Contributions is (1) the income
or loss allocable to the Participant's Before Tax
Contribution Account (and, if applicable, the
Qualified Non-elective Contribution Account or the
Qualified Matching Contribution Account or both)
multiplied by a fraction, the numerator of which is
such Participant's Excess Contribution for the year
and the denominator is the Participant's account
balance attributable to Before Tax Contributions (and
Qualified Non-Elective Contributions or Qualified
Matching Contributions or both, if any of such
contributions are included in the ADP test) without
regard to any income or loss occurring during such
taxable year, plus, (2) if Gap Period income or loss
applies, as elected in the Adoption Agreement, ten
percent of the amount determined under (1) multiplied
by the number of whole calendar months between the
end of the Plan Year and the date of distribution,
counting the month of distribution if distribution
occurs after the 15th of such month.
(2) Accounting for Excess Contributions. Excess
Contributions shall be distributed from the
Participant's Before Tax Contribution Account and
Qualified Matching Contribution Account (if
applicable) in proportion to the Participant's Before
Tax Contributions and Qualified Matching
Contributions (to the extent used in the ADP test)
for the Plan Year. Excess Contributions shall be
distributed from the participant's Qualified
Non-elective Contribution Account only to the extent
that
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<PAGE>
such Excess Contributions exceed the balance in
the Participant's Before Tax Contribution Account.
(H) Recharacterization. If the Plan permits After Tax
Contributions (Employee Contributions), Excess Contributions
may be recharacterized pursuant to this subsection.
Recharacterized amounts may be used in the Plan from which
Excess Contributions arose or in another Plan of the employer
with the same Plan Year.
(1) Treatment of Amounts Recharacterized. A Participant
may treat his or her Excess Contributions as an
amount distributed to the Participant and then
contributed by the Participant to the Plan.
Recharacterized amounts will remain nonforfeitable
and subject to the same distribution requirements as
Before Tax Contributions. Amounts may not be
recharacterized by a Highly Compensated Employee to
the extent that such amount in combination with other
After Tax Contributions made by that Employee would
exceed any stated limit under the Plan on After Tax
Contributions.
(2) Timing of Recharacterization. Recharacterization must
occur no later than two and one-half months after the
last day of the Plan Year in which such Excess
Contributions arose and is deemed to occur no earlier
than the date the last Highly Compensated Employee is
informed in writing of the amount recharacterized and
the consequences thereof. Recharacterized amounts
will be taxable to the Participant for the
Participant's tax year in which the Participant would
have received them in cash.
(I) Adjustments to Before Tax Contribution Percentages.
Anything to the contrary in this Article III notwithstanding,
the Committee shall have the right to reduce the percentages
designated pursuant to Section 3.2(B), of any one or more
Highly Compensated Employees in a manner prescribed or
approved by the Committee to the extent necessary or
convenient to ensure that at least one of the ADP tests set
forth in Section 3.2(F) is satisfied, but in no event shall
such reduction result in a percentage less than zero. Any
such reduction shall be effected quarterly, or more frequently
as the Committee may determine and each affected Highly
Compensated Employee shall be deemed to have elected the
permissible percentage determined by the Committee. The
Committee may, on a prospective basis, and subject to the
percentage limits of Section 3.3 below, treat amounts
contributed to the Plan pursuant to a salary reduction
agreement as After Tax Contributions by each affected Highly
Compensated Employee; provided that if any such reduction
cannot be so treated because of the said percentage limits
or because of the nondiscrimination requirements of Code
Section 401(m) or otherwise, then the amount of such reduction
(and any income allocable thereto) shall be distributed to
each affected Highly Compensated Employee pursuant to Code
Section 401(k)(8) or Code Section 401(m)(6), if applicable,
not later than the close of the first 2-1/2 months of the Plan
Year following the Plan Year in which the contribution was
made.
3.3 After Tax Contributions. (Employee Contributions).
(A) Allocation of After Tax Contributions. If the Employer selects
Item C(2)(b) in the Adoption Agreement, the Employer will
deduct from the Participant's pay and allocate to
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<PAGE>
each Participant's After Tax Contribution Account an amount
equal to the percentage of Compensation authorized by the
Participant as an After Tax Contribution. The Employer shall
transmit After Tax Contributions to the Trustee within thirty
(30) days after the month end in which such deductions are
made.
(B) Employee Authorizes After Tax Contributions. To the extent
provided in the Adoption Agreement, a Participant may elect to
make After Tax Contributions under the Plan.
(1) Election to Make After Tax Contributions. An Employee
may elect to make After Tax Contributions as of his
or her Entry Date as described in Section 2.1(B).
Such election will not become effective before the
Entry Date.
(2) Modification and Termination of After Tax
Contributions. A Participant's election to commence
After Tax Contributions shall remain in effect until
modified or terminated. A Participant may increase or
decrease his or her After Tax Contributions as
selected by the Employer in Item C(3) of the Adoption
Agreement upon written notice to the Committee. A
Participant may terminate his or her election to make
After Tax Contributions at any time as of the
Participant's next wage payment date upon written
notice to the Committee. Any Participant who
terminates After Tax Contributions may elect to
recommence making After Tax Contributions as of the
date selected by the Employer in Item C(3) of the
Adoption Agreement following his or her suspension of
contributions.
(C) Maximum Amount of After Tax Contributions. A Participant's
After Tax Contributions are subject to any limitations imposed
in Item C(3) of the Adoption Agreement, calculated on an
annual basis, and any further limitations under the Plan.
(D) Cash Bonuses. If Item C(2)(c) of the Adoption Agreement is
selected, a Participant may also enter into a salary reduction
agreement on cash bonuses, directing that the amount of such
salary reduction be contributed to the Plan as an After Tax
Contribution, or received by the Participant in cash. A
Participant shall be afforded a reasonable period to elect to
defer amounts described in this Section 3.3 to the Plan. Such
election shall not become effective before the Participant's
Entry Date.
3.4 Employer Contributions.
(A) Matching Contributions. If elected by the Employer in the
Adoption Agreement, the Employer will or may make Matching
Contributions to the Plan. The amount of such Matching
Contributions shall be calculated by reference to the
Participants' Before Tax Contributions and/or After Tax
Contributions as specified by the Employer in the Adoption
Agreement.
(B) Qualified Matching Contributions. If elected by the Employer
in the Adoption Agreement, the Employer may make Qualified
Matching Contributions to the Plan.
In addition, in lieu of distributing Excess Contributions as
provided in Section 3.2(G) of the Plan, or Excess Aggregate
Contributions as provided in Section 3.5(C) of the Plan, the
Employer may make Qualified Matching Contributions on behalf
of Employees that are
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<PAGE>
sufficient to satisfy either the Actual
Deferral Percentage or the Average Contribution Percentage
test, or both, pursuant to regulations under the Code.
(C) Qualified Non-elective Contributions. If elected by the
Employer in the Adoption Agreement, the Employer may make
Qualified Non-elective Contributions to the Plan.
In addition, in lieu of distributing Excess Contributions as
provided in Section 3.2(G) of the Plan, or Excess Aggregate
Contributions as provided in Section 3.5(C) of the Plan, the
Employer may make Qualified Non-elective Contributions on
behalf of Employees that are sufficient to satisfy either the
Actual Deferral Percentage or the Average Contribution
Percentage test, or both, pursuant to regulations under the
Code.
(D) Separate Accounts. An Employer Matching Account shall be
maintained for a Participant's accrued benefit attributable to
Matching Contributions. A Qualified Matching Contribution
Account shall be maintained for a Participant's accrued
benefit attributable to Qualified Matching Contributions. A
Qualified Non-elective Contribution Account shall be
maintained for a Participant's accrued benefit attributable to
Qualified Non-elective Contributions. Such accounts shall be
credited with the applicable contributions, earnings and
losses, distributions, and other adjustments.
(E) Vesting. Matching Contributions will be vested in accordance
with the Employer's election in Items C(4)(d) and C(4)(e) of
the Adoption Agreement. In any event, Matching Contributions
shall be fully vested at Normal Retirement Date, upon the
complete or partial termination of the Plan, or upon the
complete discontinuance of Matching Contributions, as
applicable. Qualified Non-elective Contributions and Qualified
Matching Contributions are nonforfeitable when made.
(F) Forfeitures. Forfeitures of Matching Contributions shall be
used to reduce such contributions, or shall be allocated to
Participants, in accordance with the Employer's election in
Item C(6) of the Adoption Agreement.
(G) Allocation of Discretionary Matching Contributions. If the
Employer selects Item C(4)(b) in the Adoption Agreement, any
discretionary Matching Contributions shall be allocated as of
the allocation date specified in Item C(4)(c)(ii) of the
Adoption Agreement, to the Employer Matching Account of each
Participant who has made Before Tax Contributions and/or
After Tax Contributions eligible for matching. If Item
C(4)(c)(ii)(e) has been selected (imposing a last day of the
Plan Year requirement) the allocation shall be made to a
Participant who (1) if a Participant in a nonstandardized
Plan, is employed or on leave of absence on the last day of
the Plan Year, and (2) if a Participant in a standardized
Plan, either completes more than 500 Hours of service during
the Plan Year or is employed on the last day of the Plan
Year. The following Participants will also share in the
Matching Contributions for the year, if elected in the
Adoption Agreement: (1) Participants in a nonstandardized
Plan whose employment terminated before the end of the Plan
Year because of retirement, death, disability or as
specified in the Adoption Agreement, and (2) Participants
in a standardized Plan whose employment terminated before the
end of the Plan Year because of retirement, death, disability
or as specified in the Adoption Agreement, and completed
500 Hours of Service or less. Notwithstanding the
foregoing, if the Employer makes a contribution prior to
the end of the Plan Year, Participants shall be
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entitled to an allocation of that contribution when made,
without regard to any end of the Plan Year requirement.
(H) Limitation on Employer Contributions. The Employer's
contributions for any Plan Year shall not exceed the maximum
amount which the Employer may deduct pursuant to Section 404
of the Code.
3.5 Limitations on After Tax Contributions (Employee Contributions) and
Matching Contributions.
(A) Contribution Percentage. The ACP for Participants who are
Highly Compensated Employees for each Plan Year and the ACP
for Participants who are Non-highly Compensated Employees for
the same Plan Year must satisfy one of the following tests:
(1) 1.25 Limit. The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-highly
Compensated Employees for the same Plan Year by 1.25,
or
(2) 2.0 Limit. The ACP for Participants who are Highly
Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-highly
Compensated Employees for the same Plan Year
multiplied by two (2), provided that the ACP for
Participants who are Highly Compensated Employees
does not exceed the ACP for Participants who are
Non-highly Compensated Employees by more than two (2)
percentage points.
(B) Special Rules.
(1) Multiple Use. If one or more Highly Compensated
Employees participate in both a cash or deferred
arrangement and a Plan subject to the ACP test
maintained by the Employer and the sum of the ADP and
ACP of those Highly Compensated Employees subject to
either or both tests exceeds the Aggregate Limit,
then the ACP of those Highly Compensated Employees
who also participate in a cash or deferred
arrangement will be reduced (beginning with such
Highly Compensated Employee whose ACP is the highest)
so that the limit is not exceeded. The amount by
which each Highly Compensated Employee's Contribution
Percentage amounts is reduced shall be treated as an
Excess Aggregate Contribution. The ADP and ACP of the
Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests.
Multiple use does not occur if either the ADP and ACP
of the Highly Compensated Employees does not exceed
1.25 multiplied by the ADP and ACP of the Non-highly
Compensated Employees.
(2) Aggregation of Contribution Percentages. For purposes
of this section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and
who is eligible to have Contribution Percentage
Amounts allocated to his or her accounts under two or
more plans described in Section 401(a) of the Code,
or arrangements described in Section 401(k) of the
Code, that are maintained by the Employer, shall be
determined as if the total of such Contribution
Percentage Amounts was made under each Plan. If a
Highly Compensated Employee participates in two or
more cash or deferred arrangements that have
different Plan
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<PAGE>
years all cash or deferred arrangements ending with
or within the same calendar year shall be treated as
a single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if
mandated to be disaggregated under regulations under
Section 401(m) of the Code.
(3) Aggregation of Plans. In the event that this Plan
satisfies the requirements of Sections 401(m),
401(a)(4) or 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of
the Code only if aggregated with this Plan, then this
section shall be applied by determining the
Contribution Percentage of Employees as if all such
plans were a single Plan. For Plan Years beginning
after December 31, 1989, plans may be aggregated in
order to satisfy Section 401(m) of the Code only if
they have the same Plan Year.
(4) Family Aggregation. For purposes of determining the
Contribution Percentage of a Participant who is a
five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Employee
shall include the Contribution Percentage Amounts and
Compensation for the Plan Year of Family Members, as
defined in Section 414(q)(6) of the Code. Family
Members, with respect to Highly Compensated
Employees, shall be disregarded as separate employees
in determining the Contribution Percentage both for
Participants who are Non-highly Compensated Employees
and for Participants who are Highly Compensated
Employees.
(5) Time of Contributions. For purposes of determining
the Contribution Percentage test, After Tax
Contributions are considered to have been made in the
Plan Year in which contributed to the Trust. Matching
Contributions and Qualified Non-elective
Contributions will be considered made for a Plan Year
if made no later than the end of the twelve-month
period beginning on the day after the close of the
Plan Year.
(6) Records. The Employer shall maintain records
sufficient to demonstrate satisfaction of the ACP
test and the amount of Qualified Non-elective
Contributions or Qualified Matching Contributions, or
both, used in such test.
(7) Regulations. 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.
(C) Distribution of Excess Aggregate Contributions.
(1) General Rule. Notwithstanding any other provision of
this Plan, Excess Aggregate Contributions, plus any
income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable,
distributed no later than the last day of each Plan
Year to Participants to whose accounts Excess
Aggregate Contributions were allocated for the
preceding Plan Year. Excess Aggregate Contributions
of Participants who are subject to the Family Member
aggregation rules shall be allocated among the Family
Members in proportion to the After Tax and Matching
Contributions (or amounts treated as Matching
Contributions) of each Family
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<PAGE>
Member that is combined
to determine the combined ACP. 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 amounts arose, a ten (10) percent
excise tax will be imposed on the Employer
maintaining the Plan with respect to those amounts.
Excess Aggregate Contributions shall be treated as
Annual Additions under the Plan.
(2) Determination of Income or Loss. Excess Aggregate
Contributions shall be adjusted for income or loss up
to the date of distribution. The income or loss
allocable to Excess Aggregate Contributions is the
sum of: (1) income or loss allocable to the
Participant's After Tax Contribution Account,
Matching Contribution Account, Qualified Matching
Contribution Account, (if any, and if all amounts
therein are not used in the ADP test) and, if
applicable, the Qualified Non-elective Contribution
Account and Before Tax Contribution Account for the
Plan Year multiplied by a fraction, the numerator of
which is such Participant's Excess Aggregate
Contributions for the year and the denominator is the
Participant's account balance(s) attributable to
Contribution Percentage Amounts without regard to any
income or loss occurring during such Plan Year; and
(2) ten percent of the amount determined under (1)
multiplied by the number of whole calendar months
between the end of the Plan Year and the date of
distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
(3) Forfeitures of Excess Aggregate Contributions.
Forfeitures of Excess Aggregate Contributions may
either be reallocated to the accounts of Non-Highly
Compensated Employees or applied to reduce Employer
Contributions, as elected by the Employer in Item
C(6)(c) of the Adoption Agreement.
(4) Accounting for Excess Aggregate Contributions. Excess
Aggregate Contributions shall be forfeited, if
forfeitable, or distributed on a pro-rata basis from
the Participant's After Tax Contribution Account and
Matching Contribution Account and Qualified Matching
Contribution Account (and, if applicable, the
Participant's Qualified Non-elective Contribution
Account and Before Tax Contribution Account, or
both).
3.6 Net Profits Not Required if So Elected in Adoption Agreement. If the
Employer elects, Matching Contributions may be made without regard to
Net Profits in accordance with Item C(4)(c)(iii) of the Adoption
Agreement. If the Plan is a profit-sharing Plan, the Plan shall
continue to be designed to qualify as a profit-sharing Plan for
purposes of Sections 401(a), 402, 412, and 417 of the Code. Net Profits
shall not be required for Before Tax Contributions or After Tax
Contributions to be made to the Plan.
3.7 Form, Payment and Allocation of Contributions. All contributions under
this Article III made for a Plan Year shall be made in cash, and shall
be delivered to the Trustee at such time or times as shall be agreed
upon between the Committee and the Trustee. The Committee shall
instruct the Trustee as to the allocation of contributions to the
Participant's accounts.
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<PAGE>
3.8 Distribution Requirements for Before Tax Contribution Account. Before
Tax Contributions, Qualified Non-elective Contributions and Qualified
Matching Contributions, and income allocable to each are not
distributable to a Participant or his or her Beneficiary or
Beneficiaries, in accordance with such Participant's, Beneficiary's or
Beneficiaries' election, earlier than upon separation from service,
death, disability, or as selected in the Adoption Agreement. Such
amounts may not be distributed unless in accordance with the
Participant's election made pursuant to rules established by the
Committee as authorized in the Adoption Agreement, and upon:
(A) Termination of the Plan without the establishment of another
defined contribution Plan, other than an employee stock
ownership Plan (as defined in Section 4975(e) or Section 409
of the Code) or a simplified employee pension Plan as defined
in Section 408(k).
(B) The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used in a trade or business of
such corporation if such corporation continues to maintain
this Plan after the disposition, but only with respect to
Employees who continue employment with the corporation
acquiring such assets.
(C) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the
meaning of Section 409(d)(3) of the Code) if such corporation
continues to maintain this Plan, but only with respect to
Employees who continue employment with such subsidiary.
(D) The attainment of age 59-1/2 in the case of a profit-sharing
Plan, or the attainment of the Plan's Normal Retirement Date,
if either or both are selected in the Adoption Agreement.
(E) The Hardship of the Participant as described in Section
3.9, if selected in the Adoption Agreement.
All distributions that may be made pursuant to one or more of
the foregoing distributable events are subject to the spousal
and Participant consent requirements (if applicable) contained
in Sections 411(a)(11) and 417 of the Code. In addition,
distributions after March 31, 1988, that are triggered by any
of the first three events above, in Sections 3.8(A), (B) and
(C) must be made in a lump sum.
3.9 Hardship Distribution.
(A) Amount Available for Withdrawal. Upon the written request of
a Participant received and approved by the Committee, a
Participant may withdraw, in cash, up to one hundred per
cent (100%) of the amount of such Participant's Before Tax
Contributions (and any earnings credited to a Participant's
account as of the end of the last Plan Year ending before
July 1, 1989) or such lesser amount as the Committee may
approve, in the event of Hardship. For purposes of this
Section, Hardship is defined as immediate and heavy financial
need of the Employee where such Employee lacks other
available resources. Hardship distributions are subject to
the spousal consent requirements contained in Sections
411(a)(11) and 417 of the Code. The Committee is authorized
to and shall request from the Participant making such a
request such evidence as the Committee deems necessary and
appropriate to substantiate a Hardship, the amount of expenses
resulting
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<PAGE>
from such Hardship and the other resources of the
Participant reasonably available to meet such expenses.
(B) Special Rules:
(1) Immediate and Heavy Need. The following are the only
financial needs considered immediate and heavy:
expenses incurred or necessary for medical care,
described in Section 213(d) of the Code, of the
Employee, the Employee's Spouse or dependents; the
purchase (excluding mortgage payments) of a principal
residence for the Employee; payment of tuition and
related educational fees for the next twelve months
of post-secondary education for the Employee, the
Employee's Spouse, children or dependents; or the
need to prevent the eviction of the Employee from, or
a foreclosure on the mortgage of, the Employee's
principal residence.
(2) Satisfaction of Need. A distribution will be
considered as necessary to satisfy an immediate and
heavy financial need of the Employee only if:
(a) The Employee has obtained all distributions,
other than Hardship distributions, and all
nontaxable loans under all plans maintained
by the Employer;
(b) All plans maintained by the Employer provide
that the Employee's Before Tax Contributions
(and After Tax Contributions) will be
suspended for twelve months after the
receipt of the Hardship distribution;
(c) The distribution is not in excess of an
immediate and heavy financial need
(including amounts necessary to pay any
federal, state or local income taxes or
penalties reasonably anticipated to result
from the distribution); and
(d) All plans maintained by the Employer provide
that the Employee may not make Before Tax
Contributions for the Employee's taxable
year immediately following the taxable year
of the Hardship distribution in excess of
the applicable limit under Section 402(g) of
the Code for such taxable year less the
amount of such Employee's Before Tax
Contributions for the taxable year of the
Hardship distribution.
(3) Taxes and Penalties. The amount of an immediate and
heavy financial need may include any amounts
necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result
from the distribution.
3.10 Withdrawal of After Tax Contributions. Subject to the provisions of the
Plan, in accordance with rules for giving notice as determined by the
Committee, a Participant may withdraw as of the first Accounting Date
subsequent to receipt by the Committee of such notice:
(A) Maximum Amount. An amount equal to not more than 100% of the
Participant's After Tax Contribution Account determined as
of such Accounting Date. No Participant who has made any
withdrawal of After Tax Contributions in the twelve (12)
months preceding the giving of such notice may make a
withdrawal under this Section. A Participant who
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<PAGE>
makes a withdrawal of After Tax Contributions shall be
required to suspend After Tax Contributions for a period of
six (6) months, commencing with the effective date of such
withdrawal. A Participant may, pursuant to Article III,
elect to commence After Tax Contributions as of the first day
of the first payroll period of the month following the
conclusion of such suspension period, or the first payroll
period of any month thereafter, upon advance written notice
to the Committee.
(B) Minimum Amount. Notwithstanding anything to the contrary in
this Section 3.10, any withdrawal made pursuant to Section
3.10(A) shall be for a minimum whole dollar amount not less
than Five Hundred Dollars ($500.00); except that if the amount
available for withdrawal is less than Five Hundred Dollars
($500.00) then the minimum amount of the withdrawal shall be
the amount available.
(C) Forfeitures. No forfeitures will occur solely as a result of
an Employee's withdrawal of After Tax Contributions.
(D) Loan Security. Notwithstanding anything to the contrary in
this Section 3.10, a Participant may not make a withdrawal
pursuant to this Section of any portion of the Participants
vested interest which has been assigned to secure repayment of
a loan in accordance with Section 11.10, below, until such
time as the Committee shall have released said portion so
assigned.
3.11. Withdrawal of Matching Contributions. Subject to the provisions of the
Plan, in accordance with rules for giving notice as determined by the
Committee, and as elected in the Adoption Agreement, a Participant may
withdraw as of the first Accounting Date subsequent to receipt by the
Committee of such notice:
(A) Maximum Amount. An amount equal to not more than 100% of the
vested amounts in the Participant's Matching Contribution
Account determined as of such Accounting Date. No Participant
who has made any withdrawal of Matching Contributions in the
twelve (12) months preceding the giving of such notice may
make a withdrawal under this Section.
(B) Minimum Amount. Notwithstanding anything to the contrary in
this Section 3.11, any withdrawal made pursuant to Section
3.11(A) shall be for a minimum whole dollar amount not less
than Five Hundred Dollars ($500.00); except that if the amount
available for withdrawal is less than Five Hundred Dollars
($500.00) then the minimum amount of the withdrawal shall be
the amount available.
(C) Forfeitures. No forfeitures will occur solely as a result of
an Employee's withdrawal of Matching Contributions.
(D) Loan Security. Notwithstanding anything to the contrary in
this Section 3.11, a Participant may not make a withdrawal,
pursuant to this Section of any portion of the Participant's
vested interest which has been assigned to secure repayment of
a loan in accordance with Section 11.10, below, until such
time as the Committee shall have released said portion so
assigned.
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<PAGE>
ARTICLE IV
OTHER CONTRIBUTIONS
4.1 Employer Contributions.
(A) Money Purchase Pension Plans Only. As elected by the Employer
in the Adoption Agreement, the Employer shall make
contributions to the Plan.
(B) Profit Sharing Plans and 401(k) Plans Only.
(1) Employer Contributions. For each Plan Year, the
Employer, shall or may make contributions to the Plan
in an amount as selected in the Adoption Agreement or
determined by Resolution of the Board of Directors of
the Employer.
(2) Net Profits Not Required if So Elected in Adoption
Agreement. If the Employer elects, Employer
Contributions under a profit sharing Plan may be made
without regard to Net Profits in accordance with Item
B(8)(a)(iii) of the Adoption Agreement. The Plan
shall continue to be designed to qualify as a
profit-sharing Plan for purposes of Sections 401(a),
402, 412, and 417 of the Code.
4.2 Separate Accounts. An Employer Contribution Account shall be maintained
for each Participant to which will be credited the employer pension or
profit sharing contributions ("Employer Contributions"). Such accounts
shall be credited with the applicable contributions, earnings and
losses, distributions, and other adjustments.
4.3 Vesting. Employer Contributions will be vested in accordance with the
Employer's election in Item B(7), as applicable, of the Adoption
Agreement. In any event, Employer Contributions shall be fully vested
at Normal Retirement Date, upon the complete or partial termination of
the Plan, and, in profit sharing plans, upon the complete
discontinuance of Employer Contributions.
4.4 Limitation on Employer Contributions. The Employer's Contribution for
any Plan Year shall not exceed the maximum amount which the Employer
may deduct pursuant to Section 404 of the Code. The Employer
Contributions shall be payable not later than the time for filing the
Employer's federal income tax return, including extensions.
4.5 Employee Contributions.
(A) Distributions from Qualified Plans - Rollovers.
(1) If the Employer selects Item B(9) in the Adoption
Agreement, an Employee who is entitled to make a
rollover contribution described in Section 402(a)(5),
Section 403(a)(4) or Section 408(d)(3) of the Code
("Rollover Contribution"), may elect, with the
approval of the Committee, to make such a Rollover
Contribution to the Plan. The Employee shall deliver
or cause to be delivered, to the Trustee the cash
which constitutes such Rollover Contribution at such
time or times and in such manner as shall be
specified by the Committee. As of the date of receipt
of such property by the Trustee, a Rollover Account
shall be established in the name of the Employee who
has made a Rollover Contribution as provided in this
Section 4.5
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and shall be credited with such assets on
such date. A Rollover Contribution shall not be
deemed to be a contribution of such Employee for any
purpose of this Agreement. All Rollover Contributions
and the earnings on these contributions shall be
immediately fully vested and nonforfeitable.
(2) Subject to the provisions of the Plan, on advance
notice given to the Committee in accordance with
rules established by the Committee a Participant in a
profit sharing Plan or 401(k) profit sharing Plan may
withdraw all or any part (in any whole dollar amount
specified by the Participant) of the value of any
Rollover Account, provided no Participant who has
made any withdrawal under Section 4.5(A) during the
calendar year in which such notice is given may make
an additional withdrawal under this Section 4.5(A)
during the remainder of such year.
(B) Nondeductible Employee Contributions and Matching
Contributions No Longer Accepted.
(1) This Plan will not accept nondeductible employee
contributions and matching contributions except
pursuant to a 401(m) arrangement described in Article
III. Employee contributions for Plan Years beginning
after December 31, 1986, together with any matching
contributions as defined in Section 401(m) of the
Code, will be limited so as to meet the
nondiscrimination test of Section 401(m).
(2) A separate account will be maintained by the Trustee
for the previously made nondeductible employee
contributions of each Participant.
(3) Employee contributions and earnings thereon will be
nonforfeitable at all times. No forfeitures will
occur solely as a result of an Employee's withdrawal
of Employee contributions.
(C) Deductible Employee Contributions No Longer Accepted. The
Committee will not accept deductible Employee contributions
which are made for a taxable year beginning after December 31,
1986. Contributions made prior to that date will be maintained
in a separate account which will be nonforfeitable at all
times. The account will share in the gains and losses of
the Trust Fund in the same manner as described in
Article VI of the Plan. No part of the deductible voluntary
contribution account will be used to purchase life insurance.
Subject to Section 7.10, Joint and survivor annuity
requirements (if applicable), the Participant may withdraw
any part of the deductible voluntary contribution account
by making a written application to the Committee.
4.6 Exclusive Benefit. Except as provided in the Plan, the Employer has no
beneficial interest in the Trust Fund, and no part of the Trust Fund
shall revert or be repaid to the Employer, directly or indirectly, or
diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries, except that (1) any contribution
made by the Employer because of a mistake of fact must be returned to
the Employer within one year of the contribution; (2) in the event the
deduction of a contribution made by the Employer is disallowed under
Section 404 of the Code, such contribution (to the extent disallowed)
must be returned to the Employer within one year of the disallowance of
the deduction; and (3) in the event that the Commissioner of Internal
Revenue determines that the Plan is not initially qualified under the
Internal Revenue Code, any
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<PAGE>
contribution made incident to that initial
qualification by the Employer must be returned to the Employer within
one year after the date the initial qualification is denied, but only
if the application for the qualification is made by the time 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.
4.7 Form, Payment and Allocation of Contributions. Contributions made for a
Plan Year shall be made in cash; provided, however, that if the Plan
has an Employer Stock Fund, contributions for the Employer Stock Fund
may be made in Employer Stock. Contributions shall be delivered to the
Trustee at such time or times as shall be agreed upon between the
Committee and the Trustee. The Committee shall instruct the Trustee as
to the allocation of contributions to the Participant's accounts
pursuant to the elections made in the Adoption Agreement. Employer
Stock contributed to the Plan shall be valued at fair market value at
the time of its transfer to the Plan.
4.8 Safe Harbor Allocation. Notwithstanding anything to the contrary in the
Adoption Agreement, in the event the requirements of Code Sections
401(a)(26) or 410(b) are not met during the Plan Year, Employer
Contributions will be allocated to Eligible Employees in the following
order until the applicable requirements are met:
(A) Eligible Employees employed by the Employer on the last day of
the Plan Year and who have completed more than 750 Hours of
Service during the Plan Year;
(B) Eligible Employees employed by the Employer on the last day of
the Plan Year and who have completed more than 500 but less
than 750 Hours of Service during the Plan Year;
(C) Eligible Employees employed by the Employer on the last day
of the Plan Year and who have completed 500 or fewer Hours of
Service during the Plan Year;
(D) Eligible Employees who have completed 750 or more Hours of
Service during the Plan Year;
(E) Eligible Employees who have completed more than 500 but
less than 750 Hours of Service during the Plan Year.
In no event will Employees who have terminated employment with
the Employer during the Plan Year and who have completed 500
or fewer Hours of Service during the Plan Year receive any
allocation of Employer Profit Sharing Contributions.
ARTICLE V
PERIOD OF PARTICIPATION
5.1 Termination Dates. A Participant's Termination Date will be the date on
which his employment with the Employer is terminated because of the
first to occur of the following events:
(A) Normal Retirement. The Participant retires from the employ of
the Employer upon attaining the Normal Retirement Date
selected in the Adoption Agreement. If the Employer enforces a
mandatory retirement age the Normal Retirement Date is the
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<PAGE>
date the Participant attains the lesser of that mandatory age
or the age specified in the Adoption Agreement.
(B) Early Retirement. The Participant retires from the employ of
the Employer upon attaining the Early Retirement Date selected
in the Adoption Agreement. If a Participant terminates
employment prior to meeting any minimum age specified in the
Adoption Agreement but after having completed the specified
minimum service requirement, the terminated Participant shall
be entitled to an early retirement benefit upon attaining the
minimum age required.
(C) Late Retirement. The Participant retires from the employ of
the Employer after the Normal Retirement Date. A Participant
who continues to work beyond the Normal Retirement Date shall
continue participation in the Plan on the same basis as the
other Participants.
(D) Disability Retirement. The Participant is terminated from the
employ of the Employer because of Disability, as determined by
the Committee, as defined in Section 1.1(I), irrespective of
his age.
(E) Death. The Participant's death.
(F) Other Termination. The Participant terminates employment
before Normal, Early, Late or Disability Retirement.
If a Participant continues in the employ of the Employer but
no longer is a member of a class of Employees to which the
Plan has been and continues to be extended by the Employer,
the Participant's Termination Date nevertheless will be as
stated above and his or her accounts will be held as stated in
Section 5.2.
5.2 Restricted Participation. When distribution of part or all of the
benefits to which a Participant is entitled under the Plan is deferred
beyond or cannot be made until after the Participant's Termination
Date, or during any period that a Participant continues in the employ
of the Employer but no longer is a member of a class of Employees to
which the Plan has been and continues to be extended by the Employer,
the Participant, or in the event of his or her death such Participant's
Beneficiary, will be considered and treated as a Participant for all
purposes of the Plan, except that no share of contributions or
forfeitures will be credited to his or her Accounts (a) for any period
such Participant continues in the employ of the Employer but no longer
is a member of a class of Employees to which the Plan has been and
continues to be extended by the Employer, or (b) after the
Participant's Termination Date.
ARTICLE VI
ACCOUNTING
6.1 Accounts Established. There shall be established and maintained for
each Participant such accounts as are applicable, to reflect such
Participant's interest in each Investment Fund.
All income, expenses, gains and losses attributable to each account
shall be separately accounted for. The interest of each Participant in
the Trust Fund at any time shall consist of the amount
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credited to his or her accounts as of the last preceding Valuation
Date plus credits and minus debits to such accounts since that date.
6.2 Employer Contributions Considered Made On Last Day of Plan Year. Unless
otherwise elected in the Adoption Agreement, for purposes of this
Article VI, the Employer's Contribution under Article IV will be
considered to have been made on the last day of the Plan Year for which
contributed.
6.3 Accounting Steps. As of each Valuation Date, the Trustee shall:
(A) Charge to the prior account balances all previously uncharged
payments or distributions made from Participants' accounts
since the last preceding Valuation Date.
(B) Adjust the net credit balances in Participants' accounts
upward or downward, pro rata, so that the total of such net
credit balances will equal the then adjusted net worth of the
Trust Fund;
(C) Allocate and credit Employer Contributions and any forfeitures
(as described in Section 7.3) that are to be allocated and
credited as of that date in accordance with Sections 6.5 and
6.6.
Notwithstanding the preceding, the Trustee shall be authorized
to utilize such other method of accounting for the gains or
losses experience by the Trust as may accurately reflect each
Participant's interest therein.
6.4 Allocation of Employer Contributions.
(A) Discretionary Profit Sharing Contributions.
(1) Nonstandardized Plans. If the Plan is a
nonstandardized Plan, Employer Contributions for the
Plan Year shall be allocated among and credited to
the Employer Contribution Accounts of each
Participant, including a Participant on leave of
absence, who is entitled to receive a contribution as
elected by the Employer in the Adoption Agreement,
pursuant to the formula elected by the Employer in
Item B(8)(b) of the Adoption Agreement If elected in
the Adoption Agreement, Participants whose employment
terminated because of retirement, death or disability
before the end of the Plan Year will share in the
contributions for the year if elected in the Adoption
Agreement.
(2) Standardized Plans. Employer Contributions for the
Plan Year shall be allocated among and credited to
the Employer Contribution Account of each Participant
who either completes more than 500 Hours of Service
during the Plan Year (or such lesser number of Hours
of Service as may be specified in the Adoption
Agreement) or is employed on the last day of the Plan
Year pursuant to the formula elected by the Employer
in Item B(8)(b) of the Adoption Agreement. If elected
in the Adoption Agreement, Participants whose
employment terminated before the end of the Plan Year
because of retirement, death or disability will share
in the contributions for the year if elected in the
Adoption Agreement.
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(B) Money Purchase Pension Plans. Employer Contributions will be
made and allocated to the Employer Contribution Accounts of
Participants for the Plan Year as elected in the Adoption
Agreement. Sections 6.4(A)(1) and (2) above also apply to the
Money Purchase Pension Plans.
(C) Paired Plans. Notwithstanding anything in the Plan to the
contrary, if the Employer maintains two plans which are Paired
Plans, only one may contain an allocation, as elected in the
Adoption Agreement, utilizing permitted disparity as defined
in Code Section 401(l).
6.5 Allocation of Forfeitures. As elected in Items B(11) and/or C(6) of the
Adoption Agreement, as of the last day of the Plan Year, any
forfeitures which arose under the Plan during that year shall be used
to: (i) pay the expenses of the Plan; (ii) reduce Employer
Contributions; or, (iii) be allocated to Participants accounts, as may
be selected in the Adoption Agreement. Forfeitures under (iii) shall be
allocated as provided in Section 6.4.
6.6 Limitation on Allocations.
(A) Definitions: For purposes of limiting allocations pursuant to
this section, the following definitions shall apply:
(1) Annual Additions: The sum of the following amounts
credited to a Participant's account for the
Limitation Year:
(a) Employer Contributions;
(b) Employee Contributions;
(c) forfeitures;
(d) amounts allocated, after March 31, 1984,
to an individual medical account, as defined
in Section 415 (l)(2) of the Code, which
is part of a pension or annuity Plan
maintained by the Employer are treated as
Annual Additions to a defined contribution
Plan. Also 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 Section
419A(d)(3) of the Code, under a welfare
benefit fund, as defined in Section 419(e)
of the Code, maintained by the Employer
are treated as Annual Additions to a defined
contribution Plan; and,
(e) allocations under a simplified employee
pension.
For this purpose, any Excess Amount applied under
Sections 6.6(B)(4) or 6.6(C)(6) in the Limitation
Year to reduce Employer Contributions will be
considered Annual Additions for such Limitation Year.
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(2) Compensation: Compensation as described below,
interpreted consistently with the provisions of Code
Section 414(s) and the regulations issued thereunder,
as may be selected by the Employer, and uniformly
applied for testing purpose:
(a) W-2 Compensation (Wages, Tips, and Other
Compensation required to be reported under
Sections 6041, 6051, and 6052 of the Code,
as reported on Form W-2). Compensation is
defined as wages within the meaning of
Section 3401(a) and all other payments of
compensation to an Employee by the Employer
(in the course of the Employer's trade or
business) for which the Employer is required
to furnish the Employee a written statement
under Sections 6041(d), 6051(a)(3) and
6052 of the Code. Compensation must be
determined without regard to any rules under
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 Section 3401(a)(2).
(b) Withholding Compensation (ss.3401(a)).
Compensation is defined as wages within the
meaning of Section 3401(a) for the purposes
of income tax withholding at the source but
determined without regard to any rules 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
Section 3401(a)(2)).
(c) Section 415 safe-harbor compensation.
Compensation is defined as wages, salaries,
and 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 includible in gross income
(including, but not limited to, commissions
paid salesman, 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
1.62-2(c)), and excluding the following:
(i) Employer contributions to a Plan of
deferred compensation which are not
includible in the Employee's gross
income for the taxable year in which
contributed, or Employer
contributions under a simplified
employee pension Plan to the extent
such contributions are deductible by
the Employee, 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 an Employee 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
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(iv) other amounts which received 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 Section 403(b)
of the Code (whether or not the
contributions are actually
excludable from the gross income of
the Employee).
Notwithstanding anything in the definitions of
Compensation preceding, at the discretion of the
Employer, uniformly applied, Compensation shall, for
purposes of ADP and ACP testing as provided for in
Article III, include amounts not currently includible
in income pursuant to Code Sections 125, 402(a)(8),
402(h) and 403(b). For allocation purposes, such
amounts shall be includible as elected in the
Adoption Agreement.
For any self-employed Individual, Compensation will
mean Earned Income.
For Limitation Years beginning after December 31,
1991, for purposes of applying the limitations of
Section 6.6, Compensation for a Limitation Year is
the compensation actually paid or made available
during such Limitation Year.
Notwithstanding the preceding sentence, Compensation
for a Participant in a defined contribution Plan who
is permanently and totally disabled (as defined in
Section 22(e)(3) of the Code) is the Compensation
such Participant would have received for the
Limitation Year if the Participant had been paid at
the rate of Compensation paid immediately before
becoming permanently and totally disabled; such
imputed compensation for the disabled Participant may
be taken into account only if the Participant is not
a Highly Compensated Employee, (as defined in Section
414(q) of the Code), and contributions made on behalf
of such Participant are nonforfeitable when made.
(3) Defined Benefit Fraction: A fraction, the numerator
of which is the sum of the Participant's Projected
Annual Benefits under all the defined benefit plans
(whether or not terminated) maintained by the
Employer, and the denominator of which is the lesser
of 125 percent of the dollar limitation determined
for the Limitation Year under Sections 415(b) and (d)
of the Code or 140 percent of the Participant's
Highest Average Compensation, including any
adjustments under Section 415(b) of the Code.
Notwithstanding the above 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, the
denominator of this fraction will not be less than
125 per cent of the sum of the annual benefits under
such plans which the Participant had accrued as of
the close of the last Limitation Year beginning
before January 1, 1987, disregarding any changes in
the terms and conditions of the Plan after May 5,
1986. The preceding sentence applies only if the
defined benefit plans individually and in the
aggregate satisfied the requirements of Section 415
for all Limitation Years beginning before January 1,
1987.
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(4) Defined Contribution Dollar Limitation: For purposes
of calculating the Maximum Permissible Amount:
$30,000 or, if greater, one-fourth of the defined
benefit dollar limitation set forth in Section
415(b)(1) of the Code as in effect for the Limitation
Year.
(5) Defined Contribution Fraction: A fraction, the
numerator of which is the sum of the Annual Additions
to the Participant's accounts under all the 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 defined
in Section 419(e) of the Code, individual medical
accounts, as defined in Section 415(l)(2) of the
Code, and simplified employee pension, maintained by
the Employer), and the denominator of which is the
sum of the maximum aggregate amounts for the current
and all prior Limitation Years of service with the
Employer (regardless of whether a defined
contribution Plan was maintained by the Employer).
The maximum aggregate amount in any Limitation Year
is the lesser of 125 percent of the dollar limitation
determined under Sections 415(b) and (d) of the Code
in effect under Section 415(c)(1)(A) of the Code or
35 percent of the Participant's Compensation for such
year.
If the Employee was a participant as of the end 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, the numerator of
this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would
otherwise exceed 1.0 under the terms of this Plan.
Under the adjustment, an amount equal to the product
of (1) the excess of the sum of the fractions over
1.0 times (2) the denominator of this fraction, will
be permanently subtracted from the numerator of this
fraction. The adjustment is 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 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 Annual Additions.
(6) Employer: For purposes of this Section 6.6: the
Employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in
section 414(b) of the Code as modified by Section
415(h), all commonly controlled trades or businesses
(as defined in Section 414(c) as modified by Section
415(h)) or affiliated service groups (as defined in
Section 414(m)) of which the adopting Employer is a
part, and any other entity required to be aggregated
with the Employer pursuant to regulations under
Section 414(o) of the Code.
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<PAGE>
(7) Excess Amount: The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum
Permissible Amount.
(8) Highest Average Compensation: For purposes of
calculating the Defined Benefit Fraction, the average
compensation for the three (3) consecutive Years of
Service with the Employer that produces the highest
average. A Year of Service with the Employer is the
twelve-consecutive month period defined in Item
B(4)(j) of the Adoption Agreement.
(9) Limitation Year: A calendar year or any other 12
consecutive month period elected in Item B(4)(d) of
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.
(10) Master or Prototype Plan: A Plan the form of which is
the subject of a favorable opinion letter from the
Internal Revenue Service.
(11) Maximum Permissible Amount: The maximum Annual
Addition that may be contributed or allocated to a
Participant's account under the Plan for any
Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation,
or
(b) 25 percent of the Participant's Compensation
for the Limitation Year.
The Compensation limitation referred to in
(b) shall not apply to any contribution for
medical benefits (within the meaning of
Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an
Annual Addition under Section 415(l)(1) or
419A(d)(2) of the Code.
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 will not exceed the
Defined Contribution Dollar Limitation
multiplied by the following fraction:
Number of months in the short Limitation
----------------------------------------
Year
----
12
(12) Projected Annual Benefit: For purposes of calculating
the Defined Benefit Fraction: 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 the
Participant would be entitled under the terms of the
Plan, assuming: (1) the Participant will continue
employment until Normal Retirement Date under the
Plan, (or current age, if later), and (2) 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.
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(B) Annual Addition Limitations:
(1) If the Participant does not participate in, and has
never participated in another qualified Plan or
welfare benefit fund, as defined in Section 419(e) of
the Code maintained by the Employer, or an individual
medical account, as defined in Section 415(l)(2) of
the Code, maintained by the Employer, or a simplified
employee pension, as defined in Section 408(K) of the
Code, maintained by the Employer which provides an
Annual Addition as defined in Section 6.6(E), the
amount of Annual Additions which may be credited to
the Participant's account for any Limitation Year
will not exceed the lesser of the Maximum Permissible
Amount or any other limitation contained in this
Plan. If the Employer Contribution that would
otherwise be contributed or allocated to the
Participant's account would cause the Annual
Additions for the Limitation Year to exceed the
Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the
Maximum Permissible Amount.
(2) Prior to determining the 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, uniformly determined for all Participants
similarly situated.
(3) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible
Amount for the Limitation Year will be determined on
the basis of the Participant's actual Compensation
for the Limitation Year.
(4) If pursuant to Section 6.6(B)(3) or as result of the
allocation of forfeitures, there is an Excess Amount,
the excess will be disposed of as follows:
(a) Any nondeductible voluntary employee
contributions, to the extent they would
reduce the Excess Amount, will be returned
to the Participant.
(b) If after the application of paragraph (a) an
Excess Amount still exists and the
Participant is covered by the Plan at the
end of the Limitation Year, the Excess
Amount in the Participant's account will be
used to reduce Employer Contributions
(including any allocation of forfeitures)
for such Participant in the next Limitation
year, and each succeeding Limitation Year,
if necessary.
(c) If after the application of paragraph (a) an
Excess Amount still exists, and the
Participant is not covered by the Plan at
the end of a Limitation Year, the Excess
Amount will be held unallocated in a
suspense account. The suspense account will
be applied to reduce future Employer
Contributions (including allocation of any
forfeitures) for all remaining Participants
in the next Limitation Year and each
succeeding Limitation Year, if necessary.
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(d) If a suspense account is in existence at any
time during a Limitation Year pursuant to
this Section 6.6(A), it will not participate
in the allocation of the trust's investment
gains and losses. If a suspense account is
in existence at any time during a particular
Limitation Year, all amounts in the suspense
account must be allocated and reallocated to
Participants' accounts before any Employer
Contributions or any Employee contributions
may be made to the Plan for that Limitation
Year. Excess Amounts may not be distributed
to Participants or former Participants.
(C) Multiple Plan Limitation.
(1) This Section 6.6(C) applies if, in addition to this
Plan, the Participant is covered under another
qualified Master or Prototype defined contribution
Plan maintained by the Employer, a welfare benefit
fund, as defined in Section 419(e) of the Code
maintained by the Employer, or an individual medical
account, as defined in Section 415(l)(2) of the Code,
maintained by the Employer, or a simplified employee
pension maintained by the employer which provides an
Annual Addition as defined in Section 6.6(A) during
any Limitation Year. The Annual Additions which may
be credited to a Participant's accounts 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 accounts under
the other qualified master and prototype defined
contribution plans, welfare benefit funds, individual
medical accounts, and simplified employee pensions
for the same Limitation Year. If the Annual Additions
with respect to the Participant under other qualified
master and prototype defined contribution plans and
welfare benefit funds, individual medical accounts,
and simplified employee pension, maintained by the
Employer are less than the Maximum Permissible Amount
and the contributions that would otherwise be
contributed or allocated to the Participant's
Employer Contribution Account under this Plan would
cause the Annual Additions for the Limitation Year to
exceed this limitation, the amount contributed or
allocated will be reduced so that the Annual
Additions under all such plans and funds for the
Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the
Participant under such other qualified master and
prototype defined contribution plans, welfare benefit
funds individual medical accounts, and simplified
employee pension, in the aggregate are equal to or
greater than the Maximum Permissible Amount, no
amount will be contributed or allocated to the
Participant's Employer Contribution Account under
this Plan for the Limitation Year.
(2) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer
may determine the Maximum Permissible Amount for a
Participant in the manner described in Section
6.6(B)(2).
(3) As soon as is administratively feasible after the end
of the Limitation Year, the Maximum Permissible
Amount for the Limitation Year will be determined on
the basis of the Participant's actual Compensation
for the Limitation Year.
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(4) If, pursuant to Section 6.6(C)(3) or as a result of
the allocation of forfeitures, a Participant's Annual
Additions under this Plan and all other plans result
in an Excess Amount for a Limitation Year, the Excess
Amount shall be deemed to consist of the amounts last
allocated, except that Annual Additions attributable
to a simplified employee pension will be deemed to
have been allocated first, followed by annual
additions to a welfare benefit fund or individual
medical account regardless of the actual allocation
date.
(5) If an Excess Amount was allocated to a Participant on
an allocation date of this Plan which coincides with
an allocation date of another Plan, the Excess Amount
attributed to this Plan will be the product of:
(a) the total Excess Amount allocated as of such
date, times
(b) the ratio of (i) the Annual Additions
allocated to the Participant for the
Limitation Year as of such date under this
Plan to (ii) the total Annual Additions
allocated to the Participant for the
Limitation Year as of such date under this
and all other qualified Master or Prototype
defined contribution plans.
(6) Any Excess Amount attributed to this Plan should be
disposed of as provided in Section 6.6(C)(4).
(D) If the Participant is covered under another qualified defined
contribution Plan maintained by the Employer which is not a
Master or Prototype Plan, Annual Additions which may be
credited to the Participant's accounts under this Plan for any
Limitation Year will be limited in accordance with Section
6.6(C) (1-6) as though the Plan were a Master or Prototype
Plan unless the Employer provides other limitations in Item
B(12) of the Adoption Agreement.
(E) If the Employer maintains, or at any time maintained, a
qualified defined benefit Plan covering any Participant in
this Plan, the sum of the Participant's Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction will not
exceed 1.0 in any Limitation Year. The Annual Additions which
may be credited to the Participant's accounts under this Plan
for any Limitation Year will be limited in accordance with
Item B(12) of the Adoption Agreement.
6.7 Reports to Participants. The Committee shall cause reports to be made
at least annually to each Participant and to the Beneficiary of each
deceased Participant as to the value of each such Participant's
accounts, as of an appropriate preceding Valuation Date.
ARTICLE VII
PAYMENT OF ACCOUNT BALANCES
7.1 Termination of Employment Upon Disability or Death. A Participant shall
become fully vested in his or her Employer Contribution Accounts if the
Participant becomes Disabled under Sections 5.1(A), (B), (C) or (D) or
dies while still employed. The accounts of a Participant who retires
becomes Disabled or dies will become distributable to the Participant
or to his or her Spouse or
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Beneficiary. If distributed immediately,
subject to Section 7.4, the distributable balance, after adjustments,
will be determined as soon as practicable following the receipt by the
Trustee of written notice of the Participant's termination from the
Committee.
7.2 Timing for Determining Account Balance Upon Termination of Employment
Prior to Retirement, Disability or Death. If a Participant terminates
employment with the Employer before retirement under Sections 5.1(F)
the vested portion of the Participant's Employer Contribution Account
and/or Matching Account shall be determined and such Participant's
accounts will be distributable to the Participant. If distributed
immediately, subject to Section 7.4, the distributable balance, after
adjustments, will be determined as soon as practicable following
receipt by the Trustee of written notice of the Participant's
termination from the Committee. The account balance shall be
distributable at such time as elected in the Adoption Agreement, but in
no event shall an account balance not be distributable later than the
Participant's Normal Retirement Date.
7.3 Vesting On Distribution Before Break-in-Service; Cash-Outs.
(A) If an Employee terminates service, and the value of the
Employee's vested account balance derived from Employer and
Employee contributions is not greater than $3,500, the
Employee will receive a distribution of the value of the
entire vested portion of such account balances, and Rollover
Account balance, if any. The nonvested portion will be treated
as a forfeiture. For purposes of this Section 7.3, if the
value of an Employee's vested account balance is zero, the
Employee shall be deemed to have received a distribution
of such vested account balance. A Participant's vested
account balance shall not include accumulated deductible
employee contributions within the meaning of Section 72(o)
(5)(B) of the Code for Plan Years beginning prior to
January 1, 1989.
(B) If an Employee terminates service, and elects, in accordance
with the requirements of Section 7.4, to receive the value of
the Employee's vested account balance, the nonvested portion
will be treated as a forfeiture. If the Employee elects to
have distributed less than the entire vested portion of the
balance in the Employer Contribution Account, the part of the
nonvested portion that will be treated as a forfeiture is the
total nonvested portion multiplied by a fraction, the
numerator of which is the amount of the distribution
attributable to Employer Contributions and the denominator of
which is the total value of the vested balance in the Employer
Contribution Account.
(C) If an Employee receives a distribution pursuant to this
Section 7.3 and the Employee resumes employment covered under
this Plan, the Employee's Employer Contribution Account and/or
Matching Account balance will be restored to the amount on the
date of distribution if the Employee repays to the Plan the
full amount of the distribution attributable to Employer
contributions before the earlier of 5 years after the first
date on which the Participant is subsequently reemployed
by the Employer, or the date the Participant incurs five (5)
consecutive one (1) year Breaks in Service following the date
of the distribution. If an Employee is deemed to receive a
distribution pursuant to this Section 7.3, and the
Employee resumes employment covered under this Plan before the
date the Participant incurs five (5) consecutive one (1)
year Breaks in Service, upon the reemployment of such
Employee, the Employer Contribution Account balance and/or
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<PAGE>
Matching Account balance of the Employee will be restored to
the amount on the date of such deemed distribution.
7.4 Restrictions on Immediate Distributions.
(A) If the value of a Participant's vested account balance derived
from Employer and Employee contributions exceeds (or at the
time of any prior distribution exceeded) $3,500, and the
account balance is immediately distributable, the Participant
and the Participant's Spouse (or where either the Participant
or the Spouse has died, the survivor) must consent to any
distribution of such account balance. 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. The annuity starting date is the first day
of the first period for which an amount is paid as an annuity
or any other form. The Committee shall notify the Participant
and the Participant's Spouse of the right to defer any
distribution until the Participant's account balance 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 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. However,
distribution may commence less than 30 days after the notice
described in the preceding sentence is given, provided the
distribution is one to which sections 401(a)(11) and 417 of
the Internal Revenue Code do not apply, 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 the participant, after receiving
the notice, affirmatively elects a distribution.
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 account balance
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 7.10 of
the Plan, only the Participant need consent to the
distribution of an account balance that is immediately
distributable. Neither the consent of the Participant nor the
Participant's Spouse shall be required to the extent that a
distribution is required to satisfy Section 401(a)(9) or
Section 415 of the Code. In addition, upon termination of this
Plan if the Plan does not offer an annuity option (purchased
from a commercial provider), and if the Employer or any entity
within the same controlled group as the Employer does not
maintain another defined contribution Plan (other than an
employee stock ownership Plan as defined in Section 4975(e)(7)
of the Code), the Participant's account balance will, without
the Participant's consent, be distributed to the Participant.
However, if any entity within the same controlled group as the
Employer maintains another defined contribution Plan (other
than an employee stock ownership Plan as defined in Section
4975(e)(7) of the Code) then the Participant's account balance
will be transferred, without the Participant's consent, to the
other Plan if the Participant does not consent to an immediate
distribution.
An account balance is immediately distributable if any part of
the account balance could be distributed to the Participant
(or surviving spouse) before the Participant attains or would
have attained if not deceased) the later of the Normal
Retirement Date or age 62.
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(B) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first
day of the first Plan Year beginning after December 31, 1988,
the Participant's vested account balance shall not include
amounts attributable to accumulated deductible employee
contributions within the meaning of Section 72(o)(5)(B) of the
Code.
7.5 Commencement of Benefits. Unless the Participant elects otherwise,
payments will be made or commence to a Participant by the Trustee, as
directed by the Committee, no later than the sixtieth (60th) day after
the latest of the close of the Plan Year in which (1) the Participant
attains age sixty-five (65) (or Normal Retirement Date; if earlier);
(2) occurs the tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan; or (3) the Participant
terminates his or her service with the Employer.
Notwithstanding the foregoing, the failure of a Participant and Spouse
to consent to a distribution while a benefit is immediately
distributable, within the meaning of Section 7.4 of the Plan, shall be
deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
7.6 Timing and Modes of Distribution.
(A) General Rules.
(1) Subject to Section 7.10, Joint and Survivor Annuity
Requirements, the requirements of this Section 7.6
shall apply to any distribution of a Participant's
interest and will take precedence over any
inconsistent provisions of this Plan. Unless
otherwise specified, the provisions of this Section
7.6 apply to calendar years beginning after December
31, 1984.
(2) All distributions required under this Section 7.6
shall be determined and made in accordance with the
Income Tax Regulations under Section 401(a)(9),
including the minimum distribution incidental benefit
requirement of Section 1.401(a)(9)-2 of the
regulations.
(3) The normal form of payment for a profit-sharing Plan
satisfying the requirements of Section 7.10(F) hereof
shall be a single sum with no option for annuity
payments; provided, however, that distributions may
be made:
(a) In installment payments, if the Employer
has elected installment payments in Item
B(10)(a) of the Adoption Agreement;
(b) Through such other form of benefit as may be
identified in Item B(10)(a) of the Adoption
Agreement, which shall be available to
Participants as an optional form of benefit
payment, and shall preclude Employer
discretion;
(c) Through such other form of benefits as may
be required to be protected as Section
411(d)(6) protected benefits.
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(B) Required Beginning Date. The entire interest of a Participant
must be distributed or begin to be distributed no later than
the Participant's required beginning date.
(C) 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):
(1) the life of the Participant,
(2) the life of the Participant and a designated
Beneficiary,
(3) a period certain not extending beyond the life
expectancy of the Participant, or
(4) a period certain not extending beyond the joint and
last survivor expectancy of the Participant and a
designated Beneficiary.
(D) 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:
(1) Individual Account.
(a) 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.
(b) 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.
(c) 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
(1) the applicable life expectancy or (2)
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
Income Tax Regulations. Distributions after
the death of the Participant shall be
distributed using the applicable life
expectancy in
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Section (1)(a) above as the
relevant divisor without regard to
Regulations Section 1.401(a)(9)-2.
(d) 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 other calendar
years, including the minimum distribution for
the distribution calendar year in which the
Employee's required beginning date occurs,
must be made on or before December 31 of that
distribution calendar year.
(2) Other Forms. If the Participant's benefit is
distributed in the form of an annuity purchased from
an insurance company, distributions thereunder shall
be made in accordance with the requirements of
Section 401(a)(9) of the Code and the regulations
thereunder.
(E) Death Distribution Provisions
(1) Distribution Beginning Before Death. If the
Participant dies after distribution of his or her
interest has begun, 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.
(2) Distribution Beginning After Death. If the
Participant dies before distribution of his or her
interest begins, distribution of the Participant's
entire 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 (a) or (b) below:
(a) if any portion of the Participant's 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 commencing on or before December
31 of the calendar year immediately
following the calendar year in which the
Participant died;
(b) if the designated Beneficiary is the
Participant's surviving Spouse, the date
distributions are required to begin in
accordance with (a) above shall not be
earlier than the later of (1) December 31 of
the calendar year immediately following the
calendar year in which the Participant died
and (2) December 31 of the calendar year in
which the Participant would have attained
age 70-1/2.
If the Participant has not made an election
pursuant to this Section 7.6(E)(2) by the
time of his or her death, the Participant's
designated Beneficiary must elect the method
of distribution no later than the earlier of
(1) December 31 of the calendar year in
which distributions would be required to
begin under this section, or (2) December 31
of the calendar year in which contains the
fifth anniversary of the date of death of
the Participant. If the Participant has no
designated Beneficiary, or if the
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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.
(3) Surviving Spouse's Death. For purposes of Section
(E)(2) above, if the surviving Spouse dies after the
Participant, but before payments to such Spouse
begin, the provisions of Section (E)(2) with the
exception of paragraph (b) therein, shall be applied
as if the surviving Spouse were the Participant.
(4) Minor Beneficiary. For purposes of this Section (E),
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.
(5) Distribution Considered to Begin on Required
Beginning Date. For the purposes of this Section (E),
distribution of a Participant's interest is
considered to begin on the Participant's required
beginning date (or, if Section (E)(3) above is
applicable, the date distribution is required to
begin to the surviving Spouse pursuant to Section
(E)(2) above). 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 is the date
distribution actually commences.
(F) Definitions.
(1) Applicable life expectancy: 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. The applicable
calendar year shall be the first distribution
calendar year, and if life expectancy is being
recalculated such succeeding calendar year.
(2) Designated Beneficiary: The individual who is
designated as the Beneficiary under the Plan in
accordance with Section 401(a)(9) and the proposed
regulations thereunder.
(3) Distribution calendar year: A calendar year for which
a minimum distribution is required. For distributions
beginning before the Participant's death, the first
distribution calendar year is 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 is the
calendar year in which distributions are required to
begin pursuant to Section (E) above.
(4) Life expectancy: Life expectancy and joint and last
survivor expectancy are computed by use of the
expected return multiples in Tables V and VI of
Section 1.72-9 of the Income Tax Regulations.
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<PAGE>
Unless otherwise elected by the Participant (or
Spouse, in the case of distributions described in
Section (E)(2)(b) above) 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 non-spouse Beneficiary may not be
recalculated.
(5) Participant's benefit:
(a) The account balance 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 balance as of dates
in the valuation calendar year after the
valuation date and decreased by
distributions made in the valuation calendar
year after the valuation date.
(b) Exception for second distribution calendar
year. For purposes of paragraph (a) above,
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.
(6) Required beginning date:
(a) General rule. The required beginning date of
a Participant is the first day of April of
the calendar year following the calendar
year in which the Participant attains age
70-1/2.
(b) Transitional rules. The required beginning
date of a Participant who attains age 70-1/2
before January 1, 1988, shall be determined
in accordance with (1) or (2) below:
(i) Non-5-percent owners. The required
beginning date of a Participant who
is not a 5-percent owner is the
first day of April of the calendar
year following the calendar year in
which the later of retirement or
attainment of age 70-1/2 occurs.
(ii) 5-percent owners. The required
beginning date of a Participant who
is a 5-percent owner during any year
beginning after December 31, 1979,
is the first day of April following
the later of:
(a) the calendar year in which
the participant attains 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-percent
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owner, or the
calendar year in which the
Participant retires.
The required beginning date of a Participant
who is not a 5-percent owner who attains age
70-1/2 during 1988 and who has not retired
as of January 1, 1989, is April 1, 1990.
(c) 5-percent owner. A Participant is treated as
a 5-percent owner for purposes of this
Section if such Participant is a 5-percent
owner as defined in Section 416(i) of the
Code (determined in accordance with 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 owner attains age 66-1/2 or
any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent
owner under this Section, they must continue
to be distributed, even if the Participant
ceases to be a 5-percent owner in a
subsequent year.
(G) Transitional Rule.
(1) Distributions to 5-percent Owners. Notwithstanding
the other requirements of this Section 7.6 and
subject to the requirements of Section 7.10, Joint
and Survivor Annuity Requirements, distributions on
behalf of any Employee, including a 5-percent owner,
may be made in accordance with all of the following
requirements (regardless of when such distribution
commences):
(a) The distribution by the plan is one which
would not have disqualified such plan under
Section 401(a)(9) of the Internal Revenue
Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a
method of distribution designated by the
Employee whose interest in the plan is being
distributed or, if the Employee is deceased,
by a Beneficiary of such Employee.
(c) Such designation was in writing, was signed
by the Employee or the Beneficiary, and was
made before January 1, 1984.
(d) The Employee had accrued a benefit under the
Plans of December 31, 1983.
(e) The method of distribution designated by the
Employee or the Beneficiary specifies the
time at which distribution will commence,
the period over which distributions will be
made, and in the case of any distribution
upon the Employee's death, the Beneficiaries
of the Employee listed in order of priority.
(2) Distribution on Death. A distribution upon death will
not be covered by this transitional rule unless the
information in the designation contains the required
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information described above with respect to the
distributions to be made upon the death of the
Employee.
(3) Designation of Distribution Method. For any
distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee,
or the Beneficiary, to whom such distribution is
being made, will be presumed to have designated the
method of distribution under which the distribution
is being made if the method of distribution was
specified in writing and the distribution satisfies
the requirements in subsections (G)(1)(a) and (e).
(4) Revocation of Designations. If a designation is
revoked any subsequent distribution must satisfy the
requirements of Section 401(a)(9) of the Code and the
regulations thereunder. 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 Section 401(a)(9) of the
Code and the regulations thereunder, but for the
Section 242(b)(2) 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 Income
Tax Regulations. Any changes in the designation will
be considered to be a revocation of the designation.
However, the mere substitution or addition of another
Beneficiary (one not named in the designation) under
the designation will not be considered to be a
revocation of the designation, so long as such
substitution or addition does not alter the period
over which distributions are to be made under the
designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in
which 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 shall apply.
7.7 Designation of Beneficiary.
(A) Default Beneficiary. In the case of a Participant who is
married, the Participant's Beneficiary shall be the
Participant's Spouse, but if the Participant's Spouse consents
as provided in this Section 7.7, or if the Participant is not
married, then the Participant shall have the right to
designate that after such Participant's death such
Participant's accounts shall be distributed to a designated
Beneficiary or Beneficiaries.
(B) Spousal Consent. Any consent of a Spouse given pursuant
to this Section must be in writing and given prior to the
death of the Participant. Such consent must acknowledge
the effect of the Participant's Beneficiary designation, the
identity of any non-Spouse Beneficiary, including any class of
Beneficiaries and contingent Beneficiaries, and the consent
must be witnessed by a Plan representative or a Notary
Public. The Participant may not subsequently change the
designation of his or her Beneficiary unless his Spouse
consents to the new designation in accordance with the
requirements set forth in the preceding sentence. The consent
of a Participant's Spouse shall not be required if the
Participant establishes to the satisfaction of the Committee
that consent may not be obtained because there is no Spouse,
the Spouse cannot be located or because of such other
circumstances as the Secretary of the Treasury may prescribe
by regulations. A Spouse's
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<PAGE>
consent shall be irrevocable.
Any consent by a Spouse, or establishment that the consent
of the Spouse may not be obtained, shall be effective only
with respect to that Spouse.
(C) Changing Beneficiaries. Subject to Subparagraphs (A) and (B)
above, the Participant's designation of Beneficiary may be
made, changed or revoked by the Participant at any time by a
written instrument, in form satisfactory to the Committee,
and shall become effective only when executed by such
Participant (and, if applicable, consented to by the
Participant's Spouse as set forth in Section 7.7(B)) and filed
with the Committee prior to such Participant's death.
If all of the Beneficiaries named in such designation shall
have predeceased such Participant, or die prior to complete
distribution of the Participant's accounts, or if such
Participant fails to execute and file a designation and is not
survived by a Spouse the payment of such Participant's
accounts shall be made pursuant to the Plan and to such
Beneficiaries as required by state law. Neither the Employer,
the Committee, nor the Trustee, shall have any duty to see
that such Participant, any Spouse or any Beneficiary
executes and files any such designation with the Committee.
7.8 Optional Forms of Benefit. The optional forms of benefit provided by
this Plan are not subject to Employer discretion and are made available
to all Participants on a nondiscriminatory basis. The optional forms of
benefit are described in Articles III and VII, as may be selected in
the Adoption Agreement. If selected in Item B(13) of the Adoption
Agreement, the Employer may attach to the Plan a list of the Section
"411(d)(6) protected benefits" that must be preserved from a
individually designed Plan or other prototype Plan which this Plan
amends.
7.9 Distribution Upon Disability. In the event of the Disability of the
Participant, the Trustee, following receipt of notification of such
Disability from the Committee, shall make distributions from the
Account.
7.10 Joint and Survivor Annuity Requirements.
(A) Application. The provisions of this Section 7.10 shall apply
to any Participant who is credited with at least one Hour of
Service with the Employer on or after August 23, 1984, and
such other Participants as provided in Section 7.10(G).
(B) Qualified Joint and Survivor Annuity. Unless an optional form
of benefit is selected pursuant to a Qualified Election within
the ninety-day period ending on the Annuity Starting Date, a
married Participant's Vested Account Balance will be paid in
the form of a Qualified Joint and Survivor Annuity and an
unmarried Participant's Vested Account Balance will be paid in
the form of a life annuity. The Participant may elect to have
such annuity distributed upon attainment of the Earliest
Retirement Age under the Plan.
(C) Qualified Pre-Retirement Survivor Annuity. Unless an optional
form of benefit has been selected within the election period
pursuant to a Qualified Election, if a Participant dies before
the Annuity Starting Date then the Participant's Vested
Account Balance shall be applied toward the purchase of an
annuity for the life of the surviving Spouse. The surviving
Spouse may elect to have such annuity distributed within a
reasonable period after the Participant's death.
(D) Definitions.
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(1) Election period: The period which begins on the first
day of the Plan Year in which the Participant attains
age 35 and ends on the date of the Participant's
death. If a Participant separates from service prior
to the first day of the Plan Year in which age 35 is
attained, with respect to the account balance as of
the date of separation, the election period shall
begin on the date of separation.
Pre-age 35 waiver: A Participant who will not yet
attain age 35 as of the end of any 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 attain 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 7.10(E).
Qualified Preretirement Survivor Annuity coverage
will be automatically reinstated as of the first day
of the Plan Year in which the Participant attains age
35. Any new waiver on or after such date shall be
subject to the full requirements of this Section
7.10.
(2) Earliest retirement age: The earliest date on which,
under the Plan, the Participant could elect to
receive retirement benefits.
(3) Qualified Election: A waiver of a Qualified Joint and
Survivor Annuity or a Qualified Preretirement
Survivor Annuity. Any waiver of a Qualified Joint and
Survivor Annuity or a Qualified Preretirement
Survivor Annuity shall not be effective unless: (a)
the Participant's Spouse consents in writing to the
election; (b) the election designates a specific
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.
Additionally, a Participant's waiver of the Qualified
Joint and Survivor Annuity shall not be effective
unless the election designates a form of benefit
payment which may not be changed without spousal
consent (or the spouse expressly permits designations
by the Participant without any further spousal
consent). If it is established to the satisfaction of
a Plan representative that there is no Spouse or that
the Spouse cannot be located, a waiver will be deemed
a Qualified Election.
Any consent by a Spouse obtained under this provision
(or establishment that the consent of a Spouse may
not be obtained) shall be effective only with respect
to such Spouse. A consent that permits designations
by the Participant without any requirement of further
consent by such Spouse must acknowledge that the
Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where
applicable, and that the Spouse voluntarily elects to
relinquish either or both of such rights. 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 benefits. The number
of revocations shall not be limited. No consent
obtained under this provision shall be valid unless
the Participant has received notice as provided in
Paragraph (E) below.
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<PAGE>
(4) Qualified Joint and Survivor Annuity: An immediate
annuity for the life of the Participant with a
survivor annuity for the life of the Spouse which is
not less than 50 percent and not more than 100
percent of the amount of the annuity which is payable
during the joint lives of the Participant and the
Spouse and which is the amount of benefit which can
be purchased with the Participant's vested account
balance. The percentage of the survivor annuity under
the Plan shall be 50%.
(5) Spouse (surviving spouse): the Spouse or surviving
Spouse of the Participant, provided that a former
Spouse will be treated as the Spouse or surviving
Spouse and the current Spouse will not be treated as
the Spouse or surviving Spouse to the extent provided
under a qualified domestic relations order as
described in Section 414(p) of the Code.
(6) Annuity Starting Date: The first day of the first
period for which an amount is payable as an
annuity or any other form.
(7) Vested Account Balance: The aggregate value of the
Participant's vested account balances derived from
Employer and Employee contributions (including
rollovers), whether vested before or upon death. The
provisions of this Section 7.10 shall apply to a
Participant who is vested in amounts attributable to
Employer contributions, Employee contributions (or
both) at the time of death or distribution.
(E) Notice Requirements.
(1) Qualified Joint and Survivor Annuity. In the case of
a Qualified Joint and Survivor Annuity as described
in Section 7.10(B), the Committee shall no less than
30 days and no more than 90 days prior to the Annuity
Starting Date provide each Participant a written
explanation of: (i) the terms and conditions of a
Qualified Joint and Survivor Annuity; (ii) the
Participant's right to make and the effect of an
election to waive the Qualified Joint and Survivor
Annuity form of benefit; (iii) the rights of a
Participant's Spouse; and (iv) the right to make, and
the effect of, a revocation of a previous election to
waive the Qualified Joint and Survivor Annuity.
(2) Qualified Pre-Retirement Survivor Annuity. In the
case of a Qualified Pre-Retirement Survivor Annuity
as described in Section 7.10(C), the Committee shall
provide each Participant within the applicable period
for such Participant a written explanation of the
Qualified Pre-Retirement Survivor Annuity in such
terms and in such manner as would be comparable to
the explanation provided for meeting the requirements
of Section 7.10(E) applicable to a Qualified Joint
and Survivor Annuity.
The applicable period for a Participant is whichever
of the following periods ends last: (i) the period
beginning with the first day of the Plan Year
preceding the Plan Year in which the Participant
attains age thirty-two (32) and ending with the close
of the Plan Year in which the Participant attains age
thirty-five (35); (ii) a reasonable period ending
after the individual becomes a Participant; (iii) a
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reasonable period ending after Section 7.10(E)(3)
ceases to apply to the Participant; and (iv) a
reasonable period ending after Section 7.10 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
from service before attaining age thirty-five (35).
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events
described in (ii), (iii) and (iv) is the end of the
two-year period beginning one year prior to the date
the applicable event occurs, and ending one year
after that date. In the case of a Participant who
separates from service before the Plan Year in which
age 35 is attained, notice shall be provided within
the two-year period beginning one-year prior to
separation and ending one year after separation. If
such a Participant thereafter returns to employment
with the Employer, the applicable period for such
participant shall be redetermined.
(3) Subsidized Annuity Distributions. Notwithstanding the
other requirements of this Section 7.10(E), the
respective notices prescribed by this Section 7.10(E)
need not be given to a Participant if (1) the Plan
"fully subsidizes" the cost of a Qualified Joint and
Survivor Annuity or Qualified Pre-Retirement Survivor
Annuity, and (2) the Plan does not allow the
Participant to waive the Qualified Joint and Survivor
Annuity or Qualified Preretirement Survivor Annuity
and does not allow a married Participant to designate
a non-Spouse Beneficiary. For purposes of this
Section 7.10(E), a Plan fully subsidizes the cost of
a benefit if no increase in cost, or decrease in
benefits to the Participant may result from the
Participant's failure to elect another benefit.
(F) Safe harbor rules.
(1) Application. This Section shall apply to a
Participant in a profit-sharing Plan, and 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 Section 72(o)(5)(B) of the Code, and
maintained on behalf of a Participant in a money
purchase pension Plan, (including a target benefit
Plan) if the following conditions are satisfied: (1)
the Participant does not or cannot elect payments in
the form of a life annuity, and (2) on the death of
the Participant, the Participant's vested account
balance will be paid to the Participant's surviving
Spouse, but if there is no surviving Spouse or, if
the surviving Spouse has already consented in a
manner conforming to a Qualified Election, then to
the Participant's designated Beneficiary. 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 account balance shall be adjusted for gains or
losses occurring after the Participant's death in
accordance with the provisions of the Plan governing
the adjustment of account balances for other types of
distributions. This Section 7.10(F) shall not be
operative with respect to a Participant in a
profit-sharing Plan if the Plan is a direct or
indirect transferee of a defined benefit Plan, money
purchase Plan, a target benefit Plan, stock bonus, or
profit-sharing Plan which is subject to the survivor
annuity requirements of Section 401(a)(11) and
Section 417 of the Code. If this
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Section 7.10(F) is
operative, then the provisions of this Section 7.10,
other than in Section 7.10(G), shall be inoperative.
(2) Waiver. The Participant may waive the spousal death
benefit described in this section at any time
provided that no such waiver shall be effective
unless it satisfies the conditions of Section
7.10(D)(3) (other than the notification requirement
referred to therein) that would apply to the
Participant's waiver of the Qualified Preretirement
Survivor Annuity.
(3) Vested Account Balance. For purposes of this Section
7.10(F), vested account balance shall mean, in the
case of a money purchase pension Plan or a target
benefit Plan, the Participant's separate account
balance attributable solely to accumulated deductible
employee contributions within the meaning of Section
72(o)(5) (B) of the Code. In the case of a
profit-sharing Plan, vested account balance shall
have the same meaning as provided in Section
7.10(D)(7).
(G) Transitional Rules.
(1) 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 7.10 must be given the opportunity to elect
to have the prior sections of this Section 7.10 apply
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 such Participant had at least ten (10) years of
vesting service when he or she separated from
service.
(2) Any living Participant not receiving benefits on
August 23, 1984 who was credited with at least one
Hour of Service under this Plan or 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 7.10(G)(4).
(3) The respective opportunities to elect (as described
in Section 7.10(G)(1) and (2) 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 these
Participants.
(4) Any Participant who has elected pursuant to Section
7.10(G)(2) and any Participant who does not elect
under Section 7.10(G)(1) or who meets the
requirements of Section 7.10(G)(1) except that such
Participant does not have at least ten (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
of benefits would have been payable in the form of a
life annuity:
a) Automatic joint and survivor annuity. If
benefits in the form of a life annuity
become payable to a married participant who:
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(i) begins to receive payments under the
Plan on or after Normal Retirement
Date; or
(ii) dies on or after Normal Retirement
Date 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 Date (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 will 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 election
hereunder will be in writing and may be
changed by the Participant at any time.
b) Election of early survivor annuity. A
Participant who is employed after attaining
the Qualified Early Retirement Age will
be given the opportunity to elect, during
the election period, to have a survivor
annuity payable on death. 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 his or her death. Any election
under this provision will be in writing
and may be changed by the Participant at
any time. The election period begins on
the later of (1) the 90th day before the
Participant attains the Qualified Early
Retirement Age, or (2) the date on which
participation begins, and ends on the date
the Participant terminates employment.
c) For purposes of this Section 7.10(G)(4):
(i) Qualified Early Retirement Age is
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 Date, or (iii) the
date the Participant begins
participation.
(ii) Qualified Joint and Survivor Annuity
is an annuity for the life of the
participant with a survivor annuity
for the life of the Spouse as
described in Section 7.10(D)(4).
(H) Nontransferability. Any annuity distributed from the Plan
must be nontransferable.
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(I) Incorporation of Terms. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or
Spouse shall comply with the requirements of this Plan.
7.11 Distributions to Qualified Plans. In the event a former Employee whose
accounts have not been fully distributed becomes an active participant
in a Plan qualified under Section 401(a) of the Code, the Committee may
direct the Trustee to transfer the amount in such Participant's
account(s) to any such Plan provided the Plan to receive such transfers
authorizes accepting the transfer, provides that assets transferred
shall be held in a separate account and requires that the assets
transferred shall not be subject to any forfeiture provisions.
7.12 Profit Sharing Plans and 401(k) Profit Sharing Plans Only - Withdrawal
of Employer Contributions. Subject to the provisions of the Plan, in
accordance with rules for giving notice as determined by the Committee,
and as elected in the Adoption Agreement, a Participant may withdraw as
of the first Accounting Date subsequent to receipt by the Committee of
such notice:
(A) An amount equal to not more than 100% of the Participant's
Employer Contribution Account determined as of such Accounting
Date. No Participant who has made any withdrawal of Employer
Contributions in the twelve (12) months preceding the giving
of such notice may make a withdrawal under this Section.
(B) Notwithstanding anything to the contrary in this Section 7.12,
any withdrawal made pursuant to Section 7.12(A) shall be for a
minimum whole dollar amount not less than Five Hundred Dollars
($500.00); except that if the amount available for withdrawal
is less than Five Hundred Dollars ($500.00) then the minimum
amount of the withdrawal shall be the amount available.
(C) No forfeitures will occur solely as a result of an Employee's
withdrawal of Employer Contributions.
(D) Notwithstanding anything to the contrary in this Section 7.12,
a Participant may not make a withdrawal, pursuant to this
Section of any portion of the Participant's vested interest
which has been assigned to secure repayment of a loan in
accordance with Section 10.10, below, until such time as the
Committee shall have released said portion so assigned.
7.13. Prohibition Against Alienation.
(A) Except as provided in Sections 401(a)(13) and 414(p) of the
Code, no benefit or interest available under this Plan will be
subject to assignment or alienation, either voluntarily or
involuntarily.
(B) The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable
with respect to a Participant pursuant to a domestic relations
order, unless the Committee determines that such order is a
qualified domestic relations order, as defined in Section
414(p) of the Code, or any domestic relations order entered
before January 1, 1985.
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(C) All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights
afforded to any "alternate payee" under a "qualified domestic
relations order." Furthermore, an immediate distribution to
an "alternate payee" shall be permitted if such distribution
is authorized by a "qualified domestic relations order,"
even if the affected Participant has not reached the "earliest
retirement age" under the Plan, provided that in no event
will any such distribution accelerate the repayment of any
loan made to the affected Participant under the Plan, unless
such Participant consents thereto in writing. For purposes of
this Section 7.13, "alternate payee," "qualified domestic
relations order" and "earliest retirement age" shall have the
meaning set forth under Code Section 414(p), unless a
Qualified Distribution Date has been selected in the
Adoption Agreement, in which case the earliest retirement
age shall be the date on which the domestic relations order is
determined to be qualified.
7.14 Missing Participant or Beneficiary. Each Participant and/or each
Beneficiary must file with the Committee from time to time in writing
his or her post office address and each change of post office address.
Any communication, statement or notice addressed to a Participant
and/or Beneficiary at such last post office address filed with the
Committee or if no address is filed with the Committee then at the last
post office address as shown on the Employer's records, will be binding
on the Participant and/or Beneficiary for all purposes of the Plan.
Neither the Committee nor the Trustee shall be required to search for
or locate a Participant or Beneficiary.
Any other provision of the Plan to the contrary notwithstanding, if any
application for a benefit has not been filed by a Participant otherwise
eligible therefor within ninety (90) days after the Plan Year in which
occurred his or her termination date, the Committee shall mail to such
Participant and/or Beneficiary at his or her last known address an
application for benefit and a reminder that he or she is eligible for
such benefit. If such application is not filed with the Committee in
accordance with the provisions of the Plan within ninety (90) days
after it is so mailed to such Participant or his or her termination
date, whichever is later, the benefit shall be forfeited and shall be
used to reduce future Employer Contributions as though the Participant
were not vested in his or her accounts as of the end of said ninety
(90) day period. Upon the subsequent filing of an application therefor
by the Participant and/or his Beneficiary, such accounts shall be
immediately reinstated pursuant to this provision as though the
Participant were 100% vested in his or her accounts in an amount equal
to the cash value of the accounts on the date forfeited. To the extent
forfeited amounts are not available, the Employer shall contribute the
amount required to reinstate the Participant's account balance.
7.15 Limitation on Certain Distributions. Notwithstanding anything contained
herein to the contrary, the Trustee may, in its discretion, delay
satisfying requests for distributions for up to one year where
distributions require amounts to be withdrawn from the Guaranteed
Investment Contract Fund; provided, however, that in no event shall the
Trustee delay distributions to a Participant beyond the legally
required time for distribution as set forth in Section 7.5.
7.16 Form of Distributions and Withdrawals. The Trustee shall make all
distributions and withdrawals under the Plan, including Hardship
withdrawals, other withdrawals while the Participant is still employed,
and distributions upon retirement, disability, death and separation
from service, pro rata, from all accounts and Investment Funds, as
follows:
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(A) In a Plan with no Employer Stock Fund, all withdrawals and
distributions under the Plan shall be made in cash.
(B) In a Plan with an Employer Stock Fund:
(1) Withdrawals and distributions under the Plan from
the other Investment Fund(s) shall be made in cash.
(2) Withdrawals and distributions under the Plan from the
Employer Stock Fund may be made in cash or in full
shares of Employer Stock, with any fractional share
paid in cash, as elected by the Participant. For the
cash portion of any distribution or withdrawal, the
Participant will receive the cash proceeds from the
sale of shares of Employer Stock as of the sale date.
ARTICLE VIII
DIRECT ROLLOVERS
8.1 General. This Article 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 Article, 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.
8.2 Definitions.
(A) 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 section 401(a)
(9) of the Code; and the portion of any distribution that is
not includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to
employer securities).
(B) 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.
(C) 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
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relations order, as defined in section
414(p) of the Code, are distributees with regard to the
interest of the Spouse or former Spouse.
(D) Direct Rollover: A direct rollover is a payment by the Plan to
the eligible retirement Plan specified by the distributee.
(E) Waiver of Notice. 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: (1) the plan
administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular
distribution option), and (2) the Participant, after receiving
the notice, affirmatively elects a distribution.
ARTICLE IX
TOP-HEAVY PROVISIONS
9.1 Use of Top-Heavy Provisions. If the Plan becomes a Top-Heavy Plan in
any Plan Year after December 31, 1983, the provisions of this Article
IX will supersede any conflicting provision in the Plan or the Adoption
Agreement. The Committee has sole responsibility to make the
determination as to the top-heavy status of the Plan.
9.2 Top-Heavy Definitions.
(A) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the
determination period was an officer of the Employer if such
individual's annual Compensation exceeds 50% of the dollar
limitation under Section 415(b)(1)(A) of the Code, 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 100% of the dollar
limitation under Section 415(c)(1)(A) of the Code, a 5 per
cent owner of the Employer, or a 1 per cent owner of the
Employer who has an annual Compensation of more than $150,000.
Annual compensation means compensation as defined in Item B(4)
(a) of the Adoption Agreement, but including amounts
contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross
income under Section 125, Section 402(e)(3), Section
402(h)(1)(B) or Section 403(b) of the Code. The determination
period is the Plan Year containing the Determination Date and
the 4 preceding Plan Years.
The determination of who is Key Employee will made by the
Committee in accordance with Section 416(i)(1) of the Code and
the regulations thereunder.
(B) Top-Heavy Plan: This Plan, for any Plan Year beginning after
December 31, 1983, if any of the following conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds 60
percent and this Plan is not part of any Required
Aggregation Group or Permissive Aggregation Group of
plans.
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(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 percent.
(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 percent.
(C) Top-Heavy Ratio: For purposes of determining if the Plan is
a Top-Heavy Plan:
(1) If the Employer maintains one or more defined
contribution plans (including any Simplified employee
pension Plan) and the Employer has not maintained any
defined benefit Plan which during the 5-year period
ending on the Determination Date(s) has or has had
accrued benefits, 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 account balances of all Key
Employees as of the Determination Date(s) (including
any part of any account balance distributed in the
5-year period ending on the Determination Date(s)),
and the denominator of which is the sum of all
account balances (including any part of any account
balance distributed in the 5-year period ending on
the Determination Date(s), both computed in
accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and
denominator of the Top-Heavy Ratio are increased to
reflect any contribution not actually made as of the
Determination Date, but which is required to be taken
into account on that date under Section 416 of the
Code and the regulations thereunder.
(2) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee
Pension Plan) and the Employer maintains or has
maintained one or more defined benefit plans which
during the 5-year period ending on the Determination
Date(s) has or has had any accrued benefits, 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 aggregated defined contribution plan or
plans for all Key Employees determined in accordance
with (1) above, and the Present Value of accrued
benefits under the aggregated defined benefit plan or
plans for all Key Employees as of the Determination
Date(s), and the denominator of which is the sum of
the account balances under the aggregated defined
contribution plan or plans for all Participants,
determined in accordance with (1) above, and the
Present Value of accrued benefits under the defined
benefit plan or plans for all Participants as of the
Determination Date(s), all determined in accordance
with Section 416 of the Code and regulations
thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of
the Top-Heavy Ratio are increased for any
distribution of an accrued benefit made in the
five-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
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for the first and second Plan
years of a defined benefit Plan. The account balances
and accrued benefits of a Participant (a) who is not
a Key Employee but who was a Key Employee in a prior
year, or (b) who has not been credited with at least
one Hour of Service with any Employer maintaining the
Plan at any time during the five-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. Voluntary 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.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes
under all defined benefit plans maintained by the
Employer, or (b) 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 Section 411(b)(1)(C) of the Code.
(D) 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 Section
401(a)(4) and Section 410 of the Code.
(E) Required Aggregation Group: (1) Each qualified Plan of the
Employer in which at least one Key Employee participates or
participated at any time during the determination period
(regardless of whether the Plan has terminated), and (2) any
other qualified Plan of Employer which enables a Plan
described in (1) to meet the requirements of Section 401(a)(4)
or Section 410 of the Code.
(F) Determination Date: For purposes of determining if there is a
Key Employee and for calculating the Top-Heavy Ratio: 1) for
any Plan Year subsequent to the first Plan Year, the last day
of the preceding Plan Year, and 2) for the first Plan Year of
the Plan, the last day of that year.
(G) Valuation Date: The date specified in Item B(14)(c) of the
Adoption Agreement as of which account balances or accrued
benefits are valued for purposes of calculating the Top-Heavy
Ratio.
(H) Present Value: Present Value shall be based only on the
interest and mortality rates specified in the Adoption
Agreement.
9.3 Minimum Allocation.
(A) Except as otherwise provided in Section 9.3(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 per cent (3%) of such
Participant's Compensation or in the case where the Employer
has no defined benefit Plan which designates this Plan to
satisfy
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Section 401 of the Code, the largest percentage of
Employer contributions and forfeitures, as a percentage of the
Key Employee's Compensation, as limited by Section 401(a)(17)
of the Code, 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 for
the year because of (i) such Participants failure to complete
1,000 Hours of Service (or any other equivalent provided in
the Plan) or (ii) the Employee's failure to make mandatory
contributions or (iii) Compensation less than a stated
amount.
(B) For purposes of computing the minimum allocation, Compensation
shall mean Compensation as defined in Section 6.6(A) as
limited by Section 401(a)(17) of the Code.
(C) Section 9.3(A) shall not apply to any Participant who was not
employed by the Employer on the last day of the Plan Year.
(D) Section 9.3(A) shall not apply to any Participant to the
extent the Participant is covered under any other plan or
plans of the Employer and the Employer has provided in Item
B(14) of the Adoption Agreement that the minimum allocation or
benefit requirement applicable to Top-Heavy Plans will be met
in the other plan or plans.
(E) The minimum allocation required (to the extent required to be
nonforfeitable under Section 416(b) of the Code) may not be
forfeited under Section 411(a)(3)(B) or Section 411(a)(3)(D)
of the Code.
(F) For each Plan Year in which the Paired Plans are Top-Heavy,
the Top-Heavy requirements set forth in Article VIII of the
Plan and Item B(14) of the Adoption Agreement shall apply.
(G) Neither Before Tax Contributions nor Matching Contributions
may be taken into account for the purpose of satisfying the
minimum Top-Heavy contribution requirements.
9.4 Minimum Vesting Schedules. For any Plan Year in which this Plan is a
Top-Heavy Plan, the vesting schedule elected by the Employer in Item
B(14) and/or C(4)(d) of the Adoption Agreement will automatically apply
to the Plan. The minimum vesting schedule applies to all benefits
within the meaning of Section 411(a)(7) of the Code except those
attributable to Employee contributions, including benefits accrued
before the effective date of Section 416 and benefits accrued before
the Plan became a Top-Heavy Plan. Further, no decrease in a
Participant's nonforfeitable percentage may occur in the event the
Plan's status as a Top-Heavy Plan changes for any Plan Year. However,
this Section 9.4 does not apply to the account balance of any Employee
who does not have an Hour of Service after the Plan has initially
become a Top-Heavy Plan and such Employee's account balance
attributable to employer contributions and forfeitures will be
determined without regard to this Section 9.4.
ARTICLE X
TRUSTEE
10.1 Trustee. The Trustee shall receive, hold, invest, administer and
distribute the Trust Fund in accordance with the provisions of the Plan
as herein set forth.
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10.2 Records and Accounts of Trustee. The Trustee shall maintain accurate
and detailed records and accounts of all its transactions of the Trust
Fund, which shall be available at all reasonable times for inspection
or audit by any person designated by the Employer and by any other
person or entity to the extent required by law.
10.3 Reports to Employer. As soon as practicable following the close of each
accounting period and following the effective date of the termination
of the Plan, the Trustee shall file a written report with the Employer.
The report shall set forth all transactions with respect to the Trust
Fund during the period listing the Trust Fund assets with their market
value as of the close of the period covered by the report.
10.4 Powers of Trustee. The Trustee shall administer the Trust Fund as a
nondiscretionary Trustee, and the Trustee shall not have any discretion
or authority with regard to the investment of the Trust Fund and shall
act solely as a directed Trustee of the fund contributed to it. The
Trustee, as a nondiscretionary Trustee, as may be directed by the
Employer (or the Participants to the extent provided herein) is
authorized and empowered, by way of limitation, with the following
powers, rights and duties, each of which the Trustee shall exercise in
a nondiscretionary manner as directed in accordance with the direction
of the Employer (or the Participants) as a Named Fiduciary (except to
the extent that Plan assets are subject to the control and management
of a properly appointed Investment Manager):
(A) At the direction of the Named Fiduciary, to sell, write
options on, convey or transfer, invest and reinvest any part
thereof in each and every kind of property, whether real,
personal or mixed, tangible or intangible, whether income or
non-income producing and wherever situated, including, but not
limited to, time deposits (including time deposits in the
Trustee or its affiliates, or any successor thereto, if the
deposits bear a reasonable rate of interest), fee simple,
leasehold or lesser estates in real estate, shares of common
and preferred stock, mortgages, bonds, leases, notes,
debentures, equipment or collateral trust certificates,
rights, warrants, convertible or exchangeable, and other
corporate, individual or government securities or obligations,
annuity, retirement or other insurance contracts, mutual funds
(including funds for which the Trustee or its affiliates serve
as investment advisor), units of group or collective trusts
established to permit the pooling of funds of separate
pension and profit sharing trusts, provided the Internal
Revenue Service has ruled such group trust to be qualified
under Code Section 401(a) and exempt under Code Section
501(a) (or the applicable corresponding provision of any
other Revenue Act) or in units of any other common,
collective or commingled trust fund heretofore or
hereafter established and maintained by the Trustee or its
affiliates; as long as the Trustee holds any units hereunder,
the instrument establishing such common trust fund (including
all amendments thereto) shall be deemed to have been adopted
and made a part of this Plan, and such other investments as
the Named Fiduciary shall direct the Trustee to invest Plan
assets or hold as an Investment Fund for the investment
of Plan assets pursuant to Participant direction.
(B) At the direction of the Named Fiduciary, to sell, convert,
redeem, exchange, grant options for the purchase or exchange
of, or otherwise dispose of any property held hereunder, at
public or private sale, for cash or upon credit with or
without security, without obligation on the part of any person
dealing with the Trustee to see to the application of the
proceeds of or to inquire into the validity, expediency, or
propriety of any such disposal;
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(C) At the direction of the Named Fiduciary, to manage, operate,
repair, partition and improve and mortgage or lease (with or
without an option to purchase) for any length of time any
property held in the Trust Fund; to renew or extend any
mortgage or lease, upon such terms as the Trustee may deem
expedient; to agree to reduction of the rate of interest on
any mortgage; to agree to any modification in the terms of any
lease or mortgage, or of any guarantee pertaining to
either of them; to exercise and enforce any right of
foreclosure; to bid in property on foreclosure; to take a
deed in lieu of foreclosure with or without paying
consideration therefor and in connection therewith to release
the obligation on the bond secured by the mortgage; and to
exercise and enforce in any action, suit or proceeding at
law or in equity any rights, covenants, conditions, or
remedies with respect to any lease or mortgage or to any
guarantee pertaining to either of them or to waive any default
in the performance thereof;
(D) In accordance with the direction of a Named Fiduciary, to
vote, personally or by general or limited proxy, any shares of
stock or other securities held in the Trust Fund, provided
that all voting rights pertaining to shares of any financial
institution in the state where the Trustee is located shall be
exercised by the trustee only if and as directed in writing by
the Committee; provided further, that the Trustee and the
Employer may agree in writing that such voting rights be
passed through to the Participant's in proportion to their
interest in the Investment Funds, to delegate discretionary
voting power to the trustees of a voting trust for any period
of time; and to exercise or sell, personally or by power of
attorney, any conversion or subscription or other rights
appurtenant to any securities or other property held in the
Trust Fund;
(E) As may be directed by the Named Fiduciary, to join in or
oppose any reorganization, recapitalization, consolidation,
merger or liquidation, or any Plan therefor, or any lease
(with or without an option to purchase), mortgage or sale of
the property of any organization the securities of which are
held in the Trust Fund; to pay from the Trust Fund any
assessments, charges, or compensation specified in any Plan of
reorganization, recapitalization, consolidation, merger or
liquidation; to deposit any property with any committee or
depository; and to retain any property allotted to the Trust
Fund in any reorganization, recapitalization, consolidation,
merger or liquidation;
(F) In accordance with the written instructions of a Named
Fiduciary, to settle, compromise or commit to arbitration any
claim, debt or obligation of or against the Trust Fund; to
enforce or abstain from enforcing any right, claim, debt, or
obligation; and to abandon any property determined by it to be
worthless;
(G) As may be directed by the Named Fiduciary, to continue to hold
any property of the Trust Fund, whether or not productive of
income; to reserve from investment and keep unproductive of
income, without liability for interest, such cash as it deems
advisable and, consistent with its obligations as Trustee
hereunder, to hold such cash in a demand deposit in the
Trustee bank, its affiliates, or any successor thereto;
(H) To hold property of the Trust Fund in its own name, or in the
name of nominee, without disclosure of this trust, or in
bearer form so that it may pass by delivery, and to deposit
property with any depository, but no such holding or
depositing shall relieve the Trustee of
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its responsibility for
the safe custody and disposition of the Trust Fund in
accordance with the provisions of this agreement as may be
directed by the Named Fiduciary, and the Trustee's records
shall at all times show that such property is part of the
Trust Fund;
(I) As directed by the Named Fiduciary, to make, execute and
deliver, as Trustee, any deeds, conveyances, leases (with or
without option to purchase), mortgages, options, contracts,
waivers, or other instruments that the Trustee shall deem
necessary or desirable in the exercise of its powers under
this agreement;
(J) To employ, at the expense of the Employer or the Trust Fund,
agents and delegate to them such duties as the Trustee sees
fit; the Trustee shall not be responsible for any loss
occasioned by any such agents selected by it with reasonable
care; the Trustee may consult with legal counsel (who may be
counsel for the Employer) concerning any questions which may
arise with reference to its power or duties under this Plan,
and the written opinion of such counsel shall be full and
complete protection with respect to any action taken or not
taken by the Trustee in good faith and in accordance with the
written opinion of such counsel;
(K) To pay out of the Trust Fund any taxes imposed or levied with
respect to the Trust Fund and may contest the validity or
amount of any tax, assessment, penalty, claim or demand
respecting the Trust Fund; however, unless the Trustee shall
have first been indemnified to its satisfaction, it shall not
be required to contest the validity of any tax, or to
institute, maintain or defend against any other action or
proceeding either at law or in equity;
(L) To make loans to Participants in accordance with policies
established by the Committee and in accordance with the terms
of the Plan and the and to segregate or otherwise identify
property of the Trust Fund as directed by the Committee for
such purpose including providing collateral for loans made
pursuant to the Plan.
10.5 Trustee's Fees and Expenses. The Trustee shall be entitled to receive
reasonable fees for its services hereunder in accordance with its
schedule of fees then in effect and shall be entitled to receive
reimbursement for all reasonable expenses incurred by it in the
administration of this Plan. Except to the extent that the Employer
shall pay such fees and expenses, they shall be charged to and
collected by the Trustee from each Participant's accounts. The
Trustee's fees and expenses for extraordinary services in connection
with any Participant's accounts may be charged to and collected by the
Trustee from such accounts.
10.6 Trustee May Resign or Be Removed. The Trustee may resign by written
notice to the Employer which shall be effective sixty (60) days after
delivery unless the Trustee and the Employer agree to an earlier
effective date. The Trustee may be removed by the Employer by written
notice to the Trustee which shall be effective sixty (60) days after
delivery unless the Trustee and the Employer agree to an earlier
effective date. Prior to the effective date of such resignation or
removal, the Employer shall amend its Plan to eliminate any reference
to the PRISM(R) Prototype Retirement Plan and Trust, and appoint a new
trustee. The Trustee shall deliver the Trust Fund to its successor on
the effective date of resignation or removal, or as soon after such
effective date as practicable. However, the Trustee may first subtract
any amounts owed it from the Trust Fund for compensation, expenses and
taxes due.
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If the Employer fails to so amend the Plan and appoint a successor
trustee within the sixty (60) days, or longer period as the Trustee
permits in writing, the Trustee shall apply to a court of competent
jurisdiction for appointment of a successor trustee.
10.7 Separate Investment Funds.
(A) The assets of the Trust Fund shall be held in such number of
Investment Funds as the Employer and the Trustee may agree,
plus an Employer Stock Fund if selected bythe Employer in the
Adoption Agreement, as the Employer shall designate in writing
on the Investment Fund Designation form affixed to the
Adoption Agreement. Such Investment Funds shall be selected
by the Employer from among the funds offered by the Trustee
for use as Investment Funds in the PRISM(R)Prototype
Retirement Plan & Trust. The Trustee reserves the right to
change the funds available for use as Investment Funds in
the PRISM(R)Prototype Retirement Plan & Trust, from time to
time, and the Employer agrees to execute an amended Investment
Fund Designation form to reflect any such changes as may
impact the Investment Funds available to the Employer's Plan.
The Employer hereby acknowledges that, available as Investment
Funds are interests in registered investment companies (i.e.
mutual funds) for which the sponsoring organization, its
parent, affiliates or successors may serve as investment
advisor and receive compensation from the registered
investment company for its services as investment advisor.
The Employer acknowledges that it, as Named Fiduciary,
has the sole responsibility for selection of the Investment
Funds offered under the Plan, and it has done so on the
basis of the Employer's determination, after due inquiry,
of the appropriateness of the selected Investment Funds as
vehicles for the investment of Plan assets pursuant to the
terms of the Plan, considering all relevant facts and
circumstances, including but not limited to (i) the investment
policy and philosophy of the Employer developed pursuant to
ERISA Section 402(b)(1); (ii) the Participants, including
average level of investment experience and sophistication;
(iii) the ability of Participants, using an appropriate mix
of Investment Funds, to diversify the investment of Plan
assets held for their benefit; (iv) the ability of
Participants to, utilizing an appropriate mix of Investment
Funds, to structure an investment portfolio within their
account in the Plan with risk and return characteristics
within the normal range of risk and return characteristics
for individuals with similar investment backgrounds,
experience and expectations; and, (v) in making the selection
of Investment Funds, the Employer did not rely on any
representations or recommendations from the Trustee or any
of its employees, except as may have been provided through
written materials, including marketing materials provided
by the various sponsors or distributors of the Investment
Funds, and that the Investment Fund selection has not be
influenced, approved, or encouraged through the actions of the
Trustee or its employees.
For purposes of the Plan, "Employer Stock" shall mean common
stock listed on a recognized securities exchange issued by an
Employer of Employees covered by the Plan or by an affiliate
of such Employer and which shall be a "qualifying employer
security" as defined in ERISA. The Employer Stock Fund shall
be invested and reinvested in shares of Employer Stock, which
stock shall be purchased by the Trustee to the extent not
contributed to the Plan by the Employer, except for amounts
which may reasonably be expected to be necessary to satisfy
distributions to be made in cash. No Employer Stock shall be
acquired or held in any Investment Fund other than the
Employer Stock Fund. Up to 100% of the assets of the Trust
Fund may be invested in Employer Stock.
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All contributions shall be allocated by the Trustee to the
Plan's Investment Funds specified by the Employer. Dividends,
interest and other distributions shall be reinvested in the
same Investment Fund from which received.
Employers sponsoring 401(k) profit sharing plans may elect to
determine the Investment Funds, including an Employer Stock
Fund, if applicable, into which Matching Contributions and/or
Employer Contributions will be invested and/or into which
Participants may not direct contributions. By making these
designations, the Employer shall be deemed to have advised the
Trustee in writing regarding the retention of investment
powers.
Notwithstanding the foregoing provisions of this Section
10.7(A), the Trustee may, in its discretion, accept certain
investments which have been, and are, held as part of the
Trust Fund prior to the date the Employer adopted this Plan.
Such investments shall be considered investments directed by
the Employer or an Investment Committee for the Plan
("Investment Committee"), if one is acting. The Trustee shall
hold, administer and dispose of such investments in accordance
with directions to the Trustee contained in a written notice
from the Employer or Investment Committee. Any such notice
shall advise the Trustee regarding the retention of investment
powers by the Employer or the Investment Committee and shall
be of a continuing nature or otherwise, and may be revoked in
writing by the Employer or Investment Committee.
The Trustee shall not be liable but shall be fully protected
by reason of its taking or refraining from taking any action
at the direction of the Employer or Investment Committee, nor
shall the Trustee be liable but shall be fully protected by
reason of its refraining from taking any action because of the
failure of the Employer or the Investment Committee to give a
direction or order. The Trustee shall be under no duty to
question or make inquiry as to any direction, notification or
order or failure to give a direction, notification or order by
the Employer or the Investment Committee. The Trustee shall be
under no duty to make any review of investments directed by
the Employer or Investment Committee acquired for the Trust
Fund and under no duty at any time to make any recommendation
with respect to disposing of or continuing to retain any such
investments. While the Employer may direct the Trustee with
respect to Plan investments, the Employer may not (1) borrow
from the Fund or pledge any assets of the Fund as security for
a loan; (2) buy property or assets from or sell property or
assets to the Fund; (3) charge any fee for services rendered
to the Fund; or (4) receive any services from the Fund on a
preferential basis.
The Employer hereby indemnifies and holds the Trustee or its
nominee harmless from any and all actions, claims, demands,
liabilities, losses, damages or reasonable expenses of
whatsoever kind and nature in connection with or arising out
of (1) any action taken or omitted in good faith or any
investment or disbursement of any part of the Trust Fund made
by the Trustee in accordance with the directions of the
Employer or the Investment Committee or any inaction with
respect to any Employer or Investment Committee directed
investment or with respect to any investment previously made
at the direction of the Employer or Investment Committee in
the absence of directions from the Employer or Investment
Committee therefor, or (2) any failure by the Trustee to pay
for any property
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purchased by the Employer or the Investment
Committee for the Trust Fund by reason of the insufficiency of
funds in the Trust Fund.
Anything hereinabove to the contrary notwithstanding, the
Employer shall have no responsibility to the Trustee under the
foregoing indemnification if the Trustee knowingly
participated in or knowingly concealed any act or omission of
the Employer or Investment Committee knowing that such act or
omission constituted a breach of fiduciary responsibility, or
if the Trustee fails to perform any of the duties undertaken
by it under the provisions of this Plan, or if the Trustee
fails to act in conformity with the directions of an
authorized representative of the Employer or the Investment
Committee.
(B) Each Participant shall by such mechanism as may be agreed upon
between the Trustee and Employer, direct that the
contributions made to his or her accounts for which the
Participant may direct investments, as selected by the
Employer in the Adoption Agreement, be invested in one or more
of the Investment Funds, including the Employer Stock Fund, if
applicable. At the time an Employee becomes eligible for the
Plan, he or she shall specify the percentage of his or her
accounts (expressed in percentage increments as may be agreed
to between the Employer and the Trustee) to be invested
pro-rata in each such Investment Fund.
(C) Upon prior written notice to the Trustee, or other form of
notice acceptable to the Trustee, a Participant may change an
investment direction with respect to future contributions.
Through acceptable notice to the Trustee, the Participant may
elect to transfer all or a portion of such Participant's
interest in each Investment Fund (based on the value of such
interest on the Valuation Date immediately preceding such
election), including an Employer Stock Fund, if applicable, to
any other of the Investment Funds selected by the Employer so
that the Participant's interest in the said Investment Funds
immediately after the transfer is allocated in percentage
increments as may be agreed to by the Employer and the
Trustee.
Notwithstanding any Participant's election to change
Investment Funds, the Trustee may, in its discretion, delay
satisfaction of requests to change from a guaranteed
investment contract fund for up to one year, or delay
satisfaction of changes in Investment Funds pending settlement
of prior changes in Investment Funds.
(D) The Employer will be responsible when transmitting Employer
and Employee contributions to show the dollar amount to be
credited to each Investment Fund for each Employee.
(E) Except as otherwise provided in the Plan, neither the Trustee,
nor the Employer, nor any fiduciary of the Plan shall be
liable to the Participant or any of his or her beneficiaries
for any loss resulting from action taken at the direction of
the Participant.
(F) In a 401(k) profit sharing Plan where the Employer has elected
to invest a portion or all of the Matching Contributions
and/or Employer Contributions in the Employer Stock Fund, then
the following shall apply:
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If selected by the Employer in the Adoption Agreement, a
Participant who is fifty-five (55) years of age or older and
who is 100% vested in his Matching Contribution account and/or
Employer Contribution account may elect to have the Employer
Stock (and any earnings thereon) attributable to such Matching
Contributions and/or Employer Contributions diversified in the
other Investment Funds under the Plan in accordance with the
following rules and limitations. The amount of Employer Stock
which may be diversified each Plan Year shall be determined in
accordance with the following schedule:
==================================== =========================================
then the percent of the number of whole
shares (rounded to the nearest whole
number) credited to the Participants'
Matching Account and/or Employer
If the age attained by the Contribution Account on the last day of
Participant the preceding Plan Year which may be
during the Plan Year is: diversified pursuant to the rules below
may not exceed
==================================== =========================================
55 25%
==================================== =========================================
56 25%
==================================== =========================================
57 30%
==================================== =========================================
58 40%
==================================== =========================================
59 50%
==================================== =========================================
60 60%
==================================== =========================================
61 70%
==================================== =========================================
62 80%
==================================== =========================================
63 90%
==================================== =========================================
64 100%
==================================== =========================================
The election to diversify may only be made once each Plan
Year. The election may be made in any month by providing
notice to the Committee in accordance with the frequency
selected by the Employer for other Investment Fund changes
under the Plan. Each election to make a transfer pursuant to
this Section shall specify the Investment Fund(s) into which
the shares subject to diversification will be reinvested so
that the Participant's interest in the said Investment
Fund(s), immediately after the transfer, is allocated in
increments as may be allowed by the Trustee. Thereafter, the
Participant's interest in said Investment Fund(s) shall be
subject to transfer in accordance with this Section.
(G) Forfeitures arising under the Plan will be invested in an
Investment Fund as may be selected in the discretion of the
Employer.
(H) In the event the Trust holds life insurance, the following
restrictions shall apply:
(1) Limitations on Premium Payments
(a) If ordinary or whole life insurance
contracts are purchased on the life of a
Participant, less than one-half of the
insured Participant's current allocation
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of contributions will be used to pay
premiums attributable to such insurance.
Ordinary or whole life insurance contracts
are those with both nondecreasing benefits
and nonincreasing premiums.
(b) If term or universal life insurance
contracts are purchased, no more than
one-quarter of the insured Participant's
current allocation of contributions will be
used to pay premiums attributable to such
insurance.
(c) If a combination of ordinary or whole life
insurance contracts and term or universal
life insurance contracts are purchased, the
sum of one-half of the ordinary life
insurance premiums and all other life
insurance premiums will not exceed
one-fourth of the aggregate employer
contributions allocated to any participant.
(2) The Plan Administrator will direct the Trustee to
convert the entire value of any life insurance
contract at or before the Participant's actual
retirement or distribution on termination of
employment, but not later than the Participant's
Required Beginning Date to provide cash values or
retirement annuity income, or, subject to the Joint
and Survivor Annuity waiver requirements of Section
7.10, the Plan Administrator may direct the Trustee
to distribute the insurance contract directly to the
Participant.
(3) The Trustee, at the direction of the Employer shall
be entitled to exercise all rights and options with
respect to any such life insurance contracts held by
the Plan.
10.8 Registration, Distribution and Voting of Employer Stock and Procedures
Regarding Tender Offers.
(A) All voting rights on shares of Employer Stock held in the
Employer Stock Fund shall be exercised by the Trustee only as
directed by the Participants acting in their capacity as
"Named Fiduciaries" (as defined in Section 402 of the Act) in
accordance with the following provisions of this Section
10.8(A):
(1) As soon as practicable before each annual or special
shareholders' meeting of the Employer, the Trustee
shall furnish to each Participant sufficient copies
of the proxy solicitation material sent generally to
shareholders, together with a form requesting
confidential instructions on how the shares of
Employer Stock allocated to such Participant's
account, and, separately, such shares of Employer
Stock as may be unallocated ("Unallocated Shares") or
allocated to Participant accounts but for which the
Trustee does not receive timely voting instruction
from the Participant ("Non-Directed Shares"),
(including fractional shares to 1/1000th of a share)
are to be voted. The direction with respect to
Non-Directed Shares and Unallocated Shares shall
apply to such number of votes equal to the total
number of votes attributable to Non-Directed Shares
and Unallocated Shares multiplied by a fraction, the
numerator of which is the number of shares of
Employer Stock credited to the Participant's account
and the denominator of which is the total number of
shares credited to the accounts of all such
Participants who have timely provided directions to
the Trustee with respect to Non-Directed Shares and
Unallocated Shares under this Section 10.8(A)(1). The
Employer and the Committee will cooperate with the
Trustee to ensure that Participants receive the
requisite information in a timely manner. The
materials furnished to the
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Participants shall include
a notice from the Trustee that the Trustee will vote
any shares for which timely instructions are not
received by the Trustee as may be directed by those
voting Participants, acting in their capacity as
Named Fiduciaries of the Plan as provided above. Upon
timely receipt of such instructions, the Trustee
shall vote the shares as instructed. The instructions
received by the Trustee from Participants or
Beneficiaries shall be held by the Trustee in strict
confidence and shall not be divulged or released to
any person including directors, officers or employees
of the Employer, or of any other company, except as
otherwise required by law.
(2) With respect to all corporate matters submitted to
shareholders, all shares of Employer Stock shall be
voted only in accordance with the directions of such
Participants as Named Fiduciaries as given to the
Trustee as provided in Section 10.8(A)(1). With
respect to shares of Employer Stock allocated to the
account of a deceased Participant, such Participant's
Beneficiary, as Named Fiduciary, shall be entitled to
direct the voting of shares of Employer Sock as if
such Beneficiary were the Participant.
(B) All tender or exchange decisions with respect to Employer
Stock held in the Employer Stock Fund shall be made only by
the Participants acting in their capacity as Named Fiduciaries
with respect to the Employer Stock allocated to their accounts
in accordance with the following provisions of this Section
10.8(B):
(1) In the event an offer shall be received by the
Trustee (including a tender offer for shares of
Employer Stock subject to Section 14(d)(1) of the
Securities Exchange Act of 1934 or subject to Rule
13e-4 promulgated under that Act, as those provisions
may from time to time be amended) to purchase or
exchange any shares of Employer Stock held by the
Trust, the Trustee will advise each Participant who
has shares of Employer Stock credited to such
Participant's account in writing of the terms of the
offer as soon as practicable after its commencement
and will furnish each Participant with a form by
which he may instruct the Trustee confidentially
whether or not to tender or exchange shares allocated
to such Participant's account, and, separately,
Unallocated Shares and Non-Directed Shares (including
fractional shares to 1/1000th of a share). The
directions with respect to Non-Directed Shares and
Unallocated Shares shall apply to such number of
Non-Directed Shares and Unallocated Shares equal to
the total number of Non-Directed Shares and
Unallocated Shares multiplied by a fraction, the
numerator of which is the number of shares of
Employer Stock credited to the Participant's account
and the denominator of which is the total number of
shares credited to the accounts of all such
Participants who have timely provided directions to
the Trustee with respect to Non-Directed Shares and
Unallocated Shares under this Section 10.8(B). The
materials furnished to the Participants shall include
(i) a notice from the Trustee that, except as
provided in this Section 10.8(B), the Trustee will
not tender or exchange any shares for which timely
instructions are not received by the Trustee and (ii)
such related documents as are prepared by any person
and provided to the shareholders of the Employer
pursuant to the Securities Exchange Act of 1934. The
Committee and the Trustee may also provide
Participants with such other material concerning the
tender or exchange offer as the Trustee or the
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Committee in its discretion determines to be
appropriate; provided, however, that prior to any
distribution of materials by the Committee, the
Trustee shall be furnished with sufficient numbers of
complete copies of all such materials. The Employer
and the Committee will cooperate with the Trustee to
ensure that Participants receive the requisite
information in a timely manner.
(2) The Trustee shall tender or not tender shares or
exchange shares of Employer Stock (including
fractional shares to 1/1000th of a share) only as and
to the extent instructed by the Participants as Named
Fiduciaries as provided in Section 10.8(B)(1). With
respect to shares of Employer Stock allocated to the
account of a deceased Participant, such Participant's
Beneficiary, as a Named Fiduciary, shall be entitled
to direct the Trustee whether or not to tender or
exchange such shares as if such Beneficiary were the
Participant. If tender or exchange instructions for
shares of Employer Stock allocated to the account of
any Participant are not timely received by the
Trustee, the Trustee will treat the non-receipt as a
direction not to tender or exchange such shares. The
instructions received by the Trustee from
Participants or Beneficiaries shall be held by the
Trustee in strict confidence and shall not be
divulged or released to any person, including
directors, officers or employees of the Employer, or
of any other company, except as otherwise required by
law.
(3) In the event, under the terms of a tender offer or
otherwise, any shares of Employer Stock tendered for
sale, exchange or transfer pursuant to such offer may
be withdrawn from such offer, the Trustee shall
follow such instructions respecting the withdrawal of
such securities from such offer in the same manner
and the same proportion as shall be timely received
by the Trustee from the Participants, as Named
Fiduciaries, entitled under this Section 10.8(B) to
give instructions as to the sale, exchange or
transfer of securities pursuant to such offer.
(4) In the event an offer shall be received by the
Trustee and instructions shall be solicited from
Participants pursuant to Section 10.8(B)(1-3)
regarding such offer, and prior to termination of
such offer, another offer is received by the Trustee
for the securities subject to the first offer, the
Trustee shall use its best efforts under the
circumstances to solicit instructions from the
Participants to the Trustee (i) with respect to
securities tendered for sale, exchange or transfer
pursuant to the first offer, whether to withdraw such
tender, if possible, and, if withdrawn, whether to
tender any securities so withdrawn for sale, exchange
or transfer pursuant to the second offer and (ii)
with respect to securities not tendered for sale,
exchange or transfer pursuant to the first offer,
whether to tender or not to tender such securities
for sale, exchange or transfer pursuant to the second
offer. The Trustee shall follow all such instructions
received in a timely manner from Participants in the
same manner and in the same proportion as provided in
Section 10.8(B)(1-3). With respect to any further
offer for any Employer Stock received by the Trustee
and subject to any earlier offer (including
successive offers from one or more existing
offerors), the Trustee shall act in the same manner
as described above.
(5) A Participant's instructions to the Trustee to tender
or exchange shares of Employer Stock will not be
deemed a withdrawal or suspension from the Plan or a
forfeiture
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<PAGE>
of any portion of the Participant's
interest in the Plan. Funds received in exchange for
tendered shares will be credited to the account of
the Participant whose shares were tendered and will
be used by the Trustee to purchase Employer Stock, as
soon as practicable. In the interim, the Trustee will
invest such funds in short-term investments permitted
under the Plan, and in the same manner in which
forfeited amounts are invested.
(6) In the event the Employer initiates a tender or
exchange offer, the Trustee may, in its sole
discretion, enter into an agreement with the Employer
not to tender or exchange any shares of Employer
Stock in such offer, in which event, the foregoing
provisions of this Section 10.8(B) shall have no
effect with respect to such offer and the Trustee
shall not tender or exchange any shares of Employer
Stock in such offer.
(C) The Trustee acting with respect to the Employer Stock Fund may
with the consent of the Committee designate any Employee or
other Trustee as agent to solicit the instructions to vote
provided for in Subsection (A) of this Section, and shall be
held harmless in relying upon such agent's written advice as
to how shares are to be voted, and said Trustee may, with the
consent of the Committee, designate any Employee as agent to
solicit instructions from Participants regarding such a tender
offer, as required under Subsection (B) above, and shall be
held harmless in relying upon such agent's written advice as
to whether shares of Employer Stock are to be tendered.
(D) The Employer shall be responsible for complying with
applicable federal and state securities laws and regulations.
10.9 Valuation of Investment Funds and Accounts.
(A) As of each Valuation Date, the Trustee shall determine the
fair market value of each Investment Fund, including an
Employer Stock Fund, if any, being administered by the
Trustee. With respect to each such Investment Fund, the
Trustee shall determine (a) the change in value between the
current Valuation Date and the then last preceding Valuation
Date, (b) the net gain or loss resulting from expenses paid
(including fees and expenses, if any, which are to be charged
to such Fund) and (c) realized and unrealized gains and
losses.
The transfer of funds to or from an Investment Fund pursuant
to Section 10.7(C) and payments, distributions and withdrawals
from an Investment Fund to provide benefits under the Plan for
Participants or Beneficiaries shall not be deemed to be gains,
expenses or losses of an Investment Fund.
After each Valuation Date, the Trustee shall allocate the net
gain or loss of each Investment Fund as of such Valuation Date
to the accounts of Participants participating in such
Investment Fund on such Valuation Date. Contributions,
forfeitures and rollovers received and credited to
Participants' accounts as of such Valuation Date, or as of any
earlier date since the last preceding Valuation Date shall not
be considered in allocating gains or losses allocated to
Participants' accounts.
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(B) The reasonable and equitable decision of the Trustee as to the
value of each Investment Fund, including an Employer Stock
Fund, if any, and of any account as of each Valuation Date
shall be conclusive and binding upon all persons having any
interest, direct or indirect, in the Investment Funds or in
any account.
ARTICLE XI
ADMINISTRATION
11.1 Committee Membership. The Employer shall appoint a Committee which
shall consist of at least one member. The Committee members will be
named in the Adoption Agreement and may be, but are not required to be,
Employees of the Employer. All members of the Committee shall serve at
the pleasure of the Employer. In the event that the Committee has more
than one member, one member shall serve as Chairman and one as
Secretary. Any member of the Committee may resign by notice in writing
to the Employer. Any vacancy in the Committee shall be filled by the
Employer as soon as practicable after a vacancy. If the Employer does
not designate a Committee, the Employer shall assume all of the duties
of the Committee.
11.2 Powers and Duties of Committee. The Committee shall have all powers and
duties and only the powers and duties as are specifically conferred
upon it by this Plan or as the Employer may delegate to or impose upon
it consistent with the provisions of this Plan, ERISA and the Code.
Without limiting the generality of the foregoing, the Committee shall
have the following powers and duties:
(A) to interpret and construe the terms and provisions of this
Plan and to decide any questions which may arise hereunder,
including but not limited to --
(1) the amount of a Participant's Compensation,
(2) a Participant's Years of Service,
(3) the age of any person who might be entitled to
receive benefits,
(4) the right of any person to receive benefits,
(5) the amount of any benefits to be paid to any persons;
(B) to cause to be maintained all necessary records and accounts
under this Plan and to keep in convenient form any data as may
be necessary for valuation of the assets and liabilities;
(C) to rely upon the records of the Employer or upon any
certificate, statement or other representation made to it by a
Participant, a Beneficiary, the authorized representative of
the Participant or Beneficiary, or the Trustee concerning any
fact required to be determined under any of the provisions of
this Plan, and the Committee shall not be required to make
inquiry into the propriety of any action by the Employer or
the Trustee;
(D) to give written notice to a Participant, a Beneficiary, or the
authorized representative of the Participant or Beneficiary,
of the amount of benefits payable under this Plan;
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(E) to make and enforce any rules, not inconsistent with this
Plan, as it shall deem necessary or proper for the efficient
administration of this Plan;
(F) to have and exercise such other authority as it deems
necessary to carry out the purposes and provisions of this
Plan, provided that any act of discretion permitted shall be
exercised in a uniform non-discriminatory manner with respect
to individuals in like or similar circumstances;
(G) to adopt rules and guidelines for the administration of this
Plan, provided that they are not inconsistent with the terms
of this Plan and are uniformly applicable to all persons
similarly situated and to delegate in accordance with Section
11.8 such functions and duties as the Committee deems
advisable;
(H) to establish a funding policy and investment objectives
consistent with the purposes of the Plan and the requirements
of law;
(I) to employ such attorneys, accountants and agents as it shall
determine to assist it in carrying out its duties hereunder.
Except as otherwise provided in this Plan or determined by the
Employer, any action or determination taken or made by the Committee or
any interpretation or construction made by the Committee shall be final
and shall be binding upon all persons. The Committee shall at all times
exercise the power and authority given to it under this Plan in a fair,
reasonable and non-discriminatory manner.
11.3 Actions of the Committee. Any act authorized or required to be taken by
the Committee shall be taken by a decision of the majority of the
members acting at the time. Any decision of the Committee may be
expressed by a vote at a Committee meeting or in writing, signed by all
members of the Committee, without a meeting. All allocation statements,
notices, directions, approvals, instructions and all other
communications required or authorized to be given by the Committee
under this Plan shall be in writing and signed by a majority of the
members of the Committee. The Committee may, however, by an instrument
in writing signed by all the members and filed with the Trustee,
designate one or more if its members as having the authority to sign
all such communications on behalf of the Committee. Until notified in
writing to the contrary, the Trustee shall be fully protected in acting
in accordance with all communications which it considers genuine and to
have been signed on behalf of the Committee by the members authorized
to sign communications. If at any time for any reason the Committee
shall be unable to act with respect to any matter, the Employer shall
act with respect to that matter and its action shall be final and it
shall be binding upon all persons.
11.4 Resignation, Removal and Designation of Successors. Any member of the
Committee may resign at any time and any member may be removed by the
Employer with or without cause. In case of resignation, death, removal
or inability or failure for any cause of any member of the Committee to
serve or to continue to serve, a successor shall be appointed by the
Employer. The Committee shall promptly notify the Trustee of any change
in its membership.
11.5 Committee Review. If any Participant, Spouse, Beneficiary, or other
authorized representative of a Participant, Spouse or Beneficiary shall
file an application with the Committee for benefits under
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the Plan and
the application is denied, in whole or in part, such applicant shall be
notified of the denial in writing within ninety (90) days of receipt of
the claim. The notice to the applicant shall state that the Committee
has denied the application pursuant to the exercise of its
discretionary powers. This notice shall set forth the specific reasons
for the denial, specific reference to pertinent Plan provisions upon
which the denial is based, a description of any additional information
needed to perfect the claim with an explanation of why it is necessary
and an explanation of procedure for appeal.
Any Participant, Spouse, Beneficiary, or other authorized
representative of the Participant, Spouse or Beneficiary whose
application for benefits has been denied may, within sixty (60) days
after receiving the notification, make a written application to the
Committee to review the denial. The applicant may request that the
review be made by written statements submitted by the applicant and the
Committee, at a hearing, or by both. Any hearing shall be held in the
main offices of the Employer on a date and time as the Employer shall
designate with at least seven (7) days notice to the applicant unless
the applicant accepts shorter notice. Within sixty (60) days after the
review has been completed, the Employer shall render a written decision
and shall send a copy to the applicant. This decision shall include
specific reasons for the decision, as well as specific references to
the pertinent Plan provisions upon which the decision is based.
If the Participant, Spouse, Beneficiary, or other authorized
representative of a Participant, Spouse or Beneficiary does not file
written notice with the Employer at the times set forth above, the
individual shall have waived all benefits under this Plan other than as
set forth in the notice from the Committee.
11.6 Records. The Committee shall keep or cause to be kept records of all
meetings, proceedings and actions held, undertaken or performed by it
and shall furnish to the Employer reports as the Employer may request.
11.7 Compensation. The members of the Committee shall serve without
compensation for services as such, but all reasonably incurred fees and
expenses shall be paid by the Employer.
11.8 Designation of Named Fiduciaries and Allocation of Responsibility Among
Fiduciaries. The Employer, the Committee and the Trustee shall be
"Named Fiduciaries" with respect to this Plan as that term is defined
in ERISA. The Named Fiduciaries shall have only those specific powers,
duties, responsibilities and obligations as are given to them under
this Plan. The Named Fiduciaries may designate any person or persons as
a fiduciary and may delegate to such person or persons any one or more
of their powers, functions, duties and responsibilities with respect to
the Plan as set forth in this Plan, authorizing or providing for such
direction, information or action. Any such designation shall be made in
writing and shall become effective upon written acceptance. No such
designation or delegation by the Employer or the Committee of any of
its powers, authority or responsibilities to the Trustee shall become
effective unless such designation or delegation shall first be accepted
by the Trustee in a writing signed by it and delivered to the Employer
or the Committee, as applicable. Furthermore, each Named Fiduciary may
rely upon any such direction, information or action of another Named
Fiduciary as being proper under this Plan and is not required to
inquire into the propriety of any such direction, information or
action. It is intended that under this Plan each Named Fiduciary shall
be responsible for the proper exercise of its own powers, duties,
responsibilities and obligations and shall not be responsible for act
or failure to act of another fiduciary.
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11.9 Notice by Committee or Employer. Any communication or notice to any
person by the Committee or the Employer shall be in writing and may be
given by delivery to the person or by first class mail with postage
prepaid addressed to the person at the last address on file with the
Committee or the Employer. Any notice delivered as provided above shall
be deemed to have been given when delivered, and any notice mailed as
provided above shall be deemed to have been given when mailed.
11.10 Loans to Participants.
(A) (1) In accordance with Section 11.8 above, the
Committee is hereby designated as the named fiduciary
with sole authority and responsibility to approve or
deny loans and, except as provided in subsections (G)
and (H) of this Section, collect unpaid loans, in
accordance with the provisions of this Section 11.10.
This Section 11.10 shall apply if the Employer is
eligible to and elects Item B(16) of the Adoption
Agreement.
(2) Subject to the consent of the Committee, loans may be
made upon approval of the written application of a
Participant or Beneficiary submitted to the
Committee. Such application shall be submitted during
a specified period established by the Committee prior
to the date the loan is to be made. The Committee
shall notify the Participant or Beneficiary whether
the loan has been approved or denied. Loans shall be
made available to all Participants and Beneficiaries
on a reasonably equivalent basis, except that no
loans will be made to any Stockholder-Employee or
Owner-Employee and no loan shall be made to any
Participant which the Committee, upon reviewing the
Participant's written application determines may be
reasonably expected to be unable to repay the loan.
Loans shall not be made available to Highly
Compensated Employees (as defined in Section 414(q)
of the Code) in an amount greater than the amount
made available to other Employees. Except for loans
made prior to the date this Plan is adopted, a
Participant or Beneficiary shall have no more than
five loans outstanding at any given time.
(3) All loans will be adequately secured and will bear a
reasonable rate of interest. Rates of interest will
be determined daily by the Trustee for Plan loans.
The Committee will determine the minimum loan amount
for the Plan.
(B) In reviewing and approving or denying loan applications
hereunder, the Committee shall bear sole responsibility for
ensuring compliance with all applicable federal or state laws
and regulations, including the federal Truth In Lending Act
(15 U.S.C. ss.1601 et seq.), and Equal Credit Opportunity Act
(15 U.S.C. ss.1691 et seq.). The Committee shall upon request
supply the Trustee with evidence that it has complied with
such federal or state law.
(C) Notwithstanding Section 7.13 above, each loan made hereunder
shall be secured by a written assignment, in favor of the
Plan, of that portion of the Participant's accounts which the
Committee determines to be necessary to adequately secure
repayment of the loan.
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(D) A Participant must obtain the consent of his or her Spouse, if
any, to use the account balance as security for the loan.
Spousal consent shall be obtained no earlier than the
beginning of the ninety (90) day period that ends on the date
the loan is to be so secured. The consent must be in writing
and must be witnessed by a Plan representative or Notary
Public. Such consent shall thereafter be binding with respect
to the consenting spouse or any subsequent spouse with respect
to that loan. A new consent shall be required if the account
balance is used for renegotiation, extension, renewal, or
other revision of the loan.
Notwithstanding the preceding paragraph, no spousal consent is
required for the use of the account balance as security for a
Plan loan to the Participant under a safe-harbor profit
sharing Plan as described in Section 7.10(F).
(E) No loan shall be approved by the Committee to any Participant
or Beneficiary in any amount which exceeds the lesser of
(1) $50,000, reduced by the excess (if any) of -
(a) the highest outstanding balance of loans
from the Plan during the one-year period
ending on the day before the date on which
such loan was made, over,
(b) the outstanding balance of loans from the
Plan on the date on which such loan was
made, or
(2) fifty percent (50%) of the present value of the
Participant's nonforfeitable accrued benefit.
For purposes of the above limitation, all loans from all plans
of the Employer and other members of a group of employers
described in Sections 414(b), (c), (m) and (o) of the Code are
aggregated.
The term of the loan shall be determined by the Committee.
Furthermore, any loan shall, by its terms require that
repayment (principal and interest) be amortized in level
payments, not less frequently than quarterly over a period not
extending beyond five years from the date of the loan, except
that the Committee, in its discretion, may permit a repayment
period in excess of five years for loans made to a Participant
or Beneficiary used to acquire a dwelling unit which, within a
reasonable time (determined at the time the loan is made) will
be used as a principal residence of the borrower.
An assignment or pledge of any portion of the participant's
interest in the Plan will be treated as a loan under this
paragraph.
(F) Each loan hereunder shall be made pro rata from the
borrowing Participant's available accounts and Investment
Funds. Loan repayments shall generally be made via
payroll deduction, except that the repayment of outstanding
principal at maturity, in the event the loan is called, or
in the event the Participant chooses to prepay the loan shall
be made in such manner as the Committee shall determine.
Loan repayments and interest thereon shall be credited to the
Investment Funds and accounts in accordance with current
elections. No loan shall be considered a general investment
of the Trust Fund. Each loan shall be evidenced by a written
agreement, evidencing the Participant's obligation to repay
the borrowed amount to the Plan, in such form and with such
provisions consistent with this Section 11.10 as is
acceptable to the Trustee. All loan agreements shall be
deposited with the Trustee.
(G) In the event a Participant does not repay the principal of
such loan or interest thereon at such times as are required by
the terms of the loan or if the Participant ceases to be an
Employee while such Participant has a loan made hereunder
which is outstanding, the Committee, in its discretion, may
direct the Trustee to take such action as the Committee may
reasonably determine, including:
(1) demand repayment of the loan and, subject to Section
10.4(K), institute legal action against the
Participant to enforce collection of any balance due
from the Participant, or
(2) demand repayment of the loan, and charge the total
amount of the unpaid loan and unpaid interest against
the balance credited to the Participant's vested
account balance which was assigned as security for
the loan and reduce any payment or distribution from
the Trust Fund to which the Participant or the
Participant's Beneficiary may become entitled to the
extent necessary to discharge the obligation on the
loan.
Notwithstanding the foregoing provisions of this Paragraph
(G), in the event of default, foreclosure on the note and
attachment of security will not occur until a distributable
event occurs in the Plan.
(H) In the event the Committee fails or refuses for any reason to
direct the Trustee as provided in Paragraph (G) above or if
the Trustee otherwise reasonably concludes that the
collectibility of a loan hereunder is in jeopardy, the Trustee
is authorized to take such action as it may reasonably
determine to enforce repayment and satisfaction of the loan.
The Employer shall be responsible for costs and expenses
incurred in collecting any loan balance.
(I) In the event that the amount of any payment or distribution
from the Trust Fund is insufficient to repay the balance due
on any loan, the Participant shall be liable for and continue
to make repayments on such balance.
(J) If a valid spousal consent has been obtained in accordance
with Paragraph (D), 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 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 payable to the surviving Spouse, then the 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.
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ARTICLE XII
FAILURE TO ATTAIN OR RETAIN QUALIFIED STATUS
12.1 Failure to Qualify as a Prototype. This Plan is established with the
intent that it shall qualify under Section 401 of the Code and that it
shall comply with ERISA and all other applicable laws, regulations and
rulings. It may be modified and amended retroactively, if necessary, to
secure such qualification. Should the Internal Revenue Service
determine that this Plan does not qualify under the Code or any statute
of similar import, or fails or refuses to issue an opinion, and if the
Plan is not amended, as required to qualify, before the time allowed by
law for the Employer to file its corporate federal tax return for the
taxable year in which the Effective Date occurs, the Plan shall be
considered to be rescinded and of no force and effect. Any assets
attributable to contributions made by the Employer shall be returned to
the Employer by the Trustee as soon as administratively feasible. The
Employer shall refund to the Participant any contributions made by the
Participant to the Plan.
12.2 Failure of Employer to Attain or Retain Qualification. If the
Employer's Plan fails to attain or retain qualification, such Plan will
no longer participate in this prototype Plan and will be considered an
individually designed Plan.
ARTICLE XIII
MISCELLANEOUS
13.1 Employer Action. Except as may be specifically provided herein, any
action required or permitted to be taken by the Employer may be taken
on behalf of the Employer by any officer of the Employer.
13.2 No Guarantee of Interests. Neither the Trustee, the Employer nor any
other named fiduciary in any way guarantees the Trust Fund from loss or
depreciation, nor do they guarantee any payment to any person. The
liability of the Trustee, the Employer and a named fiduciary to make
any payments hereunder is limited to the available assets of the Trust
Fund.
13.3 Employment Rights. The Plan is not a contract of employment.
Participation in the Plan will not give any Participant the right to be
retained in the Employer's employ, nor any right or claim to any
benefit under the Plan, unless the right or claim has specifically
accrued under the Plan.
13.4 Interpretations and Adjustments. To the extent permitted by law, an
interpretation of the Plan and a decision on any matter within a named
fiduciary's discretion made in good faith is binding on all persons. A
misstatement or other mistake of fact shall be corrected when it
becomes known and the person responsible shall make such adjustment on
account thereof as he or she considers equitable and practicable.
13.5 Uniform Rules. In the administration of the Plan, uniform rules
will be applied to all Participants similarly situated.
13.6 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person
acting on it considers pertinent and reliable and signed, made or
presented by the proper party or parties.
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13.7 Waiver of Notice. Any notice required under the Plan may be waived by
the person entitled to notice.
13.8 Controlling Law. The law of the state where the Trustee is located
shall be the controlling state law in all matters relating to the Plan
and shall apply to the extent that it is not preempted by the laws of
the United States of America.
13.9 Tax Exemption of Trust. The trust herein created is designated as
constituting a part of a Plan intended to qualify under Sections 401(a)
of the Code and to be tax-exempt under Section 501(a) of the Code.
13.10 Counterparts. The Plan may be executed in two or more counterparts,
any one of which will be an original without reference to the others.
13.11 Annual Statement of Account. The assets of the Trust Fund will be
valued annually at fair market as of the last day of each Plan Year. On
such date the earning and losses of the Trust Fund will be allocated to
each Participant's accounts in the ratio that such account balance
bears to all account balances. The Trustee will deliver to the Employer
a statement of each Participant's account balances as of the last day
of Plan Year.
13.12 No Duty to Inquire. No person shall have any duty to make any inquiry
as to the application or use of the Trust Fund, or any part thereof, or
to inquire into the validity, expediency or propriety of any matter or
thing done or proposed to be done by the Trustee.
13.13 Invalidity. In case any provisions of this Plan shall be invalid,
this fact shall not affect the validity of any other provision.
13.14 Titles. Titles to Articles and Sections are for convenience only and
shall have no bearing upon the construction or interpretation of this
Plan.
13.15 No Duty of Trustee to Collect Contributions. The Trustee shall be
accountable for all contributions received but shall have no duty to
require any contributions to be delivered or to determine if the
contributions received comply with the Plan or with any Board of
Directors resolution of the Employer providing for contributions.
13.16 Trustee Distributes by Committee Direction. The Trustee shall make
distributions only through Committee direction. The Trustee shall have
no responsibility to see how distributions are applied or to ascertain
whether the Committee's directions comply with the Plan.
Notwithstanding anything in the Plan to the contrary, payments made in
accordance with these provisions will continue only so long as amounts
remain in the Participant's accounts.
ARTICLE XIV
AMENDMENT OR TERMINATION
14.1 Amendment by the Sponsor. Society National Bank, the sponsoring
organization, reserves the right without being required to obtain the
approval of the Employer to amend any part of the Plan from time to
time, subject to the provisions of Article XII, Section 14.2 and the
following:
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(A) Except as provided in Section 14.1(B) and (C), no amendment
shall become effective until at least thirty (30) days' prior
written notice (unless the Employer agrees to shorter notice)
has been given to the Employer, nor shall any such amendment
reduce Participants' benefits to less than the benefits to
which they would have been entitled if they had resigned from
the employ of the Employer on the effective date of the
amendment;
(B) An amendment of the Plan and Trust which the sponsor deems
necessary to enable the Plan and Trust to meet the
requirements of Section 401(a) of the Code may be made
effective as of the date the Plan and Trust was established by
the sponsor or as of any subsequent date;
(C) An amendment of the Plan and Trust to conform the Plan and
Trust to any change in the law, regulations or rulings of the
United States may take effect as of the date such amendment is
required to be effective. Any amendment executed pursuant to
the provisions of this Section 14.1 shall be executed by an
authorized officer of the sponsor, or its successor. For
purposes of this Section 14.1, the Employer shall be deemed to
have been furnished a copy of any amendment on the business
day next following the mailing by the sponsor or the Trustee.
14.2 Amendment by Adopting Employer. The Employer may (1) change the choice
of options in the Adoption Agreement, (2) add overriding language in
the Adoption Agreement when such language is necessary to satisfy
Section 415 or Section 416 of the Code because of the required
aggregation of multiple plans, and (3) add certain model amendments
published by the Internal Revenue Service which specifically provide
that their adoption will not cause the Plan to be treated as
individually designed. An Employer that amends the Plan for any other
reason, including a waiver of the minimum funding requirement under
Section 412(d) of the Code, will no longer participate in this Master
or Prototype Plan and will be considered to have an individually
designed Plan.
14.3 Vesting - Plan Termination. In the event of termination or partial
termination of the Plan, the account balance of each affected
Participant will be nonforfeitable.
14.4 Vesting - Complete Discontinuance of Contributions. In the event of a
complete discontinuance of contributions under the Plan, the account
balance of each affected Participant will be nonforfeitable.
14.5 Plan Merger - Maintenance of Benefit. In the event of a merger or
consolidation with, or transfer of assets to any other Plan, each
Participant will receive a benefit immediately after the merger,
consolidation or transfer (if the Plan then terminated) which is at
least equal to the benefit the Participant was entitled to immediately
before such merger, consolidation or transfer (if the Plan had then
terminated).
14.6 Direct Transfer. In its discretion, the Trustee may accept the direct
transfer of Plan assets from the trustee of other retirement plans
described in Code Section 401(a). If the Plan receives a direct
transfer of elective deferrals (or amounts treated as elective
deferrals) under a Plan with a Code Section 401(k) arrangement, the
distribution restrictions of Code Sections 401(k)(2) and (10) continue
to apply to those transferred elective deferrals.
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14.7 Termination of Participation by Employer. The Employer expects to
continue its participation in this Plan indefinitely but reserves the
right to terminate this Plan as to its Employees at any time by written
instrument filed with the Trustee. In the event of such termination,
partial termination or complete discontinuance of contributions, or
termination as provided in Section 13.3, the account balance of each
affected Participant will be nonforfeitable. Distribution to
Participants who have theretofore become entitled to the payment of any
benefits hereunder or to Spouses or Beneficiaries of deceased
Participants shall be made in the same manner as if the Employer's
participation had not terminated or contributions had not been
discontinued.
The account(s) of each such Participant, in the event of payment in
other than a single sum, need not be converted into cash, but may
continue to remain in the trust, with a right and obligation thereafter
to participate in the net earnings, losses, taxes and expenses of the
trust.
If any Participant shall die after the termination of the Employer's
participation and before all of said Participant's interest has been
paid, then, upon the written direction of Employer, the entire
undistributed portion shall be paid in a single sum to the
Participant's Beneficiary.
In the event of complete discontinuance of contributions, the Employer
shall terminate this Plan as to its Employees and each Participant's
interest shall be distributed to such Participant.
14.8 Notice of Amendment, Termination or Partial Termination. The Committee
will notify affected Participants of an amendment, termination or
partial termination of the Plan within a reasonable time.
14.9 Substitution of Trustee. Any corporation or association into which the
Trustee may be converted, merged or with which it may be consolidated,
or any corporation or association resulting from any conversion,
merger, reorganization or consolidation to which the Trustee may be a
party, shall be the successor of the Trustee hereunder without the
execution or filing of any instrument or the performance of any further
act.
ARTICLE XV
DISCHARGE OF DUTIES BY FIDUCIARIES
15.1 Discharge of Duties. Subject to the provisions of Articles IX and X,
the Named Fiduciaries and any other fiduciary shall discharge their
respective duties set forth in the Plan solely in the interest of the
Participants and their Spouses and Beneficiaries and:
(A) for the exclusive purpose of:
(1) providing benefits to Participants and their Spouses
and Beneficiaries; and
(2) defraying reasonable expenses of administering the
Plan;
(B) with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in
a like capacity and familiar with such matters would use in
the conduct of an enterprise of a like character and with like
aims; and
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(C) by diversifying the investments of the Plan so as to minimize
the risk of large losses, unless under the circumstances it is
clearly prudent not to do so.
ARTICLE XVI
AMENDMENT AND CONTINUATION OF ORIGINAL PLAN
16.1 Amendment and Continuation. Notwithstanding any of the foregoing
provisions of the Plan to the contrary, an Employer which has
previously established a profit sharing Plan and trust or money
purchase pension Plan and trust, as applicable, (the "Original Plan")
may, in accordance with the provisions of the Original Plan, amend and
continue that Plan in the form of this Plan and Trust and become an
Employer hereunder, subject to the following:
(A) Subject to the conditions and limitations of the Plan, each
person who is a Participant or former Participant under the
Original Plan immediately prior to the Effective Date of the
amendment and continuation thereof in the form of this Plan
will continue as a Participant under this Plan;
(B) The words "Original Plan" shall be substituted for the word
"Plan" where the word appears in Section 2.2 of the Plan;
(C) No election may be made in the Adoption Agreement if such
election will reduce the benefits of a Participant under the
Original Plan to less than the benefits to which he would have
been entitled if he had resigned from the employ of the
Employer on the date of the amendment and continuation of the
Original Plan in the form of this Plan;
(D) The amounts, if any, credited to a Participant's or former
Participant's accounts, immediately prior to the Effective
Date of the amendment and continuation of the Original Plan in
the form of this Plan shall constitute the opening balances in
his or her accounts, as appropriate, under this Plan and
Trust;
(E) Amounts being paid to a former Participant or Beneficiary in
accordance with the provisions of the Original Plan shall
continue to be paid in accordance with such provisions; and
(F) Any Beneficiary designation in effect under the Original Plan
immediately before its amendment and continuation in the form
of this Plan shall be deemed to be a valid Beneficiary
designation filed with the Employer under Section 7.7 of this
Plan, to the extent consistent with the provisions of this
Plan, unless and until the Participant or former Participant
revokes such Beneficiary designation or makes a new
Beneficiary designation under this Plan.
IN WITNESS WHEREOF, Society National Bank has established this
prototype Plan as of the 24th day of March, 1995.
SOCIETY NATIONAL BANK
By: /s/ Edward J. Togetti
-----------------------------------------
Title: Senior Vice President and General Counsel
Page 87
EXHIBIT 10.2
03/24/95
Basic Plan Document # 05
Plan # 002
IRS Letter Serial No.: D363689a
PRISM(R) PROTOTYPE RETIREMENT PLAN & TRUST
401(k) Profit Sharing Plan
(Nonstandardized)
Adoption Agreement <F1>
The Employer <F2>, designated below, hereby establishes a profit-sharing
plan (optionally including a cash or deferred arrangement (as defined in
ss.401(k) of the Internal Revenue Code)) for all Eligible Employees as
defined in this Adoption Agreement pursuant to the terms of the PRISM(R)
Prototype Retirement Plan & Trust Basic Plan Document # 05.
A. Employer Information:
1. Name: M.D.C. Holdings, Inc.
---------------------
2. Address: 3600 South Yosemite Street, Suite 900
-------------------------------------
3. Address: Denver, CO 80237
------------------
4. Attention: Valerie Andres Telephone: 303-773-1100
-------------- ------------
5. Employer Taxpayer Identification Number <F3>: 84-0622967
----------
B. Basic Plan Provisions:
1. Plan Name (select one):
This plan is established effective , (the "Effective
Date") as a profit sharing plan (optionally with a
cash or deferred arrangement as defined in Code
ss.401(k)) to be known as (the "Plan") in the form of
the PRISM(R) Prototype Retirement Plan & Trust.
b. This plan is an amendment and restatement in the form
of the PRISM(R) Prototype Retirement Plan & Trust,
effective 07/01/98, (the "Effective Date") of the
M.D.C. Holdings, Inc. 401(k) Savings Plan (the
"Plan"), originally effective as of 01/01/92 (the
"Original Effective Date").
<PAGE>
2. Employers Three Digit Plan Number: 004
3. Committee Members <F4>: Paris G. Reece III, Daniel S. Japha,
Thomas M. Jenkins, Larry M. Harvey,
Steven U.Parker
4. Definitions:
a. Compensation for allocation purposes:
i Will be determined over the following
applicable period (select only one):
(a) X the Plan Year
---
(b) the period of Plan participation
--- during the Plan Year
(c) a consecutive 12 month period
--- commencing on and ending with, or
within, the Plan Year.
ii X If selected, Compensation will
--- include Employer contributions made
pursuant to a Salary Reduction
Agreement, or other arrangement,
which are not includible in the
gross income of the Employee under
ss.ss.125, 402(e)(3), 402(h)(1)(B)
or 403(b)of the Internal Revenue
Code.
iii Shall not include (select as many as
desired):
(a) Bonuses
---
(b) Commissions
---
(c) Taxable fringe benefits identified
--- below:
(d) X Other items of remuneration
--- identified below: Reimbursements
and other expense allowances
including fringe benefits, moving
expenses, deferred compensation
and welfare benefits.
iv Shall be limited to $ , which shall
--- be the maximum amount of
compensation considered for plan
allocation purposes (but not for
testing purposes), and may not be an
amount in excess of the Internal
Revenue Codess.401(a)(17) limit in
effect for the Plan Year<F5>. If no
amount is specified, Compensation
shall be limited to the Internal
Revenue Codess.401(a)(17)
<PAGE>
amount, as
adjusted by the Secretary of the
Treasury from time to time.
b. Early Retirement Date:
i is not applicable to this Plan
---
ii X is the latter of the date on
--- which the Participant attains age
55 (not less than 55) and the
date on which the Participant
completes 5 Years of Service.
c. Hour of Service shall be determined on the basis
of the method selected below. Only one method may
be selected. The method shall be applied to all
Employees covered under the Plan as follows
(select only one):
i X On the basis of actual hours for
--- which an Employee is paid, or
entitled to be paid.
ii On the basis of days worked. An
--- Employee shall be credited with
ten (10) Hours of Service if
under ss.1.1(U) of the Plan such
Employee would be credited with
at least one (1) Hour of Service
during the day.
iii On the basis of weeks worked. An
--- Employee shall be credited with
forty-five (45) Hours of Service
if under ss.1.1(U) of the Plan
such Employee would be credited
with at least one (1) Hour of
Service during the week.
iv On the basis of semi-monthly
--- payroll periods. An Employee
shall be credited with
ninety-five (95) Hours of Service
if under ss.1.1(U) of the Plan
such Employee would be credited
with at least one (1) Hour of
Service during the semi-monthly
payroll period.
v On the basis of months worked. An
--- Employee shall be credited with
one hundred ninety (190) Hours of
Service if under ss.1.1(U) of the
Plan such Employee would be
credited with at least one (1)
Hour of Service during the month.
d. Limitation Year shall mean the 12 month period
commencing on January 1 and ending on
December 31.
e. Normal Retirement Date for each Participant
shall mean (select one):
i X the date the Participant attains
--- age: 65 (not to exceed 65)
ii the latter of the date the
--- Participant attains age (not to
exceed 65) or the (not to exceed
5th) anniversary of the
participation commencement date.
If for the Plan Years beginning
before January 1, 1988, Normal
Retirement Date was determined
<PAGE>
with reference to the
anniversary of the participation
commencement date (more than 5
but not to exceed 10 years), the
anniversary date for Participants
who first commenced participation
under the Plan before the first
Plan Year beginning on or after
January 1, 1988 shall be the
earlier of (A) the tenth
anniversary of the date the
Participant commenced
participation in the Plan (or
such anniversary as had been
elected by the employer, if less
than 10) or (B) the fifth
anniversary of the first day of
the first Plan Year beginning on
or after January 1, 1988.
Notwithstanding any other
provisions of the Plan, the
participant commencement date is
the first day of the first Plan
Year in which the Participant
commenced participation in the
Plan.
f. Permitted Disparity Level, for purposes of
allocating Employer Contributions, shall mean
(select only one):
i X Not applicable - the Plan does
--- not use permitted disparity.
ii The Taxable Wage Base, which is
--- the contribution and benefit base
under section 230 of the Social
Security Act at the beginning of
the year.
iii % (not greater than 100%) of
--- the Taxable Wage Base as defined
in B(4)(f)(ii) above.
iv $ , provided that the amount does
--- not exceed the Taxable Wage Base
as defined in B(4)(f)(ii) above.
g. Plan Year shall mean (select and complete only
one of the following):
i The 12-consecutive month period
--- which coincides with the
Limitation Year. The first Plan
Year shall be the period
commencing on the Effective Date
and ending on the last day of the
Limitation Year.
ii The 12-consecutive month period
--- commencing on, , 19, and each
annual anniversary thereof.
iii X The calendar year (January 1
--- through December 31).
h. Qualified Distribution Date, for purposes of
making distributions under the provisions of a
Qualified Domestic Relations Order (as defined in
Internal Revenue Code ss.414(p)), X shall be the
date the order is determined to be qualified. If
shall is selected, the Alternate Payee will be
entitled to an immediate distribution of benefits
as directed by the Qualified Domestic Relations
Order. If shall not is selected, the Alternate
<PAGE>
Payee may only take a distribution on the
earliest date that the Participant is entitled to
a distribution.
i. Spouse:
If selected, Spouse shall mean
only that person who has actually
been the Participants spouse for
at least one year.
j. Year of Service shall mean:
i For eligibility purposes (select one of the
following):
(a) the 12 consecutive months
--- during which an Employee is
credited with (not more
than 1000) Hours of
Service.
(b) X a Period of Service (using
--- the elapsed time method
of counting Service, as
described in ss.1.1(N)(3)
of the Plan).
ii For allocation accrual purposes (select one
of the following):
(a) X the 12 consecutive months
--- during which an Employee is
credited with 1000 (not
more than 1000) Hours of
Service.
(b) a Period of Service (using
--- the elapsed time method
of counting Service, as
described in ss.1.1(N)(3)
of the Plan).
iii For vesting service purposes (select one of
the following):
(a) the 12 consecutive months
--- during which an Employee is
credited with (not more
than 1000) Hours of
Service.
(b) X a Period of Service (using
--- the elapsed time method
of counting Service, as
described in ss.1.1(N)(3)
of the Plan).
iv For purpose of computing Years of Service in
plans where Year of Service is defined in
terms of Hours of Service), the consecutive
12 month period shall be:
(a) For eligibility purposes, the first Year
of Service shall be computed using the
12 month period commencing on the
Employee's date of hire and ending on
the first annual anniversary of the
Employee's date of hire (the "Initial
Computation Period"). In the event an
employee does not complete an
eligibility Year of Service during this
initial computation period, the
computation period shall be (select only
one):
<PAGE>
(1) X the period commencing
--- on each annual
anniversary of the
Employee's date of
hire and ending on the
next annual
anniversary of the
Employee's date of
hire.
(2) the Plan Year,
--- commencing with the
Plan Year in which the
Initial Computation
Period ends.
(b) For vesting purposes, Years of Service
shall be computed on the basis of:
(1) X the period commencing
--- on each annual
anniversary of the
Employee's date of
hire and ending on the
next annual
anniversary of the
Employee's date of
hire.
(2) the Plan Year,
--- commencing with the
first Plan Year an
Employee completes an
Hour of Service.
(c) For allocation accrual purposes, Year of
Service shall be computed on the basis
of the Plan Year.
v X For eligibility purposes, Years
--- of Service with the following
Predecessor Employers shall
count in fulfilling the
eligibility requirements for
this Plan: any predecessor
organization if the Employer
maintains the Plan of the
predecessor employer.
vi X For vesting purposes, Years of
--- Service with the following
Predecessor Employers shall
count for purposes of
determining the nonforfeitable
amount of a Participant's
account: any predecessor
organization if the Employer
maintains the Plan of the
predecessor employer.
5. Coverage:
This Plan is extended by the Employer to the following
Employees who have met the eligibility requirements
(select as many as appropriate):
i All Employees
---
ii Salaried Employees
---
iii Sales Employees
---
iv Hourly Employees
---
<PAGE>
v Leased Employees
---
vi X All Employees except (select as
--- applicable):
(a) X those who are members
--- of a unit of Employees
covered by a collective
bargaining agreement
between the
Employer and Employee
representatives, if
retirement benefits
were the subject of
good faith bargaining
and if two percent or
less of the Employees
who are covered
pursuant to that
agreement are
professionals as
defined in Section
1.410(b)-9 of the
Regulations. For this
purpose, the term
Employee representative
does not include any
organization more than
half of whose members
are Employees who are
owners, officers, or
executives of the
Employer.
(b) X those who are
--- nonresident aliens
(within the
meaning of
Internal Revenue
Code
ss.7701(b)(1)(B))
and who receive no
earned income
(within the
meaning of
Internal Revenue
Code ss.911(d)(2))
from the Employer
which constitutes
income from
sources within the
United States
(within the
meaning of
Internal Revenue
Code
ss.861(a)(3)).
vii Union Employees (who are
--- members of the following unions
or union affiliates):
vii Other Employees, described as
--- follows:
6. Eligibility:
An Employee covered by the Plan may become a Participant
upon completion of the following eligibility requirements:
a. Service<F6>:
i There shall be no minimum
--- service requirement for an
Employee to become a
Participant.
ii X The Employee must complete 6
--- Months of Service (not more
than 2 years) to be a
Participant for purposes of
<PAGE>
receiving allocations of
Employer Profit Sharing
Contributions.
b. Age:
i There shall be no minimum age
--- requirement for an Employee to
become a Participant.
ii X The Employee must attain age 21
--- (not more than 21) to be a
Participant in the Plan.
c. Waiver of Age and Service Requirements:
i Notwithstanding the provisions
--- of Items B(6)(a) and (b),
Employees who have not
satisfied the age and service
requirements, but would
otherwise be eligible to
participate in the plan, shall
be eligible to participate on
the Effective Date.
ii For new Plans, notwithstanding
--- the provisions of Items B(6)(a)
and (b), Employees who have not
satisfied the age and service
requirements, but would
otherwise be eligible to
participate in the plan, shall
be eligible to participate on
the Effective Date.
d. Entry Dates:
Upon completion of the eligibility requirements,
an Employee shall commence participation in the
Plan (select only one):
i As soon as practicable under
--- the payroll practices utilized
by the Employer, and
consistently applied to all
Employees, or if earlier, the
first day of the Plan Year<F7>.
ii As of the first day of the
--- month following the completion
of the eligibility requirements.
iii X As of the earliest of the first
--- day of the Plan Year, fourth,
seventh or tenth month of the
Plan Year next following
completion of the eligibility
requirements.
iv As of the earliest of the first
--- day of the Plan Year or seventh
month of the Plan Year next
following completion of the
eligibility requirements.
v As of the first day of the Plan
--- Year next following completion
of the eligibility requirements
(may only be selected if the
eligibility year of service
requirement is 6 months or
less).
7. Vesting:
<PAGE>
a. The percentage of a Participant's Employer
Contribution Account (attributable to Employer
Profit Sharing Contributions) to be vested in him
or her upon termination of employment prior to
attainment of the Plan's Normal Retirement Date
shall be<F8>:
<TABLE>
<CAPTION>
Completed Years of Service
<S> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7
------- ------- ------- ------- ------- ------- ----
0% 100%
-- ----
0% 0% 100%
-- -- ----
0% 20% 40% 60% 80% 100%
-- --- --- --- --- ----
0% 0% 20% 40% 60% 80% 100%
-- -- --- --- --- --- ----
10% 20% 30% 40% 60% 80% 100%
--- --- --- --- --- --- ----
X 0% 40% 60% 80% 100%
-- --- --- --- ----
0% 0% 0% 0% 0% 0% 100%
-- -- -- -- -- -- ----
Full and immediate vesting upon entry into the Plan<F9>
Notwithstanding anything to the contrary in the
Plan, the amount inserted in the blanks above
shall not exceed the limits specified in Code
ss.411(a)(2).
</TABLE>
b. For purposes of computing a Participant's vested
account balance, Years of Service for vesting
purposes X shall include Years of Service before
the Employer maintained this Plan or any
predecessor plan, and X shall not include Years
of Service before the Employee attained age 18.
c. Notwithstanding the provisions of this Item
B(7)(c) of the Adoption Agreement, a Participant
shall become fully vested in his Participant's
Employer Contribution if: <F10>
i the Participant's job is
--- eliminated without the
Participant being offered a
comparable position elsewhere
with the Employer.
ii for such reason as is described
--- below:
8. Employer Profit Sharing Contributions:
a. Contributions:
i X In its discretion, the Employer
--- may contribute Employer Profit
Sharing Contributions to the
Plan.
ii The Employer shall contribute
--- Employer Profit Sharing
Contributions to the Plan in
the amount of % of the
Compensation of all Eligible
Participants under the Plan.
<PAGE>
iii X If selected, the Employer may
--- make Employer Profit Sharing
Contributions without regard to
current or accumulated Net
Profits of the Employer for the
taxable year ending with, or
within the Plan Year.
iv X If selected, the Employer may
--- designate all or any part of
the Employer Profit Sharing
Contributions as Qualified
Nonelective Contributions,
provided, however, that
contributions so designated
will be subject to the same
vesting, distribution, and
withdrawal restrictions as
Before Tax Contributions <F11>.
b. Allocations:
Employer Profit Sharing Contributions shall be
allocated to the accounts of eligible
Participants according to the following selected
allocation formula:
i X The Employer Profit Sharing
--- Contributions shall be
allocated to each eligible
Participant's account in the
ratio which the Participant's
Compensation bears to the
Compensation of all eligible
Participants. Employer Profit
Sharing Plan Contributions,
shall be allocated to the
accounts of Participants who
have completed a Year of
Service <F12> (select one):
(a) as of the last
--- day of the month
preceding the month
in which the
contribution was made.
(b) as of the last day of
--- the Plan quarter
preceding the quarter
in which the
contribution was made.
(c) X as of the last day of
--- the Plan Year.
The Employer Profit Sharing Contributions
shall be allocated in accordance with the
following formula:
(a) If the Plan is Top-Heavy,
the contribution shall be
first credited to each
eligible Participant's
Account in the ratio which
the Participant's
Compensation bears to the
total Compensation of all
eligible Participants, up
to 3% of each Participant's
Compensation.
(b) If the Plan is Top-Heavy,
any Employer Profit Sharing
Contribution remaining
after the allocation in (a)
above shall be credited to
each eligible Participant's
account in the ratio which
the Participant's Excess
<PAGE>
Compensation<F13> bears to
the total Excess
Compensation of all
eligible Participants, up
to 3% of each eligible
Participant's Excess
Compensation.
(c) Any contributions remaining
after the allocation in (b)
above shall be credited to
each eligible Participant's
account in the ratio which
the sum of the
Participant's total
Compensation and Excess
Compensation bears to the
sum of the total
Compensation and Excess
Compensation of all
eligible Participants, up
to an amount equal to the
maximum Excess Percentage
times the sum of the
Participant's Compensation
and Excess Compensation. If
the Plan is Top-Heavy, the
maximum Excess Percentage
is N/A % (insert
percentage). If the Plan is
not Top-Heavy, the maximum
Excess Percentage is N/A %
(insert percentage, which
shall not exceed the prior
Excess Percentage
limitation specified by
more than 3).
Note: If the Permitted Disparity
Level defined at Item
B(4)(f) is the Taxable Wage
Base (which is the
contribution and benefit
base under section 230 of
the Social Security Act at
the beginning of the year),
then the maximum Excess
Percentage should be 2.7%
if the Plan is Top-Heavy
and 5.7% if the Plan is not
Top-Heavy.
If the Permitted Disparity
Level defined at Item
B(4)(f) is greater than 80%
but less than 100% of the
Taxable Wage Base, then the
maximum Excess Percentage
should be 2.4% if the Plan
is Top-Heavy and 5.4% if
the Plan is not Top-Heavy.
If the Permitted Disparity
Level defined at Item
B(4)(f) is greater than the
greater of $10,000 or 20%
of the Taxable Wage Base,
but not more than 80%, then
the maximum Excess
Percentage should be 1.3%
if the Plan is Top-Heavy
and 4.3% if the Plan is not
Top-Heavy.
(d) Any remaining Employer
Profit Sharing Contribution
shall be allocated among
eligible Participants'
accounts in the ratio which
the Participant's
Compensation bears to the
total Compensation of all
Participants.
<PAGE>
iii X If selected, and the Employer
--- has elected to allocate
Employer Profit Sharing Plan
Contributions as of the last
day of the Plan Year, a
Participant must be employed by
the Employer on the last day of
the Plan Year in order to
receive an allocation <F14>.
iv X A Participant who terminates
--- before the end of the period
for which contributions are
allocated shall share in the
allocation of Employer Profit
Sharing Contributions if
termination of employment was
the result of (select all that
apply):
(a)_X_ retirement
---
(b) X disability
---
(c) X death
---
(d) X other, as
--- specified
below: Other
termination of
employment
from the
company on
account of a
Change of
Control, as
defined in the
addendum
attached
hereto.
9. Rollover & Transfer Contributions (select one):
a. X Subject to policies, applied in a
--- consistent and nondiscriminatory manner,
adopted by the Committee, each Employee,
who would otherwise be eligible to
participate in the Plan except that such
Employee has not yet met the eligibility
requirements, and each Participant may
make a Rollover Contribution as
described in Internal Revenue Code
ss.ss.402(a)(5), 403(a)(4) or 408(d)(3).
(b) Subject to policies, applied in a
--- consistent and nondiscriminatory manner,
adopted by the Committee, each
Participant may make a Rollover
Contribution as described in Internal
Revenue Code ss.ss.402(a)(5), 403(a)(4)
or 408(d)(3).
(c) No Employee shall make Rollover
--- Contributions to the Plan.
10. Distributions:
a. Distributions Upon Separation from Service:
The Normal Form of Benefit under the Plan shall
be a single lump sum distribution, made as soon
as administratively practical after receipt of a
distribution request from a Participant entitled
to a distribution or upon
<PAGE>
the Participant's
attainment of the Plan's Early Retirement Date or
the Plan's Normal Retirement Date, whichever is
earlier.
In addition to the Normal Form of Benefit, the
Participant shall be entitled to select from
among the following optional forms of benefit
specified by the employer (select as many as
apply):
i. Installment payments
---
ii X Such other forms as may be
--- specified below: Joint &
Survivor Annuity, or an
annuity, provided that the
annuity that provides for
payments not extending beyond
the life expectancy of the
Participant, the joint life
expectancy of the Participant
and a designated Beneficiary,
or for a period certain not
extending beyond the life
expectancy of the Participant,
the joint life expectancy of
the Participant and a
designated Beneficiary or the
combination of an annuity and
a single lump sum
b. In-Service Distributions (select as may be
appropriate):
i There shall be no in-service
--- distribution of Participant
account balances derived from
Employer Profit Sharing
Contributions.
ii X Participants may request an
--- in-service distribution of
their account balance
attributable to Employer Profit
Sharing Contributions, for the
following reasons:
(a) X For purposes of
--- satisfying a
financial hardship,
as determined in
accordance with
the uniform
nondiscriminatory
policy of the
Committee;
(b) X Attainment of age
59 1/2 by the
Participant; or
(c Attainment of the
--- Plan's Normal
Retirement Date by
the Participant.
11. Forfeitures:
a. Forfeitures of amounts attributable to Employer
Profit Sharing Contributions shall be reallocated
as of:
<PAGE>
i X the last day of the Plan Year
--- in which the Forfeiture
occurred.
ii the last day of the Plan Year
--- following the Plan Year in
which the Forfeiture occurred.
iii the last day of the Plan Year
--- in which the Participant
suffering the Forfeiture has
incurred five consecutive One
Year Breaks in Service.
b. Forfeitures of Employer Profit Sharing Contributions
shall be reallocated as follows:
i Not applicable as Employer
--- Profit Sharing Contributions
are always 100% vested and
nonforfeitable.
ii X Used first to pay the expenses
--- of administering the Plan, and
then allocated pursuant to one
of the following two options
<F15>:
iii Forfeitures shall be allocated
--- to Participant's accounts in
the same manner as Employer
Profit Sharing Contributions,
Employer Matching
Contributions, Qualified
Nonelective Contributions or
Qualified Matching
Contributions, in the
discretion of the Employer, for
the year in which the
Forfeiture arose.
iv X Forfeitures shall be applied to
--- reduce the Employer Profit
Sharing Contributions, Employer
Matching Contributions,
Qualified Nonelective
Contributions or Qualified
Matching Contributions, in the
discretion of the Employer, for
the Plan Year following the
Plan Year in which
the Forfeiture arose.
12. Limitations on Allocations:
If the Employer maintains or ever maintained another
qualified retirement plan in which any Participant in this
Plan is (or was) a participant, or could possibly become a
participant, the Employer must complete the following:
a. If the Participant is covered under another
qualified defined contribution plan maintained by
the Employer other than a Master or Prototype
Plan:
i X The provisions of this Plan
--- shall apply as if the other
plan were a Master or Prototype
plan; or,
ii The following provisions will
--- be effective to limit the total
Annual Additions to the Maximum
Permissible Amount, and will
properly reduce any Excess
Amounts, in a manner that
precludes Employer discretion:
<PAGE>
b. If the Participant is or ever has been a
participant in a qualified defined benefit plan
maintained by the Employer, the following
provisions will be effective to satisfy the 1.0
limitation of Internal Revenue Code ss.415(e), in
a manner that precludes Employer discretion:
13. Internal Revenue Code ss.411(d)(6) Protected Benefits:
If selected, the Plan has Internal Revenue
Code ss.411(d)(6) Protected Benefits from a
prior plan that this Plan amends, that must
be protected.
(Attach addendum)
14. Top-Heavy Plan Provisions:
For each Plan Year in which the Plan is a Top-Heavy Plan
the following provisions will apply:
a. The percentage of a Participant's Employer
Contribution Account to be vested in him upon
termination of employment prior to retirement
shall be:
i. a percentage determined in
--- accordance with the following
schedule:
<TABLE>
<CAPTION>
<S> <C>
Years of Service Percentage
---------------- ----------
Less than two 0
Two but less than three 20
Three but less than four 40
Four but less than five 60
Five but less than six 80
Six or more 100;
</TABLE>
ii. 100% vesting after (not to
--- exceed 3) Years of Service;
provided, however, that Years
of Service may not exceed two
(2) if the service requirement
for eligibility exceeds 1 year;
or
iii. X computed in accordance with the
--- vesting schedule selected by
the Employer in Items B(7)(a)
or C(4)(d), as long as the
benefits under the vesting
schedule in Items B(7)(a) or
C(4)(d) vest at least as
rapidly as the two options
specified in this Item
B(14)(a), above.
<PAGE>
If the vesting schedule under the Plan shifts in
or out of the schedules above 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 ss.2.2 of the Basic Plan Document
applies.
b. For purposes of minimum Top-Heavy allocations,
contributions and forfeitures equal to 3 % (not
less than 3%) of each Non-key Employee's
Compensation will be allocated to each
Participant's Contribution Account when the Plan
is a Top-Heavy Plan, except as otherwise provided
in the Basic Plan Document. This Item 14 will
not apply to any Participant to the extent the
Participant is covered under any other plan or
plans of the Employer and the Employer completes
the following: (Insert the name of the plan
or plans which will meet the minimum allocation
or benefit requirement applicable to
Top-Heavy plans.)
c. The Valuation Date as of which account balances
or accrued benefits are valued for purposes of
computing the Top-Heavy Ratio shall be the last
day of each Plan Year.
d. If the Employer maintains or has ever maintained
one or more defined benefit plans which have
covered or could cover a Participant in this
Plan, complete the following:
Present Value: For purposes of establishing
Present Value to compute the Top-Heavy Ratio, any
benefit shall be discounted only for mortality
and interest based on the following:
Interest rate: % Mortality table:
15. Investments:
a. Investments made pursuant to the investment
direction provisions of the Basic Plan Document
shall be made into any appropriate Investment
Fund as selected by the Employer. In addition,
investment of Plan assets is expressly
authorized, as required by Revenue Ruling 81-100,
in each of the following common or collective
funds sponsored by the Trustee, or an affiliate
of the Trustee <F16>:
Key Trust EB Managed Guaranteed Income
Contract Fund, Key Trust Multiple Investment
Trust for Employee Benefit Trusts, and other
collective trusts exempt from tax under IRC
ss.501 and as described in Rev. Rul. 81-100.
b. X If selected, an Employer Stock Fund shall be
--- available as an Investment Fund pursuant to the
terms of the Basic Plan Document.
<PAGE>
i. If selected, and an Employer
--- Stock Fund is available as an
Investment Fund, Participants
will have the right,
notwithstanding any other
provisions of the Plan, to
direct that a portion of the
Plan assets held for their
benefit and invested in the
Employer Stock Fund be
diversified pursuant to the
provisions of ss.10.7(F) of the
Basic Plan Document.
c. Participants may make changes of existing account
balances and future contributions from among the
Investment Funds offered:
i. X Once during each business
--- day that the Trustee and
the New York Stock
Exchange are open.
ii. Once during each calendar
--- month.
iii Once during each quarter
--- of the Plan Year.
iv. Once during each rolling
--- day period.
d. If selected, the Participant shall be
--- restricted in making changes of existing
account balances from any Investment Fund,
as specified in the terms or conditions of
such Investment Fund, and the Employer shall
attach an addendum specifying such
restriction.
e. The Participant will designate into which
Investment Funds all contributions to their
accounts are made, except the following:
i. Employer Profit Sharing
--- Contributions
ii. Employer Mandatory
--- Matching Contributions
iii. Employer Discretionary
--- Matching Contributions
iv. Qualified Matching
--- Contributions
v. Qualified Nonelective
--- Contributions
f. If selected, and to the extent a selection
--- is made above, the Employer shall attach an
Investment Direction Addendum specifying how
the contributions so specified shall be
invested among the Investment Fund.
g. If selected, the Participant shall be
--- restricted in the use of the Employer Stock
Fund as an Investment Fund for designating
the investment of contributions in the
Participant's account, as follows:
<PAGE>
i. The Participant may not direct the
---investment of Plan assets held in their
account into the Employer Stock Fund.
ii. The Participant may direct -- % of the
---following contributions into the
(a) Employer Stock Fund:
---
(b) Employer Profit
--- Sharing Contributions
(c) Employer Mandatory
--- Matching Contributions
(d) Employer Discretionary
--- Matching Contributions
(e) Qualified Matching
--- Contributions
(f) Qualified Nonelective
--- Contributions
iii. % of the above referenced
--- contributions will be invested
into the Employer Stock Fund,
with the balance invested among:
(a) the other Investment
--- Funds, including the
Employer Stock Fund
(b) the other Investment
--- Funds, not including
the Employer Stock
Fund
16. Loans (select one):
a. X Loans may be made from the Plan in
--- accordance with the Basic Plan Document and
such policies and procedures as the
Committee may adopt and apply on a
consistent and nondiscriminatory basis<F17>.
b. No loans shall be made from the Plan.
---
17. Trustee:
The Trustee of this Plan shall be KeyTrust Company
National Association (a bank or trust company affiliated
with KeyCorp within the meaning of Internal Revenue Code
ss.1504).
18. Effective Date Addendum:
<PAGE>
If selected, the following provisions shall have the
specified effective dates (which are different from the
date specified in Item B(1)):
<PAGE>
C. ss.401(k) Plan Provisions:
1. Service:
An Eligible Employee shall be required to fulfill the
following eligibility service requirements in order to
participate in the Plan through a salary reduction
agreement and for purposes of receiving an allocation of
Employer Matching Contributions:
a. X The Employee must complete 6 Months of
--- Service (not more than 1 year) to be a
Participant for purposes of receiving
allocations of Employer Matching
Contributions.
b. X The Employee must complete 6 Months of
--- Service (not more than 1 year) to be a
Participant for purposes of entering into a
Salary Reduction Agreement and having
Employee Before Tax Contributions or
Employee After Tax Contributions contributed
to the Plan on the Employee's behalf.
2. Employee Salary Deferrals:
a. Participants shall be entitled to enter into a Salary
Reduction Agreement providing for Before Tax Contributions
to be made to the Plan.
i. X The minimum Before Tax
--- Contribution shall be 1 % of the
Participant's Compensation.
ii. X The maximum Before Tax
--- Contribution shall be 15 % of
the Participant's Compensation.
b. Participants shall be entitled to enter into a Salary
Reduction Agreement providing for After Tax Contributions
to be made to the Plan.
i. The minimum After Tax
--- Contribution shall be % of the
Participant's Compensation.
ii. The maximum After Tax
--- Contribution shall be % of the
Participant's Compensation.
iii. If selected, notwithstanding the
--- above, a Participant shall not
be able to enter into a Salary
Reduction Agreement providing
for After Tax Contributions to
be made to the Plan unless the
Participant has entered into a
Salary Reduction Agreement that
provides for Before Tax
Contributions to be made to the
Plan in an amount of at least
% of the Participant's
---- Compensation.
c. If selected, a Participant shall be entitled
--- to enter into a Salary Reduction Agreement
providing that any extraordinary item of
<PAGE>
compensation, not yet payable (including
bonuses), be withheld from the
Participant's Compensation and contributed
to the Plan as either a Before Tax
Contribution, or After Tax Contribution
(provided such contributions are authorized
above, and to the extent that such
contribution, when aggregated with either
the Participants other Before Tax
Contributions or After Tax Contributions
do not exceed the limitations
specified above, on an annual basis).
3. Contribution Changes:
a. Participants may increase or decrease the
amount of contributions made to the Plan
pursuant to a Salary Reduction Agreement
once each:
i. Plan Year
---
ii Semi-annual period, based on
--- the Plan Year
iii. X Quarter, based on the Plan Year
---
iv Month
---
v Other, as specified below
--- (provided that it is at least
once per year):
b. Claims for returns of Excess Before Tax
Contributions for the Participant's preceding
taxable year must be made in writing, and
submitted to the Committee by March 15 (specify a
date between March 1 and April 15).<F18>
4. Employer Matching Contributions <F19>:
a. Mandatory Matching Contributions:
The Employer shall make contributions to the
Plan, in an amount as specified below:
i. An amount, equal to % of each
--- Participant's Before Tax
Contributions, however, no match
shall be made on Participants
Before Tax Contributions in
excess of % (or $ ) of the
Participant's Compensation.
ii. An amount, equal to % of each
--- Participant's After Tax
Contributions, but not to exceed
% of the Participant's
Compensation, or $ .
<PAGE>
iii An amount, equal to % of each
--- Participant's contributions made
pursuant to a Salary Reduction
Agreement (including both Before
Tax Contributions and After Tax
Contributions), but only if the
Participant has entered into a
Salary Reduction Agreement
providing for Before Tax
Contributions of at least % of
the Participant's Compensation,
but not to exceed % of the
Participant's Compensation,
or $ .
iv An amount equal to the sum of the
--- following:
(a) % of the first % of the
Participant's Compensation
deferred pursuant to a
Salary Reduction
Agreement; plus,
(b) % of the next % of the
Participant's Compensation
deferred pursuant to a
Salary Reduction
Agreement; plus,
(c) % of the next % of the
Participant's Compensation
deferred pursuant to a
Salary Reduction
Agreement, but not to
exceed % of the
Participant's
Compensation, or $ .
v. An amount equal to $ , for
--- each Participant who enters
into a Salary Reduction
Agreement providing for Before
Tax Contributions, After Tax
Contributions, or either Before
Tax Contributions or After Tax
Contributions (or a combination
of both) equal to or exceeding
% of the Participant's
Compensation. Such
contributions shall be made and
allocated:
(a) only during
---- the first Plan
Year the Plan
is in effect,
or if a
restatement,
for the first
Plan Year
beginning
with, or
containing the
re-statement
Effective
Date.
(b) each Plan Year
---- that a
Participant
has in force a
Salary
Reduction
Agreement
meeting the
criteria
specified
above.
(c) during the
---- first Plan
Year that the
Participant
participates
through a
Salary
Reduction
Agreement
meeting the
criteria
specified
above.
b. Discretionary Matching Contributions:
X The Employer shall make contributions to
--- the Plan, in an amount determined by
resolution of the Board of Directors on
an annual basis. The Board resolution
shall provide for the percentage and/or
<PAGE>
amount of Before Tax Contributions
and/or After Tax Contributions to be
matched and the maximum percentage
and/or amount of Before Tax
Contributions and/or After Tax
Contributions eligible for matching.
c. Allocation of Matching Contributions:
Employer Matching Contributions shall be
allocated pursuant to the terms of the Basic Plan
Document, notwithstanding the foregoing:
i. X A Participant who terminates
--- before the end of the period
for which contributions are
allocated shall share in the
allocation of Employer Matching
Contributions if termination of
employment was the result of
(select all that apply):
(a) X retirement
---
(b) X disability
---
(c) X death
---
(d) X other, as
--- specified
below:
Other
termination of
employment
from the
company on
account of a
Change of
Control, as
defined in the
addendum
attached
hereto.
ii._X_ Employer Matching Contributions
--- shall be allocated to the
accounts of Participants
(select one): Only allocated to
those Participants who are
employed on the last day of the
Plan Year.
(a) as of each pay
--- period for
which a
contribution
was made
pursuant to a
Salary
Reduction
Agreement.
(b) semi-monthly.
---
(c) as of the last
--- day of the
month
preceding the
month in which
the
contribution
was made.
(d) as of the last
--- day of the
Plan quarter
preceding the
quarter in
which the
contribution
was made.
(e) X as of the last
--- day of the
Plan year.
iii. X If selected, the Employer may
--- make Employer Matching
Contributions without regard to
current or accumulated Net
<PAGE>
Profits of the Employer for the
taxable year ending with, or
within the Plan Year <F20>.
d. The percentage of a Participant's Employer
Matching Contribution Account<F21> (attributable
to Employer Matching Contributions) to be vested
in him or her upon termination of employment
prior to attainment of the Plan's Normal
Retirement Date shall be <F22>:
<TABLE>
<CAPTION>
Completed Years of Service
<S> <C> <C> <C> <C> <C> <C> <C>
1 2 3 4 5 6 7
------- ------- ------- ------- ------- ------- ----
0% 100%
-- ----
0% 0% 100%
-- -- ----
0% 20% 40% 60% 80% 100%
-- --- --- --- --- ----
0% 0% 20% 40% 60% 80% 100%
-- -- --- --- --- --- ----
10% 20% 30% 40% 60% 80% 100%
--- --- --- --- --- --- ----
Vi X 0% 40% 60% 80% 100%
-- --- --- --- ----
0% 0% 0% 0% 0% 0% 100%
-- -- -- -- -- -- ----
Full and immediate vesting upon entry into the Plan
---
Notwithstanding anything to the contrary
in the Plan, the amount inserted in the
blanks above shall not exceed the limits
specified in Code ss.411(a)(2).
</TABLE>
e. Notwithstanding the provisions of this Item
C(4)(e) of the Adoption Agreement, a Participant
shall become fully vested in his Participant's
Employer Matching Contribution Account if <F23>:
i. the Participant's job is
--- eliminated without the
Participant being offered a
comparable position elsewhere
with the Employer.
ii. for such reason as is described
--- below:
f. Corrective Contributions:
i. X If selected, the Employer shall
--- be authorized to make Qualified
Matching Contributions, subject
to the terms of the Basic Plan
Document, in an amount
determined by resolution of the
Board of Directors on an annual
basis.
ii. X If selected, the Employer shall
--- be authorized to make Qualified
Nonelective Contributions,
subject to the terms of the
Basic Plan Document, in an
amount determined by resolution
of the Board of Directors on an
annual basis.
<PAGE>
5. Gap Earnings:
If selected, Gap Earnings, as defined
--- inss.3.2(G)(1) of the Basic Plan Document,
will be calculated for Excess Elective
Deferrals, Excess Contributions and Excess
Aggregate Contributions, and refunded to the
Participant as provided for in Article III
of the Basic Plan Document.
6. Forfeitures:
a. Forfeitures of amounts attributable to Employer
Matching Contributions shall be reallocated as of:
i. X the last day of the Plan Year in
--- which the Forfeiture occurred.
ii. the last day of the Plan Year
--- following the Plan Year in which
the Forfeiture occurred.
iii. the last day of the Plan Year in
--- which the Participant suffering
the Forfeiture has incurred the
fifth consecutive One Year Break
in Service.
b. Forfeitures of Employer Matching Contributions shall
be reallocated as follows:
i. Not applicable as Employer Matching
--- Contributions are always 100% vested
and nonforfeitable.
ii. X Used first to pay the expenses of
--- administering the Plan, and then
allocated pursuant to one of the
following two options:
iii. Forfeitures shall be allocated to
--- Participant's accounts in the same
manner as Employer Profit Sharing
Contributions, Employer Matching
Contributions, Qualified Nonelective
Contributions or Qualified Matching
Contributions, in the discretion of
the Employer, for the year in which
the Forfeiture arose.
iv. X Forfeitures shall be applied to
--- reduce the Employer Profit Sharing
Contributions, Employer Matching
Contributions, Qualified Nonelective
Contributions or Qualified Matching
Contributions, in the discretion of
the Employer, for the Plan Year
following the Plan Year in which the
Forfeiture arose.
c. Forfeitures of Excess Aggregate Contributions shall
be:
i. X Applied to reduce Employer
--- contributions for the Plan Year
in which the excess arose, but
allocated as below, to the
extent the excess exceeds
Employer contributions for the
Plan Year, or the Employer has
already contributed for such
Plan Year.
<PAGE>
ii. X Allocated after all other
--- forfeitures under the Plan:
(a) X to the
--- Matching
Contribution
account of
each
Non-highly
Compensated
Participant
who made
Before Tax
Contributions
or After Tax
Contributions
in the ratio
which each
such
Participant's
Compensation
for the Plan
Year bears to
the total
Compensation
of all such
Participants
for the Plan
Year; or,
(b) to the
--- Matching
Contribution
account of
each
Non-highly
Compensated
Eligible
Participant in
the ratio
which each
Eligible
Participant's
Compensation
for the Plan
Year bears to
the total
Compensation
of all
Eligible
Participants
for the
Plan Year.
7. In-Service Distributions (select as may be appropriate):
(a) There shall be no in-service
--- distribution of Participant account
balances derived from Before Tax
Contributions (including Qualified
Nonelective Contributions and Qualified
Matching Contributions treated as Before
Tax Contributions under the terms of the
Basic Plan Document), or Employer
Matching Contributions.
b. X Participants may request an in-service
--- distribution of their account balance
attributable to Employer Matching
Contributions, for the following
reasons:
i. X For purposes of
--- satisfying a financial
hardship, as
determined in
accordance with the
uniform
nondiscriminatory
policy of the
Committee;
ii X Attainment of age
--- 59 1/2 by the
Participant; or
iii Attainment of the
--- Plan's Normal
Retirement Date by the
Participant.
c. X Participants may request an in-service
--- distribution of their account balance
attributable to Employee Before Tax
Contributions, for the following
reasons:
i. For purposes of
--- satisfying a financial
hardship, as
determined by the
facts and
circumstances of an
Employee's situation,
in accordance with the
provisions of ss.3.9
of the Basic Plan
Document;
<PAGE>
ii X For purposes of
--- satisfying a financial
hardship, using the
"safe harbor"
provisions of ss.3.9
of the Basic Plan
Document.
iii X Attainment of age
--- 59 1/2 by the
Participant; or
iv. Attainment of the
--- Plan's Normal
Retirement Date
by the Participant.
<PAGE>
NOTICE: The adopting Employer may not rely on an opinion letter issued by
the National Office of the Internal Revenue Service as evidence that the
Plan is qualified under the provisions of ss.401 of the Internal Revenue
Code. In order to obtain reliance with respect to the Plan's qualification,
the Employer must apply to the Key District Office of the Internal Revenue
Service for a determination letter.
This Adoption Agreement may only be used in conjunction with Basic Plan
Document # 05.
This Plan document may only be used under the express authority of KeyCorp,
its subsidiaries and affiliates, and is not effective as completed until
executed by a duly authorized officer of KeyCorp, one of its subsidiaries
or affiliates, and approved by KeyCorp's counsel.
KeyCorp, as sponsor, may amend or discontinue this prototype plan document
upon proper notification to all adopting Employers pursuant to Revenue
Ruling 89-13.
Failure to properly fill out an Adoption Agreement may result in
disqualification of the Plan, and adverse tax consequences to the Employer
and Plan Participants.
This Plan is sponsored by:
KeyCorp, on behalf of its operating subsidiaries, banking and trust
company affiliates
127 Public Square
Cleveland, Ohio 44114
(800) 982-3811
<PAGE>
In Witness Whereof, the Employer and the Trustee, by their respective
duly authorized officers, have caused this Adoption Agreement to be
executed on this 1st day of July, 1999.
--- ---- ----
Employer: M.D.C. Holdings, Inc.
---------------------
By: /s/ Daniel S. Japha
-----------------------------
Title: Secretary
--------------------------
Trustee: KeyTrust Company National Association
-------------------------------------
By: /s/
-----------------------------
Title: Assistant Vice President
--------------------------
and
By: /s/
-----------------------------
Title: Vice President
--------------------------
Approved on Behalf of Trustee:
Initials: CMA Date: 1/29/99
--------------------- ----------------
<PAGE>
Investment Fund Designation
M.D.C. Holdings, Inc. (the "Named Fiduciary"), as an independent fiduciary with
respect to the M.D.C. Holdings, Inc. 401(k) Savings Plan (the "Plan"), an
employee pension benefit plan covered by the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and its
employees who participate therein (the "Participants"), hereby designates the
following investment funds from among the investment fund options available for
adopting employers of the PRISM(R) Prototype Retirement Plan & Trust (as defined
in ss.10.7 of the Plan), available for selection by Participants for the
investment of Plan assets held for their benefit:
(a) EB MaGIC(R) Fund
(b) Fidelity Advisor Growth Opportunities Fund: Class T
(c) Invesco Dynamics
(d) Neuberger & Berman Genesis - Assets
(e) The American Funds Group(R): EuroPacific Growth Fund
(f) The American Funds Group(R): The Bond Fund of America
(g) The American Funds Group(R): The Income Fund of America
(h) The American Funds Group(R): Washington Mutual Investors Fund
(i) The Victory Stock Index Fund
(j) M.D.C. Holdings Inc. Common Stock
(k)
(l)
(m)
The plan assets are currently invested in the funds more fully described
below (Existing Funds). The Named Fiduciary further designates that assets
held in each of the Existing Funds by the Plan prior to liquidation and
transfer to the Trustee shall be reinvested in the PRISM(R) Fund(s) as
specified below:
<TABLE>
<CAPTION>
<S> <C>
Existing Funds: PRISM(R) Funds:
<PAGE>
(a)Guranteed Short Term Fund (a) EB MaGIC(R) Fund
(b)Guranteed Long Term Fund (b) EB MaGIC(R) Fund
(c)Cigna Balanced Fund (c) The American Funds Group(R): The Income
Fund of America
(d)Fidelity Advisor Balanced Fund (d) The American Funds Group(R): The Income
Fund of America
(e)Stock Market Index Fund (e) The Victory Stock Index Fund
(f)Fidelity Advisor Growth Opportunities Fund (f) Fidelity Advisor Growth Opportunities
Fund: Class T
(g)M.D.C. Holdings Inc. Common Stock (g) M.D.C. Holdings Inc. Common Stock
Fund
(h) (h) Invesco Dynamics
(i) (i) Neuberger & Berman Genesis - Assets
(j) (j) The American Funds Group(R):
EuroPacific Growth Fund
(k) (k) The American Funds Group(R): The Bond
Fund of America
(l) (l) The American Funds Group(R): Washington
Mutual Investors Fund
(m) (m) M.D.C. Holdings Inc. Common Stock
X. In addition, if selected, an Employer Stock Fund will also be available.
</TABLE>
In making the selection of Investment Funds, and in designating the
PRISM(R) Funds into which the liquidated assets from each of the Existing
Funds will be invested in, the Named Fiduciary hereby confirms and
acknowledges that:
<PAGE>
The Named Fiduciary has had made available to it copies of the
prospectuses (to the extent required under applicable federal
securities law and regulation) for each investment fund
available for selection by adopting employers of the PRISM(R)
Prototype Retirement Plan & Trust, and has received copies of
each such prospectus for the Investment Funds selected; The
Named Fiduciary acknowledges that the Trustee of the Plan may
receive certain fees for services provide to, or on behalf of
an Investment Fund, or the sponsors or distributors thereof,
pursuant to plans of distribution adopted by the fund under
the provisions of Rule 12b-1 of the Investment Company Act of
1940, and further acknowledges that (i) such fee, if paid, is
appropriate for services rendered to the fund, and when
aggregated with other fees for service payable to the Trustee
constitutes reasonable compensation for the Trustee's services
to the Plan; and (ii) the Plan will be able to redeem its
interest in any such Investment Fund on reasonably short
notice without penalty; The Named Fiduciary further
acknowledges that it has selected the Investment Funds on its
determination, after due inquiry, that the Investment Funds
are appropriate vehicles for the investment of Plan assets
pursuant to the terms of the Plan, considering all relevant
facts and circumstances, including but not limited to (i) the
investment policy and philosophy of the Named Fiduciary
developed pursuant to ERISA ss.404; (ii) the ability of
Participants, using an appropriate mix of Investment Funds, to
diversify the investment of Plan assets held for their
benefit; and, (iii) the ability of Participants to, utilizing
an appropriate mix of Investment Funds, to structure an
investment portfolio within their account in the Plan with
risk and return characteristics within the normal range of
risk and return characteristics for individuals with similar
investment backgrounds, experience and expectations; and, The
Named Fiduciary acknowledges that it has not relied on any
representations or recommendations from the Trustee or any of
its employees in selecting the Investment Funds, or in
specifying which of the selected PRISM(R) Funds into which the
liquidated assets from each of the Existing Funds will be
invested.
The Trustee agrees to follow the Named Fiduciary's direction with respect
to offering the Investment Funds available for selection by the
Participants in the Plan for the investment of Plan assets held for their
benefit:
In Witness Whereof, the Employer, by its duly authorized
representative, has executed this document in connection with adoption of
the Plan utilizing the PRISM(R) Prototype Retirement Plan & Trust
documents, as provided by the Trustee.
Named Fiduciary: M.D.C. Holdings, Inc.
---------------------
<PAGE>
By: Daniel S. Japha
-----------------------------
Title: Secretary
-----------------------------
<PAGE>
<F1> Footnotes in this Adoption Agreement are not to be
construed as part of the Plan provisions but are explanatory
only. To the extent a footnote is inconsistent with the
provisions of the Basic Plan Document or applicable law,
the provisions of the Plan shall be construed in conformity
with the Basic Plan Document or law.
<F2> Terms that are capitalized are defined in the PRISM(R)
Prototype Retirement Plan & Trust Basic Plan Document.
<F3> The Plan will have an individual TIN, distinct from the
Employer TIN.
<F4> Committee members direct the day to day operation of the
Plan. Committee members serve at the pleasure of the
Employer. See ss.11.4 for changes in Committee membership.
If no Committee members are specified, the Employer shall
assume responsibility for the operations of the Plan.
<F5> If no amount is specified, the maximum amount of
Compensation allowed under Code ss.401(a)(17)(the "$150,000
limit" ("$200,000 limit" prior to the Plan Year beginning
before January 1, 1994)), as adjusted from time to time,
shall be used.
<F6> If a fractional year is elected, the elapsed time method
of computing service shall be used for the fractional year.
Eligibility provisions for optional cash or deferred
arrangements are contained in Item C of this Adoption
Agreement.
<F7> Notwithstanding the foregoing, an Employee who has met the
eligibility requirements may not enter the Plan later than
six months following the date on which the Employee first
completes the eligibility requirements.
<F8> Notwithstanding the selection made in this Item B(7)(a),
a participant shall be fully vested in his or her Employer
Contribution Accounts if the Participant dies or becomes
Disabled while in the employ of the Employer.
<F9> If more than one Year of Service is an eligibility
requirement, Item viii must be selected.
<F10> The provisions of this section will be administered by the
Employer on a consistent and nondiscriminatory basis.
<F11> Amounts designated as Qualified Nonelective Contributions
will be allocated pursuant to ss.3.1(A)(14) of the Basic
Plan Document.
<F12> In the event contributions are allocated on a basis other
than a full plan year, the Year of Service shall be based on
the elapsed time method of calculation, and a Participant
shall be deemed to have completed an appropriate Period of
Service for allocation purposes if the Participant has
completed a pro-rata Period of Service corresponding to the
interval on which contributions are allocated.
<F13> Excess Compensation means a Participant's Compensation in
excess of the Permitted Disparity Level specified in the
Definitions section of this Adoption Agreement.
<F14> Even if this Item is selected, the provisions of ss.4.8 of
the Basic Plan Document may supersede this requirement if
necessary to satisfy Code Sections 401(a)(26) and 410(b).
<F15> If this option is selected, iii or iv must be selected to
reallocate Forfeitures of Employer Profit Sharing
Contributions remaining after expenses of administering the
Plan have been paid.
<PAGE>
<F16> This Item is for use in identifying collective trust funds,
which, pursuant to Revenue Ruling 81-100 must be
specifically referenced in the Plan. Actual Investment Funds
are referenced on the Investment Fund Designation form
attached to this Adoption Agreement.
<F17> If this option is selected, the Employer must establish
appropriate procedures for implementation of the Plan's loan
program.
<F18> The date specified is for the refund of amount deferred in
excess of the Code ss.402(g) limit (the $7,000 limit) for
the Participant's taxable year.
<F19> The Employer shall have the right to designate all, or any
portion of Employer Matching Contributions as Qualified
Matching Contributions, which shall then be subject to the
same vesting, distribution, and withdrawal restrictions as
Before Tax Contributions.
<F20> Net Profits will never be required for the contribution of
Before Tax Contributions, After Tax Contributions, Qualified
Nonelective Contributions or Qualified Matching
Contributions.
<F21> Notwithstanding anything in the Adoption Agreement to the
contrary, amounts in a Participant's account attributable to
Before Tax Contributions, Qualified Nonelective
Contributions, and Qualified Matching Contributions shall be
100% vested and nonforfeitable at all time.
<F22> Notwithstanding the selection made in this item B(7)(b), a
Participant shall be fully vested in his or her Employer
Contribution Accounts if the Participant dies or becomes
Disabled while in the employ of the Employer.
<F23> The provisions of this section will be administered by the
Employer on a consistent and nondiscriminatory basis.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from MDC
Holdings, Inc. consolidated financial statements included in its Form 10-Q for
the quarter ended June 30, 1999 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 19,619
<SECURITIES> 0
<RECEIVABLES> 11,814
<ALLOWANCES> 0
<INVENTORY> 614,935
<CURRENT-ASSETS> 0
<PP&E> 2,604
<DEPRECIATION> 0
<TOTAL-ASSETS> 816,712
<CURRENT-LIABILITIES> 0
<BONDS> 256,484
0
0
<COMMON> 281
<OTHER-SE> 339,840
<TOTAL-LIABILITY-AND-EQUITY> 816,712
<SALES> 681,010
<TOTAL-REVENUES> 696,884
<CGS> (611,860)
<TOTAL-COSTS> (632,904)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 63,980
<INCOME-TAX> (25,272)
<INCOME-CONTINUING> 38,708
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,708
<EPS-BASIC> 1.74
<EPS-DILUTED> 1.71
</TABLE>
