<PAGE> 1
As filed with the Securities and Exchange Commission on August 11, 1994
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
Under the
Securities Act of 1933
----------
PLY GEM INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 11-1727150
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
777 Third Avenue
New York, New York 10017
(Address of Principal Executive Offices)
----------
PLY GEM INDUSTRIES, INC. GROUP PROFIT-SHARING/401(K) PLAN
(Full Title of the Plan)
Mr. Jeffrey S. Silverman
Ply Gem Industries, Inc.
777 Third Avenue
New York, New York 10017
(Name and Address of Agent For Service)
(212) 832-1550
(Telephone Number, Including Area Code, of Agent For Service)
Copy to:
Charles M. Modlin, Esq.
EAB Plaza
Uniondale, New York 11556
----------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Amount Offering Aggregate Amount of
Securities to be Price Per Offering Registration
to be Registered Registered(1) Share(2) Price(2) Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 100,000 $19.25 $1,925,000 $664.00
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(Cover Page Continued on Next Page)
<PAGE> 2
(Continuation of Cover Page)
(1) The Plan provides that in the event of a stock dividend, stock split,
recapitalization, etc., the total number of shares which may be optioned or
awarded, the number of shares covered by each outstanding option, commitment or
undelivered award, and the price per share of the outstanding options shall be
equitably adjusted. Accordingly, pursuant to Rule 416, this Registration
Statement covers, in addition to the number of shares of Common Stock stated
above, an additional indeterminate number of shares which, by reason of any
such event, may become subject to the Plan.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(h) based on the average high and low prices of the
Common Stock registered on the American Stock Exchange on August 8, 1994.
<PAGE> 3
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been filed by Ply Gem Industries,
Inc. (the "Registrant") with the Securities and Exchange Commission (the
"Commission") are hereby incorporated by reference:
(a) Annual Report on Form 10-K for the year ended
December 31, 1993;
(b) Quarterly Report on Form 10-Q for the quarter ended
April 2, 1994;
(c) Amendment to Annual Report on Form 10-K/A for the
year ended December 31, 1993;
(d) Current Report on Form 8-K dated February 24, 1994;
and
(e) The description of the Common Stock of the Registrant
which is contained in a registration statement filed
by the Registrant under Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act"), including any amendment or report filed for
the purpose of updating such description.
All documents filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act of 1934 after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and made a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statements. Any statement so modified or
superseded, shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Item 4. DESCRIPTION OF SECURITIES.
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Except as herein set forth, there is no charter provision, by-law,
contract, arrangement or statute under which any director or officer of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such.
Section 145 of the Delaware General Corporation Law provides as
follows:
II-1
<PAGE> 4
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. (a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or
II-2
<PAGE> 5
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan;
and references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Articles VII and VIII of the Certificate of Incorporation of the
Registrant provide as follows:
ARTICLE VII:
(a) Each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative ("proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal representative, is
or was a director or officer of this corporation or is or was serving at the
request of the corporation as a director or officer of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any other
capacity while serving as a director or officer, shall be indemnified and held
harmless by the corporation to the fullest extent authorized by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter
be amended, (but, in the case of any such amendment, only to the extent that
such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment) against all expenses, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such persons in
connection therewith; provided, however, that the corporation shall indemnify
any such person seeking indemnity in connection with a proceeding (or part
thereof) initiated by such
II-3
<PAGE> 6
person only if such proceeding (or part thereof) was authorized by the board of
directors of the corporation. Such right shall be a contract right and shall
include the right to be paid by the corporation for expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that the payment of such expenses incurred by a director or officer in
his or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of such proceeding, shall be made only upon delivery
to the corporation of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it should be determined ultimately
that such director or officer is not entitled to be indemnified under this
Article VII or otherwise. The corporation may, by action of the board of
directors, provide indemnification to employees and agents of the corporation
with a lesser or the same scope and effect as the foregoing indemnification of
directors and officers.
(b) If a claim under Paragraph (a) of this Article VII is not paid in
full by the corporation within ninety days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant
has not met the standards of conduct which make it permissible under the
General Corporation Law of the State of Delaware for the corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the corporation. Neither the failure of the corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in said
law, nor an actual determination by the corporation (including its board of
directors, independent legal counsel, or its stockholders) that the claimant
had not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant had not met the applicable
standard of conduct.
(c) The rights conferred on any person by Paragraphs (a) and (b) of
this Article shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of this Certificate of
Incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
(d) The corporation may maintain insurance, at its expense, to protect
itself and any such director or officer of the corporation or of another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the corporation would have the
power to indemnify such person against such expense, liability or loss under
the General Corporation Law of the State of Delaware.
ARTICLE VIII:
A director of this corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. If the Delaware General
Corporation Law is amended after approval by the stockholders of this Article
VIII to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended from time to time.
Any appeal or modification of this Article VIII shall not increase the
personal liability of any director of this corporation for any act or
occurrence taking place prior to such repeal or modification, or otherwise
II-4
<PAGE> 7
adversely affect any right or protection of a director of the corporation
existing at the time of such repeal or modification.
The provisions of this Article VIII shall not be deemed to limit or
preclude indemnification of a director by the corporation for any liability of
a director which has not been eliminated by the provisions of this Article
VIII."
ARTICLE VIII of the Amended and Restated By-Laws of the Registrant
provides as follows:
SECTION 1. Right to Indemnification. The Corporation shall to the
fullest extent permitted by applicable law as then in effect indemnify any
person (the "Indemnitee") who was or is involved in any manner (including,
without limitation, as a party or a witness), or is threatened to be made so
involved, in any threatened, pending or completed investigation, claim, action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including. without limitation, any action, suit or proceeding by or in the
right of the corporation to procure a judgment in its favor) (a "Proceeding")
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such Proceeding. Such indemnification shall
be a contract right and shall include the right to receive payment in advance
of any expenses incurred by the Indemnitee in connection with such Proceeding,
consistent with the provisions of applicable law as then in effect.
SECTION 2. Contracts and Funding. The Corporation may enter into
contracts with any director, officer, employee or agent of the Corporation in
furtherance of the provisions of this Article VIII and may create a trust fund,
grant a security interest or use other means (including, without limitation, a
letter of credit) to ensure the payment of such amounts as may be necessary to
effect indemnification as provided in this Article VIII.
SECTION 3. Employee Benefit Plans. For purposes of this Article
VIII, references to "other enterprises" shall include employee benefits plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee,
or agent, of the Corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner not opposed to the best interests of a corporation.
SECTION 4. Indemnification Not Exclusive Right. The right of
indemnification and advancement of expenses provided in this Article VIII shall
not be exclusive of any other rights to which a person seeking indemnification
may otherwise be entitled, under any statute, by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. The provisions of this Article VIII shall inure to the benefit of the
heirs and legal representatives of any person entitled to indemnity under this
Article VIII and shall be applicable to Proceedings commenced or continuing
after the adoption of this Article VIII, whether arising from acts or omissions
occurring before or after such adoption.
SECTION 5. Advancement of Expenses; Procedures. In furtherance, but
not in limitation, of the foregoing provisions, the following procedures and
remedies shall apply with respect to advancement of expenses and the right to
indemnification under this Article VIII:
II-5
<PAGE> 8
(a) Advancement of Expenses. All reasonable expenses incurred by or
on behalf of the Indemnitee in connection with any Proceeding shall be advanced
to the Indemnitee by the Corporation within 20 days after the receipt by the
Corporation of a statement or statements from the Indemnitee requesting such
advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the expenses incurred by the Indemnitee and, if required by law at the
time of such advance, shall include or be accompanied by an undertaking by or
on behalf of the Indemnitee to repay the amounts advanced if it should
ultimately be determined that the Indemnitee is not entitled to be indemnified
against such expenses.
(b) Written Request for Indemnification. To obtain indemnification
under this Article VIII, an Indemnitee shall submit to the Secretary of the
Corporation a written request, including such documentation and information as
is reasonably available to the Indemnitee and reasonably necessary to determine
whether and to what extent the Indemnitee is entitled to indemnification (the
"Supporting Documentation"). The determination of the Indemnitee's entitlement
to indemnification shall be made within a reasonable time after receipt by the
Corporation of the written request for indemnification together with the
Supporting Documentation. The Secretary of the Corporation shall, promptly
upon receipt of such a request for indemnification, advise the Board of
Directors in writing that the Indemnitee has requested indemnification.
(c) Procedure for Determination. The Indemnitee's entitlement to
indemnification under this Article VIII shall be determined (i) by the Board of
Directors by a majority vote of a quorum (as defined in Article II of these
By-Laws) consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders, but only if a majority of the
disinterested directors, if they constitute a quorum of the Board of Directors,
presents the issue of entitlement to indemnification to the stockholders for
their determination."
The Company has purchased Directors' and Officers' Liability
Insurance. Subject to the policy conditions, the insurance provides coverage
for amounts payable by the Company to its directors and officers pursuant to
the Registrant's Certificate of Incorporation and By-Laws.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
Item 8. EXHIBITS.
The following exhibits are filed as part of this Registration
Statement:
4.1 Ply Gem Industries, Inc. Group Profit-Sharing/401(K) Plan
5.1 Opinion and consent of Messrs. Elihu H. Modlin and Charles M.
Modlin.
23.1 Consent of Grant Thornton.
23.2 Consent of Messrs. Elihu H. Modlin and Charles M. Modlin
(included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-8 hereof).
The Registrant hereby undertakes to submit the Plan and any amendment
to the Plan to the Internal Revenue Service ("IRS") in a timely manner and will
make all changes required by the IRS in order to qualify the Plan.
Item 9. Undertakings.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
II-6
<PAGE> 9
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the "Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this Registration
Statement:
provided , however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering; and
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-7
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of New York, State of New York, on August 11, 1994
PLY GEM INDUSTRIES, INC.
By: /s/ Jeffrey S. Silverman
-------------------------
Jeffrey S. Silverman
Chairman, Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Jeffrey S. Silverman and
Herbert P. Dooskin or any one of them with full authority to act without the
other, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, as each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, their or
his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jeffrey S. Silverman Chairman, Chief Executive August 11, 1994
- ---------------------------------- Officer (Principal Executive
Jeffrey S. Silverman Officer) and Director
/s/ Herbert P. Dooskin Executive Vice President August 11, 1994
- ---------------------------------- (Principal Financial Officer)
Herbert P. Dooskin and Director
/s/ Jerome Baum Controller August 11, 1994
- ----------------------------------
Jerome Baum
/s/ Albert Hersh Director August 11, 1994
- ----------------------------------
Albert Hersh
/s/ Elihu H. Modlin Director August 11, 1994
- ----------------------------------
Elihu H. Modlin
</TABLE>
II-8
<PAGE> 11
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
------- -----------
4.1 Ply Gem Industries, Inc. Group Profit-Sharing/401(K) Plan
5.1 Opinion and consent of Messrs. Elihu H. Modlin and Charles M.
Modlin.
23.1 Consent of Grant Thornton.
23.2 Consent of Messrs. Elihu H. Modlin and Charles M. Modlin
(included in Exhibit 5.1).
24.1 Power of Attorney (included on page II-8 hereof).
<PAGE> 1
PLY GEM INDUSTRIES, INC.
GROUP PROFIT-SHARING / 401 (k) PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
ARTICLE 1 - DEFINITIONS
1.01 Account 1
1.02 Anniversary Date 1
1.03 Annuity Starting Date 2
1.04 Applicable Computation Period 2
1.05 Beneficiary 2
1.06 Board of Directors 2
1.07 Committee 2
1.08 Company 2
1.09 Compensation 2
1.10 Controlled or Affiliated Service Group 4
1.11 Disability 4
1.12 Effective Date/Supplemental Effective Date 4
1.13 Election Period 5
1.14 Employee/Eligible Employee/Leased Employee 5
1.15 Employer 6
1.16 Highly Compensated Employee/
Nonhighly Compensated Employee 6
1.17 Internal Revenue Code or Code 8
1.18 Participant 8
1.19 Plan 8
1.20 Plan Year 8
1.21 Protected Spouse 8
1.22 Qualified Annuity 8
1.23 Qualified Domestic Relations Order 9
1.24 Retirement 9
1.25 Retirement Dates 9
1.26 Service (Break-in-Service - Month of Service -
Year of Service - Hour of Employment) 9
1.27 Trust Agreement 10
1.28 Trustee 10
1.29 Trust Fund 11
1.30 Valuation Date 11
ARTICLE 2 - ELIGIBILITY AND PARTICIPATION
2.01 Eligibility for Participation 12
2.02 Change in Employment Status 12
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ARTICLE 3 - CONTRIBUTIONS
3.01 Elective Deferral Contributions 14
3.02 Reduction of Excess Elective
Deferral Contributions 14
3.03 Matching and Regular Contributions 14
3.04 Voluntary Contributions 16
3.05 Contribution Changes 16
3.06 Discontinuance of Contributions 16
3.07 Rollover Contributions from Other
Qualified Plans 17
3.08 Transfer of Assets from Other
Qualified Plans 18
3.09 Deposit of Contributions 18
3.10 Payment of Expenses 19
ARTICLE 4 - CONTRIBUTIONS LIMITATIONS
4.01 $7,000 Limitation on Elective
Deferral Contributions 20
4.02 Limitation on Elective Deferral and
Matching Contributions 20
4.03 Limitation on Allocations 24
ARTICLE 5 - MAINTENANCE OF ACCOUNTS, INVESTMENT FUNDS AND
VALUATION OF THE TRUST FUND
5.01 Maintenance of Accounts 30
5.02 Investment Election 30
5.03 Investment Funds 30
5.04 Valuation of Trust Fund 31
5.05 Allocation of Investment Earnings and
Expenses 31
ARTICLE 6 - BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT
6.01 Upon Retirement 32
6.02 Upon Disability 32
6.03 Upon Death 32
6.04 Upon Other Termination of Employment 34
6.05 Reemployment and Repayment of Benefits 35
ARTICLE 7 - DISTRIBUTION OF BENEFITS
7.01 Claim Procedure For Benefits 37
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7.02 Commencement of Benefits 37
7.03 Method and Form of Payment of Benefits 41
7.04 Spousal Consent Requirements With Respect
to Participant Elections 44
7.05 Disposition of Unclaimed Benefits 45
7.06 Non-Assignability 45
7.07 Substitute Payee 45
7.08 Satisfaction of Liability 46
7.09 Direct Rollover to Eligible Retirement Plans 46
7.10 Waiver of 30 Day Notice Requirement 47
ARTICLE 8 - ADMINISTRATION OF THE PLAN
8.01 Assignment of Administrative Authority 48
8.02 Organization and Operation of the Committee 48
8.03 Authority and Responsibility 49
8.04 Records and Reports 50
8.05 Required Information 50
8.06 Fiduciary Liability 50
8.07 Payment of Expenses 51
8.08 Indemnification 51
8.09 Qualified Domestic Relations Orders 51
ARTICLE 9 - AMENDMENT AND TERMINATION
9.01 Amendment 56
9.02 Termination 56
9.03 Vesting Upon Termination 57
9.04 Distribution of Benefits After Termination 57
ARTICLE 10 - PARTICIPATING COMPANIES
10.01 Adoption by Other Entities 58
10.02 Alternative Provisions 58
10.03 Right to Withdraw (Plan Spinoff) 58
10.04 Procedure Upon Withdrawal 58
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ARTICLE 11 - TOP-HEAVY PROVISIONS
11.01 Definition of Top-Heavy and Super Top-Heavy 60
11.02 Definition of Key Employee 61
11.03 Minimum Employer Contribution 62
11.04 Minimum Vesting 63
11.05 Limitation of Allocations 63
ARTICLE 12 - WITHDRAWAL OF FUNDS DURING EMPLOYMENT
12.01 Withdrawals from Elective Deferral
Contribution Account 64
12.02 Withdrawals from Matching and Regular
Contribution Accounts 64
12.03 Withdrawals from Rollover and Transfer Accounts 64
12.04 Financial Hardship Rules 64
12.05 General Withdrawal Rules 66
ARTICLE 13 - LOANS
13.01 Amount of Loans and Terms of Repayment 67
ARTICLE 14 - GENERAL PROVISIONS
14.01 Exclusiveness of Benefits 69
14.02 Limitation of Rights 69
14.03 Limitation of Liability and Legal Actions 69
14.04 Construction of Agreement 70
14.05 Title to Assets 70
14.06 Severability 70
14.07 Titles and Headings 70
14.08 Counterparts as Original 70
14.09 Merger of Plans 70
14.10 Internal Revenue Service Approval 71
ARTICLE 15 - PROVISIONS RELATING TO COMPANY STOCK
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ARTICLE 1
DEFINITIONS
For purposes of the Plan, the following words and phrases shall have the
following meanings unless a different meaning is plainly required by the
context. Wherever used, the masculine pronoun shall include the feminine
pronoun and the feminine pronoun shall include the masculine and the singular
shall include the plural and the plural shall include the singular.
1.01 "Account"
The interest of a Participant in the Trust Fund as represented by his
accounts as designated below.
(a) "Elective Deferral Contribution Account" (Account A) -
Portion of Trust Fund attributable to a Participant's Elective
Deferral Contributions in accordance with the provisions of
Section 3.01.
(b) "Matching Contribution Account" (Account B) - Portion of
Trust Fund attributable to the Company's
(i) Matching Contributions in accordance with the
provisions of Subsection 3.03(a); and
(ii) Additional Matching Contributions in accordance with
the provisions of Subsection 3.03(b).
(c) "Regular Contribution Account" (Account C) - Portion of
Trust Fund attributable to the Company's Regular Contributions
in accordance with the provisions of Subsection 3.03(c) and
Top-Heavy Contributions in accordance with Article 11. Also
includes the portion of the Trust Fund attributable to a
Participant's participation in the Ply-Gem Industries, Inc.
Stock Bonus Plan.
(d) "Rollover Account" (Account D) - Portion of Trust Fund
attributable to funds rolled over from another qualified plan
in accordance with Section 3.07.
(e) "Transfer Account" (Account E) - Portion of Trust Fund
attributable to the Company's contributions during a
Participant's participation under another qualified plan and
transferred in accordance with the provisions of Section 3.08.
1.02 "Anniversary Date"
Each January 1 commencing after the Effective Date.
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1.03 "Annuity Starting Date"
The first day of the first period for which an amount is payable as an
annuity. If a benefit is not payable in the form of an annuity, the
first day on which all events have occurred which entitle the
Participant to such benefit.
1.04 "Applicable Computation Period"
(a) For purposes of contributions in accordance with Articles 3
and 11, Applicable Computation Period shall be a Plan Year.
(b) For all other purposes, Applicable Computation Period shall be
the 12-month period beginning as of the date a person first
completed an Hour of Employment with the Employer and each
anniversary thereof.
1.05 "Beneficiary"
The person designated to receive benefits payable under the Plan in
the event of death. In the event a Beneficiary is not designated, the
Participant's surviving spouse shall be deemed his Beneficiary or in
the absence of a surviving spouse, the benefits shall be paid to the
Participant's estate.
1.06 "Board of Directors"
The Board of Directors of Ply Gem Industries, Inc.
1.07 "Committee"
The persons appointed in accordance with Section 8.01 to administer
the Plan. In the absence of such designation, the Company shall serve
as the Committee and in such case all references herein to the
Committee shall be deemed a reference to the Company.
1.08 "Company"
(a) Ply Gem Industries, Inc. and any successor which shall
maintain this Plan; and
(b) any other business entity which duly adopts the Plan with the
approval of the Board of Directors.
1.09 "Compensation"
(a) Unless otherwise indicated, for purposes of Sections 3.01, and
3.03, the amount described in Subsection (c), exclusive of any
(i) amount which is paid by the Employer but not by the
Company; (ii) amount paid by the Company for any period during
which the Participant's employment status did not meet the
requirements of Section 1.14 and (iii) amounts paid before an
Eligible Employee was eligible to become a
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<PAGE> 8
Participant in accordance with Section 2.01. For purposes of
Section 3.01, third party insurance payments shall be excluded.
(b) For purposes of Section 4.03, the Participant's wages for the
Plan Year paid by the Employer of the type reported in box 10
of Form W-2 (1991). Such wages shall include amounts within
the meaning of Section 3401(a) of the Code plus any other
amounts paid to the Participant by the Employer for which the
Employer is required to furnish a written statement under
Section 6041(d) and 6051(a)(3) of the Code, determined without
regard to any rules that limit the amount required to be
reported based on the nature or location of the employment or
services performed, exclusive of
(i) severance pay on a non payroll basis and
(ii) non-qualified deferred compensation payments.
(c) For purposes of Sections 1.16 and 4.02 and Article 11, the
amount described in Subsection (b) increased by the amount of
any contributions made by the Employer under any salary
reduction or similar arrangement to a qualified deferred
compensation, pension or cafeteria plan, contributions to a
simplified employee pension plan described in Section 408(k)
of the Code, contributions towards the purchase of an annuity
contract described in Section 403(b) of the Code, compensation
deferred under a deferred compensation plan within the meaning
of Section 457(b) of the Code and Employee contribution (under
governmental plans described in Section 414(h)(2) of the Code
which are picked up and treated as Employer contributions.
For purposes of Section 1.16, the amount described above shall
be for the applicable period for making the determination of
Highly Compensated Employees.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the Plan shall
not exceed the OBRA '93 annual compensation limit. The OBRA '93
annual compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which Compensation is determined
(determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination
period, and the denominator of which is 12.
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<PAGE> 9
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall
mean the OBRA '93 annual compensation limit set forth in this
provision.
If compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current
Plan Year, the Compensation for that prior determination period is
subject to the OBRA '93 annual compensation limit in effect for that
prior determination period. For this purpose, for the determination
periods beginning before the first day of the first Plan Year
beginning on or after January 1, 1993, the OBRA '93 annual
compensation limit is $150,000.
For Plan Years beginning before January 1, 1994, the Compensation
limitation shall be determined in accordance with the provisions of
the Plan in effect prior to this restatement.
1.10 "Controlled or Affiliated Service Group"
(a) "Controlled Group" - Any group of business entities under
common control, including but not limited to proprietorships
and partnerships, or a controlled group of corporations within
the meaning of Sections 414(b), (c) and (o) of the Code. For
purposes of Section 4.03, the phrase "more than 50%" is
substituted for the phrase "at least 80%" each place it
appears in Section 1563(a)(1) of the Code.
(b) "Affiliated Service Group" - Any group of business entities
within the meaning of Section 414(m) of the Code.
1.11 "Disability"
Any physical or mental condition which may reasonably be expected to
be permanent and which renders the Participant incapable of continuing
as an Eligible Employee for his customary Hours of Employment.
1.12 "Effective Date"
January 1, 1988, the date as of which the Plan was established.
"Supplemental Effective Date"
January 1, 1994, the last date as of which the Plan was amended in its
entirety.
Unless otherwise provided herein, those provisions added or amended to
comply with the Tax Reform Act of 1986 required to be effective as of
January 1, 1988 shall be effective as of such date.
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<PAGE> 10
1.13 "Election Period"
The period commencing 90 days before the Annuity Starting Date and
ending on such Annuity Starting Date.
1.14 "Employee"
Any person in the employ of the Company.
Leased Employees shall be included as Employees unless (i) such
individual is covered by a money purchase pension plan providing (A) 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 by the employer pursuant to a salary
reduction agreement which are excludable from the Leased Employee's
gross income under Section 125, 402(a)(8), 403(h) or 403(b) of the
Code; (B) immediate participation; and (C) full and immediate vesting;
and (ii) Leased Employees do not constitute more than 20% of the
Employer's Nonhighly Compensated Employee workforce.
"Eligible Employee"
An Employee for whom the Company is required to contribute Federal
Insurance Contributions Act taxes excluding persons (a) who are Leased
Employees, (b) under the jurisdiction of a collective bargaining unit
(i) having a pension or profit-sharing plan to which the Company is
required to contribute under the terms of the collective bargaining
agreement or (ii) for whom retirement benefits were the subject of
good faith bargaining and (c) excluding persons employed by Hoover
Treated Wood Products, Inc. and Sagebrush Sales, Inc. who are
remunerated on an hourly basis.
Notwithstanding the above, Leased Employees shall be included in the
definition of Eligible Employee if the requirements of Section
414(n)(2) of the Code require such inclusion in order to meet the plan
qualification requirements enumerated in Section 414(n) and then only
if the coverage requirements of Section 410(b) of the Code would
otherwise not be met.
"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.
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<PAGE> 11
1.15 "Employer"
The Company and any other business entity in a Controlled or
Affiliated Service Group which includes the Company.
1.16 "Highly Compensated Employee"
(a) An Employee who is a Highly Compensated Active Employee or a
Highly Compensated Former Employee.
(b) A Highly Compensated Active Employee is any Employee who
performs Service with the Employer during the Determination
Year and is described in either the Look-back Year Group or
the Determination Year Group or both such groups.
(i) The Look-back Year Group includes any Employee who (A)
was at any time during the Look-back Year a 5% owner,
as defined in Section 416(i)(1) of the Code; (B)
received Compensation from the Employer in excess of
$75,000; (C) received Compensation from the Employer in
excess of $50,000 and was in the Top-Paid Group, as
defined in Section 414(q) of the Code, of Employees for
such Look-back Year; or (D) was at any time an officer
and received Compensation greater than 50% of the
maximum dollar limitation under Section 415(b)(1)(A) of
the Code.
The 415(b)(1)(A) limitation and the $75,000 and $50,000
thresholds set forth above shall be adjusted annually
for increases in the cost-of-living in accordance with
Section 415(d) of the Code, effective as of January 1
of the calendar year such increase is promulgated and
applicable to the Plan Year which begins with or within
such calendar year.
(ii) The Determination Year Group includes any Employee who
(A) was at any time during the Determination Year a 5%
owner, as defined in Section 416(i)(1) of the Code; or
(B) is both (1) described in Subparagraphs (i)(B),
(i)(C) or (i)(D) above substituting the Determination
Year for the Look-back Year; and (2) a member of the
group consisting of the 100 Employees paid the greatest
Compensation during the Determination Year of
reference.
(c) A Highly Compensated Former Employee for a Determination Year
is any former Employee who separated from Service prior to
such Determination Year and was a Highly Compensated Active
Employee for either the year in which such Employee separated
from Service or any Determination Year ending on or after such
Employee's 55th birthday.
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<PAGE> 12
(d) For purposes of this definition, the following shall be
applicable:
(i) The Determination Year is the applicable Plan Year for
which a determination is being made and the Look-back
Year is the 12-month period immediately preceding such
Plan Year.
(ii) If there are no officers as described above in either
the Determination Year or the Look-back Year, then the
highest paid officer of the Employer in each such year
shall be deemed a Highly Compensated Employee with
respect to such year.
(iii) The determination of Highly Compensated Employees,
including the determinations of the number and identity
of Employees in the Top-Paid Group, the top 100
Employees and the number of Employees treated as
officers shall be governed by Section 414(q) of the
Code and Treasury Regulation 1.414(q)-1T.
(iv) The Compensation and contributions under the Plan of a
Highly Compensated Employee who is a 5% owner or in the
group consisting of the 10 Highly Compensated Employees
paid the greatest Compensation during any Determination
Year or Look-back Year shall be determined by
aggregating such amounts with the Compensation and
contributions of each other Employee who is the spouse,
lineal ascendant or descendant or spouse of a lineal
ascendant or descendant of such Highly Compensated
Employee.
(e) The Company may make the following elections as provided for
in Treasury Regulation 1.414(q)-1T:
(i) the special rule for determining Highly Compensated
Former Employees who separated from Service before
January 1, 1987 in accordance with Treasury Regulation
1.414(q)-1T, Q&A 4(d). However, once such an election
is made it may not be changed without the consent of
the Commissioner;
(ii) the calendar year election for the Look-back Year in
accordance with Treasury Regulation 1.414(q)-1T, Q&A
14(b);
(iii) the modification on a consistent and uniform basis of
the permissible age and service exclusions in
accordance with Treasury Regulation 1.414(q)-1T, Q&A
9(b)(2);
(iv) the inclusion of employees covered under a collective
bargaining agreement in accordance with Treasury
Regulation 1.414(q)-1T, Q&A 9(b)(2);
7
<PAGE> 13
(v) the inclusion of leased employees in determining the
highly compensated group in accordance with Treasury
Regulation 1.414(q)-1T, Q&A 7(b)(4); and
(vi) the transitional rule in accordance with Treasury
Regulation 1.414(q)-1T, Q&A 15.
"Nonhighly Compensated Employee"
An Employee who is not deemed to be a Highly Compensated Employee.
1.17 "Internal Revenue Code" or "Code"
The Internal Revenue Code of 1986, and any amendments thereto.
1.18 "Participant"
(a) An Eligible Employee who participates under the Plan in
accordance with Section 2.01.
(b) Each other Eligible Employee or former Eligible Employee for
whom an Account is maintained.
1.19 "Plan"
The plan of the Company, as herein set forth and as from time to time
supplemented and amended, which Plan is intended to be a
profit-sharing plan for purposes of Sections 401(a), 402, 412 and 417
of the Code.
1.20 "Plan Year"
A period of 12 consecutive months commencing on the Effective Date and
each Anniversary Date thereof.
1.21 "Protected Spouse"
The spouse to whom the Participant had been legally married on the
earlier of the date of the Participant's death or the Participant's
Annuity Starting Date.
1.22 "Qualified Annuity"
(a) In the case of a married Participant, an immediate annuity
payable for the life of the Participant with a survivorship
benefit payable to the Participant's spouse (on the Annuity
Starting Date) for life. Such survivorship benefit shall not
be less than 50% or greater than 100% of the benefit payable
to the Participant. In the absence of a specific election,
100% shall be applicable.
(b) In the case of a Participant who is not married on his Annuity
Starting Date, an immediate annuity payable for the
8
<PAGE> 14
life of the Participant. Upon the Participant's death, all
benefits cease.
1.23 "Qualified Domestic Relations Order"
A domestic relations order as defined in Section 8.09 in accordance
with Section 414(p) of the Code.
1.24 "Retirement"
The termination of employment of a Participant on his Normal or
Deferred Retirement Date.
1.25 "Retirement Dates"
(a) "Normal Retirement Date" - The date on which the Participant
attains age 65.
(b) "Deferred Retirement Date" - The first day of any month
subsequent to the Participant's Normal Retirement Date.
1.26 "Service"
(a) All periods of employment with an Employer.
A period of employment begins as of the date the Employee
first completes an Hour of Employment for the Employer and
ends on the earlier of the date the Employee resigns, is
discharged, retires or dies or, if the Employee is absent for
any other reason, on the first anniversary of the first day of
such absence (with or without pay) from the Employer. If an
Employee is absent for any reason and returns to the employ of
the Employer before incurring a Break-in-Service, as provided
in Subsection (b), he shall receive credit for his period of
absence up to a maximum of 12 months. Service subsequent to a
Break-in-Service will be credited as a separate period of
employment.
(b) "Break-in-Service" - A period of 12-consecutive months during
which an Employee fails to accrue an Hour of Employment with
the Employer. Such period begins on the earlier of the date
the Employee resigns, is discharged, retires or dies or, if
the Employee is absent for any other reason, on the first
anniversary of the first day of such absence (with or without
pay) from the Employer. If an Employee is absent by reason of
(i) the pregnancy of the Employee, (ii) the birth of a child
of the Employee, (iii) the placement of a child with the
Employee in connection with an adoption of such child by such
Employee, or (iv) caring for such child immediately following
such birth or placement, such Employee will not be treated as
having retired, resigned or been discharged and the period
between the first and second anniversary of the first day of
such absence shall not be deemed a Break-in-Service.
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<PAGE> 15
(c) "Month of Service" - A calendar month any part of which is in
a period of employment or credited absence.
(d) "Year of Service" - Unless otherwise indicated, 12 Months of
Service.
(e) "Hour of Employment"
(i) For an Employee paid on an hourly basis or for whom
hourly records of employment are required to be
maintained, each hour for which the person is directly
or indirectly paid or entitled to payment for the
performance of duties or for the period of time when no
duties are performed, irrespective of whether the
employment relationship has terminated, such as
vacation, holiday or illness.
(ii) For an Employee paid on a non-hourly basis or for whom
hourly records of employment are not required to be
maintained, each week for which the person is directly
or indirectly paid or entitled to payment shall be
equal to 45 Hours of Employment.
(iii) A person shall receive an Hour of Employment for each
hour for which back pay has been awarded or agreed to
irrespective of mitigation of damages, provided that
each such hour shall be credited to the Applicable
Computation Period to which it pertains, rather than
the Applicable Computation Period in which the award or
agreement is made, and further provided that no such
award or agreement shall have the effect of crediting
an Hour of Employment for any hour for which the person
previously received credit under (i) or (ii) above.
(iv) Notwithstanding the foregoing, Hours of Employment
shall be computed and credited in accordance with
Department of Labor Regulation 2530.200b-2,
Subparagraphs (b) and (c).
1.27 "Trust Agreement"
The instrument executed by the Company and the Trustee fixing the
rights and liabilities of each with respect to holding and
administering the Trust Fund, which instrument shall be incorporated
by reference into this Plan.
1.28 "Trustee"
The Trustee or any successor Trustee, appointed by the Board of
Directors, acting in accordance with the terms of the Trust Agreement.
10
<PAGE> 16
1.29 "Trust Fund"
All assets held by the Trustee for the purposes of the Plan in
accordance with the terms of the Trust Agreement.
1.30 "Valuation Date"
The last day of each March, June, September and December or such other
dates as the Committee may determine from time to time.
11
<PAGE> 17
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.01 Eligibility for Participation
(a) Each Eligible Employee on the Supplemental Effective Date who
was a Participant of the Plan shall continue as a Participant
as of the Supplemental Effective Date.
(b) Each other Eligible Employee shall become a Participant as of
the Supplemental Effective Date or the January, April, July or
October 1 coincident with or next following the later of the
date he completes six Months of Service or attains age 21.
For purposes of this Section, an Eligible Employee shall be
deemed employed as of the first day of a month only if he was
actually employed on or before the first business day of such
month.
(c) If a former Participant is reemployed, he shall be eligible to
resume his participation as of the date of his reemployment.
Such Participant may elect to comply with the provisions of
Section 3.01 as of the date of his reemployment or any
subsequent January 1, April 1, July 1, or October 1.
2.02 Change in Employment Status
(a) In the event a Participant ceases to be an Eligible Employee
as the result of becoming part of an excluded class, only
Compensation up to the date he ceased to be an Eligible
Employee shall be considered for purposes of contributions in
accordance with Article 3. Such Employee shall remain a
Participant but shall not be permitted to contribute in
accordance with Article 3 or share in any Company
contributions or forfeitures allocated in accordance with
Article 3 for the period beyond the date he ceased to be an
Eligible Employee.
In the event such Participant returns to an eligible class and
again becomes an Eligible Employee, he shall be permitted to
share in Company contributions or forfeitures allocated in
accordance with Article 3 as of the date he again became an
Eligible Employee and may elect to comply with the provisions
of Section 3.01 as of such date or any subsequent January 1,
April 1, July 1 or October 1. Only Compensation from the date
he again became an Eligible Employee shall be considered for
purposes of such contributions.
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<PAGE> 18
(b) If a person otherwise satisfied the eligibility requirements
of Section 2.01 and subsequently becomes an Eligible Employee,
he shall be eligible to become a Participant as of the date he
became an Eligible Employee and may elect to comply with the
provisions of Section 3.01 as of such date or any subsequent
January 1, April 1, July 1, or October 1.
(c) In the event a collective bargaining agreement is entered into
between the Company and a representative for any class of
Employees in the employ of the Company subsequent to the
Supplemental Effective Date, eligibility for participation in
the Plan by such Employees who are not Participants shall not
be extended beyond the effective date of the collective
bargaining agreement unless the agreement extends
participation in the Plan to such Employees. The provisions
of Subsection (a) shall apply to those Employees who are
currently Participants.
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<PAGE> 19
ARTICLE 3
CONTRIBUTIONS
3.01 Elective Deferral Contributions
A Participant may, when first eligible or as of any subsequent January
1, April 1, July 1 or October 1 elect to save, through pay reduction
each payroll period, no less than 1% nor more than 8%, in whole
percentages, of that portion of his Compensation attributable to such
payroll period, subject to the limitations on Elective Deferral
Contributions under Sections 4.01 and 4.02 and the limitations on
annual additions under Section 4.03.
Such contributions shall take the form of before tax contributions
(hereinafter known as "Elective Deferral Contributions") and shall be
deemed to be Company contributions for purposes of Section 414(h) of
the Code.
(a) An initial written election must be made by an Eligible
Employee and submitted to the Committee at least 30 days (or
such other period as the Committee may fix from time to time)
prior to the first date the Eligible Employee would be
eligible to become a Participant of the Plan in accordance
with Section 2.01.
(b) An election, once made, shall remain in effect until
subsequently changed by the Eligible Employee in accordance
with the provisions of Section 3.05 or 3.06.
3.02 Reduction of Excess Elective Deferral Contributions
If Elective Deferral Contributions under Section 3.01 are projected to
exceed the limitations of Sections 4.01 or 4.02 at any time during a
Plan Year, the Committee, in a good faith effort to comply with such
limitations, retains the right to reduce the rate of elective
deferrals made by Highly Compensated Employees. Such reduction shall
be made in the sole discretion of the Committee and for purposes of
Section 4.02 shall be accomplished by progressively reducing the
Elective Deferral Contributions of those Highly Compensated Employees
with the highest deferral percentage until the limitations are met.
Contributions made prior to the date of such reduction shall be deemed
to be made pro rata throughout the Plan Year of reference for purposes
of entitlement to a Matching Contribution under Section 3.03.
3.03 Matching and Regular Contributions
Subject to the limitations on annual additions under Section 4.03, the
Company shall contribute the following amounts:
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(a) Matching Contributions - 25% of that portion of the
Participant's Elective Deferral Contributions each payroll
period which does not exceed 4% of the Participant's
Compensation for such payroll period. Only Elective Deferral
Contributions which are not required to be restricted under
Sections 3.02, 4.01 or 4.02 shall be matched. No Matching
Contribution will be provided in excess of the limitations
under Subsections 4.02(b) and (c).
(b) Additional Matching Contributions - For any Plan Year, the
Company may contribute such additional amounts as it shall
determine. Such Additional Matching Contributions shall be
allocated to Participants in the employ of the Company on the
last business day of such Plan Year in the same proportion
that the Elective Deferral Contributions of each such
Participant for such Plan Year bears to the aggregate Elective
Deferral Contributions of all Participants for such Plan Year,
taking into consideration only that portion of each
Participant's Elective Deferral Contributions which does not
exceed 4% of such Participant's Compensation for each payroll
period during such Plan Year.
Qualified Matching Contributions - For any Plan Year, the
Company may contribute such additional amounts as it shall
determine. Such Qualified Matching Contributions shall be
allocated to those Participants who are Nonhighly Compensated
Employees in the employ of the Company on the last business
day of such Plan Year in the same proportion that the Elective
Deferral Contributions of each such Participant for such Plan
Year bears to the aggregate Elective Deferral Contributions of
all such Participants for such Plan Year, taking into
consideration only that portion of each Participant's Elective
Deferral Contributions which does not exceed 4% of such
Participant's Compensation for each payroll period during such
Plan Year.
Such contributions shall be subject to Treasury Regulation
1.401(k)-1(g)(13).
Notwithstanding the foregoing provision, a Participant
otherwise eligible shall share in such Additional or Qualified
Matching Contributions for the Plan Year of (i) his
Retirement, Disability or death, (ii) the commencement of a
Leave of Absence authorized by the Company or (iii) his
transfer to another business entity to which such Participant
had been transferred by the Company, even if the Participant
is not in the employ of the Company on the last business day
of such Plan Year.
(c) Regular Contributions - Such amount as the Company shall
determine for each Plan Year, which, along with forfeitures,
shall be allocated to each Participant in the same proportion
that his Compensation bears to the aggregate Compensation of
all Participants for such Plan Year,
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<PAGE> 21
provided the Participant is in the employ of the Company on
the last business day of such Plan Year, which amount shall
be credited at the end of the Plan Year.
Notwithstanding the foregoing provision, a Participant shall
be entitled to a share of the Company's Regular Contributions
plus forfeitures, if any, for the Plan Year of (i) his
Retirement, Disability or death, (ii), the commencement or end
of a Leave of Absence authorized by the Company or (iii) his
transfer to another business entity to which such Participant
had been transferred by the Company, even if the Participant
is not in the employ of the Company on the last business day
of such Plan Year.
A Participant shall not share in the allocation of the
Company's Regular Contributions or forfeitures for any Plan
Year during which he terminated his employment for reasons
other than specified in (i), (ii) or (iii).
Notwithstanding the above, in the event the Plan fails to meet
the requirements of Section 401(a)(26) or 410(b) of the Code,
those Participants who are not in the employ of the Company on
the last business day of the Plan Year shall share in the
allocation of the Company's Regular Contribution to the extent
necessary by progressively including those Participants with
the greatest number of Months of Service to a minimum of four
until the requirements are met.
3.04 Voluntary Contributions
Voluntary Contributions shall not be required or permitted.
3.05 Contribution Changes
A Participant may, subject to the minimum and maximum percentages as
specified in Section 3.01, increase or reduce the percentage rate of
his Elective Deferral Contributions during a Plan Year, as of any
January 1, April 1, July 1 or October 1 (or as of such other dates as
the Committee may fix from time to time), by written notification to
the Committee at least 30 days (or such other period as the Committee
may fix from time to time) prior to the effective date of such change.
3.06 Discontinuance of Contributions
(a) A Participant may discontinue his Elective Deferral
Contributions at any time during a Plan Year, by written
notification to the Committee at least 30 days (or such other
period as the Committee may fix from time to time) prior to
the effective date of such discontinuance.
(b) A Participant may resume his Elective Deferral Contributions
as of any subsequent January 1, April 1, July 1 or October 1
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<PAGE> 22
(or such other dates as the Committee may fix from time to
time) by written notification to the Committee at least 15
days (or such other period as the Committee may fix from time
to time) prior to the effective date of such resumption.
(c) The discontinuance of Elective Deferral Contributions will
automatically include a discontinuance of the Matching
Contributions.
3.07 Rollover Contributions from Other Qualified Plans
(a) Any Eligible Employee upon commencement of employment may make
a rollover contribution to the Trust Fund of all or any
portion of the entire amount (including money or any other
property acceptable to the Committee and Trustee) which is an
eligible rollover distribution, as defined in Section
402(c)(4) of the Code and temporary Treasury Regulation
1.402(C)-2T, Q&A 3 and 4, provided such rollover contribution
is either (i) a direct transfer from another qualified plan or
(ii) received on or before the 60th day immediately following
the date the Employee received such distribution from a
qualified plan or conduit Individual Retirement Account or
Annuity.
Such Eligible Employee must complete and sign the Plan's
rollover request form and provide such evidence as is
requested by the Committee, including evidence supporting the
satisfaction of the remaining provisions of this Section.
(b) The distribution intended to be rolled over must be an
eligible rollover distribution from a
(i) qualified trust, as verified by written evidence from
the administrator of the distributing plan;
(ii) conduit IRA, as verified in writing by the custodian or
insurance company that the original distribution from
the qualified trust was an eligible rollover
distribution; or
(iii) qualified trust as a direct rollover as provided for in
Section 402(c) of the Code.
(c) The Committee shall credit the fair market value of any
rollover contribution and investment earnings attributable
thereto to the Participant's Rollover Account. Such rollover
contributions shall not be considered annual additions for
purposes of Section 4.03.
(d) An Eligible Employee who becomes a Participant by virtue of
the acceptance of such rollover contribution, but who is not
otherwise eligible for participation in accordance with
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Section 2.01, shall not be entitled to make contributions or
share in any Company contribution allocated in accordance
with this Article 3 or Article 11.
(e) The Committee may promulgate specific rules and regulations
governing all aspects of this Section.
3.08 Transfer of Assets from Other Qualified Plans
(a) The Committee may accept the direct transfer to the Trust Fund
from another qualified trust fund of those assets (including
money or any other property acceptable to the Committee and
Trustee) attributable to a Participant's participation in any
qualified plan to which such trust relates. Such transferred
amounts shall not be considered annual additions for purposes
of Section 4.03.
Notwithstanding the foregoing provisions, transfers from a
plan subject to Section 412 of the Code without the required
spousal consent shall not be permitted.
(b) The amount transferred shall be credited to the Participant's
Accounts as determined by the Committee, taking into account
the applicable vesting schedules, amounts subject to special
tax treatment and withdrawal rules. Additional Transfer
Accounts will be established, if required, to accommodate
these objectives.
(c) An Eligible Employee who becomes a Participant by virtue of a
transfer of assets, but who is not otherwise eligible for
participation in accordance with Section 2.01, shall not be
entitled to make contributions or share in any Company
contribution allocated in accordance with this Article 3 or
Article 11.
(d) The Committee may promulgate specific rules and regulations
governing all aspects of this Section but until promulgated,
all other provisions of the Plan shall be applicable based on
the Account to which such assets were transferred.
3.09 Deposit of Contributions
The Company shall deposit the Elective Deferral Contributions with the
Trustee as soon as practicable (in no event to exceed 90 days)
following the date on which such amounts would otherwise have been
paid to the Participant. All other Company contributions must be
deposited by the earlier of the end of the subsequent Plan Year or
after the end of the period described in Code Section 404(a)(6)
applicable to the tax year of the Company with or within which the
Plan Year ends.
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3.10 Payment of Expenses
In addition to its contributions, the Company may elect to pay all the
administrative expenses of the Plan and all fees and retainers of the
Plan's Trustee, accountant, counsel, consultant, administrator or
other specialist so long as the Plan or Trust Fund remains in effect.
If the Company does not pay all or part of such expenses, the Trustee
shall pay these expenses from the Trust Fund. All expenses relating
directly to the investments of the Trust Fund, including taxes,
brokerage commissions and registration charges, must be paid from the
Trust Fund.
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ARTICLE 4
CONTRIBUTION LIMITATIONS
4.01 $7,000 Limitation on Elective Deferral Contributions
Each Participant's Elective Deferral Contributions under Section 3.01,
when added to any additional elective deferrals, as defined in Section
402(g) of the Code, under all other plans maintained by the Employer,
shall be limited to $7,000 during any calendar year, adjusted annually
for increases in the cost-of-living in accordance with Section 415(d)
of the Code, or such other maximum permitted under Section 402(g) of
the Code.
To the extent a Participant's Elective Deferral Contributions exceed
the above limitation the Employer will notify the Plan of such excess
and such amount will be designated as an excess deferral. Such excess
deferral will be distributed to such Participant with investment
experience no later than April 15 following the close of the calendar
year to which such excess relates. Such excess may be distributed
prior to the close of the calendar year of reference provided the
correcting distribution is made after the date on which the plan
received the excess deferral and is specifically designated as an
excess deferral.
Investment experience will be determined in accordance with the fourth
paragraph of Section 4.02(d) below.
4.02 Limitation on Elective Deferral and Matching Contributions
(a) The Actual Deferral Percentage of Highly Compensated Employees
in the Testing Group for any Plan Year shall be limited to the
greater of
(i) the Actual Deferral Percentage for the Nonhighly
Compensated Employees in the Testing Group multiplied
by 1.25; or
(ii) the Actual Deferral Percentage for the Nonhighly
Compensated Employees in the Testing Group multiplied
by 2.00, provided, however, that the Actual Deferral
Percentage for the Highly Compensated Employees in the
Testing Group may not exceed the Actual Deferral
Percentage for such Nonhighly Compensated Employees by
more than two percentage points.
(b) The Actual Contribution Percentage of Highly Compensated
Employees in the Testing Group for any Plan Year shall be
limited to the greater of
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<PAGE> 26
(i) the Actual Contribution Percentage for Nonhighly
Compensated Employees in the Testing Group multiplied
by 1.25; or
(ii) the Actual Contribution Percentage for Nonhighly
Compensated Employees in the Testing Group multiplied
by 2.00, provided, however, that the Actual
Contribution Percentage for the Highly Compensated
Employees in the Testing Group may not exceed the
Actual Contribution Percentage for such Nonhighly
Compensated Employees by more than two percentage
points.
(c) If one or more Highly Compensated Employees are eligible for
both Elective Deferral Contributions and to receive Matching
Contributions, such contributions shall be limited to the
greater of (i) or (ii) below. Notwithstanding the above, this
Subsection (c) shall only be applicable if both the Actual
Deferral Percentage and the Actual Contribution Percentage of
the Highly Compensated Employees exceeds 1.25 multiplied by
the respective Nonhighly Compensated Employee percentages.
(i) The sum of
(A) 1.25 times the greater of
(1) the Actual Deferral Percentage for the
Nonhighly Compensated Employees, or
(2) the Actual Contribution Percentage for
the Nonhighly Compensated Employees;
and
(B) two plus the lesser of Subparagraph (1) or (2)
above, provided that such amount may not
exceed 200% of the lesser of Subparagraph (1)
or (2).
(ii) The sum of
(A) 1.25 times the lesser of
(1) the Actual Deferral Percentage for the
Nonhighly Compensated Employees, or
(2) the Actual Contribution Percentage for
the Nonhighly Compensated Employees;
and
(B) two plus the greater of Subparagraph (1) or
(2) above, provided that such amount may not
exceed 200% of the greater of Subparagraph (1)
or (2).
(d) To the extent the otherwise applicable Elective Deferral and
Matching Contributions for any Plan Year must be limited due
to the restrictions described in Subsections (a), (b) and
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<PAGE> 27
(c), such limitations shall be applied to the Highly
Compensated Employees' Elective Deferral and/or Matching
Contribution percentages, whichever applicable, beginning with
the highest of such percentages until the limitations are met.
Reductions to satisfy Subsection (c) shall be applied first to
unmatched Elective Deferral Contributions, if any, and then to
matched Elective Deferral Contributions and Matching
Contributions proportionately.
Excess Elective Deferral and Matching Contributions shall be
allocated to Participants who are subject to the family
aggregation rules of Section 414(q)(6) of the Code in
proportion to their unadjusted deferrals and contributions.
Any excess Elective Deferral Contributions that result from
the above limitations shall be refunded to such Highly
Compensated Employees with investment experience, no later
than the last day of the Plan Year subsequent to the Plan Year
to which the excess relates. The limitation on Matching
Contributions is effected by limiting the otherwise applicable
Matching Contributions in accordance with Subsection 3.03(a).
Investment experience shall be the sum of (i) the income or
loss allocable to the Participant's Elective Deferral
Contribution Account for the Plan Year multiplied by a
fraction, the numerator of which is such Participant's excess
Elective Deferral Contributions for the year and the
denominator is the sum of (A) the Participant's Elective
Deferral Contribution Account balance as of the beginning of
the Plan Year and (B) the Participant's Elective Deferral[ or
Voluntary] Contributions for the Plan Year; and (ii) ten
percent of the amount determined under (i) 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.
(e) Definitions and Special Rules
(i) The Actual Deferral Percentage for the Highly
Compensated Employees and Nonhighly Compensated
Employees for a Plan Year shall be the average of the
ratios (calculated separately for each such Employee in
the Testing Group) of
(A) the amount of contributions credited to the
Elective Deferral Contribution Account on
behalf of each such Employee in the Testing
Group during such Plan Year, to
(B) the Compensation of each such Employee in the
Testing Group for such Plan Year.
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For purposes of the above, Qualified Matching
Contributions and Qualified Nonelective Contributions
may be taken into account in determining the Actual
Deferral Percentage for each Employee in the Testing
Group for such Plan Year provided such amounts comply
with the provisions of Treasury Regulation
1.401(k)-1(b).
Qualified Matching Contributions, Qualified Nonelective
Contributions and Elective Deferral Contributions
included in the calculation of the Actual Contribution
Percentages will not be included in the calculation of
Actual Deferral Percentages.
(ii) The Actual Contribution Percentage for the Highly
Compensated and Nonhighly Compensated Employees in the
Testing Group for a Plan Year shall be the average of
the ratios (calculated separately for each such
Employee in the Testing Group) of
(A) the amount of Matching Contributions credited
on behalf of each such Employee in the Testing
Group during such Plan Year, to
(B) the Compensation of each such Employee in the
Testing Group for such Plan Year.
For purposes of the above, Qualified Matching
Contributions, Qualified Nonelective Contributions and
Elective Deferral Contributions may be taken into
account in determining the Actual Contribution
Percentage for each Employee in the Testing Group for
such Plan Year provided such amounts comply with the
provisions of Treasury Regulation 1.401(m)-1(b).
Qualified Matching Contributions, Qualified Nonelective
Contributions and Elective Deferral Contributions
included in the calculation of the Actual Deferral
Percentages will not be included in the calculation of
Actual Contribution Percentages.
(iii) Testing Group shall mean the group of all Eligible
Employees eligible for participation in accordance with
Section 2.01.
(iv) All Eligible Employees in the Testing Group will be
included in determining the Actual Deferral Percentages
and/or the Actual Contribution Percentages, whichever
is applicable. The ratio averaged into the respective
percentages will be zero for any Eligible Employee in
the Testing Group if the otherwise applicable numerator
is zero.
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(v) All such ratios and the average of such ratios shall be
calculated to the nearest one-hundredth of one percent.
(vi) The deferral percentage and/or contribution percentage
for a Plan Year for any Highly Compensated Employee who
is eligible to participate under two or more plans or
arrangements described in Section 401(a) or 401(k) of
the Code that are maintained by the Employer shall be
determined as if all contributions were made under a
single plan.
(vii) In the event that this Plan satisfies the requirements
of Section 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,
deferral and contribution percentages shall be
determined as if all such plans were a single plan.
Any other plan may be aggregated with this Plan at the
discretion of the Company. Plans may be aggregated in
order to satisfy Section 401(k) of the Code only if
they have the same Plan Year.
(viii) The ratio for any 5% owner, as defined in Section
416(i)(1) of the Code, and for any Highly Compensated
Employee in the group consisting of the 10 Highly
Compensated Employees paid the greatest Compensation
shall be determined by aggregating the Elective
Deferral Contributions or Matching Contributions and
Compensation of such individual with the respective
amounts of each other Eligible Employee who is a family
member of such Highly Compensated Employee.
Once the ratio for the family group is determined, the
individual ratios of the family members are not taken
into account.
For purposes of this paragraph, family member shall
mean the spouse, lineal ascendant or descendant or
spouse of a lineal ascendant or descendant of the
Highly Compensated Employee.
4.03 Limitation on Allocations
(a) The "annual addition" for any Participant shall not exceed the
amount determined hereunder. Annual addition shall mean the
sum of Employer contributions, Employee contributions and
forfeitures allocated on behalf of a Participant for a Plan
Year, which is defined to be the limitation year.
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<PAGE> 30
Annual additions shall also include excess deferrals, excess
contributions and excess aggregate contributions, other than
excess deferrals distributed in accordance with Treasury
Regulation 1.402(g)-1(e)(2) or (3).
The determination of the annual addition will be made as if
all defined contribution plans of the Employer were one plan
and any Participant contributions to defined benefit plans
will be treated as contributions to defined contribution
plans. Annual additions will be applied to the applicable
Plan Year in accordance with Section 1.415-6(b) of the
Treasury Regulations.
For purposes of Subsection (b)(i), annual addition shall also
include amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section 415(1) of
the Code which is part of a defined benefit plan maintained by
the Employer and 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 11.02) under a welfare benefit plan (as
defined in Section 419A(d) of the Code) maintained by the
Employer.
(b) The annual addition for any Participant shall not exceed the
lesser of (i) or (ii) below:
(i) $30,000, or if greater, one-fourth of the defined
benefit dollar limitation set forth in Section
415(b)(1)(A) of the Code as in effect for the
limitation year.
In the event of a short Plan Year, the maximum dollar
limitation shall be divided by 12 and multiplied by the
number of months in the short Plan Year.
(ii) 25% of the Participant's Compensation.
(c) If a Participant also is or has been a participant in one or
more defined benefit plans of the Employer, whether or not
terminated, the projected annual benefit from such defined
benefit plans shall be reduced so that a "combined benefit
factor" in excess of 1.0 shall not result. The combined
benefit factor is the sum of (i) the defined benefit factor
and (ii) the defined contribution factor where
(i) the defined benefit factor is a fraction
(A) the numerator of which is the Participant's
projected annual benefit under all defined
benefit plans of the Employer at the end of
the limitation year of the Plan, and
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(B) the denominator of which is the lesser of
(1) 1.25 multiplied by the maximum
allowable annual benefit under Sections
415(b)(1)(A) and 415(d) of the Code at
the end of the limitation year of the
Plan, or
(2) 1.4 multiplied by the maximum allowable
annual benefit under Section
415(b)(1)(B) of the Code at the end of
the limitation year of the Plan, and
(ii) the defined contribution factor is a fraction
(A) the numerator of which is the sum of the
annual additions for such Participant under
all defined contribution plans of the
Employer, whether or not terminated, for all
such years during which he was a participant
in such plans, and
(B) the denominator of which is the sum of the
lesser of the amounts determined in (1) or (2)
for the current year and each prior year
during which the Participant was employed by
the Employer, regardless of whether or not a
plan was in existence during those years:
(1) 1.25 multiplied by the maximum dollar
limitation as defined in Subsection
(b)(i), or
(2) 1.4 multiplied by the compensation
limitation as defined in Subsection
(b)(ii).
(d) A Participant shall not be permitted to defer Compensation or
contribute amounts, nor shall he be entitled to an allocation
of any Employer contributions or forfeitures under any
qualified defined contribution plan which exceeds the
limitations described herein.
(e) The limitations on allocations to a Participant's Account will
be applied by limiting otherwise allocable amounts starting
with the latest allocations during the limitation year. To
the extent more than one type of addition is allocated as of
any date, the limitation will be applied in the following
order:
(i) forfeitures;
(ii) Employer contributions under profit-sharing plans other
than matching contributions;
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<PAGE> 32
(iii) Employer contributions under money purchase plans other
than matching contributions;
(iv) Employer matching contributions under money purchase
plans.
(v) Employer matching contributions under profit-sharing
plans;
(vi) Employee contributions; and
(vii) elective deferrals.
Amounts listed above which would have been added to a
Participant's Account based on an allocation method specified
in a Plan will be reallocated among the remaining Participants
eligible to share under the Plan.
Amounts listed above which would have been added to the
Participant's Account based on an individually defined
entitlement will reduce the Employer's contribution
commitment.
Employee contributions and elective deferrals will be limited
at the time deposited and will not be permitted to the extent
the limits of this Section would be violated.
In the event annual additions on behalf of a Participant
participating in more than one plan of the same type during a
Plan Year are required to be limited under this Section, the
limitation shall be ratably apportioned among all such plans.
(f) Notwithstanding the above, if an excess allocation occurs as a
result of
(i) an allocation of forfeitures;
(ii) a reasonable error in determining a Participant's
Compensation;
(iii) a reasonable error in determining the amount of
elective deferrals that may be made under this
Section; or
(iv) any other reason acceptable to the Internal Revenue
Service,
the resulting additions to the Participant's Account will be
reduced by first eliminating Employee contributions and
elective deferrals to the extent otherwise required to be
refunded under Sections 402(g), 401(k)(3) or 401(m)(2) of the
Code. Any additional reductions permitted under this
27
<PAGE> 33
Subsection will be applied in the manner described in
Subsection (e).
However, any amounts paid to the Trust for the limitation year
which are not allocated to other Participants will be held in
a suspense account, without investment earnings, and allocated
and reallocated in the following limitation year and, to the
extent necessary, each subsequent limitation year.
Allocations from a suspense account in a money purchase plan
will be viewed as an allocation of accrual requirement for the
year in which the amount is ultimately allocated.
In the event a plan is terminated, suspense accounts shall
revert to the Employer to the extent such accounts may not
then be allocated on behalf of any remaining eligible
Participants.
(g) Notwithstanding any provision of the Plan to the contrary,
(i) the annual addition for any Plan Years beginning before
January 1, 1987 shall not be recomputed to include all
Employee contributions.
(ii) if the Employee 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 the defined benefit
fraction will not be less than 125 percent 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 of the Code for all limitation years
beginning before January 1, 1987.
(iii) 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 the defined
contribution 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
(A) the excess of the sum of the fractions over 1.0
times (B) the denominator of the defined contribution
fraction, will be permanently subtracted from the
numerator of the defined
28
<PAGE> 34
contribution 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 Code Section 415 limitation
applicable to the first limitation year beginning on or
after January 1, 1987.
(iv) transitional rules provided in conjunction with
legislative changes and changes in the Plan's top-heavy
status will be applied in accordance with Internal
Revenue Service promulgations and legislative history.
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ARTICLE 5
MAINTENANCE OF ACCOUNTS, INVESTMENT FUNDS AND
VALUATION OF THE TRUST FUND
5.01 Maintenance of Accounts
The Committee shall establish and maintain a separate accounting in
the name of each Participant to which it shall credit all amounts
contributed in accordance with Articles 3 and 11.
5.02 Investment Election
(a) Initial Election - Each Participant shall designate one or
more of the investment funds established in accordance with
Section 5.03 for the investment of his Account. The
percentage elected for investment in any one of the investment
funds must be a multiple of 25%, and the same percentage shall
be applied equally to each of the Participant's Accounts.
(b) Subsequent Election - A Participant may, by written notice to
the Committee at least 15 days prior to the January 1, April
1, July 1 or October 1 as of which such election is to be
effective, change his investment fund election with respect to
subsequent contributions but, until changed, an investment
fund election, once made, shall remain in effect for all
subsequent Plan Years.
(c) Transfer Election - A Participant may by written notice to the
Committee at least 15 days prior to the January 1, April 1,
July 1 or October 1 as of which such election is to be
effective, elect a change in investment funds applicable to
his then existing Accounts, provided such change (i) results
in multiples of 25% in any one investment fund; (ii) is
applied to the ending balance determined as of the applicable
Valuation Date; and (iii) is applicable equally to each of the
Participant's Accounts. Such change shall become effective
within such period of time as may be administratively required
for the orderly liquidation of investments following the
applicable Valuation Date.
(d) The Committee may promulgate any additional rules and
regulations it deems necessary or appropriate to govern all
aspects of this Section.
5.03 Investment Funds
The Trust Fund shall be divided into such investment funds as
designated by the Committee and approved by the Trustee for the
investment of all Accounts, which shall be administered as a unit.
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5.04 Valuation of Trust Fund
(a) The Trust Fund shall be valued by the Trustee as of each
Valuation Date on the basis of its fair market value.
(b) The Trust Fund may also be valued by the Trustee as of any
other date as the Committee may authorize for any reason the
Committee deems appropriate.
5.05 Allocation of Investment Earnings and Expenses
On the basis of the valuation as of a Valuation Date, subject to the
provisions of Subsection 7.03(h), the Accounts of all Participants,
shall be (a) proportionately adjusted to reflect expenses in
accordance with Section 3.10 and investment earnings, other than those
credited to a specific Account; and (b) directly adjusted to reflect
all other applicable transactions during the Plan Year attributable to
such Accounts including, but not limited to, any contributions or
distributions.
31
<PAGE> 37
ARTICLE 6
BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT
6.01 Upon Retirement
A Participant shall be 100% vested in his Account at all times after
first becoming eligible for Retirement.
A Participant shall be eligible to retire on his Normal or Deferred
Retirement Date.
In the event a Participant does not retire on his Normal Retirement
Date, he shall continue to be credited with contributions in
accordance with Articles 3 and 11 until his actual retirement.
6.02 Upon Disability
(a) A Participant who incurs a Disability prior to termination of
employment shall be 100% vested in his Account.
(b) In determining the existence of a Participant's Disability,
the Committee may select a physician to examine such
Participant and render a medical opinion. The final
determination shall be made by the Committee on the basis of
the evidence requested and made available.
(c) If such Participant returns to the employ of the Company, he
shall resume his participation as of the date of his return.
The Participant's vested interest in that portion of his
Account attributable to Service from the date of his last
reemployment shall be determined in accordance with the
provisions of Article 6, without regard to his prior
Disability.
6.03 Upon Death
(a) A Participant who dies prior to termination of employment
shall be 100% vested in his Account.
(b) Upon the death of a Participant before his Annuity Starting
Date, the Participant's Protected Spouse shall be entitled to
100% of such Participant's vested Account. If the Participant
is not survived by a Protected Spouse, the Participant's
vested Account shall be payable to his Beneficiary. Such
vested Account shall take into account any Participant loans
made in accordance with Article 13.
Notwithstanding the above, subject to Subsection (c), such
Participant may waive the death benefit otherwise payable to
the Protected Spouse in favor of a different Beneficiary.
Such waiver must specify such other Beneficiary and include
32
<PAGE> 38
the written acknowledgment and irrevocable consent of the
Participant's spouse and be witnessed by a Plan representative
or a notary public.
(c) Any waiver of death benefits to the Participant's Protected
Spouse with respect to 50% of any Account which includes funds
transferred without the required spousal consent, directly or
indirectly, to the Plan from a plan subject to Section 412 of
the Code, prior to termination of employment or the first day
of the Plan Year during which the Participant attains age 35
will be null and void as of the earlier of such dates, but may
be renewed by executing a new waiver which meets the
requirement of Subsection (b).
In the event of the Participant's death on or subsequent to
the indicated dates and prior to the submission of a new
waiver, the Protected Spouse shall be entitled to 50% of any
such Account.
The designation of a Beneficiary other than the Protected
Spouse to receive the balance of benefits payable remains
valid after the earlier of the dates described above.
Any waiver prior to the first day of the Plan Year during
which such Participant attains age 35 which is made by a
Participant whose employment was terminated but who is
subsequently reemployed is not revoked by this rule at any
time but applies solely to benefits accrued before the date of
termination.
(d) The Committee shall provide to Participants within the
Applicable Period notice of the availability of any election
which results in a waiver of any death benefit payable to the
Protected Spouse. Such notice shall be in such terms and such
manner as would be comparable to the notice described in
Subsection 7.04(e).
For purposes of this Subsection, the term Applicable Period
means, with respect to a Participant, whichever of the
following periods ends last:
(i) The period beginning with the first day of the Plan
Year in which the Participant attains age 32 and ending
with the close of the Plan Year preceding the Plan Year
in which the Participant attains age 35.
(ii) A reasonable period ending after the individual becomes
a Participant.
(iii) A reasonable period ending after this Section first
applies to the Participant.
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<PAGE> 39
(iv) A reasonable period ending after separation from
service in the case of a Participant who separates
before attaining age 35.
A reasonable period ending after the events described
in Paragraphs (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 Participant
thereafter returns to employment with the Company, the
Applicable Period for such Participant shall be
redetermined.
(e) Upon the death of a Participant after his Annuity Starting
Date, his Beneficiary shall be entitled to receive the death
benefit, if any, as determined by the provisions of the
benefit elected in accordance with Section 7.03.
(f) Each Participant, upon becoming eligible for participation in
the Plan, may designate a primary Beneficiary to receive the
benefits payable in the event of his death, or, absent the
applicability of a survivor annuity, may designate a secondary
Beneficiary to receive any benefits payable in the event of
the death of the primary Beneficiary. If a Participant
designates a primary Beneficiary but not a secondary
Beneficiary or if any such secondary Beneficiary dies, the
Beneficiary last in receipt of or entitled to any benefit
shall have the right to designate a successor Beneficiary to
receive any benefits payable in the event of his death. In
the absence of any such designation, benefits payable upon the
death of the last living Beneficiary shall be paid in a lump
sum to such Beneficiary's estate. A Participant may change
his Beneficiary designation at any time. All Beneficiary
designations and changes shall be made on an appropriate form
and filed with the Committee. If the primary Beneficiary
designated by the Participant is anyone other than the
Participant's Protected Spouse, such designation must include
the written acknowledgment and consent of such spouse and be
witnessed by a Plan representative or a notary public, to the
extent required by law and the Committee. Such consent will
be limited to a specific alternate Beneficiary and any change
in such alternate Beneficiary will require a new spousal
consent.
6.04 Upon Other Termination of Employment
(a) Upon a Participant's termination of employment for reasons
other than Retirement, Disability or death, the following
provisions shall be applicable:
34
<PAGE> 40
(i) Such Participant shall have a 100% vested interest in
his Elective Deferral Contribution, Rollover and
Transfer Accounts.
(ii) Such Participant's vested interest in his Matching
Contribution and Regular Contribution Accounts shall,
subject to Subsection 6.05(a), be determined in
accordance with the following schedule on the basis of
such Participant's full Years of Service.
<TABLE>
<CAPTION>
Number of Years Percentage of Account
--------------- ---------------------
<S> <C>
Less than 3 full years 0%
3 full years 30%
4 full years 40%
5 full years 60%
6 full years 80%
7 or more full years 100%
</TABLE>
(b) The portion of a Participant's Account which is not vested
shall be forfeited on the earlier of the date on which the
Participant receives a distribution of his vested benefits or
the date on which such Participant incurs five consecutive
Breaks-in-Service, but in no event shall such forfeiture occur
earlier than the first day after the Valuation Date next
following the date on which the Participant terminated
employment. If a Participant does not have a vested interest
in his Account, he shall be deemed to have received an
immediate distribution as of the first day after the Valuation
Date next following the date on which such Participant
terminated employment.
That portion of a Participant's
(i) Matching Contribution Account which is not vested shall
be used to reduce the Company's contributions in
accordance with Subsection 3.03(a).
(ii) Regular Contribution Account which is not vested shall
be reallocated in accordance with Subsection 3.03(c)
and Article 11.
6.05 Reemployment and Repayment of Benefits
(a) If a Participant is reemployed by the Employer prior to
incurring five consecutive Breaks-in-Service, the dollar
amount which was subject to forfeiture in accordance with
Subsection 6.04(b) will be restored to the Participant's
Account if the Participant repays the amount distributed, if
any, from Elective Deferral Contribution, Matching
Contribution, Regular Contribution, Qualified Matching
Contribution and Qualified Nonelective Contribution Accounts.
Such amounts must be repaid to the Trust Fund in a lump sum
within five years from the date such Participant
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<PAGE> 41
resumes his employment with the Employer. If a Participant
who is deemed to receive a distribution pursuant to Subsection
6.04(b) is reemployed by the Employer prior to incurring five
consecutive Breaks-in-Service, the dollar amount which was
subject to forfeiture in accordance with such Subsection will
be restored to the Participant's Account. The funds required
for the restoration of such Account may, as determined by the
Committee, be paid from forfeitures, Company Regular
Contributions, or investment gains of the Trust Fund
attributable to the Regular Contribution Accounts of all
Participants.
Such repaid amounts shall be credited to the Participant's
Accounts as determined by the Committee, taking into account
the applicable vesting schedules, amounts subject to special
tax treatment and withdrawal rules. Additional Accounts will
be established, if required, to accommodate these objectives.
Amounts repaid and restored in accordance with this Subsection
will not be treated as annual additions for purposes of
Section 4.03.
(b) Notwithstanding the above, no restoration shall be made to a
Participant's Account and no repayment will be permitted with
respect to funds accumulated prior to reemployment in the case
of
(i) any Participant who was fully vested, or
(ii) any Participant who is reemployed after incurring five
consecutive Breaks-in-Service.
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<PAGE> 42
ARTICLE 7
DISTRIBUTION OF BENEFITS
7.01 Claim Procedure For Benefits
(a) Any request for specific information with respect to benefits
under the Plan must be made to the Committee in writing by a
Participant or his Beneficiary. Oral communications will not
be recognized as a formal request or claim for benefits.
(b) The Committee shall provide adequate notice in writing to any
Participant or Beneficiary whose claim for benefits under the
Plan has been denied, (i) setting forth the specific reasons
for such denial; specific references to pertinent plan
provisions; a description of any material and information
which had been requested but not received by the Committee;
and, (ii) advising such Participant or Beneficiary that any
appeal of such adverse determination must be in writing to the
Committee, within such period of time designated by the
Committee but, until changed, not more than 60 days after
receipt of such notification, and must include a full
description of the pertinent issues and basis of claim.
(c) If the Participant or Beneficiary fails to appeal such action
to the Committee in writing within the prescribed period of
time, the Committee's adverse determination shall be final.
(d) If an appeal is filed with the Committee, the Participant or
Beneficiary shall submit such issues he feels are pertinent
and the Committee shall re-examine all facts, make a final
determination as to whether the denial of benefits is
justified under the circumstances, and advise the Participant
or Beneficiary in writing of its decision and the specific
reasons on which such decision was based, within 60 days of
receipt of such written request, unless special circumstances
require a reasonable extension of such 60-day period.
7.02 Commencement of Benefits
The following provisions shall be applicable for determining when
distribution of benefits shall be made. These provisions are intended
to conform to the requirements of Section 401(a)(9) of the Code,
including the minimum distribution incidental benefit proposed
Treasury Regulation 1.401(a)(9)-2, and shall be construed accordingly:
(a) Unless otherwise provided in Subsection (c), in the event of
termination of employment, benefits which total $3,500 or
37
<PAGE> 43
less will commence as soon as administratively feasible
following the Valuation Date next subsequent to such
termination.
(b) Unless otherwise provided in this Section, in the event of
termination of employment, benefits which total more than
$3,500 will commence as soon as administratively feasible
following[ the Valuation Date next subsequent to such
termination, provided that, if the Participant has not
attained his Normal Retirement Date, the Participant consents
to such distribution within his Election Period. If a
Participant had funds transferred without the required spousal
consent, directly or indirectly, from a plan subject to Code
Section 412, any distribution of benefits attributable to such
transferred funds, if more than $3,500, to the Protected
Spouse as Beneficiary prior to the date the Participant would
have attained his Normal Retirement Date will require the
written acknowledgment and irrevocable consent of such spouse
within 90 days of the Annuity Starting Date.
Notwithstanding the above, no consent to a distribution prior
to the date the Participant attained his Normal Retirement
Date shall be valid until after written notification of the
right to defer is received by the Participant or Protected
Spouse, if applicable. The Committee shall provide such
written notification of the right to defer any benefit payable
no less than 30 days nor more than 90 days before the Annuity
Starting Date.
If a Participant does not consent to the distribution at the
time specified above and fails to elect deferral in accordance
with Subsection (d), benefits will commence as of the 60th day
following the last day of the Plan Year during which the
Participant's Normal Retirement Date occurs.
If the Participant's Protected Spouse as Beneficiary does not
consent to the distribution of a Participant's transferred
funds at the time specified above, and if such funds exceed
$3,500, benefits attributable to such transferred funds will
commence as of the 60th day following the last day of the Plan
Year during which the Participant's Normal Retirement Date
would have occurred.
(c) The amount of any benefit payable will be determined as of the
Valuation Date preceding the date such benefit is processed,
adjusted to reflect intervening contributions and withdrawals
but not investment experience.
If the amount of any payment under this Section would
adversely affect the Trust Fund by forcing the premature
liquidation of assets, such payment may be delayed until the
timely and orderly liquidation of investments can be
accomplished, but in no event later than the 60th day
38
<PAGE> 44
following the last day of the Plan Year during which occurs
the latest of
(i) the date a Participant attains the earlier of his
Normal Retirement Date or age 65;
(ii) the tenth anniversary of the year during which the
Participant commenced participation in the Plan; or
(iii) the date the Participant terminates his employment.
If the amount of any payment under this Section would
adversely affect the Trust Fund by permitting former
Participants to enter into direct competition with the
Company, such payment will be delayed until the 60th day after
the end of the Plan Year during which the Participant's Normal
Retirement Date occurs.
If the amount of any payment under this Section cannot be
ascertained by the applicable commencement date, payment shall
be made no later than 60 days after the earliest date on which
the amount of such payment can be ascertained.
(d) A Participant who terminates employment may elect that benefit
payments commence at a date later than specified in Subsection
(b) by submitting a signed, written statement describing the
benefit and the date on which the payment of such benefit
shall commence, provided such date is not later than the April
1 following the calendar year during which the Participant
attains age 70-1/2 or such later date as may be promulgated by
the Internal Revenue Service.
(e) Effective for Plan Years beginning before January 1, 1989,
distribution of benefits to a 5% owner, within the meaning of
Section 416(i)(1)(B)(i) of the Code, must commence not later
than the April 1 following the calendar year in which the
Participant attains age 70-1/2, or such later date as
promulgated by the Internal Revenue Service, whether or not
the Participant terminates employment in that year and whether
or not the Participant applies for benefit payment.
Effective for Plan Years beginning after December 31, 1988,
distribution of benefits must commence not later than the
April 1 following the calendar year in which the Participant
attains age 70-1/2, or such later date as promulgated by the
Internal Revenue Service, whether or not the Participant
terminates employment in that year and whether or not the
Participant applies for benefit payment.
The foregoing shall not apply to a Participant (i) who attains
age 70-1/2 before January 1, 1988 unless such Participant was
or becomes a 5% owner, within the meaning of Section
416(i)(1)(B)(i) of the Code, at any time during the Plan Year
ending with or within the calendar year in which
39
<PAGE> 45
he attains age 66-1/2 or any subsequent Plan Year, or (ii) who
had made a valid election under Section 242(b) of the Tax
Equity and Fiscal Responsibility Act of 1982 (TEFRA) to
commence his benefits at a later date.
(f) If the designated Beneficiary is,
(i) the Participant's spouse, such spouse may elect that
benefit payments commence at a date later than
specified in Subsection (b) by submitting a signed
written statement describing the benefit and the date
on which the payment of such benefit shall commence,
provided such date is not later than the latest of (A)
December 31 of the calendar year in which the
Participant dies, (B) December 31 of the calendar year
during which the Participant would have attained age
70-1/2, or (C) such later date as may be promulgated by
the Internal Revenue Service.
If such spouse dies prior to the commencement of
benefits, and if the distribution of any death benefit
payable to the spouse's Beneficiary is made in a form
that may extend beyond the December 31 of the calendar
year during which the fifth anniversary of such
spouse's death occurs, such distribution must commence
no later than the December 31 of the calendar year
immediately following the date of such spouse's death
or such later date as may be promulgated by the
Internal Revenue Service.
(ii) other than the Participant's spouse, and the death
benefit payable is made in a form that may extend
beyond the December 31 of the calendar year during
which the fifth anniversary of such Participant's death
occurs, such distribution must commence no later than
the December 31 of the calendar year immediately
following the date of such Participant's death or such
later date as may be promulgated by the Internal
Revenue Service.
(g) If a Participant is in receipt of benefits from the Company's
insured long-term disability program, if applicable, payment
of the Participant's Elective Deferral Contribution, Matching
Contribution, Regular Contribution, Transfer, Qualified
Matching Contribution and Qualified Nonelective Contribution
Accounts shall be deferred to the first day of the month in
which such Participant is no longer eligible to receive such
benefits or, if earlier, the 60th day following the last day
of the Plan Year during which the Participant's Normal
Retirement Date occurs, provided the benefits payable under
the long-term disability program would otherwise be reduced by
the benefits payable under the Plan.
40
<PAGE> 46
7.03 Method and Form of Payment of Benefits
The following provisions shall be applicable for determining the
method and form of payment of all benefits. These provisions are
intended to conform to the requirements of Section 401(a)(9) of the
Code, including the minimum distribution incidental benefit proposed
Treasury Regulation 1.401(a)(9)-2, and shall be construed accordingly.
(a) Subject to Section 7.02, any benefit payable to a Participant
who has terminated employment or Beneficiary which in total is
$3,500 or less will be distributed in a lump sum.
(b) Subject to Section 7.02, any benefit payable to a Participant
who has terminated employment which is more than $3,500 will
be distributed at the Participant's election as follows:
(i) All or any portion of such amount may be distributed in
a lump sum, subject to the provisions below.
(ii) The balance, if any, may be used to purchase an
immediate or deferred annuity in accordance with the
provisions of Subsections (e), (f) and (g).
(c) Subject to Section 7.02, if a Participant's benefits are
required to commence in accordance with Subsection 7.02(d) or
(e), such Participant shall make an irrevocable election as to
the optional form of payment. Such benefit shall reflect the
Participant's elections regarding Beneficiary and
recalculation of life expectancies in accordance with
regulations under Code Section 401(a)(9). A Participant whose
Account includes funds transferred without the required
spousal consent, directly or indirectly, from a plan subject
to Code Section 412, must elect to recalculate life
expectancies unless his spouse consents to waive the Qualified
Annuity. The options available will include the options
available under Subsection (f), with lifetime option benefits
determined using the rules provided by regulations under Code
Section 401(a)(9) and will be payable through the purchase of
an annuity contract. Upon subsequent termination of
employment, the optional form previously elected will remain
in effect. In lieu of the options available under Subsection
(f), the Participant may elect to have the value of his
Account each year payable in a lump sum or to have the minimum
amount required to be distributed each year under Code Section
401(a)(9) payable directly from the Trust Fund with the
remaining balance payable in a lump sum upon termination of
employment.
In the absence of an election by the Participant, the form of
payment shall irrevocably be the minimum amount required to be
distributed each year under Code Section 401(a)(9)
41
<PAGE> 47
payable directly from the Trust Fund with the remaining
balance payable in a lump sum upon such Participant's
termination of employment and life expectancies shall not be
recalculated. If the Participant's Account includes funds
transferred without the required spousal consent, directly or
indirectly, from a plan subject to Code Section 412, the form
of payment shall irrevocably be a Qualified Annuity and life
expectancies shall be recalculated.
(d) Subject to Section 7.02 and before the Participant's Annuity
Starting Date, any benefit payable to a Participant's
Beneficiary other than the Participant's Protected Spouse
which is more than $3,500 may be distributed in a lump sum or
used to purchase an immediate annuity in accordance with the
provisions of Subsections (e) and (f), as elected by the
Participant while in the employ of the Company. In the
absence of such an election by the Participant, or if the
Participant's Protected Spouse is the Beneficiary, such
Beneficiary may make the election.
In the absence of an election by the Beneficiary, benefits
will be payable in a lump sum unless the Protected Spouse is
the Beneficiary and the Participant had funds transferred
without the required spousal consent, directly or indirectly,
to the Plan from a plan subject to Section 412 of the Code, in
which case, benefits will be payable to the Protected Spouse
in the form of a life annuity.
(e) Any benefit payable as an annuity will be distributed (i) by
the purchase of a nontransferable single premium annuity
contract, including an annuity purchased under a group annuity
contract, on behalf of a Participant or Beneficiary from an
insurance company, provided at least $3,500 is available for
the purchase of the annuity, or (ii) directly from the Trust
Fund.
Any annuity contract purchased and distributed to a
Participant or Beneficiary shall comply with the requirement
of this Plan.
In the absence of a requirement or an election indicating the
type of annuity preferred, a deferred annuity will be provided
upon the Participant's termination of employment unless the
Participant had attained his Normal Retirement Date, in which
event an immediate annuity shall be provided. If the payment
of benefits to a Participant is deferred in accordance with
Subsection 7.02(g), a deferred annuity will be provided on
behalf of such Participant.
(f) The annuity options available include the Life, Joint and 100%
Survivor, 15 Year Certain and Continuous, and 10, 15 or 20
Year Certain Installments.
42
<PAGE> 48
The election of the annuity option under the above provisions
shall be at the discretion of the Participant or his
Beneficiary provided that no method shall be permitted which
would (i) result in the benefits being payable over a period
extending beyond the life of such Participant or the lives of
such Participant and his Beneficiary or life expectancy of
such Participant or the life expectancy of such Participant
and his Beneficiary; or (ii) distribute any remaining balance,
in the event of a Participant's death after the commencement
of his benefits, less rapidly than the method of distribution
in effect prior to his death.
In no event may the Participant or Beneficiary change any
annuity option subsequent to the Annuity Starting Date.
(g) Subject to Section 7.04,
(i) if a Participant elects to receive his benefits in the
form of a life annuity, such benefits shall be
distributed under a Qualified Annuity unless the
Participant elects to receive his retirement income
under any other optional form of distribution as made
available to such Participant.
(ii) if a Participant has had funds transferred without the
required spousal consent, directly or indirectly, from
a plan subject to Code Section 412 and the portion of
the Participant's Account attributable to such
transferred funds is more than $3,500, such funds will
be distributed in the form of a Qualified Annuity
unless the Participant elects to receive his retirement
income under any other optional form of distribution as
made available to such Participant.
(iii) the Participant shall have the right to elect, revoke
or change any election under this Subsection at any
time during his Election Period.
(h) Notwithstanding the provisions of Section 5.05, when
distribution of benefits from the Trust Fund is to be
deferred, whether in whole or in part, the Committee may
direct the Trustee to deposit the Participant's Account in an
interest-bearing account or to purchase, on behalf of such
Participant, a single-premium deferred annuity policy.
Thereafter, such Participant's Account shall be credited with
the interest attributable to such account or shall be equal to
the value of such annuity policy and the provisions of Section
5.05 shall not be applicable.
(i) Any benefits payable under this Article may be paid in cash,
securities, or such other assets of the Trust Fund as the
Committee may direct.
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<PAGE> 49
The distribution of a lump sum payment and/or annuity contract
to the Participant or his Beneficiary will constitute the
complete discharge of all obligations of the Plan.
7.04 Spousal Consent Requirements With Respect to Participant Elections
(a) If a Participant is married and has elected to receive his
benefits in the form of a life annuity, any election by such
Participant to commence a benefit payment in a form other than
a Qualified Annuity at any time will require the written
acknowledgment and irrevocable consent of the Protected Spouse
as witnessed by a Plan representative or a notary public
during the Election Period.
(b) If a Participant is married and has had funds transferred
without the required spousal consent[ after December 31,
1984], directly or indirectly, to the Plan from a plan subject
to Section 412 of the Code, any election by such Participant
to commence a benefit payment in a form other than a Qualified
Annuity at any time, will require the written acknowledgment
and irrevocable consent of the Protected Spouse as witnessed
by a Plan representative or a notary public during the
Election Period.
Notwithstanding the above, if such transferred funds are
accounted for separately, the above consent requirement will
only apply to payments attributable to such funds and then
only if the value of such funds at the Annuity Starting Date
exceeds $3,500.
(c) Any spousal consent will be limited to a specific alternate
Beneficiary and form of payment and any change in such
Beneficiary or form will require a new spousal consent.
(d) If it is established to the satisfaction of the Committee that
there is no spouse because the spouse cannot be located or
such other circumstances as may be promulgated by the Internal
Revenue Service or established by law, such consent will not
be required. Spousal consent may additionally be required at
the Committee's request.
(e) Notwithstanding the above, no consent to a distribution or
election of an optional form shall be valid until written
notification of the provisions of this Section and Subsection
7.03(g) is received by the Participant. The Committee shall
provide such written notification no less than 30 days nor
more than 90 days before the Annuity Starting Date.
Such notice shall contain a written explanation of
44
<PAGE> 50
(i) the terms and conditions of a Qualified Annuity;
(ii) the Participant's right to make and the effect of an
election to waive the Qualified Annuity form of
benefit;
(iii) the rights of the Protected Spouse;
(iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Annuity; and
(v) a description of the optional forms available under
Subsection 7.03(f).
7.05 Disposition of Unclaimed Benefits
In the event that any check or notice with respect to the payment of
benefits under the Plan remains outstanding at the expiration of six
months from the date of mailing of such check to the last known
address of the payee, the Committee shall notify the Trustee to stop
payment of all such outstanding checks and to suspend the issuance of
any further checks, if any, to such payee. If, during the three-year
period (or such other period as specified in the Trust Agreement) from
the date of mailing of the first such check or of notice that a
benefit is due under the Plan, the Committee cannot establish contact
with the payee by taking such action as it deems appropriate and the
payee does not make contact with the Committee, the remaining benefits
shall be forfeited and used to reduce the Company's contributions in
accordance with Section 3.03. In the event the payee is located
subsequent to the date the benefits were forfeited, the dollar amount
of such benefits shall be restored in accordance with the provisions
of Article 6.
7.06 Non-Assignability
No benefit under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such action shall be void for all
purposes of the Plan. No benefit shall in any manner be subject to
the debts, contracts, liabilities, engagements or torts of any person,
nor shall it be subject to attachments or other legal process for or
against any person, except with respect to a Qualified Domestic
Relations Order and in such other instances and to such extent as may
be required by law and except as provided in Article 13.
7.07 Substitute Payee
If a Participant or Beneficiary entitled to receive any benefits
hereunder is in his minority or is, in the judgment of the Committee,
legally, physically, or mentally incapable of personally receiving and
receipting any distribution, the
45
<PAGE> 51
Committee may instruct the Trustee to make distributions to his
legally appointed guardian.
7.08 Satisfaction of Liability
After all benefits have been distributed in full to a Participant or
to his Beneficiary, all liability to such Participant or to his
Beneficiary shall cease.
7.09 Direct Rollover to Eligible Retirement Plans
(a) Notwithstanding any provisions of the Plan to the contrary
that would otherwise limit a Distributee's election under this
Section, a Distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct
Rollover.
(b) Definitions
(i) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution
of all or any portion of the balance to the credit of
the Distributee, except that an Eligible Rollover
Distribution does not include: (A) 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 of
more; (B) any distribution to the extent such
distribution is required under Section 401(a)(9) of the
Code; and (C) the portion of any distribution that is
not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation
with respect to Employer securities).
(ii) Eligible Retirement Plan
An Eligible Retirement Plan is an individual retirement
account described in Section 408(a) of the Code, an
individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts
the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover
Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or
individual retirement annuity.
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(iii) Distributee
A Distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate
payee under a Qualified Domestic Relations Order, are
Distributees with regard to the interest of the spouse
or former spouse.
(iv) Direct Rollover
A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
7.10 Waiver of 30 Day Notice Requirement
Notwithstanding any provisions of the Plan to the contrary, if a
distribution is one to which Sections 401(a)(11) and 417 of the 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 Treasury
Regulations is given, provided that:
(a) the Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or
not to elect a distribution (and, if applicable, a particular
distribution option), and
(b) the Participant, after receiving the notice, affirmatively
elects a distribution.
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ARTICLE 8
ADMINISTRATION OF THE PLAN
8.01 Assignment of Administrative Authority
The Board of Directors shall appoint a Committee to administer the
Plan. The Committee may consist of directors, officers, Employees, or
any other individuals, who, upon acceptance of such appointment, shall
serve at the pleasure of the Board of Directors. Any member may
resign by delivering his written resignation to the Board of Directors
and to the Committee. Vacancies in the Committee arising from
resignation, death or removal shall be filled by the Board of
Directors. The Board of Directors shall also appoint the Trustee and
may appoint an investment manager.
8.02 Organization and Operation of the Committee
(a) The Committee shall act, in carrying out its duties and
responsibilities, in the interest of the Participants and
Beneficiaries with the care, skill, prudence,and diligence
under the circumstances then prevailing that a prudent man,
acting in a like capacity and familiar with such matters,
would use in the conduct of an enterprise of like character
and aims.
(b) The Committee shall act by a majority of its members unless
unanimous consent is required by the Plan or by unanimous
approval of its members if there are two or less members in
office at the time. In the event of a Committee deadlock, the
Committee shall determine the method for resolving such
deadlock. If there are two or more Committee members, no
member shall act upon any question pertaining solely to
himself, and the other member or members shall make any
determination required by the Plan in respect thereof.
(c) The Committee may authorize any one or more of its members to
execute documents on behalf of the Committee and shall notify
the Trustee in writing of such action and the name or names of
the member or members so designated.
(d) The Committee may, by unanimous consent, delegate specific
authority and responsibilities to one or more of its members.
The member or members so designated shall be solely liable,
jointly and severally, for their acts or omissions with
respect to such delegated authority and responsibilities.
Members not so designated, except as provided under Subsection
8.06(b), shall be relieved from liability for any act or
omission resulting from such delegation.
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(e) The Committee shall endeavor not to engage in any prohibited
transactions, as specified in the Employee Retirement Income
Security Act of 1974, or any successor act. However, any
member of the Committee who is a Participant or Beneficiary
shall not be precluded from receiving benefits payable under
the Plan.
8.03 Authority and Responsibility
The Committee and its delegates shall have full discretionary
authority and responsibility for administration of the Plan. Such
authority and responsibility shall include, but shall not be limited
to, the following areas.
(a) Appointment of qualified accountants, consultants,
administrators, counsel or other persons it deems necessary or
advisable, who shall serve the Committee as advisors only and
shall not exercise any discretionary authority, responsibility
or control with respect to the management or administration of
the Plan.
Any action of the Committee on the basis of advice, opinion,
reports, etc. furnished by such qualified accountants,
consultants, administrators and counsel shall be the sole
responsibility of the Committee.
Members of the Committee shall not be precluded from serving
the Committee in any other capacity, provided any compensation
paid for such services is reasonable.
(b) Determination of eligibility to participate and all benefits,
and resolution of all questions arising from the
administration, interpretation and application of the Plan,
including the determination of the validity of any Qualified
Domestic Relations Order in accordance with Section 8.09.
(c) Notification to the Trustee of all benefits payable under the
Plan and the manner in which such benefits are to be paid.
(d) Adoption of forms and regulations for the administration of
the Plan.
(e) Remedy of any inequity resulting from incorrect information
received or communicated, or of administrative error.
(f) Assurance that its members, the Trustee and other persons who
handle funds or other property of the Trust Fund are bonded as
required by law.
(g) Settlement or compromise of any claims or debts arising from
the operation of the Plan and the commencement of any legal
actions or administrative proceeding.
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(h) Direction to the Trustee as to specific investments which,
under the terms of the Trust Agreement, may be made only upon
written direction of the Committee or which are made in
accordance with specific provisions of the Plan, such as
annuity or group investment contracts, loans to Participants,
or earmarked investments selected by Participants.
(i) Action as agent for the service of legal process.
(j) Communication regarding the liquidity needs of the Plan so
that investment discretion can be exercised to effect specific
objectives.
8.04 Records and Reports
(a) The Committee shall keep a record of its proceedings and acts
and shall keep books of account, records and other data
necessary for the proper administration of the Plan.
(b) The Committee shall make its records available for examination
by the Employer, or any Participant or Beneficiary during
business hours at the principal place of business of the
Company. However, a Participant or Beneficiary may examine
only records pertaining exclusively to himself and such other
records specified by law.
(c) The Committee shall make available to any Participant or
Beneficiary any material required by law without cost. The
Committee may, upon written request by any Participant or
Beneficiary, provide copies of such material as it deems
appropriate and shall furnish copies of such material required
by law. The Participant or Beneficiary may be required to pay
the reasonable cost as determined by the Committee of
preparing and furnishing such material or the cost as
prescribed by law.
8.05 Required Information
The Company and Participants or Beneficiaries entitled to benefits
shall furnish forms, including but not limited to annuity
applications, and any information or evidence, as requested by the
Committee for the proper administration of the Plan. Failure on the
part of any Participant or Beneficiary to comply with such request
within a reasonable period of time shall be sufficient grounds for
delay in the payment of benefits until the information or evidence
requested is received.
8.06 Fiduciary Liability
(a) A member of the Committee who breaches the responsibilities,
obligations, or duties imposed by law shall be liable to the
Plan for any losses resulting from such breach.
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(b) A member of the Committee shall be liable for a breach of
fiduciary responsibility by another Committee member or
Trustee, with respect to the Plan or Trust Fund, under the
following circumstances.
(i) The member knowingly participates in or undertakes to
conceal an act or omission of another member of the
Committee or Trustee, with knowledge that the act or
omission is such a breach.
(ii) If the member's failure to comply with Subsection
8.02(a) has enabled another member or Trustee to commit
such a breach.
(iii) The member has knowledge of such a breach by another
member or Trustee and does not make reasonable efforts
under the circumstances to remedy the breach.
8.07 Payment of Expenses
Those members of the Committee who are full-time paid employees of the
Company shall serve without compensation. The expenses of the
Committee, including reasonable compensation as may be agreed upon in
writing between the Company and the Committee for members of the
Committee who are not full-time employees of the Company, shall be
deemed administrative expenses payable in accordance with Article 3.
8.08 Indemnification
The Company shall indemnify members of the Committee against personal
financial loss resulting from liability incurred in the administration
of the Plan, unless such liability and loss were caused by such
individual's gross negligence or willful misconduct.
8.09 Qualified Domestic Relations Orders
(a) Qualified Domestic Relations Order
(i) A Qualified Domestic Relations Order (hereinafter
referred to as "QDRO") is a Domestic Relations Order
which creates or recognizes the existence of an
Alternate Payee's right to, or assigns to an Alternate
Payee the right to, receive all or a portion of the
benefits payable with respect to a Participant under
the Plan, and which the Committee has determined meets
the requirements of Paragraphs (ii) and (iii).
(ii) A Domestic Relations Order meets the requirements of a
QDRO only if the order clearly specifies
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(A) the name and the last known mailing address
(if any) of the Participant and the name and
mailing address of each Alternate Payee
covered by the order;
(B) the amount or percentage of the Participant's
benefits to be paid by the Plan to each such
Alternate Payee, or the manner in which such
amount or percentage is to be determined;
(C) the number of payments or period to which such
order applies; and
(D) that the order applies to this Plan.
(iii) A Domestic Relations Order meets the requirements of a
QDRO only if the order
(A) does not require the Plan to provide any type
or form of benefits, or any option, not
otherwise provided under the Plan;
(B) does not require the Plan to provide increased
benefits (determined on the basis of actuarial
value); and
(C) does not require the payment of benefits to an
Alternate Payee which are required to be paid
to another Alternate Payee under another
Domestic Relations Order previously determined
to be a QDRO.
(iv) In the case of any payment before a Participant has
separated from service, a QDRO shall not be treated as
failing to meet the requirements of Paragraph (iii)(A)
above solely because the order requires the payment of
benefits to an Alternate Payee
(A) on or after the date on which the Participant
attains (or would have attained) the Earliest
Retirement Age;
(B) as if the Participant had retired on the date
such payment is to begin under such order; and
(C) in any form in which such benefits may be paid
under the Plan to the Participant (other than
in the form of a joint and survivor annuity
with respect to the Alternate Payee and his or
her subsequent spouse).
(v) For purposes of Paragraph (iv), Earliest Retirement Age
means the earlier of
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(A) the date on which the Participant is entitled
to a distribution under the Plan; or
(B) the later of (1) the date the Participant
attains age 50 or (2) the earliest date on
which the Participant could begin receiving
benefits under the Plan if such Participant
separated from service.
Notwithstanding any provisions of the Plan to the
contrary, for purposes of Subparagraph (A) above, a
distribution to an Alternate Payee may be made prior to
the date on which the Participant is entitled to a
distribution under Section 7.02 or Article 12 if
requested by the Alternate Payee to the extent such
distribution is permitted under the QDRO. Nothing in
this provision shall permit the Participant to receive
a distribution at a date otherwise not permitted under
Section 7.02 or Article 12 nor shall it permit the
Alternate Payee to receive a form of payment not
permitted in Section 7.03.
(b) Procedures
Upon receipt of a Domestic Relations Order, the Committee
shall take, or cause to be taken, the following actions:
(i) The Committee shall promptly notify the Participant,
each Alternate Payee covered by the order and each
representative for these parties of the receipt of the
Domestic Relations Order. Such notice shall include a
copy of the order and these QDRO Procedures for
determining whether such order is a QDRO.
(ii) Once a Domestic Relations Order has been received (A)
the affected Participant will not be permitted to
request a withdrawal or a loan from the Plan and (B) no
distributions will be made from the Plan to the
Participant upon a subsequent termination until after
the payment to the Alternate Payee has been determined,
unless the Committee determines the order not to be a
QDRO.
(iii) Within a reasonable period after receipt of a Domestic
Relations Order, the Committee shall determine whether
it is a QDRO and shall notify the parties indicated in
Paragraph (i) of such determination. Such notice shall
indicate whether the benefits payable to the Alternate
Payee in accordance with the QDRO are subject to a
previously existing QDRO.
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(iv) Pending the Committee's determination of whether a
Domestic Relations Order is a QDRO, if payments are due
to be paid to the Participant, the Committee shall
withhold payment and separately account for the amounts
otherwise payable to the Alternate Payee during such
period if the order is subsequently determined to be a
QDRO (hereinafter referred to as the "segregated
amounts"). If, within the 18-month period beginning
with the date the first payment would have been
required to be made under the Domestic Relations Order,
the Committee determines the order to be a QDRO, the
Committee shall pay the segregated amounts, including
any interest thereon, to the person or persons entitled
thereto. If, within such 18-month period, the
Committee determines an order is not a QDRO or the
Committee fails to reach a decision, the Committee
shall pay the segregated amounts to the Participant.
If, after the 18-month period, the Committee
subsequently determines that the order is a QDRO, the
Committee shall pay benefits subsequent to such
determination in accordance with the order. If action
is taken in accordance with this Subsection (b), the
Plan's obligation to the Participant and each Alternate
Payee shall be discharged to the extent of any payment
made pursuant to the QDRO.
(v) In determining the segregated amount in accordance with
Paragraph (iv), the Participant's vested interest shall
be prorated between the Participant and Alternate Payee
and the entire amount of any nonvested interest[ or any
outstanding Plan loans] will be credited to the
Participant and not taken into consideration in making
such determination. Any future contributions[ or loan
repayment] will be credited to the Participant and not
the Alternate Payee.
(vi) Upon a determination by the Committee that a Domestic
Relations Order is a QDRO, the Committee shall arrange
for benefits to be paid to the Alternate Payee in
accordance with such order and Sections 7.02 and 7.03
as if the Participant had terminated employment at such
time.
(vii) If benefits are not immediately distributable to the
Alternate Payee, such amount shall be separately
accounted for until such time as the distribution is
made. Any amount subject to a QDRO will not be
available to the Participant under the Plan withdrawal
provisions nor will it be available as collateral for a
Plan loan.
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(viii) The Alternate Payee shall be treated as a Beneficiary
for all purposes of the Plan. The Alternate Payee will
be eligible for the same investment election option in
accordance with Article 5 as the Participant.
(ix) Any expense charges related to the administration of
the QDRO will be prorated between the Participant and
the Alternate Payee and will be automatically deducted
by the Committee from the amount payable.
The foregoing provisions are effective for QDROs entered into on or
after January 1, 1985, except that, in the case of a Domestic
Relations Order entered into before January 1, 1985, the Committee (i)
may treat such order as a QDRO even though such order fails to meet
the requirements of Subsections (a)(ii) and (iii) above, and (ii) must
treat such order as a QDRO if benefits were being paid pursuant to
such order on January 1, 1985.
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ARTICLE 9
AMENDMENT AND TERMINATION
9.01 Amendment
(a) The Plan may be amended or otherwise modified by the Board of
Directors, or the Committee to the extent authorized in
accordance with Subsection (c). Copies of any such amendment
or modification shall be sent to the governing body of each
Company for adoption.
(b) No amendment or modification shall
(i) permit any part of the Trust Fund, other than such part
as is required to pay taxes, administrative expenses
and expenses incurred in effectuating such changes, to
be used for or diverted to purposes other than the
exclusive benefit of the Participants or Beneficiaries
and/or persons entitled to benefits under the Plan or
permit any portion of the Trust Fund to revert to or
become the property of the Company;
(ii) have the effect of reducing the Account of any
Participant as of the date of such amendment or deprive
any Participant or Beneficiary of a benefit accrued and
payable; or
(iii) eliminate any option which constitutes a valuable right
available to a Participant with respect to benefits
previously accrued to the extent the Participant
satisfied, either before or after the amendment, the
conditions for the form of payment except as otherwise
permitted by applicable law and regulations.
(c) The Committee may amend or modify the Plan in order to bring
the Plan into compliance with applicable law or regulations,
provided said amendment or modification does not have a
material effect on the estimated cost of maintaining the Plan
and does not create a new class of benefits or entitlements.
9.02 Termination
While the Plan and Trust Fund are intended to be permanent, they may
be terminated at the discretion of the Board of Directors. Written
notification of such action shall be given to each Company, the
Trustee and the Committee. Thereafter, no further contributions shall
be made to the Trust Fund.
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9.03 Vesting Upon Termination
Upon the complete discontinuance of Company contributions or the
termination or partial termination of the Plan and Trust Fund, the
Account of each affected Participant shall become fully vested and
shall not be reduced except
(a) for adjustments resulting from a valuation in accordance with
Article 5, which valuation shall also reflect the expenses
incurred for administration of the Plan and/or Trust Fund
after such discontinuance or termination date, and all
expenses incurred in effectuating the complete discontinuance
of Company contributions or termination or partial termination
of the Plan and Trust Fund, such as the fees and retainers of
the Plan's Trustee, accountant, custodian, administrator,
consultant, counsel and other specialists if such expenses are
not paid by the Company;
(b) for distributions of benefits by the Trustee to the
Participant in accordance with the Plan and at the written
direction of the Committee; and
(c) as provided in Section 14.01.
9.04 Distribution of Benefits After Termination
As soon as administratively feasible following the termination of the
Plan and Trust Fund, the Trustee, as authorized and directed by the
Committee, shall, provided there is no successor defined contribution
plan within the meaning of Section 401(k)(10)(A)(i) of the Code,
distribute each Account, after adjustment in accordance with
Subsection 9.03(a), in a manner consistent with the provisions of
Article 7.
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ARTICLE 10
PARTICIPATING COMPANIES
10.01 Adoption by Other Entities
Any corporation or other business entity may, by resolution of its own
governing body, and with the approval of the Board of Directors, adopt
the Plan and thereby become a Company. Notwithstanding the adoption
of the Plan by other entities, the Plan will be administered as a
single plan and all Plan assets will be available to pay benefits to
all Participants under the Plan.
10.02 Alternative Provisions
No Company may adopt alternative provisions as to itself or its
Employees.
Upon request of the governing body of a Company, the Board of
Directors may amend the Plan with respect to the Employees of such
Company provided that any change will only apply if any inequity
resulting from such changed Plan provisions is not found to be
discriminatory on behalf of Highly Compensated Employees.
10.03 Right to Withdraw (Plan Spinoff)
Each Company having adopted the Plan shall have the right as of the
last day of any month to withdraw from the Plan and/or Trust Agreement
by delivering to the Board of Directors, the Committee and the Trustee
written notification from its own governing body of such action and
setting forth the date as of which the withdrawal shall be effective.
The date specified in such written notice shall be deemed a Valuation
Date.
10.04 Procedure Upon Withdrawal
(a) If a Company withdraws from the Plan and Trust Agreement as
the result of its adoption of a different plan, the Trustee
shall segregate the portion of the Trust Fund attributable to
the Accounts of Participants employed solely by such Company.
As soon as administratively feasible, the Trustee shall
transfer the segregated assets to the insurance carrier or
fiduciary designated by the Company as the agency through
which the benefits of such successor plan are to be disbursed.
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(b) If a Company withdraws from the Plan and Trust Agreement as
the result of its adoption of a resolution to terminate its
participation in the Plan and to distribute assets to its
Employees who are Participants, the Trustee shall segregate
the portion of the Trust Fund attributable to the Accounts of
the Participants who are employed solely by such Company, and
the termination provisions of Section 9.03 and 9.04 shall
apply with respect to such segregated assets.
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ARTICLE 11
TOP-HEAVY PROVISIONS
11.01 Definition of Top-Heavy and Super Top-Heavy
(a) The Plan will be Top-Heavy for a Plan Year if, as of the final
Valuation Date of the preceding Plan Year (or the final
Valuation Date of the current Plan Year, if such year is the
first Plan Year), hereinafter referred to as the Determination
Date,
(i) the aggregate value of the Accounts of all Participants
who are Key Employees (as defined in Section 11.02)
exceeds 60% of the aggregate value of such Accounts of
all Participants and the Plan cannot be aggregated with
any other plans which would result in the formation of
a non-Top-Heavy aggregation group of plans; or
(ii) the Plan is required to be part of an aggregation group
of plans and the aggregation group is Top-Heavy. The
group will be deemed Top-Heavy if the aggregate value
of all defined contribution plan accounts and the value
of all defined benefit plan accrued benefits
attributable to Key Employees exceeds 60% of such
values attributable to all participants of the
aggregated plans. Such benefit values and accounts
shall be aggregated using the Determination Dates of
the individual plans which fall within the same
calendar year.
For purposes of this Section, aggregation group means all
plans, including terminated plans, maintained by the Employer
if maintained within the last five years ending on the
Determination Date, in which a Key Employee is a participant
or which enables any plan in which a Key Employee is a
participant to meet the requirements of Section 401(a)(4) or
Section 410 of the Code, as well as all other plans maintained
by the Employer, provided that inclusion of such other plans
in the aggregation group would not prevent the group of plans
from continuing to meet the requirements of such sections of
the Code.
(b) The Plan will be Super Top-Heavy for a Plan Year if the
aggregate value of all defined contribution plan accounts and
the value of all defined benefit plan accrued benefits
attributable to all Participants who are Key Employees exceeds
90% of such values attributable to all Participants in lieu of
60% as stated in Subsection (a).
(c) For purposes of determining the aggregate value of the benefit
values and accounts under this Section,
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distributions, other than rollovers or direct transfers
to another qualified plan maintained by the Employer or
rollovers or direct transfers not initiated by the Participant,
made during the five-year period ending on the Determination
Date of the plan from which such distributions were made, shall
be included to the extent such distributions are not otherwise
reflected in the value of any accrued benefit under a defined
benefit plan as determined with respect to such plan's
Determination Date. Such aggregate value shall not include
any (i) assets rolled over or transferred at the initiation of
the Participant directly from a qualified plan maintained by a
business entity other than an Employer to the Plan, (ii)
amounts attributable to former Key Employees, (iii) amounts
attributable to Participants not employed during such five-year
period, or (iv) amounts attributable to deductible employee
contributions under former Section 219(e)(2) of the Code.
A Participant's accounts under any defined contribution plan
as of any Determination Date, other than the Determination
Date which falls within the first Plan Year, shall not include
any Employer contributions due and not yet paid as of the
Determination Date, if the plan under which the account is
maintained is not subject to Section 412 of the Code.
Accrued benefit values under defined benefit plans aggregated
with this Plan shall be determined, subject to the rules set
forth in Section 416(g)(4)(F)(ii) of the Code, as of the dates
of the most recent valuations preceding or coincident with
such defined benefit plans' Determination Dates, in accordance
with the interest and mortality rate assumptions specified in
such defined benefit plans for this purpose or, if not
specified, shall be determined using an interest rate of 5%
and mortality rates in accordance with Group Annuity Mortality
Table for 1951 (Projection "C" to 1970, set back five years
for females). Such accrued benefit values shall be determined
under the method of accrual used for all plans of the Employer
or, if such method is not identical, as if such benefit
accrued under the fractional rule as described in Section
411(b)(1)(C) of the Code.
11.02 Definition of Key Employee
An Employee or a former Employee will be considered to be a Key
Employee for a Plan Year if, at any time during the Plan Year or the
preceding four Plan Years, he is an officer of the Employer earning
more than 50% of the maximum dollar limitation under Section
415(b)(1)(A) of the Code; one of the 10 employees owning the largest
interests (minimum 1/2%) in the Employer earning more than the maximum
dollar limitation under Section 415(c)(1)(A) of the Code; a 5% owner;
or a 1% owner whose compensation exceeds
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$150,000. This definition of Key Employee shall be governed by
Section 416 of the Code and Regulations thereunder. For purposes of
this definition, but only to the extent required by law, a Key
Employee's Beneficiary shall be treated as a Key Employee, and
ownership percentages shall be determined without regard to
aggregation of entities under common control within the meaning of
Sections 414(b), (c) and (m) of the Code. In no event shall more than
50 employees (or, if less, the greater of three employees or 10
percent of the employees) be deemed officers for purposes of this
definition.
11.03 Minimum Employer Contribution
(a) Unless otherwise provided in this Section, for any Plan Year
in which the Plan is determined to be Top-Heavy, the sum of
the Company contribution and forfeitures, if any, allocated to
any non Key Employee Participant in the employ of the Company
on the last business day of that Plan Year, shall not be less
than an amount which, in combination with all other such
amounts allocated to him under all other defined contribution
plans maintained by the Employer, is equal to the lesser of
(i) 3% of the Participant's Compensation or
(ii) the highest percentage of Compensation (net of amounts
contributed under a qualified salary reduction or
similar arrangement) at which contributions (including
Employer matching contributions and forfeitures) are
allocated for the Plan Year under the Plan and under
any other defined contribution plan required to be
aggregated with the Plan on behalf of any Key Employee,
times the Participant's Compensation.
(b) Any contributions made solely to comply with the provisions of
this Section shall be credited at the end of the Plan Year.
(c) If any Participant is also covered by a defined benefit plan
or plans maintained by the Employer, then for each year the
Plan is determined to be Top-Heavy, 5% will be substituted in
lieu of the 3% minimum allocation under Paragraph (a)(i) for
such Participant and Paragraph (a)(ii) shall not be
applicable, unless the Participant receives the Top-Heavy
defined benefit minimum under the defined benefit plan or
plans in accordance with Section 416(c)(1) of the Code,
notwithstanding any offset attributable to defined
contribution account balances, in which event no minimum
contribution will be required under the Plan.
(d) For purposes of this Section, only benefits derived from
Employer contributions under the Plan, or any other defined
contribution plan or plans are to be taken into account to
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determine whether the minimum Employer contribution or
benefit has been satisfied, excluding matching contributions
and any contributions attributable to a salary reduction or
similar arrangement, but including contributions as defined in
Treasury Regulation 1.401(k)-1(g)(13). Such salary reduction
contributions will be taken into account to determine the
Employer contribution made on behalf of any Key Employee under
Subsection 11.03[(a)][(b)](ii), but not to determine whether
the minimum Employer contribution or benefit has been
satisfied.
(e) An employee of a business entity which has not adopted the
Plan shall not be considered a Participant for purposes of
this Section unless also employed by the Company.
(f) An Eligible Employee who becomes a Participant by virtue of
the acceptance of a rollover contribution in accordance with
Section 3.07 or a transfer of assets in accordance with
Section 3.08 but who is not otherwise eligible in accordance
with Section 2.01, shall not be entitled to share in any
Company contribution allocated in accordance with this
Article.
11.04 Minimum Vesting
(a) The following vesting schedule shall be substituted for the
vesting schedule under Subsection 6.04(a) as of the first day
of the first Plan Year the Plan is determined to be Top-Heavy
for persons not under the jurisdiction of a collective
bargaining unit.
<TABLE>
<CAPTION>
Number of Years Percentage of Account
--------------- ---------------------
<S> <C>
Less than 2 full years 0%
2 full years 20%
3 full years 40%
4 full years 60%
5 full years 80%
6 or more full years 100%
</TABLE>
(b) The vesting schedule under Subsection 11.04(a), unless
subsequently amended, shall remain applicable even if the Plan
later ceases to be Top-Heavy.
11.05 Limitation of Allocations
For any Plan Year in which the Plan is determined to be Top-Heavy or
Super Top-Heavy, the reference to "1.25" in Item (1) of Paragraph (B)
of Subsection 4.03(c) will be changed to read "1.0".
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<PAGE> 69
ARTICLE 12
WITHDRAWAL OF FUNDS DURING EMPLOYMENT
12.01 Withdrawals from Elective Deferral Contribution Account
Subject to the general withdrawal rules below, a Participant may
withdraw up to 100% of his Elective Deferral Contribution Account (a)
after attaining age 59-1/2 or (b) before attaining age 59-1/2,
provided such withdrawal meets the Financial Hardship Rules below.
12.02 Withdrawals from Matching and Regular Contribution Accounts
No withdrawals shall be permitted from a Participant's Matching and
Regular Contribution Accounts.
12.03 Withdrawals from Rollover and Transfer Accounts
No withdrawals shall be permitted from a Participant's Rollover and
Transfer Accounts.
12.04 Financial Hardship Rules
(a) For purposes of this Article, a Financial Hardship withdrawal
may be made only if it is on account of an immediate and heavy
financial need of the Participant and is necessary to satisfy
such financial need.
(b) The following needs shall be recognized as immediate and heavy
financial needs:
(i) medical expenses, as described in Section 213(d) of the
Code, previously incurred by the Participant, the
Participant's spouse or the Participant's dependents,
or funds necessary for these persons to obtain medical
care described in Section 213(d) of the Code,
(ii) purchase of a principal residence for the Participant,
(iii) tuition payments and related educational fees for the
next 12 months of post-secondary education for the
Participant or the Participant's spouse, children or
other dependents,
(iv) the need to prevent eviction from or foreclosure on the
mortgage of the Participant's principal residence,
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<PAGE> 70
(v) any other financial need as may be promulgated by the
Internal Revenue Service, and
(vi) any other financial stress the satisfaction of which is
necessary for the safety, well-being, livelihood or
health of the Participant or his immediate family.
(c) Unless otherwise provided in Subsection (d), the Participant
shall provide the Committee with a signed written statement
certifying that the Financial Hardship cannot be relieved
(i) through reimbursement or compensation by insurance or
otherwise,
(ii) by reasonable liquidation of such Participant's assets,
including those of his spouse and minor children if
they are reasonably available to him,
(iii) by discontinuance of Elective Deferral Contributions, or
(iv) by other distributions or loans from the Plan or any
other qualified plan or loans from commercial sources
on reasonable commercial terms.
(d) In the absence of the above certification, the following
requirements will be applicable:
(i) The Participant must have obtained all other
distributions and loans available under all plans
maintained by the Employer.
(ii) Elective Deferral Contributions and any other Employee
contributions under all plans maintained by the
Employer will be suspended for 12 months following the
receipt of the Financial Hardship withdrawal. The
Participant's Elective Deferral Contributions under
Section 3.01 will automatically be resumed following
the required period of suspension, unless the
Participant elects otherwise.
(iii) The limitation of Section 4.01 which is imposed on a
Participant's Elective Deferral Contributions for the
calendar year immediately following the calendar year
of the Financial Hardship withdrawal will be reduced by
the amount of such contributions and/or deferrals for
the calendar year of such withdrawal.
(e) The amount of such Financial Hardship withdrawal may not
exceed the amount required to meet the specified need plus any
amounts necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result from the
withdrawal. In addition, the amount of such
65
<PAGE> 71
withdrawal from a Participant's Elective Deferral
Contribution Account shall be limited to the sum of the
Participant's Elective Deferral Contributions made.
(f) A Financial Hardship withdrawal from a Participant's Elective
Deferral Contribution Account will be available only after the
total amount available from all other Accounts has been
withdrawn.
12.05 General Withdrawal Rules
Any withdrawal shall be subject to the following requirements:
(a) If a Participant elected to receive his benefits in the form
of a life annuity in accordance with the provisions of
Sections 7.03 and 7.04 at any time, any withdrawal will be
distributed under a Qualified Annuity unless such Participant
elects to receive such withdrawal in a lump sum. All
withdrawals will be considered separate Annuity Starting Dates
for purposes of Sections 7.02 and 7.04.
(b) Only one withdrawal will be permitted during any Plan Year.
(c) A written request for a withdrawal must be submitted to the
Committee at least 15 days prior to the withdrawal date.
Withdrawals will be taken from the investment funds
proportionately.
(d) A withdrawal may be requested as of any January 1, April 1,
July 1 or October 1, or at such other dates as the Committee
may fix from time to time with respect to a hardship
withdrawal, providing that withdrawal of such portion of the
Participant's Account will be permitted only if the market
value of Trust Fund assets invested in such fund, adjusted for
contributions and payment activity has not declined and there
is no significant adverse economic effect on the Trust Fund.
If requested as of any date other than the day after a
Valuation Date, no investment earnings will be credited on the
amount withdrawn for the period from the last Valuation Date
to the date specified for the withdrawal.
(e) The minimum amount that may be withdrawn is $500 or the
balance in the Participant's Accounts from which a current
withdrawal is permitted, if less. The minimum amount
limitation shall not apply in the case of a hardship
withdrawal.
(f) If a loan is outstanding at the time a withdrawal is
requested, such withdrawal shall be permitted only to the
extent that the remaining vested Account balance under the
Plan will be at least 100% of the outstanding loan balance as
of the date of the withdrawal.
66
<PAGE> 72
ARTICLE 13
LOANS
13.01 Amount of Loans and Terms of Repayment
The Committee shall promulgate any additional specific rules and
regulations governing all aspects of this Article as it deems
necessary. The following general rules shall serve as the basis for
any specific rules and regulations:
(a) Upon written application on forms provided by the Committee,
the Committee may grant a loan to a Participant, except
shareholder employees or owner employees as referred to in
Section 4975(d) of the Code.
(b) The minimum amount of any loan shall be $1,000.
(c) In no event shall a loan exceed the lesser of
(i) $50,000, reduced by the highest outstanding loan
balance during the one-year period ending on the day
before the date on which any new loan is to be granted,
(ii) 50% of the amount to which the Participant is vested
under this Plan on the date the loan is granted, or
(iii) the Participant's Elective Deferral Account.
(d) Each loan granted to a Participant must be repaid in full
before any subsequent loan is granted to such Participant.
(e) All loans under this Article shall be considered investments
of the Account of the Participant to whom the loan is granted.
Interest shall be charged thereon at a rate determined on the
basis of loans granted under similar circumstances by
financial institutions in the locale of the Company's
principal place of business.
If a loan is granted as of any date other than the day after a
Valuation Date, no investment earnings will be credited on the
amount of the loan for the period from the last Valuation Date
to the date the loan is granted.
(f) Each loan shall be secured by the assignment of not more than
50% of the Participant's vested Account balance on the date
the loan is granted, a promissory note executed by the
Participant and such additional collateral as the Committee
shall require to assure repayment of the loan and all interest
payable thereon.
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<PAGE> 73
(g) Each loan shall be repaid by the Participant either through
payroll deductions or in such other manner as the Committee
shall determine, provided such payment schedule does not
permit payment less frequently than quarterly. All payment
schedules shall be calculated to amortize principal and
interest in level payments over the period of the loan as
agreed to by the Committee and the Participant not to exceed
five years from the date of such loan.
Principal and interest payments shall be credited to the
Account of the Participant to whom the loan is granted and
shall be invested in accordance with the Participant's current
investment election.
(h) If a Participant should fail to make a payment when due, the
entire unpaid balance of the loan shall be in default and the
Committee shall take any one or more of the following steps,
as it deems necessary, to secure repayment of such loan:
(i) Deduct the amount of the outstanding indebtedness from
the Participant's Account, to the extent permitted and
available under law and in accordance with the terms of
the Plan. Such deduction will not occur until a
distributable event occurs under the terms of the Plan.
(ii) Instruct the Trustee to sell any property held as
collateral for such loan.
(iii) Take such other steps as may be required.
(i) Each loan will require that within the 90-day period before
the granting of the loan, the Participant and, if married, his
spouse, consent to such loan in writing, and acknowledge the
reduction in the Participant's Account in the event the loan
is in default.
(j) Any Participant who is a "party in interest" as defined in
ERISA Section 3(14) and who ceases to be an active Eligible
Employee may be eligible to borrow from the Plan under terms
and conditions reflecting valid differences between active
Participants and other Participants which would be considered
in a normal commercial setting, such as the unavailability of
payroll deductions for repayment. In addition, there will be
an annual fee for the administration of each of such loans of
$100. In no event will loans be unreasonably withheld from
any eligible applicant.
(k) No distribution from the Plan upon termination of employment
for any reason shall be made to any Participant or Beneficiary
unless and until all loans, including interest thereon, have
been fully repaid.
68
<PAGE> 74
ARTICLE 14
GENERAL PROVISIONS
14.01 Exclusiveness of Benefits
The Plan has been created for the exclusive benefit of the
Participants and their Beneficiaries. No part of the Trust Fund shall
ever revert to the Company nor shall such Trust Fund ever be used
other than for the exclusive benefit of the Participants and their
Beneficiaries, except as provided in Sections 3.10 and 9.03 and 14.10
and Subsection 4.03(d) provided, however, that contributions made by
the Company by mistake of fact or which are not deductible under
Section 404 of the Code, may be returned to the Company within one
year of the mistaken payment of the contribution or the date of
disallowance of the deduction, as the case may be. All contributions
made by the Company shall be conditional upon their deductibility
under Section 404 of the Code. No person shall have any interest in
or right to any part of the Trust Fund, or any equitable right under
the Trust Agreement, except to the extent expressly provided in the
Plan or Trust Agreement.
14.02 Limitation of Rights
Neither the establishment of the Plan, nor any modification thereof,
nor the creation of any fund, trust or account, nor the purchase of
any policy, nor the payment of any benefits shall be construed as
giving any Participant, Beneficiary, or any other person whomsoever,
any legal or equitable right against the Company, the Committee, or
the Trustee, unless such right shall be specifically provided for in
the Plan or conferred by affirmative action of the Committee or the
Company in accordance with the terms and provisions of the Plan; or as
giving any Participant or any other employee of the Company the right
to be retained in the service of the Company and all Participants and
other employees shall remain subject to discharge to the same extent
as if the Plan had never been adopted.
14.03 Limitation of Liability and Legal Actions
In any action or proceeding involving the Trust Fund, or any part
thereof, or the administration thereof, the Company, the Committee,
and the Trustee shall be the only necessary parties. Any final
judgment entered in any such action or proceeding, which is not
appealed or appealable, shall be binding and conclusive on the parties
thereto, and all persons having or claiming to have an interest in the
Trust Fund or under the Plan.
69
<PAGE> 75
14.04 Construction of Agreement
The Plan shall be construed according to the laws of the State in
which the Company named under Article l has its principal place of
business, and all provisions hereof shall be administered according
to, and its validity shall be determined under, the laws of such State
except where pre-empted by Federal law.
14.05 Title to Assets
No Participant, Beneficiary or any other person shall have any legal
or equitable right or interest in the funds set aside by the Company,
or otherwise received or held under the Plan, or in any assets of the
Trust Fund, except as expressly provided in the Plan, and no
Participant, Beneficiary or any other person shall be deemed to
possess a right to any assets except as herein provided.
14.06 Severability
Should any provision of the Plan or any regulations adopted thereunder
be deemed or held to be unlawful or invalid for any reason, such fact
shall not adversely affect the other provisions or regulations unless
such invalidity shall render impossible or impractical the functioning
of the Plan and, in such case, the appropriate parties shall
immediately adopt a new provision or regulation to take the place of
the one held illegal or invalid.
14.07 Titles and Headings
The titles and headings of the Sections in this instrument are for
convenience of reference only and, in the event of any conflict, the
text rather than such titles or headings shall control.
14.08 Counterparts as Original
The Plan has been prepared in counterparts, each of which so prepared
shall be construed an original.
14.09 Merger of Plans
Upon the merger or consolidation of any other plan with this Plan or
the transfer of assets or liabilities from this Plan to any other
plan, all Participants of this Plan shall be entitled to a benefit
immediately after the merger, consolidation or transfer (if the
merged, consolidated or transferee plan had then been terminated) at
least equal to the benefit they would have been entitled to
immediately prior to such merger, consolidation or transfer (if the
Plan had then terminated).
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<PAGE> 76
14.10 Internal Revenue Service Approval
If the Plan shall not be initially approved and qualified by the
Internal Revenue Service as meeting the requirements of the Code or
any other applicable act so as to permit the Company, for income tax
purposes, to deduct its contributions to the Trust, all of the
Company's contributions to the Trust Fund shall be returned to the
Company, provided the application for the determination is made by the
time prescribed by law for the filing of the Company's return for the
taxable year in which such Plan was adopted, or such later date as the
Secretary of the Treasury may prescribe. In such event, the Plan
shall be null and void.
71
<PAGE> 77
ARTICLE 15
PROVISIONS RELATING TO COMPANY STOCK
15.01 ESOP Contributions
The Company, subject to the limitations on annual additions under
Section 4.03 of the Plan, may contribute as an ESOP contribution to the Trust,
in cash or in shares of Company Stock, such amount as it shall determine. ESOP
contributions shall be allocated in accordance with Section 15.05 of the Plan.
15.02 Timing of ESOP Contributions
The Company shall deposit ESOP contributions with the Trust at such
time as is necessary to meet the obligations on an Exempt Loan to the extent
such obligations are not satisfied out of dividends paid on allocated and
unallocated shares of Company Stock and the proceeds of the sale of Company
Stock held in the Unallocated ESOP Suspense Account acquired with the proceeds
of such Exempt Loan, and at such other time as the Company may in its discretion
determine.
15.03 Exempt Loan
(a) The Plan may borrow money pursuant to an Exempt Loan, provided
the proceeds of an Exempt Loan are used within a reasonable
time after receipt only for any or all of the following
purposes:
(i) to acquire Company Stock,
(ii) to repay such Exempt Loan; or
(iii) to repay a prior Exempt Loan.
(b) (i) the terms of the Exempt Loan must, at the time the
Exempt Loan is made, be at least as favorable to the
ESOP as the terms of a comparable loan resulting from
arm's-length negotiations between independent
parties,
(ii) the interest rate shall not exceed a reasonable rate
of interest;
<PAGE> 78
(iii) any collateral pledged to the lender by the Plan
shall consist only of the Company Stock purchased
with the proceeds of the Exempt Loan and Company
Stock that was pledged as collateral on a prior
Exempt Loan repaid with the proceeds of the current
Exempt Loan;
(iv) any pledge of Company Stock shall provide for the
release of shares so pledged pursuant to Section 15.05
of the Plan;
(v) the lender shall have no recourse against the Plan
except with respect to the collateral given for such
Exempt Loan, earnings attributable to such
collateral, Company contributions to the ESOP (other
than contributions of Company Stock) that are made to
meet obligations under such Exempt Loan and earnings
attributable to the investment of such contributions;
(vi) the Exempt Loan must be for a specific term and may
not be payable at the demand of any person, except in
the case of default,
(vii) in the event of default upon an Exempt Loan, the
value of the assets of the Trust transferred in
satisfaction of the Exempt Loan shall not exceed the
amount of default. If the lender is a "party in
interest" as defined in Section 3(14) of ERISA or a
"disqualified person" as defined in Section
4975(e)(2) of the code, the Exempt Loan shall provide
for a transfer of assets of the Trust upon default
only upon and to the extent of the failure of the
Plan to meet the payment schedule of the Exempt Loan;
and
(viii) the payments of principal and interest on the Exempt Loan
shall be made only (A) from (1) the Company contributions
described in Section 15.02 and earnings on such Company
contributions, (2) from dividends made with respect to shares
of Company Stock purchased with the Exempt Loan or a loan
refinanced by such Exempt Loan which shares have been released
from the Unallocated ESOP Suspense Account and allocated to a
<PAGE> 79
Participant ESOP Account and (3) from dividends or other
earnings with respect to the Unallocated ESOP Suspense Account
maintained with respect to such Exempt Loan received during or
prior to the year, less such payments in prior years, (B) the
proceeds of a subsequent Exempt Loan made to repay the prior
Exempt Loan and (C) the proceeds of the sale of Company Stock
held in the Unallocated ESOP Suspense Account acquired with
the proceeds of such Exempt Loan. Such contributions and
dividends and other earnings must be accounted for separately
in the books of account of the Plan until the Exempt Loan is
repaid.
15.04 Nonterminable Protections and Rights
Except as is otherwise required by applicable law, Section 15.10 of
the Plan and except for a call provision in any convertible preferred stock
that meets the requirements of Section 409(1) of the Code and any regulations
promulgated thereunder, no Company Stock acquired with the proceeds of an
Exempt Loan may be subject to a put, call or other option, or buy-sell or
similar arrangement while held by and when distributed from the Trust, whether
or not the Plan then contains an ESOP. The protections and rights granted in
this Section and Subsections 15.10(b) and (c) of the Plan are nonterminable,
and such protections and rights shall continue to exist under the terms of the
Plan so long as any Company Stock acquired with the proceeds of an Exempt Loan
is held by the Trust or by any Participant or other person for whose benefit
such protections and rights have been created, and neither the repayment of
such Exempt Loan nor the failure of any portion of the Plan to be an ESOP, nor
an amendment of the Plan shall cause a termination of such protections and
rights.
15.05 Allocations to Participants
(a) Allocations of Non Leveraged Contributions
(i) As of the last day of each Plan Year, any
contributions made to the ESOP with respect to the
Plan Year by the Company and not used to make
payments on an Exempt Loan or to make a contribution
required pursuant to Subsection 15.05(b)(ii)(B) of
the Plan shall be allocated to the ESOP Account of
each Participant who is in the employ of
<PAGE> 80
the Company on the last business day of the Plan Year
which amount shall be credited at the end of the Plan
Year.
(ii) Notwithstanding the foregoing provisions, a
Participant shall be entitled to a share of the
Company's ESOP contributions for the Plan Year of (A)
his Retirement, Disability or death, (B) the
commencement or end of a leave of absence authorized
by the Company or (C) his transfer to another
business entity to which such Participant had been
transferred by the Company, even if the Participant
is not in the employ of the Company on the last
business day of the Plan Year.
As used herein, leave of absence shall mean a leave
granted for pregnancy, sickness, death or any family
obligation or status; personal or family hardship or
special business circumstances; educational purposes;
and/or civic, charitable or governmental services,
provided that all Employees under similar
circumstances shall be treated in a similar manner.
A Participant shall not share in the allocation of
the Company's ESOP contribution for any Plan Year
during which he terminated his employment for reasons
other than specified in Subsections 15.05(a)(ii)
(A), (B) or (C).
(iii) Notwithstanding the foregoing, a Participant who is
employed on an hourly basis by Sagebrush Sales
Company or Continental Wood Preservers shall not
share in the allocation of Company contributions.
(iv) The ESOP contribution to be allocated for the Plan
Year to any Participant's ESOP Account shall be
allocated to each Participant eligible to share in
the allocation in the same proportions that each
Participant's Compensation bears to the aggregate of
Compensation of all Participants eligible to share in
the allocation for such Plan Year.
<PAGE> 81
(b) Release and Allocation of Shares upon Payment on an Exempt Loan
(i) All Company Stock acquired by the Plan with the
proceeds of an Exempt Loan initially shall be
credited to the Unallocated ESOP Suspense Account.
Such Company Stock shall be released and withdrawn
from the Unallocated ESOP Suspense Account as if all
Company Stock in the Unallocated ESOP Suspense
Account were encumbered. For each Plan Year during
the duration of the Exempt Loan, the number of shares
of Company Stock released from the Unallocated ESOP
Suspense Account following each payment on the Exempt
Loan shall be determined pursuant to Subsection
15.05(b)(i)(A) or 15.05(b)(i)(B).
(A) If (1) the Exempt Loan provides for annual
payments of principal and interest at a
cumulative rate that is not less rapid at any
time than level annual payments of such
amounts for 10 years, (2) the interest paid
on the loan is computed using standard loan
amortization tables and (3) the Company so
elects at the time the Exempt Loan is made,
the number of shares of Company Stock
released from the Unallocated ESOP Suspense
Account following each payment on the Exempt
Loan shall equal the number of encumbered
shares held immediately before release for
the current Plan Year multiplied by a
fraction, the numerator of which is the
amount of principal paid for the Plan Year
and the denominator of which is the sum of
the numerator plus the principal to be paid
on such Exempt Loan for all future Plan
Years. The release method described in this
Subsection shall not apply if, by reason of
any renewal, extension or refinancing, the
sum of the expired duration of the Exempt
Loan, the renewal period, the extension
period and the duration of a new Exempt Loan
exceeds 10 years.
<PAGE> 82
(B) In all cases other than those expressed in
Subsection 15.05(b)(i)(A), the number of
shares of Company Stock released from the
Unallocated ESOP Suspense Account following
each payment on the Exempt Loan shall equal
the number of encumbered shares held
immediately before release for the current
Plan Year multiplied by a fraction, the
numerator of which is the amount of principal
and interest paid for the Plan Year and the
denominator of which is the sum of the
numerator plus the principal and interest to
be paid on such Exempt Loan for all future
Plan Years.
(ii) Shares of Company Stock withdrawn from the
Unallocated ESOP Suspense Account shall be allocated
to each Participant's ESOP Account as follows and in
the following order:
(A) the number of shares of Company Stock with a
fair market value equal to the dividends paid
on shares of Company Stock allocated to a
Participant's ESOP Account used to make
payments on an Exempt Loan, determined as of
the date that the payment was made on the
Exempt Loan, shall be allocated to the ESOP
Account to which the shares of Company Stock
that gave rise to such dividends were
allocated as of the last day of the Plan Year
with respect to which such payment was made;
(B) in the event that the number of shares
released from the Unallocated ESOP Suspense
Account is insufficient to make the
allocation described in Subsection 15.05(b)
(ii)(A), the Company shall be required to
make an additional contribution, either in
Company Stock or in cash or to make an
additional payment on an Exempt Loan, equal
to the amount necessary to permit such
allocation.
<PAGE> 83
(iii) (A) Each Participant who is in the employ of the
Company on the last business day of the Plan
Year may be eligible to share in the
allocation of shares of Company Stock
released from the Unallocated ESOP Suspense
Account (to the extent that the number of
Shares so released exceeds the number of
shares allocated pursuant to Subsection
15.05(b)(ii)(A)).
(B) Notwithstanding the foregoing provisions, a
Participant shall be entitled to a share of
the shares of Company Stock released from the
Unallocated ESOP Suspense Account for the
Plan Year of (1) his Retirement, Disability
or death, (2) the commencement or end of a
leave of absence authorized by the Company or
(3) his transfer to another business entity
to which such Participant had been
transferred by the Company, even if the
Participant is not in the employ of the
Company on the last business day of the Plan
Year.
As used herein, leave of absence shall mean a
leave granted for pregnancy, sickness, death
or any family obligation or status; personal
or family hardship or special business
circumstances; educational purposes; and/or
civic, charitable or governmental services,
provided that all Employees under similar
circumstances shall be treated in a similar
manner.
A Participant shall not share in the
allocation of shares of Company Stock
released from the Unallocated ESOP Suspense
Account for any Plan Year during which he
terminated his employment for reasons other
than specified in Subsections 15.05(b)(iii)
(B)(1), (2) or (3).
(C) Notwithstanding the foregoing, a Participant
who is employed on an hourly basis by
Sagebrush Sales Company or Continental Wood
Preservers
<PAGE> 84
shall not share in the allocation of Company
contributions.
(iv) As of the last day of each Plan Year, the number of
shares of Company Stock released and withdrawn from
the Unallocated ESOP Suspense Account for such Plan
Year (reduced by the number of shares of Company
Stock allocated pursuant to Subsection
15.05(b)(ii)(A) of the Plan) shall be allocated to
each Participant eligible to share in the allocation
in the same proportions that each Participant's
Compensation bears to the aggregate of Compensation
for the Plan Year of all Participants eligible to
share in the allocation.
(c) Allocation of Forfeitures
(i) As of the last day of each Plan Year, amounts
attributable to the non-vested portion of any
Participant's ESOP Account forfeited during the Plan
Year in excess of the amount thereof used to restore
forfeitures to ESOP Accounts shall be allocated to
each eligible Participant's ESOP Account.
(ii) As of the last day of each Plan Year, the forfeitures
to be allocated for the Plan Year to Account 4s shall
be divided among the Participants eligible to share
in the allocation in the same proportions that each
Participant's Compensation bears to the aggregate of
Compensation for the Plan Year of all Participants
eligible to share in the allocation. Each
Participant's share shall be credited to his ESOP
Account.
15.06 Investment of ESOP Funds
The portion of the Trust Fund attributable to the ESOP (other than any
portion which a Participant diversifies pursuant to Section 15.07 of the Plan)
shall be invested in the ESOP Stock Fund. The ESOP Stock Fund must invest
primarily in Company Stock. The ESOP Stock Fund may be invested entirely in
Company Stock without regard to the percentage limitations of ERISA Section 407
on holding and acquiring such stock. The Plan may not
<PAGE> 85
obligate itself to acquire Company Stock with respect to ESOP Stock Fund from a
particular holder thereof at an indefinite time determined upon the happening
of an event such as the death of the holder, nor may it obligate itself to
acquire Company Stock with respect to the ESOP Stock Fund under a put option
binding on the Plan.
15.07 ESOP Diversification
(a) Each Qualified Participant shall be permitted to diversify his
ESOP Account with respect to the first Plan Year in which he
becomes a Qualified Participant and the next five consecutive
Plan Years. A Qualified Participant shall be permitted to
make the diversification elections provided for in this
Section until the expiration of 90 days after the last day of
each applicable Plan Year by directing the Trustee, in
writing, as to the investment in an investment fund listed in
Section 5.01 other than the ESOP Stock Fund of (i) 25% (or, in
the last such Plan Year, 50%) of the total number of shares
that have ever been allocated to such Participant's ESOP
Account on or before the most recent plan allocation date
reduced by (ii) the amount of shares the Participant has
elected to diversify pursuant to this Section in prior Plan
Years. The number of shares determined hereunder shall be
rounded to the nearest whole number of shares and shall be
valued as of the Valuation Date coincident with or next
following the date the Qualified Participant makes a
diversification election provided for hereunder.
(b) Any diversification option selected by a Participant pursuant
to Subsection 15.07(a) shall be implemented no later than 90
days after the last day of the period through which the
diversification election can be made.
(c) No Participant shall be permitted to diversify his ESOP
Account under this Section if, as of the Valuation Date
coincident with the last day of any applicable Plan Year, the
value of the Participant's ESOP Account is $500 or less.
<PAGE> 86
15.08 Voting and Tender of Stock Held in the ESOP Stock Fund
(a) Voting Rights
(i) Each Participant shall be entitled to direct the
Trustee, and the Trustee shall have no discretion, as
to the manner in which Company Stock which is
entitled to vote and which is allocated to such
Participant's ESOP Account, is to be voted. The
Trustee shall vote combined fractional shares, to the
extent possible, to reflect the directions of the
Participants holding such shares.
(ii) The Company shall provide the Trustee and each
Participant who has Company Stock allocated to his
ESOP Account with notices and information statements
(including proxy statements) when voting rights are
to be exercised, at the same time and in the same
manner (except to the extent the Securities Exchange
Act of 1934 requires otherwise) as such notices and
information statements (including proxy statements)
are provided to shareholders of the Company
generally.
(iii) Except to the extent prohibited by applicable law,
the Trustee shall have no discretion as the voting of
any Company Stock (i) held in the any Participant's
ESOP Account for which the Trustee does not receive
affirmative and valid Participant directions, and
(ii) held in the Unallocated ESOP Suspense Account.
The Trustee shall vote such Company Stock in the same
proportions as Company Stock allocated to any
Participant's ESOP Account for which the Trustee
receives affirmative and valid written voting
instructions.
(b) Tender Rights
(i) If any person shall commence a tender or exchange
offer or any similar transaction with respect to
Company Stock, each Participant shall be entitled to
direct the Trustee, and the Trustee shall have no
discretion, as to whether the Company Stock allocated
to such Participant's ESOP Account is to be tendered
and whether such tender is to be revoked (to the
extent such
<PAGE> 87
a revocation is permitted by the terms of such tender
or exchange offer or applicable law). The Trustee
shall tender shares of Company Stock allocated to any
Participant's ESOP Account for which the Trustee
shall have received affirmative and valid Participant
directions to tender (except to the extent such
directions are revoked prior to such tender); the
Trustee shall revoke the tender of shares of Company
Stock allocated to any Participant's ESOP Account for
which the Trustee shall have received affirmative and
valid Participant directions to revoke such tender.
(ii) Except to the extent prohibited by applicable law,
the Trustee shall have no discretion as to whether or
not to tender, or whether to revoke tenders with
respect to (i) shares of Company Stock allocated to
any Participant's ESOP Account for which the Trustee
does not receive affirmative and valid Participant
directions, and (ii) shares of Company Stock held in
the Unallocated ESOP Suspense Account. The Trustee
shall tender or not and shall revoke tenders with
respect to such shares of Company Stock in the same
proportions as the shares of Company Stock allocated
to any Participant's ESOP Account for which the
Trustee receives affirmative and valid directions
whether or not to tender and whether to revoke such
tender.
(c) Confidentiality of Voting and Tender Directions
The Committee shall devise and implement a procedure which is
designed to assure the confidentiality of any Participant's
voting or tender directions so that in directing the Trustee
to vote or tender any shares of Company Stock pursuant to this
Article, the Participants are in fact rendering independent
decisions without influence from the Company.
(d) Participants Named Fiduciaries
Each Participant who, pursuant to this Section, affirmatively
and validly directs the Trustee as to voting or tender
decisions with respect to Company Stock held in the ESOP Stock
Fund shall
<PAGE> 88
be a named fiduciary of the Plan within the meaning of Section
402(a) of ERISA, with authority to make voting and tender
decisions with respect to the number of Shares of Company
Stock (both allocated and unallocated) for which such voting
or tender decisions are directed.
15.09 Medium of Distribution from the ESOP
Benefits under the Plan attributable to a Participant's ESOP Account
shall be distributed in the form of Company Stock (except that cash shall be
distributed in lieu of any fractional shares of Company Stock).
15.10 Put Option
(a) If Company Stock which was not acquired with the proceeds of
an Exempt Loan is distributed to a Participant or Beneficiary
and such Company Stock is not readily tradable on an
established securities market (within the meaning of Sections
409 and 4975 of the Code), the Participant or Beneficiary
shall have the right to require the Company to repurchase the
Company Stock distributed to such Participant or Beneficiary
under a fair valuation formula (within the meaning of Sections
401(a)(28) and 409(h) of the Code).
(b) Company Stock which is acquired with the proceeds of an Exempt
Loan and which is not publicly traded when distributed or is
not readily tradable on an established securities market or is
subject to a trading limitation when distributed, shall be
subject to a put option. For purposes of this Subsection, a
"trading limitation" on Company Stock is a restriction under
any Federal or State securities law or any regulation
thereunder, or an agreement affecting the Company Stock which
would make the Company Stock not as freely tradable as stock
not subject to such restriction.
(c) The put option described hereunder shall be exercisable only
by a Participant, a Beneficiary, by the Participant's donees,
or by a person (including an estate or its distributee) to
whom the Company Stock passes by
<PAGE> 89
reason of a Participant's death. For purposes of this
Section, a Participant shall include a former Participant.
The put option shall permit a Participant or such other
beneficiaries of such put option to sell the Company Stock to
the Company. Under no circumstances shall the put option bind
the Plan. However, the put option shall grant the Plan an
option to assume the rights and obligations of the Company at
the time that the put option is exercised. If it is known at
the time an Exempt Loan is made that Federal or State law will
be violated by the Company's honoring such put option, the put
option shall permit the Company Stock to be put, in a manner
consistent with such law, to a third party (e.g., an affiliate
of the Company or a shareholder other than the Plan) that has
substantial net worth at the time the Exempt Loan is made and
whose net worth is reasonably expected to remain substantial.
The put option shall commence as of the day following the date
the Company Stock is distributed to the Participant or
Beneficiary and end 60 days thereafter and, if the put option
is not exercised within such 60-day period, an additional
60-day option period shall commence on the first day of the
fifth month of the Plan Year next following the date the
Company Stock was distributed to the Participant or
Beneficiary (or such other 60-day period as provided in
regulations promulgated by the Secretary of the Treasury).
However, in the case of Company Stock that is publicly traded
without restrictions when distributed but ceases to be traded
within either of the 60-day periods described herein after
distribution, the Company shall notify each holder of such
Company Stock in writing on or before the tenth day after the
date the Company Stock ceases to be so traded that for the
remainder of the applicable 60-day period the Company Stock is
subject to the put option. The number of days between the
tenth day and the date on which notice is actually given, if
later than the tenth day, shall be added to the duration of
the put option. The notice shall inform distributees of the
terms of the put options that they hold. The terms of such
put options shall satisfy the provisions of this Section. The
foregoing periods during which the put option is exercisable
shall not include any
<PAGE> 90
time when such put option cannot be exercised because the
Company or such other person bound by the put option is
prohibited from honoring it by applicable Federal or State
law.
The put option may be exercised by the holder thereof
notifying the company in writing that the put option is being
exercised; the notice shall state the name and address of the
holder and the number of shares to be sold. The price at
which the put option shall be exercisable shall be the fair
market value of the Company Stock determined in good faith by
the Committee based on an appraisal by an "independent
appraiser" (within the meaning of Section 401(a)(28) of the
Code). Payment under a put option granted in connection with
a "total distribution" of Company Stock shall be paid in
substantially equal monthly, quarterly, semiannual or annual
installments over a period certain beginning not later than
thirty days after the exercise of the put option and not
exceeding five years. The Company shall provide the holder of
the put option with adequate security for its obligation and
shall pay a reasonable interest rate on the unpaid amounts.
The amount to be paid under the put option involving
installment distributions shall be paid not later than thirty
days after the exercise of the put option. Payment under the
put option may not be restricted by the provisions of a loan
or any other arrangement, including the terms of the Company's
articles of incorporation, unless so required by applicable
State law.
For purposes of this Section, "total distribution" means a
distribution to a Participant or Beneficiary within one
taxable year of the entire value of the Participant's ESOP
Account.
(d) An arrangement involving the Plan that creates a put option
may not provide for the issuance of put options other than as
provided under this Section.
<PAGE> 91
15.11 Use of ESOP Dividends
The Company may cause cash dividends received by the Trust in respect
of shares of Company Stock held by the ESOP, whether allocated to a
Participant's ESOP Account or held in the Unallocated ESOP Suspense Account, to
repay any outstanding Exempt Loan, the proceeds of which were used to acquire
such Company Stock. The Company may cause cash dividends payable in respect of
shares of Company Stock allocated to a Participant's ESOP Account to be paid
directly in cash to the Participant or Beneficiary.
15.12 Special ESOP Definitions
(a) "Company Stock"
Common stock of Ply-Gem Industries, Inc. or convertible preferred
stock of Ply-Gem Industries, Inc. which meets the requirements of Section
409(1)(3) of the Code.
(b) "ESOP"
The portion of the Plan intended to be an employee stock ownership
plan within the meaning of Section 4975(e)(7) of the Code and Treasury
Regulation Section 54.4975-11.
(c) "ESOP Stock Fund"
The Investment Fund described in Section 15.06 of the Plan.
(d) "Exempt Loan"
A loan made to the Trust with a "disqualified person" within the
meaning of Section 4975(e)(2) of the Code with respect to the Plan or a "party
in interest" within the meaning of Section 3(14) of the Employee Retirement
Income Security Act of 1974, as it may be amended from time to time ("ERISA")
with respect to the Plan or a loan to the Trust which is guaranteed by a
"disqualified person" or a "party in interest" which satisfies the requirements
of Department of Labor Regulation 29 CFR Section 2550.408b-3, Treasury
Regulation Section 54.5975-7(b) and Section 15.03 of the Plan.
<PAGE> 92
(e) "Qualified Participant"
A Participant who has both attained age 55 and who has completed ten
years of participation in the Plan.
(f) "Qualifying ESOP"
An employee stock ownership plan described in Section 4975(e)(7) of
the Code under which not more than one-third of the contributions by Controlled
Group members is allocated to "highly compensated employees" as defined in
Subsection 4.01(d) of the Plan.
(g) "Qualifying ESOP Contributions"
The amount of contributions by a Controlled Group member with respect
to the ESOP made on behalf of a Participant in the form of employer securities
as defined in Section 409 of the Code or in cash and used to purchase such
securities, or used to repay principal or interest on a loan that was used to
purchase such securities.
(h) Unallocated ESOP Suspense Account
An account under the ESOP containing Company Stock acquired with the
proceeds of an Exempt Loan and which has not been released from such account
and allocated to any Participant's ESOP Account pursuant to Section 15.05 of
the Plan.
15.13 Special Provisions
(a) All Company Matching contributions in accordance with Section
3.02 shall be made in the form of Company Stock.
Notwithstanding any other provision of the Plan to the
contrary, a Participant's investment election under Article V
shall not apply to the Participant's Matching Contribution
Account.
(b) With respect to this Article 15, the plan is intended to
contain an employee stock ownership provision within the
meaning of Section 4975(e)(7) of the Code and Treasury
Regulation Section 54.4975-11.
<PAGE> 1
[LETTERHEAD]
August 11, 1994
Ply Gem Industries, Inc.
777 Third Avenue
New York, New York 10017
Re: Registration Statement on Form S-8
Ply Gem Industries, Inc. Group Profit -
Sharing/401(k) Plan
-----------------------------------------
Dear Sirs:
We have acted as counsel to you (the "Company") and, as such, are
familiar with the corporate proceedings taken and to be taken with respect to
the adoption of the Ply Gem Industries, Inc. Group Profit - Sharing/401(k) Plan
and the sale of shares pursuant thereto. We have acted as counsel to the
Company with respect to the preparation of a Registration Statement on Form S-8
relating to 100,000 shares of the Common Stock of the Company, par value $.25
per share (the "Common Stock") issuable pursuant to the aforesaid Plan.
It it our opinion that:
(1) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware; and
(2) Shares of Common Stock issuable in accordance with provisions
of the Ply Gem Industries, Inc. Group Profit - Sharing 401/(k) Plan
shall be, upon due issuance and payment therefor in accordance with the
provisions of said Plan validly and legally issued, fully paid and
non-assessable.
The undersigned consents to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to the Registration Statement
and to all references to us in the said Registration Statement.
Very truly yours,
CHARLES M. MODLIN
<PAGE> 1
CONSENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
We have issued our reports dated February 24, 1994 (except for Note E, as to
which the date is March 23, 1994) accompanying the consolidated financial
statements and schedules of Ply Gem Industries Inc. and subsidiaries appearing
in the 1993 Annual Report on Form 10-K, as amended on April 28, 1994, for the
year ended December 31, 1993 which are incorporated by reference in this
Registration Statement. We consent to the incorporation by reference in the
Registration Statement of the aforementioned reports.
GRANT THORNTON
New York, New York
August 11, 1994
